EXHIBIT 10.6
SUBSIDIARY SECURITY AGREEMENT
THIS SUBSIDIARY SECURITY AGREEMENT (this "Agreement") dated as of June
17, 2005 between each of the parties listed on the signature page hereto as
"Debtors" (each a "Debtor, and collectively the "Debtors"), and WACHOVIA BANK,
NATIONAL ASSOCIATION with an office located at 000 00xx Xxxxxx XX, 000 Xxxxxxxx,
Xxxxxxx, Xxxxxxx, 00000, as the Secured Party (in such capacity, the "Secured
Party").
WHEREAS, pursuant to that certain Credit Agreement dated as of June 17,
2005 (as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement"), by and between Xxxxxx Industries, Inc. (the
"Borrower") and the Secured Party, the Secured Party has agreed to make
available to the Borrower certain financial accommodations on the terms and
conditions set forth in the Credit Agreement;
WHEREAS, the Borrower and each of the Debtors, though separate legal
entities, are mutually dependent on each other in the conduct of their
respective businesses as an integrated operation and have determined it to be in
their mutual best interests to obtain financing from the Secured Party through
their collective efforts;
WHEREAS, each Debtor has executed and delivered a guarantee in favor of
the Secured Party pursuant to which the Debtors guaranteed the prompt repayment
of the Borrower's obligations under the Credit Agreement (the "Guarantee");
WHEREAS, each Debtor acknowledges that it will receive direct and
indirect benefits from the Secured Party, the Secured Party making such
financial accommodations available to the Borrower under the Credit Agreement
and, accordingly, each Debtor is willing to grant to the Secured Party a
security interest in the Collateral (as defined below) to secure the Borrower's
obligations to the Secured Party and to secure their obligations to the Secured
Party under the Guarantee on the terms and conditions contained herein; and
WHEREAS, each Debtor's execution and delivery of this Agreement is a
condition to the Secured Party making, and continuing to make, such financial
accommodations to the Borrower.
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 Debtors, the Debtors hereby agree with the Secured Party 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
each of the Debtors, 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 any Debtor.
"DEBTOR(S)" 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
(d) the Secured Party'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
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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, each of the Debtors hereby collaterally
assigns and pledges to the Secured Party, and grants to the Secured Party a
security interest and lien in and to, the Collateral. The Secured Party
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 Debtors
hereby irrevocably authorize the Secured Party 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 Debtors or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9
of the 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 such Debtor is an organization,
the type of organization and any organization identification number issued to
such 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
Debtors agree to furnish any such information to the Secured Party promptly upon
request.
SECTION 4. OTHER ACTIONS. Further to insure the attachment, perfection
and first priority of, and the ability of the Secured Party to enforce, the
Secured Party's security interest in the Collateral, the Debtors agree, in each
case at the Debtors' own expense, to take the following actions with respect to
the following Collateral:
(a) PROMISSORY NOTES AND TANGIBLE CHATTEL PAPER. If any of the
Debtors shall at any time hold or acquire any promissory notes or tangible
chattel paper constituting Collateral, the Debtors shall forthwith endorse,
assign and deliver the same to the Secured Party, accompanied by such
instruments of transfer or assignment duly executed in blank as the Secured
Party may from time to time specify.
(b) [Reserved]
(c) INVESTMENT PROPERTY. If any of the Debtors 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, such Debtor shall, at the Secured Party's
request and option, endorse, assign and deliver the same to the Secured Party,
accompanied by such instruments of transfer or assignment duly executed in blank
as the Secured Party may from time to time specify. If any Collateral consisting
of securities now or hereafter acquired by any Debtor are uncertificated and are
issued to such Debtor or its nominee directly by the issuer
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thereof, such Debtor shall immediately notify the Secured Party thereof and, at
the Secured Party's request and option, pursuant to an agreement in form and
substance satisfactory to the Secured Party, cause the issuer to agree to comply
with instructions from the Secured Party as to such securities, without further
consent of the Secured Party 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 Debtors
shall promptly notify the Secured Party thereof and, if requested by the Secured
Party, shall promptly obtain an acknowledgement from the bailee, in form and
substance satisfactory to the Secured Party, that the bailee holds such
Collateral for the benefit of the Secured Party and shall act upon the
instructions of the Secured Party, without the further consent of the Debtors.
(e) ELECTRONIC CHATTEL PAPER AND TRANSFERABLE RECORDS. If any of the
Debtors at any time holds or acquires an interest in any electronic chattel
paper or any "transferable record", as that 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, such Debtor shall promptly notify the Secured Party
thereof and, at the request of the Secured Party, shall take such action as the
Secured Party may reasonably request to vest in the Secured Party 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 any of the Debtors is at any time a
beneficiary under a letter of credit now or hereafter issued in favor of such
Debtor, such Debtor shall promptly notify the Secured Party thereof and, at the
request and option of the Secured Party, such Debtor shall, pursuant to an
agreement in form and substance satisfactory to the Secured Party, either (i)
arrange for the issuer and any confirmer of such letter of credit to consent to
an assignment to the Secured Party of the proceeds of any drawing under the
letter of credit or (ii) arrange for the Secured Party to become the transferee
beneficiary of the letter of credit, with the Secured Party 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 Debtors may
retain the proceeds of any such letter of credit.
(g) COMMERCIAL TORT CLAIMS. If any of the Debtors shall at any time
hold or acquire a commercial tort claim, such Debtor shall promptly notify the
Secured Party in a writing signed by such Debtor of the brief details thereof
and grant to the Secured Party 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 Secured Party.
(h) OTHER ACTIONS AS TO ANY AND ALL COLLATERAL. The Debtors further
agree to take any other action reasonably requested by the Secured Party to
insure the attachment, perfection and
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first priority of, and the ability of the Secured Party to enforce, the Secured
Party'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 any of the Debtor's signatures thereon is required
therefor, (ii) causing the Secured Party'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 Secured Party to
enforce, the Secured Party'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 Secured Party to
enforce, the Secured Party'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 Secured Party 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
Debtors represent and warrant to the Secured Party that as of the date hereof
(a) the Debtors' exact legal names are as set forth on Schedule 5 hereto, (b)
the Debtors are corporations incorporated under the laws of the jurisdictions
set forth on Schedule 5 hereto, (c) the Debtors' organizational identification
numbers are as set forth on Schedule 5 hereto and (d) the Debtors' chief
executive offices, as well as their mailing addresses are as set forth on
Schedule 5 hereto.
SECTION 6. COVENANTS REGARDING LEGAL STATUS. The Debtors covenant with
the Secured Party as follows: (a) without providing at least thirty (30) days
prior written notice to the Secured Party, none of the Debtors will 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 such Debtor does not have an organizational identification number
and later obtains one, such Debtor will forthwith notify the Secured Party of
such organizational identification number, and (c) none of the Debtors will
change its type of organization, jurisdiction of organization or other legal
structure.
SECTION 7. REPRESENTATIONS AND WARRANTIES REGARDING COLLATERAL, ETC. The
Debtors further represent and warrant to the Secured Party as follows: (a) each
of the Debtors own 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, none of Debtors hold any commercial tort
claim except as indicated on Schedule 7(d) hereto, (e) none of the Debtors hold
or own any trademark, copyright or patent except as indicated on Schedule 7(e)
hereto and (e) each of the Debtors 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
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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 Debtors further
covenant with the Secured Party as follows: (a) the Collateral, to the extent
not delivered to the Secured Party pursuant to Section 4 and except for sales of
inventory in the ordinary course of business and dispositions and transfers
permitted under the Credit Agremeent, will be kept at those locations listed on
Schedule 8(a) hereto, and the Debtors will not remove the Collateral from such
locations, without providing at least thirty (30) days prior written notice to
the Secured Party, (b) except for the security interest herein granted and
Permitted Liens, the Debtors shall be the owners of the Collateral free from any
lien, security interest or other encumbrance, and the Debtors 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 Secured Party, (c) except for Permitted
Liens, the Debtors 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 Secured Party, (d) the Debtors 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 Debtors shall permit the Secured
Party, or its designee, to inspect the Collateral at any reasonable time and
upon reasonable notice, wherever located, (f) the Debtors will promptly pay when
due all taxes, assessments, governmental charges and levies upon the Collateral
or incurred in connection with the use or operation of the Collateral or
incurred in connection therewith to the extent required pursuant to the Credit
Agreement, (g) each 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 statutes and ordinances, the failure
with which to comply would not result in a Material Adverse Effect and (h) none
of the Debtors shall 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 Debtors 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 SECURED PARTY. In the Secured
Party's reasonable discretion, if any of the Debtors fail to timely do so (as
required hereunder or under the Loan Documents), the Secured Party 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 Debtors agree to reimburse the
Secured Party on demand for all reasonable expenditures so made. The Secured
Party shall have no obligation to the Debtors 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) SECURED PARTY'S OBLIGATIONS AND DUTIES. Anything herein
to the contrary notwithstanding, each Debtor shall remain obligated and liable
under each contract or agreement
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comprised in the Collateral to be observed or performed by such Debtor
thereunder. The Secured Party 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 Secured Party of any payment relating to any of the
Collateral, nor shall the Secured Party be obligated in any manner to perform
any of the obligations of such 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 Secured Party 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 Secured Party or to which the Secured Party may be entitled at
any time or times. The Secured Party'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 Secured Party
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 Secured Party 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 credited by or due from the Secured Party to the Debtors 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 Debtors shall, at the request and option of the Secured Party
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
Secured Party in any account, chattel paper, general intangible, instrument
constituting Collateral or other Collateral and that payment thereof is to be
made directly to the Secured Party or to any financial institution designated by
the Secured Party as the Secured Party's agent therefor, and the Secured Party
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 Debtors shall hold any proceeds of
collection of accounts, chattel paper, general intangibles, instruments
constituting Collateral and other Collateral received by the Debtors as trustee
for the Secured Party, without commingling the same with other funds of the
Debtors and shall turn the same over to the Secured Party in the identical form
received, together with any necessary endorsements or assignments. The Secured
Party shall apply the proceeds of collection of such accounts, chattel paper,
general intangibles, instruments and other Collateral received by the Secured
Party 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 SECURED PARTY. Debtors hereby
irrevocably constitute and appoint the Secured Party and any officer or agent
thereof, with full power of
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substitution, as its true and lawful attorneys-in-fact with full irrevocable
power and authority in the place and stead of the Debtors or in the Secured
Party'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 Debtors, without notice to
or assent by any 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 Secured Party were the
absolute owner thereof for all purposes, and to do, at the Debtors' expense, at
any time, or from time to time, all acts and things which the Secured Party
deems necessary or advisable to protect, preserve or realize upon the Collateral
and the Secured Party's security interest therein, in order to effect the intent
of this Agreement, all no less fully and effectively as the Debtors 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 Debtors,
the exercise of voting rights with respect to voting securities constituting
Collateral, which rights may be exercised, if the Secured Party 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 conveyance or transfer with respect to such Collateral; and (ii)
to the extent that the Debtors' authorization given in Section 3 is not
sufficient, to file such financing statements with respect hereto, with or
without any of the Debtors' signatures, or a photocopy of this Agreement in
substitution for a financing statement, as the Secured Party may deem reasonably
appropriate and to execute in the Debtors' name such financing statements and
amendments thereto and continuation statements which may require the Debtors'
signature.
(b) RATIFICATION BY THE DEBTORS. To the extent permitted by
law, the Debtors hereby ratify 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 SECURED PARTY. The powers conferred on the
Secured Party hereunder are solely to protect the interests of the Secured Party
in the Collateral and shall not impose any duty upon the Secured Party to
exercise any such powers. The Secured Party 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 any of the Debtors for any act or failure to act, except for the
Secured Party'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 Secured Party, without any other notice to or
demand upon the Debtors, 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
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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 Secured Party may, so far as the Debtors can give authority therefor, enter
upon any premises on which the Collateral may be situated and remove the same
therefrom. The Secured Party may in its discretion require the Debtors to
assemble all or any part of the Collateral at such location or locations within
the jurisdiction(s) of each Debtor's principal office(s) or at such other
locations as the Secured Party 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 Secured Party shall give to the
Debtors 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 Debtors hereby
acknowledge that ten (10) Business Days prior written notice of such sale or
sales shall be reasonable notice. In addition, the Debtors waive any and all
rights that they may have to a judicial hearing in advance of the enforcement of
any of the Secured Party'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 Secured Party to exercise remedies in
a commercially reasonable manner, the Debtors acknowledge and agree that it is
not commercially unreasonable for the Secured Party (a) to fail to incur
expenses reasonably deemed significant by the Secured Party 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 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 Debtors, 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 Secured Party against risks of loss, collection or disposition of
Collateral or to provide to the Secured Party a guaranteed return from the
collection or disposition of Collateral, or (l) to the extent deemed appropriate
by the Secured Party, to obtain the services of brokers, investment bankers,
consultants and other professionals to assist the Secured Party in the
collection or disposition of any of the Collateral. The Debtors acknowledge that
the purpose of this Section 15 is to provide non-exhaustive indications of what
actions or omissions by the Secured Party would fulfill the Secured Party's
duties under the Uniform Commercial Code of the State or any other relevant
jurisdiction in the Secured Party's exercise of remedies against the Collateral
and that other
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actions or omissions by the Secured Party 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 Debtors or to impose any duties on the
Secured Party 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 SECURED PARTY, ETC. The Secured Party 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 Secured Party. No delay or omission on the part of the Secured Party 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 Secured Party 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 Secured Party deems
expedient.
SECTION 17. SURETYSHIP WAIVERS BY DEBTORS. The Debtors waive 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 Debtors assent 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 Secured Party may deem advisable. The Secured Party
shall have no 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 Debtors further waive any and all other
suretyship defenses.
SECTION 18. MARSHALLING. The Secured Party 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 Secured Party 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, each of the Debtors 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 Secured Party'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 they lawfully may, the Debtors hereby
irrevocably waive the benefits of all such laws.
SECTION 19. PROCEEDS OF DISPOSITIONS; EXPENSES. The Debtors agree to pay
to the Secured Party on demand any and all reasonable and actual expenses,
including attorneys' fees
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and disbursements, incurred or paid by the Secured Party in protecting,
preserving or enforcing the Secured Party'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 Debtors. In the absence of final payment and satisfaction in
full of all of the Obligations, the Debtors shall remain liable for any
deficiency.
SECTION 20. OVERDUE AMOUNTS. Until paid, all amounts due and payable by
the Debtors 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 ANY OF THE
DEBTORS AND THE SECURED PARTY 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 SECURED PARTY AND THE
DEBTORS 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 ANY OF THE DEBTORS AND THE SECURED PARTY 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 DEBTORS AND THE SECURED PARTY HEREBY AGREES
THAT THE FEDERAL DISTRICT COURT OF THE NORTHERN DISTRICT OF GEORGIA OR, AT THE
OPTION OF THE SECURED PARTY, ANY STATE COURT LOCATED IN GEORGIA, SHALL HAVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY OF THE
DEBTORS AND SECURED PARTY PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR TO ANY MATTER ARISING HEREFROM OR THEREFROM. EACH OF
THE DEBTORS AND THE SECURED PARTY 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
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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 SECURED PARTY OR THE ENFORCEMENT BY
THE SECURED PARTY 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 Debtors 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 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 Debtors agree to indemnify the Secured
Party, 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 Secured Party in any way relating to or
arising out of the operation of the Debtors' business, any action taken by the
Secured Party with respect to any contract or account debtor pursuant to this
Agreement or any other action taken by the Secured Party pursuant to the terms
of this Agreement; PROVIDED, HOWEVER, that the Debtors 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 Secured Party'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 Debtors agree to reimburse
the Secured Party promptly upon demand for any reasonable out-of-pocket expenses
(including reasonable and actual counsel fees of the counsel(s) of the Secured
Party's own choosing) incurred by the Secured Party 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 Secured Party to enforce the terms of this
Agreement, any
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"lender liability" suit or claim brought against the Secured Party, and any
claim or suit brought against the Secured Party 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 Debtors on the request of the
Secured Party notwithstanding any claim or assertion that the Secured Party is
not entitled to indemnification hereunder upon receipt of an undertaking by the
Secured Party that the Secured Party will reimburse the Debtors if it is
actually and finally determined by a court of competent jurisdiction that the
Secured Party is not so entitled to indemnification. The agreements in this
Section shall survive the termination of this Agreement. The Secured Party
agrees to give the Debtors prompt notice of any suit or cause of action brought
against the Secured Party 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. JOINT AND SEVERAL OBLIGATIONS. The obligations of the
Debtors hereunder shall be joint and several, and accordingly, each Debtor
confirms that it is liable for the full amount of the Obligations and any other
amount owing pursuant hereto, regardless of whether incurred by such Debtor.
Each Debtor assumes all responsibility for being and keeping itself informed of
the financial condition of the other Debtors, and of all other circumstances
bearing upon the risk of nonpayment of any of the Obligations and the nature,
scope and extent of the risks that such Debtor assumes and incurs hereunder, and
agrees that the Secured Party shall have no any duty whatsoever to advise any
Debtor of information regarding such circumstances or risks.
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 Debtors and their successors and assigns, and shall inure to
the benefit of the Secured Party 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 Debtors acknowledge receipt
of a copy of this Agreement.
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IN WITNESS WHEREOF, the Debtors have caused this Subsidiary Security
Agreement to be duly executed and delivered under seal by its duly authorized
officers as of the day first above written.
DEBTORS:
XXXXXX INDUSTRIES TOWING EQUIPMENT, INC.
CHAMPION CARRIER CORPORATION
XXXXXX/GREENVILLE, INC.
CHEVRON, 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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