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Exhibit 10(b)(iv)
EXHIBIT I
FORM OF
AMENDED AND RESTATED
SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT, dated July 27, 1998,
made by THE ▇▇▇▇▇-▇▇▇▇▇▇▇ STORES CORP., an Ohio corporation (the "Borrower"),
▇▇▇▇▇-▇▇▇▇▇▇▇ WEST VIRGINIA, INC. a West Virginia corporation ("EBWVA"), THE
EL-BEE CHARGIT CORP., an Ohio corporation ("Chargit"), and THE BEE-GEE SHOE
CORP., an Ohio corporation ("Bee-Gee" and, together with the Borrower, EBWVA and
Chargit, each, a "Grantor" and collectively, the "Grantors") in favor of
CITICORP USA, INC., as agent for the financial institutions party to the Amended
and Restated Credit Agreement referred to below (in such capacity, the "Agent").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower has entered into an Amended and Restated
Credit Agreement, dated as of July 27, 1998, with the financial institutions
party thereto (the "Lenders"), Citibank, N.A., as issuer (the "Issuer"), and
Citicorp USA, Inc. ("CUSA"), as Agent for the Lenders, the Issuer and the Swing
Loan Bank (in such capacity, the "Agent") (said Agreement, as it may be amended
or otherwise modified from time to time, being the "Amended and Restated Credit
Agreement" and capitalized terms not defined herein but defined therein being
used herein as therein defined); and
WHEREAS, the Borrower owns beneficially and of record 100% of
the capital stock of each of EBWVA, Chargit and Bee-Gee and the Borrower and
each of EBWVA, Chargit and Bee-Gee are members of the same consolidated group of
companies and are engaged in related businesses, and each of EBWVA, Chargit and
Bee-Gee will derive direct and indirect economic benefit from the Loans and
Letters of Credit; and
WHEREAS, each of EBWVA, Chargit and Bee-Gee has entered into a
Guaranty, dated December 30, 1997 in the case of Chargit and Bee-Gee, and dated
July 27, 1998 in the case of EBWVA, in favor of the Agent for the ratable
benefit of the Guarantied Parties (as defined in each Guaranty) (as each may be
amended, supplemented or otherwise modified from time to time, being a
"Guaranty"); and
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WHEREAS, it is a condition precedent to the making of the
Loans and the issuance of the Letters of Credit pursuant to the Amended and
Restated Credit Agreement that the Grantors shall have entered into this
Agreement;
NOW, THEREFORE, in consideration of the premises and in order
to induce the Lenders to make the Loans and the Issuer to issue the Letters of
Credit each Grantor hereby agrees with the Agent on behalf and for the ratable
benefit of the Secured Parties as follows:
1. DEFINED TERMS. As used in this Agreement, the following
terms have the meanings specified below (such meanings being equally applicable
to both the singular and plural forms of the terms defined):
"ACCOUNT" means any "account," as such term is
defined in Section 9-106 of the UCC, now owned or hereafter
acquired by a Grantor and, in any event, includes, without
limitation, (i) all accounts receivable, book debts and other
forms of obligations (other than forms of obligations
evidenced by Chattel Paper, Documents or Instruments) now
owned or hereafter received or acquired by or belonging or
owing to such Grantor (including, without limitation, under
any trade name, style or division thereof) whether arising out
of goods sold or services rendered by such Grantor or from any
other transaction, whether or not the same involves the sale
of goods or services by such Grantor (including, without
limitation, any such obligation which might be characterized
as an account or contract right under the UCC), (ii) all of
such Grantor's rights in, to and under all purchase orders or
receipts now owned or hereafter acquired by it for goods or
services, and all of such Grantor's rights to any goods
represented by any of the foregoing (including, without
limitation, unpaid seller's rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned,
reclaimed or repossessed goods), (iii) all moneys due or to
become due to such Grantor under all contracts for the sale of
goods or the performance of services or both by such Grantor
(whether or not yet earned by performance on the part of such
Grantor or in connection with any other transaction), now in
existence or hereafter
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occurring, including, without limitation, the right to receive
the proceeds of said purchase orders and contracts, and (iv)
all collateral security and guarantees of any kind given by
any Person with respect to any of the foregoing.
"ACCOUNT DEBTOR" means any "account debtor," as such
term is defined in Section 9-105(1)(a) of the UCC.
"BROKER" means any "broker," as such term is defined
in Chapter 8 (or Article 8) of the UCC, and in any event shall
include, but not be limited to, any Person defined as a broker
or dealer under the federal securities laws, but without
excluding a bank acting in that capacity.
"CHATTEL PAPER" means any "chattel paper," as such
term is defined in Section 9-105(1)(b) of the UCC, now owned
or hereafter acquired by a Grantor.
"CLEARING CORPORATION" means any "clearing
corporation," as such term is defined in Chapter 8 (or Article
8) of the UCC, and in any event shall include, but not be
limited to, any (i) Person that is registered as a "clearing
agency" under the federal securities laws, (ii) federal
reserve bank, or (iii) other Person that provides clearance or
settlement services with respect to Financial Assets that
would require it to register as a clearing agency under the
federal securities laws but for an exclusion or exemption from
the registration requirement, if its activities as a clearing
corporation, including promulgation of rules, are subject to
regulation by a federal or state Governmental Authority.
"COLLATERAL" has the meaning assigned to such
term in Section 2 of this Agreement.
"CONTRACTS" means all contracts, undertakings or
other agreements (other than Chattel Paper, Documents or
Instruments) in or under which a Grantor may now or hereafter
have any right, title or interest, including, without
limitation, with respect to an Account, any agreement relating
to the terms of payment or the terms of performance thereof.
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"DOCUMENTS" means any "document," as such term is
defined in Section 9-105(1)(f) of the UCC, now owned or
hereafter acquired by a Grantor.
"ENTITLEMENT HOLDER" means any Person identified in
the records of a Securities Intermediary as the Person having
a Security Entitlement against the Securities Intermediary.
"EQUIPMENT" means any "equipment," as such term is
defined in Section 9-109(2) of the UCC, now owned or hereafter
acquired by a Grantor and, in any event, includes, without
limitation, all machinery, equipment, furnishings, fixtures,
vehicles, computers and other electronic data-processing and
office equipment now owned or hereafter acquired by such
Grantor and any and all additions, substitutions and
replacements of any of the foregoing, wherever located,
together with all attachments, components, parts, equipment
and accessories installed thereon or affixed thereto.
"FINANCIAL ASSET" means any financial asset, and in
any event shall include, but not be limited to, any (i)
Security, (ii) obligation of a Person or a share,
participation or other interest in a Person or in property or
an enterprise of a Person, which is, or is of a type, dealt in
or traded on financial markets, or which is recognized in any
area in which it is issued or dealt in as a medium for
investment and (iii) any property that is held by a Securities
Intermediary for another Person in a Securities Account if the
Securities Intermediary has expressly agreed with the other
Person that the property is to be treated as a Financial Asset
under Chapter 8 (or Article 8) of the UCC.
"GENERAL INTANGIBLES" means any "general
intangibles," as such term is defined in Section 9-106 of the
UCC, now owned or hereafter acquired by a Grantor and, in any
event, includes, without limitation, all customer lists,
trademarks, patents, rights in intellectual property,
licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether patented or
patentable or not) and technical information, procedures,
designs, knowledge,
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know-how, software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials and
records, goodwill, rights of indemnification and all right,
title and interest which such Grantor may now or hereafter
have in or under any Contract, now owned or hereafter acquired
by such Grantor.
"GOVERNMENTAL AUTHORITY" means any nation or
government, any federal, state, county, municipal, parish,
provincial or other political subdivision thereof and any
department, commission, board, court, agency or other
instrumentality or entity exercising executive, legislative,
judicial, regulatory or administrative functions of or
pertaining to government.
"INSTRUMENT" means any "instrument," as such term is
defined in Section 9-105(1)(i) of the UCC, now owned or
hereafter acquired by a Grantor, other than instruments that
constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"INVENTORY" means any "inventory," as such term is
defined in Section 9-109(4) of the UCC, now owned or hereafter
acquired by a Grantor, and wherever located, and, in any
event, includes, without limitation, all inventory,
merchandise, goods and other personal property now owned or
hereafter acquired by such Grantor which are held for sale or
lease or are furnished or are to be furnished under a contract
of service or which constitute raw materials, work in process
or materials used or consumed or to be used or consumed in
such Grantor's business, or the processing, packaging,
delivery or shipping of the same, and all finished goods.
"INVESTMENT PROPERTY" means any investment property,
now owned or hereafter acquired, and, in any event, shall
include, without limitation, each of the following: (a) any
Security, whether certificated or uncertificated, (b) any
Security Entitlement, (c) any Securities Account, (d) any
Commodity Contract, (e) any Commodity Account, and (f) all
proceeds of any of the foregoing.
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"ISSUER" means any "issuer," as such term is defined
in Chapter 8 (or Article 8) of the UCC, and in any event shall
include, but not be limited to, any Person that, with respect
to an obligation on or a defense to a Security, (i) places or
authorizes the placing of its name on a Security Certificate,
other than as authenticating trustee, registrar, transfer
agent or the like, to evidence a share, participation or other
interest in its property or in an enterprise, or to evidence
its duty to perform an obligation represented by the
certificate, (ii) creates a share, participation or other
interest in its property or in an enterprise, or undertakes an
obligation, that is an Uncertificated Security, (iii) directly
or indirectly creates a fractional interest in its rights or
property, if the fractional interest is represented by a
Security Certificate, or (iv) becomes responsible for, or in
the place of, another Issuer.
"OBLIGATIONS" means, (a) with respect to the
Borrower, the Obligations as defined in the Amended and
Restated Credit Agreement and all obligations, now existing or
hereafter arising, of the Borrower under this Agreement and
(b) with respect to EBWVA, Bee-Gee and Chargit, all the
obligations, now existing or hereafter arising, of such
Grantor under its Guaranty and all obligations, now existing
or hereafter arising, of EBWVA, Bee-Gee and Chargit under this
Agreement.
"PERMITTED LIENS" means Liens permitted by Section
7.1 of the Amended and Restated Credit Agreement existing as
of the date hereof or to be
created hereafter.
"PERSON" means any individual, corporation, limited
liability company, joint venture, general or limited
partnership, association, trust, unincorporated organization
or Governmental Authority, or other similar entity.
"PROCEEDS" means "proceeds," as such term is defined
in Section 9-306(1) of the UCC, and, in any event, shall
include, without limitation, (i) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to a
Grantor from
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time to time with respect to any of the Collateral, (ii) any
and all payments (in any form whatsoever) made or due and
payable to a Grantor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture
of all or any part of the Collateral by any Governmental
Authority (or any Person acting under color of Governmental
Authority), and (iii) any and all other amounts from time to
time paid or payable under or in connection with any of the
Collateral.
"SECURITIES ACCOUNT" means any account to which a
Financial Asset is or may be credited in accordance with an
agreement under which the Person maintaining the account
undertakes to treat the Person for whom the account is
maintained as entitled to exercise the rights that comprise
the Financial Asset.
"SECURITIES INTERMEDIARY" means any (i) Clearing
Corporation, or (ii) Person, including a bank or Broker, that
in the ordinary course of its business maintains Securities
Accounts for others and is acting in that capacity.
"SECURITY" means any "security," as such term is
defined in Chapter 8 (or Article 8) of the UCC and, in any
event, shall include, but not be limited to, any obligation of
an Issuer or a share, participation or other interest in an
Issuer or in property or an enterprise of an Issuer: (i) which
is represented by a Security Certificate in bearer or
registered form, or the transfer of which may be registered
upon books maintained for that purpose by or on behalf of the
Issuer; (ii) which is one of a class or series or but its
terms is divisible into a class or series of shares,
participations, interests or obligations; and (iii) which (a)
is, or is of a type, dealt in or traded on securities
exchanges or securities markets or (b) is a medium for
investment and by its terms expressly provides that it is a
security governed by Chapter 8 (or Article 8) of the UCC.
"SECURITY CERTIFICATE" means any certificate
representing a Security.
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"SECURITY ENTITLEMENT" means any of the rights and
property interests of an Entitlement Holder with respect to a
Financial Asset.
"UCC" means the Uniform Commercial Code as the same
may, from time to time, be in effect in the State of New York;
PROVIDED, HOWEVER, in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or
priority of the Agent's and the Secured Parties' security
interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the
State of New York, the term "UCC" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment,
perfection or priority and for purposes of definitions related
to such provisions.
"UNCERTIFICATED SECURITY" means any "uncertificated
security," as such term is defined in Chapter 8 (or Article 8)
of the UCC, and in any event shall include, but not be limited
to, any Security that is not represented by a certificate.
2. GRANT OF SECURITY INTEREST.
(a) As collateral security for the full and prompt payment
when due (whether at stated maturity, by acceleration or otherwise) of,
and the performance of, all of the Obligations for which it is
responsible and to induce the Lenders to make the Loans and the Issuer
to issue the Letters of Credit pursuant to the Amended and Restated
Credit Agreement, each Grantor hereby assigns, conveys, mortgages,
pledges, hypothecates and transfers to the Agent, on behalf and for the
ratable benefit of the Secured Parties, and hereby grants to the Agent,
on behalf and for the ratable benefit of the Secured Parties, a
security interest in, all of such Grantor's right, title and interest
in, to and under the following (all of which being hereinafter
collectively called the "Collateral"):
(i) all Accounts;
(ii) all Inventory;
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(iii) all General Intangibles that relate to
Inventory;
(iv) all of the rights (but none of the obligations)
of each of the Borrower and Chargit under (x) the Purchase
Agreement between the Borrower and Chargit, (y) the Purchase
Agreement between Chargit and The El-Bee Receivables
Corporation, each dated as of December 30, 1997, and (z) each
of the other Securitization Documents, as each such Purchase
Agreement or other Securitization Document may be amended,
supplemented or otherwise modified from time to time, and
including any and all extensions, renewals, replacements and
substitutions of either such Purchase Agreement or other
Securitization Document;
(v) all Chattel Paper, all Contracts and any and all
claims of a Grantor for damages arising out of or for breach
of or a default under any Contract and the right of a Grantor
to perform or to compel performance under any Contract and to
exercise all remedies thereunder, all Documents, all
Equipment, all General Intangibles (in addition to all General
Intangibles in subsection (iii) above), all Instruments, all
other goods and personal property of a Grantor whether
tangible or intangible or whether now owned or hereafter
acquired by a Grantor and wherever located, excluding,
however, any Accounts and related property sold pursuant to
the Securitization Documents (as defined in the Amended and
Restated Credit Agreement); and
(vi) to the extent not otherwise included, all
Proceeds of each of the foregoing and all accessions to,
substitutions and replacements for, and rents, profits and
products of, each of the foregoing, including, without
limitation, Proceeds in the form of Accounts, Chattel Paper,
Contracts, Documents, Equipment, General Intangibles,
Instruments and Investment Property.
PROVIDED, HOWEVER, that the property described in clause (v)
above shall constitute Collateral only as long as the
Over-Advance Amount is greater than zero, and upon the
reduction of the Over-Advance
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Amount to zero, the security interest granted to the Agent
pursuant to such clause (v) shall automatically be terminated
and released without any action by any party. Upon such
termination and release, the Agent, at the expense of the
Borrower, will execute and deliver to the Borrower such
documents as the Borrower may reasonably request to evidence
such termination and release.
(b) In addition, as collateral security for the prompt and
complete payment when due of the Obligations, each Secured Party is
hereby granted a lien and security interest in all property of a
Grantor held by such Secured Party or any Affiliate of such Secured
Party, including, without limitation, all property of every
description, now or hereafter in the possession or custody of or in
transit to such Secured Party for any purpose, including safekeeping,
collection or pledge, for the account of the Grantor, or as to which a
Grantor may have any right or power.
3. RIGHTS OF THE SECURED PARTIES; LIMITATIONS ON
SECURED PARTIES' OBLIGATIONS. With respect to Accounts,
Contracts, Chattel Paper and Instruments Constituting
Collateral:
(a) It is expressly agreed by each Grantor that, anything
herein to the contrary notwithstanding, such Grantor shall remain
liable under each of the Contracts to observe and perform all the
conditions and obligations to be observed and performed by it
thereunder and such Grantor shall perform all of its duties and
obligations thereunder, all in accordance with and pursuant to the
terms and provisions of each such Contract. Neither the Agent nor any
Lender shall have any obligation or liability under any Contract by
reason of or arising out of this Agreement or the granting of a
security interest in any contract to the Agent on behalf and for the
ratable benefit of and the Secured Parties of a security interest
therein or the receipt by the Agent or any Lender of any payment
relating to any Contract pursuant hereto, nor shall the Agent or any
Lender be required or obligated in any manner to perform or fulfill any
of the obligations of such Grantor under or pursuant to any Contract,
or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any
performance by any party
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under any Contract, or to present or file any claim, or to take any
action to collect or enforce any performance or the payment of any
amounts which may have been assigned to it or to which it may be
entitled at any time or times.
(b) The Agent authorizes each Grantor to collect its Accounts,
Chattel Paper and Instruments that are Collateral, provided that such
collection is performed in a prudent and businesslike manner, and the
Agent may, upon the occurrence and during the continuance of any Event
of Default and without notice, limit or terminate said authority at any
time. If required by the Agent at any time during the continuance of
any Event of Default, any Proceeds, when first collected by such
Grantor, received in payment of any such Account or in payment for any
of its Inventory or on account of any of its Contracts, shall be
promptly deposited by such Grantor in precisely the form received (with
all necessary indorsements) in a special bank account maintained by the
Agent and subject to withdrawal only by the Agent, as hereinafter
provided, and until so turned over shall be deemed to be held in trust
by such Grantor for and as the Agent's property and shall not be
commingled with such Grantor's other funds or properties. Such
Proceeds, when deposited, shall continue to be collateral security for
all of the Obligations and shall not constitute payment thereof until
applied as hereinafter provided. The Agent shall upon the request of
the Majority Lenders apply all or a part of the funds on deposit in
said special account to the principal of or interest on or both in
respect of any of the Obligations in accordance with the provisions of
Section 8(d) hereof and any part of such funds which the Majority
Lenders elect not so to apply and deem not required as collateral
security for the Obligations shall be paid over from time to time by
the Agent to such Grantor. If an Event of Default has occurred and is
continuing, at the request of the Agent such Grantor shall deliver to
the Agent all original and other documents evidencing, and relating to,
the sale and delivery of such Inventory or the performance of labor or
service which created such Accounts, including, without limitation, all
original orders, invoices and shipping receipts.
(c) The Agent may at any time, upon the occurrence and during
the continuance of any Default or
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Event of Default, after first notifying the relevant Grantor of its
intention to do so, notify Account Debtors of such Grantor, parties to
Contracts of such Grantor, obligors of Instruments of such Grantor and
obligors in respect of Chattel Paper of such Grantor that the Accounts
and the right, title and interest of such Grantor in and under such
Contracts, such Instruments and such Chattel Paper have been assigned
to the Agent and that payments shall be made directly to the Agent.
Upon the request of the Agent, such Grantor will so notify such Account
Debtors, parties to such Contracts, obligors of such Instruments and
obligors in respect of such Chattel Paper. Upon the occurrence and
during the continuance of an Event of Default, the Agent may in its own
name or in the name of others communicate with such Account Debtors,
parties to such Contracts, obligors of such Instruments and obligors in
respect of such Chattel Paper to verify with such Persons to the
Agent's satisfaction the existence, amount and terms of any such
Accounts, Contracts, Instruments or Chattel Paper.
(d) Upon reasonable prior notice to the relevant Grantor
(unless an Event of Default has occurred and is continuing, in which
case no notice is necessary), the Agent shall have the right to make
test verifications of the Accounts and physical verifications of the
Inventory of such Grantor in any manner and through any medium that it
considers advisable, and each Grantor agrees to furnish all such
assistance and information as the Agent may require in connection
therewith.
4. REPRESENTATIONS AND WARRANTIES. Each Grantor
hereby represents and warrants to the Secured Parties as
follows:
(a) Each Grantor is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of its
organization.
(b) The execution, delivery and performance by each Grantor of
this Agreement are within such Grantor's corporate powers, have been
duly authorized by all necessary corporate action, do not contravene
such Grantor's certificate of incorporation or by-laws, any Requirement
of Law or any order or decree of any court, or any Contractual
Obligation of such Grantor, and do not result in or require the
creation of any
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Lien (other than pursuant to the Amended and Restated Credit Agreement)
upon or with respect to any of its properties.
(c) No consent, authorization, approval or other action by,
and no notice to or filing with, any Governmental Authority is required
for the due execution, delivery and performance by each Grantor of this
Agreement.
(d) This Agreement has been duly executed and delivered by
each Grantor and is the legal, valid and binding obligation of such
Grantor, enforceable against such Grantor in accordance with its terms.
(e) There are no pending or threatened actions, investigations
or proceeding affecting any Grantor or any of its Subsidiaries before
any court, Governmental Authority or arbitrator other than those that
in the aggregate could not reasonably be expected to have a Material
Adverse Effect.
(f) Each Grantor is the sole owner of each item of the
Collateral in which it purports to grant a security interest hereunder,
having good title thereto, free and clear of any and all Liens, except
for the security interest granted pursuant to this Agreement and other
Permitted Liens. No material amounts payable under or in connection
with any of its Accounts or Contracts (to the extent constituting
Collateral) are evidenced by Instruments which have not been delivered
to the Agent.
(g) No effective 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 by any Grantor in
favor of the Agent pursuant to this Agreement or such as relate to
other Permitted Liens.
(h) Appropriate financing statements having been filed in the
jurisdictions listed on Schedule I hereto, this Agreement is effective
to create a valid and continuing first priority Lien on and prior to
all other Liens except Permitted Liens. All action necessary or
desirable to protect and perfect such
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security interest in each item of the Collateral has
been duly taken.
(i) Each Grantor's principal place of business and the place
where its records concerning the Collateral are kept and the location
of its Inventory and Equipment are set forth on Schedule II hereto.
(j) The amount represented by each Grantor to the Agent from
time to time as owing by each Account Debtor or by all Account Debtors
in respect of the Accounts of such Grantor will at such time be the
correct amount actually and unconditionally owing by such Account
Debtors thereunder.
5. COVENANTS. Each Grantor covenants and agrees with the Agent
and the Lenders that from and after the date of this Agreement and until the
Obligations are fully satisfied:
(a) FURTHER DOCUMENTATION; PLEDGE OF INSTRUMENTS. At any time
and from time to time, upon the written request of the Agent, and at
the sole expense of each Grantor, such Grantor will promptly and duly
execute and deliver any and all such further instruments and documents
and take such further action as the Agent may reasonably deem desirable
to obtain the full benefits of this Agreement and of the rights and
powers herein granted, including, without limitation, using its best
efforts to secure all consents and approvals necessary or appropriate
for the assignment to the Agent of any Contract (to the extent
constituting part of the Collateral) held by such Grantor or in which
such Grantor has any rights not heretofore assigned, the filing of any
financing or continuation statements under the UCC with respect to the
Liens and security interests granted hereby, transferring Collateral to
the Agent's possession (if a security interest in such Collateral can
be perfected by possession) and placing the interest of the Agent as
lienholder on the certificate of title of any vehicle. Each Grantor
also hereby authorizes the Agent to file any such financing or
continuation statement without the signature of such Grantor to the
extent permitted by applicable law. If any of the Collateral shall be
or become evidenced by any Instrument, each Grantor agrees to pledge
such Instrument to the Agent and shall duly endorse such
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Instrument in a manner satisfactory to the Agent and deliver the same
to the Agent.
(b) MAINTENANCE OF RECORDS. Each Grantor will keep and
maintain at its own cost and expense satisfactory and complete records
of the Collateral, including, without limitation, a record of all
payments received and all credits granted with respect to the
Collateral and all other dealings with the Collateral. Each Grantor
will ▇▇▇▇ its books and records pertaining to the Collateral to
evidence this Agreement and the Lien and security interests granted
hereby. If requested by the Agent, all Chattel Paper that is Collateral
will be marked with the following legend: "This writing and the
obligations evidenced or secured hereby are subject to the security
interest of Citicorp USA, Inc., as the Agent". If requested by the
Agent, the security interest of the Agent shall be noted on the
certificate of title of each vehicle that is Collateral. For the
Agent's and the Lenders' further security, each Grantor agrees that,
upon the occurrence and during the continuance of any Event of Default,
each Grantor shall deliver and turn over all of such Grantor's books
and records pertaining to the Collateral to the Agent or to its
representatives at any time on demand of the Agent. Prior to the
occurrence of an Event of Default and upon reasonable notice from the
Agent, each Grantor shall permit any representative of the Agent to
inspect such books and records and will provide photocopies thereof to
the Agent all in accordance with the provisions of the Amended and
Restated Credit Agreement.
(c) INDEMNIFICATION. In any suit, proceeding or action brought
by the Agent or any Lender relating to any Account, Chattel Paper,
Contract, General Intangible or Instrument constituting Collateral for
any sum owing thereunder, or to enforce any provision of any such
Account, Chattel Paper, Contract, General Intangible or Instrument,
each Grantor will save, indemnify and keep each of the Agent and the
Lenders harmless from and against all expense, loss or damage suffered
by reason of any defense, set-off, counterclaim, recoupment or
reduction of liability whatsoever of the obligor thereunder, arising
out of a breach by such Grantor of any obligation thereunder or arising
out of any other agreement, Indebtedness or liability at any time owing
to, or in favor of, such obligor or its successors from such Grantor,
and all
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such obligations of such Grantor shall be and remain enforceable
against and only against such Grantor and shall not be enforceable
against the Agent or the Lenders.
(d) COMPLIANCE WITH LAWS, ETC. Each Grantor will comply, in
all material respects, with all acts, rules, regulations, orders,
decrees and directions of any Governmental Authority, applicable to the
Collateral or any part thereof or to the operation of such Grantor's
business; PROVIDED, HOWEVER, that such Grantor may contest any act,
regulation, order, decree or direction in any reasonable manner which
shall not, in the sole opinion of the Agent, adversely affect the
Agent's rights hereunder or adversely affect the first priority of its
Lien on and security interest in the Collateral.
(e) PAYMENT OF OBLIGATIONS. Each Grantor will pay promptly
when due all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of its income or profits
therefrom and all claims of any kind (including, without limitation,
claims for labor, materials and supplies), except that no such charge
need be paid if (i) such non-payment does not involve any danger of the
sale, forfeiture or loss of any of the Collateral or any interest
therein, and (ii) such charge is adequately reserved against in
accordance with and to the extent required by GAAP.
(f) COMPLIANCE WITH TERMS OF ACCOUNTS, ETC. In all material
respects, each Grantor will comply with and perform with all
obligations, covenants, conditions and agreements with respect to any
Account, Chattel Paper, Contract, License and all other agreements to
which it is a party or by which it is bound (to the extent constituting
Collateral).
(g) LIMITATION ON LIENS ON COLLATERAL. No Grantor will create,
permit or suffer to exist, and each Grantor will defend the Collateral
against and take such other action as is necessary to remove, any Lien
on the Collateral except Permitted Liens, and will defend the right,
title and interest of the Agent and the Lenders in and to any of such
Grantor's rights under the Chattel Paper, Contracts, Documents,
Equipment, General Intangibles and Instruments (to the extent
constituting Collateral) and to the Inventory
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and in and to the Proceeds thereof against the claims
and demands of all Persons whomsoever.
(h) LIMITATIONS ON MODIFICATIONS OF ACCOUNTS. Upon the
occurrence and during the continuance of any Event of Default, no
Grantor will, without the Agent's prior written consent, grant any
extension of the time of payment of any of the Accounts, Chattel Paper
or Instruments that are Collateral or compromise, compound or settle
the same for less than the full amount thereof, or release, wholly or
partly, any Person liable for the payment thereof, or allow any credit
or discount whatsoever thereon.
(i) MAINTENANCE OF INSURANCE. Each Grantor will maintain, with
financially sound and reputable companies, insurance policies (i)
insuring its Inventory and, to the extent constituting Collateral,
Equipment against loss by fire, explosion, theft and such other
casualties as are usually insured against by companies engaged in the
same or similar businesses and (ii) insuring such Grantor and the Agent
and the Banks against liability for personal injury and property damage
relating to such Inventory and, to the extent constituting Collateral,
Equipment, such policies to be in such amounts and 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, naming the Agent
as an additional insured with a lender loss payable clause in favor of
the Agent on behalf and for the ratable benefit of the Secured Parties.
Each Grantor shall, if so requested by the Agent, deliver to the Agent
as often as the Agent may reasonably request, a report of a reputable
insurance broker satisfactory to the Agent with respect to the
insurance on such Inventory and, to the extent constituting Collateral,
Equipment. All insurance with respect to such Inventory and, to the
extent constituting Collateral, Equipment shall (i) contain a clause
which provides that the Secured Parties' interest under the policy will
not be invalidated by any act or omission of, or any breach of warranty
by, the insured, or by any change in the title, ownership or possession
of the insured property, or by the use of the property for purposes
more hazardous than is permitted in the policy, and (ii) provide that
no cancellation, reduction in amount or change in coverage thereof
shall
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be effective until at least ten days after receipt by the Agent of
written notice thereof.
(j) LIMITATIONS ON DISPOSITION. No Grantor will sell, lease,
transfer or otherwise dispose of any of the Collateral, or attempt or
contract to do so, except as permitted by the Amended and Restated
Credit Agreement.
(k) FURTHER IDENTIFICATION OF COLLATERAL. Each Grantor will,
if so requested by the Agent, furnish to the Agent, as often as the
Agent reasonably requests, statements and schedules further identifying
and describing the Collateral and such other reports in connection with
the Collateral as the Agent may reasonably request, all in reasonable
detail.
(l) NOTICES. Each Grantor will advise the Agent promptly, in
reasonable detail, (i) of any material Lien or claim made or asserted
against any of the Collateral, (ii) of any material change in the
composition of the Collateral, and (iii) of the occurrence of any other
event which would have a material adverse effect on the aggregate value
of the Collateral or in the security interests created hereunder.
(m) RIGHT OF INSPECTION. Upon reasonable notice to the
relevant Grantor (unless an Event of Default has occurred and is
continuing, in which case no notice is necessary), the Agent shall at
all times have full and free access during normal business hours to all
the books and records and correspondence of such Grantor, and the Agent
or its representatives may examine the same, take extracts therefrom
and make photocopies thereof, and such Grantor agrees to render to the
Agent, at such Grantor's cost and expense after an Event of Default has
occurred and is continuing, such clerical and other assistance as may
be reasonably requested with regard thereto. Upon reasonable notice to
the relevant Grantor (unless an Event of Default has occurred and is
continuing, in which case no notice is necessary), the Agent and its
representatives shall also have the right to enter into and upon any
premises where any of the Inventory or Equipment is located for the
purpose of inspecting the same, observing its use or otherwise
protecting its interests therein.
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(n) MAINTENANCE OF EQUIPMENT. Each Grantor will keep and
maintain its Equipment, to the extent constituting Collateral, in good
operating condition sufficient for the continuation of the business
conducted by such Grantor on a basis consistent with past practices,
and such Grantor will provide all maintenance and service and all
repairs necessary for such purpose.
(o) CONTINUOUS PERFECTION. No Grantor will change its name,
identity or corporate structure in any manner which might make any
financing or continuation statement filed in connection herewith
seriously misleading within the meaning of Section 9-402(7) of the UCC
(or any other then applicable provision of the UCC) unless such Grantor
shall have given the Agent at least 30 days' prior written notice
thereof and shall have taken all action (or made arrangements to take
such action substantially simultaneously with such change if it is
impossible to take such action in advance) necessary or reasonably
requested by the Agent to amend such financing statement or
continuation statement so that it is not seriously misleading. No
Grantor will change its principal place of business or remove its
records or change the location of its Inventory and, to the extent
constituting Collateral, Equipment, each as set forth on Schedule II
hereto, unless it gives the Agent at least 30 days' prior written
notice thereof and has taken such action as is necessary to cause the
security interest of the Agent in the Collateral to continue to be
perfected.
6. THE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) Each Grantor hereby irrevocably constitutes and appoints
the Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Grantor
and in the name of such Grantor or in its own name, from time to time
in the Agent's discretion, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute
and deliver any and all documents and instruments which the Agent may
deem necessary or desirable to accomplish the purposes of this
Agreement and, without limiting the generality of the foregoing, hereby
gives the Agent the power and right, on behalf of such Grantor, without
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notice to or assent by such Grantor to do the
following:
(i) to ask, demand, collect, receive and give
acquittances and receipts for any and all moneys due and to
become due under any Collateral and, in the name of such
Grantor or in its own name or otherwise, to take possession of
and endorse and collect any checks, drafts, notes, acceptances
or other Instruments for the payment of moneys due under any
Collateral and to file any claim or to take any other action
or proceeding in any court of law or equity or otherwise
deemed appropriate by the Agent for the purpose of collecting
any and all such moneys due under any Collateral whenever
payable and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Agent for the purpose of collecting any and
all such moneys due under any Collateral whenever payable;
(ii) to pay or discharge taxes, Liens, security
interests or other encumbrances levied or placed on or
threatened against the Collateral, to effect any repairs or
any insurance called for by the terms of this Agreement and to
pay all or any part of the premiums therefor and the costs
thereof; and
(iii) (A) to direct any party liable for any payment
under any of the Collateral to make payment of any and all
moneys due, and to become due thereunder, directly to the
Agent or as the Agent shall direct; (B) to receive payment of
and receipt for any and all moneys, claims and other amounts
due, and to become due at any time, in respect of or arising
out of any Collateral; (C) to sign and indorse any invoices,
freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and
other Documents constituting or relating to the Collateral;
(D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and
to enforce any other right
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in respect of any Collateral; (E) to defend any suit, action
or proceeding brought against such Grantor with respect to any
Collateral; (F) to settle, compromise or adjust any suit,
action or proceeding described above and, in connection
therewith, to give such discharges or releases as the Agent
may deem appropriate; (G) to license or, to the extent
permitted by an applicable license, sublicense, whether
general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any patent or trademark, throughout the
world for such term or terms, on such conditions, and in such
manner, as the Agent shall in its sole discretion determine;
and (H) generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Agent were
the absolute owner thereof for all purposes, and to do, at the
Agent's option and such Grantor's expense, at any time, or
from time to time, all acts and things which the Agent
reasonably deems necessary to protect, preserve or realize
upon the Collateral and the Agent's and the Lenders' Lien
therein, in order to effect the intent of this Agreement, all
as fully and effectively as such Grantor might do.
(b) The Agent agrees that, except upon the occurrence and
during the continuance of an Event of Default, it will forbear from
exercising the power of attorney or any rights granted to the Agent
pursuant to this Section 6. Each Grantor hereby ratifies, to the extent
permitted by law, all that any said attorney shall lawfully do or cause
to be done by virtue hereof. The power of attorney granted pursuant to
this Section 6, being coupled with an interest, shall be irrevocable
until the Obligations are indefeasibly paid in full.
(c) The powers conferred on the Agent hereunder are solely to
protect the Agent's and the Lenders' interests in the Collateral and
shall not impose any duty upon it to exercise any such powers. The
Agent shall be accountable only for amounts that it actually receives
as a result of the exercise of such powers and neither it nor any of
its officers, directors, employees or agents shall be responsible to
any Grantor
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for any act or failure to act, except for its own gross
negligence or willful misconduct.
(d) Each Grantor also authorizes the Agent, at any time and
from time to time upon the occurrence and during the continuance of an
Event of Default, (i) to communicate in its own name with any party to
any Contract with regard to the assignment of the right, title and
interest of such Grantor in and under the Contracts hereunder and other
matters relating thereto and (ii) to execute, in connection with the
sale provided for in Section 8 hereof, any indorsements, assignments or
other instruments of conveyance or transfer with respect to the
Collateral.
7. PERFORMANCE BY THE AGENT OF EACH GRANTOR'S OBLIGATIONS. If
any Grantor fails to perform or comply with any of its agreements contained
herein and the Agent, as provided for by the terms of this Agreement, shall
itself perform or comply, or otherwise cause performance or compliance, with
such agreement, the reasonable expenses of the Agent incurred in connection with
such performance or compliance, together with interest thereon at the highest
rate then in effect in respect of the Loans, shall be payable by such Grantor to
the Agent on demand and shall constitute Obligations secured hereby.
8. REMEDIES, RIGHTS UPON AN EVENT OF DEFAULT.
(a) If an Event of Default shall occur and be continuing, the
Agent shall, at the request of the Majority Lenders, or may with the
consent of the Majority Lenders, exercise in addition to all other
rights and remedies granted to it in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the UCC.
Without limiting the generality of the foregoing, each Grantor
expressly agrees that in any such event the Agent, without demand of
performance or other demand, advertisement or notice of any kind
(except the notice specified below of time and place of public or
private sale) to or upon such Grantor or any other Person (all and each
of which demands, advertisements and/or notices are hereby expressly
waived to the maximum extent permitted by the UCC and other applicable
law), may forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may
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forthwith sell, lease, assign, give an option or options to purchase,
or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at
public or private sale or sales, at any exchange or broker's board or
any of the Agent's offices or elsewhere at such prices as it may deem
best, for cash or on credit or for future delivery without assumption
of any credit risk. The Agent or any Lender shall have the right upon
any such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any part
of said Collateral so sold, free of any right or equity of redemption,
which equity of redemption such Grantor hereby releases to the fullest
extent permitted by law. Each Grantor further agrees, at the Agent's
request to assemble the Collateral and make it available to the Agent
at places which the Agent shall reasonably select, whether at such
Grantor's premises or elsewhere. The Agent shall apply the net proceeds
of any such collection, recovery receipt, appropriation, realization or
sale, as provided in Section 8(d) hereof, each Grantor remaining liable
for any deficiency remaining unpaid after such application, and only
after so paying over such net proceeds and after the payment by the
Agent of any other amount required by any provision of law, including
Section 9-504(1)(c) of the UCC, need the Agent account for the surplus,
if any, to such Grantor. To the maximum extent permitted by applicable
law, each Grantor waives all claims, damages, and demands against the
Secured Parties arising out of the repossession, retention or sale of
the Collateral. Each Grantor agrees that the Agent need not give more
that ten days' notice of the time and place of any public sale or of
the time after which a private sale may take place and that such notice
is reasonable notification of such matters. Each Grantor shall remain
liable for any deficiency if the proceeds of any sale or disposition of
the Collateral are insufficient to pay all amounts to which the Secured
Parties are entitled, such Grantor also being liable for the fees and
expenses of any attorneys employed by the Agent and the Lenders to
collect such deficiency.
(b) Each Grantor also agrees to pay all costs of the Agent and
the Lenders, including, without limitation, attorneys' fees, incurred
in connection
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with the enforcement of any of its rights and remedies
hereunder.
(c) Each Grantor hereby waives presentment, demand, protest or
any notice (to the maximum extent permitted by applicable law) of any
kind in connection with this Agreement or any Collateral.
(d) The Proceeds of any sale, disposition or other realization
upon all or any part of the Collateral shall be distributed by the
Agent in the following order of priorities:
First, to the payment of the costs and expenses of such sale,
including, without limitation, all expenses of the Agent and its agents
including the fees and expenses of its counsel, and all expenses,
liabilities and advances made or incurred by the Agent and the Lenders
in connection therewith or pursuant to Section 7 hereof;
Next, to the Lenders and the Agent, pro rata, for
the payment in full of the Obligations; and
Finally, after payment in full of all the Obligations, to the
payment to the Grantor of such Collateral, or its successors or
assigns, or to whomsoever may be lawfully entitled to receive the same
as a court of competent jurisdiction may direct.
9. LIMITATION ON THE SECURED PARTIES' DUTY IN RESPECT OF
COLLATERAL. No Secured Party shall have any duty as to any Collateral in its
possession or control or in the possession or control of any agent or nominee of
it or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto, except that each Secured Party
shall use reasonable care with respect to the Collateral in its possession or
under its control. Upon request of the relevant Grantor, the Agent shall account
for any moneys received by it in respect of any foreclosure on or disposition of
the Collateral.
10. NOTICES. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, telecopy, or cable
communication) and mailed, telegraphed, telexed, telecopied, cabled or delivered
by hand, if to any Grantor, addressed to it at the address indicated on the
signature pages hereto, and if to
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any Secured Party, addressed to it at the address of such Secured Party
specified in the Amended and Restated Credit Agreement, or, as to each party, at
such other address as shall be designated by such party in a written notice to
each other party complying as to delivery with the terms of this Section. All
such notices and other communications shall, when mailed, telegraphed, telexed,
telecopied, cabled or delivered, be effective when deposited in the mails,
delivered to the telegraph company, confirmed by telex answerback, telecopied
with confirmation or receipt, delivered to the cable company, or delivered by
hand to the addressee or its agent, respectively.
11. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement nor consent to any departure by any Grantor therefrom shall in
any event be effective unless the same shall be in writing, approved by the
Majority Lenders (except where under Section 10.1 of the Amended and Restated
Credit Agreement, the approval of each Lender is required) and signed by the
Agent, and then any such waiver or consent shall only be effective in the
specific instance and for the specific purpose for which given.
12. NO WAIVER; REMEDIES. (a) No failure on the part of any
Secured Party to exercise, and no delay in exercising any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative, may be
exercised singly or concurrently, and are not exclusive of any remedies provided
by law or any of the other Loan Documents.
(b) Failure by any of the Secured Parties at any time or times
hereafter to require strict performance by any Grantor or any other Person of
any of the provisions, warranties, terms or conditions contained in any of the
Loan Documents now or at any time or times hereafter executed by such Grantor or
any such other Person and delivered to any of the Secured Parties shall not
waive, affect or diminish any right of any of the Secured Parties at any time or
times hereafter to demand strict performance thereof, and such right shall not
be deemed to have been modified or waived by any course of conduct or knowledge
of any of the Secured Parties, or any agent, officer or employee of any Secured
Party.
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13. SUCCESSORS AND ASSIGNS. This Agreement and all obligations
of each Grantor hereunder shall be binding upon the successors and assigns of
such Grantor, and shall, together with the rights and remedies of the Agent
hereunder, inure to the benefit of the Agent, the Lenders, and their respective
successors and assigns.
14. GOVERNING LAW. This Agreement shall be governed by, and be
construed and interpreted in accordance with, the law of the State of New York.
Wherever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and without invalidating the remaining provisions of this Agreement.
15. WAIVER OF JURY TRIAL. Each Grantor waives any right it may
have to trial by jury in any action or proceeding to enforce or defend any
rights or remedies hereunder, under the Amended and Restated Credit Agreement or
under any of the other Loan Documents or any other document relating to any of
the foregoing.
16. FURTHER INDEMNIFICATION. Each Grantor agrees to pay, and
to save the Agent and each Lender harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all excise, sales or
other similar taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.
17. SECTION TITLES. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of this Agreement.
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to
be executed and delivered by its duly authorized officer on the date first above
written.
Address: THE ▇▇▇▇▇-▇▇▇▇▇▇▇ STORES CORP.
By:_________________________
Name:
Title:
Address: ▇▇▇▇▇-▇▇▇▇▇▇▇ WEST VIRGINIA
By:_________________________
Name:
Title:
Address: THE BEE-GEE SHOE CORP.
By:_________________________
Name:
Title:
Address: THE EL-BEE CHARGIT CORP.
By:_________________________
Name:
Title:
Accepted and acknowledged by:
CITICORP USA, INC., as Agent
By:______________________________
Name:
Title:
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SCHEDULE I TO SECURITY AGREEMENT
FILINGS
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JURISDICTION FILING OFFICE
------------ -------------
29
SCHEDULE II TO SECURITY AGREEMENT
LOCATION OF RECORDS AND CERTAIN COLLATERAL
------------------------------------------
Principal Place of
Business and
Location of Records
---------------------
Location of
Inventory
and Equipment
--------------
