EXHIBIT 10.3.7
FOURTH AGREEMENT OF AMENDMENT
FOURTH AGREEMENT OF AMENDMENT, made and effective as of the 5th day of
April, 2001, by and among Q.E.P. CO., INC., a Delaware corporation with its
chief executive office and principal place of business at 0000 Xxxxxxx Xxxxx,
Xxxx Xxxxx, Xxxxxxx 00000, Q.E.P. - O'TOOL, INC., a California corporation with
its chief executive office and principal place of business at 0000 Xxxx Xxxxx
Xxxx, Xxxxxxxxx, XX 00000, XXXXXX TOOL CORPORATION, an Indiana corporation with
its chief executive office and principal place of business at 0000 Xxxxxxx
Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000, WESTPOINT FOUNDRY, INC., an Indiana
corporation with its chief executive office and principal place of business at
0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000, and XXXXXXX CONSOLIDATED
INDUSTRIES, INC., a Delaware corporation with its chief executive office and
principal place of business at 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000,
XXXXXXX JAPAN KK, an entity organized in Japan with its chief executive office
and principal place of business at 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx
00000, XXXXXXX HOLDING INTERNATIONAL, INC., a Delaware corporation with its
chief executive office and principal place of business at 0000 Xxxxxxx Xxxxx,
Xxxx Xxxxx, Xxxxxxx 00000, XXXXXXX COMPANY CANADA LIMITED, an entity organized
in Ontario, Canada with its chief executive office and principal place of
business at 0000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx, Xxxxxx X0X0X0, XXXXXXX
HOLLAND B.V., an entity organized in The Netherlands with its chief executive
office and principal place of business at 3360 AB Sliedrecht, X.X. Xxx 00,
Xxxxxxxxxxx, Xxx Xxxxxxxxxxx, XXXXXXX U. K. LIMITED , an entity organized in
England with its chief executive office and principal place of business at Xxxx
00, Xxxxxxxxxx Xxxxxxxxxx Xxxxxx, Bailiff Bridge, Brighouse, West Yorkshire,
England, HD6 4EA, XXXXXXX GERMANY GmbH, an entity organized in Germany with its
chief executive office and principal place of business at Xxxxxxxxxxxxxxx 00,
00000 Xxxxxxxxx-Xxxxxxx, Xxxxxxx, XXXXXXX S.A.R.L. , an entity organized in
France with its chief executive office and principal place of business at 00 xxx
xx xx Xxxx, 00000 Xxxxxxx, Xxxxxx, Q.E.P. STONE HOLDINGS, INC., a Florida
corporation with a place of business at 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx
00000, Q.E.P. AUST. PTY. LIMITED, an entity organized in Australia with a place
of business at 00-00 Xxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxx 0000, Q.E.P CO. AUST.
PTY. LIMITED, an entity organized in Australia with its chief executive office
and principal place of business at 00-00 Xxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxx
0000, Q.E.P. CHILE LIMITADA, an entity organized in Chile with a place of
business at Xx. Xxxxxxxx 0000, Xxxxxxxxxx, Xxxxxxxx, Xxxxx, Q.E.P HOLDING B.V. ,
an entity organized in the Netherlands with its chief executive office and
principal place of business at 3360 AB Sliedrecht, Parrallelweg, The
Netherlands, Q.E.P. CO. NEW ZEALAND LIMITED, an entity organized in New Zealand
with a place of business at 00 Xxxxxxx Xxxxx, Xxxxxxx Xxxx, Xxxxxxxx, Xxx
Xxxxxxx, Q.E.P. ZOCALIS HOLDING L.L.C., a Delaware limited liability company
with a place of business at 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000,
Q.E.P. ZOCALIS S.R.L., an entity organized in Argentina with its chief executive
office and principal place of business at 0000 Xxxxx Xxxxxxx, Xxxxxx Xxxxx,
Xxxxxxxxx, and BOIARDI PRODUCTS CORPORATION, an Ohio corporation with its chief
executive office and principal place of business at 000 Xxxx Xxxxxx, Xxxxxx
Xxxxx, Xxx Xxxxxx 00000 (all of the foregoing hereinafter collectively called
the "Borrower" unless otherwise specifically indicated), and FLEET CAPITAL
CORPORATION, a Rhode Island corporation with an office at Xxx Xxxxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxxxxx 00000 (hereinafter referred to as the "Lender").
PREAMBLE
WHEREAS, pursuant to that certain Amended and Restated Loan Agreement
dated as of October 21, 1997 by and between Fleet National Bank ("Assignor") and
Borrower (as amended and in effect from time to time, the "Loan Agreement"),
Assignor has extended certain loans and other financial accommodations to
Borrower consisting of: (a) a discretionary commercial revolving loan in the
principal amount of up to $16,500,000, (the "Revolving Loan") which includes a
discretionary sublimit (the "BV Loan") of $5,000,000 to Xxxxxxx Xxxxxxx B.V.
("BV"), pursuant to which Borrower may borrow, repay and re-borrow Revolving
Loan advances for Borrower's general working capital purposes; and (b) a term
loan in the original principal amount of $8,000,000 (the "Term Loan");
WHEREAS, in addition to the Loan Agreement: (a) the Revolving Loan is
evidenced by that certain Second Amended and Restated Revolving Promissory Note
dated as of October 21, 1997 from Borrower to Assignor (the "Revolving Credit
Note"); (b) the Term Loan is evidenced by that certain Term Promissory Note
dated as of October 21, 1997 from Borrower to Assignor (the "Term Loan Note");
and (c) the BV Loan is evidenced by that certain Revolving Promissory Note dated
June 14, 1999 from BV to Assignor (the "BV Note");
WHEREAS, Assignor assigned all of its right, title and interest to
Lender pursuant to an Assignment and Assumption Agreement dated as of November
30, 2000;
WHEREAS, Borrower has requested Lender to, among other things, increase
the amount of the Revolving Loan, provide an additional term loan, amend certain
financial covenants and increase the interest rate with respect to the Loans;
WHEREAS, the Borrower is repaying its obligations to all existing
holders of its 8% Subordinated Debentures and entering into a new Subordinated
Loan and Security Agreement with The HillStreet Fund, L.P., and
WHEREAS, Lender is willing to extend the requested accommodations
subject to and in reliance upon the representations, warranties,
acknowledgments, covenants and agreements of Borrower contained herein.
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AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and acknowledging that Lender is relying upon the
representations, warranties, acknowledgments, covenants and agreements of
Borrower contained herein, Borrower and Lender agree as follows:
I. Acknowledgments and Affirmations.
A. Borrower and Lender acknowledge and agree that capitalized terms
used herein and without definition shall have the meanings assigned to them in
the Loan Agreement.
B. Borrower acknowledges and affirms that:
1. As of March 27, 2001, Borrower is legally and validly indebted to
Lender under the Loan Agreement in the principal amount (including the face
amount of outstanding Letters of Credit) of $14,304,485.51 with respect to the
Revolving Loan and $4,000,000.00 with respect to the Term Loan, plus interest,
fees and charges accrued and accruing thereon and thereunder, and there is no
defense, offset or counterclaim with respect to any such indebtedness or
independent claim or action against Lender.
2. All indebtedness of Borrower to Lender whenever and however
arising, is secured by a duly perfected, first priority security interest in the
Collateral (as defined in the Loan Agreement).
3. The subordinated indebtedness of Borrower to The HillStreet Fund,
L.P., entered into on even date herewith, has been duly authorized by Borrower.
C. Borrower represents and warrants that:
1. The resolutions previously adopted by the Board of Directors of
each Borrower with respect to the Loan Agreement and provided to Lender have not
in any way been rescinded or modified and have been in full force and effect
since their adoption to and including the date hereof and are now in full force
and effect, except to the extent that they have been modified or supplemented to
authorize this Agreement and the documents and transactions describe herein.
2. Each Borrower has the corporate power and authority to enter into
this Agreement and the transactions contemplated herein, and each Borrower has
taken all necessary corporate action to authorize this Agreement and the
transactions contemplated herein.
3. All representations, warranties and covenants contained in the
Loan Agreement, and in the schedules and exhibits attached thereto (as updated
and modified, to the extent applicable, by the schedules delivered to The
HillStreet Fund, L.P.), are true and correct on and as of the date hereof, are
incorporated herein by reference and, with respect to each Borrower organized
under the laws of any jurisdiction with the United States, Canada, the
Netherlands, Australia or the
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United Kingdom, are hereby remade, and, with respect to each other Borrower, are
hereby remade to the best of their knowledge.
4. No Borrower is currently in default under the Loan Agreement,
and no condition exists or has occurred which would constitute a default
thereunder but for the giving of notice or passage of time, or both.
D. The consummation of the transactions contemplated herein (a) is not
prevented or limited by, nor does it conflict with or result in a breach of the
terms, conditions or provisions of, any Borrower's articles of incorporation or
bylaws, or any evidence of indebtedness, agreement or instrument of whatever
nature to which any Borrower is a party or by which any of them is bound, (b)
does not constitute a default under any of the foregoing, and (c) does not
violate any federal, state or local law, regulation or order or other of any
court or agency which is binding upon any Borrower.
E. Lender consents to the incurrence by Borrower of the subordinated
indebtedness in favor of The HillStreet Fund, L.P., entered into on even date
herewith, pursuant to the Subordinated Debt Agreement (as defined in the Loan
Agreement).
II. Amendments to Loan Agreement. The following amendments to the Loan
Agreement shall be made.
1. The definitions of "Commitment," "Loans," "Maturity Date,"
"Notes" and "Subordinated Debt Agreement" in Section 1.1 are deleted in their
entirety and replaced with the following:
(a) "Commitment," means Lender's commitment to make (i) Revolving
Advances to Borrower pursuant to Section 2.1 of this Agreement in
an outstanding aggregate principal amount not to exceed at any time
$13,000,000 and (ii) BV Advances pursuant to Section 2.1A of this
Agreement in an outstanding aggregate principal amount not to
exceed at any time $5,000,000.
(b) "Loans" means the Revolving Advances, the Term Loan, the BV
Loan, and the 2001 Term Loan made or to be made pursuant to this
Agreement.
(c) "Maturity Date" means (i) in the case of the Revolving Credit
Loan and the BV Loan, July 25, 2003, (ii) in the case of the Term
Loan, October 1, 2004, and (iii) in the case of the 2001 Term Loan,
April 1, 2003, or (iv) earlier as set forth in this Agreement.
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(d) "Notes" means the Revolving Credit Note, the Term Note, the BV
Note and the 2001 Term Note.
(e) "Subordinated Debt Agreement" means the Subordinated Loan And
Security Agreement between the Borrower and The HillStreet Fund,
L.P. relating to the Subordinated Debt.
2. The following new definitions are hereby incorporated in Section 1.1
in the appropriate alphabetical locations:
(a) "Excess Cash Flow" shall mean, for any period, the difference
arrived at by subtracting (i) the sum of Current Maturities of Long Term
Debt plus Interest Expense from (ii) Earnings Before Interest, Taxes,
Depreciation and Amortization minus the sum of unfinanced capital
expenditures and taxes.
(b) "Fourth Amendment" means the Fourth Agreement of Amendment by and
among Borrower and Lender dated as of April 5, 2000.
(c) " Intercreditor Agreement" means the Intercreditor Agreement, dated
as of April 5, 2001, by and among Borrower, Lender and The HillStreet Fund,
L.P.
(d) "Seller Notes" mean (i) that certain promissory note in the
principal amount of Nine Hundred Thousand and 00/100 Dollars ($900,000.00)
dated as of September 10, 1999,executed by QEP in favor of Xxxx X. Xxxxxxx,
(ii) that certain promissory note in the principal amount of One Million
Six Hundred Thousand and 00/100 Dollars ($1,600,000.00) executed by QEP in
favor of Stone Mountain Manufacturing, Inc. and (iii) the payment
obligation pursuant to that certain Agreement for the Purchase and Sale of
Shares by and between Q.E.P. Zocalis Holding LLC and Zocalis S.R.L. in the
amount of One Million Two Hundred Fifty Thousand and 00/100 Dollars
($1,250,000.00) dated as of ______________.
(e) "2001 Term Loan" means that term as defined in Section 2.2A(a).
(f) "2001 Term Note" means that term as defined in Section 2.2A(b).
3. Section 2.1(c) is hereby amended by deleting the figure
"$11,500,000" and inserting in place thereof the figure "$13,000,000".
4. The following new Section 2.2A is inserted after existing Section
2.2 and before Section 2.3:
Section 2.2A 2001 Term Loan.
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(a) Subject to the terms and conditions set forth in this Agreement,
Lender shall, on the date hereof, make a term loan to Borrower (the "2001
Term Loan") in an original principal amount of One Million Five Hundred
Thousand U.S. Dollars ($1,500,000).
(b) The 2001 Term Loan shall be evidenced by, and repaid in accordance
with a single promissory note of Borrower in the form attached hereto as
Exhibit B-1 duly completed, executed and delivered to Lender, in the
principal amount of $1,500,000 dated of even date herewith, payable to
Lender and maturing on the Maturity Date for the 2001 Term Loan (the "2001
Term Note").
(c) Commencing July 1, 2001 and continuing on the first business day of
each succeeding calendar quarter thereafter (October 1, January 1, April 1
and July 1 or the first business day thereafter), Borrower shall make
mandatory scheduled principal payments under the 2001 Term Note quarterly
in the amount of $187,500.00 per calendar quarter plus interest on the
outstanding principal balance as stated in the 2001 Term Note, until the
outstanding principal amount of the 2001 Term Note, together with all
interest accrued thereon, has been fully paid, except that if not sooner
paid, the principal amount, together with all accrued but unpaid interest
thereon, shall be due and payable on the Maturity Date for the 2001 Term
Loan.
(d) Borrower may prepay any portion of the outstanding principal of the
2001 Term Loan, in whole or in part, together with accrued interest to the
date of such prepayment on the amount prepaid and all amounts required
under Section 2.21 hereof, (i) with respect to any principal portion that
bears interest with reference to the Prime Rate, on any Business Day,
without Make-Whole Premium, and (ii) with respect to any principal portion
that bears interest with reference to LIBOR, on the last Business Day of
the Interest Period applicable to the portion of the 2001 Term Loan being
prepaid, without Make-Whole Premium. Any such prepayment will offset, on a
dollar-for-dollar basis, the payment required under Section 2.22 for the
year in which such prepayment is made.
5. Section 2.3(a) is hereby amended by deleting the text and the table
set forth therein in its entirety, and inserting the following in place thereof:
(a) Commencing with the first such date following the date of this
Agreement, Borrower promises to pay interest to Lender, on the outstanding
and unpaid principal balances of each of the Revolving Loan and the Term
Loan, at a rate per annum equal to (i) in the case of Prime Rate Advances,
the Prime Rate, monthly in arrears on the first day of each calendar month
and on the applicable Maturity Date, and (ii) in the case of LIBOR Rate
Advances, the LIBOR Rate plus the LIBOR Spread (the "LIBOR Spread") as set
forth in the following table:
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--------------------------------------------------------------
Trailing Senior Debt
(determined as the average of
the Borrower's total Senior LIBOR Spread
Debt (excluding Seller Notes)
outstanding on the last day of
each of the three months
preceding the determination) to
Trailing EBITDA Ratio
(determined on a rolling four-
quarter basis as of the end of
each fiscal quarter to
Borrower)
--------------------------------------------------------------
4.01 250 basis points
--------------------------------------------------------------
3.26 - 4.00 225 basis points
--------------------------------------------------------------
2.26 - 3.25 200 basis points
--------------------------------------------------------------
2.25 x 175 basis points
--------------------------------------------------------------
Such payments shall be made on the last day of each applicable Interest Period,
or in the case of Interest Periods having a duration of more than three (3)
months, on each three-month anniversary date of the commencement of such
Interest Period. Changes in the LIBOR Spread resulting from a change in the
above ratios shall become effective on the due date of delivery by the Borrower
of a compliance certificate evidencing such change. If the Borrower shall fail
to timely deliver a compliance certificate within five days of such
certificate's due date in accordance with Section 5.8(c) of this Agreement, the
LIBOR Spread shall be 250 basis points from the day such certificate was due
until the day a certificate evidencing a lower LIBOR Spread is actually
delivered to the Lender. Each Revolving Advance shall be comprised entirely of a
Prime Rate Advance or a LIBOR Rate Advance as Borrower may request pursuant to
Section 2.5. Borrower shall not be entitled to request any Revolving Advance
which, if made, would result in more than five (5) LIBOR Rate Advances
outstanding hereunder at any time. For purposes of the foregoing, LIBOR Rate
Advances having different Interest Periods, regardless of whether they commence
on the same date, shall be considered separate LIBOR Rate Advances. Each LIBOR
Rate Advance shall be in a principal amount of $500,000 (or the equivalent in an
Alternative Currency) or in $50,000 (or the equivalent in an Alternative
Currency) increments in excess thereof. As of the date of the Fourth Amendment,
the LIBOR Spread is 200 basis points.
Commencing with the first such date following the date of this
Agreement,
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Borrower promises to pay interest to Lender, on the outstanding and unpaid
principal balance of the 2001 Term Loan, at a rate per annum equal to the
LIBOR Rate plus 275 basis points.
6. The following new sections, Section 2.21 and Section 2.22, are
hereby inserted immediately following Section 2.20:
2.21 Prepayment Penalties. If a security agreement, providing Lender
with a security interest in substantially all of the assets of each of the
Borrowers which are organized in Australia (but excluding Q.E.P. Co.
Australia Pty, Limited), the Netherlands, Canada, and the United Kingdom is
not executed by each of such Borrowers, respectively, on or prior to April
30, 2001, then, in the event that any prepayment of the obligations
hereunder is made other than prepayments consisting of (a) proceeds of
asset sales not made in the ordinary course of business or (b) Excess Cash
Flow as required under Section 2.22, a penalty shall be paid to the Lender
in the amount of (i) one percent (1%) of the amount of the prepayment if
the prepayment is effected on or prior to the first anniversary of the date
of the Fourth Amendment, and (ii) one-half percent (0.5%) of the amount of
the prepayment if the prepayment is effected after the first anniversary of
the date of the Fourth Amendment and on or prior to January 25, 2003.
2.22 Excess Cash Flow Recapture. So long as there is any principal
amount outstanding under the 2001 Term Note, Borrower shall pay Lender
twenty- five percent (25%) of the amount of Excess Cash Flow for the
immediately preceding fiscal year annually within ten (10) days of the
delivery of Borrower's audited financial statements for such fiscal year.
Such payment shall be allocated to payment of the principal due under the
2001 Term Note in the inverse order of maturity.
7. Section 6.6 is hereby amended by deleting the text thereof in its
entirety and inserting the following in its place:
Section 6.6 Restricted Payments. Pay, make or declare any Restricted
Payment, except (i) payments to The HillStreet Fund, L.P. expressly
permitted by the Intercreditor Agreement, and (ii) unless an Event of
Default shall have occurred and be continuing, or would occur after giving
effect to any such payment, payments to Xxxxx Xxxxx in connection with the
repurchase of shares of the Borrower's common stock which she holds, as
approved by Borrower's Board of Directors in May 1998.
8. Section 7.2 is hereby amended by deleting the text thereof in its
entirety and inserting the following in its place:
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Section 7.2 Tangible Net Worth. Maintain at all times a
Tangible Net Worth of not less than $14,750,000 at all times.
9. Section 7.3 is hereby amended by deleting the text thereof in its
entirety and inserting the following in its place:
Section 7.3 Leverage Ratio. Maintain as of the end of each
quarter of the Borrower, a ratio of (i) Total Liabilities minus
Subordinated Debt to (ii) Tangible Net Worth plus Subordinated Debt of
not greater than 2.75:1.0.
10. Section 7.6 is hereby amended by deleting the text thereof in its
entirety and inserting the following in its place:
Section 7.6 Debt Service Coverage Ratio. The Borrower shall
maintain, on a rolling four quarter basis as of the end of each fiscal
quarter of the Borrower, a ratio of (i) Earnings Before Interest,
Taxes, Depreciation and Amortization minus cash Capital Expenditures to
(ii) Current Maturities of Long Term Debt plus Interest Expense, of not
less than 1.25:1.0. Such ratio shall be determined without giving
effect to the $2,000,000 one-time charge taken by Borrower during its
fiscal year ended February 28, 2001.
Section 7.6A Fixed Charge Coverage Ratio. The Borrower shall
maintain, on a rolling four quarter basis as of the end of each fiscal
quarter of the Borrower, a ratio of (i) Earnings Before Interest,
Taxes, Depreciation and Amortization minus the sum of unfinanced
Capital Expenditures and taxes, to (ii) Current Maturities of Long Term
Debt plus Interest Expense, of not less than 1.1:1.0. Such ratio shall
be determined without giving effect to the $2,000,000 one-time charge
taken by Borrower during its fiscal year ended February 28, 2001.
11. The following new Section 7.8 is hereby inserted at the end of
Article 7, after Section 7.7:
Section 0.8 Exclusion from Calculations. All calculations made
pursuant to Article 7 shall exclude any adjustments required
by GAAP as a result of the mandatory put provisions contained
in the Warrant Agreement between the Borrower and The
HillStreet Fund, L.P.
12. Section 9.1(a)(1) is hereby amended by deleting the text thereof in
its entirety and inserting the following in its place:
(1) Borrower shall fail to pay the principal of, premium, if any, or
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interest on the Notes, or any amount of any fee, or any other liability
or indebtedness owing by Borrower to Lender within three (3) days of
the due date thereof;
13. Exhibit B-1 is hereby added to the Loan Agreement in the form
attached hereto as Exhibit B-1.
III. Amendment to Other Loan Documents.
A. The Revolving Credit Note is amended by deleting "$11,500,000.00"
and "ELEVEN MILLION FIVE HUNDRED THOUSAND" wherever they appear and inserting in
place thereof "$13,000,000.00" and "THIRTEEN MILLION."
B. The Loan Documents are each hereby amended so as to be consistent
with the amendments set forth in this Agreement.
C. Each of the Security Agreements in place between the Lender and any
of the Borrowers is amended by adding the following provisions thereto as a new
section to be numbered in coordination with the rest of such security agreement:
Section __. Concerning Revised Article 9 of the Uniform Commercial Code.
The parties acknowledge and agree to the following provisions of this
Agreement in anticipation of the possible application to the transactions
contemplated hereby, in one or more jurisdictions, of Revised Article 9 of
the Uniform Commercial Code in the form or substantially in the form
approved by the American Law Institute and the National Conference of
Commissioners on Uniform State Law and contained in the 1999 Official Text
of the Uniform Commercial Code ("Revised Article 9").
A. Attachment. In applying the law of any jurisdiction in which Revised
Article 9 is in effect, the Collateral is all assets of the Debtor, whether
or not within the scope of Revised Article 9. The Collateral shall include,
without limitation, the following categories of assets as defined in
Revised Article 9: goods (including without limitation inventory, equipment
and any accessions thereto), instruments (including without limitation
promissory notes), documents, accounts (including without limitation
health-care-insurance receivables), chattel paper (whether tangible or
electronic), deposit accounts, letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing), commercial tort claims,
securities and all other investment property, general intangibles
(including without limitation payment intangibles and software), supporting
obligations and any and all proceeds of any thereof, wherever located,
whether now owned and hereafter acquired. If the Debtor shall at any time,
whether or not Revised Article 9 is in effect in any particular
jurisdiction, acquire a commercial tort claim, as defined in
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Revised Article 9, the Debtor shall immediately notify the Secured Party in
a writing signed by the Debtor of the brief details thereof and grant to
the Secured Party in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing
to be in form and substance satisfactory to the Secured Party.
B. Perfection by Filing. The Secured Party may at any time and from
time to time, pursuant to the provisions of this Security Agreement, file
financing statements, continuation statements and amendments thereto that
describe the Collateral as all assets of the Debtor or words of similar
effect and which contain any other information required by Part 5 of
Revised Article 9 for the sufficiency or filing office acceptance of any
financing statement, continuation statement or amendment, including whether
the Debtor is an organization (including without limitation a registered
organization), the type of organization and any organization identification
number issued to the Debtor. The Debtor agrees to furnish any such
information to the Secured Party promptly upon request. Any such financing
statements, continuation statements or amendments may be signed by the
Security Party on behalf of the Debtor, as provided in Section ___ and may
be filed at any time in any jurisdiction whether or not Revised Article 9
is then in effect in that jurisdiction.
C. Other Perfection, etc.. The Debtor shall at any time and from time
to time, whether or not Revised Article 9 is in effect in any particular
jurisdiction, take such steps as the Security Party may reasonably request
for the Secured Party (a) to obtain an acknowledgement, in form and
substance satisfactory to the Secured Party, of any bailee having
possession of any of the Collateral that the bailee holds such Collateral
for the Secured Party, (b) to obtain "control" of any investment property,
deposit accounts, letter-of-credit rights or electronic chattel paper (as
such terms are defined in Revised Article 9 with corresponding provisions
in Rev. xx.xx. 9-104, 9-105, 9-106 and 9-107 relating to what constitutes
"control" for such items of Collateral), with any agreements establishing
control to be in form and substance satisfactory to the Secured Party, and
(c) otherwise to insure the continued perfection and priority of the
Secured Party's security interest in any of the Collateral and of the
preservation of its rights therein, whether in anticipation and following
the effectiveness of Revised Article 9 in any jurisdiction.
D. Other Provisions. In applying the law of any jurisdiction in which
Revised Article 9 is in effect, the following references to sections in
this Agreement to existing Article 9 of that jurisdiction shall be to the
Revised Article 9 Section of that jurisdiction indicated below:
--------------------------------------------------------------------------------
Agreement Section Existing Article 9 Revised Article 9
--------------------------------------------------------------------------------
(3) ss. 9-103(3) Rev.ss.9-102(a)(34)
--------------------------------------------------------------------------------
(9.2) ss. 0-000 Xxx.xx.0-000
--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
(12) xx.xx. 8-106 and Rev.ss.ss.8-106 and 9-106
9-115 (1994)
--------------------------------------------------------------------------------
(17) ss. 9-504(1)(c) Rev.ss.ss.9-608(a)(1)(C) and
9-615(a)(3)
--------------------------------------------------------------------------------
E. Savings Clause. Nothing contained in this section shall be construed
to narrow the scope of the Secured Party's security interest in any of the
Collateral or the perfection or priority thereof or to impair or otherwise
limit any of the rights, powers, privileges or remedies of the Secured
Party hereunder except (and then only to the extent) mandated by Revised
Article 9 to the extent then applicable.
IV. Conditions Precedent.
A. The effectiveness of this Agreement shall be subject to the prior
satisfaction of each of the following conditions:
1. Lender shall have received each of the following, in form and
substance satisfactory to Lender and its counsel:
(a) This Agreement, duly executed by Borrower;
(b) The 2001 Term Note, duly executed by Borrower;
(c) The Guaranty, duly executed by Xxxxx Xxxxx;
(d) The Stock Pledge Agreements, duly created by each of Q.E.P. Co.,
Inc. and each of the companies listed on Schedule A, attached hereto,
respectively, in favor of Lender with respect to the stock listed on the
respective schedules attached to such agreements;
(e) The Amended Trademark Collateral Security Agreement, duly
executed by Borrower;
(f) The Amended Patent Collateral Security Agreement, duly executed
by Borrower;
(g) Individual security agreements, duly executed by Q.E.P. Stone
Holdings, Inc., Boiardi Products Corporation, and Q.E.P. Zocalis Holding LLC
granting Lender a security interest in all of the assets of such Borrower;
(h) UCC-1 Financing Statements, duly executed by each of the
Borrowers with respect to each jurisdiction in which collateral is located;
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(i) The Intercreditor Agreement, duly executed by The HillStreet
Fund, L.P. (the subordinated lender);
(j) Accounts Receivable Letters, duly executed by each of the
Borrowers;
(k) Landlord's Waivers, duly executed by each landlord leasing
premises to the Borrower;
(l) Copies of all corporate action taken by each Borrower, including
resolutions of its Board of Directors, authorizing the execution, delivery, and
performance of the Fourth Amendment and each other document to be delivered
pursuant to this Agreement, certified as of the date of this Agreement by the
Secretary of such Borrower;
(m) A certificate, dated as of the date of this Agreement, of the
Secretary of each Borrower certifying the names and true signatures of the
officers of such Borrower authorized to sign this Fourth Amendment and the other
documents to be delivered by it under this Agreement;
(n) A favorable opinion of independent counsel for Borrower,
satisfactory to Lender, dated the date of this Agreement;
(o) A Borrowing Base Certificate of Borrower dated the date of this
Agreement;
(p) The Subordinated Debt shall have been issued pursuant to the
Subordinated Debt Agreement and the holders of the Subordinated Debt shall have
executed and delivered the Intercreditor Agreement to Lender;
(q) An amendment fee of $50,000; and
(r) All other documents, instruments and agreements that Lender
shall reasonably require in connection with this Agreement, including without
limitation those documents, instruments, and agreements required under previous
amendments to the Loan Agreement which have not yet been delivered to Lender.
V. Miscellaneous.
A. Each Borrower acknowledges, agrees and affirms that Lender's
first priority security interest in its personal property and assets shall
continue to secure Borrower's respective indebtedness to Lender arising under
Loans.
B. This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut (except its conflicts of laws
provisions).
13
C. Upon the execution of this Agreement, the Loan Agreement is
amended to the extent this Agreement amends the Loan Agreement. Except as
specifically amended by the terms of this Agreement, all terms and conditions
set forth in the Loan Agreement shall remain in full force and effect.
[The remainder of this page has been left blank intentionally.]
14
IN WITNESS WHEREFORE, the parties have caused this Agreement to be
executed and delivered as of the date first above written.
WITNESSES AS TO ALL BORROWER:
BORROWERS Q.E.P. CO., INC.
By
----------------------------------- --------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
Duly Authorized
-----------------------------------
Q.E.P.-O'TOOL, INC.
By
--------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
Duly Authorized
XXXXXX TOOL CORPORATION
By
--------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
Duly Authorized
WESTPOINT FOUNDRY, INC.
By
--------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
Duly Authorized
XXXXXXX CONSOLIDATED
INDUSTRIES, INC.
By
--------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
Duly Authorized
15
XXXXXXX HOLDING INTERNATIONAL INC.
By
--------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
Duly Authorized
XXXXXXX COMPANY CANADA LIMITED
By
--------------------------------------
Xxxx Xxxxxxxxx
Its Treasurer
Duly Authorized
XXXXXXX U. K. LIMITED
By
--------------------------------------
Xxxx Xxxxxxxxx
Its: Director
Duly Authorized
XXXXXXX GERMANY GmbH
By
--------------------------------------
Xxxx Xxxxxxxxx
Its: Director
Duly Authorized
XXXXXXX S.A.R.L.
By
--------------------------------------
Xxxx Xxxxxxxxx
Its: Director
Duly Authorized
16
XXXXXXX JAPAN KK
By
--------------------------------------
Xxxx Xxxxxxxxx
Its: Director
Duly Authorized
XXXXXXX HOLLAND B.V.
By
--------------------------------------
Xxxx Xxxxxxxxx
Its Director
Duly Authorized
Q.E.P. HOLDING B.V.
By
--------------------------------------
Xxxx Xxxxxxxxx
Its: Director
Duly Authorized
Q.E.P. STONE HOLDINGS, INC.
By
--------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
Duly Authorized
17
Q.E.P. AUST. PTY. LIMITED
By
--------------------------------------
Xxxx Xxxxxxxxx
Its Director
Duly Authorized
Q.E.P. CO. AUST. PTY. LIMITED
By
--------------------------------------
Xxxx Xxxxxxxxx
Its: Director
Duly Authorized
Q.E.P. CO. NEW ZEALAND LIMITED
By
--------------------------------------
Xxxx Xxxxxxxxx
Its: Director
Duly Authorized
Q.E.P. CHILE LIMITADA
By
--------------------------------------
Xxxx Xxxxxxxxx
Its Director
Duly Authorized
Q.E.P. ZOCALIS HOLDING L.L.C.
By
--------------------------------------
Xxxx Xxxxxxxxx
Its Director
Duly Authorized
18
Q.E.P. ZOCALIS SRL
By
--------------------------------------
Xxxx Xxxxxxxxx
Its Director
Duly Authorized
BOIARDI PRODUCTS CORPORATION
By
--------------------------------------
Xxxx Xxxxxxxxx
Its Director
Duly Authorized
WITNESSES AS TO LENDER: LENDER:
FLEET CAPITAL CORPORATION
By
----------------------------------- --------------------------------------
Xxxxxx Xxxxxxx
Its Senior Vice President
-----------------------------------
STATE OF ___________ )
) ss. ________ ______________ , 2001
COUNTY OF __________ )
Xxxx Xxxxxxxxx, known by me or adequately identified to me, personally
appeared before me, the undersigned, and, as signer of the foregoing instrument,
acknowledged his execution of the same to be his free act and deed and the free
act and deed of each of the entities for which he executed the foregoing
instrument.
----------------------------------------
Notary Public/
Commissioner of the Superior Court
19
SCHEDULE A
XXXXXXX CONSOLIDATED INDUSTRIES, INC.
Q.E.P. HOLDING B.V.
XXXXXXX XXXXXXX B.V.
Q.E.P. ZOCALIS HOLDING L.L.C.
XXXXXX TOOL CORPORATION
Q.E.P. AUST. PTY. LIMITED.
20
2001 TERM NOTE
$1,500,000 Hartford, Connecticut
April 5th, 2001
FOR VALUE RECEIVED, the undersigned, Q.E.P. CO., INC., a Delaware
corporation with its chief executive office and principal place of business at
0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000, Q.E.P. - O'TOOL, INC., a
California corporation with its chief executive office and principal place of
business at 0000 Xxxx Xxxxx Xxxx, Xxxxxxxxx, XX 00000, XXXXXX TOOL CORPORATION,
an Indiana corporation with its chief executive office and principal place of
business at 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000, WESTPOINT FOUNDRY,
INC., an Indiana corporation with its chief executive office and principal place
of business at 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000, and XXXXXXX
CONSOLIDATED INDUSTRIES, INC., a Delaware corporation with its chief executive
office and principal place of business at 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx,
Xxxxxxx 00000, XXXXXXX JAPAN KK, an entity organized in Japan with its chief
executive office and principal place of business at 0000 Xxxxxxx Xxxxx, Xxxx
Xxxxx, Xxxxxxx 00000, XXXXXXX HOLDING INTERNATIONAL, INC., a Delaware
corporation with its chief executive office and principal place of business at
0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx 00000, XXXXXXX COMPANY CANADA LIMITED,
an entity organized in Ontario, Canada with its chief executive office and
principal place of business at 0000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx, Xxxxxx
X0X0X0, XXXXXXX HOLLAND B.V., an entity organized in The Netherlands with its
chief executive office and principal place of business at 3360 AB Sliedrecht,
X.X. Xxx 00, Xxxxxxxxxxx, Xxx Xxxxxxxxxxx, XXXXXXX U. K. LIMITED , an entity
organized in England with its chief executive office and principal place of
business at Xxxx 00, Xxxxxxxxxx Xxxxxxxxxx Xxxxxx, Bailiff Bridge, Brighouse,
West Yorkshire, England, HD6 4EA, XXXXXXX GERMANY GmbH, an entity organized in
Germany with its chief executive office and principal place of business at
Xxxxxxxxxxxxxxx 00, 00000 Xxxxxxxxx-Xxxxxxx, Xxxxxxx, XXXXXXX S.A.R.L. , an
entity organized in France with its chief executive office and principal place
of business at 00 xxx xx xx Xxxx, 00000 Xxxxxxx, Xxxxxx, Q.E.P. STONE HOLDINGS,
INC., a Florida corporation with a place of business at 0000 Xxxxxxx Xxxxx, Xxxx
Xxxxx, Xxxxxxx 00000, Q.E.P. AUST. PTY. LIMITED, an entity organized in
Australia with a place of business at 00-00 Xxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxx
0000, Q.E.P CO. AUST. PTY. LIMITED, an entity organized in Australia with its
chief executive office and principal place of business at 00-00 Xxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxxx 0000, Q.E.P. CHILE LIMITADA, an entity organized in Chile
with a place of business at Xx. Xxxxxxxx 0000, Xxxxxxxxxx, Xxxxxxxx, Xxxxx,
Q.E.P HOLDING B.V. , an entity organized in the Netherlands with its chief
executive office and principal place of business at 3360 AB Sliedrecht,
Parrallelweg, The Netherlands, Q.E.P. CO. NEW ZEALAND LIMITED, an entity
organized in New Zealand with a place of business at 00 Xxxxxxx Xxxxx, Xxxxxxx
Xxxx, Xxxxxxxx, Xxx Xxxxxxx, Q.E.P. ZOCALIS HOLDING L.L.C., a Delaware limited
liability company with a place of business at 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx,
Xxxxxxx 00000, Q.E.P. ZOCALIS S.R.L., an entity organized in Argentina with its
chief executive office and principal place of business at 0000 Xxxxx Xxxxxxx,
Xxxxxx Xxxxx,
Xxxxxxxxx, and BOIARDI PRODUCTS CORPORATION, an Ohio corporation with its chief
executive office and principal place of business at 000 Xxxx Xxxxxx, Xxxxxx
Xxxxx, Xxx Xxxxxx 00000 (all of the foregoing hereinafter collectively called
the "Borrower" unless otherwise specifically indicated) promises to pay to the
order of FLEET CAPITAL CORPORATION, a Rhode Island corporation with an office at
Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 (hereinafter referred to as the
"Lender") ONE MILLION FIVE HUNDRED THOUSAND ($1,500,000) (the "Principal
Amount"), pursuant to that certain Amended and Restated Loan Agreement by and
between Borrower and Lender dated October 21, 1997 (as amended and in effect
from time to time, the "Loan Agreement"), together with (i) interest at the rate
and in the manner provided in the Loan Agreement; (ii) all amounts which may
become due under the Loan Agreement or any of the other Loan Documents; (iii)
any costs and expenses, including reasonable attorneys' and appraiser's fees
incurred in the collection of this Note or the enforcement of the Loan Agreement
or any of the other Loan Documents, foreclosure thereunder or in any litigation
or controversy arising from or connected with this Note, or the Loan Agreement
or any of the other Loan Documents; and (iv) all taxes or duties assessed upon
said sum against Lender or upon the debt evidenced hereby. All amounts owing
under this Note and interest thereon shall be payable in legal tender of the
United States of America in immediately available funds. Capitalized terms used
herein and not otherwise defined shall have the meanings given to them in the
Loan Agreement.
Equal quarterly payments of principal in the amount of One Hundred
Eighty-Seven Thousand Five Hundred Dollars ($187,500) shall be due and payable
commencing on July 1, 2001 and continuing on the first business day of each
succeeding calendar quarter thereafter for a period of eight (8) quarters, until
the outstanding Principal Amount, together with all interest accrued thereon has
been fully paid, except that if not sooner paid, the Principal Amount, together
with all accrued but unpaid interest thereon, shall be due and payable on April
1, 2003 (the "Maturity Date").
Interest on the Principal Amount shall be computed on the basis of a
360-day year for actual days elapsed and shall be payable at the LIBOR rate plus
two and three-quarters percent (2.75%) and in the manner as provided in the Loan
Agreement and shall be paid quarterly until all of said Principal Amount has
been fully paid, whether before or after the Maturity Date, by acceleration or
otherwise, and whether or not any judgment is obtained hereon.
In the event that Lender has not received, within fifteen (15) days of
its due date, any installment of the Principal Amount and interest (upon the
Maturity Date or otherwise), or payment with respect to any other payment due
under this Note, Borrower shall be subject to a late charge equal to five
percent (5%) of such amount due.
Upon the occurrence of default by Borrower in the performance of any of
Borrower's obligations hereunder, or an Event of Default as defined in the Loan
Agreement or in any other Loan Documents, Lender may, at its option, accelerate
Borrower's obligations hereunder and declare the entire unpaid Principal Amount,
together with accrued interest and all other amounts
2
then due which are evidenced by this Note, to be immediately due and payable,
without the necessity for demand or additional notice. In addition, upon the
occurrence of such default or Event of Default or after the Maturity Date, all
principal and accrued but unpaid interest shall bear interest only paid in full,
payable on demand at the Default Rate. Failure to exercise these options shall
not constitute a waiver of the right to exercise the same in the event of any
subsequent default.
Borrower may prepay this Note only as permitted in the Loan Agreement.
Notwithstanding any provisions of this Note, it is the understanding
and agreement of Borrower and Lender that the maximum rate of interest to be
paid by Borrower to Lender shall not exceed the highest of the maximum rate of
interest permissible to be charged by Lender under applicable laws. Any amount
paid in excess of such rate shall be deemed to be a payment in reduction of
principal except to the extent that such amount is in excess of the then
outstanding Principal Amount, in which event such excess shall be returned to
the Borrower.
This Note shall be governed by and construed in accordance with the
laws of the State of Connecticut. This Note shall bind the successors and
assigns of Borrower, and shall inure to the benefit of Lender and its successors
and assigns. This Note may not be changed or terminated orally, but only by an
agreement in writing signed by the party against whom enforcement of any such
change or termination is sought.
Whenever in this Note words of any gender appear, they shall be deemed
to apply equally to any other gender. Whenever used in this Note, the plural
shall include the singular and the singular shall include the plural, as the
context shall require. In the event that Borrower consists of more than one
person or entity, the obligations hereunder shall be joint and several.
TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION
EVIDENCED BY THIS NOTE, THE LOAN AGREEMENT, AND ANY OTHER LOAN DOCUMENTS
EVIDENCING OR SECURING THE SAME, BORROWER AGREES THAT THIS IS A COMMERCIAL
TRANSACTION AND NOT A CONSUMER TRANSACTION, AND WAIVES ANY RIGHT TO NOTICE AND A
HEARING AND AUTHORIZES LENDER'S ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT
REMEDY WITHOUT COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF
THIS WAIVER AND WAIVES ANY CLAIM IN TORT, CONTRACT OR OTHERWISE AGAINST LENDER'S
ATTORNEY WHICH MAY ARISE OUT OF SUCH ISSUANCE OF A WRIT FOR A PREJUDGMENT REMEDY
WITHOUT COURT ORDER. BORROWER ACKNOWLEDGES AND STIPULATES THAT SUCH WAIVER AND
AUTHORIZATION GRANTED ABOVE ARE MADE KNOWINGLY AND FREELY AND AFTER FULL
CONSULTATION WITH COUNSEL. SPECIFICALLY, BORROWER RECOGNIZES AND UNDERSTANDS
THAT THE EXERCISE OF LENDER'S RIGHTS DESCRIBED ABOVE MAY RESULT IN THE
ATTACHMENT OF OR LEVY AGAINST
3
BORROWER'S PROPERTY, AND SUCH WRIT FOR A PREJUDGMENT REMEDY WILL NOT HAVE THE
PRIOR WRITTEN APPROVAL OR SCRUTINY OF A COURT OF LAW OR OTHER JUDICIAL OFFICER
NOR WILL BORROWER HAVE THE RIGHT TO ANY NOTICE OR PRIOR HEARING WHERE BORROWER
MIGHT CONTEST SUCH A PROCEDURE. THE INTENT OF BORROWER IS TO GRANT TO LENDER FOR
GOOD AND VALUABLE CONSIDERATION THE RIGHT TO OBTAIN SUCH A PREJUDGMENT REMEDY
AND TO EXPRESS ITS BELIEF THAT ANY SUCH PREJUDGMENT REMEDY OBTAINED IS VALID AND
CONSTITUTIONAL. FURTHER, TO THE EXTENT ALLOWED UNDER APPLICABLE LAW, BORROWER
HEREBY WAIVES DEMAND, PRESENTMENT FOR PAYMENT, PROTEST, NOTICE OF PROTEST,
NOTICE OF DISHONOR, DILIGENCE IN COLLECTION, NOTICE OF NONPAYMENT OF THIS NOTE
AND ANY AND ALL NOTICES OF A LIKE NATURE.
[the remainder of this page was left blank intentionally]
4
BORROWER:
Q.E.P. CO., INC.
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
Duly Authorized
Q.E.P.-O'TOOL, INC.
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
Duly Authorized
XXXXXX TOOL CORPORATION
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
Duly Authorized
WESTPOINT FOUNDRY, INC.
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
Duly Authorized
XXXXXXX CONSOLIDATED INDUSTRIES, INC.
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
Duly Authorized
5
XXXXXXX HOLDING INTERNATIONAL, INC.
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
Duly Authorized
XXXXXXX COMPANY CANADA LIMITED
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its Treasurer
Duly Authorized
XXXXXXX U. K. LIMITED
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its: Director
Duly Authorized
XXXXXXX GERMANY GmbH
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its: Director
Duly Authorized
XXXXXXX S.A.R.L.
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its: Director
Duly Authorized
6
XXXXXXX JAPAN KK
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its: Director
Duly Authorized
XXXXXXX HOLLAND B.V.
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its Director
Duly Authorized
Q.E.P. HOLDING B.V.
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its: Director
Duly Authorized
Q.E.P. STONE HOLDINGS, INC.
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
Duly Authorized
7
Q.E.P. AUST. PTY. LIMITED
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its Director
Duly Authorized
Q.E.P. CO. AUST. PTY. LIMITED
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its: Director
Duly Authorized
Q.E.P. CO. NEW ZEALAND LIMITED
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its: Director
Duly Authorized
Q.E.P. CHILE LIMITADA
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its Director
Duly Authorized
Q.E.P. ZOCALIS HOLDING, L.L.C.
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its Director
Duly Authorized
8
Q.E.P. ZOCALIS S.R.L.
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its Director
Duly Authorized
BOIARDI PRODUCTS CORPORATION
By:
----------------------------------------
Xxxx Xxxxxxxxx
Its Director
Duly Authorized
STATE OF _________________ )
) ss. _____________ April __, 2001
COUNTY OF ________________ )
Xxxx Xxxxxxxxx, known by me or adequately identified to me, personally
appeared before me, the undersigned, and, as signer of the foregoing instrument,
acknowledged his execution of the same to be his free act and deed and the free
act and deed of each of the entities for which he executed the foregoing
instrument.
----------------------------------------
Notary Public/
Commissioner of the Superior Court
9
GUARANTY AGREEMENT
This Guaranty, dated as of April 5, 2001, is from XXXXX XXXXX, an
individual residing in the State of Florida (the "Guarantor") to FLEET CAPITAL
CORPORATION, a Rhode Island corporation having an office at 000 Xxxxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxx 00000 (the "Lender").
RECITALS
WHEREAS, pursuant to that certain Amended and Restated Loan Agreement
(the "Loan Agreement") dated as of October 21, 1997, as amended from time to
time, by and between Fleet National Bank ("Assignor") and Borrower (as defined
in the Loan Agreement), Assignor has extended certain loans and other financial
accommodations to Borrower consisting of: (a) a discretionary commercial
revolving loan in the principal amount of up to $18,000,000, (the "Revolving
Loan") which includes a discretionary sublimit (the "BV Loan") of $5,000,000 to
Xxxxxxx Holland B.V. ("BV"), pursuant to which Borrower may borrow, repay and
re-borrow Revolving Loan advances for Borrower's general working capital
purposes; and (b) a term loan in the original principal amount of $8,000,000
(the "Term Loan"); and (c) a second loan in the original principal amount of
$1,500,000 (the "2001 Term Loan," and, collectively with the Revolving Loan, the
BV Loan and the Term Loan, the "Loans");
WHEREAS, in addition to the Loan Agreement: (a) the Revolving Loan is
evidenced by that certain Second Amended and Restated Revolving Promissory Note
dated as of October 21, 1997 from Borrower to Assignor (the "Revolving Credit
Note"); (b) the Term Loan is evidenced by that certain Term Promissory Note
dated as of October 21, 1997 from Borrower to Assignor (the "Term Note"); (c)
the BV Loan is evidenced by that certain Revolving Promissory Note dated June
14, 1999 from BV to Assignor (the "BV Note"); and the 2001 Term Loan is
evidenced by that certain 2001 Term Promissory Note as even date herewith (the
"2001 Term Note," and, collectively with the Revolving Credit Note, the Term
Note and the BV Note, the "Notes").
WHEREAS, Assignor assigned all of its right, title and interest to
Lender pursuant to an Assignment and Assumption Agreement dated as of November
30, 2000;
WHEREAS, Borrower has requested Lender to, among other things, increase
the amount of the Revolving Loan, amend certain financial covenants, make the
2001 Term Loan and increase the interest rate with respect to the Loans; and
WHEREAS, Lender is willing to extend the requested accommodations
subject to and in reliance upon the representations, warranties,
acknowledgments, covenants and agreements of Borrower contained in the Loan
Agreement and of Guarantor contained herein.
1
In consideration of and as a material inducement for the Lender making,
now or in the future, loans, advances or otherwise giving credit to Borrower,
with respect to the Loans as evidenced by the Notes, the Guarantor does hereby
represent, warrant, covenant, and agree as follows:
ARTICLE I
COVENANTS AND AGREEMENTS
Section 1. The Guaranty. The Guarantor hereby absolutely and
unconditionally guarantees to the Lender the full and prompt payment and
performance of fifty percent (50%) of the then outstanding liabilities of
Borrower to the Lender, whenever and however arising under the 2001 Term Loan
and the 2001 Term Note. As used herein, "liabilities" means, liabilities and
obligations of Borrower to the Lender under the 2001 Term Loan, and all
extensions, renewals and substitutions therefor, and all reasonable costs,
expenses and reasonable attorneys' and other professionals' fees incurred in the
collection solely of said liabilities and in any litigation arising solely from
such liabilities or this Guaranty or in the defense, protection, preservation,
realization and enforcement of any rights, liens or remedies against Guarantor
under this Guaranty. All payments by Guarantor shall be paid in lawful money of
the United States of America. Each and every payment obligation or liability
guaranteed hereunder shall give rise to a separate cause of action, and separate
suits may but need not be brought hereunder as each cause of action arises. The
Guarantor's initial obligation hereunder is $750,000 plus the expenses and costs
specified in this section.
Section 2. Unconditional Nature of Guaranty.
(a) The obligations of Guarantor under this Guaranty shall be
absolute and unconditional and shall remain in full force and effect until every
payment, obligation or liability guaranteed hereunder shall have been fully and
finally paid and performed. Guarantor further guarantees that all payments made
by Borrower with respect to any liabilities hereby guaranteed will, when made,
be final and agrees that if any such payment is recovered from or repaid by the
Lender in whole or in part in any bankruptcy, insolvency or similar proceeding
instituted by or against Borrower, this Guaranty shall continue to be fully
applicable to such liabilities to the same extent as though the payment so
recovered or repaid had never been originally made on such liabilities. The
obligations of Guarantor shall not be affected, modified, released, discharged
or impaired, in whole or in part, upon the happening from time to time of any
event, including, without limitation, any of the following, whether or not with
notice to, or consent of, Guarantor:
(i) The compromise, settlement, release, change or
modification, whether material or otherwise, or termination of any or all of the
liabilities;
2
(ii) The failure to give notice to Guarantor of the
occurrence of an event of default under the terms and provisions of this
Guaranty, or any of the other instruments, agreements or documents evidencing,
securing or otherwise relating to any of the liabilities or securing or
otherwise relating to the Loan Agreement, and this Guaranty (collectively,
including the Loan Agreement and this Guaranty, the "Financing Agreements");
(iii) The modification, amendment, recession or
waiver by the Lender of the payment, performance or observance by Borrower or
Guarantor of any of their respective obligations, conditions, covenants or
agreements contained in any of the Financing Agreements;
(iv) The extension of time for payment of any
principal, interest or any other amount due and owing under any of the Financing
Agreements, or of the time for performance of any other obligations, covenants
or agreements under or arising out of any of the Financing Agreements, or the
extension or the renewal of any thereof;
(v) The modification or amendment (whether material
or otherwise) of any duty, obligation, covenant or agreement set forth in any of
the Financing Agreements;
(vi) The taking or the failure to take any of the
actions referred to in any of the Financing Agreements;
(vii) Any failure, omission, delay or lack on the
part of the Lender to enforce, assert or exercise any right, power or remedy
conferred on the Lender in any of the Financing Agreements;
(viii) The full or partial discharge of Borrower in
bankruptcy or similar proceeding or otherwise;
(ix) The release or discharge, in whole or in part,
or the death, bankruptcy, liquidation or dissolution of any other person or
entity other than the Guarantor which is primarily or secondarily liable with
respect to the liabilities;
(x) The addition, exchange, release or surrender of
all or any of the collateral held by the Lender as security for the liabilities;
or
(xi) The default or failure of Guarantor fully to
perform any of Guarantor's obligations set forth in this Guaranty.
(b) The Guarantor agrees that no delay, act of commission or
omission of any kind or at any time upon the part of the Lender or its
successors and assigns with respect to any matter whatsoever shall in any way
impair the rights of the Lender to enforce any right, power or benefit under
this Guaranty or any of the other Financing Agreements to which Guarantor is a
3
party or be construed to be a waiver thereof. Any such right may be exercised
from time to time and as often as may be deemed expedient. No set-off,
counterclaim, reduction, or diminution of any obligation, or any defense of any
kind or nature which Guarantor has or may have against the Lender, or any
assignee or successor thereof shall be available hereunder to Guarantor against
the Lender or its successors and assigns.
(c) To the extent not otherwise expressly provided herein, the
Guarantor expressly waives all defenses of suretyship or impairment of
collateral.
Section 3. Right of the Lender to Proceed Against Guarantor.
(a) Upon any failure in the payment of any of the liabilities
or obligations of Guarantor under this Guaranty, or of the Borrower under the
2001 Term Loan, the liability of Guarantor shall be effective immediately
without notice or demand and shall be payable or performable on demand without
any suit or action against Borrower. Upon any other failure or Event of Default
(other than payment) of the Guarantor under this Guaranty, or of the Borrower
under the Loan Agreement, the liability of Guarantor shall be effective twenty
(20) days after Guarantor's receipt of notice of such failure or Event of
Default if such failure or Event of Default is not cured or waived prior to the
end of such period. No delay or omission in exercising any right hereunder shall
operate as a waiver of such right or any other right.
(b) The Lender, in its sole discretion, shall have the right
to proceed first and directly against the Guarantor under this Guaranty without
proceeding against or exhausting any other remedies which it may have against
Borrower or any other person primarily or secondarily liable for any of the
liabilities and without resorting to any security held by the Lender.
(c) This Guaranty is entered into by Guarantor for the benefit
of the Lender and its permitted successors and assigns, all of whom shall be
entitled to enforce performance and observance of this Guaranty.
Section 4. Waivers, Payment of Costs and Other Agreements.
(a) GUARANTOR ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS
GUARANTY IS A PART IS A COMMERCIAL TRANSACTION, AND HEREBY WAIVES GUARANTOR'S
RIGHTS TO NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL
STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH RESPECT TO
ANY PREJUDGMENT REMEDY WHICH THE LENDER MAY DESIRE TO USE, AND FURTHER WAIVES
GUARANTOR'S RIGHTS TO REQUEST THAT THE LENDER POST A BOND, WITH OR WITHOUT
SURETY, TO PROTECT GUARANTOR AGAINST DAMAGES THAT MAY BE CAUSED BY ANY
PREJUDGMENT REMEDY SOUGHT OR
4
OBTAINED BY THE LENDER. GUARANTOR HEREBY FURTHER EXPRESSLY WAIVES DILIGENCE,
DEMAND, PRESENTMENT, PROTEST, NOTICE OF NONPAYMENT OR PROTEST, NOTICE OF THE
ACCEPTANCE OF THIS GUARANTY, NOTICE OF ANY RENEWALS OR EXTENSIONS OF THE NOTE
AND OF ANY ACCOMMODATIONS MADE OR EXTENSIONS OR OTHER FINANCIAL ACCOMMODATIONS
GRANTED TO BORROWER OR OTHER ACTION TAKEN IN RELIANCE HEREON AND ALL OTHER
DEMANDS AND NOTICES OF ANY DESCRIPTION IN CONNECTION WITH THIS GUARANTY, ANY OF
THE LIABILITIES OR OTHERWISE.
(b) GUARANTOR HEREBY WAIVES TRIAL BY JURY IN ANY COURT AND IN
ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN
ANY WAY RELATED TO THE FINANCING TRANSACTIONS OF WHICH THIS GUARANTY IS A PART
AND/OR THE ENFORCEMENT OF ANY OF THE LENDER'S RIGHTS AND REMEDIES, INCLUDING
WITHOUT LIMITATION, TORT CLAIMS. GUARANTOR ACKNOWLEDGES THAT GUARANTOR MAKES
THIS WAIVER KNOWINGLY, VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER CONSIDERATION
OF THE RAMIFICATIONS OF THIS WAIVER WITH GUARANTOR'S ATTORNEYS. GUARANTOR
FURTHER ACKNOWLEDGES THAT THE LENDER HAS NOT AGREED WITH OR REPRESENTED TO
GUARANTOR THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES.
(c) Except for the payment of compensation to the Guarantor by
the Borrower in the ordinary course, the Guarantor hereby fully subordinates to
the liabilities owed to the Lender (i) any right of subrogation that the
Guarantor may have against the Borrower, including without limitation, any right
of subrogation by virtue of the Guarantor's making payments hereunder, and (ii)
any other claims that the Guarantor may have against the Borrower and any other
indebtedness, direct or indirect, absolute or contingent, that the Borrower may
now or hereafter owe to the Guarantor (the rights, claims and indebtedness
referred to in clauses (i) and (ii) being collectively referred to herein as
"Subordinated Claims"). So long as an Event of Default has occurred and is
continuing, the Guarantor will not accept any payment upon any of the
Subordinated Claims, and will not have the right to take action to collect any
of the Subordinated Claims, until the liabilities have been fully and finally
paid.
(d) THE GUARANTOR ACKNOWLEDGES THAT GUARANTOR MAKES THE
WAIVERS SET FORTH IN SUBSECTIONS (a), (b) AND (c) ABOVE KNOWINGLY AND
VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER CONSIDERATION OF THE RAMIFICATIONS OF
THOSE WAIVERS WITH GUARANTOR'S ATTORNEY. THE GUARANTOR FURTHER ACKNOWLEDGES THAT
THE LENDER HAS NOT AGREED WITH OR REPRESENTED TO GUARANTOR OR ANY OTHER PARTY
HERETO THAT THE PROVISIONS OF
5
SUBSECTIONS (a), (b) AND (c) ABOVE WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
(e) Guarantor agrees to pay all reasonable costs and expenses,
including reasonable fees of attorneys, paralegals and other professionals,
arising out of or with respect to the validity, enforcement, realization,
protection or preservation of this Guaranty or any of the liabilities subject to
this Guaranty.
(f) If, for any reason, Borrower has no legal existence or is
under no legal obligation to discharge any liabilities subject to this Guaranty
or if any such liabilities have become irrecoverable from Borrower by operation
of law or for any other reason, this Guaranty shall nevertheless be binding on
Guarantor to the same extent as if Guarantor at all times had been the principal
obligor on all such liabilities. In the event that acceleration of the time for
payment of any liabilities subject to this Guaranty is stayed upon the
insolvency, bankruptcy or reorganization of Borrower, or for any other reason,
all such amounts otherwise subject to acceleration under the terms of the 2001
Term Note shall be immediately due and payable by Guarantor, without notice or
demand.
Section 5. Set-off. The Guarantor hereby gives the Lender a lien and,
at any time after the occurrence of an Event of Default, a right of set-off for
all Guarantor's liabilities to the Lender upon and against all Guarantor's
deposits, credits, collateral and property now or hereafter in the possession or
control of the Lender or in transit to it. The Lender may, at any time,
following the occurrence of an Event of Default without notice to Guarantor,
apply or set-off the same, or any part thereof (if Lender reasonably believes
that such Event of Default continues to exist as of the date of such application
or set-off), to any liability of the Guarantor to the Lender, whether or not the
Lender shall have made demand under this Guaranty and although such obligations
may be contingent or unmatured.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 1. Guarantor Representations, Warranties and Covenants. The
Guarantor hereby represents, warrants and covenants that:
(a) The Guarantor is an individual residing in the State of
Florida and has the power and authority to execute this Guaranty and incur the
obligations hereunder.
(b) Neither the execution and delivery of this Guaranty, the
consummation of the transactions contemplated hereby nor the fulfillment of or
compliance with the terms and conditions of this Guaranty is prevented or
limited by or conflicts with or results in a breach of the terms, conditions or
provisions of any contractual or other restriction on the Guarantor or any
6
agreement or instrument of whatever nature to which the Guarantor is now a party
or by which the Guarantor or Guarantor's property is bound or constitutes a
default under any of the foregoing.
(c) The Guarantor has received and will receive a direct and
material financial benefit from the accommodations extended by the Lender to
Borrower.
(d) All authorizations, consents and approvals of governmental
bodies or agencies required in connection with the execution and delivery of
this Guaranty, or in connection with the performance of the Guarantor's
obligations hereunder or thereunder have been obtained as required hereunder or
by law.
(e) This Guaranty constitutes a valid and legally binding
obligation of the Guarantor, enforceable in accordance with its terms.
(f) There is no action or proceeding pending or to the best of
Guarantor's knowledge threatened against the Guarantor before any court or
administrative agency that might adversely affect the ability of the Guarantor
to perform Guarantor's obligations under this Guaranty.
(g) The Guarantor is solvent as of the date of and after
giving effect to this Guaranty.
(h) Failure of Guarantor to comply with any of the covenants
herein shall constitute a default of the liabilities, entitling the Lender to
exercise all rights and remedies set forth in any of the Financing Agreements.
(i) Guarantor shall provide Lender (a) within one hundred
twenty (120) days of Borrower's fiscal year end a financial statement in form
satisfactory to Lender and (b) within fifteen (15) days of filing, hit federal
and state income tax returns together with all schedules attached thereto.
ARTICLE III
NOTICE AND SERVICE OF PROCESS,
PLEADINGS AND OTHER PAPERS
Section 1. Designation of Agent for Service of Process. Guarantor
hereby agrees to be subject to service of process in the State of Connecticut
and to remain so subject so long as any of the liabilities are outstanding. If
for any reason Guarantor should not be so subject, Guarantor hereby designates
and appoints, without power of revocation, the Secretary of the State of
Connecticut as Guarantor's agent upon whom may be served all process, pleadings,
7
notices or other papers which may be served upon Guarantor as a result of any of
Guarantor's obligations under this Guaranty.
Section 2. Consent to Service of Process. Guarantor irrevocably (a)
agrees that any suit, action or other legal proceeding arising out of this
Guaranty may be brought in the courts of record of the State of Connecticut or
the courts of the United States located in such state; (b) consents to the
jurisdiction of each such court in any such suit, action or proceeding; and (c)
waives any objection which such Guarantor may have to the laying of venue of any
such suit, action or proceeding in any of such courts. For such time as any of
the liabilities is outstanding, Guarantor's agent designated in Section 3.1
hereof shall accept and acknowledge on Guarantor's behalf services of any and
all process in any such suit, action or proceeding brought in any such court.
Guarantor agrees and consents that any such services of process upon such agent
and written notice of such service to Guarantor by registered mail shall be
taken and held to be valid personal service upon Guarantor and that any such
service of process shall be of the same force and validity as if services were
made upon Guarantor according to the laws governing the validity and
requirements of such service in such state, and waives all claim of error by
reason of any such service.
Section 3. Notices, Etc. All notices, demands, requests, and other
communications given under this Agreement shall only be effective if they are
(i) in writing, (ii) actually received by the addressee, and (iii) sent by hand
delivery, by facsimile transmission, by reputable express delivery service, or
by first-class mail, postage prepaid:
(a) If to the Lender, to it at:
Fleet Capital Corporation
000 Xxxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Senior Vice President
Telecopy No.: (000) 000-0000
With a copy to:
Pepe & Hazard LLP
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
(b) If to Guarantor, to it at:
8
Xxxxx Xxxxx
000 Xxxxxxx'x Xxx
Xxxxxx Xxxxx, XX 00000
Telecopy No.: (000) 000-0000
With a copy to:
Holland & Knight LLP
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
or to such other address (and/or facsimile transmission number) as Borrower or
Lender, as the case may be, shall have specified in a notice sent to the other
in accordance with this Section.
9
ARTICLE IV
GENERAL
Section 1. No Remedy Exclusive; Effect of Waiver. No remedy herein
conferred upon or reserved to the Lender is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Guaranty or now or hereafter existing at law or in equity. In order to entitle
the Lender to exercise any remedy reserved to it in this Guaranty, it shall not
be necessary to give any notice, other than such notice as may be herein
expressly required. No waiver, amendment, release or modification of this
Guaranty shall be established by conduct, custom or course of dealing, but
solely by an instrument in writing duly executed by the parties thereunto duly
authorized. A waiver on one occasion shall not be a bar to or waiver of any
right of any other occasion. No delay or omissions or failure of performance
hereunder shall impair any such right or power or shall be construed to be a
waiver thereof, but such right and power may be exercised from time to time and
as often may be deemed expected. The Guarantor acknowledges that this Guaranty
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and is intended as
a final expression and a complete and exclusive statement of the terms of this
Guaranty.
Section 2. Counterparts. This Guaranty may be executed simultaneously
in several counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
Section 3. Severability. The invalidity or unenforceability of any one
or more phrases, sentences, clauses or Sections contained in this Guaranty shall
not affect the validity or enforceability of the remaining portions of this
Guaranty, or any part thereof.
Section 4. Connecticut Law. This Guaranty shall be governed by the laws
of the State of Connecticut (but not its conflicts of law provisions).
Section 5. Termination. If all sums and indebtedness owing under the
2001 Term Loan shall be fully and indefeasibly paid in cash, this Guaranty shall
terminate and be of no further force or any effect.
Section 6. Definitions. Any term not defined herein shall have the
meaning given therefor in the Loan Agreement.
10
IN WITNESS WHEREOF, Guarantor has executed this Guaranty on the date
first above written.
GUARANTOR:
----------------------------------------
Xxxxx Xxxxx
11
AMENDED PATENT COLLATERAL SECURITY AGREEMENT
THIS AMENDED PATENT COLLATERAL SECURITY AGREEMENT (the "Agreement") is
made on the 4th day of April, 2001 between XXXXXXX CONSOLIDATED INDUSTRIES,
INC., a corporation having a mailing address at 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx,
Xxxxxxx 00000 ("Obligor") and FLEET CAPITAL CORPORATION, having a mailing
address at 000 Xxxxxxxxxxx Xxxxxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxx 00000 ("Lender").
BACKGROUND. Obligor with certain of its affiliates (collectively. the
"Borrowers") has executed and delivered its Amended and Restated Revolving Loan
promissory note (the "Revolving Note") to the Lender in the aggregate principal
amount of up to $18,000,000.00, a Term Note (the "Term Note") in the aggregate
principal amount of $8,000,000.00, and a 2001 Term Loan Promissory Note (the
"2001 Term Note") in the aggregate principal amount of up to $1,500,000.00 (the
Revolving Note, the Term Note and the 2001 Term Note collectively the "Notes"),
pursuant to a certain Amended and Restated Loan Agreement dated as of October
21, 1997 among Borrowers and Fleet National Bank ("FNB"), subsequently assigned
by FNB to Lender, and as most recently amended by a Fourth Agreement of
Amendment dated as of April 4, 2001 (as amended from time to time, the "Loan
Agreement"). In order to induce the Lender to execute and deliver the Loan
Agreement, Obligor has granted to Lender a security interest in, and a mortgage
on, all right, title and interest of Obligor in and to the Patents (as
hereinafter defined). The parties hereto reaffirm their respective duties and
obligations pursuant to the Loan Documents, and consistent with such duties and
obligations file herewith an amended Schedule A (as hereinafter described).
NOW, THEREFORE, in consideration of Lender making the Loan to Obligor,
Obligor hereby agrees with Lender as follows:
1. To secure the complete and timely satisfaction of all Obligations
(as defined in the Loan Agreement), Obligor hereby grants and conveys to Lender
a security interest in, and a mortgage on, the entire right, title and interest
in and to the patents and applications therefor listed in Schedule A hereto,
including all reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, any foreign counterparts thereto, the right to
xxx for past, present and future infringements (subject to paragraph 12 below)
and without limitation all proceeds thereof (such as, by way of example, license
royalties and proceeds of infringement suits), as well as all rights
corresponding thereto throughout the world (collectively called the "Patents").
2. Obligor covenants and warrants that:
(a) The Patents are subsisting and have not been adjudged invalid
or unenforceable, in whole or in part;
(b) To the best of Obligor's knowledge, each of the Patents is
valid and enforceable;
(c) Obligor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the
Patents, free and clear of any liens, charges and encumbrances,
including without limitation pledges, assignments, licenses,
shop rights and covenants by Obligor not to xxx third persons,
except as to that certain security interest granted by Obligor
in favor of The HillStreet Fund L.P., which security interest
is junior in priority to the security interest granted to
Lender hereunder; and
(d) Obligor has the unqualified right to enter into this Agreement
and perform its terms and has entered and will enter into
written agreements with each of its present and future
employees, agents and consultants that will enable it to comply
with the covenants herein contained.
Except as specifically set forth above, Obligor does not warrant that the
Patents will not be declared invalid if challenged in court.
3. Obligor agrees that, until all of the Obligations shall have been
satisfied in full, it will not enter into any agreement including, without
limitation of, which is inconsistent with Obligor's obligations under this
Agreement, without Lender's prior written consent.
4. If, before the Obligations shall have been satisfied in full,
Obligor shall obtain rights to any new patentable inventions, or become entitled
to the benefit of any patent application or patent for any reissue, division,
continuation, renewal, extension, or continuation-in-part of any Patent or any
improvement on any Patent, the provisions of paragraph 1 shall automatically
apply thereto and Obligor shall give to Lender prompt notice thereof in
writing-hereof.
5. Obligor authorizes Lender to modify this Agreement by amending
Schedule A to include any future patents and patent applications which are
Patents under paragraph 1 or paragraph 4 hereof.
6. If any Event of Default shall have occurred and be continuing, and
not be cured within any applicable cure period, as designated within the Loan
Agreement, the Notes, or any other document executed in connection with the
loans contemplated thereby, Obligor's right, title and interest in and to the
Patents shall terminate forthwith, and the Lender shall have, in addition to all
other rights and remedies given it by this Agreement, those allowed by law and
the rights and remedies of a secured party under the Uniform Commercial Code as
enacted in any jurisdiction in which the Patents may be located and, without
limiting the generality of the foregoing, the Lender may immediately, without
demand of performance and without other notice (except as set forth below) or
demand whatsoever to Obligor, all of which are hereby expressly waived, and
without advertisement, sell at public or private sale or otherwise realize upon,
the whole or from time to time any part of the Patents, or any interest which
the Obligor may have therein, and after deducting from the proceeds of sale or
other disposition of the Patents all expenses (including all reasonable expenses
for brokers' fees and legal services), shall apply the residue of such proceeds
toward the payment of the Obligations. Any remainder of the proceeds after
payment in full of the Obligations shall be paid over to the Obligor. Notice of
any
2
sale or other disposition of the Patents shall be given to Obligor at least
five (5) days before the time of any intended public or private sale or other
disposition of the Patents is to be made, which Obligor hereby agrees shall be
reasonable notice of such sale or other disposition. At any such sale or other
disposition, any holder of any Note or Lender may, to the extent permissible
under applicable law, purchase the, whole or any part of the Patents sold, free
from any right of redemption on the part of Obligor, which right is hereby
waived and released.
7. If any Event of Default shall have occurred and be continuing,
Obligor hereby authorizes and empowers Lender to make, constitute and appoint
any officer or agent of Lender, as Lender may select in its exclusive
discretion, as Obligor's true and lawful attorney-in-fact, with the power to
endorse Obligor's name on all applications, documents, papers and instruments
necessary for Lender to use the Patents, or to grant or issue any exclusive or
nonexclusive license under the Patents to any third person, or necessary for
Lender to assign, pledge, convey or otherwise transfer title in or dispose of
the Patents to any third person, Obligor hereby ratifies all that such attorney
shall lawfully do or cause to be done by virtue hereof. This power of attorney
shall be irrevocable for the life of this Agreement.
8. At such time as Obligor shall completely satisfy all of the
Obligations, this Agreement shall terminate and Lender shall execute and deliver
to Obligor all deeds, assignments and other instruments as may be necessary or
proper to re-vest in Obligor full title to the Patents, subject to any
disposition thereof which may have been made by Lender pursuant hereto.
9. Any and all fees, costs and expenses, of whatever kind or nature,
including the reasonable attorney's fees and legal expenses incurred by Lender
in connection with the preparation of this Agreement and all other documents
relating hereto and the consummation of this transaction, the filing or
recording of any documents (including all taxes in connection therewith) in
public offices, the payment or discharge of any taxes, counsel fees, maintenance
fees, encumbrances or otherwise protecting, maintaining or preserving the
Patents, or in defending or prosecuting any actions or proceedings arising out
of or related to the Patents, shall be borne and paid by Obligor on demand by
Lender and until so paid shall be added to the principal amount of the
Obligations and shall bear interest at the highest rate prescribed in the Loan
Agreement.
10. Obligor shall have the duty, through counsel acceptable to Lender,
to prosecute diligently any patent applications of the Patents pending as of the
date of this Agreement or thereafter until the Obligations shall have been paid
in full, to, if reasonable, make application on unpatented but patentable
inventions and to preserve and maintain all rights in patent applications and
patents of the Patents, including without limitation the payment of all
maintenance fees. Any expenses incurred in connection with such an application
shall be borne by Obligor. The Obligor shall not abandon any right to file a
patent application, or any pending patent application or patent without the
consent of the Lender, which consent shall not be unreasonably withheld.
11. Obligor shall have the right, with the consent of Lender, which
shall not be unreasonably withheld, to bring suit to its own name, and to join
Lender, if necessary, as a party
3
to such suit so long as Lender is satisfied that such joinder will not subject
it to any risk of liability, to enforce the Patents and any licenses thereunder.
Obligor shall promptly, upon demand, reimburse and indemnify Lender for all
damages, costs and expenses, including legal fees, incurred by Lender pursuant
to this paragraph 11.
12. No course of dealing between Obligor and Lender, nor any failure to
exercise, nor any delay in exercising, on the part of Lender, any right, power
or privilege hereunder or under the Loan Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
13. All of Lender's rights and remedies with respect to the Patents,
whether established hereby or by the Loan Agreement, or by any other agreements
or by law shall be cumulative and may be exercised singularly or concurrently.
14. The provisions of this Agreement are severable, and if any clause
or provision shall be held invalid and unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction, and shall not in any
manner affect such clause or provision in any other Jurisdiction, or any clause
or provision of this Agreement in any Jurisdiction.
15. This Agreement is subject to modification only by a writing signed
by the parties, except as provided in paragraph 5.
16. The benefits and burdens of this Agreement shall inure to the
benefit of and be binding upon the respective successors and permitted assigns
of the parties.
17. The validity and interpretation of this Agreement and the rights
and obligations of the parties shall be governed by the internal laws of the
State of Connecticut without reference to its conflict of laws provisions.
18. This Agreement constitutes the amendment and restatement in its
entirety of the Patent Collateral Security Agreement from Obligor to FNB dated
as of October 21, 1997, and is in substitution therefor and an amendment and
replacement thereof. Nothing herein or in any other document shall be construed
to release or terminate any lien, mortgage, pledge or other security interest in
favor of Lender.
4
WITNESS the execution hereof under seal as of the day and year first
above written.
OBLIGOR
XXXXXXX CONSOLIDATED INDUSTRIES, INC.
By:
-------------------------------------
Xxxx Xxxxxxxxx
Its Chief Financial Officer
Duly Authorized
LENDER
FLEET CAPITAL CORPORATION
By:
-------------------------------------
Xxxxxx Xxxxxxx
Its Senior Vice President
Duly Authorized
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF CONNECTICUT )
) ss: Hartford
COUNTY OF HARTFORD )
On this 4th day of April, 2001, before me, the undersigned officer,
personally appeared Xxxx Xxxxxxxxx, Chief Financial Officer of Xxxxxxx
Consolidated Industries, Inc., signer and sealer of the foregoing instrument and
acknowledged the same to be his free act and deed and the free act and deed of
said corporation.
----------------------------------------
Notary Public
My Commission Expires:
5
STATE OF CONNECTICUT )
) ss: Hartford
COUNTY OF HARTFORD )
On this 4th day of April, 2001, before me, the undersigned officer,
personally appeared Xxxxxx Xxxxxxx, Senior Vice President of Fleet Capital
Corporation, signer and sealer of the foregoing instrument and acknowledged the
same to be her free act and deed and the free act and deed of said corporation.
----------------------------------------
Commissioner of the Superior Court
Notary Public
My Commission Expires:
6
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT ("Agreement") made as of the 5th day of
April, 2001 by and between Q.E.P. CO., INC., a Delaware corporation with its
chief executive office and principal place of business at 0000 Xxxxxxx Xxxxx,
Xxxx Xxxxx, Xxxxxxx 00000 (the "Borrower"), and FLEET CAPITAL CORPORATION, a
Rhode Island corporation with an office at Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000 (hereinafter referred to as the "Lender").
WITNESSETH:
WHEREAS, Borrower and Fleet National Bank ("Assignor") entered into a
certain Amended and Restated Loan Agreement, dated as of October 21, 1997, as
amended from time to time (the "Loan Agreement"), which was assigned by Assignor
to Lender pursuant to an Assignment and Assumption Agreement dated as of
November 30, 2000; and
WHEREAS, the Borrower owns, directly or indirectly, all of the equity
interests in the entities listed on Schedule A attached hereto (the "Entities");
and
WHEREAS, the obligation of the Lender to enter into the Fourth
Amendment (as defined in the Loan Agreement) and to make loans or extensions of
credit or furnish financial accommodations to the Borrower is subject to the
condition, among others, that Borrower shall execute and deliver this Agreement
and grant the security interest hereinafter described;
WHEREAS, on even date herewith the Borrower is re-financing certain of
its subordinated obligations with The Hillstreet Fund, L.P. ("Hillstreet"), and
in connection therewith, Borrower is granting Hillstreet a subordinated pledge
in the common stock listed on Schedule A.
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, receipt of which is acknowledged, it is hereby
agreed as follows:
1. Definitions; Rules of Interpretation. The following additional
terms, as used herein, have the respective meanings set forth below:
"Affiliate" shall mean any Person controlling, controlled by or under
common control with another Person.
"Associate" shall have the meaning ascribed to such term in Rule 405
promulgated by the Securities and Exchange Commission under the Securities Act
of 1933, as amended.
"Default" shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default.
"Event of Default" shall mean any default hereunder or under the Loan
Agreement, and any other Event of Default as defined in any one or more of the
Financing Documents.
"Financing Documents" means any and all documents evidencing, securing
or relating to the Obligations.
"Lien" or "Liens" shall mean any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute or contract,
and including but not limited to the security interest lien arising from a
security agreement, mortgage, encumbrance, pledge, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes.
"Obligations" shall mean all indebtedness, advances, obligations and
liabilities of every kind and description now or in the future owing by Borrower
to Lender under the Financing Documents or otherwise, whether direct or
indirect, joint or several, absolute or contingent; due or to become due.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, limited liability company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Pledged Collateral" shall mean (a) the Shares, (b) all income and
profits on the Shares, including all interest, dividends, and other payments and
distributions with respect to the Shares, including without limitation
promissory notes, other instruments, distributions in connection with total or
partial liquidation or dissolution of the Entities and distributions in
connection with a reduction of capital, capital surplus or paid-in-surplus of
the Entities, (c) all proceeds of the foregoing, and (d) all other rights and
privileges with respect to the Shares.
"Security Interest" shall mean the pledge and security interest granted
by Borrower under this Agreement.
"Shares" shall mean (a) one hundred percent (100%) of the equity
interests in the Entities formed under the laws of any jurisdiction in the
United States of America or Canada, and sixty-five percent (65%) of the equity
interests in the Entities formed under the laws of any jurisdiction outside of
the United States of America or Canada, (b) all substitutions and replacements
thereof, (c) all warrants, options and rights (if any) for the purchase of
equity interests in the Entities, and (d) any additional equity interests in or
capital stock of the Entities required to be pledged and delivered to Lender
pursuant to Section 9 hereof.
This Agreement shall be governed by the following rules of
interpretation: The use of any gender shall include all genders. The singular
number shall include the plural and the plural the singular as the context may
require. Whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms. The words
"include," "including," and "such as" shall each be construed as if followed by
the phrases "without being limited to." The words "herein," "hereof,"
"hereunder" and words of similar import shall be construed to refer to this
Agreement as a whole and not to any particular Section hereof unless expressly
so stated. The section headings herein are for convenience of reference only and
shall not affect in any way the interpretation of any of the provisions hereof.
2
2. Pledge. The Borrower hereby pledges and grants a security interest
to Lender in the Pledged Collateral, now existing and hereafter arising or
acquired, as security for the payment and performance of the Obligations.
3. Delivery of the Shares. The Shares have been previously delivered to
the Lender accompanied by duly executed instruments of transfer, or assignment
in blank, with signatures appropriately guaranteed, accompanied by any required
transfer tax stamps, all in form and substance satisfactory to Lender. Lender
may at any time in its discretion, without notice to Borrower, transfer or
register in the name of the Lender or any of its nominees any or all of the
Shares.
4. Representations and Warranties. The Borrower represents and
warrants that:
(a) Borrower owns all of the Pledged Collateral, free and clear of
any Liens other than the Security Interest and the subordinated security
interests in favor of The Hillstreet Fund, L.P. which are being granted as of
the date hereof. The equity interests shown on Schedule A, are all of the issued
and outstanding capital stock of the Entities. All of such equity interests have
been duly authorized and validly issued, are fully paid and non-assessable, and
none of such equity interests are subject to options to purchase or similar
rights of any Person.
(b) There are no restrictions upon the voting rights or upon the
transfer of any of the Shares other than as may appear on the face of the
certificates evidencing the Shares or as provided under applicable state,
federal or foreign securities laws. The Borrower has the right to vote, pledge
and grant a security interest in or otherwise transfer such Pledged Collateral
free of any encumbrances other than the junior encumbrance in favor of The
Hillstreet Fund, L.P. Borrower is not a party to or otherwise bound by any
agreement, other than this Agreement, which restricts in any manner the rights
of any present or future holder of any of the Shares with respect thereto.
(c) Lender has a valid perfected first priority security interest in
all of the Pledged Collateral, subject to no prior Lien. No registration,
recordation or filing with any governmental body, agency or authority is
required in connection with the execution or delivery of this Agreement or
necessary for the validity or enforceability hereof or for the perfection or
enforcement of the Security Interest.
5. Authority. The Borrower hereby appoints the Lender as its
attorney-in-fact to arrange, at Lender's option, for the transfer upon, or at
any time after, the existence or occurrence of an Event of Default, of the
Pledged Collateral on the books of Borrower or on the books of each of the
Entities to the name of the Lender or to the name of the Lender's nominee.
6. Certain Restrictions. Neither Borrower nor any Affiliate or
Associate of Borrower shall sell, transfer or grant any rights with respect to
any equity interests in the Entities or any subsidiary of the Entities without
the prior written consent of Lender.
3
7. Voting Rights; Dividends.
(a) During the term of this Agreement, and so long as there shall
not occur a Default or an Event of Default:
(i) the Borrower shall have the right to vote the Shares on all
corporate questions for all purposes not inconsistent with the terms of this
Agreement or the Financing Documents and, to that end, if Lender transfers the
Shares into its name or the name of its nominee, Lender shall, upon the request
of the Borrower, unless a Default or an Event of Default shall have occurred,
execute and deliver or cause to be executed and delivered to Borrower proxies
with respect to the Shares; and
(ii) the Borrower may receive and retain any and all dividends
or other distributions paid in respect of the Pledged Collateral; provided,
however, that any and all (A) dividends and interest paid or payable other than
in cash in respect of, and instruments and other property received, receivable
or otherwise distributed in respect of or in exchange for, any Pledged
Collateral, (B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus and (C) cash paid, payable or otherwise distributed
in any permitted redemption of, or permitted exchange of, any Pledged
Collateral, shall be, and shall forthwith be delivered to or at the direction of
the Lender to hold as Pledged Collateral and shall, if received by the Borrower,
be received in trust for the benefit of the Lender, shall be segregated from the
other property or funds of the Borrower, and shall be forthwith delivered to or
at the direction of the Lender in the exact form received with any necessary
endorsement and/or appropriate stock powers duly executed in blank, to be held
by the Lender as Pledged Collateral and as further collateral security for the
Obligations;
(b) Upon the occurrence of an Event of Default:
(i) the Lender shall thereafter be entitled to exercise all
voting powers pertaining to the Shares and all proxies theretofore executed by
Lender shall terminate and thereafter be null and void and of no effect
whatsoever, and the Borrower, forthwith upon the request of the Lender, shall
secure (if not already secured by the Lender) executed resignations of the
officers and directors of Borrower and of the Entities in order that the Lender
may elect the officers and directors of Borrower and of the Entities designated
by Lender; and
(ii) all rights of the Borrower to receive the dividends,
payments or other distributions which it would otherwise be authorized to
receive and retain pursuant to Section 7(a)(ii), shall cease, and all such
rights shall thereupon become vested in the Lender which shall thereupon have
the sole right to receive and hold as Pledged Collateral such dividends and
interest payments; and
(iii) all dividends and interest payments which are received by
the Borrower contrary to the provisions of this Section 7 shall be received in
trust for the benefit of the Lender, shall be segregated from other funds of the
Borrower, and shall be forthwith paid over to the Lender as Pledged Collateral
in the exact form received with any necessary
4
endorsement and/or appropriate stock powers duly executed in blank, to be held
by or on behalf of the Lender as Pledged Collateral and as further collateral
security for the Obligations.
8. Subsequent Changes Affecting Pledged Collateral. The Borrower
represents to the Lender that the Borrower has made its own arrangements for
keeping informed of changes or potential changes affecting the Pledged
Collateral (including, but not limited to, rights to convert, rights to
subscribe, payment of dividends, reorganization or other exchanges, tender
offers and voting rights), and the Borrower agrees that the Lender shall have no
responsibility or liability for informing the Borrower of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereto. The Lender may, upon or at any time after the occurrence of an
Event of Default, without notice and at its option, transfer or register the
Pledged Collateral or any part thereof into its or its nominee's name with or
without any indication that such Pledged Collateral is subject to the security
interest hereunder.
9. Shares Adjustments; Warrants and Rights; Dividends. In the event
that, during the term of this Agreement, (a) any stock dividend,
reclassification, recapitalization, readjustment or other change is declared or
made in the capital structure of Borrower or of any of the Entities, (b) any
option included within the Pledged Collateral is exercised, (c) Borrower or of
any of the Entities issues any additional or substitute shares of its capital
stock, (d) subscription rights, options, warrants or any other rights shall be
issued or exercised in connection with the Pledged Collateral, or (e) if the
Borrower shall otherwise receive or be entitled to receive any (i) shares of
capital stock of any of the Entities, (ii) promissory note or other instrument
by virtue of its being or having been an owner of any Pledged Collateral, (iii)
payment of dividends or other distribution payable in cash or in securities or
other property (but only to the extent permitted under subparagraph 7(ii)
hereof), or (iv) payment of dividends or other distribution in connection with a
partial or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus, all such shares, promissory notes,
instruments, options, warrants, rights, dividends, payments or distributions and
all new stock or other securities so acquired by the Borrower as a result of any
of the foregoing, shall be immediately pledged and assigned by the Borrower to
the Lender and immediately delivered to and held by Lender under the terms of
this Agreement in the same manner as the Pledged Collateral originally pledged
hereunder; and in the event that the Borrower shall receive such shares,
promissory notes, instruments, options, warrants, rights, dividends, payments or
distributions, the same shall be held in trust for the benefit of the Lender,
and the Borrower shall segregate them from the Borrower's other property and
shall deliver the same forthwith to or at the direction of the Lender in the
exact form received, with any necessary endorsement and/or appropriate stock
powers duly executed in blank, to be held by or on behalf of the Lender as
Pledged Collateral. Nothing contained in this Section shall be deemed to permit
any issuance of stock, subscription rights, options, warrants or any other
rights, or any stock dividend, reclassification, readjustment or other change in
the capital structure of Borrower or of any of the Entities which is not
expressly permitted in the Financing Documents.
10. Registration. In the event that Lender determines that it is
advisable to register under or otherwise comply in any way with the Securities
Act of 1933 or any similar Federal or State Law, or if such registration or
compliance is required with respect to the securities included in the Pledged
Collateral prior to the sale thereof by Lender, upon or at any time after the
occurrence of an Event of Default, the Borrower will use its best efforts to
cause such
5
registration to be effectively made, at no expense to Lender, and to continue
such registration effective for such time as may be reasonably necessary in the
option of the Lender, and will reimburse Lender for any expense incurred by
Lender, including reasonable attorneys' and accountants' fees and expenses, in
connection therewith.
11. Default.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Lender shall have, in addition to any other rights given by law or
the rights hereunder or in the Financing Documents, all of the rights and
remedies with respect to the Pledged Collateral of a secured party under the
Uniform Commercial Code. In addition, with respect to the Pledged Collateral, or
any part thereof, which shall then be or shall thereafter come into the
possession or custody of the Lender, the Lender may sell the Pledged Collateral
or any part thereof at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit (without assumption of any credit
risk) or for future delivery, and at such price or prices as the Lender may deem
satisfactory. Lender may be the purchaser of any or all of the Pledged
Collateral so sold at any public sale (or, if the Pledged Collateral is of a
type customarily sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations, at any private sale).
(b) The Borrower recognizes that the Lender may deem it
impracticable to effect a public sale of all or any part of the Pledged
Collateral or any other securities constituting Pledged Collateral and that the
Lender may, therefore, determine to make one or more private sales of any such
securities to a restricted group of purchasers who will be obligated to agree,
among other things, to acquire such securities for their own account, for
investment and not with a view to the distribution or resale thereof. The Lender
is authorized, in connection with any sale of the Pledged Collateral, if it
deems it advisable so to do, (i) to restrict the prospective bidders on or
purchasers of any of the Shares to a limited number of sophisticated investors
who will represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or sale of any of such
Shares, (ii) to cause to be placed on certificates for any or all of the Shares
or on any other securities pledged hereunder a legend to the effect that such
security has not been registered under the Securities Act of 1933 and may not be
disposed of in violation of the provision of said Act, and (iii) to impose such
other limitations or conditions in connection with any such sale as the Lender
deems necessary or advisable in order to comply with said Act or any other law.
The Borrower acknowledges that any such private sale may be at prices and on
terms less favorable to the seller than the prices and other terms which might
have been obtained at a public sale and, notwithstanding the foregoing, agrees
that such private sales shall be deemed to have been made in a commercially
reasonable manner and that the Lender shall have no obligation to delay sale of
any such securities for the period of time necessary to permit the issuer of
such securities to register such securities for public sale under the Securities
Act of 1933.
(c) The Borrower covenants and agrees that it will execute and
deliver such documents and take such other action as the Lender deems necessary
or advisable in order that any sale hereunder may be made in compliance with
law.
6
(d) Upon any sale hereunder the Lender shall have the right to
deliver, assign and transfer to the purchaser thereof the Pledged Collateral so
sold. Each purchaser at such sale shall hold the Pledged Collateral so sold
absolutely and free from any claim or right of whatsoever kind, including any
equity or right of redemption of the Borrower which may be waived, and the
Borrower, to the extent permitted by law, hereby specifically waives all rights
of redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted.
(e) Unless the Collateral threatens to decline speedily in value or
is or becomes of a type sold on a recognized market, Lender will give the
Borrower reasonable notice of the time and place of any public sale thereof, or
of the time after which any private sale or other intended disposition is to be
made. Any requirements of reasonable notice shall be met if such notice is sent
to the Lender in conformity with Section 23 hereof, at least ten (10) days
before the time of the sale or disposition. Any other requirement of notice,
demand or advertisement for sale is, to the extent permitted by law, waived. The
notice (if any) of any sale hereunder shall (1) in case of a public sale, state
the time and place fixed for such sale, (2) in case of sale at a broker's board
or on a securities exchange, state the board or exchange at which such sale is
to be made and the day on which the Pledged Collateral, or the portion thereof
so being sold, will first be offered for sale at such board or exchange, and (3)
in the case of a private sale, state the day after which such sale may be
consummated. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Lender may fix in the
notice of such sale. At any such sale the Pledged Collateral may be sold in one
lot as an entirety or in separate parcels, as the Lender may determine. The
Lender shall not be obligated to make any such sale pursuant to any such notice.
The Lender may, without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by announcement at the
time and place fixed for the sale, and such sale may be made at any time or
place to which the same may be so adjourned. In case of any sale of all or any
part of the Pledged Collateral on credit or for future delivery, the Pledged
Collateral so sold may be retained by the Lender until the selling price is paid
by the purchaser thereof, but the Lender shall not incur any liability in case
of the failure of such purchaser to take up and pay for the Pledged Collateral
so sold and, in case of any such failure, such Pledged Collateral may again be
sold upon like notice. The Lender, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the security interest granted under this Agreement and sell the
Pledged Collateral, or any portion thereof, under a judgment or decree of a
court or courts of competent jurisdiction.
12. Proceeds of Dispositions; Expenses. The Borrower shall pay to the
Lender on demand any and all expenses, including court costs and reasonable
attorneys' fees and disbursements, incurred or paid by the Lender in protecting,
preserving or enforcing the Lender's rights under or in respect of any of the
Pledged Collateral. After deducting all of said expenses, the residue of any
proceeds of collection or sale of the Pledged Collateral shall, to the extent
actually received in cash, be applied to the payment of the Obligations in such
order or preference as the Lender may determine, proper allowance being made for
any Obligations not then due. Upon the final payment and satisfaction in full of
all of the Obligations and after making any payments required by the Uniform
Commercial Code of the State of Connecticut, any excess shall be returned to the
Borrower.
7
13. Waivers. The Borrower hereby waives notice of acceptance of this
Agreement and of extensions of credit, loans, advances or other financial
assistance by the Lender to any Borrowers under the Financing Documents or under
any other agreement, note, document or instrument now or at any time or times
hereafter executed by any of the Borrowers and delivered to the Lender. The
Borrower further waives presentment and demand for payment of any of the
Obligations, protest and notice of dishonor or default with respect to any of
the Obligations, and all other notices and demands of any description to which
the Borrower might otherwise be entitled except as herein otherwise expressly
provided. The Borrower further waives all defenses based upon suretyship or
impairment of collateral. The Lender shall not be deemed to have waived any of
its rights upon or under the Obligations or the Pledged Collateral unless such
waiver shall be in writing and signed by the Lender. No delay or omission on the
part of the Lender in exercising any right shall operate as a waiver of such
right or any other right. A waiver on any one occasion shall not be construed as
a bar to or waiver of any right on any future occasion. All rights and remedies
of the Lender with respect to the Obligations or the Pledged Collateral, whether
evidenced hereby or by any other instrument or papers, shall be cumulative and
may be exercised singularly, alternatively, successfully or concurrently at such
time or at such times as the Lender deems expedient.
14. Consent. The Borrower hereby consents that from time to time,
before or after the occurrence or existence of any Default or Event of Default,
with or without notice to or assent from the Borrower, any other security at any
time held by or available to the Lender for any of the Obligations or any other
security at any time held by or available to the Lender for any obligation of
any other person, firm or corporation secondarily or otherwise liable for any of
the Obligations, may be exchanged, surrendered or released and any of the
Obligations may be changed, altered, renewed, extended, continued, surrendered,
compromised, waived or released, in whole or in part, as Lender may see fit, and
Borrower shall remain bound under this Agreement notwithstanding any such
exchange, surrender, release, alteration, renewal, extension, continuance,
compromise, waiver or inaction, extension of further credit or other dealing.
Without limiting the generality of the foregoing, the Borrower assents to any
extension or postponement of the time of payment or any other indulgence, to the
addition or release of any party or person primarily or secondarily liable, to
the acceptance of partial payment on any Obligation, and the settlement,
compromising or adjusting of any thereof, all in such manner and at such time or
times as the Lender may deem advisable.
15. Limitation of Lender's Duty. Lender shall have no duty with respect
to any Pledged Collateral in its possession or control or in the possession or
control of any agent or bailee, other than the duty to use reasonable care in
the safe custody thereof. Without limiting the generality of the foregoing,
Lender shall be under no obligation to take any steps necessary as to (a) the
collection or protection of the Pledged Collateral, (b) the preservation of
rights in Pledged Collateral against any other parties, (c) or the preservation
of any other rights. Lender may take such steps at its option, but all expenses
incurred in connection therewith shall be for the sole account of Borrower. The
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession or control if the
Pledged Collateral is accorded treatment substantially equal to that which it
accords its own property. Lender shall not be liable or responsible for any loss
or damage to any of the Pledged Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any agent or bailee selected by the
Lender in good faith.
8
16. Term. This Agreement shall remain in full force and effect until
all of the Obligations have been fully paid and satisfied.
17. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Lender and its respective successors
and assigns, and the transferees and holders of any of the Obligations. This
Agreement may be sold, assigned and transferred to any other person, firm,
association or corporation to whom any of the Obligations may be sold, assigned,
transferred and when so sold, assigned, negotiated or transferred this Agreement
shall apply to, and the Pledged Collateral shall secure, any credit given, loans
or advances made or financial assistance otherwise extended at any time or from
time to time by such assignee to Borrower and any notes, mortgages, conditional
sale contracts, security agreements or other forms of obligations and all other
debts, obligations and liabilities then or thereafter existing, direct or
indirect, absolute or contingent, howsoever evidenced and without limitation as
to amount, of Borrower to such assignee and transferee, and any renewal or
extensions thereof, as if such assignee or transferee had been the original
Lender hereunder.
18. Applicable Law. This Agreement shall be governed by and construed
under the laws of the State of Connecticut. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but, if any provision of this Agreement shall be held to
be prohibited or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
19. Service of Process; Consent to Jurisdiction
(a) The Borrower represents, warrants and covenants that the
Borrower is subject to service of process in the State of Connecticut and that
the Borrower will remain subject to such service of process so long as any of
the Obligations is outstanding. If for any reason the Borrower should not be
subject to such service of process, the Borrower hereby designates and appoints,
without power of revocation, the Connecticut Secretary of State as the
Borrower's agent upon whom may be served all process, pleadings, notices or
other papers which may be served upon the Borrower as a result of any of the
Borrower's obligations under this Agreement.
(b) The Borrower irrevocably (i) agrees that any suit, action or
other legal proceeding arising out of this Agreement may be brought in the
courts of record of the State of Connecticut or the courts of the United States
located in such state; (ii) consents to the jurisdiction of each such court in
any such suit, action or proceeding; and (iii) waives any objection which the
Borrower may have to the laying of venue of any such suit, action or proceeding
in any of such courts. For such time as any of the liabilities is outstanding,
the Borrower's agent designated in Section 19(a) hereof shall accept and
acknowledge on the Borrower's behalf services of any and all process in any such
suit, action or proceeding brought in any such court. The Borrower agrees and
consents that any such services of process upon such agent and written notice of
such service to the Borrower by registered mail shall be taken and held to be
valid personal service upon the Borrower and that any such service of process
shall be of the same force and validity as if services were made upon the
Borrower according to the laws
9
governing the validity and requirements of such service in such state, and
waives all claim of error by reason of any such service.
20. Prejudgment Remedies. THE BORROWER AGREES THAT THIS IS A COMMERCIAL
TRANSACTION AND NOT A CONSUMER TRANSACTION, AND WAIVES WITH RESPECT TO ALL
RIGHTS OF CREDITORS TO PROPERTY UNDER CONNECTICUT LAW, ANY RIGHT TO A NOTICE AND
HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, OR
OTHER STATUTE OR STATUTES AFFECTING PREJUDGMENT REMEDIES AND AUTHORIZES LENDER'S
ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED
THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER, AND WAIVES ANY CLAIM IN
TORT, CONTRACT OR OTHERWISE AGAINST LENDER'S ATTORNEY WHICH MAY ARISE OUT OF
SUCH ISSUANCE OF THE WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER.
21. Waiver of Jury Trial. BORROWER HEREBY EXPRESSLY WAIVES ANY AND ALL
RIGHTS IT MAY HAVE TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF
ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND BORROWER
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THE LENDER MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF DEBTOR'S CONSENT TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY. EXCEPT
AS PROHIBITED BY LAW, THE BORROWER WAIVES ANY RIGHT WHICH IT MAY HAVE TO CLAIM
OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. The Borrower (a) certifies that neither the Lender
nor any representative, agent or attorney of the Lender has represented,
expressly or otherwise, that the Lender would not, in the event of litigation,
seek to enforce the foregoing waivers, and (b) acknowledges that, in entering
into the LSA and the other Financing Agreements to which the Lender is a party,
the Lender is relying upon, among other things, the waivers and certifications
contained in this Section 21.
22. Further Assurances. The Borrower agrees that it will cooperate with
the Lender and, at its own expense, shall do, make, execute and deliver all such
additional and further acts, things, deeds, assurances, assignments, documents,
agreements and instruments as the Lender may require more completely to vest in
and assure to the Lender its rights hereunder or in any of the Pledged
Collateral. Without limiting the generality of the foregoing, Borrower shall
execute and deliver, or cause to be executed and delivered, all such other stock
powers, proxies,
10
instruments, documents and resignations of officers and directors, as the Lender
may request from time to time in order to carry out the provisions and purposes
hereof.
23. Notices. Any notice or other communication required or desired to
be served, given or delivered hereunder shall be in writing, and shall be deemed
to have been validly served, given or delivered upon deposit in the United
States mails, as registered or certified mail, with proper postage prepaid and
addressed to the party to be notified as provided in the Loan Agreement, or to
such other address as either party may hereafter designate for itself by written
notice to the other party in the manner herein prescribed.
[The remainder of this page has been left blank intentionally.]
11
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
WITNESSES AS TO ALL BORROWER:
BORROWERS Q.E.P. CO., INC.
By
----------------------------------- --------------------------------------
Name: Xxxx Xxxxxxxxx
Its: Chief Financial Officer
----------------------------------- Duly Authorized
LENDER:
FLEET CAPITAL CORPORATION
By:
-------------------------------------
Name: Xxxxxx Xxxxxxx
Its: Senior Vice President
Duly Authorized
STATE OF ___________ )
) ss. ___________ ___________, 2001
COUNTY OF __________ )
Xxxx Xxxxxxxxx, known by me or adequately identified to me, personally
appeared before me, the undersigned, and, as signer of the foregoing instrument,
acknowledged his execution of the same to be his free act and deed and the free
act and deed of each of the entities for which he executed the foregoing
instrument.
----------------------------------------
Notary Public/
Commissioner of the Superior Court
12
Schedule A
1. Xxxxxxx Consolidated Industries Inc., which owns 100% of the issued and
outstanding shares of stock/units of the following entities:
X. Xxxxxxx Japan KK (Inactive)
X. Xxxxxxx Company Canada Limited
X. Xxxxxxx Holding International Inc. (Delaware)
2. Q.E.P.-O'Tool, Inc. (California)
3. Boiardi Products Corporation (Ohio Corporation)
4. Xxxxxx Tool Corporation (Inactive) (Indiana Corporation), which owns 100% of
the issued and outstanding shares of stock/units of the following entity:
A. Westpoint Foundry, Inc. (Inactive) (Indiana Corporation)
5. Q.E.P. Stone Holdings, Inc. (Florida)
6. Q.E.P. Zocalis Holding L.L.C. (Delaware), which owns 100% of the issued and
outstanding shares of stock/units of the following entity:
A. Q.E.P. Zocalis, Srl (Argentina)
7. Q.E.P. Chile Limitada
8. Q.E.P. AUST. PTY. LIMITED (Australia) which owns 100% of the issued and
outstanding shares of stock/units of the following entity:
A. Q.E.P. CO. AUST. PTY. LIMITED (Australia)
9. Q.E.P. Holding B.V. which owns 100% of the issued and outstanding shares of
stock/units of the following entity:
X. Xxxxxxx Xxxxxxx B.V., which owns 100% of the issued and outstanding
shares of stock/units of the following entities:
x. Xxxxxxx S.A.R.L. (France)
ii. Xxxxxxx Germany GmbH (Germany)
iii. Xxxxxxx U. K. Limited. (United Kingdom)
10. Q.E.P. Co. New Zealand Limited
13
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of April 5th, 2001 between Q.E.P. ZOCALIS
HOLDING L.L.C., a Delaware limited liability company (the "Borrower"), and FLEET
CAPITAL CORPORATION (hereinafter, the "Lender").
PREAMBLE
WHEREAS, Borrower and Fleet National Bank ("Assignor") entered into a
certain Amended and Restated Loan Agreement, dated as of October 21, 1997, as
amended from time to time (the "Loan Agreement"), which was assigned by Assignor
to Lender pursuant to an Assignment and Assumption Agreement dated as of
November 30, 2000; and
WHEREAS, it is a condition precedent to the Lender's making any loans
to the Borrower under the Loan Agreement that the Borrower execute and deliver
to the Lender a security agreement in substantially the form hereof; and
WHEREAS, the Borrower wishes to grant security interests in favor of
the Lender as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
Section 1. Definitions. Certain capitalized terms used herein have the
meaning ascribed to them in Exhibit A hereof. All capitalized terms used herein
but not defined in Exhibit A hereof or elsewhere in this Agreement shall have
the respective meanings provided therefor in the Loan Agreement.
Section 2. Grant of Security Interest.
(a) The Borrower hereby grants to the Lender, to secure the
payment and performance in full of all of the Obligations, a security interest
in and so pledges and assigns to the Lender the properties, assets and rights of
the Borrower in and to all Accounts, Books and
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Records, Chattel Paper, Documents, Equipment, Equipment Leases, General
Intangibles, Instruments, Investment Property and Inventory, in each case as
defined in Exhibit A, wherever located, whether now owned or hereafter acquired
or arising in each case, and all Proceeds and products thereof (all of the same
being hereinafter called the "Collateral").
(b) Pursuant to the terms hereof, the Borrower has endorsed,
assigned and delivered to the Lender all Chattel Paper pledged by it hereunder,
together with instruments of transfer or assignment duly executed in blank as
the Lender may have specified. In the event that the Borrower shall, after the
date of this Agreement, acquire any other Chattel Paper to be pledged by it
hereunder, the Borrower shall forthwith endorse, assign and deliver the same to
the Lender, accompanied by such instruments of transfer or assignment duly
executed in blank as the Lender may from time to time specify.
Section 3. Title to Collateral, etc. Except for the Vehicles, the
Borrower is the owner of the Collateral free from any adverse lien, security
interest or other encumbrance, except for the security interest created by this
Agreement and with respect to the Vehicles, the Borrower has a first priority
security interest in such titled equipment. None of the Collateral constitutes,
or is the proceeds of, "farm products" as defined in the Uniform Commercial Code
of the State of Connecticut as in effect from time to time (the "UCC"). None of
the Account Debtors in respect of any Chattel Paper or General Intangibles and
none of the obligors in respect of any Instruments included in the Collateral is
a governmental authority subject to the Federal Assignment of Claims Act.
Section 4. Continuous Perfection. The Borrower's place of business or,
if more than one, chief executive office is indicated on Exhibit B attached
hereto. The Borrower will not change the same, or the name, identity or
corporate structure of the Borrower in any manner, without providing at least
thirty (30) days prior written notice to the Lender. The Collateral, to the
extent not delivered to the Lender pursuant to Section 2.(b), will be kept at
the principal place of business and chief executive office of the Borrower
listed on Exhibit B hereto or at the principal place of business of the lessee
under any Equipment Lease which place of business shall be set forth in each
Equipment Lease or at such other place as is set forth in or permitted by such
Equipment Lease and the Borrower will not remove or cause to be removed any
Collateral from such locations, without providing at least thirty (30) days
written notice to the Lender.
Section 5. No Liens. Except for the security interest herein granted
and liens permitted by the Loan Agreement, if any, the Borrower shall, except
for the Vehicles, be the owner of the Collateral free from any lien, security
interest or other encumbrance, and the Borrower shall defend the same against
all claims and demands of all persons at any time claiming the same or any
interests therein adverse to the Lender. The Borrower shall not pledge, mortgage
or create, or suffer to exist a security interest in the Collateral in favor of
any person other than the Lender except for liens permitted by the Loan
Agreement, if any.
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Section 6. No Transfers. The Borrower will not sell, offer to sell,
lease or otherwise transfer the Collateral or any interest therein except for
sales and leases of Inventory and Equipment in the ordinary course of business.
Section 7. Insurance.
(a) The Borrower will comply with the insurance requirements
set forth in Section 5.5 of the Loan Agreement.
(b) The proceeds of any casualty insurance in respect of any
casualty loss of any of the Collateral shall, subject to the rights, if any, of
other parties with a prior interest in the property covered thereby (i) so long
as no Event of Default has occurred and is continuing and to the extent that the
amount of such proceeds is less than $100,000, be disbursed to the Borrower for
direct application by the Borrower solely to the repair or replacement of the
Borrower's property so damaged or destroyed, and (ii) in all other
circumstances, be turned over to and held by the Lender as cash collateral for
the Obligations. The Lender may, at its sole option, disburse from time to time
all or any part of such proceeds so held as cash collateral, upon such terms and
conditions as the Lender may reasonably prescribe, for direct application by the
Borrower solely to the repair or replacement of the Borrower's property so
damaged or destroyed, or the Lender may apply all or any part of such proceeds
to the Obligations with the Commitment (if not then terminated) being reduced by
the amount so applied to the Obligations.
Section 8. Equipment Leases and Accounts.
(a) As of the time when each of its Equipment Leases and
Accounts arises, the Borrower shall be deemed to have represented and warranted
that all such Equipment Leases and Accounts and all records, papers and
documents relating thereto (i) are genuine and in all respects what they purport
to be, (ii) represent the legal, valid and binding obligation of the related
Account Debtor evidencing indebtedness unpaid and owed by such Account Debtor
arising out of the sale or lease (or both) and delivery of the merchandise
listed therein, (iii) will, except for the original or duplicate original
invoice sent to a purchaser evidencing such purchaser's account, be the only
original writings evidencing and embodying such obligation of the Account Debtor
named therein, (iv) constitute and evidence true and valid obligations,
enforceable in accordance with their respective terms, not subject to the
fulfillment of any contract or condition whatsoever or to any defenses, setoffs
or counterclaims (except with respect to refunds, returns and allowances in the
ordinary course of business), or stamp or other taxes, and (v) are in all
material respects in compliance and conform with all applicable federal, state
and local laws and applicable laws of any relevant foreign jurisdiction;
(b) The Borrower shall keep and maintain at its own cost and
expense satisfactory and complete records of each Equipment Lease and Account
for at least five years (with the exception of sales slips which shall be
retained for at least six months) from the date on
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which such Lease Agreement or Account comes into existence, including records of
all payments received, all credits granted thereon, all merchandise returned and
all other documentation relating thereto, and, to the extent not previously
delivered to the Lender in accordance with the Loan Agreement, the Borrower
shall make the same available to the Lender for inspection, at the Borrower's
sole cost and expense. Upon the request of the Lender, Borrower shall, at its
own cost and expense, deliver all tangible evidence of Equipment Leases and
Accounts (including all documents evidencing Equipment Leases and Accounts) and
such books and records to the Lender or to its representatives (copies of which
evidence and books and records may be retained by the Borrower) at any time upon
the Lender's reasonable demand. The Lender may transfer a full and complete copy
of the Borrower's books, records, credit information, reports, memoranda and all
other writings relating to the Equipment Leases or Accounts to and for the use
by any person that has acquired or is contemplating acquisition of an interest
in the Equipment Leases and Accounts or the Lender's security interest therein
without the consent of the Borrower;
(c) The Borrower shall legend, in form and manner satisfactory
to the Lender, the Equipment Leases and Accounts and other books, records and
documents of the Borrower evidencing or pertaining to the Equipment Leases and
Accounts with an appropriate reference to the fact that the Equipment Leases and
Accounts have been assigned to the Lender and that the Lender has a security
interest therein.
(d) The Borrower shall use all commercially reasonable efforts
to cause to be collected from its Account Debtors, as and when due, any and all
amounts owing under or on account of each Equipment Lease and Account
(including, without limitation, and subject to the provisions of the Loan
Agreement, Equipment Leases, Accounts which are delinquent, such Equipment
Leases or Accounts to be collected in accordance with lawful collection
procedures) and shall apply forthwith upon receipt thereof all such amounts as
are so collected to the outstanding balance of such Equipment Leases and
Accounts. The costs and expenses (including, without limitation, attorney's
fees) of collection, whether incurred by the Borrower or the Lender, shall be
borne by the Borrower.
(e) If at any time Borrower shall take and perfect a security
interest in any property of an Account Debtor or any other Person to secure
payment and performance of an Equipment Lease or Account, the Borrower shall
promptly assign such security interest to the Lender. Such assignment need not
be filed of public record unless necessary to continue the perfected status of
the security interest against creditors of and transference from the Account
Debtor or other person granting the security interest.
Section 9. Equipment. The Borrower shall not permit any Equipment to
become a fixture to real estate or accession to other personal property unless
the Lender shall have a first priority lien thereon.
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Section 10. Maintenance of Collateral; Compliance with Law. The
Borrower will require the underlying lessee to keep the Collateral in good order
and repair and will not, and will require the underlying lessee not to, use the
same in violation of law or any policy of insurance thereon. Subject to the
rights of any lessee, the Lender, or its designee, may inspect the Collateral at
any reasonable time, wherever located. The Borrower will pay promptly when due
all taxes, assessments, governmental charges and levies upon the Collateral or
incurred in connection with the use or operation of such Collateral or incurred
in connection with this Agreement. The Borrower has at all times operated, and
the Borrower will continue to operate, its business in compliance with all
applicable provisions of the federal Fair Labor Standards Act, as amended.
Section 11. Collateral Protection Expenses; Preservation of Collateral.
(a) In its discretion, the Lender may discharge taxes and
other encumbrances at any time levied or placed on any of the Collateral, make
repairs thereto and pay any necessary filing fees. The Borrower agrees to
reimburse the Lender on demand for any and all expenditures so made. The Lender
shall have no obligation to the Borrower to make any such expenditures, nor
shall the making thereof relieve the Borrower of any default.
(b) Anything herein to the contrary notwithstanding, the
Borrower shall remain liable under each lease, contract or agreement comprised
in the Collateral to be observed or performed by the Borrower thereunder. The
Lender shall not have any obligation or liability under any such lease, contract
or agreement by reason of or arising out of this Agreement or the receipt by the
Lender of any payment relating to any of the Collateral, nor shall the Lender be
obligated in any manner to perform any of the obligations of the Borrower under
or pursuant to any such lease, contract or agreement, to make inquiry as to the
nature or sufficiency of any payment received by the Lender in respect of the
Collateral or as to the sufficiency of any performance by any party under any
such lease, contract or agreement, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to the Lender or to which the Lender may be entitled at
any time or times. The Lender's sole duty with respect to the custody,
safe-keeping and physical preservation of the Collateral in its possession,
under ss. 9-207 of the Uniform Commercial Code of the State of Connecticut or
otherwise, shall be to deal with such Collateral in the same manner as the
Lender deals with similar property for its own account.
Section 12. Settlement and Setoff. Whether or not Obligations are due,
the Lender may demand, xxx for, collect, or make any settlement or compromise it
deems desirable with respect to the Collateral to the extent permitted by the
underlying leases. Regardless of the adequacy of Collateral or any other
security for the Obligations, any deposits or other sums at any time credited by
or due from the Lender to the Borrower may at any time be applied to or set off
against any of the Obligations.
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Section 13. Notification to Account Debtors and Other Obligors. Upon
the occurrence of an Event of Default and upon the expiration of any applicable
grace periods, the Borrower shall, at the request of the Lender, notify Account
Debtors on Accounts, Chattel Paper and General Intangibles of the Borrower and
obligors on instruments for which the Borrower is an obligee of the security
interest of the Lender in any Account, Chattel Paper, General Intangible or
Instrument and that payment thereof is to be made directly to the Lender or to
any financial institution designated by the Lender as the Lender's agent
therefor, and the Lender may itself, without notice to or demand upon the
Borrower, so notify Account Debtors and obligors. After the making of such a
request or the giving of any such notification, the Borrower shall hold any
proceeds of collection of Accounts, Chattel Paper, General Intangibles and
Instruments received by the Borrower as trustee for the Lender without
commingling the same with other funds of the Borrower and shall turn the same
over to the Lender in the identical form received, together with any necessary
endorsements or assignments. The Lender shall apply the proceeds of collection
of Accounts, Chattel Paper, General Intangibles and Instruments received by the
Lender to the Obligations, such proceeds to be immediately entered after final
payment in cash or solvent credits of the items giving rise to them.
Section 14. Further Assurances. The Borrower, at its own expense, shall
do, make, execute and deliver all such additional and further acts, things,
deeds, assurances, assignments, documents, agreements and instruments as the
Lender may require more completely to vest in and assure to the Lender its
rights hereunder or in any of the Collateral, including, without limitation (a)
executing, delivering and, where appropriate, filing financing statements and
continuation statements under the Uniform Commercial Code, (b) obtaining
governmental and other third party consents and approvals, and (c) obtaining
waivers and consents from mortgagees, landlords and lessees. To the extent
permitted by applicable law, the Borrower hereby authorizes the Lender to
execute and file financing statements or continuation statements without the
Borrower's signature appearing thereon. The Borrower agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement. The Borrower shall
pay the costs of, or incidental to, any recording or filing of any financing or
continuation statements.
Section 15. Power of Attorney.
(a) The Borrower hereby irrevocably constitutes and appoints
the Lender and any officer or agent thereof, with full power of substitution, as
its true and lawful attorneys-in-fact with full irrevocable power and authority
in the place and stead of the Borrower or in the Lender's own name, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments that may
be necessary or desirable to accomplish the purposes of this Agreement and,
without limiting the generality of the foregoing, hereby gives said attorneys
the power and right, on behalf of the Borrower, without notice to or assent by
the Borrower, to do the following:
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(i) Upon the occurrence and during the continuance of an
Event of Default beyond any applicable grace periods,
if any, to receive, open and dispose of all mail
addressed to Borrower relating to the Collateral, to
notify the Post Office authorities to change the
address for delivery of such mail addressed to
Borrower to such address as Lender may designate; to
endorse the name of Borrower on any notes,
acceptances, checks, drafts money orders, instruments
or other evidence of payment or proceeds of the
Collateral that may come into Lender's possession; to
sign the name of Borrower on any invoices, bills of
lading, documents, drafts against and notices (which
also may direct, among other things, that payment be
made directly to Lender) to Account Debtors or
obligors of Borrower relating to the Collateral; to
make requests for verification of Accounts relating
to the Collateral; to execute proofs of claim and
loss relating to the Collateral; to execute any
endorsements, schedules, assignments, or other
instruments of conveyance or transfer relating to the
Collateral; to adjust and compromise any claims under
insurance policies relating to the Collateral, and;
to execute releases relating to the Collateral;
(ii) upon the occurrence and during the continuance of an
Event of Default beyond any applicable grace periods,
if any, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any
of the Collateral in such manner as is consistent
with the UCC and as fully and completely as through
the Lender were the absolute owner thereof for all
purposes, and to do at the Borrower's expense, at any
time, or from time to time, all acts and things which
the Lender deems necessary to protect, preserve or
realize upon the Collateral and the Lender's security
interest therein, in order to effect the intent of
this Agreement, all as fully and effectively as the
Borrower might do, including, without limitation (A)
the filing and prosecuting of registration and
transfer applications with the appropriate federal or
local agencies or authorities with respect to
trademarks, copyrights and patentable inventions and
processes relating to the Collateral, and (B) the
execution, delivery and recording, in connection with
any sale or other disposition of any Collateral, the
endorsements, assignments or other instruments of
conveyance or transfer with respect to such
Collateral;
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(iii) to file such financing statements with respect
hereto, with or without the Borrower's signature, or
a photocopy of this Agreement in substitution for a
financing statement, as the Lender may deem
appropriate with respect to the Collateral and to
execute in the Borrower's name such financing
statements and continuation statements which may
require the Borrower's signature; and
(iv) to do all other acts and things necessary and
advisable in the sole discretion of Lender to carry
out and enforce this Agreement.
(b) To the extent permitted by law, the Borrower hereby
ratifies all that said attorneys shall lawfully do or cause to be done by virtue
hereof. This power of attorney is a power coupled with an interest and shall be
irrevocable.
(c) The powers conferred on the Lender hereunder are solely to
protect its interests in the Collateral and shall not impose any duty upon it to
exercise any such powers. The Lender shall be accountable only for the amounts
that it actually receives as a result of the exercise of such powers and neither
it nor any of its officers, directors, employees or agents shall be responsible
to the Borrower for any act or failure to act, except for the Lender's own gross
negligence or willful misconduct.
Section 16. Remedies.
(a) If an Event of Default shall have occurred and be
continuing beyond any applicable grace periods, if any, the Lender may, without
notice or demand to the Borrower, declare this Agreement to be in default, and
the Lender shall thereafter have in any jurisdiction in which enforcement hereof
is sought, in addition to all other rights and remedies, the rights and remedies
of a secured party under the UCC, including, without limitation, the right to
take possession of the Collateral, and for that purpose the Lender may, so far
as the Borrower can give authority therefor, enter upon any premises on which
the Collateral may be situated and remove the same therefrom. The Lender may in
its discretion require the Borrower to assemble all or any part of the
Collateral at such location or locations within the state(s) of the Borrower's
principal office(s) or at such other locations as the Lender may designate.
Unless the Collateral is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized market, the Lender shall give to
the Borrower at least ten (10) business days prior written notice of the time
and place of any public sale of Collateral or of the time after which any
private sale or any other intended disposition is to be made. The Borrower
hereby acknowledges that ten (10) business days prior written notice of such
sale or sales shall be reasonable notice. In addition, the Borrower waives any
and all rights that it may have to judicial hearing in advance of the
enforcement of any of the Lender's rights hereunder, including, without
limitation, its right following an Event of Default to take immediate possession
of the Collateral and exercise its rights with respect thereto.
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(b) Without limiting the generality of the foregoing, the
Borrower agrees that the Lender shall have the right, subject to the mandatory
requirements of applicable law, and to the extent permitted by the underlying
leases and/or notes, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the Lender
shall deem appropriate. The Lender shall be authorized at any such sale (if it
deems it advisable to do so) to restrict the prospective bidders or purchasers
to persons who will represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to the distribution or
sale thereof, and upon consummation of any such sale the Lender shall have the
right to assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely free from any claim or right on the part of Borrower, and
Borrower hereby waives (to the fullest extent permitted by applicable law) all
rights of redemption, stay and appraisal that Borrower now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted.
(c) Any public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Lender may fix and
state in the notice (if any) of such sale. At any such sale, the Collateral, or
portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Lender may (in its sole and absolute discretion) determine. The
Lender shall not be obligated to make any sale of any Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Lender may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Lender until the sale price is paid by the purchaser or purchasers thereof, but
the Lender shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon notice. For purposes
hereof, (a) a written agreement to purchase the Collateral or any portion
thereof shall be treated as a sale thereof, (b) the Lender shall be free to
carry out such sale pursuant to such agreement and (c) Borrower shall, to the
extent required by the Uniform Commercial Code, be entitled to the return of the
Collateral or any portion thereof, notwithstanding the fact that after the
Lender shall have entered into such an agreement or all Events of Default shall
have been remedied and the Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the Lender may proceed by
a suit or suits at law or in equity to foreclose upon the Collateral and to sell
the Collateral or any portion thereof pursuant to a judgment or decree of a
court or courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver. Any sale pursuant to the provisions of this Section 16
shall be deemed to conform to the commercially reasonable standards as provided
in the UCC.
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Section 17. No Waiver, etc. The Borrower waives demand, notice,
protest, notice of acceptance of this Agreement, notice of loans made, credit
extended, Collateral received or delivered or other action taken in reliance
hereon and all other demands and notices of any description. With respect to
both the Obligations and the Collateral, the Borrower assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of Collateral, to the addition or release of
any party or person primarily or secondarily liable, to the acceptance of
partial payment thereon and the settlement, compromising or adjusting of any
thereof, all in such manner and at such time or times as the Lender may deem
advisable. The Lender shall have no duty as to the collection or protection of
the Collateral or any income thereon, nor as to the preservation of rights
against prior parties, nor as to the preservation of any rights pertaining
thereto beyond the safe custody thereof. The Lender shall not be deemed to have
waived any of its rights upon or under the Obligations or the Collateral unless
such waiver shall be in writing and signed by the Lender. No delay or omission
on the part of the Lender in exercising any right shall operate as a waiver of
such right or any other right. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right on any future occasion. All rights
and remedies of the Lender with respect to the Obligations or the Collateral,
whether evidenced hereby or by any other instrument or papers, shall be
cumulative and may be exercised singularly, alternatively, successfully or
concurrently at such time or at such times as the Lender deems expedient, to the
extent permitted by the underlying leases and/or notes.
Section 18. Marshalling. The Lender shall not be required to marshal
any present or future collateral security (including, but not limited to, this
Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of its rights hereunder
and in respect of such collateral security and other assurances of payment shall
be cumulative and in addition to all other rights, however existing or arising.
To the extent that it lawfully may, the Borrower hereby agrees that it will not
invoke any law relating to the marshalling of collateral which might cause delay
in or impede the enforcement of the Lender's rights under this Agreement or
under any other instrument creating or evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, the Borrower hereby irrevocably waives the benefits
of all such laws.
Section 19. Proceeds of Dispositions; Expenses. The Borrower shall pay
to the Lender on demand any and all expenses, including reasonable attorneys'
fees and disbursements, incurred or paid by the Lender in protecting, preserving
or enforcing the Lender's rights under or in respect of any of the Obligations
or any of the Collateral. After deducting all of said expenses, the residue of
any proceeds of collection or sale of the Obligations or Collateral shall, to
the extent actually received in cash, be applied to the payment of the
Obligations in such order or preference as the Lender may determine, proper
allowance being made for any Obligations not
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then due. Upon the final payment and satisfaction in full of all of the
Obligations and after making any payments required by the UCC, any excess shall
be returned to the Borrower, and the Borrower shall remain liable for any
deficiency in the payment of the Obligations.
Section 20. Overdue Amounts. Until paid, all amounts due and payable by
the Borrower hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Loan Agreement.
Section 21. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT. The Borrower
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the State of Connecticut or any federal court sitting therein and
consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Borrower by mail at the address
specified in Section 10.2 of the Loan Agreement. The Borrower hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
Section 22. Prejudgment Remedies. THE BORROWER AGREES THAT THIS IS A
COMMERCIAL TRANSACTION AND NOT A CONSUMER TRANSACTION, AND WAIVES WITH RESPECT
TO ALL RIGHTS OF CREDITORS TO PROPERTY UNDER CONNECTICUT LAW, ANY RIGHT TO A
NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, AS
AMENDED, OR OTHER STATUTE OR STATUTES AFFECTING PREJUDGMENT REMEDIES AND
AUTHORIZES LENDER'S ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT
COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER, AND
WAIVES ANY CLAIM IN TORT, CONTRACT OR OTHERWISE AGAINST LENDER'S ATTORNEY WHICH
MAY ARISE OUT OF SUCH ISSUANCE OF THE WRIT FOR A PREJUDGMENT REMEDY WITHOUT
COURT ORDER. FURTHER, TO THE EXTENT ALLOWED UNDER APPLICABLE LAW, BORROWER
HEREBY WAIVES DEMAND, PRESENTMENT FOR PAYMENT, PROTEST, NOTICE OF PROTEST,
NOTICE OF DISHONOR, DILIGENCE IN COLLECTION, NOTICE OF NONPAYMENT OF THIS
AGREEMENT AND ANY AND ALL NOTICES OF A LIKE NATURE.
Section 23. Waiver of Jury Trial. BORROWER HEREBY EXPRESSLY WAIVES ANY
AND ALL RIGHTS IT MAY HAVE TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR
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ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND BORROWER
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THE LENDER MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF DEBTOR'S CONSENT TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY. Except
as prohibited by law, the Borrower waives any right which it may have to claim
or recover in any litigation referred to in the preceding sentence any special,
exemplary, punitive or consequential damages or any damages other than, or in
addition to, actual damages. The Borrower (a) certifies that neither the Lender
nor any representative, agent or attorney of the Lender has represented,
expressly or otherwise, that the Lender would not, in the event of litigation,
seek to enforce the foregoing waivers, and (b) acknowledges that, in entering
into the Loan Agreement and the other Loan Documents to which the Lender is a
party, the Lender is relying upon, among other things, the waivers and
certifications contained in this Section 23.
Section 24. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 10.2 of the Loan Agreement.
Section 25. Security Interest Absolute. All rights of the Lender
hereunder, the security interest granted herein and all obligations of the
Borrower hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Loan Agreement, any other Loan
Documents, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Obligations or any other amendment or waiver of or any consent to any departure
from the Loan Agreement, any other Loan Document or any other agreement or
instrument relating to the foregoing, (c) any exchange, release or nonperfection
of any of the Collateral or any other collateral, or any release or amendment or
waiver of or consent to or departure from any Guaranty, for all or any of the
Obligations or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of Borrower in respect of the Obligations
or in respect of this Agreement (other than the indefeasible payment in full of
all of the Obligations).
Section 26. Miscellaneous. The headings of each section of this
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Agreement and all rights and obligations hereunder shall be
binding upon the Borrower and its respective successors and assigns, and shall
inure to the benefit of the Lender and its successors and assigns. If any term
of this Agreement shall be held to be invalid, illegal or unenforceable, the
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validity of all other terms hereof shall in no way be affected thereby, and this
Agreement shall be construed and be enforceable as if such invalid, illegal or
unenforceable term had not been included herein. The Borrower acknowledges
receipt of a copy of this Agreement. This Agreement may be executed in any
number of counterparts, each of which shall constitute an original and all of
which taken together shall constitute one instrument. Any notices required to be
given hereunder shall be given to the parties at their respective addresses set
forth in the Loan Agreement.
Section 27. Concerning Revised Article 9 of the Uniform Commercial
Code. The parties acknowledge and agree to the following provisions of this
Agreement in anticipation of the possible application to the transactions
contemplated hereby, in one or more jurisdictions, of revised Article 9 of the
Uniform Commercial Code in the form or substantially in the form approved by the
American Law Institute and the National Conference of Commissioners on Uniform
State Law and contained in the 1999 Official Text of the Uniform Commercial Code
("Revised Article 9").
A. Attachment. In applying the law of any jurisdiction in which Revised
Article 9 is in effect, the Collateral is all assets of the Debtor, whether or
not within the scope of Revised Article 9. The Collateral shall include, without
limitation, the following categories of assets as defined in Revised Article 9:
goods (including without limitation inventory, equipment and any accessions
thereto), instruments (including without limitation promissory notes),
documents, accounts (including with out limitation health-care-insurance
receivables), chattel paper (whether tangible or electronic), deposit accounts,
letter-of-credit rights (whether or not the letter of credit is evidenced by a
writing), commercial tort claims, securities and all other investment property,
general intangible (including without limitation payment intangibles and
software), supporting obligations and any and all proceeds of any thereof,
wherever located, whether now owned and hereafter acquired. If the Debtor shall
at any time, whether or not Revised Article 9 is in effect in any particular
jurisdiction, acquire a commercial tort claim, as defined in Revised Article 9,
the Debtor shall immediately notify the Secured Party in a writing signed by the
Debtor of the brief details thereof and grant to the Secured Party in such
writing a security interest therein and in the proceeds thereof, all upon the
terms of this Agreement, with such writing to be in form and substance
satisfactory to the Secured Party.
B. Perfection by Filing. The Secured Party may at any time and from
time to time, pursuant to the provisions of this Security Agreement, file
financing statements, continuation statements and amendments thereto that
describe the Collateral as all assets of the Debtor or words of similar effect
and which contain any other information required by Part 5 of Revised Article 9
for the sufficiency or filing office acceptance of any financing statement,
continuation statement or amendment, including whether the Debtor is an
organization (including without limitation a registered organization), the type
or organization and any organization identification number issued to the Debtor.
The Debtor agrees to furnish any such information to the Secured Party promptly
upon request. Any such financing statements, continuation statements or
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amendments may be signed by the Security Party on behalf of the Debtor, as
provided in Section 15 and may be filed at any time in any jurisdiction whether
or not Revised Article 9 is then in effect in that jurisdiction.
C. Other Perfection, etc. The Debtor shall at any time and from time to
time, whether or not Revised Article 9 is in effect in any particular
jurisdiction, take such steps as the Security Party may reasonably request for
the Secured Party (a) to obtain an acknowledgement, in form and substance
satisfactory to the Secured Party, of any bailee having possession of any of the
Collateral that the bailee holds such Collateral for the Secured Party, (b) to
obtain "control" of any investment property, deposit accounts, letter-of-credit
rights or electronic chattel paper (as such terms are defined in Revised Article
9 with corresponding provisions in Rev. xx.xx. 9-104, 9-105, 9-106, 9-107
relating to what constitutes "control" for such items of Collateral), with any
agreement establishing control to be in form and substance satisfactory to the
Secured Party, and (c) otherwise to insure the continued perfection and priority
of the Secured Party's security interest in any of the Collateral and of the
preservation of its rights therein, whether in anticipation and following the
effectiveness of Revised Article 9 in any jurisdiction.
D. Other Provisions. In applying the law of any jurisdiction in which
Revised Article 9 is in effect, the following references to sections in this
Agreement to existing Article 9 of that jurisdiction shall be to the Revised
Article 9 Section of that jurisdiction indicated below:
----------------- ----------------------------- ------------------------------------------
Agreement Section Existing Article 9 Revised Article 9
----------------- ----------------------------- ------------------------------------------
(3) ss. 9-103(3) Xxx.xx. 9-102(a)(34)
----------------- ----------------------------- ------------------------------------------
(9.2) ss. 9-207 Xxx.xx. 9-207
----------------- ----------------------------- ------------------------------------------
(12) xx.xx. 8-106 and 9-115 (1994) Xxx.xx.xx. 8-106 and 9-106
----------------- ----------------------------- ------------------------------------------
(17) ss. 9-504(1)(c) Xxx.xx.xx. 9-608(a)(1)(C) and 9-615 (a)(3)
----------------- ----------------------------- ------------------------------------------
E. Savings Clause. Nothing contained in this section shall be construed
to narrow the scope of the Secured Party's security interest in any of the
Collateral or the perfection or priority thereof or to impair or otherwise limit
any of the rights, powers, privileges or remedies of the Secured Party hereunder
except (and then only to the extent) mandated by Revised Article 9 to the extent
then applicable.
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IN WITNESS WHEREOF, intending to be legally bound, the Borrower has
caused this Agreement to be duly executed as of the date first above written.
Q.E.P. ZOCALIS HOLDING, L.L.C.
By:
--------------------------------
Name: Xxxx Xxxxxxxxx
Its: Director
(Duly Authorized)
Accepted:
FLEET CAPITAL CORPORATION
By:
------------------------------
Name:
Its:
(Duly Authorized)
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EXHIBIT A
As used in this Security Agreement, the following terms shall have the
respective meanings ascribed to them below:
"Accounts" means all "accounts" (as defined in the UCC) arising from or
related to the lease of any Equipment or Inventory financed by the Debtor with
the proceeds of the Loans, and all accounts receivable, rental payments,
contract rights, book debts, notes, drafts and other obligations or indebtedness
owing to the Debtor arising from the sale or lease of Equipment or Inventory
financed by the Debtor with the proceeds of the Loan (including, without
limitation, any such obligation which might be characterized as an account,
contract right or general intangible under the Uniform Commercial Code in effect
in any jurisdiction) and all of the Debtor's rights in, to and under all
purchase orders or leases for goods, services or other property represented by
any of the foregoing (including returned or repossessed goods and unpaid
sellers' rights of rescission, replevin, reclamation and rights to stoppage in
transit) and all monies due to or to become due to the Debtor under all
contracts for the sale or lease of any said Equipment or Inventory by it
(whether or not yet earned by performance on the part of the Debtor), in each
case whether now in existence or hereafter arising or acquired including,
without limitation, the right to receive the proceeds of said purchase orders
and contracts and all collateral security and guarantees of any kind given by
any Person with respect to any of the foregoing.
"Account Debtor" means any person who is or who may become obligated to
Borrower under, with respect to or on an Account.
"Books and Records" means all books and records(including), without
limitation, customer lists, credit files, computer programs, printouts and other
computer materials and records) of the Debtor pertaining to any of the
Collateral;
"Chattel Paper" means all "chattel paper" (as defined in the UCC)
evidencing, representing, arising from or existing in respect of, relating to,
securing or otherwise supporting the payment of, any of the Accounts, including
(but not limited to) Equipment Leases, lease agreements and schedules,
promissory notes, drafts, bills of exchange and trade acceptances, now owned or
hereafter acquired by the Debtor in connection with any Equipment Leases.
"Collateral" has the meaning set forth in Section 2 of this Agreement.
"Documents" means all "documents" (as defined in the UCC) or other
receipts covering, evidencing or representing goods, now owned or hereafter
acquired by the Debtor with the proceeds of the Loans.
"Equipment" means all "equipment" (as defined in the UCC) now owned or
hereafter acquired by the Debtor with the proceeds of the Loans, including
without limitation, all of Debtor's now owned or hereafter acquired machinery,
equipment, furniture, furnishings, fixtures,
B-1
embroidery machinery, silk screening equipment, manufacturing equipment, office
machinery, inventory, conveyors, tools, materials, storage and handling
equipment, computer equipment and hardware, including central processing units,
terminals, drives, memory units, printers, keyboards, screens, peripherals and
input or output devices, automotive testing equipment, trucks, molds, dies,
stamps, motor vehicles, together with Debtor's interest in, and right to, any
and all manuals, computer programs and other materials relating to the use,
operation or structure of any of the foregoing, and all tangible personal
property similar to any of the foregoing and acquired by the Debtor with the
proceeds of the Loans, all supplies used or consumed in the operation of any of
the above items, and all improvements, accessions or appurtenances thereto, and
any proceeds, including insurance proceeds, thereof.
"Equipment Leases" means any lease of Equipment financed by the Debtor
with the proceeds of any of the Loans and all rights of Debtor under any such
lease, including, without limitation, (i) any extensions, renewals or guarantees
of the lessees' obligations thereunder, together with all Equipment covered
under the leases, whether now owned or hereafter acquired, and all accessories
and replacements thereof, now thereon and hereafter to be placed thereon, which
shall become a component part of said Equipment and Chattel Paper, Accounts and
General Intangibles related to the leases and all proceeds and insurance
proceeds of any and all of the foregoing, (ii) all rents, income, profits,
security deposits and other benefits to which the Debtor may now or hereafter be
entitled from the leases, the property covered by such leases and/or all monies
due or to become due in connection with the exercise by lessee of an option, if
any, to purchase the property described in the leases, (iii) all Books and
Records, customer lists, ledger cards, computer programs, computer tapes, disks,
and printouts and other property and General Intangibles at any time evidencing
or relating to any of the foregoing, whether now in existence or hereafter
created, and (iv) all rights and remedies of Debtor under the leases and any
guaranty thereof, including the right to take, in the Debtor's or the Lender's
name, any and all proceedings, legal equitable or otherwise, that the Debtor
might otherwise take.
"Event of Default" means (i) the failure of the Borrower to pay or
perform any of the Obligations as and when due to be paid or performed and (ii)
the occurrence of an Event of Default (as such term is defined in the Loan
Agreement) under the Loan Agreement or any Loan Document.
"General Intangibles" means all "general intangibles" (as defined in
the UCC), now owned or hereafter acquired by the Debtor which relate to any: (A)
Equipment Leases; or (B) Equipment financed by the Debtor with the proceeds of
the Loan, including, without limitation, (i) all obligations or indebtedness
owing to the Debtor (other than Accounts) from whatever source arising and
related to (A) or (B) above, (ii) all customer lists, ledger cards, computer
programs, computer tapes, disks, printouts, licenses, patents, patent licenses,
trademarks, trademark licenses, rights in intellectual property, goodwill, trade
names, service marks, trade secrets, copyrights and permits related to (A) and
(B) above, and (iii) all rights or claims in respect of refunds for taxes paid
which are related to (A) and (B) above.
"Instruments" means all "instruments" or "letters of credit" (each as
defined in the UCC) evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise
B-2
supporting the payment of, any of the Accounts or Equipment Leases, including
(but not limited to) promissory notes, drafts, bills of exchange and trade
acceptances, now owned or hereafter acquired by the Debtor in connection with
any such Accounts or Equipment Leases..
"Inventory" means all "inventory" (as defined in the UCC), now owned or
hereafter acquired by the Debtor with the proceeds of the Loans, if any,
wherever located, and any products made or processed therefrom and all
substances, if any, commingled therewith or added thereto.
"Investment Property" means all investment property (as defined in the
UCC) now owned or hereafter acquired by the Debtor with the proceeds of the
Loans, if any, including without limitation all security entitlements, now owned
or hereafter acquired by the Debtor, wherever located.
"Lender Parties" shall have the meaning assigned in the Loan Agreement.
"Loan Documents" shall have the meaning assigned in the Loan Agreement.
"Loans" shall have the meaning assigned in the Preamble of this
Agreement.
"Obligations" means all obligations of the Borrower to the Lender,
whether now existing or hereafter arising, including, without limitation, (a)
all obligations of the Borrower under or in respect of the Loan Agreement,
including its obligations in respect of principal and interest on any Advance
under, or any Notes issued pursuant to, the Loan Agreement, and all other
amounts payable under the Loan Agreement, (b) all other amounts payable by the
Borrower hereunder or under any other Loan Documents, (c) all interest on the
Obligations listed in the foregoing clauses (a) and (b), including, without
limitation, any interest which accrues after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Borrower or any other Lender Parties, or which would
accrue but for the commencement of such case, proceeding or other action,
whether or not allowed or allowable as a claim in any such proceeding and (d)
any renewals or extensions, replacements, modifications, substitutions,
amendments and restatements of any of the foregoing.
"Proceeds" means all proceeds of, and all other profits, products,
rents or receipts, in whatever form, arising from the collection, sale, lease,
exchange, assignment, licensing or other disposition of, or other realization
upon, Collateral, including without limitation all licenses, permits,
authorizations, and applications, all claims of the Borrower against third
parties for loss of, damage to or destruction of, or for proceeds payable under,
or unearned premiums with respect to, policies of insurance in respect of any
Collateral, and any condemnation or requisition payments with respect to any
Collateral, in each case whether now existing or hereafter arising.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of Connecticut; provided that if by reason of mandatory provisions
of law, the perfection or the effect of perfection or non-perfection of the
security interests in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than Connecticut, "UCC" means
B-3
the Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection.
B-4
EXHIBIT B
Q.E.P. Zocalis Holding LLC
0000 Xxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000