Exhibit 4.22
SECURITY AGREEMENT
This SECURITY AGREEMENT (as amended, supplemented, amended and restated or
otherwise modified from time to time, this "Security Agreement"), dated as of
May 22, 2002, is made by XXXXX X. XXXXXXXXX COMPANY, a Delaware corporation (the
"Issuer Grantor"), each domestic Restricted Subsidiary (as defined in the
Indenture referred to below) of the Issuer Grantor, a signatory hereto, and each
other Person which may from time to time hereafter become a party hereto
pursuant to Section 7.4 (each, individually, an "Additional Subsidiary Grantor",
and collectively, the "Additional Subsidiary Grantors", and together with each
such domestic Restricted Subsidiary, each individually, a "Subsidiary Grantor",
and collectively, the "Subsidiary Grantors", and together with the Issuer
Grantor, each individually, a "Grantor", and collectively, the "Grantors") in
favor of The Bank of New York, as trustee (together with any successor(s)
thereto in such capacity, the "Trustee") under the Indenture (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to an indenture, dated as of the date hereof (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Indenture"), between the Issuer Grantor and the Trustee whereby the
Issuer Grantor is issuing to the Noteholders (as defined below) the aggregate
principal amount of $250,000,000 9 3/4% Senior Secured Notes (the "Notes");
WHEREAS, as a condition precedent to the Noteholders purchasing the Notes
to be issued under the Indenture, each Grantor is required to execute and
deliver this Security Agreement;
WHEREAS, each Grantor has duly authorized the execution, delivery and
performance of this Security Agreement; and
WHEREAS, it is in the best interests of each Grantor to execute this
Security Agreement inasmuch as such Grantor will derive substantial direct and
indirect benefits from the proceeds of the Notes made available to the Issuer
Grantor by the Noteholders pursuant to their purchase of the Notes issued under
the Indenture.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the
Noteholders to purchase the Notes issued under the Indenture, each Grantor
agrees, for the benefit of each Secured Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Terms. The following terms when used in this Security
Agreement, including its preamble and recitals, shall have the following
meanings (such definitions to be equally applicable to the singular and plural
forms thereof):
"Additional Subsidiary Grantor" and "Additional Subsidiary Grantors"
are defined in the preamble.
"Administrative Agent" means the administrative agent under the Term
Loan Agreement.
"Collateral" is defined in Section 2.1.
"Collateral Account" is defined in Section 4.3.
"Domestic Restricted Subsidiary" means any Restricted Subsidiary
organized or formed in any state of the United States or the District of
Columbia.
"Equipment" is defined in clause (a) of Section 2.1.
"Grantor" and "Grantors" are defined in the preamble.
"Indenture" is defined in the first recital.
"Issuer Grantor" is defined in the preamble.
"Material Adverse Effect" means (a) a material adverse effect on the
business, assets, debt service capacity, tax position, liabilities (including
environmental liabilities), financial condition or operations or prospects of
the Issuer Grantor and the Subsidiary Grantors, taken as a whole, (b) a material
adverse effect upon the ability of the Issuer Grantor or any other Grantor to
perform its respective material obligations under the Note Documents to which it
is or will be a party or (c) an impairment of the validity or enforceability of,
or a material impairment of the rights, remedies or benefits available to the
Trustee or the Secured Parties under this Security Agreement or any other Note
Document.
"Mobile Assets" means trucks, trailers, and other motor vehicles,
together with in each case all parts, instruments, accessories and other
Equipment installed in or attached thereto.
"Note Documents" means the Indenture, the Purchase Agreement, the
Notes, the Registration Rights Agreement, the Security Documents, the
Intercreditor Agreement and each other agreement, document or instrument
delivered in connection with the transactions contemplated under the Indenture
or any other Note Document whether or not specifically mentioned herein or
therein.
"Noteholder" means the Person in whose name a Note is registered on the
Registrar's books and each of its successors, transferees or assigns.
"Notes" is defined in the first recital.
"Secured Obligations" is defined in Section 2.2.
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"Secured Party" and "Secured Parties" mean the Trustee, the Noteholders
and each of their respective successors, transferees or assigns.
"Security Agreement" is defined in the preamble.
"Subsidiary Grantor" and "Subsidiary Grantors" are defined in the
preamble.
"Taking" has the meaning assigned to that term in the Mortgage.
"Term Loan Agreement" means the Term Loan Agreement dated as of March
24, 1998 among the Issuer Grantor, the various financial institutions party
thereto and Fleet National Bank, as administrative agent.
"Trustee" is defined in the preamble.
"Trustee Noteholder Request" means a request made by the Trustee to a
Grantor at the direction of Noteholders of not less than 25% in aggregate
principal amount of the then outstanding Notes.
"U.C.C." means the Uniform Commercial Code, as in effect from time to
time in the State of New York.
SECTION 1.2 Indenture Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Security Agreement, including
its preamble and recitals, have the meanings provided in the Indenture.
SECTION 1.3 U.C.C. Definitions. Unless otherwise defined herein or in
the Indenture or the context otherwise requires, terms for which meanings are
provided in the U.C.C. are used in this Security Agreement, including its
preamble and recitals, with such meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1 Grant of Security. Each Grantor hereby assigns and pledges
to the Trustee for its benefit and the ratable benefit of each of the Secured
Parties, and hereby grants to the Trustee for its benefit and the ratable
benefit of each of the Secured Parties, a security interest in all of its right,
title and interest in and to the following, whether now owned or hereafter
acquired by such Grantor (the "Collateral"):
(a) all equipment, machinery, apparatus or tools in all forms
of such Grantor, including:
(i) all plate processing, cutting, tube honing, burning,
sawing, shearing, grinding, polishing, hot-rolling, and
cold-finishing equipment;
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(ii) all bar, tubing and pipe, plate, sheet and other metal product
finishing equipment;
(iii) all lighting and power equipment;
(iv) all heating, ventilating, sprinkling, water, power and
communications equipment;
(v) all cleaning equipment;
(vi) all lift, elevator and escalator equipment;
(vii) all electrical equipment; and
(viii) all computer and other electronic data processing hardware,
integrated computer systems, central processing units, memory
units, display terminals, printers, features, computer
elements, card readers, tape drives, hard and soft disk drives,
cables, electrical supply hardware, generators, power
equalizers, accessories and all peripheral devices and other
related computer hardware; and all firmware associated with all
of the foregoing in this clause 2.1(a), wherever located,
together with all parts thereof and all accessions, additions,
attachments, improvements, substitutions and replacements
thereto and therefor and all accessories related thereto, and
any of the foregoing which shall constitute fixtures under
applicable law (any and all of the foregoing being the
"Equipment");
(b) all Mobile Assets of such Grantor;
(c) all general intangibles (excluding intellectual property)
relating to the Equipment and the Mobile Assets;
(d) the Collateral Account and all funds held therein and all
certificates and instruments, if any, from time to time representing or
evidencing the Collateral Account;
(e) all investments, if any, from time to time held in the
Collateral Account; all certificates and instruments, if any, from time to time
representing or evidencing such investments; all securities, instruments,
financial assets, investment property, interest and earnings held in or credited
to the Collateral Account; all security entitlements with respect to the
Collateral Account; and all proceeds in respect of any and all of the foregoing;
(f) all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, evidencing, embodying,
incorporating or referring to, any of the foregoing in this Section 2.1; and
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(g) all rents, profits, returns, income and proceeds of and from
any and all of the foregoing Collateral (including proceeds which constitute
property of the types described in clauses (a), (b), (c), (d), (e) and (f),
proceeds deposited from time to time in the Collateral Account of any Grantor,
and, to the extent not otherwise included, all payments under insurance (whether
or not the Trustee is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral).
Notwithstanding the foregoing, "Collateral" shall not include (x) any
general intangibles or other rights arising under any contracts, instruments,
licenses or other documents as to which the grant of a security interest would
constitute a violation of a valid and enforceable restriction in favor of a
third party on such grant, after giving effect to Sections 9-406 through 9-409
of the U.C.C. to the extent applicable, unless and until any required consents
shall have been obtained, which required consents, each Grantor agrees to use
its best efforts in obtaining and (y) any inventory (including raw materials,
work-in-process, supplies and finished goods), accounts receivable (including
sellers' rights relating thereto, all contracts and contract rights relating
thereto and all books and records relating thereto), all collection accounts,
deposit accounts and other bank accounts relating to collection of the
foregoing, together with the proceeds and products of all of the foregoing,
which secures or is purported to secure obligations under the Revolver Credit
Agreement.
SECTION 2.2 Security for Obligations. This Security Agreement secures the
payment of all Obligations of the Issuer Grantor now or hereafter existing under
the Indenture, the Notes and each other Note Document to which the Issuer
Grantor is or may become a party, whether for principal, interest, costs, fees,
expenses or otherwise, and all obligations of each other Grantor and each other
Obligor now or hereafter existing under this Security Agreement and each other
Note Document to which such other Grantor or such other Obligor is or may become
a party (all such obligations of the Issuer Grantor, such other Grantor and such
other Obligor collectively referred to herein as the "Secured Obligations").
SECTION 2.3 Continuing Security Interest; Transfer of Notes. This Security
Agreement shall create a continuing security interest in the Collateral and
shall
(a) remain in full force and effect until payment in full in cash
of all Secured Obligations,
(b) be binding upon each Grantor, its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the Trustee
hereunder, to the benefit of the Trustee and each other Secured Party.
Without limiting the generality of the foregoing clause (c), any Noteholder
may assign or otherwise transfer (in whole or in part) any Note held by it to
any other Person or entity, and such other Person or entity shall thereupon
become vested with all the
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rights and benefits in respect thereof granted to such Noteholder under any Note
Document (including this Security Agreement) or otherwise, subject, however, to
any contrary provisions in such assignment or transfer, and to the provisions of
the Indenture. Upon the payment in full in cash of all Secured Obligations, the
security interest granted herein shall terminate and all rights to the
Collateral shall revert to such Grantor. Upon any such termination, the Trustee
will, at such Grantor's sole expense, execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.
Upon any sale or other transfer of Collateral permitted by the terms of Section
413 of the Indenture, the security interest created hereunder in such Collateral
(but not in the proceeds thereof) shall be deemed to be automatically released
and the Trustee will, at such Grantor's sole expense, execute and deliver to
such Grantor such documents as such Grantor shall reasonably request to evidence
such release.
SECTION 2.4 Grantors Remain Liable. Anything herein to the contrary
notwithstanding
(a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein, and shall
perform all of its duties and obligations under such contracts and agreements to
the same extent as if this Security Agreement had not been executed,
(b) the exercise by the Trustee of any of its rights hereunder
shall not release any Grantor from any of its duties or obligations under any
such contracts or agreements included in the Collateral, and
(c) neither the Trustee nor any other Secured Party shall have any
obligation or liability under any such contracts or agreements included in the
Collateral by reason of this Security Agreement, nor shall the Trustee or any
other Secured Party be obligated to perform any of the obligations or duties of
any Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION 2.5 Security Interest Absolute. All rights of the Trustee and the
security interests granted to the Trustee hereunder, and all obligations of each
Grantor hereunder, shall be absolute and unconditional, irrespective of
(a) any lack of validity or enforceability of the Indenture, any
Note or any other Note Document;
(b) the failure of any Secured Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Issuer Grantor, any other Obligor or any
other Person under the provisions of the Indenture, any Note,
any other Note Document or otherwise, or
(ii) to exercise any right or remedy against any other guarantor
of, or collateral securing any Secured Obligations;
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(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations or any other extension,
compromise or renewal of any Secured Obligations;
(d) any reduction, limitation, impairment or termination of any
Secured Obligations for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to (and each
Grantor hereby waives any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality, nongenuineness, irregularity, compromise, unenforceability of, or
any other event or occurrence affecting, any Secured Obligations or otherwise;
(e) any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of the terms of the Indenture, any Note or
any other Note Document;
(f) any addition, exchange, release, surrender or non-perfection of
any collateral (including the Collateral), or any amendment to or waiver or
release of or addition to or consent to departure from any guaranty, for any of
the Secured Obligations; or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Issuer Grantor,
any other Obligor, or any surety or any guarantor.
SECTION 2.6 Postponement of Subrogation, etc. Each Grantor hereby agrees
that it will not exercise any rights which it may acquire by reason of any
payment made hereunder, whether by way of subrogation, reimbursement or
otherwise, until the prior payment in full in cash of all Secured Obligations.
Any amount paid to any Grantor on account of any payment made hereunder prior to
the payment in full in cash of all Secured Obligations shall be held in trust
for the benefit of the Secured Parties and each holder of a Note and shall
immediately be paid to the Secured Parties and each holder of a Note and
credited and applied against the Secured Obligations, whether matured or
unmatured, in accordance with the terms of the Indenture; provided, however,
that if
(a) such Grantor has made payment to the Secured Parties and each
holder of a Note of all or any part of the Secured Obligations, and
(b) all Secured Obligations have been paid in full in cash,
each Secured Party and each holder of a Note agrees that, at such Grantor's
request, the Trustee, on behalf of itself and the Noteholders, will execute and
deliver to such Grantor appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
such Grantor of an interest in the Secured Obligations resulting from such
payment by such Grantor. In furtherance of the foregoing, for so long as any
Secured Obligations remain outstanding, such Grantor shall refrain from taking
any action or commencing any proceeding against the Issuer Grantor or any other
Obligor (or its successors or assigns, whether in connection with a
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bankruptcy proceeding or otherwise) to recover any amounts in respect of
payments made under this Security Agreement to any Secured Party or any holder
of a Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Grantor represents and warrants to each Secured Party as set forth
in this Article.
SECTION 3.1 Location of Collateral, etc. All of such Grantor's
Equipment and Collateral Accounts of such Grantor are located at the places
specified in Item A and Item B of Schedule I hereto. None of the Equipment has,
within the four months preceding the date of this Security Agreement, been
located at any place other than the places specified in Item A or C of Schedule
I hereto except as set forth in a footnote thereto. The place(s) of business and
chief executive office of such Grantor and the office(s) where such Grantor
keeps its records concerning the general intangibles relating to the Equipment,
are located at the addresses set forth in Item C of Schedule I hereto. Such
Grantor has no trade names other than those set forth in Item D of Schedule I
hereto. During the four months preceding the date hereof, such Grantor has not
been known by any legal name different from the one set forth on the signature
page hereto, nor has such Grantor been the subject of any merger or other
corporate reorganization, except as set forth in Item E of Schedule I hereto.
All Mobile Assets of such Grantor operate out of the locations specified in Item
F of Schedule I hereto.
SECTION 3.2 Ownership, No Liens, etc. Such Grantor owns its Collateral
free and clear of any Lien, security interest, charge or encumbrance except for
the security interest created by this Security Agreement and except as permitted
by the Indenture. No effective financing statement or other instrument similar
in effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed (i) in favor of the Administrative
Agent in connection with the Term Loan Agreement and the related security
agreement referred to in the Indenture (which Liens will be terminated upon the
repayment of the indebtedness under the Term Loan Agreement with the proceeds of
the issuance of the Notes); (ii) in favor of the Trustee relating to this
Security Agreement or (iii) as have been filed in connection with Liens
permitted pursuant to Section 411 of the Indenture.
SECTION 3.3 Possession and Control. Such Grantor has exclusive
possession and control of its Equipment and Mobile Assets.
SECTION 3.4 Validity, etc. This Security Agreement creates
(a) a valid first-priority security interest in the Collateral
(other than Mobile Assets), securing the payment of the Secured Obligations, all
filings and other actions necessary or desirable to perfect and protect such
security interest have been duly taken; and
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(b) a valid security interest in each Mobile Asset securing the
payment of the Secured Obligations and upon the recordation or notation of the
lien of the Trustee on the certificate of title in respect of such Mobile Asset,
such security interest will be a valid, first-priority, perfected security
interest.
SECTION 3.5 Authorization, Approval, etc. Except as have been obtained or
made and are in full force and effect, no authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required either
(a) for the grant by such Grantor of the security interest granted
hereby or for the execution, delivery and performance of this Security Agreement
by such Grantor, or
(b) for the perfection of or the exercise by the Trustee of its
rights and remedies hereunder.
SECTION 3.6 Compliance with Laws. Such Grantor is in compliance with the
requirements of all applicable laws (including the provisions of the Fair Labor
Standards Act), rules, regulations and orders of every governmental authority,
the non-compliance with which would be reasonably expected to have a Material
Adverse Effect or which might materially adversely affect the value of the
Collateral or the worth of the Collateral as collateral security.
ARTICLE IV
COVENANTS
SECTION 4.1 General. Each Grantor covenants and agrees that, so long as any
portion of the Secured Obligations shall remain unpaid, such Grantor will
perform, comply with and be bound by the obligations set forth in this Article.
SECTION 4.2 As to Equipment and Mobile Assets. Such Grantor hereby agrees
that it shall
(a) keep all the Equipment at and operate all Mobile Assets out of
the places therefor specified in Section 3.1 or, upon 30 days' prior written
notice to the Trustee, at such other places in a jurisdiction where all
representations and warranties set forth in Article III (including Section 3.4
shall be true and correct, and all action required pursuant to the first
sentence of Section 4.7 shall have been taken with respect to the Equipment;
(b) cause the Equipment and Mobile Assets to be maintained and
preserved in the same condition, repair and working order as of the date of this
Security Agreement, ordinary wear and tear excepted, and in accordance with any
manufacturer's manual; and forthwith, or in the case of any loss or damage to
any of the Equipment or Mobile Assets, as quickly as practicable after the
occurrence thereof, make or cause to be made all repairs, renewals,
replacements, and other improvements so that its business
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carried on in connection therewith may be properly conducted at all times unless
the Issuer Grantor determines in good faith that the continued maintenance of
any of such properties is no longer economically desirable; and promptly furnish
to the Trustee a statement respecting any loss or damage in excess of $250,000
to any of the Equipment or Mobile Assets; and
(c) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Equipment and the Mobile
Assets, except to the extent the validity thereof is being contested in good
faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP have been set aside.
SECTION 4.3 As to the Collateral Account. (a) Promptly upon receipt, or
notice of any pending receipt, of any Collateral Proceeds in respect of an Asset
Disposition (or related Asset Disposition) of at least $5,000,000 to the extent
provided in Section 413 of the Indenture, any Insurance Proceeds in excess of
$1,000,000 or any Net Awards in excess of $1,000,000 by any Grantor, (i) such
Grantor will establish (if not already established on or prior to the date of
such Grantor's receipt of any such Collateral Proceeds, Insurance Proceeds or
Net Awards) a deposit account with The Bank of New York, acting as Trustee, that
will be maintained pursuant to any agreement that the Trustee may reasonably
request, (its "Collateral Account" and, together with the Collateral Account of
each other Grantor, the "Collateral Account")) and such Grantor shall not
commingle any Collateral Proceeds, Insurance Proceeds and Net Awards, and shall
hold separate and apart from all other property, all such Collateral Proceeds,
Insurance Proceeds and Net Awards in express trust for the benefit of the
Trustee until delivery thereof is made to the Trustee; and (ii) such Grantor
will ensure that no funds, other than Collateral Proceeds, Insurance Proceeds
and Net Awards, will be paid to its Collateral Account. The Trustee shall
maintain the Collateral Account until amounts due to all Secured Parties have
been paid in full in cash to such Secured Parties.
(b) The Trustee shall apply such amount of proceeds as soon as
practicable after receipt as follows:
(i) if a Default has occurred or an Event of Default has occurred
and is continuing, and the Secured Obligations have been
accelerated, pursuant to and in accordance with Section 906 of
the Indenture;
(ii) if no Default shall have occurred or no Event of Default shall
have occurred or be continuing, (A) any Trust Moneys
constituting Insurance Proceeds or Net Awards may be withdrawn
by such Grantor pursuant to clause (c) hereof to be applied to
effect a Restoration or clause (d) hereof to make an investment
in property; or (B) in accordance with Section 413 of the
Indenture governing Asset Dispositions, any Trust Moneys
constituting Collateral Proceeds, may be withdrawn by such
Grantor pursuant to clause (d) hereof.
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(c) To the extent that any Trust Moneys consist of either
Insurance Proceeds or Net Awards received by the Trustee and such Insurance
Proceeds or Net Awards may be applied by any Grantor to effect a Restoration of
the affected Collateral, and such Grantor shall provide the Trustee with prompt
written notice describing the nature and extent of damage or destruction. Such
Grantor shall have 30 days to provide its initial estimate of the cost of
Restoration or the nature and extent of the Taking which may result and the
Insurance Proceeds or Net Awards may be withdrawn by such Grantor and shall be
paid by the Trustee, upon receipt by the Trustee of the following:
(i) Officers' Certificate. An Officers' Certificate of such
Grantor, dated not more than 30 days prior to the date of the
application for the withdrawal and payment of such Trust
Money stating that (A) expenditures have been made, or costs
incurred, by such Grantor in a specified amount to make
certain repairs, rebuildings and replacements of the
Collateral, which shall be briefly described, and stating the
fair market value thereof at the date of the expenditure or
incurrence thereof by such Grantor; (B) there is no
outstanding Indebtedness other than costs for which payment
is being requested, for the purchase price or construction of
such repairs, rebuildings or replacements, or for labor,
wages, materials or supplies in connection with the making
thereof, which, if unpaid, might become the basis of a
vendor's, mechanic's, laborer's, materialman's statutory or
other similar Lien upon any Collateral; (C) no Default under
the Note Documents shall have occurred or Event of Default
under the Note Documents shall have occurred and be
continuing; and (D) all conditions precedent provided for
herein and in the Note Documents (if any) relating to such
withdrawal and payment have been complied with;
(ii) Opinion of Counsel. An Opinion of Counsel substantially
stating that (A) all conditions precedent provided for herein
and in the Note Documents (if any) relating to such
withdrawal and payment have been complied with; and (B) the
Trustee has a valid and perfected Lien on such repairs,
rebuildings and replacements, that the same and every part
thereof are subject to no Liens prior to the Lien of the Note
Documents, except Permitted Liens;
(iii) Architect's or Engineer's Certificate. An independent
architect's, engineer's or appraiser's certificate stating
that (A) the Collateral is capable of Restoration, prior to
the scheduled maturity of the Indenture, to substantially the
same condition as existed immediately prior to the casualty
or Taking; (B) the aggregate estimated direct and indirect
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costs of such Restoration; (C) the estimated time for
completion of such Restoration (which time shall not exceed
eighteen months from the date of the damage, destruction or
Taking); and (D) as to any Taking, that the property taken in
such Taking, or sold under threat thereof, is not necessary
to such Grantor's customary use or occupancy of such
Collateral;
(iv) Deposit of Excess Amount. In the event that the estimated
cost of Restoration as set forth in the architect's,
engineer's or appraiser's certificate (and such revisions to
such estimate as are from time to time made) exceeds the
aggregate amount of net Insurance Proceeds or Net Awards
actually received from time to time in respect thereof, such
Grantor shall deposit the amount of such excess with the
Trustee;
(v) Final Request Documentation. If such request is the final
request for any payment, in addition to the documentation
required by subclauses (i), (ii) and (iii) above, such
request shall be accompanied by (A) a legal opinion or a
title insurance policy which the Trustee shall be fully
protected in relying upon, binder or endorsement confirming
that there has not been filed with respect to all or any part
of the applicable Collateral any Lien which is not either
discharged of record or bonded and which could have priority
over the Lien of the applicable Mortgage and (B) an Officers'
Certificate stating that all occupancy certificates,
operating and other permits, licenses, waivers, other
documents, or any combination of the foregoing required by
law in connection with or as a result of such Restoration
have been obtained;
provided, however, that compliance by such Grantor of the provisions set forth
in clauses (c)(ii) through (c)(v) above shall only be required if the estimated
cost of such Restoration exceeds $2,000,000 or such Restoration cannot be
completed within one year from the date of damage, destruction or Taking.
Upon compliance with the foregoing provisions of this Section 4.3(c),
the Trustee shall, to the extent received by it and deposited in the applicable
Collateral Account, not fewer than five nor more than twelve Business Days,
after the receipt of a written request of the applicable Grantor, pay to such
Grantor an amount of Trust Moneys and excess amounts deposited, of the character
aforesaid equal to the amount of the expenditures or costs stated in the
Officers' Certificate required by clause (i) of this Section 4.3(c), or the fair
value as determined by such Grantor and set forth in the Officers' Certificate,
as the case may be, of such repairs, rebuildings and replacements covered by
such Officers' Certificate, whichever is less. All Insurance Proceeds or Net
Awards not used for
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Restoration as set forth in this Section 4.3(c), or to make investments in
property, as set forth in Section 4.3(d), shall be applied to the repayment or
prepayment of the Notes as set forth in the Indenture.
(d) To the extent Trust Moneys consist of Collateral Proceeds,
Insurance Proceeds or Net Awards and any Grantor intends to use such funds to
acquire additional property, buildings, fixtures, equipment and other items as
provided in the Indenture, within 365 days from date of receipt of such
Collateral Proceeds, Insurance Proceeds or Net Awards into the Collateral
Account, such Trust Moneys shall be paid by the Trustee to such Grantor;
provided, however, that the Trustee shall have previously received and shall be
fully protected in relying upon the following:
(i) Notice. A notice which shall (A) refer to this Section
4.3(d), (B) contain all documents referred to below, (C)
describe with particularity the Collateral Proceeds,
Insurance Proceeds or Net Awards and the Asset Disposition,
casualty or Taking from which such Collateral Proceeds,
Insurance Proceeds or Net Awards were received, and (D)
describe with particularity the investment to be made with
respect to the released Collateral Proceeds, Insurance
Proceeds or Net Awards;
(ii) Officers' Certificate. An Officers' Certificate certifying
that (A) the release of the Collateral Proceeds, Insurance
Proceeds or Net Awards complies with the terms and conditions
of the Indenture, (B) there is no Default in effect or Event
of Default in effect or continuing on the date thereof under
the Indenture, (C) the release of the Collateral Proceeds,
Insurance Proceeds or Net Awards will not result in a Default
or Event of Default under the Indenture, (D) the parties
executing any and all documents required under this Section
4.3(d) were duly authorized to do so, and (E) all conditions
precedent and covenants provided for in the Indenture (if
any) relating to such release and application of the
Collateral Proceeds, Insurance Proceeds or Net Awards have
been complied with;
(iii) Real Property Investment. If the Collateral Proceeds,
Insurance Proceeds or Net Awards are to be invested in real
property: (A) an Officers' Certificate attaching a Mortgage
or other instrument or instruments and certifying that such
Mortgage or other instrument or instruments are in recordable
form sufficient to grant to the Trustee for the benefit of
the Secured Parties (1) substantially the same rights and
remedies in respect of such real property as granted thereto
under the Mortgages executed and delivered on the date hereof
and (2) a valid first priority
13
mortgage Lien on such real property subject to no Liens other
than Permitted Liens and, if the Issuer Grantor acquired
another Person that has real property leasehold interests
using Collateral Proceeds, Insurance Proceeds or Net Awards,
a valid first-priority mortgage Lien, subject to Permitted
Liens, on any real property leasehold of such Person in the
name of the Trustee; (B) for any acquired property an
Officers' Certificate attaching a policy of title insurance
(or a paid commitment to issue title insurance) and
certifying that such policy of title insurance (or a paid
commitment to issue title insurance) insures that the Lien of
the instruments delivered pursuant to clause (A) above
constitutes a valid and perfected first priority mortgage
Lien on such real property in an aggregate amount equal to
the lesser of the fair market value of the real property and
the then outstanding principal amount of the Secured
Obligations and further certifying that any specific
exceptions to such title insurance are Permitted Liens,
together with such endorsements and other opinions of the
type included in the title insurance policy or otherwise
delivered to the Trustee on the date hereof; (C) in the event
such real property has a fair market value, as determined by
such Grantor and as set forth in an Officers' Certificate, in
excess of $2,000,000, a survey with respect thereto; (D) an
Officers' Certificate stating that such Grantor has caused
there to be conducted by a reputable expert a review and
analysis of the environmental conditions relating to such
real property and that, in the reasonable and good faith
judgment of the issuer thereof such real property does not
contain any conditions which would cause a prudent
institutional lender to decline to fund loans secured by such
real property, together with a copy of the written report of
such expert; and (E) such further documents, opinions,
certificates or instruments as are customarily provided to
institutional mortgage lenders;
(iv) Personal Property Investment. If the released Collateral
Proceeds , Insurance Proceeds or Net Awards are not invested
in real property:
(A) an Officers' Certificate attaching an instrument and
financing statements or other instruments and
certifying that such instruments and financing
statements or other instruments are sufficient to grant
to the Trustee, for the benefit of the Secured Parties
(1) substantially the same rights and remedies in
respect of such personal property
14
interest as granted thereto under the Security Documents
executed and delivered on the date hereof and (2) a valid
first priority Lien on such personal property interest
subject to no Liens other than Permitted Liens;
(B) an Officers' Certificate attaching a closing statement
indicating payments made or to be made by the applicable
Grantor and certifying that such closing statement sets
forth all filing fees, recording charges, transfer taxes
and other costs and expenses, including reasonable legal
fees and disbursements of counsel for the Trustee (and any
local counsel), that have been incurred or may be incurred
to validly and effectively subject such personal property
to the Lien of any Security Document.
(e) If, prior to the receipt by the Trustee of Insurance Proceeds
or Net Awards, the Collateral shall have been sold on foreclosure, the Trustee
will be paid, to the extent permitted by applicable law, such Insurance Proceeds
or Net Awards to the extent of any deficiency found to be due upon such sale,
with legal interest thereon, whether or not a deficiency judgment shall have
been sought or recovered or denied, and the reasonable attorneys' fees, costs
and disbursements incurred by the Trustee in connection with the collection of
such Net Award or Insurance Proceeds.
(f) Trust Moneys shall be invested in Cash Equivalents as requested
by the applicable Grantor and approved by the Trustee, and all interest thereon
shall be applied as provided in this Section 4.3.
SECTION 4.4 As to Collateral.Until the occurrence and continuance of a
Default of the nature set forth in Section 901(d) or (e) of the Indenture or an
Event of Default, and such time as the Trustee shall notify such Grantor of the
revocation of such power and authority each Grantor will, at its own expense,
endeavor to collect, as and when due, all amounts due with respect to any of the
Collateral, including the taking of such action with respect to such collection
as the Trustee may reasonably request following the occurrence of a Default of
the nature set forth in Section 901(d) or (e) of the Indenture or an Event of
Default or, in the absence of such request, as such Grantor may deem advisable,
and may grant, in the ordinary course of business (except as otherwise permitted
under the Indenture), to any party obligated on any of the Collateral, any
rebate, refund or allowance to which such party may be lawfully entitled, and
may accept, in connection therewith, the return of goods, the sale or lease of
which shall have given rise to such Collateral. The Trustee, however, may, at
any time following a Default of the nature set forth in Section 901(d) or (e) of
the Indenture or an Event of Default, whether before or after any revocation of
such power and authority or the maturity of any of the Secured Obligations,
notify any parties obligated on any of the Collateral to make payment to the
Trustee of any amounts due or to become due thereunder and enforce collection of
any of the Collateral by suit or otherwise and surrender, release, or exchange
15
all or any part thereof, or compromise or extend or renew for any period
(whether or not longer than the original period) any indebtedness thereunder or
evidenced thereby. Upon request of the Trustee following a Default of the nature
set forth in Section 901(d) or (e) of the Indenture or an Event of Default, each
Grantor will, at its own expense, notify any parties obligated on any of the
Collateral to make payment to the Trustee of any amounts due or to become due
thereunder.
(b) The Trustee is authorized to endorse, in the name of such
Grantor, any item, howsoever received by the Trustee, representing any payment
on or other proceeds of any of the Collateral.
SECTION 4.5 Insurance.Each Grantor will maintain or cause to be maintained
with responsible insurance companies insurance with respect to its business and
properties (including the Equipment and Mobile Assets) against such casualties
and contingencies and of such types and in such amounts as is required pursuant
to the Indenture and will, not less frequently than annually, furnish to the
Trustee a certificate of a reputable insurance broker setting forth the nature
and extent of all insurance maintained by such Grantor in accordance with this
Section. Without limiting the foregoing, such Grantor further agrees as follows:
(a) Each policy for property insurance shall show the Trustee as
loss payee.
(b) Each policy for liability insurance shall show the Trustee as
an additional insured.
(c) Each insurance policy shall provide that at least 30 days'
prior written notice of cancellation or of lapse shall be given to the Trustee
by the insured.
(d) Such Grantor shall, if so requested by the Trustee, deliver to
the Trustee a copy of each insurance policy.
(e) All payments in respect of property insurance if required
pursuant to the terms of a Mortgage or any other Note Document to be delivered
to the Trustee shall be deposited to the Collateral Account (as provided in
Section 4.3), and if there shall be no Collateral Account shall be paid to such
Grantor.
SECTION 4.6 Transfers and Other Liens. Each Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by Section 413 of the
Indenture; or
(b) create or suffer to exist any Lien or other charge or
encumbrance upon or with respect to any of the Collateral to secure Indebtedness
of any Person or entity, except for the security interest created by this
Security Agreement and except as permitted by the Indenture.
16
SECTION 4.7 Further Assurances, etc. Each Grantor agrees that, from time to
time at its own expense, it will promptly prepare, execute and, if applicable,
deliver to the Trustee for its execution all further instruments and documents,
and, upon a Trustee Noteholder Request, will take all further action, that may
be necessary or desirable in order to perfect, preserve and protect any security
interest granted or purported to be granted hereby or to enable the Trustee to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, such Grantor will
(a) upon a Trustee Noteholder Request, xxxx conspicuously each of
its records pertaining to the Collateral with a legend indicating that such
document or Collateral is subject to the security interest granted hereby;
(b) upon a Trustee Noteholder Request, execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable in order to perfect and
preserve the security interests and other rights granted or purported to be
granted to the Trustee hereby; and
(c) upon a Trustee Noteholder Request, furnish to the Trustee, from
time to time, statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral, all in
reasonable detail; and
(d) if a Default of the nature described in Sections 901(a) and (b)
of the Indenture or an Event of Default shall occur, then each Grantor which (i)
owns any Mobile Assets or (ii) acquires any Mobile Assets following such Default
or Event of Default, shall, within 30 days of such Default or Event of Default
or upon such acquisition, as the case may be, take all steps that are necessary
or desirable to ensure that the security interest granted in favor of the
Trustee in such Mobile Assets will be a valid, first priority, perfected
security interest.
With respect to the foregoing and the grant of the security interest
hereunder, such Grantor hereby authorizes the Trustee to execute any such
financing or continuation statements, and amendments thereto, or other
instruments or notices delivered by the Grantor to the Trustee pursuant to this
Section 4.7; it being understood and agreed that the Trustee shall have no
duties pursuant to this Section 4.7 except to execute any such financing
statements or continuation statements or amendments thereto, or other
instruments or notices that have been delivered by the Grantor to the Trustee
for execution pursuant to this Section 4.7. A carbon, photographic or other
reproduction of this Security Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
ARTICLE V
THE TRUSTEE
SECTION 5.1 Trustee Appointed Attorney-in-Fact. Each Grantor hereby
irrevocably appoints the Trustee such Grantor's attorney-in-fact, with full
authority in the
17
place and stead of such Grantor and in the name of such Grantor or otherwise,
from time to time in the Trustee's discretion, following the occurrence and
continuation of a Default of the nature set forth in Section 901(d) or (e) of
the Indenture or an Event of Default, to take any action and to execute any
instrument which the Trustee may deem necessary or advisable to accomplish the
purposes of this Security Agreement, including:
(a) to ask, demand, collect, xxx for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a) above;
(c) to file any claims or take any action or institute any
proceedings which the Trustee may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of the Trustee with
respect to any of the Collateral; and
(d) to perform the affirmative obligations of such Grantor
hereunder (including all obligations of such Grantor pursuant to Section 4.7).
Such Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2 Trustee May Perform. If any Grantor fails to perform any
agreement contained herein, the Trustee may itself (but shall not be obligated
to) perform, or cause performance of, such agreement, and the expenses of the
Trustee incurred in connection therewith shall be payable by such Grantor
pursuant to Section 6.2.
SECTION 5.3 Trustee Has No Duty. In addition to, and not in limitation of,
Section 2.4, the powers conferred on the Trustee hereunder are solely to protect
its interest (on behalf of the Secured Parties) in the Collateral and shall not
impose any duty on it to exercise any such powers. Except for reasonable care of
any Collateral in its possession and the accounting for moneys actually received
by it hereunder, the Trustee shall have no duty as to any Collateral or as to
the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral.
SECTION 5.4 Reasonable Care. The Trustee is required to exercise reasonable
care in the custody and preservation of any of the Collateral in its possession;
provided, however, the Trustee shall be deemed to have exercised reasonable care
in the custody and preservation of any of the Collateral, if it takes such
action for that purpose as any Grantor reasonably requests in writing at times
other than upon the occurrence and during the continuance of any Event of
Default, but failure of the Trustee to comply with any such request at any time
shall not in itself be deemed a failure to exercise reasonable care.
18
ARTICLE VI
REMEDIES
SECTION 6.1 Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Trustee may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the
U.C.C. (whether or not the U.C.C. applies to the affected Collateral) and also
may
(i) require each Grantor to, and such Grantor hereby agrees that it
will, at its expense and upon request of the Trustee forthwith,
assemble all or part of the Collateral as directed by the
Trustee and make it available to the Trustee at a place to be
designated by the Trustee which is reasonably convenient to
both parties, and
(ii) without notice except as specified below, sell the Collateral
or any part thereof in one or more parcels at public or private
sale, at any of the Trustee's offices or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as
the Trustee may deem commercially reasonable. Each Grantor
agrees that, to the extent notice of sale shall be required by
law, at least ten days' prior notice to such Grantor of the
time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable
notification. The Trustee shall not be obligated to make any
sale of Collateral regardless of notice of sale having been
given. The Trustee may adjourn any public or private sale from
time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) All cash proceeds received by the Trustee in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Trustee, be held by the Trustee as
collateral for, and/or then or at any time thereafter applied (after payment of
any amounts payable to the Trustee pursuant to Section 6.2) in whole or in part
by the Trustee for the ratable benefit of the Secured Parties against, all or
any part of the Secured Obligations in such order as the Trustee shall elect.
Any surplus of such cash or cash proceeds held by the Trustee and remaining
after payment in full in cash of all the Secured Obligations shall be paid over
to the applicable Grantor or to whomsoever may be lawfully entitled to receive
such surplus.
19
SECTION 6.2 Indemnity and Expenses.
(a) Each Grantor jointly and severally agrees to indemnify the
Trustee from and against any and all claims, losses and liabilities arising out
of or resulting from this Security Agreement (including enforcement of this
Security Agreement), except claims, losses or liabilities resulting solely from
the Trustee's gross negligence or willful misconduct.
(b) Each Grantor will upon demand pay to the Trustee the amount of
any and all reasonable expenses, including the reasonable fees and disbursements
of its counsel and of any experts and agents, which the Trustee may incur in
connection with (i) the administration of this Security Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral, and (iii) the exercise or
enforcement of any of the rights of the Trustee or the Secured Parties
hereunder, or (iv) the failure by any Grantor to perform or observe any of the
provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1 Note Document. This Security Agreement is a Note Document
executed pursuant to the Indenture and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Indenture.
SECTION 7.2 Amendments; etc. No amendment to or waiver of any provision of
this Security Agreement nor consent to any departure by any Grantor herefrom,
shall in any event be effective unless made or given in compliance with all the
terms and provisions of the Indenture, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 7.3 Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing or by facsimile addressed, delivered
or transmitted, if to the Issuer Grantor or the Trustee, to such party at its
address or facsimile number set forth in the Indenture and if to a Subsidiary
Grantor, addressed to it in care of the Issuer Grantor at the address or
facsimile number of the Issuer Grantor set forth in the Indenture and in each
case, to any other address or facsimile number given to the sender of any notice
or communication pursuant to the terms of this Section 7.3. Any notice, if
mailed and properly addressed with postage prepaid or if properly addressed and
sent by pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by facsimile, shall be deemed given when transmitted (and
electronic confirmation of receipt thereof has been received).
SECTION 7.4 Additional Grantors. Upon the execution and delivery by any
other Person of an instrument in the form of Annex I hereto, such Person shall
become a "Subsidiary Grantor" and a "Grantor" hereunder with the same force and
effect as if
20
originally named as a Subsidiary Grantor and a Grantor herein. The execution and
delivery of any such instrument shall not require the consent of any other
Grantor hereunder. The rights and obligations of each Grantor hereunder shall
remain in full force and effect notwithstanding the addition of any new Grantor
as a party to this Security Agreement.
SECTION 7.5 Section Captions. Section captions used in this Security
Agreement are for convenience of reference only, and shall not affect the
construction of this Security Agreement.
SECTION 7.6 Severability. Wherever possible each provision of this Security
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Security Agreement.
SECTION 7.7 Counterparts. This Security Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed an
original and all of which shall constitute together but one and the same
agreement.
SECTION 7.8 GOVERNING LAW, ENTIRE AGREEMENT, ETC. THIS SECURITY AGREEMENT
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. THIS SECURITY AGREEMENT AND THE OTHER NOTE DOCUMENTS
CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE
SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR
ORAL, WITH RESPECT THERETO.
SECTION 7.9 Other Matters Regarding the Trustee. No provision of this
Security Agreement shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder or to take or omit to take any action under this Security Agreement or
at the request, order or direction of the Noteholders or in the exercise of any
of its rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
or reasonably assured to it.
In no event shall the Trustee be liable for special, punitive, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profit), even if the Trustee has been advised of the likelihood of such
loss or damage and regardless of the form of action.
21
The Trustee shall not be responsible or liable for any failure or delay in
the performance of its obligations under this Security Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its reasonable
control, including without limitation, acts of God; earthquakes; fires; floods;
wars; civil or military disturbances; sabotage; epidemics; riots; terrorist
acts, interruptions, loss or malfunctions of utilities, computer (hardware or
software) or communications service; accidents; labor disputes; and acts of
civil or military authority or governmental actions.
SECTION 7.10 FORUM SELECTION; CONSENT TO JURISDICTION.ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS SECURITY AGREEMENT
OR ANY OTHER NOTE DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE TRUSTEE OR ANY GRANTOR
RELATING THERETO SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY (TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW) IN THE COURTS OF THE STATE OF NEW YORK, NEW YORK
COUNTY, OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE TRUSTEE'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY, AND OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH GRANTOR IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY
PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH GRANTOR HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT
THAT ANY GRANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF
ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, EACH GRANTOR HEREBY IRREVOCABLY WAIVES (TO
THE EXTENT PERMITTED UNDER APPLICABLE LAW) SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS SECURITY AGREEMENT AND THE OTHER NOTE DOCUMENTS.
SECTION 7.11 WAIVER OF TRIAL BY JURY.THE TRUSTEE AND EACH GRANTOR HEREBY
KNOWINGLY, VOLUNTARILY AND
22
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH,
THIS SECURITY AGREEMENT OR ANY OTHER NOTE DOCUMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE
TRUSTEE OR ANY GRANTOR RELATING THERETO. EACH GRANTOR ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE TRUSTEE AND THE NOTEHODLERS
ENTERING INTO THIS SECURITY AGREEMENT AND EACH SUCH OTHER NOTE DOCUMENT.
23
IN WITNESS WHEREOF, each Grantor has caused this Security Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
XXXXX X. XXXXXXXXX COMPANY
By __________________________________
Name:
Title:
THE BANK OF NEW YORK, as
Trustee
By _________________________________
Name:
Title:
24
SCHEDULE I to Security Agreement
Xxxxx X. Xxxxxxxxx Company
Item A. Location of Equipment
All of the equipment is located at the locations set forth on the
attached Schedule I.C
Item B. Location of Collateral Accounts
There are no collateral accounts.
Item C. Place(s) of Business and Chief Executive Office
The places of business and chief executive office are set forth on the
attached Schedule I.C
Item D. Trade Names
DOMESTIC:
EMJ
EMJ Company
Xxxxx X. Xxxxxxxxx Holding Company, Inc.
Xxxxx X. Xxxxxxxxx Company
Xxxxxxxxx Steel and Aluminum
Xxxxxxxxx Steel
FOREIGN:
Xxxxx X. Xxxxxxxxx (Canada), Inc.
Item E. Merger or Other Corporate Reorganization
There are no mergers or other corporate reorganizations.
Item F. Mobile Assets
All of the Mobile Assets are operated out of the locations listed on
Schedule I.C.
SCHEDULE I.C to Security Agreement
Xxxxx X. Xxxxxxxxx Company
Equipment Locations, Places of Business and Chief Executive Office
Corporate Office Address
(Orange County)
0000 Xxxx Xxxxx Xxxxxx
Xxxx, Xxxxxxxxxx 00000
Owned Properties
City Address
1. Boston 00 Xxxxx Xxxxxx
(Xxxxxxxxx Xxxxxx) Xxxxxxxxx, XX 00000
2. Charlotte 0000 Xxxxxxxxxxxx Xxxx.
(Xxxxxxxxxxx Xxxxxx) Xxxxxxxxx, XX 00000
3. Schaumburg 0000 Xxxxxxxx Xxxx.
(referred to as Chicago) Xxxxxxxxxx, XX 00000
(Xxxx County)
4. Twinsburg (referred to as 0000 Xxxxxxxxxx Xxxxxxx
Cleveland)
(Summit County) Xxxxxxxxx, XX 00000
5. Cleveland Plate 00000 Xxxxxxxx Xxxx
(Xxxxxxxx Xxxxxx) Xxxxxxxxx, XX 00000
6. Dallas Service Center/ 0000 X. Xxxxxxxx Xxxxxx
Xxxxxx Xxxxx Xxxxxx, XX 00000
(Dallas County)
7. Houston 0000 Xxxxxxx Xxxxx
(Xxxxxx Xxxxxx) Xxxxxxx, XX 00000
8. Lynwood 0000 Xxxxxx Xxxxxx Xxxx Xxxx.
(referred to as Los Angeles
Plate)
(Los Angeles County) Xxxxxxx, XX 00000
9. Lynwood 00000 Xxxxxxx Xx.
(xxxxxxxx to as Los Angeles)
(Los Angeles County) Xxxxxxx, XX 00000
10. Blaine 0000 000xx Xxxxxx X.X.
(referred to as Minneapolis) Xxxxxx, XX 00000
(Anoka County)
11. Phoenix 5445 X. Xxxxxxx St.
(Maricopa County) Xxxxxxx, XX 00000
(No Mortgage)
12. Tulsa 0000 X. Xxxx Xx.
(Xxxxx Xxxxxx) Xxxxx, XX 00000
13. Tulsa 0000 X. 00xx Xxxxxx
(Xxxxx Xxxxxx) Xxxxx, XX 00000
City Address
14. Plainfield 0000 Xxxxxxx Xxxx.
(Xxxxxxxxx Xxxxxx) Xxxxxxxxxx, XX 00000
2
LEASED PROPERTIES
CINCINNATI (Xxxxxxxx County)
000 Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
QUAD CITIES (Xxxxx County)
000 X. 00xx Xxxxxx
Xxxxxxxx, Xxxx 00000
DENVER (Xxxxx County)
0000 Xxxxxxx Xx.
Xxxxxx, XX 00000
FAIRLESS HILLS (Bucks County)
(referred to as Philly Sales/Credit Office)
000-000 Xxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
HAYWARD (Alameda County)
00000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
KANSAS CITY (Xxxxxxx County)
0000 X. Xxxxxxxxx Xxx.
Xxxxxx Xxxx, XX 00000
LITTLE ROCK (Pulaski County)
0000 Xxxxx Xxxxxxxx Xx.
Xxxxxx Xxxx, XX 00000
MEMPHIS (Shelby County)
0000 Xxxxxxx Xx.
Xxxxxxx, XX 00000
PHILADELPHIA (Bucks County)
00 Xxxxx Xxxx.
Xxxxxxxxx, XX 00000
PORTLAND (Multinomah County)
0000 X. Xxxxxx Xx.
Xxxxxxxx, XX 00000
SEATTLE (King County)
00000 00xx Xxxxxx Xx.
Xxxx, XX 00000
ST. LOUIS (St. Louis County)
0000 Xxxxx Xxxxx Xxxxx
Xxxxx Xxxx, XX 00000
ROSEVILLE (Macomb County)
College Industrial Park
Building H
00000 Xxxxx
Xxxxxxxxx, XX 00000
ROCKY HILL (Hartford County)
KALA Building
2189 Xxxxx Xxxxx Highway, Suite 14
Rocky Hill, CT
(Hartford Sales Office)
CHATTANOOGA (Xxxxxxxx County)
0000 Xxxx 00xx Xx
Xxxxxxxxxxx, XX 00000
ROCHESTER (Monroe County)
000 Xxxxx Xxxx
Xxxxxxxx, XX 00000
SALT LAKE CITY (Salt Lake County)
0000 Xxxx 000 Xxxxx
Xxxx Xxxx Xxxx, XX 00000
WRIGHTSVILLE (York County)
000 Xxxxxxx Xxxxx
0
Xxxxxxxxxxxx, XX 00000
HEADQUARTERS (Orange County)
0000 Xxxx Xxxxx Xxxxxx
Xxxx, XX 00000
3
ANNEX I
to Security Agreement
SUPPLEMENT TO SECURITY AGREEMENT
This SUPPLEMENT NO. ___, dated as of ___________ __, ____ (this
"Supplement"), to the Security Agreement, dated as of May 22, 2002 (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
"Security Agreement"), among the initial signatories thereto and each other
Person which from time to time thereafter became a party thereto pursuant to
Section 7.4 thereof (each, individually, a "Grantor", and, collectively, the
"Grantors"), in favor of The Bank of New York, as trustee (together with any
successor(s) thereto in such capacity, the "Trustee") under the Indenture (as
defined below), is made by the undersigned.
W I T N E S S E T H:
WHEREAS, pursuant to an indenture, dated as of May 22, 2002 (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
"Indenture"), between the Issuer Grantor (such and other capitalized terms being
used herein with the meanings provided, or incorporated by reference, in the
Security Agreement) and the Trustee whereby the Issuer Grantor is issuing to the
Noteholders (as defined below) the aggregate principal amount of $250,000,000
9 3/4% Senior Secured Notes (the "Notes");
WHEREAS, as a condition precedent to the Noteholders purchasing the Notes
to be issued under the Indenture, the undersigned is required to execute and
deliver this Supplement;
WHEREAS, the undersigned has duly authorized the execution, delivery and
performance of this Supplement and the Security Agreement;
WHEREAS, the Security Agreement provides that additional parties may become
Grantors under the Security Agreement by execution and delivery of an instrument
in the form of this Supplement;
WHEREAS, pursuant to the provisions of Section 7.4 of the Security
Agreement, the undersigned is becoming an Additional Subsidiary Grantor under
the Security Agreement;
WHEREAS, the undersigned is a Subsidiary of the Issuer Grantor; and
WHEREAS, the undersigned desires to become a Subsidiary Grantor and a
Grantor under the Security Agreement in order to induce the Secured Parties to
continue to hold the Notes issued under the Indenture as consideration therefor;
NOW, THEREFORE, the undersigned agrees, for the benefit of each Secured
Party, as follows:
SECTION 1. In accordance with the Security Agreement, the undersigned by
its signature below becomes a Subsidiary Grantor and a Grantor under the
Security Agreement with the same force and effect as if it were an original
signatory thereto as a Subsidiary Grantor and a Grantor and the undersigned
hereby
(a) agrees to all the terms and provisions of the Security Agreement
applicable to it as a Subsidiary Grantor and a Grantor thereunder;
(b) assigns and pledges to the Trustee for its benefit and the
ratable benefit of each of the Secured Parties, and grants to the Trustee for
its benefit and the ratable benefit of each of the Secured Parties, a security
interest in all of the following, whether now or hereafter existing or acquired
by the undersigned (its "Collateral"):
(i) all Equipment of the undersigned;
(ii) all Mobile Assets of the undersigned;
(iii) all general intangibles (excluding intellectual property)
relating to the Equipment and the Mobile Assets of the
undersigned;
(iv) all books, records, writings, data bases, information and other
property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the
foregoing in this clause (b); and
(v) all rents, profits, returns, income and proceeds of and from any
and all of the foregoing Collateral (including proceeds which
constitute property of the types described in subclauses (i)
through (iv) of this clause (b), proceeds deposited from time to
time in the Collateral Account, and, to the extent not otherwise
included, all payments under insurance (whether or not the
Trustee is the loss payee thereof), or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or otherwise
with respect to any of the foregoing Collateral);provided,
however, that notwithstanding the foregoing, "Collateral" shall
not include (x) any general intangibles or other rights arising
under any contracts, instruments, licenses or other documents as
to which the grant of a security interest would constitute a
violation of a valid and enforceable restriction in favor of a
Person (other than an Affiliate of a Grantor) on such grant,
unless and until any required consents shall have been obtained,
which required consents the undersigned agrees to use its best
efforts in obtaining and (y) any inventory (including raw
materials, work-in-process, supplies and finished goods),
accounts receivable
2
(including sellers' rights relating thereto, all contracts and
contract rights relating thereto and all books and records
relating thereto), all collection accounts, deposit accounts and
other bank accounts relating to collection of the foregoing,
together with the proceeds and products of all of the foregoing,
which secures or is purported to secure obligations under the
Revolver Credit Agreement;
(c) agrees that the Schedule attached hereto shall be deemed to be a
Schedule thereto; and
(d) represents and warrants that the representations and warranties
made by it as a Subsidiary Grantor and a Grantor thereunder are true and correct
on and as of the date hereof.
In furtherance of the foregoing, each reference to a "Grantor", "Subsidiary
Grantor" or "Additional Subsidiary Grantor" in the Security Agreement shall be
deemed to include the undersigned.
SECTION 2. The undersigned hereby represents and warrants that this
Supplement has been duly authorized, executed and delivered by the undersigned
and constitutes a legal, valid and binding obligation of the undersigned,
enforceable against it in accordance with its terms.
SECTION 3. Except as expressly supplemented hereby, the Security Agreement
shall remain in full force and effect in accordance with its terms.
SECTION 4. In the event any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired.
SECTION 5. Without limiting the provisions of the Indenture (or any other
Note Document, including the Security Agreement), the undersigned agrees to
reimburse the Trustee for its reasonable out-of-pocket expenses in connection
with this Supplement, including reasonable attorneys' fees and expenses of the
Trustee.
SECTION 6. THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THIS SUPPLEMENT, THE SECURITY
AGREEMENT AND THE OTHER NOTE DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG
THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND
SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 7. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS SUPPLEMENT OR ANY OTHER NOTE DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING,
3
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE TRUSTEE OR ANY GRANTOR
RELATING THERETO SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY (TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW) IN THE COURTS OF THE STATE OF NEW YORK, NEW YORK
COUNTY, OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE TRUSTEE'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY, AND OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH GRANTOR IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY
PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH GRANTOR HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT
THAT ANY GRANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF
ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, EACH GRANTOR HEREBY IRREVOCABLY WAIVES (TO
THE EXTENT PERMITTED UNDER APPLICABLE LAW) SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS SUPPLEMENT AND THE OTHER NOTE DOCUMENTS.
SECTION 8. THE TRUSTEE AND EACH GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH,
THIS SUPPLEMENT OR ANY OTHER NOTE DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE TRUSTEE OR ANY
GRANTOR RELATING THERETO. EACH GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE TRUSTEE AND THE NOTEHODLERS ENTERING
INTO THIS SUPPLEMENT AND EACH SUCH OTHER NOTE DOCUMENT.
4
SECTION 9. This Supplement hereby incorporates by reference the provisions
of the Security Agreement, which provisions are deemed to be a part hereof, and
this Supplement shall be deemed to be a part of the Security Agreement.
SECTION 10. This Supplement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of
which shall constitute together but one and the same agreement.
SECTION 11. The undersigned hereby acknowledges it has received a copy of
that certain Intercreditor Agreement dated as of May 22, 2002, between the
Trustee and the administrative agent under the Revolver Credit Agreement and
hereby agrees to the terms and provisions thereof.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
5
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
[NAME OF ADDITIONAL
SUBSIDIARY GRANTOR]
By:__________________________________
Name:
Title:
ACKNOWLEDGED AND ACCEPTED BY:
THE BANK OF NEW YORK,
as Trustee
By:____________________________
Name:
Title:
6
SCHEDULE I to Supplement No. __
Security Agreement
([NAME OF ADDITIONAL SUBSIDIARY GUARANTOR])
Item A. Location of Equipment
Description Location
1.
2.
3.
Item B. Location of Collateral Accounts
Contact Bank Name and Address Account Number Person
1.
2.
3.
Item C. Place(s) of Business and Chief Executive Office
Item D. Trade Names
Item E. Merger or Other Corporate Reorganization
Item F. Mobile Assets
