[EXECUTION COPY]
THIS AGREEMENT IS SUBJECT TO THE
TERMS OF A SUBORDINATION AND INTERCREDITOR
AGREEMENT, DATED AS OF JULY 7, 2000,
IN FAVOR OF MELLON BANK, N.A., AS AGENT
SECURITY AGREEMENT
THIS AGREEMENT, dated as of July 7, 2000 made by SPECIALTY
TRANSPORTATION SERVICES, INC., an Illinois corporation ("STS"), in favor of
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XXXXXXXXX ENVIRONMENTAL & INDUSTRIAL EQUITY PARTNERS, L.P., a Delaware limited
partnership ("Xxxxxxxxx").
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Recitals:
WHEREAS, STS and Xxxxxxxxx have entered into a Note and
Warrant Purchase Agreement, dated as of July 7, 2000 (as amended, modified or
supplemented from time to time, the "Purchase Agreement"), whereby Xxxxxxxxx is
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investing $7,000,000 in STS, as evidenced by and to be repaid with interest
thereon in accordance with a subordinated convertible promissory note, dated as
of July 7, 2000, made by STS to Xxxxxxxxx (as amended, modified, or supplemented
from time to time, and together with the PIK Notes issued with respect thereto,
the "Notes");
WHEREAS, it is a condition precedent to the investment under
the Purchase Agreement that STS execute and deliver this Agreement, and this
Agreement is made by STS, among other things, to induce Xxxxxxxxx to enter into
the Purchase Agreement, and to induce Xxxxxxxxx to make an investment in STS as
evidenced by the Notes;
WHEREAS, STS acknowledges that Xxxxxxxxx has relied and will
rely on this Agreement in entering into the Purchase Agreement and making the
investment in STS as evidenced by the Notes; and
NOW, THEREFORE, in consideration of the promises, and
intending to be legally bound hereby, STS hereby agrees as follows:
Article I
Definitions
1.01. Definitions. In addition to the words and terms defined
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in this Agreement, capitalized terms not defined herein shall have the meanings
given to them in the Purchase
Agreement. Unless otherwise defined herein or by reference herein, or the
context otherwise clearly requires, all words and terms defined in the UCC shall
have the same meaning in this Agreement. In addition, as used in this Agreement,
the following words and terms shall have the following meanings:
"Accounts" shall mean (a) all rights to payment of money for
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goods sold or leased or for services rendered which are not evidenced
by an Instrument or Chattel Paper and (b) all other property now or
hereafter constituting an "account" as defined in the UCC, in each case
whether now existing or hereafter acquired and whether or not earned by
performance.
"Agent" shall mean Xxxxxxxxx or Xxxxxxxxx'x designee which
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will act as its agent or bailee for purposes of holding, perfecting
and/or securing Xxxxxxxxx'x interest in the Collateral or Alternative
Collateral, which is the subject of this Agreement.
"Alternative Collateral" shall mean either a bond or other
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collateral, in form, substance and amount reasonably satisfactory to
Xxxxxxxxx, securing payment by STS of all Contingent Secured
Obligations.
"Chattel Paper" shall mean (a) all writings which evidence
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both a monetary obligation and a security interest in, or a lease of,
such goods, including any Instrument evidencing such monetary
obligation and security interest or lease and (b) all other property
now or hereafter constituting "chattel paper" as defined in the UCC, in
each case whether now owned or hereafter acquired and whether or not
earned by performance.
"Collateral" shall have the meaning given to such term in
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Section 2.01.
"Collateral Account" shall have the meaning given to such term
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in Section 5.05(a) of the Security Agreement given by STS in favor of
Mellon Bank, N.A. as agent under the Credit Agreement, dated as of
January 30, 1998, between STS and Mellon Bank, N.A. (the "Mellon Credit
Agreement"), which definition is incorporated by reference herein.
"Contingent Secured Obligation" at any time shall mean a
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Secured Obligation which at such time is a contingent obligation under
an indemnification provision that survives indefinitely. A Secured
Obligation under such an indemnification provision shall not constitute
a Contingent Secured Obligation if an unsatisfied claim for payment
under such provision has been made, or if an action, suit, proceeding
or investigation is pending or threatened which, in the judgment of
Xxxxxxxxx, might thereafter give rise to a claim under such provision.
"Contract Rights" shall mean (a) all rights to receive monies
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due and to become due under or in connection with any contract
(including, but not limited to, the Contracts) not yet earned by
performance, which are not evidenced by an Instrument or Chattel Paper,
(b) all
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rights to terminate, to perform, to compel performance, and otherwise
to exercise rights or remedies under or in connection with any contract
(including, but not limited to, the Contracts), (c) all claims for
damages arising out of or for breach of or default under any contract
(including, but not limited to, the Contracts), and (d) all rights to
receive proceeds of any insurance, indemnity, warranty or guaranty with
respect to any contract (including, but not limited to, the Contracts),
in each case whether now existing or hereafter acquired.
"Contracts" shall mean all material agreements and contracts
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of STS as set forth in Schedule 3.07, in each case as the same may be
amended, modified or supplemented from time to time.
"Deposit Account Collateral" shall mean (a) the deposit
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accounts set forth in Schedule 3.09, (b) all funds held in any of the
foregoing, and all certificates and instruments, if any, from time to
time representing or evidencing any of the foregoing, (c) all notes,
deposit accounts (including certificates of deposit), checks and other
instruments from time to time hereafter delivered to or otherwise
possessed by Xxxxxxxxx or its Agent for or on behalf of STS in
substitution for or in addition to any of the Deposit Account
Collateral, and (d) all interest, dividends, cash, instruments, and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any of the Deposit Account
Collateral.
"Documents" shall mean all property now or hereafter
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constituting "documents of title" as defined by the UCC, whether now
owned or hereafter acquired.
"Equipment" shall mean (a) all forms of equipment or fixtures
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of STS, and all accessions, additions, attachments, parts,
substitutions, replacements and documents of title thereto or therefor
and (b) all other property of STS now or hereafter constituting
"equipment" as defined in the UCC, in each case whether now owned or
hereafter acquired and wherever located.
"Instruments" shall mean (a) (i) all negotiable instruments,
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(ii) all certificated securities and (iii) all other writings which
evidence a right to the payment of money, but which are not themselves
security agreements or leases and are of a type which is in the
ordinary course of business transferred by delivery with any necessary
endorsement or assignment and (b) all other property now or hereafter
constituting an "instrument" as defined in the UCC, in each case
whether now owned or hereafter acquired.
"Inventory" shall mean (a) all forms of inventory of STS held
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for sale or lease or furnished or to be furnished under contracts of
service, all raw materials, work in process and materials used or
consumed in the manufacture thereof, and all accessions, products and
documents of title thereto or therefor and (b) all other property of
STS now or hereafter
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constituting "inventory" as defined in the UCC, in each case whether
now owned or hereafter acquired and wherever located.
"Investment Property" shall mean (a) all securities of STS and
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(b) all other property of STS now or hereafter constituting "investment
property" as defined in the UCC, whether now owned or hereafter
acquired.
"Letter of Credit Collateral Account" shall have the meaning
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given to such term in Section 5.06(a) of the Security Agreement given
by STS in favor of Mellon Bank, N.A. as agent under the Mellon Credit
Agreement, which definition is incorporated by reference herein.
"Marks" shall mean all trademarks and service marks
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(registered or unregistered), all registrations, recordings and
applications made, filed or recorded in the United States Patent and
Trademark Office or any similar office or agency of any other
Governmental Authority for trademarks or service marks, all other
trademarks, tradenames, fictitious business names, business names,
company names, corporate names, business identifiers, trade styles,
trade dress, service marks, logos or designs, and all other property or
rights of similar nature, all renewals, reissues and extensions of any
of the foregoing, the goodwill of STS's business symbolized by any of
the foregoing, all licenses and license agreements with respect to any
of the foregoing, and all proceeds of and rights associated with any of
the foregoing (including but not limited to all license royalties and
all claims of right or priority of use, causes of action and rights to
collect damages now or hereafter existing by reason of any past,
present or future infringement or dilution of any of the foregoing or
injury to the associated goodwill).
"Motor Vehicles" shall mean all forms of motor vehicles of
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STS, and all accessions, additions, attachments, parts, substitutions,
replacements and documents of title thereto or therefor, whether now
owned or hereafter acquired and wherever located.
"Obligor" shall mean any Person now or hereafter obligated for
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any reason to make any payment now or hereafter to STS.
"Proceeds" shall mean whatever is received when any of the
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Collateral is sold, exchanged, collected or otherwise disposed of, both
cash and non-cash, and, to the extent not otherwise included, all
payments under any insurance or any indemnity, warranty or guaranty
payable by reason of loss or damage to or otherwise with respect to any
Collateral.
"Receivables" shall mean all Accounts, Chattel Paper, Contract
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Rights, Documents, and Instruments of STS (including, without
limitation, all right, title and interest of STS in, to or under any
Related Receivables Document), in each case whether now owned or
hereafter acquired and whether or not earned by performance.
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"Related Receivables Documents" shall mean (a) all contracts
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and agreements to which STS is a party, is bound or is a beneficiary
and (b) all mortgages, security agreements, guaranties, Guaranty
Equivalents, leases and other agreements and Instruments, which, in the
case of clause (a), creates, evidences, secures or relates to any
Receivable (except to the extent that the assignment of such agreement
pursuant to this Agreement would result in a violation by STS of any
agreement pursuant to which the related Receivable was issued or
secured), in each case whether now existing or owned or hereafter
arising or acquired.
"Secured Obligations" shall mean all indebtedness, obligations
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and other liabilities from time to time of STS to Xxxxxxxxx under or in
connection with the Purchase Agreement, the Notes and this Agreement,
including all obligations to pay principal, interest, fees, indemnities
or other amounts, in each whether such obligations are direct or
indirect, secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or performance,
now existing or hereafter arising; provided, that Secured Obligations
shall not include any indebtedness, obligations or other liabilities of
Xxxxx Transportation Services, Inc. under the Purchase Agreement or
relating to the Warrant (as defined in the Purchase Agreement).
"Subordination Agreement" shall mean the Subordination and
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Intercreditor Agreement, dated as of July 7, 2000, among STS, Xxxxxxxxx
and Mellon Bank, N.A., as such agreement may be amended from time to
time.
"UCC" shall mean the Uniform Commercial Code as in effect in
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the applicable United States jurisdiction from time to time.
Article II
Security
2.01. Grant of Security. Subject only to the pre-existing and
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superior security interest in the Collateral (the "Senior Security Interest") in
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favor of Mellon Bank, N.A., as agent for the Senior Lenders (the "Senior
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Agent"), as more fully set forth in the Subordination Agreement, as security for
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the full and timely payment and performance of each of the Secured Obligations,
STS hereby assigns, pledges, transfers, and sets over unto Xxxxxxxxx, and hereby
grants and creates in favor of Xxxxxxxxx a security interest in and to, all of
STS*STS's right, title and interest in, to and under the following, in each case
whether now existing or hereafter arising, now owned or hereafter acquired, and
wherever located (the "Collateral"):
(a) all Contracts and Contract Rights;
(b) all Equipment;
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(c) all Inventory;
(d) all Investment Property;
(e) all Marks;
(f) all Motor Vehicles;
(g) all Receivables;
(h) all Deposit Account Collateral;
(i) the Collateral Account;
(j) the Letter of Credit Collateral Account;
(k) all Proceeds; and
(l) all books, correspondence, credit files, customer lists,
computer software, data bases, records and other documents relating to the
foregoing.
2.02. STS Remains Liable. Notwithstanding anything herein to
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the contrary, (a) STS shall remain liable under the contracts and agreements
included in the Collateral to the extent set forth therein to perform all of its
duties and obligations thereunder to the same extent as if this Agreement had
not been executed, (b) the exercise by Xxxxxxxxx of any of the rights hereunder
shall not release STS from any of its duties or obligations under the contracts
and agreements included in the Collateral and (c) Xxxxxxxxx shall not have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall Xxxxxxxxx be obligated to
perform any of the obligations or duties of STS thereunder or to take any action
to collect or enforce any claim for payment assigned hereunder.
2.03. Continuing Agreement. This Agreement creates a
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continuing security interest in the Collateral and shall continue in full force
and effect until all Secured Obligations (other than Contingent Secured
Obligations if Alternative Collateral has been delivered to Xxxxxxxxx or its
Agent) have been paid in cash and performed in full, and all commitments to
extend credit under the Purchase Agreement and the Notes have terminated. Upon
the payment in cash and performance in full of all Secured Obligations (other
than Contingent Secured Obligations if Alternative Collateral has been delivered
to Xxxxxxxxx or its Agent) and termination of all commitments to extend credit
under the Purchase Agreement and the Notes, the security interest granted hereby
shall terminate and all rights to the Collateral shall revert to STS. Upon any
such termination, Xxxxxxxxx or its Agent will, at STS's request and expense,
return to STS, without any representations, warranties or recourse of any kind
whatsoever, such of the Collateral as then may be held by
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Xxxxxxxxx or its Agent hereunder, and execute and deliver to STS such documents
as STS may reasonably request to evidence such termination.
2.04. Delivery of Instruments and Chattel Paper. Subject only
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to the Senior Security Interest as provided in the Subordination Agreement, STS
shall deliver to Xxxxxxxxx or its Agent on the date hereof all certificates or
instruments representing or evidencing Instruments or Chattel Paper included in
the Collateral or Deposit Account Collateral; provided that on and prior to the
date of payment in full of the Senior Debt (the "Senior Debt Retirement Date"),
STS shall not deliver to Xxxxxxxxx or its Agent any such certificates or
instruments, including without limitation certificates or instruments relating
to the Intercompany Loan. Such certificates or instruments shall be in suitable
form for transfer by delivery and shall be accompanied by instruments of
transfer or assignment, undated and duly executed in blank, all in form and
substance satisfactory to Xxxxxxxxx or its Agent. Subject only to the Senior
Security Interest as provided in the Subordination Agreement, Xxxxxxxxx or its
Agent shall have the right, at any time following the occurrence of an Event of
Default or Potential Event of Default and without notice to STS, to transfer to
or to register in the name of Xxxxxxxxx or its Agent any or all of the
Instruments and the Chattel Paper included in the Collateral and the Deposit
Account Collateral, at STS's expense.
2.05. Deposit Account Letter Agreements. On or promptly
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following the Senior Debt Retirement Date, STS shall deliver to Xxxxxxxxx or its
Agent a fully executed Deposit Account Letter Agreement, substantially in the
form attached hereto as Exhibit A (the "Deposit Account Letter Agreement") for
each deposit account of STS existing on the date of such delivery.
Article III
Representations And Warranties
STS hereby represents and warrants to Xxxxxxxxx as follows:
3.01. Title. STS is the legal and beneficial owner of the
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Collateral, free and clear of any lien, security interest, option or other
charge or encumbrance, except for (a) the Senior Security Interest, (b) the
security interest under this Agreement in favor of Xxxxxxxxx securing the
Secured Obligations and (c) Permitted Liens. No effective financing statement or
other item similar in effect covering any Collateral is on file in any recording
office, except such as may be filed in favor of the Senior Agent pursuant to the
Senior Security Interest, or in favor of Xxxxxxxxx relating to this Agreement.
3.02. Validity, Perfection and Priority. Subject only to the
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Senior Security Interest as more fully set forth in the Subordination Agreement,
this Agreement creates a valid security interest in the Collateral in favor of
Xxxxxxxxx securing the Secured Obligations, which security interest (other than
with respect to Motor Vehicles) has been duly perfected and is prior to all
other liens, security interests, options or other charges or encumbrances. All
filings and other actions
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necessary or desirable to perfect and protect such security interest (other than
with respect to Motor Vehicles) in favor of Xxxxxxxxx have been duly made and
taken.
3.03. Governmental Approvals and Filings. No authorization,
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approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is or will be necessary (a) for the grant by STS of
the security interest in the Collateral hereunder or for the execution, delivery
or performance of this Agreement by STS, (b) to ensure the validity, perfection
or priority of the security interest in the Collateral granted hereunder or (c)
for the exercise by Xxxxxxxxx of any of its rights or remedies hereunder, except
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for the filing of financing statements and continuation statements in the
jurisdictions set forth in Schedule 3.03 (as such Schedule may be amended from
time to time in accordance with Section 4.03) pursuant to the UCC as in effect
in such jurisdictions.
3.04. Places of Business and Names.
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(a) Places of Business. Schedule 3.04(a) (as such Schedule
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may be amended from time to time in accordance with Section 4.03) identifies as
of the date hereof the address of (a) the principal place of business and chief
executive office of STS, (b) the office where STS keeps its records concerning
the Collateral and (c) each place of business of STS.
(b) Names. Except as set forth in Schedule 3.04(b) (as such
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Schedule may be amended from time to time in accordance with Section 4.03),
neither STS nor any of its direct or indirect predecessors by merger,
consolidation or other corporate reorganization is or has been known by or used
any corporate or fictitious name or trade name (other than the corporate name of
STS as of the date hereof), nor has STS or any such predecessor been the subject
of any merger, consolidation or other corporate reorganization, nor has STS or
any such predecessor otherwise changed its name, identity or corporate structure
during the one year period ending on the date hereof. For each such direct and
indirect predecessor of STS, Schedule 3.04(b) also identifies the respective
addresses referred to in Section 3.05 for all times during such period.
3.05. Equipment and Inventory. Schedule 3.05 (as such Schedule
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may be amended from time to time in accordance with Section 4.03) identifies as
of the date hereof the address of each place at which Equipment (other than
Motor Vehicles) and Inventory of STS is located.
3.06. Instruments and Chattel Paper. All certificates and
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instruments required to be delivered by STS to Xxxxxxxxx or its Agent under
Section 2.04 evidencing Instruments and Chattel Paper, together with instruments
of transfer or assignment, undated and duly executed in blank, have been
delivered to Xxxxxxxxx or its Agent as required under Section 2.04. STS owns the
Instruments and Chattel Paper beneficially and, to the extent such Instruments
and Chattel Paper may be held of record, also of record (or, in the case of
record ownership, such Instruments and Chattel Paper may be owned of record by
Xxxxxxxxx or its Agent pursuant to this Agreement), free and clear of any Lien,
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except for the Senior Security Interest and the Permitted Liens. Each Instrument
or Chattel Paper is the legal, valid and binding obligation of the issuer
thereof and is not in default.
3.07. Contracts. Schedule 3.07 sets forth a list of all of the
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Contracts of STS as of the date hereof. A true and correct copy of each Contract
has been furnished to Xxxxxxxxx. Each Contract has been duly authorized,
executed and delivered by all parties thereto, enforceable against each party
thereto in accordance with its terms. There exists no material default under any
Contract by any party thereto. No Contract is evidenced by a promissory note,
instrument or chattel paper.
3.08. Marks. STS has no Marks as of the date hereof.
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3.09. Deposit Accounts. Schedule 3.09 (as amended from time to
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time in accordance with Section 4.09) sets forth a list of deposit accounts of
STS. The term "deposit accounts," as used in this Agreement, shall be construed
to include, but is not limited to, any certificate of deposit, negotiable or
nonnegotiable, amounts on deposit in any deposit accounts, Collateral Accounts,
Letter of Credit Collateral Accounts or lockboxes of STS.
Article IV
Certain Covenants
STS hereby covenants to Xxxxxxxxx as follows:
4.01. Books and Records; Inspection. STS shall (a) keep
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complete and accurate books and records concerning the Collateral and, at the
request of Xxxxxxxxx from time to time, permit Xxxxxxxxx or its Agent to inspect
and copy such books and records, (b) at the request of Xxxxxxxxx from time to
time, permit Xxxxxxxxx or its Agent to inspect any Collateral not in the
possession of Xxxxxxxxx or its Agent, and (c) furnish to Xxxxxxxxx or its Agent
such information and reports in connection with the Collateral at such times and
in such form as Xxxxxxxxx may reasonably request. Xxxxxxxxx or its Agent shall
have the right to examine and verify the Collateral from time to time, and STS
shall cooperate with Xxxxxxxxx and its Agent in such examination and
verification.
4.02. Transfers and Other Liens, etc.
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(a) Transfers. STS shall not sell, assign, transfer or
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otherwise dispose of any Collateral (voluntarily or involuntarily, by operation
of law or otherwise), except as permitted by the Purchase Agreement or the
Subordination Agreement.
(b) Other Liens. STS shall not create or permit to exist any
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lien, security interest, option or other charge or encumbrance on any Collateral
(voluntarily or involuntarily, by operation of law or otherwise), except as
permitted under the Purchase Agreement or the Subordination Agreement.
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4.03. Change of Location, Name or Filing Offices, etc. STS
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shall not (a) change its principal place of business or chief executive office
from that set forth in Schedule 3.04(a), (b) open or change the location of any
office where STS keeps its records concerning the Receivables from that set
forth in Schedule 3.04(a), (c) be known by or use any corporate or fictitious
name or trade name other than as set forth in Section 3.04(b) hereof, (d)
maintain Equipment at any address other than as set forth on Schedule 3.04(a),
or (e) otherwise take any action or omit to take any action which would at any
time make any provision of Section 3.04 or 3.06 untrue as of such time, except
in accordance with this Section 4.03. If STS desires to make any change in any
of the items referred to in Section 3.03, 3.04(a) or 3.04(b), STS shall give
Xxxxxxxxx at least 30 days (or, in the case of changes in Schedule 3.03 arising
out of changes in applicable Law, the lesser of 30 days and the number of days
available to STS before such Law becomes effective) prior written notice of its
intention to do so, together with the proposed change in writing or a proposed
supplement to such Schedule, as the case may be. If STS has taken all of the
actions deemed necessary or desirable by Xxxxxxxxx or its Agent to maintain at
all times the perfection and priority of the Lien granted to Xxxxxxxxx,
Xxxxxxxxx shall consent to such written change or supplement (and upon giving
such consent such written change or supplement to such Schedule shall constitute
a part of this Agreement). No such amendment or other action by Xxxxxxxxx shall
relieve STS of its obligation under Section 4.09 or any other obligation under
the Purchase Agreement, the Notes or this Agreement.
4.04. Additional Covenants Pertaining to Equipment and
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Inventory.
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(a) Maintenance and Repair. STS shall cause the Equipment
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to be maintained and preserved in the same condition, repair and working order
as when new, ordinary wear and tear excepted, and in accordance with any
applicable manufacturers manual; and STS shall forthwith, or in the case of any
loss or damage to any of the Equipment as promptly as practicable after the
occurrence thereof, make or cause to be made all repairs, replacements and other
improvements in connection therewith which are necessary or desirable to such
ends. STS shall promptly notify Xxxxxxxxx of any material loss or damage to any
of the Equipment.
(b) Possession and Control. Subject to the Senior Security
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Interest, STS shall at all times retain exclusive possession and control of all
Equipment and Inventory.
4.05. Additional Covenants Pertaining to Receivables.
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(a) Location. STS shall keep its chief executive office,
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and the offices (whether maintained by STS or otherwise) where books and records
relating to the Collateral are kept, and its places of business, at the
respective addresses identified in Schedule 3.04(a) or, upon 60 days notice
(specifically referring to this Section 4.05(a)) to Xxxxxxxxx, at such other
locations in jurisdictions where all actions referred to in Section 4.08(a) have
been completed. STS shall maintain its chief executive office in the 48
contiguous United States.
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(b) Collection; Servicing. Except as otherwise provided in
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this Section 4.05(b), STS shall continue to collect, at its own expense, all
amounts due or to become due STS under the Receivables. In connection with such
collections, STS may take (and on or following the Senior Debt Retirement Date,
at the direction of Xxxxxxxxx or its Agent, shall take) such action as STS (or,
on or following the Senior Debt Retirement Date, Xxxxxxxxx) may xxxx necessary
or advisable to enforce collection of the Receivables; provided, however, that
Xxxxxxxxx shall have the right at any time on or following the Senior Debt
Retirement Date, upon the occurrence and during the continuance of an Event of
Default or Potential Event of Default and upon notice to STS of its intention to
do so, to notify (or require STS to notify) the account debtors or Obligors
under any Receivables of the security interest in favor of Xxxxxxxxx in the
Receivables and, subject only to the rights of the Senior Agent under the Senior
Security Interest as provided in the Subordination Agreement, to direct such
account debtors or Obligors to make payments of all amounts due or to become due
to STS thereunder directly to Xxxxxxxxx or its Agent and, upon such notification
and at the expense of STS, to enforce collection of any such Receivables, and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as STS may have done. After receipt by STS of the notice
from Xxxxxxxxx referred to in the proviso to the preceding sentence, and in any
case only on or following the Senior Debt Retirement Date, (i) all amounts and
proceeds (including instruments) received by STS in respect of the Receivables
shall be received in trust for the benefit of Xxxxxxxxx hereunder, shall be
segregated from other funds of STS and shall be forthwith paid over or delivered
to Xxxxxxxxx or its Agent in the same form as so received (with any necessary
endorsement) to be held as Collateral hereunder and either (A) released to STS
so long as no Event of Default or Potential Event of Default shall have occurred
and be continuing, or (B) if any Event of Default or Potential Event of Default
shall have occurred and be continuing, and if Xxxxxxxxx or its Agent does not
otherwise in its discretion elect to release such amounts to STS, applied to pay
down the balance due to Xxxxxxxxx under the Notes and the Purchase Agreement,
subject only to the Senior Security Interest as provided in the Subordination
Agreement and (ii) STS shall not adjust, settle or compromise the amount or
payment of any Receivable, release wholly or partly any account debtor or
Obligor thereof, or allow any credit or discount thereon.
4.06. Additional Covenants Pertaining to Instruments and
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Investment Property.
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(a) Voting Rights. Subject to the terms and provisions of
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the Senior Debt Documents, and notwithstanding the security interest in the
Collateral granted to and created in favor of Xxxxxxxxx by this Agreement, STS
shall have the right, until the occurrence and continuation of an Event of
Default or Potential Event of Default, to collect and retain all dividends paid
upon the Collateral, to collect and retain all payments on the Collateral, to
exercise all voting rights with respect to the Collateral, to maintain the
Collateral in its own name or that of its nominees and to give all consents,
waivers and ratifications in respect thereof.
(b) Stock Dividends. On and following the Senior Debt
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Retirement Date, STS agrees to deliver to Xxxxxxxxx or its Agent forthwith upon
receipt by STS, to be held by Xxxxxxxxx or its Agent as part of the Collateral
under and subject to the terms of this Agreement, all stock
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dividends and instruments received by STS at any time and paid upon any
securities included in the Collateral and all other securities or instruments
included within the definition of Collateral which are received by STS at any
time after the execution hereof, in each case together with undated stock powers
therefor duly signed by STS in blank or endorsements as described in Section
2.04.
4.07. Additional Covenants Pertaining to Contracts.
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(a) Performance, etc. STS shall perform and observe all of
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the terms and provisions of each Contract to be performed or observed by it,
maintain each Contract in full force and effect, enforce each Contract in
accordance with its terms and, on and following the Senior Debt Retirement Date,
take all such action to such ends as Xxxxxxxxx may request from time to time.
(b) Notices; Demands. STS shall furnish to Xxxxxxxxx
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promptly upon receipt thereof, copies of all notices and other communications
received by STS under or in connection with each Contract (exclusive of routine
communications, unless otherwise requested by Xxxxxxxxx), and from time to time
upon the request of Xxxxxxxxx on and following the Senior Debt Retirement Date,
make to any other party to any Contract such demands and requests for
information and reports or for action as STS is entitled to make under or in
connection therewith.
(c) No Amendments, etc. On and following the Senior Debt
------------------
Retirement Date, STS shall not (i) amend or otherwise modify any Contract or
give any consent, waiver or approval thereunder, or adjust, settle or compromise
any amount payable by or to, or any claim by or against, STS thereunder, (ii)
cancel or terminate any Contract or consent to or accept any cancellation or
termination thereof, (iii) waive any material breach of or default under any
Contract, (iv) consent to or permit or accept any prepayment of amounts to
become due to STS under or in connection with any Contract, or (v) take any
other action in connection with any Contract that would impair the value of the
interest or rights of STS thereunder or that would impair the interests or
rights of Xxxxxxxxx.
4.08. Additional Covenants Pertaining to Marks.
----------------------------------------
(a) General. STS shall (i) act prudently and in good faith
-------
with respect to the preservation of its rights in any Xxxx, (ii) taking into
account the value of any Xxxx and giving consideration to STS*s relationships
with its customers, take all actions reasonably necessary or appropriate to
preserve, protect and defend STS*s rights in and ownership of such Xxxx, and
(iii) notify Xxxxxxxxx in writing, with reasonable supporting detail, of each
pending or, to STS*s knowledge, threatened, action, suit, proceeding, claim or
assertion that STS*s use of any Xxxx violates the rights of any third party.
(b) Required Filings. STS (i) shall not use any Xxxx in the
----------------
ordinary course of STS*s business which is registered with, or for which an
application has been made with, the United States Patent and Trademark Office or
any similar office or agency of any other Governmental
-12-
Authority and (ii) shall not, and shall not permit any of its agents, employees,
licensees or designees, to file an application for the registration of any Xxxx
with the United States Patent and Trademark Office or any similar office or
agency of any other Governmental Authority, unless, in each case, on or
following the Senior Debt Retirement Date STS promptly executes and delivers to
Xxxxxxxxx an Agreement of Liens on Patents and Trademarks, in substantially the
form attached hereto as Exhibit B (the "Agreement of Liens on Patents and
---------------------------------
Trademarks"), for filing with the appropriate office or agency.
----------
4.09. Additional Covenants Pertaining to Deposit Accounts. If
---------------------------------------------------
STS desires to establish any additional deposit accounts on or following the
Senior Debt Retirement Date, STS shall (a) give Xxxxxxxxx written notice of its
intention to do so at least 10 days prior to adding any such account, together
with a description of such deposit account and (b) on or before the date such
deposit account is established, deliver a fully executed Deposit Account Letter
Agreement regarding such deposit account to Xxxxxxxxx.
4.10. Risk of Loss. Risk of loss of, damage to or destruction
------------
of the Collateral is and shall remain upon STS.
4.11. Maintenance of Liens. STS at its expense will cause
--------------------
financing statements (and continuation statements with respect to such financing
statements), and any other appropriate instruments, to be recorded, published,
registered and filed in such manner, at such times and in such places, and will
pay all such recording, publishing, registration, filing or other taxes, fees
and charges, and will do such other acts and things as may be required from time
to time to establish, perfect, maintain, preserve and protect the Liens hereof
as valid and perfected Liens on the Collateral prior to all other Liens except
the Senior Security Interest.
4.12. Further Assurances.
------------------
(a) General. Subject to the Senior Security Interest, STS
-------
shall from time to time, at its expense, promptly execute and deliver all
further instruments and agreements, and take all further actions, that may be
necessary or appropriate, or that Xxxxxxxxx may reasonably request, in order to
perfect or protect any assignment, pledge or security interest granted or
purported to be granted hereby or to enable Xxxxxxxxx to exercise or enforce its
rights and remedies hereunder. Without limiting the generality of the foregoing,
STS will:
(i) on or following the Senior Debt Retirement Date,
if any Collateral shall be evidenced by a promissory note or other instrument,
chattel paper or negotiable document, immediately deliver to Xxxxxxxxx or its
Agent such promissory note or instrument or chattel paper or negotiable
document, duly endorsed and accompanied by duly executed instruments of transfer
or assignment, all in form and substance satisfactory to Xxxxxxxxx; and
-13-
(ii) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as Xxxxxxxxx may request, in order to perfect and
preserve any assignment, pledge or security interest granted or purported to be
granted hereby; and
(iii) on or following the Senior Debt Retirement Date,
xxxx conspicuously each copy of all chattel paper and negotiable documents
included in the Collateral and, at the request of Xxxxxxxxx or its Agent, each
Related Contract and each of its records pertaining to the Collateral with a
legend, in form and substance satisfactory to Xxxxxxxxx, indicating that such
chattel paper, negotiable document, Related Contract or Collateral is subject to
the security interest granted pursuant hereto.
(b) Financing Statements, etc. STS hereby authorizes
-------------------------
Xxxxxxxxx to file one or more financing or continuation statements, and
amendments thereto, relating to any Collateral without the signature of STS
where permitted by law. A photocopy or other reproduction of this Agreement or
any financing statement covering any Collateral shall be sufficient as a
financing statement where permitted by law.
Article V
Certain Rights And Remedies Of Xxxxxxxxx
5.01. Duties of Xxxxxxxxx.
-------------------
(a) No Duty to Perform. Subject to the terms and provisions
------------------
of the Subordination Agreement, if STS fails to perform any agreement or
condition contained herein or in any of the Related Receivables Documents,
Xxxxxxxxx may (but shall have no duty to) itself perform, or cause performance
of, such agreement or condition, and the expenses of Xxxxxxxxx incurred in
connection therewith shall be reimbursed by STS. The powers conferred on
Xxxxxxxxx under this Agreement are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
(b) Specific Duties. Except for exercise of reasonable care
---------------
in the custody and preservation of any Collateral in its possession and
accounting for monies received by it pursuant to this Agreement, Xxxxxxxxx shall
have no duty as to any Collateral. In any event Xxxxxxxxx (a) shall have no duty
to take any steps to preserve rights against prior parties or any other rights
pertaining to any Collateral and (b) shall not be liable for any action,
omission, insolvency or default on the part of the Agent, or any designee or
custodian (other than Xxxxxxxxx) appointed by Xxxxxxxxx in good faith. Xxxxxxxxx
shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if it takes such action for such
purpose as STS requests in writing from time to time (but failure to take any
such action shall not in itself be deemed a failure to exercise reasonable care
or evidence of such failure). Subject only to the performance by Xxxxxxxxx of
its
-14-
duties set forth in this Section 5.01, risk of loss, damage and diminution in
value of the Collateral, of whatever nature and however caused, shall be on STS.
5.02. Power of Attorney. Subject only to the rights of the
-----------------
Senior Agent under the Senior Security Interest, as provided in the
Subordination Agreement, STS hereby irrevocably appoints Xxxxxxxxx or its Agent,
with full power of substitution, to be the attorney-in-fact of STS on and
following the Senior Debt Retirement Date, with full authority in the place and
stead of STS and in the name of STS or otherwise, from time to time in
Xxxxxxxxx*s or its Agent's discretion, to take any action and to execute any
instruments and agreements which Xxxxxxxxx or its Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including the following:
(a) to demand, collect, enforce, file claims for, xxx for,
recover, compromise, release, and take any action or institute any proceedings
to collect or enforce, all rights to payments due or to become due and all other
rights of STS under or in connection with any Collateral.
(b) to receive, endorse and collect any checks, notes or
other instruments, documents, chattel paper or any other payment media in
connection with the foregoing clause (a), and
(c) to perform all obligations of STS hereunder;
provided, that, except for taking actions referred to in Section 4.12(a), such
--------
power of attorney may be exercised on and following the Senior Debt Retirement
Date only so long as an Event of Default or Potential Event of Default has
occurred and is continuing. Such power of attorney is irrevocable and coupled
with an interest. All third parties are entitled to rely conclusively on a
representation by Xxxxxxxxx that it is entitled to exercise such power of
attorney.
5.03. Certain Remedies. Subject only to the rights of the
----------------
Senior Agent under the Senior Security Interest as provided in the Subordination
Agreement, if any Event of Default shall have occurred and be continuing,
Xxxxxxxxx shall have such rights and remedies with respect to the Collateral and
each part thereof as are provided to a secured party by the UCC and all other
rights and remedies which it may have under this Agreement, the Purchase
Agreement or the Notes, any other instrument or agreement, at law or in equity
or otherwise, and, in addition, the following provisions shall apply:
(a) Subject to the Subordination Agreement, and in any
event on and following the Senior Debt Retirement Date, Xxxxxxxxx or its Agent
may (i) take absolute possession and control of the Collateral or any part
thereof, (ii) transfer any Collateral into its name, (iii) notify the parties
obligated on the Collateral to make to Xxxxxxxxx any payments due or to become
due, (iv) receive any payments made under or in connection with the Collateral,
(v) exercise all rights and remedies of STS under or in connection with the
Collateral, (vi) demand, collect, enforce, file claims for, xxx for, recover,
compromise, release, and take any action or institute any proceedings to collect
or enforce,
-15-
all rights to payments due or to become due and all other rights of STS under or
in connection with any Collateral, and (vii) otherwise deal in and act with
respect to the Collateral in all respects as though it were the outright owner
thereof.
(b) Subject only to the rights of the Senior Agent under
the Senior Security Interest as provided in the Subordination Agreement,
Xxxxxxxxx may require STS to, and STS hereby agrees that it will, at its
expense, from time to time on Xxxxxxxxx*s request, forthwith assemble all or
part of the tangible Collateral as directed by Xxxxxxxxx and make it available
to Xxxxxxxxx at STS*s premises or such other place as may be designated by
Xxxxxxxxx; and Xxxxxxxxx may enter into and occupy any premises owned or leased
by STS where the Collateral or any part thereof is located or assembled for a
reasonable period in order to effectuate Xxxxxxxxx*s rights and remedies
hereunder or under law, without obligation to STS in respect of such occupation.
(c) Subject only to the rights of the Senior Agent under
the Senior Security Interest as provided in the Subordination Agreement,
Xxxxxxxxx may, without being required to give any notice except to the extent
hereinafter provided, apply the cash, if any, then held by it or its Agent as
Collateral hereunder to the payment of the Secured Obligations and, if there
shall be no such cash or the cash so applied shall be insufficient to pay in
full all Secured Obligations, sell all or any portion of the Collateral at any
broker's board or on any securities exchange or at any public or private sale,
for cash, upon credit or for future delivery, in one lot or in separate parcels,
all as Xxxxxxxxx may deem commercially reasonable (and Xxxxxxxxx may be the
purchaser of any or all of the Collateral so sold and in such event shall
thereafter own and hold the same, absolutely, free from any right or claim of
whatsoever kind, and Xxxxxxxxx shall have the right to bid-in the Secured
Obligations or any part thereof for such purpose).
(d) STS recognizes that, on or following the Senior Debt
Retirement Date, Xxxxxxxxx may be unable, or may deem it inadvisable, to effect
a public sale of all or a portion of the Collateral by reason of certain
provisions contained in the Securities Act of 1933, as amended, or applicable
state securities laws, but may deem it advisable, for purposes of complying with
such laws, to resort to one or more private sales to a restricted group of
purchasers who will be obliged, among other things, to acquire such Collateral
for their own accounts for investment and not with a view to the distribution or
resale thereof. STS agrees that private sales so made may be at prices and on
other terms less favorable to the seller than if such Collateral were sold at
public sale and that Xxxxxxxxx shall have no obligation to delay sale of any
such Collateral for the period of time necessary to permit the issuers of such
Collateral, even if such issuers would agree, to register or qualify such
Collateral for public sale under the Securities Act of 1933, as amended, or
applicable state securities laws. STS agrees that private sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner.
(e) Subject to the Subordination Agreement, and in any
event on and following the Senior Debt Retirement Date, upon any sale of the
Collateral, Xxxxxxxxx shall have the right to deliver, assign and transfer to
the purchaser thereof the Collateral so sold. Each purchaser (which
-16-
may include Xxxxxxxxx) at any such sale shall hold the property sold absolutely,
free from any claim or right of whatever kind, including any equity or rights of
redemption, of STS, and STS specifically waives, to the fullest extent permitted
by Law, against any such purchaser all rights of redemption, stay or appraisal
which STS has or may have under any Law now existing or hereafter adopted.
(f) On and following the Senior Debt Retirement Date, to
the fullest extent permitted by Law, STS waives any notice of the time or place
of any sale of Collateral by Xxxxxxxxx and all other notices in connection with
the exercise of remedies with respect to the Collateral and, to the extent
notice of sale is required by Law, it is understood and agreed that ten days
notice is commercially reasonable. Xxxxxxxxx shall not be obligated to make any
sale pursuant to any such notice. Xxxxxxxxx may adjourn any such public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
(g) On or following the Senior Debt Retirement Date,
Xxxxxxxxx may, without being required to give any notice except to the extent
hereinafter required, exercise its right to collect, demand or withdraw from the
depositary institution all or any part of the Deposit Account Collateral, and
all other funds, investments and other property therein, liquidate investments
in such accounts as it deems appropriate and apply the resulting funds in such
order as Xxxxxxxxx may elect, to the Secured Obligations.
(h) On and following the Senior Debt Retirement Date, all
payments and distributions on account of the Collateral and the proceeds of any
sale of any part of the Collateral, and any other cash held by Xxxxxxxxx or its
Agent under this Agreement, shall be applied: (i) first, to the payment of the
reasonable costs and expenses in connection with such sale, including without
limitation reasonable attorneys' fees and legal expenses, and all reasonable
expenses, liabilities and advances made or incurred by Xxxxxxxxx in connection
therewith, (ii) second, to pay down the balance due to Xxxxxxxxx under the Notes
and (iii) finally, if all Secured Obligations shall have been paid in full, the
balance, if any, shall be paid to STS or as otherwise required by Law. STS shall
remain fully liable for any deficiency.
5.04. Indemnity and Expenses. Without limitation of any other
----------------------
right to indemnity which Xxxxxxxxx or any other Person may have under this
Agreement or otherwise: (a) STS agrees to indemnify Xxxxxxxxx from and against
any and all claims, losses and liabilities arising out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities if the same result solely from the gross
negligence or willful misconduct of Xxxxxxxxx, as finally determined by a court
of competent jurisdiction; and (b) STS will on demand pay to Xxxxxxxxx the
amount of any and all expenses, including reasonable fees and disbursements of
counsel and of any experts and agents, which Xxxxxxxxx may incur in connection
with (i) the administration of this Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization upon,
any of the Collateral, (iii) the exercise or enforcement of any of the rights of
Xxxxxxxxx hereunder, or (iv) the failure by STS to perform or observe any of the
-17-
provisions hereof. The agreements contained in this Section shall survive the
termination of this Agreement.
Article VI
Miscellaneous
6.01. Amendments and Waivers. Neither this Agreement nor any
----------------------
term hereof may be amended, waived, discharged or terminated except to the
extent specifically set forth in a writing manually signed by or on behalf of
STS and Xxxxxxxxx. Such amendments or waivers shall be made in accordance with,
and shall be subject to, Section 8E of the Purchase Agreement.
6.02. No Implied Waiver; Remedies Cumulative. No delay or
--------------------------------------
failure of Xxxxxxxxx in exercising any right or remedy under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right or remedy preclude any other or further exercise thereof or the
exercise of any other right or remedy. The rights and remedies of Xxxxxxxxx
under this Agreement are cumulative and not exclusive of any other rights or
remedies available hereunder, under any other agreement, at law, or otherwise.
6.03. Notices. Except to the extent, if any, otherwise
-------
expressly provided herein, all notices and other communications (collectively
"Notices") under this Agreement shall be given, shall be effective, and may be
relied upon, in the same way as notices under Section 8N of the Purchase
Agreement.
6.04. Termination of Liens. Upon indefeasible payment in full
--------------------
in cash of all Secured Obligations (other than Contingent Secured Obligations if
Alternative Collateral has been delivered to Xxxxxxxxx or its Agent), or
termination of the obligations of Xxxxxxxxx to make the loans under the Purchase
Agreement, Xxxxxxxxx shall, at the request of STS, release the Liens created
hereby and redeliver to STS any remaining Collateral in the possession of
Xxxxxxxxx or its Agent.
6.05. Entire Agreement. This Agreement, the Subordination
----------------
Agreement, the Purchase Agreement and the Notes constitute the entire agreement
of STS and Xxxxxxxxx with respect to the subject matter hereof and supersedes
all prior negotiations, agreements, understandings and communications. No
representation, understanding, promise or condition concerning the subject
matter hereof shall be binding upon Xxxxxxxxx unless expressed herein or
therein. No course of dealing, course or performance, trade usage or parole
evidence of any nature, whether based on actions, omissions or circumstances
occurring or existing heretofore or hereafter, may be used in any way to alter
or supplement the terms hereof.
6.06. Survival. The obligations of STS under Sections 2.03
--------
and 6.04 shall survive termination of this Agreement and all other events and
conditions whatever. All representations and
-18-
warranties of STS contained in or made in connection with this Agreement shall
survive, and shall not be waived by, the execution and delivery of this
Agreement, any investigation by or knowledge of Xxxxxxxxx, any extension of
credit, termination of this Agreement, or any other event or circumstance
whatever.
6.07. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute but one and the same agreement.
6.08. Construction. In this Agreement, unless the context
------------
otherwise clearly requires, references to the plural include the singular, the
singular the plural, and the part the whole; the neuter case includes the
masculine and feminine cases; and "or" is not exclusive. In this Agreement, any
references to property (and similar terms) include an interest in such property
(or other item referred to); "include," "includes," "including" and similar
terms are not limiting; and "hereof," "herein," "hereunder" and similar terms
refer to this Agreement as a whole and not to any particular provision; and
"expenses," "costs," "out-of-pocket expenses" and similar terms include the
charges of in-house counsel, auditors and other professionals of the relevant
Person to the extent that such amounts are routinely identified and charged
under such Person*s cost accounting system. Section and other headings in this
Agreement, and any table of contents herein, are for reference only and shall
not affect the interpretation of this Agreement in any respect. Section and
other references in this Agreement are to this Agreement unless otherwise
specified. This Agreement has been fully negotiated between the applicable
parties, each party having the benefit of legal counsel, and accordingly neither
any doctrine of construction of security agreements in favor of STS, nor any
doctrine of construction of ambiguities against the party controlling the
drafting, shall apply to this Agreement.
6.09. Successors and Assigns. This Agreement shall be binding
----------------------
upon STS and its successors and assigns, and shall inure to the benefit of and
be enforceable by Xxxxxxxxx and its successors and assigns. Without limitation
of the foregoing, Xxxxxxxxx (and any successive assignee or transferee) from
time to time may assign or otherwise transfer all or any portion of its rights
or obligations under the Purchase Agreement, the Notes or this Agreement
(including all or any portion of any commitment to extend credit), or any
Secured Obligations, to any other Person, and such Secured Obligations
(including any Secured Obligations resulting from extension of credit by such
other Person under or in connection with the Purchase Agreement, the Notes or
this Agreement) shall be and remain Secured Obligations entitled to the benefit
of this Agreement, and to the extent of its interest in such Secured Obligations
such other Person shall be vested with all the benefits in respect thereof
granted to Xxxxxxxxx in this Agreement or otherwise.
6.10. Governing Law. This Agreement shall be governed by,
-------------
construed and enforced in accordance with the domestic laws of the State of
Illinois, without regard to any choice of law or conflict of law provisions or
rule (whether of the State of Illinois or any other jurisdiction) that would
cause the application of the laws of any other jurisdiction other than the State
of Illinois.
-19-
* * * * *
-20-
IN WITNESS WHEREOF, STS has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
ATTEST: SPECIALTY TRANSPORTATION SERVICES, INC.
By:_______________________________________________ By:_________________________________
Title: ___________________________________________ Title:______________________________
ACCEPTED:
XXXXXXXXX ENVIRONMENTAL &
INDUSTRIAL EQUITY PARTNERS,
L.P., a Delaware limited partnership
By Xxxxxxxxx Capital Environmental,
L.L.C., a Delaware limited liability company
Its General Partner
By Xxxxxxxxx Capital, Inc.,
Its Managing Agent
By: ______________________________________________
Name: ____________________________________________
Title: ___________________________________________
-21-
Exhibit A
to
Security Agreement
DEPOSIT ACCOUNT LETTER AGREEMENT
______________________, 20___
[Name and address
of Deposit Account Bank]
Ladies and Gentlemen:
We refer to the account on Annex A hereto maintained with you
by Specialty Transportation Services, Inc. ("STS") (together with all
---
subaccounts thereunder, and all monies, instruments and other property therein
from time to time, collectively, the "Account").
-------
Xxxxxxxxx Environmental & Industrial Equity Partners, L.P.
("Xxxxxxxxx") is the holder of a security interest under the Security Agreement,
---------
dated as of July 7, 2000 made by STS in favor of Xxxxxxxxx. STS has assigned,
pledged and transferred to Xxxxxxxxx and has granted and created in favor of
Xxxxxxxxx a security interest in and to, the Account, including all monies,
instruments and other property therein from time to time. Xxxxxxxxx'x security
interest in the Account is subordinate and junior only to the security interest
given by STS to Mellon Bank, N.A., under a Security Agreement dated as of
January 30, 1998 (the "Senior Security Interest"), as more fully described in
------------------------
the Subordination and Intercreditor Agreement, dated as of July 7, 2000, between
and among STS, Mellon Bank, N.A. and Xxxxxxxxx. By signing this Letter
Agreement, you acknowledge notice of, and consent to, the foregoing. You also
agree as follows, notwithstanding anything to the contrary in any other
agreement relating to the Account:
(a) From and after the date hereof, subject only to the
Senior Security Interest, and: (i) subject to clause (ii), Xxxxxxxxx shall have
sole of dominion and control with respect to the Account as though it were the
sole owner thereof; (ii) prior to the occurrence of an Event of Default under
the Purchase Agreement dated as of July 7, 2000, as amended from time to time,
between STS and Xxxxxxxxx, Xxxxxxxxx hereby directs you to release funds to STS
or at the direction of STS; (iii) if an Event of Default has occurred and is
continuing or exists, you shall act upon instructions of Xxxxxxxxx with respect
to the Account and shall not be required to determine whether or not an Event of
Default has occurred and is continuing or exists prior to so acting.
(b) As of the date hereof, you have received no notice of
any other currently effective assignment or pledge of, security interest or
other lien in, attachment, garnishment, execution or other writ or process
against, or other adverse interest or claim of adverse interest in,
-22-
the Account, other than the Senior Security Interest, and you will promptly
notify Xxxxxxxxx, upon receiving notice of any assertion by any person of any of
the foregoing.
(c) You agree to provide access at any time during your
normal business hours to any and all of your records of, or relating to, STS and
its accounts maintained by you, including without limitation records of all
collections and disbursements and other transfers of any kind for STS.
(d) All service charges and fees with respect to the
Account and the actions contemplated by this Letter Agreement shall be payable
by, and shall be the sole responsibility of, STS. Such service charges and fees
may be deducted from the Account.
(e) You hereby waive and agree not to assert, claim or
endeavor to exercise any right of set-off, banker's lien or any other right or
claim you may now or hereafter have with respect to the Account, and you shall
have no rights in the Account (except only that you may set-off against the
Account the face amount of any payment item deposited in and credited to the
Account which is subsequently returned, and except that you may deduct from the
Account service charges and fees with respect to the Account as provided in
paragraph (d) hereof).
You shall not be liable to STS in any manner for actions taken
upon instructions of Xxxxxxxxx pursuant to paragraph (a) above. STS hereby
authorizes you to treat Xxxxxxxxx as the owner of the Account and does hereby
authorize Xxxxxxxxx at any time, and from time to time, to have all or any part
of the Account transferred into its own name, or into the name of its nominee,
and thereafter, subject to the provisions of paragraph (a) above, to exercise
all rights relating to said Account.
This letter agreement shall be binding upon you and your
successors and assigns and shall inure to the benefit of Xxxxxxxxx and its
respective successors, transferees and assigns.
* * * * *
-23-
This letter agreement shall be governed by and construed in
accordance with the laws of the [State of ________________________].
Very truly yours,
SPECIALTY TRANSPORTATION SERVICES, INC.
By:____________________________________
Name:___________________________________
Title:__________________________________
XXXXXXXXX ENVIRONMENTAL &
INDUSTRIAL EQUITY PARTNERS, L.P.,
a Delaware limited partnership
By Xxxxxxxxx Capital Environmental, L.L.C.,
a Delaware limited liability company
Its General Partner
By Xxxxxxxxx Capital, Inc.
Its Managing Agent
By:____________________________________
Name:___________________________________
Title:__________________________________
Address for notices to Xxxxxxxxx Environmental & Industrial Equity Partners,
X.X.
Xxxxxxxxx Environmental & Industrial Equity Partners, L.P.
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attention: _____________________
-24-
Acknowledged and agreed to as of
this day of _________________, 2000
[NAME OF DEPOSIT ACCOUNT BANK]
By:__________________________________
Name:________________________________
Title:_______________________________
-25-
ANNEX A
[Identify Account]
-26-
Exhibit B
to
Security Agreement
AGREEMENT OF LIEN ON
TRADEMARKS, SERVICE MARKS AND PENDING APPLICATIONS
THIS AGREEMENT, by SPECIALTY TRANSPORTATION SERVICES, INC., an Illinois
corporation ("STS"), in favor of XXXXXXXXX ENVIRONMENTAL & INDUSTRIAL EQUITY
---
PARTNERS, L.P., a Delaware limited partnership ("Xxxxxxxxx").
---------
Recitals:
A. STS has adopted, used and is using certain marks which
are registered in, or applications for which are pending in, the United States
and/or foreign countries, all of which marks, registrations thereof and
applications therefor are more particularly described hereinafter.
B. STS and Xxxxxxxxx have entered into a Security
Agreement dated as of July 7, 2000 (as amended, modified or supplemented from
time to time, the "Security Agreement"). Pursuant to the Security Agreement, STS
------------------
has granted to and created in favor of Xxxxxxxxx, to secure the Obligations, a
lien on and security interest in certain property of STS, including the marks,
registrations thereof and pending applications therefor referred to above.
NOW, THEREFORE, STS, intending to be legally bound, hereby
confirms that it has granted to and created in favor of Xxxxxxxxx, pursuant to
the Security Agreement, and hereby grants to and creates in favor of Xxxxxxxxx,
a lien on and security interest in and to the following marks, registrations
thereof and pending applications therefor, together with the goodwill of the
business symbolized by such marks, as security for the full and timely payment
and performance of the Secured Obligations. Xxxxxxxxx'x security interest in the
Trademarks, Service Marks and Pending Applications is subordinate and junior
only to the security interest given by STS to Mellon Bank, N.A., under a
Security Agreement dated as of January 30, 1998, as more fully described in the
Subordination and Intercreditor Agreement, dated as of July 7, 2000, between and
among STS, Mellon Bank, N.A. and Xxxxxxxxx:
I. U.S. Trademark/Service Xxxx Registrations:
------------------------------------------
Xxxx Reg No. Reg Date Int. Class Goods
---- ------- -------- ---------- -----
II. U.S. Trademark/Service Xxxx Applications:
-----------------------------------------
Xxxx App. No. App. Date Int. Class Goods
---- -------- --------- ---------- -----
-27-
This Agreement is part of the Security Agreement referred to
in the Note and Warrant Purchase Agreement, dated as of July 7, 2000, between
STS and Xxxxxxxxx, as amended or supplemented from time to time.
WITNESS the due execution hereof as of the __ day of ________,
2000.
SPECIALTY TRANSPORTATION SERVICES, INC.
By:_____________________________________
Name:____________________________________
Title:___________________________________
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STATE OF____________ )
) SS:
COUNTY OF___________ )
On this, the __ day of _______________, 2000, before me, a
Notary Public, the undersigned officer, personally appeared
_____________________, who acknowledged himself/herself to be _________________
of Specialty Transportation Services, Inc., an Illinois corporation, and that
he/she as ______________, being authorized to do so, executed the foregoing
instrument for the purpose therein contained by signing the name of the
corporation by himself/herself as ________________.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------------------
Notary Public
My Commission Expires:
(Notarial Seal)
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