Exhibit 10.3
SECURITY AGREEMENT
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SECURITY AGREEMENT, dated as of May 7, 1999, among each of the
corporations or limited partnerships listed on Schedule A
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hereto (each of such corporations are sometimes collectively referred to
herein as "Grantors" and individually as a "Grantor"), and GENERAL
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ELECTRIC CAPITAL CORPORATION, a New York corporation, in its capacity as
Agent for Lenders.
W I T N E S S T H:
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WHEREAS, pursuant to that certain Credit Agreement dated as
of the date hereof by and among Grantors, Agent and Lenders (including
all annexes, exhibits and schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the
"Credit Agreement"), Lenders have agreed to make the Loans and to incur
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Letter of Credit Obligations on behalf of Grantors;
WHEREAS, in order to induce Agent and Lenders to enter into
the Credit Agreement and other Loan Documents and to induce Lenders to make
the Loans and to incur Letter of Credit Obligations as provided for in the
Credit Agreement, Grantors have agreed to grant a continuing Lien on the
Collateral (as hereinafter defined) to secure the Obligations;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
I. DEFINED TERMS. All capitalized terms used but not
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otherwise defined herein have the meanings given to them in the Credit
Agreement or in Annex A thereto. All other undefined terms contained in
this Security Agreement, unless the context indicates otherwise, have the
meanings provided for by the Code to the extent the same are used or
defined therein.
II. GRANT OF LIEN.
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A. To secure the prompt and complete payment,
performance and observance of all of the Obligations (specifically
including, without limitation, each Grantor's Obligations arising under
the cross-guaranty provisions of Section 12 of the Credit Agreement),
each Grantor hereby grants, assigns, conveys, mortgages, pledges,
hypothecates and transfers to Agent, for itself and the benefit of
Lenders, a Lien upon all of its right, title and interest in, to and under
the following property, whether now owned by or owing to, or hereafter
acquired by or arising in favor of such Grantor (including under any trade
names, styles or derivations thereof), and whether owned or consigned by
or to, or leased from or to, such Grantor, and regardless of where
located (all of which being hereinafter collectively referred to as the
"Collateral"):
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1. all Accounts;
2. all Inventory;
3. all General Intangibles;
4. all present and future Contracts and
contract rights to the extent relating to the Accounts and
Inventory, including, without limitation, contract rights which
evidence or support Accounts, choses in action or causes of actions
or claims arising out of Accounts or Inventory, agreements or
arrangements with sales agents, distributors or the like and/or
consignees, deposit accounts, Letters of Credit, Instruments
(relating to Accounts or Inventory), guaranty or warranty claims
with respect to Accounts or Inventory, and the proceeds of all of
the foregoing;
5. all present and future Chattel Paper,
Documents, Instruments and other forms of payment relating to or
evidencing the payment of money arising out of the sale, lease or
other disposition of Inventory or rendition of services in the
ordinary course of business; all monies and Investment Property to
the extent relating to the foregoing and the proceeds thereof, now
or hereafter held or received or held by, or in transit to, Agent,
Lender or any of their respective affiliates or participants,
whether for safekeeping, pledge, custody, transmission, collection
or otherwise; deposits (general or special) and balances to the extent
relating to the foregoing; all right, title and interest in, to and in
respect of all goods relating to, or which by sale have resulted in any of
the foregoing, including, without limitation, all goods described in
invoices, Documents, Contracts or Instruments with respect to, or otherwise
representing or evidencing, any of same, including, without limitation, all
returned, reclaimed or repossessed goods; all right, title and interest, and
all enforcement and other rights, remedies, and security and liens, in, to
and in respect of any of the foregoing, including, without limitation,
rights of stoppage in transit, replevin, repossession, sequestration and
reclamation and other rights and remedies of an unpaid vendor, lienor or
secured party, guaranties, or other Contracts of suretyship with respect
thereto, or deposits or other security for the obligation of any Account
Debtor, credit and other insurance to the extent relating to the foregoing;
6. Records;
7. All Borrower Accounts, Concentration Accounts,
Disbursement Accounts, and all other deposit and other bank accounts and all
deposits therein;
8. all money, cash or cash equivalents of any
Grantor; and
9. to the extent not otherwise included, all
Proceeds and products of the foregoing and all accessions to, substitutions
and replacements for, and rents and profits of, each of the foregoing.
B. In addition, to secure the prompt and complete
payment, performance and observance of the Obligations and in order to
induce Agent and Lenders as aforesaid, each Grantor hereby grants to Agent,
for itself and the benefit of Lenders, a right of setoff against the
property of such Grantor held by Agent or any Lender, consisting of property
described above in Section 2(a) now or hereafter in the possession or
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custody of or in transit to Agent or any Lender, for any purpose, including
safekeeping, collection or pledge, for the account of such Grantor, or as to
which such Grantor may have any right or power.
III. AGENT'S AND LENDERS' RIGHTS: LIMITATIONS ON AGENT'S AND
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LENDERS' OBLIGATIONS.
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A. It is expressly agreed by Grantors that, anything
herein to the contrary notwithstanding, each Grantor shall remain liable
under each of its Contracts and each of its Licenses to observe and
perform all the conditions and obligations to be observed and performed by
it thereunder. Neither Agent nor any Lender shall have any obligation or
liability under any Contract or License by reason of or arising out of this
Security Agreement or the granting herein of a Lien thereon or the receipt
by Agent or any Lender of any payment relating to any Contract or License
pursuant hereto. Neither Agent nor any Lender shall be required or obligated
in any manner to perform or fulfill any of the obligations of any Grantor
under or pursuant to any Contract or License, or to make any payment, or to
make any inquiry as to the nature or the sufficiency of any payment received
by it or the sufficiency of any performance by any party under any Contract
or License, or to present or file any claims, or to take any action to
collect or enforce any performance or the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times.
B. Agent may at any time after an Event of Default
shall have occurred and be continuing, without prior notice to any Grantor,
notify Account Debtors that the Accounts and related Collateral have been
assigned to Agent, and that payments shall be made directly to Agent. Upon
the request of Agent, each Grantor shall so notify Account Debtors.
C. Agent may at any time in Agent's own name or in the
name of any Grantor communicate with Account Debtors or parties to Contracts
to verify with such Persons, to Agent's satisfaction, the existence, amount
and terms of any such Accounts and related Collateral. If an Event of
Default shall have occurred and be continuing, each Grantor, at its own
expense, shall cause the independent certified public accountants then
engaged by such Grantor to prepare and deliver to Agent and each Lender at
any time and from time to time promptly upon Agent's request the following
reports with respect to each Grantor: 1. a reconciliation of all Accounts;
2. an aging of all Accounts; 3. trial balances; and 4. a test verification
of such Accounts as Agent may request. Each Grantor, at its own expense,
shall deliver to Agent the results of each physical verification, if any,
which such Grantor may in its discretion have made, or caused any other
Person to have made on its behalf, of all or any portion of its Inventory.
IV. REPRESENTATIONS AND WARRANTIES. Each Grantor
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represents and warrants that:
A. Each Grantor is the sole owner of each item of the
Collateral upon which it purports to xxxxx x Xxxx hereunder, and has good and
marketable title thereto free and clear of any and all Liens other than
Permitted Encumbrances.
B. No effective security agreement, financing
statement, equivalent security or Lien instrument or continuation statement
covering all or any part of the Collateral is on file or of record in any
public office, except such as may have been filed 1. by any Grantor in favor
of Agent pursuant to this Security Agreement or the other Loan Documents,
and 2. in connection with any other Permitted Encumbrances.
C. This Security Agreement is effective to create a
valid and continuing Lien on and, upon the filing of the appropriate
financing statements listed on Schedule I hereto, a perfected Lien in favor
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of Agent, for itself and the benefit of Lenders, on the Collateral with
respect to which a Lien may be perfected by filing pursuant to the Code.
Such Lien is prior to all other Liens, except Permitted Encumbrances that
would be prior to Liens in favor of Agent for the benefit of Agent and
Lenders as a matter of law, and is enforceable as such as against any and all
creditors of and purchasers from any Grantor (other than purchasers of
Inventory in the ordinary course of business). All action by any Grantor
necessary or desirable to protect and perfect such Lien on each item of the
Collateral has been duly taken.
D. Each Grantor's chief executive office, principal
place of business, corporate offices, all warehouses and premises where
Collateral is stored or located, and the locations of all of its books and
records concerning the Collateral are set forth on Schedule II hereto.
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E. With respect to the Accounts, except as
specifically disclosed in the most recent Collateral Report delivered to
Agent 1. they represent bona fide sales of Inventory or rendering of services
to Account Debtors in the ordinary course of each Grantor's business and are
not evidenced by a judgment, Instrument or Chattel Paper; 2. there are no
setoffs,claims or disputes existing or asserted with respect thereto and no
Grantor has made any agreement with any Account Debtor for any extension of
time for the payment thereof, any compromise or settlement for less than the
full amount thereof, any release of any Account Debtor from liability there-
for, or any deduction therefrom except a discount or allowance allowed by
such Grantorin the ordinary course of its business for prompt payment and
disclosed to Agent; 3. to each Grantor's knowledge, there are no facts,
events or occurrences which in any way impair the validity or enforceability
thereof or could reasonably be expected to reduce the amount payable there-
under as shown on any Grantor's books and records and any invoices, state-
ments and Collateral Reports delivered to Agent and Lenders with respect
thereto; 4. no Grantor has received any notice of proceedings or actions
which are threatened or pending against any Account Debtor which might
result in any adverse change in such Account Debtor's financial condition;
and 5. no Grantor has knowledge that any Account Debtor is unable generally
to pay its debts as they become due. Further with respect to the Accounts
(x) the amounts shown on all invoices, statements and Collateral Reports
which may be delivered to the Agent with respect thereto are actually and
absolutely owing to such Grantor as indicated thereon and are not in any way
contingent; (y) no payments have been or shall be made thereon except
payments immediately delivered to the applicable Borrower Accounts or the
Agent as required pursuant to the terms of Annex C to the Credit Agreement;
and (z) to each Grantor's knowledge, all Account Debtors have the capacity to
contract.
F. With respect to any Inventory scheduled or listed
on the most recent Collateral Report delivered to Agent pursuant to the terms
of this Security Agreement or the Credit Agreement, 1. such Inventory is
located at one of the applicable Grantor's locations set forth on
Schedule II hereto, as applicable, 2. the applicable Grantor has good,
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indefeasible and merchantable title to such Inventory and such Inventory is
not subject to any Lien or security interest or document whatsoever except
for the Lien granted to Agent, for the benefit of Agent and Lenders, and
except for Permitted Encumbrances, 3. such Inventory is not subject to any
licensing, patent, royalty, trademark, trade name or copyright agreements
with any third parties which would require any consent of any third party
upon sale or disposition of that Inventory or the payment of any monies to
any third party as a precondition of such sale or other disposition, and
4. the completion of manufacture, sale or other disposition of such
Inventory by Agent following an Event of Default shall not require the
consent of any Person and shall not constitute a breach or default
under any contract or agreement to which any Grantor is a party or to which
such property is subject.
G. No Grantor has any interest in, or title to, any
Patent, Trademark or Copyright except as set forth in Schedule IV hereto.
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This Security Agreement is effective to create a valid and continuing Lien
on and, upon filing of the Copyright Security Agreements with the United
States Copyright Office and filing of the Patent Security Agreements and the
Trademark Security Agreements with the United State Patent and Trademark
Office, perfected Liens in favor of Agent on each Grantor's Patents,
Trademarks and Copyrights and such perfected Liens are enforceable as such
as against any and all creditors of and purchasers from any Grantor. Upon
filing of the Copyright Security Agreements with the United States Copyright
Office and filing of the Patent Security Agreements and the Trademark
Security Agreements with the United State Patent and Trademark Office and
the filing of appropriate financing statements listed on Schedule I hereto,
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all action necessary or desirable to protect and perfect Agent's Lien on
each Grantor's Patents, Trademarks or Copyrights shall have been duly taken.
V. COVENANTS. Each Grantor covenants and agrees with
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Agent, for the benefit of Agent and Lenders, that from and after the date of
this Security Agreement and until the Termination Date:
A. Further Assurances. At any time and from time to
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time, upon the written request of Agent and at the sole expense of Grantors,
each Grantor shall promptly and duly execute and deliver any and all such
further instruments and documents and take such further actions as Agent may
deem desirable to obtain the full benefits of this Security Agreement and of
the rights and powers herein granted, including 1. using its best efforts to
secure all consents and approvals necessary or appropriate for the assignment
to or for the benefit of Agent of any License or Contract held by such Grantor
or in which such Grantor has any rights required to be assigned hereunder and
not heretofore assigned, 2. filing any financing or continuation statements
under the Code with respect to the Liens granted hereunder or under any other
Document, 3. transferring Collateral to Agent's possession (for the
benefit of Agent and Lenders) if such Collateral consists of Chattel Paper,
Instruments or if a Lien on such Collateral can be perfected only by
possession, or if requested by Agent, and 4. obtaining, or using its best
efforts to obtain, waivers of Liens, if any exist, from landlords and
mortgagees in accordance with the Credit Agreement. Each Grantor also hereby
authorizes Agent, for the benefit of Agent and Lenders, to file any such
financing or continuation statements without the signature of such Grantor to
the extent permitted by applicable law. If any amount payable under or in
connection with any of the Collateral is or shall become evidenced by any
Instrument, such Instrument, other than checks and notes received in the
ordinary course of business, shall be duly endorsed in a manner satisfactory
to Agent immediately upon such Grantor's receipt thereof.
B. Maintenance of Records. Grantors shall keep and
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maintain, at their own cost and expense, satisfactory and complete records of
the Collateral, including a record of any and all payments received and any
and all credits granted with respect to the Collateral and all other dealings
with the Collateral. Grantors shall xxxx their books and records pertaining
to the Collateral to evidence this Security Agreement and the Liens granted
hereby.
C. Covenants Regarding Patent, Trademark and
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Copyright Collateral.
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1. Grantors shall notify Agent immediately if
they know or have reason to know that any application or registration
relating to any Patent, Trademark or Copyright (now or hereafter existing)
may become abandoned or dedicated, or of any adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any court) regarding any
Grantor's ownership of any Patent, Trademark or Copyright, its right to
register the same, or to keep and maintain the same.
2. In no event shall any Grantor, either
itself or through any agent, employee, licensee or designee, file an
application for the registration of any Patent, Trademark or Copyright
with the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency without giving Agent prior
written notice thereof, and, upon request of Agent, Grantor shall execute and
deliver any and all Patent Security Agreements, Copyright Security Agreements
or Trademark Security Agreements as Agent may request to evidence Agent's
Lien on such Patent, Trademark or Copyright, and the General Intangibles of
such Grantor relating thereto or represented thereby.
3. Grantors shall take all actions necessary
or requested by Agent to maintain and pursue each application, to obtain the
relevant registration and to maintain the registration of each of the
Patents, Trademarks and Copyrights (now or hereafter existing), including
the filing of applications for renewal, affidavits of use, affidavits of
noncontestability and opposition and interference and cancellation
proceedings,[unless the applicable Grantor shall determine that such Patent,
Trademark or Copyright is not material to the conduct of its business].
4. In the event that any of the Patent,
Trademark or Copyright Collateral is infringed upon, or misappropriated or
diluted by a third party, such Grantor shall notify Agent promptly after
such Grantor learns thereof. Such Grantor shall, unless such Grantor shall
reasonably determine that such Patent, Trademark or Copyright Collateral is
in no way material to the conduct of its business or operations, promptly
xxx for infringement, misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation or dilution, and shall take
such other actions as Agent shall deem appropriate under the circumstances
to protect such Patent, Trademark or Copyright Collateral.
D. Indemnification. In any suit, proceeding or
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action brought by Agent or any Lender relating to any Account or any other
Collateral for any sum owing thereunder or to enforce any provision of any
Account or any other Collateral each Grantor will save, indemnify and keep
Agent and Lenders harmless from and against all expense (including reasonable
attorneys' fees and expenses), loss or damage suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction of liability whatsoever
of the obligor thereunder, arising out of a breach by any Grantor of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to, or in favor of, such obligor or its successors
from such Grantor, except in the case of Agent or any Lender, to the extent
such expense, loss, or damage is attributable solely to the gross negligence
or willful misconduct of Agent or such Lender as finally determined by a court
of competent jurisdiction. All such obligations of Grantors shall be and
remain enforceable against and only against Grantors and shall not be
enforceable against Agent or any Lender.
E. Compliance with Terms of Accounts, etc. In all
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material respects, each Grantor will perform and comply with all obligations
in respect of its Accounts and other Collateral and all other agreements to
which it is a party or by which it is bound relating to the Collateral.
F. Limitation on Liens on Collateral. No Grantor
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will create, permit or suffer to exist, and each Grantor will defend the
Collateral against, and take such other action as is necessary to remove, any
Lien on the Collateral except Permitted Encumbrances, and will defend the
right, title and interest of Agent and Lenders in and to any of such Grantor's
rights under the Collateral against the claims and demands of all Persons
whomsoever.
G. Limitations on Disposition. No Grantor will sell,
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lease, transfer or otherwise dispose of any of the Collateral, or attempt or
contract to do so except as permitted by the Credit Agreement.
H. Further Identification of Collateral. Grantors
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will, if so requested by Agent, furnish to Agent, as often as Agent requests,
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Agent may reasonably
request, all in such detail as Agent may specify.
I. Notices. Grantors will advise Agent promptly, in
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reasonable detail, 1. of any Lien (other than Permitted Encumbrances) or claim
made or asserted against any of the Collateral, and 2. of the occurrence of
any other event which would have a material adverse effect on the aggregate
value of the Collateral or on the Liens created hereunder or under any other
Loan Document.
VI. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
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On the Closing Date each Grantor shall execute and
deliver to Agent a power of attorney (the "Power of Attorney") substantially
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in the form attached hereto as Exhibit A. The power of attorney granted
pursuant to the Power of Attorney is a power coupled with an interest and
shall be irrevocable until the Termination Date. The powers conferred on
Agent, for the benefit of Agent and Lenders, under the Power of Attorney
are solely to protect Agent's interests (for the benefit of Agent and
Lenders) in the Collateral and shall not impose any duty upon Agent or
any Lender to exercise any such powers. Agent agrees that A. it shall
not exercise any power or authority granted under the Power of Attorney
unless an Event of Default has occurred and is continuing, and B. Agent
shall account for any moneys received by Agent in respect of any
foreclosure on or disposition of Collateral pursuant to the Power of
Attorney provided that none of Agent or any Lender shall have any duty as
to any Collateral, and Agent and Lenders shall be accountable only for
amounts that they actually receive as a result of the exercise of such
powers. NONE OF AGENT, LENDERS OR THEIR RESPECTIVE AFFILIATES, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO
ANY GRANTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR
OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A
COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES.
VII. REMEDIES: RIGHTS UPON DEFAULT.
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A. In addition to all other rights and remedies granted
to it under this Security Agreement, the Credit Agreement, the other Loan
Documents and under any other instrument or agreement securing, evidencing
or relating to any of the Obligations, if any Event of Default shall have
occurred and be continuing, Agent may exercise all rights and remedies of
a secured party under the Code. Without limiting the generality of the
foregoing, each Grantor expressly agrees that in any such event Agent,
without demand of performance or other demand, advertisement or notice of
any kind (except the notice specified below of time and place of public or
private sale) to or upon such Grantor or any other Person (all and each of
which demands, advertisements and notices are hereby expressly waived to
the maximum extent permitted by the Code and other applicable law), may
forthwith enter upon the premises of such Grantor where any Collateral
is located through self-help, without judicial process, without first
obtaining a final judgment or giving such Grantor or any other Person notice
and opportunity for a hearing on Agent's claim or action and may collect,
receive, assemble, process, appropriate and realize upon the Collateral, or
any part thereof, and may forthwith sell, lease, assign, give an option or
options to purchase, or sell or otherwise dispose of and deliver said
Collateral (or contract to do so), or any part thereof, in one or more
parcels at a public or private sale or sales, at any exchange at such prices
as it may deem acceptable, for cash or on credit or for future delivery
without assumption of any credit risk. Agent or any Lender shall have
the right upon any such public sale or sales and, to the extent permitted by
law, upon any such private sale or sales, to purchase for the benefit of
Agent and Lenders, the whole or any part of said Collateral so sold, free
of any right or equity of redemption, which equity of redemption each Grantor
hereby releases. Such sales may be adjourned and continued from time to
time with or without notice. Agent shall have the right to conduct such
sales on any Grantor's premises or elsewhere and shall have the right to
use any Grantor's premises without charge for such time or times as Agent
deems necessary or advisable.
Each Grantor further agrees, at Agent's request, to assemble the
Collateral and make it available to Agent at places which Agent shall select,
whether at such Grantor's premises or elsewhere. Until Agent is able to
effect a sale, lease, or other disposition of Collateral, Agent shall have
the right to hold or use Collateral, or any part thereof, to the extent that
it deems appropriate for the purpose of preserving Collateral or its value
or for any other purpose deemed appropriate by Agent. Agent shall have no
obligation to any Grantor to maintain or preserve the rights of such Grantor
as against third parties with respect to Collateral while Collateral is in
the possession of Agent. Agent may, if it so elects, seek the appointment
of a receiver or keeper to take possession of Collateral and to enforce any
of Agent's remedies (for the benefit of Agent and Lenders), with respect to
such appointment without prior notice or hearing as to such appointment.
Agent shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale to the Obligations as provided in the
Credit Agreement, and only after so paying over such net proceeds, and
after the payment by Agent of any other amount required by any provision of
law, need Agent account for the surplus, if any, to any Grantor. To the
maximum extent permitted by applicable law, each Grantor waives all claims,
damages, and demands against Agent or any Lender arising out of the
repossession, retention or sale of the Collateral except such as arise solely
out of the gross negligence or willful misconduct of Agent or such Lender as
finally determined by a court of competent jurisdiction. Each Grantor agrees
that ten (10) days prior notice by Agent of the time and place of any public
sale or of the time after which a private sale may take place is reasonable
notification of such matters. Grantors shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all Obligations, including any attorneys' fees and other
expenses incurred by Agent or any Lender to collect such deficiency.
B. Except as otherwise specifically provided herein,
each Grantor hereby waives presentment, demand, protest or any notice (to
the maximum extent permitted by applicable law) of any kind in connection
with this Security Agreement or any Collateral.
VIII. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY
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COLLATERAL. For the purpose of enabling Agent to exercise rights and
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remedies under Section 7 hereof (including, without limiting the terms of
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Section 7 hereof, in order to take possession of, hold, preserve, process,
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assemble, prepare for sale, market for sale, sell or otherwise dispose of
Collateral) at such time as Agent shall be lawfully entitled to exercise such
rights and remedies, each Grantor hereby grants to Agent, for the benefit of
Agent and Lenders, an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to such Grantor) to use,
license or sublicense any Intellectual Property now owned or hereafter
acquired by such Grantor, and wherever the same may be located, and including
in such license access to all media in which any of the licensed items may
be recorded or stored and to all computer software and programs used for the
compilation or printout thereof.
IX. LIMITATION ON AGENT'S AND LENDERS' DUTY IN RESPECT OF
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COLLATERAL. Agent and each Lender shall use reasonable care with respect to
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the Collateral in its possession or under its control. Neither Agent nor any
Lender shall have any other duty as to any Collateral in its possession or
control or in the possession or control of any agent or nominee of Agent or
such Lender, or any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto.
X. REINSTATEMENT. This Security Agreement shall remain
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in full force and effect and continue to be effective should any petition
be filed by or against any Grantor for liquidation or reorganization, should
any Grantor become insolvent or make an assignment for the benefit of any
creditor or creditors or should a receiver or trustee be appointed for all
or any significant part of any Grantor's assets, and shall continue to be
effective or be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a
"voidable preference," "fraudulent conveyance," or otherwise, all as
though such payment or performance had not been made. In the event that
any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
XI. NOTICES. Except as otherwise provided herein, whenever
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it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon
any of the parties by any other party, or whenever any of the parties
desires to give and serve upon any other party any communication with
respect to this Security Agreement, each such notice, demand, request,
consent, approval, declaration or other communication shall be in writing
and shall be given in the manner, and deemed received, as provided for in
the Credit Agreement.
XII. SEVERABILITY. Whenever possible, each provision of
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this Security Agreement shall be interpreted in a manner as to be effective
and valid under applicable law, but if any provision of this Security
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the
remaining provisions of this Security Agreement. This Security Agreement is
to be read, construed and applied together with the Credit Agreement and the
other Loan Documents which, taken together, set forth the complete
understanding and agreement of Agent, Lenders and Grantors with respect to
the matters referred to herein and therein.
XIII. NO WAIVER; CUMULATIVE REMEDIES. Neither Agent nor
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any Lender shall by any act, delay, omission or otherwise be deemed to have
waived any of its rights or remedies hereunder, and no waiver shall be valid
unless in writing, signed by Agent and then only to the extent therein set
forth. A waiver by Agent of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which Agent
would otherwise have had on any future occasion. No failure to exercise nor
any delay in exercising on the part of Agent or any Lender, any right, power
or privilege hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law. None of the terms or
provisions of this Security Agreement may be waived, altered, modified or
amended except by an instrument in writing, duly executed by Agent and
Grantors.
XIV. LIMITATION BY LAW. All rights, remedies and powers
-----------------
provided in this Security Agreement may be exercised only to the extent that
the exercise thereof does not violate any applicable provision of law, and
all the provisions of this Security Agreement are intended to be subject to
all applicable mandatory provisions of law that may be controlling and to be
limited to the extent necessary so that they shall not render this Security
Agreement invalid, unenforceable, in whole or in part, or not entitled to be
recorded, registered or filed under the provisions of any applicable law.
XV. TERMINATION OF THIS SECURITY AGREEMENT. Subject to
--------------------------------------
Section 10 hereof, this Security Agreement shall terminate upon
----------
the Termination Date.
XVI. SUCCESSORS AND ASSIGNS. This Security Agreement and
----------------------
all obligations of Grantors hereunder shall be binding upon the successors
and assigns of each Grantor (including any debtor-in-possession on behalf
of such Grantor) and shall, together with the rights and remedies of Agent,
for the benefit of Agent and Lenders, hereunder, inure to the benefit of
Agent and Lenders, all future holders of any instrument evidencing any of
the Obligations and their respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other dispositions of
any agreement governing or instrument evidencing the Obligations or any
portion thereof or interest therein shall in any manner affect the Lien
granted to Agent, for the benefit of Agent and Lenders, hereunder. No
Grantor may assign, sell, hypothecate or otherwise transfer any interest in
or obligation under this Security Agreement.
XVII. COUNTERPARTS. This Security Agreement may be
------------
executed in any number of separate counterparts, each of which shall
collectively and separately constitute one agreement.
XVIII. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY
-------------
PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THAT STATE, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. EACH GRANTOR HEREBY CONSENTS AND AGREES THAT THE
STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW
YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN GRANTORS, AGENT AND LENDERS PERTAINING TO THIS SECURITY
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF
OR RELATING TO THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENT, LENDERS AND GRANTORS ACKNOWLEDGE THAT ANY APPEALS
FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK
COUNTY, CITY OF NEW YORK, NEW YORK, AND, PROVIDED, FURTHER, NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH GRANTOR EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND EACH GRANTOR HEREBY WAIVES ANY OBJECTION
WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH GRANTOR
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH ON ANNEX I TO THE CREDIT
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID.
XIX. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
--------------------
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES
WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION
RULES), THE PARTIES DESIRE THAT DISPUTES ARISING HEREUNDER OR RELATING
HERETO BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, LENDERS, AND GRANTORS ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED IN CONNECTION WITH, THIS SECURITY AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.
XX. SECTION TITLES. The Section titles contained in this
--------------
Security Agreement are and shall be without substantive meaning or content of
any kind whatsoever and are not a part of the agreement between the parties
hereto.
XXI. NO STRICT CONSTRUCTION. The parties hereto have
----------------------
participated jointly in the negotiation and drafting of this Security
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Security Agreement shall be construed as if drafted jointly by
the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provisions of
this Security Agreement.
XXII. ADVICE OF COUNSEL. Each of the parties represents
-----------------
to each other party hereto that it has discussed this Security Agreement and,
specifically, the provisions of Section 18 and Section 19, with its counsel.
---------- ----------
XXIII. BENEFIT OF LENDERS. All Liens granted or
------------------
contemplated hereby shall be for the benefit of Agent and Lenders, and all
proceeds or payments realized from Collateral in accordance herewith shall be
applied to the Obligations in accordance with the terms of the Credit
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each of the parties hereto has caused this
Security Agreement to be executed and delivered by its duly authorized officer
as of the date first set forth above.
AEC FUNDING CORP.
ACTION CONTRACT SERVICES, INC.
AMERICAN ECO CORPORATION
BROOKFIELD CORP.
C.A. XXXXXX CONSTRUCTION COMPANY
C.A. XXXXXX MAINTENANCE, INC.
CAMBRIDGE CONSTRUCTION SERVICE CORP.
CHEMPOWER, INC.
ECO SYSTEMS, INC.
GLOBAL POWER COMPANY
H.E. CO. SERVICES, INC.
INDUSTRA, INC.
INDUSTRA THERMAL SERVICE CORP.
INDUSTRA SERVICE CORP.
LAKE XXXXXXX CONSTRUCTION CORPORATION
NUS, INC.
SEPARATION AND RECOVERY SYSTEMS
CALIFORNIA
SEPARATION AND RECOVERY SYSTEMS, INC.
SOUTHWICK CORP.
SPECIALTY MANAGEMENT GROUP, INC.
THE XXXXXX GROUP, INC.
UNITED ECO SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------
Title: Vice President Of Each
------------------- -------
CONTROLLED POWER LIMITED PARTNERSHIP
By: Southwick Corp., its general partner
By: /s/ Xxxxx X. Xxxxxx
---------------------
Title: Vice President
-----------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Title: Duly Authorized Signatory
-------------------------
SCHEDULE A
----------
to
SECURITY AGREEMENT
------------------
GRANTORS
---------
AEC FUNDING CORP., a Delaware corporation
ACTION CONTRACT SERVICES, INC., a Delaware corporation
AMERICAN ECO CORPORATION, an Ontario corporation
BROOKFIELD CORP., an Ohio corporation
C.A. XXXXXX CONSTRUCTION COMPANY, a Delaware corporation
C.A. XXXXXX MAINTENANCE, INC., a Texas corporation
CAMBRIDGE CONSTRUCTION SERVICE CORP., a Nevada corporation
CHEMPOWER, INC., an Ohio corporation
CONTROLLED POWER LIMITED PARTNERSHIP, an Illinois limited partnership
ECO SYSTEMS, INC., a Delaware corporation
GLOBAL POWER COMPANY, an Ohio corporation
H.E. CO. SERVICES, INC., a Texas corporation
INDUSTRA, INC., a Washington corporation
INDUSTRA SERVICE CORP., a Washington corporation
INDUSTRA THERMAL SERVICE CORP., a Washington corporation
LAKE XXXXXXX CONSTRUCTION CORPORATION, a Louisiana corporation
NUS, INC., a Washington corporation
SEPARATION AND RECOVERY SYSTEMS CALIFORNIA, a California
SEPARATION AND RECOVERY SYSTEMS, INC., a Nevada corporation
SOUTHWICK CORP., an Ohio corporation
SPECIALTY MANAGEMENT GROUP, INC., a Texas corporation
THE XXXXXX GROUP, INC., a Delaware corporation
UNITED ECO SYSTEMS, INC., a Delaware corporation
