SECURITY AGREEMENT
(BORROWER)
THIS SECURITY AGREEMENT (this "Agreement"), made as of the 26th of January,
1996, by XXXXXX INDUSTRIES, INC., a Delaware corporation (the "Company"), in
favor of SUNTRUST BANK, ATLANTA, a Georgia banking corporation ("SunTrust"), as
collateral agent (SunTrust, in such capacity, the "Collateral Agent") for
itself, First Union National Bank of South Carolina, a national banking
association ("First Union"), NatWest Bank N.A., a national banking association
("NatWest"), and The Prudential Insurance Company of America, a New Jersey
corporation ("Prudential") (each of SunTrust, First Union, NatWest and
Prudential, together with their respective successors and assigns, are
hereinafter referred to individually, a "Lender" and collectively the
"Lenders").
W I T N E S S E T H :
WHEREAS, SunTrust, First Union and NatWest (the "Credit Agreement Lenders")
have agreed to make available to the Company a $60,000,000 revolving credit
facility (the "Revolving Credit Facility") pursuant to that certain Revolving
Credit Agreement, dated as of the date hereof, among the Company, SunTrust,
First Union and NatWest as Lenders, SunTrust and First Union as Agent for the
Credit Agreement Lenders and SunTrust as Administrative Agent for the Credit
Agreement Lenders (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement");
WHEREAS, on December 20, 1988, Prudential purchased from the Company its
senior promissory note, dated as of December 20, 1988, in the stated principal
amount of $20,000,000, of which $9,230,766 remains outstanding, pursuant to that
certain Note Agreement, dated as of December 20, 1988, between Prudential and
the Company (as heretofore and hereafter amended, restated, supplemented or
otherwise modified from time to time, the "Prudential Agreement"), and in
connection with the establishment of the Revolving Credit Facility, Prudential
has agreed to make certain amendments to the terms and covenants of the
Prudential Agreement (the "Prudential Amendment"); and
WHEREAS, it is a condition precedent to the establishment of the Revolving
Credit Facility and to Prudential's agreeing to the Prudential Amendment that
the Company enter into this Agreement, and the Company wishes to fulfill said
condition precedent; and
NOW, THEREFORE, in order to induce the Credit Agreement Lenders to extend
the Revolving Credit Facility and Prudential to enter into the Prudential
Amendment and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
Credit Agreement are used herein as therein defined, and the following terms
shall have the following meanings (such meanings being equally applicable to
both the singular and plural forms of the terms defined):
"Account Debtor" shall mean any "account debtor," as such term is defined
in Section 9-105(1)(a) of the UCC.
"Accounts" shall mean any "account," as such term is defined in Section
9-106 of the UCC, now owned or hereafter acquired by the Company or in which the
Company now has or hereafter acquires any rights, wherever located, and in any
event, shall include, without limitation, all accounts receivable, book debts
and other rights to payment and forms of obligations (other than those evidenced
by Chattel Paper, Documents or Instruments) now owned or hereafter received or
acquired by or belonging or owing to the Company (including, without limitation,
under any trade names, styles or divisions thereof) arising out of goods sold or
leased or services rendered by the Company and all of the Company's rights in,
to and under all purchase orders or receipts now owned or hereafter acquired by
it for goods or services, and all of the Company's rights to any goods
represented by any of the foregoing (including, without limitation, unpaid
seller's rights of rescission, replevin, reclamation and stoppage in transit and
rights to returned, reclaimed or repossessed goods), and all moneys due or to
become due to the Company under all contracts for the sale of goods or the
performance of services or both by the Company (whether or not yet earned by
performance on the part of the Company or in connection with any other
transaction), now in existence or hereafter occurring, including, without
limitation, the right to receive the proceeds of said purchase orders and
contracts, and all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing and all insurance policies insuring
any of the foregoing.
"Chattel Paper" shall mean any "chattel paper," as such term is defined in
Section 9-105(1)(b) of the UCC, now owned or hereafter acquired by the Company
or in which the Company now has or hereafter acquires any rights and wherever
located.
"Collateral" shall have the meaning assigned to such term in Section 2 of
this Security Agreement.
"Consignee" shall have the meaning assigned to such term in Section 5(l) of
this Security Agreement.
"Contracts" shall mean all contracts, undertakings, or other agreements
relating to or governing all Accounts and Inventory (other than rights evidenced
by Chattel Paper, Documents or Instruments) in or under which the Company may
now or hereafter have any right, title or interest and wherever located, subject
to any limitations or prohibitions contained therein, including, without
limitation, any agreement relating to the terms of payment of an Account or the
terms of performance thereof.
"Credit Agreement" shall mean that certain Revolving Credit Agreement,
dated as of the date hereof, among the Company, the Credit Agreement Lenders,
SunTrust and First Union as Agent for the Credit Agreement Lenders and SunTrust
as Administrative Agent for the Credit Agreement Lenders, as hereafter amended,
restated, supplemented or otherwise modified from time to time.
"Credit Agreement Lenders" shall mean, collectively, SunTrust, First Union
and NatWest, together with their successors and assigns under the Credit
Agreement.
"Credit Documents" shall mean the Credit Agreement, the Prudential
Agreement, each Exhibit and Schedule to the Credit Agreement and the Prudential
Agreement, the Notes, the Guaranty Agreements, the Intercreditor Agreement, the
Security Documents, the Supplemental Documents hereafter executed and delivered
to the Lenders and the Collateral Agent and each other document, instrument,
certificate and opinion executed and delivered in connection with the foregoing,
each as amended, restated, supplemented or otherwise modified from time to time.
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"Documents" shall mean any "documents," as such term is defined in Section
9-105(1)(f) of the UCC, now owned or hereafter acquired by the Company or in
which the Company now has or hereafter acquires any rights and wherever located,
relating to or governing any Accounts or Inventory.
"Event of Default" shall mean any "Event of Default" as defined in the
Credit Agreement or as defined in the Prudential Agreement.
"Facility" shall mean either the $60,000,000 revolving credit facility made
available to the Company by the Credit Agreement Lenders pursuant to the Credit
Agreement or the $9,230,766 term loan made to the Company by Prudential pursuant
to the Prudential Agreement, and the term "Facilities" shall mean all such
facilities, collectively.
"General Intangibles" shall mean any "general intangibles," as such term is
defined in Section 9-106 of the UCC, now owned or hereafter acquired by the
Company or in which the Company now has or hereafter acquires any rights, and,
in any event, shall include, without limitation, all right, title and interest
which the Company may now or hereafter have in, under or with respect to any
Contract, causes of action, franchises, tax refund claims, customer lists,
Trademarks, Patents, rights in intellectual property, Licenses, permits,
copyrights, trade secrets, proprietary or confidential information, inventions
and discoveries (whether patented or patentable or not) and technical
information, procedures, designs, know-how, software, data bases, business
records data, processes, models, drawings, materials and records, goodwill, all
claims under guaranties, security interests or other security held by or granted
to the Company to secure payment of the Accounts by an Account Debtor obligated
thereon, all rights of indemnification and all other intangible property of any
kind and nature, in each case, as the foregoing relate to any Accounts or
Inventory.
"Government Agency" shall mean the United States of America, any federal,
local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions thereof
or pertaining thereto.
"Guarantor" shall mean Xxxxxx-Kinston Corp., a North Carolina corporation
and a wholly owned subsidiary of the Company, together with all Significant
Subsidiaries of the Company that hereafter execute or join a Guaranty Agreement.
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"Guaranty Agreements" shall mean, collectively, (i) that certain Guaranty
Agreement, dated as of the date hereof, executed by the Guarantor in favor of
SunTrust and First Union as Agents for the Credit Agreement Lenders, as
hereafter amended, restated, supplemented or otherwise modified from time to
time and (ii) that certain Guaranty Agreement, dated as of the date hereof,
executed by the Guarantor in favor of Prudential, as hereafter amended,
restated, supplemented or otherwise modified from time to time.
"hereby," herein," hereof," hereunder" and words of similar import refer to
this Security Agreement as a whole (including, without limitation, any schedules
hereto) and not merely to the specific Section, paragraph or clause in which the
respective word appears.
"Instruments" shall mean any "instrument," as such term is defined in
Section 9-105(1)(i) of the UCC, now owned or hereafter acquired by the Company
or in which the Company now has or hereafter acquires any rights, in either case
as Proceeds from any Accounts or Inventory and wherever located, other than
instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intercreditor Agreement" shall mean that certain Intercreditor Agreement,
dated as of the date hereof, among the Lenders, and acknowledged and agreed to
by the Company and the Subsidiary Guarantor, as hereafter amended, restated,
supplemented or otherwise modified from time to time.
"Inventory" shall mean any "inventory," as such term is defined in Section
9-109(4) of the UCC, now owned or hereafter acquired by the Company or in which
the Company now has or hereafter acquires any rights and wherever located, and,
in any event, shall include, without limitation, all inventory, merchandise,
goods and other personal property, now owned or hereafter acquired by the
Company or in which the Company now has or hereafter acquires any rights and
wherever located, which are held for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials, work in
process or materials used or consumed or to be used or consumed in the Company's
business, or the processing, packaging, delivery or shipping of the same, and
all finished goods.
"License" shall mean any Patent License, Trademark License or other license
under which the Company is the licensor or licensee relating to Accounts or
Inventory, and in the case of Licenses under which the Company is the licensor,
all rights to collect royalties thereunder.
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"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind or description and shall include, without limitation,
any agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof including any lease or
similar arrangement with a public authority executed in connection with the
issuance of industrial development revenue bonds or pollution control revenue
bonds, and the filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction.
"Notes" shall mean, collectively, the Revolving Credit Notes and that
certain Senior Note due October 31, 1998, dated as of December 20, 1988,
executed by the Company in favor of Prudential in the initial principal amount
of $20,000,000, as heretofore amended or modified.
"Patent License" shall mean all written agreements granting any right to
make, use, sell and/or practice any invention or discovery that is the subject
matter of a Patent now owned or hereafter acquired by the Company or in which
the Company now has or hereafter acquires any rights, relating to Accounts or
Inventory.
"Patent" or "Patents" shall mean one or all of the following now owned or
hereafter acquired or developed by the Company or in which the Company now has
or hereafter acquires any rights, including, without limitation, pursuant to any
Patent License, and wherever located, to the extent related to Accounts or
Inventory: (i) all letters patent of the United States or any other country and
all applications for letters patent of the United States or any other country,
and (ii) all reissues, reexaminations, continuations, continuations-in-part,
divisions, and extensions of any of the foregoing.
"Proceeds" shall mean "proceeds," as such term is defined in Section
9-306(1) of the UCC and, in any event, shall include, without limitation, (i)
any and all proceeds of any insurance, indemnity, warranty or guaranty payable
to the Company from time to time with respect to any of the Collateral, (ii) any
and all payments (in any form whatsoever) made or due and payable to the Company
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental body, authority, bureau or agency (or any person acting under color
of governmental authority), (iii) any claim of the Company against third parties
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(A) for past, present or future infringement of any Patent or Patent License or
(B) for past, present or future infringement or dilution of any Trademark or
Trademark License or for injury to the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark License, (iv)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral, and (v) the following types of property
acquired with cash proceeds: Accounts, Chattel Paper, Contracts, Documents,
General Intangibles and Inventory.
"Prudential" shall mean The Prudential Insurance Company of America, a New
Jersey corporation.
"Prudential Agreement" shall mean that certain Note Agreement, dated as of
December 20, 1988, between the Company and Prudential, as heretofore and as
hereafter amended, restated, renewed, extended, supplemented or otherwise
modified from time to time, pursuant to which Prudential purchased the Company's
senior promissory note, dated as of December 20, 1988 in the current principal
amount of $9,230,766.
"PTO" shall mean the United States Patent and Trademark Office and its
successors.
"Secured Obligations" shall mean all present and future obligations of the
Company and its Subsidiaries incurred under, with respect to or evidenced by the
Credit Agreement, the Prudential Agreement, the Notes, the Security Documents,
the Guaranty Agreements, the other Credit Documents and all other agreements,
documents and instruments evidencing any of the Facilities, including without
limitation all loans evidenced by the Notes, interest accruing thereon,
make-whole and yield maintenance premiums required thereunder (including,
without limitation, the Make-Whole Premium (as defined in the Prudential
Agreement)), and fees payable thereunder and all other indebtedness,
liabilities, obligations, covenants and duties of the Company to any of the
Secured Parties, of every kind, nature and description, direct or indirect,
absolute or contingent, due or not due, in contract or tort, liquidated or
unliquidated, arising under, with respect to or evidenced by the Credit
Agreement, the Prudential Agreement, the Notes, the Security Documents, the
Guaranty Agreements, the other Credit Documents and all other agreements,
documents and instruments evidencing any of the Facilities, by operation of law
or otherwise, now existing or hereafter arising or whether or not for the
payment of money or the performance or the nonperformance of any act, including,
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but not limited to, all debts, liabilities and obligations owing by the Company
to others which the Lenders may have obtained by assignment or otherwise, and
all damages which the Company may owe to any of the Secured Parties by reason of
any breach by the Company of any representation, warranty, covenant, agreement
or other provision of the Credit Agreement, the Prudential Agreement, the Notes,
the Security Documents, the Guaranty Agreements, all other Credit Documents and
all other agreements, documents and instruments evidencing any of the
Facilities.
"Secured Parties" shall mean, collectively, the Collateral Agent, the
Lenders, SunTrust in its capacity as Agent and Administrative Agent for the
Credit Agreement Lenders and First Union in its capacity as Agent for the Credit
Agreement Lenders.
"Security Agreement" shall mean this Security Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to time and any
exhibits or schedules hereto.
"Security Documents" shall mean, collectively, this Security Agreement and
that certain Security Agreement (Guarantors), dated as of the date hereof,
executed by the Subsidiary Guarantor in favor of the Collateral Agent, as
hereafter amended, restated, supplemented or otherwise modified from time to
time, and all UCC financing statements naming the Company or any of its
Subsidiaries as debtor and the Collateral Agent as secured party.
"Supplemental Documents" shall mean, collectively, the documents described
on Schedule 6 executed or delivered by any Significant Subsidiary after the
Closing Date.
"Trademark License" shall mean all written agreements granting any right to
use any Trademark or Trademark registration now owned or hereafter acquired by
the Company or in which the Company now has or hereafter acquires any rights.
"Trademark" or "Trademarks" shall mean one or all of the following now
owned or hereafter acquired by the Company or in which the Company now has or
hereafter acquires any rights to the extent related to any Accounts or Inventory
(including, without limitation, pursuant to any Trademark License): (i) all
trademarks, trade names, corporate names, business names, trade styles, service
marks, logos, other source or business identifiers, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
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applications in connection therewith, including, without limitation,
registrations, recordings and applications in the PTO or any other country or
any political subdivision thereof, (ii) all extensions or renewals thereof and
(iii) the goodwill of the Company business connected with the use of, and
symbolized by, any of the foregoing.
"UCC" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of Georgia; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Secured Parties' security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Georgia, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.
"Value" shall mean, with respect to any Inventory, the lower of FIFO cost
or market value of such Inventory.
2. Grant of Security Interest. (a) As collateral security for the prompt
and complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of all the Secured Obligations and to induce the
Credit Agreement Lenders to enter into the Credit Agreement and Prudential to
enter into the Prudential Amendment and to extend the Facilities in accordance
with the terms thereof, the Company hereby pledges to the Collateral Agent, for
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, for the ratable benefit of the Secured Parties, a security interest in
all of the Company's right, title and interest in, to and under the following
(all of which being hereinafter collectively referred to as the "Collateral"):
(i) all Accounts of the Company;
(ii) all Chattel Paper of the Company;
(iii) all Contracts of the Company;
(iv) all Documents of the Company;
(v) all General Intangibles of the Company;
(vi) all Instruments of the Company;
(vii) all Inventory of the Company;
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(viii) all accounts maintained by the Company with any financial
institution, including without limitation, all of the accounts
described in Schedule 5 attached hereto, and all funds on deposit
therein, all investments arising out of such funds, all claims
thereunder or in connection therewith, all cash, securities, rights and
other property at any time and from time to time received, receivable
or otherwise distributed in respect of such accounts, such funds or
such investments;
(ix) all books, records, printouts, ledger cards, files,
correspondence, computer programs, tapes, disks and related data
processing software, including source and object codes (owned by the
Company or in which it has an interest) which at any time evidence or
contain information relating to any of the collateral (including,
without limitation, customer lists and supplier lists) or are otherwise
necessary or helpful in the collection thereof or realization
thereupon;
(x) all guaranties, warranties, liens on real or personal property,
leases, and other agreements and property which in any way secure or
relate to any Accounts, Inventory, General Intangibles, Contracts,
Documents, Instruments or Chattel Paper, or are acquired for the
purpose of securing and enforcing any item thereof; and
(xi) to the extent not otherwise included, all Proceeds of each of
the foregoing and all accessions to, substitutions and replacements
for, and rents, profits and products of each of the foregoing;
provided, however, that the foregoing grant of a security interest shall
not include a security interest in, and the term "Collateral" shall not include
any equipment (as such term is defined in Section 9-109(2) of the UCC), any real
estate, plants or fixtures (as such term is defined in Section 9-313(1) of the
UCC) or any Patent License, Trademark License or equipment lease of the Company
to the extent that the granting of a security interest in such Patent License,
Trademark License or equipment lease is prohibited by the terms thereof;
9
provided, further that upon the termination or expiration of any such
prohibition with respect to any such Patent License, Trademark License or
equipment lease, such Patent License, Trademark License or equipment lease shall
become subject to the security interest hereunder and shall thereafter be deemed
to be Collateral.
(b) In addition, as collateral security for the prompt and complete payment
and performance when due of the Secured Obligations and in order to induce the
Lenders as aforesaid, each Lender is hereby granted a lien and security interest
in all property of the Company held by such Lender, including, without
limitation, all Property of every description, now or hereafter in the
possession or custody of or in transit to such Lender for any purpose, including
safekeeping, collection or pledge, for the account of the Company, or as to
which the Company may have any right or power.
(c) The Company intends and hereby acknowledges that the grant of a
security interest in the Collateral to the Collateral Agent, for the ratable
benefit of the Secured Parties, conveys a security interest in all right, title
and interest of the Company to the Collateral, whether such Collateral is owned
individually, jointly or severally by the Company.
3. Right of the Secured Parties; Limitations on the Secured Parties'
Obligations. It is expressly agreed by the Company that, anything herein to the
contrary notwithstanding, the Company shall remain liable under each of its
Contracts and each of its Licenses to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, and the Company shall
perform all of its duties and obligations thereunder, all in accordance with and
pursuant to the terms and provisions of each such Contract or License. None of
the Secured Parties shall have any obligation or liability under any Contract or
License by reason of or arising out of this Security Agreement or the granting
to the Collateral Agent or any other Secured Party of a security interest
therein or the receipt by the Collateral Agent or any other Secured Party of any
payment relating to any Contract or License pursuant hereto, nor shall the
Collateral Agent or any other Secured Party be required or obligated in any
manner to perform or fulfill any of the obligations of the Company under or
pursuant to any Contract or License, or to make any payment, or to make any
inquiry as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any Contract or License, or to
present or file any claim, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
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4. Representations, Warranties and Covenants. The Company hereby
represents, warrants and covenants that: (a) all of the Inventory is located at
the places specified in Schedule 1 attached hereto and such location is an
owned, leased or bailment location as specified in Schedule 1 attached hereto.
The correct corporate name, the principal place of business and the chief
executive office of the Company and the places where the Company's books and
records concerning the Collateral are currently kept are set forth in Schedule 2
attached hereto and made a part hereof. All records concerning Accounts and
General Intangibles and all originals of any Documents, Instruments or Chattel
Paper are located at the addresses set forth on Schedule 2 and none of the
Accounts is evidenced by a promissory note or other Instrument.
(b) The amount represented by the Company from time to time to the
Collateral Agent as the amount owing by each Account Debtor or by all Account
Debtors in respect of any Accounts will, at such time, be the correct amount
actually and unconditionally owing by such Account Debtor(s) thereunder, (except
to the extent, if any, that such Account Debtor(s) may be entitled to normal
trade discounts, adjustments, returns and allowances).
(c) The Company has exclusive possession and control of the Inventory,
except for (i) Inventory temporarily in transit with common or other carriers
and (iii) Inventory located at (A) a location specified on Schedule 1 attached
hereto or (B) such other locations as are permitted by the Collateral Agent
pursuant to Section 5 of this Security Agreement.
(d) The Company is the legal and beneficial owner of, or has rights to use,
the Collateral free and clear of all Liens. The Company has not, during the five
(5) years preceding the date hereof, been known as or used any other corporate,
trade or fictitious name, except as disclosed on Schedule 3 hereto, nor acquired
all or substantially all the assets, capital stock or operating unit of any
Person, except as disclosed on Schedule 3 hereto, and each predecessor in
interest of the Company during the five (5) years preceding the Closing Date is
disclosed on Schedule 3 hereto.
(e) This Security Agreement creates in favor of the Collateral Agent, for
the ratable benefit of the Secured Parties, a legal, valid and enforceable Lien
on the Collateral, securing the payment of the Secured Obligations. When
financing statements have been filed in the appropriate offices under the UCC in
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the locations listed on Schedule 4, the Collateral Agent will have a fully
perfected first priority Lien on the Collateral, to the extent such Lien may be
perfected by UCC filings.
(f) No authorization, approval, or other action by, and no notice to or
filing with, any Governmental Agency is required either (i) for the grant of a
Lien by the Company in the Collateral pursuant to this Security Agreement or
(ii) the exercise by the Collateral Agent of the rights provided for in this
Security Agreement or the remedies in respect to the Collateral pursuant to this
Security Agreement, except in the case of clause (ii), the filings described in
the preceding Section 4(e).
(g) (i) As of the date hereof, the Trademarks are subsisting, valid and
enforceable, and no claim has been made that the Company's use of any Trademark
does or may violate the rights of any third person, and (ii) the Company has
used, and will continue to use for the duration of this Security Agreement,
reasonably necessary statutory notice in connection with its use of Trademarks.
5. Covenants. The Company covenants and agrees with the Collateral Agent
and the other Secured Parties that from and after the date of this Security
Agreement:
(a) At any time and from time to time, upon the Collateral Agent's
reasonable request and at the expense of the Company, the Company will promptly
and duly execute and deliver any and all such further instruments and documents
and take such further action as the Collateral Agent may deem necessary or
desirable in order to perfect and protect any Lien granted or purported to be
granted hereby or to enable the Collateral Agent to exercise and enforce its
right and remedies hereunder with respect to the Collateral. Without limiting
the generality of the foregoing, the Company will (i) secure all consents and
approvals necessary or appropriate for the assignment to the Collateral Agent of
any material License or material Contract held by the Company or in which the
Company has any rights, (ii) xxxx conspicuously each item of Chattel Paper and
each related Contract and each of its records pertaining to the Chattel Paper,
with a legend, in form and substance satisfactory to the Collateral Agent,
indicating that such Chattel Paper or related Contract is subject to the
security interest granted hereby, (iii) if any Account shall be evidenced by a
promissory note or other Instrument (including, without limitation, any letter
of credit on which the Company is named as a beneficiary), deliver and pledge to
the Collateral Agent hereunder such certificate, note or other Instrument duly
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indorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance reasonably satisfactory to the Collateral Agent, and
(iv) execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, in form and substance reasonably satisfactory to the Collateral
Agent, in order to perfect and preserve the security interest granted or
purported to be granted hereby. The Company hereby authorizes the Collateral
Agent to file any such financing or continuation statements without the
signature of the Company to the extent permitted by applicable law. The Company
hereby agrees that a carbon, photographic, photostatic or other reproduction of
this Security Agreement or of a financing statement is sufficient as a financing
statement to the extent permitted by applicable law. If any Inventory is in the
possession or control of any warehouseman or any of the Company's agents or
processors, the Company shall, upon the Collateral Agent's reasonable request,
notify such warehouseman, agent or processor of the Collateral Agent's security
interest in such Inventory and, upon the Collateral Agent's request, instruct
them to hold all such Inventory for the Collateral Agent's account and, from and
after the occurrence of, and during the continuance of, an Event of Default,
subject to the Collateral Agent's instructions.
(b) (i) The Company shall keep the Inventory at the places
specified in Schedule 1 hereof, except for Inventory temporarily in
transit between such locations. So long as no Event of Default has
occurred and is continuing the Company may designate additional
Inventory locations by delivering written notice thereof to the
Collateral Agent at least fifteen (15) days prior to establishing any
such location where the Value of the Inventory at such location will
equal or exceed $1,500,000. Written notice of additional Inventory
locations where the Value of the Inventory located thereon will be less
than $1,500,000 shall be provided by the Company to the Collateral
Agent no later than the date that the next weekly Borrowing Base
Certificate is delivered by the Company to the Lenders pursuant to the
Credit Agreement after the establishment of such Inventory location;
nothing contained in this clause (i) shall limit the obligations of the
Company in clause (ii) and (iii) below.
(ii) Prior to the establishment of any such location within the
United States, the Company shall (1) cause to be made all filings under
the UCC necessary or appropriate to preserve the perfection of the
security interests described herein in the Inventory to be located at
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such locations and deliver to the Collateral Agent recorded
counterparts to all such filings, (2) to the extent that such location
is leased by the Company from any other Person and the Value of the
Inventory of the Company and the Guarantors at such location is at
least $2,500,000, obtain and deliver to the Collateral Agent a landlord
agreement substantially in the form of Exhibit A hereto from each party
directly or indirectly leasing such location to the Company (including
the title owner of such property), and (3) to the extent such location
is not owned or leased by the Company and the Value of the Inventory of
the Company and the Guarantors at such location is at least $300,000,
obtain and deliver to the Collateral Agent a bailee letter
substantially in the form of Exhibit B hereto from the party directly
controlling possession of such Inventory at such location.
(iii) Prior to the establishment of any such location outside the
United States, the Company shall obtain and deliver to the Collateral
Agent a bailee letter substantially in the form of Exhibit B hereto
from the party directly controlling possession of such Inventory at
such location; provided, however, that if at any time the Value of the
Inventory at locations outside the United States is equal to or exceeds
the lesser of (i) 20% of the aggregate Value of all Inventory of the
Company and (ii) $15,000,000, then the Company shall promptly deliver
such security documents, filing instruments and opinions as the
Collateral Agent shall reasonably deem necessary or desirable in order
to ascertain that the Collateral Agent has a first priority perfected
lien on such Inventory at such locations.
(iv) Notwithstanding the foregoing, no more than 10% of all
Inventory of the Company and the Guarantors may be located at leased
locations in the United States for which no landlord waiver has been
obtained and delivered to the Collateral Agent and at locations which
are neither owned nor leased by the Company or the Guarantors for which
no bailee letter has been obtained and delivered to the Collateral
Agent; provided, however, Inventory of the Company may be located at
the Fayette, Alabama plant while no landlord waiver has been obtained
for a period of fifteen days after the date hereof, and the Company
agrees to undertake to obtain a landlord waiver from its landlord at
Fayette, Alabama during such fifteen-day period.
14
(v) Upon the establishment of any new locations in accordance with
the foregoing clauses (i) through (iv), Schedule 1 hereto shall be
deemed amended to add such location thereto without further action by
the Collateral Agent or the Company, and the Company hereby authorizes
the Collateral Agent to substitute a new Schedule 1 hereto to reflect
such additional location(s).
(c) The Company will keep its principal place of business and chief
executive office and the office where it keeps its records concerning the
Accounts, and the office where it keeps all originals of all Chattel Paper, at
the locations therefor specified in Schedule 2 unless (i) the Company shall have
given the Collateral Agent at least thirty (30) days' prior written notice of
the establishment of a new location which shall be within the United States and
the Collateral Agent shall have consented in writing thereto and (ii) the
Company shall have made all filings under the UCC necessary or appropriate (as
determined by the Collateral Agent in its reasonable discretion) to preserve the
perfection of Collateral Agent's Lien in the Accounts and other Collateral. The
Company will hold and preserve such records and Chattel Paper and will permit
representatives of the Collateral Agent or any Lender, or any authorized
employee, agent or representative thereof, at any time during customary business
hours and as often as shall be reasonably requested, to inspect and make copies
and abstracts from such records and Chattel Paper. The Company will maintain a
set of books and records related to its Accounts at all times at its Andrews,
South Carolina location, which books and records shall be updated daily.
(d) The Company will keep and maintain at the Company's own cost and
expense satisfactory and complete records of the Collateral in a manner
reasonably acceptable to the Collateral Agent, including, without limitation, a
record of all payments received and all credits granted with respect to such
Collateral and a record of the Collateral Agent's security interest on the
Collateral. Upon the occurrence and during the continuance of an Event of
Default, the Company shall, for the Collateral Agent's further security, deliver
and turn over to the Collateral Agent or the Collateral Agent's designated
representatives at any time upon request by the Collateral Agent or the
Collateral Agent's designated representative, copies any such books and records
(including, without limitation, any and all computer tapes, programs, and source
codes relating to the Collateral or any part or parts thereof).
15
(e) In any suit, proceeding or action brought by the Collateral Agent with
respect to any Account, Chattel Paper, Contract, Instrument or General
Intangible comprising part of the Collateral, the Company will save, indemnify
and keep the Collateral Agent and each other Secured Party harmless from and
against all expense, loss or damages suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the obligor
thereunder, arising out of a breach by the Company of any obligation or arising
out of any other agreement, indebtedness or liability at any time owing to or in
favor of such obligor or its successors from the Company, and all such
obligations of the Company shall be and shall remain enforceable against and
only against the Company and shall not be enforceable against the Collateral
Agent or any other Secured Party; provided that the Company shall have no
obligation to indemnify the Collateral Agent with respect to costs caused by or
resulting from the willful misconduct or gross negligence of the Collateral
Agent.
(f) The Company will not create, permit or suffer to exist, and will defend
the Collateral against and take such other action as is necessary to remove, any
Lien on the Collateral, and will defend the right, title and interest of the
Collateral Agent in and to the Company's rights to the Collateral, including,
without limitation, the Proceeds and products thereof, against the claims and
demands of all Persons whatsoever, excluding any Liens permitted under the
Credit Agreement and the Prudential Agreement.
(g) The Company will not (i) grant any extension of the time of payment of
any of the Collateral except in the ordinary course of business or compromise,
compound or settle the same for less than the full amount thereof except in the
ordinary course of business, (ii) release, wholly or partly, any Person liable
for the payment thereof, except in the ordinary course of business in connection
with a settlement permitted under clause (i) hereof, or (iii) allow any credit
or discount whatsoever thereon other than trade discounts granted in the
ordinary course of business.
(h) The Company will not sell, transfer, lease or otherwise dispose of any
of the Collateral or contract to do so, except to the extent permitted under the
terms of each of the Credit Agreement and the Prudential Agreement.
(i) The Company will advise the Collateral Agent promptly, and in
reasonable detail, of (i) any material Lien or claim made by or asserted against
any or all of the Collateral (other than Liens permitted under the Credit
16
Agreement and the Prudential Agreement), and (ii) the occurrence of any other
event which would have a material adverse effect on the aggregate value of the
Collateral or on the Liens with respect to such Collateral created hereunder.
(j) The Company shall, at the Collateral Agent's request, in the event that
the Company has Accounts with respect to which the Account Debtor is the United
States of America or any department, agency or instrumentality thereof (all such
Accounts hereinafter referred to as "Government Receivables"), promptly comply
with the Assignment of Claims Act of 1940, as amended (31 U.S.C. 3727 et seq.),
with respect to such Government Receivables and shall promptly deliver to the
Collateral Agent evidence of such compliance, which evidence shall be in form
and substance reasonably satisfactory to the Collateral Agent.
(k) The Company will not change its name, identity or corporate structure
in any manner which might make any financing statement filed hereunder seriously
misleading, unless it shall have (i) given the Collateral Agent at least thirty
(30) days' prior written notice thereof (and received in writing any consent of
the Lenders that may be required under the terms of the Credit Agreement and the
Prudential Agreement), and (ii) certified to the Collateral Agent that all
filings reflecting such new name, identity or structure have been made which are
necessary or appropriate to preserve the perfection of the security interests
described herein.
(l) The Company will not at any time place any Inventory on consignment
with any Person without the Collateral Agent's prior written consent, which
consent will not be unreasonably withheld. If at any time during the term of
this Security Agreement, any Inventory is placed by the Company on consignment
with any Person ("Consignee"), with the prior written consent of the Collateral
Agent, the Company shall, prior to the delivery of any such consigned Inventory:
(i) provide the Collateral Agent with all consignment agreements and other
instruments and documentation to be used in connection with such consignment,
all of which agreements, instruments and documentation shall be acceptable in
form and substance to the Collateral Agent, (ii) prepare, execute and file
appropriate financing statements with respect to any consigned Inventory showing
the Consignee as debtor, the Company as secured party and the Collateral Agent
as assignee of secured party, (iii) prepare, execute and file appropriate
financing statements with respect to any consigned Inventory showing the Company
as debtor and the Collateral Agent as secured party, (iv) after all financing
17
statements referred to in clauses (ii) and (iii) above shall have been filed,
conduct a search of all filings made against the Consignee in all jurisdictions
in which the Inventory to be consigned is to be located while on consignment,
and deliver to the Collateral Agent copies of the results of all such searches,
and (v) notify, in writing, all creditors of the Consignee which are or may be
holders of security interests in the Inventory to be consigned that the Company
expects to deliver certain Inventory to the Consignee, all of which Inventory
shall be described in such notice by item or type.
(m) The Company shall notify the Collateral Agent immediately if it knows
or has reason to know that any Patent or any registration relating to any
Trademark which is material to the conduct of the Company's business may become
abandoned, cancelled or declared invalid, or if any Trademark or the invention
disclosed in any of the Patents is dedicated to the public domain, or of any
material adverse determination in any proceeding in the PTO or in any United
States court regarding the Company's ownership of any Patent or Trademark which
is material to the conduct of the Company's business, its right to register the
same, or to keep and maintain the same. If the Company, either itself or through
any agent, employee, licensee or designee, applies for a Patent or files an
application for the registration of any Trademark with the PTO or in any
analogous office or agency in any other country or any political subdivision
thereof, or otherwise obtains rights in any Patent or Trademark, the Company
will promptly inform the Collateral Agent, and, upon request of the Collateral
Agent, execute and deliver any and all agreements, instruments, documents and
papers as the Collateral Agent may request to evidence the Collateral Agent's
security interest in such Patent or Trademark and the General Intangibles used
in connection therewith, including, without limitation, in the case of
Trademarks, the goodwill of the Company's business connected with the use
thereof or symbolized thereby. Consistent with the Company's past business
practice, the Company will (i) take all reasonably necessary actions permitted
by applicable law to prosecute each Patent or Trademark application which is
material to the conduct of the company's business; (ii) to attempt to obtain the
broadest Patent or registration of a Trademark therefrom and (iii) to maintain
each Patent and Trademark registration which is material to the conduct of the
Company's business, including, without limitation, with respect to Patents,
payments of required maintenance fees, and, with respect to Trademarks, filing
of applications for renewal, affidavits of use and affidavits of
incontestability. In the event that the Company fails to take any of such
actions, the Collateral Agent may do so in the Company's name or, if an Event of
18
Default has occurred and is continuing in the Collateral Agent's name, and all
expenses incurred by the Collateral Agent in connection therewith shall be paid
by the Company in accordance with Section 9 hereof. Consistent with the
Company's past business practices, the Company shall use its best efforts to
detect infringers of the Patents and Trademarks which are material to its
business. In the event that any of the Patents or Trademarks is infringed or, in
the case of any Trademark, diluted by a third party, the Company shall (i)
notify the Collateral Agent promptly after it learns thereof and (ii) unless the
Company shall reasonably determine that such Patent or Trademark is not material
to the conduct of the Company's business, to promptly take appropriate action to
enjoin such infringement or, in the case of any Trademark, dilution and to seek
any and all damages for such infringement or dilution or shall take such other
actions (including entering into licenses or covenants not to xxx) as the
Company in the exercise of its business judgment shall reasonably deem
appropriate under the circumstances to protect the Patents or Trademarks. In the
event that the Company fails to take any such actions the Collateral Agent may
do so in the Company's name or, if an Event of Default has occurred and is
continuing the Collateral Agent's name, and all expenses incurred by the
Collateral Agent in connection therewith shall be paid by the Company in
accordance with Section 9 hereof.
6. Insurance. (a) The Company shall at its sole cost and expense provide
and maintain in full force and effect insurance with respect to the Collateral
and all parts thereof, as required under, and on the terms and conditions set
forth in, Section 6.12 of the Credit Agreement, which terms and conditions are
hereby incorporated herein by reference as fully as if fully set forth herein
and, in addition shall (i) provide for all losses in excess of $250,000 to be
paid directly to the Collateral Agent pursuant to a loss payable endorsement in
form and substance satisfactory to the Collateral Agent, (ii) name the Secured
Parties as additional insureds thereunder (without any representation or
warranty by or any obligation by or any obligation upon the Collateral Agent) as
their interest may appear, (iii) obtain the agreement by the insurer that any
proceeds thereunder shall be payable to the Collateral Agent notwithstanding any
action, inaction or breach of representation or warranty by the Company, (iv)
provide that there shall be no recourse against the Secured Parties for payment
of premiums or other amounts with respect thereto, and (v) provide that at least
30 days' prior written notice of cancellation or of lapse of such policy shall
be given to the Collateral Agent by the insurer unless otherwise agreed to by
the Collateral Agent. The Company shall, if so requested by the Collateral
19
Agent, deliver to the Collateral Agent original or duplicate copies of such
insurance and, as often as the Collateral Agent may reasonably request, a report
of a reputable insurance broker with respect to such insurance.
(b) The Company hereby (i) directs all insurers under such policies of
insurance maintained hereunder and under the Credit Agreement for which the
Collateral Agent is required to be named loss payee to pay all proceeds payable
thereunder in excess of $250,000 irectly to the Collateral Agent, for the
ratable benefit of the Secured Parties and (ii) irrevocably makes, constitutes
and appoints the Collateral Agent (and all officers, employees or agents
designated by the Collateral Agent) as the Company's true and lawful attorney
(and agent-in-fact) for the purpose of making, settling and adjusting claims
under such policies of insurance if the proceeds of such claims are to be
applied to the Secured Obligations pursuant to the last sentence of this Section
6(b), endorsing the name of the Company on any check, draft, instrument or other
item of payment for the proceeds of such policies of insurance which are to be
applied to the Obligations pursuant to the last sentence of this Section 6(b),
and for making all determinations and decisions with respect to such policies of
insurance which relate to proceeds to be applied to the Obligations; provided,
however, that the Collateral Agent agrees not to exercise such rights as the
Company's true and lawful attorney (and agent-in-fact) unless a Default or Event
of Default has occurred and is continuing. The Company shall promptly notify the
Collateral Agent in writing of any payment it receives of insurance proceeds in
respect of damaged or destroyed Collateral. Proceeds of such insurance received
by the Collateral Agent in respect of damages or destruction to the Collateral,
after deducting therefrom all expenses incurred by the Collateral Agent in
collecting or administering such funds, shall be applied by the Collateral Agent
to the payment of outstanding Secured Obligations in accordance with the
Intercreditor Agreement.
(c) If any insurance required to be provided hereunder shall expire, be
withdrawn, become void by breach of any condition thereof by the Company, or
become void or questionable by reason of the failure or impairment of the
capital of any insurer, or if for any other reason whatsoever any such insurance
shall become unsatisfactory to the Collateral Agent in its reasonable credit
judgment, the Company immediately shall obtain new or additional insurance which
shall be satisfactory to the Collateral Agent in its reasonable credit judgment.
The Company shall not take out any separate or additional insurance which is
contributing in the event of loss unless it is properly endorsed and otherwise
satisfactory to the Collateral Agent in all respects.
20
(d) In the event the Company at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay any
premium in whole or in part relating thereto, the Collateral Agent, without
waiving or releasing any obligations or default by the Company hereunder, may at
any time or times thereafter (but shall not be obligated to) obtain and maintain
such policies of insurance and pay such premium and take any other action with
respect thereto which the Collateral Agent deems advisable. All sums so
disbursed by the Collateral Agent, including attorneys' fees, court costs,
expenses and other charges relating thereto, shall be payable, on demand, by the
Company to the Collateral Agent in accordance with Section 9 hereof.
7. Collections, Verifications. (a) The Collateral Agent may at any time,
upon the occurrence and during the continuation of any Event of Default, open
the Company's mail and collect any and all amounts due from Account Debtors and
notify Account Debtors of the Company, parties to the Contracts of the Company,
obligors of Instruments of the Company and obligors in respect of Chattel Paper
of the Company that the Accounts and the right, title and interest of the
Company in and under such Contracts, Instruments and Chattel Paper have been
assigned to the Collateral Agent and that payments shall be made directly to the
Collateral Agent or to a lockbox designated by the Collateral Agent. Upon the
request of the Collateral Agent, the Company will so notify such Account
Debtors, parties to such Contracts, obligors of such Instruments and obligors in
respect of such Chattel Paper. The Collateral Agent may at any time, in its own
name or in the name of the Company, communicate with such Account Debtors,
parties to such Contracts, obligors of such Instruments and obligors in respect
of such Chattel Paper to verify with such Persons to the Collateral Agent's
satisfaction the existence, amount and terms of any such Accounts, Contracts,
Instruments or Chattel Paper.
(b) The Collateral Agent shall have the right to make test verifications of
the Accounts and physical verifications of the Inventory in any manner and
through any medium that it considers advisable, and the Company agrees to
furnish all such assistance and information as the Collateral Agent may require
in connection therewith.
21
8. Collateral Agent's Appointment as Attorney-in-Fact. (a) The Company
hereby irrevocably constitutes and appoints the Collateral Agent and any officer
or agent thereof with full power of substitution as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Company and in the name of the Company or otherwise from time to
time in the Collateral Agent's discretion, to take any action and to execute and
deliver any and all documents and instruments which the Collateral Agent may
deem necessary or advisable to accomplish the purposes of this Security
Agreement and, without limiting the generality of the foregoing, hereby gives
the Collateral Agent the power and right, on behalf of the Company, without
notice to or assent by the Company to do the following:
(i) upon failure or refusal of the Company to execute
and/or deliver to the Collateral Agent any financing statement,
continuation statement, instrument or document which the Collateral
Agent may deem necessary or desirable to obtain the full benefits of
this Security Agreement and of the rights and powers granted hereunder,
to sign the Company's name on any of the foregoing documentation and to
deliver such documentation to any Person as the Collateral Agent shall
elect;
(ii) upon the occurrence of an Event of Default and
subject to Section 8(b) below, to ask, demand, collect, receive and
give acquittances and receipts for any and all moneys due and to become
due under any Collateral and, in the name of the Company or its own
name or otherwise, to take possession of and endorse and collect any
checks, drafts, notes, acceptances or other Instruments for the payment
of moneys due under any Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Collateral Agent for the purpose of
collecting any and all such moneys due under any Collateral whenever
payable and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Collateral Agent for the purpose of collecting any and all such moneys
due under any Collateral whenever payable;
(iii) upon failure of the Company to do so, to pay or
discharge taxes (except for those being contested in good faith by the
Company for which adequate reserves have been established) or Liens
levied or placed on or threatened against the Collateral, to obtain any
insurance called for by the terms of the Credit Agreement, the
22
Prudential Agreement or this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof;
(iv) upon an Event of Default and the failure of
the Company to do so, to effect any repairs called for by the terms of
this Security Agreement and to pay all or any of the costs
thereof; and
(v) upon the occurrence of an Event of Default and
subject to Section 8(b) below, (A) to direct any party liable for any
payment under any of the Collateral to make payment of any and all
moneys due, and to become due thereunder, directly to the Collateral
Agent or as the Collateral Agent shall direct, (B) to receive payment
of and receipt for any and all moneys, claims and other amounts due,
and to become due at any time, in respect of or arising out of any
Collateral, (C) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with
accounts and other Documents constituting or relating to the
Collateral, (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction
to collect the Collateral or any part thereof and to enforce any other
right in respect of any Collateral, (E) to defend any suit, action or
proceeding brought against the Company with respect to any Collateral,
(F) to settle, compromise or adjust any suit, action or proceeding
described above and, in connection therewith, to give such discharges
or releases as the Collateral Agent may reasonably deem appropriate,
(G) to license or, to the extent permitted by an applicable license,
sublicense, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any Patent or Trademark, throughout
the world for such term or terms, on such conditions, and in such
manner, as the Collateral Agent shall in its sole discretion determine,
and (H) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Collateral Agent were the absolute owner
thereof for all purposes, and to do, at the Collateral Agent's option
and the Company's expense, at any time, or from time to time, all acts
and things which the Collateral Agent deems necessary to protect,
preserve or realize upon the Collateral and the Lien of the Collateral
Agent and the other Secured Parties therein, in order to effect the
intent of this Security Agreement, all as fully and effectively as the
Company might do.
23
(b) The Company hereby ratifies, to the extent permitted by law, all that
said attorneys shall lawfully do or cause to be done by virtue hereof. The power
of attorney granted pursuant to this Section 8 is a power coupled with an
interest and shall be irrevocable until the Secured Obligations are indefeasibly
paid in full.
(c) The powers conferred on the Collateral Agent hereunder are solely to
protect the interests of the Collateral Agent and the other Secured Parties in
the Collateral and shall not impose any duty upon any of them to exercise any
such powers. The Collateral Agent shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers and neither it nor
any of its officers, directors, employees or agents shall be responsible to the
Company for any act or failure to act, except for its own gross negligence or
willful misconduct.
(d) The Company also authorizes the Collateral Agent (i) to communicate in
its own name with any party to any Contract with regard to the assignment of the
right, title and interest of the Company in and under the Contracts hereunder
and other matters relating thereto and (ii) to execute, in connection with any
sale provided for in Section 10 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
9. Performance by the Collateral Agent of the Company's Obligations. If the
Company fails to perform or comply promptly with any of its agreements contained
herein and the Collateral Agent, as provided for by the terms of this Security
Agreement, itself performs or complies, or otherwise causes performance or
compliance, with such agreement, the expenses of the Collateral Agent incurred
in connection with such performance or compliance, together with interest
thereon at the highest rate then applicable under the Credit Agreement, shall be
payable by the Company to the Collateral Agent on demand and shall constitute
Secured Obligations secured hereby.
10. Remedies Upon Default. (a) If an Event of Default shall occur and be
continuing, the Collateral Agent may exercise, in addition to all other rights
and remedies granted to it in this Security Agreement and in any other Credit
Document, all rights and remedies of a secured party under the UCC. Without
limiting the generality of the foregoing, the Company expressly agrees that in
24
any such event the Collateral Agent, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon the Company or any other
Person (all and each of which demands, advertisements and/or notices are hereby
expressly waived to the extent permitted by the UCC and other applicable law),
may forthwith enter upon the premises of the Company where any Collateral is
located through self-help, without judicial process, without first obtaining a
final judgment or giving the Company notice and opportunity for a hearing on the
Collateral Agent's claim or the Collateral Agent's action, and without paying
rent, and collect, receive, assemble, process, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
an option or options to purchase, or sell or otherwise dispose of and deliver
said Collateral (or contract to do so), or any part thereof, in one or more
parcels at public or private sale or sales, at any exchange or broker's board or
at any of the Collateral Agent's offices or elsewhere at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. The Collateral Agent or any Lender shall have the right upon
any such public sale or sales, and, to the extent permitted by applicable law,
upon any such private sale or sales, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption, which equity of
redemption the Company hereby releases. Such sales may be adjourned and
continued from time to time with or without notice. The Collateral Agent shall
have the right to conduct such sales on the Company's premises or elsewhere and
shall have the right to use the Company's premises without charge for such sales
for such time or times as Collateral Agent deems necessary or advisable. The
Company further agrees, at the Collateral Agent's request, to assemble the
Collateral and make it available to the Collateral Agent at places which the
Collateral Agent shall select, whether at the Company's premises or elsewhere.
Until the Collateral Agent is able to effect a sale, lease, or other disposition
of Collateral, the Collateral Agent shall have the right to use or operate
Collateral, or any part thereof, to the extent that it deems appropriate for the
purpose of preserving Collateral or its value or for any other purpose deemed
appropriate by the Collateral Agent. The Collateral Agent shall have no
obligation to the Company to maintain or preserve the rights of the Company as
against third parties with respect to Collateral while Collateral is in the
possession of the Collateral Agent. The Collateral Agent may, if it so elects,
seek the appointment of a receiver or keeper to take possession of Collateral
and to enforce any of the Collateral Agent's remedies with respect to such
appointment without prior notice or hearing. The Collateral Agent shall apply
25
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, as provided in Section 10(d) hereof, the Company remaining
liable for any deficiency remaining unpaid after such application, and the
Collateral Agent shall be required to account for the surplus, if any, to the
Company only after so paying over such net proceeds and after the payment by the
Collateral Agent of any other amount required by any provision of law, including
Section 9-504(1)(c) of the UCC. To the extent permitted by applicable law, the
Company waives all claims, damages and demands against the Collateral Agent and
Lenders arising out of the repossession, retention or sale of the Collateral
except such as arise out of the gross negligence or wilful misconduct of the
Collateral Agent or any Lender. The Company agrees that the Collateral Agent
need not give more than ten (10) days' notice (which notification shall be
deemed given when given in the manner provided in Section 14 hereof) of the time
and place of any public sale or of the time after which a private sale may take
place and that such notice is reasonable notification of such matters. The
Company shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all Secured Obligations,
the Company also being liable for the reasonable fees and expenses of any
attorneys employed by the Collateral Agent to collect such deficiency.
(b) The Company also agrees to pay all costs of the Collateral Agent,
including, without limitation, the expenses and reasonable attorneys' fees,
incurred in connection with the enforcement of any of its rights and remedies
hereunder.
(c) The Company hereby waives presentment, demand, protest or any notice
(to the maximum extent permitted by applicable law) of any kind in connection
with this Security Agreement or any Collateral.
(d) The Proceeds of any sale, disposition or other realization upon all or
any part of the Collateral shall be distributed by the Collateral Agent in
accordance with the priorities set forth in the Intercreditor Agreement.
11. Grant of License to Use Patent and Trademark Collateral. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
Section 10 hereof at such time as the Collateral Agent, without regard to this
Section 11, shall be lawfully entitled to exercise such rights and remedies, the
Company hereby grants to the Collateral Agent an irrevocable, non-exclusive
license (exercisable upon the occurrence of an Event of Default without payment
of royalty or other compensation to the Company) to use, license or sublicense
26
any Patent or Trademark. Any such license shall include, without limitation,
access to all media in which any of the licensed items may be recorded or stored
and to all computer and automatic machinery, software and programs used for the
compilation or printout thereof.
12. Limitation on the Collateral Agent's Duties. The powers conferred on
the Collateral Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for exercising reasonable care in the custody and preservation of
Collateral in its possession or possession of its agents or nominees and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Collateral or any income thereon or as to the
taking of any necessary steps to preserve rights against any parties or any
other rights pertaining to the Collateral. The Collateral Agent shall be deemed
to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords its own property.
13. Term of Agreement; Reinstatement. This Agreement and the Liens granted
hereunder shall remain in full force and effect until the later of (x) the
payment and performance in full of all Secured Obligations and all other amounts
payable hereunder and (y) the expiration or termination of all Facilities.
Further, this Agreement and the Liens granted hereunder shall remain in full
force and effect and continue to be effective should any petition be filed by or
against the Company for liquidation or reorganization, should the Company become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of the
Company's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Secured Obligations
and the cash collateral for any such contingent obligations and liabilities, or
any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a "voidable preference", "fraudulent conveyance", or
otherwise, all as though such payment or performance had not been made. In the
event that any payment or performance or any such cash collateral, or any part
thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
27
14. Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including telecopier) and shall be effective (a)
if given by mail, when deposited in the mails or (b) if given by telecopier,
when so telecopied. Notices hereunder shall be mailed or telecopied as follows:
If to the Company:
Xxxxxx Industries, Inc.
0000 Xxxxx Xxxxx Xxxxx, Xxx. 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Telephone No: 000-000-0000
Telecopy No: 000-000-0000
with a copy to:
Xxxxxxx & Xxxxxxxxxx
0000 Xxxxxxxxx Xxxx, X.X., Xxx. 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telephone No: 000-000-0000
Telecopy No: 404-262-1222
If to the Collateral Agent:
SunTrust Bank, Atlanta
00 Xxxx Xxxxx,
Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Mr. Xxxxx Xxxxxxxxxxx and
Xx. Xxx Xxxxxxxxx
Telephone No: (000) 000-0000
Telecopy No: (000) 000-0000
with a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: G. Xxxxxx Xxxxx
Telephone No: (000) 000-0000
Telecopy No: (000) 000-0000
28
15. Severability. Every provision of this Agreement is intended to be
severable. If any term or provision of this Agreement or any other document
delivered in connection herewith shall be unenforceable in any respect, the
enforceability of the remaining provisions shall not thereby be affected. Time
is of the essence of this Agreement.
16. No Waiver; Cumulative Remedies. Neither the Collateral Agent nor any
other Secured Party shall by any act, delay, omission or otherwise be deemed to
have waived any of its rights or remedies hereunder, and no waiver shall be
valid unless in writing, signed by the Collateral Agent, and then only to the
extent therein set forth. A waiver by the Collateral Agent of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Collateral Agent would otherwise have had on any
future occasion. No failure to exercise nor any delay in exercising on the part
of the Collateral Agent or any other Secured Party, any right, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or future exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies hereunder provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law. None of the terms or provisions of this Security
Agreement may be altered, modified or amended except by an instrument in
writing, duly executed by the Company and Collateral Agent, and then such
alteration, modification or amendment shall only be effective for the specific
instance and for the specific purpose for which given. None of the terms and
provisions of this Security Agreement may be waived except by an instrument in
writing, duly executed by the Collateral Agent and then such waiver shall only
be effective for the specific instance and for the specific purpose for which
given.
17. Successors and Assigns. This Security Agreement and all obligations of
the Company hereunder shall be binding upon the successors and assigns of the
Company, and shall, together with the rights and remedies of the Collateral
Agent hereunder, inure to the benefit of the Collateral Agent and the other
Secured Parties and any of their respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other dispositions of any
agreement governing or instrument evidencing the Secured Obligations or any
portion thereof or interest therein shall in any manner affect the security
interest granted to the Collateral Agent or the other Secured Parties hereunder.
29
Without limiting the generality of the foregoing, any Lender may assign or
otherwise transfer all or any portion of its rights and obligations under any
Credit Document in accordance with the terms thereof (including, without
limitation, any portion of the Facilities owing to it), to any other person or
entity, and such other person or entity shall thereupon become vested with all
the benefits in respect thereof granted to such Lender herein or otherwise.
18. GOVERNING LAW; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND ALL OTHER
DOCUMENTS CONTEMPLATED HEREBY, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND UNDER THE OTHER DOCUMENTS SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF GEORGIA (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF GEORGIA OR OF THE
UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. TO THE FULLEST EXTENT ALLOWED BY LAW, THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND THE COMPANY HEREBY IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.
(c) THE COMPANY HEREBY IRREVOCABLY DESIGNATES THE CT CORPORATION, ATLANTA,
GEORGIA, AS ITS DESIGNEE, APPOINTEE AND LOCAL AGENT TO RECEIVE, FOR AND ON
BEHALF OF THE COMPANY, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE NOTES OR
ANY DOCUMENT RELATED THERETO. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS
SERVED ON SUCH LOCAL AGENT WILL BE PROMPTLY FORWARDED BY SUCH LOCAL AGENT AND BY
THE SERVER OF SUCH PROCESS BY MAIL TO THE COMPANY AT ITS ADDRESS SET FORTH
OPPOSITE ITS SIGNATURE BELOW, BUT THE FAILURE OF THE COMPANY TO RECEIVE SUCH
COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. THE COMPANY
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS
SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 3 DAYS AFTER SUCH MAILING.
30
(d) Nothing herein shall affect the right of the Collateral Agent and the
other Secured Parties to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the Company in any
other jurisdiction.
19. Indemnity. The Company shall protect, indemnify and save harmless the
Collateral Agent and the other Secured Parties, their officers, directors,
employees, representatives and agents (each, an "Indemnified Party") from, and
hold each of them harmless against, any and all costs, losses, liabilities,
claims, damages or expenses actually incurred by any of them (whether or not any
of them is designated a party thereto) arising out of or by reason of any
investigation, litigation or other proceeding related to this Agreement or any
transaction contemplated hereby, including, without limitation, the reasonable
fees and disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding. Notwithstanding anything in this
Agreement to the contrary, the Company shall not be responsible to any
Indemnified Party for any losses, damages, liabilities or expenses which result
from such Indemnified Party's gross negligence or willful misconduct. The
Company's obligations under this Section shall survive any termination of this
Agreement.
20. Payment of Expenses, Etc. The Company shall:
(a) whether or not the transactions hereby contemplated are consummated,
pay all reasonable, out-of-pocket costs and expenses of the Collateral Agent and
the other Secured Parties in the administration (both before and after the
execution hereof and including reasonable expenses actually incurred relating to
advice of counsel as to the rights and duties of the Collateral Agent and the
other Secured Parties with respect thereto) of, and in connection with the
preparation, execution and delivery of, preservation of rights under,
enforcement of, and, after a Default or Event of Default, refinancing,
renegotiation or restructuring of, this Agreement and the other Credit Documents
and the documents and instruments referred to therein, and any amendment, waiver
or consent relating thereto (including, without limitation, the reasonable fees
actually incurred and disbursements of counsel for the Collateral Agent), and in
the case of enforcement of this Agreement or any Credit Document after an Event
of Default, all such reasonable, out-of-pocket costs and expenses (including,
without limitation, the reasonable fees actually incurred and disbursements of
counsel), of the Collateral Agent or any of the other Secured Parties; and
31
(b) pay and hold the Collateral Agent and the other Secured Parties
harmless from and against any and all present and future stamp, documentary, and
other similar Taxes with respect to this Agreement, the Notes and any other
Credit Documents, any collateral described therein, or any payments due
thereunder, and save each Lender harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to pay such
Taxes.
21. Security Interest Absolute. All rights of the Collateral Agent and
security interests hereunder, and all obligations of the Company hereunder,
shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit Documents, the
other Security Documents or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the obligations, or any other amendment or waiver of or
any consent to any departure from the Credit Documents, including, without
limitation, any increase in the Secured Obligations resulting from the extension
of additional credit to the Company or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(d) any manner of application of collateral, or proceeds thereof, to all or
any of the Secured Obligations, or any manner of sale or other disposition of
any collateral for all or any part of the Secured Obligations or any other
assets of the Company or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate structure or
existence of the Company or any of its Subsidiaries; or
(f) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Company or a third party pledgor.
32
22. Entire Agreement. This Agreement and the other Credit Documents
executed and delivered contemporaneously herewith, together with the exhibits
and schedules attached hereto and thereto, constitute the entire understanding
of the parties with respect to the subject matter hereof, and any other prior or
contemporaneous agreements, whether written or oral, with respect thereto. The
execution of this Agreement and the other Credit Documents by the Company was
not based upon any facts or materials provided by the Collateral Agent or any of
the Secured Parties, nor was the Company induced to execute this Agreement or
any other Credit Document by any representation, statement or analysis made by
the Collateral Agent or any other Secured Party.
23. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Security Agreement to be
executed and delivered by its duly authorized officers on the date first set
forth above.
XXXXXX INDUSTRIES, INC.,
a Delaware corporation
Address: 4130 Faber Place Drive By: /s/ Xxxxx X. Xxxx
Suite 200 Name: Xxxxx X. Xxxx
Xxxxxxxxxx, XX 00000 Title: Executive Vice President
and Chief Financial Officer
Attn: Xxxxx Xxxx
Telecopier No.: 000-000-0000
Attest: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Secretary
SCHEDULE 1
TO
SECURITY AGREEMENT
Locations of Inventory and Status
Location Owned, Leased, Bailment
-------- -----------------------
Conifer Street Owned
Xxxxxxx, South Carolina 29510
Georgetown County
Airport Industrial Park Owned
Xxxxxxx, South Carolina 29510
Georgetown County
Outlet Store Leased
0 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Xxxxxxxxxx Xxxxxx
0000 Xxx Xxxxxxxx Xxxx Xxxxxx
Xxxxxxxxxxxxx, Xxxxxxx 00000
Gwinnett Xxxxxx
Xxx Xxxxxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Cullman County
0000 Xxxxxx Xxxxxx X. Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Fayette County
000 00xx Xxxxxx XX Leased
Xxxxxxx, Xxxxxxx 00000
Fayette County
Xxxxxx-Kinston Corp. Bailment
Hwy 11 & Xxxxxxxxxx Xx.
Kinston, North Carolina 28502
Lenoir County
00
Xxxxxx Xxxxxxxx XX xx XX Xxxxxxxx
Amapolas #0000 Xxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxx
Xxxxxx-Strathleven Limited Bailment
Guinep Way
Montego Bay, Jamaica
Xxxxxx Freeport Limited Bailment
Montego Bay, Freezone
Montego Bay, Jamaica
Acro Tex, Inc. Bailment
0000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Big Sur S.A. de C.V.
Perifarico PTE Casaliesq Blvd.
Culosio, Int. Parque Octillo Bailment
Hermosillo, Sonora, Mexico
Attn: Xxxxxx Gluschankoff
Classic Manufacturing Bailment
X.X. Xxx 000
Xxxxxxx Xxx, Xxxxxxx
Contract Apparel Bailment
00000 Xxxxxx Xxxxx
Xx Xxxx, Xxxxx 00000
Xxxxxxxxx Manufacturing Bailment
000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Xxxx Xxx Bailment
c/o All Seasons Sportswear
000 Xxxx Xxxx
Xxxxxxx, XX 00000
Down East Fabrics Bailment
0000-X X. Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
34
JRF Enterprises Bailment
0000X Xxxxxxx Xxx 00
Xxxxxxxxxx, Xxxxxxx 00000
Major League Bailment
c/o Four D's
000 Xxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
Maquilas Kino S.A. de C.V. Bailment
Paqua De Negocios Octillo
Hermosillo, Sonora, Mexico
Multitex S.A. de C.V. Bailment
0xx Xxxxxx 00-00
Xxxx 0
Xxxxxxxxx Xxxx, Xxxxxxxxx
Peace Textiles, Inc. Bailment
0000 X. Xxxxxxxx Xxxx
Xxxxxx, XX 00000
Pottesville Bleach & Dye Company Bailment
000 Xxxxx 00 Xxxxx
Xxxxxxxxxx Xxxxx, XX 00000
Quality Xxxxx Bailment
X.X. Xxx 0000
Xxxxx Xxxxxxxx, XX 00000
Standard Warehouse Distribution Center Bailment
0000 Xxx Xxxxxxxx Xxxx
Xxxxxxxxxxxxx, Xxxxxxx 00000
Xxxxxxxx Xxxxxx
Texfi, Inc. Bailment
X.X. Xxx 000
Xxx Xxxxx, XX 00000
Tifton Textiles, Inc. Bailment
Xxxxx 0, Xxx 000-X
Xxxxxx, Xx 00000
35
Whitwell Sportwear Bailment
0 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
SCHEDULE 2
TO
SECURITY AGREEMENT
Locations of Books and Records
0000 Xxxxx Xxxxx Xxxxx
Xxxxx 000
Ashley Corporate Center
Charleston, South Carolina 29405
Charleston County
Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Georgetown County
SCHEDULE 3
TO
SECURITY AGREEMENT
Previous Company Names and Tradenames
Acquisition of certain assets of Montego Bay Traders Corporation, a Cayman
Island corporation, by Xxxxxx Industries, Inc. on June 30, 1995
Mars Bluff Industries, Inc., a South Carolina corporation, manufacturing
facility closed and sold. Corporation liquidated into Xxxxxx, its parent, in
1994
SCHEDULE 4
TO
SECURITY AGREEMENT
UCC Financing Statements
(1) Alabama
Secretary of State, Alabama
(2) Georgia
Gwinnett County, Georgia
(3) North Carolina
Secretary of State, North Carolina
Lenoir County, North Carolina
(4) South Carolina
Secretary of State, South Carolina
(5) Pennsylvania
Secretary of State, Pennsylvania
(6) Tennessee
Secretary of State, Tennessee
(7) Texas
Secretary of State, Texas
SCHEDULE 6
TO
SECURITY AGREEMENT
Supplemental Documents
1. Supplement to Security Agreement (Guarantor) (as defined in the
Credit Agreement)
2. Supplement to Guaranty Agreements
3. Lien Search Results in such locations as the Secured Parties shall
require
4. UCC Financing Statements in such locations as the Secured Parties
shall require
5. Opinions of Counsel as the Secured Parties shall require
6. Corporate Authority Documents (article of incorporation, bylaws,
resolutions of the Board of Directors, incumbency)
7. Such other documents, instruments and certificates as the Secured
Parties shall reasonably require consistent with the Credit
Agreement
EXHIBIT A
[FORM OF LANDLORD AGREEMENT]
THIS LANDLORD'S AGREEMENT ("Agreement") is made and entered by the
undersigned landlord (the "Landlord") in favor of SUNTRUST BANK, ATLANTA, a
Georgia banking corporation ("SunTrust") in its capacity as collateral agent (in
such capacity the "Agent") for itself and certain other "Lenders" (as defined
below).
W I T N E S S E T H:
RECITALS:
(a) Landlord is the landlord and Xxxxxx Kinston Corp. ("Company") is the
tenant under a lease, sublease or similar agreement, a copy of which is attached
hereto as Exhibit "A" (the "Lease"). The business premises (the "Premises")
described in the Lease are used by Company for the the manufacture of goods and
storage of inventory.
(b) Company has entered into, and contemplates that it will enter into,
certain financing arrangements (the "Financing Arrangements") with SunTrust and
certain other lenders (collectively the "Lenders") for whom SunTrust will act as
Agent. Pursuant to the Financing Arrangements, the Lenders have made and will
make certain loans and other financial accommodations to Xxxxxx Industries,
Inc., which owns 100% of the Company, which loans and other accommodations have
been guaranteed by the Company.
(c) Company will secure its obligations to Lenders under the Financing
Arrangements by granting to the Agent, for the benefit of Lenders, a security
interest in, among other property, all of its inventory (the "Collateral"), some
of which are or hereafter may be located on the Premises.
(d) In connection therewith and pursuant to Lenders' request, Company has
requested that Landlord execute this Agreement in favor of the Agent, for the
benefit of Lenders.
(e) Landlord has agreed, at Company's request and as an accommodation to
Company, to execute this Agreement.
36
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, Landlord certifies to and agrees as follows in favor of
the Agent, for the benefit of Lenders:
(i) Valid Lease. The Lease is a valid and subsisting lease for the terms
set forth therein, and no modifications or amendments to the Lease have been
entered into by the parties subsequent to their execution thereof.
(ii) No Default. No event has occurred as of the date hereof which
constitutes a default under the Lease, or would constitute such a default either
with passage of time or the giving of any required notice.
(iii) Lien Subordination. Landlord acknowledges and agrees that: (a) the
lien and security interest of the Agent (for the benefit of Lenders) in the
Collateral shall be superior to any lien, right, title, claim or interest which
Landlord may now or hereafter have therein; (b) Landlord shall not assert as
against the Agent's interest therein any statutory, contractual or possessory
lien, right, title, claim or interest in the Collateral, including without
limitation, rights of levy or distraint for rent, all of which it hereby
subordinates to the Agent's lien and security interest for the term of this
Agreement; (c) the Agent and Lenders shall have access to the Collateral and the
Premises at all times hereafter during regular business hours to remove the
Collateral therefrom should the Agent or Lenders elect to enforce the Agent's
security interest in the Collateral, without hindrance or delay by Landlord and
(d) all Collateral now or hereafter situated on the Premises shall remain the
property of Company notwithstanding the mode or manner of its affixation to the
Premises.
(iv) Termination of the Lease. If, after the date hereof, Landlord intends
to terminate the Lease or otherwise exercise the right to require Company to
surrender the Premises or if Landlord becomes aware that Company has abandoned
the Premises or terminated the Lease (each of the foregoing, a "Termination
Event"), Landlord agrees to notify the Agent in writing at SunTrust Bank,
Atlanta, 00 Xxxx Xxxxx, Xxxxxxx, Xxxxxxx 00000, Attention: Xxxxx Xxxxxxxxxxx and
Xxx Xxxxxxxxx, of the occurrence of such Termination Event (such notice herein,
a "Termination Notice").
(v) Use of the Premises; Continuance of the Lease. Landlord agrees that if
a Termination Event occurs the Agent or its designee may (at its option, but
without obligation): (i) within ten (10) days after the Agent's receipt of the
Termination Notice relative thereto, notify Landlord that the Agent or such
designee desires to use or have access to the Premises for up to ninety (90)
37
days, after which notice the Agent or its designee shall have the right to use
or have access to the Premises for up to ninety (90) days (with the actual
number of days to be at the Agent's or its designee's option), provided that the
Agent or its designee shall pay or cause to be paid rent to Landlord at the
rental rate provided under the Lease (pro-rated on a daily basis) for the actual
number of days that the Agent or its designee has access to or is making use of
the Premises (but without incurring any other obligation under the Lease); (ii)
within such ninety (90) day period, notify Landlord that the Agent or its
designee desires to lease the Premises for the then remaining term of the Lease,
after which notice the Agent or its designee shall have the right to lease the
Premises for the then remaining term of the Lease in accordance with the terms
of the Lease, provided that the Agent or its designee performs or causes to be
performed all obligations of Company as lessee under the Lease (including,
without limitation, the obligation of Company to pay any past due rent); or
(iii) enter onto the Premises within thirty (30) days after the Agent's receipt
of the Termination Notice in order to remove the Collateral therefrom, without
charge, except for reasonable compensation for any damage to the Premises caused
by such removal, and in either such event, Landlord agrees to cooperate with the
Agent and not to hinder the Agent's actions in protecting the Collateral.
(vi) Bankruptcy. Notwithstanding anything contained herein to the contrary,
in the event that the Company is the subject of a bankruptcy or similar
proceeding, the periods described in the preceding Section 5 shall be stayed for
so long as the Agent is stayed as a result of such bankruptcy or other
proceeding from exercising its rights and remedies under the Financing
Arrangements and such periods shall commence to run only when any stay affecting
the Agent is lifted. Furthermore, the Landlord agrees that if the Lease is
rejected at any time during such bankruptcy or similar proceeding, the Landlord
will enter into an identical lease with identical terms with the Agent or its
successor or assign.
(vii) Consent of Landlord. Landlord hereby consents to the execution and
delivery by Company of a Security Agreement or similar instrument (the "Security
Agreement") in favor of the Agent, for the benefit of Lenders, securing the
Financing Arrangements and the granting thereunder by the Company of liens,
security title and security interests on or with respect to the Collateral.
Notwithstanding anything to the contrary in the Lease or any other agreement of
the Company, the execution and delivery by the Company of the Security Agreement
and the granting of liens, security title and security interests thereunder
shall not constitute a breach or default under the Lease or any other agreement
of the Company with the Landlord.
38
(viii) Notice to Transferee. Landlord hereby agrees to make this Agreement
known to any transferee of the Premises and any person who may have any right or
interest in the Premises, the Lease or the Collateral.
(ix) Term. This Agreement shall remain in full force and effect until the
Financing Arrangements have been terminated, and all obligations and liabilities
of Company to Lenders and the Agent have been paid and satisfied in full.
(x) Modification; Successors and Assigns. The provisions of this Agreement
may not be modified or terminated orally, and shall be binding upon the
successors, assigns and personal representatives of Landlord, and upon any
successor owner or transferee of the Premises, and shall inure to the benefit of
the successors and assigns of the Agent and Lenders.
IN WITNESS WHEREOF, Landlord has caused this Agreement to be executed, by
its duly authorized officer, agent or other representative as of the _____ day
of ______, ___.
Signed and delivered LANDLORD:
in the presence of:
------------------------
Notary Public
---------------------------------
My Commission Expires: By:
---------------------
---------------------
(NOTARY SEAL) Landlord's Address for Notices:
ACKNOWLEDGED AND
AGREED TO:
XXXXXX INDUSTRIES, INC.
By:_________________________
Name:____________________
Title:___________________
SUNTRUST BANK, ATLANTA,
as Agent
By:_________________________
Name:____________________
Title:___________________
By:_________________________
Name:____________________
Title:___________________
Schedule 1 to the Landlord Agreement
[Attach Copy of Lease]
EXHIBIT B
[FORM OF BAILEE LETTER]
[Date]
[Name of Bailee]
[Address of Bailee]
Re: Xxxxxx Industries, Inc.
Ladies and Gentlemen:
Pursuant to Section 9-305 of the Uniform Commercial Code as in effect in
the State of Georgia and the State of [insert state where bailee is located], we
hereby notify you that Xxxxxx Industries, Inc., a Delaware corporation (the
"Company"), will enter into that certain Security Agreement, dated as of January
__, 26, 1996, in favor of SunTrust Bank, Atlanta as collateral agent (the
"Collateral Agent") for itself, First Union National Bank of South Carolina,
NatWest Bank, N.A., The Prudential Life Insurance Company of America and their
respective successors and assigns (as hereafter amended, restated, supplemented
or otherwise modified from time to time, the "Security Agreement".
Pursuant to the Security Agreement, the Company will grant a security
interest in the collateral described therein (the "Collateral"), including,
without limitation, all of its Inventory, as defined therein, some of which
Inventory is in your possession. Upon receipt of this notice by you, you will be
effectively appointed as the bailee of the Collateral Agent and the security
interest in the Collateral granted pursuant to the Security Agreement will be
perfected under the Uniform Commercial Code as in effect in the States of
Georgia and [state where bailee is located]. By its signed confirmation below,
the Company joins in this notification.
We request that you countersign below to evidence your acknowledgment that
(1) you are the bailee for the Collateral Agent, (2) you will notify the
Collateral Agent at the address provided below upon your receipt of any
notification by any other party of a lien, security interest or encumbrance on
any of the Inventory of the Company in your possession and (3) you do not
39
currently have, nor will you accept at any time in the future, any lien,
security interest or other encumbrance on any of the Inventory of the Company in
your possession.
Very truly yours,
SUNTRUST BANK, ATLANTA
By:
Name:
Title:
By:
Name:
Title:
Agreed and Confirmed:
XXXXXX INDUSTRIES, INC.
By:
Name:
Title:
We hereby acknowledge that (1) we are the bailee for the Collateral Agent,
(2) we will notify the Collateral Agent upon our receipt of any notification by
any other party of a lien, security interest or encumbrance on any of the
Inventory of the Company in our possession and (3) we do not currently have, nor
will we accept at any time in the future, any lien, security interest or other
encumbrance on any of the Inventory of the Company in our possession.
[NAME OF BAILEE]
By:
Name:
Title:
