Execution Copy
GUARANTOR SECURITY AGREEMENT
THIS GUARANTOR SECURITY AGREEMENT is made as of the 12th day of April,
2002 by Kinetek, Inc., a Delaware corporation ("Guarantor") in favor of U.S.
Bank National Association, as Trustee (the "Trustee") for the benefit of
itself and Holders of Notes, with an address at U.S. Bank Trust Center, 000
Xxxx 0xx Xxxxxx, Xxxxx Xxxx, Xxxxxxxxx 00000.
1. DEFINITIONS
As used in this Agreement:
"Agreement" shall mean this Guarantor Security Agreement, as it may be
amended, modified or supplemented from time to time.
"Collateral" shall mean all of the Property and interests in Property
described in Section 2 of this Agreement, and all other property that now or
hereafter secures the payment and performance of any of the Obligations.
"Default" shall have the meaning provided to such term in Section 4.1.
"Guaranty" shall mean that certain guaranty set forth in the Indentures
of even date herewith made by Guarantor in favor of Trustee, for the benefit
of Trustee and the Holders of Notes, as it may be amended, modified or
supplemented from time to time.
"Guaranty Documents" shall mean, collectively, this Agreement, the
Guaranty and all other agreements, instruments and documents now or hereafter
executed and/or delivered by Guarantor to Trustee in order to evidence or
secure the Obligations, as each may be amended, modified or supplemented from
time to time.
"Holders" shall have the meaning set forth in the Indentures.
"Indentures" shall mean the two Indentures dated as of even date herewith
among the Issuer and Trustee, as amended, modified or supplemented from time
to time.
"Issuer" shall mean Kinetek Industries, Inc., a Delaware corporation.
"Notes" shall have the meaning set forth in the Indentures.
"Obligations" shall mean all obligations with respect to the Guaranty and
all other loans and all other advances, debts, liabilities, obligations,
covenants and duties arising due or payable from Guarantor to Trustee or any
Holder of any kind or nature, present or future, arising under the Guaranty,
this Agreement or any of the other Guaranty Documents, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising
and however acquired. The term includes, without limitation, all interest,
charges, expenses, fees, attorneys' fees and any other sums chargeable to
Guarantor under the Guaranty, this Agreement or any of the other Guaranty
Documents.
"Security Agreement" shall mean that certain Security Agreement dated as
of even date herewith, by and between Issuer and Trustee as it may be amended,
modified or supplemented from time to time.
The foregoing definitions shall be equally applicable to the singular and
plural forms of the defined terms. Capitalized terms used in this Agreement
without definition and defined in the Security Agreement shall have the
meanings ascribed to such terms in the Security Agreement, including without
limitation terms defined in the Appendix A to the Security Agreement, it being
understood and acknowledged that any such capitalized terms defined in the
Security Agreement describing property or interests in property of the Issuer
(including, without limitation, capitalized terms used in Section 1 of this
Agreement) shall be construed herein to refer to property or interests in
property of Guarantor. Terms used in this Agreement and not defined herein or
in the Security Agreement shall have the meanings given such terms in the UCC.
2. SECURITY INTEREST
2.1. Security Interest in Collateral. To secure the prompt payment and
performance to Trustee and each Holder of the Obligations, Guarantor hereby
grants to Trustee for the benefit of itself and each Holder a continuing Lien
upon all of Guarantor's assets, including all of the following Property and
interests in Property of Guarantor (collectively, the "Collateral"), whether
now owned or existing or hereafter created, acquired or arising and
wheresoever located:
(a) Accounts;
(b) Certificated Securities;
(c) Chattel Paper (including Electronic Chattel Paper and Tangible
Chattel Paper);
(d) Computer Hardware and Software and all rights with respect
thereto, including, any and all licenses, options, warranties, service
contracts, program services, test rights, maintenance rights, support
rights, improvement rights, renewal rights and indemnifications, and any
substitutions, replacements, additions or model conversions of any of the
foregoing;
(e) Contract Rights;
(f) Deposit Accounts;
(g) Documents;
(h) Equipment;
(i) Financial Assets;
(j) Fixtures;
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(k) General Intangibles, including Payment Intangibles and Software;
(l) Goods (including all of its Equipment, Fixtures and Inventory),
and all accessions, additions, attachments, improvements, substitutions
and replacements thereto and therefor;
(m) Instruments;
(n) Intellectual Property;
(o) Inventory;
(p) Investment Property;
(q) money (of every jurisdiction whatsoever);
(r) Letter-of-Credit Rights;
(s) Payment Intangibles;
(t) Security Entitlements;
(u) Software;
(v) Supporting Obligations;
(w) Uncertificated Securities;
(x) Commercial Tort Claims; and
(y) to the extent not included in the foregoing, all other personal
property of any kind or description;
together with all books, records, writings, data bases, information and
other property relating to, used or useful in connection with, or
evidencing, embodying, incorporating or referring to any of the foregoing,
and all Proceeds, products, offspring, rents, issues, profits and returns
of and from any of the foregoing; provided, that (a) the grant under this
Section 2.1 shall not include more than 65% of the Securities of any
Foreign Subsidiary and (b) the foregoing shall not include (and the grant,
assignment and transfer of a security interest as provided herein shall not
extend to) (i) "intent to use" trademarks at all times prior to the first
use thereof, whether by the actual use thereof in commerce, the recording
of a statement of use with the United States Patent and Trademark Office or
otherwise or (ii) any General Intangibles or Intellectual Property which in
accordance with applicable licenses or other agreements applicable thereto
terminate or become terminable if a security interest is granted therein (a
"Terminable Intangible"); provided, further, that the foregoing shall
include any and all Accounts, Chattel Paper, Payment Intangibles and
Instruments arising under any and all such Terminable Intangibles.
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2.2. Other Collateral
2.2.1. Commercial Tort Claims. Guarantor shall promptly notify
Trustee in writing upon incurring or otherwise obtaining a Commercial
Tort Claim after the date hereof involving an amount in excess of
$200,000 against any third party and, upon request of Trustee, promptly
enter into an amendment to this Agreement and do such other acts or
things deemed appropriate by Trustee to give Trustee a security interest
in any such Commercial Tort Claim. Guarantor represents and warrants that
as of the date of this Agreement, to its knowledge, neither the Issuer
nor such Guarantor possesses any Commercial Tort Claims.
2.2.2. Other Collateral. Guarantor shall promptly notify Trustee in
writing upon acquiring or otherwise obtaining any Collateral after the
date hereof consisting of Deposit Accounts, Investment Property,
Letter-of-Credit Rights or Chattel Paper and, within 10 days after
request by Trustee, execute such other documents, and do such other acts
or things deemed appropriate by Trustee to provide to Trustee or its
agent "control" (within the meaning of the applicable Uniform Commercial
Code) or possession with respect to such Collateral; including without
limitation, executing and delivering and causing the relevant depositary
bank to execute and deliver an Account Control Agreement; promptly notify
Trustee in writing upon acquiring or otherwise obtaining any Collateral
after the date hereof consisting of Instruments and, within 10 days after
request by Trustee, execute such other documents, and do such other acts
or things deemed appropriate by Trustee to provide Trustee or its agent
control or possession with respect to such Instruments and with respect
to Collateral in the possession of a third party, other than Certificated
Securities and Goods covered by a Document, use its best efforts to
obtain an acknowledgement from the third party that it is holding the
Collateral for the benefit of Trustee in addition to the Senior Agent.
The provisions of this subsection 1.2.2 shall not apply to more than 65%
of the Securities of any Foreign Subsidiary.
2.3. Lien Perfection; Further Assurances. Guarantor shall, and at any time
from time to time upon the written request of the Trustee the Guarantor shall,
in each case at the Guarantor's expense, promptly, execute such UCC-1
financing statements as are required by the UCC and such other instruments,
assignments or documents as are necessary to perfect Trustee's Lien upon any
of the Collateral and shall take such other action as may be required to
perfect or to continue the perfection of Trustee's Lien upon the Collateral.
Guarantor shall pay, or reimburse Trustee for, all costs and fees of preparing
and having filed UCC-1 financing statements, amendments thereto and other
documents, and of taking such other actions to perfect and to continue
Trustee's Lien on any and all Collateral, including without limitation the
initial perfection thereof. Unless prohibited by applicable law, Guarantor
hereby authorizes Trustee to execute and file any such financing statement,
including, without limitation, financing statements that indicate the
Collateral (i) as all assets of Guarantor or words of similar effect, or (ii)
as being of an equal or lesser scope, or with greater or lesser detail, than
as set forth in Section 2.1, on Guarantor's behalf. Guarantor also hereby
ratifies its authorization for Trustee to have filed in any jurisdiction any
like financing statements or amendments thereto if filed prior to the date
hereof. The parties agree that a carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement and may be filed
in any appropriate office in lieu thereof. At Trustee's request, Guarantor
shall also promptly execute or cause to be executed and shall deliver to
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Trustee or its agent any and all documents, instruments and agreements deemed
necessary by Trustee, to give effect to or carry out the terms or intent of
this Agreement and the other Guaranty Documents. The provisions of this
Section 2.3 (i) shall not require that any leasehold mortgages be provided
other than upon Trustee's reasonable request therefor and (ii) shall not apply
to the motor vehicles owned by Guarantor to the extent that the fair market
value of the motor vehicles owned by the Issuer and the Guarantors does not
exceed 300,000 in the aggregate.
2.4. Lien on Realty. The due and punctual payment and performance of the
Obligations shall also be secured by the Lien created by Mortgages upon all
real Property identified therein. Each Mortgage shall be executed by the
Guarantor in favor of Trustee. Each Mortgage shall be duly recorded, at
Guarantor's expense, in each office where such recording is required to
constitute a fully perfected second Lien (subject only to the Lien in favor of
the Senior Agent) on the real Property covered thereby. The Guarantor shall
deliver to Trustee, at Guarantor's expense, mortgagee title insurance
policies issued by a title insurance company reasonably satisfactory to
Trustee, which policies shall be in form and substance satisfactory to Trustee
and shall insure a valid second Lien in favor of Trustee (subject only to the
Lien in favor of the Senior Agent), for the benefit of itself and Holders of
the Notes, on the Property covered by each Mortgage, subject only to those
exceptions acceptable to Trustee and its counsel. The Guarantor shall deliver
to Trustee such other documents, including, without limitation, as-built
survey prints of the real Property, as Trustee and its counsel may request
relating to the real Property subject to the Mortgages. Trustee agrees that
final survey prints of the real Property existing as of December 14, 2001, and
final title insurance policies reflecting the delivery of such surveys, all in
form or substance reasonably satisfactorily to Trustee, may be delivered to
Trustee within 30 days after the date hereof. Notwithstanding the foregoing
provisions of this Section 2.4, the Guarantor may xxxxx x Xxxx in real
Property acquired by the Guarantor after the date hereof to a mortgagee other
than Trustee, so long as (a) the fair market value of such real Property does
not exceed (1) $500,000 individually or (2) $1,000,000 in the aggregate,
together with all other real Property owned the Guarantor that is not subject
to the Lien of a Mortgage and (b) such Lien granted to a mortgagee other than
Trustee secures Indebtedness that is incurred pursuant to and in accordance
with subsection 8.2.3(xiv) of the Senior Loan Agreement.
2.5. Subordination. Notwithstanding any other provision contained
here, the Lien granted by the Guarantor to the Trustee and any rights of
the Trustee with respect to the Collateral described herein, pursuant to
this Agreement or any Guaranty Document, to secure the Obligations shall be
(i) subordinate and junior in priority to the Liens granted the Senior
Agent and Senior Lenders pursuant to the Senior Loan Agreement or any other
Senior Security Documents, and (ii) subject to the terms and conditions of
the Intercreditor Agreement. Any provisions contained herein that purport
to give the Trustee the right to exercise its judgment, the right to be
satisfied or other similar rights or decision making abilities shall only
be operative after such time as all indebtedness under the Senior Loan
Agreement has been fully and indefeasibly paid in cash and satisfied and
all lending commitments under the Senior Loan Agreement have been
terminated. In addition, the Guarantor and the Trustee acknowledge and
agree that, to the extent that any provision hereunder imposes an
obligation upon the Guarantor that the Guarantor is unable to satisfy due
to the satisfaction of its obligations under the Senior Loan Agreement and
the
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Senior Security Documents, such provision shall not become operative until all
indebtedness under the Senior Loan Agreement has been fully and indefeasibly
paid in cash and satisfied and all lending commitments under the Senior Loan
Agreement have been terminated.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1. Incorporation of Representations and Covenants. The representations
and warranties set forth in Section 3 of the Security Agreement as they
related to the Guarantor, the Guarantor's Collateral, operations, business or
affairs or the Other Agreements to which the Guarantor is a party, each of
which is incorporated herein by reference, are true and correct, and the
Trustee and Holders of the Notes shall be entitled to rely on each of them as
if they were fully set forth herein. Guarantor hereby covenants and agrees
that, so long as any of the Obligations remain outstanding, Guarantor will
fully comply with all of the provisions of Sections 2 with respect to the
Guarantor's Collateral, and all of the covenants of Section 3 of the Security
Agreement, with respect to the Guarantor's Collateral, operations, business
and affairs, as if Guarantor were the Issuer under the Security Agreement.
3.2. Location of Collateral. Guarantor further covenants and agrees that,
so long as any of the Obligations remain outstanding all Collateral, other
than Inventory in transit and motor vehicles, will at all times be kept by
Guarantor at one or more of the business locations set forth in Exhibit 2.11
of the Security Agreement, as updated by Guarantor providing prior written
notice to Trustee of any new location.
3.3. Intangible Collateral. Guarantor represents and warrants, and
covenants and agrees, that its General Intangibles and Intellectual Property
constituting Terminable Intangibles are not, and will not at any time be,
material to the business or operations of the Issuer and the Guarantors taken
as a whole.
4. DEFAULTS; RIGHTS AND REMEDIES ON DEFAULT
4.1. Default. Each of the following occurrences shall constitute a default
under this Agreement (each, a "Default"):
(a) Breach of Other Agreement. The occurrence of any Event of
Default under the any Other Agreement; or
(b) Breach under Guaranty Documents. Guarantor's failure to pay when
due any obligations of Guarantor under the Guaranty, or the occurrence of
any breach of the terms and conditions contained in any Guaranty
Document.
4.2. Remedies
(a) Remedies. Upon or at any time during the continuance of a
Default, Trustee shall have and may exercise from time to time the
following rights and remedies (subject in each case to the terms of the
Intercreditor Agreement and Section 2.5 hereof):
(i) All of the rights and remedies of a secured party under the
UCC or under other applicable law, and all other legal and equitable
rights to which Trustee or Holders may be entitled, all of which
rights and remedies shall be cumulative and shall be in addition to
any other rights or remedies contained in this Agreement or any of
the Other Agreements, and none of which shall be exclusive.
(ii) The right to take immediate possession of the Collateral,
and to (i) require Guarantor to assemble the Collateral, at
Guarantor's expense, and make it available to Trustee at a place
designated by Trustee which is reasonably convenient to both
parties, and (ii) enter any premises where any of the Collateral
shall be located and to keep and store the Collateral on said
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premises until sold (and if said premises be the Property of
Guarantor, Guarantor agrees not to charge Trustee for storage
thereof).
(iii) The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing
or processing thereof, at public or private sale or sales, with such
notice as may be required by law, in lots or in bulk, for cash or on
credit, all as Trustee, in its sole discretion, may deem advisable.
Trustee may, at Trustee's option, disclaim any and all warranties
regarding the Collateral in connection with any such sale. Guarantor
agrees that 10 days' written notice to Guarantor of any public or
private sale or other disposition of Collateral shall be reasonable
notice thereof, and such sale shall be at such locations as Trustee
may designate in said notice. Trustee shall have the right to
conduct such sales on Guarantor's premises, without charge therefor,
and such sales may be adjourned from time to time in accordance with
applicable law. Trustee shall have the right to sell, lease or
otherwise dispose of the Collateral, or any part thereof, for cash,
credit or any combination thereof, and Trustee, on behalf of
Holders, may purchase all or any part of the Collateral at public
or, if permitted by law, private sale and, in lieu of actual payment
of such purchase price, may set off the amount of such price against
the Obligations. The proceeds realized from the sale of any
Collateral may be applied, after allowing 2 Business Days for
collection (provided, that amounts received in immediately available
funds shall be credited upon receipt thereof), first to the costs,
expenses and attorneys' fees incurred by Trustee in collecting the
Obligations, in enforcing the rights of Trustee and Holders under
the Other Agreements and in collecting, retaking, completing,
protecting, removing, storing, advertising for sale, selling and
delivering any Collateral, second to the interest due upon any of
the Obligations; and third, to the principal of the Obligations. If
any deficiency shall arise, Guarantor shall remain liable to Trustee
and Holders therefor.
(iv) Trustee is hereby granted a license or other right to use,
without charge, Guarantor's labels, patents, copyrights, licenses,
rights of use of any name, trade secrets, tradenames, trademarks and
advertising matter, or any Property of a similar nature, as it
pertains to the Collateral, in completing, advertising for sale and
selling any Collateral and Guarantor's rights under all licenses and
all franchise agreements shall inure to Trustee's benefit.
(v) At Trustee's request, Guarantor shall deliver to Trustee
all original and other documents evidencing, and relating to, the
agreements and transactions which gave rise to the Accounts,
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including, without limitation, all original orders, invoices and
shipping receipts. Trustee in its own name or in the name of others
may communicate with Account Debtors under the Accounts to verify
with them to Trustee's satisfaction the existence, amount and terms
of any Accounts. Upon the request of Trustee at any time, Guarantor
shall notify Account Debtors on the Accounts that the Accounts have
been assigned to Trustee and that payments in respect thereof shall
be made directly to Trustee. Anything herein to the contrary
notwithstanding, Guarantor shall remain liable under each of the
Accounts to observe and perform all the conditions and obligations
to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise thereto. Neither the
Trustee nor any Holder shall have any obligation or liability under
any Account (or any agreement giving rise thereto) by reason of or
arising out of this Agreement or the receipt by Trustee of any
payment relating thereto, nor shall Trustee or any Holder be
obligated in any manner to perform any of the obligations of
Guarantor under or pursuant to any Account (or any agreement giving
rise thereto), to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present
or file any claim, to take any action to enforce any performance or
to collect the payment of any amounts which may have been assigned
to it or to which it may be entitled at any time or times. Any
payments of Accounts, when collected by Guarantor ("Proceeds of
Accounts"), consisting of cash, cash equivalents, checks and other
near-cash items, shall be held by Guarantor in trust for Trustee,
segregated from other funds of Guarantor, and shall, forthwith upon
receipt by such Guarantor (and, in any event within two Business
Days) be turned over to Trustee in the exact form received by
Guarantor, (duly endorsed by such Guarantor to Trustee, if
required), and deposited in any account that is subject to an
Account Control Agreement maintained under sole dominion and control
of Trustee. Each such deposit of Proceeds of Accounts shall be
accompanied by a report identifying in reasonable detail the nature
and source of payments included in the deposit. All Proceeds of
Accounts while held by the Trustee (or by such Guarantor in trust
for Trustee) shall continue to be held as collateral security for
all the Obligations and shall not constitute payment thereof until
so applied as provided in Section 4.2(a)(iii).
(b) Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities and other undertakings of
Guarantor contained in this Agreement and the Other Agreements, or in any
document referred to herein or contained in any agreement supplementary
hereto or in any schedule given to Trustee or any Holder or contained in
any other agreement between Trustee, any Holder and Guarantor,
heretofore, concurrently or hereafter entered into, shall be deemed
cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions or agreements of Guarantor herein contained. The
failure or delay of Trustee or any Holder to require strict performance
by Guarantor of any provision of this Agreement or any Other Agreement or
to exercise or enforce any rights, Liens, powers or remedies hereunder or
under any of the aforesaid agreements or other documents or security or
Collateral shall not operate as a waiver of such performance, Liens,
rights, powers and remedies, but all such requirements, Liens, rights,
powers and remedies shall continue in full force and effect until all
Obligations owing or to become owing from Guarantor to Trustee and each
Holder shall have been fully satisfied. None of the undertakings,
agreements, warranties, covenants and representation of Guarantor
contained in this Agreement or any of the Other Agreements and no Default
by Guarantor under this Agreement or any Other Agreement shall be deemed
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to have been suspended or waived by Trustee or any Holder, unless such
suspension or waiver is by an instrument in writing specifying such
suspension or waiver and is signed by duly authorized representatives of
Trustee (or such Holder, as applicable) and directed to Guarantor.
4.3. Set Off and Sharing of Payments. Subject to the terms of the
Intercreditor Agreement and Section 2.5 hereof, in addition to any rights now
or hereafter granted under applicable law and not by way of limitation of any
such rights, during the continuance of any Event of Default, Trustee is hereby
authorized by the Guarantor at any time or from time to time, with reasonably
prompt subsequent notice to the Guarantor (any prior or contemporaneous notice
to the Guarantor being hereby expressly waived) to set off and to appropriate
and to apply any and all (i) balances held by Trustee at any of its offices
for the account of the Guarantor (regardless of whether such balances are then
due to the Guarantor), and (ii) other property at any time held or owing by
Trustee to or for the credit or for the account of the Guarantor, against and
on account of any of the Obligations.
5. MISCELLANEOUS.
5.1. Power of Attorney. Subject to the terms of the Intercreditor Agreement
and Section 2.5 hereof, Guarantor hereby irrevocably designates, makes,
constitutes and appoints Trustee (and all Persons designated by Trustee) as
Guarantor's true and lawful attorney (and agent-in-fact), solely with respect
to the matters set forth in this Section 5.1, and Trustee, or Trustee's agent,
may, without notice to Guarantor and in Guarantor's or Trustee's name, but at
the cost and expense of Guarantor:
5.1.1 Upon the occurrence and during the continuance of an Event of
Default, and subject to the terms of the Intercreditor Agreement and
Section 2.5 hereof, at such time or times as Trustee in its sole
discretion, may determine, endorse Guarantor's name on any checks, notes,
acceptances, drafts, money orders or other evidence of payment or
proceeds of collateral that come into possession or control of Trustee.
5.1.2. At such time or times upon or after the occurrence and during
the continuance of a Default, subject to the terms of the Intercreditor
Agreement and Section 2.5 hereof, as Trustee or its agent in its sole
discretion may determine: (i) demand payment of the Accounts from the
Account Debtors, enforce payment of the Accounts by legal proceedings or
otherwise, and generally exercise all of Guarantor's rights and remedies
with respect to the collection of the Accounts; (ii) settle, adjust,
compromise, discharge or release any of the Accounts or other Collateral
or any legal proceedings brought to collect any of the Accounts or other
Collateral; (iii) sell or assign any of the Accounts and other Collateral
upon such terms, for such amounts and at such time or times as Trustee
deems advisable, and at Trustee's option, with all warranties regarding
the Collateral disclaimed; (iv) take control, in any manner, of any item
of payment or proceeds relating to any Collateral; (v) prepare, file and
sign Guarantor's name to a proof of claim in bankruptcy or similar
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document against any Account Debtor or to any notice of lien, assignment
or satisfaction of lien or similar document in connection with any of the
Collateral; (vi) receive, open and dispose of all mail addressed to
Guarantor whether or not relating to its Accounts that comes into
Trustee's possession and notify the postal authorities to change the
address for mail delivery to Guarantor to such address as Trustee may
designate; (vii) endorse the name of Guarantor upon any of the items of
payment or proceeds relating to any Collateral and deposit the same to
the account of Trustee on account of the Obligations; (viii) endorse the
name of Guarantor upon any chattel paper, document, instrument, invoice,
freight xxxx, xxxx of lading or similar document or agreement relating to
the Accounts, Inventory and any other Collateral; (ix) use Guarantor's
stationery and sign the name of Guarantor to verifications of the
Accounts and notices thereof to Account Debtors; (x) use the information
recorded on or contained in any data processing equipment and Computer
Hardware and Software relating to the Accounts, Inventory, Equipment and
any other Collateral; (xi) make and adjust claims under policies of
insurance; and (xii) do all other acts and things necessary, in Trustee's
determination, to fulfill Guarantor's obligations under this Agreement.
The power of attorney granted hereby shall constitute a power coupled
with an interest and shall be irrevocable.
5.2. Indemnity. Guarantor hereby agrees to indemnify Trustee (and each of
its Affiliates) and hold Trustee (and each of its Affiliates) harmless from
and against any liability, loss, damage, suit, action or proceeding ever
suffered or incurred by any such Person (including reasonable attorneys fees
and legal expenses) as the result of Guarantor's failure to observe, perform
or discharge Guarantor's duties hereunder. In addition, Guarantor shall defend
Trustee (and each of its Affiliates) against and save it harmless from all
claims of any Person with respect to the Collateral (except those resulting
from the Gross negligence or intentional misconduct of any such Person).
Without limiting the generality of the foregoing, these indemnities shall
extend to any claims asserted against Trustee (and each of its Affiliates) by
any Person under any Environmental Laws by reason of Guarantor's or any other
Person's failure to comply with laws applicable to solid or hazardous waste
materials or other toxic substances. Notwithstanding any contrary provision in
this Agreement, the obligation of Guarantor under this Section 5.2 shall
survive the payment in full of the Obligations and the termination of this
Agreement.
5.3. Complete Agreement. The Other Agreements constitute the complete
agreement among the parties with respect to the subject matter hereof and may
not be modified, altered or amended, except as provided in Section 5.4.
Guarantor may not sell, assign or transfer any interest in this Agreement or
any of the other Guaranty Documents, or any of the Obligations or any portion
thereof, including, without limitation, Guarantor's rights, title, interests,
remedies, powers and duties hereunder or thereunder.
5.4. Modification of Agreement. No amendment, modification or
supplement or waiver of any provision of this Agreement nor consent to any
departure by the Trustee therefrom, shall in any event be effective unless
the same shall be in writing and signed by Trustee and Guarantor, and
approved or consented to by the Majority Holders and then such amendment,
modification or supplement or
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such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, that no amendment,
modification, supplement, waiver or consent shall be effective, unless in
writing and signed by each Holder, do any of the following: (1) amend any
provision of this Agreement that requires the consent of all Holders or
consent to or waive any breach thereof, (2) amend the definition of the term
"Majority Holders", (3) amend this Section 5.4 or (4) release any substantial
portion of the Collateral. If a fee is to be paid by Guarantor in connection
with any waiver or amendment hereunder, the agreement evidencing such
amendment or waiver may provide that only Holders executing such agreement by
a specified date may share in such fee (and in such case, such fee shall be
divided among the applicable Holders on a pro rata basis without including the
interests of any Holders who have not timely executed such agreement).
5.5. Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, (i) Trustee incurs legal or
accounting expenses or any other costs or out-of-pocket expenses in connection
with (1) the negotiation and preparation of this Agreement or any of the other
Guaranty Documents or any amendment of or modification of this Agreement or
any of the other Guaranty Documents, or (2) the administration of this
Agreement or any of the other Guaranty Documents and the transactions
contemplated hereby and thereby; or (ii) Trustee (but, as to expenses, costs
and out-of-pocket expenses of such Holder of the types described in clause
(ii)(3) of this Section 5.5, only if an Event of Default then exists), incurs
legal or accounting expenses or any other costs or out-of-pocket expenses in
connection with (1) any litigation, contest, suit, proceeding or action
(whether instituted by Trustee, Guarantor or any other Person) relating to the
Collateral, this Agreement or any of the other Guaranty Documents or
Guarantor's affairs; (2) any attempt to enforce any rights of Trustee against
Guarantor or any other Person which may be obligated to Trustee by virtue of
this Agreement or any of the other Guaranty Documents, including, without
limitation, the Account Debtors; or (3) any attempt to inspect, verify,
protect, preserve, restore, collect, sell, liquidate or otherwise dispose of
or realize upon the Collateral; then all such legal and accounting expenses,
other costs and out of pocket expenses of Trustee, as applicable, shall be
charged to Guarantor; provided, that (a) if an Event of Default does not then
exist, Guarantor shall only be responsible for such expenses, costs and
out-of-pocket expenses to the extent that the same are reasonable and (b)
Guarantor shall not be responsible for such expenses, costs and out-of-pocket
expenses to the extent incurred because of the gross negligence or willful
misconduct of Trustee. All amounts chargeable to Guarantor under this Section
5.5 shall be Obligations secured by all of the Collateral, shall be payable to
Trustee or such Holder, as the case maybe, 15 days after demand therefor, and
shall bear interest from the date due until paid in full at the rate
applicable to Notes from time to time.
5.6. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
5.7. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of Guarantor, Trustee
and each Holder.
5.8. Notice. Except as otherwise provided herein, all notices,
requests and demands to or upon a party hereto shall be delivered and shall
be deemed delivered in accordance with the notice provisions set forth in
the Security
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Agreement, with any such notices required or permitted to be sent to Guarantor
to be delivered to Guarantor in care of Kinetek at Kinetek's address set forth
in the Security Agreement.
5.9. Interpretation. No provision of this Agreement or any of the other
Guaranty Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or
judicial authority by reason of such party having or being deemed to have been
structured, drafted or dictated such provision.
5.10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT IF
ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NEW
YORK, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND
PROCEDURE FOR FORECLOSURE OF TRUSTEE'S LIEN UPON THE COLLATERAL TO THE EXTENT
THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE
LAWS OF NEW YORK.
5.11. Waivers. GUARANTOR IRREVOCABLY WAIVES (A) THE RIGHT TO TRIAL BY JURY
(WHICH TRUSTEE HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, OR ANY
OF THE OTHER GUARANTY DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (B)
PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT,
NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL
OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS,
INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY TRUSTEE OR ANY
LENDER, ON WHICH GUARANTOR MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND
CONFIRMS WHATEVER TRUSTEE OR ANY LENDER MAY DO IN THIS REGARD; (C) NOTICE
PRIOR TO TRUSTEE'S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND
OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING TRUSTEE TO
EXERCISE ANY REMEDIES HEREUNDER; (D) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS, (E) NOTICE OF ACCEPTANCE HEREOF; (F) (i) THE
RIGHT TO TRIAL BY JURY (WHICH TRUSTEE HEREBY ALSO WAIVES) IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE
SECURITY DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT,
DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL
PAPER AND GUARANTIES AT ANY TIME HELD BY TRUSTEE OR ANY HOLDER ON WHICH THE
ISSUER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER
TRUSTEE OR ANY HOLDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO TRUSTEE'S
TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING TRUSTEE TO EXERCISE ANY OF
TRUSTEE'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND
EXEMPTION LAWS; (v) NOTICE OF ACCEPTANCE HEREOF AND (vi) EXCEPT AS PROHIBITED
BY LAW, ANY RIGHT TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES; AND (G) PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
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COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO GUARANTOR IN CARE OF KINETEK AT THE ADDRESS SET FORTH IN THE
NOTICE PROVISIONS OF THE SECURITY AGREEMENT AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF GUARANTOR'S ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PAID. NOTHING
IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF TRUSTEE OR
ANY HOLDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO
PRECLUDE THE ENFORCEMENT BY TRUSTEE OR ANY HOLDER OF ANY JUDGMENT OR ORDER
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION. THE ISSUER
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO TRUSTEE
ENTERING INTO THIS AGREEMENT AND THAT TRUSTEE IS RELYING UPON THE FOREGOING
WAIVERS IN ITS FUTURE DEALINGS WITH THE ISSUER. THE ISSUER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL
AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. GUARANTOR
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO TRUSTEE'S
ENTERING INTO THIS AGREEMENT AND THAT TRUSTEE IS RELYING UPON THE FOREGOING
WAIVERS IN ITS FUTURE DEALINGS WITH GUARANTOR. GUARANTOR WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL
AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
5.12. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which counterparts taken together shall constitute
but one and the same instrument.
5.13. Term of Agreement. This Agreement shall be in full force and effect
for a term commencing on the date hereof and continuing until all Obligations
have been paid in full and the Indentures shall be fully discharged. Upon
payment in full of the Obligations and the discharge of the Indentures, the
Liens provided for hereunder shall terminate and all rights to the Collateral
shall revert to the Guarantor. The Trustee agrees that, upon such termination
of the Liens hereunder, the Trustee shall, at the Guarantor's expense,
execute and deliver to the Guarantor such documents as the Guarantor shall
reasonably request to evidence the termination of such Liens.
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5.14. Consent. Whenever Trustee's, Majority Holders' or all Holders'
consent is required to be obtained under this Agreement, any of the Other
Agreements or any of the Security Documents as a condition to any action,
inaction, condition or event, except as otherwise specifically provided
herein, Trustee, Majority Holders or all Holders, as applicable, shall be
authorized to give or withhold such consent in their sole and absolute
discretion and to condition its consent upon the giving of additional
Collateral security for the Obligations, the payment of money or any other
matter.
5.15. Reinstatement. This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any amount received by Trustee
in respect of the Obligations is rescinded or must otherwise be restored or
returned by Trustee upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of Guarantor or upon the appointment of any intervenor or
conservator of, or trustee or similar official for, Guarantor or any
substantial part of its assets; or otherwise, all as though such payments had
not been made.
5.16. No Deductions. Any and all payments or reimbursements made hereunder
shall be made free and clear of and without deduction for any and all taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto; excluding, however, the following: taxes imposed on the
income of Trustee or any Holder or franchise taxes by the jurisdiction under
the laws of which Trustee or any Holder is organized or doing business or any
political subdivision thereof and taxes imposed on its income by the
jurisdiction of Trustee's or such Holder's applicable lending officer or any
political subdivision thereof or franchise taxes (all such taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto excluding such taxes imposed on net income, herein "Tax Liabilities").
5.17. Successor Trustee. Upon the effective appointment of a successor
Trustee under the Indentures, such successor Trustee shall succeed to the
rights, powers and duties of Trustee under this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed in Chicago,
Illinois, on the day and year specified at the beginning hereof.
KINETEK, INC.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
--------------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
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