EXHIBIT 4.3
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of November 20, 1998, by and among (a)
COMPASS AEROSPACE CORPORATION, a Delaware corporation (the "BORROWER"), (b)
AEROMIL ENGINEERING COMPANY, a Delaware corporation ("AEROMIL"), (c) WESTERN
METHODS MACHINERY CORPORATION, a California corporation ("WESTERN METHODS"),
(d) XXXXXX MACHINE INCORPORATED, a Washington corporation ("XXXXXX"), (e)
XXXXXXXX MACHINE, INC., a Kansas corporation ("XXXXXXXX"), (f) WICHITA
MANUFACTURING, INC., a California corporation ("WICHITA"), (g) SEA-LECT
PRODUCTS, INC., a Delaware corporation ("SEA-LECT"), (h) J&J LEASING, INC., a
Washington corporation ("J&J"), (i) CWE ACQUISITION CO., a Delaware
corporation ("CWE"), (j) LAMSCO WEST, INC., a California corporation,
("LAMSCO"), (k) each other entity that becomes a party hereto pursuant to
Section 22 hereof (each such entity, together with the Borrower, Aeromil,
Western Methods, Barnes, Brittain, Wichita, Sea-Lect, J&J, CWE and Lamsco,
collectively, the "ASSIGNORS"), and (l) BANKBOSTON, N.A., a national banking
association, as agent (hereinafter, in such capacity, the "ADMINISTRATIVE
AGENT") for itself and other lending institutions (hereinafter, collectively,
the "LENDERS") which are or may become parties to a Credit Agreement, dated
as of November 20, 1998 (as amended, restated, modified, or supplemented and
in effect from time to time, the "CREDIT AGREEMENT"), among the Assignors,
the Lenders and the Administrative Agent.
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make
certain Loans to the Borrowers and to provide credit for Letters of Credit
issued for the account of the Borrower;
WHEREAS, pursuant to the Guaranty, each Assignor (other than the Borrower)
has jointly and severally guaranteed to the Lenders and the Administrative Agent
the payment when due of each of the Obligations under the Credit Agreement and
the other Loan Documents;
WHEREAS, each of the Assignors wishes to grant security interests in favor
of the Administrative Agent, for the benefit of the Lenders and the
Administrative Agent, as herein provided, as security for the Obligations of the
Assignors under the Credit Agreement and the other Loan Documents;
NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definitions
shall have the respective meanings provided therefor in the Credit Agreement.
All terms defined in the Uniform Commercial Code and used herein shall have the
same definitions herein as specified therein. The term "UNIFORM COMMERCIAL
CODE", as used herein, means the Uniform Commercial Code as in effect in the
applicable jurisdiction.
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2. GRANT OF SECURITY INTEREST.
2.1. COLLATERAL GRANTED. Each of the Assignors hereby grants to the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, to secure the payment and performance in full of all of the
Obligations, a security interest in and so pledges and assigns to the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, the following properties, assets and rights of such Assignor,
wherever located, whether now owned or hereafter acquired or arising, and
all proceeds and products thereof (all of the same being hereinafter called
the "COLLATERAL"):
All personal and fixture property of every kind and nature
including without limitation all furniture, fixtures, equipment, raw
materials, inventory, other goods, accounts, contract rights, rights
to the payment of money, insurance refund claims and all other
insurance claims and proceeds, tort claims, chattel paper, documents,
instruments, securities and other investment property, deposit
accounts, rights to proceeds of letters of credit and all general
intangibles including, without limitation, all tax refund claims,
license fees, patents, patent applications, trademarks, trademark
applications, trade names, copyrights, copyright applications, rights
to xxx and recover for past infringement of patents, trademarks and
copyrights, computer programs, computer software, engineering
drawings, service marks, customer lists, goodwill, and all licenses,
permits, agreements of any kind or nature pursuant to which such
Assignor possesses, uses or has authority to possess or use property
(whether tangible or intangible) of others or others possess, use or
have authority to possess or use property (whether tangible or
intangible) of such Assignor, and all recorded data of any kind or
nature, regardless of the medium of recording including, without
limitation, all software, writings, plans, specifications and
schematics.
2.2. DELIVERY OF INSTRUMENTS, ETC.
(a) Pursuant to the terms hereof, each of the Assignors has endorsed,
assigned and delivered to the Administrative Agent all negotiable or non-
negotiable instruments, certificated securities and chattel paper pledged
by it hereunder, together with instruments of transfer or assignment duly
executed in blank as the Administrative Agent may have specified. In the
event that any Assignor shall, after the date of this Agreement, acquire
any other negotiable or non-negotiable instruments, certificated securities
or chattel paper to be pledged by it hereunder, such Assignor shall
forthwith endorse, assign and deliver the same to the Administrative Agent,
accompanied by such instruments of transfer or assignment duly
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executed in blank as the Administrative Agent may from time to time
specify.
(b) To the extent that any securities now or hereafter acquired by
any Assignor are uncertificated and are issued to such Assignor or its
nominee directly by the issuer thereof, such Assignor shall cause the
issuer to note on its books the security interest of the Administrative
Agent in such securities and shall cause the issuer, pursuant to an
agreement in form and substance satisfactory to the Administrative Agent,
to agree to comply with instructions from the Administrative Agent as to
such securities, without further consent of such Assignor or such nominee.
To the extent that any securities, whether certificated or uncertificated,
or other financial assets now or hereafter acquired by any Assignor are
held by such Assignor or its nominee through a securities intermediary,
such Assignor shall (i) if necessary to perfect a security interest, cause
such securities intermediary to note on its books the security interest of
the Administrative Agent in such securities or other financial assets and
to confirm such notation promptly to the Administrative Agent and (ii) at
the request of the Administrative Agent, cause such securities
intermediary, pursuant to an agreement in form and substance reasonably
satisfactory to the Administrative Agent, to agree to comply with
entitlement orders from the Administrative Agent as to such securities or
other financial assets, without further consent of such Assignor or such
nominee. The Administrative Agent agrees with each Assignor that the
Administrative Agent shall not give any such entitlement orders to any such
issuer or securities intermediary unless an Event of Default has occurred
and is continuing and the Administrative Agent has elected to exercise its
rights and remedies as contemplated by Section 14.
(c) To the extent that any Assignor is a beneficiary under any
written letter of credit now or hereafter issued in favor of such Assignor,
such Assignor shall deliver such letter of credit to the Administrative
Agent. The Administrative Agent shall from time to time, at the request
and expense of the Assignors, make such arrangements with any Assignor as
are in the Administrative Agent's reasonable judgment necessary and
appropriate so that such Assignor may make any drawing to which such
Assignor is entitled under such letter of credit, without impairment of the
Administrative Agent's perfected security interest in such Assignor's
rights to proceeds of such letter of credit or in the actual proceeds of
such drawing. At the Administrative Agent's request, any Assignor shall,
for any letter of credit, whether or not written, now or hereafter issued
in favor of such Assignor as beneficiary, execute and deliver to the issuer
and any confirmer of such letter of credit an assignment of proceeds form,
in favor of the Administrative Agent and satisfactory to the Administrative
Agent and such issuer or (as the case may be) such confirmer, requiring the
proceeds of any drawing under such
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letter of credit to be paid directly to the Administrative Agent for
application as provided in the Credit Agreement.
2.3. EXCLUDED COLLATERAL. Notwithstanding the foregoing provisions
of this Section 2, such grant of security interest shall not extend to, and
the term "COLLATERAL" shall not include, any chattel paper and general
intangibles which are now or hereafter held by any Assignor as licensee,
lessee or otherwise, to the extent that (a) such chattel paper and general
intangibles are not assignable or capable of being encumbered as a matter
of law or under the terms of the license, lease or other agreement
applicable thereto (but solely to the extent that any such restriction
shall be enforceable under applicable law), without the consent of the
licensor or lessor thereof or other applicable party thereto and (b) such
consent has not been obtained; PROVIDED, HOWEVER, that the foregoing grant
of security interest shall extend to, and the term "COLLATERAL" shall
include, (i) any and all proceeds of such chattel paper and general
intangibles to the extent that the assignment or encumbering of such
proceeds is not so restricted and (ii) upon any such licensor, lessor or
other applicable party consent with respect to any such otherwise excluded
chattel paper or general intangibles being obtained, thereafter such
chattel paper or general intangibles as well as any and all proceeds
thereof that might have theretofore have been excluded from such grant of a
security interest and the term "COLLATERAL".
2.4. STOCK PLEDGE AGREEMENT. Concurrently herewith certain of the
Assignors are executing and delivering to the Administrative Agent, for the
benefit of the Lenders and the Administrative Agent, a stock pledge
agreement pursuant to which such Assignors are pledging to the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, all the shares of the capital stock of each such Assignor's
subsidiaries. Such pledge(s) shall be governed by the terms of such stock
pledge agreement and not by the terms of this Agreement.
2.5. PRE-FILINGS. Each of the Assignors hereby acknowledges that (a)
any and all Uniform Commercial Code financing statements filed in
connection with any other previously or now existing credit facilities,
including without limitation, the Existing Facility, naming BankBoston,
N.A. as Administrative Agent (or otherwise as a representative of itself
and other financial institutions), as secured party, and such Assignor, as
debtor, shall be effective to perfect the Administrative Agent's security
interest granted by such Assignor pursuant to this Agreement to the extent
that such security interest may be perfected by the filing of Uniform
Commercial Code financing statements and (b) such prior filings represent
pre-perfecting of Uniform Commercial Code financing statements for purposes
of so perfecting the security interests granted by the Assignors hereunder.
Until all of the Obligations have been fully paid and satisfied and in
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full, the provisions of this Section 2.5 shall continue to apply, and such
pre-filings shall continue to be effective and not subject to any right of
termination in respect of the security interests granted herein..
3. TITLE TO COLLATERAL, ETC. The Assignors are the owners of the
Collateral free from any adverse Lien, security interest or other encumbrance,
except for the security interest created by this Agreement and Permitted Liens.
None of the account debtors in respect of any accounts, chattel paper or general
intangibles and none of the obligors in respect of any instruments included in
the Collateral is a governmental authority subject to the Federal Assignment of
Claims Act.
4. CONTINUOUS PERFECTION. Each Assignor's place of business or, if more
than one, chief executive office is indicated on the Perfection Certificate
delivered by such Assignor to the Administrative Agent herewith (collectively,
the "PERFECTION CERTIFICATES"). None of the Assignor's will change the same, or
the name, identity or corporate structure of any Assignor in any manner, without
providing at least thirty (30) days prior written notice to the Administrative
Agent. The Collateral, to the extent not delivered to the Administrative Agent
pursuant to Section 2.2, will be kept at those locations listed on the
Perfection Certificates and the Assignors will not remove the Collateral from
such locations, without providing at least thirty (30) days prior written notice
to the Administrative Agent.
5. NO LIENS. Except for the security interest herein granted and
Permitted Liens, the Assignors shall be the owner of the Collateral free from
any lien, security interest or other encumbrance, and each Assignor shall defend
the same against all claims and demands of all persons at any time claiming the
same or any interests therein adverse to the Administrative Agent or any of the
Lenders. The Assignors shall not pledge, mortgage or create, or suffer to exist
a security interest in the Collateral in favor of any person other than the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, except for Permitted Liens.
6. NO TRANSFERS. The Assignors will not sell or offer to sell or
otherwise transfer the Collateral or any interest therein except for (a) sales
and leases of inventory and licenses of general intangibles in the ordinary
course of business and (b) sales or other dispositions of obsolescent items of
equipment in the ordinary course of business consistent with past practices.
7. INSURANCE.
7.1. MAINTENANCE OF INSURANCE. Each of the Assignors will maintain
with financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as shall
be in accordance with general practices of businesses engaged in similar
activities in similar geographic areas.
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Such insurance shall be in such amounts, contain such terms, be in such
forms and be for such periods as may be reasonably satisfactory to the
Administrative Agent. In addition, all such insurance shall be payable
to the Administrative Agent as loss payee under a "standard" or "New
York" loss payee clause for the benefit of the Lenders and the
Administrative Agent. Without limiting the foregoing, each Assignor
will (a) keep all of its physical property insured with casualty or
physical hazard insurance on an "all risks" basis, with a full
replacement cost endorsement and an "agreed amount" clause in an amount
equal to one hundred percent (100%) of the full replacement cost of such
property, (b) maintain all such workers' compensation or similar
insurance as may be required by law and (c) maintain, in amounts and
with deductibles equal to those generally maintained by businesses
engaged in similar activities in similar geographic areas, general
public liability insurance against claims of bodily injury, death or
property damage occurring, on, in or about the properties of such
Assignor; business interruption insurance; and product liability
insurance.
7.2. INSURANCE PROCEEDS. If a casualty loss suffered by any of the
Assignors results in a loss recovery from the Assignors' insurer and the
loss is one which does not materially impair the operations of any of the
facilities of such Assignors, then in such event the Administrative Agent
shall turn over all such loss recoveries to Borrower for the repair or
replacement of the loss which gave rise to any such recovery. If, however,
the loss is of a nature which does materially impair the operations of a
facility of the Assignors, then the Administrative Agent may withhold the
proceeds of the insurance recovery or cash collateral for the Obligations
if (a) there exists a Default or an Event of Default, or (b) the
Administrative Agent in its reasonable determination based on projected
operations of the Assignors (taking into account a reasonable estimate of
the time necessary to repair the facility which is the subject of the loss)
reasonably believes that there will occur an Event of Default at the end of
any of the next four quarterly financial covenant measurement periods. If
none of the conditions specified in clauses (a) or (b) exists at the time
of such loss, then the Administrative Agent shall promptly release the
proceeds of the insurance recovery to Borrower for repair or replacement of
the loss. If the Default does not become an Event of Default or if no
Event of Default occurs at the end of any of the next four financial
covenant measuring periods under the circumstances of clause (b) above,
then the Administrative Agent shall promptly release the proceeds of the
insurance recovery to the Borrower for repair or replacement of the loss.
If, however, a Default or an Event of Default exists, or, in the case of
clause (b), an Event of Default occurs or is continuing as at the end of
any of the applicable quarterly periods, then the Administrative Agent may,
at any time while any such Default or Event of Default is continuing, apply
such
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loss proceeds to the Obligations in such order and manner as the
Administrative Agent may in it discretion choose.
7.3. NOTICE OF CANCELLATION, ETC. All policies of insurance shall
provide for at least thirty (30) days prior written cancellation notice to
the Administrative Agent. In the event of failure by any Assignor to
provide and maintain insurance as herein provided, the Administrative Agent
may, at its option, provide such insurance and charge the amount thereof to
such Assignor. The Assignors shall furnish the Administrative Agent with
certificates of insurance and policies evidencing compliance with the
foregoing insurance provision.
8. MAINTENANCE OF COLLATERAL; COMPLIANCE WITH LAW. The Assignors will
keep the Collateral in good order and repair and will not use the same in
violation of law or any policy of insurance thereon. The Administrative Agent,
or its designee, may inspect the Collateral at any reasonable time, wherever
located. The Assignors will pay promptly when due all taxes, assessments,
governmental charges and levies upon the Collateral or incurred in connection
with the use or operation of such Collateral or incurred in connection with this
Agreement; PROVIDED that any such taxes, assessments, governmental charges and
levies need not be paid if the validity or amount thereof shall currently be
contested in good faith by appropriate proceedings and if adequate reserves with
respect thereto shall have been set aside on its books; and PROVIDED FURTHER
that all such taxes, assessments, governmental charges and levies shall be paid
forthwith upon the commencement of proceedings to foreclose any Lien that may
have attached as security therefor. Each of the Assignors has at all times
operated, and each Assignor will continue to operate, its business in compliance
with all applicable provisions of the federal Fair Labor Standards Act, as
amended, and with all applicable provisions of federal, state and local statutes
and ordinances dealing with the control, shipment, storage or disposal of
hazardous materials or substances.
9. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
9.1. EXPENSES INCURRED BY ADMINISTRATIVE AGENT. In its discretion,
the Administrative Agent may discharge taxes and other encumbrances at any
time levied or placed on any of the Collateral, make repairs thereto and
pay any necessary filing fees. The Assignors agree to reimburse the
Administrative Agent on demand for any and all expenditures so made. The
Administrative Agent shall have no obligation to any Assignor to make any
such expenditures, nor shall the making thereof relieve any Assignor of any
default.
9.2. ADMINISTRATIVE AGENT'S OBLIGATIONS AND DUTIES. Anything herein
to the contrary notwithstanding, each Assignor shall remain liable under
each contract or agreement comprised in the Collateral to be observed or
performed by any such
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Assignor thereunder. Neither the Administrative Agent nor any Lender
shall have any obligation or liability under any such contract or
agreement by reason of or arising out of this Agreement or the receipt
by the Administrative Agent or any Lender of any payment relating to any
of the Collateral, nor shall the Administrative Agent or any Lender be
obligated in any manner to perform any of the obligations of any
Assignor under or pursuant to any such contract or agreement, to make
inquiry as to the nature or sufficiency of any payment received by the
Administrative Agent or any Lender in respect of the Collateral or as to
the sufficiency of any performance by any party under any such contract
or agreement, to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which
may have been assigned to the Administrative Agent or to which the
Administrative Agent or any Lender may be entitled at any time or times.
The Administrative Agent's sole duty with respect to the custody, safe
keeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the Uniform Commercial Code or otherwise, shall
be to deal with such Collateral in the same manner as the Administrative
Agent deals with similar property for its own account.
10. SECURITIES AND DEPOSITS. If a Default or an Event of Default shall
have occurred and be continuing, the Administrative Agent may at any time, at
its option, transfer to itself or any nominee any securities constituting
Collateral, receive any income thereon and hold such income as additional
Collateral or apply it to the Obligations. If a Default or an Event of Default
shall have occurred and be continuing, whether or not any Obligations are due,
the Administrative Agent may demand, xxx for, collect, or make any settlement or
compromise which it deems desirable with respect to the Collateral. Regardless
of the adequacy of Collateral or any other security for the Obligations, any
deposits or other sums at any time credited by or due from the Administrative
Agent or any Lender to any Assignor may at any time be applied to or set off
against any of the Obligations.
11. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER OBLIGORS. If a Default or
an Event of Default shall have occurred and be continuing, each Assignor shall,
at the request of the Administrative Agent, notify account debtors on accounts,
chattel paper and general intangibles of such Assignor and obligors on
instruments for which such Assignor is an obligee of the security interest of
the Administrative Agent in any account, chattel paper, general intangible or
instrument and that payment thereof is to be made directly to the Administrative
Agent or to any financial institution designated by the Administrative Agent as
the Administrative Agent's agent therefor, and the Administrative Agent may
itself, if a Default or an Event of Default shall have occurred and be
continuing, without notice to or demand upon such Assignor, so notify account
debtors and obligors. After the making of such a request or the giving of any
such notification, each Assignor shall hold any proceeds of collection of
accounts, chattel paper,
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general intangibles and instruments received by such Assignor as trustee
for the Administrative Agent, for the benefit of the Lenders and the
Administrative Agent, without commingling the same with other funds of
such Assignor and shall turn the same over to the Administrative Agent
in the identical form received, together with any necessary endorsements
or assignments. During the continuation of Default or an Event of
Default, the Administrative Agent shall apply the proceeds of collection
of accounts, chattel paper, general intangibles and instruments received
by the Administrative Agent to the Obligations, such proceeds to be
immediately entered after final payment in cash or solvent credits of
the items giving rise to them.
12. FURTHER ASSURANCES. Each Assignor, at its own expense, shall do,
make, execute and deliver all such additional and further acts, things, deeds,
assurances and instruments as the Administrative Agent may require more
completely to vest in and assure to the Administrative Agent and the Lenders
their respective rights hereunder or in any of the Collateral, including,
without limitation, (a) executing, delivering and, where appropriate, filing
financing statements and continuation statements under the Uniform Commercial
Code, (b) obtaining governmental and other third party consents and approvals,
including without limitation any consent of any licensor, lessor or other
applicable party referred to in Section 2.3, (c) obtaining waivers from
mortgagees and landlords and (d) taking all actions required by Sections 8-313
and 8-321 of the Uniform Commercial Code (1990) or Sections 8-106 and 9-115 of
the Uniform Commercial Code (1994), as applicable in each relevant jurisdiction,
with respect to certificated and uncertificated securities.
13. POWER OF ATTORNEY.
13.1. APPOINTMENT AND POWERS OF ADMINISTRATIVE AGENT. Each Assignor
hereby irrevocably constitutes and appoints the Administrative Agent and
any officer or agent thereof, with full power of substitution, as its true
and lawful attorneys-in-fact with full irrevocable power and authority in
the place and stead of such Assignor or in the Administrative Agent's own
name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments that may be necessary or desirable to accomplish the purposes
of this Agreement and, without limiting the generality of the foregoing,
hereby gives said attorneys the power and right, on behalf of such
Assignor, without notice to or assent by such Assignor, to do the
following:
(a) upon the occurrence and during the continuance of a Default
or an Event of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral
in such manner as is consistent with the Uniform Commercial Code and
as fully and completely as
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though the Administrative Agent were the absolute owner thereof for
all purposes, and to do at such Assignor's expense, at any time, or
from time to time, all acts and things which the Administrative
Agent deems necessary to protect, preserve or realize upon the
Collateral and the Administrative Agent's security interest
therein, in order to effect the intent of this Agreement, all as
fully and effectively as such Assignor might do, including, without
limitation, (i) the filing and prosecuting of registration and
transfer applications with the appropriate federal or local
agencies or authorities with respect to trademarks, copyrights and
patentable inventions and processes, (ii) upon written notice to
such Assignor, the exercise of voting rights with respect to voting
securities, which rights may be exercised, if the Administrative
Agent so elects, with a view to causing the liquidation in a
commercially reasonable manner of assets of the issuer of any such
securities and (iii) the execution, delivery and recording, in
connection with any sale or other disposition of any Collateral, of
the endorsements, assignments or other instruments of conveyance or
transfer with respect to such Collateral; and
(b) to file such financing statements with respect hereto, with
or without such Assignor's signature, or a photocopy of this Agreement
in substitution for a financing statement, as the Administrative Agent
may deem appropriate and to execute in such Assignor's name such
financing statements and amendments thereto and continuation
statements which may require such Assignor's signature.
13.2. RATIFICATION BY ASSIGNORS. To the extent permitted by law,
each Assignor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
13.3. NO DUTY ON ADMINISTRATIVE AGENT. The powers conferred on the
Administrative Agent hereunder are solely to protect the interests of the
Administrative Agent and the Lenders in the Collateral and shall not impose
any duty upon the Administrative Agent to exercise any such powers. The
Administrative Agent shall be accountable only for the amounts that it
actually receives as a result of the exercise of such powers and neither it
nor any of its officers, directors, employees or agents shall be
responsible to each Assignor for any act or failure to act, except for the
Administrative Agent's own gross negligence or willful misconduct.
14. REMEDIES. If an Event of Default shall have occurred and be
continuing, the Administrative Agent may, without notice to or demand upon any
Assignor, declare this Agreement to be in default, and the Administrative Agent
shall thereafter have in any jurisdiction in which
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enforcement hereof is sought, in addition to all other rights and remedies,
the rights and remedies of a secured party under the Uniform Commercial Code,
including, without limitation, the right to take possession of the
Collateral, and for that purpose the Administrative Agent may, so far as such
Assignor can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. The Administrative
Agent may in its discretion require any Assignor to assemble all or any part
of the Collateral at such location or locations within the state(s) of such
Assignor's principal office(s) or at such other locations as the
Administrative Agent may designate. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Administrative Agent shall give to the Assignors at
least five (5) Business Days prior written notice of the time and place of
any public sale of Collateral or of the time after which any private sale or
any other intended disposition is to be made. Each Assignor hereby
acknowledges that five (5) Business Days prior written notice of such sale or
sales shall be reasonable notice. In addition, each Assignor waives any and
all rights that it may have to a judicial hearing in advance of the
enforcement of any of the Administrative Agent's rights hereunder, including,
without limitation, its right following an Event of Default to take immediate
possession of the Collateral and to exercise its rights with respect thereto.
15. NO WAIVER, ETC. Except as specifically required in the Loan
Documents, each Assignor waives demand, notice, protest, notice of acceptance
of this Agreement, notice of loans made, credit extended, Collateral received
or delivered or other action taken in reliance hereon and all other demands
and notices of any description. With respect to both the Obligations and the
Collateral, each Assignor assents to any extension or postponement of the
time of payment or any other indulgence, to any substitution, exchange or
release of or failure to perfect any security interest in any Collateral, to
the addition or release of any party or person primarily or secondarily
liable, to the acceptance of partial payment thereon and the settlement,
compromising or adjusting of any thereof, all in such manner and at such time
or times as the Administrative Agent may deem advisable. The Administrative
Agent shall have no duty as to the collection or protection of the Collateral
or any income thereon, nor as to the preservation of rights against prior
parties, nor as to the preservation of any rights pertaining thereto beyond
the safe custody thereof as set forth in Section 9.2. The Administrative
Agent shall not be deemed to have waived any of its rights upon or under the
Obligations or the Collateral unless such waiver shall be in writing and
signed by the Administrative Agent. No delay or omission on the part of the
Administrative Agent in exercising any right shall operate as a waiver of
such right or any other right. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right on any future occasion. All
rights and remedies of the Administrative Agent with respect to the
Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, shall be cumulative and may be
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exercised singularly, alternatively, successively or concurrently at such
time or at such times as the Administrative Agent deems expedient.
16. MARSHALLING. Neither the Administrative Agent nor any Lender shall be
required to marshal any present or future collateral security (including but not
limited to this Agreement and the Collateral) for, or other assurances of
payment of, the Obligations or any of them or to resort to such collateral
security or other assurances of payment in any particular order, and all of the
rights of the Administrative Agent hereunder and of the Administrative Agent or
any Lender in respect of such collateral security and other assurances of
payment shall be cumulative and in addition to all other rights, however
existing or arising. To the extent that it lawfully may, each Assignor hereby
agrees that it will not invoke any law relating to the marshalling of collateral
which might cause delay in or impede the enforcement of the Administrative
Agent's rights under this Agreement or under any other instrument creating or
evidencing any of the Obligations or under which any of the Obligations is
outstanding or by which any of the Obligations is secured or payment thereof is
otherwise assured, and, to the extent that it lawfully may, each Assignor hereby
irrevocably waives the benefits of all such laws.
17. PROCEEDS OF DISPOSITIONS; EXPENSES. The Assignors shall pay to the
Administrative Agent on demand any and all expenses, including reasonable
attorneys' fees and disbursements, incurred or paid by the Administrative Agent
in protecting, preserving or enforcing the Administrative Agent's rights under
or in respect of any of the Obligations or any of the Collateral. After
deducting all of said expenses, the residue of any proceeds of collection or
sale of the Obligations or Collateral shall, to the extent actually received in
cash, be applied to the payment of the Obligations in such order or preference
as the Lender may determine OR in such order or preference as is provided in the
Credit Agreement, proper allowance and provision being made for any Obligations
not then due. Upon the final payment and satisfaction in full of all of the
Obligations and after making any payments required by Section 9-504(1)(c) of the
Uniform Commercial Code, any excess shall be returned to the Assignors, and the
Assignors shall remain liable for any deficiency in the payment of the
Obligations.
18. OVERDUE AMOUNTS. Until paid, all amounts due and payable by any
Assignor hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Credit Agreement.
19. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS INTENDED TO
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Each Assignor agrees that
any suit for the enforcement of this Agreement may be brought in the courts of
the State of New York or any federal court sitting therein and consents to the
non-
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exclusive jurisdiction of such court and to service of process in any such
suit being made upon any Assignor by mail at the address specified in Section
17.5 of the Credit Agreement. Each Assignor hereby waives any objection that
it may now or hereafter have to the venue of any such suit or any such court
or that such suit is brought in an inconvenient court.
20. WAIVER OF JURY TRIAL. EACH ASSIGNOR WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF
ANY SUCH RIGHTS OR OBLIGATIONS. Each Assignor (a) certifies that neither the
Administrative Agent or any Lender nor any representative, agent or attorney of
the Administrative Agent or any Lender has represented, expressly or otherwise,
that the Administrative Agent or any Lender would not, in the event of
litigation, seek to enforce the foregoing waivers and (b) acknowledges that, in
entering into the Credit Agreement and the other Loan Documents to which the
Administrative Agent or any Lender is a party, the Administrative Agent and the
Lenders are relying upon, among other things, the waivers and certifications
contained in this Section 20.
21. MISCELLANEOUS. The headings of each section of this Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon each
Assignor and its respective successors and assigns, and shall inure to the
benefit of the Administrative Agent, the Lenders and their respective successors
and assigns. If any term of this Agreement shall be held to be invalid, illegal
or unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. Each
Assignor acknowledges receipt of a copy of this Agreement.
22. ADDITIONAL ASSIGNORS. It is understood and agreed that any Subsidiary
of any Assignor that is required to execute a counterpart of this Agreement
after the date hereof pursuant to the Credit Agreement shall become an Assignor
hereunder by executing a counterpart hereof or assumption agreement with respect
hereto, in form and substance satisfactory to the Administrative Agent, and
delivering the same to the Administrative Agent.
[Remainder of page left intentionally blank.]
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IN WITNESS WHEREOF, intending to be legally bound, each of the Assignors
has caused this Agreement to be duly executed as of the date first above
written.
COMPASS AEROSPACE CORPORATION
By:
-----------------------------------
Name:
Title:
AEROMIL ENGINEERING COMPANY
By:
-----------------------------------
Name:
Title:
WESTERN METHODS MACHINERY CORPORATION
By:
-----------------------------------
Name:
Title:
XXXXXXXX MACHINE, INC.
By:
-----------------------------------
Name:
Title:
SEA-LECT PRODUCTS, INC.
By:
-----------------------------------
Name:
Title:
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WICHITA MANUFACTURING, INC.
By:
-----------------------------------
Name:
Title:
XXXXXX MACHINE INCORPORATED
By:
-----------------------------------
Name:
Title:
J&J LEASING, INC.
By:
-----------------------------------
Name:
Title:
CWE ACQUISITION CO.
By:
-----------------------------------
Name:
Title:
LAMSCO WEST, INC.
By:
-----------------------------------
Name:
Title:
Accepted:
BANKBOSTON, N.A., as Administrative Agent
By:
-----------------------------------
Name:
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Title:
