Exhibit (c)(4)
SECURITY AGREEMENT
DATED AS OF APRIL 18, 1997
AMONG
GTS DURATEK, INC.,
GENERAL TECHNICAL SERVICES, INC.,
GTS INSTRUMENT SERVICES, INCORPORATED,
AND
ANALYTICAL RESOURCES, INC.
AND
FIRST UNION NATIONAL BANK OF MARYLAND,
AS COLLATERAL AGENT
TABLE OF CONTENTS*
Page
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ARTICLE I
DEFINITIONS
Section 1.01 Definitions........................................................ 1
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01 Title to Collateral.............................................. 1
Section 2.02 Validity, Perfection and Priority of Security Interests.......... 2
Section 2.03 Insurance........................................................ 2
Section 2.04 Fair Labor Standards Act......................................... 2
ARTICLE III
SECURITY INTEREST
Section 3.01 Grant of Security Interests...................................... 2
Section 3.02 Continuing Liability of the Borrower; Right to Use Collateral.... 2
Section 3.03 Cash Proceeds Account............................................ 3
Section 3.04 Cash Collateral Account.......................................... 3
Section 3.05 XX Xxxx Collateral Account....................................... 4
Section 3.06 Investment of Funds in Collateral Accounts....................... 5
ARTICLE IV
COVENANTS
Section 4.01 Delivery of Perfection Certificate; Filing of Financing
Statements and Delivery of Search Reports........................ 6
Section 4.02 Change of Name, Identity or Structure; Locations of
Places of Business, Chief Executive Office and Collateral........ 6
Section 4.03 Further Assurances............................................... 6
Section 4.04 Collateral in Possession of Other Persons........................ 7
Section 4.05 Books and Records................................................ 7
Section 4.06 Delivery of Instruments.......................................... 7
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*The Table of Contents is not a part of this Security Agreement
Section 4.07 Modification of Assigned Agreements, Etc.............................. 7
Section 4.08 Equipment; Fixtures................................................... 8
Section 4.09 Disposition of Collateral............................................. 8
Section 4.10 Insurance............................................................. 8
Section 4.11 Information Regarding Collateral...................................... 9
Section 4.12 Covenants Regarding Patent and Trademark Collateral.................. 9
ARTICLE V
REMEDIES; RIGHTS UPON DEFAULT
Section 5.01 General Authority..................................................... 10
Section 5.02 Remedies upon Event of Default........................................ 11
Section 5.03 Limitation on Duty of the Collateral Agent in Respect of Collateral... 14
Section 5.04 Application of Proceeds............................................... 14
Section 5.05 Assigned Agreements................................................... 15
ARTICLE VI
MISCELLANEOUS
Section 6.01 Notices............................................................... 16
Section 6.02 No Waivers; Non-Exclusive Remedies.................................... 16
Section 6.03 Compensation and Expenses of the Collateral Agent; Indemnification.... 16
Section 6.04 Amendments and Waivers................................................ 18
Section 6.05 Successors and Assigns................................................ 18
Section 6.06 Limitation of Law; Severability....................................... 18
Section 6.07 Governing Law......................................................... 18
Section 6.08 Counterparts; Effectiveness........................................... 18
Section 6.09 Termination........................................................... 19
Section 6.10 Entire Agreement...................................................... 19
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Security Agreement Definitions Appendix
Schedule 4.01 - Schedule of Filings to Perfect Security Interests
Exhibit A - Perfection Certificate
Schedule 1 - Changes of Name, Identity or Corporate Structure; Unusual
Transactions
Schedule 6 - Lists of Patents, Trademarks and Copyrights
Schedule 7 - Assigned Agreements
Exhibit B - Form of Description of Collateral
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SECURITY AGREEMENT
This Security Agreement (as amended, supplemented or modified from
time to time, this "Agreement") is dated as of April 18, 1997 and is among GTS
DURATEK, INC., a Delaware corporation ("Duratek"), GENERAL TECHNICAL SERVICES,
INC., a Maryland corporation ("Technical"), GTS INSTRUMENT SERVICES,
INCORPORATED, a Maryland corporation ("Instrument"), and ANALYTICAL RESOURCES,
INC., a Pennsylvania corporation ("Analytical", and together with Duratek,
Technical, and Instrument, the "Assignors"), and FIRST UNION NATIONAL BANK OF
MARYLAND, a national banking association, as Collateral Agent (the "Collateral
Agent") for First Union National Bank of Maryland and First Union National Bank
of North Carolina.
The Borrower, the Banks and the Agents are parties to a Credit
Agreement dated as of April 18, 1997 (as the same may be amended, supplemented
or modified from time to time and including any agreement extending the maturity
of, refinancing or otherwise restructuring all or any portion of the obligations
of the Borrowers under such agreement or any successor agreement, the "Credit
Agreement"). To induce the Banks and the Agents to enter into the Credit
Agreement, and as a condition precedent to the Banks' and Agents' obligations
thereunder, the Assignors have agreed to grant a continuing security interest in
and to the Collateral to secure the Obligations. Accordingly, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS. All capitalized terms used in this
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Agreement or in any Appendix, Schedule or Exhibit hereto which are not otherwise
defined herein or therein shall have the meanings set forth in the Security
Agreement Definitions Appendix attached hereto, and which is incorporated herein
by reference in its entirety and is part of this Agreement to the same extent as
if it had been set forth in this Section 1.01 in full. Terms defined in the
Credit Agreement and not otherwise defined herein or in the Security Agreement
Definitions Appendix have, as used herein, the respective meanings provided for
therein.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Assignors represent and warrant that:
SECTION 2.01 TITLE TO COLLATERAL. Each Assignor has good and
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marketable title to all of the Collateral, free and clear of any Liens other
than Permitted Liens. Each Assignor has taken all actions necessary under the
UCC to perfect its interest in any Accounts and "chattel paper" (as defined in
the UCC) purchased or otherwise acquired by it, as against its assignors and
creditors of its assignors. Each Assignor has not performed any acts which might
prevent the Collateral Agent from enforcing any of the terms of this Agreement
or which would limit the
Collateral Agent in any such enforcement. Other than financing statements or
other similar or equivalent documents or instruments with respect to the
Security Interests and Permitted Liens, no financing statement, mortgage,
security agreement or similar or equivalent document or instrument covering all
or any part of the Collateral is on file or of record in any jurisdiction in
which such filing or recording would be effective to perfect a Lien on such
Collateral. No Collateral is in the possession of any Person (other than the
Assignor) asserting any claim thereto or security interest therein, except that
the Collateral Agent or its designee may have possession of Collateral as
contemplated hereby and by the Credit Agreement.
SECTION 2.02 VALIDITY, PERFECTION AND PRIORITY OF SECURITY INTERESTS.
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The Security Interests constitute valid security interests under the UCC
securing the Obligations. When UCC financing statements containing a description
of the Collateral in the form specified in Exhibit B hereto shall have been
filed in the offices specified in Schedule 4.01 hereto, the Security Interests
shall constitute perfected security interests in all right, title and interest
of the Assignors in the Collateral (except Inventory in transit) to the extent
that a security interest therein may be perfected by filing pursuant to the UCC,
prior to all other Liens and rights of others therein except for Permitted
Liens.
SECTION 2.03 INSURANCE. The Inventory and Equipment are insured in
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accordance with the requirements of the Credit Agreement.
SECTION 2.04 FAIR LABOR STANDARDS ACT. All Inventory has or will
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have been produced in compliance with the applicable requirements of the Fair
Labor Standards Act, as amended from time to time, or any successor statute, and
regulations promulgated thereunder.
ARTICLE III
SECURITY INTEREST
SECTION 3.01 GRANT OF SECURITY INTERESTS. In order to secure the full
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and punctual payment of the Obligations in accordance with the terms thereof,
and to secure the performance of all of the obligations of the Assignors
hereunder and the Borrowers under the Credit Agreement and the other Loan
Documents, each Assignor hereby grants to the Collateral Agent a continuing
security interest in and to all of the Collateral, whether now owned or existing
or hereafter acquired, created or arising, whether tangible or intangible, and
regardless of where located.
SECTION 3.02 CONTINUING LIABILITY OF THE BORROWER; RIGHT TO USE
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COLLATERAL. The Security Interests are granted as security only and shall not
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subject the Collateral Agent or the Banks to, or transfer or in any way affect
or modify, any obligation or liability of any Assignor with respect to any of
the Collateral or any transaction in connection therewith. So long as no Event
of Default shall have occurred and be continuing, each Assignor shall have the
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right to use its Collateral except to the extent otherwise provided herein with
respect to the Collateral Accounts.
SECTION 3.03 CASH PROCEEDS ACCOUNT.
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(a) Creation of Cash Proceeds Account. There is hereby established with
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the Collateral Agent a cash collateral account (the "Cash Proceeds Account") in
the name of "GTS DURATEK, INC. - FIRST UNION NATIONAL BANK OF MARYLAND" and
under the exclusive control of the Collateral Agent into which there shall be
deposited from time to time the cash proceeds of the Collateral required to be
delivered to the Collateral Agent pursuant to paragraph (b) of this Section or
any other provision of the Loan Documents. Any income received by the Collateral
Agent with respect to the balance from time to time standing to the credit of
the Cash Proceeds Account, including any interest, shall remain, or be
deposited, in the Cash Proceeds Account. All right, title and interest in and to
the cash amounts on deposit from time to time in the Cash Proceeds Account shall
vest in the Collateral Agent, shall constitute part of the Collateral and shall
not constitute payment of the Obligations until applied thereto as hereinafter
provided.
(b) Deposits to Cash Proceeds Account. The Assignors shall instruct all
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Account Debtors and other Persons obligated in respect of Accounts and other
Collateral to make all payments in respect of the Accounts or other Collateral
directly to a post office box which shall be in the name and under the control
of the Collateral Agent. All such payments made to the Collateral Agent shall be
deposited in the Cash Proceeds Account. In addition to the foregoing, each
Assignor agrees that if the proceeds of any Collateral (including the payments
made in respect of Accounts) shall be received by it, such Assignor shall as
promptly as possible deposit such proceeds to the Cash Proceeds Account. Until
so deposited, all such proceeds shall be held in trust by such Assignor for and
as the property of the Collateral Agent and shall not be commingled with any
other funds or property of such Assignor. The Assignors hereby irrevocably
authorize and empower the Collateral Agent, its officers, employees and
authorized agents to endorse and sign their names on all checks, drafts, money
orders or other media of payment so delivered, and such endorsements or
assignments shall, for all purposes, be deemed to have been made by the
Assignors prior to any endorsement or assignment thereof by the Collateral
Agent. The Collateral Agent may use any convenient or customary means for the
purpose of collecting such checks, drafts, money orders or other media of
payment.
(c) Withdrawals from Cash Proceeds Account. Collected funds on deposit in
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the Cash Proceeds Account shall be withdrawn by the Collateral Agent on the
Business Day following the day on which the Collateral Agent considers the funds
deposited therein to be collected funds and applied to repay the Obligations
which are then due and payable. Until an Event of Default shall occur, all
collected funds remaining on deposit in the Cash Proceeds Account after the
application required by the preceding sentence shall then be deposited in the
Operating Account.
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SECTION 3.04 CASH COLLATERAL ACCOUNT. All amounts required to be
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deposited by the Assignors as cash collateral pursuant to Section 5.04(b)(i)
hereof shall be deposited in a cash collateral account (the "Cash Collateral
Account") established and maintained by the Assignor at the offices of the
Collateral Agent or such other bank as the Assignor and the Collateral Agent may
agree, in the name and under the exclusive control of the Collateral Agent.
Forthwith upon such establishment, the Assignor shall notify the Collateral
Agent of the location, account name and account number of such account. Any
income received with respect to the balance from time to time standing to the
credit of the Cash Collateral Account, including any interest or capital gains
on Liquid Investments, shall remain, or be deposited, in the Cash Collateral
Account. All right, title and interest in and to the cash amounts on deposit
from time to time in the Cash Collateral Account together with any Liquid
Investments from time to time made pursuant to Section 3.06 shall vest in the
Collateral Agent, shall constitute part of the Collateral hereunder and shall
not constitute payment of the Obligations until applied thereto as hereinafter
provided. If and when any portion of the Performance Letter of Credit
Liabilities on which any deposit in the Cash Collateral Account was based (the
"Relevant Contingent Exposure") shall become fixed (a "Direct Exposure") as a
result of the payment by the issuer thereof of a draft presented under any
Performance Letter of Credit, the amount of such Direct Exposure (but not more
than the amount in the Cash Collateral Account at the time) shall be withdrawn
by the Collateral Agent from the Cash Collateral Account for application
pursuant to the Credit Agreement, and the Relevant Contingent Exposure shall
thereupon be reduced by such amount. If immediately available cash on deposit in
the Cash Collateral Account is not sufficient to make any distribution to the
Collateral Agent referred to in this Section 3.04, the Collateral Agent shall
cause to be liquidated as promptly as practicable such Liquid Investments in the
Cash Collateral Account designated by Duratek as required to obtain sufficient
cash to make such distribution and, notwithstanding any other provision of this
Section 3.04, such distribution shall not be made until such liquidation has
taken place. So long as no Event of Default shall have occurred and be
continuing, the funds in the Cash Collateral Account in excess of the Relevant
Contingent Exposure shall be paid to Duratek on demand.
SECTION 3.05 XX XXXX COLLATERAL ACCOUNT. There is hereby established
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with the Collateral Agent a cash collateral account (the "XX Xxxx Collateral
Account") in the name of "GTS DURATEK, INC. - FIRST UNION NATIONAL BANK OF
MARYLAND (XX XXXX COLLATERAL ACCOUNT)" and under the exclusive control of the
Collateral Agent into which there has been deposited the sum of $5,803,000 in
cash and/or marketable securities. In addition, all amounts required to be
deposited by the Assignors as cash collateral pursuant to Section [5.21] of the
Credit Agreement and Section 5.04(b)(ii) hereof shall be deposited in the XX
Xxxx Collateral Account. The Collateral Agent is hereby authorized to withdraw
amounts from the Money Manager Account, from time to time, and deposit such
funds into the XX Xxxx Collateral Account as may be necessary to maintain a
balance in the XX Xxxx Collateral Account equal to 38% of the amount of the
Tennessee Letter of Credit Liabilities. Any income received by the Collateral
Agent with respect to the balance from time to time standing to the credit of
the
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XX Xxxx Collateral Account, including any interest, or capital gains on Liquid
Investments, shall remain, or be deposited, in the XX Xxxx Collateral Account.
All right, title and interest in and to the cash amounts on deposit from time to
time in the XX Xxxx Collateral Account, together with any Liquid Investments
from time to time made pursuant to Section 3.06 shall vest in the Collateral
Agent, shall constitute part of the Collateral hereunder and shall not
constitute payment of the Obligations until applied thereto as hereinafter
provided. If and when any portion of the Tennessee Letter of Credit Liabilities
on which any deposit in the XX Xxxx Collateral Account was based (the "Relevant
Contingent Exposure") shall become fixed (a "Direct Exposure") as a result of
the payment by the issuer thereof of a draft presented under any Tennessee
Letter of Credit, the amount of such Direct Exposure (but not more than the
amount in the XX Xxxx Collateral Account at the time) shall be withdrawn by the
Collateral Agent from the XX Xxxx Collateral Account for application pursuant to
the Credit Agreement, and the Relevant Contingent Exposure shall thereupon be
reduced by such amount. If immediately available cash on deposit in the XX Xxxx
Collateral Account is not sufficient to make any distribution to the Collateral
Agent referred to in this Section 3.05, the Collateral Agent shall cause to be
liquidated as promptly as practicable such Liquid Investments in the XX Xxxx
Collateral Account designated by Duratek as required to obtain sufficient cash
to make such distribution and, notwithstanding any other provision of this
Section 3.05, such distribution shall not be made until such liquidation has
taken place. So long as no Event of Default shall have occurred and be
continuing, funds in the XX Xxxx Collateral Account in excess of an amount equal
to 38% of the Tennessee Letter of Credit Liabilities shall be paid to Duratek on
demand.
SECTION 3.06 INVESTMENT OF FUNDS IN COLLATERAL ACCOUNTS. Amounts on
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deposit in the Cash Collateral Account and the XX Xxxx Collateral Account shall
be invested and re-invested from time to time in such Liquid Investments as
Duratek shall determine, which Liquid Investments shall be held in the name and
be under the control of the Collateral Agent, provided that, if an Event of
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Default has occurred and is continuing, the Collateral Agent may liquidate any
such Liquid Investments and apply or cause to be applied the proceeds thereof in
the manner specified in Section 5.04. For this purpose, "Liquid Investments"
means Cash Equivalents; provided that (i) each Liquid Investment shall mature
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within 180 days after it is acquired by the Collateral Agent and (ii) in order
to provide the Collateral Agent with a perfected security interest therein, each
Liquid Investment shall be either:
(i) evidenced by negotiable certificates or instruments, or if
non-negotiable then issued in the name of the Collateral Agent, which
(together with any appropriate instruments of transfer) are delivered to,
and held by, the Collateral Agent or an agent thereof (which shall not be
any Assignor or any of its Affiliates) in the State of Maryland; or
(ii) in book-entry form and issued by the United States and
subject to pledge under applicable state law and Treasury regulations and
as to which (in the
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opinion of counsel to the Collateral Agent) appropriate measures shall have
been taken for perfection of the Security Interests.
ARTICLE IV
COVENANTS
The Assignors covenant and agree with the Collateral Agent that until
the payment in full of all Obligations and until there is no Commitment to make
further advances, incur obligations or otherwise give value, the Assignors will
comply with the following:
SECTION 4.01 DELIVERY OF PERFECTION CERTIFICATE; FILING OF FINANCING
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STATEMENTS AND DELIVERY OF SEARCH REPORTS. On or prior to the Effective Date,
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each Assignor shall deliver a Perfection Certificate to the Collateral Agent and
shall cause all filings, recordings, notices and other actions specified in
Schedule 4.01 hereto to have been completed, except that the Assignors shall
have (i) until the expiration of 3 Business Days following the Effective Date to
cause the filing specified on Schedule 4.01 with the United States Patent and
Trademark Office to be completed, and (ii) until the expiration of 5 Business
Days following the Effective Date to cause the UCC filings designated by an
asterisk on Schedule 4.01 to be completed. The information set forth in the
Perfection Certificate shall be correct and complete. Not later than 60 days
following the Closing Date, each Assignor shall furnish to the Collateral Agent
file search reports and confirmations of receipt of notices from each filing
jurisdiction and each notice recipient set forth in Schedule 4.01 confirming the
filing information set forth in such Schedule.
SECTION 4.02 CHANGE OF NAME, IDENTITY OR STRUCTURE; LOCATIONS OF
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PLACES OF BUSINESS, CHIEF EXECUTIVE OFFICE AND COLLATERAL. No Assignor will
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change its name, identity or corporate structure in any manner unless it shall
have given the Collateral Agent not less than 30 days' prior notice thereof. No
Assignor will change the location of (i) its place or places of business, its
chief executive office or its chief place of business or (ii) the locations
where it keeps or holds any Collateral or any records relating thereto from the
applicable location described in such Assignor's Perfection Certificate unless
it shall have given the Collateral Agent not less than 30 days' prior notice
thereof. In any event, no Assignor will change the location of its place or
places of business, its chief executive office or any Collateral if such change
would cause the Security Interests in such Collateral to lapse or cease to be
perfected.
SECTION 4.03 FURTHER ASSURANCES. Each Assignor will, from time to
------------------
time, at its expense, execute, deliver, file and record any statement,
assignment, instrument, document, agreement or other paper and take any other
action (including, without limitation, any filings of financing or continuation
statements under the UCC, any filings with the United States Patent and
Trademark Office, and any Notices of Assignment under the Assignment of Claims
Act) that from time to time may be necessary or desirable, or that the
Collateral Agent may request, in order to create, preserve, perfect, confirm or
validate the Security Interests or to enable the
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Collateral Agent to obtain the full benefit of this Agreement, or to enable the
Collateral Agent to exercise and enforce any of its rights, powers and remedies
created hereunder or under applicable law with respect to any of the Collateral.
To the extent permitted by applicable law, each Assignor hereby authorizes the
Collateral Agent to execute and file financing statements or continuation
statements without such Assignor's signature appearing thereon. Each Assignor
agrees that a carbon, photographic, photostatic or other reproduction of this
Agreement or of a financing statement is sufficient as a financing statement.
The Assignors shall pay the costs of, or incidental to, any recording or filing
of any financing or continuation statements concerning the Collateral.
SECTION 4.04 COLLATERAL IN POSSESSION OF OTHER PERSONS. If any
-----------------------------------------
Collateral is at any time in the possession or control of any warehouseman,
bailee or any Assignor's agents or processors, such Assignor shall notify such
warehouseman, bailee, agent or processor of the Security Interests created
hereby and to hold all such Collateral for the Collateral Agent's account
subject to the Collateral Agent's instructions. Such Assignor agrees that if any
warehouse receipt or receipt in the nature of a warehouse receipt is issued with
respect to any of its Inventory, such warehouse receipt or other receipt in the
nature thereof shall not be "negotiable" (as such term is defined in Section 7-
104 of the Uniform Commercial Code in any relevant jurisdiction or under other
relevant law).
SECTION 4.05 BOOKS AND RECORDS. The Assignors shall keep full and
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accurate books and records relating to the Collateral, including, without
limitation, the originals of all documentation with respect thereto, records of
all payments received, all credits granted thereon, all merchandise returned and
all other dealings therewith, and the Assignors will make the same available to
the Collateral Agent for inspection, at the Assignors' own cost and expense, at
any and all reasonable times upon demand. Upon direction by the Collateral
Agent, the Assignors shall stamp or otherwise xxxx such books and records in
such manner as the Collateral Agent may reasonably require in order to reflect
the Security Interests.
SECTION 4.06 DELIVERY OF INSTRUMENTS. The Assignors will immediately
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deliver each Instrument, certificated security and uncertificated security to
the Collateral Agent indorsed (as applicable) to the Collateral Agent; provided
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that so long as no Event of Default shall have occurred and be continuing and
except as provided by any other Loan Document, the Assignors may retain for
collection in the ordinary course of business any Instruments (other than
certificated securities, checks, drafts and other Instruments constituting
payments in respect of Accounts and other Collateral, as to which the provisions
of Section 2.08(c) of the Credit Agreement and Section 3.03 hereof shall apply)
received by them in the ordinary course of business and the Collateral Agent
shall, promptly upon request of any Assignor, make appropriate arrangements for
making any other Instrument pledged by such Assignor available to it for
purposes of presentation, collection or renewal (any such arrangement to be
effected, to the extent deemed appropriate to the Collateral Agent, against
trust receipt or like document).
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SECTION 4.07 MODIFICATION OF ASSIGNED AGREEMENTS, ETC. Each Assignor
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shall keep the Collateral Agent informed of all material circumstances bearing
upon the right, title and interest of such Assignor under the Assigned
Agreements. No Assignor will, except with the consent of the Collateral Agent
amend, modify, extend, renew, cancel or terminate any Assigned Agreement, waive
any default under or breach of any Assigned Agreement, compromise or settle any
material dispute, claim, suit or legal proceeding relating to any Assigned
Agreement, sell or assign any Assigned Agreement or interest therein, consent to
or permit or accept any prepayment of amounts to become due under or in
connection with any Assigned Agreement, except as expressly provided therein, or
take any other action in connection with any Assigned Agreement which would
impair the value of the interests or rights of such Assignor thereunder or which
would impair the interests or rights of the Collateral Agent under this
Agreement, except that, unless the Collateral Agent shall have notified such
Assignor upon the occurrence of a Default or Event of Default that this
exception is no longer applicable, such Assignor may modify, make adjustments
with respect to, extend or renew any Assigned Agreements in the ordinary course
of business. The Assignor will duly fulfill all of its obligations under or in
connection with the Assigned Agreements unless the failure to do so would not
have a Material Adverse Effect.
SECTION 4.08 EQUIPMENT; FIXTURES. The Assignors shall promptly
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inform the Collateral Agent of any material additions to or deletions from the
Equipment and shall not permit any such items to become a fixture to real estate
or an accession to other personal property.
SECTION 4.09 DISPOSITION OF COLLATERAL. Without the prior written
-------------------------
consent of the Collateral Agent, the Assignors will not sell, lease, exchange,
assign or otherwise dispose of, or grant any option with respect to, any
Collateral, except that, subject to the rights of the Collateral Agent hereunder
if an Event of Default shall have occurred and be continuing, the Assignors may
grant Licenses in their respective Patents and Trademarks in the ordinary course
of their businesses, and the Assignors may sell, lease or exchange Inventory and
obsolete, unused or unnecessary Equipment in the ordinary course of business,
whereupon, in the case of such a sale or exchange, the Security Interests
created hereby in such item (but not in any Proceeds arising from such sale or
exchange) shall cease immediately without any further action on the part of the
Collateral Agent.
SECTION 4.10 INSURANCE. Prior to the Closing Date, each Assignor
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will cause the Collateral Agent to be named as an insured party and loss payee
on each insurance policy covering risks relating to any of its Inventory and
Equipment. Each Assignor will deliver to the Collateral Agent, upon its request,
the insurance policies for such insurance or certificates of insurance
evidencing such coverage. Each such insurance policy shall include effective
waivers by the insurer of all claims for insurance premiums against the
Collateral Agent, provide for coverage to the Collateral Agent regardless of the
breach by such Assignor of any warranty or
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representation made therein, not be subject to co-insurance, provide that all
insurance proceeds in excess of $250,000 per claim shall be payable to such
Assignor and the Collateral Agent and provide that no cancellation, termination
or material modification thereof shall be effective until at least 30 days after
receipt by the Collateral Agent of notice thereof. So long as no Event of
Default has occurred and is continuing, the Collateral Agent shall deliver the
proceeds of any claims in the Collateral Agent's possession to the Assignor.
Each Assignor hereby appoints the Collateral Agent as its attorney-in-fact to
make proof of loss, claim for insurance and adjustments with insurers, and to
execute or endorse all documents, checks or drafts in connection with payments
made as a result of any insurance policies, but the Collateral Agent agrees not
to exercise any of the foregoing rights unless an Event of Default shall have
occurred and be continuing. Each Assignor assumes all liability and
responsibility in connection with the Collateral acquired by it and the
liability of such Assignor to pay the Obligations shall in no way be affected or
diminished by reason of the fact that such Collateral may be lost, destroyed,
stolen, damaged or for any reason whatsoever unavailable to such Assignor.
SECTION 4.11 INFORMATION REGARDING COLLATERAL. The Assignors will,
--------------------------------
promptly upon request, provide to the Collateral Agent all information and
evidence it may reasonably request concerning the Collateral to enable the
Collateral Agent to enforce the provisions of this Agreement.
SECTION 4.12 COVENANTS REGARDING PATENT AND TRADEMARK COLLATERAL.
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(a) Each Assignor (either itself or through licensees) will, for each
Patent, not do any act, or omit to do any act, whereby any Patent which is
material to the conduct of such Assignor's business may become invalidated or
dedicated to the public, and shall continue to xxxx any products covered by a
Patent with the relevant patent number or indication that a Patent is pending as
required by the Patent laws.
(b) Each Assignor (either itself or, if permitted by law, through its
licensees or its sublicensees) will, for each Trademark material to the conduct
of such Assignor's business, (i) maintain such Trademark in full force free from
any claim of abandonment or invalidity for non-use, (ii) maintain the quality of
products and services offered under such Trademark, (iii) display such Trademark
with notice of federal registration to the extent required by applicable law,
(iv) not knowingly use or knowingly permit the use of such Trademark in
violation of any third party rights and (v) not permit any assignment in gross
of such Trademark.
(c) Each Assignor (either itself or through licensees) will, for each work
covered by a material copyright, continue to publish, reproduce, display, adopt
and distribute the work with appropriate copyright notice.
(d) Each Assignor shall notify the Collateral Agent immediately if it
knows or has reason to know that any Patent, Trademark or copyright (or any
application or registration
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relating thereto) material to the conduct of its business may become abandoned
or dedicated to the public, or of any adverse determination or development
(including, without limitation, the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office,
United States Copyright Office or any court) regarding such Assignor's ownership
of any Patent, Trademark or copyright, its right to register the same or to keep
and maintain the same.
(e) Each Assignor will take all necessary steps to file, maintain and
pursue each material application relating to the Patents, Trademarks and/or
copyrights (and to obtain the relevant grant or registration) and to maintain
each registration of the Patents, Trademarks and copyrights which is material to
the conduct of such Assignor's business, including filing of applications for
renewal, affidavits of use, affidavits of incontestability and maintenance fees,
and, if consistent with good business judgment, to initiate opposition,
interference and cancellation proceedings against third parties.
(f) In the event that any rights to any Patent, Trademark, copyright or
License relating thereto material to the conduct of any Assignor's business is
believed infringed, misappropriated or diluted by a third party, such Assignor
shall notify the Collateral Agent promptly after it learns thereof and shall, if
consistent with good business judgment, promptly xxx for infringement,
misappropriation or dilution and to recover any and all damages for such
infringement, misappropriation or dilution, and take such other actions as such
Assignor shall reasonably deem appropriate under the circumstances to protect
such Patent, Trademark, copyright or License.
(g) In no event shall any Assignor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark or
copyright with the United States Patent and Trademark Office, United States
Copyright Office or any office or agency in any political subdivision of the
United States or in any other country or any political subdivision thereof,
unless not less than 10 days prior thereto it informs the Collateral Agent, and,
upon request of the Collateral Agent, executes and delivers any and all
agreements, instruments, documents and papers as the Collateral Agent may
request to evidence the Security Interests in such Patent, Trademark or
copyright and the goodwill or accounts and general intangibles of such Assignor
relating thereto or represented thereby, and such Assignor hereby appoints the
Collateral Agent its attorney-in-fact to execute and file such writings for the
foregoing purposes.
ARTICLE V
REMEDIES; RIGHTS UPON DEFAULT
SECTION 5.01 GENERAL AUTHORITY. The Assignors hereby irrevocably
-----------------
appoint the Collateral Agent their true and lawful attorney, with full power of
substitution, in the name of any or all of the Assignors, the Collateral Agent
or otherwise, for the sole use and benefit of the Collateral Agent, but at the
Assignors' expense, to the extent permitted by law to exercise at any time and
from time to time while an Event of Default has occurred and is continuing, all
or any
-10-
of the following powers with respect to all or any of the Collateral, all acts
of such attorney being hereby ratified and confirmed; such power, being coupled
with an interest, is irrevocable until the Obligations are paid in full and
until there is no Commitment by the Collateral Agent to make further advances,
incur obligations or otherwise give value:
(i) to demand, xxx for, collect, receive and give acquittance
for any and all monies due or to become due thereon or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with the
same or the proceeds or avails thereof, including without limitation for
the implementation of any assignment, lease, License, sublicense, grant of
option, sale or other disposition of any Patent, Trademark or copyright or
any action related thereto, as fully and effectually as if the Collateral
Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference thereto;
provided that the Collateral Agent shall give such Assignor not less than ten
--------
days' prior notice of the time and place of any sale or other intended
disposition of any of such Assignor's Collateral, except any Collateral which is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market. The Collateral Agent and such Assignor agree that
such notice constitutes "reasonable notification" within the meaning of Section
9-504(3) of the UCC. Except as otherwise provided herein, each Assignor hereby
waives, to the extent permitted by applicable law, notice and judicial hearing
in connection with the Collateral Agent's taking possession or the Collateral
Agent's dispositions of any of the Collateral, including, without limitation,
any and all prior notice and hearing for any prejudgment remedy or remedies and
any such right which such Assignor would otherwise have under the Constitution
or any statute of the United States or of any state.
SECTION 5.02 REMEDIES UPON EVENT OF DEFAULT.
------------------------------
(a) If any Event of Default has occurred and is continuing, the Collateral
Agent may exercise all rights of a secured party under the UCC (whether or not
in effect in the jurisdiction where such rights are exercised) and, in addition,
the Collateral Agent may, without being required to give any notice, except as
herein provided or as may be required by mandatory provisions of law, (i)
withdraw all cash and Liquid Investments in the Collateral Accounts and apply
such cash and Liquid Investments and other cash, if any, then held by it as
Collateral as specified in Section 5.04 and (ii) if there shall be no such cash
or Liquid Investments or if such cash and Liquid Investments shall be
insufficient to pay all the Obligations in full or cannot be so
-11-
applied for any reason, sell the Collateral or any part thereof at public or
private sale, for cash, upon credit or for future delivery, and at such price or
prices as the Collateral Agent may deem satisfactory. The Collateral Agent and
any of the Banks may be the purchaser of any or all of the Collateral so sold at
any public sale (or, if the Collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely distributed
standard price quotations, at any private sale). The Assignors will execute and
deliver such documents and take such other action as the Collateral Agent deems
necessary or advisable in order that any such sale may be made in compliance
with law. Upon any such sale, the Collateral Agent shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold.
Each purchaser at any such sale shall hold the Collateral so sold to it
absolutely and free from any claim or right of whatsoever kind, including any
equity or right of redemption of the Assignors which may be waived, and the
Assignors, to the extent permitted by law, hereby specifically waive all rights
of redemption, stay or appraisal which they have or may have under any law now
existing or hereafter adopted. The notice (if any) of such sale required by
Section 5.01 shall (i) in the case of a public sale, state the time and place
fixed for such sale, and (ii) in the case of a private sale, state the day after
which such sale may be consummated. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as the
Collateral Agent may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may determine. The Collateral Agent shall not be obligated to
make any such sale pursuant to any such notice. The Collateral Agent may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
same may be so adjourned without further notice. In the case of any sale of all
or any part of the Collateral on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the selling price is paid
by the purchaser thereof, but the Collateral Agent shall not incur any liability
in the case of the failure of such purchaser to take up and pay for the
Collateral so sold and, in the case of any such failure, such Collateral may
again be sold upon like notice. The Collateral Agent, instead of exercising the
power of sale herein conferred upon it, may proceed by a suit or suits at law or
in equity to foreclose the Security Interests and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
(b) For the purpose of enforcing any and all rights and remedies under
this Agreement the Collateral Agent may (i) require the Assignors to, and each
Assignor agrees that it will, at its expense and upon the request of the
Collateral Agent, forthwith assemble all or any part of the Collateral as
directed by the Collateral Agent and make it available at a place designated by
the Collateral Agent which is, in the Collateral Agent's opinion, reasonably
convenient to the Collateral Agent and such Assignor, whether at the premises of
such Assignor or otherwise, it being understood that such Assignor's obligation
so to deliver the Collateral is of the essence of this Agreement and that,
accordingly, upon application to a court of equity having jurisdiction, the
Collateral Agent shall be entitled to a decree requiring specific performance by
such Assignor
-12-
of such obligations; (ii) to the extent permitted by applicable law, enter, with
or without process of law and without breach of the peace, any premise where any
of the Collateral is or may be located, and without charge or liability to the
Collateral Agent seize and remove such Collateral from such premises; (iii) have
access to and use the Assignors' books and records relating to the Collateral;
and (iv) prior to the disposition of the Collateral, store or transfer it
without charge in or by means of any storage or transportation facility owned or
leased by the Assignors, process, repair or recondition it or otherwise prepare
it for disposition in any manner and to the extent the Collateral Agent deems
appropriate and, in connection with such preparation and disposition, use
without charge any Patent, Trademark, copyright, License relating thereto or
technical process used by the Assignors. The Collateral Agent may also render
any or all of the Collateral unusable at any Assignor's premises and may dispose
of such Collateral on such premises without liability for rent or costs.
(c) Without limiting the generality of the foregoing, if any Event of
Default has occurred and is continuing (but subject to the terms of any
License):
(i) the Collateral Agent may license, or sublicense, whether
general, special or otherwise, and whether on an exclusive or non-exclusive
basis, any Patents, Trademarks or copyrights included in the Collateral
throughout the world for such term or terms, on such conditions and in such
manner as the Collateral Agent shall in its sole discretion determine;
(ii) the Collateral Agent may (without assuming any obligations
or liability thereunder), at any time and from time to time, enforce (and
shall have the exclusive right to enforce) against any licensee or
sublicensee all rights and remedies of the Assignor in, to and under any
Patent License, Trademark License or license with respect to copyrights and
take or refrain from taking any action under any provision thereof, and the
Assignor hereby releases the Collateral Agent from, and agrees to hold the
Collateral Agent free and harmless from and against any claims arising out
of, any lawful action so taken or omitted to be taken with respect thereto;
and
(iii) upon request by the Collateral Agent, each Assignor will
use its best efforts to obtain all requisite consents or approvals by the
licensor or sublicensor of each Patent License, license with respect to
copyrights or Trademark License to effect the assignment of all of the
Assignor's rights, title and interest thereunder to the Collateral Agent or
its designee and will execute and deliver to the Collateral Agent a power
of attorney, in form and substance satisfactory to the Collateral Agent,
for the implementation of any lease, assignment, license, sublicense, grant
of option, sale or other disposition of a Patent, Trademark or copyright;
and
(iv) the Collateral Agent may direct any Assignor to refrain,
in which event such Assignor shall refrain, from using or practicing any
Trademark, Patent or copyright
-13-
in any manner whatsoever, directly or indirectly and shall, if requested by
the Collateral Agent change such Assignor's name to eliminate therefrom any
use of any Trademark and will execute such other and further documents as
the Collateral Agent may request to further confirm this and transfer
ownership of the Trademarks, Patents, copyrights and registrations and any
pending applications therefor to the Collateral Agent.
(d) In the event of any disposition of any Patent, Trademark or copyright
pursuant to this Article V, the Assignors shall supply their know-how and
expertise relating to the manufacture and sale of the products or services
bearing Trademarks or the products, services or works made or rendered in
connection with or under Patents, Trademarks or copyrights, and their customer
lists and other records relating to such Patents, Trademarks or copyrights and
to the distribution of said products, services or works, to the Collateral
Agent.
SECTION 5.03 LIMITATION ON DUTY OF THE COLLATERAL AGENT IN RESPECT OF
--------------------------------------------------------
COLLATERAL. Beyond the exercise of reasonable care in the custody thereof, the
----------
Collateral Agent shall have no duty to exercise any rights or take any steps to
preserve the rights of any Assignor in the Collateral in its or such Assignor's
possession or control or in the possession or control of any agent or bailee or
any income thereon or as to the preservation of rights against prior parties or
any other rights pertaining thereto, nor shall the Collateral Agent be liable to
the Assignor or any other Person for failure to meet any obligation imposed by
Section 9-207 of the UCC or any successor provision. The Collateral Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
the Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which it accords its own property, and shall not be
liable or responsible for any loss or damage to any of the Collateral, or for
any diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee or other agent or bailee
selected by the Collateral Agent in good faith.
SECTION 5.04 APPLICATION OF PROCEEDS.
-----------------------
(a) Priority of Distribution. If an Event of Default shall have occurred
------------------------
and be continuing, the proceeds of any sale of, or other realization upon, all
or any part of the Collateral and any cash held in the Collateral Accounts shall
be applied by the Collateral Agent in the following order of priority:
(i) to payment of the expenses of such sale or other
realization, including reasonable compensation to agents and counsel for
the Collateral Agent, and all expenses, liabilities and advances incurred
or made by the Collateral Agent in connection therewith, and any other
Obligations owing to the Collateral Agent in respect of sums advanced by
the Collateral Agent to preserve the Collateral or to preserve its security
interest in the Collateral;
-14-
(ii) an amount equal to (A) the unpaid principal of and accrued
but unpaid interest on all Revolving Loans, all Reimbursement Obligations
and all other Obligations which arise or are incurred in connection with
the Loan Documents; plus (B) the aggregate amount that is (or may
thereafter become) available for drawing under all Letters of Credit then
outstanding (or deemed to be outstanding) under the Credit Agreement; plus
(C) all unpaid fees owing to the Collateral Agent under the Credit
Agreement; plus (D) to the extent not covered by paragraph (i) above, all
unreimbursed expenses for which the Collateral Agent is to be reimbursed
pursuant to Section 9.03 of the Credit Agreement, Section 7.03 hereof or
any other provision of any of the Loan Documents, shall be applied to
payment of the Obligations;
(iii) an amount equal to the Derivatives Obligations shall be
applied to the payment thereof;
(iv) to the payment of all other Obligations, until all
Obligations shall have been paid in full; and
(v) to payment to the Assignors or their successors or
assigns, or as a court of competent jurisdiction may direct, of any surplus
then remaining from such proceeds.
(b) Distributions with Respect to Letters of Credit. The Collateral Agent
agrees and acknowledges that if (after all outstanding Revolving Loans and
Reimbursement Obligations with respect to Letters of Credit have been paid in
full) the Collateral Agent is to receive a distribution on account of undrawn
amounts (i) with respect to Performance Letters of Credit issued (or deemed
issued) under the Credit Agreement, such amounts shall be deposited in the Cash
Collateral Account as cash security for the repayment of Obligations and (ii)
with respect to Tennessee Letters of Credit issued (or deemed issued) under the
Credit Agreement, such amounts shall be deposited in the XX Xxxx Collateral
Account as cash security for the repayment of the Obligations. Upon termination
of all outstanding Letters of Credit, all of such cash security shall be applied
to the remaining Obligations. If there remains any excess cash security in such
accounts, such excess cash shall be withdrawn by the Collateral Agent and
distributed in accordance with Section 5.04(a) hereof.
(c) It is understood that the Assignors shall remain jointly and severally
liable to the extent of any deficiency between the amount of the proceeds of the
Collateral and the amount of the Obligations.
SECTION 5.05 ASSIGNED AGREEMENTS. Each Assignor hereby irrevocably
--------------------
authorizes and empowers the Collateral Agent, in the Collateral Agent's sole
discretion, if an Event of Default has occurred and is continuing, to assert,
either directly or on behalf of such Assignor, any claims such Assignor may
have, from time to time, against any other party to any Assigned Agreement or to
otherwise exercise any right or remedy of such Assignor under any
-15-
Assigned Agreement (including without limitation, the right to enforce directly
against any party to an Assigned Agreement all of such Assignor's rights
thereunder, to make all demands and give all notices and make all requests
required or permitted to be made by such Assignor under any Assigned Agreements)
as the Collateral Agent may deem proper. Each Assignor hereby irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent) as such Assignor's true and lawful
attorney-in-fact for the purpose of enabling the Collateral Agent, to assert and
collect such claims and to exercise such rights and remedies.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 NOTICES. Unless otherwise specified herein, all
-------
notices, requests or other communications to any party hereunder shall be in
writing (including bank wire, telex, facsimile transmission or similar writing)
and shall be given to such party (i) at its address referred to in Section 9.01
of the Credit Agreement or (ii) other address, facsimile number or telex number
as such party shall hereafter specify for the purpose of communications
hereunder by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the appropriate
answerback is received, (ii) if given by facsimile transmission, when
transmitted to the facsimile number specified in this Section and confirmation
of receipt is received, (iii) if given by mail, 48 hours after such
communication is deposited, certified mail, return receipt requested, in the
mails with appropriate first class postage prepaid, addressed as aforesaid or
(iv) if given by other means, when delivered at the address specified in this
Section 6.01. Rejection or refusal to accept, or the inability to deliver
because of a changed address of which no notice was given shall not affect the
validity of notice given in accordance with this Section.
SECTION 6.02 NO WAIVERS; NON-EXCLUSIVE REMEDIES. No failure or delay
----------------------------------
on the part of the Collateral Agent to exercise, no course of dealing with
respect to, and no delay in exercising any right, power or privilege under this
Agreement or any other Loan Document or any other document or agreement
contemplated hereby or thereby shall operate as a waiver thereof nor shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies provided herein and in the other Loan
Documents are cumulative and are not exclusive of any other remedies provided by
law. Without limiting the foregoing, nothing in this Agreement shall impair the
right of the Collateral Agent to exercise any right of set-off or counterclaim
it may have and to apply the amount subject to such exercise to the payment of
indebtedness of each Assignor other than such Assignor's indebtedness under the
Credit Agreement and the other Loan Documents.
-16-
SECTION 6.03 COMPENSATION AND EXPENSES OF THE COLLATERAL AGENT;
--------------------------------------------------
INDEMNIFICATION.
---------------
(a) Expenses. The Assignors shall pay (i) all out-of-pocket expenses of
--------
the Collateral Agent, including fees and disbursements of special and local
counsel for the Collateral Agent, in connection with the preparation and
administration of this Agreement or any document or agreement contemplated
hereby, any consent or waiver hereunder or any amendment hereof or any Default
or alleged Default and (ii) if an Event of Default occurs, all out-of-pocket
expenses incurred by the Collateral Agent, including (without duplication) the
fees and disbursements of outside counsel in connection with such Event of
Default and collection, bankruptcy, insolvency and other enforcement proceedings
resulting therefrom.
(b) Protection of Collateral. If any Assignor fails to comply with the
------------------------
provisions of the Credit Agreement, this Agreement or any other Loan Document,
such that the value of any Collateral or the validity, perfection, rank or value
of any Security Interest is thereby diminished or potentially diminished or put
at risk, the Collateral Agent may, but shall not be required to, effect such
compliance on behalf of such Assignor, and such Assignor shall reimburse the
Collateral Agent for the costs thereof on demand. All insurance expenses and
all expenses of protecting, storing, warehousing, appraising, insuring,
handling, maintaining and shipping the Collateral, any and all excise, property,
sales and use taxes imposed by any state, federal or local authority on any of
the Collateral, or in respect of periodic appraisals and inspections of the
Collateral to the extent the same may be requested by the Collateral Agent from
time to time, or in respect of the sale or other disposition thereof shall be
borne and paid by the Assignors. If any Assignor fails to promptly pay any
portion thereof when due, the Collateral Agent may, at its option, but shall not
be required to, pay the same and charge such Assignor's account therefor, and
such Assignor agrees to reimburse the Collateral Agent therefor on demand. All
sums so paid or incurred by the Collateral Agent for any of the foregoing and
any and all other sums for which the Assignors may become liable hereunder and
all costs and expenses (including attorneys' fees, legal expenses and court
costs) reasonably incurred by the Collateral Agent in enforcing or protecting
the Security Interests or any of its rights or remedies under this Agreement,
shall, together with interest thereon for each day from the date when paid or
incurred by the Collateral Agent until paid by the Assignors at the rate per
annum equal to the sum of 2% plus the LIBOR Market Index Rate for such day, be
additional Obligations.
(c) Indemnification. The Assignors agree, jointly and severally, to
---------------
indemnify each Indemnitee and hold each Indemnitee harmless from and against any
and all liabilities, obligations, losses, damages, penalties, claims, demands,
actions, suits, judgments, costs and expenses of any kind, including, without
limitation, the reasonable fees and disbursements of counsel, which may be
incurred by, imposed on or asserted against such Indemnitee in connection with
any investigation or administrative or judicial proceeding (whether or not such
Indemnitee shall be designated a party thereto) brought or threatened relating
to or arising out of
-17-
this Agreement or in any other way connected with the enforcement of any of the
terms of, or the preservation of any rights hereunder, or in any way relating to
or arising out of the manufacture, ownership, ordering, purchasing, delivery,
control, acceptance, lease, financing, possession, operation, condition, sale,
return or other disposition or use of the Collateral (including, without
limitation, latent or other defects, whether or not discoverable), the violation
of the laws of any country, state or other governmental body or unit, any tort
(including, without limitation, any claims, arising or imposed under the
doctrine of strict liability, or for or on account of injury to or the death of
any Person (including any Indemnitee), or property damage), or contract claim;
provided that no Indemnitee shall have the right to be indemnified hereunder
--------
for such Indemnitee's own gross negligence or willful misconduct as determined
by a court of competent jurisdiction. The Assignors agree that upon written
notice by any Indemnitee of the assertion of such a liability, obligation, loss,
damage, penalty, claim, demand, action, judgment or suit, the Assignors shall
assume full responsibility for the defense thereof. Each Indemnitee agrees to
use its best efforts to notify the Assignors of any such assertion of which such
Indemnitee has knowledge.
(d) Obligations; Survival. Any amounts paid by any Indemnitee as to which
---------------------
such Indemnitee has the right to reimbursement shall constitute Obligations.
The indemnity obligations of the Assignors contained in this Section 6.03 shall
continue in full force and effect notwithstanding the full payment of all Note
and all of the other Obligations and notwithstanding the discharge thereof.
SECTION 6.04 AMENDMENTS AND WAIVERS. Any provision of this
----------------------
Agreement may be amended, changed, discharged, terminated or waived if, but only
if, such amendment or waiver is in writing and is signed by the Assignors and
the Collateral Agent.
SECTION 6.05 SUCCESSORS AND ASSIGNS. This Agreement shall be
----------------------
binding upon each of the parties hereto and inure to the benefit of the
Collateral Agent and its successors and assigns. The Assignors shall not assign
or delegate any of their rights and duties hereunder without the prior written
consent of the Collateral Agent.
SECTION 6.06 LIMITATION OF LAW; SEVERABILITY
-------------------------------
(a) All rights, remedies and powers provided in this Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions of this Agreement are
intended to be subject to all applicable mandatory provisions of law which may
be controlling and be limited to the extent necessary so that they will not
render this Agreement invalid, unenforceable in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any
applicable law.
(b) If any provision hereof is invalid or unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect
-18-
in such jurisdiction and shall be liberally construed in favor of the Collateral
Agent in order to carry out the intentions of the parties hereto as nearly as
may be possible; and (ii) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability of
such provisions in any other jurisdiction.
SECTION 6.07 GOVERNING LAW. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Maryland except as
otherwise required by mandatory provisions of law and except to the extent that
remedies provided by the laws of any jurisdiction other than the State of
Maryland are governed by the laws of such jurisdictions.
SECTION 6.08 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
---------------------------
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when the Collateral Agent
shall receive counterparts hereof executed by itself and the Assignors.
SECTION 6.09 TERMINATION. Upon full, final and irrevocable payment
------------
and performance of all Obligations and the termination of all Commitments under
the Credit Agreement, the Security Interests shall terminate and all rights to
the Collateral shall revert to the Assignors. In addition, at any time and from
time to time prior to such termination of the Security Interests, the Collateral
Agent may release any of the Collateral of any Assignor. Upon any such
termination of the Security Interests or release of Collateral, the Collateral
Agent will, upon request by and at the expense of such Assignor, execute and
deliver to such Assignor such documents as such Assignor shall reasonably
request to evidence the termination of the Security Interests or the release of
such Collateral, as the case may be. Any such documents shall be without
recourse to or warranty by the Collateral Agent. Upon the termination of all
Commitments under the Credit Agreement, and so long as all Obligations other
than the Letter of Credit Liabilities shall have been fully, finally and
irrevocably paid and performed, the Collateral Agent will release its liens on
all Collateral except for the Collateral Accounts if, but only if, there shall
be, and the Assignors agree that there shall remain, funds in the Cash
Collateral Account and the XX Xxxx Collateral Account equal to 100% of the
Letter of Credit Liabilities.
SECTION 6.10 ENTIRE AGREEMENT. This Agreement and the other Loan
----------------
Documents constitute the entire agreement and understanding among the parties
hereto and supersedes any and all prior agreements and understandings, oral or
written, and any contemporaneous oral agreements and understandings relating to
the subject matter hereof and thereof.
[SIGNATURES APPEAR ON NEXT PAGE]
-19-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
GTS DURATEK, INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Treasurer
GENERAL TECHNICAL SERVICES,
INC., a Maryland corporation
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Treasurer
GTS INSTRUMENT SERVICES,
INCORPORATED, a Maryland corporation
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Treasurer
ANALYTICAL RESOURCES, INC.,
a Pennsylvania corporation
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Treasurer
FIRST UNION NATIONAL BANK
OF MARYLAND, a national banking
association, as Collateral Agent
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
-20-
GTS DURATEK, INC., GENERAL TECHNICAL SERVICES, INC.,
GTS INSTRUMENT SERVICES, INCORPORATED, and
ANALYTICAL RESOURCES, INC.
SECURITY AGREEMENT DEFINITIONS APPENDIX
---------------------------------------
The definitions set forth in this Security Agreement Definitions
Appendix are incorporated by reference into Section 1.01 of the Security
Agreement dated as of April 18, 1997 between GTS Duratek, Inc., a Delaware
corporation ("Duratek"), General Technical Services, Inc., a Maryland
corporation ("Technical"), GTS Instrument Services, Incorporated, a Maryland
corporation ("Instrument"), and Analytical Resources, Inc., a Pennsylvania
corporation ("Analytical", and together with Duratek, Technical, and Instrument,
the "Assignors") and First Union National Bank of Maryland. Reference in this
Security Agreement Definitions Appendix to "this Agreement", "herein", "hereof",
"hereunder" and to any Article or Section shall be interpreted to mean this
Security Agreement and the referenced Article or Section, including this
Security Agreement Definitions Appendix.
DEFINITIONS
-----------
"Accounts" means, with respect to each Assignor, all "accounts" (as
defined in the UCC) now owned or hereafter acquired by such Assignor, and shall
also mean and include all accounts receivable, contract rights, book debts,
notes, drafts and other obligations or indebtedness owing to such Assignor
arising from the sale, lease or exchange of goods or other property by it and/or
the performance of services by it (including, without limitation, any such
obligation which might be characterized as an account, contract right or general
intangible under the Uniform Commercial Code in effect in any jurisdiction) and
all of such Assignor's rights in, to and under all purchase orders for goods,
services or other property, and all of such Assignor's rights to any goods,
services or other property represented by any of the foregoing (including
returned or repossessed goods and unpaid seller's rights of rescission,
replevin, reclamation and rights to stoppage in transit) and all monies due to
or to become due to such Assignor under all contracts for the sale, lease or
exchange of goods or other property and/or the performance of services by it
(whether or not yet earned by performance on the part of such Assignor), in each
case whether now in existence or hereafter arising or acquired including,
without limitation, the right to receive the proceeds of said purchase orders
and contracts and all collateral security and guarantees of any kind given by
any Person with respect to any of the foregoing.
"Account Debtor" means, with respect to any Account, Document,
Instrument or General Intangible, any Person obligated to make payment
thereunder, including, without limitation, any account debtor thereon.
"Administrative Agent" means the Bank in its capacity as
administrative agent for the Bank under the Credit Agreement and its successors
and assigns in such capacity.
"Agents" means the Administrative Agent and the Collateral Agent, and
"Agent" means either of them.
"Agreement" or "Security Agreement" means this Security Agreement, as
it may be amended, modified or supplemented from time to time.
"Assigned Agreements" means, with respect to each Assignor, those
contracts and agreements of such Assignor identified in or pursuant to Section 7
of the Perfection Certificate, as the same may be amended, modified or
supplemented from time to time.
"Bank" means First Union National Bank of Maryland, a national banking
association, and its successors and assigns.
"Banks" means the Bank and the North Carolina Bank, and their
respective successors and assigns.
"Borrowers" means GTS Duratek, Inc., a Delaware corporation, General
Technical Services, Inc., a Maryland corporation, GTS Instrument Services,
Incorporated, a Maryland corporation, Analytical Resources, Inc., a Pennsylvania
corporation, The Scientific Ecology Group, Inc., a Tennessee corporation, SEG
Colorado, Inc., a Delaware corporation, and Hittman Transport Services, Inc., a
Delaware corporation, and their successors.
"Cash Collateral Account" has the meaning set forth in Section 3.04 of
this Security Agreement.
"Cash Equivalents" means (i) direct obligations of the United States
or any agency thereof, or obligations guaranteed by the United States or any
agency thereof, (ii) commercial paper rated in the highest grade by a nationally
recognized credit rating agency or (iii) time deposits with, including
certificates of deposit issued by, any office located in the United States of
any bank or trust company which is organized under the laws of the United States
or any state thereof and has capital, surplus and undivided profits aggregating
at least $250,000,000; provided, in each case that such investment matures
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within one year from the date of acquisition thereof by the Assignor.
"Cash Proceeds Account" has the meaning set forth in Section 3.03 of
this Security Agreement.
"Collateral" means, with respect to each Assignor, all right, title
and interest of such Assignor in the following, whether now owned or existing or
hereafter acquired, created or arising, whether tangible or intangible, and
regardless of where located:
(a) Accounts;
(b) Inventory;
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(c) General Intangibles;
(d) Documents;
(e) Instruments;
(f) Equipment (other than items of Equipment now or hereafter subject
to a Capital Lease or a purchase money security interest if such lease or
security agreement provides that it would be a breach of the Assignor's
obligations thereunder to further encumber such item of Equipment);
(g) Assigned Agreements;
(h) the Collateral Accounts, all cash deposited therein from time to
time, the Liquid Investments made pursuant to Section 3.03 of this Security
Agreement and other monies and property (including deposit accounts) of any
kind of such Assignor maintained with or in the possession or under the
control of the Collateral Agent;
(i) all books and records (including, without limitation, customer
lists, credit files, computer programs, printouts and other computer
materials and records) of such Assignor pertaining to any of the
Collateral; and
(j) all Proceeds of all or any of the Collateral described in clauses
(a) through (i) above.
"Collateral Accounts" means the Cash Collateral Account, the Cash
Proceeds Account, the XX Xxxx Collateral Account and the Operating Account.
"Collateral Agent" means the Bank, in its capacity as collateral agent
for the Banks, and its successors and assigns in such capacity.
"Credit Agreement" means the Credit Agreement among the Borrowers, the
Banks and the Agents, as it may be amended, modified or supplemented from time
to time.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
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"Documents" means, with respect to each Assignor, all Adocuments" (as
defined in the UCC) or other receipts covering, evidencing or representing
goods, now owned or hereafter acquired by such Assignor.
"Equipment" means, with respect to each Assignor, all "equipment" (as
defined in the UCC) now owned or hereafter acquired by such Assignor, including
all items of machinery, equipment, furnishings and fixtures of every kind,
including leasehold improvements, whether affixed to real property or not, as
well as all motor vehicles, automobiles, trucks, trailers, railcars, barges and
vehicles of every description, trailers, handling and delivery equipment, all
additions to, substitutions for, replacements of or accessions to any of the
foregoing, all attachments, components, parts (including spare parts) and
accessories whether installed thereon or affixed thereto and all fuel for any
thereof.
"General Intangibles" means, with respect to each Assignor, all
"general intangibles" (as defined in the UCC) now owned or hereafter acquired by
such Assignor, including, without limitation, (i) all obligations and
indebtedness owing to such Assignor (other than Accounts), from whatever source
arising, (ii) all Patents, Trademarks, copyrights, Licenses, rights in
intellectual property, goodwill, trade names, service marks, trade secrets,
confidential or proprietary technical and business information, know-how, show-
how, software, customer lists, subscription lists, data bases and related
documentation, registration, franchises and all other intellectual or other
similar property rights, (iii) all rights or claims in respect of refunds for
taxes paid, (iv) all rights in respect of any pension plans or similar
arrangements maintained for employees of such Assignor or any member of the
ERISA Group and (v) all "uncertificated securities" (as defined in the UCC).
"Instruments" means, with respect to each Assignor, all "instruments"
(as defined in Article 9 of the UCC), "chattel paper" and "certificated
securities" (each as defined in the UCC) or "letters of credit" (as defined in
Article 9 of the UCC) evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise supporting the payment of, any of
the Accounts or General Intangibles, including (but not limited to) promissory
notes, drafts, bills of exchange and trade acceptances, now owned or hereafter
acquired by such Assignor.
"Inventory" means, with respect to each Assignor, all "inventory" (as
defined in the UCC) now owned or hereafter acquired by such Assignor, wherever
located, and shall also mean and include, without limitation, all raw materials
and other materials and supplies, work-in-process and finished goods and any
products made or processed therefrom and all substances, if any, commingled
therewith or added thereto.
"XX Xxxx Collateral Account" has the meaning set forth in Section 3.05
of this Security Agreement.
"License" means, with respect to each Assignor, (i) with respect to
any Patent, any agreement now or hereafter in existence granting to such
Assignor, or pursuant to which such Assignor has granted to any other Person,
any right with respect to any Patent or any invention
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now or hereafter in existence, whether patentable or not, whether a Patent or
application for Patent is in existence on such invention or not, and whether a
Patent or application for Patent on such invention may come into existence, and
(ii) with respect to any Trademark, any agreement now or hereafter in existence
granting to such Assignor, or pursuant to which such Assignor has granted to any
other Person, any right to use any Trademark (in each case exclusive of license
agreements which by their terms prohibit assignment or a grant of a security
interest by such Assignor as licensee thereunder); provided that rights to
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payments under any such license shall be included in the Collateral to the
extent permitted thereby or by Section 9-318 of the UCC.
"Liquid Investments" has the meaning set forth in Section 3.06 of this
Security Agreement.
"Money Manager Account" means the existing money manager account of
Duratek located at the Bank, bearing the account number 1556592237, and any
successor or replacement account.
"North Carolina Bank" means First Union National Bank of North
Carolina, a national banking association, and its successors and assigns.
"Operating Account" means the demand deposit account maintained with
the Collateral Agent by Duratek on which Duratek draws checks to pay its
operating expenses.
"Patents" means all of the following:
(i) all letters patent and design letters patent of the United
States or any other country, all applications for letters patent and design
letters patent of the United States or any other country including, without
limitation, applications in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof
or any other country or political subdivision thereof;
(ii) all reissues, divisions, continuations, continuations-in-
part, renewals or extensions thereof;
(iii) all claims for, and rights to xxx for, past or future
infringement of any of the foregoing; and
(iv) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the foregoing, including,
without limitation, damages and payments for past or future infringements
thereof.
"Perfection Certificate" means, with respect to each Assignor, a
certificate, substantially in the form of Exhibit A to this Security Agreement,
completed and supplemented with the schedules and attachments contemplated
thereby to the satisfaction of the Collateral Agent, and duly executed by a vice
president or treasurer of such Assignor.
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"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Proceeds" means, with respect to each Assignor, all proceeds of, and
all other profits, products, rents or receipts, in whatever form, arising from
the collection, sale, lease, exchange, assignment, licensing or other
disposition of or other realization upon or payment for the use of, Collateral,
including (without limitation) all claims of such Assignor against third parties
for loss of, damage to or destruction of, or for proceeds payable under, or
unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any
Collateral, in each case whether now existing or hereafter arising.
"Security Interests" means the security interests in the Collateral
granted under this Security Agreement securing the Obligations.
"Trademark" means all of the following:
(i) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service
marks, logos, brand names, trade dress, prints and labels on which any of
the foregoing have appeared or appear, package and other designs, and any
other source or business identifiers, and general intangibles of like
nature, and the rights in any of the foregoing which arise under applicable
law;
(ii) the goodwill of the business symbolized thereby or
associated with each of them;
(iii) all registrations and applications in connection
therewith, including, without limitation, registrations and applications in
the United States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other country or any
political subdivision thereof;
(iv) all reissues, extensions and renewals thereof;
(v) all claims for, and rights to xxx for, past or future
infringements of any of the foregoing; and
(vi) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the foregoing, including,
without limitation, damages and payments for past or future infringements
thereof.
"UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of Maryland, provided that if by reason of mandatory
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provisions of law, the perfection or the effect of perfection or non-perfection
of the Security Interest in any Collateral is governed by
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the Uniform Commercial Code as in effect in a jurisdiction other than the State
of Maryland, "UCC" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection.
USAGE
-----
The following rules of construction and usage shall be applicable to
any instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined meanings
when used in any instrument governed hereby and in any certificate or other
document made or delivered pursuant thereto unless otherwise defined therein.
(b) The words "hereof", "herein", "hereunder" and words of similar import
when used in an instrument refer to such instrument as a whole and not to any
particular provision or subdivision thereof; references in any instrument to
"Article", "Section" or another subdivision or to an attachment are, unless the
context otherwise requires, to an article, section or subdivision of or an
attachment to such instrument; and the term "including" means "including without
limitation".
(c) The definitions contained in this Appendix are equally applicable to
both the singular and plural forms of such terms, unless the context otherwise
requires, and to the masculine as well as to the feminine and neuter genders of
such terms.
(d) Any agreement, instrument or statute defined or referred to below or
in any agreement or instrument that is governed by this Appendix means such
agreement or instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and includes (in the case of agreements or instruments) references to
all attachments thereto and instruments incorporated therein. References to a
Person are also to its permitted successors and assigns.
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