EXHIBIT 10.13.3
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as defined in Article 6 hereof, along with all
other defined terms, this "Security Agreement") is made and effective as of
January 18, 2002, by EACH "BORROWER" THAT IS FROM TIME TO TIME LISTED ON
SCHEDULE 1 HERETO OR OTHERWISE ADDED AS A SIGNATORY HERETO (each, as more fully
defined below, a "Borrower"; collectively, the "Borrowers"), in favor of
HOMEGOLD FINANCIAL, INC. ("Lender"), (as defined in the Credit Agreement
referred to below).
R E C I T A L S
WHEREAS, pursuant to that certain Revolving Credit Agreement by and
among Borrowers and Lender (as may be amended from time to time, "Credit
Agreement"), each Borrower is required to have executed and delivered this
Security Agreement encumbering all of each Borrower's tangible and intangible
personal property assets in favor of Lender; and
WHEREAS, each Borrower has determined that it is in its best interest
to execute this Security Agreement inasmuch as each Borrower has determined that
the execution, delivery and performance of this Security Agreement is necessary
or convenient to the conduct, promotion or attainment of the business of such
Borrower;
NOW, THEREFORE, for good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged) and intending to be legally bound
hereby, each Borrower and Lender hereby agree as follows:
ARTICLE 1: SECURITY INTEREST, COLLATERAL ASSIGNMENT AND PLEDGE
1.1. Grant of Security. Each Borrower (as of the effective date of becoming
a signatory hereto) hereby collaterally assigns and pledges to Lender and hereby
grants to Lender a present, absolute, unconditional and continuing security
interest in, all of the following property, assets and equity interests, whether
or not such property and assets are covered by Article 9 of the applicable UCC
(collectively, and including all Pledged Collateral, "Collateral"):
(a) Accounts: All accounts, contract rights, chattel paper, customer
monitoring contracts, customer maintenance contracts, instruments and
documents, whether now owned or hereafter created or acquired by any
Borrower or in which any Borrower now has or hereafter acquires any
interest, including all accounts due to any Borrower from any
independent third party financing entity.
(b) Receivables. All Consumer Loan receivables, collateral for
Consumer Loans including checks and all trade and other receivables.
(c) Equipment: All computers, machinery, apparatus, equipment,
fittings, furniture, fixtures, motor vehicles, and other tangible
personal Property of every kind and description, now owned or hereafter
acquired, and all parts, accessories, and special tools thereto and all
increases and accessions thereto and substitutions and replacements
therefor.
(d) General Intangibles: All general intangibles, whether now owned or
hereafter created or acquired, including, without limitation, all
choses in action, causes of action, corporate or other business
records, deposit accounts, inventions, designs, patents, patent
applications, trademarks, trade names, trade secrets, goodwill,
copyrights, registrations, licenses, franchises, customer lists, tax
refund claims, computer programs, all claims under guaranties, security
interests or other security held by or granted to any Borrower to
secure payment of any of the Accounts, all rights to indemnification
and all other intangible property of every kind and nature (other than
Accounts).
(e) All monies and other Property of any kind, now or at any time or
times hereafter, while in the possession or under the control of Lender
or a bailee of Lender, together with all proceeds relating thereto.
1.2. Security for Secured Obligations. This Security Agreement secures the
payment and performance in full of (a) all obligations (monetary or otherwise)
of each Borrower now or hereafter existing under the Credit Agreement, as well
as under any other agreement with Lender to extend credit to any Borrower or to
any Affiliate of any such Borrower (whether for principal, interest, costs,
fees, expenses, protective advances or otherwise), and (b) all obligations
(monetary or otherwise) of any Borrower now or hereafter existing under this
Security Agreement or the Credit Agreement (all such obligations under Clauses
"(a)" and "(b)" being referred to collectively as the "Secured Obligations").
1.3. Continuing Security Interest; Assignment; Termination. This Security
Agreement creates a continuing security interest in and collateral assignment
and pledge of the Collateral and will remain in full force and effect until
terminated as described below in this Section. This Security Agreement is
binding upon each Borrower and its successors, transferees and assignees, and
(together with the rights and remedies of Lender hereunder) inures to the
benefit of Lender and its successors, transferees, participants and assignees.
Without limiting the generality of the foregoing, except to the extent
restricted under the Credit Agreement, Lender may assign, syndicate, participate
or otherwise transfer (in whole or in part, and without any Borrower's consent)
any indebtedness thereunder to any other Person, and such other Person or entity
will thereupon become vested with all the rights and benefits in respect thereof
granted to Lender under the Credit Agreement and this Security Agreement or
otherwise, subject, however, to any contrary provisions in such assignment or
transfer.
1.4. Security Interest Absolute. All rights of Lender and the security
interests, collateral assignments and pledges granted, assigned and pledged to
Lender hereunder, and all obligations of each Borrower hereunder, are absolute
and unconditional, irrespective of the occurrence of any one or more of the
following:
a. Any lack of validity or enforceability of the Credit Agreement; or
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b. The failure of Lender or any holder of any Note:
i. To assert any claim or demand or to enforce any right or remedy
under the provisions of the Credit Agreement or otherwise, or
ii. To exercise any right or remedy against any other Borrower of, or
any collateral securing, any obligations of any Borrower owing to
Lender; or
c. Any change in the time, manner or place of payment of, or in any other
term of, any Secured Obligation; or
d. Any other extension, increase, refinancing, restructuring, compromise
or renewal of any Secured Obligation; or
e. Any reduction, limitation, impairment or termination of any Secured
Obligation for any reason, including any waiver, release, surrender,
alteration or compromise; or
f. Any amendment to, rescission, waiver, or other modification of, or any
consent to departure from, the terms of the Credit Agreement; or
g. Any addition, exchange, release, surrender or nonperfection of any
collateral (including the Collateral), or any amendment to or waiver
or release of or addition to or consent to departure from any
guaranty, for any Secured Obligation; or
h. Any other circumstances which might otherwise constitute a defense
available to, or a legal or equitable discharge of, any Borrower or
its obligations hereunder, including, without limitation, any and all
suretyship defenses.
Each Borrower hereby waives any right to or any claim of any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of any
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any Secured
Obligation.
1.5. Deposit Control Agreement. Each Borrower agrees to execute and deliver
to Lender a Deposit Control Agreement, substantially in the form of Exhibit A
hereto, with respect to each deposit account of Borrower.
ARTICLE 2: REPRESENTATIONS AND WARRANTIES
Each Borrower hereby represents and warrants to Lender as set forth in
this Article.
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2.1. Valid and Perfected Security Interest. This Security Agreement creates
a valid security interest in the Collateral and proceeds thereof securing the
payment of the Secured Obligations. All filings and other actions necessary or
desirable to perfect and protect such security interest, collateral assignment
and pledge have been duly taken or will be duly taken as of the effective date
hereof. Upon perfection, such security interest and pledge will be of a first
priority ranking.
2.2. Authorization and Approval. No authorization, approval or other action
by (and no notice to or filing with) any Official Body or other Person is
required either (a) for the grant by any Borrower of the security interest,
collateral assignment and pledge granted hereby, or (b) for the execution,
delivery and performance of this Security Agreement by any Borrower, or (c) for
the perfection by Lender of its rights and interests hereunder, or (d) for the
exercise by Lender of its rights and remedies hereunder.
2.3. Compliance with Laws and Contracts. Each Borrower is (and after
execution and delivery of the Loan Documents to which such Borrower is a party,
such Borrower will be) in compliance in all material respects with the
requirements of all applicable laws, rules, regulations, policies, orders and
decrees of every Official Body and with all contractual restrictions, in either
instance the non-compliance with which individually or in the aggregate could
reasonably be expected to have or cause a Material Adverse Effect.
2.4. Validity of Obligations. This Security Agreement constitutes the
legal, valid and binding obligation of each Borrower and is enforceable against
each Borrower in accordance with the terms hereof.
ARTICLE 3: COVENANTS
Each Borrower covenants and agrees that, so long as this Security Agreement
remains effective, each Borrower will comply with the covenants set forth in
this Article, unless Lender otherwise consents in writing.
3.1. Further Assurances. Each Borrower (from time to time at its own
expense) will promptly execute and deliver all further instruments and
documents, and will take all further action, that may be necessary or desirable
(or that Lender may reasonably request) in order to perfect, preserve and
protect any security interest, collateral assignment or pledge granted or
purported to be granted hereby or to enable Lender to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, each Borrower:
a. Will ▇▇▇▇ conspicuously each chattel paper included in the Contract
Rights and, at the request of Lender, each of its records pertaining to the
Collateral with a legend (in form and substance reasonably satisfactory to
Lender) indicating that such chattel paper is subject to the security
interest, collateral assignment and pledge granted hereby, and in the event
any such chattel paper is in electronic form, will ensure that the
electronic record of chattel paper has only one authoritative copy, that
authoritative copy identifies the Lender and its interest, that the
authoritative copy is communicated to and maintained by the Lender or its
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designated custodian, that the authoritative copy is readily identifiable
as such and that there are appropriate controls in place relating to
revisions of the copy; and
b. If any Contract Rights shall be evidenced by a promissory note or
other instrument, negotiable document or chattel paper, then will deliver
and pledge to Lender hereunder such promissory note, instrument, negotiable
document or chattel paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to Lender; and
c. Will execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices as may be
necessary (or as Lender may reasonably request) in order to perfect and
preserve the security interests, collateral assignments, pledges and other
rights granted or purported to be granted to Lender hereby; and
d. Will furnish to Lender (from time to time at Lender's request)
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Lender may
reasonably request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest, collateral
assignment and pledge hereunder, each Borrower hereby authorizes Lender to file
one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the signature of such
Borrower where permitted by law. A carbon, photographic or other reproduction of
this Security Agreement or any financing statement covering the Collateral or
any part thereof shall be sufficient as a financing statement where permitted by
law.
ARTICLE 4: LENDER
4.1. Lender Appointed Attorney-in-Fact. Each Borrower hereby irrevocably
appoints Lender as such Borrower's attorney-in-fact, with full authority in the
name, place and stead of such Borrower or otherwise, from time to time in
Lender's reasonable discretion, to take any action and to execute any instrument
which Lender may deem reasonably necessary or advisable to accomplish the
purposes of this Security Agreement. This authority includes the following:
a. To ask, demand, collect, ▇▇▇ for, recover, compromise, restructure,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral including proceeding
against any of the Collateral provided by any account debtor; and/or
b. To notify the parties obligated on any of the Collateral to make
payment to Lender of any amount due or to become due in connection
therewith; and/or
c. To receive, endorse, and collect any drafts, checks or other
instruments, documents and chattel paper in connection with Clause "a"
of this Section; and/or
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d. To file any claims or take any action or institute any proceedings
which Lender may deem reasonably necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of Lender, any Lender or any Borrower with respect to any of the
Collateral; and/or
e. To execute (in the name, place and stead of any Borrower)
endorsements, assignments, powers and other instruments of conveyance
or transfer with respect to all or any of the Collateral; and/or
f. To perform any and all of the affirmative obligations and covenants of
such Borrower hereunder (with notice thereof to be provided to such
Borrower by Lender within a reasonable time thereafter).
Each Borrower hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest.
4.2. Lender May Perform. From time to time, Lender (at its option) may
perform (or may cause the performance of) any act which any Borrower agrees
hereunder to perform and which such Borrower fails to perform after being
requested in writing so to perform (it being understood that no such request
need be given during the continuance of an Event of Default), and Lender from
time to time may also take any other action which Lender reasonably deems
necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein or collateral assignments or
pledges thereof. The costs and expenses of Lender incurred in connection with
any such performance will be payable by Borrowers (jointly and severally)
pursuant to Section 5.3 hereof.
4.3. Lender Has No Duty. The rights and powers conferred upon Lender
hereunder are solely to protect Lender's and each Lender's interest in the
Collateral and do not impose any duty on Lender to exercise any such rights or
powers. Except for reasonable care of any Collateral in Lender's possession and
the accounting for moneys actually received by it hereunder, Lender has no duty
as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral.
4.4. Reasonable Care. Lender is required to exercise reasonable care in the
custody and preservation of any of the Collateral in its possession; provided,
however, Lender will be deemed to have exercised such reasonable care in the
custody and preservation of any of the Collateral if Lender takes such action
for that purpose as any Borrower reasonably requests in writing at times other
than after the occurrence or during the continuance of a Default.
Notwithstanding the foregoing, any failure or refusal by Lender at any time to
comply with any such request by any Borrower will not in itself be deemed a
failure to exercise reasonable care.
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ARTICLE 5: DEFAULTS AND REMEDIES
5.1. Events of Default. The breach of any term of this Agreement by a
Borrower or the occurrence of any "Event of Default" under and as defined in the
Credit Agreement will constitute an independent Event of Default ("Event of
Default") hereunder.
5.2. Certain Remedies. If any Event of Default occurs and is continuing:
a. In addition to other rights and remedies provided for herein
(including under Article 4) or otherwise available to Lender (including
under the Credit Agreement and/or applicable law), Lender may also exercise
in respect of the Collateral all the rights and remedies of a secured party
upon default under the UCC (whether or not the UCC applies to the affected
Collateral). Upon the occurrence of any Event of Default, Lender will have
the immediate right to enforce and realize upon any and all collateral
security granted under the Credit Agreement (including the Collateral
hereunder) in any manner or order that Lender deems expedient without
regard to any equitable principles of marshalling or otherwise. All rights
and remedies available to Lender are to be considered cumulative in nature.
b. Without notice except as expressly specified herein or required by
applicable law, Lender may also sell the Collateral or any part thereof in
one or more parcels at public or private sale, at any of Lender's offices
or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as Lender may deem commercially reasonable. To the extent
notice of sale is required by law, each Borrower agrees that prior notice
to a Borrower of at least ten (10) calendar days indicating the time and
place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. Lender shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. Lender may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale
(without further notice) may be made at the time and place to which it was
so adjourned.
c. Lender may require Borrowers to, and each Borrower hereby agrees
(at its expense) that it will, forthwith assemble all or part of the
Collateral as directed by Lender and make it available to Lender at a place
designated by Lender that is reasonably convenient to both Lender and
Borrowers.
d. Unless Lender otherwise consents, each Borrower will remit to
Lender all cash proceeds received in respect of any sale of, or collection
from, or other realization upon all or any part of the Collateral. All cash
proceeds received by Lender from any Borrower or otherwise in respect of
any sale of, collection from, or other realization upon all or any part of
the Collateral (in the discretion of Lender) may be held by Lender as
additional Collateral for the Secured Obligations, and/or then or at any
time thereafter may be applied in whole or in part by Lender against all or
any part of the Secured Obligations in an order consistent with the
designated application of payments provided for in the Credit Agreement.
Any surplus of such cash or cash proceeds held by Lender and remaining
after payment in full of all the Secured Obligations will be paid over to a
Borrower or to whomsoever Lender reasonably believes may be lawfully
entitled to receive such surplus.
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5.3. Indemnity and Expenses.
a. Each Borrower agrees (jointly and severally) to indemnify and hold
Lender harmless from and against any and all claims, losses and liabilities
arising out of or in any manner resulting from any or all of the following: (1)
any Borrower's failure to perform or otherwise observe any of its obligations
hereunder, or (2) Lender's enforcement of any of the provisions hereof, or (3)
any Borrower's gross negligence, misrepresentation, willful misconduct or fraud.
b. Upon demand, each Borrower (jointly and severally) will pay Lender the
amount of any and all costs and expenses that Lender may incur in connection
with any of the matters described under clause "a" of this Section. Without
limitation, each Borrower's obligation to reimburse Lender for such fees, costs
and expenses includes all reasonable fees and disbursements of Lender's counsel
and any other experts and agents that Lender may retain in connection herewith
(whether or not litigation is commenced).
c. If any Borrower fails or refuses to pay Lender any amount due hereunder
or to otherwise deliver to Lender any property required to be delivered
hereunder, then such amount (or, as appropriate, the fair market value of such
property) will accrue interest until paid or delivered at a per annum rate equal
to two percent (2%) per annum in excess of the highest rate then otherwise
applicable to indebtedness under the Credit Agreement (or the maximum amount
permitted by applicable law, whichever is less).
5.4. Lender's Rights Upon Occurrence of Liquidation Events.
a. Right to Certain Payments and Distributions. Upon the occurrence of any
Liquidation Event, any payment or distribution of any kind or character (whether
in cash, securities or other property) that but for this Security Agreement
would be payable or deliverable to a Borrower must instead be paid or delivered
directly to Lender for application on the Secured Obligations, whether or not
then due or mature.
b. Non-Cash Payments and Distributions. Notwithstanding the provisions of
Clause "a" of this Section, if Lender receives delivery of any such payment or
distribution in connection with a Liquidation Event in a form other than cash,
then Lender may hold such property as additional Collateral for the Secured
Obligations, and no Borrower will be entitled to a credit with respect to the
Secured Obligations, nor will the Secured Obligations otherwise be adjusted in
any respect, until such time as Lender (in its sole and absolute discretion) has
sold, discounted or otherwise liquidated such distribution (at a price
considered by Lender to be in its sole best interest) and then such credit or
adjustment to the Secured Obligations will be limited only to the net cash
proceeds realized therefrom after the payment of all costs and expenses
associated with such sale or liquidation.
c. Collection of Payments and Distributions. In addition to any rights
otherwise permitted under the Credit Agreement or applicable law, each Borrower
hereby irrevocably authorizes and empowers Lender, upon the occurrence of a
Liquidation Event, to file and/or vote claims and take such other proceedings,
in each instance in Lender's own name or in the name of a Borrower, or
otherwise, all as Lender may deem reasonably necessary or advisable for the
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enforcement of this Security Agreement. Each Borrower further agrees duly and
promptly (i) to take such action as may be requested by Lender to assist in the
collection and/or compromise of any amounts owed to any Borrower, and (ii) to
file appropriate proofs of claim in respect of such amounts, and (iii) to
execute and deliver to Lender on demand such powers of attorney, proofs of
claim, assignments of claim or other instruments as may be requested by Lender
to enable Lender to enforce any and all claims upon or with respect to such
amounts, and (iv) to collect, compromise and receive any and all payments or
distributions which may be payable or deliverable at any time upon or with
respect to such amounts.
5.5. Delivery of Payments and Distributions. If any Borrower receives any
payment, distribution or any other funds or property in contravention of the
provisions hereof or the Credit Agreement, then such Borrower must immediately
forthwith deliver such payment, distribution or other funds or property (or
proceeds thereof) to Lender in precisely the form received (except for the
endorsement or assignment without recourse of such Borrower where necessary) for
application on the Secured Obligations (or, at Lender's option, held as
additional Collateral therefor), whether or not then due or mature. Until such
funds or property are delivered to Lender, such Borrower must hold such payment,
distribution or other funds or property (or proceeds thereof) (a) in trust for
the benefit of and as property of Lender and (b) separate from (i.e., not
commingled with) its other assets. If a Borrower fails or refuses to make any
such endorsement or assignment, then Lender (or any of its officers or
employees) are hereby irrevocably authorized by such Borrower to make the
endorsement and/or assignment.
5.6. Cooperation and Assistance. Each Borrower agrees (during the existence
of a Default) to take any actions that Lender may reasonably request in order to
enable Lender and each Lender to receive the full rights and benefits granted to
Lender hereunder. Each Borrower further agrees that, during the existence of a
Default or an Event of Default, each Borrower will assist and cooperate with
Lender (and will use its best efforts to cause others to assist and cooperate
with Lender) to ensure that each Borrower continues (a) to operate in the normal
course of business, and (b) to fulfill all of its legal, regulatory and
contractual obligations and (c) to otherwise be properly and professionally
managed.
ARTICLE 6: DEFINITIONS
6.1. Credit Agreement Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Security Agreement (including the
preamble and recitals hereof) have the meanings provided in the Credit
Agreement.
6.2. Certain Terms. The following terms (whether or not underscored) when
used in this Security Agreement (including the preamble and recitals hereof)
have the following meanings:
a. "Borrower(s)" means, individually and collectively, each Borrower
under and as defined in the Credit Agreement, including any successor or
assignee thereof.
b. "Collateral" is defined in Section 1.1.
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c. "Credit Agreement" is defined in the Recitals.
d. "Equipment" is defined in Section 1.1.
e. "Liquidation Event" means any foreclosure on or any sale of all or
any material part of the assets of any Borrower, or any liquidation,
dissolution or other winding up (partial or complete) of any Borrower or
any Borrower's business, or any sale, receivership, insolvency or
bankruptcy proceeding, any assignment for the benefit of creditors, or any
other proceeding by or against any Borrower or its assets for any relief
under any bankruptcy or insolvency law relating to the relief of debtors,
readjustment of indebtedness, arrangements, reorganizations, compositions
or extensions.
f. "Official Body" means any federal, state, local, or other
government (or any political subdivision, agency, authority, bureau,
commission, department or instrumentality thereof) and any court, tribunal,
grand jury or arbitrator, in each instance whether foreign or domestic.
g. "Person" means any natural person, corporation, partnership,
limited liability company, firm, association, trust, government,
governmental agency or any other entity, whether acting in an individual,
fiduciary or other capacity.
h. "Secured Obligations" is defined in Section 1.2.
i. "Security Agreement" means this Security Agreement and all
exhibits, schedules and supplemental addenda hereto, all as may be amended
and otherwise modified from time to time hereafter.
j. "UCC" means the Uniform Commercial Code as in effect in South
Carolina or, if the laws of some other jurisdiction otherwise dictates,
then the Uniform Commercial Code as in effect in the jurisdiction whose
laws govern the interpretation of the relevant provisions of this Security
Agreement.
6.3. UCC Definitions. Unless otherwise defined herein or the context
otherwise requires, terms for which meanings are provided in the UCC are used in
this Security Agreement (including in the preamble and recitals hereof) with
such meanings.
ARTICLE 7: MISCELLANEOUS PROVISIONS
7.1. Amendments. No amendment to or waiver of any provision of this
Security Agreement, nor consent to any departure by any Borrower herefrom, shall
in any event be effective unless such amendment, waiver or consent is in writing
and signed by Lender. Any such waiver or consent will be effective only in the
specific instance and for the specific purpose for which given.
7.2. Addresses for Notices. Any notice, request, consent, waiver or other
communication required or permitted under or in connection with this Security
Agreement will be deemed satisfactorily given if it is in writing and is
delivered either personally to the addressee thereof, or by prepaid registered
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or certified U.S. mail (return receipt requested), or by a nationally recognized
commercial courier service with next-day delivery charges prepaid, or by
telegraph, or by facsimile (voice confirmed), or by any other reasonable means
of personal delivery to the party entitled thereto at its respective address set
forth below its signature to this Security Agreement (or, if blank, then to such
party at its address or facsimile number set forth in the Credit Agreement). If
any Borrower fails to insert an address below (and in the Credit Agreement),
then such failure shall constitute a designation of its last known address as
the address for all notices, including notices of default and sale. Any party to
this Security Agreement may change its address or facsimile number for notice
purposes by giving notice thereof to the other parties hereto in accordance with
this Section, provided that such change shall not be effective until 2 calendar
days after notice of such change. All such notices and other communications will
be deemed given and effective (a) if by mail, then upon actual receipt or 5
calendar days after mailing as provided above (whichever is earlier), or (b) if
by facsimile, then upon successful transmittal to such party's designated
number, or (c) if by telegraph, then upon actual receipt or 2 Business Days
after delivery to the telegraph company (whichever is earlier), or (d) if by
nationally recognized commercial courier service, then upon actual receipt or 2
Business Days after delivery to the courier service (whichever is earlier), or
(e) if otherwise delivered, then upon actual receipt.
7.3. Severability. Wherever possible, each provision of this Security
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law. If any provision of this Security Agreement shall be prohibited
by or invalid under such law, then such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Security Agreement.
7.4. Governing Law; Entire Agreement. This Security Agreement shall be
governed by and construed in accordance with the internal laws of South
Carolina, except to the extent that the validity or perfection of the security
interest, collateral assignment or pledge hereunder (or remedies hereunder) in
respect of any particular Collateral are required to be governed by the laws of
a jurisdiction other than South Carolina. This Security Agreement and the other
loan documents constitute the entire understanding among the parties hereto with
respect to the subject matter hereof and supersede any prior agreements (written
or oral) with respect thereto.
7.5. Reinstatement. To the maximum extent not prohibited by applicable law,
this Security Agreement shall continue to be effective or be reinstated if at
any time any amount received by Lender in respect of the Credit Agreement is
rescinded or must otherwise be restored or returned by Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of any
Borrower or upon the appointment of any receiver, intervenor, conservator,
trustee or similar official for any Borrower or any substantial part of any
Borrower's assets, or otherwise, all as though such payments had not been made.
7.6. Conflict Provision. In the event of any irreconcilable conflict
between the terms and conditions of this Security Agreement and the terms and
conditions of the Credit Agreement, the terms and conditions of the Credit
Agreement shall govern.
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7.7. Waiver of Suretyship Defenses. Each Borrower hereby waives any and all
defenses and rights of discharge based on suretyship or impairment of collateral
(including any lack of attachment or perfection with respect thereto) that it
may now have or may hereafter acquire with respect to Lender or any of such
Borrower's obligations hereunder or under any other agreement that it may have
or hereafter enter into with Lender.
7.8. WAIVER OF NOTICE; WAIVER OF BOND. EACH BORROWER WAIVES ALL RIGHTS OF
NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY LENDER OF ITS RIGHTS
DURING THE CONTINUANCE OF ANY EVENT OF DEFAULT TO REPOSSESS THE COLLATERAL WITH
JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL. EACH
BORROWER WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF LENDER IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY FOR THE SECURED
OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
LENDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR
PRELIMINARY OR PERMANENT INJUNCTION THIS SECURITY AGREEMENT OR THE CREDIT
AGREEMENT.
7.9. WAIVER OF LIABILITY. EACH BORROWER (A) AGREES THAT NEITHER LENDER (NOR
ANY DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF LENDER) SHALL HAVE ANY LIABILITY TO
ANY BORROWER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES OR
COSTS SUFFERED OR INCURRED BY ANY BORROWER IN ANY WAY RELATED TO THE
TRANSACTIONS CONTEMPLATED OR THE RELATIONSHIP ESTABLISHED BY THE CREDIT
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
EXCEPT FOR FORESEEABLE ACTUAL LOSSES RESULTING DIRECTLY AND EXCLUSIVELY FROM
LENDER'S OWN GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD, AND (B) WAIVES,
RELEASES AND AGREES NOT TO ▇▇▇ UPON ANY CLAIM AGAINST LENDER (OR ITS DIRECTORS,
OFFICERS, EMPLOYEES OR AGENTS) WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE.
MOREOVER, WHETHER OR NOT SUCH DAMAGES ARE RELATED TO A CLAIM THAT IS SUBJECT TO
THE WAIVER EFFECTED ABOVE AND WHETHER OR NOT SUCH WAIVER IS EFFECTIVE, LENDER
(INCLUDING ANY DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF LENDER) SHALL NOT HAVE
ANY LIABILITY WITH RESPECT TO (AND EACH BORROWER HEREBY WAIVES, RELEASES AND
AGREES NOT TO ▇▇▇ UPON ANY CLAIM FOR) ANY SPECIAL, INDIRECT, CONSEQUENTIAL,
PUNITIVE OR NON-FORESEEABLE DAMAGES SUFFERED BY ANY BORROWER IN ANY WAY RELATED
TO THE TRANSACTIONS CONTEMPLATED OR THE RELATIONSHIP ESTABLISHED BY THE CREDIT
AGREEMENT OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH.
7.10. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION IN ANY
WAY RELATED TO THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OR INACTIONS OF LENDER OR ANY
LENDER OR ANY BORROWER WILL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF SOUTH CAROLINA OR IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
SOUTH CAROLINA; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
BORROWER OR ANY COLLATERAL MAY ALSO BE BROUGHT (AT LENDER'S OR SUCH LENDER'S
OPTION) IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL MAY BE FOUND OR
WHERE LENDER OR ANY LENDER MAY OTHERWISE OBTAIN PERSONAL JURISDICTION OVER SUCH
BORROWER. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF SOUTH CAROLINA AND OF THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF SOUTH CAROLINA FOR THE PURPOSE OF ANY SUCH LITIGATION
AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND
NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
EACH BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
OUTSIDE SOUTH CAROLINA. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES
(TO THE FULLEST EXTENT PERMITTED BY LAW) ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY BORROWER HAS OR
12
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, THEN SUCH BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT
OF ITS OBLIGATIONS UNDER THIS SECURITY AGREEMENT.
7.11. WAIVER OF JURY TRIAL. LENDER AND EACH BORROWER EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION (WHETHER AS CLAIM, COUNTER-CLAIM, AFFIRMATIVE
DEFENSE OR OTHERWISE) IN ANY WAY RELATED TO THE CREDIT AGREEMENT, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS
OR INACTIONS OF LENDER OR ANY BORROWER. EACH BORROWER ACKNOWLEDGES AND AGREES
(A) THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION
(AND EACH OTHER PROVISION OF THE CREDIT AGREEMENT), AND (B) THAT IT HAS BEEN
ADVISED BY LEGAL COUNSEL IN CONNECTION HEREWITH, AND (C) THAT THIS PROVISION IS
A MATERIAL INDUCEMENT FOR LENDER ENTERING INTO THE CREDIT AGREEMENT.
7.12. Counterparts. This Security Agreement may be executed in any number
of counterparts with the same effect as if all the signatures on such
counterparts appeared on one document. Each counterpart will be deemed to be an
original, but all counterparts together will constitute one and the same
instrument.
[BALANCE OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this
Security Agreement, as an instrument under seal (whether or not any such seals
are physically attached hereto), through their duly authorized officers, as of
the date first written above.
ATTEST: FLEXCHECK HOLDINGS LLC
(as a Borrower)
By: ______________________ By:
-----------------------------
Name: __________________________ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: __________________________ Title: Sole Manager
[SEAL]
[ADDITIONAL SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement, as an instrument under seal (whether or not any such seals are
physically attached hereto), through their duly authorized officers, as of the
date first written above.
WITNESS: HOMEGOLD FINANCIAL, INC.
(Lender)
By: By:
--------------------------- ---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇:
-----------------
Title: Title: President
-----------------
Address:
Facsimile: