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EXHIBIT 10.5
AMENDED AND RESTATED SECURITY AGREEMENT
This Amended and Restated Security Agreement (the "Agreement") is
dated as of May ___, 1998, by and among the parties executing this Agreement
under the heading "Debtors" (such parties, along with any parties who execute
and deliver to the Agent an agreement in the form attached hereto as Exhibit D,
being hereinafter referred to collectively as the "Debtors" and individually as
a "Debtor"), and XXXXXX TRUST AND SAVINGS BANK, an Illinois banking corporation
("Xxxxxx"), with its mailing address at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000, acting as agent hereunder for the Secured Creditors hereinafter
identified and defined (Xxxxxx acting as such agent and any successor or
successors to Xxxxxx acting in such capacity being hereinafter referred to as
the "Agent");
PRELIMINARY STATEMENTS
X. Xxxxxx Industrial Group, Inc., a Georgia corporation (the
"Company"), and certain subsidiaries of the Company, Xxxxxx, individually and as
agent, and certain lenders are currently party to a Credit Agreement dated as of
January 20, 1998 (such Credit Agreement, as the same may have been amended or
modified from time to time, including amendments and restatements thereof in its
entirety, being hereinafter referred to as the "Prior Credit Agreement"),
pursuant to which Xxxxxx and other lenders from time to time party to the Prior
Credit Agreement agreed, subject to certain terms and conditions, to extend
credit and make certain other financial accommodations available to the
"Borrowers" identified therein.
B. The Company and certain subsidiaries of the Company are currently
party to a Security Agreement dated as of January 20, 1998, with Xxxxxx,
individually and as agent for the lenders party to the Prior Credit Agreement
(the "Prior Security Agreement"), pursuant to which the Company and such other
subsidiaries have granted liens on certain personal property as collateral
security for the indebtedness, obligations, and liabilities of the "Borrowers"
owing to such lenders under the Prior Credit Agreement.
C. Concurrently herewith, Xxxxxx and the other lenders party to the
Prior Credit Agreement are refinancing all indebtedness, obligations, and
liabilities owed to such lenders by the "Borrowers" under the Prior Credit
Agreement (the "Prior Obligations").
D. The Company and Xxxxxx, individually and as Agent, have also
entered into a Credit Agreement dated of even date herewith (such Credit
Agreement, as the same may be amended or modified from time to time, including
amendments and restatements thereof in its entirety, being hereinafter referred
to as the "Credit Agreement") pursuant to which Xxxxxx and other lenders which
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from time to time become party thereto (Xxxxxx and such other lenders which from
time to time become party thereto being hereinafter referred to collectively as
the "Lenders" and individually as a "Lender") have agreed to modify the terms
and conditions applicable to the Prior Obligations and to provide for additional
credit and financial accommodations to be made available to the Company
thereunder, all subject to the terms and conditions therein set forth.
E. The Company may from time to time enter into one or more interest
rate exchange, cap, collar, floor or other agreements with one or more of the
Lenders party to the Credit Agreement, or their affiliates, for the purpose of
hedging or otherwise protecting the Company against changes in interest rates
(the liability of the Company in respect of such agreements with such Lenders
and their affiliates being hereinafter referred to as the "Hedging Liability")
(the affiliates of the Lenders to which any Hedging Liability is owed, together
with the Lenders and the Agent, being collectively referred to herein as the
"Secured Creditors").
F. As a condition precedent to extending credit or otherwise making
financial accommodations available to the Company under the Credit Agreement,
the Lenders have required, among other things, that each Debtor grant to the
Agent for the benefit of the Secured Creditors a lien on and security interest
in certain personal property of such Debtor pursuant to this Agreement.
G. The Company owns, directly or indirectly, all or substantially
all of the equity interests in each Debtor (other than the Company) and the
Company provides each Debtor with financial, management, administrative, and
technical support which enables such Debtor to conduct its business in an
orderly and efficient manner in the ordinary course.
H. Each Debtor will benefit, directly or indirectly, from credit and
other financial accommodations extended by the Secured Creditors to the Company.
NOW, THEREFORE, for and in consideration of the execution and
delivery by the Lenders of the Credit Agreement, and other good and valuable
consideration, receipt whereof is hereby acknowledged, the parties hereto hereby
agree as follows:
Section 1. Terms Defined in Credit Agreement. All capitalized
terms used herein without definition shall have the same meanings herein as
such terms have in the Credit Agreement. The term "Debtor" and "Debtors" as
used herein shall mean and include the Debtors collectively and also each
individually, with all grants, representations, warranties and covenants of
and by the Debtors, or any of them, herein contained to constitute joint and
several grants, representations, warranties and covenants of and by the
Debtors; provided, however, that unless the context in which the same is used
shall otherwise require, any grant, representation,
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warranty or covenant contained herein related to the Collateral shall be made by
each Debtor only with respect to the Collateral owned by it or represented by
such Debtor as owned by it.
Section 2. Grant of Security Interest in the Collateral;
Obligations Secured. (a) Each Debtor hereby grants to the Agent for the benefit
of the Secured Creditors a lien on and security interest in, and right of
set-off against, and acknowledges and agrees that the Agent has and shall
continue to have for the benefit of the Secured Creditors a continuing lien on
and security interest in, and right of set-off against, any and all right, title
and interest of each Debtor, whether now owned or existing or hereafter created,
acquired or arising, in and to the following:
(i) Receivables. Receivables, whether now owned or existing
or hereafter created, acquired or arising, and however evidenced or
acquired, or in which such Debtor now has or hereafter acquires any
rights (the term "Receivables" means and includes all accounts,
accounts receivable, contract rights, instruments, notes, drafts,
acceptances, documents, chattel paper, any right of such Debtor to
payment for goods sold or leased or for services rendered, whether
arising out of the sale of Inventory (as hereinafter defined) or
otherwise and whether or not earned by performance, and all other forms
of obligations owing to such Debtor, and all of such Debtor's rights to
any merchandise and other goods (including without limitation any
returned or repossessed goods and the right of stoppage in transit)
which is represented by, arises from or is related to any of the
foregoing);
(ii) General Intangibles. All general intangibles, whether now
owned or existing or hereafter created, acquired or arising, or in
which such Debtor now has or hereafter acquires any rights, including,
without limitation all patents, patent applications, patent licenses,
trademarks, trademark registrations, trademark licenses, trade styles,
trade names, copyrights, copyright registrations, copyright licenses
and other licenses and similar intangibles and all customer, client and
supplier lists (in whatever form maintained) and all rights in leases
and other agreements relating to real or personal property, all causes
of action and tax refunds of every kind and nature, all privileges,
franchises, immunities, licenses, permits and similar intangibles, all
rights to receive payments in connection with the termination of any
pension plan or employee stock ownership plan or trust established for
the benefit of employees of such Debtor and all other personal property
(including things in action) not otherwise covered by this Agreement;
(iii) Inventory. Inventory, whether now owned or existing or
hereafter created, acquired or arising, or in which such Debtor now has
or hereafter acquires any rights and all documents of title at any time
evidencing or representing any part thereof (the term "Inventory" means
and includes all goods which are held for sale or lease or are to be
furnished under contracts of service or consumed in such Debtor's
business, and all goods
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which are raw materials, work-in-process, finished goods,
materials and supplies of every kind and nature, in each case used or
usable in connection with the acquisition, manufacture, processing,
supply, servicing, storing, packing, shipping, advertising, selling,
leasing or furnishing of such goods, and any constituents or
ingredients thereof, and all goods which are returned or repossessed
goods);
(iv) Equipment. Equipment, whether now owned or existing or
hereafter created, acquired or arising, or in which such Debtor now has
or hereafter acquires any rights (the term "Equipment" means and
includes all equipment, machinery, tools, trade fixtures, furniture,
furnishings, office equipment and vehicles (including vehicles subject
to a certificate of title law) and all other goods, in each case now or
hereafter used or usable in connection with such Debtor's business,
together with all parts, accessories and attachments relating to any of
the foregoing);
(v) Investment Property. All Investment Property, whether now
owned or existing or hereafter created, acquired or arising, or in
which such Debtor now has or hereafter acquires any rights (the term
"Investment Property" means and includes all investment property and
any other securities (whether certificated or uncertificated), security
entitlements, securities accounts, commodity contracts and commodity
accounts, including all substitutions and additions thereto, all
dividends, distributions and sums distributable or payable from, upon,
or in respect of such property, and all rights and privileges incident
to such property);
(vi) Records and Cabinets. Supporting evidence and documents
relating to any of the above-described property, including without
limitation, computer programs, disks, tapes and related electronic data
processing media, rights of such Debtor to retrieve the same from third
parties, written applications, credit information, account cards,
payment records, correspondence, delivery and installation
certificates, invoice copies, delivery receipts, notes and other
evidences of indebtedness, insurance certificates and the like,
together with all books of account, ledgers and cabinets in which the
same are reflected or maintained, all whether now existing or hereafter
arising;
(vii) Deposits and Property in Possession. All deposit accounts
(whether general, special or otherwise) maintained with the Agent or
any of the Secured Creditors and all sums now or hereafter on deposit
therein or payable thereon, and any and all other property or interests
in property which now is or may from time to time hereafter come into
the possession, custody or control of the Agent or any of the Secured
Creditors, or any agent or affiliate of the Agent or any of the Secured
Creditors, in any way and for any purpose (whether for safekeeping,
custody, pledge, transmission, collection or otherwise);
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(viii) Accessions and Additions. All accessions and additions to
and substitutions and replacements of any of the foregoing, whether now
existing or hereafter arising; and
(ix) Proceeds and Products. All proceeds and products of the
foregoing and all insurance of the foregoing and proceeds thereof,
whether now existing or hereafter arising;
all of the foregoing being herein sometimes referred to as the "Collateral."
(b) This Agreement is made and given to secure, and shall secure, the
payment and performance of (i) (x) any and all indebtedness, obligations and
liabilities of the Company to the Agent, the Lenders, or any of them
individually, evidenced by or otherwise arising out of or relating to the Credit
Agreement or any promissory note of the Company issued at any time under the
Credit Agreement (including all notes issued in extension or renewal thereof or
in substitution or replacement therefor), and (y) any liability of any of the
Debtors, or any of them individually, arising out of the Credit Agreement, as
well as for any and all other indebtedness, obligations and liabilities of the
Debtors, or any of them individually, to the Secured Creditors with respect to
any Hedging Liability, or any of them individually, evidenced by or otherwise
arising out of or relating to this Agreement or any other Loan Document or (in
the case of any Hedging Liability) any other agreement with any one or more of
the Secured Creditors, in each case, whether now existing or hereafter arising
(and whether arising before or after the filing of a petition in bankruptcy),
due or to become due, direct or indirect, absolute or contingent, and howsoever
evidenced, held or acquired, and (ii) any and all expenses and charges, legal or
otherwise, suffered or incurred by the Secured Creditors, or any of them
individually, in collecting or enforcing any of such indebtedness, obligations
or liabilities or in realizing on or protecting or preserving any security
therefor, including, without limitation, the lien and security interest granted
hereby (all of the foregoing being hereinafter referred to as the
"Obligations"). Notwithstanding anything in this Agreement to the contrary, the
right of recovery against any Debtor (other than the Company to which this
limitation shall not apply) under this Agreement shall not exceed $1 less than
the amount which would render such Debtor's obligations under this Agreement
void or voidable under applicable law, including fraudulent conveyance law.
Section 3. Covenants, Agreements, Representations and
Warranties. Each Debtor hereby covenants and agrees with, and represents and
warrants to the Secured Creditors that:
(a) Such Debtor is duly organized and existing under the laws
of the state of its organization, is the sole and lawful owner of its
Collateral and has full right, power and authority to enter into this
Agreement and to perform each and all of the matters and things herein
provided for; and the execution and delivery of this Agreement, and the
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observance and performance of any of the matters and things herein set
forth, will not violate or contravene any provision of law or of the
articles of incorporation, by-laws or operating agreement of such
Debtor, as applicable, or of any indenture, loan agreement or other
agreement of or affecting such Debtor or any of its properties, or
result in the creation or imposition of any liens or encumbrance on any
property of such Debtor.
(b) The Collateral is in each Debtor's possession at the
locations listed under Column 1 on Schedule A attached hereto. Each
Debtor's respective chief executive office and chief place of business
is listed opposite its name on Schedule A attached hereto and the
Debtors have no other places of business other than those listed under
Column 4 on Schedule A attached hereto. No Debtor will remove its
Collateral from the locations specified in the first sentence of this
Section 3(b) without prior written notice to the Agent, unless such
Collateral will be moved to a location outside the United States, in
which event, the Agent's prior written consent shall be required, which
consent shall not be unreasonably withheld (provided that if for any
reason Collateral is at any time kept or located at locations other
than its present location or locations hereafter consented to by the
Agent shall nevertheless have and retain a security interest therein).
(c) The Collateral and every part thereof is and will be free
and clear of all security interests, liens (including, without
limitation, mechanic's, laborer's and statutory liens), attachments,
levies and encumbrances of every kind, nature and description and
whether voluntary or involuntary except for the security interest of
the Agent therein and as otherwise provided in the Credit Agreement,
and each Debtor will warrant and defend its Collateral against any
claims and demands of all persons at any time claiming the same or any
interest therein adverse to any Secured Creditor.
(d) Each Debtor will pay promptly when due all taxes,
assessments, and governmental charges and levies upon or against its
Collateral in each case before the same become delinquent and before
penalties accrue thereon, unless and to the extent that the same are
being contested in good faith by appropriate proceedings.
(e) Each Debtor at its own cost and expense will maintain,
keep and preserve its Collateral in good repair and condition and will
not waste or destroy such Collateral or any part thereof and will not
be negligent in the care and use of any Collateral and will not use or
permit to be used any Collateral in violation of any statute, ordinance
or other governmental requirement. Each Debtor will perform its
obligations under any contract or other agreement constituting part of
the Collateral, it being understood and agreed that the Secured
Creditors have no responsibility to perform such obligations.
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(f) Except for liens expressly permitted by the Credit
Agreement, and subject to Sections 5(a), 7(b) and 7(c) hereof, no
Debtor will, without the Agent's prior written consent, sell, assign,
mortgage, lease or otherwise dispose of its Collateral or any interest
therein.
(g) Each Debtor will insure its Collateral which is insurable
against such risks and hazards as other companies similarly situated
insure against, and including in any event loss or damage by fire,
theft, burglary, pilferage, loss in transit and such other hazards as
the Agent may specify, in amounts and under policies containing loss
payable clauses to the Agent as its interest may appear (and, if the
Agent requests, naming the Secured Creditors as additional insureds
therein) by insurers acceptable to the Agent. In case of any material
loss, damage to or destruction of its Collateral or any part thereof,
the appropriate Debtor shall promptly give written notice thereof to
the Agent generally describing the nature and extent of such damage or
destruction. In the event any Debtor shall receive any proceeds of such
insurance, such Debtor will immediately pay over such proceeds to the
Agent. Net insurance proceeds received by the Agent under the
provisions hereof or under any policy or policies of insurance covering
the Collateral or any part thereof shall be applied to the reduction of
the Obligations (whether or not then due); provided, however, that the
Agent may in its sole discretion release any or all such insurance
proceeds to the appropriate Debtor. All insurance proceeds shall be
subject to the lien and security interest of the Agent hereunder.
UNLESS THE DEBTORS PROVIDE THE AGENT WITH EVIDENCE OF THE
INSURANCE COVERAGE REQUIRED BY THIS AGREEMENT, THE AGENT MAY PURCHASE
INSURANCE AT THE DEBTORS' EXPENSE TO PROTECT THE AGENT'S INTERESTS IN
THE COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT ANY DEBTOR'S
INTERESTS IN THE COLLATERAL. THE COVERAGE PURCHASED BY THE AGENT MAY
NOT PAY ANY CLAIMS THAT ANY DEBTOR MAKES OR ANY CLAIM THAT IS MADE
AGAINST SUCH DEBTOR IN CONNECTION WITH THE COLLATERAL. THE DEBTORS MAY
LATER CANCEL ANY SUCH INSURANCE PURCHASED BY THE AGENT, BUT ONLY AFTER
PROVIDING THE AGENT WITH EVIDENCE THAT THE DEBTORS HAVE OBTAINED
INSURANCE AS REQUIRED BY THIS AGREEMENT. IF THE AGENT PURCHASES
INSURANCE FOR THE COLLATERAL, THE DEBTORS WILL BE RESPONSIBLE FOR THE
COSTS OF THAT INSURANCE, INCLUDING INTEREST AND ANY OTHER CHARGES THAT
THE AGENT MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE INSURANCE,
UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE
INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO THE OBLIGATIONS
SECURED HEREBY. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF
INSURANCE THE DEBTORS MAY BE ABLE TO OBTAIN ON THEIR OWN.
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(h) Each Debtor will at all times allow the Agent, any
Secured Creditor or their respective representatives free access to and
right of inspection of the Collateral. Each Debtor will, to the extent
it is within its power so to do, authorize and instruct all bailees and
other parties at any time holding, storing, shipping or transferring
all or any part of such Debtor's Collateral to permit the Agent, any
Secured Creditor or their respective or its designees to examine and
inspect any of such Collateral then in such party's possession and to
verify from such party's own books and records any information
concerning such Collateral or any part thereof which the Agent or such
Secured Creditor may seek to verify. As to any premises not owned by
any of the Debtors wherein any of the Collateral is located, if any,
the appropriate Debtor shall, unless the Agent requests otherwise,
cause each Person having any right, title or interest in, or lien on,
any of such premises to enter into an agreement (any such agreement to
contain a legal description of such premises) whereby such party
disclaims any right, title and interest in, and lien on, the
Collateral, allowing the removal of such Collateral by the Agent or its
designee and otherwise in form and substance acceptable to the Agent.
(i) Each Debtor agrees from time to time to deliver to the
Agent and any Secured Creditor such evidence of the existence and
identity of such Debtor's Collateral and of its availability as
collateral security pursuant hereto (including, without limitation,
schedules describing all Receivables created or acquired by such
Debtor, copies of customer invoices or the equivalent and original
shipping or delivery receipts for all merchandise and other goods sold
or leased or services rendered, together with such Debtor's warranty of
the genuineness thereof, and reports stating the book value of
Inventory and Equipment by major category and location), as the Agent
or such Secured Creditor may request. Each Debtor will promptly notify
the Agent and each Secured Creditor of any Collateral which such Debtor
has determined to have been rendered obsolete, stating the prior book
value of such Collateral, its type and location.
(j) Each Debtor will comply with the terms and conditions of
any leases, easements, right-of-way agreements or other agreements
covering the premises wherein its Collateral is located and any orders,
ordinances, laws or statutes of any city, state or other governmental
entity, department or agency having jurisdiction with respect to such
premises or the conduct of business thereon.
(k) On failure of any Debtor to perform any of the covenants
and agreements herein contained, the Agent may, at its option, perform
the same and in so doing may expend such sums as the Agent may deem
advisable in the performance thereof, including without limitation the
payment of any insurance premiums, the payment of any taxes, liens and
encumbrances, expenditures made in defending against any adverse claim
and all other expenditures which the Agent may be compelled to make by
operation of
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law or which the Agent may make by agreement or otherwise
for the protection of the security hereof. All such sums and amounts so
expended shall be repayable by the Debtors immediately without notice
or demand, shall constitute so much additional Obligations hereby
secured and shall bear interest from the date said amounts are expended
at the rate per annum (computed on the basis of a 365-day or 366 day
year, as the case may be, for the actual number of days elapsed)
determined by adding 2% to the Base Rate (such rate per annum as so
determined being hereinafter referred to as the "Default Rate"). No
such performance of any covenant or agreement by the Agent on behalf of
any Debtor and no such advancement or expenditure therefor, shall
relieve any Debtor of any default under the terms of this Agreement or
in any way obligate the Agent or any Secured Creditor to take any
further or future action with respect thereto. The Agent, in making any
payment hereby authorized, may do so according to any xxxx, statement
or estimate procured from the appropriate public office or holder of
the claim to be discharged without inquiry into the accuracy of such
xxxx, statement or estimate or into the validity of any tax assessment,
sale, forfeiture, tax lien or title or claim. The Agent, in performing
any act hereunder, shall be the sole judge of whether the relevant
Debtor is required to perform same under the terms of this Agreement.
The Agent is authorized to charge any depository account of any Debtor
maintained with the Agent for the amount of such sums and amounts so
expended.
(l) Each Debtor warrants that such Debtor has not transacted
business, and does not transact business, under any trade names except
as set forth on Schedule B. Each Debtor agrees that it will not change
its name or transact business under any trade names without first
giving the Agent 30 days' prior written notice of its intent to do so.
(m) Each Debtor agrees to execute and deliver to the Agent
such further agreements and assignments or other instruments and to do
all such other things as the Agent may deem necessary or appropriate to
assure the Agent its security interest hereunder, including such
financing statement or statements or amendments thereof or supplements
thereto or other instruments as the Agent or the Required Lenders may
from time to time require in order to comply with the Uniform
Commercial Code as enacted in the State of Illinois and any successor
statute(s) thereto (the "Code"). Each Debtor hereby agrees that a
carbon, photographic or other reproduction of this Agreement or any
such financing statement is sufficient for filing as a financing
statement by the Agent without notice thereof to any Debtor wherever
the Agent in its sole discretion desires to file the same. In the event
for any reason the law of any other jurisdiction than Illinois becomes
or is applicable to the Collateral or any part thereof, or to any of
the Obligations, each Debtor agrees to execute and deliver all such
instruments and to do all such other things as the Agent in its sole
discretion deems necessary or appropriate to preserve, protect and
enforce the security interests of the Agent under the law of such other
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jurisdiction to at least the same extent as such security interests
would be protected under the Code. If any Collateral is in the
possession or control of any Debtor's agents or processors and unless
the Agent requests otherwise, such Debtor agrees to notify such agents
or processors in writing of the Agent's security interests therein, and
upon the Agent's request instruct them to hold all such Collateral for
the Agent's account and subject to the Agent's instructions. The
Debtors agree to xxxx their books and records to reflect the security
interests of the Agent in the Collateral.
Section 4. Special Provisions Re: Receivables. (a) As of the time
any Receivable becomes subject to the security interest provided for hereby and
at all times thereafter, each Debtor shall be deemed to have warranted as to
each and all of such Receivables that all warranties of such Debtor set forth in
this Agreement are true and correct with respect to such Receivables; that each
Receivable and all papers and documents relating thereto are genuine and in all
respects what they purport to be; that each Receivable is valid and subsisting
and, if such Receivable is an account, arises out of a bona fide sale of goods
sold and delivered by such Debtor to, or in the process of being delivered to,
or out of and for services theretofore actually rendered by such Debtor to, the
account debtor named therein; that no such Receivable is evidenced by any
instrument or chattel paper unless such instrument or chattel paper has
theretofore been endorsed by such Debtor and delivered to the Agent (except to
the extent the Agent specifically requests such Debtor not to do so with respect
to any such instrument or chattel paper); that no surety bond was required or
given in connection with said Receivable or the contracts or purchase orders out
of which the same arose; that the amount of the Receivable represented as owing
is the correct amount actually and unconditionally owing, except for normal cash
discounts on normal trade terms in the ordinary course of business if such
Receivable is an account and that the amount of such Receivable represented as
owing is not disputed and is not subject to any set-offs, credits, deductions or
countercharges other than those arising in the ordinary course of such Debtor's
business which are disclosed to the Agent in writing promptly upon such Debtor
becoming aware thereof; provided, however, that the untruth of the foregoing
warranties of this sentence as to Receivables aggregating not more than $100,000
shall not constitute a breach of this sentence. Without limiting the foregoing,
if any Receivable arises out of a contract with the United States of America or
any of its departments, agencies or instrumentalities, if and to the extent the
Agent so requests, each Debtor agrees to notify the Agent and execute whatever
instruments and documents are required by the Agent in order that such
Receivable shall be assigned to the Agent and that proper notice of such
assignment shall be given under the federal Assignment of Claims Act (or any
successor statute).
(b) Each Debtor shall keep all of its books and records relating to
the Receivables only at its chief executive office described in Section 3(b)
hereof.
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(c) Unless and until an Event of Default occurs, any merchandise
which is returned by a customer or account debtor or otherwise recovered may be
resold by the Debtors in the ordinary course of their respective businesses in
accordance with Section 5(b) hereof; after an Event of Default occurs, such
merchandise shall be set aside and held by each of the Debtors as trustee for
the Secured Creditors and shall remain part of the Agent's Collateral. Unless
and until an Event of Default occurs, each Debtor may settle and adjust disputes
and claims with its customers and account debtors, handle returns and recoveries
and grant discounts, credits and allowances in the ordinary course of its
business and otherwise for amounts and on terms which such Debtor considers
advisable. However, after an Event of Default has occurred and unless the Agent
requests otherwise, each Debtor shall notify the Agent promptly of all returns
and recoveries and on request deliver the merchandise to the Agent. After an
Event of Default has occurred and unless the Agent requests otherwise, each
Debtor shall also notify the Agent promptly of all disputes and claims and
settle or adjust them at no expense to the Agent or the Secured Creditors, but
no discount, credit or allowance other than on normal trade terms in the
ordinary course of business shall be granted to any customer or account debtor
and no returns of merchandise shall be accepted by such Debtor without the
Agent's consent. The Agent may, at all times after such an Event of Default has
occurred, settle or adjust disputes and claims directly with customers or
account debtors for amounts and upon terms which the Agent considers advisable.
(d) From time to time, as the Agent may request of any Debtor, such
Debtor shall provide the Agent with schedules describing all Receivables created
or acquired by such Debtor, provided, however, that the failure of such Debtor
to execute and deliver such schedules shall not affect or limit the Agent's
security interest or other rights in and to any such Receivables. Together with
each schedule, each Debtor shall if requested by the Agent, furnish copies of
customers' invoices or the equivalent, and original shipping or delivery
receipts, for all merchandise sold, and each Debtor warrants the genuineness
thereof.
Section 5. Collection of Receivables. (a) Except as otherwise
provided in this Agreement each Debtor shall make collection of all of its
Receivables and may use the same to carry on its business in accordance with
sound business practice and otherwise subject to the terms hereof.
(b) Whether or not the Agent has exercised any or all of its rights
under other provisions of this Section 5 and whether or not any Event of Default
has occurred, at the request of the Agent, each Debtor agrees that: (i) all
instruments and chattel paper at any time constituting part of the Collateral
(including any post-dated checks) shall, upon receipt by the relevant Debtor, be
immediately endorsed to and deposited with Agent; and (ii) such Debtor shall
instruct all account debtors to remit all payments in respect of its Receivables
to a lockbox or lockboxes from which deposits will be made into one or more
accounts maintained with the
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Agent or under the control by agreement of the Agent (whether or not
maintained with the Agent), the Debtors acknowledging that each such account and
all funds contained therein constitute Collateral hereunder.
(c) Whether or not any Event of Default has occurred and whether or
not the Agent has exercised any or all of its rights under other provisions of
this Section 5, in the event the Agent requests any Debtor to do so, all
instruments and chattel paper at any time constituting part of the Receivables
(including any postdated checks) shall, upon receipt by such Debtor, be
immediately endorsed to and deposited with the Agent.
(d) Upon the occurrence and during the continuation of any Event of
Default and whether or not the Agent has exercised any or all of its rights
under other provisions of this Section 5, the Agent or its designee may notify
any Debtor's customers or account debtors at any time that Receivables have been
assigned to the Agent or of the Agent's security interest therein and either in
its own name, or such Debtor's or both, demand, collect (including without
limitation through a lockbox analogous to that described in Section 5(b)
hereof), receive, receipt for, xxx for, compound and give acquittance for any or
all amounts due or to become due on Receivables, and in the Agent's discretion
file any claim or take any other action or proceeding which the Agent may deem
necessary or appropriate to protect and realize upon the security interest of
the Agent in the Receivables.
(e) Any proceeds of Receivables or other Collateral transmitted to or
otherwise received by the Agent pursuant to any of the provisions of Sections
5(b), 5(c) or 5(d) hereof shall be handled and administered by the Agent in and
through a remittance account maintained at the Agent and each Debtor
acknowledges that the maintenance of such remittance account by the Agent is
solely for the Agent's own convenience and that such Debtor does not have any
right, title or interest in such remittance account or any amounts at any time
standing to the credit thereof. The Agent may apply all or any part of any
proceeds of Receivables or other Collateral received by it from any source to
the payment of the Obligations (whether or not then due and payable), such
applications to be made in such amounts, in such manner and order and at such
intervals as the Agent may from time to time in its discretion determine, but
not less often than once each week. The Agent need not apply or give credit for
any item included in proceeds of Receivables or other Collateral until the Agent
has received final payment therefor at its office in cash or final solvent
credits current in Chicago, Illinois, acceptable to the Agent as such. However,
if the Agent does give credit for any item prior to receiving final payment
therefor and the Agent fails to receive such final payment or an item is charged
back to the Agent for any reason, the Agent may at its election in either
instance charge the amount of such item back against the remittance account,
together with interest thereon at the Default Rate. Each Debtor shall accompany
each transmission of any proceeds of Receivables or other Collateral to the
Agent with a report in such form as the Agent shall require identifying the
particular Receivable
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or other Collateral from which the same arises or relates. The Debtors
hereby jointly and severally indemnify the Secured Creditors from and against
all liabilities, damages, losses, actions, claims, judgments, costs, expenses,
charges and attorney's fees suffered or incurred by the Agent or the Secured
Creditors because of the maintenance of the foregoing arrangements. The Secured
Creditors shall have no liability or responsibility to any Debtor for accepting
any check, draft or other order for payment of money bearing the legend "payment
in full" or words of similar import or any other restrictive legend or
endorsement whatsoever or be responsible for determining the correctness of any
remittance.
Section 6. Special Provisions Re: Investment Property. (a) Unless
and until an Event of Default has occurred and is continuing and thereafter
until notified to the contrary by the Agent pursuant to Section 9(e) hereof:
(i) Each Debtor shall be entitled to exercise all voting
and/or consensual powers pertaining to the Investment Property or any
part thereof owned or held by it, for all purposes not inconsistent
with the terms of this Agreement, the Credit Agreement or any other
document evidencing or otherwise relating to any Obligations; and
(ii) Each Debtor shall be entitled to receive and retain all
cash dividends paid upon or in respect of the Investment Property owned
or held by it.
(b) Certificates for all securities now or at any time constituting
Investment Property hereunder shall be promptly delivered by the relevant Debtor
to the Agent duly endorsed in blank for transfer or accompanied by an
appropriate assignment or assignments or an appropriate undated stock power or
powers, in every case sufficient to transfer title thereto, and, with respect to
any Investment Property held by a securities intermediary, commodity
intermediary, or other financial intermediary of any kind, the relevant Debtor
shall execute and deliver, and shall cause any such intermediary to execute and
deliver, an agreement among such Debtor, the Agent, and such intermediary in
form and substance satisfactory to the Agent which provides, among other things,
for the intermediary's agreement that it will comply with entitlement orders,
and apply any value distributed on account of any Investment Property maintained
in an account with such intermediary, as directed by the Agent without further
consent by such Debtor at any time after the occurrence of any Event of Default;
provided, however, that, prior to the existence of an Event of Default and
thereafter until otherwise required by the Agent or the Required Lenders, a
Debtor shall not be required to deliver any such certificates or cause any such
agreement to be entered into with the relevant financial intermediary if and so
long as (i) the fair market value of any such Investment Property held by such
Debtor is less than $100,000 and (ii) the aggregate fair market value of all
such Investment Property held by the Debtors and not subject to the control (as
such term is defined in the Code) of the Agent under the Collateral Documents is
less than $250,000 at any one time outstanding. The Agent may at any time after
the occurrence of
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an Event of Default cause to be transferred into its name or the name of its
nominee or nominees any and all of the Investment Property hereunder.
(c) Unless and until an Event of Default has occurred and is
continuing, each Debtor may sell or otherwise dispose of any Investment Property
to the extent permitted by the Credit Agreement, provided that no Debtor shall
sell or otherwise dispose of any capital stock or other equity interests in any
other Debtor or any direct or indirect Subsidiary of any Debtor without the
Agent's prior written consent. During the existence of any Event of Default, no
Debtor shall sell or otherwise dispose of all or any part of the Investment
Property without the prior written consent of the Agent.
(d) Each Debtor represents that on the date of this Agreement, none
of the Investment Property consists of margin stock (as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System) except to
the extent such Debtor has delivered to the Agent a duly executed and completed
Form U-1 with respect to such stock. If at any time the Investment Property or
any part thereof consists of margin stock, the relevant Debtor shall promptly so
notify the Agent and deliver to the Agent a duly executed and completed Form U-1
and such other instruments and documents reasonably requested by the Agent in
form and substance satisfactory to the Agent.
(e) Notwithstanding anything to the contrary contained herein, in the
event any Investment Property is subject to the terms of a separate security
agreement (including, without limitation, the Pledge Agreement bearing even date
herewith relating to the equity interests issued by certain of the Debtors
hereunder) in favor of the Agent, the terms of such separate security agreement
shall govern and control unless otherwise agreed to in writing by the Secured
Creditors.
Section 7. Special Provisions Re: Inventory and Equipment. (a)
Each Debtor will at its own cost and expense maintain, keep and preserve its
Inventory in good and merchantable condition and keep and preserve its Equipment
in good repair, working order and condition, ordinary wear and tear excepted,
and without limiting the foregoing make all necessary and proper repairs,
replacements and additions to the Equipment so that the efficiency thereof shall
be fully preserved and maintained.
(b) Each Debtor may, until an Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Agent, use, consume
and sell its Inventory in the ordinary course of its business as presently
conducted, but a sale in the ordinary course of business shall not under any
circumstance include any transfer or sale in satisfaction, partial or complete,
of a debt owing by any Debtor.
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(c) Each Debtor may, until an Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Agent, sell (i)
obsolete, worn out or unusable Equipment which is concurrently replaced with
similar Equipment at least equal in quality and condition to that sold and owned
by such Debtor free of any lien, charge or encumbrance other than the lien
hereof and (y) Equipment which is not necessary for, or of importance to, the
proper conduct of any Debtor's business in the ordinary course and failure to
repair or replace such Equipment would not be disadvantageous to the rights
hereunder of the Secured Creditors.
(d) As of the time any Inventory or Equipment becomes subject to the
security interest provided for hereby and at all times thereafter, each Debtor
shall be deemed to have warranted as to any and all of its Inventory and
Equipment that all warranties of such Debtor set forth in this Agreement are
true and correct with respect to such Inventory and Equipment and that all of
such Inventory and Equipment is located at a location set forth pursuant to
Section 3(b) hereof. Each Debtor warrants and agrees that no Inventory is or
will be consigned to any other person without the Agent's prior written consent.
(e) Each Debtor shall at its own cost and expense cause the lien of
the Agent in and to any portion of its Collateral subject to a certificate of
title law to be duly noted on such certificate of title or to be otherwise filed
in such manner as is prescribed by law in order to perfect such lien and shall
cause all such certificates of title and evidences of lien to be deposited with
the Agent unless otherwise permitted by the Required Lenders in their sole
discretion; provided that no Debtor shall be obligated to cause the Agent's lien
to be so noted or to deliver any such certificate of title to the Agent to the
extent such certificate is held by another creditor with a purchase money
security interest permitted by the Credit Agreement on the Collateral
represented by such certificate.
(f) Each Debtor shall at its own cost and expense cause any
certificate of title evidencing any of the Collateral to be amended to reflect
the current and correct name of such Debtor as and when required by applicable
law, but in any event no later than such date on which such Debtor must renew
its registration of such Collateral under applicable law. Each Debtor shall
cause the lien of the Agent in such Collateral to continue to be duly noted on
such amended or reissued certificate of title.
(g) Except for Equipment from time to time located on the real estate
described on Schedule C attached hereto and as otherwise disclosed to the Agent
in writing, none of the Equipment is or will be attached to real estate in such
a manner that the same may become a fixture.
(h) If any of its Inventory is at any time evidenced by a document of
title, such document shall be promptly delivered by the appropriate Debtor to
the Agent.
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Section 8. Power of Attorney. In addition to any other powers of
attorney contained herein, each Debtor appoints the Agent, its nominee, or any
other person whom the Agent may designate as such Debtor's attorney in fact,
with full power to endorse such Debtor's names on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security that may
come into the Agent's possession, to sign such Debtor's names on any invoice or
xxxx of lading relating to any Receivables, on drafts against customers, on
schedules and assignments of Receivables, on notices of assignment, on public
records, on verifications of accounts and on notices to customers, to send
requests for verification of Receivables to customers or account debtors, to
notify the post office authorities to change the address for delivery of such
Debtor's mail to an address designated by the Agent and to receive, open and
dispose of all mail addressed to such Debtor and to do all other things
necessary to carry out this Agreement. Each Debtor hereby ratifies and approves
all acts of any such attorney and agree that neither the Agent nor any such
attorney nor any Secured Creditor will be liable for any acts or omissions nor
for any error of judgment or mistake of fact or law other than their own gross
negligence or willful misconduct. The foregoing power of attorney, being coupled
with an interest, is irrevocable until the Obligations have been fully satisfied
and any commitment of the Secured Creditors to extend credit constituting
Obligations has terminated. The Agent may file one or more financing statements
disclosing its security interest in any or all of the Collateral without any
Debtor's signature appearing thereon. Each Debtor also hereby grants the Agent a
power of attorney to execute any such financing statement, or amendments and
supplements to financing statements, on behalf of such Debtor without notice
thereof to any Debtor, which power of attorney is coupled with an interest and
is irrevocable until the Obligations have been fully satisfied and any
commitment of the Secured Creditors to extend credit constituting Obligations to
the Company has terminated.
Section 9. Defaults and Remedies. (a) The occurrence of any event
or the existence of any condition which is specified as an Event of Default
under the Credit Agreement shall constitute an "Event of Default" hereunder.
(b) Upon the occurrence of any Event of Default, the Agent shall
have, in addition to all other rights provided herein or by law, the rights and
remedies of a secured party under the Code (regardless of whether the Code is
the law of the jurisdiction where the rights or remedies are asserted and
regardless of whether the Code applies to the affected Collateral), and further
the Agent may, without demand and without advertisement, notice, hearing or
process of law, all of which each Debtor hereby waives to the extent permitted
by law, at any time or times, sell and deliver any or all Collateral held by or
for it at public or private sale, for cash, upon credit or otherwise, at such
prices and upon such terms as the Agent deems advisable, in its sole discretion.
In addition to all other sums due the Agent and the Secured Creditors hereunder,
the Debtors jointly and severally agree to pay to the Agent and the Secured
Creditors all costs and expenses incurred by the Agent and the Secured
Creditors, including reasonable attorneys' fees
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and court costs, in obtaining, liquidating or enforcing payment of Collateral or
Obligations or in the prosecution or defense of any action or proceeding by or
against the Agent or such other Secured Creditor or the Debtors or any of them
concerning any matter arising out of or connected with this Agreement or the
Collateral or Obligations, including without limitation any of the foregoing
arising in, arising under or related to a case under the Bankruptcy Code. Any
requirement of reasonable notice shall be met if such notice is personally
served on or mailed, postage prepaid, to the Debtors in accordance with Section
14(b) hereof at least ten days before the time of sale or other event giving
rise to the requirement of such notice; however, no notification need be given
to a Debtor if that Debtor has signed, after an Event of Default has occurred, a
statement renouncing any right to notification of sale or other intended
disposition. The Agent shall not be obligated to make any sale or other
disposition of the Collateral regardless of notice having been given. The Agent
or any Secured Creditor may be the purchaser at any such sale. To the extent
permitted by applicable law, each Debtor hereby waives all of its rights of
redemption from any such sale. Subject to the provisions of applicable law, the
Agent may postpone or cause the postponement of the sale of all or any portion
of the Collateral by announcement at the time and place of such sale, and such
sale may, without further notice, be made at the time and place to which the
sale was postponed or the Agent may further postpone such sale by announcement
made at such time and place.
(c) Without in any way limiting the foregoing, during the existence
of any Event of Default, the Agent shall have the right, in addition to all
other rights provided herein or by law, to take physical possession of any and
all of the Collateral and anything found therein, the right for that purpose to
enter without legal process any premises where the Collateral may be found
(provided such entry be done lawfully), and the right to maintain such
possession on each Debtor's premises (each Debtor hereby agreeing to lease
warehouses without cost or expense to the Agent or its designee if the Agent so
requests) or to remove its Collateral or any part thereof to such other places
as the Agent may desire. During the existence of any Event of Default, the Agent
shall have the right to exercise any and all rights with respect to deposit
accounts of any Debtor maintained with the Agent or any Secured Creditor,
including, without limitation, the right to collect, withdraw and receive all
amounts due or to become due or payable under each such deposit account. During
the existence of any Event of Default, each Debtor shall, upon the Agent's
demand, assemble its Collateral and make it available to the Agent at a place
designated by the Agent. If the Agent exercises its right to take possession of
the Collateral, each Debtor shall also at its expense perform any and all other
steps requested by the Agent to preserve and protect the security interest
hereby granted in the Collateral, such as placing and maintaining signs
indicating the security interest of the Agent, appointing overseers for the
Collateral and maintaining stock records.
(d) Without in any way limiting the foregoing, each Debtor hereby
grants to the Agent and the Secured Creditors a royalty-free irrevocable license
and right to use all of such
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Debtor's patents, patent applications, patent licenses, trademarks, trademark
registrations, trademark licenses, trade names, trade styles, and similar
intangibles in connection with any foreclosure or other realization by the Agent
or the Secured Creditors on all or any part of the Collateral, provided that the
license granted hereunder shall not include any rights in any license agreement
under which the relevant Debtor is licensee which, by its terms, prohibits the
license contemplated by this Section. The license and right granted the Secured
Creditors hereby shall be without any royalty or fee or charge whatsoever. Such
license and right shall only be exercisable upon the occurrence and continuation
of an Event of Default.
(e) Without in any way limiting the foregoing, during the existence
of any Event of Default, all rights of a Debtor to exercise the voting and/or
consensual powers which it is entitled to exercise pursuant to Section 6(a)(i)
hereof and/or to receive and retain the distributions which it is entitled to
receive and retain pursuant to Section 6(a)(ii) hereof, shall, at the option of
the Agent, cease and thereupon become vested in the Agent, which, in addition to
all other rights provided herein or by law, shall then be entitled solely and
exclusively to exercise all voting and other consensual powers pertaining to the
Investment Property and/or to receive and retain the distributions which such
Debtor would otherwise have been authorized to retain pursuant to Section
6(a)(ii) hereof and shall then be entitled solely and exclusively to exercise
any and all rights of conversion, exchange or subscription or any other rights,
privileges or options pertaining to any Investment Property as if the Agent were
the absolute owner thereof including, without limitation, the rights to
exchange, at its discretion, any and all of the Investment Property upon the
merger, consolidation, reorganization, recapitalization or other readjustment of
the respective issuer thereof or upon the exercise by or on behalf of any such
issuer or the Agent of any right, privilege or option pertaining to any
Investment Property and, in connection therewith, to deposit and deliver any and
all of the Investment Property with any committee, depositary, transfer Agent,
registrar or other designated agency upon such terms and conditions as the Agent
may determine. Without limiting the foregoing, during the existence of any Event
of Default, the Agent may, by written demand, direct any securities
intermediary, commodities intermediary, or other financial intermediary at any
time holding any Investment Property, or any issuer thereof, to deliver such
Collateral, or any part thereof, and/or liquidate such Collateral, or any party
thereof, and deliver the proceeds therefrom to the Agent. In the event the Agent
in good faith believes any of the Collateral constitutes restricted securities
within the meaning of any applicable securities laws, any disposition thereof in
compliance with such laws shall not render the disposition commercially
unreasonable.
(f) The powers conferred upon the Agent hereunder are solely to
protect its interest in the Collateral and shall not impose on it any duty to
exercise such powers. The Agent shall be deemed to have exercised reasonable
care in the custody and preservation of Investment Property in its possession if
such Collateral is accorded treatment substantially equivalent to that which the
Agent accords its own property consisting of similar type assets, it being
understood,
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however, that the Agent shall have no responsibility for ascertaining or taking
any action with respect to calls, conversions, exchanges, maturities, tenders,
or other matters relating to any such Collateral, whether or not the Agent has
or is deemed to have knowledge of such matters. This Agreement constitutes an
assignment of rights only and not an assignment of any duties or obligations of
any Debtor in any way related to the Collateral, and the Agent shall have no
duty or obligation to discharge any such duty or obligation. The Agent shall
have no responsibility for taking any necessary steps to preserve rights against
any parties with respect to any Collateral or initiating any action to protect
the Collateral against the possibility of a decline in market value. Neither the
Agent or any Secured Creditor, nor any party acting as attorney for the Agent or
any Secured Creditor, shall be liable for any acts or omissions or for any error
of judgment or mistake of fact or law other than such person's gross negligence
or willful misconduct.
(g) Failure by the Agent or any Secured Creditor to exercise any
right, remedy or option under this Agreement or any other agreement between the
Debtors or any of them and the Agent or any Secured Creditor or Secured
Creditors or provided by law, or delay by the Agent or any Secured Creditor in
exercising the same, shall not operate as a waiver; no waiver shall be effective
unless it is in writing, signed by the party against whom enforcement of the
waiver is sought and then only to the extent specifically stated. Neither the
Agent, any Secured Creditor nor any party acting as attorney for the Agent or
such Secured Creditor, shall be liable for any acts or omissions or for any
error of judgment or mistake of fact or law other than their gross negligence or
willful misconduct. The rights and remedies of the Secured Creditors under this
Agreement shall be cumulative and not exclusive of any other right or remedy
which the Agent or any Secured Creditor may have. For purposes of this
Agreement, an Event of Default shall be construed as continuing after its
occurrence until the same is waived in writing by the Lenders or the Required
Lenders, as the case may be, in accordance with the Credit Agreement.
Section 10. Application of Proceeds. The proceeds and avails of
the Collateral at any time received by the Agent upon the occurrence and during
the continuation of any Event of Default shall, when received by the Agent in
cash or its equivalent, be applied by the Agent in reduction of the Obligations
in accordance with the terms of the Credit Agreement. The Debtors shall remain
liable to the Agent and the Secured Creditors for any deficiency. Any surplus
remaining after the full payment and satisfaction of the Obligations shall be
returned to the Debtors or to whomsoever the Agent reasonably determines is
lawfully entitled thereto.
Section 11. Continuing Agreement. This Agreement shall be a
continuing agreement in every respect and shall remain in full force and effect
until all of the Obligations, both for principal and interest, have been fully
paid and satisfied and any commitment to extend any credit constituting
Obligations to the Company shall have terminated.
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Section 12. Primary Security; Obligations Absolute. The lien and
security herein created and provided for stand as direct and primary security
for the Obligations. No application of any sums received by the Agent in respect
of the Collateral or any disposition thereof to the reduction of the Obligations
or any portion thereof shall in any manner entitle any Debtor to any right,
title or interest in or to the Obligations or any collateral security therefor,
whether by subrogation or otherwise, unless and until all Obligations have been
fully paid and satisfied and any commitment to extend credit constituting
Obligations to the Company shall have terminated. Each Debtor acknowledges and
agrees that the lien and security hereby created and provided for are absolute
and unconditional and shall not in any manner be affected or impaired by any
acts or omissions whatsoever of the Agent, any Secured Creditor or any other
holder of any of the Obligations, and without limiting the generality of the
foregoing, the lien and security hereof shall not be impaired by any acceptance
by the Agent, any Secured Creditor or any holder of any of the Obligations of
any other security for or guarantors upon any of the Obligations or by any
failure, neglect or omission on the part of the Agent, any Secured Creditor or
any other holder of any of the Obligations to realize upon or protect any of the
Obligations or any collateral security therefor. The lien and security hereof
shall not in any manner be impaired or affected by (and the Agent and the
Secured Creditors, without notice to anyone, are hereby authorized to make from
time to time) any sale, pledge, surrender, compromise, settlement, release,
renewal, extension, indulgence, alteration, substitution, exchange, change in,
modification or disposition of any of the Obligations, or of any collateral
security therefor, or of any guaranty thereof or of any obligor thereon. The
Secured Creditors may at their discretion at any time grant credit to the
Company without notice to any Debtor in such amounts and on such terms as the
Secured Creditors may elect (all of such to constitute additional Obligations)
without in any manner impairing the lien and security hereby created and
provided for. No release, compromise or discharge of any Debtor hereunder or
with respect to any of the Obligations or any Collateral provided by such Debtor
shall release or discharge, or impair the agreements of, any other Debtor
hereunder or in any manner impair the liens and security interests granted by
any other Debtor hereunder; and the Agent may proceed against the Collateral
provided hereunder by any one or more of the Debtors without proceeding against
any or all of the other Debtors, their respective properties or any other
security or guaranty whatsoever. Without limiting the generality of the
foregoing, the Agent (acting at the direction of the Secured Creditors) may at
any time or from time to time release any Debtor from its obligations hereunder
or release any Collateral or effect any compromise with any Debtor, and no such
release or compromise shall in any manner impair or otherwise effect the liens
granted by, or the obligations of, the other Debtors hereunder. In order to
foreclose or otherwise realize hereon and to exercise the rights granted the
Agent hereunder and under applicable law as against any Debtor or any Collateral
in which such Debtor has rights, there shall be no obligation on the part of the
Agent, any Secured Creditor or any other holder of any of the Obligations at any
time to first resort for payment to the Company or any other Debtor or any other
Person, its property or estate or to any guaranty of the Obligations or any
portion thereof or to resort to any other collateral security, property, liens
or any other rights
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or remedies whatsoever, and the Agent shall have the right to enforce this
instrument as against any Debtor or any Collateral in which such Debtor has
rights, irrespective of whether or not other proceedings or steps are pending
seeking resort to or realization upon or from any of the foregoing.
Section 13. The Agent. In acting under or by virtue of this
Agreement, the Agent shall be entitled to all the rights, authority, privileges
and immunities provided in Section 10 of the Credit Agreement, all of which
provisions of said Section 10 are incorporated by reference herein with the same
force and effect as if set forth herein in their entirety. The Agent hereby
disclaims any representation or warranty to the Secured Creditors concerning the
perfection of the security interest granted hereunder or in the value of any of
the Collateral.
Section 14. Miscellaneous. (a) This Agreement cannot be changed or
terminated orally. All of the rights, privileges, remedies and options given to
the Agent and the Secured Creditors hereunder shall inure to the benefit of
their respective successors and assigns, and all the terms, conditions,
promises, covenants, representations and warranties of and in this Agreement
shall bind each Debtor and its legal representatives, successors and assigns,
provided that no Debtor may assign its rights or delegate its duties hereunder
without the Agent's prior written consent. Without limiting the generality of
the foregoing, and subject to the provisions of Sections 12.14 and 12.15 of the
Credit Agreement, any Lender may assign or otherwise transfer any indebtedness
held by it secured by this Agreement to any other person or entity, and such
other person or entity shall thereupon become vested with all the benefits in
respect thereof granted to such Lender herein or otherwise, subject, however, to
the provisions of the Credit Agreement. Each Debtor hereby releases the Agent
and each Secured Creditor from any liability for any act or omission relating to
its Collateral or this Agreement, except the Agent's or such Secured Creditor's
gross negligence or willful misconduct.
(b) All communications provided for herein shall be in writing,
except as otherwise specifically provided for hereinabove, and shall be deemed
to have been given or made, if to any Debtor when given to the Company in
accordance with Section 12.8 of the Credit Agreement, or if to the Agent or any
Lender, when given to such party in accordance with Section 12.8 of the Credit
Agreement.
(c) No Secured Creditor shall have the right to institute any suit,
action or proceeding in equity or at law for the foreclosure against any
Collateral subject to this Agreement or for the execution of any trust or power
hereof or for the appointment of a receiver, or for the enforcement of any other
remedy under or upon this Agreement; it being understood and intended that no
one or more of the Secured Creditors shall have any right in any manner
whatsoever to affect, disturb or prejudice the lien and security interest of
this Agreement by its or their action or to enforce any right hereunder, and
that all proceedings at law or in equity shall be
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instituted, had and maintained by the Agent in the manner herein provided for
the ratable benefit of the Secured Creditors.
(d) In the event that any provision hereof shall be deemed to be
invalid by reason of the operation of any law or by reason of the interpretation
placed thereon by any court, this Agreement shall be construed as not containing
such provision, but only as to such locations where such law or interpretation
is operative, and the invalidity of such provision shall not affect the validity
of any remaining provision hereof, and any and all other provisions hereof which
are otherwise lawful and valid shall remain in full force and effect. Without
limiting the generality of the foregoing, in the event that this Agreement shall
be deemed to be invalid or otherwise unenforceable with respect to any Debtor,
such invalidity or unenforceability shall not affect the validity of this
Agreement with respect to the other Debtors.
(e) Upon the execution and delivery of this Agreement by the Debtors
hereunder, this Agreement shall supersede all provisions of the Prior Security
Agreement as of such date. The Debtors hereby agree that, notwithstanding the
execution and delivery of this Agreement, the lien and security interest created
and provided for under the Prior Security Agreement continue in effect under and
pursuant to the terms of this Agreement for the benefit of all of the
Obligations secured hereby. Nothing herein contained shall in any manner affect
or impair the priority of the liens and security interests created and provided
for by the Prior Security Agreement as to the indebtedness and obligations which
would otherwise be secured hereby prior to giving effect to this Agreement
(f) This Agreement shall be deemed to have been made in the State of
Illinois and shall be governed by the internal laws of the State of Illinois
(without regard to the principles of conflicts of law). All terms which are used
in this Agreement which are defined in the Code shall have the same meanings
herein as said terms do in the Code unless this Agreement shall otherwise
specifically provide. The headings in this instrument are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision hereof.
(g) This Agreement may be executed in any number of counterparts,
each constituting an original, but all together one and the same instrument.
Each Debtor acknowledges that this Agreement is and shall be effective upon its
execution and delivery by such Debtor to the Agent, and it shall not be
necessary for the Agent to execute this Agreement or any other acceptance hereof
or otherwise to signify or express its acceptance hereof.
(h) THE AGENT AND THE DEBTORS AGREE THAT ALL DISPUTES AMONG THEM
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR
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FEDERAL COURTS LOCATED IN XXXX COUNTY, ILLINOIS, BUT EACH OF THE AGENT AND THE
DEBTORS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE OF XXXX COUNTY, ILLINOIS. EACH OF THE DEBTORS WAIVES IN
ALL DISPUTES ANY OBJECTION THAT SUCH DEBTOR MAY HAVE TO THE LOCATION OF THE
COURT CONSIDERING THE DISPUTE OR ANY OBJECTION THAT SUCH DEBTOR MAY HAVE THAT
ANY OTHER PARTY HAS NOT BEEN JOINED IN SUCH PROCEEDING. EACH OF THE DEBTORS
AGREES THAT THE AGENT SHALL HAVE THE RIGHT TO PROCEED AGAINST EACH AND ANY OF
THE DEBTORS OR THEIR COLLATERAL IN A COURT IN ANY LOCATION TO ENABLE THE AGENT
TO REALIZE ON THE COLLATERAL, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF THE AGENT, WHETHER OR NOT PROCEEDING SEPARATELY AGAINST ANY
DEBTOR AND ITS PROPERTY OR JOINTLY AGAINST THE COMPANY AND ANY ONE OR MORE OF
THE DEBTORS AND THEIR PROPERTY. EACH OF THE DEBTORS WAIVES ANY OBJECTION THAT IT
MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE AGENT HAS COMMENCED A
PROCEEDING DESCRIBED IN THIS PARAGRAPH.
[SIGNATURE PAGES TO FOLLOW]
-23-
24
IN WITNESS WHEREOF, the Debtors have caused this Agreement to be duly
executed as of the date first above written.
DEBTORS:
XXXXXX INDUSTRIAL GROUP, INC.
By
Its
--------------------------------------
XXXXXX METALCRAFT CO.
By
Its
--------------------------------------
XXXXXX METALCRAFT CO. OF NORTH CAROLINA
By
Its
--------------------------------------
XXXXXX METALCRAFT CO. OF SOUTH CAROLINA
By
Its
--------------------------------------
XXXXXXX XXXXXX, INC.
-24-
25
By
Its
--------------------------------------
B&W METAL FABRICATORS, INC.
By
Its
--------------------------------------
-25-
26
Accepted and agreed to as of the date first above written.
XXXXXX TRUST AND SAVINGS BANK, as Agent
By
Its
-------------------------------------
-26-
