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EXHIBIT 10.2
SECURITY AGREEMENT
This Security Agreement (the "Agreement") is dated as of January____, 1998,
by and among the parties executing this Agreement under the heading "Debtors"
(such parties, along with any parties who execute and deliver to the Agent an
agreement in the form attached hereto as Exhibit D, being hereinafter referred
to collectively as the "Debtors" and individually as a "Debtor"), and ▇▇▇▇▇▇
TRUST AND SAVINGS BANK, an Illinois banking corporation ("▇▇▇▇▇▇"), with its
mailing address at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, acting as
agent hereunder for the Lenders hereinafter identified and defined (▇▇▇▇▇▇
acting as such agent and any successor or successors to ▇▇▇▇▇▇ acting in such
capacity being hereinafter referred to as the "Agent");
PRELIMINARY STATEMENTS
▇. ▇▇▇▇▇▇ Industrial Group, Inc., a Georgia corporation (the
"Company"), and certain Subsidiaries of the Company, ▇▇▇▇▇▇, individually and as
agent, and certain Lenders have entered into a Credit Agreement dated as of even
date herewith (such Credit Agreement, as the same may be amended or modified
from time to time, including amendments and restatements thereof in its
entirety, being hereinafter referred to as the "Credit Agreement"), pursuant to
which ▇▇▇▇▇▇ and other Lenders from time to time party to the Credit Agreement
(▇▇▇▇▇▇ and the other Lenders which are now or from time to time hereafter
become party to the Credit Agreement, being hereinafter referred to collectively
as the "Lenders" and individually as a "Lender") have agreed, subject to certain
terms and conditions, to extend credit and make certain other financial
accommodations available to the Borrowers identified therein.
B. As a condition precedent to extending credit or otherwise making
financial accommodations available to the Borrowers under the Credit Agreement,
the Lenders have required, among other things, that each Debtor grant to the
Agent for the benefit of the Lenders a lien on and security interest in certain
personal property of such Debtor pursuant to this Agreement.
C. The Company owns, directly or indirectly, all or substantially all
of the equity interests in each Debtor (other than the Company) and the Company
provides each Debtor with financial, management, administrative, and technical
support which enables such Debtor to conduct its business in an orderly and
efficient manner in the ordinary course.
D. Each Debtor will benefit, directly or indirectly, from credit and
other financial accommodations extended by the Lenders to the Borrowers.
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NOW, THEREFORE, for and in consideration of the execution and delivery
by the Lenders of the Credit Agreement, and other good and valuable
consideration, receipt whereof is hereby acknowledged, the parties hereto hereby
agree as follows:
Section 1. Terms Defined in Credit Agreement. All capitalized terms
used herein without definition shall have the same meanings herein as such terms
have in the Credit Agreement. The term "Debtor" and "Debtors" as used herein
shall mean and include the Debtors collectively and also each individually, with
all grants, representations, warranties and covenants of and by the Debtors, or
any of them, herein contained to constitute joint and several grants,
representations, warranties and covenants of and by the Debtors; provided,
however, that unless the context in which the same is used shall otherwise
require, any grant, representation, warranty or covenant contained herein
related to the Collateral shall be made by each Debtor only with respect to the
Collateral owned by it or represented by such Debtor as owned by it.
Section 2. Grant of Security Interest in the Collateral; Obligations
Secured. (a) Each Debtor hereby grants to the Agent for the benefit of the
Lenders a lien on and security interest in, and right of set-off against, and
acknowledges and agrees that the Agent has and shall continue to have for the
benefit of the Lenders a continuing lien on and security interest in, and right
of set-off against, any and all right, title and interest of each Debtor,
whether now owned or existing or hereafter created, acquired or arising, in and
to the following:
(i) Receivables. Receivables, whether now owned or existing or
hereafter created, acquired or arising, and however evidenced or
acquired, or in which such Debtor now has or hereafter acquires any
rights (the term "Receivables" means and includes all accounts,
accounts receivable, contract rights, instruments, notes, drafts,
acceptances, documents, chattel paper, any right of such Debtor to
payment for goods sold or leased or for services rendered, whether
arising out of the sale of Inventory (as hereinafter defined) or
otherwise and whether or not earned by performance, and all other forms
of obligations owing to such Debtor, and all of such Debtor's rights to
any merchandise and other goods (including without limitation any
returned or repossessed goods and the right of stoppage in transit)
which is represented by, arises from or is related to any of the
foregoing);
(ii) General Intangibles. All general intangibles, whether now owned
or existing or hereafter created, acquired or arising, or in which such
Debtor now has or hereafter acquires any rights, including, without
limitation all patents, patent applications, patent licenses,
trademarks, trademark registrations, trademark licenses, trade styles,
trade names, copyrights, copyright registrations, copyright licenses
and other licenses and similar intangibles and all customer, client and
supplier lists (in whatever form maintained) and all rights in leases
and other agreements relating to real or personal property, all
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causes of action and tax refunds of every kind and nature, all
privileges, franchises, immunities, licenses, permits and similar
intangibles, all rights to receive payments in connection with the
termination of any pension plan or employee stock ownership plan or
trust established for the benefit of employees of such Debtor and all
other personal property (including things in action) not otherwise
covered by this Agreement;
(iii) Inventory. Inventory, whether now owned or existing or
hereafter created, acquired or arising, or in which such Debtor now has
or hereafter acquires any rights and all documents of title at any time
evidencing or representing any part thereof (the term "Inventory" means
and includes all goods which are held for sale or lease or are to be
furnished under contracts of service or consumed in such Debtor's
business, and all goods which are raw materials, work-in-process,
finished goods, materials and supplies of every kind and nature, in
each case used or usable in connection with the acquisition,
manufacture, processing, supply, servicing, storing, packing, shipping,
advertising, selling, leasing or furnishing of such goods, and any
constituents or ingredients thereof, and all goods which are returned
or repossessed goods);
(iv) Equipment. Equipment, whether now owned or existing or
hereafter created, acquired or arising, or in which such Debtor now has
or hereafter acquires any rights (the term "Equipment" means and
includes all equipment, machinery, tools, trade fixtures, furniture,
furnishings, office equipment and vehicles (including vehicles subject
to a certificate of title law) and all other goods, in each case now or
hereafter used or usable in connection with such Debtor's business,
together with all parts, accessories and attachments relating to any of
the foregoing);
(v) Investment Property. All Investment Property, whether now owned
or existing or hereafter created, acquired or arising, or in which such
Debtor now has or hereafter acquires any rights (the term "Investment
Property" means and includes all investment property and any other
securities (whether certificated or uncertificated), security
entitlements, securities accounts, commodity contracts and commodity
accounts, including all substitutions and additions thereto, all
dividends, distributions and sums distributable or payable from, upon,
or in respect of such property, and all rights and privileges incident
to such property);
(vi) Records and Cabinets. Supporting evidence and documents
relating to any of the above-described property, including without
limitation, computer programs, disks, tapes and related electronic data
processing media, rights of such Debtor to retrieve the same from third
parties, written applications, credit information, account cards,
payment records, correspondence, delivery and installation
certificates, invoice copies, delivery
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receipts, notes and other evidences of indebtedness, insurance
certificates and the like, together with all books of account,
ledgers and cabinets in which the same are reflected or maintained,
all whether now existing or hereafter arising;
(vii) Deposits and Property in Possession. All deposit accounts
(whether general, special or otherwise) maintained with the Agent or
any of the Lenders and all sums now or hereafter on deposit therein or
payable thereon, and any and all other property or interests in
property which now is or may from time to time hereafter come into the
possession, custody or control of the Agent or any of the Lenders, or
any agent or affiliate of the Agent or any of the Lenders, in any way
and for any purpose (whether for safekeeping, custody, pledge,
transmission, collection or otherwise);
(viii) Accessions and Additions. All accessions and additions to and
substitutions and replacements of any of the foregoing, whether now
existing or hereafter arising; and
(ix) Proceeds and Products. All proceeds and products of the
foregoing and all insurance of the foregoing and proceeds thereof,
whether now existing or hereafter arising;
all of the foregoing being herein sometimes referred to as the "Collateral."
(b) This Agreement is made and given to secure, and shall secure, the
payment and performance of (i) (x) any and all indebtedness, obligations and
liabilities of any of the Borrowers to the Agent, the Lenders, or any of them
individually, evidenced by or otherwise arising out of or relating to the
Credit Agreement or any promissory note of any of the Borrowers issued at any
time under the Credit Agreement (including all notes issued in extension or
renewal thereof or in substitution or replacement therefor), and (y) any
liability of any of the Debtors, or any of them individually, arising out of
the Credit Agreement, as well as for any and all other indebtedness,
obligations and liabilities of the Debtors, or any of them individually, to the
Agent, the Lenders, or any of them individually, evidenced by or otherwise
arising out of or relating to this Agreement or any other Loan Document, in
each case, whether now existing or hereafter arising (and whether arising
before or after the filing of a petition in bankruptcy), due or to become due,
direct or indirect, absolute or contingent, and howsoever evidenced, held or
acquired, and (ii) any and all expenses and charges, legal or otherwise,
suffered or incurred by the Agent, the Lenders, or any of them individually, in
collecting or enforcing any of such indebtedness, obligations or liabilities or
in realizing on or protecting or preserving any security therefor, including,
without limitation, the lien and security interest granted hereby (all of the
foregoing being hereinafter referred to as the "Obligations"). Notwithstanding
anything in this Agreement to the contrary, the right of
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recovery against any Debtor (other than the Borrowers to which this limitation
shall not apply) under this Agreement shall not exceed $1 less than the amount
which would render such Debtor's obligations under this Agreement void or
voidable under applicable law, including fraudulent conveyance law.
Section 3. Covenants, Agreements, Representations and Warranties. Each
Debtor hereby covenants and agrees with, and represents and warrants to the
Agent and the Lenders that:
(a) Such Debtor is duly organized and existing under the laws of the
state of its organization, is the sole and lawful owner of its
Collateral and has full right, power and authority to enter into this
Agreement and to perform each and all of the matters and things herein
provided for; and the execution and delivery of this Agreement, and the
observance and performance of any of the matters and things herein set
forth, will not violate or contravene any provision of law or of the
articles of incorporation, by-laws or operating agreement of such
Debtor, as applicable, or of any indenture, loan agreement or other
agreement of or affecting such Debtor or any of its properties, or
result in the creation or imposition of any liens or encumbrance on any
property of such Debtor.
(b) The Collateral is in each Debtor's possession at the locations
listed under Column_1 on Schedule_A attached hereto. Each Debtor's
respective chief executive office and chief place of business is listed
opposite its name on Schedule_A attached hereto and the Debtors have no
other places of business other than those listed under Column_4 on
Schedule_A attached hereto. No Debtor will remove its Collateral from
the locations specified in the first sentence of this Section_3(b)
without prior written notice to the Agent, unless such Collateral will
be moved to a location outside the United States, in which event, the
Agent's prior written consent shall be required, which consent shall
not be unreasonably withheld (provided that if for any reason
Collateral is at any time kept or located at locations other than its
present location or locations hereafter consented to by the Agent shall
nevertheless have and retain a security interest therein).
(c) The Collateral and every part thereof is and will be free and
clear of all security interests, liens (including, without limitation,
mechanic's, laborer's and statutory liens), attachments, levies and
encumbrances of every kind, nature and description and whether
voluntary or involuntary except for the security interest of the Agent
therein and as otherwise provided in the Credit Agreement, and each
Debtor will warrant and defend its Collateral against any claims and
demands of all persons at any time claiming the same or any interest
therein adverse to the Agent or any Lender.
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(d) Each Debtor will pay promptly when due all taxes, assessments,
and governmental charges and levies upon or against its Collateral in
each case before the same become delinquent and before penalties accrue
thereon, unless and to the extent that the same are being contested in
good faith by appropriate proceedings.
(e) Each Debtor at its own cost and expense will maintain, keep and
preserve its Collateral in good repair and condition and will not waste
or destroy such Collateral or any part thereof and will not be
negligent in the care and use of any Collateral and will not use or
permit to be used any Collateral in violation of any statute, ordinance
or other governmental requirement. Each Debtor will perform its
obligations under any contract or other agreement constituting part of
the Collateral, it being understood and agreed that the Agent and the
Lenders have no responsibility to perform such obligations.
(f) Except for liens expressly permitted by the Credit Agreement,
and subject to Sections_5(a), 7(b) and 7(c) hereof, no Debtor will,
without the Agent's prior written consent, sell, assign, mortgage,
lease or otherwise dispose of its Collateral or any interest therein.
(g) Each Debtor will insure its Collateral which is insurable
against such risks and hazards as other companies similarly situated
insure against, and including in any event loss or damage by fire,
theft, burglary, pilferage, loss in transit and such other hazards as
the Agent may specify, in amounts and under policies containing loss
payable clauses to the Agent as its interest may appear (and, if the
Agent requests, naming the Agent and the Lenders as additional insureds
therein) by insurers acceptable to the Agent. In case of any material
loss, damage to or destruction of its Collateral or any part thereof,
the appropriate Debtor shall promptly give written notice thereof to
the Agent generally describing the nature and extent of such damage or
destruction. In the event any Debtor shall receive any proceeds of such
insurance, such Debtor will immediately pay over such proceeds to the
Agent. Net insurance proceeds received by the Agent under the
provisions hereof or under any policy or policies of insurance covering
the Collateral or any part thereof shall be applied to the reduction of
the Obligations (whether or not then due); provided, however, that the
Agent may in its sole discretion release any or all such insurance
proceeds to the appropriate Debtor. All insurance proceeds shall be
subject to the lien and security interest of the Agent hereunder.
UNLESS THE DEBTORS PROVIDE THE AGENT WITH EVIDENCE OF THE INSURANCE
COVERAGE REQUIRED BY THIS AGREEMENT, THE AGENT MAY PURCHASE INSURANCE
AT THE DEBTORS' EXPENSE TO PROTECT THE AGENT'S INTERESTS IN THE
COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT ANY DEBTOR'S
INTERESTS IN THE COLLATERAL.
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THE COVERAGE PURCHASED BY THE AGENT MAY NOT PAY ANY CLAIMS THAT ANY
DEBTOR MAKES OR ANY CLAIM THAT IS MADE AGAINST SUCH DEBTOR IN
CONNECTION WITH THE COLLATERAL. THE DEBTORS MAY LATER CANCEL ANY SUCH
INSURANCE PURCHASED BY THE AGENT, BUT ONLY AFTER PROVIDING THE AGENT
WITH EVIDENCE THAT THE DEBTORS HAVE OBTAINED INSURANCE AS REQUIRED BY
THIS AGREEMENT. IF THE AGENT PURCHASES INSURANCE FOR THE COLLATERAL,
THE DEBTORS WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE,
INCLUDING INTEREST AND ANY OTHER CHARGES THAT THE AGENT MAY IMPOSE IN
CONNECTION WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE
DATE OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS OF
THE INSURANCE MAY BE ADDED TO THE OBLIGATIONS SECURED HEREBY. THE COSTS
OF THE INSURANCE MAY BE MORE THAN THE COST OF INSURANCE THE DEBTORS MAY
BE ABLE TO OBTAIN ON THEIR OWN.
(h) Each Debtor will at all times allow the Agent, any Lender or
their respective representatives free access to and right of inspection
of the Collateral. Each Debtor will, to the extent it is within its
power so to do, authorize and instruct all bailees and other parties at
any time holding, storing, shipping or transferring all or any part of
such Debtor's Collateral to permit the Agent, any Lender or their
respective or its designees to examine and inspect any of such
Collateral then in such party's possession and to verify from such
party's own books and records any information concerning such
Collateral or any part thereof which the Agent or such Lender may seek
to verify. As to any premises not owned by any of the Debtors wherein
any of the Collateral is located, if any, the appropriate Debtor shall,
unless the Agent requests otherwise, cause each Person having any
right, title or interest in, or lien on, any of such premises to enter
into an agreement (any such agreement to contain a legal description of
such premises) whereby such party disclaims any right, title and
interest in, and lien on, the Collateral, allowing the removal of such
Collateral by the Agent or its designee and otherwise in form and
substance acceptable to the Agent.
(i) Each Debtor agrees from time to time to deliver to the Agent and
any Lender such evidence of the existence and identity of such Debtor's
Collateral and of its availability as collateral security pursuant
hereto (including, without limitation, schedules describing all
Receivables created or acquired by such Debtor, copies of customer
invoices or the equivalent and original shipping or delivery receipts
for all merchandise and other goods sold or leased or services
rendered, together with such Debtor's warranty of the genuineness
thereof, and reports stating the book value of Inventory and Equipment
by major category and location), as the Agent or such Lender may
request. Each Debtor will promptly notify the Agent and each Lender of
any Collateral which such Debtor has
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determined to have been rendered obsolete, stating the prior book
value of such Collateral, its type and location.
(j) Each Debtor will comply with the terms and conditions of any
leases, easements, right-of-way agreements or other agreements covering
the premises wherein its Collateral is located and any orders,
ordinances, laws or statutes of any city, state or other governmental
entity, department or agency having jurisdiction with respect to such
premises or the conduct of business thereon.
(k) On failure of any Debtor to perform any of the covenants and
agreements herein contained, the Agent may, at its option, perform the
same and in so doing may expend such sums as the Agent may deem
advisable in the performance thereof, including without limitation the
payment of any insurance premiums, the payment of any taxes, liens and
encumbrances, expenditures made in defending against any adverse claim
and all other expenditures which the Agent may be compelled to make by
operation of law or which the Agent may make by agreement or otherwise
for the protection of the security hereof. All such sums and amounts so
expended shall be repayable by the Debtors immediately without notice
or demand, shall constitute so much additional Obligations hereby
secured and shall bear interest from the date said amounts are expended
at the rate per annum (computed on the basis of a 365-day or 366 day
year, as the case may be, for the actual number of days elapsed)
determined by adding 2% to the Base Rate (such rate per annum as so
determined being hereinafter referred to as the "Default Rate"). No
such performance of any covenant or agreement by the Agent on behalf of
any Debtor and no such advancement or expenditure therefor, shall
relieve any Debtor of any default under the terms of this Agreement or
in any way obligate the Agent or any Lender to take any further or
future action with respect thereto. The Agent, in making any payment
hereby authorized, may do so according to any ▇▇▇▇, statement or
estimate procured from the appropriate public office or holder of the
claim to be discharged without inquiry into the accuracy of such ▇▇▇▇,
statement or estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien or title or claim. The Agent, in performing any
act hereunder, shall be the sole judge of whether the relevant Debtor
is required to perform same under the terms of this Agreement. The
Agent is authorized to charge any depository account of any Debtor
maintained with the Agent for the amount of such sums and amounts so
expended.
(l) Each Debtor warrants that such Debtor has not transacted
business, and does not transact business, under any trade names except
as set forth on Schedule_B. Each Debtor agrees that it will not change
its name or transact business under any trade names without first
giving the Agent 30 days' prior written notice of its intent to do so.
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(m) Each Debtor agrees to execute and deliver to the Agent such
further agreements and assignments or other instruments and to do all
such other things as the Agent may deem necessary or appropriate to
assure the Agent its security interest hereunder, including such
financing statement or statements or amendments thereof or supplements
thereto or other instruments as the Agent or the Required Lenders may
from time to time require in order to comply with the Uniform
Commercial Code as enacted in the State of Illinois and any successor
statute(s) thereto (the "Code"). Each Debtor hereby agrees that a
carbon, photographic or other reproduction of this Agreement or any
such financing statement is sufficient for filing as a financing
statement by the Agent without notice thereof to any Debtor wherever
the Agent in its sole discretion desires to file the same. In the event
for any reason the law of any other jurisdiction than Illinois becomes
or is applicable to the Collateral or any part thereof, or to any of
the Obligations, each Debtor agrees to execute and deliver all such
instruments and to do all such other things as the Agent in its sole
discretion deems necessary or appropriate to preserve, protect and
enforce the security interests of the Agent under the law of such other
jurisdiction to at least the same extent as such security interests
would be protected under the Code. If any Collateral is in the
possession or control of any Debtor's agents or processors and unless
the Agent requests otherwise, such Debtor agrees to notify such agents
or processors in writing of the Agent's security interests therein, and
upon the Agent's request instruct them to hold all such Collateral for
the Agent's account and subject to the Agent's instructions. The
Debtors agree to ▇▇▇▇ their books and records to reflect the security
interests of the Agent in the Collateral.
Section 4. Special Provisions Re: Receivables. (a)_As of the time any
Receivable becomes subject to the security interest provided for hereby and at
all times thereafter, each Debtor shall be deemed to have warranted as to each
and all of such Receivables that all warranties of such Debtor set forth in this
Agreement are true and correct with respect to such Receivables; that each
Receivable and all papers and documents relating thereto are genuine and in all
respects what they purport to be; that each Receivable is valid and subsisting
and, if such Receivable is an account, arises out of a bona fide sale of goods
sold and delivered by such Debtor to, or in the process of being delivered to,
or out of and for services theretofore actually rendered by such Debtor to, the
account debtor named therein; that no such Receivable is evidenced by any
instrument or chattel paper unless such instrument or chattel paper has
theretofore been endorsed by such Debtor and delivered to the Agent (except to
the extent the Agent specifically requests such Debtor not to do so with respect
to any such instrument or chattel paper); that no surety bond was required or
given in connection with said Receivable or the contracts or purchase orders out
of which the same arose; that the amount of the Receivable represented as owing
is the correct amount actually and unconditionally owing, except for normal cash
discounts on normal trade terms in the ordinary course of business if such
Receivable is an
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account and that the amount of such Receivable represented as owing is not
disputed and is not subject to any set-offs, credits, deductions or
countercharges other than those arising in the ordinary course of such Debtor's
business which are disclosed to the Agent in writing promptly upon such Debtor
becoming aware thereof; provided, however, that the untruth of the foregoing
warranties of this sentence as to Receivables aggregating not more than $100,000
shall not constitute a breach of this sentence. Without limiting the foregoing,
if any Receivable arises out of a contract with the United States of America or
any of its departments, agencies or instrumentalities, if and to the extent the
Agent so requests, each Debtor agrees to notify the Agent and execute whatever
instruments and documents are required by the Agent in order that such
Receivable shall be assigned to the Agent and that proper notice of such
assignment shall be given under the federal Assignment of Claims Act (or any
successor statute)
(b) Each Debtor shall keep all of its books and records relating to the
Receivables only at its chief executive office described in Section_3(b) hereof.
(c) Unless and until an Event of Default occurs, any merchandise which
is returned by a customer or account debtor or otherwise recovered may be resold
by the Debtors in the ordinary course of their respective businesses in
accordance with Section_5(b) hereof; after an Event of Default occurs, such
merchandise shall be set aside and held by each of the Debtors as trustee for
the Agent and the Lenders and shall remain part of the Agent's Collateral.
Unless and until an Event of Default occurs, each Debtor may settle and adjust
disputes and claims with its customers and account debtors, handle returns and
recoveries and grant discounts, credits and allowances in the ordinary course of
its business and otherwise for amounts and on terms which such Debtor considers
advisable. However, after an Event of Default has occurred and unless the Agent
requests otherwise, each Debtor shall notify the Agent promptly of all returns
and recoveries and on request deliver the merchandise to the Agent. After an
Event of Default has occurred and unless the Agent requests otherwise, each
Debtor shall also notify the Agent promptly of all disputes and claims and
settle or adjust them at no expense to the Agent or the Lenders, but no
discount, credit or allowance other than on normal trade terms in the ordinary
course of business shall be granted to any customer or account debtor and no
returns of merchandise shall be accepted by such Debtor without the Agent's
consent. The Agent may, at all times after such an Event of Default has
occurred, settle or adjust disputes and claims directly with customers or
account debtors for amounts and upon terms which the Agent considers advisable.
(d) From time to time, as the Agent may request of any Debtor, such
Debtor shall provide the Agent with schedules describing all Receivables created
or acquired by such Debtor, provided, however, that the failure of such Debtor
to execute and deliver such schedules shall not affect or limit the Agent's
security interest or other rights in and to any such Receivables.
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Together with each schedule, each Debtor shall if requested by the Agent,
furnish copies of customers' invoices or the equivalent, and original shipping
or delivery receipts, for all merchandise sold, and each Debtor warrants the
genuineness thereof.
Section 5. Collection of Receivables. (a) Except as otherwise provided
in this Agreement each Debtor shall make collection of all of its Receivables
and may use the same to carry on its business in accordance with sound business
practice and otherwise subject to the terms hereof.
(b) Whether or not the Agent has exercised any or all of its rights
under other provisions of this Section_5 and whether or not any Event of Default
has occurred, at the request of the Agent, each Debtor agrees that: (i)_all
instruments and chattel paper at any time constituting part of the Collateral
(including any post-dated checks) shall, upon receipt by the relevant Debtor, be
immediately endorsed to and deposited with Agent; and (ii)_such Debtor shall
instruct all account debtors to remit all payments in respect of its Receivables
to a lockbox or lockboxes from which deposits will be made into one or more
accounts maintained with the Agent or under the control by agreement of the
Agent (whether or not maintained with the Agent), the Debtors acknowledging that
each such account and all funds contained therein constitute Collateral
hereunder.
(c) Whether or not any Event of Default has occurred and whether or not
the Agent has exercised any or all of its rights under other provisions of this
Section_5, in the event the Agent requests any Debtor to do so, all instruments
and chattel paper at any time constituting part of the Receivables (including
any postdated checks) shall, upon receipt by such Debtor, be immediately
endorsed to and deposited with the Agent.
(d) Upon the occurrence and during the continuation of any Event of
Default and whether or not the Agent has exercised any or all of its rights
under other provisions of this Section_5, the Agent or its designee may notify
any Debtor's customers or account debtors at any time that Receivables have been
assigned to the Agent or of the Agent's security interest therein and either in
its own name, or such Debtor's or both, demand, collect (including without
limitation through a lockbox analogous to that described in Section_5(b)
hereof), receive, receipt for, ▇▇▇ for, compound and give acquittance for any or
all amounts due or to become due on Receivables, and in the Agent's discretion
file any claim or take any other action or proceeding which the Agent may deem
necessary or appropriate to protect and realize upon the security interest of
the Agent in the Receivables.
(e) Any proceeds of Receivables or other Collateral transmitted to or
otherwise received by the Agent pursuant to any of the provisions of
Sections 5(b), 5(c) or 5(d) hereof shall
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be handled and administered by the Agent in and through a remittance
account maintained at the Agent and each Debtor acknowledges that the
maintenance of such remittance account by the Agent is solely for the Agent's
own convenience and that such Debtor does not have any right, title or interest
in such remittance account or any amounts at any time standing to the credit
thereof. The Agent may apply all or any part of any proceeds of Receivables or
other Collateral received by it from any source to the payment of the
Obligations (whether or not then due and payable), such applications to be made
in such amounts, in such manner and order and at such intervals as the Agent may
from time to time in its discretion determine, but not less often than once each
week. The Agent need not apply or give credit for any item included in proceeds
of Receivables or other Collateral until the Agent has received final payment
therefor at its office in cash or final solvent credits current in Chicago,
Illinois, acceptable to the Agent as such. However, if the Agent does give
credit for any item prior to receiving final payment therefor and the Agent
fails to receive such final payment or an item is charged back to the Agent for
any reason, the Agent may at its election in either instance charge the amount
of such item back against the remittance account, together with interest thereon
at the Default Rate. Each Debtor shall accompany each transmission of any
proceeds of Receivables or other Collateral to the Agent with a report in such
form as the Agent shall require identifying the particular Receivable or other
Collateral from which the same arises or relates. The Debtors hereby jointly and
severally indemnify the Agent and the Lenders from and against all liabilities,
damages, losses, actions, claims, judgments, costs, expenses, charges and
attorney's fees suffered or incurred by the Agent or the Lenders because of the
maintenance of the foregoing arrangements. The Agent and the Lenders shall have
no liability or responsibility to any Debtor for accepting any check, draft or
other order for payment of money bearing the legend "payment in full" or words
of similar import or any other restrictive legend or endorsement whatsoever or
be responsible for determining the correctness of any remittance.
Section 6. Special Provisions Re: Investment Property. (a)__Unless and
until an Event of Default has occurred and is continuing and thereafter until
notified to the contrary by the Agent pursuant to Section_9(e) hereof:
(i) Each Debtor shall be entitled to exercise all voting and/or
consensual powers pertaining to the Investment Property or any part
thereof owned or held by it, for all purposes not inconsistent with the
terms of this Agreement, the Credit Agreement or any other document
evidencing or otherwise relating to any Obligations; and
(ii) Each Debtor shall be entitled to receive and retain all cash
dividends paid upon or in respect of the Investment Property owned or
held by it.
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(b) Certificates for all securities now or at any time constituting
Investment Property hereunder shall be promptly delivered by the relevant Debtor
to the Agent duly endorsed in blank for transfer or accompanied by an
appropriate assignment or assignments or an appropriate undated stock power or
powers, in every case sufficient to transfer title thereto, and, with respect to
any Investment Property held by a securities intermediary, commodity
intermediary, or other financial intermediary of any kind, the relevant Debtor
shall execute and deliver, and shall cause any such intermediary to execute and
deliver, an agreement among such Debtor, the Agent, and such intermediary in
form and substance satisfactory to the Agent which provides, among other things,
for the intermediary's agreement that it will comply with entitlement orders,
and apply any value distributed on account of any Investment Property maintained
in an account with such intermediary, as directed by the Agent without further
consent by such Debtor at any time after the occurrence of any Event of Default;
provided, however, that, prior to the existence of an Event of Default and
thereafter until otherwise required by the Agent or the Required Lenders, a
Debtor shall not be required to deliver any such certificates or cause any such
agreement to be entered into with the relevant financial intermediary if and so
long as (i) the fair market value of any such Investment Property held by such
Debtor is less than $100,000 and (ii)_the aggregate fair market value of all
such Investment Property held by the Debtors and not subject to the control (as
such term is defined in the Code) of the Agent under the Collateral Documents is
less than $250,000 at any one time outstanding. The Agent may at any time after
the occurrence of an Event of Default cause to be transferred into its name or
the name of its nominee or nominees any and all of the Investment Property
hereunder.
(c) Unless and until an Event of Default has occurred and is
continuing, each Debtor may sell or otherwise dispose of any Investment Property
to the extent permitted by the Credit Agreement, provided that no Debtor shall
sell or otherwise dispose of any capital stock or other equity interests in any
other Debtor or any direct or indirect Subsidiary of any Debtor without the
Agent's prior written consent. During the existence of any Event of Default, no
Debtor shall sell or otherwise dispose of all or any part of the Investment
Property without the prior written consent of the Agent.
(d) Each Debtor represents that on the date of this Agreement, none of
the Investment Property consists of margin stock (as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System) except to
the extent such Debtor has delivered to the Agent a duly executed and completed
Form U-1 with respect to such stock. If at any time the Investment Property or
any part thereof consists of margin stock, the relevant Debtor shall promptly so
notify the Agent and deliver to the Agent duly executed and completed Form U-1
and such other instruments and documents reasonably requested by the Agent in
form and substance satisfactory to the Agent.
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(e) Notwithstanding anything to the contrary contained herein, in the
event any Investment Property is subject to the terms of a separate security
agreement (including, without limitation, the Pledge Agreement bearing even date
herewith relating to the equity interests issued by certain of the Debtors
hereunder) in favor of the Agent, the terms of such separate security agreement
shall govern and control unless otherwise agreed to in writing by the Agent and
the Lenders.
Section 7. Special Provisions Re: Inventory and Equipment. (a)__Each
Debtor will at its own cost and expense maintain, keep and preserve its
Inventory in good and merchantable condition and keep and preserve its Equipment
in good repair, working order and condition, ordinary wear and tear excepted,
and without limiting the foregoing make all necessary and proper repairs,
replacements and additions to the Equipment so that the efficiency thereof shall
be fully preserved and maintained.
(b) Each Debtor may, until an Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Agent, use, consume
and sell its Inventory in the ordinary course of its business as presently
conducted, but a sale in the ordinary course of business shall not under any
circumstance include any transfer or sale in satisfaction, partial or complete,
of a debt owing by any Debtor.
(c) Each Debtor may, until an Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Agent, sell
(i) obsolete, worn out or unusable Equipment which is concurrently replaced with
similar Equipment at least equal in quality and condition to that sold and owned
by such Debtor free of any lien, charge or encumbrance other than the lien
hereof and (y)_Equipment which is not necessary for, or of importance to, the
proper conduct of any Debtor's business in the ordinary course and failure to
repair or replace such Equipment would not be disadvantageous to the rights
hereunder of the Agent and the Lenders.
(d) As of the time any Inventory or Equipment becomes subject to the
security interest provided for hereby and at all times thereafter, each Debtor
shall be deemed to have warranted as to any and all of its Inventory and
Equipment that all warranties of such Debtor set forth in this Agreement are
true and correct with respect to such Inventory and Equipment and that all of
such Inventory and Equipment is located at a location set forth pursuant to
Section 3(b) hereof. Each Debtor warrants and agrees that no Inventory is or
will be consigned to any other person without the Agent's prior written consent.
(e) Each Debtor shall at its own cost and expense cause the lien of the
Agent in and to any portion of its Collateral subject to a certificate of title
law to be duly noted on such certificate of title or to be otherwise filed in
such manner as is prescribed by law in order to perfect such lien
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and shall cause all such certificates of title and evidences of lien to be
deposited with the Agent unless otherwise permitted by the Required Lenders in
their sole discretion; provided that no Debtor shall be obligated to cause the
Agent's lien to be so noted or to deliver any such certificate of title to the
Agent to the extent such certificate is held by another creditor with a purchase
money security interest permitted by the Credit Agreement on the Collateral
represented by such certificate.
(f) Each Debtor shall at its own cost and expense cause any certificate
of title evidencing any of the Collateral to be amended to reflect the current
and correct name of such Debtor as and when required by applicable law, but in
any event no later than such date on which such Debtor must renew its
registration of such Collateral under applicable law. Each Debtor shall cause
the lien of the Agent in such Collateral to continue to be duly noted on such
amended or reissued certificate of title.
(g) Except for Equipment from time to time located on the real estate
described on Schedule C attached hereto and as otherwise disclosed to the Agent
in writing, none of the Equipment is or will be attached to real estate in such
a manner that the same may become a fixture.
(h) If any of its Inventory is at any time evidenced by a document of
title, such document shall be promptly delivered by the appropriate Debtor to
the Agent.
Section 8. Power of Attorney. In addition to any other powers of
attorney contained herein, each Debtor appoints the Agent, its nominee, or any
other person whom the Agent may designate as such Debtor's attorney in fact,
with full power to endorse such Debtor's names on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security that may
come into the Agent's possession, to sign such Debtor's names on any invoice or
▇▇▇▇ of lading relating to any Receivables, on drafts against customers, on
schedules and assignments of Receivables, on notices of assignment, on public
records, on verifications of accounts and on notices to customers, to send
requests for verification of Receivables to customers or account debtors, to
notify the post office authorities to change the address for delivery of such
Debtor's mail to an address designated by the Agent and to receive, open and
dispose of all mail addressed to such Debtor and to do all other things
necessary to carry out this Agreement. Each Debtor hereby ratifies and approves
all acts of any such attorney and agree that neither the Agent nor any such
attorney nor any Lender will be liable for any acts or omissions nor for any
error of judgment or mistake of fact or law other than their own gross
negligence or willful misconduct. The foregoing power of attorney, being coupled
with an interest, is irrevocable until the Obligations have been fully satisfied
and any commitment of the Lenders to extend credit constituting Obligations has
terminated. The Agent may file one or more financing
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statements disclosing its security interest in any or all of the Collateral
without any Debtor's signature appearing thereon. Each Debtor also hereby grants
the Agent a power of attorney to execute any such financing statement, or
amendments and supplements to financing statements, on behalf of such Debtor
without notice thereof to any Debtor, which power of attorney is coupled with an
interest and is irrevocable until the Obligations have been fully satisfied and
any commitment of the Lenders to extend credit constituting Obligations to any
of the Borrowers has terminated.
Section 9. Defaults and Remedies. (a) The occurrence of any event or
the existence of any condition which is specified as an Event of Default under
the Credit Agreement shall constitute an "Event of Default" hereunder.
(b) Upon the occurrence of any Event of Default, the Agent shall have,
in addition to all other rights provided herein or by law, the rights and
remedies of a secured party under the Code (regardless of whether the Code is
the law of the jurisdiction where the rights or remedies are asserted and
regardless of whether the Code applies to the affected Collateral), and further
the Agent may, without demand and without advertisement, notice, hearing or
process of law, all of which each Debtor hereby waives to the extent permitted
by law, at any time or times, sell and deliver any or all Collateral held by or
for it at public or private sale, for cash, upon credit or otherwise, at such
prices and upon such terms as the Agent deems advisable, in its sole
discretion. In addition to all other sums due the Agent and the Lenders
hereunder, the Debtors jointly and severally agree to pay to the Agent and the
Lenders all costs and expenses incurred by the Agent and the Lenders, including
reasonable attorneys' fees and court costs, in obtaining, liquidating or
enforcing payment of Collateral or Obligations or in the prosecution or defense
of any action or proceeding by or against the Agent or such Lender or the
Debtors or any of them concerning any matter arising out of or connected with
this Agreement or the Collateral or Obligations, including without limitation
any of the foregoing arising in, arising under or related to a case under the
Bankruptcy Code. Any requirement of reasonable notice shall be met if such
notice is personally served on or mailed, postage prepaid, to the Debtors in
accordance with Section 14(b) hereof at least ten days before the time of sale
or other event giving rise to the requirement of such notice; however, no
notification need be given to a Debtor if that Debtor has signed, after an
Event of Default has occurred, a statement renouncing any right to notification
of sale or other intended disposition. The Agent shall not be obligated to make
any sale or other disposition of the Collateral regardless of notice having
been given. The Agent or any Lender may be the purchaser at any such sale. To
the extent permitted by applicable law, each Debtor hereby waives all of its
rights of redemption from any such sale. Subject to the provisions of
applicable law, the Agent may postpone or cause the postponement of the sale of
all or any portion of the Collateral by announcement at the time and place of
such sale, and such sale may, without further notice, be
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made at the time and place to which the sale was postponed or the Agent may
further postpone such sale by announcement made at such time and place.
(c) Without in any way limiting the foregoing, during the existence of
any Event of Default, the Agent shall have the right, in addition to all other
rights provided herein or by law, to take physical possession of any and all of
the Collateral and anything found therein, the right for that purpose to enter
without legal process any premises where the Collateral may be found (provided
such entry be done lawfully), and the right to maintain such possession on each
Debtor's premises (each Debtor hereby agreeing to lease warehouses without cost
or expense to the Agent or its designee if the Agent so requests) or to remove
its Collateral or any part thereof to such other places as the Agent may desire.
During the existence of any Event of Default, the Agent shall have the right to
exercise any and all rights with respect to deposit accounts of any Debtor
maintained with the Agent or any Lender, including, without limitation, the
right to collect, withdraw and receive all amounts due or to become due or
payable under each such deposit account. During the existence of any Event of
Default, each Debtor shall, upon the Agent's demand, assemble its Collateral and
make it available to the Agent at a place designated by the Agent. If the Agent
exercises its right to take possession of the Collateral, each Debtor shall also
at its expense perform any and all other steps requested by the Agent to
preserve and protect the security interest hereby granted in the Collateral,
such as placing and maintaining signs indicating the security interest of the
Agent, appointing overseers for the Collateral and maintaining stock records.
(d) Without in any way limiting the foregoing, each Debtor hereby
grants to the Agent and the Lenders a royalty-free irrevocable license and right
to use all of such Debtor's patents, patent applications, patent licenses,
trademarks, trademark registrations, trademark licenses, trade names, trade
styles, and similar intangibles in connection with any foreclosure or other
realization by the Agent or the Lenders on all or any part of the Collateral,
provided that the license granted hereunder shall not include any rights in any
license agreement under which the relevant Debtor is licensee which, by its
terms, prohibits the license contemplated by this Section. The license and right
granted the Agent and the Lenders hereby shall be without any royalty or fee or
charge whatsoever. Such license and right shall only be exercisable upon the
occurrence and continuation of an Event of Default.
(e) Without in any way limiting the foregoing, during the existence of
any Event of Default, all rights of a Debtor to exercise the voting and/or
consensual powers which it is entitled to exercise pursuant to Section_6(a)(i)
hereof and/or to receive and retain the distributions which it is entitled to
receive and retain pursuant to Section 6(a)(ii) hereof, shall, at the option of
the Agent, cease and thereupon become vested in the Agent, which, in addition to
all other rights provided herein or by law, shall then be entitled solely and
exclusively to exercise all voting and
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other consensual powers pertaining to the Investment Property and/or to receive
and retain the distributions which such Debtor would otherwise have been
authorized to retain pursuant to Section 6(a)(ii) hereof and shall then be
entitled solely and exclusively to exercise any and all rights of conversion,
exchange or subscription or any other rights, privileges or options pertaining
to any Investment Property as if the Agent were the absolute owner thereof
including, without limitation, the rights to exchange, at its discretion, any
and all of the Investment Property upon the merger, consolidation,
reorganization, recapitalization or other readjustment of the respective issuer
thereof or upon the exercise by or on behalf of any such issuer or the Agent of
any right, privilege or option pertaining to any Investment Property and, in
connection therewith, to deposit and deliver any and all of the Investment
Property with any committee, depositary, transfer Agent, registrar or other
designated agency upon such terms and conditions as the Agent may determine.
Without limiting the foregoing, during the existence of any Event of Default,
the Agent may, by written demand, direct any securities intermediary,
commodities intermediary, or other financial intermediary at any time holding
any Investment Property, or any issuer thereof, to deliver such Collateral, or
any part thereof, and/or liquidate such Collateral, or any party thereof, and
deliver the proceeds therefrom to the Agent. In the event the Agent in good
faith believes any of the Collateral constitutes restricted securities within
the meaning of any applicable securities laws, any disposition thereof in
compliance with such laws shall not render the disposition commercially
unreasonable.
(f) The powers conferred upon the Agent hereunder are solely to protect
its interest in the Collateral and shall not impose on it any duty to exercise
such powers. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of Investment Property in its possession if such
Collateral is accorded treatment substantially equivalent to that which the
Agent accords its own property consisting of similar type assets, it being
understood, however, that the Agent shall have no responsibility for
ascertaining or taking any action with respect to calls, conversions, exchanges,
maturities, tenders, or other matters relating to any such Collateral, whether
or not the Agent has or is deemed to have knowledge of such matters. This
Agreement constitutes an assignment of rights only and not an assignment of any
duties or obligations of any Debtor in any way related to the Collateral, and
the Agent shall have no duty or obligation to discharge any such duty or
obligation. The Agent shall have no responsibility for taking any necessary
steps to preserve rights against any parties with respect to any Collateral or
initiating any action to protect the Collateral against the possibility of a
decline in market value. Neither the Agent or any Lender, nor any party acting
as attorney for the Agent or any Lender, shall be liable for any acts or
omissions or for any error of judgment or mistake of fact or law other than such
person's gross negligence or willful misconduct.
(g) Failure by the Agent or any Lender to exercise any right, remedy or
option under this Agreement or any other agreement between the Debtors or any of
them and the Agent or any
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Lender or Lenders or provided by law, or delay by the Agent or any Lender in
exercising the same, shall not operate as a waiver; no waiver shall be effective
unless it is in writing, signed by the party against whom enforcement of the
waiver is sought and then only to the extent specifically stated. Neither the
Agent, any Lender nor any party acting as attorney for the Agent or such Lender,
shall be liable for any acts or omissions or for any error of judgment or
mistake of fact or law other than their gross negligence or willful misconduct.
The rights and remedies of the Agent and the Lenders under this Agreement shall
be cumulative and not exclusive of any other right or remedy which the Agent or
any Lender may have. For purposes of this Agreement, an Event of Default shall
be construed as continuing after its occurrence until the same is waived in
writing by the Lenders or the Required Lenders, as the case may be, in
accordance with the Credit Agreement.
Section 10. Application of Proceeds. The proceeds and avails of the
Collateral at any time received by the Agent upon the occurrence and during the
continuation of any Event of Default shall, when received by the Agent in cash
or its equivalent, be applied by the Agent in reduction of the Obligations in
accordance with the terms of the Credit Agreement. The Debtors shall remain
liable to the Agent and the Lenders for any deficiency. Any surplus remaining
after the full payment and satisfaction of the Obligations shall be returned to
the Debtors or to whomsoever the Agent reasonably determines is lawfully
entitled thereto.
Section 11. Continuing Agreement. This Agreement shall be a continuing
agreement in every respect and shall remain in full force and effect until all
of the Obligations, both for principal and interest, have been fully paid and
satisfied and any commitment to extend any credit constituting Obligations to
any of the Borrowers shall have terminated.
Section 12. Primary Security; Obligations Absolute. The lien and
security herein created and provided for stand as direct and primary security
for the Obligations. No application of any sums received by the Agent in respect
of the Collateral or any disposition thereof to the reduction of the Obligations
or any portion thereof shall in any manner entitle any Debtor to any right,
title or interest in or to the Obligations or any collateral security therefor,
whether by subrogation or otherwise, unless and until all Obligations have been
fully paid and satisfied and any commitment to extend credit constituting
Obligations to any of the Borrowers shall have terminated. Each Debtor
acknowledges and agrees that the lien and security hereby created and provided
for are absolute and unconditional and shall not in any manner be affected or
impaired by any acts or omissions whatsoever of the Agent, any Lender or any
other holder of any of the Obligations, and without limiting the generality of
the foregoing, the lien and security hereof shall not be impaired by any
acceptance by the Agent, any Lender or any holder of any of the Obligations of
any other security for or guarantors upon any of the Obligations or by any
failure, neglect or omission on the part of the Agent, any Lender or any other
holder of any of the
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Obligations to realize upon or protect any of the Obligations or any collateral
security therefor. The lien and security hereof shall not in any manner be
impaired or affected by (and the Agent and the Lenders, without notice to
anyone, are hereby authorized to make from time to time) any sale, pledge,
surrender, compromise, settlement, release, renewal, extension, indulgence,
alteration, substitution, exchange, change in, modification or disposition of
any of the Obligations, or of any collateral security therefor, or of any
guaranty thereof or of any obligor thereon. The Lenders may at their discretion
at any time grant credit to any of the Borrowers without notice to any Debtor in
such amounts and on such terms as the Lenders may elect (all of such to
constitute additional Obligations) without in any manner impairing the lien and
security hereby created and provided for. No release, compromise or discharge of
any Debtor hereunder or with respect to any of the Obligations or any Collateral
provided by such Debtor shall release or discharge, or impair the agreements of,
any other Debtor hereunder or in any manner impair the liens and security
interests granted by any other Debtor hereunder; and the Agent may proceed
against the Collateral provided hereunder by any one or more of the Debtors
without proceeding against any or all of the other Debtors, their respective
properties or any other security or guaranty whatsoever. Without limiting the
generality of the foregoing, the Agent (acting at the direction of the Lenders)
may at any time or from time to time release any Debtor from its obligations
hereunder or release any Collateral or effect any compromise with any Debtor,
and no such release or compromise shall in any manner impair or otherwise effect
the liens granted by, or the obligations of, the other Debtors hereunder. In
order to foreclose or otherwise realize hereon and to exercise the rights
granted the Agent hereunder and under applicable law as against any Debtor or
any Collateral in which such Debtor has rights, there shall be no obligation on
the part of the Agent, any Lender or any other holder of any of the Obligations
at any time to first resort for payment to any of the Borrowers or any other
Debtor or any other Person, its property or estate or to any guaranty of the
Obligations or any portion thereof or to resort to any other collateral
security, property, liens or any other rights or remedies whatsoever, and the
Agent shall have the right to enforce this instrument as against any Debtor or
any Collateral in which such Debtor has rights, irrespective of whether or not
other proceedings or steps are pending seeking resort to or realization upon or
from any of the foregoing.
Section 13. The Agent. In acting under or by virtue of this Agreement,
the Agent shall be entitled to all the rights, authority, privileges and
immunities provided in Section_10 of the Credit Agreement, all of which
provisions of said Section 10 are incorporated by reference herein with the
same force and effect as if set forth herein in their entirety. The Agent
hereby disclaims any representation or warranty to the Lenders concerning the
perfection of the security interest granted hereunder or in the value of any
of the Collateral.
Section 14. Miscellaneous. (a) This Agreement cannot be changed or
terminated orally. All of the rights, privileges, remedies and options given
to the Agent and the Lenders
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hereunder shall inure to the benefit of their respective successors and assigns,
and all the terms, conditions, promises, covenants, representations and
warranties of and in this Agreement shall bind each Debtor and its legal
representatives, successors and assigns, provided that no Debtor may assign its
rights or delegate its duties hereunder without the Agent's prior written
consent. Without limiting the generality of the foregoing, and subject to the
provisions of Sections 12.14 and 12.15 of the Credit Agreement, any Lender may
assign or otherwise transfer any indebtedness held by it secured by this
Agreement to any other person or entity, and such other person or entity shall
thereupon become vested with all the benefits in respect thereof granted to such
Lender herein or otherwise, subject, however, to the provisions of the Credit
Agreement. Each Debtor hereby releases the Agent and each Lender from any
liability for any act or omission relating to its Collateral or this Agreement,
except the Agent's or such Lender's gross negligence or willful misconduct.
(b) All communications provided for herein shall be in writing, except
as otherwise specifically provided for hereinabove, and shall be deemed to have
been given or made, if to any Debtor when given to any of the Borrowers in
accordance with Section 12.8 of the Credit Agreement, or if to the Agent or any
Lender, when given to such party in accordance with Section 12.8 of the Credit
Agreement.
(c) No Lender shall have the right to institute any suit, action or
proceeding in equity or at law for the foreclosure against any Collateral
subject to this Agreement or for the execution of any trust or power hereof or
for the appointment of a receiver, or for the enforcement of any other remedy
under or upon this Agreement; it being understood and intended that no one or
more of the Lenders shall have any right in any manner whatsoever to affect,
disturb or prejudice the lien and security interest of this Agreement by its or
their action or to enforce any right hereunder, and that all proceedings at law
or in equity shall be instituted, had and maintained by the Agent in the manner
herein provided for the ratable benefit of the Lenders.
(d) In the event that any provision hereof shall be deemed to be
invalid by reason of the operation of any law or by reason of the interpretation
placed thereon by any court, this Agreement shall be construed as not containing
such provision, but only as to such locations where such law or interpretation
is operative, and the invalidity of such provision shall not affect the validity
of any remaining provision hereof, and any and all other provisions hereof which
are otherwise lawful and valid shall remain in full force and effect. Without
limiting the generality of the foregoing, in the event that this Agreement shall
be deemed to be invalid or otherwise unenforceable with respect to any Debtor,
such invalidity or unenforceability shall not affect the validity of this
Agreement with respect to the other Debtors.
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(e) This Agreement shall be deemed to have been made in the State of
Illinois and shall be governed by the internal laws of the State of Illinois
(without regard to the principles of conflicts of law). All terms which are used
in this Agreement which are defined in the Code shall have the same meanings
herein as said terms do in the Code unless this Agreement shall otherwise
specifically provide. The headings in this instrument are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision hereof.
(f) This Agreement may be executed in any number of counterparts, each
constituting an original, but all together one and the same instrument. Each
Debtor acknowledges that this Agreement is and shall be effective upon its
execution and delivery by such Debtor to the Agent, and it shall not be
necessary for the Agent to execute this Agreement or any other acceptance hereof
or otherwise to signify or express its acceptance hereof.
(g) THE AGENT AND THE DEBTORS AGREE THAT ALL DISPUTES AMONG THEM
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL
COURTS LOCATED IN ▇▇▇▇ COUNTY, ILLINOIS, BUT EACH OF THE AGENT AND THE DEBTORS
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF ▇▇▇▇ COUNTY, ILLINOIS. EACH OF THE DEBTORS WAIVES IN ALL
DISPUTES ANY OBJECTION THAT SUCH DEBTOR MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE OR ANY OBJECTION THAT SUCH DEBTOR MAY HAVE THAT ANY
OTHER PARTY HAS NOT BEEN JOINED IN SUCH PROCEEDING. EACH OF THE DEBTORS AGREES
THAT THE AGENT SHALL HAVE THE RIGHT TO PROCEED AGAINST EACH AND ANY OF THE
DEBTORS OR THEIR COLLATERAL IN A COURT IN ANY LOCATION TO ENABLE THE AGENT TO
REALIZE ON THE COLLATERAL, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED
IN FAVOR OF THE AGENT, WHETHER OR NOT PROCEEDING SEPARATELY AGAINST ANY DEBTOR
AND ITS PROPERTY OR JOINTLY AGAINST THE BORROWER AND ANY ONE OR MORE OF THE
DEBTORS AND THEIR PROPERTY. EACH OF THE DEBTORS WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH THE AGENT HAS COMMENCED A PROCEEDING
DESCRIBED IN THIS PARAGRAPH.
[SIGNATURE PAGES TO FOLLOW]
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IN WITNESS WHEREOF, the Debtors have caused this Agreement to be duly
executed as of the date first above written.
DEBTORS:
▇▇▇▇▇▇ INDUSTRIAL GROUP, INC.
By
Its__________________________________
▇▇▇▇▇▇ METALCRAFT CO.
By
Its__________________________________
▇▇▇▇▇▇ METALCRAFT CO. OF NORTH
CAROLINA
By
Its__________________________________
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Accepted and agreed to as of the date first above written.
▇▇▇▇▇▇ TRUST AND SAVINGS BANK, as
Agent as aforesaid for the Lenders
By
Its____________________________________
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