SECOND AMENDED AND RESTATED
SECURITY AGREEMENT
This Second Amended and Restated Security Agreement (this
"Security Agreement") is entered into as of March __, 2000, by and among
Marketing Specialists Corporation (the "Borrower"), and the subsidiaries of
Borrower signatory hereto (the "Guarantors", and together with the Borrower,
individually and collectively, the "Companies"), in favor of First Union
National Bank, a national banking association, as agent ("Agent") for the
lenders (together with such additional financial institutions as may become
Lenders from time to time as provided in the Credit Agreement described below
"Lenders").
BACKGROUND
A. Borrower has entered into that certain Second Amended and Restated
Credit Agreement dated as of the date hereof (as may be amended from time to
time, the "Credit Agreement") among the Borrower, the Lenders and the Agent.
B.
C. Pursuant to the Credit Agreement, Marketing Specialists Sales
Company ("MSSC," a Guarantor hereunder), The Chase Manhattan Bank (the
"Revolver Agent") and Bank of America, N.A. ("Account Agent") are entering
into that certain Three Party Agreement Relating to Lockbox Services (with
Activation) dated the date hereof (the "Agency Account Agreement"), providing
that, upon notice from Revolver Agent (or Agent, to the extent the Revolver
Agent is no longer a party thereto) to Account Agent, Account Agent will shut
down the Companies' lock box accounts and forward checks or other items or
payment instruments received thereafter to Agent.
D.
E. As a condition to Agent's and Lenders' willingness to enter into the
Credit Agreement, the Companies are willing to execute and deliver to Agent, as
agent for the Lenders, this Security Agreement.
F.
G. The Borrower, Guarantors and the Agent are parties to that certain
Amended and Restated Security Agreement dated August 18, 1999 (the "Existing
Security Agreement").
H.
I. The parties desire to amend the Existing Security Agreement and the
Guarantors signatory hereto desire to become party to the Security Agreement
as set forth herein.
J.
K. This Security Agreement amends and restates in its entirety the
Existing Security Agreement; provided, however, that this Security Agreement
shall not constitute a novation and nothing herein shall be deemed to have
terminated or discharged any indebtedness or obligation under the Existing
Security Agreement, all of which shall remain outstanding under and be
governed by this Security Agreement.
X.
X. NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally
bound, each Company and the Agent hereby agree as follows:
N.
O.
B.DEFINITIONS. All capitalized terms used and not defined herein shall have the
respective meaning ascribed thereto in the Credit Agreement. In addition, as
used herein, the following terms shall have the following meanings:
C.
1. BOOKS AND RECORDS. The term "Books and Records" means
all of the Companies' books and records, including without
limitation, all books and records indicating, summarizing, or
evidencing the Collateral, including without limitation,
computer runs, invoices, tapes, processing software, processing
contracts (such as contracts for computer time and services) and
any computer prepared information, tapes, or data of every kind
and description relating to the Collateral, whether in the
possession of any Companies or in the possession of third
parties.
1. COLLATERAL. The term "Collateral" means all tangible and
intangible property of the Companies, whether now owned or
hereafter acquired, including, but not limited to, each
Company's interest now and in the future in the following types
or items of property:
a. ACCOUNTS - All presently owned and hereafter acquired
accounts, accounts receivable, contract rights, bills, acceptances, and other
forms of obligations arising out of the sale, lease or consignment of goods or
the rendition of services by any of the Companies; together with any property
evidencing or relating to the Accounts (including, without limitation,
guaranties, credit insurance and Letters of Credit), any security for the
Accounts, all Books and Records relating thereto, and all Proceeds of any of the
foregoing, including returned or reclaimed inventory.
b.
c. INVENTORY - All presently owned and hereafter
acquired inventory of every nature, kind, and
description, wherever located, including, without
limitation, raw materials, goods, work in process,
finished goods, parts or supplies; all goods and
property held for sale or lease or to be furnished under
contracts of service; and all goods and inventory
returned, reclaimed or repossessed, together with all
Proceeds of any of the foregoing.
a. EQUIPMENT - All presently owned and hereafter
acquired equipment, whether or not affixed to realty,
including, without limitation, machines, computers,
kiosks, trucks, trailers, motors, tools, dies, parts,
jigs, goods, accessories, handling and delivery
equipment, fixtures, improvements, office machines and
furniture, together with all Proceeds
of any of the foregoing, and all accessions,
accessories, replacements and the rights of the
Companies under any manufacturer's warranties relating
to the foregoing.
a. CHATTEL PAPER - All presently owned and
hereafter acquired chattel paper, including, but not
limited to, any writing or writings which evidence both
a monetary obligation and a security interest in or a
lease of specific goods, together with all Proceeds of
any of the foregoing.
a. GENERAL INTANGIBLES - All presently owned and
hereafter acquired general intangibles, including,
without limitation, any personal property, choses in
action, causes of action, designs, plans, goodwill, tax
refunds, licenses, franchises, trademarks, tradenames,
service marks, copyrights, trade agreements, customer
lists and patents and all rights under license
agreements for use of the same, together with all
Proceeds of any of the foregoing.
a. INSTRUMENTS - All presently owned and hereafter
acquired instruments, including, without limitation,
bills of exchange, notes, and all negotiable
instruments, all checks or other items or payment
instruments, all certificated securities, all
certificates of deposit and any other writing that
evidences a right to the payment of money and is not
itself a security agreement or lease and is of a type
that is in the ordinary course of business transferred
by delivery with any necessary endorsement or
assignment, together with all Proceeds of any of the
foregoing.
a. DOCUMENTS - All presently owned and hereafter
acquired documents, including, but not limited to,
documents of title (as that term is defined in the
Uniform Commercial Code) and any and all receipts,
including, but not limited to, receipts of the kind
described in Article 7 of the Uniform Commercial Code,
together with all Proceeds of any of the foregoing.
a. LETTERS OF CREDIT - All presently owned and
hereafter acquired letters of credit, including, but not
limited to, any written undertaking to pay money
conditioned upon presentation of specified documents,
and advices of letters of credit, together with all
Proceeds of any of the foregoing.
a. INVESTMENT PROPERTY - All presently owned and
hereafter acquired investment property, including all
securities, securities accounts, and security
entitlements, together with all Proceeds of any of the
foregoing.
a. PROCEEDS - All presently owned and hereafter
acquired proceeds, as that term is defined in the
Uniform Commercial Code, including, without limitation,
whatever is received upon the use, lease, sale,
exchange, collection, any other utilization or any
disposition of any of the Collateral described in this
Section A(2), whether cash or non-cash, all rental or
lease payments, accounts, chattel paper, instruments,
documents, contract rights, general intangibles,
equipment, inventory, substitutions, additions,
accessions, replacements, products, and renewals of,
for, or to such property and all insurance therefor.
1. LIABILITIES. The term "Liabilities" means any and all
obligations and indebtedness of every kind and description of
the Companies to the Lenders pursuant to, under, or in
connection with the Loan Documents, whether such debts or
obligations are primary or secondary, direct or indirect,
absolute or contingent, sole, joint or several, secured or
unsecured, due or to become due, contractual or tortious,
arising by operation of law or otherwise, or now or hereafter
existing, whether incurred by any Companies as principal,
surety, endorser, guarantor, accommodation party or otherwise,
including, without limitation, principal, interest and fees,
late fees and expenses (including attorneys' fees and costs
and/or the allocated fees and costs of Agent's in-house legal
counsel, to the extent required to be paid under the Loan
Documents), or that have been or may hereafter be contracted or
incurred, and any obligations of the Companies or any of them
under interest rate protection agreements, swaps, hedging
contracts or similar arrangements with any Lender (including
without limitation, any swap agreements as defined in 11U.S.C.
Section 101). If a party ceases to be a Lender, any obligations
under interest rate protection agreements, swaps, hedging
contracts or similar arrangements (including without
limitation, any swap agreements as defined in 11U.S.C. Section
101) with that party prior to the date it ceased to be a Lender
shall continue to be Liabilities secured hereunder.
1. LOAN DOCUMENTS. The term "Loan Documents" means the
Credit Agreement, the Notes, the Collateral Security Documents,
and any other documents and agreements executed and delivered in
connection with the Credit Agreement.
1. SECURITY AGREEMENT. The term "Security Agreement" means
this Security Agreement, together with all Schedules and
Exhibits hereto as may be amended, restated or otherwise
modified from time to time.
1. UNIFORM COMMERCIAL CODE. The term "Uniform Commercial
Code" means the Uniform Commercial Code, in effect from time to
time in the Commonwealth of Pennsylvania.
Unless the context otherwise requires, all capitalized terms not
specifically defined herein which are defined in the Uniform
Commercial Code shall have the meanings stated therein.
A. SECURITY INTEREST. In order to secure the due and punctual payment
and performance of the Liabilities, the Companies hereby grant to
Agent, for the benefit of the Lenders, a continuing security
interest in and general lien upon their right, title and interest
in the Collateral. The security interests granted herein are
granted as security only and shall not subject Agent to, or in any
way affect or modify, any obligation or liability of the Companies
with respect to any of the Collateral or any transaction which gave
rise thereto.
A. FURTHER ASSURANCES; FILING.
1. DELIVERY OF DOCUMENTS, ETC. At any time and from time to time,
upon the demand of Agent, the Companies will, at the Companies'
expense: (i) give, execute, deliver, file, and/or record any
notice, statement, instrument, document, agreement, or other
papers that may be necessary or desirable, or that Agent may
request, in order to create, preserve, perfect, or validate any
security interest granted pursuant hereto or intended to be
granted hereunder or to enable Agent to exercise or enforce its
rights hereunder or with respect to such security interest; (ii)
keep, stamp, or otherwise xxxx any and all documents,
instruments, chattel paper, and their respective Books and
Records in such manner as Agent may reasonably require to
evidence the security interest granted hereunder.
1. FILING OF FINANCING STATEMENT. At Agent's sole option,
and without the consent of the Companies, Agent may file a
carbon, photographic, or other reproduction of this Security
Agreement or any financing statement executed pursuant hereto as
a financing statement in any jurisdiction so permitting. Without
the prior written consent of Agent, no Companies shall file or
authorize or permit to be filed in any jurisdiction any such
financing or like statement in which First Union National Bank
or its successor as Agent is not named as the sole secured party
as Agent for the Lender, except as permitted under the Credit
Agreement.
A. REPRESENTATIONS AND WARRANTIES. Each Company represents and warrants
to Agent, which representations and warranties shall be continuing
representations and warranties until all of the Liabilities are
satisfied in full, as follows:
1. SECURITY AGREEMENT QUESTIONNAIRES. Set forth on Schedule
A are complete, true and correct responses as to each Company to
the information requested by the Security Agreement
Questionnaire attached as Schedule A (subject to subsequent
disclosure pursuant to Paragraph E(2) hereof). If, for any
reason, any Company's Security Agreement Questionnaire is not
attached to this Security Agreement at the time of execution,
such failure shall in no way alter
Agent's right to rely upon the representations and warranties
contained in such Security Agreement Questionnaire and the
other representations and warranties contained in this Section
D. The Companies agrees that Agent may attach any Company's
Security Agreement Questionnaire to this Security Agreement at
any time subsequent to the execution of this Security
Agreement.
1. DEPOSIT ACCOUNTS. Set forth on Schedule B is a complete,
true and correct listing of all lock boxes and deposit accounts
maintained by each of the Companies including the name of the
depository institution, how the account is titled, and the
account number (subject to subsequent disclosure pursuant to
Paragraph E(2) hereof) other than (i) xxxxx cash accounts,
provided the aggregate balance of all such xxxxx cash accounts
shall not at any time exceed $200,000, and (ii) "MDS accounts"
which do not contain any funds appearing on the balance sheet of
the Companies or to which the Companies are legally entitled
(all such lock boxes and accounts not excluded by clauses (i)
and (ii), the "Covered Accounts"). Each Covered Account listed
on Schedule B other than the "Deposit Accounts" (as defined in
the Agency Account Agreement) shall be promptly closed, or shall
remain open solely for the purpose or purposes identified on
Schedule B. No Company shall establish or maintain any Covered
Account not listed on Schedule B without prior written consent
of Agent.
1. NO CONSENTS NECESSARY. No consent or approval of any
person or entity, including, without limitation, any debt or
equity holder of any Companies, or of any public authority, is
necessary for the valid execution, delivery and performance of
this Security Agreement, or any document or instrument executed
in connection herewith, or the exercise by Agent or Lenders of
their rights and remedies hereunder that have not been obtained.
1. TITLE. The Companies are, or to the extent that any
Collateral will be acquired after the date hereof, will be, the
owners of the Collateral, holding good and marketable title
thereto, free from any lien, security interest, encumbrance, or
claim other than the liens and encumbrances of Agent and have
the right to grant the security interests created by this
Security Agreement subject to Permitted Liens under the Credit
Agreement.
1. NO FICTITIOUS NAMES. The Companies do not operate or
issue invoices under any name other than the name(s) set forth
on the signature page hereof and as otherwise disclosed on
Schedule A.
1. COLLATERAL NOT SUBJECT TO AGREEMENTS OR LICENSES. The
Collateral is not subject to or restricted by any agreement or
license relating to patents, trademarks, trade secrets, or
copyrights, except that the Companies' computer and word
processing equipment is subject to various software licenses or
otherwise disclosed on Schedule A.
A. COVENANTS. Each Company hereby covenants and agrees that for as long
as any Liabilities are outstanding:
1. DEFENSE OF COLLATERAL. The Companies shall defend the
Collateral against all claims and demands of all persons or
entities at any time claiming any interest therein other than
Agent.
1. NOTICE OF CHANGES IN LOCATION OF CHIEF EXECUTIVE OFFICE,
RESIDENCE, BOOKS AND RECORDS, COLLATERAL. The Companies shall
provide Agent with prompt written notice of: (i) any intended
change in the chief executive office or residence of any of the
Companies, and/or any office where any of the Companies maintain
their Books and Records; (ii) the location or movement of any
Collateral to or at an address other than the addresses set
forth on Schedule A hereto; and (iii) the establishment of any
new lock box or deposit account, all such notices to be received
by Agent at least 30 days prior to the effective date of any
such change; provided, that no notice shall be required pursuant
to (i) or (ii) above with respect to any sales office location
at which no Books and Records are maintained other than Books
and Records that are duplicates of Books and Records maintained
at other locations of which Agent has notice hereunder and at
which the aggregate value of all other Collateral located at
such premises does not exceed $20,000. If any such new location
as set forth in (i) and (ii) above is on leased or mortgaged
premises, the Companies will furnish Agent, prior to the
effective date of any such change, with landlord's or
mortgagee's waivers pertaining to such premises in form and
substance reasonably satisfactory to Agent. With respect to any
new deposit account, the Companies shall, if required by Agent,
prior to the first use of such deposit account, furnish to Agent
with blocked account letters or such other agreements with the
applicable depository institution as Agent shall reasonably
require, in each case in form and substance reasonably
satisfactory to Agent.
1. CONTROLLED ACCOUNT. The Companies hereby acknowledge and
agree that (i) except as agreed to by the Agent in writing, all
account debtors of the Companies will be instructed to send
payment to the Post Office Boxes (as defined in the Agency
Account Agreement) maintained by Account Agent, and all payments
from account debtors will be deposited initially into the
Lockbox Accounts (as defined in the Agency Account Agreement)
maintained by Account Agent, and (ii) MSSC will maintain at all
times instructions to Account Agent to sweep daily all available
funds in the Deposit Accounts to a deposit account maintained
with the Revolver Agent (or Agent, to the extent the Revolver
Agent is no longer a party thereto) for this purpose.
1. SECURITY INTERESTS IN COLLATERAL. The Companies shall
keep the Collateral free from any lien, security interest, or
encumbrance except those in
favor of Agent and except as permitted pursuant to the
Credit Agreement, in good order and repair, reasonable wear
and tear excepted, and will not waste or destroy the
Collateral or any part thereof. If reasonably requested by
Agent, the Companies shall give notice of Agent's security
interests in the Collateral to any third person with whom
the Companies has any actual or prospective contractual
relationship or other business dealings.
1. MAINTENANCE, INSPECTION OF BOOKS AND RECORDS. The
Companies shall maintain complete and accurate Books and Records
and shall make all necessary entries therein to reflect the
costs, values and locations of the Collateral and all payments,
credits and adjustments thereto. The Companies shall keep Agent
fully informed as to the location of all such Books and Records,
shall permit Agent and its authorized agents to have full,
complete and unrestricted access thereto at all reasonable times
to inspect, audit and make copies of any and all such Books and
Records (collectively, a "Records Inspection") and upon
submission to the Companies of an invoice therefor, the
Companies will reimburse Agent for any and all fees and costs
related to any Records Inspection by Agent and its authorized
agents, PROVIDED THAT, unless an Event of Default has occurred
and is continuing: (i) Agent shall give Companies reasonable
notice of such Records Inspection; and (ii) Agent shall not
perform more than three Records Inspections (not including
ordinary course visits and meetings) at the premises of the
Companies during any twelve month period. Agent's rights
hereunder shall be enforceable at law or in equity, and the
Companies consents to the entry of judicial orders or
injunctions enforcing specific performance of such obligations
hereunder.
1. MAINTENANCE AND INSPECTION OF EQUIPMENT. With respect to
equipment constituting Collateral, the Companies shall: (i) keep
accurate books and records with respect thereto, including,
without limitation, maintenance records; (ii) upon request,
deliver to Agent all evidence of ownership in such Collateral,
including certificates of title with Agent's interest
appropriately noted on the certificate; (iii) permit Agent and
its authorized agents to inspect any or all such equipment at
all reasonable times, PROVIDED THAT, unless an Event of Default
has occurred: (A) Agent shall give Companies reasonable notice
of such inspection of equipment; and (B) Agent shall not perform
more than three such inspections (not including ordinary course
visits and meetings) at the premises of the Companies during any
twelve month period; (iv) preserve such equipment, excluding
obsolete equipment, in good condition and repair, and pay the
cost of all replacement parts, repairs to and maintenance of
such equipment, and (v) if after the date hereof, any of the
Collateral is moved to or located upon land (other than at
locations identified on the Security Agreement Questionnaires)
which land is the subject of a lease or mortgage, at the request
of Agent, use reasonable best efforts to deliver an agreement of
subordination from the lessor or mortgagee providing that any
lien of such party shall be subordinate to the security interest
of Agent granted herein.
1. CONTINUING OF PERFECTED STATUS OF COLLATERAL. The
Companies agrees to cooperate and join, at their expense, with
Agent in taking such steps as are necessary, in Agent's
judgment, to perfect or continue the perfected status of the
security interests granted herein, including, without
limitation, the execution and delivery of any financing
statements, amendments thereto and continuation statements, the
notation of encumbrances in favor of Agent on certificates of
title, and the execution and filing of any collateral
assignments and any other instruments requested by Agent to
perfect its security interest in the Collateral and any and all
general intangibles relating to the Collateral. Agent is
expressly authorized to file financing statements without the
Companies's signature.
A. GENERAL AUTHORITY.
1. BANK AS ATTORNEY-IN-FACT. Each Company hereby
irrevocably appoints Agent (and any of its attorneys, officers,
employees, or agents), upon the occurrence and during the
continuation of an Event of Default, as its true and lawful
attorney-in-fact, said appointment being coupled with an
interest, with full power of substitution, in the name of the
Companies, Agent, or otherwise, for the sole use and benefit of
Agent in its sole discretion, but at the Companies' expense, to
exercise, to the extent permitted by law, in its name or in the
name of the Companies or otherwise, the powers set forth herein,
whether or not any of the Liabilities are due, such powers,
including, but not limited to, the power at any time: (i) to
endorse the name of the Companies upon any instruments of
payment, invoice, freight, or express xxxx, xxxx of lading,
storage, or warehouse receipt relating to the Collateral; (ii)
to demand, collect, receive payment of, settle, compromise, or
adjust all or any of the Collateral; (iii) to sign and file one
or more financing statements naming the Companies as debtor and
Agent as secured party and indicating therein the types or
describing the items of Collateral herein specified; (iv) to
correspond and negotiate directly with insurance carriers; and
(v) to execute any notice, statement, instrument, agreement, or
other paper that Agent may require to create, preserve, perfect,
or validate any security interest granted pursuant hereto or to
enable Agent to exercise or enforce its rights hereunder or with
respect to such security interest.
1. LIABILITY OF BANK AS ATTORNEY-IN-FACT. Neither Agent nor its
attorneys, officers, employees, or agents shall be liable for
acts, omissions, any error in judgment, or mistake in fact in
its/their capacity as attorney-in-fact. Each Company hereby
ratifies all acts of Agent as its attorney-in-fact. This power,
being coupled with an interest, is irrevocable until the
Liabilities have been fully satisfied. Agent shall not be
required to take any steps necessary to preserve any rights
against prior parties with respect to any of the Collateral.
1. EFFECT OF EXTENSIONS AND MODIFICATIONS. Agent may extend the
time of payment, arrange for payment in installments, or
otherwise modify the terms of, or release, any of the
Collateral, without thereby incurring responsibility to, or
discharging or otherwise affecting any liability of, any
Companies or any other obligor.
A. EVENTS OF DEFAULT. The occurrence of an Event of Default under the
Credit Agreement shall constitute an Event of Default under this
Security Agreement.
A. REMEDIES.
1. ACCELERATION OF LIABILITIES; GENERAL RIGHTS OF BANK.
Upon the occurrence and during the continuance of an Event of
Default, Agent may, in accordance with Paragraph 7.2 of the
Credit Agreement, exercise any and all rights and remedies it
has under this Security Agreement, any other Loan Document
and/or applicable law.
1. RIGHT OF SETOFF. If any Liabilities shall be due and
payable or any one or more Events of Default shall have occurred
and be continuing, whether or not the Agent shall have made
demand under any Loan Document and regardless of the adequacy of
any collateral for the Liabilities or other means of obtaining
repayment of the Liabilities, each Lender shall have the right,
without notice to any Company and is specifically authorized
hereby to set-off against and apply to the then unpaid balance
of the Liabilities any items or funds of any Company held by
such Lender or any affiliate of such Lender, any and all
deposits (whether general or special, time or demand, matured or
unmatured) or any other property of any Company including,
without limitation, securities and/or certificates of deposit,
now or hereafter maintained by any Company for its or their own
account with such Lender or any affiliate of such Lender, and
any other indebtedness at any time held or owing by such Lender
or any affiliate of such Lender, to or for the credit or the
account of Borrower, even if effecting such set-off results in a
loss or reduction of interest or the imposition of a penalty
applicable to the early withdrawal of time deposits. For such
purpose, the Lenders shall have, and each Company hereby grants
to each Lender, a first lien on and security interest in such
deposits, property, funds and accounts and the proceeds thereof,
subject to Permitted Liens under the Credit Agreement.
1. TURNOVER OF PROPERTY HELD BY AFFILIATES. Each Company
authorizes each affiliate of each Lender, upon the occurrence
and during the continuance of an Event of Default, at the
request of any such Lender, and without notice to any Company,
to turn over to the Agent any property of such Company,
including, without limitation, funds and securities, held by
such affiliate for any such Company's account and to debit any
deposit account maintained by such
Company with such affiliate (even if such deposit account is
not then due or there results a loss or reduction of interest
or the imposition of a penalty in accordance with law
applicable to the early withdrawal of time deposits), in the
amount requested by such Lender up to the amount of the
Liabilities, and to pay or transfer such amount or property
to the Agent for application to the Liabilities.
1. ADDITIONAL RIGHTS AND REMEDIES. In addition to the
rights and remedies available to Agent as set forth above, upon
the occurrence of an Event of Default hereunder, or at any time
thereafter, Agent may at its option in accordance with the
Credit Agreement, immediately and without notice, do any or all
of the following, which rights and remedies are cumulative, may
be exercised from time to time, and are in addition to any
rights and remedies available to Agent under any other agreement
or instrument by and between any Company or Companies and the
Agent:
a. Exercise any and all of the rights and remedies of a
secured party under the Uniform Commercial Code,
including, without limitation, the right to require the
Companies to assemble the Collateral and make it
available to Agent at a place reasonably convenient to
the parties;
a. Notify account debtors of any Company that their
obligations to such Company are payable directly to
Agent, for benefit of the Lenders, and collect such
sums.
a. Operate, utilize, recondition and/or refurbish
any of the Collateral for the purpose of enhancing or
preserving the value thereof by any means deemed
appropriate by Agent, in its sole discretion, including,
without limitation, converting raw materials and/or
work-in-process into finished goods;
a. Demand, xxx for, collect, or retrieve any money
or property at any time payable, receivable on account
of, or in exchange for, or make any compromise, or
settlement deemed desirable with respect to any of the
Collateral;
a. Upon five (5) business days' prior written
notice to the Borrower (or one (1) day notice by
telephone with respect to Collateral that is perishable
or threatens to decline rapidly in value), which each
Company hereby acknowledges to be sufficient,
commercially reasonable and proper, Agent may sell,
lease or otherwise dispose of any or all of the
Collateral at any time and from time to time at public
or private sale, with or without advertisement thereof.
Each Company waives the benefit of any marshaling
doctrine with respect to Agent's exercise of its rights
hereunder. Each Company grants a royalty-free license to
Agent for all
patents, service marks, trademarks, tradenames,
copyrights, computer programs and other intellectual
property and proprietary rights sufficient to permit
Agent to exercise all rights granted to Agent under
this Section. Agent or anyone else may be the
purchaser of any or all of the Collateral so sold and
thereafter hold such Collateral absolutely, free from
any claim or right of whatsoever kind, including any
equity of redemption of any Company or any other
obligor, any such notice, right and/or equity of
redemption being hereby expressly waived and released.
1. APPLICATION OF PROCEEDS. Upon a sale of any Collateral
by Agent, Agent shall apply the sale proceeds in accordance with
Section 8.17 of the Credit Agreement, except the fees payable
under Paragraph 2.13 thereof, which shall be paid solely to
Agent.
A.MISCELLANEOUS.
B.
1. REMEDIES CUMULATIVE; NO WAIVER. The rights, powers and
remedies of Agent provided in this Security Agreement and any of
the other Loan Documents are cumulative and not exclusive of any
right, power or remedy provided by law or equity. No failure or
delay on the part of Agent in the exercise of any right, power
or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy
preclude any other or further exercise thereof, or the exercise
of any other right, power or remedy.
1. NOTICES. Each Company agrees that any notice, request or
consent required to be given to such Companies hereunder or in
connection herewith may be given to Borrower on behalf of such
Companies. Any notice, request or consent required hereunder or
in connection herewith shall be deemed satisfactorily given if
in writing and delivered by hand, mailed (registered or
certified mail) or sent by facsimile transmission to Agent or
Borrower at their respective addresses or telecopier number set
forth below, or to any party at such other addresses or
telecopier numbers as may be given by any party to the others in
writing:
if to Borrower:
Marketing Specialists Corporation
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
Telecopier: (000) 000-0000
if to Agent:
First Union National Bank
0000 Xxxxxxxx Xxxxxx
XX 4843
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telecopier: (000) 000-0000
1. COSTS AND EXPENSES; INDEMNIFICATION. Whether or not
the transactions contemplated by this Security
Agreement and the other Loan Documents are fully
consummated, the Borrower shall promptly pay (or
reimburse, as Agent may elect) all reasonable costs
and expenses which Agent has incurred or may hereafter
incur in connection with the negotiation, preparation,
reproduction, interpretation, perfection, monitoring
and enforcement of the Loan Documents, the collection
of all amounts due under the Loan Documents, and all
amendments, modifications, consents or waivers, if
any, to the Loan Documents. Such costs and expenses
shall include, without limitation, the fees and
disbursements of counsel to Agent, the costs of
appraisals, searches of public records, costs of
filing and recording documents with public offices,
internal and/or external audit and/or examination fees
and costs, stamp, excise and other taxes, the fees of
Agent's accountants, consultants or other
professionals, costs and expenses from any actual or
attempted sale of all or any part of the Collateral,
or any exchange, enforcement, collection, compromise,
or settlement of any of the Collateral or receipt of
the proceeds thereof, and for the care and preparation
for sale of the Collateral (including insurance costs)
and defending and asserting the rights and claims of
Agent in respect thereof, by litigation or otherwise.
Each Company shall indemnify, defend and hold harmless
Agent with respect to any and all claims, expenses,
demands, losses, costs, fines or liabilities of any
kind (including, without limitation, those involving
death, personal injury or property damage and
including reasonable attorneys fees and costs) arising
from the use or ownership of the Collateral other than
those resulting from Agent's own willful misconduct or
gross negligence. The reimbursement and
indemnification obligations of each Company under this
Section shall constitute Liabilities secured by the
Collateral and shall survive any termination of the
Loan Documents.
1. GOVERNING LAW. This Security Agreement shall be
construed in accordance with and governed by the
substantive laws of the Commonwealth of Pennsylvania
without reference to conflict of laws principles.
1. INTEGRATION. This Security Agreement and the other
Loan Documents constitute the sole agreement of the
parties with respect to the subject matter hereof and
thereof and supersede all oral negotiations and prior
writings with respect to the subject matter hereof and
thereof.
1. AMENDMENT; WAIVER. No amendment of this Security
Agreement, and no waiver of any one or more of the
provisions hereof shall be effective unless set forth
in writing and signed by the parties hereto.
1. SUCCESSORS AND ASSIGNS. This Security Agreement (i)
shall be binding upon each Company and the Agent and
their respective successors and permitted assigns, and
(ii) shall inure to the benefit of each Company and
the Agent and their respective successors and
permitted assigns; PROVIDED, HOWEVER, that no Company
may assign its rights hereunder or any interest herein
without the prior written consent of Agent, and any
such assignment or attempted assignment by any Company
shall be void and of no effect with respect to Agent.
1. SEVERABILITY. The illegality or unenforceability of
any provision of this Security Agreement or any
instrument or agreement required hereunder shall not
in any way affect or impair the legality or
enforceability of the remaining provisions of this
Security Agreement or any instrument or agreement
required hereunder. In lieu of any illegal or
unenforceable provision in this Security Agreement,
there shall be added automatically as a part of this
Security Agreement a legal and enforceable provision
as similar in terms to such illegal or unenforceable
provision as may be possible.
1. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Each
Company irrevocably appoints each officer of Borrower
as its attorney upon whom may be served any notice,
process or pleading in any action or proceeding
against it arising out of or in connection with this
Security Agreement, the Credit Agreement, the Notes,
the Loan Documents or any of the Collateral; each
Company hereby consents that any action or proceeding
against it be commenced and maintained in any court
within the Commonwealth of Pennsylvania or in the
United States District Court for the Eastern District
of Pennsylvania by service of process on any officer
of Borrower; and each Company agrees that the courts
of the Commonwealth of Pennsylvania and the United
States District Court for the Eastern District of
Pennsylvania shall have jurisdiction with respect to
the subject matter hereof and the person of each
Company and the Collateral. Notwithstanding the
foregoing, Agent, in its absolute discretion may also
initiate proceedings in the courts of any other
jurisdiction in which any
Company may be found or in which any of its properties
or Collateral may be located.
1. INCONSISTENCIES. The Loan Documents are intended to be
consistent. However, in the event of any
inconsistencies among any of the Loan Documents, such
inconsistency shall not affect the validity or
enforceability of any Loan Document. In the event of
any inconsistency or ambiguity in any of the Loan
Documents, the Loan Documents shall not be construed
against any one party but shall be interpreted
consistent with Agent's policies and procedures.
1. HEADINGS. The headings of sections and paragraphs have
been included herein for convenience only and shall
not be considered in interpreting this Security
Agreement.
1. SCHEDULES. If a Schedule and/or an Exhibit is attached
hereto, the provisions thereof are incorporated herein.
1. WAIVER OF JURY TRIAL; ACKNOWLEDGMENTS.
a. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR THE NOTES OR OTHER
LOAN DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF AGENT OR LENDERS. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR AGENT'S ENTERING INTO THIS
AGREEMENT ON BEHALF OF THE LENDERS.
a. BORROWER ACKNOWLEDGES THAT IT HAS HAD THE
ASSISTANCE OF COUNSEL IN THE REVIEW AND EXECUTION OF THIS
AGREEMENT AND, SPECIFICALLY, SECTION 13(a) HEREOF, AND
FURTHER ACKNOWLEDGES THAT THE MEANING AND EFFECT OF
THE FOREGOING WAIVER OF JURY TRIAL HAVE BEEN FULLY
EXPLAINED TO BORROWER BY SUCH COUNSEL.
IN WITNESS WHEREOF the parties hereto have executed this Second Amended and
Restated Security Agreement as of the date above first written.
Attest: MARKETING SPECIALISTS
CORPORATION
By: By:
---------------------------------------------- ----------------------------------------------
Name: Name:
Title: Title:
Attest: MARKETING SPECIALISTS SALES
COMPANY
By: By:
---------------------------------------------- ----------------------------------------------
Name: Name:
Title: Title:
Attest: BROMAR, INC.
By: By:
---------------------------------------------- ----------------------------------------------
Name: Name:
Title: Title:
Attest: XXXX XXXXX ASSOCIATES, INC.
By: By:
---------------------------------------------- ----------------------------------------------
Name: Name:
Title: Title:
SCHEDULE A
Security Agreement Questionnaires Attached
SCHEDULE B
Deposit Accounts
