Document:

adtn-ex103_170.htm

Exhibit 10.3

SECURITY AGREEMENT

(Pledge of Investment Property)

 

THIS SECURITY AGREEMENT is made and entered into as of this 4th day of November, 2020, by and between ADTRAN, INC., a Delaware corporation (“Pledgor”), whose address is 901 Explorer Boulevard, Huntsville, Alabama 35806, and CADENCE BANK, N.A. (“Secured Party”), with banking offices at 2100 Third Avenue North, Suite 1100, Birmingham, Alabama 35203.

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the terms and conditions of the Promissory Note dated November 4, 2020, by Pledgor, as “Borrower” thereunder, in favor of Secured Party (as may be renewed, restated, replaced, modified, rearranged, increased, and extended from time to time, the “Note”), Secured Party has made a certain $10,000,000 revolving line of credit (the “Loan”) to the Pledgor as provided for therein; and

 

WHEREAS, Pledgor has agreed to pledge all of the cash, securities, securities entitlements and investment property from time to time in its US Bank Account Number ____________ (the “Account”) and the proceeds of the Account (the current holdings of the Account as of the latest statement date being described in Exhibit “A” attached hereto) as security for the Loan; and

 

NOW, THEREFORE, for and in consideration of the premises and the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of all of which are hereby acknowledged, Pledgor hereby agrees with Secured Party as follows:

 

ARTICLE 1

 

GENERAL TERMS

 

1.1Terms Defined Above.  As used in this Security Agreement, the terms “Pledgor,” “Loan,” “Secured Party,” and “Account” have the meanings indicated above.

 

1.2Additional Defined Terms. As used herein, each of the following terms shall have the following meanings:

 

“Account Cash” shall mean any and all amounts in the Account in the form of cash.

 

“Code” shall mean the Uniform Commercial Code as presently in effect in the State of Alabama.

 

“Collateral” shall mean all property, including without limitation, cash or other proceeds, in which Secured Party shall have a security interest pursuant to Section 2.1 of this Security Agreement.

 

 

 

“Default” shall mean any failure of Pledgor to abide by the terms of this Security Agreement or a default under and as defined in the documents and instruments governing the Loans.

 

“Entitlement Holder” shall have the meaning assigned to such term in Section 7-8-102(a)(7) of the Code.

 

“Financial Assets” shall have the meaning assigned to such term in Section 7-8-102(a)(9) of the Code.

 

“Investment Property” shall have the meaning assigned to such term in Section 7-9A-102(a)(49) of the Code.

 

“Obligations” shall have the meaning indicated in Section 2.2 hereof.

 

“Pledged Securities” shall mean all Financial Assets in the Account, specifically including but not limited to the securities listed on the Client Statement attached hereto as Exhibit “A”.

 

 “Security Agreement” shall mean this Security Agreement, as it may from time to time be amended or supplemented.

 

“Security Entitlement” shall have the meaning assigned to such term in Section 7-8-102(a)(17) of the Code.

 

1.3Terms Defined in Code.  All terms used herein which are defined in the Code shall have the same meaning herein unless the context otherwise requires.

 

ARTICLE 2

 

SECURITY INTEREST

 

2.1Grant of Security Interest.  Pledgor hereby assigns, transfers, and delivers (or causes to be transferred and delivered) to Secured Party and grants to Secured Party a security interest in and a general lien upon all of Pledgor’s right, title and interest in and to the following described property.

 

(a)The Account;

 

(b)the Pledged Securities, and all rights comprising any of the foregoing;

 

(c)All Security Entitlements related or credited to the Pledged Securities and all rights comprising any of the foregoing;

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(d)All of Pledgor’s right, title, and interest in and to any Investment Property related to or arising in connection with the Pledged Securities;

 

(e)Any and all substitutions for, or additions to, the Collateral;

 

(f)Any and all stock, bonds, mutual funds, government obligations, dividends (other than cash dividends), cash equivalents, or other property, whether certificated or uncertificated, which Pledgor is or may hereafter become entitled to receive on account of the Collateral (or any substitutions therefor or additions thereto); and

 

(g)The proceeds of any and all property described in subparagraphs (a)-(f) (including, without limitation, cash or cash equivalents received from the sale of the Collateral).

 

2.2Obligations Secured.  The assignment, transfer, and delivery of the Collateral and the security interest in, general lien upon, and right of set-off against the Collateral is granted to secure (a) the payment and performance by the Pledgor of the Loan and its other obligations under and with respect to the Note, and (b) the payment and performance by Pledgor of Pledgor’s obligations under this Security Agreement (obligations referred to in clauses (a) and (b) are sometimes collectively referred to herein as the “Obligations”).

 

2.3Release of Securities to Pledgor.  The Secured Party agrees that, upon the repayment in full of the Note and the expiration of any time period during which such payment could be rescinded or set aside under any bankruptcy or other applicable law, and provided that no Event of Default has then occurred and is continuing, the Secured Party shall release the liens and security interests granted herein in the Pledged Securities and other Collateral at the request and expense of Pledgor, without recourse or warranty.  Notwithstanding anything in this Agreement to the contrary other than section 4.1(l), trades, withdrawals, transfers, etc., are permitted on the Account as long as they comply with the terms and conditions governing the Account.

 

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES

 

3.1Representations and Warranties.  In order to induce Secured Party to accept this Security Agreement, Pledgor represents and warrants to Secured Party that:

 

(a)At all times, the Pledged Securities shall have been duly authorized, validly issued, and shall be validly outstanding, fully paid, and nonassessable and shall not have been issued in violation of the preemptive rights of any person or entity or of any agreement by which the Pledgor or any issuer of such Collateral is bound;

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(b)No information, exhibit, or report furnished by the Pledgor to the Secured Party in connection with the negotiation of this Security Agreement contained or contains any material misstatement of fact, or omitted to state a material fact or any fact necessary to make the statements contained herein not misleading;

 

(c)Except for the security interest in favor of the Secured Party, the Pledgor owns and shall own good and marketable title to the Collateral free and clear of any other security interests, pledges, encumbrances, liens, adverse claims, or options, and the Pledgor has full right, power, and authority to sell, convey, transfer, assign, pledge, grant a security interest in, and deliver the Pledged Securities and the other Collateral to the Secured Party in the manner provided herein;

 

(d)This Security Agreement creates a valid and binding first-priority security interest in the Collateral and constitutes the legal, valid, and binding obligation of the Pledgor, enforceable against the Pledgor in accordance with its terms;

 

(e)The Pledgor is not engaged principally, or as one of its important activities, in the business of extending or obtaining credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T, U, or X (or any successor regulation thereto) of the Board of Governors of the Federal Reserve System).  No part of the proceeds of any extension of credit under the documents and instruments governing the Loan have been or will be used to purchase or carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock.  No transaction contemplated by and described in this Security Agreement is in violation of any regulations promulgated by the Board of Governors of the Federal Reserve System, including, without limitation, Regulations T, U, or X (or any successor regulation thereto);

 

(f)At all times, the Pledged Securities shall have been properly issued, drawn, made and/or accepted and shall be genuine; the issuer, drawer, maker, and/or acceptor thereof shall have no defenses (including, without limitation, defenses of any party which would be available in an action on a simple contract and the defenses of want or failure of consideration, non-performance of any condition precedent, non-delivery, or delivery for a special purpose), right of set-off or claims to the Pledged Securities; Pledgor’s transfer of the Pledged Securities to Secured Party as provided herein is effective and rightful; Pledgor does not know of any fact which might impair the validity of the Pledged Securities; and

 

(g)(i) The execution and delivery by Pledgor of this Security Agreement does not cause Pledgor to become insolvent or unable to pay Pledgor’s 

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debts as they become due, and (ii) the execution and delivery of this Security Agreement by Pledgor has benefitted, and does benefit, Pledgor, directly and indirectly, in an amount in excess of the value of the Obligations.

 

ARTICLE 4

 

COVENANTS AND AGREEMENTS

 

4.1Covenants and Agreements.  A deviation from the provisions of this Article 4 shall not constitute a Default under this Security Agreement if such deviation is consented to in writing by Secured Party.  Without the prior written consent of Secured Party, Pledgor will at all times comply with the following covenants from the date hereof and for so long as any part of the Obligations are outstanding:

 

(a)The Pledgor will pay, prior to delinquency, all taxes, charges, liens, and assessments against the Collateral and the Pledged Securities, including, without limitation, any federal income tax liability arising from any dividends or distributions paid with regard to any of the Pledged Securities;

 

(b)The Pledgor shall provide, or cause to be provided, to the Secured Party all now or hereafter existing certificates directly evidencing the Pledged Securities;

 

(c)After the occurrence of a Default, any and all

 

(i)dividends paid or payable, other than in cash, and all instruments and other property received, receivable, or otherwise distributed in respect of or in exchange for any Collateral or Pledged Securities,

 

(ii)dividends and other distributions paid or payable in cash in respect of any Collateral or Pledged Securities in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus, or paid-in surplus, and

 

(iii)cash paid, payable, or otherwise distributed in respect of principal of, in redemption of, or in exchange for any Collateral or Pledged Securities,

 

shall be forthwith delivered to the Secured Party and, if received by the Pledgor, be received in trust for the benefit of the Secured Party, be segregated from the other property or funds of the Pledgor, and be forthwith delivered to the Secured Party in the same form as so received (with any necessary endorsement);

 

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(d)Pledgor will not pledge, mortgage, otherwise encumber, create, or suffer a lien or security interest to exist in any of the Collateral (other than in favor of Secured Party) or sell, assign, exchange, margin, or otherwise transfer any of the Collateral to or in favor of any person or entity other than Secured Party.  Pledgor will not file or permit to be filed or recorded any financing statement or other security instrument with respect to the Collateral other than in favor of Secured Party;

 

(e)Pledgor agrees to pay prior to delinquency all taxes, charges, liens, security interests, and assessments against the Collateral and, upon the failure of Pledgor to do so, Secured Party at its option may pay any of them and will be the sole judge of the legality or validity thereof and of the amount necessary to discharge the same;

 

(f)Secured Party shall be deemed to have possession of any of the Collateral in transit to it;

 

(g)Pledgor will sign, execute, deliver, and file, alone or with Secured Party, any financing statements, security agreements, or other documents or procure any instruments or documents as may be requested by Secured Party from time to time to confirm, perfect, and preserve the security interests intended to be granted hereby, and in addition, Pledgor hereby authorizes Secured Party to execute and deliver on behalf of Pledgor and to file such financing statements, security agreements, agreement with Broker, and other documents without the signature of Pledgor either in Secured Party’s name or in the name of Pledgor and as agent and attorney-in-fact for Pledgor.  Pledgor will do all such additional and further acts or things, give such assurances, and execute such documents or instruments as Secured Party requires to vest more completely in and assure to Secured Party its rights under this Security Agreement;

 

(h)At the option of Secured Party, a carbon, photographic, or other reproduction of this Security Agreement or of a financing statement covering the Collateral will be sufficient as a financing statement and may be filed as a financing statement;

 

(i)Pledgor will transmit to Secured Party promptly all information that Pledgor may have or receive (i) with respect to the Collateral and (ii) with respect to issuers or obligors in respect of the Collateral which might in any way affect the value of the Collateral or Secured Party’s rights or remedies with respect thereto.  Further, Pledgor will cause monthly reports and account statements, in form satisfactory to Secured Party, relating to the Account and the value of the Collateral contained or held therein to be sent by Investment Advisor to Secured Party in a manner acceptable to Secured Party;

 

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(j)Pledgor agrees to pay to Secured Party at Secured Party’s banking quarters, all reasonable advances, charges, costs and expenses (including reasonable attorneys’ fees and legal expenses) incurred by Secured Party in connection with confirming, perfecting, and preserving the security interest created under this Security Agreement, in connection with protecting Secured Party against the claims or interests of any person or entity against the Collateral, and in exercising any right, power or remedy conferred by this Security Agreement or by law or in equity (including, but not limited to, reasonable attorneys’ fees and legal expenses incurred by Secured Party in the collection of instruments deposited with or purchased by Secured Party and amounts incurred in connection with the operation, maintenance or foreclosure of any or all of the Collateral).  The amount of all such advances, charges, costs and expenses will be due and payable by Pledgor to Secured Party upon demand, together with interest thereon at the highest rate permitted to be charged under applicable law; and

 

(k)THE FORECLOSURE, RESALE, OR LIQUIDATION OF THE PLEDGED SECURITIES BY SECURED PARTY WILL NOT REQUIRE REGISTRATION UNDER ANY STATE OR FEDERAL SECURITIES LAWS.  TO THE EXTENT THAT SUCH SECURITIES LAWS NOW OR HEREAFTER APPLY TO THE PLEDGED SECURITIES, PLEDGOR WILL INDEMNIFY AND REIMBURSE SECURED PARTY FOR ALL OF ITS COSTS AND EXPENSES RELATING TO THE REGISTRATION OF THE SHARES AND THE COMPLIANCE BY SECURED PARTY WITH ALL APPLICABLE LAWS AND REGULATIONS.

 

ARTICLE 5

 

RIGHTS, REMEDIES AND DEFAULT

 

5.1Default Remedies.  Upon the happening and during the continuance of any Default, Secured Party may then:

 

(a)Receive, endorse, collect by legal proceedings or otherwise, and demand payment directly from the makers, drawers, acceptors, issuers and/or obligors of the Collateral and receipt for all sums and amounts now or hereafter payable on or with respect to the Collateral (including, without limitation, notifying Broker to make all payments relating to the Collateral directly to Secured Party, without the necessity of joinder by Pledgor); provided that all such sums so paid to and received by Secured Party shall be applied on the Obligations as provided herein;

 

(b)From time to time extend the time of payment, arrange for payment in installation or otherwise modify the terms of or enter into any other agreement in any way relating to or affecting the Collateral, and in connection therewith may 

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deposit or surrender control of any security held therefor, accept other property in exchange for any security held therefor and take such action as it may deem proper, and any money or property received in exchange for any security held therefor shall be applied on the Obligations or thereafter held by Secured Party pursuant to the provisions hereof;

 

(c)Make any compromise or settlement Secured Party deems desirable with respect to the Collateral;

 

	
 
	
(d)
	
Insure, process, and preserve the Collateral
	
 

 

(e)Demand, sue for, or receive any money or property at any time payable or receivable on account of or in exchange for Collateral;

 

(f)Transfer equitable and legal title to the Account to Secured Party (without the necessity of consent thereto by Pledgor), and/or register in the name of Secured Party any of the Pledged Securities and other Collateral and whether or not the Pledged Securities constituting a part of the Collateral are so transferred or registered to exchange any of the Pledged Securities for other property upon reorganization, recapitalization or other readjustment and in connection therewith to deposit any of the Pledged Securities with any committee or depository upon such terms as Secured Party may determine; all without notice and without liability except to account for property actually received by Secured Party; and

 

(g)In its discretion, sell for cash and assign and deliver all or any part of the Collateral then covered by this Security Agreement in a commercially reasonable manner at public or private sale without notice or advertisement other than as required under the Code, or may cause all or any part of the Collateral to be sold at judicial sale after judgment in any court of competent jurisdiction, and may bid and become purchaser at any such public sale or judicial sale.  If notice to Pledgor is required by the Code of public or private sale of all or any part of the Collateral, the Secured Party may give written notice five (5) days prior to the date of the public sale of all or any part of the Collateral or prior to the date after which private sale of all or any part of the Collateral will be made, by mailing such notice to Pledgor as provided in Section 6.8 of this Security Agreement (it being agreed and stipulated that all of the Pledged Securities constituting a part of the Collateral currently may be sold on a recognized market or redeemed by the issuer thereof upon request).  For this purpose, in addition to the security interests granted in this Security Agreement and irrespective of the validity and continuing effectiveness of such security interests, Pledgor hereby designates and appoints the Secured Party his true and lawful attorney and agent to sell, or cause to be sold, any or all of the Collateral provided by such Pledgor and apply the proceeds of such sale in accordance with the provisions of this Security Agreement and the Code.  Pledgor agrees that such designation of authority is coupled with an interest and until 

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termination of this Security Agreement shall be irrevocable.  The proceeds of sale of all or any part of the Collateral, either in respect of the security interests granted by this Security Agreement, or of the power of attorney hereinabove granted, shall be utilized first to pay costs and expenses of such sale, including, without limitation, attorneys’ fees, and the entire remainder of such proceeds shall be applied against the unpaid Obligations.  Any excess after the payment of all Obligations shall be allocated to Pledgor.

 

5.2Voting Rights, Dividends, Etc. After Default.  Upon the occurrence and during the continuance of a Default:

 

(a)at the option of the Secured Party, with notice to the Pledgor, all rights of the Pledgor to exercise the voting and other consensual rights which he would otherwise be entitled to exercise pursuant to and with respect to the Pledged Securities, shall be transferred to and vested in the Secured Party, who shall thereupon have the sole right to exercise such voting and other consensual rights; and

 

(b)all dividends relating to the Pledged Securities which are received by the Pledgor after the occurrence of a Default shall be received in trust for the benefit of the Secured Party, shall be segregated from other funds of the Pledgor, and shall be forthwith paid over to the Secured Party as Collateral in the same form as so received (with any necessary endorsement).

 

5.3Proceeds.  After the happening of a Default, the proceeds of any sale or other disposition of the Collateral and all sums received or collected by Secured Party from or on account of the Collateral shall be applied by Secured Party in the manner set forth in § 7-9A-615 of the Code (all such proceeds applied to the Obligations shall, subject to the Code, be applied in a manner determined by Secured Party, exercising its sole discretion).

 

5.4Secured Party’s Duties.  The powers conferred upon Secured Party by this Security Agreement are solely to protect its interest in the Collateral and shall not impose any duty upon Secured Party to exercise any such powers.  Secured Party shall be under no duty whatsoever to make or give any presentment, demand for performance, notice of non-performance, protest, notice of protest, notice of dishonor, or other notice or demand in connection with any Collateral or the Obligations, or to take any steps necessary to preserve any rights against prior parties.  Secured Party shall not be liable for failure to collect or realize upon any or all of the Obligations or Collateral, or for any delay in so doing, nor shall Secured Party be under any duty to take any action whatsoever with regard thereto.  The Secured Party’s duty with reference to the Collateral (and only to the extent it is in possession of Secured Party) shall be solely to use reasonable care in the custody and preservation of Collateral in the Secured Party’s possession.  The Secured Party need not take any steps to keep the Collateral identifiable and under no circumstance whatsoever is Secured Party required to sell, or cause to be sold, or consent to any request to sell, exchange, or liquidate any of the Collateral in the event the value of any such Collateral has declined or is 

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anticipated to decline in the future.  THE SECURED PARTY SHALL NOT BE RESPONSIBLE IN ANY WAY FOR ANY DEPRECIATION IN THE VALUE OF THE COLLATERAL, NOR SHALL THE SECURED PARTY BE UNDER ANY DUTY TO SELL OR DISPOSE OF THE COLLATERAL, OR ALLOW THE COLLATERAL TO BE SOLD OR DISPOSED OF BY ANY PARTY OTHER THAN PLEDGOR IN THE EVENT THAT THE COLLATERAL IS PROJECTED TO, OR DOES, DECLINE IN VALUE.  Secured Party shall have no duty to comply with any recording, filing, or other legal requirements necessary to establish or maintain the validity, priority or enforceability of, or Secured Party’s rights in or to, any of the Collateral.

 

5.6Secured Party’s Actions.  Pledgor waives any rights to require Secured Party to proceed against any person or entity, exhaust any Collateral or pursue any other remedy in Secured Party’s power; waives any and all notice of acceptance of this Security Agreement or of creation, modification, renewal or extension for any period of any of the Obligations from time to time; and waives any defense arising by reason of any disability or other defense of any other person to entity.  All dealings between Pledgor and Secured Party, whether or not resulting in the creation of Obligations, shall conclusively be presumed to have been had or consummated in reliance upon this Security Agreement.  Pledgor authorizes Secured Party, without notice or demand and without any reservation of rights against Pledgor and without affecting Pledgor’s liability hereunder or on the Obligations, from time to time, to (a) take and hold any other property as collateral, other than the Collateral, for any or all of the Obligations, and exchange, enforce, waive and release any or all of the Collateral or such other property; (b) apply the Collateral or such other property and direct the order or manner of sale thereof as Secured Party in its discretion may determine; (c) renew, extend for any period, accelerate, modify, amend, or supplement any of the provisions of any of the instruments and agreements now or hereafter securing or otherwise pertaining to any of the Obligations; and (e) release or substitute Pledgor.  It is further agreed by all the parties hereto that:

 

(i)Demand, notice, protest, and all demands and notices of any action taken (and notices of intent to take any action) by the Secured Party under this Security Agreement, or in connection with the Obligations are hereby waived, and any indulgence of the Secured Party, substitution for, exchange of or release of Collateral, in whole or in part, or addition or release of any person or entity liable on the Obligations, or any of them, or the Collateral is hereby consented to;

 

(ii)Pledgor agrees to pay prior to delinquency all taxes, charges, broker’s fees, liens, and assessments against the Collateral delivered by or for the account of Pledgor, and upon Pledgor’s failure to do so the Secured Party at its option may pay any of them and shall be the sole judge of the legality or validity thereof and the amount necessary to discharge the same (all taxes relating to the Account and other Collateral shall at all times be the responsibility of Pledgor).  Such payment shall become part of the Obligations secured by this Security Agreement and shall be paid to the Secured Party by Pledgor immediately and 

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without demand, with interest thereon at the highest rate of interest permitted by applicable law;

 

(iii)PLEDGOR AGREES TO INDEMNIFY AND SAVE AND HOLD SECURED PARTY HARMLESS FROM AND AGAINST ANY CLAIM OF ANY THIRD PERSON TO ANY COLLATERAL AND ANY CLAIM BY ANY OTHER PARTY OR ENTITY ARISING (INCLUDING, WITHOUT LIMITATION, A BANKRUPTCY TRUSTEE), DIRECTLY OR INDIRECTLY, AS A RESULT OF SECURED PARTY’S ENTERING INTO THIS SECURITY AGREEMENT AND/OR PURSUING ANY OF ITS RIGHTS AND REMEDIES HEREUNDER, PROVIDED THAT PLEDGOR SHALL HAVE NO OBLIGATION UNDER THIS PROVISION TO SECURED PARTY WITH RESPECT TO LIABILITIES OF OR CLAIMS AGAINST SECURED PARTY THAT ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NON-APPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SECURED PARTY OR FROM THE BREACH BY SECURED PARTY OF ITS OBLIGATIONS UNDER THIS SECURITY AGREEMENT; AND

 

(iv)Pledgor will, at any time and from time to time, execute and deliver such further instruments, make such filings and take such further action as may reasonably be requested by Secured Party in order to cure any defects in the execution and delivery of, or to comply with or accomplish the covenants and agreements contained in, this Security Agreement or to preserve, perfect, or protect the security interests granted to Secured Party herein.

 

ARTICLE 6

 

MISCELLANEOUS

 

6.1Transfer of Obligations and Collateral.  Secured Party may transfer any or all of the Obligations, and upon any such transfer Secured Party may transfer any or all of the Collateral and shall be fully discharged thereafter from all liability with respect to the Collateral so transferred, and the transferee shall be vested with all rights, powers and remedies of Secured party hereunder with respect to Collateral so transferred; but with respect to any Collateral not so transferred Secured Party shall retain all rights, powers and remedies hereby given.  Secured Party may at any time deliver any or all of the Collateral to Pledgor whose receipt shall be a complete and full acquittance for the Collateral so delivered, and Secured Party shall thereafter be discharged from any liability therefor.

 

6.2Continuing Agreement.  This is a continuing Security Agreement and the grant of a security interest hereunder shall remain in full force and effect and all the rights, powers and remedies of Secured Party hereunder shall continue to exist until the Obligations are paid in full as the same become due and payable; and until Secured Party has no further obligation to 

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advance monies to Pledgor under the documents and instruments governing the Loans or otherwise and until Secured Party, upon request of Pledgor, has executed a written termination statement, reassigned to Pledgor, without recourse, the Collateral and all rights conveyed hereby and returned possession of the Collateral to Pledgor.

 

6.3Cumulative Rights.  The rights, powers and remedies of Secured Party hereunder shall be in addition to all rights, powers and remedies given by statute or rule of law and are cumulative.  The exercise of any one or more of the rights, powers and remedies provided herein shall not be construed as a waiver of any other rights, powers and remedies of Secured Party.  Furthermore, regardless of whether or not the Uniform Commercial Code is in effect in the jurisdiction where such rights, powers and remedies are asserted, Secured Party shall have the rights, powers and remedies of a secured party under the Code.

 

6.4Exercise of Rights, Etc.  Time shall be of the essence for the performance of any act under this Security Agreement or the Obligations by Pledgor, but neither Secured Party’s acceptance of partial or delinquent payments nor any forbearance, failure or delay by Secured Party in exercising any right, power or remedy shall be deemed a waiver of any obligation of Pledgor or of any right, power or remedy of Secured Party or preclude any other or further exercise thereof; and no single or partial exercise of any right, power or remedy shall preclude any other or further exercise thereof, or the exercise of any other right, power or remedy.

 

6.5Remedy and Waiver.  Secured Party may remedy any Default and may waive any default without waiving the Default remedied or waiving any prior or subsequent Default.

 

6.6Non-Judicial Remedies.  Secured Party may enforce its rights hereunder without prior judicial process or judicial hearing, and Pledgor expressly waives, renounces and knowingly relinquishes any and all legal rights which might otherwise require Secured Party to enforce its rights by judicial process.  In so providing for non-judicial remedies, Pledgor recognizes and concedes that such remedies are consistent with the usage of the trade, are responsive to commercial necessity, and are the result of bargaining at arm’s length.  Nothing herein is intended to prevent Secured Party or Pledgor from resorting to judicial process at either party’s option.

 

6.7Preservation of Liability.  Neither this Security Agreement nor the exercise by Secured Party of (or the failure to so exercise) any right, power or remedy conferred herein or by law shall be construed as relieving any person or entity liable on the Obligations (whether directly or by guaranty or otherwise) from liability on the Obligations and for any deficiency thereon.  Further, all covenants, agreements, representations, and warranties made and agreed to by Pledgor in this Security Agreement are made jointly and severally, whether or not specifically described herein.

 

6.8Notices.  Any notice or demand under this Security Agreement or in connection with this Security Agreement shall be in writing and shall be mailed, postage prepaid, 

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to the addresses set forth on the first page of this Security Agreement, but actual notice, however given or received, shall always be effective.

 

6.9Construction.  THIS SECURITY AGREEMENT HAS BEEN MADE IN AND THE CONVEYANCE, ASSIGNMENT, TRANSFER AND DELIVERY HAS BEEN MADE IN AND THE SECURITY INTEREST GRANTED HEREBY IS GRANTED IN AND EACH SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ALABAMA, AND OF THE UNITED STATES OF AMERICA, AS APPLICABLE, IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY, ENFORCEMENT AND PERFORMANCE.

 

6.10Amendment and Waiver.  This Security Agreement may not be amended, except in writing and signed by Pledgor and Secured Party.

 

6.11Invalidity.  If any provision of this Security Agreement is rendered or declared invalid, illegal or unenforceable by reason of any existing or subsequently enacted legislation or by a judicial decision which shall have become final, Pledgor and Secured Party shall promptly meet and negotiate substitute provisions for those rendered invalid, illegal or unenforceable, but all of the remaining provisions shall remain in full force and effect.

 

6.12Survival of Agreements.  All representations and warranties of Pledgor herein, and all covenants and agreements herein not fully performed before the effective date of this Security Agreement, shall survive such date.

 

6.13Successors and Assigns.  The covenants and agreements herein contained by or on behalf of Pledgor will bind Pledgor, Pledgor’s heirs, legal representatives, successors, and assigns and shall inure to the benefit of Secured Party and its successors and assigns.

 

6.14Titles of Articles, Sections and Subsections.  All titles or headings to articles, sections, subsections or other divisions of this Security Agreement are only for the convenience of the parties and shall not be construed to have any effect or meaning with respect to the other content of such articles, sections, subsections or other divisions, such other content being controlling as to the agreement between the parties hereto.

 

6.15Counterparts.  This Security Agreement may be executed in two or more counterparts, and it shall not be necessary that the signatures of all parties hereto be contained on any one counterpart hereof; each counterpart shall be deemed an original, but all of which together shall constitute one and the same instrument.  This Security Agreement shall be binding on all whose signatures are affixed hereto.

 

6.16Final Agreement.  THIS SECURITY AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.

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6.17Sealed Instrument.  This Security Agreement is intended to take effect as a sealed instrument.

 

6.18Waiver of Trial by Jury.  PLEDGOR AND SECURED PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, THE LOAN DOCUMENTS, THE OBLIGATIONS, ALL OTHER DOCUMENTS GIVEN TO EVIDENCE OR SECURE THE OBLIGATIONS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING OR STATEMENTS RELATED THERETO (WHETHER VERBAL OR WRITTEN).

 

[SIGNATURES APPEAR ON FOLLOWING PAGE.]

14

 

[SIGNATURE PAGE TO SECURITY AGREEMENT]

 

IN WITNESS WHEREOF, Pledgor has caused this Security Agreement to be duly executed as of the date first above written.

 

	
 
	
 
	
PLEDGOR:
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
ADTRAN, INC., a Delaware corporation
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Michael Foliano
	
[SEAL]

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
Name:
	
Michael Foliano
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
Title:
	
CFO
	
 

 

[Signatures continue on following page.]

15

 

[SIGNATURE PAGE TO SECURITY AGREEMENT (continued)]

 

IN WITNESS WHEREOF, Secured Party has caused this Security Agreement to be duly executed as of the date first above written.

 

	
 
	
 
	
SECURED PARTY:
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
CADENCE BANK, N.A.
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/ Brian Heslop
	
[SEAL]

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
Name:
	
Brian Heslop
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
Title:
	
Executive Vice President
	
 

 

[End of signatures.]

 

 

 

16

 

EXHIBIT “A”

 

Client Statement showing Pledged Securitiesadtn-ex104_171.htm

Exhibit 10.4

 

 

THIS DOCUMENT IS A STANDARD AGREEMENT FOR USE WITH A U.S. BANK NATIONAL ASSOCIATION CUSTODY ACCOUNT (AND NOT, FOR EXAMPLE, WITH A U.S. BANK NATIONAL ASSOCIATION TRUST ACCOUNT), BUT NOT WHERE U.S. BANK NATIONAL ASSOCIATION IS THE SECURED PARTY.

 

 

CONTROL AGREEMENT

 

This Control Agreement (the “Agreement”) is among ADTRAN, Inc. (legal name of entity), a corporation (legal form of entity) organized under the laws of the State of Delaware (“Pledgor”); CADENCE BANK, N.A. (legal name of entity), a banking corporation (legal form of entity) organized under the laws of the State of Alabama (“Secured Party”); and U.S. Bank National Association, a national banking association organized under the laws of the United States with offices in Minneapolis, Minnesota (“Intermediary”).

 

WHEREAS, Pledgor and Intermediary are the only parties to a fully-executed custody agreement, as may be amended from time to time, pursuant to which Intermediary maintains U.S. Bank Custody Account No.  ________________ (SEI account number) entitled ADTRAN, Inc. - LCP (SEI long name) for Pledgor’s assets (the “Account”) (such agreement, the “Custody Agreement”);

 

WHEREAS, Pledgor hereby directs Intermediary to enter into this Agreement;

 

NOW, THEREFORE, the parties hereby agree as follows: 

 

1.Collateral; Account Control.  Pledgor and Secured Party hereby represent and warrant that they are parties to a separate agreement pursuant to which Pledgor has granted to Secured Party a security interest in all of Pledgor’s right, title and interest in, to, and with respect to any assets held as of the date of this Agreement or hereafter in the Account, together with any securities, instruments, financial assets, investment property, and any other property issued in replacement of or in substitution or exchange for any of the foregoing, any securities entitlements in and to any of the foregoing, any books and records relating thereto, and any proceeds of the foregoing (including any cash interest, income, or dividends with respect to the foregoing) (collectively, the “Collateral”).

 

2.UCC.  Intermediary is a “securities intermediary” with respect to the Account, and the Account is a “securities account”, within the meaning of Uniform Commercial Code Article 8 as adopted in Minnesota, Minn. Stat. Ch. 336, Article 8 (“Article 8”).  Notwithstanding anything in this Agreement to the contrary, (i) Minnesota is Intermediary’s jurisdiction for the purposes of Article 8 and (ii) nothing in this Agreement will constitute a waiver of any of Intermediary’s rights as a securities intermediary under Minn. Stat. §336.9-206.

 

3.Assets Held in the Account.  (Check A or B.  If neither is checked or both are checked, then A and only A is deemed to be checked.)

 

	
 
	
☐
	
A.     Intermediary’s official statement of the Account (an “Account Statement”) is not attached as an exhibit hereto.  Intermediary does not hereby confirm that any assets are held in the Account as of the date of this Agreement.

 

	
 
	
☒
	
B.     Intermediary’s official statement of the Account (an “Account Statement”) is attached as an exhibit hereto.  Intermediary hereby confirms that all assets listed on such Account Statement are held in the Account as of the date stated on such Account Statement.

 

1

 

 

4.Certain Assets Not Collateral.  Notwithstanding anything herein to the contrary, the following assets are not Collateral (even if they are included in an Account Statement), and Intermediary hereby makes no confirmation, covenant, representation, or warranty with respect thereto:

 

4.1.Any assets that are neither registered in the name of Intermediary or Intermediary’s nominee nor maintained by Intermediary at any central securities depository (such as the Depository Trust Company) or Federal Reserve Bank or with a sub-custodian nor held by Intermediary in unregistered or bearer form or in such form as will pass title by delivery.

 

4.2.Any global securities maintained by Intermediary with a sub-custodian.

 

4.3.Any contract, declaration of trust, document of title, general intangible, lease, limited liability company interest, loan agreement, note, offering memorandum, partnership interest, security certificate, subscription agreement, or other instrument which may establish rights to income, principal, or other distributions on an asset.

 

4.4.Any units resulting from Intermediary’s provision of unitized accounting services under the Custody Agreement and reflecting assets not held in the Account.

 

4.5.Real estate.

 

4.6.Any securities which are “control securities” or “restricted securities” within the meaning of Rule 144 under the Securities Act of 1933, as amended, or are subject to other marketability limitations.

 

4.7.Any asset that is not a “financial asset” within the meaning of Article 8.

 

4.8.Any such “financial asset” in the physical possession of Intermediary that is registered in the name of, payable to the order of, or specially indorsed to anyone other than Intermediary and has not been indorsed to Intermediary or in blank.  

 

Pledgor hereby covenants not to deliver, or cause to be delivered, any of the foregoing to the Account.

 

5.Secured Party’s Power to Direct Intermediary.

 

5.1.Pledgor and Secured Party hereby direct Intermediary to comply with all directions, instructions, or entitlement orders concerning the Collateral originated by Secured Party without further consent by Pledgor.  Intermediary will comply with all directions, instructions, or entitlement orders concerning the Collateral originated by Secured Party without further consent by Pledgor.  Pledgor hereby agrees that Intermediary’s obligation to act on Secured Party’s directions, instructions, or entitlements orders is unconditional.  Intermediary will have no duty, obligation, or authority to determine whether Secured Party is acting properly, even if Pledgor objects or directs Intermediary not to follow Secured Party’s directions, instructions, or entitlement orders. 

 

5.2.If Intermediary receives from Secured Party a written notice that Secured Party is exercising exclusive control over the Collateral substantially in the form of Exhibit A (Notice of Exclusive Control) attached hereto (the “Notice of Exclusive Control”), then Intermediary will, in reliance upon such Notice of Exclusive Control, stop complying with directions, instructions, or entitlement orders concerning the Collateral originated by Pledgor.  Intermediary will have no duty, obligation, or authority to determine whether Secured Party’s delivery of the Notice of Exclusive Control (or the terms thereof) is proper, even if Pledgor objects or directs Intermediary not to honor the Notice of Exclusive Control.

 

6.Withdrawal or Transfer (Part 1).  (Check A, B, or C.  If none is checked or more than one are checked, then A and only A is deemed to be checked.)

 

	
 
	
☒
	
A.     Unless and until Intermediary receives a Notice of Exclusive Control, Secured Party hereby consents to Pledgor’s withdrawal or transfer of the Collateral, including Pledgor’s instructions to Intermediary to that effect.

 

2

 

 

	
 
	
☐
	
B.     Secured Party hereby consents to Pledgor’s withdrawal or transfer of the Collateral, including Pledgor’s instructions to Intermediary to that effect, but only if such withdrawal or transfer is made to the following destination: [INSERT ACCOUNT NAME, ACCOUNT NUMBER, AND ROUTING INFORMATION] (the “Pre-Approved Destination”). Pledgor will not, and hereby covenants not to, withdraw or transfer any Collateral without Secured Party’s prior written consent unless such withdrawal or transfer is made to the Pre-Approved Destination.  Without Secured Party’s prior written consent, Intermediary will not comply with Pledgor’s instructions to withdraw or transfer the Collateral unless such withdrawal or transfer is made to the Pre-Approved Destination.

 

	
 
	
☐
	
C.     Pledgor will not, and hereby covenants not to, withdraw or transfer any Collateral without Secured Party’s prior written consent.  Without Secured Party’s prior written consent, Intermediary will not comply with Pledgor’s instructions to withdraw or transfer the Collateral.

 

7.Withdrawal or Transfer (Part 2).

 

7.1.Notwithstanding anything herein to the contrary, any limits on Pledgor’s withdrawal or transfer of the Collateral do not apply to cash interest, income, and dividends.

 

7.2.Pledgor may notify Intermediary from time to time of the identity of Pledgor’s agent with respect to the Account (“Agent”).  To that end, Pledgor hereby identifies:

 

Name of Agent (Firm Name):                                                                                        

EIN of Agent (Firm EIN):                                                                                              

 

Notwithstanding anything herein to the contrary, Secured Party hereby consents to Agent’s withdrawal of Collateral, including Agent’s instructions to Intermediary to that effect, for the purpose of paying Agent’s fees and expenses with respect to the Account.  Pledgor hereby covenants that (i) such fees and expenses will not exceed 1% of the value of the Collateral at the time of any withdrawal, according to the pricing services and sources relied upon by Intermediary, and (ii) the sole purpose of any such instruction is payment of Agent’s fees and expenses with respect to the Account.

 

8.Trading or Substitution.  (Check A or B.  If neither is checked or both are checked, then A and only A is deemed to be checked.)

 

	
 
	
☒
	
A.     Unless and until Intermediary receives a Notice of Exclusive Control, Secured Party hereby consents to Pledgor’s trading or substituting the Collateral, including Pledgor’s instructions to Intermediary to that effect, so long as the proceeds resulting from such trading or substituting remain in the Account.  Pledgor will not, and hereby covenants not to, trade for the Account on margin.

 

	
 
	
☐
	
B.     Pledgor will not, and hereby covenants not to, trade or substitute the Collateral without Secured Party’s prior written consent.  Without Secured Party’s prior written consent, Intermediary will not comply with Pledgor’s instructions to trade or substitute the Collateral.

 

9.Trade, Substitute, Withdraw, or Transfer.  As used herein, the words “trade” and “substitute” and words derived therefrom refer to deliveries out of the Account for counter-value, whereas the words “withdraw” and “transfer” and words derived therefrom refer to deliveries out of the Account not for counter-value.

 

10.Effectiveness of Notice of Exclusive Control.  Any Notice of Exclusive Control provided to Intermediary will only be binding after (a) Intermediary receives such Notice of Exclusive Control and (b) Intermediary has had a reasonable opportunity to act upon such Notice of Exclusive Control.

 

3

 

 

11.No Other Security Interest; Ownership of Collateral.  

 

11.1.Pledgor hereby represents and warrants that (i) Pledgor has not granted a security interest in the Collateral to any person or entity other than Secured Party and Intermediary, and (ii) Pledgor is the sole beneficial owner of the Collateral (except for Secured Party’s interest and Intermediary’s interest).

 

11.2.Intermediary’s records show that Pledgor is the sole owner of the Collateral and that Intermediary has not received notice of any levy, security interest, or other claim in or to the Collateral other than this Agreement (“Adverse Claim”).  If Intermediary receives notice of an Adverse Claim, then Intermediary will use commercially reasonable efforts to notify Pledgor and Secured Party thereof.

 

11.3.Intermediary is not presently obligated to comply with transfer or withdrawal orders from any person other than Pledgor with respect to the Collateral.  After the execution of this Agreement, without Secured Party’s prior written consent, Intermediary will not enter into any agreements by which Intermediary agrees to comply with transfer or withdrawal orders of any person other than Secured Party with respect to the Collateral.  

 

11.4.To the extent Pledgor has directed, or hereafter directs, Intermediary to designate the Account as transfer on death (“TOD”) or payable on death (“POD”), Pledgor hereby acknowledges that any right, title, or interest of any beneficiary under such TOD or POD designation is subordinate to Secured Party’s right, title, and interest in the Account.  By way of example and not limitation, Secured Party may thus direct liquidation of any and all assets in the Account upon any loan default, including death of a Pledgor, and apply the liquidation proceeds to amounts outstanding under any loan(s) and other obligations secured by the Account before any distribution of assets under pursuant to such TOD or POD.  This Section 11.4 cannot be amended or superseded by the execution of any TOD or POD agreement.

 

12.Limited Subordination.  

 

12.1.Intermediary hereby subordinates to Secured Party’s security interests all of Intermediary’s present and future liens, security interests, rights of set-off, claims, and other rights and interests relating to the Collateral, except for those resulting from any (i) advance of funds or securities in furtherance of settling securities transactions and other financial-market transactions under the Custody Agreement (“Settlement Claims”) or (ii) outstanding compensation, expenses, fees, costs, or other charges incurred by Intermediary in providing services under this Agreement or the Custody Agreement.  

 

12.2.Intermediary hereby represents and warrants that no Settlement Claims are past due as of the date of this Agreement.  

 

12.3.Except to the extent allowed under this Section, Intermediary will not execute or exercise any of Intermediary’s present or future liens, security interests, rights of set-off, claims, or other rights or interests relating to the Collateral.

 

13.Limited Responsibility of Intermediary.

 

13.1.Intermediary will be fully protected in acting in accordance with any direction, instruction, or entitlement order provided pursuant to this Agreement, and Intermediary has no duty to (i) solicit or confirm directions, instructions, or entitlement orders; (ii) notify Pledgor of receiving any direction, instruction, or entitlement order originated by Secured Party or Notice of Exclusive Control; (iii) select a broker in furtherance of complying with a direction, instruction, or entitlement order or take any action that would require Intermediary to register as a broker; or (iv) question whether any direction, instruction, or entitlement order received under this Agreement by email or any financial-messaging system, network, or service acceptable to Intermediary, such as the Society for Worldwide Interbank Financial Telecommunication messaging system (“Messaging System”), or entered into Pledgor’s or Secured Party’s account in Intermediary’s on-line portal, is unreliable or has been compromised, such as by identity theft.

 

13.2.Other than the obligation to provide Account Statements as set forth herein, Intermediary will have no responsibility or liability to Secured Party with respect to the value of the Collateral.

4

 

 

 

13.3.Intermediary will have no duty to investigate or make any determination or provide any notice as to (i) whether Secured Party has “control” of the Collateral within the meaning of Article 8; (ii) the suitability or value of any asset held as Collateral or any decrease in such value; (iii) the purpose of any direction, instruction, or entitlement order provided pursuant to this Agreement; or (iv) whether a default exists under any other agreement.

 

13.4.The duties of Intermediary will be strictly limited to those set forth in this Agreement, and no implied covenants, duties, responsibilities, representations, warranties, or obligations will be read into this Agreement against Intermediary.  

 

13.5.Notwithstanding anything to the contrary, Intermediary makes no representation or warranty with regard to the enforceability of any security interest described herein. 

 

14.Indemnification; Force Majeure; Damages.

 

14.1.Indemnification.  

 

14.1.1.“Indemnified Person” means Intermediary and its affiliates, and their officers, directors, employees, agents, successors, and assigns.  “Harm” means claims, costs, damages, delayed payment or non-payment on assets sold, expenses (including attorneys’ and other professional fees), fines, interest, liabilities, losses, penalties, stockholders’ assessments (asserted on account of asset registration), and taxes. 

 

14.1.2.Pledgor hereby indemnifies and releases each Indemnified Person and holds each Indemnified Person harmless from and against, and an Indemnified Person will incur no liability to any person or entity for, any Harm that may be imposed on, incurred by, or asserted against an Indemnified Person by reason of the Indemnified Person’s action or omission in connection with this Agreement or the Account (including, but not limited to, an action or omission that is consistent with directions provided under this Agreement), except to the extent that a court of competent jurisdiction has made a final judgment that the Harm resulted directly from the Indemnified Person’s willful misconduct, gross negligence, bad faith, or material breach of this Agreement.  

 

14.1.3.Secured Party hereby indemnifies and releases each Indemnified Person and holds each Indemnified Person harmless from and against, and an Indemnified Person will incur no liability to any person or entity for, any Harm that may be imposed on, incurred by, or asserted against an Indemnified Person by reason of the Indemnified Person’s action or omission in connection with this Agreement or the Account (including, but not limited to, an action or omission that is consistent with directions provided under this Agreement), except to the extent that a court of competent jurisdiction has made a final judgment that the Harm resulted directly from the Indemnified Person’s willful misconduct, gross negligence, bad faith, or material breach of this Agreement.  

 

14.1.4.The foregoing provisions will survive the termination of this Agreement. 

 

14.2.Force Majeure.  No party is liable for any delay or failure in performing its obligations under this Agreement caused by wars (whether declared or not and including existing wars), revolutions, insurrections, riots, civil commotion, acts of God, accidents, fires, explosions; stoppages of labor, strikes, or other differences with employees (other than Intermediary’s disputes with its employees); laws, regulations, orders, or other acts of any governmental authority; or any other circumstances beyond its reasonable control.  Nor will any such failure or delay give any party the right to terminate this Agreement.

 

14.3.Damages.  No party is liable for any indirect, incidental, special, punitive, or consequential damages arising out of or in any way related to this Agreement or the performance of its obligations under this Agreement.  This limitation applies even if the party has been advised of, or is aware of, the possibility of such damages.

 

15.Tax Reporting.  All reports relating to the Collateral to federal, state, and local tax authorities will be made under the name and tax identification number of Pledgor.

 

5

 

 

16.Termination of Agreement.

 

16.1.Intermediary may terminate this Agreement by notice to Pledgor and Secured Party, and such termination will be effective thirty (30) calendar days after delivery of the notice, except to the extent the parties agree in writing to a different effective date.  Secured Party may terminate this Agreement by notice to Intermediary, and such termination will be effective upon delivery.  Pledgor may not terminate this Agreement.

 

16.2.This Agreement is deemed to be terminated, and Pledgor and Secured Party hereby direct Intermediary to close the Account, upon Secured Party’s withdrawal or transfer of all the Collateral.

 

17.Account Statements.  Intermediary will send duplicate copies of any Account Statements to Secured Party at its address set forth below.

 

18.Authorized Persons; Delivery of Directions.

 

18.1.Authorized Persons.  With respect to this Agreement: 

 

18.1.1.Pledgor will notify Intermediary of the identity of each (i) employee of Pledgor who is authorized to act on Pledgor’s behalf, (ii) third-party agent that is authorized to act on Pledgor’s behalf, and (iii) employee of each third-party agent who is authorized to act on such agent’s behalf.  In no event is any such agent authorized to execute this Agreement or any amendment thereto or to terminate this Agreement.

 

18.1.2.Secured Party will notify Intermediary of the identity of each (i) employee of Secured Party who is authorized to act on Secured Party’s behalf, (ii) third-party agent that is authorized to act on Secured Party’s behalf, and (iii) employee of each third-party agent who is authorized to act on such agent’s behalf.  In no event is any such agent authorized to execute this Agreement or any amendment thereto or to terminate this Agreement.

 

18.1.3.Intermediary may assume that any such employee or agent of Pledgor continues to be so authorized, until Intermediary receives notice to the contrary from Pledgor (or, with respect to any such employee of any such agent, from such agent).  Intermediary may assume that any such employee or agent of Secured Party continues to be so authorized, until Intermediary receives notice to the contrary from Secured Party (or, with respect to any such employee of any such agent, from such agent).

 

18.1.4.Pledgor hereby represents and warrants that any such employee or agent of Pledgor was duly appointed and is appropriately monitored and covenants that Pledgor will furnish such employee or agent with a copy of this Agreement, as amended from time to time.  Pledgor hereby acknowledges that (i) such employee’s or agent’s actions or omissions are binding upon Pledgor as if Pledgor had taken such actions or made such omissions itself and (ii) Intermediary is indemnified, released, and held harmless accordingly.

 

18.1.5.Secured Party hereby represents and warrants that any such employee or agent of Secured Party was duly appointed and is appropriately monitored and covenants that Secured Party will furnish such employee or agent with a copy of this Agreement, as amended from time to time.  Secured Party hereby acknowledges that (i) such employee’s or agent’s actions or omissions are binding upon Secured Party as if Secured Party had taken such actions or made such omissions itself and (ii) Intermediary is indemnified, released, and held harmless accordingly.

 

18.2.Delivery of Directions.  

 

18.2.1.Any direction, notice, or other communication to or from Pledgor provided for in this Agreement will be given in writing and (i) unless the recipient has timely delivered a superseding address under this Agreement, addressed as provided under this Agreement, (ii) entered into Pledgor’s account in Intermediary’s on-line portal, or (iii) sent to Intermediary by Messaging System. 

 

18.2.2.Any direction, notice, or other communication to or from Secured Party provided for in this Agreement will be given in writing and (i) unless the recipient has timely delivered a superseding address under this 

6

 

 

Agreement, addressed as provided under this Agreement, (ii) entered into Secured Party’s account in Intermediary’s on-line portal, or (iii) sent to Intermediary by Messaging System.

 

18.2.3.Any direction received from Pledgor under this Agreement by email or Messaging System, or entered into Pledgor’s account in Intermediary’s on-line portal, is deemed to be given in a writing signed by Pledgor.  Pledgor hereby represents and warrants that Pledgor maintains commercially reasonable security measures for preventing unauthorized access to its portal account; to the email accounts of its employees, agents, and agents’ employees; and to any Messaging System used by its employees, agents, and agents’ employees, and Pledgor hereby assumes all risk to the Account of such unauthorized access.  Pledgor hereby acknowledges that Pledgor is fully informed of the protections and risks associated with the various methods of transmitting directions to Intermediary and that there may be more secure methods of transmitting directions than the methods selected by Pledgor and Pledgor’s agents.

 

18.2.4.Any direction received from Secured Party under this Agreement by email or Messaging System, or entered into Secured Party’s account in Intermediary’s on-line portal, is deemed to be given in a writing signed by Secured Party.  Secured Party hereby represents and warrants that Secured Party maintains commercially reasonable security measures for preventing unauthorized access to its portal account; to the email accounts of its employees, agents, and agents’ employees; and to any Messaging System used by its employees, agents, and agents’ employees, and Secured Party hereby assumes all risk to the Account of such unauthorized access.  Secured Party hereby acknowledges that Secured Party is fully informed of the protections and risks associated with the various methods of transmitting directions to Intermediary and that there may be more secure methods of transmitting directions than the methods selected by Secured Party and Secured Party’s agents.

 

19.Services Not Exclusive.  Intermediary is free to render services to others, whether similar to those services rendered under this Agreement or of a different nature.

 

20.Binding Obligations.  Pledgor, Secured Party, and Intermediary each hereby represent and warrant that (i) it has the power and authority to transact the business in which it is engaged and to execute, deliver, and perform this Agreement and has taken all action necessary to execute, deliver, and perform this Agreement and (ii) this Agreement constitutes its legal, valid, and binding obligation enforceable according to the terms hereof.

 

21.Complete Agreement; Amendment; Prevalence.  

 

21.1.Complete Agreement.  This Agreement contains a complete statement of all the arrangements between the parties with respect to its subject matter and supersedes any existing agreements between them concerning the subject.  This Agreement and any administrative form under this Agreement may be proved either by a signed original or by a reproduced copy thereof (including, not by way of limitation, a microfiche copy or an electronic file copy).  

 

21.2.Amendment.  This Agreement may be amended at any time, in whole or in part, by a written instrument signed by Pledgor, Secured Party, and Intermediary.  

 

21.3.Prevalence.  Pledgor and Intermediary hereby acknowledge and agree that, in the event of any inconsistency between this Agreement and the Custody Agreement regarding the Collateral, this Agreement prevails with respect to the Collateral.

 

22.Governing Law; Venue.  This Agreement will be governed, enforced, and interpreted according to the laws of the State of Minnesota without regard to conflicts of laws, except where pre-empted by federal law.  All legal actions or other proceedings directly or indirectly relating to this Agreement will be brought in federal court (or, if unavailable, state court) sitting in the State of Minnesota.  The parties submit to the jurisdiction of any such court in any such action or proceeding and waive any immunity from suit in such court or execution, attachment (whether before or after judgment), or other legal process in or by such court.

 

7

 

 

23.Successors and Assigns.

 

23.1.This Agreement binds, and inures to the benefit of, Pledgor, Secured Party, Intermediary, and their respective successors and assigns; provided, however, that Pledgor will have no right to assign any rights with respect to Collateral, except as specifically permitted in this Agreement.

 

23.2.No party may assign any of its rights under this Agreement without the consent of each other party, which consent will not be unreasonably withheld.  Pledgor hereby acknowledges that Intermediary will withhold consent unless and until Intermediary verifies Pledgor’s assignee’s identity according to Intermediary’s Customer Identification Program and, to that end, Pledgor hereby agrees to notify Intermediary of such assignment and provide Intermediary with the assignee’s name, physical address, EIN, organizational documents, certificate of good standing, and license to do business, as well as other information that Intermediary may request.  Secured Party hereby acknowledges that Intermediary will withhold consent unless and until Intermediary verifies Secured Party’s assignee’s identity according to Intermediary’s Customer Identification Program and, to that end, Secured Party hereby agrees to notify Intermediary of such assignment and provide Intermediary with the assignee’s name, physical address, EIN, organizational documents, certificate of good standing, and license to do business, as well as other information that Intermediary may request.  No consent is required if a party merges with, consolidates with, or sells substantially all of its assets to another entity, provided that such other entity assumes without delay, qualification, or limitation all obligations of that party under this Agreement by operation of law or by contract.

 

24.Severability.  The provisions of this Agreement are severable.  The invalidity of a provision herein will not affect the validity of any other provision.

 

25.No Third-Party Beneficiaries.  This Agreement is made solely for the benefit of the parties.  No person other than such parties has any rights or remedies under this Agreement.

 

26.Solvency.

 

26.1.Intermediary has no duty to inquire whether Pledgor or Secured Party is insolvent or subject to a pending bankruptcy or receivership proceeding.  

 

26.2.Pledgor hereby represents and warrants that Pledgor is neither insolvent nor subject to any pending bankruptcy or receivership proceeding.  Pledgor will promptly notify Intermediary and Secured Party of any such insolvency or proceeding.

 

26.3.Secured Party hereby represents and warrants that Secured Party is neither insolvent nor subject to any pending bankruptcy or receivership proceeding.  Secured Party will promptly notify Intermediary and Pledgor of any such insolvency or proceeding.

 

26.4.Intermediary may forward any such notice onto Secured Party or Pledgor, as the case may be.  In any event, if Intermediary has actual knowledge of any such proceeding, then Intermediary may suspend performance of any of its obligations under this Agreement and may require additional documentation from the directing party before following any direction under this Agreement.  Pledgor and Secured Party (i) will reimburse Intermediary for any expenses, fees, costs, or other charges incurred by Intermediary in responding to any such proceeding, including, but not limited to, any fees charged by an attorney of Intermediary’s choice, and (ii) hereby covenant not to give any direction under this Agreement that is contrary to applicable bankruptcy or receivership law.

 

27.Legal Advice.  Pledgor and Secured Party hereby acknowledge that they (i) did not receive legal advice from Intermediary concerning this Agreement, (ii) had an adequate opportunity to consult attorneys of their choice before executing this Agreement, and (iii) executed this Agreement upon their own judgment and, if sought, the advice of such attorneys.

 

8

 

 

28.Waiver of Jury Trial.  Each party hereby irrevocably waives all right to a trial by jury in any action, proceeding, claim, or counterclaim (whether based on contract, tort, or otherwise) directly or indirectly arising out of or relating to this Agreement.

 

29.Legal Action.  If Intermediary is served with any freeze order, garnishment, levy, restraining order, search warrant, subpoena, writ of attachment or execution, or similar order relating to the Account (each, a “Legal Action”), then Intermediary will, to the extent permitted by law, use commercially reasonable efforts to notify Pledgor and Secured Party of such service.  Pledgor and Secured Party will reimburse Intermediary for any expenses, fees, costs, or other charges incurred by Intermediary in responding to the Legal Action, including, but not limited to, any fees charged by an attorney of Intermediary’s choice.  If Pledgor notifies Intermediary that Pledgor is seeking a protective order to resist the Legal Action, then Intermediary will provide reasonable cooperation at Pledgor’s request and sole cost and expense.  If Secured Party notifies Intermediary that Secured Party is seeking a protective order to resist the Legal Action, then Intermediary will provide reasonable cooperation at Secured Party’s request and sole cost and expense.  In any event, Intermediary may comply with the Legal Action at any time, except to the extent Intermediary has received a protective order that prevents Intermediary from complying.

 

30.Interpleader.  With respect to Collateral that is the subject of a dispute, Intermediary may file an interpleader action or other petition with a court of competent jurisdiction for directions with respect to the dispute.  Pledgor and Secured Party will reimburse Intermediary for any expenses, fees, costs, or other charges incurred by Intermediary in filing such petition and implementing such directions, including, but not limited to, any fees charged by an attorney of Intermediary’s choice.  Before disbursing Collateral pursuant to such directions, Intermediary will deduct therefrom an amount in payment or reimbursement for all (i) compensation, expenses, fees, costs, or other charges incurred by Intermediary in providing services under this Agreement or the Custody Agreement and (ii) Settlement Claims.

 

31.Representations and Warranties.  Pledgor and Secured Party each hereby covenant that, if any of the representations or warranties that it provides in this Agreement becomes inaccurate or incomplete, it will promptly notify Intermediary thereof and of any fact, omission, event, or change of circumstances related thereto.

 

32.Publicity.  No party will disclose the existence of this Agreement or any terms thereof in advertising, promotional, or marketing materials without obtaining, in each case, the prior written consent of each other party.

 

33.Counterparts and Duplicates.  This Agreement may be executed in any number of counterparts, each of which will be considered an original, but all of which together will constitute the same instrument.  

 

34.Effective Date.  This Agreement will become effective when all parties have signed it.  The date of this Agreement will be the date this Agreement is signed by the last party to sign it (as indicated by the date associated with that party’s signature).

 

[SIGNATURES APPEAR ON FOLLOWING PAGE.]

 

 

9

 

 

[SIGNATURE PAGE TO CONTROL AGREEMENT]

 

IN WITNESS WHEREOF, an authorized officer of each party hereby executes this Agreement on the date stated beneath that party’s signature.

 

	
PLEDGOR (AS DEFINED IN THIS AGREEMENT)
	
 

	
 
	
 

	
By:
	
 
	
/s/ Michael Foliano
	
 
	
 

	
 
	
 
	
(Signature of Pledgor’s authorized officer)
	
 

	
 
	
 
	
Michael Foliano
	
 
	
 

	
 
	
 
	
(Printed name of Pledgor’s authorized officer)
	
 

	
 
	
 
	
 
	
 
	
 

	
Its:
	
 
	
CFO
	
 

	
 
	
 
	
(Title of Pledgor’s authorized officer)
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
Dated:
	
 
	
November 4, 2020
	
 

	
 
	
 
	
 
	
 
	
 

	
U.S. Mail Address:
	
 
	
 

	
ADTRAN, INC.
	
 
	
 

	
901 Explorer Boulevard
	
 
	
 

	
Huntsville, Alabama 35806
	
 
	
 

	
 
	
 
	
 

	
Email Address:
	
 
	
 

	
Mike.Foliano@adtran.com
	
 
	
 
	
 
	
 

 

	
SECURED PARTY (AS DEFINED IN THIS AGREEMENT)
	
 

	
 
	
 

	
By:
	
 
	
/s/ Brian Heslop
	
 
	
 

	
 
	
 
	
(Signature of Secured Party’s authorized officer)
	
 

	
 
	
 
	
Brian Heslop
	
 
	
 

	
 
	
 
	
(Printed name of Secured Party’s authorized officer)
	
 

	
 
	
 
	
 
	
 
	
 

	
Its:
	
 
	
Executive Vice President
	
 

	
 
	
 
	
(Title of Secured Party’s authorized officer)
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
Dated:
	
 
	
November 4, 2020
	
 

	
 
	
 
	
 
	
 
	
 

	
U.S. Mail Address:
	
 
	
 

	
CADENCE BANK, N.A.
	
 
	
 

	
2100 Third Avenue North, Suite 1100
	
 
	
 

	
Birmingham, Alabama 35203
	
 
	
 

	
 
	
 
	
 

	
Email Address:
	
 
	
 

	
Brian.Heslop@CadenceBank.com
	
 
	
 
	
 
	
 

 

 

[Signatures continue on following page.]

10

 

 

[SIGNATURE PAGE TO CONTROL AGREEMENT (continued)]

 

	
U.S. BANK NATIONAL ASSOCIATION
	
 
	
	
 
	
 
	
	
By:
	
 
	
/s/ Kameron M. George
	
 
	
 

	
 
	
 
	
(Signature)
	
 

	
 
	
 
	
Kameron M. George
	
 
	
 

	
 
	
 
	
(Printed Name)
	
 

	
 
	
 
	
 
	
 
	
 

	
Its:
	
 
	
Vice President and Relationship Manager
	
 

	
 
	
 
	
 
	
 
	
 

	
Dated:
	
 
	
November   4 , 2020
	
 

	
 
	
 
	
 
	
 
	
 

	
U.S. Mail Address:
	
 
	
 
	
	
2204 Lakeshore Drive Suite 205
	
 
	
 
	
 
	
 

	
Birmingham, AL 35209
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
Email Address:
	
 
	
 
	
	
Kameron.george@usbank.com
	
 
	
                      
	
 
	
 

 

[End of signatures.]

 

 

11

 

 

CONTROL AGREEMENT

 

Exhibit A (Notice of Exclusive Control)

 

[Drafting note:  To be provided on letterhead of Secured Party]

 

	
Date:
	
                               

 

	
To:
	
U.S. Bank National Association

c/o                                                                                             , Vice President and Relationship Manager

                                                                                                             

                                                                                                             

 

	
Re:
	
Agreement entitled “Control Agreement” among ADTRAN, INC. (“Pledgor”); CADENCE BANK, N.A. (“Secured Party”); and U.S. Bank National Association (“Intermediary”) and dated                         (the “Control Agreement”)

 

Notice of Exclusive Control

 

Secured Party hereby (i) notifies Intermediary that Secured Party is exercising exclusive control over the Collateral (as defined in the Control Agreement); (ii) instructs Intermediary to stop complying with directions, instructions, or entitlement orders concerning the Collateral originated by Pledgor; and (iii) represents and warrants to Intermediary that this Notice of Exclusive Control is lawful and authorized by the applicable agreement between Pledgor and Secured Party.  Intermediary has no duty, obligation, or authority to determine whether Secured Party’s delivery of this Notice of Exclusive Control (or the terms hereof) is proper, even if Pledgor objects or directs Intermediary not to honor this Notice of Exclusive Control.

 

 

	
SECURED PARTY (AS DEFINED ABOVE)
	
 

	
 
	
 

	
By:
	
 
	
 
	
 
	
 

	
 
	
 
	
(Signature of Secured Party’s authorized officer)
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
(Printed name of Secured Party’s authorized officer)
	
 

	
 
	
 
	
 
	
 
	
 

	
Its:
	
 
	
 
	
 

	
 
	
 
	
(Title of Secured Party’s authorized officer)
	
 
	
 

	
 
	
 
	
 
	
 

	
Dated:
	
 
	
 
	
 

 

12

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