FORM
ATTACHED TO THE CONVERSION AGREEMENT AS EXHIBIT B.
3.
GRANT OF LIEN AND SECURITY INTERESTS.
(A)
FIRST PRIORITY LIEN INTEREST.
AS SECURITY
FOR THE OBLIGATIONS, HAYNES HEREBY GRANTS TO TIMET A CONTINUING FIRST PRIORITY
SECURITY INTEREST IN THE OPERATING ASSETS, WHETHER NOW OWNED OR HEREAFTER
ACQUIRED BY HAYNES, OR IN WHICH HAYNES NOW HAS OR AT ANY TIME IN THE FUTURE MAY
ACQUIRE ANY RIGHT, TITLE OR INTEREST (THE "COLLATERAL").
ON OR PRIOR TO THE
DATE HEREOF, (I) ANY APPLICABLE LOAN DOCUMENTS HAVE BEEN AMENDED TO REFLECT THE
FIRST PRIORITY OF THE LIEN CREATED HEREUNDER AND ARE OTHERWISE IN THE FORM
APPROVED BY TIMET, AND (II) ANY LIENS SUPERIOR TO THE FIRST PRIORITY LIEN
CREATED HEREUNDER HAVE BEEN RELEASED IN FORMS REASONABLY ACCEPTABLE TO TIMET,
AND SUCH DOCUMENTS WILL BE DELIVERED TO TIMET WITHIN THREE (3) BUSINESS DAY FROM
THE DATE HEREOF.
(B)
FINANCING STATEMENTS.
HAYNES HEREBY
AUTHORIZES TIMET TO FILE ONE OR MORE FINANCING STATEMENTS, AND AMENDMENTS
THERETO, RELATING TO THE COLLATERAL.
(C)
NON-DISTURBANCE.
ON OR PRIOR TO THE DATE
HEREOF, HAYNES AND ANY MORTGAGEE OR OTHER PARTY HOLDING AN INTEREST IN THE REAL
ESTATE SHALL EXECUTE A NON-DISTURBANCE AGREEMENT OR SIMILAR AGREEMENT IN FAVOR
OF TIMET IN FORM REASONABLY ACCEPTABLE TO TIMET, AND SUCH DOCUMENTS WILL BE
DELIVERED TO TIMET WITHIN THREE (3) BUSINESS DAY FROM THE DATE HEREOF.
7
4.
RIGHT OF ACCESS.
(A)
GENERAL.
UPON THE OCCURRENCE OF A HAYNES
BANKRUPTCY EVENT OR A SECURED FACILITY EVENT, TIMET OR ITS AGREED-UPON
DESIGNEE(S) SHALL HAVE A RIGHT, BUT NOT THE OBLIGATION, TO USE AND OCCUPY THE
OPERATING ASSETS TO PERFORM ANY OR ALL OF THE TITANIUM CONVERSION SERVICES (THE
"RIGHT OF ACCESS"), SUBJECT TO THE MAXIMUM MONTHLY VOLUME AND THE MAXIMUM ANNUAL
VOLUME, FOR A PERIOD COMMENCING UPON THE HAYNES BANKRUPTCY EVENT OR SECURED
FACILITY EVENT, AS THE CASE MAY BE, AND ENDING AT THE EARLIER OF (I) THE
EXPIRATION OF THE TERM OF THE CONVERSION AGREEMENT OR (II) THE TERMINATION OF
THE RIGHT OF ACCESS PURSUANT TO SECTION 4(D), SUBJECT TO REINSTATEMENT AS SET
FORTH THEREIN (THE "ACCESS PERIOD").
TIMET MAY INVOKE THE RIGHT OF ACCESS BY
DELIVERING WRITTEN NOTICE TO HAYNES INDICATING TIMET'S INTENTION TO INVOKE THE
RIGHT OF ACCESS.
TIMET SHALL HAVE NO RIGHT TO SELL, TRANSFER, OR DISPOSE OF THE
OPERATING ASSETS AS PART OF THE RIGHT OF ACCESS.
(B)
TIMET'S OBLIGATIONS. IF TIMET INVOKES THE
RIGHT OF ACCESS FOR ITSELF OR ITS DESIGNEE(S), TIMET AND ITS DESIGNEE SHALL:
(I)
USE REASONABLE CARE IN THE CUSTODY AND
PRESERVATION OF THE OPERATING ASSETS;
(II)
INDEMNIFY, DEFEND AND HOLD HAYNES AND ITS
OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS HARMLESS FROM ANY AND ALL COSTS,
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES), LOSSES, DAMAGES, LIABILITIES OR
CLAIMS (COLLECTIVELY, "CLAIMS") WITH RESPECT TO INJURY TO OR DEATH OF PERSONS
OCCURRING ON THE REAL ESTATE TO THE EXTENT ARISING OUT OF THE WILLFUL MISCONDUCT
OR GROSS NEGLIGENCE OF TIMET OR ITS OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS TO
THE EXTENT SUCH CLAIMS ARISE OR ACCRUE DURING AN ACCESS PERIOD; AND