CONFORMED COPY
SECURITY AGREEMENT dated as of July 25, 1997 among XXXXXXX
COMPANIES, INC. an Oklahoma corporation (the "BORROWER"), each
subsidiary of the Borrower listed on Schedule I hereto or
becoming a party hereto as provided herein (each such subsidiary
individually a "SUBSIDIARY GRANTOR" and collectively, the
"SUBSIDIARY GRANTORS"; the Subsidiary Grantors and the Borrower
are referred to collectively herein as the "GRANTORS") and THE
CHASE MANHATTAN BANK, a New York banking corporation ("CHASE"),
as collateral agent ("COLLATERAL AGENT") for the Secured Parties
(as defined herein).
Reference is made to (a) the Credit Agreement dated as of July 25,
1997 (as amended, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), among the Borrower, the Lenders (such term and each
other capitalized term used but not otherwise defined herein being defined as
provided in Article I) from time to time party thereto, Chase, as
Administrative Agent for the Lenders and Collateral Agent, BancAmerica
Securities, Inc., as Syndication Agent, and Societe Generale, as
Documentation Agent, and (b) the Guarantee Agreement dated as of July 25,
1997 (as amended, supplemented or otherwise modified from time to time, the
"GUARANTEE AGREEMENT"), among the Guarantors (as defined therein) and the
Collateral Agent.
The Lenders have agreed to make Loans to the Borrower, and the
Issuing Banks have agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. Each of the Guarantors has agreed to
guarantee, among other things, all the obligations of the Borrower under the
Credit Agreement. The obligations of the Lenders to make Loans and of the
Issuing Banks to issue Letters of Credit are conditioned upon, among other
things, the execution and delivery by the Grantors of an agreement in the
form hereof to secure (a) the due and punctual payment by the Borrower of (i)
the principal of and premium, if any, and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (ii)
each payment required to be made by the Borrower under the Credit Agreement
in respect of any Letter of Credit, when and as due, including payments in
respect of reimbursement of disbursements, interest thereon and obligations
to provide cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations
incurred during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding), of the Borrower to the Secured Parties under the Credit
Agreement and the other Loan Documents, (b) the due and punctual performance
of all covenants,
agreements, obligations and liabilities of the Borrower under or pursuant to
the Credit Agreement and the other Loan Documents, (c) the due and punctual
payment and performance of all the covenants, agreements, obligations and
liabilities of each Loan Party under or pursuant to this Agreement and the
other Loan Documents and (d) the due and punctual payment and performance of
all obligations of the Borrower under each Hedging Agreement entered into
with any counterparty that was a Lender at the time such Hedging Agreement
was entered into or that is a Lender on the date hereof (all the monetary and
other obligations described in the preceding clauses (a) through (d) being
collectively called the "OBLIGATIONS").
Accordingly, the Grantors and the Collateral Agent, on behalf of
itself and each Secured Party (and each of their respective successors or
assigns), hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITION OF TERMS USED HEREIN. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall
have the meanings set forth in the Credit Agreement.
SECTION 1.02. DEFINITION OF CERTAIN TERMS USED HEREIN. As used
herein, the following terms shall have the following meanings:
"ACCOUNT DEBTOR" means any person who is or who may become
obligated to any Grantor under, with respect to or on account of an Account.
"ACCOUNTS" mean any and all right, title and interest of any
Grantor to payment for goods and services sold or leased, including any such
right evidenced by chattel paper, whether due or to become due, whether or
not it has been earned by performance, and whether now or hereafter acquired
or arising in the future, excluding accounts receivable from Affiliates of
the Grantors and Financing Notes.
"ACCOUNTS RECEIVABLE" means all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities
and guarantees with respect thereto, including, without limitation, any
rights to stoppage in transit, replevin, reclamation and resales, and all
related security interests, liens and pledges, whether voluntary or
involuntary, and any liens or security interests taken in an Account Debtor
to secure any Accounts, in each case whether now existing or owned or
hereafter arising or acquired.
"COLLATERAL" means all (a) Accounts Receivable, (b) Documents, (c)
Inventory and (d) Proceeds.
"CREDIT AGREEMENT" shall have the meaning assigned to such term in
the preliminary statement of this Agreement.
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"DOCUMENTS" mean all instruments, files, records, ledger sheets and
documents covering or relating to any of the Collateral.
"GRANTORS" means the Borrower and each Subsidiary listed on
Schedule I hereto, as modified from time to time in accordance with Section
4.02(a) and Section 7.15.
"INVENTORY" means all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished
by any Grantor under contracts of service, or consumed in any Grantor's
business, including raw materials, intermediates, work in process, packaging
materials, finished goods, semi-finished inventory, scrap inventory,
manufacturing supplies and spare parts, and all such goods that have been
returned to or repossessed by or on behalf of any Grantor.
"OBLIGATIONS" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"PERFECTION CERTIFICATE" means a certificate substantially in the
form of Annex 1 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Financial Officer of
the Borrower.
"PROCEEDS" shall mean any consideration received from the sale,
exchange, lease or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of the possession
of any Collateral and any payment received from any insurer or other person
or entity as a result of the destruction, loss, theft, damage or other
involuntary conversion of whatever nature of any asset or property which
constitutes Collateral, including any and all amounts from time to time paid
or payable under or in connection with any of the Collateral.
"SECURED PARTIES" means (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent, (d) the Issuing Banks, (e) each counterparty
to a Hedging Agreement entered into with the Borrower if such counterparty
was a Lender at the time the Hedging Agreement was entered into or that is a
Lender on the date hereof, (f) the beneficiaries of each indemnification
obligation undertaken by any Grantor under any Loan Document and (g) the
successors and assigns of each of the foregoing.
"SECURITY INTEREST" shall have the meaning assigned to such term in
Section 2.01.
SECTION 1.03. RULES OF INTERPRETATION. The rules of
interpretation specified in Section 1.03 of the Credit Agreement shall be
applicable to this Agreement.
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ARTICLE II
SECURITY INTEREST
SECTION 2.01. SECURITY INTEREST. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor
hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges,
hypothecates and transfers to the Collateral Agent, its successors and
assigns, for the ratable benefit of the Secured Parties, and hereby grants to
the Collateral Agent, its successors and assigns, for the ratable benefit of
the Secured Parties, a security interest in, all of such Grantor's right,
title and interest in, to and under the Collateral (the "Security Interest").
Without limiting the foregoing, the Collateral Agent is hereby authorized to
file one or more financing statements, continuation statements or other
documents for the purpose of perfecting, confirming, continuing, enforcing or
protecting the Security Interest granted by each Grantor, without the
signature of any Grantor, and naming any Grantor or the Grantors as debtors
and the Collateral Agent as secured party.
SECTION 2.02. NO ASSUMPTION OF LIABILITY. The Security Interest
is granted as security only and shall not subject the Collateral Agent or any
other Secured Party to, or in any way alter or modify, any obligation or
liability of any Grantor with respect to or arising out of the Collateral.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Grantors jointly and severally represent and warrant to the
Collateral Agent and the Secured Parties that:
SECTION 3.01. TITLE AND AUTHORITY. Each Grantor has good and
valid rights in and title to the Collateral with respect to which it has
purported to grant a Security Interest hereunder and has full power and
authority to grant to the Collateral Agent the Security Interest in such
Collateral pursuant hereto and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the
consent or approval of any other person other than any consent or approval
which has been obtained.
SECTION 3.02. FILINGS. The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
statements or other appropriate filings containing a description of the
Collateral have been delivered to the Collateral Agent for filing in each
governmental, municipal or other office specified in Schedule 6 to the
Perfection Certificate, which are all the filings that are necessary to
publish notice of and protect the validity of and to establish a legal, valid
and perfected security interest in favor of the Collateral Agent (for the
ratable benefit of the Secured Parties) in respect of all Collateral in which
the Security Interest may be perfected by filing in the United States (or
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any political subdivision thereof) and its territories and possessions, and
no further or subsequent filing or refiling is necessary in any such
jurisdiction, except as provided under applicable law with respect to the
filing of continuation statements.
SECTION 3.03. VALIDITY OF SECURITY INTEREST. The Security
Interest constitutes (a) a legal and valid security interest in all the
Collateral securing the payment and performance of the Obligations and (b)
subject to the filings described in Section 3.02 above, a perfected security
interest in all Collateral in which a security interest may be perfected by
filing, recording or registering a financing statement or analogous document
in the United States (or any political subdivision thereof) and its
territories and possessions pursuant to the Uniform Commercial Code or other
applicable law in such jurisdictions. The Security Interest is and shall be
prior to any other Lien on any of the Collateral, other than Liens that are
permitted to exist under paragraphs (b), (c), (e), (f) and (h) of Section
6.01 of the Credit Agreement and Liens that are permitted under Section
6.01(g) of the Credit Agreement that arise in connection with paragraphs (b),
(c), (e) and (f) of such Section.
SECTION 3.04. ABSENCE OF OTHER LIENS. The Collateral is owned by
the Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.01 of the Credit Agreement. No Grantor has filed or
consented to the filing of (a) any financing statement or analogous document
under the Uniform Commercial Code or any other applicable laws covering any
Collateral or (b) any assignment in which any Grantor assigns any Collateral
or any security agreement or similar instrument covering any Collateral with
any foreign governmental, municipal or other office, which financing
statement or analogous document, assignment, security agreement or similar
instrument is still in effect, except, in each case, for Liens expressly
permitted pursuant to Section 6.01 of the Credit Agreement.
ARTICLE IV
COVENANTS
SECTION 4.01. CHANGE OF NAME; LOCATION OF COLLATERAL; RECORDS;
PLACE OF BUSINESS. (a) Each Grantor agrees promptly to notify the
Collateral Agent in writing of any change (i) in its corporate name or in any
trade name used to identify it in the conduct of its business or in the
ownership of its properties, (ii) in the location of its chief executive
office, its principal place of business, any office in which it maintains
books or records relating to Collateral owned by it or any office or facility
at which Collateral owned by it is located (including the establishment of
any such new office or facility), (iii) in its identity or corporate
structure or (iv) in its Federal Taxpayer Identification Number. Each
Grantor agrees not to effect or permit any change referred to in the
preceding sentence unless all filings have been made under the Uniform
Commercial Code or otherwise that are required in order for the Collateral
Agent to continue at all times following such change to
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have a valid, legal and perfected first priority security interest in all the
Collateral. Each Grantor agrees promptly to notify the Collateral Agent if
any material portion of the Collateral owned or held by such Grantor is
damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense,
such complete and accurate records with respect to the Collateral owned by it
as is consistent with its current practices and in accordance with such
prudent and standard practices used in industries that are the same as or
similar to those in which such Grantor is engaged, but in any event to
include complete accounting records indicating all payments and proceeds
received with respect to any part of the Collateral, and, at such time or
times as the Collateral Agent may reasonably request, promptly to prepare and
deliver to the Collateral Agent a duly certified schedule or schedules in
form and detail satisfactory to the Collateral Agent showing the identity,
amount and location of any and all Collateral.
SECTION 4.02. PERIODIC CERTIFICATION. Each year, at the time of
delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 5.01(a) of the Credit Agreement, the Borrower shall
deliver to the Collateral Agent a certificate executed by a Financial Officer
(a) setting forth the information required pursuant to Section 2 of the
Perfection Certificate or confirming that there has been no change in such
information since the date of such certificate or the date of the most recent
certificate delivered pursuant to this Section 4.02 and (b) certifying that
all Uniform Commercial Code financing statements or other appropriate
filings, including all refilings (other than continuation statements),
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to clause (b) above to the extent necessary to protect
and perfect the Security Interest.
SECTION 4.03. PROTECTION OF SECURITY. Each Grantor shall, at its
own cost and expense, take any and all actions necessary to defend title to
the Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien
not expressly permitted pursuant to Section 6.01 of the Credit Agreement.
SECTION 4.04. FURTHER ASSURANCES. Each Grantor agrees, at its
own expense, to execute, acknowledge, deliver and cause to be duly filed all
such further instruments and documents and take all such actions as the
Collateral Agent may from time to time request to better assure, preserve,
protect and perfect the Security Interest and the rights and remedies created
hereby, including the payment of any fees and taxes required in connection
with the execution and delivery of this Agreement, the granting of the
Security Interest and the filing of any financing statements or other
documents in connection herewith or therewith. If any amount payable under
or in connection with any of the Collateral shall be or become evidenced by
any
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promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.
SECTION 4.05. INSPECTION AND VERIFICATION. The Collateral Agent
and such persons as the Collateral Agent may reasonably designate shall have
the right to inspect the Collateral, all records related thereto (and to make
extracts and copies from such records) and the premises upon which any of the
Collateral is located, to discuss the Grantors' affairs with the officers of
the Grantors and their independent accountants and to verify under reasonable
procedures the validity, amount, quality, quantity, value, condition and
status of, or any other matter relating to, the Collateral, including, in the
case of Accounts or Collateral in the possession of any third person, by
contacting Account Debtors or the third person possessing such Collateral for
the purpose of making such a verification. The Grantors shall bear the cost
and expense of any such inspection and verification that is conducted once
per year or upon the occurrence and during the continuance of an Event of
Default. The Collateral Agent shall have the absolute right to share any
information it gains from such inspection or verification with any Secured
Party (it being understood that any such information shall be deemed to be
"Information" subject to the provisions of Section 9.12 of the Credit
Agreement).
SECTION 4.06. TAXES; ENCUMBRANCES. At its option and upon giving
10 days' written notice to the Borrower, the Collateral Agent may discharge
past due taxes, assessments, charges, fees, Liens, security interests or
other encumbrances at any time levied or placed on the Collateral and not
permitted pursuant to Section 6.01 of the Credit Agreement, and may pay for
the maintenance and preservation of the Collateral to the extent any Grantor
fails to do so as required by the Credit Agreement or this Agreement, and
each Grantor jointly and severally agrees to reimburse the Collateral Agent
on demand for any payment made or any expense incurred by the Collateral
Agent pursuant to the foregoing authorization; PROVIDED, HOWEVER, that
nothing in this Section 4.06 shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the Collateral Agent
or any Secured Party to cure or perform, any covenants or other promises of
any Grantor with respect to taxes, assessments, charges, fees, Liens,
security interests or other encumbrances and maintenance as set forth herein
or in the other Loan Documents.
SECTION 4.07. CONTINUING OBLIGATIONS OF THE GRANTORS. Each
Grantor shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it under each contract, agreement
or instrument relating to the Collateral, all in accordance with the terms
and conditions thereof, and each Grantor jointly and severally agrees to
indemnify and hold harmless the Collateral Agent and the Secured Parties from
and against any and all liability for such performance.
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SECTION 4.08. USE AND DISPOSITION OF COLLATERAL. None of the
Grantors shall make or permit to be made an assignment, pledge or
hypothecation of the Collateral or shall grant any other Lien in respect of
the Collateral, except as expressly permitted by Section 6.01 of the Credit
Agreement. None of the Grantors shall make or permit to be made any transfer
of the Collateral and each Grantor shall remain at all times in possession of
the Collateral owned by it, except that (a) Inventory may be sold in the
ordinary course of business and (b) unless and until the Collateral Agent or
the Required Lenders shall notify the Grantors that an Event of Default shall
have occurred and be continuing and that during the continuance thereof the
Grantors shall not sell, convey, lease, assign, transfer or otherwise dispose
of any Collateral (which notice may be given by telephone if promptly
confirmed in writing), the Grantors may use and dispose of the Collateral in
any lawful manner not inconsistent with the provisions of this Agreement, the
Credit Agreement or any other Loan Document.
SECTION 4.09. LIMITATION ON MODIFICATION OF ACCOUNTS. None of
the Grantors will, without the Collateral Agent's prior written consent,
grant any extension of the time of payment of any of the Accounts Receivable,
compromise, compound or settle the same for less than the full amount
thereof, release, wholly or partly, any person liable for the payment thereof
or allow any credit or discount whatsoever thereon, other than extensions,
credits, discounts, compromises or settlements granted or made in the
ordinary course of business and consistent with its current practices and in
accordance with such prudent and standard practices used in industries that
are the same as or similar to those in which such Grantor is engaged.
SECTION 4.10. INSURANCE. The Grantors shall at all times keep the
Inventory insured at the Grantors' own expense, to the Collateral Agent's
reasonable satisfaction, against fire, theft and all other risks to which the
Collateral may be subject, in such amounts and with such deductibles as would
be maintained by operators of businesses similar to the businesses of the
Grantors. Within 30 days of the date hereof, each policy or certificate with
respect to such insurance shall be endorsed to the Collateral Agent's
satisfaction for the benefit of the Collateral Agent (including, without
limitation, by naming the Collateral Agent as an additional insured and as
provided in the next succeeding sentence) and such policy or certificate
shall be delivered to the Collateral Agent. Each such policy shall state
that (i) it cannot be canceled without 30 days' prior written notice to the
Collateral Agent, (ii) no claim in excess of $25,000,000 shall be settled
with the insurance provider without the prior consent of the Collateral Agent
and (iii) the Collateral Agent shall be a loss payee on any claim in excess
of $25,000,000. At least 10 days prior to the expiration of any such policy
of insurance, the relevant Grantor shall deliver to the Collateral Agent
either (1) an extension or renewal policy or an insurance certificate
evidencing renewal or extension of such policy, or (2) notice that such
policy has not been extended or renewed. If such policy has not been
extended or renewed, such Grantor agrees to
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consult with the Collateral Agent, and to furnish any information that the
Collateral Agent may request, as to the status of negotiations with such
insurance provider. If such Grantor shall fail to insure such Collateral in
accordance with prudent industry practices or if such Grantor shall fail to
so endorse and deposit, or to extend or renew prior to expiration, all such
insurance policies or certificates with respect thereto, the Collateral Agent
shall have the right (but shall be under no obligation) to advance funds to
procure or renew or extend such insurance and such Grantor agrees to
reimburse the Collateral Agent for all costs and expenses thereof, with
interest on all such funds from the date advanced until paid in full at the
rate specified in Section 2.13(c)(ii) of the Credit Agreement.
SECTION 4.11. CASUALTY. Upon the occurrence and during the
continuance of an Event of Default, the Collateral Agent, as directed by the
Required Banks, shall have the option to apply any Net Proceeds of insurance
received by it pursuant to this Agreement toward the payment of the
Obligations in accordance with Section 6.02 hereof or to continue to hold
such proceeds as additional collateral to secure the performance of the
Obligations. So long as no Event of Default shall have occurred and be
continuing, the relevant Grantor shall have the option (i) to direct the
Collateral Agent to apply any Net Proceeds of insurance received by it toward
payment of the Obligations in accordance with Section 6.02 hereof or (ii) to
elect, by delivery of written notice to the Collateral Agent, to apply such
proceeds to the repair or replacement of the item or items of Collateral in
respect of which such proceeds were received. In the event that such Grantor
elects to apply such proceeds to the repair or replacement of any item of
Collateral pursuant to clause (ii) of the preceding sentence, the Collateral
Agent shall release such proceeds as soon as practicable following its
receipt of such Grantor's written notice of such election. Such Grantor
shall upon its receipt of such proceeds promptly commence and diligently
continue to perform such repair or promptly effect such replacement.
SECTION 4.12. LEGEND. Each Grantor shall legend, in form and
manner satisfactory to the Collateral Agent, its Accounts Receivable and its
books, records and documents evidencing or pertaining thereto to the extent
such Accounts Receivable are evidenced by chattel paper, with an appropriate
reference to the fact that such Accounts Receivable have been assigned to the
Collateral Agent for the benefit of the Secured Parties and that the
Collateral Agent has a security interest therein.
ARTICLE V
POWER OF ATTORNEY
Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent and attorney-in-fact,
and in such capacity the Collateral Agent shall have the right, with power of
substitution for each Grantor and in each
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Grantor's name or otherwise, for the use and benefit of the Collateral Agent
and the Secured Parties, upon either the termination of the Commitments or
acceleration of Loans pursuant to Article VII of the Credit Agreement (a) to
receive, endorse, assign and/or deliver any and all notes, acceptances,
checks, drafts, money orders or other evidences of payment relating to the
Collateral or any part thereof; (b) to demand, collect, receive payment of,
give receipt for and give discharges and releases of all or any of the
Collateral; (c) to sign the name of any Grantor on any invoice or xxxx of
lading relating to any of the Collateral; (d) to send verifications of
Accounts Receivable to any Account Debtor; (e) to commence and prosecute any
and all suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect or otherwise realize on all or any of the
Collateral or to enforce any rights in respect of any Collateral; (f) to
settle, compromise, compound, adjust or defend any actions, suits or
proceedings relating to all or any of the Collateral; (g) to notify, or to
require any Grantor to notify, Account Debtors to make payment directly to
the Collateral Agent; and (h) to use, sell, assign, transfer, pledge, make
any agreement with respect to or otherwise deal with all or any of the
Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Collateral
Agent were the absolute owner of the Collateral for all purposes; PROVIDED,
HOWEVER, that nothing herein contained shall be construed as requiring or
obligating the Collateral Agent or any Secured Party to make any commitment
or to make any inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent or any Secured Party, or to present or file
any claim or notice, or to take any action with respect to the Collateral or
any part thereof or the moneys due or to become due in respect thereof or any
property covered thereby, and no action taken or omitted to be taken by the
Collateral Agent or any Secured Party with respect to the Collateral or any
part thereof shall give rise to any defense, counterclaim or offset in favor
of any Grantor or to any claim or action against the Collateral Agent or any
Secured Party. It is understood and agreed that the appointment of the
Collateral Agent as the agent and attorney-in-fact of the Grantors for the
purposes set forth above is coupled with an interest and is irrevocable. The
provisions of this Section shall in no event relieve any Grantor of any of
its obligations hereunder or under any other Loan Document with respect to
the Collateral or any part thereof or impose any obligation on the Collateral
Agent or any Secured Party to proceed in any particular manner with respect
to the Collateral or any part thereof, or in any way limit the exercise by
the Collateral Agent or any Secured Party of any other or further right which
it may have on the date of this Agreement or hereafter, whether hereunder,
under any other Loan Document, by law or otherwise.
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ARTICLE VI
REMEDIES
SECTION 6.01. REMEDIES UPON DEFAULT. Upon the occurrence and
during the continuance of an Event of Default, each Grantor agrees to deliver
each item of Collateral to the Collateral Agent on demand, and it is agreed
that the Collateral Agent shall have the right, with or without legal
process and with or without prior notice or demand for performance, to take
possession of the Collateral and without liability for trespass to enter any
premises where the Collateral may be located for the purpose of taking
possession of or removing the Collateral and, generally, to exercise any and
all rights afforded to a secured party under the Uniform Commercial Code or
other applicable law. Without limiting the generality of the foregoing, each
Grantor agrees that the Collateral Agent shall have the right, subject to the
mandatory requirements of applicable law, to sell or otherwise dispose of all
or any part of the Collateral, at public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for future
delivery as the Collateral Agent shall deem appropriate. Each purchaser at
any such sale shall hold the property sold absolutely, free from any claim or
right on the part of any Grantor, and each Grantor hereby waives (to the
extent permitted by law) all rights of redemption, stay and appraisal which
such Grantor now has or may at any time in the future have under any rule of
law or statute now existing or hereafter enacted.
The Collateral Agent shall give the Grantors 10 days' written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of
New York or its equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of Collateral. Such notice, in the case of a
public sale, shall state the time and place for such sale and, in the case of
a sale at a broker's board or on a securities exchange, shall state the board
or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board
or exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral Agent
may fix and state in the notice (if any) of such sale. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in one lot as an
entirety or in separate parcels, as the Collateral Agent may (in its sole and
absolute discretion) determine. The Collateral Agent shall not be obligated
to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given. The Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral
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Agent until the sale price is paid by the purchaser or purchasers thereof,
but the Collateral Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may be sold again upon
like notice. At any public (or, to the extent permitted by law, private)
sale made pursuant to this Section, any Secured Party may bid for or
purchase, free (to the extent permitted by law) from any right of redemption,
stay, valuation or appraisal on the part of any Grantor (all said rights
being also hereby waived and released to the extent permitted by law), the
Collateral or any part thereof offered for sale and may make payment on
account thereof by using any claim then due and payable to such Secured Party
from any Grantor as a credit against the purchase price, and such Secured
Party may, upon compliance with the terms of sale, hold, retain and dispose
of such property without further accountability to any Grantor therefor. For
purposes hereof, a written agreement to purchase the Collateral or any
portion thereof shall be treated as a sale thereof; the Collateral Agent
shall be free to carry out such sale pursuant to such agreement and no
Grantor shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Collateral
Agent shall have entered into such an agreement all Events of Default shall
have been remedied and the Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the Collateral Agent
may proceed by a suit or suits at law or in equity to foreclose this
Agreement and to sell the Collateral or any portion thereof pursuant to a
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver.
SECTION 6.02. APPLICATION OF PROCEEDS. The Collateral Agent shall
apply the proceeds of any collection or sale of the Collateral, as well as
any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by the
Administrative Agent or the Collateral Agent (in its capacity as such
hereunder or under any other Loan Document) in connection with such
collection or sale or otherwise in connection with this Agreement or any of
the Obligations, including all court costs and the fees and expenses of its
agents and legal counsel, the repayment of all advances made by the
Collateral Agent hereunder or under any other Loan Document on behalf of
any Grantor and any other costs or expenses incurred in connection with the
exercise of any right or remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in accordance
with the amounts of the Obligations owed to them on the date of any such
distribution); and
THIRD, to the Grantors, their successors or assigns, or as a court of
competent jurisdiction may otherwise direct.
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The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent
(including pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Collateral Agent or of the officer making the
sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. NOTICES. All communications and notices hereunder
shall (except as otherwise expressly permitted herein) be in writing and
given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Grantor shall be given
to it in care of the Borrower.
SECTION 7.02. SECURITY INTEREST ABSOLUTE. All rights of the
Collateral Agent hereunder, the Security Interest and all obligations of the
Grantors hereunder shall be absolute and unconditional irrespective of (a)
any lack of validity or enforceability of the Credit Agreement, any other
Loan Document, any agreement with respect to any of the Obligations or any
other agreement or instrument relating to any of the foregoing, (b) any
change in the time, manner or place of payment of, or in any other term of,
all or any of the Obligations, or any other amendment or waiver of or any
consent to any departure from the Credit Agreement, any other Loan Document
or any other agreement or instrument, (c) any exchange, release or
non-perfection of any Lien on other collateral, or any release or amendment
or waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations, or (d) any other circumstance
that might otherwise constitute a defense available to, or a discharge of,
any Grantor in respect of the Obligations or this Agreement.
SECTION 7.03. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by
the Secured Parties and shall survive the making by the Lenders of the Loans,
and the execution and delivery to the Lenders of any notes evidencing such
Loans, regardless of any investigation made by the Lenders or on their
behalf, and shall continue in full force and effect until this Agreement
shall terminate.
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SECTION 7.04. BINDING EFFECT; SEVERAL AGREEMENT. This Agreement
shall become effective as to any Grantor when a counterpart hereof executed
on behalf of such Grantor shall have been delivered to the Collateral Agent
and a counterpart hereof shall have been executed on behalf of the Collateral
Agent, and thereafter shall be binding upon such Grantor and the Collateral
Agent and their respective successors and assigns, and shall inure to the
benefit of such Grantor, the Collateral Agent and the other Secured Parties
and their respective successors and assigns, except that no Grantor shall
have the right to assign or transfer its rights or obligations hereunder or
any interest herein or in the Collateral (and any such assignment or transfer
shall be void) except as expressly contemplated by this Agreement or the
Credit Agreement. This Agreement shall be construed as a separate agreement
with respect to each Grantor and may be amended, modified, supplemented,
waived or released with respect to any Grantor without the approval of any
other Grantor and without affecting the obligations of any other Grantor
hereunder.
SECTION 7.05. SUCCESSORS AND ASSIGNS. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of any Grantor or the Collateral Agent that
are contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
SECTION 7.06. COLLATERAL AGENT'S FEES AND EXPENSES;
INDEMNIFICATION. (a) Each Grantor jointly and severally agrees to pay upon
demand to the Collateral Agent the amount of any and all reasonable expenses,
including the reasonable fees, disbursements and other charges of its counsel
and of any experts or agents, which the Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from or other realization upon
any of the Collateral, (iii) the exercise, enforcement or protection of any
of the rights of the Collateral Agent hereunder or (iv) the failure of any
Grantor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under
the other Loan Documents, each Grantor jointly and severally agrees to
indemnify the Collateral Agent, each Secured Party and each Related Party
thereof (each such person being called an "INDEMNITEE") against, and hold
each of them harmless from, any and all losses, claims, damages, liabilities
and related expenses, including reasonable fees, disbursements and other
charges of counsel, incurred by or asserted against any of them arising out
of, in any way connected with, or as a result of, the execution, delivery or
performance of this Agreement or any claim, litigation, investigation or
proceeding relating hereto or to the Collateral, whether or not any
Indemnitee is a party thereto; PROVIDED that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses resulted from the gross negligence or willful
misconduct of such Indemnitee.
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(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents.
The provisions of this Section 7.06 shall remain operative and in full force
and effect regardless of the termination of this Agreement or any other Loan
Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term
or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Collateral Agent or any Lender.
All amounts due under this Section 7.06 shall be payable on written demand
therefor.
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.08. WAIVERS; AMENDMENT. (a) No failure or delay of
the Collateral Agent in exercising any power or right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to enforce such
a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Collateral Agent hereunder and of the Collateral Agent, the Issuing Banks,
the Administrative Agent and the Lenders under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provisions of this Agreement or any other
Loan Document or consent to any departure by any Grantor therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or
demand on any Grantor in any case shall entitle such Grantor or any other
Grantor to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Grantor or Grantors with respect
to which such waiver, amendment or modification is to apply, with any consent
required under Section 9.02 of the Credit Agreement.
SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER LOAN
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DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.09.
SECTION 7.10. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7.11. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract (subject to
Section 7.04), and shall become effective as provided in Section 7.04.
Delivery of an executed signature page to this Agreement by facsimile
transmission shall be effective as delivery of a manually executed
counterpart hereof.
SECTION 7.12. HEADINGS. Article and Section headings used herein
are for the purpose of reference only, are not part of this Agreement and are
not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 7.13. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a)
Each Grantor hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out
of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of
any such action or proceeding may be heard and determined in such New York
State court or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Collateral Agent, the
Administrative Agent, the Issuing Banks or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement or the other Loan
Documents against any Grantor or its properties in the courts of any
jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to
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this Agreement or the other Loan Documents in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 7.01. Nothing in
this Agreement shall affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 7.14. TERMINATION. This Agreement and the Security
Interest shall terminate when all the Obligations have been paid in full, the
Lenders have no further commitment to lend, the L/C Exposure has been reduced
to zero and the Issuing Banks have no further commitment to issue Letters of
Credit under the Credit Agreement, at which time the Collateral Agent shall
execute and deliver to the Grantors, at the Grantors' expense, all Uniform
Commercial Code termination statements and similar documents which the
Grantors shall reasonably request to evidence such termination. Any
execution and delivery of termination statements or documents pursuant to
this Section 7.14 shall be without recourse to or warranty by the Collateral
Agent. In the event that all the capital stock of a Subsidiary Grantor (or
assets of any Grantor) shall be sold, transferred or otherwise disposed of to
a person that is not an Affiliate of the Borrower in accordance with the
terms of the Credit Agreement, such Subsidiary Grantor shall automatically be
released from its obligations hereunder, the Security Interest in the
Collateral of such Subsidiary Grantor (or the Security Interest in such
assets) shall be automatically released and the Collateral Agent shall sign
applicable release statements as reasonably requested by the applicable
Grantor; PROVIDED that the Required Lenders shall have consented to such
sale, transfer or other disposition (if and as required by the Credit
Agreement) and the terms of such consent did not provide otherwise.
SECTION 7.15. ADDITIONAL GRANTORS. Upon execution and delivery by
the Collateral Agent and a Subsidiary of an instrument in the form of Annex 2
hereto, such Subsidiary shall become a Grantor hereunder with the same force
and effect as if originally named as a Grantor herein. The execution and
delivery of any such instrument shall not require the consent of any Grantor
hereunder. The rights and obligations of each Grantor hereunder shall remain
in full force and effect notwithstanding the addition of any new Grantor as a
party to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
XXXXXXX COMPANIES, INC.,
by
/s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President and Treasurer
EACH OF THE SUBSIDIARY GRANTORS LISTED ON SCHEDULE I HERETO,
by
/s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President and Treasurer
THE CHASE MANHATTAN BANK, as Collateral Agent,
by
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
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