Exhibit 4.3
SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of August 16, 2002, among
REPUBLIC ENGINEERED PRODUCTS LLC, a Delaware limited liability company (the
"Borrower"), N&T RAILWAY COMPANY LLC, a Delaware limited liability company
("N&T") and BLUE STEEL CAPITAL CORP., a Delaware corporation ("Blue Steel" and
collectively with N&T, the "Guarantors"), (the Borrower and the Guarantors being
collectively referred to herein as the "Companies" and individually as a
"Company"), FLEET CAPITAL CORPORATION, as administrative agent (hereinafter, in
such capacity, the "Administrative Agent") for itself and the other lending
institutions (hereinafter, collectively, the "Lenders") which are or may become
parties to a Revolving Credit Agreement of even date herewith (as amended and in
effect from time to time, the "Credit Agreement") among the Companies, the
Lenders, the Administrative Agent and the other parties thereto.
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed, upon
the terms and subject to the conditions contained therein, to make loans and
otherwise extend credit to the Borrower;
WHEREAS, each of the Companies is a member of a group of related
companies, the success of any one of which is dependent in part on the success
of other members of the group;
WHEREAS, each of the Guarantors expects to receive substantial direct and
indirect benefits from the making of loans and other extensions of credit to the
Borrower by the Lenders pursuant to the Credit Agreement (which benefits are
hereby acknowledged);
WHEREAS, each of the Guarantors has issued a Guaranty in favor of the
Administrative Agent and the Lenders pursuant to (S)6.2 of the Credit Agreement,
pursuant to which such Person has guaranteed the payment and performance of the
Obligations;
WHEREAS, it is a condition precedent to the Lenders' making any loans or
otherwise extending credit to the Borrower under the Credit Agreement that the
Companies execute and deliver to the Administrative Agent, for the benefit of
the Lenders and the Administrative Agent, a security agreement in substantially
the form hereof; and
WHEREAS, each Company wishes to grant a security interest in favor of the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein without definitions
shall have the respective meanings provided therefor in the Credit Agreement.
The term "State", as used herein, means the State of New York. All terms defined
in the Uniform Commercial Code of the State and used herein shall have the same
definitions herein as specified therein. However, if a term is defined in
Article 9 of the Uniform Commercial Code of the State differently than in
another Article of the Uniform Commercial Code of the State, the term has the
meaning specified in such Article 9.
2. Grant of Security Interest.
2.1. Collateral Granted. Each Company hereby grants to the
Administrative Agent, for the benefit of the Lenders and the
Administrative Agent, to secure the payment and performance in full of
all of the Obligations, a security interest in and so pledges and assigns
to the Administrative Agent, for the benefit of the Lenders and the
Administrative Agent, all of the following properties, assets and rights
of such Company, as applicable, whether now owned or hereafter acquired
or arising, and all proceeds (including insurance proceeds) and products
thereof and all general intangibles, documents and instruments relating
to any of the following (all of the same being hereinafter called the
"Collateral"):
(a) all inventory, including raw materials, work in progress
and finished goods;
(b) all deposit accounts (other than Collateral Accounts (as
defined in the Pledge Intercreditor Agreement) in the name of the
Trustee), accounts, including accounts receivable, chattel paper, and
insurance refund claims and all other insurance claims and proceeds to
which the Administrative Agent is entitled pursuant to the provisions of
(S)8.7 of the Credit Agreement;
(c) all rights to all short term Investments described in
(S)9.3 of the Credit Agreement constituting proceeds of Collateral
described in (a) or (b), and to the extent such Investments do not
constitute Collateral for the Notes, together with all income therefrom
and increases therein;
(d) all patents, trademarks, trade names, including without
limitation, all right, title and interest of such Company in and to the
trademarks, service marks, registrations of trademarks and service marks
and applications therefor, patents and applications for patents set forth
on the attached Exhibit A (collectively, the "Patents and Trademarks"),
together with all right, title and interest of such Company in and to all
patents and trademarks which such Company may hereinafter acquire, the
right to file and prosecute applications for patents and trademarks,
including the Patents and Trademarks, and similar intellectual property
anywhere in the world and the good will of the business connected with
the use of and symbolized by the Patents and Trademarks, together with
all assets which uniquely reflect the good will of the business of such
Company, including but not limited to, such Company's trade names,
customer lists, trade secrets, corporate and other business records,
license rights, advertising materials, operating manuals, methods,
processes, know-how, sales literature, drawings, specifications,
descriptions, inventions, name plates, catalogues, copyrights, dealer
contracts, supplier contracts, distribution agreements, confidential
information, consulting agreements, engineering contracts and engineering
drawings (all of the foregoing of each Company described in this clause
(d) collectively referred to herein as the "Intellectual Property"),
provided, however that the Collateral shall not include any Intellectual
Property consisting of such Company's patents that both (i) relate to
equipment and (ii) are not Cast-Roll Intellectual Property, as defined
hereinafter, provided further, however, that the Collateral shall include
any of such Company's Patents that relate to any Company's processes
(industrial or otherwise) or manufacturing methods; and
(e) all furniture, fixtures, equipment, raw materials,
inventory, or other goods associated with or used in connection with the
Canton Cast-Roll Facility (all of the foregoing of each Company described
in this clause (e) collectively referred to herein as the "Canton Fixed
Assets"), and all insurance refund claims and all other insurance claims,
tort claims, chattel paper and all general intangibles related to the
Canton Fixed Assets (including, without limitation, all patents of such
Company relating to equipment used exclusively at the Canton Cast-Roll
Facility (all such patents of each Company collectively referred to
herein as the "Cast-Roll Intellectual Property")).
2.2. Excluded Collateral. Notwithstanding the foregoing provisions
of this (S)2, such grant of security interest shall not extend to, and
the term "Collateral" shall not include, any chattel paper, general
intangibles and intellectual property which are now or hereafter held by
any Company as licensee, lessee or otherwise, to the extent that, after
giving effect to the provisions of (S)(S)9-406, 407 and 408 of the
Uniform Commercial Code, (i) such chattel paper, general intangibles and
intellectual property are not assignable or capable of being encumbered
as a matter of law or under the terms of the license, lease or other
agreement applicable thereto (but solely to the extent that any such
restriction shall be enforceable under applicable law), without the
consent of the licensor or lessor thereof or other applicable party
thereto and (ii) such consent has not been obtained; provided, however,
that the foregoing grant of security interest shall extend to, and the
term "Collateral" shall include, (A) any and all proceeds of such chattel
paper, general intangibles and intellectual property to the extent that
the assignment or encumbering of such proceeds is not so restricted and
(B) following the receipt of consent from licensor, lessor or other
applicable party with respect to any such otherwise excluded chattel
paper, general intangibles and intellectual property, such chattel paper,
general intangibles and intellectual property as well as any and all
proceeds thereof that might have theretofore have been excluded from such
grant of a security interest and the term "Collateral".
3. Authorization to File Financing Statements. Each Company hereby
irrevocably authorizes the Administrative 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 described in (S)2 above or words of similar effect, regardless
of whether any particular asset comprised in the Collateral falls within the
scope of Article 9 of the Uniform Commercial Code of the State or such
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) provide any other information required by part 5 of Article 9 of
the Uniform Commercial Code of the State or such other jurisdiction for the
sufficiency or filing office acceptance of any financing statement or amendment,
including (i) whether such Company is an organization, the type of organization
and any organizational identification number issued to such Company and, (ii) in
the case of a financing statement filed as a fixture filing, a sufficient
description of real property to which the Collateral relates. Each Company
agrees to furnish any such information to the Administrative Agent promptly upon
the Administrative Agent's request. Each Company also ratifies its authorization
for the Administrative Agent to have filed in any Uniform Commercial Code
jurisdiction any like initial financing statements or amendments thereto if
filed prior to the date hereof.
4. Other Actions. Further to insure the attachment, perfection and first
priority of, and the ability of the Administrative Agent to enforce, the
Administrative Agent's security interest in the Collateral, each Company agrees,
in each case at such Company's expense, to take the following actions with
respect to the following Collateral, as applicable, and without limitation on
such Company's other obligations contained in this Agreement:
4.1. Promissory Notes and Tangible Chattel Paper. If any Company
shall, now or at any time hereafter, hold or acquire any promissory notes
or tangible chattel paper constituting Collateral, such Company shall
forthwith endorse, assign and deliver the same to the Administrative
Agent, accompanied by such instruments of transfer or assignment duly
executed in blank as the Administrative Agent may from time to time
specify.
4.2. Investment Property. Without limiting (S)5.1 hereof, if any
Company shall, now or at any time hereafter, hold or acquire any
certificated securities constituting Collateral described in (S)2 above,
such Company shall forthwith endorse, assign and deliver the same to the
Administrative Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Administrative Agent may from
time to time specify. If any securities now or hereafter acquired by any
Company constituting Collateral described in (S)2 above, are
uncertificated and are issued to such Company or its nominee directly by
the issuer thereof, such Company shall immediately notify the
Administrative Agent thereof and, at the Administrative Agent's request
and option, pursuant to an agreement in form and substance reasonably
satisfactory to the Administrative Agent, either (a) cause the issuer to
agree to comply without further consent of such Company or such nominee,
at any time with instructions
from the Administrative Agent as to such securities, or (b) arrange for
the Administrative Agent to become the registered owner of the
securities. If any securities constituting Collateral described in (S)2
above, whether certificated or uncertificated, or other investment
property, now or hereafter acquired by any Company are held by such
Company or its nominee through a securities intermediary or commodity
intermediary, such Company shall immediately notify the Administrative
Agent thereof and, at the Administrative Agent's request and option,
pursuant to an agreement in form and substance reasonably satisfactory to
the Administrative Agent, either (i) cause such securities intermediary
or (as the case may be) commodity intermediary to agree to comply, in
each case without further consent of such Company or such nominee, at any
time with entitlement orders or other instructions from the
Administrative Agent to such securities intermediary as to such
securities or other investment property, or (as the case may be) to apply
any value distributed on account of any commodity contract as directed by
the Administrative Agent to such commodity intermediary, or (ii) in the
case of financial assets or other investment property held through a
securities intermediary, arrange for the Administrative Agent to become
the entitlement holder with respect to such investment property, with
such Company being permitted, only with the consent of the Administrative
Agent, to exercise rights to withdraw or otherwise deal with such
investment property. The Administrative Agent agrees with each Company
that the Administrative Agent shall not give any such entitlement orders
or instructions or directions to any such issuer, securities intermediary
or commodity intermediary, and shall not withhold its consent to the
exercise of any withdrawal or dealing rights by such Company, unless an
Event of Default has occurred and is continuing, or, after giving effect
to any such investment and withdrawal rights not otherwise permitted by
the Loan Documents, would occur. The provisions of this paragraph shall
not apply to any financial assets credited to a securities account for
which the Administrative Agent is the securities intermediary.
4.3. Collateral in the Possession of a Bailee. If any Collateral
is, now or at any time hereafter, in the possession of a bailee, the
applicable Company shall promptly notify the Administrative Agent thereof
and, at the Administrative Agent's request and option, shall promptly
obtain an acknowledgement from the bailee, in form and substance
reasonably satisfactory to the Administrative Agent, that the bailee
holds such Collateral for the benefit of the Administrative Agent and
such bailee's agreement to comply, without further consent of such
Company, at any time with instructions of the Administrative Agent as to
such Collateral. The Administrative Agent agrees with each Company that
the Administrative Agent shall not give any such instructions unless an
Event of Default has occurred and is continuing or would occur after
taking into account any action by such Company with respect to the
bailee.
4.4. Electronic Chattel Paper and Transferable Records. If any
Company, now or at any time hereafter, holds or acquires an interest in
any
Collateral consisting of electronic chattel paper or any "transferable
record," as that term is defined in Section 201 of the federal Electronic
Signatures in Global and National Commerce Act, or in (S)16 of the
Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, such Company shall promptly notify the Administrative Agent
thereof and, at the request and option of the Administrative Agent, shall
take such action as the Administrative Agent may reasonably request to
vest in the Administrative Agent control, under (S)9-105 of the Uniform
Commercial Code in effect in such jurisdiction, of such electronic
chattel paper or control under Section 201 of the federal Electronic
Signatures in Global and National Commerce Act or, as the case may be,
(S)16 of the Uniform Electronic Transactions Act, as so in effect in such
jurisdiction, of such transferable record. The Administrative Agent
agrees with each Company that the Administrative Agent will arrange,
pursuant to procedures satisfactory to the Administrative Agent and so
long as such procedures will not result in the Administrative Agent's
loss of control, for such Company to make alterations to the electronic
chattel paper or transferable record permitted under (S)9-105 of the
Uniform Commercial Code or, as the case may be, Section 201 of the
federal Electronic Signatures in Global and National Commerce Act or
(S)16 of the Uniform Electronic Transactions Act for a party in control
to make without loss of control, unless an Event of Default has occurred
and is continuing or would occur after taking into account any action by
such Company with respect to such electronic chattel paper or
transferable record.
4.5. Letter-of-credit Rights. If any Company is, now or at any
time hereafter, a beneficiary under a letter of credit constituting
Collateral described in (S)2 above, such Company shall promptly notify
the Administrative Agent thereof and, at the request and option of the
Administrative Agent, such Company shall, pursuant to an agreement in
form and substance reasonably satisfactory to the Administrative Agent,
either (a) arrange for the issuer and any confirmer or other nominated
person of such letter of credit to consent to an assignment to the
Administrative Agent of the proceeds of the letter of credit or (b)
arrange for the Administrative Agent to become the transferee beneficiary
of the letter of credit, with the Administrative Agent agreeing, in each
case, that the proceeds of the letter of credit are to be applied to the
Obligations as provided in the Credit Agreement.
4.6. Commercial Tort Claims. If any Company shall, now or at any
time hereafter, hold or acquire a commercial tort claim in respect of any
Collateral described in (S)2 above, such Company shall immediately notify
the Administrative Agent in a writing signed by such Company of the
particulars thereof and grant to the Administrative Agent, for the
benefit of the Lenders and the Administrative Agent and the
Administrative Agent, in such writing a security interest therein and in
the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance reasonably satisfactory to the
Administrative Agent.
4.7. Other Actions as to any and all Collateral. Each Company
further agrees, upon the request of the Administrative Agent and at the
Administrative Agent's option, to take any and all other actions as the
Administrative Agent may reasonably determine to be necessary or useful
for the attachment, perfection and first priority of, and the ability of
the Administrative Agent to enforce, the Administrative Agent's security
interest in any and all of the Collateral, including, without limitation,
(a) executing, delivering and, where appropriate, filing financing
statements and amendments relating thereto under the Uniform Commercial
Code as in effect in any relevant jurisdiction, to the extent, if any,
that such Company's signature thereon is required therefor, (b) causing
the Administrative Agent's name to be noted as secured party on any
certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of the Administrative
Agent to enforce, the Administrative Agent's security interest in such
Collateral, (c) complying with any provision of any statute, regulation
or treaty of the United States as to any Collateral if compliance with
such provision is a condition to attachment, perfection or priority of,
or ability of the Administrative Agent to enforce, the Administrative
Agent's security interest in such Collateral, (d) using commercially
reasonable efforts to obtain governmental and other third party waivers,
consents and approvals, in form and substance reasonably satisfactory to
the Administrative Agent, including, without limitation, any consent of
any licensor, lessor or other person obligated on Collateral, (e) using
commercially reasonable efforts to obtain waivers from mortgagees and
landlords in form and substance reasonably satisfactory to the
Administrative Agent and (f) taking all actions under any other law, as
reasonably determined by the Administrative Agent to be applicable in any
foreign jurisdiction.
5. Relation to Other Security Documents. The provisions of this Agreement
supplement the provisions of any real estate mortgage or deed of trust granted
by any Company to the Administrative Agent, for the benefit of the Lenders and
the Administrative Agent, and which secures the payment or performance of any of
the Obligations. Nothing contained in any such real estate mortgage or deed of
trust shall derogate from any of the rights or remedies of the Administrative
Agent or any Lender hereunder. In addition to the provisions of this Agreement
being so read and construed with any such mortgage or deed of trust, the
provisions of this Agreement shall be read and construed with the other Security
Documents referred to below in the manner so indicated.
5.1. Pledge Agreements. Concurrently herewith each of the Borrower
and the Parent is executing and delivering to the Administrative Agent,
for the benefit of the Lenders and the Administrative Agent, a pledge
agreement pursuant to which the Borrower is pledging to the
Administrative Agent all of the shares of capital stock or membership
interests, as the case may be, of each of the Subsidiary Guarantors and
the Parent is pledging to the Administrative Agent all of the capital
stock or membership interests of the Borrower. Such
pledges shall be governed by the terms of such pledge agreements and not
by the terms of this Agreement.
5.2. Patent and Trademark Assignments. Concurrently herewith the
Borrower is executing and delivering to the Administrative Agent, for the
benefit of the Lenders and the Administrative Agent, the Patent
Assignment and the Trademark Assignment pursuant to which the Borrower is
assigning to the Administrative Agent, for the benefit of the Lenders and
the Administrative Agent, certain Collateral consisting of patents and
patent rights and trademarks, service marks and trademark and service
xxxx rights, together with the goodwill appurtenant thereto. The
provisions of the Patent Assignment and the Trademark Assignment are
supplemental to the provisions of this Agreement, and nothing contained
in the Patent Assignment or the Trademark Assignment shall derogate from
any of the rights or remedies of the Administrative Agent or any Lender
hereunder. Neither the delivery of, nor anything contained in, the Patent
Assignment or the Trademark Assignment shall be deemed to prevent or
postpone the time of attachment or perfection of any security interest in
such Collateral created hereby.
6. Representations and Warranties Concerning Companies' Legal Status.
Each Company has previously delivered to the Administrative Agent a certificate
signed by such Company and entitled "Perfection Certificate" (each a "Perfection
Certificate"). Each Company represents and warrants to the Administrative Agent
and the Lenders as follows: (a) such Company's exact legal name is that
indicated on the Perfection Certificate and on the signature page hereof, (b)
such Company is an organization of the type, and is organized in the
jurisdiction, set forth in the Perfection Certificate, (c) the Perfection
Certificate accurately sets forth such Company's organizational identification
number or accurately states that such Company has none, (d) the Perfection
Certificate accurately sets forth such Company's place of business or, if more
than one, its chief executive office, as well as such Company's mailing address,
if different, (e) all other information set forth on the Perfection Certificate
pertaining to such Company and the Collateral is accurate and complete and (f)
there has been no change in any of such information since the date on which the
Perfection Certificate was signed by such Company.
7. Covenants Concerning Companies' Legal Status. Each Company covenants
with the Administrative Agent and the Lenders as follows: (a) without providing
at least thirty (30) days prior written notice to the Administrative Agent, such
Company will not change its name, (b) if such Company changes its mailing
address or organizational identification number if it has one, or if such
Company does not have an organizational identification number, if such Company
later obtains one, such Company will forthwith notify the Administrative Agent
of its new mailing address or organizational identification number, and (c)
except as otherwise permitted by (S)8.6 of the Credit Agreement, such Company
will not change its type of organization or jurisdiction of organization without
the prior written consent of the Administrative Agent.
8. Representations and Warranties Concerning Collateral, Etc. Each
Company further represents and warrants to the Administrative Agent and the
Lenders as follows: (a) such Company is the owner of or has other rights in or
power to transfer the Collateral, free from any right or claim of any person or
any adverse Lien, except for the security interest created by this Agreement and
Permitted Liens, (b) none of the Collateral constitutes, or is the proceeds of,
"farm products" as defined in (S)9-102(a)(34) of the Uniform Commercial Code of
the State, (c) as of the Effective Date, such Company holds no commercial tort
claim, (d) except where non-compliance would not have a Material Adverse Effect,
such Company has at all times operated its business in compliance with all
applicable provisions of the federal Fair Labor Standards Act, as amended, and
with all applicable provisions of federal, state and local statutes and
ordinances dealing with the control, shipment, storage or disposal of hazardous
materials or substances, and (e) there has been no change in any of such
information since the date on which the Perfection Certificate was signed by
such Company.
9. Covenants Concerning Collateral, Etc. Each Company further covenants
with the Administrative Agent and the Lenders as follows: (a) the Collateral, to
the extent not delivered to the Administrative Agent pursuant to (S)4, will be
kept at those locations listed on the Perfection Certificate and the Company
will not remove the Collateral from such locations, without providing at least
thirty (30) days prior written notice to the Administrative Agent unless such
Collateral is removed to another location in which the Administrative Agent has
a perfected security interest, (b) except for the security interest herein
granted and Permitted Liens, such Company shall be the owner of or have other
rights in the Collateral free from any right or claim of any other person or any
Lien, and such Company shall defend the same against all claims and demands of
all persons at any time claiming the same or any interests therein adverse to
the Administrative Agent or any Lender, (c) such Company shall not pledge,
mortgage or create, or suffer to exist any right of any person in or claim by
any person to the Collateral, or any Lien in the Collateral in favor of any
person, other than the Administrative Agent, other than Permitted Liens, (d)
such Company will keep the Collateral in good order and repair and will not use
the same in violation of law or any policy of insurance thereon, except where
the failure to do so would not reasonably be expected to have a Material Adverse
Effect, (e) such Company will permit the Administrative Agent, or its designee,
to inspect the Collateral at any reasonable time, wherever located, (f) such
Company will pay promptly when due all taxes, assessments, governmental charges
and levies upon the Collateral or incurred in connection with the use or
operation of the Collateral or incurred in connection with this Agreement,
except as permitted by (S)8.8 of the Credit Agreement, (g) such Company has at
all times operated and will continue to operate, its business in compliance with
all applicable provisions of the federal Fair Labor Standards Act, as amended,
and with all applicable provisions of federal, state and local statutes and
ordinances dealing with the control, shipment, storage or disposal of hazardous
materials or substances, except where the failure to do so would not have a
Material Adverse Effect and (h) such Company will not sell or otherwise dispose,
or offer to sell or otherwise dispose, of the Collateral or any interest therein
except for dispositions permitted by (S)9.6 of the Credit Agreement.
10. Collateral Protection Expenses; Preservation of Collateral.
10.1. Expenses Incurred by Administrative Agent. In the
Administrative Agent's discretion, if any Company fails to do so, the
Administrative Agent may discharge taxes and other encumbrances at any
time levied or placed on any of the Collateral, maintain any of the
Collateral, make repairs thereto and pay any necessary filing fees or
insurance premiums. The Companies jointly and severally agree to
reimburse the Administrative Agent on demand for any and all expenditures
so made. The Administrative Agent shall have no obligation to any Company
to make any such expenditures, nor shall the making thereof be construed
as a waiver or cure of any Default or Event of Default.
10.2. Administrative Agent's Obligations and Duties. Anything
herein to the contrary notwithstanding, each Company shall remain
obligated and liable under each contract or agreement comprised in the
Collateral to be observed or performed by such Company thereunder.
Neither the Administrative Agent nor any Lender shall have any obligation
or liability under any such contract or agreement by reason of or arising
out of this Agreement or the receipt by the Administrative Agent or any
Lender of any payment relating to any of the Collateral, nor shall the
Administrative Agent or any Lender be obligated in any manner to perform
any of the obligations of any Company under or pursuant to any such
contract or agreement, to make inquiry as to the nature or sufficiency of
any payment received by the Administrative Agent or any Lender in respect
of the Collateral or as to the sufficiency of any performance by any
party under any such contract or agreement, to present or file any claim,
to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to the Administrative Agent
or to which the Administrative Agent, or any Lender may be entitled at
any time or times. The Administrative Agent's sole duty with respect to
the custody, safe keeping and physical preservation of the Collateral in
its possession, under (S)9-207 of the Uniform Commercial Code of the
State or otherwise, shall be to deal with such Collateral in the same
manner as the Administrative Agent deals with similar property for its
own account.
11. Securities and Deposits. The Administrative Agent may at any time
following and during the continuance of an Event of Default, at its option,
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. The Administrative Agent may at any time during an
Event of Default demand, xxx for, collect, or make any settlement or compromise
which it deems desirable with respect to the Collateral. Regardless of the
adequacy of any Collateral, during the continuance of any Event of Default, any
deposits or other sums credited by or due from the Administrative Agent or any
of the Lenders to any Company may be applied to or set off against any of the
Obligations.
12. Notification to Account Debtors and Other Persons Obligated on
Collateral. If an Event of Default shall have occurred and be continuing, each
Company shall, at the request and option of the Administrative Agent, notify
account debtors and other persons obligated on any of the Collateral of the
security interest of the Administrative Agent in any account, chattel paper,
general intangible, instrument or other Collateral and that payment thereof is
to be made directly to the Administrative Agent or to any financial institution
designated by the Administrative Agent as the Administrative Agent's agent
therefor, and the Administrative Agent may itself, if an Event of Default shall
have occurred and be continuing, without notice to or demand upon such Company,
so notify account debtors and other persons obligated on Collateral. After the
making of such a request or the giving of any such notification, each Company
shall hold any proceeds of collection of accounts, chattel paper, general
intangibles, instruments and other Collateral received by such Company as
trustee for the Administrative Agent, for the benefit of the Lenders and the
Administrative Agent, without commingling the same with other funds of such
Company and shall turn the same over to the Administrative Agent in the
identical form received, together with any necessary endorsements or
assignments. The Administrative Agent shall apply the proceeds of collection of
accounts, chattel paper, general intangibles, instruments and other Collateral
received by the Administrative Agent to the Obligations, such proceeds to be
immediately credited after final payment in cash or other immediately available
funds of the items giving rise to them.
13. Power of Attorney.
13.1. Appointment and Powers of Administrative Agent. Each Company
hereby irrevocably constitutes and appoints the Administrative Agent
and any officer or agent thereof, with full power of substitution, as
its true and lawful attorneys-in-fact with full irrevocable power and
authority in the place and stead of such Company or in the
Administrative Agent's own name, for the purpose of carrying out the
terms of this Agreement, to take (while an Event of Default shall have
occurred and be continuing) any and all appropriate action and to
execute any and all documents and instruments that may be necessary or
useful to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, hereby gives said attorneys
the power and right, on behalf of such Company, without notice to or
assent by such Company, to do the following:
(a) upon the occurrence and during the continuance of an
Event of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise dispose of or deal with any
of the Collateral in such manner as is consistent with the Uniform
Commercial Code of the State and as fully and completely as though
the Administrative Agent were the absolute owner thereof for all
purposes, and to do, at such Company's expense, at any time, or
from time to time, all acts and things which the Administrative
Agent deems necessary or useful to protect, preserve or realize
upon the Collateral and the Administrative Agent's security
interest therein, in order to effect the intent of this Agreement,
all
no less fully and effectively as such Company might do, including,
without limitation, (i) the filing and prosecuting of registration
and transfer applications with the appropriate federal, state or
local agencies or authorities with respect to trademarks,
copyrights and patentable inventions and processes, (ii) upon
written notice to such Company, the exercise of voting rights with
respect to voting securities, which rights may be exercised, if the
Administrative Agent so elects, with a view to causing the
liquidation of assets of the issuer of any such securities and
(iii) the execution, delivery and recording, in connection with any
sale or other disposition of any Collateral, of the endorsements,
assignments or other instruments of conveyance or transfer with
respect to such Collateral; and
(b) regardless of whether or not an Event of Default has
occurred and is continuing, to the extent that such Company's
authorization given in (S)3 is not sufficient, to file such
financing statements with respect hereto, with or without such
Company's signature, or a photocopy of this Agreement in
substitution for a financing statement, as the Administrative Agent
may deem appropriate and to execute in the Company's name such
financing statements and amendments thereto and continuation
statements which may require such Company's signature.
13.2. Ratification by Company. To the extent permitted by law, such
Company hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and is irrevocable.
13.3. No Duty on Administrative Agent. The powers conferred on the
Administrative Agent hereunder are solely to protect the interests of
the Administrative Agent and the Lenders in the Collateral and shall
not impose any duty upon the Administrative Agent to exercise any such
powers. The Administrative Agent shall be accountable only for the
amounts that it actually receives as a result of the exercise of such
powers, and neither it nor any of its officers, directors, employees or
agents shall be responsible to any Company for any act or failure to
act, except for the Administrative Agent's own gross negligence or
willful misconduct.
14. Rights and Remedies. Subject to the provisions of the Credit
Agreement, if an Event of Default shall have occurred and be continuing, the
Administrative Agent, without any other notice to or demand upon any Company,
shall have in any jurisdiction in which enforcement hereof is sought, in
addition to all other rights and remedies, the rights and remedies of a secured
party under the Uniform Commercial Code of the State and any additional rights
and remedies as may be provided to a secured party in any jurisdiction in which
Collateral is located, including, without limitation, the right to take
possession of the Collateral, and for that purpose the Administrative Agent may,
so far as such Company can give authority therefor, enter
upon any premises on which the Collateral may be situated and remove the same
therefrom. The Administrative Agent may in its discretion require such Company
to assemble all or any part of the Collateral at such location or locations
within the jurisdiction(s) of such Company's principal office(s) or at such
other locations as the Administrative Agent may reasonably designate. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Administrative Agent shall
give to such Company at least ten (10) Business Days prior written notice of the
time and place of any public sale of Collateral or of the time after which any
private sale or any other intended disposition is to be made. Each Company
hereby acknowledges that ten (10) Business Days prior written notice of such
sale or sales shall be reasonable notice. In addition, such Company waives any
and all rights that it may have to a judicial hearing in advance of the
enforcement of any of the Administrative Agent's rights and remedies hereunder,
including, without limitation, its right following an Event of Default to take
immediate possession of the Collateral and to exercise its rights and remedies
with respect thereto.
15. Standards for Exercising Rights and Remedies. To the extent that
applicable law imposes duties on the Administrative Agent to exercise remedies
in a commercially reasonable manner, each Company acknowledges and agrees that
it is not commercially unreasonable for the Administrative Agent (a) to fail to
incur expenses reasonably deemed significant by the Administrative Agent to
prepare Collateral for disposition or otherwise to fail to complete raw material
or work in process into finished goods or other finished products for
disposition, (b) to fail to obtain third party consents for access to Collateral
to 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, (c) to fail to exercise collection
remedies against account debtors or other persons obligated on Collateral or to
fail to remove Liens on or any adverse claims against Collateral, (d) 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, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (f) to contact other persons, whether or not in the
same business as the Company, for expressions of interest in acquiring all or
any portion of the Collateral, (g) to hire one or more professional auctioneers
to assist in the disposition of Collateral, whether or not the collateral is of
a specialized nature, (h) 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 capability of doing so, or that match buyers and
sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties, (k) to purchase insurance or
credit enhancements to insure the Administrative Agent against risks of loss,
collection or disposition of Collateral or to provide to the Administrative
Agent a guaranteed return from the collection or disposition of Collateral, or
(l) to the extent deemed appropriate by the Administrative Agent, to obtain the
services of brokers, investment bankers, consultants and other professionals to
assist the Administrative Agent in the collection or disposition of any of the
Collateral. Each Company acknowledges that the purpose of this ss.15 is to
provide non-exhaustive indications of what actions or omissions by the
Administrative Agent would fulfill the Administrative Agent's duties under the
Uniform Commercial Code of the State or any other relevant jurisdiction in the
Administrative Agent's exercise of remedies against the Collateral and that
other actions or omissions by the Administrative Agent shall not be deemed to
fail to fulfill such duties solely on account of not being indicated in this
(S)15. Without limitation upon the foregoing, nothing contained in this (S)15
shall be construed to grant any rights to any Company or to impose any duties on
the Administrative Agent that would not have been granted or imposed by this
Agreement or by applicable law in the absence of this (S)15.
16. No Waiver by Administrative Agent, etc. The Administrative Agent
shall not be deemed to have waived any of its rights and remedies in respect of
the Obligations or the Collateral unless such waiver shall be in writing and
signed by the Administrative Agent with the consent of the Majority Lenders. No
delay or omission on the part of the Administrative Agent in exercising any
right or remedy shall operate as a waiver of such right or remedy or any other
right or remedy. A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion. All rights and remedies
of the Administrative Agent with respect to the Obligations or the Collateral,
whether evidenced hereby or by any other instrument or papers, shall be
cumulative and may be exercised singularly, alternatively, successively or
concurrently at such time or at such times as the Administrative Agent deems
expedient.
17. Suretyship Waivers by Companies. Each Company waives demand,
notice, protest, notice of acceptance of this Agreement, notice of loans made,
credit extended, Collateral received or delivered or other action taken in
reliance hereon and all other demands and notices of any description. With
respect to both the Obligations and the Collateral, each Company assents to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Administrative Agent may deem advisable. The
Administrative Agent shall have no duty as to the collection or protection of
the Collateral or any income therefrom, the preservation of rights against prior
parties, or the preservation of any rights pertaining thereto beyond the safe
custody thereof as set forth in (S)10.2. Each Company further waives any and all
other suretyship defenses.
18. Marshalling. Neither the Administrative Agent nor any Lender shall
be required to marshal any present or future collateral security (including but
not limited to the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights and
remedies of the Administrative Agent or any Lender hereunder and of the
Administrative Agent or any Lender in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights and remedies, however existing or arising. To the extent that it lawfully
may, each Company hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Administrative Agent's rights and remedies under this Agreement or under
any other instrument creating or evidencing any of the Obligations or under
which any of the Obligations is outstanding or by which any of the Obligations
is secured or payment thereof is otherwise assured, and, to the extent that it
lawfully may, the Company hereby irrevocably waives the benefits of all such
laws.
19. Proceeds of Dispositions; Expenses. The Companies jointly and
severally agree to pay to the Administrative Agent on demand any and all
reasonable expenses, including reasonable attorneys' fees and disbursements,
incurred or paid by the Administrative Agent in protecting, preserving or
enforcing the Administrative Agent's rights and remedies under or in respect of
any of the Collateral. After deducting all of said expenses, the residue of any
proceeds of collection or sale or other disposition of Collateral shall, to the
extent actually received in cash, be applied to the payment of the Obligations
in such order or preference as is provided in the Credit Agreement, proper
allowance and provision being made for any Obligations not then due. Upon the
final payment and satisfaction in full of all of the Obligations and after
making any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the
Uniform Commercial Code of the State, any excess shall be returned to the
applicable Company. In the absence of final payment and satisfaction in full of
all of the Obligations, each Company shall remain liable for any deficiency.
20. Overdue Amounts. Until paid, all amounts due and payable by each
Company hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Credit Agreement.
21. Governing Law; Consent to Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK. Each Company agrees that any action or claim arising out of any dispute in
connection with this Agreement, any rights or obligations hereunder or the
performance or enforcement of such rights or obligations may be brought in the
courts of the State of New York or any federal court sitting therein and
consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made by mail at the address for such Company
specified in ss.20 of the Credit Agreement. Each Company hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
22. Waiver of Jury Trial. EACH OF THE PARTIES WAIVES ITS RIGHT TO A
JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as
prohibited by law, each Company waives any right which it may have to claim or
recover in any litigation referred to in
the preceding sentence any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages. Each Company (a)
certifies that neither the Administrative Agent or any Lender nor any
representative, agent or attorney of the Administrative Agent or any Lender has
represented, expressly or otherwise, that the Administrative Agent or any Lender
would not, in the event of litigation, seek to enforce the foregoing waivers or
other waivers contained in this Agreement and (b) acknowledges that, in entering
into the Credit Agreement and the other Loan Documents to which the
Administrative Agent or any Lender is a party, the Administrative Agent and the
Lenders are relying upon, among other things, the waivers and certifications
contained in this (S)22.
23. Termination. At such time as all of the Obligations have been
finally paid and satisfied in full in cash and all Commitments have been
terminated, this Agreement shall terminate and the Administrative Agent shall,
upon the written request and at the expense of the Companies, execute and
deliver to the Companies all releases, assignments and other instruments as may
be necessary or proper to terminate the Administrative Agent's security interest
granted hereunder, as fully as if this Agreement had not been made, subject to
any disposition of all or any part thereof that may have been made by the
Administrative Agent pursuant hereto. Upon the sale of any Collateral in
accordance with the provisions of the Credit Agreement and this Agreement, the
Administrative Agent shall, upon the written request and at the expense of the
Companies, execute and deliver to the Companies, all releases, assignments and
other instruments as may be necessary or proper to terminate the Administrative
Agent's security interest in such Collateral. Notwithstanding the foregoing,
this Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any amount received by the Administrative Agent, or any
Lender in respect of the Obligations is rescinded or must otherwise be restored
or returned by the Administrative Agent or any Lender upon insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower, upon the
appointment of any intervenor or conservator of, or trustee or similar official
for the Borrower or any substantial part of its assets, or otherwise, all as
though such payments had not been made.
24. Miscellaneous. The headings of each section of this Agreement are
for convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon each
Company and its successors and assigns, and shall inure to the benefit of the
Administrative Agent, the Lenders and their respective successors and assigns.
If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. Each
Company acknowledges receipt of a copy of this Agreement.
IN WITNESS WHEREOF, intending to be legally bound, each Company has
caused this Security Agreement to be duly executed as of the date first above
written.
REPUBLIC ENGINEERED PRODUCTS LLC
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
BLUE STEEL CAPITAL CORP.
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
N&T RAILWAY COMPANY LLC
By: REPUBLIC ENGINEERED PRODUCTS LLC
Its Sole Member
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
Accepted:
FLEET CAPITAL
CORPORATION, as
Administrative Agent
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF KINGS (certificate filed in New York) )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 16th day of August, 2002, personally appeared Xxxxxxx Xxxxxx
to me known personally, and who, being by me duly sworn, deposes and says that
he is the President of Republic Engineered Products LLC, and that said
instrument was signed and sealed on behalf of said limited liability company by
authority of the Board of Managers, and said person acknowledged said instrument
to be the free act and deed of said limited liability company.
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Notary Public
My commission expires: July 1, 2006
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF KINGS (certificate filed in New York) )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 16th day of August, 2002, personally appeared Xxxxxxx Xxxxxx
to me known personally, and who, being by me duly sworn, deposes and says that
he is the President of Blue Steel Capital Corporation, and that said instrument
was signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said person acknowledged said instrument to be the free act and
deed of said corporation.
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Notary Public
My commission expires: July 1, 2006
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF NEW YORK )
) ss.
COUNTY OF KINGS CERTIFICATE FILED IN NEW YORK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 16th day of August, 2002, personally appeared
Xxxxxxx Xxxxxx to me known personally, and who, being by me duly sworn,
deposes and says that he is the President of N&T Railway Company LLC, and that
said instrument was signed and sealed on behalf of said limited liability
company by authority of The Board of Managers, and said person acknowledged said
instrument to be the free act and deed of said limited liability company.
/s/ Xxxxxx X. Xxxxxxxx
_______________________________
Notary Public
My commission expires: July 1, 2006
Exhibit A
