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Exhibit 10.27
H&E FINANCE CORP. SECURITY AGREEMENT
(IN FAVOR OF THE COLLATERAL AGENT)
THIS SECURITY AGREEMENT, dated as of June 17, 2002 (this "SECURITY AGREEMENT")
is entered into by and between H&E Finance Corp., a Delaware corporation (the
"GRANTOR"), and The Bank of New York, in its capacity as trustee (in such
capacity, the "TRUSTEE") and collateral agent (in such capacity, the "COLLATERAL
AGENT") under the Indenture referred to below.
WHEREAS:
(A) Pursuant to the terms, conditions and provisions of the Indenture dated as
of the date hereof (as it may be amended, restated, supplemented or
otherwise modified and in effect from time to time, the "INDENTURE") among
the Grantor, H&E Equipment Services L.L.C., a Louisiana limited liability
company ("H&E" and together with Grantor, each individually an "ISSUER" and
collectively the "ISSUERS"), the guarantors named therein and the
Collateral Agent, the Issuers are issuing, as of the date hereof
$200,000,000 of 11?% Senior Secured Notes due 2012, and may, from time to
time, issue additional notes in accordance with the provisions of the
Indenture (collectively, the "NOTES");
(B) Pursuant to that certain H&E Finance Corp. Security Agreement dated as of
the date hereof by the Grantor in favor of General Electric Capital
Corporation, as collateral agent for the secured parties therein (the
"CREDIT AGREEMENT AGENT") (such document, as amended, modified or
supplemented from time to time, the "PRIORITY SECURITY AGREEMENT"), the
Grantor has granted to the Credit Agreement Agent a first-priority lien and
security interest in the Collateral (as defined below) pursuant to the
Credit Agreement dated as of June 17, 2002 (as it may be amended, restated,
supplemented or otherwise modified and in effect from time to time, the
"CREDIT AGREEMENT") among H&E, Great Northern Equipment, Inc., a Montana
corporation (together with H&E, each individually, a "BORROWER", and
collectively, and jointly and severally, the "BORROWERS"), the other
Persons named therein as lenders from time to time (the "LENDERS"), the
other Persons named therein as credit parties (the "CREDIT PARTIES"),
Credit Agreement Agent, as Arranger, Bank of America, N.A., as Syndication
Agent and Fleet Capital Corporation, as Documentation Agent, the Lenders
have agreed to make available to Borrowers, upon the terms and conditions
thereof, certain revolving credit facilities;
(C) In order to induce the Trustee to enter into the Indenture and the Initial
Purchasers to purchase the Notes, the Grantor, pursuant to the terms of the
Indenture, has agreed to grant the Collateral Agent a continuing Lien on
the Collateral (as defined below) and a security interest in the Collateral
in accordance with this Security Agreement; and
(D) To the extent and upon the terms set forth in Article 10 of the Indenture,
(i) the Liens granted by this Security Agreement as security for the
Secured Obligations upon any and all of the Collateral are subordinate in
ranking to all present and future Priority Liens upon any and all of the
Collateral; and (ii) the Note Liens upon any and all Collateral will be of
equal ranking with all present and future Parity Liens.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and in order to induce the Trustee to enter into the Indenture and the
Initial Purchasers to purchase the Notes, the Grantor hereby agrees with the
Trustee as the Collateral Agent for the benefit of all the present and future
Holders of Secured Obligations (as defined below) as follows:
1. DEFINED TERMS
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(a) Unless otherwise defined herein, terms defined in the Indenture
and used herein have the meanings given to them in the Indenture. All other
undefined terms contained in this Security Agreement, unless the context
indicates otherwise, have the meanings provided for by Article 9 of the New York
Uniform Commercial Code (the "CODE") to the extent the same are used or defined
therein.
(b) The following shall have (unless otherwise provided elsewhere in
this Security Agreement) the following respective meanings (such meanings being
equally applicable to both the singular and plural form of the terms defined):
"ACCOUNT DEBTOR" means any Person who may become obligated to
an Obligor under, with respect to, or on account of, an
Account, Chattel Paper or General Intangibles (including a
payment intangible);
"ACCOUNTS" means all "accounts," as such term is defined in the
Code, now owned or hereafter acquired by any Obligor including
(a) all accounts receivable, other receivables, book debts and
other forms of obligations (other than forms of obligations
evidenced by Chattel Paper, or Instruments), (including any
such obligations that may be characterized as an account or
contract right under the Code), (b) all of each Obligor's
rights in, to and under all purchase orders or receipts for
goods or services, (c) all of each Obligor's rights to any
goods represented by any of the foregoing (including unpaid
sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or
repossessed goods), (d) all rights to payment due to any
Obligor for property sold, leased, licensed, assigned or
otherwise disposed of, for a policy of insurance issued or to
be issued, for a secondary obligation incurred or to be
incurred, for energy provided or to be provided, for the use or
hire of a vessel under a charter or other contract, arising out
of the use of a credit card or charge card, or for services
rendered or to be rendered by such Obligor or in connection
with any other transaction (whether or not yet earned by
performance on the part of such Obligor), (e) all health care
insurance receivables and (f) all collateral security of any
kind, given by any Account Debtor or any other Person with
respect to any of the foregoing;
"CHATTEL PAPER" means any "chattel paper," as such term is
defined in the Code, including electronic chattel paper, now
owned or hereafter acquired by any Obligor;
"COLLATERAL" has the meaning assigned to such term in Section 2
hereof;
"CONTRACTS" means all "contracts," as such term is defined in
the Code, now owned or hereafter acquired by any Obligor, in
any event, including all contracts, undertakings, or agreements
(other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which any Obligor may now or hereafter
have any right, title or interest, including any agreement
relating to the terms of payment or the terms of performance of
any Account;
"COPYRIGHT LICENSE" means any and all rights now owned or
hereafter acquired by any Obligor under any written agreement
granting any right to use any Copyright or Copyright
registration;
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"COPYRIGHT SECURITY AGREEMENTS" means the Copyright Security
Agreements made in favor of the Trustee as the Collateral Agent
for the benefit of the present and future Holders of Secured
Obligations by each applicable Obligor;
"COPYRIGHTS" means all of the following now owned or hereafter
acquired by any Obligor: (a) all copyrights and General
Intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and
all applications in connection therewith, including all
registrations, recordings and applications in the United States
Copyright Office or in any similar office or agency of the
United States, any state or territory thereof, or any other
country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof;
"DEPOSIT ACCOUNTS" means all "deposit accounts" as such term is
defined in the Code, now or hereafter held in the name of any
Obligor;
"DOCUMENTS" means all "documents," as such term is defined in
the Code, now owned or hereafter acquired by any Obligor,
wherever located;
"EQUIPMENT INVENTORY" means Inventory of any Borrower
consisting of equipment held for sale or lease to third parties
and equipment while on lease to third parties;
"FIXTURES" means all "fixtures" as such term is defined in the
Code, now owned or hereafter acquired by any Obligor;
"GENERAL INTANGIBLES" means all "general intangibles," as such
term is defined in the Code, now owned or hereafter acquired by
any Obligor, including all right, title and interest that such
Obligor may now or hereafter have in or under any Contract, all
payment intangibles, customer lists, Licenses, Copyrights,
Trademarks, Patents, and all applications therefor and
reissues, extensions or renewals thereof, rights in
Intellectual Property, interests in partnerships, joint
ventures and other business associations, licenses, permits,
copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or
patentable), technical information, procedures, designs,
knowledge, know-how, software, data bases, data, skill,
expertise, experience, processes, models, drawings, materials
and records, goodwill (including the goodwill associated with
any Trademark or Trademark License), all rights and claims in
or under insurance policies (including insurance for fire,
damage, loss and casualty, whether covering personal property,
real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance,
and all unearned premiums), uncertificated securities, choses
in action, deposit, checking and other bank accounts, rights to
receive tax refunds and other payments, rights to receive
dividends, distributions, cash, Instruments and other property
in respect of or in exchange for pledged Stock and Investment
Property, rights of indemnification, all books and records,
correspondence, credit files, invoices and other papers,
including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the
control of such Obligor or any computer bureau or service
company from time to time acting for such Obligor;
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"GOODS" means all "goods" as defined in the Code, now owned or
hereafter acquired by any Obligor, wherever located, including
embedded software to the extent included in "goods" as defined
in the Code, manufactured homes, standing timber that is cut
and removed for sale and unborn young of animals;
"HOLDERS OF SECURED OBLIGATIONS" means the Holders of Notes and
all other Persons who at any time hold or acquire any interest
in, or any right to enforce, any of the Secured Obligations;
"INSTRUMENTS" means any "instrument," as such term is defined
in the Code, now owned or hereafter acquired by any Obligor,
wherever located, and, in any event, including all certificated
securities, all certificates of deposit, and all promissory
notes and other evidences of indebtedness, other than
instruments that constitute, or are a part of a group of
writings that constitute, Chattel Paper;
"INTELLECTUAL PROPERTY" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such
Trademarks;
"INVENTORY" means all "inventory," as such term is defined in
the Code, now owned or hereafter acquired by any Obligor,
wherever located, and in any event including inventory,
merchandise, goods and other personal property that are held by
or on behalf of any Obligor for sale or lease or are furnished
or are to be furnished under a contract of service, or that
constitute raw materials, work in process, finished goods,
returned goods, or materials or supplies of any kind, nature or
description used or consumed or to be used or consumed in such
Obligor's business or in the processing, production, packaging,
promotion, delivery or shipping of the same, including all
supplies and embedded software;
"INVESTMENT PROPERTY" means all "investment property" as such
term is defined in the Code now owned or hereafter acquired by
any Obligor, wherever located, including (i) all securities,
whether certificated or uncertificated, including stocks,
bonds, interests in limited liability companies, partnership
interests, treasuries, certificates of deposit, and mutual fund
shares; (ii) all securities entitlements of any Obligor,
including the rights of any Obligor to any securities account
and the financial assets held by a securities intermediary in
such securities account and any free credit balance or other
money owing by any securities intermediary with respect to that
account; (iii) all securities accounts of any Obligor; (iv) all
commodity contracts of any Obligor; and (v) all commodity
accounts of any Obligor;
"LETTER-OF-CREDIT RIGHTS" means "letter-of-credit rights" as
such term is defined in the Code, now owned or hereafter
acquired by any Obligor, including rights to payment or
performance under a letter of credit, whether or not such
Obligor, as beneficiary, has demanded or is entitled to demand
payment or performance;
"LICENSE" means any Copyright License, Patent License,
Trademark License or other license of rights or interests now
held or hereafter acquired by any Obligor;
"PATENT LICENSE" means rights under any written agreement now
owned or hereafter acquired by any Obligor granting any right
with respect to any invention on which a Patent is in
existence;
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"PATENT SECURITY AGREEMENTS" means the Patent Security
Agreements made in favor of the Trustee as the Collateral Agent
for the benefit of the present and future Holders of Secured
Obligations by each applicable Obligor;
"PATENTS" means all of the following in which any Obligor now
holds or hereafter acquires any interest: (a) all letters
patent of the United States or of any other country, all
registrations and recordings thereof, and all applications for
letters patent of the United States or of any other country,
including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar
office or agency of the United States, any State or any other
country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof;
"P&E" means all "equipment," as such term is defined in the
Code, now owned or hereafter acquired by any Obligor, wherever
located and, in any event, including all such Obligor's
machinery and equipment, including processing equipment,
conveyors, machine tools, data processing and computer
equipment, including embedded software and peripheral equipment
and all engineering, processing and manufacturing equipment,
office machinery, furniture, materials handling equipment,
tools, attachments, accessories, automotive equipment,
trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and
nature, trade fixtures and fixtures not forming a part of real
property, together with all additions and accessions thereto,
replacements therefor, all parts therefor, all substitutes for
any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto and
all products and proceeds thereof and condemnation awards and
insurance proceeds with respect thereto. P&E excludes Equipment
Inventory and Fixtures;
"PROCEEDS" means "proceeds," as such term is defined in the
Code, including (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Obligor from
time to time with respect to any of the Collateral, (b) any and
all payments (in any form whatsoever) made or due and payable
to any Obligor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture
of all or any part of the Collateral by any Governmental
Authority (or any Person acting under color of governmental
authority), (c) any claim of any Obligor against third parties
(i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future
infringement or dilution of any Copyright, Copyright License,
Trademark or Trademark License, or for injury to the goodwill
associated with any Trademark or Trademark License, (d) any
recoveries by any Obligor against third parties with respect to
any litigation or dispute concerning any of the Collateral,
including claims arising out of the loss or nonconformity of,
interference with the use of, defects in, or infringement of
rights in, or damage to, Collateral, (e) all amounts collected
on, or distributed on account of, other Collateral, including
dividends, interest, distributions and Instruments with respect
to Investment Property and pledged Stock, and (f) any and all
other amounts, rights to payment or other property acquired
upon the sale, lease, license, exchange or other disposition of
Collateral and all rights arising out of Collateral;
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"SECURED OBLIGATIONS" means all liability of the Grantor,
whenever incurred or arising, under, for or in respect of the
Notes, the Guarantees and any and all other present and future
Note Obligations;
"SPECIFIED PRIORITY LIEN" means the Lien on the Collateral
granted by the Grantor to the Credit Agreement Agent for the
benefit of the Lenders under the Priority Security Agreement
which Lien has priority to the Lien hereof to the extent and on
the terms set forth in Article 10 of the Indenture;
"STOCK" means all shares, options, warrants, general or limited
partnership interests, membership interests or other
equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or
equivalent entity whether voting or nonvoting, including common
stock, preferred stock or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934);
"SUPPORTING OBLIGATIONS" means all "supporting obligations" as
such term is defined in the Code, including letters of credit
and guaranties issued in support of Accounts, Chattel Paper,
Documents, General Intangibles, Instruments or Investment
Property;
"TRADEMARK SECURITY AGREEMENTS" means the Trademark Security
Agreements made in favor of the Trustee as the Collateral Agent
for the benefit of the present and future Holders of Secured
Obligations by each applicable Obligor;
"TRADEMARK LICENSE" means rights under any written agreement
now owned or hereafter acquired by any Obligor granting any
right to use any Trademark; and
"TRADEMARKS" means all of the following now owned or hereafter
existing, adopted or acquired by any Obligor: (a) all
trademarks, trade names, limited liability company names,
corporate names, business names, trade styles, service marks,
logos, other source or business identifiers, prints and labels
on which any of the foregoing have appeared or appear, designs
and general intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and
all applications in connection therewith, including
registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency
of the United States, any state or territory thereof, or any
other country or any political subdivision thereof, (b) all
reissues, extensions or renewals thereof, and (c) all goodwill
associated with or symbolized by any of the foregoing.
2. GRANT OF LIEN
(a) To secure the prompt and complete payment, performance and observance
of all of the Secured Obligations, the Grantor hereby grants, assigns,
conveys, mortgages, pledges, hypothecates and transfers to the Trustee
as the Collateral Agent for the benefit of all of the present and
future Holders of Secured Obligations, a Lien upon all of its right,
title and interest in, to and under all personal property and other
assets, whether now owned by or owing to, or hereafter acquired by or
arising in favor of the Grantor (including under any trade names,
styles or derivations thereof), and whether owned or consigned by
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or to, or leased from or to the Grantor, and regardless of where
located (all of which being hereinafter collectively referred to as
the "COLLATERAL"), including:
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Documents;
(iv) all General Intangibles (including payment intangibles and
software, but excluding any Contract that by its terms
prohibits any Lien, where such prohibition is effective under
applicable law, including Sections 9-406 and 9-408 of the
Code);
(v) all Goods (including Inventory, P&E and Fixtures);
(vi) all Instruments;
(vii) all Investment Property;
(viii) all Deposit Accounts;
(ix) all money, cash or cash equivalents of the Grantor;
(x) all Supporting Obligations and all Letter-of-Credit Rights of
the Grantor;
(xi) all commercial tort claims; and
(xii) to the extent not otherwise included, all Proceeds, tort
claims, insurance claims and other rights to payments not
otherwise included in the foregoing and products of the
foregoing and all accessions to, substitutions and replacements
for, and rents and profits of, each of the foregoing;
PROVIDED, that the Collateral shall not include any property which is
an Excluded Asset for as long as such property is an Excluded
Asset, but if any such property at any time ceases to be an
Excluded Asset, it shall immediately and automatically become
part of the Collateral without need for any additional grant of
a security interest therein.
(b) In addition, to secure the prompt and complete payment, performance
and observance of the Secured Obligations and in order to induce the
Trustee and the Initial Purchasers as aforesaid, the Grantor hereby
grants to the Trustee as the Collateral Agent for the benefit of the
present and future Holders of Secured Obligations, a right of setoff
against the property of the Grantor held by the Credit Agreement
Agent, the Trustee, the Collateral Agent or any present or future
Holder of Secured Obligations, consisting of property described above
in Section 2(a) now or hereafter in the possession or custody of or in
transit to the Credit Agreement Agent, the Trustee, the Collateral
Agent or any present or future Holder of Secured Obligations, for any
purpose, including safekeeping, collection or pledge, for the account
of the Grantor, or as to which the Grantor may have any right or
power.
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3. THE COLLATERAL AGENT'S RIGHTS; LIMITATIONS ON THE COLLATERAL AGENT'S
OBLIGATIONS
(a) It is expressly agreed by the Grantor that, anything herein to the
contrary notwithstanding, the Grantor shall remain liable under each
of its Contracts and each of its Licenses to observe and perform all
the conditions and obligations to be observed and performed by it
thereunder. Neither the Trustee, the Collateral Agent nor any present
or future Holder of Secured Obligations shall have any obligation or
liability under any Contract or License by reason of or arising out of
this Security Agreement or the granting herein of a Lien thereon or
the receipt by the Trustee, the Collateral Agent or any present or
future Holder of Secured Obligations of any payment relating to any
Contract or License pursuant hereto. Neither the Trustee, the
Collateral Agent nor any present or future Holder of Secured
Obligations shall be required or obligated in any manner to perform or
fulfill any of the obligations of the Grantor under or pursuant to any
Contract or License, or to make any payment, or to make any inquiry as
to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any Contract or
License, or to present or file any claims, or to take any action to
collect or enforce any performance or the payment of any amounts which
may have been assigned to it or to which it may be entitled at any
time or times.
(b) Subject to Article 10 of the Indenture, the Collateral Agent may at
any time after an Event of Default shall have occurred and be
continuing (or if any rights of set-off (other than set-off against an
Account arising under the Contract giving rise to the same Account) or
contra accounts may be asserted with respect to the following),
without prior notice to the Grantor, notify Account Debtors and other
Persons obligated on the Collateral that the Collateral Agent has a
security interest therein, and that payments shall be made directly to
the Collateral Agent . Upon the request of the Collateral Agent, the
Grantor shall notify Account Debtors and other Persons obligated on
the Collateral. Once any such notice has been given to any Account
Debtor or other Person obligated on such Collateral, the Grantor shall
not give any contrary instructions to such Account Debtor or other
such Person without the Collateral Agent's prior written consent.
(c) Subject to Article 10 of the Indenture, the Collateral Agent may at
any time in the name of the Grantor or if an Event of Default shall
have occurred and be continuing, in the Collateral Agent's own name,
or in the name of a nominee of the Collateral Agent, communicate (by
mail, telephone, facsimile or otherwise) with Account Debtors, parties
to Contracts, obligors in respect of Instruments and obligors in
respect of Chattel Paper and/or payment intangibles to verify with
such Persons, to the Collateral Agent's satisfaction, the existence,
amount and terms of, and any other matter relating to, any such
Accounts, Contracts, Instruments or Chattel Paper and/or payment
intangibles. If a Default or Event of Default shall have occurred and
be continuing, the Grantor, at its own expense, shall cause the
independent certified public accountants then engaged by the Grantor
to prepare and deliver to the Collateral Agent at any time and from
time to time promptly upon the Collateral Agent's request the
following reports with respect to the Grantor: (i) a reconciliation of
all Accounts; (ii) an aging of all Accounts; (iii) trial balances; and
(iv) a test verification of such Accounts as the Collateral Agent may
request. The Grantor, at its own expense, shall deliver to the
Collateral Agent the results of each physical verification, if any,
which the Grantor may in its discretion have made, or caused any other
Person to have made on its behalf, of all or any portion of its
Inventory.
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4. REPRESENTATIONS AND WARRANTIES
The Grantor represents and warrants that:
(a) The Grantor has rights in and the power to transfer each item of the
Collateral upon which it purports to grant a Lien hereunder free and
clear of any and all Liens other than Permitted Liens (which Permitted
Liens include the Specified Priority Lien).
(b) No effective security agreement, financing statement, equivalent
security or Lien instrument or continuation statement covering all or
any part of the Collateral is on file or of record in any public
office, except such as may have been filed (i) by the Grantor in favor
of the Credit Agreement Agent pursuant to the Credit Agreement or the
other Priority Lien Documents; (ii) by the Grantor in favor of the
Trustee as the Collateral Agent for the benefit of the present and
future Holders of Secured Obligations pursuant to this Security
Agreement or the other Note Documents; and (iii) in connection with
any other Permitted Liens pursuant to the Indenture.
(c) This Security Agreement is effective to create a valid and continuing
Lien on and, upon the filing of the appropriate financing statements
in the filing offices listed on Schedule I hereto, a perfected Lien in
favor of the Collateral Agent for the benefit of the present and
future Holders of Secured Obligations, on the Collateral with respect
to which a Lien may be perfected by filing pursuant to the Code. Such
Lien is prior to all other Liens, except Priority Liens and Permitted
Liens that would be prior to Liens in favor of the Collateral Agent as
a matter of law, and is enforceable as such as against any and all
creditors of and purchasers from the Grantor (other than purchasers
and lessees of Inventory in the ordinary course of business). All
action by the Grantor reasonably necessary or desirable to protect and
perfect such Lien on each item of the Collateral has been duly taken.
(d) Schedule II hereto lists all Instruments, Letter-of-Credit Rights and
Chattel Paper of the Grantor. All action by the Grantor necessary or
desirable to protect and perfect the Lien of the Collateral Agent on
each item set forth on Schedule II (including the delivery of all
originals thereof to the Collateral Agent and the legending of all
Chattel Paper as required by Section 5(b) hereof; PROVIDED that prior
to the Discharge of Priority Lien Indebtedness, such items need not be
delivered to the Collateral Agent so long as they are held by the
Credit Agreement Agent) has been duly taken. The Lien of the
Collateral Agent for the benefit of the present and future Holders of
Secured Obligations, on the Collateral listed on Schedule II hereto is
prior to all other Liens, except for Specified Priority Liens and
Permitted Liens that would be prior to the Liens in favor of the
Collateral Agent as a matter of law, and is enforceable as such
against any and all creditors of and purchasers from the Grantor.
(e) The Grantor's name as it appears in official filings in the state of
its incorporation or other organization, the type of entity of the
Grantor (including corporation, partnership, limited partnership or
limited liability company), organizational identification number
issued by the Grantor's state of incorporation or organization or a
statement that no such number has been issued, the Grantor's state of
organization or incorporation, the location of the Grantor's chief
executive office, principal place of business, offices, all warehouses
and premises where Collateral is stored or located, and the locations
of all of its books and records concerning the Collateral are set
forth on Schedule III hereto.
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(f) With respect to the Accounts, (i) they represent bona fide sales of
Inventory or rendering of services to Account Debtors in the ordinary
course of the Grantor's business and are not evidenced by a judgment,
Instrument or Chattel Paper; (ii) except as permitted under the Credit
Agreement, there are no setoffs, claims or disputes existing or
asserted with respect thereto and the Grantor has not made any
agreement with any Account Debtor for any extension of time for the
payment thereof, any compromise or settlement for less than the full
amount thereof, any release of any Account Debtor from liability
therefor, or any deduction therefrom except a discount or allowance
allowed by the Grantor in the ordinary course of its business for
prompt payment and disclosed to the Collateral Agent; (iii) to the
Grantor's knowledge, there are no facts, events or occurrences which
are not permitted under the Credit Agreement which in any way impair
the validity or enforceability thereof or could reasonably be expected
to reduce the amount payable thereunder as shown on the Grantor's
books and records and any invoices and statements delivered to the
Collateral Agent with respect thereto; and (iv) the Grantor has not
received any notice of proceedings or actions which are threatened or
pending against any Account Debtor which might result in any adverse
change in such Account Debtor's financial condition. Further with
respect to the Accounts (x) the amounts shown on all invoices,
statements and collateral reports which may be delivered to the Credit
Agreement Agent or the Collateral Agent with respect thereto are
actually and absolutely owing to the Grantor as indicated thereon and
are not in any way contingent; (y) no payments have been or shall be
made thereon except payments immediately delivered to the applicable
Blocked Accounts, to Credit Agreement Agent or to the Collateral
Agent; and (z) to the Grantor's knowledge, all Account Debtors have
the capacity to contract.
(g) With respect to any Inventory, (i) such Inventory is located at one of
the Grantor's locations set forth on Schedule III hereto, PROVIDED
that upon 15 days' prior written notice to the Collateral Agent and
upon the Collateral Agent having filed UCC-1 financing statements, the
Grantor may amend Schedule III; (ii) no Inventory is now, or shall at
any time or times hereafter be stored at any other location without
the Collateral Agent's prior consent, which shall not be unreasonably
withheld, and if the Collateral Agent gives such consent, the Grantor
will concurrently therewith obtain, to the extent required by the
Indenture, bailee, landlord and mortgagee agreements; (iii) the
Grantor has good, indefeasible and merchantable title to such
Inventory and such Inventory is not subject to any Lien or security
interest or document whatsoever except for the Priority Liens, the
Lien granted to the Collateral Agent for the benefit of the present
and future Holders of Secured Obligations, and Permitted Liens
pursuant to the Indenture; (iv) such Inventory is not subject to any
licensing, patent, royalty, trademark, tradename or copyright
agreements with any third parties which would require any consent of
any third party upon sale or disposition of that Inventory or the
payment of any monies to any third party as a precondition of such
sale or other disposition; and (v) the completion of manufacture, sale
or other disposition of such Inventory by the Collateral Agent
following an Event of Default shall not require the consent of any
Person other than as provided in the Indenture and shall not
constitute a breach or default under any contract or agreement to
which the Grantor is a party or to which such property is subject.
(h) The Grantor has no interest in, or title to, any Patent, Trademark or
Copyright except as set forth in Schedule IV hereto. This Indenture is
effective to create a valid and continuing Lien on and, upon filing of
the Copyright Security Agreements with the United States Copyright
Office and filing of the Patent Security Agreements and the Trademark
Security Agreements with the United States Patent and Trademark
Office, perfected Liens in favor of the Collateral Agent on the
Grantor's Patents, Trademarks
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(other than state registered trademarks) and Copyrights and such
perfected Liens are enforceable as such as against any and all
creditors of and purchasers from the Grantor. Upon filing of the
Copyright Security Agreements with the United States Copyright Office
and filing of the Patent Security Agreements and the Trademark
Security Agreements with the United States Patent and Trademark Office
and the filing of appropriate financing statements listed on
Schedule I hereto, all action necessary or desirable to protect and
perfect the Collateral Agent's Lien on the Grantor's Patents,
Trademarks (other than state registered trademarks) or Copyrights
shall have been duly taken.
(i) The Grantor does not hold for sale or lease or lease as lessor any
goods that are covered by a certificate of title statute of any state
other than goods of a kind that it is in the business of selling.
(j) All motor vehicles owned by the Grantor which are P&E are listed on
Schedule V hereto, by model, model year and vehicle identification
number ("VIN") except in respect to any vehicles which are Excluded
Assets. The Grantor shall provide notice to the Collateral Agent of,
and deliver to the Collateral Agent motor vehicle title certificates
for, all motor vehicles that are P&E and that are covered by a
certificate of title from time to time owned by it, and shall cause
such title certificates to be filed (with the Collateral Agent's lien
noted thereon) in the appropriate state motor vehicle filing office;
PROVIDED that prior to the Discharge of Priority Lien Indebtedness,
such motor vehicle title certificates need not be delivered to the
Collateral Agent so long as they are held by the Credit Agreement
Agent.
5. COVENANTS
The Grantor covenants and agrees with the Trustee as the Collateral Agent
for the benefit of the present and future Holders of Secured Obligations,
that from and after the date of this Security Agreement and until the date
of termination of the Liens and this Security Agreement:
(a) Further Assurances: Pledge of Instruments; Chattel Paper.
(i) At any time and from time to time, upon the written request of
the Collateral Agent and at the sole expense of the Grantor,
the Grantor shall promptly and duly execute and deliver any and
all such further instruments and documents and take such
further actions as the Collateral Agent may deem desirable to
obtain the full benefits of this Security Agreement and of the
rights and powers herein granted, including (A) using its best
efforts to secure all consents and approvals necessary or
appropriate for the assignment to or for the benefit of the
Collateral Agent of any License or Contract held by the Grantor
and to enforce the security interests granted hereunder; and
(B) filing any financing or continuation statements under the
Uniform Commercial Code with respect to the Liens granted
hereunder or under the Indenture or any other Note Document as
to those jurisdictions that are not Uniform Commercial Code
jurisdictions.
(ii) Unless the Collateral Agent shall otherwise consent in writing
(which consent may be revoked), then upon, and concurrently
with, the discharge of Priority Lien Indebtedness, without
notice or demand, the Grantor shall deliver to the Collateral
Agent all Collateral consisting of negotiable Documents,
certificated securities, Chattel Paper and Instruments (in each
case, accompanied by stock
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powers, allonges or other instruments of transfer executed in
blank) promptly after such the Grantor receives the same.
(iii) The Grantor shall obtain or use its commercially reasonable
best efforts to obtain waivers or subordinations of Liens from
landlords and mortgagees, and the Grantor shall in all
instances obtain signed acknowledgements of the Collateral
Agent's Liens from bailees having possession of any of the
Grantor's Goods that they hold for the benefit of Credit
Agreement Agent or the Collateral Agent.
(iv) The Grantor hereby irrevocably authorizes the Collateral Agent
at any time and from time to time to file in any filing office
in any Uniform Commercial Code jurisdiction any initial
financing statements and amendments thereto that (a) indicate
the Collateral (i) as all assets of the Grantor or words of
similar effect, regardless of whether any particular asset
comprised in the Collateral falls within the scope of Article 9
of the Code or such jurisdiction; or (ii) as being of an equal
or lesser scope or with greater detail, and (b) contain any
other information required by part 5 of Article 9 of the Code
for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether the
Grantor is an organization, the type of organization and any
organization identification number issued to the Grantor; and
(ii) in the case of a financing statement filed as a fixture
filing or indicating Collateral as as-extracted collateral or
timber to be cut, a sufficient description of real property to
which the Collateral relates. The Grantor agrees to furnish any
such information to the Collateral Agent promptly upon request.
The Grantor also ratifies its authorization for the Collateral
Agent to have filed in any Uniform Commercial Code jurisdiction
any initial financing statements or amendments thereto if filed
prior to the date hereof.
(v) The Grantor shall promptly, and in any event within two (2)
Business Days after the same is acquired by it, notify the
Collateral Agent of any commercial tort claim (as defined in
the Code) acquired by it and unless otherwise consented by
Credit Agreement Agent and the Collateral Agent, the Grantor
shall enter into a supplement to this Security Agreement,
granting to the Collateral Agent a Lien in such commercial tort
claim.
(b) Maintenance of Records
The Grantor shall keep and maintain, at its own cost and expense,
satisfactory and complete records of the Collateral, including a
record of any and all payments received and any and all credits
granted with respect to the Collateral and all other dealings with the
Collateral. The Grantor shall mark its books and records pertaining to
the Collateral to evidence this Security Agreement and the Liens
granted hereby. If in accordance with, and to the extent consistent
with, the terms of the Indenture, the Grantor retains possession of
any Chattel Paper or Instruments with the Collateral Agent's consent,
such Chattel Paper and Instruments shall be marked with the following
legend: "This writing and the obligations evidenced or secured hereby
are subject to the security interest of General Electric Capital
Corporation, as Agent, for the benefit of Agent and certain Lenders
and of The Bank of New York, as the Collateral Agent, for the benefit
of the Collateral Agent and certain holders of Senior Notes."
(c) Covenants Regarding Patent, Trademark and Copyright Collateral
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(i) The Grantor shall notify the Collateral Agent immediately if it
knows or has reason to know that any application or
registration relating to any Patent, Trademark or Copyright
(now or hereafter existing) may become abandoned or dedicated,
or of any adverse determination or development (including the
institution of, or any such determination or development in,
any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any court)
regarding the Grantor's ownership of any Patent, Trademark or
Copyright, its right to register the same, or to keep and
maintain the same.
(ii) In no event shall the Grantor, either directly or through any
agent, employee, licensee or designee, file an application for
the registration of any Patent, Trademark or Copyright with the
United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency without giving
the Collateral Agent prior written notice thereof, and, upon
request of the Collateral Agent, the Grantor shall execute and
deliver any and all Patent Security Agreements, Copyright
Security Agreements or Trademark Security Agreements as the
Collateral Agent may request to evidence the Collateral Agent's
Lien on such Patent, Trademark or Copyright, and the General
Intangibles of the Grantor relating thereto or represented
thereby.
(iii) The Grantor shall take all actions necessary or requested by
the Collateral Agent to maintain and pursue each application,
to obtain the relevant registration and to maintain the
registration of each of the Patents, Trademarks and Copyrights
(now or hereafter existing), including the filing of
applications for renewal, affidavits of use, affidavits of
noncontestability and opposition and interference and
cancellation proceedings, unless the Grantor shall determine
that such Patent, Trademark or Copyright is not material to the
conduct of its business.
(iv) In the event that any of the Patent, Trademark or Copyright
Collateral is infringed upon, or misappropriated or diluted by
a third party, the Grantor shall notify the Collateral Agent
promptly after the Grantor learns thereof. The Grantor shall,
unless it shall reasonably determine that such Patent,
Trademark or Copyright Collateral is in no way material to the
conduct of its business or operations, promptly sue for
infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or
dilution, and shall take such other actions as the Collateral
Agent shall deem appropriate under the circumstances to protect
such Patent, Trademark or Copyright Collateral.
(d) Indemnification
In any suit, proceeding or action brought by the Trustee, the
Collateral Agent or any present of future Holder of Secured
Obligations relating to any Collateral for any sum owing with respect
thereto or to enforce any rights or claims with respect thereto, the
Grantor will save, indemnify and keep the Trustee, the Collateral
Agent and the present and future Holders of Secured Obligations
harmless from and against all reasonable expense (including reasonable
attorneys' fees and expenses), loss or damage suffered by reason of
any defense, setoff, counterclaim, recoupment or reduction of
liability whatsoever of the Account Debtor or other Person obligated
on the Collateral, arising out of a breach by the Grantor of any
obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to, or in favor of, such
obligor or
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its successors from the Grantor, except in the case of the Trustee,
the Collateral Agent or any present or future Holder of Secured
Obligations, to the extent such expense, loss or damage is
attributable solely to the gross negligence or willful misconduct of
the Trustee, the Collateral Agent or such present or future Holder of
Secured Obligations as finally determined by a court of competent
jurisdiction. All such obligations of the Grantor shall be and remain
enforceable against and only against the Grantor and shall not be
enforceable against the Trustee, the Collateral Agent or any present
or future Holder of Secured Obligations.
(e) Compliance with Terms of Accounts, etc.
In all material respects, the Grantor will perform and comply with all
obligations in respect of the Collateral and all other agreements to
which it is a party or by which it is bound relating to the
Collateral.
(f) Limitation on Liens on Collateral
The Grantor will not create, permit or suffer to exist, and will
defend the Collateral against, and take such other action as is
necessary to remove, any Lien on the Collateral except Permitted Liens
(including Specified Priority Liens), and will defend the right, title
and interest of the Trustee, the Collateral Agent and the present and
future Holders of Secured Obligations in and to any of the Grantor's
rights under the Collateral against the claims and demands of all
Persons whomsoever.
(g) Limitations on Disposition
The Grantor will not sell, license, lease, transfer or otherwise
dispose of any of the Collateral, or attempt or contract to do so
except as permitted by the Indenture.
(h) Notices
The Grantor will advise the Collateral Agent promptly, in reasonable
detail, (i) of any Lien (other than Permitted Liens) or claim made or
asserted against any of the Collateral; and (ii) of the occurrence of
any other event which would have a material adverse effect on the
aggregate value of the Collateral or on the Liens created hereunder or
under the Indenture or any other Note Document.
(i) Further Identification of Collateral
The Grantor will, if so requested by the Collateral Agent, furnish to
the Collateral Agent, as often as the Collateral Agent requests,
statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as
the Collateral Agent may reasonably request, all in such detail as the
Collateral Agent may specify.
(j) Good Standing Certificates
At the request of the Collateral Agent, but not more frequently than
once during each calendar quarter, the Grantor shall, unless the
Collateral Agent shall otherwise consent, provide to the Collateral
Agent a certificate of good standing from its state of incorporation
or organization.
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(k) No Reincorporation
Without limiting the prohibitions on Change of Control involving the
Grantor contained in the Indenture, the Grantor shall not
reincorporate or reorganize itself under the laws of any jurisdiction
other than the jurisdiction in which it is incorporated or organized
as of the date hereof without the prior written consent of the
Collateral Agent.
(l) Terminations; Amendments Not Authorized
The Grantor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect
to any financing statement without the prior written consent of the
Collateral Agent and agrees that it will not do so without the prior
written consent of the Collateral Agent, subject to the Grantor's
rights under Section 9-509(d)(2) of the Code.
(m) Authorized Terminations
All security interests granted herein shall continue until released in
accordance with the Indenture.
(n) Government Contracts
The Grantor agrees that if they are a party to any contract or
agreement with any Governmental Authority they will, if requested by
the Collateral Agent, take such actions as may be necessary to comply
with the Federal Assignment of Claims Act, as amended (31 U.S.C.
Section 3727) or any similar state or local law pursuant to which the
consideration due the Grantor thereunder is $3,000,000 or more in the
aggregate.
6. THE COLLATERAL AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT
On the Closing Date, the Grantor shall execute and deliver to the
Collateral Agent powers of attorney (collectively, the "POWER OF ATTORNEY")
substantially in the forms attached hereto as Exhibit A-1 and A-2,
respectively. The powers of attorney granted pursuant to the Power of
Attorney are powers coupled with an interest and shall be irrevocable until
the payment and performance in full of the Secured Obligations. The powers
conferred on the Collateral Agent for the benefit of the present and future
Holders of Secured Obligations, under the Power of Attorney are solely to
protect the Collateral Agent's interests (for the benefit of the present
and future Holders of Secured Obligations) in the Collateral and shall not
impose any duty upon the Collateral Agent to exercise any such powers. The
Collateral Agent agrees that (a) except for the powers granted in clause
(h) of the Power of Attorney, it shall not exercise any power or authority
granted under the Power of Attorney unless an Event of Default has occurred
and is continuing, (b) the exercise of any power or authority granted under
the Power of Attorney shall be subject to Article 10 of the Indenture, and
(c) the Collateral Agent shall account for any moneys received by the
Collateral Agent in respect of any foreclosure on or disposition of
Collateral pursuant to the Power of Attorney provided that neither the
Collateral Agent nor any present or future Holder of Secured Obligations
shall have any duty as to any Collateral, and the Collateral Agent and the
present and future Holders of Secured Obligations shall be accountable only
for amounts they actually receive as a result of the exercise of such
powers. NONE OF THE COLLATERAL AGENT, THE PRESENT OR FUTURE HOLDERS OF
SECURED OBLIGATIONS OR THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO GRANTOR FOR
ANY ACT OR
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FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT
OF DAMAGES TO THE EXTENT ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL
DAMAGES.
7. REMEDIES; RIGHTS UPON DEFAULT
(a) Subject to Article 10 of the Indenture: (i) in addition to all other
rights and remedies granted to it under this Security Agreement, the
Indenture, the other Note Documents and under any other instrument or
agreement securing, evidencing or relating to any of the Secured
Obligations, if any Event of Default shall have occurred and be
continuing, the Collateral Agent may exercise all rights and remedies
of a secured party under the Code; (ii) without limiting the
generality of the foregoing, the Grantor expressly agrees that in any
such event the Collateral Agent, without demand of performance or
other demand, advertisement or notice of any kind (except the notice
specified below of time and place of public or private sale) to or
upon the Grantor or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum
extent permitted by the Code and other applicable law), may forthwith
enter upon the premises of the Grantor where any Collateral is located
through self-help, without judicial process, without first obtaining a
final judgment or giving the Grantor or any other Person notice and
opportunity for a hearing on the Collateral Agent's claim or action
and may collect, receive, assemble, process, appropriate and realize
upon the Collateral, or any part thereof, and may forthwith sell,
lease, license, assign, give an option or options to purchase, or sell
or otherwise dispose of and deliver said Collateral (or contract to do
so), or any part thereof, in one or more parcels at a public or
private sale or sales, at any exchange at such prices as it may deem
acceptable, for cash or on credit or for future delivery without
assumption of any credit risk; (iii) the Trustee, the Collateral Agent
or any present or future Holder of Secured Obligations shall have the
right upon any such public sale or sales and, to the extent permitted
by law, upon any such private sale or sales, to purchase for the
benefit of the present and future Holders of Secured Obligations, the
whole or any part of said Collateral so sold, free of any right or
equity of redemption, which equity of redemption the Grantor hereby
releases; (iv) such sales may be adjourned and continued from time to
time with or without notice; (v) the Collateral Agent shall have the
right to conduct such sales on the Grantor's premises or elsewhere and
shall have the right to use the Grantor's premises without charge for
such time or times as the Collateral Agent deems necessary or
advisable; (vi) if any Event of Default shall have occurred and be
continuing, the Grantor further agrees, at the Collateral Agent's
request, to assemble the Collateral and make it available to the
Collateral Agent at a place or places designated by the Collateral
Agent which are reasonably convenient to the Collateral Agent and the
Grantor, whether at the Grantor's premises or elsewhere; (vii) until
the Collateral Agent is able to effect a sale, lease, or other
disposition of Collateral, the Collateral Agent shall have the right
to hold or use Collateral, or any part thereof, to the extent that it
deems appropriate for the purpose of preserving Collateral or its
value or for any other purpose deemed appropriate by the Collateral
Agent; (viii) the Collateral Agent shall have no obligation to the
Grantor to maintain or preserve the rights of the Grantor as against
third parties with respect to Collateral while Collateral is in the
possession of the Collateral Agent; (ix) the Collateral Agent may, if
it so elects, seek the appointment of a receiver or keeper to take
possession of Collateral and to enforce any of the Collateral Agent's
remedies (for the benefit of the present and future Holders of Secured
Obligations), with respect to such appointment
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without prior notice or hearing as to such appointment; (x) the
Collateral Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale to the Secured
Obligations as provided in the Indenture, and only after so applying
such net proceeds, and after the payment by the Collateral Agent for
application to amounts secured by the Priority Lien and after payment
by the Collateral Agent of any other amount required by any provision
of law, need the Collateral Agent account for the surplus, if any, to
the Grantor; (xi) to the maximum extent permitted by applicable law,
the Grantor waives all claims, damages, and demands against the
Trustee, the Collateral Agent or any present or future Holder of
Secured Obligations arising out of the repossession, retention or sale
of the Collateral except to the extent arising out of the gross
negligence or willful misconduct of the Trustee, the Collateral Agent
or such present or future Holder of Secured Obligations as finally
determined by a court of competent jurisdiction; (xii) the Grantor
agrees that ten (10) days prior notice by the Collateral Agent of the
time and place of any public sale or of the time after which a private
sale may take place is reasonable notification of such matters; and
(xiii) the Grantor shall remain liable for any deficiency if the
proceeds of any sale or disposition of the Collateral are insufficient
to pay all of the Secured Obligations, including any attorneys' fees
or other expenses incurred by the Trustee, the Collateral Agent or any
present or future Holder of Secured Obligations to collect such
deficiency.
(b) Except as otherwise specifically provided herein, the Grantor hereby
waives presentment, demand, protest or any notice (to the maximum
extent permitted by applicable law) of any kind in connection with
this Indenture or any Collateral.
(c) To the extent that applicable law imposes duties on the Collateral
Agent to exercise remedies in a commercially reasonable manner, the
Grantor acknowledges and agrees that it is not commercially
unreasonable for the Collateral Agent (i) to fail to incur expenses
reasonably deemed significant by the Collateral Agent to prepare
Collateral for disposition or otherwise to complete raw material or
work in process into finished goods or other finished products for
disposition; (ii) 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; (iii) to fail to exercise collection remedies against
Account Debtors or other Persons obligated on Collateral or to remove
Liens on or any adverse claims against Collateral; (iv) 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; (v) to advertise
dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature;
(vi) to contact other Persons, whether or not in the same business as
the Grantor, for expressions of interest in acquiring all or any
portion of such Collateral; (vii) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not
the Collateral is of a specialized nature; (viii) 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 capacity of doing so, or that match buyers and sellers of
assets; (ix) to dispose of assets in wholesale rather than retail
markets; (x) to disclaim disposition warranties, such as title,
possession or quiet enjoyment; (xi) to purchase insurance or credit
enhancements to insure the Collateral Agent against risks of loss,
collection or disposition of Collateral or to provide to the
Collateral Agent a guaranteed return from the collection or
disposition of Collateral; or (xii) to the extent deemed appropriate
by the Collateral Agent, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist the
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Collateral Agent in the collection or disposition of any of the
Collateral. The Grantor acknowledges that the purpose of this
Section 7(c) is to provide non-exhaustive indications of what actions
or omissions by Agent would not be commercially unreasonable in the
Collateral Agent's exercise of remedies against the Collateral and
that other actions or omissions by the Collateral Agent shall not be
deemed commercially unreasonable solely on account of not being
indicated in this Section 7(c). Without limitation upon the foregoing,
nothing contained in this Section 7(c) shall be construed to grant any
rights to the Grantor or to impose any duties on the Collateral Agent
that would not have been granted or imposed by this Security Agreement
or by applicable law in the absence of this Section 7(c).
(d) Neither the Trustee, the Collateral Agent nor any present or future
Holders of Secured Obligations shall be required to make any demand
upon, or pursue or exhaust any of their rights or remedies against,
the Grantor, any other obligor, guarantor, pledgor or any other Person
with respect to the payment of the Secured Obligations or to pursue or
exhaust any of their rights or remedies with respect to any Collateral
therefor or any direct or indirect guarantee thereof. Neither the
Trustee, the Collateral Agent nor any present or future Holders of
Secured Obligations shall be required to marshal the Collateral or any
guarantee of the Secured Obligations or to resort to the Collateral or
any such guarantee in any particular order, and all of its and their
rights hereunder or under the Indenture or any other Note Document
shall be cumulative. To the extent it may lawfully do so, the Grantor
absolutely and irrevocably waives and relinquishes the benefit and
advantage of, and covenants not to assert against the Trustee, the
Collateral Agent or any present or future Holder of Secured
Obligations, any valuation, stay, appraisement, extension, redemption
or similar laws and any and all rights or defenses it may have as a
surety now or hereafter existing which, but for this provision, might
be applicable to the sale of any Collateral made under the judgment,
order or decree of any court, or privately under the power of sale
conferred by this Security Agreement, or otherwise.
8. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY
For the purpose of enabling the Collateral Agent to exercise rights and
remedies under Section 7 hereof (including, without limiting the terms of
Section 7 hereof, in order to take possession of, hold, preserve, process,
assemble, prepare for sale, market for sale, sell or otherwise dispose of
Collateral) at such time as the Collateral Agent shall be lawfully entitled
to exercise such rights and remedies, the Grantor hereby grants to the
Collateral Agent, for the benefit of the Collateral Agent for the present
and future Holders of Secured Obligations, an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compensation to
the Grantor) to use, license or sublicense any Intellectual Property now
owned or hereafter acquired by the Grantor, and wherever the same may be
located, and including in such license access to all media in which any of
the licensed items may be recorded or stored and to all computer software
and programs used for the compilation or printout thereof.
9. LIMITATION ON THE COLLATERAL AGENT'S DUTY IN RESPECT OF COLLATERAL
The Collateral Agent shall use reasonable care with respect to the
Collateral in its possession or under its control. Neither the Collateral
Agent nor any present or future Holder of Secured Obligations shall have
any other duty as to any Collateral in its possession or control or in the
possession or control of any agent or nominee of the Collateral Agent or
such present or future
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Holder of Secured Obligations, or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto.
10. REINSTATEMENT
This Security Agreement shall remain in full force and effect and continue
to be effective should any petition be filed by or against the Grantor for
liquidation or reorganization, should the Grantor become insolvent or make
an assignment for the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of the
Grantor's assets, and shall continue to be effective or be reinstated, as
the case may be, if at any time payment and performance of the Secured
Obligations, or any part thereof, is, pursuant to applicable law, rescinded
or reduced in amount, or must otherwise be restored or returned by any
obligee of the Secured Obligations, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Secured
Obligations shall be reinstated and deemed reduced only by such amount paid
and not so rescinded, reduced, restored or returned.
11. NOTICES
Except as otherwise provided herein, whenever it is provided herein that
any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by
any other party, or whenever any of the parties desires to give and serve
upon any other party any communication with respect to this Security
Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be given
in the manner, and deemed received, as provided for under the Indenture.
12. SEVERABILITY
Whenever possible, each provision of this Security Agreement shall be
interpreted in a manner as to be effective and valid under applicable law,
but if any provision of this Security Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity without invalidating the remainder
of such provision or the remaining provisions of this Security Agreement.
This Security Agreement is to be read, construed and applied together with
the Indenture and the other Note Documents which, taken together, set forth
the complete understanding and agreement of the Trustee, the Collateral
Agent, the present and future Holders of Secured Obligations and the
Grantor with respect to the matters referred to herein and therein.
13. NO WAIVER; CUMULATIVE REMEDIES
Neither the Trustee, the Collateral Agent nor any present or future Holders
of Secured Obligations shall by any act, delay, omission or otherwise be
deemed to have waived any of its rights or remedies hereunder, and no
waiver shall be valid unless in writing, signed by the Collateral Agent and
then only to the extent therein set forth. A waiver by the Collateral Agent
of any right or remedy hereunder on any one occasion shall not be construed
as a bar to any right or remedy which the Collateral Agent would otherwise
have had on any future occasion. No failure to exercise nor any delay in
exercising on the part of the Trustee, the Collateral Agent or any present
or future Holder of Secured Obligations, any right, power or
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privilege hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law. None of the terms or
provisions of this Security Agreement may be waived, altered, modified or
amended except by an instrument in writing, duly executed by the Collateral
Agent and the Grantor.
14. LIMITATION BY LAW
All rights, remedies and powers provided in this Security Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions of this Security
Agreement are intended to be subject to all applicable mandatory provisions
of law that may be controlling and to be limited to the extent necessary so
that they shall not render this Security Agreement invalid, unenforceable,
in whole or in part, or not entitled to be recorded, registered or filed
under the provisions of any applicable law.
15. ASSIGNMENT
The Collateral Agent may assign all of its rights and delegate all of its
obligations hereunder to any successor Collateral Agent as provided in the
Indenture. The Collateral Agent and each Holder of Secured Obligations may
assign, indorse or transfer any instrument evidencing all or any part of
the Secured Obligations as provided in, and in accordance with, the
Indenture, and the holder of such instrument shall be entitled to the
benefits of this Security Agreement.
16. TERMINATION OF THIS SECURITY AGREEMENT
The security interests granted hereby shall continue in full force and
effect until released in accordance with the provisions of the Indenture.
17. SUCCESSORS AND ASSIGNS
This Security Agreement and all obligations of the Grantor hereunder shall
be binding upon the successors and assigns of the Grantor (including any
debtor-in-possession on behalf of the Grantor) and shall, together with the
rights and remedies of the Trustee, the Collateral Agent, and the present
and future Holders of Secured Obligations, hereunder, inure to the benefit
of the Trustee, the Collateral Agent, and the present and future Holders of
Secured Obligations, their respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other dispositions
of any agreement governing or instrument evidencing the Secured Obligations
or any portion thereof or interest therein shall in any manner affect the
Lien granted to the Trustee as the Collateral Agent for the benefit of the
present and future Holders of Secured Obligations, hereunder. The Grantor
may not assign, sell, hypothecate or otherwise transfer any interest in or
obligation under this Security Agreement.
18. COUNTERPARTS
This Security Agreement may be executed in any number of separate
counterparts, each of which shall collectively and separately constitute
one and the same agreement.
19. GOVERNING LAW
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EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THE INDENTURE OR ANY OTHER NOTE
DOCUMENT, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS
(OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
GRANTOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED
IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK, SHALL HAVE NON-EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN GRANTOR,
THE TRUSTEE, THE COLLATERAL AGENT OR ANY OF THE PRESENT OR FUTURE HOLDERS
OF SECURED OBLIGATIONS PERTAINING TO THIS SECURITY AGREEMENT, THE INDENTURE
OR ANY OF THE OTHER NOTE DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATING TO THIS SECURITY AGREEMENT THE INDENTURE OR ANY OF THE OTHER NOTE
DOCUMENTS, PROVIDED, THAT THE TRUSTEE, THE COLLATERAL AGENT, ANY OF THE
PRESENT OR FUTURE HOLDERS OF SECURED OBLIGATIONS AND GRANTOR ACKNOWLEDGE
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK, AND, PROVIDED,
FURTHER, NOTHING IN THIS SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE COLLATERAL AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION
IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE SECURED OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF COLLATERAL AGENT. GRANTOR EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND GRANTOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. GRANTOR HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY
SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO
GRANTOR AT THE ADDRESS SET FORTH IN THE INDENTURE AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
20. WAIVER OF JURY TRIAL
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS
ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT
PERSON AND THE PARTIES WISH APPLICABLE STATE LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT DISPUTES ARISING HEREUNDER OR
RELATING HERETO BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG THE
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TRUSTEE, THE COLLATERAL AGENT, THE PRESENT OR FUTURE HOLDERS OF SECURED
OBLIGATIONS AND GRANTOR ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS
SECURITY AGREEMENT OR ANY OF THE OTHER NOTE DOCUMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO.
21. INDEMNIFICATION
The Grantor will pay, reimburse the Trustee, the Collateral Agent and the
Holders of Notes for, and to the fullest extent lawful defend and indemnify
each of them against, all claims, liabilities, taxes, costs and expenses of
every type and nature (including, without limitation, the reasonable fees
and charges of attorneys, advisors, auditors and consultants acting for any
of them) incurred by any of them as a result of or in connection with the
creation, perfection, protection or enforcement of the security interests
granted hereby or the exercise or enforcement of any right or remedy under
this Security Agreement or to prove, preserve, protect or enforce any such
security interest or any claim based upon such security interests in any
lawsuit, bankruptcy case or other insolvency or liquidation proceeding.
In accepting, holding and enforcing the security interests, rights and
remedies granted hereby or arising hereunder or otherwise acting as
Collateral Agent, the Collateral Agent may rely upon and enforce each and
all of the provisions of Article 7 of the Indenture conferring any rights,
powers, immunities, indemnities or benefits upon the Trustee, including
(without limitation) the indemnification provided by Section 7.07(a) of the
Indenture, and the Grantor agrees to be bound by each and all of such
provisions as fully as if set forth at length herein.
22. SECTION TITLES
The Section titles contained in this Security Agreement are and shall be
without substantive meaning or content of any kind whatsoever and are not a
part of the agreement between the parties hereto.
23. NO STRICT CONSTRUCTION
The parties hereto have participated jointly in the negotiation and
drafting of this Security Agreement. In the event an ambiguity or question
of intent or interpretation arises, this Security Agreement shall be
construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any provisions of this Security Agreement.
24. ADVICE OF COUNSEL
Each of the parties represents to each other party hereto that it has
discussed this Security Agreement and, specifically, the provisions of
Section 19 and Section 20, with its counsel.
25. BENEFIT OF HOLDERS
All Liens granted or contemplated hereby shall be for the benefit of the
Collateral Agent for the benefit of the present and future Holders of
Secured Obligations, and all proceeds or payments realized from Collateral
in accordance herewith shall be applied to the Secured Obligations in
accordance with the terms of the Indenture.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.
H&E FINANCE CORP.,
as the Grantor
By: /s/ T. Eastman
Name: T. Eastman
Title: CFO and Assistant Secretary
THE BANK OF NEW YORK,
as the Trustee and the Collateral Agent
By: /s/ M. Ciesmelewski
Name: M. Ciesmelewski
Title: Authorized Signatory
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EXHIBIT A-1
POWER OF ATTORNEY
This Power of Attorney is executed and delivered by H&E Finance Corp., a
Delaware corporation (the "GRANTOR"), to The Bank of New York (hereinafter
referred to as "ATTORNEY"), as the Trustee as the Collateral Agent for the
benefit of the present and future Holders of Secured Obligations, under an
Indenture dated as of June 17, 2002 and a Security Agreement dated as of
June 17, 2002, and other related documents (each as further amended, modified or
supplemented, as applicable, from time to time, the "NOTE DOCUMENTS"). No person
to whom this Power of Attorney is presented, as authority for Attorney to take
any action or actions contemplated hereby, shall be required to inquire into or
seek confirmation from the Grantor as to the authority of Attorney to take any
action described below, or as to the existence of or fulfillment of any
condition to this Power of Attorney, which is intended to grant to Attorney
unconditionally the authority to take and perform the actions contemplated
herein, and the Grantor irrevocably waives any right to commence any suit or
action, in law or equity, against any person or entity which acts in reliance
upon or acknowledges the authority granted under this Power of Attorney. The
power of attorney granted hereby is coupled with an interest, and may not be
revoked or canceled by the Grantor without Attorney's written consent.
The Grantor hereby irrevocably constitutes and appoints Attorney (and all
officers, employees or agents designated by Attorney), with full power of
substitution, as the Grantor's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the Grantor and in the
name of the Grantor or in its own name, from time to time in Attorney's
discretion, to take any and all appropriate action and to execute and deliver
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of the Note Documents, and, without limiting the
generality of the foregoing, the Grantor hereby grants to Attorney the power and
right, on behalf of the Grantor, without notice to or assent by the Grantor, and
at any time, to do the following: (a) change the mailing address of the Grantor,
open a post office box on behalf of the Grantor, open mail for the Grantor, and
ask, demand, collect, give acquittances and receipts for, take possession of,
endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications, and
notices in connection with any property of the Grantor; (b) effect any repairs
to any asset of the Grantor, or continue to obtain any insurance and pay all or
any part of the premiums therefor and costs thereof, and make, settle and adjust
all claims under such policies of insurance, and make all determinations and
decisions with respect to such policies; (c) pay or discharge any taxes, liens,
security interests, or other encumbrances levied or placed on or threatened
against the Grantor or its property; (d) defend any suit, action or proceeding
brought against the Grantor if the Grantor does not defend such suit, action or
proceeding or if Attorney believes that the Grantor is not pursuing such defense
in a manner that will maximize the recovery to Attorney, and settle, compromise
or adjust any suit, action, or proceeding described above and, in connection
therewith, give such discharges or releases as Attorney may deem appropriate;
(e) file or prosecute any claim, litigation, suit or proceeding in any court of
competent jurisdiction or before any arbitrator, or take any other action
otherwise deemed appropriate by Attorney for the purpose of collecting any and
all such moneys due to the Grantor whenever payable and to enforce any other
right in respect of the Grantor's property; (f) cause the certified public
accountants then engaged by the Grantor to prepare and deliver to Attorney at
any time and from time to time, promptly upon Attorney's request, the following
reports: (1) a reconciliation of all accounts, (2) an aging of all accounts, (3)
trial balances, (4) test verifications of such accounts as Attorney may request,
and (5) the results of each physical verification of inventory; (g) communicate
in its own name with any party to any Contract with regard to the assignment of
the right, title and interest of the Grantor in and under the Contracts and
other matters relating thereto; (h) to file such financing statements with
respect to the Security Agreement, with or without the Grantor's signature, or
to file a photocopy of the Security Agreement in substitution for a financing
statement, as the Agent may deem appropriate and to execute in
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the Grantor's name such financing statements and amendments thereto and
continuation statements which may require the Grantor's signature; and (i)
execute, in connection with any sale provided for in any Note Document, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral and to otherwise direct such sale or resale, all as
though Attorney were the absolute owner of the property of the Grantor for all
purposes, and to do, at Attorney's option and the Grantor's expense, at any time
or from time to time, all acts and other things that Attorney reasonably deems
necessary to perfect, preserve, or realize upon the Grantor's property or assets
and Attorney's Liens thereon, all as fully and effectively as the Grantor might
do. The Grantor hereby ratifies, to the extent permitted by law, all that said
Attorney shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this Power of Attorney is executed by the Grantor and the
Grantor has caused its seal to be affixed pursuant to the authority of its board
of directors on June __, 2002.
ATTEST:
By: /s/ T. Eastman
Name: T. Eastman
Title: CFO
NOTARY PUBLIC CERTIFICATE
On this 16 day of June, 2002, Terence Eastman who is personally known to me
appeared before me in his/her capacity as the Chief Financial Officer of H&E
Finance Corp. (the "Grantor") and executed on behalf of the Grantor the Power of
Attorney in favor of The Bank of New York to which this Certificate is attached.
/s/ Jeffrey Gimpel
---------------------------------------------
Notary Public
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EXHIBIT A-2
POWER OF ATTORNEY
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, H&E Finance Corp., a Delaware corporation with
its principal place of business at 11100 Mead, 2nd Floor, Baton Rouge, LA 70816
(hereinafter called the "GRANTOR"), hereby appoints and constitutes The Bank of
New York (the "SECURED PARTY") as the Trustee and the Collateral Agent under an
Indenture dated as of June 17, 2002 (as it may be amended, restated,
supplemented or otherwise modified and in effect from time to time, the
"INDENTURE") among, INTER ALIA, the Grantor and Secured Party, its true and
lawful attorney, with full power of substitution, and with full power and
authority, upon the occurrence and during the continuance of an Event of Default
(defined in the Indenture) to perform the following acts on behalf of the
Grantor:
(i) For the purpose of granting, selling, licensing or otherwise disposing
of all right, title and interest of the Grantor in and to any letters
patent, design and plant patents, utility models, industrial designs,
inventory certificates and statutory invention registrations of the
United States or any other country or political subdivision thereof, and
all registrations, recordings, reissues, continuations,
continuations-in-part, term restorations and extensions thereof, and all
pending applications therefor, and for the purpose of the recording,
registering and filing of, or accomplishing any other formality with
respect to the foregoing, to execute and deliver any and all agreements,
documents, instruments of transfer or other papers necessary or
advisable to effect such purpose;
(ii) For the purpose of granting, selling, licensing or otherwise disposing
of all right, title and interest of Debtor in and to any trademarks,
trade names, trade styles and service marks, and all registrations,
recordings, reissues, extensions and renewals thereof, and all pending
applications therefor, and for the purpose of the recording, registering
and filing of, or accomplishing any other formality with respect to the
foregoing, to execute and deliver any and all agreements, documents,
instruments of transfer or other papers necessary or advisable to effect
such purpose;
(iii) For the purpose of granting, selling, licensing or otherwise disposing
of all right, title and interest of Debtor in and to any copyrights, and
all registrations, recordings, extensions and renewals thereof, and all
pending applications therefor, and for the purpose of the recording,
registering and filing of, or accomplishing any other formality with
respect to the foregoing, to execute and deliver any and all agreements,
documents, instruments of transfer or other papers necessary or
advisable to effect such purpose; and
(iv) To execute any and all documents, statements, certificates or other
papers necessary or advisable in order to obtain the purposes described
above as Secured Party may in its sole but reasonable discretion
determine.
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This power of attorney is made pursuant to a Copyright Security Agreement, a
Patent Security Agreement and a Trademark Security Agreement, each of which is
dated the date hereof, as amended from time to time, by the Grantor in favor of
Secured Party and will take effect solely for the purposes of Section 7 of the
Security Agreement and is subject to the conditions thereof and may not be
revoked until the payment or performance in full of all "Note Obligations" as
defined in the Indenture.
Dated as of June 17, 2002.
H&E FINANCE CORP.
By: /s/ Lindsay C. Jones
Name: Lindsay C. Jones
Title: SVP Finance and Secretary
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