BANCBOSTON LEASING INC.
SECURITY AGREEMENT
This SECURITY AGREEMENT (the "Agreement") is made as of this 26th
day of August, 1999 by XXXXX SHOE, INC., a Delaware corporation, with its
principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000, JBI,
INC., a Massachusetts corporation, with its principal place of business at
000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000, THE CASUAL MALE, INC., a Massachusetts
corporation, with its principal place of business at 000 Xxxxxxxx Xxxxxx,
Xxxxxx, XX 00000, WGS CORPORATION, a Massachusetts corporation, with its
principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000, TCMB&T,
INC., a Massachusetts corporation, with its principal place of business at
000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000, (collectively, the "Debtor" or
"Debtors"), in favor of BANCBOSTON LEASING INC., a Massachusetts corporation,
with its head office at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the
"Secured Party").
RECITALS
WHEREAS, each Debtor has requested and, from time to time, will
request certain credit and financial accommodations from the Secured Party in
order to acquire or finance certain capital equipment and for other purposes
as well;
WHEREAS, the obligations of each Debtor under credit and financial
accommodations are represented by that certain Master Security Agreement
dated as of August 26, 1999 ("Security Agreement") and one or more Chattel
Promissory Notes ("Note") executed by each Debtor in favor of the Secured
Party; and
WHEREAS, the Secured Party has made and will make credit and
financial accommodations available to each Debtor provided the Secured Party
is granted the rights and remedies as set forth in this Agreement;
NOW, THEREFORE, IN CONSIDERATION OF the foregoing and the mutual
promises as hereinafter set forth, each Debtor and the Secured Party agree as
follows:
SECTION 1. DEFINITIONS. All capitalized terms used herein or in any
certificate, report or other document delivered pursuant hereto shall have
the meanings assigned to them below (unless otherwise defined).
ACCOUNTS. All accounts, including, without limitation, "accounts" as
defined in the Uniform Commercial Code as adopted in Massachusetts (the
"UCC"), and also all: accounts, accounts receivable, amounts due from Host
Stores (as such term is defined in a certain Loan and Security Agreement by
and between the Debtor and the Secured Party, as amended from time to time),
notes, drafts, acceptances, and other forms of obligations and receivables
and rights to payment for credit extended and for goods sold or leased, or
services rendered, whether or not yet earned by performance; all Contract
Rights; all Inventory which gave rise thereto, and all rights associated with
such Inventory, including the right of stoppage in transit; all reclaimed,
returned, rejected, or repossessed Inventory (if any) the sale of which gave
rise to any Account.
BOOKS AND RECORDS. All books, records, and information relating to
the collateral and/or to the operation of the Debtor's business, and all
rights of access to such books, records, and information, and all property in
which such books, records, and information are stored, recorded, and
maintained.
CHATTEL PAPER. All chattel paper, including, without limitation
"chattel paper" as defined in the UCC.
COLLATERAL. See Section 2.
CONTRACT RIGHTS. All contract rights, includes, without limitation,
"contract rights" as now or formerly defined in the UCC and also any right to
payment under a contract not yet earned by performance and not evidenced by
an instrument or Chattel Paper.
ENCUMBRANCE. Any mortgage, pledge, security interest, lien or other
charge or encumbrance of any kind or nature upon or with respect to any
property.
EQUIPMENT. "Equipment" is defined in the Security Agreement and is
subject to the terms thereof.
EVENT OF DEFAULT. See Section 7.
GENERAL INTANGIBLES. All general intangibles, includes, without
limitation, "general intangibles" as defined in the UCC; rights to payment;
goodwill; causes of action; judgments; franchises; license agreements;
computer records; rights of access to computer service bureaus; trade
secrets; copyrights and derivative works and interests; trade names,
trademarks, service marks, and all good will relating thereto; applications
for registration of the foregoing; and all other intellectual property.
INVESTMENT PROPERTY. All Investment Property (as defined in the UCC)
instruments, documents of title, documents, policies and certificates of
insurance, securities, deposits, deposit accounts, money, cash, or other
property.
OBLIGATIONS. All obligations of the Debtor to the Secured Party of
every kind and description, whether direct or indirect, absolute or contingent,
primary or secondary, joint or several, due or to become due, or now existing or
hereafter arising or acquired and whether by way of loan, discount, letter of
credit, lease, or otherwise including, without limitation, the obligations
arising under the Note, Security Agreement and this Agreement.
SECURITIES. All capital stock of JBI Apparel, Inc., TCM Holding
Company, Inc., LP Innovations, Inc., Xxxxxxx Companies, Inc., Buckmin, Inc., Elm
Equipment Corp., Isab, Inc., Jared Corporation, Xxxxx Shoe (Canada) Ltd., Xxxxx
Shoe International, Inc., and White Cap Footware, Inc.
UNIFORM COMMERCIAL CODE. The Uniform Commercial Code as in effect in The
Commonwealth of Massachusetts.
SECTION 2. GRANT. To secure the payment and performance of the
Obligations, the Debtor hereby assigns and pledges to the Secured Party all of
its rights, title and interest in, and grants to the Secured Party a continuing
security interest in all assets, properties and rights of the Debtor of every
kind and nature, including without limitation, all Accounts, Books and Records,
Chattel Paper, Contract
-2-
Rights, General Intangibles, and Investment Property, (the above not to
include the items of Collateral as defined in the Security Agreement) whether
now owned or existing or hereafter arising or acquired, together with all,
instruments, documents of title, policies and certificates of insurance,
securities, deposit accounts, cash or other property owned by the Debtor or
in which the Debtor has an interest that are now or may hereafter be in the
possession, custody or control of the Secured Party or its participants or
assigns for any purpose; any and all additions, substitutions, replacements
and accessions thereto; and all proceeds and products of any of the foregoing
(collectively, the "Collateral")
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO
EACH DEBTOR. Each Debtor makes the following representations and warranties,
and agrees to the following covenants, each of which representations,
warranties and covenants shall be continuing and in force so long as any of
the Obligations remain outstanding.
3.1 NAME; DEBTOR LOCATION; CHANGES. Each Debtor represents the
following: (i) the name of each Debtor set forth in this Agreement is the
true and correct legal name of each Debtor, the list attached as Exhibit A
hereto sets forth a complete and accurate statement of any trade name used
within the past year for the Debtors set forth therein, and no Debtor has
done business under any other trade, assumed, fictitious or any other name
during such one year period; and (ii) the address of each Debtor set forth in
this Agreement is each Debtor's chief executive office and the place where
its business records are kept. Each Debtor will not (a) change its name,
identity or organizational structure or (b) change its chief executive
office, or place where its business records are kept, unless such Debtor
shall have given the Secured Party at least 30 days prior written notice and
shall have delivered to the Secured Party such new Uniform Commercial Code
financing statements or other documentation as may be necessary or required
by the Secured Party to ensure the continued perfection and priority of the
security interests granted by this Agreement.
3.2 ORGANIZATION; GOOD STANDING. Each Debtor is duly organized,
validly existing and in good standing under the laws of the state of its
organization and is duly qualified and in good standing in every other state
in which the nature of its business or properties requires such
qualification, except where the failure to so qualify would not have a
material adverse impact on the assets or operations of the affected Debtor.
3.3 AUTHORIZATION OF AGREEMENT; NO CONSENTS; NO CONFLICTS. The
execution, delivery and performance of this Agreement have been duly
authorized by all necessary action, corporate or otherwise, and do not and
will not (i) require any consent or approval of the stockholders of any
Debtor, if any, (ii) contravene the terms of the charter, by-laws or other
organizational papers of any Debtor, (iii) violate any applicable law, rule
or regulation of any governmental agency in any material respect, (iv)
contravene any provision of any agreement, instrument, order or undertaking
binding on any Debtor or by which any of its properties are bound or
affected, in any material respect, (v) other than as contemplated hereby,
result in or require the imposition of any Encumbrance on any of the
properties of any Debtor, or (vi) other than filings required by the Uniform
Commercial Code, require the approval or consent of, or filing or
registration with, any governmental or other agency or authority or any other
party, or, with respect to subsections (ii), (iii), (iv) and (v) above, to
the extent any Debtor has failed to make such filing, it does not and would
not have a material adverse impact on any Debtor.
3.4 LITIGATION; FINANCIAL CONDITIONS; Y2K PROBLEM. Each Debtor
represents and warrants that (i) there are no pending actions or proceedings
to which each Debtor is a party, and there are no threatened actions or
proceedings of which each Debtor has knowledge, before any court, arbitrator
or administrative agency which, either individually or in the aggregate,
would have a Material Adverse
-3-
Effect on each Debtor except as set forth on Exhibit B attached hereto, (ii)
each Debtor is not in default under any obligation for borrowed money, for
the deferred purchase price of property or any Agreement which, either
individually or in the aggregate, would have a Material Adverse Effect on
each Debtor, (iii) the financial statements of each Debtor (copies of which
have been furnished to the Secured Party) have been prepared in accordance
with generally accepted accounting principles, consistently applied, and
fairly present the financial condition of each Debtor and the results of its
operations as of the date of, and for the period covered by, such statements,
and, since the date of such statements, there has been no material adverse
change in such conditions or operations, (iv) each Debtor has reviewed the
areas within its business and operations which could be adversely affected
by, and has developed or is developing a program to address on a timely
basis, the "Year 2000 Problem," that is, the risk that computer applications
used by each Debtor may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to, and any date on or
after, December 31, 1999, and have made related appropriate inquiry of
material suppliers and vendors and, based on such review and program, each
Debtor believes that the "Year 2000 Problem" will not have a Material Adverse
Effect on each Debtor, and (v) from time to time, at the request of the
Secured Party, each Debtor shall provide to the Secured Party such updated
information or documentation as is requested regarding the status of its
efforts to address the Year 2000 Problem. For purposes of this Section 3.4,
"Material Adverse Effect" shall mean (1) a materially adverse effect on the
business, condition (financial or otherwise), operations, performance or
properties of each Debtor, or (2) a material impairment of the ability of
each Debtor to perform its obligations under, or to remain in compliance
with, this Agreement.
3.5 OWNERSHIP OF COLLATERAL; ABSENCE OF LIENS AND RESTRICTIONS. Each
Debtor is, and in the case of property acquired after the date hereof, will
be, the sole legal and equitable owner of the Collateral, holding good and
marketable title to the same free and clear of all Encumbrances except for a
security interest in the Collateral in favor of BankBoston Retail Finance
Inc. ("BBRF") pursuant to a certain 1999 Loan and Security Agreement dated as
of August __, 1999 as may be amended from time to time, as such security
interest exists on the date hereof, between BancBoston and BBRF, and as
subject to an Intercreditor Agreement between BancBoston and BBRF (the "BBRF
Interest") securing certain obligations of the Debtor to the BBRF (the "BBRF
Obligations") and the security interests granted hereunder or permitted
hereby, and has good right and legal authority to assign, deliver, and create
a security interest in the Collateral in the manner herein contemplated. The
Collateral is genuine and is what it is purported to be. The Collateral is
not subject to any restriction that would prohibit or restrict the
assignment, delivery or creation of the security interests contemplated
hereunder.
3.6 SECURITY INTEREST. This Agreement, the Security Agreement and the
Note, together with the filing of Uniform Commercial Code financing
statements in the appropriate offices for the location of Collateral, create
a valid and continuing lien on and perfected security interest in the
Collateral subject only to the BBRF Interest (except for property located in
the United States in which a security interest may not be perfected by filing
under the Uniform Commercial Code), prior to all other Encumbrances except
the BBRF Interest, and is enforceable as such against creditors of the
Debtor. Other than in favor of BBRF, no financing statement under the Uniform
Commercial Code of any state or other instrument evidencing a lien on the
Collateral that names the Debtor as debtor is on file in any jurisdiction and
the Debtor has not signed any such document or any agreement authorizing the
filing of any such financing statement or instrument.
3.7 SALES AND FURTHER ENCUMBRANCES. Each Debtor agrees that it will
not sell, grant, assign or transfer any interest in, or permit to exist any
Encumbrance on, any of the Collateral other than in favor of the Secured
Party or its affiliates or the BBRF Interest except for (i) sales of
Inventory or grants of licenses and other rights in the ordinary course of
the Debtor's business for cash or on open account and
-4-
on terms of payment ordinarily extended to its customers; (ii) so long as no
Event of Default hereunder has occurred and is continuing, sales of
Investment Property, other than Investment Properties that represent
ownership of its subsidiaries, if such sales are made on fair and reasonable
terms in arms-length transactions, or as otherwise permitted by the Secured
Party in writing. The Debtor shall defend its title to and the Secured
Party's interest in the Collateral against all claims and take any action
necessary to remove any Encumbrances other than those permitted hereunder and
defend the right, title and interest of the Secured Party in and to any of
the Debtor's rights in the Collateral.
3.8 VALIDITY OF ACCOUNTS. Each Account constituting Collateral is and
shall be a valid, legal and binding obligation of the party purported to be
obligated thereon, enforceable in accordance with its terms and free of
material setoffs, defenses or counterclaims.
3.9 INSPECTION; VERIFICATION OF ACCOUNTS. After the occurrence of an
Event of Default each debtor shall allow the Secured Party to examine,
inspect or make extracts from or copies of the Debtor's books and records,
inspect the Collateral and arrange for verification of Accounts constituting
Collateral directly with the Debtor's accountants, the account debtors or by
other methods.
3.10 ACCOUNTS: COLLECTION AND DELIVERY OF PROCEEDS. Each Debtor will
diligently collect all of its Accounts constituting Collateral until the
Secured Party exercises its rights to collect the Accounts pursuant to this
Agreement. Each Debtor shall, at the request of the Secured Party, notify
account debtors of the security interest of the Secured Party in any Account
and that payment thereof is to be made directly to the Secured Party. Upon
request of the Secured Party, any proceeds of Accounts or Inventory
constituting Collateral received by the Debtor, whether in the form of cash,
checks, notes or other instruments, shall be held in trust for the Secured
Party and each Debtor shall deliver said proceeds daily to the Secured Party,
without commingling, in the identical form received (properly endorsed or
assigned where required to enable the Secured Party to collect same). The
rights and obligations set forth in this Section 3.10 are expressly subject
to the terms and conditions of the Intercreditor Agreement and the BBRF
Interest.
3.11 INSURANCE. Where appropriate, each Debtor will keep the
Collateral insured at all times by insurance in such form and amounts as may
be satisfactory to the Secured Party, and in any event (without specific
request by the Secured Party) will insure the Collateral against physical
hazard insurance on an "all risks" basis. Such insurance shall be with
insurance companies satisfactory to the Secured Party and shall be payable to
the Secured Party as an additional insured and Debtor, as their respective
interests may appear. Such insurance shall provide for not less than 30 days'
notice of cancellation, change in form or non-renewal to the Secured Party,
and shall insure the interest of the Secured Party regardless of any breach
or violation by the Debtor or any other person of the warranties,
declarations or covenants contained in such policies. The Debtor shall insure
the Collateral in amounts sufficient to prevent the application of any
co-insurance provisions. The Debtor shall evidence its compliance with the
foregoing by delivering a certificate with respect to each policy
concurrently with the execution hereof, annually thereafter, and from time to
time upon the request of the Secured Party.
3.12 INVENTORY: MAINTENANCE AND USE, PAYMENT OF TAXES. Each Debtor
will keep the Collateral in good order and repair, will not use the same in
violation of law or any policy of insurance thereon, and will pay promptly
when due all taxes and assessments on the Collateral or on its use or
operation.
3.13 GENERAL INTANGIBLES: REGISTRATION, MAINTENANCE OF COPIES. Each
Debtor will apply for, and pursue diligently applications for, registration
of its ownership of the General Intangibles constituting Collateral and for
which registration is appropriate, and will use such other measures as are
-5-
appropriate to preserve its rights in its other General Intangibles
constituting Collateral. Each Debtor will, at the request of the Secured
Party, retain off-site current copies of all materials created by or
furnished to the Debtor on which is recorded then-current information about
any computer programs or data bases that the Debtor has developed or
otherwise has the right to use from time to time. Such materials include,
without limitation, magnetic or other computer media on which object, source
or other code is recorded or that are documentation of those computer
programs or data bases, in the nature of listing printouts, narrative
descriptions, flow diagrams and similar things. Each Debtor will, at the
request of the Secured Party and in accordance with the terms of the
Intercreditor Agreement, deliver a set of such copies to the Secured Party
for safekeeping and retention or transfer in the event of foreclosure.
3.14 SECURITIES: VOTING, DIVIDENDS, CERTIFICATES, OPTIONS, ETC. Until
the occurrence of an Event of Default hereunder, the Debtor shall retain the
right to vote any of the Securities constituting Collateral in a manner not
inconsistent with the terms of this Agreement. If the Debtor, as registered
holder of such Securities, receives (i) any dividend or other distribution in
cash or other property in connection with the liquidation or dissolution of
the issuer of such Securities, or in connection with the redemption or
payment of such Securities, or (ii) any stock certificate, option or right,
or other distribution, whether as an addition to, in substitution of, or in
exchange for, such Securities, or otherwise, the Debtor agrees to accept same
in trust for the Secured Party and to deliver same forthwith to the Secured
Party or its designee, in the exact form received, with the Debtor's
endorsement or reassignment when necessary, to be held by the Secured Party
as Collateral.
3.15 SECURITIES: DELIVERY OR REGISTRATION. Upon request of the Secured
Party and subject to the terms of the Intercreditor Agreement, the Debtor
will (i) deliver all of its Securities constituting Collateral and
represented by certificates, including without limitation all stock of its
subsidiaries, to the Secured Party to hold pursuant to the terms of this
Agreement, and (ii) register in the name of the Secured Party or its designee
any uncertificated Security constituting Collateral or the Secured Party's
security interest therein on the books maintained by or on behalf of the
issuer thereof or the depository therefor.
3.16 FURTHER ASSURANCES. Upon the written request of the Secured
Party, and at the sole expense of the Debtor, each Debtor will promptly
execute and deliver such further instruments and documents and take such
further actions as the Secured Party may deem desirable to obtain the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, filing of any financing statement under the
Uniform Commercial Code, and, subject to the terms of the Intercreditor
Agreement, execution of assignments of General Intangibles, delivery of
appropriate stock or bond powers, transfer of Collateral (other than
Inventory, and Accounts) to the Secured Party's possession. The Debtor
authorizes the Secured Party to file any such financing statement without the
signature of the Debtor to the extent permitted by applicable law, and to
file a copy of this Agreement in lieu of a financing statement. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any promissory note or other instrument, such note or instrument
shall be immediately delivered to the Secured Party, duly endorsed in a
manner satisfactory to it.
3.17 FINANCIAL PERFORMANCE COVENANTS. Each Debtor shall observe and
comply with the following financial performance covenants, which compliance
shall be determined as if no Material Accounting Change had occurred (other
than any Material Accounting Change specifically taken into account in the
setting of such covenants). Secured Party may determine each Debtor's
compliance with such covenants based upon financial reports and statements
provided to Secured Party by each Debtor, by BankBoston, N.A. or by
BankBoston Retail Finance, Inc. (whether or not such financial reports or
-6-
statements are required to be furnished pursuant to this Security Agreement)
as well as by reference to interim financial information provided to, or
developed by, Secured Party. For purposes hereof, any capitalized terms not
otherwise defined in this Security Agreement shall have the meanings assigned
to them in that certain Loan and Security Agreement dated as of August ____,
1999 ("Loan Agreement") among BankBoston Retail Finance Inc. as
administrative Agent and Collateral Agent, certain other financial
institutions as revolving credit lenders, Back Bay Capital Funding LLC as
term lender, and each Debtor as lead borrower for certain other borrowers, as
the Loan Agreement existed as of the date of this Security Agreement.
(i) Each Debtor shall not permit its cumulative Consolidated EBITDA,
tested quarterly on a rolling four-quarters basis (three-quarters basis for
the test as of October 31, 1999) to be less than the following:
------------------------------------------------------------------------
FISCAL QUARTERS ENDING ON OR ABOUT MINIMUM CUMULATIVE CONSOLIDATED
EBITDA
------------------------------------------------------------------------
October 31, 1999 $27,000,000
------------------------------------------------------------------------
------------------------------------------------------------------------
January 31, 2000 40,000,000
------------------------------------------------------------------------
------------------------------------------------------------------------
April 30, 2000 40,000,000
------------------------------------------------------------------------
------------------------------------------------------------------------
July 31, 2000 40,000,000
------------------------------------------------------------------------
------------------------------------------------------------------------
October 31, 2000 41,500,000
------------------------------------------------------------------------
------------------------------------------------------------------------
January 31, 2001 43,000,000
------------------------------------------------------------------------
------------------------------------------------------------------------
Thereafter 43,000,000
------------------------------------------------------------------------
(ii) Each Debtor shall maintain a Fixed Charge Ratio
equal to or greater than 1.4 tested quarterly on a rolling
four-quarters basis, commencing with the four quarters ending on or
about January 31, 2000;
(iii) Each Debtor shall maintain Overall Availability
of not less than $40 million for the period commencing December 10,
2001 and ending December 30, 2001.
SECTION 4. NOTICES AND REPORTS PERTAINING TO COLLATERAL. Each Debtor
will, with respect to the Collateral:
(a) promptly furnish to the Secured Party, from time to time upon
request, reports in form and detail satisfactory to the Secured
Party and immediately notify the Secured Party as to any action to
foreclose upon or otherwise exercise any right or remedy with
respect to the BBRF Interest;
(b) promptly notify the Secured Party of any Encumbrance asserted
against the Collateral which may have a material adverse effect
upon the Collateral, including any attachment, levy, execution or
other legal process levied against any of the Collateral, and of
any information received by the Debtor relating to the Collateral,
including the Accounts, the account debtors, or other persons
obligated in connection therewith, that may in any way adversely
-7-
affect the value of the Collateral or the rights and remedies of
the Secured Party with respect thereto;
(c) promptly notify the Secured Party when it obtains knowledge of
actual or imminent bankruptcy or other insolvency proceeding of
any account debtor or issuer of Investment Properties, which may
have a material adverse effect upon the Debtor;
(d) after the occurrence of an Event of Default, concurrently with the
reports required to be furnished under subsection (a), and
immediately if material in amount, notify the Secured Party of any
return or adjustment, rejection, repossession, or loss or damage
of or to merchandise represented by Accounts or constituting
Inventory and of any credit, adjustment or dispute arising in
connection with the goods or services represented by Accounts or
constituting Inventory; and
(e) after the occurrence of an Even of Default, promptly after the
application by the Debtor for registration of any General
Intangibles, as contemplated in Section 3.13, notify the Secured
Party thereof.
The Debtor authorizes the Secured Party to destroy all invoices, delivery
receipts, reports and other types of documents and records submitted to the
Secured Party in connection with the transactions contemplated herein at any
time subsequent to 12 months from the time such items are delivered to the
Secured Party.
SECTION 5. SECURED PARTY'S RIGHTS WITH RESPECT TO COLLATERAL. The Secured
Party may, after the occurrence of an Event of Default which is continuing and
subject to the terms of the Intercreditor Agreement, at its option and at any
time, whether or not the Obligations are due, without notice or demand on the
Debtor, take the following actions with respect to the Collateral:
(a) with respect to any Accounts (i) notify account debtors of the
security interest of the Secured Party in such Accounts and that
payment thereof is to be made directly to the Secured Party; (ii)
demand, collect, and receipt for any amounts relating thereto, as
the Secured Party may determine; (iii) commence and prosecute any
actions in any court for the purposes of collecting any such
Accounts and enforcing any other rights in respect thereof; (iv)
defend, settle or compromise any action brought and, in connection
therewith, give such discharges or releases as the Secured Party
may deem appropriate; (v) receive, open and dispose of mail
addressed to the Debtor and endorse checks, notes, drafts,
acceptances, money orders, bills of lading, warehouse receipts or
other instruments or documents evidencing payment, shipment or
storage of the goods giving rise to such Accounts or securing or
relating to such Accounts, on behalf of and in the name of the
Debtor; and (vi) sell, assign, transfer, make any agreement in
respect of, or otherwise deal with or exercise rights in respect
of, any such Accounts or the goods or services which have given
rise thereto, as fully and completely as though the Secured Party
were the absolute owner thereof for all purposes;
(b) with respect to any Inventory (i) make, adjust and settle claims
under any insurance policy related thereto and place and pay for
appropriate insurance thereon; (ii) discharge taxes and other
Encumbrances at any time levied or placed thereon; (iii) make
repairs or provide maintenance with respect thereto; and (iv) pay
any necessary filing fees and any taxes arising as a consequence
of any such filing. The Secured Party shall have no obligation to
make any
-8-
such expenditures nor shall the making thereof relieve the
Debtor of its obligation to make such expenditures; and
(c) with respect to any Securities (i) transfer them at any time to
itself, or to its nominee, and receive the income thereon and hold
the same as Collateral hereunder or apply it to any matured
Obligations; and (ii) demand, xxx for, collect or make any
compromise or settlement it deems desirable.
Except as otherwise provided herein, the Secured Party shall have no duty as to
the collection or protection of the Collateral nor as to the preservation of any
rights pertaining thereto, beyond the safe custody of any Collateral in its
possession.
SECTION 7. DEFAULTS. Any Event of Default under the Security Agreement
shall constitute an "Event of Default" hereunder thereby entitling BancBoston to
exercise any and all remedies available at law or under the Security Agreement
or this Agreement, in any case, after the giving of any required notice and the
elapse of any cure period. All rights and remedies of BancBoston are cumulative
and are exclusive of any rights or remedies provided by law or in equity or by
agreement, and may be exercised separately or concurrently.
SECTION 8. SECURED PARTY'S RIGHTS AND REMEDIES.
8.1 So long as any Event of Default shall have occurred and is
continuing, and subject to the terms of the Intercreditor
Agreement:
(a) The Secured Party may, at its option, without notice or
demand, cause all of the Obligations including, without
limitation, all principal and interest due or to become due
under all Notes to become immediately due and payable and take
immediate possession of the Collateral; for that purpose, the
Secured Party may, so far as each Debtor can give authority
therefor, enter upon any premises on which any of the
Collateral is situated and remove the same therefrom or remain
on such premises and in possession of such Collateral for
purposes of conducting a sale or enforcing the rights of the
Secured Party. Each Debtor will, upon demand, assemble the
Collateral and make it available to the Secured Party at a
place and time designated by the Secured Party that is
reasonably convenient to both parties.
(b) The Secured Party may collect and receive all income and
proceeds with respect to the Collateral and exercise all
rights of any Debtor with respect thereto.
(c) The Secured Party may sell, lease or otherwise dispose of the
Collateral at a public or private sale, with or without having
the Collateral at the place of sale, and upon such terms and
in such manner as the Secured Party may determine, and the
Secured Party may purchase any Collateral at any such public
sale or such private sale to the extent permitted by law.
Unless the Collateral threatens to decline rapidly in value or
is of the type customarily sold on a recognized market, the
Secured Party shall send to each Debtor prior written notice
(which, if given within ten (10) days of any sale, shall be
deemed to be reasonable) of the time and place of any public
sale of the Collateral or of the time after which any private
sale or other disposition thereof is to be made. Each Debtor
agrees that, upon any such sale, the Collateral shall be held
by the purchaser free from all claims or rights of every kind
and nature including any equity of redemption or
-9-
similar rights, and all such equity of redemption and similar
rights are hereby expressly waived and released by each
Debtor. In the event any consent, approval or authorization
of any governmental agency is necessary to effectuate any such
sale, each Debtor shall execute all applications or other
instruments as may be required.
(d) In any jurisdiction where the enforcement of its rights
hereunder is sought, the Secured Party shall have, in addition
to all other rights and remedies, the rights and remedies of a
secured party under the Uniform Commercial Code.
8.2 IMMEDIATE ACCELERATION. Upon the occurrence of an Event of
Default described in subsection 10(g) and (h) of the Security Agreement, the
remedy set forth in subsection 11.1(a) shall be deemed to have been exercised
immediately and automatically without any act or declaration of the Secured
Party and all Obligations including, without limitation, all principal and
interest due or to become due under the Notes shall be immediately due and
payable.
8.3 EXPENSES; DEFICIENCY. In connection with the Secured
Party's exercise of its rights upon the occurrence and continuation of an
Event of Default:
(a) The Secured Party shall be entitled to retain and to apply the
proceeds of any disposition of the Collateral, FIRST, to its reasonable
expenses of retaking, holding, protecting and maintaining, and preparing for
disposition and disposing of, the Collateral, including documented and
reasonable attorneys' fees and other legal expenses incurred by it in
connection therewith; and SECOND, to the payment of the Obligations in such
order of priority as the Secured Party shall determine. Any surplus remaining
after such application shall be paid to each Debtor or to whomever may be
legally entitled thereto, provided that, in no event, shall each Debtor be
credited with any part of the proceeds of the disposition of the Collateral
until such proceeds shall have been received in cash by the Secured Party.
Each Debtor shall remain liable for any deficiency.
(i) the Secured Party may, at its option, without notice or
demand, cause all of the Obligations to become immediately
due and payable and take immediate possession of the
Collateral, and for that purpose the Secured Party may, so
far as the Debtor can give authority therefor, enter upon
any premises on which any of the Collateral is situated and
remove the same therefrom or remain on such premises and in
possession of such Collateral for purposes of conducting a
sale or enforcing the rights of the Secured Party;
(ii) the Debtor will, upon demand, assemble the Collateral and
make it available to the Secured Party at a place and time
designated by the Secured Party that is reasonably
convenient to both parties;
(iii) the Secured Party may collect and receive all income and
proceeds in respect of the Collateral and exercise all
rights of the Debtor with respect thereto, including without
limitation the right to exercise all voting and corporate
rights at any meeting of the shareholders of the issuer of
any Securities and to exercise any and all rights of
conversion, exchange, subscription or any other rights,
privileges or options pertaining to any Securities as if the
Secured Party were the absolute owner thereof, including the
right to exchange, at its discretion, any and all of any
Securities upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer
thereof, all without liability except to account for
property actually received (but the
-10-
Secured Party shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing);
(iv) the Secured Party may sell, lease or otherwise dispose of
the Collateral at a public or private sale, with or without
having the Collateral at the place of sale, and upon such
terms and in such manner as the Secured Party may determine,
and the Secured Party may purchase any Collateral at any
such sale. Unless the Collateral threatens to decline
rapidly in value or is of the type customarily sold on a
recognized market, the Secured Party shall send to the
Debtor prior written notice (which, if given within five
days of any sale, shall be deemed to be reasonable) of the
time and place of any public sale of the Collateral or of
the time after which any private sale or other disposition
thereof is to be made. The Debtor agrees that upon any such
sale the Collateral shall be held by the purchaser free from
all claims or rights of every kind and nature, including any
equity of redemption or similar rights, and all such equity
of redemption and similar rights are hereby expressly waived
and released by the Debtor. In the event any consent,
approval or authorization of any governmental agency is
necessary to effectuate any such sale, the Debtor shall
execute all applications or other instruments as may be
required; and
(v) in any jurisdiction where the enforcement of its rights
hereunder is sought, the Secured Party shall have, in
addition to all other rights and remedies, the rights and
remedies of a secured party under the Uniform Commercial
Code.
(b) Prior to any disposition of Collateral pursuant to this Agreement
the Secured Party may, at its option, cause any of the Collateral
to be repaired or reconditioned (but not upgraded unless mutually
agreed) in such manner and to such extent as Secured Party in its
good faith judgement believes advisable to make it saleable.
(c) The Secured Party is hereby granted a license or other right to
use, without charge, the Debtor's labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks
and advertising matter, or any property of a similar nature,
relating to the Collateral, in completing production of,
advertising for sale and selling any Collateral; and the Debtor's
rights under all licenses and all franchise agreements shall inure
to the Secured Party's benefit.
(d) The Debtor recognizes that the Secured Party may be unable to
effect a public sale of all or a part of the Securities by reason
of certain prohibitions contained in the Securities Act of 1933
(as amended from time to time, the "Securities Act") or the
securities laws of various states (the "Blue Sky Laws"), but may
be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree, among
other things, to acquire the Securities for their own account, for
investment and not with a view to the distribution or resale
thereof. The Debtor acknowledges that private sales so made may be
at prices and upon other terms less favorable to the seller than
if the Securities were sold at public sales. The Debtor agrees
that the Secured Party has no obligation to delay sale of any of
the Securities for the period of time necessary to permit the
Securities to be registered for public sale under the Securities
Act or the Blue Sky Laws, and that private sales made under the
foregoing circumstances shall be deemed to have been made in a
commercially reasonable manner.
-11-
(e) The Secured Party shall be entitled to retain and to apply the
proceeds of any disposition of the Collateral, first, to its
reasonable expenses of retaking, holding, protecting and
maintaining, and preparing for disposition and disposing of, the
Collateral, including attorneys' fees and other legal expenses
incurred by it in connection therewith; and second, to the payment
of the Obligations in such order of priority as the Secured Party
shall determine. Any surplus remaining after such application
shall be paid to the Debtor or to whomever may be legally entitled
thereto, provided that in no event shall the Debtor be credited
with any part of the proceeds of the disposition of the Collateral
until such proceeds shall have been received in cash by the
Secured Party. The Debtor shall remain liable for any deficiency.
SECTION 9. WAIVERS. The Debtor waives presentment, demand, notice,
protest, notice of acceptance of this Agreement, notice of any loans made,
credit or other extensions granted, collateral received or delivered or any
other action taken in reliance hereon and all other demands and notices of
any description, except for such demands and notices as are expressly
required to be provided to the Debtor under this Agreement or any other
document evidencing the Obligations. With respect to both the Obligations and
the Collateral, the Debtor assents to any extension or postponement of the
time of payment or any other forgiveness or indulgence, to any substitution,
exchange or release of Collateral, to the addition or release of any party or
person primarily or secondarily liable, to the acceptance of partial payment
thereon and the settlement, compromise or adjustment of any thereof, all in
such manner and at such time or times as the Secured Party may deem
advisable. The Secured Party may exercise its rights with respect to the
Collateral without resorting, or regard, to other collateral or sources of
reimbursement for Obligations. The Secured Party shall not be deemed to have
waived any of its rights with respect to the Obligations or the Collateral
unless such waiver is in writing and signed by the Secured Party. No delay or
omission on the part of the Secured Party in exercising any right shall
operate as a waiver of such right or any other right. A waiver on any one
occasion shall not bar or waive the exercise of any right on any future
occasion. All rights and remedies of the Secured Party in the Obligations or
the Collateral, whether evidenced hereby or by any other instrument or
papers, are cumulative and not exclusive of any remedies provided by law or
any other agreement, and may be exercised separately or concurrently.
SECTION 10. EXPENSES. Each Debtor shall, on demand, pay or reimburse
the Secured Party for all reasonable expenses (including reasonable and
documented attorneys' fees of outside counsel or allocation costs of in-house
counsel) incurred or paid by the Secured Party in connection with the
enforcement of this Agreement, up to three (3) on-site periodic examinations
of the Collateral in each calendar year, and any other amounts permitted to
be expended by the Secured Party hereunder including, without limitation,
such expenses as are incurred to preserve the value of the Collateral and the
validity, perfection, and priority of any security interest created hereby,
the collection, sale or other disposition of any of the Collateral, or the
exercise by the Secured Party of any of the rights conferred upon it under
this Agreement. The obligation to pay any such amount shall be an additional
Obligation secured by the Collateral and each such amount shall bear interest
from the time of demand at the rate per annum equal to the rate of interest
announced, from time to time, by BankBoston, N.A., or its successor and
assigns, at its head office as its Base Rate plus 6%, or 18% per annum,
whichever is less. If such rate violates applicable law, the rate shall be
the maximum rate of interest per annum allowed by such law.
SECTION 11. NOTICES. Any demand upon or notice to any Debtor that the
Secured Party may give shall be effective when delivered by hand, properly
deposited in the mails postage prepaid, or sent by telex, answerback
received, or electronic facsimile transmission, receipt acknowledged, or
delivered
-12-
to a telegraph company or overnight courier, in each case addressed to the
Debtor at the address shown at the beginning of this Agreement or as it
appears on the books and records of the Secured Party. Demands or notices
addressed to any other address at which the Secured Party customarily
communicates with the Debtor also shall be effective. Any notice by the
Debtor to the Secured Party shall be given as aforesaid, addressed to the
Secured Party at the address shown at the beginning of this Agreement or such
other address as the Secured Party may advise the Debtor in writing.
SECTION 12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon each Debtor, its successors and assigns, and shall inure to the benefit
of and be enforceable by the Secured Party and its successors and assigns.
Without limiting the generality of the foregoing sentence, the Secured Party
may assign or otherwise transfer any agreement or any note held by it
evidencing, securing or otherwise executed in connection with the
Obligations, or sell participations in any interest therein, to any other
person or entity, and such other person or entity shall thereupon become
vested, to the extent set forth in the agreement evidencing such assignment,
transfer or participation, with all the rights in respect thereof granted to
the Secured Party herein.
SECTION 13. GENERAL. This Agreement may not be amended or modified
except by a writing signed by the Debtor and the Secured Party, nor may the
Debtor assign any of its rights hereunder. This Agreement and the terms,
covenants and conditions hereof shall be construed in accordance with, and
governed by, the laws of The Commonwealth of Massachusetts (without giving
effect to any conflicts of law provisions contained therein). In the event
that any Collateral or any deposit or other sum due from or credited by the
Secured Party is held or stands in the name of the Debtor and another or
others jointly, the Secured Party may deal with the same for all purposes as
if it belonged to or stood in the name of the applicable Debtor alone.
SECTION 14. SECTION HEADINGS. Section headings are for
convenience of reference only and are not a part of this Agreement.
SECTION 15. JURY WAIVER. THE SECURED PARTY (BY ITS ACCEPTANCE HEREOF)
AND THE DEBTOR AGREE THAT NEITHER OF THEM, NOR ANY ASSIGNEE OR SUCCESSOR
SHALL (A) SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY
OTHER ACTION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT, ANY RELATED
INSTRUMENTS, ANY COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR
AMONG ANY OF THEM, OR (B) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS
OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE SECURED PARTY AND THE
DEBTOR, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NEITHER THE
SECURED PARTY NOR THE DEBTOR HAS AGREED WITH OR REPRESENTED TO THE OTHER THAT
THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
-13-
IN WITNESS WHEREOF, each Debtor has caused this Agreement to be duly
executed as an instrument under seal as of the date first written above.
BANCBOSTON LEASING, INC. XXXXX SHOE, INC.
By: /s/ Xxxx X. Xxx By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------- -------------------------------
Title: Assistant Vice President Title: Executive Vice President
JBI, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Executive Vice President
THE CASUAL MALE, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Executive Vice President
WGS CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Executive Vice President
TCMB&T, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Executive Vice President
