EXHIBIT 10.2 SECURITY AGREEMENT
(THT INC.)
SECURITY AGREEMENT (as amended, supplemented, restated or modified from
time to time, "this Agreement"), dated as of March 27, 1997 between THT Inc., a
Delaware corporation (the "Debtor"), and Fleet Bank N.A. (the "Bank"). Except as
otherwise defined herein, terms used herein and defined in the Credit Agreement
referred to below, as in effect on the date hereof, shall have the meaning
specified for such terms in the Credit Agreement.
WHEREAS, the Debtor and the Bank are entering into a Credit Agreement of
even date herewith (as amended, supplemented, restated or modified from time to
time, the "Credit Agreement"), pursuant to which the Bank is agreeing to make
certain Loans to the Borrowers (as defined therein) subject to the terms and
conditions of the Credit Agreement;
WHEREAS, the execution and delivery of this Agreement and the grant to the
Bank of the security interests contemplated hereby are conditions precedent to
the obligation of the Bank to make Loans to the Borrowers;
NOW, THEREFORE, in consideration of the premises and to induce the Bank to
execute and deliver the Credit Agreement and to make Loans to the Borrowers
thereunder, the parties hereby agree as follows:
X. Security Interest. As security for the prompt and complete payment
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and performance in full of all the Obligations, the Debtor hereby assigns,
pledges and transfers to the Bank and grants to the Bank a security interest in
and lien on all of the Debtor's right, title and interest in, to and under the
following, in each case, whether now owned or existing or hereafter acquired or
arising, and wherever located (all of which being hereinafter collectively
called the "Collateral"):
(1) all accounts, as such term is defined in Section 9-106 of
the UCC. "UCC" shall mean the Uniform Commercial Code as in effect from time to
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time in the State of New York.
(2) all chattel paper, as such term is defined in Section 9-
105(b) of the UCC;
(3) all books, records, computer software, computer printouts,
customer lists, blueprints, technical specifications, manuals, and similar items
which relate to any Collateral other than such items obtained under license or
franchise agreements which prohibit assignment or disclosure of such items;
(4) all equipment, as such term is defined in Section 9-109(2)
of the UCC, including, without limitation, machinery, manufacturing equipment,
data processing equipment, computers, office equipment, furniture, appliances,
and tools, (collectively, the "Equipment");
(5) all fixtures, as such term is defined in Section 9-313 of
the UCC;
(6) all general intangibles, as such term is defined in Section
9-106 of the UCC, including, without limitation, rights to the payment of money
(other than Receivables), trademarks and service marks (including applications
therefor, except any intent-to-use applications as such
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term is defined in 15 U.S.C. (S) 1060) (collectively, "the Marks"), copyrights,
contracts, licenses, and franchises (except in the case of licenses and
franchises in respect of which the Debtor is the licensee or franchisee if the
agreement in respect of such license or franchise prohibits by its terms any
assignment or grant of a security interest, limited and general partnership
interests and joint venture interests, federal income tax refunds, trade names,
distributions on certificated securities (as defined in Section 8-102(1)(a) of
the UCC and uncertificated securities (as defined in Section 8-102(1)(b) of the
UCC), computer programs and other computer software, inventions, designs, trade
secrets, good will, proprietary rights, customer lists, supplier contracts, sale
orders, correspondence, advertising materials, payments due in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of any
property, reversionary interests in pension and profit sharing plans and
reversionary, beneficial and residual interests in trusts, credits with and any
other claims against any Person, together with any of the collateral for any of
the foregoing and the rights under any security agreement granting a security
interest in such collateral;
(7) all instruments, as such term is defined in Section 9-
105(1)(i) of the UCC;
(8) all insurance policies;
(9) all inventory, as such term is defined in Section 9-109(4)
of the UCC, including without limitation, all goods (whether such goods are in
the possession of the Debtor of a bailee or other Person for sale, lease,
storage, transit, processing, use or otherwise and whether consisting of whole
goods, spare parts, components, supplies, materials or consigned or returned or
repossessed goods) including without limitation, all such goods which are held
for sale or lease or are to be furnished (or which have been furnished) under
any contract of service or which are raw materials or work in progress, or
materials used in or consumed in the Debtor's business (collectively, the
"Inventory");
(10) all money, as such term is defined in Section 1-201(24) of
the UCC;
(11) all Receivables, which shall mean all rights to payment for
goods sold or leased or services rendered, whether or not earned by performance
and all rights in respect of the account debtor, including without limitation,
all such rights in which the Debtor has any right, title or interest by reason
of the purchase thereof by the Debtor, and including without limitation all such
rights constituting or evidenced by any account, chattel, paper, instrument,
general intangible, note, contract, invoice, purchase order, draft, acceptance,
intercompany account, security agreement, or other evidence of indebtedness or
security, together with (a) any collateral assigned, hypothecated or held to
secure any of the foregoing and the rights under any security agreement granting
a security interest in such collateral, (b) all goods, the sale of which gave
rise to any of the foregoing, including, without limitation, all rights in any
returned or repossessed goods and unpaid seller's rights, (c) all guarantees,
endorsements and indemnifications on, or of, any of the foregoing, and (d) all
powers of attorney for the execution of any evidence of indebtedness or security
or other writing in connection therewith (collectively, the "Receivables");
(12) all Receivables records, which shall mean (a) all original
copies of all documents, instruments or other writings evidencing the
Receivables, (b) all books, correspondence, credit or other files, records,
ledger sheets or cards, invoices and other papers relating to Receivables,
including without limitation all tapes, cards, computer tapes, computer disks,
computer runs, recordkeeping systems and other papers and documents relating to
the
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Receivables, whether in the possession or under the control of the Debtor or any
computer bureau or agent from time to time acting for the Debtor or otherwise,
(c) all evidences of the filing of financing statements and the registration of
other instruments in connection therewith and amendments, supplements or other
modifications thereto, notices to other creditors or secured parties, and
certificates, acknowledgements, or other writings including without limitation
lien search reports, from filing or other registration officers, (d) all credit
information, reports and memoranda relating thereto and (e) all other written or
non-written forms of information related in any way to the foregoing or any
Receivable;
(13) all trademarks, service marks, designs, logos, indicia,
trade names, corporate names, company names, business names, fictitious business
names, trade styles, elements of package or trade dress, and other source and
product or service identifiers, used or associated with or appurtenant to the
products, services and businesses of the Debtor, that (a) are set forth on
Schedule D hereto, or (b) have been adopted, acquired, owned, held or used by
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the Debtor or are now owned, held or used by the Debtor, in the Debtor's
business, or with the Debtor's products and services, or in which the Debtor has
any right, title or interest, or (c) are in the future adopted, acquired, owned,
held and used by the Debtor in the Debtor's business or with the Debtor's
products and services, or in which the Debtor in the future acquires any right,
title or interest.
(14) all patents and patent applications, whether United States
or foreign, that are owned by the Debtor or in which the Debtor has any right,
title or interest, now or in the future, including but not limited to: (a) the
patent and patent applications listed on Schedule F hereto; (b) all letters
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patent of the United States or any other country, and all applications for
letters patent of the United States or any other country; (c) all re-issues,
continuations, divisions, continuations-in-part, renewals or extensions thereof;
(d) the inventions disclosed or claimed therein, including the right to make,
use, practice and/or sell (or license or otherwise or transfer or dispose of)
the inventions disclosed or claimed therein; and (e) the right (but not the
obligation) to make and prosecute applications for such patents (collectively,
the "Patents").
(15) all other tangible or intangible personal property;
(16) all accessions as such term is defined in Section 9-314 of
the UCC and additions to any or all of the foregoing, all substitutions and
replacements for any or all of the foregoing; and
(17) proceeds or products of any or all of the foregoing.
XI. Obligations Secured. The security interest granted hereby shall
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secure all obligations of the Borrowers, whether now existing or hereafter
arising, under the Credit Agreement, the Notes issued thereunder, and all other
Loan Documents (the "Obligations").
XII. Representations and Warranties. The Debtor hereby makes the
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following representations and warranties which shall be deemed to be repeated
and confirmed upon the creation or acquisition by the Debtor of each item of
Collateral and upon the creation of any Obligation:
(a) except for the security interest of the Bank therein and except for
Permitted Liens, the Debtor is, and as to Collateral acquired from time to time
after the date hereof the Debtor will
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be, the owner of all the Collateral, free from any lien, security interest,
encumbrance or other right, title or interest of any person or entity;
(b) appropriate financing statements with respect to the security interest
created hereunder in the Collateral have been duly executed and delivered by the
Debtor to the Bank and will be filed in all appropriate offices; no filing of
any other financing statements or other instruments and no recording, filing or
indexing of this Agreement is necessary or appropriate in order to preserve,
protect and perfect the liens and security interests created by this Agreement
in the Collateral as legal, valid and enforceable perfected liens and security
interests in the Collateral superior and prior to the rights of all other
Persons therein.
(c) there is no financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) now on file or registered in any
public office covering any interest of the Debtor in the Collateral, or intended
so to be, other than those listed in Schedule B hereto, and so long as the
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Debtor may borrow from the Bank or any of the Obligations remain unpaid the
Debtor will not execute and there will not be on file in any public office any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) relating to the Collateral, except (i) financing
statements filed or to be filed in respect of the security interests in the
Collateral granted hereunder to the Bank and (ii) financing statements filed in
respect of Permitted Liens;
(d) the chief executive office and principal place of business of the
Debtor is located at the address set forth next to its signature below. The
originals of all documents (as well as all duplicates thereof) evidencing all
Receivables and the only original books of account and records of the Debtor
relating thereto are kept at said chief executive office or at the location set
forth for the Debtor in Schedule C hereto. All Inventory consisting of finished
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goods and all Equipment of the Debtor, if any, is held on the date hereof at the
locations specified for the Debtor in Schedule A hereof; and
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XII. Covenants of the Debtor. (a) At all reasonable times the Bank
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shall have full access to, and the right to audit, check, inspect and make
abstracts and copies of, the Debtor's books, records, audits, correspondence and
all other papers and computer files, disks and tapes and programs relating to
the Collateral. The Bank shall have the right to confirm and verify the
Receivables and other Collateral and to do whatever the Bank may deem reasonably
necessary in its reasonable discretion to protect the interests of the Bank. The
Bank or its agent may enter from time to time the premises of the Debtor at any
reasonable time during normal business hours for the purpose of inspecting the
Collateral and any and all records pertaining thereto.
(b) The Debtor will keep the Equipment, at its cost and expense, in good
operating repair and condition, and will not misuse, abuse or waste the
Equipment or allow the Equipment to deteriorate (or permit any of the
foregoing), except for normal wear and tear in the ordinary course of business,
and will make the Equipment available for inspection by the Bank at all
reasonable times during normal business hours.
(c) The Debtor will not create, permit or suffer to exist, and the Debtor
will defend the Collateral against and take such other action as is reasonably
necessary to remove, any lien, security interest or encumbrance on the
Collateral other than Permitted Liens and will defend the right, title and
interest of the Bank in and to any of the Debtor's rights to the Collateral
against
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the claims and demands of all persons whomsoever claiming an interest therein
adverse to the Bank.
(d) The Debtor will not change the location specified on Schedules A and C
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hereof of its chief executive office, principal place of business or the office
where records concerning the Receivables are kept and the Debtor will not keep
Equipment or Inventory (other than any such Inventory in transit) at any
location other than the locations specified in Schedule A hereto until, in each
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case, (i) the Debtor shall have given to the Bank not less than 30 days' prior
written notice of its intention so to do, clearly describing such new location
and providing such other information in connection therewith as the Bank may
reasonably request, and (ii) with respect to such new location, the Debtor shall
have taken such action, reasonably satisfactory to the Bank (including, without
limitation, the delivery of additional financing statements duly signed by the
Debtor), to maintain the security interest of the Bank in the Collateral at all
times senior and fully perfected and in full force and effect. With respect to
Inventory, action reasonably satisfactory to the Bank shall mean prior to
implementing such proposal such Debtor furnishes to the Bank all UCC financing
statements and other documents specified by the Bank as reasonably necessary to
continue the Lien of the Bank on the Inventory as a first and perfected senior
Lien. The Debtor Borrower shall not in any event keep Inventory (other than any
such Inventory in transit) at any location other than the locations specified in
Schedule A if to do so would cause the Bank's Lien on such Inventory to cease
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being a first and perfected senior Lien.
(e) The Debtor will furnish to the Bank within ten (10) days of any
request therefor by the Bank, statements (in form, substance and detail
reasonably satisfactory to the Bank) of all Receivables of the Debtor (including
any aging thereof), itemized by account debtor, and of the location (and
aggregate book value at each such location) of all Inventory and Equipment of
the Debtor, each such statement to be certified by its chief financial officer,
and, promptly from time to time, such other information as the Bank may
reasonably request regarding the Collateral and the Debtor's operations,
business, affairs and financial condition.
(f) The Debtor will, at its own expense, make, execute, endorse,
acknowledge, file or deliver to the Bank from time to time such lists,
descriptions, schedules, invoices, warehouse receipts, bills of confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers
of attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted as the Bank deems reasonably
appropriate or advisable to perfect, preserve or protect its security interest
in the Collateral.
XIV. Special Provisions Concerning Receivables. (a) As of the time when
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each Receivable of the Debtor arises, the Debtor shall be deemed to have
warranted as to each such Receivable that such Receivable and all papers and
documents relating thereto are genuine and in all respects what they purport to
be, and that each such Receivable (i) will, to its knowledge, represent the
legal, valid and binding obligation of the account debtor thereon for the unpaid
amount owed by such account debtor for the sale and delivery by the Debtor of
the goods, or the performance by the Debtor of the services, listed therein,
(ii) will be the only original writings evidencing and embodying such obligation
of the account debtor named therein, (iii) will evidence obligations arising in
the ordinary course of the Debtor's business in one or more arm's-length
transactions, not subject to any stamp or other taxes, except as shall be
disclosed to the Bank, and (iv) will be, to the best knowledge of the Debtor, in
compliance and will conform with all applicable federal, state and local laws.
The Debtor shall use its best efforts to take all steps
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necessary to preserve the liability of each account debtor, guarantor, endorser,
obligor or secondary party on or with respect to the Receivables of the Debtor.
(b) The Debtor will keep and maintain, at the Debtor's own cost and
expense, satisfactory and complete records of the Receivables of the Debtor,
including, without limitation, records of all payments received, all credits
granted thereon, all merchandise returned and all other dealings therewith, and
the Debtor will make copies of the same available to the Bank, at the Debtor's
own cost and expense, at any and all reasonable times upon demand of the Bank.
At the request of the Bank (which request, if made before the occurrence of an
Event of Default, shall state that, in the opinion of the Bank (or the Bank's
legal counsel), the legend specified below is necessary to perfect or protect
the first priority of the security interests of the Bank in the Receivables),
the Debtor shall legend, in form and manner reasonably satisfactory to the Bank,
the Receivables of the Debtor and other books, records and documents of the
Debtor evidencing or pertaining to accounts receivable with an appropriate
reference to the fact that the Receivables of the Debtor have been assigned to
the Bank and that the Bank has a security interest therein.
(c) The Debtor will not rescind or cancel any indebtedness evidenced by
any Receivable or modify any material term thereof, or extend or renew the same,
or compromise or settle any dispute, claim, suit or legal proceeding relating
thereto, or sell any Receivable or interest therein, without the prior written
consent of the Bank, except as permitted by Paragraph 5(e) hereof.
(d) The Debtor will duly fulfill all obligations on its part to be
fulfilled under or in connection with the Receivables and will use due diligence
to preserve the rights of the Bank in the Receivables and will not knowingly do
anything to impair the rights of the Bank in the Receivables.
(e) The Debtor will use reasonable efforts to collect or cause to be
collected from the account debtor on each Receivable of the Debtor, as and when
due (including, without limitation, Receivables which are delinquent, such
Receivables to be collected in accordance with generally accepted lawful
collection procedures) any and all amounts owing under or on account of such
Receivable, except that prior to the occurrence of an Event of Default, the
Debtor may allow in the ordinary course of business as adjustments to amounts
owing under the Receivables of the Debtor (i) an extension or renewal of the
time or times of payment, or settlement for less than the total unpaid balance,
which the Debtor finds necessary in accordance with sound business and credit
judgment, and (ii) a refund or credit due as a result of returned or damaged
Inventory or improper or faulty performance of services. The costs and expenses
(including attorneys' fees) of collection, whether incurred by the Debtor or the
Bank, shall be borne by the Debtor.
(f) The Debtor shall, promptly upon learning thereof, report to the Bank
all delays in performance, notices of default, claims made or disputes asserted
by any account debtor or other obligor on any Receivable of the Debtor or
instrument on which there is owing more than $25,000 and any other matters
materially affecting the value, enforceability or collectibility of any such
Receivable.
(g) After the occurrence and during the continuance of any Event of
Default, the Bank is authorized and empowered in its sole discretion to accept
the return of the goods, if any, represented by any Receivable of the Debtor or
contract rights, without notice to or consent by
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the Debtor, all without discharging or in any way affecting the Debtor's
liability hereunder or on the Obligations.
(h) After the occurrence and during the continuance of any Event of
Default, the Bank shall have the right, without notice to (unless specifically
provided for herein), or assent by, the Debtor, but without affecting the
Obligations, in the name of the Debtor or in the name of the Bank or otherwise:
(i) to notify any or all account debtors under any or all of the Receivables to
make payment thereof directly to the Bank for the account of the Debtor or the
Bank and to require the Debtor to forthwith give similar notice to the account
debtors; (ii) to demand, collect, ▇▇▇ for, receive, compound and give
acquittance for the Receivables or any part thereof; (iii) to extend the time of
payment of, compromise or settle for cash, credit or otherwise, and upon any
terms and conditions, any of the Receivables; (iv) to endorse the name of the
Debtor on any checks, drafts or other orders or instruments for the payment of
moneys payable to the Debtor which shall be issued in respect of any Receivable;
(v) to file any claims and commence, maintain or discontinue any actions, suits
or other proceedings deemed by the Bank in its reasonable discretion to be
necessary or advisable for the purpose of collecting or enforcing payment of any
Receivable; (vi) to execute any instrument and do any and all other things
necessary and proper to protect and preserve and realize upon the Receivables
and the other rights contemplated hereby; (vii) to require the Debtor to
forthwith account for and transmit to the Bank in the same form as received all
proceeds (other than physical property) of collection of Receivables received by
the Debtor and, until so transmitted, to hold the same in trust for the Bank and
not commingle such proceeds with any other funds of the Debtor; (viii) to
require the Debtor to deliver, at the Debtor's expense, any or all papers,
documents, correspondence, records and computer programs and tapes and other
electronic data processing software evidencing or relating to the Receivables to
the Bank at a place designated by the Bank (and after delivery thereof the
Debtor shall have no further claim to or interest in such Receivables); (ix) to
notify the post office authorities to change the address for delivery of mail
addressed to the Debtor to such address as the Bank may designate; and (x) to do
all other acts and things reasonably necessary to carry out this Agreement. The
Bank shall not be obligated to do any of the acts hereinabove authorized, but in
the event that the Bank elects to do any such act, the Bank shall not be
responsible to the Debtor except for its gross negligence or willful misconduct.
(i) If any Receivable of the Debtor becomes evidenced by a promissory note
or similar instrument in the sum of more than $25,000, the Debtor will notify
the Bank thereof, and upon request by the Bank will promptly deliver such
instrument to the Bank appropriately endorsed to the order of the Bank as
further security for the payment in full of the Obligations.
XV. Special Provisions Concerning Inventory and Equipment. (a) The
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Debtor will at all times keep all of its Inventory and Equipment, if any,
insured at the expense of the Debtor, to the Bank's satisfaction, against fire,
theft, and all other risks to which such Inventory and Equipment may be subject;
all policies or certificates with respect to such insurance shall be endorsed to
the Bank's reasonable satisfaction for the benefit of the Bank to the extent of
its interest therein (including, without limitation, by naming the Bank as loss
payee), provided that the Debtor may be the loss payee for all payments under
said insurance with respect to any casualty involving a loss of less than
$50,000, and evidence of such insurance satisfactory to the Bank shall be
deposited with the Bank. If the Debtor shall fail to insure its Inventory and
Equipment to the Bank's reasonable satisfaction, or if the Debtor shall fail to
so endorse and deposit all policies or certificates with respect thereto in
accordance herewith, the Bank shall have the right (but shall be under no
obligation) to procure such insurance and the Debtor agrees to
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reimburse the Bank for all costs and expenses of procuring such insurance. The
Bank may apply any proceeds of such insurance with respect to the Inventory and
Equipment, when received by it, toward the payment of any of the Obligations
owing by the Debtor, whether or not the same shall then be due; provided,
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however, that so long as no Event of Default or material Default shall have
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occurred and be continuing when the Bank receives such proceeds, the Bank shall
forward any such proceeds received by it to the Debtor, at the Debtor's request,
for application to the cost of repairing or replacing the items of Inventory or
Equipment in respect of which such proceeds were paid. The Debtor shall give
immediate written notice to the insurers (and in the case of a loss or damage
involving more than $25,000, to the Bank) of any loss or damage to the
Collateral or any part thereof and shall promptly file all necessary or
appropriate proofs of loss with the insurers. The Debtor hereby appoints the
Bank the attorney-in-fact for the Debtor in obtaining, adjusting and cancelling
any such insurance and endorsing settlement drafts.
(b) The Debtor will prevent, by all reasonable action or actions as may be
necessary, any of the Equipment (other than Equipment located on property owned
by the Debtor and subject to a mortgage in favor of the Bank) from becoming
fixtures under the laws of the jurisdiction where such Equipment is located.
The Debtor will, if requested by the Bank, use reasonable efforts to obtain
waivers or subordinations of liens, in form satisfactory to the Bank, from each
lessor, each sublessor and each mortgagee of each lessor and sublessor whose
mortgage was executed prior to the lease from such lessor or sublessor, of real
property on which any of the Equipment is or may be located, and will perform
all other acts the Bank may request to maintain the Equipment apart from any
realty.
(c) The Bank shall have the right upon the occurrence of an Event of
Default which shall be continuing, without notice to (unless specifically
provided for herein), or assent by, the Debtor but without affecting the
Obligations, in the name of the Debtor or in the name of the Bank or otherwise:
(i) upon notice to such effect, to require the Debtor to deliver, at the
Debtor's expense, any or all of the Inventory and Equipment to the Bank at a
place designated by the Bank (and after delivery thereof the Debtor shall have
no further claim to or interest in such Inventory and Equipment); (ii) to take
possession of any or all of the Inventory and Equipment of the Debtor and, for
that purpose, to enter, with the aid and assistance of any Person, any premises
where the Inventory or Equipment, or any part thereof, is, or may be, placed or
assembled, and to remove any of such Inventory and Equipment, to render the
Equipment unusable or to dispose of or store the Inventory and Equipment in such
premises at the cost and expense of the Debtor; and (iii) to execute any
instrument and do all the things necessary and proper to protect and preserve
and realize upon the Inventory and Equipment and the other rights contemplated
hereby. The Bank shall not be obligated to do any of the acts hereinabove
authorized, but in the event that the Bank elects to do any such act, the Bank
shall not be responsible to the Debtor except for the Bank's gross negligence or
willful misconduct. It is hereby understood that the Debtor's obligation so to
deliver the Collateral or any portion thereof is of the essence of this
Agreement and that, accordingly, upon the application to a court of equity
having jurisdiction, the Bank shall be entitled to a decree requiring specific
performance by the Debtor of said obligation.
(d) Upon taking possession of any Equipment or Inventory pursuant hereto
following the occurrence of an Event of Default, the Bank shall have the right
to hold, store or use, operate, manage and control such Equipment and Inventory.
Upon any such taking of possession by the Bank of any Equipment or Inventory,
the Bank may, from time to time at the expense of the Debtor, make all such
repairs, replacements, alterations, additions and improvements to any of such
Equipment and Inventory as the Bank may deem reasonably proper. In any such
case, the
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Bank shall have the right to manage and control such Inventory and Equipment and
to carry on the business and exercise all rights and powers of the Debtor
respecting the Inventory and Equipment, all as the Bank shall deem best; and the
Bank shall be entitled to collect and receive all rents, issues, profits, fees,
revenues and other income of the same and every part thereof. Such rents,
issues, profits, fees, revenues and other income shall be applied to pay the
expenses incurred in (i) holding and operating such Equipment and Inventory;
(ii) performing all maintenance, repairs, replacements, alterations, additions
and improvements which the Bank may be required or elect to make, if any; and
(iii) paying all taxes, assessments, insurance and other charges upon such
Equipment and Inventory or any part thereof, and all other payments, which the
Bank may be required or authorized or elect to make (including reasonable fees
and disbursements of the Bank's counsel). Any remaining rents, issues, profits,
fees, revenues and other income shall be applied to the payment of the
Obligations in accordance with Paragraph 11 hereof.
(e) Notwithstanding any other provision of this Agreement to the contrary,
prior to the occurrence of an Event of Default, the Debtor may, in the ordinary
course of business, dispose of any item of Equipment or Inventory which is
subject to the security interest granted by the Debtor to the Bank under this
Agreement, free of such security interest, without any further act of the Bank.
XVI. Financing Statements; Documentary Stamp Taxes. (a) The Debtor
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agrees to sign and deliver to the Bank such financing statements, in form
reasonably acceptable to the Bank, as the Bank may from time to time request as
are necessary in the reasonable opinion of the Bank to establish and maintain a
valid, enforceable and perfected security interest in the Collateral and the
other rights and security contemplated hereby which is superior and prior to the
rights of all third persons. The Debtor will pay any applicable filing fees and
related expenses. The Debtor authorizes the Bank to file any such financing
statements without the signature of the Debtor.
(b) The Debtor agrees to procure, pay for, affix to any and all documents
and cancel any documentary tax stamps or similar taxes required by, and in
accordance with, applicable law and the Debtor will indemnify and hold the Bank
harmless against any liability (including interest and penalties) in respect of
such taxes.
XVII. Additional Provisions Concerning the Marks. (a) Debtor represents
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and warrants that it is the true and lawful owner of the Marks listed in
Schedule D attached hereto and that said Marks constitute all the Marks that
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Debtor now owns. Debtor further represents and warrants that it is a licensee
under the Marks listed in such Schedule D and that said Marks constitute all the
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Marks under which Debtor is licensed.
(b) Absent prior written consent of the Bank, Debtor shall not divest
itself of any right in or affecting a ▇▇▇▇, whether or not such right is
presently held by Debtor.
(c) Promptly upon learning thereof, Debtor shall notify the Bank in
writing of all pertinent details available to it, with respect to any material
infringement or other material violation of Debtor's right in any ▇▇▇▇, whether
or not such right is presently held by Debtor. As to each such instance, absent
the Bank's authorization to proceed otherwise, Debtor shall diligently and to
the extent permitted by law pursue a remedy. Promptly upon learning thereof,
Debtor shall notify the Bank of all pertinent details available to it regarding
any claim that Debtor's use of any ▇▇▇▇ violates the property right of another.
-52-
(d) As to all Marks as to which Debtor has or shall have title, and at its
own expense, Debtor shall comply with all requirements for maintaining
registration, including but not limited to the filing of affidavits and seeking
of renewals. Without prior written consent of the Bank, Debtor shall not
abandon any such filing of an affidavit of use or any such application of
renewal, prior to exhaustion of all administrative and judicial remedies. Six
months prior to due dates for affidavits of use, or applications for renewal of
registrations, Debtor shall notify the Bank that such affidavits or applications
are being processed.
(e) If Debtor hereafter becomes the owner of any ▇▇▇▇, then within 30 days
of becoming the owner of such ▇▇▇▇, or as soon thereafter as reasonable, Debtor
shall deliver to the Bank a certificate of registration or copy of the
application, and a grant of security in such ▇▇▇▇ in favor of the Bank,
confirming the grant thereof hereunder. If Debtor hereafter secures a license
under any ▇▇▇▇, then within 30 days of execution of the license agreement,
Debtor shall deliver to the Bank a copy of the certificate of registration or of
the application, and a grant of security in Debtor's rights under such
agreement, confirming the grant thereof hereunder. The form of any confirmatory
grants shall be in a form satisfactory to the Bank.
(f) If an Event of Default shall occur and be continuing, the Bank may by
written notice to Debtor take any or all of the following actions: (a) declare
Debtor's entire right, title, and interest in any Marks under which Debtor has
an interest to be vested, in which event such right, title, and interest shall
immediately vest in the Bank, and Debtor shall execute an assignment, in form
and substance satisfactory to the Bank, of all its rights, title, and interest
under such Marks to the Bank; (b) take and use or sell Debtor's rights in said
Marks, along with the goodwill, assets secured under this agreement, and all
other elements of Debtor's ongoing business symbolized by the Marks and secured
under this Assignment, and the right to carry on the business of the Debtor in
connection with which these Marks have been used; and (c) direct Debtor to
refrain, in which event Debtor shall refrain, from using the Marks in any
manner, directly or indirectly, and if requested by the Bank, Debtor shall
change its corporate name to eliminate therefrom any use of any ▇▇▇▇, and
execute any other and further documents which the Bank may request further to
confirm the foregoing and to transfer to the Bank ownership of Debtor's rights
to such Marks.
XVIII. Additional Provisions Concerning Patents. (a) Debtor represents and
----------------------------------------
warrants that it is the true and lawful, exclusive owner of the Patents listed
on Exhibit F attached hereto, and that said Patents constitute all Patents which
Debtor now owns.
(b) Absent prior written consent of the Bank, Debtor shall not divest
itself of any rights under any Patents material to its business, whether or not
Debtor currently holds such rights.
(c) Promptly upon learning thereof, Debtor shall notify the Bank in
writing of all pertinent information available to it regarding any infringement
or other violation of any of Debtor's rights under any Patent material to the
business of the Debtor, whether or not Debtor currently has such rights. Absent
the Bank's authorization to do otherwise, and to the extent permitted by law,
Debtor shall diligently pursue a remedy. Promptly upon learning thereof, Debtor
shall notify the Bank in writing of any claim that any activity of Debtor
infringes or otherwise violates the right of any third party with respect to the
Patent.
-53-
(d) At its own expense, Debtor shall cause to be timely paid all post-
issuance fees required in order to maintain in force rights under the Patents
material to the business of Debtor, pursuant to 35 U.S.C. (S) 6.
(e) If Debtor hereafter acquires rights in any Patent not shown in Exhibit
F, Debtor shall deliver to the Bank within 30 days, a copy of the Patent, and a
grant of security on such Patent in favor of the Bank confirming the grant
thereof hereunder, the form of such confirmatory grant to be substantially in
the form in Schedule F hereto.
----------
(f) If an Event of Default shall occur and be continuing, the Bank by
written notice to Debtor may take any or all of the following actions: (a)
declare the entire right, title, and interest of Debtor in each of the Patents
vested, in which event such right, title, and interest shall immediately vest in
the Bank, in which case Debtor agrees to execute an assignment, in form and
substance satisfactory to the Bank, of all its rights, title, and interest in
and to such Patent rights to the Bank; (b) take and practice or sell the Patent
rights; and (c) directly or indirectly, will execute such other and further
documents as the Bank may request further to confirm the foregoing and to
transfer ownership of the Patent rights.
XIX Additional Provisions Concerning Remedies and Sale of Collateral.
----------------------------------------------------------------
(a) In addition to any rights and remedies contained herein or now or hereafter
granted under applicable law and not by way of limitation of any such rights and
remedies, upon the occurrence of an Event of Default which shall be continuing,
the Bank shall have all of the rights and remedies of a secured party under the
UCC. The Bank may take legal proceedings for the appointment of a receiver or
receivers (to which the Bank shall be entitled as a matter of right) to take
possession of the Collateral pending the sale thereof pursuant either to the
powers of sale granted by this Agreement or to a judgment, order or decree made
in any judicial proceeding for the foreclosure or involving the enforcement of
this Agreement.
(b) Upon the occurrence of any Event of Default which shall be continuing,
the Bank shall have the right to seize and take possession of any Collateral
(and any paper, documents, correspondence, computer files, disks, tapes and
programs and other electronic data processing software relating to the
Collateral), and may enter the premises where they, or any of them, are located
for the purpose of effecting such seizure. The Bank shall not be liable to the
Debtor for any damage suffered by the Debtor by reason thereof and the Debtor
shall indemnify the Bank for any liability which may accrue to any person by
reason of such entry or seizure, except for liability arising out of the gross
negligence or willful misconduct of the Bank. At any time or from time to time
after the occurrence of an Event of Default which shall be continuing the Bank
may hire and maintain on any of the premises of the Debtor a custodian or
independent contractor selected by the Bank who shall have full authority to do
all lawful acts necessary to protect the interests of the Bank and to report to
the Bank thereon. The Debtor hereby agrees to cooperate with any such person
and to do whatever the Bank may reasonably request to preserve the Collateral of
the Debtor. All expenses incurred by the Bank by reason of the employment of
any such persons shall be a part of the Obligations.
(c) Upon the occurrence of an Event of Default which shall be continuing
the Bank may, without obligation to resort to other security, at any time and
from time to time, sell, re-sell, assign and deliver all or any of the
Collateral, in one or more parcels at the same or different times, and all
right, title and interest, claim and demand therein and right of redemption
thereof, at public or private sale, for cash, upon credit or for future
delivery, and at such price or prices
-54-
and on such terms as the Bank may determine, with the amounts realized from any
such sale to be applied in the manner provided in Section 9 hereof. The Debtor
hereby agrees that all of the foregoing may be effected without demand,
advertisement or notice (except as required by law or as expressly provided
herein), all of which (to the extent permitted by law) are hereby expressly
waived. Upon any sale of any of the Collateral, whether made under the power of
sale hereby given or under judgment, order or decree in any judicial proceeding
for the foreclosure involving the enforcement of this Agreement, (i) the Bank
may bid for the property being sold, and upon compliance with the terms of sale
may hold, retain and possess and dispose of such property in its own absolute
right without further accountability, and may, in paying the purchase money
therefor, discharge a portion of the Obligations owing to the Bank in an amount
equal to such purchase price in lieu of cash in payment of the amount which
shall be payable thereon; (ii) the Bank may make and deliver to the purchaser or
purchasers a good and sufficient deed, ▇▇▇▇ of sale and instrument of assignment
and transfer of the property sold; (iii) the Bank is hereby irrevocably
appointed the true and lawful attorney-in-fact of the Debtor in its name and
stead, to make all necessary deeds, bills of sale and instruments of assignment
and transfer of the property thus sold and for such other purposes as are
necessary or desirable to effectuate the provisions of this Agreement, and for
that purpose the Bank may execute and deliver all necessary deeds, bills of sale
and instruments of assignment and transfer, and may substitute one or more
Persons with like power, the Debtor hereby ratifying and confirming all that its
said attorney, or such substitute or substitutes, shall lawfully do by virtue
hereof; but if so requested by the Bank or by any purchaser, the Debtor shall
ratify and confirm any such sale or transfer by executing and delivering to the
Bank or such purchaser all deeds, bills of sale, instruments of assignment and
transfer and releases as may be designated in any such request; (iv) all right,
title, interest, claim and demand whatsoever, either at law or in equity or
otherwise, of the Debtor of, in and to the property so sold shall be divested
and such sale shall be a perpetual bar both at law and in equity against the
Debtor, its successors and assigns, and against any and all Persons claiming or
who may claim the property sold or any part thereof from, through or under the
Debtor, its successors or assigns; (v) the receipt of the Bank or of the officer
thereof making such sale shall be a sufficient discharge to the purchaser or
purchasers at such sale for his or their purchase money, and such purchaser or
purchasers, and his, its or their assigns or personal representatives, shall
not, after paying such purchase money and receiving such receipt of the Bank or
of such officers thereof, be obligated to see to the application of such
purchase money or be in anywise answerable for any loss, misapplication or non-
application, thereof.
(d) To the extent that it may lawfully do so, the Debtor agrees that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any appraisement, valuation, stay, extension
or redemption laws, or any law permitting it to direct the order in which the
Collateral or any part thereof shall be sold, now or at any time hereafter in
force, which may delay, prevent or otherwise affect the performance or
enforcement of this Agreement or the Obligations, and the Debtor hereby
expressly waives all benefit or advantage of any such laws and covenants that it
will not hinder, delay or impede the execution of any power granted or delegated
to the Bank in this Agreement, but will suffer and permit the execution of every
such power as though no such laws were in force. In the event of any sale of
Collateral pursuant to this Agreement by the Bank, the Bank shall, at least ten
(10) days before such sale, give the Debtor written, telegraphic or telex notice
of its intention to sell, except that, if the Bank shall determine in its sole
discretion that any of the Collateral is perishable or threatens to decline
speedily in value, any such sale may be made upon one (1) day's written,
telegraphic, telecopy or telex notice to the Debtor.
-55-
(e) The Debtor agrees that at any time during the occurrence of any Event
of Default, which shall be continuing, thereof, any of the moneys, deposit
balances and other property of the Debtor held by, or coming into the possession
of, the Bank may be applied (including, without limitation, by way of set-off)
by the Bank to the reduction of the Obligations to the Bank.
XX. Application of Moneys; Reassignment of Collateral. Except as
-------------------------------------------------
otherwise provided herein, all moneys which the Bank shall receive pursuant to
this Agreement or with respect to the Collateral shall be applied in the
following manner: first, to the payment of all costs and expenses incurred in
-----
connection with the administration and enforcement of, or the preservation of
any rights under, this Agreement and the realization on such Collateral
(including, without limitation, the fees and disbursements of the Bank's counsel
and agents); and, second, to the payment of all other Obligations in such order
------
and manner as the Bank shall determine. The balance, if any, of such moneys
shall be paid over to the Debtor or as otherwise required by law or as directed
by a court of competent jurisdiction. Upon the payment in full of the
Obligations and the termination of the Bank's obligation to make Loans under the
Credit Agreement, all Collateral of the Debtor not sold or otherwise disposed of
pursuant hereto shall, at the request of the Debtor and at the sole cost and
expense of the Debtor, be reassigned by the Bank to the Debtor (or as otherwise
directed by a court of competent jurisdiction) without recourse and without any
representations, warranties or agreements of any kind (other than a
representation that the Bank has not assigned or transferred the Collateral so
reassigned or its security interests therein, except as contemplated hereby or
by the Credit Agreement). The Debtor shall remain liable to the Bank for any
deficiency remaining on the Obligations owing to the Bank after the aforesaid
application of such moneys to the Obligations.
XXI. Exercise of Rights. The Bank shall have the right in its sole
------------------
discretion to determine which rights, security, liens, guarantees, security
interests or remedies it shall retain, pursue, release, subordinate, modify or
take any other action with respect thereto, without in any way modifying or
affecting any of the other of them or any of the Bank's rights hereunder.
XXII. Waivers, Amendments, Required Notices. The Debtor hereby waives
-------------------------------------
notice of acceptance of this Agreement, notice of nonpayment of any Obligations
or of any Receivables or of any instrument relating thereto, demand,
presentment, protest and notice thereof with respect to any and all instruments,
notice of Collateral received or delivered, or any other action taken in
reliance hereon and all other demands and notices of any description, except
such as are expressly provided for herein or which by applicable law may not be
waived on the date hereof. No failure on the part of the Bank to exercise, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof or as a waiver of any Event of Default, nor shall any single or
partial exercise by the Bank of any right, power or remedy hereunder or with
respect to the Obligations preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. No amendment or modification of
this Agreement nor any waiver of any provision of this Agreement or consent to
any departure by the Debtor therefrom shall in any event be effective unless the
same shall be in writing and signed by the Bank, and then any such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on the Debtor in any case shall, of itself,
entitle the Debtor to any other or further notice or demand in similar or other
circumstances. If notice, whether before or after any default by the Debtor
hereunder has occurred, is required by law or by the provisions of this
Agreement to be given by the Bank to the Debtor, the Debtor agrees that five (5)
Business Days' notice given in the manner provided below shall be reasonable
notice.
-56-
XXIII. Cumulative Remedies. This Agreement and the liens and security
------------------
interests of the Debtor granted hereunder are in addition to and not in
substitution for any security interests and collateral now or hereafter held by
or on behalf of the Bank to secure the Obligations of the Borrowers and shall
not affect the rights, remedies or powers of the Bank in respect of any
Obligation held by the Bank. The remedies herein provided are cumulative and
are not exclusive of any remedy provided by law.
XXIV. Notices. (a) Any notice, demand or communication hereunder shall
-------
be given in writing (including facsimile transmission or telex) and mailed or
delivered to each party at its address set forth in the Credit Agreement, or, as
to each party, at such other address as shall be designated by such party by a
prior notice to the other parties in accordance with the terms of this Section
15. (b) All notices hereunder shall be effective (i) five (5) Business Days
after such notice is mailed, by registered or certified mail, postage prepaid
(return receipt requested), (ii) upon delivery by hand, and (iii) in the case of
any notice or communication by telex, facsimile transmission or cable, on the
date when sent, and answerback or confirmation, as the case may be, is received.
XXV. Costs and Expenses. (a) The Debtor hereby agrees to pay on demand
------------------
all reasonable out-of-pocket costs and expenses (including without limitation
the reasonable fees and disbursements of counsel for the Bank) incurred by the
Bank in connection with (i) the preparation and administration of this
Agreement, (ii) the enforcement of this Agreement and the security interests
granted hereunder, (iii) any filings or recordings with respect to the security
interests granted hereunder (including all filing and recording fees, stamp
taxes, recording taxes and intangible property taxes), (iv) the receipt of
proceeds of the Receivables hereunder, (v) the care and preservation of the
Collateral, and (vi) the preparation of any requested amendments to this
Agreement or waivers or consents in connection herewith. Any such expenses so
incurred by the Bank shall be secured hereby and be a part of the Obligations.
(b) If any Lien or tax shall be claimed with respect to the Collateral
which in the opinion of the Bank may possibly create a valid obligation having
priority over the security interest granted to any of them herein, the Bank may
(but shall have no obligation to) in its reasonable discretion and without
notice to the Debtor pay such taxes or the amount secured by such lien and the
amount of such payment shall be charged to the Debtor's account and added to the
Obligations secured hereby; provided, however, that the Bank shall not make such
-------- -------
payment with respect to any Lien or tax being contested in good faith by the
Debtor by appropriate proceedings if (i) such proceedings shall suspend the
enforcement of such Lien or collection of such tax, (ii) no part of the Debtor's
rights in and under the Collateral shall be subject to sale, forfeiture or
diminution, and (iii) the Debtor shall have furnished such security as may be
required in the proceedings or reasonably requested by the Bank.
(c) Upon any failure by the Debtor to perform any of its duties and
obligations hereunder, the Bank may, but shall not be obligated to, perform any
or all of such duties, and the Debtor shall pay to the Bank, forthwith upon
written demand therefor, an amount equal to the cash or out-of-pocket expense
incurred by the Bank in so doing plus interest thereon from the date such
expense is incurred until it is paid at a rate equal to the highest rate of
interest payable by the Borrower from time to time on the Obligations of the
Borrower under the Credit Agreement and the Notes issued thereunder.
-57-
XXVI. Successors and Assigns, Governing Law, Survival. This Agreement
-----------------------------------------------
shall be governed by, and construed in accordance with, the laws of the State of
New York, shall inure to the benefit of and shall be binding upon the Bank and
the Debtor and their respective successors and assigns and shall continue in
full force and effect so long as the Credit Agreement remains in effect and
until all of the Obligations have been satisfied in full. The Debtor may not
assign its rights or obligations hereunder or the Collateral or any portion
thereof without the prior written consent of the Bank. All covenants,
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement and shall continue in full force and
effect until all of the Loans and all other Obligations of each Borrower under
the Credit Agreement, the Notes and any Loan Document have been paid in full and
the Commitments have been terminated.
XXVII. Severability. If any part of this Agreement is contrary to,
------------
prohibited by or deemed invalid under any applicable law of any jurisdiction,
such provision shall, as to such jurisdiction, be inapplicable and deemed
omitted to the extent so contrary, prohibited or invalid, without invalidating
the remainder hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
XXVIII. No Assumption of Duties; Limitation on Liabilities. (a) Nothing
--------------------------------------------------
herein contained shall be construed to constitute the Bank as the Debtor's agent
for any purpose whatsoever except for the limited purposes of receiving proceeds
of the Collateral as provided above. The Bank does not assume, by anything
contained herein or in any assignment or otherwise, the Debtor's obligations
under any Receivable or other Collateral or any contract or agreement relating
thereto, and the Bank shall not be responsible in any way for the Debtor's
performance of any of the terms and conditions thereof.
(b) Neither the Bank nor any of its directors, officers, agents or
employees shall be liable to any Person for any action taken or omitted by the
Bank or any of its officers, directors, employees or agents hereunder or with
respect to any transaction contemplated by this Agreement, except for the Bank's
or such officers', directors', employees' or agents' gross negligence or
willful misconduct. Without limiting the generality of the foregoing, the Bank
shall not be responsible or liable for any shortage, discrepancy, damage, loss
or destruction of any part of the Collateral wherever the same may be located
and regardless of the cause thereof unless due to the Bank's gross negligence or
willful misconduct. The Bank shall not, under any circumstances except for its
gross negligence or willful misconduct, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument received in payment thereof or for
any damage resulting therefrom.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
Address:
------- THT INC.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Westport, Connecticut Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ Title: President
Attn.: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-58-
Address:
-------
1133 Avenue of the Americas FLEET BANK N.A.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇. ▇▇▇▇▇ Title: Vice President
-59-
SCHEDULE A
----------
to Security Agreement
Location of Inventory
---------------------
None.
Location of Equipment
---------------------
None.
Remote Warehouse Locations:
---------------------------
Jackburn Mfg., Inc.
▇▇▇▇▇▇ Area Industrial Development
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-60-
SCHEDULE B
----------
to Security Agreement
Permitted Liens
---------------
DEBTOR SECURED DESCRIPTION PERMITTED
JURISDICTION NAME PARTY(IES) NUMBER DATE FILED OF COLLATERAL FILING
------------ ---- ---------- ------ ---------- ------------- ------
None.
SCHEDULE C
----------
to Security Agreement
Locations at Which Records
Regarding Receivables are Maintained
------------------------------------
THT Inc.
--------
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SCHEDULE D
----------
to Security Agreement
Trademarks, Service Marks and Copyrights
(including applications)
------------------------
OWNER ▇▇▇▇ REG. NO. REG. DATE
----- ---- -------- ---------
None.
SCHEDULE E
----------
to Security Agreement
[INTENTIONALLY OMITTED]
SCHEDULE F
----------
to Security Agreement
Patents
-------
None.
EXHIBIT A-1
-----------
BORROWING NOTICE
(Term Loan)
[DATE]
Fleet Bank N.A.
1133 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, THT Inc., Setterstix Corporation and Jackburn Mfg.,
Inc. (each being a "Borrower" and, collectively, the "Borrowers"), refer to the
-------- ---------
Credit Agreement dated as of March ___, 1997, as the same may have been amended,
supplemented or otherwise modified from time to time (the "Credit Agreement,"
----------------
the terms defined therein being used herein as therein defined), among the
Borrowers and Fleet Bank N.A. The Borrowers hereby irrevocably notify you that
they wish to borrow on the Borrowing Date specified below the sum of $2,000,000
under the Term Loan Commitment provided in the Credit Agreement, and in that
connection set forth the terms on which such Term Loan is requested to be made:
(A) Borrowing Date/*/
---------------
(B) Interest Rate type (specify Base Rate Loan
or Eurodollar Loan) ---------------
(C)Interest Period with respect to any Eurodollar Loan (specify one, two, three
or six months) and the date of the last day of such Interest Period./**/
mo(s).
--------------
m/d/y
The Borrowers hereby represent and warrant that the following
statements are true on the date hereof and will be true on the Borrowing Date
and after giving effect to the Term Loan:
(a) no Default under the Credit Agreement has occurred and is continuing
or would result from the making of the Term Loan requested hereunder or
from the application of the proceeds thereof; and
(b) the representations and warranties contained in Sections 5.1, 5.2 and
5.3 of the Credit Agreement are and shall be true
____________________
* This date must be at least one Business Day after the Date of this Notice
for Base Rate Loans, and at least three Business Days after the Date of
this Notice for Eurodollar Loans.
** Shall be subject to the definition of "Interest Period" (See Article I and
---
Section 2.6 of the credit Agreement) and shall not end later than the
Maturity Date.
and correct in all material respects as of such Borrowing Date (except for
any such representations and warranties which by their terms expressly
relate to the date of the Credit Agreement only).
[Instructions, if any, for deposit of the proceeds of the Loan.]/***/
Very truly yours,
THT INC.
By:
Name:
Title:
SETTERSTIX CORPORATION
By:
Name:
Title:
____________________
*** Loan proceeds will be divided into equal amounts and deposited in each
Borrower's demand deposit account at the Bank's Office unless otherwise
directed by the Borrowers.
JACKBURN MFG., INC.
By:
Name:
Title:
EXHIBIT A-2
-----------
BORROWING NOTICE
(Revolving Credit Loan)
[DATE]
Fleet Bank N.A.
1133 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned (the "Borrower") or one Borrower, refer(s) to the
--------
Credit Agreement dated as of March ___, 1997, as the same may have been amended
from time to time (the "Credit Agreement," the terms defined therein being used
----------------
herein as therein defined), among the Borrowers and Fleet Bank N.A. The
undersigned hereby irrevocably request(s) a Revolving Credit Loan under the
Credit Agreement on the Borrowing Date specified below, and in that connection
set(s) forth the terms on which such Revolving Credit Loan is requested to be
made:
(A)Borrowing Date/*/ __________
(B)Principal Amount/**/ __________
(C)Interest Rate Type (specify Base Rate Loan
or Eurodollar Loan) __________
(D)Interest Period with respect to any Eurodollar Loan specify one, two, three
of six months) and the last day of such Interest Period/***/ mo(s).
-------------
m/d/y
____________________
* This date must be at least one Business Day after the Date of this Notice
for Base Rate Loans, and at least three Business Days after the Date of
this Notice for Eurodollar Loans.
** This amount may not be less than $100,000 and must be in an integral
multiple of $100,000 (unless equal to the entire Unused Revolving Loan
Commitment) but not greater than the total Revolving Loan Commitment
available on the Borrowing Date.
*** This date is subject to the definition of "Interest Period" in the Credit
Agreement and shall not end later than the Revolving Credit Expiration
Date.
The Borrowers hereby represent and warrant that the following
statements are true on the date hereof and will be true on the Borrowing Date
and after giving effect to the Revolving Credit Loan requested hereunder:
(a) no Default under the Credit Agreement has occurred and is continuing
or would result from the making of the Revolving Credit Loan requested
hereunder or from the application of the proceeds thereof; and
(b) the representations and warranties contained in Sections 5.1, 5.2 and
5.3 of the Credit Agreement are and shall be true and correct in all
material respects as of such Borrowing Date (except for any such
representations and warranties which by their terms expressly relate to the
date of the Credit Agreement only).
[Instructions, if any, for deposit of the proceeds of the Loan]
Very truly yours,
[NAME OF BORROWER AS IT APPEARS
ON CERTIFICATE OF INCORPORATION]
By:
Name:
Title:
EXHIBIT A-3
-----------
INTEREST NOTICE
[DATE]
Fleet Bank N.A.
1133 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned (the "Borrower" or, collectively, if more than one,
--------
the "Borrowers"), refer(s) to the Credit Agreement dated as of March ___, 1997,
---------
as the same may have been amended, supplemented or otherwise modified from time
to time (the "Credit Agreement", the terms defined therein being used herein as
----------------
therein defined), among the Borrowers and Fleet Bank N.A. The undersigned
hereby irrevocably notify you that they elect to convert the Loan(s) specified
below pursuant to Section 2.6 of the Credit Agreement, and in that connection
set(s) forth the terms to which such Loan(s) is (are) are to be converted:
==============================================================================
(A) 1. Initial Borrowing Date of Loan 1.
2. Current type of Loan (circle one) 2. Base Rate Loan/Eurodollar
Loan
3. Total principal amount of Loan
outstanding 3.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
(B) 1. Amount of Loan to be converted/1/ 1.
2. Type of Loan (circle one) 2. Base Rate Loan/Eurodollar
Loan
3. Interest Period (if Eurodollar Loan; 3. mo(s)
specify one, two, three or six ----
months) and last day of such Interest m/d/y
Period./2/
4. Effective Date of this election./3/ 4.
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Very truly yours,
/4/[THT INC.
By:
Name:
Title: ]
Very truly yours,
[SETTERSTIX CORPORATION
By:
Name:
Title: ]
______________________
/1/ If different portions of the Loan are to be converted to different loan
types or Interest Periods, this part (B) should be repeated for each
portion of the Loan. Each Loan or portion thereof which is to be a
Eurodollar Loan must be in an aggregate principal amount of at least
$100,000 or integral multiples thereof.
/2/ The Borrowers may not have more than four Interest Periods in effect at any
one time. If no Interest Period is specified, the Borrowers will be deemed
to have selected an Interest Period of one month's duration.
/3/ This date must be at least two Business Days after the Date of this Notice
for Base Rate Loans, and at least three Business Days after the Date of
this Notice for Eurodollar Loans.
/4/ One, two or all three Borrowers may submit an Interest Notice for a Loan.
[JACKBURN MFG., INC.]
By:
Name:
Title: ]
Exhibit B-1
-----------
PROMISSORY NOTE
(Term Loan)
$2,000,000 [Initial Borrowing Date]
FOR VALUE RECEIVED, the undersigned, THT Inc., Setterstix Corporation
and Jackburn Mfg., Inc. (each being a "Borrower" and, collectively, the
--------
"Borrowers"), hereby promise, jointly and severally, to pay to the order of
----------
FLEET BANK N.A. (the "Bank"), in lawful money of the United States of America,
----
the principal sum of TWO MILLION DOLLARS ($2,000,000) as follows: (i) twenty
(20) consecutive equal quarterly installments on the last Business Day (as such
term is defined in the Credit Agreement referred to below) of each quarter,
commencing on June 30, 1997, each such installment to be in an amount equal to
$100,000, and (ii) a final installment of principal on March 31, 2002, in an
amount equal to the then outstanding principal amount of this Note.
This Note shall bear interest from the date hereof on the unpaid
principal balance hereof at the rates, and payable on the dates, specified in
the Credit Agreement referred to below.
Payments of both principal and interest on this Note shall be made in
immediately available funds at the office of the Bank at 1133 Avenue of the
Americas, New York, New York, or at such other place as the holder of this Note
shall designate by a notice in writing to the Borrower.
If any amount hereunder is payable on a day that is not a Business
Day, the due date thereof shall be extended to the immediately succeeding
Business Day and interest thereon shall accrue during the period of such
extension at the rate provided in the Credit Agreement.
This Note is the Term Note referred to in the Credit Agreement dated
as of March ___, 1997 (said Credit Agreement, as amended, supplemented or
modified from time to time, herein called the "Credit Agreement") among the
----------------
Borrowers and the Bank and evidences the Term Loan outstanding under the Credit
Agreement made by the Bank to the Borrowers. This Note is subject to
acceleration in accordance with the provisions of the Credit Agreement and is
secured by the Security Documents and the Collateral referred to in the Credit
Agreement. The Borrowers may prepay or may be required to prepay all or any part
of the principal of this Note before maturity upon the terms provided in the
Credit Agreement. Capitalized terms used in this Note and not defined herein
have the respective meanings assigned to them in the Credit Agreement.
This Note shall be governed by and construed in accordance with the
laws of the State of New York.
Very truly yours,
THT INC.
By:
Name:
Title:
SETTERSTIX CORPORATION
By:
Name:
Title:
JACKBURN MFG., INC.
By:
Name:
Title:
Exhibit B-2
-----------
PROMISSORY NOTE
(Revolving Credit Loans)
$2,000,000 [Initial Borrowing Date]
FOR VALUE RECEIVED, the undersigned, THT Inc., Setterstix Corporation
and Jackburn Mfg., Inc. (each being a "Borrower" and, collectively, the
--------
"Borrowers"), hereby promise, jointly and severally, to pay to the order of
----------
FLEET BANK N.A. (the "Bank"), on the Revolving Credit Expiration Date, (as such
---- --------------------------------
term is defined in the Credit Agreement referred to below) at the office of the
Bank at 1133 Avenue of the Americas, New York, New York (or at such other place
as the holder of this Note shall designate by a notice in writing to the
Borrowers), the principal sum of TWO MILLION DOLLARS ($2,000,000), or such
lesser amount as shall equal the aggregate unpaid principal amount of the
Revolving Credit Loans made by the Bank to the Borrowers pursuant to the Credit
Agreement, in lawful money of the United States of America and in immediately
available funds, and to pay interest on the unpaid principal balance hereof from
time to time outstanding at the aforesaid office or place and at the rates and
on the dates specified in the Credit Agreement.
The Bank is hereby authorized by the Borrowers to endorse on the
schedule attached to this Note (or any continuation thereof) the amount of each
Revolving Credit Loan made by the Bank to the Borrowers pursuant to the Credit
Agreement, the date such Revolving Credit Loan is made and the amount of each
payment or prepayment of the principal of such Revolving Credit Loan received by
the Bank, provided that any failure by the Bank to make any such endorsement
shall not affect the obligations of the Borrowers hereunder or under the Credit
Agreement in respect of such Revolving Credit Loan. Each such endorsement by the
Bank shall constitute conclusive evidence of the accuracy thereof, absent
manifest error.
If any amount hereunder is payable on a day that is not a Business
Day, the due date thereof shall be extended to the immediately succeeding
Business Day and interest thereon shall accrue during the period of such
extension at the rate provided in the Credit Agreement.
This Note is the Revolving Credit Note referred to in the Credit
Agreement dated as of March __, 1997 (said Credit Agreement, as amended,
supplemented or modified from time to time, herein called the "Credit
------
Agreement") among the Borrowers and the Bank and evidences Revolving Credit
---------
Loans outstanding under the Credit Agreement made by the Bank to the Borrowers.
This Note is subject to acceleration in accordance with the provisions of the
Credit Agreement and is secured by the Security Documents and the Collateral
referred to in the Credit Agreement. The Borrowers may prepay or may be required
to prepay all or any part of the principal of this Note before maturity upon the
terms provided in the Credit Agreement. Capitalized terms used in this Note and
not defined herein have the respective meanings assigned to them in the Credit
Agreement.
This Note shall be governed by and construed in accordance with the
laws of the State of New York.
Very truly yours,
THT INC.
By:
Name:
Title:
SETTERSTIX CORPORATION
By:
Name:
Title:
JACKBURN MFG., INC.
By:
Name:
Title:
Schedule to
Promissory Note dated
_________, 1997 of THT Inc.,
Setterstix Corporation, and Jackburn Mfg., Inc.
(collectively, the "Borrowers")
---------
This Note evidences Revolving Credit Loans made to the Borrowers under
the within-described Credit Agreement, in the principal amounts and on the dates
set forth below, and the repayments or prepayments of the principal of said
Revolving Credit Loans.
Principal Principal
Date of Amount of Amount Paid Balance Notation
Loan Loan or Prepaid Outstanding Made By
------- ---------- ----------- ------------ -------
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
________ __________ ___________ ____________ _____________
Exhibit C
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EXTENSION REQUEST
(Revolving Credit Commitment Period)
[DATE]/*/
Fleet Bank N.A.
1133 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, THT Inc., Setterstix Corporation and Jackburn Mfg.,
Inc. (each being a "Borrower" and, collectively, the "Borrowers"), refer to the
-------- ---------
Credit Agreement dated as of March ___, 1997, as the same may have been amended,
supplemented or modified from time to time (the "Credit Agreement," the terms
----------------
defined therein being used herein as therein defined), among the Borrowers and
Fleet Bank N.A. On the date hereof the Revolving Credit Expiration Date under
the Credit Agreement is _____________, 199_/**/, on which date the Revolving
Credit Commitment Period will end and all Revolving Credit Loans under the
Credit Agreement will be due and payable. The Borrowers hereby request, in
accordance with Section 2.5(b) of the Credit Agreement, that the Revolving
Credit Commitment Period be extended for an additional 364 days, thereby
extending the Revolving credit Expiration Date to ___________, 199_./***/
The Borrowers represent and warrant to you that on the date hereof
there exists no Default under the Credit Agreement.
The Borrowers understand that you may in your sole and absolute
discretion refuse to consent to the extension requested herein and that the
Revolving Credit Commitment Period and Revolving Credit Expiration Date shall
not be extended, and all Revolving Credit Loans shall be due and payable on
________________, 199_,/***/ unless you shall affirmatively
____________________
* Extension Requests must be delivered to the Bank at least 60 days prior to
the current Revolving Credit Expiration Date.
** Insert current Revolving Credit Expiration Date.
*** Insert date which is no later than 364 days after current Revolving Credit
Expiration Date.
consent in writing to the requested extension.
Very truly yours,
THT INC.
By:
Name:
Title:
SETTERSTIX CORPORATION
By:
Name:
Title:
JACKBURN MFG., INC.
By:
Name:
Title:
Exhibit D
---------
BORROWING BASE REPORT
THT Inc., Setterstix Corporation and Jackburn Mfg., Inc.
As of ____________, 199__
1. Eligible Accounts Receivable (all amounts are net of any discounts,
----------------------------
credits, rebates, allowances or set-offs):
Aging:
-----
(i) 1-30 days from invoice date $
(ii) 31-60 days from invoice date $
(ii) 61-90 days from invoice date $
(iv) 91-120 days from invoice date $
(v) 121-150 days from invoice date $
(vi) 151-180 days from invoice date $
(vi) over 180 days from invoice date $
TOTAL $
Less:
Accounts receivable subject to Liens other than Liens in $
(i) favor of the Bank or in which Jackburn or Setterstix do
not have good, marketable and undisputed title
(ii) Accounts receivable not payable in dollars $
(ii) Accounts receivable evidenced by a promissory note or $
other negotiable instrument (not including any such note
or instrument pledged to the Bank)
(iv) Accounts receivable where the account debtors on such $
accounts receivable are not residents or entities
organized under the laws of the U.S. or Canada, or do
not maintain an office or branch located in the U.S. or
Canada, or (if a non-U.S. resident) such account
receivables not covered by a letter of credit in favor of
Jackburn or Setterstix issued or confirmed by a U.S.
bank or U.S. office of a non-U.S. bank duly authorized
to issue or confirm such letter of credit
(v) Accounts receivable of account debtors who are presently $
or during the immediately preceding 360 days in default on
the payment of any account receivable (except where such
non-payment results from a bona fide dispute)
(vi) Accounts receivable of account debtors subject to $
bankruptcy or insolvency proceedings or the
creditworthiness of which is otherwise known to
Jackburn or Setterstix as risky
(vi) Accounts receivable not evidenced by an invoice or $
dated on or about the date that shipment, delivery or
performance was made or rendered to the account
debtor
(vi) Affiliate accounts receivable $
(ix) Affiliate accounts receivable $
(x) Accounts receivable more than 75 days past due or $
more than 105 days from invoice date
(xi) Accounts receivable where the account debtors have $
been reasonably determined by the Bank in good faith
to be unacceptable to the Bank
(xi) Accounts receivable balances from account debtors who $
in the aggregate with their Affiliates have accounts
receivable aggregating more than 25% of any
Borrower's accounts receivable (list amount which is
more than 25%)
(xi) Accounts receivable in excess of $10,000 in the $
aggregate from the government of the United States of
America or any agency or department thereof which do
not meet all requirements of the Assignment of Claims
Act
TOTAL $
Eligible Accounts Receivable $
2. Eligible Inventory (all amounts are based on the lower of cost (on a first-in
------------------
first-out basis) or market value):
Total amount of inventory of Jackburn and Setterstix of $
merchantable quality which is held at locations specified
in Schedule 5.1(p) (or at other locations permitted in
the Credit Agreement) or which is in transit and in
which the Bank has a Lien pursuant to a Security
Agreement, subject to no other liens
Less:
(i) Inventory not held by Jackburn or Setterstix $
(ii) Inventory not manufactured, sold or consumed by $
Jackburn or Setterstix in the ordinary course of business
(iii) Maintenance and supplies $
(iv) Customized finished inventory held by Jackburn or
Setterstix for more than 90 days (in the case of such
inventory for which there are no firm orders) or more
than 180 days (in the case of such inventory for which
there are bona fide firm orders from any person
unaffiliated with Setterstix or Jackburn) $
(v) Excess inventory and not-readily-marketable inventory $
(vi) Inventory which is held by the Borrowers on
consignment $
TOTAL $
Eligible Inventory $
3. Available Revolving Credit Commitment:
-------------------------------------
A. Total amount of Eligible Accounts Receivable $
B. Percentage of Eligible Accounts Receivable included
in Borrowing Base 80%
C. Amount of Eligible Accounts Receivable included in
Borrowing Base (A x B) $
D. Total amount of Eligible Inventory $
E. Percentage of Eligible Inventory included in
Borrowing Base 50%
F. Amount of Eligible Inventory included in Borrowing
Base (D x E) $
G. Borrowing Base (C + F) $
H. Revolving Credit Commitment $2,000,000
I. Outstanding principal amount of Revolving Credit
Loans $
J. Unused Revolving Credit Commitment
(G or H, whichever is less, minus I) $
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Prepared by:________________
Date: ______________________
Schedule 5.1(b)
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Stockholders of Each Borrower
-----------------------------
(See attached Organization Chart)
THT Inc.
-------
Stock is publicly traded.
Largest shareholders:
PH II 1,811,350 shares 45.5% ownership
▇▇▇▇ ▇. ▇▇▇▇▇ 180,000 shares 4.6% ownership
Setterstix Corporation
----------------------
THT Holdings Inc. 100% ownership
Jackburn Mfg., Inc.
------------------
AJH Corp. 52% ownership
Jackburn Corp. 48% ownership
Schedule 5.1(o)
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Trademark
---------
OWNER ▇▇▇▇ REG. NO. REG. DATE
----- ---- -------- ---------
Setterstix "Setterstix" 628,830 6/12/56
Corporation (See attachment) (Renewal Term Begins
6/12/96)
Patents
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Setterstix Corporation:
-------------------------
NUMBER ISSUED TITLE
------ ------ -----
4,209,112 06/24/80 Stick Feeding Apparatus
4,232,811 11/11/80 Apparatus For Dispensing and Inserting Sticks
4,271,978 06/09/81 Stick Dispenser
4,298,118 11/03/81 Stick Separating Apparatus With Improved
Radiation Counter
4,340,151 07/20/82 Stick Feeding Apparatus
Foreign Trademarks And Applications
-----------------------------------
None.
Foreign Patents And Applications
--------------------------------
None.
Software
--------
None.
Schedule 5.1(p)
---------------
Location of Offices and Collateral
----------------------------------
THT Inc. Jackburn Mfg., Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Setterstix Corporation Remote Warehouse Locations:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ---------------------------
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Jackburn Mfg., Inc.
Jackburn Mfg., Inc. Girard Area Industrial Development
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Jackburn Mfg., Inc. Setterstix Corporation
Girard Tool & Die Division ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Sub-Lease:
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Phoenix Oil Refinery, Inc.
d/b/a Phoenix Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Schedule 5.1(q)
---------------
Assumed names; former names
---------------------------
THT Inc.
-------
Texas Hi Tech, Inc. (1983-1986)
THT Lloyd's, Inc. (1986-1988)
THT Inc. (1988-date)
Setterstix Corporation
----------------------
Setterstix Acqusition Corporation (3/21/90-4/30/90)
(purchased of assets of Setterstix, Inc. on 3/21/90)
Setterstix Corporation (4/30/90-date)
Jackburn Mfg., Inc.
-------------------
None.
Schedule 5.3(a)
---------------
Hazardous Materials
-------------------
THT Inc.
-------
None.
Setterstix Corporation
----------------------
None.
Jackburn Mfg., Inc.
-------------------
None.
Schedule 7.2(a)(ii)
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Existing Permitted Debt of Borrowers
------------------------------------
THT Inc.
-------
None.
Setterstix Corporation
----------------------
None.
Jackburn Mfg., Inc.
-------------------
None.
Schedule 7.2(b)
---------------
Existing Permitted Liens of Borrowers
-------------------------------------
THT Inc.
-------
None.
Setterstix Corporation
----------------------
None.
Jackburn Mfg., Inc.
-------------------
None.
Schedule 7.2(e)
---------------
Existing Permitted Loans of Borrowers
-------------------------------------
THT Inc.
-------
None.
Setterstix Corporation
----------------------
None.
Jackburn Mfg., Inc.
-------------------
None.
