EXHIBIT 10.8
Execution Copy
Amended and Restated Security Agreement, dated as of
February 25, 1999, made by Wahlco Environmental Systems,
Inc., a Delaware corporation ("Borrower") and each
Subsidiary of Borrower listed on the signature pages hereto
(each a "Grantor", and together with Borrower, "Grantors")
and Wexford Management LLC, a Connecticut limited liability
company, as Agent (the "Agent").
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Whereas, concurrently with the execution and delivery hereof, Borrower
and Thermatrix Inc. (the "Borrowers") are entering into a Second Amended and
Restated Credit Agreement, dated as of the date hereof, with the Lenders named
therein (the "Lenders") and the Agent (as the same may hereafter be modified,
extended, replaced or otherwise amended, the "Credit Agreement"), pursuant to
which the Borrowers shall be jointly and severally liable for the payment and
performance of all of the obligations and liabilities to the Lenders and the
Agent set forth therein and in the other Loan Documents;
Whereas, each Grantor is a direct and/or indirect subsidiary of a
Borrower;
Whereas, it is a condition to the effectiveness of the Credit
Agreement that the Grantors guaranty the payment and performance of the
Obligations to the Lenders and the Agent and concurrently with the execution and
delivery hereof Grantors are entering executing and delivering a guaranty (the
"Guaranty"); and
Whereas, each of the Grantors will receive substantial direct and
indirect benefits from the Lenders and the Agent entering into the Credit
Agreement;
Now, therefore, in consideration of the premises and of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Original Wahlco
Security Agreement is amended and restated in its entirety and the parties
hereto agree as follows:
1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein. The following additional terms, as used herein, have the following
respective meanings:
"Accounts" means all "accounts" (as defined in the UCC) now owned or
hereafter acquired by any Grantor, and shall also mean and include all accounts
receivable, contract rights, book debts, notes, drafts and other obligations or
indebtedness owing to any Grantor arising from the sale, lease or exchange of
goods or other property by it and/or the performance of services by it
(including, without limitation, any such obligation which might be characterized
as an account, contract right or general intangible under the UCC in effect in
any jurisdiction) and all of any Grantor's rights in, to and under all purchase
orders for goods, services or other property, and all of any Grantor's rights to
any goods, services or other property represented by any of the foregoing
(including returned or repossessed goods and unpaid sellers' rights of
rescission, replevin, reclamation and rights to stoppage in transit) and all
monies due to or to become due to any Grantor under all contracts for the sale,
lease or exchange of goods or other property and/or
the performance of services by it (whether or not yet earned by performance on
the part of any Grantor), in each case whether now in existence or hereafter
arising or acquired including, without limitation, the right to receive the
proceeds of said purchase orders and contracts and all collateral security and
guarantees of any kind given by any Person with respect to any of the foregoing.
"Collateral" has the meaning set forth in Section 3.
"Copyright Office" means the United States Copyright Office.
"Copyrights" means all of the following now or hereafter acquired by
any Grantor: (i) all copyrights, registrations and applications therefor, (ii)
all renewals and extensions thereof, (iii) all income, royalties, damages and
payments now and hereafter due or payable or both with respect thereto,
including, without limitation, damages and payments for past or future
infringements or misappropriations thereof, (iv) all rights to xxx for past,
present and future infringements or misappropriations thereof, and (v) all other
rights corresponding thereto throughout the world.
"Documents" means all "documents" (as defined in the UCC) or other
receipts covering, evidencing or representing goods, now owned or hereafter
acquired by any Grantor.
"Equipment" means all "equipment" (as defined in the UCC) now owned or
hereafter acquired by any Grantor, including without limitation all motor
vehicles, trucks, trailers, railcars and barges.
"Federal Intellectual Property Laws" means the Copyright Act and the
Patent and Trademark Act.
"General Intangibles" means all "general intangibles" (as defined in
the UCC) now owned or hereafter acquired by any Grantor, including, without
limitation, (i) all obligations or indebtedness owing to any Grantor (other than
Accounts) from whatever source arising, (ii) all patents, patent licenses,
trademarks, trademark licenses, rights in intellectual property, goodwill, trade
names, service marks, trade secrets, copyrights, permits and licenses, (iii) all
rights or claims in respect of refunds for taxes paid and (iv) all rights in
respect of any pension plan or similar arrangement maintained for employees of
any Grantor.
"Instruments" means all "instruments", "chattel paper" or "letters of
credit" (each as defined in the UCC) evidencing, representing, arising from or
existing in respect of, relating to, securing or otherwise supporting the
payment of, any of the Accounts, including (but not limited to) promissory
notes, drafts, bills of exchange and trade acceptances, now owned or hereafter
acquired by any Grantor.
"Intellectual Property Collateral" means all of the Copyrights,
Licenses, Patents, Trademarks and Trade Secrets as to which the Lenders and the
Agent have been granted a security interest hereunder.
"Inventory" means all "inventory" (as defined in the UCC) now owned or
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hereafter acquired by any Grantor, wherever located, and shall also mean and
include, without limitation, all raw materials and other materials and supplies,
work-in-process and finished goods and any products made or processed therefrom
and all substances, if any, commingled therewith or added thereto.
"License" means any Patent License, Trademark License or other license
as to which the Lenders and the Agent have been granted a security interest
hereunder.
"Patent License" means any written agreement granting any right to
practice any invention on which a Patent is in existence now owned or hereafter
acquired by any Grantor.
"Patents" means all of the following now or hereafter acquired by any
Grantor: (i) all patents and patent applications, (ii) all inventions and
improvements described and claimed therein, (iii) all releases, divisions,
continuations, renewals, extensions and continuations-in-part thereof, (iv) all
income, royalties, damages and payments now and hereafter due and/or payable to
any Grantor with respect thereto, including, without limitation, damages and
payments for past, present or future infringements or misappropriations thereof,
(v) all rights to xxx for past, present and future infringements or
misappropriations thereof, and (vi) all other rights corresponding thereto
throughout the world.
"Perfection Certificate" means a certificate substantially in the form
of Exhibit A, completed and supplemented with the schedules and attachments
contemplated thereby to the satisfaction of the Agent, and duly executed by the
chief financial officer of any Grantor.
"Permitted Liens" means the Security Interests and the Liens on
Collateral permitted to be created, assumed or exist pursuant to Section 1.68 of
the Credit Agreement.
"Proceeds" means all proceeds of, and all other profits, products,
rents or receipts, in whatever form, arising from the collection, sale, lease,
exchange, assignment, licensing or other disposition of, or other realization
upon, collateral, including without limitation all claims of any Grantor against
third parties for loss of, damage to or destruction of, or for proceeds payable
under, or unearned premiums with respect to, policies of insurance in respect
of, any collateral, and any condemnation or requisition payments with respect to
any collateral, in each case whether now existing or hereafter arising.
"PTO" means United States Patent and Trademark Office.
"Secured Obligations" means the Obligations of Grantors under the
Credit Agreement and the Loan Documents.
"Security Interests" means the security interests in the Collateral
granted hereunder securing the Secured Obligations.
"Trade Secrets" means trade secrets, along with any and all (i)
income, royalties, damages and payments now and hereafter due and/or payable to
any Grantor with respect thereto, including, without limitation, damages and
payments thereof, (ii) rights to xxx for past, present
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and future infringements or misappropriations thereof, and (iii) all other
rights corresponding thereto throughout the world.
"Trademark License" means any written agreement granting any right to
use any Trademark or Trademark registration now owned or hereafter acquired by
any Grantor.
"Trademarks" means all of the following now owned or hereafter
acquired by any Grantor: (i) all trademarks (including service marks and trade
names, whether registered or at common law), registrations and applications
therefor, and the entire product lines and goodwill of any Grantor's business
connected therewith and symbolized thereby, (ii) all renewals thereof, (iii) all
income, royalties, damages and payments now and hereafter due or payable or both
with respect thereto, including, without limitation, damages and payments for
past, present or future infringements or misappropriations thereof, (iv) all
rights to xxx for past, present and future infringements or misappropriations
thereof, and (v) all other rights corresponding thereto throughout the world.
"UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of New York; provided that if by reason of mandatory
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provisions of law, the perfection or the effect of perfection or non-perfection
of the Security Interest in any Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than New York, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or non-
perfection.
2. Representations and Warranties. Grantors represent and warrant as
follows:
(A) Each Grantor has good and marketable title to all of the
Collateral in which such Grantor purports to grant a Security Interest
hereunder, free and clear of any Liens other than the Permitted Liens. Each
Grantor has taken all actions necessary under the UCC to perfect its interest in
any Accounts purchased or otherwise acquired by it, as against its assignors and
creditors of its assignors.
(B) No Grantor has performed any acts which might prevent the Agent
from enforcing any of the terms of this Agreement or which would limit the Agent
in any such enforcement. Other than financing statements or other similar or
equivalent documents or instruments with respect to the Security Interests and
Permitted Liens, and other than the LIM/Mannesman Security Agreements entered
into in connection with the Merger Agreement, no financing statement, mortgage,
security agreement, filings with the Copyright Office and the PTO or similar or
equivalent document or instrument covering all or any part of the Collateral in
which any Grantor purports to grant a Security Interest hereunder is on file or
of record in any jurisdiction in which such filing or recording would be
effective to perfect a Lien on such Collateral. No such Collateral is in the
possession of any Person (other than Grantors) asserting any claim thereto or
security interest therein, except that the Agent or its designee may have
possession of the Collateral as contemplated hereby.
(C) The Security Interests constitute valid security interests under
the UCC securing the Secured Obligations. No UCC financing statements other
than the UCC Financing
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statements filed by the Agent in connection with the Original Wahlco Security
Agreement, and no filings other than the filings made in the Copyright Office
and the PTO by the Agent on January 22, 1999, are necessary to cause the
Security Interests to constitute perfected security interests in the Collateral
(except Inventory in transit) in which each Grantor purports to grant a Security
Interest hereunder to the extent that a security interest therein may be
perfected by filing pursuant to the UCC and the Federal Intellectual Property
Laws, prior to all other Liens and rights of others therein except for the
Permitted Liens.
(D) All Inventory in which each Grantor purports to grant a Security
Interest hereunder has or will have been produced in compliance with the
applicable requirements of the Fair Labor Standards Act, as amended.
(E) Each Grantor has caused the Agent to be named as loss payee on
each insurance policy required by Section 6.7 of the Credit Agreement. Evidence
of the Agent's status as loss payee is attached as Schedule 2F hereto.
3. The Security Interests. (A) In order to secure the full and
punctual payment of the Secured Obligations in accordance with the terms
thereof, and to secure the performance of all of the obligations of Grantors
hereunder, under the Credit Agreement and under the Guaranty, each Grantor
hereby grants to the Agent for the ratable benefit of the Lenders a continuing
security interest in and to all of the following property of each Grantor,
whether now owned or existing or hereafter acquired or arising and regardless of
where located (all being collectively referred to as the "Collateral"):
(1) Accounts;
(2) Inventory;
(3) General Intangibles;
(4) Documents;
(5) Instruments;
(6) Equipment;
(7) Copyrights;
(8) Patents;
(9) Patent Licenses;
(10) Trademarks;
(11) Trademark Licenses;
(12) Trade Secrets;
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(13) All books and records (including, without limitation, customer
lists, credit files, computer programs, printouts and other computer materials
and records) of each Grantor pertaining to any of the Collateral; and
(14) All Proceeds of all or any of the Collateral described in Clauses
1 through 13 hereof.
(B) The Security Interests are granted as security only and shall not subject
the Agent or any Lender to, or transfer or in any way affect or modify, any
obligation or liability of each Grantor with respect to any of the Collateral or
any transaction in connection therewith. Notwithstanding the foregoing, the
security interest granted herein shall not extend to and the term "Collateral"
shall not include (i) any property, rights or licenses to the extent the
granting of a security interest therein would be contrary to applicable law or
(ii) any rights under any license agreement where such license agreement would
be terminable by the counterparty thereto if any Grantor's interest therein were
subject to the security interest created hereby (but only to the extent such
right to terminate is enforceable under applicable law). Each such license
agreement existing on the date hereof is set forth in Schedule 11 of the
Disclosure Letter.
4. Further Assurances; Covenants. (A) No Grantor will change (i)
its name, identity or corporate structure or the location of its chief executive
office or chief place of business in any manner or (ii) the locations where it
keeps or holds any Collateral or any records relating thereto from the current
location of such Collateral unless such Collateral shall have a value of less
than $250,000 unless, in each case, Grantors shall have given the Agent prior
written notice thereof. Grantors shall not in any event change the location of
any Collateral if such change would cause the Security Interests in such
Collateral to lapse or cease to be perfected.
(B) Each Grantor will, from time to time, at its expense, execute,
deliver, file and record any statement, assignment, instrument, notification,
document, agreement or other paper and take any other action, (including,
without limitation, any filings of financing or continuation statements under
the UCC or filings under the Federal Intellectual Property Laws) that from time
to time may be reasonably necessary or desirable, or that the Agent may
reasonably request, in order to create, preserve, perfect, confirm or validate
the Security Interests or to enable the Agent and the Lenders to obtain the full
benefits of this Agreement, or to enable the Agent to exercise and enforce any
of its rights, powers and remedies hereunder with respect to any of the
Collateral. To the extent permitted by applicable law, each Grantor hereby
authorizes the Agent to execute and file financing statements or continuation
statements without each Grantor's signature appearing thereon. Each Grantor
agrees that a carbon, photographic, photostatic or other reproduction of this
Agreement or of a financing statement is sufficient as a financing statement.
Each Grantor shall pay the costs of, or incidental to, any recording or filing
of any financing or continuation statements concerning the Collateral in which
each Grantor purports to grant a Security Interest hereunder.
(C) If any Collateral is at any time in the possession or control of
any warehouseman, bailee or any of Grantors' agents or processors, each Grantor
shall notify such
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warehouseman, bailee, agent or processor of the Security Interests created
hereby and to hold all such Collateral for the Agent's account subject to the
Agent's instructions.
(D) Each Grantor shall keep full and accurate books and records
relating to the Collateral in which each Grantor purports to grant a Security
Interest hereunder, and stamp or otherwise xxxx such books and records in such
manner as the Lenders or the Agent may reasonably require in order to reflect
the Security Interests.
(E) Each Grantor will immediately deliver and pledge each Instrument
to the Agent, appropriately endorsed to the Agent, provided that so long as no
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Event of Default shall have occurred and be continuing under the Credit
Agreement. Each Grantor may retain for collection in the ordinary course any
Instruments received by it in the ordinary course of business and the Agent
shall, promptly upon request of each Grantor, make appropriate arrangements for
making any other Instrument pledged by each Grantor available to it for purposes
of presentation, collection or renewal (any such arrangement to be effected, to
the extent deemed appropriate to the Agent, against trust receipt or like
document).
(F) Each Grantor shall use its best efforts to cause to be collected
from its account debtors, as and when due, any and all amounts owing under or on
account of each Account (including, without limitation, Accounts which are
delinquent, such Accounts to be collected in accordance with lawful collection
procedures) and shall apply forthwith upon receipt thereof all such amounts as
are so collected to the outstanding balance of such Account. Subject to the
rights of the Agent and the Lenders hereunder if an Event of Default under the
Credit Agreement shall have occurred and be continuing, each Grantor may allow
in the ordinary course of business as adjustments to amounts owing under its
Accounts (i) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which such Grantor finds
appropriate in accordance with sound business judgment and (ii) a refund or
credit due as a result of returned or damaged merchandise, all in accordance
with such Grantor's ordinary course of business consistent with its historical
collection practices. The costs and expenses (including, without limitation,
attorney's fees) of collection, whether incurred by Grantors or the Agent, shall
be borne by Grantors.
(G) Upon the occurrence and during the continuance of any Event of
Default under the Credit Agreement, Grantors will promptly notify (and Grantors
hereby authorizes the Agent so to notify) each account debtor in respect of any
Account or Instrument that such Collateral has been assigned to the Agent
hereunder, and that any payments due or to become due in respect of such
Collateral are to be made directly to the Agent or its designee.
(H) Without the prior written consent of the Lenders and the Agent,
Grantors will not sell, lease, exchange, assign or otherwise dispose of, or
grant any option with respect to, any Collateral except that, subject to the
rights of the Agent and the Lenders hereunder if an Event of Default shall have
occurred and be continuing under the Credit Agreement, Grantors may sell, lease,
exchange, assign or otherwise dispose of Collateral pursuant to Section 7.3(c)
of the Credit Agreement, whereupon, in the case of such a sale or exchange, the
Security Interests created hereby in such item (but not in any Proceeds arising
from such sale or exchange) shall cease immediately without any further action
on the part of the Agent.
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(K) Collateral Covenants Regarding Intellectual Property:
(1) Each Grantor shall notify the Agent immediately if it knows or
has reason to know that any application or registration relating to any
Trademark, Copyright or Patent which is material to the conduct of
Grantors' business may become abandoned or dedicated, or of any adverse
determination or development (including, without limitation, the
institution of, or any such determination or development in, any proceeding
in the PTO, the Copyright Office or any court) regarding Grantors'
ownership of any intellectual property which is material to the conduct of
Grantors' business, its right to register the same, or to keep and maintain
the same.
(2) In no event shall a Grantor, either itself or through any agent,
employee, licensee or designee, file an application for the registration of
any Trademark, Copyright or Patent with the PTO or any similar office or
agency in any other country or any political subdivision thereof, unless it
promptly informs the Agent, and, upon request of the Agent, executes and
delivers any and all agreements, instruments, filings, notifications,
documents, and papers as the Agent may request to evidence the Agent's
security interest in such intellectual property and the General
Intangibles, including, without limitation, the goodwill of Grantors,
relating thereto or represented thereby.
(3) Each Grantor will take all necessary and appropriate actions,
including, without limitation, in any proceeding before PTO, to maintain
and pursue each application (and to obtain the relevant registration) and
to maintain each registration of the Trademarks, Copyrights and Patents
which are material to the conduct of Grantors' business, including, without
limitation, filing of applications for renewal, affidavits of use,
affidavits of incontestability and opposition cancellation proceedings.
(4) In the event that any of the Intellectual Property Collateral is
infringed, misappropriated or diluted by a third party, each Grantor shall
notify the Agent promptly after it learns thereof and shall, if requested
by the Agent, promptly xxx for infringement, misappropriation or dilution
and to recover any and all damages for such infringement, misappropriation
or dilution, and take such other actions as Grantors shall reasonably deem
appropriate under the circumstances to protect such Intellectual Property
Collateral.
5. General Authority. Each Grantor hereby irrevocably appoints the
Agent its true and lawful attorney, with full power of substitution, in the name
of Each Grantor, the Agent, the Lenders or otherwise, for the sole use and
benefit of the Agent and the Lenders, but at Grantors' expense, to the extent
permitted by law to exercise, at any time and from time to time while an Event
of Default under the Credit Agreement has occurred and is continuing, all or any
of the following powers with respect to all or any of the Collateral:
(A) to demand, xxx for, collect, receive and give acquittance for any
and all monies due or to become due thereon or by virtue thereof,
(B) to settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereto,
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(C) to sell, transfer, assign or otherwise deal in or with the same
or the proceeds or avails thereof, as fully and effectually as if the Agent were
the absolute owner thereof, and
(D) to extend the time of payment of any or all thereof and to make
any allowance and other adjustments with reference thereto;
provided that the Agent shall give Grantors not less than ten days' prior
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written notice of the time and place of any sale or other intended disposition
of any of the Collateral, except any Collateral which is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market. Grantors agree that such notice constitutes "reasonable notification"
within the meaning of Section 9-504(3) of the UCC.
6. Remedies Upon Event of Default. (A) If an Event of Default has
occurred and is continuing under the Credit Agreement, the Agent may exercise on
behalf of the Lenders all rights of a secured party under the UCC (whether or
not in effect in the jurisdiction where such rights are exercised) and, in
addition, the Agent may, without being required to give any notice, except as
herein provided or as may be required by mandatory provisions of law, (i) apply
cash, if any, then held by it as Collateral as specified in Section 8 and (ii)
if there shall be no such cash or if such cash shall be insufficient to pay all
the Secured Obligations in full, sell the Collateral or any part thereof at
public or private sale, for cash, upon credit or for future delivery, and at
such price or prices as the Agent may deem satisfactory. The Agent or any Lender
may be the purchaser of any or all of the Collateral so sold at any public sale
(or, if the Collateral is of a type customarily sold in a recognized market or
is of a type which is the subject of widely distributed standard price
quotations, at any private sale). Grantors will execute and deliver such
documents and take such other action as the Agent deems necessary or advisable
in order that any such sale may be made in compliance with law. Upon any such
sale the Agent shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. Each purchaser at any such sale shall
hold the Collateral so sold to it absolutely and free from any claim or right of
whatsoever kind, including any equity or right of redemption of any Grantor
which may be waived, and each Grantor, to the extent permitted by law, hereby
specifically waives all rights of redemption, stay or appraisal which it has or
may have under any law now existing or hereafter adopted. The notice (if any) of
such sale required by Section 5 shall (1) in case of a public sale, state the
time and place fixed for such sale, and (2) in the case of a private sale, state
the day after which such sale may be consummated. Any such public sale shall be
held at such time or times within ordinary business hours and at such place or
places as the Agent may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels, as the
Agent may determine. The Agent shall not be obligated to make any such sale
pursuant to any such notice. The Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the same may be so adjourned. In case
of any sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the Agent until the selling
price is paid by the purchaser thereof, but the Agent shall not incur any
liability in case of the failure of such purchaser to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may again
be sold upon like notice. The Agent, instead of
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exercising the power of sale herein conferred upon it, may proceed by a suit or
suits at law or in equity to foreclose the Security Interests and sell the
Collateral, or any portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction.
(B) For the purpose of enforcing any and all rights and remedies
under this Agreement the Agent may (i) require any Grantor to, and each Grantor
agrees that it will, at its expense and upon the request of the Agent, forthwith
assemble all or any part of the Collateral as directed by the Agent and make it
available at a place designated by the Agent which is, in its opinion,
reasonably convenient to the Agent and Grantors, whether at the premises of any
Grantor or otherwise, (ii) to the extent permitted by applicable law, enter,
with or without process of law and without breach of the peace, any premise
where any of the Collateral is or may be located, and without charge or
liability to it seize and remove such Collateral from such premises, (iii) have
access to and use Grantors' books and records relating to the Collateral and
(iv) prior to the disposition of the Collateral, store or transfer it without
charge in or by means of any storage or transportation facility owned or leased
by any Grantor, process, repair or recondition it or otherwise prepare it for
disposition in any manner and to the extent the Agent deems appropriate and, in
connection with such preparation and disposition, use without charge any
trademark, trade name, copyright, patent or technical process used by any
Grantor.
7. Limitation on Duty of The Agent in Respect of Collateral. Beyond
the exercise of reasonable care in the custody thereof, the Agent shall have no
duty as to any Collateral in its possession or control or in the possession or
control of any agent or bailee or any income thereon or as to the preservation
of rights against prior parties or any other rights pertaining thereto. The
Agent shall be deemed to have exercised reasonable care in the custody of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which it accords its own property, and shall not be
liable or responsible for any loss or damage to any of the Collateral, or for
any diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee or other agent or bailee
selected by the Agent in good faith.
8. Application of Proceeds. Upon the occurrence and continuance of
an Event of Default under the Credit Agreement, the proceeds of any sale of, or
other realization upon, all or any part of the Collateral shall be applied by
the Agent in the following order of priorities:
first, to payment of the expenses of such sale or other realization,
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including reasonable compensation to agents and counsel for the Agent, and
all expenses, liabilities and advances incurred or made by the Agent in
connection therewith, and any other unreimbursed expenses for which the
Agent or any Lender is to be reimbursed pursuant to Section 11;
second, to the ratable payment of all other Secured Obligations other
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than principal and interest;
third, to the ratable payment of accrued but unpaid interest on the
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Secured Obligations in accordance with the terms thereof;
fourth, to the ratable payment of unpaid principal of the Secured
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Obligations; and
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finally, to payment to Borrower of any surplus then remaining from
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such proceeds.
The Agent may make distributions hereunder in cash or in kind or, on a ratable
basis, in any combination thereof.
9. Concerning the Agent. (A) The Agent is authorized to take all
such action as is provided to be taken by it as the Agent hereunder and all
other action reasonably incidental thereto. As to any matters not expressly
provided for herein (including, without limitation, the timing and methods of
realization upon the Collateral) the Agent shall act or refrain from acting in
accordance with written instructions from the Lenders or, in the absence of such
instructions, in accordance with its discretion.
(B) The Agent shall not be responsible for the existence, genuineness
or value of any of the Collateral or for the validity, perfection, priority or
enforceability of the Security Interests in any of the Collateral, whether
impaired by operation of law or by reason of any action or omission to act on
its part hereunder. The Agent shall have no duty to ascertain or inquire as to
the performance or observance of any of the terms of this Agreement by Grantors.
10. Appointment of Co-Agents. At any time or times, in order to
comply with any legal requirement in any jurisdiction, the Agent may appoint one
or more other Persons, either to act as co-agent or co-agents, jointly with the
Agent, or to act as separate agent or agents on behalf of the Lenders with such
power and authority as may be necessary for the effectual operation of the
provisions hereof and may be specified in the instrument of appointment (which
may, in the discretion of the Agent, include provisions for the protection of
such co-agent or separate agent similar to the provisions of Section 9).
11. Expenses. In the event that any Grantor fails to comply with the
provisions of the Credit Agreement or this Agreement, such that the value of any
Collateral or the validity, perfection, rank or value of any Security Interest
is thereby diminished or potentially diminished or put at risk, the Agent if
requested by the Lenders may, but shall not be required to, effect such
compliance on behalf of Grantors, and Grantors shall reimburse the Agent for the
costs thereof on demand. All insurance expenses and all expenses of protecting,
storing, warehousing, appraising, insuring, handling, maintaining, and shipping
the Collateral, any and all excise, property, sales, and use taxes imposed by
any state, federal, or local authority on any of the Collateral, or in respect
of periodic appraisals and inspections of the Collateral to the extent the same
may be requested by the Lenders from time to time, or in respect of the sale or
other disposition thereof shall be borne and paid by Grantors; and if Grantors
fail to promptly pay any portion thereof when due, the Agent or any Lender may,
at its option, but shall not be required to, pay the same and charge Grantors'
account therefor, and Grantors agree to reimburse the Agent or such Lender
therefor on demand. All sums so paid or incurred by the Agent or any Lender for
any of the foregoing and any and all other sums for which Grantors may become
liable hereunder and all costs and expenses (including attorneys' fees, legal
expenses and court costs) reasonably incurred by the Agent or any Lender in
enforcing or protecting the Security Interests or any of their rights or
remedies under this Agreement, shall be additional Secured Obligations
hereunder.
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12. Termination of Security Interests; Release of Collateral. Upon
the repayment in full of all Secured Obligations under the Credit Agreement, the
Security Interests shall terminate and all rights to the Collateral shall revert
to Grantors. At any time and from time to time prior to such termination of the
Security Interests, the Agent may release any of the Collateral. Upon any such
termination of the Security Interests or release of Collateral, the Agent will,
at the expense of Grantors, execute and deliver to Grantors such documents as
Grantors shall reasonably request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may be.
13. Notices. All notices, communications and distributions hereunder
shall be given in accordance with Section 10.13 of the Credit Agreement.
14. Waivers, Non-Exclusive Remedies. No failure on the part of the
Agent to exercise, and no delay in exercising and no course of dealing with
respect to, any right under this Agreement shall operate as a waiver thereof;
nor shall any single or partial exercise by the Agent of any right under the
Credit Agreement, the Guaranty or this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The rights in this
Agreement, the Credit Agreement and the Guaranty are cumulative and are not
exclusive of any other remedies provided by law.
15. Successors and Assigns. This Agreement is for the benefit of the
Agent and the Lenders and their successors and assigns, and in the event of an
assignment of all or any of the Secured Obligations, the rights hereunder, to
the extent applicable to the indebtedness so assigned, may be transferred with
such indebtedness. This Agreement shall be binding on Grantors and their
successors and assigns.
16. Changes in Writing. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by Grantors and the Agent with the consent of the Lenders.
17. GOVERNING LAW. ALL MATTERS RELATING TO THE INTERPRETATION,
CONSTRUCTION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE
WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
18. CONSENT TO JURISDICTION. GRANTORS, EACH OF THE LENDERS AND THE
AGENT IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF (i) THE SUPREME COURT
OF THE STATE OF NEW YORK, NEW YORK COUNTY AND (ii) THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE PURPOSES OF ANY SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY
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TRANSACTION CONTEMPLATED HEREBY. GRANTORS, EACH OF THE LENDERS AND THE AGENT
FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENTS BY
UNITED STATES REGISTERED MAIL TO SUCH PARTY'S RESPECTIVE ADDRESS FOR NOTICES SET
FORTH IN SECTION 10.13 OF THE CREDIT AGREEMENT SHALL BE EFFECTIVE SERVICE OF
PROCESS FOR ANY ACTION, SUIT OR PROCEEDING IN NEW YORK WITH RESPECT TO ANY
MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION IN THIS SECTION 18. GRANTORS,
EACH OF THE LENDERS AND THE AGENT IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT
OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN (a) THE SUPREME
COURT OF THE STATE OF NEW YORK, NEW YORK COUNTY AND (b) THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND HEREBY FURTHER
IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
19. Severability. If any provision hereof is invalid or unenforceable
in any jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Agent and the Lenders in order to
carry out the intentions of the parties hereto as nearly as may be possible; and
(ii) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.
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In Witness Whereof, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
Wahlco Environmental Systems, Inc.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
and Chief Financial Officer
Bachmann Companies, Inc.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
Wahlco, Inc.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
Wahlco Engineered Products, Inc.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
Wexford Management LLC, as Agent
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President and
General Counsel
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