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EXHIBIT 10.43
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT, dated as of February ___,
1997 (this "Security Agreement" or this "Agreement"), is between
LASON SYSTEMS, INC. a Delaware corporation (the "Borrower"), and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking
association with its principal offices in Charlotte, North Carolina ("First
Union"), in its capacity as agent (the "Agent") for the Lenders (as that term
is defined in the Loan Agreement referred to below).
BACKGROUND STATEMENT
A. The Borrower, the Lenders and the Agent have entered into an Amended
and Restated Loan Agreement dated as of the date hereof (together with any
amendments, modifications and supplements thereto, any replacements, renewals,
extensions and restatements thereof, and any substitutes therefor, in whole or
in part, the "Loan Agreement"), the provisions of which are hereby incorporated
by reference. Capitalized terms that are not defined herein shall have the
meanings assigned to such terms in the Loan Agreement.
B. Pursuant to the terms and conditions of the Loan Agreement, the
Lenders have agreed to make certain loans in the aggregate principal amount of
up to $40,000,000, which amount may be increased up to $60,000,000 under the
terms and conditions of the Loan Agreement (the "Loans") to the Borrower. The
Loans are evidenced by Notes (as defined in the Loan Agreement) in the
aggregate principal amount of up to $40,000,000, and may be further evidenced
by Notes in the aggregate amount of up to $20,000,000.
C. To induce the Lenders to make the Loans pursuant to the Loan
Agreement and to secure the payment of the Obligations, as defined in the Loan
Agreement, the Borrower has agreed to grant to the Agent, for the benefit of
the Lenders, a security interest in the Collateral described herein on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower and the Agent, on behalf of Lenders, for themselves,
their successors and assigns, hereby agree as follows:
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ARTICLE I
DEFINITIONS
1.1 Defined Terms. The following terms shall have the meanings set
forth below:
"Accounts" or "Accounts Receivable" means (i) all of the Borrower's
accounts, as defined in the Uniform Commercial Code, now owned or hereafter
acquired or arising, (ii) all of the Borrower's present or future accounts
receivable, rights to payment for goods sold or leased, or to be sold or to be
leased, or for services rendered or to be rendered, all present and future
receivables, book debts, notes, bills, drafts, acceptances, choses in action,
chattel paper, instruments and documents, (iii) all of the Borrower's rights,
remedies, security interests and liens in, to and in respect of Accounts
Receivable, present and future, including without limitation rights of stoppage
in transit, replevin, repossession and reclamation and other rights and
remedies of an unpaid vendor, lienor or secured party, guaranties or other
contracts of suretyship with respect to any Account Receivable, deposits or
other security for the obligation of any debtor or obligor in any way obligated
on or in connection with any Account Receivable, (iv) all customer lists, books
and records, ledger and account cards, computer tapes, disks, printouts and
records, whether now in existence or hereafter created, relating to Accounts
Receivable, (v) to the extent permitted by applicable law, all of the
Borrower's right, title and interest, present and future, in, to and in respect
of all goods relating to, or which by sale have resulted in, Accounts
Receivable, including without limitation all goods described in invoices or
other documents or instruments with respect to, or otherwise representing or
evidencing, any Account Receivable, and all returned, reclaimed or repossessed
goods, and (vi) all proceeds, including insurance proceeds, of any of the
foregoing.
"Collateral" means and includes all right, title and interest of the
Borrower in all personal property of the Borrower (other than equity interests
in any entity), now owned or existing or hereafter acquired or arising,
constituting all of the Borrower's Accounts or Accounts Receivable, Contracts,
Equipment, General Intangibles, Inventory and Other Assets held or received by,
in transit to, or in the possession or control of the Borrower or the Lenders,
and all substitutions or replacements thereof and all products and proceeds
thereof, including, without limitation, insurance proceeds of the foregoing
Collateral.
"Contracts" shall mean all material agreements and contracts of the
Borrower, now owned or existing or hereafter acquired or arising, except for
contracts that expressly prohibit collateral assignment without consent and for
which no consent has been obtained, together with any and all extensions,
modifications,
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amendments and renewals thereof and all proceeds of any and all of the
foregoing.
"Equipment" means all of the Borrower's equipment, as defined in the
Uniform Commercial Code, now owned or hereafter acquired, and includes, without
limitation, all machinery, equipment, motor vehicles, computer equipment and
software, printers, copying and data storage devices and other electronic
equipment, accessions, accessories, additions, parts, supplies, apparatus,
appliances, fittings, furniture, office equipment and office furnishings of
every kind and description, wherever located and all proceeds, including
insurance proceeds, thereof.
"General Intangibles" means all general intangibles, as defined in the
Uniform Commercial Code, now existing or hereafter owned, acquired or arising,
in which the Borrower now has or hereafter acquires any rights, and all
contracts and contract rights (but excluding contracts of the Borrower that by
their express terms are void or voidable upon the pledge or assignment thereof,
unless consent has been obtained for the pledge or assignment thereof), causes
of action, inventions, designs, patents, patent applications, trademarks,
trademark registrations and applications, goodwill, goodwill associated with
trademarks, trade names, trade secrets, trade processes, copyrights, copyright
registrations and applications, licenses, permits, franchises, customer lists,
computer programs, all claims under guaranties, tax refund claims, rights and
claims against carriers and shippers, leases, claims under mechanics' and
materialmen's liens, claims under insurance policies, all rights to
indemnification or contribution, whether arising by contract or otherwise, and
all other intangible personal property of similar kind and nature, together
with any and all extensions, modifications, amendments and renewals, and all
proceeds, including insurance proceeds, thereof, as applicable.
"Inventory" means all of the Borrower's inventory, as defined in the
Uniform Commercial Code, wherever located, now owned or hereafter held or
acquired, and all goods manufactured, acquired or held for sale or lease, raw
materials, work-in-process, and finished goods or component materials, and all
supplies, goods, incidentals, office supplies, packaging materials and any and
all items used or consumed in the operation of the business of the Borrower or
that may contribute to finished products or to the sale, promotion and shipment
thereof, in which the Borrower now or at any time hereafter may have an
interest, whether or not the same is in transit or in the constructive, actual
or exclusive occupancy or possession of the Borrower or is held by the Borrower
or by others for the Borrower's account, and all proceeds, including insurance
proceeds, thereof.
"Other Assets" means all of the Borrower's personal property assets now
owned or hereafter acquired (including without
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limitation all amounts that may be owing from time to time by any Lender or any
of its affiliates to the Borrower in any capacity, including without limitation
any balance or share belonging to the Borrower, or any deposit or other account
with such Lender or any of its Affiliates), except for the Accounts, the
Accounts Receivable, the Equipment, the General Intangibles and the Inventory
and proceeds of such other assets.
1.2 UCC Terms. All terms in this Security Agreement that are not
capitalized shall have the meanings provided by the Uniform Commercial Code to
the extent the same are used or defined therein.
ARTICLE II
CREATION OF SECURITY INTEREST
To secure the prompt payment and other performance of the Obligations,
the Borrower hereby grants to the Agent, for the benefit of the Lenders, a
continuing security interest in the Collateral.
ARTICLE III
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Borrower hereby represents, warrants and covenants as follows:
3.1 Ownership of Collateral. The Borrower has, and as to any property
acquired after the date hereof which constitutes Collateral, shall have, good,
indefeasible and merchantable title in fee simple (or its equivalent under
applicable law) to and ownership of the Collateral and shall promptly provide
evidence to the Agent of such ownership upon request.
3.2 Perfection. As to those assets for which perfection may be
accomplished by filing under the Uniform Commercial Code, the security
interests granted to the Agent hereunder, when properly perfected and continued
by filing in all jurisdictions set forth on EXHIBIT A attached hereto, shall
constitute at all times a valid and perfected security interest vested in the
Agent in and upon the Collateral located in the United States, in each case
enforceable against the Borrower and all third parties (except purchasers of
Borrower's Inventory in the ordinary course of business) in all relevant
jurisdictions and securing the payment of all Obligations purported to be
secured thereby. No Uniform Commercial Code financing statement that names
Borrower as debtor has been filed and is still in effect, other than Financing
Statements in favor of the Agent, on behalf of the Lenders, and Financing
Statements described in Schedule 1.1 of the Loan Agreement, and the Borrower
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has not signed any financing statement or any security agreement which remains
effective on or after the Closing Date pursuant to which any secured party is
authorized to file any such financing statement.
3.3 Priority. Except for Permitted Liens, the Agent's security
interests in the Collateral are first-priority liens, are not and (assuming
timely filing of continuation statements as required) hereinafter shall not
become subordinate or junior to the Liens of any other person, including any
Governmental Authority. Except for Permitted Liens, the Borrower shall not
grant a security interest in or permit a Lien upon any of the Collateral to
anyone except the Agent, for the benefit of the Lenders.
3.4 Further Assurances. The Borrower shall execute and deliver to the
Agent concurrently with the execution of this Security Agreement, and at any
time or times hereafter at the request of the Agent, all assignments,
certificates of title, conveyances, assignment statements, Financing
Statements, renewal Financing Statements, security agreements, affidavits,
notices and all other agreements, instruments and documents (collectively,
"Other Documents"), and pay all connected costs, that the Agent may reasonably
request, in form and substance reasonably satisfactory to the Agent, and shall
take any and all other steps reasonably requested by the Agent in order to
perfect and maintain the security interests and liens granted herein and to
consummate fully all of the transactions contemplated by this Security
Agreement, including without limitation: (a) recording or filing such Financing
Statements and Other Documents as may from time to time be reasonably requested
by the Agent with such Governmental Authorities and other Persons as may be
necessary or advisable in order to perfect, establish, confirm and maintain the
security interests and liens created hereunder, and (b) defending the title of
the Borrower to the Collateral by means of negotiation with and, if necessary,
appropriate legal proceedings against, each and every party claiming an
interest therein contrary or adverse to the Borrower's title to same. The
Borrower hereby authorizes the Agent to file, at the Agent's election, a
carbon, photographic or other reproduction of this Agreement as a Financing
Statement, to the extent acceptable in the relevant jurisdictions.
3.5 Attorney-in-fact. The Borrower hereby irrevocably makes,
constitutes and appoints the Agent, its successors or assigns, as the true and
lawful attorneys of the Borrower with power to: (a) sign the name of the
Borrower on any Financing Statement, renewal Financing Statement, notice or
other similar document that in the Agent's opinion should be filed in order to
perfect or continue the perfection of the security interests granted by this
Security Agreement; (b) upon the occurrence and during the continuance of an
Event of Default, to act on the Borrower's behalf, at the Borrower's cost, in
obtaining any orders, consents, approvals, licenses or certificates required by
any Governmental
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Authority as a prerequisite to the transfer of the Borrower's business,
operations or facilities relating to any of the Collateral, to the extent
permitted by applicable law; and (c) upon the occurrence and during the
continuance of an Event of Default, to do all other things necessary to carry
out the provisions of this Security Agreement and the other Loan Documents,
specifically including without limitation those actions described in SECTION
5.5 hereof relating to the Accounts Receivable and Contracts. Neither the
Agent nor any Lender nor their attorneys and agents shall be liable for any act
or omission or for any error of judgment or mistake of fact in the exercise of
this power of attorney unless such act, omission, error or mistake shall occur
solely as a result of the gross negligence or willful misconduct of such
Person. This power, being coupled with an interest, is irrevocable so long as
any of the Obligations remain unpaid and any Lender's obligation to make
advances under any of the other Loan Documents has not terminated.
3.6 Principal Place of Business; Location of Collateral; Records. The
Borrower's federal employer identification number is set forth on EXHIBIT B
attached hereto. The chief executive office and principal place of business of
the Borrower as of the Closing Date is set forth on EXHIBIT B attached hereto.
Except as set forth on EXHIBIT B attached hereto, the Borrower has not, during
the preceding five (5) years, used any fictitious or trade name or any
corporate name other than its current corporate name as set forth on the first
page hereof and "Lason Acquisition Corp." The Borrower has possession and
control of all Collateral now in existence, except for any Inventory or
Equipment rented, leased, under conditional sale to or on demonstration to
parties other than Affiliates in the ordinary course of the Borrower's business
("Leased Goods"). EXHIBIT B also lists all places where the Borrower
maintains records relating to Accounts Receivable, including without limitation
records, ledger sheets, correspondence and invoice documents. Such records are
and hereafter shall be kept in appropriate containers in safe places and bear
and shall bear suitable legends identifying them. EXHIBIT B attached hereto
also lists all places where the Borrower maintains Inventory and/or Equipment,
indicates whether the premises are owned or leased by the Borrower and lists
the names and addresses of any landlords, warehousemen or other third parties
who own such premises. The Borrower enjoys peaceful and undisturbed possession
under all of its leases and all such leases are valid and existing and in full
force and effect. Upon request, the Borrower shall deliver copies of all such
leases to the Agent. Other than Leased Goods and the sale of Inventory in the
ordinary course of business to the extent permitted hereby or by the Loan
Agreement, the Borrower shall not store any Collateral or the records relating
thereto at any locations other than those identified on EXHIBIT B, and the
Borrower shall not move its executive office and principal place of business to
any location other than the location identified herein, unless in each case the
Borrower has first given to the Agent
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thirty (30) days' prior written notice of such removal of Collateral or
relocation, and if the Agent determines, in its sole discretion, that it may
not have a perfected first priority security interest in any Collateral located
or to be located at such new location, the Borrower has delivered to the Agent
such documents, instruments and Financing Statements reasonably required by the
Agent to perfect its first-priority security interest (subject to Permitted
Liens) therein.
3.7 Right of Inspection. The Agent and each Lender shall, at all
times during normal business hours and upon reasonable notice, have full access
to and the right to audit the Borrower's books and records, make photocopies
thereof, and confirm and verify the existence and location of Collateral.
3.8 Reports. The Borrower shall furnish such reports, information and
data regarding the Collateral as the Agent shall reasonably request from time
to time.
3.9 Landlord and Bailee Waivers. Upon request by the Agent, the
Borrower shall use its best efforts to furnish and record, at the Borrower's
sole cost and expense, waivers by landlords and bailees of all liens with
respect to any Collateral that is or may be located upon premises of lessors
and bailees, such waivers to be in form and substance reasonably acceptable to
the Agent.
3.10 Disclosure of Security Interest. The Borrower shall make
appropriate entries upon its financial statements and books and records
disclosing the Agent's security interest in the Collateral.
ARTICLE IV
EQUIPMENT
Except for any unused or obsolete Equipment, the Borrower will keep the
Equipment in good repair (normal wear and tear excepted) and maintained in a
reasonable state of proper operating efficiency. The Borrower shall not permit
any such items to become a fixture to real estate or accessions to other
personal property.
ARTICLE V
ACCOUNTS RECEIVABLE
The Borrower warrants, represents and covenants as follows:
5.1 Representations and Warranties. Each Account Receivable
represents and will represent a bona fide sale and/or rendition of services by
the Borrower to customers of a kind ordinarily rendered in the ordinary course
of the Borrower's business, or the delivery
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of merchandise usually dealt in by the Borrower in the ordinary course of its
business, will have been invoiced in writing to the obligor thereof, will be
for a liquidated amount from a customer competent to contract therefor maturing
as stated in the invoice or other supporting data covering such sale, and as of
the date of its creation will not be subject to any deduction, offset,
counterclaim, lien or other condition other than discounts and offsets
customarily given by the Borrower in the ordinary course of its business.
5.2 Schedules of Accounts. The Agent and the Lenders may rely on all
statements or representations made by the Borrower on or with respect to any
schedule of Accounts Receivable delivered hereunder or under the Loan
Agreement, and, unless otherwise indicated in writing by the Borrower, each
Account listed on any schedule of Accounts will be genuine and in all respects
what it purports to be, will not be evidenced by an instrument or document, or
if so, will be evidenced only by one original instrument or document which has
been duly delivered to the Agent; will be for a liquidated amount maturing as
stated in any schedule of Accounts Receivable delivered to the Agent or the
Lenders; there are to the Borrower's knowledge no facts, events or occurrences
that would in any way impair the validity or enforcement thereof; the goods
giving rise thereto are not, and were not at the time of the sale thereof,
subject to any lien, claim, encumbrance or security interest except Permitted
Liens.
5.3 Prohibition Against Compromises, Extensions. Upon the occurrence
and during the continuance of an Event of Default, the Borrower upon notice
from the Agent shall not grant any extension of the time for payment of any
Account Receivable; compromise or settle any Account Receivable for less than
the full amount thereof; release, in whole or in part, any person or property
liable for the payment thereof; or allow any credit or discount thereon (other
than those discounts granted in the ordinary course of the Borrower's
business).
5.4 Verification of Accounts. Except during the existence of an Event
of Default when notice shall not be necessary, with prior telephonic notice to
the Borrower, any of the Agent's officers, employees, or agents shall have the
right, at any time or times hereafter, in the Agent's name or in the name of
the Borrower, to verify the validity, amount or any other matter relating to
any Accounts Receivable by mail, telephone, telegraph or otherwise.
5.5 Collection of Accounts; Contracts. The Borrower hereby authorizes
the Agent, and the Agent, for the benefit of the Lenders, shall have the right
at any time and from time to time during the existence of an Event of Default,
without notice to the Borrower, subject to any restrictions imposed by
applicable law, (a) to notify any or all Account Debtors to the Borrower that
the Agent, for the benefit of the Lenders, has a security interest in
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such Collateral and direct all such Persons to make payments to the Agent or to
a lockbox designated by the Agent, on behalf of the Lenders, of all sums owing
by them to the Borrower; (b) to receive, endorse, assign and deliver, in the
Borrower's name or in the name of the Agent, all checks, notes, drafts and
other instruments relating to any Collateral, including receiving, opening and
properly disposing of all mail addressed to the Borrower concerning Accounts
Receivable and the Contracts; (c) to notify postal authorities to change the
address for delivery of mail to such address as the Agent may designate
(provided, however, that, upon such notification to postal authorities, all
notices from the Agent or any Lender to the Borrower under the Loan Documents
shall be made by personal delivery); (d) to sell or assign the Accounts
Receivable and Contracts upon such terms as the Agent may deem advisable; (e)
to sign the Borrower's name on any invoice or xxxx of lading relating to any
account drafts against Account Debtors, on schedules and assignments of
Accounts Receivable, on notices of assignment, and on verifications of Accounts
and on notices to Account Debtors; and (f) to take or bring at the Borrower's
cost, in the Borrower's name or in the name of the Agent, on behalf of the
Lenders, all steps, actions and suits deemed by the Agent necessary to effect
collections of any Accounts Receivable and Contracts, to settle, compromise or
release in whole or in part any amounts owing on Accounts Receivable and
Contracts, to prosecute any action or proceeding with respect to Accounts
Receivable and Contracts, to extend the time of payment of any and all Accounts
Receivable and Contracts and to make allowances and adjustments with respect
thereto. The powers set forth in this SECTION 5.5, being coupled with an
interest, are irrevocable so long as any of the Obligations remain unpaid and
the Lenders' obligation to make Loans has not terminated. In the exercise of
the powers herein granted to the Agent, no liability shall be asserted or
enforced against the Agent, all such liability being hereby expressly waived
and released by the Borrower except for any liability resulting solely from the
willful misconduct or gross negligence of the Agent. The Borrower hereby
agrees to indemnify and hold the Agent free and harmless from and against any
and all liability, reasonable expense (including reasonable attorneys' fees),
cost, loss or damage which the Agent may incur by reason of any act or omission
of the Borrower with regard to any Account Receivable or under any of the
Contracts, and if the Agent incurs any liability, expense, cost, loss or damage
(except as may be incurred solely by the Agent's willful misconduct or gross
negligence) (i) with respect to any Account Receivable or any Contract for
which it is to be indemnified by the Borrower as aforesaid, or (ii) by reason
of, or in connection with, the good faith exercise of the Agent's rights
hereunder, the amount thereof, including reasonable costs, expenses and
attorneys' fees and expenses, shall become part of the Obligations secured by
the Collateral, payable on demand, and bear interest at the Default Rate.
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5.6 Lockbox/ACH Arrangement; Assignment of Lockbox Accounts. At the
written request of the Agent, the Borrower shall establish and maintain a
lockbox/ACH arrangement with the Agent, in accordance with this Section. The
Borrower has pledged to the Agent the account or accounts (the "Lockbox
Accounts") maintained in connection with any such lockbox/ACH arrangement with
the Agent pursuant to SECTION 5.7 below. The Borrower agrees to maintain the
lockbox/ACH arrangement and such Lockbox Accounts in full force and effect at
all times from and after a request of the Agent pursuant to this SECTION 5.6
during the term of this Agreement. At any time when the lockbox/ACH
arrangement is in effect pursuant to this SECTION 5.6, whenever the Borrower
shall receive any monies, checks, notes, drafts or any other items of payment
relating to, or proceeds of, the Collateral, the Borrower agrees with the Agent
and the Lenders as follows:
(i) The Borrower shall hold all such items of payment
separate from the other funds of the Borrower, and no later than the
first Business Day following the receipt thereof, the Borrower shall
deposit the same in the Lockbox Accounts or forward or cause to be
forwarded the same to the lockbox/ACH service for deposit in the
Lockbox Accounts;
(ii) So long as no Event of Default is continuing, the
Agent shall apply such funds from time to time first, to pay fees and
interest then payable with respect to the Obligations and second, to
pay principal on the Revolving Loans, and the Borrower hereby
authorizes the Agent to make all such repayments. So long as no Event
of Default is continuing, the Agent shall then invest or disburse to
the Borrower's operating accounts any funds held in the Lockbox
Account after payment of such fees, interest and principal amounts;
provided, however, that no item received by the Agent shall be
disbursed to the Borrower unless and until such item is actually
honored by the payee's depository bank and such collection is finally
credited to one of the Lockbox Accounts. Notwithstanding the
foregoing or anything else to the contrary contained herein, upon the
occurrence and during the continuance of an Event of Default, the
Agent shall have the right to hold all funds in the Lockbox Accounts
or to apply such funds from time to time in repayment of the
Obligations in accordance with the Loan Agreement, and the Borrower
hereby authorizes the Agent to hold such funds or to make all such
repayments.
(iii) For the purpose of computing interest hereunder, all
such items of payment shall be deemed applied by the Agent, for the
benefit of the Lenders, on account of the Obligations of the Borrower
two (2) calendar days after receipt of such items of payment at the
payment location designated pursuant to ARTICLE III of the Loan
Agreement;
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(iv) No such item received by the Agent shall constitute
payment to any of the Lenders or of the Revolving Loans unless and
until such item is actually honored by the payee's depository bank and
such collection is finally credited to the Agent's account.
Notwithstanding anything to the contrary herein, each such item of
payment shall, solely for purposes of determining the occurrence of an
Event of Default, be deemed received upon actual receipt by the Agent,
unless the same is subsequently dishonored for any reason whatsoever;
and
(v) The Agent assumes no responsibility for such
lockbox/ACH service arrangement, including without limitation any
claim of accord and satisfaction or release with respect to deposits
made to the Lockbox Accounts.
5.7 Assignment of Lockbox Accounts.
(a) The Borrower hereby pledges, assigns, transfers and grants to
the Agent, for the benefit of the Lenders, a first priority lien on, and
security interest in, all of the Borrower's right, title and interest in and to
the Lockbox Accounts, together with all monies or proceeds due or to become due
thereunder, and any and all additional or renewed deposits to the Lockbox
Accounts, any and all sums due or to become due on any such deposits by way of
interest or otherwise (collectively, the "Deposits"). Such security interest
is given as collateral security for the prompt and complete payment when due
(whether upon demand, at the stated maturity, by acceleration or otherwise) and
performance of the Obligations. The Agent agrees that upon payment in full of
the Obligations the termination of the Lenders' Commitments, and the expiration
or cash settlement of any Swap Agreements, such assignment shall be terminated
and, upon the Borrower's written request, the Agent will deliver to the
Borrower a statement in writing that the Obligations have been satisfied and
that this assignment has been terminated.
(b) The Borrower hereby represents to the Agent that:
(i) Neither the Lockbox Accounts nor the Deposits have
heretofore been, and will not be, pledged, assigned,
transferred, encumbered or otherwise disposed of by
the Borrower, except in favor of the Agent for the
benefit of the Lenders and for Permitted Liens.
(ii) The Borrower shall, immediately upon the Agent's
request, execute and deliver such further instruments
and documents, and take all such actions, as the
Agent deems reasonably necessary to further evidence
and perform this assignment.
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(c) The Borrower hereby irrevocably constitutes and appoints the
Agent its true and lawful attorney-in-fact with full and irrevocable power and
authority in the Borrower's place and stead and in the name of the Borrower or
in the name of the Agent or otherwise, from time to time, in the Agent's
discretion, for the purpose of carrying out the terms of this assignment, to
take any and all actions and to execute any and all instruments that may be
necessary to accomplish the purpose of this assignment. The Borrower hereby
gives the Agent the power and right during the existence of any Event of
Default, on behalf of the Borrower, without notice to or assent by the
Borrower, to ask, demand, collect, receive and give acquittances and receipts
for any and all moneys in the Lockbox Accounts and to apply such amounts to the
Obligations. The Agent shall not be required or obligated in any manner to
make any demand or to make any inquiry as to the nature or sufficiency of any
payment received by the Agent or to present or file any claim or to take any
action to collect or enforce the payment of any amounts that may have been
assigned to the Agent or to which the Agent may be entitled hereunder at any
time or times. These powers of attorney are powers coupled with an interest
and shall be irrevocable so long as any of the Obligations remain unpaid and
the Lenders' obligation to make Loans has not terminated.
ARTICLE VI
INVENTORY
6.1 Representations and Warranties. All of the Inventory is of
good and merchantable quality, free from material defects, and saleable or
useable in the ordinary course of business of the Borrower unless such defect
or condition is not reasonably expected to have a Material Adverse Effect.
6.2 Use of Inventory. Unless and until the privilege of the
Borrower to use the Inventory in the ordinary course of its business is revoked
by the Agent upon the occurrence and during the continuance of an Event of
Default hereunder, the Borrower may, in any lawful manner not inconsistent with
this Security Agreement or the other Loan Documents, process, use and, in the
ordinary course of business but not otherwise, sell its Inventory. Upon the
occurrence and during the continuance of an Event of Default hereunder, the
Agent shall have the right to revoke or suspend the Borrower's processing, sale
or other use of the Inventory.
6.3 Inspection of Inventory. The Agent shall have the right from
time to time hereafter upon reasonable notice during normal business hours to
inspect and test the Inventory, and the Borrower agrees to reimburse the Agent
for its reasonable out-of-pocket costs and expenses in so doing.
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6.4 Safekeeping of Inventory. Prior to foreclosure or taking of
possession, neither the Agent nor any Lender shall be liable for or responsible
in any way for the safekeeping of the Inventory, or for any loss or damage
thereto or for any diminution in the value thereof, or for any act or default
of any carrier, warehouseman, or forwarding agency thereof, or other Person
whomsoever, but the same shall be at all times at the Borrower's risk. All
risk of loss, damage or destruction to the Inventory or any portion thereof
shall be borne by the Borrower while in its possession or control.
ARTICLE VII
CONTRACTS
7.1 COVENANTS RELATING TO THE CONTRACTS. Borrower agrees:
(a) faithfully to abide by, perform and discharge each
and every material obligation, covenant, condition and agreement contained in
each of the Contracts to be performed by the Borrower and to enforce
performance by the other parties to such Contract other than the Borrower (the
"Contract Parties") of each and every material obligation, covenant, condition
and agreement to be performed by such Contract Parties;
(b) anything herein to the contrary notwithstanding, (i)
Borrower shall remain liable under the Contracts to perform all of their
obligations thereunder to the extent as if this Agreement had not been
executed; (ii) the exercise by the Agent of any of its rights hereunder shall
not release Borrower from any of its obligations under the Contracts; and (iii)
the Agent shall not have any obligation or liability by reason of this
Agreement under the Contracts, nor shall the Agent be obligated to perform any
of the obligations or duties of Borrower thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder. The powers
conferred on the Agent hereunder are solely to protect its interest and
privilege in the Contracts, as collateral, and shall not impose any duty upon
it to exercise any such powers.
7.2 DEFAULT UNDER CONTRACT. During the continuance of an Event of
Default, upon the occurrence of a material default or breach by Borrower under
any of the Contracts, the Agent shall have the right (but not the obligation)
to correct, to the extent Borrower fails to do so after written demand by the
Agent, any such default in such manner and to such extent as the Agent
reasonably may deem necessary to protect the security hereof, including
specifically, without limitation, the right (but not the obligation) to appear
in and defend any action or proceeding purporting to affect the security hereof
or the rights or powers of the Agent, and also the right (but not the
obligation) to perform and discharge each and every material obligation,
covenant, condition and agreement of Borrower under the Contracts, to the
extent Borrower fails to do so after demand by the Agent, and, in
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exercising any such powers, to pay necessary and reasonable costs and expenses,
employ counsel and incur and pay reasonable attorneys' fees and expenses. The
Agent shall not be obligated to perform or discharge, nor does it hereby
undertake to perform or discharge, any obligation, duty or liability under any
of the Contracts.
7.3 PERFORMANCE OF CONTRACTS FOR AGENT. Each of the Contract
Parties, upon written notice from the Agent of the occurrence of an Event of
Default hereunder, shall be and is hereby authorized by Borrower to perform
each of the Contracts for the benefit of the Agent in accordance with the terms
and conditions thereof without any obligation to determine whether or not such
an Event of Default has in fact occurred.
7.4 REPRESENTATIONS AND WARRANTIES. Borrower hereby further
covenants, represents and warrants to the Agent that (a) Borrower is not in
default in any material respect under any of the Contracts, and to the
knowledge of Borrower none of the Contract Parties is in material default under
any of the Contracts except as disclosed in writing to the Agent; (b) no
amendments or modifications to or waivers under the Contracts that are
inconsistent with the terms hereof or that alter any material term of a
Contract will be made without the prior written consent of the Agent; (c) to
the knowledge of Borrower, the Contracts are, and each Contract entered into in
the future will be, legal, valid and binding obligations of the parties
thereto, enforceable against such parties in accordance with the respective
terms thereof and no defense, offset, deduction or counterclaim exists
thereunder in favor of any such party except where any such unenforceability,
defense, offset, deduction or counterclaim would not have a Material Adverse
Effect; (d) performance by Borrower of its obligations hereunder in a manner
consistent with applicable law will not contravene any law or governmental
regulation or any contractual restriction binding on or affecting Borrower or
any of the properties of Borrower and will not result in or require the
creation of any lien, security interest or other charge or encumbrance upon or
with respect to any of the properties of Borrower; (e) this Agreement creates a
valid collateral assignment of, and security interest in favor of the Agent in,
the Contracts, and the filing of the Financing Statements required to be filed
pursuant to the Credit Agreement will perfect, and establish (subject only to
Permitted Liens) the first priority of, the Agent's security interest hereunder
in the Contracts securing the Obligations; and (f) Borrower will immediately
notify the Agent in writing upon the happening of any of the following events
with respect to its Contracts: i) any material waiver by the Contract Party
under any Contract which adversely affects the amount of monies due or to
become due under such Contract, or otherwise substantially adversely affects
Borrower's interests under such Contract; ii) termination of any Contract in
whole or in part; and
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iii) failure of any party under any Contract to perform any of its material
obligations thereunder.
ARTICLE VIII
DEFAULT
8.1 Event of Default. Any one of the following events will
constitute an "Event of Default" hereunder:
(a) failure of the Borrower to observe, perform or comply
with any of the terms, provisions, conditions, covenants, warranties or
representations contained in this Security Agreement, which failure is not
cured to the satisfaction of the Agent within thirty (30) days after the
Borrower acquires knowledge thereof; or
(b) the occurrence of an Event of Default (as defined in the
Loan Agreement) other than an Event of Default described in the foregoing
subparagraph (a).
8.2 Rights and Remedies. The Agent shall have, in addition to any
other rights and remedies contained in this Security Agreement or in any other
Loan Documents, all the rights and remedies of a secured party under the
Uniform Commercial Code, and all other rights and remedies provided by law, all
of which shall be cumulative to the extent permitted by law. During the
existence of any Event of Default, the Agent shall have the right without
further notice to the Borrower to appropriate, take possession and control of,
set off and apply to the payment of any or all of the Obligations, any or all
Collateral, in such manner as the Agent shall in its sole discretion determine,
to enforce payment of the Accounts Receivable and the Contracts or any other
Collateral, to settle, compromise or release, in whole or in part, any amounts
owing on the Collateral, to prosecute any action, suit or proceeding with
respect to the Collateral, to extend the time of payment of any and all
Collateral, to make allowances and adjustments with respect thereto, to issue
credits in the name of the Borrower or the Agent, to sell, assign and deliver
the Collateral (or any part thereof), at public or private sale, at broker's
board, for cash, upon credit or otherwise, at the Agent's sole option and
discretion and the Agent or any Lender may bid or become purchaser at any such
sale, if public, free from any right of redemption, which is hereby expressly
waived. The Borrower agrees that the giving of ten (10) days' notice by the
Agent, sent by certified mail, return receipt requested, postage prepaid, to
the Borrower at the address set forth in the Loan Agreement for the receipt of
notices by the Borrower, designating the place and time of any public sale, or
of the time after which any private sale or other intended disposition of the
Collateral is to be made, shall be deemed to be reasonable notice thereof to
the Borrower and the Borrower waives any other notice with respect thereto.
The net
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cash proceeds resulting from the exercise of any of the foregoing rights or
remedies shall be applied by the Agent to the payment of the Obligations, in
such order as the Agent, for the benefit of Lenders, may elect, and the
Borrower shall remain liable to the Agent and the Lenders for any deficiency,
together with interest thereon at the rates provided in the Loan Agreement, and
the costs and expenses of collection of such deficiency, including (to the
extent permitted by law) without limitation reasonable attorneys' fees,
expenses and disbursements. The balance, if any, remaining after payment in
full of all of the Obligations shall be paid, first, to the holder of any
subordinate security interest in the Collateral known to the Agent or the
Lenders to whom the Agent or the Lenders are obligated to make such payment,
and then, to the Borrower, subject in all cases to any duty of the Agent and
the Lenders imposed by law.
8.3 Attorneys' Fees and Other Expenses. If at any time or times
hereafter, the Agent or any Lender employs counsel for advice with respect to
this Security Agreement or any other Loan Document, or to intervene, file a
petition, answer, motion or other pleading in any suit or proceeding relating
to this Security Agreement or any other Loan Document, or relating to any
Collateral, or to protect, take possession of, or liquidate any Collateral, or
to attempt to enforce any security interest or lien in any Collateral, or to
represent the Agent or any Lender in any pending or threatened litigation with
respect to the affairs of the Borrower in any way relating to any of the
Collateral or to the Obligations or to enforce any rights of the Agent or
Lenders or liabilities of the Borrower, any Account Debtor, or any other Person
who may be obligated to the Agent or Lenders by virtue of this Security
Agreement or any other Loan Document, then in any of such events, all of the
reasonable attorneys' fees arising from such services, and any reasonable
expenses, costs and charges relating thereto, including court costs and similar
expenses, shall, to the maximum extent permitted by law, become a part of the
Obligations secured by the Collateral, payable on demand.
8.4 Assembly of Collateral. Upon the occurrence and during the
continuance of an Event of Default, the Agent shall have the right to require
the Borrower to assemble the Collateral and make it reasonably available to the
Agent at one or more of the locations listed on EXHIBIT B, and to take
possession of the Collateral and to enter and remain upon the various premises
of the Borrower without cost or charge to the Agent, and to use the same,
together with materials, supplies, books and records of the Borrower for the
purpose of liquidating or collecting the Collateral, whether by foreclosure,
auction or otherwise. In addition, upon the occurrence and during the
continuance of an Event of Default, the Agent may remove from such premises the
Collateral and any records with respect thereto to the premises of the Agent or
any designated agent of the Agent for such time as the
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Agent may desire, in order to collect or liquidate the Collateral effectively.
8.5 No Waiver. The Agent's failure at any time or times hereafter
to require strict performance by the Borrower of any of the provisions of this
Security Agreement or any other Loan Document shall not waive, affect or
diminish any right of the Agent or any Lender at any time or times hereafter to
demand strict performance therewith and with respect to any other of this
Security Agreement or any other Loan Document, and any waiver of any Event of
Default shall not waive or affect any other Event of Default, whether prior or
subsequent thereto, and whether of the same or a different type. None of the
provisions of this Security Agreement or any other Loan Document shall be
deemed to have been waived by any act or knowledge of the Agent or any Lender,
their agents, officers or employees except by an instrument in writing signed
by an officer of the Agent or such Lender and directed to the Borrower
specifying such waiver.
8.6 Waiver by the Borrower. Except for the notices expressly
provided for herein, the Borrower waives any and all notices or demands that
the Borrower might be entitled to receive with respect to this Security
Agreement by virtue of any applicable statute or law, including without
limitation demand, presentment, protest, notice of protest, notice of default,
notice of intent to accelerate, release, compromise, settlement, extension or
renewal of all commercial paper, accounts, contract rights, instruments,
guaranties and otherwise, at any time held by the Agent on which the Borrower
may in any way be liable, notice of nonpayment at maturity of any and all
Accounts Receivable and notice of any action taken by the Agent unless
expressly required by this Security Agreement.
8.7 No Marshalling. The Collateral and all other collateral that
the Agent may at any time acquire from any other source or by a guaranty,
endorsement or property of any other Person, in connection with the Obligations
of the Borrower to the Lenders shall constitute collateral for all of the
Obligations, without apportionment or designation as to particular Obligations,
and all Obligations, howsoever and whensoever incurred, shall be secured by all
of the Collateral, howsoever and whensoever acquired, and the Agent shall have
the right, in the Agent's sole discretion, to determine whether to proceed
against the Collateral or such other property, guaranty or endorsement upon the
occurrence and during the continuance of an Event of Default, and the Agent
shall have the right, in the Agent's sole discretion, to determine which
rights, security, liens, security interests or remedies the Agent shall at any
time pursue, relinquish, subordinate or modify or to take any other action with
respect thereto, without in any way modifying or affecting any of them, any of
the Agent's or any Lender's rights or any of the Obligations. The Borrower
irrevocably waives the right to direct the application of any and
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all payments that may be received by the Agent during the continuance of an
Event of Default and the Borrower does hereby irrevocably agree that, during
the continuance of an Event of Default, the Agent shall have the continuing
exclusive right to apply and reapply any and all such payments received in such
manner as the Agent may deem advisable, notwithstanding any entry upon any of
its books and records.
ARTICLE IX
MISCELLANEOUS
9.1 Binding Effect. This Security Agreement and all other
instruments and documents executed and delivered pursuant hereto or in
connection herewith shall be binding upon and inure to the benefit of the
successors and assigns of the parties hereto.
9.2 Governing Law. This Agreement shall be construed and
interpreted in accordance with the internal laws and judicial decisions of the
State of North Carolina without giving effect to the conflict of laws
principles thereof, except to the extent that matters of perfection and
validity of the security interests hereunder, or remedies hereunder, are
governed by the laws of a jurisdiction other than the State of North Carolina.
9.3 Survival of Agreement. All representations and warranties
of the Borrower and all obligations of the Borrower contained herein and in any
other Loan Document shall survive the execution and delivery of this Security
Agreement and all other Loan Documents.
9.4 Termination of Security Interest; Assignment. This Security
Agreement and the security interests in the Collateral created hereby will
terminate when all of the Obligations have been paid and finally discharged in
full, when the Lenders' obligation to make advances under the Loan Agreement
has been terminated, and when any and all Swap Agreements have expired or been
cash settled. In the event of a sale or assignment by the Agent or any Lender
of all or any of the Obligations held by it, the Agent or such Lender may
assign or transfer its rights and interest under this Security Agreement in
whole or in part to the purchaser or purchasers of such Obligations, whereupon
such purchaser or purchasers will become vested with all of the powers, rights
and responsibilities of the Agent or such Lender hereunder, and the Agent or
such Lender, as applicable, will thereafter be forever released and fully
discharged from any liability or responsibility hereunder with respect to the
rights, interest and responsibilities so assigned, other than liabilities
arising out of actions taken prior to the date of assignment. The Borrower may
not assign this Security Agreement without the express written consent of the
Agent.
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Upon termination of this Agreement or upon any partial release of
Collateral to the Borrower, the Agent shall, upon the request of the Borrower,
promptly assign, transfer and deliver to the Borrower (without recourse,
without representation or warranty and on an "as is" basis) any such released
Collateral that is in the possession of the Agent or its subagents (to the
extent not sold or otherwise applied pursuant to the terms hereof), together
with proper instruments (including Uniform Commercial Code termination
statements) acknowledging the termination of this Agreement or the release of
such Collateral, as applicable.
9.5 Notice. Except as otherwise provided herein, notice to the
Borrower or to the Agent shall be given or delivered in the manner set forth in
SECTION 14.3 of the Loan Agreement.
9.6 Severability. To the extent any provision of this Security
Agreement is prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Security Agreement.
9.7 Sub-Agent. Subject to the applicable provisions of the Loan
Agreement, the Agent may appoint a sub-agent to perform any and all of its
duties and obligations and to exercise all of its rights hereunder.
9.8 Captions. The captions to the sections of this Agreement
have been inserted for convenience only and shall not limit or modify any of
the terms hereof.
9.9 Counterparts. This Security Agreement may be executed in
two or more counterparts, which when assembled shall constitute one and the
same agreement.
9.10 Amendments. This Agreement may be amended, modified or
waived only by an instrument in writing signed by the Borrower and the Agent.
9.11 Collateral Agent. The Agent shall act in the capacity of
collateral agent for Lenders in accordance with its rights and duties set forth
in the Loan Agreement.
9.12 Conflict of Terms. The terms of this Agreement and the
terms of the Loan Agreement shall be construed and interpreted to the fullest
extent possible to give effect to all such terms. In the event of any conflict
between the terms of this Agreement and the Loan Agreement, the terms of the
Loan Agreement shall control.
9.13 No Third Party Rights Created. It is expressly intended,
understood and agreed that this Agreement is made and entered into for the sole
protection and benefit of the Borrower,
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the Agent and the Lenders, and their respective successors and assigns (but in
the case of assigns, only to the extent permitted hereunder) and that no other
Person or Persons shall have any right at any time to action hereon or rights
to the proceeds of the Loans evidenced and secured by the Loan Documents.
9.14 Waiver of Jury Trial; Arbitration; Remedies. The WAIVER OF
JURY TRIAL provisions of SECTION 14.2 of the Loan Agreement, including the
arbitration provision of subsection 14.2(c) thereof, shall apply to any
dispute, claim or controversy arising out of, connected with or relating to
this Agreement.
9.15 No Joint Venture. The relationship between the Agent and
the Lenders, on the one hand, and the Borrower, on the other hand, is solely
that of lender, collateral agent and borrower, and nothing contained herein or
in any of the Loan Documents shall in any manner be construed as making any
such Persons partners, joint venturers or creating any other relationship other
than lender and borrower.
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IN WITNESS WHEREOF, this Security Agreement has been executed under
seal as of the day and year first above written by the duly authorized officers
of the parties hereto.
LASON SYSTEMS, INC.
By:
--------------------------------
Xxxx X. Xxxxxx,
Chief Executive Officer
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, AS AGENT
By:
--------------------------------
--------------------------------
Vice President
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Exhibit A to Amended and Restated
Security Agreement
First Union National Bank
of North Carolina, as Agent
Lason Systems, Inc.
February , 1997 / $40,000,000
EXHIBIT A TO AMENDED AND RESTATED SECURITY AGREEMENT
JURISDICTIONS FOR UCC FILINGS
Delaware Secretary of State
Michigan Xxxxxxxxx xx Xxxxx
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00
Xxxxxxx X to Amended and Restated
Security Agreement
First Union National Bank
of North Carolina, as Agent
Lason Systems, Inc.
February , 1997 / $40,000,000
EXHIBIT B TO AMENDED AND RESTATED SECURITY AGREEMENT
PRINCIPAL PLACE OF BUSINESS; LOCATIONS OF COLLATERAL; FICTITIOUS NAMES
Borrower's Tax Identification Number
00-0000000
Borrower's Principal Place of Business/Executive Xxxxxx
0000 Xxxxxxxxxx Xxxxxxx
Xxxx, Xxxxxxxx 00000
Fictitious and Trade Names Used in Last 5 Years
Diversitec Image Technology, Inc. (used in Michigan only)
Locations of Accounts Receivable Records
00000 Xxxxxxxxxxx Xx.
Xxxxxxx, Xxxxxxxx 00000
0000 Xxxxxxxxxx Xxxxxxx
Xxxx, Xxxxxxxx 00000
Locations of Inventory and Equipment
Description of Location Owned or Leased Lessor/Warehouseman
----------------------- --------------- -------------------
00000 Xxxxxxxxxxx Xx. Leased MART Associates
Xxxxxxx, Xxxxxxxx 00000
0000 Xxxxxxxxxx Xxxxxxx Leased Uniroyal/Xxxxxxxx
Xxxx, Xxxxxxxx 00000 Tire Company (sub-lessor)
Prudential Insurance Co. of America (lessor)
300 Renaissance Center (Used with Ford Motor Facility
Xxxxxxx, Xxxxxxxx 00000 permission)
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31001 Xxxxxxxxxxx Road Leased Xxxxxx & Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000 Investment Co.
38281 Xxxxxxxxxxx Road Leased Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000 and Xxxxx Xxx
0000 Xxxxxxx Xxxxxx Xxxx., Leased Plaza North
Suite 445 Associates with
Xxxxxxx, Xxxxxxxx 00000 Diversitec Image Technology
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