Exhibit 10.4
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement"), dated January 26, 1998, is
entered into by and among XXXXX & XXXXX COMPANY, a Delaware corporation (the
"Borrower"), and EACH OF THE CORPORATIONS LISTED AS A SUBSIDIARY ON THE ATTACHED
SCHEDULE I (the "Subsidiaries" being collectively referred to herein together
with the Borrower as the "Debtors" and individually as a "Debtor"), and PNC
BANK, NATIONAL ASSOCIATION, in its capacity as Agent for the Banks (the
"Agent");
WITNESSETH THAT:
WHEREAS, each Debtor is (or will be with respect to after-acquired
property) the legal and beneficial owner and the holder of its respective
Collateral (as defined in Section 1 hereof); and
WHEREAS, pursuant to that certain Amended and Restated Credit Agreement (as
it may hereafter from time to time be restated, amended, modified or
supplemented, the "Credit Agreement") of even date herewith among, INTER ALIA,
the Banks, Xxxxx & Xxxxx Company, a Delaware corporation (the "Borrower"), the
Guarantors and the Agent, the Banks and the Agent have agreed to make certain
loans to the Borrower and issue letters of credit for the account of the
Borrower and the Guarantors; and
WHEREAS, the obligation of the Banks and the Agent to make loans and issue
letters of credit under the Credit Agreement is subject to the condition, among
others, that each of the Debtors secure its obligations to the Banks and the
Agent under the Credit Agreement and the other Loan Documents in the manner set
forth herein.
NOW, THEREFORE, intending to be legally bound hereby, the parties hereto
covenant and agree as follows:
1. Terms which are defined in the Credit Agreement and not otherwise
defined herein are used herein as defined therein. The following words and
terms shall have the following meanings, respectively, unless the context hereof
otherwise clearly requires:
(a) "Code" means the Uniform Commercial Code of each state as in
effect on the date hereof and as the same may subsequently be amended from time
to time, the substantive provisions of which are applicable to any of the
property of the Debtors in which the Agent and the Banks are granted a security
interest pursuant to this Agreement.
(b) "Collateral" means, in the case of each Debtor, all of its right,
title and interest in, to and under the following described property of such
Debtor (each capitalized term used in this Section 1(b) shall have in this
Agreement the meaning given to it by Article 9 of the Code as in effect in
Pennsylvania):
(i) all now existing and hereafter acquired and arising
Accounts, General Intangibles, Chattel Paper, Investment Property, Documents,
Instruments, Letters of Credit, Advices of Credit, Equipment, and Inventory, all
Products of and Accessions to the foregoing and all Proceeds of all of the
foregoing (including without limitation all insurance policies and proceeds
thereof);
(ii) to the extent, if any, not included in clause (i) above,
each and every other item of personal property and fixtures, both those that are
now owned and those that hereafter arise or are acquired, regardless of whether
Article 9 of the Code is applicable to any extent to the creation, perfection or
enforcement of Liens thereon or therein.
Without limiting the foregoing and to the extent permitted by applicable Law,
Collateral includes all business records and information, including computer
tapes and other storage media containing the same and computer programs and
software (including without limitation, source code, object code and related
manuals and documentation and all licenses to use such software) for accessing
and manipulating such information.
The definition of Collateral shall not include the general or limited
partnership interests of the Debtors in the Existing Partnerships to the extent
that the grant of a security interest in such partnerships interests is not
permitted under the terms of the applicable partnership agreement.
Notwithstanding anything to the contrary contained herein or in the other Loan
Documents, the Agent and the Banks will not take any action pursuant to this
Agreement, the Credit Agreement or any other Loan Document that would constitute
or result in any assignment of any rights under or with respect to any General
Intangible, license, permit or authorization without first obtaining the prior
approval of the applicable federal, state or local governmental authority, if,
under the existing Law, such assignment of any rights under or with respect to
any General Intangible, license, permit or authorization would require the prior
approval of such federal, state or local governmental authority. Prior to the
exercise by the Agent and the Banks of any power, right, privilege or remedy
pursuant to this Agreement which requires any consent, approval, recording,
qualification or authorization of any federal, state or local governmental
authority or instrumentality, appropriate Debtor will execute and deliver, or
will cause the execution and delivery of, all applications, certificates,
instruments and other documents and papers that the Agent and the Banks may be
required to obtain for such governmental consent, approval, recording,
qualification or authorization. Without limiting the generality of the
foregoing, such Debtor will use its best efforts upon the request of the Agent
or the Banks to obtain from the appropriate governmental authorities the
necessary consents and approvals, if any (i) for the granting to the Agent
pursuant hereto of the security interest provided for in this Agreement to the
extent, if any, such security interest may be granted under existing statutes or
regulations and (ii) for the assignment or transfer of such authorizations,
licenses and permits to the Agent or its designee upon or following the
occurrence and during the continuance of an Event of Default.
(c) "Debt" means, collectively, all now existing and hereafter
arising Indebtedness of the Borrower and the other Debtors to the Agent and the
Banks under the Credit Agreement, the Guaranty Agreement of the Debtors and
other Loan Documents, including without limitation, all Indebtedness, whether of
principal, interest, fees, expenses or otherwise, of
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the Borrower and the Debtors to the Agent and the Banks now existing or
hereafter incurred under the Credit Agreement, the Guarantee Agreement of the
Debtors or the Notes, or any of the other Loan Documents referred to therein as
any of the same or any one or more of them may from time to time be amended,
restated, modified or supplemented, together with any and all extensions,
renewals, refinancings or refundings thereof in whole or in part.
(d) "Receivables" means all of the Collateral except Equipment and
Inventory.
2. As security for the due and punctual payment and performance of the
Debt in full, each Debtor hereby agrees that the Agent for the benefit of the
Banks, and the Agent and the Banks shall have, and each Debtor hereby grants to
and creates in favor of the Agent for the benefit of the Banks, a first priority
security interest under the Code and lien in and to each Debtor's respective
Collateral subject only to Permitted Liens. Without limiting the generality of
Section 4 below, each Debtor further agrees that with respect to each item of
Collateral as to which (i) the creation of a valid and enforceable security
interest is not governed exclusively by the Code or (ii) the perfection of a
valid and enforceable security interest therein under the Code cannot be
accomplished either by the Agent's taking possession thereof or by the filing in
appropriate locations of appropriate Code financing statements executed by the
Debtor, such Debtor will at its expense execute and deliver to the Agent such
documents, agreements, notices, assignments and instruments and take such
further actions as may be requested by the Agent from time to time for the
purpose of creating a valid and perfected first priority Lien on such item,
subject only to Permitted Liens, enforceable against the Debtor and all third
parties to secure the Debt.
3. Each Debtor jointly and severally represents and warrants to the
Agent and the Banks that (a) such Debtor has good and marketable title to its
Collateral, and (b) except for the security interest granted to and created in
favor of the Agent hereunder and Permitted Liens, all the Collateral is free and
clear of any Lien.
4. Each Debtor will faithfully preserve and protect the Agent's security
interest in such Debtor's Collateral as a prior perfected security interest
under the Code, superior and prior to the rights of all third Persons, except
for Permitted Liens, and will, upon request therefor by the Agent, do all such
other acts and things and will, upon request therefor by the Agent, execute,
deliver, file and record all such other documents and instruments, including,
without limitation, financing statements, security agreements, assignments and
documents and powers of attorney with respect to the Collateral, and pay all
filing fees and taxes related thereto, as the Agent in its reasonable discretion
deems necessary or advisable from time to time in order to attach, continue,
preserve, perfect and protect said security interest; and each Debtor hereby
irrevocably appoints the Agent, its officers, employees and agents, or any of
them, as attorneys-in-fact for such Debtor to execute, deliver, file and record
such items for such Debtor and in such Debtor's name, place and stead. This
power of attorney, being coupled with an interest, shall be irrevocable for the
life of this Agreement.
5. Each Debtor jointly and severally covenants and agrees that:
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(a) it will defend the Agent and the Banks' right, title and security
interest in and to the Collateral and the proceeds thereof against the claims
and demands of all Persons whomsoever, other than any Person claiming a right in
the Collateral pursuant to an agreement between such Person and the Banks and
other than the holder of a Permitted Lien;
(b) it will not suffer or permit to exist on any Collateral any Lien
except for Permitted Liens;
(c) it will not take or omit to take any action, the taking or the
omission of which might result in a material alteration or impairment of the
Collateral or of the Agent's or the Banks' rights under this Agreement;
(d) except as permitted by the Credit Agreement it will not sell,
assign or otherwise dispose of any portion of the Collateral;
(e) it will (i) obtain and maintain sole and exclusive possession or
control of the Collateral, (ii) keep the Collateral and all records pertaining
thereto at the locations specified on the Security Interest Data Summary
attached as SCHEDULE A hereto, unless it shall have given the Agent prior notice
and taken any action reasonably requested by the Agent to maintain its security
interest therein, (iii) deliver to the Agent upon the Agent's request therefor
all Collateral consisting of Chattel Paper immediately upon such Debtor's
receipt of a request therefor, and (iv) keep materially accurate and complete
books and records concerning the Collateral and such other books and records as
the Agent may from time to time reasonably require;
(f) it will promptly furnish to the Agent and the Banks such
information and documents relating to the Collateral as the Agent and the Banks
may reasonably request, including, without limitation, all invoices, Documents,
contracts, Chattel Paper, Instruments and other writings pertaining to such
Debtor's contracts or the performance thereof; all of the foregoing to be
certified upon request of the Agent by an Authorized Officer of such Debtor;
6. Each Debtor assumes full responsibility for taking any and all
necessary steps to preserve the Agent and the Banks' rights with respect to the
Collateral against all Persons other than anyone asserting rights in respect of
a Permitted Lien. The Agent shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its possession if the Agent
takes such action for that purpose as the Debtors shall request in writing or in
the absence of such request, if the Agent deals with it in the same manner that
it deals with similar property for its own account, provided that such requested
action will not, in the judgment of the Agent, impair the security interest in
the Collateral created hereby or the Agent or the Banks' rights in, or the value
of, the Collateral, and provided further that such written request is received
by the Agent in sufficient time to permit the Agent to take the requested
action.
7. (a) At any time and from time to time whether or not an Event of
Default then exists and without prior notice to or consent of the Debtors, the
Agent and the Banks may at its option take such actions as the Agent and the
Banks deems appropriate (i) to attach, perfect, continue, preserve and protect
the Agent's prior security interest in the Collateral, and/or (ii) inspect,
audit and verify the Collateral, including reviewing all of the Debtors' books
and
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records and copying and making excerpts therefrom, provided that prior to an
Event of Default or a Potential Default, the same is done with advance notice
during normal business hours to the extent access to any of the Debtors'
premises is required, and to add all liabilities, obligations, costs and
expenses reasonably incurred in connection with the foregoing clauses (i) and
(ii) to the Debt, to be paid by the Debtors to the Agent upon demand;
(b) At any time and from time to time after an Event of Default
exists and is continuing and without prior notice to or consent of the Debtors,
the Agent and the Banks may at its option take such action as the Agent and the
Banks deems appropriate (i) to maintain, repair, protect and insure the
Collateral, and/or (ii) to perform, keep, observe and render true and correct
any and all covenants, agreements, representations and warranties of the Debtors
hereunder, and to add all liabilities, obligations, costs and expenses
reasonably incurred in connection with the foregoing clauses (i) and (ii) to the
Debt, to be paid by the Debtors to the Agent upon demand.
8. After the occurrence and during the continuance of an Event of Default
under the Credit Agreement:
(a) The Agent and the Banks shall have and may exercise all the
rights and remedies available to a secured party under the Code in effect at the
time, and such other rights and remedies as may be provided by Law and as set
forth below, including without limitation to take over and collect all the
Debtors' Receivables and all other Collateral, and to this end each Debtor
hereby appoints the Agent, its officers, employees and agents, as its
irrevocable, true and lawful attorneys-in-fact with all necessary power and
authority to (i) take possession immediately, with or without notice, demand, or
legal process, of any of or all of the Collateral wherever found, and for such
purposes, enter upon any premises upon which the Collateral may be found and
remove the Collateral therefrom, (ii) require the Debtors to assemble the
Collateral and deliver it to the Agent or to any place designated by the Agent
at the Debtors' expense, (iii) receive, open and dispose of all mail addressed
to any Debtor and notify postal authorities to change the address for delivery
thereof to such address as the Agent may designate, (iv) demand payment of the
Receivables, (v) enforce payment of the Receivables by legal proceedings or
otherwise, (vi) exercise all of the Debtors' rights and remedies with respect to
the collection of the Receivables, (vii) settle, adjust, compromise, extend or
renew the Receivables, (viii) settle, adjust or compromise any legal proceedings
brought to collect the Receivables, (ix) to the extent permitted by applicable
Law, sell or assign the Receivables upon such terms, for such amounts and at
such time or times as the Agent deems advisable, (x) discharge and release the
Receivables, (xi) take control, in any manner, of any item of payment or
proceeds from any account debtor, (xii) prepare, file and sign the Debtor's name
on any Proof of Claim in Bankruptcy or similar document against any account
debtor, (xiii) prepare, file and sign the Debtor's name on any notice of Lien,
assignment or satisfaction of Lien or similar document in connection with the
Receivables, (xiv) do all acts and things necessary, in the Agent's sole
discretion, exercised in good faith, to fulfill the Debtors' obligations under
the Loan Documents, (xv) endorse the name of the Debtor upon any check, Chattel
Paper, Document, Instrument, invoice, freight xxxx, xxxx of lading or similar
document or agreement relating to the Receivables or Inventory; (xvi) use the
Debtor's stationery and sign the Debtor's name to verifications of the
Receivables and notices thereof to account debtors; (xvii) access and use the
information recorded on or contained in any data processing equipment or
computer hardware or software relating to the Receivables,
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Inventory, or other Collateral or proceeds thereof to which the Debtor has
access, (xviii) demand, xxx for, collect, compromise and give acquittances for
any and all Collateral, (xix) prosecute, defend or compromise any action, claim
or proceeding with respect to any of the Collateral, and (xx) take such other
action as the Agent may deem appropriate with respect to the Collateral,
including extending or modifying the terms of payment of the Debtor's debtors.
This power of attorney, being coupled with an interest, shall be irrevocable for
the life of this Agreement. To the extent permitted by Law, each Debtor hereby
waives all claims of damages due to or arising from or connected with any of the
rights or remedies exercised by the Agent and the Banks pursuant to this
Agreement, except claims for physical damage to the Collateral arising from
gross negligence or willful misconduct by the Agent and the Banks.
(b) The Agent and the Banks shall have the right to lease, sell or
otherwise dispose of all or any of the Collateral at public or private sale or
sales for cash, credit or any combination thereof, with such notice as may be
required by Law (it being agreed by each Debtor that, in the absence of any
contrary requirement of Law, ten (10) days' prior notice of a public or private
sale of Collateral shall be deemed reasonable notice), in lots or in bulk, for
cash or on credit, all as the Agent and the Banks, in their absolute discretion
exercised in good faith, may deem advisable. Such sales may be adjourned from
time to time with or without notice. The Agent and the Banks shall have the
right to conduct such sales on any Debtor's premises or elsewhere and shall have
the right to use any Debtor's premises without charge for such sales for such
time or times as the Agent and the Banks may see fit. The Agent and the Banks
may purchase all or any part of the Collateral at public or, if permitted by
Law, private sale and, in lieu of actual payment of such purchase price, may set
off the amount of such price against the Debt.
9. The security interest in each Debtor's Collateral granted to and
created in favor of the Agent by this Agreement shall be for the benefit of the
Agent and the Banks. Each of the rights, privileges, and remedies provided to
the Agent and the Banks hereunder or otherwise by Law with respect to each
Debtor's Collateral shall be exercised by the Agent and the Banks only for its
own benefit, and any of the Debtor's Collateral or proceeds thereof held or
realized upon at any time by the Agent and the Banks shall be applied as set
forth in Section 9.2.5 of the Credit Agreement. Each Debtor shall remain liable
to the Agent and the Banks for and shall pay to the Agent and the Banks any
deficiency which may remain after such sale or collection.
10. If the Agent and the Banks repossesses or seeks to repossess any of
the Collateral pursuant to the terms hereof because of the occurrence and
continuance of an Event of Default, then to the extent it is commercially
reasonable for the Agent and the Banks to store any Collateral on any Debtor's
premises, such Debtor, to the extent it has the right to do so, hereby agrees to
lease to the Agent and the Banks on a month-to-month tenancy for a period not to
exceed one hundred twenty (120) days at the Banks' election, at a rental of One
Dollar ($1.00) per month, the premises on which the Collateral is located,
provided it is located on premises owned or leased by such Debtor.
11. Upon indefeasible payment in full of the Debt, expiration of the
Letters of Credit and termination of the Credit Agreement and the Commitments,
this Agreement shall terminate and be of no further force and effect, and the
Agent and the Banks shall thereupon promptly return to each Debtor such of its
Collateral and such other documents delivered by such Debtor
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hereunder as may then be in the Agent and the Banks' possession and execute such
documents, instruments, agreements or any combination thereof as the Debtors
shall reasonably request to evidence such termination. Until such time,
however, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Upon any
sale or other transfer of any Collateral which sale is not prohibited by and
which disposition is made in accordance with the Credit Agreement, the Agent and
the Banks shall (i) release its security interest on the Collateral being sold
or transferred and (ii) execute such documents, instruments, agreements or any
combination thereof as the Debtor shall request to evidence such termination.
12. No failure or delay on the part of the Agent or the Banks in
exercising any right, remedy, power or privilege hereunder shall operate as a
waiver thereof or of any other right, remedy, power or privilege of the Agent
and the Banks hereunder; nor shall any single or partial exercise of any such
right, remedy, power or privilege preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege. No waiver of a
single Event of Default shall be deemed a waiver of a subsequent Event of
Default. All waivers under this Agreement must be in writing. The rights and
remedies of the Agent and the Banks under this Agreement are cumulative and in
addition to any rights or remedies which it may otherwise have, and the Agent
and the Banks may enforce any one or more remedies hereunder successively or
concurrently at its option.
13. All notices, statements, requests and demands given to or made upon
either party hereto in accordance with the provisions of this Agreement shall be
given or made as provided in Section 11.6 of the Credit Agreement.
14. Each Debtor agrees that as of the date hereof, all information
contained on the Security Interest Data Schedule attached hereto as SCHEDULE A
is accurate and complete and contains no omission or misrepresentation. The
Debtors shall promptly notify the Agent of any changes in the information set
forth thereon.
15. Each Debtor acknowledges that the provisions hereof giving the Agent
and the Banks rights of access to books, records and information concerning the
Collateral and such Debtor's operations and providing the Agent and the Banks
access to such Debtor's premises are intended to afford the Agent and the Banks
with immediate access to current information concerning such Debtor and its
activities, including without limitation, the value, nature and location of the
Collateral so that the Agent and the Banks can, among other things, make an
appropriate determination after the occurrence of an Event of Default, whether
and when to exercise its other remedies hereunder and at Law, including without
limitation, instituting a replevin action should such Debtor refuse to turn over
any Collateral to the Agent and the Banks. Each Debtor further acknowledges
that should such Debtor at any time fail to promptly provide such information
and access to the Agent and the Banks, such Debtor acknowledges that the Agent
and the Banks would have no adequate remedy at Law to promptly obtain the same.
Each Debtor agrees that the provisions hereof may be specifically enforced by
the Agent and the Banks and waives any claim or defense in any such action or
proceeding that the Agent and the Banks have an adequate remedy at Law.
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16. This Agreement shall be binding upon and inure to the benefit of the
Agent and the Banks and their respective successors and assigns, and each Debtor
and its respective successors and assigns, except that the Debtors may not
assign or transfer the Debtor's obligations hereunder or any interest herein.
17. This Agreement shall be deemed to be a contract under the laws of the
Commonwealth of Pennsylvania and for all purposes shall be governed by and
construed in accordance with the laws of said Commonwealth excluding its rules
relating to conflicts of Law.
18. Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall not invalidate the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
19. This Agreement amends and restates that certain Security Agreement
dated March 13, 1997, between the Debtors and PNC Bank, National Association.
This Agreement is not intended as a novation, and shall not be a novation, of
the obligations of the parties thereto and hereto.
[SIGNATURES APPEAR ON NEXT PAGE]
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[SIGNATURE PAGE 1 OF 1 TO SECURITY AGREEMENT]
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed and delivered this Agreement as of the day and year
first above set forth.
XXXXX & XXXXX COMPANY
By /s/ Xxxxx Xxxxxx
-----------------
Xxxxx Xxxxxx
Senior Vice President and Chief
Financial Officer
EACH OF THE CORPORATIONS LISTED AS A
SUBSIDIARY ON THE ATTACHED SCHEDULE I
By /s/ Xxxxx Xxxxxx
-----------------
Xxxxx Xxxxxx
Senior Vice President and Chief
Financial Officer of each of the
Subsidiaries listed on Schedule I
PNC BANK, NATIONAL ASSOCIATION,
as Agent
By /s/ Xxx X. Xxxxx
------------------
Xxx X. Xxxxx
Senior Vice President
