Document:

Exhibit 4.3

 

EXECUTION COPY

 

SECURITY AGREEMENT

 

This SECURITY AGREEMENT (as amended, supplemented,
amended and restated or otherwise modified from time to time, this “Security
Agreement”), dated as of February 1, 2005, is made by EDGEN
CORPORATION, a Nevada corporation (as successor by merger to Edgen Acquisition
Corporation) (the “Company”), each Guarantor (as defined below)
signatory hereto, and each other Guarantor which may from time to time
hereafter become a party hereto pursuant to Section 7.5 (each,
individually, an “Additional Grantor”, and collectively, the “Additional
Grantors”, and together with the Company, each such Subsidiary, each,
individually, a “Grantor”, and collectively, the “Grantors”), in
favor of THE BANK OF NEW YORK,
as collateral agent (together with its successor(s) thereto, in such capacity,
the “Collateral Agent”) for each of the Secured Parties.

 

W I T N E S S E T H:

 

WHEREAS, the Company, the other Grantors and the
Collateral Agent, as trustee, have entered into an Indenture, dated as of February 1,
2005 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the “Indenture”), and in connection therewith, the Company
has issued (the “Notes Issuance”) its Senior Secured Notes due 2011
(and, if applicable, its Senior Secured Notes due 2011, Series B issued in
exchange therefor) (collectively, the “Notes”);

 

WHEREAS, the Grantors have entered into that certain
Amended and Restated Loan and Security Agreement, dated as of February 1,
2005, (as amended, supplemented, amended and restated or otherwise modified
from time to time, the “Loan Agreement”) among the financial
institutions party thereto (together with GMAC Commercial Finance LLC (“GMAC
CF”), collectively the “Senior Lenders”) and GMAC CF, as agent for
the Senior Lenders (in such capacity, together with its successors and assigns,
in such capacity, the “Agent”), pursuant to which Agent and Senior
Lenders have agreed to make certain loans and other financial accommodations
available to the Grantors from time to time, which Loan Agreement is referenced
as the “Senior Credit Facility” under the Indenture, and the other Grantors
hereto have granted Liens to the Agent for the benefit of the Senior Lenders;

 

WHEREAS, as a condition precedent to the Notes
Issuance, each Grantor is required to execute and deliver this Security
Agreement;

 

WHEREAS, each Grantor has duly authorized the
execution, delivery and performance of this Security Agreement; and

 

WHEREAS, it is in the best interests of each Grantor
to execute this Security Agreement inasmuch as such Grantor will derive
substantial direct and indirect benefits from proceeds of the Notes issued by
the Company;

 

NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and in order to
induce the Holders to acquire the Notes and

 

 

maintain the Indebtedness
evidenced thereby, each Grantor agrees, for the benefit of each Secured Party,
as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1.  Certain Terms.  The following terms (whether or not
underscored) when used in this Security Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):

 

“Additional Grantor” and “Additional
Grantors” are defined in the preamble.

 

“Agent” is defined in the second recital.

 

“Collateral” is defined in Section 2.1.

 

“Collateral Agent” is defined in the preamble.

 

“Company” is defined in the preamble.

 

“Computer Hardware and Software Collateral”
means:

 

(a)  all computer
and other electronic data processing hardware, integrated computer systems,
central processing units, memory units, display terminals, printers, card
readers, tape drives, hard and soft disk drives, cables, computer accessories
and all peripheral devices and other related computer hardware;

 

(b)  all software
programs (including both source code, object code and all related applications
and data files), whether now owned, licensed or leased or hereafter acquired by
any Grantor, designed for use on the computers and electronic data processing
hardware described in clause (a) above;

 

(c)  all firmware
associated therewith;

 

(d)  all
documentation (including flow charts, logic diagrams, manuals, guides and specifications)
with respect to such hardware, software and firmware described in the preceding
clauses (a) through (c); and

 

(e)  all rights with
respect to all of the foregoing, including any and all copyrights, licenses,
options, warranties, service contracts, program services, test rights,
maintenance rights, support rights, improvement rights, renewal rights and
indemnifications and any substitutions, replacements, additions or model
conversions of any of the foregoing.

 

“Copyright Collateral” means all copyrights
(including all copyrights for semiconductor chip product mask works) of each
Grantor, whether statutory or common law, registered or unregistered, now or
hereafter in force throughout the world including all of such Grantor’s right,
title and interest in and to all copyrights registered in the United States
Copyright Office

 

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including those referred
to in Item A of Schedule V attached hereto, and all
applications for registration of copyrights, all copyright licenses, including
each copyright license referred to in Item B of Schedule V
attached hereto, the right to sue for past, present and future infringements of
any thereof, all rights corresponding thereto throughout the world, all
extensions and renewals of any thereof and all proceeds of the foregoing,
including licenses, royalties, income, payments, claims, damages and proceeds
of suit.

 

“General Intangibles” means all “general
intangibles” and all “payment intangibles”, each as defined in the U.C.C, and
shall include all interest rate or currency protection or hedging arrangements,
all tax refunds, all licenses, permits, concessions and authorizations and all
Intellectual Property Collateral (in each case, regardless of whether
characterized as general intangibles under the U.C.C).

 

“Grantor” and “Grantors” are defined in
the preamble.

 

“Indenture” is defined in the first recital.

 

“Intellectual Property Collateral” means,
collectively, the Computer Hardware and Software Collateral, the Copyright
Collateral, the Patent Collateral, the Trademark Collateral and the Trade
Secrets Collateral.

 

“Loan Agreement” is defined in the second
recital.

 

“Motor Vehicles” means motor vehicles,
tractors, trailers and other like property, whether or not the title thereto is
governed by a certificate of title or ownership.

 

“Notes” is defined in the first recital.

 

“Notes Issuance” is defined in the first
recital.

 

“Patent
Collateral” means:

 

(a)  all letters
patent and applications for letters patent, including all patent applications
in preparation for filing and including each patent and patent application
referred to in Item A of Schedule III attached hereto;

 

(b)  all reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations of any of the items described in clause (a);

 

(c)  all patent
licenses, including each patent license referred to in Item B of Schedule III
attached hereto; and

 

(d)  all proceeds
of, and rights associated with, the foregoing (including license royalties and
proceeds of infringement suits), the right to sue third parties for past,
present or future infringements of any patent or patent application, including
any patent or patent application referred to in Item A of Schedule III
attached hereto, and for breach or enforcement of any patent license, including
any patent license referred to in Item B of Schedule III
attached hereto, and all rights corresponding thereto throughout the world.

 

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“Security Agreement” is defined in the preamble.

 

“Related Documents” means the Indenture, the
Notes, this Security Agreement, the Trademark Security Agreement, the Patent
Security Agreement, if any, the Copyright Security Agreement, if any, and the
Mortgages.

 

“Secured Obligations” is defined in Section 2.2.

 

“Secured Parties” means the Collateral Agent,
the Trustee and the Holders.

 

“Securities Act” is defined in Section 6.2.

 

“Senior Lenders” is defined in the second
recital.

 

“Trademark Collateral” means:

 

(a)  all trademarks,
trade names, corporate names, company names, business names, fictitious
business names, trade styles, service marks, certification marks, collective
marks, logos, other source of business identifiers, prints and labels on which
any of the foregoing have appeared or appear, designs and general intangibles
of a like nature (all of the foregoing items in this clause (a) being
collectively called a “Trademark”), now existing anywhere in the world
or hereafter adopted or acquired, all registrations thereof and all
applications in connection therewith, including registrations and applications
in the United States Patent and Trademark Office or in any office or agency of
the United States of America or any State thereof or any foreign country in each
case, owned by any Grantor, including those referred to in Item A
of Schedule IV attached hereto;

 

(b)  all Trademark
licenses, including each Trademark license referred to in Item B of
Schedule IV attached hereto;

 

(c)  all renewals of
any of the items described in clause (a) and (b);

 

(d)  all of the
goodwill of the business connected with the use of, and symbolized by the items
described in, clauses (a) and (b); and

 

(e)  all proceeds
of, and rights associated with, the foregoing, including any claim by any
Grantor against third parties for past, present or future infringement or
dilution of any Trademark, Trademark registration or Trademark license,
including any Trademark, Trademark registration or Trademark license referred
to in Item A and Item B of Schedule IV attached
hereto, or for any injury to the goodwill associated with the use of any such
Trademark or for breach or enforcement of any Trademark license.

 

“Trade Secrets Collateral” means all common law
and statutory trade secrets and all other confidential or proprietary or useful
information and all know-how obtained by or used in the business of any Grantor
(all of the foregoing being collectively called a “Trade Secret”),
whether or not such Trade Secret has been reduced to a writing or other tangible
form, including all documents and things embodying or incorporating such Trade
Secret, all Trade Secret licenses,

 

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including each Trade
Secret license referred to in Schedule VI attached hereto, and
including the right to sue for and to enjoin and to collect damages for the
actual or threatened misappropriation of any Trade Secret and for the breach or
enforcement of any such Trade Secret license.

 

“U.C.C.” means the Uniform Commercial Code as
in effect from time to time in the State of New York; provided, that if,
with respect to any U.C.C. financing statement or by reason of any provisions
of law, the perfection or the effect of perfection or non-perfection of the
security interests granted to the Collateral Agent pursuant to the applicable
Related Document is governed by the Uniform Commercial Code as in effect in a
jurisdiction of the United States other than New York, then “U.C.C.” means the
Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions of each Related Document and any
U.C.C. financing statement relating to such perfection or effect of perfection
or non-perfection.

 

Section 1.2.  Indenture Definitions.  Unless otherwise defined herein or the
context otherwise requires, terms used in this Security Agreement, including
its preamble and recitals, have the meanings provided in the Indenture.

 

Section 1.3.  U.C.C. Definitions.  When used herein the terms Account, Chattel
Paper, Commercial Tort Claim, Commodity Account, Commodity Contract, Deposit
Account, Document, Electronic Chattel Paper, Equipment, Goods, Instrument,
Inventory, Investment Property, Letter-of-Credit Rights, Proceeds, Promissory
Notes, Securities Account, Security Entitlement and Supporting Obligations have
the meaning provided in Article 8 or Article 9, as applicable, of the
U.C.C.  Letters of Credit has the meaning
provided in Section 5-102 of the U.C.C.

 

ARTICLE II

SECURITY INTEREST

 

Section 2.1.  Grant of Security Interest.  Each Grantor hereby assigns, pledges,
hypothecates, charges, mortgages, delivers, and transfers to the Collateral
Agent for its benefit and the ratable benefit of each of the Secured Parties,
and hereby grants to the Collateral Agent for its benefit and the ratable
benefit of each of the Secured Parties, a continuing security interest in all
of the following property, whether tangible or intangible, whether now or
hereafter existing, owned or acquired by such Grantor, and wherever located
(collectively the “Collateral”):

 

(a) 
Accounts;

 

(b)  Chattel
Paper;

 

(c) 
Commercial Tort Claims listed on Item H of Schedule II (as
such schedule may be amended or supplemented from time to time);

 

(d)  Deposit
Accounts;

 

(e) 
Documents;

 

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(f)  General
Intangibles;

 

(g)  Goods;

 

(h)  Instruments;

 

(i)  Investment
Property;

 

(j)  Letter-of-Credit Rights and Letters of
Credit;

 

(k)  Supporting Obligations;

 

(l)  all books, records, writings, databases,
information and other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the foregoing in
this Section;

 

(m)  all Proceeds of the foregoing and, to the
extent not otherwise included, 

(A) all payments under insurance (whether or not the Collateral Agent is
the loss payee thereof) and (B) all tort claims; and

 

(n)  all other property and rights of every kind
and description and interests therein.

 

Notwithstanding the foregoing, “Collateral” shall not
include Excluded Assets of such Grantor.

 

Section 2.2.  Security for Obligations.  This Security Agreement secures the payment
of all Obligations of the Company now or hereafter existing under the
Indenture, the Notes and each other Related Document to which the Company is or
may become a party, whether for principal, interest, costs, fees, expenses or
otherwise, and all Obligations of each Grantor now or hereafter existing under
its Subsidiary Guarantee, this Security Agreement and each other Related
Document to which such Grantor is or may become a party (all such obligations
of such Grantor being the “Secured Obligations”).

 

Section 2.3.  Delivery of Intercompany Notes.  Except with respect to any Term Intercompany
Notes (as defined in the Loan Agreement) required under the terms of Section 6.11(ii) of
the Loan Agreement to be secured by the security agreement described in such Section (each
a “Working Capital Intercompany Note”) prior to the payment in full in
cash of the Obligations (as defined in the Loan Agreement) and the irrevocable
termination of the Loan Agreement, all Collateral comprised of intercompany
notes evidenced by an Instrument shall be delivered to and held by or on behalf
of (and endorsed to the order of) the Collateral Agent pursuant hereto, shall
be in suitable form for transfer by delivery, and shall be accompanied by all
necessary instruments of transfer or assignment, duly executed in blank.

 

Section 2.4.  Payments on Intercompany Notes.  Except with respect to any Working Capital
Intercompany Notes prior to the payment in full in cash of the Obligations (as
defined in the Loan Agreement) and the irrevocable termination of the Loan
Agreement, in the event that any payment of principal or interest is to be made
on any intercompany note at a time when no Event of Default has occurred and is
continuing or would result therefrom such Dividend or 

 

6

 

payment may be
paid directly to the applicable Grantor. 
If any such or Event of Default has occurred and is continuing, then any
such Dividend or payment shall be paid directly to the Collateral Agent or,
with respect to any Working Capital Intercompany Notes prior to the payment in
full in cash of the Obligations (as defined in the Loan Agreement) and the
irrevocable termination of the Loan Agreement, to the Agent.

 

Section 2.5.  Continuing Security Interest; Transfer of
Notes.  This Security Agreement shall
create a continuing security interest in the Collateral and shall

 

(a)  remain in full
force and effect until payment in full in cash of all Secured Obligations,

 

(b)  be binding upon
each Grantor, its successors, transferees and assigns, and

 

(c)  inure, together
with the rights and remedies of the Collateral Agent hereunder, to the benefit
of the Collateral Agent and each other Secured Party.

 

Without limiting the generality of the foregoing clause (c),
any Holder may assign or otherwise transfer (in whole or in part) any Note held
by it to any other Person, and such other Person shall thereupon become vested
with all the rights and benefits in respect thereof granted to such Holder
under any Related Document (including this Security Agreement) or otherwise,
subject, however, to any contrary provisions in such assignment or transfer,
and to the provisions of Sections 2.15 and 2.16 of the Indenture.  Upon the payment in full in cash of all
Secured Obligations, the security interest granted herein shall terminate and
all rights to the Collateral shall revert to such Grantor. Upon any such
termination, the Collateral Agent will, at such Grantor’s sole expense, execute
and deliver to such Grantor such documents as such Grantor shall reasonably
request to evidence such termination. 
Upon (i) the sale, transfer or other disposition of Collateral in
accordance with Section 4.11 of the Indenture or (ii) the payment in
full in cash of all Secured Obligations, the security interests granted herein
shall automatically terminate with respect to (x) such Collateral (in the case
of clause (i)) or (y) all Collateral (in the case of clause (ii)).  Upon any such sale, transfer, disposition or
termination, the Collateral Agent will, at such Grantor’s sole expense, deliver
to such Grantor, without any representations, warranties or recourse of any
kind whatsoever, all applicable Instruments, together with all other applicable
Collateral held by the Collateral Agent hereunder, and execute and deliver to
such Grantor such documents as such Grantor shall reasonably request to
evidence such termination (including such documents as such Grantor shall
reasonably request to remove the notation of the Collateral Agent as lienholder
on any certificate of title for any applicable Motor Vehicle with a fair market
value in excess of $50,000).

 

Section 2.6.  Grantor Remains Liable.  Anything herein to the contrary
notwithstanding

 

(a)  each Grantor
shall remain liable under the contracts and agreements included in the
Collateral to the extent set forth therein, and shall perform all of its duties
and obligations under such contracts and agreements to the same extent as if
this Security Agreement had not been executed,

 

7

 

(b)  the exercise by
the Collateral Agent of any of its rights hereunder shall not release any
Grantor from any of its duties or obligations under any such contracts or
agreements included in the Collateral, and

 

(c)  neither the
Collateral Agent nor any other Secured Party shall have any obligation or
liability under any such contracts or agreements included in the Collateral by
reason of this Security Agreement, nor shall the Collateral Agent or any other
Secured Party be obligated to perform any of the obligations or duties of any
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.

 

Section 2.7.  Security Interest Absolute.  This Security Agreement shall in all respects
be a continuing, absolute, unconditional and irrevocable grant of security
interest, and shall remain in full force and effect until all of the Security
Obligations have been paid in full. All rights of the Collateral Agent and
the security interests granted to the Collateral Agent (for its benefit and the
ratable benefit of each other Secured Party) hereunder, and all obligations of
each Grantor that is a Guarantor hereunder, shall be absolute and unconditional
and irrevocable, irrespective of

 

(a)  any lack of
validity, legality or enforceability of the Indenture, any Note or any other
Related Document;

 

(b)  the failure of
any Secured Party

 

(i)  to assert any
claim or demand or to enforce any right or remedy against the Company, any
other Grantor or any other Person under the provisions of the Indenture, any
Note, any other Related Document or otherwise, or

 

(ii)  to exercise
any right or remedy against any other guarantor of, debtor or obligor with
respect to, or collateral securing, any Secured Obligations;

 

(c)  any change in
the time, manner or place of payment of, or in any other term of, all or any of
the Secured Obligations or any other extension, compromise or renewal of any
Secured Obligations;

 

(d)  any reduction,
limitation, impairment or termination of any Secured Obligations for any
reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to (and such Grantor hereby waives any
right to or claim of) any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or occurrence
affecting, any Secured Obligations or otherwise;

 

(e)  any amendment
to, rescission, waiver, or other modification of, or any consent to departure
from, any of the terms of the Indenture, any Note or any other Related
Document;

 

(f)  any addition,
exchange, release, surrender or non-perfection of any collateral (including the
Collateral), or any amendment to or waiver or release of or addition to or
consent to departure from any guaranty, for any of the Secured Obligations; or

 

8

 

(g)  any other
circumstances which might otherwise constitute a defense available to, or a
legal or equitable discharge of, the Company, any other Grantor, any surety or
any guarantor, debtor or obligor.

 

Section 2.8.  Postponement of Subrogation, etc.  Each Grantor hereby agrees that it will not
exercise any rights which it may acquire by reason of any payment made
hereunder, whether by way of subrogation, reimbursement or otherwise, until the
prior payment in full in cash of all Secured Obligations.  Any amount paid to any Grantor on account of
any payment made hereunder prior to the payment in full in cash of all Secured
Obligations shall be held in trust for the benefit of the Secured Parties and
shall immediately be paid to the Secured Parties and credited and applied
against the Secured Obligations, whether matured or unmatured, in accordance
with the terms of the Indenture; provided, however, that if

 

(a)  such Grantor
has made payment to the Secured Parties of all or any part of the Secured
Obligations, and

 

(b)  all Secured
Obligations have been paid in full in cash,

 

each Secured Party agrees that, at the requesting Grantor’s request and
sole expense, the Secured Parties will execute and deliver to such Grantor appropriate
documents (without recourse and without representation or warranty) necessary
to evidence the transfer by subrogation to such Grantor of an interest in the
Secured Obligations resulting from such payment by such Grantor.  In furtherance of the foregoing, for so long
as any Secured Obligations remain outstanding, each Grantor shall refrain from
taking any action or commencing any proceeding against the Company or any other
Grantor (or its successors or assigns, whether in connection with a bankruptcy
proceeding or otherwise) to recover any amounts in respect of payments made
under this Security Agreement to any Secured Party.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Section 3.1.  Representations and Warranties.  Each Grantor represents and warrants to each
Secured Party insofar as the representations and warranties contained herein
are applicable to such Grantor and its properties, as set forth in this Article III.

 

Section 3.2.
Grantor Name, Location, etc.  The
jurisdiction in which each Grantor is located for purposes of Sections 9-301
and 9-307 of the U.C.C. is set forth in Item A of Schedule II
hereto.  Set forth in Item B of Schedule II
is each location a secured party would have filed a U.C.C. financing statement
to perfect a security interest in equipment, inventory and general intangibles
owned by each Grantor in the past five years. 
No Grantor has any trade names other than those set forth in Item C
of Schedule II hereto. 
During the past five years preceding the date hereof, no Grantor has
been known by any legal name different from the one set forth on the signature page hereto,
nor has such Grantor been the subject of any merger or other corporate
reorganization, except as set forth in Item D of Schedule II
hereto.  The name set forth on the
signature page is the true and correct name of such Grantor.  Each Grantor’s federal taxpayer
identification number is (and, during the four months preceding the date
hereof, such Grantor has

 

9

 

not had a federal
taxpayer identification number different from that) set forth in Item E
of Schedule II hereto.  No
Grantor is a party to any federal, state or local government contract except as
set forth in Item F of Schedule II hereto.  No Grantor maintains any deposit accounts
with any Person except as set forth in Item G of Schedule II
hereto.

 

Section 3.3.  Ownership, No Liens, etc.  Such Grantor owns its Collateral free and
clear of any Lien, security interest, charge or encumbrance except for the
security interest created by this Security Agreement except as permitted by the
Indenture.  No effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording office, except such as may have been
filed in favor of the Collateral Agent relating to this Security Agreement or
as have been filed in connection with Liens permitted pursuant to Section 4.14
of the Indenture or as to which a duly executed termination statement relating
to such financing statement or other instrument has been delivered to the
Collateral Agent on the Closing Date.

 

Section 3.4.  Possession and Control.  Each Grantor agrees that it will maintain
exclusive possession of its goods, instruments, promissory notes and inventory,
other than (a) inventory in transit in the ordinary course of business, (b) inventory
which is in the possession or control of a warehouseman, bailee agent or other
Person (other than a Person controlled by or under common control with such
Grantor) that has been notified of the security interest created in favor of
the Secured Parties pursuant to this Security Agreement, and to whom such
Grantor has made commercially reasonable efforts to cause to agree to hold such
inventory subject to the Secured Parties’ Lien and waive any Lien held by it
against such inventory and (c) instruments or promissory notes that have
been delivered to the Collateral Agent or the Agent, as applicable, pursuant to
Section 3.5.

 

Section 3.5.  Negotiable Documents, Instruments and
Chattel Paper.  Such Grantor has,
contemporaneously herewith, delivered to the Agent, subject to the Senior
Intercreditor Agreement, possession of all originals of all negotiable
documents, instruments and chattel paper currently owned or held by such
Grantor (duly endorsed in blank).

 

Section 3.6.  Intellectual Property Collateral.  With respect to any Intellectual Property
Collateral the loss, impairment or infringement of which could reasonably be
expected to have a Material Adverse Effect:

 

(a)  such
Intellectual Property Collateral is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part;

 

(b)  to the
knowledge of such Grantor such Intellectual Property Collateral is valid and
enforceable;

 

(c)  such Grantor
has made all necessary filings and recordations to protect its interest in any
Intellectual Property Collateral that is registered with, issued by, or the
subject of an application for registration with or issuance by a Government
Authority, including letters patent, trademark registrations or applications
for either of the foregoing in its interests in the Patent Collateral, if any,
and Trademark Collateral in the United States Patent and Trademark Office and
in corresponding offices in countries in which

 

10

 

the failure to so file and/or record could reasonably
be expected to have a Material Adverse Effect and its claims to the Copyright
Collateral, if any, in the United States Copyright Office and in corresponding
offices in countries in which the failure to so file and/or record could
reasonably be expected to have a Material Adverse Effect;

 

(d)  with respect to
items of Intellectual Property Collateral that are owned by a Grantor, such
Grantor is the exclusive owner of the entire and unencumbered right, title and
interest in and to such Intellectual Property Collateral and no written claim
has been received by such Grantor that the use of such Intellectual Property
Collateral in the business of such Grantor does or may violate the intellectual
property rights of any third party; and

 

(e)  such Grantor
has performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every such
item of owned Intellectual Property Collateral in full force and effect
throughout the world, as applicable.

 

Such Grantor owns directly or is entitled to use by
license or otherwise, all patents, Trademarks, Trade Secrets, copyrights, mask
works, licenses, technology, know-how, processes and rights with respect to any
of the foregoing used in the conduct of such Grantor’s business.

 

Section 3.7.  Validity, etc.  This Security Agreement creates a valid
continuing security interest in the Collateral securing the payment of the
Secured Obligations, and, subject to the Senior Intercreditor Agreement and
Liens of the type referred to in clause (xiii) of the definition of “Permitted
Liens” in the Indenture:

 

(a)  in the case of
Collateral comprised of Motor Vehicles with a fair market value in excess of
$50,000, upon the recordation or notation of the Collateral Agent’s Lien on the
certificates of title or ownership in respect of such Motor Vehicles and the
filing of the Uniform Commercial Code financing statements delivered by the
Grantor having an interest in such Motor Vehicles to the Collateral Agent with
respect to such Collateral, such security interest will be a valid first
priority perfected security interest;

 

(b)  in the case of
all other Collateral in which a security interest can be perfected by filing of
a Uniform Commercial Code financing statements or a Collateral Agreement, upon
the filing in the jurisdiction of incorporation or formation of the applicable
Grantor Uniform Commercial Code financing statements or such Collateral
Agreement delivered by the Grantor to the Collateral Agent with respect to such
Collateral, such security interest will be a valid first priority perfected
security interest (subject to Permitted Liens).

 

Each Grantor agrees to deliver UCC-1 and UCC-3
financing statements to a filing agent acceptable to the Collateral Agent and
make any other filings reasonably necessary to perfect the security interests
contemplated hereby at the sole expense of such Grantor.

 

Section 3.8.  Authorization, Approval, etc.  Except as have been obtained or made and are
in full force and effect (or otherwise provided for hereunder), no
authorization, approval or other

 

11

 

action by, and no
notice to or filing with, any governmental authority or regulatory body is
required either

 

(a)  for the grant
by such Grantor of the security interest granted hereby, the pledge by such
Grantor of any Collateral pursuant hereto or for the execution, delivery and
performance of this Security Agreement by such Grantor, or

 

(b)  for the
perfection of or the exercise by the Collateral Agent of its rights and
remedies hereunder.

 

Section 3.9.  Compliance with Laws.  Such Grantor is in compliance with the
requirements of all applicable laws (including the provisions of the Fair Labor
Standards Act), rules, regulations and orders of every governmental authority,
the non-compliance with which could reasonably be expected to have a Material
Adverse Effect or which could reasonably be expected to materially adversely
affect the value of the Collateral as a whole or the worth of the Collateral as
a whole as collateral security.

 

ARTICLE IV

COVENANTS

 

Section 4.1.  Certain Covenants.  Each Grantor covenants and agrees that, so
long as any portion of the Secured Obligations shall remain unpaid, such
Grantor will, unless the Trustee shall otherwise consent in writing, perform,
comply with and be bound by the obligations set forth in this Article IV.

 

Section 4.2.  Change of Name, Location.  No Grantor will change its name or place of
incorporation or organization or federal taxpayer identification number except
upon 30 days’ prior written notice to the Collateral Agent.  If any Grantor is organized outside of the
United States, it will not change its “location” as determined in accordance
with Sections 9-301 and 9-307 of the U.C.C. and as set forth in Item
A of Schedule II hereto except upon 30 days’ prior written
notice to the Collateral Agent.

 

Section 4.3.  As to Accounts.  (a)  Each Grantor shall have the right
to collect all Accounts so long as no Event of Default shall have occurred and
be continuing.

 

(b)                                 Subject
to the Senior Intercreditor Agreement, upon (i) the occurrence and
continuance of an Event of Default and (ii) the delivery of notice by the
Collateral Agent to each Grantor, all Proceeds of Collateral received by such
Grantor shall be delivered in kind to the Collateral Agent for deposit in a
Deposit Account of such Grantor maintained with the Collateral Agent (together with any other Accounts pursuant to
which any portion of the Collateral is deposited with the Collateral Agent,
the “Collateral Accounts”),
and such Grantor shall not commingle any such Proceeds, and shall hold separate
and apart from all other property, all such Proceeds in express trust for the
benefit of the Collateral Agent until delivery thereof is made to the
Collateral Agent.

 

12

 

(c)                                  Following
the delivery of notice pursuant to clause (b)(ii), the Collateral Agent
shall have the right to apply any amount in the Collateral Account to the
payment of any Obligations which are due and payable.

 

(d)                                 With
respect to each of the Collateral Accounts, it is hereby confirmed and agreed
that (i) deposits in such Collateral Account are subject to a security
interest as contemplated hereby, (ii) such Collateral Account shall be
under the control of the Collateral Agent and (iii) the Collateral Agent
shall have the sole right of withdrawal over such Collateral Account.

 

Section 4.4.  Motor Vehicles.  (a)  Such Grantor shall deliver
to the Collateral Agent the original of the certificate of title or ownership
listing the Collateral Agent as lienholder for any Motor Vehicle owned by such
Grantor that has a fair market value of at least $50,000.

 

(b)                                 Upon
the acquisition after the date hereof by such Grantor of any Motor Vehicle
having a fair market value of at least $50,000 or such Grantor shall deliver to
the Collateral Agent originals of the certificates of title or ownership for
such Motor Vehicles, together with the manufacturer’s statement of origin with
the Collateral Agent listed as lienholder.

 

(c)                                  Without
limiting Section 5.1, such Grantor hereby appoints the Collateral
Agent as its attorney-in-fact, effective the date hereof, and terminating upon
the termination of this Security Agreement, for the purpose of (i) executing
on behalf of such Grantor title or ownership applications for filing with
appropriate state agencies to enable Motor Vehicles having a fair market value
of at least $50,000 now owned or hereafter acquired by such Grantor to be
retitled and the Collateral Agent listed as lienholder thereon, (ii) filing
such applications with such state agencies and (iii) executing such other
documents and instruments on behalf of, and taking such other action in the
name of, such Grantor as the Collateral Agent may deem necessary or advisable
to accomplish the purposes hereof (including, without limitation, the purpose
of creating in favor of the Collateral Agent a perfected lien on such Motor
Vehicles and exercising the rights and remedies of the Collateral Agent under Section 6.1
hereof).  This appointment as attorney-in-fact
is irrevocable and coupled with an interest.

 

(d)                                 Any
certificates of title or ownership delivered pursuant to the terms hereof shall
be accompanied by odometer statements for each such Motor Vehicle covered
thereby.

 

Section 4.5.  As to Collateral.   (a)  Until the occurrence and
continuance of an Event of Default such Grantor (i) will,
at its own expense, endeavor to collect, as and when due, all amounts due with
respect to any of the Collateral, including the taking of such action with
respect to such collection as the Collateral Agent may reasonably request
following the occurrence and continuance of an Event of Default or, in the
absence of such request, as such Grantor may deem advisable, and (ii) may grant, in the ordinary course of business
(except as otherwise prohibited under the Indenture), to any party obligated on
any of the Collateral, any rebate, refund or allowance to which such party may
be lawfully entitled, and may accept, in connection therewith, the return of
goods, the sale or lease of which shall have given rise to such

 

13

 

Collateral.  The Collateral Agent, however, may, at any
time following the occurrence and during the continuance an Event of Default,
whether before or after any revocation of such power and authority or the
maturity of any of the Secured Obligations, notify any parties obligated on any
of the Collateral to make payment to the Collateral Agent of any amounts due or
to become due thereunder and enforce collection of any of the Collateral by
suit or otherwise and surrender, release, or exchange all or any part thereof,
or compromise or extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder or evidenced thereby.  Upon request of the Collateral Agent
following the occurrence and during the continuance of an Event of Default,
such Grantor will, at its own expense, notify any parties obligated on any of
the Collateral to make payment to the Collateral Agent of any amounts due or to
become due thereunder.

 

(b)                                 Following
the occurrence and during the continuance of an Event of Default, the
Collateral Agent is authorized to endorse, in the name of such Grantor, any
item, howsoever received by the Collateral Agent, representing any payment on
or other proceeds of any of the Collateral.

 

Section 4.6.  As to Intellectual Property Collateral.  Each Grantor covenants and agrees to comply
with the following provisions as such provisions relate to any Intellectual
Property Collateral of such Grantor:

 

(a)  such Grantor
shall not, unless such Grantor shall either (i) reasonably and in good
faith determine that any of the Patent Collateral is of negligible economic
value to such Grantor, or (ii) have a valid business purpose to do
otherwise, do any act, or omit to do any act, whereby any of the Patent
Collateral may lapse or become abandoned or dedicated to the public or
unenforceable;

 

(b)  such Grantor
shall not, and such Grantor shall not permit any of its licensees to, unless
such Grantor shall either (i) reasonably and in good faith determine that
any of the Trademark Collateral is of negligible economic value to such
Grantor, or (ii) have a valid business purpose to do otherwise,

 

(i)  fail to
continue to use any of the Trademark Collateral in order to maintain all of the
Trademark Collateral in full force free from any claim of abandonment for
non-use,

 

(ii)  fail to
maintain as in the past the quality of products and services offered under
all of the Trademark Collateral in a manner which might reasonably be expected
to cause material impairment of any such Trademark Collateral,

 

(iii)  fail to
employ any of the Trademark Collateral registered with any Federal or
state or foreign authority with an appropriate notice of such registration,

 

(iv)  knowingly do
or permit any act or knowingly omit to do any act whereby any of the Trademark
Collateral may lapse or become invalid or unenforceable;

 

14

 

(c)  such Grantor
shall not, unless such Grantor shall either (i) 
reasonably and in good faith determine that any of the Copyright Collateral or
any of the Trade Secrets Collateral is of negligible economic value to such
Grantor, or (ii)  have a valid business purpose
to do otherwise, do or permit any act or knowingly omit to do any act whereby
any of the Copyright Collateral or any of the Trade Secrets Collateral may
lapse or become invalid or unenforceable or placed in the public domain except
upon expiration of the end of an unrenewable term of a registration thereof;

 

(d)  such Grantor
shall notify the Collateral Agent immediately if it knows, or has reason to
know, that any application or registration relating to any material item of the
Intellectual Property Collateral may become abandoned or dedicated to the
public or placed in the public domain or invalid or unenforceable, 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 foreign counterpart
thereof or any court) regarding such Grantor’s ownership of any of the
Intellectual Property Collateral, its right to register the same or to keep and
maintain and enforce the same;

 

(e)  in the event
such Grantor or any of its agents, employees, designees or licensees shall file
an application for the registration of any Intellectual Property Collateral
with the United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency in any other country or any political
subdivision thereof, it shall promptly inform the Collateral Agent, and upon
request of the Collateral Agent, execute and deliver any and all agreements,
instruments, documents and papers as the Collateral Agent may reasonably
request to evidence the Collateral Agent’s security interest in such
Intellectual Property Collateral and the goodwill and general intangibles of
such Grantor relating thereto or represented thereby;

 

(f)  such Grantor
shall take all necessary steps, including in any proceeding before the
United States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency in any other country or any political
subdivision thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any registration
of, the Intellectual Property Collateral, including the filing of applications
for renewal, affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings and the payment of fees and taxes
(except to the extent that dedication, abandonment or invalidation is permitted
under the foregoing clauses (a), (b) and (c)); and

 

(g)  such Grantor
shall, contemporaneously herewith, execute and deliver to the Collateral Agent
a Patent Security Agreement and a Trademark Security Agreement in the forms of Exhibits
A and B hereto, respectively, and shall execute and deliver to the
Collateral Agent any other document required to acknowledge or register or
perfect the Collateral Agent’s interest in any part of the Intellectual
Property Collateral.

 

Section 4.7.  Insurance.  Such Grantor will maintain or cause to be
maintained with responsible insurance companies insurance with respect to its
business and properties (including the Equipment and Inventory) against such
casualties and contingencies and of such types and in

 

15

 

such amounts as is
required pursuant to the Indenture and will, upon the request of the Collateral
Agent, furnish a certificate of a reputable insurance broker setting forth the
nature and extent of all insurance maintained by such Grantor in accordance
with this Section.

 

Section 4.8.  Further Assurances, etc.  Such Grantor agrees that, from time to time
at its own expense, it will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary
or desirable, or that the Collateral Agent may request, in order to perfect,
preserve and protect any security interest granted or purported to be granted
hereby or to enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral.  Without limiting the generality of the
foregoing, subject to the Senior Intercreditor Agreement, such Grantor will

 

(a)  execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices (including any assignment of claim form under or
pursuant to the federal assignment of claims statute, 31 U.S.C. § 3726,
any successor or amended version thereof or any regulation promulgated under or
pursuant to any version thereof), as may be necessary or desirable, or as the
Collateral Agent may request, in order to perfect and preserve the security
interests and other rights granted or purported to be granted to the Collateral
Agent hereby;

 

(b)  promptly
execute and deliver all further instruments, and take all further action, that
may be necessary or desirable, or that the Collateral Agent may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Collateral Agent to exercise
and enforce its rights and remedies hereunder with respect to any Collateral;

 

(c)  cause the
Collateral Agent to be listed as the lienholder on the certificate of title or
ownership relating to any Motor Vehicle owned by such Grantor that has a fair
market value of at least $50,000;

 

(d)  not take or
omit to take any action the taking or the omission of which would result in any
impairment or alteration of any obligation of the maker of any Intercompany
Note or other instrument constituting Collateral;

 

(e)  furnish to the
Collateral Agent, from time to time at the Collateral Agent’s request,
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 reasonable detail;

 

(f)  do all things
reasonably requested by the Collateral Agent in order to enable the Collateral
Agent to have control (as such term is defined in Article 8 and Article 9
of any applicable Uniform Commercial Code relevant to the creation, perfection
or priority of Collateral consisting of investment property, deposit accounts,
electronic chattel paper and letter of credit rights) over any Collateral;

 

(g)  notify the
Collateral Agent if such Grantor reasonably believes it is entitled to recover
a commercial tort claim the value of which is in excess of $100,000 and such

 

16

 

Grantor take all such action reasonably requested by
the Collateral Agent to grant to the Collateral Agent and perfect a security
interest in such commercial tort claim; and

 

(h)  in the event
the Obligations and Commitments (as each such term is defined in the Loan
Agreement) are terminated, use commercially reasonably efforts to enter into
control agreements with respect to such Grantor’s deposit accounts within a
commercially reasonable time from such termination, naming the Collateral Agent
as the secured party thereunder, in each case substantially similar to the
control agreements, if any, entered into by such Grantor pursuant to clause
(dd) of Section 8.1 of the Loan Agreement (which shall be released in
favor of a new agent upon the consummation of a replacement Credit Agreement).

 

With respect to the foregoing and the grant of the
security interest hereunder, each Grantor hereby authorizes the Collateral
Agent to file one or more financing or continuation statements, and amendments
thereto, relative to all or any part of the Collateral.  Each Grantor agrees that a carbon,
photographic or other reproduction of this Security Agreement or any UCC
financing statement covering the Collateral or any part thereof shall be sufficient
as a UCC financing statement where permitted by law.  Each Grantor hereby authorizes the Collateral
Agent to file financing statements describing as the collateral covered thereby
“all of the debtor’s personal property or assets” or words to that effect,
notwithstanding that such wording may be broader in scope than the Collateral
described in this Security Agreement.

 

ARTICLE V

THE COLLATERAL AGENT

 

Section 5.1.  Collateral Agent Appointed
Attorney-in-Fact.  Each Grantor
hereby irrevocably appoints the Collateral Agent such Grantor’s
attorney-in-fact, with full authority in the place and stead of such Grantor
and in the name of such Grantor or otherwise, from time to time in the
Collateral Agent’s discretion, following the occurrence and during the continuance
of an Event of Default, to take any action and to execute any instrument which
the Collateral Agent may deem necessary or advisable to accomplish the purposes
of this Security Agreement, including:

 

(a)  to ask, demand,
collect, sue for, recover, compromise, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral;

 

(b)  to receive,
endorse, and collect any drafts or other instruments, documents and chattel
paper, in connection with clause (a) above;

 

(c)  to file any
claims or take any action or institute any proceedings which the Collateral
Agent may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of the Collateral Agent with
respect to any of the Collateral; and

 

(d)  to perform the
affirmative obligations of such Grantor hereunder (including all obligations of
such Grantor pursuant to Section 4.10).

 

17

 

Such Grantor hereby acknowledges, consents and agrees
that the power of attorney granted pursuant to this Section is irrevocable
and coupled with an interest.

 

Section 5.2.  Collateral Agent May Perform.  If any Grantor fails to perform any agreement
contained herein, the Collateral Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Collateral Agent incurred in
connection therewith shall be payable by such Grantor pursuant to Section 6.3.

 

Section 5.3.  Collateral Agent Has No Duty.  In addition to, and not in limitation of, Section 2.6,
the powers conferred on the Collateral Agent hereunder are solely to protect
its interest (on behalf of the Secured Parties) in the Collateral and shall not
impose any duty on it to exercise any such powers.  Except for reasonable care of any Collateral
in its possession and the accounting for moneys actually received by it
hereunder, the Collateral Agent shall have no duty as to any Collateral or
responsibility for

 

(a)  ascertaining or
taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Investment Property, whether or not
the Collateral Agent has or is deemed to have knowledge of such matters, or

 

(b)  taking any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.

 

Section 5.4.  Reasonable Care.  The Collateral Agent is required to exercise
reasonable care in the custody and preservation of any of the Collateral in its
possession; provided, however, the Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral, if it takes such action for that purpose as any Grantor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the Collateral
Agent to comply with any such request at any time shall not in itself be deemed
a failure to exercise reasonable care.

 

ARTICLE VI

REMEDIES

 

Section 6.1.  Certain Remedies.  If any Event of Default shall have occurred
and be continuing:

 

(a)  The Collateral
Agent may exercise in respect of the Collateral, in addition to other rights
and remedies provided for herein or otherwise available to it, all the rights
and remedies of a secured party on default under the U.C.C. (whether or not the
U.C.C. applies to the affected Collateral) and also may

 

(i)  require each
Grantor to, and such Grantor hereby agrees that it will, at its expense and
upon request of the Collateral Agent forthwith, assemble all or part of the
Collateral as directed by the Collateral Agent and make it available to the
Collateral Agent at a place to be designated by the Collateral Agent which is
reasonably convenient to both parties, and

 

18

 

(ii)  without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Collateral Agent’s
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Collateral Agent may deem commercially reasonable.  Each Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten days’ prior notice to
such Grantor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification.  The Collateral Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been
given.  The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

 

(b)  All cash
proceeds received by the Collateral Agent in respect of any sale of, collection
from, or other realization upon, all or any part of the Collateral shall be
applied by the Collateral Agent against, all or any part of the Secured
Obligations as follows:

 

(i)  first, to the
payment of any amounts payable to the Collateral Agent pursuant to
Sections 6.08 and 7.07 of the Indenture and Section 6.4;

 

(ii)  second, to the
equal and ratable payment of Secured Obligations, in accordance with each
Secured Party’s Secured Obligations owing to it under or pursuant to the
Indenture or any other Related Document, applied

 

(A)  first to fees
and expense reimbursements then due to such Secured Party,

 

(B)  then to
interest due to such Secured Party, and

 

(C)  then to pay the
remaining outstanding Secured Obligations; and

 

(iii)  third, to be
held as additional collateral security until the payment in full in cash of all
of the Secured Obligations, after which such remaining cash proceeds shall be
paid over to the applicable Grantor or to whomsoever may be lawfully entitled
to receive such surplus.

 

(c)  The Collateral
Agent may,

 

(i)  transfer all or
any part of the Collateral into the name of the Collateral Agent or its
nominee, with or without disclosing that such Collateral is subject to the lien
and security interest hereunder,

 

(ii)  notify the
parties obligated on any of the Collateral to make payment to the Collateral
Agent of any amount due or to become due thereunder,

 

(iii)  enforce
collection of any of the Collateral by suit or otherwise, and surrender,
release or exchange all or any part thereof, or compromise or extend or

 

19

 

renew for any period (whether or not longer than the
original period) any obligations of any nature of any party with respect
thereto,

 

(iv)  endorse any
checks, drafts, or other writings in such Grantor’s name to allow collection of
the Collateral,

 

(v)  take control of
any proceeds of the Collateral, and

 

(vi)  execute (in
the name, place and stead of such Grantor) endorsements, assignments, stock
powers and other instruments of conveyance or transfer with respect to all or
any of the Collateral.

 

Section 6.2.  Compliance with Restrictions.  Each Grantor agrees that in any sale of any
of the Collateral whenever an Event of Default shall have occurred and be
continuing, the Collateral Agent is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to Persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and such Grantor further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Collateral Agent be liable nor accountable to
such Grantor for any discount allowed by the reason of the fact that such
Collateral is sold in compliance with any such limitation or restriction.

 

Section 6.3.  Indemnity and Expenses.

 

(a)                                  Each
Grantor jointly and severally agrees to indemnify the Collateral Agent from and
against any and all claims, losses and liabilities arising out of or resulting
from this Security Agreement (including enforcement of this Security
Agreement), except claims, losses or liabilities resulting from the Collateral
Agent’s gross negligence or wilful misconduct.

 

(b)                                 Each
Grantor will upon demand pay to the Collateral Agent the amount of any and all
reasonable expenses, including the reasonable fees and disbursements of its
counsel and of any experts and agents, which the Collateral Agent may incur in
connection with

 

(i)                                     the
administration of this Security Agreement,

 

(ii)                                  the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral,

 

(iii)                               the
exercise or enforcement of any of the rights of the Collateral Agent or
the Secured Parties hereunder, and

 

20

 

(iv)                              the
failure by any Grantor to perform or observe any of the provisions hereof.

 

ARTICLE VII

 

MISCELLANEOUS
PROVISIONS

 

Section 7.1.  Related Document.  This Security Agreement is a Related Document
executed pursuant to the Indenture and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
provisions of Article I thereof.

 

Section 7.2.  Amendments; etc.  No amendment to or waiver of
any provision of this Security Agreement nor consent to any departure by
any Grantor herefrom, shall in any event be effective unless the same shall be
in writing and signed by the Collateral Agent (on behalf of (x) the Holders or
(y) the Holder or Holders of at least a majority in aggregate principal amount
of the outstanding Notes, as the case may be), and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.

 

Section 7.3.  Protection of Collateral.  The Collateral Agent may from time to time,
at its option, perform any act which each Grantor agrees hereunder to perform
and which such Grantor shall fail to perform after being requested in writing
so to perform (it being understood that no such request need be given after the
occurrence and during the continuance of an Event of Default) and the
Collateral Agent may from time to time take any other action which the
Collateral Agent reasonably deems necessary for the maintenance, preservation
or protection of any of the Collateral or of its security interest therein.

 

Section 7.4.  Addresses for Notices.  All notices and other communications provided
for hereunder shall be in writing (including telegraphic communication) and, if
to any Grantor, mailed or telecopied or delivered to it, addressed to it in
care of the Company at the address of the Company specified in the Indenture,
if to the Collateral Agent, mailed or telecopied or delivered to it, addressed
to it at the address of the Collateral Agent specified in the Indenture.  All such notices and other communications,
when mailed and properly addressed with postage prepaid or if properly addressed
and sent by pre-paid courier service, shall be deemed given when received; any
such notice or communication, if transmitted by telecopier, shall be deemed
given when transmitted and electronically confirmed.

 

Section 7.5.  Additional Grantors.  Upon the execution and delivery by any other
Person of an instrument in the form of Annex I hereto, such Person shall
become a “Grantor” hereunder with the same force and effect as if originally
named as a Grantor herein.  The execution
and delivery of any such instrument shall not require the consent of any other
Grantor hereunder.  The rights and
obligations of each Grantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Grantor as a party to this Security
Agreement.

 

Section 7.6.  Section Captions.  Section captions used in
this Security Agreement are for convenience of reference only, and shall
not affect the construction of this Security Agreement.

 

Section 7.7.  Severability.  Wherever possible each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any

 

21

 

provision of this
Security Agreement shall be prohibited by or invalid under such 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.

 

Section 7.8.  Counterparts.  This Security Agreement may be executed by
the parties hereto in several counterparts, each of which shall be deemed an
original and all of which shall constitute together but one and the same
agreement.

 

Section 7.9.  Governing Law, Entire Agreement, etc.  THIS SECURITY AGREEMENT
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.  THIS SECURITY
AGREEMENT AND THE OTHER RELATED DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

 

Section 7.10.  Senior Intercreditor Agreement.  (a)  In case of any conflict or
inconsistency between this Security Agreement and the Senior Intercreditor
Agreement or with respect to the rights and obligations of the parties, the
Senior Intercreditor Agreement shall control; provided, however,
that the terms of the Senior Intercreditor Agreement shall not increase the
obligations of, or adversely affect any rights, of any Grantor, in each case
under this Security Agreement.

 

(b)                                 Not
in limitation but in furtherance of the foregoing, any provision of this
Security Agreement that provides for the Collateral Agent to have “control” of
any Collateral for purposes of Article 8 or 9 of the U.C.C. shall be deemed
satisfied if the Agent shall have control of such Collateral so long as the
conditions described in Section 9-314(c) of the U.C.C. shall
not be satisfied prior to the Collateral Agent obtaining control of any such
Collateral following the relinquishment of such control by the Agent unless the
Lien of the Collateral Agent in such Collateral is terminated or released in
accordance with the terms hereof or the Senior Intercreditor Agreement.

 

(c)                                  Notwithstanding
anything herein to the contrary, the Lien and security interest granted to the
Collateral Agent pursuant to this Security Agreement and the exercise of any
right or remedy by the Collateral Agent hereunder, are subject to the
provisions of the Senior Intercreditor Agreement.  In the event of any conflict between the
terms of the Senior Intercreditor Agreement and this Security Agreement, the
terms of the Senior Intercreditor Agreement shall govern.

 

[REMAINDER OF PAGE
INTENTIONALLY BLANK]

 

22

 

IN WITNESS WHEREOF, each Grantor has caused this
Security Agreement to be duly executed and delivered by its officer thereunto
duly authorized as of the date first above written.

 

	
   

  	
  EDGEN CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David L. Laxton, III

  
	
   

  	
  Name: David L. Laxton, III

  
	
   

  	
  Title:

  	
  Senior Vice President, Chief Financial
  Officer and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EDGEN LOUISIANA CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David L. Laxton, III

  
	
   

  	
  Name: David L. Laxton, III

  
	
   

  	
  Title: Treasurer and Secretary

  
	
   

  	
   

  
	
   

  	
  EDGEN CARBON PRODUCTS GROUP, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David L. Laxton, III

  
	
   

  	
  Name: David L. Laxton, III

  
	
   

  	
  Title: Treasurer and Secretary

  
	
   

  	
   

  
	
   

  	
  EDGEN ALLOY PRODUCTS GROUP, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David L. Laxton, III

  
	
   

  	
  Name: David L. Laxton, III

  
	
   

  	
  Title: Treasurer and Secretary

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK, as Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Geovanni Barris

  
	
   

  	
  Name: Geovanni Barris

  
	
   

  	
  Title: Vice President

  
				

 

Security
AgreementExhibit 10.1

 

$105,000,000

 

EDGEN ACQUISITION CORPORATION

 

to be merged with
and into

 

EDGEN CORPORATION

 

9.875% Senior Secured Notes due
2011

 

 

PURCHASE AGREEMENT

 

January 25, 2005

JEFFERIES &
COMPANY, INC.

520 Madison Avenue

12th Floor

New York, New York 10022

 

Ladies and Gentlemen:

 

Edgen
Acquisition Corporation, a Nevada corporation (the “Acquisition Corporation”)
to be merged (the “Merger”) with and into Edgen Corporation, a Nevada
corporation (the “Company”), the Company and each of the Guarantors (as
hereinafter defined) hereby agree with you as follows:

 

1.             Issuance
of Notes.  Subject to the terms
and conditions herein contained, Acquisition Corporation (the “Issuer,” except
that references to the “Issuer” shall be deemed upon effectiveness of the Merger
to refer to the Company) proposes to issue and sell to Jefferies &
Company, Inc. (the “Initial
Purchaser”) $105,000,000 aggregate principal amount of 9.875% Senior
Secured Notes due 2011 (each a “Note” and, collectively, the “Notes”).  The Notes will be issued pursuant to an
indenture (the “Indenture”),
as supplemented by a supplemental indenture (the “Supplemental Indenture”) to
be dated as of the Closing Date (as hereinafter defined), by and among the
Issuer, the Guarantors party thereto, as applicable, and The Bank of New York,
as trustee (in such capacity, the “Trustee”)
and collateral agent (in such capacity, the “Collateral Agent”).  Capitalized terms used, but not defined
herein, shall have the meanings set forth in the “Description of the Notes” section of
the Final Offering Circular (as hereinafter defined).

 

The
Notes will be offered and sold to the Initial Purchaser pursuant to an
exemption from the registration requirements under the Securities Act of 1933,
as amended (the “Act”).  Upon original issuance thereof, and until
such time as the same is no longer required under the applicable requirements
of the Act, the Notes shall bear the legends set forth in the final offering
circular, dated the date hereof (the “Final Offering Circular”).  The Issuer and the Company have prepared a
preliminary offering circular, dated January 12, 2005 (the “Preliminary Offering Circular”),
and the Final Offering Circular relating to the offer and sale of the Notes
(the “Offering”).  “Offering Circular” means, as of any date or
time referred to in this Agreement, the most recent offering circular (whether
the Preliminary Offering Circular or the Final Offering Circular, and any
amendment or supplement to either such document), including exhibits and
schedules thereto.

 

Concurrently
with the sale of the Notes on the Closing Date, the Company will enter into a
new amended and restated senior secured revolving credit facility among the
Company and the Subsidiaries of

 

 

the Company named therein, GMAC Commercial Finance LLC, and the other
lenders signatory thereto, which provides for a revolving loan facility in an
amount of up to $20.0 million (the “Credit Agreement”).

 

2.             Terms
of Offering.  The Initial
Purchaser has advised the Issuer and the Company, and the Issuer and the
Company understand, that the Initial Purchaser will make offers to sell (the “Exempt Resales”) the Notes
purchased by the Initial Purchaser hereunder on the terms set forth in the
Final Offering Circular solely to persons (the “Subsequent Purchasers”) whom the Initial Purchaser reasonably
believes to be (i) “qualified institutional buyers” (“QIBs”) as defined in Rule 144A
under the Act (ii) (based upon written representations made by such
persons to the Initial Purchaser) institutional “accredited investors” as
defined in Rule 501(a)(1), (2), (3) or (7) under the Act (“Accredited
Investors”) or (iii) non-U.S. persons in reliance upon Regulation S
under the Act.

 

Pursuant to the Indenture (as supplemented by the Supplemental
Indenture defined below), all Domestic Restricted Subsidiaries of the Company
shall jointly and severally and fully and unconditionally guarantee, on a
senior secured basis, to each holder of the Notes and the Trustee, the payment
and performance of the Company’s obligations under the Indenture and the Notes
(each such subsidiary being referred to herein as a “Guarantor” and each
such guarantee being referred to herein as a “Guarantee”).  

 

Pursuant to the terms of the Collateral Agreements, all of the
obligations under the Notes and the Indenture will be secured by a lien and
security interest in substantially all of the assets of the Company and its
Domestic Restricted Subsidiaries (other than, as provided by the Collateral Agreements,
certain excluded assets such as the leasehold interests of the Company or its
subsidiaries and the Capital Stock of any of their respective subsidiaries);
provided however that the liens securing all of the obligations under the Notes
and the Indenture will be contractually subordinated to the liens securing the
Credit Agreement with respect to collateral consisting of accounts, inventory
and certain related assets.

 

Holders of the Notes (including Subsequent Purchasers) will have the
registration rights set forth in the registration rights agreement applicable
to the Notes (the “Registration
Rights Agreement”), to be executed on and dated as of the Closing
Date, in a form reasonably acceptable to the Issuer and the Initial Purchaser
in conformity with the description of such registration rights contained in the
Offering Circular.  Pursuant to the
Registration Rights Agreement, the Company will agree, among other things, to
file with the Securities and Exchange Commission (the “SEC”) (a) a registration
statement under the Act relating to Senior Secured Notes (the “Exchange
Notes”) which shall be identical to the Notes (except that the Exchange
Notes shall have been registered pursuant to such registration statement and
will not be subject to restrictions on transfer or contain additional interest
provisions) to be offered in exchange for the Notes (such offer to exchange
being referred to as the “Exchange
Offer”), and/or (b) under certain circumstances, a shelf
registration statement pursuant to Rule 415 under the Act (the “Shelf Registration Statement”)
relating to the resale by certain holders of the Notes.  If required under the Registration Rights
Agreement, the Company will issue Exchange Notes to the Initial Purchaser (the “Private
Exchange Notes”).  If the Company
fails to satisfy its obligations under the Registration Rights Agreement, it
will be required to pay additional interest to the holders of the Notes under
certain circumstances in accordance with the terms of the Registration Rights
Agreement.

 

Effective upon consummation of the Merger, the Company will assume the
Issuer’s obligations under the Indenture, the Collateral Agreements and the
Notes, and will cause the Guarantors to become Guarantors and execute a
supplemental indenture (the “Supplemental Indenture”) to the Indenture as
required by the Indenture.

 

2

 

This Agreement, the Indenture, the Supplemental Indenture, the
Collateral Agreements, the Registration Rights Agreement, the Notes, the
Guarantees, the Exchange Notes and the Private Exchange Notes are collectively
referred to herein as the “Documents.”

 

3.             Purchase,
Sale and Delivery.  On the basis
of the representations, warranties, agreements and covenants herein contained
and subject to the terms and conditions herein set forth, the Issuer agrees to
issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to
purchase from the Issuer, $105,000,000 aggregate principal amount of Notes for
a purchase price equal to the aggregate principal amount thereof, net of fees and
commissions to the Initial Purchaser in an amount equal to $5,150,000, of which
$3,150,000 is commissions. Delivery to the Initial Purchaser of and payment for
the Notes shall be made at a Closing (the “Closing”) to be held at 10:00 a.m., New York time, on February 1,
2005 (the “Closing Date”)
at the New York offices of Dechert LLP. 
The Closing Date and time and location of the Closing may be varied by
agreement between the Initial Purchaser and the Issuer.

 

The Issuer shall deliver to the Initial Purchaser one or more
certificates representing the Notes in definitive form, registered in such
names and denominations as the Initial Purchaser may request upon at least two
business days prior to the Closing, against payment by the Initial Purchaser of
the purchase price therefor by immediately available Federal funds bank wire
transfer to such bank account or accounts as the Issuer shall designate to the
Initial Purchaser at least two business days prior to the Closing.  The certificates representing the Notes in
definitive form shall be made available to the Initial Purchaser for inspection
at the New York offices of Dechert LLP (or such other place as shall be
reasonably acceptable to the Initial Purchaser) not later than the close of
business one business day immediately preceding the Closing Date.  Notes to be represented by one or more
definitive global securities in book-entry form will be deposited on the
Closing Date, by or on behalf of the Issuer, with The Depository Trust Company
(“DTC”) or its designated custodian, and registered in the name of Cede &
Co.

 

4.             Representations
and Warranties of the Issuer, the Company and the Guarantors.  The Issuer represents and warrants to the
Initial Purchaser that:

 

(a)           The
Preliminary Offering Circular as of its date did not, and the Final Offering
Circular as of its date did not, and as of the Closing Date will not, contain
any untrue statement of a material fact, or omit to state a material fact
(except in the case of the Preliminary Offering Circular, for pricing terms and
other financial or similar terms intentionally left blank) necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this Section 4(a) do not apply to statements or omissions
made in reliance upon and in conformity with information relating to the
Initial Purchaser and furnished to the Issuer or the Company in writing by the
Initial Purchaser expressly for use in the Preliminary Offering Circular or the
Final Offering Circular.  No injunction
or order has been issued that either (i) asserts that any of the
transactions contemplated by the Documents is subject to the registration
requirements of the Act or (ii) would prevent or suspend the issuance or
sale of any of the Notes or the use of the Preliminary Offering Circular, the
Final Offering Circular or any amendment or supplement thereto, in any
jurisdiction.  Each of the Preliminary Offering
Circular and the Final Offering Circular, as of their respective dates
contained, and the Final Offering Circular, as of the Closing Date will
contain, all the information specified in, and meet the requirements of Rule 144A(d)(4) under
the Act.

 

(b)           Each
corporation, partnership, or other entity in which the Company, directly or indirectly through any of its subsidiaries,
owns more than fifty percent (50%) of any class of equity securities or
interests is listed on Schedule I attached hereto (the “Subsidiaries”).  Each such Subsidiary that is a Foreign
Restricted Subsidiary has an asterisk (“*”) next to its name on such

 

3

 

schedule.  Acquisition Corporation does not have any Subsidiaries
as of the date hereof and as of the Closing Date will not have any Subsidiaries
other than as a result of the Acquisition.

 

(c)           Each
of the Issuer, the Company and the Subsidiaries (i) has been duly
organized or formed and is a validly existing corporation or limited liability
company, as the case may be, and is in good standing under the laws of its
jurisdiction of organization, (ii) has all requisite corporate or limited
liability company power and corporate or limited liability company authority to
carry on its business and to own, lease and operate its properties and assets
as described in the Offering Circular, and (iii) is duly qualified or
licensed to do business and is in good standing as a foreign corporation or
limited liability company, as the case may be, authorized to do business in
each jurisdiction in which the nature of such businesses or the ownership or
leasing of such properties requires such qualification, except where the
failure to be so qualified, licensed or in good standing would not,
individually or in the aggregate, have a material adverse effect on (A) the
properties, business, operations, assets, liabilities or financial condition of
the Issuer, the Company and the Company’s Subsidiaries, taken as a whole, (B) the
ability of each of the Issuer, the Company or the Guarantors to perform their
respective obligations in all material respects under any of the Documents, (C) the
attachment, perfection or priority of any of the Liens or security interests
intended to be created by the Collateral Agreements which Liens or security
interests are, individually or in the aggregate, material, or (D) the
validity or enforceability of any of the Documents, and (E) the
consummation of any of the transactions contemplated under any of the Documents
(each, a “Material Adverse Effect”).

 

(d)           All
of the issued and outstanding shares of capital stock of the Company have been
duly authorized, validly issued, and are fully paid and nonassessable, and were
not issued in violation of, and are not subject to, any preemptive or similar
rights.  The column titled “Actual” in
the table under the caption “Capitalization”
in the Final Offering Circular (including the footnotes thereto) sets forth, as
of its date, the capitalization of the Company. 
All of the outstanding shares of capital stock or other equity interests
of each of the Subsidiaries of the Company are owned, directly or indirectly,
by the Company, free and clear of all liens, security interests, mortgages,
pledges, charges, equities, claims or restrictions on transferability or
encumbrances of any kind other than those (i) imposed by the Act or the
securities or “Blue Sky” laws of certain domestic or foreign jurisdictions, (ii) granted
pursuant to or in connection with the Company’s existing credit facility,
existing notes or existing letters of credit or (iii) contemplated by this
Agreement, the Credit Agreement, or any of the Documents (collectively, the “Liens”).  Except as disclosed in the Offering Circular
and except in connection with the Acquisition and the Merger, upon the
effectiveness of the Merger, there are no outstanding (A) options,
warrants or other rights to purchase from the Company or any of its
Subsidiaries, (B) agreements, contracts, arrangements or other obligations
of the Company or any of its Subsidiaries to issue or (C) other rights to
convert any obligation into or exchange any securities for, in the case of each
of clauses (A) through (C), shares of capital stock of or
other ownership or equity interests in the Company or any of the Subsidiaries.

 

(e)           Except
as contemplated by this Agreement or the Registration Rights Agreement, no
holder of securities of the Company or any of its Subsidiaries will be entitled
to have such securities registered under the registration statements required
to be filed by the Company and the Guarantors with respect to the Notes
pursuant to the Registration Rights Agreement.

 

(f)            The
Company and each of the Guarantors that is a corporation has all requisite
corporate power and corporate authority, and each of the Guarantors that is a
limited liability company has all the requisite limited liability company power
and limited liability company authority, to execute, deliver and perform its
obligations under the Documents to which it is a party and to consummate the
transactions contemplated thereby.

 

4

 

(g)           This
Agreement has been duly and validly authorized, executed and delivered by the
Issuer, the Company and each of the Guarantors. 
The execution, delivery and performance of the Indenture, the
Supplemental Indenture and the Collateral Agreements have been duly and validly
authorized by, to the extent party thereto, the Issuer, the Company and the
Guarantors.  Each of the Indenture, the
Supplemental Indenture and the Collateral Agreements, when executed and delivered
by the Issuer, the Company and the Guarantors, as applicable, and assuming due
authorization, execution and delivery by the Trustee and the Collateral Agent,
will constitute a legal, valid and binding obligation of each of the Issuer, the
Company and the Guarantors, as applicable, enforceable against each of the
Issuer, the Company and the Guarantors, as applicable, in accordance with its
terms, except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, receivership, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to or affecting
creditors’ rights generally, (ii) general principles of equity (whether
considered in a proceeding at law or in equity) and the discretion of the court
or other body before which any proceeding therefor may be brought, and (iii) an
implied covenant of good faith and fair dealing, and except as rights to
indemnity and contribution may be limited by federal or state securities laws
or public policy considerations.

 

(h)           The
Registration Rights Agreement has been duly and validly authorized by the
Company and the Guarantors.  The
Registration Rights Agreement, when executed and delivered by the Company and
the Guarantors and assuming due authorization, execution and delivery by the
Initial Purchaser, will constitute a legal, valid and binding obligation of the
Company and the Guarantors, enforceable against the Company and the Guarantors
in accordance with its terms, except that (A) the enforcement thereof may
be subject to (i) bankruptcy, insolvency, reorganization, receivership,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to or affecting creditors’ rights generally and (ii) general
principles of equity (whether considered in a proceeding at law or in equity)
and the discretion of the court or other body before which any proceeding
therefor may be brought, and (iii) an implied covenant of good faith and
fair dealing, and (B) any rights to indemnity or contribution thereunder
may be limited by federal and state securities laws and public policy
considerations.

 

(i)            The
Notes, when issued, will be in the form contemplated by the Indenture.  When duly executed and delivered by the
Issuer, and to the extent parties thereto, the Guarantors, the Indenture (as
supplemented by the Supplemental Indenture) will meet the requirements for
qualification under the Trust Indenture Act of 1939, as amended (the “TIA”).  The Notes, Exchange Notes and Private
Exchange Notes have each been duly and validly authorized by the Issuer (and by
the Company, effective upon the Merger) and, in the case of the Notes, when
duly authenticated by the Trustee, delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement and the Indenture, the
Notes will have been duly executed, validly issued and delivered by the Issuer
and will be legal, valid and binding obligations of the Issuer, and effective
upon the effectiveness of the Merger, the Company, entitled to the benefit of
the Indenture and the Supplemental Indenture and, effective upon effectiveness
of the Merger, enforceable against the Company in accordance with their terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, receivership, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to or affecting
creditors’ rights generally, (ii) general principles of equity (whether
considered in a proceeding at law or in equity) and the discretion of the court
before which any proceeding therefor may be brought, and (iii) an implied
covenant of good faith and fair dealing, and except as rights to indemnity and
contribution may be limited by federal or state securities laws or public
policy considerations.

 

(j)            The
Guarantees have been duly and validly authorized by the Guarantors and, when
executed by the Guarantors in accordance with the terms of the Indenture and
the Supplemental Indenture, and assuming due authentication of the Notes by the
Trustee, upon delivery to the Initial Purchaser

 

5

 

against payment therefor
in accordance with the terms of this Agreement and the Indenture, effective
upon effectiveness of the Merger will have been duly executed, issued and
delivered by each such Guarantor and will be legal, valid and binding
obligations of the Guarantors, entitled to the benefit of the Indenture and the
Supplemental Indenture and, effective upon effectiveness of the Merger,
enforceable against the Guarantors in accordance with their terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, receivership, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to or affecting creditors’
rights generally, (ii) general principles of equity (whether applied by a
court of law or equity) and the discretion of the court before which any
proceeding therefor may be brought, and (iii) an implied covenant of good
faith and fair dealing, and except as rights to indemnity and contribution may
be limited by federal or state securities laws or public policy considerations.

 

(k)           None
of the Issuer, the Company or any of the Company’s Subsidiaries is in violation
of its certificate of incorporation, by-laws or other organizational documents
(the “Charter Documents”).  None of the Issuer, the Company or any of the
Company’s Subsidiaries is (i) in violation of any Federal, state, local or
foreign statute, law (including, without limitation, common law) or ordinance,
or any judgment, decree, rule, regulation or order applicable to any of them or
their respective properties (collectively, “Applicable Law”) of any federal, state, local and other
governmental authority, governmental or regulatory agency or body, court,
arbitrator or self-regulatory organization, domestic or foreign, with
jurisdiction over any of them or any of their respective properties (each, a “Governmental Authority”), or (ii) in
breach of or default under any bond, debenture, note or other evidence of
indebtedness, indenture, mortgage, deed of trust, lease or any other agreement
or instrument to which any of them is a party or by which any of them or their
respective property is bound (collectively, “Applicable Agreements”), other than as disclosed in the Final
Offering Circular and except for such violations, breaches or defaults that
could not, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.  There exists
no condition that, with the passage of time or otherwise, would constitute (a) a
violation of any such (1) Charter Document or (2) Applicable Law, (b) a
breach of or default under any Applicable Agreement or (c) result in the
imposition of any penalty or the acceleration of any indebtedness that in the
case of clause (a)(2), (b) or (c) above could
reasonably be expected to result in a Material Adverse Effect.

 

(l)            Neither
the execution, delivery or performance by the Issuer, the Company or the
Guarantors of the Documents to which they are parties nor the consummation by
them of any transactions contemplated therein will conflict with, violate,
constitute a breach of or a default (with the passage of time or otherwise)
under, require the consent of any person (other than consents already obtained and
in full force and effect or that will have been obtained on or prior to the
Closing Date) under, result in the imposition of a Lien on any assets of the
Issuer, the Company or any of the Company’s Subsidiaries, or result in an
acceleration of indebtedness under or pursuant to (i) the Charter
Documents, (ii) any Applicable Agreement, or (iii) assuming the
accuracy of the representations and warranties of the Initial Purchaser in Section 6
of this Agreement and, in the case of any Exempt Resales made to Accredited
Investors, the accuracy of the representations and warranties of such
Accredited Investors contained in the Accredited Investor Letters executed by
such Accredited Investors, any Applicable Law, except for conflicts,
violations, breaches, defaults, consent requirements, Lien impositions or the
acceleration of indebtedness that could not reasonably be expected to result,
in the case of clauses (ii) or (iii) above, a Material
Adverse Effect.

 

(m)          When
executed and delivered, the Documents will conform in all material respects to
the descriptions thereof in the Final Offering Circular.

 

6

 

(n)           Assuming
the accuracy of the representations and warranties of the Initial Purchaser in Section 6
of this Agreement and, in the case of any Exempt Resales made to Accredited
Investors, the accuracy of the representations and warranties of such
Accredited Investors contained in the Accredited Investor Letters executed by such
Accredited Investors, no consent, approval, authorization or order of any
Governmental Authority is required for the issuance and sale by the Company of
the Notes to the Initial Purchaser or the consummation by the Company of the
other transactions contemplated hereby, except (A) such as have been
obtained or will be obtained under or made on or prior to the Closing Date, (B) registration
of the Exchange Offer or resale of the Notes under the Act pursuant to the
Registration Rights Agreement, and qualification of the Indenture under the
TIA, in connection with the issuance of the Exchange Notes, (C) such
filings and recordings with Governmental Authorities as may be required to
perfect liens under the Collateral Agreements and the Credit Agreement, (D) such
consents, approvals, authorizations, orders, filings, registrations,
qualifications, licenses or permits as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the Notes,
(E) in connection with the Merger, the filing of the Certificate of Merger
with the Nevada Secretary of State, or (F) which could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

 

(o)           Except
as disclosed in the Final Offering Circular, there is no action, claim, suit,
demand, hearing, notice of violation or deficiency, or proceeding, domestic or
foreign (collectively, “Proceedings”),
pending or, to the knowledge of the Issuer, the Company or any of the Company’s
Subsidiaries, threatened, that either (i) seeks to restrain, enjoin,
prevent consummation of, or otherwise challenge any of the Documents or any of
the transactions contemplated therein, or (ii) individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.  Neither the Issuer nor the Company is subject
to any judgment, order, decree, rule or regulation of any Governmental
Authority that, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect.

 

(p)           Each
of the Company and the Guarantors own, license or possess all licenses,
permits, certificates, consents, orders, approvals and other authorizations
from, and has made all declarations and filings with, all Governmental
Authorities, presently required or necessary to own or lease, as the case may
be, and to operate their respective properties and to carry on their respective
businesses as now or proposed to be conducted as set forth in the Offering
Circular (“Permits”), except where the failure to obtain such Permits,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect; each of the Company and its Subsidiaries has fulfilled
and performed all of its obligations with respect to such Permits and no event
has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material impairment
of the rights of the holder of any such Permit, except as otherwise set forth
in the Offering Circular or where such failure to fulfill and perform,
revocation, termination or material impairment, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect;
and neither the Company nor any of its Subsidiaries has received any notice of
any proceeding relating to revocation or modification of any such Permit,
except as described in the Offering Circular or except where such revocation or
modification, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.

 

(q)           Each
of the Company and its Subsidiaries has good and insurable title to all real
property owned by it and good title to all material personal property owned by
it and good and valid title to all leasehold estates in real and personal
property being leased by it and, as of the Closing Date, will be free and clear
of all Liens.

 

7

 

(r)            All
material Tax returns required to be filed on or prior to the date hereof by the
Company or any of its Subsidiaries have been filed (taking into account all
applicable extensions) and all such returns when filed were true, complete, and
correct in all material respects and all material Taxes that are shown as due
thereon from the Company and its Subsidiaries have been paid other than those (i) currently
payable without penalty or interest or (ii) being contested in good faith
and by appropriate proceedings and for which adequate reserves have been
established in accordance with generally accepted accounting principles of the
United States, consistently applied (“GAAP”).  To the
knowledge of the Company, there are no actual or proposed Tax assessments
against the Company or any of its Subsidiaries that would, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.  To the knowledge of the Company and its
Subsidiaries, the accruals and reserves on the books and records of the Company
and its Subsidiaries in respect of any material Tax liability for any period
not finally determined are adequate to meet any assessments of Tax for any such
period.  For purposes of this Agreement,
the term “Tax” and “Taxes” shall mean all Federal, state, local and foreign
taxes, and other assessments of a similar nature (whether imposed directly or
through withholding), including any interest, additions to tax, or penalties
applicable thereto.

 

(s)                                  Each
of the Company and its Subsidiaries owns, licenses, or has the right to use the
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names (collectively, “Intellectual
Property”) currently used or currently proposed to be used for the
operation of its businesses and as of the Closing Date, will be free and clear
of all Liens, other than Permitted Liens, except as disclosed in the Offering
Circular and except where the failure to so own, license of have the right to use
would not reasonably be expected to have a Material Adverse Effect.  To the Company’s knowledge, no claims or
notices of any potential claim have been asserted by any person challenging the
use of any such Intellectual Property by the Company or any of its Subsidiaries
or questioning the validity or effectiveness of the Intellectual Property or
any license or agreement related thereto (other than any claims that, if
successful, would not, individually or in the aggregate, have a Material
Adverse Effect).  To the Company’s
knowledge, the current or currently proposed use of such Intellectual Property
by the Company or any of its Subsidiaries will not infringe on the Intellectual
Property rights of any other person.

 

(t)            The
Company and its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) material transactions
are executed in accordance with management’s general or specific authorization,
(ii) material transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP, and to maintain asset
accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any material
differences.

 

(u)           The
audited historical consolidated financial statements and related notes of the
Company and its Subsidiaries contained in the Final Offering Circular (the “Financial Statements”) present
fairly in all material respects the consolidated financial position, results of
operations and cash flows of the Company and its consolidated Subsidiaries, as
of the respective dates and for the respective periods to which they apply and
have been prepared in accordance with GAAP. 
The historical financial data set forth under “Summary Historical
Consolidated Financial Data” and “Selected Historical Consolidated Financial
Data” included in the Final Offering Circular has been prepared on a basis
consistent with that of the Financial Statements and present fairly in all
material respects the consolidated financial position and results of operations
of the Company and its consolidated Subsidiaries as of the respective dates and
for the respective periods indicated. 
The

 

8

 

statistical and market
and industry-related data included in the Final Offering Circular are based on
or derived from sources that the Company believes to be reliable and accurate
in all material respects.

 

(v)           Subsequent
to the respective dates as of which information is given in the Final Offering
Circular, except as disclosed in the Final Offering Circular and except for the
Acquisition, the Merger and the transactions contemplated by this Agreement,
the Credit Agreement, and the Documents, (i) the Issuer, the Company and
the Subsidiaries have not (x) incurred any liabilities, direct or contingent,
that are material, individually or in the aggregate, to the Issuer, the Company
and the Subsidiaries, considered as one enterprise, or (y) entered into any
transactions not in the ordinary course of business which are material with
respect to the Issuer, the Company and the Subsidiaries, considered as one
enterprise, (ii) there has not been any material decrease in the capital
stock or any material increase in long-term indebtedness or any material
increase in short-term indebtedness of the Issuer or the Company, or any payment
of or declaration to pay any dividends or any other distribution with respect
to the Company and (iii) there has not been any material adverse change in
the properties, business, operations, assets, liabilities or financial
condition of the Issuer, the Company and the Subsidiaries, considered as one
enterprise, in the aggregate (each of clauses (i), (ii) and (iii),
a “Material Adverse Change”).

 

(w)          On
the Closing Date, immediately after the consummation of the Offering, the
related financing transactions and the application of the use of proceeds
therefrom as indicated in the “Use of Proceeds” section of the Offering
Circular, each of the Company and each Guarantor will be solvent.  As used in this paragraph, the term “Solvent”
means, with respect to a particular date and a particular Person, that on such
date (i) the present fair market value (or present fair saleable value) of
the assets of such Person, considered as a whole and as a going concern, is not
less than the total amount required to pay the probable liabilities of such
Person on its total existing debts and liabilities (including identified
contingent liabilities) as they become absolute and matured; (ii) such
Person is generally able to pay its debts and other liabilities, contingent
obligations and commitments as they mature and become due in the normal course
of business; (iii) assuming consummation of the issuance of the Notes and
Guarantees as contemplated by this Agreement and the Offering Circular, such
Person has not incurred debts or liabilities beyond its ability to pay its
debts and liabilities as such debts and liabilities mature; (iv) such
Person is not engaged in any business or transaction, and does not currently
propose to engage in any business or transaction, for which its property would
constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which such Person is engaged; and (v) such
Person is not otherwise insolvent under the standards set forth in applicable
laws.  In computing the amount of such
contingent liabilities at any time, it is intended that such liabilities will
be computed at the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

 

(x)            Neither
the Issuer nor the Company has and, to its knowledge, no one acting on its
behalf (other than the Initial Purchaser or anyone acting on its behalf, as to
which no representation is made) has, (i) taken, directly or indirectly,
any action designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation
of the price of the Notes or to facilitate the sale or resale of any of the
Notes, (ii) sold, bid for, purchased, or paid anyone any compensation for
soliciting purchases of, any of the Notes in a manner that could require
registration of the Notes under the Act, or (iii) except as disclosed in
the Final Offering Circular, and except in connection with the Acquisition,
paid or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Issuer or the Company.

 

9

 

(y)           Without
limiting any provision herein, no registration under the Act and no
qualification of the Indenture under the TIA is required for the sale of the
Notes to the Initial Purchaser as contemplated hereby or for the Exempt
Resales, assuming (i) that the purchasers in the Exempt Resales are QIBs
or Accredited Investors or non-U.S. persons (as defined under Regulation S of
the Act), (ii) the accuracy of the Initial Purchaser’s representations
contained in Section 6, and (iii) the accuracy of the representations
made by each Accredited Investor who purchases Notes pursuant to an Exempt
Resale as set forth in the Accredited Investor Letter.

 

(z)            No
securities of the Issuer or the Company of the same class (within the meaning
of Rule 144A under the Act) as the Notes are listed on a national
securities exchange registered under Section 6 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), or quoted in a U.S.
automated inter-dealer quotation system. 
No securities of the Issuer or the Company of the same class as the
Notes have been offered, issued or sold by the Issuer or the Company or any of
the Company’s Affiliates within the six-month period immediately prior to the
date hereof.

 

(aa)                            None
of the Issuer, the Company or any of their affiliates or other person acting on
behalf of the Issuer or the Company has offered or sold the Notes by means of
any general solicitation or general advertising within the meaning of Rule 502(c) under
the Act or, with respect to Notes sold outside the United States to non-U.S.
persons (as defined in Rule 902 under the Act), by means of any directed
selling efforts within the meaning of Rule 902 under the Act, and the
Issuer, the Company, any affiliate of the Company and any person acting on
behalf of the Issuer or the Company have complied with and will implement the “offering
restrictions” within the meaning of such Rule 902; provided, that
no representation is made in this subsection with respect to the actions
of the Initial Purchaser or anyone acting on its behalf.

 

(bb)         Each
of the Company, each of its Subsidiaries and each ERISA Affiliate has fulfilled
its obligations, if any, under the minimum funding standards of Section 302
of the United States Employee Retirement Income Security Act of 1974, as
amended (“ERISA”) with respect to each “pension plan” (as defined in Section 3(2) of
ERISA), subject to Section 302 of ERISA which the Company, any of its
Subsidiaries or any ERISA Affiliate sponsors or maintains, or with respect to
which it has (or within the last three years had) any obligation to make
contributions, and each such plan is in compliance in all material respects
with the presently applicable provisions of ERISA and the Internal Revenue Code
of 1986, as amended (the “Code”). 
None of the Company, any of its Subsidiaries or any ERISA Affiliate has
incurred any unpaid liability to the Pension Benefit Guaranty Corporation
(other than for the payment of premiums in the ordinary course) or to any such
plan under Title IV of ERISA.  “ERISA
Affiliate” means a corporation, trade or business that is, along with the
Company or any of its Subsidiaries, a member of a controlled group of
corporations or a controlled group of trades or businesses, as described in Section 414
of the Code or Section 4001 of ERISA.

 

(cc)         (i) Neither
the Company nor any of the Guarantors is party to or bound by any collective
bargaining agreement with any labor organization; (ii) there is no union
representation question existing with respect to the employees of the Company
or any of the Guarantors, and, to the knowledge of the Company, no union
organizing activities are taking place that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect; (iii) no
labor strike, work stoppage, slowdown, or other material labor dispute is
pending against the Company or any of the Guarantors, or, to the knowledge of
the Company, threatened against the Company or any of the Guarantors that,
individually or in the aggregate, would reasonably be expected to have a Material
Adverse Effect; (iv) to the knowledge of the Company, there is no
threatened or pending liability against the Company or any of the Guarantors
pursuant to the Worker Adjustment Retraining and Notification Act of 1988, as
amended (“WARN”), or any similar state or local law concerning a plant
closing or mass layoff that, individually or in the aggregate,

 

10

 

would reasonably be
expected to have a Material Adverse Effect; (v) there is no
employment-related charge, complaint, grievance, investigation, unfair labor
practice claim, or inquiry of any kind, pending against the Company or any of
the Guarantors that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect; and (ix) no term or condition
of employment exists through arbitration awards, settlement agreements, or side
agreement that is contrary to the express terms of any applicable collective
bargaining agreement other than such term or condition that, , individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.

 

(dd)         None
of the transactions contemplated in the Documents or the application of the
proceeds by the Company or any of the Subsidiaries of the proceeds of the Notes
will violate or result in a violation of Section 7 of the Exchange Act,
(including, without limitation, Regulation T (12 C.F.R. Part 220),
Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224)
of the Board of Governors of the Federal Reserve System).

 

(ee)         Neither
the Company nor any of its Subsidiaries is an open-end investment company, unit
investment trust or face-amount certificate company that is or is required to
be registered under Section 8 of the United States Investment Company Act
of 1940, as amended (the “Investment Company Act”); and neither the
Company nor any of its Subsidiaries, after giving effect to the Offering and
sale of the Notes and the application of the proceeds thereof as described in
the Final Offering Circular, will be an “investment company” as defined in the
Investment Company Act.

 

(ff)           Neither
the Issuer nor the Company has engaged any broker, finder, commission agent or
other person (other than the Initial Purchaser) in connection with the Offering
or any of the transactions contemplated in the Documents (other than the
Acquisition), and the Company is not under any obligation to pay any broker’s
fee or commission in connection with such transactions (other than commissions
or fees to the Initial Purchaser).

 

(gg)         Each of the
Company and each of its Subsidiaries is (i) in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to
the protection of the environment or hazardous or toxic substances of wastes,
pollutants or contaminants (“Environmental Laws”), (ii) has
received and is in compliance with all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct its respective
businesses and (iii) has not received notice of any actual or potential
liability for the investigation or remediation of any disposal or release of
hazardous or toxic substances or wastes, pollutants or contaminants, in each
case except where such non-compliance with Environmental Laws, failure to receive
and comply with required permits, licenses or other approvals, or liability,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect, whether
or not arising from transactions in the ordinary course of business.  Neither the Company nor any of its
Subsidiaries has received notice that it has been named as a “potentially
responsible party” under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, with respect to any matter
which, as of the date hereof is unresolved.

 

(hh)         (a)           Upon:

 

(i)            execution and delivery of the Collateral
Agreements by the Company and the Guarantors parties thereto and the Collateral
Agent (as defined therein), compliance by the Company and the Guarantors with
their respective obligations thereunder and the Issuance of the Notes; and

 

11

 

(ii)           (A)           certain of the filing or recording of the
Collateral Agreements or appropriate financing statements with the appropriate
filing records, registry, or other public office, together with the payment of
the requisite filing or recordation fees related thereto, and

 

(B)           in the case of Motor Vehicles (as defined
in the Security Agreement), upon the recordation or notation of the Collateral
Agent’s security interest on the certificates of title or ownership in respect
of such Motor Vehicles and the filing of the Uniform Commercial Code financing
statements delivered by the Company or any Guarantor, as the case may be,
having an interest in such Motor Vehicles to the Collateral Agent with respect
to such Motor Vehicles,

 

the security interest of the
Collateral Agent in the Collateral (as defined in the Collateral Agreements)
will, to the extent required by the Collateral Agreements, be a valid and
enforceable perfected security interest, which security interests will be
superior to and prior to the rights of all third persons other than holders of
Permitted Liens.

 

(b)           As
of the Closing Date, except with respect to Permitted Liens, there will be no
currently effective financing statement, security agreement, chattel mortgage,
real estate mortgage or other document filed or recorded with any filing
records, registry, or other public office, that purports to cover, affect or
give notice of any present or possible future Lien on, or security interest in,
any assets or property of the Company or any Guarantor or any rights
thereunder.

 

(ii)           Each
certificate signed by any officer of the Issuer, the Company or any Guarantor,
and delivered to the Initial Purchaser pursuant to this Agreement shall be
deemed a representation and warranty by the Issuer, the Company or any such
Guarantor of the Company (and not individually by such officer) to the Initial
Purchaser with respect to the matters covered thereby.

 

(jj)           The
Company and the Subsidiaries of the Company are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are reasonably adequate for the conduct of the respective businesses
in which they are engaged.  All policies
of insurance insuring the Company or any of its Subsidiaries or their
respective businesses, assets, employees, officers and directors are in full
force and effect.  The Company and its
Subsidiaries are in compliance with the terms of such policies in all material
respects, and there are no claims by the Company or any of its Subsidiaries
under any such policy or instrument as to which any insurance company is
denying liability or defending under a reservation of rights clause, except for
such non-compliance, denial of liability or defense that, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect.  Neither the Company nor any such
Subsidiary has been refused any insurance coverage sought or applied for, and
neither the Company nor any such Subsidiary has any reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not, individually or in
the aggregate, have a Material Adverse Effect.

 

5.             Covenants
of the Company and the Guarantors. 
Each of the Issuer, on the one hand, as to itself individually, and the
Company and the Guarantors on the other hand, as to the Company and the
Guarantors jointly and severally, agrees:

 

(a)           To
(i) advise the Initial Purchaser promptly after obtaining knowledge (and,
if requested by the Initial Purchaser, confirm such advice in writing) of (A) the
issuance by any state securities

 

12

 

commission of any stop
order suspending the qualification or exemption from qualification of any of
the Notes for offer or sale in any jurisdiction, or the initiation of any
proceeding for such purpose by any state securities commission or other
regulatory authority, or (B) the happening of any event during the period
referred to in Section 5(d) that makes any statement of a
material fact made in the Final Offering Circular untrue or that requires the
making of any additions to or changes in the Final Offering Circular in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, (ii) use its commercially reasonable
efforts to prevent the issuance of any stop order or order suspending the
qualification or exemption from qualification of any of the Notes under any
state securities or Blue Sky laws, and (iii) if, at any time, any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of any of the
Notes under any such laws, use its commercially reasonable efforts to obtain
the withdrawal or lifting of such order at the earliest practicable time.

 

(b)           To
furnish the Initial Purchaser, without charge, as many copies of the Final
Offering Circular, and any amendments or supplements thereto, as the Initial
Purchaser may reasonably request. Each of the Issuer and the Company hereby
consents to the use of the Preliminary Offering Circular and the Final Offering
Circular, and any amendments and supplements thereto, by the Initial Purchaser
in connection with Exempt Resales.

 

(c)           Except
as set forth in Section 5(d), not to amend or supplement the
Offering Circular prior to the Closing Date, or at any time prior to the
completion of the resale by the Initial Purchaser of all the Notes purchased by
the Initial Purchaser, unless the Initial Purchaser shall previously have been
advised thereof and shall have provided its written consent thereto (which
consent shall not be unreasonably withheld or delayed and shall be provided
within three business days from the date on which it was so advised).

 

(d)           At
any time prior to the completion of the resale by the Initial Purchaser of all
of the Notes, (i) if, in the reasonable judgment of the Issuer or its
counsel, or the Initial Purchaser or its counsel, it may be necessary or
advisable to amend or supplement the Final Offering Circular in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary to amend or supplement the Final
Offering Circular to comply with Applicable Law, to notify the Initial
Purchaser or the Company, as the case may be, of any the same and in such case
the Company will prepare, at the expense of the Company, an appropriate
amendment or supplement to the Final Offering Circular (in form and substance
reasonably satisfactory to the Initial Purchaser) so that (A) as so
amended or supplemented, the Final Offering Circular will not include an untrue
statement of material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, and (B) the Final Offering Circular will
comply with Applicable Law and (ii) if in the reasonable judgment of the
Issuer it becomes necessary or advisable to amend or supplement the Final
Offering Circular so that the Final Offering Circular will contain all of the
information specified in, and meet the requirements of, Rule 144A(d)(4) of
the Act, to prepare an appropriate amendment or supplement to the Final
Offering Circular (in form and substance reasonably satisfactory to the Initial
Purchaser) so that the Final Offering Circular, as so amended or supplemented,
will contain the information specified in, and meet the requirements of, such
Rule.

 

(e)           To
cooperate with the Initial Purchaser and the Initial Purchaser’s counsel in
connection with the qualification of the Notes under the securities or Blue Sky
laws of such jurisdictions as the Initial Purchaser may request and continue
such qualification in effect so long as reasonably required for Exempt Resales;
provided that none of the Issuer, the Company or any of the Guarantors
shall be obligated to (i) execute or file any general consent to service
of process or take any action that

 

13

 

would subject it to
service of process in suits other than those arising out of the offer and sale
of the Notes in any jurisdiction in which it is not otherwise subject, (ii) register
or qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it is not now so registered or qualified, or (iii) subject
itself to general taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject.

 

(f)            Whether
or not any of the Offering or the transactions contemplated under the Documents
are consummated or this Agreement is terminated, to pay (i) all costs,
expenses, fees and taxes (other than federal, state, or local taxes of the
Initial Purchaser) incident to and in connection with: (A) the
preparation, printing and distribution of the Preliminary Offering Circular and
the Final Offering Circular and all amendments and supplements thereto
(including, without limitation, financial statements and exhibits), and all
other agreements, memoranda, correspondence and other documents prepared and
delivered in connection herewith, (B) the negotiation, printing,
processing and distribution (including, without limitation, word processing and
duplication costs) and delivery of, each of the Documents, (C) the
preparation, issuance and delivery of the Notes, including but not limited to
all stamp, documentary and transfer taxes (other than federal, state, or local
taxes of the Initial Purchaser) and other duties, if any, which may be imposed
by the United States or any political subdivision thereof or taxing authority
thereof or therein with respect to the issuance of the Notes or the sale
thereof to the Initial Purchaser (D) the qualification of the Notes for
offer and sale under the securities or Blue Sky laws of the several states (including,
without limitation, the reasonable fees and disbursements of the Initial
Purchaser’s counsel relating to such registration or qualification), (E) furnishing
such copies of the Preliminary Offering Circular and the Final Offering
Circular, and all amendments and supplements thereto, as may reasonably be
requested for use by the Initial Purchaser and (F) the performance of the
obligations of the Company and the Guarantors obligations under the
Registration Rights Agreement, including but not limited to the Exchange Offer,
the Exchange Offer Registration Statement and any Shelf Registration Statement,
(ii) all fees and expenses of the counsel, accountants and any other
experts or advisors retained by the Company, (iii) all expenses and
listing fees in connection with the application for quotation of the Notes on
the Private Offerings, Resales and Trading Automated Linkages (“PORTAL”) market, (iv) all
fees and expenses (including fees and expenses of counsel) of the Company in
connection with approval of the Notes by DTC for “book-entry” transfer, (v) all
fees charged by rating agencies in connection with the rating of the Notes, (vi) all
fees and expenses (including reasonable fees and expenses of counsel) of the
Trustee and all collateral agents, (vii) all costs and expenses in
connection with the creation and perfection of the Liens under the Collateral
Agreements (including without limitation, filing and recording fees, search
fees, taxes and costs of title policies) and (viii) all fees, disbursements
and out-of-pocket expenses incurred by Initial Purchaser in connection with its
services to be rendered hereunder including, without limitation, the fees and
disbursements of Mayer, Brown Rowe & Maw LLP, counsel to the Initial
Purchaser, travel and lodging expenses, word processing charges, messenger and
duplicating services, facsimile expenses and other customary expenditures in an
amount, with respect to this clause (viii), not to exceed $500,000, provided that the Initial Purchaser shall be responsible for
and shall pay any of its costs and expenses described in the preceding clause (viii) in
excess of such amount, including the fees and disbursements of its counsel.
Notwithstanding the foregoing, none of the Issuer, the Company or any of the
Guarantors shall be responsible for any of the foregoing costs, fees or
expenses provided in clauses (i) through (viii) above to the extent
such costs, fees or expenses have been incurred prior to or in respect of
periods prior to December 5, 2004, except for the fees and disbursements
of Mayer, Brown, Rowe & Maw LLP referred to in clause (viii) above,
for which the Issuer, the Company and the Guarantors will be responsible,
subject to the limitations described in clause (viii).

 

14

 

(g)           In
the case of the Issuer, to apply the net proceeds of the Offering in all
material respects as described in the Final Offering Circular under the caption
“Use of Proceeds.”

 

(h)           To
do and perform in all material respects all things required to be done and
performed by the Company and the Guarantors under this Agreement prior to and
after the Closing Date.

 

(i)            Not
to, and not to permit any of its Subsidiaries or its other affiliates (as
defined in Rule 501(b) of the Act), to, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any “security” (as
defined in the Act) that would be integrated with the sale of the Notes in a
manner that would require the registration under the Act of the sale to the
Initial Purchaser or to the Subsequent Purchasers of the Notes.

 

(j)            From
and after the Closing Date, for so long as any of the Notes remain outstanding,
during any period in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act, to make available, upon request, to any owner of the Notes in
connection with any sale thereof and any prospective Subsequent Purchasers of
such Notes from such owner, the information required by Rule 144A(d)(4) under
the Act.

 

(k)           To
comply with the representation letter of the Company to DTC relating to the
approval of the Notes by DTC for “book entry” transfer.

 

(l)            To
use its reasonable best efforts to assist the Initial Purchaser in effecting
the inclusion of the Notes on the PORTAL Market.

 

(m)          For
so long as any of the Notes remain outstanding, the Company will furnish to the
Initial Purchaser copies of all reports and other communications (financial or
otherwise) furnished by the Company to the Trustee for distribution to the
holders of the Notes and, as soon as available, copies of any reports or
financial statements furnished to or filed by the Company with the SEC or any
national securities exchange on which any class of securities of the Company
may be listed; provided, however, that in no case shall the
Company be required to furnish materials pursuant to this paragraph which are
filed and publicly accessible via EDGAR.

 

(n)           Except
in connection with the Exchange Offer or the filing of the Shelf Registration
Statement, not to, and not to authorize or permit any person acting on its
behalf to, (i) distribute any offering material in connection with the
offer and sale of the Notes other than the Preliminary Offering Circular and
the Final Offering Circular and any amendments and supplements to the Final
Offering Circular prepared in compliance with this Agreement, or (ii) solicit
any offer to buy or offer to sell the Notes by means of any form of general
solicitation or general advertising (including, without limitation, as such
terms are used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act.

 

(o)           During
the two year period after the Closing Date (or such shorter period as may be
provided for in Rule 144(k) under the Act, as the same may be in effect
from time to time), to not, and to not permit any current or future
Subsidiaries of either the Company or any other affiliates (as defined in Rule 144A
under the Act) controlled by the Company to, resell any of the Notes which
constitute “restricted securities” under Rule 144 that have been
reacquired by the Company, any current or future Subsidiaries of the Company or
any other “affiliates” (as defined in Rule 144A under the Act) controlled
by the Company, except pursuant to an effective registration statement under
the Act.

 

15

 

(p)           To use
their best efforts to complete on or prior to the Closing Date all filings and
other similar actions required in connection with the perfection of security
interests as and to the extent contemplated by the Collateral Agreements.

 

6.             Representations
and Warranties of the Initial Purchaser.  The Initial Purchaser represents and warrants
to the Issuer, the Company and the Guarantors that as of the date hereof and as
of the Closing Date:

 

(a)           It
is a QIB as defined in Rule 144A under the Act, with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Notes and the Initial
Purchaser acknowledges that it is purchasing the Notes pursuant to a private
sale exempt from registration under the Act and that the Notes have not been
registered under the Act. It will offer the Notes for resale only upon the
terms and conditions set forth in this Agreement and in the Final Offering
Circular.

 

(b)           It
is not acquiring the Notes with a view to any distribution thereof that would
violate the Act or the securities laws of any state of the United States or any
other applicable jurisdiction.  It will solicit
offers to buy the Notes only from, and will offer and sell the Notes only to, (A) persons
reasonably believed by the Initial Purchaser to be QIBs or (B) persons
reasonably believed by the Initial Purchaser to be Accredited Investors or (C) non-U.S.
persons reasonably believed by the Initial Purchaser to be a purchaser referred
to in Regulation S under the Act; provided, however, that in
purchasing such Notes, such persons are deemed to have represented and agreed
as provided under the caption “Notice to Investors” contained in the Final
Offering Circular.

 

(c)           No
form of general solicitation or general advertising in violation of the Act has
been or will be used nor will any offers in any manner involving a public
offering within the meaning of Section 4(2) of the Act.

 

(d)           With
respect to offers and sales outside the United States, it has offered the Notes
and will offer and sell the Notes (1) as part of its distribution at any
time and (2) otherwise until 40 days after the later of the commencement of
the offering of the Notes and the Closing Date, only in accordance with Rule 903
of Regulation S or another exemption from the registration requirements of the
Act.  Accordingly, neither it nor any
person acting on its behalf has engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the Notes, and any
such persons have complied and will comply with the offering restrictions
requirements of Regulation S.  Terms used
in this Section 6(e) and Section 6(f) have the meanings
given to them by Regulation S.

 

(e)           The
Initial Purchaser agrees that, at or prior to confirmation of a sale of the
Notes pursuant to Regulation S it will have sent to each distributor, dealer or
person receiving a selling concession, fee or other remuneration that purchases
Notes from it or through it during the restricted period a confirmation or
notice to substantially the following effect:

 

“The Securities covered hereby have not been
registered under the United States Securities Act of 1933, as amended (the “Securities
Act”), and may not be offered or sold within the United States or to or for the
account or benefit of, U.S. persons (i) as part of their distribution at
any time and (ii) otherwise until forty days after the later of the date
upon which the offering of the Securities commenced and the date of closing,
except in either case in accordance with Regulation S or Rule 144A under
the Securities Act.  Terms used above
have the meaning given to them by Regulation S.”

 

16

 

(f)            The
Initial Purchaser will deliver to each Subsequent Purchaser of the Notes, in
connection with its original distribution of the Notes, a copy of the Final
Offering Circular, as amended and supplemented at the date of such delivery.

 

7.             Conditions
to Obligations of the Initial Purchaser.  The obligations of the Initial Purchaser to
purchase the Notes under this Agreement are subject to the satisfaction or
waiver of each of the following conditions:

 

(a)           All
the representations and warranties of the Issuer, the Company and the Company’s
Subsidiaries contained in this Agreement shall be true and correct in all
material respects (other than representations and warranties with a materiality
qualifier, which shall be true and correct as written) as of the Closing
Date.  On or prior to the Closing Date,
the Issuer, the Company and each other party to the Documents (other than the
Initial Purchaser) shall have performed or complied in all material respects
with all of the agreements and satisfied all conditions on their respective
parts required to be performed, complied with or satisfied as of or prior to
the Closing Date pursuant to the Documents (other than conditions to be
satisfied by such other parties, which the failure to so satisfy would not,
individually or in the aggregate, have a Material Adverse Effect).

 

(b)           No
injunction, restraining order or order of any nature by a Governmental
Authority shall have been issued as of the Closing Date that would prevent or materially
interfere with the consummation of the Offering or any of the transactions
contemplated under the Documents; and no stop order suspending the
qualification or exemption from qualification of any of the Notes in any
jurisdiction shall have been issued and no Proceeding for that purpose shall
have been commenced or, to the knowledge of the Issuer or the Company, be
pending or threatened as of the Closing Date.

 

(c)           No
action shall have been taken and no Applicable Law shall have been enacted,
adopted or issued that would, as of the Closing Date, prevent the consummation
of the Offering or any of the transactions contemplated under the
Documents.  No Proceeding shall be
pending or, to the knowledge of the Company, threatened other than Proceedings
that (A) if adversely determined would not, individually or in the
aggregate, adversely affect the issuance or marketability of the Notes, and (B) would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

(d)           Subsequent
to the execution and delivery of this Agreement, there shall not have been any
Material Adverse Change the effect of which, in the sole judgment of the
Initial Purchaser, makes it impracticable or inadvisable to proceed with the
completion of the Offering or the purchase and sale of the Notes.

 

(e)           The
Notes shall have been designated PORTAL securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
relating to trading in the PORTAL market.

 

(f)            Subsequent
to the execution and delivery of this Agreement, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any notice
have been given of any potential or intended downgrading, suspension or
withdrawal of, or of any review (or of any potential or intended review) for a
possible change that does not indicate the direction of the possible change in,
any rating of the Company or any debt securities of the Company (including,
without limitation, the placing of any of the foregoing ratings on credit watch
with negative or developing implications or under review with an uncertain
direction) by any “nationally recognized statistical rating organization” as
such term is defined for purposes of Rule 436(g)(2) under the Act,
(ii)

 

17

 

there shall not have
occurred any adverse change, nor shall any notice have been given of any
potential or intended adverse change, in the outlook for any rating of the
Company or any securities of the Company by any such rating organization and (iii) no
such rating organization shall have given notice that it has assigned (or is
considering assigning) a lower rating to the Notes than that on which the Notes
were marketed.

 

(g)           The
Initial Purchaser shall have received on the Closing Date:

 

(i)            certificates dated the Closing Date,
signed by (1) the Chief Executive Officer and (2) the principal
financial or accounting officer of each of the Issuer and the Company on behalf
of Issuer and the Company, respectively, to the effect that, with respect to
the Issuer or the Company, as the case may be, (a) the representations and
warranties, as to itself, set forth in Section 4 hereof are true
and correct in all material respects with the same force and effect as though
expressly made at and as of the Closing Date, (b) it has performed and
complied with all agreements and satisfied all conditions in all material
respects on its part required by this Agreement to be performed or satisfied by
it at or prior to the Closing Date, (c) at the Closing Date, since the
date hereof or since the date of the most recent financial statements in the
Final Offering Circular (exclusive of any amendment or supplement thereto after
the date hereof), no event or events have occurred, no information has become
known to the Company nor does any condition exist that, individually or in the
aggregate, would have a Material Adverse Effect, there has not occurred a
Material Adverse Change, and (d) the sale of the Notes has not been enjoined
(temporarily or permanently) by a Governmental Authority with applicable
jurisdiction;

 

(ii)           a certificate, dated the Closing Date,
executed by the Secretary of the Company and each Guarantor, certifying such
matters as the Initial Purchaser may reasonably request;

 

(iii)          the opinion of Dechert LLP, special New
York counsel to the Issuer and the Company and the Guarantors, dated the
Closing Date, containing opinions substantially to the effect of the opinions
set forth in Exhibit A attached hereto;

 

(iv)          an opinion of Schreck Brignone, special
Nevada counsel to the Issuer and the Company, dated the Closing Date and
addressed to the Initial Purchaser, containing opinions substantially to the
effect of the opinions set forth in Exhibit B attached hereto;

 

(v)           an opinion of Kantrow, Spaht, Weaver & Blitzer, special Louisiana counsel
to the Guarantors, dated the Closing Date and addressed to the Initial
Purchaser, containing opinions substantially to the effect of the opinions set
forth in Exhibit C attached hereto; and

 

(vi)          an opinion of Mayer, Brown, Rowe &
Maw LLP, special New York counsel to the Initial Purchaser, dated the Closing
Date and addressed to the Initial Purchaser, in form reasonably satisfactory to
the Initial Purchaser covering such matters as are customarily covered in
opinions delivered by counsel to an initial purchaser to such initial
purchaser.

 

(h)           The
Initial Purchaser shall have received from Deloitte & Touche, LLP,
independent auditors, with respect to the Company, (A) a customary comfort
letter, dated the date of the Final Offering Circular, in form and substance
reasonably satisfactory to the Initial Purchaser and its counsel, with respect
to the financial statements and certain financial information contained in the
Final Offering Circular, and (B) a customary comfort letter, dated the
Closing Date, in form and substance reasonably satisfactory to the Initial
Purchaser and its counsel, to the effect that

 

18

 

Deloitte &
Touche, LLP reaffirms the statements made in its letter furnished pursuant to clause
(A).

 

(i)            Each
of the Documents shall have been executed and delivered by all parties thereto,
and if requested, the Initial Purchaser shall have received copies thereof.

 

(j)            The
Initial Purchaser shall have received copies of all opinions, certificates and
other documents required by this Agreement to be delivered to it on or prior to
the Closing Date.

 

(k)           The
terms of each Document shall conform in all material respects to the description
thereof in the Final Offering Circular to the extent described therein.

 

(l)            The
Collateral Agent shall have received (with a copy for the Initial Purchaser) on
the Closing Date:

 

(i)            appropriately completed copies of Uniform
Commercial Code financing statements naming the Issuer, the Company and each
Guarantor as a debtor and the Collateral Agent as the secured party, or other
similar instruments or documents to be filed under the UCC of all jurisdictions
as may be necessary or, in the reasonable opinion of the Collateral Agent and
its counsel, desirable to perfect the security interests of the Collateral
Agent pursuant to the Collateral Agreements;

 

(ii)           appropriately completed copies of Uniform
Commercial Code Form UCC-3 termination statements, if any, necessary
to release all Liens (other than Liens created by the Indenture, Liens created
by the Collateral Agreements and Permitted Liens) of any Person in any
collateral described in any Collateral Agreement previously granted by any
Person;

 

(iii)          Lien search results, dated a date
reasonably near to the Closing Date, listing all effective financing statements
which name the Issuer, the Company or any Guarantor (under its present name and
any previous names) as the debtor, together with copies of such financing
statements (none of which shall cover any Collateral described in any
Collateral Agreement, other than such financing statements that evidence
Permitted Liens);

 

(iv)          a certificate from one or more insurance
companies reasonably satisfactory to the Collateral Agent, evidencing coverage
required to be maintained pursuant to the Documents and naming the Collateral
Agent on behalf of the Holders as mortgagee (in the case of property insurance)
or additional insured (in the case of liability insurance);

 

(v)           such other approvals or documents as the
Collateral Agent may reasonably request in form and substance reasonably
satisfactory to the Collateral Agent; and

 

(vi)          the Collateral Agent and its counsel
shall be satisfied that (i) the Lien granted to the Collateral Agent, for
the benefit of the Secured Parties in the collateral described above is of the
priority described in the Final Offering Circular; and (ii) no Lien exists
on any of the collateral described above other than the Lien created in favor
of the Collateral Agent, for the benefit of the Secured Parties, pursuant to a
Collateral Agreement, in each case subject to the Permitted Liens.

 

(m)          The
Initial Purchaser shall have received evidence satisfactory to it that funds
managed by Jefferies Capital Partners and certain members of management of the
Company shall have made

 

19

 

an equity investment in
the Issuer in the amount of $24.0 million in cash substantially as described in
the Offering Circular (the “Equity Investment”).

 

(n)           The
Acquisition, the Merger, the Equity Investment and the Credit Agreement shall
have been consummated substantially concurrently with the Offering pursuant to
agreements in form and substance reasonably satisfactory to the Initial
Purchaser.

 

8.             Indemnification
and Contribution.

 

(a)           (A) Prior
to the Merger, the Issuer, as to itself, and the Company and each of the
Guarantors, agree, and (B) upon effectiveness of the Merger, the Issuer
and each of the Guarantors, jointly and severally, agrees, to indemnify and
hold harmless the Initial Purchaser, and each person, if any, who controls the
Initial Purchaser within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, against any losses, claims, damages or liabilities of any
kind to which the Initial Purchaser or such controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as any such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon:

 

(i)            any untrue statement or alleged untrue
statement of any material fact contained in any Offering Circular or any
amendment or supplement thereto; or

 

(ii)           the omission or alleged omission to
state, in any Offering Circular or any amendment or supplement thereto, a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;

 

and,
subject to the provisions hereof, will reimburse promptly upon demand, the
Initial Purchaser and each such controlling person for any legal or other
expenses reasonably incurred by the Initial Purchaser or such controlling
person in connection with investigating or defending against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action in respect thereof; provided, however, none of the
Issuer, the Company or any Guarantor shall be liable in any such case to the
extent (but only to the extent) that any such loss, claim, damage or liability
is finally judicially determined by a court of competent jurisdiction in a
final, unappealable judgment, to have resulted primarily from any untrue
statement or alleged untrue statement or omission or alleged omission made in any
Offering Circular or any amendment or supplement thereto in reliance upon and
in conformity with written information concerning the Initial Purchaser
furnished to the Issuer or the Company by the Initial Purchaser specifically
for use therein.  This indemnity
agreement will be in addition to any liability that the Company and the
Guarantors may otherwise have to the indemnified parties.  The Company and the Guarantors shall not be
liable under this Section 8 for any settlement of any claim or
action effected without their prior written consent, which shall not be
unreasonably withheld; and provided  further, however, that
this indemnity, as to the Preliminary Offering Circular or the Final Offering
Circular, shall not inure to the benefit of the Initial Purchaser (or any
person controlling such Initial Purchaser) on account of any loss, claim,
damage or liability arising from the sale of Notes to any person by such
Initial Purchaser if such Initial Purchaser failed to send or give a copy of
the Final Offering Circular (as the same may be supplemented or amended) to
such person at or prior to the written confirmation of the sale of the Notes to
such person, and the untrue statement or alleged untrue statement or omission
or alleged omission of a material fact in such Preliminary Offering Circular
was corrected in the Final Offering Circular, unless such failure resulted from
noncompliance by the Issuer or the Company with Section 5(b).

 

20

 

(b)           The Initial Purchaser agrees to indemnify and
hold harmless each of the Issuer, the Company, each of the Guarantors and their
respective directors, officers and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act against any losses, claims, damages or liabilities of any kind
to which the Company or any such director, officer or controlling person may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) are
finally judicially determined by a court of competent jurisdiction in a final,
unappealable judgment, to have resulted primarily from (i) any untrue
statement or alleged untrue statement of any material fact contained in any
Offering Circular or any amendment or supplement thereto or (ii) the
omission or the alleged omission to state therein a material fact required to
be stated in any Offering Circular or any amendment or supplement thereto or
necessary to make the statements therein not misleading, in each case to the
extent (but only to the extent) that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information concerning such Initial Purchaser,
furnished to the Issuer or the Company or their agents by the Initial Purchaser
specifically for use therein; and, subject to the limitation set forth
immediately preceding this clause, will reimburse promptly upon demand, any legal
or other expenses incurred by the Issuer, the Company, each of the Guarantors
or any such director, officer or controlling person in connection with any such
loss, claim, damage, liability or action in respect thereof.  This indemnity agreement will be in addition
to any liability that the Initial Purchaser may otherwise have to the
indemnified parties.

 

(c)           As
promptly as reasonably practicable after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action for which
such indemnified party is entitled to indemnification under this Section 8,
such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party of the commencement thereof in writing; but the omission to
so notify the indemnifying party (i) will not relieve such indemnifying
party from any liability under paragraph (a) or (b) above
unless and only to the extent it is materially prejudiced as a result thereof
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraphs (a) and (b) above.  In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may determine, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party; provided, however,
that if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest under applicable standards of professional responsibility, (ii) the
defendants in any such action include both the indemnified party and the
indemnifying party, and the indemnified party shall have been advised by
counsel in writing that there may be one or more legal defenses available to it
and/or other indemnified parties that are different from or additional to those
available to the indemnifying party, or (iii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after receipt by the
indemnifying party of notice of the institution of such action, then, in each
such case, the indemnifying party shall not have the right to direct the
defense of such action on behalf of such indemnified party or parties and such
indemnified party or parties shall have the right to select separate counsel to
defend such action on behalf of such indemnified party or parties at the
reasonable expense of the indemnifying party. 
After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 8 for
any legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate
counsel in

 

21

 

accordance with the
proviso to the immediately preceding sentence (it being understood, however,
that in connection with such action the indemnifying party shall not be liable
for the expenses of more than one separate counsel (in addition to local
counsel) in any one action or separate but substantially similar actions in the
same jurisdiction arising out of the same general allegations or circumstances,
designated by the Initial Purchaser in the case of paragraph (a) of
this Section 8 or the Company in the case of paragraph (b) of
this Section 8, representing the indemnified parties under such paragraph
(a) or paragraph (b), as the case may be, who are parties to
such action or actions) or (ii) the indemnifying party has authorized in
writing the employment of counsel for the indemnified party at the expense of
the indemnifying party.  After such
notice from the indemnifying party to such indemnified party, the indemnifying
party will not be liable for the costs and expenses of any settlement of such
action effected by such indemnified party without the prior written consent of
the indemnifying party (which consent shall not be unreasonably withheld),
unless such indemnified party waived in writing its rights under this Section 8,
in which case the indemnified party may effect such a settlement without such
consent.

 

(d)           No
indemnifying party shall be liable under this Section 8 for any
settlement of any claim or action (or threatened claim or action) effected
without its written consent, which shall not be unreasonably withheld, but if a
claim or action settled with its written consent, or if there be a final
judgment for the plaintiff with respect to any such claim or action, each
indemnifying party jointly and severally agrees, subject to the exceptions and
limitations set forth above, to indemnify and hold harmless each indemnified
party from and against any and all losses, claims, damages or liabilities (and
legal and other expenses as set forth above) incurred by reason of such
settlement or judgment.  No indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement or
compromise of any pending or threatened proceeding in respect of which the
indemnified party is or could have been a party, or indemnity could have been
sought hereunder by the indemnified party, unless such settlement (A) includes
an unconditional written release of the indemnified party, in form and
substance satisfactory to the indemnified party, from all liability on claims
that are the subject matter of such proceeding and (B) does not include
any statement as to an admission of fault, culpability or failure to act by or
on behalf of the indemnified party.

 

(e)           In
circumstances in which the indemnity agreement provided for in the preceding
paragraphs of this Section 8 is unavailable to, or insufficient to
hold harmless, an indemnified party in respect of any losses, claims, damages
or liabilities (or actions in respect thereof), each indemnifying party, in
order to provide for just and equitable contributions, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect (i) the relative benefits received
by the indemnifying party or parties, on the one hand, and the indemnified
party, on the other, from the Offering or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, not
only such relative benefits but also the relative fault of the indemnifying
party or parties, on the one hand, and the indemnified party, on the other, in
connection with the statements or omissions or alleged statements or omissions
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof).  The relative benefits
received by the Issuer, the Company and the Guarantors, on the one hand, and
the Initial Purchaser, on the other, shall be deemed to be in the same
proportion as the total proceeds from the Offering (before deducting expenses)
received by the Issuer bear to the total discounts and commissions received by
the Initial Purchaser.  The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuer or the Company, on the one hand, or the Initial
Purchaser, on the other, the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent

 

22

 

such statement or omission
or alleged statement or omissions, and any other equitable considerations
appropriate in the circumstances.

 

(f)            The
Issuer, the Company, the Guarantors and the Initial Purchaser agree that it
would not be equitable if the amount of such contribution determined pursuant
to the immediately preceding paragraph (e) were determined by pro
rata or per capita allocation or by any other method of allocation that does
not take into account the equitable considerations referred to in the first
sentence of the immediately preceding paragraph (e).  Notwithstanding any other provision of this Section 8,
the Initial Purchaser shall not be obligated to make contributions hereunder
that in the aggregate exceed the total discounts, commissions and other
compensation received by such Initial Purchaser under this Agreement, less the
aggregate amount of any damages that such Initial Purchaser has otherwise been
required to pay by reason of the untrue or alleged untrue statements or the
omissions or alleged omissions to state a material fact.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.  For
purposes of the immediately preceding paragraph (e), each person, if
any, who controls the Initial Purchaser within the meaning of Section 15
of the Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Initial Purchaser, and each director of the Issuer, the
Company and the Guarantors, each officer of the Issuer, the Company and the
Guarantors and each person, if any, who controls either of the Company or the
Guarantors within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, shall have the same rights to contribution as the Company
and the Guarantors.

 

9.             Termination.  The Initial Purchaser may terminate this
Agreement at any time prior to the Closing Date by written notice to the Issuer
if any of the following has occurred:

 

(a)           since
the date hereof, any Material Adverse Effect or development involving or
reasonably expected to result in a prospective Material Adverse Effect that
could, in the Initial Purchaser’s reasonable judgment, be expected to (i) make
it impracticable or inadvisable to proceed with the offering or delivery of the
Notes on the terms and in the manner contemplated in the Final Offering
Circular, or (ii) materially impair the investment quality of any of the
Notes;

 

(b)           the
failure of the Issuer, the Company or the Guarantors to satisfy the conditions
contained in Section 7(a) hereof on or prior to the Closing
Date;

 

(c)           any
outbreak or escalation of hostilities or other national or international
calamity or crisis, including acts of terrorism, or material adverse change or
disruption in economic conditions in, or in the financial markets of, the
United States (it being understood that any such change or disruption shall be
relative to such conditions and markets as in effect on the date hereof), if
the effect of such outbreak, escalation, calamity, crisis, act or material
adverse change in the economic conditions in, or in the financial markets of,
the United States could be reasonably expected to make it, in the Initial
Purchaser’s judgment, impracticable or inadvisable to market or proceed with
the offering or delivery of the Notes on the terms and in the manner
contemplated in the Final Offering Circular or to enforce contracts for the
sale of any of the Notes;

 

(d)           the
suspension or limitation of trading generally in securities on the New York
Stock Exchange, the American Stock Exchange or the NASDAQ National Market or
any setting of limitations on prices for securities on any such exchange or
NASDAQ National Market;

 

(e)           on
or after the date hereof, any securities of the Company shall have been
downgraded or placed on any “watch list” for possible downgrading by any “nationally
recognized statistical rating organization,” as such term is defined for
purposes of Rule 436(g)(2) under the Act; or

 

23

 

(f)            the
declaration of a banking moratorium by any Governmental Authority; or the
taking of any action by any Governmental Authority after the date hereof in
respect of its monetary or fiscal affairs that in the Initial Purchaser’s
opinion could reasonably be expected to have a material adverse effect on the
financial markets in the United States.

 

10.          Survival
of Representations and Indemnities.  The representations and warranties,
covenants, indemnities and contribution and expense reimbursement provisions
and other agreements, representations and warranties of the Issuer, the Company
and the Guarantors set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
the Initial Purchaser, (ii) acceptance of the Notes, and payment for them
hereunder, and (iii) any termination of this Agreement.

 

11.          Default
by the Initial Purchaser.  If the
Initial Purchaser shall breach its obligations to purchase the Notes that it
has agreed to purchase hereunder on the Closing Date and arrangements
satisfactory to the Issuer for the purchase of such Notes are not made within
36 hours after such default, this Agreement shall terminate with respect to the
Initial Purchaser without liability on the part of the Issuer.  Nothing herein shall relieve the Initial
Purchaser from liability for its default.

 

12.          Information
Supplied by the Initial Purchaser.  The statements set forth
on the cover page with respect to price, the last full paragraph on page ii,
and in the first sentence of the third paragraph, the fourth sentence of the
fifth paragraph, the sixth paragraph and the seventh paragraph under the
heading “Plan of Distribution” in the Offering Circular (to the extent such
statements relate to the Initial Purchaser) constitute the only information
furnished by the Initial Purchaser to the Company or the Guarantors for the
purposes of Sections 4(a) and 8 hereof.

 

13.          Company
and Guarantor Execution.  On the Closing Date, effective upon
effectiveness of the Merger, (i) the Company and the Guarantors will
become a party to this Agreement by executing and delivering this Agreement to
the Initial Purchaser and (ii) each of the Company and the Guarantors
shall execute and deliver the Registration Rights Agreement and the
Supplemental Indenture.  By executing and
delivering this Agreement, (A) the Company expressly (i) agrees and
acknowledges that by operation of law it has become successor to all of the
obligations of the Issuer, (ii) agrees to assume all of the obligations of
the Issuer and the Company under this Agreement and (iii) agrees to take
any and all actions required to be taken by the Issuer or the Company under
this Agreement, (B) the Company and each of the Guarantors expressly agree
that all representations and warranties made in this Agreement by the Issuer on
behalf of itself, the Company and the Guarantors shall be considered to by made
by, effective as to, and binding upon, the Company and the Guarantors.

 

14.          Miscellaneous.

 

(a)           Notices
given pursuant to any provision of this Agreement shall be addressed as
follows: (i) if to the Company, to: Edgen Corporation, 18444 Highland Road,
Baton Rouge, Louisiana 70809, Attention: David Laxton, Chief Financial Officer,
with a copy to: Dechert LLP, 30 Rockefeller Plaza, New York, New York 10112-2200,
Attention: Bonnie A. Barsamian, Esq., and (ii) if to the Initial
Purchaser, to: Jefferies & Company, Inc., 520 Madison Avenue,
12th Floor, New York, New York 10022, Attention: Lloyd H. Feller, Esq., with a copy to: Mayer, Brown,
Rowe & Maw LLP, 1675 Broadway, New York, New York 10019-5820,
Attention: Ronald S. Brody, Esq., (or in any case to such other address as
the person to be notified may have requested in writing).

 

(b)           This
Agreement has been and is made solely for the benefit of and shall be binding
upon the Issuer, the Company and the Guarantors, the Initial Purchaser and, to
the extent provided in Section 8 hereof, the controlling persons,
officers, directors, partners, employees, representatives

 

24

 

and agents referred to in
Section 8, and their respective heirs, executors, administrators,
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term “successors and assigns” shall not include a purchaser of
any of the Notes from the Initial Purchaser merely because of such purchase.  Notwithstanding the foregoing, it is
expressly understood and agreed that each purchaser who purchases Notes from
the Initial Purchaser is intended to be a beneficiary of the covenants of the
Company and the Guarantors contained in the Registration Rights Agreement to
the same extent as if the Notes were sold and those covenants were made
directly to such purchaser by the Company and the Guarantors, and each such
purchaser shall have the right to take action against the Company and the
Guarantors to enforce, and obtain damages for any breach of, those covenants.

 

(c)           THE
VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET
FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY
THEREIN, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

 

(d)           EACH
OF THE ISSUER, THE COMPANY AND EACH GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY
(I) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN ANY SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY; AND (II) WAIVES (A) ITS RIGHT TO A TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE INITIAL PURCHASER AND FOR ANY
COUNTERCLAIM RELATED TO ANY OF THE FOREGOING AND (B) ANY OBJECTION WHICH
IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

(e)           This
Agreement may be signed in various counterparts, which together shall
constitute one and the same instrument.

 

(f)            The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

 

(g)           If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.

 

(h)           This
Agreement may be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may be given; provided that the same
are in writing and signed by all of the signatories hereto.

 

25

 

(i)            This
Purchase Agreement, including the documents and the instruments referred to
herein and the letter agreement between the Issuer and the Initial Purchaser,
dated the date hereof, constitutes the entire agreement between the parties
relating to its subject matter and supercedes all prior or contemporaneous
negotiations or agreements, whether oral or written, relating to the subject
matter hereof.

 

26

 

Please confirm that the foregoing correctly sets forth the agreement
between the Issuer, the Company, the Guarantors and the Initial Purchaser.

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  ISSUER:

  
	
   

  	
  EDGEN ACQUISITION CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nicholas Davaviras

  	
   

  
	
   

  	
   

  	
  Name: Nicholas Davaviras

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
  EDGEN CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David L. Laxton, III

  	
   

  
	
   

  	
   

  	
  Name: David L. Laxton, III

  
	
   

  	
   

  	
  Title: Senior Vice President, Chief Financial 

  
	
   

  	
   

  	
           Officer and
  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
  EDGEN ALLOY PRODUCTS GROUP, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David L. Laxton, III

  	
   

  
	
   

  	
   

  	
  Name: David L. Laxton, III

  
	
   

  	
   

  	
  Title: Treasurer and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EDGEN CARBON PRODUCTS GROUP, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David L. Laxton, III

  	
   

  
	
   

  	
   

  	
  Name: David L. Laxton, III

  
	
   

  	
   

  	
  Title: Treasurer and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EDGEN LOUISIANA CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David L. Laxton, III

  	
   

  
	
   

  	
   

  	
  Name: David L. Laxton, III

  
	
   

  	
   

  	
  Title: Treasurer and Secretary

  

 

 

	
  Accepted and Agreed to:

  	
   

  
	
  JEFFERIES & COMPANY, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ Rich Goldenberg

  	
   

  	
   

  
	
   

  	
  Name: Rich Goldenberg

  	
   

  
	
   

  	
  Title:   Managing Director

  	
   

  
				

 

 

SCHEDULE I

 

LIST OF SUBSIDIARIES

 

	
  Name

  	
   

  	
  Jurisdiction of Organization

  
	
   

  	
   

  	
   

  
	
  Edgen Alloy Products
  Group, L.L.C.

  	
   

  	
  Louisiana

  
	
   

  	
   

  	
   

  
	
  Edgen Carbon Products
  Group, L.L.C.

  	
   

  	
  Louisiana

  
	
   

  	
   

  	
   

  
	
  Edgen Louisiana
  Corporation

  	
   

  	
  Louisiana

  
	
   

  	
   

  	
   

  
	
  Edgen Canada, Inc.*

  	
   

  	
  Alberta, Canada

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}]]