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EXHIBIT 10.5
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is entered into as
of March 31, 1998 among SIMCALA, INC. , a Delaware corporation (the "Borrower"),
SIMCALA HOLDINGS, INC., a Georgia corporation, and certain Subsidiaries of the
Borrower (individually a "Guarantor" and collectively the "Guarantors"; together
with the Borrower, individually an "Obligor", and collectively the "Obligors")
and NATIONSBANK, N.A., in its capacity as agent (in such capacity, the "Agent")
for the lenders from time to time party to the Credit Agreement described below
(the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement, dated as of the
date hereof (as amended, modified, extended, renewed or replaced from time to
time, the "Credit Agreement"), among the Borrower, the Guarantors, the Lenders
and the Agent, the Lenders have agreed to make Loans and issue Letters of Credit
upon the terms and subject to the conditions set forth therein; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Loans and
to issue Letters of Credit under the Credit Agreement that the Obligors shall
have executed and delivered this Security Agreement to the Agent for the ratable
benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Credit
Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of North Carolina on the date
hereof are used herein as so defined: Accounts, Chattel Paper, Deposit
Accounts, Documents, Equipment, Farm Products, Fixtures, General
Intangibles, Instruments, Inventory and Proceeds. For purposes of this
Security Agreement, the term "Lender" shall include any Affiliate of
any Lender which has entered into a Hedging Agreement with the
Borrower.
(b) In addition, the following terms shall have the following
meanings:
"Copyright Licenses": any written agreement, naming any
Obligor as licensor, granting any right under any Copyright including,
without limitation, any thereof referred to in Schedule 1(b) hereto.
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"Copyrights": (a) all registered United States copyrights in
all Works, now existing or hereafter created or acquired, all
registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, registrations,
recordings and applications in the United States Copyright office
including, without limitation, any thereof referred to in Schedule 1(b)
hereto, and (b) all renewals thereof including, without limitation, any
thereof referred to in Schedule 1(b) hereto.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to an Obligor of any right to
manufacture, use or sell any invention covered by a Patent, including,
without limitation, any thereof referred to in Schedule 1(b) hereto.
"Patents": (a) all letters patent of the United States or any
other country and all reissues and extensions thereof, including,
without limitation, any thereof referred to in Schedule 1(b) hereto,
and (b) all applications for letters patent of the United States or any
other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any
thereof referred to in Schedule 1(b) hereto.
"Secured Obligations": the collective reference to the
following:
(a) In the case of the Borrower, the prompt
performance and observance by the Borrower of all obligations
of the Borrower under the Credit Agreement, the Notes, this
Security Agreement and the other Credit Documents to which the
Borrower is a party;
(b) In the case of the Guarantors, the
prompt performance and observance by such Guarantor of all
obligations of such Guarantor under the Credit Agreement, this
Security Agreement and the other Credit Documents to which
such Guarantor is a party, including, without limitation, its
guaranty obligations arising under Section 4 of the Credit
Agreement; and
(c) All other indebtedness, liabilities and
obligations of any kind or nature, now existing or hereafter
arising, owing from any Obligor to any Lender or the Agent,
howsoever evidenced, created, incurred or acquired, whether
primary, secondary, direct, contingent, or joint and several,
including, without limitation, all liabilities arising under
Hedging Agreements and all obligations and liabilities
incurred in connection with collecting and enforcing the
Secured Obligations.
"Trademark License": means any agreement, written or oral,
providing for the grant by or to an Obligor of any right to use any
Trademark, including, without limitation, any thereof referred to in
Schedule 1(b) hereto.
"Trademarks": (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers,
and the goodwill associated therewith, now existing or
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hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other country or
any political subdivision thereof, or otherwise, including, without
limitation, any thereof referred to in Schedule 1(b) hereto, and (b)
all renewals thereof.
"Work": any work which is subject to copyright protection
pursuant to Title 17 of the United States Code.
2. Grant of Security Interest in the Collateral. To secure the prompt
payment and performance in full when due, whether by lapse of time, acceleration
or otherwise, of the Secured Obligations, each Obligor hereby grants to the
Agent, for the benefit of the Lenders, a continuing security interest in, and a
right to set off against, any and all right, title and interest of such Obligor
in and to the following, whether now owned or existing or owned, acquired, or
arising hereafter (collectively, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Copyrights;
(d) all Copyright Licenses;
(e) all Deposit Accounts;
(f) all Documents;
(g) all Equipment;
(h) all Fixtures;
(i) all General Intangibles;
(j) all Instruments;
(k) all Inventory;
(l) all Patents;
(m) all Patent Licenses;
(n) all Trademarks;
(o) all Trademark Licenses;
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(p) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks, and
related data processing software (owned by such
Obligor or in which it has an interest) that at any
time evidence or contain information relating to any
Collateral or are otherwise necessary or helpful in
the collection thereof or realization thereupon; and
(q) to the extent not otherwise included,
all Proceeds and products of any and all of the
foregoing.
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest created hereby in the
Collateral (i) constitutes continuing collateral security for all of the Secured
Obligations, whether now existing or hereafter arising and (ii) is not to be
construed as an assignment of any Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks or Trademark Licenses.
3. Provisions Relating to Accounts.
(a) Anything herein to the contrary notwithstanding, each of
the Obligors shall remain liable under each of the Accounts to observe
and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any
agreement giving rise to each such Account. Neither the Agent nor any
Lender shall have any obligation or liability under any Account (or any
agreement giving rise thereto) by reason of or arising out of this
Security Agreement or the receipt by the Agent or any Lender of any
payment relating to such Account pursuant hereto, nor shall the Agent
or any Lender be obligated in any manner to perform any of the
obligations of an Obligor under or pursuant to any Account (or any
agreement giving rise thereto), to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by
it or as to the sufficiency of any performance by any party under any
Account (or any agreement giving rise thereto), to present or file any
claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to which
it may be entitled at any time or times.
(b) Once during each calendar year or at any time after the
occurrence and during the continuation of an Event of Default, the
Agent shall have the right, but not the obligation, upon prior written
notice to the Obligors, to make test verifications of the Accounts in
any manner and through any medium that it reasonably considers
advisable, and the Obligors shall furnish all such assistance and
information as the Agent may require in connection with such test
verifications. After the occurrence and during the continuance of an
Event of Default, upon the Agent's request and at the expense of the
Agent, the Obligors shall cause independent public accountants or
others satisfactory to the Agent to furnish to the Agent reports
showing reconciliations, aging and test verifications of, and trial
balances for, the Accounts. After the occurrence and during the
continuance of an Event of Default, the Agent in its own name or in the
name of others
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may communicate with account debtors on the Accounts to verify with
them to the Agent's satisfaction the existence, amount and terms of any
Accounts.
4. Representations and Warranties. Each Obligor hereby represents and
warrants to the Agent, for the benefit of the Lenders, that so long as any of
the Secured Obligations remain outstanding or any Credit Document or Hedging
Agreement is in effect or any Letter of Credit shall remain outstanding, and
until all of the Commitments shall have been terminated:
(a) Chief Executive Office; Books & Records. Each Obligor's
chief executive office and chief place of business is (and for the
prior four months have been) located at the locations set forth on
Schedule 4(a) hereto, and each Obligor keeps its books and records at
such locations.
(b) Location of Collateral. The location of all Collateral
owned by each Obligor is as shown on Schedule 4(b) hereto.
(c) Ownership. Each Obligor is the legal and beneficial owner
of its Collateral and has the right to pledge, sell, assign or transfer
the same. Each Obligor's legal name is as shown in this Security
Agreement and no Obligor has in the past four months changed its name,
been party to a merger, consolidation or other change in structure or
used any tradename except as set forth in Schedule 4(c) attached
hereto.
(d) Security Interest/Priority. This Security Agreement
creates a valid security interest in favor of the Agent, for the
benefit of the Lenders, in the Collateral of such Obligor and, when
properly perfected by filing, shall constitute a valid perfected
security interest in such Collateral, to the extent such security can
be perfected by filing under the UCC, free and clear of all Liens
except for Permitted Liens.
(e) Farm Products. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
(f) Accounts. (i) Each Account of the Obligors and the papers
and documents relating thereto are genuine and in all material respects
what they purport to be, (ii) each Account arises out of (A) a bona
fide sale of goods sold and delivered by such Obligor (or is in the
process of being delivered) or (B) services theretofore actually
rendered by such Obligor to, the account debtor named therein, (iii) no
Account of an Obligor is evidenced by any Instrument or Chattel Paper
unless such Instrument or Chattel Paper has been theretofore endorsed
over and delivered to the Agent and (iv) no surety bond was required or
given in connection with any Account of an Obligor or the contracts or
purchase orders out of which they arose.
(g) Inventory. No Inventory is held by an Obligor pursuant to
consignment, sale or return, sale on approval or similar arrangement.
(h) Copyrights, Patents and Trademarks.
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(i) Schedule 1(b) hereto includes all Copyrights,
Copyright Licenses, Patents, Patent Licenses, Trademarks and
Trademark Licenses owned by the Obligors in their own names as
of the date hereof.
(ii) To the best of each Obligor's knowledge, each
Copyright, Patent and Trademark of such Obligor is valid,
subsisting, unexpired, enforceable and has not been abandoned.
(iii) Except as set forth in Schedule 1(b) hereto,
none of such Copyrights, Patents and Trademarks is the subject
of any licensing or franchise agreement.
(iv) No holding, decision or judgment has been
rendered by any Governmental Authority which would limit,
cancel or question the validity of any Copyright, Patent or
Trademark.
(v) No action or proceeding is pending seeking to
limit, cancel or question the validity of any Copyright,
Patent or Trademark, or which, if adversely determined, would
have a material adverse effect on the value of any Copyright,
Patent or Trademark.
(vi) All applications pertaining to the Copyrights,
Patents and Trademarks of each Obligor have been duly and
properly filed, and all registrations or letters pertaining to
such Copyrights, Patents and Trademarks have been duly and
properly filed and issued, and all of such Copyrights, Patents
and Trademarks are valid and enforceable.
(vii) No Obligor has made any assignment or agreement
in conflict with the security interest in the Copyrights,
Patents or Trademarks of each Obligor hereunder.
5. Covenants. Each Obligor covenants that, so long as any of the
Secured Obligations remain outstanding or any Credit Document or Hedging
Agreement is in effect or any Letter of Credit shall remain outstanding, and
until all of the Commitments shall have been terminated, such Obligor shall:
(a) Other Liens. Defend the Collateral against the claims and
demands of all other parties claiming an interest therein, keep the
Collateral free from all Liens, except for Permitted Liens, and not
sell, exchange, transfer, assign, lease or otherwise dispose of the
Collateral or any interest therein, except as permitted under the
Credit Agreement.
(b) Preservation of Collateral. Keep the Collateral in good
order, condition and repair and not use the Collateral in violation of
the provisions of this Security
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Agreement or any other agreement relating to the Collateral or any
policy insuring the Collateral or any applicable statute, law, bylaw,
rule, regulation or ordinance.
(c) Instruments/Chattel Paper. If any amount payable under or
in connection with any of the Collateral shall be or become evidenced
by any Instrument or Chattel Paper, immediately deliver such Instrument
or Chattel Paper to the Agent, duly indorsed in a manner satisfactory
to the Agent, to be held as Collateral pursuant to this Security
Agreement.
(d) Change in Location. Not, without providing 30 days prior
written notice to the Agent and without filing such amendments to any
previously filed financing statements as the Agent may require, (a)
change the location of its chief executive office and chief place of
business (as well as its books and records) from the locations set
forth on Schedule 4(a) hereto, (b) change the location of its
Collateral from the locations set forth for such Obligor on Schedule
4(b) hereto, or (c) change its name, be party to a merger,
consolidation or other change in structure or use any tradename other
than as set forth on Schedule 4(c) attached hereto.
(e) Inspection. Upon reasonable notice, and during reasonable
hours, at all times allow the Agent or its representatives to visit and
inspect the Collateral as set forth in Section 7.10 of the Credit
Agreement.
(f) Perfection of Security Interest. Execute and deliver to
the Agent such agreements, assignments or instruments (including
affidavits, notices, reaffirmations and amendments and restatements of
existing documents, as the Agent may reasonably request) and do all
such other things as the Agent may reasonably deem necessary or
appropriate (i) to assure to the Agent its security interests
hereunder, including (A) such financing statements (including renewal
statements) or amendments thereof or supplements thereto or other
instruments as the Agent may from time to time reasonably request in
order to perfect and maintain the security interests granted hereunder
in accordance with the UCC, (B) with regard to Copyrights, a Notice of
Grant of Security Interest in Copyrights in the form of Schedule
5(f)(i), (C) with regard to Patents, a Notice of Grant of Security
Interest in Patents for filing with the United States Patent and
Trademark Office in the form of Schedule 5(f)(ii) attached hereto and
(D) with regard to Trademarks, a Notice of Grant of Security Interest
in Trademarks for filing with the United States Patent and Trademark
Office in the form of Schedule 5(f)(iii) attached hereto, (ii) to
consummate the transactions contemplated hereby and (iii) to otherwise
protect and assure the Agent of its rights and interests hereunder. To
that end, each Obligor agrees that the Agent may file one or more
financing statements disclosing the Agent's security interest in any or
all of the Collateral of such Obligor without, to the extent permitted
by law, such Obligor's signature thereon, and further each Obligor also
hereby irrevocably makes, constitutes and appoints the Agent, its
nominee or any other person whom the Agent may designate, as such
Obligor's attorney in fact with full power and for the limited purpose
to sign in the name of such Obligor any such financing statements, or
amendments and supplements to financing statements, renewal financing
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statements, notices or any similar documents which in the Agent's
reasonable discretion would be necessary, appropriate or convenient in
order to perfect and maintain perfection of the security interests
granted hereunder, such power, being coupled with an interest, being
and remaining irrevocable so long as the Credit Agreement is in effect
or any amounts payable thereunder or under any other Credit Document,
any Letter of Credit or any Hedging Agreement shall remain outstanding,
and until all of the Commitments thereunder shall have terminated. Each
Obligor hereby agrees that a carbon, photographic or other reproduction
of this Security Agreement or any such financing statement is
sufficient for filing as a financing statement by the Agent without
notice thereof to such Obligor wherever the Agent may in its sole
discretion desire to file the same. In the event for any reason the law
of any jurisdiction other than North Carolina becomes or is applicable
to the Collateral of any Obligor or any part thereof, or to any of the
Secured Obligations, such Obligor agrees to execute and deliver all
such instruments and to do all such other things as the Agent in its
sole discretion reasonably deems necessary or appropriate to preserve,
protect and enforce the security interests of the Agent under the law
of such other jurisdiction (and, if an Obligor shall fail to do so
promptly upon the request of the Agent, then the Agent may execute any
and all such requested documents on behalf of such Obligor pursuant to
the power of attorney granted hereinabove). If any Collateral is in the
possession or control of an Obligor's agents and the Agent so requests,
such Obligor agrees to notify such agents in writing of the Agent's
security interest therein and, upon the occurrence of and during the
continuation of and Event of Default, upon the Agent's request,
instruct them to hold all such Collateral for the Lenders' account and
subject to the Agent's instructions. Each Obligor agrees to mark its
books and records to reflect the security interest of the Agent in the
Collateral.
(g) Treatment of Accounts. Not grant or extend the time for
payment of any Account, or compromise or settle any Account for less
than the full amount thereof, or release any person or property, in
whole or in part, from payment thereof, or allow any credit or discount
thereon, other than as normal and customary in the ordinary course of
an Obligor's business.
(h) Covenants Relating to Copyrights.
(i) Employ the Copyright for each Work with such
notice of copyright as may be required by law to secure
copyright protection.
(ii) Not do any act or knowingly omit to do any act
whereby any material Copyright may become invalidated and (A)
not do any act, or knowingly omit to do any act, whereby any
material Copyright may become injected into the public domain;
(B) notify the Agent immediately if it knows, or has reason to
know, that any material Copyright may become injected into the
public domain or of any adverse determination or development
(including, without limitation, the institution of, or any
such determination or development in, any court or tribunal in
the United States or any other country) regarding an Obligor's
ownership of any such Copyright or its validity; (C) take all
necessary steps as it
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shall deem appropriate under the circumstances, to maintain
and pursue each application (and to obtain the relevant
registration) and to maintain each registration of each
material Copyright owned by an Obligor including, without
limitation, filing of applications for renewal where
necessary; and (D) promptly notify the Agent of any material
infringement of any material Copyright of an Obligor of which
it becomes aware and take such actions as it shall reasonably
deem appropriate under the circumstances to protect such
Copyright, including, where appropriate, the bringing of suit
for infringement, seeking injunctive relief and seeking to
recover any and all damages for such infringement.
(iii) Not make any assignment or agreement in
conflict with the security interest in the Copyrights of each
Obligor hereunder.
(i) Covenants Relating to Patents and Trademarks.
(i) (A) Continue to use each Trademark on each and
every trademark class of goods applicable to its current line
as reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force free
from any claim of abandonment for non-use, (B) maintain as in
the past the quality of products and services offered under
such Trademark, (C) employ such Trademark with the appropriate
notice of registration, (D) not adopt or use any mark which is
confusingly similar or a colorable imitation of such Trademark
unless the Agent, for the ratable benefit of the Lenders,
shall obtain a perfected security interest in such mark
pursuant to this Security Agreement, and (E) not (and not
permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any Trademark may become
invalidated.
(ii) Not do any act, or omit to do any act, whereby
any Patent may become abandoned or dedicated.
(iii) Notify the Agent and the Lenders within a
reasonable time if it knows, or has reason to know, that any
application or registration relating to any Patent or
Trademark may become abandoned or dedicated, or of any adverse
determination or development (including, without limitation,
the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark
Office or any court or tribunal in any country) regarding an
Obligor's ownership of any Patent or Trademark or its right to
register the same or to keep and maintain the same.
(iv) Whenever an Obligor, either by itself or
through an agent, employee, licensee or designee, shall file
an application for the registration of any Patent or Trademark
with the United States Patent and Trademark Office or any
similar office or agency in any other country or any political
subdivision thereof, an Obligor shall report such filing to
the Agent and the Lenders within fifteen Business Days after
the last day of the fiscal quarter in which such filing
occurs.
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Upon request of the Agent, an Obligor shall execute and
deliver any and all agreements, instruments, documents and
papers as the Agent may request to evidence the Agent's and
the Lenders' security interest in any Patent or Trademark and
the goodwill and general intangibles of an Obligor relating
thereto or represented thereby.
(v) Take all reasonable and necessary steps,
including, without limitation, in any proceeding before the
United States Patent and Trademark Office, or any similar
office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application
(and to obtain the relevant registration) and to maintain each
registration of the Patents and Trademarks, including, without
limitation, filing of applications for renewal, affidavits of
use and affidavits of incontestability.
(vi) Promptly notify the Agent and the Lenders after
it learns that any Patent or Trademark included in the
Collateral is infringed, misappropriated or diluted by a third
party and promptly sue for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement,
misappropriation or dilution, or take such other actions as it
shall reasonably deem appropriate under the circumstances to
protect such Patent or Trademark.
(vii) Not make any assignment or agreement in
conflict with the security interest in the Patents or
Trademarks of each Obligor hereunder.
(j) New Patents, Copyrights and Trademarks. Promptly provide
the Agent with (i) a listing of all applications, if any, for new
Copyrights, Patents or Trademarks (together with a listing of the
issuance of registrations or letters on present applications), which
new applications and issued registrations or letters shall be subject
to the terms and conditions hereunder, and (ii) (A) with respect to
Copyrights, a duly executed Notice of Security Interest in Copyrights,
(B) with respect to Patents, a duly executed Notice of Security
Interest in Patents, (C) with respect to Trademarks, a duly executed
Notice of Security Interest in Trademarks or (D) such other duly
executed documents as the Agent may request in a form acceptable to
counsel for the Agent and suitable for recording to evidence the
security interest in the Copyright, Patent or Trademark which is the
subject of such new application.
(k) Insurance. Insure, repair and replace the Collateral of
such Obligor as set forth in the Credit Agreement. All insurance
proceeds shall be subject to the security interest of the Agent
hereunder.
6. Advances by Lenders. On failure of any Obligor to perform any of the
covenants and agreements contained herein, the Agent may, at its sole option and
in its sole discretion, perform the same and in so doing may expend such sums as
the Agent may reasonably deem advisable in the performance thereof, including,
without limitation, the payment of any insurance
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premiums, the payment of any taxes, a payment to obtain a release of a Lien or
potential Lien, expenditures made in defending against any adverse claim and all
other expenditures which the Agent or the Lenders may make for the protection of
the security hereof or which may be compelled to make by operation of law. All
such sums and amounts so expended shall be repayable by the Obligors on a joint
and several basis promptly upon timely notice thereof and demand therefor, shall
constitute additional Secured Obligations and shall bear interest from the date
said amounts are expended at the default rate specified in Section 3.1 of the
Credit Agreement for Loans that are Base Rate Loans. No such performance of any
covenant or agreement by the Agent or the Lenders on behalf of any Obligor, and
no such advance or expenditure therefor, shall relieve the Obligors of any
default under the terms of this Security Agreement, the other Credit Documents
or any Hedging Agreement. The Lenders may make any payment hereby authorized in
accordance with any bill, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to the extent such
payment is being contested in good faith by an Obligor in appropriate
proceedings and against which adequate reserves are being maintained in
accordance with GAAP.
7. Events of Default.
The occurrence of an event which under the Credit Agreement would
constitute an Event of Default shall be an Event of Default hereunder (an "Event
of Default").
8. Remedies.
(a) General Remedies. Upon the occurrence of an Event of
Default and during continuation thereof, the Lenders shall have, in
addition to the rights and remedies provided herein, in the Credit
Documents, in the Hedging Agreements or by law (including, but not
limited to, the rights and remedies set forth in the Uniform Commercial
Code of the jurisdiction applicable to the affected Collateral), the
rights and remedies of a secured party under the UCC (regardless of
whether the UCC is the law of the jurisdiction where the rights and
remedies are asserted and regardless of whether the UCC applies to the
affected Collateral), and further, the Agent may, with or without
judicial process or the aid and assistance of others, (i) enter on any
premises on which any of the Collateral may be located and, without
resistance or interference by the Obligors, take possession of the
Collateral, (ii) dispose of any Collateral on any such premises, (iii)
require the Obligors to assemble and make available to the Agent at the
expense of the Obligors any Collateral at any place and time designated
by the Agent which is reasonably convenient to both parties, (iv)
remove any Collateral from any such premises for the purpose of
effecting sale or other disposition thereof, and/or (v) without demand
and without advertisement, notice, hearing or process of law, all of
which each of the Obligors hereby waives to the fullest extent
permitted by law, at any place and time or times, sell and deliver any
or all Collateral held by or for it at public or private sale, by one
or more contracts, in one or more parcels, for cash, upon credit or
otherwise, at such prices and upon such terms as the Agent deems
advisable, in its sole discretion (subject to any and all mandatory
legal
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requirements). In addition to all other sums due the Agent and the
Lenders with respect to the Secured Obligations, the Obligors shall pay
the Agent and each of the Lenders all reasonable documented costs and
expenses incurred by the Agent or any such Lender, including, but not
limited to, reasonable attorneys' fees and court costs, in obtaining or
liquidating the Collateral, in enforcing payment of the Secured
Obligations, or in the prosecution or defense of any action or
proceeding by or against the Agent or the Lenders or the Obligors
concerning any matter arising out of or connected with this Security
Agreement, any Collateral or the Secured Obligations, including,
without limitation, any of the foregoing arising in, arising under or
related to a case under the Bankruptcy Code. To the extent the rights
of notice cannot be legally waived hereunder, each Obligor agrees that
any requirement of reasonable notice shall be met if such notice is
personally served on or mailed, postage prepaid, to the Borrower in
accordance with the notice provisions of Section 11.1 of the Credit
Agreement at least 10 days before the time of sale or other event
giving rise to the requirement of such notice. The Agent and the
Lenders shall not be obligated to make any sale or other disposition of
the Collateral regardless of notice having been given. To the extent
permitted by law, any Lender may be a purchaser at any such sale. To
the extent permitted by applicable law, each of the Obligors hereby
waives all of its rights of redemption with respect to any such sale.
Subject to the provisions of applicable law, the Agent and the Lenders
may postpone or cause the postponement of the sale of all or any
portion of the Collateral by announcement at the time and place of such
sale, and such sale may, without further notice, to the extent
permitted by law, be made at the time and place to which the sale was
postponed, or the Agent and the Lenders may further postpone such sale
by announcement made at such time and place.
(b) Remedies relating to Accounts. Upon the occurrence of an
Event of Default and during the continuation thereof, whether or not
the Agent has exercised any or all of its rights and remedies
hereunder, each Obligor will promptly upon request of the Agent
instruct all account debtors to remit all payments in respect of
Accounts to a mailing location selected by the Agent. In addition, the
Agent or its designee may notify any Obligor's customers and account
debtors that the Accounts of such Obligor have been assigned to the
Agent or of the Agent's security interest therein, and may (either in
its own name or in the name of an Obligor or both) demand, collect
(including without limitation by way of a lockbox arrangement),
receive, take receipt for, sell, sue for, compound, settle, compromise
and give acquittance for any and all amounts due or to become due on
any Account, and, in the Agent's discretion, file any claim or take any
other action or proceeding to protect and realize upon the security
interest of the Lenders in the Accounts. Each Obligor acknowledges and
agrees that the Proceeds of its Accounts remitted to or on behalf of
the Agent in accordance with the provisions hereof shall be solely for
the Agent's own convenience and that such Obligor shall not have any
right, title or interest in such Accounts or in any such other amounts
except as expressly provided herein. The Agent and the Lenders shall
have no liability or responsibility to any Obligor for acceptance of a
check, draft or other order for payment of money bearing the legend
"payment in full" or words of similar import or any other restrictive
legend or endorsement or be responsible for determining the correctness
of any remittance unless such acceptance was willful or with gross
negligence. Each Obligor hereby agrees to indemnify the Agent
- 12 -
13
and the Lenders from and against all liabilities, damages, losses,
actions, claims, judgments, costs, expenses, charges and reasonable
attorneys' fees suffered or incurred by the Agent or the Lenders (each,
an "Indemnified Party") because of the maintenance of the foregoing
arrangements except as relating to or arising out of the gross
negligence or willful misconduct of an Indemnified Party or its
officers, employees or agents. In the case of any investigation,
litigation or other proceeding, the foregoing indemnity shall be
effective whether or not such investigation, litigation or proceeding
is brought by an Obligor, its directors, shareholders or creditors or
an Indemnified Party or any other Person or any other Indemnified Party
is otherwise a party thereto.
(c) Access. In addition to the rights and remedies hereunder,
upon the occurrence of an Event of Default and during the continuance
thereof, the Agent shall have the right to enter and remain upon the
various premises of the Obligors without cost or charge to the Agent,
and use the same, together with materials, supplies, books and records
of the Obligors for the purpose of collecting and liquidating the
Collateral, or for preparing for sale and conducting the sale of the
Collateral, whether by foreclosure, auction or otherwise. In addition,
the Agent may remove Collateral, or any part thereof, from such
premises and/or any records with respect thereto, in order to
effectively collect or liquidate such Collateral.
(d) Nonexclusive Nature of Remedies. Failure by the Agent or
the Lenders to exercise any right, remedy or option under this Security
Agreement, any other Credit Document, any Hedging Agreement or as
provided by law, or any delay by the Agent or the Lenders in exercising
the same, shall not operate as a waiver of any such right, remedy or
option. No waiver hereunder shall be effective unless it is in writing,
signed by the party against whom such waiver is sought to be enforced
and then only to the extent specifically stated, which in the case of
the Agent or the Lenders shall only be granted as provided herein. To
the extent permitted by law, neither the Agent, the Lenders, nor any
party acting as attorney for the Agent or the Lenders, shall be liable
hereunder for any acts or omissions or for any error of judgment or
mistake of fact or law other than their gross negligence or willful
misconduct hereunder. The rights and remedies of the Agents and the
Lenders under this Security Agreement shall be cumulative and not
exclusive of any other right or remedy which the Agent or the Lenders
may have.
(e) Retention of Collateral. The Agent may, after providing
the notices required by Section 9-505(2) of the UCC or otherwise
complying with the requirements of applicable law of the relevant
jurisdiction, to the extent the Agent is in possession of any of the
Collateral, retain the Collateral in satisfaction of the Secured
Obligations. Unless and until the Agent shall have provided such
notices, however, the Agent shall not be deemed to have retained any
Collateral in satisfaction of any Secured Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which
the Agent or the Lenders are legally entitled, the Obligors shall be
jointly and severally liable for the deficiency, together with
- 13 -
14
interest thereon at the default rate specified in Section 3.1 of the
Credit Agreement for Loans that are Base Rate Loans, together with the
costs of collection and the reasonable fees of any attorneys employed
by the Agent to collect such deficiency. Any surplus remaining after
the full payment and satisfaction of the Secured Obligations shall be
returned to the Obligors or to whomsoever a court of competent
jurisdiction shall determine to be entitled thereto.
9. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Obligor hereby designates and appoints the
Agent, on behalf of the Lenders, and each of its designees or agents,
as attorney-in-fact of such Obligor, irrevocably and with power of
substitution, with authority to take any or all of the following
actions upon the occurrence and during the continuance of an Event of
Default:
(i) to demand, collect, settle, compromise, adjust,
give discharges and releases, all as the Agent may reasonably
determine;
(ii) to commence and prosecute any actions at any
court for the purposes of collecting any Collateral and
enforcing any other right in respect thereof;
(iii) to defend, settle or compromise any action
brought and, in connection therewith, give such discharge or
release as the Agent may deem reasonably appropriate;
(iv) receive, open and dispose of mail addressed to
an Obligor and endorse checks, notes, drafts, acceptances,
money orders, bills of lading, warehouse receipts or other
instruments or documents evidencing payment, shipment or
storage of the goods giving rise to the Collateral of such
Obligor on behalf of and in the name of such Obligor, or
securing, or relating to such Collateral;
(v) sell, assign, transfer, make any agreement in
respect of, or otherwise deal with or exercise rights in
respect of, any Collateral or the goods or services which have
given rise thereto, as fully and completely as though the
Agent were the absolute owner thereof for all purposes;
(vi) adjust and settle claims under any insurance
policy relating thereto;
(vii) execute and deliver all assignments,
conveyances, statements, financing statements, renewal
financing statements, security agreements, affidavits, notices
and other agreements, instruments and documents that the Agent
may determine necessary in order to perfect and
- 14 -
15
maintain the security interests and liens granted in this
Security Agreement and in order to fully consummate all of the
transactions contemplated therein;
(viii) institute any foreclosure proceedings that the
Agent may deem appropriate; and
(ix) do and perform all such other acts and things
as the Agent may reasonably deem to be necessary, proper or
convenient in connection with the Collateral.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Secured Obligations remain
outstanding, any Credit Document or any Hedging Agreement is in effect
or any Letter of Credit shall remain outstanding and (ii) until all of
the Commitments shall have been terminated. The Agent shall be under no
duty to exercise or withhold the exercise of any of the rights, powers,
privileges and options expressly or implicitly granted to the Agent in
this Security Agreement, and shall not be liable for any failure to do
so or any delay in doing so. The Agent shall not be liable for any act
or omission or for any error of judgment or any mistake of fact or law
in its individual capacity or its capacity as attorney-in-fact except
acts or omissions resulting from its gross negligence or willful
misconduct. This power of attorney is conferred on the Agent solely to
protect, preserve and realize upon its security interest in the
Collateral.
(b) Performance by the Agent of Obligations. If any Obligor
fails to perform any agreement or obligation contained herein, the
Agent itself may perform, or cause performance of, such agreement or
obligation, and the expenses of the Agent incurred in connection
therewith shall be payable by the Obligors on a joint and several basis
pursuant to Section 11 hereof.
(c) Assignment by the Agent. The Agent may from time to time
assign the Secured Obligations and any portion thereof and/or the
Collateral and any portion thereof, and the assignee shall be entitled
to all of the rights and remedies of the Agent under this Security
Agreement in relation thereto.
(d) The Agent's Duty of Care. Other than the exercise of
reasonable care to assure the safe custody of the Collateral while
being held by the Agent hereunder, the Agent shall have no duty or
liability to preserve rights pertaining thereto, it being understood
and agreed that the Obligors shall be responsible for preservation of
all rights in the Collateral, and the Agent shall be relieved of all
responsibility for the Collateral upon surrendering it or tendering the
surrender of it to the Obligors. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Agent accords its own property,
which shall be no less than the treatment employed by a reasonable and
prudent agent in the industry, it being understood that the Agent shall
not
- 15 -
16
have responsibility for taking any necessary steps to preserve rights
against any parties with respect to any of the Collateral.
10. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the Agent or
any of the Lenders in cash or its equivalent, will be applied in reduction of
the Secured Obligations in the order set forth in Section 3.15(b) of the Credit
Agreement, and each Obligor irrevocably waives the right to direct the
application of such payments and proceeds and acknowledges and agrees that the
Agent shall have the continuing and exclusive right to apply and reapply any and
all such payments and proceeds in the Agent's sole discretion, notwithstanding
any entry to the contrary upon any of its books and records.
11. Costs of Counsel. If at any time hereafter, whether upon the
occurrence of an Event of Default or not, the Agent employs counsel to prepare
or consider amendments, waivers or consents with respect to this Security
Agreement, or to take action or make a response in or with respect to any legal
or arbitral proceeding relating to this Security Agreement or relating to the
Collateral, or to reasonably protect the Collateral or reasonably exercise any
rights or remedies under this Security Agreement or with respect to the
Collateral, then the Obligors agree to promptly pay upon demand any and all such
reasonable documented costs and expenses of the Agent or the Lenders, all of
which costs and expenses shall constitute Secured Obligations hereunder.
12. Continuing Agreement.
(a) This Security Agreement shall be a continuing agreement in
every respect and shall remain in full force and effect so long as any
of the Secured Obligations remain outstanding or any Credit Document or
Hedging Agreement is in effect or any Letter of Credit shall remain
outstanding, and until all of the Commitments thereunder shall have
terminated (other than any obligations with respect to the indemnities
and the representations and warranties set forth in the Credit
Documents). Upon such payment and termination, this Security Agreement
shall be automatically terminated and the Agent and the Lenders shall,
upon the request and at the expense of the Obligors, forthwith release
all of its liens and security interests hereunder and shall execute and
deliver all UCC termination statements and/or other documents
reasonably requested by the Obligors evidencing such termination.
Notwithstanding the foregoing all releases and indemnities provided
hereunder shall survive termination of this Security Agreement.
(b) This Security Agreement shall continue to be effective or
be automatically reinstated, as the case may be, if at any time
payment, in whole or in part, of any of the Secured Obligations is
rescinded or must otherwise be restored or returned by the Agent or any
Lender as a preference, fraudulent conveyance or otherwise under any
bankruptcy, insolvency or similar law, all as though such payment had
not been made; provided that in the event payment of all or any part of
the Secured Obligations is rescinded or must be restored or returned,
all reasonable costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by the Agent or any
Lender in defending
- 16 -
17
and enforcing such reinstatement shall be deemed to be included as a
part of the Secured Obligations.
13. Amendments; Waivers; Modifications. This Security Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 11.6 of the Credit Agreement.
14. Successors in Interest. This Security Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Obligor, its successors and assigns and shall inure, together with the rights
and remedies of the Agent and the Lenders hereunder, to the benefit of the Agent
and the Lenders and their successors and permitted assigns; provided, however,
that none of the Obligors may assign its rights or delegate its duties hereunder
without the prior written consent of each Lender or the Required Lenders, as
required by the Credit Agreement. To the fullest extent permitted by law, each
Obligor hereby releases the Agent and each Lender, and its successors and
assigns, from any liability for any act or omission relating to this Security
Agreement or the Collateral, except for any liability arising from the gross
negligence or willful misconduct of the Agent, or such Lender, or its officers,
employees or agents.
15. Notices. All notices required or permitted to be given under this
Security Agreement shall be in conformance with Section 11.1 of the Credit
Agreement.
16. Counterparts. This Security Agreement may be executed in any number
of counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart.
17. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Security Agreement.
18. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
Any legal action or proceeding with respect to this Security Agreement
may be brought in the courts of the State of North Carolina, or of the
United States for the Western District of North Carolina, and, by
execution and delivery of this Security Agreement, each Obligor hereby
irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of such courts. Each
Obligor further irrevocably consents to the service of process out of
any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by registered or certified mail, postage
prepaid, to it at the address for notices pursuant to Section 11.1 of
the Credit Agreement, such service to become
- 17 -
18
effective 30 days after such mailing. Nothing herein shall affect the
right of the Agent to serve process in any other manner permitted by
law or to commence legal proceedings or to otherwise proceed against
any Obligor in any other jurisdiction.
(b) Each Obligor hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with
this Security Agreement brought in the courts referred to in subsection
(a) hereof and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
19. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
20. Severability. If any provision of any of the Security Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
21. Entirety. This Security Agreement, the other Credit Documents and
the Hedging Agreements represent the entire agreement of the parties hereto and
thereto, and supersede all prior agreements and understandings, oral or written,
if any, including any commitment letters or correspondence relating to the
Credit Documents, the Hedging Agreements or the transactions contemplated herein
and therein.
22. Survival. All representations and warranties of the Obligors
hereunder shall survive the execution and delivery of this Security Agreement,
the other Credit Documents and the Hedging Agreements, the delivery of the Notes
and the making of the Loans and the issuance of the Letters of Credit under the
Credit Agreement.
23. Other Security. To the extent that any of the Secured Obligations
are now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities owned by an Obligor), or by a
guarantee, endorsement or property of any other Person, then the Agent and the
Lenders shall have the right to proceed against such other property, guarantee
or endorsement upon the occurrence and during the continuance of any Event of
Default, and the Agent and the Lenders have the right, in their sole discretion,
to determine which rights, security, liens, security interests or remedies the
Agent and the Lenders shall at any time pursue, relinquish, subordinate, modify
or take with respect thereto, without in any way modifying or affecting any of
them or any of the Agent's and the Lenders' rights or the Secured Obligations
under this Security Agreement, under any other of the Credit Documents or under
any Hedging Agreement.
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19
24. Joint and Several Obligations of Obligors.
(a) Each of the Obligors is accepting joint and several
liability hereunder in consideration of the financial accommodation to
be provided by the Lenders under the Credit Agreement, for the mutual
benefit, directly and indirectly, of each of the Obligors and in
consideration of the undertakings of each of the Obligors to accept
joint and several liability for the obligations of each of them.
(b) Each of the Obligors jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but
also as a co-debtor, joint and several liability with the other
Obligors with respect to the payment and performance of all of the
Secured Obligations arising under this Security Agreement, the other
Credit Documents and the Hedging Agreements, it being the intention of
the parties hereto that all the Obligations shall be the joint and
several obligations of each of the Obligors without preferences or
distinction among them.
(c) Notwithstanding any provision to the contrary contained
herein or in any other of the Credit Documents, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of
any applicable state or federal law relating to fraudulent conveyances
or transfers) then the obligations of each Guarantor hereunder shall be
limited to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, the
Bankruptcy Code).
25. Rights of Required Lenders. All rights of the Agent hereunder, if
not exercised by the Agent, may be exercised by the Required Lenders.
- 19 -
20
Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: SIMCALA, INC. ,
a Delaware corporation
By: /s/ C. E. Boardwine
-----------------------------------------
Name: C. E. Boardwine
Title: President and Chief Executive Officer
GUARANTORS: SIMCALA HOLDINGS, INC.,
a Georgia corporation
By: /s/ William D. Davies
-----------------------------------------
Name: William A. Davies
Title: Secretary-Treasurer
Accepted and agreed to in Charlotte, North Carolina as of the date
first above written.
NATIONSBANK, N.A., as Agent
By: /s/ Michael D. McKay
-----------------------------------------
Name: Michael D. McKay
Title: Senior Vice President
21
SCHEDULE 1(b)
INTELLECTUAL PROPERTY
None.
22
SCHEDULE 4(a)
CHIEF EXECUTIVE OFFICE
Simcala, Inc.
Ohio Ferro-Alloys Road
Mt. Meigs, Alabama 36057
Simcala, Holdings, Inc.
c/o CGW Southeast Partners III, L.P.
Twelve Piedmont Center, Suite 210
Atlanta, Georgia 30305
23
SCHEDULE 4(b)
LOCATIONS OF COLLATERAL
Simcala, Inc.
Ohio Ferro-Alloys Road
Mt. Meigs, Alabama 36057
Marietta Industrial Enterprises
Alloys Division
Route 7 South
Marietta, OH 45750
24
SCHEDULE 4(c)
MERGERS, CONSOLIDATIONS, CHANGE IN STRUCTURE OR USE OF TRADENAMES
Merger between Simcala, Inc. and SAC Acquisition Corp. with Simcala, Inc. as the
survivor
25
SCHEDULE 5(f)(i)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
COPYRIGHTS
United States Copyright Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of
March 31, 1998 (as the same may be amended, modified, extended or restated from
time to time, the "Security Agreement") by and among the Obligors party thereto
(each an "Obligor" and collectively, the "Obligors") and NationsBank, N.A., as
Agent (the "Agent") for the lenders referenced therein (the "Lenders"), the
undersigned Obligor has granted a continuing security interest in and continuing
lien upon, the copyrights and copyright applications shown below to the Agent
for the ratable benefit of the Lenders:
COPYRIGHTS
Date of
Copyright No. Description of Copyright Copyright
------------- ------------------------ ---------
Copyright Applications
Copyright Description of Copyright Date of Copyright
Applications No. Applied For Applications
---------------- ------------------------ -----------------
26
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest in the foregoing copyrights and
copyright applications (i) may only be terminated in accordance with the terms
of the Security Agreement and (ii) is not to be construed as an assignment of
any copyright or copyright application.
Very truly yours,
----------------------------------
[Obligor]
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
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27
SCHEDULE 5(f)(ii)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
PATENTS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of
March 31, 1998 (the "Security Agreement") by and among the Obligors party
thereto (each an "Obligor" and collectively, the "Obligors") and NationsBank,
N.A., as Agent (the "Agent") for the lenders referenced therein (the "Lenders"),
the undersigned Obligor has granted a continuing security interest in and
continuing lien upon, the patents and patent applications shown below to the
Agent for the ratable benefit of the Lenders:
PATENTS
Description of Patent Date of
Patent No. Item Patent
---------- --------------------- -------
Patent Applications
Patent Description of Patent Date of Patent
Applications No. Applied For Applications
---------------- --------------------- --------------
28
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest in the foregoing patents and
patent applications (i) may only be terminated in accordance with the terms of
the Security Agreement and (ii) is not to be construed as an assignment of any
patent or patent application.
Very truly yours,
----------------------------------
[Obligor]
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
- 28 -
29
SCHEDULE 5(f)(iii)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
TRADEMARKS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of
March 31, 1998 (the "Security Agreement") by and among the Obligors party
thereto (each an "Obligor" and collectively, the "Obligors") and NationsBank,
N.A., as Agent (the "Agent") for the lenders referenced therein (the "Lenders"),
the undersigned Obligor has granted a continuing security interest in and
continuing lien upon, the trademarks and trademark applications shown below to
the Agent for the ratable benefit of the Lenders:
TRADEMARKS
Description of Trademark Date of
Trademark No. Item Trademark
------------- ------------------------ ---------
Trademark Applications
Trademark Description of Trademark Date of Trademark
Applications No. Applied For Applications
---------------- ------------------------ -----------------
30
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest in the foregoing trademarks and
trademark applications (i) may only be terminated in accordance with the terms
of the Security Agreement and (ii) is not to be construed as an assignment of
any trademark or trademark application.
Very truly yours,
----------------------------------
[Obligor]
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
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