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Exhibit 10.05
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of this 22nd day of April, 1999, by and
between NASHUA CORPORATION, a Delaware corporation with a principal place of
business at 44 Franklin Street, Nashua, New Hampshire 03061-2002 (the "Debtor"),
and FLEET BANK-NH, a bank incorporated under the laws of the State of New
Hampshire with a principal place of business at 1155 Elm Street, Manchester, New
Hampshire 03101 (the "Secured Party").
W I T N E S S E T H :
WHEREAS, incident to a Loan Agreement of even date by and between the
Debtor and the Secured Party (the "Loan Agreement"), the Secured Party may make
loans and financial accommodations to the Debtor (collectively, the "Loan"), all
as set forth in the Loan Agreement; and
WHEREAS, the obligations of the Secured Party to make the Loan to the
Debtor are subject to the condition, among others, that the Debtor shall execute
and deliver this Agreement and grant the security interests hereinafter
described;
NOW, THEREFORE, in consideration of the willingness of the Secured
Party to make the Loan to the Debtor and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. SECURITY INTEREST. As security for the Secured Obligations
described in Section 2 hereof, the Debtor hereby grants to the Secured Party a
security interest in and lien on all of the property described below
(hereinafter referred to collectively as the "Collateral"):
(a) All inventory wherever located (including in transit), including,
but not limited to, goods, merchandise and other personal property, held for
sale or lease or furnished or to be furnished under a contract of service, or
constituting raw materials, work in process, or materials used or consumed in
the Debtor's business, or consigned to others or held by others for return to
the Debtor, whether now owned or subsequently acquired or manufactured and
wherever located;
(b) All accounts, accounts receivable, demand deposits, "cash
collateral" (as defined in 11 U.S.C. Section 363(a)), contracts, contract
rights, notes, bills, drafts, chattel paper, acceptances, instruments, tax
refunds, insurance proceeds, and all other debts, obligations, and liabilities
in whatever form, owing to the Debtor from any person or entity, rights of the
Debtor, earned or to be earned, under contracts to sell goods or render
services, all of which now belong, have belonged, or will belong to the Debtor
for goods sold by it or for services rendered by it, together with all
guaranties and securities therefor, all right, title and interest of the Debtor
in the merchandise giving rise thereto, including the right of stoppage in
transit, and all goods subsequently acquired by the Debtor by way of
substitution, replacement, return, repossession or otherwise;
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(c) Any and all products and proceeds of any or all of the foregoing,
including, without limitation, cash, cash equivalents, tax refunds and the
proceeds of insurance policies providing coverage against the loss or
destruction of or damage to any of the Collateral;
(d) All of the Debtor's after-acquired property of the kinds and
types described in paragraphs (a)-(c) herein; and
(e) All records and data relating to any of the property described
above, whether in the form of a writing, photograph, microfile, microfiche, or
electronic media, together with all of the Debtor's right, title and interest in
and to all computer software required to utilize, create, maintain and process
any of such records or data or electronic media.
The purpose of this Security Agreement is to make the Secured Party a
secured party and provide it with a continuing first priority interest under the
Uniform Commercial Code of the State of New Hampshire in property of the Debtor,
as more particularly described above.
2. SECURED OBLIGATIONS. The security interest granted herein shall
secure the following (the "Secured Obligations"):
(a) The Debtor's payment and performance of a certain loan and other
extensions of credit (including without limitation foreign exchange facilities
and letters of credit issued by the Secured Party or any affiliate thereof on
behalf or for the benefit of the Debtor) in the aggregate amount of Fifteen
Million Dollars ($15,000,000) to the Debtor by the Secured Party pursuant to the
Loan Agreement and the obligation of the Debtor pursuant to the Master Agreement
(as defined in the Loan Agreement).
(b) The payment of all other sums with interest and charges thereon
advanced in accordance herewith to protect the validity, security and priority
of this Security Agreement;
(c) The Debtor's payment or other performance of its obligations
under the Loan Agreement, notes evidencing the Loan (the "Note"), the Master
Agreement, this Security Agreement and any and all other loan documents and
instruments described in and contemplated thereby (collectively, the "Loan
Documents") as the same may be amended, modified, extended, renewed, replaced or
restated.
The Debtor agrees that the Collateral granted to the Secured Party
pursuant to this Security Agreement shall, in addition to securing any Loan,
advance or indebtedness which may be made contemporaneously with the execution
of the Loan Agreement, also secure all future advances, loans, liabilities, and
extensions of credit of every nature made by the Secured Party and indebtedness
of the Debtor to the Secured Party pursuant to the Loan Agreement.
3. WARRANTIES AND REPRESENTATIONS OF THE DEBTOR. The Debtor warrants
and represents to the Secured Party as follows (which shall survive the
execution and delivery of this Agreement and shall be continuing warranties and
representations as long as any Secured Obligations remain outstanding):
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(a) Each representation or warranty made in the Loan Documents
relating to the Debtor, the Collateral or the security furnished hereunder is
true, accurate and complete in all material respects.
(b) The Debtor conducts business only under and through the business
and trade names and entities set forth in the introductory paragraph of this
Security Agreement and as set forth on Exhibit A hereto.
(c) No authorization, approval or other action by, and no notice to
or filing with, any governmental authority or other person is required either
(a) for the grant by the Debtor of the security interests granted hereby or for
the execution, delivery or performance of this Security Agreement by the Debtor
or (b) for the perfection of or the exercise by the Secured Party of their
respective rights and remedies hereunder, except the filing of financing
statements.
(d) The Debtor has not performed any acts which might prevent the
Secured Party from enforcing any of the terms and conditions of this Security
Agreement or which would limit any of them in any such enforcement except for
existing liens and encumbrances disclosed in Exhibit C.
(e) The address shown at the beginning of this Agreement is the
principal place of business of the Debtor and all of the Debtor's additional
places of business, if any, and the locations of all the Collateral, are listed
in Exhibit B attached hereto. The Debtor will not change its principal or any
other place of business, or the location of any Collateral, without at least
thirty (30) days' prior written notice to the Secured Party.
(f) The Collateral is and, if acquired hereafter, will be, lawfully
owned by the Debtor, free and clear of all other liens, encumbrances and
security interests, except as may be disclosed to the Secured Party on Exhibit C
hereto and as permitted by the Loan Agreement, and the Debtor will warrant and
defend title to the same against the claims and demands of all persons.
4. AFFIRMATIVE COVENANTS OF THE DEBTOR. (a) The Debtor shall
promptly notify and provide the Secured Party with a complete description of the
opening of any new places of business, the closing of any existing places of
business, the conduct of business under any names or through any entities other
than those set forth herein, the relocation of any of the Collateral to any new
place of business, which would affect the financing statements filed by the
Secured Party. The Debtor will furnish to the Secured Party from time to time
such statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral, as such Secured Party
may reasonably request, all in reasonable detail.
(b) The Debtor shall continuously take all steps that are necessary
or prudent to protect the security interests of the Secured Party in the
Collateral.
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(c) The Debtor shall defend the Collateral against the claims and
demands of all persons.
(d) The Debtor shall deliver and pledge to the Secured Party,
endorsed or accompanied by instruments of assignment or transfer satisfactory to
the Secured Party, any instruments, documents and chattel paper which the
Secured Party may specify.
(e) The Debtor shall keep and maintain the Collateral in good
condition and repair and adequately insured (as provided in the Loan Documents)
and permit the Secured Party and its agents to inspect the Collateral at any
reasonable time. The Debtor shall be permitted to make normal replacement of its
fixed assets.
(f) The Debtor shall comply, in all material respects, with all
governmental regulations applicable to the Collateral or any part thereof or to
the operation of the Debtor's business; provided, however, that the Debtor may
contest any governmental regulation in any reasonable manner which shall not, in
the reasonable opinion of the Secured Party, adversely affect the Secured
Party's rights or the priority of its security interest in the Collateral.
(g) The Debtor shall pay promptly when due, all taxes, assessments
and governmental charges or levies imposed upon the Collateral or in respect of
its income or profits therefrom, as well as all claims of any kind, except that
no such charge need be paid if (i) the validity thereof is being contested in
good faith by appropriate proceedings, (ii) such proceedings do not involve any
danger of the sale, forfeiture or loss of any of the Collateral or any interest
therein; and (iii) such charge is adequately reserved against in accordance with
the generally accepted accounting principles.
(h) The Debtor shall advise the Secured Party promptly, in reasonable
detail, (i) of any lien, security interest, encumbrance or claim made or
asserted against any of the Collateral that is not permitted by this Agreement,
(ii) of any material change, substantial loss or depreciation in the composition
of the Collateral, and (iii) of the occurrence of any other material adverse
effect on the aggregate value, enforceability or collectability of the
Collateral or on the security interests created hereunder.
(i) The Debtor shall give, execute, deliver and file or record in the
proper governmental offices, any instrument, paper or document, including but
not limited to, one or more financing statements under the Uniform Commercial
Code, satisfactory to the Secured Party, or take any action, which the Secured
Party may deem necessary or desirable in order to create, preserve, perfect,
extend, continue, modify, terminate or otherwise effect any security interest
granted pursuant hereto, or to enable the Secured Party to exercise or enforce
any of its rights hereunder, including without limitation, upon the occurrence
of an Event of a Default, the establishment of one or more lockbox accounts with
the Secured Party or others who are, and in a manner which is, satisfactory to
the Secured Party.
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(j) The Debtor shall keep, and stamp or otherwise mark, any of its
documents, instruments and chattel paper and its books relating to any of the
Collateral in such manner as the Secured Party may reasonably require.
(k) The Debtor shall pay, or reimburse the Secured Party, in the
amount of all expenses (including reasonable fees and expenses of attorneys,
experts and agents) incurred in any way in connection with the exercise, defense
or assertion of any of its rights or interests hereunder, the enforcement of any
provisions hereof or the management, preservation, use, operation, maintenance,
collection, possession, disposition or enforcement of any of the Collateral (all
such expenses shall be treated as Secured Obligations hereunder).
(l) Upon any failure of the Debtor to comply with its obligations
above, the Secured Party may, at its option, and without affecting any of its
other rights or remedies herein or as a secured party under the Uniform
Commercial Code, procure the insurance protection it deems necessary and/or
cause repairs or modifications to be made to the Collateral, the cost of either
or both of which shall be a lien against the Collateral added to the amount of
the indebtedness secured hereby and payable on demand with interest at a per
annum rate computed on the same basis as the Secured Obligations.
(m) The Debtor hereby assigns to the Secured Party any and all moneys
which may become due and payable under any policy insuring the Collateral,
including return of unearned premiums, and directs any such insurance company to
make payment directly to the Secured Party, and authorizes the Secured Party to
apply such moneys in payment on account of the indebtedness secured hereby,
whether or not due, or, at the sole option of the Secured Party, toward
replacement of the Collateral, and to remit any surplus to the Debtor.
5. NEGATIVE COVENANTS OF THE DEBTOR. Except as otherwise provided in
the Loan Agreement, without the prior written consent of the Secured Party, the
Debtor shall not:
(a) Transfer, sell or assign any of the Collateral except for the
sale of inventory in the ordinary course of business.
(b) Allow or permit any other security interest or lien to attach to
any of the Collateral, except those liens listed on Exhibit C.
(c) File, or authorize or permit to be filed, in any jurisdiction any
financing statement relating to any of the Collateral unless the Secured Party
is named as sole secured party, except those interests already filed and listed
on Exhibit C and those permitted by the Loan Agreement.
(d) Permit any of the Collateral to be levied upon under any legal
process.
(e) Permit anything to be done that may materially impair the value
of any of the Collateral or the security therein intended to be afforded hereby.
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6. EVENTS OF DEFAULT. The Debtor shall be in default under this
Security Agreement upon the occurrence of an event of default under any Loan
Document, including the Loan Agreement (herein called "Events of Default").
7. RIGHTS OF SECURED PARTY ON DEFAULT. Upon the occurrence of any
Event of Default, the Secured Party may declare all of the Secured Obligations
to be immediately due and payable and shall then have the remedies of a secured
party under the Uniform Commercial Code or under any other applicable law,
including, without limitation, the right to take possession of the Collateral,
and in addition thereto, the right to enter upon any premises on which the
Collateral or any part thereof may be situated and remove the same therefrom.
The Secured Party may require the Debtor to make the Collateral (to the extent
the same is moveable) available to the Secured Party at a place to be designated
by the Secured Party which is reasonably convenient to all parties. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Secured Party will give the
Debtor at least ten (10) days' prior written notice by registered or certified
mail at the address of the Debtor set forth above (or at such other address or
addresses as the Debtor shall specify in writing to the Secured Party) of the
time and place of any public sale thereof or of the place and time after which
any private sale or any other intended disposition thereof is to be made. Any
such notice shall be deemed to meet any requirement hereunder or under any
applicable law (including the Uniform Commercial Code) that reasonable
notification be given of the time and place of such sale or other disposition.
After deducting all reasonable costs and expenses of collection, storage,
custody, sale or other disposition and delivery (including reasonable legal
costs and attorneys' fees) and all other charges against the Collateral, the
residue of the proceeds of any such sale or disposition shall be applied to the
payment of the Secured Obligations in such order of priority as the Secured
Party shall determine or held in escrow to apply to any contingent obligations
of the Debtor to the Bank, as required, and any surplus shall be returned to the
Debtor. In the event the proceeds of any sale, lease or other disposition of the
Collateral hereunder are insufficient to pay all of the Secured Obligations in
full, the Debtor will be liable for the deficiency, together with interest
thereon, at the maximum rate provided in the Note and the reasonable cost and
expenses of collection of such deficiency, including (to the extent permitted by
law), without limitation, reasonable attorneys' fees, expenses and
disbursements.
8. RIGHTS OF THE SECURED PARTY TO USE AND OPERATE COLLATERAL, ETC.
Upon the occurrence of any Event of Default, but subject to the provisions of
the Uniform Commercial Code or other applicable law, the Secured Party shall
have the right and power to take possession of all or any part of the
Collateral, and to exclude the Debtor and all persons claiming under the Debtor
wholly or partly therefrom, and thereafter to hold, store, and/or use, operate,
manage and control the same. Without limiting the generality of the foregoing,
the Secured Party shall, have the right to apply for and have a receiver
appointed by a court of competent jurisdiction in any action taken by the
Secured Party to enforce its rights and remedies hereunder in order to manage,
protect and preserve the Collateral and continue the operation of the business
of the Debtor and to collect all revenues and profits thereof and apply the same
to the payment of all expenses and other charges of such receivership including
the
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compensation of the receiver and to the payment of the Secured Obligations as
aforesaid until a sale or other disposition of such Collateral shall be finally
made and consummated.
9. COLLECTION OF ACCOUNTS RECEIVABLE, ETC. Upon the occurrence of
any Event of Default, the Secured Party may notify or may require the Debtor to
notify account debtors obligated on any or all of the Debtor's accounts
receivable, whether now existing or hereafter arising, to make payment directly
to the Secured Party, and may take possession of all proceeds of any accounts in
the Debtor's possession, and may take any other steps which the Secured Party
deem necessary or advisable to collect any or all accounts receivable or other
Collateral or proceeds thereof.
10. WAIVER, ETC. The Debtor hereby waives presentment, demand,
notice, protest and, except as is otherwise provided herein, all other demands
and notices in connection with this Security Agreement or the enforcement of the
Secured Party's rights hereunder or in connection with any Secured Obligations
or any Collateral; consents to and waives notice of the granting of renewals,
extensions of time for payment or other indulgences to the Debtor or to any
account debtor in respect of any account receivable, or substitution, release or
surrender of any Collateral, the addition or release of persons primarily or
secondarily liable on any Secured Obligation or on any account receivable or
other Collateral, the acceptance of partial payments on any Secured Obligation
or on any account receivable or other Collateral and/or the settlement or
compromise thereof. No delay or omission on the part of the Secured Party in
exercising any right hereunder shall operate as a waiver of such right or of any
other right hereunder. Any waiver of any such right on any one occasion shall
not be construed as a bar to or waiver of any such right on any such future
occasion.
THE BORROWER AND THE BANK MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE
OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE BANK
TO ACCEPT THIS AGREEMENT AND MAKE THE LOAN.
11. TERMINATION; ASSIGNMENTS, ETC. This Agreement and the security
interest in the Collateral created hereby shall be terminated when all of the
Secured Obligations have been (a) fully and finally paid and performed and (b)
delivery of a final discharge in writing by the Bank (this Agreement and such
security interest shall continue in full force and effect notwithstanding any
temporary payment of the Secured Obligations under a revolving credit
instrument). In the event of a sale or assignment by the Secured Party of all or
any of the Secured Obligations held by it to the extent permitted by the Loan
Agreement, the Secured Party may assign or transfer its rights and interests
under this Security Agreement in whole or in part to the purchaser or purchasers
of such Secured Obligations, whereupon such purchaser or purchasers shall become
vested with all of the powers and rights of the Secured Party
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hereunder, and the Secured Party shall thereafter be forever released and fully
discharged from any liability or responsibility hereunder, with respect to the
rights and interests so assigned.
12. NOTICES. Except as otherwise provided herein, notice to the
Debtor or to the Secured Party shall be deemed to have been sufficiently given
or served for all purposes hereof if mailed, certified or registered mail,
return receipt requested, postage prepaid to the parties at the addresses set
forth above in this Security Agreement or at such other address as the party to
whom such notice is directed may have designated in writing to the other parties
hereto.
13. MISCELLANEOUS. (a) The powers conferred on the Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for monies actually
received by it hereunder, the Secured Party shall not have any duty as to any
Collateral or as to the taking of any necessary steps to preserve any right of
it or of the Debtor against other parties pertaining to any Collateral.
(b) No provision hereof shall be amended except by a writing signed
by the Secured Party and the Debtor.
(c) Any provision of this Security Agreement which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.
(d) This Security Agreement shall be binding upon and shall inure to
the benefit of the permitted assigns and successors of the Secured Party and the
Debtor.
(e) No delay, failure to enforce, or single or partial exercise on
the part of the Secured Party in connection with any of its rights hereunder
shall constitute an estoppel or waiver thereof, or preclude other or further
exercises or enforcement thereof and no waiver of any default hereunder shall be
a waiver of any subsequent default.
(f) This Security Agreement shall be governed as to its validity,
interpretation and effect in accordance with the laws of the State of New
Hampshire.
IN WITNESS WHEREOF, acting by and through its duly authorized agent the
parties hereto have executed this Security Agreement on the day and year first
hereinbefore stated.
NASHUA CORPORATION
_____________________________ By:__________________________________
Witness John L. Patenaude, Its Duly
Authorized Vice President-Finance, Chief
Financial Officer and Treasurer
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FLEET BANK-NH
______________________________ By:__________________________________
Witness Amy LeBlanc Hackett, Its Duly
Authorized Vice President
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EXHIBIT A
Business and Trade Names
[To Be Completed By Borrower]
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EXHIBIT B
Location(s) of the Collateral
[To Be Completed By Borrower]
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EXHIBIT C
Other Liens, Etc.
[To Be Completed By Borrower]
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