Exhibit 10.42
SENIOR SECURITY AGREEMENT
This SENIOR SECURITY AGREEMENT, dated as of December 14, 2000 (the
"Security Agreement"), is entered into by and among HTI CLASS B, LLC, a
Delaware limited liability company (the "Grantor"), HEARTLAND TECHNOLOGY,
INC., a Delaware corporation ("Borrower"), and HEARTLAND PARTNERS, L.P., a
Delaware limited partnership ("Heartland Partners" or the "Partnership") and
CMC HEARTLAND PARTNERS, a partnership formed under the laws of the State of
Delaware ("CMC Heartland"), (hereafter, Heartland Partners and CMC Heartland,
individually and collectively, are referred to as the "Secured Party"). When
referred to jointly, the signatories to this Security Agreement will
hereafter be referred to as the "Parties."
W I T N E S S E T H:
WHEREAS, Secured Party has, prior to the date of this Security
Agreement, made certain loans and intercompany advances Borrower;
WHEREAS, Borrower is the sole member of Grantor;
WHEREAS, Grantor, to secure repayment of the "Obligations" (hereinafter
defined) to the Secured Party, and to induce Secured Party to make future
loans and intercompany advances to Borrower, desires to pledge certain
"Collateral" (hereinafter defined) to Secured Party;
WHEREAS, the extension and/or continued extension of credit, as
aforesaid, by Secured Party is necessary and desirable to the conduct and
operation of the business of Borrower and will inure to the personal and
financial benefit of the Grantor;
WHEREAS, the Grantor presently owns all of the "Collateral" (as defined
herein);
NOW, THEREFORE for good and valuable consideration, the receipt of
which is hereby acknowledged by the Grantor, and intending to be legally
bound hereby, the Grantor and Secured Party hereby agree as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Section shall have the following
defined meanings for all purposes of this Agreement:
"Borrower" shall mean Heartland Technology, Inc., a Delaware
corporation.
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"Class B Limited Partner" shall mean Grantor's status, rights, and
privileges as a Class B limited partner of the Partnership, as reflected on
the books and records of the Partnership on the date of this Security
Agreement.
"Class B Limited Partnership Interest" shall mean the interest of the
Class B Limited Partner in the Partnership.
"Collateral" shall mean the following whether now or hereafter
existing or acquired:
(i) the Class B Limited Partnership Interest, and any
substitutions, replacements or additions thereto; and
(ii) all of the Grantor's right, title and interest as a Class
B Limited Partner in the Partnership, including without
limitation, all of the Grantor's right as a Class B
Limited Partner to receive deposits, proceeds, profits,
distributions, special distributions, dividends, interest
and other amounts, at any time or from time to time, of
cash and other property, real, personal or mixed, and the
right as a Class B Limited Partner to receive
distributions, special distributions and profits from the
Partnership or in connection with all property owned or
controlled by the Partnership, and the development thereof
or upon complete or partial liquidation of the Partnership
or otherwise.
"Collateral Release Event" shall mean receipt by Grantor of written
notice of a Termination Event.
"Grantor" shall mean HTI Class B, LLC, a Delaware limited liability
company.
"Event of Default" shall have the meaning assigned in Article VII of
this Security Agreement.
"Obligations" shall mean the indebtedness evidenced by that certain
Line of Credit Promissory Note (the "Note") issued by the Borrower to the
Secured Party and all other now or hereafter existing loans or advances from
Secured Party to Borrower, and any extensions, renewals or refinancing
thereof.
"Partnership" shall mean Heartland Partners, L.P., a Delaware limited
partnership organized under the Partnership Agreement.
"Partnership Agreement" shall mean the Amended and Restated Agreement
of Limited Partnership of Heartland Partners, L.P., dated as of June 27,
1990, as amended by the Amendment to the Amended and Restated Agreement of
Limited Partnership of Heartland Partners, L.P., dated December 4, 1997, as
it may be further amended, supplemented or restated from time to time.
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"Secured Party" shall mean Heartland Partners, L.P., a Delaware
limited partnership, and CMC Heartland Partners, a Delaware partnership,
individually or collectively.
"Security Interest" shall mean the senior security interest granted by
the Grantor to the Secured Party in the Collateral pursuant to Article II of
this Security Agreement.
"Subordinated Debt" shall mean all obligations, liabilities, and
indebtedness of the Borrower to Subordinated Debt Holders, whether now
existing or incurred in the future, which is subordinated to the Security
Interest.
"Subordinated Debt Holders" shall mean all holders of any security
interests of the Grantor, whether now existing or hereafter arising, which is
subordinated to the Security Interest.
"Subordinated Security Agreements" shall mean any other security
agreement entered into by Grantor, granting a security interest in the
Collateral, whether now existing or hereafter arising, which is subordinated
to the Security Interest.
"Termination Event" shall mean (i) receipt by Grantor of written notice
by Secured Party of its intent to terminate the loans to Grantor and (ii) the
satisfaction and payment of all Obligations; provided, however, that Secured
Party may make loans from time to time to Borrower and receive payments from
time to time from Borrower prior to delivery of written notice of Secured
Party's intention to terminate the loans, and such repayments shall not be
deemed a "Termination Event."
"UCC" shall mean the Uniform Commercial Code as the same may from time
to time be in effect in the State of Delaware.
Terms otherwise not specifically defined herein shall have the meaning
ascribed to them in the UCC.
ARTICLE II
PLEDGE AND GRANT OF SENIOR SECURITY INTEREST
1. To secure the payment of the Obligations (together with all
reasonable costs and expenses of the Secured Party incurred in connection
with the enforcement of this Agreement and the Note), the Grantor hereby
pledges and grants to the Secured Party a senior lien on, and a senior
security interest in, the Collateral.
2. Notwithstanding any security agreement(s) or other agreements
heretofore or hereafter entered into between Grantor and the Subordinated
Debt Holders, or any financing statement(s) heretofore or hereafter filed
against the Collateral, and notwithstanding the time or order of filing,
attachment or perfection, this Security Agreement is senior to any lien and
security interest of any Subordinated Debt Holder in the Collateral to secure
its rights, and Borrower's or Grantor's obligations, under or arising out of
Subordinated Security Agreements and Subordinated Debt.
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ARTICLE III
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF GRANTOR
The Grantor represents, warrants and covenants that as of the
date of execution of this Agreement, and continuing until the occurrence of
the Collateral Release Event:
A. The Grantor is duly organized under the law of the State of
Delaware, and shall not change the state of its organization
without the prior consent of the Secured Party.
B. The Grantor is the sole owner of 100% of the Class B Limited
Partnership Interest.
C. No certificate has been issued to represent the pledged
Collateral, and the pledged Collateral is an uncertificated
security within the meaning of UCC 8-102(a)(18).
D. Grantor has full power, authority and legal right to execute this
Security Agreement and to grant the Security Interest in the
Collateral to the Secured Party.
E. This Security Agreement has been duly executed and delivered by
the Grantor and constitutes a legal, valid and binding obligation
of Grantor in accordance with its terms.
F. The Class B Limited Partnership Interest is a security within the
meaning of 8-102(a)(15) of the UCC.
G. The pledged Collateral is subject to the subordinated lien and
security interest, now existing or hereafter granted, of the
Subordinated Debt Holders, as created under or arising out of the
Subordinated Security Agreements. Except for the security
interest created by the Subordinated Security Agreements, and the
senior security interest granted to the Secured Party pursuant to
this Security Agreement, the Collateral is not subject to any
other liens, claims, and/or interests.
ARTICLE IV
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF PARTNERSHIP
The Partnership represents, warrants and covenants that as of the
date of execution of this Agreement:
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A. The Partnership is the issuer of the pledged Collateral.
B. The pledged Collateral is a security within the meaning of
8-102(a)(15) of the UCC.
C. No certificate has been issued to represent the pledged
Collateral, and the pledged Collateral is an uncertificated
security within the meaning of 8-102(a)(18) of the UCC.
D. All property credited to the Collateral will be treated as
financial assets under Article 8 of the UCC.
ARTICLE V
GRANTOR'S POWERS
1. So long as an Event of Default shall not then exist, Grantor
shall be the only party entitled (i)to exercise for any purpose any and all
voting rights and powers, and (ii)to receive any and all distributions, in
each case arising from or relating to the Collateral; provided, however, that
Grantor shall not exercise such rights or powers, or consent to any action of
the Partnership that would be in contravention of the provisions of, or
constitute an Event of Default under, this Security Agreement.
2. Upon the occurrence of an Event of Default, unless Secured Party
designates in writing to Grantor to the contrary, all rights of Grantor
provided in Section 5.1 shall cease, and all voting rights and powers and
rights to distributions included in the Collateral or otherwise described in
Section 5.1 shall thereupon become vested in Secured Party, and Secured Party
shall thereafter have the sole and exclusive right and authority to exercise
such voting rights and powers. Grantor shall execute such documents and
instruments, including but not limited to, statements that Grantor no longer
has the right to act as a partner, owner or otherwise as Secured Party may
request.
Notwithstanding anything herein to the contrary:
(A) Upon the redemption of the Class B Limited Partnership
Interest or the dissolution or liquidation (in whole or in part)
of the Partnership, if any sum is to be paid in redemption of the
Class B Limited Partnership Interest or as a liquidating
distribution or dividend or otherwise, or
(B) If any distribution of capital shall be made on the Class B
Limited Partnership Interest, or any shares, interests, warrants,
rights, obligations or other property shall be distributed upon
or with respect to the Collateral pursuant to a recapitalization
or reclassification of the capital of the Partnership, or
pursuant to the dissolution, liquidation (in whole or in part),
bankruptcy or reorganization of the Partnership, or pursuant to
the merger or consolidation of the Partnership with or into
another entity,
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then any sum or any shares, interests, warrants, obligations, rights or other
property so paid or distributed shall be held by the Secured Party or made
subject to a Control Agreement (substantially in the foprm attached hereto as
Exhibit A)or otherwise as the parties agree to perfect the Secured Party's
security interest therein, shall otherwise be deemed to be Collateral
hereunder.
ARTICLE VI
EVENTS OF DEFAULT
Each of the following occurrences shall constitute an event of
default hereunder (herein called an "Event of Default"):
A. a failure of the Borrower to make any payment of the Obligations
to Secured Party on the date that such payment obligation becomes
due or the failure of the Borrower to timely pay any obligation
or indebtedness that is secured, in whole or in part, at any time
or from time to time, by the Collateral;
B. a failure by Grantor to perform its obligations under this
Security Agreement;
C. a receiver, liquidator or trustee of the Borrower or the Grantor
or of any property of the Borrower or the Grantor shall be
appointed by court order and such order shall remain unstayed and
in effect for more than 60 days; or the Borrower or the Grantor
shall be adjudged bankrupt or insolvent; or any of the property
of the Borrower or the Grantor shall be restrained, attached or
sequestered by court order of become subject to any levy of any
court and such order shall remain unstayed and in effect for more
than 60 days; or a petition to reorganize the Borrower or the
Grantor under any bankruptcy, reorganization, arrangement,
moratorium, or insolvency law or code or other debtor relief
proceedings shall be filed against the Borrower or the Grantor
and shall not be dismissed within 60 days after such filing or an
order for relief shall be entered against the Borrower or the
Grantor, as applicable, (it being understood that for the
purposes of Sections (C), (D), (E), (F) and (G), the term the
"Borrower" includes any "significant subsidiary" of the Borrower
as that term is defined by the Securities and Exchange
Commission);
D. the Borrower or the Grantor shall file a petition in voluntary
bankruptcy or requesting relief under any provision of any
bankruptcy, reorganization, or insolvency law or shall consent to
the filing of any petition against it under any such law or code;
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E. the Borrower or the Grantor shall make an assignment for the
benefit of its creditors or consent to the appointment of a
receiver, trustee, or liquidator of the Borrower or the Grantor
or of all or any part of the property of the Borrower or the
Grantor;
F. the Borrower or the Grantor shall be dissolved or liquidated or
the existence of the Borrower or the Grantor shall terminate
except pursuant to a merger pursuant to which the Obligations
become obligations of the surviving entity; or
G. any seizure, vesting, or intervention by or under the authority
of any governmental agency by which the management of the
Borrower or the Grantor is displaced or its authority in the
conduct of its business is curtailed shall occur.
ARTICLE VII
POWER OF ATTORNEY
The Grantor hereby appoints the Secured Party as its lawful
attorney-in-fact to take, at the Secured Party's option and at the Grantor's
expense and liability, all actions which the Secured Party may deem necessary
or desirable to effectuate the Secured Party's rights under this Security
Agreement, including without limitation the execution of any instrument which
the Secured Party may deem necessary or desirable in connection with the
protection or enforcement of the Secured Party's rights, interests and powers
hereunder
ARTICLE VIII
PROTECTION OF SECURITY INTEREST
The Grantor shall take any action necessary to preserve
redemption, conversion, warrant, preemptive or other rights (and be aware of
the dates limiting the exercise of such rights) concerning the Collateral.
The Secured Party may, but need not, take any action to preserve such rights.
No failure to act by the Secured Party shall relieve the Grantor of its
duties under this section or in any way impair or discharge the Obligations
or any of them, and no failure to act by the Secured Party shall result in
any liability to the Grantor or the Borrower on the part of the Secured
Party. No omission by the Secured Party with respect to any such matters
shall in any way impair or discharge the Obligations or any of them.
Notwithstanding anything in this Security Agreement to the contrary, the
Secured Party shall have no obligation to exercise any rights or privileges,
and no failure by the Secured Party to exercise any rights or privileges
shall constitute a default under this Security Agreement or result in any
liability to the Grantor on the part of the Secured Party. If the validity
or priority of this Security Agreement or of any rights, titles, security
interests or other interests created or evidenced hereby or thereby shall be
attacked, endangered or questioned, or if any legal proceedings are
instituted with respect thereto, the Grantor will give prompt written notice
thereof to the Secured Party and the Grantor at its own cost and expense will
diligently endeavor to cure any defect that may be developed or claimed, and
will take all necessary and appropriate steps for the defense of such legal
proceedings. The Secured Party (whether or not named as a party to legal
proceedings with respect thereto) is hereby authorized and empowered to take
such additional steps as in its sole judgment and discretion may be necessary
or proper for the defense of any such legal proceedings or the protection of
the validity or priority of this Security Agreement and the rights, titles,
security interests and other interests created or evidenced hereby or
thereby, and all expenses so incurred of every kind and character shall be a
demand obligation owing by the Grantor to the Secured Party and shall bear
interest from the date of expenditure until paid at the rate of 10% per annum
or, if lower, the highest rate of interest permitted by law
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ARTICLE IX
SECURED PARTY REMEDIES UPON EVENT OF DEFAULT
If an Event of Default shall occur and the Collateral Release
Event shall not have occurred, the Secured Party shall have all rights and
remedies under this Agreement and applicable law and in addition thereto:
A. The Secured Party, without obligation to resort to other
security, shall have the right at any time and from time to time
to sell, resell, assign and deliver, in its discretion, all or
any of the Collateral, and all right, title and interest, claim
and demand therein and right of redemption thereof, on any
securities exchange on which the Class B Limited Partnership
Interest may be listed, or at public or private sale, at any
Secured Party's premises or elsewhere, for cash, upon credit or
for future delivery, and in connection therewith Secured Party
may grant options, Grantor hereby waiving and releasing any and
all equity or right of redemption. If any of the Collateral is
sold by the Secured Party upon credit or for future delivery, the
Secured Party shall not be liable for the failure of the
purchaser to purchase or pay for the same and, in the event of
any such failure, Secured Party may resell such Collateral. In
no event shall Borrower or Grantor be credited with any part of
the proceeds of sale of any Collateral until cash payment thereof
has actually been received by the Secured Party.
B. The Secured Party shall be entitled to exercise all rights and to
enjoy all benefits of the Grantor under the Collateral,
including, without limitation, the right to enforce any rights of
Grantor with respect to the Collateral, and to receive, retain
and apply to the payment of the Obligations any and all monies
paid upon or for the account of the Grantor with respect to the
Collateral.
C. The Secured Party shall be entitled to exercise all voting power
with respect to the Collateral and to receive and retain, as
additional Collateral hereunder, any and all interest payments,
distributions or dividends at any time declared or paid upon any
of the Collateral.
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ARTICLE X
RELEASE OF COLLATERAL
Upon the occurrence of a Collateral Release Event:
A. Secured Party shall terminate and release the Security Interest,
and will execute and deliver to Grantor such documents as Grantor
may reasonably request and provide to Secured Party to evidence
the termination of the Security Interest.
B. Grantor shall be entitled to the return of all of the Collateral
and the release by the Secured Party of their security interest
therein, and Secured Party will deliver to Grantor all stock
certificates and instruments representing or evidencing
Collateral being physically held by Secured Party.
ARTICLE XI
MISCELLANEOUS PROVISIONS
1 . Remedies Cumulative. The remedies provided herein in favor of
the Secured Party shall not be deemed exclusive, but shall be cumulative, and
shall be in addition to all other remedies in favor of the Secured Party
existing at law or in equity, including without limitation, those remedies
specified in the Note, and may be exercised either individually or jointly by
Heartland Partners and CMC Heartland.
2. No Waiver. No delay on the part of the Secured Party or of any
holder of the obligations in exercising any of its options, powers or rights,
or partial or single exercise thereof, shall constitute a waiver thereof. No
waiver or amendment of any provision of this Agreement shall be enforceable
unless in writing and signed by Secured Party and unless it expressly refers
to the provision affected.
3. Notices. Any notice of any sale, lease, other disposition, or
other intended action by the Secured Party shall be deemed reasonable if it
is in writing and deposited in the United States mail fifteen (15) days in
advance of the intended disposition or other intended action, first class
postage prepaid, and addressed to Grantor at its address set forth below (or
any other address designated in a written notice by Grantor previously
received by the Secured Party).
4. Governing Law. This Security Agreement and the rights and
obligations of the Secured Party and Grantor hereunder shall be construed in
accordance with and governed by the internal laws of the State of Illinois,
cannot be changed orally, and shall bind and inure to the benefit of Grantor
and the Secured Party and their respective successors and assigns.
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5. Counterparts. This Security Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which taken together shall constitute but one and the same instrument.
6. Secured Party's Signature Not Necessary. The Grantor acknowledges
that this Security Agreement is and shall be effective upon execution by the
Grantor and delivery to and acceptance hereof by the Secured Party, and it
shall not be necessary for any Secured Party to execute any acceptance hereof
or otherwise to signify or express its acceptance hereof to Grantor. This
Agreement may be executed by facsimile signature, but Grantor agrees to
furnish an original to the Secured Party within ten business days after
signing.
7. Headings. The article headings of this Security Agreement are
for convenience of reference only, and will not affect the meaning of any of
its provisions.
8. Guaranty. Borrower hereby guarantees the performance by the
Grantor of all obligations of Grantor under this Security Agreement.
9. Securities Laws. The Grantor and the Borrower recognize that the
Secured Party's ability to effect a public sale of all or a part of the
Collateral may be limited by reason of certain prohibitions contained in (a)
the Securities Act of 1933, as amended, as now or hereafter in effect, (b)
the Exchange Act, or (c)applicable Blue Sky or other state securities laws,
as now or hereafter in effect, and the Secured Party may be compelled to
resort to one or more private sales of the Collateral to a restricted group
of purchasers who may be obliged to agree, among other things, to acquire
such Collateral for their own account, for investment and not with a view to
the distribution or resale thereof. The Grantor and the Borrower agree that
private sales so made may be at prices and other terms less favorable than if
such Collateral were sold at public sales, and that the Secured Party has no
obligation to delay sale of any such Collateral for the period of time
necessary to permit the Partnership, as issuer of such Collateral, even if
the Partnership would agree, to register such Collateral for public sale
under such applicable securities laws. The Grantor and the Borrower agree
that private sales made under the foregoing circumstances shall be deemed to
have been made in a commercially reasonable manner
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IN WITNESS WHEREOF, Grantor and Secured Party have caused this Security
Agreement to be duly executed as of the day and year first above written.
Secured Party: HEARTLAND PARTNERS, L.P.
By HTI Interests, LLC
Its General Partner
By s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its President & CEO
Secured Party: CMC HEARTLAND PARTNERS
By Heartland Technology, Inc.
as Managing Partner
By s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its President & CEO
Grantor: HTI CLASS B, LLC
By s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its President & CEO
Borrower: HEARTLAND TECHNOLOGY, INC.
By s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its President & CEO
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EXHIBIT A
CONTROL AGREEMENT
This CONTROL AGREEMENT, dated as of December 14, 2000, (the "Control
Agreement") is entered into between Heartland Partners, L.P., a Delaware
limited liability partnership (the "Partnership"), HTI Class B, LLC (the
"Grantor"), and CMC Heartland Partners, a Delaware partnership ("CMC
Heartland"), (the Partnership and CMC Heartland are individually and
collectively referred to herein as the "Secured Party").
1. The Grantor and the Secured Party have entered into a certain Security
Agreement executed as of the date hereof (the "Security Agreement").
All capitalized terms used in this Control Agreement shall have the
meaning ascribed to them in the Security Agreement. Pursuant to the
Security Agreement, the Grantor has granted the Secured Party a
security interest in the Collateral, including the Class B Limited
Partnership Interest in the Partnership (the "Pledged Collateral").
The parties are entering into this Control Agreement to perfect the
security interest in the Pledged Collateral.
2. The Partnership represents and warrants to the Secured Party that:
2.1. The Partnership is the issuer of the Pledged Collateral.
2.2. The Pledged Collateral is a security within the meaning of
8-102(a)(15) of the UCC.
2.3. No certificate has been issued to represent the Pledged
Collateral, and the Pledged Collateral is an uncertificated
security within the meaning of 8-102(a)(18) of the UCC.
2.4. The Partnership does not know of any claim to or interest in the
Pledged Collateral, except for claims and interests of the
parties referred to in this Control Agreement.
3. The Partnership will comply with all notifications it receives
directing it to transfer or redeem the Pledged Collateral (each an
entitlement order) originated by the Secured Party without further
consent by the Grantor.
4. Except as otherwise provided in this section, the Partnership will
comply with entitlement orders originated by the Grantor without
further consent by the Secured Party. If the Secured Party notifies
the Partnership that the Secured Party will exercise exclusive control
over the Pledged Collateral (a "notice of exclusive control"), the
Partnership will cease complying with entitlement orders or other
directions concerning the Pledged Collateral originated by the Grantor
and distributing to the Grantor interest and dividends on property in
the Pledged Collateral. Until the Partnership receives a notice of
exclusive control, the Partnership may distribute to the Grantor all
interest and regular cash dividends on property in the Pledged
Collateral. The Partnership will not comply with any entitlement order
originated by the Grantor that would require the Partnership to make a
free delivery to the Grantor or any other person.
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5. The Partnership will not agree with any third party, other than the
Secured Party that the Partnership will comply with entitlement orders
originated by the third party.
6. The Partnership will send copies of all statements and confirmations
for the Pledged Collateral simultaneously to the Grantor and the
Secured Party. The Partnership will use reasonable efforts promptly to
notify the Secured Party and the Grantor if any other person, other
than the Secured Party and the Pari Passu Debt Holders claims that it
has a property interest in property in the Pledged Collateral and that
it is a violation of that person's rights for anyone else to hold,
transfer, or deal with the property.
7. Except for permitting a withdrawal, delivery, or payment in violation
of section 4, the Partnership will not be liable to the Secured Party
for complying with entitlement orders from the Grantor that are
received by the Partnership before the Partnership receives and has a
reasonable opportunity to act on a notice of exclusive control. The
Partnership will not be liable to the Grantor for complying with a
notice of exclusive control or with entitlement orders originated by
the Secured Party, even if the Grantor notifies the Partnership that
the Secured Party is not legally entitled to issue the entitlement
order or notice of exclusive control, unless the Partnership 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.
8. This Control Agreement does not create any obligation of the
Partnership except for those expressly set forth in this Control
Agreement. In particular, the Partnership need not investigate whether
the Secured Party is entitled under the Secured Party's agreements with
the Grantor to give an entitlement order or a notice of exclusive
control. The Partnership may rely on notices and communications it
believes given by the appropriate party.
9. The Secured Party and the Grantor will indemnify the Partnership, its
officers, directors, employees, and agents against claims, liabilities,
and expenses arising out of this Control Agreement (including
reasonable attorneys' fees and disbursements), except to the extent the
claims, liabilities, or expenses are caused by the Partnership's gross
negligence or willful misconduct. The Secured Party's and the Grantor's
liability under this section is joint and several.
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10. The Secured Party may terminate this Control Agreement by notice to the
Partnership and the Grantor. The Partnership may terminate this Control
Agreement on 30 days notice to the Secured Party and the Grantor.
11. If the Secured Party notifies the Partnership that the Secured Party's
security interest in the Pledged Collateral has terminated, this
Security Agreement will immediately terminate. Sections 8 and 9 will
survive termination of this Control Agreement.
12. This Control Agreement will be governed by the laws of the State of
Illinois. The Partnership and the Grantor may not change the law
governing the Pledged Collateral without the Secured Party's express
written agreement.
13. This agreement is the entire agreement, and supersedes any prior
agreements and contemporaneous oral agreements, of the parties
concerning its subject matter.
14. No amendment of, or waiver of a right under, this Control Agreement
will be binding unless it is in writing and signed by the party to be
charged.
15. To the extent a provision of this Control Agreement is unenforceable,
this Control Agreement will be construed as if the unenforceable
provision were omitted.
16. All property credited to the Pledged Collateral will be treated as
financial assets under Article 8 of the Illinois Uniform Commercial
Code.
17. A successor to or assignee of the Secured Party's rights and
obligations under the security agreement between the Secured Party and
the Grantor will succeed to the Secured Party's rights and obligations
under this Control Agreement.
18. A notice or other communication to a party under this Control Agreement
will be in writing, will be sent to the party's address set forth below
or to such other address as the party may notify the other parties and
will be effective on receipt.
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IN WITNESS WHEREOF, the Partnership, Grantor and Secured Party have caused
this Security Agreement to be duly executed as of the day and year first
above written.
Partnership and Secured Party: HEARTLAND PARTNERS, L.P.
By HTI Interests, LLC
Its General Partner
By _______________________________
Its _______________________________
Secured Party: CMC HEARTLAND PARTNERS
By Heartland Technology, Inc.
as Managing Partner
By _______________________________
Its _______________________________
Grantor: HTI CLASS B, LLC
By _______________________________
Its _______________________________
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