EXHIBIT 4.2
SECURITY AGREEMENT
among
COINMACH SERVICE CORP.,
COINMACH LAUNDRY CORPORATION
and
THE BANK OF NEW YORK,
as Collateral Agent
Dated as of November [ ], 2004
TABLE OF CONTENTS
Page
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ARTICLE I
SECURITY INTERESTS
Section 1.1. Grant of Security Interests................................................................... 2
Section 1.2. Power of Attorney............................................................................. 3
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.1. Necessary Filings............................................................................. 3
Section 2.2. No Liens...................................................................................... 4
Section 2.3. Other Financing Statements.................................................................... 4
Section 2.4. Chief Executive Office; Records; Corporate Name; Jurisdiction of Incorporation................ 4
Section 2.5. Location of Inventory and Equipment........................................................... 4
Section 2.6. Recourse...................................................................................... 5
Section 2.7. Trade Names; Change of Name................................................................... 5
Section 2.8. Benefit to Laundry Corp....................................................................... 5
ARTICLE III
SPECIAL PROVISIONS CONCERNING
ACCOUNTS; CONTRACT RIGHTS; INSTRUMENTS
AND CERTAIN OTHER TYPES OF COLLATERAL
Section 3.1. Additional Representations and Warranties..................................................... 5
Section 3.2. Maintenance of Records........................................................................ 6
Section 3.3. Direction to Account Debtors; Contracting Parties, etc........................................ 6
Section 3.4. Modification of Terms, etc.................................................................... 6
Section 3.5. Collection.................................................................................... 7
Section 3.6. Further Actions............................................................................... 7
Section 3.7. Special Provisions Regarding Certain Types of Collateral...................................... 7
ARTICLE IV
SPECIAL PROVISIONS CONCERNING MARKS
Section 4.1. Additional Representations and Warranties.................................................... 11
Section 4.2. Licenses and Assignments..................................................................... 11
Section 4.3. Infringements................................................................................ 11
Section 4.4. Preservation of Trademarks................................................................... 12
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Section 4.5. Maintenance of Registration.................................................................. 12
Section 4.6. Future Registered Marks...................................................................... 12
Section 4.7. Remedies..................................................................................... 12
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS AND COPYRIGHTS
Section 5.1. Additional Representations and Warranties.................................................... 13
Section 5.2. Licenses and Assignments..................................................................... 13
Section 5.3. Infringements................................................................................ 13
Section 5.4. Maintenance of Patents....................................................................... 13
Section 5.5. Prosecution of Patent Application............................................................ 14
Section 5.6. Other Patents and Copyrights................................................................. 14
Section 5.7. Remedies..................................................................................... 14
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
Section 6.1. Protection of Collateral Agent's Security.................................................... 14
Section 6.2. Warehouse Receipts Non-negotiable............................................................ 15
Section 6.3. Further Actions.............................................................................. 15
Section 6.4. Financing Statements......................................................................... 15
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
Section 7.1. Remedies; Obtaining the Collateral Upon Default.............................................. 15
Section 7.2. Remedies; Disposition of the Collateral...................................................... 17
Section 7.3. Waiver of Claims............................................................................. 18
Section 7.4. Application of Proceeds...................................................................... 18
Section 7.5. Remedies Cumulative.......................................................................... 19
Section 7.6. Discontinuance of Proceedings................................................................ 19
Section 7.7. Additional Remedies With Respect to Collateral Located in Louisiana.......................... 19
ARTICLE VIII
INDEMNITY
Section 8.1. Indemnity.................................................................................... 21
Section 8.2. Indemnity Obligations Secured by Collateral; Survival........................................ 22
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ARTICLE IX
DEFINITIONS
ARTICLE X
MISCELLANEOUS
Section 10.1. Notices...................................................................................... 28
Section 10.2. Waiver; Amendment............................................................................ 29
Section 10.3. Obligations Absolute......................................................................... 29
Section 10.4. Successors and Assigns....................................................................... 29
Section 10.5. Headings Descriptive......................................................................... 29
Section 10.6. Severability................................................................................. 29
Section 10.7. GOVERNING LAW................................................................................ 29
Section 10.8. Pledgor's Duties............................................................................. 29
Section 10.9. Termination; Release......................................................................... 30
Section 10.10. Counterparts................................................................................. 30
Section 10.11. The Collateral Agent......................................................................... 30
Section 10.12 Intercreditor Agreement...................................................................... 31
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SECURITY AGREEMENT
SECURITY AGREEMENT (as amended, modified or supplemented from time
to time, this "Agreement"), dated as of November [ ], 2004, by COINMACH SERVICE
CORP. (the "Company"), a Delaware corporation having an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and COINMACH LAUNDRY CORPORATION ("Laundry
Corp." and, together with the Company, the "Pledgors") in favor of THE BANK OF
NEW YORK ("BNY"), as Collateral Agent (in such capacity and together with any
successors in such capacity, the "Collateral Agent") for the benefit of the
Secured Creditors (as defined below). Except as otherwise defined herein, all
capitalized terms used herein and defined in the indenture, dated as of the date
hereof (as amended, modified or supplemented from time to time (the
"Indenture"), between the Company, the subsidiary guarantors party thereto from
time to time and BNY as trustee (the "Trustee") and as Collateral Agent shall be
used herein as so defined.
R E C I T A L S:
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1. The Company intends to issue on the date hereof $[ ] million
aggregate principal amount of its [ ]% Senior Secured Notes due 2024 (the
"Senior Secured Notes") pursuant to the Indenture, and may issue additional
Senior Secured Notes from time to time in accordance with the Indenture.
2. The obligations of the Company under the Indenture and the Senior
Secured Notes will be guaranteed by Laundry Corp. in accordance with the
Indenture.
3. Laundry Corp. will receive substantial benefits from the proceeds
of the Senior Secured Notes and has agreed to grant to the Collateral Agent
Liens on and security interests in the Collateral owned by it to secure its
Obligations (as defined below).
4. Laundry Corp. has previously granted a Lien and pledged all of
its right, title and interest in and relating to the Capital Stock of Coinmach
Corporation ("Coinmach Corp."), a Delaware corporation, and Proceeds thereof
(collectively, the "Shared Collateral") in favor of Deutsche Bank Trust Company
Americas ("DB Trust"), as collateral agent (the "Credit Agreement Collateral
Agent") under the Credit Agreement (as amended, modified or supplemented from
time to time, the "Credit Agreement") dated as of January 25, 2002, among
Laundry Corp., Coinmach Corp., the lenders party thereto from time to time in
their capacities as lenders thereunder, DB Trust, as administrative agent and
the Credit Agreement Collateral Agent.
5. It is a condition precedent to the purchase of the Senior
Secured Notes that the Pledgors shall have executed and delivered this
Agreement to the Collateral Agent for the benefit of the Collateral Agent, the
Trustee and the Holders from time to time of the Senior Secured Notes
(collectively, the "Secured Creditors").
6. It is a condition precedent to the effectiveness of certain
amendments to the Credit Agreement and to the Holdings Pledge Agreement (as
defined therein) necessary to permit the grant by Laundry Corp. hereunder of
the Liens in favor of the Collateral Agent on the Shared Collateral that
Laundry Corp. shall have executed and delivered a certain intercreditor
agreement (the "Intercreditor Agreement") dated as of the date hereof (as the
same may be amended, supplemented or otherwise modified from time to time)
among Laundry Corp., the Collateral Agent and .
7. The Pledgors desire to enter into this Agreement in order to
satisfy the condition described in the preceding paragraph and to secure the
payment and performance of all the Obligations.
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, in consideration of the above-described extensions
of credit to be made to the Pledgors and other benefits accruing to the
Pledgors, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the
Collateral Agent for the benefit of the Secured Creditors and hereby covenants
and agrees with the Collateral Agent for the benefit of the Secured Creditors as
follows:
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ARTICLE I
SECURITY INTERESTS
Section 1.1. Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due of all of the Obligations, each
Pledgor does hereby collaterally assign and transfer unto the Collateral Agent
for the benefit of the Secured Creditors, and does hereby grant to the
Collateral Agent for the benefit of the Secured Creditors a continuing security
interest of first priority (subject to Liens evidenced by Permitted Filings and
other Permitted Liens) in, all of the right, title and interest of such Pledgor
in, to and under all of the following, whether now existing or hereafter from
time to time acquired (collectively, the "Collateral"):
(i) all Equipment;
(ii) all Inventory;
(iii) all Contracts, together with all Contract Rights thereunder;
(iv) all Instruments;
(v) all General Intangibles;
(vi) all Accounts;
(vii) all Insurance Policies;
(viii) all Intellectual Property;
(ix) all Chattel Paper;
(x) all Investment Property and Financial Assets;
(xi) all Deposit Accounts, including, without limitation, the Cash
Collateral Account established for the Pledgors and all monies, securities
and instruments deposited or required to be deposited in such Cash
Collateral Account;
(xii) all Letter-of-Credit Rights;
(xiii) all Goods;
(xiv) all Commercial Tort Claims, including, without limitation,
each Specified Commercial Tort Claim;
(xv) all Documents;
(xvi) all Fixtures;
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(xvii) all Supporting Obligations relating to any and all of the
foregoing;
(xviii) all books, records, ledgers, printouts, computer recording
media, data files, tapes, file materials and other papers containing
information relating to any and all items of Collateral; and
(xix) to the extent not covered by clauses (i) through (xviii) of
this sentence, all other personal property whether tangible or intangible
wherever located; and
(xx) all Proceeds of any and all of the foregoing.
(b) The security interests of the Collateral Agent under
this Agreement extends to all Collateral of the kind which is the
subject of this Agreement which each Pledgor may acquire at any time
during the continuation of this Agreement.
Section 1.2. Power of Attorney. Each Pledgor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of such Pledgor or as otherwise provided herein), in the
Collateral Agent's reasonable discretion, to take any action and to execute any
instrument which the Collateral Agent may reasonably deem necessary or advisable
to accomplish the purposes of this Agreement, which appointment as attorney is
coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Pledgor represents, warrants and covenants, as of the date
hereof, which representations, warranties and covenants shall survive execution
and delivery of this Agreement, as follows:
Section 2.1. Necessary Filings. All filings, registrations and
recordings necessary or appropriate to create, preserve, protect and perfect the
security interest granted by each Pledgor to the Collateral Agent hereby in
respect of the Collateral are set forth in Schedule 8 to the Perfection
Certificate. To the knowledge of each Pledgor, such filings, registrations and
recordings have been filed, registered or recorded or concurrently herewith are
being filed, registered or recorded, and the security interest granted to the
Collateral Agent pursuant to this Agreement in and to the Collateral constitutes
or shall constitute, upon such filing, registration or recordings, a perfected
security interest therein prior to the rights of all other Persons therein and
subject to no other Liens (except that the Collateral may be subject to the
security interests evidenced by the financing statements disclosed on Schedule 6
to the Perfection Certificate (the "Permitted Filings") and to any other
Permitted Liens), and is or shall be entitled to all the rights, priorities and
benefits afforded by the Uniform Commercial Code to the extent complied with or
other relevant law as enacted in any relevant jurisdiction to perfected security
interests.
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Section 2.2. No Liens. Each Pledgor is, and as to Collateral
acquired by it from time to time after the date hereof such Pledgor will be, the
owner of all of the Collateral pledged by it hereunder free from any Lien,
security interest, encumbrance or other right, title or interest of any Person
(other than Liens created hereby, Permitted Liens or Liens evidenced by the
Permitted Filings), and such Pledgor shall use its good faith efforts to defend
the Collateral against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to the Collateral Agent.
Section 2.3. Other Financing Statements. As of the date hereof,
there is no financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) on file or of record in any
relevant jurisdiction covering or purporting to cover any interest of any kind
in the Collateral except as disclosed in Schedules 6 and 8 to the Perfection
Certificate and as may be filed in connection with Permitted Liens. So long as
the Termination Date has not occurred, no Pledgor shall execute or authorize to
be filed in any public office any financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) or statements
relating to the Collateral, except financing statements filed or to be filed in
respect of and covering the security interests granted hereby by such Pledgor or
in respect of Permitted Liens.
Section 2.4. Chief Executive Office; Records; Corporate Name;
Jurisdiction of Incorporation. (a) As of the date hereof, the chief executive
office of each Pledgor is located at the location indicated on Schedule 2(a) to
the Perfection Certificate.
(b) The exact legal name, type of organization and jurisdiction of
organization (together with the organizational identification number, if any,
issued by such jurisdiction to each Pledgor) of each Pledgor is set forth in
Schedule 1(a) to the Perfection Certificate. No Pledgor shall "reincorporate" or
"reorganize" or otherwise cause the Collateral to be transferred to a Person
incorporated or organized in another state except to the extent (i) permitted
pursuant to the provisions of the Indenture, (ii) it shall have given to the
Collateral Agent not less than 10 days' prior written notice of its intention so
to do, clearly describing such transaction and providing such other information
in connection therewith as the Collateral Agent may reasonably request, (iii)
with respect to such transaction, such Pledgor shall have taken all action to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted and perfected hereby at all times fully perfected and in
full force and effect and (iv) the Collateral Agent shall have received
reasonably satisfactory evidence that all other actions (including, without
limitation, the payment of all filing fees and taxes, if any, payable in
connection with such actions) have been taken, in order to perfect (and maintain
the perfection and priority of) the security interest granted hereby.
Section 2.5. Location of Inventory and Equipment. All Inventory and
Equipment held on the date hereof by each Pledgor is located at one of the
locations shown on the Schedules to Section 2 of the Perfection Certificate. No
Pledgor shall establish a new location for Equipment and/or Inventory that shall
cause the security interest of the Collateral Agent in such Equipment and/or
Inventory granted hereby (x) to be unperfected or (y) to lose its priority.
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Section 2.6. Recourse. This Agreement is made with full recourse to
each Pledgor and pursuant to and upon all the warranties, representations,
covenants and agreements on the part of such Pledgor contained herein or in the
Senior Secured Notes or the Indenture, and otherwise in writing in connection
herewith or therewith.
Section 2.7. Trade Names; Change of Name. No Pledgor has or operates
in any jurisdiction under, or in the preceding 5 years has not had or has not
operated in any jurisdiction under, any trade names, fictitious names or other
names (including, without limitation, any names of divisions or operations)
except its legal name and such other trade, fictitious or other names as are
listed on Schedules 1(b) and 1(c) to the Perfection Certificate. No Pledgor
shall change its legal name or assume or operate in any jurisdiction under any
trade, fictitious or other name in any manner which might make any financing
statement or continuation statement filed in connection therewith seriously
misleading within the meaning of Section 9-507 of the UCC except those names
listed on Schedule 1(b) and 1(c) to the Perfection Certificate and new names
(including, without limitation, any names of divisions or operations)
established in accordance with the last sentence of this Section 2.7. No Pledgor
shall assume or operate in any jurisdiction under any new trade, fictitious or
other name that would make any financing statement or continuation statement
filed in connection therewith, seriously misleading within the meaning of
Section 9-507 of the UCC until (i) it shall have given to the Collateral Agent
not less than 10 days' prior written notice of its intention so to do, clearly
describing such new name and the jurisdictions in which such new name shall be
used and providing such other information in connection therewith as the
Collateral Agent may reasonably request and (ii) with respect to such new name,
it shall have taken all reasonable action to maintain the security interest of
the Collateral Agent in the Collateral intended to be granted hereby at all
times fully perfected and in full force and effect.
Section 2.8. Benefit to Laundry Corp. Laundry Corp. will receive
substantial benefits from the proceeds of the Senior Secured Notes.
ARTICLE III
SPECIAL PROVISIONS CONCERNING
ACCOUNTS; CONTRACT RIGHTS; INSTRUMENTS
AND CERTAIN OTHER TYPES OF COLLATERAL
Section 3.1. Additional Representations and Warranties. As of the
time when each of its Accounts arises, each Pledgor shall be deemed to have
represented and warranted that such Account, and all records, papers and
documents relating thereto (if any) are genuine and in all material respects
what they purport to be, and that all papers and documents (if any) relating
thereto to the actual knowledge of such Pledgor (i) will represent the genuine,
legal, valid and binding obligation of the account debtor evidencing
indebtedness unpaid and owed by the respective account debtor arising out of the
performance of labor or services or the sale or lease and delivery of the
merchandise listed therein, or both, (ii) will be the only original writings
evidencing and embodying such obligation of the account debtor named therein
(other than copies created for general accounting purposes), (iii) will evidence
true and valid obligations, enforceable in accordance with their respective
terms and (iv) will be in compliance and will conform in
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each case in all material respects with all applicable federal, state and local
laws and applicable laws of any relevant foreign jurisdiction.
Section 3.2. Maintenance of Records. Each Pledgor will keep and
maintain at its own cost and expense satisfactory and complete records of its
Accounts and Contracts, including, but not limited to, the originals or copies
of all documentation (including each Contract) with respect thereto, records of
all payments received, all credits granted thereon, all merchandise returned and
all other dealings therewith, and such Pledgor will make the same available on
such Pledgor's premises to the Collateral Agent for inspection, at such
Pledgor's own cost and expense, at any and all reasonable times; provided,
however, if no Event of Default has occurred and is then continuing, the
Collateral Agent shall give such Pledgor reasonable prior written notice of any
such inspection. Upon the occurrence and during the continuance of an Event of
Default and upon the reasonable request of the Collateral Agent, each Pledgor
shall, at its own cost and expense, deliver all tangible evidence of its
Accounts and Contract Rights (including, without limitation, all documents
evidencing the Accounts and all Contracts) and such books and records to the
Collateral Agent or to its representatives (copies of which evidence and books
and records may be retained by such Pledgor). Upon the occurrence and during the
continuance of an Event of Default and the delivery by the Collateral Agent of
notice thereof to the Company in accordance with Article Six of the Indenture to
the extent such notice is required pursuant to Article Six of the Indenture, if
the Collateral Agent so directs, each Pledgor shall legend, in form and manner
reasonably satisfactory to the Collateral Agent, its Accounts and the Contracts,
as well as all books, records and documents of such Pledgor evidencing or
pertaining to such Accounts and Contracts with an appropriate reference to the
fact that such Accounts and Contracts have been assigned to the Collateral Agent
and that the Collateral Agent has a security interest therein.
Section 3.3. Direction to Account Debtors; Contracting Parties, etc.
Upon the occurrence and during the continuance of an Event of Default and
delivery of notice thereof to the Company in accordance with Article Six of the
Indenture to the extent such notice is required pursuant to Article Six of the
Indenture, and if the Collateral Agent so directs each Pledgor, to the extent
permitted by applicable law, each Pledgor agrees (x) to cause all payments on
account of the Accounts and Contracts to be made directly to the Cash Collateral
Account, (y) that the Collateral Agent may, at its option, directly notify the
obligors with respect to any Accounts and/or under any Contracts to make
payments with respect thereto as provided in preceding clause (x), and (z) that
the Collateral Agent may enforce collection of any such Accounts and Contracts
and may adjust, settle or compromise the amount of payment thereof, in the same
manner and to the same extent as such Pledgor. Without notice to or assent by
any Pledgor, the Collateral Agent may apply any or all amounts then in, or
thereafter deposited in, the Cash Collateral Account which application shall be
effected in the manner provided in Section 7.4 of this Agreement. The reasonable
costs and expenses (including reasonable attorneys' fees) of collection, whether
incurred by any Pledgor or the Collateral Agent, shall be borne by the Pledgors.
Section 3.4. Modification of Terms, etc. Except as otherwise
provided in the Indenture, no Pledgor shall rescind or cancel any indebtedness
evidenced by any Account or under any Contract, or modify any term relating to
such indebtedness or make any adjustment with
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respect thereto, or extend or renew the same, or compromise or settle any
material dispute, claim, suit or legal proceeding relating thereto, or sell any
Account or Contract, or interest therein, without the prior written consent of
the Collateral Agent (not to be unreasonably withheld), except as permitted by
Section 3.5. Except as otherwise provided in the Indenture, each Pledgor will
duly fulfill all obligations on its part to be fulfilled under or in connection
with the Accounts and Contracts and will do nothing to impair in any material
respect the rights of the Collateral Agent in the Accounts or Contracts.
Section 3.5. Collection. Each Pledgor shall endeavor to cause to be
collected from the account debtor named in each of its Accounts or obligor under
any of its Contracts, as and when due (including, without limitation, amounts
which are delinquent, such amounts to be collected in accordance with generally
accepted lawful collection procedures) any and all amounts owing under or on
account of such Account or Contract, and apply forthwith upon receipt thereof
all such amounts as are so collected to the outstanding balance of such Account
or under such Contract, except that, unless an Event of Default has occurred and
is continuing and the Collateral Agent has delivered notice thereof to the
Company in accordance with Article Six of the Indenture to the extent such
notice is required pursuant to Article Six of the Indenture, such Pledgor may
allow in the ordinary course of business as adjustments to amounts owing under
its Accounts and Contracts (i) an extension or renewal of the time or times of
payment, or settlement for less than the total unpaid balance, as such Pledgor
finds appropriate in accordance with sound business judgment and (ii) a refund
or credit due as a result of returned or damaged merchandise or improperly
performed services. The reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees) of collection, whether incurred by any
Pledgor or the Collateral Agent, shall be borne by the Pledgors.
Section 3.6. Further Actions. Each Pledgor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Accounts, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may reasonably require.
Section 3.7. Special Provisions Regarding Certain Types of
Collateral.
(a) Deposit Accounts, Securities Accounts and Commodity Accounts.
(i) Each Pledgor hereby represents, warrants and covenants that (A) it
does not maintain any Securities Accounts or Commodity Accounts with any
Securities Intermediary or Commodity Intermediary other than the
Securities Accounts and/or Commodity Accounts listed in Schedule 15 to the
Perfection Certificate and (B) it shall not in the future maintain any
Securities Accounts or Commodity Accounts except with any Securities
Intermediary or Commodity Intermediary in accordance with the provisions
of this Section 3.7. Each Pledgor hereby represents and warrants that it
does not maintain any Deposit Accounts other than the Deposit Accounts
listed in Schedule 15 to the Perfection Certificate (the "Existing Deposit
Accounts"). Each Pledgor agrees that, consistent with its existing
practice, it shall (i) deposit all amounts collected in the ordinary
course of its busi-
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ness into the Existing Deposit Accounts and (ii) ensure that no funds in
an aggregate amount exceeding $500,000 are on deposit for more than
five (5) Business Days in any Deposit Account with respect to which the
Collateral Agent does not have control and that no funds in an aggregate
amount exceeding $3,000,000 are on deposit for more than five (5)
Business Days in all Deposit Accounts with respect to which the
Collateral Agent does not have control. No Pledgor shall hereafter
establish and maintain any Deposit Account, Securities Account or
Commodity Account with any Depository Bank, Securities Intermediary or
Commodity Intermediary, respectively, unless (1) such Pledgor shall have
given the Collateral Agent 15 days' prior written notice of its
intention to establish such new Deposit Account, Securities Accounts or
Commodity Accounts with such Depository Bank, Securities Intermediary or
Commodity Intermediary, (2) such Depository Bank, Securities
Intermediary or Commodity Intermediary shall be reasonably acceptable to
the Collateral Agent and (3) in the case of a new Deposit Account,
Securities Account or Commodity Account, the Pledgor shall have used
commercially reasonable efforts to cause such Depository Bank,
Securities Intermediary or Commodity Intermediary to enter into a
Control Agreement. Each Pledgor shall accept any cash and Investment
Property in trust for the benefit of the Collateral Agent and within
three (3) Business Day of actual receipt thereof, deposit any cash or
Investment Property and any new securities, instruments, documents or
other property by reason of ownership of the Investment Property received
by it into a Deposit Account, Securities Account or Commodity Account
subject to Collateral Agent's control.
(ii) Each Pledgor hereby acknowledges and agrees that
notwithstanding any provisions hereof or any other circumstance to the
contrary, the Pledgors will use commercial reasonable efforts to cause the
Collateral Agent at all times to (A) have "control" (as defined in Section
8-106 of the UCC) of all Investment Property, as confirmed in one or more
Control Agreements in respect thereof, and (B) be authorized to direct the
applicable Securities Intermediary or Commodity Intermediary with respect
to such Investment Property to comply without further consent of such
Pledgor or any investment manager or any other Person acting or purporting
to act for any Pledgor being required, with all Entitlement Orders
originated by the Collateral Agent with respect to the Investment
Property. The Collateral Agent hereby agrees that it shall not issue any
Entitlement Orders to any Securities Intermediary or Commodity
Intermediary in respect of the Investment Property except in connection
with the Collateral Agent's exercise of remedies upon the occurrence of an
Event of Default.
(iii) Each Pledgor hereby acknowledges and agrees that
notwithstanding any provisions hereof or any other circumstance to the
contrary, the Pledgors will use commercially reasonable efforts to cause
the Collateral Agent at all times to (A) have "control" (as defined in
Section 9-104 of the UCC) of all Deposit Accounts, as confirmed in the
Control Agreement in respect thereof, and (B) be authorized to direct the
institution maintaining such Deposit Account to comply without further
consent of any Pledgor or any person acting or purporting to act for any
Pledgor being required, with all instructions originated by the Collateral
Agent directing disposition of the funds in such Deposit Account. The
Collateral Agent hereby agrees that it shall not issue any such
instructions
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to the institution maintaining the Deposit Account except in connection
with the Collateral Agent's exercise of remedies upon the occurrence of an
Event of Default.
(iv) So long as no Event of Default has occurred and is continuing,
each Pledgor may trade, sell, exchange, lend, apply or transfer funds or
Investment Property from any Deposit Account, Securities Account or
Commodity Account, in each case to the extent not inconsistent with the
other provisions hereof or the provisions of the Indenture; and
(v) As between the Collateral Agent and each Pledgor, such Pledgor
shall bear the investment risk with respect to the Investment Property,
and the risk of loss of, damage to, or the destruction of any cash or the
Investment Property, whether in the possession of, or maintained as a
security entitlement or deposit by, or subject to the control of, the
Collateral Agent, a Securities Intermediary, a Commodity Intermediary or a
Depository Bank, such Pledgor or any other Person; provided, however, that
nothing contained in this Section 3.7(a)(v) shall release or relieve any
Securities Intermediary, Commodity Intermediary or Depository Bank of its
duties and obligations to such Pledgors or any other Person under the
applicable Control Agreement or under applicable law. Each Pledgor shall
promptly pay all charges and fees of whatever kind or nature with respect
to the cash or Investment Property pledged by it or under this Agreement.
In the event such Pledgor shall fail to make such payment contemplated in
the immediately preceding sentence, the Collateral Agent may do so for the
account of such Pledgor and such Pledgor shall promptly reimburse and
indemnify the Collateral Agent from all costs and expenses incurred by the
Collateral Agent under this Section 3.7(a)(v) in accordance with Section
8.1 hereof.
(b) Instruments and Tangible Chattel Paper. If any amount
payable under or in connection with any of the Collateral shall be
evidenced by any Instrument or Tangible Chattel Paper in an amount in
excess of $250,000, the Pledgor acquiring such Instrument or Tangible
Chattel Paper shall forthwith endorse, assign and deliver the same to
the Collateral Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Collateral Agent may from time
to time specify. As of the date hereof, such Instruments and Tangible
Chattel Paper are set forth on Schedule 11 to the Perfection
Certificate.
(c) Electronic Chattel Paper and Transferable Records. If any
amount payable under or in connection with any of the Pledged
Collateral shall be evidenced by any Electronic Chattel Paper or any
"transferable record," as that term is defined in Section 201 of the
Federal Electronic Signatures in Global and National Commerce Act, or
in Section 16 of the Uniform Electronic Transactions Act as in effect
in any relevant jurisdiction, the Pledgor acquiring such Electronic
Chattel Paper or Transferable record shall promptly notify the
Collateral Agent thereof and, at the request of the Collateral Agent,
shall take such action as the Collateral Agent may reasonably request
to vest in the Collateral Agent control under UCC Section 9-105 of such
Electronic Chattel Paper or control under Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or, as the
case may be, Section 16 of the Uniform Electronic Transactions Act,
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as so in effect in such jurisdiction, of such transferable record. The
Collateral Agent agrees with each Pledgor that the Collateral Agent
will arrange, pursuant to procedures satisfactory to the Collateral
Agent and so long as such procedures will not result in the Collateral
Agent's loss of control, for such Pledgor to make alterations to the
Electronic Chattel Paper or transferable record permitted under UCC
Section 9-105 or, as the case may be, Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or Section 16
of the Uniform Electronic Transactions Act for a party in control to
allow without loss of control, unless an Event of Default has occurred
and is continuing or would occur after taking into account any action
by any Pledgor with respect to such electronic chattel paper or
transferable record.
(d) Letter-of-Credit Rights. If any Pledgor is at any time a
beneficiary under a Letter of Credit now or hereafter issued in favor
of such Pledgor, such Pledgor shall promptly notify the Collateral
Agent thereof and, at the request and option of the Collateral Agent,
such Pledgor shall, pursuant to an agreement in form and substance
reasonably satisfactory to the Collateral Agent arrange for the issuer
and any confirmer of such Letter of Credit to consent to an assignment
to the Collateral Agent of the proceeds of any drawing under the Letter
of Credit.
(e) Commercial Tort Claims. If any Pledgor shall at any time
hold or acquire a Commercial Tort Claim, such Pledgor shall immediately
notify the Collateral Agent in writing signed by such Pledgor of the
brief details thereof and grant to the Collateral 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 Collateral Agent.
(f) Motor Vehicles. At any time after the occurrence and
during the continuance of an Event of Default, each Pledgor shall, upon
the request of the Collateral Agent, deliver to the Administrative
Agent originals of the certificates of title or ownership for the motor
vehicles (and any other Equipment covered by Certificates of Title or
ownership owned by it) with the Collateral Agent listed as lienholder
therein.
(g) Intercompany Note and Intercompany Note Guaranty. No
Pledgor shall:
(i) sell, convey, transfer or assign (or otherwise engage in any
other transfer for value of) the Intercompany Note or Intercompany Note
Guaranty or any of its interest therein;
(ii) amend, supplement, or waive any provision of the Intercompany
Note or the Intercompany Note Guaranty, other than any amendment,
supplement or waiver which would not have an adverse effect on the
interests of the Collateral Agent or any other Secured Creditor, the
Indenture or the Senior Secured Notes, or subordinate its rights under
the Intercompany Note or the Intercompany Note Guaranty to the rights of
any other creditor of Coinmach Corp.;
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(iii) compromise, reduce, forgive or release or extend the time for
payment of any obligation of Coinmach Corp. under the Intercompany Note or
of any Intercompany Note Guarantor under the Intercompany Note Guaranty;
or
(iv) take or omit to take any action the taking or the omission of
which would result in any material impairment or alteration of any
obligation of Coinmach Corp. under the Intercompany Note or any
Intercompany Note Guarantor under the Intercompany Note Guaranty.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING MARKS
Section 4.1. Additional Representations and Warranties. Each Pledgor
represents and warrants that, as of the date hereof, it is the true and lawful
exclusive owner of its Trademarks listed in Schedule 13(a) to the Perfection
Certificate and that said listed Trademarks include all the United States
federal registrations or applications registered in the United States Patent and
Trademark Office. Each Pledgor represents and warrants that, to the best of its
knowledge, it owns or is licensed to use or is not prohibited from using all
Trademarks that it uses. Each Pledgor further warrants that it is aware of no
third party claim that any aspect of such Pledgor's present or contemplated
business operations infringes or will infringe any Trademark. Each Pledgor
represents and warrants that it is the owner of record of all United States
registrations and applications listed in Schedule 13(a) to the Perfection
Certificate and that said registrations are valid, subsisting, have not been
canceled and that such Pledgor is not aware of any third-party claim that any of
said registrations is invalid or unenforceable. Each Pledgor hereby grants to
the Collateral Agent an absolute power of attorney to sign, upon the occurrence
and during the continuance of an Event of Default and delivery of notice thereof
to the Company in accordance with Article Six of the Indenture to the extent
such notice is required pursuant to Article Six of the Indenture, any document
which may be required by the United States Patent and Trademark Office in order
to effect an absolute assignment of all right, title and interest in each
Trademark and associated Goodwill, and record the same.
Section 4.2. Licenses and Assignments. Other than the license
agreements listed on Schedule 13(a) to the Perfection Certificate and any
extensions or renewals thereof, each Pledgor hereby agrees not to divest itself
of any right under any Significant Trademark absent prior written consent of the
Collateral Agent, which consent shall not be unreasonably withheld.
Section 4.3. Infringements. Each Pledgor agrees, promptly upon
learning thereof, to notify the Collateral Agent in writing of the name and
address of, and to furnish such pertinent information that may be available with
respect to, any party who may be infringing or otherwise violating any of such
Pledgor's rights in and to any Significant Trademark, or with respect to any
party claiming that such Pledgor's use of any Significant Trademark violates any
property right of that party, in each case to the extent that such Pledgor
reasonably believes that such infringement or violation is material to its
business. Each Pledgor further agrees, if consistent with good business practice
and unless otherwise agreed by the Collateral Agent, diligently
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to prosecute any Person infringing any Significant Trademark to the extent that
such Pledgor reasonably believes that such infringement is material to its
business.
Section 4.4. Preservation of Trademarks. Each Pledgor agrees to use
its Significant Marks in interstate commerce during the time in which this
Agreement is in effect, sufficiently to preserve such Significant Trademarks as
trademarks or service marks registered under the laws of the United States.
Section 4.5. Maintenance of Registration. Each Pledgor shall, at its
own expense, diligently process all documents required by the Trademark Act of
1946, 15 U.S.C. Sections 1051 et seq. to maintain trademark registration,
including but not limited to affidavits of use and applications for renewals of
registration in the United States Patent and Trademark Office for all of its
Significant Trademarks pursuant to 15 U.S.C. Sections 1058(a), 1059 and
1065, and shall pay all fees and disbursements in connection therewith and shall
not abandon any such filing of affidavit of use or any such application of
renewal prior to the exhaustion of all reasonable administrative and judicial
remedies without the prior written consent of the Collateral Agent, which
consent shall not be unreasonably withheld.
Section 4.6. Future Registered Marks. If any Trademark registration
issues hereafter to any Pledgor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within thirty (30)
days of receipt of such certificate such Pledgor shall deliver a copy of such
certificate, and a grant of security interest in such Trademark to the
Collateral Agent, confirming the grant thereof hereunder, the form of such
confirmatory grant to be substantially the same as the form hereof.
Section 4.7. Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent may, upon delivery to the Company of written
notice thereof in accordance with Article Six of the Indenture to the extent
such notice is required by Article Six of the Indenture, take any or all of the
following actions: (i) declare the entire right, title and interest of each
Pledgor in and to each of the Trademarks and the Goodwill of the business
associated therewith, together with all trademark rights and rights of
protection to the same, vested, in which event such rights, title and interest
shall immediately vest, in the Collateral Agent for the benefit of the Secured
Creditors, in which case the Collateral Agent shall be entitled to exercise the
power of attorney referred to in Section 4.1 to execute, cause to be
acknowledged and notarized and record said absolute assignment with the
applicable agency; (ii) take and use or sell the Trademarks and the Goodwill of
each Pledgor's business symbolized by the Trademarks and the right to carry on
the business and use the assets of each Pledgor in connection with which the
Trademarks have been used; and (iii) direct each Pledgor to refrain, in which
event such Pledgor shall refrain, from using the Trademarks in any manner
whatsoever, directly or indirectly, and, if requested by the Collateral Agent,
change such Pledgor's corporate name to eliminate therefrom any use of any
Trademark and execute such other and further documents that the Collateral Agent
may request to further confirm this and to transfer ownership of the Trademarks
and registrations and any pending trademark application in the United States
Patent and Trademark Office or any equivalent government agency or office in any
foreign jurisdiction to the Collateral Agent.
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ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS AND COPYRIGHTS
Section 5.1. Additional Representations and Warranties. Each Pledgor
represents and warrants that to the best of its knowledge, as of the date
hereof, it is the true and lawful exclusive owner of all rights in its Patents
listed in Schedule 13(a) to the Perfection Certificate and in the Copyrights
listed in Schedule 13(b) to the Perfection Certificate hereto, that said Patents
include all the United States patents and applications for United States patents
that such Pledgor now owns and that said Copyrights constitute all the United
States Copyrights registered with the United States Copyright Office and
applications for United States copyrights that the Pledgor now owns. Each
Pledgor represents and warrants that to the best of its knowledge, as of the
date hereof, it owns or is licensed to practice under all Patents and Copyrights
that it now uses or practices under. Such Pledgor further warrants that it is
aware of no third party claim that any aspect of such Pledgor's present or
contemplated business operations infringes or will infringe any Patent or any
Copyright. Each Pledgor hereby grants to the Collateral Agent an absolute power
of attorney to sign, upon the occurrence and during the continuance of any Event
of Default and delivery of notice thereof to the Company in accordance with
Article Six of the Indenture to the extent such notice is required pursuant to
Article Six of the Indenture, any document which may be required by the United
States Patent and Trademark Office or the United States Copyright Office in
order to effect an absolute assignment of all right, title and interest in each
Patent and Copyright, and record the same.
Section 5.2. Licenses and Assignments. Other than the license agreements
listed on Schedules 13(a) and 13(b) to the Perfection Certificate and any
extensions or renewals thereof, each Pledgor hereby agrees not to divest itself
of any right under any Significant Patent or Significant Copyright absent prior
written consent of the Collateral Agent, which consent shall not be unreasonably
withheld.
Section 5.3. Infringements. Each Pledgor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Pledgor with respect to any infringement or other
violation of such Pledgor's rights in any Significant Patent or Significant
Copyright, or with respect to any claim that practice of any Significant Patent
or Significant Copyright violates any property right of that party, in each case
to the extent that such Pledgor reasonably believes that such infringement or
violation is material to its business. Each Pledgor further agrees, consistent
with good business practice and absent direction of the Collateral Agent to the
contrary, diligently to prosecute any Person infringing any Significant Patent
or Significant Copyright to the extent that such Pledgor reasonably believes
that such infringement is material to its business, which consent shall not be
unreasonably withheld.
Section 5.4. Maintenance of Patents. At its own expense, each Pledgor
shall make timely payment of all post-issuance fees required pursuant to 15
U.S.C. Section 41 to maintain in force rights under each Significant Patent.
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Section 5.5. Prosecution of Patent Application. At its own expense, each
Pledgor shall diligently prosecute all applications for Significant Patents
listed in Schedule 13(a) to the Perfection Certificate and shall not abandon any
such application prior to exhaustion of all reasonable administrative and
judicial remedies, absent written consent of the Collateral Agent, which consent
shall not be unreasonably withheld.
Section 5.6. Other Patents and Copyrights. Within 30 days of acquisition
of any Patent or Copyright, or of filing of an application for any Patent or
Copyright, each Pledgor shall deliver to the Collateral Agent a copy of such
Patent or Copyright or such application, as the case may be, with a grant of
security as to such Patent or Copyright, as the case may be, confirming the
grant thereof hereunder, the form of such confirmatory grant to be substantially
the same as the form hereof.
Section 5.7. Remedies. If an Event of Default shall occur and be
continuing and Collateral Agent has delivered notice thereof to the Company in
accordance with Article Six of the Indenture to the extent such notice is
required pursuant to Article Six of the Indenture, the Collateral Agent may by
written notice to the Company, take any or all of the following actions: (i)
declare the entire right, title, and interest of each Pledgor in each of its
Patents and Copyrights vested, in which event such right, title, and interest
shall immediately vest in the Collateral Agent for the benefit of the Secured
Creditors, in which case the Collateral Agent shall be entitled to exercise the
power of attorney referred to in Section 5.1 to execute, cause to be
acknowledged and notarized and record said absolute assignment with the
applicable agency; (ii) take and practice or sell the Patents and Copyrights;
and (iii) direct each Pledgor to refrain, in which event such Pledgor shall
refrain, from practicing the Patents and Copyrights directly or indirectly, and
such Pledgor shall execute such other and further documents as the Collateral
Agent may request further to confirm this and to transfer ownership of the
Patents and Copyrights to the Collateral Agent for the benefit of the Secured
Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
Section 6.1. Protection of Collateral Agent's Security. No Pledgor will do
anything to impair in any material respect the rights of the Collateral Agent in
the Collateral. Each Pledgor will at all times keep its Inventory and Equipment
insured in favor of the Collateral Agent, at such Pledgor's own expense to the
extent and in the manner provided in the Indenture. If such Pledgor shall fail
to insure its Inventory and Equipment in accordance with the preceding sentence,
or if such Pledgor shall fail to so endorse and deposit all policies with
respect thereto, the Collateral Agent shall have the right (but shall be under
no obligation), upon prior notice to such Pledgor, to procure such insurance and
such Pledgor agrees to promptly reimburse the Collateral Agent for all
reasonable costs and expenses of procuring such insurance. The Collateral Agent
shall, at the time such proceeds of such insurance are distributed to the
Secured Creditors, apply such proceeds in accordance with Section 7.4 or as
otherwise provided in the Indenture. Each Pledgor assumes all liability and
responsibility in connection with the Collateral acquired by it and the
liability of such Pledgor to pay the Obligations shall in no way be affected or
diminished by reason of the fact that such Collateral may be lost, destroyed,
stolen, damaged or for any
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reason whatsoever unavailable to such Pledgor unless such loss or damage is
finally judicially determined to have been incurred by reason of the gross
negligence or willful misconduct of any Secured Creditor or any agent of any
Secured Creditor or the failure of a Secured Creditor, in exercising its
remedies hereunder, to act in a commercially reasonable manner.
Section 6.2. Warehouse Receipts Non-negotiable. Each Pledgor agrees that
if any warehouse receipt or receipt in the nature of a warehouse receipt is
issued with respect to any of its Inventory, such warehouse receipt or receipt
in the nature thereof shall not be "negotiable" (as such term is used in Section
7-104 of the Uniform Commercial Code as in effect in any relevant jurisdiction
or under other relevant law).
Section 6.3. Further Actions. Each Pledgor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which the Collateral Agent
deems reasonably appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral in accordance with the terms hereof.
Section 6.4. Financing Statements. Each Pledgor agrees to execute and
deliver to the Collateral Agent such financing statements, in form reasonably
acceptable to the Collateral Agent, as the Collateral Agent may from time to
time reasonably request or as are necessary in the reasonable opinion of the
Collateral Agent to establish and maintain a valid, enforceable, first priority
perfected security interest (subject to Permitted Liens) in the Collateral as
provided herein and the other rights and security contemplated hereby all in
accordance with the Uniform Commercial Code as enacted in any and all applicable
jurisdictions or any other applicable law. Each Pledgor will pay any applicable
filing fees, recordation taxes and related expenses. Each Pledgor authorizes the
Collateral Agent to file any such financing statements without the signature of
such Pledgor where permitted by law including, without limitation, the filing of
financing statements describing the Collateral as "all assets in which the
Debtor now owns or hereafter acquires rights."
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
Section 7.1. Remedies; Obtaining the Collateral Upon Default. Each Pledgor
agrees that, if any Event of Default shall have occurred and be continuing and
the Collateral Agent shall have delivered to the Company notice thereof in
accordance with Article Six of the Indenture to the extent such notice is
required pursuant to Article Six of the Indenture, then and in every such case,
subject to any mandatory requirements of applicable law then in effect, the
Collateral Agent, in addition to any rights now or hereafter existing under
applicable law, shall have all rights as a secured creditor under the Uniform
Commercial Code in all applicable juris-
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dictions and may also (subject to laws and regulations governing the national
security of the United States):
(a) personally, or by agents or attorneys, immediately retake possession
of the Collateral or any part thereof, from such Pledgor or any other Person who
then has possession of any part thereof with or without notice or process of
law, and for that purpose may enter upon such Pledgor's premises where any of
the Collateral is located and remove the same and use in connection with such
removal any and all services, supplies, aids and other facilities of such
Pledgor; possession of machinery shall, however, be subject to the terms of the
Location Leases; and
(b) instruct the obligor or obligors on any agreement, instrument or other
obligation (including, without limitation, the Accounts and the Contracts)
constituting the Collateral to make any payment required by the terms of such
agreement, instrument or other obligation directly to the Collateral Agent and
may exercise any and all remedies of such Pledgor in respect of such Collateral;
and
(c) withdraw all monies, securities and instruments in the Cash Collateral
Account for application to the Obligations in accordance with Section 7.4; and
(d) sell, assign or otherwise liquidate, or direct such Pledgor to sell,
assign or otherwise liquidate, any or all of its Collateral or any part thereof,
and take possession of the proceeds of any such sale or liquidation; and
(e) take possession of the Collateral or any part thereof, by directing
such Pledgor in writing to deliver the same to the Collateral Agent at any
commercially reasonable place or places designated by the Collateral Agent, in
which event such Pledgor shall at its own expense:
(i) forthwith cause the Collateral pledged by it to be moved to the
place or places so designated by the Collateral Agent and there delivered
to the Collateral Agent, and
(ii) store and keep any Collateral so delivered to the Collateral
Agent at such place or places pending further action by the Collateral
Agent as provided in Section 7.2, and
(iii) while the Collateral shall be so stored and kept, provide such
guards and maintenance services as shall be necessary to protect the same
and to preserve and maintain them in good condition; and
(f) license or sublicense (to the extent not in violation of the license),
whether on an exclusive or nonexclusive basis, any Trademarks, Patents or
Copyrights included in the Collateral for such term and on such conditions and
in such manner as the Collateral Agent shall in its commercially reasonable
judgment determine;
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it being understood that such Pledgor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Pledgor of said obligation.
Section 7.2. Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Collateral Agent under or pursuant to Section 7.1 and any
other Collateral whether or not so repossessed by the Collateral Agent, may be
sold, assigned, leased or otherwise disposed of under one or more contracts or
as an entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine;
provided that such terms shall be commercially reasonable. Any of the Collateral
may be sold, leased or otherwise disposed of, in the condition in which the same
existed when taken by the Collateral Agent or after any commercially reasonable
overhaul or repair made by or at the direction of the Collateral Agent. To the
extent permitted by any requirement of law, the Collateral Agent and the Secured
Creditors or any of their respective Affiliates may be the purchaser, licensee,
assignee or recipient of any or all of the Collateral at any such sale and shall
be entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold, assigned or
licensed at such sale, to use and apply any of the Obligations owed to such
Person as a credit on account of the purchase price of any Collateral payable by
such Person at such sale. Each purchaser, assignee, licensee or recipient at any
such sale shall acquire the property sold, assigned or licensed absolutely free
from any claim or right on the part of any Pledgor, and each Pledgor hereby
waives, to the fullest extent permitted by law, all rights of redemption, stay
and/or appraisal which it now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. The Collateral
Agent shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. The Collateral Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. Each Pledgor hereby waives, to the fullest
extent permitted by law, any claims against the Collateral Agent arising by
reason of the fact that the price at which any Collateral may have been sold,
assigned or licensed at such a private sale was less than the price which might
have been obtained at a public sale, even if the Collateral Agent accepts the
first offer received and does not offer such Pledged Collateral to more than one
offeree. Each Pledgor acknowledges and agrees that, to the extent notice of sale
shall be required by law, ten days' notice to such Pledgor of the time and place
of any public sale or of the time after which any private sale or other intended
disposition is to take place shall be commercially reasonable notification of
such matters. No notification need be given to any Pledgor if it has signed,
after the occurrence of an Event of Default, a statement renouncing or modifying
any right to notification of sale or other intended disposition. Each Pledgor
agrees to do or cause to be done all such other acts and things as may be
reasonably necessary to make such sale or sales of all or any portion of the
Collateral valid and binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at such Pledgor's
reasonable expense.
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Section 7.3. Waiver of Claims. Except as otherwise provided in this
Agreement, EACH PLEDGOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH PLEDGOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and each Pledgor hereby further waives, to the extent permitted
by law:
(a) all damages occasioned by such taking of possession except any damages
which are the direct result of the Collateral Agent's gross negligence or
willful misconduct or failure to act, in exercising its remedies hereunder, in a
commercially reasonable manner;
(b) all other requirements as to the time, place and terms of sale or
other requirements with respect to the enforcement of the Collateral Agent's
rights hereunder; and
(c) all rights of redemption, appraisement, valuation, stay, extension or
moratorium now or hereafter in force under any applicable law in order to
prevent or delay the enforcement of this Agreement or the absolute sale of the
Collateral or any portion thereof, and each Pledgor, for itself and all who may
claim under it, insofar as it or they now or hereafter lawfully may, hereby
waives the benefit of all such laws unless such action or threatened action is
not commercially reasonable.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of each Pledgor therein and thereto, and
shall be a perpetual bar both at law and in equity against such Pledgor and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
such Pledgor other than any Collateral remaining after the occurrence of the
Termination Date.
Section 7.4. Application of Proceeds(i) . (a) All moneys collected by the
Collateral Agent (or, to the extent any Pledge Agreement or any other Collateral
Agreement to which any Pledgor is a party requires proceeds of Collateral under
such agreement to be applied in accordance with the provisions of this
Agreement, the pledgee or secured creditor under such other agreement) upon any
sale or other disposition of the Collateral, together with all other moneys
received by the Collateral Agent hereunder, shall be applied in the order set
forth in Section 6.10 of the Indenture. Any balance of such Proceeds remaining
after the occurrence of the Termination Date, shall be paid over to the
applicable Pledgor or to whomsoever may be lawfully entitled to receive the
same.
(b) It is understood and agreed that each Pledgor shall remain liable to
the extent of any deficiency between the amount of the proceeds of the
Collateral hereunder and the aggregate amount of the Obligations, except to the
extent that such proceeds are not applied by the Collateral Agent in accordance
with this Agreement and the Indenture.
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Section 7.5. Remedies Cumulative. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement, the
Senior Secured Notes or the Indenture or now or hereafter existing at law or in
equity, or by statute and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time or simultaneously and as often and in such order as may be deemed
expedient by the Collateral Agent. All such rights, powers and remedies shall
be cumulative and the exercise or the beginning of exercise of one shall not be
deemed a waiver of the right to exercise of any other or others. No delay or
omission of the Collateral Agent in the exercise of any such right, power or
remedy, renewal or extension of any of the Obligations and no course of dealing
between any Pledgor and the Collateral Agent or any holder of any of the
Obligations shall impair any such right, power or remedy or shall be construed
to be a waiver of any Default or Event of Default or an acquiescence therein.
No notice to or demand on any Pledgor in any case shall entitle it to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Collateral Agent to any other or further
action in any circumstances without notice or demand. In the event that the
Collateral Agent shall bring any suit to enforce any of its rights hereunder
and shall be entitled to judgment, then in such suit the Collateral Agent may
recover expenses, including reasonable attorneys' fees, and the amounts thereof
shall be included in such judgment.
Section 7.6. Discontinuance of Proceedings. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case each
Pledgor, the Collateral Agent and each holder of any of the Obligations shall be
restored to their former positions and rights hereunder with respect to the
Collateral subject to the security interest created under this Agreement, and
all rights, remedies and powers of the Collateral Agent shall continue as if no
such proceeding had been instituted.
Section 7.7. Additional Remedies With Respect to Collateral Located in
Louisiana. Upon the occurrence and during the continuance of any Event of
Default and provided that the Collateral Agent shall have delivered to the
Company notice thereof in accordance with Article Six of the Indenture to the
extent such notice is required pursuant to Article Six of the Indenture, the
Collateral Agent shall be entitled to exercise any one or more of the following
remedies (all of which are cumulative):
(a) Default Remedies. In addition to the rights of the Collateral Agent
with respect to possessory collateral, the Collateral Agent shall have the
right, in accordance with the Indenture, to accelerate payment of all amounts
that each Pledgor may then owe to the Secured Creditors, which will then entitle
the Collateral Agent to foreclose under this Agreement under ordinary or
executory process procedures, or under the seizure and disposition remedies set
forth in R.S. 6:965 et seq. (where applicable), and to cause the Collateral to
be immediately seized wherever found, and sold with or without appraisal, in
regular session of court or in vacation, in accordance with applicable Louisiana
law, without the necessity of further demanding payment from such Pledgor, or of
notifying such Pledgor, or placing such Pledgor in default. For pur-
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poses of foreclosure under Louisiana executory process procedures, such Pledgor
confesses judgment and acknowledges to be indebted to the Secured Creditors up
to the full amount of the Obligations, in principal, interest, costs, expenses,
attorney's fees and other fees and charges and all other amounts secured by this
Agreement. To the extent permitted under applicable Louisiana law, each Pledgor
additionally: (A) waives any benefit of appraisal as provided under Articles
2332, 2336, 2723 and 2724 of the Louisiana Code of Civil Procedure, and all
other laws with regard to appraisal upon judicial sale, recognizing that no
appraisal shall be required prior to sale; (B) waives the demand and three days'
delay as provided under Articles 2639 and 2721 of the Louisiana Code of Civil
Procedure; (C) waives the notice of seizure as provided under Articles 2293 and
2721 of the Louisiana Code of Civil Procedure; (D) waives the three (3) days'
delay provided under Articles 2331 and 2722 of the Louisiana Code of Civil
Procedure; and (E) waives all other benefits provided under Articles 2331, 2722
and 2723 of the Louisiana Code of Civil Procedure and all other Articles not
specifically mentioned above. Each Pledgor further agrees that any declaration
of fact made by authentic act before a Notary Public by a person declaring that
such facts are within his or her knowledge shall constitute authentic evidence
of such facts for purposes of foreclosure under applicable Louisiana law, such
Pledgor further agrees that the Collateral Agent may appoint a keeper of the
Collateral in the event of foreclosure.
Should the Collateral for any reason be located in another state at or
following any Event of Default, each Pledgor agrees that the Collateral Agent
may, in accordance with the terms hereof, take possession of the Collateral in
any manner then permitted under the laws of the state in which the Collateral is
then located or under the laws of Louisiana as then applicable, including R.S.
6:965 et seq. Should the Collateral Agent for any reason have or acquire
possession of the Collateral at or following default, the Collateral Agent may
sell the Collateral at public or private sale as authorized by Louisiana law or
the applicable provisions of the Uniform Commercial Code or similar laws in
effect in the state where the Collateral is then located. If the Collateral
Agent is required by law to give any Pledgor notice of the public or private
sale of the Collateral, each Pledgor agrees that the requirements of reasonable
notice shall be met if the Collateral Agent mails such notice to such Pledgor at
the Company's address as shown in this Agreement at least ten (10) days before
the time of any public sale or, if disposition is by private sale, at least ten
(10) days before the time after which private sale may occur. If public sale is
held, there will be sufficient compliance with all requirements of notice to the
public by a single publication in a newspaper in general circulation in the
parish or county where the Collateral is then located. This notice should
include the time and place of sale, and a brief description of the property to
be sold.
(b) Proceeds; Surplus; Deficiencies. The Collateral Agent shall apply any
proceeds derived or to be derived from the sale, collection or other disposition
of the Collateral in the manner provided in Section 7.4 hereof. The Pledgors
shall be entitled to any surplus if one results after application of the
proceeds and the Pledgors shall remain liable for any deficiency.
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ARTICLE VIII
INDEMNITY
Section 8.1. Indemnity. (a) Each Pledgor agrees to indemnify, reimburse
and hold the Collateral Agent, each Secured Creditor and their respective
successors, assigns, employees, agents and servants (hereinafter in this Section
8.1 referred to individually as an "Indemnitee" and collectively as
"Indemnitees") harmless from any and all liabilities, obligations, damages,
injuries, penalties, claims, demands, actions, suits, judgments and any and all
costs, expenses or disbursements (including reasonable attorneys' fees and
expenses) (for the purposes of this Section 8.1 the foregoing are collectively
called "expenses") of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnities arising out of this Agreement, the Notes or
the Indenture or any other document executed in connection herewith and
therewith or in any other way connected with the administration of the
transactions contemplated hereby and thereby or the enforcement of any of the
terms of, or the preservation of any rights under any thereof, or in any way
relating to or arising out of the manufacture, ownership, ordering, purchase,
delivery, control, acceptance, lease, financing, possession, operation,
condition, sale, return or other disposition, or use of the Collateral
(including, without limitation, latent or other defects, whether or not
discoverable), any contract claim or, to the maximum extent permitted under
applicable law, the violation of the laws of any country, state or other
governmental body or unit, or any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage); provided that no Indemnitee shall be indemnified pursuant to this
Section 8.1(a) for expenses to the extent finally judicially determined to have
been incurred by reason of the gross negligence or willful misconduct of such
Indemnitee. Each Pledgor agrees that upon written notice by any Indemnitee of
the assertion of such a liability, obligation, damage, injury, penalty, claim,
demand, action, suit or judgment, such Pledgor shall assume full responsibility
for the defense thereof. Each Indemnitee agrees to use its commercially
reasonable efforts to promptly notify the Company of any such assertion of which
such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a), each Pledgor
agrees to pay, or reimburse the Collateral Agent for any and all reasonable
fees, costs and expenses of whatever kind or nature incurred in connection with
the creation, preservation or protection of the Collateral Agent's Liens on, and
security interest in, the Collateral, including, without limitation, all fees
and taxes in connection with the recording or filing of instruments and
documents in public offices, payment or discharge of any taxes or Liens upon or
in respect of the Collateral, reasonable premiums for insurance with respect to
the Collateral and all other reasonable fees, costs and expenses in connection
with protecting, maintaining or preserving the Collateral and the Collateral
Agent's interest therein, whether through judicial proceedings or otherwise, or
in defending or prosecuting any actions, suits or proceedings arising out of or
relating to the Collateral as set forth herein and in the Indenture.
(c) Without limiting the application of Section 8.1(a) or (b), each
Pledgor agrees to pay, indemnify and hold each Indemnitee harmless from and
against any loss, costs,
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damages and expenses which such Indemnitee may suffer, expend or incur in
consequence of or growing out of any material misrepresentation by such Pledgor
in this Agreement or the Indenture, or in any writing contemplated by or made or
delivered pursuant to or in connection with this Agreement or the Indenture as
set forth herein and in the Indenture.
(d) If and to the extent that the obligations of any Pledgor under this
Section 8.1 are unenforceable for any reason, such Pledgor hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law.
Section 8.2. Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnification obligations of each Pledgor contained in this Article VIII shall
continue in full force and effect notwithstanding the occurrence of the
Termination Date.
ARTICLE IX
DEFINITIONS
(a) The following terms which are capitalized herein shall have the
meanings given to them in the Uniform Commercial Code. Such definitions shall be
equally applicable to the singular and plural forms of the terms defined.
"Account"
"Chattel Paper"
"Commercial Tort Claim"
"Commodity Account"
"Commodity Intermediary"
"Deposit Account"
"Documents"
"Electronic Chattel Paper"
"Entitlement Holder"
"Entitlement Order"
"Equipment"
"Financial Asset"
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"Fixtures"
"General Intangibles"
"Goods"
"Inventory"
"Investment Property"
"Letter-of-Credit Right"
"Letter of Credit"
"Payment Intangible"
"Securities Account"
"Securities Intermediary"
"Security"
"Security Entitlement"
"Supporting Obligations"
"Tangible Chattel Paper"
(b) The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.
"Cash Collateral Account" shall mean a non-interest bearing cash
collateral account maintained with the Collateral Agent for the benefit of the
Secured Creditors.
"Coinmach Corp." shall have the meaning provided in the fourth paragraph
of this Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a) of this
Agreement.
"Collateral Agent" shall have the meaning provided in the first paragraph
of this Agreement.
"Company" shall have the meaning provided in the first paragraph of this
Agreement.
"Contract Rights" shall mean all rights of each Pledgor (including,
without limitation, all rights to payment) under each Contract.
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"Contracts" shall mean all contracts between each Pledgor and one or more
additional parties (including, without limitation, (i) each partnership
agreement to which such Pledgor is a party and (ii) any Interest Swap
Obligations), but excluding (x) licenses to the extent that the terms thereof
prohibit the assignment of, or granting of a security interest in, such licenses
and (y) location contracts which have not, with the Collateral Agent's approval,
been assigned to the Collateral Agent but, in each of the cases described in
clauses (x) and (y) of this definition, excluding the right to receive any
payment (including, without limitation, Accounts, General Intangibles and
Payment Intangibles) or any other rights referred to in Sections 9-406(f),
9-407(a) or 9-408(a) of the Uniform Commercial Code (or any successor provisions
of any jurisdiction or any other applicable law); provided, however, that at
such time as such license is no longer subject to such prohibition, such license
shall (without any act or delivery by any Person) constitute a Contract
hereunder.
"Control Agreement" shall mean an agreement in form and substance
reasonably acceptable to the Administrative Agent sufficient to establish
"control" (as defined in Section 8-106 of the Uniform Commercial Code with
respect to Securities Accounts, as defined in Section 9-104 of the Uniform
Commercial Code with respect to Deposit Accounts, and as defined in Section
9-106 of the Uniform Commercial Code with respect to Commodity Accounts) over
any applicable Investment Property (including, without limitation, any
Securities Account or Commodity Account) or Deposit Account.
"Copyrights" shall mean, collectively, with respect to each Pledgor, all
copyrights (whether statutory or common law and whether established or
registered in the United States or any other country) now owned or hereafter
created or acquired by or assigned to such Pledgor, whether published or
unpublished, and all copyright registrations and applications made by such
Pledgor including, without limitation, the copyrights, registrations and
applications listed in Schedule 13(b) to the Perfection Certificate, together
with any and all (i) rights and privileges arising under applicable law with
respect to such Pledgor's use of any copyrights, (ii) reissues, renewals,
continuations and extensions thereof, (iii) income, fees, royalties, damages,
claims and payments now or hereafter due and/or payable with respect thereto,
including, without limitation, damages and payments for past, present or future
infringements thereof, (iv) rights corresponding thereto throughout the world
and (v) rights to ▇▇▇ for past, present or future infringements thereof.
"Credit Agreement Collateral Agent" shall have the meaning provided in the
fourth paragraph of this Agreement.
"Depository Bank" shall have the meaning provided to the term "bank" in
Article 9 of the Uniform Commercial Code.
"Existing Deposit Accounts" shall have the meaning provided in Section 3.7
of this Agreement.
"Goodwill" shall mean, collectively, with respect to each Pledgor, the
goodwill connected with such Pledgor's business including, without limitation,
(i) all goodwill connected with the use of and symbolized by any of the
Intellectual Property in which such Pledgor has any interest and (ii) all
know-how, trade secrets, customer and supplier lists, proprietary information,
inventions, methods, procedures, formulae, descriptions, compositions, technical
data, drawings, specifications, name plates, catalogs, confidential information
and the right to limit the use or
-24-
disclosure thereof by any person or entity, pricing and cost information,
business and marketing plans and proposals, consulting agreements, engineering
contracts and such other assets which relate to such goodwill.
"Holders" shall have the meaning provided in the first paragraph of this
Agreement.
"Indemnitee" shall have the meaning provided in Section 8.1(a) of this
Agreement.
"Indenture" shall have the meaning provided in the first paragraph of this
Agreement.
"Instrument" shall have the meaning provided to such term in Article 9 of
the Uniform Commercial Code as in effect on the date hereof in the State of New
York but shall not include any Location Leases.
"Insurance Policies" shall mean, collectively, with respect to each
Pledgor, all insurance policies held by such Pledgor or naming such Pledgor as
insured, additional insured or loss payee, all such insurance policies entered
into after the date hereof, other than insurance policies (or certificates of
insurance evidencing such insurance policies) relating to health and welfare
insurance and life insurance policies in which such Pledgor is not named as
beneficiary (i.e., insurance policies that are not "Key Man" insurance policies)
and all rights, claims and recoveries relating thereto (including, without
limitation, all dividends, returned premiums and other rights to receive money
in respect of any of the foregoing).
"Intellectual Property" shall mean, collectively, the Patents, Trademarks,
Copyrights, Licenses and Goodwill.
"Intercreditor Agreement" shall have the meaning provided in the sixth
paragraph of this Agreement.
"Laundry Corp." shall have the meaning provided in the first paragraph of
this Agreement.
"Licenses" shall mean, collectively, with respect to each Pledgor, all
license and distribution agreements and covenants not to ▇▇▇ with any other
party with respect to any Patent, Trademark, or Copyright or any other patent,
trademark or copyright, whether such Pledgor is a licensor or licensee,
distributor or distributee under any such license or distribution agreement,
including, without limitation, the license and distribution agreements listed in
Schedules 13(a) and 13(b) to the Perfection Certificate, together with any and
all (i) renewals, extensions, supplements and continuations thereof, (ii)
income, fees, royalties, damages, claims and payments now and hereafter due
and/or payable thereunder and with respect thereto including, without
limitation, damages and payments for past, present or future infringements or
violations thereof, (iii) rights to ▇▇▇ for past, present and future
infringements or violations thereof and (iv) any other rights to use, exploit or
practice any or all of the Patents, Trademarks or Copyrights or any other
patents, trademarks or copyrights.
"Location Leases" shall mean leases, licenses or other agreements pursuant
to which any Pledgor leases, licenses or otherwise obtains the right to use any
real property at which Collateral constituting personal property is located.
"Senior Secured Notes" shall have the meaning provided in the first
paragraph of this Agreement.
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"Obligations" shall mean the collective reference to the unpaid principal
of and interest on the Senior Secured Notes and all other obligations and
liabilities of any Pledgor (including, without limitation, any increase in the
aggregate principal amount of the Senior Secured Notes, together with any
interest accruing at the then applicable rate provided in the Indenture or the
Senior Secured Notes after the maturity of the Notes and interest accruing at
the then applicable rate provided in the Indenture after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Company, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) to the Collateral Agent
or any Secured Creditor, whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, the Indenture, the Senior Secured Notes, the
Guarantees, this Agreement, or any other document made, delivered or given in
connection with any of the foregoing, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel that are required to be paid by such Pledgor pursuant to the terms of
any of the foregoing agreements).
"Patents" shall mean, collectively, with respect to each Pledgor, all
patents issued or assigned to and all patent applications and registrations made
by such Pledgor (whether established or registered or recorded in the United
States or any other country), including, without limitation, the patents, patent
applications, registrations and recordings listed in Schedule 13(a) to the
Perfection Certificate, together with any and all (i) rights and privileges
arising under applicable law with respect to such Pledgor's use of any patents,
(ii) inventions and improvements described and claimed therein, (iii) reissues,
divisions, continuations, renewals, extensions and continuations-in-part
thereof, (iv) income, fees, royalties, damages, claims and payments now or
hereafter due and/or payable thereunder and with respect thereto including,
without limitation, damages and payments for past, present or future
infringements thereof, (v) rights corresponding thereto throughout the world,
and (vi) rights to ▇▇▇ for past, present or future infringements thereof.
"Perfection Certificate" shall mean that certain Perfection Certificate
dated the Closing Date, delivered by the Company and Laundry Corp. in favor of
the Collateral Agent (for the benefit of the Secured Creditors).(1)
"Permitted Filings" shall have the meaning provided in Section 2.1 of this
Agreement.
"Pledgors" shall have the meaning provided in the first paragraph of this
Agreement.
"Proceeds" shall have the meaning provided to such term in the Uniform
Commercial Code as in effect in the State of New York on the date hereof or
under other relevant law
--------
1 Discuss how updated/supplemented.
-26-
and, in any event, shall include, but not be limited to, (i) any and all
proceeds of any insurance, indemnity, warranty or guaranty payable to the
Collateral Agent or any Pledgor from time to time with respect to any of the
Collateral, (ii) any and all payments (in any form whatsoever) made or due and
payable to any Pledgor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority (or any person acting under color of
Governmental Authority) (iii) instruments representing obligations to pay
amounts in respect of any Collateral, (iv) products of the Collateral and (v)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.
"Secured Creditors" shall have the meaning provided in the fifth paragraph
of this Agreement.
"Significant Copyrights" shall mean those Copyrights which each Pledgor
believes in its reasonable judgment to be material to its business.
"Significant Patents" shall mean those Patents which each Pledgor believes
in its reasonable judgment to be material to its business.
"Significant Trademarks" shall mean those Trademarks which each Pledgor
believes in its reasonable judgment to be material to its business.
"Specified Commercial Tort Claims" shall mean each Commercial Tort Claim
with respect to which the applicable Pledgor has complied with the provisions of
Section 3.8(e).
"Termination Date" means the earliest to occur of the date on which (a)
all Obligations have been paid in full in cash; (b) the Company exercises its
legal defeasance option or covenant defeasance option described in Section 8.01
of the Indenture; (c) the satisfaction and discharge of the Indenture occurs in
accordance with Section 8.02 thereof and (d) the Merger Event occurs.
"Trademarks" shall mean, collectively, with respect to each Pledgor, all
trademarks (including service marks), slogans, logos, designs, certification
marks, trade dress, uniform resource locations (URLs), domain names, corporate
names and trade names, whether registered or unregistered, owned by or assigned
to such Pledgor and all registrations and applications for the foregoing
(whether statutory or common law and whether established or registered in the
United States or any other country) including, without limitation, the
registrations and applications listed in Schedule 13(a) to the Perfection
Certificate, together with any and all (i) rights and privileges arising under
applicable law with respect to such Pledgor's use of any trademarks, (ii)
reissues, continuations, extensions and renewals thereof, (iii) income, fees,
royalties, damages and payments now and hereafter due and/or payable thereunder
and with respect thereto, including, without limitation, damages, claims and
payments for past, present or future infringements thereof, (iv) rights
corresponding thereto throughout the world and (v) rights to ▇▇▇ for past,
present and future infringements thereof.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect on the date hereof in the State of New York; provided, however, that if
by reason of manda-
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tory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any item or portion of the Pledged
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, "Uniform Commercial Code" shall
also mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection.
ARTICLE X
MISCELLANEOUS
Section 10.1. Notices. All such notices and communications hereunder shall
be telecopied or delivered by messenger or overnight courier service and all
such notices and communications shall, when mailed, telegraphed, telecopied, or
cabled or sent by overnight courier, be effective when delivered to the
telegraph company, cable company or as overnight courier, as the case may be, or
sent by overnight, telecopier and when mailed shall be effective three Business
Days following deposit in the mail with proper postage, except that notices and
communications to the Collateral Agent shall not be effective until received by
the Collateral Agent. All notices, requests, demands or other communications
shall be in writing and addressed as follows:
(a) if to any Pledgor, at:
Coinmach Service Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
Coinmach Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy to:
Mayer, Brown, ▇▇▇▇ & Maw LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) if to the Collateral Agent:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
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Section 10.2. Waiver; Amendment. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied any manner whatsoever
except in accordance with Article Nine of the Indenture.
Section 10.3. Obligations Absolute. The obligations of each Pledgor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Pledgor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement or the Indenture except as
specifically set forth in a waiver granted pursuant to Section 10.2 hereof; or
(c) any amendment to or modification of the Senior Secured Notes or the
Indenture or any security for any of the Obligations; whether or not such
Pledgor shall have notice or knowledge of any of the foregoing.
Section 10.4. Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns and shall inure
to the benefit of the Collateral Agent, each Secured Creditor and each Pledgor
and their respective successors and assigns, provided that no Pledgor may
transfer or assign any or all of its rights or obligations hereunder without the
written consent of the Collateral Agent or otherwise in compliance with the
Indenture. All agreements, statements, representations and warranties made by
each Pledgor herein or in any certificate or other instrument delivered by such
Pledgor or on its behalf under this Agreement shall be considered to have been
relied upon by the Secured Creditors and shall survive the execution and
delivery of this Agreement, the Senior Secured Notes and the Indenture
regardless of any investigation made by the Secured Creditors or on their
behalf.
Section 10.5. Headings Descriptive. The headings of the several sections
of this Agreement are inserted for convenience only and shall not in any way
affect the meaning or construction of any provision of this Agreement.
Section 10.6. 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 10.7. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK.
Section 10.8. Pledgor's Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Pledgor shall remain liable
to perform all of the obligations, if any, assumed by it with respect to the
Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
-29-
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of such Pledgor under or with
respect to any Collateral except to the extent directly resulting from the
Collateral Agent's gross negligence or willful misconduct or failure to act, in
exercising its remedies hereunder, in a commercially reasonable manner.
Section 10.9. Termination; Release. (a) On the Termination Date, this
Agreement and the security interest created hereby shall terminate, and the
Collateral Agent shall, at the request and expense of the Pledgors, promptly
execute and deliver to the applicable Pledgor as promptly thereafter as
reasonably practicable a proper instrument or instruments (including Uniform
Commercial Code termination statements on form UCC-3) acknowledging the
satisfaction and termination of this Agreement, and will duly assign, transfer
and deliver to the applicable Pledgor (without recourse and without any
representation or warranty) such of the Collateral of such Pledgor as may be in
the possession of the Collateral Agent or any of its sub-agents and has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any proceeds of Collateral at the time held by the
Collateral Agent or any of its sub-agents hereunder.
(b) In the event that any part of the Collateral is sold in connection
with a sale not prohibited by the Indenture or released in accordance with
Article Eleven of the Indenture and the proceeds of such sale or sales or from
such release are applied in accordance with, and to the extent required by, the
Indenture, to the extent required to be so applied, such Collateral will be
sold or released, free and clear of the Liens created by this Agreement and the
Collateral Agent, at the request and expense of the applicable Pledgor, will
duly assign, transfer and deliver to such Pledgor (without recourse and without
any representation or warranty) such of the Collateral as is then being (or has
been) so sold or released and as may be in the possession of the Collateral
Agent and has not theretofore been released pursuant to this Agreement.
(c) At any time that any Pledgor desires that the Collateral Agent take
any action to acknowledge or give effect to any release of Collateral pursuant
to the foregoing Section 10.9(b), it shall deliver to the Collateral Agent a
certificate signed by its chief financial officer stating that the release of
the respective Collateral is permitted pursuant to Section 10.9(a) or (b).
(d) The Collateral Agent shall have no liability whatsoever to any Holder
as a result of any release of Collateral by it in accordance with this Section
10.9.
Section 10.10. Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the Company
and the Collateral Agent.
Section 10.11. The Collateral Agent. The Collateral Agent will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed by the parties
hereto and each Secured Creditor, by accepting the benefits of this Agreement
acknowledges and agrees that the obligations of the Collateral Agent as holder
of the Collateral and interests therein and with respect to the disposition
thereof,
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and otherwise under this Agreement, are only those expressly set forth in this
Agreement. The Collateral Agent shall act hereunder on the terms and conditions
set forth in Article Seven of the Indenture.
Section 10.12 Intercreditor Agreement
(a) The Liens granted hereunder in favor of the Collateral Agent for the
benefit of the Secured Creditors in respect of the Shared Collateral and the
exercise of any right related thereto thereby shall be subject, in each case,
to the terms of the Intercreditor Agreement.
(b) In the event of any direct conflict between the express terms and
provisions of this Agreement and of the Intercreditor Agreement, the terms and
provisions of the Intercreditor Agreement shall control.
(c) Notwithstanding anything to the contrary herein, any provision hereof
that requires any Pledgor to (i) deliver any Shared Collateral to the
Collateral Agent, or (ii) provide that the Collateral Agent have control over
such Shared Collateral may be satisfied by (A) the delivery of such Shared
Collateral by such Pledgor to the Credit Agreement Collateral Agent for the
benefit of the Lenders and the Collateral Agent for the benefit of the Secured
Creditors pursuant to Section 5.4 of the Intercreditor Agreement and (B)
providing that the Credit Agreement Collateral Agent be provided with control
with respect to such Shared Collateral of such Pledgor for the benefit of the
Lenders and the Collateral Agent for the benefit of Secured Creditors pursuant
to Section 5.4 of the Intercreditor Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
COINMACH SERVICE CORP,
as the Company and a Pledgor
By:
---------------------------------------
Name.
Title
COINMACH LAUNDRY CORPORATION,
as Guarantor and Pledgor
By:
---------------------------------------
Name:
Title
THE BANK OF NEW YORK,
as Collateral Agent
By:
---------------------------------------
Name:
Title:
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