EXHIBIT 4.7
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of July 3, 1996, is made and given
by THE O'BOISIE CORPORATION, an Illinois corporation (the "Grantor"), to
REPUBLIC ACCEPTANCE CORPORATION, A Minnesota corporation (the "Secured Party").
RECITALS
A. The Grantor and the Secured Party have entered into a Credit
Agreement dated as of July 3, 1996 (as the same may hereafter be amended,
supplemented, extended, restated, or otherwise modified from time to time, the
"Credit Agreement") pursuant to which the Secured Party has agreed to extend to
the Grantor certain credit accommodations consisting of a Revolving Credit
Facility in the amount of $5,000,000 and a Term Loan Facility in the amount of
$5,000,000 all as more fully described in the Credit Agreement.
B. It is a condition precedent to the obligation of the Secured Party
to extend credit accommodations pursuant to the terms of the Credit Agreement
that this Agreement be executed and delivered by the Grantor.
C. The Grantor finds it advantageous, desirable and in its best
interests to comply with the requirement that it execute and deliver this
Security Agreement to the Secured Party.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Secured Party to enter into the Credit Agreement and to extend credit
accommodations to the Grantor thereunder, the Grantor hereby agrees with the
Secured Party for the Secured Party's benefit as follows:
Section 1. DEFINED TERMS.
1(a) As used in this Agreement, the following terms shall have the
meanings indicated:
"ACCOUNT" shall mean the rights of the Grantor to payment for goods sold or
leased or for services rendered which is not evidenced by an Instrument or
Chattel Paper, whether or not such right has been earned by performance, all
guaranties and security therefor, and all interests in the goods the sale or
lease of which gave rise thereto, including the right to stop such goods in
transit.
"ACCOUNT DEBTOR" shall mean a Person who is obligated on or under any
Account, Chattel Paper, Instrument or General Intangible.
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"CHATTEL PAPER" shall mean a writing or writings which evidence both a
monetary obligation and a security interest in or lease of specific goods; when
a transaction is evidenced by both a security agreement or a lease and by an
Instrument or a series of Instruments, the group of writings taken together
constitutes Chattel Paper.
"COLLATERAl" shall mean all property and rights in property now owned or
hereafter at any time acquired by the Grantor in or upon which a Security
Interest is granted to the Secured Party by the Grantor under this Agreement.
"DOCUMENT" shall mean any xxxx of lading, dock warrant, dock receipt,
warehouse receipt or order for the delivery of goods, together with any other
document or receipt which in the regular course of business or financing is
treated as adequately evidencing that the Person in possession of it is entitled
to receive, hold and dispose of the document and the goods it covers.
"EQUIPMENT" shall mean all machinery, equipment, furniture, furnishings
and fixtures, including all accessions, accessories and attachments thereto, and
any guaranties, warranties, indemnities and other agreements of manufacturers,
vendors and others with respect to such Equipment.
"EVENT OF DEFAULt" shall have the meaning given to such term in Section 18
hereof.
"FINANCING STATEMENT" shall have the meaning given to such term in Section
4 hereof.
"GENERAL INTANGIBLES" shall mean any personal property (other than goods,
Accounts, Chattel Paper, Documents, Instruments and money) including choses in
action, causes of action, contract rights, corporate and other business records,
inventions, designs, patents, patent applications, service marks, trademarks,
tradenames, trade secrets, engineering drawings, good will, registrations,
copyrights, licenses, franchises, customer lists, tax refund claims, royalties,
licensing and product rights, rights to the retrieval from third parties of
electronically processed and recorded data and all rights to payment resulting
from an order of any court.
"INSTRUMENT" shall mean a draft, check, certificate of deposit, note, xxxx
of exchange, security or any other writing which evidences a right to the
payment of money and is not itself a security agreement or lease and is of a
type which is transferred in the ordinary course of business by delivery with
any necessary endorsement or assignment.
"INVENTORY" shall mean any and all goods owned or held by or for the
account of the Grantor for sale or lease, or for furnishing under a contract of
service, or as raw materials, work in process, materials incorporated in or
consumed in the production of any of the foregoing and supplies, in each case
wherever the same shall be located, whether in transit, on consignment, in
retail outlets, warehouses, terminals or otherwise, and all property the sale,
lease or other disposition of which has given rise to an Account and which has
been returned to the Grantor or repossessed by the Grantor or stopped in
transit.
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"LIEN" shall mean any security interest, mortgage, pledge, lien, charge,
encumbrance, title retention agreement or analogous instrument or device
(including the interest of the lessors under capitalized leases), in, of or on
any assets or properties of the Person referred to.
"OBLIGATIONS" shall mean (a) all indebtedness, liabilities and obligations
of the Grantor to the Secured Party of every kind, nature or description under
the Credit Agreement, including the Grantor's obligation on any promissory note
or notes under the Credit Agreement and any note or notes hereafter issued in
substitution or replacement thereof, (b) all liabilities of the Grantor under
this Agreement, and (c) in all of the foregoing cases whether due or to become
due, and whether now existing or hereafter arising or incurred.
"PERSON" shall mean any individual, corporation, partnership, limited
partnership, limited liability company, joint venture, firm, association, trust,
unincorporated organization, government or governmental agency or political
subdivision or any other entity, whether acting in an individual, fiduciary or
other capacity.
"SECURITY INTEREST" shall have the meaning given such term in Section 2
hereof.
1(b) All other terms used in this Agreement which are not
specifically defined herein shall have the meaning assigned to such terms in the
Uniform Commercial Code in effect in the State of Minnesota as of the date of
this Agreement to the extent such other terms are defined therein.
1(c) Unless the context of this Agreement otherwise clearly requires,
references to the plural include the singular, the singular, the plural and "or"
has the inclusive meaning represented by the phrase "and/or." The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation." The words "hereof," "herein," "hereunder," and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. References to Sections are
references to Sections in this Security Agreement unless otherwise provided.
Section 2. GRANT OF SECURITY INTEREST. As security for the payment
and performance of all of the Obligations, the Grantor hereby grants to the
Secured Party a security interest (the "Security Interest") in all of the
Grantor's right, title, and interest in and to the following, whether now or
hereafter owned, existing, arising or acquired and wherever located:
2(a) All Accounts.
2(b) All Chattel Paper.
2(c) All Documents.
2(d) All Equipment.
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2(e) All General Intangibles.
2(f) All Instruments.
2(g) All Inventory.
2(h) To the extent not otherwise included in the foregoing, (i) all other
rights to the payment of money, including rents and other sums payable to the
Grantor under leases, rental agreements and other Chattel Paper and insurance
proceeds; (ii) all books, correspondence, credit files, records, invoices, bills
of lading, and other documents relating to any of the foregoing, including,
without limitation, all tapes, cards, disks, computer software, computer runs,
and other papers and documents in the possession or control of the Grantor or
any computer bureau from time to time acting for the Grantor; (iii) all rights
in, to and under all policies insuring the life of any officer, director,
stockholder or employee of the Grantor, the proceeds of which are payable to the
Grantor; and (iv) all accessions and additions to, parts and appurtenances of,
substitutions for and replacements of any of the foregoing.
2(i) To the extent not otherwise included, all proceeds and products of
any and all of the foregoing.
Section 3. GRANTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) the Grantor shall remain liable under the Accounts, Chattel
Paper, General Intangibles and other items included in the Collateral to the
extent set forth therein to perform all of its duties and obligations thereunder
to the same extent as if this Agreement had not been executed, (b) the exercise
by the Secured Party of any of the rights hereunder shall not release the
Grantor from any of its duties or obligations under any items included in the
Collateral, and (c) the Secured Party shall have no obligation or liability
under Accounts, Chattel Paper, General Intangibles and other items included in
the Collateral by reason of this Agreement, nor shall the Secured Party be
obligated to perform any of the obligations or duties of the Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
Section 4. TITLE TO COLLATERAL. The Grantor has (or will have at the
time it acquires rights in Collateral hereafter acquired or arising) and will
maintain so long as the Security Interest may remain outstanding, title to each
item of Collateral (including the proceeds and products thereof), free and clear
of all Liens except the Security Interest and except Liens permitted by the
Credit Agreement. The Grantor will defend the Collateral against all claims or
demands of all Persons (other than the Secured Party) claiming the Collateral or
any interest therein. As of the date of execution of this Security Agreement,
no effective financing statement or other similar document used to perfect and
preserve a security interest under the laws of any jurisdiction (a "Financing
Statement") covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed (a) in favor of the Secured
Party relating to this Agreement, or (b) to perfect Liens permitted by the
Credit Agreement.
Section 5. DISPOSITION OF COLLATERAL. The Grantor will not sell,
lease or otherwise dispose of, or discount or factor with or without recourse,
any Collateral, except in the ordinary course of business.
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Section 6. NAMES, OFFICES, LOCATIONS. The Grantor does business
solely under its own name and the trade names and styles, if any, set forth on
Schedule II hereto. Except as noted on said Schedule, no such trade names or
styles and no trademarks or other similar marks owned by the Grantor are
registered with any governmental unit. The chief place of business and chief
executive office and the office where it keeps its books and records concerning
the Accounts and General Intangibles and the originals of all Chattel Paper,
Documents and Instruments are located at its address set forth on the signature
page hereof. All items of Equipment and Inventory existing on the date of this
Agreement are located at the places specified on Schedule I hereto. The Grantor
will immediately notify the Secured Party of any additional state in which any
item of Inventory or Equipment is hereafter located. The Grantor will from time
to time at the request of the Secured Party provide the Secured Party with
current lists as to the locations of the Equipment and Inventory. The Grantor
will not permit any Inventory, Equipment, Chattel Paper or Documents or any
records pertaining to Accounts and General Intangibles to be located in any
state or area in which, in the event of such location, a financing statement
covering such Collateral would be required to be, but has not in fact been,
filed in order to perfect the Security Interest. The Grantor will not change
its name or the location of its chief place of business and chief executive
office unless the Secured Party has been given at least 30 days prior written
notice thereof and the Grantor has executed and delivered to the Secured Party
such Financing Statements and other instruments required or appropriate to
continue the perfection of the Security Interest.
Section 7. RIGHTS TO PAYMENT. Except as the Grantor may otherwise
advise the Secured Party in writing, each Account, Chattel Paper, Document,
General Intangible and Instrument constituting or evidencing Collateral is (or,
in the case of all future Collateral, will be when arising or issued) the valid,
genuine and legally enforceable obligation of the Account Debtor or other
obligor named therein or in the Grantor's records pertaining thereto as being
obligated to pay or perform such obligation. Without the Secured Party's prior
written consent, the Grantor will not agree to any modifications, amendments,
subordinations, cancellations or terminations of the obligations of any such
Account Debtors or other obligors except in the ordinary course of business.
The Grantor will perform and comply in all material respects with all its
obligations under any items included in the Collateral and exercise promptly and
diligently its rights thereunder.
Section 8. FURTHER ASSURANCES.
8(a) The Grantor agrees that from time to time, at its expense, it
will promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or that the Secured Party may
reasonably request, in order to perfect and protect the Security Interest
granted or purported to be granted hereby or to enable the Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral (but any failure to request or assure that the Grantor execute and
deliver such instrument or documents or to take such action shall not affect or
impair the validity, sufficiency or enforceability of this Agreement and the
Security Interest, regardless of whether any such item was or was not executed
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and delivered or action taken in a similar context or on a prior occasion).
Without limiting the generality of the foregoing, the Grantor will, promptly and
from time to time at the request of the Secured Party: (i) xxxx, or permit the
Secured Party to xxxx, conspicuously its books, records, and accounts showing or
dealing with the Collateral, and each item of Chattel Paper included in the
Collateral, with a legend, in form and substance reasonably satisfactory to the
Secured Party, indicating that each such item of Collateral and each such item
of Chattel Paper is subject to the Security Interest granted hereby; (ii)
deliver and pledge to the Secured Party, all Instruments and Documents, duly
indorsed or accompanied by duly executed instruments of transfer or assignment,
with full recourse to the Grantor, all in form and substance reasonably
satisfactory to the Secured Party; (iii) execute and file such Financing
Statements or continuation statements in respect thereof, or amendments thereto,
and such other instruments or notices (including fixture filings with any
necessary legal descriptions as to any goods included in the Collateral which
the Secured Party determines might be deemed to be fixtures, and instruments and
notices with respect to vehicle titles), as may be necessary or desirable, or as
the Secured Party may reasonably request, in order to perfect, preserve, and
enhance the Security Interest granted or purported to be granted hereby; and
(iv) obtain waivers, in form satisfactory to the Secured Party, of any claim to
any Collateral from any landlords or mortgagees of any property where any
Inventory or Equipment is located.
8(b) The Grantor hereby authorizes the Secured Party to file one or
more Financing Statements or continuation statements in respect thereof, and
amendments thereto, relating to all or any part of the Collateral without the
signature of the Grantor where permitted by law. A photocopy or other
reproduction of this Agreement or any Financing Statement covering the
Collateral or any part thereof shall be sufficient as a Financing Statement
where permitted by law.
8(c) The Grantor will furnish to the Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Secured Party may
reasonably request, all in reasonable detail and in form and substance
reasonably satisfactory to the Secured Party.
Section 9. TAXES AND CLAIMS. The Grantor will promptly pay all taxes
and other governmental charges levied or assessed upon or against any Collateral
or upon or against the creation, perfection or continuance of the Security
Interest, as well as all other claims of any kind (including claims for labor,
material and supplies) against or with respect to the Collateral, except to the
extent (a) such taxes, charges or claims are being contested in good faith by
appropriate proceedings, (b) such proceedings do not involve any material danger
of the sale, forfeiture or loss of any of the Collateral or any interest therein
and (c) such taxes, charges or claims are adequately reserved against on the
Grantor's books in accordance with generally accepted accounting principles.
Section 10. BOOKS AND RECORDS. The Grantor will keep and maintain at
its own cost and expense satisfactory and complete records of the Collateral,
including a record of all payments received and credits granted with respect to
all Accounts, Chattel Paper and other items included in the Collateral.
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Section 11. INSPECTION, REPORTS, VERIFICATIONS. The Grantor will at
all reasonable times permit the Secured Party or its representatives to examine
or inspect any Collateral, any evidence of Collateral and the Grantor's books
and records concerning the Collateral, wherever located. The Grantor will from
time to time when requested by the Secured Party furnish to the Secured Party a
report on its Accounts, Chattel Paper, General Intangibles and Instruments,
naming the Account Debtors or other obligors thereon, the amount due and the
aging thereof. The Secured Party or its designee is authorized to contact
Account Debtors and other Persons obligated on any such Collateral from time to
time to verify the existence, amount and/or terms of such Collateral.
Section 12. NOTICE OF LOSS. The Grantor will promptly notify the
Secured Party of any loss of or material damage to any material item of
Collateral or of any substantial adverse change, known to Grantor, in any
material item of Collateral or the prospect of payment or performance thereof.
Section 13. INSURANCE. The Grantor will keep the Equipment and
Inventory insured against "all risks" for the full replacement cost thereof
subject to a deductible not exceeding $25,000 and with an insurance company or
companies reasonably satisfactory to the Secured Party, the policies to protect
the Secured Party as its interests may appear, with such policies or
certificates with respect thereto to be delivered to the Secured Party at its
request. Each such policy or the certificate with respect thereto shall provide
that such policy shall not be cancelled or allowed to lapse unless at least 30
days prior written notice is given to the Secured Party.
Section 14. LAWFUL USE; FAIR LABOR STANDARDS ACT. The Grantor will
use and keep the Collateral, and will require that others use and keep the
Collateral, only for lawful purposes, without violation of any federal, state or
local law, statute or ordinance. All Inventory of the Grantor as of the date of
this Agreement that was produced by the Grantor or with respect to which the
Grantor performed any manufacturing or assembly process was produced by the
Grantor (or such manufacturing or assembly process was conducted) in compliance
in all material respects with all requirements of the Fair Labor Standards Act,
and all Inventory produced, manufactured or assembled by the Grantor after the
date of this Agreement will be so produced, manufactured or assembled, as the
case may be.
Section 15. ACTION BY THE SECURED PARTY. If the Grantor at any time
fails to perform or observe any of the foregoing agreements, the Secured Party
shall have (and the Grantor hereby grants to the Secured Party) the right, power
and authority (but not the duty) to perform or observe such agreement on behalf
and in the name, place and stead of the Grantor (or, at the Secured Party's
option, in the Secured Party's name) and to take any and all other actions which
the Secured Party may reasonably deem necessary to cure or correct such failure
(including, without limitation, the payment of taxes, the satisfaction of Liens,
the procurement and maintenance of insurance, the execution of assignments,
security agreements and Financing Statements, and the indorsement of
instruments); and the Grantor shall thereupon pay to the Secured Party on demand
the amount of all monies expended and all costs and expenses (including
reasonable attorneys' fees and legal expenses) incurred by the Secured Party in
connection with or as a result of the performance or observance of such
agreements or the taking of such action by the Secured Party, together with
interest thereon from the date expended or incurred at the highest lawful rate
then applicable to any of the Obligations, and all such monies expended, costs
and expenses and interest thereon shall be part of the Obligations secured by
the Security Interest.
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Section 16. INSURANCE CLAIMS. As additional security for the payment
and performance of the Obligations, the Grantor hereby assigns to the Secured
Party any and all monies (including proceeds of insurance and refunds of
unearned premiums) due or to become due under, and all other rights of the
Grantor with respect to, any and all policies of insurance now or at any time
hereafter covering the Collateral or any evidence thereof or any business
records or valuable papers pertaining thereto. At any time, whether before or
after the occurrence of any Event of Default, the Secured Party may (but need
not), in the Secured Party's name or in Grantor's name, execute and deliver
proofs of claim, receive all such monies, indorse checks and other instruments
representing payment of such monies, and adjust, litigate, compromise or release
any claim against the issuer of any such policy. Notwithstanding any of the
foregoing, so long as no Event of Default exists the Grantor shall be entitled
to all insurance proceeds with respect to Equipment or Inventory provided that
such proceeds are applied to the cost of replacement Equipment or Inventory.
Section 17. THE SECURED PARTY'S DUTIES. The powers conferred on the
Secured Party hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such powers. The Secured
Party shall be deemed to have exercised reasonable care in the safekeeping of
any Collateral in its possession if such Collateral is accorded treatment
substantially equal to the safekeeping which the Secured Party accords its own
property of like kind. Except for the safekeeping of any Collateral in its
possession and the accounting for monies and for other properties actually
received by it hereunder, the Secured Party shall have no duty, as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Secured Party has or is deemed to have knowledge
of such matters, or as to the taking of any necessary steps to preserve rights
against any Persons or any other rights pertaining to any Collateral. The
Secured Party will take action in the nature of exchanges, conversions,
redemptions, tenders and the like requested in writing by the Grantor with
respect to the Collateral in the Secured Party's possession if the Secured Party
in its reasonable judgment determines that such action will not impair the
Security Interest or the value of the Collateral, but a failure of the Secured
Party to comply with any such request shall not of itself be deemed a failure to
exercise reasonable care.
Section 18. DEFAULT. Each of the following occurrences shall
constitute an Event of Default under this Agreement: (a) the Grantor shall fail
to observe or perform any covenant or agreement applicable to the Grantor under
this Agreement after any grace period which shall be three (3) business days for
any payment default and 15 days for any covenant default; or (b) any
representation or warranty made by the Grantor in this Agreement or any
schedule, exhibit, supplement or attachment hereto or in any financial
statements, or reports or certificates heretofore or at any time hereafter
submitted by or on behalf of the Grantor to the Secured Party shall prove to
have been false or materially misleading when made; or (c) any Event of Default
shall occur under the Credit Agreement after giving effect to any applicable
grace period.
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Section 19. REMEDIES ON DEFAULT. Upon the occurrence of an Event of
Default and at any time thereafter:
19(a) The Secured Party may exercise and enforce any and all rights
and remedies available upon default to a secured party under the Uniform
Commercial Code.
19(b) The Secured Party shall have the right to enter upon and into
and take possession of all or such part or parts of the properties of the
Grantor, including lands, plants, buildings, Equipment, Inventory and other
property as may be necessary or appropriate in the reasonable judgment of the
Secured Party to permit or enable the Secured Party to manufacture, produce,
process, store or sell or complete the manufacture, production, processing,
storing or sale of all or any part of the Collateral, as the Secured Party may
elect, and to use and operate said properties for said purposes and for such
length of time as the Secured Party may deem reasonably necessary or appropriate
for said purposes without the payment of any compensation to Grantor therefor.
The Secured Party may require the Grantor to, and the Grantor hereby agrees that
it will, at its expense and upon request of the Secured Party forthwith,
assemble all or part of the Collateral as directed by the Secured Party and make
it available to the Secured Party at a place or places to be designated by the
Secured Party.
19(c) Any sale of Collateral may be in one or more parcels at public
or private sale, at any of the Secured Party's offices or elsewhere, for cash,
on credit, or for future delivery, and upon such other terms as are commercially
reasonable. The Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given, and the Secured Party
may adjourn any public or private sale from time to time by announcement made at
the time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
19(d) The Secured Party is hereby granted a license or other right to
use, without charge, all of the Grantor's property, including, without
limitation, all of the Grantor's labels, trademarks, copyrights, patents and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral, in completing production of, advertising for sale and selling any
Collateral, and the Grantor's rights under all licenses and all franchise
agreements shall inure to the Secured Party's benefit until the Obligations are
paid in full.
19(e) If notice to the Grantor of any intended disposition of
Collateral or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if given in the
manner specified for the giving of notice in Section 24 hereof at least ten
calendar days prior to the date of intended disposition or other action, and the
Secured Party may exercise or enforce any and all other rights or remedies
available by law or agreement against the Collateral, against the Grantor, or
against any other Person or property.
Section 20. REMEDIES AS TO CERTAIN RIGHTS TO PAYMENT. Upon the
occurrence of an Event of Default and at any time thereafter the Secured Party
may notify any Account Debtor or other Person obligated on any Accounts or other
Collateral that the same have been assigned or transferred to the Secured Party
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and that the same should be performed as requested by, or paid directly to, the
Secured Party, as the case may be. The Grantor shall join in giving such
notice, if the Secured Party so requests. The Secured Party may, in the Secured
Party's name or in the Grantor's name, demand, xxx for, collect or receive any
money or property at any time payable or receivable on account of, or securing,
any such Collateral or grant any extension to, make any compromise or settlement
with or otherwise agree to waive, modify, amend or change the obligation of any
such Account Debtor or other Person. If any payments on any such Collateral are
received by the Grantor after an Event of Default has occurred, such payments
shall be held in trust by the Grantor as the property of the Secured Party and
shall not be commingled with any funds or property of the Grantor and shall be
forthwith remitted to the Secured Party for application on the Obligations.
Section 21. APPLICATION OF PROCEEDS. All cash proceeds received by
the Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of the
Secured Party, be held by the Secured Party as collateral for, or then or at any
time thereafter be applied in whole or in part by the Secured Party against, all
or any part of the Obligations (including, without limitation, any expenses of
the Secured Party payable pursuant to Section 22 hereof).
Section 22. COSTS AND EXPENSES; INDEMNITY. The Grantor will pay or
reimburse the Secured Party on demand for all out-of-pocket expenses (including
in each case all filing and recording fees and taxes and all reasonable fees and
expenses of counsel and of any experts and agents) incurred by the Secured Party
in connection with the creation, perfection, protection, satisfaction,
foreclosure or enforcement of the Security Interest and the preparation,
administration, continuance, amendment or enforcement of this Agreement, and all
such costs and expenses shall be part of the Obligations secured by the Security
Interest. The Grantor shall indemnify and hold the Secured Party harmless from
and against any and all claims, losses and liabilities (including reasonable
attorneys' fees) growing out of or resulting from this Agreement and the
Security Interest hereby created (including enforcement of this Agreement) or
the Secured Party's actions pursuant hereto, except claims, losses or
liabilities resulting from the Secured Party's gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction. Any liability of the Grantor to indemnify and hold the Secured
Party harmless pursuant to the preceding sentence shall be part of the
Obligations secured by the Security Interest. The obligations of the Grantor
under this Section shall survive any termination of this Agreement.
Section 23. WAIVERS; REMEDIES; MARSHALLING. This Agreement can be
waived, modified, amended, terminated or discharged, and the Security Interest
can be released, only explicitly in a writing signed by the Secured Party. A
waiver so signed shall be effective only in the specific instance and for the
specific purpose given. Mere delay or failure to act shall not preclude the
exercise or enforcement of any rights and remedies available to the Secured
Party. All rights and remedies of the Secured Party shall be cumulative and may
be exercised singly in any order or sequence, or concurrently, at the Secured
Party's option, and the exercise or enforcement of any such right or remedy
shall neither be a condition to nor bar the exercise or enforcement of any
other. The Grantor hereby waives all requirements of law, if any, relating to
the marshalling of assets which would be applicable in connection with the
enforcement by the Secured Party of its remedies hereunder, absent this waiver.
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Section 24. NOTICES. Any notice or other communication to any party
in connection with this Agreement shall be in writing and shall be sent by
manual delivery, telegram, telex, facsimile transmission, overnight courier or
United States mail (postage prepaid) addressed to such party at the address
specified on the signature page hereof, or at such other address as such party
shall have specified to the other party hereto in writing. All periods of
notice shall be measured from the date of delivery thereof if manually
delivered, from the date of sending thereof if sent by telegram, telex or
facsimile transmission, from the first business day after the date of sending if
sent by overnight courier, or from four days after the date of mailing if
mailed.
Section 25. GRANTOR ACKNOWLEDGEMENTS. The Grantor hereby
acknowledges that (a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement, (b) the Secured Party has no fiduciary
relationship to the Grantor, the relationship being solely that of debtor and
creditor, and (c) no joint venture exists between the Grantor and the Secured
Party.
Section 26. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER CREDIT
AGREEMENT. This Agreement shall (a) create a continuing security interest in
the Collateral and shall remain in full force and effect until payment in full
of the Obligations and the expiration of the obligations, if any, of the Secured
Party to extend credit accommodations to the Grantor, (b) be binding upon the
Grantor, its successors and assigns, and (c) inure to the benefit of, and be
enforceable by, the Secured Party and its successors, transferees, and assigns.
Without limiting the generality of the foregoing clause (c), the Secured Party
may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement to any other Persons to the extent and in
the manner provided in the Credit Agreement and may similarly transfer all or
any portion of its rights under this Security Agreement to such Persons.
Section 27. TERMINATION OF SECURITY INTEREST. Upon payment in full
of the Obligations and the expiration of any obligation of the Secured Party to
extend credit accommodations to the Grantor, the Security Interest granted
hereby shall terminate. Upon any such termination, the Secured Party will
return to the Grantor such of the Collateral then in the possession of the
Secured Party as shall not have been sold or otherwise applied pursuant to the
terms hereof and execute and deliver to the Grantor such documents as the
Grantor shall reasonably request to evidence such termination. Any reversion or
return of Collateral upon termination of this Agreement and any instruments of
transfer or termination shall be at the expense of the Grantor and shall be
without warranty by, or recourse on, the Secured Party. As used in this
Section, "Grantor" includes any assigns of Grantor, any Person holding a
subordinate security interest in any of the Collateral or whoever else may be
lawfully entitled to any part of the Collateral.
SECTION 28. GOVERNING LAW AND CONSTRUCTION. THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE MANDATORILY GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF MINNESOTA. Whenever possible, each provision of this Agreement and
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any other statement, instrument or transaction contemplated hereby or relating
hereto shall be interpreted in such manner as to be effective and valid under
such applicable law, but, if any provision of this Agreement or any other
statement, instrument or transaction contemplated hereby or relating hereto
shall be held to be prohibited or invalid under such applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement or any other statement, instrument or
transaction contemplated hereby or relating hereto.
SECTION 29. CONSENT TO JURISDICTION. AT THE OPTION OF THE SECURED
PARTY, THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE
COURT SITTING IN HENNEPIN COUNTY; AND THE GRANTOR CONSENTS TO THE JURISDICTION
AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS
NOT CONVENIENT. IN THE EVENT THE GRANTOR COMMENCES ANY ACTION IN ANOTHER
JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR
INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE SECURED PARTY AT
ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE
JURISDICTIONS AND VENUES ABOVE-DESCRIBED.
SECTION 30. WAIVER OF NOTICE AND HEARING. THE GRANTOR HEREBY WAIVES
ALL RIGHTS TO A JUDICIAL HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE
SECURED PARTY OF ITS RIGHTS TO POSSESSION OF THE COLLATERAL WITHOUT JUDICIAL
PROCESS OR OF ITS RIGHTS TO REPLEVY, ATTACH, OR LEVY UPON THE COLLATERAL WITHOUT
PRIOR NOTICE OR HEARING. THE GRANTOR ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY
COUNSEL OF ITS CHOICE WITH RESPECT TO THIS PROVISION AND THIS AGREEMENT, BUT
DOES NOT WAIVE ANY RIGHT GRANTED UNDER THE UNIFORM COMMERCIAL CODE.
SECTION 31. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE
SECURED PARTY, BY ITS ACCEPTANCE OF THIS AGREEMENT, IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 32. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.
Section 33. GENERAL. All representations and warranties contained in
this Agreement or in any other agreement between the Grantor and the Secured
Party shall survive the execution, delivery and performance of this Agreement
and the creation and payment of the Obligations. The Grantor waives notice of
the acceptance of this Agreement by the Secured Party. Captions in this
Agreement are for reference and convenience only and shall not affect the
interpretation or meaning of any provision of this Agreement.
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IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
THE O'BOISIE CORPORATION
By ________________________
Title _______________________
Address for Grantor:
0000 Xxxx 00xx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx
00000
Grantor's Tax ID # 00-0000000
Address for Secured Party :
Republic Acceptance Corporation
0000 Xxxxxxx Xxxxxx X.X.
Xxxxxxxxxxx, Xxxxxxxxx 00000
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SCHEDULE I
to
Security Agreement
Locations of Equipment and Inventory
as of Date of Security Agreement
[Locations to be provided, including county. Locations not owned by Grantor
should be specified with name of landlord or warehouse.]
SCHEDULE II
to
Security Agreement
Trade Names and Trade Styles
POTATO-BASED CHIPS
O'Boisies - U.S. Registration No. 1,511,130
Tato Skins - U.S. Registration No. 1,424,126
Ripplin's - U.S. Registration No. 1,558,272
FLOUR-BASED CHIPS
Pizzaria's - U.S. Registration No. 1,676,397
PRETZELS
Knots - U.S. Registration No. 961,049
Braids - U.S. Registration No. 1,417,946 (Supplemental)
U.S. Registration No. 1,537,532 (Principal)
(Suggested Exhibit for Financing Statement.
NOT PART OF THE SECURITY AGREEMENT.)
EXHIBIT A
TO FINANCING STATEMENT
Debtor: The O'Boisie Corporation
0000 Xxxx 00xx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx
00000
Secured Party: Republic Acceptance Corporation
0000 Xxxxxxx Xxxxxx X.X.
Xxxxxxxxxxx, Xxxxxxxxx 00000
This Financing Statement covers the following types (or items) of property:
All of the Debtor's right, title, and interest in and to the following, whether
now or hereafter owned, existing, arising or acquired and wherever located:
All Accounts
All Chattel Paper
All Documents
All Equipment
All General Intangibles
All Instruments
All Inventory
To the extent not otherwise included in the foregoing, (i) all other rights to
the payment of money, including rents and other sums payable to the Debtor under
leases, rental agreements and other Chattel Paper and insurance proceeds;
(ii) all books, correspondence, credit files, records, invoices, bills of
lading, and other documents relating to any of the foregoing, including,
without limitation, all tapes, cards, disks, computer software, computer
runs, and other papers and documents in the possession or control of the
Debtor or any computer bureau from time to time acting for the Debtor; (iii)
all rights in, to and under all policies insuring the life of any officer,
director, stockholder or employee of the Debtor, the proceeds of which are
payable to the Debtor; and (iv) all accessions and additions to, parts and
appurtenances of, substitutions for and replacements of any of the foregoing.
To the extent not otherwise included, all proceeds and products of any and all
of the foregoing.
DEFINED TERMS
As used in this Financing Statement, the following terms shall have the meanings
indicated:
"ACCOUNT" shall mean the rights of the Debtor to payment for goods
sold or leased or for services rendered which is not evidenced by an
Instrument or Chattel Paper, whether or not such right has been earned by
performance, all guaranties and security therefor, and all interests in the
goods the sale or lease of which gave rise thereto, including the right to
stop such goods in transit.
"CHATTEL PAPER" shall mean a writing or writings which evidence
both a monetary obligation and a security interest in or lease of specific
goods; when a transaction is evidenced by both a security agreement or a
lease and by an Instrument or a series of Instruments, the group of writings
taken together constitutes Chattel Paper.
"DOCUMENT" shall mean any xxxx of lading, dock warrant, dock receipt,
warehouse receipt or order for the delivery of goods, together with any other
document or receipt which in the regular course of business or financing is
treated as adequately evidencing that the Person in possession of it is entitled
to receive, hold and dispose of the document and the goods it covers.
"EQUIPMENT" shall mean all machinery, equipment, furniture,
furnishings and fixtures, including all accessions, accessories and attachments
thereto, and any guaranties, warranties, indemnities and other agreements of
manufacturers, vendors and others with respect to such Equipment.
"GENERAL INTANGIBLES" shall mean any personal property (other than
goods, Accounts, Chattel Paper, Documents, Instruments and money) including
choses in action, causes of action, contract rights, corporate and other
business records, inventions, designs, patents, patent applications, service
marks, trademarks, tradenames, trade secrets, engineering drawings, good will,
registrations, copyrights, licenses, franchises, customer lists, tax refund
claims, royalties, licensing and product rights, rights to the retrieval from
third parties of electronically processed and recorded data and all rights to
payment resulting from an order of any court.
"INSTRUMENT" shall mean a draft, check, certificate of deposit, note,
xxxx of exchange, security or any other writing which evidences a right to the
payment of money and is not itself a security agreement or lease and is of a
type which is transferred in the ordinary course of business by delivery with
any necessary endorsement or assignment.
"INVENTORY" shall mean any and all goods owned or held by or for the
account of the Debtor for sale or lease, or for furnishing under a contract of
service, or as raw materials, work in process, materials incorporated in or
consumed in the production of any of the foregoing and supplies, in each case
wherever the same shall be located, whether in transit, on consignment, in
retail outlets, warehouses, terminals or otherwise, and all property the sale,
lease or other disposition of which has given rise to an Account and which has
been returned to the Debtor or repossessed by the Debtor or stopped in transit.
* * *