EXHIBIT 10.8
EXECUTION COPY
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of December 19, 2003, between Republic
Engineered Products, Inc., a Delaware corporation (the "Company"), and Fleet
Capital Corporation, as collateral agent (hereinafter, in such capacity, the
"Collateral Agent") for itself and other holders of Notes (hereinafter,
collectively, the "Noteholders") which are or may become purchasers under a Note
Purchase Agreement dated as of December 19, 2003 (as amended and in effect from
time to time, the "Note Purchase Agreement"), among the Company, the Noteholders
and the Collateral Agent.
WHEREAS, the Company has entered into an Amended and Restated Asset
Purchase Agreement, dated as of December 19, 2003 (the" Asset Purchase
Agreement"), by and among the Company, as purchaser, and Republic Engineered
Products LLC ("Republic"), N&T Railway Company LLC ("N&T"), and Blue Steel
Capital Corp. ("Blue Steel" and collectively with Republic and N&T, the
"Sellers");
WHEREAS, delivery of the Notes is a condition precedent to the
Sellers' obligation to sell their assets pursuant to the Asset Purchase
Agreement;
WHEREAS, it is a condition precedent to the Noteholders' purchasing
any Note under the Note Purchase Agreement that the Company execute and deliver
to the Collateral Agent, for the benefit of the Noteholders and the Collateral
Agent, a security agreement in substantially the form hereof; and
WHEREAS, the Company wishes to grant a security interest in favor of
the Collateral Agent, for the benefit of the Noteholders and the Collateral
Agent, as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein without
definitions shall have the respective meanings provided therefor in the Note
Purchase Agreement. The term "State", as used herein, means the State of New
York. All terms defined in the Uniform Commercial Code of the State and used
herein shall have the same definitions herein as specified therein. However, if
a term is defined in Article 9 of the Uniform Commercial Code of the State
differently than in another Article of the Uniform Commercial Code of the State,
the term has the meaning specified in Article 9. The term "electronic document"
applies in the event that the 2003 revisions to Article 7, with amendments to
Article 9, of the Uniform Commercial Code, in substantially the form approved by
the American Law Institute and the National Conference of Commissioners on
Uniform State Laws, are now or hereafter adopted and become effective in the
State or in any other relevant jurisdiction. The term "Obligations", as used
herein, means all of the indebtedness, obligations and liabilities of the
Company to the Collateral Agent and the Noteholders, individually or
collectively, whether direct or indirect, joint or several,
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absolute or contingent, due or to become due, now existing or hereafter arising
under or in respect of the Note Purchase Agreement, any promissory notes or
other instruments or agreements executed and delivered pursuant thereto or in
connection therewith or this Agreement.
2. GRANT OF SECURITY INTEREST. The Company hereby grants to the
Collateral Agent, for the benefit of the Noteholders and the Collateral Agent,
to secure the payment and performance in full of all of the Obligations, a
security interest in and pledges and assigns to the Collateral Agent, for the
benefit of the Noteholders and the Collateral Agent, all of the following
properties, assets and rights of the Company, as applicable, whether now owned
or hereafter acquired or arising, and all proceeds (including insurance
proceeds) and products thereof and all general intangibles, documents and
instruments relating to any of the following (all of the same being hereinafter
called the "Collateral"):
(a) business interruption insurance claims and proceeds
of business interruption insurance provided that such security
interests shall be limited to fifty percent (50%) of any
proceeds greater than Five Million U.S. Dollars ($5,000,000)
but less than Twenty Five Million U.S. Dollars ($25,000,000)
received by the Sellers or the Company after December 5, 2003,
for business interruption insurance coverage relating to the
loss events experienced by the Sellers at their Lorain, Ohio,
plant in January, June, and August of 2003; provided that such
security interests shall in no event exceed Ten Million U.S.
Dollars ($10,000,000) in the aggregate; and
(b) all furniture, fixtures, equipment, or other goods
associated with or used in connection with the Canton Cast
Roll Facility (all of the foregoing of the Company described
in this clause (b) collectively referred to herein as the
"Canton Fixed Assets"), and all insurance claims, tort claims,
chattel paper and all general intangibles related to the
Canton Fixed Assets (including, without limitation, all
patents of the Company relating to equipment used by the
Company exclusively at the Canton Cast Roll Facility but
excluding the Mexican patent applications with numbers 9802605
and 9603223) (all such patents of the Company collectively
referred to herein as the "Cast Roll Intellectual Property").
3. AUTHORIZATION TO FILE FINANCING STATEMENTS. The Company hereby
irrevocably authorizes the Collateral Agent at any time and from time to time to
file in any filing office in any Uniform Commercial Code jurisdiction any
initial financing statements and amendments thereto that (a) indicate the
Collateral (i) as described in Section 2 above or words of similar effect,
regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the Uniform Commercial Code of the State or
such jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail and (b) provide any other information required by part 5 of Article 9 of
the Uniform Commercial Code of the State or such other jurisdiction for the
sufficiency or filing office acceptance of any financing statement or amendment,
including (i) whether the Company is an organization, the type of organization
and any organizational
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identification number issued to the Company and, (ii) in the case of a financing
statement filed as a fixture filing, a sufficient description of real property
to which the Collateral relates. The Company agrees to furnish any such
information to the Collateral Agent promptly upon the Collateral Agent's
request. The Company also ratifies its authorization for the Collateral Agent to
have filed in any Uniform Commercial Code jurisdiction any like initial
financing statements or amendments thereto if filed prior to the date hereof.
4. OTHER ACTIONS. Further to ensure the attachment, perfection and
first priority of, and the ability of the Collateral Agent to enforce, the
Collateral Agent's security interest in the Collateral, the Company agrees, in
each case at the Company's expense, to take the following actions with respect
to the following Collateral, as applicable, and without limitation on the
Company's other obligations contained in this Agreement:
4.1. PROMISSORY NOTES AND TANGIBLE CHATTEL PAPER. If the
Company shall, now or at any time hereafter, hold or acquire any
promissory notes or tangible chattel paper constituting Collateral,
the Company shall forthwith endorse, assign and deliver the same to
the Collateral Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Collateral Agent may from
time to time specify.
4.2. COLLATERAL IN THE POSSESSION OF A BAILEE. If any
Collateral is, now or at any time hereafter, in the possession of a
bailee, the Company shall promptly notify the Collateral Agent
thereof and, at the Collateral Agent's request and option, shall
promptly obtain an acknowledgement from the bailee, in form and
substance reasonably satisfactory to the Collateral Agent, that the
bailee holds such Collateral for the benefit of the Collateral
Agent, such bailee's agreement to comply, without further consent of
the Company, at any time with instructions of the Collateral Agent
as to such Collateral. The Collateral Agent agrees with the Company
that the Collateral Agent shall not give any such instructions
unless an Event of Default has occurred and is continuing or would
occur after taking into account any action by the Company with
respect to the bailee.
4.3. ELECTRONIC CHATTEL PAPER AND TRANSFERABLE RECORDS. If the
Company, now or at any time hereafter, holds or acquires an interest
in any Collateral consisting of electronic chattel paper or any
"transferable record," as that term is defined in Section 201 of the
federal Electronic Signatures in Global and National Commerce Act,
or in Section 16 of the Uniform Electronic Transactions Act as in
effect in any relevant jurisdiction, the Company shall promptly
notify the Collateral Agent thereof and, at the request and option
of the Collateral Agent, shall take such action as the Collateral
Agent may reasonably request to vest in the Collateral Agent
control, under Section 9-105 of the Uniform Commercial Code in
effect in such jurisdiction, of such electronic chattel paper or
control under Section 201 of the federal Electronic Signatures in
Global and National Commerce Act or, as the case may be, Section 16
of the Uniform Electronic Transactions Act, as so in effect in such
jurisdiction, of such transferable record. The Collateral Agent
agrees with the Company that the Collateral Agent will
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arrange, pursuant to procedures satisfactory to the Collateral Agent
and so long as such procedures will not result in the Collateral
Agent's loss of control, for the Company to make alterations to the
electronic chattel paper or transferable record permitted under
Section 9-105 of the Uniform Commercial Code or, as the case may be,
Section 201 of the federal Electronic Signatures in Global and
National Commerce Act or Section 16 of the Uniform Electronic
Transactions Act for a party in control to make without loss of
control, unless an Event of Default has occurred and is continuing
or would occur after taking into account any action by the Company
with respect to such electronic chattel paper or transferable
record.
4.4. LETTER-OF-CREDIT RIGHTS. If the Company is, now or at any
time hereafter, a beneficiary under a letter of credit constituting
Collateral described in Section 2 above, the Company shall promptly
notify the Collateral Agent thereof and, at the request and option
of the Collateral Agent, the Company shall, pursuant to an agreement
in form and substance reasonably satisfactory to the Collateral
Agent, either (a) arrange for the issuer and any confirmer or other
nominated person of such letter of credit to consent to an
assignment to the Collateral Agent of the proceeds of the letter of
credit or (b) arrange for the Collateral Agent to become the
transferee beneficiary of the letter of credit, with the Collateral
Agent agreeing, in each case, that the proceeds of the letter of
credit are to be applied to the Obligations as provided in the Note
Purchase Agreement.
4.5. COMMERCIAL TORT CLAIMS. If the Company shall, now or at
any time hereafter, hold or acquire a commercial tort claim
described in Section 2 above, the Company shall immediately notify
the Collateral Agent in a writing signed by the Company of the
particulars thereof and grant to the Collateral Agent, for the
benefit of the Noteholders and the Collateral Agent, in such writing
a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and
substance reasonably satisfactory to the Collateral Agent.
4.6. OTHER ACTIONS AS TO ANY AND ALL COLLATERAL. The Company
further agrees, upon the request of the Collateral Agent and at the
Collateral Agent's option, to take any and all other actions as the
Collateral Agent may reasonably determine to be necessary or useful
for the attachment, perfection and first priority of, and the
ability of the Collateral Agent to enforce, the Collateral Agent's
security interest in any and all of the Collateral, including,
without limitation, (a) executing, delivering and, where
appropriate, filing financing statements and amendments relating
thereto under the Uniform Commercial Code as in effect in any
relevant jurisdiction, to the extent, if any, that the Company's
signature thereon is required therefor, (b) causing the Collateral
Agent's name to be noted as secured party on any certificate of
title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of the Collateral
Agent to enforce, the Collateral Agent's security interest in such
Collateral, (c) complying with any provision of any statute,
regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment,
perfection or priority of, or ability of the Collateral Agent
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to enforce, the Collateral Agent's security interest in such
Collateral, (d) using commercially reasonable efforts to obtain
governmental and other third party waivers, consents and approvals,
in form and substance reasonably satisfactory to the Collateral
Agent, including, without limitation, any consent of any licensor,
lessor or other person obligated on Collateral, and (e) taking all
actions under any other law, as reasonably determined by the
Collateral Agent to be applicable in any foreign jurisdiction.
5. RELATION TO OTHER SECURITY DOCUMENTS. The provisions of this
Agreement supplement the provisions of any real estate mortgage or deed of trust
granted by the Company to the Collateral Agent, for the benefit of the
Noteholders and the Collateral Agent, and which secures the payment or
performance of any of the Obligations. Nothing contained in any such real estate
mortgage or deed of trust shall derogate from any of the rights or remedies of
the Collateral Agent or any of the Noteholders hereunder.
6. REPRESENTATIONS AND WARRANTIES CONCERNING COMPANY'S LEGAL STATUS.
The Company has previously delivered to the Collateral Agent a certificate
signed by the Company and entitled "Perfection Certificate" (the "Perfection
Certificate"). The Company represents and warrants to the Noteholders and the
Collateral Agent as follows: (a) the Company's exact legal name is that
indicated on the Perfection Certificate and on the signature page hereof, (b)
the Company is an organization of the type, and is organized in the
jurisdiction, set forth in the Perfection Certificate, (c) the Perfection
Certificate accurately sets forth the Company's organizational identification
number or accurately states that the Company has none, (d) the Perfection
Certificate accurately sets forth the Company's place of business or, if more
than one, its chief executive office, as well as the Company's mailing address,
if different, (e) all other information set forth on the Perfection Certificate
pertaining to the Company is accurate and complete, and (f) there has been no
change in any of such information since the date on which the Perfection
Certificate was signed by the Company.
7. COVENANTS CONCERNING COMPANY'S LEGAL STATUS. The Company
covenants with the Noteholders and the Collateral Agent as follows: (a) without
providing at least thirty (30) days prior written notice to the Collateral
Agent, the Company will not change its name, its place of business or, if more
than one, chief executive office, or its mailing address or organizational
identification number if it has one, (b) if the Company does not have an
organizational identification number and later obtains one, the Company will
forthwith notify the Collateral Agent of such organizational identification
number, and (c) except as otherwise permitted by the Note Purchase Agreement,
the Company will not change its type of organization, jurisdiction of
organization or other legal structure.
8. REPRESENTATIONS AND WARRANTIES CONCERNING COLLATERAL, ETC. The
Company further represents and warrants to the Noteholders and the Collateral
Agent as follows: (a) the Company is the owner of or has other rights in or
power to transfer the Collateral, free from any right or claim of any person or
any adverse Lien, except for the security interest created by this Agreement and
other Liens permitted by the Note
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Purchase Agreement, (b) none of the Collateral constitutes, or is the proceeds
of, "farm products" as defined in Section 9-102(a)(34) of the Uniform Commercial
Code of the State, (c) the Company holds no commercial tort claim, (d) except
where non-compliance would not have a Material Adverse Effect, the Company has
at all times operated its business in compliance with all applicable provisions
of the federal Fair Labor Standards Act, as amended, and with all applicable
provisions of federal, state and local statutes and ordinances dealing with the
control, shipment, storage or disposal of hazardous materials or substances, and
(e) there has been no change in any of such information since the date on which
the Perfection Certificate was signed by the Company.
9. COVENANTS CONCERNING COLLATERAL, ETC. The Company further
covenants with the Collateral Agent and the Noteholders as follows: (a) the
Collateral, to the extent not delivered to the Collateral Agent pursuant to
Section 4, will be kept at those locations listed on the Perfection Certificate
and the Company will not remove the Collateral from such locations, without
providing at least thirty (30) days prior written notice to the Collateral
Agent, (b) except for the security interests herein granted and liens permitted
by the Note Purchase Agreement, the Company shall be the owner of or have other
rights in the Collateral free from any right or claim of any other person or any
Lien, and the Company shall defend the same against all claims and demands of
all persons at any time claiming the same or any interests therein adverse to
the Collateral Agent or any of the Noteholders, (c) the Company shall not
pledge, mortgage or create, or suffer to exist any right of any person in or
claim by any person to the Collateral, or any Lien in the Collateral in favor of
any person, other than the Collateral Agent other than Liens permitted by the
Note Purchase Agreement, (d) the Company will keep the Collateral in good order
and repair and will not use the same in violation of law or any policy of
insurance thereon, except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect, (e) the Company will permit the
Collateral Agent, or its designee, to inspect the Collateral at any reasonable
time, wherever located, (f) the Company will pay promptly when due all taxes,
assessments, governmental charges and levies upon the Collateral or incurred in
connection with the use or operation of the Collateral or incurred in connection
with this Agreement, except as permitted by the Note Purchase Agreement, (g) the
Company will continue to operate its business in compliance with all applicable
provisions of the federal Fair Labor Standards Act, as amended, and with all
applicable provisions of federal, state and local statutes and ordinances
dealing with the control, shipment, storage or disposal of hazardous materials
or substances, except where the failure to do so would not have a Material
Adverse Effect, and (h) the Company will not sell or otherwise dispose, or offer
to sell or otherwise dispose, of the Collateral or any interest therein except
for dispositions permitted by the Note Purchase Agreement.
10. INSURANCE.
10.1. MAINTENANCE OF INSURANCE. The Company will maintain with
financially sound and reputable insurers insurance with respect to
its properties and business against such casualties and
contingencies as shall be in accordance with general practices of
businesses of established reputations engaged in the same or similar
activities in similar geographic areas. Such insurance shall be in
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such minimum amounts that the Company will not be deemed a
co-insurer under applicable insurance laws, regulations and policies
and otherwise shall be in such amounts, contain such terms, be in
such forms and be for such periods as may be reasonably satisfactory
to the Collateral Agent. In addition, all insurance insuring any of
the Collateral and the interruption of the business of the Company
shall be payable to the Collateral Agent as additional insured and
loss payee under a "standard" or "New York" loss payee clause for
the benefit of the Noteholders and the Collateral Agent. Without
limiting the foregoing, the Company will (a) keep all of its
physical property insured with casualty or physical hazard insurance
on an "all risks" basis, with broad form flood and earthquake
coverages and electronic data processing coverage, with a full
replacement cost endorsement and an "agreed amount" clause in an
amount equal to 100% of the full replacement cost of such property,
(b) maintain all such workers' compensation or similar insurance as
may be required by law and (c) maintain, in amounts and with
deductibles equal to those generally maintained by businesses
engaged in similar activities in similar geographic areas, general
public liability insurance against claims of bodily injury, death or
property damage occurring, on, in or about the properties of the
Company; and business interruption insurance.
10.2. INSURANCE PROCEEDS. The proceeds of any casualty
insurance in respect of any casualty loss of any of the Collateral
(a) so long as no Default or Event of Default has occurred and is
continuing and to the extent that the amount of such proceeds is
less than $100,000, be disbursed to the Company for direct
application by the Company solely to the repair or replacement of
the Company's property so damaged or destroyed and (b) in all other
circumstances, be held by the Collateral Agent as cash collateral
for the Obligations. The Collateral Agent may, at its sole option,
disburse from time to time all or any part of such proceeds so held
as cash collateral, upon such terms and conditions as the Collateral
Agent may reasonably prescribe, for direct application by the
Company solely to the repair or replacement of the Company's
property so damaged or destroyed, or the Collateral Agent may apply
all or any part of such proceeds to the Obligations with the Notes
(if not then terminated) being reduced by the amount so applied to
the Obligations. All proceeds of business interruption insurance
constituting Collateral will be applied to prepay the Notes as set
forth in the Note Purchase Agreement.
10.3. CONTINUATION OF INSURANCE. All policies of insurance
shall provide for at least thirty (30) days prior written
cancellation notice to the Collateral Agent. In the event of failure
by the Company to provide and maintain insurance as herein provided,
the Collateral Agent may, at its option, provide such insurance and
charge the amount thereof to the Company. The Company shall furnish
the Collateral Agent with certificates of insurance and policies
evidencing compliance with the foregoing insurance provision.
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11. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
11.1. EXPENSES INCURRED BY COLLATERAL AGENT. In the Collateral
Agent's discretion, the Collateral Agent may discharge taxes and
other encumbrances at any time levied or placed on any of the
Collateral, maintain any of the Collateral, make repairs thereto,
and pay any necessary filing fees or insurance premiums. The Company
agrees to reimburse the Collateral Agent on demand for any and all
expenditures so made. The Collateral Agent shall have no obligation
to the Company to make any such expenditures, nor shall the making
thereof be construed as a waiver or cure of any Default or Event of
Default.
11.2. COLLATERAL AGENT'S OBLIGATIONS AND DUTIES. Anything
herein to the contrary notwithstanding, the Company shall remain
obligated and liable under each contract or agreement comprised in
the Collateral to be observed or performed by the Company
thereunder. Neither the Collateral Agent nor any Noteholder shall
have any obligation or liability under any such contract or
agreement by reason of or arising out of this Agreement or the
receipt by the Collateral Agent or any Noteholder of any payment
relating to any of the Collateral, nor shall the Collateral Agent or
any Noteholder be obligated in any manner to perform any of the
obligations of the Company under or pursuant to any such contract or
agreement, to make inquiry as to the nature or sufficiency of any
payment received by the Collateral Agent or any Noteholder in
respect of the Collateral or as to the sufficiency of any
performance by any party under any such contract or agreement, 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 the Collateral Agent or to which the Collateral
Agent or any Noteholder may be entitled at any time or times. The
Collateral Agent's sole duty with respect to the custody, safe
keeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the Uniform Commercial Code of
the State or otherwise, shall be to deal with such Collateral in the
same manner as the Collateral Agent deals with similar property for
its own account.
12. POWER OF ATTORNEY.
12.1. APPOINTMENT AND POWERS OF COLLATERAL AGENT. The Company
hereby irrevocably constitutes and appoints the Collateral Agent and
any officer or agent thereof, with full power of substitution, as
its true and lawful attorneys-in-fact with full irrevocable power
and authority in the place and stead of the Company or in the
Collateral Agent's own name, for the purpose of carrying out the
terms of this Agreement, to take (while an Event of Default shall
have occurred and be continuing) any and all appropriate action and
to execute any and all documents and instruments that may be
necessary or useful to accomplish the purposes of this Agreement
and, without limiting the generality of the foregoing, hereby gives
said attorneys the power and right, on behalf of the Company,
without notice to or assent by the Company, to do the following:
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(a) upon the occurrence and during the continuance of an
Event of Default, generally to sell, transfer, pledge, make
any agreement with respect to or otherwise dispose of or deal
with the Collateral in such manner as is consistent with the
Uniform Commercial Code of the State and as fully and
completely as though the Collateral Agent were the absolute
owner thereof for all purposes, and to do, at the Company's
expense, at any time, or from time to time, all acts and
things which the Collateral Agent deems necessary or useful to
protect, preserve or realize upon the Collateral and the
Collateral Agent's security interest therein, in order to
effect the intent of this Agreement, all no less fully and
effectively as the Company might do, including, without
limitation, the filing and prosecuting of registration and
transfer applications with the appropriate federal, state, or
local agencies or authorities with respect to patentable
inventions and processes, the execution, delivery and
recording, in connection with any sale or other disposition of
the Collateral, of the endorsements, assignments or other
instruments of conveyance or transfer with respect to such
Collateral; and
(b) regardless of whether or not an Event of Default has
occurred and is continuing, to the extent that the Company's
authorization given in Section 3 is not sufficient, to file
such financing statements with respect hereto, with or without
the Company's signature, or a photocopy of this Agreement in
substitution for a financing statement, as the Collateral
Agent may deem appropriate and to execute in the Company's
name such financing statements and amendments thereto and
continuation statements which may require the Company's
signature.
12.2. RATIFICATION BY COMPANY. To the extent permitted by law,
the Company hereby ratifies all that said attorneys shall lawfully
do or cause to be done by virtue hereof. This power of attorney is a
power coupled with an interest and is irrevocable.
12.3. NO DUTY ON COLLATERAL AGENT. The powers conferred on the
Collateral Agent hereunder are solely to protect the interests of
the Collateral Agent and the Noteholders in the Collateral and shall
not impose any duty upon the Collateral Agent to exercise any such
powers. The Collateral Agent shall be accountable only for the
amounts that it actually receives as a result of the exercise of
such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Company for any act
or failure to act, except for the Collateral Agent's own gross
negligence or willful misconduct.
13. RIGHTS AND REMEDIES. If an Event of Default shall have occurred
and be continuing, the Collateral Agent, without any other notice to or demand
upon the Company, shall have in any jurisdiction in which enforcement hereof is
sought, in addition to all other rights and remedies, the rights and remedies of
a secured party under the Uniform Commercial Code of the State and any
additional rights and remedies as may be provided to a secured party in any
jurisdiction in which Collateral is located,
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including the right to take possession of the Collateral, and for that purpose
the Collateral Agent may, so far as the Company can give authority therefor,
enter upon any premises on which the Collateral may be situated and remove the
same therefrom. The Collateral Agent may in its discretion require the Company
to assemble all or any part of the Collateral at such location or locations
within the jurisdiction(s) of the Company's principal office(s) or at such other
locations as the Collateral Agent may reasonably designate. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Collateral Agent shall give to
the Company at least ten (10) Business Days prior written notice of the time and
place of any public sale of Collateral or of the time after which any private
sale or any other intended disposition is to be made. The Company hereby
acknowledges that ten (10) Business Days prior written notice of such sale or
sales shall be reasonable notice. In addition, the Company waives any and all
rights that it may have to a judicial hearing in advance of the enforcement of
any of the Collateral Agent's rights and remedies hereunder, including its right
following an Event of Default to take immediate possession of the Collateral and
to exercise its rights and remedies with respect thereto.
14. STANDARDS FOR EXERCISING RIGHTS AND REMEDIES. To the extent that
applicable law imposes duties on the Collateral Agent to exercise remedies in a
commercially reasonable manner, the Company acknowledges and agrees that it is
not commercially unreasonable for the Collateral Agent (a) to fail to incur
expenses reasonably deemed significant by the Collateral Agent to prepare
Collateral for disposition or otherwise to fail to complete raw material or work
in process into finished goods or other finished products for disposition, (b)
to fail to obtain third party consents for access to Collateral to be disposed
of, or to obtain or, if not required by other law, to fail to obtain
governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (c) to fail to exercise collection
remedies against account debtors or other persons obligated on Collateral or to
fail to remove Liens on or any adverse claims against Collateral, (d) to
exercise collection remedies against account debtors and other persons obligated
on Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (f) to contact other persons, whether or not in the
same business as the Company, for expressions of interest in acquiring all or
any portion of the Collateral, (g) to hire one or more professional auctioneers
to assist in the disposition of Collateral, whether or not the collateral is of
a specialized nature, (h) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties, (k) to purchase insurance or
credit enhancements to insure the Collateral Agent against risks of loss,
collection or disposition of Collateral or to provide to the Collateral Agent a
guaranteed return from the collection or disposition of Collateral, or (l) to
the extent deemed appropriate by the Collateral Agent, to obtain the services of
brokers, investment bankers, consultants and other professionals to assist the
Collateral Agent in the collection or disposition of any of the Collateral. The
Company acknowledges that the purpose of this Section 14 is to provide
non-exhaustive indications of what actions or omissions by the Collateral Agent
would fulfill the
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Collateral Agent's duties under the Uniform Commercial Code of the State or any
other relevant jurisdiction in the Collateral Agent's exercise of remedies
against the Collateral and that other actions or omissions by the Collateral
Agent shall not be deemed to fail to fulfill such duties solely on account of
not being indicated in this Section 14 Without limitation upon the foregoing,
nothing contained in this Section 14 shall be construed to grant any rights to
the Company or to impose any duties on the Collateral Agent that would not have
been granted or imposed by this Agreement or by applicable law in the absence of
this Section 14.
15. NO WAIVER BY COLLATERAL AGENT, ETC. The Collateral Agent shall
not be deemed to have waived any of its rights and remedies in respect of the
Obligations or the Collateral unless such waiver shall be in writing and signed
by the Collateral Agent with the consent of the Required Holders. No delay or
omission on the part of the Collateral Agent in exercising any right or remedy
shall operate as a waiver of such right or remedy or any other right or remedy.
A waiver on any one occasion shall not be construed as a bar to or waiver of any
right or remedy on any future occasion. All rights and remedies of the
Collateral Agent with respect to the Obligations or the Collateral, whether
evidenced hereby or by any other instrument or papers, shall be cumulative and
may be exercised singularly, alternatively, successively or concurrently at such
time or at such times as the Collateral Agent deems expedient.
16. SURETYSHIP WAIVERS BY COMPANY. The Company waives demand,
notice, protest, notice of acceptance of this Agreement, notice of loans made,
credit extended, Collateral received or delivered or other action taken in
reliance hereon and all other demands and notices of any description. With
respect to both the Obligations and the Collateral, the Company assents to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Collateral Agent may deem advisable. The Collateral
Agent shall have no duty as to the collection or protection of the Collateral or
any income therefrom, the preservation of rights against prior parties, or the
preservation of any rights pertaining thereto beyond the safe custody thereof as
set forth in Section 11.2. The Company further waives any and all other
suretyship defenses.
17. MARSHALLING. Neither the Collateral Agent nor any Noteholder
shall be required to marshal any present or future collateral security
(including but not limited to the Collateral) for, or other assurances of
payment of, the Obligations or any of them or to resort to such collateral
security or other assurances of payment in any particular order, and all of the
rights and remedies of the Collateral Agent or any Noteholder hereunder and of
the Collateral Agent or any Noteholder in respect of such collateral security
and other assurances of payment shall be cumulative and in addition to all other
rights and remedies, however existing or arising. To the extent that it lawfully
may, the Company hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Collateral Agent's rights and remedies under this Agreement or under any
other instrument creating or evidencing any of the Obligations or under which
any of the Obligations is outstanding or by which
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any of the Obligations is secured or payment thereof is otherwise assured, and,
to the extent that it lawfully may, the Company hereby irrevocably waives the
benefits of all such laws.
18. PROCEEDS OF DISPOSITIONS; EXPENSES. The Company shall pay to the
Collateral Agent on demand any and all reasonable expenses, including reasonable
attorneys' fees and disbursements, incurred or paid by the Collateral Agent in
protecting, preserving or enforcing the Collateral Agent's rights and remedies
under or in respect of any of the Obligations or the Collateral. After deducting
all of said expenses, the residue of any proceeds of collection or sale or other
disposition of the Collateral shall, to the extent actually received in cash, be
applied to the payment of the Obligations in such order or preference as is
provided in the Note Purchase Agreement, proper allowance and provision being
made for any Obligations not then due. Upon the final payment and satisfaction
in full of all of the Obligations and after making any payments required by
Sections 9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial Code of the
State, any excess shall be returned to the Company. In the absence of final
payment and satisfaction in full of all of the Obligations, the Company shall
remain liable for any deficiency.
19. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
Company hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Note Purchase Agreement.
20. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK. The Company agrees that any action or claim arising out of any dispute in
connection with this Agreement, any rights or obligations hereunder or the
performance or enforcement of such rights or obligations may be brought in the
courts of the State of New York or any federal court sitting therein and
consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Company by mail at the address
specified in Section 21 of the Note Purchase Agreement. The Company hereby
waives any objection that it may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.
21. WAIVER OF JURY TRIAL. THE COMPANY WAIVES ITS RIGHT TO A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as
prohibited by law, the Company waives any right which it may have to claim or
recover in any litigation referred to in the preceding sentence any special,
exemplary, punitive or consequential damages or any damages other than, or in
addition to, actual damages. The Company (a) certifies that neither the
Collateral Agent or any Noteholder nor any representative, agent or attorney of
the Collateral Agent or any Noteholder has represented, expressly or otherwise,
that the Collateral Agent or any Noteholder would not, in the event of
litigation, seek to
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enforce the foregoing waivers or other waivers contained in this Agreement and
(b) acknowledges that, in entering into the Note Purchase Agreement and the
other Note Documents to which the Collateral Agent or any Noteholder is a party,
the Collateral Agent and the Noteholders are relying upon, among other things,
the waivers and certifications contained in this Section 21.
22. TERMINATION. At such time as all of the Obligations have been
finally paid and satisfied in full in cash, this Agreement shall terminate and
the Collateral Agent shall, upon the written request and at the expense of the
Company, execute and deliver to the Company all releases, assignments and other
instruments as may be necessary or proper to terminate the Collateral Agent's
security interest granted hereunder, as fully as if this Agreement had not been
made, subject to any disposition of all or any part thereof that may have been
made by the Collateral Agent pursuant hereto. Upon the sale of any Collateral in
accordance with the provisions of the Note Purchase Agreement and this
Agreement, the Collateral Agent shall, upon the written request and at the
expense of the Company, execute and deliver to the Company, all releases,
assignments and other instruments as may be necessary or proper to terminate the
Collateral Agent's security interest in such Collateral. Notwithstanding the
foregoing, this Agreement shall continue to be effective or be reinstated, as
the case may be, if at any time any amount received by the Collateral Agent, or
any Noteholder in respect of the Obligations is rescinded or must otherwise be
restored or returned by the Collateral Agent or any Noteholder upon insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Company, upon the
appointment of any intervenor or conservator of, or trustee or similar official
for the Company or any substantial part of its assets, or otherwise, all as
though such payments had not been made.
23. MISCELLANEOUS. The headings of each section of this Agreement
are for convenience only and shall not define or limit the provisions thereof.
This Agreement and all rights and obligations hereunder shall be binding upon
the Company and its successors and assigns, and shall inure to the benefit of
the Collateral Agent, the Noteholders and their respective successors and
assigns. If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. The
Company acknowledges receipt of a copy of this Agreement.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, intending to be legally bound, the Company has
caused this Agreement to be duly executed as of the date first above written.
REPUBLIC ENGINEERED PRODUCTS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
Accepted:
FLEET CAPITAL CORPORATION, AS
COLLATERAL AGENT
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: SR.V.P.
Signature page to Security Agreement
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this _______ day of _________, 20__, personally appeared Xxxxxx X.
Xxxxxxxx to me known personally, and who, being by me duly sworn, deposes and
says that [s]he is the CEO of Republic Engineered Products, Inc., and that said
instrument was signed and sealed on behalf of said corporation by authority of
its Board of Directors, and said CEO acknowledged said instrument to be the free
act and deed of said corporation.
/s/ Xxxxxx Xxxxxxxxxx
-------------------------------------
Notary Public
My Commission expires:
XXXXXX XXXXXXXXXX
Notary Public, State of New York
No. 01LE6069337
Qualified in Nassau County
Certificate Filed in New York County
Commission Expires 1/28/06
