EXHIBIT 10.2
------------
FORM OF
LOAN AND SECURITY AGREEMENT
between
CASUAL MALE RETAIL GROUP, INC.
as Lender
and
LP INNOVATIONS, INC.
as Borrower
_______________________, 2002
TABLE OF CONTENTS
Page
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ARTICLE 1 INTERPRETATION................................................1
Section 1.1 Definitions...................................................1
Section 1.2 Rules of Construction.........................................4
ARTICLE 2 TERMS OF LOAN AND OBLIGATION..................................4
Section 2.1 Terms of Loan.................................................4
Section 2.2 Interest on Overdue Payments; Default Rate....................6
Section 2.3 Prepayments of Principal......................................6
Section 2.4 Time and Place of Payments....................................7
Section 2.5 Application of Funds..........................................7
Section 2.6 Payments to be Free of Deductions.............................7
ARTICLE 3 SECURITY INTERESTS; FURTHER ASSURANCES........................7
Section 3.1 Grant of Security Interest....................................7
Section 3.2 Other Collateral; Lien Perfection.............................8
Section 3.3 Further Assurances............................................8
Section 3.4 Locations of Collateral.......................................8
Section 3.5 Protection of Collateral......................................8
ARTICLE 4 REPRESENTATIONS AND WARRANTIES................................8
Section 4.1 Enforceable Obligations.......................................8
Section 4.2 No Legal Bar..................................................9
Section 4.3 Compliance with Laws; Licenses and Permits....................9
Section 4.4 Location......................................................9
Section 4.5 Organization and Qualification................................9
Section 4.6 Corporate Power and Authority.................................9
Section 4.7 Solvent Financial Condition...................................9
Section 4.8 Taxes.........................................................9
Section 4.9 Litigation...................................................10
Section 4.10 No Defaults..................................................10
Section 4.11 General Collateral Representation............................10
Section 4.12 Disclosure...................................................10
Section 4.13 Survival of Representations and Warranties...................11
ARTICLE 5 AFFIRMATIVE COVENANTS........................................11
Section 5.1 Maintenance of Property; Insurance; Licenses.................11
Section 5.2 Inspection of Property; Books and Records....................11
Section 5.3 Notices......................................................11
Section 5.4 Collateral...................................................11
Section 5.5 Further Documents............................................12
Section 5.6 Licenses and Permits.........................................12
Section 5.7 Financial Statements.........................................12
Section 5.8 Projections..................................................13
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Table of Contents
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(continued)
Page
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Section 5.9 Conversion Shares............................................13
Section 5.10 Other Information............................................13
ARTICLE 6 NEGATIVE COVENANTS...........................................13
Section 6.1 Limitation on Liens..........................................13
Section 6.2 Limitation on Sale of Assets.................................13
Section 6.3 Change of Locations..........................................13
Section 6.4 Mergers; Consolidations; Acquisitions........................14
Section 6.5 Loans........................................................14
Section 6.6 Total Indebtedness...........................................14
Section 6.7 Capital Expenditures.........................................14
Section 6.8 Operating Income.............................................14
Section 6.9 Dividends....................................................14
ARTICLE 7 EVENTS OF DEFAULT AND REMEDIES...............................14
Section 7.1 Events of Default............................................14
Section 7.2 Remedies.....................................................16
Section 7.3 Application of Proceeds......................................17
Section 7.4 Set-Off......................................................17
Section 7.5 Rights Cumulative; Waiver....................................17
ARTICLE 8 COLLECTION OF COLLATERAL AND NOTICE OF ASSIGNMENT............17
Section 8.1 Disclaimer of Liability......................................17
ARTICLE 9 MISCELLANEOUS................................................18
Section 9.1 Amendments and Waivers.......................................18
Section 9.2 Notices......................................................18
Section 9.3 Successors and Assigns.......................................18
Section 9.4 Collection Costs.............................................18
Section 9.5 Counterparts.................................................19
Section 9.6 Governing Law................................................19
Section 9.7 Consent to Jurisdiction......................................19
Section 9.8 WAIVER OF JURY TRIAL.........................................19
Section 9.9 Other Waivers................................................20
Section 9.10 Power of Attorney............................................20
Section 9.11 Indemnity....................................................20
Section 9.12 Entire Agreement.............................................20
Section 9.13 Interpretation...............................................20
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Table of Contents
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(continued)
EXHIBITS
A Form of Convertible Secured Promissory Note
SCHEDULES
Schedule 1.1 Evidence of Previous Advancements
Schedule 1.2 Permitted Liens
Schedule 3.4 Locations of Collateral
Schedule 4.2 Legal Bars
Schedule 4.4 Location, ID Number, etc.
Schedule 4.11(c) UCC Filing Locations
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FORM OF
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT (this "Agreement") is made this ____ day
of ____________, 2002, by and between CASUAL MALE RETAIL GROUP, INC. (the
"Lender"), a Delaware corporation, and LP INNOVATIONS, INC. (the "Borrower"), a
Nevada corporation.
Preliminary Statements
WHEREAS, the Borrower has been a wholly-owned subsidiary of the Lender,
and the Lender now wishes to spin-off the shares of the Borrower to the
stockholders of the Lender.
WHEREAS, the Lender has made loans to the Borrower in the aggregate total
amount of $1,000,000.00 (collectively the "Previous Advancements") each of which
loans has been itemized by _______________.
WHEREAS, the Borrower has requested that the Lender make an additional
loan (the "New Loan") to the Borrower in the amount of $500,000.00 (the "Loan
Amount").
WHEREAS, the Lender has agreed in its sole discretion that it may make the
New Loan in the Loan Amount if the Borrower enters into and delivers this Loan
and Security Agreement governing amongst other things, the making of the New
Loan, the repayment of the Previous Advancements and such New Loan and, if made,
the granting of the security interest in the Collateral to the Lender to secure
the Total Borrowings.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower hereby agrees with
the Lender as follows:
ARTICLE 1
INTERPRETATION
Section 1.1 Definitions. The following capitalized terms are defined as
follows:
"Business Day" means any day except a Saturday, Sunday or legal holiday on
which commercial banking institutions are open for business in New York City.
"Cash Flow" means, for any period of determination thereof, the following,
each calculated for such period, without duplication: (i) EBITDA, less (ii)
capital expenditures actually made in cash, less (iii) income and franchise
taxes resulting from tax payments actually made and paid in cash, less interest
paid on indebtedness (including the Total Borrowing), during such Period the
amount of cash flow of the Borrower in excess of $25,000.00.
"Collateral" has the meaning set forth in Section 3.1.
"Common Stock" means the authorized common stock of the Borrower, par
value $0.01 per share.
"Conversion Date" has the meaning set forth in Section 2.1(c)(6).
"Conversion Price" means $0.40 per share..
"Conversion Shares" has the meaning set forth in Section 2.1(c)(6).
"Default" means any event or condition the occurrence of which with giving
of notice, the lapse of time, or both, would constitute an Event of Default.
"Default Rate" means an amount equal to the Interest Rate plus two percent
(2.00%).
"Distribution" means the distribution by the Lender of the common stock of
the Borrower to stockholders of the Lender.
"Distribution Date" means the date on which the Distribution is
consummated.
"Event of Default" has the meaning set forth in Article 7 hereof.
"Excess Cash Flow" means, for any period of determination (i) Cash Flow,
minus (ii) scheduled amortization of principal and interest and mandatory
prepayments of any indebtedness (including the Total Borrowings), minus (iii)
cash dividends and distribution paid (or accrued during such period) on capital
stock as permitted hereunder, minus (iv) increases in working capital, and plus,
decreases in working capital.
"Interest Payment Dates" has the meaning set forth in Section 2.1(c)(4)
herein.
"Interest Rate" means a rate of interest equal to 12% per annum,
compounded daily.
"Lien" means in respect of property or assets, any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code or comparable law
of any jurisdiction in respect of any of the foregoing). The term "Lien" shall
include reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances.
"Loan Amount" means $500,000.00, as more particularly described in the
third "Whereas" clause of this Agreement.
"Loan Documents" means this Agreement, the Note and the documentation
listed on Schedule 1.1 hereto evidencing the Previous Advancements.
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"Maturity Date" means the one year anniversary of the Distribution Date.
"New Loan" means the new loan in the Loan Amount requested by the
Borrower.
"Note" means the convertible secured promissory note executed by the
Borrower in favor of the Lender, evidencing the Total Borrowings, such note to
be in substantially the form of Exhibit A attached hereto.
"Obligations" means, without limitation, the New Loan (if made), the
Previous Advancements, all interest thereon and all other debts, obligations, or
liabilities of every kind and description of the Borrower to the Lender, now due
or to become due, direct or indirect, absolute or contingent, presently existing
or hereafter arising, joint or several, secured or unsecured, whether for
payment or performance, regardless of how the same arise or by what instrument,
agreement or book account they may be evidenced, or whether evidenced by any
instrument, agreement or book account, including, without limitation, all loans
(including any loan by renewal or extension), all extensions and advancements of
funds, all overdrafts, all guarantees, all bankers acceptances, all agreements,
all letters of credit issued by the Lender for the Borrower and the applications
relating thereto, all indebtedness of the Borrower to the Lender, and all
undertakings to take or refrain from taking any action. Obligations shall also
include all interest and other charges chargeable to the Borrower or due from
the Borrower to the Lender from time to time and all costs and expenses referred
to in Sections 9.4.
"Operating Income" means for any period of determination, the difference
between the Borrower's revenues and the related costs and expenses; all itemized
in accordance with GAAP but excluding income derived from sources other than its
regular activities and before income deductions.
"Other Loan Documents" means all documents, instruments, financing
statements, certificates and other agreements executed in connection with the
Loan Documents but excluding such Loan Documents.
"Organizational ID Number" means the organizational identification number
assigned to Borrower by the applicable governmental unit or agency of the State
of Nevada.
"Permitted Liens" means those liens set forth on Schedule 1.2 attached
hereto.
"Person" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever nature.
"Previous Advancements" means the aggregate amount of $1,000,000.00
advanced by the Lender to the Borrower from May 14, 2002 through, but not
including, the Distribution Date as more particularly described on Schedule 1.1
hereto.
"Proceeds" has the meaning provided in the Uniform Commercial Code.
"Requirements of Law" means, with respect to any Person, any law, treaty,
rule or regulation or determination of an arbitrator or a court or other
governmental authority, in each
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case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Solvent" as to any Person, that such Person (i) owns property and assets
the fair saleable value of which is greater than the amount required to pay all
of such Person's indebtedness (including contingent debts), (ii) is able to pay
all of its indebtedness as such indebtedness matures and (iii) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
"Total Borrowings" $1,500,000, being the aggregate of the New Loan, if and
when made, and the Previous Advancements.
"Uniform Commercial Code" or "UCC" means the Uniform Commercial Code in
effect in the State of New York on the date hereof as it may be amended or
revised.
Section 1.2 Rules of Construction.
(a) Use of Capitalized Terms. For purposes of this Agreement, unless
the context otherwise requires, the capitalized terms used in this Agreement
shall have the meanings herein assigned to them, and such definitions shall be
applicable to both singular and plural forms of such terms. In addition, all
terms defined in the Uniform Commercial Code shall have the meanings given
therein unless otherwise defined herein.
(b) Construction. All references in this Agreement to the single
number and neuter gender shall be deemed to mean and include the plural number
and all genders, and vice versa, unless the context shall otherwise require.
(c) Headings. All headings and titles contained in this Agreement
are for convenience only and shall not affect the interpretation of this
Agreement.
(d) Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(e) Interpretation. This document is the result of reasoned
negotiation between the parties and should not be construed against any party.
ARTICLE 2
TERMS OF LOAN AND OBLIGATION
Section 2.1 Terms of Loan.
(a) Previous Advancements. The Borrower acknowledges the receipt of
the Previous Advancements and its obligation to repay such loans in accordance
with the terms of this Agreement, and hereby agrees to repay such Previous
Advancements in accordance with the
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terms hereof. Any reference in this Agreement to the Total Borrowings shall
include the Previous Advancements.
(b) New Loan. Subject to and upon the terms and conditions of and in
reliance upon the representations and warranties made in this Agreement, the
Lender hereby agrees that it may, in its sole discretion, make the New Loan
available to the Borrower in the Loan Amount on the Distribution Date or any
later date. Such New Loan, if made, shall be deposited to account number _______
at __________. Such New Loan shall be used solely for the working capital
requirements of the Borrower following the Distribution.
(c) Obligations of the Borrower. Subject to and upon the terms and
conditions of this Agreement, the Borrower hereby agrees to repay the Total
Borrowings to the Lender on the earlier to occur of the due date therefor or the
Maturity Date. The absolute and unconditional obligation of the Borrower to
repay the Total Borrowings and interest thereon shall be evidenced by the Note.
The Note shall include the following terms:
(1) Amount. The face amount of the Note shall equal the Total
Borrowings;
(2) Term. The Note shall be dated as of the date hereof and
shall mature and be due and payable in full on, or before
(upon acceleration of the Note in accordance with the terms
hereof), the Maturity Date;
(3) Interest Rate. The Note shall bear interest (computed on the
basis of the actual number of days elapsed over a 360-day
year) on the daily outstanding principal balance thereunder
at the Interest Rate;
(4) Interest Payment Dates. Interest on the Note shall be due
and payable on the first Business Day of each month,
commencing on the Distribution Date and on the date the
Total Borrowings are due whether by maturity, acceleration
or otherwise (each an "Interest Payment Date");
(5) Principal Payment. Other than as specified with respect to
prepayments in Section 2.3 hereof, the Borrower shall pay to
the order of the Lender, in lawful money of the United
States of America, the aggregate unpaid principal amount of
the Total Borrowings on the Maturity Date, without any
action being taken on the part of the Lender and in
accordance with Section 2.4 hereof; and
(6) Convertibility. At any time during normal business hours
following the date hereof, the Lender, at its sole option
and discretion, upon five (5) days' prior notice to
Borrower, shall be entitled to convert all or any part of
the principal amount outstanding under the Note into Common
Stock of the Borrower at the Conversion Price (the
"Conversion Shares"). In the event that the Lender notifies
Borrower of its decision to convert a portion only of such
outstanding principal amount of the Note, the Borrower shall
execute and deliver to Lender
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a new convertible secured promissory note, substantially
similar to the Note and reflecting the reduced principal
amount then due hereunder. Simultaneously with the delivery
of such new convertible secured promissory note, the
Borrower shall also deliver to the Lender the stock
certificates representing the Conversion Shares. Upon the
issuance of any Conversion Shares, the Obligations of the
Borrower under the Note shall be satisfied to the full
extent of the value of such Conversion Shares.
Section 2.2 Interest on Overdue Payments; Default Rate. (a) If any payment
of interest or principal is not paid when due for any period (after expiration
of any applicable grace period), the interest rate for the applicable period
shall be calculated at the Default Rate.
(b) Upon the occurrence and during the continuance of any Event of
Default, the outstanding principal and all accrued interest as well as any other
charges due the Lender hereunder or under the Note, shall bear interest from the
date on which such amount shall have first become due and payable to the Lender
(or, in the case of other charges due the Lender hereunder, five (5) Business
Days after demand therefor by the Lender) to the date on which such amount shall
be paid to the Lender (whether before or after judgment), at the Default Rate.
Upon the occurrence and during the continuance of any Event of Default, any
accrued and unpaid interest shall become and be absolutely due and payable to
the Lender, on demand, at any time. Interest will continue to accrue until the
Obligations are discharged (whether before or after judgment) in full.
Section 2.3 Prepayments of Principal.
(a) Mandatory Prepayments. The Borrower shall mandatorily and
immediately prepay the Total Borrowings, in part or in full, to the extent
applicable, in any and/or all of the following circumstances:
(1) Upon any partial or full sale or encumbrance by the Borrower
of any Collateral, the Borrower shall make a mandatory
prepayment to Lender in an amount equal to the total amount
realized from such sale or the value of such encumbrance;
(2) Upon any sale of equity securities by the Borrower, the
Borrower shall make a mandatory prepayment to the extent the
net proceeds thereof exceed $500,000.00; and
(3) Upon the realization by the Borrower of Excess Cash Flow,
the Borrower shall make a mandatory prepayment in an amount
equal to such Excess Cash Flow.
(b) Voluntary Prepayments. The Borrower may voluntarily prepay,
without premium or penalty, the Total Borrowings in part or in full at any time
upon notice to the Lender of at least five (5) days prior to the specified
prepayment date.
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Section 2.4 Time and Place of Payments. Notwithstanding anything in the
Loan Documents to the contrary, each payment payable by the Borrower to the
Lender under this Agreement or the Note shall be made directly by wire transfer
to an account of the Lender at __________, or such other place as may be
designated by the Lender, not later than 12:00 p.m. local time, on the due date
of each such payment in immediately available funds.
Section 2.5 Application of Funds. Notwithstanding anything in this Article
2 to the contrary, the funds received by the Lender shall be applied toward the
Obligations as follows: first, to the payment of all fees, charges and other
sums (with the exception of principal and interest) due and payable to the
Lender under the Note or this Agreement at such time including, without
limitation, all reasonable and necessary costs, expenses, disbursements and
losses which shall have been incurred or sustained by the Lender in the
collection of the Obligations hereunder (including attorneys fees) or the
exercise, protection, or enforcement by the Lender of all or any of the rights,
remedies, powers and privileges of the Lender under this Agreement, the Note, or
any of the other Loan Documents and in and towards the provision of adequate
indemnity to the Lender against all taxes or Liens which by law shall have, or
may have priority over the rights of the Lender in and to such funds; second, to
the payment of interest which shall be due and payable on the principal of the
Note; third, to the payment of principal on the Note; and fourth, the surplus
remaining (if any), to the Borrower or such other Person or Persons as may be
determined by the Borrower or any court of competent jurisdiction.
Section 2.6 Payments to be Free of Deductions. Each payment payable to the
Lender under this Agreement or the Note, shall be made in accordance with
Section 2.4 hereof, without set-off or counterclaim and free and clear of and
without any deduction of any kind for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, restrictions or conditions of any
nature now or hereafter imposed or levied as a result of any change in law or
regulation or any change in the interpretation or application of any existing
law by any political subdivision or any taxing or other authority therein,
unless the Borrower is compelled by law to make any such deduction or
withholding
ARTICLE 3
SECURITY INTERESTS; FURTHER ASSURANCES
Section 3.1 Grant of Security Interest. To secure the prompt payment and
performance of all of the Obligations under the Loan Documents, the Borrower
hereby grants to the Lender a continuing security interest in and assigns to the
Lender all of the Borrower's assets or property whether real, personal or mixed,
or tangible or intangible, wheresoever located, now owned or hereafter acquired
by the Borrower, including without limitation, all Accounts, Certificated
Securities, Chattel Paper, Contract Rights, Deposit Accounts, Documents,
Equipment, Financial Assets, Fixtures, General Intangibles, Goods, Instruments,
Inventory, Investment Property, Security Entitlements, Uncertificated
Securities, Commercial Tort Claims, Software, Letter of Credit Rights and all
Proceeds thereof (as each such defined term is defined in the UCC) and to the
extent not included in the foregoing, all property and assets of any kind or
description owned by Borrower, all of such assets and property being
collectively hereinafter the "Collateral."
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Section 3.2 Other Collateral; Lien Perfection. Borrower shall promptly
notify Lender in writing upon acquiring or otherwise obtaining any New
Collateral and, upon the request of Lender, will promptly execute such other
documents, and do such other acts or things deemed appropriate by Lender to
deliver to Lender a perfected security interest in such Collateral. Borrower
shall execute such UCC-1 financing statements as are required by the UCC and
such other instruments, assignments or documents as are necessary to perfect
Lender's Lien upon any of the Collateral and shall take such other action as may
be required to perfect or to continue the perfection of Lender's Lien upon the
Collateral. Unless prohibited by applicable law, Borrower hereby irrevocably
authorizes Lender to execute and file any such financing statements, including,
without limitation, financing statements that indicate the Collateral (i) as
being all assets of Borrower or words of similar effect, or (ii) as being of an
equal or lesser scope, or with greater or lesser detail, than as set forth in
Section 3.1, on Borrower's behalf. The parties agree that a photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement and may be filed in any appropriate office in lieu thereof.
Section 3.3 Further Assurances. At Lender's request, Borrower shall
promptly execute or cause to be executed and shall deliver to Lender any and all
documents, certificates, instruments and agreements deemed necessary by Lender
to give effect to, or carry out, the terms or intent of the Loan Documents,
including, without limitation, the perfection of Lender's security interest in
the Collateral and the issuance to Lender of the Conversion Shares in full or
partial settlement of the Obligations.
Section 3.4 Locations of Collateral. All Collateral, will at all times be
kept by Borrower at the business locations set forth in Schedule 3.4 hereto and
shall not, without the prior written approval of Lender, be moved therefrom.
Section 3.5 Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral, any
and all excise, property, sales, and use taxes imposed by any state, federal, or
local authority on any of the Collateral or in respect of the sale thereof shall
be borne and paid by Borrower. If Borrower fails to promptly pay any portion
thereof when due, Lender may, at its option, but shall not be required to, pay
the same and charge Borrower therefor. Lender shall not be liable or responsible
in any way for the safekeeping of any of the Collateral or for any loss or
damage thereto (except for reasonable care in the custody thereof while any
Collateral is in Lender's actual possession) or for any diminution in the value
thereof, or for any act or default of any warehouseman, carrier, forwarding
agency, or other person whomsoever, but the same shall be at Borrower's sole
risk.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and make the
New Loan, the Borrower hereby represents and warrants to the Lender that:
Section 4.1 Enforceable Obligations. This Agreement and the Note have been
duly executed and delivered on behalf of the Borrower, and constitute the legal,
valid and binding obligation of the Borrower, enforceable against it in
accordance with their terms, except as
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enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
Section 4.2 No Legal Bar. Except as set forth on Schedule 4.2 attached
hereto, the execution, delivery and performance of this Agreement, the Note, and
the other Loan Documents and the consummation of the transactions contemplated
thereby, will not (i) violate any Requirements of Law, or (ii) conflict with or
result in a breach of the terms or provisions of, or constitute a default under,
or (except as otherwise contemplated and required or permitted by any of the
Loan Documents) result in the creation of any Lien, under any material
contractual obligation of the Borrower.
Section 4.3 Compliance with Laws; Licenses and Permits. The Borrower is in
compliance with all Requirements of Law and possesses all licenses and permits
required for the operation of the Collateral.
Section 4.4 Location. Schedule 4.4 attached hereto lists the Borrower's
exact legal name, principal place of business, and the Borrowers Organizational
I.D. Number and federal tax identification number. The Borrower will not change
any of the foregoing, absent Lender's prior written consent.
Section 4.5 Organization and Qualification. Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Borrower is duly qualified and is authorized
to do business and is in good standing as a foreign corporation in each state or
jurisdiction listed on Schedule 4.5 hereto and in all other states and
jurisdictions in which the failure of Borrower to be so qualified would have a
material adverse effect on the financial condition, business or properties and
assets of Borrower .
Section 4.6 Corporate Power and Authority. Borrower is duly authorized and
empowered to enter into, execute, deliver and perform this Agreement and each of
the other Loan Documents. The execution, delivery and performance of this
Agreement and each of the other Loan Documents have been duly authorized by all
necessary corporate action and do not and will not (i) require any consent or
approval of the shareholders; (ii) contravene Borrower's articles or certificate
of incorporation or by-laws; (iii) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease or
instrument to which Borrower is a party or by which it or its properties and
assets may be bound or affected.
Section 4.7 Solvent Financial Condition. Borrower is now and, after giving
effect to the New Loan to be made hereunder, at all times will be, Solvent.
Section 4.8 Taxes. Borrower has filed all federal, state and local tax
returns and other reports it is required by law to file and has paid, or made
provision for the payment of, all taxes, assessments, fees, levies and other
governmental charges upon it, its income, properties and assets as and when such
taxes, assessments, fees, levies and charges are due and payable, unless and to
the extent any thereof are being actively contested in good faith and by
appropriate proceedings and Borrower maintains reasonable reserves on its books
therefor. The provision for
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taxes on the books of Borrower are adequate for all years not closed by
applicable statutes, and for its current fiscal year.
Section 4.9 Litigation. Except as set forth on Schedule 4.9 hereto, there
are no actions, suits, proceedings or investigations pending, or to the
knowledge of Borrower, threatened, against or affecting Borrower, or the
business, operations, properties, assets prospects, profits or condition of
Borrower. The Borrower is not in default with respect to any order, writ,
injunction, judgment, decree or rule of any court, governmental authority or
arbitration board or tribunal.
Section 4.10 No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or
Borrower's performance hereunder, constitute a Default or an Event of Default.
Section 4.11 General Collateral Representation.
(a) The Borrower is and at all times will be the sole owner of and
have good title to the Collateral, free from all Liens, in favor of any Person
other than the Permitted Liens, and has full right and power to grant the Lender
a security interest therein. All information furnished to the Lender concerning
the Collateral is and will be complete, accurate and correct in all respects
when furnished;
(b) No security agreement, financing statement, equivalent security
or Lien instrument or continuation statement covering all or any part of the
Collateral is on file or of record in any public office, except such as may have
been filed (i) by the Borrower in favor of the Lender pursuant to this
Agreement, or (ii) in respect of the items of Collateral subject to the
Permitted Liens; and
(c) The provisions of this Agreement are sufficient to create in
favor of the Lender, from and after the date hereof, a valid and continuing lien
on, and security interest in, the types of the Collateral hereunder in which a
security interest may be created under Article 9 of the UCC. Financing
Statements on Form UCC-1 have been duly executed on behalf of the Borrower and
the description of such Collateral set forth therein is sufficient to perfect
security interests in such Collateral in which a security interest may be
perfected by the filing of financing statements under the UCC. When such
financing statements are duly filed in the filing offices listed on Schedule
4.5(c) hereto, and the requisite filing fees are paid, such filings will be
sufficient to perfect the security interests in such of the Collateral described
in the financing statements as can be perfected by filing, which perfected
security interests will be prior to all other Liens in favor of others and
rights of others except for Permitted Liens, enforceable as such against
creditors of and purchasers from the Borrower. All action necessary to protect
and perfect a security interest in each item of the Collateral (excluding cash
and cash equivalents not constituting Proceeds) in which a security interest may
be perfected under Article 9 of the UCC has been duly taken, except that a
security interest in cash and cash equivalents not in the possession of the
Lender is not perfected.
Section 4.12 Disclosure. No representation or warranty made by the
Borrower in this Agreement or in any other document furnished or to be furnished
from time to time in
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connection herewith or therewith contains or will contain any misrepresentation
of a material fact or omits or will omit to state any material fact necessary to
make the statements herein or therein not misleading.
Section 4.13 Survival of Representations and Warranties. The foregoing
representations and warranties are made by the Borrower with the knowledge and
intention that the Lender will rely thereon, and shall survive the execution and
delivery of this Agreement. Such representations and warranties shall be
continuous in nature and shall remain accurate, complete and not misleading
during the term of this Agreement, except for changes to which Lender consents
in writing.
ARTICLE 5
AFFIRMATIVE COVENANTS
So long as any amount due on the Note remains outstanding and unpaid or
any other Obligation is owing to the Lender, the Borrower agrees as follows:
Section 5.1 Maintenance of Property; Insurance; Licenses. To the extent
applicable, the Borrower shall keep the Collateral in good working order and
condition, ordinary wear and tear excepted; maintain all workers' compensation
insurance required by law; maintain with financially sound and reputable
insurance companies insurance on the Collateral and liability insurance with
respect to its activities against at least such risks as are usually insured
against in the same general area by companies engaged in the same or a similar
business or use of Equipment similar to the Collateral, or, in case of an Event
of Default which shall occur and be continuing, as the Lender may specify from
time to time, with insurers and in amounts acceptable to the Lender; and furnish
to the Lender, upon written request, full information as to the insurance
carried. Such insurance, other than Workers' compensation insurance shall name
the Lender as additional insured or loss payee, as the case may be.
Section 5.2 Inspection of Property; Books and Records. The Borrower grants
to the Lender, or its representatives, upon reasonable notice (or no notice if
the Lender believes that an Event of Default has occurred and deems it necessary
for the protection of the Collateral or its rights under this Agreement), full
and complete access to the Collateral and all books of account, records,
correspondence and other papers relating to the Collateral during normal
business hours and the right to inspect, examine, verify and make abstracts from
the copies of such books of account, records, correspondence and other papers
and discuss the contents thereof and Borrowers business and financial condition
and prospects with officers of the Lender.
Section 5.3 Notices. The Borrower shall promptly give notice to the Lender
of (i) any breach of any representation or warranty and (ii) the occurrence of
any Default or Event of Default setting forth the details of the Default or
Event of Default and any action taken or contemplated to be taken with respect
to the same.
Section 5.4 Collateral. The Borrower shall maintain the Collateral, as the
same is constituted from time to time, free and clear of all Liens, except
Permitted Liens; defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any
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interest therein and pay all costs and expenses (including reasonable attorney's
fees) incurred in connection with such defense.
Section 5.5 Further Documents. The Borrower shall execute such further
documents and instruments and take such other action as to enable the Lender to
cause the Lender's Lien to be noted on each document of ownership or title as to
which evidence of the Lender's Lien is necessary or, in the Lender's or the
Lender's counsel's opinion, advisable to be shown in order to perfect the
Lender's Lien on the Collateral covered by such document.
In addition, the Borrower shall promptly pay all necessary filing,
subscription and inscription fees and all recording and other similar fees, and
all taxes and other expenses related to such filings, registrations or
recordings.
After the date hereof, at the request of the Lender, the Borrower shall
pay, upon demand, all expenses (including reasonable attorneys' fees) incurred
by the Lender in connection herewith and the other Loan Documents including,
protecting the Collateral or exercising any rights in connection therewith.
Section 5.6 Licenses and Permits. The Borrower shall maintain all licenses
and permits applicable to the Collateral.
Section 5.7 Financial Statements. The Borrower shall keep adequate records
and books of account with respect to its business activities in which proper
entries are made in accordance with GAAP reflecting all its financial
transactions; and cause to be prepared and furnished to Lender the following
(all to be prepared in accordance with GAAP applied on a consistent basis,
unless Borrower's certified public accountants concur in any change therein and
such change is disclosed to Lender and is consistent with GAAP):
(i) not later than ninety (90) days after the close of each fiscal
year of Borrower, unqualified, audited financial statements of Borrower as
of the end of such year, certified by a firm of independent certified
public accountants of recognized standing selected by Borrower but
acceptable to Lender (except for a qualification for a change in accounting
principles with which the accountant concurs);
(ii) not later than thirty (30) days after the end of each quarter
hereafter, including the last month of Borrower's fiscal year, unaudited,
interim financial statements of Borrower as of the end of such quarter and
of the portion of Borrower's financial year then elapsed, certified by the
principal financial officer of Borrower as prepared in accordance with GAAP
and fairly presenting the financial position and results of operations of
Borrower for such period subject only to changes from audit and year-end
adjustments and except that such statements need not contain notes;
(iii) promptly after the sending or filing thereof, as the case may
be, copies of any proxy statements, financial statements or reports or
other communications which Borrower has made available to its shareholders;
and
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(iv) such other data and information (financial and otherwise) as
Lender, from time to time, may reasonably request, bearing upon or related
to this Agreement, the Collateral or Borrower's financial condition,
prospects or results of operations.
Concurrently with the delivery of the financial statements described
in clause (i) of this subsection 5.7, Borrower shall forward to Lender a copy of
the accountants' letter to Borrower's management that is prepared in connection
with such financial statements and also shall cause to be prepared and shall
furnish to Lender a certificate of the aforesaid certified public accountants
certifying to Lender that, based upon their examination of the financial
statements of Borrower performed in connection with their examination of said
financial statements, they are not aware of any Default or Event of Default, or,
if they are aware of such Default or Event of Default, specifying the nature
thereof, and acknowledging, in a manner satisfactory to Lender, that they are
aware that Lender is relying on such financial statements.
Section 5.8 Projections. No later than thirty (30) days prior to the end
of each fiscal year of Borrower, Borrower shall deliver to Lender financial
projections of Borrower for the forthcoming three (3) years, year by year, and
for the forthcoming fiscal year, month by month, with appropriate supporting
documentation.
Section 5.9 Conversion Shares. Any Conversion Shares issued hereunder
shall, when issued, be duly and validly authorized, validly issued, fully paid
and non-assessable and free of any Lien.
Section 5.10 Other Information. The Borrower shall furnish to the Lender
such other information and reports in form and substance satisfactory to the
Lender as and when the Lender may from time to time reasonably request.
ARTICLE 6
NEGATIVE COVENANTS
The Borrower covenants and agrees with the Lender and warrants that, as
long as the Total Borrowings shall remain unpaid:
Section 6.1 Limitation on Liens. The Borrower shall not create, incur,
assume or suffer to exist any Lien upon any of the Collateral, except for the
Permitted Liens.
Section 6.2 Limitation on Sale of Assets. The Borrower shall not convey,
sell, lease, assign, transfer or otherwise dispose of any of the Collateral,
absent the written consent of the Lender and upon such sale or disposition, the
proceeds thereof shall be paid to Lender.
Section 6.3 Change of Locations. The Borrower shall not remove the
Collateral from the location or jurisdiction set forth in Schedule 3.11; unless
(a) the Borrower gives the Lender prior written consent thereto (which consent
shall not be unreasonably withheld); and (b) a financing statement covering such
location of the Collateral is on file and of record in the appropriate
governmental office creating a valid first lien and security interest in the
Collateral in favor of the Lender.
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Section 6.4 Mergers; Consolidations; Acquisitions. The Borrower shall not
merge or consolidate, with any Person; nor acquire, all or any substantial part
of the properties or assets of any Person.
Section 6.5 Loans. The Borrower shall not make any loans or other advances
of money (other than for salary, travel advances, advances against commissions
and other similar advances in the ordinary course of business) to any Person.
Section 6.6 Total Indebtedness. The Borrower shall not create, incur,
assume, or suffer to exist, any indebtedness, except:
(i) Obligations owing to Lender;
(ii) Indebtedness existing on the date of this Agreement and disclosed
to Lender in writing;
(iii) Accounts payable to trade creditors and current operating
expenses which are not aged more than sixty (60) days from billing date or
more than thirty (30) days from the due date, in each case incurred in the
ordinary course of business and paid within such time period, unless the
same are being actively contested in good faith and by appropriate and
lawful proceedings; and Borrower shall have set aside such reserves, if
any, with respect thereto as are required by GAAP and deemed adequate by
Borrower and its independent accountants; and
(iv) Indebtedness not included in paragraphs (i) through (iii) above
which does not exceed at any time, in the aggregate, the sum of
$250,000.00.
Section 6.7 Capital Expenditures. The Borrower shall not make capital
expenditures (including, without limitation, by way of capitalized leases)
which, in the aggregate, exceed $250,000.00 during any fiscal year.
Section 6.8 Operating Income. The Borrower shall have a quarterly
Operating Income of not less than $250,000.00 and its annual Operating Income
shall not be less than $100,000.00. In addition, Borrower shall provide to
Lender promptly at the end of each fiscal quarter and year, as applicable, an
analysis of the quarterly and/or annual operating income statements and all
requested supporting documentation.
Section 6.9 Dividends. The Borrower shall not make, pay or declare any
dividend or other distribution on the Capital Stock of Borrower, absent Lender's
prior written consent.
ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default:
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(a) Payments. Failure by the Borrower to pay any interest on the
Note within five (5) Business Days of when it is due and payable or declared due
and payable, as the case may be or failure by the Borrower to pay any principal
on the Note on the date on which it is due and payable or declared due and
payable, as the case may be.
(b) Commencement of Bankruptcy or Reorganization Proceeding.
(1) The Borrower shall commence any case, proceeding or other
action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or
seeking to adjudicate it as bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, wind-up,
liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its assets; or
(2) There shall be commenced against the Borrower any such case,
proceeding or other action which results in the entry of an
order for relief or any such adjudication or appointment or
remains undismissed, undischarged or unbonded for a period
of thirty (30) days; or
(3) There shall be commenced against the Borrower any case,
proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against
all or any substantial part of its assets which results in
the entry of an order for any such relief which shall not
have been vacated, discharged, or stayed or bonded pending
appeal within thirty (30) days from the entry thereof.
(c) Assignments and Delegations. Any attempt by the Borrower to
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Lender.
(d) Misrepresentations. Any representation or warranty herein or in
any certificate or instrument finished by Borrower to Lender pursuant to this
Agreement, proves to have been false or misleading in any material respect.
(e) Covenants. Borrower fails to perform or observe any covenant or
agreement contained herein or in any Loan Document and such failure continues
unremedied ten (10) days from the date on which the Borrower first became aware
of such failure.
(f) Collateral. Any material loss, destruction or theft of any of
the Collateral not fully covered by insurance.
(g) Material Adverse Change. There shall occur any material adverse
change in Borrower's financial condition or prospects.
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(h) Ownership. The stockholders of Lender, as of the Distribution
Date, shall cease to own and control at least 51% of the issued and outstanding
stock of Borrower.
(i) Other Defaults. There shall occur any default or event of
default on the part of Borrower under any agreement, document or instrument to
which Borrower is a party or by which Borrower or any of its assets or property
is bound, creating or relating to any indebtedness (other than the Obligations)
if the payment or maturity of such indebtedness is accelerated in consequence of
such event of default or demand for payment of such indebtedness is made.
Section 7.2 Remedies. Upon the occurrence of an Event of Default described
in this Article 7, the Lender, at its option, may:
(a) declare the Obligations of the Borrower immediately due and
payable, without presentment, notice, protest or demand of any kind for the
payment of all or any part of the Obligations (all of which are expressly waived
by the Borrower) and exercise all of its rights and remedies against the
Borrower and any Collateral provided herein or in any other agreement between
the Borrower and the Lender, and
(b) exercise all rights granted to a secured party under the Uniform
Commercial Code or otherwise, provided, that upon the occurrence of an Event of
Default described in Section 7.1(b) above, all of the Obligations shall become
automatically due and payable without declaration, notice or demand by Lender.
Upon the occurrence and during the continuance of an Event of Default, the
Lender shall have the right, without notice of advertisement, to sell, lease, or
otherwise dispose of all or any part of the Collateral in the name of the
Borrower, or the Lender, or in the name of such other party as the Lender may
designate, either at public or private sale or at any broker's board, in lots or
in bulk, for cash or for credit, with or without warranties or representations,
and upon such other terms and conditions as the Lender, in its sole discretion,
may deem advisable, and the Lender shall have the right to purchase at any such
sale. If any such Collateral shall require rebuilding, repairing, maintenance or
preparation, the Lender shall have the right, at its option, to do such of the
aforesaid as is necessary, for the purpose of putting such Collateral in such
saleable form as the Lender shall deem appropriate. The Borrower agrees, at the
request of the Lender but at Borrower's expense, to assemble such Collateral and
to make it available to the Lender, at its direction, either at the Lender's
place of residence, at the premises of the Borrower or such other place the
Lender may direct and to make available to the Lender the premises and
facilities of the Borrower for the purpose of the Lender's taking possession of,
removing or putting such Collateral in saleable form. However, if notice of
intended disposition of any Collateral is required by law, it is agreed that ten
(10) Business Days' notice shall constitute reasonable notification and full
compliance with the law. The net cash proceeds resulting from the Lender's
exercise of any of the foregoing rights (after deducting all charges, costs and
expenses including reasonable attorneys' fees) shall be applied by the Lender to
the payment of the Obligations, whether due or to become due, as provided in
Section 2.5. The Borrower shall remain liable to the Lender for any
deficiencies, and the Lender in turn agrees to remit to the Borrower, or its
successors or assigns, any surplus resulting therefrom. The enumeration of the
foregoing rights
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is not intended to be exhaustive and the exercise of any right shall not
preclude the exercise of any other rights, all of which shall be cumulative.
Section 7.3 Application of Proceeds. The Lender shall apply the proceeds
of any disposition of the Collateral to the payment of the Obligations in
accordance with the provisions of Section 2.5 hereof.
Section 7.4 Set-Off. The Lender shall have the right, without prior notice
to the Borrower, any such notice being expressly waived to the extent permitted
by applicable law, to set-off and apply against the payment of the Obligations,
whether matured or unmatured, any amount owing from the Lender to the Borrower
at, or at any time after, the happening of any Event of Default, and such right
of set-off may be exercised by the Lender against the Borrower or against any
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, custodian or execution, judgment or attachment creditor of
the Borrower, or against anyone else claiming through or against the Borrower or
such trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receivers, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by the Lender prior to the making, filing or issuance, or service upon
the Lender of, or of notice of, any such petition, assignment for the benefit of
creditors, appointment or application for the appointment of a receiver, or
issuance of execution, subpoena, order or warrant.
Section 7.5 Rights Cumulative; Waiver. The rights, options and remedies of
the Lender shall be cumulative and no failure or delay by the Lender in
exercising any right, option or remedy shall be deemed a waiver thereof or of
any other right, option or remedy, or waiver of any Event of Default hereunder,
nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy hereunder. The Lender shall not be deemed to have waived
any of the Lender's rights hereunder or under any other agreement, instrument or
paper signed by the Borrower unless such waiver shall be in writing and signed
by the Lender in accordance with the provisions hereof.
ARTICLE 8
COLLECTION OF COLLATERAL AND NOTICE OF ASSIGNMENT
Section 8.1 Disclaimer of Liability. The Lender shall not, under any
circumstances, be liable for any error or omission or delay of any kind
occurring in the settlement, collection or payment of any of the Collateral or
any instruments received in payment thereof or for any damage resulting
therefrom, unless caused by the Lender's willful acts or gross negligence. The
Lender shall not be liable for or prejudiced by any loss, depreciation or other
damage to the Collateral unless caused by the Lender's willful, malicious or
gross negligence act, and the Lender shall have no duty to take any action to
preserve or collect any of the Collateral.
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ARTICLE 9
MISCELLANEOUS
Section 9.1 Amendments and Waivers. The Borrower and the Lender may amend
this Agreement or the Note, and the Lender may waive future compliance by the
Borrower with any provision of this Agreement or the Note, but no such amendment
or waiver shall be effective unless in a written instrument executed by an
authorized officer of the Lender and the Borrower.
Section 9.2 Notices. All notices, consents, requests and demands to or
upon the respective parties hereto shall be in writing and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered by hand, or when deposited in the mail, postage prepaid, or, in the
case of telex, telegraphic or telecopy notice, when sent, addressed as follows:
If to the Lender: Casual Male Retail Group, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: General Counsel/Chief Financial Officer
Fax: _______________________
If to the Borrower: LP Innovations, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: President/Chief Financial Officer
Fax: _______________________
Notices of changes of address shall be given in the same manner.
Section 9.3 Successors and Assigns. This Agreement will be binding upon
and inure to the benefit of the Borrower, the Lender and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Lender. Such consent may be refused for any reason or no reason
at all. Any attempt by the Borrower to transfer any of its rights or obligations
under this Agreement without the prior written consent of the Lender will be
null and void and shall constitute an Event of Default under Section 7.1. If the
Lender transfers its Note and its rights under this Agreement, then the Lender
shall be relieved and released from its obligations hereunder.
Section 9.4 Collection Costs. All reasonable costs and expenses incurred
by the Lender to obtain, enforce or preserve the security interests granted by
this Agreement and to collect the Obligations, including, without limitation,
all reasonable out-of-pocket costs, all reasonable costs to maintain and
preserve the Collateral and all reasonable attorneys' fees and legal expenses
incurred in obtaining or enforcing payment of any of the Obligations or
foreclosing the Lender's security interest in any of the Collateral, whether
through judicial proceedings or otherwise, or in enforcing or protecting its
rights and interests under this Agreement or under any other instrument or
document delivered pursuant hereto, or in protecting
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the rights of any holder or holders with respect thereto, or in defending or
prosecuting any actions or proceedings arising out of or relating to the
Lender's transactions with the Borrower, shall be paid by the Borrower to the
Lender, upon demand, and the Lender may take judgment against the Borrower for
all such costs, expense and fees in addition to all other amounts due from the
Borrower hereunder.
Section 9.5 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
Section 9.6 Governing Law. This Agreement and the Note and the rights and
obligations of the parties under this Agreement and the Note is governed by, and
shall be construed and interpreted in accordance with, the laws of the State of
New York, without regard to New York choice of law provisions.
Section 9.7 Consent to Jurisdiction. The Borrower hereby absolutely and
irrevocably consents and submits to the jurisdiction of the courts of the State
of New York and of any federal court located in the said state in connection
with any actions or proceedings brought against the Borrower by the Lender
arising out of or relating to this Agreement, the Note or any other Loan
Documents. The Borrower hereby waives and shall not assert in any such action or
proceeding, in each case, to the fullest extent permitted by applicable law, any
claim that (a) the Borrower is not personally subject to the jurisdiction of any
such court, (b) the Borrower is immune from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to it or its property, (c) any such suit,
action or proceeding is brought in an inconvenient forum, (d) the venue of any
such suit, action or proceeding is improper, or (e) this Agreement, the Note or
any Loan Document may not be enforced in or by any such court. In any such
action or proceeding, the Borrower hereby absolutely and irrevocably waive
personal service of any summons, complaint, declaration or other process and
hereby absolutely and irrevocably agree that the service thereof may be made as
the Lender may elect, by certified mail directed to the Borrower at the location
provided for notices to the Borrower under this Agreement or, in the
alternative, in any other form or manner permitted by law. The Borrower hereby
agrees that they will appear or answer any such summons, complaint, declaration
or other process so served upon them within thirty (30) days after receipt of
notice thereof. Any action brought by the Borrower in connection with this
Agreement or the transactions contemplated hereby shall be brought in any state
or federal court sitting in the State of New York. Anything hereinbefore to the
contrary notwithstanding, the Lender hereof may xxx the Borrower in the courts
of any other country, state of the United States or place where the Borrower or
any of the property or assets may be found or in any other appropriate
jurisdictions.
Section 9.8 WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED INDUCEMENT
FOR THE LENDER TO MAKE CREDIT AVAILABLE TO THE BORROWER, AND AFTER HAVING THE
OPPORTUNITY TO CONSULT ITS ADVISORS AND COUNSEL, THE BORROWER HEREBY EXPRESSLY
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO THIS
AGREEMENT OR ARISING IN ANY WAY FROM THE OBLIGATIONS.
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Section 9.9 Other Waivers. The Borrower waives notice of nonpayment,
demand, notice of demand, presentment, protest and notice of protest with
respect to the Obligations, or notice of acceptance hereof, notice of the Loan
made or Previous Advances extended, credit extended, Collateral received or
delivered, or any other action taken in reliance hereon, and all other demands
and notices of any description, except such as are expressly provided for
herein.
Section 9.10 Power of Attorney. Borrower hereby irrevocably designates,
makes, constitutes and appoints Lender (and all Persons designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact) and Lender, or Lender's
agent, may, without notice to Borrower at any time, after the occurrence of an
Event of Default, and in either Borrower's or Lender's name, but at the cost and
expense of Borrower act and perform under this Agreement and the other Loan
Documents as the Lender sees fit in its sole discretion.
Section 9.11 Indemnity. Borrower hereby agrees to indemnify Lender and
hold Lender harmless from and against any liability, loss, damage, suit, action
or proceeding ever suffered or incurred by Lender (including reasonable
attorneys fees and legal expenses) as the result of Borrower's failure to
observe, perform or discharge Borrower's duties hereunder. In addition, Borrower
shall defend Lender against and save it harmless from all claims of any Person
with respect to the Collateral. Without limiting the generality of the
foregoing, these indemnities shall extend to any claims asserted against Lender
by any Person under any environmental laws or similar laws by reason of
Borrower's or any other Person's failure to comply with laws applicable to solid
or hazardous waste materials or other toxic substances. Notwithstanding any
contrary provision in this Agreement, the obligation of Borrower under this
Section 9.11 shall survive the payment in full of the Obligations and the
termination of this Agreement.
Section 9.12 Entire Agreement. This Agreement, the other Loan Documents
and the Other Agreements, embody the entire understanding and agreement between
the parties hereto and thereto with respect to the subject matter hereof and
thereof and supersede all prior agreements, understandings and inducements,
whether express or implied, oral or written.
Section 9.13 Interpretation. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
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IN WITNESS WHEREOF, the parties have duly executed this Loan and Agreement
by their duly authorized officers as of the date first above written.
LENDER:
CASUAL MALE RETAIL GROUP, INC.
By:
---------------------------------
Name:
Title:
BORROWER:
LP INNOVATIONS, INC.
By:
---------------------------------
Name:
Title:
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CONVERTIBLE SECURED PROMISSORY NOTE
-----------------------------------
$1,500,000.00 New York, New York
____________, 2002
FOR VALUE RECEIVED, the undersigned, LP INNOVATIONS, INC. (the
"Borrower"), a Nevada corporation, with its principal place of business at 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, hereby unconditionally promises to
pay to the order of CASUAL MALE RETAIL GROUP, INC. (together with any successor
or assign, the "Lender"), a Delaware corporation, with its principal place of
business at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, in lawful money of
the United States of America and in immediately available funds, the principal
amount of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000.00) on the
Maturity Date, or as much of such principal amount as shall be outstanding and
unpaid on such Maturity Date. The Borrower further promises to pay interest, in
lawful money of the United States of America and in immediately available funds
on the unpaid principal balance of, and, in certain cases, on the unpaid
interest due on, this Secured Promissory Note (the "Note") from time to time
outstanding at the rate and computed in the manner provided in the Loan and
Security Agreement (the "Loan Agreement"), dated as of ____________, 2002,
between the Borrower and the Lender but in no event in excess of the maximum
rate of interest permitted under applicable law. Capitalized terms used and not
otherwise defined herein shall have the respective meanings ascribed to them in
the Loan Agreement.
This Note is the convertible secured promissory note referred to in the
Loan Agreement, is secured as provided in the Loan Agreement, and the Lender is
entitled to all the benefits thereof. The Borrower shall make when due any and
all payments and prepayments (including mandatory prepayments on this Note
required under the Loan Agreement. Reference is herein made to the Loan
Agreement for the rights of the Lender to accelerate the unpaid balance hereof
prior to the Maturity Date and, at its sole option, to receive Conversion Shares
and all other obligations of the Borrower.
The Borrower hereby waives any rights of set-off, diligence, demand,
presentment, protest and notice of any kind, release, surrender or substitution
of security, or forbearance or other indulgence.
This Note may not be changed, modified, or terminated orally, but only by
an agreement in writing signed by both parties.
IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS NOTE, THE BORROWER
KNOWINGLY AND VOLUNTARILY WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) THE
RIGHT TO A TRIAL BY JURY AND THE DEFENSES OF FORUM NON CONVENIENS AND IMPROPER
VENUE. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS AND
SHALL BE BINDING UPON THE SUCCESSORS AND ASSIGNS OF THE BORROWER AND INURE TO
THE BENEFIT OF THE LENDER AND ITS SUCCESSORS
AND ASSIGNS. If any item or provision of this Note shall be held invalid,
illegal or unenforceable, the validity of all other terms and provisions herein
shall in no way be affected thereby.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Convertible Secured Promissory Note on the date first above written.
LP INNOVATIONS, INC.
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Name:
Title:
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