EXHIBIT 10(s)
SECURITY AGREEMENT
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This SECURITY AGREEMENT, dated October 31, 1995, is made by Guest
Packaging, Inc., a New Jersey corporation (the "Pledgor"), in favor of PNC
Bank, National Association (the "Secured Party") as agent for the benefit of
the Secured Party and the Lenders party to the Revolving Credit and Term Loan
Agreement (as the same may be amended, modified or supplemented from time to
time, the "Credit Agreement") dated October 31, 1995 among Guest Supply, Inc.,
Guest Packaging, Inc. and Xxxxxxxxxxxx-Xxxx Co., as Borrower, PNC Bank,
National Association and First Fidelity Bank, N.A., as Lenders, and the Secured
Party, as Agent.
W I T N E S S E T H:
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WHEREAS, all financial accommodations to be made to Guest Supply,
Inc., Guest Packaging, Inc. and Xxxxxxxxxxxx-Xxxx Co., as joint and several
obligors, (collectively, the "Borrower") by the Lenders pursuant to the terms
and conditions of the Credit Agreement are to be secured by, among other
collateral, the assignment, grant and pledge by the Pledgor to the Secured
Party of a continuing security interest in all of the (i) Accounts, (ii)
Contracts and contract rights, (iii) Chattel Paper, (iv) Documents, (v)
Equipment, (vi) General Intangibles, (vii) Instruments, (viii) Inventory and
(ix) Fixtures of the Pledgor, whether now owned or hereafter acquired; and
WHEREAS, one of the conditions precedent to the obligation of the
Lenders to extend the credit facilities described in the Credit Agreement is
that the Pledgor execute and deliver this Security Agreement to the Secured
Party for the benefit of the Secured Party and the Lenders.
NOW, THEREFORE, in consideration of the premises, to induce the
Lenders to extend the credit facilities described in the Credit Agreement and
for other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the Pledgor hereby agrees with the Secured Party, as
follows:
1. Defined Terms. (a) Unless otherwise defined herein,
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terms which are defined in the Credit Agreement and used herein are used herein
as defined in the Credit Agreement.
(b) The following terms which are defined in the UCC (as
such term is defined below) on the date hereof
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are used herein as so defined: Accounts, Account Debtor, Chattel Paper,
Documents, Equipment, Fixtures, General Intangibles, Goods, Instruments,
Inventory, Proceeds and Products.
(c) The following terms shall have the following meanings:
(i) "Collateral" shall have the meaning assigned
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to it in Section 2 of this Security Agreement;
(ii) "Contracts" means all contracts to which the
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Pledgor is now or hereafter becomes a party, including, in each case, without
limitation, (a) all rights of the Pledgor to receive moneys due and to become
due to it thereunder or in connection therewith, (b) all rights of the Pledgor
to damages arising out of, or for, breach or default in respect thereof, (c)
all rights of the Pledgor to terminate the contracts, to perform thereunder and
to compel performance and to otherwise exercise all remedies thereunder, and
(d) any other rights or benefits arising under any other contract entered into
by the Pledgor; except, in the case of clauses (b), (c) and (d) only to the
extent that, in the case of any contract, the Pledgor's right, title and
interest therein is assignable without consent, or with consent and the consent
of all necessary parties to such contract has been obtained);
(iii) "Material Contract" means any Contract which
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represents 3% or more of the amount of sales of the Borrower:
(iv) "Security Agreement" means this Security
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Agreement, as amended, supplemented or otherwise modified from time to time;
and
(v) "Obligations" means all indebtedness,
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liabilities and obligations (whether denominated as principal, fees, interest
or otherwise including amounts that, but for the initiation of any proceeding
under any insolvency or bankruptcy law, would become due) of (i) any Person
constituting the Borrower to the Secured Party or any Lender, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with the
Credit Agreement or any other Loan Document, and (ii) the Pledgor to the
Secured Party or any Lender whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with this Security Agreement;
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(vi) "UCC" means the Uniform Commercial Code as from
time to time in effect in the State of New Jersey; provided, that if by reason
of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of any Lien on any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than New Jersey, "UCC"
means the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or the effect of
perfection or non-perfection. References to sections of the UCC shall be
construed as necessary to refer to any successor sections of the UCC.
2. Grant of Security Interest. As collateral security for
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the prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of the Obligations, the Pledgor hereby
mortgages, pledges, assigns, hypothecates and grants to the Secured Party, for
the benefit of the Secured Party and the Lenders, a continuing security
interest in all of the following property now owned or at any time hereafter
acquired by the Pledgor or in which the Pledgor now has or at any time in the
future may acquire any right, title or interest (collectively, the
!'Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all General Intangibles, including, without limitation,
all trade secrets, tradenames, copyrights, copyright
applications, patent applications, patents, trademarks,
trademark registrations and applications therefor;
(vi) all Instruments;
(vii) all Equipment;
(viii) all Inventory;
(ix) to the extent not otherwise included in clause (vii) of
this Section 2, all other machinery, apparatus,
equipment, fittings, Fixtures, furniture and
furnishings now or hereafter located
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upon the real property described in Schedule C hereto,
or any part thereof, and used or usable in connection
with any future occupancy or use of such property;
(x) any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by
certificates of deposit, whether matured or unmatured
but not including trust accounts) and any other
Indebtedness at any time held or owing by the Secured
Party or any Lender to or for the credit or the account
of the Pledgor;
(xi) any and all claims or payments made under any insurance
policy;
(xii) all interest of the Pledgor in any goods the sale or
lease of which shall have given or shall give rise to,
and in all guaranties and other property securing the
payment of or performance under, any Accounts,
Contracts, General Intangibles or any Chattel Paper or
Instruments referred to above;
(xiii) any and all personal property of any Person of any kind
or description subject to a separate mortgage, pledge
or security interest in favor of the Pledgor or in
which the Pledgor now or hereafter has or acquires a
security interest securing any indebtedness, pursuant
to any written agreement or instrument other than this
Security Agreement;
(xiv) all replacements, substitutions, additions or
accessions to or for any of the foregoing;
(xv) to the extent related to the property described above,
all books, correspondence, credit files, records,
invoices and other papers and documents, including,
without limitation, to the extent so related, all
tapes, cards, computer runs, computer programs and
electronic, magnetic or other archival
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systems or papers and documents in the possession or
control of the Pledgor or any computer or service
bureau from time to time acting for the Pledgor;
(xvi) all property or interests in property of the Pledgor
which now may be owned or hereafter may come into the
possession, custody or control of the Secured Party or
any Lender, or any agent or affiliate of the Secured
Party or any Lender (whether for safekeeping, deposit,
custody, pledge, transmission, collection or
otherwise), including, without limitation, all rights
and interests of the Pledgor in respect of any and all
(a) notes, drafts, letters of credit, stocks, bonds,
and debt and equity securities, whether or not
certificated, and warrants, options, puts, calls and
other rights to acquire or otherwise relating to the
same, (b) cash, and (c) proceeds of loans, advances and
other financial accommodations, including, without
limitation, loans, advances and other financial
accommodations made or extended under the Loan
Documents; and
(xvii) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing.
3. Rights of Secured Party: Limitations on Secured Party's
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Obligations.
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(a) Pledgor Remains Liable under Accounts and
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Contracts. Anything herein to the contrary notwithstanding, the Pledgor
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shall remain liable under each of the Accounts and Contracts to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise to
each such Account and in accordance with and pursuant to the terms and
provisions of each such Contract. Neither the Secured Party nor any Lender
shall have any obligation or liability under any Account (or any agreement
giving rise thereto) or Contract by reason of or arising out of this Security
Agreement or the receipt by the Secured Party or any Lender of any payment
relating to such Account or Contract pursuant hereto, nor shall the Secured
Party or any Lender be obligated in any manner to perform
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any of the obligations of the Pledgor under or pursuant to any Account (or any
agreement giving rise thereto) or under or pursuant to any Contract, to make
any payment, to make any inquiry as to the nature or the sufficiency of any
payment received by any of them or as to the sufficiency of any performance by
any party under any Account (or any agreement giving rise thereto) or under any
Contract, 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 them or to which they may be entitled at any time or times.
(b) Notice to Account Debtors and Contracting
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Parties. After the occurrence and during the continuance of an Event of
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Default, upon the request of the Secured Party at any time, the Pledgor shall
notify Account debtors on the Accounts and the parties to the Contracts that
the Accounts and the Contracts have been assigned to the Secured Party and that
payments in respect thereof shall be made directly to the Secured Party. After
the occurrence and during the continuance of an Event of Default, the Secured
Party may, at any time in its own name or in the names of others communicate
with Account debtors on the Accounts and the parties to the Contracts to verify
with them to its satisfaction the existence, amount and terms of any Accounts
or Contracts. The costs relating to the foregoing matters, including
reasonable attorneys' fees and out of pocket expenses shall be borne solely by
the Pledgor whether incurred by the Secured Party or the Pledgor.
(c) Analysis of Accounts. Upon reasonable notice to
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the Pledgor, the Secured Party shall have the right to make test verifications
of the Accounts in any manner and through any medium that it reasonably
considers advisable, and the Pledgor shall furnish all such assistance and
information as the Secured Party may require in connection therewith; provided,
however, that, prior to the occurrence and continuance of an Event of Default,
Secured Party shall obtain Pledgor's written consent (which shall not be
unreasonably withheld or delayed) prior to communicating with Account Debtors.
At any time and from time to time, upon the Secured Party's request and at the
expense of the Pledgor, the Pledgor shall furnish to the Secured Party reports
showing reconciliations, aging and test verifications of, and trial balances
for. the Accounts.
4. Representations and Warranties. The Pledgor hereby
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represents and warrants that:
(a) Title: No Other Liens. The Pledgor has good and
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marketable title to the Collateral, subject only to
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Liens permitted by the Credit Agreement (hereinafter, the "Permitted
Encumbrances"). Other than with respect to Permitted Encumbrances, no security
agreement, financing statement or other public notice with respect to all or
any part of the Collateral is on file or of record in any public office except
such as may have been filed pursuant to the Credit Agreement or as to which
UCC-3 termination statements have been received and filed or which have expired
and not been renewed.
(b) Perfected First Priority Liens. When appropriate
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financing statements have been filed by the Secured Party in the jurisdictions
listed on Schedule A hereto against the Pledgor, the Liens granted pursuant to
this Security Agreement will constitute perfected Liens (to the extent such
Liens can be perfected by filing) on the Collateral in favor of the Secured
Party, which are prior to all other Liens on the Collateral and in existence on
the date hereof other than Permitted Encumbrances, and which are enforceable as
such against all creditors of the Pledgor.
(c) Accounts. The amount represented by the Pledgor to
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the Secured Party from time to time as owing by each Account Debtor or by all
Account Debtors in respect of the Accounts will at such time be the correct
amount actually owing by such Account Debtor or Debtors thereunder. The
place(s) where the Pledgor keeps its books and records concerning the Accounts
is as set forth on Schedule B hereto.
(d) Contracts. No consent of any Person (other than
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the Pledgor), including, without limitation, any Governmental Authority, to any
Contract is required, or purports to be required, in connection with the
execution, delivery and performance of this Security Agreement. To the best
knowledge of the Pledgor each Contract is in full force and effect and
constitutes a valid and legally enforceable obligation of the parties thereto,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting that enforcement of
creditor's rights generally. No consent or authorization of, filing with or
other act by or in respect of any Governmental Authority is required in
connection with the execution, delivery, performance, validity or
enforceability of any of the Contracts by any party thereto other than those
which have been duly obtained, made or performed, are in full force and effect
and do not subject the scope of any such Contract to any adverse limitation,
either specific or general in nature. Neither the Pledgor nor (to the best of
the Pledgor's knowledge) any other party to any Contract is in default or is
likely to become in default in the
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performance or observance of any of the terms thereof. The Pledgor has fully
performed all its obligations under each Contract required to be performed as
of the date hereof. To the best knowledge of the Pledgor the right, title and
interest of the Pledgor in, to and under each Contract are not subject to any
defense, offset, counterclaim or claim which would materially adversely affect
the value of such Contract as Collateral, nor have any of the foregoing been
asserted or alleged against the Pledgor as to any Contract. The Pledgor has
delivered to the Secured Party a complete and correct copy of each Material
Contract, including all amendments, supplements and other modifications
thereto.
(e) Inventory and Equipment. The Inventory and
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Equipment is kept, from time to time, at the locations listed on Schedule C
hereto.
(f) Chief Executive Office. The Pledgor's chief
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executive office is as set forth on Schedule B annexed hereto.
(g) Other Places of Business. The Pledgor's other
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places of business are as set forth on Schedule B annexed hereto, and if no
other places of business are set forth on Schedule B then Pledgor has no other
place of business other than its chief executive office as set forth in Section
4(f) above.
(h) Trade Names. Certain Accounts may be and/or
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certain of the Pledgor's invoices may be, from time to time, rendered to
customers under the trade names listed on Schedule B (which together with any
new trade names used after the date hereof are referred to collectively, as the
"Trade Names" and each individually, as a "Trade Name"). As to such Trade
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Names and the related Accounts, the Pledgor hereby warrants and agrees that:
(i) each Trade Name is a trade name and style (and
not the name of an independent corporation or other legal entity) by which the
Pledgor may identify and sell certain of its goods or services and conduct a
portion of its business and Pledgor has filed or made all public or other
notices in any jurisdiction required to lawfully operate under such Trade
Names;
(ii) all Accounts, Chattel Paper, Instruments and
Proceeds thereof and returned merchandise which arise from the sale of goods
invoiced under the Trade Names are and shall be (x) owned solely by the Pledgor
and (y) subject to the security interest and other terms of this Security
Agreement;
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(iii) new Trade Names may only be used by the Pledgor
after the Secured Party is given fifteen (15) days prior written notice of the
use of any such new Trade Name, which notice shall set forth the name of such
new Trade Name; and
(iv) the Pledgor does not use any Trade Name other
than the Trade Names listed on Schedule B hereto.
(i) Rolling Stock. The Pledgor does not own any
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railroad cars, locomotives or other rolling stock used or intended for use in
interstate commerce.
(j) Patents Trademarks. Copyrights. Except as set
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forth on Schedule D, the Pledgor does not own, license or have rights in or to
any trademark, patent or copyright and has not filed and is not in the process
of filing any application with any Governmental Authority to obtain any of the
foregoing. Except as set forth on Schedule D, the Pledgor does not need or
require a license or right to use any patent, copyright, trademark or service
xxxx to conduct its business.
5. Covenants. The Pledgor covenants and agrees that, from
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and after the date of this Security Agreement until the Obligations are paid in
full:
(a) Further Documentation; Pledge of Instruments and
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Chattel Paper. At any time and from time to time, upon the written request
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of the Secured Party and at the sole expense of the Pledgor, the Pledgor will
promptly and duly execute and deliver such further instruments and documents
and take such further action as the Secured Party may reasonably request for
the purpose of obtaining or preserving the full benefits of this Security
Agreement and the rights and powers herein granted, including, without
limitation, the filing of documents with the Office of Patents and Trademarks
and the filing of any financing or continuation statements under the UCC in
effect in any jurisdiction with respect to the Liens created hereby. The
Pledgor also hereby authorizes the Secured Party, or any agent acting for the
benefit and on behalf of the Secured Party to file any such financing or
continuation statement without the signature of the Pledgor to the extent
permitted by applicable law. A carbon, photographic or other reproduction of
this Security Agreement shall be sufficient as a financing statement for filing
in any jurisdiction. If any amount payable under or in connection with any of
the Collateral shall be or become evidenced by any Instrument or Chattel Paper,
such Instrument or Chattel Paper shall, after the occurrence and during the
continuance of an Event of
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Default, be immediately delivered to the Secured Party, duly endorsed in a
manner satisfactory to the Secured Party to be held as Collateral pursuant to
this Security Agreement.
(b) Indemnification. The Pledgor agrees to pay, and to
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save the Secured Party harmless from, any and all liabilities, costs and
expenses (including without limitation, reasonable legal fees and expenses) (i)
with respect to, or resulting from, any delay in paying, any and all excise,
sales or other taxes which may be payable or determined to be payable with
respect to any of the Collateral, (ii) with respect to, or resulting from, any
delay in complying with any Requirement of Law applicable to any of the
Collateral, (iii) with respect to fees, taxes or other costs incurred with
respect to recording UCC financing statements or other public recordings or
notices of security interests, or (iv) in connection with any of the
transactions contemplated by this Security Agreement or the enforcement of the
Secured Party's rights hereunder, except those liabilities, costs and expenses
arising out of the Secured Party's gross negligence or willful misconduct. In
any suit, proceeding or action brought by the Secured Party under any Account
for any sum owing thereunder or to enforce any provisions of any Account or
Contract the Pledgor will save, indemnify and keep the Secured Party harmless
from and against all expense, loss or damage suffered by the Secured Party in
such action commenced in connection with the enforcement of any provision of
any Account or Contract except for expenses, loss or damage arising out of the
gross negligence or willful misconduct of the Secured Party.
(c) Maintenance of Records. The Pledgor will keep and
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maintain at its own cost and expense, complete records of the Collateral,
including, without limitation, a record of all payments received and all
credits granted with respect to the Collateral. The Pledgor will xxxx its
books and records pertaining to the Collateral to evidence this Security
Agreement and the security interests granted hereby. For the Secured Party's
further security, the Secured Party shall have a security interest in all of
the Pledgor's books and records pertaining to the Collateral. Upon reasonable
notice from Secured Party to Pledgor prior to an Event of Default and upon
demand thereafter, the Pledgor shall make available all such books and records
to the Secured Party or to its representatives during normal business hours at
the request of the Secured Party.
(d) Right of Inspection. The Secured Party and the
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Lenders shall at all times have full and free access during normal business
hours, upon reasonable prior notice, to all the books, correspondence and
records of the Pledgor
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and the Secured Party or its representatives may examine the same and make
photocopies thereof, and the Pledgor agrees to render to the Secured Party such
clerical and other assistance as may be reasonably requested with regard
thereto. The Secured Party and the Lenders shall also have the right, during
normal business hours, to enter into and upon any premises where any of the
Inventory is located for the purpose of inspecting the same, observing its use
or otherwise protecting its interests therein.
(e) Compliance with Laws. etc. The Pledgor will comply
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with all Requirements of Law applicable to the Collateral or any part thereof.
(f) Compliance with Terms of Contracts etc. The
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Pledgor will perform and comply in all material respects with all its
obligations under any agreements, documents and other instruments relating to
the Collateral except where the failure to so perform will not have a Material
Adverse Effect.
(g) Payment of Obligations. The Pledgor will pay, as
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the same become due, all obligations (including without limitation, any and all
lease obligations and warehouse charges), taxes and governmental fees, charges
or levies imposed upon the Collateral or in respect of its income or profits
therefrom, as well as all claims of any kind (including, without limitation,
claims for labor, materials and supplies) against or with respect to the
Collateral; provided, that it may protest the payment of, and withhold payment
during such protest of, any such obligations, taxes, fees, charges or levies or
claims if it is acting in good faith and reserves in conformity with GAAP with
respect thereto have been provided on its books unless such protest violates
Section 5(h) below.
(h) Limitation on Liens on Collateral. The Pledgor
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will not create, incur or permit to exist, will defend the Collateral against,
and will take such other action as is necessary to remove, any Lien or claim on
or to the Collateral, other than the Liens created hereby and Permitted
Encumbrances and will defend the right, title and interest of the Secured Party
in and to any of the Collateral against the claims and demands of all Persons
whomsoever except Persons claiming under this Security Agreement.
(i) Limitations on Dispositions of Collateral. Except
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for disposal of obsolete items, the Pledgor will not sell, transfer, lease or
otherwise dispose
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of any Collateral, except as permitted by the Credit Agreement.
(j) Limitations on Modifications Waivers and
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Extensions of Contracts and Agreements Giving Rise to Accounts. The Pledgor
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will not (i) amend, modify, terminate or waive any provision of any Contract or
any agreement giving rise to an Account in any manner which could reasonably be
expected to materially adversely affect the value of such Contract or Account
as Collateral, (ii) fail to exercise promptly and diligently each and every
right which it may have under each Contract, or agreement giving rise to an
Account or (iii) fail to deliver to the Secured Party a copy of each material
demand, notice or document received by it relating in any way to any Material
Contract or any agreement constituting a Material Contract.
(k) Limitation on Discounts. Compromises and
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Extensions of Accounts and Contracts. Other than in the ordinary course of
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business as generally conducted by the Pledgor over a period of time, and in
any event, after the occurrence and during the continuance of an Event of
Default, the Pledgor will not grant any extension of the time of payment of any
of the Accounts or payments of any amounts due under any Contract, compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partially, any Person liable for the payment thereof, or allow any
credit or discount whatsoever thereon.
(l) Maintenance of Equipment. The Pledgor will
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maintain each item of Equipment in good operating condition, ordinary wear and
tear and immaterial impairments of value and damage by the elements excepted,
and will provide all maintenance, service and repairs necessary for such
purpose.
(m) Maintenance of Insurance. The Pledgor will
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maintain, with financially sound and reputable companies, insurance policies
(i) insuring the Inventory and Equipment against loss by fire, explosion,
theft, such other casualties as may be reasonably satisfactory to the Secured
Party and (ii) insuring the Pledgor and the Secured Party against liability for
personal injury and property damage relating to such Inventory and Equipment,
such policies to be in such form and amounts and having such coverage as may be
reasonably satisfactory to the Secured Party, with losses payable to the
Pledgor and the Secured Party, provided, that with the written consent of the
Secured Party all payments to be made to the Secured Party under such policies
may be used to repair or replace damaged or destroyed Inventory or
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Equipment. The Secured Party shall be provided all evidence and documents
necessary to demonstrate the use of such insurance proceeds. All such
insurance shall (i) provide that no cancellation, material reduction in amount
or material change in coverage thereof shall be effective until at least 15
days after receipt by the Secured Party of written notice thereof, (ii) name
the Secured Party as loss payee, (iii) provide that the Secured Party shall
have the right, but not the obligation, to pay premiums thereon, and (iv) be
reasonably satisfactory in all other respects to the Secured Party. Upon the
request of the Secured Party, the Pledgor shall deliver to the Secured Party a
report of a reputable insurance broker with respect to such insurance during
each calendar year and such supplemental reports with respect thereto as the
Secured Party may from time to time reasonably request.
(n) Further Identification of Collateral. The Pledgor
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will furnish to the Secured Party from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as the Secured Party may reasonably request, all
in reasonable detail.
(o) Notices. The Pledgor will advise the Secured Party
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promptly, in reasonable detail, by written notice (i) of any Lien (other than
Liens created or permitted hereby) on, or claim asserted against, any of the
Collateral and (ii) of the occurrence of any other event which could reasonably
be expected to have any material adverse effect on the aggregate value of the
Collateral or on the Liens created hereunder.
(p) Changes in Locations. Name. etc. The Pledgor will
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not (i) change the location of its chief executive office or other places of
business from that specified in Sections 4(f) and 4(g), respectively, or remove
its books and records from the location specified in Section 4(c), (ii) permit
any of the Inventory to be kept at a location other than that listed in
Schedule C hereto, or (iii) change its name, taxpayer identification number,
identity or corporate structure to such an extent that any financing statement
filed by the Secured Party, or any agent acting for the benefit and on behalf
of the Secured Party, in connection with this Security Agreement would become
misleading, unless it shall have given the Secured Party at least 30 days prior
written notice thereof.
(q) Limitation on Assignments. Pledgor will not,
-------------------------
without the consent of Secured Party, agree to any provision in any Contract or
other agreement constituting
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Collateral, which purports (or is so broad in scope so as) to limit Pledgor's
rights to pledge or assign the right to payment of monies due or to become due
thereunder.
6. Appointment as Attorney-in-Fact.
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(a) Powers. The Pledgor hereby irrevocably constitutes
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and appoints the Secured Party, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of the Pledgor and in the name of the Pledgor or in its own
name, from time to time in the Secured Party's discretion, for the purpose of
carrying out the terms of this Security Agreement, to execute UCC-1 Financing
Statements in the Pledgor's name as debtor and, upon the occurrence and during
the continuance of any Event of Default, to take any and all appropriate action
and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Security Agreement, and without
limiting the generality of the foregoing, the Pledgor hereby gives the Secured
Party the power and right (but not the obligation), on behalf of the Pledgor,
without notice to or assent by the Pledgor, to do the following:
(i) in the case of any Collateral, at any time when
any Event of Default shall have occurred and be continuing, in the name of the
Pledgor or its own name, or otherwise, to open mail addressed to the Pledgor,
to take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account, Instrument, General Intangible or Contract or contract right or with
respect to any other Collateral and to file any claim or to take any other
action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Secured Party for the purpose of collecting any and all such
moneys due under any such Account, Instrument, General Intangible or contract
right or with respect to any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral, to effect any repairs or any
insurance called for by the terms of this Security Agreement and to pay all or
any part of the premiums therefor and the costs thereof; and
(iii) upon the occurrence and during the continuance of
any Event of Default, (A) to direct any party liable for any payment under any
of the Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Secured Party; (B) to ask or
15
demand for, collect, receive payment of and receipt for, any and all moneys,
claims and other amounts due or to become due at any time in respect of or
arising out of any Collateral; (C) to sign and endorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in connection
with any of-the Collateral; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to enforce any other right in respect
of any Collateral; (E) to defend any suit, action or proceeding brought against
the Pledgor with respect to any Collateral; (F) to settle, compromise or adjust
any suit, action or proceeding described in clause (E) above and in connection
therewith, to give such discharges or releases as the Secured Party may deem
appropriate; and (G) generally, to sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Secured Party was the absolute owner thereof for
all purposes, and to do at the Secured Party's option and the Pledgor's
expense, at any time, or from time to time, all acts and things which the
Secured Party deems necessary to protect, preserve or realize upon the
Collateral and the Liens granted hereunder and to effect the intent of this
Security Agreement, all as fully and effectively as the Pledgor might do.
The Pledgor hereby ratifies all that said attorney 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.
(b) Other Powers. The Pledgor also authorizes the
------------
Secured Party, at any time and from time to time, to execute, in connection
with the sale provided for in Section 9 hereof, any endorsements, assignments
or other instruments of conveyance or transfer with respect to the Collateral.
(c) No DutY on Secured Party's Part. The powers
-------------------------------
conferred on the Secured Party hereunder are solely to protect its interests in
the Collateral and shall not impose any duty upon the Secured Party to exercise
any such powers. The Secured Party shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers. None of the
Secured Party's officers, directors, employees or agents shall be responsible
to the Pledgor for any act or failure to act hereunder, except for their own
gross negligence or willful misconduct.
16
(d) Trademarks and Licenses. The Pledgor further
-----------------------
grants to the Secured Party an irrevocable, non-exclusive license at no charge
to use the trademarks, patents, copyrights and licenses used in connection with
the sale of goods including, without limitation, those listed on Schedule D
annexed hereto associated with the Collateral in connection with any
foreclosure or liquidation together with the right to grant a nonexclusive
sublicense without charge to any buyer of such Collateral for the purpose of
resale. All such licenses and rights to sublicense include all computer
programs, and other Collateral used in connection with such trademarks.
7. Performance by Secured Party of Pledgor's
-----------------------------------------
Obligations. If the Pledgor fails to perform or comply with any of its
-----------
agreements contained herein and the Secured Party shall perform or comply, or
otherwise cause performance or compliance, with such agreement, the expenses of
the Secured Party incurred in connection with such performance or compliance,
together with interest thereon at a rate per annum equal to the highest
interest rate prescribed in the Credit Agreement, shall be payable by the
Pledgor to the Secured Party on demand and shall constitute Obligations secured
hereby.
8. Proceeds. It is agreed that if an Event of Default shall
--------
occur and be continuing (a) all proceeds of Collateral received by the Pledgor
consisting of cash, checks and cash equivalents shall be held by the Pledgor in
trust for the Secured Party segregated from other funds of the Pledgor, and
shall, forthwith upon receipt by the Pledgor, be turned over to the Secured
Party in the exact form received by the Pledgor (duly endorsed by the Pledgor
to the Secured Party, if required), and (b) any and all such proceeds of
Collateral received by the Secured Party (whether from the Pledgor or
otherwise) may, in the sole discretion of the Secured Party, be held by the
Secured Party as collateral security for, and/or then or at any time thereafter
may be applied by the Secured Party against, the Obligations then due and
payable, such application to be in such order as the Secured Party shall elect.
Any balance of such proceeds remaining after the Obligations shall have been
paid in full shall be paid over to the Pledgor or to whomsoever may be lawfully
entitled to receive the same.
9. Remedies. If an Event of Default shall occur and be
--------
continuing, the Secured Party may exercise, in addition to all other rights and
remedies granted to the Secured Party in this Security Agreement and in any
other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party
17
under the UCC or any other applicable laws. Without limiting the generality of
the foregoing, the Secured Party, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law) to or upon the Pledgor or any other Person (all and
each of which demands, presentments, protests, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do
any of the foregoing) in one or more parcels at public or private sale or
sales, at any exchange, broker's board or office of the Secured Party or
elsewhere upon such terms and conditions as they may deem advisable and at such
prices as they may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Secured Party 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 the
Collateral so sold. The Pledgor further agrees, at the Secured Party's
request, to assemble the Collateral and make it available to the Secured Party
at places which the Secured Party shall reasonably select, whether at the
Pledgor's premises or elsewhere. The Secured Party shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Secured Party hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the Obligations,
in such order as the Secured Party may elect, and only after such application
and after the payment to the Secured Party of any other amount required by any
provision of law, including, without limitation, any provision of the UCC, need
the Secured Party account for the surplus, if any, to the Pledgor. To the
extent permitted by applicable law, the Pledgor waives all claims, damages and
demands it may acquire against the Secured Party arising out of the exercise by
the Secured Party of any of its rights hereunder except any arising out of its
gross negligence or willful misconduct. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice . shall
be deemed reasonable and proper if given at least 10 days before such sale or
other disposition. The Pledgor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay the Obligations and the reasonable
18
fees and disbursements of any attorneys employed by the Secured Party to
collect such deficiency.
10. Limitation on Duties Regarding Preservation of
----------------------------------------------
Collateral. The Secured Party's sole duty with respect to the custody,
----------
safekeeping and physical preservation of the Collateral in its possession,
under the UCC or otherwise, shall be to deal with it in the same manner as the
Secured Party deals with similar property for its own account. Neither the
Secured Party nor any of its directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of the Pledgor or
otherwise.
11. Powers CouPled with an Interest. All authorizations and
-------------------------------
agencies herein contained with respect to the Collateral are coupled with an
interest and are irrevocable.
12. Severability. Any provision of this Security Agreement
------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
13. Section Headings. The section headings used in this
----------------
Security Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interPretation
hereof.
14. No Waiver: Cumulative Remedies. The Secured Party shall
------------------------------
not by any act (except by a written instrument pursuant to Section 15 hereof),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Event of Default or in any breach
of any of the terms and conditions hereof. No failure to exercise, nor any
delay in exercising, on the part of the Secured Party, of any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Secured Party of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
the Secured Party would otherwise have on any future occasion. The rights and
remedies herein provided
19
are cumulative, may be exercised singly or concurrently and are not exclusive
of any rights or remedies provided by law.
15. Waivers and Amendments: Successors and Assigns; Governing
----------------------------------------------------------
Law. (a) None of the terms or provisions of this Security Agreement may be
---
waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Pledgor and the Secured Party.
(b) This Security Agreement shall be binding upon the
successors and assigns of the Pledgor and shall inure to the benefit of the
Secured Party, the Lenders and their respective successors and assigns. This
Security Agreement shall be governed by, and be construed and interpreted in
accordance with, the laws of the State of New Jersey (without regard to
conflicts of law principles thereof), except to the extent that the validity,
perfection or enforcement of the security interests hereunder, or remedies
hereunder, in respect of any particular Collateral located outside the
boundaries of the State of New Jersey are governed by the laws of a
jurisdiction other than the State of New Jersey.
16. Notices. Notices hereunder may be given as provided in
-------
the Credit Agreement and the Pledgor agrees to be bound by the notice
provisions of the Credit Agreement.
17. Jurisdiction. The Pledgor hereby irrevocably submits to
------------
the jurisdiction of any court of the State of New Jersey or Federal court
sitting in the State of New Jersey in any action or proceeding arising out of
or relating to this Agreement and the Pledgor hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such court of the State of New Jersey, or to the extent permitted by law, in
such Federal court. The Pledgor hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The Pledgor also irrevocably
consents to the service of any and all process in any such action or proceeding
arising out of or in connection with this Agreement by the mailing of copies of
such process to the Pledgor at the address and in the manner specified in
Section 16 hereof. The Pledgor agrees that a final and non-appealable judgment
(or a judgment whose time to appeal has expired) in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. THE PLEDGOR AND
SECURED PARTY HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING (INCLUDING
ANY COUNTERCLAIM) IN ANY
20
COURT ARISING ON, OUT OF, OR IN ANY WAY RELATING TO THIS AGREEMENT OR ANY
AMENDMENT OR SUPPLEMENT HERETO OR THERETO OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
18. Pledge and Assignment Absolute. All rights of the
------------------------------
Secured Party, the pledge and assignment hereunder and all obligations of the
Pledgor hereunder, shall be absolute and unconditional, irrespective of:
(i) any lack of validity or enforceability of the Credit
Agreement, any other document or any other agreement or instrument
relating thereto;
(ii) 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
Credit Agreement;
(iii) any exchange, release or non-perfection of any other
Collateral, or any release or amendment or waiver of or consent to
departure from this Agreement or any other Collateral Document; or
(iv) any other circumstance that might otherwise constitute
a defense available to, or a discharge of, the Pledgor.
19. Indemnity and Expenses. (a) The Pledgor agrees to
----------------------
indemnify the Secured Party from and against any and all claims, losses and
liabilities growing out of or resulting from this Agreement (including, without
limitation, enforcement of this Agreement), except claims, losses or
liabilities resulting from the Secured Party's gross negligence or willful
misconduct.
(b) The Pledgor will upon demand pay to the Secured Party
the amount of any and all reasonable expenses, including, without limitation,
the reasonable fees and disbursements of its counsel and of any experts and
agents, which the Secured Party may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, or use of, or
the sale of, collection from, or other realization upon, any of the Pledged
Collateral, (iii) the exercise or enforcement of any of the rights of the
Secured Party hereunder, or (iv) the failure by the Pledgor to perform or
observe any of the provisions hereof.
21
IN WITNESS WHEREOF, the Pledgor has caused this Security Agreement
to be duly executed and delivered as of the date first above written.
GUEST PACKAGING, INC.
[corporate seal]
By:___________________________
Name:
Title:
CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF NEW JERSEY )
: ss.:
COUNTY OF MIDDLESEX )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 31st day of October 1995, personally appeared Xxxx Xxxxx to
me known personally, and who, being by me duly sworn, deposes and says that he
is the Assistant Secretary of Guest Packaging, Inc. and that the seal affixed
to the foregoing instrument is the corporate seal of said corporation, and that
said instrument was signed and sealed on behalf of said corporation by
authority of its Board of Directors, and said Xxxx Xxxxx acknowledged said
instrument to be the free act and deed of said corporation.
______________________________
Notary Public
Guest Packaging, Inc.
Schedules to Security Agreement
Schedule A
Jurisdictions for Filing UCC-1's
--------------------------------
Secretary of State of New Jersey
Union County, New Jersey
(414 Xxxx Xxxxx Xxxxxx
Xxxxxx, XX)
Secretary of State of New Jersey
Middlesex County, New Jersey
(0X Xxxxxxxx Xxx
Xxxxxx, XX)
Schedule B
----------
a) Location of Pledgor's books and records concerning Accounts:
000 X.X. Xxxxxxx Xxx
Xxxxx Xxxxxxxxx, XX 00000
b) Location of Pledgor's chief executive office:
000 X.X. Xxxxxxx Xxx
Xxxxx Xxxxxxxxx, XX 00000
c) Location of Pledgor's other places of business:
0X, 0X & 0X Xxxxxxxx Xxx
Xxxxxx, XX 00000
000 Xxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
d) List of tradenames:
None .
Schedule C
----------
Location(s) of the Pledgor's Inventory:
5A, 5B and 0X Xxxxxxxx Xxx
Xxxxxx, XX 00000
000 Xxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
000 X.X. Xxxxxxx Xxx
Xxxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Locations of Equipment:
0X, 0X & 0X Xxxxxxxx Xxx
Xxxxxx, XX 00000
000 Xxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
000 X.X. Xxxxxxx Xxx
Xxxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Schedule D
----------
Trademarks, Patents, Copyrights, License Agreements:
None.
