EXHIBIT 10.47

 

 

 

TABLE OF CONTENTS

 

ARTICLE I SECURITY INTERESTS

 

1.1  GRANT OF SECURITY INTERESTS

1.2  POWER OF ATTORNEY

 

ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

 

2.1  CHIEF EXECUTIVE OFFICE/INVENTORY AND EQUIPMENT LOCATIONS

2.2  STATE OF INCORPORATION

2.3  TRADE NAMES; CHANGE OF NAME

 

ARTICLE III PROVISIONS CONCERNING ALL COLLATERAL

 

3.1  PROTECTION OF ADMINISTRATIVE AGENT’S SECURITY

3.2  WAREHOUSE RECEIPTS NON-NEGOTIABLE; THIRD-PARTY ACKNOWLEDGMENTS

3.3  FURTHER ACTIONS

3.4  FINANCING STATEMENTS

 

ARTICLE IV REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT

 

4.1  REMEDIES; OBTAINING THE COLLATERAL UPON DEFAULT

4.2  REMEDIES; DISPOSITION OF THE COLLATERAL

4.3  WAIVER OF CLAIMS

4.4  APPLICATION OF PROCEEDS

4.5  REMEDIES CUMULATIVE

4.6  DISCONTINUANCE OF PROCEEDINGS

 

ARTICLE V INDEMNITY

 

5.1  INDEMNITY

5.2  INDEMNITY OBLIGATIONS SECURED BY COLLATERAL; SURVIVAL

 

ARTICLE VI DEFINITIONS

 

ARTICLE VII MISCELLANEOUS

 

7.1  NOTICES

7.2  WAIVER; AMENDMENT

7.3  OBLIGATIONS ABSOLUTE

7.4  SUCCESSORS AND ASSIGNS

7.5  HEADINGS DESCRIPTIVE

7.6  SEVERABILITY

7.7  GOVERNING LAW

7.8  BORROWER’S DUTIES

7.9  TERMINATION; RELEASE

7.10  COUNTERPARTS

7.11  THE ADMINISTRATIVE AGENT

 

ARTICLE VIII

 

ANNEX A             Schedule of Chief Executive Offices

ANNEX B              Schedule of Inventory and Equipment Locations

ANNEX C              Schedule of Trade, Fictitious and Other Names

 

SECURITY AGREEMENT

THIS SECURITY AGREEMENT, dated as of October 12, 2001, is between BMC
INDUSTRIES, INC., a Minnesota corporation (“Borrower”), BANKERS TRUST COMPANY,
as administrative agent (the “Administrative Agent”) and U.S. BANK NATIONAL
ASSOCIATION (“US Bank”) for the benefit of (i) the Lenders and the Agent under
the Credit Agreement hereinafter referred to (such Lenders and the Agent are
hereinafter called the “Bank Creditors”), (ii) if one or more Lenders (or any
Affiliate thereof) enter into one or more (A) interest rate protection
agreements (including, without limitation, interest rate swaps, caps, floors,
collars and similar agreements), (B) foreign exchange contracts, currency swap
agreements or other similar agreements or arrangements designed to protect
against the fluctuations in currency values and/or (C) other types of hedging
agreements from time to time (collectively, the “Interest Rate Protection or
Other Hedging Agreements”) with, or guaranteed by, Borrower, any such Lender or
Lenders or any Affiliate of such Lender or Lenders (even if the respective
Lender subsequently ceases to be a Lender under the Credit Agreement for any
reason) so long as any such Lender or Affiliate participates in the extension of
such Interest Rate Protection or Other Hedging Agreements and their subsequent
assigns, if any (collectively, the “Other Creditors”) and (iii) US Bank as
lender under the US Bank Letter of Credit Facility (as defined below) (the “LC
Creditor” and, together with the Other Creditors and the Bank Creditors,
hereinafter called the “Secured Creditors”).  Except as otherwise defined
herein, terms used herein and defined in the Credit Agreement (as hereinafter
defined) shall be used herein as so defined.

W I T N E S S E T H :

WHEREAS, Borrower, the financial institutions (the “Lenders”) from time to time
party thereto and Bankers Trust Company, as Administrative Agent (together with
any successor agent, the “Agent”), have entered into an Amended and Restated
Credit Agreement, dated as of June 25, 1998, providing for the making of Loans
and the issuance of, and participation in, Letters of Credit as contemplated
therein (as used herein, the term “Credit Agreement” means the Credit Agreement
described above in this paragraph, as in effect on the date hereof and as
amended by that certain Second Amendment and Restatement Agreement dated as of
the date hereof, as the same may be amended, modified, extended, renewed,
replaced, restated or supplemented from time to time, and including any
agreement extending the maturity of or restructuring of all or any portion of
the Indebtedness under such agreement or any successor agreements);

WHEREAS, Borrower may at any time and from time to time enter into, or
guarantee, one or more Interest Rate Protection or Other Hedging Agreements with
one or more Other Creditors;

WHEREAS, it is a condition precedent to each of the above-described extensions
of credit that Borrower shall have executed and delivered this Agreement; and

WHEREAS, Borrower desires to enter into this Agreement in order to satisfy the
condition described in the preceding paragraph;

NOW, THEREFORE, in consideration of the extensions of credit to be made to
Borrower and other benefits accruing to Borrower, the receipt and sufficiency of
which are hereby acknowledged, Borrower hereby makes the following
representations and warranties to the Administrative Agent for the benefit of
the Secured Creditors and hereby covenants and agrees with the Administrative
Agent for the benefit of the Secured Creditors as follows:

ARTICLE I
SECURITY INTERESTS

 

1.1           GRANT OF SECURITY INTERESTS.  (A)  AS SECURITY FOR THE PROMPT AND
COMPLETE PAYMENT AND PERFORMANCE WHEN DUE OF ALL OF THE OBLIGATIONS, BORROWER
DOES HEREBY PLEDGE AND GRANT TO THE ADMINISTRATIVE AGENT FOR THE BENEFIT OF THE
SECURED CREDITORS, A CONTINUING SECURITY INTEREST OF FIRST PRIORITY (SUBJECT TO
LIENS EVIDENCED BY PERMITTED FILINGS AND OTHER PERMITTED LIENS) IN, ALL OF THE
RIGHT, TITLE AND INTEREST OF BORROWER IN, TO AND UNDER ALL OF THE FOLLOWING,
WHETHER NOW EXISTING OR HEREAFTER FROM TIME TO TIME ACQUIRED:  (I) EACH AND
EVERY ACCOUNT, (II) ALL CONTRACTS, TOGETHER WITH ALL CONTRACT RIGHTS ARISING
THEREUNDER, (III) ALL INVENTORY, (IV) ALL EQUIPMENT, (V) ALL OTHER GOODS,
GENERAL INTANGIBLES, CHATTEL PAPER, DOCUMENTS, INVESTMENT PROPERTY AND
INSTRUMENTS, AND (VI) ALL PROCEEDS AND PRODUCTS OF ANY AND ALL OF THE FOREGOING
(ALL OF THE ABOVE, COLLECTIVELY, THE “COLLATERAL”).

 

(b)  The security interests of the Administrative Agent under this Agreement
extend to all Collateral of the kind which is the subject of this Agreement
which Borrower may acquire at any time during the continuation of this
Agreement.

1.2           POWER OF ATTORNEY.  BORROWER HEREBY CONSTITUTES AND APPOINTS THE
ADMINISTRATIVE AGENT ITS TRUE AND LAWFUL ATTORNEY, WITH FULL POWER AFTER THE
OCCURRENCE OF AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT (IN THE NAME OF
BORROWER OR OTHERWISE), IN THE ADMINISTRATIVE AGENT’S REASONABLE DISCRETION, TO
TAKE ANY ACTION AND TO EXECUTE ANY INSTRUMENT REQUIRED BY THIS AGREEMENT IF
BORROWER HAS FAILED TO DO SO AFTER DEMAND BY THE ADMINISTRATIVE AGENT.

 

ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Borrower represents, warrants and covenants, which representations, warranties
and covenants shall survive execution and delivery of this Agreement, as
follows:

2.1           CHIEF EXECUTIVE OFFICE/INVENTORY AND EQUIPMENT LOCATIONS.  THE
CHIEF EXECUTIVE OFFICE OF BORROWER IS LOCATED AT THE ADDRESS INDICATED ON ANNEX
A HERETO.  ALL INVENTORY AND EQUIPMENT HELD ON THE DATE HEREOF BY BORROWER IS
LOCATED AT ONE OF THE LOCATIONS SHOWN ON ANNEX B HERETO (OTHER THAN (I)
IMMATERIAL PORTIONS OF INVENTORY OR EQUIPMENT OR (II) EQUIPMENT OUT FOR
REPAIR).    PRIOR TO JANUARY 1, 2002, THE BORROWER SHALL NOT (X) MOVE ITS CHIEF
EXECUTIVE OFFICE TO ANY OF THE STATES OF MISSISSIPPI, ALABAMA OR FLORIDA, OR (Y)
MOVE ANY INVENTORY OR EQUIPMENT TO ANY OF THE STATES OF MISSISSIPPI, ALABAMA OR
FLORIDA UNTIL (I) IT SHALL HAVE GIVEN TO THE ADMINISTRATIVE AGENT NOT LESS THAN
30 DAYS’ PRIOR WRITTEN NOTICE OF ITS INTENTION TO DO SO, (II) WITH RESPECT TO
SUCH MOVE, IT SHALL HAVE TAKEN ALL ACTION, REASONABLY SATISFACTORY TO THE
ADMINISTRATIVE AGENT, TO MAINTAIN THE SECURITY INTEREST OF THE ADMINISTRATIVE
AGENT IN THE COLLATERAL INTENDED TO BE GRANTED AND PERFECTED UNDER THE UNIFORM
COMMERCIAL CODE HEREBY AT ALL TIMES FULLY PERFECTED AND IN FULL FORCE AND
EFFECT, (III) AT THE REASONABLE REQUEST OF THE ADMINISTRATIVE AGENT, IT SHALL
HAVE FURNISHED A CUSTOMARY OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE
ADMINISTRATIVE AGENT TO THE EFFECT THAT ALL FINANCING OR CONTINUATION STATEMENTS
AND AMENDMENTS OR SUPPLEMENTS THERETO HAVE BEEN FILED IN THE APPROPRIATE FILING
OFFICE OR OFFICES, AND ALL OTHER ACTIONS (INCLUDING, WITHOUT LIMITATION, THE
PAYMENT OF ALL FILING FEES AND TAXES, IF ANY, PAYABLE IN CONNECTION WITH SUCH
FILINGS) HAVE BEEN TAKEN, IN ORDER TO PERFECT (AND MAINTAIN THE PERFECTION AND
PRIORITY OF) THE SECURITY INTEREST GRANTED HEREBY AND (IV) THE ADMINISTRATIVE
AGENT SHALL HAVE RECEIVED EVIDENCE THAT ALL OTHER ACTIONS (INCLUDING, WITHOUT
LIMITATION, THE PAYMENT OF ALL FILING FEES AND TAXES, IF ANY, PAYABLE IN
CONNECTION WITH SUCH FILINGS) HAVE BEEN TAKEN, IN ORDER TO PERFECT (AND MAINTAIN
THE PERFECTION AND PRIORITY OF) THE SECURITY INTEREST GRANTED HEREBY.

 

2.2           STATE OF INCORPORATION.  THE STATE OF INCORPORATION OF BORROWER IS
INDICATED ON ANNEX A HERETO.  BORROWER WILL NOT CHANGE ITS STATE OF
INCORPORATION EXCEPT AS IN ACCORDANCE WITH THE LAST SENTENCE OF THIS SECTION
2.2.  BORROWER SHALL NOT ESTABLISH A NEW STATE OF INCORPORATION UNTIL (I) IT
SHALL HAVE GIVEN TO THE ADMINISTRATIVE AGENT NOT LESS THAN 30 DAYS’ PRIOR
WRITTEN NOTICE OF ITS INTENTION TO DO SO, CLEARLY DESCRIBING SUCH NEW STATE OF
INCORPORATION AND PROVIDING SUCH OTHER INFORMATION IN CONNECTION THEREWITH AS
THE ADMINISTRATIVE AGENT MAY REASONABLY REQUEST, (II) WITH RESPECT TO SUCH NEW
STATE OF INCORPORATION, IT SHALL HAVE TAKEN ALL ACTION, REASONABLY SATISFACTORY
TO THE ADMINISTRATIVE AGENT, TO MAINTAIN THE SECURITY INTEREST OF THE
ADMINISTRATIVE AGENT IN THE COLLATERAL INTENDED TO BE GRANTED AND PERFECTED
UNDER THE UNIFORM COMMERICAL CODE HEREBY AT ALL TIMES FULLY PERFECTED AND IN
FULL FORCE AND EFFECT, (III) AT THE REASONABLE REQUEST OF THE ADMINISTRATIVE
AGENT, IT SHALL HAVE FURNISHED A CUSTOMARY OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE ADMINISTRATIVE AGENT TO THE EFFECT THAT ALL FINANCING OR
CONTINUATION STATEMENTS AND AMENDMENTS OR SUPPLEMENTS THERETO HAVE BEEN FILED IN
THE APPROPRIATE FILING OFFICE OR OFFICES, AND ALL OTHER ACTIONS (INCLUDING,
WITHOUT LIMITATION, THE PAYMENT OF ALL FILING FEES AND TAXES, IF ANY, PAYABLE IN
CONNECTION WITH SUCH FILINGS) HAVE BEEN TAKEN, IN ORDER TO PERFECT (AND MAINTAIN
THE PERFECTION AND PRIORITY OF) THE SECURITY INTEREST GRANTED HEREBY AND (IV)
THE ADMINISTRATIVE AGENT SHALL HAVE RECEIVED EVIDENCE THAT ALL OTHER ACTIONS
(INCLUDING, WITHOUT LIMITATION, THE PAYMENT OF ALL FILING FEES AND TAXES, IF
ANY, PAYABLE IN CONNECTION WITH SUCH FILINGS HAVE BEEN TAKEN, IN ORDER TO
PERFECT (AND MAINTAIN THE PERFECTION AND PRIORITY OF) THE SECURITY INTEREST
GRANTED HEREBY.

 

2.3           TRADE NAMES; CHANGE OF NAME.  BORROWER DOES NOT HAVE AND HAS NOT
OPERATED IN ANY JURISDICTION UNDER, OR IN THE PRECEDING 12 MONTHS HAS NOT HAD
NOR HAS OPERATED IN ANY JURISDICTION UNDER, ANY TRADE NAMES, FICTITIOUS NAMES OR
OTHER NAMES (INCLUDING, WITHOUT LIMITATION, ANY NAMES OF DIVISIONS OR
OPERATIONS) EXCEPT ITS LEGAL NAME AND SUCH OTHER TRADE, FICTITIOUS OR OTHER
NAMES AS ARE LISTED ON ANNEX C HERETO.  THE CORPORATION IDENTIFICATION NUMBER OR
OTHER APPLICABLE FORMATION IDENTIFICATION NUMBER SHALL BE SET FORTH ACROSS FROM
THE EXACT LEGAL NAME OF BORROWER IDENTIFIED IN ANNEX C.  BORROWER SHALL NOT
CHANGE ITS LEGAL NAME OR ASSUME OR OPERATE IN ANY JURISDICTION UNDER ANY TRADE,
FICTITIOUS OR OTHER NAME IN ANY MANNER WHICH MIGHT MAKE ANY FINANCING STATEMENT
OR CONTINUATION STATEMENT FILED IN CONNECTION THEREWITH SERIOUSLY MISLEADING
EXCEPT THOSE NAMES LISTED ON ANNEX C HERETO AND NEW NAMES (INCLUDING, WITHOUT
LIMITATION, ANY NAMES OF DIVISIONS OR OPERATIONS) ESTABLISHED IN ACCORDANCE WITH
THE LAST SENTENCE OF THIS SECTION 2.3.  BORROWER SHALL NOT ASSUME OR OPERATE IN
ANY JURISDICTION UNDER ANY NEW TRADE, FICTITIOUS OR OTHER NAME THAT WOULD MAKE
ANY FINANCING STATEMENT OR CONTINUATION STATEMENT FILED IN CONNECTION THEREWITH,
SERIOUSLY MISLEADING UNTIL (I) IT SHALL HAVE GIVEN TO THE ADMINISTRATIVE AGENT
NOT LESS THAN 30 DAYS’ PRIOR WRITTEN NOTICE OF ITS INTENTION SO TO DO, CLEARLY
DESCRIBING SUCH NEW NAME AND THE JURISDICTIONS IN WHICH SUCH NEW NAME SHALL BE
USED AND PROVIDING SUCH OTHER INFORMATION IN CONNECTION THEREWITH AS THE
ADMINISTRATIVE AGENT MAY REASONABLY REQUEST, (II) WITH RESPECT TO SUCH NEW NAME,
IT SHALL HAVE TAKEN ALL ACTION TO MAINTAIN THE SECURITY INTEREST OF THE
ADMINISTRATIVE AGENT IN THE COLLATERAL INTENDED TO BE GRANTED HEREBY AT ALL
TIMES FULLY PERFECTED AND IN FULL FORCE AND EFFECT, (III) AT THE REASONABLE
REQUEST OF THE ADMINISTRATIVE AGENT, IT SHALL HAVE FURNISHED A CUSTOMARY OPINION
OF COUNSEL REASONABLYACCEPTABLE TO THE ADMINISTRATIVE AGENT TO THE EFFECT THAT
ALL FINANCING OR CONTINUATION STATEMENTS AND AMENDMENTS OR SUPPLEMENTS THERETO
HAVE BEEN FILED IN THE APPROPRIATE FILING OFFICE OR OFFICES, AND (IV) THE
ADMINISTRATIVE AGENT SHALL HAVE RECEIVED EVIDENCE THAT ALL OTHER ACTIONS
(INCLUDING, WITHOUT LIMITATION, THE PAYMENT OF ALL FILING FEES AND TAXES, IF
ANY, PAYABLE IN CONNECTION WITH SUCH FILINGS) HAVE BEEN TAKEN, IN ORDER TO
PERFECT (AND MAINTAIN THE PERFECTION AND PRIORITY OF) THE SECURITY INTEREST
GRANTED HEREBY.

 

 

ARTICLE III
PROVISIONS CONCERNING ALL COLLATERAL

 

3.1           PROTECTION OF ADMINISTRATIVE AGENT’S SECURITY.  BORROWER WILL DO
NOTHING TO IMPAIR THE RIGHTS OF THE ADMINISTRATIVE AGENT IN THE COLLATERAL OTHER
THAN DISPOSITIONS, THE CREATION OF LIENS AND OTHER ENCUMBRANCES AND OTHER
ACTIONS PERMITTED HEREUNDER AND UNDER THE CREDIT AGREEMENT AND OTHER LOAN
DOCUMENTS.

 

3.2           WAREHOUSE RECEIPTS NON-NEGOTIABLE; THIRD-PARTY ACKNOWLEDGMENTS. 
BORROWER AGREES THAT IF ANY WAREHOUSE RECEIPT OR RECEIPT IN THE NATURE OF A
WAREHOUSE RECEIPT IS ISSUED WITH RESPECT TO ANY OF ITS INVENTORY, SUCH WAREHOUSE
RECEIPT OR RECEIPT IN THE NATURE THEREOF SHALL NOT BE “NEGOTIABLE” (AS SUCH TERM
IS USED IN SECTION 7-104 OF THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY
RELEVANT JURISDICTION OR UNDER OTHER RELEVANT LAW).  WHERE COLLATERAL WITH A
FAIR MARKET VALUE OF GREATER THAN $100,000 IS IN THE POSSESSION OF A THIRD
PARTY, BORROWER WILL JOIN WITH THE ADMINISTRATIVE AGENT IN NOTIFYING THE THIRD
PARTY OF THE ADMINISTRATIVE AGENT’S SECURITY INTEREST AND OBTAINING AN
ACKNOWLEDGMENT FROM THE THIRD PARTY THAT IT IS HOLDING THE COLLATERAL FOR THE
BENEFIT OF THE ADMINISTRATIVE AGENT.

 

3.3           FURTHER ACTIONS.  BORROWER WILL, AT ITS OWN EXPENSE, MAKE,
EXECUTE, ENDORSE, ACKNOWLEDGE, FILE AND/OR DELIVER TO THE ADMINISTRATIVE AGENT
FROM TIME TO TIME SUCH LISTS, DESCRIPTIONS AND DESIGNATIONS OF ITS COLLATERAL,
WAREHOUSE RECEIPTS, RECEIPTS IN THE NATURE OF WAREHOUSE RECEIPTS, BILLS OF
LADING, DOCUMENTS OF TITLE, VOUCHERS, INVOICES, SCHEDULES, CONFIRMATORY
ASSIGNMENTS, CONVEYANCES, FINANCING STATEMENTS, TRANSFER ENDORSEMENTS, POWERS OF
ATTORNEY, CERTIFICATES, REPORTS AND OTHER ASSURANCES OR INSTRUMENTS AND TAKE
SUCH FURTHER STEPS RELATING TO THE COLLATERAL AND OTHER PROPERTY OR RIGHTS
COVERED BY THE SECURITY INTEREST HEREBY GRANTED, WHICH THE ADMINISTRATIVE AGENT
DEEMS REASONABLY APPROPRIATE OR ADVISABLE TO PERFECT, PRESERVE OR PROTECT ITS
SECURITY INTEREST IN THE COLLATERAL.  NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT, SO LONG AS NO UNMATURED EVENT OF DEFAULT OR EVENT OF DEFAULT
SHALL HAVE OCCURRED AND BE CONTINUING, THE ONLY OBLIGATION OF THE BORROWER
ARISING HEREUNDER IN CONNECTION WITH THE PERFECTION OF THE SECURITY INTERESTS
GRANTED IN THE COLLATERAL LISTED IN SECTIONS 1.1(A)(II) AND (V) ABOVE (AND
SECTION 1.1(A)(VI), BUT SOLELY TO THE EXTENT IT RELATES TO SECTIONS 1.1(A)(II)
AND (V)) SHALL BE TO DELIVER FINANCING STATEMENTS PURSUANT TO SECTION 3.4 BELOW.

 

3.4           FINANCING STATEMENTS.  BORROWER AGREES TO DELIVER TO THE
ADMINISTRATIVE AGENT SUCH FINANCING STATEMENTS, IN FORM REASONABLY ACCEPTABLE TO
THE ADMINISTRATIVE AGENT, AS THE ADMINISTRATIVE AGENT MAY FROM TIME TO TIME
REASONABLY REQUEST OR AS ARE REASONABLY  NECESSARY (OR DESIRABLE IN THE
REASONABLE OPINION OF THE ADMINISTRATIVE AGENT) TO ESTABLISH AND MAINTAIN A
VALID, ENFORCEABLE, FIRST PRIORITY PERFECTED SECURITY INTEREST (SUBJECT ONLY TO
PERMITTED LIENS) IN THE COLLATERAL AS PROVIDED HEREIN AND THE OTHER RIGHTS AND
SECURITY CONTEMPLATED HEREBY ALL IN ACCORDANCE WITH THE UNIFORM COMMERCIAL CODE
AS ENACTED IN ANY AND ALL RELEVANT JURISDICTIONS OR ANY OTHER RELEVANT LAW. 
BORROWER WILL PAY ANY APPLICABLE FILING FEES, RECORDATION TAXES AND RELATED
EXPENSES RELATING TO ITS COLLATERAL.  BORROWER HEREBY AUTHORIZES THE
ADMINISTRATIVE AGENT TO FILE ANY SUCH UNIFORM COMMERICAL CODE FINANCING
STATEMENTS WITHOUT THE SIGNATURE OF BORROWER WHERE PERMITTED BY LAW.

 

ARTICLE IV
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT

 

4.1           REMEDIES; OBTAINING THE COLLATERAL UPON DEFAULT.  BORROWER AGREES
THAT, IF ANY EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, THEN AND IN
EVERY SUCH CASE, SUBJECT TO ANY MANDATORY REQUIREMENTS OF APPLICABLE LAW THEN IN
EFFECT, THE ADMINISTRATIVE AGENT, IN ADDITION TO ANY RIGHTS NOW OR HEREAFTER
EXISTING UNDER APPLICABLE LAW, SHALL HAVE ALL RIGHTS AS A SECURED CREDITOR UNDER
THE UNIFORM COMMERCIAL CODE IN ALL RELEVANT JURISDICTIONS AND MAY:

 

(a)           personally, or by agents or attorneys, immediately take possession
of the Collateral or any part thereof, from Borrower or any other Person who
then has possession of any part thereof with or without notice or process of
law, and for that purpose may enter upon Borrower’s premises where any of the
Collateral is located and remove the same and use in connection with such
removal any and all services, supplies, aids and other facilities of Borrower;
and

(b)           instruct the obligor or obligors on any agreement, instrument or
other obligation (including, without limitation, the Accounts and the Contracts)
constituting the Collateral to make any payment required by the terms of such
agreement, instrument or other obligation directly to the Administrative Agent
and may exercise any and all remedies of Borrower in respect of such Collateral;
and

(c)           sell, assign or otherwise liquidate, or direct Borrower to sell,
assign or otherwise liquidate, any or all of the Collateral or any part thereof,
and take possession of the proceeds of any such sale or liquidation; and

(d)           take possession of the Collateral or any part thereof, by
directing Borrower in writing to deliver the same to the Administrative Agent at
any place or places reasonably designated by the Administrative Agent, in which
event Borrower shall at its own expense:

(i)            forthwith cause the same to be moved to the place or places so
designated by the Administrative Agent and there delivered to the Administrative
Agent, and

(ii)           store and keep any Collateral so delivered to the Administrative
Agent at such place or places pending further action by the Administrative Agent
as provided in Section 6.2 hereof, and

(iii)          while the Collateral shall be so stored and kept, provide such
guards and maintenance services as shall be necessary to protect the same and to
preserve and maintain them in good condition; and

it being understood that Borrower’s obligation so to deliver the Collateral is
of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Administrative Agent shall be entitled
to seek a decree requiring specific performance by Borrower of said obligation.

4.2           REMEDIES; DISPOSITION OF THE COLLATERAL.  IF AN EVENT OF DEFAULT
SHALL HAVE OCCURRED AND BE CONTINUING, THEN ANY COLLATERAL REPOSSESSED BY THE
ADMINISTRATIVE AGENT UNDER OR PURSUANT TO SECTION 4.1 HEREOF AND ANY OTHER
COLLATERAL WHETHER OR NOT SO REPOSSESSED BY THE ADMINISTRATIVE AGENT, MAY BE
SOLD, ASSIGNED, LEASED OR OTHERWISE DISPOSED OF UNDER ONE OR MORE CONTRACTS OR
AS AN ENTIRETY, AND WITHOUT THE NECESSITY OF GATHERING AT THE PLACE OF SALE THE
PROPERTY TO BE SOLD, AND IN GENERAL IN SUCH MANNER, AT SUCH TIME OR TIMES, AT
SUCH PLACE OR PLACES AND ON SUCH TERMS AS THE ADMINISTRATIVE AGENT MAY, IN
COMPLIANCE WITH ANY MANDATORY REQUIREMENTS OF APPLICABLE LAW, DETERMINE TO BE
COMMERCIALLY REASONABLE.  ANY OF THE COLLATERAL MAY BE SO SOLD, LEASED OR
OTHERWISE DISPOSED OF, IN THE CONDITION IN WHICH THE SAME EXISTED WHEN TAKEN BY
THE ADMINISTRATIVE AGENT OR AFTER ANY OVERHAUL OR REPAIR AT THE EXPENSE OF
BORROWER WHICH THE ADMINISTRATIVE AGENT SHALL DETERMINE TO BE COMMERCIALLY
REASONABLE.  ANY SUCH DISPOSITION WHICH SHALL BE A PRIVATE SALE OR OTHER PRIVATE
PROCEEDINGS PERMITTED BY SUCH REQUIREMENTS SHALL BE MADE UPON NOT LESS THAN 10
DAYS’ WRITTEN NOTICE TO BORROWER SPECIFYING THE TIME AT WHICH SUCH DISPOSITION
IS TO BE MADE AND THE INTENDED SALE PRICE OR OTHER CONSIDERATION THEREFOR, AND
SHALL BE SUBJECT, FOR THE 10 DAYS AFTER THE GIVING OF SUCH NOTICE, TO THE RIGHT
OF BORROWER OR ANY NOMINEE OF BORROWER TO ACQUIRE THE COLLATERAL INVOLVED AT A
PRICE OR FOR SUCH OTHER CONSIDERATION AT LEAST EQUAL TO THE INTENDED SALE PRICE
OR OTHER CONSIDERATION SO SPECIFIED.  ANY SUCH DISPOSITION WHICH SHALL BE A
PUBLIC SALE PERMITTED BY SUCH REQUIREMENTS SHALL BE MADE UPON NOT LESS THAN 10
DAYS’ WRITTEN NOTICE TO BORROWER SPECIFYING THE TIME AND PLACE OF SUCH SALE AND,
IN THE ABSENCE OF APPLICABLE REQUIREMENTS OF LAW, SHALL BE BY PUBLIC AUCTION
(WHICH MAY, AT THE ADMINISTRATIVE AGENT’S OPTION, BE SUBJECT TO RESERVE), AFTER
PUBLICATION OF NOTICE OF SUCH AUCTION NOT LESS THAN 10 DAYS PRIOR THERETO IN TWO
NEWSPAPERS IN GENERAL CIRCULATION IN THE CITY OF NEW YORK OR IN SUCH OTHER
LOCATIONS AS MAY BE NECESSARY IN ORDER FOR THE SALE TO BE “COMMERCIALLY
REASONABLE” (AS SUCH TERM IS USED IN ARTICLE 9 PART V OF THE NEW YORK UNIFORM
COMMERCIAL CODE).  TO THE EXTENT PERMITTED BY ANY SUCH REQUIREMENT OF LAW, THE
ADMINISTRATIVE AGENT AND THE SECURED CREDITORS MAY BID FOR AND BECOME THE
PURCHASER OF THE COLLATERAL OR ANY ITEM THEREOF, OFFERED FOR SALE IN ACCORDANCE
WITH THIS SECTION WITHOUT ACCOUNTABILITY TO BORROWER.  IF, UNDER MANDATORY
REQUIREMENTS OF APPLICABLE LAW, THE ADMINISTRATIVE AGENT SHALL BE REQUIRED TO
MAKE DISPOSITION OF THE COLLATERAL WITHIN A PERIOD OF TIME WHICH DOES NOT PERMIT
THE GIVING OF NOTICE TO BORROWER AS HEREINABOVE SPECIFIED, THE ADMINISTRATIVE
AGENT NEED GIVE BORROWER ONLY SUCH NOTICE OF DISPOSITION AS SHALL BE REASONABLY
PRACTICABLE IN VIEW OF SUCH MANDATORY REQUIREMENTS OF APPLICABLE LAW.  BORROWER
AGREES TO DO OR CAUSE TO BE DONE ALL SUCH OTHER ACTS AND THINGS AS MAY BE
REASONABLY NECESSARY TO MAKE SUCH SALE OR SALES OF ALL OR ANY PORTION OF THE
COLLATERAL VALID AND BINDING AND IN COMPLIANCE WITH ANY AND ALL APPLICABLE LAWS,
REGULATIONS, ORDERS, WRITS, INJUNCTIONS, DECREES OR AWARDS OF ANY AND ALL
COURTS, ARBITRATORS OR GOVERNMENTAL INSTRUMENTALITIES, DOMESTIC OR FOREIGN,
HAVING JURISDICTION OVER ANY SUCH SALE OR SALES, ALL AT BORROWER’S EXPENSE.

 

4.3           WAIVER OF CLAIMS.  EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT,
BORROWER HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND
JUDICIAL HEARING IN CONNECTION WITH THE ADMINISTRATIVE AGENT’S TAKING POSSESSION
OR THE ADMINISTRATIVE AGENT’S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING,
WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT
REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH BORROWER WOULD OTHERWISE HAVE UNDER
THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, AND
BORROWER HEREBY FURTHER WAIVES, TO THE EXTENT PERMITTED BY LAW:

 

(a)           all damages occasioned by such taking of possession except any
damages which are the direct result of the Administrative Agent’s gross
negligence or willful misconduct;

(b)           all other requirements as to the time, place and terms of sale or
other requirements with respect to the enforcement of the Administrative Agent’s
rights hereunder; and

(c)           all rights of redemption, appraisement, valuation, stay, extension
or moratorium now or hereafter in force under any applicable law in order to
prevent or delay the enforcement of this Agreement or the absolute sale of the
Collateral or any portion thereof, and Borrower, for itself and all who may
claim under it, insofar as it or they now or hereafter lawfully may, hereby
waives the benefit of all such laws.

Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of Borrower therein and thereto, and shall
be a perpetual bar both at law and in equity against Borrower and against any
and all Persons claiming or attempting to claim the Collateral so sold, optioned
or realized upon, or any part thereof, from, through and under Borrower.

4.4           APPLICATION OF PROCEEDS.  (A)  ALL MONEYS COLLECTED BY THE
ADMINISTRATIVE AGENT (OR, TO THE EXTENT THE PLEDGE AGREEMENT OR ANY MORTGAGE TO
WHICH BORROWER IS A PARTY REQUIRES PROCEEDS OF COLLATERAL UNDER SUCH AGREEMENT
TO BE APPLIED IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT, THE PLEDGEE
OR MORTGAGEE UNDER SUCH OTHER AGREEMENT) UPON ANY SALE OR OTHER DISPOSITION OF
THE COLLATERAL, TOGETHER WITH ALL OTHER MONEYS RECEIVED BY THE ADMINISTRATIVE
AGENT HEREUNDER, SHALL BE APPLIED AS FOLLOWS:  (I)          FIRST, TO THE
PAYMENT OF ALL AMOUNTS OWING THE ADMINISTRATIVE AGENT OF THE TYPE DESCRIBED IN
CLAUSES (III) AND (IV) OF THE DEFINITION OF “OBLIGATIONS”;

(ii)           second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding Primary
Obligations shall be paid to the Secured Creditors as provided in Section 4.4(e)
hereof, with each Secured Creditor receiving an amount equal to such outstanding
Primary Obligations or, if the proceeds are insufficient to pay in full all such
Primary Obligations, its Pro Rata Share of the amount remaining to be
distributed;

(iii)          third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii), an amount equal to the
outstanding Secondary Obligations shall be paid to the Secured Creditors as
provided in Section 4.4(e), with each Secured Creditor receiving an amount equal
to its outstanding Secondary Obligations or, if the proceeds are insufficient to
pay in full all such Secondary Obligations, its Pro Rata Share of the amount
remaining to be distributed; and

(iv)          fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (iii), inclusive, and following
the termination of this Agreement pursuant to Section 7.9(a) hereof, to Borrower
or to whomever may be lawfully entitled to receive such surplus.

(b)           For purposes of this Agreement (i) “Pro Rata Share” shall mean,
when calculating a Secured Creditor’s portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor’s Primary Obligations
or Secondary Obligations, as the case may be, and the denominator of which is
the then outstanding amount of all Primary Obligations or Secondary Obligations,
as the case may be, (ii) “Primary Obligations” shall mean (A) in the case of the
Credit Agreement Obligations, all principal of, and interest on, all Loans, all
Unpaid Drawings theretofore made (together with all interest accrued thereon),
and the aggregate Stated Amounts of all Letters of Credit issued (or deemed
issued) under the Credit Agreement, and all Fees and (B) in the case of the
Other Obligations, all amounts due under the Interest Rate Protection or Other
Hedging Agreements (other than indemnities, fees (including, without limitation,
attorneys’ fees) and similar obligations and liabilities) and (iii) “Secondary
Obligations” shall mean all Obligations other than Primary Obligations.

(c)           When payments to Secured Creditors are based upon their respective
Pro Rata Shares, the amounts received by such Secured Creditors hereunder shall
be applied (for purposes of making determinations under this Section 4.4 only)
(i) first, to their Primary Obligations and (ii) second, to their Secondary
Obligations.  If any payment to any Secured Creditor of its Pro Rata Share of
any distribution would result in overpayment to such Secured Creditor, such
excess amount shall instead be distributed in respect of the unpaid Primary
Obligations or Secondary Obligations, as the case may be, of the other Secured
Creditors, with each Secured Creditor whose Primary Obligations or Secondary
Obligations, as the case may be, have not been paid in full to receive an amount
equal to such excess amount multiplied by a fraction the numerator of which is
the unpaid Primary Obligations or Secondary Obligations, as the case may be, of
such Secured Creditor and the denominator of which is the unpaid Primary
Obligations or Secondary Obligations, as the case may be, of all Secured
Creditors entitled to such distribution.

(d)           Each of the Secured Creditors agrees and acknowledges that if the
Bank Creditors are to receive a distribution on account of undrawn amounts with
respect to Letters of Credit issued (or deemed issued) under the Credit
Agreement (which shall only occur after all outstanding Loans and Unpaid
Drawings with respect to such Letters of Credit have been paid in full), such
amounts shall be paid to the Agent under the Credit Agreement and held by it,
for the equal and ratable benefit of the Bank Creditors, as cash security for
the repayment of Obligations owing to the Bank Creditors as such.  If any
amounts are held as cash security pursuant to the immediately preceding
sentence, then upon the termination of all outstanding Letters of Credit, and
after the application of all such cash security to the repayment of all
Obligations owing to the Bank Creditors after giving effect to the termination
of all such Letters of Credit, if there remains any excess cash, such excess
cash shall be returned by the Agent to the Administrative Agent for distribution
in accordance with Section 4.4(a) hereof.

(e)           Except as set forth in Section 4.4(d) hereof, all payments
required to be made hereunder shall be made (i) if to the Bank Creditors, to the
Agent under the Credit Agreement for the account of the Bank Creditors, and (ii)
if to the Other Creditors, to the trustee, paying agent or other similar
representative (each a “Representative”) for the Other Creditors or, in the
absence of such a Representative, directly to the Other Creditors.

(f)            For purposes of applying payments received in accordance with
this Section 4.4, the Administrative Agent shall be entitled to rely upon (i)
the Agent under the Credit Agreement and (ii) the Representative for the Other
Creditors or, in the absence of such a Representative, upon the Other Creditors
for a determination (which the Agent, each Representative for any Secured
Creditors and the Secured Creditors agree (or shall agree) to provide upon
request of the Administrative Agent) of the outstanding Primary Obligations and
Secondary Obligations owed to the Bank Creditors or the Other Creditors, as the
case may be.  Unless it has actual knowledge (including by way of written notice
from a Bank Creditor or an Other Creditor) to the contrary, the Agent and each
Representative, in furnishing information pursuant to the preceding sentence,
and the Administrative Agent, in acting hereunder, shall be entitled to assume
that no Secondary Obligations are outstanding.  Unless it has actual knowledge
(including by way of written notice from an Other Creditor) to the contrary, the
Administrative Agent, in acting hereunder, shall be entitled to assume that no
Interest Rate Protection or Other Hedging Agreements are in existence.

(g)           It is understood and agreed that Borrower shall remain jointly and
severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral hereunder and the aggregate amount of the sums
referred to in clauses (i) through (iii), inclusive, of Section 4.4(a) hereof.

4.5           REMEDIES CUMULATIVE.  EACH AND EVERY RIGHT, POWER AND REMEDY
HEREBY SPECIFICALLY GIVEN TO THE ADMINISTRATIVE AGENT SHALL BE IN ADDITION TO
EVERY OTHER RIGHT, POWER AND REMEDY SPECIFICALLY GIVEN UNDER THIS AGREEMENT, THE
INTEREST RATE PROTECTION OR OTHER HEDGING AGREEMENTS, THE OTHER LOAN DOCUMENTS
OR NOW OR HEREAFTER EXISTING AT LAW OR IN EQUITY, OR BY STATUTE AND EACH AND
EVERY RIGHT, POWER AND REMEDY WHETHER SPECIFICALLY HEREIN GIVEN OR OTHERWISE
EXISTING MAY BE EXERCISED FROM TIME TO TIME OR SIMULTANEOUSLY AND AS OFTEN AND
IN SUCH ORDER AS MAY BE DEEMED EXPEDIENT BY THE ADMINISTRATIVE AGENT.  ALL SUCH
RIGHTS, POWERS AND REMEDIES SHALL BE CUMULATIVE AND THE EXERCISE OR THE
BEGINNING OF THE EXERCISE OF ONE SHALL NOT BE DEEMED A WAIVER OF THE RIGHT TO
EXERCISE ANY OTHER OR OTHERS.  NO DELAY OR OMISSION OF THE ADMINISTRATIVE AGENT
IN THE EXERCISE OF ANY SUCH RIGHT, POWER OR REMEDY AND NO RENEWAL OR EXTENSION
OF ANY OF THE OBLIGATIONS AND NO COURSE OF DEALING BETWEEN BORROWER AND THE
ADMINISTRATIVE AGENT OR ANY HOLDER OF ANY OF THE OBLIGATIONS SHALL IMPAIR ANY
SUCH RIGHT, POWER OR REMEDY OR SHALL BE CONSTRUED TO BE A WAIVER OF ANY DEFAULT
OR EVENT OF DEFAULT OR AN ACQUIESCENCE THEREIN.  NO NOTICE TO OR DEMAND ON
BORROWER IN ANY CASE SHALL ENTITLE IT TO ANY OTHER OR FURTHER NOTICE OR DEMAND
IN SIMILAR OR OTHER CIRCUMSTANCES OR CONSTITUTE A WAIVER OF ANY OF THE RIGHTS OF
THE ADMINISTRATIVE AGENT TO ANY OTHER OR FURTHER ACTION IN ANY CIRCUMSTANCES
WITHOUT NOTICE OR DEMAND.  IN THE EVENT THAT THE ADMINISTRATIVE AGENT SHALL
BRING ANY SUIT TO ENFORCE ANY OF ITS RIGHTS HEREUNDER AND SHALL BE ENTITLED TO
JUDGMENT, THEN IN SUCH SUIT THE ADMINISTRATIVE AGENT MAY RECOVER REASONABLE
EXPENSES, INCLUDING REASONABLE ATTORNEYS’ FEES, AND THE AMOUNTS THEREOF SHALL BE
INCLUDED IN SUCH JUDGMENT.

 

4.6           DISCONTINUANCE OF PROCEEDINGS.  IN CASE THE ADMINISTRATIVE AGENT
SHALL HAVE INSTITUTED ANY PROCEEDING TO ENFORCE ANY RIGHT, POWER OR REMEDY UNDER
THIS AGREEMENT BY FORECLOSURE, SALE, ENTRY OR OTHERWISE, AND SUCH PROCEEDING
SHALL HAVE BEEN DISCONTINUED OR ABANDONED FOR ANY REASON OR SHALL HAVE BEEN
DETERMINED ADVERSELY TO THE ADMINISTRATIVE AGENT, THEN AND IN EVERY SUCH CASE
BORROWER, THE ADMINISTRATIVE AGENT AND EACH HOLDER OF ANY OF THE OBLIGATIONS
SHALL BE RESTORED TO THEIR FORMER POSITIONS AND RIGHTS HEREUNDER WITH RESPECT TO
THE COLLATERAL SUBJECT TO THE SECURITY INTEREST CREATED UNDER THIS AGREEMENT
(EXCEPT TO THE EXTENT OF ANY SUCH ADVERSE DETERMINATION), AND ALL RIGHTS,
REMEDIES AND POWERS OF THE ADMINISTRATIVE AGENT SHALL CONTINUE (A) AS IF NO SUCH
PROCEEDING HAD BEEN INSTITUTED, IN THE CASE OF ANY SUCH PROCEEDING SO
DISCONTINUED OR ABANDONED, OR (B) AS IF NO PROCEEDING HAD BEEN INSTITUTED,
EXCEPT TO THE EXTENT OF THE DETERMINATION, IN THE CASE OF ANY SUCH PROCEEDING SO
ADVERSELY DETERMINED.

ARTICLE V
INDEMNITY

 

5.1           INDEMNITY.  (A)  BORROWER AGREES TO INDEMNIFY AND HOLD HARMLESS
THE ADMINISTRATIVE AGENT AND EACH SECURED CREDITOR AND THEIR RESPECTIVE
SUCCESSORS, ASSIGNS, EMPLOYEES, AGENTS AND SERVANTS (INDIVIDUALLY AN
“INDEMNITEE,” AND COLLECTIVELY THE “INDEMNITEES”) FROM AND AGAINST ANY AND ALL
CLAIMS, DEMANDS, LOSSES, JUDGMENTS AND LIABILITIES (INCLUDING LIABILITIES FOR
PENALTIES) OF WHATSOEVER KIND OR NATURE, AND TO REIMBURSE EACH INDEMNITEE FOR
ALL COSTS AND EXPENSES, INCLUDING REASONABLE ATTORNEYS’ FEES, GROWING OUT OF OR
RESULTING FROM THIS AGREEMENT OR THE EXERCISE BY ANY INDEMNITEE OF ANY RIGHT OR
REMEDY GRANTED TO IT HEREUNDER OR UNDER ANY INTEREST RATE HEDGING AGREEMENT OR
UNDER ANY OTHER LOAN DOCUMENT (BUT EXCLUDING ANY CLAIMS, DEMANDS, LOSSES,
JUDGMENTS AND LIABILITIES OR EXPENSES TO THE EXTENT INCURRED BY REASON OF GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE).  IF AND TO THE EXTENT THAT
THE OBLIGATIONS OF THE BORROWER UNDER THIS SECTION 5.1(A) ARE UNENFORCEABLE FOR
ANY REASON, THE BORROWER HEREBY AGREES TO MAKE THE MAXIMUM CONTRIBUTION TO THE
PAYMENT AND SATISFACTION OF SUCH OBLIGATIONS WHICH IS PERMISSIBLE UNDER
APPLICABLE LAW.

 

(b)           Without limiting the application of Section 5.1(a) hereof,
Borrower agrees to pay, or reimburse the Administrative Agent for any and all
reasonable fees, costs and expenses of whatever kind or nature incurred in
connection with the creation, preservation or protection of the Administrative
Agent’s Liens on, and security interest in, the Collateral, including, without
limitation, all reasonable fees and taxes in connection with the recording or
filing of instruments and documents in public offices, payment or discharge of
any taxes or Liens upon or in respect of the Collateral, premiums for insurance
with respect to the Collateral and all other reasonable fees, costs and expenses
in connection with protecting, maintaining or preserving the Collateral and the
Administrative Agent’s interest therein, whether through judicial proceedings or
otherwise, or in defending or prosecuting any actions, suits or proceedings
arising out of or relating to the Collateral.

(c)           Without limiting the application of Section 5.1(a) or (b) hereof,
Borrower agrees to pay, indemnify and hold each Indemnitee harmless from and
against any loss, costs, damages and expenses which such Indemnitee may suffer,
expend or incur in consequence of or growing out of any misrepresentation by
Borrower in this Agreement, any Interest Rate Protection or Other Hedging
Agreement, any other Loan Document or in any writing contemplated by or made or
delivered pursuant to or in connection with this Agreement, any Interest Rate
Protection or Other Hedging Agreement or any other Loan Document.

(d)           If and to the extent that the obligations of Borrower under this
Section 5.1 are unenforceable for any reason, Borrower hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations which
is permissible under applicable law.

5.2           INDEMNITY OBLIGATIONS SECURED BY COLLATERAL; SURVIVAL.  ANY
AMOUNTS PAID BY ANY INDEMNITEE AS TO WHICH SUCH INDEMNITEE HAS THE RIGHT TO
REIMBURSEMENT SHALL CONSTITUTE OBLIGATIONS SECURED BY THE COLLATERAL PRIOR TO
THE RELEASE OF THE COLLATERAL PURSUANT TO THE TERMS HEREOF.  THE INDEMNITY
OBLIGATIONS OF BORROWER CONTAINED IN THIS ARTICLE V SHALL CONTINUE IN FULL FORCE
AND EFFECT NOTWITHSTANDING THE FULL PAYMENT OF ALL THE NOTES ISSUED UNDER THE
CREDIT AGREEMENT, THE TERMINATION OF ALL INTEREST RATE PROTECTION OR OTHER
HEDGING AGREEMENTS AND THE PAYMENT OF ALL OTHER OBLIGATIONS (BUT EXCLUDING ANY
UNASSERTED CONTINGENT AND INDEMNIFICATION OBLIGATIONS WHICH SURVIVE THE
TERMINATION HEREOF) AND NOTWITHSTANDING THE DISCHARGE THEREOF.

 

ARTICLE VI
DEFINITIONS

 

The following terms shall have the meanings herein specified.  Such definitions
shall be equally applicable to the singular and plural forms of the terms
defined.

“Account” shall have the meaning provided in the Uniform Commercial Code.

“Administrative Agent” shall have the meaning provided in the first paragraph of
this Agreement.

“Agent” shall have the meaning provided in the first WHEREAS clause of this
Agreement.

“Agreement” shall mean this Security Agreement as the same may be modified,
supplemented, extended, renewed, replaced, restated or amended from time to time
in accordance with its terms.

“Bank Creditor” shall have the meaning provided in the first paragraph of this
Agreement.

“Borrower” shall have the meaning provided in the first paragraph of this
Agreement.

 “Chattel Paper” shall have the meaning provided in the Uniform Commercial Code.

“Class” shall have the meaning provided in Section 7.2 of this Agreement.

“Collateral” shall have the meaning provided in Section 1.1(a) of this
Agreement.

“Contract Rights” shall mean all rights of Borrower (including, without
limitation, all rights to payment) under each Contract.

“Contracts” shall mean all contracts between Borrower and one or more additional
parties (including, without limitation, (i) each partnership agreement to which
Borrower is a party and (ii) any Interest Rate Protection or Other Hedging
Agreements), but excluding licenses, agreements and leases, which are immaterial
to the operations of Borrower, to the extent that the terms thereof prohibit the
assignment of, or granting of a security interest in, such licenses, agreements
or leases.

 “Credit Agreement” shall have the meaning provided in the first WHEREAS clause
of this Agreement.

“Credit Agreement Obligations” shall have the meaning provided in the definition
of “Obligations” in this Article VI.

“Default” shall mean any event which, with notice or lapse of time, or both,
would constitute an Event of Default.

“Documents” shall have the meaning provided in the Uniform Commercial Code.

“Equipment” shall mean any “equipment,” as such term is defined in the Uniform
Commercial Code, now or hereafter owned by Borrower.

“Event of Default” shall mean any Event of Default under, and as defined in, the
Credit Agreement and shall in any event, without limitation, include any payment
default on any of the Obligations after the expiration of any applicable grace
period.

“General Intangibles” shall have the meaning provided in the Uniform Commercial
Code.

“Goods” shall have the meaning provided in the Uniform Commercial Code.

 “Indemnitee” shall have the meaning provided in Section 5.1 of this Agreement.

“Instrument” shall have the meaning provided in Article 9 of the Uniform
Commercial Code.

“Interest Rate Protection or Other Hedging Agreements” shall have the meaning
provided in the first paragraph of this Agreement.

“Inventory” shall mean all “inventory” as such term is defined in the Uniform
Commercial Code, now or hereafter owned by Borrower.

“Investment Property” shall have the meaning ascribed thereto in Article 9 of
the UCC.

“LC Creditor” shall have the meaning provided in the first WHEREAS clause of
this Agreement.

“Lenders” shall have the meaning provided in the first WHEREAS clause of this
Agreement.

 “Obligations” shall mean (i) the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of all obligations
(including, without limitation, all “Obligations” as such term is defined in the
Credit Agreement and all obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities of
Borrower now existing or hereafter incurred under, arising out of or in
connection with the Credit Agreement or any other Loan Document to which
Borrower is a Party and the due performance and compliance by Borrower with all
of the terms, conditions and agreements contained in each such Loan Document
(all such obligations and liabilities being herein collectively called the
“Credit Agreement Obligations”); (ii) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities of
Borrower now existing or hereafter incurred under, arising out of or in
connection with (x) any Interest Rate Protection or Other Hedging Agreement,
whether such Interest Rate Protection or Other Hedging Agreement is now in
existence or hereafter arising and the due performance and compliance by
Borrower with all of the terms, conditions and agreements contained therein and
(y) the US Bank Letter of Credit Facility up to a maximum amount of $2,000,000
(provided that at no time shall there be more than $2,000,000 under the US Bank
Letter of Credit Facility secured by the Security Documents) (all such
obligations and liabilities described in this clause (ii) being herein
collectively called the “Other Obligations”); (iii) any and all sums advanced by
the Administrative Agent in order to preserve the Collateral or preserve its
security interest in the Collateral; (iv) in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or liabilities of
Borrower referred to in clauses (i) and (ii), after an Event of Default shall
have occurred and be continuing, the reasonable expenses of taking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Collateral, or of any exercise by the Administrative Agent of its rights
hereunder, together with reasonable attorneys’ fees and court costs; and (v) all
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement under Section 6.1 of this Agreement.  It is acknowledged and
agreed that the “Obligations” shall include extensions of credit of the types
described above, whether outstanding on the date of this Agreement or extended
from time to time after the date of this Agreement.

“Other Creditors” shall have the meaning provided in the first paragraph of this
Agreement.

“Other Obligations” shall have the meaning provided in the definition of
“Obligations” in this Article VI.

 “Permitted Filings” shall mean any filing or similar item that is a matter of
public record on the date of this Agreement.

“Primary Obligations” shall have the meaning provided in Section 4.4(b) of this
Agreement.

“Pro Rata Share” shall have the meaning provided in Section 4.4(b) of this
Agreement.

“Proceeds” shall have the meaning provided in the Uniform Commercial Code.

 “Representative” shall have the meaning provided in Section 5.4(e) of this
Agreement.

“Required Secured Creditors” shall mean (i) the Required Lenders (or, to the
extent required by Article XI of the Credit Agreement, all of the Lenders) under
the Credit Agreement so long as any Credit Agreement Obligations remain
outstanding and (ii) in any situation not covered by preceding clause (i), the
holders of a majority of the outstanding principal amount of the Other
Obligations.

“Requisite Creditors” shall have the meaning provided in Section 7.2 of this
Agreement.

“Secondary Obligations” shall have the meaning provided in Section 4.4(b) of
this Agreement.

“Secured Creditors” shall have the meaning provided in the first paragraph of
this Agreement.

 “Termination Date” shall have the meaning provided in Section 7.9 of this
Agreement.

“Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code as now
or hereafter in effect from time to time in the State of New York or any other
applicable jurisdiction.

“US Bank Letter of Credit Facility” means that certain revolving letter of
credit facility in effect on the date hereof pursuant to that certain Continuing
Reimbursement Agreement for Commercial Letters of Credit, dated as of July 14,
2000 by and among the LC Creditor and the Borrower providing for commercial
letters of credit; provided, however, that at no time shall there be more than a
maximum amount of $2,000,000 under the US Bank Letter of Credit Facility secured
by the Security Documents.

ARTICLE VII
MISCELLANEOUS

 

7.1           NOTICES.  ALL SUCH NOTICES AND COMMUNICATIONS HEREUNDER SHALL BE
SENT OR DELIVERED IN ACCORDANCE WITH THE TERMS OF THE CREDIT AGREEMENT.

 

7.2           WAIVER; AMENDMENT.  NONE OF THE TERMS AND CONDITIONS OF THIS
AGREEMENT MAY BE CHANGED, WAIVED, MODIFIED OR VARIED IN ANY MANNER WHATSOEVER
UNLESS IN WRITING DULY SIGNED BY BORROWER AND THE ADMINISTRATIVE AGENT (WITH THE
WRITTEN CONSENT OF THE REQUIRED LENDERS, OR TO THE EXTENT REQUIRED BY SECTION
11.1 OF THE CREDIT AGREEMENT, ALL THE LENDERS); PROVIDED, HOWEVER, THAT ANY
CHANGE, WAIVER, MODIFICATION OR VARIANCE AFFECTING THE RIGHTS AND BENEFITS OF A
SINGLE CLASS OF SECURED CREDITORS (AND NOT ALL SECURED CREDITORS IN A LIKE OR
SIMILAR MANNER) SHALL REQUIRE THE WRITTEN CONSENT OF THE REQUISITE CREDITORS OF
SUCH AFFECTED CLASS.  FOR THE PURPOSE OF THIS AGREEMENT, THE TERM “CLASS” SHALL
MEAN EACH CLASS OF SECURED CREDITORS, I.E., WHETHER (I) THE BANK CREDITORS AS
HOLDERS OF THE CREDIT AGREEMENT OBLIGATIONS OR (II) THE OTHER CREDITORS AS THE
HOLDERS OF THE OTHER OBLIGATIONS; AND THE TERM “REQUISITE CREDITORS” OF ANY
CLASS SHALL MEAN EACH OF (A) WITH RESPECT TO THE CREDIT AGREEMENT OBLIGATIONS,
THE REQUIRED LENDERS AND (B) WITH RESPECT TO THE OTHER OBLIGATIONS, THE HOLDERS
OF AT LEAST A MAJORITY OF ALL OBLIGATIONS OUTSTANDING FROM TIME TO TIME UNDER
THE INTEREST RATE PROTECTION AGREEMENTS OR OTHER HEDGING AGREEMENTS.

 

7.3           OBLIGATIONS ABSOLUTE.  THE OBLIGATIONS OF BORROWER HEREUNDER SHALL
REMAIN IN FULL FORCE AND EFFECT WITHOUT REGARD TO, AND SHALL NOT BE IMPAIRED BY,
(A) ANY BANKRUPTCY, INSOLVENCY, REORGANIZATION, ARRANGEMENT, READJUSTMENT,
COMPOSITION, LIQUIDATION OR THE LIKE OF BORROWER; (B) ANY EXERCISE OR
NON-EXERCISE, OR ANY WAIVER OF, ANY RIGHT, REMEDY, POWER OR PRIVILEGE UNDER OR
IN RESPECT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY INTEREST RATE
PROTECTION OR OTHER HEDGING AGREEMENT EXCEPT AS SPECIFICALLY SET FORTH IN A
WAIVER GRANTED PURSUANT TO SECTION 7.2 HEREOF; OR (C) ANY AMENDMENT TO OR
MODIFICATION OF ANY LOAN DOCUMENT OR ANY INTEREST RATE PROTECTION OR OTHER
HEDGING AGREEMENT OR ANY SECURITY FOR ANY OF THE OBLIGATIONS; WHETHER OR NOT
BORROWER SHALL HAVE NOTICE OR KNOWLEDGE OF ANY OF THE FOREGOING.

 

7.4           SUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL BE BINDING UPON THE
PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS AND SHALL INURE TO
THE BENEFIT OF THE ADMINISTRATIVE AGENT, EACH SECURED CREDITOR AND BORROWER AND
THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, PROVIDED THAT BORROWER MAY NOT TRANSFER
OR ASSIGN ANY OR ALL OF ITS RIGHTS OR OBLIGATIONS HEREUNDER WITHOUT THE WRITTEN
CONSENT OF THE REQUIRED SECURED CREDITORS.  ALL AGREEMENTS, STATEMENTS,
REPRESENTATIONS AND WARRANTIES MADE BY BORROWER HEREIN OR IN ANY CERTIFICATE OR
OTHER INSTRUMENT DELIVERED BY BORROWER OR ON ITS BEHALF UNDER THIS AGREEMENT
SHALL BE CONSIDERED TO HAVE BEEN RELIED UPON BY THE SECURED CREDITORS AND SHALL
SURVIVE THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS
AND THE INTEREST RATE PROTECTION OR OTHER HEDGING AGREEMENTS REGARDLESS OF ANY
INVESTIGATION MADE BY THE SECURED CREDITORS OR ON THEIR BEHALF.

 

7.5           HEADINGS DESCRIPTIVE.  THE HEADINGS OF THE SEVERAL SECTIONS OF
THIS AGREEMENT ARE INSERTED FOR CONVENIENCE ONLY AND SHALL NOT IN ANY WAY AFFECT
THE MEANING OR CONSTRUCTION OF ANY PROVISION OF THIS AGREEMENT.

 

7.6           SEVERABILITY.  ANY PROVISION OF THIS AGREEMENT WHICH IS PROHIBITED
OR UNENFORCEABLE IN ANY JURISDICTION SHALL, AS TO SUCH JURISDICTION, BE
INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR UNENFORCEABILITY WITHOUT
INVALIDATING THE REMAINING PROVISIONS HEREOF, AND ANY SUCH PROHIBITION OR
UNENFORCEABILITY IN ANY JURISDICTION SHALL NOT INVALIDATE OR RENDER
UNENFORCEABLE SUCH PROVISION IN ANY OTHER JURISDICTION.

 

7.7           GOVERNING LAW.  THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF SAID STATE,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

 

7.8           BORROWER’S DUTIES.  IT IS EXPRESSLY AGREED, ANYTHING HEREIN
CONTAINED TO THE CONTRARY NOTWITHSTANDING, THAT BORROWER SHALL REMAIN LIABLE TO
PERFORM ALL OF THE OBLIGATIONS, IF ANY, ASSUMED BY IT WITH RESPECT TO THE
COLLATERAL AND THE ADMINISTRATIVE AGENT SHALL NOT HAVE ANY OBLIGATIONS OR
LIABILITIES WITH RESPECT TO ANY COLLATERAL BY REASON OF OR ARISING OUT OF THIS
AGREEMENT, NOR SHALL THE ADMINISTRATIVE AGENT BE REQUIRED OR OBLIGATED IN ANY
MANNER TO PERFORM OR FULFILL ANY OF THE OBLIGATIONS OF BORROWER UNDER OR WITH
RESPECT TO ANY COLLATERAL.

 

7.9           TERMINATION; RELEASE.  (A)  AFTER THE TERMINATION DATE, THIS
AGREEMENT SHALL AUTOMATICALLY TERMINATE (PROVIDED THAT ALL INDEMNITIES SET FORTH
HEREIN INCLUDING, WITHOUT LIMITATION, IN SECTION 5.1 HEREOF SHALL SURVIVE SUCH
TERMINATION) AND THE ADMINISTRATIVE AGENT, AT THE REQUEST AND EXPENSE OF
BORROWER, WILL EXECUTE AND DELIVER TO BORROWER A PROPER INSTRUMENT OR
INSTRUMENTS (INCLUDING UNIFORM COMMERCIAL CODE TERMINATION STATEMENTS ON FORM
UCC-3) ACKNOWLEDGING THE SATISFACTION AND TERMINATION OF THIS AGREEMENT, AND
WILL DULY ASSIGN, TRANSFER AND DELIVER TO BORROWER (WITHOUT RECOURSE AND WITHOUT
ANY REPRESENTATION OR WARRANTY) SUCH OF THE COLLATERAL OF BORROWER AND AS HAS
NOT THERETOFORE BEEN SOLD OR OTHERWISE APPLIED OR RELEASED PURSUANT TO THIS
AGREEMENT.  AS USED IN THIS AGREEMENT, “TERMINATION DATE” SHALL MEAN THE DATE
UPON WHICH THE TOTAL COMMITMENT AND ALL INTEREST RATE PROTECTION OR OTHER
HEDGING AGREEMENTS HAVE BEEN TERMINATED, NO NOTE UNDER THE CREDIT AGREEMENT IS
OUTSTANDING (AND ALL LOANS HAVE BEEN REPAID IN FULL), ALL LETTERS OF CREDIT HAVE
BEEN TERMINATED AND ALL OBLIGATIONS (AS DEFINED IN THE CREDIT AGREEMENT) THEN
OUTSTANDING (OTHER THAN ANY INDEMNITIES DESCRIBED IN SECTION 5.1 HEREOF AND IN
SECTION 11.4 OF THE CREDIT AGREEMENT WITH RESPECT TO WHICH NO CLAIM HAS BEEN
ASSERTED) HAVE BEEN PAID IN FULL IN CASH.

 

(b)           In the event that any part of the Collateral is sold or otherwise
disposed of in connection with a sale or other disposition permitted by Section
8.7 of the Credit Agreement or is otherwise released at the direction of the
Required Lenders (or all the Lenders if required by Section 11.1 of the Credit
Agreement) and the proceeds of such sale or sales or from such release are
applied in accordance with the provisions of Section 4.4 of the Credit
Agreement, to the extent required to be so applied, such Collateral will be sold
free and clear of the Liens created by this Agreement and the Administrative
Agent, at the request and expense of Borrower, will duly assign, transfer and
deliver to Borrower (without recourse and without any representation or
warranty) such of the Collateral as is then being (or has been) so sold or
released and has not theretofore been released pursuant to this Agreement.  The
Administrative Agent shall also be entitled to and is hereby authorized and
directed to duly assign, transfer and deliver such of the Collateral as provided
in Section 11.20(b) of the Credit Agreement.

(c)           At any time that Borrower desires that the Administrative Agent
take any action to acknowledge or give effect to any release of Collateral
pursuant to the foregoing Section 7.9(a) or (b), as the case may be, it shall
deliver to the Administrative Agent a certificate signed by an Authorized
Officer stating that the release of the respective Collateral is permitted
pursuant to Section 7.9(a) or (b), as the case may be.

(d)           The Administrative Agent shall have no liability whatsoever to any
Secured Creditor as a result of any release of Collateral by it in accordance
with this Section 7.9.

7.10         COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF
COUNTERPARTS AND BY THE DIFFERENT PARTIES HERETO ON SEPARATE COUNTERPARTS, EACH
OF WHICH WHEN SO EXECUTED AND DELIVERED SHALL BE AN ORIGINAL, BUT ALL OF WHICH
SHALL TOGETHER CONSTITUTE ONE AND THE SAME INSTRUMENT.  A SET OF COUNTERPARTS
EXECUTED BY ALL THE PARTIES HERETO SHALL BE LODGED WITH BORROWER AND THE
ADMINISTRATIVE AGENT.

 

7.11         THE ADMINISTRATIVE AGENT.  THE ADMINISTRATIVE AGENT WILL HOLD IN
ACCORDANCE WITH THIS AGREEMENT ALL ITEMS OF THE COLLATERAL AT ANY TIME RECEIVED
UNDER THIS AGREEMENT.  IT IS EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES
HERETO AND EACH SECURED CREDITOR, BY ACCEPTING THE BENEFITS OF THIS AGREEMENT,
ACKNOWLEDGES AND AGREES THAT THE OBLIGATIONS OF THE ADMINISTRATIVE AGENT AS
HOLDER OF THE COLLATERAL AND INTERESTS THEREIN AND WITH RESPECT TO THE
DISPOSITION THEREOF, AND OTHERWISE UNDER THIS AGREEMENT, ARE ONLY THOSE
EXPRESSLY SET FORTH IN THIS AGREEMENT AND AS PROVIDED IN THE UNIFORM COMMERCIAL
CODE IN THE STATE OF NEW YORK.  THE ADMINISTRATIVE AGENT SHALL ACT HEREUNDER ON
THE TERMS AND CONDITIONS SET FORTH IN ARTICLE IX AND SECTION 11.18 OF THE CREDIT
AGREEMENT.

 

                7.12         US Bank.  (a) US Bank as LC Creditor under the US
Bank Letter of Credit Facility and in its capacity as a Secured Party hereunder
hereby irrevocably designates and appoints Bankers Trust Company as
Administrative Agent under this Agreement and irrevocably authorizes Bankers
Trust Company to act as its Administrative Agent and to take such action on its
behalf under the provisions of this Agreement and to exercise such powers and
perform such duties as are expressly delegated to the Administrative Agent under
this Agreement and the Loan Documents, together with such other powers as are
reasonably incidental thereto.  Notwithstanding any provision to the contrary in
this Agreement, the Administrative Agent shall not have any duties or
responsibilities with respect to US Bank in its capacity LC Creditor under the
US Bank Letter of Credit Facility or any fiduciary relationship with US Bank,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Administrative Agent.

 

                (b)           For avoidance of doubt, US Bank expressly
acknowledges that all rights and remedies of the Administrative Agent hereunder
shall be exercised by the Administrative Agent in accordance with the applicable
provisions of the Credit Agreement, and no consent of, or notice to, US Bank
shall be required with respect thereto and US Bank shall not undertake any
separate action with respect to the Collateral.  The sole right of US Bank
hereunder shall be to receive its proportionate share of any proceeds received
by the Administrative Agent hereunder in accordance with the terms hereof.

 

 

 

[Signature Page Follows]

.                               IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed and delivered by their duly authorized
officers as of the date first above written.

 

 

 

BMC INDUSTRIES, INC.,

 

as Borrower

 

 

 

 

By:

/s/ Kathleen P. Pepski

 

Name:

Kathleen P. Pepski

 

Title:   

Senior Vice President and

 

 

   Chief Financial Officer

 

 

 

 

 

 

 

BANKERS TRUST COMPANY,

 

as Administrative Agent

 

 

 

By:   

/s/ Robert Telesca

 

Name:

Robert Telesca

 

Title:    

Vice President

 

 

 

 

 

 

 

U.S. BANK NATIONAL ASSOCIATION

 

 

 

 

By:   

/s/ William J. Umscheid

 

Name:  

William J. Umscheid

 

Title:    

Vice President

 

 

ANNEX A

to

Security Agreement

SCHEDULE OF CHIEF EXECUTIVE OFFICES

 

 

(a) Chief Executive Office

                One Meridian Crossings, Suite 850

                Minneapolis, Minnesota 55423

 

(b) State of Incorporation

Minnesota

 

 

 

 

 

ANNEX B

to

Security Agreement

SCHEDULE OF INVENTORY

 

AND EQUIPMENT LOCATIONS

 

ARTICLE VIII

 

Hennepin County, Minnesota

Ramsey County, Minnesota

Cortland County, New York

Onondaga County, New York

 

 

 

ANNEX C

to

Security Agreement

SCHEDULE OF TRADE, FICTITIOUS AND OTHER NAMES

 

BMC Industries,
Inc.                                                                          
ID#:  41-0169210

BMC Industries

BMC

Vision-Ease Lens

Vision-Ease

Buckbee-Mears

Buckbee-Mears Cortland

Buckbee-Mears St. Paul

BMSP