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EXHIBIT 3
PLEDGE AGREEMENT
AGREEMENT dated as of November 13, 2000 between UNOVA, Inc. (with its
successors, the "BORROWER") and Morgan Guaranty Trust Company of New York, as
Collateral Agent (the "COLLATERAL AGENT").
W I T N E S S E T H :
WHEREAS, the Borrower, certain Banks (the "BANKS") and Morgan Guaranty
Trust Company of New York, as agent for such Banks (the "ADMINISTRATIVE AGENT"),
are parties to a Credit Agreement dated September 24, 1997 (as the same has
heretofore been or may hereafter be amended from time to time, the "CREDIT
AGREEMENT"); and
WHEREAS, in order to induce said Banks and the Administrative Agent to
enter into the Amendment No. 6 and Waiver to the Credit Agreement, the Borrower
has agreed to grant a continuing security interest in and to the Collateral (as
hereafter defined) to secure (i) its obligations under the Credit Agreement and
the Notes issued pursuant thereto and (ii) certain other obligations;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein. The following additional terms, as used herein, have the following
respective meanings:
"ADDITIONAL SECURED OBLIGATIONS" means obligations of the Borrower or a
Subsidiary in respect of (i) letters of credit, bank guarantees and foreign
exchange contracts in an aggregate principal or maximum amount not to exceed
$75,000,000 at any time and (ii) multi-currency loans in an aggregate principal
amount not to exceed $25,000,000 at any time, in each case designated by the
Borrower in accordance with Section 17.
"COLLATERAL" has the meaning assigned to such term in Section 3(a).
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"DOMESTIC SUBSIDIARY" means any Subsidiary organized under the laws of
the United States or a political subdivision thereof, except KCH Funding LLC, a
Delaware limited liability company.
"INDENTURE" means the Indenture dated as of March 11, 1998 between the
Borrower and The First National Bank of Chicago, as Trustee.
"ISSUER" means each issuer of Pledged Securities.
"LIQUIDATED SECURED OBLIGATION" means at any time any Secured
Obligation (or portion thereof) that is not an Unliquidated Secured Obligation
at such time.
"LIQUID INVESTMENT" means a Permitted Investment (other than commercial
paper) that matures within 30 days after it is first included in the Collateral.
"PERMITTED INVESTMENTS" means investments in:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
(or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States), in each case maturing
within one year from the date of acquisition thereof;
(b) commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody's;
(c) certificates of deposit, banker's acceptances and time
deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States or any State thereof
which has a combined capital and surplus and undivided profits of at
least $500,000,000; and
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above and
entered into with a financial institution satisfying the criteria
described in clause (c) above.
"PLEDGED INSTRUMENTS" means (i) the Subsidiary Notes and (ii) any
instrument required to be pledged to the Collateral Agent pursuant to Section
3(a)(ii).
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"PLEDGED SECURITIES" means the Pledged Instruments and the Pledged
Stock.
"PLEDGED STOCK" means (i) the Subsidiary Shares and (ii) any other
capital stock required to be pledged to the Collateral Agent pursuant to Section
3(a)(ii).
"POST-PETITION INTEREST" means any interest that accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Borrower (or would accrue but for the
operation of applicable bankruptcy or insolvency laws), whether or not such
interest is allowed or allowable as a claim in any such proceeding.
"RELEASE CONDITIONS" means the following conditions for terminating all
the Security Interests:
(i) all Commitments under the Credit Agreement shall have
expired or been terminated;
(ii) all Liquidated Secured Obligations shall have been paid
in full; and
(iii) no Unliquidated Secured Obligation shall remain
outstanding or such Unliquidated Secured Obligation shall be cash
collateralized to an extent and in a manner reasonably satisfactory to
each affected Secured Party.
"RESTRICTED AMOUNT" means the maximum amount of the Secured Obligations
secured by the Restricted Collateral, which principal amount (i) shall initially
be $107,000,000 and (ii) shall be reduced by the amount of any proceeds of
Restricted Collateral applied to the Secured Obligations pursuant to Section 13.
"RESTRICTED COLLATERAL" means all Pledged Securities issued by a
Restricted Subsidiary, and all other Debt of a Restricted Subsidiary owed
directly to the Borrower, and all of the rights and privileges of the Borrower
with respect thereto, and all income and profits thereon, and all interest,
dividends and other payments and distributions with respect thereto, and all
proceeds of the foregoing.
"RESTRICTED SUBSIDIARY" has the meaning set forth in the Indenture.
"SECURED OBLIGATIONS" means (i) all principal of all Loans outstanding
from time to time under the Credit Agreement, all interest (including
Post-Petition Interest) on such Loans and all other amounts now or hereafter
payable by the Borrower pursuant to the Loan Documents, (ii) all obligations (if
any) designated by the Borrower as Additional Secured Obligations pursuant to
Section 17 and (iii) any renewal, extension, refunding or refinancing of any of
the foregoing.
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"SECURED PARTIES" means the holders from time to time of the Secured
Obligations.
"SECURITY INTERESTS" means the security interests in the Collateral
granted hereunder securing the Secured Obligations.
"SUBSIDIARY NOTES" means the notes and other debt instruments of
Domestic Subsidiaries owed directly to the Borrower identified in Schedule I
hereto.
"SUBSIDIARY SHARES" means the shares of capital stock of Domestic
Subsidiaries owned directly by the Borrower identified in Schedule II hereto.
"UNLIQUIDATED SECURED OBLIGATION" means, at any time, any Secured
Obligation (or portion thereof) that is contingent in nature or unliquidated at
such time, including any Secured Obligation that is:
(i) an obligation to reimburse a bank for drawings not yet
made under a letter of credit issued by it;
(ii) any other obligation (including any guarantee) that is
contingent in nature at such time; provided that contingent obligations
under general indemnification provisions (such as Sections 8.03, 8.04
and 9.03 of the Credit Agreement) or the like as to which no claim is
pending or reasonably foreseeable shall not be treated as Unliquidated
Secured Obligations for purposes of the administration of this
Agreement;
(iii) an obligation in respect of foreign exchange contracts
that have not matured or otherwise been terminated at such time; or
(iv) an obligation to provide collateral to secure any of the
foregoing types of obligations.
Unless otherwise defined herein, or unless the context otherwise
requires, all terms used herein which are defined in the New York Uniform
Commercial Code as in effect on the date hereof shall have the meanings therein
stated.
SECTION 2. Representations and Warranties. The Borrower represents and
warrants as follows:
(a) Issuers. The Issuers represent all Domestic Subsidiaries which are
issuers of (i) capital stock held directly by the Borrower or (ii) notes or
other instruments evidencing Debt owed directly to the Borrower.
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(b) Title to Pledged Securities. The Borrower owns all of the Pledged
Securities, free and clear of any Liens other than the Security Interests. The
Pledged Stock includes all of the issued and outstanding capital stock of each
Issuer owned directly by the Borrower. All of the Pledged Stock has been duly
authorized and validly issued, and is fully paid and non-assessable, and is
subject to no options to purchase or similar rights of any Person. The Borrower
is not and will not become a party to or otherwise bound by any agreement, other
than this Agreement and the Indenture, which restricts in any manner the rights
of any present or future holder of any of the Pledged Securities with respect
thereto.
(c) Validity, Perfection and Priority of Security Interests. Upon the
delivery of the Pledged Instruments and certificates representing the Pledged
Stock to the Collateral Agent in accordance with Section 4 hereof, the
Collateral Agent will have valid and perfected security interests in the
Collateral subject to no prior Lien. No registration, recordation or filing with
any governmental body, agency or official is required in connection with the
execution or delivery of this Agreement or necessary for the validity or
enforceability hereof or for the perfection or enforcement of the Security
Interests. Neither the Borrower nor any of its Subsidiaries has performed or
will perform any acts which might prevent the Collateral Agent from enforcing
any of the terms and conditions of this Agreement or which would limit the
Collateral Agent in any such enforcement.
(d) UCC Filing Locations. The chief executive office of the Borrower is
located at 21900 Burbank Boulevard, Woodland Hills, California 91367-7418. Under
the Uniform Commercial Code as in effect in the State in which such office is
located, no local filing is required to perfect a security interest in
collateral consisting of general intangibles.
SECTION 3. The Security Interests. (a) In order to secure the full and
punctual payment of the Secured Obligations, subject to paragraph (b) below, in
accordance with the terms thereof, and to secure the performance of all the
obligations of the Borrower hereunder:
(i) The Borrower hereby assigns and pledges to and with the
Collateral Agent for the benefit of the Secured Parties and grants to
the Collateral Agent for the benefit of the Secured Parties security
interests in the Pledged Securities and any other Debt of a Domestic
Subsidiary owed directly to the Borrower, and all of its rights and
privileges with respect to the Pledged Securities and such Debt, and
all income and profits thereon, and all interest, dividends and other
payments and distributions with respect thereto, and all proceeds of
the foregoing (the "Collateral"). Contemporaneously with the execution
and delivery hereof, the Borrower is delivering the Subsidiary Notes
and certificates representing the Subsidiary Shares in pledge
hereunder.
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(ii) In the event that any Person at any time hereafter becomes
a Domestic Subsidiary, the Borrower will immediately pledge and deposit
with the Collateral Agent certificates representing all shares of
capital stock of any class of such Domestic Subsidiary directly owned
by the Borrower and any note or other instrument evidencing Debt of
such Domestic Subsidiary owed directly to the Borrower, as additional
security for the Secured Obligations. In the event that any Issuer at
any time issues any additional or substitute shares of capital stock of
any class or any substitute note to the Borrower, or owes any other
Debt directly to the Borrower evidenced by an instrument, the Borrower
will immediately pledge and deposit with the Collateral Agent
certificates representing all such shares and such note or an
instrument evidencing such other Debt as additional security for the
Secured Obligations. All such shares, notes and instruments constitute
Pledged Securities and are subject to all provisions of this Agreement.
(iii) The Security Interests are granted as security only and
shall not subject the Collateral Agent or any Secured Party to, or
transfer or in any way affect or modify, any obligation or liability of
the Borrower or any of its Subsidiaries with respect to any of the
Collateral or any transaction in connection therewith.
(b) The Security Interests granted hereunder in the Restricted
Collateral secure the Secured Obligations only to the extent of the Restricted
Amount.
SECTION 4. Delivery of Pledged Securities. All Pledged Instruments
shall be delivered to the Collateral Agent by the Borrower pursuant hereto
indorsed to the order of the Collateral Agent, and accompanied by any required
transfer tax stamps, all in form and substance reasonably satisfactory to the
Collateral Agent. All certificates representing Pledged Stock delivered to the
Collateral Agent by the Borrower pursuant hereto shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, with signatures appropriately guaranteed, and
accompanied by any required transfer tax stamps, all in form and substance
reasonably satisfactory to the Collateral Agent.
SECTION 5. Further Assurances. (a) The Borrower agrees that it will, at
its expense and in such manner and form as the Administrative Agent may
reasonably require, execute, deliver, file and record any financing statement,
specific assignment or other paper and take any other action that may be
reasonably necessary or desirable, or that the Administrative Agent may
reasonably request, in order to create, preserve, perfect or validate any
Security Interest or to enable the Collateral Agent to exercise and enforce its
rights
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hereunder with respect to any of the Collateral. To the extent permitted by
applicable law, the Borrower hereby authorizes the Collateral Agent to execute
and file, in the name of the Borrower or otherwise, Uniform Commercial Code
financing statements (which may be carbon, photographic, photostatic or other
reproductions of this Agreement or of a financing statement relating to this
Agreement) which the Administrative Agent in its sole discretion may deem
necessary or appropriate to further perfect the Security Interests.
(b) The Borrower agrees that it will not change (i) its name, identity
or corporate structure in any manner or (ii) the location of its chief executive
office unless it shall have given the Collateral Agent not less than 30 days'
prior notice thereof.
SECTION 6. Record Ownership of Pledged Stock. During the continuance of
an Event of Default, the Collateral Agent may at any time or from time to time,
in its sole discretion, cause any or all of the Pledged Stock to be transferred
of record into the name of the Collateral Agent or its nominee. The Borrower
will promptly give to the Collateral Agent copies of any material notices or
other communications received by it with respect to Pledged Stock registered in
the name of the Borrower and the Collateral Agent will promptly give to the
Borrower copies of any material notices and communications received by the
Collateral Agent with respect to Pledged Stock registered in the name of the
Collateral Agent or its nominee.
SECTION 7. Right to Receive Distributions on Collateral. During the
continuance of an Event of Default, the Collateral Agent shall have the right to
receive and to retain as Collateral hereunder all dividends, interest and other
payments and distributions made upon or with respect to the Collateral and the
Borrower shall take all such action as the Collateral Agent may deem necessary
or appropriate to give effect to such right. All such dividends, interest and
other payments and distributions which are received by the Borrower during the
continuance of an Event of Default shall be received in trust for the benefit of
the Collateral Agent and the Secured Parties and, if the Collateral Agent so
directs during the continuance of an Event of Default, shall be segregated from
other funds of the Borrower and shall, forthwith upon demand by the Collateral
Agent during the continuance of an Event of Default, be paid over to the
Collateral Agent as Collateral in the same form as received (with any necessary
endorsement). After all Events of Default have been cured, the Collateral
Agent's right to retain dividends, interest and other payments and distributions
under this Section 7 shall cease and the Collateral Agent shall pay over to the
Borrower any such Collateral retained by it during the continuance of an Event
of Default.
SECTION 8. Right to Vote Pledged Stock. (a) Unless an Event of Default
shall have occurred and be continuing, the Borrower will have the right, from
time
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to time, to vote and to give consents, ratifications and waivers with respect to
the Pledged Stock, and the Collateral Agent will, upon receiving a written
request from the Borrower, deliver to the Borrower or as specified in such
request such proxies, powers of attorney, consents, ratifications and waivers in
respect of any of the Pledged Stock that is registered in the name of the
Collateral Agent or its nominee as shall be specified in such request and be in
form and substance satisfactory to the Collateral Agent.
(b) If an Event of Default shall have occurred and be continuing, the
Collateral Agent will have the right to the extent permitted by law to vote, to
give consents, ratifications and waivers and to take any other action with
respect to the Pledged Stock, with the same force and effect as if the
Collateral Agent were the absolute and sole owner thereof, and the Borrower will
take all such action as the Collateral Agent may reasonably request from time to
time to give effect to such right.
SECTION 9. Authority to Administer Collateral. The Borrower irrevocably
appoints the Collateral Agent its true and lawful attorney, with full power of
substitution, in the name of the Borrower, the Collateral Agent, any Secured
Party or otherwise, for the sole use and benefit of the Secured Parties, but at
the Borrower's expense, to the extent permitted by law to exercise, at any time
and from time to time while an Event of Default shall have occurred and be
continuing, all or any of the following powers with respect to all or any of the
Collateral:
(a) to demand, sue for, collect, receive and give acquittance
for any and all monies due or to become due upon or by virtue thereof,
(b) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(c) to sell, lease, license or otherwise dispose of the same
or the proceeds or avails thereof, as fully and effectually as if the
Collateral Agent were the absolute owner thereof, and
(d) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference thereto;
provided that the Collateral Agent will give the Borrower at least ten days'
prior written notice of the time and place of any public sale thereof or the
time after which any private sale or other intended disposition thereof will be
made. The Collateral Agent and the Borrower agree that such notice constitutes
"reasonable notification" within the meaning of Section 9-504(3) of the Uniform
Commercial Code.
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SECTION 10. Remedies upon Event of Default. If any Event of Default
shall have occurred and be continuing, the Collateral Agent may exercise on
behalf of the Secured Parties all the rights of a secured party under the
Uniform Commercial Code (whether or not in effect in the jurisdiction where such
rights are exercised) and, in addition, the Collateral Agent may, without being
required to give any notice, except as herein provided or as may be required by
mandatory provisions of law, (i) apply the cash, if any, then held by it as
Collateral as specified in Section 13 and (ii) if there shall be no such cash or
if such cash shall be insufficient to pay all the Secured Obligations in full,
sell the Collateral or any part thereof at public or private sale or at any
broker's board or on any securities exchange, for cash, upon credit or for
future delivery, and at such price or prices as the Collateral Agent may deem
satisfactory. Any Secured Party may be the purchaser of any or all of the
Collateral so sold at any public sale (or, if the Collateral is of a type
customarily sold in a recognized market or is of a type which is the subject of
widely distributed standard price quotations, at any private sale). The
Collateral Agent is authorized, in connection with any such sale, if it deems it
advisable so to do, (A) to restrict the prospective bidders on or purchasers of
any of the Pledged Securities to a limited number of sophisticated investors who
will represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or sale of any of such
Pledged Securities, (B) to cause to be placed on certificates for any or all of
the Pledged Securities or on any other securities pledged hereunder a legend to
the effect that such security has not been registered under the Securities Act
of 1933 and may not be disposed of in violation of the provision of said Act,
and (C) to impose such other limitations or conditions in connection with any
such sale as the Collateral Agent reasonably deems necessary or advisable in
order to comply with said Act or any other law. The Borrower will execute and
deliver such documents and take such other action as the Collateral Agent
reasonably deems necessary or advisable in order that any such sale may be made
in compliance with law. Upon any such sale the Collateral Agent shall have the
right to deliver, assign and transfer to the purchaser thereof the Collateral so
sold. Each purchaser at any such sale shall hold the Collateral so sold
absolutely and free from any claim or right of whatsoever kind, including any
equity or right of redemption of the Borrower which may be waived, and the
Borrower, to the extent permitted by law, hereby specifically waives all rights
of redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The notice (if any) of such sale required by
Section 9 shall (1) in the case of a public sale, state the time and place fixed
for such sale, (2) in the case of a sale at a broker's board or on a securities
exchange, state the board or exchange at which such sale is to be made and the
day on which the Collateral, or the portion thereof so being sold, will first be
offered for sale at such board or exchange, and (3) in the case of a private
sale, state the day after which such sale may be consummated. Any such public
sale shall be held at such time or times within ordinary business hours and at
such place or places as the Collateral Agent may fix in the notice of such sale.
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At any such sale the Collateral may be sold in one lot as an entirety or in
separate parcels, as the Collateral Agent may determine. The Collateral Agent
shall not be obligated to make any such sale pursuant to any such notice. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for the sale, and such sale may be made at any time
or place to which the same may be so adjourned. In the case of any sale of all
or any part of the Collateral on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the selling price is paid
by the purchaser thereof, but the Collateral Agent shall not incur any liability
in the case of the failure of such purchaser to take up and pay for the
Collateral so sold and, in the case of any such failure, such Collateral may
again be sold upon like notice. The Collateral Agent, instead of exercising the
power of sale herein conferred upon it, may proceed by a suit or suits at law or
in equity to foreclose the Security Interests and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
SECTION 11. Expenses. The Borrower will forthwith upon demand pay to
the Collateral Agent:
(a) the amount of any taxes that the Collateral Agent may have
been required to pay by reason of the Security Interests or to free any
of the Collateral from any Lien thereon;
(b) the amount of any and all reasonable out-of-pocket
expenses, including transfer taxes and reasonable fees and expenses of
counsel and other experts, that the Collateral Agent may incur in
connection with (x) the administration or enforcement of the Credit
Agreement or this Agreement, including such expenses as are incurred to
preserve the value of the Collateral or the validity, perfection, rank
or value of any Security Interest, (y) the collection, sale or other
disposition of any Collateral or (z) the exercise by the Collateral
Agent of any of its rights or powers under the Credit Agreement or this
Agreement;
(c) the amount of any fees that the Borrower shall have agreed
in writing to pay to the Collateral Agent and that shall have become
due and payable in accordance with such written agreement; and
(d) the amount required to indemnify the Collateral Agent for,
or hold it harmless and defend it against, any loss, liability or
expense (including the reasonable fees and expenses of its counsel and
any experts or sub-agents appointed by it hereunder) incurred or
suffered by the Collateral Agent in connection with the Credit
Agreement or this Agreement, except to the extent that such loss,
liability or expense arises
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from the Collateral Agent's gross negligence or willful misconduct or a
breach of any duty that the Collateral Agent has under this Agreement
(after giving effect to Sections 12 and 14).
Any such amount not paid to the Collateral Agent on demand will bear interest
for each day thereafter until paid at a rate per annum equal to the sum of 2%
plus the rate applicable to Base Rate Loans for such day.
SECTION 12. Limitation on Duty in Respect of Collateral. Beyond the
exercise of reasonable care in the custody and preservation thereof, the
Collateral Agent will have no duty as to any Collateral in its possession or
control or in the possession or control of any sub-agent or bailee or any income
therefrom or as to the preservation of rights against prior parties or any other
rights pertaining thereto. The Collateral Agent will be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession or control if such Collateral is accorded treatment substantially
equal to that which it accords its own property, and will not be liable or
responsible for any loss or damage to any Collateral, or for any diminution in
the value thereof, by reason of any act or omission of any sub-agent or bailee
selected by the Collateral Agent in good faith or by reason of any act or
omission by the Collateral Agent pursuant to instructions from the
Administrative Agent (including any voting instruction pursuant to Section 8),
except to the extent that such liability arises from the Collateral Agent's
gross negligence or willful misconduct.
SECTION 13. Application of Proceeds. (a) If an Event of Default shall
have occurred and be continuing, the Collateral Agent may apply the proceeds of
any sale or other disposition of all or any part of the Collateral, in the
following order of priorities (subject to Section 3(b)):
(i) first, to pay the expenses of such sale or other
disposition, including reasonable compensation to agents of and counsel
for the Collateral Agent, and all expenses, liabilities and advances
incurred or made by the Collateral Agent in connection with the Credit
Agreement or this Agreement, and any other amounts then due and payable
to the Collateral Agent pursuant to Section 11 or to the Administrative
Agent pursuant to the Credit Agreement;
(ii) second, to pay ratably all interest (including
Post-Petition Interest) and all facility and other fees included in the
Secured Obligations, until payment in full of all such interest and
fees shall have been made;
(iii) third, to pay the unpaid principal of the Secured
Obligations ratably until payment in full of the principal of all
Secured Obligations shall have been made;
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(iv) fourth, to pay all other Secured Obligations ratably,
until payment in full of all such other Secured Obligations shall have
been made; and
(v) finally, to pay to the Borrower, or as a court of
competent jurisdiction may direct, any surplus then remaining from the
proceeds of the Collateral owned by it.
The Collateral Agent may make distributions hereunder in cash or in kind or, on
a ratable basis, in any combination thereof; provided that in no event will the
Collateral Agent apply proceeds from the Restricted Collateral to the amounts
described in clauses (i) through (iv) above in excess of the Restricted Amount.
(b) If at any time any portion of any monies collected or received by
the Collateral Agent would, but for the provisions of this Section 13(b), be
payable pursuant to Section 13(a) in respect of an Unliquidated Secured
Obligation, the Collateral Agent shall not apply any monies to pay such
Unliquidated Secured Obligation but instead shall request the holder thereof, at
least 10 days before each proposed distribution hereunder, to notify the
Collateral Agent as to the maximum amount of such Unliquidated Secured
Obligation if then ascertainable (e.g., in the case of a letter of credit, the
maximum amount available for subsequent drawings thereunder). If the holder of
such Unliquidated Secured Obligation does not notify the Collateral Agent of the
maximum ascertainable amount thereof at least two Domestic Business Days before
such distribution, such holder will not be entitled to share in such
distribution. If such holder does so notify the Collateral Agent as to the
maximum ascertainable amount thereof, the Collateral Agent will allocate to such
holder a portion of the monies to be distributed in such distribution,
calculated as if such Unliquidated Secured Obligation were outstanding in such
maximum ascertainable amount. However, the Collateral Agent will not apply such
portion of such monies to pay such Unliquidated Secured Obligation, but instead
will hold such monies or invest such monies in Liquid Investments. All such
monies and Liquid Investments and all proceeds thereof will constitute
Collateral hereunder, but will be subject to distribution in accordance with
this Section 13(b) rather than Section 13(a). The Collateral Agent will hold all
such monies and Liquid Investments and the net proceeds thereof in trust until
all or part of such Unliquidated Secured Obligation becomes a Liquidated Secured
Obligation, whereupon the Collateral Agent at the request of the relevant
Secured Party will apply the amount so held in trust to pay such Liquidated
Secured Obligation; provided that, if the other Secured Obligations theretofore
paid pursuant to the same clause of Section 13(a) (i.e., clause second or
fourth) were not paid in full, the Collateral Agent will apply the amount so
held in trust to pay the same percentage of such Liquidated Secured Obligation
as the percentage of such other Secured Obligations theretofore paid pursuant to
the same clause of Section
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13(a). If (i) the holder of such Unliquidated Secured Obligation shall advise
the Collateral Agent that no portion thereof remains in the category of an
Unliquidated Secured Obligation and (ii) the Collateral Agent still holds any
amount held in trust pursuant to this Section 13(b) in respect of such
Unliquidated Secured Obligation (after paying all amounts payable pursuant to
the preceding sentence with respect to any portions thereof that became
Liquidated Secured Obligations), such remaining amount will be applied by the
Collateral Agent in the order of priorities set forth in Section 13(a).
(c) In making the payments and allocations required by this Section,
the Collateral Agent may rely upon information supplied to it from any Secured
Party (or any trustee, agent or similar representative designated pursuant to
Section 17 to supply such information) as to its Secured Obligations for
purposes of determining the amounts of the Secured Obligations and whether a
Secured Obligation is an Unliquidated Secured Obligation or not. All
distributions made by the Collateral Agent pursuant to this Section shall be
final (except in the event of manifest error) and the Collateral Agent shall
have no duty to inquire as to the application by any Secured Party of any amount
distributed to it.
SECTION 14. Concerning the Collateral Agent. The provisions of the
Credit Agreement shall inure to the benefit of the Collateral Agent in respect
of this Agreement and shall be binding upon the parties to the Credit Agreement
in such respect. In furtherance and not in derogation of the rights, privileges
and immunities of the Collateral Agent therein set forth:
(a) The Collateral Agent is authorized to take all such action
as is provided to be taken by it as Collateral Agent hereunder and all
other action reasonably incidental thereto. As to any matters not
expressly provided for herein (including, without limitation, the
timing and methods of realization upon the Collateral) the Collateral
Agent shall act or refrain from acting in accordance with written
instructions from the Required Banks or, in the absence of such
instructions, in accordance with its reasonable discretion.
(b) The Collateral Agent shall not be responsible for the
existence, genuineness or value of any of the Collateral or for the
validity, perfection, priority or enforceability of the Security
Interests in any of the Collateral, whether impaired by operation of
law or by reason of any action or omission to act on its part
hereunder. The Collateral Agent shall have no duty to ascertain or
inquire as to the performance or observance of any of the terms of this
Agreement by the Borrower.
SECTION 15. Appointment of Co-Agents. At any time or times, in order to
comply with any legal requirement in any jurisdiction, the Collateral Agent may
appoint another Secured Party or trust company or one or more other persons,
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either to act as co-agent or co-agents, jointly with the Collateral Agent, or to
act as separate agent or agents on behalf of the Secured Parties with such power
and authority as may be necessary for the effectual operation of the provisions
hereof and may be specified in the instrument of appointment (which may, in the
discretion of the Collateral Agent, include provisions for the protection of
such co-agent or separate agent similar to the provisions of Section 14).
SECTION 16. Termination of Security Interests; Release of Collateral .
(a) The Security Interests granted by the Borrower shall terminate when all the
Release Conditions are satisfied; provided that the Security Interests in the
Restricted Collateral shall terminate when the Restricted Amount has been
reduced to zero.
(b) The Security Interests granted by the Borrower with respect to any
Collateral shall terminate upon the sale of such Collateral to a Person other
than the Borrower or one of its Subsidiaries in a transaction not prohibited by
the Credit Agreement. Such termination shall not require the consent of any
Secured Party, and the Collateral Agent shall be fully protected in relying on a
certificate of the Borrower as to whether any particular sale of assets is
permitted under the Credit Agreement.
(c) At any time before the Security Interests granted by the Borrower
terminate, the Collateral Agent may, at the written request of the Borrower,
release any Collateral with the prior written consent of the Required Banks.
(d) Upon any termination of a Security Interest or release of
Collateral, the Collateral Agent will, at the expense of the Borrower, execute
and deliver to the Borrower such documents as the Borrower shall reasonably
request to evidence the termination of such Security Interest or the release of
such Collateral, as the case may be.
SECTION 17. Additional Secured Obligations. On or after the date
hereof, the Borrower may designate Additional Secured Obligations for purposes
hereof by delivering to the Collateral Agent a certificate signed by a financial
officer identifying the obligation so designated, certifying that such
obligation is permitted under the Credit Agreement, stating that such obligation
is designated as an Additional Secured Obligation for purposes hereof and
specifying the name and address of the holder of such obligation or of a
trustee, agent or similar representative designated to supply information with
respect to such Additional Secured Obligation to the Collateral Agent as
contemplated by Section 13(b).
SECTION 18. Notices. All notices hereunder shall be given in accordance
with Section 9.01 of the Credit Agreement.
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SECTION 19. No Implied Waivers; Remedies Not Exclusive. No failure by
the Collateral Agent or any Secured Party to exercise, and no delay in
exercising and no course of dealing with respect to, any right or remedy under
this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise by the Collateral Agent or any Secured Party of any right or
remedy under the Credit Agreement or this Agreement preclude any other or
further exercise thereof or the exercise of any other right or remedy. The
rights and remedies specified in the Credit Agreement and this Agreement are
cumulative and are not exclusive of any other rights or remedies provided by
law.
SECTION 20. Successors and Assigns. This Agreement is for the benefit
of the Collateral Agent and the Secured Parties. If all or any part of any
Secured Party's interest in any Secured Obligation is assigned or otherwise
transferred, the transferor's rights hereunder, to the extent applicable to the
obligation so transferred, shall be automatically transferred with such
obligation. This Agreement shall be binding on the Borrower and its respective
successors and assigns.
SECTION 21. Amendments and Waivers. Neither this Agreement nor any
provision hereof may be waived, amended, modified or terminated except pursuant
to an agreement or agreements in writing enter into by the parties hereto, with
the consent of the Required Banks. No such waiver, amendment or modification
shall affect the rights of a Secured Party (other than a Bank) hereunder more
adversely than it affects the comparable rights of the Banks hereunder, without
the consent of such Secured Party.
SECTION 22. Choice of Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York, except as
otherwise required by mandatory provisions of law and except to the extent that
remedies provided by the laws of any jurisdiction other than New York are
governed by the laws of such jurisdiction.
SECTION 23. Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Collateral Agent
and the Secured Parties in order to carry out the intentions of the parties
hereto as nearly as may be possible; and (ii) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
SECTION 24. Foreign Currency Translations. The Collateral Agent shall
determine, using such methods and rates as the Collateral Agent deems
appropriate from time to time, the United States dollar equivalent of the amount
of any
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Additional Secured Obligation denominated in a different currency. For purposes
of applying the limitations on amounts set forth in the definition of Additional
Secured Obligations, such determination shall be made at the time such
Additional Secured Obligation is designated as such by the Borrower, and
subsequent changes in currency translation shall not affect the status of such
Additional Secured Obligation hereunder (but shall be taken into account in the
administration of this Agreement).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
UNOVA, INC.
By: /s/ Elmer C. Hull, Jr.
-----------------------------------
Title: Vice President and Treasurer
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Collateral
Agent
By: /s/ Joseph F. Murphy
-----------------------------------
Title: Vice President
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