Exhibit 4.3
SECURITY AGREEMENT
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This Security Agreement (this "Agreement") is dated as of November 25,
2003 among THE CIT GROUP/BUSINESS CREDIT, INC., having an office at 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as agent for Lenders (as defined
herein) ("Secured Party") and LOEHMANN'S HOLDINGS, INC. ("Parent"), LOEHMANN'S,
INC. ("Sub-Parent") and XXXXXXXX'X REAL ESTATE HOLDINGS, INC. ("REH" and,
together with Parent and Sub-Parent, each a "Company" and collectively, the
"Companies"), each a Delaware corporation having its principal place of business
at 0000 Xxxxxx Xxxxxx, Xxxxx, Xxx Xxxx 00000.
BACKGROUND
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Loehmann's Operating Co. ("Debtor") has entered into that certain Loan
and Security Agreement dated as of November 25, 2003 with Companies, the
financial institutions named therein or which hereafter become a party thereto
(each a "Lender" and collectively, "Lenders") and Secured Party as agent for
Lenders (as amended, supplemented, restated or modified from time to time, the
"Loan Agreement"). Pursuant to the terms of the Loan Agreement, Lenders and
Secured Party have agreed to make certain extensions of credit available to the
Debtor. Lenders and Secured Party are willing to make such extensions of credit
available to the Debtor only upon the condition, among others, that the
Companies execute and deliver their Guaranty of the obligations of Debtor to
Lenders and Secured Party and that the Companies secure their Guaranty by
executing and delivering this Agreement to Secured Party.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings and the terms and conditions contained herein, the parties hereto
agree as follows:
1. A. General Definitions. When used in this Agreement, the following
terms shall have the following meanings:
"Collateral" shall mean and include:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Investment Property;
(f) all of each Company's right, title and interest in and to (i) its
respective goods and other property, including, but not limited to, all
merchandise returned or rejected by customers, property relating to or securing
any of its Receivables; (ii) all of each Company's rights as a consignor, a
consignee, an unpaid vendor, mechanic, artisan or other lienor, including
stoppage
in transit, setoff, detinue, replevin, reclamation and repurchase;
(iii) all additional amounts due to each Company from any customer relating to
the Receivables; (iv) other property, including warranty claims, relating to any
goods securing this Agreement; (v) all of each Company's contract rights, rights
of payment which have been earned under a contract right, instruments (including
promissory notes), documents, chattel paper (including electronic chattel
paper), warehouse receipts, deposit accounts, letters of credit and money; (vi)
all commercial tort claims (whether now existing or hereafter arising); (vii) if
and when obtained by any Company, all real and personal property of third
parties in which such Company has been granted a lien or security interest as
security for the payment or enforcement of Receivables; and (viii) any other
goods, personal property or real property now owned or hereafter acquired in
which any Company has expressly granted a security interest or may in the future
grant a security interest to Secured Party hereunder, or in any amendment or
supplement hereto or thereto, or under any other agreement between Secured Party
and such Company;
(g) all of each Company's ledger sheets, ledger cards, files,
correspondence, records, books of account, business papers, computers, computer
software (owned by such Company or in which it has an interest), computer
programs, tapes, disks and documents relating to (a), (b), (c), (d), (e) and (f)
of this Paragraph; and
(h) all proceeds and products of (a), (b), (c), (d), (e), (f) and (g)
in whatever form, including, but not limited to: cash, deposit accounts (whether
or not comprised solely of proceeds), certificates of deposit, insurance
proceeds (including hazard, flood and credit insurance), negotiable instruments
and other instruments for the payment of money, chattel paper, security
agreements, documents, eminent domain proceeds, condemnation proceeds and tort
claim proceeds.
Notwithstanding the foregoing, Collateral shall not include any Real Estate
lease or general intangible that (x) by its express terms (which terms are
enforceable under applicable law) or (y) pursuant to applicable law (regardless
of whether the terms thereof permit assignment), is not assignable, transferable
or cannot be subject to a Lien; provided, however, that, in the event of the
termination or elimination (whether by agreement, lapse or otherwise) of each
prohibition or requirement for any consent contained in any such Real Estate
lease or general intangible, such Real Estate lease or general intangible, as
applicable, shall immediately (without any act or delivery by any Person) be
deemed to be Collateral; and provided, further, that each Company agrees to use
reasonable efforts to negotiate for the consent to Agent's security interest
hereunder by landlords under Real Estate leases and other parties to agreements
regarding general intangibles entered into by such Company after the date
hereof.
"Company" and "Companies" shall have the meanings set forth in the
introductory paragraph hereof and shall extend to all permitted successors and
assigns.
"Default" means any act or event which, with the giving of notice or
passage of time or both, would constitute an Event of Default.
"Environmental Complaint" means any notice of violation, request for
information or notification that any Company is potentially responsible for
investigation or cleanup of environmental conditions on its property, demand
letter or complaint, order, citation, or other
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written notice with regard to any Hazardous Discharge or violation of any
environmental laws affecting its property or such Company's interest therein.
"Equipment" shall mean and include all of each Company's goods (other
than Inventory), whether now owned or hereafter acquired and wherever located,
including, without limitation, all equipment, machinery, apparatus, motor
vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all
replacements and substitutions therefor or accessions thereto.
"Event of Default" means the occurrence of any of the events set forth
in Section 12.
"GAAP" means generally accepted accounting principles, practices and
procedures in effect from time to time.
"General Intangibles" shall mean and include all of each Company's
general intangibles, whether now owned or hereafter acquired, including, without
limitation, all payment intangibles, all choses in action, causes of action,
corporate or other business records, inventions, designs, patents, patent
applications, equipment formulations, manufacturing procedures, quality control
procedures, trademarks, trademark applications, service marks, trade secrets,
goodwill, copyrights, design rights, software, computer information, source
codes, codes, records and dates, registrations, licenses, franchises, customer
lists, tax refunds, tax refund claims, computer programs, all claims under
guaranties, security interests or other security held by or granted to such
Company to secure payment of any of the Receivables by a customer (other than to
the extent covered by Receivables), all rights of indemnification and all other
intangible property of every kind and nature (other than Receivables).
"Guaranty" means the Guaranty dated November ___, 2003 which is
executed by the Companies in favor of Secured Party and Lenders, as amended,
modified, supplemented or restated from time to time.
"Hazardous Discharge" means any release or threat of release of a
reportable quantity of any hazardous substances on any Company's property.
"Inventory" shall mean and include all of any Person's now owned or
hereafter acquired goods, merchandise and other personal property, wherever
located, to be furnished under any consignment arrangement, contract of service
or held for sale or lease, all raw materials, work in process, finished goods
and materials and supplies of any kind, nature or description which are or might
be used or consumed in such Person's business or used in selling or furnishing
such goods, merchandise and other personal property, and all documents of title
or other documents representing them.
"Investment Property" means shall have the meaning set forth in the
UCC, and shall mean and include all of each Company's now owned or hereafter
acquired securities, whether certificated or uncertificated, securities
entitlements, securities accounts, commodity and futures contracts and commodity
and futures accounts.
"Loans" means all extensions of credit under the Loan Agreement.
"Loan Agreement" shall have the meaning set forth in the Background
paragraph hereof.
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"Obligations" means and includes all obligations of each Company to
Secured Party and Lenders under the Guaranty, direct or indirect, absolute or
contingent, due or to become due, contractual or tortious, liquidated or
unliquidated, whether existing by operation of law or otherwise now existing or
hereafter arising, including, without limitation, all payments such Company is
required to make by law or otherwise arising under or as a result of this
Agreement, together with all reasonable expenses and reasonable attorneys' fees
(other than the fees of internal counsel) chargeable to such Company's account
or incurred by Secured Party and/or any Lender in connection with such Company's
account whether provided for herein, in the Guaranty or in any other agreement,
instrument or document executed by or on behalf of such Company or delivered to
Secured Party or any Lender relating to this Agreement or the transactions
contemplated hereby.
"Permitted Liens" means (i) Permitted Liens (as such term is defined in
the Loan Agreement, as applicable to the Companies in accordance with the Loan
Agreement) and (ii) liens in favor of Secured Party.
"Person" shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether Federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Receivables" shall mean and include all of each Company's accounts,
contract rights, instruments (including those evidencing indebtedness owed to
such Company by its Affiliates), documents, chattel paper (including electronic
chattel paper), general intangibles relating to accounts, drafts and
acceptances, credit card receivables and all other forms of obligations owing to
such Company, all supporting obligations, guarantees and other security
therefor, whether secured or unsecured, now existing or hereafter created, and
whether or not specifically sold or assigned to Secured Party hereunder;
provided, however, that "Receivables" shall not include amounts paid or payable
in connection with the issuance of shares of capital stock of Parent.
"Secured Party" shall have the meaning set forth in the introductory
paragraph hereof and shall include its successors and assigns.
"Subsidiary" of any Person means a corporation or other entity of whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"UCC" means the Uniform Commercial Code as adopted in the State of New
York as amended or revised from time to time, and any successor statute.
B. Accounting Terms. Any accounting terms used in this Agreement which
are not specifically defined shall have the meanings customarily given them in
accordance with GAAP.
C. Other Terms. All capitalized terms used herein that are not defined
herein shall have the meanings given to them in the Loan Agreement. Except as
provided herein (or, by
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operation of the immediately preceding sentence, in the Loan Agreement), all
other terms used in this Agreement and defined in the UCC shall have the meaning
given therein unless otherwise defined herein (or, by operation of the
immediately preceding sentence, in the Loan Agreement). To the extent the
definition of any category or type of collateral is expanded by any amendment,
modification or revision to the UCC, such expanded definition will apply
automatically as of the date of such amendment, modification or revision.
2. Security Interest.
(a) To secure the prompt payment and performance to Secured
Party and each Lender of the Obligations, each Company hereby assigns, pledges
and grants to Secured Party for its benefit and for the ratable benefit of each
Lender a continuing security interest in and to all of its Collateral, whether
now owned or existing or hereafter acquired or arising and wheresoever located.
Each Company shall xxxx its books and records as may be necessary to perfect
Secured Party's security interest and, if required by GAAP, shall cause its
financial statements to reflect such security interest. Each Company shall
promptly provide Secured Party with written notice of all commercial tort
claims, such notice to contain the case title together with the applicable court
and a brief description of the claim(s). Upon delivery of each such notice, the
applicable Company shall be deemed to hereby grant to Secured Party a security
interest and lien in and to such commercial tort claims and all proceeds
thereof.
(b) Each Company shall take all action that may be necessary,
or that Secured Party may reasonably request, so as at all times to maintain the
validity, perfection, enforceability and priority of Secured Party's security
interest in the Collateral or to enable Secured Party to protect, exercise or
enforce its rights hereunder and in the Collateral, including, but not limited
to, (i) promptly discharging all liens other than Permitted Liens, (ii)
obtaining landlords' or mortgagees' lien waivers requested by Secured Party,
(iii) delivering to Secured Party, endorsed or accompanied by such instruments
of assignment as Secured Party may specify, and stamping or marking, in such
manner as Secured Party may specify, any and all chattel paper, instruments,
letters of credits and advices thereof and negotiable documents evidencing or
forming a part of the Collateral, (iv) entering into warehousing, lockbox and
other custodial arrangements reasonably satisfactory to Secured Party, and (v)
executing and delivering financing statements, control agreements, instruments
of pledge, notices and assignments, in each case in form and substance
reasonably satisfactory to Secured Party, relating to the creation, validity,
perfection, maintenance or continuation of Secured Party's security interest
under the UCC or other applicable law. Secured Party is hereby authorized to
file financing statements signed by Secured Party instead of any Company to the
extent that any Company is required to execute such financing statements under
the UCC. By its signature hereto, each Company hereby authorizes Secured Party
to file against such Company one or more financing continuation or amendment
statements pursuant to the UCC in form and substance satisfactory to Secured
Party (which statements may have a description of collateral comprising "all
assets" of such Company or which is otherwise broader than that set forth
herein). All reasonable out-of-pocket charges, expenses and fees Secured Party
may incur in doing any of the foregoing, and any local taxes relating thereto,
shall be paid to Secured Party immediately upon demand.
3. Representations Concerning the Collateral.
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(a) Each Company represents, warrants and covenants (i) that, on the
date hereof, it does not own any assets, properties or rights other than (x) in
the case of Parent, deferred tax assets and all of the capital stock of Sub
Parent; (y) in the case of Sub-Parent, all of the capital stock of Borrower and
REH, miscellaneous general intangibles and a 401(k) plan for employees of each
Company and the Borrower; and (z) in the case of REH, leasehold interests and
prepaid expenses; (ii) that it does not engage (and shall not at any time
engage) in any business activity other than activity that is required in
connection with its ownership of assets and properties as set forth in clause
(i) above and other activities incidental to the operation of its assets and
properties and the operation by the Borrower of its assets and properties and
business activities; and (iii) that it shall not at any time own any assets or
properties other than, (1) with respect to REH, additional leasehold interests
and prepaid expenses, the assets and properties as set forth in clause (i) above
and other assets that, in the aggregate, will not be of material value, and (2)
with respect to each other Company, the assets and properties as set forth in
clause (i) above and other assets that, in the aggregate, will not be of
material value.
(b) Each Company further represents and warrants that:
(i) the Collateral is owned solely by such Company free and
clear of all claims, liens, security interests and encumbrances (including
without limitation any claims of infringement) except (I) those in Secured
Party's favor and (II) Permitted Liens;
(ii) all Receivables are not subject to any present, future or
contingent offsets, disputes or counterclaims other than in the ordinary course
of business.
(iii) it does not possess or have any rights to any Inventory
or any General Intangibles consisting of inventions, designs, patents, patent
applications, equipment formulations, manufacturing procedures, trademarks,
trademark applications, service marks, trade secrets, copyrights, design rights,
franchises and/or customer lists.
(c) In addition to the foregoing, REH represents and warrants that it
does not have any assets consisting of Investment Property.
4. Covenants Concerning the Collateral.
(a) Each Company covenants that from and after the date of this
Agreement and until the Obligations are paid in full in cash it shall:
(i) except as permitted under the Loan Agreement, not dispose
of any of the Collateral whether by sale, lease or otherwise;
(ii) except as permitted under the Loan Agreement, not
encumber, mortgage, pledge, assign or grant any security interest in any
Collateral or any of its other assets to anyone other than Secured Party, except
for Permitted Liens;
(iii) to the extent required by GAAP, place notations upon any
financial statement prepared by such Company to disclose Secured Party's
security interest in the Collateral;
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(iv) defend the Collateral against the claims and demands of
all parties, except as to Permitted Liens;
(v) keep and maintain the Equipment which continues to be used
and useful in the ownership of its other assets and/or the operation of its
business in good operating condition, except for ordinary wear and tear. Such
Company shall not permit any such items to become a fixture to real estate or
accessions to other personal property;
(vi) not acquire any (or any rights to any) Inventory or
General Intangibles consisting of inventions, designs, patents, patent
applications, equipment formulations, manufacturing procedures, trademarks,
trademark applications, service marks, trade secrets, copyrights, design rights,
franchises and/or customer lists; and
(vii) perform all other steps reasonably requested by Secured
Party to create and maintain in Secured Party's favor a valid perfected first
priority security interest in all Collateral.
(b) Notwithstanding the foregoing, REH covenants that from and after
the date of this Agreement and until the Obligations are paid in full in cash it
shall not acquire any Collateral consisting of Investment Property.
5. Collection and Maintenance of Collateral and Records. Each Company
shall keep and maintain, at its own cost and expense, records of the Collateral
which are complete in all material respects, including, without limitation, a
record of any and all payments received and any and all credits granted with
respect to the Collateral and all other dealings with the Collateral. Secured
Party may at any time verify any Company's Receivables utilizing an audit
control company or any other agent of Secured Party. After the occurrence and
during the continuance of an Event of Default, Secured Party or Secured Party's
designee may notify any Person of Secured Party's security interest in
Receivables (contracts, instruments, or chattel paper as the case may be),
collect them directly from such Person or parties to contracts, instruments and
chattel paper and charge the reasonable collection costs and expenses to the
applicable Company's account, but, unless and until Secured Party does so or
gives such Company other instructions, such Company may continue to collect all
Receivables for its own benefit. After the occurrence and during the continuance
of an Event of Default, to the extent that Secured Party or Secured Party's
designee does not take action in accordance with the immediately preceding
sentence, each Company shall collect all Receivables for Secured Party, receive
all payments thereon for Secured Party's benefit in trust as Secured Party's
trustee and immediately deliver them to Secured Party in their original form
with all necessary endorsements or, as directed by Secured Party, deposit such
payments as directed by Secured Party. Each Company shall provide Secured Party,
as requested by Secured Party, such schedules, documents and/or information
regarding the Collateral as Secured Party may reasonably require.
6. Inspections. Subject to the terms and conditions of the Loan
Agreement, Secured Party shall have the right to (a) visit and inspect each
Company's properties and the Collateral, (b) inspect, audit and make extracts
from each Company's relevant books and records, including, but not limited to,
management letters prepared by independent accountants and (c) discuss with each
Company's principal officers and independent accountants such Company's
business,
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assets, liabilities, financial condition, results of operations and business
prospects, and such Company shall furnish all such assistance and information as
Secured Party may require in connection therewith. Each Company will deliver to
Secured Party any instrument necessary for Secured Party to obtain records from
any service bureau maintaining records for such Company.
7. Additional Representations, Warranties and Covenants. Each Company
represents, warrants, and covenants that:
(a) such Company is a corporation duly organized and validly
existing under the laws of the State of Delaware and is not required to be
qualified to do business in any other state or jurisdiction.
(b) the execution, delivery and performance of this Agreement
(i) has been duly authorized, (ii) is not in contravention of such Company's
certificate of incorporation, by-laws or of any indenture, agreement or
undertaking to which such Company is a party or by which such Company is bound
and (iii) is within such Company's corporate powers.
(c) this Agreement is such Company's legal, valid and binding
obligation, enforceable in accordance with its terms.
(d) it keeps and will continue to keep all of its books and
records concerning the Collateral at such Company's chief executive offices
located at the address set forth in the introductory paragraph of this Agreement
and will not move such books and records without giving Secured Party at least
thirty (30) days prior written notice and taking all actions deemed by the
Secured Party necessary to continuously protect and perfect Secured Party's
liens upon the Collateral; and the tangible Collateral is not stored or located
at any locations other than such Company's chief executive offices located at
the address set forth in the introductory paragraph of this Agreement or at such
other locations as to which such Company or the Debtor shall have given the
Secured Party at least thirty (30) days prior written notice.
(e) any time and from time to time, upon the written request
of Secured Party and at the sole expense of such Company, such Company shall
promptly and duly execute and deliver any and all such further instruments and
documents and take such further actions as Secured Party may reasonably deem
necessary to obtain the full benefits of this Agreement and of the rights and
powers herein granted.
8. Power of Attorney. Each Company hereby irrevocably appoints Secured
Party or any other Person whom Secured Party may designate as such Company's
attorney-in-fact, with full power and authority in place and stead of such
Company and in the name of such Company or in its own name to, after the
occurrence and during the continuance of an Event of Default: (i) endorse such
Company's name on any checks, notes, acceptances, money orders, drafts or other
forms of payment or security that may come into Secured Party's possession; (ii)
sign such Company's name on any invoice or xxxx of lading relating to any
Receivables, drafts against customers, schedules and assignments of Receivables,
notices of assignment, financing statements and other public records,
verifications of account and notices to or from Persons; (iii) verify the
validity, amount or any other matter relating to any Receivable by mail,
telephone, telegraph or otherwise with the applicable Persons; (iv) do all
things necessary to carry out this
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Agreement and all related documents; (v) continue any insurance existing
pursuant to the terms of this Agreement and pay all or any part of the premium
therefor and the cost thereof; and (vi) notify the post office authorities to
change the address for delivery of such Company's mail to an address designated
by Secured Party, and to receive, open and dispose of all mail addressed to such
Company. Each Company hereby ratifies and approves all acts of the attorney in
the absence of such attorney's gross negligence or willful misconduct. The
powers conferred on the Secured Party hereunder are solely to protect its
interests in the Collateral and shall not impose any duty upon it to exercise
any such powers. Neither Secured Party nor the attorney will be liable for any
acts or omissions or for any error of judgment or mistake of fact or law in the
absence of such attorney's gross negligence or willful misconduct. This power,
being coupled with an interest, is irrevocable until the Obligations are paid in
full in cash.
9. Expenses. Companies shall pay all of Secured Party's out-of-pocket
costs and expenses, including without limitation reasonable fees and
disbursements of counsel (other than internal counsel) and appraisers, in
connection with the preparation, execution and delivery of this Agreement and in
connection with the prosecution or defense of any action, contest, dispute, suit
or proceeding concerning any matter in any way arising out of, related to or
connected with this Agreement. Companies shall also pay all of Secured Party's
out-of-pocket costs and expenses, including without limitation fees and
disbursements of counsel, in connection with (a) the preparation, execution and
delivery of any waiver, any amendment thereto or consent proposed or executed in
connection with the transactions contemplated by this Agreement, (b) Secured
Party's obtaining performance of any Company's obligations under this Agreement,
including, but not limited to, the enforcement or defense of Secured Party's
security interests, assignments of rights and liens hereunder as valid perfected
security interests, (c) any attempt to inspect, verify, protect, collect, sell,
liquidate or otherwise dispose of any Collateral and (d) any consultations in
connection with any of the foregoing. All such costs and expenses together with
all filing, recording and search fees, taxes and interest payable by any Company
to Secured Party shall be payable on demand and shall be secured by the
Collateral.
10. Assignment By Secured Party and Lenders. Secured Party and Lenders
may assign any or all of the Obligations together with any or all of the
security therefor and any transferee shall succeed to all of Secured Party's and
Lenders' rights with respect thereto, all in accordance with the Loan Agreement.
Upon such transfer, Secured Party and Lenders shall be released from all
responsibility for the Collateral for the period from and after such transfer to
the extent same is assigned to any transferee.
11. Waivers. Each Company waives demand, notice, protest, notice of
acceptance of this Agreement, notice of loans made, credit extended, Collateral
received or delivered or other action taken in reliance hereon and all other
demands and notices of any description. With respect to both the Obligations and
the Collateral, each Company assents to any extension or postponement of the
time of payment or any other indulgence, to any substitution, exchange or
release of or failure to perfect any security interest in any 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, compromising or
adjusting of any thereof, all in such manner and at such time or times as the
Secured Party may deem advisable.
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12. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) the occurrence of a Default or Event of Default under the
Loan Agreement.
(b) any lien created hereunder for any reason ceases to be or
is not a valid and perfected lien having a first priority interest (other than
for Permitted Liens).
(c) if any Company attempts to terminate, challenges the
validity of, or challenges its liability under, the Guaranty.
13. Remedies. Upon the occurrence and during the continuation of any
Event of Default, Secured Party shall have the right to demand repayment in full
of all Obligations, whether or not otherwise due (in such case Secured Party may
deposit any and all such amounts realized in a cash collateral deposit account
to be maintained as security for the Obligations). Until all Obligations have
been fully satisfied in cash, Secured Party shall retain its security interest
in all Collateral. Secured Party shall have, in addition to all other rights
provided herein, the rights and remedies of a secured party under the UCC and
under other applicable law, and all other legal and equitable rights to which
Secured Party may be entitled, including without limitation, the right to take
immediate possession of the Collateral and to require Companies to assemble the
Collateral, at Companies' expense, and to make it available to Secured Party at
a place designated by Secured Party which is reasonably convenient to both
parties and to enter any of the premises of Companies or wherever the Collateral
shall be located, with or without force or process of law, and to keep and store
the same on said premises until sold (and if said premises be the property of
any Company, such Company agrees not to charge Secured Party for storage
thereof). Further, Secured Party may, at any time or times after the occurrence
and during the continuation of an Event of Default, sell and deliver all
Collateral held by or for Secured Party in one or more parcels at public or
private sale for cash, upon credit or otherwise, at such prices and upon such
terms as Secured Party, in Secured Party's sole discretion, deems advisable or
Secured Party may otherwise recover upon the Collateral in any commercially
reasonable manner as Secured Party, in its sole discretion, deems advisable.
Except as to that part of the Collateral which is perishable or threatens to
decline speedily in nature or is of a type customarily sold on a recognized
market, the requirement of reasonable notice shall be met if such notice is
mailed postage prepaid to Companies at their addresses as shown in Secured
Party's records, at least ten (10) days before the time of the event of which
notice is being given. Secured Party may be the purchaser at any sale, if it is
public. Until Secured Party is able to effect a sale, lease, or other
disposition of Collateral, Secured Party shall have the right to use or operate
Collateral, or any part thereof, to the extent that it deems appropriate for the
purpose of preserving Collateral or its value or for any other purpose deemed
appropriate by Secured Party. Secured Party shall have no obligation to any
Company to maintain or preserve the rights of any Company as against third
parties with respect to Collateral while Collateral is in the possession of
Secured Party. Secured Party may, if it so elects, seek the appointment of a
receiver or keeper to take possession of Collateral and to enforce any of
Secured Party's remedies with respect to such appointment without prior notice
or hearing. In connection with the exercise of the foregoing remedies, Secured
Party is granted permission to use all of any Company's (a) proprietary rights
and (b) Equipment. The proceeds realized from the sale of any Collateral shall
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be applied as follows: first, to the costs, expenses and attorneys' fees and
expenses incurred by Secured Party for collection and for acquisition,
completion, protection, removal, storage, sale and deliver of the Collateral;
second, to the payment of the Obligations in such order as Secured Party elects;
and third, to the applicable Guarantor (unless otherwise required under
applicable law). If any deficiency shall arise, the Companies shall remain
liable to Secured Party therefor.
14. Waiver; Cumulative Remedies. Failure by Secured Party to exercise
any right, remedy or option under this Agreement or any supplement hereto or any
other agreement between any Company and Secured Party or delay by Secured Party
in exercising the same, will not operate as a waiver; no waiver by Secured Party
will be effective unless it is in writing and then only to the extent
specifically stated. Secured Party's rights and remedies under this Agreement
will be cumulative and not exclusive of any other right or remedy which Secured
Party may have.
15. Notices. Any notice or request hereunder may be given to any
Company or Secured Party as provided in the Loan Agreement.
16. Governing Law and Waiver of Jury Trial. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK. SECURED PARTY SHALL HAVE THE RIGHTS AND REMEDIES OF A SECURED PARTY
UNDER APPLICABLE LAW INCLUDING, BUT NOT LIMITED TO, THE UCC. EACH COMPANY AGREES
THAT ALL ACTIONS AND PROCEEDINGS RELATING DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT OR ANY OTHER OBLIGATIONS SHALL BE LITIGATED IN THE FEDERAL DISTRICT
COURT OF THE SOUTHERN DISTRICT OF THE STATE OF NEW YORK OR, AT SECURED PARTY'S
OPTION, IN ANY OTHER COURTS LOCATED IN THE STATE OF NEW YORK OR ELSEWHERE AS
SECURED PARTY MAY SELECT AND THAT SUCH COURTS ARE CONVENIENT FORUMS AND SUCH
COMPANY AND SECURED PARTY EACH SUBMITS TO THE PERSONAL JURISDICTION OF SUCH
COURTS. EACH COMPANY AND SECURED PARTY EACH WAIVES PERSONAL SERVICE OF PROCESS
AND CONSENTS THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO IT AT ITS ADDRESS SET
FORTH ON THE FIRST PAGE OF THIS AGREEMENT OR AT SUCH OTHER ADDRESS AS ANY PARTY
MAY GIVE THE OTHERS NOTICE OF PURSUANT TO SECTION 15 HEREOF, AND SERVICE SO MADE
SHALL BE DEEMED COMPLETED TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.
EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BETWEEN ANY COMPANY AND SECURED PARTY, AND EACH COMPANY WAIVES THE
RIGHT TO ASSERT IN ANY ACTION OR PROCEEDING INSTITUTED BY SECURED PARTY WITH
REGARD TO THIS AGREEMENT OR ANY OF THE OBLIGATIONS ANY OFFSETS OR COUNTERCLAIMS
WHICH IT MAY HAVE (OTHER THAN OFFSETS OR COUNTERCLAIMS THAT CANNOT, AS A MATTER
OF LAW, BE RAISED IN A SEPARATE ACTION OR PROCEEDING).
17. Limitation of Liability. Each Company acknowledges and understands
that in order to assure repayment of the Obligations, Secured Party may be
required to exercise any and all of Secured Party's rights and remedies
hereunder and agrees that neither Secured Party nor
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any of Secured Party's agents shall be liable for acts taken or omissions made
in connection herewith or therewith except for actual bad faith, gross
negligence or willful misconduct.
18. Entire Understanding. This Agreement contain the entire
understanding between Companies and Secured Party and any promises,
representations, warranties or guarantees not herein contained shall have no
force and effect unless in writing, signed by the Companies and Secured Party.
Neither this Agreement, nor any portion or provisions thereof may be changed,
modified, amended, waived, supplemented, discharged, cancelled or terminated
orally or by any course of dealing, or in any manner other than by an agreement
in writing, signed by the party to be charged.
19. Severability. Wherever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions thereof.
20. Captions. All captions are and shall be without substantive meaning
or content of any kind whatsoever.
21. Marshaling. Secured Party shall not be required to marshal any
present or future collateral security (including but not limited to this
Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of its rights hereunder
and in respect of such collateral security and other assurances of payment shall
be cumulative and in addition to all other rights, however existing or arising.
To the extent that it lawfully may, each Company hereby agrees that it will not
invoke any law relating to the marshaling of collateral which might cause delay
in or impede the enforcement of the Secured Party's rights under this Agreement
or under any other instrument creating or evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, each Company hereby irrevocably waives the benefits
of all such laws.
22. Counterparts; Telecopied Signatures. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original and all
of which when taken together shall constitute one and the same instrument. Any
signature delivered by a party by facsimile transmission shall be deemed to be
an original signature hereto.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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23. Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
XXXXXXXX'X HOLDINGS, INC.
By:
---------------------------------------------
Name:
Title:
XXXXXXXX'X, INC.
By:
---------------------------------------------
Name:
Title:
XXXXXXXX'X REAL ESTATE HOLDINGS, INC.
By:
---------------------------------------------
Name:
Title:
THE CIT GROUP/BUSINESS CREDIT, INC., as agent
By:
---------------------------------------------
Name:
Title:
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