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EXHIBIT 10.10
SECURITY AGREEMENT
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SECURITY AGREEMENT, dated as of December 18, 1998, between
ALPHA TUBE CORPORATION, a Delaware corporation and a debtor-in-possession under
Chapter 11 of the Bankruptcy Code (the "Assignor"), and BANKAMERICA BUSINESS
CREDIT, INC., as Agent (together with any successor agent, the "Agent") for the
benefit of the Agent and the lenders from time to time party to the Loan and
Security Agreement hereinafter referred to (the Agent and such lenders are
hereinafter called the "Secured Creditors"). Except as otherwise defined herein,
terms used herein and defined in the Loan and Security Agreement shall be used
herein as so defined.
W I T N E S S E T H:
WHEREAS, Acme Metals Incorporated, a debtor-in-possession (the
"Parent"), Acme Steel Company, a debtor-in-possession ("ASC"), Acme Packaging
Corporation, a debtor-in-possession ("APC"), Alabama Metallurgical Corporation,
a debtor-in-possession ("AMC"), Acme Steel Company International, Inc., a
debtor-in-possession ("ASCI" and, together with the Parent, ASC, APC and AMC,
jointly and severally, the "Borrowers"), and the Secured Creditors have entered
into a certain Loan and Security Agreement dated as of the date hereof (as
amended, amended and restated, modified, supplemented or renewed from time to
time, the "Loan and Security Agreement").
WHEREAS, as a condition to the Secured Creditors making any
Loans and issuing or causing the issuance of any Letters of Credit or Credit
Support under the Loan and Security Agreement, the Secured Creditors have
required the execution and delivery of this Security Agreement by the Assignor.
NOW, THEREFORE, in consideration of the premises and in order
to induce the Secured Creditors to make Loans and to issue or cause the issuance
of Letters of Credit and Credit Support under the Loan and Security Agreement,
the Assignor hereby agrees with the Agent for the benefit of the Secured
Creditors as follows:
ARTICLE I
SECURITY INTERESTS
ARTICLE I.1. Grant of Security Interest. As security for all
present and future Obligations (including, without limitation, the obligations
of the Assignor under the Alpha Tube Guaranty), the Assignor hereby grants to
the Agent, for the ratable benefit of the Secured Creditors, a continuing
security interest in, lien on, and right of set-off against, all of the
following property of the Assignor, whether now owned or existing or hereafter
acquired or arising, regardless of where located (collectively, the
"Collateral"):
(i) all Accounts;
(ii) all Inventory;
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(iii) all contract rights, letters of credit, chattel paper,
instruments, notes, documents, and documents of title;
(iv) all General Intangibles;
(v) all Equipment;
(vi) all money, investment property, securities, security
entitlements, securities accounts and other property of any kind of the
Assignor, including, without limitation, any capital stock or equity interests
in any Subsidiaries of the Assignor;
(vii) all deposit accounts, credits and balances with and other
claims against any Secured Creditor or any of its affiliates or any other
financial institution in which the Assignor maintains deposits;
(viii) all books, records and other property related to or
referring to any of the foregoing, including, without limitation, books,
records, account ledgers, data processing records, computer software and other
property and General Intangibles at any time evidencing or relating to any of
the foregoing; and
(ix) all accessions to, substitutions for and replacements,
products and proceeds of any of the foregoing, including, but not limited to,
proceeds of any insurance policies, claims against third parties, and
condemnation or requisition payments with respect to all or any of the
foregoing.
I(a) The security interests of the Agent under this Agreement
extend to all Collateral of the kind which is the subject of this Agreement
which the Assignor may acquire at any time during the continuation of this
Agreement.
ARTICLE I.2. Power of Attorney. The Assignor hereby irrevocably
appoints the Agent as the Assignor's attorney-in-fact, effective from time to
time after the occurrence and during the continuance of an Event of Default,
with full authority in the place and stead of the Assignor and in the name of
the Assignor or otherwise, in the Agent's discretion, to take any action and to
execute any instrument which the Agent may reasonably deem necessary or
advisable to accomplish the purposes of this Agreement and the Alpha Tube
Guaranty, which appointment as attorney is coupled with an interest.
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ARTICLE II
PROVISIONS CONCERNING ALL COLLATERAL
ARTICLE II.1. Protection of Agent's Security. The Assignor will do
nothing to impair the security interest granted herein to the Agent in the
Collateral. The Assignor assumes all liability and responsibility in connection
with the Collateral and the liability of the Assignor to pay the Obligations
shall in no way be affected or diminished by reason of the fact that any
Collateral may be lost, destroyed, stolen, damaged or for any reason whatsoever
unavailable to the Assignor.
ARTICLE II.2. Further Actions. The Assignor will, at its own
expense, make, execute, endorse, acknowledge, file and/or deliver to the Agent
from time to time such financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which the Agent deems
reasonably appropriate or advisable to perfect, preserve or protect its security
interest in the Collateral.
ARTICLE II.3. Financing Statements. The Assignor agrees to execute
and deliver, upon request of the Agent, to the Agent such financing statements
(or similar statements or instruments of registration under the law of any
jurisdiction), in form acceptable to the Agent, as the Agent may from time to
time reasonably request or as are desirable in the opinion of the Agent to
establish and maintain a valid, enforceable, perfected security interest in the
Collateral. The Assignor will pay any applicable filing fees, recordation taxes
and related expenses. The Assignor authorizes the Agent to file any such
financing statements without the signature of the Assignor where permitted by
law.
ARTICLE III
REMEDIES
ARTICLE III.1. Remedies. Notwithstanding the provisions of Section
362 of the Bankruptcy Code and without order of or application or motion to the
Bankruptcy Court:
(a) The Assignor agrees that, if any Event of Default shall have
occurred and be continuing, then and in every such case, the Agent shall have
all rights as a secured creditor under the UCC in all relevant jurisdictions and
all rights now or hereafter existing under any other applicable law.
(b) Without limitation to the foregoing, if an Event of Default
exists and is continuing: (i) the Agent shall have for the benefit of the Agent
and the Lenders, in addition to all other rights of the Agent and the Lenders,
the rights and remedies of a secured party under the UCC; (ii) the Agent may, at
any time, take possession of the Collateral and keep it on the Assignor's
premises, at no cost to the Agent or any Lender, or remove any part of it to
such other
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place or places as the Agent may desire, or the Assignor shall, upon the Agent's
demand, at the Assignor's cost, assemble the Collateral and make it available to
the Agent at a place reasonably convenient to the Agent; and (iii) the Agent may
sell and deliver any Collateral at public or private sales conducted in a
commercially reasonable manner, for cash, upon credit or otherwise, at such
prices and upon such terms as the Agent deems advisable, in its sole discretion,
and may, if the Agent deems it reasonable, postpone or adjourn any sale of the
Collateral by an announcement at the time and place of sale or of such postponed
or adjourned sale without giving a new notice of sale. Without in any way
requiring notice to be given in the following manner, the Assignor agrees that
any notice by the Agent of sale, disposition or other intended action hereunder
or in connection herewith, whether required by the UCC or otherwise, shall
constitute reasonable notice to the Assignor if such notice is mailed by
registered or certified mail, return receipt requested, postage prepaid, or is
delivered personally against receipt, at least five (5) Business Days prior to
such action to the Assignor's address specified in or pursuant to Alpha Tube
Guaranty. If any Collateral is sold on terms other than payment in full at the
time of sale, no credit shall be given against the Obligations until the Agent
or the Lenders receive payment, and if the buyer defaults in payment, the Agent
may resell the Collateral without further notice to the Assignor. In the event
the Agent seeks to take possession of all or any portion of the Collateral by
judicial process, the Assignor irrevocably waives: (a) the posting of any bond,
surety or security with respect thereto which might otherwise be required; (b)
any demand for possession prior to the commencement of any suit or action to
recover the Collateral; and (c) any requirement that the Agent retain possession
and not dispose of any Collateral until after trial or final judgment. The
Assignor agrees that the Agent has no obligation to preserve rights to the
Collateral or marshal any Collateral for the benefit of any Person. The Agent is
hereby granted a license or other right to use, without charge, the Assignor's
labels, patents, copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, in completing production of,
advertising or selling any Collateral, and the Assignor's rights under all
licenses and all franchise agreements shall inure to the Agent's benefit for
such purpose. The proceeds of sale shall be applied first to all expenses of
sale, including attorneys' fees, and then to the Obligations in whatever order
the Agent elects. The Agent will return any excess to the Assignor and the
Assignor shall remain liable for any deficiency.
(c) If an Event of Default occurs, the Assignor hereby waives,
except to the extent expressly provided otherwise herein, all rights to notice
and hearing prior to the exercise by the Agent of the Agent's rights to
repossess the Collateral without judicial process or to replevy, attach or levy
upon the Collateral without notice or hearing.
(d) The Agent agrees to provide the Assignor, the Parent and Wolf,
Block, Xxxxxx and Xxxxx-Xxxxx with not less than three Business Days prior
written notice of the first exercise by the Agent of any rights or remedies by
the Agent under this Section 3.1.
ARTICLE III.2. Remedies Cumulative. Each and every right, power
and remedy hereby specifically given to the Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement or under
the other Loan Documents now or hereafter existing at law or in equity, or by
statute and each and every right, power and remedy whether specifically herein
given or otherwise existing may be exercised from time to time or
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simultaneously and as often and in such order as may be deemed expedient by the
Agent. All such rights, powers and remedies shall be cumulative and the exercise
or the beginning of exercise of one shall not be deemed a waiver of the right to
exercise of any other or others. No delay or omission of the Agent in the
exercise of any such right, power or remedy, renewal or extension of any of the
Obligations and no course of dealing between the Assignor and the Agent or any
holder of any of the Obligations shall impair any such right, power or remedy or
shall be construed to be a waiver of any Default or Event of Default or an
acquiescence therein. No notice to or demand on the Assignor in any case shall
entitle it to any other or further notice or demand in similar or other
circumstances or constitute a waiver of any of the rights of the Agent to any
other or further action in any circumstances without notice or demand. In the
event that the Agent shall bring any suit to enforce any of its rights hereunder
and shall be entitled to judgment, then in such suit the Agent may recover
reasonable expenses, including attorneys' fees, and the amounts thereof shall be
included in such judgment.
ARTICLE IV
MISCELLANEOUS
ARTICLE IV.1. Notices. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto or Wolf, Block, Xxxxxx and Xxxxx-Xxxxx shall be given in the
manner provided in Section 15 of the Alpha Tube Guaranty.
ARTICLE IV.2. Waiver; Amendment. None of the terms and conditions
of this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by the Assignor and the Agent (with the
written consent of the requisite Lenders).
ARTICLE IV.3. Obligations Absolute. The obligations of the
Assignor hereunder shall remain in full force and effect without regard to, and
shall not be impaired by, (a) any exercise or non-exercise, or any waiver of,
any right, remedy, power or privilege under or in respect of this Agreement or
any other Loan Document except as specifically set forth in a waiver granted
pursuant to Section 4.2 hereof; or (b) any amendment to or modification of any
Loan Document or any security for any of the Obligations; whether or not the
Assignor shall have notice or knowledge of any of the foregoing.
ARTICLE IV.4. Successors and Assigns. This Agreement shall be
binding upon the Assignor and its successors and assigns and shall inure to the
benefit of the Agent and each other Secured Creditor and their respective
successors and assigns, provided that the Assignor may not transfer or assign
any or all of its rights or obligations hereunder. All agreements, statements,
representations and warranties made by the Assignor herein or in any certificate
or other instrument delivered by the Assignor or on its behalf under this
Agreement shall be considered to have been relied upon by the Secured Creditors
and shall survive the execution and delivery of this
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Agreement and the other Loan Documents regardless of any investigation made by
the Secured Creditors or on their behalf.
ARTICLE IV.5. Headings Descriptive. The headings of the several
sections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
ARTICLE IV.6. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
ARTICLE IV.7. SETOFF; GOVERNING LAW; WAIVER OF JURY TRIAL AND
SETOFF; CONSENT TO JURISDICTION, ETC. IN ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, OR ANY
INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, OR THE VALIDITY,
PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, OR ANY OTHER
CLAIM OR DISPUTE HOWSOEVER ARISING, BETWEEN THE ASSIGNOR ON THE ONE HAND AND ANY
ONE OR MORE OF THE SECURED CREDITORS ON THE OTHER HAND, THE ASSIGNOR HEREBY, TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, (i) WAIVES THE RIGHT TO INTERPOSE
ANY SETOFF, RECOUPMENT, COUNTERCLAIM OR CROSS-CLAIM IN CONNECTION WITH ANY SUCH
LEGAL ACTION OR PROCEEDING, IRRESPECTIVE OF THE NATURE OF SUCH SETOFF,
RECOUPMENT, COUNTERCLAIM OR CROSS-CLAIM, UNLESS SUCH SETOFF, RECOUPMENT,
COUNTERCLAIM OR CROSS-CLAIM COULD NOT, BY REASON OF ANY APPLICABLE FEDERAL OR
STATE PROCEDURAL LAWS, BE INTERPOSED, PLEADED OR ALLEGED IN ANY OTHER ACTION AND
(ii) WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LEGAL ACTION
OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK;
PROVIDED THAT THE AGENT SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) EXCEPT FOR MATTERS WITHIN THE EXCLUSIVE JURISDICTION OF THE
BANKRUPTCY COURT, ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN THE
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COURTS OF THE XXXXX XX XXX XXXX XX XX XXX XXXXXX XXXXXX FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
ASSIGNOR CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EXCEPT FOR MATTERS WITHIN THE
EXCLUSIVE JURISDICTION OF THE BANKRUPTCY COURT, THE ASSIGNOR IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING AND
EXCEPT FOR MATTERS WITHIN THE EXCLUSIVE JURISDICTION OF THE BANKRUPTCY COURT:
(1) THE AGENT SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE
ASSIGNOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT DEEMS
NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY
FOR THE OBLIGATIONS OF THE ASSIGNOR HEREUNDER AND (2) THE ASSIGNOR ACKNOWLEDGES
THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE
MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.
(c) THE ASSIGNOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE ASSIGNOR AT ITS
ADDRESS SET FORTH IN SECTION 15 OF THE ALPHA TUBE GUARANTY AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO
DEPOSITED IN THE U.S. MAILS. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF
THE AGENT TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
(d) THE ASSIGNOR HEREBY WAIVES ITS RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE ASSIGNOR HEREBY AGREES THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE ASSIGNOR HEREBY FURTHER AGREES THAT ITS
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION
HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
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ARTICLE IV.8. Assignor's Duties. It is expressly agreed, anything
herein contained to the contrary notwithstanding, that the Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Agent shall not have any obligations or liabilities with
respect to any Collateral by reason of or arising out of this Agreement, nor
shall the Agent be required or obligated in any manner to perform or fulfill any
of the obligations of the Assignor under or with respect to any Collateral. The
Agent shall maintain safe custody of any Collateral in its possession and shall
account for funds received by it hereunder, but only to the extent, in each
instance, required under the UCC (and only then to the extent such requirement
cannot be waived).
ARTICLE IV.9. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
ARTICLE IV.10. Termination. Upon payment in full of all
Obligations, the termination and cancellation of all Letters of Credit and the
termination of all Commitments, this Agreement shall terminate, and the Agent
shall cause to be assigned, transferred and delivered against receipt but
without any recourse, warranty or representation whatsoever, any remaining
Collateral and money received in respect thereof, to or on the order of the
Assignor and to be released and canceled all licenses and rights referred to in
Section 3.1(b). The Agent shall also execute and deliver to the Assignor upon
such termination such UCC termination statements and other documentation
reasonably requested by the Assignor to effect the termination and release of
the Liens on the Collateral.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered by their duly authorized officers as of the date
first above written.
ALPHA TUBE CORPORATION, INC.
as Debtor-in-Possession
By:___________________________
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
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BANKAMERICA BUSINESS CREDIT, INC.,
as Agent
By:_______________________________
Name:
Title:
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