THIRD AMENDMENT AND MODIFICATION TO LOAN AGREEMENT
THIS THIRD AMENDMENT AND MODIFICATION TO LOAN AGREEMENT (the
"Amendment") is made as of the 27th day of February, 1997, by and among LIBERTY
TECHNOLOGIES, INC. ("LTI"), LTH DELAWARE, INC. ("LTH"), LIBERTY TECHNICAL
SERVICES, INC. (formerly known as "Industrial NDT Company, Inc.") ("NDT"), BETA
MONITORS INTERNATIONAL, INC. ("BMI"), LIBERTY INTERNATIONAL INC. ("LII"), and
LIBERTY IMAGING SYSTEMS, INC. ("LIS") (collectively "Borrowers" and individually
a "Borrower") and FIRST UNION NATIONAL BANK ("Bank").
BACKGROUND
A. By a Loan Agreement dated December 2, 1993, as amended by Amendment
and Modification to Loan Agreement dated December 30, 1995 and Second Amendment
and Modification to Loan Agreement (the "Second Amendment") dated October 11,
1996 (collectively, the "Loan Agreement"), by and among Bank and Borrowers, Bank
agreed, inter alia, to extend to Borrowers a revolving credit facility in the
principal amount of up to Five Million Dollars ($5,000,000.00) (the "Revolving
Credit"), with a temporary increase in the amount of Two Million Five Hundred
Thousand Dollars ($2,500,000.00) available through March 1, 1997 (the
"Increase").
B. Borrowers have requested that Bank (i) extend the expiration date
of the Increase through May 1, 1997, and (ii) waive Borrowers' failure to comply
with certain financial covenants contained in the Loan Agreement for the period
ending December 31, 1996 and through April 30, 1997, which Bank is willing to do
on the terms set forth herein.
NOW, THEREFORE, intending to be legally bound hereby, the parties
hereto agree as follows:
1. CAPITALIZED TERMS. Capitalized terms not otherwise defined herein
will have the meanings set forth therefor in the Loan Agreement.
2. EXTENSION OF EXPIRATION DATE. Each reference to "March 1, 1997"
contained in Section 1.1(a) of the Loan Agreement is hereby deleted and replaced
with "May 1, 1997".
3. USAGE FEE. Borrowers and Bank hereby confirm that the usage fee
described in Section 3.5 of the Loan Agreement shall, until the Increase expires
on May 1, 1997, be calculated on the difference between Seven Million Five
Hundred Thousand Dollars ($7,500,000.00) minus the average outstanding principal
balance of all cash advances and outstanding standby letters of credit under the
Revolving Credit for the applicable quarter.
4. WAIVER. Bank hereby waives Borrowers' failure to comply with the
provisions of Sections 6.1, 6.2, 6.3 and 6.7 of the Loan Agreement for the
period ended December 31, 1996 and for any period thereafter through and
including April 30, 1997. Such waiver applies solely to the Sections and to the
time periods referenced above and does not constitute a release or waiver of
(i) any other Event of Default that may exist under the Loan Agreement, (ii)
Borrowers' obligation to comply with any other term, condition or covenant
applicable to Borrowers under the Loan Agreement, or (iii) Borrowers' obligation
to comply with the terms of the foregoing Sections for any period after April
30, 1997. Nothing contained herein constitutes an agreement or commitment of
Bank to provide any other waiver to Borrowers.
5. SECURITY INTERESTS. Each Borrower hereby covenants and agrees to
grant to Bank, as security for repayment of all sums advanced and outstanding
under the Revolving Credit and all other Bank Indebtedness, a valid and
perfected security interest in and to all present and future inventory, accounts
and receivables of such Borrower, and in and to all proceeds thereof
(collectively, the "Collateral"), which security interests shall be evidenced by
a Security Agreement executed by each Borrower in favor of Bank (collectively,
the "Security Agreements") and by such UCC-1 financing statements as Bank shall
require, which Security Agreement, financing statements and other documents
required to be executed or delivered under the terms hereof or of the Security
Agreements shall (a) be in form and content approved by Bank, and (b) constitute
"Loan Documents" under the terms of the Loan Agreement.
6. ADDITIONAL DOCUMENTS; FURTHER ASSURANCES. Each Borrower covenants
and agrees to execute and deliver to Bank, or to cause to be executed and
delivered to Bank, contemporaneously herewith, at the sole cost and expense of
Borrowers, an allonge to the Increase Note, the Security Agreements, UCC-1
financing statements and any and all other documents, agreements, including,
without limitation, landlord and warehousemen releases and waivers, statements,
resolutions, evidence of insurance, searches, certificates, consents and
information as Bank may require in connection with the matters or actions
described herein. Each Borrower further covenants and agrees to execute and
deliver to Bank or to cause to be executed and delivered at the sole cost and
expense of Borrowers, from time to time, any and all other documents,
agreements, statements, certificates and information as Bank shall reasonably
request to evidence or effect the terms hereof, the Loan Agreement, as amended,
or any of the other Loan Documents, or to protect or enforce Bank's interest in
the Collateral.
7. FURTHER AGREEMENTS AND REPRESENTATIONS. Each Borrower does hereby:
(a) ratify, confirm and acknowledge that the Loan Agreement, as
amended, and the other Loan Documents continue to be and are valid, binding and
in full force and effect;
(b) covenant and agree to perform all obligations of Borrowers
contained herein, under the Increase Note, as amended, the original Revolving
Credit Note, and under the Loan Agreement, as amended, and the other Loan
Documents;
(c) acknowledge and agree that such Borrower has no defense,
set-off, counterclaim or challenge against the payment of any sums owing under
Loan Documents, the enforcement of any of the terms of the Loan Agreement, as
amended, or the other Loan Documents;
(d) acknowledge and agree that except as previously disclosed to
and consented to by Bank in writing, all representations and warranties of
Borrowers contained in the Loan
2
Agreement and/or the other Loan Documents are true, accurate and correct on and
as of the date hereof as if made on and as of the date hereof;
(e) represent and warrant that, upon execution of this Amendment,
no Event of Default (as defined in the Loan Agreement or any of the other Loan
Documents) or event which with the giving of notice or passage of time or both
would constitute such an Event of Default exists and all information described
in the foregoing Background is true, accurate and complete;
(f) acknowledge and agree that nothing contained herein and no
actions taken pursuant to the terms hereof is intended to constitute a novation
of the Loan Agreement or any of the other Loan Documents, and, except for the
waiver provided in Paragraph 4 hereof, does not constitute a release,
termination or waiver of any of the rights or remedies granted to the Bank
therein, which rights and remedies are hereby ratified, confirmed, extended and
continued as security for the obligations of Borrowers to Bank under the Loan
Agreement and the other Loan Documents, including, without limitation, this
Amendment; and
(g) acknowledge and agree that a Borrower's failure to comply
with or perform any of its covenants, agreements or obligations contained in
this Amendment, the Increase Note, as amended, any of the Security Agreements or
under any other agreement or instrument executed in connection herewith, shall
constitute an Event of Default under the Loan Agreement and each of the Loan
Documents.
8. Remaining Fee. Contemporaneously with the execution hereof,
Borrowers shall pay to Bank the $5,000.00 fee remaining to be paid under the
Second Amendment.
9. COSTS AND EXPENSES. Upon execution of this Amendment, Borrowers
shall, expressly in addition to the fee described in Paragraph 8 above, pay to
Bank all costs and expenses incurred by Bank in connection with the review,
preparation and negotiation of this Amendment and all documents in connection
therewith, including, without limitation, all of Bank's attorneys' fees and
costs, search costs and filing fees.
10. INCONSISTENCIES. To the extent of any inconsistency between the
terms, conditions and provisions of this Amendment and the terms, conditions and
provisions of the Loan Agreement or the other Loan Documents, the terms,
conditions and provisions of this Amendment shall prevail. All terms, conditions
and provisions of the Loan Agreement and the other Loan Documents not
inconsistent herewith shall remain in full force and effect and are hereby
ratified and confirmed by Borrowers.
11. CONSTRUCTION. All references to the Loan Agreement therein or in
any other Loan Documents shall be deemed to be a reference to the Loan Agreement
as amended hereby.
3
12. NO WAIVER. Except as expressly provided in Paragraph 4 above,
nothing contained herein and no actions taken pursuant to the terms hereof are
intended to nor shall they constitute a waiver by the Bank of any rights or
remedies available to Bank at law or in equity or as provided in the Loan
Agreement or the other Loan Documents. Nothing contained herein constitutes an
agreement or obligation by Bank to grant any further amendments to any of the
Loan Documents.
13. BINDING EFFECT. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
14. GOVERNING LAW. This Amendment shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
15. HEADINGS. The headings of the sections of this Amendment are
inserted for convenience only and shall not be deemed to constitute a part of
this Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
LIBERTY TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
LTH DELAWARE, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
LIBERTY TECHNICAL SERVICES, INC.
(formerly known as
Industrial NDT Company, Inc.)
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
4
(SIGNATURES CONTINUED ON THE FOLLOWING PAGE)
(SIGNATURES CONTINUED FROM THE PRECEDING PAGE)
BETA MONITORS INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
LIBERTY INTERNATIONAL INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
LIBERTY IMAGING SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxx X. Storm
---------------------------------------------
Xxxxxxx X. Storm, Senior Vice President
5
ALLONGE TO NOTE DATED OCTOBER 11, 1996 FROM LIBERTY TECHNOLOGIES, INC., LTH
DELAWARE, INC., LIBERTY TECHNICAL SERVICES, INC. (formerly known as "INDUSTRIAL
NDT COMPANY, INC."), BETA MONITORS INTERNATIONAL, INC., LIBERTY INTERNATIONAL,
INC. AND LIBERTY IMAGING SYSTEMS, INC. TO FIRST UNION NATIONAL BANK
THIS ALLONGE ("Allonge") is made this 27th day of February, 1997 by
and between LIBERTY TECHNOLOGIES, INC., LTH DELAWARE, INC., LIBERTY TECHNICAL
SERVICES, INC. (formerly known as "Industrial NDT Company, Inc."), BETA MONITORS
INTERNATIONAL, INC., LIBERTY INTERNATIONAL, INC., and LIBERTY IMAGING SYSTEMS,
INC. (collectively the "Makers"), and FIRST UNION NATIONAL BANK ("Bank").
BACKGROUND
A. Makers executed and delivered to Bank that certain Note dated
October 11, 1996, payable to the order of Bank in the original principal amount
of Two Million Five Hundred Thousand Dollars ($2,500,000.00) (the "Note"), which
Note is the "Increase Note" under that certain Loan Agreement dated December 2,
1993 between Bank and Borrowers, as amended (such Loan Agreement, as amended,
being referred to herein as the "Loan Agreement").
B. Pursuant to that certain Third Amendment and Modification to Loan
Agreement (the "Amendment") of even date herewith among Bank and Makers, Bank
and Borrowers agreed to extend the final maturity date of the Note to May 1,
1997.
C. Bank and Makers desire to amend the Note to evidence such
extension.
NOW, THEREFORE, in consideration of the mutual benefits inuring to
Makers and Bank, and intending to be legally bound hereby, the Note is hereby
modified as follows:
1. Extension. Each reference to "March 1, 1997" contained in the Note
is hereby deleted and replaced with "May 1, 1997".
2. Agreements and Representations of Makers. Each Maker does hereby:
(a) ratify, confirm and acknowledge that, as amended hereby, the
Note and all other documents executed in connection therewith are valid, binding
and in full force and effect;
(b) acknowledge and agree that nothing contained herein and no
actions taken pursuant to the terms hereof is intended to constitute a novation
of the Note or any of the other documents executed in connection therewith, or
of any sums advanced and outstanding thereunder, and does not constitute a
release, termination or waiver of any of the liens, security interests, rights
or remedies granted to Bank therein, which rights and remedies are hereby
ratified, confirmed, extended and continued as security for the Note, as
amended;
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(c) acknowledge and agree that this Allonge shall not be
construed as a waiver of any of Bank's rights under the Note as heretofore
existing or as hereafter modified by this Allonge; and
(d) authorize and direct that this Allonge be attached to and
become a part of the Note.
3. Construction. Any capitalized terms used in this Allonge not
otherwise defined herein shall have the meaning as set forth in the Loan
Agreement, as amended.
4. Single Instrument. Bank and Makers have executed this Allonge under
seal on the date first above written.
MAKER:
LIBERTY TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
LTH DELAWARE, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
LIBERTY TECHNICAL SERVICES, INC.
(formerly known as
Industrial NDT Company, Inc.)
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
BETA MONITORS INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
LIBERTY INTERNATIONAL INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
(SIGNATURES CONTINUED ON THE FOLLOWING PAGE)
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(SIGNATURES CONTINUED FROM THE PRECEDING PAGE)
LIBERTY IMAGING SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxx X. Storm
---------------------------------------------
Xxxxxxx X. Storm, Senior Vice President
-3-
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is executed this 27th day of
February, 1997, by LIBERTY TECHNOLOGIES, INC., a Pennsylvania corporation (the
"Obligor"), in favor of FIRST UNION NATIONAL BANK (the "Bank"). Obligor,
intending to be legally bound, hereby agrees as follows:
1. DEFINITIONS. For purposes of this Agreement,
1.1 "account", "account debtor", "chattel paper", "documents",
"equipment", "general intangibles", "goods", "instrument", "inventory" and
"proceeds" shall have the meanings given such terms in the Code.
1.2 "Bank Indebtedness" shall have such meaning as provided therefor
in the Loan Agreement.
1.3 "Chief Executive Office" shall mean the place from which the main
part of the business operations of Obligor are managed. Obligor's current Chief
Executive Office is 000 Xxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
1.4 "Code" shall mean the Uniform Commercial Code as adopted by the
Commonwealth of Pennsylvania, as the same may be amended from time to time.
1.5 "Collateral" shall mean all existing and after-acquired accounts
and inventory of Obligor and all proceeds thereof, including without limitation:
(a) All present and future accounts and all other rights to the
payment of money whether or not yet earned, for services rendered or goods sold,
consigned, leased or furnished by Obligor or otherwise, together with (i) all
goods (including any returned, rejected, repossessed or consigned goods), the
sale, consignment, lease or other furnishings of which shall have given or may
give rise to any of the foregoing, (ii) all of Obligor's rights as a consignor,
consignee, unpaid vendor or other lienor in connection therewith, including
stoppage in transit, set-off, detinue, replevin and reclamation, (iii) all
general intangibles, contract rights, instruments and documents related to any
accounts, (iv) all guaranties, mortgages, security interests, assignments, and
other encumbrances on real or personal property, leases and other agreements or
property securing or relating to any accounts, (v) choses-in-action, claims and
judgments related to any accounts, and (vi) all products and proceeds of any of
the foregoing.
(b) All present and future inventory (including but not limited
to goods held for sale or lease or furnished or to be furnished under contracts
for service, raw materials, work-in-process, finished goods and goods used or
consumed in Obligor's business) whether owned, consigned or held on consignment,
together with all merchandise, component materials, supplies, packing, packaging
and shipping materials, and all returned, rejected or repossessed goods sold,
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consigned, leased or otherwise furnished by Obligor and all products and
proceeds of any of the foregoing.
(c) All present and future general ledger sheets, files, records,
books of account, invoices, bills, certificates or documents of ownership, bills
of sale, business papers, correspondence, credit files, tapes, cards, computer
runs and all other data and data storage systems whether in the possession of
Obligor or any service bureau relating to, generated in connection with, or
evidencing any of the items referenced in (a) or (b) above.
1.6 "Event of Default" shall include any and all events described in
Section 7 below.
1.7 "Loan Agreement" shall mean that certain Loan Agreement dated
December 2, 1993 among, inter alios, Bank and Obligor, as amended, including,
without limitation, by Third Amendment and Modification to Loan Agreement of
even date and as the same may hereafter be amended from time to time.
1.8 "Loan Documents" shall mean all agreements, documents and
instruments evidencing the Bank Indebtedness and all agreements, documents and
instruments collateral thereto, together with all amendments, replacements,
increases, renewals and modifications thereof or thereto, including without
limitation this Agreement and the Loan Agreement.
2. SECURITY INTEREST. Obligor grants to Bank a security interest in and
lien on the Collateral.
3. EFFECT OF GRANT. The security interests in and liens on the Collateral
granted to Bank by Obligor hereunder shall not be rendered void by the fact that
no Bank Indebtedness exists as of a particular date, but shall continue in full
force and effect until all Bank Indebtedness has been paid in full, Bank has no
agreement or commitment outstanding pursuant to which Bank may extend credit to
or on behalf of Obligor and Bank has executed and delivered termination
statements and/or releases of Bank with respect to the Collateral.
4. OBLIGATIONS SECURED. The Collateral and the continuing security
interests granted therein shall secure the Bank Indebtedness. IT IS THE EXPRESS
INTENTION OF OBLIGOR THAT THE COLLATERAL SHALL SECURE ALL EXISTING AND FUTURE
BANK INDEBTEDNESS.
5. REPRESENTATIONS. Obligor hereby represents and warrants as follows,
which representations and warranties shall be true and correct as of the date
hereof and, unless disclosed to and approved by Bank, at the time of the
creation of any Bank Indebtedness and until all Bank Indebtedness has been paid
in full:
5.1 Title to Collateral. The Collateral is and will be owned by
Obligor free and clear of all liens and other encumbrances of any kind
(including liens or other encumbrances upon properties acquired or to be
acquired under conditional sales agreements or other title retention
-2-
devices), excepting only liens in favor of the Bank and those certain liens and
encumbrances expressly permitted under Section 5.9 of the Loan Agreement.
Obligor will defend the Collateral against any claims of all persons or entities
other than the Bank or a permitted lienholder.
5.2 Governmental Consents. Except as described in Section 4.10 of the
Loan Agreement, no consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of Obligor is
required in connection with the execution, delivery or performance by Obligor of
this Agreement or the consummation of the transactions contemplated hereby.
5.3 Addresses. The portions of the Collateral which are tangible
(corporeal) property and Obligor's books and records pertaining thereto will at
all times be located at the addresses set forth on Schedule 5.3 attached hereto;
or such other location determined by Obligor after prior notice to Bank and
delivery to Bank of any items requested by Bank in its reasonable discretion to
maintain perfection and priority of Bank's security interests and liens and
access to Obligor's books and records.
5.4 Inventory Warranties. With respect to inventory from time to time
scheduled, listed or referred to in any certificate, statement or report
prepared by or for Obligor and delivered to Bank, Obligor warrants and
represents that (a) such inventory is located at the address or addresses listed
on Schedule 5.3 attached hereto and is not in transit; (b) Obligor has good,
indefeasible and merchantable title to such inventory and such inventory is not
subject to any lien or security interest whatsoever except for the prior,
perfected security interest granted to Bank and any liens expressly permitted
under Section 5.9 of the Loan Agreement; (c) to Obligor's knowledge and except
as disclosed to Bank in writing, such inventory is of good and merchantable
quality, free from any defects; (d) such inventory is not subject to any
licensing, patent, royalty, trademark, trade name or copyright agreements with
any third parties; and (e) the completion of the manufacture and sale or other
disposition of such inventory by Bank following an Event of Default shall not
require the consent of any person and shall not constitute a breach or default
under any contract or agreement to which the Obligor is a party or to which the
inventory is subject.
5.5 Accounts Receivable Warranties. With respect to all accounts
receivable from time to time scheduled, listed or referred to in any
certificate, statement or report prepared by or for Obligor and delivered to
Bank, Obligor warrants and represents that (a) the accounts are genuine, are in
all material respects what they purport to be, and are not, except as disclosed
and assigned to Bank in writing, evidenced by any chattel paper, note,
instrument or judgment; (b) Obligor has good and marketable title to such
accounts, except for liens expressly permitted under the Loan Agreement and,
except as disclosed to Bank in writing, the accounts represent undisputed, bona
fide transactions completed in accordance with the terms thereof and as
represented to Bank; (c) to Borrower's knowledge, except as disclosed to Bank in
writing, there are no setoffs, counterclaims or disputes existing or asserted
with respect thereto and Obligor has not made any agreement with any account
debtor for any deduction therefrom; (d) to Borrower's knowledge, except as
disclosed to Bank in writing, there are no facts, events or occurrences which
impair the validity or enforcement thereof or may reduce the amount payable
thereunder as shown on any certificates, statements or reports prepared by or
for Obligor and delivered to Bank, or on Obligor's
-3-
books and records and all invoices and statements delivered to Bank with respect
thereto; (e) to the best of Obligor's knowledge, all account debtors have the
capacity to contract and are solvent; (f) the goods sold giving rise thereto are
not subject to any lien, claim, encumbrance or security interest except that of
Bank and except for liens expressly permitted under the Loan Agreement; (g) to
the best of Obligor's knowledge, there are no proceedings or actions which are
threatened or pending against any account debtor which might result in any
material adverse change in such account debtor's financial condition; (h) the
account is not an account with respect to which the account debtor is an
affiliate of Obligor or a director, officer of employee of Obligor or its
affiliates; (i) the account does not arise with respect to goods which have not
been shipped or arise with respect to services which have not been fully
performed and accepted as satisfactory by the account debtor; (j) the account is
not an account with respect to which the account debtor's obligation to pay the
account is conditional upon the account debtor's approval or is otherwise
subject to any repurchase obligation or return right, as with sales made on a
xxxx-and-hold, guaranteed sale, sale-and-return, or sale on approval basis; (k)
to Borrower's knowledge, except as disclosed to Bank in writing, the amounts
shown on the applicable certificates, statements, on Obligor's books and records
and all invoices and statements which may be delivered to Bank with respect to
such accounts are actually and absolutely owing to Obligor and are not in any
way contingent; and (l) the accounts have not been sold, assigned or transferred
to any other Person and no Person except Obligor has any claim thereto or (with
the exception of the applicable account debtor) any claims to the goods sold.
5.6 Accuracy of Representations and Warranties. No representation or
warranty by Obligor contained herein or in any certificate or other document
furnished by Obligor pursuant hereto or in connection herewith fails to contain
any statement of material fact necessary to make such representation or warranty
not misleading in light of the circumstances under which it was made. There is
no fact which Obligor knows or should know and has not disclosed to Bank, which
does or may materially and adversely affect Obligor, or any of its operations.
6. COVENANTS. Obligor covenants and agrees that until the Bank Indebtedness
have been paid in full, Obligor shall:
6.1 Disposition of Assets. Not sell, lease, transfer or otherwise
dispose of all, substantially all, or any material portion of the Collateral,
except for sales of inventory in the ordinary course for fair consideration.
6.2 Liens. Not create, incur or permit to exist any mortgage, pledge,
encumbrance, lien, security interest or charge of any kind (including liens or
charges upon properties acquired or to be acquired under conditional sales
agreements or other title retention devices) on any of the Collateral, whether
now owned or hereafter acquired, or upon any income or profits therefrom, except
as permitted hereunder or under the Loan Documents.
6.3 Insurance. Carry adequate insurance issued by responsible and
financially sound insurers acceptable to Bank, in amounts acceptable to Bank (at
least adequate to comply with any co-insurance provisions) and against all such
liability and hazards as are usually carried by entities engaged in the same or
a similar business similarly situated or as may be required by Bank in its
reasonable discretion. Obligor will carry business interruption insurance in
such amounts as
-4-
may be required by Bank in its reasonable discretion. In the case of insurance
on any of the Collateral Obligor shall carry insurance in the full insurable
value thereof and cause Bank to be named as loss payee (with a lender's loss
payable endorsement) with respect to all personal property, and additional
insured with respect to all liability insurance, as its interests may appear
with thirty (30) days' notice to be given Bank by the insurance carrier prior to
cancellation or material modification of such insurance coverage.
Obligor shall cause to be delivered to Bank the insurance policies therefor
or in the alternative, evidence of insurance and at least thirty (30) business
days prior to the expiration of any such insurance, additional policies or
duplicates thereof or in the alternative, evidence of insurance evidencing the
renewal of such insurance and payment of the premiums therefor. Obligor shall
direct all insurers that in the event of any loss thereunder or the cancellation
of any insurance policy, the insurers shall make payments for such loss and pay
all returned or unearned premiums directly to Bank and not to Obligor and Bank
jointly.
In the event of any loss, Obligor will give Bank immediate notice thereof
and Bank may make proof of loss whether the same is done by Obligor. Bank is
granted a power of attorney by Obligor with full power of substitution to file
any proof of loss in Obligor's or Bank's name, to endorse Obligor's name on any
check, draft or other instrument evidencing insurance proceeds, and to take any
action or sign any document to pursue any insurance loss claim. Such power being
coupled with an interest is irrevocable.
In the event of any loss, Bank, at its option, may (i) retain and apply
all or any part of the insurance proceeds to reduce, in such order and amounts
as Bank may elect the Bank Indebtedness, or (ii) disburse all or any part of
such insurance proceeds to or for the benefit of Obligor for the purpose of
repairing or replacing Collateral after receiving proof satisfactory to Bank of
such repair or replacement, in either case without waiving or impairing the Bank
Indebtedness or any provision of this Agreement. Any deficiency thereon shall be
paid by Obligor to Bank upon demand. Obligor shall not take out any insurance
without having Bank named as loss payee or additional insured thereon. Obligor
shall bear the full risk of loss from any loss of any nature whatsoever with
respect to the Collateral. Notwithstanding the foregoing, if no Event of Default
has occurred and no event or circumstance exists which, upon the passage of
time, delivery of notice or both would constitute any such Event of Default,
Bank shall make insurance proceeds on the Collateral actually received by Bank
available to Obligor if, as a result of Obligor's use of such proceeds, Bank
receives replacement Collateral of the same type and value as those giving rise
to the insurance proceeds or as Bank shall otherwise approve.
6.4 Additional Documents and Future Actions. At its sole cost, take
such actions and provide Bank from time to time with such agreements, financing
statements and additional instruments, documents or information as the Bank may
in its reasonable discretion deem necessary or advisable to perfect, protect and
maintain the security interests in the Collateral, to permit Bank to protect its
interest in the Collateral, or to carry out the terms of the Loan Documents.
Obligor hereby authorizes and appoints Bank as its attorney-in-fact, with full
power of substitution, to take such actions as Bank may deem advisable in its
reasonable discretion to protect the Collateral and its interests thereon and
its rights hereunder, to execute on Obligor's behalf and file at Obligor's
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expense financing statements, and amendments thereto, in those public offices
deemed necessary or appropriate by Bank to establish, maintain and protect a
continuously perfected security interest in the Collateral, and to execute on
Obligor's behalf such other documents and notices as Bank may deem advisable in
its reasonable discretion to protect the Collateral and its interests therein
and its rights hereunder. Such power being coupled with an interest is
irrevocable. Obligor irrevocably authorizes the filing of a carbon, photographic
or other copy of this Agreement, or of a financing statement, as a financing
statement and agrees that such filing is sufficient as a financing statement.
6.5 Government Contracts. Promptly notify Bank if any of Obligor's
accounts arise out of contracts with any department, agency or instrumentality
of the United States or any State, Commonwealth or municipality and execute any
instruments and take any steps required by Bank in order that all moneys due and
to become due under any such contracts shall be assigned to Bank and notice
thereof given to the United States under the Federal Assignment of Claims Act or
any other applicable law, statute or regulation.
6.6 Name or Address Change. Not change its name or address except upon
thirty (30) days prior written notice to Bank and delivery to Bank of any items
requested by Bank to maintain perfection and priority of Bank's security
interests and access to Obligor's books and records.
6.7 Inspections. Permit officers of Bank, or such persons as any of
them may designate, to visit and inspect any of the properties of Obligor,
examine (either by Bank's employees or by independent accountants) any of the
Collateral or other assets of Obligor, including the books of account of
Obligor, and discuss the affairs, finances and accounts of Obligor with its
officers and with its independent accountants, at such times as Bank may desire.
Prior to the occurrence of an Event of Default, Bank shall conduct such visits
and inspections during normal business hours and after prior notice to Obligor.
6.8 Requested Information. With reasonable promptness, deliver to Bank
all financial information in respect of the condition, operation and affairs of
Obligor and the Collateral as Bank may reasonably request from time to time.
7. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an event of default hereunder:
7.1 The occurrence of any Event of Default under the Loan Agreement or
any of the other Loan Documents;
7.2 The failure of Obligor to duly perform or observe any obligation,
covenant or agreement on its part contained herein which is not cured within any
applicable grace or cure period under the Loan Agreement;
7.3 Any representation or warranty of Obligor contained herein is
discovered to be untrue in any material respect or any statement, certificate or
data furnished by Obligor pursuant
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hereto is discovered to be untrue in any material respect as of the date as of
which the facts therein set forth are stated or certified; and/or
7.4 Any material uninsured damage to, or loss, theft, or destruction
of, any of the Collateral occurs.
8. REMEDIES OF BANK.
8.1 Remedies. At the option of the Bank, upon the occurrence of an
Event of Default, or at any time thereafter:
(a) The entire unpaid principal of the Bank Indebtedness, or any
part thereof, all interest accrued thereon, all fees due hereunder and all other
obligations of Obligor to Bank hereunder or under any other agreement, note or
otherwise arising will become immediately due and payable without any further
demand or notice;
(b) Bank may enter the premises occupied by Obligor and take
possession of the Collateral and any records relating thereto; and/or
(c) Bank may exercise each and every right and remedy granted to
it under the Loan Documents, under the Code and under any other applicable law
or at equity.
8.2 Sale or Other Disposition of Collateral. The sale, lease or other
disposition of the Collateral, or any part thereof, by Bank after an Event of
Default may be for cash, credit or any combination thereof, and Bank may
purchase all or any part of the Collateral at public or, if permitted by law,
private sale, and in lieu of actual payment of such purchase price, may set-off
the amount of such purchase price against the Bank Indebtedness then owing. Any
sales of the Collateral may be adjourned from time to time with or without
notice. The Bank may cause the Collateral to remain on Obligor's premises or
otherwise or to be removed and stored at premises owned by other persons, at
Obligor's expense, pending sale or other disposition of the Collateral. Obligor,
at Bank's request, shall assemble the Collateral consisting of inventory and
tangible assets and make such assets available to Bank at a place to be
designated by Bank. Bank shall have the right to conduct such sales on Obligor's
premises, at Obligor's expense, or elsewhere, on such occasion or occasions as
Bank may see fit. Any notice required to be given by Bank of a sale, lease or
other disposition or other intended action by Bank with respect to any of the
Collateral which is deposited in the United States mail, postage prepaid and
duly addressed to Obligor at the address specified in Section 11 below, at least
five (5) business days prior to such proposed action, shall constitute fair and
reasonable notice to Obligor of any such action. The net proceeds realized by
Bank upon any such sale or other disposition, after deduction for the expenses
of retaking, holding, storing, transporting, preparing for sale, selling or
otherwise disposing of the Collateral incurred by Bank in connection therewith
and all other reasonable costs and expenses related thereto including reasonable
attorney fees, shall be applied in such order as Bank, in its sole discretion,
elects, toward satisfaction of the Bank Indebtedness. Bank shall account to
Obligor for any surplus realized upon such sale or other disposition, and
Obligor shall remain liable for any deficiency. The commencement of any action,
legal or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect
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Bank's security interest in the Collateral. Obligor agrees that Bank has no
obligation to preserve rights to the Collateral against any other parties. Bank
is hereby granted a license or other right to use, after an Event of Default,
without charge, Obligor's labels, general intangibles, intellectual property,
equipment, real estate, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale and selling any inventory or other
Collateral and Obligor's rights under all contracts, licenses, leases and
franchise agreements shall inure to Bank's benefit. Bank shall be under no
obligation to xxxxxxxx any assets in favor of Obligor or any other party or
against or in payment of any or all of the Bank Indebtedness.
8.3 Actions with Respect to Accounts. Obligor hereby irrevocably
makes, constitutes and appoints Bank (and any of Bank's designated officers,
employees or agents) as Obligor's true and lawful attorney-in-fact, with full
power of substitution, with power to sign Obligor's name and to take any of the
following actions, in Obligor's name or the name of Bank, as Bank may determine
in its reasonable discretion, without notice to Obligor and at Obligor's
expense:
(a) Verify the validity and amount of or any other matter
relating to the Collateral by mail, telephone, telecopy or otherwise;
(b) Upon the occurrence of an Event of Default, notify all
account debtors that Obligor's accounts have been assigned to Bank and that Bank
has a security interest therein;
(c) Upon the occurrence of an Event of Default, direct all
account debtors to make payment of all Obligor's accounts directly to Bank and
forward invoices directly to such account debtors;
(d) Upon the occurrence of an Event of Default, take control in
any manner of any cash or non-cash items of payment or proceeds of such
accounts;
(e) Upon the occurrence of an Event of Default, notify the United
States Postal Service to change the address for delivery of mail addressed to
Obligor to such address as Bank may designate;
(f) Upon the occurrence of an Event of Default, have access to
any lockbox or postal boxes into which Obligor's mail is deposited and receive,
open and dispose of all mail addressed to Obligor;
(g) Upon the occurrence of an Event of Default, take control in
any manner of any rejected, returned, stopped in transit or repossessed goods
relating to any accounts;
(h) Upon the occurrence of an Event of Default, enforce payment
of and collect any accounts, by legal proceedings or otherwise, and for such
purpose Bank may:
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(1) Demand payment of any accounts or direct any account
debtors to make payment of accounts directly to Bank;
(2) Receive and collect all monies due or to become due to
Obligor;
(3) Exercise all of Obligor's rights and remedies with
respect to the collection of accounts;
(4) Settle, adjust, compromise, extend, renew, discharge or
release the accounts;
(5) Sell or assign the accounts on such terms, for such
amount and at such times as Bank deems advisable;
(6) Prepare, file and sign Obligor's name or names on any
Proof of Claim or similar document in any proceeding filed under federal or
state bankruptcy, insolvency, reorganization or other similar law as to any
account debtor;
(7) Prepare, file and sign Obligor's name or names on any
Notice of Lien, Claim of Mechanic's Lien, Assignment or Satisfaction of Lien or
Mechanic's Lien or similar document in connection with the Collateral;
(8) Endorse the name of Obligor upon any chattel papers,
documents, instruments, invoices, freight bills, bills of lading or similar
documents or agreements relating to the accounts or goods pertaining thereto or
upon any checks or other media of payment or evidences of a security interest
that may come into Bank's possession;
(9) Sign the name of Obligor to verifications of accounts
and notices thereof sent by account debtors to Obligor; or
(10) Take all other actions necessary or desirable, as
determined by Bank in its reasonable discretion, to protect Obligor's or Bank's
interest in the accounts.
Obligor ratifies and approves all acts of said attorneys and agrees that said
attorneys shall not be liable for any acts of commission or omission, nor for
any error of judgment or mistake of fact or law, except willful misconduct or
gross negligence. This power, being coupled with an interest, is irrevocable.
Obligor agrees to assist the Bank in the collection and enforcement of its
accounts and not to hinder, delay or impede the Bank on its collection or
enforcement of said accounts.
8.4 Set-Off. Without limiting the rights of Bank under applicable law,
Bank has and may exercise a right of set-off, a lien against and a security
interest in all property of Obligor now or at any time in Bank's possession in
any capacity whatsoever, including but not limited to any balance of any
deposit, trust or agency account, or any other bank account with Bank, but
expressly including any separate segregated account containing contributions to
an employee retirement plan
-9-
or payments for federal withholding taxes, as security for all obligations of
Obligor to Bank under the Loan Documents or otherwise. At any time and from time
to time following the occurrence of an Event of Default, Bank may without notice
or demand, set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by Bank to or for the credit of Obligor against any or all of the
Bank Indebtedness and the Obligor's obligations under the Loan Documents.
If any bank account of Obligor with Bank is attached or otherwise liened or
levied upon by any third party, Bank need not await the running of any
applicable grace period hereunder, but Bank shall have and be deemed to have the
immediate right of set-off and may apply the funds or amount thus set-off
against Obligor's obligations to the Bank.
8.5 Delay or Omission Not Waiver. Neither the failure nor any delay on
the part of Bank to exercise any right, remedy, power or privilege under the
Loan Documents upon the occurrence of any Event of Default or otherwise shall
operate as a waiver thereof or impair any such right, remedy, power or
privilege. No waiver of any Event of Default shall affect any later Event of
Default or shall impair any rights of Bank. No single, partial or full exercise
of any rights, remedies, powers and privileges by the Bank shall preclude
further or other exercise thereof. No course of dealing between Bank and Obligor
shall operate as or be deemed to constitute a waiver of Bank's rights under the
Loan Documents or affect the duties or obligations of Obligor.
8.6 Remedies Cumulative; Consents. The rights, remedies, powers and
privileges provided for herein shall not be deemed exclusive, but shall be
cumulative and shall be in addition to all other rights, remedies, powers and
privileges in Bank's favor at law or in equity. Whenever the Bank's consent or
approval is required or permitted, such consent or approval shall be at the sole
and absolute discretion of Bank.
9. CERTAIN FEES, COSTS, EXPENSES AND EXPENDITURES. Obligor agrees to pay on
demand all reasonable costs and expenses of Bank, including without limitation:
9.1 All costs and expenses in connection with the preparation, review,
negotiation, execution, delivery and administration of the Loan Documents, and
the other documents to be delivered in connection therewith, or any amendments,
extensions and increases to any of the foregoing (including, without limitation,
reasonable attorney's fees and expenses, and the cost of appraisals and
reappraisals of Collateral), and the cost of periodic lien searches and tax
clearance certificates, as Bank deems advisable;
9.2 All losses, costs and expenses in connection with the enforcement,
protection and preservation of the Bank's rights or remedies under the Loan
Documents, or any other agreement relating to any Obligations, or in connection
with legal advice relating to the rights or responsibilities of Bank (including
without limitation court costs, reasonable attorney's fees and expenses of
accountants and appraisers); and
-10-
9.3 Any and all stamp and other taxes payable or determined to be
payable in connection with the execution and delivery of the Loan Documents, and
all liabilities to which Bank may become subject as the result of delay in
paying or omission to pay such taxes.
In the event Obligor shall fail to pay taxes, insurance, assessments, costs
or expenses which it is required to pay hereunder, or fails to keep the
Collateral free from security interests or lien (except as expressly permitted
herein), or fails to maintain or repair the Collateral as required hereby, or
otherwise breaches any obligations under the Loan Documents, Bank in its
reasonable discretion, may make expenditures for such purposes and the amount so
expended (including reasonable attorney's fees and expenses, filing fees and
other charges) shall be payable by Obligor on demand and shall constitute part
of the Bank Indebtedness.
In the event any action at law or in equity in connection with the Loan
Documents, the Bank Indebtedness or matters collateral thereto is terminated
adverse to Obligor, Obligor will pay all attorneys' fees and legal costs
incurred by Bank in connection with such actions.
With respect to any amount required to be paid by Obligor under this
Section, in the event Obligor fails to pay such amount on demand, Obligor shall
also pay to Bank interest thereon at the default rate set forth in Section 2.2
of the Loan Agreement. Obligor's obligations under this Section shall survive
termination of this Agreement.
10. TIME IS OF THE ESSENCE. Time is of the essence in Obligor's
performance of its obligations under the Loan Documents.
11. COMMUNICATIONS AND NOTICES. All notices, requests and other
communications made or given in connection with this Agreement shall be in
writing and, unless receipt is stated herein to be required, shall be deemed to
have been validly given if delivered personally to the individual or division or
department to whose attention notices to a party are to be addressed, or by
private carrier, telecopy (with original forwarded by first class mail), or
registered or certified mail, return receipt requested, in all cases with
postage prepaid, addressed as follows, until some other address (or individual
or division or department for attention) shall have been designated by notice
given by one party to the other:
To Obligor:
Liberty Technologies, Inc.
000 Xxxxx Xxxx, Xxxxx _____
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Vice President-Finance
and Chief Financial Officer
Telecopy Number: (000) 000-0000
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With a copy to:
Pepper, Xxxxxxxx & Xxxxxxx
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esquire
Telecopier: (000) 000-0000
To Bank:
First Union National Bank
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Storm, Senior Vice President
Telecopier: (000) 000-0000
With a copy to:
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx
000 Xxxxxx Xxxxxxx, Xxxxxxxx 000
X.X. Xxx 0000
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxx, Esquire
Telecopier: (000) 000-0000 or 238-0374
12. LIMITATION ON LIABILITY. Obligor shall be responsible for and Bank is
hereby released from any claim or liability in connection with:
12.1 Safekeeping any Collateral;
12.2 Any loss or damage to any Collateral;
12.3 Any diminution in value of the Collateral; or
12.4 Any act or default of another person or entity.
Bank shall only be liable for any act or omission on its part constituting
willful misconduct or gross negligence. In the event that Bank breaches its
required standard of conduct, Obligor agrees that its liability shall be only
for direct damages suffered and shall not extend to consequential or incidental
damages. In the event Obligor brings suit against Bank in connection with the
transactions contemplated hereunder and Bank is found not to be liable, Obligor
will indemnify and hold Bank harmless from all costs and expenses, including
attorney's fees, incurred by Bank in connection with such suit. Nothing
contained herein, however, relieves Bank from any obligation, if any, imposed on
a secured creditor under the Code with respect to safekeeping of collateral.
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13. WAIVERS. In connection with any proceedings hereunder or in connection
with any of the Bank Indebtedness, including without limitation any action by
Bank in replevin, foreclosure or other court process or in connection with any
other action related to the Bank Indebtedness or the transactions contemplated
hereunder, Obligor waives:
13.1 all errors, defects and imperfections in such proceedings;
13.2 all benefits under any present or future laws exempting any
property, real or personal, or any part of any proceeds thereof from attachment,
levy or sale under execution, or providing for any stay of execution to be
issued on any judgment recovered in connection with the Bank Indebtedness or in
any replevin or foreclosure proceeding, or otherwise providing for any
valuation, appraisal or exemption;
13.3 all rights to inquisition on any real estate, which real estate
may be levied upon pursuant to a judgment obtained in connection with any of the
Bank Indebtedness and sold upon any writ of execution issued thereon in whole or
in part, in any order desired by Bank;
13.4 presentment for payment, demand, notice of demand, notice of
non-payment, protest and notice of protest of any of the Bank Indebtedness;
13.5 any requirement for bonds, security or sureties required by
statute, court rule or otherwise;
13.6 any demand for possession of Collateral prior to commencement of
any suit; and
13.7 all rights to claim or recover attorney's fees and costs in the
event that Obligor is successful in any action to remove, suspend or enforce a
judgment entered by confession.
14. EXCLUSIVE JURISDICTION. Obligor hereby consents to the exclusive
jurisdiction of any state or federal court located within the Commonwealth of
Pennsylvania, and irrevocably agrees that, subject to the Bank's election, all
actions or proceedings relating to the Loan Documents or the transactions
contemplated hereunder shall be litigated in such courts, and Obligor waives any
objection which it may have based on improper venue or forum non conveniens to
the conduct of any proceeding in any such court and waives personal service of
any and all process upon it, and consents that all such service of process be
made by mail or messenger directed to it at the address set forth in Section 11.
Nothing contained in this Section 14 shall affect the right of Bank to serve
legal process in any other manner permitted by law or affect the right of Bank
to bring any action or proceeding against Obligor or its property in the courts
of any other jurisdiction.
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15. MISCELLANEOUS PROVISIONS.
15.1 Severability. The provisions of this Agreement and all other Loan
Documents are deemed to be severable, and the invalidity or unenforceability of
any provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.
15.2 Headings. The headings of the Articles, Sections, paragraphs and
clauses of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement.
15.3 Binding Effect. This Agreement and all rights and powers granted
hereby will bind and inure to the benefit of the parties hereto and their
respective permitted successors and assigns.
15.4 Amendment. No modification of this Agreement or any of the Loan
Documents shall be binding or enforceable unless in writing and signed by or on
behalf of the party against whom enforcement is sought.
15.5 Governing Law. This Agreement has been made, executed and
delivered in the Commonwealth of Pennsylvania and will be construed in
accordance with and governed by the laws of such Commonwealth.
15.6 No Third Party Beneficiaries. The rights and benefits of this
Agreement and the Loan Documents shall not inure to the benefit of any third
party.
15.7 Exhibits and Schedules. All exhibits and schedules attached
hereto are hereby made a part of this Agreement.
15.8 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
15.9 No Joint Venture. Nothing contained herein is intended to permit
or authorize Obligor to make any contract on behalf of Bank, nor shall this
Agreement be construed as creating a partnership, joint venture or making Bank
an investor in Obligor.
15.10 Filing of Financing Statements. Copies or reproductions of this
document or of any financing statement may be filed as a financing statement.
15.11 Waiver of Right to Trial by Jury. OBLIGOR AND BANK WAIVE ANY
RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a)
ARISING UNDER THIS AGREEMENT OR ANY OTHER
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DOCUMENT OR INSTRUMENT REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH,
OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
OBLIGOR WITH RESPECT TO THIS AGREEMENT OR ANY OTHER DOCUMENT OR INSTRUMENT
REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE. OBLIGOR AND BANK AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF OBLIGOR AND
BANK TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the undersigned has executed this Security
Agreement on the date first above written.
LIBERTY TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx, Vice President
Bank hereby joins in this Agreement for the sole purpose of ratifying and
confirming its consent to the provisions contained in Section 5.11 above.
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxx X. Storm
-----------------------------------
Xxxxxxx X. Storm, Senior Vice President
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NAMES AND ADDRESSES OF OBLIGOR
000 Xxxxx Xxxx, Xxxxxxxxxxxx, XX 00000
SCHEDULE 5.3
TO
SECURITY AGREEMENT
-16-
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is executed this 27th day of
February, 1997, by LIBERTY TECHNICAL SERVICES, INC., a Pennsylvania corporation
(the "Obligor"), in favor of FIRST UNION NATIONAL BANK (the "Bank"). Obligor,
intending to be legally bound, hereby agrees as follows:
1. DEFINITIONS. For purposes of this Agreement,
1.1 "account", "account debtor", "chattel paper", "documents",
"equipment", "general intangibles", "goods", "instrument", "inventory" and
"proceeds" shall have the meanings given such terms in the Code.
1.2 "Bank Indebtedness" shall have such meaning as provided therefor
in the Loan Agreement.
1.3 "Chief Executive Office" shall mean the place from which the main
part of the business operations of Obligor are managed. Obligor's current Chief
Executive Office is 0000 Xxxxxxxxxx Xxxx, X. Xxxxxxxxxx, XX 00000.
1.4 "Code" shall mean the Uniform Commercial Code as adopted by the
Commonwealth of Pennsylvania, as the same may be amended from time to time.
1.5 "Collateral" shall mean all existing and after-acquired accounts
and inventory of Obligor and all proceeds thereof, including without limitation:
(a) All present and future accounts and all other rights to the
payment of money whether or not yet earned, for services rendered or goods sold,
consigned, leased or furnished by Obligor or otherwise, together with (i) all
goods (including any returned, rejected, repossessed or consigned goods), the
sale, consignment, lease or other furnishings of which shall have given or may
give rise to any of the foregoing, (ii) all of Obligor's rights as a consignor,
consignee, unpaid vendor or other lienor in connection therewith, including
stoppage in transit, set-off, detinue, replevin and reclamation, (iii) all
general intangibles, contract rights, instruments and documents related to any
accounts, (iv) all guaranties, mortgages, security interests, assignments, and
other encumbrances on real or personal property, leases and other agreements or
property securing or relating to any accounts, (v) choses-in-action, claims and
judgments related to any accounts, and (vi) all products and proceeds of any of
the foregoing.
(b) All present and future inventory (including but not limited
to goods held for sale or lease or furnished or to be furnished under contracts
for service, raw materials, work-in-process, finished goods and goods used or
consumed in Obligor's business) whether owned, consigned or held on consignment,
together with all merchandise, component materials, supplies, packing, packaging
and shipping materials, and all returned, rejected or repossessed goods sold,
-1-
consigned, leased or otherwise furnished by Obligor and all products and
proceeds of any of the foregoing.
(c) All present and future general ledger sheets, files, records,
books of account, invoices, bills, certificates or documents of ownership, bills
of sale, business papers, correspondence, credit files, tapes, cards, computer
runs and all other data and data storage systems whether in the possession of
Obligor or any service bureau relating to, generated in connection with, or
evidencing any of the items referenced in (a) or (b) above.
1.6 "Event of Default" shall include any and all events described in
Section 7 below.
1.7 "Loan Agreement" shall mean that certain Loan Agreement dated
December 2, 1993 among, inter alios, Bank and Obligor, as amended, including,
without limitation, by Third Amendment and Modification to Loan Agreement of
even date and as the same may hereafter be amended from time to time.
1.8 "Loan Documents" shall mean all agreements, documents and
instruments evidencing the Bank Indebtedness and all agreements, documents and
instruments collateral thereto, together with all amendments, replacements,
increases, renewals and modifications thereof or thereto, including without
limitation this Agreement and the Loan Agreement.
2. SECURITY INTEREST. Obligor grants to Bank a security interest in and
lien on the Collateral.
3. EFFECT OF GRANT. The security interests in and liens on the Collateral
granted to Bank by Obligor hereunder shall not be rendered void by the fact that
no Bank Indebtedness exists as of a particular date, but shall continue in full
force and effect until all Bank Indebtedness has been paid in full, Bank has no
agreement or commitment outstanding pursuant to which Bank may extend credit to
or on behalf of Obligor and Bank has executed and delivered termination
statements and/or releases of Bank with respect to the Collateral.
4. OBLIGATIONS SECURED. The Collateral and the continuing security
interests granted therein shall secure the Bank Indebtedness. IT IS THE EXPRESS
INTENTION OF OBLIGOR THAT THE COLLATERAL SHALL SECURE ALL EXISTING AND FUTURE
BANK INDEBTEDNESS.
5. REPRESENTATIONS. Obligor hereby represents and warrants as follows,
which representations and warranties shall be true and correct as of the date
hereof and, unless disclosed to and approved by Bank, at the time of the
creation of any Bank Indebtedness and until all Bank Indebtedness has been paid
in full:
5.1 Title to Collateral. The Collateral is and will be owned by
Obligor free and clear of all liens and other encumbrances of any kind
(including liens or other encumbrances upon properties acquired or to be
acquired under conditional sales agreements or other title retention
-2-
devices), excepting only liens in favor of the Bank and those certain liens and
encumbrances expressly permitted under Section 5.9 of the Loan Agreement.
Obligor will defend the Collateral against any claims of all persons or entities
other than the Bank or a permitted lienholder.
5.2 Governmental Consents. Except as described in Section 4.10 of the
Loan Agreement, no consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of Obligor is
required in connection with the execution, delivery or performance by Obligor of
this Agreement or the consummation of the transactions contemplated hereby.
5.3 Addresses. The portions of the Collateral which are tangible
(corporeal) property and Obligor's books and records pertaining thereto will at
all times be located at the addresses set forth on Schedule 5.3 attached hereto;
or such other location determined by Obligor after prior notice to Bank and
delivery to Bank of any items requested by Bank in its reasonable discretion to
maintain perfection and priority of Bank's security interests and liens and
access to Obligor's books and records.
5.4 Inventory Warranties. With respect to inventory from time to time
scheduled, listed or referred to in any certificate, statement or report
prepared by or for Obligor and delivered to Bank, Obligor warrants and
represents that (a) such inventory is located at the address or addresses listed
on Schedule 5.3 attached hereto and is not in transit; (b) Obligor has good,
indefeasible and merchantable title to such inventory and such inventory is not
subject to any lien or security interest whatsoever except for the prior,
perfected security interest granted to Bank and any liens expressly permitted
under Section 5.9 of the Loan Agreement; (c) to Obligor's knowledge and except
as disclosed to Bank in writing, such inventory is of good and merchantable
quality, free from any defects; (d) such inventory is not subject to any
licensing, patent, royalty, trademark, trade name or copyright agreements with
any third parties; and (e) the completion of the manufacture and sale or other
disposition of such inventory by Bank following an Event of Default shall not
require the consent of any person and shall not constitute a breach or default
under any contract or agreement to which the Obligor is a party or to which the
inventory is subject.
5.5 Accounts Receivable Warranties. With respect to all accounts
receivable from time to time scheduled, listed or referred to in any
certificate, statement or report prepared by or for Obligor and delivered to
Bank, Obligor warrants and represents that (a) the accounts are genuine, are in
all material respects what they purport to be, and are not, except as disclosed
and assigned to Bank in writing, evidenced by any chattel paper, note,
instrument or judgment; (b) Obligor has good and marketable title to such
accounts, except for liens expressly permitted under the Loan Agreement and,
except as disclosed to Bank in writing, the accounts represent undisputed, bona
fide transactions completed in accordance with the terms thereof and as
represented to Bank; (c) to Borrower's knowledge, except as disclosed to Bank in
writing, there are no setoffs, counterclaims or disputes existing or asserted
with respect thereto and Obligor has not made any agreement with any account
debtor for any deduction therefrom; (d) to Borrower's knowledge, except as
disclosed to Bank in writing, there are no facts, events or occurrences which
impair the validity or enforcement thereof or may reduce the amount payable
thereunder as shown on any certificates, statements or reports prepared by or
for Obligor and delivered to Bank, or on Obligor's
-3-
books and records and all invoices and statements delivered to Bank with respect
thereto; (e) to the best of Obligor's knowledge, all account debtors have the
capacity to contract and are solvent; (f) the goods sold giving rise thereto are
not subject to any lien, claim, encumbrance or security interest except that of
Bank and except for liens expressly permitted under the Loan Agreement; (g) to
the best of Obligor's knowledge, there are no proceedings or actions which are
threatened or pending against any account debtor which might result in any
material adverse change in such account debtor's financial condition; (h) the
account is not an account with respect to which the account debtor is an
affiliate of Obligor or a director, officer of employee of Obligor or its
affiliates; (i) the account does not arise with respect to goods which have not
been shipped or arise with respect to services which have not been fully
performed and accepted as satisfactory by the account debtor; (j) the account is
not an account with respect to which the account debtor's obligation to pay the
account is conditional upon the account debtor's approval or is otherwise
subject to any repurchase obligation or return right, as with sales made on a
xxxx-and-hold, guaranteed sale, sale-and-return, or sale on approval basis; (k)
to Borrower's knowledge, except as disclosed to Bank in writing, the amounts
shown on the applicable certificates, statements, on Obligor's books and records
and all invoices and statements which may be delivered to Bank with respect to
such accounts are actually and absolutely owing to Obligor and are not in any
way contingent; and (l) the accounts have not been sold, assigned or transferred
to any other Person and no Person except Obligor has any claim thereto or (with
the exception of the applicable account debtor) any claims to the goods sold.
5.6 Accuracy of Representations and Warranties. No representation or
warranty by Obligor contained herein or in any certificate or other document
furnished by Obligor pursuant hereto or in connection herewith fails to contain
any statement of material fact necessary to make such representation or warranty
not misleading in light of the circumstances under which it was made. There is
no fact which Obligor knows or should know and has not disclosed to Bank, which
does or may materially and adversely affect Obligor, or any of its operations.
6. COVENANTS. Obligor covenants and agrees that until the Bank Indebtedness
have been paid in full, Obligor shall:
6.1 Disposition of Assets. Not sell, lease, transfer or otherwise
dispose of all, substantially all, or any material portion of the Collateral,
except for sales of inventory in the ordinary course for fair consideration.
6.2 Liens. Not create, incur or permit to exist any mortgage, pledge,
encumbrance, lien, security interest or charge of any kind (including liens or
charges upon properties acquired or to be acquired under conditional sales
agreements or other title retention devices) on any of the Collateral, whether
now owned or hereafter acquired, or upon any income or profits therefrom, except
as permitted hereunder or under the Loan Documents.
6.3 Insurance. Carry adequate insurance issued by responsible and
financially sound insurers acceptable to Bank, in amounts acceptable to Bank (at
least adequate to comply with any co-insurance provisions) and against all such
liability and hazards as are usually carried by entities engaged in the same or
a similar business similarly situated or as may be required by Bank in its
reasonable discretion. Obligor will carry business interruption insurance in
such amounts
-4-
as may be required by Bank in its reasonable discretion. In the case of
insurance on any of the Collateral Obligor shall carry insurance in the full
insurable value thereof and cause Bank to be named as loss payee (with a
lender's loss payable endorsement) with respect to all personal property, and
additional insured with respect to all liability insurance, as its interests may
appear with thirty (30) days' notice to be given Bank by the insurance carrier
prior to cancellation or material modification of such insurance coverage.
Obligor shall cause to be delivered to Bank the insurance policies therefor
or in the alternative, evidence of insurance and at least thirty (30) business
days prior to the expiration of any such insurance, additional policies or
duplicates thereof or in the alternative, evidence of insurance evidencing the
renewal of such insurance and payment of the premiums therefor. Obligor shall
direct all insurers that in the event of any loss thereunder or the cancellation
of any insurance policy, the insurers shall make payments for such loss and pay
all returned or unearned premiums directly to Bank and not to Obligor and Bank
jointly.
In the event of any loss, Obligor will give Bank immediate notice thereof
and Bank may make proof of loss whether the same is done by Obligor. Bank is
granted a power of attorney by Obligor with full power of substitution to file
any proof of loss in Obligor's or Bank's name, to endorse Obligor's name on any
check, draft or other instrument evidencing insurance proceeds, and to take any
action or sign any document to pursue any insurance loss claim. Such power being
coupled with an interest is irrevocable.
In the event of any loss, Bank, at its option, may (i) retain and apply all
or any part of the insurance proceeds to reduce, in such order and amounts as
Bank may elect the Bank Indebtedness, or (ii) disburse all or any part of such
insurance proceeds to or for the benefit of Obligor for the purpose of repairing
or replacing Collateral after receiving proof satisfactory to Bank of such
repair or replacement, in either case without waiving or impairing the Bank
Indebtedness or any provision of this Agreement. Any deficiency thereon shall be
paid by Obligor to Bank upon demand. Obligor shall not take out any insurance
without having Bank named as loss payee or additional insured thereon. Obligor
shall bear the full risk of loss from any loss of any nature whatsoever with
respect to the Collateral. Notwithstanding the foregoing, if no Event of Default
has occurred and no event or circumstance exists which, upon the passage of
time, delivery of notice or both would constitute any such Event of Default,
Bank shall make insurance proceeds on the Collateral actually received by Bank
available to Obligor if, as a result of Obligor's use of such proceeds, Bank
receives replacement Collateral of the same type and value as those giving rise
to the insurance proceeds or as Bank shall otherwise approve.
6.4 Additional Documents and Future Actions. At its sole cost, take
such actions and provide Bank from time to time with such agreements, financing
statements and additional instruments, documents or information as the Bank may
in its reasonable discretion deem necessary or advisable to perfect, protect and
maintain the security interests in the Collateral, to permit Bank to protect its
interest in the Collateral, or to carry out the terms of the Loan Documents.
Obligor hereby authorizes and appoints Bank as its attorney-in-fact, with full
power of substitution, to take such actions as Bank may deem advisable in its
reasonable discretion to protect the Collateral and its interests thereon and
its rights hereunder, to execute on Obligor's behalf and file at Obligor's
-5-
expense financing statements, and amendments thereto, in those public offices
deemed necessary or appropriate by Bank to establish, maintain and protect a
continuously perfected security interest in the Collateral, and to execute on
Obligor's behalf such other documents and notices as Bank may deem advisable in
its reasonable discretion to protect the Collateral and its interests therein
and its rights hereunder. Such power being coupled with an interest is
irrevocable. Obligor irrevocably authorizes the filing of a carbon, photographic
or other copy of this Agreement, or of a financing statement, as a financing
statement and agrees that such filing is sufficient as a financing statement.
6.5 Government Contracts. Promptly notify Bank if any of Obligor's
accounts arise out of contracts with any department, agency or instrumentality
of the United States or any State, Commonwealth or municipality and execute any
instruments and take any steps required by Bank in order that all moneys due and
to become due under any such contracts shall be assigned to Bank and notice
thereof given to the United States under the Federal Assignment of Claims Act or
any other applicable law, statute or regulation.
6.6 Name or Address Change. Not change its name or address except upon
thirty (30) days prior written notice to Bank and delivery to Bank of any items
requested by Bank to maintain perfection and priority of Bank's security
interests and access to Obligor's books and records.
6.7 Inspections. Permit officers of Bank, or such persons as any of
them may designate, to visit and inspect any of the properties of Obligor,
examine (either by Bank's employees or by independent accountants) any of the
Collateral or other assets of Obligor, including the books of account of
Obligor, and discuss the affairs, finances and accounts of Obligor with its
officers and with its independent accountants, at such times as Bank may desire.
Prior to the occurrence of an Event of Default, Bank shall conduct such visits
and inspections during normal business hours and after prior notice to Obligor.
6.8 Requested Information. With reasonable promptness, deliver to Bank
all financial information in respect of the condition, operation and affairs of
Obligor and the Collateral as Bank may reasonably request from time to time.
7. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an event of default hereunder:
7.1 The occurrence of any Event of Default under the Loan Agreement or
any of the other Loan Documents;
7.2 The failure of Obligor to duly perform or observe any obligation,
covenant or agreement on its part contained herein which is not cured within any
applicable grace or cure period under the Loan Agreement;
7.3 Any representation or warranty of Obligor contained herein is
discovered to be untrue in any material respect or any statement, certificate or
data furnished by Obligor pursuant
-6-
hereto is discovered to be untrue in any material respect as of the date as of
which the facts therein set forth are stated or certified; and/or
7.4 Any material uninsured damage to, or loss, theft, or destruction
of, any of the Collateral occurs.
8. REMEDIES OF BANK.
8.1 Remedies. At the option of the Bank, upon the occurrence of an
Event of Default, or
at any time thereafter:
(a) The entire unpaid principal of the Bank Indebtedness, or any
part thereof, all interest accrued thereon, all fees due hereunder and all other
obligations of Obligor to Bank hereunder or under any other agreement, note or
otherwise arising will become immediately due and payable without any further
demand or notice;
(b) Bank may enter the premises occupied by Obligor and take
possession of the Collateral and any records relating thereto; and/or
(c) Bank may exercise each and every right and remedy granted to
it under the Loan Documents, under the Code and under any other applicable law
or at equity.
8.2 Sale or Other Disposition of Collateral. The sale, lease or other
disposition of the Collateral, or any part thereof, by Bank after an Event of
Default may be for cash, credit or any combination thereof, and Bank may
purchase all or any part of the Collateral at public or, if permitted by law,
private sale, and in lieu of actual payment of such purchase price, may set-off
the amount of such purchase price against the Bank Indebtedness then owing. Any
sales of the Collateral may be adjourned from time to time with or without
notice. The Bank may cause the Collateral to remain on Obligor's premises or
otherwise or to be removed and stored at premises owned by other persons, at
Obligor's expense, pending sale or other disposition of the Collateral. Obligor,
at Bank's request, shall assemble the Collateral consisting of inventory and
tangible assets and make such assets available to Bank at a place to be
designated by Bank. Bank shall have the right to conduct such sales on Obligor's
premises, at Obligor's expense, or elsewhere, on such occasion or occasions as
Bank may see fit. Any notice required to be given by Bank of a sale, lease or
other disposition or other intended action by Bank with respect to any of the
Collateral which is deposited in the United States mail, postage prepaid and
duly addressed to Obligor at the address specified in Section 11 below, at least
five (5) business days prior to such proposed action, shall constitute fair and
reasonable notice to Obligor of any such action. The net proceeds realized by
Bank upon any such sale or other disposition, after deduction for the expenses
of retaking, holding, storing, transporting, preparing for sale, selling or
otherwise disposing of the Collateral incurred by Bank in connection therewith
and all other reasonable costs and expenses related thereto including reasonable
attorney fees, shall be applied in such order as Bank, in its sole discretion,
elects, toward satisfaction of the Bank Indebtedness. Bank shall account to
Obligor for any surplus realized upon such sale or other disposition, and
Obligor shall remain liable for any deficiency. The commencement of any action,
legal or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect
-7-
Bank's security interest in the Collateral. Obligor agrees that Bank has no
obligation to preserve rights to the Collateral against any other parties. Bank
is hereby granted a license or other right to use, after an Event of Default,
without charge, Obligor's labels, general intangibles, intellectual property,
equipment, real estate, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale and selling any inventory or other
Collateral and Obligor's rights under all contracts, licenses, leases and
franchise agreements shall inure to Bank's benefit. Bank shall be under no
obligation to xxxxxxxx any assets in favor of Obligor or any other party or
against or in payment of any or all of the Bank Indebtedness.
8.3 Actions with Respect to Accounts. Obligor hereby irrevocably
makes, constitutes and appoints Bank (and any of Bank's designated officers,
employees or agents) as Obligor's true and lawful attorney-in-fact, with full
power of substitution, with power to sign Obligor's name and to take any of the
following actions, in Obligor's name or the name of Bank, as Bank may determine
in its reasonable discretion, without notice to Obligor and at Obligor's
expense:
(a) Verify the validity and amount of or any other matter
relating to the Collateral by mail, telephone, telecopy or otherwise;
(b) Upon the occurrence of an Event of Default, notify all
account debtors that Obligor's accounts have been assigned to Bank and that Bank
has a security interest therein;
(c) Upon the occurrence of an Event of Default, direct all
account debtors to make payment of all Obligor's accounts directly to Bank and
forward invoices directly to such account debtors;
(d) Upon the occurrence of an Event of Default, take control in
any manner of any cash or non-cash items of payment or proceeds of such
accounts;
(e) Upon the occurrence of an Event of Default, notify the United
States Postal Service to change the address for delivery of mail addressed to
Obligor to such address as Bank may designate;
(f) Upon the occurrence of an Event of Default, have access to
any lockbox or postal boxes into which Obligor's mail is deposited and receive,
open and dispose of all mail addressed to Obligor;
(g) Upon the occurrence of an Event of Default, take control in
any manner of any rejected, returned, stopped in transit or repossessed goods
relating to any accounts;
(h) Upon the occurrence of an Event of Default, enforce payment
of and collect any accounts, by legal proceedings or otherwise, and for such
purpose Bank may:
-8-
(1) Demand payment of any accounts or direct any account
debtors to make payment of accounts directly to Bank;
(2) Receive and collect all monies due or to become due to
Obligor;
(3) Exercise all of Obligor's rights and remedies with
respect to the collection of accounts;
(4) Settle, adjust, compromise, extend, renew, discharge or
release the accounts;
(5) Sell or assign the accounts on such terms, for such
amount and at such times as Bank deems advisable;
(6) Prepare, file and sign Obligor's name or names on any
Proof of Claim or similar document in any proceeding filed under federal or
state bankruptcy, insolvency, reorganization or other similar law as to any
account debtor;
(7) Prepare, file and sign Obligor's name or names on any
Notice of Lien, Claim of Mechanic's Lien, Assignment or Satisfaction of Lien or
Mechanic's Lien or similar document in connection with the Collateral;
(8) Endorse the name of Obligor upon any chattel papers,
documents, instruments, invoices, freight bills, bills of lading or similar
documents or agreements relating to the accounts or goods pertaining thereto or
upon any checks or other media of payment or evidences of a security interest
that may come into Bank's possession;
(9) Sign the name of Obligor to verifications of accounts
and notices thereof sent by account debtors to Obligor; or
(10) Take all other actions necessary or desirable, as
determined by Bank in its reasonable discretion, to protect Obligor's or Bank's
interest in the accounts.
Obligor ratifies and approves all acts of said attorneys and agrees that said
attorneys shall not be liable for any acts of commission or omission, nor for
any error of judgment or mistake of fact or law, except willful misconduct or
gross negligence. This power, being coupled with an interest, is irrevocable.
Obligor agrees to assist the Bank in the collection and enforcement of its
accounts and not to hinder, delay or impede the Bank on its collection or
enforcement of said accounts.
8.4 Set-Off. Without limiting the rights of Bank under applicable law,
Bank has and may exercise a right of set-off, a lien against and a security
interest in all property of Obligor now or at any time in Bank's possession in
any capacity whatsoever, including but not limited to any balance of any
deposit, trust or agency account, or any other bank account with Bank, but
expressly including any separate segregated account containing contributions to
an employee retirement plan
-9-
or payments for federal withholding taxes, as security for all obligations of
Obligor to Bank under the Loan Documents or otherwise. At any time and from time
to time following the occurrence of an Event of Default, Bank may without notice
or demand, set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by Bank to or for the credit of Obligor against any or all of the
Bank Indebtedness and the Obligor's obligations under the Loan Documents.
If any bank account of Obligor with Bank is attached or otherwise liened or
levied upon by any third party, Bank need not await the running of any
applicable grace period hereunder, but Bank shall have and be deemed to have the
immediate right of set-off and may apply the funds or amount thus set-off
against Obligor's obligations to the Bank.
8.5 Delay or Omission Not Waiver. Neither the failure nor any delay on
the part of Bank to exercise any right, remedy, power or privilege under the
Loan Documents upon the occurrence of any Event of Default or otherwise shall
operate as a waiver thereof or impair any such right, remedy, power or
privilege. No waiver of any Event of Default shall affect any later Event of
Default or shall impair any rights of Bank. No single, partial or full exercise
of any rights, remedies, powers and privileges by the Bank shall preclude
further or other exercise thereof. No course of dealing between Bank and Obligor
shall operate as or be deemed to constitute a waiver of Bank's rights under the
Loan Documents or affect the duties or obligations of Obligor.
8.6 Remedies Cumulative; Consents. The rights, remedies, powers and
privileges provided for herein shall not be deemed exclusive, but shall be
cumulative and shall be in addition to all other rights, remedies, powers and
privileges in Bank's favor at law or in equity. Whenever the Bank's consent or
approval is required or permitted, such consent or approval shall be at the sole
and absolute discretion of Bank.
9. CERTAIN FEES, COSTS, EXPENSES AND EXPENDITURES. Obligor agrees to pay on
demand all reasonable costs and expenses of Bank, including without limitation:
9.1 All costs and expenses in connection with the preparation, review,
negotiation, execution, delivery and administration of the Loan Documents, and
the other documents to be delivered in connection therewith, or any amendments,
extensions and increases to any of the foregoing (including, without limitation,
reasonable attorney's fees and expenses, and the cost of appraisals and
reappraisals of Collateral), and the cost of periodic lien searches and tax
clearance certificates, as Bank deems advisable;
9.2 All losses, costs and expenses in connection with the enforcement,
protection and preservation of the Bank's rights or remedies under the Loan
Documents, or any other agreement relating to any Obligations, or in connection
with legal advice relating to the rights or responsibilities of Bank (including
without limitation court costs, reasonable attorney's fees and expenses of
accountants and appraisers); and
-10-
9.3 Any and all stamp and other taxes payable or determined to be
payable in connection with the execution and delivery of the Loan Documents, and
all liabilities to which Bank may become subject as the result of delay in
paying or omission to pay such taxes.
In the event Obligor shall fail to pay taxes, insurance, assessments, costs
or expenses which it is required to pay hereunder, or fails to keep the
Collateral free from security interests or lien (except as expressly permitted
herein), or fails to maintain or repair the Collateral as required hereby, or
otherwise breaches any obligations under the Loan Documents, Bank in its
reasonable discretion, may make expenditures for such purposes and the amount so
expended (including reasonable attorney's fees and expenses, filing fees and
other charges) shall be payable by Obligor on demand and shall constitute part
of the Bank Indebtedness.
In the event any action at law or in equity in connection with the Loan
Documents, the Bank Indebtedness or matters collateral thereto is terminated
adverse to Obligor, Obligor will pay all attorneys' fees and legal costs
incurred by Bank in connection with such actions.
With respect to any amount required to be paid by Obligor under this
Section, in the event Obligor fails to pay such amount on demand, Obligor shall
also pay to Bank interest thereon at the default rate set forth in Section 2.2
of the Loan Agreement. Obligor's obligations under this Section shall survive
termination of this Agreement.
10. TIME IS OF THE ESSENCE. Time is of the essence in Obligor's
performance of its obligations under the Loan Documents.
11. COMMUNICATIONS AND NOTICES. All notices, requests and other
communications made or given in connection with this Agreement shall be in
writing and, unless receipt is stated herein to be required, shall be deemed to
have been validly given if delivered personally to the individual or division or
department to whose attention notices to a party are to be addressed, or by
private carrier, telecopy (with original forwarded by first class mail), or
registered or certified mail, return receipt requested, in all cases with
postage prepaid, addressed as follows, until some other address (or individual
or division or department for attention) shall have been designated by notice
given by one party to the other:
To Obligor:
Liberty Technical Services, Inc.
000 Xxxxx Xxxx, Xxxxx _____
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Vice President-Finance
and Chief Financial Officer
Telecopy Number: (000) 000-0000
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With a copy to:
Pepper, Xxxxxxxx & Xxxxxxx
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esquire
Telecopier: (000) 000-0000
To Bank:
First Union National Bank
000 Xxxxx Xxxxx Xxxxxx, XX0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Storm, Senior Vice President
Telecopier: (000) 000-0000
With a copy to:
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx
000 Xxxxxx Xxxxxxx, Xxxxxxxx 000
X.X. Xxx 0000
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxx, Esquire
Telecopier: (000) 000-0000 or 238-0374
12. LIMITATION ON LIABILITY. Obligor shall be responsible for and Bank is
hereby released from any claim or liability in connection with:
12.1 Safekeeping any Collateral;
12.2 Any loss or damage to any Collateral;
12.3 Any diminution in value of the Collateral; or
12.4 Any act or default of another person or entity.
Bank shall only be liable for any act or omission on its part constituting
willful misconduct or gross negligence. In the event that Bank breaches its
required standard of conduct, Obligor agrees that its liability shall be only
for direct damages suffered and shall not extend to consequential or incidental
damages. In the event Obligor brings suit against Bank in connection with the
transactions contemplated hereunder and Bank is found not to be liable, Obligor
will indemnify and hold Bank harmless from all costs and expenses, including
attorney's fees, incurred by Bank in connection with such suit. Nothing
contained herein, however, relieves Bank from any obligation, if any, imposed on
a secured creditor under the Code with respect to safekeeping of collateral.
-12-
13. WAIVERS. In connection with any proceedings hereunder or in connection
with any of the Bank Indebtedness, including without limitation any action by
Bank in replevin, foreclosure or other court process or in connection with any
other action related to the Bank Indebtedness or the transactions contemplated
hereunder, Obligor waives:
13.1 all errors, defects and imperfections in such proceedings;
13.2 all benefits under any present or future laws exempting any
property, real or personal, or any part of any proceeds thereof from attachment,
levy or sale under execution, or providing for any stay of execution to be
issued on any judgment recovered in connection with the Bank Indebtedness or in
any replevin or foreclosure proceeding, or otherwise providing for any
valuation, appraisal or exemption;
13.3 all rights to inquisition on any real estate, which real estate
may be levied upon pursuant to a judgment obtained in connection with any of the
Bank Indebtedness and sold upon any writ of execution issued thereon in whole or
in part, in any order desired by Bank;
13.4 presentment for payment, demand, notice of demand, notice of
non-payment, protest and notice of protest of any of the Bank Indebtedness;
13.5 any requirement for bonds, security or sureties required by
statute, court rule or otherwise;
13.6 any demand for possession of Collateral prior to commencement of
any suit; and
13.7 all rights to claim or recover attorney's fees and costs in the
event that Obligor is successful in any action to remove, suspend or enforce a
judgment entered by confession.
14. EXCLUSIVE JURISDICTION. Obligor hereby consents to the exclusive
jurisdiction of any state or federal court located within the Commonwealth of
Pennsylvania, and irrevocably agrees that, subject to the Bank's election, all
actions or proceedings relating to the Loan Documents or the transactions
contemplated hereunder shall be litigated in such courts, and Obligor waives any
objection which it may have based on improper venue or forum non conveniens to
the conduct of any proceeding in any such court and waives personal service of
any and all process upon it, and consents that all such service of process be
made by mail or messenger directed to it at the address set forth in Section 11.
Nothing contained in this Section 14 shall affect the right of Bank to serve
legal process in any other manner permitted by law or affect the right of Bank
to bring any action or proceeding against Obligor or its property in the courts
of any other jurisdiction.
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15. MISCELLANEOUS PROVISIONS.
15.1 Severability. The provisions of this Agreement and all other Loan
Documents are deemed to be severable, and the invalidity or unenforceability of
any provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.
15.2 Headings. The headings of the Articles, Sections, paragraphs and
clauses of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement.
15.3 Binding Effect. This Agreement and all rights and powers granted
hereby will bind and inure to the benefit of the parties hereto and their
respective permitted successors and assigns.
15.4 Amendment. No modification of this Agreement or any of the Loan
Documents shall be binding or enforceable unless in writing and signed by or on
behalf of the party against whom enforcement is sought.
15.5 Governing Law. This Agreement has been made, executed and
delivered in the Commonwealth of Pennsylvania and will be construed in
accordance with and governed by the laws of such Commonwealth.
15.6 No Third Party Beneficiaries. The rights and benefits of this
Agreement and the Loan Documents shall not inure to the benefit of any third
party.
15.7 Exhibits and Schedules. All exhibits and schedules attached
hereto are hereby made a part of this Agreement.
15.8 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
15.9 No Joint Venture. Nothing contained herein is intended to permit
or authorize Obligor to make any contract on behalf of Bank, nor shall this
Agreement be construed as creating a partnership, joint venture or making Bank
an investor in Obligor.
15.10 Filing of Financing Statements. Copies or reproductions of this
document or of any financing statement may be filed as a financing statement.
15.11 Waiver of Right to Trial by Jury. OBLIGOR AND BANK WAIVE ANY
RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a)
ARISING UNDER THIS AGREEMENT OR ANY OTHER
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DOCUMENT OR INSTRUMENT REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH,
OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
OBLIGOR WITH RESPECT TO THIS AGREEMENT OR ANY OTHER DOCUMENT OR INSTRUMENT
REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE. OBLIGOR AND BANK AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF OBLIGOR AND
BANK TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the undersigned has executed this Security
Agreement on the date first above written.
LIBERTY TECHNICAL SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
Bank hereby joins in this Agreement for the sole purpose of ratifying and
confirming its consent to the provisions contained in Section 5.11 above.
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxx X. Storm
----------------------------------
Xxxxxxx X. Storm, Senior Vice President
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NAMES AND ADDRESSES OF OBLIGOR
a) 0000 Xxxxxxxxxx Xxxx, X. Xxxxxxxxxx, XX 00000
b) 000 Xxxxx Xxxx, Xxxxxxxxxxxx, XX 00000
SCHEDULE 5.3
TO
SECURITY AGREEMENT
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is executed this 27th day of
February, 1997, by LIBERTY INTERNATIONAL INC., a Nevada corporation (the
"Obligor"), in favor of FIRST UNION NATIONAL BANK (the "Bank"). Obligor,
intending to be legally bound, hereby agrees as follows:
1. DEFINITIONS. For purposes of this Agreement,
1.1 "account", "account debtor", "chattel paper", "documents",
"equipment", "general intangibles", "goods", "instrument", "inventory" and
"proceeds" shall have the meanings given such terms in the Code.
1.2 "Bank Indebtedness" shall have such meaning as provided therefor
in the Loan Agreement.
1.3 "Chief Executive Office" shall mean the place from which the main
part of the business operations of Obligor are managed. Obligor's current Chief
Executive Office is 000 Xxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
1.4 "Code" shall mean the Uniform Commercial Code as adopted by the
Commonwealth of Pennsylvania, as the same may be amended from time to time.
1.5 "Collateral" shall mean all existing and after-acquired accounts
and inventory of Obligor and all proceeds thereof, including without limitation:
(a) All present and future accounts and all other rights to the
payment of money whether or not yet earned, for services rendered or goods sold,
consigned, leased or furnished by Obligor or otherwise, together with (i) all
goods (including any returned, rejected, repossessed or consigned goods), the
sale, consignment, lease or other furnishings of which shall have given or may
give rise to any of the foregoing, (ii) all of Obligor's rights as a consignor,
consignee, unpaid vendor or other lienor in connection therewith, including
stoppage in transit, set-off, detinue, replevin and reclamation, (iii) all
general intangibles, contract rights, instruments and documents related to any
accounts, (iv) all guaranties, mortgages, security interests, assignments, and
other encumbrances on real or personal property, leases and other agreements or
property securing or relating to any accounts, (v) choses-in-action, claims and
judgments related to any accounts, and (vi) all products and proceeds of any of
the foregoing.
(b) All present and future inventory (including but not limited
to goods held for sale or lease or furnished or to be furnished under contracts
for service, raw materials, work-in-process, finished goods and goods used or
consumed in Obligor's business) whether owned, consigned or held on consignment,
together with all merchandise, component materials, supplies, packing, packaging
and shipping materials, and all returned, rejected or repossessed goods sold,
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consigned, leased or otherwise furnished by Obligor and all products and
proceeds of any of the foregoing.
(c) All present and future general ledger sheets, files, records,
books of account, invoices, bills, certificates or documents of ownership, bills
of sale, business papers, correspondence, credit files, tapes, cards, computer
runs and all other data and data storage systems whether in the possession of
Obligor or any service bureau relating to, generated in connection with, or
evidencing any of the items referenced in (a) or (b) above.
1.6 "Event of Default" shall include any and all events described in
Section 7 below.
1.7 "Loan Agreement" shall mean that certain Loan Agreement dated
December 2, 1993 among, inter alios, Bank and Obligor, as amended, including,
without limitation, by Third Amendment and Modification to Loan Agreement of
even date and as the same may hereafter be amended from time to time.
1.8 "Loan Documents" shall mean all agreements, documents and
instruments evidencing the Bank Indebtedness and all agreements, documents and
instruments collateral thereto, together with all amendments, replacements,
increases, renewals and modifications thereof or thereto, including without
limitation this Agreement and the Loan Agreement.
2. SECURITY INTEREST. Obligor grants to Bank a security interest in and
lien on the Collateral.
3. EFFECT OF GRANT. The security interests in and liens on the Collateral
granted to Bank by Obligor hereunder shall not be rendered void by the fact that
no Bank Indebtedness exists as of a particular date, but shall continue in full
force and effect until all Bank Indebtedness has been paid in full, Bank has no
agreement or commitment outstanding pursuant to which Bank may extend credit to
or on behalf of Obligor and Bank has executed and delivered termination
statements and/or releases of Bank with respect to the Collateral.
4. OBLIGATIONS SECURED. The Collateral and the continuing security
interests granted therein shall secure the Bank Indebtedness. IT IS THE EXPRESS
INTENTION OF OBLIGOR THAT THE COLLATERAL SHALL SECURE ALL EXISTING AND FUTURE
BANK INDEBTEDNESS.
5. REPRESENTATIONS. Obligor hereby represents and warrants as follows,
which representations and warranties shall be true and correct as of the date
hereof and, unless disclosed to and approved by Bank, at the time of the
creation of any Bank Indebtedness and until all Bank Indebtedness has been paid
in full:
5.1 Title to Collateral. The Collateral is and will be owned by
Obligor free and clear of all liens and other encumbrances of any kind
(including liens or other encumbrances upon properties acquired or to be
acquired under conditional sales agreements or other title retention
-2-
devices), excepting only liens in favor of the Bank and those certain liens and
encumbrances expressly permitted under Section 5.9 of the Loan Agreement.
Obligor will defend the Collateral against any claims of all persons or entities
other than the Bank or a permitted lienholder.
5.2 Governmental Consents. Except as described in Section 4.10 of the
Loan Agreement, no consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of Obligor is
required in connection with the execution, delivery or performance by Obligor of
this Agreement or the consummation of the transactions contemplated hereby.
5.3 Addresses. The portions of the Collateral which are tangible
(corporeal) property and Obligor's books and records pertaining thereto will at
all times be located at the addresses set forth on Schedule 5.3 attached hereto;
or such other location determined by Obligor after prior notice to Bank and
delivery to Bank of any items requested by Bank in its reasonable discretion to
maintain perfection and priority of Bank's security interests and liens and
access to Obligor's books and records.
5.4 Inventory Warranties. With respect to inventory from time to time
scheduled, listed or referred to in any certificate, statement or report
prepared by or for Obligor and delivered to Bank, Obligor warrants and
represents that (a) such inventory is located at the address or addresses listed
on Schedule 5.3 attached hereto and is not in transit; (b) Obligor has good,
indefeasible and merchantable title to such inventory and such inventory is not
subject to any lien or security interest whatsoever except for the prior,
perfected security interest granted to Bank and any liens expressly permitted
under Section 5.9 of the Loan Agreement; (c) to Obligor's knowledge and except
as disclosed to Bank in writing, such inventory is of good and merchantable
quality, free from any defects; (d) such inventory is not subject to any
licensing, patent, royalty, trademark, trade name or copyright agreements with
any third parties; and (e) the completion of the manufacture and sale or other
disposition of such inventory by Bank following an Event of Default shall not
require the consent of any person and shall not constitute a breach or default
under any contract or agreement to which the Obligor is a party or to which the
inventory is subject.
5.5 Accounts Receivable Warranties. With respect to all accounts
receivable from time to time scheduled, listed or referred to in any
certificate, statement or report prepared by or for Obligor and delivered to
Bank, Obligor warrants and represents that (a) the accounts are genuine, are in
all material respects what they purport to be, and are not, except as disclosed
and assigned to Bank in writing, evidenced by any chattel paper, note,
instrument or judgment; (b) Obligor has good and marketable title to such
accounts, except for liens expressly permitted under the Loan Agreement and,
except as disclosed to Bank in writing, the accounts represent undisputed, bona
fide transactions completed in accordance with the terms thereof and as
represented to Bank; (c) to Borrower's knowledge, except as disclosed to Bank in
writing, there are no setoffs, counterclaims or disputes existing or asserted
with respect thereto and Obligor has not made any agreement with any account
debtor for any deduction therefrom; (d) to Borrower's knowledge, except as
disclosed to Bank in writing, there are no facts, events or occurrences which
impair the validity or enforcement thereof or may reduce the amount payable
thereunder as shown on any certificates, statements or reports prepared by or
for Obligor and delivered to Bank, or on Obligor's
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books and records and all invoices and statements delivered to Bank with respect
thereto; (e) to the best of Obligor's knowledge, all account debtors have the
capacity to contract and are solvent; (f) the goods sold giving rise thereto are
not subject to any lien, claim, encumbrance or security interest except that of
Bank and except for liens expressly permitted under the Loan Agreement; (g) to
the best of Obligor's knowledge, there are no proceedings or actions which are
threatened or pending against any account debtor which might result in any
material adverse change in such account debtor's financial condition; (h) the
account is not an account with respect to which the account debtor is an
affiliate of Obligor or a director, officer of employee of Obligor or its
affiliates; (i) the account does not arise with respect to goods which have not
been shipped or arise with respect to services which have not been fully
performed and accepted as satisfactory by the account debtor; (j) the account is
not an account with respect to which the account debtor's obligation to pay the
account is conditional upon the account debtor's approval or is otherwise
subject to any repurchase obligation or return right, as with sales made on a
xxxx-and-hold, guaranteed sale, sale-and-return, or sale on approval basis; (k)
to Borrower's knowledge, except as disclosed to Bank in writing, the amounts
shown on the applicable certificates, statements, on Obligor's books and records
and all invoices and statements which may be delivered to Bank with respect to
such accounts are actually and absolutely owing to Obligor and are not in any
way contingent; and (l) the accounts have not been sold, assigned or transferred
to any other Person and no Person except Obligor has any claim thereto or (with
the exception of the applicable account debtor) any claims to the goods sold.
5.6 Accuracy of Representations and Warranties. No representation or
warranty by Obligor contained herein or in any certificate or other document
furnished by Obligor pursuant hereto or in connection herewith fails to contain
any statement of material fact necessary to make such representation or warranty
not misleading in light of the circumstances under which it was made. There is
no fact which Obligor knows or should know and has not disclosed to Bank, which
does or may materially and adversely affect Obligor, or any of its operations.
6. COVENANTS. Obligor covenants and agrees that until the Bank Indebtedness
have been paid in full, Obligor shall:
6.1 Disposition of Assets. Not sell, lease, transfer or otherwise
dispose of all, substantially all, or any material portion of the Collateral,
except for sales of inventory in the ordinary course for fair consideration.
6.2 Liens. Not create, incur or permit to exist any mortgage, pledge,
encumbrance, lien, security interest or charge of any kind (including liens or
charges upon properties acquired or to be acquired under conditional sales
agreements or other title retention devices) on any of the Collateral, whether
now owned or hereafter acquired, or upon any income or profits therefrom, except
as permitted hereunder or under the Loan Documents.
6.3 Insurance. Carry adequate insurance issued by responsible and
financially sound insurers acceptable to Bank, in amounts acceptable to Bank (at
least adequate to comply with any co-insurance provisions) and against all such
liability and hazards as are usually carried by entities engaged in the same or
a similar business similarly situated or as may be required by Bank in its
reasonable discretion. Obligor will carry business interruption insurance in
such amounts as
-4-
may be required by Bank in its reasonable discretion. In the case of insurance
on any of the Collateral Obligor shall carry insurance in the full insurable
value thereof and cause Bank to be named as loss payee (with a lender's loss
payable endorsement) with respect to all personal property, and additional
insured with respect to all liability insurance, as its interests may appear
with thirty (30) days' notice to be given Bank by the insurance carrier prior to
cancellation or material modification of such insurance coverage.
Obligor shall cause to be delivered to Bank the insurance policies therefor
or in the alternative, evidence of insurance and at least thirty (30) business
days prior to the expiration of any such insurance, additional policies or
duplicates thereof or in the alternative, evidence of insurance evidencing the
renewal of such insurance and payment of the premiums therefor. Obligor shall
direct all insurers that in the event of any loss thereunder or the cancellation
of any insurance policy, the insurers shall make payments for such loss and pay
all returned or unearned premiums directly to Bank and not to Obligor and Bank
jointly.
In the event of any loss, Obligor will give Bank immediate notice thereof
and Bank may make proof of loss whether the same is done by Obligor. Bank is
granted a power of attorney by Obligor with full power of substitution to file
any proof of loss in Obligor's or Bank's name, to endorse Obligor's name on any
check, draft or other instrument evidencing insurance proceeds, and to take any
action or sign any document to pursue any insurance loss claim. Such power being
coupled with an interest is irrevocable.
In the event of any loss, Bank, at its option, may (i) retain and apply all
or any part of the insurance proceeds to reduce, in such order and amounts as
Bank may elect the Bank Indebtedness, or (ii) disburse all or any part of such
insurance proceeds to or for the benefit of Obligor for the purpose of repairing
or replacing Collateral after receiving proof satisfactory to Bank of such
repair or replacement, in either case without waiving or impairing the Bank
Indebtedness or any provision of this Agreement. Any deficiency thereon shall be
paid by Obligor to Bank upon demand. Obligor shall not take out any insurance
without having Bank named as loss payee or additional insured thereon. Obligor
shall bear the full risk of loss from any loss of any nature whatsoever with
respect to the Collateral. Notwithstanding the foregoing, if no Event of Default
has occurred and no event or circumstance exists which, upon the passage of
time, delivery of notice or both would constitute any such Event of Default,
Bank shall make insurance proceeds on the Collateral actually received by Bank
available to Obligor if, as a result of Obligor's use of such proceeds, Bank
receives replacement Collateral of the same type and value as those giving rise
to the insurance proceeds or as Bank shall otherwise approve.
6.4 Additional Documents and Future Actions. At its sole cost, take
such actions and provide Bank from time to time with such agreements, financing
statements and additional instruments, documents or information as the Bank may
in its reasonable discretion deem necessary or advisable to perfect, protect and
maintain the security interests in the Collateral, to permit Bank to protect its
interest in the Collateral, or to carry out the terms of the Loan Documents.
Obligor hereby authorizes and appoints Bank as its attorney-in-fact, with full
power of substitution, to take such actions as Bank may deem advisable in its
reasonable discretion to protect the Collateral and its interests thereon and
its rights hereunder, to execute on Obligor's behalf and file at Obligor's
-5-
expense financing statements, and amendments thereto, in those public offices
deemed necessary or appropriate by Bank to establish, maintain and protect a
continuously perfected security interest in the Collateral, and to execute on
Obligor's behalf such other documents and notices as Bank may deem advisable in
its reasonable discretion to protect the Collateral and its interests therein
and its rights hereunder. Such power being coupled with an interest is
irrevocable. Obligor irrevocably authorizes the filing of a carbon, photographic
or other copy of this Agreement, or of a financing statement, as a financing
statement and agrees that such filing is sufficient as a financing statement.
6.5 Government Contracts. Promptly notify Bank if any of Obligor's
accounts arise out of contracts with any department, agency or instrumentality
of the United States or any State, Commonwealth or municipality and execute any
instruments and take any steps required by Bank in order that all moneys due and
to become due under any such contracts shall be assigned to Bank and notice
thereof given to the United States under the Federal Assignment of Claims Act or
any other applicable law, statute or regulation.
6.6 Name or Address Change. Not change its name or address except upon
thirty (30) days prior written notice to Bank and delivery to Bank of any items
requested by Bank to maintain perfection and priority of Bank's security
interests and access to Obligor's books and records.
6.7 Inspections. Permit officers of Bank, or such persons as any of
them may designate, to visit and inspect any of the properties of Obligor,
examine (either by Bank's employees or by independent accountants) any of the
Collateral or other assets of Obligor, including the books of account of
Obligor, and discuss the affairs, finances and accounts of Obligor with its
officers and with its independent accountants, at such times as Bank may desire.
Prior to the occurrence of an Event of Default, Bank shall conduct such visits
and inspections during normal business hours and after prior notice to Obligor.
6.8 Requested Information. With reasonable promptness, deliver to Bank
all financial information in respect of the condition, operation and affairs of
Obligor and the Collateral as Bank may reasonably request from time to time.
7. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an event of default hereunder:
7.1 The occurrence of any Event of Default under the Loan Agreement or
any of the other Loan Documents;
7.2 The failure of Obligor to duly perform or observe any obligation,
covenant or agreement on its part contained herein which is not cured within any
applicable grace or cure period under the Loan Agreement;
7.3 Any representation or warranty of Obligor contained herein is
discovered to be untrue in any material respect or any statement, certificate or
data furnished by Obligor pursuant
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hereto is discovered to be untrue in any
material respect as of the date as of which the facts therein set forth are
stated or certified; and/or
7.4 Any material uninsured damage to, or loss, theft, or destruction
of, any of the Collateral occurs.
8. REMEDIES OF BANK.
8.1 Remedies. At the option of the Bank, upon the occurrence of an
Event of Default, or at any time thereafter:
(a) The entire unpaid principal of the Bank Indebtedness, or any
part thereof, all interest accrued thereon, all fees due hereunder and all other
obligations of Obligor to Bank hereunder or under any other agreement, note or
otherwise arising will become immediately due and payable without any further
demand or notice;
(b) Bank may enter the premises occupied by Obligor and take
possession of the Collateral and any records relating thereto; and/or
(c) Bank may exercise each and every right and remedy granted to
it under the Loan Documents, under the Code and under any other applicable law
or at equity.
8.2 Sale or Other Disposition of Collateral. The sale, lease or other
disposition of the Collateral, or any part thereof, by Bank after an Event of
Default may be for cash, credit or any combination thereof, and Bank may
purchase all or any part of the Collateral at public or, if permitted by law,
private sale, and in lieu of actual payment of such purchase price, may set-off
the amount of such purchase price against the Bank Indebtedness then owing. Any
sales of the Collateral may be adjourned from time to time with or without
notice. The Bank may cause the Collateral to remain on Obligor's premises or
otherwise or to be removed and stored at premises owned by other persons, at
Obligor's expense, pending sale or other disposition of the Collateral. Obligor,
at Bank's request, shall assemble the Collateral consisting of inventory and
tangible assets and make such assets available to Bank at a place to be
designated by Bank. Bank shall have the right to conduct such sales on Obligor's
premises, at Obligor's expense, or elsewhere, on such occasion or occasions as
Bank may see fit. Any notice required to be given by Bank of a sale, lease or
other disposition or other intended action by Bank with respect to any of the
Collateral which is deposited in the United States mail, postage prepaid and
duly addressed to Obligor at the address specified in Section 11 below, at least
five (5) business days prior to such proposed action, shall constitute fair and
reasonable notice to Obligor of any such action. The net proceeds realized by
Bank upon any such sale or other disposition, after deduction for the expenses
of retaking, holding, storing, transporting, preparing for sale, selling or
otherwise disposing of the Collateral incurred by Bank in connection therewith
and all other reasonable costs and expenses related thereto including reasonable
attorney fees, shall be applied in such order as Bank, in its sole discretion,
elects, toward satisfaction of the Bank Indebtedness. Bank shall account to
Obligor for any surplus realized upon such sale or other disposition, and
Obligor shall remain liable for any deficiency. The commencement of any action,
legal or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect
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Bank's security interest in the Collateral. Obligor agrees that Bank has no
obligation to preserve rights to the Collateral against any other parties. Bank
is hereby granted a license or other right to use, after an Event of Default,
without charge, Obligor's labels, general intangibles, intellectual property,
equipment, real estate, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale and selling any inventory or other
Collateral and Obligor's rights under all contracts, licenses, leases and
franchise agreements shall inure to Bank's benefit. Bank shall be under no
obligation to xxxxxxxx any assets in favor of Obligor or any other party or
against or in payment of any or all of the Bank Indebtedness.
8.3 Actions with Respect to Accounts. Obligor hereby irrevocably
makes, constitutes and appoints Bank (and any of Bank's designated officers,
employees or agents) as Obligor's true and lawful attorney-in-fact, with full
power of substitution, with power to sign Obligor's name and to take any of the
following actions, in Obligor's name or the name of Bank, as Bank may determine
in its reasonable discretion, without notice to Obligor and at Obligor's
expense:
(a) Verify the validity and amount of or any other matter
relating to the Collateral by mail, telephone, telecopy or otherwise;
(b) Upon the occurrence of an Event of Default, notify all
account debtors that Obligor's accounts have been assigned to Bank and that Bank
has a security interest therein;
(c) Upon the occurrence of an Event of Default, direct all
account debtors to make payment of all Obligor's accounts directly to Bank and
forward invoices directly to such account debtors;
(d) Upon the occurrence of an Event of Default, take control in
any manner of any cash or non-cash items of payment or proceeds of such
accounts;
(e) Upon the occurrence of an Event of Default, notify the United
States Postal Service to change the address for delivery of mail addressed to
Obligor to such address as Bank may designate;
(f) Upon the occurrence of an Event of Default, have access to
any lockbox or postal boxes into which Obligor's mail is deposited and receive,
open and dispose of all mail addressed to Obligor;
(g) Upon the occurrence of an Event of Default, take control in
any manner of any rejected, returned, stopped in transit or repossessed goods
relating to any accounts;
(h) Upon the occurrence of an Event of Default, enforce payment
of and collect any accounts, by legal proceedings or otherwise, and for such
purpose Bank may:
-8-
(1) Demand payment of any accounts or direct any account
debtors to make payment of accounts directly to Bank;
(2) Receive and collect all monies due or to become due to
Obligor;
(3) Exercise all of Obligor's rights and remedies with
respect to the collection of accounts;
(4) Settle, adjust, compromise, extend, renew, discharge or
release the accounts;
(5) Sell or assign the accounts on such terms, for such
amount and at such times as Bank deems advisable;
(6) Prepare, file and sign Obligor's name or names on any
Proof of Claim or similar document in any proceeding filed under federal or
state bankruptcy, insolvency, reorganization or other similar law as to any
account debtor;
(7) Prepare, file and sign Obligor's name or names on any
Notice of Lien, Claim of Mechanic's Lien, Assignment or Satisfaction of Lien or
Mechanic's Lien or similar document in connection with the Collateral;
(8) Endorse the name of Obligor upon any chattel papers,
documents, instruments, invoices, freight bills, bills of lading or similar
documents or agreements relating to the accounts or goods pertaining thereto or
upon any checks or other media of payment or evidences of a security interest
that may come into Bank's possession;
(9) Sign the name of Obligor to verifications of accounts
and notices thereof sent by account debtors to Obligor; or
(10) Take all other actions necessary or desirable, as
determined by Bank in its reasonable discretion, to protect Obligor's or Bank's
interest in the accounts.
Obligor ratifies and approves all acts of said attorneys and agrees that said
attorneys shall not be liable for any acts of commission or omission, nor for
any error of judgment or mistake of fact or law, except willful misconduct or
gross negligence. This power, being coupled with an interest, is irrevocable.
Obligor agrees to assist the Bank in the collection and enforcement of its
accounts and not to hinder, delay or impede the Bank on its collection or
enforcement of said accounts.
8.4 Set-Off. Without limiting the rights of Bank under applicable law,
Bank has and may exercise a right of set-off, a lien against and a security
interest in all property of Obligor now or at any time in Bank's possession in
any capacity whatsoever, including but not limited to any balance of any
deposit, trust or agency account, or any other bank account with Bank, but
expressly including any separate segregated account containing contributions to
an employee retirement plan
-9-
or payments for federal withholding taxes, as security for all obligations of
Obligor to Bank under the Loan Documents or otherwise. At any time and from time
to time following the occurrence of an Event of Default, Bank may without notice
or demand, set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by Bank to or for the credit of Obligor against any or all of the
Bank Indebtedness and the Obligor's obligations under the Loan Documents.
If any bank account of Obligor with Bank is attached or otherwise liened or
levied upon by any third party, Bank need not await the running of any
applicable grace period hereunder, but Bank shall have and be deemed to have the
immediate right of set-off and may apply the funds or amount thus set-off
against Obligor's obligations to the Bank.
8.5 Delay or Omission Not Waiver. Neither the failure nor any delay on
the part of Bank to exercise any right, remedy, power or privilege under the
Loan Documents upon the occurrence of any Event of Default or otherwise shall
operate as a waiver thereof or impair any such right, remedy, power or
privilege. No waiver of any Event of Default shall affect any later Event of
Default or shall impair any rights of Bank. No single, partial or full exercise
of any rights, remedies, powers and privileges by the Bank shall preclude
further or other exercise thereof. No course of dealing between Bank and Obligor
shall operate as or be deemed to constitute a waiver of Bank's rights under the
Loan Documents or affect the duties or obligations of Obligor.
8.6 Remedies Cumulative; Consents. The rights, remedies, powers and
privileges provided for herein shall not be deemed exclusive, but shall be
cumulative and shall be in addition to all other rights, remedies, powers and
privileges in Bank's favor at law or in equity. Whenever the Bank's consent or
approval is required or permitted, such consent or approval shall be at the sole
and absolute discretion of Bank.
9. CERTAIN FEES, COSTS, EXPENSES AND EXPENDITURES. Obligor agrees to pay on
demand all reasonable costs and expenses of Bank, including without limitation:
9.1 All costs and expenses in connection with the preparation, review,
negotiation, execution, delivery and administration of the Loan Documents, and
the other documents to be delivered in connection therewith, or any amendments,
extensions and increases to any of the foregoing (including, without limitation,
reasonable attorney's fees and expenses, and the cost of appraisals and
reappraisals of Collateral), and the cost of periodic lien searches and tax
clearance certificates, as Bank deems advisable;
9.2 All losses, costs and expenses in connection with the enforcement,
protection and preservation of the Bank's rights or remedies under the Loan
Documents, or any other agreement relating to any Obligations, or in connection
with legal advice relating to the rights or responsibilities of Bank (including
without limitation court costs, reasonable attorney's fees and expenses of
accountants and appraisers); and
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9.3 Any and all stamp and other taxes payable or determined to be
payable in connection with the execution and delivery of the Loan Documents, and
all liabilities to which Bank may become subject as the result of delay in
paying or omission to pay such taxes.
In the event Obligor shall fail to pay taxes, insurance, assessments, costs
or expenses which it is required to pay hereunder, or fails to keep the
Collateral free from security interests or lien (except as expressly permitted
herein), or fails to maintain or repair the Collateral as required hereby, or
otherwise breaches any obligations under the Loan Documents, Bank in its
reasonable discretion, may make expenditures for such purposes and the amount so
expended (including reasonable attorney's fees and expenses, filing fees and
other charges) shall be payable by Obligor on demand and shall constitute part
of the Bank Indebtedness.
In the event any action at law or in equity in connection with the Loan
Documents, the Bank Indebtedness or matters collateral thereto is terminated
adverse to Obligor, Obligor will pay all attorneys' fees and legal costs
incurred by Bank in connection with such actions.
With respect to any amount required to be paid by Obligor under this
Section, in the event Obligor fails to pay such amount on demand, Obligor shall
also pay to Bank interest thereon at the default rate set forth in Section 2.2
of the Loan Agreement. Obligor's obligations under this Section shall survive
termination of this Agreement.
10. TIME IS OF THE ESSENCE. Time is of the essence in Obligor's performance
of its obligations under the Loan Documents.
11. COMMUNICATIONS AND NOTICES. All notices, requests and other
communications made or given in connection with this Agreement shall be in
writing and, unless receipt is stated herein to be required, shall be deemed to
have been validly given if delivered personally to the individual or division or
department to whose attention notices to a party are to be addressed, or by
private carrier, telecopy (with original forwarded by first class mail), or
registered or certified mail, return receipt requested, in all cases with
postage prepaid, addressed as follows, until some other address (or individual
or division or department for attention) shall have been designated by notice
given by one party to the other:
To Obligor:
Liberty International Inc.
000 Xxxxx Xxxx, Xxxxx _____
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Vice President-Finance
and Chief Financial Officer
Telecopy Number: (000) 000-0000
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With a copy to:
Pepper, Xxxxxxxx & Xxxxxxx
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esquire
Telecopier: (000) 000-0000
To Bank:
First Union National Bank
000 Xxxxx Xxxxx Xxxxxx, XX0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Storm, Senior Vice President
Telecopier: (000) 000-0000
With a copy to:
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx
000 Xxxxxx Xxxxxxx, Xxxxxxxx 000
X.X. Xxx 0000
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxx, Esquire
Telecopier: (000) 000-0000 or 238-0374
12. LIMITATION ON LIABILITY. Obligor shall be responsible for and Bank is
hereby released from any claim or liability in connection with:
12.1 Safekeeping any Collateral;
12.2 Any loss or damage to any Collateral;
12.3 Any diminution in value of the Collateral; or
12.4 Any act or default of another person or entity.
Bank shall only be liable for any act or omission on its part
constituting willful misconduct or gross negligence. In the event that Bank
breaches its required standard of conduct, Obligor agrees that its liability
shall be only for direct damages suffered and shall not extend to consequential
or incidental damages. In the event Obligor brings suit against Bank in
connection with the transactions contemplated hereunder and Bank is found not to
be liable, Obligor will indemnify and hold Bank harmless from all costs and
expenses, including attorney's fees, incurred by Bank in connection with such
suit. Nothing contained herein, however, relieves Bank from any obligation, if
any, imposed on a secured creditor under the Code with respect to safekeeping of
collateral.
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13. WAIVERS. In connection with any proceedings hereunder or in
connection with any of the Bank Indebtedness, including without limitation any
action by Bank in replevin, foreclosure or other court process or in connection
with any other action related to the Bank Indebtedness or the transactions
contemplated hereunder, Obligor waives:
13.1 all errors, defects and imperfections in such proceedings;
13.2 all benefits under any present or future laws exempting any
property, real or personal, or any part of any proceeds thereof from attachment,
levy or sale under execution, or providing for any stay of execution to be
issued on any judgment recovered in connection with the Bank Indebtedness or in
any replevin or foreclosure proceeding, or otherwise providing for any
valuation, appraisal or exemption;
13.3 all rights to inquisition on any real estate, which real estate
may be levied upon pursuant to a judgment obtained in connection with any of the
Bank Indebtedness and sold upon any writ of execution issued thereon in whole or
in part, in any order desired by Bank;
13.4 presentment for payment, demand, notice of demand, notice of
non-payment, protest and notice of protest of any of the Bank Indebtedness;
13.5 any requirement for bonds, security or sureties required by
statute, court rule or otherwise;
13.6 any demand for possession of Collateral prior to commencement of
any suit; and
13.7 all rights to claim or recover attorney's fees and costs in the
event that Obligor is successful in any action to remove, suspend or enforce a
judgment entered by confession.
14. EXCLUSIVE JURISDICTION. Obligor hereby consents to the exclusive
jurisdiction of any state or federal court located within the Commonwealth of
Pennsylvania, and irrevocably agrees that, subject to the Bank's election, all
actions or proceedings relating to the Loan Documents or the transactions
contemplated hereunder shall be litigated in such courts, and Obligor waives any
objection which it may have based on improper venue or forum non conveniens to
the conduct of any proceeding in any such court and waives personal service of
any and all process upon it, and consents that all such service of process be
made by mail or messenger directed to it at the address set forth in Section 11.
Nothing contained in this Section 14 shall affect the right of Bank to serve
legal process in any other manner permitted by law or affect the right of Bank
to bring any action or proceeding against Obligor or its property in the courts
of any other jurisdiction.
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15. MISCELLANEOUS PROVISIONS.
15.1 Severability. The provisions of this Agreement and all other Loan
Documents are deemed to be severable, and the invalidity or unenforceability of
any provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.
15.2 Headings. The headings of the Articles, Sections, paragraphs and
clauses of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement.
15.3 Binding Effect. This Agreement and all rights and powers granted
hereby will bind and inure to the benefit of the parties hereto and their
respective permitted successors and assigns.
15.4 Amendment. No modification of this Agreement or any of the Loan
Documents shall be binding or enforceable unless in writing and signed by or on
behalf of the party against whom enforcement is sought.
15.5 Governing Law. This Agreement has been made, executed and
delivered in the Commonwealth of Pennsylvania and will be construed in
accordance with and governed by the laws of such Commonwealth.
15.6 No Third Party Beneficiaries. The rights and benefits of this
Agreement and the Loan Documents shall not inure to the benefit of any third
party.
15.7 Exhibits and Schedules. All exhibits and schedules attached
hereto are hereby made a part of this Agreement.
15.8 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
15.9 No Joint Venture. Nothing contained herein is intended to permit
or authorize Obligor to make any contract on behalf of Bank, nor shall this
Agreement be construed as creating a partnership, joint venture or making Bank
an investor in Obligor.
15.10 Filing of Financing Statements. Copies or reproductions of this
document or of any financing statement may be filed as a financing statement.
15.11 Waiver of Right to Trial by Jury. OBLIGOR AND BANK WAIVE ANY
RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a)
ARISING UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT OR INSTRUMENT REFERRED TO
HEREIN OR DELIVERED IN CONNECTION HEREWITH, OR (b) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF OBLIGOR WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER
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DOCUMENT OR INSTRUMENT REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH,
OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE. OBLIGOR AND BANK AGREE AND CONSENT THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
OBLIGOR AND BANK TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the undersigned has executed this Security
Agreement on the date first above written.
LIBERTY INTERNATIONAL INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
Bank hereby joins in this Agreement for the sole purpose of ratifying and
confirming its consent to the provisions contained in Section 5.11 above.
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxx X. Storm
---------------------------------
Xxxxxxx X. Storm, Senior Vice President
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NAMES AND ADDRESSES OF OBLIGOR
000 Xxxxx Xxxx, Xxxxxxxxxxxx, XX 00000
SCHEDULE 5.3
TO
SECURITY AGREEMENT
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is executed this 27th day of
February, 1997, by BETA MONITORS INTERNATIONAL, INC., a Nevada corporation (the
"Obligor"), in favor of FIRST UNION NATIONAL BANK (the "Bank"). Obligor,
intending to be legally bound, hereby agrees as follows:
1. DEFINITIONS. For purposes of this Agreement,
1.1 "account", "account debtor", "chattel paper", "documents",
"equipment", "general intangibles", "goods", "instrument", "inventory" and
"proceeds" shall have the meanings given such terms in the Code.
1.2 "Bank Indebtedness" shall have such meaning as provided therefor
in the Loan Agreement.
1.3 "Chief Executive Office" shall mean the place from which the main
part of the business operations of Obligor are managed. Obligor's current Chief
Executive Office is 0000 Xxxxxx Xxxx, Xxxxxxx, XX 00000.
1.4 "Code" shall mean the Uniform Commercial Code as adopted by the
Commonwealth of Pennsylvania, as the same may be amended from time to time.
1.5 "Collateral" shall mean all existing and after-acquired accounts
and inventory of Obligor and all proceeds thereof, including without limitation:
(a) All present and future accounts and all other rights to the
payment of money whether or not yet earned, for services rendered or goods sold,
consigned, leased or furnished by Obligor or otherwise, together with (i) all
goods (including any returned, rejected, repossessed or consigned goods), the
sale, consignment, lease or other furnishings of which shall have given or may
give rise to any of the foregoing, (ii) all of Obligor's rights as a consignor,
consignee, unpaid vendor or other lienor in connection therewith, including
stoppage in transit, set-off, detinue, replevin and reclamation, (iii) all
general intangibles, contract rights, instruments and documents related to any
accounts, (iv) all guaranties, mortgages, security interests, assignments, and
other encumbrances on real or personal property, leases and other agreements or
property securing or relating to any accounts, (v) choses-in-action, claims and
judgments related to any accounts, and (vi) all products and proceeds of any of
the foregoing.
(b) All present and future inventory (including but not limited
to goods held for sale or lease or furnished or to be furnished under contracts
for service, raw materials, work-in-process, finished goods and goods used or
consumed in Obligor's business) whether owned, consigned or held on consignment,
together with all merchandise, component materials, supplies, packing, packaging
and shipping materials, and all returned, rejected or repossessed goods sold,
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consigned, leased or otherwise furnished by Obligor and all products and
proceeds of any of the foregoing.
(c) All present and future general ledger sheets, files, records,
books of account, invoices, bills, certificates or documents of ownership, bills
of sale, business papers, correspondence, credit files, tapes, cards, computer
runs and all other data and data storage systems whether in the possession of
Obligor or any service bureau relating to, generated in connection with, or
evidencing any of the items referenced in (a) or (b) above.
1.6 "Event of Default" shall include any and all events described in
Section 7 below.
1.7 "Loan Agreement" shall mean that certain Loan Agreement dated
December 2, 1993 among, inter alios, Bank and Obligor, as amended, including,
without limitation, by Third Amendment and Modification to Loan Agreement of
even date and as the same may hereafter be amended from time to time.
1.8 "Loan Documents" shall mean all agreements, documents and
instruments evidencing the Bank Indebtedness and all agreements, documents and
instruments collateral thereto, together with all amendments, replacements,
increases, renewals and modifications thereof or thereto, including without
limitation this Agreement and the Loan Agreement.
2. SECURITY INTEREST. Obligor grants to Bank a security interest in and
lien on the Collateral.
3. EFFECT OF GRANT. The security interests in and liens on the Collateral
granted to Bank by Obligor hereunder shall not be rendered void by the fact that
no Bank Indebtedness exists as of a particular date, but shall continue in full
force and effect until all Bank Indebtedness has been paid in full, Bank has no
agreement or commitment outstanding pursuant to which Bank may extend credit to
or on behalf of Obligor and Bank has executed and delivered termination
statements and/or releases of Bank with respect to the Collateral.
4. OBLIGATIONS SECURED. The Collateral and the continuing security
interests granted therein shall secure the Bank Indebtedness. IT IS THE EXPRESS
INTENTION OF OBLIGOR THAT THE COLLATERAL SHALL SECURE ALL EXISTING AND FUTURE
BANK INDEBTEDNESS.
5. REPRESENTATIONS. Obligor hereby represents and warrants as follows,
which representations and warranties shall be true and correct as of the date
hereof and, unless disclosed to and approved by Bank, at the time of the
creation of any Bank Indebtedness and until all Bank Indebtedness has been paid
in full:
5.1 Title to Collateral. The Collateral is and will be owned by
Obligor free and clear of all liens and other encumbrances of any kind
(including liens or other encumbrances upon properties acquired or to be
acquired under conditional sales agreements or other title retention
-2-
devices), excepting only liens in favor of the Bank and those certain liens and
encumbrances expressly permitted under Section 5.9 of the Loan Agreement.
Obligor will defend the Collateral against any claims of all persons or entities
other than the Bank or a permitted lienholder.
5.2 Governmental Consents. Except as described in Section 4.10 of the
Loan Agreement, no consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of Obligor is
required in connection with the execution, delivery or performance by Obligor of
this Agreement or the consummation of the transactions contemplated hereby.
5.3 Addresses. The portions of the Collateral which are tangible
(corporeal) property and Obligor's books and records pertaining thereto will at
all times be located at the addresses set forth on Schedule 5.3 attached hereto;
or such other location determined by Obligor after prior notice to Bank and
delivery to Bank of any items requested by Bank in its reasonable discretion to
maintain perfection and priority of Bank's security interests and liens and
access to Obligor's books and records.
5.4 Inventory Warranties. With respect to inventory from time to time
scheduled, listed or referred to in any certificate, statement or report
prepared by or for Obligor and delivered to Bank, Obligor warrants and
represents that (a) such inventory is located at the address or addresses listed
on Schedule 5.3 attached hereto and is not in transit; (b) Obligor has good,
indefeasible and merchantable title to such inventory and such inventory is not
subject to any lien or security interest whatsoever except for the prior,
perfected security interest granted to Bank and any liens expressly permitted
under Section 5.9 of the Loan Agreement; (c) to Obligor's knowledge and except
as disclosed to Bank in writing, such inventory is of good and merchantable
quality, free from any defects; (d) such inventory is not subject to any
licensing, patent, royalty, trademark, trade name or copyright agreements with
any third parties; and (e) the completion of the manufacture and sale or other
disposition of such inventory by Bank following an Event of Default shall not
require the consent of any person and shall not constitute a breach or default
under any contract or agreement to which the Obligor is a party or to which the
inventory is subject.
5.5 Accounts Receivable Warranties. With respect to all accounts
receivable from time to time scheduled, listed or referred to in any
certificate, statement or report prepared by or for Obligor and delivered to
Bank, Obligor warrants and represents that (a) the accounts are genuine, are in
all material respects what they purport to be, and are not, except as disclosed
and assigned to Bank in writing, evidenced by any chattel paper, note,
instrument or judgment; (b) Obligor has good and marketable title to such
accounts, except for liens expressly permitted under the Loan Agreement and,
except as disclosed to Bank in writing, the accounts represent undisputed, bona
fide transactions completed in accordance with the terms thereof and as
represented to Bank; (c) to Borrower's knowledge, except as disclosed to Bank in
writing, there are no setoffs, counterclaims or disputes existing or asserted
with respect thereto and Obligor has not made any agreement with any account
debtor for any deduction therefrom; (d) to Borrower's knowledge, except as
disclosed to Bank in writing, there are no facts, events or occurrences which
impair the validity or enforcement thereof or may reduce the amount payable
thereunder as shown on any certificates, statements or reports prepared by or
for Obligor and delivered to Bank, or on Obligor's
-3-
books and records and all invoices and statements delivered to Bank with respect
thereto; (e) to the best of Obligor's knowledge, all account debtors have the
capacity to contract and are solvent; (f) the goods sold giving rise thereto are
not subject to any lien, claim, encumbrance or security interest except that of
Bank and except for liens expressly permitted under the Loan Agreement; (g) to
the best of Obligor's knowledge, there are no proceedings or actions which are
threatened or pending against any account debtor which might result in any
material adverse change in such account debtor's financial condition; (h) the
account is not an account with respect to which the account debtor is an
affiliate of Obligor or a director, officer of employee of Obligor or its
affiliates; (i) the account does not arise with respect to goods which have not
been shipped or arise with respect to services which have not been fully
performed and accepted as satisfactory by the account debtor; (j) the account is
not an account with respect to which the account debtor's obligation to pay the
account is conditional upon the account debtor's approval or is otherwise
subject to any repurchase obligation or return right, as with sales made on a
xxxx-and-hold, guaranteed sale, sale-and-return, or sale on approval basis; (k)
to Borrower's knowledge, except as disclosed to Bank in writing, the amounts
shown on the applicable certificates, statements, on Obligor's books and records
and all invoices and statements which may be delivered to Bank with respect to
such accounts are actually and absolutely owing to Obligor and are not in any
way contingent; and (l) the accounts have not been sold, assigned or transferred
to any other Person and no Person except Obligor has any claim thereto or (with
the exception of the applicable account debtor) any claims to the goods sold.
5.6 Accuracy of Representations and Warranties. No representation or
warranty by Obligor contained herein or in any certificate or other document
furnished by Obligor pursuant hereto or in connection herewith fails to contain
any statement of material fact necessary to make such representation or warranty
not misleading in light of the circumstances under which it was made. There is
no fact which Obligor knows or should know and has not disclosed to Bank, which
does or may materially and adversely affect Obligor, or any of its operations.
6. COVENANTS. Obligor covenants and agrees that until the Bank Indebtedness
have been paid in full, Obligor shall:
6.1 Disposition of Assets. Not sell, lease, transfer or otherwise
dispose of all, substantially all, or any material portion of the Collateral,
except for sales of inventory in the ordinary course for fair consideration.
6.2 Liens. Not create, incur or permit to exist any mortgage, pledge,
encumbrance, lien, security interest or charge of any kind (including liens or
charges upon properties acquired or to be acquired under conditional sales
agreements or other title retention devices) on any of the Collateral, whether
now owned or hereafter acquired, or upon any income or profits therefrom, except
as permitted hereunder or under the Loan Documents.
6.3 Insurance. Carry adequate insurance issued by responsible and
financially sound insurers acceptable to Bank, in amounts acceptable to Bank (at
least adequate to comply with any co-insurance provisions) and against all such
liability and hazards as are usually carried by entities engaged in the same or
a similar business similarly situated or as may be required by Bank in its
reasonable discretion. Obligor will carry business interruption insurance in
such amounts as
-4-
may be required by Bank in its reasonable discretion. In the case of insurance
on any of the Collateral Obligor shall carry insurance in the full insurable
value thereof and cause Bank to be named as loss payee (with a lender's loss
payable endorsement) with respect to all personal property, and additional
insured with respect to all liability insurance, as its interests may appear
with thirty (30) days' notice to be given Bank by the insurance carrier prior to
cancellation or material modification of such insurance coverage.
Obligor shall cause to be delivered to Bank the insurance policies therefor
or in the alternative, evidence of insurance and at least thirty (30) business
days prior to the expiration of any such insurance, additional policies or
duplicates thereof or in the alternative, evidence of insurance evidencing the
renewal of such insurance and payment of the premiums therefor. Obligor shall
direct all insurers that in the event of any loss thereunder or the cancellation
of any insurance policy, the insurers shall make payments for such loss and pay
all returned or unearned premiums directly to Bank and not to Obligor and Bank
jointly.
In the event of any loss, Obligor will give Bank immediate notice thereof
and Bank may make proof of loss whether the same is done by Obligor. Bank is
granted a power of attorney by Obligor with full power of substitution to file
any proof of loss in Obligor's or Bank's name, to endorse Obligor's name on any
check, draft or other instrument evidencing insurance proceeds, and to take any
action or sign any document to pursue any insurance loss claim. Such power being
coupled with an interest is irrevocable.
In the event of any loss, Bank, at its option, may (i) retain and apply all
or any part of the insurance proceeds to reduce, in such order and amounts as
Bank may elect the Bank Indebtedness, or (ii) disburse all or any part of such
insurance proceeds to or for the benefit of Obligor for the purpose of repairing
or replacing Collateral after receiving proof satisfactory to Bank of such
repair or replacement, in either case without waiving or impairing the Bank
Indebtedness or any provision of this Agreement. Any deficiency thereon shall be
paid by Obligor to Bank upon demand. Obligor shall not take out any insurance
without having Bank named as loss payee or additional insured thereon. Obligor
shall bear the full risk of loss from any loss of any nature whatsoever with
respect to the Collateral. Notwithstanding the foregoing, if no Event of Default
has occurred and no event or circumstance exists which, upon the passage of
time, delivery of notice or both would constitute any such Event of Default,
Bank shall make insurance proceeds on the Collateral actually received by Bank
available to Obligor if, as a result of Obligor's use of such proceeds, Bank
receives replacement Collateral of the same type and value as those giving rise
to the insurance proceeds or as Bank shall otherwise approve.
6.4 Additional Documents and Future Actions. At its sole cost, take
such actions and provide Bank from time to time with such agreements, financing
statements and additional instruments, documents or information as the Bank may
in its reasonable discretion deem necessary or advisable to perfect, protect and
maintain the security interests in the Collateral, to permit Bank to protect its
interest in the Collateral, or to carry out the terms of the Loan Documents.
Obligor hereby authorizes and appoints Bank as its attorney-in-fact, with full
power of substitution, to take such actions as Bank may deem advisable in its
reasonable discretion to protect the Collateral and its interests thereon and
its rights hereunder, to execute on Obligor's behalf and file at Obligor's
-5-
expense financing statements, and amendments thereto, in those public offices
deemed necessary or appropriate by Bank to establish, maintain and protect a
continuously perfected security interest in the Collateral, and to execute on
Obligor's behalf such other documents and notices as Bank may deem advisable in
its reasonable discretion to protect the Collateral and its interests therein
and its rights hereunder. Such power being coupled with an interest is
irrevocable. Obligor irrevocably authorizes the filing of a carbon, photographic
or other copy of this Agreement, or of a financing statement, as a financing
statement and agrees that such filing is sufficient as a financing statement.
6.5 Government Contracts. Promptly notify Bank if any of Obligor's
accounts arise out of contracts with any department, agency or instrumentality
of the United States or any State, Commonwealth or municipality and execute any
instruments and take any steps required by Bank in order that all moneys due and
to become due under any such contracts shall be assigned to Bank and notice
thereof given to the United States under the Federal Assignment of Claims Act or
any other applicable law, statute or regulation.
6.6 Name or Address Change. Not change its name or address except upon
thirty (30) days prior written notice to Bank and delivery to Bank of any items
requested by Bank to maintain perfection and priority of Bank's security
interests and access to Obligor's books and records.
6.7 Inspections. Permit officers of Bank, or such persons as any of
them may designate, to visit and inspect any of the properties of Obligor,
examine (either by Bank's employees or by independent accountants) any of the
Collateral or other assets of Obligor, including the books of account of
Obligor, and discuss the affairs, finances and accounts of Obligor with its
officers and with its independent accountants, at such times as Bank may desire.
Prior to the occurrence of an Event of Default, Bank shall conduct such visits
and inspections during normal business hours and after prior notice to Obligor.
6.8 Requested Information. With reasonable promptness, deliver to Bank
all financial information in respect of the condition, operation and affairs of
Obligor and the Collateral as Bank may reasonably request from time to time.
7. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an event of default hereunder:
7.1 The occurrence of any Event of Default under the Loan Agreement or
any of the other Loan Documents;
7.2 The failure of Obligor to duly perform or observe any obligation,
covenant or agreement on its part contained herein which is not cured within any
applicable grace or cure period under the Loan Agreement;
7.3 Any representation or warranty of Obligor contained herein is
discovered to be untrue in any material respect or any statement, certificate or
data furnished by Obligor pursuant
-6-
hereto is discovered to be untrue in any material respect as of the date as of
which the facts therein set forth are stated or certified; and/or
7.4 Any material uninsured damage to, or loss, theft, or destruction
of, any of the Collateral occurs.
8. REMEDIES OF BANK.
8.1 Remedies. At the option of the Bank, upon the occurrence of an
Event of Default, or at any time thereafter:
(a) The entire unpaid principal of the Bank Indebtedness, or any
part thereof, all interest accrued thereon, all fees due hereunder and all other
obligations of Obligor to Bank hereunder or under any other agreement, note or
otherwise arising will become immediately due and payable without any further
demand or notice;
(b) Bank may enter the premises occupied by Obligor and take
possession of the Collateral and any records relating thereto; and/or
(c) Bank may exercise each and every right and remedy granted to
it under the Loan Documents, under the Code and under any other applicable law
or at equity.
8.2 Sale or Other Disposition of Collateral. The sale, lease or other
disposition of the Collateral, or any part thereof, by Bank after an Event of
Default may be for cash, credit or any combination thereof, and Bank may
purchase all or any part of the Collateral at public or, if permitted by law,
private sale, and in lieu of actual payment of such purchase price, may set-off
the amount of such purchase price against the Bank Indebtedness then owing. Any
sales of the Collateral may be adjourned from time to time with or without
notice. The Bank may cause the Collateral to remain on Obligor's premises or
otherwise or to be removed and stored at premises owned by other persons, at
Obligor's expense, pending sale or other disposition of the Collateral. Obligor,
at Bank's request, shall assemble the Collateral consisting of inventory and
tangible assets and make such assets available to Bank at a place to be
designated by Bank. Bank shall have the right to conduct such sales on Obligor's
premises, at Obligor's expense, or elsewhere, on such occasion or occasions as
Bank may see fit. Any notice required to be given by Bank of a sale, lease or
other disposition or other intended action by Bank with respect to any of the
Collateral which is deposited in the United States mail, postage prepaid and
duly addressed to Obligor at the address specified in Section 11 below, at least
five (5) business days prior to such proposed action, shall constitute fair and
reasonable notice to Obligor of any such action. The net proceeds realized by
Bank upon any such sale or other disposition, after deduction for the expenses
of retaking, holding, storing, transporting, preparing for sale, selling or
otherwise disposing of the Collateral incurred by Bank in connection therewith
and all other reasonable costs and expenses related thereto including reasonable
attorney fees, shall be applied in such order as Bank, in its sole discretion,
elects, toward satisfaction of the Bank Indebtedness. Bank shall account to
Obligor for any surplus realized upon such sale or other disposition, and
Obligor shall remain liable for any deficiency. The commencement of any action,
legal or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect
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Bank's security interest in the Collateral. Obligor agrees that Bank has no
obligation to preserve rights to the Collateral against any other parties. Bank
is hereby granted a license or other right to use, after an Event of Default,
without charge, Obligor's labels, general intangibles, intellectual property,
equipment, real estate, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale and selling any inventory or other
Collateral and Obligor's rights under all contracts, licenses, leases and
franchise agreements shall inure to Bank's benefit. Bank shall be under no
obligation to xxxxxxxx any assets in favor of Obligor or any other party or
against or in payment of any or all of the Bank Indebtedness.
8.3 Actions with Respect to Accounts. Obligor hereby irrevocably
makes, constitutes and appoints Bank (and any of Bank's designated officers,
employees or agents) as Obligor's true and lawful attorney-in-fact, with full
power of substitution, with power to sign Obligor's name and to take any of the
following actions, in Obligor's name or the name of Bank, as Bank may determine
in its reasonable discretion, without notice to Obligor and at Obligor's
expense:
(a) Verify the validity and amount of or any other matter
relating to the Collateral by mail, telephone, telecopy or otherwise;
(b) Upon the occurrence of an Event of Default, notify all
account debtors that Obligor's accounts have been assigned to Bank and that Bank
has a security interest therein;
(c) Upon the occurrence of an Event of Default, direct all
account debtors to make payment of all Obligor's accounts directly to Bank and
forward invoices directly to such account debtors;
(d) Upon the occurrence of an Event of Default, take control in
any manner of any cash or non-cash items of payment or proceeds of such
accounts;
(e) Upon the occurrence of an Event of Default, notify the United
States Postal Service to change the address for delivery of mail addressed to
Obligor to such address as Bank may designate;
(f) Upon the occurrence of an Event of Default, have access to
any lockbox or postal boxes into which Obligor's mail is deposited and receive,
open and dispose of all mail addressed to Obligor;
(g) Upon the occurrence of an Event of Default, take control in
any manner of any rejected, returned, stopped in transit or repossessed goods
relating to any accounts;
(h) Upon the occurrence of an Event of Default, enforce payment
of and collect any accounts, by legal proceedings or otherwise, and for such
purpose Bank may:
-8-
(1) Demand payment of any accounts or direct any account
debtors to make payment of accounts directly to Bank;
(2) Receive and collect all monies due or to become due to
Obligor;
(3) Exercise all of Obligor's rights and remedies with
respect to the collection of accounts;
(4) Settle, adjust, compromise, extend, renew, discharge or
release the accounts;
(5) Sell or assign the accounts on such terms, for such
amount and at such times as Bank deems advisable;
(6) Prepare, file and sign Obligor's name or names on any
Proof of Claim or similar document in any proceeding filed under federal or
state bankruptcy, insolvency, reorganization or other similar law as to any
account debtor;
(7) Prepare, file and sign Obligor's name or names on any
Notice of Lien, Claim of Mechanic's Lien, Assignment or Satisfaction of Lien or
Mechanic's Lien or similar document in connection with the Collateral;
(8) Endorse the name of Obligor upon any chattel papers,
documents, instruments, invoices, freight bills, bills of lading or similar
documents or agreements relating to the accounts or goods pertaining thereto or
upon any checks or other media of payment or evidences of a security interest
that may come into Bank's possession;
(9) Sign the name of Obligor to verifications of accounts
and notices thereof sent by account debtors to Obligor; or
(10) Take all other actions necessary or desirable, as
determined by Bank in its reasonable discretion, to protect Obligor's or Bank's
interest in the accounts.
Obligor ratifies and approves all acts of said attorneys and agrees that said
attorneys shall not be liable for any acts of commission or omission, nor for
any error of judgment or mistake of fact or law, except willful misconduct or
gross negligence. This power, being coupled with an interest, is irrevocable.
Obligor agrees to assist the Bank in the collection and enforcement of its
accounts and not to hinder, delay or impede the Bank on its collection or
enforcement of said accounts.
8.4 Set-Off. Without limiting the rights of Bank under applicable law,
Bank has and may exercise a right of set-off, a lien against and a security
interest in all property of Obligor now or at any time in Bank's possession in
any capacity whatsoever, including but not limited to any balance of any
deposit, trust or agency account, or any other bank account with Bank, but
expressly including any separate segregated account containing contributions to
an employee retirement plan
-9-
or payments for federal withholding taxes, as security for all obligations of
Obligor to Bank under the Loan Documents or otherwise. At any time and from time
to time following the occurrence of an Event of Default, Bank may without notice
or demand, set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by Bank to or for the credit of Obligor against any or all of the
Bank Indebtedness and the Obligor's obligations under the Loan Documents.
If any bank account of Obligor with Bank is attached or otherwise liened or
levied upon by any third party, Bank need not await the running of any
applicable grace period hereunder, but Bank shall have and be deemed to have the
immediate right of set-off and may apply the funds or amount thus set-off
against Obligor's obligations to the Bank.
8.5 Delay or Omission Not Waiver. Neither the failure nor any delay on
the part of Bank to exercise any right, remedy, power or privilege under the
Loan Documents upon the occurrence of any Event of Default or otherwise shall
operate as a waiver thereof or impair any such right, remedy, power or
privilege. No waiver of any Event of Default shall affect any later Event of
Default or shall impair any rights of Bank. No single, partial or full exercise
of any rights, remedies, powers and privileges by the Bank shall preclude
further or other exercise thereof. No course of dealing between Bank and Obligor
shall operate as or be deemed to constitute a waiver of Bank's rights under the
Loan Documents or affect the duties or obligations of Obligor.
8.6 Remedies Cumulative; Consents. The rights, remedies, powers and
privileges provided for herein shall not be deemed exclusive, but shall be
cumulative and shall be in addition to all other rights, remedies, powers and
privileges in Bank's favor at law or in equity. Whenever the Bank's consent or
approval is required or permitted, such consent or approval shall be at the sole
and absolute discretion of Bank.
9. CERTAIN FEES, COSTS, EXPENSES AND EXPENDITURES. Obligor agrees to pay on
demand all reasonable costs and expenses of Bank, including without limitation:
9.1 All costs and expenses in connection with the preparation, review,
negotiation, execution, delivery and administration of the Loan Documents, and
the other documents to be delivered in connection therewith, or any amendments,
extensions and increases to any of the foregoing (including, without limitation,
reasonable attorney's fees and expenses, and the cost of appraisals and
reappraisals of Collateral), and the cost of periodic lien searches and tax
clearance certificates, as Bank deems advisable;
9.2 All losses, costs and expenses in connection with the enforcement,
protection and preservation of the Bank's rights or remedies under the Loan
Documents, or any other agreement relating to any Obligations, or in connection
with legal advice relating to the rights or responsibilities of Bank (including
without limitation court costs, reasonable attorney's fees and expenses of
accountants and appraisers); and
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9.3 Any and all stamp and other taxes payable or determined to be
payable in connection with the execution and delivery of the Loan Documents, and
all liabilities to which Bank may become subject as the result of delay in
paying or omission to pay such taxes.
In the event Obligor shall fail to pay taxes, insurance, assessments, costs
or expenses which it is required to pay hereunder, or fails to keep the
Collateral free from security interests or lien (except as expressly permitted
herein), or fails to maintain or repair the Collateral as required hereby, or
otherwise breaches any obligations under the Loan Documents, Bank in its
reasonable discretion, may make expenditures for such purposes and the amount so
expended (including reasonable attorney's fees and expenses, filing fees and
other charges) shall be payable by Obligor on demand and shall constitute part
of the Bank Indebtedness.
In the event any action at law or in equity in connection with the Loan
Documents, the Bank Indebtedness or matters collateral thereto is terminated
adverse to Obligor, Obligor will pay all attorneys' fees and legal costs
incurred by Bank in connection with such actions.
With respect to any amount required to be paid by Obligor under this
Section, in the event Obligor fails to pay such amount on demand, Obligor shall
also pay to Bank interest thereon at the default rate set forth in Section 2.2
of the Loan Agreement. Obligor's obligations under this Section shall survive
termination of this Agreement.
10. TIME IS OF THE ESSENCE. Time is of the essence in Obligor's performance
of its obligations under the Loan Documents.
11. COMMUNICATIONS AND NOTICES. All notices, requests and other
communications made or given in connection with this Agreement shall be in
writing and, unless receipt is stated herein to be required, shall be deemed to
have been validly given if delivered personally to the individual or division or
department to whose attention notices to a party are to be addressed, or by
private carrier, telecopy (with original forwarded by first class mail), or
registered or certified mail, return receipt requested, in all cases with
postage prepaid, addressed as follows, until some other address (or individual
or division or department for attention) shall have been designated by notice
given by one party to the other:
To Obligor:
Beta Monitors International, Inc.
000 Xxxxx Xxxx, Xxxxx _____
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Vice President-Finance
and Chief Financial Officer
Telecopy Number: (000) 000-0000
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With a copy to:
Pepper, Xxxxxxxx & Xxxxxxx
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esquire
Telecopier: (000) 000-0000
To Bank:
First Union National Bank
000 Xxxxx Xxxxx Xxxxxx, XX0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Storm, Senior Vice President
Telecopier: (000) 000-0000
With a copy to:
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx
000 Xxxxxx Xxxxxxx, Xxxxxxxx 000
X.X. Xxx 0000
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxx, Esquire
Telecopier: (000) 000-0000 or 238-0374
12. LIMITATION ON LIABILITY. Obligor shall be responsible for and Bank is
hereby released from any claim or liability in connection with:
12.1 Safekeeping any Collateral;
12.2 Any loss or damage to any Collateral;
12.3 Any diminution in value of the Collateral; or
12.4 Any act or default of another person or entity.
Bank shall only be liable for any act or omission on its part constituting
willful misconduct or gross negligence. In the event that Bank breaches its
required standard of conduct, Obligor agrees that its liability shall be only
for direct damages suffered and shall not extend to consequential or incidental
damages. In the event Obligor brings suit against Bank in connection with the
transactions contemplated hereunder and Bank is found not to be liable, Obligor
will indemnify and hold Bank harmless from all costs and expenses, including
attorney's fees, incurred by Bank in connection with such suit. Nothing
contained herein, however, relieves Bank from any obligation, if any, imposed on
a secured creditor under the Code with respect to safekeeping of collateral.
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13. WAIVERS. In connection with any proceedings hereunder or in connection
with any of the Bank Indebtedness, including without limitation any action by
Bank in replevin, foreclosure or other court process or in connection with any
other action related to the Bank Indebtedness or the transactions contemplated
hereunder, Obligor waives:
13.1 all errors, defects and imperfections in such proceedings;
13.2 all benefits under any present or future laws exempting any
property, real or personal, or any part of any proceeds thereof from attachment,
levy or sale under execution, or providing for any stay of execution to be
issued on any judgment recovered in connection with the Bank Indebtedness or in
any replevin or foreclosure proceeding, or otherwise providing for any
valuation, appraisal or exemption;
13.3 all rights to inquisition on any real estate, which real estate
may be levied upon pursuant to a judgment obtained in connection with any of the
Bank Indebtedness and sold upon any writ of execution issued thereon in whole or
in part, in any order desired by Bank;
13.4 presentment for payment, demand, notice of demand, notice of
non-payment, protest and notice of protest of any of the Bank Indebtedness;
13.5 any requirement for bonds, security or sureties required by
statute, court rule or otherwise;
13.6 any demand for possession of Collateral prior to commencement of
any suit; and
13.7 all rights to claim or recover attorney's fees and costs in the
event that Obligor is successful in any action to remove, suspend or enforce a
judgment entered by confession.
14. EXCLUSIVE JURISDICTION. Obligor hereby consents to the exclusive
jurisdiction of any state or federal court located within the Commonwealth of
Pennsylvania, and irrevocably agrees that, subject to the Bank's election, all
actions or proceedings relating to the Loan Documents or the transactions
contemplated hereunder shall be litigated in such courts, and Obligor waives any
objection which it may have based on improper venue or forum non conveniens to
the conduct of any proceeding in any such court and waives personal service of
any and all process upon it, and consents that all such service of process be
made by mail or messenger directed to it at the address set forth in Section 11.
Nothing contained in this Section 14 shall affect the right of Bank to serve
legal process in any other manner permitted by law or affect the right of Bank
to bring any action or proceeding against Obligor or its property in the courts
of any other jurisdiction.
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15. MISCELLANEOUS PROVISIONS.
15.1 Severability. The provisions of this Agreement and all other Loan
Documents are deemed to be severable, and the invalidity or unenforceability of
any provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.
15.2 Headings. The headings of the Articles, Sections, paragraphs and
clauses of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement.
15.3 Binding Effect. This Agreement and all rights and powers granted
hereby will bind and inure to the benefit of the parties hereto and their
respective permitted successors and assigns.
15.4 Amendment. No modification of this Agreement or any of the Loan
Documents shall be binding or enforceable unless in writing and signed by or on
behalf of the party against whom enforcement is sought.
15.5 Governing Law. This Agreement has been made, executed and
delivered in the Commonwealth of Pennsylvania and will be construed in
accordance with and governed by the laws of such Commonwealth.
15.6 No Third Party Beneficiaries. The rights and benefits of this
Agreement and the Loan Documents shall not inure to the benefit of any third
party.
15.7 Exhibits and Schedules. All exhibits and schedules attached
hereto are hereby made a part of this Agreement.
15.8 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
15.9 No Joint Venture. Nothing contained herein is intended to permit
or authorize Obligor to make any contract on behalf of Bank, nor shall this
Agreement be construed as creating a partnership, joint venture or making Bank
an investor in Obligor.
15.10 Filing of Financing Statements. Copies or reproductions of this
document or of any financing statement may be filed as a financing statement.
15.11 Waiver of Right to Trial by Jury. OBLIGOR AND BANK WAIVE ANY
RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a)
ARISING UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT OR INSTRUMENT REFERRED TO
HEREIN OR DELIVERED IN CONNECTION HEREWITH, OR (b) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF OBLIGOR WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER
-14-
DOCUMENT OR INSTRUMENT REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH,
OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE. OBLIGOR AND BANK AGREE AND CONSENT THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
OBLIGOR AND BANK TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the undersigned has executed this Security Agreement on
the date first above written.
BETA MONITORS INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
Bank hereby joins in this Agreement for the sole purpose of ratifying and
confirming its consent to the provisions contained in Section 5.11 above.
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxx X. Storm
---------------------------------
Xxxxxxx X. Storm, Senior Vice President
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NAMES AND ADDRESSES OF OBLIGOR
a) 0000 Xxxxxx Xxxx, Xxxxxxx, XX 00000
b) 000 Xxxxx Xxxx, Xxxxxxxxxxxx, XX 00000
SCHEDULE 5.3
TO
SECURITY AGREEMENT
-16-
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is executed this 27th day of
February, 1997, by LTH DELAWARE, INC., a Delaware corporation (the "Obligor"),
in favor of FIRST UNION NATIONAL BANK (the "Bank"). Obligor, intending to be
legally bound, hereby agrees as follows:
1. DEFINITIONS. For purposes of this Agreement,
1.1 "account", "account debtor", "chattel paper", "documents",
"equipment", "general intangibles", "goods", "instrument", "inventory" and
"proceeds" shall have the meanings given such terms in the Code.
1.2 "Bank Indebtedness" shall have such meaning as provided therefor
in the Loan Agreement.
1.3 "Chief Executive Office" shall mean the place from which the main
part of the business operations of Obligor are managed. Obligor's current Chief
Executive Office is 000 Xxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
1.4 "Code" shall mean the Uniform Commercial Code as adopted by the
Commonwealth of Pennsylvania, as the same may be amended from time to time.
1.5 "Collateral" shall mean all existing and after-acquired accounts
and inventory of Obligor and all proceeds thereof, including without limitation:
(a) All present and future accounts and all other rights to the
payment of money whether or not yet earned, for services rendered or goods sold,
consigned, leased or furnished by Obligor or otherwise, together with (i) all
goods (including any returned, rejected, repossessed or consigned goods), the
sale, consignment, lease or other furnishings of which shall have given or may
give rise to any of the foregoing, (ii) all of Obligor's rights as a consignor,
consignee, unpaid vendor or other lienor in connection therewith, including
stoppage in transit, set-off, detinue, replevin and reclamation, (iii) all
general intangibles, contract rights, instruments and documents related to any
accounts, (iv) all guaranties, mortgages, security interests, assignments, and
other encumbrances on real or personal property, leases and other agreements or
property securing or relating to any accounts, (v) choses-in-action, claims and
judgments related to any accounts, and (vi) all products and proceeds of any of
the foregoing.
(b) All present and future inventory (including but not limited
to goods held for sale or lease or furnished or to be furnished under contracts
for service, raw materials, work-in-process, finished goods and goods used or
consumed in Obligor's business) whether owned, consigned or held on consignment,
together with all merchandise, component materials, supplies, packing, packaging
and shipping materials, and all returned, rejected or repossessed goods sold,
-1-
consigned, leased or otherwise furnished by Obligor and all products and
proceeds of any of the foregoing.
(c) All present and future general ledger sheets, files, records,
books of account, invoices, bills, certificates or documents of ownership, bills
of sale, business papers, correspondence, credit files, tapes, cards, computer
runs and all other data and data storage systems whether in the possession of
Obligor or any service bureau relating to, generated in connection with, or
evidencing any of the items referenced in (a) or (b) above.
1.6 "Event of Default" shall include any and all events described in
Section 7 below.
1.7 "Loan Agreement" shall mean that certain Loan Agreement dated
December 2, 1993 among, inter alios, Bank and Obligor, as amended, including,
without limitation, by Third Amendment and Modification to Loan Agreement of
even date and as the same may hereafter be amended from time to time.
1.8 "Loan Documents" shall mean all agreements, documents and
instruments evidencing the Bank Indebtedness and all agreements, documents and
instruments collateral thereto, together with all amendments, replacements,
increases, renewals and modifications thereof or thereto, including without
limitation this Agreement and the Loan Agreement.
2. SECURITY INTEREST. Obligor grants to Bank a security interest in and
lien on the Collateral.
3. EFFECT OF GRANT. The security interests in and liens on the Collateral
granted to Bank by Obligor hereunder shall not be rendered void by the fact that
no Bank Indebtedness exists as of a particular date, but shall continue in full
force and effect until all Bank Indebtedness has been paid in full, Bank has no
agreement or commitment outstanding pursuant to which Bank may extend credit to
or on behalf of Obligor and Bank has executed and delivered termination
statements and/or releases of Bank with respect to the Collateral.
4. OBLIGATIONS SECURED. The Collateral and the continuing security
interests granted therein shall secure the Bank Indebtedness. IT IS THE EXPRESS
INTENTION OF OBLIGOR THAT THE COLLATERAL SHALL SECURE ALL EXISTING AND FUTURE
BANK INDEBTEDNESS.
5. REPRESENTATIONS. Obligor hereby represents and warrants as follows,
which representations and warranties shall be true and correct as of the date
hereof and, unless disclosed to and approved by Bank, at the time of the
creation of any Bank Indebtedness and until all Bank Indebtedness has been paid
in full:
5.1 Title to Collateral. The Collateral is and will be owned by
Obligor free and clear of all liens and other encumbrances of any kind
(including liens or other encumbrances upon properties acquired or to be
acquired under conditional sales agreements or other title retention
-2-
devices), excepting only liens in favor of the Bank and those certain liens and
encumbrances expressly permitted under Section 5.9 of the Loan Agreement.
Obligor will defend the Collateral against any claims of all persons or entities
other than the Bank or a permitted lienholder.
5.2 Governmental Consents. Except as described in Section 4.10 of the
Loan Agreement, no consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of Obligor is
required in connection with the execution, delivery or performance by Obligor of
this Agreement or the consummation of the transactions contemplated hereby.
5.3 Addresses. The portions of the Collateral which are tangible
(corporeal) property and Obligor's books and records pertaining thereto will at
all times be located at the addresses set forth on Schedule 5.3 attached hereto;
or such other location determined by Obligor after prior notice to Bank and
delivery to Bank of any items requested by Bank in its reasonable discretion to
maintain perfection and priority of Bank's security interests and liens and
access to Obligor's books and records.
5.4 Inventory Warranties. With respect to inventory from time to time
scheduled, listed or referred to in any certificate, statement or report
prepared by or for Obligor and delivered to Bank, Obligor warrants and
represents that (a) such inventory is located at the address or addresses listed
on Schedule 5.3 attached hereto and is not in transit; (b) Obligor has good,
indefeasible and merchantable title to such inventory and such inventory is not
subject to any lien or security interest whatsoever except for the prior,
perfected security interest granted to Bank and any liens expressly permitted
under Section 5.9 of the Loan Agreement; (c) to Obligor's knowledge and except
as disclosed to Bank in writing, such inventory is of good and merchantable
quality, free from any defects; (d) such inventory is not subject to any
licensing, patent, royalty, trademark, trade name or copyright agreements with
any third parties; and (e) the completion of the manufacture and sale or other
disposition of such inventory by Bank following an Event of Default shall not
require the consent of any person and shall not constitute a breach or default
under any contract or agreement to which the Obligor is a party or to which the
inventory is subject.
5.5 Accounts Receivable Warranties. With respect to all accounts
receivable from time to time scheduled, listed or referred to in any
certificate, statement or report prepared by or for Obligor and delivered to
Bank, Obligor warrants and represents that (a) the accounts are genuine, are in
all material respects what they purport to be, and are not, except as disclosed
and assigned to Bank in writing, evidenced by any chattel paper, note,
instrument or judgment; (b) Obligor has good and marketable title to such
accounts, except for liens expressly permitted under the Loan Agreement and,
except as disclosed to Bank in writing, the accounts represent undisputed, bona
fide transactions completed in accordance with the terms thereof and as
represented to Bank; (c) to Borrower's knowledge, except as disclosed to Bank in
writing, there are no setoffs, counterclaims or disputes existing or asserted
with respect thereto and Obligor has not made any agreement with any account
debtor for any deduction therefrom; (d) to Borrower's knowledge, except as
disclosed to Bank in writing, there are no facts, events or occurrences which
impair the validity or enforcement thereof or may reduce the amount payable
thereunder as shown on any certificates, statements or reports prepared by or
for Obligor and delivered to Bank, or on Obligor's
-3-
books and records and all invoices and statements delivered to Bank with respect
thereto; (e) to the best of Obligor's knowledge, all account debtors have the
capacity to contract and are solvent; (f) the goods sold giving rise thereto are
not subject to any lien, claim, encumbrance or security interest except that of
Bank and except for liens expressly permitted under the Loan Agreement; (g) to
the best of Obligor's knowledge, there are no proceedings or actions which are
threatened or pending against any account debtor which might result in any
material adverse change in such account debtor's financial condition; (h) the
account is not an account with respect to which the account debtor is an
affiliate of Obligor or a director, officer of employee of Obligor or its
affiliates; (i) the account does not arise with respect to goods which have not
been shipped or arise with respect to services which have not been fully
performed and accepted as satisfactory by the account debtor; (j) the account is
not an account with respect to which the account debtor's obligation to pay the
account is conditional upon the account debtor's approval or is otherwise
subject to any repurchase obligation or return right, as with sales made on a
xxxx-and-hold, guaranteed sale, sale-and-return, or sale on approval basis; (k)
to Borrower's knowledge, except as disclosed to Bank in writing, the amounts
shown on the applicable certificates, statements, on Obligor's books and records
and all invoices and statements which may be delivered to Bank with respect to
such accounts are actually and absolutely owing to Obligor and are not in any
way contingent; and (l) the accounts have not been sold, assigned or transferred
to any other Person and no Person except Obligor has any claim thereto or (with
the exception of the applicable account debtor) any claims to the goods sold.
5.6 Accuracy of Representations and Warranties. No representation or
warranty by Obligor contained herein or in any certificate or other document
furnished by Obligor pursuant hereto or in connection herewith fails to contain
any statement of material fact necessary to make such representation or warranty
not misleading in light of the circumstances under which it was made. There is
no fact which Obligor knows or should know and has not disclosed to Bank, which
does or may materially and adversely affect Obligor, or any of its operations.
6. COVENANTS. Obligor covenants and agrees that until the Bank Indebtedness
have been paid in full, Obligor shall:
6.1 Disposition of Assets. Not sell, lease, transfer or otherwise
dispose of all, substantially all, or any material portion of the Collateral,
except for sales of inventory in the ordinary course for fair consideration.
6.2 Liens. Not create, incur or permit to exist any mortgage, pledge,
encumbrance, lien, security interest or charge of any kind (including liens or
charges upon properties acquired or to be acquired under conditional sales
agreements or other title retention devices) on any of the Collateral, whether
now owned or hereafter acquired, or upon any income or profits therefrom, except
as permitted hereunder or under the Loan Documents.
6.3 Insurance. Carry adequate insurance issued by responsible and
financially sound insurers acceptable to Bank, in amounts acceptable to Bank (at
least adequate to comply with any co-insurance provisions) and against all such
liability and hazards as are usually carried by entities engaged in the same or
a similar business similarly situated or as may be required by Bank in its
reasonable discretion. Obligor will carry business interruption insurance in
such amounts
-4-
as may be required by Bank in its reasonable discretion. In the case of
insurance on any of the Collateral Obligor shall carry insurance in the full
insurable value thereof and cause Bank to be named as loss payee (with a
lender's loss payable endorsement) with respect to all personal property, and
additional insured with respect to all liability insurance, as its interests may
appear with thirty (30) days' notice to be given Bank by the insurance carrier
prior to cancellation or material modification of such insurance coverage.
Obligor shall cause to be delivered to Bank the insurance policies therefor
or in the alternative, evidence of insurance and at least thirty (30) business
days prior to the expiration of any such insurance, additional policies or
duplicates thereof or in the alternative, evidence of insurance evidencing the
renewal of such insurance and payment of the premiums therefor. Obligor shall
direct all insurers that in the event of any loss thereunder or the cancellation
of any insurance policy, the insurers shall make payments for such loss and pay
all returned or unearned premiums directly to Bank and not to Obligor and Bank
jointly.
In the event of any loss, Obligor will give Bank immediate notice thereof
and Bank may make proof of loss whether the same is done by Obligor. Bank is
granted a power of attorney by Obligor with full power of substitution to file
any proof of loss in Obligor's or Bank's name, to endorse Obligor's name on any
check, draft or other instrument evidencing insurance proceeds, and to take any
action or sign any document to pursue any insurance loss claim. Such power being
coupled with an interest is irrevocable.
In the event of any loss, Bank, at its option, may (i) retain and apply all
or any part of the insurance proceeds to reduce, in such order and amounts as
Bank may elect the Bank Indebtedness, or (ii) disburse all or any part of such
insurance proceeds to or for the benefit of Obligor for the purpose of repairing
or replacing Collateral after receiving proof satisfactory to Bank of such
repair or replacement, in either case without waiving or impairing the Bank
Indebtedness or any provision of this Agreement. Any deficiency thereon shall be
paid by Obligor to Bank upon demand. Obligor shall not take out any insurance
without having Bank named as loss payee or additional insured thereon. Obligor
shall bear the full risk of loss from any loss of any nature whatsoever with
respect to the Collateral. Notwithstanding the foregoing, if no Event of Default
has occurred and no event or circumstance exists which, upon the passage of
time, delivery of notice or both would constitute any such Event of Default,
Bank shall make insurance proceeds on the Collateral actually received by Bank
available to Obligor if, as a result of Obligor's use of such proceeds, Bank
receives replacement Collateral of the same type and value as those giving rise
to the insurance proceeds or as Bank shall otherwise approve.
6.4 Additional Documents and Future Actions. At its sole cost, take
such actions and provide Bank from time to time with such agreements, financing
statements and additional instruments, documents or information as the Bank may
in its reasonable discretion deem necessary or advisable to perfect, protect and
maintain the security interests in the Collateral, to permit Bank to protect its
interest in the Collateral, or to carry out the terms of the Loan Documents.
Obligor hereby authorizes and appoints Bank as its attorney-in-fact, with full
power of substitution, to take such actions as Bank may deem advisable in its
reasonable discretion to protect the Collateral and its interests thereon and
its rights hereunder, to execute on Obligor's behalf and file at Obligor's
-5-
expense financing statements, and amendments thereto, in those public offices
deemed necessary or appropriate by Bank to establish, maintain and protect a
continuously perfected security interest in the Collateral, and to execute on
Obligor's behalf such other documents and notices as Bank may deem advisable in
its reasonable discretion to protect the Collateral and its interests therein
and its rights hereunder. Such power being coupled with an interest is
irrevocable. Obligor irrevocably authorizes the filing of a carbon, photographic
or other copy of this Agreement, or of a financing statement, as a financing
statement and agrees that such filing is sufficient as a financing statement.
6.5 Government Contracts. Promptly notify Bank if any of Obligor's
accounts arise out of contracts with any department, agency or instrumentality
of the United States or any State, Commonwealth or municipality and execute any
instruments and take any steps required by Bank in order that all moneys due and
to become due under any such contracts shall be assigned to Bank and notice
thereof given to the United States under the Federal Assignment of Claims Act or
any other applicable law, statute or regulation.
6.6 Name or Address Change. Not change its name or address except upon
thirty (30) days prior written notice to Bank and delivery to Bank of any items
requested by Bank to maintain perfection and priority of Bank's security
interests and access to Obligor's books and records.
6.7 Inspections. Permit officers of Bank, or such persons as any of
them may designate, to visit and inspect any of the properties of Obligor,
examine a(either by Bank's employees or by independent accountants) any of the
Collateral or other assets of Obligor, including the books of account of
Obligor, and discuss the affairs, finances and accounts of Obligor with its
officers and with its independent accountants, at such times as Bank may desire.
Prior to the occurrence of an Event of Default, Bank shall conduct such visits
and inspections during normal business hours and after prior notice to Obligor.
6.8 Requested Information. With reasonable promptness, deliver to Bank
all financial information in respect of the condition, operation and affairs of
Obligor and the Collateral as Bank may reasonably request from time to time.
7. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an event of default hereunder:
7.1 The occurrence of any Event of Default under the Loan Agreement or
any of the other Loan Documents;
7.2 The failure of Obligor to duly perform or observe any obligation,
covenant or agreement on its part contained herein which is not cured within any
applicable grace or cure period under the Loan Agreement;
7.3 Any representation or warranty of Obligor contained herein is
discovered to be untrue in any material respect or any statement, certificate or
data furnished by Obligor pursuant
-6-
hereto is discovered to be untrue in any material respect as of the date as of
which the facts therein set forth are stated or certified; and/or
7.4 Any material uninsured damage to, or loss, theft, or destruction
of, any of the Collateral occurs.
8. REMEDIES OF BANK.
8.1 Remedies. At the option of the Bank, upon the occurrence of an
Event of Default, or at any time thereafter:
(a) The entire unpaid principal of the Bank Indebtedness, or any
part thereof, all interest accrued thereon, all fees due hereunder and all other
obligations of Obligor to Bank hereunder or under any other agreement, note or
otherwise arising will become immediately due and payable without any further
demand or notice;
(b) Bank may enter the premises occupied by Obligor and take
possession of the Collateral and any records relating thereto; and/or
(c) Bank may exercise each and every right and remedy granted to
it under the Loan Documents, under the Code and under any other applicable law
or at equity.
8.2 Sale or Other Disposition of Collateral. The sale, lease or other
disposition of the Collateral, or any part thereof, by Bank after an Event of
Default may be for cash, credit or any combination thereof, and Bank may
purchase all or any part of the Collateral at public or, if permitted by law,
private sale, and in lieu of actual payment of such purchase price, may set-off
the amount of such purchase price against the Bank Indebtedness then owing. Any
sales of the Collateral may be adjourned from time to time with or without
notice. The Bank may cause the Collateral to remain on Obligor's premises or
otherwise or to be removed and stored at premises owned by other persons, at
Obligor's expense, pending sale or other disposition of the Collateral. Obligor,
at Bank's request, shall assemble the Collateral consisting of inventory and
tangible assets and make such assets available to Bank at a place to be
designated by Bank. Bank shall have the right to conduct such sales on Obligor's
premises, at Obligor's expense, or elsewhere, on such occasion or occasions as
Bank may see fit. Any notice required to be given by Bank of a sale, lease or
other disposition or other intended action by Bank with respect to any of the
Collateral which is deposited in the United States mail, postage prepaid and
duly addressed to Obligor at the address specified in Section 11 below, at least
five (5) business days prior to such proposed action, shall constitute fair and
reasonable notice to Obligor of any such action. The net proceeds realized by
Bank upon any such sale or other disposition, after deduction for the expenses
of retaking, holding, storing, transporting, preparing for sale, selling or
otherwise disposing of the Collateral incurred by Bank in connection therewith
and all other reasonable costs and expenses related thereto including reasonable
attorney fees, shall be applied in such order as Bank, in its sole discretion,
elects, toward satisfaction of the Bank Indebtedness. Bank shall account to
Obligor for any surplus realized upon such sale or other disposition, and
Obligor shall remain liable for any deficiency. The commencement of any action,
legal or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect
-7-
Bank's security interest in the Collateral. Obligor agrees that Bank has no
obligation to preserve rights to the Collateral against any other parties. Bank
is hereby granted a license or other right to use, after an Event of Default,
without charge, Obligor's labels, general intangibles, intellectual property,
equipment, real estate, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale and selling any inventory or other
Collateral and Obligor's rights under all contracts, licenses, leases and
franchise agreements shall inure to Bank's benefit. Bank shall be under no
obligation to xxxxxxxx any assets in favor of Obligor or any other party or
against or in payment of any or all of the Bank Indebtedness.
8.3 Actions with Respect to Accounts. Obligor hereby irrevocably
makes, constitutes and appoints Bank (and any of Bank's designated officers,
employees or agents) as Obligor's true and lawful attorney-in-fact, with full
power of substitution, with power to sign Obligor's name and to take any of the
following actions, in Obligor's name or the name of Bank, as Bank may determine
in its reasonable discretion, without notice to Obligor and at Obligor's
expense:
(a) Verify the validity and amount of or any other matter
relating to the Collateral by mail, telephone, telecopy or otherwise;
(b) Upon the occurrence of an Event of Default, notify all
account debtors that Obligor's accounts have been assigned to Bank and that Bank
has a security interest therein;
(c) Upon the occurrence of an Event of Default, direct all
account debtors to make payment of all Obligor's accounts directly to Bank and
forward invoices directly to such account debtors;
(d) Upon the occurrence of an Event of Default, take control in
any manner of any cash or non-cash items of payment or proceeds of such
accounts;
(e) Upon the occurrence of an Event of Default, notify the United
States Postal Service to change the address for delivery of mail addressed to
Obligor to such address as Bank may designate;
(f) Upon the occurrence of an Event of Default, have access to
any lockbox or postal boxes into which Obligor's mail is deposited and receive,
open and dispose of all mail addressed to Obligor;
(g) Upon the occurrence of an Event of Default, take control in
any manner of any rejected, returned, stopped in transit or repossessed goods
relating to any accounts;
(h) Upon the occurrence of an Event of Default, enforce payment
of and collect any accounts, by legal proceedings or otherwise, and for such
purpose Bank may:
-8-
(1) Demand payment of any accounts or direct any account
debtors to make payment of accounts directly to Bank;
(2) Receive and collect all monies due or to become due to
Obligor;
(3) Exercise all of Obligor's rights and remedies with
respect to the collection of accounts;
(4) Settle, adjust, compromise, extend, renew, discharge or
release the accounts;
(5) Sell or assign the accounts on such terms, for such
amount and at such times as Bank deems advisable;
(6) Prepare, file and sign Obligor's name or names on any
Proof of Claim or similar document in any proceeding filed under federal or
state bankruptcy, insolvency, reorganization or other similar law as to any
account debtor;
(7) Prepare, file and sign Obligor's name or names on any
Notice of Lien, Claim of Mechanic's Lien, Assignment or Satisfaction of Lien or
Mechanic's Lien or similar document in connection with the Collateral;
(8) Endorse the name of Obligor upon any chattel papers,
documents, instruments, invoices, freight bills, bills of lading or similar
documents or agreements relating to the accounts or goods pertaining thereto or
upon any checks or other media of payment or evidences of a security interest
that may come into Bank's possession;
(9) Sign the name of Obligor to verifications of accounts
and notices thereof sent by account debtors to Obligor; or
(10) Take all other actions necessary or desirable, as
determined by Bank in its reasonable discretion, to protect Obligor's or Bank's
interest in the accounts.
Obligor ratifies and approves all acts of said attorneys and agrees that said
attorneys shall not be liable for any acts of commission or omission, nor for
any error of judgment or mistake of fact or law, except willful misconduct or
gross negligence. This power, being coupled with an interest, is irrevocable.
Obligor agrees to assist the Bank in the collection and enforcement of its
accounts and not to hinder, delay or impede the Bank on its collection or
enforcement of said accounts.
8.4 Set-Off. Without limiting the rights of Bank under applicable law,
Bank has and may exercise a right of set-off, a lien against and a security
interest in all property of Obligor now or at any time in Bank's possession in
any capacity whatsoever, including but not limited to any balance of any
deposit, trust or agency account, or any other bank account with Bank, but
expressly including any separate segregated account containing contributions to
an employee retirement plan
-9-
or payments for federal withholding taxes, as security for all obligations of
Obligor to Bank under the Loan Documents or otherwise. At any time and from time
to time following the occurrence of an Event of Default, Bank may without notice
or demand, set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by Bank to or for the credit of Obligor against any or all of the
Bank Indebtedness and the Obligor's obligations under the Loan Documents.
If any bank account of Obligor with Bank is attached or otherwise
liened or levied upon by any third party, Bank need not await the running of any
applicable grace period hereunder, but Bank shall have and be deemed to have the
immediate right of set-off and may apply the funds or amount thus set-off
against Obligor's obligations to the Bank.
8.5 Delay or Omission Not Waiver. Neither the failure nor any delay on
the part of Bank to exercise any right, remedy, power or privilege under the
Loan Documents upon the occurrence of any Event of Default or otherwise shall
operate as a waiver thereof or impair any such right, remedy, power or
privilege. No waiver of any Event of Default shall affect any later Event of
Default or shall impair any rights of Bank. No single, partial or full exercise
of any rights, remedies, powers and privileges by the Bank shall preclude
further or other exercise thereof. No course of dealing between Bank and Obligor
shall operate as or be deemed to constitute a waiver of Bank's rights under the
Loan Documents or affect the duties or obligations of Obligor.
8.6 Remedies Cumulative; Consents. The rights, remedies, powers and
privileges provided for herein shall not be deemed exclusive, but shall be
cumulative and shall be in addition to all other rights, remedies, powers and
privileges in Bank's favor at law or in equity. Whenever the Bank's consent or
approval is required or permitted, such consent or approval shall be at the sole
and absolute discretion of Bank.
9. CERTAIN FEES, COSTS, EXPENSES AND EXPENDITURES. Obligor agrees to pay on
demand all reasonable costs and expenses of Bank, including without limitation:
9.1 All costs and expenses in connection with the preparation, review,
negotiation, execution, delivery and administration of the Loan Documents, and
the other documents to be delivered in connection therewith, or any amendments,
extensions and increases to any of the foregoing (including, without limitation,
reasonable attorney's fees and expenses, and the cost of appraisals and
reappraisals of Collateral), and the cost of periodic lien searches and tax
clearance certificates, as Bank deems advisable;
9.2 All losses, costs and expenses in connection with the enforcement,
protection and preservation of the Bank's rights or remedies under the Loan
Documents, or any other agreement relating to any Obligations, or in connection
with legal advice relating to the rights or responsibilities of Bank (including
without limitation court costs, reasonable attorney's fees and expenses of
accountants and appraisers); and
-10-
9.3 Any and all stamp and other taxes payable or determined to be
payable in connection with the execution and delivery of the Loan Documents, and
all liabilities to which Bank may become subject as the result of delay in
paying or omission to pay such taxes.
In the event Obligor shall fail to pay taxes, insurance, assessments,
costs or expenses which it is required to pay hereunder, or fails to keep the
Collateral free from security interests or lien (except as expressly permitted
herein), or fails to maintain or repair the Collateral as required hereby, or
otherwise breaches any obligations under the Loan Documents, Bank in its
reasonable discretion, may make expenditures for such purposes and the amount so
expended (including reasonable attorney's fees and expenses, filing fees and
other charges) shall be payable by Obligor on demand and shall constitute part
of the Bank Indebtedness.
In the event any action at law or in equity in connection with the Loan
Documents, the Bank Indebtedness or matters collateral thereto is terminated
adverse to Obligor, Obligor will pay all attorneys' fees and legal costs
incurred by Bank in connection with such actions.
With respect to any amount required to be paid by Obligor under this
Section, in the event Obligor fails to pay such amount on demand, Obligor shall
also pay to Bank interest thereon at the default rate set forth in Section 2.2
of the Loan Agreement. Obligor's obligations under this Section shall survive
termination of this Agreement.
10. TIME IS OF THE ESSENCE. Time is of the essence in Obligor's performance
of its obligations under the Loan Documents.
11. COMMUNICATIONS AND NOTICES. All notices, requests and other
communications made or given in connection with this Agreement shall be in
writing and, unless receipt is stated herein to be required, shall be deemed to
have been validly given if delivered personally to the individual or division or
department to whose attention notices to a party are to be addressed, or by
private carrier, telecopy (with original forwarded by first class mail), or
registered or certified mail, return receipt requested, in all cases with
postage prepaid, addressed as follows, until some other address (or individual
or division or department for attention) shall have been designated by notice
given by one party to the other:
To Obligor:
LTH Delaware, Inc.
000 Xxxxx Xxxx, Xxxxx _____
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Vice President-Finance
and Chief Financial Officer
Telecopy Number: (000) 000-0000
-11-
With a copy to:
Pepper, Xxxxxxxx & Xxxxxxx
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esquire
Telecopier: (000) 000-0000
To Bank:
First Union National Bank
000 Xxxxx Xxxxx Xxxxxx, XX0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Storm, Senior Vice President
Telecopier: (000) 000-0000
With a copy to:
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx
000 Xxxxxx Xxxxxxx, Xxxxxxxx 000
X.X. Xxx 0000
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxx, Esquire
Telecopier: (000) 000-0000 or 238-0374
12. LIMITATION ON LIABILITY. Obligor shall be responsible for and Bank is
hereby released from any claim or liability in connection with:
12.1 Safekeeping any Collateral;
12.2 Any loss or damage to any Collateral;
12.3 Any diminution in value of the Collateral; or
12.4 Any act or default of another person or entity.
Bank shall only be liable for any act or omission on its part constituting
willful misconduct or gross negligence. In the event that Bank breaches its
required standard of conduct, Obligor agrees that its liability shall be only
for direct damages suffered and shall not extend to consequential or incidental
damages. In the event Obligor brings suit against Bank in connection with the
transactions contemplated hereunder and Bank is found not to be liable, Obligor
will indemnify and hold Bank harmless from all costs and expenses, including
attorney's fees, incurred by Bank in connection with such suit. Nothing
contained herein, however, relieves Bank from any obligation, if any, imposed on
a secured creditor under the Code with respect to safekeeping of collateral.
-12-
13. WAIVERS. In connection with any proceedings hereunder or in connection
with any of the Bank Indebtedness, including without limitation any action by
Bank in replevin, foreclosure or other court process or in connection with any
other action related to the Bank Indebtedness or the transactions contemplated
hereunder, Obligor waives:
13.1 all errors, defects and imperfections in such proceedings;
13.2 all benefits under any present or future laws exempting any
property, real or personal, or any part of any proceeds thereof from attachment,
levy or sale under execution, or providing for any stay of execution to be
issued on any judgment recovered in connection with the Bank Indebtedness or in
any replevin or foreclosure proceeding, or otherwise providing for any
valuation, appraisal or exemption;
13.3 all rights to inquisition on any real estate, which real estate
may be levied upon pursuant to a judgment obtained in connection with any of the
Bank Indebtedness and sold upon any writ of execution issued thereon in whole or
in part, in any order desired by Bank;
13.4 presentment for payment, demand, notice of demand, notice of
non-payment, protest and notice of protest of any of the Bank Indebtedness;
13.5 any requirement for bonds, security or sureties required by
statute, court rule or otherwise;
13.6 any demand for possession of Collateral prior to commencement of
any suit; and
13.7 all rights to claim or recover attorney's fees and costs in the
event that Obligor is successful in any action to remove, suspend or enforce a
judgment entered by confession.
14. EXCLUSIVE JURISDICTION. Obligor hereby consents to the exclusive
jurisdiction of any state or federal court located within the Commonwealth of
Pennsylvania, and irrevocably agrees that, subject to the Bank's election, all
actions or proceedings relating to the Loan Documents or the transactions
contemplated hereunder shall be litigated in such courts, and Obligor waives any
objection which it may have based on improper venue or forum non conveniens to
the conduct of any proceeding in any such court and waives personal service of
any and all process upon it, and consents that all such service of process be
made by mail or messenger directed to it at the address set forth in Section 11.
Nothing contained in this Section 14 shall affect the right of Bank to serve
legal process in any other manner permitted by law or affect the right of Bank
to bring any action or proceeding against Obligor or its property in the courts
of any other jurisdiction.
-13-
15. MISCELLANEOUS PROVISIONS.
15.1 Severability. The provisions of this Agreement and all other Loan
Documents are deemed to be severable, and the invalidity or unenforceability of
any provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.
15.2 Headings. The headings of the Articles, Sections, paragraphs and
clauses of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement.
15.3 Binding Effect. This Agreement and all rights and powers granted
hereby will bind and inure to the benefit of the parties hereto and their
respective permitted successors and assigns.
15.4 Amendment. No modification of this Agreement or any of the Loan
Documents shall be binding or enforceable unless in writing and signed by or on
behalf of the party against whom enforcement is sought.
15.5 Governing Law. This Agreement has been made, executed and
delivered in the Commonwealth of Pennsylvania and will be construed in
accordance with and governed by the laws of such Commonwealth.
15.6 No Third Party Beneficiaries. The rights and benefits of this
Agreement and the Loan Documents shall not inure to the benefit of any third
party.
15.7 Exhibits and Schedules. All exhibits and schedules attached
hereto are hereby made a part of this Agreement.
15.8 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
15.9 No Joint Venture. Nothing contained herein is intended to permit
or authorize Obligor to make any contract on behalf of Bank, nor shall this
Agreement be construed as creating a partnership, joint venture or making Bank
an investor in Obligor.
15.10 Filing of Financing Statements. Copies or reproductions of this
document or of any financing statement may be filed as a financing statement.
15.11 Waiver of Right to Trial by Jury. OBLIGOR AND BANK WAIVE ANY
RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a)
ARISING UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT OR INSTRUMENT REFERRED TO
HEREIN OR DELIVERED IN CONNECTION HEREWITH, OR (b) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF OBLIGOR WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER
-14-
DOCUMENT OR INSTRUMENT REFERRED TO HEREIN OR DELIVERED IN
CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. OBLIGOR AND BANK AGREE AND
CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF OBLIGOR AND BANK TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
IN WITNESS WHEREOF, the undersigned has executed this Security
Agreement on the date first above written.
LTH DELAWARE, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
Bank hereby joins in this Agreement for the sole purpose of ratifying and
confirming its consent to the provisions contained in Section 5.11 above.
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxx X. Storm
----------------------------------
Xxxxxxx X. Storm, Senior Vice President
-15-
NAMES AND ADDRESSES OF OBLIGOR
000 Xxxxx Xxxx, Xxxxxxxxxxxx, XX 00000
SCHEDULE 5.3
TO
SECURITY AGREEMENT
-16-
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is executed this 27th day of
February, 1997, by LIBERTY IMAGING SYSTEMS, INC., a Pennsylvania corporation
(the "Obligor"), in favor of FIRST UNION NATIONAL BANK (the "Bank"). Obligor,
intending to be legally bound, hereby agrees as follows:
1. DEFINITIONS. For purposes of this Agreement,
1.1 "account", "account debtor", "chattel paper", "documents",
"equipment", "general intangibles", "goods", "instrument", "inventory" and
"proceeds" shall have the meanings given such terms in the Code.
1.2 "Bank Indebtedness" shall have such meaning as provided therefor
in the Loan Agreement.
1.3 "Chief Executive Office" shall mean the place from which the main
part of the business operations of Obligor are managed. Obligor's current Chief
Executive Office is 000 Xxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
1.4 "Code" shall mean the Uniform Commercial Code as adopted by the
Commonwealth of Pennsylvania, as the same may be amended from time to time.
1.5 "Collateral" shall mean all existing and after-acquired accounts
and inventory of Obligor and all proceeds thereof, including without limitation:
(a) All present and future accounts and all other rights to the
payment of money whether or not yet earned, for services rendered or goods sold,
consigned, leased or furnished by Obligor or otherwise, together with (i) all
goods (including any returned, rejected, repossessed or consigned goods), the
sale, consignment, lease or other furnishings of which shall have given or may
give rise to any of the foregoing, (ii) all of Obligor's rights as a consignor,
consignee, unpaid vendor or other lienor in connection therewith, including
stoppage in transit, set-off, detinue, replevin and reclamation, (iii) all
general intangibles, contract rights, instruments and documents related to any
accounts, (iv) all guaranties, mortgages, security interests, assignments, and
other encumbrances on real or personal property, leases and other agreements or
property securing or relating to any accounts, (v) choses-in-action, claims and
judgments related to any accounts, and (vi) all products and proceeds of any of
the foregoing.
(b) All present and future inventory (including but not limited
to goods held for sale or lease or furnished or to be furnished under contracts
for service, raw materials, work-in-process, finished goods and goods used or
consumed in Obligor's business) whether owned, consigned or held on consignment,
together with all merchandise, component materials, supplies, packing, packaging
and shipping materials, and all returned, rejected or repossessed goods sold,
-1-
consigned, leased or otherwise furnished by Obligor and all products and
proceeds of any of the foregoing.
(c) All present and future general ledger sheets, files, records,
books of account, invoices, bills, certificates or documents of ownership, bills
of sale, business papers, correspondence, credit files, tapes, cards, computer
runs and all other data and data storage systems whether in the possession of
Obligor or any service bureau relating to, generated in connection with, or
evidencing any of the items referenced in (a) or (b) above.
1.6 "Event of Default" shall include any and all events described in
Section 7 below.
1.7 "Loan Agreement" shall mean that certain Loan Agreement dated
December 2, 1993 among, inter alios, Bank and Obligor, as amended, including,
without limitation, by Third Amendment and Modification to Loan Agreement of
even date and as the same may hereafter be amended from time to time.
1.8 "Loan Documents" shall mean all agreements, documents and
instruments evidencing the Bank Indebtedness and all agreements, documents and
instruments collateral thereto, together with all amendments, replacements,
increases, renewals and modifications thereof or thereto, including without
limitation this Agreement and the Loan Agreement.
2. SECURITY INTEREST. Obligor grants to Bank a security interest in and
lien on the Collateral.
3. EFFECT OF GRANT. The security interests in and liens on the Collateral
granted to Bank by Obligor hereunder shall not be rendered void by the fact that
no Bank Indebtedness exists as of a particular date, but shall continue in full
force and effect until all Bank Indebtedness has been paid in full, Bank has no
agreement or commitment outstanding pursuant to which Bank may extend credit to
or on behalf of Obligor and Bank has executed and delivered termination
statements and/or releases of Bank with respect to the Collateral.
4. OBLIGATIONS SECURED. The Collateral and the continuing security
interests granted therein shall secure the Bank Indebtedness. IT IS THE EXPRESS
INTENTION OF OBLIGOR THAT THE COLLATERAL SHALL SECURE ALL EXISTING AND FUTURE
BANK INDEBTEDNESS.
5. REPRESENTATIONS. Obligor hereby represents and warrants as follows,
which representations and warranties shall be true and correct as of the date
hereof and, unless disclosed to and approved by Bank, at the time of the
creation of any Bank Indebtedness and until all Bank Indebtedness has been paid
in full:
5.1 Title to Collateral. The Collateral is and will be owned by
Obligor free and clear of all liens and other encumbrances of any kind
(including liens or other encumbrances upon properties acquired or to be
acquired under conditional sales agreements or other title retention
-2-
devices), excepting only liens in favor of the Bank and those certain liens and
encumbrances expressly permitted under Section 5.9 of the Loan Agreement.
Obligor will defend the Collateral against any claims of all persons or entities
other than the Bank or a permitted lienholder.
5.2 Governmental Consents. Except as described in Section 4.10 of the
Loan Agreement, no consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of Obligor is
required in connection with the execution, delivery or performance by Obligor of
this Agreement or the consummation of the transactions contemplated hereby.
5.3 Addresses. The portions of the Collateral which are tangible
(corporeal) property and Obligor's books and records pertaining thereto will at
all times be located at the addresses set forth on Schedule 5.3 attached hereto;
or such other location determined by Obligor after prior notice to Bank and
delivery to Bank of any items requested by Bank in its reasonable discretion to
maintain perfection and priority of Bank's security interests and liens and
access to Obligor's books and records.
5.4 Inventory Warranties. With respect to inventory from time to time
scheduled, listed or referred to in any certificate, statement or report
prepared by or for Obligor and delivered to Bank, Obligor warrants and
represents that (a) such inventory is located at the address or addresses listed
on Schedule 5.3 attached hereto and is not in transit; (b) Obligor has good,
indefeasible and merchantable title to such inventory and such inventory is not
subject to any lien or security interest whatsoever except for the prior,
perfected security interest granted to Bank and any liens expressly permitted
under Section 5.9 of the Loan Agreement; (c) to Obligor's knowledge and except
as disclosed to Bank in writing, such inventory is of good and merchantable
quality, free from any defects; (d) such inventory is not subject to any
licensing, patent, royalty, trademark, trade name or copyright agreements with
any third parties; and (e) the completion of the manufacture and sale or other
disposition of such inventory by Bank following an Event of Default shall not
require the consent of any person and shall not constitute a breach or default
under any contract or agreement to which the Obligor is a party or to which the
inventory is subject.
5.5 Accounts Receivable Warranties. With respect to all
accounts receivable from time to time scheduled, listed or referred to in any
certificate, statement or report prepared by or for Obligor and delivered to
Bank, Obligor warrants and represents that (a) the accounts are genuine, are in
all material respects what they purport to be, and are not, except as disclosed
and assigned to Bank in writing, evidenced by any chattel paper, note,
instrument or judgment; (b) Obligor has good and marketable title to such
accounts, except for liens expressly permitted under the Loan Agreement and,
except as disclosed to Bank in writing, the accounts represent undisputed, bona
fide transactions completed in accordance with the terms thereof and as
represented to Bank; (c) to Borrower's knowledge, except as disclosed to Bank in
writing, there are no setoffs, counterclaims or disputes existing or asserted
with respect thereto and Obligor has not made any agreement with any account
debtor for any deduction therefrom; (d) to Borrower's knowledge, except as
disclosed to Bank in writing, there are no facts, events or occurrences which
impair the validity or enforcement thereof or may reduce the amount payable
thereunder as shown on any certificates, statements or reports prepared by or
for Obligor and delivered to Bank, or on Obligor's books and records
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and all invoices and statements delivered to Bank with respect thereto; (e) to
the best of Obligor's knowledge, all account debtors have the capacity to
contract and are solvent; (f) the goods sold giving rise thereto are not subject
to any lien, claim, encumbrance or security interest except that of Bank and
except for liens expressly permitted under the Loan Agreement; (g) to the best
of Obligor's knowledge, there are no proceedings or actions which are threatened
or pending against any account debtor which might result in any material adverse
change in such account debtor's financial condition; (h) the account is not an
account with respect to which the account debtor is an affiliate of Obligor or a
director, officer of employee of Obligor or its affiliates; (i) the account does
not arise with respect to goods which have not been shipped or arise with
respect to services which have not been fully performed and accepted as
satisfactory by the account debtor; (j) the account is not an account with
respect to which the account debtor's obligation to pay the account is
conditional upon the account debtor's approval or is otherwise subject to any
repurchase obligation or return right, as with sales made on a xxxx-and-hold,
guaranteed sale, sale-and-return, or sale on approval basis; (k) to Borrower's
knowledge, except as disclosed to Bank in writing, the amounts shown on the
applicable certificates, statements, on Obligor's books and records and all
invoices and statements which may be delivered to Bank with respect to such
accounts are actually and absolutely owing to Obligor and are not in any way
contingent; and (l) the accounts have not been sold, assigned or transferred to
any other Person and no Person except Obligor has any claim thereto or (with the
exception of the applicable account debtor) any claims to the goods sold.
5.6 Accuracy of Representations and Warranties. No representation or
warranty by Obligor contained herein or in any certificate or other document
furnished by Obligor pursuant hereto or in connection herewith fails to contain
any statement of material fact necessary to make such representation or warranty
not misleading in light of the circumstances under which it was made. There is
no fact which Obligor knows or should know and has not disclosed to Bank, which
does or may materially and adversely affect Obligor, or any of its operations.
6. COVENANTS. Obligor covenants and agrees that until the Bank Indebtedness
have been paid in full, Obligor shall:
6.1 Disposition of Assets. Not sell, lease, transfer or otherwise
dispose of all, substantially all, or any material portion of the Collateral,
except for sales of inventory in the ordinary course for fair consideration.
6.2 Liens. Not create, incur or permit to exist any mortgage, pledge,
encumbrance, lien, security interest or charge of any kind (including liens or
charges upon properties acquired or to be acquired under conditional sales
agreements or other title retention devices) on any of the Collateral, whether
now owned or hereafter acquired, or upon any income or profits therefrom, except
as permitted hereunder or under the Loan Documents.
6.3 Insurance. Carry adequate insurance issued by responsible and
financially sound insurers acceptable to Bank, in amounts acceptable to Bank (at
least adequate to comply with any co-insurance provisions) and against all such
liability and hazards as are usually carried by entities engaged in the same or
a similar business similarly situated or as may be required by Bank in its
reasonable discretion. Obligor will carry business interruption insurance in
such amounts as
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may be required by Bank in its reasonable discretion. In the case of insurance
on any of the Collateral Obligor shall carry insurance in the full insurable
value thereof and cause Bank to be named as loss payee (with a lender's loss
payable endorsement) with respect to all personal property, and additional
insured with respect to all liability insurance, as its interests may appear
with thirty (30) days' notice to be given Bank by the insurance carrier prior to
cancellation or material modification of such insurance coverage.
Obligor shall cause to be delivered to Bank the insurance policies therefor
or in the alternative, evidence of insurance and at least thirty (30) business
days prior to the expiration of any such insurance, additional policies or
duplicates thereof or in the alternative, evidence of insurance evidencing the
renewal of such insurance and payment of the premiums therefor. Obligor shall
direct all insurers that in the event of any loss thereunder or the cancellation
of any insurance policy, the insurers shall make payments for such loss and pay
all returned or unearned premiums directly to Bank and not to Obligor and Bank
jointly.
In the event of any loss, Obligor will give Bank immediate notice thereof
and Bank may make proof of loss whether the same is done by Obligor. Bank is
granted a power of attorney by Obligor with full power of substitution to file
any proof of loss in Obligor's or Bank's name, to endorse Obligor's name on any
check, draft or other instrument evidencing insurance proceeds, and to take any
action or sign any document to pursue any insurance loss claim. Such power being
coupled with an interest is irrevocable.
In the event of any loss, Bank, at its option, may (i) retain and apply all
or any part of the insurance proceeds to reduce, in such order and amounts as
Bank may elect the Bank Indebtedness, or (ii) disburse all or any part of such
insurance proceeds to or for the benefit of Obligor for the purpose of repairing
or replacing Collateral after receiving proof satisfactory to Bank of such
repair or replacement, in either case without waiving or impairing the Bank
Indebtedness or any provision of this Agreement. Any deficiency thereon shall be
paid by Obligor to Bank upon demand. Obligor shall not take out any insurance
without having Bank named as loss payee or additional insured thereon. Obligor
shall bear the full risk of loss from any loss of any nature whatsoever with
respect to the Collateral. Notwithstanding the foregoing, if no Event of Default
has occurred and no event or circumstance exists which, upon the passage of
time, delivery of notice or both would constitute any such Event of Default,
Bank shall make insurance proceeds on the Collateral actually received by Bank
available to Obligor if, as a result of Obligor's use of such proceeds, Bank
receives replacement Collateral of the same type and value as those giving rise
to the insurance proceeds or as Bank shall otherwise approve.
6.4 Additional Documents and Future Actions. At its sole cost, take
such actions and provide Bank from time to time with such agreements, financing
statements and additional instruments, documents or information as the Bank may
in its reasonable discretion deem necessary or advisable to perfect, protect and
maintain the security interests in the Collateral, to permit Bank to protect its
interest in the Collateral, or to carry out the terms of the Loan Documents.
Obligor hereby authorizes and appoints Bank as its attorney-in-fact, with full
power of substitution, to take such actions as Bank may deem advisable in its
reasonable discretion to protect the Collateral and its interests thereon and
its rights hereunder, to execute on Obligor's behalf and file at Obligor's
-5-
expense financing statements, and amendments thereto, in those public offices
deemed necessary or appropriate by Bank to establish, maintain and protect a
continuously perfected security interest in the Collateral, and to execute on
Obligor's behalf such other documents and notices as Bank may deem advisable in
its reasonable discretion to protect the Collateral and its interests therein
and its rights hereunder. Such power being coupled with an interest is
irrevocable. Obligor irrevocably authorizes the filing of a carbon, photographic
or other copy of this Agreement, or of a financing statement, as a financing
statement and agrees that such filing is sufficient as a financing statement.
6.5 Government Contracts. Promptly notify Bank if any of Obligor's
accounts arise out of contracts with any department, agency or instrumentality
of the United States or any State, Commonwealth or municipality and execute any
instruments and take any steps required by Bank in order that all moneys due and
to become due under any such contracts shall be assigned to Bank and notice
thereof given to the United States under the Federal Assignment of Claims Act or
any other applicable law, statute or regulation.
6.6 Name or Address Change. Not change its name or address except upon
thirty (30) days prior written notice to Bank and delivery to Bank of any items
requested by Bank to maintain perfection and priority of Bank's security
interests and access to Obligor's books and records.
6.7 Inspections. Permit officers of Bank, or such persons as any of
them may designate, to visit and inspect any of the properties of Obligor,
examine (either by Bank's employees or by independent accountants) any of the
Collateral or other assets of Obligor, including the books of account of
Obligor, and discuss the affairs, finances and accounts of Obligor with its
officers and with its independent accountants, at such times as Bank may desire.
Prior to the occurrence of an Event of Default, Bank shall conduct such visits
and inspections during normal business hours and after prior notice to Obligor.
6.8 Requested Information. With reasonable promptness, deliver to Bank
all financial information in respect of the condition, operation and affairs of
Obligor and the Collateral as Bank may reasonably request from time to time.
7. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an event of default hereunder:
7.1 The occurrence of any Event of Default under the Loan Agreement or
any of the other Loan Documents;
7.2 The failure of Obligor to duly perform or observe any obligation,
covenant or agreement on its part contained herein which is not cured within any
applicable grace or cure period under the Loan Agreement;
7.3 Any representation or warranty of Obligor contained herein is
discovered to be untrue in any material respect or any statement, certificate or
data furnished by Obligor pursuant
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hereto is discovered to be untrue in any material respect as of the date as of
which the facts therein set forth are stated or certified; and/or
7.4 Any material uninsured damage to, or loss, theft, or destruction
of, any of the Collateral occurs.
8. REMEDIES OF BANK.
8.1 Remedies. At the option of the Bank, upon the occurrence of an
Event of Default, or at any time thereafter:
(a) The entire unpaid principal of the Bank Indebtedness, or any
part thereof, all interest accrued thereon, all fees due hereunder and all other
obligations of Obligor to Bank hereunder or under any other agreement, note or
otherwise arising will become immediately due and payable without any further
demand or notice;
(b) Bank may enter the premises occupied by Obligor and take
possession of the Collateral and any records relating thereto; and/or
(c) Bank may exercise each and every right and remedy granted to
it under the Loan Documents, under the Code and under any other applicable law
or at equity.
8.2 Sale or Other Disposition of Collateral. The sale, lease or other
disposition of the Collateral, or any part thereof, by Bank after an Event of
Default may be for cash, credit or any combination thereof, and Bank may
purchase all or any part of the Collateral at public or, if permitted by law,
private sale, and in lieu of actual payment of such purchase price, may set-off
the amount of such purchase price against the Bank Indebtedness then owing. Any
sales of the Collateral may be adjourned from time to time with or without
notice. The Bank may cause the Collateral to remain on Obligor's premises or
otherwise or to be removed and stored at premises owned by other persons, at
Obligor's expense, pending sale or other disposition of the Collateral. Obligor,
at Bank's request, shall assemble the Collateral consisting of inventory and
tangible assets and make such assets available to Bank at a place to be
designated by Bank. Bank shall have the right to conduct such sales on Obligor's
premises, at Obligor's expense, or elsewhere, on such occasion or occasions as
Bank may see fit. Any notice required to be given by Bank of a sale, lease or
other disposition or other intended action by Bank with respect to any of the
Collateral which is deposited in the United States mail, postage prepaid and
duly addressed to Obligor at the address specified in Section 11 below, at least
five (5) business days prior to such proposed action, shall constitute fair and
reasonable notice to Obligor of any such action. The net proceeds realized by
Bank upon any such sale or other disposition, after deduction for the expenses
of retaking, holding, storing, transporting, preparing for sale, selling or
otherwise disposing of the Collateral incurred by Bank in connection therewith
and all other reasonable costs and expenses related thereto including reasonable
attorney fees, shall be applied in such order as Bank, in its sole discretion,
elects, toward satisfaction of the Bank Indebtedness. Bank shall account to
Obligor for any surplus realized upon such sale or other disposition, and
Obligor shall remain liable for any deficiency. The commencement of any action,
legal or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect
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Bank's security interest in the Collateral. Obligor agrees that Bank has no
obligation to preserve rights to the Collateral against any other parties. Bank
is hereby granted a license or other right to use, after an Event of Default,
without charge, Obligor's labels, general intangibles, intellectual property,
equipment, real estate, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale and selling any inventory or other
Collateral and Obligor's rights under all contracts, licenses, leases and
franchise agreements shall inure to Bank's benefit. Bank shall be under no
obligation to xxxxxxxx any assets in favor of Obligor or any other party or
against or in payment of any or all of the Bank Indebtedness.
8.3 Actions with Respect to Accounts. Obligor hereby irrevocably
makes, constitutes and appoints Bank (and any of Bank's designated officers,
employees or agents) as Obligor's true and lawful attorney-in-fact, with full
power of substitution, with power to sign Obligor's name and to take any of the
following actions, in Obligor's name or the name of Bank, as Bank may determine
in its reasonable discretion, without notice to Obligor and at Obligor's
expense:
(a) Verify the validity and amount of or any other matter
relating to the Collateral by mail, telephone, telecopy or otherwise;
(b) Upon the occurrence of an Event of Default, notify all
account debtors that Obligor's accounts have been assigned to Bank and that Bank
has a security interest therein;
(c) Upon the occurrence of an Event of Default, direct all
account debtors to make payment of all Obligor's accounts directly to Bank and
forward invoices directly to such account debtors;
(d) Upon the occurrence of an Event of Default, take control in
any manner of any cash or non-cash items of payment or proceeds of such
accounts;
(e) Upon the occurrence of an Event of Default, notify the United
States Postal Service to change the address for delivery of mail addressed to
Obligor to such address as Bank may designate;
(f) Upon the occurrence of an Event of Default, have access to
any lockbox or postal boxes into which Obligor's mail is deposited and receive,
open and dispose of all mail addressed to Obligor;
(g) Upon the occurrence of an Event of Default, take control in
any manner of any rejected, returned, stopped in transit or repossessed goods
relating to any accounts;
(h) Upon the occurrence of an Event of Default, enforce payment
of and collect any accounts, by legal proceedings or otherwise, and for such
purpose Bank may:
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(1) Demand payment of any accounts or direct any account
debtors to make payment of accounts directly to Bank;
(2) Receive and collect all monies due or to become due to
Obligor;
(3) Exercise all of Obligor's rights and remedies with
respect to the collection of accounts;
(4) Settle, adjust, compromise, extend, renew, discharge or
release the accounts;
(5) Sell or assign the accounts on such terms, for such
amount and at such times as Bank deems advisable;
(6) Prepare, file and sign Obligor's name or names on any
Proof of Claim or similar document in any proceeding filed under federal or
state bankruptcy, insolvency, reorganization or other similar law as to any
account debtor;
(7) Prepare, file and sign Obligor's name or names on any
Notice of Lien, Claim of Mechanic's Lien, Assignment or Satisfaction of Lien or
Mechanic's Lien or similar document in connection with the Collateral;
(8) Endorse the name of Obligor upon any chattel papers,
documents, instruments, invoices, freight bills, bills of lading or similar
documents or agreements relating to the accounts or goods pertaining thereto or
upon any checks or other media of payment or evidences of a security interest
that may come into Bank's possession;
(9) Sign the name of Obligor to verifications of accounts
and notices thereof sent by account debtors to Obligor; or
(10) Take all other actions necessary or desirable, as
determined by Bank in its reasonable discretion, to protect Obligor's or Bank's
interest in the accounts.
Obligor ratifies and approves all acts of said attorneys and agrees that said
attorneys shall not be liable for any acts of commission or omission, nor for
any error of judgment or mistake of fact or law, except willful misconduct or
gross negligence. This power, being coupled with an interest, is irrevocable.
Obligor agrees to assist the Bank in the collection and enforcement of its
accounts and not to hinder, delay or impede the Bank on its collection or
enforcement of said accounts.
8.4 Set-Off. Without limiting the rights of Bank under applicable law,
Bank has and may exercise a right of set-off, a lien against and a security
interest in all property of Obligor now or at any time in Bank's possession in
any capacity whatsoever, including but not limited to any balance of any
deposit, trust or agency account, or any other bank account with Bank, but
expressly including any separate segregated account containing contributions to
an employee retirement plan
-9-
or payments for federal withholding taxes, as security for all obligations of
Obligor to Bank under the Loan Documents or otherwise. At any time and from time
to time following the occurrence of an Event of Default, Bank may without notice
or demand, set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by Bank to or for the credit of Obligor against any or all of the
Bank Indebtedness and the Obligor's obligations under the Loan Documents.
If any bank account of Obligor with Bank is attached or otherwise liened or
levied upon by any third party, Bank need not await the running of any
applicable grace period hereunder, but Bank shall have and be deemed to have the
immediate right of set-off and may apply the funds or amount thus set-off
against Obligor's obligations to the Bank.
8.5 Delay or Omission Not Waiver. Neither the failure nor any delay on
the part of Bank to exercise any right, remedy, power or privilege under the
Loan Documents upon the occurrence of any Event of Default or otherwise shall
operate as a waiver thereof or impair any such right, remedy, power or
privilege. No waiver of any Event of Default shall affect any later Event of
Default or shall impair any rights of Bank. No single, partial or full exercise
of any rights, remedies, powers and privileges by the Bank shall preclude
further or other exercise thereof. No course of dealing between Bank and Obligor
shall operate as or be deemed to constitute a waiver of Bank's rights under the
Loan Documents or affect the duties or obligations of Obligor.
8.6 Remedies Cumulative; Consents. The rights, remedies, powers and
privileges provided for herein shall not be deemed exclusive, but shall be
cumulative and shall be in addition to all other rights, remedies, powers and
privileges in Bank's favor at law or in equity. Whenever the Bank's consent or
approval is required or permitted, such consent or approval shall be at the sole
and absolute discretion of Bank.
9. CERTAIN FEES, COSTS, EXPENSES AND EXPENDITURES. Obligor agrees to pay on
demand all reasonable costs and expenses of Bank, including without limitation:
9.1 All costs and expenses in connection with the preparation, review,
negotiation, execution, delivery and administration of the Loan Documents, and
the other documents to be delivered in connection therewith, or any amendments,
extensions and increases to any of the foregoing (including, without limitation,
reasonable attorney's fees and expenses, and the cost of appraisals and
reappraisals of Collateral), and the cost of periodic lien searches and tax
clearance certificates, as Bank deems advisable;
9.2 All losses, costs and expenses in connection with the enforcement,
protection and preservation of the Bank's rights or remedies under the Loan
Documents, or any other agreement relating to any Obligations, or in connection
with legal advice relating to the rights or responsibilities of Bank (including
without limitation court costs, reasonable attorney's fees and expenses of
accountants and appraisers); and
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9.3 Any and all stamp and other taxes payable or determined to be
payable in connection with the execution and delivery of the Loan Documents, and
all liabilities to which Bank may become subject as the result of delay in
paying or omission to pay such taxes.
In the event Obligor shall fail to pay taxes, insurance, assessments, costs
or expenses which it is required to pay hereunder, or fails to keep the
Collateral free from security interests or lien (except as expressly permitted
herein), or fails to maintain or repair the Collateral as required hereby, or
otherwise breaches any obligations under the Loan Documents, Bank in its
reasonable discretion, may make expenditures for such purposes and the amount so
expended (including reasonable attorney's fees and expenses, filing fees and
other charges) shall be payable by Obligor on demand and shall constitute part
of the Bank Indebtedness.
In the event any action at law or in equity in connection with the Loan
Documents, the Bank Indebtedness or matters collateral thereto is terminated
adverse to Obligor, Obligor will pay all attorneys' fees and legal costs
incurred by Bank in connection with such actions.
With respect to any amount required to be paid by Obligor under this
Section, in the event Obligor fails to pay such amount on demand, Obligor shall
also pay to Bank interest thereon at the default rate set forth in Section 2.2
of the Loan Agreement. Obligor's obligations under this Section shall survive
termination of this Agreement.
10. TIME IS OF THE ESSENCE. Time is of the essence in Obligor's performance
of its obligations under the Loan Documents.
11. COMMUNICATIONS AND NOTICES. All notices, requests and other
communications made or given in connection with this Agreement shall be in
writing and, unless receipt is stated herein to be required, shall be deemed to
have been validly given if delivered personally to the individual or division or
department to whose attention notices to a party are to be addressed, or by
private carrier, telecopy (with original forwarded by first class mail), or
registered or certified mail, return receipt requested, in all cases with
postage prepaid, addressed as follows, until some other address (or individual
or division or department for attention) shall have been designated by notice
given by one party to the other:
To Obligor:
Liberty Imaging Systems, Inc.
000 Xxxxx Xxxx, Xxxxx _____
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Vice President-Finance
and Chief Financial Officer
Telecopy Number: (000) 000-0000
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With a copy to:
Pepper, Xxxxxxxx & Xxxxxxx
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esquire
Telecopier: (000) 000-0000
To Bank:
First Union National Bank
000 Xxxxx Xxxxx Xxxxxx, XX0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Storm, Senior Vice President
Telecopier: (000) 000-0000
With a copy to:
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx
000 Xxxxxx Xxxxxxx, Xxxxxxxx 000
X.X. Xxx 0000
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxx, Esquire
Telecopier: (000) 000-0000 or 238-0374
12. LIMITATION ON LIABILITY. Obligor shall be responsible for and Bank is
hereby released from any claim or liability in connection with:
12.1 Safekeeping any Collateral;
12.2 Any loss or damage to any Collateral;
12.3 Any diminution in value of the Collateral; or
12.4 Any act or default of another person or entity.
Bank shall only be liable for any act or omission on its part constituting
willful misconduct or gross negligence. In the event that Bank breaches its
required standard of conduct, Obligor agrees that its liability shall be only
for direct damages suffered and shall not extend to consequential or incidental
damages. In the event Obligor brings suit against Bank in connection with the
transactions contemplated hereunder and Bank is found not to be liable, Obligor
will indemnify and hold Bank harmless from all costs and expenses, including
attorney's fees, incurred by Bank in connection with such suit. Nothing
contained herein, however, relieves Bank from any obligation, if any, imposed on
a secured creditor under the Code with respect to safekeeping of collateral.
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13. WAIVERS. In connection with any proceedings hereunder or in connection
with any of the Bank Indebtedness, including without limitation any action by
Bank in replevin, foreclosure or other court process or in connection with any
other action related to the Bank Indebtedness or the transactions contemplated
hereunder, Obligor waives:
13.1 all errors, defects and imperfections in such proceedings;
13.2 all benefits under any present or future laws exempting any
property, real or personal, or any part of any proceeds thereof from attachment,
levy or sale under execution, or providing for any stay of execution to be
issued on any judgment recovered in connection with the Bank Indebtedness or in
any replevin or foreclosure proceeding, or otherwise providing for any
valuation, appraisal or exemption;
13.3 all rights to inquisition on any real estate, which real estate
may be levied upon pursuant to a judgment obtained in connection with any of the
Bank Indebtedness and sold upon any writ of execution issued thereon in whole or
in part, in any order desired by Bank;
13.4 presentment for payment, demand, notice of demand, notice of
non-payment, protest and notice of protest of any of the Bank Indebtedness;
13.5 any requirement for bonds, security or sureties required by
statute, court rule or otherwise;
13.6 any demand for possession of Collateral prior to commencement of
any suit; and
13.7 all rights to claim or recover attorney's fees and costs in the
event that Obligor is successful in any action to remove, suspend or enforce a
judgment entered by confession.
14. EXCLUSIVE JURISDICTION. Obligor hereby consents to the exclusive
jurisdiction of any state or federal court located within the Commonwealth of
Pennsylvania, and irrevocably agrees that, subject to the Bank's election, all
actions or proceedings relating to the Loan Documents or the transactions
contemplated hereunder shall be litigated in such courts, and Obligor waives any
objection which it may have based on improper venue or forum non conveniens to
the conduct of any proceeding in any such court and waives personal service of
any and all process upon it, and consents that all such service of process be
made by mail or messenger directed to it at the address set forth in Section 11.
Nothing contained in this Section 14 shall affect the right of Bank to serve
legal process in any other manner permitted by law or affect the right of Bank
to bring any action or proceeding against Obligor or its property in the courts
of any other jurisdiction.
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15. MISCELLANEOUS PROVISIONS.
15.1 Severability. The provisions of this Agreement and all other Loan
Documents are deemed to be severable, and the invalidity or unenforceability of
any provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.
15.2 Headings. The headings of the Articles, Sections, paragraphs and
clauses of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement.
15.3 Binding Effect. This Agreement and all rights and powers granted
hereby will bind and inure to the benefit of the parties hereto and their
respective permitted successors and assigns.
15.4 Amendment. No modification of this Agreement or any of the Loan
Documents shall be binding or enforceable unless in writing and signed by or on
behalf of the party against whom enforcement is sought.
15.5 Governing Law. This Agreement has been made, executed and
delivered in the Commonwealth of Pennsylvania and will be construed in
accordance with and governed by the laws of such Commonwealth.
15.6 No Third Party Beneficiaries. The rights and benefits of this
Agreement and the Loan Documents shall not inure to the benefit of any third
party.
15.7 Exhibits and Schedules. All exhibits and schedules attached
hereto are hereby made a part of this Agreement.
15.8 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
15.9 No Joint Venture. Nothing contained herein is intended to permit
or authorize Obligor to make any contract on behalf of Bank, nor shall this
Agreement be construed as creating a partnership, joint venture or making Bank
an investor in Obligor.
15.10 Filing of Financing Statements. Copies or reproductions of this
document or of any financing statement may be filed as a financing statement.
15.11 Waiver of Right to Trial by Jury. OBLIGOR AND BANK WAIVE ANY
RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a)
ARISING UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT OR INSTRUMENT REFERRED TO
HEREIN OR DELIVERED IN CONNECTION HEREWITH, OR (b) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF OBLIGOR WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER
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DOCUMENT OR INSTRUMENT REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH,
OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE. OBLIGOR AND BANK AGREE AND CONSENT THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
OBLIGOR AND BANK TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the undersigned has executed this Security Agreement on
the date first above written.
LIBERTY IMAGING SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx, Vice President and Secretary
Bank hereby joins in this Agreement for the sole purpose of ratifying and
confirming its consent to the provisions contained in Section 5.11 above.
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxx X. Storm
----------------------------------------
Xxxxxxx X. Storm, Senior Vice President
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NAMES AND ADDRESSES OF OBLIGOR
000 Xxxxx Xxxx, Xxxxxxxxxxxx, XX 00000
SCHEDULE 5.3
TO
SECURITY AGREEMENT
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