EXHIBIT 10.9
GENERAL SECURITY AGREEMENT
(Floating Lien)
SECURITY AGREEMENT, dated as of October 31, 1994, between FAMILY
BOOKSTORES COMPANY, INC., a corporation incorporated under the laws of
Michigan (the "DEBTOR"), and BANK OF SCOTLAND, as agent for the financial
institutions (the "BANKS") from time to time party to the Loan Agreement
referred to below (said agent, in such capacity, the "SECURED PARTY");
W I T N E S S E T H :
WHEREAS, the Debtor and the Secured Party are parties to a Loan
Agreement (herein, as at any time amended, extended, restated, renewed or
modified, the "LOAN AGREEMENT") dated as of the date hereof, pursuant to
which the Banks have agreed, subject to the terms and conditions set forth
therein, to extend loans to the Debtor in accordance with the terms
thereof; and
WHEREAS, it is a condition to the extension of credit by the
Banks pursuant to the Loan Agreement that the Debtor enter into this
Agreement and grant to the Secured Party the security interest provided for
herein;
NOW, THEREFORE, FOR VALUE RECEIVED, IT IS AGREED:
Section 1. TERMS. Unless otherwise defined herein, terms used
in this Agreement (including the schedules hereto) and defined in the Loan
Agreement shall have the meaning specified therefor in the Loan Agreement.
As used herein the following terms shall have the meanings specified and
shall include in the singular number the plural and in the plural number
the singular:
"ACCOUNTS" has the meaning specified therefor in clause (ii) of
the definition of Collateral.
"ASSIGNED AGREEMENTS" shall mean all contracts and agreements of
the Debtor, including, without limitation, the agreements described in
Schedule 3 annexed hereto.
"COLLATERAL" means all of the Debtor's right, title and interest
in and under or arising out of each and all of the following:
All personal property and fixtures of the Debtor of any type
or description, wherever located and now existing or hereafter
arising or acquired, including but not limited to the following:
(i) all of the Debtor's goods including, without
limitation:
(a) all inventory, whether raw materials, in
process or finished, all material or
equipment usable in processing the same and
all documents of title covering any inventory
(all of the foregoing, "INVENTORY"),
including without limitation that located at
the locations listed on Schedule 1 annexed
hereto;
(b) all equipment (the "EQUIPMENT") employed in
connection with the Debtor's business,
together with all present and future
additions, attachments and accessions thereto
and all substitutions therefor and
replacements thereof, including without
limitation that located at the locations
listed on Schedule 1 annexed hereto;
(ii) all of the Debtor's present and future accounts,
accounts receivable, general intangibles,
contracts and contract rights (herein sometimes
referred to as "ACCOUNTS"), including but not
limited to the Debtor's rights (including rights
to payment) under all Assigned Agreements and all
other Accounts listed in Schedule 3 annexed hereto
(and any supplement thereto) and under all Patents
and Trademarks listed in Schedule 4 annexed hereto
(and any supplements thereto), together with
(a) all claims, rights, powers or privileges and
remedies of the Debtor relating thereto or
arising in connection therewith including,
without limitation, all rights of the Debtor
to make determinations, to exercise any
election (including, but not limited to,
election of remedies) or option or to give or
receive any notice, consent, waiver or
approval, together with full power and
authority to demand, receive, enforce,
collect or receipt for any of the foregoing
or any property which is the subject of the
Assigned Agreements, to enforce or execute
any checks, or other instruments or orders,
to file any claims and to take any action
which (in the opinion of the Secured Party)
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may be necessary or advisable in connection
with any of the foregoing,
(b) all liens, security, guaranties,
endorsements, warranties and indemnities and
all insurance and claims for insurance
relating thereto or arising in connection
therewith,
(c) all rights to property forming the subject
matter of the Accounts including, without
limitation, rights to stoppage in transit and
rights to returned or repossessed property,
(d) all writings relating thereto or arising in
connection therewith including without
limitation, all notes, contracts, security
agreements, guaranties, chattel paper and
other evidence of indebtedness or security,
all powers-of-attorney, all books, records,
ledger cards and invoices, all credit
information, reports or memorandums and all
evidence of filings or registrations relating
thereto,
(e) all inventions, processes, recipes,
production methods, proprietary information,
know-how and trade secrets used or useful in
the business of the Debtor, all copyrights,
all trade names, service marks, logos, and
the like owned or used by the Debtor and used
or useful in the business of the Debtor and
goodwill relating to the same; and all
licenses or other agreements granted to the
Debtor with respect to any of the foregoing,
in each case whether now or hereafter owned
or used, all information, customer lists,
identification of suppliers, data, plans,
blueprints, specifications, designs,
drawings, recorded knowledge, surveys,
engineering reports, test reports, manuals,
materials standards, processing standards,
performance standards, catalogs, computer and
automatic machinery software and programs,
and the like pertaining to operations by the
Debtor in, on or about any of its plants or
warehouses, all field repair data, sales data
and other information relating to sales or
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service of products now or hereafter
manufactured on or about any of its plants,
and all accounting information pertaining to
operations in, on or about any of its plants,
and all media in which or on which any of the
information or knowledge or data is stored or
contained, and all computer programs used for
the compilation or printout of such
information, knowledge, records or data, and
(f) all accounts, contract rights, general
intangibles and other property rights of any
nature whatsoever arising out of or in
connection with the foregoing, including
without limitation, payments due and to
become due, whether as repayments,
reimbursements, contractual obligations,
indemnities, damages or otherwise;
(iii) all other personal property of the Debtor of any
nature whatsoever, including, without limitation,
all accounts, bank accounts, deposits, credit
balances, contract rights, inventory, general
intangibles, goods, equipment, instruments,
chattel paper, machinery, furniture, furnishings,
fixtures, tools, supplies, appliances, plans and
drawings, together with all customer and supplier
lists and records of the business, and all
property from time to time described in any
financing statement (UCC-1) signed by the Debtor
naming the Secured Party as secured party; and
(iv) all additions, accessions, replacements,
substitutions or improvements and all products and
proceeds including, without limitation, proceeds
of insurance, of any and all of the Collateral
described in clauses (i) through (iii) above.
"INSTRUMENT" shall have the meaning specified in Article 9 of the
Uniform Commercial Code, as in effect from time to time in the State of New
York.
"MATERIAL ASSIGNED AGREEMENTS" shall mean all Assigned Agreements
which are (x) material to the business, properties, operations, prospects
or condition (financial or otherwise) of the Debtor, or (y) Material
Agreements.
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"PATENTS" shall mean (i) all United States or other patents which
Debtor may from time to time possess or be otherwise entitled to use,
including without limitation those (if any) listed on Schedule 4 to this
Agreement and all licenses of United States or other patents which Debtor
may from time to time possess or be otherwise entitled to use, including
without limitation those (if any) listed on said Schedule 4 (together with
the patents described in Section 7(g) hereof), (ii) all re-issues,
divisions, continuations, renewals, extensions and continuations-in-part
thereof, (iii) the right to xxx for past, present and future infringements
of the foregoing, and (iv) all rights corresponding to all of the foregoing
throughout the world.
"PERMITTED LIENS" shall mean Liens permitted by Section 8.2 of
the Loan Agreement.
"SECURED OBLIGATIONS" means the principal of, and interest on,
the Loans and the Notes and all other obligations of the Debtor, now
existing or hereafter arising (including future advances) under this
Agreement, the Loan Agreement, the other Loan Documents and any other
agreement or instrument executed by Debtor in connection with any of the
foregoing.
"TRADEMARKS" shall mean (i) all United States or other trademarks
which Debtor may from time to time possess or be otherwise entitled to use,
including without limitation those (if any) listed on Schedule 4 to this
Agreement, together with the goodwill of the business connected with the
use of, and symbolized by, such trademarks (together with the trademarks
described in Section 7(g) hereof), (ii) all re-issues, divisions,
continuations, renewals, extensions and continuations-in-part thereof,
(iii) the right to xxx for past, present and future infringements of the
foregoing, and (iv) all rights corresponding to all of the foregoing
throughout the world.
Section 2. SECURITY INTERESTS. As security for the payment and
performance of all Secured Obligations the Debtor does hereby grant and
assign to the Secured Party a continuing security interest in all of the
Collateral, whether now existing or hereafter arising or acquired and
wherever located.
Section 3. GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Debtor represents, warrants and covenants, which representations,
warranties and covenants shall survive execution and delivery of this
Agreement (and shall survive until indefeasible payment in full of all of
Debtor's obligations under the Loan Agreement), as follows:
(a) This Agreement is made with full recourse to the Debtor and
pursuant to and upon all the warranties, representations, covenants, and
agreements on the part of the Debtor contained herein, in the Loan
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Agreement and otherwise made in writing in connection herewith or
therewith.
(b) Except for the security interest of the Secured Party
therein, the Debtor is, and as to Collateral acquired from time to time
after the date hereof the Debtor will be, the sole legal and beneficial
owner of all the Collateral free from any lien, security interest,
encumbrance or other right, title or interest of any Person (other than
Permitted Liens) and the Debtor shall defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any
interest therein adverse to the Secured Party.
(c) There is no financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) now on file
or registered in any public office covering any interest of any kind in the
Collateral, or intended so to be, which has not been terminated or released
by the secured party named therein except for those listed on Schedule 2
hereto without an asterisk to indicate that such financing statement is to
be terminated or released on the Closing Date. So long as the Loan
Agreement remains in effect or any of the Secured Obligations of the Debtor
remain unpaid, the Debtor will not execute and there will not be on file in
any public office any financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) or statements
relating to the Collateral, except financing statements filed or to be
filed in respect of and covering the security interest of the Secured Party
hereby granted and provided for and except with respect to Permitted Liens.
(d) The chief executive office and chief place of business of
the Debtor is located at the address of the Debtor listed on the signature
page hereof, and the Debtor will not move its chief executive office or
chief place of business except to such new location as the Debtor may
establish in accordance with the last sentence of this Section 3(d). The
originals of all Assigned Agreements and all documents (as well as all
duplicates thereof) evidencing all Accounts and all other contract rights
or accounts and other property of the Debtor and the only original books of
account and records of the Debtor relating thereto are, and will continue
to be, kept at such chief executive office or at such new location as the
Debtor may establish in accordance with the last sentence of this Section
3(d). The Debtor shall not establish any such new location for its chief
executive office or chief place of business until (i) it shall have given
to the Secured Party not less than 45 days' prior written notice of its
intention so to do, clearly describing such new location and providing such
other information in connection therewith as the Secured Party may
reasonably request, and (ii) with respect to such new location, it shall
have taken such action, satisfactory to the Secured Party (including,
without limitation, all action required by Section 8 hereof), to maintain
the security interest of the Secured Party in the Accounts intended to be
granted at all times fully perfected and in full force and effect.
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(e) Debtor has no Collateral located outside of the States
listed on Schedule 5 hereto. Debtor has no Inventory, Equipment or other
Collateral at any location except the location(s) listed on Schedule 1
hereto. For so long as Debtor owns its Inventory, Equipment and other
Collateral, Debtor will not move any such Collateral to, or place any such
Collateral at any other location except such new location(s) as the Debtor
may establish in accordance with the next sentence of this Section 3(e).
The Debtor shall establish no such new location until (i) it shall have
given to the Secured Party not less than 45 days' prior written notice of
its intention so to do, clearly describing such new location and providing
such other information in connection therewith as the Secured Party may
reasonably request, and (ii) with respect to such new location, it shall
have taken such action, satisfactory to the Secured Party (including,
without limitation, all action required by Section 8 hereof), to maintain
the security interest of the Secured Party in such Collateral at all times
fully perfected and in full force and effect. The notification required by
clause (i) of the preceding sentence may be contained in a periodic monthly
or quarterly report delivered to the Secured Party pursuant to Section 7.1
of the Loan Agreement if said report is delivered prior to the 45-day
period referred to in said clause (i).
(f) The name of the Debtor is as set forth on the signature page
hereto and the Debtor shall not change such name, conduct its business in
any other name or take title to the Collateral in any other name while this
Agreement remains in effect. The Debtor has never had any name, or
conducted business under any name in any jurisdiction, other than its name
set forth on the signature page hereto, during the past six years other
than as set forth in Schedule 2 annexed hereto and the assets of the Debtor
acquired in the Acquisition were not held (prior to their sale to Debtor)
by the Seller under any name other than as set forth on Schedule 2 hereto.
(g) At the Debtor's own expense, the Debtor will: (i) without
limiting the provisions of the Loan Agreement, keep the Collateral fully
insured at all times with financially sound and responsible insurance
carriers against loss or damage by fire and other risks, casualties and
contingencies and in such manner and to the same extent that like
properties are customarily so insured by other entities engaged in the same
or similar businesses similarly situated and keep adequate insurance at all
times against liability on account of damage to persons and properties and
under all applicable workmen's compensation laws, by insurers and in
amounts satisfactory to the Secured Party, for the benefit of the Debtor
and the Secured Party, (ii) upon request by the Secured Party, promptly
deliver the insurance policies or certificates thereof to the Secured
Party, and (iii) keep the Collateral in good condition at all times (normal
wear and tear excepted) and maintain same in accordance with all
manufacturer's specifications and requirements. Upon any failure of the
Debtor to comply with its obligations pursuant to this Section 3(g), the
Secured Party may at its option, and without affecting any of its other
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rights or remedies provided 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 and 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 rate per annum equal to the Post-Default Rate in effect from
time to time.
(h) The Debtor hereby assigns to the Secured Party all of
Debtor's right, title and interest in and to any and all moneys which may
become due and payable with respect to the Collateral under any policy
insuring the Collateral, including return of unearned premium. Debtor
hereby (unless the Secured Party otherwise consents in writing or as
otherwise provided in the Loan Agreement), to the extent that (x) the
proceeds of such insurance are in excess of $100,000 or (y) if less than
$100,000, Debtor does not use any such money to replace, repair or restore
the Collateral, or (z) a Default or Event of Default exists, 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 toward replacement
of the Collateral and to remit any surplus to the Debtor subject however to
the terms of the Loan Agreement.
(i) The Debtor will not use the Collateral in violation of any
statute or ordinance or applicable insurance policy and will promptly pay
all taxes and assessments levied against the Collateral.
(j) Except as may otherwise be permitted by Sections 8.9 and
8.15 of the Loan Agreement, the Debtor will not sell, transfer, change the
registration, if any, dispose of, attempt to dispose of, substantially
modify or abandon the Collateral or any material part thereof (except for
sales of inventory in the ordinary course of business and except as
otherwise permitted pursuant to Section 5(c) of this Agreement), without
the prior written consent of the Secured Party, provided that the Debtor
may sell or otherwise dispose of obsolete or worn out Collateral no longer
used or useful in its business if the Debtor shall, in the case of
Collateral necessary for the conduct of the business of the Debtor, first
or substantially simultaneously replace the same with new property of
substantially equal value which shall forthwith become subject to the
security interest provided for herein.
(k) The Debtor will not assert against the Secured Party any
claim or defense which the Debtor may have against any seller of the
Collateral or any part thereof or against any other Person with respect to
the Collateral or any part thereof.
(l) The Debtor will indemnify and hold the Secured Party
harmless from and against any loss, liability, damage, costs and expenses
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whatsoever arising from the Debtor's use, operation, ownership or
possession of the Collateral or any part thereof.
(m) The Debtor will maintain the confidentiality of all customer
lists and not sell or otherwise dispose of such lists except that the
Debtor shall deliver copies thereof to the Secured Party upon its request,
which may be made at any time and from time to time after an Event of
Default.
(n) The Debtor will not enter into any agreement that is
inconsistent with the Debtor's obligations under this Agreement, without
the prior written consent of the Secured Party.
(o) Upon the occurrence of an Event of Default and at any time
thereafter, (x) the Secured Party may (insofar as the Debtor can give
authority therefor) enter upon any premises on which the Collateral or any
part thereof is located and remove such Collateral from such premises, and
(y) at its own expense, Debtor shall (upon request of the Secured Party)
assemble the Collateral (or such portion thereof as is covered by such
request) and make it available to the Secured Party at a place designated
by the Secured Party.
Section 4. SPECIAL PROVISIONS CONCERNING ASSIGNED AGREEMENTS.
The Debtor represents, warrants and agrees as follows:
(a) The Assigned Agreements constitute the legal, valid and
binding obligations of the Debtor and, to the best of its knowledge, the
other parties thereto, enforceable in accordance with their respective
terms subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization and similar laws affecting the enforcement of creditors'
rights generally and to general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law) or by
an implied covenant of good faith and fair dealing.
(b) The Debtor will faithfully abide by, perform and discharge
each and every obligation, covenant and agreement to be performed by the
Debtor under the Assigned Agreements.
(c) At the request of the Secured Party, and at the sole cost
and expense of the Debtor, the Debtor will enforce or secure the
performance of each and every obligation, covenant, condition and agreement
contained in the Material Assigned Agreements to be performed by the other
parties thereto.
(d) The Debtor will not modify, amend or agree to vary any of
the Material Assigned Agreements in any material respect or otherwise act
or fail to act in a manner likely (directly or indirectly) to entitle any
party thereto to claim that the Debtor is in default under the terms
thereof.
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(e) The Debtor will not terminate or permit the termination of
any Material Assigned Agreement, except in accordance with its terms.
(f) Without the prior written consent of the Secured Party, the
Debtor will not waive or in any manner release or discharge any party to
any Material Assigned Agreement from any of the material obligations,
covenants, conditions and agreements to be performed by it under such
Assigned Agreement including, without limitation, the obligation to make
all payments in the manner and at the time and places specified.
(g) If a Default or Event of Default exists and the Secured
Party so requests, the Debtor will hold any payments received by it which
are assigned and set over to the Secured Party by this Agreement for and on
behalf of the Secured Party and, in accordance with the Loan Agreement,
turn them promptly over to the Secured Party forthwith in the same form in
which they are received for application in accordance with the terms and
conditions of this Agreement and the Loan Agreement.
(h) The Debtor will appear in and defend every action or
proceeding arising under, growing out of or in any manner connected with
the Assigned Agreements or the obligations, duties or liabilities of the
Debtor and any assignee thereunder.
(i) Should the Debtor fail to make any payment or to do any act
as herein provided, the Secured Party may (but without obligation on the
Secured Party's part to do so and without notice to or demand on the Debtor
and without releasing the Debtor from any obligation hereunder) make or do
the same in such manner and to such extent as the Secured Party may deem
necessary to protect the security interests provided hereby, including
specifically, without limiting the general powers, the right to appear in
and defend any action or proceeding purporting to affect the security
interests provided hereby and the Debtor, and the Secured Party may also
perform and discharge each and every obligation, covenant and agreement of
the Debtor contained in any Assigned Agreement and, in exercising any such
powers, pay necessary costs and expenses, employ counsel and incur and pay
reasonable attorneys' fees.
(j) Upon the request of the Secured Party, the Debtor will send
to the Secured Party copies of all notices, documents and other papers
furnished or received by it with respect to any of the Assigned Agreements.
Section 5. SPECIAL PROVISIONS CONCERNING ACCOUNTS. (a) As of
the time when each Account arises, the Debtor shall be deemed to have
warranted as to each such Account that such Account and all papers and
documents relating thereto are genuine and in all respects what they
purport to be, and that all papers and documents relating thereto:
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(i) will be signed by the account debtor named therein (or
such account debtor's duly authorized agent) or is otherwise
binding on the account debtor;
(ii) will represent the genuine, legal, valid and binding
obligation of the account debtor evidencing indebtedness unpaid
and owed by such account debtor arising out of the performance of
labor or services or the sale and delivery of merchandise or
both;
(iii) to the extent evidenced by writings, will be the only
original writings evidencing and embodying such obligation of the
account debtor named therein;
(iv) will evidence true and undisputed obligations
enforceable in accordance with their respective terms and not
subject to the fulfillment of any contract or condition
whatsoever or to any defenses, set-offs or counterclaims, or
stamp or other taxes; and
(v) will be in compliance and will conform with all
applicable federal, state and local laws (including applicable
usury laws) and applicable laws of any relevant foreign
jurisdiction.
The provisions of this Section 5(a) shall only apply to Accounts where the
aggregate amount of such Accounts, payable to any Person or group of
related Persons, exceeds $100,000 in the aggregate.
(b) The Debtor will keep and maintain at the Debtor's own cost
and expense satisfactory and complete records of the Accounts, including,
but not limited to, records of all payments received, all credits granted
thereon, all merchandise returned and all other dealings therewith, and the
Debtor will make the same available to the Secured Party, at the Debtor's
own cost and expense, at any and all reasonable times upon demand of the
Secured Party. The Debtor shall, at the Debtor's own cost and expense,
deliver the Accounts (including, without limitation, all documents
evidencing the Accounts) and such books and records to the Secured Party or
to its representatives upon its demand at any time after the occurrence of
an Event of Default which is continuing. If the Secured Party shall so
request, the Debtor shall legend, in form and manner satisfactory to the
Secured Party, the Accounts and other books, records and documents of the
Debtor evidencing or pertaining to the Accounts with an appropriate
reference to the fact that the Accounts have been assigned to the Secured
Party and that the Secured Party has a security interest therein.
(c) Except in the ordinary course of business prior to an Event
of Default which is continuing, the Debtor will not rescind or cancel any
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indebtedness evidenced by any Account or modify any term thereof or make
any adjustment with respect thereto, or extend or renew the same, or
compromise or settle any dispute, claim, suit or legal proceeding relating
thereto, or sell any Account or interest therein, without the prior written
consent of the Secured Party, except that the Debtor may grant discounts of
up to 5% in connection with the prepayment of any Account.
(d) The Debtor will duly fulfill in all material respects all
obligations on its part to be fulfilled under or in connection with the
Accounts and will do nothing to impair the rights of the Secured Party in
the Accounts.
(e) The Debtor shall endeavor to collect or cause to be
collected from the account debtor named in each Account, as and when due
(including, without limitation, Accounts which are delinquent, such
Accounts to be collected in accordance with generally accepted lawful
collection procedures) any and all amounts owing under or on account of
such Account, and apply forthwith (on a daily basis) upon receipt thereof
all such amounts as are so collected to the outstanding balance of such
Account. The costs and expenses (including attorney's fees) of collection,
whether incurred by the Debtor or the Secured Party, shall be borne by the
Debtor.
(f) If any of the Accounts becomes evidenced by an Instrument
(as herein defined), the Debtor will notify the Secured Party thereof, and
upon request by the Secured Party promptly deliver such Instrument to the
Secured Party appropriately endorsed to the order of the Secured Party as
further security for the satisfaction in full of the Secured Obligations.
(g) If an Event of Default shall have occurred and be
continuing, upon request of the Secured Party the Debtor shall promptly
notify (in manner, form and substance satisfactory to the Secured Party)
all Persons who are at any time obligated under any Account that the
Secured Party possesses a security interest in such Account and that all
payments in respect thereof are to be made to such account as the Secured
Party directs.
Section 6. SPECIAL PROVISIONS CONCERNING EQUIPMENT. The Debtor
will do nothing to impair the rights of the Secured Party in the Equipment.
The Debtor shall cause the Equipment (to the extent same is a Trade
Fixture) to at all times constitute and remain personal property. The
Debtor will at all times keep all Equipment insured in favor of the Secured
Party, at the expense of the Debtor, in accordance with the Loan Agreement.
If the Debtor shall fail to insure the Equipment to the Secured Party's
satisfaction, or if the Debtor shall fail to so endorse and deposit all
policies or certificates with respect thereto, the Secured Party shall have
the right (but shall be under no obligation) to procure such insurance and
the Debtor agrees to reimburse the Secured Party for all costs and expenses
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of procuring such insurance, together with interest at a rate per annum
equal to the Post-Default Rate from time to time in effect. Subject to the
terms of the Loan Agreement, the Secured Party may apply any proceeds of
such insurance when received by it toward the payment of any of the Secured
Obligations, whether or not the same shall then be due; PROVIDED THAT such
proceeds shall not be applied to the Secured Obligations, and shall instead
be remitted by the Secured Party to the Debtor, if (x) at the time such
proceeds are received by the Secured Party, no Default or Event of Default
exists and (y) the amount of such insurance proceeds is less than $100,000.
The Debtor retains all liability and responsibility in connection with the
Equipment and the liability of the Debtor to pay the Secured Obligations
shall in no way be affected or diminished by reason of the fact that such
Equipment may be lost, destroyed, stolen, damaged or for any reason
whatsoever unavailable to the Debtor.
Section 7. SPECIAL PROVISIONS CONCERNING TRADEMARKS AND PATENTS.
(a) The Debtor (either itself or through licensees) will, for each
Trademark, (i) to the extent consistent with past practice, continue to use
such Trademark on each and every trademark class of goods applicable to its
current line as reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force free from any claim
of abandonment for non-use, (ii) maintain as in the past the quality of
products and services offered under such Trademark, (iii) employ such
Trademark with the appropriate notice of application or registration, (iv)
not use such Trademark except for the uses for which registration or
application for registration of such Trademark has been made, and (v) not
(and not permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any Trademark material to the conduct
of Debtor's business may become invalidated.
(b) The Debtor (either itself or through licensees) will, for
each Patent, not do any act, or omit to do any act, whereby any Patent
which is material to the conduct of the Debtor's business may become
abandoned or dedicated.
(c) The Debtor shall notify the Secured Party promptly (and in
any event within 30 days) if it knows or has reason to know that any
application or registration relating to any Patent or Trademark which is
material to the conduct of the Debtor's business may become abandoned or
dedicated, or of any adverse determination or development (including,
without limitation, the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office or any court) regarding the Debtor's ownership of any Patent or
Trademark which is material to the Debtor's business, its right to register
the same, or to keep and maintain the same. Notifications required by this
Section 7(c), or by Section 7(d) or 7(g), may be contained in a periodic
monthly or quarterly report delivered to the Secured Party pursuant to
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Section 7.1 of the Loan Agreement if said report is delivered within the
30-day period mentioned in said Section 7(c), 7(d) or 7(g), as the case may
be.
(d) In no event shall the Debtor, either itself or through any
agent, employee, licensee or designee, file an application for the
registration of any Patent or Trademark with the United States Patent and
Trademark Office or any similar office or agency in any other country or
any political subdivision thereof, unless it promptly (and in any event
within 30 days) informs the Secured Party, and, upon request of the Secured
Party, executes and delivers any and all agreements, instruments,
documents, and papers as the Secured Party may request to evidence the
Secured Party's security interest in such Patent or Trademark and the
goodwill and general intangibles of the Debtor relating thereto or
represented thereby, and the Debtor hereby constitutes the Secured Party
its attorney-in-fact upon the occurrence and during the continuance of an
Event of Default to execute and file all such writings for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed;
such power, being coupled with an interest, is irrevocable until the
Secured Obligations are paid in full.
(e) The Debtor will take all necessary steps that are consistent
with good business practices in any proceeding before the United States
Patent and Trademark Office or any similar office or agency in any other
country or any political subdivision thereof, to maintain and pursue each
application relating to the Patents and Trademarks (and to obtain the
relevant registration) and to maintain each registration of each of the
Patents and Trademarks which is material to the conduct of the Debtor's
business, including, without limitation, filing of applications for
renewal, affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings.
(f) In the event that any Collateral consisting of a Patent or
Trademark is infringed, misappropriated or diluted by a third party, the
Debtor shall notify the Secured Party within (30) days after it learns
thereof and shall, if consistent with good business practice, promptly xxx
for infringement, misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation or dilution, and take such
other actions as are appropriate under the circumstances to protect such
Collateral consisting of a Patent or Trademark.
(g) If, before the Secured Obligations have been satisfied in
full, the Debtor obtains rights to any new trademark or patentable
invention, or becomes entitled to the benefit of any trademark or patent
application or patent for any reissue, division, continuation, renewal,
extension, or continuation-in-part of any Patent, or any improvement on any
Patent, or any trade name, service xxxx, copyright, permit or license, the
provisions of Section 2 shall automatically apply thereto and the Debtor
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shall promptly (and in any event within 30 days) give the Secured Party
notice thereof in writing. The Debtor authorizes the Secured Party to
modify this Agreement by amending Schedule 4 to include any future patents
and trademarks and patent and trademark applications that are included in
Collateral.
(h) The Debtor shall have the duty, through counsel acceptable
to the Secured Party, to prosecute diligently any patent or trademark
application pending as of the date of this Agreement or thereafter until
the Secured Obligations have been paid in full, to make application on
unpatented but patentable inventions and to preserve and maintain all
rights in patent and trademark applications; PROVIDED, HOWEVER, that the
Debtor shall have no obligation to make application on any unpatented but
patentable inventions if making such application would be unnecessary or
imprudent in the good faith business judgment of the Debtor. Any expenses
incurred in connection with such an application shall be borne by the
Debtor. The Debtor shall not abandon any right to file a patent or
trademark application or any pending application or patent or trademark in
the United States without the consent of the Secured Party, which consent
shall not be unreasonably withheld.
(i) The Secured Party shall have the right but shall in no way
be obligated to bring suit in its own name to enforce the Patents and
Trademarks and any license thereunder, in which event the Debtor shall, at
the request of the Secured Party, do any and all lawful acts and execute
any and all proper documents required by the Secured Party in aid of such
enforcement action and indemnify the Secured Party for all costs and
expenses incurred by the Secured Party in the exercise of its rights under
this clause (i).
(j) The Debtor represents and warrants that (x) it has no
Patents or Trademarks except such as are listed on Schedule 4 hereto, and
(y) it is not the holder, owner or licensee of any copyrights except for
unregistered copyrights in various catalogs and advertising materials used
in Stores.
Section 8. FINANCING STATEMENTS; DOCUMENTARY STAMP TAXES. (a)
The Debtor will, at its own expense, make, execute, endorse, acknowledge,
file and/or deliver to the Secured Party from time to time such lists,
descriptions and designations of Inventory, warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements,
powers of attorney, certificates, reports and other assurances or
instruments and take such further steps relating to the Collateral and
other property or rights covered by the security interest hereby granted,
which the Secured Party deems appropriate or advisable to perfect, preserve
or protect its security interest in the Collateral. The Debtor hereby
constitutes the Secured Party its attorney-in-fact to execute and file in
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the name and on behalf of the Debtor such additional financing statements
as the Secured Party may request, such acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable until the Secured Obligations are paid in full. Further, to
the extent permitted by applicable law, the Debtor authorizes the Secured
Party to file any such financing statements without the signature of the
Debtor. The Debtor will pay all applicable filing fees and related
expenses in connection with any such financing statements.
(b) The Debtor agrees to procure, pay for, affix to any and all
documents and cancel any documentary tax stamps required by and in
accordance with, applicable law and the Debtor will indemnify and hold the
Secured Party harmless against any liability (including interest and
penalties) in respect of such documentary stamp taxes.
Section 9. SPECIAL PROVISIONS CONCERNING REMEDIES AND SALE. In
addition to any rights and remedies now or hereafter granted under
applicable law and not by way of limitation of any such rights and
remedies, the Secured Party shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code as enacted in any
applicable jurisdiction in addition to the rights and remedies provided
herein, in the Loan Agreement and in any other agreement executed in
connection with the Loan Agreement whereby the Debtor has granted any lien
to the Secured Party. Without in any way limiting the foregoing, upon and
after the occurrence of an Event of Default and for so long as such Event
of Default exists, upon the giving of notice to the Debtor of Secured
Party's intent to pursue any one or all of the following remedies:
(a) The Secured Party shall have the right, without notice to,
or assent by, the Debtor, in the name of the Debtor or in the name of the
Secured Party or otherwise:
(i) to ask for, demand, collect, receive, compound and give
acquittance for the Accounts or any part thereof;
(ii) to extend the time of payment of, compromise or settle
for cash, credit or otherwise, and upon any terms and conditions,
any of the Accounts;
(iii) to endorse the name of the Debtor on any checks,
drafts or other orders or instruments for the payment of moneys
payable to the Debtor which shall be issued in respect of any
Account;
(iv) to file any claims, commence, maintain or discontinue
any actions, suits or other proceedings deemed by the Secured
Party necessary or advisable for the purpose of collecting or
enforcing payment of any Account;
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(v) to make test verifications of the Accounts or any
portion thereof;
(vi) to notify any or all account debtors under any or all
of the Accounts to make payment thereof directly to the Secured
Party for the account of the Secured Party and to require the
Debtor to forthwith give similar notice to the account debtors;
(vii) to require the Debtor forthwith to account for and
transmit to the Secured Party in the same form as received all
proceeds (other than physical property) of collection of Accounts
received by the Debtor and, until so transmitted, to hold the
same in trust for the Secured Party and not commingle such
proceeds with any other funds of the Debtor;
(viii) to take possession of any or all of the Collateral
and, for that purpose, to enter, with the aid and assistance of
any Person or Persons and with or without legal process, any
premises where the Collateral, or any part thereof, are, or may
be, placed or assembled, and to remove any of such Collateral;
(ix) to execute any instrument and do all other things
necessary and proper to protect and preserve and realize upon the
Collateral and the other rights contemplated hereby;
(x) upon notice to such effect, to require the Debtor to
deliver, at the Debtor's expense, any or all Collateral to the
Secured Party at a place designated by the Secured Party and
after delivery thereof the Debtor shall have no further claim to
or interest in the Collateral; and
(xi) without obligation to resort to other security, at any
time and from time to time, to sell, re-sell, assign and deliver
all or any of the Collateral, in one or more parcels at the same
or different times, and all right, title and interest, claim and
demand therein and right of redemption thereof, at public or
private sale, for cash, upon credit or for future delivery, and
at such price, or prices and on such terms as the Secured Party
may determine, with the amounts realized from any such sale to be
applied to the Secured Obligations in the manner determined by
the Secured Party.
The Debtor hereby agrees that all of the foregoing may be effected without
demand, advertisement or notice (except as otherwise provided herein or as
may be required by law), all of which (except as otherwise provided) are
hereby expressly waived, to the extent permitted by law. The Secured Party
shall not be obligated to do any of the acts hereinabove authorized, but in
the event that the Secured Party elects to do any such act, the Secured
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Party shall not be responsible to the Debtor except for its gross
negligence or willful misconduct.
(b) The Secured Party may take legal proceedings for the
appointment of a receiver or receivers (to which the Secured Party shall be
entitled as a matter of right) to take possession of the Collateral pending
the sale thereof pursuant either to the powers of sale granted by this
Agreement or to a judgment, order or decree made in any judicial proceeding
for the foreclosure or involving the enforcement of this Agreement. If,
after the exercise of any or all of such rights and remedies, any of the
Secured Obligations shall remain unpaid, the Debtor shall remain liable for
any deficiency. After termination of this Agreement and the Loan Agreement
and the indefeasible payment in full of the Secured Obligations, any
proceeds of the Collateral received or held by the Secured Party shall be
turned over to the Debtor and the Collateral shall be reassigned to the
Debtor by the Secured Party without recourse to the Secured Party and
without any representations, warranties or agreements of any kind.
(c) Upon any sale of any of the Collateral, whether made under
the power of sale hereby given or under judgment, order or decree in any
judicial proceeding for the foreclosure or involving the enforcement of
this Agreement, and subject to any legal requirement that the Secured Party
act in a commercially reasonable manner:
(i) the Secured Party may bid for and purchase the property
being sold, and upon compliance with the terms of sale may hold,
retain and possess and dispose of such property in its own
absolute right without further accountability, and may, in paying
the purchase money therefor, deliver any Note or claims for
interest thereon and any other instruments evidencing the Secured
Obligations or agree to the satisfaction of all or a portion of
the Secured Obligations in lieu of cash in payment of the amount
which shall be payable thereon, and the Notes and such
instruments, in case the amounts so payable thereon shall be less
than the amount due thereon, shall be returned to the Secured
Party after being appropriately stamped to show partial payment;
(ii) the Secured Party may make and deliver to the purchaser
or purchasers a good and sufficient deed, xxxx of sale and
instrument of assignment and transfer of the property sold;
(iii) the Secured Party is hereby irrevocably appointed the
true and lawful attorney-in-fact of the Debtor in its name and
stead, to make all necessary deeds, bills of sale and instruments
of assignment and transfer of the property thus sold and for such
other purposes as are necessary or desirable to effectuate the
provisions (including, without limitation, this Section 9) of
this Agreement, and for that purpose it may execute and deliver
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all necessary deeds, bills of sale and instruments of assignment
and transfer, and may substitute one or more Persons with like
power, the Debtor hereby ratifying and confirming all that its
said attorney, or such substitute or substitutes, shall lawfully
do by virtue hereof; but if so requested by the Secured Party or
by any purchaser, the Debtor shall ratify and confirm any such
sale or transfer by executing and delivering to the Secured Party
or to such purchaser all property, deeds, bills of sale,
instruments or assignment and transfer and releases as may be
designated in any such request;
(iv) all right, title, interest, claim and demand
whatsoever, either at law or in equity or otherwise, of the
Debtor of, in and to the property so sold shall be divested; such
sale shall be a perpetual bar both at law and in equity against
the Debtor, its successors and assigns, and against any and all
Persons claiming or who may claim the property sold or any part
thereof from, through or under the Debtor, its successors or
assigns;
(v) the receipt of the Secured Party or of the officer
thereof making such sale shall be a sufficient discharge to the
purchaser or purchasers at such sale for his or their purchase
money, and such purchaser or purchasers, and his or their assigns
or personal representatives, shall not, after paying such
purchase money and receiving such receipt of the Secured Party or
of such officer therefor, be obliged to see to the application of
such purchase money or be in any way answerable for any loss,
misapplication or nonapplication thereof; and.
(vi) to the extent that it may lawfully do so, and subject
to any legal requirement that the Secured Party act in a
commercially reasonable manner, the Debtor agrees that it will
not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any
appraisement, valuation, stay, extension or redemption laws, or
any law permitting it to direct the order in which the Collateral
or any part thereof shall be sold, now or at any time hereafter
in force, which may delay, prevent or otherwise affect the
performance or enforcement of this Agreement, the Loan Agreement,
the Notes, the Loan Documents, or any other agreement or
instrument executed in connection with the Loan Agreement whereby
the Debtor has granted any Lien to the Secured Party, and the
Debtor hereby expressly waives all benefit or advantage of any
such laws and covenants that it will not hinder, delay or impede
the execution of any power granted or delegated to the Secured
Party in this Agreement, but will suffer and permit the execution
of every such power as though no such laws were in force. In the
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event of any sale of Collateral pursuant to this Section, the
Secured Party shall, at least 10 days before such sale, give the
Debtor written, telegraphic or telex notice of its intention to
sell, except that, if the Secured Party shall determine in its
sole discretion that any of the Collateral threatens to decline
speedily in value, any such sale may be made upon 3 days'
written, telegraphic or telex notice to the Debtor.
Section 10. APPLICATION OF MONEYS. (a) Except as otherwise
provided herein or in the Loan Agreement, all moneys which the Secured
Party shall receive, in accordance with the provisions hereof, shall be
applied (to the extent thereof) in the following manner: FIRST, to the
payment of all costs and expenses incurred in connection with the
administration and enforcement of, or the preservation of any rights under,
this Agreement or any of the reasonable expenses and disbursements of the
Secured Party (including, without limitation, the fees and disbursements of
its counsel and agents); SECOND, to the payment of all Secured Obligations
arising out of the Loan Agreement and the Notes and, if not therein
provided, in such order as the Secured Party may determine; and THIRD, to
the payment of all other Secured Obligations in such order as the Secured
Party may determine.
(b) If after applying any amounts which the Secured Party has
received in respect of the Collateral any of the Secured Obligations remain
unpaid, the Debtor shall continue to be liable for any deficiency, together
with interest.
Section 11. GRANT OF LICENSE TO USE PATENT AND TRADEMARK
COLLATERAL. For the purpose of enabling the Secured Party to exercise
rights and remedies hereunder at such time as the Secured Party, without
regard to this Section 11, shall be lawfully entitled to exercise such
rights and remedies, the Debtor hereby grants to the Secured Party an
irrevocable, non-exclusive license (exercisable without payment of royalty
or other compensation to the Debtor) to use, license or sublicense any
Patent or Trademark, now owned or hereafter acquired by the Debtor, and
wherever the same may be located, and including in such license reasonable
access to all media in which any of the licensed items may be recorded or
stored and to all computer and automatic machinery software and programs
used for the compilation or printout thereof.
Section 12. LICENSE TO THE DEBTOR. Unless and until there has
occurred and is continuing an Event of Default, the Secured Party hereby
grants to the Debtor the exclusive, nontransferable right and license to
use the Trademarks and to make, have made, use and sell the inventions
disclosed and claimed in the Patents for the Debtor's benefit and account
and for none other. The Debtor agrees not to sell or assign its interest
in, or grant any sublicense under, the license granted to the Debtor in
this Section 12 without the prior written consent of the Secured Party.
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Section 13. FEES AND EXPENSES, ETC. Any and all fees, costs and
expenses of whatever kind or nature, including but not limited to the
reasonable attorneys' fees and legal expenses incurred by the Secured Party
in connection with this Agreement, the filing or recording of any documents
(including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance fees, fees and
other costs relating to the encumbrances or otherwise protecting,
maintaining, preserving the Collateral, or in defending or prosecuting any
actions or proceedings arising out of or related to the Collateral, shall
be borne and paid by the Debtor on demand by the Secured Party and until so
paid shall be added to the principal amount of the Secured Obligations and
shall bear interest (x) prior to the maturity of the Loans, by acceleration
or otherwise, at the highest pre-maturity fluctuating rate provided for in
the Loan Agreement for the Loans and (y) after the maturity of the Loans,
by acceleration or otherwise, at a rate per annum equal to the Post-Default
Rate in effect from time to time. In addition, the Debtor will pay, and
indemnify and hold the Secured Party harmless from and against, any and all
liabilities, obligations, losses, damages penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
with respect to the Collateral, including (without limitation) claims of
patent or trademark infringement and any claim of unfair competition or
anti-trust violation, PROVIDED that the Debtor shall have no obligation
hereunder with respect to such indemnification arising from the Secured
Party's gross negligence or willful misconduct.
Section 14. MISCELLANEOUS. (a) Any notice or demand upon the
Debtor shall be deemed to have been sufficiently given or served for all
purposes thereof when mailed, postage prepaid, by registered or certified
mail, return receipt requested, or when telegraphed, telecopied, telexed or
sent by messenger or by Federal Express (or similar express or courier
service), to the Debtor at its address set forth below or at such other
address as the Debtor may designate in a writing delivered to the Secured
Party, provided that in the case where the Secured Party is required to
give only three days' notice of a proposed sale of the Collateral such
notice shall not be deemed given until delivered to the chief executive
office of the Debtor provided for herein. All notices to the Secured Party
shall be deemed to have been given when delivered by mail, telegraph,
telecopy, telex, messenger or Federal Express (or similar express or
courier service) to the Secured Party at its address set forth below or at
such other address as the Secured Party may designate in a writing
delivered to the Debtor.
(b) No delay on the part of the Secured Party in exercising any
of its rights, remedies, powers and privileges hereunder or partial or
single exercise thereof, shall constitute a waiver thereof. None of the
terms and conditions of this Agreement may be changed, waived, modified or
varied in any manner whatsoever unless in writing duly signed by the Debtor
and the Secured Party. No notice to or demand on the Debtor in any case
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shall entitle the Debtor to any other or further notice or demand in
similar or other circumstances or constitute a waiver of any of the rights
of the Secured Party to any other or further action in any circumstances
without notice or demand.
(c) The obligations of the Debtor hereunder shall remain in full
force and effect without regard to, and shall not be impaired by, (i) any
bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of the Debtor; (ii) any exercise or
non-exercise, or any waiver of, any right, remedy, power or privilege under
or in respect of the Loan Agreement, the Notes, this Agreement, the other
Loan Documents, any other agreement or instrument executed in connection
with the Loan Agreement whereby the Debtor has granted any Lien to the
Secured Party or any other agreement or instrument executed in connection
with any of the foregoing, the Secured Obligations or any security for any
of the Secured Obligations; or (iii) any amendment to or modification of
any of the foregoing; whether or not the Debtor shall have notice or
knowledge of any of the foregoing. The rights and remedies of the Secured
Party herein provided are cumulative and not exclusive of any rights or
remedies which the Secured Party would otherwise have.
(d) This Agreement shall be binding upon the Debtor and its
successors and assigns and shall inure to the benefit of the Secured Party
and its successors and assigns, except that the Debtor may not transfer or
assign any of its obligations, rights or interest hereunder without the
prior written consent of the Secured Party and any such purported
assignment by the Debtor shall be void. All agreements, representations
and warranties made herein shall survive the execution and delivery of this
Agreement.
(e) The descriptive headings of the several sections of this
Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
(f) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(g) All rights, remedies and powers provided by this Agreement
may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and the provisions hereof are
intended to be subject to all applicable mandatory provisions of law that
may be controlling and to be limited to the extent necessary so that they
will not render this Agreement invalid, unenforceable in whole or in part
or not entitled to be recorded, registered or filed under the provisions of
any applicable law.
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(h) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED WHOLLY WITHIN THE
STATE OF NEW YORK (REGARDLESS OF THE PLACE WHERE THIS AGREEMENT IS
EXECUTED) except to the extent that matters of title, or creation,
perfection and priority of the security interests created hereby, or
procedural issues of foreclosure are required to be governed by the laws of
the state in which the Collateral, or part thereof, is located.
(i) It is expressly agreed, anything herein, in the Loan
Documents or in any other agreement or instrument executed in connection
with the Loans to the contrary notwithstanding, that the Debtor shall
remain liable to perform all of the obligations, if any, assumed by it with
respect to the Collateral and the Secured Party shall not have any
obligations or liabilities with respect to any Collateral by reason of or
arising out of this Agreement, nor shall the Secured Party be required or
obligated in any manner to perform or fulfill any of the obligations of the
Debtor under or pursuant to any or in respect of any Collateral.
(j) This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
when so executed and delivered shall be an original, but all of which
counterparts taken together shall be deemed to constitute one and the same
instrument.
(k) EACH OF THE SECURED PARTY AND THE DEBTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS EITHER MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN), OR ACTIONS OF THE BANKS, THE SECURED PARTY, THE DEBTOR OR ANY
OTHER CREDIT PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
SECURED PARTY ENTERING INTO THIS AGREEMENT AND FOR THE BANKS AND THE
SECURED PARTY ENTERING INTO THE LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
Section 15. ASSIGNABILITY OF STORE LEASES. This Agreement shall
not be deemed to grant a security interest in:
(x) any Store Lease, or any Non-Trade Fixture or leasehold
improvement as to which the relevant landlord has any right or interest
under a Store Lease, which by the terms of such Store Lease are prohibited
from being assigned or encumbered without the consent of the non-Debtor
party or parties thereto, until such Person so consents; PROVIDED, HOWEVER,
that nothing in this clause (x) shall require the Debtor to obtain any such
consent (although Debtor will use its best efforts to make sure that any
Store Lease entered into after the Closing Date does not contain any such
prohibition); or
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(y) any Operating Lease (other than any which is listed on Annex
D to the legal opinion of Warner, Norcross & Xxxx dated the Closing Date
and delivered pursuant to Section 6 of the Loan Agreement) which by its
terms may not be assigned or encumbered without the consent of the non-Debtor
party or parties thereto, until such Person so consents.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered by their duly authorized officers as of the
date first above written.
ADDRESSES FAMILY BOOKSTORES
0000 Xxxxxxxxx, X.X. COMPANY, INC., as Debtor
Grand Rapids, Mich. 49530
fax: 616/000-0000 By /S/______________________________
Name: Xxxxxx X. Xxxxxxxx
Title: President
BANK OF SCOTLAND, as Agent,
000 Xxxxx Xxxxxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
fax: 212/000-0000 By /S/______________________________
Xxxx X. Xxxxx
Vice President
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