Exhibit 10.14
SECOND AMENDED AND RESTATED
SECURITY AGREEMENT AND COLLATERAL ASSIGNMENT
THIS SECOND AMENDED AND RESTATED SECURITY AGREEMENT AND COLLATERAL
ASSIGNMENT (this Second Amended and Restated Security Agreement and Collateral
Assignment, together with all exhibits, schedules, extensions, renewals,
amendments, substitutions and replacements hereto and hereof, is referred to
herein as this "Security Agreement") dated as of January 30, 1998, is made and
entered into by and between UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC., a
Delaware corporation (the "Debtor") and PNC BANK, NATIONAL ASSOCIATION, a
national banking association (the "Secured Party") and amends and restates in
its entirety and continues the security interest granted by the Amended and
Restated Security Agreement and Collateral Assignment dated as of January 31,
1996 between the Debtor and the Secured Party, which in turn amended and
restated in its entirety and continued the security interest granted by the
Security Agreement and Collateral Assignment dated as of November 18, 1994
between the Debtor and the Secured Party (the Amended and Restated Security
Agreement and Collateral Assignment and the Security Agreement and Collateral
Assignment are collectively referred to herein as the "Prior Security
Agreement").
WITNESSETH:
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WHEREAS, pursuant to a Second Amended and Restated Credit Agreement
(the Second Amended and Restated Credit Agreement and all exhibits, schedules,
extensions, renewals, amendments, substitutions and replacements thereto and
thereof is referred to herein as the "Credit Agreement") dated as of even date
herewith by and between the Secured Party as the Bank and the Debtor as the
Borrower, the Secured Party has agreed to make available to the Debtor a
revolving credit/letter of credit facility in an aggregate principal amount not
to exceed $6,500,000, and a Term Loan in the principal amount of $15,000,000,
which Indebtedness will be evidenced by the Second Amended and Restated
Revolving Credit Note and the Term Note, respectively (collectively, the
"Notes"), each dated as of even date herewith, with interest to be accrued on
each as more fully set forth in the Credit Agreement and each to be repaid at
the times and places and in the manner set forth in the Credit Agreement, and
containing other terms and provisions as set forth in the Credit Agreement; and
WHEREAS, to secure the prompt payment in full to the Secured Party of
the Obligations, as such term is defined in the Credit Agreement, the Debtor has
agreed to execute and deliver to the Secured Party this Security Agreement.
NOW, THEREFORE, in consideration of the premises (each of which is
incorporated herein by reference and made a material part hereof) and the mutual
promises contained herein and other valuable consideration, the receipt and
adequacy of which are
EXHIBIT D
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hereby acknowledged, and with the intent to be legally bound hereby, and for the
purpose of securing:
(i) the performance of all of the terms and provisions contained in
the Notes, including, but not limited to, the payment of the aggregate unpaid
principal balance of the Notes (including all advances heretofore and hereafter
made and evidenced by the Notes) and interest thereon unto the Secured Party,
its successors and assigns, according to the provisions and conditions of the
Notes, as each may be amended, extended or renewed from time to time, and in
discharge thereof;
(ii) the performance by the Debtor of all of the terms and provisions
contained in the Credit Agreement, this Security Agreement and all of the other
Loan Documents, as they may be amended, modified or supplemented from time to
time, the terms and provisions of all of such documents being specifically
incorporated herein by reference as though more fully set forth at length
herein;
(iii) the Debtor's payment of any and all of its Obligations to
the Secured Party, whether now or hereafter existing or incurred and whether
direct or indirect as guarantor, by virtue of any assignment, pledge or other
transfer or disposition to the Secured Party of Indebtedness and other
obligations of the Debtor to one or more third parties, or otherwise,
the Debtor and the Secured Party hereby agree as follows:
1. Grant of Security Interests. The Debtor hereby assigns and pledges to
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the Secured Party, and its successors and assigns, and grants to the Secured
Party, and its successors and assigns, a perfected lien and security interest,
prior to all other liens and security interests (except for Permitted
Encumbrances, but only to the extent permitted by the Credit Agreement) and
continues the grant of lien and security interest under the Prior Security
Agreement, on and in, all of the Debtor's property described below, whether now
owned or existing or hereafter acquired, arising or created, and all of the
Debtor's rights, titles and interests in and to and relating to all such
property, wherever located, and all products thereof and all proceeds derived
therefrom (including, without limitation, proceeds of insurance):
(i) All of Debtor's Accounts (whether or not Qualified Accounts),
Chattel Paper, Documents, Instruments, and Money, including without limitation
all Special Collateral (as defined in Section 3(vii) hereof);
(ii) All of the Debtor's Equipment, Fixtures, Goods and Inventory
(whether or not work-in-progress) and all accessories, accessions, attachments,
modifications, parts, fittings and special tools thereto, thereof or therefor;
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(iii) All of the Debtor's General Intangibles, including, without
limitation, all of the Debtor's patents, trademarks, trade names, copyrights,
franchises, licenses, royalty agreements, applications for any of the foregoing,
goodwill, rights to require performance of others, choses in action, causes of
action, corporate or other business records, inventions, designs, trade secrets,
registrations, tax refund claims, computer programs, options, claims, going
concern value, contract rights, customer lists, leases to which the Debtor is a
party and any guarantee claim, security interests or other security held by or
granted to the Debtor to secure payment by any party of a sum or debt owed to
the Debtor or the rights of the Debtor as the consignor of Inventory;
(iv) To the extent the terms of an agreement of the Debtor with a
third party permit, all of the rights of the Debtor to and under any and all
royalty, licensing, franchise or know-how agreements to which the Debtor is a
party;
(v) All money, residues and property of any kind of the Debtor now or
at any time hereafter delivered to, or in the possession or under the control
of, the Secured Party or an agent or a bailee of the Secured Party;
(vi) All accessories, accessions, attachments, modifications, parts,
fittings and special tools to, of or for, and all substitutions, replacements,
renewals, additions and improvements to, of or for any of the collateral listed
in items (i) through (v) above;
(vii) All products and proceeds of any of the collateral listed in
items (i) through (vi) above, including, without limitation, all proceeds of
insurance policies insuring the aforesaid collateral and documents covering the
aforesaid collateral, and all rents, revenues, issues, profits and proceeds
arising from the sale, lease, license, encumbrance, collection or any other
temporary or permanent disposition or encumbrance of such items (or any part
thereof) or any interest therein, whether or not constituting "proceeds" as
defined in the Uniform Commercial Code; and
(viii) All books, records, documents, ledger receipts and other
information of the Debtor pertaining to any of the foregoing, including, without
limitation, all customer lists, credit files, computer records, computer
programs, storage media and computer software used or required in connection
with the establishment, generation, processing, maintenance or storage of such
books, records or documents or otherwise used or acquired in connection with
documenting information pertaining to any of the aforesaid collateral.
All of the Debtor's property described in items (i) through (viii) above, both
inclusive, as well as all products and proceeds thereof and all of the Debtor's
rights, titles and interests in and to and relating to all such property,
whether now owned or existing or hereafter acquired or created, are hereinafter
referred to collectively and individually as the "Collateral".
2. Representations and Warranties. The Debtor hereby represents and
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warrants to the Secured Party that:
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(i) Title to Collateral. The Debtor has good title to all of its
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presently owned or existing Collateral, free and clear of all Encumbrances
except for Permitted Encumbrances (but only to the extent permitted by the
Credit Agreement). Each of the assignments, pledges liens and security
interests made and granted hereby, when duly and properly perfected, will be
liens and security interests prior to all other liens and security interests,
and are not in any respect subject or subordinate to any other lien or security
interest, except for the Permitted Encumbrances. Except for Permitted
Encumbrances, the Debtor has not heretofore assigned or pledged, or granted any
other lien or security interest upon or in, or otherwise assigned an Encumbrance
in, any of the Collateral.
(ii) Authority. The Debtor has and has duly exercised all requisite
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right, power and authority to enter into this Security Agreement, and to assign
and pledge, and to grant liens and security interests upon and in, the
Collateral for the purposes set forth in this Security Agreement, and to carry
out the transactions contemplated by this Security Agreement.
(iii) Chief Executive Office and Other Locations. The Debtor's chief
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executive office is as shown on Schedule 1 attached hereto and made a part
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hereof. All of the Debtor's other places of business are as shown on Schedule
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1.
(iv) Records. The records relating to the Collateral in the
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possession of, or subject to the control of, the Debtor are kept at the Debtor's
chief executive office as shown on Schedule 1 and at no other locations.
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(v) Locations of Inventory. The Collateral which consists of
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Inventory is located only at those sites more fully described on Schedule 1
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hereto.
(vi) Location of Equipment, Fixtures and Goods. The Collateral which
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consists of Equipment, Fixtures and Goods is located only at those sites more
fully described on Schedule 1.
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In determining which Accounts of the Debtor are Qualified Accounts and which
Inventory of the Debtor is Qualified Inventory, the Secured Party may rely and
shall be deemed to have relied on the representations and warranties with
respect to the Collateral made by the Debtor herein, in any other Loan Document,
or in any other schedule, report, certificate or other written document given by
the Debtor to the Secured Party.
3. Covenants. The Debtor hereby covenants and agrees with the Secured
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Party that:
(i) Title to Collateral. The Debtor will be the sole legal and
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beneficial owner of, and will have and maintain good and marketable title in and
to, all of the Collateral hereafter acquired, created or arising, free and clear
of all Encumbrances except Permitted
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Encumbrances. At its expense, the Debtor shall generally warrant title to the
Collateral and shall defend the Collateral and the rights, titles and interests
of the Secured Party therein and thereto, against all claims and demands of any
and all Persons. The Debtor shall not (A) grant, create, incur or permit to
exist any Encumbrance on or in any of the Collateral, other than Permitted
Encumbrances, (B) permit any of the Collateral to be levied upon under any legal
process, (C) assign, transfer or otherwise dispose of any of the Collateral
(except as otherwise may be permitted in the Credit Agreement), or (D) do, or
permit to be done, anything that may impair the value of any of the Collateral
or any of the liens and security interests granted or afforded by this Security
Agreement. The Debtor shall promptly discharge any Encumbrance on any of the
Collateral which is not specifically permitted to exist pursuant to the terms of
this Security Agreement or any of the other Loan Documents.
(ii) Locations of Offices and Collateral.
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(A) The Debtor will immediately advise the Secured Party in writing of
any change or anticipated change in, or any additions to, the chief executive
office and the other places of business of the Debtor listed on Schedule 1
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hereto.
(B) The Debtor will not remove or permit the removal of any of the
records relating to the Collateral from the locations shown on Schedule 1
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without the prior written consent of the Secured Party.
(C) The Debtor will not remove or permit the removal of any of the
Collateral which consists of Equipment, Fixtures and Goods from the locations
shown on Schedule 1 without the prior written consent of the Secured Party,
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except for disposition of assets in accordance with Section 6.8 of the Credit
Agreement. The Debtor shall provide to the Secured Party promptly upon request
adequate evidence that any removal of any such Collateral was permitted by such
Section 6.8, and shall ensure that any replacement Equipment, Goods and Fixtures
are free and clear of all Encumbrances, except for Permitted Encumbrances.
(iii) Changes to Chief Executive Office, Places of Business or Name
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of Debtor. If the Debtor desires to make any change or addition to the
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information set forth on Schedule 1 hereto, or to establish a new or additional
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name in which it may invoice Account Debtors, maintain records concerning the
Collateral, own Collateral or conduct its business, then the Debtor shall first,
with respect to each such new or changed name or location:
(A) give the Secured Party at least 60 days' prior written notice of
its intention to do so and provide the Secured Party with such information in
connection therewith as the Secured Party may reasonably request; and
(B) take such action, satisfactory to the Secured Party, including
without limitation all action required by Section 3(vii) hereof, as may be
necessary in the
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opinion of the Secured Party to maintain at all times the perfection and
priority of the security interests granted to the Secured Party hereunder;
provided, however, that in all such cases such new or additional location must
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be in the continental United States.
(iv) Covenants Relating to Accounts.
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(A) The Debtor shall promptly deliver to the Secured Party from time
to time any information relating to its Accounts, including without limitation
the names and addresses of Account Debtors; the aging of such Accounts; the
dates on which such Accounts first became due; the amounts of any offsets or
claims of any Account Debtor and whether the Debtor disputes such claim or
offset; copies of any documents, instruments, invoices and purchase orders; and
all schedules, certifications and any reports or other information relating to
the Debtor's Accounts all as the Secured Party may reasonably request from time
to time, all of the foregoing to be in form and substance satisfactory to the
Secured Party and in such detail as the Secured Party may reasonably request.
The Debtor shall at all times and from time to time cooperate fully with the
Secured Party and its employees, officers and authorized representatives in
verifying any matter relating to any Account.
(B) The Debtor shall not invoice any Account Debtors or maintain the
records of the Debtor relating to any Account, in any name other than the
Debtor's proper corporate name and such new names as it may establish in
accordance with Section 3(iii) above.
(C) The Debtor agrees that the Secured Party may at any time, without
notice to the Debtor, verify with any Account Debtors the status of any Accounts
payable by such Account Debtors. The Debtor shall, from time to time upon the
reasonable request of the Secured Party, execute and deliver such information,
documents and instruments, and take all such action as the Secured Party may
reasonably request in order to effectuate the purposes of this paragraph (C).
(D) The Debtor shall promptly notify the Secured Party of any dispute
(including without limitation any rejection or revocation of acceptance of
goods) between the Debtor and any Account Debtor concerning any disputed amount
in excess of $200,000 due and owing under any Account, including the reason for
the dispute, all claims related thereto and the amount in controversy. The
Debtor will promptly notify the Secured Party if the Debtor has notice or
knowledge of claims or material adverse changes which will or which Debtor
reasonably believes may affect the ultimate collectibility of any or all of the
Accounts of an Account Debtor, in an aggregate amount at any time in excess of
$500,000.
(E) To the extent that any applicable Governmental Rule, custom or any
contract or agreement with any Account Debtor requires notice to or the consent
of such
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Account Debtor in order for the Secured Party to obtain a security interest in
the Accounts of such Account Debtor, the Debtor agrees to promptly give such
notice or obtain such consent.
(v) Covenants Relating to Inventory.
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(A) The Debtor shall promptly deliver to the Secured Party from time
to time any information relating to its Inventory, including without limitation
the locations thereof; copies of any documents, instruments, invoices, purchase
orders, shipping and receipt records and inventory logs; and all schedules,
certifications and any reports or other information relating to the Debtor's
Inventory as the Secured Party may reasonably request from time to time, all of
the foregoing to be in form and substance satisfactory to the Secured Party and
in such detail as the Secured Party may reasonably request. The Debtor shall,
at all times and from time to time, cooperate fully with the Secured Party and
its employees, officers and authorized representatives in verifying any matter
relating to any Inventory.
(B) The Debtor will not remove or permit the removal of any Inventory
from the locations shown on Schedule 1, except for the sale of Inventory in the
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ordinary course of the Debtor's business. If the Debtor wishes to place or
store Inventory at a location not now shown on Schedule 1, the Debtor must first
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(1) give the Secured Party at least 30 days' written notice specifying the
address of such new location, and (ii) if such location is leased by the Debtor
as tenant, deliver to the Secured Party a Landlord's Waiver, in form and
substance satisfactory to the Secured Party, executed by the landlord.
(C) The Debtor shall keep correct and accurate daily records of all
Inventory on a first-in, first-out basis, itemizing and describing the kind,
type, quality and quantity of Inventory, the Debtor's costs therefor, the
selling prices thereof, and the daily withdrawals from and additions to
Inventory. The Debtor shall conduct a physical inventory at least once each
year, and shall deliver to the Secured Party a written report of such physical
inventory within 30 days after the completion thereof.
(vi) Performance of Agreements. The Debtor shall abide by, perform
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and discharge each and every obligation, covenant, condition, duty and agreement
in connection with the Collateral contained herein or in any of the other Loan
Documents.
(vii) Preservation of Security Interests. The Debtor will preserve
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and protect the Secured Party's security interest in the Collateral. The Debtor
will execute or join in the execution of, from time to time upon the request of
the Secured Party, all financing statements, continuation statements and all
other documents and instruments required by the Secured Party to evidence and
perfect, and continue to evidence and perfect, all of the security interests
granted herein or hereby, and the Debtor shall pay the cost of filing or
recording such documents and instruments in all public offices where deemed
necessary by the Secured Party. The Debtor will promptly furnish all documents
of title, affidavits and other documents and instruments reasonably required by
the Secured Party to further evidence or to perfect the liens and security
interests granted herein or hereby. To the extent controllable by the Debtor,
the
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Debtor will, at its own cost and expense, cause such security interests as
are governed by the Uniform Commercial Code to be perfected and to continue to
be perfected so long as the Obligations or any portion thereof is outstanding
and unpaid, or the Revolving Credit Commitment is in effect and, upon the
request of the Secured Party, the Debtor will, at its own cost and expense,
cause such liens and security interests as are governed by Governmental Rules
other than the Uniform Commercial Code, except for trademarks, to be perfected
and to continue to be perfected so long as the Obligations or any portion
thereof is outstanding and unpaid or the Revolving Credit Commitment is in
effect. Immediately upon the Debtor's receipt of any portion of the Collateral
which itself, or the ownership of which, is or becomes evidenced by an
agreement, Instrument, Document or other writing (including but not limited to
promissory notes, documents of title, trade acceptances and warehouse receipts,
all of which are herein referred to collectively as the "Special Collateral"),
the Debtor shall deliver the original thereof to the Secured Party, together
with appropriate endorsements or other specific evidence, in form and substance
acceptable to the Secured Party, of the assignment thereof to the Secured Party.
(viii) Books and Records; Notices and Other Information; Inspection.
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The Debtor will at all times keep, or cause to be kept, accurate and complete
books and records relating to the Collateral. The Debtor hereby agrees that the
Secured Party, or any of its officers, employees and authorized representatives,
shall have the right to inspect the Collateral and make extracts from the books
and records relating to the Collateral from time to time during normal business
hours. The Debtor shall promptly furnish or cause to be furnished to the
Secured Party such data and information and copies of such papers and documents
relating to the Collateral as the Secured Party may request from time to time
and in such form and substance as may be requested by the Secured Party from
time to time, shall have access to any premises where any of the Collateral is
located, and shall have the right, at any time, to discuss the Collateral with
any employee, officer, attorney, accountant, Account Debtor or creditor of the
Debtor. The Debtor will promptly deliver to the Secured Party all written
notices, and will promptly give the Secured Party written notice of any other
notices, received by it with respect to the impairment of the lien of the
Secured Party in the Collateral.
(ix) Cooperation Upon Event of Default. To assist the Secured Party
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in enforcing its rights and remedies hereunder, upon the request of the Secured
Party made from time to time after the occurrence of an Event of Default, the
Debtor will, at its expense (A) assemble and prepare for removal at and to
places designated by the Secured Party such items of Collateral selected by the
Secured Party, and (B) otherwise cooperate fully with the Secured Party in all
respects so that the Secured Party can effectively exercise its rights and
remedies hereunder.
4. Actions Upon Occurrence of Event of Default. Upon the occurrence of
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an Event of Default, the Obligations hereby secured, without further demand or
notice by the Secured Party, may or shall become at once due and payable, in
accordance with the terms of the Credit Agreement, and the Secured Party shall
have the right, at its option at any time and
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from time to time, without notice to the Debtor, which notice is hereby
expressly waived by the Debtor, to:
(i) exercise any or all of the rights and remedies afforded by the
Uniform Commercial Code or other applicable law as in effect;
(ii) exercise any or all of the rights and remedies as are provided
herein, in the Credit Agreement or any other Loan Document;
(iii) administer the Collateral and the proceeds thereof;
(iv) send verifications to any Account Debtors to verify the status of
any Account payable by such Account Debtors and to sign the name of the Debtor,
the Secured Party or the Secured Party's designee to all audit inquiries made of
Account Debtors, to all information release authorizations in connection
therewith, to all applications for documents of title, title certificates and
similar documents, to any notice of claim, satisfaction or release in connection
with an Account, and to any proof of claim in bankruptcy or any similar
document;
(v) take over and direct collection of the Debtor's Accounts and the
proceeds thereof;
(vi) give notice of the Secured Party's security interest in the
Accounts and the proceeds thereof to the Account Debtors (and the Secured Party
will have no liability to the Debtor by reason of giving or not giving such
notice);
(vii) receive and endorse the name of the Debtor upon any notes,
checks, acceptances, drafts, money orders, instruments or other documents
relating to the Collateral and effect the deposit and collection thereof for the
sole use and benefit of the Secured Party;
(viii) sign the name of the Debtor to drafts against the Account
Debtors, to notices to such Account Debtors, to assignments and notices of
assignments, to financing statements or other public records or notices and to
all other instruments and documents, and all amendments and modifications
thereof and supplements thereto;
(ix) receive, open and dispose of mail addressed to the Debtor and in
connection therewith, execute and deliver notices and documents of suit and
authorizations, in the name of the Debtor or the Secured Party, as the United
States Postal Service or other agency may require;
(x) direct the Account Debtors to make payments of all monies paid or
payable thereon directly to the Secured Party or to a lockbox designated by the
Secured Party (and, at the request of the Secured Party, the Debtor shall
indicate on all xxxxxxxx that payments thereon are to be made to the Secured
Party) and give any Account Debtors so notified and
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directed the receipt of the Secured Party for any such payment as full release
for the amount so paid;
(xi) enforce collection, either in the name of the Secured Party or in
the name of the Debtor, of any or all of the Accounts and the proceeds thereof
by suit or otherwise, or receive, give receipt for, surrender, release or
exchange all or any part thereof, or compromise, settle, extend or renew
(whether or not longer than the original period) any Account or any legal action
involving an Account and, if permitted by applicable Governmental Rules, sell or
assign any or all of the Accounts upon such terms, for such amounts and at such
time or times as the Secured Party deems advisable;
(xii) endorse in the name of the Debtor any instrument, including but
not limited to bills of lading, receipts or freight items, however received by
the Secured Party, representing Collateral or proceeds of any of the Collateral;
(xiii) enter any premises where Collateral is located, without
judicial process, and take possession and control of the Collateral; and keep
and store the Collateral on such premises until sold (and if such premises are
the property of the Debtor, the Debtor agrees not to charge the Secured Party
for storage thereof during the period the Secured Party is exercising its rights
with respect to the Collateral under the Uniform Commercial Code, this Security
Agreement or any other Loan Document) or remove the Collateral from such
premises to the premises of the Secured Party or an agent of the Secured Party
until sold;
(xiv) sell all or any portion of the Collateral at public or private
sale at such place or places and at such time or times and in such manner and
upon such terms, whether for cash or credit, as the Secured Party in its sole
discretion may determine and the Secured Party may purchase all or any of the
Collateral at such public sale or sales, and, to the extent permitted by
applicable Governmental Rules, any such private sale or sales, free from any
equity or right of redemption and the Debtor waives and releases any right to
require the Secured Party to collect the Obligations or any part thereof, from a
source or security other than the Collateral, under any theory of marshalling of
assets or otherwise;
(xv) do any and all other things and to take any and all other action,
in the name and on behalf of the Debtor, which the Secured Party may deem in its
sole discretion necessary or advisable to carry out the intent of this Security
Agreement and the Credit Agreement, including, without limitation, the grant of
the liens and security interests created hereby and the perfection, continuation
and protection of the liens and security interests created hereby and the
exercise by the Secured Party of the rights created under this Security
Agreement; and
(xvi) do all acts and things permitted by applicable Governmental
Rules which the Secured Party, in its sole discretion, deems necessary or
advisable to fulfill or cause the fulfillment of the Debtor's obligations
hereunder and under the Credit Agreement and the other Loan Documents.
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Any requirement of any applicable Governmental Rule as to reasonable
notification of the time and place of any public sale, or of the time after
which any private sale or other intended disposition of the Collateral is to be
made, shall be met by giving the Debtor at least ten days' prior written notice
of the time and place of any such public sale or the time after which any such
private sale or any other intended disposition is to be made. Any notice sent
by the Secured Party pursuant to this Section 4 may at the Secured Party's sole
option be sent on the Debtor's stationery, in which case the Debtor shall co-
sign such notice with the Secured Party.
5. Power of Attorney. The Debtor hereby makes, constitutes and appoints
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the Secured Party and any of its officers, directors, employees and authorized
agents the true and lawful agent and attorney-in-fact of the Debtor, with full
power of substitution, to take any and all of the actions described in Section 4
hereof. The Debtor agrees that neither the Secured Party nor any of its agents,
designees or attorneys-in-fact will be liable for any acts of commission or
omission, or for any error of judgment or mistake of fact or law in respect to
the exercise of the power of attorney granted under this section, except that
the Secured Party shall be liable for the acts of commission or omission of the
Secured Party, its agents, designees and attorneys-in-fact that amount to (and,
if contested or disputed by the Secured Party, are determined, by agreement or
settlement between the Secured Party and the Debtor, or by a final judgment
(including all appeals thereof) of a court or courts of competent jurisdiction,
to be or constitute) gross negligence or willful misconduct. The power of
attorney granted under this section is coupled with an interest and shall be
irrevocable until all Obligations secured hereby are paid in full and until the
Revolving Credit Commitment is terminated.
6. Maintenance of Properties; Insurance.
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(i) Maintenance of Properties. If the Debtor fails to comply with the
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provisions of Section 5.8 of the Credit Agreement relating to maintenance of its
properties, the Secured Party may, but shall not be obligated to, pay the cost
of any repairs to or maintenance of the Equipment and Fixtures, and may, but
shall not be obligated to, pay any taxes, levies or impositions relative to the
Collateral, for the account of the Debtor and add the amounts of all of the
foregoing to the Obligations.
(ii) Insurance. If the Debtor fails to effect and keep in force
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insurance covering the Collateral as required by Section 5.7 of the Credit
Agreement or fails to pay any of the premiums thereon when due, the Secured
Party may, but shall not be obligated to, do so for the account of the Debtor
and add the cost thereof to the Obligations. The Debtor hereby assigns and sets
over to the Secured Party all monies which may become payable on account of all
insurance covering the Collateral, including without limitation any return of
unearned premiums which may be due upon cancellation of any such insurance. The
Secured Party, its officers, directors, employees and authorized agents, are
hereby irrevocably appointed the attorneys-in-fact of the Debtor to endorse any
draft or check that may be payable to the Debtor
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in order to collect the proceeds of such insurance or any return of unearned
premiums. So long as any Obligations remain outstanding or the Revolving Credit
Commitment remains in effect, any such proceeds or returns of unearned premiums
shall be applied by the Secured Party to the payment of the Obligations at the
Secured Party's discretion. Any balance of insurance proceeds remaining in the
possession of the Secured Party after payment in full of the Obligations shall
be paid to the Debtor or its order as the Debtor shall instruct the Secured
Party in writing.
7. Application of Proceeds. The Secured Party shall apply the proceeds
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of any sale of or other disposition or realization upon the Collateral after the
occurrence of an Event of Default as follows:
(i) First, to the payment or reimbursement of all reasonable advances,
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expenses and disbursements of the Secured Party (including, without limitation,
the fees and disbursements of its counsel and agents) incurred in connection
with the administration and enforcement of, or the preservation of any of the
Secured Party's rights and security interests in and under the Credit Agreement,
this Security Agreement or any other Loan Document or the acquisition,
completion, protection, removal, storage, sale or delivery of the Collateral;
(ii) Second, to the repayment of the Obligations, whether for
------
principal, interest or expenses, as the Secured Party, in its sole discretion,
shall determine; and
(iii) Third, any balance to be distributed as required by law.
-----
In no event shall the Secured Party be liable to the Debtor for
interest on any surplus. If the proceeds of any such sale of or other
disposition or realization upon the Collateral are insufficient to pay the
Obligations, then the Debtor shall remain liable for such deficiency.
8. Preservation of Collateral. The Debtor assumes full responsibility
--------------------------
for taking any and all steps to preserve the Collateral. The Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of such of the Collateral as may be in the Secured Party's
possession if the Secured Party takes such action for that purpose as the Debtor
shall request in writing, provided that such requested action shall not, in the
--------
judgment of the Secured Party, be commercially unreasonable or impair the
Secured Party's security interest in such Collateral, or its rights in or the
value of such Collateral, and provided further that such written request is
----------------
received by the Secured Party in sufficient time to permit the Secured Party to
take the requested action.
9. Obligations Regarding Collateral Unaffected. This Security Agreement
-------------------------------------------
is executed only as security for the Obligations hereby secured and, therefore,
the execution and delivery of this Security Agreement shall not subject the
Secured Party, or transfer or pass to the Secured Party, or in any way affect or
modify, the liability of the Debtor under any or all of the Collateral; it being
understood and agreed that notwithstanding this Security Agreement
-12-
or any subsequent Security Agreement, all of the duties and liabilities of the
Debtor to each and every other party under each and every item of the Collateral
shall be and remain enforceable by such other party, its successors and assigns,
against, but only against, the Debtor or the Debtor's successors and assigns
other than the Secured Party or the Secured Party's representatives, successors
and assigns.
10. Defeasance. Upon the full discharge and satisfaction of the
----------
Obligations and the termination of the Revolving Credit Commitment, all rights
herein assigned to the Secured Party shall terminate, and all estate, right,
title and interest of the Secured Party in and to each and every one of the
items of Collateral shall revert to the Debtor. The Secured Party shall file
all requisite termination statements and do all such other acts as are
reasonably required of it to evidence the termination of the security interest
granted hereby.
11. Defined Terms. All capitalized terms used herein as defined terms
-------------
which are not defined herein but which are defined in the Credit Agreement shall
have the same meanings herein as are given them in the Credit Agreement.
12. Secured Party's Ability to Deal with Security. The Secured Party may
---------------------------------------------
have or in the future may hold other security and/or guaranties to secure all or
any part of the Obligations, but it is specifically understood and agreed by the
Debtor that neither the execution and delivery of this Security Agreement nor
the holding of any other security and/or guaranty shall at any time or in any
respect operate to prevent or hinder the Secured Party from resorting first to
such other security and/or guaranty or first to the Collateral, or first from
time to time to all or any of the foregoing. In addition, the Secured Party may
from time to time as it sees fit, in its sole and uncontrolled discretion,
resort to all or any part of the Collateral, without resorting to all or any
other security and/or guaranty securing the Obligations, or to all or any part
of any other security and/or guaranty securing the Obligations, without
resorting to all or any part of the Collateral, and such action on the part of
the Secured Party shall not in any respect be considered as a waiver of any of
the benefits or rights of the Secured Party relating to the Collateral or such
other security and/or guaranties.
13. Amendments and Waivers. The Secured Party and the Debtor may from
----------------------
time to time enter into amendments, extensions, supplements and replacements to
and of this Security Agreement, and the Secured Party may from time to time
waive compliance with a provision hereof. No amendment, extension, supplement,
replacement or waiver shall be effective unless it is in writing and is signed
by the Secured Party and the Debtor. All waivers shall be effective only for
the specific instance and for the specific purpose for which it is given.
14. Exercise of Remedies; Remedies Cumulative. No delay on the part of
-----------------------------------------
the Secured Party or failure by the Secured Party to exercise any power, right
or remedy under this Security Agreement shall operate as a waiver hereof, nor
shall any single or partial exercise of any power, right or remedy or any
abandonment or discontinuance of steps to
-13-
enforce such right, power or remedy preclude other or further exercises thereof,
or the exercise of any other power, right or remedy. The rights and remedies in
this Security Agreement are cumulative and not exclusive of any rights or
remedies (including, without limitation, the right of specific performance)
which the Secured Party would otherwise have.
15. Taxes. The Debtor shall pay to the Secured Party on demand any and
-----
all stamp, document, transfer or recording taxes, filing fees and similar
impositions payable or hereafter reasonably determined by the Secured Party to
be payable in connection with this Security Agreement and any other documents,
instruments and transactions pursuant to or in connection with any of the Loan
Documents. The Debtor agrees to save the Secured Party harmless from and
against any and all present and future claims or liabilities with respect to, or
resulting from, any delay in paying or failure to pay any such taxes or similar
impositions. The obligations of the Debtor pursuant to this Section 15 shall
survive the termination of this Security Agreement and the repayment of the
Obligations, and shall be part of the Obligations.
16. Expenses. The Debtor shall pay to the Secured Party on demand all
--------
reasonable expenses incurred by the Secured Party from time to time, including
but not limited to reasonable attorneys' fees and expenses, incurred in
protecting the Collateral and the Secured Party's rights therein and in
enforcing the rights and remedies of the Secured Party hereunder, together with
interest thereon calculated at the Default Rate if any such amount is not paid
upon demand. The obligations of the Debtor pursuant to this Section 16 shall
survive the termination of this Security Agreement and the repayment of the
Obligations, and shall be part of the Obligations secured hereby.
17. Notices. All notices required to be delivered pursuant to this
-------
Security Agreement shall be in writing and shall be sent to the parties hereto
in accordance with Section 9.4 of the Credit Agreement.
18. Successors and Assigns. This Security Agreement shall be binding upon
----------------------
the Debtor and the Secured Party and their respective successors and assigns,
and shall inure to the benefit of the Debtor, the Secured Party and their
respective successors and assigns; provided, however, that the Debtor shall not
-------- -------
assign its rights or duties hereunder or under any of the other Loan Documents
without the prior written consent of the Secured Party.
19. Severability. Any provision of this Security Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or enforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
20. Survival. All representations, warranties, covenants and agreements
--------
of the Debtor contained herein or in the other Loan Documents or made in writing
in connection herewith shall survive the issuance of the Note and shall continue
in full force and effect so long as the Debtor may borrow under the Credit
Agreement and so long thereafter until payment in full of the Note and the
Obligations is made.
-14-
21. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA,
WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, EXCEPTING
APPLICABLE FEDERAL LAW AND EXCEPT ONLY TO THE EXTENT PRECLUDED BY THE MANDATORY
APPLICATION OF THE LAW OF ANOTHER JURISDICTION.
22. FORUM. THE PARTIES HERETO AGREE THAT ANY ACTION OR PROCEEDING ARISING
-----
OUT OF OR RELATING TO THIS SECURITY AGREEMENT MAY BE COMMENCED IN THE COURT OF
COMMON PLEAS OF ALLEGHENY COUNTY, PENNSYLVANIA OR IN XXX XXXXXXXX XXXXX XX XXX
XXXXXX XXXXXX FOR THE WESTERN DISTRICT OF PENNSYLVANIA AND THE PARTIES HERETO
AGREE THAT A SUMMONS AND COMPLAINT COMMENCING AN ACTION OR PROCEEDING IN EITHER
OF SUCH COURTS SHALL BE PROPERLY SERVED AND SHALL CONFER PERSONAL JURISDICTION
IF SERVED PERSONALLY OR BY CERTIFIED MAIL TO THE PARTIES AT THEIR ADDRESSES
DESCRIBED IN SECTION 17, OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE
COMMONWEALTH OF PENNSYLVANIA. FURTHER, THE DEBTOR HEREBY SPECIFICALLY CONSENTS
TO THE PERSONAL JURISDICTION OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY,
PENNSYLVANIA AND THE DISTRICT COURT OF THE UNITED STATES FOR THE WESTERN
DISTRICT OF PENNSYLVANIA SITTING IN PITTSBURGH, PENNSYLVANIA AND WAIVES AND
HEREBY ACKNOWLEDGES THAT IT IS ESTOPPED FROM RAISING ANY OBJECTION BASED ON
FORUM NON CONVENIENS, ANY CLAIM THAT EITHER SUCH COURT LACKS PROPER VENUE OR ANY
----- --- ----------
CLAIM THAT EITHER SUCH COURT LACKS PERSONAL JURISDICTION OVER THE DEBTOR SO AS
TO PROHIBIT EITHER SUCH COURT FROM ADJUDICATING ANY ISSUES RAISED IN A COMPLAINT
FILED WITH EITHER SUCH COURT AGAINST THE DEBTOR BY THE SECURED PARTY CONCERNING
THIS SECURITY AGREEMENT OR PAYMENT TO THE SECURED PARTY. THE DEBTOR HEREBY
ACKNOWLEDGES AND AGREES THAT THE EXCLUSIVE CHOICE OF FORUM CONTAINED IN THIS
SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED
IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THE LOAN DOCUMENTS TO ENFORCE
THE SAME IN ANY APPROPRIATE JURISDICTION.
23. Construction. In this Security Agreement (except as otherwise
------------
expressly provided or unless the context otherwise requires), (i) the singular
shall include the plural, and vice-versa, (ii) the masculine and feminine
genders shall include the neuter gender, and vice-versa, (iii) the words
"hereof", "herein" and "hereunder" and words of similar import shall refer to
this Security Agreement as a whole and not to any particular provision of this
Security Agreement and (iv) all references to particular Sections, items,
clauses, exhibits and
-15-
schedules are references to the Sections, items, clauses, exhibits and schedules
of and to this Security Agreement.
24. Integration. This Security Agreement is the entire agreement between
-----------
the parties relating to this security transaction and it supersedes all prior
understandings and agreements, whether written or oral, between the parties
hereto relating to the transactions provided for herein.
25. Headings. Section headings used in this Security Agreement are
--------
intended for convenience only and shall not affect the meaning or construction
of this Security Agreement.
26. Counterparts. This Security Agreement and any amendment hereto may be
------------
executed in several counterparts and by each party on a separate counterpart,
each of which, when so executed and delivered, shall be an original, but all of
which together shall constitute but one and the same instrument. In proving
this Security Agreement or any amendment hereto, it shall not be necessary to
produce or account for more than one such counterpart signed by the other party
against whom enforcement is sought.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-16-
27. WAIVER OF JURY TRIAL. IN ORDER TO EXPEDITE THE RESOLUTION OF ANY
--------------------
DISPUTES WHICH MAY ARISE UNDER THIS SECURITY AGREEMENT, AND IN LIGHT OF THE
COMPLEXITY OF THE TRANSACTIONS CONTEMPLATED UNDER THIS SECURITY AGREEMENT, THE
PARTIES HERETO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF
ANY KIND OR NATURE IN ANY COURT TO WHICH THEY MAY BOTH BE PARTIES, WHETHER
ARISING OUT OF, UNDER OR BY REASON OF THIS SECURITY AGREEMENT OR OTHER
TRANSACTION BETWEEN THEM OF ANY KIND OR NATURE, AND BOTH PARTIES ACKNOWLEDGE
THAT SUCH WAIVER HAS BEEN SPECIFICALLY NEGOTIATED AS PART OF THIS SECURITY
AGREEMENT.
IN WITNESS WHEREOF, the parties hereto, with the intent to be legally
bound hereby, have caused this Security Agreement and Collateral Assignment to
be executed by their respective duly authorized officers as of the date first
written above.
UNIVERSAL STAINLESS & ALLOY
PRODUCTS, INC.
/s/ Xxxxxxx X. Xxxxxxx
By_____________________________________
Xxxxxxx X. Xxxxxxx
Name:__________________________________
CFO/Treasurer
Title:_________________________________
PNC BANK, NATIONAL ASSOCIATION
/s/ Xxxx X. Xxxxxxxxxx
By_____________________________________
Xxxx X. Xxxxxxxxxx
Name:__________________________________
Vice President
Title:_________________________________
BF 78057.4 1/28/98
000011 016855
-00-
XXXXXXXXXXXXXXX
XXXXXXXXXXXX XX XXXXXXXXXXXX )
) SS:
COUNTY OF ALLEGHENY )
On this the 30th day of January, 1998, before me, a Notary Public,
personally appeared Xxxxxxx X. Xxxxxxx, who acknowledged himself to be the
CFO/Treasurer of UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC., a Delaware
corporation, and that he as such CFO/Treasurer, being authorized to do so,
executed the foregoing Security Agreement and Collateral Assignment for the
purposes therein contained by signing the name of the corporation by himself as
such CFO/Treasurer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal the day
and year first above written.
/s/ Xxxxxx X. Xxxxx
---------------------------------------
Notary Public
My Commission Expires: September 10, 2001
BF 78057.4 1/28/98
000011 016855
-18-
Schedule 1
1. Debtor's chief executive office:
000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
2. Debtor's other places of business:
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
3. Locations of Debtor's Inventory:
a) 000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
b) International Titanium Corp.
Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
c) Tygart Steel Co.
X.X. Xxx 000
XxXxxxxxxx, XX 00000
d) Copperweld Steel Co.
0000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
e) Armco Stainless & Alloy Products
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
f) Rome Metals
X.X. Xxx 000
Xxxxxxxxx, XX 00000
g) DME Xx.
Xxxxx Xxxxxx Xxx.
Xxxxxxxxx, XX 00000
-19-
h) T. Xxxxx Xxxxxxxx
X.X. Xxx 000
Xxxx Xxxxxxxxx, XX 00000
i) Grand Valley Manufacturing Co.
000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
j) J&J Forge Co.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
k) Ionics, Inc.
X.X. Xxx 00
Xxxxxxxxxxx, XX 00000
l) Xxxxxx Steel Company
11625 Rosslyn
Xxxxxxx, Xxxxx 00000
4. Locations of Debtor's Equipment, Fixtures and Goods:
000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
BF 78057.4 1/28/98
000011 016855
-20-
