[EXECUTED VERSION]
EXHIBIT 4.5
JUNIOR SECURITY AGREEMENT
JUNIOR SECURITY AGREEMENT (this "Agreement"), dated as of June
11, 2001, between FLOUR CITY INTERNATIONAL, INC., a Nevada corporation whose
address is 0000 Xxxxxxxx Xxxx, Xxxxxxxxx, XX 00000 (the "Debtor"), and
DIMENSIONAL PARTNERS, L.P. and DIMENSIONAL PARTNERS, LTD. (together with any
permitted assigns of the Debentures, the "Secured Parties").
WITNESSETH:
WHEREAS, the Debtor has issued to the Secured Parties its 8 1/2%
Subordinated Secured Convertible Debentures Due 2004 of even date herewith in
the aggregate principal amount of $2,500,000 (the "Debentures"); and
WHEREAS, in order to induce the Secured Parties to purchase the
Debentures and to secure the Debtor's performance and payment under the
Debentures, the Debtor has agreed to execute this Agreement.
NOW THEREFORE, the parties hereto agree as follows:
1. SECURITY INTEREST. As collateral security for the prompt and
complete payment and performance when due of its obligations under the
Debentures and the prompt performance and observance of all the covenants
contained therein and in this Agreement, the Debtor hereby grants to the Secured
Parties a continuing security interest in and lien on all of the Debtor's right,
title and interest in, to and under all of the Collateral (as defined below),
including all accessions to the Collateral, substitutions and replacements
thereof, now owned or existing and hereafter acquired, created or arising, and
all products and proceeds thereof (including, without limitation, claims of the
Debtor against third parties with respect to any Collateral). The "Collateral"
shall consist of all accounts, receivables, accounts receivable, book debts and
rights to payment no matter how evidenced, and other obligations of any kind,
now or hereafter existing, arising out of or in connection with the sale or
lease of goods or the rendering of services by the Debtor or any of its
subsidiaries in the United States; and all proceeds of every kind and nature,
including proceeds of proceeds, of any and all of the foregoing Collateral,
including money and cash.
2. REPRESENTATIONS AND WARRANTIES. The Debtor hereby represents
and warrants that:
(a) Except for the security interest granted pursuant to this
Agreement and as set forth on Schedule A hereto, the Debtor is the sole owner of
the Collateral, having good and valid title thereto, free and clear of any and
all liens and encumbrances.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby to be performed by the
Debtor have been duly and validly authorized by the Board of Directors of the
Debtor and no other corporate proceedings on the part of the Debtor are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. The Debtor has all corporate power and authority to execute and
deliver this Agreement, to consummate the transactions hereby contemplated and
to take all other actions required to be taken by it pursuant to the provisions
hereof; and this Agreement is the legal, valid and binding obligation of the
Debtor, enforceable against the Debtor in accordance with its terms.
(c) Except for the filing of UCC-1 financing statements in order to
perfect the security interest granted hereunder, no consent, approval,
authorization or notification of, or declaration, filing or registration with,
any governmental entity is required on behalf of or on the part of the Debtor in
connection with the execution, delivery, or performance of this Agreement and
the consummation of the transactions contemplated hereby by the Debtor. Neither
the execution and delivery of this Agreement by the Debtor nor the consummation
of the transactions hereby contemplated to be performed by the Debtor will (i)
constitute any violation or breach of the Articles of Incorporation or By-Laws
of the Debtor, (ii) violate, or constitute a default under, or permit the
termination or acceleration of the maturity of, any indebtedness for borrowed
money of the Debtor, (iii) violate, or constitute a default under, or permit the
termination of, any license, contract, lease or other instrument to which the
Debtor is a party or by which the Debtor or any of its properties is subject or
by which any of them is bound, or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation, governmental license or permit, to which
the Debtor or any of its properties is subject or by which any of them is bound.
(d) The Debtor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada.
(e) The address set forth at the beginning of this Agreement is the
Debtor's chief executive office. All books and records of the Debtor and its
subsidiaries with regard to the Collateral are maintained and kept at such
address of the Debtor set forth at the beginning of this Agreement.
3. COVENANTS. The Debtor hereby covenants as follows:
(a) The Debtor shall pay all reasonable expenses and reimburse the
Secured Parties for any reasonable expenditure, including reasonable attorneys'
and accountants' fees, including attorneys' fees incurred in any appellate or
insolvency proceedings, in connection with the Secured Parties' exercise of
their rights and remedies herein or contained in the Debentures.
(b) The Debtor shall execute and deliver, or cause to be executed
and delivered, to the Secured Parties those documents and agreements, including
without limitation, Uniform Commercial Code financing statements, and shall take
or cause to be taken those actions that the Secured Parties may, from time to
time, reasonably request to carry out the terms and conditions of this Agreement
and the Debentures.
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(c) Except for liens or other charges or encumbrances securing the
Senior Debt (as defined in the Debentures), including the other security
interests, liens and encumbrances listed on Exhibit A hereto (collectively, the
"Permitted Senior Liens"), and liens made in the ordinary course of business and
not securing indebtedness for borrowed money, including landlord liens, tax
liens (provided they secure sums being contested in good faith), liens created
under contracts of suretyship entered into in the ordinary course of business
and the like (together with the Permitted Senior Liens, the "Permitted Liens")
the Debtor has not, and hereafter shall not, assign, convey, sell, mortgage,
pledge, hypothecate, transfer, encumber or otherwise dispose of, or grant a
security interest in, the Collateral or any interest therein, without the prior
written consent of the Secured Parties.
(d) The Debtor will not change its name, identity or organizational
structure in any manner which might make any financing or continuation statement
filed in connection herewith seriously misleading within the meaning of Section
9-402(7) of the New York Uniform Commercial Code (the "UCC"), or any other then
applicable provision of the UCC (as it may be amended or revised from time to
time) unless the Debtor shall have taken all action necessary or reasonably
requested by the Secured Party to amend such financing statement or continuation
statement so that it is not seriously misleading. The Debtor will not change its
principal place of business, remove its records from such place or change its
state of incorporation unless the Debtor shall have given the Secured Party at
least 30 days' prior written notice thereof and shall have taken such action as
is necessary to cause the security interest of the Secured Parties in the
Collateral to continue to be perfected. The Collateral shall not be located at
any location except as is specified in Section 2(e) hereof without the prior
written consent of the Secured Party.
(e) Provided the Secured Parties maintain the confidentiality
thereof and do not use any such information in violation of any laws (including
securities laws), the Debtor agrees to furnish to the Secured Parties, from time
to time on reasonable advance written notice, such information relating to the
Collateral as the Secured Parties may reasonably request.
(f) Prior to or concurrently with the execution and delivery of this
Agreement (and thereafter as may reasonably be required), the Debtor shall file
such financing statements and other documents in such offices as the Secured
Parties may request to perfect the security interests granted by Section 1 of
this Agreement.
4. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral securing the Debtor's obligations
under the Debentures and shall (a) remain in full force and effect until the
payment and discharge in full of the Debtor's obligations under and pursuant to
the terms of the Debentures, (b) be binding upon the Debtor and its successors
and assigns and (c) inure to the benefit of the Secured Parties and their
successors, transferees and assigns. Upon the termination of the security
interest created hereby pursuant to clause (a) above, the Secured Parties shall,
at the Debtor's request and expense, deliver to the Debtor a release of all
security interests granted by the Debtor to such Secured Party pursuant to this
Agreement.
5. REALIZATION UPON COLLATERAL. In the event an "event of default"
shall occur under the terms of the Debentures (an "Event of Default"), the
Secured Parties shall, subject to the terms of this Agreement and the Securities
Purchase Agreement of even date herewith (the
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"Purchase Agreement"), have all of the rights of a secured party under the
Uniform Commercial Code as in effect in the State of New York, including,
without limitation, the right to sell the Collateral at public or private
sale for cash or credit and on such terms as the Secured Parties deem
reasonable. The Secured Parties shall apply the proceeds of any realization
on the whole or any part of the Collateral after deducting all of their
reasonable expenses and costs incurred in collection and realization
(including, without limitation, reasonable counsel's fees and expenses) to
the payment of the Debtor's obligations to the Secured Parties under the
Debentures; the balance, if any, of such proceeds shall be paid to Debtor.
6. THE SECURED PARTIES' APPOINTMENT AS ATTORNEY-IN-FACT.
(a) The Debtor hereby irrevocably constitutes and appoints each of
the Secured Parties and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Debtor and in the name of the
Debtor or in its own name, from time to time in the Secured Parties' discretion,
for the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which may be reasonably necessary or desirable to exercise the
Secured Parties' rights with respect to the Collateral, subject to the terms of
this Agreement and applicable law.
(b) The Secured Parties agree that, except upon the occurrence and
during the continuation of an Event of Default and until any necessary consents
have been obtained, they will forbear from exercising the power of attorney or
any rights granted to the Secured Parties pursuant to this Section 6. The Debtor
hereby ratifies, to the extent permitted by law, all that said attorney shall
lawfully do or cause to be done by virtue hereof. The power of attorney granted
pursuant to this Section 6 is a power coupled with an interest and shall be
irrevocable until the Debentures are paid in full.
(c) The powers conferred on the Secured Parties hereunder are solely
to protect the Secured Parties' interests in the Collateral and shall not impose
any duty upon them to exercise any such powers. The Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers and neither the Secured Parties nor any of their
officers, directors, employees or agents shall be responsible to the Debtor for
any act or failure to act, except for their own gross negligence or willful
misconduct.
7. SEVERABILITY AND ENFORCEABILITY. If any of the provisions of this
Agreement, or the application thereof to any person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this Agreement, or the
application of such provision or provisions to persons or circumstances other
than those to whom or which it is held invalid or unenforceable, shall not be
affected thereby and every provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
8. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to principles of conflicts of law (other than Section 5-1401 and
Section 5-1402 of the New York General Obligations Law). Any action or
proceedings to enforce or arising out of this Agreement may be commenced in any
jurisdiction of the federal courts whose districts
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encompass any part of the City of New York or the state courts of the State
of New York sitting in the City of New York. 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.
9. NOTICES. (a) All notices or other communications to be given
pursuant to this Agreement shall be in writing and shall be deemed sufficiently
given on (i) the day on which delivered personally or by telecopy (with prompt
confirmation by mail) during a business day to the appropriate location listed
as the address below, (ii) three business days after the posting thereof by
United States registered or certified first class mail, return receipt requested
with postage and fees prepaid, or (iii) one business day after deposit thereof
for overnight delivery. Such notices or other communications shall be addressed
respectively:
As to the Debtor: Flour City International, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Mr. Xxxx Xxxx
and
Xx. Xxxxxxx Xxxx
Telecopy No.: (000) 000-0000
with a copy to:
Heller, Ehrman, White & XxXxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
As to the Secured Parties: Dimensional Partners, Ltd.
Dimensional Partners, L.P.
c/o JDS Capital Management, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
with a copy to: Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
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or to any other address or telecopy number which such party may have
subsequently communicated to the other parties in writing.
10. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be deemed to
be an original and all of which when taken together shall constitute one and
the same instrument.
11. CAPTIONS. The captions in this Agreement are for
convenience only, and in no way limit or amplify the provisions hereof.
12. SUBORDINATION OF SECURITY INTEREST. For so long as any Senior
Debt remains outstanding, the rights of the Secured Parties under this Agreement
are subject in all respects to the rights of the holders of Senior Debt under
(and as defined in) the Subordination Agreement (as defined in the Debentures)
as the same may be amended from time to time.
13. FURTHER ASSURANCES. Each party to this Agreement will promptly
execute and deliver such further instruments and agreements, including, without
limitation, Subordination Agreements (as defined in the Purchase Agreement) from
time to time, and will do such further acts and things as may be reasonably
necessary or desirable to effect fully the purposes of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have executed this document as
of the date first above written.
FLOUR CITY INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxx
---------------------------------
Name: Xxxx X. Xxxx
Title: Chief Executive Officer
DIMENSIONAL PARTNERS, LTD.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxx
Title: Director
DIMENSIONAL PARTNERS, L.P.
By: JDS Asset Management, LLC,
its general partner
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Member
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