SECURITY AGREEMENT
DATED AS OF APRIL 18, 1997
AMONG
THE SCIENTIFIC ECOLOGY GROUP, INC.,
SEG COLORADO, INC.
AND
HITTMAN TRANSPORT SERVICES, 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 ................................................ 2
Section 2.02 Validity, Perfection and Priority of Security Interests ............ 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........................................... 4
Section 3.05 Investment of Funds in Collateral Accounts........................ 4
ARTICLE IV
COVENANTS
Section 4.01 Delivery of Perfection Certificate; Filing of Financing Statements
and Delivery of Search Reports.................................... 5
Section 4.02 Change of Name, Identity or Structure; Locations of Places of
Business, Chief Executive Office and Collateral................... 5
Section 4.03 Further Assurances................................................ 6
Section 4.04 Collateral in Possession of Other Persons......................... 6
Section 4.05 Books and Records................................................. 6
Section 4.06 Delivery of Instruments........................................... 7
Section 4.07 Modification of Assigned Agreements, Etc.......................... 7
Section 4.08 Disposition of Collateral......................................... 7
Section 4.09 Information Regarding Collateral.................................. 8
Section 4.10 Covenants Regarding Patent and Trademark Collateral............... 8
______________________
* The Table of Contents is not a part of this Security Agreement.
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ARTICLE V
REMEDIES; RIGHTS UPON DEFAULT
Section 5.01 General Authority.................................................. 9
Section 5.02 Remedies upon Event of Default..................................... 10
Section 5.03 Limitation on Duty of the Collateral Agent in Respect of Collateral 13
Section 5.04 Application of Proceeds............................................ 13
Section 5.05 Assigned Agreements................................................ 14
ARTICLE VI
MISCELLANEOUS
Section 6.01 Notices........................................................... 15
Section 6.02 No Waivers; Non-Exclusive Remedies................................ 15
Section 6.03 Compensation and Expenses of the Collateral Agent; Indemnification 15
Section 6.04 Amendments and Waivers............................................ 17
Section 6.05 Successors and Assigns............................................ 17
Section 6.06 Limitation of Law; Severability................................... 17
Section 6.07 Governing Law..................................................... 18
Section 6.08 Counterparts; Effectiveness....................................... 18
Section 6.09 Termination....................................................... 18
Section 6.10 Entire Agreement.................................................. 18
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
Transaction
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 THE
SCIENTIFIC ECOLOGY GROUP, INC., a Tennessee corporation ("Group"), SEG COLORADO,
INC., a Delaware corporation ("Colorado") and HITTMAN TRANSPORT SERVICES, INC.,
a Delaware corporation ("Hittman", and together with Group and Colorado, 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 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:
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Section 2.00 Title to Collateral. Each Assignor has good and
-------------------
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 2.01 Validity, Perfection and Priority of Security
---------------------------------------------
Interests. 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 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.
ARTICLE III
SECURITY INTEREST
Section 3.01 Grant of Security Interests. In order to secure the
---------------------------
full 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
--------------------------------------------------
Collateral. The Security Interests are granted as security only and shall not
----------
subject the Collateral Agent or the Collateral Agents 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 right to use its Collateral except to the extent otherwise provided
herein with respect to the Collateral Accounts.
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Section 3.03 Cash Proceeds Account.
---------------------
(A) Creation of Cash Proceeds Account. There is hereby established
---------------------------------
with the Collateral Agent a cash collateral account (the "Cash Proceeds
Account") in the name of "THE SCIENTIFIC ECOLOGY GROUP, 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 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 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
-----------------------
deposited by the Assignors as cash collateral pursuant to Section 5.04(b) 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 Group 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 Group on demand.
Section 3.05 Investment of Funds in Collateral Accounts. Amounts on
------------------------------------------
deposit in the Cash Collateral Account shall be invested and re-invested from
time to time in such Liquid Investments as Group 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 Default has occurred and is continuing, the
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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)
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each Liquid Investment shall mature 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:
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(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 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
-------------------------------------------------------
Statements and Delivery of Search Reports. On the Effective Date, 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, (ii) until the expiration of 120 Business Days following
the Effective Date to cause the Notices of Assignment with respect to the
Government Contracts specified on Schedule 4.01 to be duly sent to the intended
recipients thereof, and (iii) 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
---------------------------------------------------------
change its name, identity or corporate structure in any manner unless it shall
have given the Collateral Agent not less
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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 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
-----------------
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.
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Section 4.06 Delivery of Instruments. The Assignors will
-----------------------
immediately deliver each Instrument, certificated security and uncertificated
security to the Collateral Agent indorsed (as applicable) to the Collateral
Agent; provided 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).
Section 4.07 Modification of Assigned Agreements, Etc. Each
----------------------------------------
Assignor 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.
Section 4.08 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.
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Section 4.09 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 4.10 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 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.
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(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 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,
-9-
(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 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
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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 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
-11-
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 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.
-12-
(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;
(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
-13-
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 with respect to 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. 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, such excess
cash shall be withdrawn by the Collateral Agent from the Cash Collateral Account
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 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.
-14-
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.
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
-15-
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 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,
-16-
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 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.
-17-
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.
-18-
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.
THE SCIENTIFIC ECOLOGY GROUP, INC.,
a Tennessee corporation
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Treasurer
SEG COLORADO, INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Treasurer
HITTMAN TRANSPORT SERVICES, INC.,
a Delaware 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: Xxxxx X. Xxxxxxxx
Title: Treasurer
-19-
THE SCIENTIFIC ECOLOGY GROUP, INC.,
SEG COLORADO, INC. and HITTMAN TRANSPORT SERVICES, 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 The Scientific Ecology Group, a
Tennessee corporation ("Group"), SEG Colorado, Inc., a Delaware corporation
("Colorado") and Hittman Transport Services, Inc., a Delaware corporation
("Hittman", and together with Group and Colorado, 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.
-1-
"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 Banks 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
--------
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.
-2-
"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) General Intangibles;
(c) Documents;
(d) Instruments;
(e) Assigned Agreements;
(f) 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;
(g) 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
(h) all Proceeds of all or any of the Collateral described in
clauses (a) through (g) above.
"Collateral Accounts" means the Cash Collateral Account, the Cash
Proceeds 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.
-3-
"Documents" means, with respect to each Assignor, all "documents" (as
defined in the UCC) or other receipts covering, evidencing or representing
goods, now owned or hereafter acquired by such Assignor.
"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.
"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 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 payments under
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any such license shall be included in the Collateral to the extent permitted
thereby or by Section 9-318 of the UCC.
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"Liquid Investments" has the meaning set forth in Section 3.05 of this
Security Agreement.
"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 Group on which Group 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.
"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.
-5-
"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 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.
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Usage
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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.
-7-
