Exhibit 10.84.1
Execution Copy
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Security Agreement") is
entered into as of March 31, 2004 by and among HEADWATERS INCORPORATED, a
Delaware corporation (the "Borrower") and each of the subsidiaries of the
Borrower listed on the signature pages hereto (collectively, the "Initial
Grantors" and together with any additional Domestic Subsidiaries, whether now
existing or hereafter formed which become parties to this Security Agreement by
executing a Supplement hereto in substantially the form of Annex I, the
"Grantors"), and BANK ONE, NA (Main Office Chicago), in its capacity as
administrative agent (the "Administrative Agent") for the lenders party to the
Credit Agreement referred to below (collectively, the "Lenders").
PRELIMINARY STATEMENT
The Borrower, the Administrative Agent and the Lenders are entering
into a Credit Agreement dated as of the date hereof (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement").
The Grantors are entering into this Security Agreement in order to induce the
Lenders to enter into and extend credit to the Borrower under the Credit
Agreement.
ACCORDINGLY, the Grantors and the Administrative Agent, on behalf of
the Holders of Secured Obligations, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Terms Defined in Credit Agreement. All capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement.
1.2. Terms Defined in New York UCC. Terms defined in the New York UCC
which are not otherwise defined in this Security Agreement are used herein as
defined in the New York UCC.
1.3. Definitions of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the Preliminary Statement, the
following terms shall have the following meanings:
"Accounts" shall have the meaning set forth in Article 9 of the New
York UCC.
"Article" means a numbered article of this Security Agreement, unless
another document is specifically referenced.
"Chattel Paper" shall have the meaning set forth in Article 9 of the
New York UCC.
"Collateral" means all Accounts, Chattel Paper, Commercial Tort Claims,
Documents, Equipment, Fixtures, Goods, General Intangibles, Instruments,
Inventory, Investment Property, Pledged Deposits, Supporting Obligations and
Other Collateral, wherever located, in which any Grantor now has or hereafter
acquires any right or interest, and the proceeds (including Stock Rights),
insurance proceeds and products thereof, together with all books and records,
customer lists, credit files, computer files, programs, printouts and other
computer materials and records related thereto.
"Commercial Tort Claims" means those certain currently existing
commercial tort claims of any Grantor, including each commercial tort claim
specifically described in Exhibit E.
"Control" shall have the meaning set forth in Article 8 or, if
applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the New York
UCC.
"Default" shall have the meaning set forth in the Credit Agreement.
"Deposit Accounts" shall have the meaning set forth in Article 9 of the
New York UCC.
"Documents" shall have the meaning set forth in Article 9 of the New
York UCC.
"Equipment" shall have the meaning set forth in Article 9 of the New
York UCC.
"Exhibit" refers to a specific exhibit to this Security Agreement,
unless another document is specifically referenced.
"Fixtures" shall have the meaning set forth in Article 9 of the New
York UCC.
"General Intangibles" shall have the meaning set forth in Article 9 of
the New York UCC.
"Goods" shall have the meaning set forth in Article 9 of the New York
UCC.
"Instruments" shall have the meaning set forth in Article 9 of the New
York UCC.
"Inventory" shall have the meaning set forth in Article 9 of the New
York UCC.
"Investment Property" shall have the meaning set forth in Article 9 of
the New York UCC.
"New York UCC" means the New York Uniform Commercial Code as in effect
from time to time.
"Other Collateral" means any property of the Grantors, not included
within the defined terms Accounts, Chattel Paper, Commercial Tort Claims,
Documents, Equipment, Fixtures, General Intangibles, Instruments, Inventory,
Investment Property and Pledged Deposits, including, without limitation, all
cash on hand, letter-of-credit rights, letters of credit, Stock Rights and
Deposit Accounts or other deposits (general or special, time or demand,
provisional or final) with any bank or other financial institution, it being
intended that the Collateral include all real and personal property of the
Grantors.
"Pledged Deposits" means all time deposits of money (other than Deposit
Accounts and Instruments), whether or not evidenced by certificates, which a
Grantor may from time to time designate as pledged to the Administrative Agent
or to any Holder of Secured Obligations as security for any Obligation, and all
rights to receive interest on said deposits.
"Receivables" means the Accounts, Chattel Paper, Documents, Investment
Property, Instruments or Pledged Deposits, and any other rights or claims to
receive money which are General Intangibles or which are otherwise included as
Collateral.
"Required Secured Parties" means (x) prior to an acceleration of the
Secured Obligations under the Credit Agreement, the Required Lenders, (y) after
an acceleration of the Secured Obligations under the Credit Agreement but prior
to the date upon which the Credit Agreement has terminated by its terms and all
of the Secured Obligations thereunder have been paid in full, Lenders and their
Affiliates holding in the aggregate more than 50% of the total of (i) the unpaid
principal amount of the outstanding Loans and LC Obligations and (ii) the
aggregate net early termination payments and all other amounts then due and
unpaid from the Borrower to the Lenders or their Affiliates under Rate
Management Transactions, as determined by the Administrative Agent in its
reasonable discretion, and (z) after the Credit Agreement has terminated by its
terms and all of the Secured Obligations thereunder have been paid in full
(whether or not the Secured Obligations under the Credit Agreement were ever
accelerated), Lenders and their Affiliates holding in the aggregate more than
50% of the aggregate net early termination payments and all other amounts then
due and unpaid from the Borrower to the Lenders or their Affiliates under Rate
Management Transactions, as determined by the Administrative Agent in its
reasonable discretion.
"Section" means a numbered section of this Security Agreement, unless
another document is specifically referenced.
"Security" has the meaning set forth in Article 8 of the New York UCC.
"Stock Rights" means any securities, dividends or other distributions
and any other right or property which any Grantor shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any securities or other ownership interests in a
corporation, partnership, joint venture or limited liability company
constituting Collateral and any securities, any right to receive securities and
any right to receive earnings, in which any Grantor now has or hereafter
acquires any right, issued by an issuer of such securities.
"Supporting Obligation" shall have the meaning set forth in Article 9
of the New York UCC.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
GRANT OF SECURITY INTEREST
Each of the Grantors hereby pledges, assigns and grants to the
Administrative Agent, on behalf of and for the ratable benefit of the Holders of
Secured Obligations and (to the extent specifically provided herein) their
Affiliates, a security interest in all of such Grantor's right, title and
interest, whether now owned or hereafter acquired, in and to the Collateral to
secure the prompt and complete payment and performance of the Secured
Obligations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of the Initial Grantors represents and warrants to the
Administrative Agent and the Holders of Secured Obligations, and each Grantor
that becomes a party to this Security Agreement pursuant to the execution of a
Security Agreement Supplement in substantially the form of Annex I represents
and warrants (after giving effect to supplements to each of the Exhibits hereto
with respect to such subsequent Grantor as attached to such Security Agreement
Supplement), that:
3.1. Title, Authorization, Validity and Enforceability. Such Grantor
has good and valid rights in or the power to transfer the Collateral owned by it
and title to the Collateral with respect to which it has purported to grant a
security interest hereunder, free and clear of all Liens except for Liens
permitted under Section 6.12 of the Credit Agreement, and has full corporate,
limited liability company or partnership, as applicable, power and authority to
grant to the Administrative Agent the security interest in such Collateral
pursuant hereto. The execution and delivery by such Grantor of this Security
Agreement has been duly authorized by proper corporate, limited liability
company or partnership, as applicable, other proceedings, and this Security
Agreement constitutes a legal, valid and binding obligation of such Grantor and
creates a security interest which is enforceable against such Grantor in all
Collateral it now owns or hereafter acquires, except as enforceability may be
limited by (i) bankruptcy, insolvency, fraudulent conveyances, reorganization or
similar laws relating to or affecting the enforcement of creditors' rights
generally, (ii) general equitable principles (whether considered in a proceeding
in equity or at law), and (iii) requirements of reasonableness, good faith and
fair dealing. When financing statements have been filed in the appropriate
offices against such Grantor in the locations listed on Exhibit C, the
Administrative Agent will have a fully perfected first priority security
interest in the Collateral owned by such Grantor in which a security interest
may be perfected by filing, subject only to prior and junior Liens permitted
under Section 6.12 of the Credit Agreement.
3.2. Principal Location. Such Grantor's mailing address and the
location of its place of business (if it has only one) or its chief executive
office (if it has more than one place of business), is disclosed in Exhibit A;
such Grantor has no other places of business except those set forth in Exhibit
A.
3.3. Property Locations. The Inventory, Equipment and Fixtures of each
Grantor are located solely at the locations of such Grantor described in Exhibit
A. All of said locations are leased by such Grantor except for locations (i)
designated on Exhibit A as owned by such Grantor and (ii) at which Inventory is
held in a public warehouse or is otherwise held by a bailee or on consignment by
such Grantor, with respect to which Inventory such Grantor has delivered
bailment agreements, warehouse receipts, financing statements or other documents
reasonably satisfactory to the Administrative Agent to protect the
Administrative Agent's and the Holders of Secured Obligations' security interest
in such Inventory.
3.4. No Other Names. Except as disclosed in Schedule 3.4, such Grantor
has not conducted business under any name except the name in which it has
executed this Security Agreement, which is the exact name as it appears in such
Grantor's organizational documents, as amended, as filed with such Grantor's
jurisdiction of organization as of the Closing Date.
3.5. Accounts and Chattel Paper. The names of the obligors, amounts
owing, due dates and other information with respect to the Accounts and Chattel
Paper owned by such Grantor are and will be, taken as a whole, materially free
of error in all records of such Grantor relating thereto and in all invoices and
reports with respect thereto furnished to the Administrative Agent by such
Grantor from time to time. As of the time when each Account or each item of
Chattel Paper arises, such Grantor shall be deemed to have represented and
warranted that such Account or Chattel Paper, as the case may be, when taken
together with the other Accounts and Chattel Paper and all records relating
thereto, are materially free from error.
3.6. No Financing Statements. No financing statement describing all or
any portion of the Collateral which has not lapsed or been terminated naming
such Grantor as debtor has been filed in any jurisdiction except financing
statements (i) naming the Administrative Agent on behalf of the Holders of
Secured Obligations as the secured party and (ii) in respect of Liens permitted
by Section 6.15 of the Credit Agreement; provided, that nothing herein shall be
deemed to constitute an agreement to subordinate any of the Liens of the
Administrative Agent under the Loan Documents to any Liens otherwise permitted
under Section 6.15 of the Credit Agreement, except to the extent permitted
therein.
3.7. Federal Employer Identification Number; State Organization Number;
Jurisdiction of Organization. Such Grantor's federal employer identification
number is, and if such Grantor is a registered organization, such Grantor's
State of organization, type of organization and State of organization
identification number and is, as set forth in Exhibit C.
3.8. Pledged Securities and Other Investment Property. Exhibit D sets
forth a complete and accurate list of the Instruments, Securities and other
Investment Property delivered to the Administrative Agent. Each Grantor is the
direct and beneficial owner of each Instrument, Security and other type of
Investment Property listed on Exhibit D as being owned by it, free and clear of
any Liens, except for the security interest granted to the Administrative Agent
for the benefit of the Holders of Secured Obligations hereunder. Each Grantor
further represents and warrants that (i) all such Instruments, Securities or
other types of Investment Property which are shares of stock in a corporation or
ownership interests in a partnership or limited liability company have been (to
the extent such concepts are relevant with respect to such Instrument, Security
or other type of Investment Property) duly and validly issued, are fully paid
and non-assessable and constitute the percentage of the issued and outstanding
shares of stock (or other equity interests) of the respective issuers thereof
indicated on Exhibit D hereto and (ii) with respect to any certificates
delivered to the Administrative Agent representing an ownership interest in a
partnership or limited liability company, either such certificates are
Securities as defined in Article 8 of the New York UCC of the applicable
jurisdiction as a result of actions by the issuer or otherwise, or, if such
certificates are not Securities, such Grantor has so informed the Administrative
Agent so that the Administrative Agent may take steps to perfect its security
interest therein as a General Intangible.
ARTICLE IV
COVENANTS
From the date of this Security Agreement and thereafter until this
Security Agreement is terminated, each of the Initial Grantors agrees, and from
and after the effective date of any Security Agreement Supplement applicable to
any Grantor (and after giving effect to supplements to each of the Exhibits
hereto with respect to such subsequent Grantor as attached to such Security
Agreement Supplement) and thereafter until this Security Agreement is terminated
each such subsequent Grantor agrees:
4.1. General.
4.1.1 Financing Statements and Other Actions; Defense of
Title. Each Grantor hereby authorizes the Administrative Agent to file,
and if reasonably requested will execute and deliver to the
Administrative Agent, all financing statements describing the
Collateral owned by such Grantor and other documents and take such
other actions as may from time to time reasonably be requested by the
Administrative Agent in order to maintain a first perfected security
interest in and, if applicable, Control of, the Collateral owned by
such Grantor, subject to Liens permitted under Section 6.15 of the
Credit Agreement (except to the extent permitted therein); provided,
that nothing herein shall be deemed to constitute an agreement to
subordinated any of the Liens of the Administrative Agent under the
Loan Documents to any Liens otherwise permitted under Section 6.15 of
the Credit Agreement. Such financing statements may describe the
Collateral in the same manner as described herein or may contain an
indication or description of collateral that describes such property in
any other manner as the Administrative Agent may determine, in its sole
discretion, is necessary, advisable or prudent to ensure that the
perfection of the security interest in the Collateral granted to the
Administrative Agent herein, including, without limitation, describing
such property as "all assets" or "all personal property, whether now
owned or hereafter acquired." Each Grantor will take any and all
actions necessary to defend title to the Collateral owned by such
Grantor against all persons and to defend the security interest of the
Administrative Agent in such Collateral and the priority thereof
against any Lien not expressly permitted hereunder.
4.1.2 Change in Corporate Existence, Type or Jurisdiction of
Organization, Location, Name. Each Grantor will:
(i) preserve its existence and corporate structure as in effect on
the Closing Date;
(ii) not change its jurisdiction of organization;
(iii) not maintain its place of business (if it has only one) or its
chief executive office (if it has more than one place of
business) at a location other than a location specified on
Exhibit A; and
(iv) not (i) have a Substantial Portion of the Inventory, Equipment
or Fixtures or proceeds or products thereof (other than
Inventory and proceeds thereof disposed of as permitted by the
Credit Agreement) at a location other than a location
specified in Exhibit A or (ii) change its name or taxpayer
identification number
unless, in each such case, such Grantor shall have given the
Administrative Agent prior written notice of such event or occurrence
and such Grantor shall have taken such steps as are reasonably
necessary or advisable to properly maintain the validity, perfection
and priority of the Administrative Agent's security interest in the
Collateral owned by such Grantor.
4.1.3 Other Financing Statements. No Grantor will suffer to
exist or authorize the filing of any financing statement naming it as
debtor covering all or any portion of the Collateral owned by such
Grantor, except any Financing Statement authorized under Section 4.1.1
hereof.
4.2. Receivables.
4.2.1 Collection of Receivables. Except as otherwise provided
in this Security Agreement, each Grantor will collect and enforce, at
such Grantor's sole expense, all amounts due or hereafter due to such
Grantor under the Receivables owned by such Grantor.
4.2.2 Delivery of Invoices. Each Grantor will deliver to the
Administrative Agent immediately upon its request after the occurrence
of a Default duplicate invoices with respect to each Account owned by
such Grantor bearing such language of assignment as the Administrative
Agent shall specify.
4.3. Instruments, Securities, Chattel Paper, Documents and Pledged
Deposits. Each Grantor will (i) deliver to the Administrative Agent immediately
upon execution of this Security Agreement the originals of all Chattel Paper,
Securities and Instruments constituting Collateral (if any then exist), (ii)
hold in trust for the Administrative Agent upon receipt and immediately
thereafter deliver to the Administrative Agent any Chattel Paper, Securities and
Instruments constituting Collateral, (iii) upon the designation of any Pledged
Deposits (as set forth in the definition thereof), deliver to the Administrative
Agent such Pledged Deposits which are evidenced by certificates included in the
Collateral endorsed in blank, marked with such legends and assigned as the
Administrative Agent shall specify, and (iv) upon the Administrative Agent's
request, after the occurrence and during the continuance of a Default, deliver
to the Administrative Agent (and thereafter hold in trust for the Administrative
Agent upon receipt and immediately deliver to the Administrative Agent) any
Document evidencing or constituting Collateral; provided, however, that this
Section 4.3 shall not have any application with respect to Instruments,
Securities, Chattel Paper, Documents and Pledged Deposits used by the Borrower
in connection with Margin Activities permitted under the Credit Agreement.
4.4. Uncertificated Securities and Certain Other Investment Property.
Each Grantor will permit the Administrative Agent from time to time to cause the
appropriate issuers (and, if held with a securities intermediary, such
securities intermediary) of uncertificated securities or other types of
Investment Property not represented by certificates which are Collateral owned
by such Grantor to xxxx their books and records with the numbers and face
amounts of all such uncertificated securities or other types of Investment
Property not represented by certificates and all rollovers and replacements
therefor to reflect the Lien of the Administrative Agent granted pursuant to
this Security Agreement. Each Grantor will use all commercially reasonable
efforts, with respect to Investment Property constituting Collateral owned by
such Grantor held with a financial intermediary, to cause such financial
intermediary to enter into a control agreement with the Administrative Agent in
form and substance reasonably satisfactory to the Administrative Agent.
Notwithstanding anything in this Section 4.4 to the contrary, this Section 4.4
shall not have any application with respect to Investment Property used by the
Borrower in connection with Margin Activities permitted under the Credit
Agreement.
4.5. Stock and Other Ownership Interests.
4.5.1 Changes in Capital Structure of Issuers. No Grantor will
(i) permit or suffer any issuer of privately held corporate securities
or other ownership interests in a corporation, partnership, joint
venture or limited liability company constituting Collateral owned by
such Grantor to dissolve, liquidate, retire any of its capital stock or
other Instruments or Securities evidencing ownership, reduce its
capital or merge or consolidate with any other entity, or (ii) vote any
of the Instruments, Securities or other Investment Property in favor of
any of the foregoing, except in each case to the extent permitted under
Section 6.11 of the Credit Agreement.
4.5.2 Issuance of Additional Securities. No Grantor will
permit or suffer the issuer of privately held corporate securities or
other ownership interests in a corporation, partnership, joint venture
or limited liability company constituting Collateral to issue any such
securities or other ownership interests, any right to receive the same
or any right to receive earnings, except to such Grantor; provided,
however, that this Section 4.5.2 shall have no application with respect
to any corporation, partnership, joint venture or limited liability
company which is not a Subsidiary of such Grantor (including, without
limitation, Persons in which a Permitted Alternative Fuel Acquisition
has been made).
4.5.3 Registration of Pledged Securities and other Investment
Property. Each Grantor will permit any registerable Collateral owned by
such Grantor to be registered in the name of the Administrative Agent
or its nominee at any time at the option of the Required Secured
Parties following the occurrence and during the continuance of a
Default and without any further consent of such Grantor; provided,
however, that this Section 4.5.3 shall not have any application with
respect to any registerable Collateral used in connection with Margin
Activities permitted under the Credit Agreement.
4.5.4 Exercise of Rights in Pledged Securities and other
Investment Property. Each Grantor will permit the Administrative Agent
or its nominee at any time after the continuance of a Default, without
notice, to exercise or refrain from exercising any and all voting and
other consensual rights pertaining to the Collateral owned by such
Grantor or any part thereof, and to receive all dividends and interest
in respect of such Collateral.
4.6. Pledged Deposits. No Grantor will withdraw all or any portion of
any Pledged Deposit or fail to rollover said Pledged Deposit without the prior
written consent of the Administrative Agent.
4.7. Deposit Accounts. Each Grantor will (i) upon the Administrative
Agent's request, cause each bank or other financial institution in which it
maintains (a) a Deposit Account to enter into a control agreement with the
Administrative Agent, in form and substance reasonably satisfactory to the
Administrative Agent in order to give the Administrative Agent Control of the
Deposit Account or (b) other deposits (general or special, time or demand,
provisional or final) to be notified of the security interest granted to the
Administrative Agent hereunder and cause each such bank or other financial
institution to acknowledge such notification in writing and (ii) upon the
Administrative Agent's request after the occurrence and during the continuance
of a Default, deliver to each such bank or other financial institution a letter,
in form and substance reasonably acceptable to the Administrative Agent,
transferring ownership of the Deposit Account to the Administrative Agent or
transferring dominion and control over each such other deposit to the
Administrative Agent until such time as no Default exists. In the case of
deposits maintained with Lenders, the terms of such letter shall be subject to
the provisions of the Credit Agreement regarding setoffs.
4.8. Letter-of-Credit Rights. Each Grantor will, upon the
Administrative Agent's request, cause each issuer of a letter of credit, to
consent to the assignment of proceeds of the letter of credit in order to give
the Administrative Agent Control of the letter-of-credit rights to such letter
of credit.
4.9. Federal, State or Municipal Claims. Each Grantor will notify the
Administrative Agent of any Collateral owned by such Grantor which constitutes a
claim against the United States government or any state or local government or
any instrumentality or agency thereof, the assignment of which claim is
restricted by federal, state or municipal law.
4.10. Intellectual Property. If, after the date hereof, any Grantor
files an application to register any new patentable invention, trademark or
copyright in addition to the patents, trademarks and copyrights described in
Exhibit B, which are all of such Grantor's patents, trademarks and copyrights as
of the Closing Date, then such Grantor shall give the Administrative Agent
notice thereof as part of the compliance certificate provided to the Agent
pursuant to Section 6.1.3 of the Credit Agreement, and the security interest
granted to the Administrative Agent hereunder shall automatically apply thereto.
Each Grantor agrees promptly upon request by the Administrative Agent to execute
and deliver to the Administrative Agent any supplement to this Security
Agreement or any other document reasonably requested by the Administrative Agent
to evidence such security interest in a form appropriate for recording in the
applicable federal office. Each Grantor also hereby authorizes the
Administrative Agent to modify this Security Agreement unilaterally (i) by
amending Exhibit B to include any future patents, trademarks and/or copyrights
of which the Administrative Agent receives notification from such Grantor
pursuant hereto and (ii) by recording, in addition to and not in substitution
for this Security Agreement, a duplicate original of this Security Agreement
containing in Exhibit B a description of such future patents, trademarks and/or
copyrights.
4.11. Commercial Tort Claims. If, after the date hereof, any Grantor
identifies the existence of a commercial tort claim belonging to such Grantor
that has arisen in the course of such Grantor's business in addition to the
commercial tort claims described in Exhibit E, which are all of such Grantor's
commercial tort claims as of the Closing Date, then such Grantor shall give the
Administrative Agent notice thereof as part of the compliance certificate
provided to the Agent pursuant to Section 6.1.3 of the Credit Agreement. Each
Grantor agrees promptly upon request by the Administrative Agent to execute and
deliver to the Administrative Agent any supplement to this Security Agreement or
any other document reasonably requested by the Administrative Agent to evidence
the grant of a security interest therein in favor of the Administrative Agent.
ARTICLE V
DEFAULT
5.1. Acceleration and Remedies. Upon the acceleration of the Secured
Obligations under the Credit Agreement pursuant to Section 8.1 thereof, the
Obligations and, to the extent provided for under the Rate Management
Transactions evidencing the same, the Rate Management Obligations, shall
immediately become due and payable without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, and the
Administrative Agent may, with the concurrence or at the direction of the
Required Secured Parties, exercise any or all of the following rights and
remedies:
5.1.1 Those rights and remedies provided in this Security
Agreement, the Credit Agreement, or any other Loan Document, provided
that this Section 5.1.1 shall not be understood to limit any rights or
remedies available to the Administrative Agent and the Holders of
Secured Obligations prior to a Default.
5.1.2 Those rights and remedies available to a secured party
under the New York UCC (whether or not the New York UCC applies to the
affected Collateral) or under any other applicable law (including,
without limitation, any law governing the exercise of a bank's right of
setoff or bankers' lien) when a debtor is in default under a security
agreement.
5.1.3 Without notice except as specifically provided in
Section 8.1 hereof or elsewhere herein, sell, lease, assign, grant an
option or options to purchase or otherwise dispose of the Collateral or
any part thereof in one or more parcels at public or private sale, for
cash, on credit or for future delivery, and upon such other terms as
the Administrative Agent may deem commercially reasonable.
The Administrative Agent, on behalf of the secured parties, may comply with any
applicable state or federal law requirements in connection with a disposition of
the Collateral, and such compliance will not be considered to adversely affect
the commercial reasonableness of any sale of the Collateral.
If, after the Credit Agreement has terminated by its terms and all of the
Obligations have been paid in full, there remain Rate Management Obligations
outstanding, the Required Secured Parties may exercise the remedies provided in
this Section 5.1 upon the occurrence of any event which would allow or require
the termination or acceleration of any Rate Management Obligations pursuant to
the terms of the agreement governing any Rate Management Transaction.
5.2. Grantors' Obligations Upon Default. Upon the request of the
Administrative Agent after the occurrence and during the Continuation of a
Default, each Grantor will:
5.2.1 Assembly of Collateral. Assemble and make available to
the Administrative Agent the Collateral and all records relating
thereto at any place or places specified by the Administrative Agent.
5.2.2 Secured Party Access. Permit the Administrative Agent,
by the Administrative Agent's representatives and agents, to enter any
premises where all or any part of the Collateral, or the books and
records relating thereto, or both, are located, to take possession of
all or any part of the Collateral and to remove all or any part of the
Collateral.
5.3. License. The Administrative Agent is hereby granted a license or
other right to use, following the occurrence and during the continuance of a
Default, without charge, each Grantor's labels, patents, copyrights, rights of
use of any name, trade secrets, trade names, trademarks, service marks, customer
lists and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising for sale,
and selling any Collateral, and, following the occurrence and during the
continuance of a Default, such Grantor's rights under all licenses and all
franchise agreements shall inure to the Administrative Agent's benefit. In
addition, each Grantor hereby irrevocably agrees that the Administrative Agent
may, following the occurrence and during the continuance of a Default, sell any
of such Grantor's Inventory directly to any person, including without limitation
persons who have previously purchased such Grantor's Inventory from such Grantor
and in connection with any such sale or other enforcement of the Administrative
Agent's rights under this Security Agreement, may sell Inventory which bears any
trademark owned by or licensed to such Grantor and any Inventory that is covered
by any copyright owned by or licensed to such Grantor and the Administrative
Agent may finish any work in process and affix any trademark owned by or
licensed to such Grantor and sell such Inventory as provided herein.
ARTICLE VI
WAIVERS, AMENDMENTS AND REMEDIES
No delay or omission of the Administrative Agent or any Holder of
Secured Obligations to exercise any right or remedy granted under this Security
Agreement shall impair such right or remedy or be construed to be a waiver of
any Default or an acquiescence therein, and any single or partial exercise of
any such right or remedy shall not preclude any other or further exercise
thereof or the exercise of any other right or remedy. No waiver, amendment or
other variation of the terms, conditions or provisions of this Security
Agreement whatsoever shall be valid unless in writing signed by the
Administrative Agent with the concurrence or at the direction of the Lenders
required under Section 8.2 of the Credit Agreement and each Grantor, and then
only to the extent in such writing specifically set forth, provided that the
addition of any Domestic Subsidiary as a Grantor hereunder by execution of a
Security Agreement Supplement in the form of Annex I (with such modifications as
shall be acceptable to the Administrative Agent) shall not require receipt of
any consent from or execution of any documentation by any other Grantor party
hereto. All rights and remedies contained in this Security Agreement or by law
afforded shall be cumulative and all shall be available to the Administrative
Agent and the Holders of Secured Obligations until the Secured Obligations have
been paid in full.
ARTICLE VII
PROCEEDS; COLLECTION OF RECEIVABLES
7.1. Lockboxes. Upon request of the Administrative Agent after the
occurrence and during the continuation of a Default, each Grantor shall execute
and deliver to the Administrative Agent lockbox agreements in the form provided
by or otherwise acceptable to the Administrative Agent, which agreements shall
be accompanied by an acknowledgment by the bank where the lockbox is located of
the Lien of the Administrative Agent granted hereunder and of irrevocable
instructions to wire all amounts collected therein to a special collateral
account at the Administrative Agent.
7.2. Collection of Receivables. The Administrative Agent may at any
time after the occurrence and during the continuation of a Default, by giving
each Grantor written notice, elect to require that the Receivables be paid
directly to the Administrative Agent for the benefit of the Holders of Secured
Obligations. In such event, each Grantor shall, and shall permit the
Administrative Agent to, promptly notify the account debtors or obligors under
the Receivables owned by such Grantor of the Administrative Agent's interest
therein and direct such account debtors or obligors to make payment of all
amounts then or thereafter due under such Receivables directly to the
Administrative Agent. Upon receipt of any such notice from the Administrative
Agent, each Grantor shall thereafter hold in trust for the Administrative Agent,
on behalf of the Holders of Secured Obligations, all amounts and proceeds
received by it with respect to the Receivables and Other Collateral and
immediately and at all times thereafter deliver to the Administrative Agent all
such amounts and proceeds in the same form as so received, whether by cash,
check, draft or otherwise, with any necessary endorsements. The Administrative
Agent shall hold and apply funds so received as provided by the terms of
Sections 7.3 and 7.4 hereof.
7.3. Special Collateral Account. Upon the occurrence and during the
continuation of a Default, the Administrative Agent may require all cash
proceeds of the Collateral to be deposited in a special non-interest bearing
cash collateral account with the Administrative Agent and held there as security
for the Secured Obligations. No Grantor shall have any control whatsoever over
said cash collateral account. If any Default has occurred and is continuing, the
Administrative Agent may (and shall, at the direction of the Required Secured
Parties), from time to time, apply the collected balances in said cash
collateral account to the payment of the Secured Obligations whether or not the
Secured Obligations shall then be due.
7.4. Application of Proceeds. The proceeds of the Collateral shall be
applied by the Administrative Agent to payment of the Secured Obligations in the
following order unless a court of competent jurisdiction shall otherwise direct:
(a) FIRST, to payment of all reasonable costs and expenses of
the Administrative Agent incurred in connection with the collection and
enforcement of the Secured Obligations or of the security interest
granted to the Administrative Agent pursuant to this Security
Agreement;
(b) SECOND, to payment of that portion of the Secured
Obligations constituting accrued and unpaid interest and fees, pro rata
among the Lenders and their Affiliates in accordance with the amount of
such accrued and unpaid interest and fees owing to each of them;
(c) THIRD, to payment of the principal of the Secured
Obligations and the net early termination payments and any other Rate
Management Obligations then due and unpaid from the Borrower to any of
the Lenders or their Affiliates, pro rata among the Lenders and their
Affiliates in accordance with the amount of such principal and such net
early termination payments and other Rate Management Obligations then
due and unpaid owing to each of them;
(d) FOURTH, to payment of any Secured Obligations (other than
those listed above) pro rata among those parties to whom such Secured
Obligations are due in accordance with the amounts owing to each of
them; and
(e) FIFTH, the balance, if any, after all of the Secured
Obligations have been satisfied, shall be distributed by the
Administrative Agent to the applicable Grantor or at its direction.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Notice of Disposition of Collateral; Condition of Collateral. Each
Grantor hereby waives notice of the time and place of any public sale or the
time after which any private sale or other disposition of all or any part of the
Collateral may be made. To the extent such notice may not be waived under
applicable law, any notice made shall be deemed reasonable if sent to the
Borrower, addressed as set forth in Article IX, at least thirty days prior to
(i) the date of any such public sale or (ii) the time after which any such
private sale or other disposition may be made. Administrative Agent shall have
no obligation to clean-up or otherwise prepare the Collateral for sale.
8.2. Compromises and Collection of Collateral. Each Grantor and the
Administrative Agent recognize that setoffs, counterclaims, defenses and other
claims may be asserted by obligors with respect to certain of the Receivables,
that certain of the Receivables may be or become uncollectible in whole or in
part and that the expense and probability of success in litigating a disputed
Receivable may exceed the amount that reasonably may be expected to be recovered
with respect to a Receivable. In view of the foregoing, each Grantor agrees that
the Administrative Agent may at any time and from time to time, if a Default has
occurred and is continuing, compromise with the obligor on any Receivable,
accept in full payment of any Receivable such amount as the Administrative Agent
in its sole discretion shall determine or abandon any Receivable, and any such
action by the Administrative Agent shall be commercially reasonable so long as
the Administrative Agent acts in good faith based on information known to it at
the time it takes any such action.
8.3. Secured Party Performance of Grantor's Obligations. Without having
any obligation to do so, the Administrative Agent may perform or pay any
obligation which any Grantor has agreed to perform or pay in this Security
Agreement and such Grantor shall reimburse the Administrative Agent for any
reasonable amounts paid by the Administrative Agent pursuant to this Section
8.3. Each Grantor's obligation to reimburse the Administrative Agent pursuant to
the preceding sentence shall be a Secured Obligation payable on demand.
8.4. Authorization for Secured Party to Take Certain Action. Each
Grantor irrevocably authorizes the Administrative Agent at any time and from
time to time in the sole discretion of the Administrative Agent and appoints the
Administrative Agent as its attorney in fact (i) to execute on behalf of such
Grantor as debtor and to file financing statements necessary or desirable in the
Administrative Agent's sole discretion to perfect and to maintain the perfection
and priority of the Administrative Agent's security interest in the Collateral,
(ii) upon the occurrence and during the continuation of a Default, to indorse
and collect any cash proceeds of the Collateral, (iii) to file a carbon,
photographic or other reproduction of this Security Agreement or any financing
statement with respect to the Collateral as a financing statement and to file
any other financing statement or amendment of a financing statement (which does
not add new collateral or add a debtor) in such offices as the Administrative
Agent in its sole discretion deems necessary or desirable to perfect and to
maintain the perfection and priority of the Administrative Agent's security
interest in the Collateral, (iv) to contact and enter into one or more
agreements with the issuers of uncertificated securities which are Collateral
owned by such Grantor and which are Securities or with financial intermediaries
holding other Investment Property as may be necessary or advisable to give the
Administrative Agent Control over such Securities or other Investment Property,
(v) upon the occurrence and during the continuation of a Default, subject to the
terms of the Credit Agreement, to enforce payment of the Instruments, Accounts
and Receivables in the name of the Administrative Agent or such Grantor, (vi)
upon the occurrence and during the continuation of a Default, to apply the
proceeds of any Collateral received by the Administrative Agent to the Secured
Obligations as provided in Article VII and (vii) upon the occurrence and during
the continuation of a Default, to discharge past due taxes, assessments,
charges, fees or Liens on the Collateral (except for such Liens as are
specifically permitted hereunder or under any other Loan Document), and each
Grantor agrees to reimburse the Administrative Agent on demand for any
reasonable payment made or any reasonable expense incurred by the Administrative
Agent in connection therewith, provided that this authorization shall not
relieve any Grantor of any of its obligations under this Security Agreement or
under the Credit Agreement.
8.5. Specific Performance of Certain Covenants. Each Grantor
acknowledges and agrees that a breach of any of the covenants contained in
Sections 4.4 or 5.2 or in Article VII hereof will cause irreparable injury to
the Administrative Agent and the Holders of Secured Obligations, that the
Administrative Agent and Holders of Secured Obligations have no adequate remedy
at law in respect of such breaches and therefore agrees, without limiting the
right of the Administrative Agent or the Holders of Secured Obligations to seek
and obtain specific performance of other obligations of the Grantors contained
in this Security Agreement, that the covenants of the Grantors contained in the
Sections referred to in this Section 8.5 shall be specifically enforceable
against the Grantors.
8.6. Use and Possession of Certain Premises. Upon the occurrence and
during the continuation of a Default, the Administrative Agent shall be entitled
to occupy and use any premises owned or leased by the Grantors where any of the
Collateral or any records relating to the Collateral are located until the
Secured Obligations are paid or the Collateral is removed therefrom, whichever
first occurs, without any obligation to pay any Grantor for such use and
occupancy.
8.7. Benefit of Agreement. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of the Grantors, the
Administrative Agent and the Holders of Secured Obligations and their respective
successors and assigns (including all persons who become bound as a debtor to
this Security Agreement), except that the Grantors shall not have the right to
assign their rights or delegate their obligations under this Security Agreement
or any interest herein, without the prior written consent of the Administrative
Agent.
8.8. Survival of Representations. All representations and warranties of
the Grantors contained in this Security Agreement shall survive the execution
and delivery of this Security Agreement.
8.9. Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.
8.10. Termination. This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been
indefeasibly paid and performed in full and no commitments of the Administrative
Agent or the Holders of Secured Obligations which would give rise to any Secured
Obligations are outstanding.
8.11. Entire Agreement. This Security Agreement embodies the entire
agreement and understanding between the Grantors and the Administrative Agent
relating to the Collateral and supersedes all prior agreements and
understandings between the Grantors and the Administrative Agent relating to the
Collateral.
8.12. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
8.13. Subordination of Intercompany Indebtedness. Each Grantor agrees
that any and all claims of such Grantor against any other Grantor with respect
to any payment or distribution of any kind or character, either in cash,
securities or other property is and shall be expressly subordinated to the
Secured Obligations pursuant to those terms and conditions set forth in the
Credit Agreement.
ARTICLE IX
NOTICES
9.1. Sending Notices. Any notice required or permitted to be given
under this Security Agreement shall be sent (and deemed received) in the manner
and to the addresses set forth in Article XIII of the Credit Agreement; and any
such notice delivered to the Borrower shall be deemed to have been delivered to
all of the Grantors.
9.2. Change in Address for Notices. Each of the Grantors, the
Administrative Agent and the Lenders may change the address for service of
notice upon it by a notice in writing to the other parties.
ARTICLE X
THE ADMINISTRATIVE AGENT
Bank One, NA (Main Office Chicago) has been appointed Administrative
Agent for the Holders of Secured Obligations hereunder pursuant to Article X of
the Credit Agreement. It is expressly understood and agreed by the parties to
this Security Agreement that any authority conferred upon the Administrative
Agent hereunder is subject to the terms of the delegation of authority made by
the Holders of Secured Obligations to the Administrative Agent pursuant to the
Credit Agreement, and that the Administrative Agent has agreed to act (and any
successor Administrative Agent shall act) as such hereunder only on the express
conditions contained in such Article X. Any successor Administrative Agent
appointed pursuant to Article X of the Credit Agreement shall be entitled to all
the rights, interests and benefits of the Administrative Agent hereunder.
[SIGNATURE PAGES FOLLOW]
SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT
IN WITNESS WHEREOF, each of the Grantors and the Administrative Agent
have executed this Security Agreement as of the date first above written.
HEADWATERS INCORPORATED, as a Grantor
By /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
COVOL SERVICES CORPORATION,
HEADWATERS CLEAN COAL CORP.,
HEADWATERS HEAVY OIL, INC.,
HEADWATERS NANOKINETIX, INC.,
HEADWATERS OLYSUB CORPORATION,
HEADWATERS TECHNOLOGY INNOVATION
GROUP, INC.,
HTI CHEMICAL SUBSIDIARY, INC.
HYDROCARBON TECHNOLOGIES, INC.,
each as a Guarantor
By /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President, General Counsel and
Secretary
ACM GEORGIA, INC.,
AMERICAN CONSTRUCTION MATERIALS, INC.,
GLOBAL CLIMATE RESERVE CORPORATION,
ISG LIBERTY, INC.,
ISG RESOURCES, INC.,
BEST MASONRY & TOOL SUPPLY, INC.,
XXXXX X. XXXXXXX, INC.,
UNITED TERRAZZO SUPPLY CO., INC.,
MAGNA WALL, INC.,
ISG MANUFACTURED PRODUCTS, INC.,
ISG PARTNER, INC.,
ISG SERVICES CORPORATION,
ISG SWIFT CRETE, INC.,
DON'S BUILDING SUPPLY, L.P.,
PALESTINE CONCRETE TILE COMPANY, L.P.,
each as a Guarantor
By /s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President, General Counsel
and Secretary
BANK ONE, NA, as Administrative Agent
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: First Vice President
