EXHIBIT 10.18
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of October 28, 1998, among HI-RISE
RECYCLING SYSTEMS, INC., a Florida corporation ("HI-RISE"), IDC ACQUISITION SUB,
INC., a New York corporation ("IDC"), XXXXXXXXX COMPANY, INC., an Ohio
corporation ("Xxxxxxxxx"), RECYCLTECH ENTERPRISES INC., an Ontario corporation
("Recycltech"), HESCO SALES, INC., a Florida corporation ("Hesco"), UNITED TRUCK
AND BODY CORPORATION, a Florida corporation ("United Truck"), HESCO EXPORT
CORPORATION, a Florida corporation ("Hesco Export"), BPI ACQUISITION CORP., a
South Carolina corporation ("Bes-Pac Acquisition Corp."), and DII ACQUISITION
CORP., a Connecticut corporation ("Xxxxxx Acquisition Corp.") (Hi-Rise, IDC,
Xxxxxxxxx, Recycltech, Hesco, United Truck, Hesco Export, Bes-Pac Acquisition
Corp. and Xxxxxx Acquisition Corp. are sometimes collectively referred to herein
as the "GRANTORS" and individually as a "GRANTOR"), and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation, in its capacity as Administrative Agent for
Lenders ("Administrative Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement dated as of the date
hereof by and among Grantors, Administrative Agent, NationsBank, N.A., as
Revolver Agent for Lenders ("Revolver Agent"), and Lenders (including all
annexes, exhibits and schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the "CREDIT AGREEMENT"), Lenders have agreed
to make the Loans and to incur Letter of Credit Obligations on behalf of
Grantors;
WHEREAS, in order to induce Administrative Agent, Revolver Agent and
Lenders to enter into the Credit Agreement and other Loan Documents and to
induce Lenders to make the Loans and to incur Letter of Credit Obligations as
provided for in the Credit Agreement, Grantors have agreed to grant a continuing
Lien on the Collateral (as hereinafter defined) to secure the Obligations;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Credit Agreement or in ANNEX A
thereto. All other undefined terms contained in this Security Agreement, unless
the context indicates otherwise, have the meanings provided for by the Code to
the extent the same are used or defined therein.
2. GRANT OF LIEN.
a. To secure the prompt and complete payment, performance and
observance of all of the Obligations (specifically including, without
limitation, each Grantor's Obligations arising under the cross-guaranty
provisions of Section 12 of the Credit Agreement), each Grantor hereby grants,
assigns, conveys, mortgages, pledges, hypothecates and transfers to
Administrative Agent, for itself and for the benefit of the Revolver Agent and
the Lenders, a Lien upon all of its right, title and interest in, to and under
the following property, whether now owned by or owing to, or hereafter acquired
by or arising in favor of such Grantor (including under any trade names, styles
or derivations thereof), and whether owned or consigned by or to, or leased from
or to, such Grantor, and regardless of where located (all of
which being hereinafter collectively referred to as the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all Fixtures;
(vii) all General Intangibles;
(viii) all Goods and interests in property of any kind, nature
or description whatsoever, whether tangible or intangible, whether real or
personal, and whether now or hereafter owned or existing, leased, consigned by
or to, or acquired by, Grantors, or any of them, and wherever located;
(ix) all Instruments;
(x) all Inventory;
(xi) all Investment Property;
(xii) All Borrower Accounts, Concentration Accounts,
Disbursement Accounts, and all other deposit and other bank accounts and all
deposits therein;
(xiii) all money, cash or cash equivalents of any Grantor; and
(xiv) to the extent not otherwise included, all Proceeds and
products of the foregoing and all accessions to, substitutions and replacements
for, and rents and profits of, each of the foregoing.
b In addition, to secure the prompt and complete payment,
performance and observance of the Obligations and in order to induce
Administrative Agent, Revolver Agent and Lenders as aforesaid, each Grantor
hereby grants to Administrative Agent, for itself and for the benefit of the
Revolver Agent and the Lenders, a right of setoff against the property of such
Grantor held by Administrative Agent, Revolver Agent or any Lender, consisting
of property described above in SECTION 2(A) now or hereafter in the possession
or custody of or in transit to Administrative Agent, Revolver Agent or any
Lender, for any purpose, including safekeeping, collection or pledge, for the
account of such Grantor, or as to which such Grantor may have any right or
power.
3. ADMINISTRATIVE AGENT'S, REVOLVER AGENT'S AND LENDERS' RIGHTS:
LIMITATIONS ON ADMINISTRATIVE AGENT'S, REVOLVER AGENT'S AND LENDERS'
OBLIGATIONS.
a. It is expressly agreed by Grantors that, anything herein to
the contrary
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notwithstanding, each Grantor shall remain liable under each of its Contracts
and each of its Licenses to observe and perform all the conditions and
obligations to be observed and performed by it thereunder. Neither
Administrative Agent, Revolver Agent nor any Lender shall have any obligation or
liability under any Contract or License by reason of or arising out of this
Security Agreement or the granting herein of a Lien thereon or the receipt by
Administrative Agent, Revolver Agent or any Lender of any payment relating to
any Contract or License pursuant hereto. Neither Administrative Agent, Revolver
Agent nor any Lender shall be required or obligated in any manner to perform or
fulfill any of the obligations of any Grantor under or pursuant to any Contract
or License, or to make any payment, or to make any inquiry as to the nature or
the sufficiency of any payment received by it or the sufficiency of any
performance by any party under any Contract or License, or to present or file
any claims, or to take any action to collect or enforce any performance or the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
b. Administrative Agent may at any time after an Event of
Default shall have occurred and be continuing, without prior notice to any
Grantor, notify Account Debtors, parties to the Contracts and obligors in
respect of Instruments and Chattel Paper, that the Accounts and the right, title
and interest of any Grantor in and under such Contracts, Instruments and Chattel
Paper have been assigned to Administrative Agent, and that payments shall be
made directly to Administrative Agent. Upon the request of Administrative Agent,
each Grantor shall so notify Account Debtors, parties to Contracts and obligors
in respect of Instruments and Chattel Paper.
c. Administrative Agent may at any time in Administrative
Agent's own name or in the name of any Grantor communicate with Account Debtors,
parties to Contracts, obligors in respect of Instruments and obligors in respect
of Chattel Paper to verify with such Persons, to Administrative Agent's
satisfaction, the existence, amount and terms of any such Accounts, Contracts,
Instruments or Chattel Paper. If an Event of Default shall have occurred and be
continuing, each Grantor, at its own expense, shall cause the independent
certified public accountants then engaged by such Grantor to prepare and deliver
to Administrative Agent, Revolver Agent and each Lender at any time and from
time to time promptly upon Administrative Agent's request the following reports
with respect to each Grantor: (i) a reconciliation of all Accounts; (ii) an
aging of all Accounts; (iii) trial balances; and (iv) a test verification of
such Accounts as Administrative Agent may request. Each Grantor, at its own
expense, shall deliver to Administrative Agent the results of each physical
verification, if any, which such Grantor may in its discretion have made, or
caused any other Person to have made on its behalf, of all or any portion of its
Inventory.
4. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and warrants
that:
a. Each Grantor is the sole owner of each item of the
Collateral upon which it purports to xxxxx x Xxxx hereunder, and has good and
marketable title thereto free and clear of any and all Liens other than
Permitted Encumbrances.
b. No effective security agreement, financing statement,
equivalent security or Lien instrument or continuation statement covering all or
any part of the Collateral is on file or of record in any public office, except
such as may have been filed (i) by any Grantor in favor of Administrative Agent
pursuant to this Security Agreement or the other Loan Documents, and (ii) in
connection with any other Permitted Encumbrances.
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c. This Security Agreement is effective to create a valid and
continuing Lien on and, upon the filing of the appropriate financing statements
listed on SCHEDULE I hereto, a perfected Lien in favor of Administrative Agent,
for itself and for the benefit of the Revolver Agent and the Lenders, on the
Collateral with respect to which a Lien may be perfected by filing pursuant to
the Code. Such Lien is prior to all other Liens, except Permitted Encumbrances
that would be prior to Liens in favor of Administrative Agent for the benefit of
itself, Revolver Agent and Lenders as a matter of law, and is enforceable as
such as against any and all creditors of and purchasers from any Grantor (other
than purchasers of Inventory in the ordinary course of business). All action by
any Grantor necessary or desirable to protect and perfect such Lien on each item
of the Collateral has been duly taken, except for the filing of the financing
statements listed on SCHEDULE I hereto.
d. All action by any Grantor necessary or desirable to protect
and perfect the Lien of Administrative Agent on all Chattel Paper and
Instruments of each Grantor (including the delivery of all originals thereof to
Administrative Agent and the legending of all Chattel Paper as required by
SECTION 5(B) hereof) has been duly taken. The Lien of Administrative Agent, for
the benefit of Administrative Agent, Revolver Agent and Lenders, on all
Instruments and Chattel Paper of each Grantor is prior to all other Liens,
except Permitted Encumbrances that would be prior to the Liens in favor of
Administrative Agent as a matter of law, and is enforceable as such against any
and all creditors of and purchasers from any Grantor.
e. Each Grantor's chief executive office, principal place of
business, corporate offices, all warehouses and premises where Collateral is
stored or located, and the locations of all of its books and records concerning
the Collateral are set forth on SCHEDULE II-A, SCHEDULE II-B, SCHEDULE II-C,
SCHEDULE II-D, SCHEDULE II-E, SCHEDULE II-F, SCHEDULE II-G, SCHEDULE II-H, and
SCHEDULE II-I respectively, hereto.
f. With respect to the Accounts, except as specifically
disclosed in the most recent Collateral Report delivered to Administrative Agent
and Revolver Agent (i) they represent bona fide sales of Inventory or rendering
of services to Account Debtors in the ordinary course of each Grantor's business
and are not evidenced by a judgment, Instrument or Chattel Paper; (ii) there are
no setoffs, claims or disputes existing or asserted with respect thereto and no
Grantor has made any agreement with any Account Debtor for any extension of time
for the payment thereof, any compromise or settlement for less than the full
amount thereof, any release of any Account Debtor from liability therefor, or
any deduction therefrom except a discount or allowance allowed by such Grantor
in the ordinary course of its business for prompt payment and disclosed to
Administrative Agent and Revolver Agent; (iii) to each Grantor's knowledge,
there are no facts, events or occurrences which in any way impair the validity
or enforceability thereof or could reasonably be expected to reduce the amount
payable thereunder as shown on any Grantor's books and records and any invoices,
statements and Collateral Reports delivered to Administrative Agent, Revolver
Agent and Lenders with respect thereto; (iv) no Grantor has received any notice
of proceedings or actions which are threatened or pending against any Account
Debtor which might result in any adverse change in such Account Debtor's
financial condition; and (v) no Grantor has knowledge that any Account Debtor is
unable generally to pay its debts as they become due. Further with respect to
the Accounts (x) the amounts shown on all invoices, statements and Collateral
Reports which may be delivered to the Administrative Agent and Revolver Agent
with respect thereto are actually and absolutely owing to such Grantor as
indicated thereon and are not in any way contingent; (y) no payments have been
or shall be made thereon except payments immediately delivered to the applicable
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Borrower Accounts or the Administrative Agent or Revolver Agent as required
pursuant to the terms of ANNEX C to the Credit Agreement; and (z) to each
Grantor's knowledge, all Account Debtors have the capacity to contract.
g. With respect to any Inventory scheduled or listed on the
most recent Collateral Report delivered to Administrative Agent and Revolver
Agent pursuant to the terms of this Security Agreement or the Credit Agreement,
except as specifically disclosed in such Collateral Report (provided that no
such disclosure shall be deemed or construed as any waiver or consent by
Administrative Agent, Revolver Agent or any Lender to any non-compliance with
any covenant, term or condition on the part of any Grantor to be observed or
performed hereunder or under any other Loan Document which may be so disclosed),
(i) such Inventory is located at one of the applicable Grantor's locations set
forth on SCHEDULE II-A, SCHEDULE II-B, SCHEDULE II-C, SCHEDULE II-D, SCHEDULE
II-E, SCHEDULE II-F, SCHEDULE II-G, SCHEDULE II-H, and SCHEDULE II-I, hereto, as
applicable, (ii) no Inventory is now, or shall at any time or times hereafter be
stored at any other location without Administrative Agent's prior consent, and
if Administrative Agent gives such consent, each applicable Grantor will
concurrently therewith obtain, to the extent required by the Credit Agreement,
bailee, landlord and mortgagee agreements, (iii) the applicable Grantor has
good, indefeasible and merchantable title to such Inventory and such Inventory
is not subject to any Lien or security interest or document whatsoever except
for the Lien granted to Administrative Agent, for the benefit of Administrative
Agent, Revolver Agent and Lenders, and except for Permitted Encumbrances, (iv)
except as specifically disclosed in the most recent Collateral Report delivered
to Administrative Agent and Revolver Agent, such Inventory is Eligible Inventory
of good and merchantable quality, free from any defects, (v) such Inventory is
not subject to any licensing, patent, royalty, trademark, trade name or
copyright agreements with any third parties which would require any consent of
any third party upon sale or disposition of that Inventory or the payment of any
monies to any third party as a precondition of such sale or other disposition,
and (vi) the completion of manufacture, sale or other disposition of such
Inventory by Administrative Agent following an Event of Default shall not
require the consent of any Person and shall not constitute a breach or default
under any contract or agreement to which any Grantor is a party or to which such
property is subject.
h. No Grantor has any interest in, or title to, any Patent,
Trademark or Copyright except as set forth in SCHEDULE III hereto. This Security
Agreement is effective to create a valid and continuing Lien on and, upon filing
of the Copyright Security Agreements with the United States Copyright Office and
filing of the Patent Security Agreements and the Trademark Security Agreements
with the United State Patent and Trademark Office, perfected Liens in favor of
Administrative Agent on each Grantor' s Patents, Trademarks and Copyrights and
such perfected Liens are enforceable as such as against any and all creditors of
and purchasers from any Grantor. Upon filing of the Copyright Security
Agreements with the United States Copyright Office and filing of the Patent
Security Agreements and the Trademark Security Agreements with the United State
Patent and Trademark Office and the filing of appropriate financing statements
listed on SCHEDULE I hereto, all action necessary or desirable to protect and
perfect Administrative Agent's Lien on each Grantor's Patents, Trademarks or
Copyrights shall have been duly taken.
5. COVENANTS. Each Grantor covenants and agrees with Administrative
Agent, for the benefit of Administrative Agent, Revolver Agent and Lenders, that
from and after the date of this Security Agreement and until the Termination
Date:
a. FURTHER ASSURANCES: PLEDGE OF INSTRUMENTS. At any time and
from time to time,
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upon the written request of Administrative Agent and at the sole expense of
Grantors, each Grantor shall promptly and duly execute and deliver any and all
such further instruments and documents and take such further actions as
Administrative Agent may deem desirable to obtain the full benefits of this
Security Agreement and of the rights and powers herein granted, including (i)
using its best efforts to secure all consents and approvals necessary or
appropriate for the assignment to or for the benefit of Administrative Agent of
any License or Contract held by such Grantor or in which such Grantor has any
rights not heretofore assigned, (ii) filing any financing or continuation
statements under the Code with respect to the Liens granted hereunder or under
any other Loan Document, (iii) transferring Collateral to Administrative Agent's
possession (for the benefit of Administrative Agent, Revolver Agent and Lenders)
if such Collateral consists of Chattel Paper, Instruments or if a Lien on such
Collateral can be perfected only by possession, or if requested by
Administrative Agent, and (iv) obtaining, or using its best efforts to obtain,
waivers of Liens, if any exist, from landlords and mortgagees in accordance with
the Credit Agreement. Each Grantor also hereby authorizes Administrative Agent,
for the benefit of Administrative Agent, Revolver Agent and Lenders, to file any
such financing or continuation statements without the signature of such Grantor
to the extent permitted by applicable law. If any amount payable under or in
connection with any of the Collateral is or shall become evidenced by any
Instrument, such Instrument, other than checks and notes received in the
ordinary course of business, shall be duly endorsed in a manner satisfactory to
Administrative Agent immediately upon such Grantor's receipt thereof.
b. MAINTENANCE OF RECORDS. Grantors shall keep and maintain,
at their own cost and expense, satisfactory and complete records of the
Collateral, including a record of any and all payments received and any and all
credits granted with respect to the Collateral and all other dealings with the
Collateral. Grantors shall xxxx their books and records pertaining to the
Collateral to evidence this Security Agreement and the Liens granted hereby. All
Chattel Paper shall be marked with the following legend: "This writing and the
obligations evidenced or secured hereby are subject to the security interest of
General Electric Capital Corporation, as Administrative Agent, for the benefit
of Administrative Agent, the Revolver Agent and certain Lenders."
c. COVENANTS REGARDING PATENT. TRADEMARK AND COPYRIGHT
COLLATERAL.
(i) Grantors shall notify Administrative Agent
immediately if they know or have reason to know that any application or
registration relating to any Patent, Trademark or Copyright (now or hereafter
existing) may become abandoned or dedicated, or of any adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office,
the United States Copyright Office or any court) regarding any Grantor's
ownership of any Patent, Trademark or Copyright, its right to register the same,
or to keep and maintain the same.
(ii) In no event shall any Grantor, either itself or
through any agent, employee, licensee or designee, file an application for the
registration of any Patent, Trademark or Copyright with the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency without giving Administrative Agent prior written notice thereof, and,
upon request of Administrative Agent, Grantor shall execute and deliver any and
all Patent Security Agreements, Copyright Security Agreements or Trademark
Security Agreements as Administrative Agent may request to evidence
Administrative Agent's Lien on such Patent, Trademark or Copyright, and the
General Intangibles of such Grantor relating thereto or represented thereby.
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(iii) Grantors shall take all actions necessary or
requested by Administrative Agent to maintain and pursue each application, to
obtain the relevant registration and to maintain the registration of each of the
Patents, Trademarks and Copyrights (now or hereafter existing), including the
filing of applications for renewal, affidavits of use, affidavits of
noncontestability and opposition and interference and cancellation proceedings.
(iv) In the event that any of the Patent, Trademark
or Copyright Collateral is infringed upon, or misappropriated or diluted by a
third party, such Grantor shall notify Administrative Agent promptly after such
Grantor learns thereof. Such Grantor shall, unless such Grantor shall reasonably
determine that such Patent, Trademark or Copyright Collateral is in no way
material to the conduct of its business or operations, promptly xxx for
infringement, misappropriation or dilution and to recover any and all damages
for such infringement, misappropriation or dilution, and shall take such other
actions as Administrative Agent shall deem appropriate under the circumstances
to protect such Patent, Trademark or Copyright Collateral.
d. INDEMNIFICATION. In any suit, proceeding or action brought
by Administrative Agent, Revolver Agent or any Lender relating to any Account,
Chattel Paper, Contract, Document, General Intangible or Instrument for any sum
owing thereunder or to enforce any provision of any Account, Chattel Paper,
Contract, Document, General Intangible or Instrument, each Grantor will save,
indemnify and keep Administrative Agent, Revolver Agent and Lenders harmless
from and against all expense (including reasonable attorneys' fees and
expenses), loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the obligor
thereunder, arising out of a breach by any Grantor of any obligation thereunder
or arising out of any other agreement, indebtedness or liability at any time
owing to, or in favor of, such obligor or its successors from such Grantor,
except in the case of Administrative Agent, Revolver Agent or any Lender, to the
extent such expense, loss, or damage is attributable solely to the gross
negligence or willful misconduct of Administrative Agent, Revolver Agent or such
Lender as finally determined by a court of competent jurisdiction. All such
obligations of Grantors shall be and remain enforceable against and only against
Grantors and shall not be enforceable against Administrative Agent, Revolver
Agent or any Lender.
e. COMPLIANCE WITH TERMS OF ACCOUNTS. ETC. In all material
respects, each Grantor will perform and comply with all obligations in respect
of its Accounts, Chattel Paper, Contracts and Licenses and all other agreements
to which it is a party or by which it is bound relating to the Collateral.
f. LIMITATION ON LIENS ON COLLATERAL. No Grantor will create,
permit or suffer to exist, and each Grantor will defend the Collateral against,
and take such other action as is necessary to remove, any Lien on the Collateral
except Permitted Encumbrances, and will defend the right, title and interest of
Administrative Agent, Revolver Agent and Lenders in and to any of such Grantor's
rights under the Collateral against the claims and demands of all Persons
whomsoever.
g. LIMITATIONS ON DISPOSITION. No Grantor will sell, lease,
transfer or otherwise dispose of any of the Collateral, or attempt or contract
to do so except as permitted by the Credit Agreement.
h. FURTHER IDENTIFICATION OF COLLATERAL. Grantors will, if so
requested by Administrative Agent, furnish to Administrative Agent, as often as
Administrative Agent requests,
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statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Administrative Agent may
reasonably request, all in such detail as Administrative Agent may specify.
i. NOTICES. Grantors will advise Administrative Agent
promptly, in reasonable detail, (i) of any Lien (other than Permitted
Encumbrances) or claim made or asserted against any of the Collateral, and (ii)
of the occurrence of any other event which would have a material adverse effect
on the aggregate value of the Collateral or on the Liens created hereunder or
under any other Loan Document.
6. ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
On the Closing Date each Grantor shall execute and deliver to
Administrative Agent a power of attorney (the "POWER OF ATTORNEY") substantially
in the form attached hereto as EXHIBIT X-0, XXXXXXX X-0, EXHIBIT X-0, XXXXXXX
X-0, XXXXXXX X-0, EXHIBIT X-0, XXXXXXX X-0, EXHIBIT A-8 and EXHIBIT A-9. The
power of attorney granted pursuant to the Power of Attorney is a power coupled
with an interest and shall be irrevocable until the Termination Date. The powers
conferred on Administrative Agent, for the benefit of Administrative Agent,
Revolver Agent and Lenders, under the Power of Attorney are solely to protect
Administrative Agent's interests (for the benefit of Administrative Agent,
Revolver Agent and Lenders) in the Collateral and shall not impose any duty upon
Administrative Agent, Revolver Agent or any Lender to exercise any such powers.
Administrative Agent agrees that (a) it shall not exercise any power or
authority granted under the Power of Attorney unless an Event of Default has
occurred and is continuing, and (b) Administrative Agent shall account for any
moneys received by Administrative Agent in respect of any foreclosure on or
disposition of Collateral pursuant to the Power of Attorney provided that none
of Administrative Agent, Revolver Agent or any Lender shall have any duty as to
any Collateral, and Administrative Agent, Revolver Agent and Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers. NONE OF ADMINISTRATIVE AGENT, REVOLVER AGENT, LENDERS
OR THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY GRANTOR FOR ANY ACT OR FAILURE TO
ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES
ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
7. REMEDIES: RIGHTS UPON DEFAULT.
a. In addition to all other rights and remedies granted to it
under this Security Agreement, the Credit Agreement, the other Loan Documents
and under any other instrument or agreement securing, evidencing or relating to
any of the Obligations, if any Event of Default shall have occurred and be
continuing, Administrative Agent may exercise all rights and remedies of a
secured party under the Code. Without limiting the generality of the foregoing,
each Grantor expressly agrees that in any such event Administrative Agent,
without demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or private
sale) to or upon such Grantor or any other Person (all and each of which
demands, advertisements and notices are hereby expressly waived to the maximum
extent permitted by the Code and other applicable law), may forthwith enter upon
the premises of such Grantor where any Collateral is located
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through self-help, without judicial process, without first obtaining a final
judgment or giving such Grantor or any other Person notice and opportunity for a
hearing on Administrative Agent's claim or action and may collect, receive,
assemble, process, appropriate and realize upon the Collateral, or any part
thereof, and may forthwith sell, lease, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at a public or
private sale or sales, at any exchange at such prices as it may deem acceptable,
for cash or on credit or for future delivery without assumption of any credit
risk. Administrative Agent, Revolver Agent or any Lender shall have the right
upon any such public sale or sales and, to the extent permitted by law, upon any
such private sale or sales, to purchase for the benefit of Administrative Agent,
Revolver Agent and Lenders, the whole or any part of said Collateral so sold,
free of any right or equity of redemption, which equity of redemption each
Grantor hereby releases. Such sales may be adjourned and continued from time to
time with or without notice. Administrative Agent shall have the right to
conduct such sales on any Grantor's premises or elsewhere and shall have the
right to use any Grantor's premises without charge for such time or times as
Administrative Agent deems necessary or advisable.
Each Grantor further agrees, at Administrative Agent's
request, to assemble the Collateral and make it available to Administrative
Agent at places which Administrative Agent shall select, whether at such
Grantor's premises or elsewhere. Until Administrative Agent is able to effect a
sale, lease, or other disposition of Collateral, Administrative Agent shall have
the right to hold or use Collateral, or any part thereof, to the extent that it
deems appropriate for the purpose of preserving Collateral or its value or for
any other purpose deemed appropriate by Administrative Agent. Administrative
Agent shall have no obligation to any Grantor to maintain or preserve the
rights of such Grantor as against third parties with respect to Collateral while
Collateral is in the possession of Administrative Agent. Administrative Agent
may, if it so elects, seek the appointment of a receiver or keeper to take
possession of Collateral and to enforce any of Administrative Agent's remedies
(for the benefit of Administrative Agent, Revolver Agent and Lenders), with
respect to such appointment without prior notice or hearing as to such
appointment. Administrative Agent shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale to the
Obligations as provided in the Credit Agreement, and only after so paying over
such net proceeds, and after the payment by Administrative Agent of any other
amount required by any provision of law, need Administrative Agent account for
the surplus, if any, to any Grantor. To the maximum extent permitted by
applicable law, each Grantor waives all claims, damages, and demands against
Administrative Agent, Revolver Agent or any Lender arising out of the
repossession, retention or sale of the Collateral except such as arise solely
out of the gross negligence or willful misconduct of Administrative Agent,
Revolver Agent or such Lender as finally determined by a court of competent
jurisdiction. Each Grantor agrees that ten (10) days prior notice by
Administrative Agent of the time and place of any public sale or of the time
after which a private sale may take place is reasonable notification of such
matters. Grantors shall remain liable for any deficiency if the proceeds of any
sale or disposition of the Collateral are insufficient to pay all Obligations,
including any attorneys' fees and other expenses incurred by Administrative
Agent, Revolver Agent or any Lender to collect such deficiency.
b. Except as otherwise specifically provided herein, each
Grantor hereby waives presentment, demand, protest or any notice (to the maximum
extent permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.
8. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY COLLATERAL. For
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the purpose of enabling Administrative Agent to exercise rights and remedies
under SECTION 7 hereof (including, without limiting the terms of SECTION 7
hereof, in order to take possession of, hold, preserve, process, assemble,
prepare for sale, market for sale, sell or otherwise dispose of Collateral) at
such time as Administrative Agent shall be lawfully entitled to exercise such
rights and remedies, each Grantor hereby grants to Administrative Agent, for the
benefit of Administrative Agent, Revolver Agent and Lenders, an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to such Grantor) to use, license or sublicense any Intellectual
Property now owned or hereafter acquired by such Grantor, and wherever the same
may be located, and including in such license access to all media in which any
of the licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof.
9. LIMITATION ON ADMINISTRATIVE AGENT'S, REVOLVER AGENT'S AND LENDERS'
DUTY IN RESPECT OF COLLATERAL. Administrative Agent, Revolver Agent and each
Lender shall use reasonable care with respect to the Collateral in its
possession or under its control. Neither Administrative Agent, Revolver Agent
nor any Lender shall have any other duty as to any Collateral in its possession
or control or in the possession or control of Administrative Agent, Revolver
Agent or any other Lender or nominee of Administrative Agent, Revolver Agent or
such Lender, or any income thereon or as to the preservation of rights against
prior parties or any other rights pertaining thereto.
10. REINSTATEMENT. This Security Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Grantor for liquidation or reorganization, should any Grantor become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Grantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Obligations,
whether as a "voidable preference," "fraudulent conveyance," or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
11. NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other party, or whenever any of the parties desires to give and
serve upon any other party any communication with respect to this Security
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be given in the manner, and
deemed received, as provided for in the Credit Agreement.
12. SEVERABILITY. Whenever possible, each provision of this Security
Agreement shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Security
Agreement. This Security Agreement is to be read, construed and applied together
with the Credit Agreement and the other Loan Documents which, taken together,
set forth the complete understanding and agreement of Administrative Agent,
Revolver Agent, Lenders and Grantors with respect to the matters referred to
herein and therein.
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13. NO WAIVER; CUMULATIVE REMEDIES. Neither Administrative Agent,
Revolver Agent nor any Lender shall by any act, delay, omission or otherwise be
deemed to have waived any of its rights or remedies hereunder, and no waiver
shall be valid unless in writing, signed by Administrative Agent and then only
to the extent therein set forth. A waiver by Administrative Agent of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which Administrative Agent would otherwise have had on any
future occasion. No failure to exercise nor any delay in exercising on the part
of Administrative Agent, Revolver Agent or any Lender, any right, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or future exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies hereunder provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law. None of the terms or provisions of this Security
Agreement may be waived, altered, modified or amended except by an instrument in
writing, duly executed by Administrative Agent and Grantors.
14. LIMITATION BY LAW. All rights, remedies and powers provided in this
Security Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Security Agreement are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited to the extent
necessary so that they shall not render this Security Agreement invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable law.
15. TERMINATION OF THIS SECURITY AGREEMENT. Subject to SECTION 10
hereof, this Security Agreement shall terminate upon the Termination Date.
16. SUCCESSORS AND ASSIGNS. This Security Agreement and all obligations
of Grantors hereunder shall be binding upon the successors and assigns of each
Grantor (including any debtor-in-possession on behalf of such Grantor) and
shall, together with the rights and remedies of Administrative Agent, for the
benefit of Administrative Agent, Revolver Agent and Lenders, hereunder, inure to
the benefit of Administrative Agent, Revolver Agent and Lenders, all future
holders of any instrument evidencing any of the Obligations and their respective
successors and assigns. No sales of participations, other sales, assignments,
transfers or other dispositions of any agreement governing or instrument
evidencing the Obligations or any portion thereof or interest therein shall in
any manner affect the Lien granted to Administrative Agent, for the benefit of
Administrative Agent, Revolver Agent and Lenders, hereunder. No Grantor may
assign, sell, hypothecate or otherwise transfer any interest in or obligation
under this Security Agreement.
17. COUNTERPARTS. This Security Agreement may be executed in any number
of separate counterparts, each of which shall collectively and separately
constitute one agreement.
18. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE,
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH GRANTOR HEREBY
11
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY,
CITY OF NEW YORK, NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN GRANTORS, ADMINISTRATIVE AGENT,
REVOLVER AGENT AND LENDERS PERTAINING TO THIS SECURITY AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT
ADMINISTRATIVE AGENT, REVOLVER AGENT, LENDERS AND GRANTORS ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK COUNTY, CITY OF NEW YORK, NEW YORK, AND, PROVIDED, FURTHER, NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE ADMINISTRATIVE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF ADMINISTRATIVE AGENT. EACH GRANTOR
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND EACH GRANTOR HEREBY WAIVES ANY OBJECTION
WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH GRANTOR HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH
GRANTOR AT THE ADDRESS SET FORTH ON ANNEX I TO THE CREDIT AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID.
19. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT DISPUTES
ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG ADMINISTRATIVE AGENT,
REVOLVER AGENT, LENDERS, AND GRANTORS ARISING OUT OF, CONNECTED WITH, RELATED
TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS
SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO.
20. SECTION TITLES. The Section titles contained in this Security
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
12
21. NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Security Agreement. In the event
an ambiguity or question of intent or interpretation arises, this Security
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Security Agreement.
22. ADVICE OF COUNSEL. Each of the parties represents to each other
party hereto that it has discussed this Security Agreement and, specifically,
the provisions of SECTION 18 and SECTION 19, with its counsel.
23. BENEFIT OF LENDERS. All Liens granted or contemplated hereby shall
be for the benefit of Administrative Agent, Revolver Agent and Lenders, and all
proceeds or payments realized from Collateral in accordance herewith shall be
applied to the Obligations in accordance with the terms of the Credit Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be to be dated for reference as of the date first above written,
but have in fact duly executed and delivered this Security Agreement this day of
October, 1998.
HI-RISE RECYCLING SYSTEMS, INC., a Florida
corporation
By: /s/
----------------------------------------------
Name:
Title:
IDC ACQUISITION SUB, INC., a New York
corporation
By: /s/
----------------------------------------------
Name:
Title:
XXXXXXXXX COMPANY, INC., an Ohio corporation
By: /s/
----------------------------------------------
Name:
Title:
13
RECYCLTECH ENTERPRISES INC., an Ontario
corporation
By: /s/
----------------------------------------------
Name:
Title:
HESCO SALES, INC., a Florida corporation
By: /s/
----------------------------------------------
Name:
Title:
UNITED TRUCK AND BODY CORPORATION, a
Florida corporation
By: /s/
----------------------------------------------
Name:
Title:
HESCO EXPORT CORPORATION, a Florida
corporation
By: /s/
----------------------------------------------
Name:
Title:
BPI ACQUISITION CORP., a South Carolina
corporation
By: /s/
----------------------------------------------
Name:
Title:
14
DII ACQUISITION CORP., a Connecticut corporation
By: /s/
----------------------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION,
AS ADMINISTRATIVE AGENT
By: /s/
----------------------------------------------
Name:
Title:
15
