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EXHIBIT 10.12
AMENDED AND RESTATED
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, entered into as of this 26th day of
September, 1997, by and between CELEBRITY, INC., a Texas corporation
("Celebrity") whose address is 0000 Xxx Xxxxx Xxxx, Xxxxx, Xxxxx 00000,
MAGICSILK, INC., a Texas corporation ("Magicsilk") whose address is 0000 Xxx
Xxxxx Xxxx, Xxxxx, Xxxxx 00000, THE XXXXXX CORPORATION, a California
corporation ("Xxxxxx") whose address is 0000 Xxxxxx Xxxx Xxxxxxxxx,
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx _______, INDIA EXOTICS, INC., a Texas corporation
whose address is 0000 Xxxxx Xxx Xxxxx, Xxxxx Xxxx, Xxxxxxxx 00000 ("India"),
and STAR WHOLESALE FLORIST, INC., a Texas corporation ("Star") whose address is
0000 X. Xxxxxxxx, Xxxxxx, Xxxxx 00000 (collectively, the "Grantors"), and
NATIONAL CANADA FINANCE CORP., a Delaware corporation, having an address at 000
Xxxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("NCFC"), Individually
and as Agent for National Bank of Canada, a commercial banking institution
organized and existing under the laws of Canada with a United States domestic
branch office located in New York, New York (the "Bank"), the said NCFC,
Individually and as such Agent being herein sometimes called the "Lender";
W I T N E S S E T H:
That for good and valuable considerations, the receipt and sufficiency of which
are hereby acknowledged, the Grantors hereby agree with the Lender as follows:
1. Definitions. Reference is made to the Loan Agreement dated May 10,
1993, as amended by a First Amendment dated July 27, 1993, a Second Amendment
dated November 17, 1993, a Third Amendment dated March 18,1994, a Fourth
Amendment dated November 4, 1994, a Fifth Amendment dated February 3, 1995, a
Sixth Amendment dated as of March 14, 1995, a Seventh Amendment dated as of
August 4, 1995, an Eighth Amendment dated as of July 22, 1997, and a Ninth
Amendment of even date herewith (as so amended and as hereafter amended or
modified from time to time, the "Loan Agreement"), among Celebrity, Magicsilk,
Xxxxxx, India, Star, and the Lender, said Loan Agreement being incorporated
herein by reference. All terms used in this Security Agreement which are
defined in the Loan Agreement or in Article 9 of the Uniform Commercial Code
(the "Code") of the State of New York and which are not otherwise defined
herein shall have the same meanings herein as set forth therein.
2. Grant of Security Interest. As collateral security for all of the
Obligations (as defined in Section 3 hereof), the Grantors hereby jointly,
severally, and jointly and severally pledge and assign to Lender, and grant to
Lender a continuing security interest in, the following (the "Collateral"):
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(a) All of the Grantors' U.S. inventory in all of its forms,
wherever located and whether now or hereafter existing, and all
accessions thereto and products thereof, including raw materials,
materials awaiting manufacture, work-in-process, finished products,
and materials used or consumed in Grantor's business (collectively
hereinafter called "Inventory");
(b) All warehouse receipts, bills of lading, and other
documents of title of every kind and character, now or at any time
hereafter evidencing or representing all or any part of Inventory;
(c) All of the Grantors' U.S. accounts, accounts receivable,
chattel paper, instruments, and other obligations of any kind, whether
or not evidenced by an instrument or chattel paper, and whether or not
earned by performance (collectively hereinafter called "Accounts
Receivable" or "Receivables") whether now or hereafter existing,
arising out of or in connection with the sale or lease of goods or the
rendering of services or otherwise, and all rights now or hereafter
existing in and to all security agreements, leases and other contracts
securing or otherwise relating to any such Accounts Receivable;
(d) All claims for tax refund, whether now existing or
hereafter arising, of any of the Grantors against any city, county,
state or federal government or any agency or authority or other
subdivision thereof, and the proceeds thereof;
(e) To the extent applicable to Inventory, all of the
Grantors' contract rights and general intangibles ("General
Intangibles") of every kind, character, and description, both now
owned and hereafter acquired, including, without limitation, goodwill,
trademarks, trade styles, trade names, patents, patent applications,
and deposit accounts;
(f) To the extent applicable to Receivables, all of the
Grantors' customer lists, original books and records, ledger and
account cards, computer tapes, discs, and printouts, whether now in
existence or hereafter created;
(g) All proceeds ("Proceeds") of any and all of the foregoing
Collateral and, to the extent not otherwise included, all payments
under insurance (whether or not Lender is the loss payee thereof), any
indemnity, warranty, or guaranty, payable by reason of loss or damage
to or otherwise with respect to any of the foregoing Collateral, and
including, without limitation, all moneys due or to become due in
connection with any of the Collateral, guaranties and security for the
payment of such moneys, the right of stoppage in transit, and all
returned or repossessed goods arising from a sale or lease thereof.
(Although proceeds are covered, Lender does not authorize the sale or
other transfer of any of the Collateral or the transfer of any
interest in the Collateral, except for the sale of goods in the
ordinary course of the Grantors' business);
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in each case, whether now owned or hereafter acquired by any of the
Grantors and howsoever such Grantor's interest therein may arise or
appear (whether by ownership, lease, security interest, claim, or
otherwise). The Collateral described in subparagraphs (a) and (f) of
this Section is hereinafter sometimes called the "Tangible
Collateral."
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 full and prompt payment, when due, of the
indebtedness (and interest thereon) evidenced and to be evidenced by
that certain promissory note of even date herewith, in the principal
sum of Thirty-five Million Dollars (U.S. $35,000,000.00), executed by
the Grantors, and payable to the order of NCFC, and any and all
renewals, modifications, and extensions of said note, in whole or in
part;
(b) The due performance and observance by each of the
Grantors of all of its covenants, agreements, representations,
liabilities, obligations, and undertakings as set forth herein, or in
the Loan Agreement (as the same may be modified, renewed or extended
from time to time) or in any other instrument or document which now or
at any time hereafter evidences or secures, in whole or in part, all
or any part of the Obligations hereby secured; and
(c) The prompt payment and performance of any and all
obligations of any of the Grantors with respect to any letters of
credit or banker's acceptances now or at any time hereafter (i) issued
by NCFC at the request and for the benefit of a Borrower, or (ii)
issued by the Bank at the request and for the benefit of any of the
Grantors.
4. Representations and Warranties. Each of the Grantors represents
and warrants as follows:
(a) Such Grantor's chief place of business and chief
executive office, where such Grantor keeps its records concerning
Accounts Receivable and all originals of all chattel paper which
constitute Accounts Receivable are located at the address specified
for such Grantor in the initial paragraph hereof. None of the Accounts
Receivable is evidenced by a promissory note or other instrument.
(b) (i) Except for Permitted Encumbrances, each of the
Grantors owns the Collateral free and clear of any lien, security
interest or other charge or encumbrance except for the security
interest created by this Agreement; and (ii) except for the financing
statements filed in favor of the Lender relating to this Agreement,
and except for any financing statements filed with respect to
Permitted Encumbrances, no other financing statement or other
instrument similar in effect covering all or any part of the
Collateral is on file in any recording office.
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(c) The exercise by the Lender of its rights and remedies
hereunder will not contravene any law or governmental regulation or
any contractual restriction binding on or affecting such Grantor or
any of its properties and will not result in or require the creation
of any lien, security interest or other charge or encumbrance upon or
with respect to any of its properties.
(d) To the best knowledge of such Grantor, except with regard
to amounts payable by the government of the United States under any
Government Contract, no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or other
regulatory body is required either for the grant by such Grantor of
the security interest created hereby in the Collateral or for the
exercise by the Lender of its rights and remedies hereunder.
(e) This Agreement creates a valid security interest in favor
of the Lender in the Collateral. The taking possession by the Lender
of all instruments and chattel paper constituting Collateral from time
to time, and the filing of financing statements with the filing
offices designated on Exhibit A hereto will perfect and establish the
priority of the Lender's security interest hereunder in the
Collateral, subject to no other liens and encumbrances, except
Permitted Encumbrances. Except as set forth in this Section 4(e), and
except with regard to amounts payable by the government of the United
States under any Government Contract, no action is necessary or
desirable to perfect or otherwise protect such security interest.
5. Covenants as to the Collateral. So long as any of the Obligations
shall remain outstanding, unless the Lender shall otherwise consent in writing:
(a) Further Assurances. The Grantors will at their expense,
at any time and from time to time, promptly execute and deliver all
further instruments and documents and take all further action that the
Lender deems necessary or desirable or that the Lender may request in
order (i) to perfect and protect the security interest created or
purported to be created hereby; (ii) to enable the Lender to exercise
and enforce its rights and remedies hereunder in respect of the
Collateral; or (iii) to otherwise effect the purposes of this
Agreement, including, without limitation: (A) executing and filing
such financing or continuation statements, or amendments thereto, as
the Lender deems necessary or desirable or that the Lender may request
in order to perfect and preserve the security interest created or
purported to be created hereby; (B) furnishing to the Lender from time
to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the
Collateral as the Lender may reasonably request, all in reasonable
detail; (C) marking conspicuously each chattel paper included in the
Accounts Receivable and, at the request of the Lender, each of the
Grantors' respective records pertaining to the Account Receivable with
a legend, in form and substance satisfactory to the Lender, indicating
that such chattel paper is subject to the security interest created
hereby; (D) if any Account Receivable shall be evidenced by a
promissory note or other instrument or chattel paper, delivering and
pledging to the
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Lender hereunder such note, instrument or chattel paper duly
endorsed and accompanied by executed instruments of transfer or
assignment, all in form and substance satisfactory to the Lender; and
(E) if any Inventory shall be represented by a warehouse receipt or
other document of title, delivering such warehouse receipt or other
document to Lender duly endorsed or assigned to the Lender, all in
form and substance satisfactory to the Lender.
(b) Location of Tangible Collateral. Except for items of
Inventory temporarily in transit to a Grantor following the purchase
of same by such Grantor, each of the Grantors will keep all of the
Tangible Collateral, both now owned and hereafter acquired, at the
location(s) described in EXHIBIT "B," hereto attached, or at such
other location or locations to which the Lender shall consent in
writing in advance of placing Tangible Collateral at such location(s).
(c) Taxes. The Grantors 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 Collateral, except to the extent
the validity thereof is being contested diligently and in good faith
by proper proceedings satisfactory to the Lender.
(d) Insurance. (i) The Grantors will, at their own expense,
maintain 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 Lender from time to time, and in accordance with
the provisions of the Loan Agreement.
(e) As to Receivables and General Intangibles.
(i) Each of the Grantors will (A) keep its chief
place of business and chief executive office and all
originals of all chattel paper which constitute Accounts
Receivable and all documents which constitute or create
General Intangibles, at the location(s) specified in
paragraph 4(a) hereof, and (B) maintain and preserve complete
and accurate records concerning the Receivables, General
Intangibles, and such chattel paper.
(ii) As of the time any Receivable becomes subject
to the security interest granted by this Security Agreement,
including, without limitation, as of each time any specific
assignment or transfer or identification is made to the
Lender of any Receivable, the Grantor that owns such
Receivable shall be deemed to have warranted that such
Receivable and all papers and documents relating thereto are
genuine and in all respects what they purport to be; that
such Receivable is valid and subsisting and arises out of a
bona fide sale of goods sold and delivered, or in the process
of being delivered, or out of and for services theretofore
actually rendered, to the account debtor named in such
Receivable; that the amount of such Receivable represented as
owing is the correct amount
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actually and unconditionally owing except for normal cash
discounts and is not disputed except for immaterial claims
not in excess of $5,000 in any one instance, and except for
such normal cash discount and immaterial claims, is not
subject to any set-offs, credits, deductions or
counter-charges; that such Grantor is the owner thereof free
and clear of all prior liens, except for the security
interest in favor of the Lender and any Permitted
Encumbrances; and that no surety bond was required or given
in connection with such Receivable or the contracts or
purchase orders out of which the same arose; and that such
Grantor has no notice of or reason to believe that the
account debtor is subject to any pending bankruptcy
proceeding, insolvency proceeding or operations of any
creditors' committee.
(iii) The Lender shall have the privilege at any
time upon its request, of inspection during reasonable
business hours of any of the business, properties or premises
of the Grantors and the books and records of the Grantors
relating to said Receivables and Inventory or the processing
or collection thereof as well as those relating to their
general business affairs and financial condition. The Lender
shall have the right at any time, whether before or after an
Event of Default, to notify any and all account debtors to
make payment thereof directly to the Lender; but to the
extent the Lender does not so elect, each of the Grantors
shall continue to collect such Grantor's Receivables. Except
as the Lender shall otherwise expressly agree in writing, all
proceeds of collection of Receivables received by the
Grantors shall be forthwith accounted for and transmitted to
the Lender in the form as received by the Grantors and shall
not be commingled with any funds of the Grantors. In the
event the account debtor of any Receivable included in this
Security Agreement shall also be indebted to any of the
Grantors in any other respect and such account debtor shall
make payment without designating the particular indebtedness
against which it is to apply, such payment shall be
conclusively presumed to be payment on the Receivable of such
account debtor included in this Security Agreement. Any
proceeds of Receivables so transmitted to the Lender shall be
handled and administered by the Lender in and through a
Remittance or similar account, but the Grantors acknowledge
that the maintenance of such an account by the Lender is
solely for its convenience in facilitating its own operations
pursuant hereto and that the Grantors have no, and shall not
have any, right, title or interest in said Receivable or in
the amounts at any time to the credit thereof. Except to the
extent the Lender may from time to time in its discretion
release proceeds to any of the Grantors for use in its
business, all proceeds received by the Lender shall be
applied on the Obligations secured hereby, whether or not
such Obligations shall have by their terms matured, such
application to be made at such intervals as the Lender may
determine, except that the Lender need not apply or give
credit for any item included in such proceeds until two (2)
business days after receipt by NCFC of such item at its main
office in New York City, New York. Items received after 1:00
o'clock p.m. current New York time on any business day shall
be deemed
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to have been received the following business day. In
administering the collection of proceeds as herein provided
for, the Lender may accept checks or drafts in any amount and
bearing any notation without incurring liability to any of
the Grantors for so doing.
(iv) Following the occurrence of an Event of
Default, the Lender shall have the right, but shall incur no
liability for failing to do so, in its own name, or in the
name of the Grantor to demand, collect, receive, receipt for,
xxx for, compound and give acquittance for, any and all
amounts due or to become due on the Receivables, to adjust,
settle or compromise the amount or payment thereof, in the
same manner and to the same extent as any of the Grantors
might have done, and to endorse the name of any of the
Grantors on all commercial paper given in payment or part
payment thereof, and in its discretion to file any claim or
take any action or proceedings which the Lender may deem
necessary or appropriate to protect and preserve and realize
upon the security interest of the Lender in the Receivables
and the proceeds thereof.
(v) Each of the Grantors will from time to time
execute such further instruments and do such further acts and
things as the Lender may reasonably require by way of further
assurance to the Lender of the matters and things herein
provided for or intended so to be. Without limiting the
foregoing, each of the Grantors agrees to execute and deliver
to the Lender an assignment or other form of identification
in the form required by the Lender of all Receivables at any
time included under this Security Agreement, together with
such other evidence of the existence and identity of such
Receivables as the Lender may reasonably require; each of the
Grantors will xxxx its books and records to reflect this
Security Agreement. Each of the Grantors will accompany each
transmission of proceeds of Receivables to the Lender with a
report in such form as the Lender may require in order to
identify the Receivables to which such proceeds apply.
(vi) Returned or repossessed goods arising from or
relating to any Receivables, if requested by the Lender,
shall be held separate and apart from any other property.
Each of the Grantors shall as often as required by Lender,
but not less often than weekly, report to the Lender the
appropriate identifying information with respect to such
goods and the Receivables out of which or to which such goods
relate.
(f) Transfers and Other Liens. Without the prior consent of
the Lender the Grantors shall not (i) sell, assign (by operation of
law or otherwise), exchange, or otherwise dispose of any of the
Collateral (except for sale or other use of Inventory in the ordinary
course of business as presently conducted); or (ii) create or suffer
to exist any lien, security interest or other charge or encumbrance
upon or with respect to any of the Collateral except for the security
interest created by this Agreement and Permitted Encumbrances.
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(g) Damage to Collateral. Each of the Grantors will promptly
furnish to the Lender a statement respecting any material loss or
damage to any of the Tangible Collateral.
(h) Field Warehouse Arrangement. Following the occurrence of
an Event of Default, if the Lender shall so require, each of the
Grantors will at its own expense continue in force and effect and
comply with and operate under a field warehouse arrangement
satisfactory in form and substance to the Lender with an independent
field warehouse company selected by such Grantor and satisfactory to
the Lender, providing for the warehousing of such portion or portions
of such Grantor's Inventory as the Lender may designate and for the
issuance of non-negotiable warehouse receipts in the name of the
Lender for or representing the Inventory located therein.
6. Additional Provisions Concerning the Collateral.
(a) Each of the Grantors hereby authorizes Lender to file,
without the signature of such Grantor where permitted by law, one or
more financing or continuation statements, and amendments thereto,
relating to the Collateral.
(b) Each of the Grantors hereby irrevocably appoints the
Lender such Grantor's attorney-in-fact and proxy, with full authority
in the place and stead of such Grantor and in the name of such Grantor
or otherwise, from time to time in the Lender's discretion following
the occurrence of an Event of Default, to take any action and to
execute any instrument which the Lender 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 Lender pursuant to Section 5(d) hereof; (ii) 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 of the Collateral; (iii) to receive, endorse, and
collect any checks, drafts or other instruments, documents, and
chattel paper in connection with clause (i) or (ii) above; (iv) to
sign its name on any invoice or xxxx of lading relating to any
Receivable, on drafts against customers, on schedules and assignments
of Receivables, on notices of assignment, financing statements and
other public records, on verification of accounts and on notices to
customers (including notices directing customers to make payment
direct to the Lender); (v) to notify the post office authorities to
change the address for delivery of its mail to an address designated
by the Lender, to receive, open and process all mail addressed to the
Grantor, to send requests for verification of Receivables to
customers; and (vi) to file any claims or take any action or institute
any proceedings which the Lender may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce the
rights of the Lender with respect to any of the Collateral. Each of
the Grantors hereby ratifies and approves all acts of said attorney;
and so long as the attorney acts in good faith, it shall have no
liability to any such Grantor for any act or omission as such attorney.
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(c) If any of the Grantors fails to perform any agreement
contained herein, the Lender may itself perform, or cause performance
of, such agreement or obligation, and the costs and expenses of the
Lender incurred in connection therewith shall be payable by the
Grantors under Section 9 hereof, and shall be fully secured hereby.
(d) The powers conferred on the Lender 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 Lender 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.
(e) Anything herein to the contrary notwithstanding, (i) the
Grantors shall remain liable under any contracts and agreements
relating to the Collateral to the extent set forth therein to perform
all of their obligations thereunder to the same extent as if this
Agreement had not been executed; (ii) the exercise by the Lender of
any of its rights hereunder shall not release any of the Grantors from
any obligations under the contracts and agreements relating to the
Collateral; and (iii) the Lender shall not have any obligation or
liability by reason of this Agreement under any contracts and
agreements relating to the Collateral, nor shall the Lender be
obligated to perform any of the obligations or duties of any of the
Grantors thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
7. Remedies Upon Default. If an Event of Default shall have
occurred:
(a) The Lender may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on
default under the Code (whether or not the Code applies to the
affected Collateral), and also may (i) require the Grantors to, and
the Grantors hereby agree that they will at their expense and upon
request of the Lender forthwith, assemble all or part of the
Collateral as directed by the Lender and make it available to the
Lender at a place to be designated by the Lender which is reasonably
convenient to the Lender; 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 Lender'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 Lender may deem
commercially reasonable. The Grantors agree that, to the extent notice
of sale shall be required by law, at least five (5) days' notice to
the Grantors 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 Lender shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Lender
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.
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(b) Any cash held by the Lender as Collateral and all cash
proceeds received by the Lender in respect of any sale of, collection
from, or other realization upon, all or any part of the Collateral
shall be applied as follows:
(i) First, to the repayment of the reasonable costs
and expenses, including reasonable attorneys' fees and legal
expenses, incurred by the Lender in connection with (A) the
administration of this Agreement, (B) the retaking, custody,
preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any Collateral,
(C) the exercise or enforcement of any of the rights of the
Lender hereunder, or (D) the failure of any of the Grantors
to perform or observe any of the provisions hereof;
(ii) Second, to the reimbursement of the Lender for
the amount of any obligations of the Grantor paid or
discharged by the Lender pursuant to the provisions of this
Agreement, and of any expenses of the Lender payable by the
Grantors hereunder;
(iii) Third, to the satisfaction of the Obligations,
in such order as Lender shall elect;
(iv) Fourth, to the payment of any other amounts
required by applicable law [including, without limitation,
Section 47-9-504(1)(c) of the Code or any successor or
similar, applicable statutory provision]; and
(v) Fifth, the surplus proceeds, if any, to the
Grantors 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 Lender is legally entitled, the Grantors shall be liable for the
deficiency, together with interest thereon at such rate(s) as shall be
fixed by instrument(s) evidencing the Obligation(s) with respect to
which such deficiency exists, together with the costs of collection
and the reasonable fees of any attorneys employed by the Lender to
collect such deficiency.
8. Rights and Duties of the Lender, Etc. The Lender undertakes, as to
this Agreement, to exercise only such duties as are specifically set forth in
this Agreement and to exercise such of the rights, powers and remedies as are
vested in it by this Agreement or by law. The Lender may consult with counsel,
and the written advice or opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.
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9. Indemnity and Expenses.
(a) The Grantors agree to indemnify the Lender from and
against any and all claims, losses, and liabilities growing out of or
resulting from this Agreement (including, without limitation,
enforcement of this Agreement and any matter growing out of or
resulting from the ordinary negligence of the Lender), except claims,
losses, or liabilities resulting solely and directly from the Lender's
gross negligence or willful misconduct.
(b) The Grantors will upon demand pay to Lender the amount of
any and all costs and expenses, including the reasonable fees and
disbursements of the Lender's counsel and of any experts and agents,
which the Lender may incur in connection with (i) the administration
of this Agreement (excluding the salary of the Lender's employees and
the Lender's normal and usual overhead expenses); (ii) the custody,
preservation, use, or operation of, or the sale of, collection from,
or other realization upon, any Collateral; (iii) the exercise or
enforcement of any of the rights of Lender hereunder; or (iv) the
failure by the Grantor to perform or observe any of the provisions
hereof, even if such failure constitutes ordinary negligence, except
expenses resulting solely and directly from the Lender's gross
negligence or willful misconduct.
10. Notices, Etc. All notices and other communications provided
for hereunder (except for routine informational communications) shall be in
writing and shall be mailed, by registered or certified mail, return receipt
requested, sent by recognized national overnight courier service, telecopied by
facsimile machine, or delivered, if to any of the Grantors, to it at its
address specified in the first paragraph of this Agreement, with copies (if
other than routine informational communication) to Celebrity, 0000 Xxx Xxxxx
Xxxx, Xxxxx, Xxxxx 00000, Attention: Xxx Xxxxxxxx (Telecopy No.: 903/509-3631)
and Xxxxxxxx & Xxxxxx, P.C., Suite 3300, 0000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxx
00000-0000, Attention: Xxxxx X. XxXxxxxx (Telecopy No.: 214/969-1751; and if to
Lender, to it at Suite 1850, 0000 Xxx Xxxxxxx, Xxxxxx, Xxxxx 00000, Attention:
Xxxxxxx X. Xxxxxxx (Telecopy No.: 214/871-2015). All such notices and other
communications shall be effective (i) if mailed, when received or three (3)
days after mailing, whichever is earlier; (ii) if sent by recognized national
overnight courier service, one (1) business day after sending; and (iii) if
telecopied, upon receipt, or (iv) if delivered, upon delivery.
11. Security Interest Absolute. All rights of the Lender, and all
security interests and all obligations of the Grantors hereunder, shall be
absolute and unconditional irrespective of: (i) any lack of validity or
enforceability of the Loan Agreement, any guaranty, or any other agreement or
instrument relating thereto; (ii) any change in the time, manner, or place of
payment of, or in any other term in respect of, all or any of the Obligations,
or any other amendment or waiver of or consent to any departure from this
Agreement, or any guaranty, or any other agreement or instrument relating
thereto; (iii) any increase in, addition to, or exchange, release, or
non-perfection of, any other collateral, or any release or amendment or waiver
of or consent to departure from any guaranty, for all or any of the
Obligations; (iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of,
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any of the Grantors in respect of the Obligations or this Agreement; or (v) the
absence of any action on the part of the Lender to obtain payment or
performance of the Obligations from the Grantors or any other party.
12. Miscellaneous.
(a) No amendment of any provision of this Security Agreement
shall be effective unless it is in writing and signed by the Grantors
and the Lender, 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 Lender, 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 Lender to exercise, and no
delay in exercising, any right hereunder or under any other instrument
or 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 Lender provided herein and in the other instruments
and documents are cumulative and are in addition to, and not exclusive
of, any rights or remedies provided by law. The rights of the Lender
under any Loan Agreement between the parties, any guaranty, any other
instrument which now or hereafter evidences or secures all or part of
the Obligations, or any related document against any party thereto are
not conditional or contingent on any attempt by the Lender to exercise
any of its rights under any other such instrument or document against
such party or against any other party.
Any provision of this Security Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity 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 payment in full of all of the Obligations, (ii) be
binding on the Grantors and their respective successors and permitted
assigns and shall inure, together with all rights and remedies of the
Lender hereunder, to the benefit of the Lender and its successors,
transferees, and assigns. None of the rights or obligations of the
Grantors hereunder may be assigned or otherwise transferred without
the prior written consent of the Lender.
(e) Upon the satisfaction in full of all of the Obligations,
the Lender will, upon the Grantors' request and at the Grantors'
expense, (i) 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 (ii) execute and deliver to the Grantors such
documents as the Grantors shall reasonably request to evidence
termination of the security interest herein granted.
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(f) This Agreement shall be governed by and construed in
accordance with the internal statutes and laws of the state of New
York, (without regard to principles of conflicts of law), except as
required by mandatory provisions of law and except to the extent that
the validity or perfection of the security interest created hereby, or
remedies hereunder, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than the State of New
York. If any provision hereof is in conflict with the provisions of
the Loan Agreement, the provisions of the Loan Agreement shall
control.
13. Effect of Prior Documents. This Agreement is given in renewal,
extension, consolidation, and modification, and as a complete restatement of
(i) that certain Security Agreement dated as of May 10, 1993 executed by
Celebrity and Magicsilk in favor of the Lender, (ii) that certain Security
Agreement dated as of November 17, 1993 executed by Xxxxxx in favor of the
Lender, and (iii) that certain Security Agreement dated as of February 3, 1995
executed by India in favor of the Lender; provided however, that nothing herein
shall be deemed to be an extinguishment or novation of any of the liens,
security interests, obligations, or duties evidenced or created by any of the
above-described documents.
14. Special Provisions. If any Rider, initialed by the parties, is
attached hereto, the provisions of such Rider are made a part hereof by
reference as fully and particularly as if set out herein verbatim. Should there
be any conflict between the provisions hereof and the provisions contained in
such Rider, the provisions of such Rider shall control.
===============================================================================
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
===============================================================================
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IN WITNESS WHEREOF, the Grantors have caused this Agreement to be
executed and delivered by their respective duly authorized officers on this the
day and year first above written.
CELEBRITY, INC. INDIA EXOTICS, INC.
By: /s/ XXXXXX X. XXXXXXXXX, XX. By: /s/ XXXXXX X. XXXXXXXXX, XX.
-------------------------------- -------------------------------
Print Name: Xxxxxx X. Xxxxxxxxx Print Name: Xxxxxx X. Xxxxxxxxx
-------------------- -------------------
Title: Chairman Title: Chairman
------------------------- ----------------------
MAGICSILK, INC. STAR WHOLESALE FLORIST, INC.
By: /s/ XXXXXX X. XXXXXXXXX, XX. By: /s/ XXXXXX X. XXXXXXXXX, XX.
-------------------------------- -------------------------------
Print Name: Xxxxxx X. Xxxxxxxxx Print Name: Xxxxxx X. Xxxxxxxxx
-------------------- -------------------
Title: Chairman Title: Chairman
------------------------- ----------------------
THE XXXXXX CORPORATION
By: /s/ XXXXXX X. XXXXXXXXX, XX.
--------------------------------
Print Name: Xxxxxx X. Xxxxxxxxx
--------------------
Title: Chairman
-------------------------
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EXHIBIT A
TO SECURITY AGREEMENT
(List of UCC Filing Offices)
1. Celebrity:
a. Secretary of State - Texas
2. Magicsilk:
a. Secretary of State - Texas
3. Xxxxxx:
a. Secretary of State - North Carolina
b. Register of Xxxxx - Xxxxxxx County, North Carolina
c. Secretary of State - California
d. County Recorder - San Diego County, California
4. India:
a. Secretary of State - Texas
b. Secretary of State - Missouri
c. Recorder of Deeds - St. Louis County, Missouri
d. Office of Clerk of Superior Court - Fulton County, Missouri
5. Star:
a. Xxxxxxxxx xx Xxxxx - Xxxxx
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00
XXXXXXX X
TO SECURITY AGREEMENT
(List of Locations of Tangible Collateral)
A. Inventory Locations for Celebrity:
1. 4501 and 0000 Xxx Xxxxx Xxxx, Xxxxx, Xxxxx 00000;
2. 0000 Xxxxxx Xxxx, Xxxxx, Xxxxx 00000; and
3. 00000 Xxxxx Xxxx Xxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000.
B. Inventory Locations for Magicsilk:
1. 0000 Xxx Xxxxx Xxxx, Xxxxx, Xxxxx 00000; and
2. 00000 Xxxxx Xxxx Xxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000.
C. Inventory Locations for Xxxxxx:
1. 0000 Xxxxxx Xxxx Xxxxxxxxx, Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx;
2. 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000; and
3. 0000 Xxxxxxx Xxxxxx, Xxxxx X, Xxxxx, Xxxxxxxxxx _____.
D. Inventory Locations for India:
1. 0000 Xxxxx Xxx Xxxxx, Xxxxx Xxxx, Xxxxxxxx 00000;
2. 0000 Xxxxx Xxx Xxxxx, Xxxxx Xxxx, Xxxxxxxx 00000;
3. 0000 Xxxxx Xxx Xxxxx, Xxxxx Xxxx, Xxxxxxxx 00000;
4. 00000-00 Xxxxx Xxxx Xxxxxxxxxx, Xxxxx Xxxx, Xxxxxxxx 00000;
and
5. 000 Xxxxxx Xxxxxx, X.X., Xxxxx 000-XX, Xxxxxxx, Xxxxxxx 00000.
E. Inventory Locations for Star:
1. 0000 X. Xxxxxxxx, Xxxxxx, Xxxxx 00000;
2. 0000 Xxxxxxxxx Xxx, Xxxxxx, Xxxxx 00000
3. 0000 X. Xxxxxxxx, Xxxxx, Xxxxx 00000
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