EXHBIIT 10.5
SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of June 17, 2005 between Xxxxxx
Industries, Inc., a Tennessee corporation, with its principal place of business
and chief executive office located at 0000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxxx 00000 (the "Debtor"), and WACHOVIA BANK, NATIONAL ASSOCIATION with an
office located at 000 00xx Xxxxxx XX, 000 Xxxxxxxx, Xxxxxxx, Xxxxxxx, 00000, as
Lender (the "Lender") under the Credit Agreement (as hereinafter defined).
WHEREAS, the Debtor and the Lender have entered into that certain Credit
Agreement dated as of June 17, 2005 (as the same may be amended, supplemented,
restated or otherwise modified from time to time, the "Credit Agreement")
pursuant to which the Lender has agreed to extend certain financial
accommodations to the Debtor subject to the terms thereof;
WHEREAS, it is a condition precedent to the Lender's extension of such
financial accommodations under the Credit Agreement that the Debtor execute and
deliver this Agreement;
NOW, THEREFORE, in consideration of the above premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Debtor, the Debtor hereby agrees with the Lender as follows:
SECTION 1. DEFINITIONS. (a) For the purposes of this Agreement:
"AGREEMENT" means this Security Agreement, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"COLLATERAL" means all of the following properties, assets and rights of
the Debtor, wherever located, whether now owned or hereafter acquired or
arising: all personal and fixture property of every kind and nature including
without limitation all goods, inventory, equipment, instruments (including
promissory notes), documents, accounts, chattel paper (whether tangible or
electronic), deposit accounts, letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing), commercial tort claims, securities
and all other investment property (but, with respect to the Equity Interests of
Foreign Subsidiaries, Collateral shall be limited to 65% of the Equity Interests
of such Foreign Subsidiaries), supporting obligations, any other contract rights
or rights to the payment of money, insurance claims, all general intangibles
(including all payment intangibles), copyrights, trademarks, patents, and all
additions, attachments, accessions, parts, replacements, substitutions,
renewals, interest, dividends, distributions, rights of any kind (including but
not limited to stock splits, stock rights, voting and preferential rights),
products, and proceeds of or pertaining to the above including, without limit,
cash or other property which were proceeds and are recovered by a bankruptcy
trustee or otherwise as a preferential transfer by Debtor.
"DEBTOR" has the meaning set forth in the first paragraph hereof.
"DEFAULT" means any of the events specified in the definition of Event
of Default, whether or not there has been satisfied any requirement for giving
of notice, lapse of time or the happening of any other condition.
"EVENT OF DEFAULT" means any of the following events, whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment or order of any court
or any order, rule or regulation of any governmental or nongovernmental body:
(a) the occurrence of an "Event of Default" under and as defined in
the Credit Agreement;
(b) the loss, theft, destruction, reduction in value, damage to or
condemnation of all of the Collateral, or any material part of the Collateral,
which such loss, theft, destruction, reduction in value, damage or condemnation
results in a Material Adverse Effect, unless such loss is fully covered by
insurance proceeds, and such proceeds are disbursed as set forth in Section 7.5
of the Credit Agreement; or
(c) the Lender's security interest should become unenforceable or
cease to be of a first priority.
"STATE" means the State of Georgia.
(b) Unless otherwise set forth herein to the contrary,
capitalized terms not otherwise defined herein shall have the meanings given
such terms in the Credit Agreement, and, further, terms not otherwise defined
herein which are defined in the Uniform Commercial Code of the State are used
herein with the meanings ascribed to them in the Uniform Commercial Code of the
State. However, if a term is defined in Article 9 of the Uniform Commercial Code
of the State differently than in another Article of the Uniform Commercial Code
of the State, the term has the meaning specified in Article 9.
SECTION 2. GRANT OF SECURITY. To secure the prompt and complete payment,
observance and performance when due (whether at stated maturity, by acceleration
or otherwise) of all of the Obligations, the Debtor hereby collaterally assigns
and pledges to the Lender, and grants to the Lender a security interest and lien
in and to, the Collateral. The Lender acknowledges that the attachment of its
security interest in any commercial tort claim as original collateral is subject
to the Company's compliance with Section 4(g).
SECTION 3. AUTHORIZATION TO FILE FINANCING STATEMENTS. The Debtor hereby
irrevocably authorizes the Lender at any time and from time to time to file in
any Uniform Commercial Code jurisdiction any initial financing statements and
amendments thereto that (a) indicate the Collateral (i) as all assets of the
Debtor or words of similar effect, regardless of whether any particular asset
comprised in the Collateral falls within the scope of Article 9 of the
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Uniform Commercial Code of the State or such jurisdiction, or (ii) as being of
an equal or lesser scope or with greater detail, and (b) contain any other
information required by part 5 of Article 9 of the Uniform Commercial Code of
the State for the sufficiency or filing office acceptance of any financing
statement or amendment, including (i) whether the Debtor is an organization, the
type of organization and any organization identification number issued to the
Debtor and, (ii) in the case of a financing statement filed as a fixture filing
or indicating Collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the Collateral relates. The
Debtor agrees to furnish any such information to the Lender promptly upon
request.
SECTION 4. OTHER ACTIONS. Further to insure the attachment, perfection
and first priority of, and the ability of the Lender to enforce, the Lender's
security interest in the Collateral, the Debtor agrees, in each case at the
Debtor's own expense, to take the following actions with respect to the
following Collateral:
(a) PROMISSORY NOTES AND TANGIBLE CHATTEL PAPER. If the Debtor shall
at any time hold or acquire any promissory notes or tangible chattel paper
constituting Collateral, the Debtor shall forthwith endorse, assign and deliver
the same to the Lender, accompanied by such instruments of transfer or
assignment duly executed in blank as the Lender may from time to time specify.
(b) [Reserved]
(c) INVESTMENT PROPERTY. If the Debtor shall at any time hold or
acquire any Equity Interests of Domestic Material Subsidiaries (and First Tier
Foreign Subsidiaries, but in such case limited to only 65% of all outstanding
Equity Interests of such First Tier Foreign Subsidiaries) in the form of
certificated securities, the Debtor shall, at the Lender's request and option,
endorse, assign and deliver the same to the Lender, accompanied by such
instruments of transfer or assignment duly executed in blank as the Lender may
from time to time specify. If any Collateral consisting of securities now or
hereafter acquired by the Debtor are uncertificated and are issued to the Debtor
or its nominee directly by the issuer thereof, the Debtor shall immediately
notify the Lender thereof and, at the Lender's request and option, pursuant to
an agreement in form and substance satisfactory to the Lender, cause the issuer
to agree to comply with instructions from the Lender as to such securities,
without further consent of the Lender or such nominee, provided, that in the
case of securities relating to any Subsidiary, such shall be limited to Domestic
Material Subsidiaries (and First Tier Foreign Subsidiaries, but in such case
limited to only 65% of all outstanding Equity Interests of such First Tier
Foreign Subsidiaries).
(d) COLLATERAL IN THE POSSESSION OF A BAILEE. If any Collateral
consisting of goods are at any time in the possession of a bailee, the Debtor
shall promptly notify the Lender thereof and, if requested by the Lender, shall
promptly obtain an acknowledgement from the bailee, in form and substance
satisfactory to the Lender, that the bailee holds such Collateral for the
benefit of the Lender and shall act upon the instructions of the Lender, without
the further consent of the Debtor.
(e) ELECTRONIC CHATTEL PAPER AND TRANSFERABLE RECORDS. If the Debtor
at any time holds or acquires an interest in any electronic chattel paper or any
"transferable record", as that
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term is defined in Section 201 of the federal Electronic Signatures in Global
and national Commerce Act, or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction, the Debtor shall
promptly notify the Lender thereof and, at the request of the Lender, shall take
such action as the Lender may reasonably request to vest in the Lender control,
under section 9-105 of the Uniform Commercial Code, of such electronic chattel
paper or control under Section 201 of the federal Electronic Signatures in
Global and National Commerce Act or, as the case may be, section 16 of the
Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of
such transferable record.
(f) LETTER-OF-CREDIT RIGHTS. If the Debtor is at any time a
beneficiary under a letter of credit now or hereafter issued in favor of the
Debtor, the Debtor shall promptly notify the Lender thereof and, at the request
and option of the Lender, the Debtor shall, pursuant to an agreement in form and
substance satisfactory to the Lender, either (i) arrange for the issuer and any
confirmer of such letter of credit to consent to an assignment to the Lender of
the proceeds of any drawing under the letter of credit or (ii) arrange for the
Lender to become the transferee beneficiary of the letter of credit, with the
Lender agreeing, in each case, that the proceeds of any drawing under the letter
of credit are to be applied as provided in the Credit Agreement. Notwithstanding
the foregoing, so long as no Event of Default has occurred and is continuing,
the Debtor may retain the proceeds of any such letter of credit.
(g) COMMERCIAL TORT CLAIMS. If the Debtor shall at any time hold or
acquire a commercial tort claim, the Debtor shall promptly notify the Lender in
a writing signed by the Debtor of the brief details thereof and grant to the
Lender in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and
substance reasonably satisfactory to the Lender.
(h) OTHER ACTIONS AS TO ANY AND ALL COLLATERAL. The Debtor further
agrees to take any other action reasonably requested by the Lender to insure the
attachment, perfection and first priority of, and the ability of the Lender to
enforce, the Lender's security interest in any and all of the Collateral
including, without limitation, (i) executing, delivering and, where appropriate,
filing financing statements and amendments relating thereto under the Uniform
Commercial Code, to the extent, if any, that the Debtor's signature thereon is
required therefor, (ii) causing the Lender's name to be noted as secured party
on any certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of the Lender to enforce, the
Lender's security interest in such Collateral, (iii) complying with any
provision of any statute, regulation or treaty of the United States as to any
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of the Lender to enforce, the Lender's
security interest in such Collateral, (iv) obtaining governmental and other
third party consents and approvals, including without limitation any consent of
any licensor, lessor or other person obligated on Collateral, (v) obtaining
waivers from mortgagees and landlords in form and substance satisfactory to the
Lender and (vi) taking all actions required by applicable law in any relevant
Uniform Commercial Code jurisdiction, or by other law as applicable in any
foreign jurisdiction.
SECTION 5. REPRESENTATIONS AND WARRANTIES REGARDING LEGAL STATUS. The
Debtor represents and warrants to the Lender as follows: as of the date hereof
(a) the Debtor's exact
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legal name is Xxxxxx Industries, Inc., (b) the Debtor is corporation
incorporated under the laws of the State of Tennessee, (c) the Debtor's
organizational identification number is 0278652 and (d) the Debtor's chief
executive office, as well as the Debtor's mailing address is 0000 Xxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxxx, Xxxxxxxxx 00000.
SECTION 6. COVENANTS REGARDING LEGAL STATUS. The Debtor covenants with
the Lender as follows: (a) without providing at least thirty (30) days prior
written notice to the Lender, the Debtor will not change its name, its primary
place of business or, if more than one, chief executive office, or its mailing
address or organizational identification number if it has one, (b) if the Debtor
does not have an organizational identification number and later obtains one, the
Debtor will forthwith notify the Lender of such organizational identification
number, and (c) the Debtor will not change its type of organization,
jurisdiction of organization or other legal structure.
SECTION 7. REPRESENTATIONS AND WARRANTIES REGARDING COLLATERAL, ETC. The
Debtor further represents and warrants to the Lender as follows: (a) the Debtor
is the owner of the Collateral, free from any lien, security interest or other
encumbrance, except for Permitted Liens, (b) none of the Collateral constitutes,
or is the proceeds of "farm products" as defined in ss. 9-102(a)(34) of the
Uniform Commercial Code of the State, (c) as of the date hereof none of the
account debtors or other persons obligated on any of the Collateral is a
governmental authority covered by the Federal Assignment of Claims Act or like
federal, state or local statute or rule in respect of such Collateral, (d) as of
the date hereof the Debtor does not hold any commercial tort claim except as
indicated on Schedule 7(d) hereto, (e) the Debtor does hold or own any
trademark, copyright or patent except as indicated on Schedule 7(e) hereto and
(e) the Debtor has at all times operated its business in compliance in all
material respects with all applicable provisions of federal, state and local
statutes and ordinances, including, without limitation, those dealing with the
control, shipment, storage or disposal of hazardous materials or substances,
except where the failure to so comply would not result in a Material Adverse
Effect.
SECTION 8. COVENANTS REGARDING COLLATERAL GENERALLY. The Debtor further
covenants with the Lender as follows: (a) the Collateral, to the extent not
delivered to the Lender pursuant to Section 4 and except for sales of inventory
in the ordinary course of business and dispositions and transfers permitted
under the Credit Agreement, will be kept at those locations listed on Schedule
8(a) hereto, and the Debtor will not remove the Collateral from such locations,
without providing at least thirty (30) days prior written notice to the Lender,
(b) except for the security interest herein granted and Permitted Liens, the
Debtor shall be the owner of the Collateral free from any lien, security
interest or other encumbrance, and the Debtor shall defend the same against all
claims and demands of all persons at any time claiming the same or any interests
therein adverse to the Lender, (c) except for Permitted Liens, the Debtor shall
not pledge, mortgage or create, or suffer to exist any lien, security interest
or other encumbrance in the Collateral in favor of any Person other than the
Lender, (d) the Debtor shall keep the Collateral in good order and repair and
will not use the same in material violation of law or any policy of insurance
thereon, (e) the Debtor shall permit the Lender, or its designee, to inspect the
Collateral at any reasonable time and upon reasonable notice, wherever located,
(f) the Debtor will promptly pay when due all taxes, assessments, governmental
charges and levies upon the Collateral or incurred in
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connection with the use or operation of the Collateral or incurred in connection
therewith to the extent required pursuant to the Credit Agreement, (g) the
Debtor shall continue to operate its business in compliance in all material
respects with all applicable provisions of federal, state and local statutes and
ordinances, including, without limitation, those dealing with the control,
shipment, storage or disposal of hazardous materials or substances, except for
those federal, state and local statues and ordinances, the failure with which to
comply would not result in a Material Adverse Effect and (h) the Debtor shall
not sell, transfer or otherwise dispose, or offer to sell, transfer or otherwise
dispose, of the Collateral or any interest therein except for (i) sales of
inventory in the ordinary course of business and (ii) dispositions permitted by
the Credit Agreement.
SECTION 9. INSURANCE. The Debtor shall at all times maintain insurance
on the Collateral as set forth in the Credit Agreement.
SECTION 10. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
(a) EXPENSES INCURRED BY LENDER. In the Lender's reasonable
discretion, if the Debtor fails to timely do so (as required hereunder or under
the Loan Documents), the Lender may discharge taxes and other encumbrances at
any time levied or placed on any of the Collateral, maintain any of the
Collateral, make repairs thereto and pay any necessary filing fees or insurance
premiums. The Debtor agrees to reimburse the Lender on demand for all reasonable
expenditures so made. The Lender shall have no obligation to the Debtor or any
other person to make any such expenditures, nor shall the making thereof be
construed as a waiver or cure of any Default or Event of Default.
(b) LENDER'S OBLIGATIONS AND DUTIES. Anything herein to the contrary
notwithstanding, the Debtor shall remain obligated and liable under each
contract or agreement comprised in the Collateral to be observed or performed by
the Debtor thereunder. The Lender shall not have any obligation or liability
under any such contract or agreement by reason of or arising out of this
Agreement or the receipt by the Lender of any payment relating to any of the
Collateral, nor shall the Lender be obligated in any manner to perform any of
the obligations of the Debtor under or pursuant to any such contract or
agreement, to make inquiry as to the nature or sufficiency of any payment
received by the Lender in respect of the Collateral or as to the sufficiency of
any performance by any party under any such contract or agreement, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to the Lender or to which
the Lender may be entitled at any time or times. The Lender's sole duty with
respect to the custody, safe keeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the Uniform Commercial Code of the
State or otherwise, shall be to deal with such Collateral in the same manner as
the Lender deals with similar property for its own account.
SECTION 11. SECURITIES AND DEPOSITS. After the occurrence and during the
continuation of an Event of Default, the Lender may at any time, at its option,
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. Regardless of the adequacy of Collateral or any
other security for the Obligations, any deposits or other sums at any time
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credited by or due from the Lender to the Debtor may at any time be applied to
or set off against any of the Obligations then due and owing.
SECTION 12. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER PERSONS OBLIGATED
ON COLLATERAL. The Debtor shall, at the request and option of the Lender during
a continuance of an Event of Default, notify account debtors and other persons
obligated on any of the Collateral of the security interest of the Lender in any
account, chattel paper, general intangible, instrument constituting Collateral
or other Collateral and that payment thereof is to be made directly to the
Lender or to any financial institution designated by the Lender as the Lender's
agent therefor, and the Lender may itself, if an Event of Default shall have
occurred and be continuing, without notice to or demand upon the Debtor, so
notify account debtors and other persons obligated on Collateral. After the
making of such a request or the giving of any such notification, the Debtor
shall hold any proceeds of collection of accounts, chattel paper, general
intangibles, instruments constituting Collateral and other Collateral received
by the Debtor as trustee for the Lender, without commingling the same with other
funds of the Debtor and shall turn the same over to the Lender in the identical
form received, together with any necessary endorsements or assignments. The
Lender shall apply the proceeds of collection of such accounts, chattel paper,
general intangibles, instruments and other Collateral received by the Lender to
the Obligations in accordance with Section 10.4 of the Credit Agreement, such
proceeds to be immediately credited after final payment in cash or other
immediately available funds of the items giving rise to them.
SECTION 13. POWER OF ATTORNEY.
(a) APPOINTMENT AND POWERS OF LENDER. The Debtor hereby irrevocably
constitutes and appoints the Lender and any officer or agent thereof, with full
power of substitution, as its true and lawful attorneys-in-fact with full
irrevocable power and authority in the place and stead of the Debtor or in the
Lender's own name, for the purpose of carrying out the terms of this Agreement,
to take any and all appropriate action and to execute any and all documents and
instruments that may be necessary or useful to accomplish the purposes of this
Agreement and, without limiting the generality of the foregoing, hereby gives
said attorneys the power and right, on behalf of the Debtor, without notice to
or assent by the Debtor, to do the following: (i) upon the occurrence and during
the continuance of an Event of Default, generally to sell, transfer, pledge,
make any agreement with respect to or otherwise dispose of or deal with any of
the Collateral in such manner as is consistent with the Uniform Commercial Code
of the State and as fully and completely as though the Lender were the absolute
owner thereof for all purposes, and to do, at the Debtor's expense, at any time,
or from time to time, all acts and things which the Lender deems necessary or
advisable to protect, preserve or realize upon the Collateral and the Lender's
security interest therein, in order to effect the intent of this Agreement, all
no less fully and effectively as the Debtor might do, including, without
limitation, (A) the filing and prosecuting of registration and transfer
applications with the appropriate federal, state or local agencies or
authorities with respect to trademarks, copyrights and patentable inventions and
processes constituting Collateral, (B) upon written notice to the Debtor, the
exercise of voting rights with respect to voting securities constituting
Collateral, which rights may be exercised, if the Lender so elects, with a view
to causing the liquidation of assets of the issuer of any such securities and
(C) the execution, delivery and recording, in connection with any sale or other
disposition of any Collateral, of the endorsements, assignments or other
instruments of
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conveyance or transfer with respect to such Collateral; and (ii) to the extent
that the Debtor's authorization given in Section 3 is not sufficient, to file
such financing statements with respect hereto, with or without the Debtor's
signature, or a photocopy of this Agreement in substitution for a financing
statement, as the Lender may deem reasonably appropriate and to execute in the
Debtor's name such financing statements and amendments thereto and continuation
statements which may require the Debtor's signature.
(b) RATIFICATION BY THE DEBTOR. To the extent permitted by law, the
Debtor hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. This power of attorney is a power coupled with an
interest and is irrevocable.
(c) NO DUTY ON LENDER. The powers conferred on the Lender hereunder
are solely to protect the interests of the Lender in the Collateral and shall
not impose any duty upon the Lender to exercise any such powers. The Lender
shall be accountable only for the amounts that it actually receives as a result
of the exercise of such powers, and neither it nor any of its officers,
directors, employees or agents shall be responsible to the Debtor for any act or
failure to act, except for the Lender's own gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final,
non-appealable judgment).
SECTION 14. RIGHTS AND REMEDIES. If an Event of Default shall have
occurred and be continuing, the Lender, without any other notice to or demand
upon the Debtor, shall have in any jurisdiction in which enforcement hereof is
sought, in addition to all other rights and remedies, the rights and remedies of
a secured party under the Uniform Commercial Code of the State and any
additional rights and remedies as may be provided to a secured party in any
jurisdiction in which Collateral is located, including, without limitation, the
right to take possession of the Collateral, and for that purpose the Lender may,
so far as the Debtor can give authority therefor, enter upon any premises on
which the Collateral may be situated and remove the same therefrom. The Lender
may in its discretion require the Debtor to assemble all or any part of the
Collateral at such location or locations within the jurisdiction(s) of the
Debtor's principal office(s) or at such other locations as the Lender may
reasonably designate. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, the Lender shall give to the Debtor at least ten (10) Business Days
prior written notice of the time and place of any public sale of Collateral or
of the time after which any private sale or any other intended disposition is to
be made. The Debtor hereby acknowledges that ten (10) Business Days prior
written notice of such sale or sales shall be reasonable notice. In addition,
the Debtor waives any and all rights that it may have to a judicial hearing in
advance of the enforcement of any of the Lender's rights and remedies hereunder,
including, without limitation, its right following, and during the continuation
of, an Event of Default to take immediate possession of the Collateral and to
exercise its rights and remedies with respect thereto.
SECTION 15. STANDARDS FOR EXERCISING RIGHTS AND REMEDIES. To the extent
that applicable law imposes duties on the Lender to exercise remedies in a
commercially reasonable manner, the Debtor acknowledges and agrees that it is
not commercially unreasonable for the Lender (a) to fail to incur expenses
reasonably deemed significant by the Lender to prepare Collateral for
disposition, (b) to fail to obtain third party consents for access to Collateral
to be disposed of, or to obtain or, if not required by other law, to fail to
obtain governmental or third
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party consents for the collection or disposition of Collateral to be collected
or disposed of, (c) to fail to exercise collection remedies against account
debtors or other persons obligated on Collateral or to fail to remove liens or
encumbrances on or any adverse claims against Collateral, (d) to exercise
collection remedies against account debtors and other persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (f) to contact other persons, whether or not in the
same business as the Debtor, for expressions of interest in acquiring all or any
portion of the Collateral, (g) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the collateral is of a
specialized nature, (h) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties, (k) to purchase insurance or
credit enhancements to insure the Lender against risks of loss, collection or
disposition of Collateral or to provide to the Lender a guaranteed return from
the collection or disposition of Collateral, or (l) to the extent deemed
appropriate by the Lender, to obtain the services of brokers, investment
bankers, consultants and other professionals to assist the Lender in the
collection or disposition of any of the Collateral. The Debtor acknowledges that
the purpose of this Section 15 is to provide non-exhaustive indications of what
actions or omissions by the Lender would fulfill the Lender's duties under the
Uniform Commercial Code of the State or any other relevant jurisdiction in the
Lender's exercise of remedies against the Collateral and that other actions or
omissions by the Lender shall not be deemed to fail to fulfill such duties
solely on account of not being indicated in this Section 15. Without limitation
upon the foregoing, nothing contained in this Section 15 shall be construed to
grant any rights to the Debtor or to impose any duties on the Lender that would
not have been granted or imposed by this Agreement or by applicable law in the
absence of this Section 15.
SECTION 16. NO WAIVER BY LENDER, ETC. The Lender shall not be deemed to
have waived any of its rights and remedies in respect of the Obligations or the
Collateral unless such waiver shall be in writing and signed by the Lender. No
delay or omission on the part of the Lender in exercising any right or remedy
shall operate as a waiver of such right or remedy or any other right or remedy.
A waiver on any one occasion shall not be construed as a bar to or waiver of any
right or remedy on any future occasion. All rights and remedies of the Lender
with respect to the Obligations or the Collateral, whether evidenced hereby or
by any other instrument or papers, shall be cumulative and may be exercised
singularly, alternatively, successively or concurrently at such time or at such
times as the Lender deems expedient.
SECTION 17. SURETYSHIP WAIVERS BY DEBTOR. The Debtor waives demand,
notice, protest, notice of acceptance of this Agreement, notice of loans made,
credit extended, Collateral received or delivered or other action taken in
reliance hereon and all other demands and notices of each description. With
respect to both the Obligations and the Collateral, the Debtor assents to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Lender may deem advisable. The Lender shall have no
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duty as to the collection or protection of the Collateral or any income
therefrom, the preservation of rights against prior parties, or the preservation
of any rights pertaining thereto beyond the safe custody thereof as set forth in
Section 10(b). The Debtor further waives any and all other suretyship defenses.
SECTION 18. MARSHALLING. The Lender shall not be required to marshal any
present or future collateral security (including but not limited to the
Collateral) for, or other assurances of payment of, the Obligations or to resort
to such collateral security or other assurances of payment in any particular
order, and all of the rights and remedies of the Lender in respect of such
collateral security and other assurances of payment shall be cumulative and in
addition to all other rights and remedies, however existing or arising. To the
extent that it lawfully may, the Debtor hereby agrees that it will not invoke
any law relating to the marshalling of collateral which might cause delay in or
impede the enforcement of the Lender's rights and remedies under this Agreement
or under any other instrument creating or evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, the Debtor hereby irrevocably waives the benefits
of all such laws.
SECTION 19. PROCEEDS OF DISPOSITIONS; EXPENSES. The Debtor agrees to pay
to the Lender on demand any and all reasonable and actual expenses, including
attorneys' fees and disbursements, incurred or paid by the Lender in protecting,
preserving or enforcing the Lender's rights and remedies under or in respect of
any of the Obligations or any of the Collateral. After deducting all of said
expenses, the residue of any proceeds of collection or sale or other disposition
of Collateral shall, to the extent actually received in cash, be applied to the
payment of the Obligations in such order or preference as is provided in Section
10.4 of the Credit Agreement. Upon the final payment and satisfaction in full of
all of the Obligations and after making any payments required by the Uniform
Commercial Code of the State, any excess shall be returned to the Debtor. In the
absence of final payment and satisfaction in full of all of the Obligations, the
Debtor shall remain liable for any deficiency.
SECTION 20. OVERDUE AMOUNTS. Until paid, all amounts due and payable by
the Debtor hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Credit Agreement.
SECTION 21. LITIGATION; GOVERNING LAW; CONSENT TO JURISDICTION. (a) EACH
PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN THE DEBTOR AND
THE LENDER WOULD BE BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND
WOULD RESULT IN DELAY AND EXPENSE TO THE PARTIES. ACCORDINGLY, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE LENDER AND THE DEBTOR HEREBY WAIVES ITS
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN
ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST ANY
PARTY HERETO ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR BY
REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN THE
DEBTOR AND
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THE LENDER OF ANY KIND OR NATURE RELATING TO ANY OF THE LOAN DOCUMENTS.
(b) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO CONTRACTS EXECUTED, AND TO
BE FULLY PERFORMED, IN SUCH STATE
(c) EACH OF THE DEBTOR AND THE LENDER HEREBY AGREES THAT THE FEDERAL
DISTRICT COURT OF THE NORTHERN DISTRICT OF GEORGIA OR, AT THE OPTION OF THE
LENDER, ANY STATE COURT LOCATED IN GEORGIA, SHALL HAVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE DEBTOR AND LENDER PERTAINING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR TO ANY
MATTER ARISING HEREFROM OR THEREFROM. THE DEBTOR AND THE LENDER EXPRESSLY SUBMIT
AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING
COMMENCED IN SUCH COURTS WITH RESPECT TO SUCH CLAIMS OR DISPUTES. EACH PARTY
FURTHER WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF
ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM, AND EACH AGREES NOT TO PLEAD OR
CLAIM THE SAME. THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE
DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE LENDER OR THE ENFORCEMENT
BY THE LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE
JURISDICTION.
(d) THE PROVISIONS OF THIS SECTION HAVE BEEN CONSIDERED BY EACH
PARTY WITH THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL
CONSEQUENCES THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER
AMOUNTS PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS AND THE TERMINATION
OF THIS AGREEMENT.
SECTION 23. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Debtor herefrom shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 24. NOTICES. Unless otherwise provided herein, communications
provided for hereunder shall be in writing and shall be mailed, telecopied or
delivered, as set forth in Section 11.1 of the Credit Agreement.
SECTION 25. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under Applicable Law, but if any provision of this Agreement shall be prohibited
by or invalid under Applicable Law, such
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provisions shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
SECTION 26. INDEMNIFICATION. The Debtor agrees to indemnify the Lender,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, reasonable and actual expenses or
disbursements of any kind or nature whatsoever which may at any time be imposed
on, incurred by, or asserted against the Lender in any way relating to or
arising out of the operation of the Debtor's business, any action taken by the
Lender with respect to any contract or account debtor pursuant to this Agreement
or any other action taken by the Lender pursuant to the terms of this Agreement;
PROVIDED, HOWEVER, that the Debtor shall not be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Lender's gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final, non-appealable judgment). Without limiting the
generality of the foregoing, the Debtor agrees to reimburse the Lender promptly
upon demand for any reasonable out-of-pocket expenses (including reasonable and
actual counsel fees of the counsel(s) of the Lender's own choosing) incurred by
the Lender in connection with the preparation, execution, administration, or
enforcement of, or legal advice with respect to the rights or responsibilities
of the parties under, this Agreement, any suit or action brought by the Lender
to enforce the terms of this Agreement, any "lender liability" suit or claim
brought against the Lender, and any claim or suit brought against the Lender
arising under any federal or state environmental statute, rule or regulation,
including, without limitation, the Superfund Act, or the Federal Resource
Conservation and Recovery Act of 1976, as amended. Such reasonable out-of-pocket
expenses (including reasonable and actual counsel fees) shall be advanced by the
Debtor on the request of the Lender notwithstanding any claim or assertion that
the Lender is not entitled to indemnification hereunder upon receipt of an
undertaking by the Lender that the Lender will reimburse the Debtor if it is
actually and finally determined by a court of competent jurisdiction that the
Lender is not so entitled to indemnification. The agreements in this Section
shall survive the termination of this Agreement. The Lender agrees to give the
Debtor prompt notice of any suit or cause of action brought against the Lender
which is covered by this Section.
SECTION 27. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which, taken
together, shall constitute but one and the same instrument.
SECTION 28. MISCELLANEOUS. The headings of each section of this
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Agreement and all rights and obligations hereunder shall be
binding upon the Debtor and its successors and assigns, and shall inure to the
benefit of the Lender and its successors and assigns. If any term of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity of
all other terms hereof shall in no way be affected thereby, and this Agreement
shall be construed and be enforceable as if such invalid, illegal or
unenforceable term had not been included herein. The Debtor acknowledges receipt
of a copy of this Agreement.
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IN WITNESS WHEREOF, the Debtor has caused this Security Agreement to be
duly executed and delivered under seal by its duly authorized officers as of the
day first above written.
XXXXXX INDUSTRIES, INC.
By: /s/ J. Xxxxxxx Xxxx
-----------------------------------
Name: J. Xxxxxxx Xxxx
------------------------------
Title: Chief Financial Officer
-----------------------------
Agreed and accepted as of the date first written above.
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxx
------------------------
Title: Vice President
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