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EXHIBIT 10.2
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of March 19, 2003, by and among HEXCEL
CORPORATION, a Delaware corporation ("HEXCEL"), CLARK-SCHWEBEL CORPORATION, a
Delaware corporation ("CLARK-SCHWEBEL"), HEXCEL POTTSVILLE CORPORATION
("POTTSVILLE"), a Delaware corporation, CLARK-SCHWEBEL HOLDING CORPORATION, a
Delaware corporation ("HOLDING"), and CS TECH-FAB HOLDINGS, INC., a Delaware
corporation ("Tech-Fab" and together with Hexcel, Clark-Schwebel, Pottsville and
Holding, collectively the "OBLIGORS" and each individually, an "OBLIGOR"), and
FLEET CAPITAL CORPORATION, as administrative agent (the "ADMINISTRATIVE AGENT")
for itself and other lending institutions which are or may become parties to
that certain Credit and Guaranty Agreement dated as of March 19, 2003 (as
amended and in effect from time to time, the "CREDIT AGREEMENT"), among the
Hexcel, the Foreign Borrowers (as defined therein), the Guarantors named
therein, the lenders from time to time a party thereto, the Administrative
Agent, Fleet Capital Corporation, as fronting bank, Fleet National Bank, London
U.K. Branch, as fronting bank and issuing bank, Fleet National Bank, as issuing
bank, and Fleet Securities, Inc., as lead arranger.
WHEREAS, it is a condition precedent to the Lenders (as defined in the
Credit Agreement) making any loans or otherwise extending credit to Hexcel and
the Foreign Borrowers under the Credit Agreement that the Obligors execute and
deliver to the Administrative Agent, for the benefit of the Lenders and the
Administrative Agent, a security agreement in substantially the form hereof; and
WHEREAS, the Obligors wish to grant a security interest in favor of the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definitions
shall have the respective meanings provided therefor in the Credit Agreement.
The term "STATE", as used herein, means the State of New York. All terms defined
in the Uniform Commercial Code of the State and used herein shall have the same
definitions herein as specified therein. However, if a term is defined in
Article 9 of the Uniform Commercial Code of the State differently than in
another Article of the Uniform Commercial Code of the State, the term has the
meaning specified in Article 9. The term "STOCK" means the shares of stock
described in ANNEX A attached hereto and required to be pledged hereunder and
any additional shares of stock at the time required to be pledged with the
Administrative Agent hereunder, and the term "STOCK COLLATERAL" means the
property at any time required to be pledged to the Administrative Agent
hereunder (whether described herein or not) and all income therefrom, increases
therein and proceeds thereof.
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2. GRANT OF SECURITY INTEREST. Each Obligor hereby grants to the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, to secure the payment and performance in full of all of the Obligations,
a security interest in and pledges and assigns to the Administrative Agent, for
the benefit of the Lenders and the Administrative Agent, all the following
properties, assets and rights of such Obligor, wherever located, whether now
owned or hereafter acquired or arising, and all proceeds and products thereof
(all of the same being hereinafter called the "COLLATERAL"):
i. all "Accounts" as defined in Section 9-102 of the Uniform Commercial
Code of the State, but only to the extent that such accounts are:
(a) rights to payment for goods sold or services rendered
(whether or not such goods or services conform to the contract),
or
(b) rights to payment for goods to be sold or services to be
rendered, but only, at any time, to the extent inventory (whether
consisting of raw materials, work-in-process or finished goods)
is then on hand that may, upon completion of manufacture, be
delivered for such sale;
ii. all rights under contracts of sale relating to or affecting the
creation or collection of any Accounts described in clause (i) above;
iii. all rights under any existing or future policy of insurance relating
to any Accounts described in clause (i) above;
iv. all letters of credit, guarantees, supporting obligations, and other
obligations securing or supporting any Accounts described in clause
(i) above;
v. all "Inventory" as defined in Section 9-102 of the Uniform Commercial
Code of the State;
vi. all rights under contracts of sale relating to or affecting the
completion or sale of any such Inventory;
vii. all rights under any existing or future policy of property loss or
casualty insurance relating to any such Inventory;
viii. all cash and Cash Equivalents (as defined in the Credit Agreement);
ix. all investment property, to the extent and only to the extent
consisting of Cash Equivalents and other proceeds of Collateral;
x. all deposit accounts (including, without limitation, bank accounts),
but
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excluding the Asset Sale Proceeds Account and deposits therein;
xi. (i) all intercompany loans to, and all other claims against, any
Foreign Subsidiary, including, without limitation, all indebtedness
for borrowed money and other monetary obligations owed by a Foreign
Subsidiary to an Obligor, and (ii) all instruments evidencing the
same, if any; in each case, whether or not evidenced by any instrument
or promissory note and whether such intercompany loan to, or claim
against, any Foreign Subsidiary is classified as an Account, General
Intangible, Instrument or Payment Intangible; and
xii. sixty-five percent (65%) of the shares of capital stock of every class
of any first tier Material Foreign Subsidiary, as more fully described
on ANNEX A hereto (as the same may be supplemented from time to time)
and, to the extent that any such first tier Material Foreign
Subsidiary is treated as a disregarded entity for United States
federal income tax purposes, in addition, sixty-five percent (65%) of
the shares of capital stock of any Material Foreign Subsidiary
directly owned by such disregarded first tier Material Foreign
Subsidiary.
3. AUTHORIZATION TO FILE FINANCING STATEMENTS; ADDITIONAL STOCK.
3.1. AUTHORIZATION TO FILE FINANCING STATEMENTS.
Each Obligor hereby irrevocably authorizes the Administrative Agent at
any time and from time to time to file in any filing office in any Uniform
Commercial Code jurisdiction any initial financing statements and
amendments thereto that provide any other information required by part 5 of
Article 9 of the Uniform Commercial Code of the State or such other
jurisdiction for the sufficiency or filing office acceptance of any
financing statement or amendment, including whether such Obligor is an
organization, the type of organization and any organizational
identification number issued to such Obligor. Each Obligor agrees to
furnish any such information to the Administrative Agent promptly upon
request. Such financing statements may describe the collateral in the same
manner as described in this Security Agreement or may contain an indication
or description of collateral that describes such property in any other
manner as the Administrative Agent may determine, in its sole discretion,
is necessary, advisable or prudent to ensure the perfection of the security
interest in the collateral granted to the Administrative Agent in
connection herewith. Each Obligor ratifies and confirms the authorization
of the Administrative Agent to have filed in any Uniform Commercial Code
jurisdiction any like initial financing statements or amendments thereto if
filed prior to the date hereof.
3.2. STOCK CERTIFICATES; AUTHORIZATION TO UPDATE ANNEX A.
The certificates for the shares of any first tier Material Foreign
Subsidiary, accompanied by stock powers or other appropriate instruments of
assignment
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thereof duly executed in blank by the Company, have been delivered to the
Administrative Agent. Each of the Obligors agrees that the Administrative
Agent may from time to time attach as ANNEX A hereto an updated list of the
shares of capital stock or securities at the time required to be pledged
with the Administrative Agent hereunder.
4. OTHER ACTIONS. Further to insure the attachment, perfection and
priority of, and the ability of the Administrative Agent to enforce, the
Administrative Agent's security interest in the Collateral, each Obligor agrees,
in each case at such Obligor's expense, to take the following actions with
respect to the following Collateral and without limitation on such Obligor's
other obligations contained in this Agreement:
4.1 PROMISSORY NOTES AND TANGIBLE CHATTEL PAPER. If any Obligor
shall, now or at any time hereafter, hold or acquire any promissory notes
constituting Collateral, such Obligor shall forthwith endorse, assign and
deliver the same to the Administrative Agent, accompanied by such
instruments of transfer or assignment duly executed in blank as the
Administrative Agent may from time to time specify.
4.2 DEPOSIT ACCOUNTS. Each Obligor shall comply with Section 7.17.1.1
of the Credit Agreement with respect to each deposit account that any
Obligor, now or at any time hereafter, opens or maintains, to the extent
provided therein.
4.3 INVESTMENT PROPERTY. Subject to Section 7.17.1.1 of the Credit
Agreement, if any Obligor shall, now or at any time hereafter, hold or
acquire any Collateral consisting of investment property, such Obligor
shall promptly endorse, assign and deliver the same to the Administrative
Agent, accompanied by such instruments of transfer or assignment duly
executed in blank as the Administrative Agent may from time to time
specify. Subject to Section 7.17.1.1 of the Credit Agreement, if any such
Collateral consisting of investment property consisting of securities now
or hereafter acquired by such Obligor are uncertificated and are issued to
any Obligor or its nominee directly by the issuer thereof, such Obligor
shall promptly notify the Administrative Agent thereof and, at the
Administrative Agent's request and option, pursuant to an agreement in form
and substance reasonably satisfactory to the Administrative Agent, either
(a) cause the issuer to agree to comply without further consent of such
Obligor or such nominee, at any time with instructions from the
Administrative Agent as to such securities, or (b) arrange for the
Administrative Agent to become the registered owner of the securities.
Subject to Section 7.17.1.1 of the Credit Agreement, if any Collateral
consisting of investment property is held by such Obligor or its nominee
through a securities intermediary or commodity intermediary, such Obligor
shall promptly notify the Administrative Agent thereof and, at the
Administrative Agent's request and option, pursuant to an agreement in form
and substance reasonably satisfactory to the Administrative Agent, either
(i) cause such securities intermediary or (as the case may be) commodity
intermediary to agree to comply, in each case without further consent of
such Obligor or such nominee, at any time with entitlement orders
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from the Administrative Agent to such securities intermediary as to such
securities or other investment property, or (as the case may be) to apply
any value distributed on account of any commodity contract as directed by
the Administrative Agent to such commodity intermediary, or (ii) in the
case of financial assets or other investment property held through a
securities intermediary, arrange for the Administrative Agent to become the
entitlement holder with respect to such investment property, with such
Obligor being permitted, prior to the occurrence and continuance of an
Event of Default, to exercise rights to withdraw or otherwise deal with
such investment property. The provisions of this paragraph shall not apply
to any financial assets credited to a securities account for which the
Administrative Agent is the securities intermediary.
4.4 LETTER-OF-CREDIT RIGHTS. If any Obligor is, now or at any time
hereafter, a beneficiary under a letter of credit constituting Collateral,
such Obligor shall promptly (and, in any event prior to the end of the next
succeeding calendar quarter) notify the Administrative Agent thereof and,
at the request and option of the Administrative Agent, such Obligor shall,
pursuant to an agreement in form and substance satisfactory to the
Administrative Agent, either (a) arrange for the issuer and any confirmer
of such letter of credit to consent to an assignment to the Administrative
Agent of the proceeds of the letter of credit or (b) arrange for the
Administrative Agent to become the transferee beneficiary of the letter of
credit, with the Administrative Agent agreeing, in each case, that the
proceeds of the letter of credit are to be applied as provided in the
Credit Agreement.
4.5 COMMERCIAL TORT CLAIMS. If any Obligor shall, now or at any time
hereafter, hold or acquire a commercial tort claim constituting Collateral,
such Obligor shall immediately notify the Administrative Agent in writing
signed by such Obligor of the particulars thereof and grant to the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, in such writing a security interest therein and in the proceeds
thereof, all upon the terms of this Agreement, with such writing to be in
form and substance satisfactory to the Administrative Agent.
4.6 ADDITIONAL STOCK. In case that any Obligor shall acquire any
additional shares of the capital stock of any first tier Material Foreign
Subsidiary or corporation which is the successor of any first tier Material
Foreign Subsidiary, or any securities exchangeable for or convertible into
shares of such capital stock of any class of any first tier Material
Foreign Subsidiary, whether by purchase, stock dividend, stock split or
otherwise, then such shares or other securities shall be subject to the
pledge, assignment and security interest granted to the Administrative
Agent, for the benefit of the Lenders and the Administrative Agent, under
this Agreement and such Obligor shall deliver to the Administrative Agent
forthwith any certificates therefor, accompanied by
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stock powers or other appropriate instruments of assignment duly executed
by such Obligor in blank.
4.7 OTHER ACTIONS AS TO ANY AND ALL COLLATERAL. Each Obligor further
agrees, upon the request of the Administrative Agent and at the
Administrative Agent's option, to take any and all other actions as the
Administrative Agent may reasonably determine to be necessary for the
attachment and perfection of, and the ability of the Administrative Agent
to enforce, the Administrative Agent's security interest in any and all of
the Collateral, including, without limitation, executing, delivering and,
where appropriate, filing financing statements and amendments relating
thereto under the Uniform Commercial Code, to the extent, if any, that such
Obligor's signature thereon is required therefor.
5. REPRESENTATIONS AND WARRANTIES CONCERNING OBLIGOR' LEGAL STATUS. Each
Obligor has previously delivered to the Administrative Agent a certificate
signed by such Obligor and entitled "Perfection Certificate" (the "PERFECTION
CERTIFICATE"). Each Obligor represents and warrants to the Lenders and the
Administrative Agent as of the date hereof, as follows: (a) such Obligor's exact
legal name is that indicated on the Perfection Certificate and on the signature
page hereof, (b) such Obligor is an organization of the type, and is organized
in the jurisdiction, set forth in the Perfection Certificate, (c) the Perfection
Certificate accurately sets forth such Obligor's organizational identification
number or accurately states that such Obligor has none, (d) the Perfection
Certificate accurately sets forth such Obligor's place of business or, if more
than one, its chief executive office, as well as such Obligor's mailing address,
if different, (e) all other information set forth on the Perfection Certificate
pertaining to such Obligor is accurate and complete in all material respects,
(f) except as notified to the Administrative Agent in writing, there has been no
material change in any of such information since the date on which the
Perfection Certificate was signed by such Obligor, (g) each Obligor has full
power, authority and legal right to execute, deliver and perform its obligations
under this Agreement and to pledge and grant a security interest in all of the
Collateral pursuant to this Agreement, and the execution, delivery and
performance hereof and the pledge of and granting of a security interest in the
Collateral hereunder have (i) been duly authorized by all necessary corporate or
other action and (ii) do not contravene (A) any law, rule or regulation, which
individually or in the aggregate, would have a Material Adverse Effect, or any
provision of such Obligor's Governing Documents or (B) any judgment, decree or
order of any tribunal, which individually or in the aggregate, would have a
Material Adverse Effect, or (C) any agreement or instrument to which such
Obligor is a party or by which it or any of its property is bound or affected
and (h) the information set forth in ANNEX A hereto relating to the Stock is
true, correct and complete in all material respects on the date hereof.
6. COVENANTS CONCERNING OBLIGOR' LEGAL STATUS. Each Obligor covenants with
the Lenders and the Administrative Agent as follows: (a) without providing at
least fifteen (15) days prior written notice to the Administrative Agent, such
Obligor will not
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change its name, its place of business or, if more than one, chief executive
office, or organizational identification number if it has one, (b) if such
Obligor does not have an organizational identification number and later obtains
one, such Obligor will forthwith notify the Administrative Agent of such
organizational identification number, and (c) such Obligor will not change its
type of organization, jurisdiction of organization or other legal structure.
7. REPRESENTATIONS AND WARRANTIES CONCERNING COLLATERAL, ETC. Each Obligor
further represents and warrants to the Lenders and the Administrative Agent as
follows: (a) such Obligor is the owner of or has rights in the Collateral, free
from any right or claim of any person or any adverse lien, except for the
security interest created by this Agreement and other Liens permitted by the
Credit Agreement, and (b) none of the Collateral constitutes, or is the proceeds
of, "farm products" as defined in Section 9-102(a)(34) of the Uniform Commercial
Code of the State.
8. COVENANTS CONCERNING COLLATERAL, ETC. Each Obligor further covenants
with the Lenders and the Administrative Agent as follows: (a) except for the
security interest herein granted and Liens permitted by the Credit Agreement,
such Obligor shall (except for sales, transfers or other dispositions permitted
by the Credit Agreement) be the owner of the Collateral free from any right or
claim of any other person or any lien, and such Obligor shall defend the same
against all material claims and demands of all persons at any time claiming the
same or any interests therein adverse to the Administrative Agent or any of the
Lenders and such Obligor will have the like title to and right to pledge and
grant a security interest in the Stock Collateral hereafter pledged or in which
a security interest is granted to the Administrative Agent hereunder and will
likewise defend the rights, pledge and security interest thereof and therein of
the Lenders and the Administrative Agent, (b) such Obligor shall not pledge,
mortgage or create, or suffer to exist any right of any person in or claim by
any person to the Collateral, or any lien in the Collateral in favor of any
person, other than the Administrative Agent except for Liens permitted by the
Credit Agreement, (c) such Obligor will permit the Administrative Agent, or its
designee, to inspect the Collateral, and such Obligor will pay all taxes,
assessments, governmental charges and levies upon the Collateral or incurred in
connection with the use or operation of the Collateral, in each case to the
extent and as further provided in the Credit Agreement.
9. INSURANCE.
9.1. MAINTENANCE OF INSURANCE. Each Obligor will maintain with
financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as shall
be in accordance with general practices of businesses of similar size and
financial strength engaged in similar activities in similar geographic
areas. In addition, all such insurance, to the extent it relates to the
Collateral, shall be payable to the Administrative Agent as loss payee
under a "standard" or "New York" loss payee clause for the benefit of the
Lenders and the Administrative Agent.
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9.2. INSURANCE PROCEEDS. Upon the occurrence and during the
continuance of an Event of Default, the proceeds of any casualty insurance
in respect of any casualty loss of any of the Collateral shall, subject to
the rights, if any, of other parties with an interest having priority in
the property covered thereby, be held by the Administrative Agent as cash
collateral for the Obligations (it being understood and agreed that if an
Event of Default is not then continuing, the Obligors shall be entitled to
receive and use the proceeds of such insurance and, further, in the event
the Administrative Agent receives or is holding any such proceeds at a time
when an Event of Default is not continuing, it shall hold such proceeds in
trust for the Obligors and shall promptly remit such proceeds to the
Company or the relevant Obligor).
9.3. CONTINUATION OF INSURANCE. All policies of insurance shall
provide for at least thirty (30) days prior written cancellation notice to
the Administrative Agent. In the event of failure by any Obligor to provide
and maintain insurance as herein provided, the Administrative Agent may, at
its option, and upon prior written notice to Hexcel provide such insurance
and charge the amount thereof to such Obligor. Each Obligor shall furnish
the Administrative Agent with certificates of insurance evidencing
compliance with the foregoing Section 9.1.
10. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
10.1. EXPENSES INCURRED BY ADMINISTRATIVE AGENT. Upon the occurrence
and during the continuance of an Event of Default in the Administrative
Agent's reasonable discretion, if any Obligor fails to do so, the
Administrative Agent may discharge taxes and other encumbrances at any time
levied or placed on any of the Collateral, maintain any of the Collateral
(subject to license), and pay any necessary filing fees or insurance
premiums. Each Obligor agrees to reimburse the Administrative Agent on
demand for all reasonable expenditures so made. The Administrative Agent
shall have no obligation to any Obligor to make any such expenditures, nor
shall the making thereof be construed as a waiver or cure of any Default or
Event of Default.
10.2. ADMINISTRATIVE AGENT'S OBLIGATIONS AND DUTIES. Neither the
Administrative Agent nor any Lender shall have any obligation or liability
under any contract or agreement by reason of or arising out of this
Agreement or the receipt by the Administrative Agent or any Lender of any
payment relating to any of the Collateral, nor shall the Administrative
Agent or any Lender be obligated in any manner to perform any of the
obligations of such Obligor under or pursuant to any such contract or
agreement, to make inquiry as to the nature or sufficiency of any payment
received by the Administrative Agent or any Lender in respect of the
Collateral or as to the sufficiency of any performance by any party under
any such contract or agreement, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts
which may have been assigned to the Administrative Agent or to which the
Administrative Agent or any Lender may be entitled at any time or times.
The Administrative Agent's sole duty with respect to the custody, safe
keeping
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and physical preservation of the Collateral in its possession, under
Section 9-207 of the Uniform Commercial Code of the State or otherwise,
shall be to deal with such Collateral in the same manner as the
Administrative Agent deals with similar property for its own account;
PROVIDED, HOWEVER, the Administrative Agent shall comply with all laws and
perform all acts as may be required by any governmental authority,
including, without limitation, protecting classified and export controlled
assets and information (including information, contracts and programs) in
the manner requested by such governmental authority.
11. SECURITIES AND DEPOSITS; DIVIDENDS, ETC.
11.1. SECURITIES AND DEPOSITS.
The Administrative Agent may at any time following and during the
continuance of a Default and Event of Default, at its option, transfer to
itself or any nominee any securities constituting Collateral, receive any
income thereon and hold such income as additional Collateral or apply it to
the Obligations. Whether or not any Obligations are due, the Administrative
Agent may following and during the continuance of a Default and Event of
Default that has occurred and is continuing, demand, sue for, collect, or
make any settlement or compromise which it deems desirable with respect to
the Collateral.
11.2. DIVIDENDS, VOTING, ETC.
So long as no Event of Default shall have occurred and be continuing,
each Obligor shall be entitled to receive all cash dividends paid in
respect of the Stock, to vote the Stock and to give consents, waivers and
ratifications in respect of the Stock; PROVIDED, HOWEVER, that no vote
shall be cast or consent, waiver or ratification given by such Obligor if
the effect thereof would materially impair any of the Stock Collateral or
be inconsistent with or result in any violation of any of the provisions of
the Credit Agreement or any of the other Loan Documents. All such rights of
any Obligor to receive cash dividends with respect to the Stock shall cease
in case an Event of Default shall have occurred and be continuing. All such
rights of such Obligor to vote and give consents, waivers and ratifications
with respect to the Stock shall, at the Administrative Agent's option, as
evidenced by the Administrative Agent's notifying such Obligor of such
election, cease in case an Event of Default shall have occurred and be
continuing.
12. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER PERSONS OBLIGATED ON
COLLATERAL. If an Event of Default shall have occurred and be continuing, each
Obligor shall, at the request and option of the Administrative Agent, notify
account debtors and other persons obligated on any of the Collateral of the
security interest of the Administrative Agent in any account or other Collateral
and that payment thereof is to be made directly to the Administrative Agent or
to any financial institution designated by the Administrative Agent as the
Administrative Agent's agent therefor, and the Administrative Agent may itself,
if an Event of Default shall have occurred and be
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continuing without notice to or demand upon such Obligor, so notify account
debtors and other persons obligated on Collateral. After the making of such a
request or the giving of any such notification in accordance with the terms
hereof, such Obligor shall hold any proceeds of collection of accounts and other
Collateral received by such Obligor as trustee for the Administrative Agent, for
the benefit of the Lenders and the Administrative Agent, without commingling the
same with other funds of such Obligor and shall turn the same over to the
Administrative Agent in the identical form received, together with any necessary
endorsements or assignments. The Administrative Agent shall apply the proceeds
of collection of accounts and other Collateral received by the Administrative
Agent to the Obligations, such proceeds to be immediately credited after final
payment in cash or other immediately available funds of the items giving rise to
them.
13. POWER OF ATTORNEY.
13.1. APPOINTMENT AND POWERS OF ADMINISTRATIVE AGENT. Each Obligor
hereby irrevocably constitutes and appoints the Administrative Agent and
any officer or agent thereof, with full power of substitution, as its true
and lawful attorneys-in-fact with full irrevocable power and authority in
the place and stead of such Obligor or in the Administrative Agent's own
name, for the purpose of carrying out the terms of this Agreement, to, upon
the occurrence and during the continuance of an Event of Default, take any
and all appropriate action and to execute any and all documents and
instruments that may be necessary to accomplish the purposes of this
Agreement and, without limiting the generality of the foregoing, hereby
gives said attorneys the power and right, on behalf of such Obligor,
without notice to or assent by such Obligor, to do the following:
(a) upon the occurrence and during the continuance of a Default
or an Event of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise dispose of or deal with any of
the Collateral in such manner as is consistent with the Uniform
Commercial Code of the State and as fully and completely as though the
Administrative Agent were the absolute owner thereof for all purposes,
and to do, at such Obligor's expense, at any time, or from time to
time, all acts and things which the Administrative Agent deems
reasonably necessary to protect, preserve or realize upon the
Collateral and the Administrative Agent's security interest therein,
in order to effect the intent of this Agreement, all no less fully and
effectively as such Obligor might do, including, without limitation,
the execution, delivery and recording, in connection with any sale or
other disposition of any Collateral, of the endorsements, assignments
or other instruments of conveyance or transfer with respect to such
Collateral; and
(b) notwithstanding the foregoing, prior to the occurrence and
continuance of an Event of Default, to file such financing statements
with respect hereto, with or without such Obligor's signature, or a
photocopy of this Agreement in substitution for a financing statement,
as the
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Administrative Agent may reasonably deem appropriate and to execute in
such Obligor's name such financing statements and amendments thereto
and continuation statements which may require such Obligor's
signature.
13.2. RATIFICATION BY OBLIGOR. To the extent permitted by law, each
Obligor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with
an interest and is irrevocable.
13.3. NO DUTY ON ADMINISTRATIVE AGENT. The powers conferred on the
Administrative Agent hereunder are solely to protect the interests of the
Administrative Agent and the Lenders in the Collateral and shall not impose
any duty upon the Administrative Agent to exercise any such powers. The
Administrative Agent shall be accountable only for the amounts that it
actually receives as a result of the exercise of such powers, and neither
it nor any of its officers, directors, employees or agents shall be
responsible to any Obligor for any act or failure to act, except for the
Administrative Agent's or any of its officers', employees' or agents' own
gross negligence or willful misconduct.
14. RIGHTS AND REMEDIES. If an Event of Default shall have occurred and be
continuing, the Administrative Agent, without any other notice to or demand upon
any Obligor, shall have in any jurisdiction in which enforcement hereof is
sought, in addition to all other rights and remedies, the rights and remedies of
a secured party under the Uniform Commercial Code of the State and any
additional rights and remedies as may be provided to a secured party in any
jurisdiction in which Collateral is located, including, without limitation, the
right to take possession of the Collateral, and for that purpose the
Administrative Agent may, so far as such Obligor can give authority therefor,
enter upon any premises on which the Collateral may be situated and remove the
same therefrom. If an Event of Default shall have occurred and be continuing,
the Administrative Agent may in its reasonable discretion require such Obligor
to assemble all or any part of the Collateral at such location or locations
within the jurisdiction(s) of such Obligor's principal office(s) or at such
other locations as the Administrative Agent may reasonably designate. If an
Event of Default shall have occurred and by continuing, each Obligor will allow
the Administrative Agent and its officers, employees and agents reasonable and
non-exclusive access to and use of all real property, equipment and fixtures
owned or leased by such Obligor, as necessary or reasonably appropriate in the
reasonable opinion of the Administrative Agent, to manufacture, produce,
complete, remove and/or sell, in any lawful manner, any Collateral. If an Event
of Default shall have occurred and be continuing, each Obligor further agrees at
the request and direction of the Administrative Agent, to manufacture, produce,
complete, remove and/or sell, and/or to cooperate with the Administrative
Agent's manufacture, production, completion, removal and/or sale of, any
Collateral. Unless the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, the
Administrative Agent shall give to such Obligor at least ten (10) Business Days
prior written notice of the time and place of any public sale of Collateral
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or of the time after which any private sale or any other intended disposition is
to be made. Each Obligor hereby acknowledges that ten (10) Business Days prior
written notice of such sale or sales shall be reasonable notice. In addition,
each Obligor waives any and all rights that it may have to a judicial hearing in
advance of the enforcement of any of the Administrative Agent's rights and
remedies hereunder, including, without limitation, its right following an Event
of Default to take immediate possession of the Collateral and to exercise its
rights and remedies with respect thereto.
15. STANDARDS FOR EXERCISING RIGHTS AND REMEDIES. To the extent that
applicable law imposes duties on the Administrative Agent to exercise remedies
in a commercially reasonable manner, each Obligor acknowledges and agrees that
it is not commercially unreasonable for the Administrative Agent (a) to fail to
incur expenses reasonably deemed significant by the Administrative Agent to
prepare Collateral for disposition or otherwise to fail to complete raw material
or work in process into finished goods or other finished products for
disposition, (b) to fail to obtain third party consents for access to Collateral
to be disposed of, or to obtain or, if not required by other law, to fail to
obtain governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (c) to fail to exercise collection
remedies against account debtors or other persons obligated on Collateral or to
fail to remove Liens on or any adverse claims against Collateral, (d) to
exercise collection remedies against account debtors and other persons obligated
on Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (f) to contact other persons, whether or not in the
same business as such Obligor, for expressions of interest in acquiring all or
any portion of the Collateral, (g) to hire one or more professional auctioneers
to assist in the disposition of Collateral, whether or not the collateral is of
a specialized nature, (h) to dispose of Collateral by utilizing internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties, (k) to purchase insurance or
credit enhancements to insure the Administrative Agent against risks of loss,
collection or disposition of Collateral or to provide to the Administrative
Agent a guaranteed return from the collection or disposition of Collateral, or
(l) to the extent reasonably deemed appropriate by the Administrative Agent, to
obtain the services of brokers, investment bankers, consultants and other
professionals to assist the Administrative Agent in the collection or
disposition of any of the Collateral. Each Obligor acknowledges that the purpose
of this Section 16 is to provide non-exhaustive indications of what actions or
omissions by the Administrative Agent would fulfill the Administrative Agent's
duties under the Uniform Commercial Code of the State or any other relevant
jurisdiction in the Administrative Agent's exercise of remedies against the
Collateral and that other actions or omissions by the Administrative Agent shall
not be deemed to fail to fulfill such duties solely on account of not being
indicated in this Section 15. Without limitation upon the foregoing, nothing
contained in this Section 15 shall be construed to grant any rights to the such
Obligor or to impose any duties on the Administrative Agent that would not have
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been granted or imposed by this Agreement or by applicable law in the absence of
this Section 15.
16. NO WAIVER BY ADMINISTRATIVE AGENT, ETC. The Administrative Agent shall
not be deemed to have waived any of its rights and remedies in respect of the
Obligations or the Collateral unless such waiver shall be in writing and signed
by the Administrative Agent and, to the extent required by the Credit Agreement,
with the consent of the Required Lenders. No delay or omission on the part of
the Administrative Agent in exercising any right or remedy shall operate as a
waiver of such right or remedy or any other right or remedy. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion. All rights and remedies of the Administrative Agent with
respect to the Obligations or the Collateral, whether evidenced hereby or by any
other instrument or papers, shall be cumulative and may be exercised singularly,
alternatively, successively or concurrently at such time or at such times as the
Administrative Agent deems expedient.
17. SURETYSHIP WAIVERS BY OBLIGORS.
Each Obligor waives demand, notice, protest, notice of acceptance of this
Agreement, notice of loans made, credit extended, Collateral received or
delivered or other action taken in reliance hereon and all other demands and
notices of any description. With respect to both the Obligations and the
Collateral, each Obligor assents to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of or
failure to perfect any security interest in any Collateral, to the addition or
release of any party or person primarily or secondarily liable, to the
acceptance of partial payment thereon and the settlement, compromising or
adjusting of any thereof, all in such manner and at such time or times as the
Administrative Agent may deem reasonably advisable. The Administrative Agent
shall have no duty as to the collection or protection of the Collateral or any
income therefrom, the preservation of rights against prior parties, or the
preservation of any rights pertaining thereto beyond the safe custody thereof as
set forth in Section 10.2. Each Obligor further waives any and all other
suretyship defenses.
18. MARSHALLING. Neither the Administrative Agent nor any Lender shall be
required to marshal any present or future collateral security (including but not
limited to the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights and
remedies of the Administrative Agent or any Lender hereunder and of the
Administrative Agent or any Lender in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights and remedies, however existing or arising. To the extent that it lawfully
may, each Obligor hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Administrative Agent's rights and remedies under this Agreement or under
any other instrument creating or evidencing any of the Obligations or under
which any of the Obligations is outstanding or by which any of the Obligations
is secured or payment
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thereof is otherwise assured, and, to the extent that it lawfully may, each
Obligor hereby irrevocably waives the benefits of all such laws.
19. PROCEEDS OF DISPOSITIONS; EXPENSES. Each Obligor shall pay to the
Administrative Agent on demand any and all reasonable expenses, including
reasonable and documented attorneys' fees and disbursements, incurred or paid by
the Administrative Agent in protecting, preserving or enforcing the
Administrative Agent's rights and remedies under or in respect of any of the
Obligations or any of the Collateral. After deducting all of said expenses, the
residue of any proceeds of collection or sale or other disposition of Collateral
shall, to the extent actually received in cash, be applied to the payment of the
Obligations in such order or preference as the Administrative Agent may
determine in accordance with the Credit Agreement, proper allowance and
provision being made for any Obligations not then due. Upon the final payment
and satisfaction in full of all of the Obligations and after making any payments
required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial
Code of the State, any excess shall be returned to such Obligor. In the absence
of final payment and satisfaction in full of all of the Obligations, such
Obligor shall remain liable for any deficiency.
20. OVERDUE AMOUNTS. Until paid, all amounts due and payable by each
Obligor hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for principal
then in effect under the Credit Agreement.
21. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS INTENDED TO
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Each Obligor agrees that any
action or claim arising out of any dispute in connection with this Agreement,
any rights or obligations hereunder or the performance or enforcement of such
rights or obligations may be brought in the courts of the State or any federal
court sitting therein and consents to the non-exclusive jurisdiction of such
court and to service of process in any such suit being made upon such Obligor by
mail at the address specified in Section 15.6 of the Credit Agreement. Each
Obligor hereby waives any objection that it may now or hereafter have to the
venue of any such suit or any such court or that such suit is brought in an
inconvenient court.
22. WAIVER OF JURY TRIAL. THE ADMINISTRATIVE AGENT AND EACH OBLIGOR WAIVES
ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER
OR THE PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as
prohibited by law, the Administrative Agent and each Obligor waives any right
which it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. Each Obligor (a)
certifies that neither the Administrative Agent or any Lender nor any
representative, agent or attorney of the Administrative Agent or any Lender has
represented, expressly or otherwise, that the
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Administrative Agent or any Lender would not, in the event of litigation, seek
to enforce the foregoing waivers or other waivers contained in this Agreement
and (b) acknowledges that, in entering into the Credit Agreement, the
Administrative Agent and the Lenders are relying upon, among other things, the
waivers and certifications contained in this Section 22.
23. RELATION TO CHARGE OVER SHARES AND FRENCH PLEDGE. The provisions of
this Agreement supplement the provisions of the Charge Over Shares and the
French Pledge.
24. MISCELLANEOUS. The headings of each section of this Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon each
Obligor and its successors and assigns, and shall inure to the benefit of the
Administrative Agent, the Lenders and their respective successors and assigns
permitted pursuant to the Credit Agreement. If any term of this Agreement shall
be held to be invalid, illegal or unenforceable, the validity of all other terms
hereof shall in no way be affected thereby, and this Agreement shall be
construed and be enforceable as if such invalid, illegal or unenforceable term
had not been included herein. Each Obligor acknowledges receipt of a copy of
this Agreement.
25 TERMINATION. (a) Notwithstanding anything to the contrary in this
Security Agreement or any other Loan Document: (i) the security interests
hereunder shall automatically cease, terminate and be void, all rights to the
Collateral shall automatically revert to the relevant Obligor, and the
obligations of the Obligors hereunder shall automatically be discharged and
released, upon repayment in full, in cash, of all the Obligations and the
termination of all lending commitments under the Credit Agreement, in each case
without any further action by the Administrative Agent, the Fronting Bank, the
Issuing Bank, any Lender or any other Person, and (ii) the security interest
hereunder shall automatically cease, terminate and be void with respect to any
Collateral that is sold, transferred or otherwise disposed of in accordance with
the terms of the Credit Agreement, and all rights with respect to such
Collateral shall automatically revert to the applicable Obligor, in each case
without any further action by the Administrative Agent, the Fronting Bank, the
Issuing Bank, any Lender or any other Person; PROVIDED that the security
interest in the proceeds and products of such Collateral shall continue.
(b) Upon any termination of this Security Agreement and/or the security
interest hereunder, the Administrative Agent will, at the expense of the
applicable Obligor, execute and deliver to such Obligor such documents as such
Obligor shall reasonably request to evidence the termination of this Security
Agreement and/or such security interest hereunder, and the release and
reassignment of any such Collateral, as the case may be.
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IN WITNESS WHEREOF, intending to be legally bound, each Obligor has caused
this Security Agreement to be duly executed as of the date first above written.
HEXCEL CORPORATION
By: /s/ Stephen C. Forsyth
------------------------------------
Name: Stephen C. Forsyth
Title: Executive Vice President
CLARK-SCHWEBEL
CORPORATION
By: /s/ Stephen C. Forsyth
-----------------------------------
Name: Stephen C. Forsyth
Title: Vice President
HEXCEL POTTSVILLE
CORPORATION
By: /s/ Stephen C. Forsyth
-----------------------------------
Name: Stephen C. Forsyth
Title: Vice President
CLARK-SCHWEBEL HOLDING
CORPORATION
By: /s/ Stephen c. Forsyth
-----------------------------------
Name: Stephen C. Forsyth
Title: Vice President
CS TECH-FAB HOLDINGS, INC.,
By: /s/ Stephen C. Forsyth
-----------------------------------
Name: Stephen C. Forsyth
Title: Vice President
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Accepted:
FLEET CAPITAL CORPORATION,
as Administrative Agent
By: /s/ Edgar Ezerins
--------------------------------------
Name: Edgar Ezerins
Title: Senior Vice President