Exhibit 10.4
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement"), dated March 13, 1997, is
entered into by and among XXXXX & XXXXX COMPANY, a Delaware corporation (the
"Borrower"), and EACH OF THE CORPORATIONS LISTED AS A SUBSIDIARY ON THE
ATTACHED SCHEDULE I (the "Subsidiaries" being collectively referred to herein
together with the Borrower as the "Debtors" and individually as a "Debtor"),
and PNC BANK, NATIONAL ASSOCIATION, a national banking association (the
"Bank");
WITNESSETH THAT:
WHEREAS, each Debtor is (or will be with respect to after-acquired
property) the legal and beneficial owner and the holder of its respective
Collateral (as defined in Section 1 hereof); and
WHEREAS, pursuant to that certain Credit Agreement (as it may hereafter
from time to time be restated, amended, modified or supplemented, the "Credit
Agreement") of even date herewith among, INTER ALIA, the Bank, Xxxxx & Xxxxx
Company, a Delaware corporation (the "Borrower"), and the Debtor, the Bank
has agreed to make certain loans to the Borrower and issue letters of credit
for the account of the Borrower and the Guarantors; and
WHEREAS, the obligation of the Bank to make loans and issue letters of
credit under the Credit Agreement is subject to the condition, among others,
that each of the Debtors secure its obligations to the Bank under the Credit
Agreement and the other Loan Documents in the manner set forth herein.
NOW, THEREFORE, intending to be legally bound hereby, the parties hereto
covenant and agree as follows:
1. Terms which are defined in the Credit Agreement and not otherwise
defined herein are used herein as defined therein. The following words and
terms shall have the following meanings, respectively, unless the context
hereof otherwise clearly requires:
(a) "Code" means the Uniform Commercial Code of each state as in
effect on the date hereof and as the same may subsequently be amended from
time to time, the substantive provisions of which are applicable to any of
the property of the Debtors in which the Bank is granted a security interest
pursuant to this Agreement.
(b) "Collateral" means, in the case of each Debtor, all of its
right, title and interest in, to and under the following described property
of such Debtor (each capitalized term used in this Section 1(b) shall have in
this Agreement the meaning given to it by Article 9 of the Code as in effect
in Pennsylvania):
(i) all now existing and hereafter acquired and arising
Accounts, General Intangibles, Chattel Paper, Investment Property, Documents,
Instruments, Letters of Credit, Advices of Credit, Equipment, and Inventory,
all Products of and Accessions to the foregoing and all Proceeds of all of
the foregoing (including without limitation all insurance policies and
proceeds thereof);
(ii) to the extent, if any, not included in clause (i) above,
each and every other item of personal property and fixtures, both those that
are now owned and those that hereafter arise or are acquired, regardless of
whether Article 9 of the Code is applicable to any extent to the creation,
perfection or enforcement of Liens thereon or therein.
Without limiting the foregoing and to the extent permitted by applicable Law,
Collateral includes all business records and information, including computer
tapes and other storage media containing the same and computer programs and
software (including without limitation, source code, object code and related
manuals and documentation and all licenses to use such software) for
accessing and manipulating such information.
The definition of Collateral shall not include the general or limited
partnership interests of the Debtors in the Existing Partnerships to the
extent that the grant of a security interest in such partnerships interests
is not permitted under the terms of the applicable partnership agreement.
Notwithstanding anything to the contrary contained herein or in the other
Loan Documents, the Bank will not take any action pursuant to this Agreement,
the Credit Agreement or any other Loan Document that would constitute or
result in any assignment of any rights under or with respect to any General
Intangible, license, permit or authorization without first obtaining the
prior approval of the applicable federal, state or local governmental
authority, if, under the existing Law, such assignment of any rights under or
with respect to any General Intangible, license, permit or authorization
would require the prior approval of such federal, state or local governmental
authority. Prior to the exercise by the Bank of any power, right, privilege
or remedy pursuant to this Agreement which requires any consent, approval,
recording, qualification or authorization of any federal, state or local
governmental authority or instrumentality, appropriate Debtor will execute
and deliver, or will cause the execution and delivery of, all applications,
certificates, instruments and other documents and papers that the Bank may be
required to obtain for such governmental consent, approval, recording,
qualification or authorization. Without limiting the generality of the
foregoing, such Debtor will use its best efforts upon the request of the Bank
to obtain from the appropriate governmental authorities the necessary
consents and approvals, if any (i) for the granting to the Bank pursuant
hereto of the security interest provided for in this Agreement to the extent,
if any, such security interest may be granted under existing statutes or
regulations and (ii) for the assignment or transfer of such authorizations,
licenses and permits to the Bank or its designee upon or following the
occurrence and during the continuance of an Event of Default.
(c) "Debt" means, collectively, all now existing and hereafter
arising Indebtedness of the Borrower and the other Debtors to the Bank under
the Credit Agreement, the Guaranty Agreement of the Debtors and other Loan
Documents, including without limitation, all
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Indebtedness, whether of principal, interest, fees, expenses or otherwise, of
the Borrower and the Debtors to the Bank now existing or hereafter incurred
under the Credit Agreement, the Guarantee Agreement of the Debtors or the
Note, or any of the other Loan Documents referred to therein as any of the
same or any one or more of them may from time to time be amended, restated,
modified or supplemented, together with any and all extensions, renewals,
refinancings or refundings thereof in whole or in part.
(d) "Receivables" means all of the Collateral except Equipment and
Inventory.
2. As security for the due and punctual payment and performance of the
Debt in full, each Debtor hereby agrees that the Bank shall have, and each
Debtor hereby grants to and creates in favor of the Bank, a first priority
security interest under the Code and lien in and to each Debtor's respective
Collateral subject only to Permitted Liens. Without limiting the generality
of Section 4 below, each Debtor further agrees that with respect to each item
of Collateral as to which (i) the creation of a valid and enforceable
security interest is not governed exclusively by the Code or (ii) the
perfection of a valid and enforceable security interest therein under the
Code cannot be accomplished either by the Bank taking possession thereof or
by the filing in appropriate locations of appropriate Code financing
statements executed by the Debtor, such Debtor will at its expense execute
and deliver to the Bank such documents, agreements, notices, assignments and
instruments and take such further actions as may be requested by the Bank
from time to time for the purpose of creating a valid and perfected first
priority Lien on such item, subject only to Permitted Liens, enforceable
against the Debtor and all third parties to secure the Debt.
3. Each Debtor jointly and severally represents and warrants to the
Bank that (a) such Debtor has good and marketable title to its Collateral,
and (b) except for the security interest granted to and created in favor of
the Bank hereunder and Permitted Liens, all the Collateral is free and clear
of any Lien.
4. Each Debtor will faithfully preserve and protect the Bank's security
interest in such Debtor's Collateral as a prior perfected security interest
under the Code, superior and prior to the rights of all third Persons, except
for Permitted Liens, and will, upon request therefor by the Bank, do all such
other acts and things and will, upon request therefor by the Bank, execute,
deliver, file and record all such other documents and instruments, including,
without limitation, financing statements, security agreements, assignments
and documents and powers of attorney with respect to the Collateral, and pay
all filing fees and taxes related thereto, as the Bank in its reasonable
discretion deems necessary or advisable from time to time in order to attach,
continue, preserve, perfect and protect said security interest; and each
Debtor hereby irrevocably appoints the Bank, its officers, employees and
agents, or any of them, as attorneys-in-fact for such Debtor to execute,
deliver, file and record such items for such Debtor and in such Debtor's
name, place and stead. This power of attorney, being coupled with an
interest, shall be irrevocable for the life of this Agreement.
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5. Each Debtor jointly and severally covenants and agrees that:
(a) it will defend the Bank's right, title and security interest in
and to the Collateral and the proceeds thereof against the claims and demands
of all Persons whomsoever, other than any Person claiming a right in the
Collateral pursuant to an agreement between such Person and the Bank and
other than the holder of a Permitted Lien;
(b) it will not suffer or permit to exist on any Collateral any Lien
except for Permitted Liens;
(c) it will not take or omit to take any action, the taking or the
omission of which might result in a material alteration or impairment of the
Collateral or of the Bank's rights under this Agreement;
(d) except as permitted by the Credit Agreement it will not sell,
assign or otherwise dispose of any portion of the Collateral;
(e) it will (i) obtain and maintain sole and exclusive possession or
control of the Collateral, (ii) keep the Collateral and all records
pertaining thereto at the locations specified on the Security Interest Data
Summary attached as SCHEDULE A hereto, unless it shall have given the Bank
prior notice and taken any action reasonably requested by the Bank to
maintain its security interest therein, (iii) deliver to the Bank upon the
Bank's request therefor all Collateral consisting of Chattel Paper
immediately upon such Debtor's receipt of a request therefor, and (iv) keep
materially accurate and complete books and records concerning the Collateral
and such other books and records as the Bank may from time to time reasonably
require;
(f) it will promptly furnish to the Bank such information and
documents relating to the Collateral as the Bank may reasonably request,
including, without limitation, all invoices, Documents, contracts, Chattel
Paper, Instruments and other writings pertaining to such Debtor's contracts
or the performance thereof; all of the foregoing to be certified upon request
of the Bank by an Authorized Officer of such Debtor;
6. Each Debtor assumes full responsibility for taking any and all
necessary steps to preserve the Bank's rights with respect to the Collateral
against all Persons other than anyone asserting rights in respect of a
Permitted Lien. The Bank shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its possession if the
Bank takes such action for that purpose as the Debtors shall request in
writing or in the absence of such request, if the Bank deals with it in the
same manner that it deals with similar property for its own account, provided
that such requested action will not, in the judgment of the Bank, impair the
security interest in the Collateral created hereby or the Bank's rights in,
or the value of, the Collateral, and provided further that such written
request is received by the Bank in sufficient time to permit the Bank to take
the requested action.
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7. (a) At any time and from time to time whether or not an Event of
Default then exists and without prior notice to or consent of the Debtors,
the Bank may at its option take such actions as the Bank deems appropriate
(i) to attach, perfect, continue, preserve and protect the Bank's prior
security interest in the Collateral, and/or (ii) inspect, audit and verify
the Collateral, including reviewing all of the Debtors' books and records and
copying and making excerpts therefrom, provided that prior to an Event of
Default or a Potential Default, the same is done with advance notice during
normal business hours to the extent access to any of the Debtors' premises is
required, and to add all liabilities, obligations, costs and expenses
reasonably incurred in connection with the foregoing clauses (i) and (ii) to
the Debt, to be paid by the Debtors to the Bank upon demand;
(b) At any time and from time to time after an Event of Default
exists and is continuing and without prior notice to or consent of the
Debtors, the Bank may at its option take such action as the Bank deems
appropriate (i) to maintain, repair, protect and insure the Collateral,
and/or (ii) to perform, keep, observe and render true and correct any and all
covenants, agreements, representations and warranties of the Debtors
hereunder, and to add all liabilities, obligations, costs and expenses
reasonably incurred in connection with the foregoing clauses (i) and (ii) to
the Debt, to be paid by the Debtors to the Bank upon demand.
8. After the occurrence and during the continuance of an Event of
Default under the Credit Agreement:
(a) The Bank shall have and may exercise all the rights and
remedies available to a secured party under the Code in effect at the time,
and such other rights and remedies as may be provided by Law and as set forth
below, including without limitation to take over and collect all the Debtors'
Receivables and all other Collateral, and to this end each Debtor hereby
appoints the Bank, its officers, employees and agents, as its irrevocable,
true and lawful attorneys-in-fact with all necessary power and authority to
(i) take possession immediately, with or without notice, demand, or legal
process, of any of or all of the Collateral wherever found, and for such
purposes, enter upon any premises upon which the Collateral may be found and
remove the Collateral therefrom, (ii) require the Debtors to assemble the
Collateral and deliver it to the Bank or to any place designated by the Bank
at the Debtors' expense, (iii) receive, open and dispose of all mail
addressed to any Debtor and notify postal authorities to change the address
for delivery thereof to such address as the Bank may designate, (iv) demand
payment of the Receivables, (v) enforce payment of the Receivables by legal
proceedings or otherwise, (vi) exercise all of the Debtors' rights and
remedies with respect to the collection of the Receivables, (vii) settle,
adjust, compromise, extend or renew the Receivables, (viii) settle, adjust or
compromise any legal proceedings brought to collect the Receivables, (ix) to
the extent permitted by applicable Law, sell or assign the Receivables upon
such terms, for such amounts and at such time or times as the Bank deems
advisable, (x) discharge and release the Receivables, (xi) take control, in
any manner, of any item of payment or proceeds from any account debtor, (xii)
prepare, file and sign the Debtor's name on any Proof of Claim in Bankruptcy
or similar document against any account debtor, (xiii) prepare, file and sign
the Debtor's name on any notice of Lien, assignment or satisfaction of Lien
or similar document in connection with the Receivables, (xiv) do all acts and
things necessary, in the Bank's sole discretion, exercised in good faith, to
fulfill the Debtors'
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obligations under the Loan Documents, (xv) endorse the name of the Debtor
upon any check, Chattel Paper, Document, Instrument, invoice, freight xxxx,
xxxx of lading or similar document or agreement relating to the Receivables
or Inventory; (xvi) use the Debtor's stationery and sign the Debtor's name to
verifications of the Receivables and notices thereof to account debtors;
(xvii) access and use the information recorded on or contained in any data
processing equipment or computer hardware or software relating to the
Receivables, Inventory, or other Collateral or proceeds thereof to which the
Debtor has access, (xviii) demand, xxx for, collect, compromise and give
acquittances for any and all Collateral, (xix) prosecute, defend or
compromise any action, claim or proceeding with respect to any of the
Collateral, and (xx) take such other action as the Bank may deem appropriate
with respect to the Collateral, including extending or modifying the terms of
payment of the Debtor's debtors. This power of attorney, being coupled with
an interest, shall be irrevocable for the life of this Agreement. To the
extent permitted by Law, each Debtor hereby waives all claims of damages due
to or arising from or connected with any of the rights or remedies exercised
by the Bank pursuant to this Agreement, except claims for physical damage to
the Collateral arising from gross negligence or willful misconduct by the
Bank.
(b) The Bank shall have the right to lease, sell or otherwise
dispose of all or any of the Collateral at public or private sale or sales
for cash, credit or any combination thereof, with such notice as may be
required by Law (it being agreed by each Debtor that, in the absence of any
contrary requirement of Law, ten (10) days' prior notice of a public or
private sale of Collateral shall be deemed reasonable notice), in lots or in
bulk, for cash or on credit, all as the Bank, in its sole discretion
exercised in good faith, may deem advisable. Such sales may be adjourned
from time to time with or without notice. The Bank shall have the right to
conduct such sales on any Debtor's premises or elsewhere and shall have the
right to use any Debtor's premises without charge for such sales for such
time or times as the Bank may see fit. The Bank may purchase all or any part
of the Collateral at public or, if permitted by Law, private sale and, in
lieu of actual payment of such purchase price, may set off the amount of such
price against the Debt.
9. The security interest in each Debtor's Collateral granted to and
created in favor of the Bank by this Agreement shall be for the benefit of
the Bank. Each of the rights, privileges, and remedies provided to the Bank
hereunder or otherwise by Law with respect to each Debtor's Collateral shall
be exercised by the Bank only for its own benefit, and any of the Debtor's
Collateral or proceeds thereof held or realized upon at any time by the Bank
shall be applied as set forth in Section 9.2.5 of the Credit Agreement. Each
Debtor shall remain liable to the Bank for and shall pay to the Bank any
deficiency which may remain after such sale or collection.
10. If the Bank repossesses or seeks to repossess any of the Collateral
pursuant to the terms hereof because of the occurrence and continuance of an
Event of Default, then to the extent it is commercially reasonable for the
Bank to store any Collateral on any Debtor's premises, such Debtor, to the
extent it has the right to do so, hereby agrees to lease to the Bank on a
month-to-month tenancy for a period not to exceed one hundred twenty (120)
days at the Bank's election, at a rental of One Dollar ($1.00) per month, the
premises on which the Collateral is located, provided it is located on
premises owned or leased by such Debtor.
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11. Upon indefeasible payment in full of the Debt, expiration of the
Letters of Credit and termination of the Credit Agreement, this Agreement
shall terminate and be of no further force and effect, and the Bank shall
thereupon promptly return to each Debtor such of its Collateral and such
other documents delivered by such Debtor hereunder as may then be in the
Bank's possession and execute such documents, instruments, agreements or any
combination thereof as the Debtors shall reasonably request to evidence such
termination. Until such time, however, this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Upon any sale or other transfer of any
Collateral which sale is not prohibited by and which disposition is made in
accordance with the Credit Agreement, the Bank shall (i) release its security
interest on the Collateral being sold or transferred and (ii) execute such
documents, instruments, agreements or any combination thereof as the Debtor
shall request to evidence such termination.
12. No failure or delay on the part of the Bank in exercising any right,
remedy, power or privilege hereunder shall operate as a waiver thereof or of
any other right, remedy, power or privilege of the Bank hereunder; nor shall
any single or partial exercise of any such right, remedy, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. No waiver of a single Event of Default
shall be deemed a waiver of a subsequent Event of Default. All waivers under
this Agreement must be in writing. The rights and remedies of the Bank under
this Agreement are cumulative and in addition to any rights or remedies which
it may otherwise have, and the Bank may enforce any one or more remedies
hereunder successively or concurrently at its option.
13. All notices, statements, requests and demands given to or made upon
either party hereto in accordance with the provisions of this Agreement shall
be given or made as provided in Section 11.6 of the Credit Agreement.
14. Each Debtor agrees that as of the date hereof, all information
contained on the Security Interest Data Schedule attached hereto as
SCHEDULE A is accurate and complete and contains no omission or
misrepresentation. The Debtors shall promptly notify the Bank of any changes in
the information set forth thereon.
15. Each Debtor acknowledges that the provisions hereof giving the Bank
rights of access to books, records and information concerning the Collateral
and such Debtor's operations and providing the Bank access to such Debtor's
premises are intended to afford the Bank with immediate access to current
information concerning such Debtor and its activities, including without
limitation, the value, nature and location of the Collateral so that the Bank
can, among other things, make an appropriate determination after the
occurrence of an Event of Default, whether and when to exercise its other
remedies hereunder and at Law, including without limitation, instituting a
replevin action should such Debtor refuse to turn over any Collateral to the
Bank. Each Debtor further acknowledges that should such Debtor at any time
fail to promptly provide such information and access to the Bank, such Debtor
acknowledges that the Bank would have no adequate remedy at Law to promptly
obtain the same. Each Debtor agrees that the provisions hereof may be
specifically enforced by the Bank and waives any claim or defense in any such
action or proceeding that the Bank has an adequate remedy at Law.
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16. This Agreement shall be binding upon and inure to the benefit of the
Bank and its successors and assigns, and each Debtor and their successors and
assigns, except that the Debtors may not assign or transfer the Debtor's
obligations hereunder or any interest herein.
17. This Agreement shall be deemed to be a contract under the laws of
the Commonwealth of Pennsylvania and for all purposes shall be governed by
and construed in accordance with the laws of said Commonwealth excluding its
rules relating to conflicts of Law.
18. Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall not invalidate the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
[SIGNATURES APPEAR ON NEXT PAGE]
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[SIGNATURE PAGE 1 OF 1 TO SECURITY AGREEMENT]
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed and delivered this Agreement as of the day and year
first above set forth.
XXXXX & XXXXX COMPANY
By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
Senior Vice President and
Chief Financial Officer
EACH OF THE CORPORATIONS
LISTED AS A SUBSIDIARY ON THE
ATTACHED SCHEDULE I
By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
Senior Vice President and
Chief Financial Officer
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: Vice President
