SECURITY AGREEMENT
Exhibit
10.3
THIS
SECURITY AGREEMENT is entered into as of April 6, 2007 by and between (i) SYPRIS
SOLUTIONS, INC., a Delaware corporation with its principal office and place
of
business and registered office in Louisville, Jefferson County, Kentucky (the
"Borrower"), (ii) SYPRIS TEST & MEASUREMENT, INC., a Delaware corporation
and subsidiary of the Borrower ("ST&M"), (iii) SYPRIS TECHNOLOGIES, INC., a
Delaware corporation and subsidiary of the Borrower ("ST"), (iv) SYPRIS
ELECTRONICS, LLC, a Delaware corporation and subsidiary of the Borrower ("SE"),
(v) SYPRIS DATA SYSTEMS, INC., a Delaware corporation and subsidiary of the
Borrower ("SDS"), (vi) SYPRIS TECHNOLOGIES XXXXXX, LLC, a Delaware corporation
and subsidiary of the Borrower ("STM"), (vii) SYPRIS TECHNOLOGIES KENTON, INC.,
a Delaware corporation and subsidiary of the Borrower ("STK") and (viii) SYPRIS
TECHNOLOGIES MEXICAN HOLDINGS, LLC ("STMH"), a Delaware corporation and
subsidiary of the Borrower ("SMH") (ST&M, ST, SE, SDS, STM, STK and STMH,
collectively, the "Guarantors"), and (ix) JPMORGAN CHASE BANK, N.A., with its
main office in Chicago, Illinois, a national banking association, in its
capacity as agent (the "Agent Bank") under the Loan Agreement referred to below,
and in its capacity as Collateral Agent ("the "Collateral Agent") under the
Collateral Sharing Agreement (defined below), for the benefit of the Banks
(defined below) and the Noteholders (defined below). Except as otherwise defined
herein, terms used herein and defined in the Collateral Sharing Agreement
(defined below) shall be used herein as therein defined.
PRELIMINARY
STATEMENT
WHEREAS,
the Agent Bank, the Banks identified on Schedule
1.1
thereto,
the Borrower and the Guarantors are entering into a certain Amended and Restated
Loan Agreement, dated as of the date hereof, as subsequently amended (the "Loan
Agreement"), providing for the making of Loans and the issuance of, and
participation in, Letters of Credit as contemplated therein;
WHEREAS,
the Borrower in June, 2004 issued its Senior Notes in the aggregate principal
amount of $55,000,000 in favor of the Noteholders, pursuant to the Note Purchase
Agreement;
WHEREAS,
the Borrower and the Noteholders are entering into a certain Third Amendment
to
Note Purchase Agreement, dated the date hereof (the "Third NPA Amendment")
pursuant to which the Borrowers and Noteholders agreed to amend certain terms
of
the Note Purchase Agreement;
WHEREAS,
the Borrower, the Guarantors, the Agent Bank, the Banks and the Noteholders
have
entered into an Amended and Restated Collateral Sharing Agreement dated as
of
the date hereof (as amended, restated or otherwise modified from time to time,
the "Collateral Sharing Agreement"), pursuant to which XX Xxxxxx Xxxxx Bank.
N.A., has been appointed as Collateral Agent, for the Banks and the
Noteholders;
WHEREAS,
it is a condition to the effectiveness of the Loan Agreement and the Third
NPA
Amendment that the Borrower and the Guarantors grant to the Collateral Agent,
for the benefit of the Collateral Agent, the Banks and the Noteholders, a
security interest in their accounts, equipment, general intangibles,
instruments, inventory, pledged deposits, and other collateral, as hereinafter
provided;
NOW,
THEREFORE, the Borrower and the Guarantors (each, an "Obligor and collectively,
the "Obligors") and the Collateral Agent, on behalf of the Banks and the
Noteholders, hereby agree as follows:
ARTICLE
I
DEFINITIONS
1.1. Terms
Defined in Collateral Sharing Agreement.
All
capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the Collateral Sharing Agreement.
1.2. Terms
Defined in Kentucky Uniform Commercial Code.
Terms
defined in the Kentucky UCC which are not otherwise defined in this Security
Agreement are used herein as defined in the Kentucky UCC.
1.3. Definitions
of Certain Terms Used Herein.
As used
in this Security Agreement, in addition to the terms defined in the introductory
paragraph hereof and the Preliminary Statement, the following terms shall have
the following meanings:
"Accounts"
shall have the meaning set forth in Article 9 of the Kentucky UCC.
"Article"
means a numbered article of this Security Agreement, unless another document
is
specifically referenced.
"Banks"
means the lenders party to the Loan Agreement and their successors and
assigns.
"Chattel
Paper" shall have the meaning set forth in Article 9 of the Kentucky
UCC.
"Collateral"
means all Accounts, Chattel Paper, Commercial Tort Claims, Documents, Equipment,
Fixtures, General Intangibles (including, without limitation, any Xxxx Claim),
Instruments, Investment Property (other than any equity interest in Subsidiaries
of the Obligors), Inventory, Pledged Deposits, cash and cash equivalents,
letter-of-credit rights, letters of credit and Deposit Accounts or other
deposits (general or special, time or demand, provisional or final) with any
bank or other financial institution or otherwise, wherever located, to the
full
extent of each Obligor's ownership right or ownership interest therein, now
or
hereafter acquired, and the Proceeds, insurance proceeds and products thereof,
and any Supporting Obligations relating to any of the foregoing, 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" shall have the meaning set forth in Article 9 of the Kentucky
UCC.
"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 Kentucky UCC.
"Xxxx
Bankruptcy Proceedings" means the bankruptcy case of Xxxx Corporation, a
Virginia corporation, under chapter 11 of the United States Code, 11 U.S.C.
§§101 - 1532, captioned as In re
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Xxxx
Corporation, et al., case no. 06-10354 (jointly administered) before the United
States Bankruptcy Court in the Southern District of New York, and any other
bankruptcy case or proceeding (foreign or domestic) relating to any of the
Xxxx
Entities.
"Xxxx
Claim" means any interest in any claim of any Obligor for damages arising out
of
any termination or rejection of any one or more of the Xxxx Supply Agreements
in
connection with or arising out of the Xxxx Bankruptcy Proceedings.
"Xxxx
Entities" means Xxxx Corporation, a Virginia corporation, its subsidiaries
and
affiliates, together with their respective successors and assigns, including,
without limitation any debtor-in-possession or any bankruptcy trustee acting
on
any of their behalf in connection with the Xxxx Bankruptcy
Proceedings."
"Xxxx
Supply Agreements" those certain agreements by and among any one or more of
the
Obligors on the one hand and any one or more of the Xxxx Entities on the other
hand, as each such agreement is amended, restated, replaced or otherwise
modified from time to time.
"Default"
means an event described in Section 5.1.
"Deposit
Accounts" shall have the meaning set forth in Article 9 of the Kentucky
UCC.
"Documents"
shall have the meaning set forth in Article 9 of the Kentucky UCC.
"Equipment"
shall have the meaning set forth in Article 9 of the Kentucky 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 Kentucky UCC.
"General
Intangibles" shall have the meaning set forth in Article 9 of the Kentucky
UCC.
"Kentucky
UCC" means the Kentucky Uniform Commercial Code as
in
effect
from time to time.
"Instruments"
shall have the meaning set forth in Article 9 of the Kentucky UCC.
"Inventory"
shall have the meaning set forth in Article 9 of the Kentucky UCC.
"Investment
Property" shall have the meaning set forth in Article 9 of the Kentucky
UCC.
"Lien"
means any lien (statutory or other), security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind
or
nature whatsoever (including, without limitation, the interest of a vendor
or
lessor under any conditional sale, capitalized lease or other title retention
agreement).
3
"Noteholders"
means the holders of the Senior Notes, together with their successors and
assigns.
"Obligations"
shall have the meaning set forth in the Collateral Sharing
Agreement.
"Person"
means an individual, partnership, corporation, limited liability company,
association, trust, unincorporated organization, or a government or agency
or
political subdivision thereof.
"Pledge
Agreement" means the Pledge Agreement, dated as of September 13, 2005, among
the
Borrower, STMH, ST and the Collateral Agent, as amended, restated or otherwise
modified from time to time.
"Pledged
Deposits" means all time deposits of money (other than Deposit Accounts and
Instruments), whether or not evidenced by certificates, and all rights to
receive interest on said deposits.
"Proceeds"
shall have the meaning set forth in Article 9 of the Kentucky UCC.
"Rate
Management Transaction" means any transaction (including an agreement with
respect thereto) now existing or hereafter entered into between any Obligor
and
any Bank or Affiliate thereof which is a rate swap, 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,
forward transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction (including any
option with respect to any of these transactions) or any combination thereof,
whether linked to one or more interest rates, foreign currencies, commodity
prices, equity prices or other financial measures.
"Rate
Management Obligations" means any and all obligations of any Obligor, whether
absolute or contingent and howsoever and whensoever created, arising, evidenced
or acquired (including all renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all Rate Management Transactions,
and
(ii) any and all cancellations, buy backs, reversals, terminations or
assignments of any Rate Management Transactions.
"Receivables"
means the Accounts, Chattel Paper, Documents, Instruments or Pledged Deposits,
and any other rights or claims to receive money which are General Intangibles
or
which are otherwise included as Collateral.
"Requisite
Creditors" shall have the meaning set forth in the Collateral Sharing Agreement.
"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 Kentucky UCC.
4
"Subsidiary"
means, as to any Person, any corporation, association or other business entity
in which such Person or one or more of its Subsidiaries owns sufficient equity
or voting interests to enable it or them (as a group) ordinarily, in the absence
of contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if
more
than a 50% interest in the profits or capital thereof is owned by such Person
or
one or more of its Subsidiaries (unless such partnership can and does ordinarily
take major business actions without the prior approval of such Person or one
or
more of its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of the
Borrower.
"Supporting
Obligations" shall have the meaning set forth in Article 9 of the Kentucky
UCC.
"Unmatured
Default" means an event which but for the lapse of time or the giving of notice,
or both, would constitute a Default.
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
Obligor hereby pledges, assigns and grants to the Collateral Agent, on behalf
of
and for the ratable benefit of the Banks, (to the extent specifically provided
herein) their Affiliates party to Rate Management Transactions, and the
Noteholders, a security interest in all of such Obligor's right, title and
interest in and to the Collateral to secure the prompt and complete payment
and
performance of the Obligations.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
Each
Obligor represents and warrants to the Collateral Agent and the Banks
that:
3.1. Title,
Authorization, Validity and Enforceability.
Each
Obligor has good and valid rights in 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 4.1.6, and has full power
and
authority to grant to the Collateral Agent the security interest in such
Collateral pursuant hereto. The execution and delivery by each Obligor of this
Security Agreement has been duly authorized by proper corporate or limited
liability company proceedings, as applicable, and this Security Agreement
constitutes a legal, valid and binding obligation of each Obligor and creates
a
security interest which is enforceable against each Obligor in all now owned
and
hereafter acquired Collateral.
3.2. Conflicting
Laws and Contracts.
Neither
the execution and delivery by the Obligors of this Security Agreement, the
creation and perfection of the security interest in the Collateral granted
hereunder, nor compliance with the terms and provisions hereof will violate
any
law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on any Obligor or such Obligor's articles or
5
certificate
of incorporation or by-laws or articles of organization or operating agreement,
as applicable, the provisions of any indenture, instrument or agreement to
which
each Obligor is a party or is subject, or by which it, or its property, is
bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien pursuant to the terms of any such indenture,
instrument or agreement (other than any Lien of the Collateral Agent on behalf
of the Banks and the Noteholders).
3.3. Obligor
Names.
Exhibit
"A" sets forth the true and correct entity name of each Obligor as set forth
in
the records of the Secretary of State of its jurisdiction of organization.
No
Obligor (or any predecessor company) has transacted business under any name
other than those set forth on Exhibit "A" at any time in the last five
years.
3.4. Type
and Jurisdiction of Organization.
The
Borrower, ST&M, ST, SDS and STK each is a corporation organized under the
laws of the State of Delaware. SE and STM each is a limited liability company
organized under the laws of the State of Delaware.
3.5. Principal
Location.
Each
Obligor'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". The Obligors have no other places of
business except those set forth in Exhibit "A".
3.6. Property
Locations.
(a) The
material Equipment and Inventory of the Obligors are located at the principal
business locations of the Obligors, which are identified in Exhibit "A". For
purposes of this Section 3.6 only, "material" shall be deemed to mean at least
90% of the net book value of the Obligors' Equipment and Inventory. All of
said
locations are owned by the Obligors except for locations which are leased by
the
Obligors as lessee and designated in Part B of Exhibit "A". All of such owned
locations are owned free and clear of any mortgage or other Lien on the real
property and improvements located as such locations, except to the extent such
Lien or mortgage is permitted under both Section 7.4 of the Loan Agreement
and
Section 10.4 of the Note Purchase Agreement. The Inventory of the Obligors
which
is held in a public warehouse or is otherwise held by a bailee or on consignment
is not a material part of the assets of the Obligors.
(b) The
Borrower has identified the following business locations as locations at which
business assets of the Obligors with a net book value of $1,000,000 or more
are
located and has covenanted in Section 4.3C of the Loan Agreement to cause
fixture filings to be made with respect to such locations within 10 days from
the date hereof :
Leased
facilities:
(i) Sypris
Electronics, LLC - Tampa, Florida facility;
(ii) Sypris
Data Systems, Inc. - Centennial, Colorado facility;
(iii) Sypris
Data Systems, Inc. - San Dimas, California facility;
(iv) Sypris
Test & Measurement, Inc. - Phoenix, Arizona facility; and
(v) Sypris
Test & Measurement, Inc. - Burlington, Massachusetts facility.
6
Owned
facilities:
(vi) Sypris
Electronics, LLC - 0000 Xxxxxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxx
facility;
(vii) Sypris
Test & Measurement, Inc. - 0000 Xxxxxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxx
facility;
(viii) Sypris
Technologies, Inc. - 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
facility;
(ix) Sypris
Technologies, Inc. - 0000 Xxxxxxxx, Xxxxxxxxxx, Xxxxxxxx facility;
(x)
Sypris
Technologies, Inc. - 000 Xxxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx
facility;
(xi) Sypris
Technologies Kenton, Inc. - 00000 Xxxxx Xxxx 00, Xxxxxx, Xxxx facility;
and
(l)
Sypris
Technologies Xxxxxx, LLC - 0000 Xxxxxx Xxxxxx Xxxx, Xxxxxx,. Xxxx
facility.
The
Borrower additionally covenants to notify the Collateral Agent of any other
location (in addition to the above) where business assets of the Obligors are
located with net book value of $1,000,000 or more as at the end of any two
consecutive fiscal quarters of the Borrower, and to cooperate with the
Collateral Agent in filing fixture financing statement(s) with respect to such
additional locations.
3.7. No
Default.
No
Default or Unmatured Default exists.
3.8. Accounts
and Chattel Paper.
The
names of the obligors, amounts owing, due dates and other information with
respect to the Accounts and Chattel Paper are and will be correctly stated
in
all material respects and in accordance with GAAP in all records of the Obligors
relating thereto and in all invoices and reports with respect thereto furnished
to the Collateral Agent by the Obligors from time to time.
3.9. Filing
Requirements with respect to Patents and Trademarks.
The
Obligor's patents and trademarks are identified in Part A of Exhibit "B". The
Obligors shall cause filing statements to be filed with the US Patent and
Trademark Office within 60 days after the date hereof, perfecting the Collateral
Agent's' security interest in the Obligor's patents and trademarks.
3.10. No
Financing Statements.
No
financing statement describing all or any portion of the Collateral which has
not lapsed or been terminated naming any Obligor as debtor has been filed in
any
jurisdiction except (i) financing statements naming the Collateral Agent on
behalf of the Banks and the Noteholders as the secured party, (ii) financing
statements described in Exhibit "C" and (iii) as permitted by Section
4.1.6.
3.11. Federal
Employer Identification Number.
Each
Obligor's Federal employer identification number is set forth in Exhibit
A.
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3.12. State
Organization Number.
Each
Obligor's State organization number is set forth in Exhibit A.
3.13 Deposit
and Securities Accounts.
Exhibit
"E" sets forth a complete and correct list of all of the Obligors' deposit
accounts and all accounts in which any securities owned by any Obligor are
held,
which in each case hold a balance in cash or securities with a fair market
value
in excess of $100,000, and listing, as to each such account, the depositary
institution at which such account is held, the type of account, the account
number and the holder of such account. The Company has complied with the terms
of Section 4.6 and 4.7 with respect to each such account.
ARTICLE
IV
COVENANTS
From
the
date of this Security Agreement, and thereafter until this Security Agreement
is
terminated:
4.1. General.
4.1.1. Inspection.
Each
Obligor will permit the Collateral Agent, by its representatives and agents
(i)
to inspect the Collateral, (ii) to examine and make copies of the records of
each Obligor relating to the Collateral and (iii) to discuss the Collateral
and
the related records of each Obligor with, and to be advised as to the same
by,
each Obligor's officers and employees (and, in the case of any Receivable,
with
any person or entity which is or may be obligated thereon), all at such
reasonable times and intervals as the Collateral Agent may determine, and all
at
each Obligor's expense.
4.1.2. Taxes.
Each
Obligor will pay when due all material taxes, assessments and governmental
charges and levies upon the Collateral, except those which are being contested
in good faith by appropriate proceedings and with respect to which no Lien
exists.
4.1.3. Records
and Reports; Notification of Default.
Each
Obligor will maintain materially complete and accurate books and records with
respect to the Collateral, and furnish to the Collateral Agent, such reports
relating to the Collateral as the Collateral Agent shall from time to time
request. Each Obligor will give prompt notice in writing to the Collateral
Agent
and the Banks of the occurrence of any Default or Unmatured Default and of
any
other development, financial or otherwise, which might materially and adversely
affect the Collateral.
4.1.4.
Authorization
to File Financing Statements; Defense of Title.
Each
Obligor hereby irrevocably authorizes the Collateral Agent at any time and
from
time to time to file in any filing office in any Uniform Commercial Code
jurisdiction any initial financing statements and amendments thereto relating
to
the security interests granted hereunder. Each Obligor will take any and all
actions reasonably necessary to defend title to the Collateral against all
persons and to defend the security interest of the Collateral Agent, on behalf
of the Banks and the Noteholders, in the Collateral and the priority thereof
against any Lien not expressly permitted hereunder.
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4.1.5. Disposition
of Collateral.
No
Obligor will sell, lease or otherwise dispose of the Collateral except (i)
prior
to the occurrence of a Default or Unmatured Default, dispositions that would
not
violate the Loan Agreement or the Note Purchase Agreement, (ii) until such
time
following the occurrence of a Default as any Obligor receives a notice from
the
Collateral Agent instructing an Obligor to cease such transactions, sales or
leases of Inventory in the ordinary course of business, and (iii) until such
time as an Obligor receives a notice from the Collateral Agent pursuant to
Article VII, proceeds of Inventory and Accounts collected in the ordinary course
of business.
4.1.6. Liens.
No
Obligor will create, incur, or suffer to exist any Lien on the Collateral except
(i) the security interest created by this Security Agreement, (ii) existing
Liens described in Exhibit "E" and (iii) other Liens permitted pursuant to
both
Section 7.4 of the Loan Agreement and Section 10.4 of the Note Purchase
Agreement.
4.1.7. Change
in Corporate Existence,
Type or Jurisdiction of Organization, Location, Name.
So that
the perfection of the security interest granted to Collateral Agent shall remain
perfected, each Obligor will:
| (a) |
preserve
its existence as
a corporation and not, in one transaction or a series of related
transactions, merge into or consolidate with any other entity, or
sell all
or substantially all of its assets;
|
| (b) |
not
change its state of organization;
and
|
| (c) |
not
(i) change its name or taxpayer identification number or (ii) change
its
mailing address,
|
|
unless
the Obligors shall have given the Collateral Agent at least
contemporaneous written notice of such event or occurrence. Failure
of an
Obligor to give timely written notice as required by this Section
shall
not be a Default hereunder unless, as result of such failure, the
Collateral Agent shall no longer have a perfected, first priority
security
interest in such Obligor's
Collateral.
|
4.1.8. Other
Financing Statements.
No
Obligor will sign or authorize the signing on its behalf or the filing of any
financing statement naming it as debtor covering all or any portion of the
Collateral, except as permitted by Section 4.1.6.
4.1.9. Collateral
Locations.
The
material (as defined in Section 3.6) Equipment and Inventory will be kept at
those locations listed on Exhibit A and Exhibit B.
4.2. Receivables.
4.2.1.
Certain
Agreements on Receivables.
No
Obligor will make or agree to make any discount, credit, rebate or other
reduction in the original amount owing on a Receivable or accept in satisfaction
of a Receivable less than the original amount thereof, except that, prior to
the
occurrence of a Default, the Obligors may reduce the amount of Accounts arising
from the
9
4.2.2.
Collection
of Receivables.
Except
as otherwise provided in this Security Agreement, each Obligor will collect
and
enforce, at each Obligor's sole expense, all material amounts due or hereafter
due to each Obligor under the Receivables.
4.2.3. Delivery
of Invoices.
Each
Obligor will deliver to the Collateral Agent immediately upon its request after
the occurrence of a Default duplicate invoices with respect to each Account
bearing such language of assignment as the Collateral Agent shall
specify.
4.2.4.
Instructions
to Account Debtors; Transfer of Payments to Control Accounts.
Each
Obligor will promptly after the date hereof (a) direct all Account debtors
to
make any and all payments on Accounts directly to a Deposit Account subject
to a
control agreement described in Section 4.6 (to the extent any such payments
are
being directed to any other account) and (b) cause any such payments received
in
any other Deposit Account (or otherwise received by any Obligor) to be
transferred forthwith to a Deposit Account subject to such a control
agreement.
4.3. Inventory
and Equipment.
4.3.1.
Maintenance
of Inventory and Equipment.
Each
Obligor will do all things necessary to maintain, preserve, protect and keep
the
Inventory and the Equipment in good repair and working and saleable condition,
consistent with the Obligor's past practices regarding maintenance of Inventory
and Equipment.
4.3.2.
Insurance.
(a)
Each Obligor will (i) maintain fire and extended coverage insurance on the
Collateral which is tangible, real or personal property containing a lender's
loss payable clause in favor of the Collateral Agent, on behalf of the Banks
and
the Noteholders, and providing that said insurance will not be terminated except
after at least 30 days' written notice from the insurance company to the
Collateral Agent, (ii) maintain such other insurance on the Collateral for
the
benefit of the Collateral Agent as the Collateral Agent shall from time to
time
request, (iii) furnish to the Collateral Agent upon the request of the
Collateral Agent from time to time the originals of all policies of insurance
on
the Collateral and certificates with respect to such insurance and (iv) maintain
general liability insurance naming the Collateral Agent, on behalf of the Banks
and the Noteholders, as an additional insured.
(b) The
proceeds of any casualty insurance in respect of any casualty loss of any of
the
Collateral shall, subject to the rights, if any, of other parties with an
interest having priority in the property covered thereby, (a) so long as no
Unmatured Default or Default has occurred and is continuing and to the extent
that the amount of such proceeds is less than $1,000,000, be disbursed to the
Obligor suffering such loss for direct application by such Obligor solely to
the
repair or replacement of such Obligor's property so damaged or destroyed and
(b)
in all other circumstances, be held by the Collateral Agent as cash collateral
for the Obligations. The Collateral Agent may, at its sole option (as directed
by the Requisite Creditors under the
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4.4. Instruments,
Chattel Paper, Documents and Pledged Deposits.
Each
Obligor will (i) if
it
shall now or at any time hereafter hold or acquire any promissory notes or
tangible Chattel Paper with an aggregate book value exceeding $100,000, promptly
notify the Collateral Agent of such fact and forthwith endorse, assign and
deliver the same to the Collateral Agent, accompanied by such instruments of
transfer or assignment duly executed in blank as the Collateral Agent may from
time to time specify, (ii) deliver to the Collateral Agent such Pledged Deposits
which are evidenced by certificates included in the Collateral endorsed in
blank, marked with such legends and assigned as the Collateral Agent shall
specify, and (iii) upon the Collateral Agent's request, after the occurrence
and
during the continuance of a Default, deliver to the Collateral Agent (and
thereafter hold in trust for the Collateral Agent upon receipt and immediately
deliver to the Collateral Agent) any Document evidencing or constituting
Collateral.
4.5. Pledged
Deposits.
No
Obligor will withdraw all or any portion of any Pledged Deposit or fail to
rollover said Pledged Deposit without the prior written consent of the
Collateral Agent.
4.6. Deposit
Accounts.
Each
Obligor will (i) promptly inform the Collateral Agent in writing at any time
that a Deposit Account in which it has an interest holds cash or securities
with
a fair market value in excess of $100,000 that is not the subject of a control
agreement of the type described in this Section 4.6, (ii) upon the Collateral
Agent's request, cause each bank or other financial institution in which it
maintains (a) such a Deposit Account to enter into a control agreement with
the
Collateral Agent, in form and substance satisfactory to the Collateral Agent
in
order to give the Collateral Agent Control of the Deposit Account or (b) other
deposits (general or special, time or demand, provisional or final) with any
bank or other financial institution holding cash or securities with a fair
market value in excess of $100,000 to be notified of the security interest
granted to the Collateral Agent hereunder and cause each such bank or other
financial institution to acknowledge such notification in writing, and (iii)
upon the Collateral 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 acceptable to the Collateral Agent,
transferring ownership of each Deposit Account to the Collateral Agent or
transferring dominion and control over each such other deposit to the Collateral
Agent until such time as no Default exists. In the case of deposits maintained
with Banks, the terms of such letter shall be subject to the provisions of
the
Loan Agreement regarding setoffs.
4.7. Investment
Property.
If any
Obligor shall, now or at any time hereafter, hold or acquire any certificated
securities (other than any equity interest in any of its Subsidiaries), such
Obligor shall forthwith endorse, assign and deliver the same to the Collateral
Agent, accompanied by such instruments of transfer or assignment duly executed
in blank as the Collateral Agent may from time to time specify. If any
securities (other than any equity interest in any Subsidiary of the Borrower
or
any Guarantor) now or hereafter acquired by any Obligor are uncertificated
and
are issued to any Obligor or its nominee directly by the issuer thereof, the
Company shall immediately notify the Collateral Agent
11
thereof
and, at the Collateral Agent's request and option, pursuant to an agreement
in
form and substance satisfactory to the Collateral Agent, either (a) cause the
issuer to agree to comply without further consent of such Obligor or such
nominee, at any time with instructions from the Collateral Agent as to such
securities, or (b) arrange for the Collateral Agent to become the registered
owner of the securities. If any securities, whether certificated or
uncertificated, or other investment property now or hereafter acquired by such
Obligor with a fair market value of greater than $100,000 are held by such
Obligor or its nominee through a securities intermediary or commodity
intermediary, such Obligor shall immediately notify the Collateral Agent thereof
in writing and, at the Collateral Agent's request and option, pursuant to an
agreement in form and substance satisfactory to the Collateral Agent, either
(i)
cause such securities intermediary or (as the case may be) commodity
intermediary to agree to comply, in each case without further consent of such
Obligor or such nominee, at any time with entitlement orders or other
instructions from the Collateral Agent to such securities intermediary as to
such securities or other investment property, or (as the case may be) to apply
any value distributed on account of any commodity contract as directed by the
Collateral Agent to such commodity intermediary, or (ii) in the case of
financial assets or other investment property held through a securities
intermediary, arrange for the Collateral Agent to become the entitlement holder
with respect to such investment property, with such Obligor being permitted,
only with the consent of the Collateral Agent, to exercise rights to withdraw
or
otherwise deal with such investment property. The Collateral Agent agrees with
the Obligors that the Collateral Agent shall not give any such entitlement
orders or instructions or directions to any such issuer, securities intermediary
or commodity intermediary, and shall not withhold its consent to the exercise
of
any withdrawal or dealing rights by the Obligors, unless a Default has occurred
and is continuing, or, after giving effect to any such investment and withdrawal
rights not otherwise permitted by the Creditor Documents, would occur. The
provisions of this paragraph shall not apply to any financial assets credited
to
a securities account for which the Collateral Agent is the securities
intermediary. Nothing in this paragraph or in this Agreement shall limit the
obligations of any Obligor party to the Pledge Agreement under the terms of
such
agreement or the obligations of any Obligor under any agreement that it may
hereafter enter into in which such Obligor pledges to the Collateral Agent,
as
security for the Obligations, such Obligor's equity interests in any of its
Subsidiaries.
4.8. Collateral
in the Possession of a Bailee.
If any
Collateral with a fair market value of greater than $100,000 is, now or at
any
time hereafter, in the possession of a bailee, the Obligor owning such
Collateral shall promptly notify the Collateral Agent thereof and, at the
Collateral Agent's request and option, shall promptly obtain an acknowledgement
from the bailee, in form and substance satisfactory to the Collateral Agent,
that the bailee holds such Collateral for the benefit of the Collateral Agent
and such bailee's agreement to comply, without further consent of such Obligor,
at any time with instructions of the Collateral Agent as to such Collateral.
The
Collateral Agent agrees with the Obligors that the Collateral Agent shall not
give any such instructions unless a Default has occurred and is continuing
or
would occur after taking into account any action by such Obligors with respect
to the bailee.
4.9. Electronic
Chattel Paper, Electronic Documents and Transferable Records.
If any
Obligor, now or at any time hereafter, holds or acquires an interest in any
electronic chattel paper, any electronic document or any "transferable record,"
as that term is defined in Section 201 of the federal Electronic Signatures
in
Global and National Commerce Act, or in §16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction, such Obligor shall
promptly notify the
12
Collateral
Agent thereof and, at the request and option of the Collateral Agent, shall
take
such action as the Collateral Agent may reasonably request to vest in the
Collateral Agent control, under §9-105 of the Kentucky UCC or any other relevant
jurisdiction, of such electronic chattel paper, control, under Section 201
of
the federal Electronic Signatures in Global and National Commerce Act or, as
the
case may be, §16 of the Uniform Electronic Transactions Act, as so in effect in
such jurisdiction, of such transferable record.
4.10. Commercial
Tort Claims.
If any
Obligor shall, now or at any time hereafter, hold or acquire a commercial tort
claim where the stated amount of such claim is in excess of $100,000, such
Obligor shall immediately notify the Collateral Agent in a writing signed by
such Obligor of the particulars thereof and grant to the Collateral Agent in
such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance
satisfactory to the Collateral Agent.
4.11 Letter-of-Credit
Rights.
Each
Obligor will upon the Collateral 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 Collateral Agent Control of the letter-of-credit rights to
such letter of credit.
4.12 Federal,
State or Municipal Claims.
Each
Obligor will notify the Collateral Agent of any Collateral 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.
4.13. Other
Actions as to any and all Collateral.
Each
Obligor further agrees, upon the request of the Collateral Agent and at the
Collateral Agent's option, to take any and all other actions as the Collateral
Agent may determine to be necessary or useful for the attachment, perfection
and
first priority of, and the ability of the Collateral Agent to enforce, the
Collateral Agent's security interest in any and all of the Collateral, including
(a) executing, delivering and, where appropriate, filing financing statements
and amendments relating thereto under the Uniform Commercial Code of any
relevant jurisdiction, to the extent, if any, that the Company's signature
thereon is required therefor, (b) causing the Collateral Agent's name to be
noted as secured party on any certificate of title for a titled good if such
notation is a condition to attachment, perfection or priority of, or ability
of
the Collateral Agent to enforce, the Collateral Agent's security interest in
such Collateral, (c) complying with any provision of any statute, regulation
or
treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability
of
the Collateral Agent to enforce, the Collateral Agent's security interest in
such Collateral, (d) obtaining governmental and other third party waivers,
consents and approvals, in form and substance satisfactory to the Collateral
Agent, including any consent of any licensor, lessor or other person obligated
on Collateral, (e) obtaining waivers from mortgagees, warehousemen, bailees
and
landlords with respect to any locations holding Collateral with a net book
value
in excess of $1,000,000, in form and substance satisfactory to the Collateral
Agent and (f) taking all actions under any earlier versions of the Uniform
Commercial Code or under any other law, as reasonably determined by the
Collateral Agent to be applicable in any relevant Uniform Commercial Code or
other jurisdiction, including any foreign jurisdiction.
13
ARTICLE
V
DEFAULT
5.1. The
occurrence of any one or more of the following events shall constitute a
Default:
5.1.1.
Any
representation or warranty made by or on behalf of an Obligor under or in
connection with this Security Agreement shall be materially false as of the
date
on which made.
5.1.2. The
breach by
any Obligor of any of the terms or provisions of Article IV or Article
VII.
5.1.3. The
breach by
any Obligor (other than a breach which constitutes a Default under Section
5.1.1
or 5.1.2) of any of the terms or provisions of this Security Agreement which
is
not remedied within 10 days after the giving of written notice to such Obligor
by the Collateral Agent.
5.1.4. Any
material
portion of the Collateral shall be transferred or otherwise disposed of, either
voluntarily or involuntarily, in any manner not permitted by Section 4.1.5
or
8.9 or shall be lost, stolen, damaged or destroyed.
5.1.5. Any
Obligation shall not be paid when due, whether at stated maturity, upon
acceleration, or otherwise.
5.1.6. The
occurrence of any "Default" under, and as defined in, the Collateral Sharing
Agreement.
5.2. Acceleration
and Remedies.
Upon
the acceleration of any of the Obligations, such Obligations (including, to
the
extent provided for under the Rate Management Transactions, 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 Collateral Agent may, with the concurrence or at the direction of the
Requisite Creditors, exercise any or all of the following rights and
remedies:
5.2.1. Those
rights
and remedies provided in this Security Agreement and any other Collateral
Document, provided
that
this Section 5.2.1 shall not be understood to limit any rights or remedies
available to the Collateral Agent, the Banks or the Noteholders prior to a
Default.
5.2.2. Those
rights
and remedies available to a secured party under the Kentucky UCC (whether or
not
the Kentucky 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.
5.2.3. Without
notice except as specifically provided in Section 8.1 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
14
The
Collateral 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 compliance will not be considered to adversely affect the
commercial reasonableness of any sale of the Collateral.
If,
after
the Creditor Documents have terminated by their terms and all of the Obligations
have been paid in full, there remain Rate Management Obligations outstanding,
the Requisite Creditors may exercise the remedies provided in this Section
5.2
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.
5.3. Debtor's
Obligations Upon Default.
Upon
the request of the Collateral Agent after the occurrence of a Default, the
Obligors will:
5.3.1. Assembly
of Collateral.
Assemble and make available to the Collateral Agent the Collateral and all
records relating thereto at any place or places specified by the Collateral
Agent.
5.3.2.
Secured
Party Access.
Permit
the Collateral Agent, by the Collateral 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.
5.4.
License.
The
Collateral Agent is hereby granted a license or other right to use, following
the occurrence and during the continuance of a Default, without charge, each
Obligor'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, each Obligor's
rights under all licenses and all franchise agreements shall inure to the
Collateral Agent's benefit. In addition, each Obligor hereby irrevocably agrees
that the Collateral Agent may, following the occurrence and during the
continuance of a Default, sell any of each Obligor's Inventory directly to
any
person, including without limitation persons who have previously purchased
each
Obligor's Inventory from such Obligor and in connection with any such sale
or
other enforcement of the Collateral Agent's rights under this Agreement, may
sell Inventory which bears any trademark owned by or licensed to any Obligor
and
any Inventory that is covered by any copyright owned by or licensed to any
Obligor and the Collateral Agent may finish any work in process and affix any
trademark owned by or licensed to any Obligor and sell such Inventory as
provided herein.
ARTICLE
VI
WAIVERS,
AMENDMENTS AND REMEDIES
15
ARTICLE
VII
PROCEEDS;
COLLECTION OF RECEIVABLES
7.1. Lockboxes.
Upon
request of the Collateral Agent after the occurrence of a Default or Unmatured
Default, each Obligor shall execute and deliver to the Collateral Agent
irrevocable lockbox agreements in the form provided by or otherwise acceptable
to the Collateral Agent, which agreements shall be accompanied by an
acknowledgment by the bank where the lockbox is located of the Lien of the
Collateral Agent granted hereunder and of irrevocable instructions to wire
all
amounts collected therein to a special collateral account at the Collateral
Agent.
7.2. Collection
of Receivables.
The
Collateral Agent may at any time in its sole discretion, by giving the Obligors
written notice, elect to require that the Receivables be paid directly to the
Collateral Agent for the benefit of the Banks and the Noteholders. In such
event, the Obligors shall, and shall permit the Collateral Agent to, promptly
notify the account debtors or obligors under the Receivables of the interests
of
the Banks and Noteholders therein and direct such account debtors or obligors
to
make payment of all amounts then or thereafter due under the Receivables
directly to the Collateral Agent. Upon receipt of any such notice from the
Collateral Agent, the Obligors shall thereafter hold in trust for the Collateral
Agent, on behalf of the Banks and the Noteholders, all amounts and proceeds
received by it with respect to the Receivables and immediately and at all times
thereafter deliver to the Collateral 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 Collateral Agent shall hold and apply funds so
received as provided by the terms of Sections 7.3 and 7.4.
7.3. Special
Collateral Account.
The
Collateral Agent may require all cash proceeds of the Collateral to be deposited
in a special non-interest bearing cash collateral account with the Collateral
Agent and held there as security for the Obligations. Each Obligor shall have
no
control whatsoever over said cash collateral account. If no Default or Unmatured
Default has occurred or is continuing, the Collateral Agent shall upon the
direction of the Requisite Creditors from time to time deposit the collected
balances in said cash collateral account into the Borrower's general operating
account with the Collateral Agent. If any Default or Unmatured Default has
occurred and is continuing, the Collateral Agent may (and shall, at the
direction of the Requisite Creditors), from time to time, apply the collected
balances in said cash collateral account to the payment of the Obligations
whether or not the Obligations shall then be due.
16
7.4. Application
of Proceeds.
The
proceeds of the Collateral shall be applied by the Collateral Agent to payment
of the Obligations as provided in the Collateral Sharing Agreement.
ARTICLE
VIII
GENERAL
PROVISIONS
8.1. Notice
of Disposition of Collateral; Condition of Collateral.
Each
Obligor 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
Obligors, addressed as set forth in Article IX, at least ten 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. Collateral Agent shall have no obligation
to clean-up or otherwise prepare the Collateral for sale.
8.2. Compromises
and Collection of Collateral.
Each
Obligor and the Collateral 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, the Obligors
agree that the Collateral 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
Collateral Agent in its sole discretion shall determine or abandon any
Receivable, and any such action by the Collateral Agent shall be commercially
reasonable so long as the Collateral 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 Debtor Obligations.
Without
having any obligation to do so, the Collateral Agent may perform or pay any
obligation which the Obligors have agreed to perform or pay in this Security
Agreement and the Obligors shall reimburse the Collateral Agent for any amounts
paid by the Collateral Agent pursuant to this Section 8.3. Each Obligor's
obligation to reimburse the Collateral Agent pursuant to the preceding sentence
shall be a Obligation payable on demand.
8.4. Authorization
for Secured Party to Take Certain Action.
Each
Obligor irrevocably authorizes the Collateral Agent at any time and from time
to
time in the sole discretion of the Collateral Agent and appoints the Collateral
Agent as its attorney in fact (i) to execute on behalf of such Obligor as debtor
and to file financing statements necessary or desirable in the Collateral
Agent's sole discretion to perfect and to maintain the perfection and priority
of the Collateral Agent's security interest in the Collateral, (ii) 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 Collateral Agent
in its sole discretion deems necessary or desirable to perfect and to maintain
the perfection and priority of the Collateral Agent's security interest in
the
Collateral, (iv) subject to the terms of Section 4.1.5, to enforce payment
of
the Receivables in the name of the Collateral Agent or
17
the
Obligor, (v) to apply the proceeds of any Collateral received by the Collateral
Agent to the Obligations as provided in Article VII and (vi) to discharge past
due taxes, assessments, charges, fees or Liens on the Collateral (except for
such Liens as are specifically permitted hereunder), and the Obligors agree
to
reimburse the Collateral Agent on demand for any payment made or any expense
incurred by the Collateral Agent in connection therewith, provided
that
this authorization shall not relieve the Obligors of any of their obligations
under this Security Agreement or under the Loan Agreement.
8.5. Suretyship
Waivers.
Each
Obligor waives demand, notice, protest, notice of acceptance of this Agreement,
notice of loans made, credit extended, Collateral received or delivered or
other
action taken in reliance hereon and all other demands and notices of any
description. With respect to both the Obligations and the Collateral, each
Obligor assents to any extension or postponement of the time of payment or
any
other indulgence, to any substitution, exchange or release of or failure to
perfect any security interest in any Collateral, to the addition or release
of
any party or person primarily or secondarily liable, to the acceptance of
partial payment thereon and the settlement, compromising or adjusting of any
thereof, all in such manner and at such time or times as the Collateral Agent
may deem advisable. The Collateral Agent shall have no duty as to the collection
or protection of the Collateral or any income therefrom, the preservation of
rights against prior parties, or the preservation of any rights pertaining
thereto beyond, with respect to the safe custody thereof, to
deal
with such Collateral in the same manner as the Collateral Agent deals with
similar property for its own account. Each Obligor further waives any and all
other suretyship defenses.
8.6. Marshaling.
Neither
the Collateral Agent nor any Bank nor any Noteholder shall be required to
marshal any present or future collateral security (including but not limited
to
the Collateral) for, or other assurances of payment of, the Obligations or
any
of them or to resort to such collateral security or other assurances of payment
in any particular order, and all of the rights and remedies of the Collateral
Agent or any Bank or Noteholder hereunder and of the Collateral Agent or any
Bank or Noteholder in respect of such collateral security and other assurances
of payment shall be cumulative and in addition to all other rights and remedies,
however existing or arising. To the extent that it lawfully may, each Obligor
hereby agrees that it will not invoke any law relating to the marshaling of
collateral which might cause delay in or impede the enforcement of the
Collateral Agent's rights and remedies under this Agreement or under any other
instrument creating or evidencing any of the Obligations or under which any
of
the Obligations is outstanding or by which any of the Obligations is secured
or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
each Obligor hereby irrevocably waives the benefits of all such
laws.
8.7. Specific
Performance of Certain Covenants.
Each
Obligor acknowledges and agrees that a breach of any of the covenants contained
in Sections 4.1.5, 4.1.6, 4.4, 5.3, or 8.7 or in Article VII will cause
irreparable injury to the Collateral Agent, the Banks and the Noteholders,
that
the Collateral Agent, the Banks and the Noteholders have no adequate remedy
at
law in respect of such breaches and therefore agrees, without limiting the
right
of the Collateral Agent, the Banks or the Noteholders to seek and obtain
specific performance of other obligations of the Obligors contained in this
Security Agreement, that the covenants of the Obligors contained in the Sections
referred to in this Section 8.5 shall be specifically enforceable against the
Obligors.
18
8.8. Use
and Possession of Certain Premises.
Upon
the occurrence of a Default, the Collateral Agent shall be entitled to occupy
and use any premises owned or leased by the Obligors where any of the Collateral
or any records relating to the Collateral are located until the Obligations
are
paid or the Collateral is removed therefrom, whichever first occurs, without
any
obligation to pay the Obligors for such use and occupancy.
8.9. Dispositions
Not Authorized.
Each
Obligor is not authorized to sell or otherwise dispose of the Collateral except
as set forth in Section 4.1.5 and notwithstanding any course of dealing between
the Obligors and the Collateral Agent or other conduct of the Collateral Agent,
no authorization to sell or otherwise dispose of the Collateral (except as
set
forth in Section 4.1.5) shall be binding upon the Collateral Agent or the Banks
or the Noteholders unless such authorization is in writing signed by the
Collateral Agent with the consent or at the direction of the Requisite
Creditors.
8.10. Benefit
of Agreement.
The
terms and provisions of this Security Agreement shall be binding upon and inure
to the benefit of the Obligors, the Collateral Agent, the Banks and the
Noteholders and their respective successors and assigns (including all persons
who become bound as a debtor to this Security Agreement), except that the
Obligors 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 Collateral Agent.
8.11. Survival
of Representations.
All
representations and warranties of the Obligors contained in this Security
Agreement shall survive the execution and delivery of this Security
Agreement.
8.12. Taxes
and Expenses.
Any
taxes (including income taxes) payable or ruled payable by Federal or State
authority in respect of this Security Agreement shall be paid by the Obligors,
together with interest and penalties, if any. Each Obligor shall reimburse
the
Collateral Agent for any and all out-of-pocket expenses and internal charges
(including reasonable attorneys', auditors' and accountants' fees and reasonable
time charges of attorneys, paralegals, auditors and accountants who may be
employees of the Collateral Agent) paid or incurred by the Collateral Agent
in
connection with the preparation, execution, delivery, administration, collection
and enforcement of this Security Agreement and in the audit, analysis,
administration, collection, preservation or sale of the Collateral (including
the expenses and charges associated with any periodic or special audit of the
Collateral). Any and all costs and expenses incurred by the Obligors in the
performance of actions required pursuant to the terms hereof shall be borne
solely by the Obligors.
8.13. 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.
8.14. Termination.
This
Security Agreement shall continue in effect (notwithstanding the fact that
from
time to time there may be no Obligations outstanding) until (i) the other
Creditor Documents have been terminated (pursuant to their express terms or
otherwise) and (ii) all of the Obligations have been indefeasibly paid and
performed in full and no commitments of the Collateral Agent, the Banks or
the
Noteholders which would give rise to any Obligations are
outstanding.
19
8.15. Entire
Agreement.
This
Security Agreement embodies the entire agreement and understanding between
the
Obligors and the Collateral Agent relating to the Collateral and supersedes
all
prior agreements and understandings between the Obligors and the Collateral
Agent relating to the Collateral.
8.16. CHOICE
OF LAW.
THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE COMMONWEALTH OF
KENTUCKY, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
8.17. Indemnity.
Each
Obligor hereby agrees to indemnify the Collateral Agent, the Banks and the
Noteholders, and their respective successors, assigns, agents and employees,
from and against any and all liabilities, damages, penalties, suits, costs,
and
expenses of any kind and nature (including, without limitation, all expenses
of
litigation or preparation therefor whether or not the Collateral Agent or any
Bank or Noteholder is a party thereto) imposed on, incurred by or asserted
against the Collateral Agent, the Banks or the Noteholders, or their respective
successors, assigns, agents and employees, in any way relating to or arising
out
of this Security Agreement, or the manufacture, purchase, acceptance, rejection,
ownership, delivery, lease, possession, use, operation, condition, sale, return
or other disposition of any Collateral (including, without limitation, latent
and other defects, whether or not discoverable by the Collateral Agent, the
Banks, the Noteholders or the Obligors, and any claim for patent, trademark
or
copyright infringement).
8.18. Impact
of Applicable Laws upon Rights of the Collateral Agent, the Banks, the
Noteholders and the Obligors with respect to Collateral.
The
Collateral Agent and the Obligors agree that the respective rights of the
Obligors, the Collateral Agent, the Banks and the Noteholders with respect
to
the Collateral are at all times subject to any limitations of applicable federal
or state laws (including laws related to national security) with respect to
such
Collateral.
ARTICLE
IX
NOTICES
9.1. Sending
Notices.
All
notices and other communications hereunder shall be in writing and shall be
delivered or mailed by first class mail, postage prepaid, at the respective
addresses set forth below, or at such other address as shall have been furnished
in writing by any Person described above to the party required to give notice
hereunder:
The
Collateral Agent: JPMORGAN
CHASE BANK, N.A.
000
Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx,
Xxxxxxxx 00000
Attn:
X. Xxxxx Xxxxx, Senior Vice President
The
Borrower and SYPRIS
SOLUTIONS, INC.
the
other
Obligors: 100
Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn:
President
20
SYPRIS
TEST & MEASUREMENT, INC.
6100
Xxxxxxx Xxxx Xxxx
Xxxxxxx,
Xxxxxxx 00000
Attention:
President
SYPRIS
TECHNOLOGIES, INC.
100
Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx,
Xxxxxxxx 00000
Attention:
President
SYPRIS
ELECTRONICS, LLC
10000
Xxxxxxx XxXxxxxx Xxxxx
Xxxxx,
Xxxxxxx 00000
Attention:
President
SYPRIS
DATA SYSTEMS, INC.
160
X.
Xxx Xxxxx
Xxx
Xxxxx, Xxxxxxxxxx 00000
Attention:
President
SYPRIS
TECHNOLOGIES XXXXXX, LLC
1500
Xxxxxx Xxxxxx Xxxx
Xxxxxx,
Xxxx 00000
Attn:
President
SYPRIS
TECHNOLOGIES KENTON, INC.
13000
Xxxxx Xxxxx 00 Xxxxx
Xxxxxx,
Xxxx 00000
Attention:
President
21
SYPRIS
TECHNOLOGIES MEXICAN HOLDINGS, LLC
100
Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx,
Xxxxxxxx 00000
Attention:
President
9.2. Change
in Address for Notices.
Each of
the Obligors and the Collateral Agent may change the address for service of
notice upon it by a notice in writing to the other parties.
ARTICLE
X
THE
COLLATERAL AGENT
XX
Xxxxxx
Xxxxx Bank, N.A. has been appointed Collateral Agent for the Banks and the
Noteholders pursuant to the Collateral Sharing Agreement. It is expressly
understood and agreed by the parties to this Security Agreement that any
authority conferred upon the Collateral Agent hereunder is subject to the terms
of the delegation of authority made by the Banks and the Noteholders to the
Collateral Agent pursuant to the Collateral Sharing Agreement, and that the
Collateral Agent has agreed to act (and any successor Collateral Agent shall
act) as such hereunder only on the express conditions contained in the
Collateral Sharing Agreement. Any successor Collateral Agent appointed pursuant
to the Collateral Sharing Agreement shall be entitled to all the rights,
interests and benefits of the Collateral Agent hereunder.
IN
WITNESS WHEREOF, the Collateral Agent, the Borrower and the Guarantors have
executed this Security Agreement as of the date first above
written.
XX
XXXXXX
CHASE BANK, N.A.,
as
Collateral Agent
By:
/s/ X. Xxxxx
Xxxxx
Title:____SVP___________________
SYPRIS
SOLUTIONS, INC.
the
Borrower
By:
/s/
Xxxxxxx X.
Xxxxx
Title:
Vice President & Treasurer
22
SYPRIS
TEST & MEASUREMENT, INC.,
a
Guarantor
By
_/s/ Xxxxxxx X.
Xxxxx
Xxxxxxx
X.
Xxxxx
Assistant
Secretary
SYPRIS
TECHNOLOGIES, INC.
a
Guarantor
By
/s/ Xxxxxxx X.
Xxxxx
Xxxxxxx
X. Xxxxx
Assistant
Secretary
SYPRIS
ELECTRONICS, LLC,
a
Guarantor
By
/s/ Xxxxxxx X.
Xxxxx
Xxxxxxx
X. Xxxxx
Assistant
Secretary
SYPRIS
DATA SYSTEMS, INC.,
a
Guarantor
By
/s/
Xxxxxxx X.
Xxxxx
Xxxxxxx
X. Xxxxx
Assistant
Secretary
SYPRIS
TECHNOLOGIES XXXXXX, LLC,
a
Guarantor
By
/s/ Xxxxxxx X.
Xxxxx
Xxxxxxx
X. Xxxxx
Assistant
Secretary
23
SYPRIS
TECHNOLOGIES KENTON, INC.
a
Guarantor
By
/s/ Xxxxxxx X.
Xxxxx
Xxxxxxx
X. Xxxxx
Assistant
Secretary
SYPRIS
TECHNOLOGIES MEXICAN HOLDINGS, LLC,
a
Guarantor
By
/s/ Xxxxxxx X.
Xxxxx
Xxxxxxx
X. Xxxxx
Assistant
Secretary
24
