EXECUTION COPY
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of February 7, 2006, among RATHGIBSON, INC.,
a Delaware corporation ("RathGibson") and RGCH HOLDINGS CORP., a Delaware
corporation ("Holdings", and together with RathGibson, sometimes collectively
referred to herein as "Grantors" and individually as a "Grantor") and GENERAL
ELECTRIC CAPITAL CORPORATION, a Delaware corporation, individually and in its
capacity as Agent for Lenders (the "Agent").
W I T N E S S E T H:
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 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:
1. DEFINED TERMS.
(a) All capitalized terms used but not otherwise defined herein have the
meanings given to them in the Credit Agreement or in Annex A thereto. All other
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.
(b) "Uniform Commercial Code jurisdiction" means any jurisdiction that
has adopted all or substantially all of Article 9 as contained in the 2000
Official Text of the Uniform Commercial Code, as recommended by the National
Conference of Commissioners on Uniform State Laws and the American Law
Institute, together with any subsequent amendments or modifications to the
Official Text.
(c) The following terms shall have (unless otherwise provided elsewhere
in this Agreement) the following respective meanings (such meanings being
equally applicable to both the singular and plural form of the terms defined):
(i) "Collateral Reports" means the reports with respect to the
Collateral referred to in Section 4.9 of the Credit Agreement.
(ii) "Control Letter" means a letter agreement between Agent and
(i) the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (ii) a securities intermediary
with respect to securities, whether certificated or uncertificated,
securities entitlements and other financial assets held in a securities
account in the name of any Credit Party and (iii) a futures commission
merchant or clearing house, as applicable, with respect to commodity
accounts and commodity contracts held by any Credit Party, whereby, among
other
things, the issuer, securities intermediary or futures commission merchant
limits any security interest in the applicable financial assets in a
manner reasonably satisfactory to Agent, acknowledges the Lien of Agent,
on behalf of itself and Lenders, on such financial assets, and agrees to
follow the instructions or entitlement orders of Agent without further
consent by the affected Credit Party.
(iii) "Excluded Deposit Account" means any zero balance Deposit
Account established solely for the purpose of funding payroll and other
compensation and benefits to employees.
2. GRANT OF LIEN.
(a) To secure the prompt and complete payment, performance and
observance of all of the Obligations, 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 all personal property and other assets, 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"), including:
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Documents;
(iv) all General Intangibles (including all Payment Intangibles
(as defined in the Code));
(v) all Goods (including Inventory, Equipment and Fixtures);
(vi) all Instruments;
(vii) all Investment Property;
(viii) all Deposit Accounts (as defined in the Code) of such
Grantor, including all blocked accounts and all other bank accounts and
all deposits therein;
(ix) all money, cash or Cash Equivalents of any Grantor;
(x) all Supporting Obligations (as defined in the Code) and
Letter-of-Credit Rights (as defined in the Code) of any Grantor;
(xi) the following commercial tort claims: NONE; and
(xii) to the extent not otherwise included, all Proceeds (as
defined in the Code), tort claims, insurance claims and other rights to
payments not otherwise included in the foregoing and products of the
foregoing and all accessions to, substitutions and replacements for, and
rents and profits of, each of the foregoing.
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(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 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;
provided, however, that the Collateral shall not include (i) 35% of the shares
of Capital Stock of any Foreign Subsidiary and (ii) any rights or interests in
any contract, permit, license or license covering real or personal property, if
under the terms of such contract, permit, license or license covering real
property, or Applicable Law with respect thereto, the valid grant of a security
interest or lien therein to the Agent would give rise to any other party to such
contract, permit, license or license agreement a legally enforceable right to
terminate its obligations thereunder, or is prohibited and such prohibition has
not been or is not waived, or the consent of the other party to such contract,
permit, license or license agreement has not been or is not otherwise obtained,
or under Applicable Law such prohibition cannot be waived, provided, that the
foregoing exclusion shall in no way be construed (x) to apply if any such
prohibition is unenforceable under Sections 9-406 or 9-407 or 9-408 of the Code
or other Applicable Law or (y) so as to limit, impair or otherwise affect the
Agent's unconditional continuing security interests in and liens upon any rights
or interests of the Grantor in or proceeds or products of or to monies due or to
become due under any such contract, permit, license or license agreement.
3. AGENT'S AND LENDERS' RIGHTS: LIMITATIONS ON AGENT'S AND LENDERS'
OBLIGATIONS.
(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 has occurred and is
continuing without prior notice to any Grantor, notify Account Debtors and other
Persons obligated on the Collateral that Agent has a security interest therein,
and that payments shall be made directly to Agent. Furthermore, if Agent
determines that Account Debtors' contra-accounts or set-off rights may cause
Borrowing Availability to be less than zero, Agent may notify Account Debtors
that Agent has a security interest therein, and that payments shall be made
directly to Agent. Upon the request of Agent, each Grantor shall so notify
Account Debtors and other Persons obligated on Collateral. Once any such notice
has been given to any Account Debtor or other Person obligated on the
Collateral, the affected Grantor shall not give any contrary instructions to
such Account Debtor or other Person without Agent's prior written consent.
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(c) Agent may at any time in Agent's own name, in the name of a nominee
of Agent or in the name of any Grantor communicate (by mail, telephone,
facsimile or otherwise) with Account Debtors, parties to Contracts and obligors
in respect of Instruments to verify with such Persons, to Agent's satisfaction,
the existence, amount, terms of, and any other matter relating to, Accounts,
Instruments, Chattel Paper and/or Payment Intangibles. If a Default or 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: (i) a reconciliation of all Accounts; (ii) an aging of all
Accounts; (iii) trial balances; and (iv) 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.
4. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and warrants
that:
(a) Each Grantor has rights in and the power to transfer each item of
the Collateral upon which it purports to xxxxx x Xxxx hereunder 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 (i) by any Grantor in favor of Agent pursuant to this
Security Agreement or the other Loan Documents, and (ii) in connection with any
other Permitted Encumbrances, and (iii) in connection with the precautionary
filings made under the Code with respect to leases or other transactions not
involving the incurrence of Indebtedness.
(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, together with any filings under Section 4(h), a
perfected Lien in favor 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 and lessees
of Inventory in the ordinary course of business).
(d) Schedule II hereto lists all Instruments, Letter of Credit Rights
and Chattel Paper of each Grantor. All action by any Grantor necessary to
protect and perfect the Lien of Agent on each item set forth on Schedule II
(including the delivery of all originals thereof to Agent and the legending of
all Chattel Paper as required by Section 5(b) hereof) has been duly taken. The
Lien of Agent, for the benefit of Agent and Lenders, on the Collateral listed on
Schedule II hereto is prior to all other Liens, except Permitted Encumbrances
that would be prior to the Liens in favor of Agent as a matter of law, and is
enforceable as such against any and all creditors of and purchasers from any
Grantor.
(e) Each Grantor's name as it appears in official filings in the state
of its incorporation or other organization, the type of entity of each Grantor
(including corporation, partnership, limited partnership or limited liability
company), organizational identification number issued by each Grantor's state of
incorporation or organization or a statement that no such number has been
issued, each Grantor's state of organization or incorporation, the location of
each Grantor's chief executive office, principal place of business, offices, all
warehouses and premises where Collateral is stored or located, and the locations
of its books and records concerning the Collateral are set forth on Schedule
IIIA or Schedule
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IIIB hereto. Each Grantor has only one state of incorporation or organization.
(f) With respect to the Accounts, except as specifically disclosed in
the most recent Collateral Report delivered to Agent (i) 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; (ii) there are no setoffs, claims or disputes
existing or to the knowledge of the Grantors, 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 therefor,
or any deduction therefrom except a discount or allowance allowed by such
Grantor in the ordinary course of its business for prompt payment and disclosed
to Agent; (iii) 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 thereunder as shown on
any Grantor's books and records and any invoices, statements and Collateral
Reports delivered to Agent and Lenders with respect thereto; (iv) no Grantor has
received any notice of proceedings or actions which are threatened or pending
against any Account Debtor which might result in any material adverse change in
such Account Debtor's financial condition; and (v) 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 Agent with respect
thereto are due 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 lockbox account or Agent as required
pursuant to Section 2.10 of the Credit Agreement; and (z) to each Grantor's
knowledge, all Account Debtors have the capacity to contract.
(g) 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, (i) such Inventory is located at one of the
applicable Grantor's locations set forth on Schedule IIIA or Schedule IIIB
hereto, as applicable, (ii) no Inventory is now, or shall at any time or times
hereafter be stored at any other location without Agent's prior consent, which
consent shall not be unreasonably withheld, and if Agent gives such consent,
which consent shall not be unreasonably withheld, each applicable Grantor will,
at Agent's request, concurrently therewith use commercially reasonable efforts
to obtain, to the extent required by the Credit Agreement, bailee, landlord and
mortgagee agreements, (iii) the applicable Grantor is the owner of 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, (iv) except as
specifically disclosed in the most recent Collateral Report delivered to Agent,
such Inventory is Eligible Inventory of good and merchantable quality, free from
any defects, (v) 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 upon such sale or
other disposition, and (vi) 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.
(h) No Grantor owns any Registered Patent, Registered Trademark or
Registered Copyright or is a party to any material License, except as set forth
in Schedule IV hereto. This Security Agreement is effective to create a valid
and continuing Lien on and, upon filing of the financing statements listed on
Schedule I hereto, filing of the Copyright Security Agreement 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,
together with any filings under Section 4(c), perfected Liens in favor of Agent
on each Registered Patent, Registered Trademark and Registered Copyright owned
by a Grantor
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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 Agreement and the Trademark Security Agreement with the United
State Patent and Trademark Office and the filing of appropriate financing
statements listed on Schedule I hereto, all action necessary to protect and
perfect Agent's Lien on each Grantor's Patents, Trademarks or Copyrights shall
have been duly taken.
5. COVENANTS. Each Grantor covenants and agrees with 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: Pledge of Instruments; Chattel Paper.
(i) At any time and from time to time, upon the written
reasonable 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
necessary in Agent's reasonable judgment to obtain the full benefits of
this Security Agreement and of the rights and powers herein granted,
including (A) using its commercially reasonable efforts to secure all
consents and approvals necessary or appropriate for the granting of a Lien
pursuant hereto for the benefit of Agent of any License or Contract held
by such Grantor and to enforce the security interests granted hereunder;
and (B) filing any financing or continuation statements under the Code
with respect to the Liens granted hereunder or under any other Loan
Document as to those jurisdictions that are not Uniform Commercial Code
jurisdictions.
(ii) Unless Agent shall otherwise consent in writing (which
consent may be revoked), each Grantor shall deliver to Agent all
Collateral consisting of negotiable Documents, certificated securities,
Chattel Paper and Instruments (other than checks and other payment
Instruments which are deposited into a Deposit Account for which Grantor
has entered into a Control Agreement in accordance with clause (v) below
within thirty (30) days of receipt) (in each case, accompanied by stock
powers, allonges or other instruments of transfer executed in blank)
promptly after such Credit Party receives the same.
(iii) Each Grantor shall, in accordance with the terms of the
Credit Agreement, use its commercially reasonable efforts to obtain
waivers or subordinations of Liens from landlords and mortgagees that are
prior to the Agent's Liens hereunder as a matter of Applicable Law, and
each Credit Party shall in all instances use its commercially reasonable
efforts to obtain (to the extent requested by Agent) signed
acknowledgements of Agent's Liens from bailees having possession of any
Grantor's Goods that they hold for the benefit of Agent.
(iv) If required by the terms of the Credit Agreement and not
waived by Agent in writing (which waiver may be revoked), each Grantor
shall obtain authenticated Control Letters from each issuer of
uncertificated securities, securities intermediary, or commodities
intermediary issuing or holding any financial assets or commodities to or
for any Grantor.
(v) In accordance with Section 2.10 of the Credit Agreement,
each Grantor shall obtain a Control Agreement with each bank or financial
institution holding a Deposit Account other than an Excluded Deposit
Account for such Grantor.
(vi) Each Grantor that is or becomes the beneficiary of a letter
of credit with an undrawn amount exceeding $250,000 shall, promptly and in
any event within two (2) Business Days after becoming a beneficiary,
notify Agent thereof and at Agent's request, shall use commercially
reasonable efforts to enter into a tri party agreement with Agent and the
issuer
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and/or confirmation bank with respect to the Letter-of-Credit Rights under
such letter of credit assigning such Letter-of-Credit Rights to Agent and
directing all payments thereunder to Agent's account set forth in Section
1.4 of the Credit Agreement or to such other account as Agent may from
time to time designate in writing, all in form and substance reasonably
satisfactory to Agent.
(vii) Each Grantor shall take all steps necessary to grant Agent
control of all electronic chattel paper with an individual value in excess
of $250,000 in accordance with the Code and all "transferable records" as
defined in each of the Uniform Electronic Transactions Act and the
Electronic Signatures in Global and National Commerce Act.
(viii) Each Grantor hereby irrevocably authorizes Agent at any time
and from time to time to file in any filing office in any Uniform
Commercial Code jurisdiction any initial financing statements and
amendments thereto that (a) indicate the Collateral (i) as all assets of
such Grantor or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of
Article 9 of the Code or such jurisdiction, or (ii) as being of an equal
or lesser scope or with greater detail, and (b) contain any other
information required by part 5 of Article 9 of the Code for the
sufficiency or filing office acceptance of any financing statement or
amendment, including (i) whether such Grantor is an organization, the type
of organization and any organization identification number issued to such
Grantor, and (ii) in the case of a financing statement filed as a fixture
filing or indicating Collateral as as-extracted collateral or timber to be
cut, a sufficient description of real property to which the Collateral
relates. Each Grantor agrees to furnish any such information to Agent
promptly upon request. Each Grantor also ratifies its authorization for
Agent to have filed in any Uniform Commercial Code jurisdiction any
initial financing statements or amendments thereto if filed prior to the
date hereof. Agent shall use its reasonable best efforts to provide the
Grantors with copies of financing statements and amendments filed pursuant
to this clause (viii) prior to or contemporaneously with the filing
thereof.
(ix) Each Grantor shall promptly, and in any event within two (2)
Business Days after the same is acquired by it, notify Agent of any
commercial tort claim in an individual amount exceeding $500,000 (as
defined in the Code) acquired by it and unless otherwise consented by
Agent, such Grantor shall enter into a supplement to this Security
Agreement, granting to Agent a Lien in such commercial tort claim.
(b) Maintenance of Records. Grantors shall keep and 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. If
any Grantor retains possession of any Chattel Paper or Instruments (other than
such Chattel Paper or Instruments that would not otherwise be required to be
delivered to the Agent in accordance with the terms hereof) with Agent's
consent, such Chattel Paper and Instruments shall be marked with the following
legend: "This writing and the obligations evidenced or secured hereby are
subject to the security interest of General Electric Capital Corporation, as
Agent, for the benefit of Agent and certain Lenders."
(c) Covenants Regarding Patent, Trademark and Copyright Collateral.
(i) Grantors shall notify Agent promptly (but in any event
within five (5) Business Days) if they know or have reason to know that
any application or registration relating to any Patent, Trademark or
Copyright (now or hereafter existing) owned by a Grantor is likely to
become forfeited, misused, unenforceable, or abandoned to the public, or
of any adverse
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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, any other
applicable Intellectual Property Office, or any court) regarding the
validity or enforceability or any Grantor's ownership of, interest in, or
right to use, any Patent, Trademark or Copyright, material to its
business, its right to register the same, or to keep and maintain the
same. Grantors shall use commercially reasonable efforts to ensure that
notification to the Administrative Agent shall occur at least one-month
prior to any Patent, Trademark, or Copyright becoming forfeited,
unenforceable, abandoned, or dedicated to the public.
(ii) 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 prompt written notice
thereof, and, upon request of Agent, such Grantor shall execute and
deliver any and all reasonable Patent Security Agreements, Copyright
Security Agreements or Trademark Security Agreements as Agent may
reasonably request to evidence Agent's Lien on such Patent, Trademark or
Copyright, and the General Intangibles of such Grantor relating thereto or
represented thereby.
(iii) Grantors shall take all actions necessary or reasonably
requested by Agent to maintain and prosecute each application, to obtain
the relevant registration and to maintain the registration of each of the
Patents, Trademarks and Copyrights (now or hereafter existing) owned by a
Grantor, including the filing of applications for renewal, affidavits of
use, affidavits of incontestability 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 or that the filing maintenance or continuation of any
application or registration or any opposition, interference or
cancellation proceedings is not necessary or advisable in its reasonable
business judgment.
(iv) Grantors shall (and shall cause any of its licensees to) (i)
(1) continue to use each Trademark in order to maintain such Trademark in
full force and effect with respect to each class of goods for which such
Trademark is currently used, free from any claim of abandonment for
non-use, except where such abandonment or non-use is consistent with the
reasonable business judgment of such Grantor, (2) maintain at least the
same standards of quality of products and services offered under such
Trademark as are currently maintained, (3) use such Trademark with the
appropriate notice of registration and all other notices and legends
required by Applicable Law, (4) not adopt or use any other Trademark that
is confusingly similar or a colorable imitation of such Trademark unless
the Agent shall obtain a perfected security interest in such other
Trademark pursuant to this Agreement and (ii) unless consistent with the
reasonable business judgment of such Grantor, not do any act or omit to do
any act whereby (w) such Trademark (or any goodwill associated therewith)
may become destroyed, invalidated, impaired or harmed in any way, (x) any
Patent may become forfeited, misused, unenforceable, abandoned or
dedicated to the public, (y) any portion of the Copyrights may become
invalidated, otherwise impaired or fall into the public domain or (z) any
trade secret may become publicly available or otherwise unprotectable.
(v) In the event that a Grantor knows or has reason to know that
any of the material Patent, Trademark or Copyright Collateral is infringed
upon, or misappropriated or diluted by a third party, such Grantor shall
notify the Agent. 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 or that doing so is
not, in the reasonable business judgment of such Grantor, appropriate or
advisable, promptly xxx for infringement,
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misappropriation or dilution and to recover any and all damages for such
infringement, misappropriation or dilution, and shall take such other
actions as such Grantor shall deem appropriate under the circumstances to
protect such Patent, Trademark or Copyright Collateral.
(d) Indemnification. In any suit, proceeding or action brought by Agent
or any Lender relating to any Collateral for any sum owing with respect thereto
or to enforce any rights or claims with respect thereto, 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 Account Debtor or other Person obligated on the
Collateral, 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 material respects,
each Grantor will perform and comply with all obligations in respect of the
Collateral and all other agreements to which it is a party or by which it is
bound relating to the Collateral, except where nonperformance or noncompliance
would not materially and adversely affect the Collateral.
(f) Limitation on Liens on Collateral. No Grantor 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, license, 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 will, if so requested
by Agent, furnish to Agent, at such times are provided in the Credit Agreement,
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 reasonably specify.
(i) Notices. Grantors will advise Agent promptly, in reasonable detail,
(i) of any Lien (other than Permitted Encumbrances) or claim made or asserted
against any of the Collateral of which it has become aware, and (ii) 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.
(j) Good Standing Certificates. Not less frequently than once during
each calendar quarter, each Grantor shall, unless Agent shall otherwise consent,
provide to Agent a certificate of good standing from its state of incorporation
or organization.
(k) No Reincorporation. Subject to Section 3.6 of the Credit Agreement,
no Grantor shall reincorporate or reorganize itself under the laws of any
jurisdiction other than the jurisdiction in which it is incorporated or
organized as of the date hereof without the prior written consent of Agent, such
consent not to be unreasonably withheld.
9
(l) Terminations; Amendments Not Authorized. Each Grantor acknowledges
that it is not authorized to file any financing statement or amendment or
termination statement with respect to any financing statement without the prior
written consent of Agent and agrees that it will not do so without the prior
written consent of Agent, subject to such Grantor's rights under Section
9-509(d)(2) of the Code.
(m) Authorized Terminations. Agent will promptly deliver to each Grantor
for filing or authorize each Grantor to prepare and file termination statements
and releases in accordance with Section 9.20 of the Credit Agreement.
6. BANK ACCOUNTS; COLLECTION OF ACCOUNTS AND PAYMENTS.
(a) On the Closing Date, each Grantor shall enter into a bank agency and
control agreement ("Bank Agency and Control Agreement"), in a form and substance
reasonably satisfactory to Agent, with each financial institution with which
each Grantor maintains from time to time any Deposit Account. other than an
Excluded Deposit Account Each Bank Agency and Control Agreement shall provide,
among other things, that (a) all items of payment deposited in each Deposit
Account subject thereto shall be held by the applicable financial institution as
agent or bailee-in-possession for Agent, on behalf of itself and Lenders, (b)
the financial institution executing such agreement has no rights of offset or
recoupment of any other claim against any Deposit Account subject thereto, as
the case may be, other than for payment of its services and other charges
directly related to the administration of each such Deposit Account and for
returned checks or other items of payment, and (c) to the extent provided below,
the financial institution will transfer, after notice by Agent of an Event of
Default, all amounts held or deposited from time to time in any such Deposit
Account as Agent may so direct. Each Grantor hereby grants to Agent, for the
benefit of Agent and Lenders, a continuing lien upon, and security interest in,
all such accounts and all funds at any time paid, deposited, credited or held in
such accounts (whether for collection, provisionally or otherwise) or otherwise
in the possession of such financial institutions, and each such financial
institution shall act as Agent's agent in connection therewith. No Grantor shall
establish any Deposit Account other than an Excluded Deposit Account with any
financial institution unless prior thereto, Agent and such Grantor shall have
entered into a Bank Agency and Control Agreement reasonably satisfactory to
Agent with such financial institution.
(b) To the extent provided for in Section 2.10 of the Credit Agreement
or as otherwise requested by Agent at any time after the occurrence and during
the continuance of an Event of Default, each Grantor shall establish a lockbox
account ("Lockbox Account") and blocked accounts (collectively, "Blocked
Accounts") in such Grantor's name with such banks as are reasonably acceptable
to Agent ("Collecting Banks"), subject to a Bank Agency and Control Agreement
pursuant to which all Account Debtors shall directly remit all payments on
Accounts and in which each Grantor will immediately deposit all cash payments
constituting proceeds of Collateral in the identical form in which such payment
was made, whether by cash or check. In addition, Agent, for the benefit of Agent
and Lenders, may establish one or more depository accounts at each Collecting
Bank or at a centrally located bank in the name of Agent or any one or more
Grantors as customer (collectively, the "Concentration Accounts"). From and
after receipt by any Collecting Bank of written notice from Agent to such
Collecting Bank that an Event of Default has occurred and is continuing, all
amounts held or deposited from time to time in the Blocked Accounts held by such
Collecting Bank shall be transferred on a daily basis to Agent (as Agent may
direct) or any of the Concentration Accounts. Subject to the foregoing, and to
each Grantor's rights under Section 2.10 of the Credit Agreement to withdraw
funds from the Blocked Accounts, each Grantor hereby agrees that all payments
received by Agent or any Lender whether by cash, check, wire transfer or any
other instrument, made to such Blocked Accounts, Lockbox Account or
Concentration Accounts or otherwise received by Agent or any Lender and whether
on the Accounts or as proceeds of other Collateral or otherwise will be the sole
and exclusive property of Lenders. Each Grantor, and any of its Affiliates,
employees, agents and other Persons acting for or in concert with such Grantor
shall, acting as
10
trustee for Agent and Lenders, receive, as the sole and exclusive property of
Lenders, any moneys, checks, notes, drafts or other payments relating to and/or
constituting proceeds of Accounts or other Collateral which come into the
possession or under the control of such Grantor or any Affiliates, employees,
agent, or other Persons acting for or in concert with such Grantor, and
immediately upon receipt thereof, such Grantor or such Persons shall deposit the
same or cause the same to be deposited in kind, in a Blocked Account or other
account subject to a Bank Agency and Control Agreement.
(c) If at any time a Collecting Bank is obligated to transfer to Agent
or any Concentration Account all amounts held or deposited in the Blocked
Accounts held by such Collecting Bank, no Grantor shall, and no Grantor shall
permit any Subsidiary to, accumulate or maintain cash in any disbursement or
payroll account, as of any date, in an amount in excess of checks outstanding
against such account as of such date and amounts necessary to meet minimum
balance requirements.
(d) Each Grantor shall close each of its deposit accounts other than
Excluded Accounts (and promptly establish replacement deposit accounts with a
financial institution which has executed, or is willing to execute, a Bank
Agency and Control Agreement) maintained with any financial institution which is
the subject of a notice from Agent that the creditworthiness of such financial
institution or any of its affiliates is no longer reasonably acceptable to
Agent, or that the operating performance, funds transfer or availability
procedures or performance with respect to any Bank Agency and Control Agreement
of such financial institution is no longer acceptable in Agent's reasonable
judgment.
7. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
On the Closing Date each Grantor shall execute and deliver to Agent a
power of attorney (the "Power of Attorney") substantially 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) except for the powers granted in clause (h) of the Power of Attorney, 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.
8. REMEDIES: RIGHTS UPON DEFAULT.
(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
11
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, license, 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.
(b) If any Event of Default shall have occurred and be continuing, each
Grantor further agrees, at Agent's request, to assemble the Collateral and make
it available to Agent at a place or places designated by Agent which are
reasonably convenient to Agent and such Grantor, 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 reasonable attorneys' fees and other expenses
incurred by Agent or any Lender to collect such deficiency.
(c) 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.
(d) To the extent that Applicable Law imposes duties on Agent to
exercise remedies in a commercially reasonable manner, each Grantor acknowledges
and agrees that it is not commercially unreasonable for Agent (i) to fail to
incur expenses reasonably deemed significant by Agent to prepare Collateral for
disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to
obtain third party consents for access to Collateral to
12
be disposed of, or to obtain or, if not required by other law, to fail to obtain
governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against Account Debtors or other Persons obligated on Collateral or to
remove Liens on or any adverse claims against Collateral, (iv) to exercise
collection remedies against Account Debtors and other Persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (vi) to contact other Persons, whether or not in the
same business as the Grantor, for expressions of interest in acquiring all or
any portion of such Collateral, (vii) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the
Collateral is of a specialized nature, (viii) to dispose of Collateral by
utilizing internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capacity of doing so, or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale
rather than retail markets, (x) to disclaim disposition warranties, such as
title, possession or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure Agent against risks of loss, collection or disposition of
Collateral or to provide to Agent a guaranteed return from the collection or
disposition of Collateral, or (xii) to the extent deemed appropriate by Agent,
to obtain the services of other brokers, investment bankers, consultants and
other professionals to assist Agent in the collection or disposition of any of
the Collateral. Each Grantor acknowledges that the purpose of this Section 8(d)
is to provide non-exhaustive indications of what actions or omissions by Agent
would not be commercially unreasonable in Agent's exercise of remedies against
the Collateral and that other actions or omissions by Agent shall not be deemed
commercially unreasonable solely on account of not being indicated in this
Section 8(d). Without limitation upon the foregoing, nothing contained in this
Section 8(d) shall be construed to grant any rights to any Grantor or to impose
any duties on Agent that would not have been granted or imposed by this Security
Agreement or by Applicable Law in the absence of this Section 8(d).
(e) Neither Agent nor the Lenders shall be required to make any demand
upon, or pursue or exhaust any of their rights or remedies against, any Grantor,
any other obligor, guarantor, pledgor or any other Person with respect to the
payment of the Obligations or to pursue or exhaust any of their rights or
remedies with respect to any Collateral therefor or any direct or indirect
guarantee thereof. Neither Agent nor the Lenders shall be required to marshal
the Collateral or any guarantee of the Obligations or to resort to the
Collateral or any such guarantee in any particular order, and all of its and
their rights hereunder or under any other Loan Document shall be cumulative. To
the extent it may lawfully do so, each Grantor absolutely and irrevocably waives
and relinquishes the benefit and advantage of, and covenants not to assert
against Agent or any Lender, any valuation, stay, appraisement, extension,
redemption or similar laws and any and all rights or defenses it may have as a
surety now or hereafter existing which, but for this provision, might be
applicable to the sale of any Collateral made under the judgment, order or
decree of any court, or privately under the power of sale conferred by this
Security Agreement, or otherwise.
9. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY COLLATERAL. For the
purpose of enabling Agent to exercise rights and remedies under Section 8 hereof
(including, without limiting the terms of Section 8 hereof, in order to take
possession of, collect, receive, appropriate, remove, realize upon, grant
options to purchase, hold, preserve, process, 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,
nonexclusive license (exercisable without payment of royalty or other
compensation to such Grantor) to use, license or sublicense any Intellectual
Property now owned or hereafter created or acquired by or for 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. For
avoidance of doubt, the foregoing license grant shall not include any
Intellectual Property of a Grantor which is not Collateral
13
hereunder, or any rights, the grant of which shall constitute a breach of any
License or agreement to which a grantor is a party, and shall be limited solely
to the extent required for the Agent to exercise its rights hereunder.
10. LIMITATION ON AGENT'S AND LENDERS' DUTY IN RESPECT OF COLLATERAL.
Agent and each Lender shall use reasonable care with respect to 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.
11. REINSTATEMENT. This Security Agreement shall remain 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.
12. NOTICES. Except as otherwise provided herein, whenever 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.
13. SEVERABILITY. Whenever possible, each provision of 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.
14. NO WAIVER; CUMULATIVE REMEDIES. Neither Agent nor 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.
14
15. 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.
16. TERMINATION OF THIS SECURITY AGREEMENT. Subject to Section 11
hereof, this Security Agreement shall terminate upon the Termination Date.
17. 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 impair 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.
18. COUNTERPARTS. This Security Agreement may be authenticated in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement. This Security Agreement may be authenticated by manual
signature, facsimile or, if approved in writing by Agent, by electronic means,
all of which shall be equally valid.
19. GOVERNING LAW. THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS
WHICH DOES NOT EXPRESSLY SET FORTH APPLICABLE LAW SHALL BE GOVERNED BY AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
20. CONSENT TO JURISDICTION. EACH PARTY HERETO HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN NEW YORK COUNTY, STATE
OF NEW YORK AND IRREVOCABLY AGREES THAT, ALL ACTIONS OR PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED
IN SUCH COURTS. EACH PARTY HERETO EXPRESSLY SUBMITS AND CONSENTS TO THE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. EACH PARTY HERETO HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH PERSON
BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH
PERSON, AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE
COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
21. WAIVER OF JURY TRIAL. BORROWER, CREDIT PARTIES, AGENT AND EACH
LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. BORROWER, CREDIT PARTIES, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
HAS RELIED ON THE WAIVER IN ENTERING INTO
15
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY
ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWER, CREDIT PARTIES, AGENT
AND EACH LENDER WARRANT AND REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF
REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
22. 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.
23. 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.
24. 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 19 and Section 20, with its counsel.
25. BENEFIT OF LENDERS. All Liens granted or contemplated hereby shall
be for the benefit of Agent, individually, 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; signature page follows]
16
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.
RATHGIBSON, INC.,
AS GRANTOR
By: /s/ Xxxxxx X. Xxxxxx
_________________________________
Name: Xxxxxx X. Xxxxxx
_________________________________
Title: President & CEO
_________________________________
RGCH HOLDINGS CORP.,
AS GRANTOR
By: /s/ Xxxxxxx Xxxxxxxxx
__________________________________
Name: Xxxxxxx Xxxxxxxxx
__________________________________
Title: President
__________________________________
GENERAL ELECTRIC CAPITAL CORPORATION,
AS AGENT
By: /s/ Xxxx Cascade
__________________________________
Name: Xxxx Cascade
__________________________________
Title: Duly Authority Signatory
Security Agreement
SCHEDULE I
to
SECURITY AGREEMENT
FILING JURISDICTIONS
SCHEDULE II
to
SECURITY AGREEMENT
INSTRUMENTS
CHATTEL PAPER
AND
LETTER OF CREDIT RIGHTS
[TO BE COMPLETED BY GRANTORS]
SCHEDULE IIIA
to
SECURITY AGREEMENT
SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL
AND RECORDS CONCERNING RATHGIBSON'S COLLATERAL
I. Grantor's official name:
II. Type of entity (e.g. corporation, partnership, business trust, limited
partnership, limited liability company):
III. Organizational identification number issued by Grantor's state of
incorporation or organization or a statement that no such number has
been issued:
IV. State or Incorporation or Organization of Grantor:
V. Chief Executive Office and principal place of business of Grantor:
VI. Corporate Offices of Grantor:
VII. Warehouses:
VIII. Other Premises at which Collateral is Stored or Located:
IX. Locations of Records Concerning Collateral:
[TO BE COMPLETED BY GRANTORS]
SCHEDULE IIIB
to
SECURITY AGREEMENT
SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL
AND RECORDS CONCERNING HOLDINGS' COLLATERAL
X. Grantor's official name:
XI. Type of entity (e.g. corporation, partnership, business trust, limited
partnership, limited liability company):
XII. Organizational identification number issued by Grantor's state of
incorporation or organization or a statement that no such number has
been issued:
XIII. State or Incorporation or Organization of Grantor:
XIV. Chief Executive Office and principal place of business of Grantor:
XV. Corporate Offices of Grantor:
XVI. Warehouses:
XVII. Other Premises at which Collateral is Stored or Located:
XVIII. Locations of Records Concerning Collateral:
[TO BE COMPLETED BY GRANTORS]
SCHEDULE IV
to
SECURITY AGREEMENT
PATENTS, TRADEMARKS AND COPYRIGHTS
[TO BE COMPLETED BY GRANTORS]
EXHIBIT A
POWER OF ATTORNEY
This Power of Attorney is executed and delivered by RathGibson, Inc., a
Delaware corporation ("RathGibson"), RGCH Holdings Corp. ("Holdings", and
together with RathGibson, sometimes collectively referred to herein as
"Grantors" and individually as a "Grantor") to General Electric Capital
Corporation, a Delaware corporation (hereinafter referred to as "Attorney"), as
Agent for the benefit of Agent and Lenders, under a Credit Agreement and a
Security Agreement, both dated as of ______________, 2006, and other related
documents (the "Loan Documents"). No person to whom this Power of Attorney is
presented, as authority for Attorney to take any action or actions contemplated
hereby, shall be required to inquire into or seek confirmation from any Grantor
as to the authority of Attorney to take any action described below, or as to the
existence of or fulfillment of any condition to this Power of Attorney, which is
intended to grant to Attorney unconditionally the authority to take and perform
the actions contemplated herein, and Grantors irrevocably waive any right to
commence any suit or action, in law or equity, against any person or entity
which acts in reliance upon or acknowledges the authority granted under this
Power of Attorney. The power of attorney granted hereby is coupled with an
interest, and may not be revoked or canceled by any Grantor without Attorney' s
written consent.
Subject to the terms and conditions of the above-referenced Security
Agreement, Grantor hereby irrevocably constitutes and appoints Attorney (and all
officers, employees or agents designated by Attorney), with full power of
substitution, as such Grantor's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Grantor and in
the name of such Grantor or in its own name, from time to time in Attorney's
discretion, to take any and all appropriate action and to execute and deliver
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of the Loan Documents and, without limiting the
generality of the foregoing, each Grantor hereby grants to Attorney the power
and right, on behalf of such Grantor, without notice to or assent by such
Grantor, and at any time, to do the following: (a) change the mailing address of
such Grantor, open a post office box on behalf of such Grantor, open mail for
such Grantor, and ask, demand, collect, give acquittances and receipts for, take
possession of, endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, and notices in connection with any property of such Grantor; (b)
effect any repairs to any asset of such Grantor, or continue or obtain any
insurance and pay all or any part of the premiums therefor and costs thereof,
and make, settle and adjust all claims under such policies of insurance, and
make all determinations and decisions with respect to such policies; (c) pay or
discharge any taxes, liens, security interests, or other encumbrances levied or
placed on or threatened against such Grantor or its property; (d) defend any
suit, action or proceeding brought against such Grantor if such Grantor does not
defend such suit, action or proceeding or if Attorney believes that such Grantor
is not pursuing such defense in a manner that will maximize the recovery to
Attorney, and settle, compromise or adjust any suit, action, or proceeding
described above and, in connection therewith, give such discharges or releases
as Attorney may deem appropriate; (e) file or prosecute any claim, litigation,
suit or proceeding in any court of competent jurisdiction or before any
arbitrator, or take any other action otherwise deemed appropriate by Attorney
for the purpose of collecting any and all such moneys due to such Grantor
whenever payable and to enforce any other right in respect of such Grantor's
property; (f) cause the certified public accountants then engaged by such
Grantor to prepare and deliver to Attorney at any time and from time to time,
promptly upon Attorney's request, the following reports: (1) a reconciliation of
all accounts, (2) an aging of all accounts, (3) trial balances, (4) test
verifications of such accounts as Attorney may request, and (5) the results of
each physical verification of inventory; (g) communicate in its own name with
any party to any Contract with regard to the assignment of the right, title and
interest of such Grantor in and
under the Contracts and other matters relating thereto; (h) to file such
financing statements with respect to the Security Agreement, with or without
such Grantor's signature, or to file a photocopy of the Security Agreement in
substitution for a financing statement, as Agent may deem appropriate and to
execute in such Grantor's name such financing statements and amendments thereto
and continuation statements which may require the Grantor's signature; and (i)
execute, in connection with any sale provided for in any Loan Document, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral and to otherwise direct such sale or resale, all as
though Attorney were the absolute owner of the property of such Grantor for all
purposes, and to do, at Attorney's option and such Grantor's expense, at any
time or from time to time, all acts and other things that Attorney reasonably
deems necessary to perfect, preserve, or realize upon such Grantor's property or
assets and Attorney's Liens thereon, all as fully and effectively as such
Grantor might do. Each Grantor hereby ratifies, to the extent permitted by law,
all that said Attorney shall lawfully do or cause to be done by virtue hereof.
[remainder of page intentionally left blank; signature page follows]
IN WITNESS WHEREOF, this Power of Attorney is executed by each Grantor,
and each Grantor has caused its seal to be affixed pursuant to the authority of
its board of directors this ____ day of February, 2006.
RATHGIBSON, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
RGCH HOLDINGS CORP.
By: ____________________________________
Name: __________________________________
Title: _________________________________
NOTARY PUBLIC CERTIFICATE
On this _____ day of ______________, 2006, ___________________ who is
personally known to me appeared before me in his/her capacity as the
___________________ of RathGibson, Inc. ("Grantor") and executed on behalf of
Grantor the Power of Attorney in favor of General Electric Capital Corporation
to which this Certificate is attached.
__________________________________
Notary Public
NOTARY PUBLIC CERTIFICATE
On this _____ day of ______________, 2006, ___________________ who is
personally known to me appeared before me in his/her capacity as the
___________________ of RGCH Holdings Corp. ("Grantor") and executed on behalf of
Grantor the Power of Attorney in favor of General Electric Capital Corporation
to which this Certificate is attached.
__________________________________
Notary Public
