SECURITY AGREEMENT
Exhibit 10.2
THIS SECURITY AGREEMENT (this “Security Agreement”, is dated as of October 21, 2005,
among APPLICA INCORPORATED, a Florida corporation (the “Borrower”), the Domestic
Subsidiaries of the Borrower (individually a “Guarantor” and collectively the
“Guarantors”; the Guarantors together with the Borrower, individually a “Credit
Party” and collectively the “Credit Parties”), and MAST CREDIT OPPORTUNITIES I
(MASTER), LTD., as Lender (the “Lender”).
WITNESSETH:
WHEREAS, pursuant to that certain Term Loan Agreement dated as of the date hereof by and
among the Borrower, the other Credit Parties and the Lender (including all annexes, exhibits and
schedules thereto, as from time to time amended, restated, supplemented or otherwise modified, the
“Term Loan Agreement”), the Lender has agreed to make the Term Loan upon the terms set
forth in the Term Loan Agreement;
WHEREAS, in order to induce the Lender to enter into the Term Loan Agreement and the other
Loan Documents and to induce the Lender to make the Term Loan as provided for in the Term Loan
Agreement, the Credit Parties have agreed to execute and deliver this Security Agreement to the
Lender; and
WHEREAS, as collateral security for payment and performance of the Credit Party’s Obligations
under the Term Loan Agreement each Credit Party is willing to grant to the Lender a security
interest in certain of its personal property and assets;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. DEFINED TERMS. The following terms shall have the following respective meanings:
“Accounts” means all of the Credit Parties’ now owned or hereafter acquired or arising
accounts, as defined in the UCC, including any rights to payment for the sale or lease of goods or
rendition of services, whether or not they have been earned by performance.
“Chattel Paper” means all of the Credit Parties’ now owned or hereafter acquired
chattel paper, as defined in the UCC, including electronic chattel paper.
“Deposit Accounts” means all “deposit accounts” as such term is defined in the UCC,
now or hereafter held in the name of any Credit Party.
“Documents” means all documents as such term is defined in the UCC, including bills of
lading, warehouse receipts or other documents of title, now owned or hereafter acquired by any
Credit Party.
“Equipment” means all of the Credit Parties’ now owned and hereafter acquired
machinery, equipment, furniture, furnishings, fixtures, and other tangible personal property
(except Inventory), including embedded software, motor vehicles with respect to which a certificate
of title has been issued, aircraft, dies, tools, jigs, molds and office equipment, as well as all
of such types of property leased by any Credit Party and all of such Credit Party’s rights and
interests with respect thereto under
such leases (including, without limitation, options to purchase); together with all present
and future additions and accessions thereto, replacements therefor, component and auxiliary parts
and supplies used or to be used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with respect thereto;
wherever any of the foregoing is located.
“General Intangibles” means all of the Credit Parties’ now owned or hereafter acquired
general intangibles, choses in action (other than as against the Lender in connection with the Loan
Documents) and causes of action and all other intangible personal property of the Credit Parties of
every kind and nature (other than Accounts), including, without limitation, all contract rights,
payment intangibles, Proprietary Rights, corporate or other business records, inventions, designs,
blueprints, plans, specifications, patents, patent applications, trademarks, service marks, trade
names, trade secrets, goodwill, copyrights, computer software, customer lists, registrations,
licenses, franchises, tax refund claims, any funds which may become due to any Credit Party in
connection with the termination of any employee benefit plan or any rights thereto and any other
amounts payable to any Credit Party from any employee benefit plan, rights and claims against
carriers and shippers, rights to indemnification, business interruption insurance and proceeds
thereof, property, casualty or any similar type of insurance and any proceeds thereof, proceeds of
insurance covering the lives of key employees on which any Credit Party is beneficiary, rights to
receive dividends, distributions, cash, Instruments and other property in respect of or in exchange
for pledged equity interests or Investment Property and any letter of credit, guarantee, claim,
security interest or other security held by or granted to any Credit Party.
“Goods” means all “goods” as defined in the UCC, now owned or hereafter acquired by a
Credit Party, wherever located, including embedded software to the extent included in “goods” as
defined in the UCC.
“Instruments” means all instruments as such term is defined in the UCC, now owned or
hereafter acquired by a Credit Party.
“Inventory” means all of the Credit Parties’ now owned and hereafter acquired
inventory, goods and merchandise, wherever located, to be furnished under any contract of service
or held for sale or lease, all returned goods, raw materials, work-in-process, finished goods
(including embedded software), other materials and supplies of any kind, nature or description
which are used or consumed in any Credit Parties’ business or used in connection with the packing,
shipping, advertising, selling or finishing of such goods, merchandise, and all documents of title
or other Documents representing them.
“Investment Property” means all of the Credit Parties’ right title and interest in and
to any and all: (a) securities whether certificated or uncertificated; (b) securities entitlements;
(c) securities accounts; (d) commodity contracts; or (e) commodity accounts.
“Letter-of-Credit Rights” means “letter-of-credit rights” as such term is defined in
the UCC, now owned or hereafter acquired by the Credit Parties, including rights to payment or
performance under a letter of credit, whether or not any Credit Party, as beneficiary, has demanded
or is entitled to demand payment or performance (other than any letter of credit issued for the
account of a Credit Party pursuant to the Revolving Credit Agreement).
“Payment Account” means each bank account established pursuant to this Security
Agreement, to which the proceeds of Accounts and other Collateral are deposited or credited, and
which is maintained in the name of the Lender or any Credit Party, as the Lender may determine, on
terms acceptable to the Lender.
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“Proprietary Rights” means all of the Credit Parties’ now owned and hereafter arising
or acquired: licenses, franchises, permits, patents, patent rights, copyrights, works which are the
subject matter of copyrights, trademarks, service marks, trade names, trade styles, patent,
trademark and service xxxx applications, and all licenses and rights related to any of the
foregoing, and all other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing, and all rights to xxx
for past, present and future infringement of any of the foregoing.
“Software” means all “software” as such term is defined in the UCC, now owned or
hereafter acquired by any Credit Party, other than software embedded in any category of Goods,
including all computer programs and all supporting information provided in connection with a
transaction related to any program.
“Supporting Obligations” means all supporting obligations as such term is defined in
the UCC, now owned or hereafter acquired by any Credit Party.
“UCC” means the Uniform Commercial Code, as in effect from time to time, of the State
of New York or of any other state the laws of which are required as a result thereof to be applied
in connection with the issue of perfection of security interests.
All other capitalized terms used but not otherwise defined herein have the meanings given to
them in the Term Loan Agreement. All other undefined terms contained in this Security Agreement,
unless the context indicates otherwise, have the meanings provided for by the UCC to the extent the
same are used or defined therein.
2. GRANT OF LIEN.
(a) As security for all Obligations, each of the Credit Parties hereby grants to the Lender, a
continuing security interest in, lien on, assignment of and right of set-off against, all of the
following property and assets of the Credit Parties, whether now owned or existing or hereafter
acquired or arising, regardless of where located:
(i) all Accounts;
(ii) all Inventory;
(iii) all Chattel Paper;
(iv) all Documents;
(v) all Instruments;
(vi) all Supporting Obligations and Letter-of-Credit Rights;
(vii) all General Intangibles (including payment intangibles and Software);
(viii) all Goods;
(ix) all Equipment;
(x) all Investment Property;
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(xi) all money, cash, cash equivalents, securities and other property of any kind of any
Credit Party held directly or indirectly by the Lender;
(xii) all of the Credit Parties’ Deposit Accounts, credits, and balances with any financial
institution with which any Credit Party maintains deposits, including any Payment Accounts:
(xiii) all books, records and other property related to or referring to any of the foregoing,
including books, records, account ledgers, data processing records, computer software and other
property and General Intangibles at any time evidencing or relating to any of the foregoing; and
(xiv) the commercial tort claims in which a Credit Party is a plaintiff: described in
Schedule IV attached hereto.
(xv) all accessions to, substitutions for and replacements, products and proceeds of any of
the foregoing, including, but not limited to, proceeds of any insurance policies, claims against
third parties, and condemnation or requisition payments with respect to all or any of the
foregoing.
All of the foregoing, together with, all equity interests in Subsidiaries to the extent pledged to
the Lender and all other property of the Credit Parties in the Lender may at any time be granted a
Lien as collateral for the Obligations, is herein collectively referred to as the “Collateral”;
provided, however, that in no event shall the Collateral include, and no Credit Party shall be
deemed to have granted a security interest in, any of the Borrower’s or any applicable Credit
Party’s rights or interests in any license, contract or agreement to which the Borrower or the
applicable Credit Party is a party or any of its rights or interests thereunder to the extent, but
only to the extent, that such a grant would, under the express terms of such license, contract or
agreement or otherwise, result in a breach of the terms or constitute a default under such license,
contract or agreement; provided, that immediately upon the ineffectiveness, waiver, lapse or
termination of any such provision, the Collateral shall include, and the Borrower or the applicable
Credit Party be deemed to have granted a security interest in, all such rights and interests as if
such provision had never been in effect.
(b) All of the Obligations shall be secured by all of the Collateral.
3. PERFECTION AND PROTECTION OF SECURITY INTEREST.
(a) The Credit Parties shall, at their expense, perform all steps requested by the Lender at
any time to perfect, maintain, protect, and enforce the Lender’s Liens, including: (i) executing,
delivering and/or filing and recording of Intellectual Property Security Agreements and executing
and filing financing or continuation statements, and amendments thereof, in form and substance
reasonably satisfactory to the Lender; (ii) delivering to the Lender warehouse receipts covering
any portion of the Collateral located in warehouses and for which warehouse receipts are issued and
certificates of title covering any portion of the collateral for which certificates of title have
been issued, unless the Lender shall have obtained a Collateral Access Agreement in form and
substance acceptable to the Lender from any applicable warehouseman; (iii) upon the occurrence of
an Event of Default, transferring Inventory to warehouses or other locations designated by the
Lender; (iv) placing notations on the Credit Parties’ books of account to disclose the Lender’s
security interest; and (v) taking such other steps as are deemed reasonably necessary by the Lender
to maintain and protect the Lender’s Liens. The Credit Parties agree that a carbon, photographic,
photostatic, or other reproduction of this Security Agreement or of a financing statement is
sufficient as a financing statement.
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(b) After all obligations of the Credit Parties under the Revolving Credit Agreement have been
paid in full and discharged, the Credit Parties shall deliver to the Lender all Collateral
consisting of negotiable Documents, certificated securities (accompanied by stock powers executed
in blank), Chattel Paper and Instruments, promptly after the Lender’s request therefor.
(c) The Credit Parties shall, in accordance with the terms of the Term Loan Agreement, at the
Lender’s request, obtain or use their commercially reasonable efforts to obtain waivers or
subordinations of Liens from landlords and mortgagees.
(d) If required by the terms of the Term Loan Agreement and not waived by the Lender in
writing (which waiver may be revoked), the Credit Parties shall obtain authenticated control
agreements from each issuer of uncertificated securities, securities intermediary, or commodities
intermediary issuing or holding any financial assets or commodities to or for any Credit Party.
(e) If a Credit Party is or becomes the beneficiary of a letter of credit (other than those
issued for the account of a Credit Party pursuant to the Revolving Credit Agreement), such Credit
Party shall promptly notify the Lender thereof and enter into a tri-party agreement with the Lender
and the issuer and/or confirmation bank with respect to Letter-of-Credit Rights assigning such
Letter-of-Credit Rights to the Lender and directing all payments thereunder to the Payment Account,
all in form and substance reasonably satisfactory to the Lender.
(f) The Credit Parties shall take all steps necessary to grant the Lender control of all
electronic chattel paper in accordance with the Code and all “transferable records” as defined in
the Uniform Electronic Transactions Act.
(g) The Credit Parties hereby irrevocably authorize the Lender at any time and from time to
time during the term of the Term Loan Agreement to file in any filing office in any jurisdiction
within the United States initial financing statements and amendments thereto that (a) indicate the
Collateral (i) as all assets of Credit Parties or words of similar effect, regardless of whether
any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC of
the State of New York or such jurisdiction, or (ii) as being of an equal or lesser scope or with
greater detail, and (b) contain any other information required by part 5 of Article 9 of the UCC of
the State of New York for the sufficiency or filing office acceptance of any financing statement or
amendment, including (i) whether the Credit Party is an organization, the type of organization and
any organization identification number issued to such Credit Party, and (ii) in the case of a
financing statement filed as a fixture filing or indicating Collateral as extracted collateral or
timber to be cut, a sufficient description of real property to which the Collateral relates. The
Credit Parties agree to furnish any such information to the Lender promptly upon written request.
Each Credit Party also ratifies its authorization for the Lender to have filed in any jurisdiction
within the United States any like initial financing statements or amendments thereto if filed prior
to the date hereof.
(h) Each Credit Party shall promptly notify the Lender of any commercial tort claim (as
defined in the UCC) acquired by it and unless otherwise consented by the Lender, such Credit Party
shall enter into a supplement to this Security Agreement, granting to the Lender a Lien in such
commercial tort claim.
(i) From time to time, the Credit Parties shall, upon the Lender’s written request, execute
and deliver confirmatory written instruments pledging to the Lender, the Collateral, but the Credit
Parties’ failure to do so shall not affect or limit any security interest or any other rights of
the Lender in and to the Collateral with respect to the Credit Parties. So long as the Term Loan
Agreement is in effect and until all Obligations have been fully satisfied, the Lender’s Liens
shall continue in full force and
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effect in all respects against the Collateral (whether or not deemed eligible for the purpose
of calculating the Availability or as the basis for any advance, loan, extension of credit, or
other financial accommodation).
(j) No Reincorporation. No Credit Party shall reincorporate or reorganize itself
under the laws of any jurisdiction other than the jurisdiction in which it is incorporated or
organized as of the date hereof or change its type of entity as identified on Schedule II
without executing all necessary documents, instruments, financing statements, amendments thereto,
assignments and/or other writings as the Lender may reasonably request to protect or enforce the
Lender’s security interest in the Collateral.
(k) Terminations Amendments Not Authorized. Each Credit Party acknowledges that it is
not authorized to file any financing statement or amendment or termination statement with respect
to any financing statement filed pursuant to the Loan Documents without the prior written consent
of the Lender and agrees that it will not do so without the prior written consent of the Lender,
subject to the rights of the Credit Parties under Section 9-509(d)(2) of the UCC.
(l) No Restriction on Payments to Lender. No Credit Party shall enter into any
contract or other agreement (other than the Revolving Credit Agreement) that restricts or prohibits
the grant of a security interest in Accounts, Chattel Paper, Instruments or payment intangibles or
the proceeds of the foregoing to the Lender.
4. LOCATION OF COLLATERAL.
Each of the Credit Parties represents and warrants to the Lender that: (A) Schedule I
is a correct and complete list of the location of the chief executive office, the location of its
books and records and the locations of the Collateral (other than In-Transit Inventory) of each of
the Credit Parties, and the locations of all of the other places of business of each of the Credit
Parties; and (B) Schedule I correctly identifies any of such facilities and locations that
are not owned by a Credit Party and sets forth the names of the owners and lessors or sublessors of
such facilities and locations. Each of the Credit Parties covenants and agrees that it will not
(i) maintain any Collateral (other than In-Transit Inventory) at any location other than those
locations listed for such Credit Party on Schedule I, (ii) otherwise change or add to any
of such locations, or (iii) change the location of its chief executive office from the location
identified in Schedule I, unless it gives the Lender at least thirty (30) days’ prior
written notice thereof and executes any and all financing statements and other documents that the
Lender reasonably requests in connection therewith.
5. JURISDICTION OF ORGANIZATION.
As to each Credit Party, Schedule II hereto identifies such Credit Party’s name as of
the Closing Date as it appears in official filings in the state of its incorporation or other
organization, the type of entity of such Credit Party (including corporation, partnership, limited
partnership or limited liability company), organizational identification number issued by such
Credit Party’s state of incorporation or organization or a statement that no such number has been
issued and the jurisdiction in which such Credit Party is incorporated or organized.
6. TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL.
Each of the Credit Parties represents and warrants to the Lender and agrees with the Lender
that: (a) each Credit Party has rights in and the power to transfer all of the Collateral free and
clear of all Liens whatsoever, except for Permitted Liens; (b) the Lender’s Liens in the Collateral
will not be
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subject to any prior Lien except for Permitted Liens; and (c) each Credit Party will use,
store, and maintain the Collateral with all reasonable care and will use such Collateral for lawful
purposes only.
7. APPRAISALS.
At such reasonable times as the Lender may request in writing, the Borrower shall, at its
expense, provide the Lender with appraisals or updates thereof of any or all of the Collateral from
an appraiser, and prepared on a basis reasonably satisfactory to the Lender, such appraisals and
updates to include, without limitation, information required by applicable law and regulation;
provided, however, that so long as no Event of Default exists, the Borrower shall
be responsible for the expense of no more than four (4) such appraisals in any calendar year.
8. [RESERVED]
9. COLLATERAL REPORTING. The Credit Parties shall provide the Lender with such
reports with respect to the Collateral as the Lender shall reasonably request in writing from time
to time. If any of the Credit Parties’ records or reports with respect to the Collateral are
prepared by an accounting service or other agent, the Credit Parties hereby authorize such service
or agent to deliver such records, reports, and related documents to the Lender.
10. ACCOUNTS.
(a) Each of the Credit Parties hereby represents and warrants to the Lender, with respect to
such Credit Party’s Accounts, that: (i) each existing Account represents, and each future Account
will represent, a bona fide sale or lease and delivery of goods by such Credit Party, or
rendition of services by such Credit Party, in the ordinary course of the Credit Party’s business;
(ii) each existing Account is, and each future Account will be, for a liquidated amount payable by
the Account Debtor thereon on the terms set forth in the invoice therefor or in the schedule
thereof delivered to the Lender, without any offset, deduction, defense, or counterclaim except
those known to the applicable Credit Party and disclosed to the Lender pursuant to this Security
Agreement; (iii) no credit, discount, or extension, or agreement will be granted on any Account,
except for those immaterial credits, discounts or extensions granted by the applicable Credit Party
in the ordinary course of business or consistent with past practices (iv) each copy of an invoice
delivered to the Lender by a Credit Party will be a genuine copy of the original invoice sent to
the Account Debtor named therein; and (v) all goods described in any invoice representing a sale of
goods will have been delivered to the Account Debtor and all services of the Borrower described in
each invoice will have been performed.
(b) The Credit Parties shall not re-date any invoice or sale, make sales on extended dating or
extend or modify any Account beyond that customary in such Credit Party’s business. If a Credit
Party becomes aware of any matter adversely affecting the collectibility of any Account or the
Account Debtor therefor involving an amount greater than $1,000,000, including information
regarding the Account Debtor’s creditworthiness, such Credit Party will promptly so advise the
Lender.
(c) If any Credit Party accepts any note or other instrument (except a check or other
instrument for the immediate payment of money) with respect to any Account, no such instrument
shall be considered as payment thereof and the applicable Credit Party will promptly deliver such
instrument to the Lender, endorsed by such Credit Party to the Lender in a manner satisfactory in
form and substance to the Lender. Regardless of the form of presentment, demand, notice of protest
with respect thereto, such Credit Party shall remain liable thereon until such instrument is paid
in full.
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(d) Each Credit Party shall notify the Lender promptly of all disputes and claims in excess of
$500,000 with any Account Debtor. Each Credit Party shall send the Lender a copy of each credit
memorandum in excess of $500,000 promptly after it has been issued. The Lender may at all times
when an Event of Default exists hereunder, settle or adjust disputes and claims directly with
Account Debtors for amounts and upon terms which the Lender shall consider advisable and, in all
cases, the Lender will credit the Borrower’s Loan Account with the net amounts received by the
Lender in payment of any Accounts.
(e) Each Credit Party shall immediately report to the Lender any return involving an amount in
excess of $500,000. Each such report shall indicate the reasons for the returns and the locations
and condition of the returned Inventory. In the event any Account Debtor returns Inventory to a
Credit Party when an Event of Default exists, such Credit Party, upon the request of the Lender,
shall: (i) hold the returned Inventory in trust for the Lender; (ii) segregate all returned
Inventory from all of its other property; (iii) dispose of the returned Inventory solely according
to the Lender’s written instructions; and (iv) not issue any credits or allowances with respect
thereto without the Lender’s prior written consent. All returned Inventory shall be subject to the
Lender’s Liens thereon.
11. COLLECTION OF ACCOUNTS; PAYMENTS.
(a) Until the Lender notifies the Borrower to the contrary in writing, each Credit Party shall
make collection of its Accounts and other Collateral for the Lender, shall receive all payments as
the Lender’s trustee, and shall immediately deliver all payments in their original form duly
endorsed in blank into a Payment Account established for the account of such Credit Party at a
Clearing Bank acceptable to Lender, subject to a Deposit Account Control Agreement. On or prior to
the date hereof, each Credit Party shall establish a lock-box service for collections of Accounts
at a Clearing Bank acceptable to the Lender and subject to a Deposit Account Control Agreement and
other documentation acceptable to the Lender. The Credit Parties shall instruct all Account
Debtors to make all payments directly to the address established for such service. If,
notwithstanding such instructions, a Credit Party receives any proceeds of Accounts, it shall
receive such payments as the Lender’s trustee, and shall immediately deliver such payments to the
Lender in their original form duly endorsed in blank or deposit them into a Payment Account, as the
Lender may direct in writing. All collections received in any lock-box or Payment Account or
directly by a Credit Party or the Lender, and all funds in any Payment Account or other account to
which such collections are deposited shall be subject to the Lender’s control pursuant to the terms
of any applicable Deposit Account Control Agreement. Subject to the terms of the Intercreditor
Agreement, the Lender or the Lender’s designee may, at any time after the occurrence of an Event of
Default, notify Account Debtors in writing that the Accounts have been assigned to the Lender and
of the Lender’s security interest therein, and may collect such Accounts directly, at the
Borrower’s expense. Subject to the terms of the Intercreditor Agreement, upon the occurrence and
during the continuance of an Event of Default, the Credit Parties, at the Lender’s written request,
shall execute and deliver to the Lender such documents as the Lender shall require to grant the
Lender access to any post office box in which collections of Accounts are received.
(b) If sales of Inventory are made or services are rendered for cash, the Credit Parties shall
immediately deliver to the Lender or deposit into a Payment Account the cash which the Borrower
receives.
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12. INVENTORY; PERPETUAL INVENTORY.
Each Credit Party represents and warrants to the Lender and agrees with the Lender that all of
the Inventory owned by the Credit Parties is and will be held for sale or lease, or to be furnished
in connection with the rendition of services, in the ordinary course of a Credit Party’s business,
and is and will be fit for such purposes. Each Credit Party agrees that all Inventory produced by
it in the United States of America will be produced in accordance with the Federal Fair Labor
Standards Act of 1938, as amended, and all rules, regulations, and orders thereunder. The Credit
Parties will conduct a physical count of the Inventory at least once per Fiscal Year, which may be
included in any appraisal to be performed in accordance with Section 7 hereof, and after and during
the continuation of an Event of Default at such other times as the Lender requests in writing.
Each Credit Party will maintain a perpetual inventory reporting system at all times. No Credit
Party will, without the Lender’s written consent, sell any Inventory on a xxxx-and-hold, guaranteed
sale, sale and return, sale on approval, consignment, or other repurchase or return basis.
13. EQUIPMENT.
The Credit Parties shall promptly inform the Lender of any material additions to or deletions
from the Equipment. The Credit Parties shall not permit any Equipment to become a fixture with
respect to real property or to become an accession with respect to other personal property with
respect to which real or personal property the Lender does not have a Lien. The Credit Parties
will not, without the Lender’s prior written consent (which consent shall not be unreasonably
withheld), alter or remove any identifying symbol or number on any of a Credit Party’s Equipment
constituting Collateral.
14. DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER.
Each Credit Party represents and warrants to the Lender that (a) all material Documents,
Instruments, and Chattel Paper describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon, are and will be complete, valid, and genuine, and (b) all
goods evidenced by such Documents, Instruments, Letter of Credit Rights and Chattel Paper are and
will be owned by a Credit Party, free and clear of all Liens other than Permitted Liens.
15. VOTING OF INVESTMENT PROPERTY.
(a) Until the Lender shall have delivered a notice contemplated by clause (b) below, the
Borrower and each Guarantor shall be entitled to vote or consent with respect to the Investment
Property in any manner not inconsistent with the terms of any Loan Document, and the Lender will,
if so requested, execute appropriate revocable proxies therefor.
(b) Subject to the terms of the Intercreditor Agreement, upon the occurrence and during the
continuance of an Event of Default, if and to the extent that the Lender shall so notify in writing
the Borrower or the Guarantor pledging the Investment Property in question, only the Lender shall
be entitled to vote or consent or take any other action with respect to the Investment Properties
(and the Borrower or the applicable Guarantor will, if so requested, execute appropriate proxies
therefor).
16. POWER OF ATTORNEY.
Each Credit Party hereby appoints the Lender and the Lender’s designee as such Credit Party’s
attorney, with power: (a) to endorse such Credit Party’s name on any checks, notes, acceptances,
money orders, or other forms of payment or security that come into the Lender’s possession; (b) to
sign such Credit Party’s name on any invoice, xxxx of lading, warehouse receipt or other negotiable
or
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non-negotiable Document constituting Collateral, on drafts against customers, on assignments of
Accounts, on notices of assignment, financing statements and other public records and to file any
such financing statements by electronic means with or without a signature as authorized or required
by applicable law or filing procedure; (c) so long as any Event of Default has occurred and is
continuing, to notify the post office authorities to change the address for delivery of such Credit
Party’s mail to an address designated by the Lender and to receive, open and dispose of all mail
addressed to the Credit Parties; (d) to send requests for verification of Accounts to customers or
Account Debtors; (e) upon the occurrence and during the continuance of an Event of Default, to
complete in such Credit Party’s name or the Lender’s name, any order, sale or transaction, obtain
the necessary Documents in connection therewith, and collect the proceeds thereof; (f) to clear
Inventory through customs in such Credit Party’s name, the Lender’s name or the name of the
Lender’s designee, and to sign and deliver to customs officials powers of attorney in such Credit
Party’s name for such purpose; (g) to the extent that a Credit Party’s authorization given in
Section 3(g) of this Security Agreement is not sufficient, to file such financing statements with
respect to this Security Agreement, with or without such Credit Party’s signature, or to file a
photocopy of this Security Agreement in substitution for a financing statement, as the Lender may
deem appropriate and to execute in such Credit Party’s name such financing statements and
amendments thereto and continuation statements which may require such Credit Party’s signature; and
(h) to do all things necessary to carry out the Term Loan Agreement and this Security Agreement.
Each Credit Party ratifies and approves all actions of such attorney taken in accordance with the
terms hereof and the Term Loan Agreement of such attorney. Neither the Lender nor the Lender’s
attorneys will be liable for any acts or omissions or for any error of judgment or mistake of fact
or law except for their gross negligence or willful misconduct. This power, being coupled with an
interest, is irrevocable until the Term Loan Agreement has been terminated and the Obligations have
been paid finally and in full.
17. THE LENDER’S RIGHTS, DUTIES AND LIABILITIES.
(a) The Credit Parties assume all responsibility and liability arising from or relating to the
use, sale, license or other disposition of the Collateral. The Obligations shall not be affected
by any failure of the Lender to take any steps to perfect the Lender’s Liens or to collect or
realize upon the Collateral, nor shall loss of or damage to the Collateral release the Borrower or
any other Credit Party from any of the Obligations. Following the occurrence and during the
continuation of an Event of Default, the Lender may (but shall not be required to), without notice
to or consent from the Credit Parties, xxx upon or otherwise collect, extend the time for payment
of, modify or amend the terms of, compromise or settle for cash, credit, or otherwise upon any
terms, grant other indulgences, extensions, renewals, compositions, or releases, and take or omit
to take any other action with respect to the Collateral, any security therefor, any agreement
relating thereto, any insurance applicable thereto, or any Person liable directly or indirectly in
connection with any of the foregoing, without discharging or otherwise affecting the liability of
the Credit Parties for the Obligations or under the Term Loan Agreement or any other agreement now
or hereafter existing between the Lender and the Borrower and any other Credit Party, provided,
however, that any amounts received pursuant to any actions taken pursuant to this Section 17(a)
shall be credited, net of costs of collection, to the Obligations in accordance with the terms of
the Term Loan Agreement.
(b) It is expressly agreed by the Credit Parties that, anything herein to the contrary
notwithstanding, the Credit Parties shall remain liable under each of its contracts and each of its
licenses (to the extent such contracts and licenses remain in effect) to observe and perform all
the conditions and obligations to be observed and performed by it thereunder. The Lender shall
have no obligation or liability under any contract or license by reason of or arising out of this
Security Agreement or the granting herein of a Lien thereon or the receipt by the Lender of any
payment relating to any contract or license pursuant hereto, except where the Lender has expressly
agreed otherwise. The Lender shall not be required or obligated in any manner to perform or
fulfill any of the obligations of any Credit Party under
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or pursuant to any contract or license, or to make any payment, or to make any inquiry as to
the nature or the sufficiency of any payment received by it or the sufficiency of any performance
by any party under any contract or license, or to present or file any claims, or to take any action
to collect or enforce any performance or the payment of any amounts which may have been assigned to
it or to which it may be entitled at any time or times.
(c) The Lender may at any time after an Event of Default has occurred and be continuing (or if
any rights of set-off (other than set-offs against an Account arising under the contract giving
rise to the same Account) or contra accounts may be asserted with respect to the following),
without prior notice to Borrower, notify Account Debtors, and other Persons obligated on the
Collateral that the Lender has a security interest therein, and that payments shall be made
directly to the Lender. Upon the request of the Lender, each of the Credit Parties shall so notify
their respective Account Debtors and other Persons obligated on Collateral. Once any such notice
has been given to any Account Debtor or other Person obligated on the Collateral, the Credit
Parties shall not give any contrary instructions to such Account Debtor or other Person without the
Lender’s prior written consent.
(d) The Lender may at any time in the Lender’s own name or in the name of a Credit Party
communicate with Account Debtors, parties to contracts and obligors in respect of Instruments to
verify with such Persons, to the Lender’s satisfaction, the existence, amount and terms of
Accounts, payment intangibles, Instruments or Chattel Paper. If a Default or Event of Default
shall have occurred and be continuing, the Credit Parties, at their own expense, shall cause the
independent certified public accountants then engaged by such Credit Parties to prepare and deliver
to the Lender at any time and from time to time promptly upon the Lender’s request the following
reports with respect to such Credit Party: (i) a reconciliation of all Accounts; (ii) an aging of
all Accounts; (iii) trial balances; and (iv) a test verification of such Accounts as the Lender may
request. The Credit Parties, at their own expense, shall deliver to the Lender the results of each
physical verification, if any, which a Credit Party may in its discretion have made, or caused any
other Person to have made on its behalf of all or any portion of its Inventory.
18. PATENT, TRADEMARK AND COPYRIGHT COLLATERAL.
(a) The Credit Parties do not have any interest in, or title to, any patent, trademark or
copyright except as set forth in Schedule III hereto. This Security Agreement is effective
to create a valid and continuing Lien on and, upon filing of the Intellectual Property Security
Agreement with the United States Copyright Office and/or the United States Patent and Trademark
Office, perfected Liens in favor of the Lender on the Credit Parties’ patents, trademarks and
copyrights and such perfected Liens are enforceable as such as against any and all creditors of and
purchasers from the Credit Parties. Upon filing of the Intellectual Property Security Agreement
with the United States Copyright Office, the United States Patent and Trademark Office and the
filing of appropriate financing statements, all action necessary or desirable to protect and
perfect the Lender’s Lien on the Credit Parties’ patents, trademarks or copyrights shall have been
duly taken.
(b) The Borrower shall notify the Lender immediately if it knows or has reason to know that
any application or registration relating to any patent, trademark or copyright (now or hereafter
existing) may become abandoned or dedicated, or of any adverse determination or development
(including the institution of, or any such determination or development in, any proceeding in the
United States Patent and Trademark Office, the United States Copyright Office or any court)
regarding a Credit Party’s ownership of any patent, trademark or copyright, its right to register
the same, or to keep and maintain the same.
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(c) Within forty-five (45) days of the last day of each fiscal quarter of the Credit Parties,
the Credit Parties shall deliver to the Lender a schedule setting forth all material applications
for the registration of any patent, trademark or copyright with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or agency and, upon
request of the Lender, the Credit Parties shall execute and deliver an Intellectual Property
Security Agreement and such other documents as the Lender may request to evidence the Lender’s Lien
on such patent, trademark or copyright, and the General Intangibles of such Credit Party relating
thereto or represented thereby.
(d) The Credit Parties shall take all actions reasonably necessary to maintain and pursue each
application, to obtain the relevant registration and to maintain the registration of each of the
patents, trademarks and copyrights (now or hereafter existing), including the filing of
applications for renewal, affidavits of use, affidavits of noncontestability and opposition and
interference and cancellation proceedings, unless the Borrower shall determine that such patent,
trademark or copyright is not material to the conduct of a Credit Party’s business.
(e) In the event that any of the patent, trademark or copyright Collateral is infringed upon,
or misappropriated or diluted by a third party, Borrower shall notify the Lender promptly after
Borrower learns thereof, Borrower shall, unless it shall reasonably determine that such patent,
trademark or copyright Collateral is not material to the conduct of a Credit Party’s business or
operations, promptly attempt to negotiate with such infringing party or xxx for infringement,
misappropriation or dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and, upon the occurrence and during the continuance of an Event of
Default, shall take such other actions as the Lender shall deem appropriate under the circumstances
to protect such patent, trademark or copyright Collateral.
19. INDEMNIFICATION.
In any suit, proceeding or action brought by the Lender relating to any Collateral for any sum
owing with respect thereto or to enforce any rights or claims with respect thereto, the Credit
Parties, jointly and severally, will save, indemnify and keep the Lender harmless from and against
all expense (including reasonable attorneys’ fees and expenses), loss or damage suffered by reason
of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of the
Account Debtor or other Person obligated on the Collateral, arising out of a breach by a Credit
Party of any obligation thereunder or arising out of any other agreement, indebtedness or liability
at any time owing to, or in favor of, such obligor or its successors from a Credit Party, except in
the case of the Lender, to the extent such expense, loss, or damage is attributable solely to the
gross negligence or willful misconduct of the Lender as finally determined by a court of competent
jurisdiction. All such obligations of the Credit Parties shall be and remain enforceable against
and only against the Credit Parties and shall not be enforceable against the Lender.
20. [RESERVED].
21. NOTICE REGARDING COLLATERAL.
Borrower will advise the Lender promptly, in reasonable detail, (i) of any Lien (other than
Permitted Liens) or material claim made or asserted against any of the Collateral, and (ii) of the
occurrence of any other event which would have a Material Adverse Effect.
22. REMEDIES; RIGHTS UPON DEFAULT. Subject to the terms of the Intercreditor
Agreement, the Lender shall have and may exercise from time to time the rights and remedies
described in this Section 22.
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(a) In addition to all other rights and remedies granted to it under this Security Agreement,
the Term Loan Agreement, the other Loan Documents and under any other instrument or agreement
securing, evidencing or relating to any of the Obligations, if any Event of Default shall have
occurred and be continuing, the Lender may exercise all rights and remedies of a secured party
under the UCC. Without limiting the generality of the foregoing, the Credit Parties expressly
agree that in any such event the Lender, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time and place of public
or private sale) to or upon a Credit Party or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent permitted by the UCC
and other applicable law), may forthwith enter upon the premises of any Credit Party where any
Collateral is located through self-help, without judicial process, without first obtaining a final
judgment or giving a Credit Party or any other Person notice and opportunity for a hearing on the
Lender’s claim or action and may collect, receive, assemble, process, appropriate and realize upon
the Collateral, or any part thereof, and may forthwith sell, lease, license, assign, give an option
or options to purchase, or sell or otherwise dispose of and deliver said Collateral (or contract to
do so), or any part thereof, in one or more parcels at a public or private sale or sales, at any
exchange at such prices as it may deem acceptable, for cash or on credit or for future delivery
without assumption of any credit risk. The Lender shall have the right upon any such public sale
or sales and, to the extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of said Collateral so sold, free of any right or equity of redemption, which
equity of redemption the Credit Parties hereby release. Such sales may be adjourned and continued
from time to time with or without notice. The Lender shall have the right to conduct such sales on
the premises of any Credit Party or elsewhere and shall have the right to use any Credit Party’s
premises without charge for such time or times as the Lender deems necessary or advisable.
(b) Upon the occurrence and during the continuance of an Event of Default, each Credit Party
further agrees, at the Lender’s request, to assemble the Collateral and make it available to the
Lender at a place or places designated by the Lender which are reasonably convenient to the Lender
and Borrower, whether at a Credit Party’s premises or elsewhere. Until the Lender is able to
effect a sale, lease, or other disposition of Collateral, the Lender shall have the right to hold
or use Collateral, or any part thereof, to the extent that it deems appropriate for the purpose of
preserving Collateral or its value or for any other purpose deemed appropriate by the Lender. The
Lender shall have no obligation to any Credit Party to maintain or preserve the rights of a Credit
Party as against third parties with respect to Collateral while Collateral is in the possession of
the Lender. Upon the occurrence and during the continuance of an Event of Default, the Lender may,
if it so elects, seek the appointment of a receiver or keeper to take possession of Collateral and
to enforce any of the Lender’s remedies with respect to such appointment without prior notice or
hearing as to such appointment. Upon the occurrence and during the continuance of an Event of
Default, the Lender shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale to the Obligations as provided in the Term Loan Agreement, and
only after so paying over such net proceeds, and after the payment by the Lender of any other
amount required by any provision of law, need the Lender account for the surplus, if any, to
Borrower. Upon the occurrence and during the continuance of an Event of Default, to the maximum
extent permitted by applicable law, the Credit Parties waive all claims, damages, and demands
against the Lender arising out of the repossession, retention or sale of the Collateral except such
as arise solely out of the gross negligence or willful misconduct of the Lender as finally
determined by a court of competent jurisdiction. Each Credit Party agrees that ten (10) days prior
notice by the Lender of the time and place of any public sale or of the time after which a private
sale may take place is reasonable notification of such matters. The Credit Parties shall remain
liable for any deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all Obligations, including reasonable attorneys’ fees or other expenses
incurred by the Lender to collect such deficiency.
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(c) Except as otherwise specifically provided herein, each Credit Party hereby waives
presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of
any kind in connection with this Security Agreement or any Collateral.
(d) The net cash proceeds resulting from the collection, liquidation, sale, lease or other
disposition of the Collateral shall be applied first to the expenses (including all attorneys’
fees) of retaking, holding, storing, processing and preparing for sale, selling, collecting,
liquidating and the like, and then to the satisfaction of all Obligations in accordance with the
terms of the Term Loan Agreement. Each Credit Party shall be liable to the Lender and shall pay to
the Lender, on demand, any deficiency which may remain after such sale, disposition, collection or
liquidation of the Collateral. The Lender shall remit to such Credit Parties or other Person
entitled thereto any surplus remaining after this Agreement has been terminated in accordance with
Section 25(f) hereof.
(e) If an Event of Default under the Term Loan Agreement has occurred and is continuing: (i)
the Lender shall have in addition to all other rights of the Lender, the rights and remedies of a
secured party under the Loan Documents and the UCC; and (ii) the Lender may sell and deliver any
Collateral at public or private sales, for cash, upon credit or otherwise, at such prices and upon
such terms as the Lender deems advisable, in its sole discretion, and may, if the Lender deems it
reasonable, postpone or adjourn any sale of the Collateral by an announcement at the time and place
of sale or of such postponed or adjourned sale without giving a new notice of sale. Without in any
way requiring notice to be given in the following manner, each Credit Party agrees that any notice
by the Lender of sale, disposition or other intended action hereunder or in connection herewith,
whether required by the UCC or otherwise, shall constitute reasonable notice to each Credit Party
if such notice is mailed by registered or certified mail, return receipt requested, postage
prepaid, or is delivered personally against receipt, at least ten (10) Business Days prior to such
action to the Borrower’s address specified in the Term Loan Agreement. If any Collateral is sold
on terms other than payment in full at the time of sale, no credit shall be given against the
Obligations until the Lender receives payment, and if the buyer defaults in payment, the Lender may
resell the Collateral without further notice to the Borrower or any Credit Party. The Lender is
hereby granted a license or other right to use, without charge, each Credit Party’s labels,
patents, copyrights, name, trade secrets, trade names, trademarks, and advertising matter, or any
similar property, in completing production of, advertising or selling any Collateral, and each
Credit Party’s rights under all licenses and all franchise agreements shall inure to the Lender’s
benefit for such purpose. The proceeds of sale shall be applied first to all expenses of sale,
including attorneys’ fees, and then to the Obligations. The Lender will return any excess to the
Borrower and the Borrower and each other Credit Party shall remain liable for any deficiency.
23. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY.
For the purpose of enabling the Lender to exercise rights and remedies under Section
22 hereof (including, without limiting the terms of Section 22 hereof, in order to take
possession of, hold, preserve, process, assemble, prepare for sale, market for sale, sell or
otherwise dispose of Collateral), solely for such purpose and solely during such time as the Lender
shall be lawfully entitled to exercise such rights and remedies, each Credit Party hereby grants to
the Lender, a nonexclusive license (which shall be irrevocable for so long as any Obligations
remain outstanding and which shall be exercisable without payment of royalty or other compensation
to the Credit Parties) to use, license or sublicense any Intellectual Property now owned or
hereafter acquired by a Credit Party (other than any Intellectual Property in connection with the
Trademark License Agreement dated June 26, 1998 between the Borrower and The Black and Xxxxxx
Corporation (other than as set forth in the Trademark License Agreement)), and wherever the same
may be located, and including in such license access to all media in which any of the licensed
items may be recorded or stored and to all computer software and programs used for the compilation
or printout thereof.
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24. LIMITATION ON LENDER’S DUTY IN RESPECT OF COLLATERAL.
The Lender shall use reasonable care with respect to the Collateral in its possession or under
its control. The Lender shall not have any other duty as to any Collateral in its possession or
control or in the possession or control of any agent or nominee of the Lender, or any income
thereon or as to the preservation of rights against prior parties or any other rights pertaining
thereto.
25. MISCELLANEOUS.
(a) Reinstatement. This Security Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against the Borrower or any other
Credit Party for liquidation or reorganization, should the Borrower or any other Credit Party
become insolvent or make an assignment for the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of any Credit Party’s assets, and
shall continue to be effective or be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations,
whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced
only by such amount paid and not so rescinded, reduced, restored or returned.
(b) Notices. Except as otherwise provided herein, whenever it is provided herein that
any notice, demand, request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by any other party, or whenever any of the parties
desires to give and serve upon any other party any communication with respect to this Security
Agreement, each such notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be given in the manner, and deemed received, as provided for in the
Term Loan Agreement and in Section 22(e) hereof.
(c) Severability. Whenever possible, each provision of this Security Agreement shall
be interpreted in a manner as to be effective and valid under applicable law, but if any provision
of this Security Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Security Agreement. This Security
Agreement is to be read, construed and applied together with the Term Loan Agreement and the other
Loan Documents which, taken together, set forth the complete understanding and agreement of the
Lender and the Credit Parties with respect to the matters referred to herein and therein.
(d) No Waiver; Cumulative Remedies. The Lender shall not by any act, delay, omission
or otherwise be deemed to have waived any of its rights or remedies hereunder, and no waiver shall
be valid unless in writing, signed by the Lender and then only to the extent therein set forth. A
waiver by the Lender of any right or remedy hereunder on any one occasion shall not be construed as
a bar to any right or remedy which the Lender would otherwise have had on any future occasion. No
failure to exercise nor any delay in exercising on the part of the Lender, any right, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law. None of the terms or provisions of this Security Agreement may be
waived, altered, modified or amended except by an instrument in writing, duly executed by the
Lender and the Credit Parties.
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(e) Limitation by Law. All rights, remedies and powers provided in this Security
Agreement may be exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions of this Security Agreement are intended to be
subject to all applicable mandatory provisions of law that may be controlling in accordance with
Section 25(c) above.
(f) Termination of this Security Agreement. Subject to Section 25(a) hereof, this
Security Agreement shall terminate upon the payment in full of all Obligations (other than
indemnification Obligations as to which no claim has been asserted and to the extent necessary to
satisfy the requirements of Section 22(d) hereof).
(g) Successors and Assigns. This Security Agreement and all obligations of the Credit
Parties hereunder shall be binding upon the successors and assigns of the Credit Parties (including
any debtor-in-possession on behalf of a Credit Party) and shall, together with the rights and
remedies of the Lender, hereunder, inure to the benefit of the Lender, all future holders of any
instrument evidencing any of the Obligations and their respective successors and assigns. No sales
of participations, other sales, assignments, transfers or other dispositions of any agreement
governing or instrument evidencing the Obligations or any portion thereof or interest therein shall
in any manner affect the Lien granted to the Lender, hereunder. No Credit Party may assign, sell,
hypothecate or otherwise transfer any interest in or obligation under this Security Agreement.
(h) Counterparts. This Security Agreement may be authenticated in any number of
separate counterparts, including facsimile copies, each of which shall collectively and separately
constitute one and the same agreement. This Security Agreement may be authenticated by manual
signature, facsimile or, if approved in writing by the Lender, electronic means, all of which shall
be equally valid.
(i) Governing Law. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS
SECURITY AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH OF THE
CREDIT PARTIES HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF
NEW YORK, STATE OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN THE CREDIT PARTIES, AND THE LENDER PERTAINING TO THIS SECURITY AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT THE LENDER AND THE CREDIT PARTIES
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF
THE COUNTY OF NEW YORK, STATE OF NEW YORK, AND, PROVIDED, FURTHER, NOTHING IN THIS
SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE LENDER FROM BRINGING SUIT OR TAKING
OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR
THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE LENDER. EACH OF THE
CREDIT PARTIES EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND EACH OF THE CREDIT PARTIES HEREBY WAIVES ANY OBJECTION WHICH IT
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND
HEREBY CONSENTS TO THE
16
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH OF
THE CREDIT PARTIES HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE CREDIT PARTIES AT THE ADDRESS
SET FORTH IN SECTION 9.1 OF THE TERM LOAN AGREEMENT AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID.
(j) Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX
FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT
PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION
RULES), THE PARTIES DESIRE THAT DISPUTES ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, AMONG THE LENDER, AND THE CREDIT PARTIES ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS SECURITY AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.
(k) Section Titles. The Section titles contained in this Security Agreement are and
shall be without substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.
(l) No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Security Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Security Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Security Agreement.
(m) Advice of Counsel. Each of the parties represents to each other party hereto that
it has discussed this Security Agreement and, specifically, the provisions of Section 25(i) and
Section 25(j), with its counsel.
(n) Benefit of Lender. All Liens granted or contemplated hereby shall be for the
benefit of the Lender, and all proceeds or payments realized from Collateral in accordance herewith
shall be applied to the Obligations in accordance with the terms of the Term Loan Agreement.
(o) Intercreditor Agreement. This Security Agreement, all rights of the Lender
hereunder and all obligations of the Credit Parties hereunder are subject to the rights of the
Revolving Credit Agent and the obligations of the Credit Parties under the Revolving Credit
Agreement and the “Loan Documents” as defined therein, all as more fully set forth in the
Intercreditor Agreement, and in the event of a conflict between the terms of this Agreement and the
Intercreditor Agreement, the terms of the Intercreditor Agreement shall control.
[Signatures will commence on following page]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set forth above.
BORROWER: APPLICA INCORPORATED, a Florida corporation |
||||
By: | /s/ Xxxxx Xxxxxxxxx | |||
Name: | Xxxxx Xxxxxxxxx | |||
Title: | Senior Vice President and Chief Financial Officer | |||
GUARANTORS: APPLICA CONSUMER PRODUCTS, INC., a Florida corporation |
||||
By: | /s/ Xxxxx Xxxxxxxxx | |||
Name: | Xxxxx Xxxxxxxxx | |||
Title: | Senior Vice President and Chief Financial Officer | |||
WD DELAWARE, INC., a Delaware corporation |
||||
By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
HP INTELLECTUAL CORP., a Delaware corporation |
||||
By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Secretary | |||
WINDMERE HOLDINGS CORPORATION, a Delaware corporation |
||||
By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Secretary |
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HP DELAWARE, INC., a Delaware corporation |
||||
By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
HPG LLC, a Delaware limited liability company |
||||
By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
APPLICA AMERICAS, INC., a Delaware corporation |
||||
By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
APPLICA MEXICO HOLDINGS, INC., a Delaware corporation |
||||
By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary |
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LENDER: MAST CREDIT OPPORTUNITIES I (MASTER), LTD. |
||||
By: | /s/ Xxxxx Xxxxxxx | |||
Name: | Xxxxx Xxxxxxx | |||
Title: | Director | |||
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