SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "AGREEMENT"), dated as of February 22,
2005, is made by AMERICAN BUSINESS FINANCIAL SERVICES, INC., as a debtor and a
debtor-in-possession, a Delaware corporation, ("ABFS"), THE AFFILIATES OF ABFS
LISTED ON ANNEX I HERETO, each as a debtor and a debtor-in-possession (together
with ABFS, each individually a "BORROWER" or a "GRANTOR", and collectively, the
"BORROWERS" or the "GRANTORS"), in favor of GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC., as agent for the Secured Parties (in such capacity, the
"AGENT").
W I T N E S S E T H :
WHEREAS, the Grantors, the lenders party thereto (the "LENDERS") and the
Agent are parties to a Debtor-in-Possession Loan and Security Agreement, dated
as of the date hereof (such Agreement, as amended, restated or otherwise
modified from time to time, being hereinafter referred to as the "LOAN
AGREEMENT");
WHEREAS, pursuant to Section 5.01(b)(vi) of the Loan Agreement, the
Agent has required Grantors to execute and deliver to the Agent a security
agreement providing for the grant to the Agent for the benefit of the Secured
Parties of a security interest in all personal property of the Grantors, except
as otherwise noted herein; and
WHEREAS, the Grantors have each determined that the execution, delivery
and performance of this Agreement directly benefits, and is in the best interest
of such Grantor;
NOW, THEREFORE, in consideration of the premises and the agreements
herein and in order to induce the Agent and the Lenders to enter into the Loan
Agreement with the Pledgors, each Pledgor hereby agrees with the Agent as
follows:
NOW, THEREFORE, in consideration of the premises and the agreements
herein and in order to induce the Agent and the Lender to enter into the Loan
Agreement with the Grantors, the Grantors jointly and severally agree with the
Agent as follows:
SECTION 1. DEFINITIONS. All terms used in this Agreement which are
defined in the Loan Agreement and which are not defined herein have the same
meanings as set forth in the Loan Agreement. All terms used in this Agreement
which are defined in Article 9 of the Uniform Commercial Code (the "CODE")
currently in effect in the State of New York and which are not defined herein or
in the Loan Agreement have the same meanings as set forth in the Code. In
addition, the following terms shall have the following meanings:
"COPYRIGHT LICENSES" means all licenses, contracts or other agreements,
whether written or oral, naming a Grantor as licensee or licensor and providing
for the grant of any right to use or sell any works covered by any Copyright,
including, without limitation, all Copyright Licenses set forth in Schedule III
hereto.
"COPYRIGHTS" means all domestic and foreign copyrights, whether
registered or not, including, without limitation, all copyright rights
throughout the universe (whether now or hereafter arising) in any and all media
(whether now or hereafter developed), in and to all original works of authorship
fixed in any tangible medium of expression, acquired or used by any Grantor
(including, without limitation, all copyrights described in Schedule III
hereto), all applications, registrations and recordings thereof (including,
without limitation, applications, registrations and recordings in the United
States Copyright Office or in any similar office or agency of the United States
or any other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof.
"EXCLUDED COLLATERAL" means the items listed on Annex B hereto.
"LICENSES" means all Trademark Licenses, Patent Licenses, and Copyright
Licenses.
"PATENT LICENSES" means all licenses, contracts or other agreements,
whether written or oral, naming a Grantor as licensee or licensor and providing
for the grant of any right to manufacture, use or sell any invention covered by
any Patent, including, without limitation, all Patent Licenses set forth in
Schedule II hereto;
"PATENTS" means all domestic and foreign letters patent, design patents,
utility patents, industrial designs, inventions, trade secrets, ideas, concepts,
methods, techniques, processes, proprietary information, technology, know-how,
formulae, rights of publicity and other general intangibles of like nature, now
existing or hereafter acquired (including, without limitation, all domestic and
foreign letters patent, design patents, utility patents, industrial designs,
inventions, trade secrets, ideas, concepts, methods, techniques, processes,
proprietary information, technology, know-how and formulae described in Schedule
II hereto), all applications, registrations and recordings thereof (including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office, or in any similar office or agency of the
United States or any other country or any political subdivision thereof), and
all reissues, divisions, continuations, continuations in part and extensions or
renewals thereof.
"RELATED CONTRACTS" means any and all credit insurance, guaranties,
letters of credit, security agreements, leases and other contracts giving rise
to, or potentially giving rise to, Accounts.
"TRADEMARK LICENSES" means all licenses, contracts or other agreements,
whether written or oral, naming any Grantor as licensor or licensee and
providing for the grant of any right to use any Trademark, including, without
limitation, all Trademark Licenses described in Schedule I hereto, together with
any goodwill connected with and symbolized by any such trademark licenses or
agreements and the right to prepare for sale and sell any and all Inventory now
or hereafter owned by the Grantor and now or hereafter covered by such licenses;
"TRADEMARKS" means all domestic and foreign trademarks, service marks,
collective marks, certification marks, trade names, business names, d/b/a's,
Internet domain names, trade styles, designs, logos and other source or business
identifiers and all general
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intangibles of like nature, now or hereafter owned, adopted, acquired or used by
any Grantor (including, without limitation, all domestic and foreign trademarks,
service marks, collective marks, certification marks, trade names, business
names, d/b/a's, Internet domain names, trade styles, designs, logos and other
source or business identifiers described in Schedule I hereto), all
applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings 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), and all reissues, extensions or renewals thereof, together with all
goodwill of the business symbolized by such marks and all customer lists,
formulae and other records of any Grantor relating to the distribution of
products and services in connection with which any of such marks are used.
SECTION 2. GRANT OF SECURITY INTEREST. As collateral security for all of
the Obligations, each Grantor hereby assigns, pledges, transfers and grants to
the Agent, for the benefit of the Secured Parties, pursuant to Section 364 of
the Bankruptcy Code and subject to the limitations set forth in the Orders
(including, without limitation, paragraphs d.i, d.ii and d.iii, paragraph XIII,
paragraphs 17.a.v through 17.a.vii and paragraphs 51.b and 51.c of the Interim
Order), a continuing Lien on and perfected security interest in all of such
Grantor's now owned or hereafter acquired right, title and interest in and to
each of the following (including, without limitation, all Property of the estate
of each Borrower (within the meaning of the Bankruptcy Code) other than
Avoidance Actions and the Excluded Collateral (as defined in the Security
Agreement) (the "COLLATERAL"):
(a) Accounts;
(b) Books;
(c) Chattel Paper (whether tangible or electronic);
(d) Commercial Tort Claims;
(e) Deposit Accounts (including the Collection Account, the IOS
Account, the Mortgage Collection Account and the other Control Accounts);
(f) Documents;
(g) Equipment;
(h) Fixtures;
(i) General Intangibles and Payment Intangibles (including all
Servicing Reimbursement Rights, the Servicing Rights, all causes of action under
the Bankruptcy Code or otherwise, other than Avoidance Actions, and all rights
of the Borrowers under any Servicing Agreement, the Custodial Agreement or any
other document);
(j) Goods;
(k) Instruments;
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(l) all Interest Rate Protection Agreements;
(m) Intellectual Property;
(n) Inventory;
(o) Investment Property;
(p) Letter-of-Credit Rights;
(q) all Mortgage Loans;
(r) all Mortgage Loan Documents, including without limitation all
promissory notes, and all Servicing Records (as defined in SECTION 11.18(B) of
the Loan Agreement), and any other collateral pledged or otherwise relating to
such Mortgage Loans, together with all files, material documents, instruments,
surveys (if available), certificates, correspondence, appraisals, computer
records, computer storage media, Mortgage Loan accounting records and other
books and records relating thereto;
(s) all mortgage guaranties and insurance (issued by governmental
agencies or otherwise) and any mortgage insurance certificate or other document
evidencing such mortgage guaranties or insurance relating to any Mortgage Loans
and all claims and payments thereunder;
(t) all other insurance policies and Insurance Proceeds relating to
any Mortgage Loans or the related Mortgaged Property
(u) Negotiable Collateral;
(v) all IOS;
(w) Supporting Obligations;
(x) money or other assets of each such Borrower that now or
hereafter come into the possession, custody, or control of any Secured Party;
(y) all interests in real property owned by any Borrower or
collateralizing any Mortgage Loan;
(z) all other Personal Property of the Borrowers, wherever located
and whether now or hereafter existing, and whether now owned or hereafter
acquired, of every kind and description, whether tangible or intangible; and
(aa) Proceeds, products, rents and profits, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the Proceeds
thereof;
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SECTION 3. SECURITY FOR OBLIGATIONS. The security interest created
hereby in the Collateral constitutes continuing collateral security for the
payment in full, performance and observance of all of the Obligations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Each Grantor jointly and
severally represents and warrants as follows:
(a) Schedule V hereto, sets forth (i) the exact legal name
of each Grantor and (ii) the organizational identification number of
each Grantor or states that no such organizational identification number
exists.
(b) Each Grantor (i) is a corporation duly organized,
validly existing and in good standing under the laws of the state or
jurisdiction of its organization as set forth on Schedule V hereto; (ii)
is qualified to do business in each jurisdiction where the failure to be
so qualified reasonably could be expected to have a Material Adverse
Effect; and (iii) subject to the entry of the Interim Order (or the
Final Order, when applicable), has all requisite power and authority to
execute, deliver and perform this Agreement and each other Loan Document
to be executed and delivered by it pursuant hereto.
(c) The execution, delivery and performance by each Grantor
of this Agreement and each other Loan Document to which such Grantor is
a party, (i) upon entry of the Interim Order (or the Final Order, when
applicable), have been duly authorized by all necessary action on the
part of the Grantor, (ii) do not and will not contravene its charter or
by-laws, any law or any contractual restriction binding on or affecting
such Grantor or any of its properties (other than conflicts, breaches
and defaults the enforcement of which will be stayed by virtue of the
filing of the Chapter 11 Cases), and (iii) do not and will not result in
or require the creation of any Lien upon or with respect to any of its
properties.
(d) Upon entry of the Interim Order (or the Final Order,
when applicable), this Agreement is, and each other Loan Document to
which any Grantor is or will be a party, when executed and delivered
pursuant hereto, will be, a legal, valid and binding obligation of such
Grantor, enforceable against such Grantor in accordance with its terms.
(e) There is no pending or, to the knowledge of the Grantor,
threatened action, suit, proceeding or claim before any court or other
Governmental Authority or any arbitrator other than the Chapter 11
Cases, or any order, judgment or award by any court or other
Governmental Authority or arbitrator, that may adversely affect the
grant by any Grantor, or the perfection, of the security interest
purported to be created hereby in the Collateral, or the exercise by the
Agent of any of its rights or remedies hereunder.
(f) Subject to the requirements of the Bankruptcy Code, all
taxes, assessments and other governmental charges imposed upon any
Grantor or any property of any Grantor (including, without limitation,
all federal income and social security taxes on employees' wages) and
which have become due and payable on or prior to the date
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hereof have been paid, except to the extent contested in good faith by
proper proceedings which stay the imposition of any penalty, fine and
Lien resulting from the non-payment thereof and with respect to which
adequate reserves in accordance with GAAP have been established for the
payment thereof.
(g) All Equipment and Inventory now existing is, and all
Equipment and Inventory hereafter existing will be, located at the
addresses specified therefor in Schedule IV hereto or at such other
locations permitted by the terms of Section 5(b) hereof. Each Grantor's
chief place of business and chief executive office, the place where each
Grantor keeps its records concerning Accounts, and all originals of all
chattel paper which constitute Accounts are located at the addresses
specified therefor in Schedule V hereto. None of the Accounts is
evidenced by a promissory note or other instrument. Set forth in
Schedule V hereto is a complete and correct list of each trade name used
by each Grantor.
(h) Each Grantor owns, or otherwise possesses adequate
rights to use, all Trademarks, Patents and Copyrights necessary to
conduct its business in substantially the same manner as conducted as of
the date hereof. Schedule I hereto sets forth a true and complete list
of all Trademarks owned by each Grantor and all Trademark Licenses to
which each Grantor is a party, in each case as of the date hereof.
Schedule II hereto sets forth a true and complete list of all Patents
and Patent Licenses owned or used by each Grantor as of the date hereof.
Schedule III hereto sets forth a true and complete list of all
Copyrights owned by any Grantor and all Copyright Licenses (other than
licenses for commercially available software entered into by each
Grantor in the ordinary course of its business) to which any Grantor is
a party, in each case as of the date hereof. All of such Patents,
Trademarks and Copyrights are subsisting and in full force and effect,
have not been abandoned in whole or in part, have not been adjudged
invalid or unenforceable, and to the best knowledge of each Grantor, are
valid and enforceable. Except as set forth in Schedule I, III or IV
hereto, (i) other than licensing agreements solely among the Grantors,
none of such Patents, Trademarks or Copyrights is the subject of any
licensing or franchising agreement and (ii) each Grantor has no
knowledge of any conflict with the rights of others to any Trademark,
Patent or Copyright and, to the best knowledge of each Grantor, no
Grantor is now infringing or in conflict with any such rights of others
in any material respect, and to the best knowledge of each Grantor, no
other Person is now infringing or in conflict in any material respect
with any such properties, assets and rights owned or used by any
Grantor. No Grantor has received any notice that it is violating or has
violated the trademarks, patents, copyrights, inventions, trade secrets,
proprietary information and technology, know-how, formulae, rights of
publicity or other intellectual property rights of any third party.
(i) The Grantors are and will be at all times the sole and
exclusive owner of, or otherwise have and will have adequate rights in,
the Collateral free and clear of any Lien except for (i) the Lien
created by this Agreement, and (ii) the Liens permitted by the Loan
Agreement. No effective financing statement or other instrument similar
in effect covering all or any part of the Collateral is on file in any
recording or filing office, except (i) such as may have been filed in
favor of the Agent relating to this Agreement,
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and (ii) such as may have been filed to perfect or protect any security
interest or encumbrance permitted by the Loan Agreement.
(j) The exercise by the Agent of any of its rights and
remedies hereunder will not contravene any law or any contractual
restriction binding on or otherwise affecting any Grantor or any of its
properties and will not result in or require the creation of any Lien
upon or with respect to any of its properties.
(k) No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority or any other
Person, is required for (i) the grant by any Grantor, or the perfection,
of the security interest purported to be created hereby in the
Collateral or (ii) the exercise by the Agent of any of its rights and
remedies hereunder, except (A) for the filing under the Code as in
effect in the applicable jurisdiction of the financing statements
described in Schedule VI hereto, (B) with respect to any action that may
be necessary to obtain control in Collateral described in Sections 5(i)
and 5(j) hereof, the taking of such actions, (C) the taking possession
of all Documents, Chattel Paper, Instruments and cash constituting
Collateral, (D) with respect to the perfection of the security interest
created hereby in the United States Trademarks, the United States
Patents, and the United States Copyrights, for the recording of the
Grant of Security Interest (Trademarks), substantially in the form of
Exhibit A hereto and the Collateral Assignment for Security (Patents),
substantially in the form of Exhibit B hereto, in the United States
Patent and Trademark Office, (E) with respect to the perfection of the
security interest created hereby in the United States Copyrights, the
registration of such United States Copyrights and the recordation of the
Collateral Assignment for Security (Copyrights), substantially in the
form of Exhibit C hereto, in the United States Copyright Office, (F)
with respect to the perfection of the security interest created hereby
in foreign Trademarks, Patents and Copyrights, for recordings and
filings in jurisdictions located outside of the United States and
covering rights in such jurisdictions relating to Patents, Trademarks,
Copyrights, Patent Licenses, Trademark Licenses and Copyright Licenses,
(G) with respect to the perfection of the security interest created
hereby in motor vehicles for which the title to such motor vehicles is
governed by a certificate of title or ownership (collectively, the
"MOTOR VEHICLES"), for the submission of an appropriate application
requesting that the Lien of the Agent be noted on the certificate of
title or ownership, completed and authenticated by the Grantor, together
with the certificate of title, with respect to each Motor Vehicle, to
the appropriate state agency and (H) entry of the Interim Order (or the
Final Order, as applicable).
(l) This Agreement creates valid security interests in favor
of the Agent for the benefit of the Agent and the Secured Parties in the
Collateral, as security for the Obligations. The Agent's possession of
all Instruments and cash constituting Collateral and its Control of all
Collateral described in Sections 5(i) and 5(j) hereof from time to time,
the recording of the Collateral Assignment for Security (Trademarks),
the Collateral Assignment for Security (Patents) and the Collateral
Assignment for Security (Copyrights), as applicable, executed pursuant
hereto in the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, and the filing of
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the financing statements described in Schedule VI hereto and, with
respect to Patents, Trademarks and Copyrights hereafter existing and not
covered by a Collateral Assignment for Security (Trademarks), a
Collateral Assignment for Security (Patents) or a Collateral Assignment
for Security (Copyrights), as applicable, the recording in the United
States Patent and Trademark Office or the United States Copyright
Office, as applicable, of appropriate instruments of assignment with
respect to such after-acquired Patents, Trademarks and Copyrights and,
in the case of such after acquired Copyrights, the registration of such
Copyrights in the United States Copyright Office, will result in the
perfection of such security interests. Such security interests are, or
in the case of Collateral in which any Grantor obtains rights after the
date hereof, will be, perfected, first priority security interests,
subject only to the security interests and other encumbrances permitted
pursuant to the Loan Agreement. Such filings and all other action
necessary or desirable to perfect and protect such security interests
have been duly taken, except for the Agent's having possession of
Collateral consisting of Instruments or cash after the date hereof, the
recording of a Collateral Assignment for Security (Trademarks), a
Collateral Assignment for Security (Patents) or a Collateral Assignment
for Security (Copyrights), as applicable, with respect to hereafter
existing Trademarks, Patents or Copyrights and the taking of appropriate
action with respect to foreign Trademarks.
(m) No Grantor holds any Commercial Tort Claims or is aware
of any such pending claims, except for such claims described in Schedule
VI.
SECTION 5. COVENANTS AS TO THE COLLATERAL. So long as any of the
Obligations shall remain outstanding or the Loan Agreement and the other Loan
Documents or the Total Commitment shall not have terminated, unless the Agent
shall otherwise consent in writing:
(a) FURTHER ASSURANCES. Each Grantor will at its expense, at
any time and from time to time, promptly execute and deliver all further
instruments and documents and take all further action that may be
necessary or desirable or that the Agent may reasonably request in order
(i) to perfect and protect the security interest purported to be created
hereby; (ii) to enable the Agent to exercise and enforce its rights and
remedies hereunder in respect of the Collateral; or (iii) otherwise to
effect the purposes of this Agreement, including, without limitation:
(A) marking conspicuously each Chattel Paper included in the Accounts
and each License and Related Contract and, at the request of the Agent,
each of its records pertaining to the Collateral with a legend, in form
and substance satisfactory to the Agent, indicating that such Chattel
Paper, License, Related Contract or Collateral is subject to the
security interest created hereby, (B) if any Account shall be evidenced
by a promissory note or other Instrument or Chattel Paper, delivering
and pledging to the Agent hereunder any such note, Instrument or Chattel
Paper duly endorsed and accompanied by executed instruments of transfer
or assignment, all in form and substance satisfactory to the Agent, (C)
executing and filing (to the extent, if any, that such Grantor's
signature is required thereon) or authenticating the filing of, such
financing or continuation statements, or amendments thereto, as may be
necessary or desirable or that the Agent may request in order to perfect
and preserve the security interest purported to be created hereby, and
(D) furnishing to the Agent from time to time
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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, (E) if any
Collateral shall be in the possession of a third party, notifying such
Person of the Agent's security interest created hereby and obtaining a
written acknowledgment from such Person that such Person holds
possession of the Collateral for the benefit of the Agent, which such
written acknowledgement shall be in form and substance satisfactory to
the Agent, (F) if at any time after the date hereof, any Grantor
acquires or holds any Commercial Tort Claim, immediately notifying the
Agent in a writing signed by such Grantor setting forth a brief
description of such Commercial Tort Claim and granting to the Agent a
security interest therein and in the proceeds thereof, which writing
shall incorporate the provisions hereof and shall be in form and
substance satisfactory to the Agent, (G) upon the acquisition after the
date hereof by any Grantor of any Equipment subject to a certificate of
title or ownership (other than Equipment that is subject to a purchase
money security interest permitted by Section 7.17(ii) of the Loan
Agreement), at the request of the Agent, cause the Agent to be listed as
the lienholder on such certificate of title or ownership within 2 days
of the acquisition thereof, and within 5 days of the acquisition thereof
deliver evidence of the same to the Agent and (H) taking all actions
required by any applicable law in any relevant Code jurisdiction or by
other law as applicable in any foreign jurisdiction.
(b) LOCATION OF EQUIPMENT AND INVENTORY. Each Grantor will
keep the Equipment and Inventory (other than used Equipment and
Inventory sold in the ordinary course of business in accordance with
Section 5(g) hereof) at the locations specified therefor in Section 4(c)
hereof, unless it is in transit from one such location to another such
location, or, upon not less than thirty (30) days' prior written notice
to the Agent accompanied by a new Schedule IV hereto indicating each new
location of the Equipment and Inventory, at such other locations in the
continental United States as the Grantor may elect, provided that (i)
all action has been taken to grant to the Agent a perfected, first
priority security interest in such Equipment and Inventory (subject to
Permitted Liens (to the extent that such Permitted Liens are accorded
priority as a matter of law or pursuant to agreement)), and (ii) the
Agent's rights in such Equipment and Inventory, including, without
limitation, the existence, perfection and priority of the security
interest created hereby in such Equipment and Inventory, are not
adversely affected thereby.
(c) CONDITION OF EQUIPMENT. Each Grantor will maintain or
cause to be maintained in good repair, working order and condition,
excepting ordinary wear and tear and damage due to casualty, all of the
Equipment and make or cause to be made all of the appropriate repairs,
renewals and replacements thereof which are necessary or desirable and
consistent with past practice of the Grantor, as quickly as practicable
after the occurrence of any loss or damage thereto. Each Grantor shall
promptly furnish to the Agent a statement describing in reasonable
detail any loss or damage in excess of $100,000 to any Equipment or
Inventory due to casualty.
(d) TAXES, ETC. Subject to any applicable restrictions
imposed under the Bankruptcy Code or by the Bankruptcy Court, each
Grantor jointly and severally
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agrees to pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except to the extent the validity thereof is
being contested in good faith by proper proceedings which stay the
imposition of any penalty, fine or Lien resulting from the non-payment
thereof and with respect to which adequate reserves in accordance with
GAAP have been set aside for the payment thereof.
(e) INSURANCE.
(i) Each Grantor will, at its own expense, maintain
insurance (including, without limitation, comprehensive general
liability and property insurance) with respect to the Equipment and
Inventory in such amounts, against such risks, in such form and with
such insurers as shall be reasonably satisfactory to the Agent from
time to time. Each policy for liability insurance shall provide for
all losses to be paid on behalf of the Agent and the Grantor as their
respective interests may appear. Each such policy shall in addition
(A) name the Grantor and the Agent as insured parties thereunder
(without any representation or warranty by or obligation upon the
Agent) as their interests may appear, (B) contain the agreement by the
insurer that any loss thereunder shall be payable to the Agent on its
own account, notwithstanding any action, inaction or breach of
representation or warranty by the Grantor, (C) provide that there
shall be no recourse against the Agent for payment of premiums or
other amounts with respect thereto, and (D) provide that at least 30
days' prior written notice of cancellation or of lapse, expiration or
other adverse change shall be given to the Agent by the insurer. Each
Grantor will, if so requested by the Agent, deliver to the Agent
original or duplicate policies of such insurance and, as often as the
Agent may reasonably request, a report of a reputable insurance broker
with respect to such insurance. Each Grantor will also, at the request
of the Agent, execute and deliver instruments of assignment of such
insurance policies and cause the respective insurers to acknowledge
notice of such assignment.
(ii) Payment under any liability insurance maintained by each
Grantor pursuant to this Section 5(e) may be paid directly to the
Person who shall have incurred liability covered by such insurance. In
the case of any loss involving damage to Equipment or Inventory as to
which clause (iii) of this Section 5(e) is not applicable, the Grantor
will make or cause to be made the necessary repairs to or replacements
of such Equipment and Inventory, and any proceeds of insurance
maintained by any Grantor pursuant to this Section 5(e) shall be paid
to the Grantor as reimbursement for the costs of such repairs or
replacements.
(iii) Upon the occurrence and during the continuance of an
Event of Default under the Loan Agreement or the actual or
constructive total loss of any Equipment that will not be promptly
replaced with the proceeds of such insurance or Inventory, all
insurance payments in respect of such Equipment and Inventory shall,
to the extent required by the Loan Agreement, be paid to the Agent and
applied as specified in Section 7(b) hereof.
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(f) PROVISIONS CONCERNING THE ACCOUNTS, THE RELATED
CONTRACTS AND THE LICENSES.
(i) Each Grantor will (A) give the Agent at least 30 days'
prior written notice of any change in the Grantor's name, identity or
corporate structure, (B) maintain its state of incorporation, chief
place of business and chief executive office and all originals of all
chattel paper which constitute Accounts at the location(s) specified
therefor in Schedule IV hereof, (C) immediately notify the Agent upon
obtaining an organizational identification number, if on the date
hereof such Grantor did not have such identification number, and (D)
keep adequate records concerning the Accounts and such chattel paper
and permit representatives of the Agent to inspect and make abstracts
from such records and chattel paper pursuant to the terms of the Loan
Agreement.
(ii) Each Grantor will duly perform and observe all of its
obligations under each Related Contract and, except as otherwise
provided in this subsection (f), continue to collect, at its own
expense, all amounts due or to become due under the Accounts. In
connection with such collections, the Grantor may (and, at the Agent's
direction, will) take such action as the Grantor or the Agent may deem
necessary or advisable to enforce collection or performance of the
Accounts; provided, however, that the Agent shall have the right at
any time, upon the occurrence and during the continuance of an Event
of Default, to notify the Account Debtors or obligors under any
Accounts of the assignment of such Accounts to the Agent and to direct
such Account Debtors or obligors to make payment of all amounts due or
to become due to the Grantor thereunder directly to the Agent or its
designated agent and, upon such notification and at the expense of the
Grantor and to the extent permitted by law, to enforce collection of
any such Accounts and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as the
Grantor might have done. After receipt by any Grantor of a notice from
the Agent that the Agent has notified or intends to notify the Account
Debtors or obligors under any Accounts as referred to in the proviso
to the immediately preceding sentence, (A) all amounts and Proceeds
(including Instruments) received by any Grantor in respect of the
Accounts shall be received in trust for the benefit of the Agent and
the Secured Parties hereunder, shall be segregated from other funds of
the Grantor and shall be forthwith paid over to the Agent in the same
form as so received (with any necessary indorsement) to be held as
cash collateral and either (1) credited to an account of the Grantor
so long as no Event of Default shall have occurred and be continuing
or (2) if any Event of Default shall have occurred and be continuing,
applied as specified in Section 7(b) hereof, and (B) no Grantor will
adjust, settle or compromise the amount or payment of any Receivable
or release, in whole or in part, any Account Debtor or obligor thereof
or allow any credit or discount thereon. In addition, upon the
occurrence and during the continuance of an Event of Default, the
Agent may (in its sole and absolute discretion) (i) notify the United
States Postal Service authorities to change to any address Agent may
designate the address for delivery of mail addressed to any Grantor
and (ii) direct any or all
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of the banks and financial institutions with which any Grantor either
maintains a Deposit Account or a lockbox or deposits the proceeds of
any Accounts to send immediately to the Agent by wire transfer (to
such account as the Agent shall specify, or in such other manner as
the Agent shall direct) all or a portion of such securities, cash,
investments and other items held by such institution. Any such
securities, cash, investments and other items so received by the Agent
shall (in the sole and absolute discretion of the Agent) be held as
additional Collateral for the Obligations or distributed in accordance
with Section 7 hereof.
(iii) Upon the occurrence and during the continuance of any
material breach or default under any material Related Contract or
other Related Contract specified in writing by the Agent from time to
time or any License referred to in Schedule I, III or IV hereto by any
party thereto other than a Grantor, the Grantors will (A) promptly
after obtaining knowledge thereof, give the Agent written notice of
the nature and duration thereof, specifying what action, if any, it
has taken and proposes to take with respect thereto, and (B) upon
written instructions from the Agent and at the Grantor's expense, take
such action as the Agent may deem necessary or advisable in respect
thereof.
(iv) Each Grantor will, at its expense, promptly deliver to
the Agent a copy of each notice or other communication received by it
by which any other party to any material Related Contract or other
Related Contract specified in writing by the Agent from time to time
or any License referred to in Schedule I, III or IV hereto purports to
exercise any of its rights or affect any of its obligations
thereunder, together with a copy of any reply by the Grantor thereto.
(v) Each Grantor will exercise promptly and diligently each
and every right which it may have under each License (other than any
right of termination) to the extent warranted in the conduct of its
business and will duly perform and observe in all respects all of its
obligations under each License and will take all action necessary to
maintain all Licenses necessary for the operation of its business in
full force and effect. No Grantor will, without the prior written
consent of the Agent, cancel, terminate, amend or otherwise modify in
any material respect, or waive any material provision of, any material
Related Contract except for amendments which would not adversely
affect Agent and the Secured Parties or any License referred to in
Schedule I, III or IV hereto.
(g) TRANSFERS AND OTHER LIENS.
(i) No Grantor will sell, assign (by operation of law or
otherwise), lease, exchange or otherwise transfer or dispose of any of
the Collateral except to the extent permitted under Section 7.17 of
the Loan Agreement, subject to the obligation of the Borrowers to make
payments pursuant to Section 2.06 of the Loan Agreement.
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(ii) No Grantor will create or suffer to exist any Lien upon
or with respect to any Collateral, except for (A) the Liens created by
this Agreement and the other Loan Documents and (B) the Liens
permitted by the Loan Agreement.
(h) TRADEMARKS, PATENTS AND COPYRIGHTS.
(i) If applicable, each Grantor has duly executed and
delivered the Grant of Security Interest (Trademarks) in the form
attached hereto as Exhibit A, the Collateral Assignment for Security
(Patents) in the form attached hereto as Exhibit B or the Collateral
Assignment for Security (Copyrights) in the form attached hereto as
Exhibit C. Each Grantor (either itself or through licensees) will, and
will cause each licensee thereof to, take all action necessary to
maintain all of the Trademarks, Patents and Copyrights in full force
and effect, including, without limitation, using the proper statutory
notices and markings and using the Trademarks on each applicable
trademark class of goods in order to so maintain the Trademarks in
full force free from any claim of abandonment for non-use, and no
Grantor will (nor permit any licensee thereof to) do any act or
knowingly omit to do any act whereby any Trademark, Patent or
Copyright may become invalidated; provided, however, that so long as
no Event of Default has occurred and is continuing, the Grantors shall
have no obligation to use or to maintain any Trademark, Patent or
Copyright (A) that relates solely to any product or work that has
been, or is in the process of being, discontinued, abandoned or
terminated, (B) that is being replaced with a trademark, patent or
copyright substantially similar to the Trademark, Patent or Copyright,
as the case may be, that may be abandoned or otherwise become invalid,
so long as such replacement Trademark, Patent or Copyright, as the
case may be, is subject to the security interest purported to be
created by this Agreement, (C) that is substantially the same as
another Trademark, Patent or Copyright that is in full force, so long
as such other Trademark, Patent or Copyright, as the case may be, is
subject to the Lien created by this Agreement, or (D) that is not
necessary for the operation of the Grantor's business and is
discontinued or disposed of in the ordinary course of business. Each
Grantor will cause to be taken all necessary steps in any proceeding
before the United States Patent and Trademark Office and the United
States Copyright Office to maintain each registration of the
Trademarks, the Patents and the Copyrights (other than those
Trademarks, Patents and Copyrights described in the proviso to the
immediately preceding sentence), including, without limitation, filing
of renewals, affidavits of use, affidavits of incontestability and
opposition, interference and cancellation proceedings and payment of
maintenance fees, filing fees, taxes or other governmental fees. If
any Trademark, Patent or Copyright is infringed, misappropriated or
diluted or otherwise violated in any material respect by a third
party, the Grantors shall (x) upon learning of such infringement,
misappropriation or dilution or other violation, promptly notify the
Agent and (y) to the extent the Grantors shall reasonably deem
appropriate under the circumstances, promptly xxx for infringement,
misappropriation or dilution or other violation, seek injunctive
relief where appropriate and recover any and all damages for such
infringement, misappropriation or dilution or other violation, or
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take such other actions as the Grantors shall reasonably deem
appropriate under the circumstances to protect such Trademark, Patent
or Copyright. Each Grantor shall furnish to the Agent from time to
time (but, unless an Event of Default has occurred and is continuing,
no more frequently than quarterly) statements and schedules further
identifying and describing the Patents, the Trademarks and the
Copyrights and such other reports in connection with the Patents, the
Trademarks and the Copyrights as the Agent may reasonably request, all
in reasonable detail and promptly upon request of the Agent, following
receipt by the Agent of any such statements, schedules or reports, the
Grantors shall modify this Agreement by amending Schedules II, III or
IV hereto, as the case may be, to include any Patent, Trademark or
Copyright, as the case may be, which becomes part of the Collateral
under this Agreement and shall execute and authenticate such documents
and do such acts as shall be necessary or, in the judgment of the
Agent, desirable to subject such Trademarks, Patents or Copyrights to
the Lien created by this Agreement. Notwithstanding anything herein to
the contrary, upon the occurrence and during the continuance of an
Event of Default the Grantor may not abandon or otherwise permit a
Trademark, Patent or Copyright to become invalid without the prior
written consent of the Agent, and if any Trademark, Patent or
Copyright is infringed, misappropriated or diluted or otherwise
violated in any material respect by a third party, the Grantor will
take such action as the Agent shall deem appropriate under the
circumstances to protect such Trademark, Patent or Copyright.
(ii) If any Grantor or any agent, employee, licensee or
designee thereof files an application for the registration of any
Trademark or Copyright or for the issuance of any Patent with the
United States Patent and Trademark Office or the United States
Copyright Office, as applicable, within 5 days of such filing the
Grantor shall provide the Agent written notice thereof. Upon request
of the Agent, the Grantor shall execute, authenticate and deliver any
and all assignments, agreements, instruments, documents and papers as
the Agent may reasonably request to evidence the Agent's security
interest hereunder in such Trademark, Patent or Copyright and the
general intangibles of the Grantor relating thereto or represented
thereby. The Grantor constitutes the Agent as its attorney-in-fact to
execute and/or authenticate and file all such writings for the
foregoing purposes, and confirms and ratifies all acts of such
attorney, and such power (being coupled with an interest) shall be
irrevocable until the termination of the Total Commitment, the
repayment of all of the Obligations in full and the termination of
each of the Loan Documents.
(i) DEPOSIT, COMMODITIES AND SECURITIES ACCOUNTS. Without
the prior written consent of the Agent, no Grantor shall make or
maintain any Deposit Account, Commodity Account or Securities Account,
except in accordance with the terms of the Loan Agreement.
(j) CONTROL. Each Grantor hereby agrees to take any or all
action that may be necessary or desirable or that the Agent may request
in order for the Agent to
-14-
obtain control in accordance with Sections 9-105 - 9-107 of the Code
with respect to the following Collateral: (i) Electronic Chattel Paper,
(ii) Investment Property and (iii) Letter-of-Credit Rights.
(k) INSPECTION AND REPORTING. Each Grantor shall permit the
Agent or any Lender, or any agents or representatives thereof or such
professionals or other Persons as the Agent may designate (i) to examine
and inspect the books and records of the Grantor and take copies and
extracts therefrom, (ii) to visit and inspect its properties, (iii) to
verify materials, leases, notes, receivables, inventory and other assets
of the Grantor from time to time, and (iv) to conduct physical counts,
appraisals and/or valuations at the locations of the Grantor, in each
case as provided in the Loan Agreement.
SECTION 6. ADDITIONAL PROVISIONS CONCERNING THE COLLATERAL.
(a) Each Grantor authorizes the Agent to file, without the
signature of the Grantor where permitted by law, one or more financing
or continuation statements, and amendments thereto, relating to the
Collateral and ratifies such authorization to the extent that the Agent
has filed any such financing or continuation statements, or amendments
thereto prior to the date hereof. A photocopy or other reproduction of
this Agreement or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where
permitted by law.
(b) Each Grantor irrevocably appoints the Agent as the
Grantor's attorney-in-fact and proxy, with full authority in the place
and stead of the Grantor and in the name of the Grantor or otherwise,
from time to time in the Agent's discretion upon the occurrence and
during the continuance of an Event of Default, to take any action and to
execute any instrument which the Agent may deem necessary or advisable
to accomplish the purposes of this Agreement (subject to the rights of
the Grantor under Section 5(f) hereof), including, without limitation,
(i) to obtain and adjust insurance required to be paid to the Agent
pursuant to Section 5(e) hereof, and to receive, indorse and collect any
drafts or other instruments, documents and chattel paper in connection
therewith, (ii) to ask, demand, collect, xxx for, recover, compound,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any Collateral, (iii) to receive, indorse,
and collect any drafts or other instruments, documents and chattel paper
in connection with clause (i) or (ii) above, and (iv) to file any claims
or take any action or institute any proceedings which the Agent may deem
necessary or desirable for the collection of any Collateral or otherwise
to enforce the rights of the Agent and the Lenders with respect to any
Collateral. This power is coupled with an interest and is irrevocable
until all of the Obligations are paid in full after the termination of
the Loan Agreement and the other Loan Documents.
(c) For the purpose of enabling the Agent to exercise rights
and remedies hereunder, at such time as the Agent shall be lawfully
entitled to exercise such rights and remedies, and for no other purpose,
each Grantor grants to the Agent, to the extent assignable, an
irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantor) to use, assign, license or
sublicense any of
-15-
the Patents, Trademarks or Copyrights now owned or hereafter acquired by
the Grantor, wherever the same may be located, including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation
or printout thereof, subject with respect to Trademarks to the
reasonable rights of quality control and inspection in favor of the
Grantor as shall be reasonably necessary to preserve the validity of
such Trademarks. Notwithstanding anything contained herein to the
contrary, but subject to the provisions of the Loan Agreement that limit
the right of any Grantor to dispose of its property and Section 5(h)
hereof, so long as no Event of Default shall have occurred and be
continuing, the Grantors may exploit, use, enjoy, protect, license,
sublicense, assign, sell, dispose of or take other actions with respect
to the Patents, Trademarks or Copyrights in the ordinary course of the
business of the Grantors. In furtherance of the foregoing, unless an
Event of Default shall have occurred and be continuing, the Agent shall
from time to time, upon the request of a Grantor, execute and deliver
any instruments, certificates or other documents, in the form so
requested, which the Grantor shall have certified are appropriate (in
its judgment) to allow it to take any action permitted above (including
relinquishment of the license provided pursuant to this clause (c) as to
any Patents, Trademarks or Copyrights). Further, upon the payment in
full of all of the Obligations and termination of the Loan Agreement,
the Agent (subject to Section 10(e) hereof) shall release and reassign
to the Grantor all of the Agent's right, title and interest in and to
the Patents, Trademarks, Copyrights and the Licenses, all without
recourse, representation or warranty whatsoever. The exercise of rights
and remedies hereunder by the Agent shall not terminate the rights of
the holders of any licenses or sublicenses theretofore granted by any
Grantor in accordance with the second sentence of this clause (c). The
Grantors release the Agent from any claims, causes of action and demands
at any time arising out of or with respect to any actions taken or
omitted to be taken by the Agent under the powers of attorney granted
herein other than actions taken or omitted to be taken through the
Agent's gross negligence or willful misconduct.
(d) If any Grantor fails to perform any agreement contained
herein, the Agent may itself perform, or cause performance of, such
agreement or obligation, in the name of the Grantor or the Agent, and
the expenses of the Agent incurred in connection therewith shall be
jointly and severally payable by the Grantor pursuant to Section 8
hereof and shall be secured by the Collateral.
(e) The powers conferred on the Agent hereunder are solely
to protect its interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
(f) Anything herein to the contrary notwithstanding (i) each
Grantor shall remain liable under the Related Contracts and Licenses and
otherwise with respect to any of the Collateral to the extent set forth
therein to perform all of its obligations thereunder to the same extent
as if this Agreement had not been executed, (ii) the exercise
-16-
by the Agent of any of its rights hereunder shall not release any
Grantor from any its obligations under the Related Contracts and
Licenses or otherwise in respect of the Collateral, and (iii) the Agent
shall not have any obligation or liability by reason of this Agreement
under the Related Contracts and Licenses or with respect to any of the
other Collateral, nor shall the Agent be obligated to perform any of the
obligations or duties of any Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
(g) To the extent that any provision of this Agreement
requires the Grantors to take action within a specified period of time,
or requires the Grantors to deliver written notice to the Agent within a
specified period of time, such specified period of time may be extended
or shortened by the Agent, at the Grantors' request, in the Agent's sole
discretion
SECTION 7. REMEDIES UPON DEFAULT. If any Event of Default shall have
occurred and be continuing:
(a) The Agent may exercise in respect of the Collateral,
without further order of, or application to, the Bankruptcy Court and in
addition to other rights and remedies provided for herein or otherwise
available to it, all of the rights and remedies of a secured party upon
default under the Bankruptcy Code and the Code (whether or not the Code
applies to the affected Collateral), and also may (i) take absolute
control of the Collateral, including, without limitation, (x) transfer
into the Agent's name or into the name of its nominee or nominees (to
the extent the Agent has not theretofore done so) and thereafter
receive, for the benefit of the Secured Parties, all payments made
thereon, give all consents, waivers and ratifications in respect thereof
and otherwise act with respect thereto as though it were the outright
owner thereof, (y) obtain physical possession of the Servicing Records
and all other files of the Grantors relating to the Collateral and all
documents relating to the Collateral which are then or may thereafter
come into the possessions of the Grantors or any third party acting for
the Grantors and (z) exercise Control over all Control Accounts, (ii)
require the Grantors to, and each Grantor agrees that it will at its
expense and upon request of the Agent forthwith, assemble all or part of
the Collateral as directed by the Agent and make it available to the
Agent at a place or places to be designated by the Agent which is
reasonably convenient to both parties, and the Agent may enter into and
occupy any premises owned or leased by any Grantor where the Collateral
or any part thereof is located or assembled for a reasonable period in
order to effectuate the Agent's rights and remedies hereunder or under
law, without obligation to any Grantor in respect of such occupation,
(iiii) use, assign, license or sublicense any of the Intellectual
Property, to the extent permitted by the terms of such Intellectual
Property, (iv) without notice except as specified below, and without any
obligation to prepare or process the Collateral for sale, (A) sell the
Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Agent's offices or elsewhere, for cash, on
credit or for future delivery, and at such price or prices and upon such
other terms as the Agent may deem commercially reasonable and/or (B)
lease, license or dispose of the Collateral or any part thereof upon
such terms as the Agent may deem commercially reasonable; PROVIDED,
HOWEVER, in
-17-
accordance with Section 9(a) of the Loan Agreement and the Orders of the
Bankruptcy Court, the Agent may not consummate foreclosure on the
Collateral or otherwise seize control of assets of the Grantors' Estates
(as such term is defined in the Bankruptcy Code) absent five (5)
Business Days' notice of an Event of Default. The Grantors agree that,
to the extent notice of sale shall be required by law, 10 days' notice
to any Grantor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification to all Grantors. The Agent shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given.
The Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. The Grantors waive any claims against the Agent and the other
Secured Parties arising by reason of the fact that the price at which
the Collateral may have been sold at a private sale was less than the
price which might have been obtained at a public sale or was less than
the aggregate amount of the Obligations, even if the Agent accepts the
first offer received and does not offer the Collateral to more than one
offeree and waives all rights which the Grantor may have to require that
all or any part of the Collateral be marshalled upon any sale (public or
private) thereof. Each Grantor hereby acknowledges that (i) any such
sale of the Collateral by the Agent shall be made without warranty, (ii)
the Agent may specifically disclaim any warranties of title, possession,
quiet enjoyment or the like, and (iii) such actions set forth in clauses
(i) and (ii) above shall not adversely effect the commercial
reasonableness of any such sale of the Collateral. In addition to the
foregoing, (i) upon written notice from the Agent, the Grantors shall
cease any use of the Trademarks, Patents or Copyrights or any xxxx or
patent similar thereto for any purpose described in such notice; (ii)
the Agent may, at any time and from time to time, upon 10 days' prior
notice to any Grantor, license, whether general, special or otherwise,
and whether on an exclusive or non-exclusive basis, any of the
Trademarks, Patents and Copyrights throughout the world for such term or
terms, on such conditions, and in such manner, as the Agent shall in its
sole discretion determine; and (iii) the Agent may, at any time,
pursuant to the authority granted in Section 6 hereof (such authority
being effective upon the occurrence of an Event of Default), execute and
deliver on behalf of the Grantors, one or more instruments of assignment
of the Trademarks, Patents and Copyrights (or any application or
registration thereof), in form suitable for filing, recording or
registration in any country.
(b) Subject to Section 4.01(k) of the Loan Agreement, any
cash held by the Agent as Collateral and all cash proceeds received by
the Agent in respect of any sale of or collection from, or other
realization upon, all or any part the Collateral may, in the discretion
of the Agent, be held by the Agent as collateral for, and/or then or at
any time thereafter applied in whole or in part by the Agent against,
all or any part of the Obligations as provided in Section 3.03 of the
Loan Agreement. Any surplus of such cash or cash Proceeds held by the
Agent and remaining after payment in full of all of the Obligations
after termination of the Loan Agreement and the other Loan Documents
shall be paid over to whomsoever shall be lawfully entitled to receive
the same or as a court of competent jurisdiction shall direct.
-18-
(c) In the event that the proceeds of any such sale,
collection or realization are insufficient to pay all amounts to which
the Agent and the other Secured Parties are legally entitled, the
Grantors shall be liable for the deficiency, together with interest
thereon at the highest rate specified in any applicable Loan Document
for interest on overdue principal thereof or such other rate as shall be
fixed by applicable law, together with the costs of collection and the
reasonable fees, costs, expenses of any attorneys employed by the Agent
to collect such deficiency.
(d) Each Grantor hereby acknowledges that if the Agent
complies with any applicable state or federal law requirements in
connection with a disposition of the Collateral, such compliance will
not adversely affect the commercial reasonableness of any sale or other
disposition of the Collateral.
(e) The Agent shall not be required to marshal any present
or future collateral security (including, but not limited to, this
Agreement and the Collateral) for, or other assurances of payment of,
the Obligations or any of them or to resort to such collateral security
or other assurances of payment in any particular order, and all of the
Agent's rights hereunder and in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all
other rights, however existing or arising. To the extent that any
Grantor lawfully may, such Grantor hereby agrees that it will not invoke
any law relating to the marshalling of collateral which might cause
delay in or impede the enforcement of the Agent's rights under this
Agreement or under any other instrument creating or evidencing any of
the Obligations or under which any of the Obligations is outstanding or
by which any of the Obligations is secured or payment thereof is
otherwise assured, and, to the extent that it lawfully may, each Grantor
hereby irrevocably waives the benefits of all such laws.
SECTION 8. INTENTIONALLY OMITTED.
SECTION 9. NOTICES, ETC. All notices and other communications provided
for hereunder shall be in writing and governed by the terms of Section 11.03 of
the Loan Agreement. Notice to any Grantor will be deemed notice to all Grantors.
SECTION 10. MISCELLANEOUS.
(a) No amendment of any provision of this Agreement shall be
effective unless it is in writing and signed by the Grantors and the
Agent, and no waiver of any provision of this Agreement, and no consent
to any departure by any Grantor therefrom, shall be effective unless it
is in writing and signed by the Agent, and then such waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which given.
(b) No failure on the part of the Agent to exercise, and no
delay in exercising, any right hereunder or under any other Loan
Document shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The rights and
remedies of the Agent provided herein and in the other Loan Documents
are cumulative
-19-
and are in addition to, and not exclusive of, any rights or remedies
provided by law. The rights of the Agent under any Loan Document against
any party thereto are not conditional or contingent on any attempt by
the Agent to exercise any of its rights under any other Loan Document
against such party or against any other Person.
(c) 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 portions hereof or thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
(d) This Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect
until the payment in full of the Obligations and the termination of the
Loan Agreement and the other Loan Documents and (ii) be binding on the
Grantors and their successors and assigns and shall inure, together with
all rights and remedies of the Agent hereunder, to the benefit of the
Agent and the other Secured Parties their respective permitted
successors, transferees and assigns. Without limiting the generality of
clause (ii) of the immediately preceding sentence and subject to the
terms of the Loan Agreement, the Agent and Lenders may assign or
otherwise transfer their respective rights under this Agreement and any
other Loan Document, to any other Person and such other Person shall
thereupon become vested with all of the benefits in respect thereof
granted to the Agent and the Lenders herein or otherwise. Upon any such
assignment or transfer, all references in this Agreement to the Agent or
any such Lender shall mean the assignee or transferee of the Agent or
such Lender. None of the rights or obligations of the Grantors hereunder
may be assigned or otherwise transferred without the prior written
consent of the Agent, and any such attempted assignment or transfer
shall be null and void.
(e) Upon the satisfaction in full of the Obligations and the
termination of the Loan Agreement and the other Loan Documents, (i) this
Agreement and the security interests created hereby shall terminate and
all rights to the Collateral shall revert to the Grantors, and (ii) the
Agent will, upon the Grantors' request and at the Grantors' sole
expense, (A) return to the Grantors such of the Collateral as shall not
have been sold or otherwise disposed of or applied pursuant to the terms
hereof, and (B) execute and deliver to the Grantors such documents as
the Grantors shall reasonably request to evidence such termination, all
without any representation, warranty or recourse whatsoever.
(f) This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York,
without reference to its conflict of law provisions (other than Section
5-1401 of the New York General Obligations Law), except as governed by
the Bankruptcy Code and as required by mandatory provisions of law and
except to the extent that the validity and perfection or the perfection
and effect of perfection or non-perfection of the security interest
created hereby or remedies hereunder, in respect of any particular
Collateral are required to be governed by the law of a jurisdiction
other than the State of New York.
-20-
(g) Any legal action, suit or proceeding with respect to
this Agreement or any document related thereto may be brought in the
courts of the State of New York or the United States of America for the
Southern District of New York, and appellate courts thereof, and, by
execution and delivery of this Agreement, each Grantor hereby accepts
for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Grantor
hereby irrevocably waives any objection, including, without limitation,
any objection to the laying of venue or based on the grounds of FORUM
NON CONVENIENS, which it may now or hereafter have to the bringing of
any such action, suit or proceeding in such respective jurisdictions and
consents to the granting of such legal or equitable relief as is deemed
appropriate by the court.
(h) Each Grantor irrevocably consents to the service of
process of any of the aforesaid courts in any such action, suit or
proceeding by the mailing of copies thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to
such Grantor at its address provided herein, such service to become
effective when received or 30 days after such mailing, whichever first
occurs.
(i) Nothing contained herein shall affect the right of the
Agent to serve process in any other manner permitted by law or commence
legal proceedings or otherwise proceed against any Grantor or any
property of any Grantor in any other jurisdiction.
(j) Each Grantor irrevocably and unconditionally waives any
right it may have to claim or recover in any legal action, suit or
proceeding referred to in this Section any special, exemplary, punitive
or consequential damages.
(K) EACH OF THE GRANTORS AND (BY ITS ACCEPTANCE OF THE
BENEFITS OF THIS AGREEMENT) THE AGENT WAIVES ANY RIGHT IT MAY HAVE TO
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT
OR OTHER ACTION OF THE PARTIES HERETO.
(l) COMMERCIAL TORT CLAIMS. If the Grantor shall at any
time, acquire a Commercial Tort Claim, the Grantor shall immediately
notify the Agent in a writing signed by the Grantor of the brief details
thereof and grant to the Agent in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance satisfactory to
the Agent.
(m) PERFECTION BY FILING. The Agent may at any time and from
time to time, pursuant to this Agreement, file financing statements,
continuation statements and amendments thereto that describe the
Collateral as all assets of the Grantor or words of similar effect and
which contain any other information required by Article 9 of the Code
for the sufficiency or filing office acceptance of any financing
statement, continuation statement or amendment, including whether the
Grantor is an organization, the type of organization and any
organization identification number issued to the Grantor. The
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Grantor agrees to furnish any such information to the Agent promptly
upon request. Any such financing statements, continuation statements or
amendments may be signed by the Agent on behalf of the Grantor, and may
be filed at any time in any jurisdiction.
(n) OTHER PERFECTION, ETC. The Grantor shall at any time and
from time to time, take such steps as the Agent may reasonably request
for the Agent (i) to obtain an acknowledgment, in form and substance
satisfactory to the Agent, of any bailee having possession of any of the
Collateral that the bailee holds such Collateral for the Agent, (ii) to
obtain "CONTROL" (as defined in the Code) of any Investment Property,
Deposit Accounts, Letter-of-Credit Rights or electronic Chattel Paper,
with any agreements establishing control to be in form and substance
satisfactory to the Agent, and (iii) otherwise to insure the continued
perfection and priority of the Agent's security interest in any of the
Collateral and of the preservation of its rights therein.
(o) This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which shall be deemed to be an original.
(p) Section headings herein are included for convenience of
reference only and shall not constitute a part of this Agreement for any
other purpose.
(q) All of the obligations of the Grantors hereunder are
joint and several. The Agent may, in its sole and absolute discretion,
enforce the provisions hereof against any of the Grantors and shall not
be required to proceed against all Grantors jointly or seek payment from
the Grantors ratably. In addition, the Agent may, in its sole and
absolute discretion, select the Collateral of any one or more of the
Grantors for sale or application to the Obligations, without regard to
the ownership of such Collateral, and shall not be required to make such
selection ratably from the Collateral owned by all of the Grantors. The
release or discharge of any Grantor by the Agent shall not release or
discharge any other Grantor from the obligations of such Person
hereunder.
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be
executed and delivered by its duly authorized officer as of the date first above
written.
GRANTORS
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and CFO
AMERICAN BUSINESS CREDIT, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and CFO
HOMEAMERICAN CREDIT, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and CFO
AMERICAN BUSINESS MORTGAGE SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and CFO
TIGER RELOCATION COMPANY
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and CFO
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ABFS CONSOLIDATED HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and CFO
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