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EXHIBIT 4.9
SUBSIDIARY SECURITY AGREEMENT
This SUBSIDIARY SECURITY AGREEMENT (this "AGREEMENT"), dated as of
June 20, 1995, made by [NAME OF SUBSIDIARY], a ________ corporation (the
"GRANTOR"), in favor of BT COMMERCIAL CORPORATION, a Delaware corporation
("BTCC"), in its capacity as collateral agent (in such capacity, the
"COLLATERAL AGENT") pursuant to that certain Intercreditor and Collateral
Agency Agreement of even date herewith (as amended, restated, supplemented or
otherwise modified from time to time, the "COLLATERAL AGENCY AGREEMENT") among
the Collateral Agent, certain "GUARANTIED PARTIES" (as defined in the
Subsidiary Guaranty hereinafter defined) and acknowledged and consented to by
Envirodyne Industries, Inc., a Delaware corporation (the "PARENT").
W I T N E S S E T H :
WHEREAS, pursuant to the "FINANCING AGREEMENTS" (as defined in the
Subsidiary Guaranty), the Parent is about to incur the "SECURED INDEBTEDNESS"
(as defined in the Collateral Agency Agreement); and
WHEREAS, Grantor acknowledges that in view of the business relations
between Grantor and Parent, the extensions of credit and other financial
accommodations contemplated by the Financing Agreements will inure to the
benefit of Grantor and it is in the direct interest and to the direct advantage
of Grantor that it execute and deliver this Agreement;
WHEREAS, pursuant to that certain Guaranty Agreement of even date
herewith (the "SUBSIDIARY GUARANTY"), made by the Grantor in favor of the
Collateral Agent on behalf and for the benefit of the Guarantied Parties, the
Grantor has guarantied the full and prompt payment and performance of the
"GUARANTIED OBLIGATIONS" (as defined in the Subsidiary Guaranty), including the
indebtedness and other obligations of Parent under the respective Financing
Agreements;
WHEREAS, it is a condition precedent to the making of the extensions
of credit and other financial accommodations contemplated by the respective
Financing Agreements that the Grantor shall have entered into this Agreement;
NOW, THEREFORE, in consideration of the premises and in order to
induce the Guarantied Parties and the other holders of the Guarantied
Obligations from time to time to make the extensions of credit and other
financial accommodations contemplated by the respective Financing Agreements,
the Grantor hereby agrees with the Collateral Agent on behalf and for the
benefit of the Guarantied Parties as follows:
1. DEFINED TERMS. Capitalized terms used in this Agreement but
not otherwise defined herein shall have the respective meanings
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ascribed to such terms in the Subsidiary Guaranty. As used in this Agreement,
the following terms have the meanings specified below (such meanings being
equally applicable to both the singular and plural forms of the terms defined):
"ACCOUNT" means any "account," as such term is defined in Section 9-106
of the UCC, now owned or hereafter acquired by the Grantor and, in any
event, includes, without limitation, (i) all accounts receivable, book
debts and other forms of obligations (other than forms of obligations
evidenced by Chattel Paper, Documents or Instruments) now owned or
hereafter received or acquired by or belonging or owing to the Grantor
(including, without limitation, under any trade name, style or division
thereof) whether arising out of goods sold or services rendered by the
Grantor or from any other transaction, whether or not the same involves
the sale of goods or services by the Grantor (including, without
limitation, any such obligation which might be characterized as an
account or contract right under the UCC), (ii) all of Grantor's rights
in, to and under all purchase orders or receipts now owned or hereafter
acquired by it for goods or services, and all of Grantor's rights to any
goods represented by any of the foregoing (including, without
limitation, unpaid seller's rights of rescission, replevin, reclamation
and stoppage in transit and rights to returned, reclaimed or repossessed
goods), (iii) all moneys due or to become due to the Grantor under all
contracts for the sale of goods or the performance of services or both
by the Grantor (whether or not yet earned by performance on the part of
the Grantor or in connection with any other transaction), now in
existence or hereafter occurring, including, without limitation, the
right to receive the proceeds of said purchase orders and contracts, and
(iv) all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.
"ACCOUNT DEBTOR" means any "account debtor," as such term is defined in
Section 9-105(1)(a) of the UCC.
"CHATTEL PAPER" means any "chattel paper," as such term is defined in
Section 9-105(1)(b) of the UCC, now owned or hereafter acquired by the
Grantor.
"COLLATERAL" has the meaning assigned to such term in Section 2 of this
Agreement.
"CONTRACTS" means all contracts, undertakings or other agreements
(other than Chattel Paper, Documents or Instruments) in or under which
the Grantor may now or hereafter have any right, title or interest,
including, without limitation, with respect to an Account, any agreement
relating to the terms of payment or the terms of performance thereof.
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"DOCUMENTS" means any "document," as such term is defined in Section
9-105(1)(f) of the UCC, now owned or hereafter acquired by the Grantor.
"EQUIPMENT" means any "equipment," as such term is defined in Section
9-109(2) of the UCC, now owned or hereafter acquired by the Grantor and,
in any event, includes, without limitation, all machinery, equipment,
furnishings, fixtures, vehicles, computers and other electronic
data-processing and office equipment now owned or hereafter acquired by
the Grantor and any and all additions, substitutions and replacements of
any of the foregoing, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or
affixed thereto.
"GECC SECURITY AGREEMENT" has the meaning assigned to such term in the
Collateral Agency Agreement.
"GENERAL INTANGIBLES" means any "general intangibles," as such term is
defined in Section 9-106 of the UCC, now owned or hereafter acquired by
the Grantor and, in any event, includes, without limitation, all
customer lists, trademarks, patents, rights in intellectual property,
licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether patented or patentable or
not) and technical information, procedures, designs, knowledge,
know-how, software, data bases, data, skill, expertise, experience,
processes, models, drawings, materials and records, goodwill, rights of
indemnification and all right, title and interest which the Grantor now
or hereafter has in or under any Contract, now owned or hereafter
acquired by the Grantor.
"INSTRUMENT" means any "instrument," as such term is defined in Section
9-105(1)(i) of the UCC, now owned or hereafter acquired by the Grantor,
other than instruments that constitute or are a part of a group of
writings that constitute Chattel Paper.
"INVENTORY" means any "inventory," as such term is defined in Section
9-109(4) of the UCC, now owned or hereafter acquired by the Grantor, and
wherever located, and, in any event, includes, without limitation, all
inventory, merchandise, goods and other personal property now owned or
hereafter acquired by the Grantor which are held for sale or lease or
are furnished or are to be furnished under a contract of service or
which constitute raw materials, work in process or materials used or
consumed or to be used or consumed in the Grantor's business, or the
processing, packaging, delivery or shipping of the same, and all
finished goods.
"LIEN" means any mortgage, pledge, lien, charge, security interest,
conditional sale or other title retention agreement or other encumbrance
of any kind or description, including, without limitation, any agreement
to give or ▇▇▇▇▇ ▇ ▇▇▇▇.
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"PERMITTED LIENS" has the meaning assigned to such term in any of the
Financing Agreements.
"PROCEEDS" means "proceeds," as such term is defined in Section
9-306(1) of the UCC, and, in any event, shall include, without
limitation, (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to the Grantor from time to time with
respect to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to the Grantor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental
authority (or any Person acting under color of governmental authority),
and (iii) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of Illinois; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the Collateral Agent's security
interest in any Collateral is governed by the Uniform Commercial Code as
in effect in a jurisdiction other than the State of Illinois, the term
"UCC" shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions
related to such provisions.
2. GRANT OF SECURITY INTEREST.
(a) As collateral security for the full and prompt payment when
due (whether at stated maturity, by acceleration or otherwise) of, and the
performance and observance of, all the Guarantied Obligations and to induce the
Guarantied Parties to make the extensions of credit and other financial
accommodations contemplated by the respective Financing Agreements, the Grantor
hereby assigns, conveys, mortgages, pledges, hypothecates and transfers to the
Collateral Agent, on behalf and for the benefit of the Guarantied Parties, and
hereby grants to the Collateral Agent, on behalf and for the benefit of the
Guarantied Parties, a lien upon and security interest in, all of the Grantor's
right, title and interest in, to and under the following (all of which being
hereinafter collectively called the "COLLATERAL"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
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(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all other goods and personal property of the Grantor
whether tangible or intangible or whether now owned or
hereafter acquired by the Grantor and wherever located; and
(x) to the extent not otherwise included, all Proceeds of
each of the foregoing and all accessions to, substitutions and
replacements for, and rents, profits and products of, each of
the foregoing;
provided, however, that, notwithstanding anything to the contrary contained in
this Section 2(a), the Collateral shall not include any Contract or General
Intangible if (and solely to the extent and for so long as) such Contract or
General Intangible expressly prohibits Grantor from granting any Lien thereon.
(b) In addition, as collateral security for the full and prompt
payment when due (whether at stated maturity, by acceleration or otherwise) of,
and the performance and observance of, all the Guarantied Obligations and to
induce the Guarantied Parties to make the extensions of credit and other
financial accommodations contemplated by the respective Financing Agreements,
each Guarantied Party is hereby granted a lien upon and security interest in
all property of the Grantor held by such Guarantied Party, including, without
limitation, all property of every description, now or hereafter in the
possession or custody of or in transit to such Guarantied Party for any
purpose, including safekeeping, collection or pledge, for the account of the
Grantor, or as to which the Grantor may have any right or power.
3. RIGHTS OF THE GUARANTIED PARTIES; LIMITATIONS ON GUARANTIED
PARTIES' OBLIGATIONS.
(a) It is expressly agreed by the Grantor that, anything herein to
the contrary notwithstanding, the Grantor shall remain liable under each of the
Contracts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder and the Grantor shall perform all of
its duties and obligations thereunder, all in accordance with and pursuant to
the terms and provisions of each such Contract. Neither the Collateral Agent
nor any other Guarantied Party shall have any obligation or liability under any
Contract by reason of or arising out of this Agreement or the granting of a
security interest in any Contract to the Collateral Agent on behalf and for the
benefit of the Guarantied Parties or the receipt by the Collateral Agent or any
other Guarantied Party of any payment relating to any Contract pursuant hereto,
nor shall the Collateral Agent or any other Guarantied Party be required or
obligated in any manner to perform or fulfill any of the obligations of the
Grantor under or pursuant
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to any Contract, or to make any payment, or to make any inquiry as to the
nature or the sufficiency of any payment received by it or the sufficiency of
any performance by any party under any Contract, or to present or file any
claim, or to take any action to collect or enforce any performance or the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
(b) On or prior to the date hereof, Grantor shall promptly
establish lock box and/or blocked accounts (collectively, "BLOCKED ACCOUNTS")
in Grantor's name with such banks as are acceptable to the Collateral Agent
("COLLECTING BANKS"), subject to irrevocable instructions in form and substance
satisfactory to the Collateral Agent, to which Account Debtors shall directly
remit all payments on Accounts and in which the Grantor will immediately
deposit all cash payments made for Inventory or other cash payments
constituting proceeds of Collateral in the identical form in which such payment
was made, whether by cash or check. In addition, the Collateral Agent, for the
benefit of the Guarantied Parties, may establish one or more depository
accounts at each Collecting Bank or at a centrally located bank (collectively,
the "COLLATERAL AGENT'S DEPOSITORY ACCOUNT"). From and after receipt by any
Collecting Bank of written notice from the Collateral Agent to such Collecting
Bank that an Event of Default has occurred, or Parent is at such time required
and has failed to make a payment pursuant to Section 4.6(a) of the Letter of
Credit Facility Agreement, until such time as the Collateral Agent shall notify
such Collecting Bank otherwise, all amounts held or deposited from time to time
in the Blocked Accounts held by such Collecting Bank shall be transferred to
the Collateral Agent's Depository Account; provided that, prior to such
Collecting Bank's receipt of such notice, such amounts shall be automatically
transferred to one or more of the Grantor's operating accounts for unrestricted
use by the Grantor, subject to the terms and provisions of the Financing
Agreements. The Grantor, and any of its affiliates, employees, agents or other
Persons acting for or in concert with the Grantor, shall, acting as trustee for
the Collateral Agent and the Guarantied Parties, receive, as the sole and
exclusive property of the Collateral Agent for the benefit of the Guarantied
Parties, any monies, checks, notes, drafts or any other payments relating to
and/or representing proceeds of Accounts or other Collateral which come into
the possession or under the control of the Grantor or any affiliates,
employees, agents or other Persons acting for or in concert with the Grantor,
and immediately upon receipt thereof, the Grantor or such Persons shall deposit
the same or cause the same to be deposited, in kind, in a Blocked Account. The
Collateral Agent shall apply all or a part of the funds on deposit in the
Collateral Agent's Depository Account to the Guarantied Obligations in
accordance with the requirements of Section 8(d) hereof. Any amounts contained
in the Collateral Agent's Depository Account or the Blocked Accounts or
otherwise received by the Collateral Agent in excess of the Guarantied
Obligations then due and payable shall be the property of the Grantor and shall
promptly be paid over to the Grantor.
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(c) If an Event of Default has occurred and is continuing, at the
request of the Collateral Agent, the Grantor shall deliver to the Collateral
Agent all original and other documents evidencing, and relating to, the sale
and delivery of Inventory or the performance of labor or service which created
Accounts, including, without limitation, all original orders, invoices, and
shipping receipts; and, prior to the occurrence of an Event of Default the
Grantor shall deliver photocopies thereof to the Collateral Agent at its
request.
(d) The Collateral Agent may at any time, upon the occurrence and
during the continuance of any Event of Default, upon concurrent notice to the
Grantor of its intention to do so, notify Account Debtors of the Grantor,
parties to Contracts of the Grantor, obligors of Instruments of the Grantor and
obligors in respect of Chattel Paper of the Grantor that the Accounts and the
right, title and interest of the Grantor in and under such Accounts, Contracts,
such Instruments and such Chattel Paper have been assigned to the Collateral
Agent and that payments shall be made directly to the Collateral Agent. Upon
the occurrence of an Event of Default, at the request of the Collateral Agent,
the Grantor will so notify such Account Debtors, parties to such Contracts,
obligors of such Instruments and obligors in respect of such Chattel Paper.
Upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent may in its own name or in the name of others communicate with
such Account Debtors, parties to such Contracts, obligors of such Instruments
and obligors in respect of such Chattel Paper to verify with such Persons to
the Collateral Agent's satisfaction the existence, amount and terms of any
Accounts, Contracts, Instruments or Chattel Paper.
(e) Upon reasonable prior notice to the Grantor (unless an Event
of Default has occurred and is continuing, in which case no notice is
necessary), the Collateral Agent shall have the right to make test
verifications of the Accounts and physical verifications of the Inventory in
any manner and through any medium that it considers advisable, and the Grantor
agrees to furnish all such assistance and information as the Collateral Agent
may reasonably require in connection therewith. The Grantor, at its own cost
and expense, will prepare and deliver to the Collateral Agent, from time to
time promptly upon the Collateral Agent's request, the following reports: (i)
a reconciliation of all its Accounts, (ii) an aging of all its Accounts, (iii)
trial balances, (iv) a test verification of such Accounts as the Collateral
Agent may request, and (v) a certificate or certificates of an officer of
Grantor certifying as to the foregoing. The Grantor at its expense will
prepare and deliver to the Collateral Agent the results of the annual physical
verification of its Inventory made or observed by such accountants.
4. REPRESENTATIONS AND WARRANTIES. The Grantor hereby represents
and warrants to the Guarantied Parties as follows:
(a) The Grantor is the sole owner of each item of the Collateral
in which it purports to grant a security interest
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hereunder, having good title thereto, free and clear of any and all Liens,
except for the security interests granted pursuant to this Agreement, the GECC
Security Agreement, other Permitted Liens and Liens securing indebtedness to be
paid from the proceeds of the First Priority Notes on or immediately following
the date hereof. No material amounts payable under or in connection with any
of its Accounts or Contracts are evidenced by Instruments which have not been
delivered to the Collateral Agent.
(b) No effective security agreement, financing statement,
equivalent security or Lien instrument or continuation statement covering all
or any part of the Collateral is on file or of record in any public office,
except such as may have been filed by the Grantor in favor of the Collateral
Agent pursuant to this Agreement or such as relate to other Permitted Liens or
Liens securing indebtedness to be paid from the proceeds of the First Priority
Notes on or immediately following the date hereof.
(c) Assuming appropriate financing statements have been filed in
the jurisdictions listed on SCHEDULE I hereto, appropriate filings have been
made with the United States Patent and Trademark Office and the United States
Copyright Office, appropriate delivery has been made of any and all
Instruments, and, solely with respect to Chattel Paper, Instruments and
vehicles, all other appropriate actions have been taken, this Agreement is
effective to create a valid and continuing first priority Lien on, and security
interest in, the Collateral prior to all other Liens except Permitted Liens.
(d) The Grantor's principal place of business and the place where
its records concerning the Collateral are kept and the location of its
Inventory and Equipment are set forth on SCHEDULE II hereto.
(e) The amount represented by the Grantor to the Collateral Agent
from time to time as owing by each Account Debtor or by all Account Debtors in
respect of the Accounts of the Grantor will at such time be the correct amount
actually and unconditionally owing by such Account Debtors thereunder.
(f) There are no preemptive or other outstanding rights, options,
warrants, conversion rights or similar agreements or understandings for the
purchase or acquisition from Grantor of any shares of capital stock or other
securities of Grantor.
5. COVENANTS. The Grantor covenants and agrees with the
Collateral Agent and the Guarantied Parties that from and after the date of
this Agreement and until the Guarantied Obligations are fully satisfied:
(a) Further Documentation; Pledge of Instruments. At any time and
from time to time, upon the written request of the Collateral Agent, and at the
sole expense of the Grantor, the Grantor will promptly and duly execute and
deliver any and all such further instruments and documents and take such
further action as the Collateral Agent may reasonably deem desirable to obtain
the
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full benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, using its good faith reasonable efforts to
secure all consents and approvals necessary or appropriate for the assignment
to the Collateral Agent of any Contract held by the Grantor or in which the
Grantor has any rights not heretofore assigned, the filing of any financing or
continuation statements under the UCC with respect to the Liens and security
interests granted hereby, transferring Collateral to the Collateral Agent's
possession (if a security interest in such Collateral can be perfected by
possession) and placing the interest of the Collateral Agent as lienholder on
the certificate of title of any vehicle. The Grantor also hereby authorizes
the Collateral Agent to file any such financing or continuation statement
without the signature of the Grantor to the extent permitted by applicable law.
If any of the Collateral shall be or become evidenced by any Instrument, the
Grantor agrees to pledge such Instrument to the Collateral Agent and shall duly
endorse such Instrument in a manner satisfactory to the Collateral Agent and
deliver the same to the Collateral Agent.
(b) Maintenance of Records. The Grantor will keep and maintain at
its own cost and expense satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all
credits granted with respect to the Collateral and all other dealings with the
Collateral. At the Collateral Agent's request, the Grantor will ▇▇▇▇ its books
and records pertaining to the Collateral to evidence this Agreement and the
Lien and security interests granted hereby. If requested by the Collateral
Agent, all Chattel Paper will be marked with the following legend: "This
writing and the obligations evidenced or secured hereby are subject to the
security interest of BT Commercial Corporation, as Collateral Agent". If
requested by the Collateral Agent, the security interest of the Collateral
Agent shall be noted on the certificate of title of each vehicle. For the
Collateral Agent's and the Guarantied Parties' further security, the Grantor
agrees that the Collateral Agent shall have a special property interest in all
of the Grantor's books and records pertaining to the Collateral and, upon the
occurrence and during the continuance of any Event of Default, at the request
of the Collateral Agent the Grantor shall deliver and turn over any such books
and records to the Collateral Agent or to its representatives at any time on
demand of the Collateral Agent. Prior to the occurrence of an Event of Default
and upon reasonable notice from the Collateral Agent, the Grantor shall permit
any representative of the Collateral Agent to inspect such books and records
and will provide photocopies thereof to the Collateral Agent.
(c) Indemnification. In any suit, proceeding or action brought by
the Collateral Agent or any other Guarantied Party relating to any Account,
Chattel Paper, Contract, General Intangible or Instrument for any sum owing
thereunder, or to enforce any provision of any Account, Chattel Paper,
Contract, General Intangible or Instrument, the Grantor will save, indemnify
and keep each of the Collateral Agent and the Guarantied Parties
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harmless from and against all expense, loss or damage suffered by reason of any
defense, set-off, counterclaim, recoupment or reduction of liability whatsoever
of the obligor thereunder, arising out of a breach by the Grantor of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to, or in favor of, such obligor or its successors
from the Grantor, and all such obligations of the Grantor shall be and remain
enforceable against and only against the Grantor and shall not be enforceable
against the Collateral Agent or the Guarantied Parties; provided, however, that
the Grantor shall not have any obligation under this Section 5(c) to the
Collateral Agent or the Guarantied Parties with respect to any expense, loss or
damage caused by or resulting from the gross negligence or willful misconduct
of the Collateral Agent or the Guarantied Parties.
(d) Compliance with Laws, Etc. The Grantor will comply, in all
material respects, with all applicable requirements of law, contractual
obligations, commitments, instruments, licenses, permits and franchises
applicable to the Collateral, including, without limitation, all permits;
provided, however, that the Grantor shall not be deemed in default of this
Section 5(d) if all such non-compliances in the aggregate could not reasonably
be expected to have, in the sole opinion of Collateral Agent, a material
adverse effect on the business assets or condition (financial or otherwise) of
the Parent and its Subsidiaries taken as a whole.
(e) Payment of Taxes, Etc. (i) The Grantor will pay and discharge
before the same shall become delinquent, all federal, state, local and other
taxes and similar charges (other than immaterial state, local and foreign taxes
and similar charges) except where contested in good faith pursuant to Section
5(e)(ii).
(ii) The Grantor may in good faith contest, by proper legal
actions or proceedings, the validity or amount of any charges or claims arising
under Section 5(e)(i), provided that at the time of commencement of any such
action or proceeding, and during the pendency thereof (A) no Default or Event
of Default shall have occurred, (B) adequate reserves with respect thereto are
maintained on the books of the Grantor in accordance with generally accepted
accounting principles, in effect from time to time, (C) none of the assets of
the Grantor would be subject to forfeiture or loss or any Lien by reasons of
the institution or prosecution of such contest, (D) if such contest is
terminated or discontinued adversely to the Grantor, the Grantor will promptly
pay or discharge such contested charges or claims and all additional charges,
interest, penalties and expenses, if any, and will deliver to the Collateral
Agent evidence acceptable to the Collateral Agent of such compliance, payment
or discharge, and (E) the nonpayment or nondischarge thereof could not singly
or in the aggregate reasonably be expected to have, in the sole opinion of the
Collateral Agent, a material adverse effect on the business, assets or
condition (financial or otherwise) of the Parent and its Subsidiaries taken as
a whole.
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(f) Compliance with Terms of Accounts, Etc. In all material
respects, the Grantor will comply with and perform all obligations, covenants,
conditions and agreements with respect to any Account, Chattel Paper, Contract,
License and all other agreements to which it is a party or by which it is
bound.
(g) Limitation on Liens on Collateral. The Grantor will not
create, permit or suffer to exist, and will defend the Collateral against and
take such other action as is necessary to remove, any Lien on the Collateral
except Permitted Liens and Liens securing indebtedness to be paid from the
proceeds of the First Priority Notes on or immediately following the date
hereof, and will defend the right, title and interest of the Collateral Agent
and the Guarantied Parties in and to any of the Grantor's rights under the
Chattel Paper, Contracts, Documents, General Intangibles and Instruments and to
the Equipment and Inventory and in and to the Proceeds thereof against the
claims and demands of all Persons whomsoever.
(h) Limitations on Modifications of Accounts. Upon the occurrence
and during the continuance of any Event of Default, the Grantor will not,
without the Collateral Agent's prior written consent, grant any extension of
the time of payment of any of the Accounts, Chattel Paper or Instruments, or
compromise, compound or settle the same for less than the full amount thereof,
or release, wholly or partly, any Person liable for the payment thereof, or
allow any credit or discount whatsoever thereon.
(i) Maintenance of Insurance. The Grantor will maintain, with
financially sound and reputable companies, insurance policies (i) insuring its
Inventory and Equipment against loss by fire, explosion, theft and such other
casualties as are usually insured against by companies engaged in the same or
similar businesses and (ii) insuring the Grantor and the Collateral Agent
against liability for personal injury and property damage relating to Inventory
and Equipment, such policies to be in such amounts and against at least such
risks as are usually insured against in the same general area by companies
engaged in the same or a similar business, naming the Collateral Agent as an
additional insured with a lender loss payable clause in favor of the Collateral
Agent on behalf and for the benefit of the Guarantied Parties. The Grantor
shall, if so requested by the Collateral Agent, deliver to the Collateral Agent
as often as the Collateral Agent may reasonably request, a report of a
reputable insurance broker satisfactory to the Collateral Agent with respect to
the insurance on its Inventory and Equipment. All insurance with respect to
the Inventory and Equipment shall (i) contain a clause which provides that the
Collateral Agent's interest under the policy will not be invalidated by any act
or omission of, or any breach of warranty by, the insured, or by any change in
the title, ownership or possession of the insured property, or by the use of
the property for purposes more hazardous than is permitted in the policy, and
(ii) provide that no cancellation, reduction in amount or change in coverage
thereof shall be effective until at least ten days after receipt by the
Collateral Agent of written notice thereof.
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(j) Limitations on Disposition. The Grantor will not sell, lease,
transfer or otherwise dispose of any of the Collateral, or attempt or contract
to do so, except as expressly permitted by all of the Financing Agreements.
(k) Further Identification of Collateral. The Grantor will, if so
requested by the Collateral Agent, furnish to the Collateral Agent, as often as
the Collateral Agent reasonably requests, statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Collateral Agent may reasonably request, all in
reasonable detail.
(l) Notices. The Grantor will advise the Collateral Agent
promptly, in reasonable detail, (i) of any material Lien or claim made or
asserted against any of the Collateral and (ii) of the occurrence of any other
event which could reasonably be expected to have a material adverse effect on
the aggregate value of the property and assets of the Parent and its
Subsidiaries taken as a whole or in the security interests created hereunder.
(m) Right of Inspection. Upon reasonable notice to the Grantor
(unless an Event of Default has occurred and is continuing, in which case no
notice is necessary), the Collateral Agent shall at all times have full and
free access during normal business hours to all the books and records and
correspondence of the Grantor, and the Collateral Agent, or its
representatives, may examine the same, take abstracts therefrom and make
photocopies thereof, and the Grantor agrees to render to the Collateral Agent,
at the Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. Upon reasonable notice to the
Grantor (unless an Event of Default has occurred and is continuing, in which
case no notice is necessary), the Collateral Agent and its representatives
shall also have the right to enter into and upon any premises where any of the
Equipment or Inventory is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein.
(n) Maintenance of Equipment. The Grantor will keep and maintain
the Equipment, other than Equipment that has become obsolete, in good operating
condition, ordinary wear and tear excepted, sufficient for the continuation of
the business conducted by the Grantor on a basis consistent with past
practices, and the Grantor will provide all maintenance and service and all
repairs necessary for such purpose.
(o) Continuous Perfection. The Grantor will not change its name,
identity or corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith seriously misleading within
the meaning of Section 9-402(7) of the UCC (or any other then applicable
provision of the UCC) unless the Grantor shall have given the Collateral Agent
at least 30 days' prior written notice thereof and shall have taken all action
(or made arrangements to take such action substantially simultaneously with
such change if it is impossible to take such
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action in advance) necessary or reasonably requested by the Collateral Agent to
amend such financing statement or continuation statement so that it is not
seriously misleading. The Grantor will not change its principal place of
business or remove its records or change the location of its Inventory and
Equipment, each as set forth on Schedule II hereto, unless it gives the
Collateral Agent at least 30 days' prior written notice thereof and has taken
such action as is necessary to cause the security interest of the Collateral
Agent in the Collateral to continue to be perfected.
6. THE COLLATERAL AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) The Grantor hereby irrevocably constitutes and appoints the
Collateral Agent and any officer or agent thereof, with full, power of
substitution, as its true and lawful attorney-in-fact with full, irrevocable
power and authority in the place and stead of the Grantor and in the name of
the Grantor or in its own name, from time to time in the Collateral Agent's
discretion upon the occurrence and during the continuance of an Event of
Default, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute and deliver any and all documents
and instruments which the Collateral Agent may deem necessary or desirable to
accomplish the purposes of this Agreement and, without limiting the generality
of the foregoing, hereby grants the Collateral Agent the power and right, on
behalf of the Grantor, without notice to or assent by the Grantor to do the
following:
(i) to ask, demand, collect, receive and give acquittances
and receipts for any and all moneys due and to become due under any
Collateral and, in the name of the Grantor or in its own name or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other Instruments for the payment of
moneys due under any Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Collateral Agent for the purpose of collecting
any and all such moneys due under any Collateral whenever payable and to
file any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by the Collateral Agent
for the purpose of collecting any and all such moneys due under any
Collateral whenever payable;
(ii) to pay or discharge taxes, Liens, security interests
or other encumbrances levied or placed on or threatened against the
Collateral, to effect any repairs or maintain any insurance called for
by the terms of this Agreement and to pay all or any part of the
premiums therefor and the costs thereof; and
(iii) (A) to direct any party liable for any payment under
any of the Collateral to make payment of any and all moneys due, and to
become due thereunder, directly to the Collateral Agent or as the
Collateral Agent shall direct; (B)
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to receive payment of and receipt for any and all moneys, claims and
other amounts due, and to become due at any time, in respect of or
arising out of any Collateral; (C) to sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications and notices
in connection with Accounts and other Documents constituting or relating
to the Collateral; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction
to collect the Collateral or any part thereof and to enforce any other
right in respect of any Collateral; (E) to defend any suit, action or
proceeding brought against the Grantor with respect to any Collateral;
(F) to settle, compromise or adjust any suit, action or proceeding
described above and, in connection therewith, to give such discharges or
releases as the Collateral Agent may deem appropriate; (G) to license
or, to the extent permitted by an applicable license, sublicense,
whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any patent or trademark, throughout the world for
such term or terms, on such conditions, and in such manner, as the
Collateral Agent shall in its sole discretion determine; and (H)
generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as
though the Collateral Agent was the absolute owner thereof for all
purposes, and to do, at the Collateral Agent's option and the Grantor's
expense, at any time, or from time to time, all acts and things which
the Collateral Agent reasonably deems necessary to protect, preserve or
realize upon the Collateral and the Collateral Agent's and the
Guarantied Parties' Lien therein, in order to effect the intent of this
Agreement, all as fully and effectively as the Grantor might do.
(b) The Grantor hereby ratifies, to the extent permitted by law,
all that any said attorney shall lawfully do or cause to be done by virtue
hereof. The power of attorney granted pursuant to this Section 6, being
coupled with an interest, shall be irrevocable until the Guarantied Obligations
are fully paid and satisfied.
(c) The powers conferred on the Collateral Agent hereunder are
solely to protect the Collateral Agent's and the Guarantied Parties' interests
in the Collateral and shall not impose any duty upon either of them to exercise
any such powers. The Collateral Agent shall be accountable only for 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 the Grantor for any act or failure to act.
(d) The Grantor also authorizes the Collateral Agent, at any time
and from time to time upon the occurrence and during the continuance of any
Event of Default, (i) to communicate in its own name with any party to any
Contract with regard to the assignment of the right, title and interest of the
Grantor in and under the
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Contracts hereunder and other matters relating thereto and (ii) to execute, in
connection with the sale provided for in Section 8 hereof, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral.
7. PERFORMANCE BY THE COLLATERAL AGENT OF THE GRANTOR'S
OBLIGATIONS. If the Grantor fails to perform or comply with any of its
agreements contained herein and the Collateral Agent, as provided for by the
terms of this Agreement, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the reasonable expenses of the
Collateral Agent incurred in connection with such performance or compliance,
together with interest thereon at the highest rate then in effect in respect of
the Guarantied Obligations, shall be payable by the Grantor to the Collateral
Agent on demand and shall constitute Guarantied Obligations.
8. REMEDIES, RIGHTS UPON AN EVENT OF DEFAULT.
(a) If any Event of Default shall occur and be continuing, the
Collateral Agent may exercise in addition to all other rights and remedies
granted to it in this Agreement and in any other Collateral Document, all
rights and remedies of a secured party under the UCC. Without limiting the
generality of the foregoing, the Grantor expressly agrees that in any such
event the Collateral Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Grantor or any other Person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived to the maximum extent permitted by the UCC and other
applicable law), may forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, lease, assign,
give an option or options to purchase, or sell or otherwise dispose of and
deliver said Collateral (or contract to do so), or any part thereof, in one or
more parcels at public or private sale or sales, at any exchange or broker's
board or any of the Collateral Agent's offices or elsewhere at such prices as
it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Collateral Agent or any other Guarantied
Party shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of said Collateral so sold, free of any right or equity of
redemption, which equity of redemption the Grantor hereby releases. The
Grantor further agrees, at the Collateral Agent's request, to assemble the
Collateral and make it available to the Collateral Agent at places which the
Collateral Agent shall reasonably select, whether at the Grantor's premises or
elsewhere. The Collateral Agent shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, as provided
in Section 8(d) hereof, the Grantor remaining liable for any deficiency
remaining unpaid after such application, and only after so paying over such net
proceeds and after the payment by the Collateral Agent of any other amount
required by any provision of law, including Section 9-504(1)(c) of the UCC,
need the Collateral
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Agent account for the surplus, if any, to the Grantor. To the extent permitted
by applicable law, the Grantor waives all claims, damages, and demands against
the Guarantied Parties arising out of the repossession, retention or sale of
the Collateral. The Grantor agrees that the Collateral Agent need not give
more than ten days' notice of the time and place of any public sale or of the
time after which a private sale may take place and that such notice is
reasonable notification of such matters. The Grantor shall remain liable for
any deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all Guarantied Obligations, the Grantor also being liable
for the reasonable fees and expenses of any attorneys employed by the
Collateral Agent and the Guarantied Parties to collect such deficiency.
(b) The Grantor also agrees to pay all costs of the Collateral
Agent and the other Guarantied Parties, including, without limitation,
reasonable attorneys' fees, incurred in connection with the enforcement of any
of their respective rights and remedies hereunder.
(c) The Grantor hereby waives presentment, demand, protest or any
notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Agreement or any Collateral.
(d) The Proceeds of any sale, disposition or other realization
upon all or any part of the Collateral shall be distributed by the Collateral
Agent in the order of priorities set forth in the Collateral Agency Agreement.
(e) The Grantor also agrees that the Collateral Agent shall be
under no obligation to ▇▇▇▇▇▇▇▇ any assets in favor of the Grantor or any other
party or against or in payment of any or all of the Guarantied Obligations. To
the extent the Collateral Agent or the other Guarantied Parties enforce their
security interests or any Guarantied Party exercises its rights of setoff and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
9. LIMITATION ON THE GUARANTIED PARTIES' DUTY IN RESPECT OF
COLLATERAL. No Guarantied Party shall have any duty as to any Collateral in
its possession or control or in the possession or control of any agent or
nominee of it or any income thereon or as to the preservation of rights against
prior parties or any other rights pertaining thereto, except that each
Guarantied Party shall use reasonable care with respect to the Collateral in
its possession or under its control. Upon request of the Grantor, the
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Collateral Agent shall account for any moneys received by it in respect of any
foreclosure on or disposition of the Collateral.
10. NOTICES. Except as otherwise provided herein, all notices and
correspondences hereunder shall be in writing and sent by certified or
registered mail, return receipt requested, or by overnight delivery service,
with all charges prepaid, if to the Collateral Agent or any other Guarantied
Party, then to BT Commercial Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Credit Department, if to the Grantor, then to the
Grantor at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
General Counsel, or by facsimile transmission, promptly confirmed in writing
sent by first class mail, if to the Collateral Agent, or any other Guarantied
Party, at (▇▇▇) ▇▇▇-▇▇▇▇, and if to the Grantor, at (▇▇▇) ▇▇▇-▇▇▇▇. All such
notices and correspondence shall be deemed given (i) if sent by certified or
registered mail, three business days after being postmarked, (ii) if sent by
overnight delivery service, when received at the above stated addresses or when
delivery is refused and (iii) if sent by telex or facsimile transmission, when
receipt of such transmission is acknowledged.
11. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Grantor therefrom shall in
any event be effective unless the same shall be in writing and signed by the
Collateral Agent and Grantor, and then any such waiver or consent shall only be
effective in the specific instance and for the specific purpose for which
given.
12. NO WAIVER; REMEDIES.
(a) No failure on the part of Collateral Agent or any other
Guarantied Party to exercise, and no delay in exercising any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative, may
be exercised singly or concurrently, and are not exclusive of any remedies
provided by law or any of the Financing Agreements or other Collateral
Documents.
(b) Failure by Collateral Agent or any other Guarantied Party at
any time or times hereafter to require strict performance by the Grantor or any
other Person of any of the provisions, warranties, terms or conditions
contained in any of the Financing Agreements or other Collateral Documents now
or at any time or times hereafter executed by the Grantor or any such other
Person and delivered to any of the Guarantied Parties shall not waive, affect
or diminish any right of any of the Guarantied Parties at any time or times
hereafter to demand strict performance thereof, and such right shall not be
deemed to have been modified or waived by any course of conduct or knowledge of
any of the Guarantied Parties, or any agent, officer or employee of any
Guarantied Party.
13. SUCCESSORS AND ASSIGNS. This Agreement and all obligations of
the Grantor hereunder shall be binding upon the
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successors and assigns of the Grantor, and shall, together with the rights and
remedies of the Collateral Agent hereunder, inure to the benefit of the
Collateral Agent, the other Guarantied Parties, and their respective successors
and assigns.
14. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed
by, and be construed and interpreted in accordance with, the internal law of
the State of Illinois, without regard to conflicts of law principles. Wherever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and without invalidating the remaining provisions of this Agreement.
15. WAIVER OF JURY TRIAL. The Grantor and Collateral Agent waive
any right they may have to trial by jury in any action or proceeding to enforce
or defend any rights or remedies hereunder, under the Subsidiary Guaranty or
under any of the other Collateral Documents.
16. FURTHER INDEMNIFICATION. The Grantor agrees to pay, and to
save the Collateral Agent and each other Guarantied Party harmless from, any
and all liabilities with respect to, or resulting from any delay in paying, any
and all excise, sales or other similar taxes which may be payable or determined
to be payable with respect to any of the Collateral or in connection with any
of the transactions contemplated by this Agreement.
17. Section TITLES. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of this Agreement.
18. CONFIDENTIALITY. Collateral Agent agrees that it will use its
reasonable best efforts not to disclose without the prior consent of the
Grantor any information with respect to the Grantor or any of its Subsidiaries
which is furnished or obtained pursuant to this Agreement and which is
designated by the Grantor to the Collateral Agent in writing as confidential;
provided, that the Collateral Agent or any other Guarantied Party may disclose
any such information (a) to its employees, auditors, or counsel, or to another
Guarantied Party if the Collateral Agent or any other Guarantied Party in its
sole discretion determines that any such party should have access to such
information, (b) as has become generally available to the public, (c) as may be
required or appropriate in any report, statement or testimony submitted to any
governmental authority having or claiming to have jurisdiction over the
Collateral Agent or any other Guarantied Party, (d) as may be required or
appropriate in response to any summons or subpoena or in connection with any
litigation, (e) in order to comply with any requirement of law, and (f) to any
prospective or actual transferee or participant in connection with any
contemplated transfer or participation of any of the Secured Indebtedness.
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19. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent and security interests hereunder, and all obligations of the Grantor
hereunder, shall be absolute and unconditional irrespective of:
(i) any lack or validity or enforceability of any
provision of any of the Financing Agreements, the Collateral Documents
or any other agreement, document or instrument relating thereto;
(ii) any change in the time, manner or place of payment
of, or in any other term of, or any increase in the amount of, all or
any of the Guarantied Obligations, or any other amendment or waiver of
any term of, or any consent to any departure from any requirement of,
any of the Financing Agreements or the Collateral Documents;
(iii) any exchange, release or non-perfection of any Lien
on any collateral, or any release or amendment or waiver of any term of
any guaranty of, or consent to departure from any requirement of any
guaranty of, all or any of the Guarantied Obligations; or
(iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, Grantor, other
than payment in full of the Guarantied Obligations.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Grantor has caused this Agreement to be
executed and delivered by its duly authorized officer on the date first above
written.
[NAME OF SUBSIDIARY], a __________
corporation
By:___________________________
Name:_________________________
Vice President
ACCEPTED AND ACKNOWLEDGED BY:
BT COMMERCIAL CORPORATION, a Delaware
corporation, as Collateral Agent
By:_______________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President
21
SCHEDULE I TO SECURITY AGREEMENT
VISKASE SALES CORPORATION FILINGS
JURISDICTION FILING OFFICE
22
SCHEDULE II TO SECURITY AGREEMENT
LOCATION OF RECORDS AND CERTAIN COLLATERAL
Principal Place of
Business and
Location of Records