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Exhibit 10.990
EXHIBIT A
[Form of Security Agreement]
THIRD AMENDED AND RESTATED SECURITY AGREEMENT
THIRD AMENDED AND RESTATED SECURITY AGREEMENT dated as of June 29,
2000 between UNITED STATIONERS SUPPLY CO., a corporation duly organized and
validly existing under the laws of the State of Illinois (together with its
successors and assigns, the "Company"); and THE CHASE MANHATTAN BANK, as
administrative agent for the lenders party to the Credit Agreement referred to
below (in such capacity, together with its successors in such capacity, the
"Administrative Agent").
The Company, United Stationers Inc., the parent corporation of the
Company and a corporation duly organized and validly existing under the laws of
the State of Delaware (together with its successors and assigns, the
"Guarantor"); certain lenders; and the Administrative Agent are parties to a
Credit Agreement dated as of March 30, 1995 (as amended and restated as of
October 31, 1996, as of April 3, 1998 and as of June 29, 2000 and thereafter
amended, restated, modified and supplemented and in effect from time to time,
the "Credit Agreement").
The Company and the Administrative Agent are party to the Amended
and Restated Security Agreement dated as of October 31, 1996 (as amended and
restated as of April 3, 1998 and as hereto amended and in effect immediately
prior to the date of this Agreement, the "Existing Security Agreement");
To induce said lenders to enter into the Credit Agreement and to
extend credit thereunder, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company has agreed
to amend and restate the Existing Security Agreement and to pledge and grant a
security interest in the Collateral (as hereinafter defined) as security for the
Secured Obligations (as hereinafter defined). Accordingly, the parties hereto
agree as follows:
Section 1. Definitions. Terms defined in the Credit Agreement are
used herein as defined therein. In addition, as used herein:
"Accounts" shall have the meaning ascribed thereto in Section 3(c)
hereof.
"Collateral" shall have the meaning ascribed thereto in Section 3
hereof.
"Collateral Account" shall have the meaning ascribed thereto in
Section 4.01 hereof.
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"Copyright Collateral" shall mean all Copyrights, whether now owned
or hereafter acquired by the Company, including each Copyright identified
in Annex 2 hereto.
"Copyrights" shall mean all copyrights, copyright registrations and
applications for copyright registrations, including, without limitation,
all renewals and extensions thereof, the right to recover for all past,
present and future infringements thereof, and all other rights of any kind
whatsoever accruing thereunder or pertaining thereto.
"Documents" shall have the meaning ascribed thereto in Section 3(i)
hereof.
"Equipment" shall have the meaning ascribed thereto in Section 3(g)
hereof.
"Foreign Subsidiary" shall mean any Subsidiary of the Company that
is not organized or created under the laws of the United States of
America, any State thereof or the District of Columbia.
"Instruments" shall have the meaning ascribed thereto in Section
3(d) hereof.
"Intellectual Property" shall mean, collectively, all Copyright
Collateral, all Patent Collateral and all Trademark Collateral, together
with (a) all inventions, processes, production methods, proprietary
information, know-how and trade secrets; (b) all licenses or user or other
agreements granted to the Company with respect to any of the foregoing, in
each case whether now or hereafter owned or used including, without
limitation, the licenses or other agreements with respect to the Copyright
Collateral, the Patent Collateral or the Trademark Collateral, listed in
Annex 4 hereto, except to the extent that a security interest therein may
not be granted without the consent of a licensor; (c) all information,
customer lists, identification of suppliers, data, plans, blueprints,
specifications, designs, drawings, recorded knowledge, surveys,
engineering reports, test reports, manuals, materials standards,
processing standards, performance standards, catalogs, computer and
automatic machinery software and programs; (d) all field repair data,
sales data and other information relating to sales or service of products
now or hereafter manufactured; (e) all accounting information and all
media in which or on which any information or knowledge or data or records
may be recorded or stored and all computer programs used for the
compilation or printout of such information, knowledge, records or data;
(f) all licenses, consents, permits, variances, certifications and
approvals of governmental agencies now or hereafter held by the Company,
except to the extent that a security interest therein may not be granted
without the consent of a licensor; and (g) all causes of action, claims or
warranties now or hereafter owned or acquired by the Company in respect of
any of the items listed above.
"Inventory" shall have the meaning ascribed thereto in Section 3(e)
hereof.
"Motor Vehicles" shall mean motor vehicles, tractors, trailers and
other like property, whether or not the title thereto is governed by a
certificate of title or ownership.
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"Patent Collateral" shall mean all Patents, whether now owned or
hereafter acquired by the Company, including each Patent identified in
Annex 3 hereto.
"Patents" shall mean all patents and patent applications, including,
without limitation, the inventions and improvements described and claimed
therein together with the reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, all income, royalties,
damages and payments now or hereafter due and/or payable under and with
respect thereto, including, without limitation, damages and payments for
past or future infringements thereof, the right to sue for past, present
and future infringements thereof, and all rights corresponding thereto
throughout the world.
"Pledged Stock" shall have the meaning ascribed thereto in Section
3(a) hereof.
"Secured Obligations" shall mean, collectively, (a) the principal of
and interest on the Loans made by the Lenders to, and the Note(s) held by
each Lender of, the Company and all other amounts from time to time owing
to the Lenders or the Administrative Agent by the Company under the Credit
Documents including, without limitation, all Reimbursement Obligations and
interest thereon, (b) the Company's obligations to any Lender (or any
Affiliate thereof) under any Hedging Agreement or in respect of any cash
management services and (c) all obligations of the Company to the Lenders
and the Administrative Agent hereunder.
"Stock Collateral" shall have the meaning ascribed thereto in
Section 3(b) hereof.
"Trademark Collateral" shall mean all Trademarks, whether now owned
or hereafter acquired by the Company, including each Trademark identified
on Annex 4 hereto. Notwithstanding the foregoing, the Trademark Collateral
does not and shall not include any Trademark that would be rendered
invalid, abandoned, void or unenforceable by reason of its being included
as part of the Trademark Collateral.
"Trademarks" shall mean all trade names, trademarks and service
marks, logos, trademark and service mark registrations, and applications
for trademark and service mark registrations, including, without
limitation, all renewals of trademark and service mark registrations, all
rights corresponding thereto throughout the world, the right to recover
for all past, present and future infringements thereof, all other rights
of any kind whatsoever accruing thereunder or pertaining thereto,
together, in each case, with the product lines and goodwill of the
business connected with the use of, and symbolized by, each such trade
name, trademark and service mark.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as
in effect from time to time in the State of New York.
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Section 2. Representations and Warranties. The Company represents
and warrants to the Lenders and the Administrative Agent that:
(a) The Company is (or, at the time that the Company acquires any
interest therein, will be) the sole beneficial owner of the Collateral and
no Lien exists or will exist upon the Collateral at any time (and no right
or option to acquire the same exists in favor of any other Person), except
for Liens permitted under Section 9.06 of the Credit Agreement and except
for the pledge and security interest in favor of the Administrative Agent
for the benefit of the Lenders created or provided for herein, which
pledge and security interest will (subject to Section 5.11 hereof)
constitute a perfected pledge and security interest in and to all of the
Collateral (other than Intellectual Property registered or otherwise
located outside of the United States of America), subject to no equal or
prior security interest or pledge except as permitted under Section 9.06
of the Credit Agreement.
(b) The Pledged Stock represented by the certificates identified in
Annex 1 hereto is, and all other Pledged Stock in which the Company shall
hereafter grant a security interest pursuant to Section 3 hereof will be,
duly authorized, validly existing, fully paid and non-assessable and none
of such Pledged Stock is or will be subject to any contractual
restriction, or any restriction under the charter or by-laws of the
relevant issuer thereof, upon the transfer of such Pledged Stock (except
for any such restriction contained herein or in the Credit Agreement).
(c) The Pledged Stock represented by the certificates identified in
Annex 1 hereto constitutes all of the issued and outstanding shares of
capital stock of each class of each issuer thereof on the date hereof (or,
in the case of any Foreign Subsidiary, not less than 65% of the issued and
outstanding shares of capital stock of each class of such Foreign
Subsidiary on the date hereof), and said Annex 1 correctly identifies, as
at the date hereof, the respective class and par value of the shares
comprising such Pledged Stock, the respective number of shares represented
by each such certificate, and the respective beneficial and registered
owner of such shares.
(d) Annexes 2, 3 and 4 hereto, respectively, set forth a complete
and correct list of all Copyrights, Patents and Trademarks owned by the
Company on the date hereof; except pursuant to licenses and other user
agreements entered into by the Company in the ordinary course of business,
that are listed in Annex 5 hereto, the Company owns and possesses the
right to use, and has done nothing to authorize or enable any other Person
to use, any Copyright, Patent or Trademark listed in said Annexes 2, 3 and
4, and all registrations listed in said Annexes 2, 3 and 4 are valid and
in full force and effect; except as may be set forth in said Annex 5, the
Company owns and possesses the right to use all Copyrights, Patents and
Trademarks.
(e) Annex 5 hereto sets forth a complete and correct list of all
licenses and other user agreements included in the Intellectual Property
on the date hereof.
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(f) To the Company's knowledge, (i) except as set forth in Annex 5
hereto, there is no violation by others of any right of the Company with
respect to any Copyright, Patent or Trademark listed in Annexes 2, 3 and 4
hereto, respectively, and (ii) the Company is not infringing in any
material respect upon any Copyright, Patent or Trademark of any other
Person; and no proceedings which if adversely determined could reasonably
be expected to have a Material Adverse Effect have been instituted or are
pending against the Company or, to the Company's knowledge, threatened,
and no claim against the Company has been received by the Company,
alleging any such violation, except as may be set forth in said Annex 5.
(g) The Company does not own any Trademarks registered in the United
States of America to which the last sentence of the definition of
Trademark Collateral applies.
(h) Any goods now or hereafter produced by the Company or any of its
Subsidiaries included in the Collateral have been and will be produced in
compliance with the requirements of the Fair Labor Standards Act, as
amended.
Section 3. Collateral. As collateral security for the prompt payment
in full when due (whether at stated maturity, by acceleration or otherwise) of
the Secured Obligations, the Company hereby pledges and grants to the
Administrative Agent, for the benefit of the Lenders as hereinafter provided, a
security interest in all of the Company's right, title and interest in the
following Property, whether now owned by the Company or hereafter acquired and
whether now existing or hereafter coming into existence (all being collectively
referred to herein as "Collateral"):
(a) all shares of capital stock of whatever class of each Subsidiary
of the Company (other than The Order People Company, a Delaware
corporation now or hereafter owned by the Company or any other Subsidiary
of the Company, including, without limitation, the shares of stock
represented by the certificates identified in Annex 1 hereto, in each case
together with the certificates representing the same (collectively, the
"Pledged Stock");
(b) all shares, securities, moneys or Property representing a
dividend on any of the Pledged Stock, or representing a distribution or
return of capital upon or in respect of the Pledged Stock, or resulting
from a split-up, revision, reclassification or other like change of the
Pledged Stock or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders of, or
otherwise in respect of, the Pledged Stock (the Pledged Stock, together
with all other certificates, shares, securities, properties or moneys as
may from time to time be pledged hereunder pursuant to clause (a) or this
clause (b), together with any proceeds, books, correspondence, credit
files, records, invoices, and other papers being herein collectively
called the "Stock Collateral");
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(c) all accounts and general intangibles (each as defined in the
Uniform Commercial Code) of the Company constituting any right to the
payment of money, including (but not limited to) all moneys due and to
become due to the Company in respect of any loans or advances or for
Inventory or Equipment or other goods sold or leased or for services
rendered, all moneys due and to become due to the Company under any
guarantee (including a letter of credit) of the purchase price of
Inventory or Equipment sold by the Company and all tax refunds (such
accounts, general intangibles and moneys due and to become due being
herein called collectively "Accounts");
(d) all instruments, chattel paper or letters of credit (each as
defined in the Uniform Commercial Code) of the Company evidencing,
representing, arising from or existing in respect of, relating to,
securing or otherwise supporting the payment of, any of the Accounts,
including (but not limited to) promissory notes, drafts, bills of exchange
and trade acceptances (herein collectively called "Instruments");
(e) all inventory (as defined in the Uniform Commercial Code) of the
Company, all goods obtained by the Company in exchange for such inventory,
and any products made or processed from such inventory including all
substances, if any, commingled therewith or added thereto (herein
collectively called "Inventory");
(f) all Intellectual Property and all other accounts or general
intangibles not constituting Intellectual Property or Accounts;
(g) all equipment (as defined in the Uniform Commercial Code) of the
Company, including all Motor Vehicles (herein collectively called
"Equipment");
(h) each contract and other agreement of the Company relating to the
sale or other disposition of Inventory or Equipment;
(i) all documents of title (as defined in the Uniform Commercial
Code) or other receipts of the Company covering, evidencing or
representing Inventory or Equipment (herein collectively called
"Documents");
(j) all rights, claims and benefits of the Company against any
Person arising out of, relating to or in connection with Inventory or
Equipment purchased by the Company, including, without limitation, any
such rights, claims or benefits against any Person storing or transporting
such Inventory or Equipment;
(k) the balance from time to time in the Collateral Account and any
Investment Property (as defined in Section 9-115 of the Uniform Commercial
Code) held therein; and
(l) all other tangible and intangible personal Property and fixtures
of the Company, including, without limitation, all proceeds, products,
accessions, rents, profits, income, benefits, substitutions and
replacements of and to any of the property of the
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Company described in the preceding clauses of this Section 3 (including,
without limitation, any proceeds of insurance thereon and all causes of
action, claims and warranties now or hereafter held by the Company in
respect of any of the items listed above) and, to the extent related to
any Property described in said clauses or such proceeds, products and
accessions, all books, correspondence, credit files, records, invoices and
other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of
the Company or any computer bureau or service company from time to time
acting for the Company;
provided that the Collateral shall not include (i) shares of capital stock of
any class issued by any Foreign Subsidiary to the extent that the percentage of
issued and outstanding shares of capital stock of such class subject to the Lien
of this Agreement would constitute more than 65% of the issued and outstanding
shares of capital stock of such class, (ii) any tangible personal Property
located outside the United States of America and (iii) any Receivables and
Related Assets transferred by the Company in connection with the Receivables
Financing and not sold, assigned, transferred or conveyed back to the Company in
accordance with the Receivables Financing Documents.
Section 4. Cash Proceeds of Collateral.
4.01 Collateral Account. The Administrative Agent shall establish
with Chase a cash collateral account (the "Collateral Account"), which may be a
"securities account" (as defined in Section 8-501 of the Uniform Commercial
Code) in the name and under the sole dominion and control of the Administrative
Agent (or, in the case of a securities account, in respect of which the
Administrative Agent is the "entitlement holder" (as defined in Section
8-102(a)(7) of the Uniform Commercial Code)), into which there shall be
deposited from time to time the cash proceeds of any of the Collateral
(including proceeds of insurance thereon) required to be delivered to the
Administrative Agent pursuant hereto and into which the Company may from time to
time deposit any additional amounts that it wishes to pledge to the
Administrative Agent for the benefit of the Lenders as additional collateral
security hereunder or that, as provided in Sections 2.10 and 10 of the Credit
Agreement, it is required to pledge as additional collateral security hereunder.
The balance from time to time in the Collateral Account shall constitute part of
the Collateral hereunder and shall not constitute payment of the Secured
Obligations until applied as hereinafter provided. As promptly as possible after
any amount is deposited into the Collateral Account pursuant to the second or
third sentence of Section 4.02 hereof, the Administrative Agent shall remit the
balance of such amount (if any) to the Company's account with Chase. However,
the Administrative Agent may (and, if instructed by the Majority Lenders shall)
at any time in its (or their) discretion apply or cause to be applied the
balance from time to time standing to the credit of the Collateral Account to
the repayment of the principal of the Revolving Credit Loans outstanding, to
accrued interest on the principal so repaid, and to the payment of any
commitment fees with respect to the Revolving Credit Commitments, in each case
in accordance with the Credit Agreement. Notwithstanding the above, at any time
following the occurrence and during the continuance of an Event of Default, the
Administrative Agent may (and, if instructed by the Lenders as specified in
Section 11.03 of the Credit Agreement, shall) in its (or their) discretion apply
or cause to be applied (subject to
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collection) the balance from time to time standing to the credit of the
Collateral Account to the payment of the Secured Obligations in the manner
specified in Section 5.09 hereof. The balance from time to time in the
Collateral Account shall be subject to withdrawal only as provided herein.
4.02 Proceeds of Accounts. At any time after the occurrence and
during the continuance of an Event of Default, the Company shall, upon the
request of the Administrative Agent, instruct all account debtors and other
Persons obligated in respect of all Accounts to make all payments in respect of
the Accounts either (a) directly to the Administrative Agent (by instructing
that such payments be remitted to a post office box which shall be in the name
and under the control of the Administrative Agent) or (b) to one or more other
banks in the United States of America (by instructing that such payments be
remitted to a post office box which shall be in the name and under the control
of such other bank(s)) under arrangements, in form and substance satisfactory to
the Administrative Agent pursuant to which the Company shall have irrevocably
instructed such other bank(s) (and such other bank(s) shall have agreed) to
remit all proceeds of such payments (net of amounts applied by, or transferred
to, such other bank(s) at the instruction of the Company to be used for the
payment of operating expenses incurred by the Company in the ordinary course of
its business and due and owing at the time of such application) directly to the
Administrative Agent for deposit into the Collateral Account. All payments made
to the Administrative Agent, as provided in the preceding sentence, shall be
immediately deposited in the Collateral Account. In addition to the foregoing,
the Company agrees that, at any time after the occurrence and during the
continuance of an Event of Default, if the proceeds of any Collateral hereunder
(including the payments made in respect of Accounts) shall be received by it,
the Company shall as promptly as possible deposit such proceeds into the
Collateral Account. Until so deposited, all such proceeds shall be held in trust
by the Company for and as the property of the Administrative Agent and shall not
be commingled with any other funds or property of the Company.
4.03 Investment of Balance in Collateral Account. The cash balance
standing to the credit of the Collateral Account shall be invested from time to
time in such Permitted Investments as the Company (or, after the occurrence and
during the continuance of an Event of Default, the Administrative Agent) shall
determine, which Permitted Investments shall be held in the name and be under
the control of the Administrative Agent (and, if the Collateral Account is a
securities account, credited to the Collateral Account); provided that (i) at
any time after the occurrence and during the continuance of an Event of Default,
the Administrative Agent may (and, if instructed by the Lenders as specified in
Section 11.03 of the Credit Agreement, shall) in its (or their) discretion at
any time and from time to time elect to liquidate any such Permitted Investments
and to apply or cause to be applied the proceeds thereof to the payment of the
Secured Obligations in the manner specified in Section 5.09 hereof and (ii) if
requested by the Company, such Permitted Investments may be held in the name and
under the control of one or more of the Lenders (and in that connection each
Lender, pursuant to Section 11.10 of the Credit Agreement, has agreed that such
Permitted Investments shall be held by such Lender as a collateral sub-agent for
the Administrative Agent hereunder).
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4.04 Cover for Letter of Credit Liabilities. Amounts deposited into
the Collateral Account as cover for Letter of Credit Liabilities under the
Credit Agreement pursuant to Section 2.10(h) or Section 10 thereof shall be held
by the Administrative Agent in a separate sub-account (designated "Letter of
Credit Liabilities Sub-Account") and all amounts held in such sub-account shall
constitute collateral security first for the Letter of Credit Liabilities
outstanding from time to time and second as collateral security for the other
Secured Obligations hereunder.
Section 5. Further Assurances; Remedies. In furtherance of the grant
of the pledge and security interest pursuant to Section 3 hereof, the Company
hereby agrees with each Lender and the Administrative Agent as follows:
5.01 Delivery and Other Perfection. The Company shall:
(a) if any of the shares, securities, moneys or other Property
required to be pledged by the Company under clauses (a) and (b) of Section
3 hereof are received by the Company, forthwith either (x) transfer and
deliver to the Administrative Agent such shares or securities so received
by the Company (together with the certificates for any such shares and
securities duly endorsed in blank or accompanied by undated stock powers
duly executed in blank), all of which thereafter shall be held by the
Administrative Agent, pursuant to the terms of this Agreement, as part of
the Collateral or (y) take such other action as the Administrative Agent
shall deem necessary or appropriate to duly record the Lien created
hereunder in such shares, securities, moneys or Property in said clauses
(a) and (b);
(b) deliver and pledge to the Administrative Agent any and all
Instruments, including without limitation, any subordinated note delivered
in connection with the Receivables Financing, endorsed and/or accompanied
by such instruments of assignment and transfer in such form and substance
as the Administrative Agent may reasonably request; provided, that so long
as no Event of Default shall have occurred and be continuing, the Company
may retain for collection in the ordinary course any Instruments received
by the Company in the ordinary course of business and the Administrative
Agent shall, promptly upon request of the Company, make appropriate
arrangements for making any Instrument pledged by the Company available to
the Company for purposes of presentation, collection or renewal (any such
arrangement to be effected, to the extent deemed appropriate by the
Administrative Agent, against trust receipt or like document);
(c) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that
may be necessary or desirable (in the judgment of the Administrative
Agent) to create, preserve, perfect or validate the security interest
granted pursuant hereto or to enable the Administrative Agent to exercise
and enforce its rights hereunder with respect to such pledge and security
interest, including, without limitation, after the occurrence of an Event
of Default, causing any or all of the Stock Collateral to be transferred
of record into the name of the Administrative Agent or its nominee (and
the Administrative Agent agrees that if any Stock Collateral is
transferred into its name or the name of its nominee, the Administrative
Agent will
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thereafter promptly give to the Company copies of any notices and
communications received by it with respect to the Stock Collateral),
provided that notices to account debtors in respect of any Accounts or
Instruments shall be subject to the provisions of clause (i) below;
(d) without limiting the obligations of the Company under Section
5.04(c) hereof, upon the acquisition after the date hereof by the Company
of any Equipment covered by a certificate of title or ownership, cause the
Administrative Agent to be listed as the lienholder on such certificate of
title and within 120 days of the acquisition thereof deliver evidence of
the same to the Administrative Agent;
(e) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise mark such books and records in such
manner as the Administrative Agent may reasonably require in order to
reflect the security interests granted by this Agreement;
(f) furnish to the Administrative Agent from time to time (but,
unless an Event of Default shall have occurred and be continuing, no more
frequently than quarterly) statements and schedules further identifying
and describing the Copyright Collateral, the Patent Collateral and the
Trademark Collateral, respectively, and such other reports in connection
with the Copyright Collateral, the Patent Collateral and the Trademark
Collateral, as the Administrative Agent may reasonably request, all in
reasonable detail;
(g) promptly upon request of the Administrative Agent, following
receipt by the Administrative Agent of any statements, schedules or
reports pursuant to clause (f) above, modify this Agreement by amending
Annexes 2, 3 and/or 4 hereto, as the case may be, to include any
Copyright, Patent or Trademark that becomes part of the Collateral under
this Agreement;
(h) permit representatives of the Administrative Agent, upon
reasonable prior notice, at any time during normal business hours to
inspect and make abstracts from its books and records pertaining to the
Collateral, and permit representatives of the Administrative Agent to be
present at the Company's place of business to receive copies of all
communications and remittances relating to the Collateral, and forward
copies of any notices or communications received by the Company with
respect to the Collateral, all in such manner as the Administrative Agent
may require; and
(i) upon the occurrence and during the continuance of any Event of
Default, upon request of the Administrative Agent, promptly notify (and
the Company hereby authorizes the Administrative Agent so to notify) each
account debtor in respect of any Accounts or Instruments that such
Collateral has been assigned to the Administrative Agent hereunder, and
that any payments due or to become due in respect of such Collateral are
to be made directly to the Administrative Agent.
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5.02 Other Financing Statements and Liens. Except for financing
statements securing Liens expressly permitted by Section 9.06 of the Credit
Agreement and protective filings filed against the Company in respect of
equipment, furniture or fixtures leased to or Property consigned with the
Company, without the prior written consent of the Administrative Agent (granted
with the authorization of the Lenders as specified in Section 11.09 of the
Credit Agreement), the Company shall not file or suffer to be on file, or
authorize or permit to be filed or to be on file, in any jurisdiction, any
financing statement or like instrument with respect to the Collateral in which
the Administrative Agent is not named as the sole secured party for the benefit
of the Lenders.
5.03 Preservation of Rights. The Administrative Agent shall not be
required to take steps necessary to preserve any rights against prior parties to
any of the Collateral.
5.04 Special Provisions Relating to Certain Collateral.
(a) Stock Collateral.
(1) The Company will cause the Pledged Stock to constitute at all
times 100% (or, with respect to any issuer that is a Foreign Subsidiary, at
least 65%) of the total number of shares of each class of capital stock of each
Subsidiary of the Company then outstanding.
(2) Unless an Event of Default shall have occurred and be continuing
and the Administrative Agent shall have given notice to the Company of its
intention to exercise rights arising hereunder or under any other Credit
Document with respect to the Pledged Stock, the Company shall have the right to
exercise all voting, consensual and other powers of ownership pertaining to the
Pledged Stock for all purposes not inconsistent with the terms of this
Agreement, the Credit Agreement, the Notes or any other instrument or agreement
referred to herein or therein, provided that the Company agrees that it will not
vote the Collateral in any manner that is inconsistent with the terms of this
Agreement, the Credit Agreement, the Notes or any such other instrument or
agreement; and the Administrative Agent shall execute and deliver to the Company
or cause to be executed and delivered to the Company all such proxies, powers of
attorney, dividend and other orders, and all such instruments, without recourse,
as the Company may reasonably request for the purpose of enabling the Company to
exercise the rights and powers that it is entitled to exercise pursuant to this
Section 5.04(a)(2).
(3) Unless and until an Event of Default has occurred and is
continuing, the Company shall be entitled to receive and retain any dividends on
the Collateral paid in cash out of earned surplus.
(4) If any Event of Default shall have occurred, then so long as
such Event of Default shall continue, and whether or not the Administrative
Agent or any Lender exercises any available right to declare any Secured
Obligation due and payable or seeks or pursues any other relief or remedy
available to it under applicable law or under this Agreement, the Credit
Agreement, the Notes or any other agreement relating to such Secured Obligation,
all dividends and other distributions on the Pledged Stock shall be paid
directly to the Administrative Agent
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and retained by it as part of the Collateral, subject to the terms of this
Agreement, and, if the Administrative Agent shall so request in writing, the
Company agrees to execute and deliver to the Administrative Agent appropriate
additional dividend, distribution and other orders and documents to that end,
provided that if such Event of Default is cured, any such dividend or
distribution theretofore paid to the Administrative Agent shall, upon request of
the Company (except to the extent theretofore applied to the Secured
Obligations), be returned by the Administrative Agent to the Company.
(b) Intellectual Property.
(1) For the purpose of enabling the Administrative Agent to exercise
rights and remedies under Section 5.05 hereof at such time as the Administrative
Agent shall be lawfully entitled to exercise such rights and remedies, and for
no other purpose, the Company hereby grants to the Administrative Agent, to the
extent assignable, an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to the Company) to use, assign, license
or sublicense any of the Intellectual Property now owned or hereafter acquired
by the Company, wherever the same may be located, including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout thereof.
(2) Notwithstanding anything contained herein to the contrary, but
subject to the provisions of Section 9.05 of the Credit Agreement that limit the
right of the Company to dispose of its Property, so long as no Event of Default
shall have occurred and be continuing, the Company will be permitted to exploit,
use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other
actions with respect to the Intellectual Property in the ordinary course of the
business of the Company. In furtherance of the foregoing, unless an Event of
Default shall have occurred and be continuing the Administrative Agent shall
from time to time, upon the request of the Company, execute and deliver any
instruments, certificates or other documents, in the form so requested, that the
Company shall have certified are appropriate (in its judgment) to allow it to
take any action permitted above (including relinquishment of the license
provided pursuant to clause (1) immediately above as to any specific
Intellectual Property). Further, upon the payment in full of all of the Secured
Obligations and cancellation or termination of the Commitments and Letter of
Credit Liabilities or earlier expiration of this Agreement or release of the
Collateral, the license granted pursuant to clause (1) immediately above shall
expire by its own terms without further action on the part of the Company or the
Administrative Agent. The exercise of rights and remedies under Section 5.05
hereof by the Administrative Agent shall not terminate the rights of the holders
of any licenses or sublicenses theretofore granted by the Company in accordance
with the first sentence of this clause (2).
(c) Motor Vehicles. At any time after the occurrence and during the
continuance of an Event of Default, the Company shall, upon the request of the
Administrative Agent, deliver to the Administrative Agent originals of the
certificates of title or ownership for the Motor Vehicles owned by it with the
Administrative Agent listed as lienholder and take such other action as the
Administrative Agent shall deem appropriate to perfect the security interest
created hereunder in all such Motor Vehicles.
Security Agreement
<PAGE>
-13-
5.05 Events of Default, Etc. During the period during which an Event
of Default shall have occurred and be continuing:
(a) the Company shall, at the request of the Administrative Agent,
assemble the Collateral owned by it at such place or places, reasonably
convenient to both the Administrative Agent and the Company, designated in
its request;
(b) the Administrative Agent may make any reasonable compromise or
settlement deemed desirable with respect to any of the Collateral and may
extend the time of payment, arrange for payment in installments, or
otherwise modify the terms of, any of the Collateral;
(c) the Administrative Agent shall have all of the rights and
remedies with respect to the Collateral of a secured party under the
Uniform Commercial Code (whether or not said Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled under
the laws in effect in any jurisdiction where any rights and remedies
hereunder may be asserted, including, without limitation, the right, to
the maximum extent permitted by law, to exercise all voting, consensual
and other powers of ownership pertaining to the Collateral as if the
Administrative Agent were the sole and absolute owner thereof (and the
Company agrees to take all such action as may be appropriate to give
effect to such right);
(d) the Administrative Agent in its discretion may, in its name or
in the name of the Company or otherwise, demand, sue for, collect or
receive any money or other Property at any time payable or receivable on
account of or in exchange for any of the Collateral, but shall be under no
obligation to do so; and
(e) the Administrative Agent may, upon ten business days' prior
written notice to the Company of the time and place, with respect to the
Collateral or any part thereof that shall then be or shall thereafter come
into the possession, custody or control of the Administrative Agent, the
Lenders or any of their respective agents, sell, lease, assign or
otherwise dispose of all or any part of such Collateral, at such place or
places as the Administrative Agent deems best, and for cash or for credit
or for future delivery (without thereby assuming any credit risk), at
public or private sale, without demand of performance or notice of
intention to effect any such disposition or of the time or place thereof
(except such notice as is required above or by applicable statute and
cannot be waived), and the Administrative Agent or any Lender or anyone
else may be the purchaser, lessee, assignee or recipient of any or all of
the Collateral so disposed of at any public sale (or, to the extent
permitted by law, at any private sale) and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including any
right or equity of redemption (statutory or otherwise), of the Company,
any such demand, notice and right or equity being hereby expressly waived
and released. In the event of any sale, assignment, or other disposition
of any of the Trademark Collateral, the goodwill
Security Agreement
<PAGE>
-14-
connected with and symbolized by the Trademark Collateral subject to such
disposition shall be included, and the Company shall supply to the
Administrative Agent or its designee, for inclusion in such sale,
assignment or other disposition, all Intellectual Property relating to
such Trademark Collateral. The Administrative 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
sale may be so adjourned.
The proceeds of each collection, sale or other disposition under this Section
5.05, including by virtue of the exercise of the license granted to the
Administrative Agent in Section 5.04(b) hereof, shall be applied in accordance
with Section 5.09 hereof.
The Company recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Administrative Agent may be compelled, with respect to any
sale of all or any part of the Collateral, to limit purchasers to those who will
agree, among other things, to acquire the Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. The
Company acknowledges that any such private sales may be at prices and on terms
less favorable to the Administrative Agent than those obtainable through a
public sale without such restrictions, and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner and that the Administrative Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of any
Collateral for the period of time necessary to permit the respective issuer
thereof to register it for public sale.
5.06 Deficiency. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 5.05 hereof are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Secured Obligations, the Company shall remain liable for any
deficiency.
5.07 Removals, Etc. Without at least 15 days' prior written notice
(or such shorter notice as to which the Administrative Agent may agree) to the
Administrative Agent, the Company shall not (i) maintain any of its books and
records with respect to the Collateral at any office or maintain its principal
place of business at any place, or permit any Inventory or Equipment to be
located anywhere, other than at 2200 East Golf Road, Des Plaines, Illinois,
60016-1267 or at one of the locations identified in Annex 6 hereto or in transit
from one of such locations to another or (ii) change its name, or the name under
which it does business, from the name shown on the signature pages hereto.
5.08 Private Sale. The Administrative Agent and the Lenders shall
incur no liability as a result of the sale of the Collateral, or any part
thereof, at any private sale pursuant to Section 5.05 hereof conducted in a
commercially reasonable manner. The Company hereby waives any claims against the
Administrative Agent or any Lender arising by reason of the fact that the price
at which the Collateral may have been sold at such a private sale was less than
the price that might have been obtained at a public sale or was less than the
aggregate amount of the
Security Agreement
<PAGE>
-15-
Secured Obligations, even if the Administrative Agent accepts the first offer
received and does not offer the Collateral to more than one offeree.
5.09 Application of Proceeds. Except as otherwise herein expressly
provided and except as provided below in this Section 5.09, the proceeds of any
collection, sale or other realization of all or any part of the Collateral
pursuant hereto, and any other cash at the time held by the Administrative Agent
under Section 4 hereof or this Section 5, shall be applied by the Administrative
Agent:
First, to the payment of the costs and expenses of such collection,
sale or other realization, including reasonable out-of-pocket costs and
expenses of the Administrative Agent and the fees and expenses of its
agents and counsel, and all expenses incurred and advances made by the
Administrative Agent in connection therewith;
Next, to the payment in full of the Secured Obligations, in each
case equally and ratably in accordance with the respective amounts thereof
then due and owing or as the Lenders holding the same may otherwise agree;
and
Finally, to the payment to the Company, or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining.
Notwithstanding the foregoing, the proceeds of any cash or other amounts held in
the "Letter of Credit Liabilities Sub-Account" of the Collateral Account
pursuant to Section 4.04 hereof shall be applied first to the Letter of Credit
Liabilities outstanding from time to time and second to the other Secured
Obligations in the manner provided above in this Section 5.09.
As used in this Section 5, "proceeds" of Collateral shall mean cash,
securities and other Property realized in respect of, and distributions in kind
of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Company or any issuer of or obligor on
any of the Collateral.
5.10 Attorney-in-Fact. Without limiting any rights or powers granted
by this Agreement to the Administrative Agent while no Event of Default has
occurred and is continuing, upon the occurrence and during the continuance of
any Event of Default the Administrative Agent is hereby appointed the
attorney-in-fact of the Company for the purpose of carrying out the provisions
of this Section 5 and taking any action and executing any instruments that the
Administrative Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, so long as the
Administrative Agent shall be entitled under this Section 5 to make collections
in respect of the Collateral, the Administrative Agent shall have the right and
power to receive, endorse and collect all checks made payable to the order of
the Company representing any dividend, payment or other distribution in respect
of the Collateral or any part thereof and to give full discharge for the same.
Security Agreement
<PAGE>
-16-
5.11 Perfection. Prior to or concurrently with the execution and
delivery of this Agreement, the Company shall (i) file such financing statements
and other documents in such offices as the Administrative Agent may request to
perfect the security interests granted by Section 3 of this Agreement and (ii)
deliver to the Administrative Agent all certificates listed in Annex 1 hereto,
accompanied by undated stock powers duly endorsed or executed in blank to the
extent any of such certificates have not previously been so delivered to the
Administrative Agent.
5.12 Termination. When all Secured Obligations shall have been paid
in full and the Commitments of the Lenders under the Credit Agreement and all
Letter of Credit Liabilities shall have expired or been terminated, this
Agreement shall terminate, and the Administrative Agent shall forthwith cause to
be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral and
money received in respect thereof, to or on the order of the Company and to be
released and canceled all licenses and rights referred to in Section 5.04(b)
hereof. The Administrative Agent shall also execute and deliver to the Company
upon such termination such Uniform Commercial Code termination statements,
certificates for terminating the Liens on the Motor Vehicles and such other
documentation as shall be reasonably requested by the Company to effect the
termination and release of the Liens on the Collateral. The Liens granted to the
Administrative Agent hereby shall also be released in accordance with Sections
9.24 and 11.09 of the Credit Agreement.
5.13 Further Assurances. The Company agrees that, from time to time
upon the written request of the Administrative Agent, the Company will execute
and deliver such further documents and do such other acts and things as the
Administrative Agent may reasonably request in order fully to effect the
purposes of this Agreement.
5.14 Release of Motor Vehicles. So long as no Event of Default shall
have occurred and be continuing, upon the request of the Company, the
Administrative Agent shall execute and deliver to the Company such instruments
as the Company shall reasonably request to remove the notation of the
Administrative Agent as lienholder on any certificate of title for any Motor
Vehicle; provided that any such instruments shall be delivered, and the release
effective only upon receipt by the Administrative Agent of a certificate from
the Company stating that the Motor Vehicle the lien on which is to be released
is to be sold or has suffered a casualty loss (with title thereto passing to the
casualty insurance company (or its designee) therefor in settlement of the claim
for such loss) and any proceeds of such sale or casualty loss to the extent
required by the Credit Agreement being paid to the Administrative Agent
hereunder.
Section 6. Miscellaneous.
6.01 No Waiver. No failure on the part of the Administrative Agent
or any Lender to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Administrative
Agent or any Lender of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
Security Agreement
<PAGE>
-17-
6.02 Notices. All notices, requests, consents and demands hereunder
shall be in writing and telecopied or delivered to the intended recipient at its
"Address for Notices" specified pursuant to Section 12.02 of the Credit
Agreement and shall be deemed to have been given at the times specified in said
Section 12.02.
6.03 Expenses. The Company agrees to reimburse each of the Lenders
and the Administrative Agent for all reasonable costs and expenses of the
Lenders and the Administrative Agent (including, without limitation, the
reasonable fees and expenses of legal counsel) in connection with (i) any
Default and any enforcement or collection proceeding resulting therefrom,
including, without limitation, all manner of participation in or other
involvement with (w) performance by the Administrative Agent of any obligations
of the Company in respect of the Collateral that the Company has failed or
refused to perform, (x) bankruptcy, insolvency, receivership, foreclosure,
winding up or liquidation proceedings, or any actual or attempted sale, or any
exchange, enforcement, collection, compromise or settlement in respect of any of
the Collateral, and for the care of the Collateral and defending or asserting
rights and claims of the Administrative Agent in respect thereof, by litigation
or otherwise, including expenses of insurance, (y) judicial or regulatory
proceedings and (z) workout, restructuring or other negotiations or proceedings
(whether or not the workout, restructuring or transaction contemplated thereby
is consummated) and (ii) the enforcement of this Section 6.03, and all such
costs and expenses shall be Secured Obligations entitled to the benefits of the
collateral security provided pursuant to Section 3 hereof.
6.04 Amendments, Etc. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by the Company
and the Administrative Agent (with the consent of the Lenders as specified in
Section 11.09 of the Credit Agreement). Any such amendment or waiver shall be
binding upon the Administrative Agent and each Lender each holder of any of the
Secured Obligations and the Company.
6.05 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of the
Company, the Administrative Agent, the Lenders and each holder of any of the
Secured Obligations; provided, however, that the Company shall not assign or
transfer its rights hereunder without the prior written consent of the
Administrative Agent.
6.06 Captions. The captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
6.07 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and either of the parties hereto may execute this Agreement by
signing any such counterpart.
6.08 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
Security Agreement
<PAGE>
-18-
6.09 Agents and Attorneys-in-Fact. The Administrative Agent may
employ agents and attorneys-in-fact in connection herewith and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith.
6.10 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Administrative
Agent and the Lenders in order to carry out the intentions of the parties hereto
as nearly as may be possible and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
Security Agreement
<PAGE>
-19-
IN WITNESS WHEREOF, the parties hereto have caused this Third
Amended and Restated Security Agreement to be duly executed and delivered as of
the day and year first above written.
UNITED STATIONERS SUPPLY CO.
By _________________________________________
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By _________________________________________
Title:
Security Agreement
<PAGE>
ANNEX 1
Pledged Stock
[See Section 2(b)]
Annex 1 to Security Agreement
<PAGE>
ANNEX 2
LIST OF COPYRIGHTS, COPYRIGHT REGISTRATIONS AND
APPLICATIONS FOR COPYRIGHT REGISTRATIONS
[See Section 2(d)]
Title Date Filed Registration No. Effective Date
--------------------------------------------------------------------------------
Annex 2 to Security Agreement
<PAGE>
ANNEX 3
LIST OF PATENTS AND PATENT APPLICATIONS
[See Section 2(d)]
File Patent Country Registration No. Date
--------------------------------------------------------------------------------
Annex 3 to Security Agreement
<PAGE>
ANNEX 4
LIST OF TRADE NAMES, TRADEMARKS, SERVICES MARKS,
TRADEMARK AND SERVICE MARK REGISTRATIONS AND
APPLICATIONS FOR TRADEMARK AND SERVICE MARK REGISTRATIONS
[See Section 2(d)]
U.S. Trademarks
Application (A)
Registration (R) Registration
Mark or Series No. (S) or Filing Date
-------------------------------------------------------------------------
Annex 4 to Security Agreement
<PAGE>
Foreign Trademarks
Application (A) Registration or
Mark Registration (R) Country Filing Date (F)
------------------------------------------------------------------------
Annex 4 to Security Agreement
<PAGE>
ANNEX 5
LIST OF CONTRACTS, LICENSES AND OTHER AGREEMENTS
[See Section 2(d), (e) and (f)]
Annex 5 to Security Agreement
<PAGE>
ANNEX 6
LIST OF LOCATIONS
[See Section 5.07]
Annex 6 to Security Agreement
