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EXHIBIT (10)(ix)
Material Contracts -- Junior
Security Agreement between
Xxxxxxx Gordman 1/2 Price
Stores, Inc. and Xxxxx
Xxxxxxxxx, as agent for The
Class 3 Creditors, dated
January 31, 1997.
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XXXXXXX GORDMAN 1/2 PRICE STORES, INC.
JUNIOR SECURITY AGREEMENT
This Junior Security Agreement (the "Agreement") dated as of January 31,
1997 by and between XXXXXXX GORDMAN 1/2 PRICE STORES, INC., a Delaware
corporation (successor by merger to Xxxxxxx Xxxxxxx Stores, Inc. and Xxxxxxx
Gordman Department Stores, Inc., each former Nebraska corporations) with its
principal place of business and mailing address at 00000 Xxxx Xxxxxx Xxxx,
Xxxxx, Xxxxxxxx 00000 (the "Company"), and Xxxxx Xxxxxxxxx, Esq., as agent for
the Class 3 Creditors (the "Class 3 Creditors"), identified in the First
Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code
for Xxxxxxx Gordman Stores, Inc., Xxxxxxx Gordman Department Stores, Inc. and
1/2 Price Stores, Inc. dated August 13, 1993 (the "Plan").
WITNESSETH THAT:
WHEREAS, before its merger into the Company, the former Nebraska
corporation known as Xxxxxxx Gordman Stores, Inc. did execute and deliver to
Xxxxxx Trust and Savings Bank, an Illinois banking corporation with its mailing
address at 000 Xxxx Xxxxxx Xxxxxx, X.X. Xxx 000, Xxxxxxx, Xxxxxxxx 00000 (the
"Bank") that certain Security Agreement dated as of March 30, 1992 (the "RGS
Security Agreement"), in order to secure certain indebtedness therein described
of said Xxxxxxx Xxxxxxx Stores, Inc. owed to the Bank (the "Original Debt ");
and
WHEREAS, before its merger into the Company, the former Nebraska
corporation known as Xxxxxxx Gordman Department Stores, Inc. did execute and
deliver to the Bank that certain Security Agreement dated as of March 30, 1992
(the "RGDS Security Agreement"), in order to secure the Original Debt; and
WHEREAS, before its merger into the Company, the former Nebraska
corporation known as 1/2 Price Stores, Inc. did execute and deliver to the
Bank that certain Security Agreement dated as of March 30, 1992 (the " 1/2
Price Security Agreement") (the RGS Security Agreement, RGDS Security Agreement
and 1/2 Price Security Agreement being hereinafter collectively referred to as
the "Original Security Agreements"), in order to secure the Original Debt; and
WHEREAS, before their merger into the Company, each of Xxxxxxx Gordman
Department Stores, Inc., Xxxxxxx Gordman Stores, Inc. and 1/2 Price Stores,
Inc., then all Nebraska corporations (collectively, the "Debtors"), proposed
the Plan, which Plan would, among other things, modify the Original Debt; and
WHEREAS, such Plan was confirmed by order of the Bankruptcy Court entered
on October 5, 1993; and
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WHEREAS, pursuant to the Plan, the Company has issued to the Bank a
Secured Term Note of the Company dated October 20, 1993 payable to the order of
the Beneficiary in the face principal amount of $4,000,000 (such Secured Term
Note and any all notes issued in extension or renewal thereof or in
substitution or replacement therefor, in each case whether in whole or in part,
as each of the foregoing may from time to time be modified or amended, being
hereinafter referred to collectively as the "Term Note") to evidence $4,000,000
in principal amount of the Original Debt as the same has been modified by the
Plan; and
WHEREAS, the Company did execute and deliver to the Bank that certain
Security Agreement dated as of October 20, 1993 (the "Senior Security
Interest"), in order to confirm and assure that the liens of the Original
Security Agreements continue to encumber the Collateral (as hereinafter
defined) for the benefit and security of the Term Note; and
WHEREAS, a portion of the Term Note was prepaid from the proceeds of an
insurance policy (the "Insurance") on the life of A. D. (Xxx) Gordman; and
WHEREAS, The Xxx Xxxxxxx Fund (the "Fund"), as beneficiary of the
Insurance, is subrogated to the rights of the Bank under the Term Note, and the
Security Agreement and Indenture of Mortgage, Deed of Trust and Security
Agreement securing such Term Note, and as such is also a holder of the Senior
Security Interest; and
WHEREAS, this Agreement is made and given pursuant to that certain waiver
and deferral agreement executed and delivered by the Class 3 Creditors
Committee (the "Waiver") as of January 31, 1997, which Waiver agrees to the
deferral of the Class 3 Creditor minimum cumulative payment under the Plan of
$1,939,000 scheduled to be escrowed on February 1, 1997 (the "1997 Minimum
Payment");
NOW, THEREFORE, for good and valuable consideration, receipt whereof is
hereby acknowledged, the parties hereto hereby agree as follows:
1. Grant of Security Interest in the Collateral. The Company hereby
grants to the Class 3 Creditors a security interest in, and acknowledges and
agrees that the Class 3 Creditors have and shall continue to have a continuing
security interest in, any and all right, title and interest of the Company in
and to the following:
(a) Equipment. Equipment, whether now owned or hereafter acquired
(the term "Equipment" means and includes equipment, machinery, tools,
trade fixtures, furniture, furnishings, office equipment, and data
processing equipment, in each case now or hereafter used or usable in
connection with the Company's business, together with all parts,
accessories and attachments relating to any of the foregoing), provided
that Equipment shall in no event include goods used in connection with
the operation of, and located at, the Company's corporate headquarters or
operating retail stores, and further provided that Equipment shall in no
event include Equipment (a certain compactor and a certain film processor
and related equipment) securing the claim of Norwest Equipment
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Finance, Inc., pursuant to the Stipulation dated August 6, 1993, between
the Debtors and Norwest Equipment Finance, Inc.;
(b) Records. Supporting evidence and documents relating to any of
the above-described property, including, without limitation, delivery and
installation certificates, invoice copies, delivery receipts, insurance
certificates and the like, together with all books of account, ledgers
and cabinets in which the same are reflected or maintained, all whether
now existing or hereafter arising;
(c) Accessions and Additions. All accessions and additions to and
substitutions and replacements of any and all of the foregoing, whether
now existing or hereafter arising; and
(d) Proceeds and Products. All proceeds and products of the
foregoing and all insurance on the foregoing and proceeds thereof,
whether now existing or hereafter arising;
all of the foregoing being herein sometimes referred to as the "Collateral ".
2. Obligations Hereby Secured. The lien and security interest herein
granted and provided for is made and given to secure, and shall secure, the
prompt payment and performance in full when due (whether by lapse of time,
acceleration or otherwise) of (i) the payment of the principal and premium, if
any, of and interest on the 1997 Minimum Payment and the Class 3 Creditors
Minimum Payment under the Plan of $1,828,000 due to be escrowed on February 2,
1998, (together, the "Minimum Payments") as and when the same becomes due and
payable (whether by lapse of time, acceleration or otherwise), and (ii) any and
all expenses and charges, legal or otherwise, suffered or incurred by the Class
3 Creditors in collecting or enforcing the Company's obligation to pay the
Minimum Payments or realizing on or protecting or preserving any security
therefor, including, without limitation, the lien and security interest granted
hereby (all of such indebtedness, obligations, liabilities, expenses and
charges described in clauses (i) and (ii) above being hereinafter referred to
as the "Secured Obligations ").
3. Covenants, Agreements, Representations and Warranties. The Company
hereby covenants and agrees with, and represents and warrants to, the Class 3
Creditors that:
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, is the sole
and lawful owner of the Collateral and has full right, power and
authority to enter into this Agreement and to perform each and all of the
matters and things herein provided for; and the execution and delivery of
this Agreement, and the observance and performance of any of the matters
and things herein set forth, will not violate or contravene any provision
of law or of the articles of incorporation or by-laws of the Company or
of any indenture, loan agreement or other agreement of or affecting the
Company or any of its properties.
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(b) The Collateral is and will remain in the Company's possession
or control at the locations listed on Schedule A attached hereto
(collectively, the "Permitted Collateral Locations "). If for any reason
Collateral is at any time kept or located at locations other than the
Permitted Collateral Locations, the Class 3 Creditors shall nevertheless
have and retain a security interest therein. The Company owns and will at
all times own all Permitted Collateral Locations, except to the extent
otherwise indicated on Schedule A. The Company's chief executive office
and principal place of business is at 00000 Xxxx Xxxxxx Xxxx, Xxxxx,
Xxxxxxxx 00000, and the Company has no other executive offices or places
of business other than retail stores. The Company will not maintain an
executive office or place of business at a location other than those
specified pursuant to the immediately preceding sentence without first
providing the Class 3 Creditors thirty (30) days' prior written notice of
its intent to do so; provided, however, that the Company will at all
times maintain its chief executive office in the contiguous continental
United States of America.
(c) The Collateral and every part thereof is and will be free and
clear of all security interests, liens (including, without limitation,
mechanics', laborers' and statutory liens), attachments, levies and
encumbrances of every kind, nature and description and whether voluntary
or involuntary, except for the security interest of the Bank and the Fund
therein and as otherwise provided on Schedule B hereto. The Company will
warrant and defend the Collateral against any claims and demands of all
persons (other than the Bank and the Fund pursuant to the Senior Security
Interest) at any time claiming the same or any interest in the Collateral
adverse to the Class 3 Creditors.
(d) The Company will promptly pay when due all taxes, assessments
and governmental charges and levies upon or against the Collateral, in
each case before the same become delinquent and before penalties accrue
thereon, unless and to the extent that the same are being contested in
good faith by appropriate proceedings which prevent foreclosure on or
other realization upon any of the Collateral and the Company shall have
established adequate reserves therefor.
(e) The Company will not waste or destroy the Collateral or any
part thereof and will not be negligent in the care or in the use of any
Collateral. The Company will not use, manufacture, sell or distribute any
Collateral in violation of any statute, ordinance or other governmental
requirement. The Company will perform in all material respects its
obligations under any contract or other agreement constituting part of
the Collateral, it being understood and agreed that the Class 3 Creditors
have no responsibility to perform such obligations.
(f) Subject to the following sentence, the Company will not,
without the Class 3 Creditors' prior written consent, sell, assign,
mortgage, lease or otherwise dispose of the Collateral or any interest
therein. The Company may, until an Event of Default has occurred and is
continuing hereunder and until otherwise notified by the Class 3
Creditors, sell obsolete, worn out or unusable Equipment which is
concurrently replaced
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with similar Equipment at least equal in quality and condition to that
sold and owned by the Company free of any lien, charge or encumbrance
other than the lien hereof. Notwithstanding the foregoing, the parties
acknowledge that (i) it is the intention of the Company to (a) sell and
leaseback Building 1 (both building and land) of the Distribution Center
and (b) to terminate its lease of the corporate offices, and that (ii)
such contemplated sale and leaseback and lease termination will not be
deemed to be an Event of Default under this Agreement.
(g) The Company will at its own cost and expense maintain, keep and
preserve the Equipment in good repair, working order and condition,
ordinary wear and tear accepted, and without limiting the foregoing make
all necessary and proper repairs, replacements and additions to the
Equipment (other than Equipment which is obsolete or uneconomical) so
that the efficiency thereof shall be fully preserved and maintained.
(h) Upon the Class 3 Creditors' request, the Company shall at its
own cost and expense cause the lien of the Class 3 Creditors in and to
any portion of the Equipment subject to a certificate of title law to be
duly noted on such certificate of title or to be otherwise filed in such
manner as is prescribed by law in order to perfect such lien and will
cause all such certificates of title and evidences of lien to be
deposited with the Class 3 Creditors.
(i) None of the Equipment is or will be attached to real estate in
such a manner that the same may become a fixture except for Equipment
from time to time located on the real estate described on Schedule C
attached hereto. In any event the Company will, upon written request of
the Class 3 Creditors, furnish agreements signed by all parties (other
than mortgagees of the Company's landlords and the Bank and the Fund
pursuant to the Senior Security Interest) having any right, title or
interest in, or lien on, any real estate on which any Equipment is
located whereby such parties disclaim any right, title and interest in,
and lien on, any such Equipment which may be prior to the security
interest of the Class 3 Creditors therein (such agreements to contain a
legal description of such real estate and otherwise to be in a form
satisfactory to the Class 3 Creditors).
(j) The Company will insure the Collateral which is insurable
against such risks and hazards as other companies similarly situated
insure against, and including in any event loss or damage by fire, theft,
burglary, pilferage, loss in transit and such other hazards as the Class
3 Creditors may reasonably specify, in amounts and under policies
containing loss payable clauses to the Class 3 Creditors as their
interests may appear or, if the Class 3 Creditors request, naming the
Class 3 Creditors as an additional insured therein) by insurers
reasonably acceptable to the Class 3 Creditors. All premiums on such
insurance shall be paid by the Company and the policies of such insurance
(or certificates therefor) delivered to the Class 3 Creditors. All
insurance required hereby shall provide that any losses shall be payable
notwithstanding any act or negligence of the Company, shall provide that
no cancellation thereof shall be effective until at least thirty (30)
days after receipt by the Company and the Class 3 Creditors of written
notice
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thereof, and shall be satisfactory to the Class 3 Creditors in all other
respects. In case of any material loss, damage to or destruction of the
Collateral or any part thereof, the Company shall promptly give written
notice thereof to the Class 3 Creditors generally describing the nature
and extent of such damage or destruction. In case of any loss, damage to
or destruction of the Collateral or any part thereof, the Company,
whether or not the insurance proceeds, if any, received on account of
such damage or destruction shall be sufficient for that purpose, at the
Company's cost and expense, will promptly repair or replace the
Collateral so lost, damaged or destroyed, except to the extent such
Collateral, prior to its loss, damage or destruction, had become obsolete
or worn out. In the event the Company shall receive any proceeds of such
insurance, the Company will immediately pay over such proceeds to the
holders of the Senior Security Interest and, upon satisfaction in full of
the Senior Security Interest, to the Class 3 Creditors. Net insurance
proceeds received by the Class 3 Creditors under the provisions hereof or
under any policy or policies of insurance covering the Collateral or any
part thereof shall be applied to the reduction of the Secured Obligations
(whether or not then due), provided, however, that the Class 3 Creditors
agree to release such insurance proceeds to the Company for replacement
or restoration of the portion of the Collateral lost, damaged or
destroyed required by this Agreement to be so replaced or restored if,
but only if, (i) no Event of Default hereunder, or any other event which
with the passage of time, the giving of notice, or both, would constitute
such an Event of Default, shall have occurred or be continuing at the
time of release, (ii) written application for such release is received
from the Company within thirty (30) days of receipt of such proceeds and
(iii) the Class 3 Creditors have received evidence reasonably
satisfactory to it that the Collateral lost, damaged or destroyed has
been or will be replaced or restored to its condition immediately prior
to the loss, destruction or other event giving rise to the payment of
such insurance proceeds. All insurance proceeds shall be subject to the
Senior Security Interest and the lien and security interest of the Class
3 Creditors hereunder.
(k) The Company will at all times allow the Class 3 Creditors or
their representatives free access to and right of inspection of the
Collateral. The Company will, upon the request of the Class 3 Creditors,
authorize and instruct all bailees and other parties at any time holding,
storing, shipping or transferring all or any part of the Collateral to
permit the Class 3 Creditors or their representatives to examine and
inspect any of the Collateral then in such party's possession and to
verify from such party's own books and records any information concerning
the Collateral or any part thereof which the Class 3 Creditors or their
representatives may seek to verify.
(1) The Company agrees from time to time to deliver to the Class 3
Creditors such evidence of the existence and identity of the Collateral
and of its availability as collateral security pursuant hereto, in each
case as the Class 3 Creditors may reasonably request. The Company shall
at the request of the Class 3 Creditors provide the Class 3 Creditors
from time to time as specified by the Class 3 Creditors with a report of
a physical listing and the location of all Equipment. The Company shall
furnish such other reports and information concerning Equipment as the
Class 3 Creditors may reasonably
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request (including, without limitation, reports stating the book value of
Equipment by major category and location). The Company will also promptly
notify the Class 3 Creditors of any Equipment which the Company has
determined to have been rendered obsolete, stating the prior book value
of such Equipment, its type and location.
(m) The Company will comply in all material respects with the terms
and conditions of any leases, easements, right-of-way agreements or other
agreements binding upon the Company or affecting the Collateral, in each
case which cover the premises wherein the Collateral is located, and any
orders, ordinances, laws or statutes of any city, state or other
governmental entity, department or agency having jurisdiction with
respect to such premises or the conduct of business thereon.
(n) The Company has not transacted business, and does not transact
business, under any trade names other than: Xxxxxxx Gordman and 1/2 Price
and Xxxxxxx Gordman 1/2 Price. The Company will not change its name or
transact business under any other trade name, in each case without first
giving the Class 3 Creditors thirty (30) days' prior written notice of
its intent to do so.
(o) The Company agrees to execute and deliver to the Class 3
Creditors such further agreements and assignments or other instruments
and documents and to do all such other things as the Class 3 Creditors
may reasonably deem necessary or appropriate to assure the Class 3
Creditors its security interest hereunder, including such financing
statement or statements or amendments thereof or supplements thereto or
other instruments and documents as the Class 3 Creditors may from time to
time reasonably require in order to comply with the Uniform Commercial
Code as enacted in the State of Nebraska and any successor statute(s)
thereto (the "Code"). The Company hereby agrees that a carbon,
photographic or other reproduction of this Agreement or any such
financing statement is sufficient for filing as a financing statement by
the Class 3 Creditors without notice thereof to the Company wherever the
Class 3 Creditors in their sole discretion desire to file the same. In
the event for any reason the law of any other jurisdiction than Nebraska
becomes or is applicable to the Collateral or any part thereof, or to any
of the Secured Obligations, the Company agrees to execute and deliver all
such instruments and documents and to do all such other things as the
Class 3 Creditors in its sole discretion deems necessary or appropriate
to preserve, protect and enforce the security interest of the Class 3
Creditors under the law of such other jurisdiction. If any Collateral is
in the possession or control of any of the Company's agents or processors
and the Class 3 Creditors so request, the Company agrees to notify such
agents or processors in writing of the Class 3 Creditors' security
interest therein and instruct them to hold all such Collateral for the
Class 3 Creditors's account and subject to the Class 3 Creditors'
instructions. The Company agrees to xxxx its books and records to reflect
the security interest of the Class 3 Creditors in the Collateral.
(p) On failure of the Company to perform any of the covenants and
agreements herein contained, the Class 3 Creditors may, at their option,
upon two days' prior notice to
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the Company (unless the Class 3 Creditors reasonably determine that
immediate payment or performance is necessary to preserve or protect the
Collateral) perform the same and in so doing may expend such sums as the
Class 3 Creditors may reasonably deem advisable in the performance
thereof, including without limitation the payment of any insurance
premiums, the payment of any taxes, liens and encumbrances, expenditures
made in defending against any adverse claims and all other expenditures
which the Class 3 Creditors may be compelled to make by operation of law
or which the Class 3 Creditors may make by agreement or otherwise for the
protection of the security hereof. All such sums and amounts so expended
shall be repayable by the Company immediately without notice or demand,
shall constitute additional Secured Obligations hereunder and shall bear
interest from the date said amounts are expended at the rate of 9% per
annum (computed on the basis of a year of 365 or 366 days, as the case
may be, and the actual number of days elapsed) (such rate per annum being
hereinafter referred to as the "Default Rate "). No such performance of
any covenant or agreement by the Class 3 Creditors on behalf of the
Company, and no such advancement or expenditure therefor, shall relieve
the Company of any default under the terms of this Agreement or in any
way obligate the Class 3 Creditors to take any further or future action
with respect thereto. The Class 3 Creditors in making any payment hereby
authorized may do so according to any xxxx, statement or estimate
procured from the appropriate public office or holder of the claim to be
discharged without inquiry into the accuracy of such xxxx, statement or
estimate or into the validity of any tax assessment, sale, forfeiture,
tax lien or title or claim. The Class 3 Creditors in performing any act
hereunder shall be the sole judge of whether the Company is required to
perform same under the terms of this Agreement. The Class 3 Creditors
are authorized to charge any depository or other account of the Company
maintained with the Class 3 Creditors for the amount of such sums and
amounts so expended.
4. Power of Attorney. In addition to any other powers of attorney
contained herein, the Company appoints the Class 3 Creditors, their nominee, or
any other person whom the Class 3 Creditors may designate as the Company's
attorney in fact, with full power, upon the occurrence and during the
continuation of any Event of Default hereunder, to endorse the Company's name
on any checks, notes, acceptances, money orders, drafts or other forms of
payment or security relating to the Collateral or other evidences of payment or
proceeds of Collateral that may come into the Class 3 Creditors' possession, to
sign the Company's name on any notices of assignment and on public records, and
to do all things necessary to carry out this Agreement. The Company hereby
ratifies and approves all acts of any such attorney and agrees that neither the
Class 3 Creditors nor any such attorney will be liable for any acts or
omissions nor for any error of judgment or mistake of fact or law other than
their gross negligence or willful misconduct. The foregoing power of attorney,
being coupled with an interest, is irrevocable until the Secured Obligations
have been fully paid and satisfied and any commitment of the Class 3 Creditors
to extend credit to the Company has terminated. The Class 3 Creditors may file
one or more financing statements disclosing its security interest in any or all
of the Collateral without the Company's signature appearing thereon. The
Company also hereby grants the Class 3 Creditors a power of attorney to execute
any such financing statements, or
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amendments and supplements to financing statements, on behalf of the Company
without notice thereof to the Company, which power of attorney is coupled with
an interest and is irrevocable until the Secured Obligations have been fully
paid and satisfied and any commitment of the Class 3 Creditors to extend credit
to the Company has terminated.
5. Defaults and Remedies. (a) The occurrence of any event of default
under the Waiver shall constitute an "Event of Default" hereunder.
(b) Upon the occurrence and during the continuation of any Event of
Default hereunder, the Class 3 Creditors shall have, in addition to all other
rights provided herein or by law, the rights and remedies of a secured party
under the Code (regardless of whether the Code is the law of the jurisdiction
where the fights or remedies are asserted and regardless of whether the Code
applies to the affected Collateral), and further the Class 3 Creditors may,
without demand and without advertisement, notice, hearing or process of law,
all of which the Company hereby waives, at any time or times, sell and deliver
any or all Collateral held by or for it at public or private sale, for cash,
upon credit or otherwise, at such prices and upon such terms as the Class 3
Creditors deem advisable, in its sole discretion. In addition to all other
sums due the Class 3 Creditors hereunder, the Company shall pay the Class 3
Creditors all costs and expenses incurred by the Class 3 Creditors, including
attorneys' fees and court costs, in obtaining, liquidating or enforcing payment
of Collateral or the Secured Obligations or in the prosecution or defense of
any action or proceeding by or against the Class 3 Creditors or the Company
concerning any matter arising out of or connected with this Agreement or the
Collateral or the Secured Obligations, including, without limitation, any of
the foregoing arising in, arising under or related to a case under the United
States Bankruptcy Code (or any successor statute), other than such costs and
expenses arising solely from the gross negligence or willful misconduct of the
Class 3 Creditors. Any requirement of reasonable notice shall be met if such
notice is personally served on or mailed, postage prepaid, to the Company in
accordance with Section 8(b) hereof at least ten (10) days before the time of
sale or other event giving rise to the requirement of such notice; however, no
notification need be given to the Company if the Company has signed, after an
Event of Default hereunder has occurred, a statement renouncing any right to
notification of sale or other intended disposition. The Class 3 Creditors shall
not be obligated to make any sale or other disposition of the Collateral
regardless of notice having been given. The Class 3 Creditors may be the
purchaser at any such sale. The Company hereby waives all of its rights of
redemption from any such sale. Subject to the provisions of applicable law,
the Class 3 Creditors may postpone or cause the postponement of the sale of all
or any portion of the Collateral by announcement at the time and place of such
sale, and such sale may, without further notice, be made at the time and place
to which the sale was postponed or the Class 3 Creditors may further postpone
such sale by announcement made at such time and place.
(c) Without in any way limiting the foregoing, the Class 3 Creditors
shall upon the occurrence and during the continuation of any Event of Default
hereunder have the right, in addition to all other rights provided herein or by
law, to take physical possession of any and all of the Collateral and anything
found therein, the right for that purpose to enter without legal process any
premises where the Collateral may be found (provided such entry be done
lawfully),
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and the right to maintain such possession on the Company's premises (the
Company hereby agreeing to lease warehouses to the Class 3 Creditors or their
designee if the Class 3 Creditors so request) or to remove the Collateral or
any part thereof to such other places as the Class 3 Creditors may desire.
Upon the occurrence and during the continuation of any Event of Default
hereunder, the Company shall, upon the Class 3 Creditors' demand, assemble the
Collateral and make it available to the Class 3 Creditors at a place designated
by the Class 3 Creditors. If the Class 3 Creditors exercise their right to
take possession of the Collateral, the Company shall also at its expense
perform any and all other steps requested by the Class 3 Creditors to preserve
and protect the security interest hereby granted in the Collateral, such as
placing and maintaining signs indicating the security interest of the Class 3
Creditors and appointing overseers for the Collateral.
(d) Failure by the Class 3 Creditors to exercise any right, remedy or
option under this Agreement or any other agreement between the Company and the
Class 3 Creditors or provided by law, or delay by the Class 3 Creditors in
exercising the same, shall not operate as a waiver; no waiver by the Class 3
Creditors shall be effective unless it is in writing and then only to the
extent specifically stated. Neither the Class 3 Creditors nor any party acting
as attorney for the Class 3 Creditors shall be liable for any acts or omissions
or for any error of judgment or mistake of fact or law other than their gross
negligence or willful misconduct. The rights and remedies of the Class 3
Creditors under this Agreement shall be cumulative and not exclusive of any
other right or remedy which the Class 3 Creditors may have.
(e) The Class 3 Creditors may enforce its rights and remedies under this
Agreement and protect and preserve the Collateral without further application
to or order of the Bankruptcy Court.
(f) Notwithstanding any other provision of this Agreement, the rights of
the Class 3 Creditors shall be subject to the rights of the holders of the
Senior Security Interest.
6. Application of Proceeds. The proceeds and avails of the Collateral at
any time received by the Class 3 Creditors after the occurrence and during the
continuation of any Event of Default hereunder shall, when received by the
Class 3 Creditors in cash or its equivalent, be applied by the Class 3
Creditors as follows:
(i) First, to the payment and satisfaction of all sums paid and
costs and expenses incurred by the Class 3 Creditors hereunder or
otherwise in connection herewith, including such monies paid or incurred
in connection with protecting, preserving or realizing upon the
Collateral or enforcing any of the terms hereof, including attorneys'
fees and court costs, together with any interest thereon (but without
preference or priority of principal over interest or of interest over
principal), to the extent the Class 3 Creditors are not reimbursed
therefor by the Company; and
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(ii) Second, to the payment and satisfaction of the remaining Secured
Obligations, whether or not then due (in whatever order the Class 3 Creditors
elect), both for interest and principal.
The Company shall remain liable to the Class 3 Creditors for any deficiency.
Any surplus remaining after the full payment and satisfaction of the foregoing
shall be returned to the Company or to whomsoever a court of competent
jurisdiction shall determine to be entitled thereto.
7. Continuing Agreement. This Agreement shall be a continuing agreement
in every respect and shall remain in full force and effect until all of the
Secured Obligations, both for principal and interest, have been fully paid and
satisfied. Upon such termination of this Agreement, the Class 3 Creditors
shall, upon the request at the expense of the Company, forthwith release their
security interest hereunder.
8. Miscellaneous. (a) This Agreement cannot be changed or terminated
orally. All of the rights, privileges, remedies and options given to the Class
3 Creditors hereunder shall inure to the benefit of its successors and assigns,
and all the terms, conditions, covenants, agreements, representations and
warranties of and in this Agreement shall bind the Company and its legal
representatives, successors and assigns, provided that the Company may not
assign its rights or delegate its duties hereunder without the Class 3
Creditors' prior written consent. The Company hereby releases the Class 3
Creditors from any liability for any act or omission relating to the Collateral
or this Agreement, except for the Class 3 Creditors' gross negligence or
willful misconduct.
(b) All communications provided for herein shall be in writing, except as
otherwise specifically provided for hereinabove, and shall be given and deemed
to have been made when served personally or when deposited in the United States
mail, postage prepaid, addressed if to the Company in c/x Xxxxxxx Xxxxxxx
Stores, Inc., 00000 Xxxx Xxxxxx Xxxx, Xxxxx, Xxxxxxxx 00000, Attention:
President, or if to the Class 3 Creditors, at Class 3 Creditors in care of
Xxxxxxxx Xxxxxxxx, Xxxxxx, Xxxxxxx & Xxxxxxxx, 000 Xxxx Xxxxxx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, or at such other address as shall be designated by any party
hereto in a written notice given to each party pursuant to this Section 8(b).
(c) In the event that any provision hereof shall be deemed to be invalid
by reason of the operation of any law or by reason of the interpretation placed
thereon by any court, this Agreement shall be construed as not containing such
provision, but only as to such locations where such law or interpretation is
operative, and the invalidity of such provision shall not affect the validity
of any remaining provisions hereof, and any and all other provisions hereof
which are otherwise lawful and valid shall remain in full force and effect.
(d) This Agreement shall be deemed to have been made in the State of
Nebraska and shall be governed by and construed in accordance with the laws of
the State of Nebraska. All terms which are used in this Agreement which are
defined in the Nebraska Uniform Commercial
11
13
Code shall have the same meanings herein as said terms do in the Nebraska
Uniform Commercial Code unless this Agreement shall otherwise specifically
provide. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning of any provision hereof.
(e) This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterpart signature pages, each
constituting an original, but all together one and the same agreement. The
Company acknowledges that this Agreement is and shall be effective upon its
execution and delivery by the Company to the Class 3 Creditors, and it shall
not be necessary for the Class 3 Creditors to execute this Agreement or any
other acceptance hereof or otherwise to signify or express their acceptance
hereof.
(f) Nothing contained in this Agreement shall in any manner affect or
impair the priority of any liens or security interests in the Collateral
heretofore granted to the Class 3 Creditors.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed as of this 31st day of January, 1997.
XXXXXXX GORDMAN 1/2 PRICE STORES, INC.
a Delaware corporation, successor by merger to
Xxxxxxx Xxxxxxx Stores, Inc., a Nebraska
corporation
By /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Its CEO
----------------------------------
XXXXX XXXXXXXXX, as agent for the
Class 3 Creditors
/s/ Xxxxx Xxxxxxxxx
--------------------------------------
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14
SCHEDULE A
LOCATIONS
Locations of Collateral (including Company's chief executive office and
principal place of business):
ADDRESS OWNER OF IMPROVEMENTS
00000 Xxxx Xxxxxx Xxxx A.G. Realty Company
Xxxxx, XX 00000
(Chief Executive Office
and principal place of business)
9202 "F' Street Company and Gordman
Xxxxx, XX 00000 Properties Company*
(Distribution Center)
*The parties acknowledge that (i) it is the intention of the Company to (a)
sell and leaseback Building 1 (both building and land) of the Distribution
Center at this address and (b) to terminate its lease of the corporate offices,
and that (ii) such contemplated sale and leaseback and lease transactions will
not be deemed to be an Event of Default under this Agreement.
15
SCHEDULE B
PERMITTED LIENS
1. Existing capitalized leases to which the Company is party to the
extent set forth in the Plan as surviving its effective date.
2. New capitalized leases entered into by the Company and purchase money
security interests (not including any assets not so financed) granted by the
Company, provided that the aggregate amount of liabilities under any such
leases entered into during any calendar year and the aggregate amount secured
by such security interests granted during such year does not exceed on a
cumulative basis $500,000.
3. The Security Agreement dated as of October 20, 1993, between the
Company and Xxxxxx Trust and Savings Bank.
4. The subrogation claim of the Xxx Xxxxxxx Fund in connection with such
Security Agreement as acknowledged in the Agreement Regarding Xxx Xxxxxxx Fund
dated as of December 13, 1996, between the Company, the Xxx Xxxxxxx Fund, and
the Estate of Xxxxxx Xxxxxxx.
5. Permitted encumbrances listed in Schedule II to the Junior Indenture
of Mortgage, Deed of Trust and Security Agreement, dated as of January 31,
1997, given by the Company to Old Republic Title Insurance Company as Trustee
for Xxxxx Xxxxxxxxx, Esq., as agent for the Class 3 Creditors.
16
SCHEDULE "C"
PROPERTY 1: The West 500 feet of the East 1,600 feet of the South Half of the
South Half of the Southwest Quarter (S1/2 S1/2 SW1/4) of
Xxxxxxx 00, Xxxxxxxx 00 Xxxxx, Xxxxx 00 Xxxx of the 6th P.M., in
the City of Omaha, in Xxxxxxx County, Nebraska, lying between the
North line of "F" Street and the South line of the Union Pacific
Railroad right-of-way (known as lane cutoff), EXCEPT the West 50
feet 4 inches thereof, being sometimes more particularly described
as follows:
Commencing at the Southeast corner of said South Half of the South
Half of the Southwest Quarter; thence Northerly, on the East line
of said South half 50.00 feet, to the North line of "F" Street;
thence Westerly on a line 50 feet North of and parallel to the
South line of said South Half (the North line of said "F" Street),
1,100.00 feet, to the Point of Beginning; thence continuing
Westerly, on a line 50.00 feet North of and parallel to the South
line of said South Half (the North line of said "F" Street), 449.67
feet; thence Northerly, on a line perpendicular to the last
described course, 443.00 feet, to the South line of the Union
Pacific Railroad right-of-way; thence Easterly, on the South line
of said Union Pacific Railroad right-of-way, 449.67 feet; thence
Southerly, on a line perpendicular to the South line of the Union
Pacific Railroad right-of-way, 443.65 feet, to the Point of
Beginning.
PROPERTY 2: That part of the South Half of the South Half of the Southwest
Quarter (S1/2 S1/2 SW1/4) of Xxxxxxx 00, Xxxxxxxx 00 Xxxxx,
Xxxxx 00 Xxxx of the 6th P.M., in the City of Omaha, in Xxxxxxx
County, Nebraska, described as follows:
Commencing at the Southeast corner of said South Half of the South
Half of the Southwest Quarter; thence Northerly, on the East line
of said South Half of the South Half of the Southwest Quarter,
50.00 feet to the North line of "F" Street; thence Westerly, on a
line 50.00 feet North of and parallel to the South line of said
South Half of the South Half of the Southwest Quarter (the North
line of said "F" Street), 1,759.67 feet, to the Southerly extension
of the West wall line of an existing building and the Point of
Beginning; thence continuing Westerly, on a line 50.00 feet North
of and parallel to the South line of said South Half of the South
Half of the Southwest Quarter (the North line of said "F" Street),
840.94 feet, to the East line of 00xx Xxxxxx; thence Northerly, on
a line 50.00 feet East of and parallel to the West line of said
South Half of the South Half of the Southwest Quarter (the East
line of said 00xx Xxxxxx), 439.43 feet, to the South line of the
Union Pacific Railroad right-of-way; thence Easterly, on the South
line of said Union Pacific Railroad right-of-way, 438.04 feet, to a
point 400.00 feet West of the West wall line of said existing
building; thence Southerly, on a line 400.00 feet West of and
parallel to the West wall line of said existing building, 189.59
feet, to the Northwest corner of a building under construction;
thence Easterly, on the North Wall line of said building under
construction, 400.00 feet, to the West wall line of said existing
building; thence Southerly, on the West wall line of said existing
building and its Southerly extension, 251.69 feet, to the Point of
Beginning;
EXCEPT that part thereof more particularly described as follows:
Beginning at the point of intersection of the East right-of-way
line of 00xx Xxxxxx and the North right-of-way line of "F" Street;
thence Northerly, along the East right-of-way line of 96th Street,
for a distance of 20.00 feet; thence Southeasterly, for a distance
of 28.28 feet, to a point on the North right-of-way line of "F"
Street; thence Westerly, along the North right-of-way of "F"
Street, for a distance of 20.00 feet, to the Point of Beginning.
17
ATTACHMENT A
Collateral
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(a) Equipment. Equipment, whether now owned or hereafter acquired (the
term "Equipment" means and includes equipment, machinery, tools, trade
fixtures, furniture, furnishings, office equipment, and data processing
equipment, in each case now or hereafter used or usable in connection with the
Company's business, together with all parts, accessories and attachments
relating to any of the foregoing), provided that Equipment shall in no event
include goods used in connection with the operation of, and located at, the
Company's corporate headquarters or operating retail stores, and further
provided that Equipment shall in no event include Equipment (a certain
compactor and a certain film processor and related equipment) securing the
claim of Norwest Equipment Finance, Inc., pursuant to the Stipulation dated
August 6, 1993, between the Debtors and Norwest Equipment Finance, Inc.;
(b) Records. Supporting evidence and documents relating to any of the
above-described property, including, without limitation, delivery and
installation certificates, invoice copies, delivery receipts, insurance
certificates and the like, together with all books of account, ledgers and
cabinets in which the same are reflected or maintained, all whether now
existing or hereafter arising;
(c) Accessions and Additions. All accessions and additions to and
substitutions and replacements of any and all of the foregoing, whether now
existing or hereafter arising; and
(d) Proceeds and Products. All proceeds and products of the foregoing
and all insurance on the foregoing and proceeds thereof, whether now existing
or hereafter arising;
