AMENDED AND RESTATED SECURITY AGREEMENT
Exhibit 10.5
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this “Agreement”) dated as of December
28, 2007, among APPLICA INCORPORATED, a Florida corporation (“Applica”), SALTON, INC., a
Delaware corporation (“Parent”), APN HOLDING COMPANY, INC., a Delaware corporation and
successor-by-merger to SFP Merger Sub, Inc. (“APN”), APPLICA CONSUMER PRODUCTS, INC., a Florida
corporation (“ACP”), APPLICA AMERICAS, INC., a Delaware corporation (“Applica
Americas”), HP DELAWARE, INC., a Delaware corporation (“HP Delaware”), HPG LLC, a
Delaware limited liability company (“HPG”), APPLICA MEXICO HOLDINGS, INC., a Delaware
corporation (“Applica Mexico”), SONEX INTERNATIONAL CORPORATION, a Delaware corporation
(“Sonex”), HOME CREATIONS DIRECT LTD., a Delaware corporation (“HCD”), SALTON
HOLDINGS, INC., a Delaware corporation (“SHI”), ICEBOX, LLC, an Illinois limited liability
company (“Icebox”), TOASTMASTER INC., a Missouri corporation (“Toastmaster”),
FAMILY PRODUCTS INC., a Delaware corporation (“Family Products”), ONE:ONE COFFEE LLC, a
Delaware limited liability company (“One Coffee”), and SALTON TOASTMASTER LOGISTICS LLC, a
Delaware limited liability company (“STL”; Applica, Parent, APN, ACP, Applica Americas, HP
Delaware, HPG, Applica Mexico, Sonex, HCD, SHI, Icebox, Toastmaster, Family Products, One Coffee
and STL being sometimes referred to herein individually as a “Borrower” and collectively as
“Borrowers”), the Guarantors identified below (individually a “Guarantor” and
collectively the “Guarantors”); the Guarantors together with the Borrowers, individually an
“Loan Party” and collectively the “Loan Parties”); and HARBINGER CAPITAL PARTNERS
MASTER FUND I, LTD., a Cayman Islands corporation, in its capacity as the administrative and
collateral agent for the Lenders (as defined in the Term Loan Agreement (as defined below)) (the
Agent and the Lenders being referred to individually as a “Secured Party” and collectively
as the “Secured Parties”) (in such capacity, together with its successors in such capacity,
the “Agent”).
WITNESSETH:
WHEREAS, pursuant to that Reimbursement and Senior Secured Credit Agreement, dated as of
October 1, 2007 (the “Original Credit Agreement”), by and among Parent, certain
Subsidiaries of Parent, the Agent, certain lenders party thereto ( the “Original Lenders”)
and certain other parties, the Original Lenders agreed to make loans and certain other financial
accommodations to Parent and certain Subsidiaries of Parent if and when the Original Lenders were
required to purchase certain other obligations of Parent;
WHEREAS, Loan Parties, the Agent, the Lenders party thereto and certain other parties have
agreed to amend and restate the Original Credit Agreement pursuant to a certain Term Loan Agreement
dated as of the date hereof (together with all annexes, exhibits and schedules thereto, as from
time to time amended, restated, modified or supplemented the “Term Loan Agreement”) and
pursuant to the terms thereof the
Lenders have agreed to make loans to or for the benefit of Borrowers upon the terms and
conditions set forth therein;
WHEREAS, certain of the Loan Parties and Agent entered into a certain Security Agreement dated
as of October 1, 2007 (the “Original Security Agreement”), pursuant to which, among other
things, each such Loan Party granted to Agent, for its benefit and the ratable benefit of the
Original Lenders to the Original Credit Agreement a security interest in and Lien upon all or
substantially all of the property of each such Loan Party as described therein;
WHEREAS, in order to induce Agent and Lenders to extend credit to Borrowers (which inure to
the direct and indirect benefit of Guarantors) under the Term Loan Agreement, Loan Parties are
willing to amend and restate the Original Security Agreement so that, as so amended and restated,
it shall read as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS; RULES OF CONSTRUCTION.
(a) As used herein, the following terms shall have the following meanings given to them (terms
defined in the singular to have the same meaning when used in the plural and vice versa):
“Account” shall have the meaning given to the term “account” in the UCC and shall
include any right to payment for the sale or lease of Goods or rendition of services, whether or
not they have been earned by performance.
“Cash Equivalents” shall mean investments in (i) marketable direct obligations issued
or unconditionally guaranteed by the government of the United States or Canada and backed by the
full faith and credit of such government; (ii) marketable obligations issued by any state of the
United States or any local government or other political subdivision thereof; (iii) domestic
certificates of deposit and time deposits, bankers’ acceptances and overnight bank deposits, in
each case issued by any commercial bank organized under the laws of the United States or Canada,
any state of the United States or the District of Columbia or any province or territory of Canada;
(iv) repurchase obligations for underlying securities of the types described in clauses (i), (ii)
and (iii); (v) commercial paper; and (vi) shares of any money market fund.
“Chattel Paper” means all of a Loan Party’s now owned or hereafter acquired “chattel
paper,” as defined in the UCC, including Electronic Chattel Paper.
“Collateral” has the meaning ascribed thereto in Section 2 below.
“Commercial Tort Claim” shall have the meaning given to the term “commercial tort
claim” in the UCC.
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“Deposit Account” shall have the meaning given to the term “deposit account” in the
UCC.
“Deposit Accounts Collateral” shall mean Deposit Accounts (and any associated
lockboxes) maintained by any Loan Party for the purpose of depositing proceeds of Collateral
pursuant to the Loan Documents or disbursing the proceeds of Loans made by Lenders pursuant to the
Loan Documents. For the avoidance of doubt, all Dominion Accounts shall constitute Deposit
Accounts Collateral.
“Document” shall have the meaning given to the term “document” in the UCC and shall
include, for each Loan Party, all of such Loan Party’s bills-of-lading, warehouse receipts or other
documents of title.
“Dominion Account” shall mean each Blocked Account and any other special deposit
account established and maintained by a Loan Party at Bank or one of Bank’s Affiliates or another
bank selected by such Loan Party, but acceptable to Agent in its sole discretion, and over which
Agent shall have a perfected security interest in and exclusive access and control for withdrawal
purposes to the extent provided in Section 7.32 of the Term Loan Agreement.
“Electronic Chattel Paper” shall have the meaning given to the term “electronic
chattel paper” in the UCC.
“Equipment” shall have the meaning given to “equipment” in the UCC and shall include,
for each Loan Party, all machinery, equipment, furniture, furnishings, fixtures, and other tangible
personal property (except Inventory) of such Loan Party, including embedded software, motor
vehicles with respect to which a certificate of title has been issued, aircraft, dies, tools, jigs,
molds and office equipment, as all of such types of property leased by such Loan Party and all of
such Loan Party’s rights and interests with respect thereto under such leases (including options to
purchase); together with all present and future additions and accessions thereto, replacements
therefor, component and auxiliary parts and supplies used or to be used in connection therewith,
and all substitutes for any of the foregoing, and all manuals, drawings, instructions, warranties
and rights with respect thereto; wherever any of the foregoing is located.
“General Intangible” shall have the meaning given to the term “general intangible” in
the UCC and shall include, for each Loan Party, all of choses in action (other than as against
Agent, Bank or any Lender in connection with the Loan Documents) and causes of action and all other
intangible personal property of such Loan Party of every kind and nature (other than Accounts),
including all contract rights, payment intangibles, Proprietary Rights, corporate or other business
records, inventions, designs, blueprints, plans, specifications, trade secrets, goodwill, computer
software, customer lists, registrations, tax refund claims, any funds which may become due to such
Loan Party in connection with the termination of any employee benefit plan or any rights thereto
and any other amounts payable to such Loan Party from any employee benefit plan, rights and claims
against carriers and shippers, rights to
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indemnification, business interruption insurance and proceeds thereof, property, casualty or
any similar type of insurance and any proceeds thereof, proceeds of insurance covering the lives of
key employees on which such Loan Party is beneficiary, rights to receive dividends, distributions,
cash, Instruments and other property in respect of or in exchange for pledged equity interests or
Investment Property and any letter of credit, guarantee, claim, security interest or other security
held by or granted to such Loan Party.
“Goods” shall have the meaning given to the term “goods” in the UCC. The term “goods”
shall include Inventory.
“Instrument” shall have the meaning given to the term “instrument” in the UCC.
“Inventory” shall have the meaning given to the term “inventory” in the UCC and shall
include, for each Loan Party, all inventory, goods and merchandise, wherever located, to be
furnished under any contract of service or held for sale or lease, all returned, rejected or
repossessed goods, all raw materials, work-in-process, finished goods (including embedded
Software), labels, samples and other materials and supplies of any kind, nature or description
which are used or consumed in such Loan Party’s business or used in connection with the packing,
shipping, advertising, promoting, selling or finishing of such goods or merchandise, and all
documents of title or other Documents representing such goods.
“Investment Property” shall have the meaning given to the term “investment property”
in the UCC and shall include, for each Loan Party, all (a) securities, whether certificated or
uncertificated, (b) securities entitlements, (c) securities accounts, (d) commodity contracts, and
(e) commodity accounts of such Loan Party.
“Letter-of-Credit Right” shall have the meaning given to the term “letter-of-credit
right” in the UCC and shall include, for each Loan Party, rights to payment or performance under a
letter of credit, whether or not such Loan Party, as beneficiary, has demanded or is entitled to
demand payment or performance (other than any letter of credit issued for the account of such Loan
Party pursuant to the Additional Debt Documents).
“Payment Account” means each bank account established pursuant to this Agreement, to
which the proceeds of Accounts and other Collateral are deposited or credited, and which is
maintained in the name of the Agent or as Loan Party, as the Agent may determine, on terms
acceptable to the Agent.
“Payment Intangible” shall have the meaning given to the term “payment intangible” in
the UCC.
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“Proprietary Rights” means, for each Loan Party, such Loan Party’s now owned and
hereafter arising or acquired licenses, franchises, permits, patents, patent rights, copyrights,
works which are the subject matter of copyrights,
trademarks, service marks, trade names, trade styles, patent, trademark and service xxxx
applications, and all licenses and rights related to any of the foregoing, and all other rights
under any of the foregoing, all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to xxx for past, present and future
infringement of any of the foregoing; provided, however, the foregoing definition
shall not include any “intent-to-use” based trademark applications until such time as an amendment
to allege use or a statement of use has been filed with the United States Patent and Trademark
Office.
“Receivable Records” shall mean all records and documents evidencing or relating to
any of the Receivables, including invoices, purchase orders, delivery receipts, waybills, payment
records, receivable agings and other like documents, whether or not in written or electronic format
or in any other medium.
“Receivables” shall mean (i) all Accounts (and related Supporting Obligations) and
(ii) all other rights to payment arising from services rendered or from the sale, lease, use or
other disposition of Inventory or Documents, whether such rights to payment constitute Payment
Intangibles, Letter-of-Credit Rights, Supporting Obligations or any other classification of
property, or are evidenced in whole or in part by Instruments, Chattel Paper or Documents.
“Software” shall have the meaning given to the term “software” in the UCC, including
all computer programs and all supporting information provided in connection with a transaction
related to any program.
“Supporting Obligation” shall have the meaning given to the term “supporting
obligation” in the UCC.
“UCC” means the Uniform Commercial Code (or any successor statute), as adopted and in
force in the State of New York or, when the laws of any other state govern the method or manner of
the perfection or enforcement of any security interest in any of the Collateral, the Uniform
Commercial Code (or any successor statute) of such state.
“Uniform Commercial Code Jurisdiction” means any jurisdiction that has adopted
“Revised Article 9” of the UCC on or after July 1, 2001.
All other capitalized terms used but not otherwise defined in this Agreement (including the
Recitals hereto) have the meanings given to them in the Term Loan Agreement or in Annex A thereto.
All other undefined terms contained in this Agreement, unless the context indicates otherwise, have
the meanings provided for by the UCC to the extent the same are used or defined therein.
(b) As used herein, the terms, “herein,” “hereof;” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular section, paragraph or
subdivision. Any pronoun used shall be deemed to cover all
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genders. All references to statutes
shall include all related rules and implementing
regulations and any amendments of same and any successors statutes, rules and regulations; to
any agreement, instrument or other document (including any of the Loan Documents) shall include any
and all modifications and supplements thereto and any and all restatement, extensions or renewals
thereof; and to “including” and “include” shall be understood to mean “including, without
limitation” (and, for purposes of this Agreement, the parties agreed that the rule of ejusdem
generis shall not be applicable to limit a general statement, which is followed by or referable to
an enumeration of specific matters to matters similar to the matters specifically mentioned).
2. GRANT OF SECURITY INTERESTS.
(a) To secure the payment and performance of all Obligations (as defined in the Term Loan
Agreement), including the Term Loan, all indemnification obligations under the Loan Documents and
all liabilities and obligations of each Guarantor under its Guaranty, each Loan Party hereby grants
and re-grants to the Agent, for the benefit of the Secured Parties, a continuing security interest
in, Lien on, assignment of and right of set-off against, all of such Loan Party’s right, title or
interest in or to all of the following types and items of property of such Loan Party, whether now
owned or existing or hereafter created, acquired or arising and wherever located:
(i) all Receivables, and all contracts out of which any Receivable has arisen and all rights
under each such contract;
(ii) all Goods, including, without limitation, all Equipment and Inventory;
(iii) all Chattel Paper;
(iv) all Documents, including, without limitation, all contracts, documents of title and other
Documents that evidence ownership of or right to receive or possess, or that otherwise relate to,
any Inventory, including, without limitation, relating to the acquisition or sale or other
disposition of Inventory;
(v) all rights of an unpaid vendor with respect to Inventory;
(vi) all tax refunds and claims for tax refunds;
(vii) all Instruments;
(viii) all Supporting Obligations;
(ix) all General Intangibles (including, without limitation, Payment Intangibles and Software
and warranties of title);
(x) all Letter-of-Credit Rights;
(xi) all Investment Property;
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(xii) all money, cash, Cash Equivalents, securities and other property of any kind of any Loan
Party held directly or indirectly by Agent or any other Secured Party;
(xiii) all Deposit Accounts and Deposit Account Collateral, credits, and balances with the
Agent or any other Secured Party or any of their Affiliates or any other financial institution with
which any Loan Party maintains deposits, including any Payment Accounts;
(xiv) all books, records and other property related to or referring to any of the foregoing,
including books, records, account ledgers, data processing records, computer software and other
property and General Intangibles at any time evidencing or relating to any of the foregoing;
(xv) the Commercial Tort Claims in which a Loan Party is a plaintiff and which are described
in Schedule IV attached hereto; and
(xvi) all accessions to, substitutions for and replacements, products and proceeds of any of
the foregoing, including, but not limited to, proceeds of any insurance policies, claims against
third parties, and condemnation or requisition payments with respect to all or any of the
foregoing.
All of the foregoing, together with, all equity interests in Subsidiaries to the extent
pledged to Agent and all other property of any Loan Party in which Agent or any other Secured Party
may at any time be granted a Lien as security for the Obligations, are herein collectively referred
to as the “Collateral”; provided, however, that the Collateral shall not include
any rights or interests of a Loan Party in any contract or license if under the terms of such
contract, or any applicable law with respect to such contract or license, the valid grant of a
security interest therein to Agent is prohibited and such prohibition has not been or is not waived
or the consent of the other party to such contract or license has not been or is not otherwise
obtained or under applicable law such prohibition cannot be waived; provided,
further, that the foregoing exclusion shall in no way be interpreted (i) to apply if any
such prohibition is ineffective or unenforceable under the UCC (including Sections 9-406, 9-407,
9-408 or 9-409) or any other applicable law or (ii) so as to limit, impair or otherwise affect
Agent’s unconditional continuing security interest in and Lien upon any rights or interests of such
Loan Party in or to monies due or to become due under any such contract (including any Accounts).
(b) For the avoidance of doubt, the security interests granted by Loan Parties in favor of
Agent, for the benefit of the Secured Parties, pursuant to this Agreement shall be in addition to,
and not in lieu of, any other security interest or Lien granted by any Loan Party in favor of any
Secured Party pursuant to any of the other Loan Documents.
(c) All of the Obligations shall be secured by all of the Collateral.
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3. PERFECTION AND PROTECTION OF SECURITY INTEREST.
(a) Loan Parties shall, at their expense, perform all steps requested by the Agent at any time
to perfect, maintain, protect, and enforce the Agent’s Liens, including: (i) filing and recording
financing or continuation statements, and amendments thereof, in form and substance reasonably
satisfactory to the Agent; (ii) delivering to the Agent warehouse receipts covering any portion of
the Collateral located in warehouses and for which warehouse receipts are issued, unless the
Additional Debt Agent shall have obtained a Collateral Access Agreement (as defined in the
Additional Debt Documents) or Imported Inventory Agreement (as defined in the Additional Debt
Documents) from any applicable warehouseman, and certificates of title covering any portion of the
Collateral for which certificates of title have been issued; (iii) upon the occurrence of an Event
of Default, and if so requested by the Agent, transferring Inventory to warehouses or other
locations designated by the Agent; (iv) placing notations on each Loan Party’s books of account to
disclose the validity, perfection and priority of Agent’s security interest; and (v) taking such
other steps as are deemed reasonably necessary by the Agent to maintain and protect the Agent’s
Liens.
(b) Promptly after the Agent’s request therefor, Loan Parties shall deliver to Agent all
Collateral consisting of negotiable Documents, certificated securities (accompanied by stock powers
executed in blank), Chattel Paper and Instruments.
(c) Loan Parties shall, in accordance with the terms of the Term Loan Agreement, obtain or use
their commercially reasonable efforts to obtain waivers or subordinations of Liens from landlords
and mortgagees.
(d) If required by the terms of the Term Loan Agreement and not waived by Agent in writing
(which waiver may be revoked), Loan Parties shall obtain authenticated control agreements from each
issuer of uncertificated securities, securities intermediary, commodities intermediary or other
Person issuing or holding any Cash Equivalents constituting Collateral to or for any Loan Party.
(e) If a Loan Party is or becomes the beneficiary of a letter of credit (other than those
issued for the account of a Loan Party pursuant to the Additional Debt Documents), such Loan Party
shall promptly notify Agent thereof and enter into a tri-party agreement with Agent and the issuer
and/or confirmation bank with respect to Letter-of-Credit Rights that constitute Collateral,
assigning such Letter-of-Credit Rights to Agent and directing all payments thereunder to the
Payment Account, all in form and substance reasonably satisfactory to Agent.
(f) Loan Parties shall take all steps necessary to grant the Agent control of all Electronic
Chattel Paper in accordance with the UCC and all “transferable records” (as defined in the Uniform
Electronic Transactions Act) in each case to the extent constituting Collateral.
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(g) Each Loan Party hereby irrevocably authorizes Agent at any time and from time to time
during the term of the Term Loan Agreement to file in any filing
office in any Uniform Commercial Code Jurisdiction any initial financing statements and
amendments thereto that (a) indicate the Collateral (i) as all assets of such Loan Party or words
of similar effect, regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the UCC or such jurisdiction, or (ii) as being of an equal or
lesser scope or with greater detail, and (b) contain any other information required by part 5 of
Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or
amendment, including (i) whether such Loan Party is an organization, the type of organization and
any organization identification number issued to such Loan Party, and (ii) in the case of a
financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral
or timber to be cut, a sufficient description of real property to which the Collateral relates.
Loan Parties agree to furnish any such information to Agent promptly upon written request. Each
Loan Party also ratifies its authorization for Agent to have filed in any Uniform Commercial Code
Jurisdiction any like initial financing statements or amendments thereto if filed prior to the date
hereof.
(h) Each Loan Party shall promptly notify Agent of any Commercial Tort Claim constituting
Collateral acquired by it and, unless otherwise consented in writing by Agent, such Loan Party
shall enter into a supplement to this Agreement, granting to Agent a security interest in such
Commercial Tort Claim.
(i) From time to time, Loan Parties shall, upon Agent’s written request, execute and deliver
confirmatory written instruments pledging to Agent, for the benefit of Agent and the other Secured
Parties, the Collateral, but Loan Parties’ failure to do so shall not affect or limit any security
interest or any other Liens or rights of Agent or any other Secured Party in and to the Collateral.
So long as the Term Loan Agreement is in effect and until all Obligations have been fully
satisfied and the Commitments have been terminated, Agent’s security interests and other Liens, for
the benefit of the Secured Parties, shall continue in full force and effect in all Collateral.
(j) Except as otherwise expressly permitted under the Term Loan Agreement, Loan Party shall
reincorporate or reorganize itself under the laws of any jurisdiction other than the jurisdiction
in which it is incorporated or organized as of the date hereof or change its type of entity as
identified on Schedule II without executing all necessary documents, instruments, financing
statements, amendments thereto, assignments and/or other writings as Agent may reasonably request
to protect or enforce Agent’s and the other Secured Parties’ security interest in the Collateral.
(k) Each Loan Party acknowledges that it is not authorized to file any amendment or
termination statement with respect to any UCC-1 financing statement filed pursuant to the Loan
Documents without the prior written consent of Agent and agrees that it will not do so without the
prior written consent of Agent, subject to the rights of Loan Parties under Section 9-509(d)(2) of
the UCC. All UCC-1 financing statements heretofore filed with respect any of the Collateral under
the Original Security Agreement shall continue in full force and effect.
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(l) No Loan Party shall enter into any contract that restricts or prohibits the grant to Agent
of a security interest in Accounts, Chattel Paper, Instruments or Payment Intangibles or the
proceeds of the foregoing.
4. LOCATION OF COLLATERAL.
Each Loan Party represents and warrants to Agent and the other Secured Parties that: (A)
Schedule I is a correct and complete list, for each Loan Party, of the location of the
chief executive office, books and records, and Collateral (other than In-Transit Inventory (as
defined in the Additional Debt Documents) of such Loan Party, and the locations of all of the other
places of business of such Loan Party; and (B) Schedule I correctly identifies any of such
facilities and locations that are not owned by a Loan Party and sets forth the names of the owners
and lessors or sublessors of such facilities and locations. Each Loan Party agrees that it will not
(i) maintain any Collateral (other than In-Transit Inventory) at any location other than those
locations listed for such Loan Party on Schedule I, (ii) otherwise change or add to any of
such locations, or (iii) change the location of its chief executive office from the location
identified in Schedule I, unless it gives the Agent at least thirty (30) days prior written
notice thereof and executes any and all financing statements and other documents that the Agent
reasonably requests in connection therewith.
5. JURISDICTION OF ORGANIZATION.
As to each Loan Party, Schedule II hereto identifies such Loan Party’s name as of the
Closing Date as it appears in official filings in the state of its incorporation or other
organization, the type of entity of such Loan Party (including corporation, partnership, limited
partnership or limited liability company), organizational identification number issued by such Loan
Party’s state of incorporation or organization or a statement that no such number has been issued
and the jurisdiction in which such Loan Party is incorporated or organized.
6. TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL.
Each Loan Party represents and warrants to the Agent and the other Secured Parties that each
Loan Party has rights in and the power to transfer all of the Collateral free and clear of all
Liens whatsoever, except for Permitted Liens and agrees that the Agent’s Liens in the Collateral
will not be subject to any prior Lien except for those Liens identified in clauses (a), (c),
(d), (g), (i) or (j) of the definition of Permitted Liens (and, in the case of clause (i), to
the extent such Liens were filed prior to December 28, 2001 for those Liens identified in
Schedule A-1 to the Term Loan Agreement) and in the case of clause (j), to the extent the
priority of such Liens is consistent with that provided in the Additional Debt Intercreditor
Agreement, to the extent then in effect; and (c) each Loan Party will use, store, and maintain the
Collateral, for the benefit of the Secured Parties, with all reasonable care and will use such
Collateral for lawful purposes only.
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7. RESERVED.
8. INVENTORY; PERPETUAL INVENTORY.
Each Loan Party represents and warrants to the Agent and the other Secured Parties and agrees
with the Agent and the other Secured Parties that all of the Inventory owned by Loan Parties is and
will be held for sale or lease, or is and will be furnished in connection with the rendition of
services, in the ordinary course of a Loan Party’s business, and is and will be fit for such
purposes. Each Loan Party agrees that all Inventory produced by it in the United States of America
will be produced in accordance with the Federal Fair Labor Standards Act of 1938 and all rules,
regulations, and orders thereunder. Loan Parties will conduct a physical count of the Inventory at
least once per Fiscal Year, and after and during the continuation of an Event of Default,
at such other times as Agent requests in writing. Each Loan Party will maintain a perpetual
inventory reporting system at all times.
9. EQUIPMENT.
Loan Parties shall promptly inform Agent of any material additions to or deletions from the
Equipment. Loan Parties shall not permit any Equipment to become a fixture with respect to real
property or to become an accession with respect to other personal property with respect to which
real or personal property Agent does not have a Lien.
10. DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER.
Each Loan Party represents and warrants to Agent and the other Secured Parties that (a) all
material Documents, Instruments, and Chattel Paper describing, evidencing, or constituting
Collateral, and all signatures and endorsements thereon, are and will be complete, valid, and
genuine, and (b) all Goods evidenced by such Documents, Instruments, Letter-of-Credit Rights and
Chattel Paper are and will be owned by a Loan Party, free and clear of all Liens other than
Permitted Liens.
11. VOTING OF INVESTMENT PROPERTY.
(a) Until Agent shall have delivered a notice contemplated by clause (b) below, each Loan
Party shall be entitled to vote or consent with respect to the Investment Property owned by it in
any manner not inconsistent with the terms of any Loan Document, and Agent will, if so requested,
execute appropriate revocable proxies therefor.
(b) Upon the occurrence and during the continuance of an Event of Default, if and to the
extent that Agent shall so notify in writing the Loan Party pledging the Investment Property in
question, only Agent shall be entitled to vote or consent or take any other action with respect to
such Investment Property (and such Loan Party will, if so requested, execute appropriate proxies
therefor).
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12. POWER OF ATTORNEY.
Each Loan Party hereby appoints the Agent and the Agent’s designee as such Loan Party’s
attorney, with power: (a) to endorse such Loan Party’s name on any checks, notes, acceptances,
money orders, or other forms of payment or security that come into the Agent’s or any other Secured
Party’s possession; (b) to sign such Loan Party’s name on any invoice, xxxx of lading, warehouse
receipt or other negotiable or non-negotiable Document constituting Collateral, on drafts against
customers, on assignments of Accounts, on notices of assignment, financing statements and other
public records and to file any such financing statements by electronic means with or without a
signature as authorized or required by applicable law or filing procedure; (c) so long as any Event
of Default has occurred and is continuing, to notify the post office authorities to change the
address for delivery of such Loan Party’s mail to an address designated by the Agent and to
receive, open and dispose of all mail addressed to Loan Parties; (d) to send requests for
verification of Accounts to customers or Account Debtors; (e) upon the occurrence and during the
continuance of an Event of Default, to complete in such Loan Party’s name or the Agent’s name, any
order, sale or transaction, obtain the necessary Documents in connection therewith, and collect the
proceeds thereof; (f) to clear Inventory through customs in such Loan Party’s name, the Agent’s
name or the name of the Agent’s designee, and to sign and deliver to customs officials powers of
attorney in such Loan Party’s name for such purpose; (g) to the extent that a Loan Party’s
authorization given in Section 3(g) of this Agreement is not sufficient, to file such
financing statements with respect to this Agreement, with or without such Loan Party’s signature,
or to file a photocopy of this Agreement in substitution for a financing statement, as the Agent
may deem appropriate and to execute in such Loan Party’s name such financing statements and
amendments thereto and continuation statements which may require such Loan Party’s signature; and
(h) to do all things necessary to carry out the Term Loan Agreement and this Agreement. Each Loan
Party ratifies and approves all actions of such attorney taken in accordance with the terms hereof
and the Term Loan Agreement. None of the Secured Parties or the Agent nor their attorneys will be
liable for any acts or omissions or for any error of judgment or mistake of fact or law except for
their gross negligence or willful misconduct. This power, being coupled with an interest, is
irrevocable until the Term Loan Agreement and Commitments thereunder have been terminated and the
Obligations have been paid finally and in full.
13. THE AGENT’S AND SECURED PARTIES’ RIGHTS, DUTIES AND LIABILITIES.
(a) Loan Parties assume all responsibility and liability arising from or relating to the use,
sale, license or other disposition of the Collateral. The Obligations shall not be affected by any
failure of the Agent or any other Secured Party to take any steps to perfect the Agent’s Liens or
to collect or realize upon the Collateral, nor shall loss of or damage to the Collateral release
the Borrowers or any other Loan Party from any of the Obligations. Following the occurrence and
during the continuation of an Event of Default, the Agent may (but shall not be required to), and
at the direction of the Required Lenders shall, without notice to or consent from Loan Parties, xxx
upon or otherwise
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collect, extend the time for payment of, modify or amend the terms of, compromise or settle
for cash, credit, or otherwise upon any terms, grant other indulgences, extensions, renewals,
compositions, or releases, and take or omit to take any other action with respect to the
Collateral, any security therefor, any agreement relating thereto, any insurance applicable
thereto, or any Person liable directly or indirectly in connection with any of the foregoing,
without discharging or otherwise affecting the liability of any Loan Party for the Obligations or
under any Loan Document or any other agreement now or hereafter existing between the Agent and/or
any other Secured Party and the Borrowers and any other Loan Party, provided,
however, that any amounts received pursuant to any actions taken pursuant to this
Section 13(a) shall be credited, net of costs of collection, to the Obligations in
accordance with the terms of the Term Loan Agreement.
(b) It is expressly agreed by Loan Parties that, anything herein to the contrary
notwithstanding, each Loan Party shall remain liable under each of its contracts and each of its
licenses (to the extent such contracts and licenses remain in effect) to observe and perform all
the conditions and obligations to be observed and performed by it thereunder. Neither Agent nor any
other Secured Party shall have any obligation or liability under any contract or license by reason
of or arising out of this Agreement or the granting herein of a Lien thereon or the receipt by
Agent or any other Secured Party of any payment relating to any contract or license pursuant
hereto, except where Agent has expressly agreed in writing otherwise. Neither Agent nor any other
Secured Party shall be required or obligated in any manner to perform or fulfill any of the
obligations of any Loan Party under or pursuant to any contract or license, or to make any payment,
or to make any inquiry as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any contract or license, or to present or file
any claims, or to take any action to collect or enforce any performance or the payment of any
amounts which may have been assigned to it or to which it may be entitled at any time or times.
(c) Agent may at any time after an Event of Default has occurred and be continuing (or if any
rights of set-off (other than set-offs against an Account arising under the contract giving rise to
the same Account) or contra accounts may be asserted with respect to the following), without prior
notice to Loan Parties, notify Account Debtors, and other Persons obligated on the Collateral that
Agent has a security interest therein, and that payments shall be made directly to Agent, for
itself and the benefit of Secured Parties. Upon the request of Agent, each Loan Party shall so
notify their respective Account Debtors and other Persons obligated on Collateral. Once any such
notice has been given to any Account Debtor or other Person obligated on the Collateral, Loan
Parties shall not give any contrary instructions to such Account Debtor or other Person without
Agent’s prior written consent.
(d) Agent may at any time, in Agent’s own name or in the name of a Loan Party, communicate
with Account Debtors, parties to contracts and Loan Parties in respect of Instruments to verify
with such Persons, to Agent’s satisfaction, the existence, amount and terms of Accounts, Payment
Intangibles, Instruments or Chattel Paper. If a Default or Event of Default shall have occurred and
be continuing, Loan Parties, at their own expense, shall cause the independent certified public
accountants
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then engaged by such Loan Parties to prepare and deliver to Agent and each Lender at any time
and from time to time, promptly upon Agent’s request, the following reports with respect to each
Loan Party: (i) a reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv) a test verification of such Accounts as Agent may request. Loan Parties, at
their own expense, shall deliver to Agent the results of each physical verification, if any, which
any Loan Party may in its discretion have made, or caused any other Person to have made on its
behalf, of all or any portion of its Inventory.
14. PATENT, TRADEMARK AND COPYRIGHT COLLATERAL.
(a) Loan Parties do not have any interest in, or title to, any issued patent, registered
trademark or copyright except as set forth in Schedule III hereto. This Agreement is
effective to create a valid and continuing Lien on and, upon filing of notifications of Agent’s
Liens with the United States Patent and Trademark Office, perfected Liens in favor of Agent with
respect to each Loan Party’s issued patents and registered trademarks and such perfected Liens are
enforceable as such as against any and all creditors of and purchasers from Loan Parties. Upon
filing of notifications of Agent’s Liens with the United States Patent and Trademark Office and the
filing of appropriate financing statements, all actions necessary or desirable to protect and
perfect Agent’s Lien on the issued patents or registered trademarks of each Loan Party shall have
been duly taken.
(b) The applicable Loan Party shall notify Agent immediately if it knows or has reason to know
that any application or registration relating to any patent or trademark (now or hereafter
existing) may become abandoned or dedicated, or subject to any adverse determination (including
such determination in the United States Patent and Trademark Office or any court) regarding a Loan
Party’s ownership of any material patent, trademark or copyright, its right to register the same,
or to keep and maintain the same.
(c) Within forty-five (45) days after the last day of each Fiscal Quarter of Loan Parties,
Loan Parties shall deliver to the Agent a schedule setting forth all material applications for the
registration of any patent, trademark or copyright with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency and, upon request of
Agent, Loan Parties shall execute and deliver any and all patent and trademark security agreements
and all copyright security agreements as Agent may request to evidence Agent’s Lien on such
patents, trademarks or copyrights, and the General Intangibles of any Loan Party relating thereto
or represented thereby.
(d) Loan Parties shall take all actions reasonably necessary to maintain and pursue each
application, to obtain the relevant registration and to maintain the registration of each of the
patents, trademarks and copyrights material to the conduct of a Loan Party’s business or operations
(now or hereafter existing), including the filing of applications for renewal, affidavits of use,
affidavits of noncontestability and opposition and interference and cancellation proceedings,
unless the Loan Parties shall determine
that such patent, trademark or copyright is not material to the conduct of a Loan Party’s
business.
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(e) In the event that any of the patent, trademark or copyright Collateral material to the
conduct of a Loan Party’s business or operations is infringed upon, or misappropriated or diluted
by a third party, Loan Parties shall notify Agent promptly after any Loan Party learns thereof.
Each Loan Party shall, unless it shall reasonably determine that such patent, trademark or
copyright Collateral is not material to the conduct of such Loan Party’s business or operations,
promptly attempt to negotiate with such infringing party or xxx for infringement, misappropriation
or dilution and to recover any and all damages for such infringement, misappropriation or dilution,
and, upon the occurrence and during the continuance of an Event of Default, shall take such other
actions as Agent shall deem appropriate under the circumstances to protect such patent, trademark
or copyright Collateral.
15. INDEMNIFICATION.
In any suit, proceeding or action brought by Agent or any other Secured Party relating to any
Collateral for any sum owing with respect thereto or to enforce any rights or claims with respect
thereto, Loan Parties, jointly and severally, will save, indemnify and keep Agent and the other
Secured Parties harmless from and against all expense (including reasonable attorneys’ fees and
expenses), loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or
reduction of liability whatsoever of the Account Debtor or other Person obligated on the
Collateral, arising out of a breach by a Loan Party of any obligation thereunder or arising out of
any other agreement, indebtedness or liability at any time owing to, or in favor of, such Loan
Party or its successors from a Loan Party, except in the case of Agent or any other Secured Party,
to the extent such expense, loss, or damage is attributable solely to the gross negligence or
willful misconduct of Agent or such other Secured Party as finally determined by a court of
competent jurisdiction. All such obligations of Loan Parties shall be and remain enforceable
against and only against Loan Parties and shall not be enforceable against Agent or any other
Secured Party.
16. [RESERVED].
17. NOTICE REGARDING COLLATERAL.
Loan Parties will advise Agent promptly, in reasonable detail, (i) of any Lien (other than
Permitted Liens) or material claim made or asserted against any of the Collateral, and (ii) of the
occurrence of any other event which would have a Material Adverse Effect.
18. REMEDIES; RIGHTS UPON DEFAULT.
(a) In addition to all other rights and remedies granted to it under this Agreement, the Term
Loan Agreement, the other Loan Documents and under any other instrument or agreement securing,
evidencing or relating to any of the Obligations,
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if any Event of Default shall have occurred and be continuing, Agent may exercise all rights
and remedies of a secured party under the UCC. Without limiting the generality of the foregoing,
Loan Parties expressly agree that in any such event Agent, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon a Loan Party or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent permitted by the UCC
and other applicable law), may forthwith enter upon the premises of any Loan Party where any
Collateral is located through self-help, without judicial process, without first obtaining a final
judgment or giving a Loan Party or any other Person notice and opportunity for a hearing on Agent’s
claim or action and may collect, receive, assemble, process, appropriate and realize upon the
Collateral, or any part thereof, and may forthwith sell, lease, license, assign, give an option or
options to purchase, or sell or otherwise dispose of and deliver said Collateral (or contract to do
so), or any part thereof, in one or more parcels at a public or private sale or sales, at any
exchange at such prices as it may deem acceptable, for cash or on credit or for future delivery
without assumption of any credit risk. Agent or any other Secured Party shall have the right upon
any such public sale or sales and, to the extent permitted by law, upon any such private sale or
sales, to purchase for the benefit of Agent and the other Secured Parties, the whole or any part of
said Collateral so sold, free of any right or equity of redemption, which equity of redemption each
Loan Party hereby releases. Such sales may be adjourned and continued from time to time with or
without notice. Agent shall have the right to conduct such sales on the premises of any Loan Party
or elsewhere and shall have the right to use any Loan Party’s premises without charge for such time
or times as Agent deems necessary or advisable.
(b) Upon the occurrence and during the continuance of an Event of Default, each Loan Party
further agrees, at Agent’s request, to assemble the Collateral and make it available to Agent at a
place or places designated by Agent which are reasonably convenient to Agent and Loan Parties,
whether at a Loan Party’s premises or elsewhere. Until Agent is able to effect a sale, lease, or
other disposition of Collateral, Agent shall have the right to hold or use Collateral, or any part
thereof, to the extent that it deems appropriate for the purpose of preserving Collateral or its
value or for any other purpose deemed appropriate by Agent. Agent shall have no obligation to any
Loan Party to maintain or preserve the rights of a Loan Party as against third parties with respect
to Collateral while Collateral is in the possession of Agent. Upon the occurrence and during the
continuance of an Event of Default, Agent may, if it so elects, seek the appointment of one or more
receivers or other custodians to take possession of any or all of the Collateral and to enforce any
of Agent’s remedies (for the benefit of Agent and the other Secured Parties) with respect to any
such appointment without prior notice or hearing as to any such appointment. Upon the occurrence
and during the continuance of an Event of Default, Agent shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale to the Obligations as provided in
the Term Loan Agreement, and only after so paying over such net proceeds, and after the payment by
Agent of any other amount required by any provision of law, need Agent account for the surplus, if
any, to Loan Parties. Upon the occurrence and during the continuance of an Event of Default, to the
maximum extent permitted by
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applicable law, each Loan Party waives all claims, damages, and demands against Agent or any
other Secured Party arising out of the repossession, retention or sale of the Collateral except
such as arise solely out of the gross negligence or willful misconduct of Agent or such other
Secured Party as finally determined by a court of competent jurisdiction. Each Loan Party agrees
that ten (10) days prior notice by Agent of the time and place of any public sale or of the time
after which a private sale may take place is reasonable notification of such matters. Loan Parties
shall remain jointly and severally liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all Obligations, including reasonable
attorneys’ fees or other expenses incurred by Agent or any other Secured Party to collect such
deficiency.
(c) Except as otherwise specifically provided herein, each Loan Party hereby waives
presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of
any kind in connection with this Agreement or any Collateral.
(d) The net cash proceeds resulting from the collection, liquidation, sale, lease or other
disposition of the Collateral shall be applied first to the expenses (including all attorneys’
fees) of retaking, holding, storing, processing and preparing for sale, selling, collecting,
liquidating and the like, and then to the satisfaction of all Obligations in accordance with the
terms of the Term Loan Agreement. Each Loan Party shall be liable to Agent and the other Secured
Parties and shall pay to Agent and the other Secured Parties, on demand, any deficiency which may
remain after such sale, disposition, collection or liquidation of the Collateral. Agent shall remit
to such Loan Parties or other Person entitled thereto any surplus remaining after this Agreement
has been terminated in accordance with Section 23(f) hereof.
(e) If an Event of Default under the Term Loan Agreement has occurred and is continuing: (i)
Agent shall have for the benefit of the Secured Parties, in addition to all other rights of Agent
and the other Secured Parties, the rights and remedies of a secured party under the Loan Documents
and the UCC; and (ii) Agent may sell and deliver any Collateral at public or private sales, for
cash, upon credit or otherwise, at such prices and upon such terms as Agent deems advisable, in its
sole discretion, and may, if Agent deems it reasonable, postpone or adjourn any sale of the
Collateral by an announcement at the time and place of sale or of such postponed or adjourned sale
without giving a new notice of sale. Without in any way requiring notice to be given in the
following manner, each Loan Party agrees that any notice by Agent of sale, disposition or other
intended action hereunder or in connection herewith, whether required by the UCC or otherwise,
shall constitute reasonable notice to each Loan Party if such notice is mailed by registered or
certified mail, return receipt requested, postage prepaid, or is delivered personally against
receipt, at least ten (10) days prior to such action to ACP’s address specified in or pursuant to
Section 14.8 of the Term Loan Agreement. If any Collateral is sold on terms other than payment in
full at the time of sale, no credit shall be given against the Obligations until Agent or the other
Secured Parties receive payment, and if the buyer defaults in payment, Agent may resell the
Collateral without further notice to the Loan Parties. Agent is hereby granted a license or other
right to use, without charge, each Loan Party’s labels, patents, copyrights, name,
trade secrets, trade names, trademarks, and advertising matter, or any similar property, in
completing production of, advertising or selling any Collateral, and each Loan Party’s rights under
all licenses and all franchise agreements shall inure to Agent’s benefit for such purpose.
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19. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY.
For the purpose of enabling the Agent to exercise rights and remedies under Section 18
hereof (including, without limiting the terms of Section 18 hereof, in order to take
possession of, hold, preserve, process, assemble, prepare for sale, market for sale, sell or
otherwise dispose of Collateral), solely for such purpose and solely during such time as Agent
shall be lawfully entitled to exercise such rights and remedies, each Loan Party hereby grants to
Agent, for the benefit of Agent and the other Secured Parties, a nonexclusive license (which shall
be irrevocable for so long as any Obligations remain outstanding and which shall be exercisable
without payment of royalty or other compensation to Loan Parties or any other Person) to use,
license or sublicense any intellectual property now owned or hereafter acquired by a Loan Party,
and wherever the same may be located, and including in such license 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.
20. LIMITATION ON AGENT’S AND SECURED PARTIES’ DUTY IN RESPECT OF
COLLATERAL.
The Agent and each other Secured Party shall use reasonable care with respect to the
Collateral in its possession or under its control. Neither the Agent nor any other Secured Party
shall have any other duty as to any Collateral in its possession or control or in the possession or
control of any agent or nominee of the Agent or such other Secured Party, or any income thereon or
as to the preservation of rights against prior parties or any other rights pertaining thereto.
21. AMENDMENT AND RESTATEMENT
This Agreement amends and restates the Original Security Agreement and is not intended to
create or result in a novation or accord and satisfaction. The terms of the Original Security
Agreement, together with all rights, duties, remedies and covenants thereunder and the grant of
each security interest thereunder, shall continue in full force and effect in this Agreement, which
shall constitute the entire understanding of the parties hereto with respect to the subject matter
hereof. This Agreement is intended to confirm and continue in favor of Agent and the other Secured
Parties the security interests granted pursuant to the Original Security Agreement in the
“Collateral” described therein, all of which security interests shall continue in full force and
effect pursuant to this Agreement, and this Agreement is not intended to grant a new security
interest in any Collateral with respect to which a security interest was previously granted by Loan
Parties pursuant to the Original Security Agreement. If and to the extent that any types or items
of property included within the definition of “Collateral” as defined in this Agreement is broader
or more expansive than the description of “Collateral” as defined in the Original Security
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Agreement or the Collateral as described herein includes property in which a Loan Party had
not previously granted a security interest to Agent under the Original Security Agreement, then
this Agreement shall grant a new security interest in such additional types or items of property.
22. DELIVERY OF COLLATERAL; ADDITIONAL DEBT INTERCREDITOR
AGREEMENT.
Notwithstanding anything to the contrary set forth herein, to the extent that Agent’s security
interest in any tangible Collateral consisting of negotiable Documents, certificated securities,
Chattel Paper and Instruments granted hereunder is perfected in favor of, or for the benefit of,
Agent by the delivery of any such Collateral to another Person pursuant to Section 10 of the
Additional Debt Intercreditor Agreement, then for so long as such perfection is maintained
thereunder, and such Additional Debt Intercreditor Agreement remains in effect, no separate
delivery to Agent of such Collateral shall be required hereunder. In addition to the foregoing,
all terms, conditions and provisions of the Agreement shall be subject to the Additional Debt
Intercreditor Agreement, so long as the Additional Debt Intercreditor Agreement remains in effect,
and in the event that any of the terms or provisions of this Agreement conflict with the terms or
provisions of the Additional Debt Intercreditor Agreement, (and at such time the Additional Debt
Intercreditor Agreement remains in effect), then the terms and provisions of the Additional Debt
Intercreditor Agreement shall control pursuant to Section 21 of the Additional Debt Intercreditor
Agreement.
23. MISCELLANEOUS.
(a) Reinstatement. This Agreement shall remain in full force and effect and continue
to be effective should any petition be filed by or against a Borrower or any other Loan Party for
liquidation or reorganization, should a Borrower or any other Loan Party become insolvent or make
an assignment for the benefit of any creditor or creditors or should a receiver or trustee be
appointed for all or any significant part of any Loan Party’s assets, and shall continue to be
effective or be reinstated, as the case may be, if at any time payment and performance of the
Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount,
or must otherwise be restored or returned by any obligee of the Obligations, whether as a “voidable
preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had
not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored
or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
(b) Notices. Except as otherwise provided herein, whenever it is provided herein that
any notice, demand, request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by any other party, or whenever any of the parties
desires to give and serve upon any other party any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other communication shall be
in writing and shall be
given in the manner, and deemed received, as provided for in the Term Loan Agreement and in
Section 18(e) hereof.
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(c) Severability. Whenever possible, each provision of this Agreement shall be
interpreted in a manner as to be effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement. This Agreement is to be read,
construed and applied together with the Term Loan Agreement and the other Loan Documents which,
taken together, set forth the complete understanding and agreement of the Agent, the other Secured
Parties and Loan Parties with respect to the matters referred to herein and therein.
(d) No Waiver; Cumulative Remedies. Neither the Agent nor any other Secured Party
shall by any act, delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by the Agent and then
only to the extent therein set forth. A waiver by the Agent of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which the Agent would otherwise
have had on any future occasion. No failure to exercise nor any delay in exercising on the part of
the Agent or any other Secured Party, any right, power or privilege hereunder, shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies hereunder provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies provided by law. None of the terms
or provisions of this Agreement may be waived, altered, modified or amended except by an instrument
in writing, duly executed by the Agent and Loan Parties.
(e) Limitation by Law. All rights, remedies and powers provided in this Agreement may
be exercised only to the extent that the exercise thereof does not violate any applicable provision
of law, and all the provisions of this Agreement are intended to be subject to all applicable
mandatory provisions of law that may be controlling in accordance with Section 23(c) above.
(f) Termination of this Agreement. Subject to Section 23(a) hereof, this
Agreement shall terminate upon the termination of all Commitments and the payment in full of all
other Obligations (other than contingent Obligations for indemnification as to which no claim has
been asserted and to the extent necessary to satisfy the requirements of the last sentence of
Section 18(d) hereof). Notwithstanding any termination of this Agreement, such termination
shall not operate to terminate any indemnification obligation of any Loan Party under this
Agreement or any of the other Loan Documents, all of which indemnification obligations shall
survive any such termination.
(g) Successors and Assigns. This Agreement shall be binding upon Loan Parties and
their respective successors and assigns and shall inure to the benefit of the Agent and the other
Secured Parties (including each Person who hereafter becomes a
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Lender under the Term Loan Agreement) and their respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other dispositions of any agreement
governing or any instrument evidencing the Obligations or any portion thereof or interest therein
shall in any manner affect the security interests and Liens granted hereunder to the Agent, for the
benefit of the Agent and the other Secured Parties. No Loan Party may assign, sell, hypothecate or
otherwise transfer any interest in or obligation under this Agreement.
(h) Counterparts. This Agreement may be authenticated in any number of separate
counterparts, including facsimile copies, each of which shall collectively and separately
constitute one and the same agreement. This Agreement may be authenticated by manual signature,
facsimile or, if approved in writing by Agent, electronic means, all of which shall be equally
valid.
(i) Release. At the request and sole expense of any Loan Party following any
termination of this Agreement as set forth in Section 23(f) of this Agreement, the Secured
Parties shall deliver to such Loan Party any Collateral held by the Secured Parties hereunder and
execute and deliver to such Loan Party such documents as such Loan Party shall reasonably request
to evidence such termination.
If any of the Collateral shall be sold, transferred or otherwise disposed of by any Loan Party
to a Person other than a Loan Party in a transaction expressly permitted by the Term Loan
Agreement, the Secured Parties, at the request and sole expense of such Loan Party, shall execute
and deliver to such Loan Party all releases or other documents reasonably necessary or desirable
for the release of the Liens created hereby on such Collateral; provided, that Loan Parties
shall have delivered to the Secured Parties at least five (5) Business Days prior to the date of
the proposed release, a written request for release identifying the relevant Collateral and the
terms of the sale or other disposition in reasonable detail, including the price thereof and any
expenses in connection therewith, together with a certification by Loan Parties stating that such
transaction has satisfied the conditions of, and is otherwise in compliance with, the Term Loan
Agreement and the other Loan Documents.
Upon the written request and at the sole expense of a Loan Party, Agent shall release such
Loan Party from its obligations hereunder in the event that all the capital stock of such Loan
Party has been sold, transferred or otherwise disposed of to a person other than another Loan Party
pursuant to a transaction permitted by the Credit Agreement. Notwithstanding any such release of a
Loan Party from this Agreement, unless otherwise agreed to by Agent in writing, all of the
indemnification provisions of this Agreement and the other Loan Documents shall survive and
continue in full force and effect with respect to such Loan Party.
(j) Governing Law; Forum; Service of Process. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED
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IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH LOAN PARTY
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN STATES OF NEW YORK, FLORIDA
OR GEORGIA SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN LOAN PARTIES, AGENT AND THE OTHER SECURED PARTIES PERTAINING TO THIS AGREEMENT OR TO ANY
MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENT, THE OTHER SECURED PARTIES AND LOAN PARTIES ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE STATES OF NEW
YORK, FLORIDA OR GEORGIA AND, PROVIDED, FURTHER, NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE
A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT OR ANY OTHER SECURED PARTY. EACH LOAN PARTY
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND EACH LOAN PARTY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
EACH LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED
IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO LOAN PARTIES AT THE ADDRESS FOR BORROWER
AGENT SET FORTH IN THE TERM LOAN AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID. EACH LOAN PARTY HEREBY IRREVOCABLY DESIGNATES AND APPOINTS BORROWER AGENT AS SUCH
LOAN PARTY’S AGENT FOR SERVICE OF PROCESS IN ANY ACTION, SUIT OR OTHER PROCEEDING INITIATED BY
AGENT OR ANY OTHER SECURED PARTY AGAINST SUCH LOAN PARTY.
(k) Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX
FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT
PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION
RULES), THE PARTIES DESIRE THAT DISPUTES ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
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THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE, AMONG AGENT, THE OTHER SECURED PARTIES, AND LOAN PARTIES ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.
(l) Section Titles. The Section titles contained in this Agreement are and shall be
without substantive meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto.
(m) No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
(n) Advice of Counsel. Each of the parties represents to each other party hereto that
it has discussed this Agreement, and specifically, the provisions of Section 23(i) and
Section 23(j) hereof, with its counsel.
(o) Benefit of Secured Parties. All Liens granted or contemplated hereby shall be for
the benefit of Agent, Lenders and the other Secured Parties, and all proceeds or payments realized
from Collateral in accordance herewith shall be applied to the Obligations in accordance with the
terms of the Term Loan Agreement.
[Signatures commence on following page]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and
delivered by its duly authorized officer as of the date first set forth above.
| BORROWERS: APPLICA INCORPORATED, a Florida corporation |
||||
| By: | /s/ Xxxxx Xxxxxxxxx | |||
| Name: | Xxxxx Xxxxxxxxx | |||
| Title: | CEO and President | |||
| SALTON, INC., a Delaware corporation |
||||
| By: | /s/ Xxxxx Xxxxxxxxx | |||
| Name: | Xxxxx Xxxxxxxxx | |||
| Title: | CEO and President | |||
| APPLICA CONSUMER PRODUCTS, INC., a Florida corporation |
||||
| By: | /s/ Xxxxx Xxxxxxxxx | |||
| Name: | Xxxxx Xxxxxxxxx | |||
| Title: | CEO and President | |||
| APN HOLDING COMPANY, INC., a Delaware corporation (and successor-by-merger to SFP Merger Sub, Inc.) |
||||
| By: | /s/ Xxxxx Xxxxxxxxx | |||
| Name: | Xxxxx Xxxxxxxxx | |||
| Title: | CEO and President | |||
| APPLICA AMERICAS, INC., a Delaware corporation |
||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxxxxx | |||
| Title: | Corporate Secretary | |||
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| HP DELAWARE, INC., a Delaware corporation |
||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxxxxx | |||
| Title: | Corporate Secretary | |||
| HPG LLC, a Delaware limited liability company |
||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxxxxx | |||
| Title: | Corporate Secretary | |||
| APPLICA MEXICO HOLDINGS,
INC., a Delaware corporation |
||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxxxxx | |||
| Title: | Corporate Secretary | |||
| SONEX INTERNATIONAL
CORPORATION, a Delaware corporation |
||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxxxxx | |||
| Title: | Corporate Secretary | |||
| HOME CREATIONS DIRECT LTD., a
Delaware corporation |
||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxxxxx | |||
| Title: | Corporate Secretary | |||
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| SALTON HOLDINGS, INC., a Delaware corporation |
||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxxxxx | |||
| Title: | Corporate Secretary | |||
| ICEBOX, LLC, an Illinois
limited liability company |
||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxxxxx | |||
| Title: | Corporate Secretary | |||
| TOASTMASTER INC., a Missouri corporation |
||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxxxxx | |||
| Title: | Corporate Secretary | |||
| FAMILY PRODUCTS INC., a Delaware corporation |
||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxxxxx | |||
| Title: | Corporate Secretary | |||
| ONE:ONE COFFEE LLC, a Delaware limited liability company |
||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxxxxx | |||
| Title: | Corporate Secretary | |||
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| SALTON TOASTMASTER LOGISTICS
LLC, a Delaware limited liability company |
||||
| By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxxxxx | |||
| Title: | Corporate Secretary | |||
| AGENT: HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD., as Agent |
||||
| By: | /s/ Xxxxxxx X. Xxxxx, Xx. | |||
| Name: | Xxxxxxx X. Xxxxx, Xx. | |||
| Title: | Executive Vice President-General Counsel & Secretary |
|||
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