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Exhibit 10.37
GUARANTOR SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented, restated or
otherwise modified from time to time, the "Security Agreement"), dated as of
November 21, 2000, made by B. W. ELLIOTT MANUFACTURING CO., LLC, a Delaware
limited liability company, HUDSON LOCK, LLC, a Delaware limited liability
company, ESP LOCK PRODUCTS, LLC, a Delaware limited liability company, GITS
MANUFACTURING COMPANY, LLC, a Delaware limited liability company, ATLANTIC
GUEST, INC., a Delaware corporation, MARINE INDUSTRIES COMPANY, LLC, a Delaware
limited liability company, TURNER ELECTRIC, LLC, a Delaware limited liability
company, VFC ACQUISITION COMPANY, INC., a Delaware corporation, GUEST BUILDING,
LLC, a Delaware limited liability company, KCI MERGER CORP., a New York
corporation, KEY COMPONENTS, INC., a New York Corporation, KEYHOLD, INC., a
Delaware corporation, KCLLC HOLDINGS, INC., a Delaware corporation, ACME
ELECTRIC CORPORATION, a New York Corporation, ACME-URDC, INC., a Utah
corporation, ACME ELECTRIC MEXICO HOLDINGS I, INC., a Delaware corporation, and
ACME ELECTRIC MEXICO HOLDINGS II, INC., a Delaware corporation (each, a
"Grantor", and collectively, the "Grantors"), in favor of FIRST UNION NATIONAL
BANK, as administrative agent for the Lenders (together with any successor(s)
thereto in such capacity, the "Administrative Agent") for each of the Lender
Parties (as defined below).
W I T N E S S E T H:
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WHEREAS, pursuant to the Credit and Guaranty Agreement, dated as of
September 29, 2000 (together with all amendments, supplements, restatements and
other modifications, if any, from time to time thereafter made thereto, the
"Credit Agreement"), among Key Components, LLC, as borrower (the "Borrower"),
certain of its Subsidiaries and its equity holders, as Guarantors, the various
financial institutions and other Persons as are or may become parties thereto,
as lenders (the "Lenders"), the Administrative Agent, Societe Generale, as
Syndication Agent for the Lenders, and First Union Securities, Inc. and SG Cowen
Securities Corporation, as Co-Arrangers, the Lenders have extended Commitments
to make Credit Extensions to the Borrower;
WHEREAS, as a condition precedent to the making of the initial Credit
Extensions under the Credit Agreement, each Grantor is required to execute and
deliver this Security Agreement;
WHEREAS, each Grantor is either a Subsidiary or equity holder of the
Borrower;
WHEREAS, each Grantor has duly authorized the execution, delivery and
performance of this Security Agreement;
WHEREAS, it is in the best interest of each Grantor to execute this
Security Agreement inasmuch as each Grantor will derive substantial direct and
indirect benefits from the Credit Extensions made from time to time to the
Borrower by the Lenders pursuant to the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Lenders
to make Credit Extensions (including the initial Credit Extensions) to the
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Borrower pursuant to the Credit Agreement, each Grantor agrees, for the benefit
of each Lender Party, as follows:
ARTICLE I
DEFINITIONS
SECTION I.1. Certain Terms. The following terms (whether or not
underscored) when used in this Security Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Collateral" is defined in Section 2.1.
"Collateral Account" is defined in Section 4.1.2(c).
"Computer Hardware and Software Collateral" means:
(a) all computer and other electronic data processing
hardware, integrated computer systems, central processing units, memory
units, display terminals, printers, features, computer elements, card
readers, tape drives, hard and soft disk drives, cables, electrical
supply hardware, generators, power equalizers, accessories, all
peripheral devices and other related computer hardware now owned or
hereafter acquired by any Grantor;
(b) all software programs (including both source code, object
code and all related applications and data files), whether now owned,
licensed or leased or hereafter acquired by the Grantor, designed for
use on the computers and electronic data processing hardware described
in clause (a) above;
(c) all firmware associated therewith now owned or hereafter
acquired by any Grantor;
(d) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such hardware,
software and firmware described in the preceding clauses (a) through
(c) above; and
(e) all rights of any Grantor with respect to all of the
foregoing, including, without limitation, any and all copyrights,
licenses, options, warranties, service contracts, program services,
test rights, maintenance rights, support rights, improvement rights,
renewal rights and indemnifications and any substitutions,
replacements, additions or model conversions of any of the foregoing.
"Copyright Collateral" means all copyrights and all semi-conductor chip
product mask works of any Grantor, whether statutory or common law, registered
or unregistered, now or hereafter in force throughout the world including,
without limitation, all of such Grantor's right, title and interest in and to
all copyrights and mask works registered in the United States Copyright Office
or anywhere else in the world and also including, without limitation, the
copyrights and mask works referred to in Item A of Schedule IV attached hereto,
and all applications for registration thereof, whether pending or in
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preparation, all copyright and mask work licenses, including each copyright and
mask work license referred to in Item B of Schedule IV attached hereto, the
right to sue for past, present and future infringements of any thereof, all
rights corresponding thereto throughout the world, all extensions and renewals
of any thereof and all proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages and proceeds of suit.
"Credit Agreement" is defined in the first recital.
"Equipment" is defined in clause (a) of Section 2.1.
"Grantor" and "Grantors" are defined in the preamble.
"Intellectual Property Collateral" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral.
"Inventory" is defined in clause (b) of Section 2.1.
"Lenders" is defined in the first recital.
"Lender Party" means, as the context may require, any Lender, each
party to a Rate Protection Agreement (other than the Borrower) and/or the
Administrative Agent and each of their respective successors, transferees and
assigns.
"Patent Collateral" means:
(a) all letters patent and applications for letters patent
throughout the world of any Grantor, including all patent applications
of any Grantor in preparation for filing anywhere in the world and
including each patent and patent application referred to in Item A of
Schedule II attached hereto;
(b) all patent licenses in favor of any Grantor, including
each patent license in favor of the Grantor referred to in Item B of
Schedule II attached hereto;
(c) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the items described in clauses (a) and (b) above; and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the
right of each Grantor to sue third parties for past, present or future
infringements of any patent or patent application, including any patent
or patent application referred to in Item A of Schedule II attached
hereto, and for breach or enforcement of any patent license, including
any patent license referred to in Item B of Schedule II attached
hereto, and all rights corresponding thereto throughout the world.
"Receivables" is defined in clause (c) of Section 2.1.
"Related Contracts" is defined in clause (c) of Section 2.1.
"Rolling Stock" means all railcars, barges and other water carrier
equipment, and all accessions, appurtenances and parts installed on and
additions thereto and replacements thereof hereafter acquired by any Grantor.
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"Secured Obligations" is defined in Section 2.2.
"Security Agreement" is defined in the preamble.
"Trademark Collateral" means:
(a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service
marks, certification marks, collective marks, logos, other source of
business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of a like
nature of each Grantor (all of the foregoing items in this clause (a)
being collectively called a "Trademark"), now existing anywhere in the
world or hereafter adopted or acquired, whether currently in use or
not, all registrations and recordings thereof and all applications in
connection therewith, whether pending or in preparation for filing,
including registrations, recordings and applications of each Grantor in
the United States Patent and Trademark Office or in any office or
agency of the United States of America or any state thereof or any
foreign country, including those referred to in Item A of Schedule III
attached hereto;
(b) all Trademark licenses in favor of each Grantor, including
each Trademark license referred to in Item B of Schedule III attached
hereto;
(c) all reissues, extensions or renewals of any of the items
described in clauses (a) and (b) above;
(d) all of the goodwill of the business of each Grantor
connected with the use of, and symbolized by the items described in,
clauses (a) and (b) above; and
(e) all proceeds of, and rights associated with, the
foregoing, including any claim by any Grantor against third parties for
past, present or future infringement or dilution of any Trademark,
Trademark registration or Trademark license of such Grantor, including
any Trademark, Trademark registration or Trademark license referred to
in Item A or Item B of Schedule III attached hereto, or for any injury
to the goodwill associated with the use of any such Trademark or for
breach or enforcement of any Trademark license.
"Trade Secrets Collateral" means common law and statutory trade secrets
and all other confidential or proprietary or useful information of each Grantor
and all know-how obtained by the each Grantor or used by each Grantor in the
business of such Grantor (all of the foregoing being collectively called a
"Trade Secret"), whether or not such Trade Secret has been reduced to a writing
or other tangible form, including all documents and things embodying,
incorporating or referring in any way to such Trade Secret, all Trade Secret
licenses, including each Trade Secret license referred to in Schedule V attached
hereto, and including the right of each Grantor to sue for and to enjoin and to
collect damages for the actual or threatened misappropriation of any Trade
Secret and for the breach or enforcement of any such Trade Secret license.
"U.C.C." means the Uniform Commercial Code, as in effect in the State
of New York.
SECTION I.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Security Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
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SECTION I.3. U.C.C. Definitions. Unless otherwise defined herein or in
the Credit Agreement or unless the context otherwise requires, terms for which
meanings are provided in the U.C.C. are used in this Security Agreement,
including its preamble and recitals, with such meanings.
ARTICLE II
SECURITY INTEREST
SECTION II.1. Grant of Security. Each Grantor hereby assigns and
pledges to the Administrative Agent for its benefit and the ratable benefit of
each of the Lender Parties, and hereby grants to the Administrative Agent for
its benefit and the ratable benefit of each of the Lender Parties a security
interest in, all of such Grantor's right, title and interest in, to and under
the following property, whether now or hereafter existing or acquired (the
"Collateral"):
(a) all equipment in all of its forms of such Grantor,
wherever located, including Rolling Stock (but excluding motor
vehicles, trucks and trailers), and all parts thereof and all
accessions, additions, attachments, improvements, substitutions and
replacements thereto and therefor (any and all of the foregoing being
the "Equipment");
(b) all inventory in all of its forms of such Grantor,
wherever located, including
(i) all merchandise, goods and other personal
property which are held for sale or lease, all raw materials
and work in process therefor (including, without limitation,
tobacco and tobacco related products), finished goods thereof,
and materials used or consumed in the manufacture or
production thereof,
(ii) all goods in which such Grantor has an interest
in mass or a joint or other interest or right of any kind
(including goods in which such Grantor has an interest or
right as consignee), and
(iii) all goods which are returned to or repossessed
by such Grantor,
and all accessions thereto, products thereof and documents therefor
(any and all such inventory, materials, goods, accessions, products and
documents being the "Inventory");
(c) all accounts, contracts, contract rights, chattel paper,
documents, instruments, and general intangibles (including tax refunds)
of such Grantor, including ownership rights of the inventory owned by
such Grantor, whether or not arising out of or in connection with the
sale or lease of goods or the rendering of services, and all rights of
such Grantor now or hereafter existing in and to all security
agreements, guaranties, leases and other contracts securing or
otherwise relating to any such accounts, contracts, contract rights,
chattel paper, documents, instruments, and general intangibles (any and
all such accounts, contracts, contract rights, chattel paper,
documents, instruments, and general intangibles being the
"Receivables", and any and all such security agreements, guaranties,
leases and other contracts being the "Related Contracts");
(d) all Intellectual Property Collateral of such Grantor;
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(e) all books, records, writings, data bases, information and
other property of such Grantor relating to, used or useful in
connection with, evidencing, embodying, incorporating or referring to
any of the foregoing in this Section 2.1;
(f) all of such Grantor's other property and rights of every
kind and description and interests therein; and
(g) all products, offspring, rents, issues, profits, returns,
income and proceeds of and from any and all of the foregoing Collateral
(including proceeds which constitute property of the types described in
clauses (a), (b), (c), (d), (e) and (f) above, proceeds deposited from
time to time in the Collateral Account and in any lock boxes of such
Grantor, and, to the extent not otherwise included, all payments under
insurance (whether or not the Administrative Agent is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of
loss or damage to or otherwise with respect to any of the foregoing
Collateral).
SECTION II.2. Security for Secured Obligations. This Security Agreement
secures the prompt payment in full of all amounts payable by the Borrower, each
Grantor and each other Obligor under or in connection with the Credit Agreement,
the Notes, each Rate Protection Agreement, the Acme Guaranty and each other Loan
Document, whether for principal, interest, costs, fees, expenses, indemnities or
otherwise and whether now or hereafter existing (all of such obligations being
the "Secured Obligations").
SECTION II.3. Continuing Security Interest; Transfer of Notes. This
Security Agreement shall create a continuing security interest in the Collateral
and shall
(a) remain in full force and effect until the indefeasible
payment in full in cash of all Secured Obligations and the expiration
or termination of all Commitments,
(b) be binding upon each Grantor, its successors, transferees
and assigns, and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative
Agent and each other Lender Party.
Without limiting the generality of the foregoing clause (c), any Lender may, to
the extent permitted pursuant to Section 11.11.1 of the Credit Agreement, assign
or otherwise transfer (in whole or in part) any Note or Loan held by it to any
other Person or entity, and such other Person or entity shall thereupon become
vested with all the rights and benefits in respect thereof granted to such
Lender under any Loan Document (including this Security Agreement) or otherwise,
subject, however, to any contrary provisions in such assignment or transfer, and
to the provisions of Section 11.11 and Article X of the Credit Agreement.
SECTION II.4. Release and Termination.
(a) Upon any sale, lease, transfer or other disposition of any item of
Collateral permitted under the terms of the Loan Documents (other than sales of
Inventory in the ordinary course of business), the Administrative Agent will, at
each Grantor's expense, execute and deliver such documents and instruments as
such Grantor shall reasonably request to evidence the release of such Collateral
from the security interest granted hereunder and shall deliver such Collateral
held by the Administrative Agent to such Grantor; provided, however, that the
proceeds of any such sale, lease transfer or other disposition are applied in
accordance with Section 3.1.2 of the Credit Agreement, to the extent applicable.
Upon any such release, the security interest granted herein shall terminate as
to such Collateral, and all rights to such Collateral shall revert to such
Grantor.
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(b) Upon the indefeasible payment in cash in full of all Secured
Obligations and the expiration or termination of all Commitments, the security
interest granted herein by each Grantor shall terminate and all rights to the
Collateral shall revert to such Grantor. Upon any such termination, the
Administrative Agent will, at the Grantors' joint and several expense, deliver
to the Grantors, without any representations, warranties or recourse of any kind
whatsoever, such documents as the Grantors shall reasonably request to evidence
such termination.
SECTION II.5. Grantor Remains Liable. Anything herein to the contrary
notwithstanding
(a) the Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein,
and shall perform all of its duties and obligations under such
contracts and agreements to the same extent as if this Security
Agreement had not been executed,
(b) the exercise by the Administrative Agent of any of its
rights hereunder shall not release any Grantor from any of its duties
or obligations under any such contracts or agreements included in the
Collateral, and
(c) neither the Administrative Agent nor any other Lender
Party shall have any obligation or liability under any such contracts
or agreements included in the Collateral by reason of this Security
Agreement, nor shall the Administrative Agent or any other Lender Party
be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION II.6. Security Interest Absolute. All rights of the
Administrative Agent and the security interests granted to the Administrative
Agent hereunder, and all obligations of each Grantor hereunder, shall be
absolute and unconditional, irrespective of
(a) any lack of validity or enforceability of the Credit
Agreement, any Note, any Rate Protection Agreement with a Lender or any
other Loan Document;
(b) the failure of any Lender Party or any holder of any Note;
(i) to assert any claim or demand or to enforce any
right or remedy against the Borrower, any Grantor, any other
Obligor or any other Person under the provisions of the Credit
Agreement, any Note, any Rate Protection Agreement with a
Lender, any other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any
other guarantor of, or collateral securing, any Secured
Obligation;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations or any
other extension, compromise or renewal of any Secured Obligation;
(d) any reduction, limitation, impairment or termination of
any Secured Obligation for any reason (other than repayment in full of
the Secured Obligations), including any claim of waiver, release,
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surrender, alteration or compromise, and shall not be subject to (and
each Grantor hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of
the invalidity, illegality, nongenuineness, irregularity, compromise or
unenforceability of, or any other event or occurrence affecting, any
Secured Obligation or otherwise;
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the Credit Agreement, any Note, any Rate Protection Agreement with a
Lender or any other Loan Document;
(f) any addition, exchange, release, surrender, impairment or
non-perfection of any collateral (including the Collateral), or any
amendment to or waiver or release of or addition to or consent to
departure from any guaranty, for any of the Secured Obligations; or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the
Borrower, any Grantor or any other Obligor, or otherwise.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION III.1. Representations and Warranties. Each Grantor represents
and warrants unto each Lender Party as set forth in this Article.
SECTION III.1.1. Location of Collateral, etc. All of the Equipment,
Inventory and lock boxes of such Grantor are located at the places specified in
Item A, Item B and Item C, respectively, of Schedule I hereto. None of the
Equipment and Inventory has, within the four months preceding the date of this
Security Agreement, been located at any place other than the places specified in
Item A and Item B, respectively, of Schedule I hereto. The principal place of
business and chief executive office of such Grantor is set forth on the
signature page hereto. Such Grantor keeps its records concerning the
Receivables, and all originals of all chattel paper which evidence Receivables,
at the addresses as set forth on the signature page hereto. Such Grantor does
not have any trade names. Such Grantor has not been known by any legal name
different from those set forth on the signature page hereto, nor has such
Grantor been the subject of any merger or other corporate reorganization. If the
Collateral includes any Inventory located in the State of California, such
Grantor is not a "retail merchant" within the meaning of Section 9102 of the
Uniform Commercial Code - Secured Transactions of the State of California. None
of the Receivables is evidenced by a promissory note or other instrument.
SECTION III.1.2. Ownership, No Liens, etc. Such Grantor owns the
Collateral free and clear of any Lien, security interest, charge or encumbrance
except for the security interest created by this Security Agreement and except
as permitted by the Credit Agreement. No effective financing statement or other
similar instrument in effect covering all or any part of the Collateral is on
file in any recording office, except such as may have been filed in favor of the
Administrative Agent relating to this Security Agreement.
SECTION III.1.3. Possession and Control. Such Grantor has exclusive
possession and control of the Equipment and Inventory.
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SECTION III.1.4. Negotiable Documents, Instruments and Chattel Paper.
Such Grantor has, contemporaneously herewith, delivered to the Administrative
Agent possession of all originals of all negotiable documents, instruments and
chattel paper currently owned or held by such Grantor (duly endorsed in blank,
if requested by the Administrative Agent).
SECTION III.1.5. Validity, etc. The Liens intended to be created by
this Security Agreement constitute valid first priority security interests in
the Collateral securing the payment of the Secured Obligations, and all filings
and other actions necessary or desirable to perfect and protect such security
interest have been duly taken.
SECTION III.1.6. Authorization, Approval, etc. No authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body (other than U.C.C. filings) is required either
(a) for the grant by such Grantor of the security interest
granted hereby or for the execution, delivery and performance of this
Security Agreement by such Grantor, or
(b) for the perfection of or the exercise by the
Administrative Agent of its rights and remedies hereunder.
SECTION III.1.7. Compliance with Laws. Such Grantor is in compliance
with the requirements of all applicable laws (including, without limitation, the
provisions of the Fair Labor Standards Act), rules, regulations and orders of
every governmental authority, the non-compliance with which would reasonably be
expected to materially adversely affect the condition (financial or otherwise),
operations, business, assets or liabilities of such Grantor.
SECTION III.1.8. Due Execution, Validity, Etc. The execution, delivery
and performance by such Grantor of this Security Agreement has been duly
authorized by all necessary action and does not contravene or result in a
default under such Grantor's Organic Documents or contravene or result in a
default under any material contractual restriction, Lien or governmental
regulation or court decree or order or law binding on such Grantor. This
Security Agreement has been duly executed and delivered on behalf of such
Grantor and constitutes the legal, valid and binding obligation of such Grantor
enforceable in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditor's right generally, and subject to the effect of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law). In addition, each representation and warranty of such Grantor
contained in each Loan Document to which it is a party is true and correct in
all material respects.
ARTICLE IV
COVENANTS
SECTION IV.1. Certain Covenants. Each Grantor covenants and agrees
that, so long as any portion of the Secured Obligations shall remain unpaid or
any Lender shall have any outstanding Commitment, such Grantor will, unless the
Required Lenders shall otherwise consent in writing, perform the obligations set
forth in this Section.
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SECTION IV.1.1. As to Equipment and Inventory. Such Grantor hereby
agrees that it shall
(a) keep all material Equipment and Inventory (other than
Inventory sold in the ordinary course of business) at the places
therefor specified in Section 3.1.1 or, upon 30 days' prior written
notice to the Administrative Agent, at such other places in a
jurisdiction where all representations and warranties set forth in
Article III shall be true and correct in all material respects, and all
action required pursuant to the first sentence of Section 4.1.7 shall
have been taken with respect to the material Equipment and Inventory;
(b) cause all material Equipment to be maintained and
preserved in good condition, repair and working order, ordinary wear
and tear excepted; and make or cause to be made all material repairs,
replacements, and other improvements in connection therewith which are
reasonably necessary or desirable to such end; and promptly furnish to
the Administrative Agent a statement respecting any loss or damage to
any of the material Equipment; and
(c) pay, before the same shall become delinquent, promptly
when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all material claims (including
claims for labor, materials and supplies) against, the Equipment and
Inventory, except to the extent the validity thereof is being contested
in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP have been set aside.
SECTION IV.1.2. As to Receivables.
(a) Such Grantor shall keep its place(s) of business and chief
executive office at the offices set forth on Schedule III of the Credit
Agreement and shall keep the offices where it keeps its records
concerning the Receivables, and all originals of all chattel paper
which evidence Receivables, located at the addresses set forth on
Schedule III of the Credit Agreement or, upon 30 days' prior written
notice to the Administrative Agent, at such other locations in a
jurisdiction where all representations and warranties set forth in
Article III shall be true and correct, and all actions required by the
first sentence of Section 4.1.7 shall have been taken with respect to
the Receivables; not change its name except upon 30 days' prior written
notice to the Administrative Agent; hold and preserve such records and
chattel paper; and permit representatives of the Administrative Agent
at any time upon reasonable advance notice and during normal business
hours to inspect and make abstracts from such records and chattel
paper.
(b) Such Grantor will direct all obligors under any
Receivables to make all payments to one or more bank accounts. Each
such bank account will be maintained only if the relevant bank has
agreed (by no later than 30 days after the Closing Date) in writing to
remit the balance from time to time in the account to the
Administrative Agent upon notice from the Administrative Agent that any
Default is continuing. No funds, other than proceeds of Collateral,
will be paid to any such bank account. None of the Grantors will open
any new bank accounts, or terminate any existing bank accounts, except
upon 10 days' prior written notice to the Administrative Agent.
(c) All proceeds of Collateral received by such Grantor shall,
upon the request of the Administrative Agent during the continuance of
an Event of Default, be delivered in kind to the Administrative Agent
for deposit to a deposit account (the "Collateral Account") of such
Grantor maintained with the Administrative Agent, and none of the
Grantors shall commingle any such proceeds, and each Grantor shall hold
separate and apart from all other property, all such proceeds in
express trust for the benefit of the Administrative Agent and the other
Lender Parties until delivery thereof is made to the Administrative
Agent. No funds, other than proceeds of Collateral, will be deposited
in the Collateral Account.
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(d) The Administrative Agent shall have the right to apply any
amount in the Collateral Account to the payment of any Secured
Obligations which are due and payable or payable upon demand, or to the
payment of any Secured Obligations at any time that an Event of Default
shall exist. Subject to the rights of the Administrative Agent, each
Grantor shall have the right, with respect to and to the extent of
collected funds in the Collateral Account, (i) as long as there shall
be no Default, to require the Administrative Agent to transfer to such
Grantor's general demand deposit account at the Administrative Agent
any or all of such collected funds and (ii) as long as there shall be a
Default and after giving effect to any exercise by the Administrative
Agent of its rights, (A) to require the Administrative Agent to
transfer to such Grantor's general demand deposit account at the
Administrative Agent amounts required to cover checks drawn against
that account which shall have been presented for payment at the
Administrative Agent as of the preceding business day and all wire
transfers which such Grantor has directed to be made on the current
business day, to the extent such checks and wire transfers are for any
purpose which does not violate any provision of any Loan Document and
(B) to require the Administrative Agent to purchase any Cash Equivalent
Investment, provided that, in the case of certificated securities, the
Administrative Agent will retain possession thereof as Collateral and,
in the case of uncertificated securities, the Administrative Agent will
take such actions, including registration of such securities in its
name, as it shall determine is necessary to perfect its security
interest therein. The Administrative Agent may at any time transfer to
such Grantor's general demand deposit account at the Administrative
Agent any or all of the collected funds in the Collateral Account;
provided, however, that any such transfer shall not be deemed to be a
waiver or modification of any of the Administrative Agent's rights
under this Section 4.1.2(d).
SECTION IV.1.3. As to Collateral.
(a) Until such time (during the continuance of an Event of
Default) as the Administrative Agent shall notify such Grantor of the
revocation of the power and authority granted by this Section 4.1.3(a),
such Grantor (i) may in the ordinary course of its business, at its own
expense, sell, lease or furnish under the contracts of service any of
the Inventory normally held by such Grantor for such purpose, and use
and consume, in the ordinary course of its business, any raw materials,
work in process or materials normally held by such Grantor for such
purpose, (ii) will, at its own expense, endeavor to collect, as and
when due, all amounts due with respect to any of the Collateral,
including the taking of such action with respect to such collection as
the Administrative Agent may reasonably request or, in the absence of
such request, as such Grantor may deem advisable, and (iii) may grant,
in the ordinary course of business, to any party obligated on any of
the Collateral, any rebate, refund or allowance to which such party may
be lawfully entitled, and may accept, in connection therewith, the
return of goods, the sale or lease of which shall have given rise to
such Collateral. The Administrative Agent, however, may (subject to
Section 7.2.6 of the Credit Agreement), at any time during the
continuance of an Event of Default, whether before or after any
revocation of such power and authority or the maturity of any of the
Secured Obligations, notify any parties obligated on any of the
Collateral to make payment to the Administrative Agent of any amounts
due or to become due thereunder and enforce collection of any of the
Collateral by suit or otherwise and surrender, release, or exchange all
or any part thereof, or compromise or extend or renew for any period
(whether or not longer than the original period) any indebtedness
thereunder or evidenced thereby. Upon request of the Administrative
Agent, such Grantor will (subject to Section 7.2.6 of the Credit
Agreement), at its own expense, notify any parties obligated on any of
the Collateral to make payment to the Administrative Agent of any
amounts due or to become due thereunder.
<PAGE>
(b) The Administrative Agent is authorized, during the
continuation of an Event of Default, to endorse, in the name of such
Grantor, any item, howsoever received by the Administrative Agent,
representing any payment on or other proceeds of any of the Collateral.
(c) Such Grantor will not change its Federal Employer
Identification Number unless the Grantor notifies the Administrative
Agent of any change in writing at least 30 days prior to the date of
such change and executes such additional security agreements and
financing statements as may be reasonably requested by the
Administrative Agent.
SECTION IV.1.4. As to Intellectual Property Collateral.
(a) Such Grantor shall not, unless such Grantor shall
reasonably and in good faith determine (and notice of such
determination shall have been delivered to the Administrative Agent)
that any of the Patent Collateral is not of material economic value to
such Grantor, do any act, or omit to do any act, whereby any of the
Patent Collateral may lapse or become abandoned or dedicated to the
public or unenforceable.
(b) Such Grantor shall not, and shall not permit any of its
licensees to, unless such Grantor shall reasonably and in good faith
determine (and notice of such determination shall have been delivered
to the Administrative Agent) that any of the Trademark Collateral is
not of material economic value to such Grantor,
(i) fail to continue to use any of the Trademark
Collateral in order to maintain all of the material Trademark
Collateral in full force free from any claim of abandonment
for non-use,
(ii) fail to maintain as in the past, in all material
respects, the quality of products and services offered under
all of the Trademark Collateral,
(iii) fail to employ all of the material Trademark
Collateral registered with any Federal or state or foreign
authority with an appropriate notice of such registration,
(iv) adopt or use any other Trademark which is
confusingly similar or a colorable imitation of any of the
material Trademark Collateral,
(v) use any of the material Trademark Collateral
registered with any Federal or state or foreign authority
except for the uses for which registration or application for
registration of all of the Trademark Collateral has been made,
and
(vi) do or permit any act or knowingly omit to do any
act whereby any of the material Trademark Collateral would
reasonably be expected to lapse or become invalid or
unenforceable.
(c) Such Grantor shall not, unless such Grantor shall
reasonably and in good faith determine (and notice of such
determination shall have been delivered to the Administrative Agent)
that any of the Copyright Collateral or any of the Trade Secrets
Collateral is not of material economic value to such Grantor, do or
permit any act or knowingly omit to do any act whereby any of the
Copyright Collateral or any of the Trade Secrets Collateral would
reasonably be expected to lapse or become invalid or unenforceable or
placed in the public domain except upon expiration of the end of an
unrenewable term of a registration thereof.
<PAGE>
(d) Such Grantor shall notify the Administrative Agent
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of the Intellectual Property
Collateral would reasonably be expected to become abandoned or
dedicated to the public or placed in the public domain or invalid or
unenforceable, or of any material adverse determination or development
(including the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark Office,
the United States Copyright Office or any foreign counterpart thereof
or any court) regarding such Grantor's ownership of any of the material
Intellectual Property Collateral, its right to register the same or to
keep and maintain and enforce the same.
(e) In no event shall such Grantor or any of its agents,
employees, designees or licensees file an application for the
registration of any Intellectual Property Collateral with the United
States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency in any other country or any political
subdivision thereof, unless it promptly informs the Administrative
Agent, and upon request of the Administrative Agent, executes and
delivers any and all agreements, instruments, documents and papers as
the Administrative Agent may reasonably request to evidence the
Administrative Agent's security interest for the benefit of the Lender
Parties in such Intellectual Property Collateral and the goodwill and
general intangibles of such Grantor relating thereto or represented
thereby.
(f) Such Grantor shall take all commercially reasonable steps,
including in any proceeding before the United States Patent and
Trademark Office, the United States Copyright Office or any similar
office or agency in any other country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, any material Intellectual Property Collateral,
including the filing of applications for renewal, affidavits of use,
affidavits of incontestability and opposition, interference and
cancellation proceedings and the payment of fees and taxes (except to
the extent that dedication, abandonment or invalidation is permitted
under the foregoing clauses (a), (b) and (c)).
SECTION IV.1.5. Insurance. Such Grantor will maintain or cause to be
maintained with responsible and reputable insurance carriers licensed to write
insurance, insurance with respect to the Equipment and Inventory against such
casualties and contingencies and of such types and in such amounts as is
customary in the case of similar businesses and will, upon the request of the
Administrative Agent, furnish a certificate of a reputable insurance broker
setting forth the nature and extent of all insurance maintained by such Grantor
in accordance with this Section. Without limiting the foregoing, each Grantor
further agrees as follows:
(a) Each policy for property insurance shall show the
Administrative Agent as loss payee.
(b) Each policy for liability insurance shall show the
Administrative Agent as an additional insured.
(c) With respect to each life insurance policy, such Grantor
shall execute and deliver to the Administrative Agent a collateral
assignment, notice of which has been acknowledged in writing by the
insurer.
(d) Each insurance policy shall provide that at least 30 days'
prior written notice of cancellation or of lapse shall be given to the
Administrative Agent by the insured.
<PAGE>
(e) Such Grantor shall, if so requested by the Administrative
Agent, deliver to the Administrative Agent a copy of each insurance
policy.
(f) All payments in respect of property insurance and life
insurance shall be paid to such Grantor.
SECTION IV.1.6. Transfers and Other Liens. The Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except Inventory in the
ordinary course of business or as permitted by the Credit Agreement; or
(b) create or suffer to exist any Lien or other charge or
encumbrance upon or with respect to any of the Collateral to secure
Indebtedness of any Person or entity, except for the security interest
created by this Security Agreement and except as permitted by the
Credit Agreement.
SECTION IV.1.7. Further Assurances, etc. Such Grantor agrees that, from
time to time at its own expense, such Grantor will promptly execute and deliver
all further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Administrative Agent may request, in order
to perfect, preserve and protect any security interest granted or purported to
be granted hereby or to enable the Administrative Agent to exercise and enforce
its rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, each Grantor will
(a) mark conspicuously each document included in the
Inventory, each chattel paper included in the Receivables and each
Related Contract and, at the request of the Administrative Agent, each
of its records pertaining to the Collateral with a legend, in form and
substance satisfactory to the Administrative Agent, indicating that
such document, chattel paper, Related Contract or Collateral is subject
to the security interest granted hereby;
(b) if any Receivable shall be evidenced by a promissory note
or other instrument, negotiable document or chattel paper, deliver and
pledge to the Administrative Agent hereunder such promissory note,
instrument, negotiable document or chattel paper duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all
in form and substance satisfactory to the Administrative Agent;
(c) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or
notices (including, without limitation, any assignment of claim form
under or pursuant to the federal assignment of claims statute, 31
U.S.C. ss. 3726, any successor or amended version thereof or any
regulation promulgated under or pursuant to any version thereof), as
may be necessary or desirable, or as the Administrative Agent may
request, in order to perfect and preserve the security interests and
other rights granted or purported to be granted to the Administrative
Agent hereby; and
(d) furnish to the Administrative Agent, from time to time at
the Administrative Agent's request, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Administrative Agent may
reasonably request, all in reasonable detail.
<PAGE>
With respect to the foregoing and the grant of the security interest hereunder,
such Grantor hereby authorizes the Administrative Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of such Grantor where permitted
by law. A carbon, photographic or other reproduction of this Security Agreement
or any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION V.1. Administrative Agent Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints the Administrative Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time in the
Administrative Agent's discretion, to take any action and to execute any
instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Security Agreement, including, without
limitation:
(a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above;
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Administrative Agent with respect to any of
the Collateral; and
(d) to perform the affirmative obligations of any Grantor
hereunder (including all obligations of such Grantor pursuant to
Section 4.1.7).
Each Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION V.2. Administrative Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be jointly and
severally payable by the Grantors pursuant to Section 6.2.
SECTION V.3. Administrative Agent Has No Duty. In addition to, and not
in limitation of, Section 2.5, the powers conferred on the Administrative Agent
hereunder are solely to protect its interest (on behalf of the Lender Parties)
in the Collateral and shall not impose any duty on it to exercise any such
powers. Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
<PAGE>
SECTION V.4. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, that the Administrative Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of any of the Collateral, if it takes such action for that purpose
as such Grantor reasonably requests in writing at times other than upon the
occurrence and during the continuance of any Event of Default, but failure of
the Administrative Agent to comply with any such request at any time shall not
in itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION VI.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the U.C.C. (whether or not the U.C.C.
applies to the affected Collateral) and also may
(i) require each Grantor to, and each Grantor hereby
agrees that it will, at its expense and upon request of the
Administrative Agent forthwith, assemble all or part of the
Collateral as directed by the Administrative Agent and make it
available to the Administrative Agent at a place to be
designated by the Administrative Agent which is reasonably
convenient to both parties; and
(ii) without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Administrative Agent's
offices or elsewhere, for cash, on credit or for future
delivery (without assumption of any credit risk), and upon
such other terms as the Administrative Agent may deem
commercially reasonable. Each Grantor agrees that, to the
extent notice of sale shall be required by law, at least ten
days' prior notice to such Grantor of the time and place of
any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The
Administrative Agent shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given.
The Administrative Agent may adjourn any public or private
sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(b) All cash proceeds received by the Administrative Agent in
respect of any sale of, collection from, or other realization upon all
or any part of the Collateral may, in the discretion of the
Administrative Agent, be held by the Administrative Agent as collateral
for, and/or then or at any time thereafter applied (after payment of
any amounts payable to the Administrative Agent pursuant to Section
6.2) in whole or in part by the Administrative Agent for the ratable
benefit of the Lender Parties against, all or any part of the Secured
Obligations in the following order:
(i) first, to payment of the expenses of such sale or
other realization including reasonable compensation to the
Administrative Agent and its agents and counsel, and all
expenses, liabilities and advances incurred or made by the
Administrative Agent in connection therewith, and any other
<PAGE>
unreimbursed expenses for which the Administrative Agent is to
be reimbursed pursuant to Sections 11.3 and 11.4 of the Credit
Agreement or Section 6.2 hereof and unpaid fees owing to the
Administrative Agent under the Credit Agreement;
(ii) second, to the ratable payment of accrued but
unpaid interest on the Loans under the Credit Agreement;
(iii) third, to the ratable (i) payment of unpaid
principal of the Loans under the Credit Agreement, (ii)
redemption of "credit exposure" under Rate Protection
Agreements ("credit exposure" being determined at such time in
accordance with the customary methods of calculating credit
exposure under similar arrangements by the counterparty to
such arrangements), and (iii) cash collateralization of Letter
of Credit Outstandings;
(iv) fourth, to the ratable payment of all other
amounts payable by the Obligors under the Credit Agreement;
and
(v) fifth, to the ratable payment of all other
Secured Obligations, and then to be held as additional
collateral security until the Termination Date, until all
Secured Obligations shall have been paid in full.
The Administrative Agent may make distributions hereunder in cash or in kind or,
on a ratable basis, in any combination thereof. Any surplus of such cash or cash
proceeds held by the Administrative Agent and remaining after payment in full of
all the Secured Obligations shall be paid over to the Grantors or to whomsoever
may be lawfully entitled to receive such surplus.
SECTION VI.2. Indemnity and Expenses.
(a) The Grantors hereby jointly and severally indemnify the
Administrative Agent and the other Lender Parties from and against any
and all claims, losses and liabilities arising out of or resulting from
this Security Agreement (including, without limitation, enforcement of
this Security Agreement), except claims, losses or liabilities
resulting from the Administrative Agent's gross negligence or wilful
misconduct.
(b) The Grantors jointly and severally will, upon demand, pay
to the Administrative Agent the amount of any and all reasonable
expenses, including the reasonable fees and disbursements of its
counsel and of any experts and agents, which the Administrative Agent
may incur in connection with
(i) the administration of this Security Agreement,
(ii) the custody, preservation, use or operation of,
or the sale of, collection from, or other realization upon,
any of the Collateral,
(iii) the exercise or enforcement of any of the
rights of the Administrative Agent or the other Lender Parties
hereunder, or
(iv) the failure by any Grantor to perform or observe
any of the provisions hereof.
<PAGE>
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION VII.1. Loan Document; Counterparts. This Security Agreement is
a Loan Document executed pursuant to the Credit Agreement and shall (unless
otherwise expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof, and may be executed in
separate counterparts.
SECTION VII.2. Amendments; etc. No amendment to or waiver of any
provision of this Security Agreement nor consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Administrative Agent (acting with the requisite consent of the
Lenders as provided in the Credit Agreement) and such Grantor, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION VII.3. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including telecopier
communication) and, if to any Grantor, mailed, telecopied or delivered to it,
addressed to it at the address as set forth on Schedule III of the Credit
Agreement, if to the Administrative Agent, mailed, telecopied or delivered to
it, addressed to it at the address of the Administrative Agent as specified in
the Credit Agreement, or as to either party at such other address as shall be
designated by such party in a written notice to each other party complying as to
delivery with the terms of this Section. Any notice, if mailed and properly
addressed and sent return receipt requested with postage prepaid, shall be
deemed given three Business Days after posting; any notice, if sent by prepaid
overnight express shall be deemed delivered on the next Business Day; any
notice, if transmitted by telecopier, shall be deemed given when sent, with
confirmation of receipt; and any notice, if transmitted by hand, shall be deemed
received when delivered.
SECTION VII.4. Section Captions. Section captions used in this Security
Agreement are for convenience of reference only, and shall not affect the
construction of this Security Agreement.
SECTION VII.5. Severability. Wherever possible each provision of this
Security Agreement shall be interpreted in such 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 such 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.
SECTION VII.6. Governing Law, Entire Agreement, etc. THIS SECURITY
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK. THIS SECURITY AGREEMENT AND THE OTHER LOAN
DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN
OR ORAL, WITH RESPECT THERETO.
SECTION VII.7. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
SECURITY AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
<PAGE>
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR ANY GRANTOR MAY BE
BROUGHT AND MAINTAINED IN ANY UNITED STATES FEDERAL OR NEW YORK STATE COURTS
SITTING IN THE CITY OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURTS SITTING
IN THE CITY OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH
ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION. EACH GRANTOR FURTHER IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH GRANTOR HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY
GRANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT
OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR
TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF
OR ITS PROPERTY, SUCH GRANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT
OF ITS OBLIGATIONS UNDER THIS SECURITY AGREEMENT.
SECTION VII.8. Waiver of Jury Trial. THE LENDER PARTIES AND EACH
GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS SECURITY AGREEMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE LENDER PARTIES OR ANY GRANTOR. EACH GRANTOR ACKNOWLEDGES AND
AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION
(AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY)
AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO
THE CREDIT AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT. IN NO EVENT SHALL ANY
LENDER PARTY BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED IN
CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY.
<PAGE>
IN WITNESS WHEREOF, each Grantor has caused this Security Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
B.W. ELLIOTT MANUFACTURING CO., LLC,
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
HUDSON LOCK, LLC,
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
ESP LOCK PRODUCTS, LLC,
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
GITS MANUFACTURING COMPANY, LLC,
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
ATLANTIC GUEST, INC.,
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
<PAGE>
MARINE INDUSTRIES COMPANY, LLC
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
TURNER ELECTRIC, LLC
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
KCLLC HOLDINGS, INC.,
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
VFC ACQUISITION COMPANY, INC.,
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
GUEST BUILDING, L.L.C., as a Grantor
by ATLANTIC GUEST, INC., its sole member
By: /s/ Alan L. Rivera
----------------------------------------
Title:
KEYHOLD, INC.,
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
<PAGE>
KEY COMPONENTS, INC.,
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
KCI MERGER CORP.,
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
ACME ELECTRIC CORPORATION,
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
ACME-URDC, INC.,
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
ACME ELECTRIC MEXICO HOLDINGS I, INC.,
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
ACME ELECTRIC MEXICO HOLDINGS I, INC.,
as a Grantor
By: /s/ Alan L. Rivera
----------------------------------------
Title:
FIRST UNION NATIONAL BANK,
as Administrative Agent
By: /s/ Robert Brown
----------------------------------------
Title:
