EXHIBIT 4.3
SECURITY AGREEMENT
Dated February 10, 2003
From
The Grantors referred to herein
as Grantors
to
Citicorp USA, Inc.
as Collateral Agent
TABLE OF CONTENTS
SECTION PAGE
Section 1. Grant of Security............................................ 2
Section 2. Security for Obligations..................................... 7
Section 3. Grantors Remain Liable....................................... 8
Section 4. Delivery and Control of Security Collateral.................. 8
Section 5. Maintaining the Account Collateral........................... 8
Section 6. Investing of Amounts in the Collateral Account............... 9
Section 7. Maintaining Electronic Chattel Paper and Transferable
Records...................................................... 10
Section 8. Representations and Warranties............................... 10
Section 9. Further Assurances........................................... 12
Section 10. As to Equipment and Inventory................................ 12
Section 11. Insurance.................................................... 13
Section 12. Post-Closing Changes; Bailees; Collections on Receivables
and Related Contracts........................................ 14
Section 13. Voting Rights; Dividends; Etc................................ 15
Section 14. Transfers and Other Liens; Additional Shares................. 16
Section 15. Collateral Agent Appointed Attorney-in-Fact.................. 16
Section 16. Collateral Agent May Perform................................. 17
Section 17. The Collateral Agent's Duties................................ 17
Section 18. Remedies..................................................... 18
Section 19. Indemnity and Expenses....................................... 19
Section 20. Amendments; Waivers; Additional Grantors; Etc................ 20
Section 21. Notices, Etc................................................. 20
Section 22. Continuing Security Interest; Assignments Under the Credit
Agreement.................................................... 21
Section 23. Release; Termination......................................... 21
Section 24. Security Interest Absolute................................... 22
2
Section 25. Execution in Counterparts.................................... 23
Section 26. The Mortgages................................................ 23
Section 27. Governing Law................................................ 23
Schedules I - Location, Chief Executive Office, Type Of Organization, Trade
Names, Jurisdiction Of Organization And Organizational
Identification Number
Schedule II - Pledged Equity and Pledged Debt
Schedule III - Locations of Equipment and Inventory
Schedule IV - Changes in Name, Location, Etc.
Schedule V - Account Collateral
Schedule VI - Commercial Tort Claims
Exhibit A - Form of Security Agreement Supplement
Exhibit B - Form of Account Control Agreement (Deposit Account/Securities
Account)
SECURITY AGREEMENT
SECURITY AGREEMENT dated February 10, 2003 made by XxXxxxxxx International,
Inc., a Panamanian corporation ("MII"), J. Xxx XxXxxxxxx, S.A., a Panamanian
corporation ("JRMSA"), J. Xxx XxXxxxxxx Holdings, Inc., a Delaware corporation
("JRMHI"), J. Xxx XxXxxxxxx, Inc., a Delaware corporation ("JRMI", and together
with JRMSA and JRMHI, the "BORROWERS" and each, a "BORROWER"), the other Persons
listed on the signature pages hereof and the Additional Grantors (as defined in
Section 20(b)) (MII, the Borrowers, the Persons so listed and the Additional
Grantors being, collectively, the "GRANTORS"), to Citicorp USA, Inc., as
collateral agent (in such capacity, together with any successor collateral agent
appointed pursuant to Article VII of the Credit Agreement (as hereinafter
defined), the "COLLATERAL AGENT") for the Secured Parties (as defined in the
Credit Agreement).
PRELIMINARY STATEMENTS.
(1) MII, the Borrowers and BWX Technologies, Inc., a Delaware corporation,
have entered into a Credit Agreement dated as of February 10, 2003 (said
Agreement, as it may hereafter be amended, amended and restated, supplemented or
otherwise modified from time to time, being the "CREDIT AGREEMENT") with the
Lender Parties and the Agents (each as defined therein). Terms defined in the
Credit Agreement and not otherwise defined in this Agreement are used in this
Agreement as defined in the Credit Agreement.
(2) Pursuant to the Credit Agreement, the Grantors are entering into this
Agreement in order to grant to the Collateral Agent for the ratable benefit of
the Secured Parties a security interest in the Collateral (as hereinafter
defined).
(3) Each Grantor is the owner of the shares of stock or other Equity
Interests (the "INITIAL PLEDGED EQUITY") set forth opposite such Grantor's name
on and as otherwise described in Part I of Schedule II hereto and issued by the
Persons named therein and of the indebtedness (the "INITIAL PLEDGED DEBT") set
forth opposite such Grantor's name on and as otherwise described in Part II of
Schedule II hereto and issued by the obligors named therein.
(4) MII has opened a collateral deposit account (the "COLLATERAL ACCOUNT"),
with Citibank, N. A. at its office at 000 Xxxx Xxx., Xxx Xxxx, XX 00000.
(5) The Grantors have opened deposit accounts and securities accounts (the
"BANK ACCOUNTS") with banks, in the names of such Grantors and subject to the
terms of this Agreement, as described in Schedule V hereto.
(6) It is a condition precedent to the making of Advances and the issuance
of Letters of Credit by the Lender Parties under the Credit Agreement and the
entry into Secured Hedge Agreements by the Hedge Banks from time to time that
the Grantors shall have granted the assignment and security interest and made
the pledge and assignment contemplated by this Agreement.
(7) Each Grantor will derive substantial direct and indirect benefit from
the transactions contemplated by the Loan Documents.
2
(8) Unless otherwise defined in this Agreement or in the Credit Agreement,
terms defined in Article 8 or 9 of the UCC (as defined below) and/or in the
Federal Book Entry Regulations (as defined below) are used in this Agreement as
such terms are defined in such Article 8 or 9 and/or the Federal Book Entry
Regulations. "UCC" means the Uniform Commercial Code as in effect, from time to
time, in the State of New York; PROVIDED that, if perfection or the effect of
perfection or non-perfection or the priority of any security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, "UCC" means the Uniform
Commercial Code as in effect from time to time in such other jurisdiction for
purposes of the provisions hereof relating to such perfection, effect of
perfection or non-perfection or priority. The term "FEDERAL BOOK ENTRY
REGULATIONS" means (a) the federal regulations contained in Subpart B
("Treasury/Reserve Automated Debt Entry System (TRADES)") governing book-entry
securities consisting of U.S. Treasury bonds, notes and bills and Subpart D
("ADDITIONAL PROVISIONS") of 31 C.F.R. Part 357, 31 C.F.R. Section 357.2,
Section 357.10 through Section 357.14 and Section 357.41 through Section 357.44
and (b) to the extent substantially identical to the federal regulations
referred to in clause (a) above (as in effect from time to time), the federal
regulations governing other book-entry securities.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lender Parties to make Advances and issue Letters of Credit under the Credit
Agreement, to induce the Hedge Banks to enter into Secured Hedge Agreements and
to induce the Secured Parties to enter into foreign exchange spot contracts from
time to time and to maintain other Bilateral Obligations, each Grantor hereby
agrees with the Collateral Agent for the ratable benefit of the Secured Parties
as follows:
Section 1. Grant of Security. (x) Each Grantor (other than MII) hereby
grants to the Collateral Agent, for the ratable benefit of the Secured Parties,
a security interest in such Grantor's right, title and interest in and to the
following, in each case, as to each type of property described below, whether
now owned or hereafter acquired by such Grantor, wherever located, and whether
now or hereafter existing or arising (collectively, the "X. XXX COLLATERAL"):
(a) all equipment (major items of movable equipment being
"CONTRACTOR'S EQUIPMENT") in all of its forms, including, without
limitation, all machinery, tools, motor vehicles, vessels ("VESSELS"),
aircraft, furniture and fixtures, and all parts thereof and all accessions
thereto and all software related thereto, including, without limitation,
software that is embedded in and is part of the equipment (any and all such
property being the "EQUIPMENT");
(b) all inventory in all of its forms, including, without limitation,
(i) all raw materials, work in process, finished goods and materials used
or consumed in the manufacture, production, preparation or shipping
thereof, (ii) goods in which such Grantor has an interest in mass or a
joint or other interest or right of any kind (including, without
limitation, goods in which such Grantor has an interest or right as
consignee) and (iii) goods that are returned to or repossessed or stopped
in transit by such Grantor), and all accessions thereto and products
thereof and documents therefor, and all software related thereto,
including, without limitation, software that is embedded in and is part of
the inventory (any and all such property being the "INVENTORY");
3
(c) all accounts (including, without limitation, health-care-insurance
receivables), chattel paper (including, without limitation, tangible
chattel paper and electronic chattel paper), instruments (including,
without limitation, promissory notes), deposit accounts, letter-of-credit
rights, general intangibles (including, without limitation, payment
intangibles) and other obligations of any kind, whether or not arising out
of or in connection with the sale or lease of goods or the rendering of
services and whether or not earned by performance, and all rights now or
hereafter existing in and to all supporting obligations and in and to all
security agreements, mortgages, Liens, leases, letters of credit and other
contracts securing or otherwise relating to the foregoing property (any and
all of such accounts, chattel paper, instruments, deposit accounts,
letter-of-credit rights, general intangibles and other obligations, to the
extent not referred to in clause (d), (e) or (f) below, being the
"RECEIVABLES", and any and all such supporting obligations, security
agreements, mortgages, Liens, leases, letters of credit and other contracts
being the "RELATED CONTRACTS");
(d) the following (the "X. XXX SECURITY COLLATERAL"), with respect to
such Grantor:
(i) the Initial Pledged Equity and the certificates, if any,
representing the Initial Pledged Equity, and all dividends,
distributions, return of capital, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Initial Pledged Equity
and all subscription warrants, rights or options issued thereon or
with respect thereto;
(ii) the Initial Pledged Debt and the instruments, if any,
evidencing the Initial Pledged Debt, and all interest, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of the Initial Pledged Debt;
(iii) all additional shares of stock and other Equity Interests
from time to time acquired by such Grantor, in any manner, and the
certificates, if any, representing such additional shares or other
Equity Interests, and all dividends, distributions, return of capital,
cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such shares or other Equity Interests and all
subscription warrants, rights or options issued thereon or with
respect thereto, PROVIDED, HOWEVER, that none of the Grantors shall be
required to pledge any Equity Interest in any Person organized or
formed in a jurisdiction outside of the United States of America that
is owned or otherwise held thereby which, when aggregated with all of
the other Equity Interests in such Person pledged by such Grantor and
the other Grantors, would result in more than 66% of the Equity
Interests in such Person entitled to vote (within the meaning of
Treasury Regulation Section 1.956-2(c)(2) promulgated under the
Internal Revenue Code) (the "VOTING EQUITY INTERESTS") (on a fully
diluted basis) being pledged to the Collateral Agent, on behalf of the
Secured Parties, under this Agreement and the other Collateral
Documents (although all of the Equity Interests in such Person not
entitled to vote (within the
4
meaning of Treasury Regulation Section 1.956-2(c)(2) promulgated under
the Internal Revenue Code) (the "NON-VOTING EQUITY INTERESTS") shall
be pledged by each of the Grantors that owns or otherwise holds any
such Non-Voting Equity Interest therein); PROVIDED that, if, as a
result of any change in the tax laws of the United States of America
after the date of this Agreement, the pledge by such Grantor of any
additional Equity Interests in any such Person to the Collateral
Agent, on behalf of the Secured Parties, under this Agreement or any
of the other Collateral Documents would not result in an increase in
the aggregate net consolidated tax liabilities of MII and its
Subsidiaries, then, promptly after the change in such laws, all such
additional Equity Interests shall be so pledged under this Agreement
or such other Collateral Document, as applicable;
(iv) all additional indebtedness from time to time owed to such
Grantor and the instruments, if any, evidencing such indebtedness, and
all interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such indebtedness;
(v) all other investment property (including, without limitation,
all (A) securities, whether certificated or uncertificated, (B)
security entitlements, (C) securities accounts, (D) commodity
contracts and (E) commodity accounts) in which such Grantor has now,
or acquires from time to time hereafter, any right, title or interest
in any manner, and the certificates or instruments, if any,
representing or evidencing such investment property, and all
dividends, distributions, return of capital, interest, distributions,
value, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such investment property and all
subscription warrants, rights or options issued thereon or with
respect thereto;
(e) the following (collectively, the "X. XXX ACCOUNT COLLATERAL"):
(i) the Bank Accounts and all funds and financial assets from
time to time credited thereto (including, without limitation, all Cash
Equivalents), all interest, dividends, distributions, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of such funds and financial assets, and all certificates and
instruments, if any, from time to time representing or evidencing the
Bank Accounts;
(ii) all promissory notes, certificates of deposit, deposit
accounts, checks and other instruments from time to time delivered to
or otherwise possessed by the Collateral Agent for or on behalf of
such Grantor, including, without limitation, those delivered or
possessed in substitution for or in addition to any or all of the then
existing X. Xxx Account Collateral; and
5
(iii) all interest, dividends, distributions, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing X. Xxx Account Collateral;
(f) all commercial tort claims described in Schedule VI hereto
(collectively, the "COMMERCIAL TORT CLAIMS COLLATERAL");
(g) all books and records (including, without limitation, customer
lists, credit files, printouts and other computer output materials and
records) of such Grantor pertaining to any of the X. Xxx Collateral; and
(h) all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the X. Xxx Collateral (including,
without limitation, proceeds, collateral and supporting obligations that
constitute property of the types described in clauses (a) through (g) of
this Section 1(x) and this clause (h)) and, to the extent not otherwise
included, all (A) payments received under insurance (whether or not the
Collateral Agent is the loss payee thereof), or under any indemnity,
warranty or guaranty, payable by reason of loss or damage to or otherwise
with respect to any of the foregoing X. Xxx Collateral, (B) tort claims,
including, without limitation, all commercial tort claims and (C) cash.
PROVIDED, HOWEVER, that X. Xxx Collateral shall not include any Permitted
Unblocked Account (a) used for payroll, employee benefits or disbursements or
(b) maintained outside of the United States, in each case maintained in the
ordinary course of business consistent with past practices; PROVIDED FURTHER
that, notwithstanding the foregoing, if the granting of a security interest in
or pledge of any specific item of the X. Xxx Collateral is restricted or
prohibited (a "RESTRICTION") by, or would cause a breach or default under or
termination, avoidance or forfeiture, or right of termination, avoidance or
forfeiture (a "REMEDY"), of, any contract, license, law or regulation, then the
security interest or pledge created hereby is ineffective with respect to such
specific item of X. Xxx Collateral, except that the granting of such security
interest in or pledge of such specific item of the X. Xxx Collateral nonetheless
remains effective to the extent (i) the granting of such security interest or
pledge is allowed by such contract, license, law or regulation or (ii) such
Restriction or Remedy is rendered ineffective under the UCC.
(y) MII hereby grants to the Collateral Agent, for the ratable benefit of
the Secured Parties, a security interest in MII's right, title and interest in
and to the following, in each case, as to each type of property described below,
whether now owned or hereafter acquired by MII, wherever located, and whether
now or hereafter existing or arising (collectively, the "MII COLLATERAL", and
together with the X. Xxx Collateral, the "COLLATERAL"):
(a) the following (the "MII SECURITY COLLATERAL", and together with
the X. Xxx Security Collateral, the "SECURITY COLLATERAL"):
(i) the Initial Pledged Equity and the certificates, if any,
representing the Initial Pledged Equity, and all dividends,
distributions, return of capital, cash, instruments and other property
from time to time received, receivable or
6
otherwise distributed in respect of or in exchange for any or all of
the Initial Pledged Equity and all subscription warrants, rights or
options issued thereon or with respect thereto;
(ii) the Initial Pledged Debt and the instruments, if any,
evidencing the Initial Pledged Debt, and all interest, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of the Initial Pledged Debt;
(iii) all additional shares of stock and other Equity Interests
of or in any issuer of the Initial Pledged Equity or any successor
entity from time to time acquired by MII in any manner (such shares
and other Equity Interests, together with the Initial Pledged Equity
and the shares and other Equity Interests described in Section
1(x)(d)(iii), being the "PLEDGED EQUITY"), and the certificates, if
any, representing such additional shares or other Equity Interests,
and all dividends, distributions, return of capital, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares
or other Equity Interests and all subscription warrants, rights or
options issued thereon or with respect thereto; PROVIDED, HOWEVER,
that MII shall not be required to pledge any Equity Interest in any
Person organized or formed in a jurisdiction outside of the United
States of America that is owned or otherwise held thereby which, when
aggregated with all of the other Equity Interests in such Person
pledged by such Grantor and the other Grantors, would result in more
than 66% of the Voting Equity Interests in such Person (on a fully
diluted basis) being pledged to the Collateral Agent, on behalf of the
Secured Parties, under this Agreement and the other Collateral
Documents (although all of the Non-Voting Equity Interests in such
Person shall be pledged by MII); PROVIDED that, if, as a result of any
change in the tax laws of the United States of America after the date
of this Agreement, the pledge by MII of any additional Equity
Interests in any such Person to the Collateral Agent, on behalf of the
Secured Parties, under this Agreement or any of the other Collateral
Documents would not result in an increase in the aggregate net
consolidated tax liabilities of MII and its Subsidiaries, then,
promptly after the change in such laws, all such additional Equity
Interests shall be so pledged under this Agreement or such other
Collateral Document, as applicable;
(iv) all additional indebtedness from time to time owed to MII by
any obligor of the Initial Pledged Debt or any successor entity (such
indebtedness, together with the Initial Pledged Debt and the
indebtedness described in Section 1(x)(d)(iv), being the "PLEDGED
DEBT") and the instruments, if any, evidencing such indebtedness, and
all interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such indebtedness; and
(b) the following (collectively, the "MII ACCOUNT COLLATERAL", and
together with the X. Xxx Account Collateral, the "ACCOUNT COLLATERAL"):
7
(i) the Collateral Account, the Bank Accounts and all funds and
financial assets from time to time credited thereto (including,
without limitation, all Cash Equivalents), all interest, dividends,
distributions, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such funds and financial assets, and all
certificates and instruments, if any, from time to time representing
or evidencing the Collateral Account or the Bank Accounts;
(ii) all promissory notes, certificates of deposit, deposit
accounts, checks and other instruments from time to time delivered to
or otherwise possessed by or under the control of the Collateral Agent
for or on behalf of MII, including, without limitation, those
delivered or possessed in substitution for or in addition to any or
all of the then existing MII Account Collateral;
(iii) all interest, dividends, distributions, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing MII Account Collateral; and
(c) all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the MII Collateral (including,
without limitation, proceeds, collateral and supporting obligations that
constitute property of the types described in clauses (a) and (b) of this
Section 1(y) and this clause (c));
PROVIDED, HOWEVER, that MII Collateral shall not include any Permitted Unblocked
Account of MII; PROVIDED FURTHER that, notwithstanding the foregoing, if the
granting of a security interest in or pledge of any specific item of the MII
Collateral is subject to a Restriction under, or would give rise to a Remedy
under, any contract, license, law or regulation, then the security interest or
pledge created hereby is ineffective with respect to such specific item of MII
Collateral, except that the granting of such security interest in or pledge of
such specific item of the MII Collateral nonetheless remains effective to the
extent (i) the granting of such security interest or pledge is allowed by such
contract, license, law or regulation or (ii) such Restriction or Remedy is
rendered ineffective under the UCC.
Section 2. Security for Obligations. This Agreement hereby secures, in the
case of each Grantor, the payment of all Bilateral Obligations and all
Obligations of such Grantor now or hereafter existing under the Loan Documents
(including, without limitation, any extensions, modifications, substitutions,
amendments or renewals of any or all of the foregoing Obligations), whether
direct or indirect, absolute or contingent, and whether for principal, interest,
fees, expenses or otherwise (all such Obligations, being the "SECURED
OBLIGATIONS"), and such Grantor agrees to pay any and all expenses (including,
without limitation, reasonable counsel fees and expenses) incurred by the Agents
or the Lender Parties in enforcing any rights under this Agreement or any other
Loan Documents. Without limiting the generality of the foregoing, this Agreement
secures, as to each Grantor, the payment of all amounts that constitute part of
the Secured Obligations and would be owed by such Grantor to any Secured Party
under the Loan Documents but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving a Loan Party.
8
Section 3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor's Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Collateral Agent
of any of the rights hereunder shall not release any Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral and (c) no Secured Party shall have any obligation or liability under
the contracts and agreements included in the Collateral by reason of this
Agreement or any other Loan Document, nor shall any Secured Party be obligated
to perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
Section 4. Delivery and Control of Security Collateral. (a) All
certificates or instruments representing or evidencing Security Collateral
(other than the certificates or instruments representing or evidencing Security
Collateral identified in Schedule II as being located outside of the United
States) shall be delivered to and held by or on behalf of the Collateral Agent
pursuant hereto and shall be in suitable form for transfer by delivery, or shall
be accompanied by duly executed instruments of transfer or assignment in blank,
all in form and substance reasonably satisfactory to the Collateral Agent.
(b) With respect to any Security Collateral in which any Grantor has any
right, title or interest and that constitutes an uncertificated security, such
Grantor will use commercially reasonable efforts to cause the issuer thereof to
agree in an authenticated record with such Grantor and the Collateral Agent
that, upon notice from the Collateral Agent that an Event of Default has
occurred and is continuing, such issuer will comply with instructions with
respect to such security originated by the Collateral Agent without further
consent of such Grantor, such authenticated record to be in form and substance
reasonably satisfactory to the Collateral Agent. With respect to any Security
Collateral in which any Grantor has any right, title or interest and that is not
an uncertificated security, upon the request of the Collateral Agent upon the
occurrence and during the continuance of an Event of Default, such Grantor will
notify each such issuer of Pledged Equity that such Pledged Equity is subject to
the security interest granted hereunder.
(c) Upon the request of the Collateral Agent upon the occurrence and during
the continuance of an Event of Default, such Grantor will notify each such
issuer of Pledged Debt that such Pledged Debt is subject to the security
interest granted hereunder.
Section 5. Maintaining the Account Collateral. So long as any Advance or
any other Obligation of any Loan Party under any Loan Document shall remain
unpaid, any Letter of Credit that has not been cash collateralized (as provided
in the Credit Agreement) shall be outstanding, any Secured Hedge Agreement shall
be in effect or any Lender Party shall have any Commitment or any Bilateral
Obligation contract with Secured Party shall be in effect:
(a) Each Grantor will maintain all Account Collateral (other than
Account Collateral maintained in the Permitted Unblocked Accounts in the
ordinary course of business consistent with past practices) only with the
Collateral Agent or with banks (the "PLEDGED ACCOUNT BANKS") that have
agreed within the time period specified in Section 5.01(r) of the Credit
Agreement, in a record authenticated by the Grantor, the Collateral
9
Agent and the applicable Pledged Account Bank, to upon notice from the
Collateral Agent that an Event of Default has occurred and is continuing,
comply with instructions originated by the Collateral Agent directing the
disposition of funds in the Account Collateral without the further consent
of the Grantor, which authenticated record shall be substantially in the
form of Exhibit B hereto, or shall otherwise be in form and substance
reasonably satisfactory to the Collateral Agent (each such agreement, an
"ACCOUNT CONTROL AGREEMENT").
(b) Except for the Permitted Unblocked Accounts, each Grantor agrees
that it will not add any bank in the United States that maintains a deposit
account for such Grantor or open any new deposit account in the United
States with any then existing Pledged Account Bank unless (i) the
Collateral Agent shall have received at least 10 days' prior written notice
of such additional bank or such new deposit account and (ii) the Collateral
Agent shall have received, in the case of a bank or Pledged Account Bank
that is not the Collateral Agent, an Account Control Agreement
authenticated by such new bank and such Grantor, or a supplement to an
existing Account Control Agreement with such then existing Pledged Account
Bank, covering such new deposit account (and, upon the receipt by the
Collateral Agent of such Account Control Agreement or supplement, Schedule
V hereto shall be automatically amended to include such other deposit
account). Each Grantor agrees that it will not terminate any bank as a
Pledged Account Bank or terminate any Account Collateral, except that the
Grantor may terminate a Bank Account, and terminate a bank as a Pledged
Account Bank with respect to such Bank Account, if it gives the Collateral
Agent at least 10 days' prior written notice of such termination (and, upon
such termination, Schedule V hereto shall be automatically amended to
delete such Pledged Account Bank and Bank Account).
(c) Upon any termination by a Grantor of any Bank Account by such
Grantor, or any Pledged Account Bank with respect thereto, such Grantor
will immediately transfer all funds and property held in such terminated
Bank Account to another Bank Account listed in Schedule V or a new Bank
Account that is permitted by clause (b) of this Section 5, so that the
Collateral Agent shall have a continuously perfected security interest in
such Account Collateral, funds and property.
(d) If an Event of Default has occurred and is continuing, the
Collateral Agent may, at any time and without notice to, or consent from,
the Grantor, transfer, or direct the transfer of, funds from the Account
Collateral to satisfy the Grantor's obligations under the Loan Documents.
As soon as reasonably practicable after any such transfer, the Collateral
Agent agrees to give written notice thereof to the applicable Grantor.
Section 6. Investing of Amounts in the Collateral Account. MII may, subject
to the provisions of Sections 5 and 18, from time to time (a) invest, or direct
the applicable Pledged Account Bank to invest, amounts received with respect to
the Collateral Account in such Cash Equivalents credited to (A) the Collateral
Account as the Borrower may select or (B) in the case of Cash Equivalents
consisting of Security Collateral, a securities account in which the Collateral
Agent is the securities intermediary or a securities account subject to a
securities account control agreement, and (b) invest interest paid on the Cash
Equivalents referred to in
10
clause (a) above, and reinvest other proceeds of any such Cash Equivalents that
may mature or be sold, in each case in such Cash Equivalents credited in the
same manner.
Section 7. Maintaining Electronic Chattel Paper and Transferable Records .
(a)So long as any Advance or any other Obligation of any Borrower under any Loan
Document shall remain unpaid, any Letter of Credit that has not been cash
collateralized (as provided in the Credit Agreement) shall be outstanding, any
Secured Hedge Agreement or any Bilateral Obligation owing to a Secured Party
shall be in effect or any Lender Party shall have any Commitment, each Grantor
will maintain all (i) electronic chattel paper so that the Collateral Agent has
control of the electronic chattel paper in the manner specified in Section 9-105
of the UCC and (ii) all transferable records so that the Collateral Agent has
control of the transferable records in the manner specified in Section 16 of the
Uniform Electronic Transactions Act, as in effect in the jurisdiction governing
such transferable record ("UETA"); and
(b) Each Grantor will promptly, but in any event within 10 Business
Days after a Responsible Officer of MII becoming aware thereof, give notice
to the Collateral Agent of any material commercial tort claim that may
arise in the future and will promptly execute or otherwise authenticate a
supplement to this Agreement, and otherwise take all necessary action, to
subject such commercial tort claim to the first priority security interest
created under this Agreement.
Section 8. Representations and Warranties. Each Grantor represents and
warrants as of the date of this Agreement, as follows:
(a) Such Grantor's exact legal name, as defined in Section 9-503(a) of
the UCC, is correctly set forth in Schedule I hereto. Schedule I hereto
lists all trade names of such Grantor (other than such Grantor's exact
legal name) that Grantor believes to be of material value or benefit to its
business. Such Grantor is located (within the meaning of Section 9-307 of
the UCC) and has its chief executive office, in the state or jurisdiction
set forth in Schedule I hereto. The information set forth in Schedule I
hereto with respect to such Grantor is true and accurate in all material
respects. Such Grantor has not, at any time in the three years immediately
preceding the date of this Agreement, changed its name, location (within
the meaning of the Section 9-307 of the UCC), chief executive office, type
of organization or jurisdiction of organization or organizational
identification number from those set forth in Schedule I hereto except as
disclosed in Schedule IV hereto.
(b) Substantially all of the Equipment (other than motor vehicles,
aircraft and Vessels) and Inventory of such Grantor that is material to
such Grantor's business and located within the United States is located at
the places specified therefor in Schedule III hereto. All Security
Collateral (other than the certificates or instruments representing or
evidencing Security Collateral identified in Schedule II as being located
outside of the United States) consisting of certificated securities and
instruments have been delivered to the Collateral Agent.
11
(c) Such Grantor is the legal and beneficial owner of the Collateral
of such Grantor free and clear of any Lien, except for the security
interest created under this Agreement and Liens permitted under the Credit
Agreement.
(d) The Initial Pledged Equity pledged by such Grantor hereunder has
been duly authorized and validly issued and, in the case of Pledged Equity
issued by an entity organized under the laws of a jurisdiction located
within the United States, is fully paid and non-assessable. With respect to
the Pledged Equity that is an uncertificated security, such Grantor has
caused or will use commercially reasonable efforts to cause the issuer
thereof to agree in an authenticated record with such Grantor and the
Collateral Agent that, upon the occurrence and during the continuance of an
Event of Default, such issuer will comply with instructions with respect to
such security originated by the Collateral Agent without further consent of
such Grantor. If such Grantor is an issuer of Pledged Equity, such Grantor
confirms that it has received notice of such security interest. The Initial
Pledged Debt (other than the instruments representing or evidencing Initial
Pledged Debt identified in Schedule II as being located outside of the
United States pledged by such Grantor hereunder has been duly authorized,
authenticated or issued and delivered, is the legal, valid and binding
obligation of the issuers thereof, is evidenced by one or more promissory
notes (which notes have been delivered to the Collateral Agent) and is not
in default.
(e) The Initial Pledged Equity pledged by such Grantor constitutes the
percentage of the issued and outstanding Equity Interests of the issuers
thereof indicated on Schedule II hereto.
(f) In the case of the Grantors other than MII, substantially all of
the investment property owned by such Grantor is listed on Schedule II
hereto or is held in the accounts listed in Schedule V hereto. In case of
MII, substantially all of the investment property owned by such Grantor is
listed in Schedule II hereto or is held in the accounts listed in Schedule
V hereto, except Equity Interests of any Subsidiary other than XxXxxxxxx
Incorporated and J. Xxx XxXxxxxxx, S.A.
(g) Such Grantor has no deposit accounts, other than the Permitted
Unblocked Accounts and the Account Collateral listed on Schedule V hereto,
as such Schedule V may be amended from time to time pursuant to Section
5(b).
(h) Except as contemplated by this Agreement and the other Loan
Documents, and except for filings required to be made by MII with the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body or
any other third party is required for the grant by such Grantor of the
security interest granted hereunder or for the execution, delivery or
performance of this Agreement by such Grantor.
(i) The Inventory that has been produced or distributed by such
Grantor has been produced in material compliance with all requirements of
applicable law, including, without limitation, the Fair Labor Standards
Act.
12
(j) To the best of such Grantor's knowledge, such Grantor has no
commercial tort claims (as defined in Section 9-102(13) of the UCC) other
than those listed in Schedule VI hereto.
Section 9. Further Assurances. (a) Each Grantor agrees that from time to
time, at the expense of such Grantor, such Grantor will promptly execute and
deliver, or otherwise authenticate, all further instruments and documents, and
take all further action that may be necessary, or that the Collateral Agent may
reasonably request, in order to perfect and protect any pledge or security
interest granted or purported to be granted by such Grantor hereunder or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral of such Grantor. Without limiting the
generality of the foregoing, each Grantor will promptly with respect to
Collateral of such Grantor: (i) upon the reasonable request of the Collateral
Agent, xxxx conspicuously each chattel paper included in Receivables with a
legend, in form and substance reasonably satisfactory to the Collateral Agent,
indicating that such chattel paper is subject to the security interest granted
hereby; (ii) if any such Collateral shall be evidenced by a promissory note or
other instrument or chattel paper, deliver and pledge to the Collateral Agent
hereunder such note or instrument or chattel paper duly indorsed and accompanied
by duly executed instruments of transfer or assignment, all in form and
substance reasonably satisfactory to the Collateral Agent; (iii) execute or
authenticate and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary, or as the
Collateral Agent may reasonably request, in order to perfect and preserve the
security interest granted or purported to be granted by such Grantor hereunder;
(iv) deliver and pledge to the Collateral Agent for benefit of the Secured
Parties certificates representing Pledged Equity that constitutes certificated
securities, accompanied by undated stock or bond powers executed in blank; (v)
take all commercially reasonable action necessary to ensure that the Collateral
Agent has control of Collateral (other than with respect to the Permitted
Unblocked Accounts) consisting of deposit accounts, electronic chattel paper,
investment property and transferable records as provided in Sections 9-104,
9-105, 9-106 and 9-107 of the UCC and in Section 16 of UETA; and (vi) deliver to
the Collateral Agent evidence that all other action that the Collateral Agent
may deem reasonably necessary or desirable in order to perfect and protect the
security interest created by such Grantor under this Agreement has been taken.
(b) Each Grantor hereby authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, in each case
without the signature of such Grantor, and regardless of whether any particular
asset described in such financing statements falls within the scope of the UCC.
A photocopy or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
(c) Each Grantor will furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral of
such Grantor and such other reports in connection with such Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.
Section 10. As to Equipment and Inventory. (a) Each Grantor will cause the
Equipment that is material to such Grantor to be maintained and preserved in
good repair,
13
working order and condition (ordinary wear and tear excepted) and will
forthwith, or in the case of any loss or damage to any of such Equipment as soon
as practicable after the occurrence thereof, make or cause to be made all
repairs, replacements and other improvements in connection therewith that are
necessary or desirable in order that the business carried on in connection
therewith may be conducted, except to the extent maintenance thereof is not
required by Section 5.01(h) of the Credit Agreement.
(b) Each Grantor will pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including, without limitation, claims for labor, materials and supplies)
against, the Equipment and Inventory of such Grantor, except to the extent
payment thereof is not required by Section 5.01(b) of the Credit Agreement. In
producing its Inventory, each Grantor will comply with all requirements of
applicable law, including, without limitation, the Fair Labor Standards Act.
Section 11. Insurance. (a) Each Grantor will, at its own expense, maintain
insurance (including self-insurance) with respect to the Vessels and
Contractor's Equipment of such Grantor, in such amounts and against such risks,
in such form and with such insurers, as such Grantor shall deem appropriate
subject to Section 5.01(d) of the Credit Agreement. Each such policy shall (i)
name such Grantor and the Collateral Agent as insured or additional insured
parties thereunder (without any representation or warranty by or obligation upon
the Collateral Agent) as their interests may appear, (ii) contain in respect to
insurance covering physical loss and/or damage to the Vessels and/or the
Contractor's Equipment the agreement by the insurer that any loss thereunder
shall be payable to the Collateral Agent, (iii) provide that there shall be no
recourse against the Collateral Agent for payment of premiums or other amounts
with respect thereto and (iv) provide that at least 10 days' prior written
notice of cancellation or of lapse shall be given to the Collateral Agent by the
insurer. Each Grantor will, if so reasonably requested by the Collateral Agent,
deliver to the Collateral Agent copies of policies of such insurance and, as
often as the Collateral Agent may reasonably request, a certificate of a
reputable insurance broker with respect to such insurance.
(b) Reimbursement under any liability insurance maintained by any Grantor
pursuant to this Section 11 may be paid directly to the Person who shall have
incurred liability covered by such insurance. In case of any loss involving
damage to Vessels and/or Contractor's Equipment when subsection (c) of this
Section 11 is not applicable, the applicable Grantor will make or cause to be
made the necessary repairs to or replacements of such Vessels and/or
Contractor's Equipment to the extent required by the Credit Agreement, and any
proceeds of insurance properly received by or released to such Grantor shall be
used by such Grantor, except as otherwise required hereunder or by the Credit
Agreement, to pay or as reimbursement for the costs of such repairs or
replacements.
(c) So long as no Event of Default shall have occurred and be continuing,
all insurance payments received by the Collateral Agent in connection with any
loss, damage or destruction of any Vessels and/or Contractor's Equipment will be
released by the Collateral Agent to the applicable Grantor for the repair,
replacement or restoration thereof. To the extent that (i) the amount of any
such insurance payments exceeds the cost of any such repair, replacement or
restoration, or (ii) such insurance payments are not otherwise required by the
applicable Grantor to complete any such repair, replacement or restoration
required hereunder,
14
such amount shall be applied to cash collateralize the obligations of the
Borrowers to the extent required by Section 2.06(b) of the Credit Agreement.
Upon the occurrence and during the continuance of any Event of Default, all
insurance payments in respect of such Vessels and/or Contractor's Equipment in
excess of $100,000 shall be paid to the Collateral Agent and shall, in the
Collateral Agent's sole discretion, (i) be released to the applicable Grantor to
be applied as set forth in the first sentence of this subsection (c) or (ii) be
held as additional Collateral hereunder or applied as specified in Section
18(b).
Section 12. Post-Closing Changes; Bailees; Collections on Receivables and
Related Contracts. (a) No Grantor will change its name, type of organization,
jurisdiction of organization, organizational identification number or location
(within the meaning of Section 9-307 of the UCC) from those set forth in Section
8(a) of this Agreement without first giving at least 30 days' prior written
notice to the Collateral Agent and taking all action reasonably required by the
Collateral Agent for the purpose of perfecting or protecting the security
interest granted by this Agreement. Except as otherwise permitted by the Credit
Agreement, no Grantor will become bound by a security agreement authenticated by
another Person (determined as provided in Section 9-203(d) of the UCC) without
giving the Collateral Agent 30 days' prior written notice thereof and taking all
action required by the Collateral Agent to ensure that the perfection and first
priority nature of the Collateral Agent's security interest in the Collateral
will be maintained. Each Grantor will hold and preserve its records relating to
the Collateral, including, without limitation, the Related Contracts, consistent
with past practices and will permit representatives of the Collateral Agent upon
reasonable notice at any time during normal business hours to inspect and make
abstracts from such records and other documents. If any Grantor does not have an
organizational identification number and later obtains one, it will forthwith
notify the Collateral Agent of such organizational identification number.
(b) If any Collateral of any Grantor is at any time in the possession or
control of a warehouseman, bailee or agent, or if the Collateral Agent so
requests such Grantor will (i) notify such warehouseman, bailee or agent of the
security interest created hereunder, (ii) instruct such warehouseman, bailee or
agent to hold all such Collateral solely for the Collateral Agent's account
subject only to the Collateral Agent's instructions (which shall permit such
Collateral to be removed by such Grantor in the ordinary course of business
until the Collateral Agent notifies such warehouseman, bailee or agent that an
Event of Default has occurred and is continuing), (iii) use commercially
reasonable efforts, to cause such warehouseman, bailee or agent to authenticate
a record acknowledging that it holds possession of such Collateral for the
Collateral Agent's benefit and shall act solely on the instructions of the
Collateral Agent without the further consent of the Grantor or any other Person,
and (iv) make such authenticated record available to the Collateral Agent.
(c) Except as otherwise provided in this subsection (c), each Grantor will
continue to use commercially reasonable efforts to collect, at its own expense,
all amounts due or to become due such Grantor under the Receivables and Related
Contracts. The Collateral Agent shall have the right at any time, upon the
occurrence and during the continuance of an Event of Default and upon written
notice to such Grantor of its intention to do so, to notify the obligors under
any Receivables and Related Contracts of the assignment of such Receivables and
Related Contracts to the Collateral Agent and to direct such obligors to make
payment of all amounts due or to become due to such Grantor thereunder directly
to the Collateral Agent and, upon such
15
notification and at the expense of such Grantor, to enforce collection of any
such Receivables and Related Contracts, to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done, and to otherwise exercise all rights with respect to
such Receivables and Related Contracts, including, without limitation, those set
forth set forth in Section 9-607 of the UCC. After receipt by any Grantor of the
notice from the Collateral Agent referred to in the preceding sentence and
during the continuance of the Event of Default to which such notice relates, all
amounts and proceeds (including, without limitation, instruments) received by
such Grantor in respect of the Receivables and Related Contracts of such Grantor
shall be received in trust for the benefit of the Collateral Agent hereunder,
shall be segregated from other funds of such Grantor and shall be forthwith paid
over to the Collateral Agent in the same form as so received (with any necessary
indorsement) to be deposited in the Collateral Account and either (A) released
to such Grantor on the terms set forth in Section [6] so long as no Event of
Default shall have occurred and be continuing or (B) if any Event of Default
shall have occurred and be continuing, applied as provided in Section 18(b). No
Grantor will consent to the subordination of its right to payment under any of
the Receivables and Related Contracts to any other indebtedness or obligations
of the obligor thereof.
Section 13. Voting Rights; Dividends; Etc. (a) So long as no Default under
Section 6.01(f) of the Credit Agreement or Event of Default shall have occurred
and be continuing:
(i) Each Grantor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Security Collateral of such
Grantor or any part thereof for any purpose.
(ii) Each Grantor shall be entitled to receive and retain any and all
dividends, interest and other distributions paid in respect of the Security
Collateral of such Grantor if and to the extent that the payment thereof is
not otherwise prohibited by the terms of the Loan Documents; PROVIDED,
HOWEVER, that any and all dividends, interest and other distributions paid
or payable in the form of instruments or certificated in respect of, or in
exchange for, any Security Collateral, shall be, and shall be forthwith
delivered to the Collateral Agent to hold as, Security Collateral and
shall, if received by such Grantor, be received in trust for the benefit of
the Collateral Agent, be segregated from the other property or funds of
such Grantor and be forthwith delivered to the Collateral Agent as Security
Collateral in the same form as so received (with any necessary
indorsement).
(iii) The Collateral Agent will execute and deliver (or cause to be
executed and delivered) to each Grantor all such instruments as such
Grantor may reasonably request for the purpose of enabling such Grantor to
receive the dividends or interest payments that it is authorized to receive
and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of a Default under
Section 6.01(f) of the Credit Agreement or an Event of Default:
(i) All rights of each Grantor (x) to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 13(a)(i) shall, upon notice to
such Grantor by the Collateral Agent, cease and
16
(y) to receive the dividends, interest and other distributions that it
would otherwise be authorized to receive and retain pursuant to Section
13(a)(ii) shall automatically cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall thereupon, so long as
such Default or Event of Default shall continue, have the sole right to
exercise or refrain from exercising such voting and other consensual rights
and to receive and hold as Security Collateral such dividends, interest and
other distributions.
(ii) All dividends, interest and other distributions that are received
by any Grantor contrary to the provisions of paragraph (i) of this Section
13(b) shall be received in trust for the benefit of the Collateral Agent,
shall be segregated from other funds of such Grantor and shall be forthwith
paid over to the Collateral Agent as Security Collateral in the same form
as so received (with any necessary indorsement).
Section 14. Transfers and Other Liens; Additional Shares. (a) Each Grantor
agrees that it will not (i) sell, assign or otherwise dispose of, or grant any
option with respect to, any of the Collateral, other than sales, assignments and
other dispositions of Collateral, and options relating to Collateral, permitted
under the terms of the Credit Agreement, or (ii) create or suffer to exist any
Lien upon or with respect to any of the Collateral of such Grantor except for
the pledge, assignment and security interest created under this Agreement and
Liens permitted under the Credit Agreement.
(b) Each Grantor agrees that it will (i) cause each issuer of the Pledged
Equity pledged by such Grantor that is a wholly-owned Subsidiary of MII not to
issue any Equity Interests or other securities in addition to or in substitution
for the Pledged Equity issued by such issuer, except to such Grantor, and (ii)
pledge hereunder, immediately upon its acquisition (directly or indirectly)
thereof, any and all additional Equity Interests or other securities of each
issuer of the Pledged Equity received by such Grantor.
Section 15. Collateral Agent Appointed Attorney-in-Fact. Each Grantor
hereby irrevocably appoints the Collateral Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time, upon the occurrence
and during the continuance of an Event of Default, in the Collateral Agent's
discretion, to take any action and to execute any instrument that the Collateral
Agent may deem necessary to accomplish the purposes of this Agreement,
including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Collateral Agent pursuant to Section 11,
(b) to ask for, demand, collect, xxx for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral,
(c) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) or (b) above,
and
(d) to file any claims or take any action or institute any proceedings
that the Collateral Agent may deem necessary or desirable for the
collection of any of the
17
Collateral or otherwise to enforce the rights of the Collateral Agent with
respect to any of the Collateral.
Section 16. Collateral Agent May Perform. If any Grantor fails to perform
any agreement contained herein, the Collateral Agent may, as the Collateral
Agent reasonably deems necessary to protect the security interest granted
hereunder in the Collateral or to protect the value thereof, but without any
obligation to do so and without notice, itself perform, or cause performance of,
such agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by such Grantor under Section 19.
Section 17. The Collateral Agent's Duties. (a) The powers conferred on the
Collateral Agent hereunder are solely to protect the Secured Parties' interest
in the Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Collateral, as to ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not any Secured Party has or is
deemed to have knowledge of such matters, or as to the taking of any necessary
steps to preserve rights against any parties or any other rights pertaining to
any Collateral. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which it accords its own property.
(b) Anything contained herein to the contrary notwithstanding, the
Collateral Agent may from time to time, when the Collateral Agent deems it to be
necessary, appoint one or more subagents (each, a "SUBAGENT") for the Collateral
Agent hereunder with respect to all or any part of the Collateral. In the event
that the Collateral Agent so appoints any Subagent with respect to any
Collateral, (i) the assignment and pledge of such Collateral and the security
interest granted in such Collateral by each Grantor hereunder shall be deemed
for purposes of this Security Agreement to have been made to such Subagent, in
addition to the Collateral Agent, for the ratable benefit of the Secured
Parties, as security for the Secured Obligations of such Grantor, (ii) such
Subagent shall automatically be vested, in addition to the Collateral Agent,
with all rights, powers, privileges, interests and remedies of the Collateral
Agent hereunder with respect to such Collateral, and (iii) the term "Collateral
Agent," when used herein in relation to any rights, powers, privileges,
interests and remedies of the Collateral Agent with respect to such Collateral,
shall include such Subagent; PROVIDED, HOWEVER, that no such Subagent shall be
authorized to take any action with respect to any such Collateral unless and
except to the extent expressly authorized in writing by the Collateral Agent,
with a copy delivered to the Grantors.
(c) Anything contained herein to the contrary notwithstanding, the
Collateral Agent will not take any action pursuant to this Agreement which would
constitute or result in the change of ownership of MI if such change of
ownership would require under then-existing law, the prior approval of the U.S.
Navy or the U. S. Department of Energy, without first obtaining such approval.
The Collateral Agent hereby acknowledges the terms of the Material Contracts and
other contracts to which BWX Technologies, Inc. or its Subsidiaries is a party
and that such agreements are not superceded by any provision contained herein.
18
Section 18. Remedies. If any Event of Default shall have occurred and be
continuing:
(a) The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon
default under the UCC (whether or not the UCC applies to the affected
Collateral) and also may: (i) require each Grantor to, and each Grantor
hereby agrees that it will at its expense and upon request of the
Collateral Agent forthwith, assemble all or part of the Collateral as
directed by the Collateral Agent and make it available to the Collateral
Agent at one or more places and times to be designated by the Collateral
Agent that are reasonably convenient to both parties; (ii) without notice
except as specified below or as required by applicable law, sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any of the Collateral Agent's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the Collateral
Agent may deem commercially reasonable; (iii) occupy any premises owned or
(to the extent permitted by the applicable lease) leased by any of the
Grantors where the Collateral or any part thereof is assembled or located
for a reasonable period in order to effectuate its rights and remedies
hereunder or under law, without obligation to such Grantor in respect of
such occupation; and (iv) exercise any and all rights and remedies of any
of the Grantors under or in connection with the Collateral, or otherwise in
respect of the Collateral, including, without limitation, (A) any and all
rights of such Grantor to demand or otherwise require payment of any amount
under, or performance of any provision of, the Receivables, the Related
Contracts and the other Collateral, (B) withdraw, or cause or direct the
withdrawal of, all funds with respect to the Account Collateral and (C)
exercise all other rights and remedies with respect to the Receivables, the
Related Contracts and the other Collateral, including, without limitation,
those set forth in Section 9-607 of the UCC. Each Grantor agrees that, to
the extent notice of sale shall be required by law, at least ten Business
Days' notice to such Grantor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute
reasonable notification. The Collateral Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
The Collateral Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was
so adjourned.
(b) Any cash held by or on behalf of the Collateral Agent and all cash
proceeds received by or on behalf of the Collateral Agent in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Collateral Agent, be held by the
Collateral Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Collateral Agent
pursuant to Section 19) in whole or in part by the Collateral Agent for the
ratable benefit of the Secured Parties against, all or any part of the
Secured Obligations, in the following manner:
(i) first, paid to the Agents for any amounts then owing to the
Agents pursuant to Section 9.04 of the Credit Agreement or otherwise
under the Loan
19
Documents, ratably in accordance with such respective amounts then
owing to the Agents; and
(ii) second, ratably (A) paid to the Lender Parties and the Hedge
Banks, respectively, for any amounts then owing to them, in their
capacities as such, under the Loan Documents ratably in accordance
with such respective amounts then owing to such Lender Parties and the
Hedge Banks, PROVIDED that, for purposes of this Section 18, the
amount owing to any such Hedge Bank pursuant to any Secured Hedge
Agreement to which it is a party (other than any amount therefore
accrued and unpaid) shall be deemed to be equal to the Agreement Value
therefor and (B) deposited as Collateral in the Collateral Account up
to an amount equal to 105% of the aggregate Available Amount of all
outstanding Letters of Credit, PROVIDED that in the event that any
such Letter of Credit is drawn, the Collateral Agent shall pay to the
Issuing Bank that issued such Letter of Credit the amount held in the
Collateral Account in respect of such Letter of Credit, PROVIDED
FURTHER that, to the extent that any such Letter of Credit shall
expire or terminate undrawn and as a result thereof the amount of the
Collateral in the Collateral Account shall exceed 105% of the
aggregate Available Amount of all then outstanding Letters of Credit,
such excess amount of such Collateral shall be applied in accordance
with the remaining order of priority set out in this Section 18(b).
Any surplus of such cash or cash proceeds held by or on the behalf of the
Collateral Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the applicable Grantor or to whomsoever
may be lawfully entitled to receive such surplus.
(c) Upon notice from the Collateral Agent, all payments received by
any Grantor in respect of the Collateral shall be received in trust for the
benefit of the Collateral Agent, shall be segregated from other funds of
such Grantor and shall be forthwith paid over to the Collateral Agent in
the same form as so received (with any necessary indorsement).
(d) Subject to Section 9.05 of the Credit Agreement, the Collateral
Agent may, without notice to any Grantor except as required by law and at
any time or from time to time, charge, setoff and otherwise apply all or
any part of the Secured Obligations against any funds held with respect to
the Account Collateral or in any other deposit account.
Section 19. Indemnity and Expenses. (a) Each Grantor agrees to indemnify,
defend and save and hold harmless each Secured Party and each of their
Affiliates and their respective officers, directors, employees, agents and
advisors (each, an "INDEMNIFIED PARTY") from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and out-of-pocket
expenses (including, without limitation, reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
to the extent such claim, damage, loss,
20
liability or expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct.
(b) Each Grantor will upon demand pay to the Collateral Agent the amount of
any and all reasonable out-of-pocket expenses, including, without limitation,
the reasonable fees and expenses of its counsel and of any experts and agents,
that the Collateral Agent may incur in connection with (i) the administration of
this Agreement, (ii) the custody, preservation, use or operation of, or the sale
of, collection from or other realization upon, any of the Collateral of such
Grantor, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent or the other Secured Parties hereunder or (iv) the failure by
such Grantor to perform or observe any of the provisions hereof.
Section 20. Amendments; Waivers; Additional Grantors; Etc. (a) No amendment
or waiver of any provision of this Agreement, and no consent to any departure by
any Grantor herefrom, shall in any event be effective unless the same shall be
in writing and signed by the Collateral Agent, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No failure on the part of the Collateral Agent or any other
Secured Party to exercise, and no delay in exercising any right hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right.
(b) Upon the execution and delivery, or authentication, by any Person of a
security agreement supplement in substantially the form of Exhibit A hereto
(each a "SECURITY AGREEMENT SUPPLEMENT"), (i) such Person shall be referred to
as an "ADDITIONAL GRANTOR" and shall be and become a Grantor hereunder, and each
reference in this Agreement and the other Loan Documents to "Grantor" shall
thereafter also mean and be a reference to such Additional Grantor, and, where
the context so permits, each reference in this Agreement and the other Loan
Documents to "Collateral" shall thereafter also mean and be a reference to the
Collateral of such Additional Grantor, and (ii) the supplemental Schedules I-VI
attached to each Security Agreement Supplement shall be incorporated into and
become a part of and supplement Schedules I-VI, respectively, hereto, and the
Collateral Agent may attach such supplemental schedules to such Schedules; and
each reference to such Schedules shall mean and be a reference to such Schedules
as supplemented pursuant to each Security Agreement Supplement.
Section 21. Notices, Etc. All notices and other communications provided for
hereunder shall be either (i) in writing (including telegraphic, telecopier or
telex communication) and mailed, telegraphed, telecopied, telexed or otherwise
delivered or (ii) by electronic mail (if electronic mail addresses are
designated as provided below) confirmed immediately in writing, in the case of
MII and the Borrowers or the Collateral Agent, addressed to it at its address
specified in the Credit Agreement and, in the case of each Grantor other than
the Borrowers and MII, addressed to it at its address set forth opposite such
Grantor's name on the signature pages hereto or on the signature page to the
Security Agreement Supplement pursuant to which it became a party hereto; or, as
to any party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and other communications
shall be deemed to have been given on the date of receipt if delivered by hand
or overnight courier service or sent by telegraph, telecopy, telex or electronic
mail (if confirmed in writing) or on the
21
date five Business Days after dispatch by certified or registered mail if
mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 21 or in accordance with the latest unrevoked
direction from such party given in accordance with this Section 21. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement or of any Security Agreement Supplement or Schedule
hereto shall be effective as delivery of an original executed counterpart
thereof.
Section 22. Continuing Security Interest; Assignments Under the Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the latest of (i)
the payment in full in cash of the Secured Obligations, (ii) the Termination
Date and (iii) the separate cash collateralization of all outstanding Letters of
Credit and all Secured Hedge Agreements, (b) be binding upon each Grantor, its
successors and assigns and (c) inure, together with the rights and remedies of
the Collateral Agent hereunder, to the benefit of the Secured Parties and their
respective successors and permitted assigns. Without limiting the generality of
the foregoing clause (c), any Lender Party may assign or otherwise transfer all
or any portion of its rights and obligations under the Credit Agreement
(including, without limitation, all or any portion of its Commitments, the
Advances owing to it and the Note or Notes, if any, held by it) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender Party herein or otherwise, in
each case, and to the extent, as provided in Section 9.07 of the Credit
Agreement.
Section 23. Release; Termination. (a) Upon any sale, lease, transfer or
other disposition of any item of Collateral of any Grantor in accordance with
the terms of the Loan Documents (other than sales of Inventory in the ordinary
course of business), the Collateral Agent will, at such Grantor's expense,
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence the release of such item of Collateral from the
assignment and security interest granted hereby; PROVIDED, HOWEVER, that (i) at
the time of such request and such release no Event of Default shall have
occurred and be continuing, (ii) such Grantor shall have delivered to the
Collateral Agent, at least five Business Days prior to the date of the proposed
release, a written request for release describing the item of Collateral and the
terms of the sale, lease, transfer or other disposition in reasonable detail,
including, without limitation, the price thereof and any expenses in connection
therewith, together with a form of release for execution by the Collateral Agent
and a certificate of such Grantor to the effect that the transaction is in
compliance with the Loan Documents and as to such other matters as the
Collateral Agent may reasonably request and (iii) the portion of proceeds of any
such sale, lease, transfer or other disposition required to be applied, or any
payment to be made in connection therewith, in accordance with Section 2.06 of
the Credit Agreement shall, to the extent so required, be paid or made to, or in
accordance with the instructions of, the Collateral Agent when and as required
under Section 2.06 of the Credit Agreement.
(b) Upon the latest of (i) the payment in full in cash of the Secured
Obligations, (ii) the Termination Date and (iii) the separate cash
collateralization of all outstanding Letters of Credit and all Secured Hedge
Agreements, the pledge and security interest granted hereby shall terminate and
all rights to the Collateral shall revert to the applicable Grantor. Upon any
such termination, the Collateral Agent will, at the applicable Grantor's
22
expense, execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such termination.
Section 24. Security Interest Absolute. The obligations of each Grantor
under this Agreement are independent of the Secured Obligations or any other
Obligations of any other Loan Party under or in respect of the Loan Documents,
and a separate action or actions may be brought and prosecuted against each
Grantor to enforce this Agreement, irrespective of whether any action is brought
against such Grantor or any other Loan Party or whether such Grantor or any
other Loan Party is joined in any such action or actions. All rights of the
Collateral Agent and the other Secured Parties and the pledge, assignment and
security interest hereunder, and all obligations of each Grantor hereunder,
shall be irrevocable, absolute and unconditional irrespective of, and each
Grantor hereby irrevocably waives (to the maximum extent permitted by applicable
law) any defenses it may now have or may hereafter acquire in any way relating
to, any or all of the following:
(a) any lack of validity or enforceability of any Loan Document or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations or any other
Obligations of any other Loan Party under or in respect of the Loan
Documents or any other amendment or waiver of or any consent to any
departure from any Loan Document, including, without limitation, any
increase in the Secured Obligations resulting from the extension of
additional credit to any Loan Party or any of its Subsidiaries or
otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral
or any other collateral, or any taking, release or amendment or waiver of
or consent to departure from any guaranty, for all or any of the Secured
Obligations;
(d) any manner of application of any Collateral or any other
collateral, or proceeds thereof, to all or any of the Secured Obligations,
or any manner of sale or other disposition of any Collateral or any other
collateral for all or any of the Secured Obligations or any other
Obligations of any other Loan Party under or in respect of the Loan
Documents or any other assets of any Loan Party or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any Loan Party or any of its Subsidiaries;
(f) any failure of any Secured Party to disclose to any Loan Party any
information relating to the business, condition (financial or otherwise),
operations, performance, assets, nature of assets, liabilities or prospects
of any other Loan Party now or hereafter known to such Secured Party (each
Grantor waiving any duty on the part of the Secured Parties to disclose
such information);
(g) the failure of any other Person to execute this Agreement or any
other Collateral Document, guaranty or agreement or the release or
reduction of liability of any Grantor or other grantor or surety with
respect to the Secured Obligations; or
23
(h) any other circumstance (including, without limitation, any statute
of limitations) or any existence of or reliance on any representation by
any Secured Party that might otherwise constitute a defense available to,
or a discharge of, such Grantor or any other Grantor or a third party
grantor of a security interest.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Secured Party or by any other Person upon the
insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as
though such payment had not been made.
Section 25. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.
Section 26. The Mortgages. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
Mortgage or Ship Mortgage and the terms of such Mortgage or Ship Mortgage are
inconsistent with the terms of this Agreement, then with respect to such
Collateral, the terms of (i) such Mortgage shall be controlling in the case of
fixtures and real estate leases, letting and licenses of, and contracts and
agreements relating to the lease of, real property, and (ii) such Ship Mortgage
shall be controlling, and the terms of this Agreement shall be controlling in
the case of all other Collateral.
Section 27. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
J. XXX XxXXXXXXX, S.A.
By \s\ Xxxxx X. Xxxxxx
------------------------------
Title: Xxxxx X. Xxxxxx
Vice President Finance &
Treasurer
J. XXX XxXXXXXXX HOLDINGS, INC.
By \s\ Xxxxx X. Xxxxxx
------------------------------
Title: Xxxxx X. Xxxxxx
Vice President Finance &
Treasurer
J. XXX XxXXXXXXX, INC.
By \s\ Xxxxx X. Xxxxxx
------------------------------
Title: Xxxxx X. Xxxxxx
Vice President Finance &
Treasurer
XxXXXXXXX INTERNATIONAL, INC.
By \s\ Xxxxx X. Xxxxxx
------------------------------
Title: Xxxxx X. Xxxxxx
Vice President Finance &
Treasurer
J. XXX XxXXXXXXX UNDERWATER
SERVICES, INC.
By \s\ Xxxxx X. Xxxxxx
------------------------------
Title: Xxxxx X. Xxxxxx
Treasurer
MENTOR SUBSEA TECHNOLOGY
SERVICES, INC.
By \s\ Xxxxx X. Xxxxxx
------------------------------
Title: Xxxxx X. Xxxxxx
Treasurer
McDERMOTT TRADE CORPORATION
By \s\ Xxxxx X. Xxxxxx
------------------------------
Title: Xxxxx X. Xxxxxx
Treasurer
J. XXX XxXXXXXXX TECHNOLOGY, INC.
By \s\ Xxxxx X. Xxxxxx
------------------------------
Title: Xxxxx X. Xxxxxx
Treasurer
OPI VESSELS, INC.
By \s\ Xxxxx X. Xxxxxx
------------------------------
Title: Xxxxx X. Xxxxxx
Treasurer
J. XXX XxXXXXXXX ENGINEERING
HOLDINGS, INC.
By \s\ Xxxxx X. Xxxxxx
------------------------------
Title: Xxxxx X. Xxxxxx
Treasurer
SABINE RIVER REALTY, INC.
By \s\ Xxxxx X. Xxxxxx
------------------------------
Title: Xxxxx X. Xxxxxx
Treasurer
SPARTEC, INC.
By \s\ Xxxxx X. Xxxxxx
------------------------------
Title: Xxxxx X. Xxxxxx
Treasurer
J. XXX XxXXXXXXX WEST AFRICA
HOLDINGS, INC.
By \s\ Xxxxx X. Xxxxxx
------------------------------
Title: Xxxxx X. Xxxxxx
Treasurer
J. XXX XxXXXXXXX ENGINEERING, LLC
By \s\ Xxxxx X. Xxxxxx
------------------------------
Title: Xxxxx X. Xxxxxx
Treasurer
J. XXX XxXXXXXXX WEST AFRICA, INC.
By \s\ Xxxxx X. Xxxxxx
------------------------------
Title: Xxxxx X. Xxxxxx
Treasurer
Acknowledged and Accepted:
CITICORP USA, INC.
By \s\ Xxxx X. Xxxxx
------------------------------
Title: Xxxx X. Xxxxx
Vice President
SCHEDULE I TO THE
SECURITY AGREEMENT
LOCATION, CHIEF EXECUTIVE OFFICE, PLACE WHERE AGREEMENTS ARE
MAINTAINED, TYPE OF ORGANIZATION, JURISDICTION OF ORGANIZATION AND
ORGANIZATIONAL IDENTIFICATION NUMBER
CHIEF PLACE WHERE
EXECUTIVE AGREEMENTS ARE TYPE OF JURISDICTION ORGANIZATIONAL
GRANTOR LOCATION OFFICE MAINTAINED ORGANIZATION OF ORGANIZATION I.D. NO.
------- -------- --------- -------------- ------------ --------------- --------------
SCHEDULE II TO THE
SECURITY AGREEMENT
PLEDGED EQUITY AND PLEDGED DEBT
PART I
======================================================================================
PERCENTAGE
OF
CLASS OF EQUITY CERTIFICATE NUMBER OUTSTANDING
GRANTOR ISSUER INTEREST PAR VALUE NO(S) OF SHARES SHARES
======================================================================================
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
======================================================================================
PART II
======================================================================================
OUTSTANDING
DEBT DESCRIPTION OF DEBT CERTIFICATE FINAL PRINCIPAL
GRANTOR ISSUER DEBT NO(S). MATURITY AMOUNT
======================================================================================
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
======================================================================================
SCHEDULE III TO THE
SECURITY AGREEMENT
LOCATION OF EQUIPMENT AND INVENTORY
[NAME OF GRANTOR]
LOCATIONS OF EQUIPMENT:
LOCATIONS OF INVENTORY:
[NAME OF GRANTOR]
LOCATIONS OF EQUIPMENT:
LOCATIONS OF INVENTORY:
[ETC.]
SCHEDULE IV TO THE
SECURITY AGREEMENT
CHANGES IN NAME, LOCATION, ETC.
CHANGES IN THE GRANTOR'S NAME (INCLUDING NEW GRANTOR WITH A NEW NAME AND NAMES
ASSOCIATED WITH ALL PREDECESSORS IN INTEREST OF THE GRANTOR)
CHANGES IN THE GRANTOR'S LOCATION
CHANGES IN THE GRANTOR'S CHIEF EXECUTIVE OFFICE
CHANGES IN THE LOCATION OF EQUIPMENT AND INVENTORY
CHANGES IN THE PLACE WHERE AGREEMENTS ARE MAINTAINED
CHANGES IN THE TYPE OF ORGANIZATION
CHANGES IN THE JURISDICTION OF ORGANIZATION
CHANGES IN THE ORGANIZATIONAL IDENTIFICATION NUMBER
SCHEDULE V TO THE
SECURITY AGREEMENT
ACCOUNT COLLATERAL
===================================================================================
NAME AND ADDRESS OF PLEDGED MAILING ADDRESS OF PLEDGED
GRANTOR ACCOUNT BANK ACCOUNT ACCOUNT NUMBER
===================================================================================
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
===================================================================================
SCHEDULE VI TO THE
SECURITY AGREEMENT
COMMERCIAL TORT CLAIMS
EXHIBIT A TO THE
SECURITY AGREEMENT
FORM OF SECURITY AGREEMENT SUPPLEMENT
[Date of Security Agreement Supplement]
Citicorp US, Inc.
as the Collateral Agent for the
Secured Parties referred to in the
Credit Agreement referred to below
[1200 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000]
Attn: ___________________
Ladies and Gentlemen:
Reference is made to (i) the Credit Agreement dated as of January ___, 2003
(as amended, amended and restated, supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT"; terms defined therein, unless otherwise defined
herein, being used herein as therein defined), among the Borrowers, the Lender
Parties and certain other lender parties party thereto, Citicorp USA, Inc., as
Collateral Agent and Administrative Agent for the Lender Parties and such other
lender parties thereto, Xxxxxxx Xxxxx Barney Inc., as lead arranger and book
runner, [NAME OF INSTITUTION], as documentation agent and [NAME OF INSTITUTION],
as syndication agent, and (ii) the Security Agreement dated January ___, 2003
(as amended, amended and restated, supplemented or otherwise modified from time
to time, the "SECURITY AGREEMENT") made by the Grantors from time to time party
thereto in favor of the Collateral Agent for the Secured Parties.
SECTION 1. Grant of Security. The undersigned hereby grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a security
interest in, all of its right, title and interest in and to all of the
Collateral of the undersigned, whether now owned or hereafter acquired by the
undersigned, wherever located and whether now or hereafter existing or arising,
including, without limitation, the property and assets of the undersigned set
forth on the attached supplemental schedules to the Schedules to the Security
Agreement.
SECTION 2. Security for Obligations. The grant of a security interest in,
the Collateral by the undersigned under this Security Agreement Supplement and
the Security Agreement secures the payment of all Obligations of the undersigned
now or hereafter existing under or in respect of the Loan Documents, whether
direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise.
Without limiting the generality of the foregoing, this Security Agreement
Supplement and the Security Agreement
secures the payment of all amounts that constitute part of the Secured
Obligations and that would be owed by the undersigned to any Secured Party under
the Loan Documents but for the fact that such Secured Obligations are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving a Loan Party.
SECTION 3. Supplements to Security Agreement Schedules. The undersigned has
attached hereto supplemental Schedules [I through IX] to Schedules [I through
IX], respectively, to the Security Agreement, and the undersigned hereby
certifies, as of the date first above written, that such supplemental schedules
have been prepared by the undersigned in substantially the form of the
equivalent Schedules to the Security Agreement and are complete and correct.
SECTION 4. Representations and Warranties. The undersigned hereby makes
each representation and warranty set forth in Section 9 of the Security
Agreement (as supplemented by the attached supplemental schedules) to the same
extent as each other Grantor.
SECTION 5. Obligations Under the Security Agreement. The undersigned hereby
agrees, as of the date first above written, to be bound as a Grantor by all of
the terms and provisions of the Security Agreement to the same extent as each of
the other Grantors. The undersigned further agrees, as of the date first above
written, that each reference in the Security Agreement to an "Additional
Grantor" or a "Grantor" shall also mean and be a reference to the undersigned.
SECTION 6. Governing Law. This Security Agreement Supplement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
Very truly yours,
[NAME OF ADDITIONAL GRANTOR]
By
-------------------------
Title:
Address for notices:
----------------------
----------------------
----------------------
EXHIBIT B TO THE
SECURITY AGREEMENT
FORM OF ACCOUNT CONTROL AGREEMENT
(DEPOSIT ACCOUNT/SECURITIES ACCOUNT)
ACCOUNT CONTROL AGREEMENT (this "AGREEMENT") dated as of ________, ____,
among____________, a ___________ (the "GRANTOR"), Citicorp USA, Inc., a
[Delaware] corporation, as Collateral Agent (the "SECURED PARTY"), and
_________, a _________ ("____________"), as securities intermediary and
depository bank (the "ACCOUNT HOLDER").
PRELIMINARY STATEMENTS:
(1) The Grantor has granted the Secured Party a security interest (the
"SECURITY INTEREST") in the following accounts maintained by the Account Holder
for the Grantor (each, an "ACCOUNT" and collectively, the "ACCOUNTS"):
[Insert account numbers and other identifying information.]
(2) Terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. UNIFORM COMMERCIAL CODE") are used in
this Agreement as such terms are defined in such Article 8 or 9.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto hereby agree as follows:
SECTION 1. The Accounts. The Grantor and Account Holder represent and
warrant to, and agrees with, the Secured Party that:
(a) The Account Holder maintains each Account for the Grantor, and all
property (including, without limitation, all funds and financial assets)
held by the Account Holder for the account of the Grantor are, and will
continue to be, credited to an Account in accordance with instructions
given by the Grantor (unless otherwise provided herein).
(b) To the extent that funds are credited to any Account, such Account
is a deposit account; and to the extent that financial assets are credited
to any Account, such Account is a securities account. The Account Holder is
(i) the bank with which each Account that is a deposit account is
maintained and (ii) the securities intermediary with respect to financial
assets held in any Account that is a securities account. The Grantor is (x)
the Account Holder's customer with respect to the Accounts and (y) the
entitlement holder with respect to financial assets credited from time to
time to any Account.
(c) Notwithstanding any other agreement to the contrary, the Account
Holder's jurisdiction with respect to each Account for purposes of the N.Y.
Uniform
Commercial Code is, and will continue to be for so long as the Security
Interest shall be in effect, the State of New York.
(d) Attached as Exhibit A hereto are statements of the respective
Accounts as of the date hereof showing the property credited to each
Account.
(e) The Grantor and Account Holder do not know of any claim to or
interest in any Account or any property (including, without limitation,
funds and financial assets) credited to any Account, except for claims and
interests of the parties referred to in this Agreement.
SECTION 2. Control by Secured Party. The Account Holder will comply with
(i) all instructions directing disposition of the funds in any and all of the
Accounts, (ii) all notifications and entitlement orders that the Account Holder
receives directing it to transfer or redeem any financial asset in any and all
of the Accounts, and (iii) all other directions concerning any and all of the
Accounts, including, without limitation, directions to distribute to the Secured
Party proceeds of any such transfer or redemption or interest or dividends on
property in any and all of the Accounts (any such instruction, notification or
direction referred to in clause (i), (ii) or (iii) above being an "ACCOUNT
DIRECTION"), in each case of clauses (i), (ii) and (iii) above originated by the
Secured Party without further consent by the Grantor or any other Person.
SECTION 3. Grantor's Rights in Accounts.
(a) Except as otherwise provided in this Section 3, the Account Holder will
comply with Account Directions and other directions concerning each Account
originated by the Grantor without further consent by the Secured Party.
(b) Until the Account Holder receives a notice from the Secured Party that
the Secured Party will exercise exclusive control over any Account (a "NOTICE OF
EXCLUSIVE CONTROL" with respect to such Account), the Account Holder may
distribute to the Grantor all interest and regular cash dividends on property
(including, without limitation, funds and financial assets) in such Account.
(c) If the Account Holder receives from the Secured Party a Notice of
Exclusive Control with respect to any Account, the Account Holder will comply
only with Account Directions originated by the Secured Party and will cease:
(i) complying with Account Directions or other directions concerning
such Account originated by the Grantor and
(ii) distributing to the Grantor interest and dividends on property
(including, without limitation, funds and financial assets) in such
Account.
SECTION 4. Priority of Secured Party's Security Interest. (a) The Account
Holder (i) subordinates to the Security Interest and in favor of the Secured
Party any security interest, lien, or right of recoupment or setoff that the
Account Holder may have, now or in the future, against any Account or property
(including, without limitation, any funds and financial assets) credited to any
Account, and (ii) agrees that it will not exercise any right in respect of any
such security interest or lien or any such right of recoupment or setoff until
the Security Interest is terminated, except that the Account Holder (A) will
retain its prior security interest and lien on property credited to any Account,
(B) may exercise any right in respect of such security interest or lien, and (C)
may exercise any right of recoupment or setoff against any Account, in the case
of clauses (A), (B) and (C) above, to secure or to satisfy, and only to secure
or to satisfy, payment (x) for such property, (y) for its customary fees and
expenses for the routine maintenance and operation of such Account, and (z) if
such Account is a deposit account, for the face amount of any items that have
been credited to such Account but are subsequently returned unpaid because of
uncollected or insufficient funds.
(b) The Account Holder will not enter into any other agreement with any
Person relating to Account Directions or other directions with respect to any
Account.
SECTION 5. Statements, Confirmations, and Notices of Adverse Claims. When
the Account Holder knows of any claim or interest in any Account or any property
(including, without limitation, funds and financial assets) credited to any
Account other than the claims and interests of the parties referred to in this
Agreement, the Account Holder will promptly notify the Secured Party and the
Grantor of such claim or interest.
SECTION 6. The Account Holder's Responsibility. (a) Except for permitting a
withdrawal, delivery, or payment in violation of Section 3, the Account Holder
will not be liable to the Secured Party for complying with Account Directions or
other directions concerning any Account from the Grantor that are received by
the Account Holder before the Account Holder receives and has a reasonable
opportunity to act on a Notice of Exclusive Control.
(b) The Account Holder will not be liable to the Grantor or the Secured
Party for complying with a Notice of Exclusive Control or with an Account
Direction or other direction concerning any Account originated by the Secured
Party, even if the Grantor notifies the Account Holder that the Secured Party is
not legally entitled to issue the Notice of Exclusive Control or Account
Direction or such other direction unless the Account Holder takes the action
after it is served with an injunction, restraining order, or other legal process
enjoining it from doing so, issued by a court of competent jurisdiction, and had
a reasonable opportunity to act on the injunction, restraining order or other
legal process.
(c) This Agreement does not create any obligation of the Account Holder
except for those expressly set forth in this Agreement and, in the case of any
Account that is a securities account, in Part 5 of Article 8 of the N.Y. Uniform
Commercial Code and, in the case of any Account that is a deposit account, in
Article 4 of the N.Y. Uniform Commercial Code. In particular, the Account Holder
need not investigate whether the Secured Party is entitled under the Secured
Party's agreements with the Grantor to give an Account Direction or other
direction concerning any Account or a Notice of Exclusive Control. The Account
Holder may rely on notices and communications it believes given by the
appropriate party.
SECTION 7. Indemnity. The Grantor will indemnify the Account Holder, its
officers, directors, employees and agents against claims, liabilities and
expenses arising out of this Agreement (including, without limitation,
reasonable attorney's fees and disbursements), except to the extent the claims,
liabilities or expenses are caused by the Account Holder's gross
negligence or willful misconduct as found by a court of competent jurisdiction
in a final, non-appealable judgment.
SECTION 8. Termination; Survival. (a) The Secured Party may terminate this
Agreement by notice to the Account Holder and the Grantor. If the Secured Party
notifies the Account Holder that the Security Interest has terminated, this
Agreement will immediately terminate.
(b) The Account Holder may terminate this Agreement on 60 days' prior
notice to the Secured Party and the Grantor, provided that before such
termination the Account Holder and the Grantor shall make arrangements to
transfer the property (including, without limitation, all funds and financial
assets) credited to each Account to another Account Holder that shall have
executed, together with the Grantor, a control agreement in favor of the Secured
Party in respect of such property in substantially the form of this Agreement or
otherwise in form and substance reasonably satisfactory to the Secured Party.
(c) Sections 6 and 7 will survive termination of this Agreement.
SECTION 9. Governing Law. This Agreement and each Account will be governed
by the law of the State of New York. The Account Holder and the Grantor may not
change the law governing any Account without the Secured Party's express prior
written agreement.
SECTION 10. Entire Agreement. This Agreement is the entire agreement, and
supersedes any prior agreements, and contemporaneous oral agreements, of the
parties concerning its subject matter.
SECTION 11. Amendments. No amendment of, or waiver of a right under, this
Agreement will be binding unless it is in writing and signed by the party to be
charged.
SECTION 12. Financial Assets. The Account Holder agrees with the Secured
Party and the Grantor that, to the fullest extent permitted by applicable law,
all property (other than funds) credited from time to time to any Account will
be treated as financial assets under Article 8 of the N.Y. Uniform Commercial
Code.
SECTION 13. Notices. A notice or other communication to a party under this
Agreement will be in writing (except that Account Directions may be given
orally), will be sent to the party's address set forth under its name below or
to such other address as the party may notify the other parties and will be
effective on receipt.
SECTION 14. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Grantor, the Secured Party and the Account
Holder, and thereafter shall be binding upon and inure to the benefit of the
Grantor, the Secured Party and the Account Holder and their respective
successors and assigns.
SECTION 15. 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 shall be deemed to be an original
and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Agreement by telecopier shall be effective as delivery of
an original executed counterpart of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
[NAME OF GRANTOR]
By
-------------------------
Name:
Title:
Address:
----------------------------
----------------------------
CITICORP USA, INC., as
Collateral Agent
By
-------------------------
Name:
Title:
Address:
----------------------------
----------------------------
[NAME OF ACCOUNT HOLDER]
By
-------------------------
Name:
Title:
Address:
----------------------------
----------------------------
EXHIBIT A
[Statements of the various Accounts showing the property credited to each
Account
