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Exhibit 4B
[EXECUTION COPY]
THIRD AMENDED AND RESTATED
GENERAL SECURITY AGREEMENT
THIS THIRD AMENDED AND
RESTATED GENERAL SECURITY AGREEMENT, dated as of the 31st day of
October, 2007 (the “Agreement”), is made among BASSETT
FURNITURE INDUSTRIES, INCORPORATED (the “Borrower”),
BASSETT FURNITURE INDUSTRIES OF NORTH CAROLINA, INC., THE E.B.
MALONE CORPORATION, BASSETT DIRECT STORES, INC., BASSETT DIRECT NC,
LLC AND BASSETT DIRECT SC, LLC (collectively, the
“Guarantors,” the Borrower and the Guarantors being
collectively called the “Grantors”), and BRANCH BANKING
AND TRUST COMPANY, as agent (in such capacity, the
“Agent”) for the Secured Parties as defined
herein.
WITNESSETH
:
RECITALS :
Reference is made to that
certain Third Amended and Restated Credit Agreement dated as of
October 31, 2007 (as amended or modified from time to time,
the “Credit Agreement”), among the Borrower, the
Guarantors, the financial institutions party thereto, as banks (the
“Banks”), Branch Banking and Trust Company, as an
Issuing Bank, Swing Line Lender and the Agent.
Each of the Guarantors has
agreed to guarantee, among other things, all the obligations of the
Borrower under the Credit Agreement, the Letter of Credit Agreement
and the other Loan Documents. The obligations of the Banks to
extend credit and of the Issuing Banks to issue the Letters of
Credit under the Credit Agreement and the other Loan Documents are
conditioned upon, among other things, the execution and delivery by
the Grantors of a security agreement in the form hereof to secure
(a) the due and punctual payment by the Borrower of
(i) the principal of and interest on the Notes, when and as
due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, and any renewals, modifications or
extensions thereof, in whole or in part; (ii) each payment
required to be made by the Borrower under the Letter of Credit
Agreements in respect of any of the Letters of Credit, when and as
due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations, if any, to provide
cash collateral and any renewals, modifications or extensions
thereof, in whole or in part; and (iii) all other monetary
obligations of the Borrower to the Secured Parties under the Credit
Agreement and the other Loan Documents (including , without
limitation, the Licensee Loan Guaranty) to which the Borrower is or
is to be a party, and any renewals, modifications or extensions
thereof, in whole or in part; (b) the due and punctual
performance of all other obligations of the Borrower under the
Credit Agreement and the other Loan Documents (including , without
limitation, the Licensee Loan Guaranty) to which the Borrower is or
is to be a party, and any renewals, modifications or extensions
thereof, in whole or in part; and (c) the due and punctual
payment and performance of all obligations of each of the
Guarantors under the Credit Agreement and the other Loan Documents
to which it is or is to be a party and any renewals, modifications
or extensions thereof, in whole or in part (all the foregoing
indebtedness, liabilities and obligations being collectively called
the “ Obligations ”).
NOW, THEREFORE, in
consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged by the Grantors and the Agent, the parties agree as
follows:
1. Definitions . As
herein used, the following terms shall have the following
meanings:
(a) “ Account
Debtor ” means any Person who is or may become obligated
to a Grantor under, with respect to or on account of an
Account.
(b) “ Account
” means any and all accounts (as that term is defined in the
U.C.C.) of any Grantor and includes, without limitation, any and
all rights of any Grantor to payment for goods sold or leased or
for services rendered whether due or to become due, whether or not
earned by performance and whether now existing or arising in the
future, including, without limitation, Accounts from Affiliates of
the Grantors.
(c) “ Chattel
Paper ” means any and all chattel paper (as that term is
defined in the U.C.C.), whether tangible or electronic, of any
Grantor.
(d) “ Collateral
” means (i) all Accounts, General Intangibles,
Documents, Chattel Paper, Instruments, and Investment Property now
existing or hereafter arising of each Grantor; (ii) all
guarantees of each Grantor’s existing and future Accounts,
General Intangibles, Chattel Paper and Instruments and all other
security held by any Grantor for the payment and satisfaction
thereof; (iii) all Inventory now owned or hereafter acquired
by any Grantor; (iv) any and all moneys, sums and amounts now
or hereafter on deposit in the Collateral Reserve Account or
otherwise to the credit of or belonging to any Grantor in the
Collateral Reserve Account; (v) any and all now owned or
hereafter acquired or arising Deposit Accounts, Letter of Credit
Rights, Goods (as that term is defined in the U.C.C.) and
Supporting Obligations; (vi) all books and records of the
Grantors (including, without limitation, computer records, tapes,
discs and programs and all other media, written, electric, magnetic
or otherwise, containing such records) which relate to any
Grantor’s Inventory, Accounts, Deposit Accounts, Letter of
Credit Rights, Goods, Supporting Obligations, General Intangibles,
Chattel Paper and Instruments or guarantees thereof; (vii) all
insurance on all of the foregoing and the proceeds of that
insurance; and (viii) all cash and noncash proceeds and
products of all of the foregoing and the proceeds and products of
other proceeds and products.
(e) “ Collateral
Reserve Account ” means a non-interest bearing, deposit
account which the Grantors may be required to open and maintain
with the Agent for the benefit of the Secured Parties pursuant to
Section 5.
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(f) “ Credit
Documents ” means the Credit Agreement, the Notes, the
Letter of Credit Agreements, the Collateral Documents and all other
Loan Documents.
(g) “ Deposit
Account ” means all deposit accounts (as that term is
defined in the U.C.C.) of any Grantor, including without
limitation, any and all moneys, sums and amounts now or hereafter
on deposit with any Secured Party or otherwise to the credit of or
belonging to any Grantor.
(h) “ Documents
” means any and all documents (as that term is defined in the
U.C.C.) of any Grantor.
(i) “ Event of
Default ” shall have the meaning assigned to it in
Section 7 hereof.
(j) “ General
Intangibles ” means all general intangibles (as that term
is defined in the U.C.C.) of any Grantor arising from, in
connection with or related to any Account, Investment Property or
any Inventory (including, without limitation, all payment
intangibles (as that term is defined in the U.C.C.) and software,
company records (paper and electronic), correspondence, credit
files, records and other documents, computer programs, computer
software, computer tapes and cards and other paper and documents in
the possession or control of any Grantor or in the possession or
control of any affiliate or computer service bureau.
(k) “
Instruments ” means all instruments (as that term is
defined in the U.C.C.) of any Grantor arising from, in connection
with or related to any Account, Investment Property or any
Inventory, including without limitation, checks, notes,
certificated certificates of deposit, investment securities,
negotiable instruments and writings evidencing a right to the
payment of money of a type transferred in the ordinary course of
business by delivery with any necessary instrument or
assignment.
(l) “ Inventory
” means any and all inventory (as that term is defined in the
U.C.C.) of any Grantor and shall include, without limitation,
tangible personal property held for sale or lease or to be
furnished under contracts of service, tangible personal property
which any such Grantor has so leased or furnished, and raw
materials, work in process and materials used, produced or consumed
in such Grantor’s business, and shall include tangible
personal property returned to any such Grantor by a purchaser or
lessor thereof following the sale or lease thereof by any such
Grantor.
(m) “ Investment
Property ” means any and all: (1) investment
property (as that term is defined in the U.C.C.) of any Grantor;
(2) securities (as that term is defined in the U.C.C.) of any
Grantor; (3) financial assets (as that term is defined in the
U.C.C.) of any Grantor; (4) security entitlements (as that
term is defined in the U.C.C.) of any Grantor and
(5) securities accounts (as that term is defined in the
U.C.C.) of any Grantor.
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(n) “ Letter of
Credit Rights ” means any and all letter of credit rights
(as that term is defined in the U.C.C.) arising from, in connection
with or related to any Account, Investment Property or any
Inventory.
(o) “
Obligations ” has the meaning set forth in the
Recitals.
(p) “ Person
” means an individual, a corporation, a limited liability
company, a government or governmental subdivision or agency or
instrumentality, a business trust, an estate, a trust, a
partnership, a cooperative, an association, two or more Persons
having a joint or common interest or any other legal or commercial
entity.
(q) “ Proceeds
” means any and all proceeds (as that term is defined in the
U.C.C.), including without limitation, whatever is received when
Collateral is sold, exchanged, collected or otherwise disposed
of.
(r) “ Secured
Parties ” means (a) the Banks, party to the Credit
Agreement, and (b) the Agent in its capacity as such under the
Credit Agreement, this Agreement and each other Loan Document,
(c) the Issuing Banks, in their capacity as such under the
Letter of Credit Agreements, (d) the Secured Parties described
in the foregoing subsections (a) through (c) inclusive of
this definition of “Secured Parties” as beneficiaries
of each indemnification obligation undertaken by any Grantor under
any Loan Document; and (e) the successors and assigns of the
foregoing.
(s) “ Supporting
Obligations ” means any and all supporting obligations
(as that term is defined in the U.C.C.) arising from, in connection
with or related to any Account, Investment Property or any
Inventory .
(t) “ U.C.C.
” means the Uniform Commercial Code as in effect in the State
of North Carolina.
Terms used herein and not
otherwise defined herein shall have the meanings set forth in the
Credit Agreement. The rules of interpretation specified in
Section 1.02 of the Credit Agreement shall be applicable to
this Agreement.
2. Security Interest .
In consideration of and in order to secure the fulfillment,
satisfaction, payment and performance of all of the Obligations,
each Grantor hereby assigns, pledges, hypothecates and sets over to
the Agent, its successors and its assigns, for the benefit of the
Secured Parties, and grants to the Agent, its successors and its
assigns, for the benefit of the Secured Parties, a security
interest in all of the Collateral.
3. Care of Collateral
. The Grantors have the risk of loss of the Collateral. The Agent
shall have no duty of care with respect to the Collateral, except
that the Agent shall exercise reasonable care with respect to
Collateral in its custody, but shall be deemed to have exercised
reasonable care if such property is accorded treatment
substantially equal to that which the Agent
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accords its own property, or if the
Agent takes such action with respect to the Collateral as a Grantor
shall request in writing but no failure to comply with any such
request nor any omission to do any such act requested by a Grantor
shall be deemed a failure to exercise reasonable care, nor shall
the Agent’s failure to take steps to collect any income
accruing on the Collateral or to preserve rights against any
parties or property be deemed a failure to have exercised
reasonable care with respect to Collateral in its custody. The
rights and security interest herein provided are granted as
security only and shall not subject the Agent or any Secured Party
to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of any of the
Collateral.
4. Set-Off . In
addition to the rights and security interest elsewhere herein set
forth, the Agent may, at its option at any time(s) after the
occurrence of an Event of Default, and with or without notice to
any Grantor, appropriate and apply to the payment or reduction,
either in whole or in part, of the amount owing on any one or more
of the Obligations, whether or not then due, any and all moneys now
or hereafter on deposit in the Collateral Reserve Account or
otherwise to the credit of or belonging to a Grantor in the
Collateral Reserve Account, it being understood and agreed that the
Agent shall not be obligated to assert or enforce any rights or
security interest hereunder or to take any action in reference
thereto, and that the Agent may in its discretion at any time(s)
relinquish its rights as to particular Collateral hereunder without
thereby affecting or invalidating the Agent’s rights
hereunder as to all or any other Collateral hereinbefore referred
to.
5. Collection of
Accounts .
(a) On the Restatement
Effective Date, each Grantor shall notify each Account Debtor to
make all payments on the Accounts Receivable Collateral to a
lockbox specified by the Agent. Upon the occurrence of an Event of
Default: (1) the Grantors shall establish and maintain with
the Agent a Collateral Reserve Account; (2) all payments
received at the lockbox shall be deposited by the Agent into the
Collateral Reserve Account; and (3) each Grantor immediately
upon receipt shall transfer and deliver to the Agent all cash,
checks, drafts, items and other instruments for the payment of
money which such Grantor now has or may at any time hereafter
receive in full or partial payment for the Inventory Collateral or
otherwise as proceeds of the Accounts Receivable Collateral and,
pending such transfer and delivery, such Grantor shall be deemed to
hold same in trust for the benefit of the Agent. All collected
balances in the Collateral Reserve Account shall be applied by the
Agent on a daily basis in ratable payment of amounts outstanding
under first, the Swing Line Advances and then, to the Advances of
the several Banks and then, at the request of the Required Banks,
to the Letter of Credit Advances and the other Obligations, as the
Required Banks shall direct the Agent. No Grantor shall be entitled
to draw on the Collateral Reserve Account without the prior written
consent of the Agent; provided, however, that at any time during
which collected balances exist in the Collateral Reserve Account,
if there are no amounts outstanding under the Notes and no other
Obligations are due and payable, and provided that no Default or
Event of Default is in existence, a Grantor may withdraw such
collected balances, or any portion thereof, therefrom. The Agent
may, additionally, at any time in its sole discretion, enforce
Grantor’s rights against the Account
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Debtors, including, without limitation,
direct Account Debtors to make payments on the Accounts Receivable
Collateral, or portions thereof, directly to the Agent and the
Account Debtors are hereby authorized and directed to do so by a
Grantor upon the Agent’s direction, and the funds so received
shall be also deposited in the Collateral Reserve Account and
applied as aforesaid.
(b) Upon occurrence of an
Event of Default, the Agent shall have the right at any time,
acting if it so chooses in the name of any or all of the Grantors,
to collect the Accounts, to sell, assign, compromise, discharge or
extend the time for payment of any Account, to institute legal
action for the collection of any Account, to apply all amounts in
the Collateral Reserve Account to payment of the Obligations, and
to do all acts and things necessary or incidental thereto and the
Grantors hereby ratify all such acts. The Agent may at any time
after the occurrence of such Event of Default and without notice to
any Grantor, notify any Account Debtor or guarantor thereof that
the Account owed by such Account Debtor has been assigned to the
Agent and is to be paid directly to the Agent. At the Agent’s
request the Grantors will so notify Account Debtors and shall
indicate on all billings to Account Debtors that payments thereon
are to be made to the Agent. In the event Account Debtors are so
notified, no Grantor shall compromise, discharge, extend the time
for payment or otherwise grant any indulgence or allowance with
respect to any Account without the prior written consent of the
Agent.
(c) Each Grantor irrevocably
designates and appoints the Agent, effective upon the occurrence of
an Event of Default, its true and lawful attorney either in the
name of the Agent or in the name of such Grantor to ask for,
demand, sue for, collect, compromise, compound, receive, receipt
for and give acquittances for any and all sums owing or which may
become due upon any items of the Inventory Collateral or the
Accounts Receivable Collateral and, in connection therewith, to
take any and all actions as the Agent may deem necessary or
desirable in order to realize upon the Inventory Collateral and the
Accounts Receivable Collateral, including, without limitation,
power to endorse in the name of such Grantor, any checks, drafts,
notes or other instruments received in payment of or on account of
the Inventory Collateral or the Accounts Receivable Collateral, but
the Agent shall not be under any duty to exercise any such
authority or power or in any way be responsible for the collection
of the Inventory Collateral or the Accounts Receivable
Collateral.
6. Representations,
Warranties and Covenants as to Collateral .
Each Grantor represents,
warrants and covenants to and for the benefit of the Agent and the
Secured Parties that:
(a) Sale of Collateral
. No Grantor will sell, lease, exchange, or otherwise dispose of
any of the Collateral without the prior written consent of the
Agent; provided, however, prior to the occurrence of an Event of
Default, Accounts may be collected in accordance with
Section 5(a) and Inventory Collateral may be sold in the
ordinary course of business for cash or on open account or on terms
of payment ordinarily extended to its customers. Upon the sale,
exchange or other disposition of the Inventory Collateral, the
security
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interest and lien created and provided
for herein, without break in continuity and without further
formality or act, shall continue in and attach to any proceeds
thereof, including, without limitation, accounts, contract rights,
shipping documents, documents of title, bills of lading, warehouse
receipts, dock warrants, dock receipts and cash or non-cash
proceeds, and in the event of any unauthorized sale, shall continue
in the Inventory Collateral itself.
(b) Accounts . All
existing and future Accounts included in the Collateral are or will
be bona fide existing obligations created by the sale and delivery
of merchandise or the rendering of services to customers and arose
or will arise in the ordinary course of business; and that such
Accounts are not and will not be subject to defense, set-off or
counterclaim which in the aggregate would materially impair the
value of such Accounts as collateral for the Obligations. No
Grantor will, without the Agent’s prior written consent,
grant any extension of the time of payment of any of the Accounts,
compromise, compound or settle the same for less than the full
amount thereof, release, wholly or partly, any person liable for
the payment thereof or allow any credit or discount whatsoever
thereon, other than extensions, credits, discounts, compromises or
settlements granted or made in the o
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