SUBSIDIARY BORROWER SECURITY AGREEMENT
AGREEMENT (this "AGREEMENT"), dated as of February 12, 1999, between
THE XXXXXXX COMPANY, INC. (with its successors, the "SUBSIDIARY BORROWER")
and FIRST UNION NATIONAL BANK, as Administrative Agent (with its successors
in such capacity, the "ADMINISTRATIVE AGENT").
W I T N E S S E T H:
WHEREAS, Sunbeam Corporation (with its successors, the
"PARENT"), the Subsidiary Borrowers referred to therein, the Lenders party
thereto, Xxxxxx Xxxxxxx Senior Funding, Inc., as Syndication Agent, Bank of
America National Trust and Savings Association, as Documentation Agent, and
First Union National Bank, as Administrative Agent, are parties to a Credit
Agreement dated as of March 30, 1998 (as amended, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT"); and
WHEREAS, as of the date hereof, the Subsidiary Borrower, the
Parent and the Administrative Agent have entered into a Subsidiary Borrowing
Agreement (as amended, supplemented or otherwise modified from time to time,
the "SUBSIDIARY BORROWING AGREEMENT"); and
WHEREAS, in order to induce the Lenders and the Administrative
Agent to permit the Subsidiary Borrower to become a party to the Credit
Agreement by executing the Subsidiary Borrowing Agreement, the Subsidiary
Borrower has agreed to grant a continuing security interest in and to the
Collateral (as hereafter defined) to secure the Secured Obligations (as
hereafter defined);
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement
and not otherwise defined herein have, as used herein, the respective
meanings provided for therein. The following additional terms, as used
herein, have the following respective meanings:
"COLLATERAL" has the meaning set forth in Section 3.
"DOCUMENTS" means all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing Inventory, now owned or
hereafter acquired by the Subsidiary Borrower.
"INVENTORY" means all "INVENTORY" (as defined in the UCC), now
owned or hereafter acquired by the Subsidiary Borrower, wherever located, and
shall also mean and include, without
limitation, all raw materials and other materials and supplies,
work-in-process and finished goods and any products made or processed
therefrom and all substances, if any, commingled therewith or added thereto.
"LETTER OF CREDIT OBLIGATION" means at any time any
reimbursement obligation of the Subsidiary Borrower with respect to any LC
Disbursement or other obligation of the Subsidiary Borrower to make a payment
in connection with a Letter of Credit issued for the account of the
Subsidiary Borrower, including contingent obligations with respect to amounts
which are then, or may thereafter become, available for drawing under Letters
of Credit issued for the account of the Subsidiary Borrower and then
outstanding.
"LIQUID INVESTMENTS" means Permitted Investments; PROVIDED that
(i) each Liquid Investment shall mature within 30 days after it is acquired
by the Administrative Agent and (ii) in order to provide the Administrative
Agent, for the benefit of the Secured Parties, with a perfected security
interest therein, each Liquid Investment shall be either:
(A) evidenced by negotiable certificates or instruments, or, if
non-negotiable, then issued in the name of the Administrative
Agent, which (together with any appropriate instruments of
transfer) are delivered to, and held by, the Administrative Agent
or an agent thereof (which shall not be the Parent or any of its
Affiliates) in the State of New York or North Carolina; or
(B) in book-entry form and issued by the United States and
subject to pledge under applicable state law and Treasury
regulations and as to which (in the opinion of counsel to the
Administrative Agent) appropriate measures shall have been taken
for perfection of the Security Interests.
"PERFECTION CERTIFICATE" means a certificate substantially in
the form of Exhibit A, completed and supplemented with the schedules and
attachments contemplated thereby to the satisfaction of the Administrative
Agent, and duly executed by the chief legal officer of the Subsidiary
Borrower.
"PERMITTED LIENS" means the Security Interests and the Liens on
the Collateral permitted to be created, to be assumed or to exist pursuant to
Section 6.02 of the Credit Agreement.
"PROCEEDS" means all proceeds of, and all other profits,
products, rents or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of, or
other realization upon, Collateral, including without limitation all claims
of the Subsidiary Borrower against third parties for loss of, damage to or
destruction of, or for proceeds payable under, or unearned premiums with
respect to, policies of insurance in respect of, any Collateral, and any
condemnation or requisition payments with respect to any Collateral, in each
case whether now existing or hereafter arising.
"SECURED OBLIGATIONS" means the obligations secured under this
Agreement, including all obligations of the Subsidiary Borrower under or in
respect of the Subsidiary Borrowing Agreement and the Credit Agreement,
including without limitation, its obligations in
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respect of (i) all principal of and interest (including, without limitation,
any interest which accrues after or would accrue but for the commencement of
any case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of the Subsidiary Borrower, whether or not allowed or
allowable as a claim in any such proceeding) on any loan made to the
Subsidiary Borrower under, or any note issued by the Subsidiary Borrower
pursuant to, the Credit Agreement, (ii) all Letter of Credit Obligations and
all interest thereon (including without limitation, any interest which
accrues after or would accrue but for the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Subsidiary Borrower, whether or not allowed or
allowable as a claim in any such proceeding), (iii) all other amounts payable
by the Subsidiary Borrower under the Subsidiary Borrowing Agreement, the
Credit Agreement and any other Loan Document to which the Subsidiary Borrower
is a party, and (iv) any renewals or extensions of any of the foregoing; it
being understood that, unless and until the Subsidiary Borrower becomes a
Subsidiary Guarantor, the Secured Obligations shall not include the
obligations of the Parent or any other Obligor (other than the Subsidiary
Borrower) under the Credit Agreement or any other Loan Document.
"SECURED PARTIES" means the Agents and the Lenders, and
"SECURED PARTY" means any of them.
"SECURITY INTERESTS" means the security interests in the
Collateral granted hereunder securing the Secured Obligations.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of New York; PROVIDED that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or
non-perfection of the Security Interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York,
"UCC" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The Subsidiary
Borrower represents and warrants as follows:
(a) The Subsidiary Borrower has good and marketable title to
all of the Collateral, free and clear of any Liens other than the
Permitted Liens.
(b) The Subsidiary Borrower has not performed any acts which
might prevent the Administrative Agent from enforcing any of the
terms of this Agreement or which would limit the Administrative
Agent in any such enforcement. Other than financing statements or
other similar or equivalent documents or instruments with respect
to the Security Interests and Permitted Liens, no financing
statement, mortgage, security agreement or similar or equivalent
document or instrument covering all or any part of the Collateral
is on file or of record in any jurisdiction in which such filing
or recording would be effective to perfect a Lien on such
Collateral. No Collateral is in the possession of any Person
(other than the Subsidiary Borrower) asserting any claim thereto
or security interest therein, except that the Administrative Agent
or its designee may have possession of Collateral as contemplated
hereby.
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(c) The information set forth in the Perfection Certificate
delivered to the Administrative Agent prior to the execution of
this Agreement is correct and complete. Not later than 60 days
following the date of such delivery, the Subsidiary Borrower shall
furnish to the Administrative Agent file search reports from each
UCC filing office set forth in Schedule 7 to its Perfection
Certificate confirming the filing information set forth in such
Schedule.
(d) The Security Interests constitute valid security interests
under applicable law securing the Secured Obligations. When UCC-1
financing statements, including the collateral description in the
form of Schedule 6(A) to the Perfection Certificate, shall have
been filed in the offices specified in the Perfection Certificate,
the Security Interests shall constitute perfected security
interests in the Collateral (except Inventory in transit) to the
extent that a security interest therein may be perfected by filing
pursuant to the UCC, prior to all other Liens and rights of others
therein except for the Permitted Liens.
(e) The Inventory is insured in accordance with the
requirements of the Credit Agreement.
(f) All Inventory manufactured by the Subsidiary Borrower has
or will have been produced in compliance with the applicable
requirements of the Fair Labor Standards Act, as amended.
SECTION 3. THE SECURITY INTERESTS. (a) In order to secure
the full and punctual payment of the Secured Obligations in accordance with
the terms thereof, and to secure the performance of all of the obligations of
the Subsidiary Borrower hereunder and under the Subsidiary Borrowing
Agreement, the Credit Agreement and the other Loan Documents to which it is a
party, the Subsidiary Borrower hereby grants to the Administrative Agent for
the ratable benefit of the Secured Parties a continuing security interest in
and to all of the following property of the Subsidiary Borrower, whether now
owned or existing or hereafter acquired or arising and regardless of where
located (all being collectively referred to as the "COLLATERAL"):
(i) Documents;
(ii) Inventory;
(iii) All books and records (including, without limitation,
customer lists, credit files, computer programs, printouts and
other computer materials and records) of the Subsidiary Borrower
pertaining to any of the Collateral; and
(iv) All Proceeds of all or any of the Collateral described in
clauses 3(a)(i) through 3(a)(iii) hereof.
(b) The Security Interests are granted as security only and
shall not subject any Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of the Subsidiary Borrower with respect
to any of the Collateral or any transaction in connection therewith.
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(c) Notwithstanding the foregoing, the Collateral shall not
include (i) any contracts or agreements to the extent the inclusion thereof
would violate a prohibition on assignment that is effective under relevant
law or (ii) any accounts receivable or other accounts (as defined in the UCC).
SECTION 4. FURTHER ASSURANCES; COVENANTS. (a) The Subsidiary
Borrower will not change (i) its name, identity or corporate structure in any
manner unless it shall have given the Administrative Agent not less than 10
days' prior written notice thereof and delivered an opinion of counsel with
respect thereto in accordance with Section 4(h); (ii) the location of its
chief executive office or chief place of business from a location described
in its Perfection Certificate to a location not described in its Perfection
Certificate unless it shall have given the Administrative Agent not less than
30 days' prior written notice thereof and delivered an opinion of counsel
with respect thereto in accordance with Section 4(h); or (iii) the locations
where it keeps or holds any Collateral (other than Inventory in transit) or
any records relating thereto from a location described in its Perfection
Certificate to a location not described in its Perfection Certificate unless
it gives the Administrative Agent written notice within 10 days thereof and
delivers an opinion of counsel with respect thereto in accordance with
Section 4(h). The Subsidiary Borrower shall not in any event change the
location of any Collateral if such change would cause the Security Interests
in such Collateral to lapse or cease to be perfected.
(b) The Subsidiary Borrower will, from time to time, at its
expense and in such manner and form as the Administrative Agent may require,
execute, deliver, file and record any statement, assignment, instrument,
document, agreement or other paper and take any other action (including,
without limitation, any filings of financing or continuation statements under
the UCC) that from time to time may be necessary or desirable, or that the
Administrative Agent may request, in order to create, preserve, perfect,
confirm or validate the Security Interests or to enable the Administrative
Agent and the other Secured Parties to obtain the full benefits of this
Agreement, or to enable the Administrative Agent to exercise and enforce any
of its rights, powers and remedies hereunder with respect to any of the
Collateral. To the extent permitted by applicable law, the Subsidiary
Borrower hereby authorizes the Administrative Agent to execute and file
financing statements or continuation statements without the Subsidiary
Borrower's signature appearing thereon. The Subsidiary Borrower agrees that a
carbon, photographic, photostatic or other reproduction of this Agreement or
of a financing statement is sufficient as a financing statement. The
Subsidiary Borrower shall pay the costs of, or incidental to, any recording
or filing of any financing or continuation statements concerning the
Collateral.
(c) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of the Subsidiary Borrower's
agents or processors upon the occurrence and during the continuance of an
Event of Default and upon the written request of the Administrative Agent,
the Subsidiary Borrower shall notify such warehouseman, bailee, agent or
processor of the Security Interests created hereby and to hold all such
Collateral for the Administrative Agent's account subject to the
Administrative Agent's instructions.
(d) The Subsidiary Borrower shall keep full and accurate
books and records relating to the Collateral, and stamp or otherwise xxxx
such books and records in such manner as the Required Lenders may reasonably
require in order to reflect the Security Interests.
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(e) Without the prior written consent of the Required
Lenders, the Subsidiary Borrower will not sell, lease, exchange, assign or
otherwise dispose of, or grant any option with respect to, any Collateral
except that, subject to the rights of the Administrative Agent and the other
Secured Parties hereunder if an Event of Default shall have occurred and be
continuing, the Subsidiary Borrower may (x) sell, lease or exchange Inventory
in the ordinary course of business and (y) consummate any Asset Sale or other
disposition of assets permitted by the terms of the Credit Agreement.
(f) Within 10 days following the execution of this
Agreement, the Subsidiary Borrower will cause the Administrative Agent to be
named as an insured party and loss payee on each insurance policy covering
risks relating to any of its Inventory. The Subsidiary Borrower will deliver
to the Administrative Agent, upon request of the Administrative Agent, the
insurance policies for such insurance or certificates of insurance evidencing
such coverage. Each such insurance policy shall include effective waivers by
the insurer of all claims for insurance premiums against the Administrative
Agent or any other Secured Party, provide for coverage to the Administrative
Agent regardless of the breach by the Subsidiary Borrower of any warranty or
representation made therein, not be subject to co-insurance, provide that
upon the occurrence and during the continuance of an Event of Default, all
insurance proceeds in excess of $200,000 per claim shall be adjusted with and
payable to the Administrative Agent and provide that no cancellation,
termination or material modification thereof shall be effective until at
least 30 days after receipt by the Administrative Agent of notice thereof.
The Subsidiary Borrower hereby appoints the Administrative Agent as its
attorney-in-fact to make proof of loss, claim for insurance and adjustments
with insurers, and to execute or endorse all documents, checks or drafts in
connection with payments made as a result of any insurance policies.
(g) The Subsidiary Borrower will, promptly upon request,
provide to the Administrative Agent all information and evidence it may
reasonably request concerning the Collateral to enable the Administrative
Agent to enforce the provisions of this Agreement.
(h) (i) Not more than six months prior to or 10 days after
each date on which the Subsidiary Borrower proposes to take any action
contemplated by Section 4(a)(i) or Section 4(a)(iii) and (ii) not more than
six months nor less than 30 days prior to each date on which the Subsidiary
Borrower proposes to take any action contemplated by Section 4(a)(ii), the
Subsidiary Borrower shall, at the Subsidiary Borrower's cost and expense,
cause to be delivered to the Secured Parties an opinion of counsel,
satisfactory to the Administrative Agent, substantially in the form of
Exhibit B to the effect that all financing statements and amendments or
supplements thereto, continuation statements and other documents required to
be recorded or filed in order to perfect and protect the Security Interests
for a period, specified in such opinion, continuing until a date not earlier
than eighteen months from the date of such opinion, against all creditors of
and purchasers from the Subsidiary Borrower have been filed in each filing
office necessary for such purpose and that all filing fees and taxes, if any,
payable in connection with such filings have been paid in full; PROVIDED that
if such opinion states that the only recordings or filings required in order
to perfect and protect the Security Interests are continuation statements,
such opinion need only address such perfection and protection of the Security
Interests for a period, specified in such opinion, continuing until a date
not earlier than six months from the date of such opinion.
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SECTION 5. GENERAL AUTHORITY. The Subsidiary Borrower hereby
irrevocably appoints the Administrative Agent its true and lawful attorney,
with full power of substitution, in the name of the Subsidiary Borrower, the
Agents, the Lenders or otherwise, for the sole use and benefit of the Secured
Parties, but at the Subsidiary Borrower's expense, to the extent permitted by
law to exercise, at any time and from time to time while an Event of Default
has occurred and is continuing and the Administrative Agent, pursuant to a
request of the Required Lenders, has notified the Subsidiary Borrower of its
decision to so exercise, all or any of the following powers with respect to
all or any of the Collateral:
(a) to demand, xxx for, collect, receive and give acquittance
for any and all monies due or to become due thereon or by virtue
thereof,
(b) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(c) to sell, transfer, assign or otherwise deal in or with the
same or the proceeds or avails thereof, as fully and effectually
as if the Administrative Agent were the absolute owner thereof,
and
(d) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference thereto;
PROVIDED that the Administrative Agent shall give the Subsidiary Borrower not
less than ten days' prior notice of the time and place of any sale or other
intended disposition of any of the Collateral, except any Collateral which is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market. The Administrative Agent and the
Subsidiary Borrower agree that such notice constitutes "reasonable
notification" within the meaning of Section 9-504(3) of the UCC.
SECTION 6. REMEDIES UPON EVENT OF DEFAULT. (a) If any Event
of Default has occurred and is continuing, the Administrative Agent may
exercise on behalf of the Secured Parties all rights of a secured party under
the UCC (whether or not in effect in the jurisdiction where such rights are
exercised) and, in addition, the Administrative Agent may, without being
required to give any notice, except as herein provided or as may be required
by mandatory provisions of law, (i) apply cash, if any, then held by it as
Collateral as specified in Section 8 and (ii) if there shall be no such cash
or if such cash shall be insufficient to pay all the Secured Obligations in
full, sell the Collateral or any part thereof at public or private sale, for
cash, upon credit or for future delivery, and at such price or prices as the
Administrative Agent may deem satisfactory. The Administrative Agent or any
Lender may be the purchaser of any or all of the Collateral so sold at any
public sale (or, if the Collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely distributed
standard price quotations, at any private sale). The Subsidiary Borrower
will execute and deliver such documents and take such other action as the
Administrative Agent deems necessary or advisable in order that any such sale
may be made in compliance with law. Upon any such sale the Administrative
Agent shall have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale shall hold
the Collateral so sold to it absolutely and free from any claim or right of
whatsoever kind, including any equity or right of redemption of the
Subsidiary Borrower which
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may be waived, and the Subsidiary Borrower, to the extent permitted by law,
hereby specifically waives all rights of redemption, stay or appraisal which
it has or may have under any law now existing or hereafter adopted. The
notice (if any) of such sale required by Section 5 shall (A) in the case of a
public sale, state the time and place fixed for such sale, and (B) in the
case of a private sale, state the day after which such sale may be
consummated. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Administrative
Agent may fix in the notice of such sale. At any such sale the Collateral
may be sold in one lot as an entirety or in separate parcels, as the
Administrative Agent may determine. The Administrative Agent shall not be
obligated to make any such sale pursuant to any such notice. The
Administrative Agent may, without notice or publication, adjourn any public
or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and such sale may be
made at any time or place to which the same may be so adjourned. In the case
of any sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the Administrative Agent
until the selling price is paid by the purchaser thereof, but the
Administrative Agent shall not incur any liability in the case of the failure
of such purchaser to take up and pay for the Collateral so sold and, in the
case of any such failure, such Collateral may again be sold upon like notice.
The Administrative Agent, instead of exercising the power of sale herein
conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the Security Interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction. For the purposes of obtaining executory process, the
Subsidiary Borrower does hereby confess judgment in favor of the
Administrative Agent for the full amount of the Secured Obligations.
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(b) For the purpose of enforcing any and all rights and
remedies under this Agreement the Administrative Agent may, at any time when
an Event of Default has occurred and is continuing, (i) require the
Subsidiary Borrower to, and the Subsidiary Borrower agrees that it will, at
the Subsidiary Borrower's expense and upon the request of the Administrative
Agent, forthwith assemble all or any part of the Collateral as directed by
the Administrative Agent and make it available at a place designated by the
Administrative Agent which is, in its opinion, reasonably convenient to the
Administrative Agent and the Subsidiary Borrower, whether at the premises of
the Subsidiary Borrower or otherwise, (ii) to the extent permitted by
applicable law, enter, with or without process of law and without breach of
the peace, any premises where any of the Collateral is or may be located, and
without charge or liability to it seize and remove such Collateral from such
premises, (iii) have access to and use the Subsidiary Borrower's books and
records relating to the Collateral and (iv) prior to the disposition of the
Collateral, store or transfer it without charge in or by means of any storage
or transportation facility owned or leased by the Subsidiary Borrower,
process, repair or recondition it or otherwise prepare it for disposition in
any manner and to the extent the Administrative Agent deems appropriate and,
in connection with such preparation and disposition, use without charge any
trademark, trade name, copyright, patent or technical process used by the
Subsidiary Borrower. The Administrative Agent may also render any or all of
the Collateral unusable at the Subsidiary Borrower's premises and may dispose
of such Collateral on such premises without liability for rent or costs.
SECTION 7. LIMITATION ON DUTY OF ADMINISTRATIVE AGENT IN
RESPECT OF COLLATERAL. Beyond the exercise of reasonable care in the custody
thereof, the Administrative Agent shall have no duty as to any Collateral in
its possession or control or in the possession or control of any agent or
bailee or any income thereon or as to the preservation of rights against
prior parties or any other rights pertaining thereto. The Administrative
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which it accords its own
property, and shall not be liable or responsible for any loss or damage to
any of the Collateral, or for any diminution in the value thereof, by reason
of the act or omission of any warehouseman, carrier, forwarding agency,
consignee or other agent or bailee selected by the Administrative Agent in
good faith.
SECTION 8. APPLICATION OF PROCEEDS. (a) Upon the occurrence
and during the continuance of an Event of Default, the proceeds of any sale
of, or other realization upon, all or any part of the Collateral and any cash
held shall be applied by the Administrative Agent in the following order of
priorities:
FIRST, to payment of the expenses of such sale or other
realization, including reasonable compensation to agents and
counsel for the Administrative Agent, and all expenses,
liabilities and advances incurred or made by the Administrative
Agent in connection therewith, and any other unreimbursed expenses
for which any Secured Party is to be reimbursed pursuant to
Section 10.03 of the Credit Agreement or Section 11 hereof and
unpaid fees owing to the Agents under the Credit Agreement;
SECOND, to the ratable payment of the Secured Obligations which
constitute the unpaid principal of the Loans and, subject to the
second sentence of subsection (b), Letter of
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Credit Obligations and the unpaid reimbursement obligations which
constitute Secured Obligations;
THIRD, to the ratable payment of the Secured Obligations arising
in respect of accrued but unpaid interest on the Secured
Obligations in accordance with the provisions of the Credit
Agreement;
FOURTH, to the ratable payment of all other Secured Obligations,
until all Secured Obligations shall have been paid in full; and
FINALLY, to payment to the Subsidiary Borrower or its successors
or assigns, or as a court of competent jurisdiction may direct, of
any surplus then remaining from such proceeds.
(b) The Administrative Agent may make distributions hereunder
in cash or in kind or, on a ratable basis, in any combination thereof. If at
any time any monies collected or received by the Administrative Agent are
distributable pursuant to this Section in respect of a Letter of Credit
Obligation which is a contingent obligation at such time, then the
Administrative Agent shall invest such amounts in Liquid Investments selected
by it and shall hold all such amounts so distributable and all such Liquid
Investments and the net proceeds thereof in trust for application to the
payment of such Letter of Credit Obligation at such time as such Letter of
Credit Obligation is no longer a contingent obligation. If the
Administrative Agent holds any amounts which were distributable in respect of
any Letter of Credit Obligation after all Letters of Credit issued for the
account of the Subsidiary Borrower have expired and all amounts payable with
respect thereto have been paid, such amounts shall be applied in the order
set forth in subsection (a) above.
(c) In making the determinations and allocations required by
this Section, the Administrative Agent shall have no liability to any Secured
Party for actions taken in reliance on information supplied by the Secured
Parties as to the amounts of the Secured Obligations held by them. All
distributions made by the Administrative Agent pursuant to this Section shall
be final, and the Administrative Agent shall have no duty to inquire as to
the application by the Secured Parties of any amount distributed to them.
However, if at any time the Administrative Agent determines that an
allocation or distribution previously made pursuant to this Section was based
on a mistake of fact (including, without limiting the generality of the
foregoing, mistakes based on any assumption that principal or interest has
been paid by payments which are subsequently recovered from the recipient
thereof through the operation of any bankruptcy, reorganization, insolvency
or other laws or otherwise), the Administrative Agent may in its discretion,
but shall not be obligated to, adjust subsequent allocations and
distributions hereunder so that, on a cumulative basis, the Administrative
Agent and the other Secured Parties receive the distributions to which they
would have been entitled if such mistake of fact had not been made.
SECTION 9. CONCERNING THE ADMINISTRATIVE AGENT. The
provisions of Article 8 of the Credit Agreement shall inure to the benefit of
the Administrative Agent in respect of this Agreement and shall be binding
upon the parties to the Credit Agreement in such respect. In furtherance and
not in derogation of the rights, privileges and immunities of the
Administrative Agent therein set forth:
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(a) The Administrative Agent is authorized to take all such
action as is provided to be taken by it as Administrative Agent
hereunder and all other action reasonably incidental thereto. As
to any matters not expressly provided for herein (including,
without limitation, the timing and methods of realization upon the
Collateral) the Administrative Agent shall act or refrain from
acting in accordance with written instructions from the Required
Lenders or, in the absence of such instructions, in accordance
with its discretion.
(b) The Administrative Agent shall not be responsible for the
existence, genuineness or value of any of the Collateral or for
the validity, perfection, priority or enforceability of the
Security Interests in any of the Collateral, whether impaired by
operation of law or by reason of any action or omission to act on
its part hereunder. The Administrative Agent shall have no duty
to ascertain or inquire as to the performance or observance of any
of the terms of this Agreement by the Subsidiary Borrower.
SECTION 10. APPOINTMENT OF CO-AGENTS. At any time or times,
in order to comply with any legal requirement in any jurisdiction, the
Administrative Agent may appoint another bank or trust company or one or more
other Persons, either to act as co-agent or co-agents, jointly with the
Administrative Agent, or to act as separate agent or agents on behalf of the
Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of appointment (which may, in the discretion of the Administrative
Agent, include provisions for the protection of such co-agent or separate
agent similar to the provisions of Section 9).
SECTION 11. EXPENSES. In the event that the Subsidiary
Borrower fails to comply with the provisions of the Subsidiary Borrowing
Agreement, the Credit Agreement or this Agreement, such that the value of any
Collateral or the validity, perfection, rank or value of any Security
Interest is thereby diminished or potentially diminished or put at risk, the
Administrative Agent if requested by the Required Lenders may, but shall not
be required to, effect such compliance on behalf of the Subsidiary Borrower,
and the Subsidiary Borrower shall reimburse the Administrative Agent for the
costs thereof on demand. All insurance expenses and all expenses of
protecting, storing, warehousing, appraising, insuring, handling,
maintaining, and shipping the Collateral, any and all excise, property,
sales, and use taxes imposed by any state, federal, or local authority on any
of the Collateral, or in respect of periodic appraisals and inspections of
the Collateral to the extent the same may be requested by the Required
Lenders from time to time, or in respect of the sale or other disposition
thereof, shall be borne and paid by the Subsidiary Borrower; and if the
Subsidiary Borrower fails to promptly pay any portion thereof when due, the
Administrative Agent or, if an Event of Default shall have occurred and be
continuing, any other Secured Party may, at its option, but shall not be
required to, pay the same and charge the Subsidiary Borrower's account
therefor, and the Subsidiary Borrower agrees to reimburse the Administrative
Agent or such other Secured Party therefor on demand. All sums so paid or
incurred by the Administrative Agent or any other Secured Party for any of
the foregoing and any and all other sums for which the Subsidiary Borrower
may become liable hereunder and all costs and expenses (including attorneys'
fees, legal expenses and court costs) reasonably incurred by the
Administrative Agent or any other Secured Party in enforcing or protecting
the Security Interests or any of their rights or remedies under this
Agreement, shall,
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together with interest thereon until paid at the rate applicable to ABR
Borrowings plus 2%, be additional Secured Obligations hereunder.
SECTION 12. TERMINATION OF SECURITY INTERESTS; RELEASE OF
COLLATERAL. (a) Upon the repayment in full of all Secured Obligations, the
termination of the commitments of the Lenders under the Credit Agreement to
make Loans to the Subsidiary Borrower and to issue Letters of Credit for its
account and the expiration or cancellation of all Letters of Credit issued
for the account of the Subsidiary Borrower, the Security Interests shall
terminate and all rights to the Collateral shall revert to the Subsidiary
Borrower.
(b) Upon the consummation of any sale or exchange of
Collateral permitted by clause (x) of Section 4(e), the Security Interests
created hereby in the Collateral subject to such sale or exchange (but not in
any Proceeds that constitute Collateral arising from such sale or exchange)
shall cease immediately without any further action on the part of any Lender
or the Administrative Agent.
(c) Except as provided otherwise in the Credit Agreement,
upon the consummation of any Asset Sale permitted by the terms of the Credit
Agreement, the Administrative Agent shall release the Collateral (but not any
Proceeds thereof) sold pursuant to such Asset Sale. Any such release shall
not require the consent of any Lender, and the Administrative Agent shall be
fully protected in relying on a certificate of the Parent or the Subsidiary
Borrower as to whether any particular Asset Sale is permitted by the terms of
the Credit Agreement.
(d) In addition to releases of Collateral effected by
subsection (b) or permitted pursuant to subsection (c), at any time and from
time to time prior to such termination of the Security Interests, the
Administrative Agent may release any of the Collateral with the prior written
consent of the Required Lenders; PROVIDED that any release of all or
substantially all of the Collateral (for purposes of this proviso, as defined
in the Credit Agreement) shall require the consent of all of the Lenders.
(e) Upon the termination of the Security Interests or any
release of Collateral permitted by this Section, the Administrative Agent
will, at the expense of the Subsidiary Borrower, execute and deliver to the
Subsidiary Borrower such documents as the Subsidiary Borrower shall
reasonably request to evidence the termination of the Security Interests or
the release of such Collateral, as the case may be.
SECTION 13. NOTICES. All notices and other communications
provided for herein shall be given in accordance with Section 10.01 of the
Credit Agreement.
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SECTION 14. WAIVERS, NON-EXCLUSIVE REMEDIES. No failure on
the part of the Administrative Agent to exercise, and no delay in exercising
and no course of dealing with respect to, any right under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise
by the Administrative Agent of any right under this Agreement, the Subsidiary
Borrowing Agreement, the Credit Agreement or any other Loan Document preclude
any other or further exercise thereof or the exercise of any other right.
The rights in this Agreement, the Subsidiary Borrowing Agreement, the Credit
Agreement and the other Loan Documents are cumulative and are not exclusive
of any other remedies provided by law.
SECTION 15. SUCCESSORS AND ASSIGNS. This Agreement is for the
benefit of the Secured Parties and their successors and assigns, and in the
event of an assignment of all or any of the Secured Obligations in accordance
with the provisions of the Credit Agreement to the extent applicable to the
indebtedness or obligation so assigned, may be transferred with such
indebtedness or obligation. This Agreement shall be binding on the
Subsidiary Borrower and its successors and assigns.
SECTION 16. CHANGES IN WRITING. Neither this Agreement nor
any provision hereof may be changed, waived, discharged or terminated orally,
but only in writing signed by the Subsidiary Borrower and the Administrative
Agent with the consent of the Required Lenders (or, solely in the case of
this Section or any provision of Section 12 specifying the circumstances
under which the consent of all Lenders is required to release Collateral, all
the Lenders).
SECTION 17. NEW YORK LAW. This Agreement shall be construed
in accordance with and governed by the laws of the State of New York, except
as otherwise required by mandatory provisions of law and except to the extent
that remedies provided by the laws of any jurisdiction other than New York
are governed by the laws of such jurisdiction.
SECTION 18. SEVERABILITY. If any provision hereof is invalid
or unenforceable in any jurisdiction, then, to the fullest extent permitted
by law, (i) the other provisions hereof shall remain in full force and effect
in such jurisdiction and shall be liberally construed in favor of the
Administrative Agent and the other Secured Parties in order to carry out the
intentions of the parties hereto as nearly as may be possible; and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any
other jurisdiction.
SECTION 19. COLLATERAL DOCUMENT. This Agreement shall constitute a
Collateral Document for all purposes under the Credit Agreement and the other
Loan Documents.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
THE XXXXXXX COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
FIRST UNION NATIONAL BANK,
as Administrative Agent
By: /s/ X. X. Xxxxxxx
---------------------------
Name: X. X. Xxxxxxx
Title: Senior Vice President
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EXHIBIT A
PERFECTION CERTIFICATE
The undersigned, the chief legal officer of THE XXXXXXX COMPANY, INC.,
a Delaware corporation (the "SUBSIDIARY BORROWER"), hereby certifies with
reference to the Subsidiary Borrower Security Agreement, dated as of
February __, 1999, between the Subsidiary Borrower and FIRST UNION NATIONAL
BANK, as Administrative Agent (terms defined therein being used herein as
therein defined), to each Secured Party as follows:
1. NAMES. (a) The exact company name of the Subsidiary
Borrower as it appears in its certificate of incorporation or certificate of
formation is as follows:
(b) Set forth below is each other company name the Subsidiary
Borrower has had within the past five years, together with the date of the
relevant change:
(c) Except as set forth in Schedule 1, the Subsidiary Borrower has
not changed its identity or company structure in any way within the past five
years.
[Changes in identity or company structure would include mergers, consolidations
and acquisitions, as well as any change in the form, nature or jurisdiction of
organization. If any such change has occurred, include in Schedule 1 the
information required by paragraphs 1, 2 and 3 of this certificate as to each
acquiree or constituent party to a merger or consolidation.]
(d) The following is a list of all other names (including
trade names or similar appellations) used by the Subsidiary Borrower or any
of its divisions or other business units at any time during the past five
years:
2. CURRENT LOCATIONS. (a) The chief executive office of the
Subsidiary Borrower is located at the following address:
MAILING ADDRESS COUNTY STATE
---------------------------------- --------------- ----------
(b) The following are all the places of business of the
Subsidiary Borrower not identified above:
MAILING ADDRESS COUNTY STATE
---------------------------------- --------------- ----------
(c) The following are all the locations where the Subsidiary
Borrower maintains any Inventory not identified above:
MAILING ADDRESS COUNTY STATE
---------------------------------- --------------- ----------
(d) The following are the names and addresses of all Persons
other than the Subsidiary Borrower which have possession of any of the
Subsidiary Borrower's Inventory:
MAILING ADDRESS COUNTY STATE
---------------------------------- --------------- ----------
3. PRIOR LOCATIONS. (a) Set forth below is the information
required by subparagraphs 2(a) and 2(b) above with respect to each location
or place of business maintained by the Subsidiary Borrower at any time during
the past five years:
(b) Set forth below is the information required by subparagraphs 2(c)
and 2(d) above with respect to each location or bailee where or with whom
Inventory has been lodged at any time during the past four months:
4. UNUSUAL TRANSACTIONS. Except as set forth in Schedule 4,
all Inventory has been acquired by the Subsidiary Borrower in the ordinary
course of its business.
5. FILE SEARCH REPORTS. Attached hereto as Schedule 5(A) is
a true copy of a file search report conducted by [Lexis] in each jurisdiction
identified in paragraph 2 or 3 above with respect to each name set forth in
paragraph 1 above. Attached hereto as Schedule 5(B) is a true copy of each
financing statement or other filing identified in such file search reports as
supplied to us by [Lexis].
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6. UCC FILINGS. A duly signed financing statement on Form
UCC-1, including a collateral description in the form of Schedule 6(A)
hereto, will be duly filed in the Uniform Commercial Code filing office in
each jurisdiction identified in paragraph 2 hereof.
7. SCHEDULE OF FILINGS. Within 30 days of the date hereof a
schedule in the form of Schedule 7 hereto setting forth filing information
with respect to the filings described in paragraph 6 above will be delivered
to the Administrative Agent.
8. FILING FEES. All filing fees and taxes payable in
connection with the filings described in paragraph 6 above have been or will
be paid.
IN WITNESS WHEREOF, we have hereunto set our hands this ___ day
of February, 1999.
THE XXXXXXX COMPANY, INC.
By:
---------------------------
Name:
Title:
3
EXHIBIT B
OPINION OF COUNSEL FOR SUBSIDIARY BORROWER
* * * *
1. The Subsidiary Borrower Security Agreement creates a valid
security interest, for the benefit of the Secured Parties, in all Collateral
(as defined in the Subsidiary Borrower Security Agreement) to the extent the
UCC is applicable thereto (the "SECURITY INTEREST").
2. UCC financing statements and amendments thereto (collectively, the
"FINANCING STATEMENTS") have been filed in the filing offices listed in
Schedule 7 to the Perfection Certificate (the "FILING JURISDICTIONS"), which
are all of the offices in which filings are required to perfect the Security
Interest, to the extent the Security Interest may be perfected by filing
under the UCC, and no further filing or recording of any document or
instrument or other action will be required so to perfect the Security
Interest, except that (i) continuation statements with respect to each
Financing Statement must be filed within [six months prior to the last
day of each consecutive five-year period beginning on the filing date];
(ii) additional filings may be necessary if the Subsidiary Borrower changes
its name, identity or company structure or the jurisdiction in which its
places of business, its chief executive office or the Collateral are located;
and (iii) we express no opinion on the perfection of, or need for further
filing or recording to perfect, the Security Interest in goods now or
hereafter located in any jurisdiction other than the Filing Jurisdictions.
3. Based solely upon our review of the search report dated ______ of
[search firm], a copy of which is attached hereto, there are:
(a) no UCC financing statements which name the Subsidiary
Borrower as debtor or seller and cover any of the Collateral, other than
the Financing Statements, and the financing statements with respect to
Permitted Liens annexed as Schedule 5(A) to the Perfection Certificate,
listed in the available records in the UCC filing offices set forth in
paragraphs 2 and 3 of the Perfection Certificate, which include all of
the offices prescribed under the UCC as the offices in which filings
should have been made to perfect security interests in the Collateral;
and
(b) no notices of the filing of any federal tax lien (filed
pursuant to Section 6323 of the Internal Revenue Code) or any lien of the
Pension Benefit Guaranty Corporation (filed pursuant to Section 4068 of
ERISA) covering any of the Collateral listed in the available records in
the [UCC filing office in state of the Subsidiary Borrower's chief
executive office], which is the only office having files which must be
searched in order to fully determine the existence of notices of the
filing of federal tax liens (filed pursuant to Section 6323 of the
Internal Revenue Code) and liens of the Pension Benefit Guaranty
Corporation (filed pursuant to Section 4068 of ERISA) on the Collateral.
4. The Security Interest validly secures the payment of all future
Loans made by the Lenders to the Subsidiary Borrower pursuant to the Credit
Agreement and all reimbursement obligations after the date hereof with
respect to Letters of Credit issued for the account of the Subsidiary
Borrower, whether or not at the time such Loans are made or Letters of Credit
are
issued an Event of Default or other event not within the control of the
Lenders has relieved or may relieve the Lenders from their obligations to
make such Loans or issue such Letters of Credit, and is perfected to the
extent set forth in paragraph 2 above with respect to such future Loans and
reimbursement obligations. Insofar as the priority thereof is governed by
the UCC, the Security Interest has the same priority with respect to such
future Loans and reimbursement obligations as it does with respect to Loans
made or reimbursement obligations incurred on the date hereof.
2
