1
Exhibit 10.14
SUBORDINATED NOTE SECURITY AGREEMENT
SUBORDINATED NOTE SECURITY AGREEMENT, dated December __, 1997 (as it may
be amended, supplemented or otherwise modified from time to time, this
"Security Agreement"), made by SELFIX, INC., a Delaware corporation
(individually, "Selfix"), TAMOR CORPORATION, a Massachusetts corporation
(individually, "Tamor"), SHUTTERS, INC., an Illinois corporation (individually,
"Shutters") and SEYMOUR HOUSEWARES CORPORATION, a Delaware corporation
(individually, "Seymour") (Selfix, Tamor, Shutters and Seymour collectively,
"Grantors"), in favor of GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation ("GE Capital"), as agent for holders of the Senior Subordinated
Notes (the "Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Note Purchase Agreement, of even date
herewith, by and among Grantors and GE Capital, as Agent for holders of the
Subordinated Notes (as the same may from time to time be amended, modified or
supplemented, the "Note Purchase Agreement"), GE Capital and certain other Note
Purchasers have agreed to purchase from Grantors senior subordinated notes (the
"Subordinated Notes") in the principal amount of $10,000,000;
WHEREAS, Grantors have agreed to grant to the holders of the Subordinated
Notes a Lien and security interest in, to and under substantially all of their
assets to secure payment of any and all obligations owing by Grantors to the
holders of the Subordinated Notes under the Note Purchase Agreement; and
WHEREAS, GE Capital is willing to purchase the Subordinated Notes but only
upon the condition, among others, that Grantors shall have executed and
delivered to GE Capital this Security Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows;
1. Defined Terms. Unless otherwise defined herein, terms defined in the
Note Purchase Agreement are used herein as therein defined, and the
following terms shall have the following meanings (such meanings
being equally applicable to both the singular and plural forms of the
terms defined):
2
"Account Debtor" shall mean any "account debtor," as such term is defined
in the Code.
"Accounts" shall mean any "account," as such term is defined in the Code,
now owned or hereafter acquired by any Grantor and, in any event, including (a)
all accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or acquired by or
belonging or owing to any Grantor whether arising out of goods sold or services
rendered by any Grantor or from any other transaction, (including any such
obligations which may be characterized as an account or contract right under
the Code), (b) and all of each Grantor's rights in, to and under all purchase
orders or receipts now owned or hereafter acquired by it for goods or services,
(c) all of each Grantor's rights to any goods represented by any of the
foregoing (including unpaid seller's rights or rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or
repossessed goods), (d) all monies due or to become due to any Grantor, under
all purchase orders and contracts for the sale of goods or the performance of
services or both by such Grantor or in connection with any other transaction
(whether or not yet earned by performance on the part of such Grantor), now or
hereafter in existence, including the right to receive the proceeds of said
purchase orders and contracts, and (e) all collateral security and guarantees
of kind, now or hereafter in existence, given by an Person with respect to any
of the foregoing.
"Chattel Paper" shall mean any "chattel paper," as such term is defined in
the Code, now owned or hereafter acquired by any Grantor.
"Code" shall mean the Uniform Commercial Code as the same may, from time
to time, be enacted and in effect in the State of Illinois provided, however,
in the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of Agent's or any Note Purchaser's security
interest in any Collateral is governed by the Uniform Commercial Code as
enacted and in effect in a jurisdiction other than the State of Illinois, the
term "Code" shall mean the Uniform Commercial Code as enacted and in effect in
such other jurisdiction solely for purposes of the provisions hereof relating
to such attachment, perfection or priority and for purposes of definitions
related to such provisions.
"Collateral" shall have the meaning assigned to such term in Section 2 of
this Security Agreement.
"Contracts" shall mean all "contracts" as such term is defined in the
Code, now or hereafter acquired by any Grantor, in any event, including all
contracts, undertakings, or agreements (other than rights evidenced by Chattel
Paper, Documents or Instruments) in or under
2
3
which any Grantor may now or hereafter have any right, title or interest,
including any agreement relating to the terms of payment or the terms of
performance of any Account.
"Documents" shall mean any "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Grantor, wherever located.
"Equipment" shall mean all "equipment," as such term is defined in the
Code, now owned or hereafter acquired by any Grantor, wherever located and, in
any event, including all of such Grantor's machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment with software and peripheral equipment (other than software
constituting part of the Accounts), and all engineering, processing and
manufacturing equipment, office machinery, furniture, materials handling
equipment, tools, attachments, accessories, automotive equipment, trailers,
trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other
equipment of every kind and nature, trade fixtures not forming a part of real
property, all whether now owned or hereafter acquired, and wherever situated,
together with all additions and accessions thereto, replacements therefore, all
substitutes for any of the foregoing, fuel therefore, and all manuals,
drawings, instructions, warranties and rights with respect thereto, and all
products and proceeds thereof and condemnation awards and insurance proceeds
with respect thereto.
"Fixtures" shall mean any "fixtures," as such term is defined in the Code,
now owned or hereafter acquired by any Grantor.
"General Intangibles" shall mean any "general intangibles," as such term
is defined in the Code, now owned or hereafter acquired by any Grantor, and, in
any event, including all right, title and interest which such Grantor may now
or hereafter have in or under any Contract, all customer lists, Licenses,
Trademarks, Patents, and all applications therefore and reissues, extensions or
renewals thereof, rights in Intellectual Property, interests in partnerships,
joint ventures and other business associations, licenses, permits, trade
secrets, proprietary or confidential information, inventions (whether or not
patented or patentable), technical information, procedures, designs, knowledge,
know-how, software, data bases, data, skill, expertise, experience, processes,
models, drawings, materials and records, goodwill (including the goodwill
associated with any Trademark or Trademark License), all rights and claims in
or under insurance policies (including insurance for fire, damage, loss and
casualty, whether covering personal property, real property, tangible rights or
intangible rights, all liability, life, key man and business interruption
insurance, and all unearned premiums), uncertificated securities, choses in
action, deposit, checking and other bank accounts, rights to receive tax
refunds and other payments, rights of indemnification, all books and records,
correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other
3
4
papers and documents in the possession or under the control of such Grantor or
any computer bureau or service company from time to time acting for such
Grantor.
"hereby," "herein," "hereof," "hereunder" and words of similar import
refer to this Security Agreement as a whole (including, without limitation, any
schedules hereto) and not merely to the specific section, paragraph or clause
in which the respective word appears.
"Instruments" shall mean any "instrument," as such term is defined in the
Code, now owned or hereafter acquired by any Grantor, wherever located, and, in
any event, including all certificated securities, all certificates of deposit,
and all notes and other, without limitation, evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property Collateral" shall mean any and all Licenses,
Patents, Trademarks and trade secrets and customer lists as to which Agent has
been granted a security interest hereunder.
"Inventory" shall mean all "inventory," as such term is defined in the
Code, now owned or hereafter acquired by any Grantor, wherever located, and, in
any event, including inventory, merchandise, goods and other personal property
which are held by or on behalf of any Grantor for sale or lease or are
furnished or are to be furnished under a contract of service, or which
constitute raw materials, work in process or materials used or consumed or to
be used or consumed in such Grantor's business, or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
other supplies.
"Investment Property" shall have the meaning ascribed thereto in Section
9-115 of the Code in those jurisdictions in which such definition has been
adopted and shall include (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Grantor, including
the rights of any Grantor to any securities account and the financial assets
held by a securities intermediary in such securities account and any free
credit balance or other money owing by any securities account and any free
credit balance or other money owing by any securities intermediary with respect
to that account; (iii) all securities accounts held by any Grantor; (iv) all
commodity contracts held by any Grantor; and (v) all commodity accounts held by
any Grantor.
"License" shall mean any Patent License, Trademark License or other
license as to which Agent has been granted a security interest hereunder.
4
5
"Patent License" shall mean rights under any written agreement now owned
or hereafter acquired by any Grantor granting any right with respect to any
invention on which a Patent is in existence.
"Patents" shall mean all of the following now or hereafter acquired by any
Grantor: (i) all patents and patent applications, (ii) all inventions and
improvements described and claimed therein, (iii) all reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof, (iv) all
income, royalties, damages and payments now and hereafter due and/or payable to
any Grantor with respect thereto, including, without limitation, damages and
payments for past, present or future infringements or misappropriation thereof,
(v) all rights to ▇▇▇ for past, present and future infringements or
misappropriation thereof, and (vi) all other rights corresponding thereto
throughout the world.
"Proceeds" shall mean "proceeds," as such term is defined in the Code and,
in any event, shall include (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Grantor form time to time with
respect to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to any Grantor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau or agency (or any person acting under color of governmental
authority), (iii) any claim of any Grantor against third parties (A) for past,
present or future infringement of any Patent or Patent License or (B) for past,
present or future infringement or dilution of any Trademark or Trademark
License or for injury to the goodwill associated with any Trademark, Trademark
registration or Trademark licensed under any Trademark License, (iv) any
recoveries by any Grantor against third parties with respect to any litigation
or dispute concerning any of the Collateral, and (v) any and all other amounts
from time to time paid or payable under or in connection with any of the
Collateral, upon disposition or otherwise.
"Secured Obligations" shall mean the obligations of each Grantor to Agent
pursuant to the Note Purchase Agreement and the Subordinated Notes, including,
without limitation, principal, interest, fees and expenses.
"Security Agreement" shall mean this Security Agreement, as the same may
from time to time be amended, modified or supplemented and shall refer to this
Security Agreement as in effect on the date such reference become operative.
"Trademark License" shall mean rights under any written agreement now
owned or hereafter acquired by any Grantor granting any right use any
Trademark.
5
6
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Grantor: (i) all trademarks (including service marks and trade
names, whether registered or at common law), registrations and applications
therefore, and the entire product lines and good will of any Grantor's business
connected therewith and symbolized thereby, (ii) all renewals thereof, (iii)
all income, royalties, damages and payments now and hereafter due or payable or
both with respect thereto, including, without limitation, damages and payments
for past, present or future infringements or misappropriations thereof, (iv)
all rights to ▇▇▇ for past, present and future infringements or
misappropriations thereof, and (v) all other rights corresponding thereto
throughout the world.
2. Grant of Security Interest.
(a) As collateral security for the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or
otherwise) of all the Secured Obligations, each Grantor hereby assigns,
conveys, mortgages, pledges, hypothecates and transfers to Agent on behalf
of the holders of the Subordinated Notes, and hereby grants to Agent on
behalf of the holders of the Subordinated Notes, a second Lien on all of
such Grantor's right, title and interest in, to and under the following
(all of which being hereinafter collectively called the, "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(ii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all Fixtures;
(vii) all General Intangibles;
(viii) all goods;
(ix) all Instruments;
(x) all Inventory;
6
7
(xi) all Investment Property;
(xii) all Grantor's accounts, concentration accounts,
disbursement accounts and all other deposit and other
bank accounts and all deposits therein;
(xiii) all money, cash or cash equivalents of any Grantor;
and
(xiv) to the extent not otherwise included, all Proceeds and
products of the foregoing and all accessions to,
substitutions and replacements for, and rents and
profits of, each of the foregoing.
(b) In addition, as collateral security for the prompt and complete
payment when due of the Secured Obligations and in order to induce Agent
as aforesaid, Agent is hereby granted a second Lien on all property of
any Grantor held by Agent, including, without limitation, all property of
every description (including any real property subject to any mortgage),
now or hereafter in the possession or custody of or in transit to Agent
for any purpose, including safekeeping, collection or pledge, for account
of any Grantor, or as to which any Grantor may have any right or power.
3. Rights of Agent; Limitations on Agent's Obligations.
(a) It is expressly agreed by Grantors that, anything herein to the
contrary notwithstanding , each Grantor shall remain liable under each of
its Contracts and each of its Licenses to observe and perform all the
conditions and obligations to be observed and performed by it thereunder
and each Grantor shall perform all of its duties and obligations
thereunder, all in accordance with and pursuant to the terms and
provisions of each such Contract or License. Agent shall not have any
obligation or liability under any Contract or License by reason of or
arising out of this Security Agreement or the granting to Agent of a
security interest therein or their receipt by Agent of any payment
relating to any Contract or License pursuant hereto, nor shall Agent be
required or obligated in any manner to perform or fulfill any of the
obligations of any Grantor under or pursuant to any Contract or License,
or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any
performance by any party under any Contract or License, or to present or
file any claim, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned to
it or to which may be entitled at any time or times.
(b) Agent authorizes each Grantor to collect its
Accounts provided that such collection is performed in a
prudent and businesslike manner, and Agent may, upon the
7
8
occurrence and during the continuation of any Event of Default and without
notice, limit or terminate said authority at any time. If required by
Agent after payment in full of the Senior Loans and at any time during the
continuation of any Event of Default, any Proceeds, when first collected
by any Grantor, received in payment of any such Account or in payment for
any of its Inventory or on account of any of its Contracts, shall be
promptly deposited by such Grantor in precisely the form received (with
all necessary endorsements) in a special bank account maintained by Agent
subject to withdrawal by Agent only, as hereinafter provided, and until so
turned over shall be deemed to be held in trust by such Grantor for and as
Agent's property and shall not be commingled with such Grantor's other
funds or properties. Such Proceeds, when deposited, shall continue to be
collateral security for all of the Secured Obligations and shall not
constitute payment thereof until applied as hereinafter provided. Agent
shall apply all or a party of the funds on deposit in said special account
to the principal of or interest on or both in respect of any of the
Secured Obligations in accordance with the provisions of Section 7(d)
hereof and any part of such funds which Agent elects not so to apply and
deems not required as collateral security for the Secured Obligations
shall be paid over from time to time by Agent to such Grantor. If an
Event of Default has occurred and is continuing and after payment in full
of the Senior Loans and, at the request of Agent, each Grantor shall
deliver to Agent all original and other documents evidencing, and relating
to , the sale and delivery of such Inventory or the performance of labor
or service which created such Accounts, including, without limitation, all
original orders, invoices and shipping receipts; and, prior to the
occurrence of an Event of Default, Grantor shall deliver photocopies
thereof to Agent at its request.
(c) Agent may at any time after payment in full of the Senior Loans
and upon the occurrence and during the continuation of any Event of
Default (whether or not waived), after first notifying the Grantors of its
intention to do so, notify Account Debtors of each Grantor, parties to the
Contracts of each Grantor, obligors of Instruments of each Grantor and
obligors in respect of Chattel Paper of each Grantor that the Accounts and
the right, title and interest of each Grantor in and under such Contracts,
such Instruments and such Chattel Paper have been assigned to Agent and
that payments shall be made directly to Agent. Upon the request of Agent
after payment in full of the Senior Loans, each Grantor will so notify
such Account Debtors, parties to such Contracts, obligors of such
Instruments and obligors in respect of such Chattel Paper that payments
shall be made directly to Agent. Upon the occurrence and during the
continuation of an Event of Default (whether or not waived), after payment
in full of the Senior Loans, Agent may in its own name or in the name of
others communicate with such Account Debtors, parties such Contracts,
obligors of such Instruments and obligors in respect of such Chattel Paper
8
9
to verify with such Persons to Agent's satisfaction the existence, amount
and terms of any such Accounts, Contracts, Instruments or Chattel Paper.
(d) Upon reasonable prior notice to any Grantor (unless an Event of
Default has occurred and is continuing, in which case no notice is
necessary), Agent shall have the right, during normal business hours, to
make test verifications of the Accounts and physical verifications of the
Inventory in any manner and through any medium that it considers
advisable, and all Grantors agree to finish all such assistance and
information as Agent may require in connection therewith. Upon the
occurrence and continuation of an Event of Default, each Grantor at its
expense will cause certified independent public accountants satisfactory
to Agent to prepare and deliver to Agent at any time and from time to
time promptly upon Agent's request, the following reports: (i) a
reconciliation of all its Accounts, (ii) an aging of all its Accounts,
(iii) trial balances, and (iv) a test verification of such Accounts as
Agent may request. Each Grantor at its expense will cause certified
independent public accountants satisfactory to Agent to prepare and
deliver to Agent the results of the annual physical verification of its
Inventory made or observed by such accountants.
4. Representations and Warranties. Each Grantor hereby represents
and warrants that:
(a) Except for the security interest granted to Agent pursuant to
this Security Agreement and other Liens permitted by the Note Purchase
Agreement, each Grantor is the sole owner of each item of the Collateral
in which it purports to grant a security interest hereunder, having good
and marketable title thereto, free and clear of any and all Liens. No
material amounts payable under or in connection with any of its Accounts
or Contracts are evidenced by Instruments which have not been delivered
to Agent.
(b) No effective security agreement, financing statement, equivalent
security or lien instrument or continuation statement covering all or any
party of the Collateral is on file or of record in any public office,
except such as my have been filed by any Grantor in favor of Agent
pursuant to this Security Agreement or such as relate to other Liens
permitted by the Note Purchase Agreement.
(c) Appropriate financing statements having been filed in the
jurisdictions listed on Schedule I hereto, this Security Agreement is
effective to create a valid and continuing lien on and perfected security
interest in the Collateral with respect to which a security interest may
be perfected by the filing of financing statements pursuant to the Code,
or by filing in the United States Patent and Trademark Office, in favor
of Agent,
9
10
prior to all other Liens except Liens permitted by the Note Purchase
Agreement, and is enforceable as such as against creditors of and
purchasers from any Grantor (other than purchasers of Inventory in the
ordinary course of business) and as against any purchaser of real property
where any of the Equipment is located and any present or future creditor
obtaining a Lien on such real property. All action necessary or desirable
to protect and perfect such security interest in each item of the
Collateral has been duly taken.
(d) Each Grantor's principal place of business and the place where
its records concerning the Collateral are kept and the location of its
Inventory and Equipment are set forth on Schedule II hereto, and no
Grantors will change such principal place of business or remove such
records or change the location of its Inventory and Equipment unless it
has taken such action as is necessary to cause the security interest of
Agent in the Collateral to continue to be perfected. No Grantor will
change its principal place of business or the place where its records
concerning the Collateral are kept or change the locations of its
Inventory and Equipment without giving thirty (30) days' prior written
notice thereof to Agent.
(e) The amount represented by each Grantor to Agent from time to
time as owing by each Account Debtor or by all Account Debtors in respect
of the Accounts of such Grantor will at such time be correct amount
actually and unconditionally owing by such Account Debtors thereunder.
(5) Covenants. Grantors covenant and agree with Agent that from and
after the date of this Security Agreement and until the Secured
Obligations are fully satisfied:
(a) Further Documentation; Pledge of Instruments. At any time and
from time to time, upon the written request of Agent, and at the sole
expense of Grantors, Grantors will promptly and duly execute and deliver
any and all such further instruments and documents and take such further
action as Agent may reasonably deem desirable to obtain the full benefits
of this Security Agreement and of the rights and powers herein granted,
including, without limitation, using their best efforts to secure all
consents and approvals necessary or appropriate for the assignment to
Agent of any License or Contract held by any Grantor or in which any
Grantor has any rights not heretofore assigned, the filing of any
financing or continuation statements under the Code with respect to the
Liens and security interests granted hereby, transferring Collateral to
Agent's possession (if a security interest in such Collateral can be
perfected by possession), and using its best efforts to obtain waivers of
Liens from landlords and mortgagees. Grantors also hereby authorize
Agent to file any such financing or continuation statement without the
signature of any Grantor to the extent permitted by applicable law. If
any amount payable under or
10
11
in connection with any of the Collateral shall be or become evidenced
by any Instrument, after the Senior Loans have been paid in full, such
Instrument shall be immediately pledged to Agent hereunder, and shall be
duly endorsed in a manner satisfactory to Agent and delivered to Agent.
(b) Maintenance of Records. Each Grantor will keep and maintain at
its own cost and expense satisfactory and complete records of the
Collateral, including, without limitation, a record of all payments
received and all credits granted with respect to the Collateral and all
other dealings with the Collateral. Each Grantor will ▇▇▇▇ its books and
records pertaining to the Collateral to evidence this Security Agreement
and the security interests granted hereby. All Chattel Paper will be
marked with the following legend: "This writing and the obligations
evidenced or secured hereby are subject to the security interest of
General Electric Capital Corporation." For Agent's further security,
each Grantor agrees that Agent shall have a special property interest in
all of each Grantor's books and records pertaining to the Collateral and,
upon the occurrence and during the continuation of any Event of Default,
after the Senior Loans has been paid in full, each Grantor shall deliver
and turn over any such books and records to Agent or to its
representatives at any time on demand of Agent. Prior to the occurrence
of an Event of Default and upon reasonable notice from Agent, each
Grantor shall permit any representative of Agent to inspect such books
and records and will provide photocopies thereof to Agent.
(c) Indemnification. In any suit, proceeding or action brought by
Agent relating to any Account, Chattel Paper, Contract, General
Intangible or Instrument for any sum owing thereunder, or to enforce any
provision of any Account, Chattel Paper, Contract, General Intangible or
Instrument, each Grantor will save, indemnify and keep Agent harmless
from and against all expense, loss or damage suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the obligor thereunder, arising out of a breach by any
Grantor or any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owning to, or in favor
so, such obligor or its successors from any Grantor, and all such
obligations of each Grantor shall be and remain enforceable against and
only against such Grantor and shall not be enforceable against Agent.
(d) Payment of Obligations. Each Grantor will pay promptly when due
all taxes, assessments and governmental charges or levies imposed upon
the Collateral or in respect of its income or profits therefrom and all
claims of any kind (including, without limitation, claims for labor,
materials and supplies), except that no such charge need be paid if (i)
such nonpayment does not involve any danger of the sale, forfeiture or
loss of
11
12
any of the Collateral or any interest therein, and (ii) such charge is
being contested in good faith, by proper proceedings, and adequate
reserves therefore have been established by each Grantor in accordance
with and to the extent required by GAAP.
(e) Compliance with Terms of Accounts, etc. In all material
respects, each Grantor will perform and comply with all obligations in
respect of Accounts, Chattel Paper, Contracts and Licenses and all other
agreements to which it is a party or by which it are bound.
(f) Limitation on Liens on Collateral. Grantors will not create,
permit or suffer to exist, and will defend the Collateral against and
take such other action as is necessary to remove, any Lien on the
Collateral except Liens permitted by the Note Purchase Agreement, and
will defend the right, title and interest of Agent in and to any of each
Grantor's rights under the Chattel Paper, Contracts, Documents, General
Intangibles and Instruments and to the Equipment and Inventory and in and
to the Proceeds thereof against the claims and demands of all Persons
whomsoever.
(g) Limitations on Modifications of Accounts. Upon the occurrence
and during the continuation of any Default or Event of Default, no
Grantor will, without Agent's prior written consent, grant any extension
of the time of payment of any of the Accounts, Chattel Paper or
Instruments, compromise, compound or settle the same for less than the
full amount thereof, release, wholly or partly, any Person liable for the
payment thereof, or allow any credit or discount whatsoever thereon other
than trade discounts granted in the ordinary course of business of such
Grantor.
(h) Maintenance of Insurance. Each Grantor will maintain, with
financially sound and reputable companies, insurance policies (i)
insuring their Inventory and Equipment against loss by fire, explosion,
theft and such other casualties as are usually insured against by
companies engaged in the same or similar businesses and (ii) insuring
each Grantor and Agent against liability for personal injury and property
damage relating to such Inventory and Equipment, such policies to be in
such amounts and against at least such risks, as are usually insured
against, in the same general area by companies engaged in the same or a
similar business, naming Agent as an additional insured with losses
payable to each Grantor and Agent as their respective interests may
appear under a standard "lender loss-payable" clause.
(i) Further Identification of Collateral. Each Grantor will if so
requested by Agent furnish to Agent, as often as Agent reasonably
requests, statements and schedules
12
13
further identifying and describing the Collateral and such other reports
in connection with the Collateral as Agent may reasonably request, all in
reasonable detail.
(j) Notices. Each Grantor will advise Agent promptly, in reasonable
detail, (i) of any material Lien, security interest, encumbrance or claim
made or asserted against any of the Collateral, (ii) of any material
change in the composition of the Collateral, and (iii) of the occurrence
of any other event which would have a material adverse effect on the
aggregate value of the Collateral or on the security interests created
hereunder.
(k) Right of Inspection. Upon reasonable notice to any Grantor
(unless an Event of Default has occurred and is continuing, in which case
no notice is necessary), Agent shall at all reasonable times have access
during normal business hours to all of the books and records and
correspondence of each Grantor, and Agent or its representatives may
examine the same, take extracts therefrom and make photocopies thereof,
and each Grantor agrees to render to Agent, at such Grantor's cost and
expense, such clerical and other assistance as may be reasonably
requested with regard thereto. Upon reasonable notice to any Grantor
(unless an Event of Default has occurred and is continuing, in which case
no notice is necessary), Agent and its representatives shall also have
the right, at reasonable times and during normal business hours, to enter
into and upon any premises where any of the Equipment or Inventory is
located for the purpose of inspecting the same, observing its use or
otherwise protecting its interests therein.
(l) Maintenance of Equipment. Each Grantor will keep and maintain
the Equipment in good operating condition sufficient for the continuation
of the business conducted by each Grantor on a basis consistent with past
practices, and each Grantor will provide all maintenance and service and
all repairs necessary for such purpose.
(m) Continuous Perfection. Grantors will not change their names,
identities or corporate structures in any manner which might make any
financing or continuation statement filed in connection herewith
seriously misleading within the meaning of section 9-402(7) of the Code
(or any other then applicable provision of the Code) unless such Grantor
shall have given Agent at least thirty (30) days' prior written notice
thereof and shall have taken all action (or made arrangements to take
such action substantially simultaneously with such change if it is
impossible to take such action in advance) necessary or reasonably
requested by Agent to amend such financing statement or continuation
statement so that it is not seriously misleading.
(n) Covenants Regarding Intellectual Property Collateral.
13
14
(i) Each Grantor shall notify Agent immediately if it knows or has
reason to know that any application or registration relating to any
Trademark which is material to the conduct of such Grantor's business may
become abandoned or dedicated, or of any adverse determination or
development (including, without limitation, the institution of, or any
such determination or development in, any proceeding in the United States
Patent and Trademark Office or any court) regarding such Grantor's
ownership of any Patent or Trademark which is material to the conduct of
such Grantor's business, its right to register the same, or to keep and
maintain the same.
(ii) In no event shall any Grantor, either itself or through any
agent, employee, licensee or designee, file an application for the
registration of any Trademark with the United States Patent or Trademark
Office or any similar office or agency in any other country or any
political subdivision thereof, unless it promptly informs Agent, and,
upon request of Agent, executes and delivers any and all agreements,
instruments, documents, and papers as Agent may request to evidence
Agent's security interest in such Trademark and the General Intangibles,
including, without limitation, the goodwill of such Grantor relating
thereto or represented thereby.
(iii) Each Grantor will take all necessary and appropriate actions to
maintain and pursue each application, to obtain the relevant
registration, and to maintain the registration of each of the Trademarks
which are material to the conduct of such Grantor's business, including,
without limitation, the filing of applications for renewal, affidavits of
use, affidavits of incontestability and opposition and interference and
cancellation proceedings.
(iv) In the event that any of the Intellectual Property Collateral is
infringed, misappropriated or diluted by a third party, the applicable
Grantor shall notify Agent promptly after it learns thereof and shall,
unless such Grantor shall reasonably determine that such Intellectual
Property Collateral is not material to the conduct of such Grantor's
business, promptly ▇▇▇ for infringement, misappropriation or dilution and
to recover any and all damages for such infringement, misappropriation or
dilution, and take such other actions as such Grantor shall reasonably
deem appropriate under the circumstances to protect such Intellectual
Property Collateral.
14
15
6. Agent's Appointment as Attorney-in-Fact.
(a) Each Grantor hereby irrevocably constitutes and appoints Agent
and any officer or Agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power authority in
the place and stead of such Grantor and in the name of each Grantor or in
its own name, from time to time in Agent's discretion, for the purpose of
carrying out the terms of this Security Agreement, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which may be necessary or desirable to accomplish the
purposes of this Security Agreement and, without limiting the generality
of the foregoing, hereby gives Agent the power and right, on behalf of
each Grantor, without notice to or assent by any Grantor to do the
following after the Senior Loans has been paid in full:
(i) in the name of each Grantor or its own name or otherwise,
to take possession of and endorse and collect any checks, drafts,
notes, acceptances or other Instruments for the payment of moneys
due under any Collateral and to receive payment of any and all
monies, claims, and other amounts due or to become due at any time
arising out of or in respect of any Collateral;
(ii) to pay or discharge taxes, Liens, security interests or
other encumbrances levied or placed on or threatened against the
Collateral, to effect any repairs or any insurance called for by
the terms of this Security Agreement and to pay all or any part of
the premiums therefore and the costs thereof; and
(iii) Upon the occurrence and during the continuation of an
Event of Default (A) to direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys
due, and to become due thereunder, directly to Agent or as Agent
shall direct; (B) to ask, demand and receive payment of and receipt
of any and all moneys, claims and other amounts due, and to become
due at any time, in respect of or arising out of any Collateral;
(C) to sign and indorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with
accounts and other Documents constituting or relating to the
Collateral; (D) to refile any claim or take or commence and
prosecute any suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect the Collateral or
any part thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding brought
against any Grantor with respect to any Collateral; (F) to settle,
compromise or adjust any suit, action or proceeding described above
and, in connection therewith, to give such
16
16
discharges or releases as Agent may deem appropriate; (G) to license
or, to the extent permitted by an applicable license, sublicense,
whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any Patent or Trademark, throughout the
world for such term or terms, on such conditions, and in such
manner, as Agent shall in its sole discretion determine; and (H) to
sell, transfer, pledge, make, any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as
through Agent were the absolute owner thereof for all purposes, and
to do, at Agent's option and at such Grantor's expense, at any time,
or from time to time, all acts and things which Agent reasonably
deems necessary to protect, preserve or realize upon the Collateral
and Agent's Lien therein, in order to effect the intent of this
Security Agreement, all as fully and effectively as each Grantor,
respectively, might do.
(b) Agent agrees that, except upon the occurrence and during the
continuation of an Event of Default, it will forebear from exercising the
power of attorney or any rights granted to Agent pursuant to this Section
6(iii). Each Grantor hereby ratifies, to the extent permitted by law,
all that said attorneys shall lawfully do or cause to be done by virtue
hereof. The power of attorney granted pursuant to this Section 6 is
power coupled with an interest and shall be irrevocable until the Secured
Obligations are indefeasible paid in full.
(c) The powers conferred on Agent hereunder are solely to protect
Agent's interests in the Collateral and shall not impose any duty upon it
to exercise any such powers. Agent shall be accountable only for amounts
that it actually receives as a result of the exercise of such powers and
neither it not any of its officers, directors, employees or agents shall
be responsible to any Grantor for any act or failure to act, except for
its own gross negligence or willful misconduct.
(d) Each Grantor also authorizes Agent, at any time and from time to
time upon occurrence and during the continuation of any Event of Default
and after the Senior Loans has been paid in full, (i) to communicate in
its own name with any party to any Contract with regard to the assignment
of the right, title and interest of such Grantor in and under the
Contracts hereunder and other matters relating thereto and (ii) to
execute, in connection with the sale provided for in Section 7 hereof,
any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
7. Remedies, Rights upon Default.
17
17
(a) If any Event of Default shall occur and be continuing, subject
to the terms of the Note Purchase Agreement, Agent shall exercise in
addition to all other rights and remedies granted to it in this
Security Agreement and in any other instrument or agreement securing,
evidencing or relating to the Secured Obligations, all rights and
remedies of a secured party under the Code. Without limiting the
generality of the foregoing, each Grantor expressly agrees that in any
such event Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon any Grantor or
any other person (all and each of which demands, advertisements and/or
notices are hereby expressly waived to the maximum extent permitted by
the Code and other applicable law), may forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral
(or contract to do so), or any part thereof, in one or more parcels at
public or private sale or sales, at any exchange or broker's board or
at any of Agent's offices or elsewhere at such prices as it may deem
best, for cash or on credit or for future delivery without assumption
of any credit risk. Agent shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption, which
equity of redemption Grantor hereby releases. Each Grantor further
agrees, at Agent's request, to assemble the Collateral and make it
available to Agent at places which Agent shall reasonably select,
whether at any Grantor's premises or elsewhere. Agent shall apply the
net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, as provided in Section 7(d) hereof, all Grantors
remaining liable for any deficiency remaining unpaid after such
application, and only after so paying over such net proceeds and after
the payment by Agent of any other amount required by any provision of
law, including section 9-504(1)(c) of the Code, need Agent account for
the surplus, if any, to such Grantor. To the maximum extent permitted
by applicable law, each Grantor waives all claims, damages, and demands
against Agent arising out of the repossession, retention or sale of the
Collateral except such as arise out of the gross negligence or willful
misconduct of Agent as finally determined by a court of competent
jurisdiction after all possible appeals have been exhausted. Each
Grantor agrees that Agent need not give more than ten (10) days' notice
(which notification shall be deemed given when mailed or delivered on
an overnight basis, postage prepaid, addressed to such Grantor at its
address referred to in Section 11 hereof) of the time and place of any
public sale or of the time after which a private sale may take place
and that such notice is reasonable notification of such matters.
Grantors shall remain liable for any deficiency if the proceeds of any
sale or disposition of the Collateral are insufficient to pay all
amounts to which Agent is
18
18
entitled, such Grantors also being liable for the fees of any attorneys
employed by Agent to collect such deficiency.
(b) Each Grantor also agrees to pay all costs of Agent including,
without limitation, reasonable attorneys' fees, incurred in connection
with the enforcement of any of its rights and remedies hereunder.
(c) Each Grantor hereby waives presentment, demand, protest or any
notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Security Agreement or any Collateral.
(d) After payment in full of the Senior Loans, the Proceeds of any
sale, disposition or other realization upon all or any part of the
Collateral (including real property) shall be distributed by Agent in the
following order of priorities:
first, to Agent in an amount sufficient to pay in full the
expenses of Agent in connection with such sale, disposition or
other realization, including all reasonable expenses, liabilities
and advances incurred or made by Agent in connection therewith,
including, without limitation, attorney's fees:
second, to Agent and such other holders, if any, of the
Subordinated Notes in an amount equal to the then unpaid principal
of and accrued interest and prepayment premiums, if any, on the
Secured Obligations applicable to the Subordinated Notes, and if
such Proceeds shall be insufficient to pay in full such amount,
then to Agent and such other holders, if any, of the Subordinated
Notes ratably in accordance with the then unpaid amounts thereof
owing to Agent and each such holder; and
finally, upon payment in full of all of the Secured
Obligations, to pay to the Grantors, or their representatives or as
a court of competent jurisdiction may direct, any surplus then
remaining from such Proceeds.
8. Grant of License to Use Intellectual Property Collateral. For
the purpose of enabling Agent to exercise rights and remedies under Section 7
hereof at such time as
19
19
Agent, without regard to this Section 8, shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to Agent an
irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to any Grantor) to use, license or
sublicense any Patent, Trade Secret or Trademark, now owned or hereafter
acquired by any Grantor, and wherever the same may be located, and
including, without limitation, in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to
all computer and automatic machinery software and programs used for the
compilation or printout thereof.
9. Appointment of Agent. (a) By its acceptance of a Subordinated
Note, each Note Purchaser appoints GE Capital as agent for purposes of
enforcing each Note Purchaser's rights with respect to Collateral,
including any real property of the Grantors subject to any mortgage. The
provisions of this Section 9 are solely for the benefit of GE Capital and
the Note Purchasers and no Grantor nor any other person shall have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Security Agreement and the
other Note Purchase Documents, GE Capital shall act solely as an agent of
the Note Purchasers and does not assume and shall not be deemed to have
assumed any obligation toward or relationship or agency or trust with or
for any Note Purchaser or any other person. GE Capital shall have no
duties or responsibilities except for those expressly set forth in this
Security Agreement and the other Note Purchase Documents. The duties of
GE Capital shall be mechanical and administrative in nature and GE
Capital shall not have, or be deemed to have, by reason of this Security
Agreement, any other Note Purchase Document or otherwise, a fiduciary
relationship in respect of any Note Purchaser. Neither GE Capital nor
any of its affiliates nor any of their respective officers, directors,
employees, agents or representatives shall be liable to any Note
Purchaser for any action taken or omitted to be taken by it hereunder or
under any other Note Purchase Document, or in connection herewith or
therewith, except for damages solely caused by its or their own gross
negligence or willful misconduct as finally determined by a court of
competent jurisdiction.
(b) If Agent shall request instructions from Majority Holders in
connection with any of the Note Purchase Documents, then Agent shall be
entitled to refrain from acting unless and until Agent has received
instructions from the Majority Holders, and Agent shall incur no
liability to any Person by reason of so refraining. Notwithstanding any
provision of any Note Purchase Document to the contrary, Agent shall be
fully justified in failing or refusing to take any action hereunder or
under any other Note Purchase Document (a) if such action would, in the
opinion of Agent, be contrary to law or the terms
20
20
of this Agreement or any other Note Purchase Document, (b) if such action
would, in the opinion of Agent, expose Agent to Environmental Liabilities
or (c) if Agent shall not first be indemnified to its satisfaction
against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. Without limiting
the foregoing, no Lender shall have any right of action whatsoever
against Agent as a result of Agent acting or refraining from acting
hereunder or under any other Note Purchase Document in accordance with
the instructions of Majority Holders, Requisite Revolving Lenders,
Supermajority Revolving Lenders or all affected Lenders, as applicable.
(c) GE Capital's Reliance, Etc. GE Capital: (a) may treat the
payee of any Note as the holder thereof until GE Capital receives written
notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to GE Capital; (b) may consult with legal counsel,
independent public accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken in good faith
by it in accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any Note Purchaser
and shall not be responsible to any Note Purchaser for any statements,
warranties or representations made in or in connection with this Security
Agreement or the other Note Purchase Documents; (d) shall not have any
duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or condition of this Security Agreement or
the other Note Purchase Documents on the part of any Grantor or to
inspect the Collateral (including the books and records) of any Grantor;
(e) shall not be responsible to any Note Purchaser for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of
this Security Agreement or the other Note Purchase Documents or any other
instrument or document furnished pursuant hereto to thereto; and (f)
shall incur no liability under or in respect of this Security Agreement
or the other Note Purchase Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy,
telegram, cable or telex) believed by it to be genuine and signed or sent
by the proper party or parties (including the Majority Holders).
(d) GE Capital and affiliates. With respect to its commitments
hereunder, GE Capital shall have the same rights and powers under this
Security Agreement and the other Note Purchase Documents as any other
Note Purchaser and may exercise the same as though it were not GE
Capital; and the term "Note Purchaser" or "Note Purchasers" shall, unless
otherwise expressly indicated, include GE Capital in its individual
capacity. GE Capital and its affiliates may lend money to, invest in,
and generally engage in any kind of business with, any Grantor, any of
their affiliates and any person who may do business with or own
securities of any Grantor or any such affiliate, all as if GE Capital
21
21
were not GE Capital and without any duty to account therefor to the
Note Purchasers. GE Capital and its Affiliates may accept fees and other
consideration from any Grantor for services in connection with this
Security Agreement or otherwise without having to account for the same to
the Note Purchasers. GE Capital has also made Senior Loans to the
Grantors and acts as agent for the holders of the Senior Loans. Each
Note Purchaser acknowledges the potential conflict of interest between GE
Capital as an agent and lender holding interests in the Senior Loans and
GE Capital as a holder of the Subordinated Notes pursuant to the Note
Purchase Agreement.
(e) Note Purchaser Credit Decision. Each Note Purchaser
acknowledges that it has, independently and without reliance upon GE
Capital or any other Note Purchaser and based on documents and
information as it has deemed appropriate, made its own credit and
financial analysis of the Grantors and its own decision to enter into
this Security Agreement. Each Note Purchaser also acknowledges that it
will, independently and without reliance upon GE Capital or any other
Note Purchaser and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Security Agreement.
(f) Indemnification. The Note Purchasers agree to indemnify Agent
(to the extent not reimbursed by Grantors and without limiting the
obligations of the Grantors hereunder), ratably according to their
respective pro rata shares, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against Agent in any way
relating to or arising out of this Security Agreement or any other Note
Purchase Document or any action taken or omitted by Agent in connection
therewith; provided, however, that no Note Purchaser shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting
from Agent's gross negligence or willful misconduct. Without limiting
the foregoing, each Note Purchaser agrees to reimburse Agent promptly
upon demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment
or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities
under, this Security Agreement and each
other Note Purchase Document, to the extent that Agent is not reimbursed
for such expenses by Grantors.
(g) Successor Agent. GE Capital may resign at any time by giving
not less than twenty (20) days' prior written notice thereof to the Note
Purchasers. Upon any such
22
22
resignation, the Majority Holders (other than GE Capital) shall have
the right to appoint a successor agent which shall be a holder of
Subordinated Notes. Upon the acceptance of any appointment as agent
hereunder by a successor agent, such successor agent shall succeed to and
become vested with all the rights, powers, privileges and duties of the
resigning agent. If the Majority Holders fail to appoint a successor to
GE Capital within that twenty-day period, the holder of the largest
principal amount of the Subordinated Notes shall be the successor agent
automatically upon expiration of such twenty day period. Upon the
earlier of the acceptance of any appointment as agent hereunder by a
successor agent or the effective date of the resigning agent's
resignation, the resigning agent shall be discharged from its duties and
obligations under this Security Agreement and the other Note Purchase
Documents, except that any indemnity rights or other rights in favor of
such resigning agent shall continue. After any resigning agent's
resignation hereunder, the provisions of this Section 9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it
was agent under this Security Agreement and the other Note Purchase
Documents.
10. Reinstatement. This Security Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Grantor for liquidation or reorganization, should any Grantor
become insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of any
Grantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Secured Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a "voidable preference", "fraudulent conveyance", or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only
by such amount paid and not so rescinded, reduced, restored or returned.
11. Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of the parties desires to
give or serve upon any other communication with respect to this Security
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and either shall be delivered in person
with receipt acknowledged or sent by registered or certified mail, return
receipt requested, postage prepaid, or by telecopy and confirmed by telecopy
answerback addressed as follows:
(a) If to Agent, at:
23
23
General Electric Capital Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Selfix Account Manager
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Counsel
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Suite 5800, Sears Tower
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to any Grantor, at:
Selfix, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
24
24
With a copy to:
Much, Shelist, Freed, Deneberg, ▇▇▇▇▇
▇▇▇▇ & Rubenstein PC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback or
three (3) Business Days after the same shall have been deposited in the United
States mail. Failure to delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to the persons
designated above to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration
or other communication.
12. Severability. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13. No Waiver; Cumulative Remedies. Agent shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
Agent, and then only to the extent therein set forth. A waiver by Agent of any
right or remedy hereunder on any one occasion shall not be construed as a bar
to any right or remedy which Agent would otherwise have had on any future
occasion. No failure to exercise nor any delay in exercising on the part of
Agent, any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law. None of the
terms or provisions of this Security
25
25
Agreement may be waived, altered, modified or amended except by an instrument
in writing, duly executed by Agent and, where applicable by any Grantor.
14. Successors and Assigns; Governing Law.
(a) This Security Agreement and all obligations of Grantors hereunder
shall be binding upon the successors and assigns of any Grantor, and
shall, together with the rights and remedies of Agent hereunder, inure to
the benefit of Agent, its respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other dispositions
of any agreements governing or instrument evidencing the Secured
Obligations or any portion thereof or interest therein shall in any
manner affect the security interest granted to Agent hereunder.
(b) This Security Agreement shall be governed by, and be construed and
interpreted in accordance with, the laws of the State of Illinois,
applicable to contracts made and performed in that State.
15. Waiver of Jury Trial. Each Grantor waives all right to
trial by jury in any action or proceeding to enforce or defend any rights or
remedies hereunder, under the Note Purchase Agreement or under the Note
Purchase Documents or relating to each of the foregoing.
16. Section Titles. The Section titles contained in this Security
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
17. Counterparts. This Security Agreement may be executed in any
number of counterparts, which shall, collectively and separately, constitute
one agreement.
18. Limitation on Actions. NOTWITHSTANDING ANY PROVISION HEREIN
CONTAINED TO THE CONTRARY, THE LIEN CREATED UNDER, AND THE TERMS AND PROVISIONS
OF, AND AGENTS RIGHTS, POWERS AND REMEDIES UNDER, THIS SECURITY AGREEMENT ARE
SUBJECT TO AND LIMITED BY THE SUBORDINATION PROVISIONS CONTAINED IN THE NOTE
PURCHASE AGREEMENT INCLUDING, WITHOUT LIMITATION, SECTION 10.3(b) THEREOF AS IN
EFFECT ON THE DATE HEREOF.
[signature page follows]
26
26
IN WITNESS WHEREOF, each of the parties hereto has caused this
Security Agreement to be executed and delivered by its duly authorized
officer on the date first set forth above.
GRANTORS
SELFIX, INC.
By:
Name:
Title:
TAMOR CORPORATION
By:
Name:
Title:
27
SHUTTERS, INC.
By:
Name:
Title:
SEYMOUR
HOUSEWARES CORPORATION
By:
Name:
Title:
29
28
Accepted and acknowledged by:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
Name:
Title:
30
29
SCHEDULE I
to
SUBORDINATED NOTE SECURITY AGREEMENT
FILING JURISDICTIONS
SELFIX TAMOR SHUTTERS
------ ----- --------
Illinois Secretary
Illinois Secretary of State Illinois Secretary of State of State
▇▇▇▇ County ▇▇▇▇▇▇▇ County
(Real Estate Records) (Real Estate Records)
Secretary of the Commonwealth of
Massachusetts
Town Clerk Leominster,
Massachusetts
Worcester County (N.D.),
Massachusetts
(Real Estate Records)
Secretary of State of Missouri
Pike County, Missouri
Pike County, Missouri
(Real Estate Records)
▇▇▇▇▇▇ County, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ County, Georgia
(Real Estate Records)
30
SEYMOUR
-------
Secretary of State of Indiana
▇▇▇▇▇▇▇ County, Indiana
(Real Estate Records)
Secretary of State of North
Carolina
Iredell County, North
Carolina
Iredell County, North
Carolina
(Real Estate Records)
Anson County, North
Carolina
City of Richmond, Virginia
State Corporations
Commission, Virginia
Secretary of State of Texas
Secratary of State of South
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ County, Texas
Jefferson County, Kentucky
Aken County, South Carolina
Lancaster County, South
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ County, North
Carolina
31
SCHEDULE II-A
to
Subordinated Note Security Agreement
LOCATION OF RECORDS AND CERTAIN COLLATERAL OF SELFIX
I. Chief Executive Office and principal place of business of Selfix:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
II. Corporate Offices of Selfix:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
III. Warehouses:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
IV. Other Premises at which Collateral is Stored or Located:
Not available.
V. Locations of Records Concerning Collateral:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
32
SCHEDULE II-B
to
Subordinated Note Security Agreement
LOCATION OF RECORDS AND CERTAIN COLLATERAL OF ▇▇▇▇▇
▇. Chief Executive Office and principal place of business of Tamor:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
II. Corporate Offices of Tamor:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
III. Warehouse:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
IV. Other Premises at which Collateral is Stored or Located:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
V. Locations of Records Concerning Collateral:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
33
SCHEDULE II-C
to
Subordinated Note Security Agreement
LOCATION OF RECORDS AND CERTAIN COLLATERAL OF SHUTTERS
I. Chief Executive Office and principal place of business of Shutters:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
II. Corporate Offices of Shutters:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
III. Warehouse:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
IV. Other Premises at which Collateral is Stored or Located:
Not available.
V. Locations of Records Concerning Collateral:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
34
SCHEDULE II-D
to
Subordinated Note Security Agreement
------------------------------------
LOCATION OF RECORDS AND CERTAIN COLLATERAL OF SEYMOUR
-----------------------------------------------------
I. Chief Executive Office and principal place of business of
▇▇▇▇▇▇▇
▇▇. Corporate Offices of Seymour
III. Warehouses
IV. Other Premises at which Collateral is stored or located
V. Locations of Records Concerning Collateral
35
SCHEDULE III-D
TO SECURITY AGREEMENT
SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL AND RECORDS CONCERNING
SEYMOUR'S COLLATERAL
I. Chief Executive Officer; Principal Place ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
of Business: ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
II. Corporate Offices of Seymour: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
III. Warehouses ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
5.33 acres located at ▇. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Bay 7, Air Cargo Facility Building
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
IV. Other Premises at which Collateral is ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Stored or Located: ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
36
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Columbus Container
Indiana
Kuntry Kottage
Indiana
Metal Service and Supply Co.
Indiana
WebsterWest
Indiana
Central Kentucky Processing, Inc.
Kentucky
Tri-State Plating, Inc.
INVENTORY LOCATIONS FOR SEYMOUR HOUSEWARES CORPORATION
1. Central Kentucky Processing Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
2. Tri State Plating Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Jefferson County
3. Graniteville Company
#▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Aken County
4. Velcro Laminates, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Lancaster County
5. ▇▇▇▇▇ Dye & Finishing
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇ ▇▇▇▇▇
