EXHIBIT 10.2
CONFORMED COPY
Foodbrands America, Inc.
$320,000,000 Credit Agreement
dated as of
December 11, 1995
Security Agreement
SECURITY AGREEMENT dated as of December 11, 1995, among
FOODBRANDS AMERICA, INC., a Delaware corporation (the
"Borrower"), each of the subsidiaries of the Borrower listed on
the signature pages hereof (individually, a "Subsidiary Grantor"
and, collectively, the "Subsidiary Grantors"; the Subsidiary
Grantors, together with the Borrower, are referred to
individually as a "Grantor" and collectively as the "Grantors")
and CHEMICAL BANK, a New York banking corporation ("Chemical
Bank"), as collateral agent (in such capacity, the "Collateral
Agent") for the Secured Parties (as defined herein).
Reference is made to the Credit Agreement dated as of
December 11, 1995 (as amended or modified from time to time, the
"Credit Agreement"), among the Borrower, the financial
institutions party thereto, as lenders (the "Lenders"), Chemical
Bank, as administrative agent (in such capacity, the
"Administrative Agent") for the Lenders and as issuing lender (in
such capacity, the "Issuing Lender"), and Citibank, N.A., as
managing agent.
The Lenders have agreed to make Loans to the Borrower, and
the Issuing Lender has agreed to issue Letters of Credit for the
account of the Borrower, pursuant to, and upon the terms and
subject to the conditions specified in, the Credit Agreement.
Each of the Subsidiary Grantors has agreed to guarantee, among
other things, all the obligations of the Borrower under the
Credit Agreement. The obligations of the Lenders to make Loans,
and of the Issuing Lender to issue Letters of Credit, are
conditioned upon (among other things) the execution and delivery
by the Grantors of a security agreement in the form hereof to
secure (a) the due and punctual payment of (i) the principal of
and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership
or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set
for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any
Letter of Credit, when and as due, including payments in respect
of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other
monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership
or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Grantors to the Secured
Parties under the Credit Agreement and the other Loan Documents
and, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Grantors under or
pursuant to the Credit Agreement and the other Loan Documents
(all the obligations referred to in this clause (b) and in the
preceding clause (a) being referred to collectively as the
"Obligations").
Accordingly, the Grantors and the Collateral Agent, on
behalf of itself and each Secured Party (and each of their
respective successors or assigns), agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. All
capitalized terms used but not defined herein shall have the
meanings set forth in the Credit Agreement or, to the extent not
defined in the Credit Agreement, in the other Loan Documents.
SECTION 1.02. Definition of Certain Terms Used Herein. As
used herein, the following terms shall have the following
meanings:
"Account Debtor" shall mean any person who is or who may
become obligated to any Grantor under, with respect to or on
account of an Account.
"Accounts" shall mean, with respect to the Grantors, any and
all right, title and interest of any Grantor to accounts,
including rights to payment for goods and services sold or
leased, or for services rendered in the ordinary course of
business, whether or not evidenced by chattel paper, together
with all interest, finance charges or other amounts payable by an
Account Debtor in respect thereof, whether due or to become due,
whether or not it has been earned by performance, and whether now
or hereafter acquired or arising in the future, including
accounts receivable from Affiliates of the Grantors.
"Accounts Receivable" shall mean, with respect to the
Grantors, all Accounts and all right, title and interest of any
Grantor to Accounts and all right, title and interest of any
Grantor in any returned goods together with all rights, titles,
securities and guarantees with respect thereto, including any
rights to stoppage in transit, replevin, reclamation and resales,
and all related security interests, liens and pledges, whether
voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.
"Collateral" shall mean all (a) Accounts, (b) Accounts
Receivable, (c) Documents, (d) Equipment (including Fixtures),
(e) General Intangibles, (f) Inventory, (g) Investment Property,
(h) Proceeds and (i) all cash and cash accounts.
"Control", with respect to any Investment Property, shall
mean control (as defined in Section 8-106 of the Uniform
Commercial Code of the State of Oklahoma as in effect as of
February 1, 1996).
"Credit Agreement" shall have the meaning assigned to such
term in the preliminary statement of this Agreement.
"Documents" shall mean all instruments, files, records,
ledger sheets and documents, whether now owned or hereafter
acquired, covering or relating to any of the Collateral (other
than any such instruments pledged and delivered pursuant to the
Pledge Agreement), including customer lists, credit files,
computer programs, printouts and other computer materials and
records.
"Equipment" shall mean all equipment in all its forms,
wherever located, now or hereafter existing, and all parts
thereof and accessions thereto, that are now or hereafter owned
by any Grantor. The term "Equipment" shall include Fixtures,
provided that Equipment shall not include any equipment subject
to Liens permitted under Section 7.02(h) or (i) of the Credit
Agreement to the extent the agreements governing such Liens would
prohibit the attachment of the Security Interest to such
equipment.
"Fixtures" shall mean all goods, whether now owned or
hereafter acquired, of any Grantor that become so related to
particular real estate that an interest in such goods arises
under any real estate law applicable thereto.
"General Intangibles" shall mean all general intangibles,
choses in action and causes of action and all other intangible
personal property of any Grantor of every kind and nature (other
than Accounts Receivable) now owned or hereafter acquired by any
Grantor (other than any such intangible personal property if
applicable law or any agreement in respect of such property by
its terms prohibits the assignment or grant of a security
interest in such property), including corporate or other business
records, indemnification claims, contract rights (including
rights under leases, whether entered into as lessor or lessee and
other agreements), Intellectual Property, goodwill,
registrations, franchises, tax refund claims and any letter of
credit, guarantee, claim, security interest or other security
held by or granted to any Grantor to secure payment by an Account
Debtor of any of the Accounts Receivable.
"Intellectual Property" shall mean all intellectual and
similar property of any Grantor of every kind and nature now
owned or hereafter acquired by any Grantor, including inventions,
designs, patents, patent applications, copyrights, copyright
registrations, applications to register copyrights, Licenses,
trademarks (including service marks), trademark or service xxxx
applications, trade names, trade secrets, confidential or
proprietary technical and business information, know-how, show-
how or other data or information, software and databases and all
embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and
accessions to, and books and records describing or used in
connection with, any of the foregoing.
"Inventory," shall mean all inventory and goods of any
Grantor, whether now owned or hereafter acquired, (wherever
located, whether in the possession of any Grantor or of a bailee
or other person for sale, storage, transit, processing or use or
otherwise consisting of whole goods, components, supplies,
materials, or consigned, returned or repossessed goods) that are
held for sale or lease or to be furnished (or have been
furnished) under any contract of service or that are raw
materials, Work in Process, farm products or materials used or
consumed in any Grantor's business or processed by or on behalf
of such Grantor.
"Investment Property" shall mean investment property , as
defined in Section 9-115 of the Uniform Commercial Code of the
State of Oklahoma as in effect as of February 1, 1996.
"License" shall mean any patent license, copyright license
or other license or sublicense (other than any Trademark License)
to which any Grantor is or becomes a party (other than those
license agreements that by their terms prohibit assignment or a
grant of a security interest by such Grantor as licensee
thereunder).
"Loan Documents" shall have the meaning assigned to such
term in the Credit Agreement.
"Obligations" shall have the meaning assigned to such term
in the preliminary statement of this Agreement.
"Perfection Certificate" shall mean the Perfection
Certificate substantially in the form of Annex I hereto, prepared
by the Borrower.
"Proceeds" shall mean any consideration received from the
sale, exchange or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of
the possession or ownership of any Collateral and any payment
received from any insurer or other person or entity as result of
the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property that
constitutes Collateral, and shall include (a) all cash and
negotiable instruments received or held on behalf of the
Collateral Agent pursuant to any lockbox or similar arrangement
relating to the payment of Accounts Receivable and Inventory and
(b) any claim of any Grantor against any third party for (and the
right to xxx and recover for and the rights to damages or profits
due or accrued arising out of or in connection with) (i) past,
current or future infringement of any patent now or hereafter
owned by any Grantor or licensed under a patent license, (ii)
past, current or future breach of any License, (iii) past,
current or future infringement of any copyright now or hereafter
owned by any Grantor or licensed under a copyright license and
(iv) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Secured Parties" shall mean (a) the Lenders, (b) the
Issuing Lender, (c) the Administrative Agent, (d) the Collateral
Agent, (e) the Managing Agent and (f) the successors and assigns
of each of the foregoing.
"Security Interest" shall have the meaning assigned to such
term in Section 2.01.
SECTION 1.03. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement
shall be applicable to this Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. Each Grantor bargains,
sells, conveys, assigns, sets over, mortgages, pledges,
hypothecates and transfers to the Collateral Agent, its
successors and its assigns, for the ratable benefit of the
Secured Parties, and grants to the Collateral Agent, its
successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in, all of such Grantor's right,
title and interest in, to and under the Collateral (the "Security
Interest") as security for the payment or performance, as the
case may be, of the Obligations owed by such Grantor. Without
limiting the foregoing, the Collateral Agent is authorized to
file one or more financing statements, continuation statements or
other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted
by each Grantor, without the signature of any Grantor, naming any
Grantor or the Grantors as debtors and the Collateral Agent as
secured party.
Each Grantor agrees at all times to keep such accurate and
complete accounting records with respect to the Collateral as is
consistent with its current practices and in accordance with such
prudent and standard practices used in industries that are the
same as or similar to those in which such Grantor is engaged.
SECTION 2.02. No Assumption of Liability. The Security
Interest is granted as security only and shall not subject the
Collateral Agent or any other Secured Party to, or in any way
alter or modify, any obligation or liability of any Grantor with
respect to or arising out of any of the Collateral.
ARTICLE III
Representations And Warranties
The Grantors jointly and severally represent and warrant to
and with the Collateral Agent and each other Secured Party that:
SECTION 3.01. Title and Authority. Each Grantor has good
and valid rights in and title to the Collateral with respect to
which it has purported to grant a Security Interest hereunder and
has full power and authority to grant to the Collateral Agent the
Security Interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with
the terms of this Agreement, without the consent or approval of
any other person other than any consent or approval that has been
obtained.
SECTION 3.02. Filings. The Perfection Certificate has been
duly prepared, completed and executed and the information set
forth therein is correct and complete in all material respects.
Fully executed Uniform Commercial Code financing statements or
other appropriate filings, recordings or registrations (other
than (a) such as would be made in the United States Copyright
Office with respect to copyrights, (b) such as would be made in
the United States Patent and Trademark Office with respect to
patents, and (c) such as would be made in the offices designated
for the filing of trademarks in the various states with respect
to trademarks) containing a description of the Collateral have
been delivered to the Collateral Agent for filing in each
governmental, municipal or other office specified in Schedule 6
to the Perfection Certificate, which are all the filings,
recordings and registrations that are necessary to publish notice
of and protect the validity of and to establish a valid and
perfected security interest in favor of the Collateral Agent (for
the ratable benefit of the Secured Parties) in respect of all
Collateral (other than (x) copyrights, to the extent that
recordings and registration in the United States Copyright Office
may be necessary, (y) patents, to the extent that recordings and
registration in the United States Patent and Trademark Office may
be necessary, and (z) trademarks, to the extent that recordings
and registration in offices designated for the filing of
trademarks in the various states may be necessary) in which the
Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision
thereof) and its territories and possessions, and no further or
subsequent filing, refiling, recording, rerecording, registration
or reregistration is necessary in any such jurisdiction, except
as provided under applicable law with respect to the filing of
continuation statements except that recordation of the Security
Interest in the United States Patent and Trademark Office may be
necessary with respect to Collateral consisting of patents and
trademarks acquired after the date hereof; recordation of the
Security Interest in the offices described above may be necessary
with respect to Collateral consisting of copyrights, patents, and
trademarks; and registration in the United States Copyright
Office may be necessary with respect to Collateral consisting of
unregistered copyrights.
SECTION 3.03. Validity of Security Interest. The Security
Interest constitutes (a) a valid security interest in all the
Collateral securing the payment and performance of the
Obligations and (b) subject to the filings described in Section
3.02 above, a perfected security interest in all Collateral in
which a security interest may be perfected by filing, recording
or registering a financing statement or analogous document in the
United States (or any political subdivision thereof) and its
territories and possessions pursuant to the Uniform Commercial
Code or other applicable law in such jurisdictions, except that
recordation of the Security Interest in the United States Patent
and Trademark Office may be necessary with respect to Collateral
consisting of patents and trademarks, recordation of the Security
Interest in the offices designated for the filing of trademarks
in the various states may be necessary with respect to Collateral
consisting of trademarks, and recordation of the Security
Interest, in addition to registration of any unregistered
copyrights, in the United States Copyright Office may be
necessary with respect to Collateral consisting of copyrights.
The Security Interest is and shall be prior to any other Lien on
any of the Collateral, other than Liens expressly permitted to be
prior to the Security Interest pursuant to Section 7.02 of the
Credit Agreement.
SECTION 3.04. Absence of Other Liens. The Collateral is
owned by the Grantors free and clear of any Lien, except for
Liens expressly permitted pursuant to Section 7.02 of the Credit
Agreement. Other than as contemplated hereby or by the Trademark
Security Agreement, none of the Grantors has filed or consented
to the filing of (a) any financing statement or analogous
document under the Uniform Commercial Code or any other
applicable laws covering any Collateral, (b) any assignment in
which any Grantor assigns any Collateral or any security
agreement or similar instrument covering any Collateral with the
United States Patent and Trademark Office or the United States
Copyright Office or (c) any assignment in which any Grantor
assigns any Collateral or any security agreement or similar
instrument covering any Collateral with any foreign governmental,
municipal or other office, which financing statement or analogous
document, assignment, security agreement or similar instrument is
still in effect.
ARTICLE IV
Covenants
SECTION 4.01. Change of Name: Location of Collateral:
Records; Place of Business. (a) Each Grantor agrees promptly to
notify the Collateral Agent of any change (i) in its corporate
name or in any trade name used to identify it in the conduct of
its business or in the ownership of its properties, (ii) in the
location of its chief executive office, its principal place of
business, any office in which it maintains books or records
relating to Collateral owned by it or any office or facility at
which Collateral owned by it is located (including the
establishment of any office or facility other than the facilities
set forth in Section 2 of the Perfection Certificate delivered on
the Closing Date), (iii) in its identity or corporate structure
or (iv) in its Federal Taxpayer Identification Number. No
Grantor shall effect or permit any change referred to in the
preceding sentence unless all filings have been made under the
Uniform Commercial Code or otherwise that are required in order
for the Collateral Agent to continue at all times following such
change to have a valid and perfected first-priority security
interest in all the Collateral. Each Grantor agrees promptly to
notify the Collateral Agent if any material portion of the
Collateral is damaged or destroyed.
(b) Each Grantor shall maintain, at its own cost and
expense, such complete and accurate records with respect to the
Collateral owned by it as is consistent with its current
practices and in accordance with such prudent and standard
practices used in industries that are the same as or similar to
those in which such Grantor is engaged and, at such time or times
as the Collateral Agent my reasonably request, promptly to
prepare and deliver to the Collateral Agent a duly certified
schedule or schedules in form and detail reasonably satisfactory
to the Collateral Agent showing the identity, amount and location
of any and all Collateral.
SECTION 4.02. Periodic Certification. At such time or times
as the Collateral Agent may reasonably request, each Grantor
shall deliver to the Collateral Agent a certificate executed by a
Financial Officer and the chief legal officer, if any, of such
Grantor (a) setting forth the information required pursuant to
Section 2 of the Perfection Certificate, (b) certifying that all
Uniform Commercial Code financing statements or other appropriate
filings, recordings or registrations, including all refilings,
rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental,
municipal or other appropriate office in each jurisdiction
identified pursuant to clause (a) above to the extent necessary
to protect and perfect the Security Interest for a period of not
less than 18 months after the date of such certificate (except as
noted therein with respect to any continuation statements to be
filed within such period), (c) setting forth, with respect to
each filing, recording or registration (including each refiling,
rerecording or reregistration) made since the date of the
Perfection Certificate or the most recent certificate delivered
pursuant to this Section 4.02, the filing office, date and file
number thereof and (d) attaching true, correct and complete
acknowledgment copies of each such filing, recording or
registration not theretofore delivered to the Collateral Agent.
SECTION 4.03. Protection of Security. Each Grantor shall,
at its own cost and expense, take any and all actions necessary
to defend title to the Collateral against all persons and to
defend the Security Interest of the Collateral Agent in the
Collateral and the priority thereof against any Lien not
expressly permitted under the Credit Agreement.
SECTION 4.04. Further Assurances. Each Grantor agrees, at
its expense, to execute, acknowledge, deliver and cause to be
duly filed all such further instruments and documents and take
all such actions as the Collateral Agent may from time to time
reasonably request to better assure, preserve, protect and
perfect the Security Interest and the rights and remedies created
hereby, including the payment of any fees and taxes required in
connection with the execution and delivery of this Agreement, the
granting of the Security Interest and the filing of any financing
statements or other documents in connection herewith. If any
amount payable under or in connection with any of the Collateral
shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall (to the extent not
previously pledged and delivered pursuant to the Pledge
Agreement) be immediately pledged and delivered to the Collateral
Agent, duly endorsed in a manner reasonably satisfactory to the
Collateral Agent. Without limiting the foregoing, each Grantor
shall, promptly upon acquiring any Investment Property, grant
Control over such Investment Property to the Collateral Agent.
SECTION 4.05. Inspection and Verification. The Collateral
Agent and such persons as the Collateral Agent may reasonably
designate shall have the right, at any reasonable time or times
upon reasonable notice and at the Grantor's own cost and expense,
to inspect the Collateral, all records related thereto (and to
make extracts and copies from such records) and the premises upon
which any of the Collateral is located, to discuss any Grantor's
affairs with the officers of such Grantor and its independent
accountants, and to verify under reasonable procedures the
validity, amount, quality, quantity, value, condition and status
of or any other matter relating to, the Collateral, to the extent
permitted by and subject to the terms of Section 6.07 of the
Credit Agreement. The Collateral Agent shall have the absolute
right to share any information it gains from such inspection or
verification with any other Secured Party (it being understood
that any such information shall be deemed to be "Information"
subject to the provisions of Section 10. 18 of the Credit
Agreement).
SECTION 4.06. Taxes; Encumbrances. At its option, the
Collateral Agent may discharge past-due taxes, assessments,
charges, fees, liens, security interests or other encumbrances at
any time levied or placed on the Collateral other than as the
same may be permitted under the Loan Documents, and may pay for
the maintenance and preservation of the Collateral to the extent
any Grantor fails to do so as required by this Agreement or the
other Loan Documents, and such Grantor agrees to reimburse the
Collateral Agent on demand for any payment made or any reasonable
and documented expense incurred by the Collateral Agent pursuant
to the foregoing authorization; provided, however, that nothing
in this Section 4.06 shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the
Collateral Agent or any other Secured Party to cure or perform,
any covenants or other promises of the Grantors with respect to
taxes, assessments, charges, fees, liens, security interests or
other encumbrances and maintenance as set forth herein or in the
other Loan Documents.
SECTION 4.07. Assignment of Security Interest. If at any
time any Grantor shall take and perfect a security interest in
any property of an Account Debtor or any other person to secure
payment and performance of an Account, such Grantor shall
promptly assign such security interest to the Collateral Agent.
Such assignment need not be filed of public record unless
necessary to continue the perfected status of the security
interest against creditors of and transferees from the Account
Debtor or other person granting the security interest.
SECTION 4.08. Continuing Obligations of the Grantors. The
Grantors shall remain liable to, at their own cost and expense,
duly and punctually observe and perform all the conditions and
obligations to be observed and performed by them under each
contract, agreement or instrument relating to the Collateral, all
in accordance with the terms and conditions thereof, and each
Grantor agrees to indemnify and hold harmless the Collateral
Agent and the other Secured Parties from and against any and all
liability for such performance.
SECTION 4.09. Use and Disposition of Collateral. The
Grantors may use but not dispose of the Collateral in any lawful
manner not inconsistent with the provisions of this Agreement,
the Credit Agreement or any other Loan Document, except that the
Grantors may dispose of Collateral to the extent expressly
permitted by provisions of the Loan Documents. Without limiting
the generality of the foregoing, it is agreed that in no event
after sixty days following the Closing Date shall Inventory in
excess of 5% of the aggregate amount of the Grantors' Inventory
(calculated on the basis of the lower of the aggregate cost or
aggregate market value of such Inventory) be in the possession or
control of any warehouseman, bailee, agent or processor at any
time unless such warehouseman, bailee, agent or processor shall
have been notified of the Security Interest and shall have agreed
in a writing in form and substance reasonably satisfactory to the
Collateral Agent to hold the Inventory subject to the Security
Interest and the instructions of the Collateral Agent.
SECTION 4.10. Limitation on Modification of Accounts. None
of the Grantors will, without the Collateral Agent's prior
written consent, grant any extension of the time of payment of
any of the Accounts Receivable, compromise, compound or settle
the same for less than the full amount thereof, release, wholly
or partly, any person liable for the payment thereof or allow any
credit or discount whatsoever thereon, other than extensions,
credits, discounts, compromises or settlements granted or made in
the ordinary course of business. After a Default or an Event of
Default shall have occurred and during the continuance thereof,
the Collateral Agent may notify the Grantors not to grant or make
any such extension, credit, discount, compromise, or settlement
under any circumstances without its prior written consent.
ARTICLE V
Collections
SECTION 5.01. Collection. If any Grantor directly receives
any remittances on Accounts Receivable or Inventory, at any time
when an Event of Default has occurred and is continuing such
remittances shall be held in trust for the benefit of the
Collateral Agent and the other Secured Parties and shall be
segregated from other funds of such Grantor, subject to the
Security Interest granted hereby.
SECTION 5.02. Collateral Agent Appointed Attorney-in-Fact.
Each Grantor appoints the Collateral Agent as the true and lawful
agent and attorney-in-fact of such Grantor for the purposes of
carrying out the provisions of this Agreement, and in such
capacity the Collateral Agent shall have the right, with power of
substitution for such Grantor and in such Grantor's name or
otherwise, for the use and benefit of the Collateral Agent and
the other Secured Parties, upon the occurrence and during the
continuance of an Event of Default, (a) to receive, endorse,
assign and/or deliver any and all notes, acceptances, checks,
drafts, money orders or other evidences of payment relating to
the Collateral or any part thereof, (b) to demand, collect,
receive payment of, give receipt for and give discharges and
releases of all or any of the Collateral; (c) to sign the name of
such Grantor on any invoice or xxxx of lading relating to any of
the Collateral; (d) to send verifications of Accounts Receivable
to any Account Debtor; (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect or otherwise realize on all or
any of the Collateral or to enforce any rights in respect of any
Collateral; (f) to settle, compromise, compound, adjust or defend
any actions, suits or proceedings relating to all or any of the
Collateral; (g) to notify, or to require such Grantor to notify,
Account Debtors to make payment directly to the Collateral Agent;
and (h) to use, sell, assign, transfer, pledge, make any
agreement with respect to or otherwise deal with all or any of
the Collateral, and to do all other acts and things necessary to
carry out the purposes of this Agreement, as fully and completely
as though the Collateral Agent were the absolute owner of the
Collateral for all purposes; provided, however, that nothing
herein contained shall be construed as requiring or obligating
the Collateral Agent or any other Secured Party to make any
commitment or to make any inquiry as to the nature or sufficiency
of any payment received by the Collateral Agent or any other
Secured Party, or to present or file any claim or notice, or to
take any action with respect to the Collateral or any part
thereof or the moneys due or to become due in respect thereof or
any property covered thereby. The Collateral Agent and the
Secured Parties shall be accountable only for amounts actually
received as a result of the exercise of the powers granted to
them herein, and neither they nor their officers, directors,
employees or agents shall be responsible to any Grantor for any
act or failure to act hereunder, except for their own gross
negligence or willful misconduct. It is understood and agreed
that the appointment of the Collateral Agent as the agent and
attorney-in-fact of the Grantors for the purposes set forth above
is coupled with an interest and is irrevocable. The provisions
of this Section 5.02 shall in no event relieve any Grantor of any
of its obligations hereunder or under the other Loan Documents
with respect to the Collateral or any part thereof or impose any
obligation on the Collateral Agent or any other Secured Party to
proceed in any particular manner with respect to the Collateral
or any part thereof, or in any way limit the exercise by the
Collateral Agent or any other Secured Party of any other or
further right that it may have on the date of this Agreement or
hereafter, whether hereunder, under any other Loan Document, by
law or otherwise. Any sale pursuant to the provisions of this
Section 5.02 shall be deemed to conform to the commercially
reasonable standards as provided in Section 9-504(3) of the
Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence
and during the continuance of an Event of Default, each Grantor
agrees to deliver each item of Collateral to the Collateral Agent
on demand, and it is agreed that the Collateral Agent shall have
the right (subject to applicable law) to take any of or all the
following actions at the same or different times: (a) with
respect to any Collateral consisting of Intellectual Property, on
demand, to cause the Security Interest to become an assignment,
transfer and conveyance of any of or all such Collateral by such
Grantor to the Collateral Agent, or to license or, to the extent
permitted by applicable law, sublicense, whether general, special
or otherwise, and whether on an exclusive or non-exclusive basis,
any such Collateral throughout the world on such terms and
conditions and in such manner as the Collateral Agent shall
determine (other than in violation of any then-existing licensing
arrangements to the extent that waivers cannot be obtained), and
(b) with or without legal process and with or without previous
notice or demand for performance, to take possession of the
Collateral (and temporary possession of any non-Collateral in
connection with any such repossession, with the right to store
such non-Collateral at the Grantors' expense and risk), without
liability for trespass to enter any premises where the Collateral
may be located for the purpose of taking possession of or
removing the Collateral and, generally, to exercise any and all
rights afforded to a secured party under the Uniform Commercial
Code or other applicable law. Without limiting the generality of
the foregoing, each Grantor agrees that the Collateral Agent
shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part
of the Collateral, at public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for
future delivery as the Collateral Agent shall deem appropriate.
The Collateral Agent shall be authorized at any such sale (if it
deems it advisable to do so) to restrict the prospective bidders
or purchasers to persons who will represent and agree that they
are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale
thereof, and upon consummation of any such sale the Collateral
Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each
such purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of such
Grantors, and each Grantor waives (to the fullest extent
permitted by applicable law) all rights of redemption, stay and
appraisal that such Grantor now has or may at any time in the
future have under any rule of law or statute now existing or
hereafter enacted.
Unless any of the Collateral threatens to decline speedily
in value or is or becomes of a type sold on a recognized market,
the Collateral Agent shall give the applicable Grantors
reasonable notice of the time and place of any public sale
thereof, or of the time after which any private sale or other
intended disposition is to be made. Any sale of the Collateral
conducted in conformity with reasonable commercial practices of
banks, commercial finance companies, insurance companies or other
financial institutions disposing of property similar to the
Collateral shall be deemed to be commercially reasonable.
Notwithstanding any provision to the contrary contained herein,
the Grantors agree that any requirements of reasonable notice
shall be met if such notice is received by the Grantors as
provided below at least ten (10) days before the time of the sale
or disposition; provided, however, that the Collateral Agent may
give any shorter notice that is commercially reasonable under the
circumstances. Such notice, in the case of a public sale, shall
state the time and place for such sale and, in the case of a sale
at a broker's board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the day on
which the Collateral, or portion thereof, will first be offered
for sale at such board or exchange. Any such public sale shall
be held at such time or times within ordinary business hours and
at such place or places as the Collateral Agent may fix and state
in the notice (if any) of such sale. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in one lot
as an entirety or in separate parcels, as the Collateral Agent
may (in its sole and absolute discretion) determine. The
Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been
given. The Collateral 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 sale, and such sale may, without further notice, be
made at the time and place to which the same was so adjourned.
In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be
retained by the Collateral Agent until the sale price is paid by
the purchaser or purchasers thereof, but the Collateral Agent
shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may be
sold again upon like notice. At any public sale made pursuant to
this Section 6.01, any Secured Party may bid for or purchase,
free (to the fullest extent permitted by applicable law) from any
right of redemption, stay, valuation or appraisal on the part of
any Grantor (all said rights being also waived and released to
the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using
any claim then due and payable to such Secured Party from any
Grantor as a credit against the purchase price, and it may, upon
compliance with the terms of sale, hold, retain and dispose of
such property without further accountability to such Grantor
therefor. For purposes hereof, (a) a written agreement to
purchase the Collateral or any portion thereof shall be treated
as a sale thereof, (b) the Collateral Agent shall be free to
carry out such sale pursuant to such agreement and (c) no Grantor
shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the
Collateral Agent shall have entered into such an agreement all
Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale
herein conferred upon it, the Collateral Agent may proceed by a
suit or suits at law or in equity to foreclose upon the
Collateral and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a court-
appointed receiver. Any sale pursuant to the provisions of this
Section 6.01 shall be deemed to conform to the commercially
reasonable standards as provided in Section 9-504(3) of the
Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions.
SECTION 6.02. Application of Proceeds. The Collateral
Agent shall apply the proceeds of any collection or sale of the
Collateral, as well as any Collateral consisting of cash, as
follows:
FIRST, to the payment of all costs and expenses
incurred by the Collateral Agent in connection with such
collection or sale or otherwise in connection with this
Agreement, any other Loan Document or any of the
Obligations, including all court costs and the reasonable
and documented fees, other charges and disbursements of its
agents and legal counsel, the repayment of all advances made
by the Collateral Agent hereunder or under any other Loan
Document on behalf of any of the Grantors and any other
costs or expenses incurred in connection with the exercise
of any right or remedy hereunder or thereunder;
SECOND, to the payment in full of the Obligations owed
to the Lenders and the Issuing Lender in respect of the
Loans made by them and outstanding and the amounts owing in
respect of any LC Disbursement pro rata as among the Lenders
and the Issuing Lender in accordance with the amount of such
Obligations owed to them;
THIRD, to the payment and discharge in full of the
Obligations (other than those referred to above) pro rata as
among the Secured Parties in accordance with the amount of
such Obligations owed to them, and to provide cash
collateral for the undrawn amount of all Letters of Credit
then outstanding; and
FOURTH, to the Grantors, their successors or assigns,
or as a court of competent jurisdiction may otherwise
direct.
The Collateral Agent shall have absolute discretion as to
the time of application of any such proceeds, moneys or balances
in accordance with this Agreement. Upon any sale of the
Collateral by the Collateral Agent (including pursuant to a power
of sale granted by statute or under a judicial proceeding), the
receipt by the Collateral Agent or of the officer making the sale
shall be a sufficient discharge to the purchaser or purchasers of
the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the
purchase money paid over to the Collateral Agent or such officer
or be answerable in any way for the misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual Property.
For the purpose of enabling the Collateral Agent to exercise
rights and remedies under Sections 6.01 and 6.02 at such time as
the Collateral Agent shall be lawfully entitled to exercise such
rights and remedies, each Grantor grants to the Collateral Agent
an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to such Grantor) to use,
license or sub-license any of the Collateral consisting of
Intellectual Property now owned or hereafter acquired by such
Grantor to the extent of the interest of such Grantor therein at
such time, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout
thereof. The use of such license by the Collateral Agent shall be
exercised, at the option of the Collateral Agent, upon the
occurrence and during the continuation of an Event of Default,
provided that any license, sub-license or other transaction
entered into by the Collateral Agent in accordance herewith shall
be binding upon the Grantors notwithstanding any subsequent cure
of an Event of Default. In operating under the license granted
by each Grantor pursuant to this Section 6.03, the Collateral
Agent agrees that the goods sold and services rendered under the
Trademarks shall be of a nature and quality substantially
consistent with those theretofore offered under such Trademarks
by such Grantor and such Grantor shall have the right to inspect
during the term of such license, at any reasonable time or times
upon reasonable notice to the Collateral Agent, and at such
Grantor's own cost and expense, representative samples of goods
sold and services rendered under the Trademarks.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices
hereunder shall (except as otherwise expressly permitted herein)
be in writing and given as provided in Section 10.01 of the
Credit Agreement.
SECTION 7.02. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the Security Interest and all
obligations of the Grantors hereunder shall be absolute and
unconditional irrespective of (a) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document,
any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any
change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations or any other
amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement
or instrument relating to the foregoing, (c) any exchange,
release or nonperfection of any other collateral, or any release
or amendment or waiver of or consent to or departure from any
guaranty, for all or any of the Obligations or (d) any other
circumstance that might otherwise constitute a defense available
to, or a discharge of, any Grantor in respect of the Obligations
or in respect of this Agreement (other than the indefeasible
payment in full of all the Obligations).
SECTION 7.03. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Grantors
herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon
by the Collateral Agent and the other Secured Parties and shall
survive the making by the Lenders of the Loans and the issuance
of the Letters of Credit by the Issuing Lender, regardless of any
investigation made by the Secured Parties or on their behalf, and
shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or LC Disbursement or any
other fee or amount payable under this Agreement or any other
Loan Document is outstanding and unpaid, as long as any Letter of
Credit remains outstanding and as long as the Commitments have
not been terminated.
SECTION 7.04. Binding Agreement: Assignments. This
Agreement shall become effective as to any Grantor when a
counterpart hereof executed on behalf of such Grantor shall have
been delivered to the Collateral Agent and a counterpart hereof
shall have been executed on behalf of the Collateral Agent, and
thereafter shall be binding upon such Grantor and the Collateral
Agent and their respective successors and assigns, and shall
inure to the benefit of such Grantors, the Collateral Agent and
the other Secured Parties, and their respective successors and
assigns, except that no Grantor shall have the right to assign
its rights or obligations hereunder or any interest herein or in
the Collateral or delegate its duties hereunder (and any such
attempted assignment or delegation shall be void), except as
expressly contemplated by this Agreement or the other Loan
Documents. It shall not be a condition to the effectiveness of
this Agreement against any Grantor that any other Grantor shall
have executed this Agreement.
SECTION 7.05. Successors and Assigns. Whenever in this
Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns
of such party; and all covenants, promises and agreements by or
on behalf of the Grantors that are contained in this Agreement
shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 7.06. Reimbursement of Collateral Agent. (a) The
Grantors jointly and severally agree to pay upon demand to the
Collateral Agent the amount of any and all reasonable and
documented expenses, including the reasonable and documented fees
and expenses of its counsel and of any experts or Administrative
Agents, that the Collateral Agent may incur in connection with
(i) the administration of this Agreement (including the customary
fees, charges and expenses of the Collateral Agent for any audits
conducted by it with respect to the Accounts Receivable or
Inventory), (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the
rights of the Collateral Agent hereunder, or (iv) the failure by
any Grantor to perform or observe any of the provisions hereof.
If the Grantors (or any of them) shall fail to do any act or
thing that they have covenanted to do hereunder or any
representation or warranty of the Grantors hereunder shall be
breached, the Collateral Agent may (but shall not be obligated
to) do the same or cause it to be done or remedy any such breach
and there shall be added to the Obligations the cost or expense
incurred by the Collateral Agent in so doing.
(b) Without limitation of their indemnification obligations
under the other Loan Documents, but in any event subject to the
limits set forth in Section 10.05 of the Credit Agreement, the
Grantors jointly and severally agree to indemnify the Collateral
Agent and the Indemnitees against and hold each of them harmless
from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees and expenses,
incurred by or asserted against any of them arising out of, in
any way connected with, or as a result of, the execution,
delivery or performance of this Agreement or any claim,
litigation, investigation or proceeding relating hereto or to the
Collateral, whether or not any Indemnitee is a party thereto,
provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages,
liabilities or related expenses have resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security
Documents. The provisions of this Section 7.06 shall remain
operative and in full force and effect regardless of the
termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the
Obligations, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document or any
investigation made by or on behalf of the Collateral Agent or any
other Secured Party. All amounts due under this Section 7.06
shall be payable on written demand therefor and shall bear
interest at the Default Rate (as defined in the Credit
Agreement).
SECTION 7.07. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 7.08. Waivers; Amendment. (a) No failure or delay
of the Collateral Agent in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of
the Collateral Agent hereunder and of the other Secured Parties
under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise
have. No waiver of any provisions of this Agreement or consent to
any departure by any Grantor therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No
notice or demand on any Grantor in any case shall entitle such
Grantor to any other or further notice or demand in similar or
other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written
agreement entered into between the Grantors and the Collateral
Agent, with the prior written consent of the Required Lenders.
SECTION 7.09. Waiver of Jury Trial. Each party hereto
waives, to the fullest extent permitted by applicable law, any
right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in connection
with this Agreement. Each party hereto (a) certifies that no
representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce the foregoing
waiver and (b) acknowledges that it and the other parties hereto
have been induced to enter into this Agreement by, among other
things, the mutual waivers and certifications in this Section
7.09.
SECTION 7.10. Severability. If any one or more of the
provisions contained in this Agreement or in any other Loan
Document should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in
any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of
such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 7.11. Jurisdiction; Consent to Service of Process.
(a) Each Grantor irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of
America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the
parties hereto irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted
by law, in such Federal court. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law. Nothing in
this Agreement shall affect any right that the Collateral Agent
or any other Secured Party my otherwise have to bring any action
or proceeding relating to this Agreement or the other Loan
Documents against any Grantor or its properties in the courts of
any jurisdiction.
(b) Each Grantor irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or
relating to this Agreement or the other Loan Documents in any New
York State or Federal court. Each of the parties hereto
irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section
7.01. Nothing in this Agreement will affect the right of any
party to this Agreement to serve process in any other manner
permitted by law.
SECTION 7.12. Termination or Release. (a) This Agreement
and the Security Interest shall terminate when all the
Obligations have been indefeasibly paid in full in cash and the
Lenders have no further commitment to lend under the Credit
Agreement, the LC Exposure and KPR LC Exposure have been reduced
to zero and the Issuing Lender has no further obligation to issue
Letters of Credit under the Credit Agreement.
(b) In connection with any termination or release pursuant
to paragraph (a), the Collateral Agent shall execute and deliver
to such Grantor, at such Grantor's expense, all Uniform
Commercial Code termination statements and similar documents that
such Grantor shall reasonably request to evidence such
termination or release. Any execution and delivery of
termination statements or documents pursuant to this Section 7.12
shall be without recourse to or warranty by the Collateral Agent.
SECTION 7.13. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall constitute an
original, but all of which, when taken together, shall constitute
but one instrument, and shall become effective as provided in
Section 7.04.
SECTION 7.14. Additional Grantors. Pursuant to Section 6.
10 of the Credit Agreement, certain Subsidiaries of the Borrower
are required to enter into this Agreement as Grantors within the
applicable time period specified by the Credit Agreement. Upon
execution and delivery by the Collateral Agent and a subsidiary
of the Borrower of an instrument in the form of Annex 2, such
subsidiary of the Borrower shall become a Grantor hereunder with
the same force and effect as if originally named as a Grantor
herein. The execution and delivery of such instrument shall not
require the consent of any Grantor hereunder. The rights and
obligations of each Grantor hereunder shall remain in full force
and effect notwithstanding the addition of any new Grantor as a
party to this Agreement.
SECTION 7.15. Headings. Article and Section headings used
herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting, this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Security Agreement as of the day and year first above
written.
FOODBRANDS AMERICA, INC.
/S/ XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: Vice President
RKR-GP, INC.
/S/ XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: Vice President
CONTINENTAL DELI FOODS, INC.
/S/ XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: Vice President
XXXXXXXX SPECIALTY BRANDS COMPANY
/S/ XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: Vice President
PAFCO IMPORTING COMPANY, INC.,
/S/ XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: Vice President
NATIONAL SERVICE CENTER, INC.,
/S/ XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: Vice President
XXXXXXXX FOOD SERVICE COMPANY,
L.L.C.
by
CONTINENTAL DELI FOODS, INC.,
manager
/S/ XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: Vice President
KPR HOLDINGS, L.P.
by
RKR-GP, INC., general partner
/S/ XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: Vice President
XXXXXX CERTIFIED EXPRESS, INC.,
/S/ XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: Vice President
FBAI INVESTMENTS CORPORATION,
/S/ XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: Vice President
XXXXXXX PACKING CO., INC,
/S/ XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: Vice President
CHEMICAL BANK, as Collateral Agent,
/S/ XXXXXX XXXXXX
Name: Xxxxxx Xxxxxx
Title: Managing Director
