EXHIBIT (b)(2)
SECURITY AGREEMENT dated as of February 1, 2002 made by IRONBRIDGE
ACQUISITION CORP., a Pennsylvania corporation, as grantor (together with any
successor by merger, the "Borrower") to COOPERATIEVE CENTRALE
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RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH
("Rabobank"), as agent (the "Agent") for the Initial Lender (as hereinafter
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defined) and other lenders party to the Credit Agreement (as hereinafter
defined) (the "Lenders").
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PRELIMINARY STATEMENTS
1. The Borrower, Utrecht-America Finance Co., as Initial Lender (the
"Initial Lender") and the Agent have entered into a Credit Agreement (the
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"Credit Agreement") dated as of February 1, 2002. The terms defined in the
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Credit Agreement and not otherwise defined herein are used herein as therein
defined.
2. It is a condition precedent to the effectiveness of the Credit
Agreement and to the Borrowing thereunder that the Borrower shall have executed
and delivered this Security Agreement.
3. The Borrower will derive substantial benefit from the transactions
contemplated by the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Initial Lender to enter into the Credit Agreement and make the
Advance thereunder, the Borrower hereby agrees as follows:
SECTION 1. Grant of Security. The Borrower hereby assigns and pledges
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to the Agent for its benefit and the ratable benefit of the other Secured
Parties and hereby grants to the Agent for its benefit and the ratable benefit
of the other Secured Parties, a first priority security interest in all of the
Borrower's right, title and interest in and to the following, whether now owned
or hereafter acquired (the "Collateral"):
(a) the Asset Sale Escrow Agreement including but not limited to (i) all
distributions, cash and other property from time to time received,
receivable or otherwise distributed in connection with the Asset Sale
Escrow Agreement, (ii) all rights to receive moneys due and to become due
under or pursuant to the Asset Sale Escrow Agreement and (iii) all of the
rights of the Borrower to perform under the Asset Sale Escrow Agreement and
to compel performance and otherwise exercise all remedies thereunder;
(b) the Asset Purchase Agreement including but not limited to (i) all
distributions, cash and other property from time to time received,
receivable or otherwise distributed in connection with the Asset Purchase
Agreement, (ii) all rights to receive moneys due and to become due under or
pursuant to the Asset Purchase Agreement and (iii) all of the rights of the
Borrower to perform under
the Asset Purchase Agreement and to compel performance and otherwise
exercise all remedies thereunder;
(c) the Merger Agreement (together with the Asset Sale Escrow Agreement and
the Asset Purchase Agreement, the "Collateral Agreements"), including but
not limited to (i) all distributions, cash and other property from time to
time received, receivable or otherwise distributed in connection with the
Merger Agreement, (ii) all rights to receive moneys due and to become due
under or pursuant to the Merger Agreement, (iii) all of the rights of the
Borrower to perform under the Merger Agreement and to compel performance
and otherwise exercise all remedies thereunder and (iv) all other rights of
the Borrower of any kind under the Merger Agreement;
(d) All accounts, contract rights, chattel paper, general intangibles and
other obligations of any kind, now or hereafter existing and all rights now
or hereafter existing in and to all security agreements, leases, and other
contracts securing or otherwise relating to any such accounts, contract
rights, chattel paper, general intangibles or obligations, in each case,
relating to the Collateral Agreements;
(e) All other personal property, now or hereafter existing; and
(f) All proceeds (as defined in the Uniform Commercial Code in effect in
the State of New York on the date hereof) of any and all of the foregoing
Collateral;
provided, however, that notwithstanding anything herein to the contrary
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(including, but not limited to the provision of clause (c) above)), the
Collateral shall not include any of the Borrower's right, title and interest in
and to any Capital Stock of PDMI.
SECTION 2. Security for Obligations. This Agreement secures the
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payment of all Obligations of the Borrower now or hereafter existing under the
Credit Agreement and the other Transaction Documents, whether for principal,
interest, fees, expenses or otherwise (all such Obligations being the "Secured
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Obligations"). Without limiting the generality of the foregoing, this Agreement
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secures the payment of all amounts that constitute part of the Secured
Obligations and would be owed by the Borrower to the Agent or any other Secured
Party but for the fact that they are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving the
Borrower.
SECTION 3. Borrower Remains Liable. Anything herein to the contrary
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notwithstanding, (a) the Borrower shall remain liable under the Collateral
Agreements to the extent set forth therein to perform all of the Borrower's
duties and obligations thereunder to the same extent as if this Agreement had
not been executed, (b) the exercise by the Agent of any of the rights hereunder
shall not release the Borrower from any of the Borrower's duties or obligations
under the Collateral Agreements and (c) neither the Agent nor any Secured Party
shall have any obligation or liability under the Collateral Agreements by reason
of this Agreement, nor shall the Agent or any Secured Party be
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obligated to perform any of the obligations or duties of the Borrower thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 4. Representations and Warranties. The Borrower represents and
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warrants as follows:
(a) No consent of any other person or entity and no authorization or
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for (i) the grant by
the Borrower of the Lien granted by it pursuant to this Agreement, (ii) the
perfection or maintenance of such liens (including the first priority
nature thereof) except for the filing of financing statements required
pursuant to Section 3.01 of the Credit Agreement, which financing
statements have been duly filed, or (iii) the exercise by the Agent or any
other Secured Party of its rights under this Agreement or the remedies in
respect of the Collateral (except as specifically provided herein).
(b) The Borrower's legal name is Ironbridge Acquisition Corp.
(c) The state of incorporation of the Borrower is the Commonwealth of
Pennsylvania and the chief place of business and chief executive office and
the office where it keeps its records concerning the Collateral, and an
original copy of the Collateral Agreements, are located at its address set
forth in the Credit Agreement.
(d) The Borrower is the legal and beneficial owner of the Collateral,
free and clear of any lien, security interest, charge or encumbrance,
except for security interests created by this Agreement. No effective
financing statement or other instrument similar in effect covering all or
any part of the Borrower's Collateral is on file in any recording office,
except such as may have been filed in favor of the Agent relating to this
Agreement.
(e) This Agreement creates a valid and perfected first priority
security interest in the Collateral enforceable against all third parties,
securing the payment of the Secured Obligations, and all filings and other
actions necessary or desirable to perfect and protect such security
interest have been duly made or taken.
(f) The Collateral Agreements, a true and complete copy of which has
been furnished to the Agent, have been duly authorized, executed and
delivered by the Borrower and, to the best of the Borrower's knowledge,
each other party thereto, have not been amended or otherwise modified, are
in full force and effect and are binding upon and enforceable against all
parties thereto in accordance with their terms. There exists no default
under the Collateral Agreements by the Borrower or, to the best of the
Borrower's knowledge, any other party thereto.
SECTION 5. Further Assurances. (a) The Borrower agrees that at any
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time and from time to time, at the expense of the Borrower, the Borrower will
promptly execute and deliver all
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further instruments and documents and take all further action that may be
necessary or desirable, or that the Agent may reasonably request, in order to
continue, perfect and protect any assignment or security interest granted or
purported to be granted hereby or to enable the Agent to exercise and enforce
its rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, the Borrower shall: (i) xxxx
conspicuously the Collateral Agreements and, at the request of the Agent, each
of its records pertaining to the Collateral with a legend, in form and substance
satisfactory to the Agent, indicating that the Collateral Agreements or
Collateral is subject to the security interest granted hereby; (ii) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or desirable, or as the Agent
may request, in order to perfect and preserve the assignment and security
interest granted or purported to be granted hereby; and (iii) prepare and
execute such reports, applications and other documents as the Agent may from
time to time reasonably request in connection with the exercise by the Agent of
its rights under the Transaction Documents.
(b) The Borrower hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Borrower's Collateral without the signature of the Borrower
where permitted by law. A carbon, photographic or other reproduction of this
Agreement or any financing statement covering the Borrower's Collateral or any
part thereof shall be sufficient as a financing statement where permitted by
law.
(c) In the event any certificates or instruments are issued that
represent or evidence any Collateral, the Borrower shall promptly deliver all
such certificates and instruments to the Agent to be held by or on behalf of the
Agent pursuant hereto, and such certificates and instruments 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
satisfactory to the Agent. The Agent shall have the right, at any time in its
discretion and without notice to the Borrower, to transfer to or to register in
the name of the Agent or any of its nominees any or all certificates or
instruments representing or evidencing any of the Borrower's Collateral, subject
only to the revocable rights specified in Section 7(a). In addition, the Agent
shall have the right at any time to exchange certificates or instruments or
evidencing Collateral for certificates or instruments of smaller or larger
denominations.
(d) The Agent is hereby authorized to demand specific performance by
the Borrower of the provisions of this Section 5. The Borrower hereby
irrevocably waives any defense based on the adequacy of a remedy at law that
might be asserted as a bar to such remedy of specific performance. The Borrower
hereby acknowledges that the provisions of this Section 5 are intended to be
enforceable at all times, whether before or after the commencement of a
proceeding for the dissolution, winding up, liquidation, arrangement,
reorganization, adjustment, protection, relief or composition of any Borrower or
its debts, whether in any bankruptcy, insolvency, arrangement, reorganization,
receivership, relief or similar proceeding or upon an assignment for the benefit
of creditors or any other marshalling of the assets and liabilities of any
Borrower or otherwise.
SECTION 6. Place of Perfection; Records. The Borrower will not change
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it's legal name, its jurisdiction of formation or its chief place of business;
provided that the Borrower may change
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its chief place of business upon 30 days' prior written notice to the Agent, to
such other location(s) in a jurisdiction where all actions required by Section 5
shall have been taken with respect to the Collateral.
SECTION 7. Voting Rights; Distributions; Etc. (a) The Agent shall have
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the sole right to exercise or refrain from exercising any and all voting and
other consensual rights, if any, pertaining to the Collateral.
(b) Any and all distributions of any kind or description in respect
of the Borrower's Collateral shall be paid directly to the Agent (and the
contract parties to each of the Collateral Agreements shall be so instructed) to
pay or prepay obligations of the Borrower under the Credit Agreement in
accordance with the terms thereof and shall, if received by the Borrower, be
received in trust for the benefit of the Agent, be segregated from the other
property or funds of the Borrower, and be forthwith delivered to the Agent as
Collateral in the same form as so received (with any necessary endorsement).
SECTION 8. As to the Collateral Agreements.
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(a) At the direction of the Agent, the Borrower shall continue to
collect, at its own expense, all amounts due or to become due to the Borrower
under the Collateral Agreements, if any. In connection with such collections,
the Borrower shall take, at the Agent's direction, such actions as the Agent may
deem necessary or advisable to enforce any or all of the Borrower's rights to
receive payments or other distributions with respect to the Collateral
Agreements. The Agent shall have the right at any time (i) to direct the parties
to the Collateral Agreements to make payment of all amounts due or to become due
to the Borrower under the Collateral Agreements directly to the Agent and, upon
such notification, (ii) at the expense of the Borrower, to enforce collection of
such amounts under the Collateral and (iii) to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as the
Borrower might have done.
(b) The Borrower shall at its expense:
(i) perform and observe all the terms and provisions of the
Collateral Agreements to be performed or observed by it, except as
otherwise provided by law, maintain the Collateral Agreements in full force
and effect, enforce the Collateral Agreements in accordance with their
respective terms and take all such action to such end as may be from time
to time requested by the Agent; and
(ii) furnish to the Agent promptly upon receipt thereof, copies of all
(A) notices of cancellation, termination, lapse, extension or renewal of,
notices of default under, waivers of any provisions of, amendments or
modifications to, the Collateral Agreements, and (B) upon the request of
the Agent, other notices, requests, proposals, appraisals, correspondence
and documents received by the Borrower with respect to the Collateral
Agreements or the Company, and from time to time upon the reasonable
request of the Agent, make such demands and
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requests for information or action upon such Persons as the Borrower is
entitled to make under the Collateral Agreements.
SECTION 9. Transfers and Other Liens. The Borrower shall not, without
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the Agent's prior written consent:
(i) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Collateral; or
(ii) create or suffer to exist any Lien upon or with respect to any of
the Collateral except for the assignment and security interest created by
this Agreement.
SECTION 10. Agent Appointed Attorney-in-Fact. The Borrower hereby
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irrevocably appoints the Agent the Borrower's attorney-in-fact, with full
authority in the place and stead of the Borrower and in the name of the Borrower
or otherwise, from time to time in the Agent's discretion, to take any action
and to execute any instrument that the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) 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;
(b) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above;
(c) to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce compliance with
the terms and conditions of the Collateral Agreements or the rights of the
Agent with respect to any of the Collateral; and
SECTION 11. Agent May Perform. If the Borrower fails to perform any
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agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Agent incurred in connection
therewith shall be payable by the Borrower under Section 14.
SECTION 12. The Agent's Duties. The powers conferred on the Agent
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hereunder are solely to protect its 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 Agent shall have no duty as to any Collateral or
as to the taking of any necessary steps to preserve rights against prior parties
or any other rights pertaining to any Collateral. The Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment substantially equal
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to that which Rabobank accords its own property, it being understood that
neither the Agent nor any other Secured Party shall have responsibility for (i)
ascertaining or taking action with respect to exchanges, maturities, tenders,
offers to purchase, notices to purchase or sell, notices of termination or
dissolution or other matters relative to any Collateral, whether or not the
Agent or any other Secured Party has or is deemed to have knowledge of such
matters, or (ii) taking any necessary steps to preserve rights against any
parties or any other rights pertaining to any Collateral.
SECTION 13. Remedies Upon Default. If any Event of Default shall have
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occurred and be continuing:
(a) The 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
Uniform Commercial Code in effect in the State of New York at such time
(the "New York Uniform Commercial Code") (whether or not the New York
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Uniform Commercial Code applies to the affected Collateral), and also may
(i) exercise any and all rights and remedies of the Borrower, (ii) require
the Borrower to, and the Borrower hereby agrees that it will at its expense
and upon request of the Agent forthwith, assemble all or part of the
Collateral as directed by the Agent and make it available to the Agent at a
place to be designated by the Agent that is reasonably convenient to both
parties, and (iii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at one or more public
or private sales, at any of the Agent's offices or elsewhere, for cash, on
credit or for future delivery, to one or more Persons (which may include
the Agent, any Secured Party or any partner of the Company), and upon such
other terms as the Agent may deem commercially reasonable. The Borrower
agrees that, to the extent notice of sale shall be required by law, at
least 10 days' notice to the Borrower 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 Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
The 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) All payments received by the Borrower under or in connection with
the Collateral Agreements or otherwise and other distributions received by
the Borrower in respect of the Collateral shall be received in trust for
the benefit of the Agent, shall be segregated from other funds of the
Borrower and shall be forthwith paid over to the Agent in the same form as
so received (with any necessary endorsement).
(c) All payments and other distributions made under or in connection
with the Collateral Agreements or otherwise in respect of the Collateral,
and all cash proceeds received by the 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 Agent, be held by the Agent for
the ratable benefit of the Secured Parties as collateral for the Secured
Obligations, and/or then or at any time thereafter applied (after payment
of any amounts payable to the Agent pursuant to Section 14) in whole or
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in part by the Agent for the ratable benefit of the Secured Parties
against, all or any part of the Secured Obligations in such order as the
Agent shall elect. Any surplus of such cash or cash proceeds held by the
Agent and remaining after payment in full of all the Secured Obligations
shall be paid over to the Borrower or to whomsoever may be lawfully
entitled to receive such surplus.
SECTION 14. Indemnity and Expenses. The Borrower will upon demand pay
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to the Agent the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, that
the 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, (iii) the exercise or
enforcement of any of the rights of the Agent or the other Secured Parties
hereunder or (iv) the failure by the Borrower to perform or observe any of the
provisions hereof.
SECTION 15. Amendments; Waivers; Etc. (a) No amendment or waiver of
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any provision of this Agreement, and no consent to any departure by the Borrower
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent and the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
(b) No failure on the part of the Agent 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.
SECTION 16. Addresses for Notices. All notices and other
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communications provided for hereunder shall be made and be effective as set
forth in the Credit Agreement.
SECTION 17. Continuing Security Interest; Assignments Under Credit
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Agreement. This Agreement shall create a continuing security interest in the
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Collateral and shall (a) remain in full force and effect until the indefeasible
payment in full in cash of the Secured Obligations, (b) be binding upon the
Borrower, its successors and assigns; it being expressly understood that (i) at
any time after the effectiveness of the Merger "Borrower" shall mean and include
PDMI as successor by merger to the Borrower and (c) inure, together with the
rights and remedies of the Agent hereunder, to the benefit of the Agent and the
other Secured Parties and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Lender 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
the Advance owing to it and the Note or Notes held by it) to any other Person or
entity, and such other Person or entity shall thereupon become vested with all
the benefits in respect thereof granted to such Lender herein or otherwise, in
each case as provided in Section 8.07 of the Credit Agreement.
SECTION 18. Termination. Upon the indefeasible payment in full in cash
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of the Secured Obligations, the assignment and security interest granted hereby
shall terminate and all rights to the Collateral shall revert to the Borrower.
Upon any such termination, the Agent will execute and deliver
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to the Borrower, at the Borrower's expense, such documents as the Borrower shall
reasonably request to evidence such termination.
SECTION 19. Borrower Not Released. The exercise by the Agent of any of
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the rights hereunder shall not release the Borrower from any of its or his
duties or obligations under any agreement with the Agent, the Secured Parties or
each other and neither the Agent nor any other Secured Party shall have any
obligation or liability under any such agreement by reason of this Agreement,
nor shall the Agent or any other Secured Party be obligated to perform any of
the obligations or duties of the Borrower thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
SECTION 20. Severability. If any term or provision of this Agreement
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is or shall become illegal, invalid or unenforceable in any jurisdiction, all
other terms and provisions of this Agreement shall remain legal, valid and
enforceable in such jurisdiction and such illegal, invalid or unenforceable
provision shall be legal, valid and enforceable in any other jurisdiction.
SECTION 21. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY
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AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. UNLESS
OTHERWISE DEFINED HEREIN OR IN THE CREDIT AGREEMENT, TERMS USED IN THE NEW YORK
UNIFORM COMMERCIAL CODE ARE USED HEREIN AS THEREIN DEFINED.
SECTION 22. Effectiveness; Execution in Counterparts. This Agreement
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shall become effective as to the Borrower when it shall have been executed by
the Borrower, and 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 a manually
executed counterpart of this Agreement.
SECTION 23. WAIVER OF JURY TRIAL. THE BORROWER AND THE AGENT HEREBY
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IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY.
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IN WITNESS WHEREOF, the Borrower has, or has caused this Agreement to
be duly executed and delivered by its officers thereunto duly authorized, as of
the date first above written.
IRONBRIDGE ACQUISITION CORP.
By:___________________________
Name: Xxxxx Xxxxx
Title: President
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