EXHIBIT B
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of February 20,
1996, made by [HECHINGER STORES COMPANY] [HECHINGER
STORES EAST COAST COMPANY], a Delaware corporation (the
"Grantor"), in favor of THE CIT GROUP/BUSINESS CREDIT,
INC., as agent for the Lenders parties to the Credit
Agreement referred to below (in such capacity, the
"Agent").
W I T N E S S E T H :
WHEREAS, the Grantor, [HECHINGER STORES
COMPANY] [HECHINGER STORES EAST COAST COMPANY] (each a
Borrower and collectively, the Borrowers ) the Agent
and certain financial institutions from time to time
party thereto (the "Lenders") are parties to a Revolving
Credit Agreement, dated as of February 20, 1996 (such
Agreement, as amended or otherwise modified from time to
time, being hereinafter referred to as the "Credit
Agreement");
WHEREAS, pursuant to the Credit Agreement, the
Lenders have agreed to make loans (the "Loans") to the
Borrowers in an aggregate principal amount at any one
time outstanding not to exceed $200,000,000, which may
include letters of credit (the "Letters of Credit")
issued with the assistance of the Agent and the Lenders
for the account of the Borrowers;
WHEREAS, it is a condition precedent to the
Lenders making any Loan or assisting the Borrowers in
obtaining the issuance of any Letter of Credit pursuant
to the Credit Agreement that the Grantor shall have
executed and delivered to the Agent a security agreement
providing for the grant to the Agent for the benefit of
the Lenders of a security interest in certain inventory
of the Grantor;
NOW, THEREFORE, in consideration of the
premises and the agreements herein and in order to induce
the Lenders to make and maintain the Loans and to assist
the Grantor in obtaining the issuance of Letters of
Credit pursuant to the Credit Agreement, the Grantor
hereby agrees with the Agent as follows:
SECTION 1. Definitions. Reference is hereby
made to the Credit Agreement for a statement of the terms
thereof. All terms used in this Agreement which are
defined in the Credit Agreement or in Article 9 of the
Uniform Commercial Code (the "Code") currently in effect
in the State of New York and which are not otherwise
defined herein shall have the same meanings herein as set
forth therein.
SECTION 2. Grant of Security Interest. As
collateral security for all of the Obligations (as
defined in Section 3 hereof), the Grantor hereby pledges
and assigns to the Agent, and grants to the Agent for the
benefit of the Lenders a continuing security interest in
the following personal property of the Grantor, wherever
located and whether now or hereafter existing and whether
now owned or hereafter acquired (the "Collateral"):
(a) all inventory of any kind, wherever
located and whether now or hereafter existing and whether
now owned or hereafter acquired (including, without
limitation, all types of goods, property and other
assets, raw, in process and finished, and all other
inventory, merchandise, goods and other tangible personal
property that are held for sale by the Grantor), all
materials used or consumed in the business of the
Grantor, goods returned to or repossessed by the Grantor,
and goods in which the Grantor has an interest in mass or
in joint or other interest or right of any kind
(including consigned goods or goods being processed), all
accessions thereto and products thereof and all packing
and shipping materials excluding, however, any such
inventory, merchandise, goods and other tangible personal
property described herein which was purchased or acquired
by the Grantor on a date that occurred on or before
August 20, 1994 (hereinafter collectively referred to as
the Inventory );
(b) the books and records of the Grantor
relating to the foregoing Collateral, including, without
limitation, all ledgers, records, computer programs,
software, printouts and other similar computer materials,
credit files, correspondence and advertising materials,
in each case indicating, summarizing or evidencing any of
the Collateral;
(c) all payments received by the Grantor
pursuant to the Business Revolving Charge Program
Agreement dated as of April 3, 1992 (the "GECC
Agreement") by and among Hechinger Company, Home Quarters
Warehouse, Inc. and General Electric Capital Corporation
("GECC"), the Credit Card Program Agreement dated as of
February 5, 1992 (the "Monogram Agreement") by and among
Hechinger Company, Home Quarters Warehouse, Inc. and
Monogram Credit Card Bank of Georgia ("Monogram") and all
other credit card servicing and similar agreements to
which the Debtor is a party; and
(d) all proceeds of any and all of the
foregoing Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not
the Agent is the loss payee thereof), and any indemnity,
warranty or guaranty payable by reason of loss or damage
to or otherwise with respect to any of the foregoing
Collateral,
in each case, howsoever the Grantor s interest therein
may arise or appear (whether by ownership, security
interest, claim or otherwise); provided that, nothing
hereunder constitutes or shall be deemed to constitute
the grant of a security interest in favor of the Agent
with respect to any of the Grantor's interest in any
contract right, any license agreement, any lease
pertaining to personal property, the collateral described
in Section 13.09 of the GECC Agreement, the collateral
described in Section 7.04 of the Monogram Agreement, and
the right to receive payments from either GECC or
Monogram pursuant to the GECC Agreement and the Monogram
Agreement (each such contract right, license agreement,
lease pertaining to personal property and collateral
being hereinafter referred to as "Excluded Property"), if
the granting of a security interest therein by the
Grantor to the Agent is prohibited by the terms and
provisions of the written agreement, document or
instrument creating, evidencing or granting a security
interest in such Excluded Property or rights related
thereto, and either (i) such agreement, document or
instrument was entered into prior to the date of this
Agreement, or (ii) such agreement, document or instrument
is entered into after the date hereof and the Grantor
delivers to the Agent a copy of such agreement, document
or instrument, provided, however, that (1) if and when
the prohibition which prevents the granting by the
Grantor to the Agent of a security interest in any
Excluded Property is removed or otherwise terminated, the
Agent will be deemed to have, and at all times to have
had, a security interest in such Excluded Property, and
(2) the Grantor shall use its reasonable efforts to
exclude from any written agreement, document or
instrument entered into on or after the date of this
Agreement creating, evidencing or granting a security
interest in any contract right, license, lease or
collateral, any prohibition against the granting by the
Grantor to the Agent of a security interest therein to
the extent that such exclusion or such efforts would not
result in such agreement, document or instrument
containing terms which are less favorable to the Grantor
than would be the case but for such exclusion or such
efforts or would result in a decision by the Persons
proposed to be parties to such agreement, document or
instrument not to enter into such agreement, document or
instrument. Notwithstanding anything set forth herein to
the contrary, the Agent will be deemed to have, and at
all times to have had, a security interest in the
proceeds of such Excluded Property.
SECTION 3. Security for Obligations. The
security interest created hereby in the Collateral
constitutes continuing collateral security for all of the
following obligations, whether now existing or hereafter
incurred (the "Obligations"):
(a) the prompt payment by the Grantor, as and
when due and payable, of all amounts from time to time
owing by it in respect of the Credit Agreement, the Notes
and the other Loan Documents, including, without
limitation, principal of and interest on the Loans
(including, without limitation, all interest that accrues
after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or
reorganization of the Grantor), Reimbursement
Obligations, Letter of Credit Exposure and repayment
obligations in respect of all Letters of Credit and all
interest thereon, all fees, commissions, expense
reimbursements, indemnifications and all other amounts
due or to become due under any Loan Document; and
(b) the due performance and observance by the
Grantor of all of its other obligations from time to time
existing in respect of the Credit Agreement and all other
Loan Documents.
SECTION 4. Representations and Warranties.
The Grantor represents and warrants as follows:
(a) There is no pending or threatened action,
suit, proceeding or claim before any court or other
Governmental Authority or any arbitrator, or any order,
judgment or award by any court or other Governmental
Authority or arbitrator, that may adversely affect the
grant by the Grantor, or the perfection, of the security
interest purported to be created hereby in the
Collateral, or the exercise by the Agent of any of its
rights or remedies hereunder.
(b) All taxes, assessments and other
governmental charges, excluding all immaterial franchise
taxes, imposed upon the Grantor or any property of the
Grantor (including, without limitation, all federal
income and social security taxes on employees' wages) and
which have become due and payable on or prior to the date
hereof have been paid, except to the extent contested in
good faith by proper proceedings which stay the
imposition of any penalty, fine and Lien resulting from
the non-payment thereof and with respect to which
adequate reserves in accordance with GAAP have been
established for the payment thereof.
(c) All Inventory now existing is, and all
Inventory hereafter existing will be, located at the
addresses specified therefor in Schedule I hereto. The
Grantor's chief place of business and chief executive
office is located at the address specified therefor in
Schedule I hereto. Set forth in Schedule II hereto is a
complete and correct list of each trade name used by the
Grantor. Set forth in Schedule III hereto is a complete
and correct list of each Depository Account and other
bank and securities account of the Grantor, together with
the address of such institution, the account number and
the type of account.
(d) The Grantor is and will be at all times
the sole and exclusive owner of the Collateral free and
clear of any Lien, except for Permitted Liens. No
effective financing statement or other instrument similar
in effect covering all or any part of the Collateral is
on file in any recording or filing office except such as
may have been filed in favor of the Agent relating to
this Agreement.
(e) The exercise by the Agent of any of its
rights and remedies hereunder will not contravene law or
any contractual restriction binding on or otherwise
affecting the Grantor or any of its properties and will
not result in or require the creation of any Lien upon or
with respect to any of its properties.
(f) No authorization or approval or other
action by, and no notice to or filing with, any
Governmental Authority or other regulatory body, or any
other Person, is required for (i) the grant by the
Grantor, or the perfection, of the security interest
purported to be created hereby in the Collateral or (ii)
the exercise by the Agent of any of its rights and
remedies hereunder, except for the filing under the
Uniform Commercial Code as in effect in the applicable
jurisdiction of the financing statements described in
Schedule IV hereto.
(g) This Agreement creates valid security
interests in favor of the Agent in the Collateral, as
security for the Obligations. The Agent's having
possession of all instruments and cash constituting
Collateral from time to time and the filing of the
financing statements described in Schedule IV, result in
the perfection of such security interests. Upon such
filings, such security interests will be perfected, first
priority security interests, subject only to Permitted
Liens.
SECTION 5. Covenants as to the Collateral. So
long as any of the Obligations shall remain outstanding,
any Revolving Credit Commitment shall not have terminated
or any Letter of Credit shall remain outstanding, unless
the Agent shall otherwise consent in writing:
(a) Further Assurances. The Grantor will at
its expense, at any time and from time to time, promptly
execute and deliver all further instruments and documents
and take all further action that may be necessary or
desirable or that the Agent may request in order (i) to
perfect and protect the security interest purported to be
created hereby; (ii) to enable the Agent to exercise and
enforce its rights and remedies hereunder in respect of
the Collateral; or (iii) otherwise to effect the purposes
of this Agreement, including, without limitation: (A)
executing and filing such financing or continuation
statements, or amendments thereto, as may be necessary or
desirable or that the Agent may request in order to
perfect and preserve the security interest purported to
be created hereby and (B) furnishing to the Agent from
time to time statements and schedules further identifying
and describing the Collateral and such other reports in
connection with the Collateral as the Agent may
reasonably request, all in reasonable detail.
(b) Location of Inventory. The Grantor will
keep the Inventory (other than Inventory sold,
transferred or disposed of, in the ordinary course of
business in accordance with Section 5(e) hereof) at the
locations specified therefor in Section 4(c) hereof, or,
upon not less than 30 days' prior written notice to the
Agent accompanied by a new Schedule I hereto indicating
each new location of the Inventory, at such other
locations in the continental United States as the Grantor
may elect, provided that (i) all action has been taken to
grant the Agent a perfected, first priority security
interest in such Inventory and (ii) the Agent's rights in
such Inventory, including, without limitation, the
existence, perfection and priority of the security
interest created hereby in such Inventory are not
adversely affected.
(c) Taxes, Etc. The Grantor will pay promptly
when due all property and other taxes, assessments and
governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and
supplies) against, the Inventory, except to the extent
the validity thereof is being contested in good faith by
proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment
thereof and with respect to which adequate reserves in
accordance with GAAP have been set aside for the payment
thereof.
(d) Insurance.
(i) The Grantor will, at its own expense,
maintain insurance (including, without limitation,
comprehensive general liability and hazard insurance)
with respect to the Inventory in such amounts, against
such risks, in such form and with such insurers as shall
be satisfactory to the Agent from time to time. Each
policy for liability insurance shall provide for all
losses to be paid on behalf of the Agent and the Grantor
as their respective interests may appear. Each policy
for property damage insurance shall provide for all
losses (A) to be paid directly to the Agent and
(B) except for losses of less than $1,000,000 per
occurrence and losses occurring during the continuance of
an Event of Default, to be adjusted with the Agent. Each
such policy shall in addition (A) name the Grantor and
the Agent as insured parties thereunder (without any
representation or warranty by or obligation upon the
Agent) as their interests may appear, (B) contain the
agreement by the insurer that any loss thereunder shall
be payable to the Agent on its own account
notwithstanding any action, inaction or breach of
representation or warranty by the Grantor, (C) provide
that there shall be no recourse against the Agent for
payment of premiums or other amounts with respect
thereto, and (D) provide that at least 30 days' prior
written notice of cancellation or of lapse shall be given
to the Agent by the insurer. The Grantor will, if so
requested by the Agent, deliver to the Agent original or
duplicate policies of such insurance and, as often as the
Agent may reasonably request, a report of a reputable
insurance broker with respect to such insurance. The
Grantor will also, at the request of the Agent, execute
and deliver instruments of assignment of such insurance
policies and cause the respective insurers to acknowledge
notice of such assignment.
(ii) Reimbursement under any liability
insurance maintained by the Grantor pursuant to this
Section 5(d) may be paid directly to the Person who shall
have incurred liability covered by such insurance. All
insurance payments in respect of Inventory shall be paid
to the Agent and applied as specified in Section 7(b)
hereof.
(e) Transfers and Other Liens.
(i) The Grantor will not sell, assign (by
operation of law or otherwise), lease, exchange or
otherwise transfer or dispose of any of the Collateral
except to the extent permitted under Section 8.04(b) of
the Credit Agreement and subject to the obligation of the
Grantor to make prepayments pursuant to Section
2.04(b)(ii) of the Credit Agreement.
(ii) The Grantor will not create or suffer
to exist any Lien upon or with respect to any Collateral
except for Permitted Liens.
(f) Bank Accounts.
The Grantor agrees and covenants that all
cash and all proceeds of the Collateral, including,
without limitation, all remittances and proceeds of
credit card sales of the Grantor, shall be deposited
either in a Depository Account or in the Cash
Concentration Account in the ordinary course of business
of the Grantor consistent with past practice. The
Grantor shall instruct each Depository Bank to transfer
all collected funds to the Cash Concentration Account in
accordance with the terms of Section 7.13 of the Credit
Agreement. Except as otherwise permitted in Section 7.13
of the Credit Agreement, all deposits into the Cash
Concentration Account shall be transferred into the Agent
Account to be applied to the Obligations in accordance
with the terms of Section 7.13 of the Credit Agreement.
(g) Inspection and Reporting. The Grantor
shall permit the Agent or any Lender, or any agents or
representatives thereof or such professionals or other
Persons as the Agent may designate (i) to examine and
inspect the books and records of the Grantor and take
copies and extracts therefrom, (ii) to conduct physical
Inventory appraisals and/or counts and/or valuations, and
(iii) to be present at the Grantor's place of business to
receive copies of all communications and remittances
relating to the Collateral, provided that in the absence
of a continuing Event of Default, all such actions
described in clauses (i) through (iii) above shall be
conducted at measurable times, during normal business
hours and upon prior notice. In addition, the Grantor
shall forward copies of any notices or communications
received or made by the Grantor with respect to the
Collateral, all in such manner as the Agent may
reasonably require.
SECTION 6. Additional Provisions Concerning
the Collateral.
(a) The Grantor hereby authorizes the Agent to
file, without the signature of the Grantor where
permitted by law, one or more financing or continuation
statements, and amendments thereto, relating to the
Collateral.
(b) The Grantor hereby irrevocably appoints
the Agent the Grantor's attorney-in-fact and proxy, with
full authority in the place and stead of the Grantor and
in the name of the Grantor or otherwise, from time to
time in the Agent's discretion, to take any action and to
execute any instrument which the Agent may deem necessary
or advisable to accomplish the purposes of this
Agreement, including, without limitation, (i) to obtain
and adjust insurance required to be paid to the Agent
pursuant to Section 5(d) hereof, (ii) upon the occurrence
of an Event of Default to ask, demand, collect, xxx for,
recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in
respect of any Collateral, (iii) upon the occurrence of
an Event of Default to receive, endorse, and collect any
drafts or other instruments, documents and chattel paper
in connection with clause (i) or (ii) above, and (iv)
upon the occurrence of an Event of Default to file any
claims or take any action or institute any proceedings
which the Agent may deem necessary or desirable for the
collection of any Collateral or otherwise to enforce the
rights of the Agent with respect to any Collateral.
(c) For the purpose of enabling the Agent to
exercise rights and remedies hereunder, the Grantor
hereby grants to the Agent, to the extent assignable, an
irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to the Grantor)
to use, assign, license or sublicense any of the
trademarks, service marks, trade names, business names,
trade styles, designs, logos and other source or business
identifiers and all general intangibles of like nature
(collectively, the "Trademarks") now owned or hereafter
acquired by the Grantor, wherever the same may be
located, including in such license reasonable access to
all media in which any of the licensed items may be
recorded or stored and to all computer programs used for
the compilation or printout thereof. Notwithstanding
anything contained herein to the contrary, but subject to
the provisions of the Credit Agreement that limits the
right of the Grantor to dispose of its property and
Section 5(e) hereof, so long as no Event of Default shall
have occurred and be continuing, the Grantor may exploit,
use, enjoy, protect, license, sublicense, assign, sell,
dispose of or take other actions with respect to the
Trademarks in the ordinary course of the business of the
Grantor. In furtherance of the foregoing, unless an
Event of Default shall have occurred and be continuing
the Agent shall from time to time, upon the request of
the Grantor, execute and deliver any instruments,
certificates or other documents, in the form so
requested, which the Grantor shall have certified are
appropriate (in its judgment) to allow it to take any
action permitted above (including relinquishment of the
license provided pursuant to this clause (c) as to any
Trademarks). Further, upon the payment in full of all of
the Obligations and cancellation or termination of the
Revolving Credit Commitments and Letters of Credit, the
Agent (subject to Section 10(e) hereof) shall transfer to
the Grantor all of the Agent's right, title and interest
in and to the Trademarks, all without recourse,
representation or warranty whatsoever. The exercise of
rights and remedies hereunder by the Agent shall not
terminate the rights of the holders of any licenses or
sublicenses theretofore granted by the Grantor in
accordance with the second sentence of this clause (c).
The Grantor hereby releases the Agent from any claims,
causes of action and demands at any time arising out of
or with respect to any actions taken or omitted to be
taken by the Agent under the powers of attorney granted
herein other than actions taken or omitted to be taken
through the Agent's gross negligence or willful
misconduct.
(d) If the Grantor fails to perform any
agreement contained herein, the Agent may itself perform,
or cause performance of, such agreement or obligation, in
the name of the Grantor or the Agent, and the expenses of
the Agent incurred in connection therewith shall be
payable by the Grantor pursuant to Section 8 hereof.
(e) The powers conferred on the Agent
hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of
any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Agent shall
have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.
SECTION 7. Remedies Upon Default. If any
Event of Default shall have occurred and be continuing:
(a) The Agent may exercise in respect of the
Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all of
the rights and remedies of a secured party upon default
under the Code (whether or not the Code applies to the
affected Collateral), and also may (i) require the
Grantor to, and the Grantor hereby agrees that it will at
its expense and upon request of the Agent forthwith,
assemble all or part of the Collateral as directed by the
Agent and make it available to the Agent at a place or
places to be designated by the Agent which is reasonably
convenient to both parties and (ii) without notice except
as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale,
at any of the Agent's offices or elsewhere, for cash, on
credit or for future delivery, and at such price or
prices and upon such other terms as the Agent may deem
commercially reasonable. The Grantor agrees that, to the
extent notice of sale shall be required by law, at least
10 days' notice to the Grantor of the time and place of
any public sale or the time after which any private sale
is to be made shall constitute reasonable notification.
The Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been
given. The Agent may adjourn any public or private sale
from time to time by announcement at the time and place
fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so
adjourned. The Grantor hereby waives any claims against
the Agent and the Lenders arising by reason of the fact
that the price at which the Collateral may have been sold
at a private sale was less than the price which might
have been obtained at a public sale or was less than the
aggregate amount of the Obligations, even if the Agent
accepts the first offer received and does not offer the
Collateral to more than one offeree and waives all rights
which the Grantor may have to require that all or any
part of the Collateral be marshalled upon any sale
(public or private) thereof. In addition to the
foregoing, (i) upon written notice from the Agent, the
Grantor shall cease any use of the Trademarks or any xxxx
similar thereto for any purpose described in such notice
so long as any of the Collateral remains unsold; and (ii)
the Agent may, at any time and from time to time, upon 10
days' prior notice to the Grantor, license, whether
general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any of the Trademarks,
throughout the world for such term or terms, on such
conditions, and in such manner, as the Agent shall in its
sole discretion determine.
(b) Any cash held by the Agent as Collateral
and all proceeds received by the Agent in respect of any
sale or collection from, or other realization upon, all
or any part the Collateral may, in the discretion of the
Agent, be held by the Agent as collateral for, and/or
then or at any time thereafter applied in whole or in
part by the Agent against, all or any part of the
Obligations as follows:
(i) first, to the payment of the costs
and expenses of such sale, collection or other
realization, including the out-of-pocket costs and
expenses of the Agent and the reasonable fees, costs,
expenses and other client charges of counsel employed in
connection therewith, to the payment of all advances made
by the Agent for the account of the Grantor hereunder and
to the payment of all costs and expenses incurred by the
Agent in connection with the administration and
enforcement of this Agreement;
(ii) second, at the option of the Agent,
to the payment or other satisfaction of any Liens and
other encumbrances upon any of the Collateral;
(iii) third, to the payment of all
other Obligations then due and payable as provided in
Section 2.08(c) of the Credit Agreement;
(iv) fourth, to the payment of any other
amounts required by applicable law (including, without
limitation, Section 9-504(1)(c) of the Code or any
successor or similar, applicable statutory provision);
and
(v) fifth, to the Grantor or to
whomsoever shall be lawfully entitled to receive the same
or as a court of competent jurisdiction shall direct.
(c) In the event that the proceeds of any such
sale, collection or realization are insufficient to pay
all amounts to which the Agent is legally entitled, the
Grantor shall be liable for the deficiency, together with
interest thereon at the highest rate specified in the
Credit Agreement for interest on overdue principal
thereof or such other rate as shall be fixed by
applicable law, together with the costs of collection and
the reasonable fees, costs, expenses and other client
charges of any attorneys employed by the Agent to collect
such deficiency.
SECTION 8. Indemnity and Expenses.
(a) The Grantor agrees to indemnify and hold
the Agent harmless from and against any and all claims,
damages, losses, liabilities, obligations, penalties,
costs or expenses (including, without limitation, legal
fees, costs, expenses and other client charges) to the
extent that they arise out of or otherwise result from
this Agreement (including, without limitation,
enforcement of this Agreement), except claims, losses or
liabilities resulting solely and directly from the
Agent's gross negligence or willful misconduct.
(b) The Grantor will upon demand pay to the
Agent (i) the amount of any and all costs and expenses,
including the reasonable fees, costs, expenses and other
client charges of counsel for the Agent and of any
experts and agents (including, without limitation, any
Person which may act as agent of the Agent), which the
Agent may incur in connection with (A) the preparation,
negotiation, execution, delivery, recordation,
administration, amendment, waiver or other modification
or termination of this Agreement, or (B) the custody,
preservation, use or operation of, the Collateral and
(ii) the amount of any and all costs and expenses,
including the reasonable fees, costs, expenses and other
client charges of counsel for the Agent and of any
experts and agents (including, without limitation, any
Person which may act as agent of the Agent), which the
Agent may incur in connection with (A) the sale of,
collection from, or other realization upon, any
Collateral, (B) the exercise or enforcement of any of the
rights of the Agent hereunder, or (C) the failure by the
Grantor to perform or observe any of the provisions
hereof.
SECTION 9. Notices, Etc.
(a) All notices, requests, demands,
directions and other communications ( Notices ) provided
for hereunder shall be in writing and shall be mailed (by
certified mail, postage prepaid and return receipt
requested), telecopied, or delivered by recognized
overnight courier to the Agent or the Grantor at their
respective addresses set forth in the Credit Agreement or
as to any such Person, at such other address as shall be
designated by such Person in a written notice to such
other Person complying as to delivery with the terms of
this Section 9. All such Notices shall be effective (i)
if mailed, three days after being deposited in the mails,
(ii) if telecopied, when sent, confirmation received and
(ii) if delivered, upon delivery with a receipt
therefore.
(b) The Agent may rely, and shall be
fully protected in relying, on any notice purportedly
made by or on behalf of the Grantor and the Agent shall
have no duty to verify the identity or authority of any
Person giving such notice. The preceding sentence shall
apply to all notices whether or not made in a manner
authorized or required by this Agreement.
SECTION 10. Miscellaneous.
(a) No amendment of any provision of this
Agreement shall be effective unless it is in writing and
signed by the Grantor and the Agent, and no waiver of any
provision of this Agreement, and no consent to any
departure by the Grantor therefrom, shall be effective
unless it is in writing and signed by the Agent, and then
such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which
given.
(b) No failure on the part of the Agent to
exercise, and no delay in exercising, any right hereunder
or under any other Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise
of any such right preclude any other or further exercise
thereof or the exercise of any other right. The rights
and remedies of the Agent provided herein and in the
other Loan Documents are cumulative and are in addition
to, and not exclusive of, any rights or remedies provided
by law. The rights of the Agent under any Loan Document
against any party thereto are not conditional or
contingent on any attempt by the Agent to exercise any of
its rights under any other Loan Document against such
party or against any other Person.
(c) Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating
the remaining portions hereof or thereof or affecting the
validity or enforceability of such provision in any other
jurisdiction.
(d) This Agreement shall create a continuing
security interest in the Collateral and shall (i) remain
in full force and effect until the later of (A) the
payment in full or release of the Obligations, (B) the
termination of all of the Revolving Credit Commitments,
or (C) the termination and cancellation of all of the
Letters of Credit, and (ii) be binding on the Grantor and
its successors and assigns and shall inure, together with
all rights and remedies of the Agent hereunder, to the
benefit of the Agent and its respective permitted
successors, transferees and assigns. Without limiting
the generality of clause (ii) of the immediately
preceding sentence and subject to Sections 10.13 and
11.07 of the Credit Agreement, the Agent may assign or
otherwise transfer its rights under this Agreement and
any other Loan Document, to any other Person and such
other Person shall thereupon become vested with all of
the benefits in respect thereof granted to the Agent
herein or otherwise. None of the rights or obligations
of the Grantor hereunder may be assigned or otherwise
transferred without the prior written consent of the
Agent, and any such assignment or transfer shall be null
and void.
(e) Upon the satisfaction in full of the
Obligations, the termination of each Letter of Credit and
of each Revolving Credit Commitment, (i) this Agreement
and the security interests created hereby shall terminate
and all rights to the Collateral shall revert to the
Grantor and (ii) the Agent will, upon the Grantor's
request and at the Grantor's expense, (A) return to the
Grantor such of the Collateral as shall not have been
sold or otherwise disposed of or applied pursuant to the
terms hereof and (B) execute and deliver to the Grantor
such documents as the Grantor shall reasonably request to
evidence such termination, all without any
representation, warranty or recourse whatsoever.
(f) This Agreement shall be governed by and
construed in accordance with the law of the State of New
York, except as required by mandatory provisions of law
and except to the extent that the validity and perfection
or the perfection and the effect of perfection or non-
perfection of the security interest created hereby, or
remedies hereunder, in respect of any particular
Collateral are governed by the law of a jurisdiction
other than the State of New York.
(g) Any legal action or proceeding with
respect to this Agreement or any document related thereto
may be brought in the courts of the State of New York or
in the United States District Court for the Southern
District of New York and, by execution and delivery of
this Agreement, the Grantor hereby accepts for itself and
in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid
courts. The Grantor hereby irrevocably waives any
objection, including, without limitation, any objection
to the laying of venue or based on the grounds of forum
non conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such
respective jurisdictions and consents to the granting of
such legal or equitable relief as is deemed appropriate
by the court.
(h) The Grantor irrevocably consents to the
service of process of any of the aforesaid courts in any
such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid,
to such Grantor at its address provided herein, such
service to become effective 30 days after such mailing.
(i) Nothing contained herein shall affect the
right of the Agent to serve process in any other manner
permitted by law or commence legal proceedings or
otherwise proceed against the Grantor or any of the
Grantor's property in any other jurisdiction.
(j) EACH OF THE GRANTOR AND (BY ITS ACCEPTANCE
OF THIS AGREEMENT) THE AGENT WAIVES ANY RIGHT IT MAY HAVE
TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON,
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT
OR OTHER ACTION OF THE PARTIES HERETO.
IN WITNESS WHEREOF, the Grantor has caused this
Agreement to be executed and delivered by its officer
thereunto duly authorized as of the date first above
written.
[GRANTOR]
By:
Name:
Title:
