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EXHIBIT 4.(a)(i)
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated as of April 28, 2000
among
▇▇▇▇ ▇▇▇▇▇▇ STORES, INC.,
▇▇▇▇ ▇▇▇▇▇▇ MERCHANDISING, INC.,
▇▇▇▇ ▇▇▇▇▇▇ RETAILING, INC.
▇▇▇▇ ▇▇▇▇▇▇ DISTRIBUTING, INC.
THE ▇. ▇▇▇▇▇▇▇▇ COMPANY
▇▇▇▇▇▇▇▇ PROPERTY CORP.
and ▇▇▇▇▇▇▇▇ WORLDWIDE CORP.
as Borrowers,
and
LASALLE BANK NATIONAL ASSOCIATION
as Bank
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is attached but
is inserted for convenience only.
1. DEFINITIONS AND TERMS......................................................1
1.1 Certain Definitions........................................1
1.2 Certain UCC and Accounting Terms..........................13
1.3 Revised Article 9.........................................13
2. LOANS: BANK'S COMMITMENTS AND BORROWING PROCEDURES.......................13
2.1 Revolving Credit Commitment...............................13
2.2 Borrowing Procedures......................................14
2.3 Letters of Credit.........................................14
2.4 Conditions for Issuance of Letters of Credit..............15
2.5 Procedure for Issuance of Letters of Credit...............15
2.6 Reimbursement Obligations for Letters of Credit...........16
2.7 Nature of Obligations.....................................17
2.8 Letter of Credit Collateral Account.......................18
2.9 All Loans to Constitute One Obligation....................19
3. LOANS: NOTES EVIDENCING LOANS............................................19
3.1 Revolving Note............................................19
3.2 Recordation...............................................19
3.3 Loan Evidence.............................................20
4. LOANS: AMOUNTS; INTEREST; CHANGE IN CIRCUMSTANCES, ETC...................20
4.1 Interest Rates; Applicable Borrowing Amounts;
Default Rate..............................................20
4.2 Computation of Interest...................................21
4.3 Conversion and Reborrowing of Loans; Interest
Periods...................................................21
4.4 Change of Law.............................................21
4.5 Unavailability of Deposits or Inability to
Ascertain the LIBOR Rate or Adjusted LIBOR Rate...........21
4.6 Yield Protection, Etc.....................................22
4.7 Funding Indemnity.........................................23
4.8 Discretion of Bank as to Manner of Funding................23
4.9 Interest Laws.............................................24
5. LOANS: GENERAL TERMS.....................................................24
5.1 Payments to Bank..........................................24
5.2 Automatic Debit...........................................24
5.3 Application of Payment....................................24
5.4 Conditions Precedent Events...............................25
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5.5 Offset....................................................25
5.6 Discretionary Disbursements...............................25
5.7 Credit Termination Date; Continuance of
Obligations, Etc..........................................25
5.8 Over-Advances.............................................26
5.9 Maintenance of Accounts...................................26
5.10 Blocked Accounts..........................................26
5.11 Service Fees..............................................26
5.12 Letter of Credit Fees.....................................27
6. LOANS: CONDITIONS TO LENDING.............................................27
6.1 Initial Loan Conditions Precedent.........................27
7. COLLATERAL: GENERAL TERMS................................................29
7.1 Grant of Security Interest................................29
7.2 Real Property Collateral..................................30
7.3 Perfection of Security Interests..........................30
7.4 Inspection of Collateral and Visitation Rights............30
7.5 First Lien and Locations of Collateral....................30
7.6 Constructive Trust........................................31
7.7 Application of Proceeds of Collateral.....................31
7.8 Third Party Collateral Claims.............................31
7.9 Additional Collateral.....................................31
7.10 No Custom or Waiver.......................................32
7.11 Special Collateral........................................32
8. COLLATERAL: ACCOUNTS RECEIVABLE..........................................32
8.1 Account Representations and Warranties....................32
8.2 Verification of Accounts Receivable.......................32
8.3 Account Restrictions......................................32
8.4 Enforcement of Right to Accounts Receivable...............33
8.5 Appointment as Attorney-in-Fact...........................33
9. COLLATERAL: INVENTORY....................................................34
9.1 Inventory Representations and Warranties..................34
9.2 Ordinary Course Sales.....................................34
10. COLLATERAL: EQUIPMENT...................................................34
10.1 Equipment Representations and Warranties..................34
10.2 Maintenance...............................................34
10.3 Evidence of Ownership.....................................35
11. REPRESENTATIONS AND WARRANTIES; COVENANTS;INDEMNIFICATION;
CONTINUING OBLIGATION....................................................35
11.1 Representations and Warranties of Borrowers...............35
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11.2 Affirmative Covenants.....................................41
11.3 Negative Covenants........................................47
12. DEFAULT..................................................................49
12.1 Events of Default.........................................49
12.2 Cumulative Remedies.......................................50
12.3 Acceleration and Termination of Loans.....................50
12.4 Rights of Secured Creditor................................51
12.5 Assembly of Collateral; Injunctive Relief.................51
12.6 Notice of Collateral Disposition..........................51
12.7 Matters Regarding Sale of Collateral......................51
12.8 Replevin..................................................52
12.9 Application of Proceeds...................................52
13. GENERAL..................................................................52
13.1 Payment Application Date..................................52
13.2 Statement of Account......................................52
13.3 Manner of Application; Waiver of Setoff Prohibition.......53
13.4 Survival of Representations and Warranties................53
13.5 Integration; Amendment; Assignment........................53
13.6 No Waiver.................................................53
13.7 Severability..............................................54
13.8 Successors and Assigns....................................54
13.9 Conflict with Other Agreements............................54
13.10 No Impairment by Termination..............................54
13.11 Waivers...................................................54
13.12 Costs, Fees and Expenses Related to Agreement
and Other Agreements......................................55
13.13 Environmental Indemnity...................................55
13.14 Release...................................................55
13.15 Governing Law.............................................55
13.16 Notices...................................................55
13.17 FORUM; VENUE; JURY TRIAL WAIVER...........................56
13.18 Other Costs, Fees and Expenses............................56
13.19 Revival...................................................57
13.20 Acknowledgments...........................................57
13.21 Section Headings..........................................57
13.22 Counterparts..............................................57
13.23 Effectiveness.............................................57
13.24 Reimbursement Among Borrowers.............................57
13.25 Guaranty..................................................58
13.26 Joint and Several Liability...............................58
13.27 Interrelationship Among the Borrowers.....................58
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the "Agreement")
is made as of the 28th day of April, 2000, by and among ▇▇▇▇ ▇▇▇▇▇▇ STORES, INC.
("▇▇▇▇ ▇▇▇▇▇▇"), ▇▇▇▇ ▇▇▇▇▇▇ MERCHANDISING, INC. ("Merchandising"), ▇▇▇▇ ▇▇▇▇▇▇
RETAILING, INC. ("Retailing"), ▇▇▇▇ ▇▇▇▇▇▇ DISTRIBUTING, INC. ("Distributing"),
THE ▇. ▇▇▇▇▇▇▇▇ COMPANY ("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇▇▇▇ PROPERTY CORP. ("Property") and
▇▇▇▇▇▇▇▇ WORLDWIDE CORP. ("Worldwide"), each an Indiana corporation except
Property, which is a Delaware corporation (each, a "Borrower" and collectively,
"Borrowers"), jointly and severally, and LASALLE BANK NATIONAL ASSOCIATION, a
national banking association ("Bank").
W I T N E S S E T H:
WHEREAS, Borrowers and Bank have entered into that certain Amended and
Restated Secured Credit Agreement dated as of January 20, 1994, as amended from
time to time (the "Original Loan Agreement");
WHEREAS, ▇▇▇▇ ▇▇▇▇▇▇ has entered into that certain Amended and Restated
Secured Term Loan payable to the Bank with an outstanding principal balance of
$1,700,000 (the "Real Estate Loan");
WHEREAS, Borrowers desire to amend and restate the Original Loan
Agreement in accordance with the terms set forth herein;
WHEREAS, Borrowers desire to pay off the Real Estate Loan with the
proceeds of the loans contemplated hereunder; and
WHEREAS, pursuant to Borrowers request, Bank is willing to extend such
financial accommodations to Borrowers under the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements set forth herein, Borrowers agree to borrow from Bank, and Bank
agrees to lend to Borrowers, subject to and upon the following terms and
conditions:
1. DEFINITIONS AND TERMS
1.1 Certain Definitions. The following words, terms and/or phrases shall
have the meanings set forth thereafter and such meanings shall be applicable to
the singular and plural form thereof, giving effect to the numerical difference.
"Accounts Receivable" means all of Borrowers' now existing or
hereafter arising or acquired Accounts, accounts receivable and other
rights to payment, however created,
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including without limitation any right to payment for goods sold or
leased or for services rendered, whether arising out of the sale of
Inventory or otherwise and whether or not it has been earned by
performance, and any and all notes, drafts, acceptances, chattel paper,
General Intangibles and other obligations arising out of or representing
a right to payment, however created, including without limitation a right
to payment for goods sold or leased or for services rendered.
"Adjusted LIBOR Rate" means a rate per annum determined pursuant
to the following formula:
Adjusted LIBOR Rate = LIBOR
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100% - Reserve Percentage
"Affiliate" means any Person (a) that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is
under common control with any other Person or one or more Affiliates, (b)
that directly or beneficially owns or holds 20% or more of any equity
interest in any other Person or one or more Affiliates or (c) 20% or more
of whose voting stock (or in the case of a person that is not a
corporation, 20% or more of any equity interest) is owned directly or
beneficially or held by any other Person or one or more Affiliates. For
purposes of this definition and this Agreement, the term "control" shall
mean, directly or indirectly, the power to direct or cause the direction
of the management or policies of a Person, whether through ownership
interest or otherwise, including without limitation the power to elect or
appoint, directly or indirectly, a majority of the members of its
governing board or body.
"Authorized Officer" means the President, the Vice President of
Finance or one or more other authorized executive officers of each
Borrower.
"Borrowers' Liabilities" means all obligations and liabilities of
each Borrower in the aggregate to Bank (including, without limitation,
all debts, claims, reimbursement obligations and indebtedness) whether
primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable, however
evidenced, created, incurred, acquired or owing and however arising,
whether under this Agreement, the Note, or the Other Agreements, or by
oral agreement or operation of law or otherwise.
"Borrowing" means the incurrence or continuance of one type of
Loan (either a Prime Rate Loan or a LIBOR Loan) under the Revolving
Credit Commitment from Bank on a given date (or resulting from
conversions on a given date), having in the case of LIBOR Loans the same
Interest Period.
"Business Day" means (i) for all purposes other than as covered by
clause (ii) below, any day on which Bank is open for the transaction of
commercial banking business in
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Chicago, Illinois other than a Saturday or Sunday and (ii) with respect
to all notices and determinations in connection with, and payments of
principal and interest on, LIBOR Loans, any day which is a Business Day
described in clause (i) above and which is also a day for trading by and
between banks in United States dollar deposits in London, England.
"Capital Expenditures" means the cost of acquiring any fixed
assets, any store fixtures, shelving, computers, the remodeling of
stores, furniture or any improvements, replacements, substitutions,
accessions or additions thereto or therefor, which have a useful life of
more than one (1) year, including without limitation, the cost of direct
or indirect acquisitions of such assets by way of purchase, capital lease
or otherwise.
"Carryover Inventory" is Inventory, other than Non-Apparel
Inventory, which would be Eligible Inventory if it were not more than one
year old and which:
(i) if included in Inventory during a spring-summer season,
remains in Inventory no longer than to the end of the third fiscal
quarter of the year containing the Borrowers' next spring-summer season;
or
(ii) if included in Inventory during a fall-winter season, remains
in Inventory no longer than to the end of the first fiscal quarter of the
year containing Borrowers' next fall- winter season.
"Charges" means all national, federal, state, county, city,
municipal and/or other governmental (or any instrumentality, division,
agency, body or department thereof, including, without limitation, the
PBGC) taxes, levies, assessments, charges, liens, claims or encumbrances
upon and/or relating to Borrowers' Liabilities, Borrowers' business,
Borrowers' ownership and/or use of the Collateral, income and/or gross
receipts.
"Closing Date" means April 28, 2000.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning assigned to such term in
Paragraph 7.1 hereof.
"Collateral Assignment of Leases" means each Collateral Assignment
of Lease executed by each Borrower in favor of Bank with respect to each
Borrower's leased Facilities, as each of the same may be amended,
modified or restated from time to time, including but not limited to, the
Amended and Restated Assignment of Distribution Center Leases and Rents.
"Conversion Date" means the Business Day on which a Prime Rate
Loan is converted to a LIBOR Loan.
"Debt" means all of a Person's liabilities, obligations and
indebtedness to any Person of any and every kind and nature, whether
primary, secondary, direct, indirect, absolute,
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contingent, fixed or otherwise, heretofore, now and/or from time to time
hereafter owing, due or payable, however evidenced, created, incurred,
acquired or owing and however arising, whether under written or oral
agreement, by operation of law or otherwise. Without in any way limiting
the generality of the foregoing, Debt specifically includes (i)
indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations to pay
the deferred purchase price of property or services, (iv) obligations as
lessee under leases which shall have been or should be, in accordance
with generally accepted accounting principles, recorded as capital
leases, (v) obligations under direct or indirect guaranties in respect
of, and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses
(i) through (iv) above, and (vi) liabilities in respect of unfunded
vested benefits under Plans and Multiemployer Plans covered by Title IV
of ERISA.
"Default Rate" shall have the meaning assigned to such term in
Paragraph 4.1(c) hereof.
"Disclosure Schedule" means a schedule, in form and substance
satisfactory to Bank, which (i) has been certified as true and correct by
an Authorized Officer of each Borrower, (ii) has been delivered to Bank
on or prior to the date hereof, (iii) describes, in reasonable detail,
all exceptions to the representations, warranties and covenants of each
Borrower herein, and (iv) is clearly identified on its face as the
Disclosure Schedule for purposes hereof. Any reference herein to a
"Schedule" shall be deemed to refer to a part of the Disclosure Schedule.
"Early Termination Date" means the date, pursuant to Paragraph
12.3, upon which, whether by notice or by right hereunder, Bank's
obligations to extend credit hereunder is terminated.
"EBITDA" means, with respect to any monthly period of Borrowers,
Borrowers' (a) net income for such period, plus (b) the aggregate amounts
deducted in determining such net income in respect of (i) Interest
Expense, (ii) federal and state income taxes, (iii) depreciation, (iv)
discounts or fees associated with indebtedness, depreciation and
amortization expenses, (v) any other non-cash charges, (vi) amortization
of General Intangibles and (vii) for the first quarter of 2000 only, the
$3,400,000 severance accrual minus (c) the aggregate amounts added in
determining such net income in respect of (i) interest income, (ii) tax
benefits, including, without limitation, operating loss carry forwards,
suspended losses and deductions, and (iii) any other non-cash income,
each determined in accordance with GAAP consistently applied.
"Eligible Inventory" means each Borrower's Inventory which meets
each of the following requirements:
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(i) it is in such condition that it may be sold in the ordinary
course of such Borrower's business;
(ii) in the case of goods held for sale, it is new and unused
(except as Bank may otherwise consent in writing);
(iii) it is less than one year old;
(iv) it is owned by such Borrower and is subject to a perfected
Lien in Bank's favor and is not subject to any other Lien whatsoever;
(v) it is situated at a location in the United States, unless a
letter of credit exists which secures the commitment to deliver the
Inventory;
(vi) in the case of Inventory stored in a warehouse or other
facility owned by a Person other than any Borrower, such Inventory is
subject to a bailee agreement acceptable in form and substance to Bank;
(vii) to the best of Borrower's knowledge, it has been produced in
compliance with the Fair Labor Standards Act of 1938, as amended, and all
rules, regulations and orders thereunder; and
(viii) Bank, in good faith, has determined, in accordance with
Borrower's customary business practices, that it is not unacceptable due
to age, type, category and/or quantity.
Any of any Borrower's Inventory which is Eligible Inventory at any time,
but which subsequently fails to meet any of the foregoing requirements,
shall forthwith cease to be Eligible Inventory.
"Environmental Claim" means any notice of violation, claim, demand,
abatement order or other order or direction (conditional or otherwise) by
any governmental authority for any damage, including, without limitation,
personal injury (including sickness, disease or death), tangible or
intangible property damage, contribution, indemnity, indirect or
consequential damages, damage to the environment, nuisance, pollution,
release of any Hazardous Material to the environment, contamination or
other adverse effects on the environment, or for fines, penalties or
restrictions, resulting from or based upon (i) the occurrence of a
Release (whether sudden or non-sudden or accidental or non-accidental)
of, or exposure to, any Hazardous Material, in, into or onto the
environment at, in, by, from, onto or related to any Facility, (ii) the
generation, use, handling, transportation, storage, treatment or disposal
of Hazardous Materials in connection with the operation of any Facility,
or (iii) the violation, or alleged violation, of any Environmental Laws
or any Governmental Authorizations relating to environmental matters in
connection with the Facilities.
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"Environmental Laws" means all statutes, ordinances, orders,
rules, regulations, plans, policies, or decrees and the like relating to
(i) environmental matters, including, without limitation, those relating
to fines, injunctions, penalties, damages, contribution, cost recovery
compensation, losses or injuries resulting from the Release or threatened
Release of Hazardous Materials, (ii) the generation, use, handling,
transportation, storage, treatment or disposal of Hazardous Materials or
(iii) occupational safety and health, industrial hygiene, land use or the
protection of human, plant or animal health or welfare related to
Hazardous Materials, in any manner applicable to Borrowers or an
Affiliate or any of their respective properties, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C.ss.9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C.ss.1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C.ss.6901 et seq.), the Federal Water Pollution
Control Act (33 U.S.C.ss.1251 et seq.), the Clean Air Act (42
U.S.C.ss.7401 et seq.), the Toxic Substances Control Act (15
U.S.C.ss.2601 et seq.), the Occupational Safety and Health Act (29
U.S.C.ss.651 et seq.) and the Emergency Planning and Community
Right-To-Know Act (42 U.S.C.ss.11001 et seq.), each as amended or
supplemented, and any analogous present or future local, state and
federal statutes and regulations promulgated pursuant thereto, each as in
effect as of the date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time and, unless the context
otherwise requires, the regulations promulgated thereunder and any
successor statute.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with Borrower or an Affiliate would be
deemed to be a "single employer" within the meaning of Section 4001(b) of
ERISA or, where applicable, would be treated as a "single employer" under
Section 412(c)(11) of the Code.
"ERISA Termination Event" means (i) a "Reportable Event" described
in Section 4043 of ERISA (other than a "Reportable Event" not subject to
the provision for 30-day notice to the PBGC under such regulations), (ii)
the withdrawal of any Borrower or any Affiliate from a Plan during a plan
year in which it was a "substantial employer," as defined in Section
4001(a) of ERISA, including a cessation of operations that is treated as
a withdrawal by a "substantial employer" under Section 4062(e) of ERISA,
(iii) the filing of a notice of intent to terminate a Plan or the
treatment of a Plan amendment as a termination under Section 4041 of
ERISA, (iv) the institution of proceedings to terminate a Plan by the
PBGC, (v) any other event or condition which in the reasonable judgment
of Bank is likely to constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to or any ERISA
administer, any Plan, or (vi) the partial or complete withdrawal of any
Borrower or any ERISA Affiliate from a Multiemployer Plan.
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"Event of Default" shall have the meaning assigned to such term in
Paragraph 12.1 hereof.
"Excess Interest" shall have the meaning assigned to such term in
Paragraph 4.9 hereof.
"Facilities" or "Facility" means any and all real property
(including, without limitation, all buildings, or other improvements
located thereon) now, hereafter or heretofore, owned, leased, operated or
used by any Borrower or any of their respective successors and assigns.
"Funded Debt" means, without duplication, (i) indebtedness for
borrowed money, including, but not limited to, all Loans incurred under
this Agreement, (ii) obligations evidenced by bonds, debentures, notes or
other similar instruments, (iii) the face amount of all letters of credit
issued for the account of any Borrower and, without duplication, all
drafts drawn thereunder, (iv) obligations to pay the deferred purchase
price of property or services, (v) obligations as lessee under leases
which have been or should be, in accordance with GAAP, recorded as
capital leases, (vi) obligations under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of other of the kinds referred to
in clauses (i) through (v) above, (vii) all net obligations under any
interest rate swap agreements, any interest rate cap agreement, any
interest rate collar agreement or other similar agreement or arrangement,
and (viii) all obligations to pay a specified purchase price for goods or
services whether or not delivered or accepted (i.e., take-or-pay and
similar obligations).
"GAAP" means United States generally accepted accounting
principles, as in effect from time to time.
"General Intangibles" means all choses in action, causes of action
and all other intangible property of Borrowers of every kind and nature
now owned or hereafter acquired by Borrowers, including, without
limitation, corporate and other business records, deposit accounts,
inventions, designs, patents, patent and trademark registrations and
applications, trademarks, trade names, trade secrets, goodwill,
copyrights, registrations, licenses, franchises, deferred tax benefits,
tax refund claims, prepaid expenses, computer programs, covenants not to
compete, customer lists and mailing lists, contract rights,
indemnification rights, causes of action and any letters of credit,
guarantee claims, security interests or other security held by or granted
to Borrowers.
"Governmental Authorization" means any permit, license,
authorization, plan, directive, consent order or consent decree of or
from any federal, state or local governmental authority, agency or court
having jurisdiction over Borrowers or any Facility.
"Hazardous Materials" means (i) any chemical, material or
substance defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous
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materials," "extremely hazardous waste," "restricted hazardous waste,"
"infectious waste," "toxic substances" or any other formulations intended
to define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental
Laws or publications promulgated pursuant thereto, (ii) any oil,
petroleum or petroleum derived substance, (iii) any drilling fluids,
produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal
resources, (iv) any flammable substances or explosives, (v) any
radioactive materials, (vi) asbestos in any form (which is or could
become friable), (vii) urea formaldehyde foam insulation, (viii)
electrical equipment which contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of fifty parts
per million, (ix) pesticides or (x) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
governmental authority or which may or could pose a hazard to the health
and safety of the owners, occupants or any Persons in the vicinity of the
Facilities.
"Interest Expense" means, for any period, the sum of all interest
in respect of Funded Debt of Borrowers accrued or capitalized during such
period (whether or not actually paid during such period), determined in
accordance with GAAP.
"Interest Period" means with respect to LIBOR Loans, the period
used for the computation of interest commencing on the date the relevant
LIBOR Loan is initiated, effected by conversion or continued, as the case
may be, and concluding on the date thirty (30), sixty (60) or ninety (90)
days thereafter, at Representative's option, with any subsequent Interest
Period commencing on the last day of the immediately preceding Interest
Period and concluding thirty (30), sixty (60) or ninety (90) days
thereafter, at Representative's option; provided, however, that no
Interest Period for any LIBOR Loan made under the Revolving Credit
Commitment may extend beyond the Maturity Date.
"Inventory" shall have the meaning ascribed to it in the Uniform
Commercial Code, as then in effect in the State of Illinois, and shall
include, without limitation, all goods held or being processed for sale
or lease including all materials, work-in-process, finished goods,
supplies and other goods customarily classified as Inventory.
"Letter of Credit" means a standby, commercial import or other
letter of credit at any time issued by Bank for the account of any
Borrower.
"Letter of Credit Obligations" means, as at the time of
determination thereof, an amount in U.S. Dollars equal to all
liabilities, whether actual or contingent, of each Borrower with respect
to all Letters of Credit, including the sum of (a) Reimbursement
Obligations and (b) the aggregate undrawn face amount of the outstanding
Letters of Credit.
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"LIBOR" means, for each Interest Period, the rate of interest per
annum as determined by Bank (rounded upward, if necessary, to the nearest
whole multiple of one-sixteenth of one percent (1/16th of 1%) or such
other integral multiple thereof at which interest rates for LIBOR-based
loans are commonly quoted to major banks in the interbank eurodollar
market) at which deposits of United States Dollars in immediately
available and freely transferable funds would be offered at 11:00 a.m.,
Chicago time, two (2) Business Days prior to the commencement of such
Interest Period by the principal offshore funding office of Bank to major
banks in the interbank eurodollar market upon request by such major banks
for a period equal to such Interest Period and in an amount equal to the
principal amount of the LIBOR Loan to be outstanding from Bank during
such Interest Period. Each determination of LIBOR made by Bank in
accordance with this paragraph shall be conclusive and binding on
Borrower except in the case of manifest error.
"LIBOR Loan" means all or a portion of a Revolving Loan bearing
interest at the Adjusted LIBOR Rate, plus the LIBOR Margin.
"LIBOR Margin" means two and one-half percent (2.50%).
"Lien" means, with respect to the Collateral, or any asset of any
Borrower, any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give any of the foregoing,
any conditional sale or other title retention agreement, any lease in the
nature thereof and the filing of or agreement to give any financing
statement under the Uniform Commercial Code in effect in any
jurisdiction).
"Loan" or "Loans" means and includes all Revolving Loans made
under the Revolving Credit Commitment, in each case including all LIBOR
Loans and all Prime Rate Loans thereunder, unless the context in which
such term is used shall otherwise require.
"Maturity Date" means June 30, 2001.
"Maximum Rate" shall have the meaning assigned to such term in
Paragraph 4.9 hereof.
"Mortgage" means that certain Amended and Restated Future Advance
Mortgage, Assignment of Rents and Leases, Security Agreement and Fixture
Filing of even date herewith made by ▇▇▇▇ ▇▇▇▇▇▇ in favor of Bank, as
amended, modified or restated from time to time.
"Mortgaged Property" means that certain parcel of real property
owned by ▇▇▇▇ ▇▇▇▇▇▇ located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
which has been mortgaged to Bank pursuant to the Mortgage.
"Multiemployer Plan" means a plan defined as such in Section
4001(a)(3) of ERISA to which contributions have been made by any Borrower
or an ERISA Affiliate.
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"Non-Apparel Inventory" is Inventory of ▇▇▇▇▇▇▇▇ consisting of
items which are neither apparel nor apparel accessories and which would
be Eligible Inventory if it were not more than one year old.
"Note" means the Revolving Note.
"Obligor" means any Person who is and/or may become obligated to
any Borrower or any Subsidiary under or on account of Accounts
Receivable.
"Other Agreements" means all agreements, instruments and
documents, including, without limitation, letters of credit, guaranties,
mortgages, deeds of trust, pledges, powers of attorney, consents,
assignments, contracts, notices, security agreements, leases, financing
statements and all other written matter heretofore, now and/or from time
to time hereafter executed by and/or on behalf of any Borrower and
delivered to Bank including, without limitation, the Note, the Mortgage,
and the Collateral Assignment of Lease.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Permitted Debt" shall have the meaning assigned to such term in
Paragraph 11.3(e) hereof.
"Permitted Investments" shall have the meaning assigned to such
term in Paragraph 11.3(f) hereof.
"Permitted Liens" shall have the meaning assigned to such term in
Paragraph 11.3(a) hereof.
"Person" means and includes an individual, a partnership, a joint
venture, a limited liability company a corporation (whether or not for
profit), a trust, an unincorporated organization, a government or any
department or agency thereof or any other entity or organization.
"Plan" means, at any time, any single-employer plan, as defined in
Section 4001(a) and subject to Title IV of ERISA, which is maintained, or
at any time during the five calendar years preceding the time in question
was maintained, for employees of any Borrower or a Subsidiary.
"Prime Rate" means the rate of interest (expressed as a percentage
per annum) most recently announced or published publicly from time to
time by Bank as its base or prime rate of interest, which is not
necessarily the lowest or most favorable rate of interest charged by Bank
on commercial loans at any one time. The rate of interest shall change
automatically and immediately as and when the Prime Rate shall change,
without notice to Borrowers, and any notice to which it may be entitled
is hereby waived, and any such change in the Bank's
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Prime Rate shall not affect any of the terms and conditions of this
Agreement, all of which shall remain in full force and effect.
"Prime Rate Loan" means a Loan bearing interest at the Prime Rate
plus the Prime Rate Margin.
"Prime Rate Margin" shall mean one-quarter of one percent (0.25%).
"Reimbursement Obligations" means, at any time, the aggregate of the
obligations of each Borrower to Bank in respect of all unreimbursed
payments or disbursements made by Bank under or in respect of the Letters
of Credit.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dumping,
leaching, or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal
of any barrels, containers or other closed receptacles containing any
Hazardous Materials), or into or out of any Facility.
"Representative" shall have the meaning assigned to such term in
Paragraph 2.2(b) hereof.
"Reserve Percentage" means, for the purpose of computing the
Adjusted LIBOR Rate, the reserve requirement imposed by the Board of
Governors of the Federal Reserve System (or any successor) under
Regulation D on Eurocurrency liabilities (as such term is defined in
Regulation D) for the applicable Interest Period as of the first day of
such Interest Period, but subject to any amendments of such reserve
requirement by such Board or its successor, and taking into account any
transitional adjustments thereto becoming effective during such Interest
Period. For purposes of this definition, LIBOR Loans shall be deemed to
be Eurocurrency liabilities as defined in Regulation D without benefit of
or credit for prorations, exemptions or offsets under Regulation D.
"Revolving Credit Commitment" shall have the meaning assigned to
such term in Paragraph 2.1 hereof.
"Revolving Loan Borrowing Base" means, as at any date of
determination thereof, an amount which is the sum of:
A) the product of the amounts of (i) each component of Eligible
Inventory, (ii) outstanding and issued documentary letters of credit, and
(iii) Carryover Inventory, multiplied by the Advance Ratio, subject to
the maximum amount of each such product to be included in the Revolving
Loan Borrowing Base, as follows:
COMPONENT OF INVENTORY MAXIMUM AMOUNT
---------------------- --------------
Eligible Inventory on premises None.
Eligible Inventory in transit. None.
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Eligible Inventory in transit not
supported by a letter of credit. None.
Outstanding and issued documentary
letters of credit. None.
Carryover Inventory. $5,000,000.
plus (B) the product of Non-Apparel Inventory multiplied by thirty
percent (30%);
plus (C) seventy percent (70%) of the fair market value of the
Mortgaged Property, which is the amount of Four Million Four Hundred
Eighty Thousand Dollars ($4,480,000), as cumulatively reduced on the
first day of each month commencing June, 2000 in the amount of Eighteen
Thousand Six Hundred Sixty-Seven Dollars ($18,667) (the "Mortgaged
Property Cap").
For purposes hereof, "Advance Ratio" shall mean either (x) during
the period beginning August 1 through December 15 of each year, seventy
percent (70%) or (y) during the period beginning December 16 through July
31 of each year, sixty percent (60%).
"Revolving Loans" means and includes all Loans made under the
Revolving Credit Commitment, unless the context in which such term is
used shall otherwise require.
"Revolving Note" means that certain Amended and Restated Revolving
Note of even date herewith in the maximum aggregate principal amount of
THIRTY-SEVEN MILLION DOLLARS ($37,000,000), as the same may be amended,
modified or restated from time to time, and together with any renewals
thereof or exchanges or substitutes therefor.
"Stock" means all capital stock, shares, interests, participation
or other equivalents, however designated, of or in a corporation or
limited liability company, whether or not voting, including but not
limited to common stock, warrants, preferred stock, convertible
debentures, and all agreements, instruments and documents convertible, in
whole or in part, into any one or more or all of the foregoing.
"Subordinated Debt" means, as of any date, the amount of Funded
Debt which is subordinated in right of payment to the Loans on terms
satisfactory to Bank in each particular case.
"Subsidiary" means any corporation of which a Person owns,
directly or indirectly through one or more intermediaries, more than
fifty percent (50%) of the voting stock at the time of determination.
"Tangible Net Worth" means, at any time, net worth (as determined
in accordance with GAAP) plus Subordinated Debt after subtracting
therefrom the amount of any General Intangibles, amounts due from
Affiliates and the amount of other assets classified as intangible by
Bank in the exercise of its sole discretion.
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"Termination Date" means the earliest to occur of (i) the Maturity
Date or (ii) the Early Termination Date.
1.2 Certain UCC and Accounting Terms. Except as otherwise defined
in this Agreement or the Other Agreements, all words, terms and/or
phrases used herein and therein shall be defined by the applicable
definition therefor (if any) in the Uniform Commercial Code as then in
effect in the State of Illinois. Notwithstanding the foregoing, any
accounting terms used in this Agreement which are not specifically
defined herein shall have the meanings customarily given to them in
accordance with GAAP. All financing computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance
with GAAP as consistently applied.
1.3 Revised Article 9. It is the intention of the parties hereto
that the priorities and agreements herein contained continue to apply
after the enactment by the various States of Revised Article 9 --Secured
Transactions (with conforming amendments to Articles 1, 2, 2a, 4, 5, 6, 7
and 8) to the UCC as approved by The American Law Institute in 1998 and
approved and recommended for enactment in all the States by the National
Conference of Commissioners for Uniform State Laws in 1998 ("Revised
Article 9") and the effectiveness of Revised Article 9 in any State.
After the effectiveness of Revised Article 9 in any State governing
perfection and the effect of perfection or non-perfection of a security
interest in any collateral, as to such State and such collateral, (i) all
section references herein to, and all defined terms used herein which are
defined in Article 9 of the UCC as currently in effect shall be deemed to
be to any corresponding Section or definition of Revised Article 9, and
(ii) if any definition used herein by reference to Revised Article 9 is
broader than the corresponding definition used in current Article 9 of
the UCC, such broader definition will apply herein.
2. LOANS: BANK'S COMMITMENTS AND BORROWING PROCEDURES
2.1 Revolving Credit Commitment. On the terms and subject to the
conditions set forth in this Agreement, Bank agrees to make revolving
credit and Letters of Credit available to Borrowers from time to time
prior to the Termination Date with respect to Revolving Loans and Letters
of Credit in such aggregate amounts as Representative may from time to
time request but in no event exceeding the maximum principal amount
available of THIRTY-SEVEN MILLION DOLLARS ($37,000,000) in the aggregate
(the "Revolving Credit Commitment"); provided, however, that in no event
shall the Revolving Credit Commitment at any one time exceed the
Revolving Loan Borrowing Base. The Revolving Credit Commitment shall be
available to Borrowers by means of Revolving Loans and Letters of Credit,
it being understood that Revolving Loans and Letters of Credit may be
repaid and used again during the period from the date hereof to and
including the Termination Date, at which time the Revolving Credit
Commitment shall expire. Notwithstanding the foregoing, Bank may, from
time to time, in its sole discretion, establish reserves in determining
the Revolving Loan Borrowing Base ("Reserves"), and increase or decrease
such Reserves from time to time, if and to the extent that, such Reserves
are necessary to protect Bank against the aggregate
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amount of exposure assumed by Bank in connection with certain interest
rate protection products entered into from time to time between Bank and
any Borrower.
2.2 Borrowing Procedures.
(a) Whenever Borrowers desire to continue or incur Revolving
Loans hereunder, Representative shall give Bank at its "Address for
Notices" set forth on the signature page hereof, prior to 11:00 A.M.
(Chicago time), at least two (2) Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing of
LIBOR Loans under the Revolving Credit Commitment and written notice on
the same Business Day (or telephonic notice promptly confirmed in
writing) of each Borrowing of Prime Rate Loans under the Revolving Credit
Commitment to be made hereunder. Each such notice (each a "Notice of
Borrowing") with respect to Revolving Loans and LIBOR Loans shall be
irrevocable and shall specify (i) the aggregate principal amount of the
Revolving Loans to be made pursuant to each Borrowing, (ii) the date of
Borrowing (which shall be a Business Day), and (iii) whether any
respective Borrowing shall consist of Prime Rate Loans or LIBOR Loans
and, if LIBOR Loans, the Interest Period to be initially applicable
thereto. In addition, each Notice of Borrowing shall be accompanied by a
Borrowing Base Certificate in the form attached hereto as Exhibit A duly
executed and completed by the Authorized Officer of Representative.
(b) Notwithstanding anything contained in this Agreement to
the contrary, the Borrowers hereby appoint ▇▇▇▇ ▇▇▇▇▇▇ (the
"Representative") to act as their sole and exclusive representative under
this Agreement for all purposes, including, without limitation, to
receive funds advanced hereunder, to receive notices and other
communications from the Bank hereunder, to make requests for advances of
funds and letters of credit hereunder and to amend, modify or supplement
this Agreement on behalf of each Borrower. The Bank shall not have (i)
any obligation to communicate with any Borrower other than the
Representative concerning this Agreement, any note or any other matter
related to the obligations of the Borrowers and (ii) any responsibility
with respect to the allocation among Borrowers of the funds advanced
hereunder. It is understood and agreed that all of the Borrowers have
obtained all necessary corporate approvals to effectuate the provisions
of this Paragraph 2.2(b).
(c) Without in any way limiting the obligation of
Representative to confirm in writing any telephonic notice permitted to
be given hereunder, Bank may prior to receipt of written confirmation act
without liability upon the basis of such telephonic notice, believed by
Bank in good faith to be from an Authorized Officer of Representative. In
each such case, Borrowers hereby waive the right to dispute Bank's record
of the terms of such telephonic notice.
2.3 Letters of Credit. Subject to all of the terms and conditions
of this Agreement, including, but not limited to, the availability of
funds pursuant to Paragraph 2.1 above with respect to the Revolving
Credit Commitment, if requested to do so by Representative, Bank
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shall issue its or cause to be issued Letters of Credit for the account
of each Borrower under the Revolving Credit Commitment. No Letter of
Credit may have an expiration date that is later than the Maturity Date.
Any amounts paid by Bank so designated by the Authorized Officer in
connection with any Letter of Credit (i) shall become part of Borrowers'
Liabilities, (ii) shall be paid from the proceeds of a Revolving Loan
requested pursuant to Paragraph 2.1 above, to the extent Bank is required
to make a Revolving Loan pursuant to the terms hereof, and (iii)
otherwise, shall be payable as set forth in Paragraph 2.6 below. In no
event shall Bank be required to issue or cause to be issued Letters of
Credit at any time there exists an Event of Default or an event which
with passage of time or giving of notice or both would mature into an
Event of Default.
2.4 Conditions for Issuance of Letters of Credit. In addition to
being subject to the satisfaction of the conditions contained in
Paragraphs 2.3, 5.7 and 6.1 below, the obligation of Bank to issue any
Letter of Credit is subject to the satisfaction in full of the following
conditions:
(a) the aggregate maximum amount then available for drawing
under Letters of Credit issued (and outstanding) by Bank, after giving
effect to any Letter of Credit requested hereunder, shall not exceed any
limit imposed by law or regulation upon Bank;
(b) Representative shall have delivered to Bank at such
times and in such manner as Bank may reasonably prescribe such documents
and materials, including, without limitation, an application therefor on
Bank's standard form, as may be required pursuant to the terms of the
proposed Letter of Credit and application therefor and the proposed
Letter of Credit shall be reasonably satisfactory to Bank as to form and
content and consistent with the Bank's master Letter of Credit agreement;
(c) as of the date of issuance, no order, judgment or decree
of any court, arbitrator or governmental authority shall purport by its
terms to enjoin or restrain Bank from issuing the Letter of Credit and no
law, rule or regulation applicable to Bank and no request or directive
(whether or not having the force of law) from any governmental authority
with jurisdiction over Bank shall prohibit or request that Bank refrain
from the issuance of Letters of Credit generally or the issuance of that
Letter of Credit; and
(d) Bank will not be required to amend or renew a Letter of
Credit if Bank would have no obligation to issue the Letter of Credit in
its amended or renewed form.
2.5 Procedure for Issuance of Letters of Credit. An Authorized
Officer of Representative shall give Bank three (3) Business Days' prior
written notice of any requested issuance of a Letter of Credit under this
Agreement (except that, in lieu of such written notice, the Authorized
Officer may give Bank telephonic notice of such request if confirmed in
writing by delivery to Bank (i) immediately of a telecopy of the written
notice required hereunder which has been signed by an Authorized Officer
of Representative requesting the Letter of
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Credit containing all information required to be contained in such
written notice and (ii) promptly (but in no event later than the
requested time of issuance) of a copy of the written notice required
hereunder containing the original signature of the Authorized Officer of
Representative; such notice shall be irrevocable and shall specify the
stated amount of the Letter of Credit requested, the effective date
(which day shall be a Business Day) of issuance of such requested Letter
of Credit, the date on which such requested Letter of Credit is to expire
(which date shall be a Business Day and shall in no event be later than
the Maturity Date), the purpose for which such Letter of Credit is to be
issued, and the applicable Person for whose benefit the requested Letter
of Credit is to be issued and the currency in which it is to be issued,
if not U.S. Dollars. At the time such request is made, the Authorized
Officer shall also provide Bank with a copy of the form of the Letter of
Credit it is requesting be issued. Such notice, to be effective, must be
received by Bank not later than 2:00 P.M. (Chicago time) or the time
agreed upon by Bank and Representative on the last Business Day on which
notice can be given under this Paragraph 2.5. Subject to the terms and
conditions of this Paragraph 2.5, Bank shall, on the requested date,
issue a Letter of Credit on behalf of such Borrower in accordance with
Bank's usual and customary business practices. Bank shall not extend or
amend any Letter of Credit unless the requirements of this Paragraph 2.5
are met as though a new Letter of Credit was being requested and issued.
2.6 Reimbursement Obligations for Letters of Credit.
(a) Borrowers agree to pay to Bank the amount of all
Reimbursement Obligations, interest and other amounts payable to Bank
under or in connection with any Letter of Credit issued on behalf of any
Borrower immediately when due, irrespective of any claim, set-off,
defense or other right which any Borrower may have at any time against
Bank or any other Person, under all circumstances, including without
limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the Other Agreements;
(ii) the existence of any claim, setoff, defense or
other right which any Borrower may have at any time against a
beneficiary named in a Letter of Credit or any transferee of any
Letter of Credit (or any Person for whom any such transferee may
be acting), Bank (except in instances relating to the gross
negligence or wilful misconduct of Bank), or any other Person,
whether in connection with this Agreement, any Letter of Credit,
the transactions contemplated herein or any unrelated transactions
(including any underlying transactions between such Borrower and
the beneficiary named in any Letter of Credit);
(iii) any draft, certificate or any other document
presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect
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or any statement therein being untrue or inaccurate in any respect
(except in instances relating to the gross negligence or wilful
misconduct of Bank);
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of this Agreement or
the Other Agreements; or
(v) the occurrence of any Event of Default.
(b) Bank shall promptly notify Representative of any draw
under a Letter of Credit. Borrowers shall reimburse Bank for drawings
under a Letter of Credit issued by it no later than the Business Day
after the payment by Bank. Unless Borrowers shall have made such payment
to Bank on such date, Borrowers shall be deemed to have elected to
fulfill its Reimbursement Obligation by requesting a Revolving Loan (as a
Prime Rate Loan) in an amount equal to the amount paid by Bank in respect
of such drawing under the Letter of Credit. No notice from any Borrower
shall be required and such Revolving Loan shall be disbursed by Bank
notwithstanding any failure to satisfy any conditions for disbursement of
a Revolving Loan set forth herein (including restatement of all
representations and warranties) and, to the extent of the Revolving Loans
so disbursed, the Reimbursement Obligation of Borrowers hereunder shall
be deemed satisfied. If any Reimbursement Obligation with respect to any
Letter of Credit is not paid by Borrowers and there is no availability to
make a Revolving Loan under Paragraph 2.1, then an Event of Default shall
be deemed to have occurred hereunder by virtue of non-payment of
Borrowers' Liabilities and the Reimbursement Obligation shall bear
interest at the Default Rate from the date of the relevant drawing under
the pertinent Letter of Credit until paid.
2.7 Nature of Obligations.
(a) As among Borrowers and Bank, Borrowers assume all risks of
the acts and omissions of, or misuse of the Letters of Credit by, the
respective beneficiaries of the Letters of Credit; provided, that the
foregoing is not intended to affect any rights Borrowers may have against
any such beneficiary. In furtherance and not in limitation of the
foregoing, Bank shall not be responsible for (i) the forms, validity,
sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and
issuance of any Letter of Credit, even if it should in fact prove to be
in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (ii) the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign a Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii)
failure of the beneficiary of a Letter of Credit to comply fully with
conditions required in order to draw upon such Letter of Credit; (iv)
errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise; (v) errors
in interpretation of technical terms; (vi) misapplication by the
beneficiary of a Letter of Credit of the proceeds of any drawing under
such Letter of Credit; and (vii) any consequences arising from causes
beyond the control of Bank and to the
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extent not avoidable by Bank by the observance of reasonable commercial
standards prevailing in the geographic area where Bank is located, except
to the extent resulting from the gross negligence or wilful misconduct of
the Bank.
(b) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by
Bank under or in connection with the Letters of Credit or any related
certificates shall not put Bank under any resulting liability to
Borrowers or relieve Borrowers of any of its obligations hereunder to
Bank except to the extent resulting from the gross negligence or willful
misconduct of Bank.
2.8 Letter of Credit Collateral Account.
(a) Upon the occurrence of an Event of Default, Borrowers
hereby agree that they will, until the final expiration date of any
Letter of Credit and thereafter as long as any amount is payable to Bank
in respect of any Letter of Credit and whether or not this Agreement is
then in effect, maintain a special collateral account (the "Letter of
Credit Collateral Account") at the Bank's office at the address specified
on the signature page hereof, in the name of Borrowers but under the sole
dominion and control of Bank and in which Borrowers shall have no
interest other than as set forth below. If this Agreement terminates for
any reason and any Letters of Credit remain outstanding beyond the
Termination Date, Borrowers shall immediately do one or more of the
following: (i) establish (if none existed) and deposit in the Letter of
Credit Collateral Account for the benefit of Bank, an amount of cash
equal to one hundred percent (100%) of the sum of the aggregate maximum
amount remaining available to be drawn under the remaining outstanding
Letters of Credit (assuming compliance with all conditions for drawing
thereunder) (herein the "Collateral Amount"), (ii) deliver to Bank, cash
equivalents in a face amount, which when discounted at Bank's customary
advance rate for collateral of that type, is at least equal to the
Collateral Amount, plus such pledge agreements, financing statements,
control agreements and other documents requested by Bank in order to
perfect a first and prior perfected security interest in such cash
equivalents in favor of Bank, or (iii) provide Bank with a letter(s) of
credit in an aggregate amount at least equal to the Collateral Amount,
such letter(s) of credit to be in form and substance, and issued by
banks, satisfactory to Bank. Bank will invest any funds on deposit from
time to time in the Letter of Credit Collateral Account in cash
equivalents, as directed by the Borrowers from time to time.
(b) Upon the occurrence and continuance of any Event of
Default hereunder, (i) the obligations of Bank to issue Letters of Credit
shall terminate in accordance with Paragraph 12.3 below and (ii)
Borrowers will be and become thereby unconditionally obligated, without
the need for demand or the necessity of any act or evidence, to deliver
to Bank, for deposit into the Letter of Credit Collateral Account, an
amount (the "Collateral Shortfall Amount") of cash or cash equivalents
equal to the excess, if any, of
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(A) one hundred percent (100%) of the sum of the
aggregate maximum amount remaining available to be drawn under
the Letters of Credit (assuming compliance with all conditions
for drawing thereunder) issued by Bank and outstanding as of
such time, minus
(B) the amount on deposit in the Letter of Credit
Collateral Account at such time that is free and clear of all
rights and claims of third parties and that has not been
applied by Bank against Borrowers' Liabilities.
(c) Upon the occurrence and during the continuance of an Event
of Default, Bank may at any time or from time to time after funds are
deposited in the Letter of Credit Collateral Account, apply such funds to
the payment of the Borrowers' Liabilities as shall from time to time have
become due and payable by Borrowers to Bank under this Agreement or the
Other Agreements. Neither Borrowers nor any Person claiming on behalf of
or through Borrowers shall have any right to withdraw any of the funds
held in the Letter of Credit Collateral Account. After all of Borrowers'
Liabilities have been indefeasibly paid in full, any funds remaining in
the Letter of Credit Collateral Account shall be returned by Bank to
Borrowers, or paid to whoever may be legally entitled thereto at such
time. Bank shall exercise reasonable care in the custody and preservation
of any funds held in the Letter of Collateral Account and shall be deemed
to have exercised such care if such funds are accorded treatment
substantially equivalent to that which Bank accords its own property, it
being understood that Bank shall not have any responsibility for taking
any necessary steps to preserve rights against any Persons with respect
to any such funds.
2.9 All Loans to Constitute One Obligation. The Loans shall
constitute one general obligation of Borrowers, and shall be secured by
the security interest in and Lien upon all of the Collateral, for Bank's
benefit, and by all other security interests, Liens, claims and
encumbrances heretofore, now or at any time or times hereafter granted by
Borrowers to Bank.
3. LOANS: NOTES EVIDENCING LOANS
3.1 Revolving Note. The Revolving Loans made by Bank under the
Revolving Credit Commitment shall be evidenced by the Revolving Note
substantially in the form set forth in Exhibit B, with appropriate
insertions, dated the date hereof, payable to the order of Bank. The
unpaid principal amount of each Revolving Loan shall bear interest and be
due and payable as provided in this Agreement and the Revolving Note.
Payments to be made by Borrowers under the Revolving Note shall be made
at the time, in the amounts and upon the terms set forth herein and
therein.
3.2 Recordation. The type, date and amount of each Loan made by
Bank, the interest rate, and the date and amount of each repayment of
principal received by Bank shall be recorded by Bank in its records. The
aggregate unpaid principal amount so recorded shall
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be prima facie evidence of the principal amount owing and unpaid on each
Note absent manifest error. The failure to so record any such amount or
any error in so recording any such amount shall not limit or otherwise
affect the obligations of Borrowers hereunder or under the Note to repay
the principal amount of the Loans together with all interest accrued
thereon.
3.3 Loan Evidence. Loans made by Bank to Borrowers pursuant to
this Agreement may or may not (at Bank's sole and absolute discretion) be
evidenced after the date hereof by notes or other instruments issued or
made by Borrowers to Bank. Where such loans are not so evidenced, such
loans shall be evidenced solely by entries upon the ledgers, books,
records and/or computer records of Bank maintained for that purpose,
which entries shall be rebuttably presumptive evidence of such loans in
the absence of manifest error.
4. LOANS: AMOUNTS; INTEREST; CHANGE IN CIRCUMSTANCES, ETC.
4.1 Interest Rates; Applicable Borrowing Amounts; Default Rate.
(a) The unpaid principal amount of each Revolving Loan that is
a Prime Rate Loan shall bear interest from the date of such Loan until
maturity (whether by acceleration or otherwise) at a rate per annum which
shall at all times be the Prime Rate in effect from time to time plus the
Prime Rate Margin, in each case with such interest payable in accordance
with Paragraph 4.1(d) below.
(b) Each LIBOR Loan shall be in a minimum amount of $500,000
or such greater amount which is an integral multiple of $100,000 and
shall bear interest on the unpaid principal amount thereof from the date
of such LIBOR Loan until maturity (whether by acceleration or otherwise)
at a rate per annum equal to the sum of the LIBOR Margin plus the
Adjusted LIBOR Rate, with such interest payable in accordance with
Paragraph 4.1(d) below. More than one LIBOR Loan may be incurred on any
Business Day; provided, that at no time shall there be outstanding more
than five (5) LIBOR Loans hereunder.
(c) If an Event of Default shall have occurred and be
continuing hereunder, all LIBOR Loans shall convert to Prime Rate Loans
and all Loans shall bear interest from the date of such Event of Default,
payable on demand, at a rate per annum (the "Default Rate") equal to the
sum of three percent (3%) plus the interest rate then in effect.
(d) Interest on Loans shall accrue from and including the date
of any such Loan to but excluding the date of any repayment thereof and
shall be payable (i) in respect of each Revolving Loan that is a Prime
Rate Loan, monthly in arrears on the last Business Day of each calendar
month, (ii) in respect of each LIBOR Loan, on the last day of each
Interest Period applicable thereto, and (iii) in respect of each Loan, on
any prepayment or conversion (on the amount prepaid or converted), as
applicable, at maturity (whether by acceleration or otherwise) and, after
such maturity, on demand.
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(e) Bank, upon determining the interest rate for any borrowing
or reborrowing of LIBOR Loans for any Interest Period, shall promptly
notify Representative thereof.
4.2 Computation of Interest. Interest on each Loan shall be
computed for the actual number of days elapsed on the basis of a 360-day
year. The interest rate applicable to each Loan that bears interest at
the Prime Rate shall change simultaneously with each change in the Prime
Rate.
4.3 Conversion and Reborrowing of Loans; Interest Periods.
(a) LIBOR Loans shall mature and become due and payable on the
last day of the Interest Period applicable thereto. Following the end of
an Interest Period, provided that no Event of Default has occurred and is
continuing, Borrowers shall have the right, subject to the terms and
conditions of this Agreement, to reborrow through a new LIBOR Loan in
whole or in part, subject to Paragraph 4.1(b) above, any LIBOR Loan from
any current Interest Period into a subsequent Interest Period, provided
that Representative shall give Bank notice of the reborrowing of any such
LIBOR Loan as provided in Paragraph 2.2(a) hereof.
(b) In the event that Borrowers fail to give notice pursuant
to Paragraph 2.2(a) hereof to specify the Interest Period applicable to
such reborrowing, such Loan shall be reborrowed as a Prime Rate Loan.
4.4 Change of Law. Notwithstanding any other provisions of this
Agreement or the Note, if at any time Bank shall determine in good faith
that any change in applicable law or regulation or in the interpretation
thereof makes it unlawful or impossible for Bank to continue to maintain
any LIBOR Loan, Bank shall promptly give notice thereof (together with an
explanation of the reasons therefor) to Representative, and the
obligation of Bank to effect by conversion or continue such LIBOR Loan
under this Agreement shall terminate until it is no longer unlawful or
impossible for Bank to effect by conversion or maintain such LIBOR Loan.
Upon the receipt of such notice, Borrowers may elect to either (i) pay or
prepay, as the case may be, the outstanding principal amount of any such
LIBOR Loan, together with all interest accrued thereon and all other
amounts payable to Bank under this Agreement, or (ii) convert the
principal amount of such affected LIBOR Loan to a Prime Rate Loan
available hereunder, subject to the terms and conditions of this
Agreement.
4.5 Unavailability of Deposits or Inability to Ascertain the LIBOR
Rate or Adjusted LIBOR Rate. Notwithstanding any other provision of this
Agreement or the Note to the contrary, if prior to the commencement of
any Interest Period Bank shall determine in good faith (i) that deposits
in the amount of any LIBOR Loan scheduled to be outstanding are not
available to Bank in the relevant market or (ii) by reason of
circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the LIBOR rate or Adjusted LIBOR
Rate, then Bank shall promptly give notice thereof to Representative, and
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the obligation of Bank to effect by conversion or continue any such LIBOR
Loan in such amount and for such Interest Period shall terminate until
deposits in such amount and for the Interest Period selected by Borrowers
shall again be readily available in the relevant market and adequate and
reasonable means exist for ascertaining the LIBOR rate or Adjusted LIBOR
Rate, as the case may be. Upon the giving of such notice, Borrowers may
elect to either (i) pay or prepay, as the case may be, the outstanding
principal amount of any such LIBOR Loan, together with all interest
accrued thereon and all other amounts payable to Bank in respect of LIBOR
Loans under this Agreement or (ii) convert the principal amount of such
affected LIBOR Loan to a Prime Rate Loan available hereunder, subject to
all the terms and conditions of this Agreement.
4.6 Yield Protection, Etc.
(a) Increased Costs. If (x) Regulation D of the Board of
Governors of the Federal Reserve System, or (y) the adoption of any
applicable law, treaty, rule, regulation or guideline, or any change
therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by Bank
or its lending branch with any request or directive (whether or not
having the force of law) of any such authority, central bank or
comparable agency,
(i) shall subject Bank, its lending branch or any Loan
to any tax, duty, change, stamp tax, fee, deduction, withholding
or other charge in respect of this Agreement, any Loan, the Note
or the obligation of Bank to make or maintain any Loan, or shall
change the basis of taxation of payments to Bank of the principal
of or interest on any Loan or any other amounts due under this
Agreement in respect of any Loan or its obligation to make or
maintain any Loan (except for changes in the rate of tax on the
overall net income of Bank imposed by the federal, state or local
jurisdiction in which Bank's principal executive office or its
lending branch is located);
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board
of Governors of the Federal Reserve System), special deposit or
similar requirement against assets of, deposits with or for the
account of, or credit extended by, Bank; or
(iii) shall impose on Bank any penalty with respect
to the foregoing or any other condition affecting this Agreement,
any Loan, any Note or the obligation of Bank to make or maintain
any Loan;
and the result of any of the foregoing is to increase the cost to (or to
impose a cost on) Bank of making or maintaining any Loan, or to reduce
the amount of any sum received or receivable by Bank under this Agreement
or under the Note, then Bank shall notify Representative after it
receives final notice of any of the foregoing and, within forty-five (45)
days after demand by
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Bank (which demand shall be accompanied by a statement setting forth the
basis of such demand), Borrowers shall pay directly to Bank, such
additional amount or amounts as will compensate Bank for such increased
cost or such reduction.
(b) Capital Adequacy. If, after the date hereof, either (i)
the introduction of or any change in or change in the interpretation of
any law or regulation or (ii) compliance by Bank with any guideline or
request from any central bank or other governmental authority (whether or
not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by Bank or any corporation
controlling Bank and Bank determines that the amount of such capital is
increased solely by or solely based upon the existence of Bank's
commitment to lend hereunder and other commitments of this type, then,
upon demand by Bank, Borrowers shall immediately pay to Bank, from time
to time as specified by Bank, additional amounts sufficient to compensate
Bank in the light of such circumstances, to the extent that Bank
reasonably determines such increase in capital to be allocable to the
existence of Bank's commitment to lend hereunder.
4.7 Funding Indemnity. In the event Bank shall incur any loss,
cost or expense (including, without limitation, any loss of profit and
any loss, cost or expense incurred by reason of the liquidation or
re-employment of deposits or other funds required by Bank to fund or
maintain any LIBOR Loan or the relending or reinvesting of such deposits
or amounts paid or prepaid to Bank) as a result of:
(a) any payment of a LIBOR Loan on a date other than the
last day of the then applicable Interest Period;
(b) any failure by Borrowers to effect by conversion or
continue any LIBOR Loan on the date specified in the notice given
pursuant to Paragraph 2.2(a) hereof;
(c) any failure by Borrowers to make any payment of
principal or interest when due on any LIBOR Loan, whether at stated
maturity, by acceleration or otherwise; or
(d) the occurrence of any Event of Default;
then, upon the demand by Bank, Borrowers shall pay to Bank such amount as
will reimburse Bank for such loss, cost or expense. If Bank makes such a
claim for compensation under this Paragraph 4.7, Bank shall provide to
Representative a certificate setting forth the amount of such loss, cost
or expense in reasonable detail.
4.8 Discretion of Bank as to Manner of Funding. Notwithstanding
any provision of this Agreement to the contrary other than Paragraph 4.7,
Bank shall be entitled to fund and maintain its funding of all or any
part of the Loans in any manner it sees fit.
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4.9 Interest Laws. Notwithstanding any provision to the contrary
contained in this Agreement or the Other Agreements, Borrowers shall not
be required to pay, and Bank shall not be permitted to collect, any
amount of interest in excess of the maximum amount of interest permitted
by law ("Excess Interest"). If any Excess Interest is provided for or
determined by a court of competent jurisdiction to have been provided for
in this Agreement or in any of the Other Agreements, then in such event:
(a) the provisions of this Paragraph shall govern and control; (b)
Borrowers shall not be obligated to pay any Excess Interest; (c) any
Excess Interest that Bank may have received and/or disbursed to Bank
hereunder shall be, at Bank's option, timely (i) applied as a credit
against the outstanding principal balance of Borrowers' Liabilities or
accrued and unpaid interest (not to exceed the maximum amount permitted
by law), (ii) refunded to the payor thereof, or (iii) any combination of
the foregoing; (d) the interest rate(s) provided for herein shall be
automatically reduced to the maximum lawful rate allowed from time to
time under applicable law (the "Maximum Rate"), and this Agreement and
the Other Agreements shall be deemed to have been and shall be reformed
and modified to reflect such reduction; and (e) Borrowers shall not have
any action against Bank for any damages arising out of the payment or
collection of any Excess Interest.
5. LOANS: GENERAL TERMS
5.1 Payments to Bank. That portion of Borrowers' Liabilities
consisting of: (i) principal payable on account of the Loans made by Bank
to Borrowers pursuant to this Agreement shall be payable by Borrowers to
Bank as provided in the Revolving Note in respect of the Revolving Loans;
(ii) costs, fees and expenses payable pursuant to this Agreement shall be
payable by Borrowers to Bank on demand; (iii) interest payable pursuant
to this Agreement shall be payable by Borrowers to Bank, as provided in
Paragraph 4.1; and (iv) the balance of Borrowers' Liabilities, if any,
shall be payable by Borrowers to Bank as and when provided in this
Agreement or the Other Agreements.
5.2 Automatic Debit. In order to cause timely payment to be made
to Bank of all Borrowers' Liabilities as and when due, Borrowers hereby
authorize and direct Bank to debit the amount of such Borrowers'
Liabilities, as and when due, to any deposit account of any Borrower
(including, without limitation, by increasing the principal balance due
under the Revolving Loan). Bank may cause interest and other amounts
payable on the obligations of Borrowers to Bank to be paid by making a
direct charge to Borrower accounts at Bank in accordance with the terms
hereof.
5.3 Application of Payment. Subject to Paragraph 13.3 below and
except as otherwise specified herein, Borrowers shall, at the time of
making each payment under this Agreement or the Note (whether by account
debit or otherwise), specify to Bank the Loan or other amounts payable by
Borrowers hereunder to which such payment is to be applied (and in the
event that it fails to so specify, or if an Event of Default has occurred
and is continuing, Bank may allocate such payment in such manner as it
may determine to be appropriate). All
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such payments shall be applied to the amounts due hereunder in the
inverse order of their maturities.
5.4 Conditions Precedent Events. Each Loan made by Bank to
Borrowers at the request of Borrowers issued for the account of any
Borrower pursuant to this Agreement or the Other Agreements shall in any
event be subject to the following conditions precedent: (i) there shall
not then exist an Event of Default (as hereinafter defined) or any event
or condition which with notice, lapse of time and/or the making of such
Loan would constitute an Event of Default; (ii) the representations and
warranties of each Borrower contained in this Agreement shall be true and
correct as of the date of such Loan with the same effect as though made
on such date; (iii) all of the covenants and agreements of each Borrower
in this Agreement, and all of the requirements of this Agreement with
respect to such Loan, shall have been complied with; and (iv) there shall
not have occurred, since the date of this Agreement, any material adverse
change in the financial condition, results of operations or business of
any Borrower. Each Borrowing by Borrowers hereunder shall be deemed a
representation and warranty by each Borrower that the foregoing
conditions have been fulfilled as of the date of such borrowing. Bank
shall have received upon request a certificate signed by an Authorized
Officer of Representative dated the date of such requested Loan
certifying satisfaction of the conditions specified in clauses (i)-(iv)
of this Paragraph 5.4.
5.5 Offset. Each Borrower agrees that, in addition to (and without
limitation of) any right of set-off, bankers' lien or counterclaim Bank
may otherwise have, upon the occurrence or continuance of an Event of
Default, Bank shall be entitled, at its option, to offset balances held
by it for account of any Borrower at any of its offices, in United States
Dollars or in any other currency, against any principal of or interest on
any of Bank's Loans, or any other amount payable to such Bank hereunder,
which is not paid when due (regardless of whether such balances are then
due to Borrowers), in which case it shall promptly notify Representative
thereof, provided that Bank's failure to give such notice shall not
affect the validity thereof.
5.6 Discretionary Disbursements. Bank, in its sole and absolute
discretion, may immediately upon notice to Representative, disburse any
or all proceeds of Loans made or available to Borrowers pursuant to this
Agreement and/or the Other Agreements to pay any fees, costs, expenses or
other amounts required to be paid by Borrowers hereunder and not so paid.
All monies so disbursed by Bank shall be a part of Borrowers'
Liabilities, payable by Borrowers on demand.
5.7 Credit Termination Date; Continuance of Obligations, Etc. This
Agreement, Bank's obligation to loan monies to Borrowers, and Borrowers'
ability to borrow monies from Bank shall be in effect until the
Termination Date. Notwithstanding the foregoing and until such date when
Borrowers' Liabilities shall be paid in full, Borrowers' obligations
hereunder and under the Other Agreements shall continue, interest shall
continue to be paid in accordance
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with the foregoing, Bank shall be entitled to retain its security
interest in the Collateral and Bank shall retain all of its rights and
remedies under this Agreement.
5.8 Over-Advances. If, at any time and for any reason, the
aggregate amount of Borrowers' Liabilities in respect of Revolving Loans
outstanding hereunder exceeds the Revolving Credit Commitment (an
"Over-Advance"), then Borrowers shall immediately pay to Bank, the amount
of such Over-Advance. If such Over-Advance remains outstanding for more
than one (1) Business Day, such Over-Advance shall constitute an Event of
Default and until such Over-Advance is so repaid to Bank, the amount of
such Over-Advance shall bear interest at the applicable Default Rate.
5.9 Maintenance of Accounts. Borrowers shall maintain with Bank a
depository account which shall be pledged to Bank as Collateral (the
"Concentration Account"). Borrowers will deposit to the Concentration
Account with Bank each Business Day, either directly or by wire transfer
(via the automated clearing house system or otherwise) from each other
bank or depository institution where Borrowers have a deposit account,
all payments made, all receipts for goods sold or services rendered and
all other remittances constituting proceeds of Collateral deposited to
such other deposit account; provided, however, Borrowers may retain a
balance in such accounts for ▇▇▇▇▇ cash purposes at the end of each week,
but in no event in excess of $50,000 in aggregate.
5.10 Blocked Accounts. Upon the occurrence and during the
continuance of an Event of Default, at the discretion of the Bank, any
deposit account at the Bank may become a blocked account (a "Blocked
Account"), pursuant to which all payments made to the Blocked Account
shall be the sole and exclusive property of Bank and no persons other
than Bank shall have a right to setoff against the Blocked Account. Bank
will apply all deposits to the Blocked Account, including cash, solvent
credits, collections of Accounts Receivable, proceeds of Collateral and
any other amounts, upon availability of such funds on or after the date
of deposit, first, to the outstanding amount of borrowings under the
Revolving Credit Commitment, and second, to Borrowers' Concentration
Accounts at the Bank in such order as Bank shall determine; provided that
(a) Bank shall charge back to Borrowers any payments that may be required
to be returned to the entity making such payment and Borrowers shall
continue to pay interest on the amount charged back from the date that
such payment was applied against Borrowers' Liabilities; and (b) Bank
shall have the exclusive right to determine how, when and in what amounts
application of such payments and such credits shall be made on Borrowers'
Liabilities, and such determination shall be conclusive upon Borrowers.
5.11 Service Fees. Each Borrower acknowledges that Bank will
charge Borrowers standard service charges in effect from time to time for
various services performed by Bank in connection with any aspect of the
relationship between Borrowers and Bank. Each Borrower hereby agrees that
if such service charges exceed the credit to Borrowers arising from
earnings attributable to funds on deposit with Bank in the applicable
Operating Accounts, such service charge deficiency shall be deducted by
Bank from the Operating Accounts or the
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Concentration Account, monthly, in arrears, within ten (10) days
following the end of each month.
5.12 Letter of Credit Fees.
(a For each commercial Letter of Credit, Borrowers shall pay
Bank fees equal to (i) the amount of all drafts drawn under such Letter
of Credit and honored by the Bank multiplied by one-eight of one percent
(0.125%) (the "L/C Draw Fee"), and (ii) an initial issuance fee and an
amendment fee, as applicable, in accordance with Bank's then-existing fee
structure. The L/C Draw Fee and the initial issuance fee shall be fully
earned on the date such commercial Letter of Credit is issued. The L/C
Draw Fees are payable when drafts drawn under a letter of credit are
honored and the fees in subparagraph (ii) above are payable when the
Letter of Credit is issued.
(b For each standby Letter of Credit, Borrower shall pay Bank
a fee for each such Letter of Credit equal to the average daily face
amount of such standby Letter of Credit multiplied by two percent (2.0%)
per annum, such fee to be calculated on the basis of a 360 day year and
charged for the actual number of days during the period from and
including the date of issuance of such Letter of Credit to and excluding
the date of expiration and termination, and payable the date it is
issued.
For purposes of (a) and (b) above, the "average daily face amount"
of a Letter of Credit shall be the sum of the amounts available to be
drawn under such Letter of Credit on each day from the date the Letter of
Credit is established until the date it expires, divided by the number of
days from the date the Letter of Credit is established until the date it
expires.
6. LOANS: CONDITIONS TO LENDING
6.1 Initial Loan Conditions Precedent. In addition to those
conditions set forth in Paragraph 5.4 above with respect to all Loans and
advances hereunder, prior to or contemporaneously with the making of the
initial advance of funds, Bank's obligation to make any Loan is subject
to the satisfaction of the following conditions precedent:
(a Fees and Expenses. Borrowers shall have paid all fees owed
to Bank and reimbursed Bank for all expenses due and payable hereunder on
or before the date hereof.
(b Documents. Bank shall have received the following
documents, in form and substance satisfactory to Bank, and all of the
transactions contemplated by each such document shall have been
consummated or each condition contemplated by each such document shall
have been satisfied:
(i Related Documents. Executed originals of this
Agreement as required by Bank and one original of the Revolving
Note, each payable to Bank
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conforming to the requirements hereof duly executed by each
Borrower. The applicable Form UCC-1 and UCC-2 financing
statements, as applicable, related to the Collateral (as herein
defined) shall have been filed in all jurisdictions that Bank
deems necessary or advisable.
(ii Mortgage Loan Documents. Executed originals of the
Mortgage, together with a Lender's Title Policy and an A.L.T.A.
Survey for the Mortgaged Property.
(iii Legal Opinion. The legal opinion of counsel to
Borrowers.
(iv Officer's Certificate. A certificate executed by
the Authorized Officer of each Borrower, stating that (A) no
default or Event of Default has occurred and is continuing, (B) no
material adverse change in the financial condition or operations
of the business of any Borrower has occurred since January 31,
2000 and (C) each condition precedent to the consummation of the
Loans contemplated hereby has been met or satisfied.
(v Insurance Policies. Certificates from each insurance
carrier of each Borrower evidencing that all insurance policies
and coverage required by Paragraph 11.2(g) below are in effect,
together with a lender's loss payable and additional insured
endorsement.
(vi Constituent Documents. A copy of the Articles of
Incorporation for each Borrower, certified by the Secretary of
State of Indiana, and a copy of each Borrower's Bylaws, certified
by the Secretary of each Borrower, in each case together with all
amendments.
(vii Good Standing Certificates. A Good Standing
Certificate for each Borrower from the Secretary of State of
Indiana and each state in which each Borrower is required to be
qualified to transact business as a foreign corporation.
(viii Resolutions. Certified copies of resolutions of
the Board of Directors of each Borrower authorizing the execution
and delivery of and the consummation of the transactions
contemplated by this Agreement and the Other Agreements and all
other documents or instruments to be executed and delivered in
conjunction herewith and therewith by each Borrower.
(ix Incumbency Certificates. A certificate of the
Secretary of each Borrower certifying as to the names of the
officer or officers of each Borrower authorized to sign this
Agreement and the Other Agreements, in each case together with a
sample of the true signature of each such individual.
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(x Landlord's Lien Waiver. Landlord's lien waivers
executed by the landlord/lessor of each leased property of each
Borrower.
(xi Collateral Assignment of Lease. A Collateral
Assignment of Lease executed by each Borrower for each leased
Facility of each Borrower together with an acknowledgment of each
landlord of such leased Facility.
(xii Trademark Assignment. A Trademark and License
Agreement executed by each Borrower.
(xiii Payoff Letter. Payoff Letter and UCC-3 Termination
Statements from such creditors deemed necessary by Bank
acknowledging the payoff of certain obligations to such creditors.
(xiv Other Documents. Such other documents as Bank may
reasonably request.
(c Bank's Review. The Bank's review of and satisfaction with
the ownership, capital, corporate, organizational and legal structure of
each Borrower.
7. COLLATERAL: GENERAL TERMS
7.1 Grant of Security Interest. To secure the prompt payment of
Borrowers' Liabilities and the prompt, full and faithful performance by
each Borrower of all of the provisions to be kept, observed or performed
by Borrowers, Borrowers hereby pledge, transfer, deliver, grant and
assign to Bank, jointly and severally, and grant to Bank a security
interest in and to and a first lien on all of each Borrower's property of
any kind or description, tangible or intangible, of whatever description,
whether now existing and/or owned and hereafter arising and/or acquired,
wherever located in the United States including, but not limited to, the
following: (a) accounts (including, without limitation, all of each
Borrower's Accounts Receivable), chattel paper, contract rights, letters
of credit, instruments and documents (sometimes hereinafter individually
and collectively referred to as "Accounts"), and all goods whose sale,
lease or other disposition by each Borrower which have given rise to
Accounts and have been returned to or repossessed or stopped in transit
by any Borrower; (b) Inventory; (c) goods (other than Inventory),
machinery, Equipment, vehicles and fixtures (hereinafter individually and
collectively referred to as "Equipment"); (d) General Intangibles; (e)
monies, reserves, deposits, deposit accounts and interest or dividends
thereon, securities, cash, cash equivalents and other property now or at
any time or times hereafter in the possession or under the control of
Bank or its bailee; (f) liens, guarantees and other rights and privileges
pertaining to any of the foregoing; (g) all books, records and computer
records in any way relating to the foregoing; (h) all other assets of
each Borrower whether real, personal, tangible or intangible or mixed,
now existing or hereafter acquired, created, built or otherwise coming
into being together with all improvements thereon; (i) all accessions,
substitutions, renewals, improvements and replacements of and additions
to the foregoing; and (j) all
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products and proceeds of the foregoing including, without limitation,
proceeds of insurance policies insuring the same (all of the foregoing
personal property and real property is hereinafter sometimes individually
and sometimes collectively referred to as "Collateral"). Each Borrower
shall make appropriate entries upon its financial statements and books
and records disclosing Bank's security interest in the Collateral.
7.2 Real Property Collateral. The term "Collateral" shall also
include the Mortgaged Property owned by ▇▇▇▇ ▇▇▇▇▇▇ pursuant to the terms
of the Mortgage executed by ▇▇▇▇ ▇▇▇▇▇▇ in favor of Bank.
7.3 Perfection of Security Interests. Each Borrower shall execute
and/or deliver to Bank, at any time and from time to time hereafter at
the request of Bank, all agreements, instruments, financing statements,
documents and other written matter (sometimes hereinafter individually
and collectively referred to as "Supplemental Documentation") that Bank
reasonably may request, in form and substance acceptable to Bank, to
perfect and maintain perfected the security interest in the Collateral
granted hereby and to consummate the transactions contemplated in or by
this Agreement and the Other Agreements. Each Borrower, irrevocably,
hereby makes, constitutes and appoints Bank (and all Persons designated
by Bank for that purpose) as each Borrower's true and lawful attorney and
agent-in-fact to sign the name of such party on the Supplemental
Documentation and to deliver the Supplemental Documentation to such
Persons as Bank may reasonably elect. Each Borrower agrees that a carbon,
photographic or photostatic copy or other reproduction of this Agreement
or of any financing statement shall be sufficient as a financing
statement.
7.4 Inspection of Collateral and Visitation Rights. Bank shall
have the right to inspect the Collateral and all related records (and the
premises upon which it is located), perform field audits and inventory
valuations, visit and inspect the properties and assets of each Borrower
and verify the amount and condition of or any other matter relating to
the Collateral. All reasonable costs, fees and expenses incurred by Bank
or for which Bank has become obligated, in connection with such
inspection and/or verification shall constitute part of Borrowers'
Liabilities, payable by Borrowers to Bank on demand; provided, however,
that Borrowers shall not be obligated to bear the cost of more than one
field audit and one inventory valuation for any one Borrower in any six
month period unless an Event of Default has occurred.
7.5 First Lien and Locations of Collateral. Borrowers warrant and
represent to and covenant with Bank that: (a) as of the Closing Date,
Bank's security interest in the Collateral is now and at all times
hereafter shall be perfected and have a first priority other than
Permitted Liens; (b) the offices and/or locations where Borrowers keep
the Collateral consisting of personal property and books and records
concerning the Collateral are at the locations specified on Schedule 7.5
and no Borrower shall remove such books and records and/or the Collateral
therefrom and shall not keep any of such books and records and/or the
Collateral at any other office or location without the prior written
consent of Bank; and (c) the addresses
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specified on Schedule 7.5 include and designate each Borrower's chief
executive office, chief place of business and other offices and places of
business and are each Borrower's sole offices and places of business. By
written notice delivered to Bank at least thirty (30) days prior thereto,
Borrowers shall advise Bank of any Borrower's opening of any new office,
store or place of business or its closing of any existing office, store
or place of business and any new office, store or place of business shall
be within the continental United States of America, and prior to opening
such new office, store or place of business, Borrowers shall deliver an
acceptable landlord waiver to Bank, in form reasonably acceptable to
Bank. There are no liens on the Collateral other than the lien of Bank
pursuant hereto and Permitted Liens.
7.6 Constructive Trust. In order to facilitate enforcement of
Bank's security interests in the Collateral, each Borrower shall receive,
as the sole and exclusive property of Bank, and as trustee for Bank, all
monies, checks, notes, drafts and all other payment for and/or proceeds
of Collateral which come into the possession or under the control of any
Borrower (or any of its shareholders, directors, officers, employees,
representatives or those Persons acting for or in concert with any
Borrower) and immediately upon receipt thereof, Borrowers shall remit the
same (or cause the same to be remitted), in kind, to Bank.
7.7 Application of Proceeds of Collateral. Upon the occurrence and
during the continuance of an Event of Default, Bank, at time or times in
its sole and absolute discretion, may take control of, in any manner, and
may endorse any Borrower's name, as appropriate, to any of the items of
payment or proceeds described in Paragraph 7.6 above and, pursuant to the
provisions of this Agreement, Bank may, in its sole and absolute
discretion, apply the same to and on account of Borrowers' Liabilities.
For the purposes of this Paragraph, each Borrower, irrevocably, hereby
makes, constitutes and appoints Bank (and all persons designated by Bank
for that purpose) as each Borrower's true and lawful attorney and
agent-in-fact with power, without notice to any Borrower, to take any
such actions.
7.8 Third Party Collateral Claims. Bank, in its sole and absolute
discretion, without waiving or releasing any Event of Default or
obligation, liability, or duty of any Borrower under this Agreement or
the Other Agreements, may at any time or times hereafter, but shall be
under no obligation to, pay, acquire and/or accept an assignment of any
security interest, lien, encumbrance, or claim asserted by any Person
against the Collateral. All sums paid by Bank, in respect thereof and all
costs, fees and expenses, including reasonable attorney's fees, court
costs, expenses and other charges relating thereto that are incurred by
Bank on account thereof shall be part of Borrowers' Liabilities payable
by Borrowers to Bank on demand.
7.9 Additional Collateral. Bank may, in its sole and absolute
discretion, retain as additional Collateral or release to Borrowers, from
time to time, such portion of the monies, reserves and/or proceeds
received by Bank with respect to the Collateral as Bank may determine.
All such monies, reserves, proceeds and other property of any Borrower in
the possession of Bank at any time or times hereafter are hereby pledged
by each Borrower to
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Bank as additional Collateral hereunder and must be applied by Bank on
account of Borrowers' Liabilities.
7.10 No Custom or Waiver. No authorization given by Bank pursuant
to this Agreement or the Other Agreements to sell any specified portion
of Collateral or any items thereof, and no waiver by Bank in connection
therewith shall establish a custom or constitute a waiver of the
limitation contained in this Agreement against such sales, with respect
to any portion of the Collateral or any item thereof not covered by said
authorization.
7.11 Special Collateral. Immediately upon receipt by any Borrower
of that portion of Collateral evidenced or secured by an agreement,
letter of credit, instrument and/or document, including, without
limitation, promissory note, documents of title and warehouse receipts
("Special Collateral"), each Borrower shall ▇▇▇▇ the same to show that
such Special Collateral is subject to a security interest in favor of
Bank, and shall deliver the original thereof to Bank, together with
appropriate endorsements, the documents required to draw thereunder (as
may be relevant to letters of credit) and/or other specific evidence of
assignment (in form and substance satisfactory to Bank).
8. COLLATERAL: ACCOUNTS RECEIVABLE
8.1 Account Representations and Warranties. Except as otherwise
disclosed by Borrowers to Bank in writing, each Borrower hereby warrants
and represents to Bank with respect to the Accounts Receivable that: (a)
they are genuine, in all respects what they purport to be and are not
evidenced by a judgment; (b) they represent undisputed, bona fide
transactions completed in accordance with the terms and provisions
contained in the invoices and other documents with respect thereto; (c)
the amounts thereof are actually and absolutely owing and are not
contingent for any reason; (d) there are no material setoffs,
counterclaims or disputes existing or asserted with respect thereto and
no Borrower has made any agreement with any Obligor thereof for any
deduction therefrom except a regular discount allowed by Borrowers in the
ordinary course of its business for prompt payment; (e) the services
furnished and/or goods sold giving rise thereto is not subject to any
lien, claim, encumbrance or security interest except that of Bank and
Permitted Liens; and (f) no Borrower has any knowledge of any fact or
circumstance which would impair the validity or collectibility thereof.
8.2 Verification of Accounts Receivable. Any of Bank's officers,
employees or representatives shall have the right, in Bank's name or in
the name of a nominee of Bank, to verify the validity, amount or any
other matter relating to any Accounts Receivable by mail, telephone,
telegraph or otherwise. All costs, fees and expenses relating thereto
that are incurred by Bank (or for which Bank becomes obligated) shall be
part of Borrowers' Liabilities payable by Borrowers to Bank on demand.
8.3 Account Restrictions. Unless Bank notifies Representative in
writing that Bank suspends any one or more of the following requirements,
Borrowers shall: (a) promptly upon
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any Borrower's learning thereof, inform Bank in writing of any material
delay in any Borrower's performance of any of its obligations to any
Obligor relating to Accounts Receivable in excess of $250,000 and of any
assertion of any claims, offsets or counterclaims by any Obligor relating
to Accounts Receivable in excess of $250,000 and of any allowances,
credits and/or other monies granted by any Borrower to any Obligor which
exceed $250,000 in value; (b) not permit or agree to any material
extension, compromise or settlement or make any change or modification of
any material kind or nature with respect to any Accounts Receivable in
excess of $250,000, including any of the terms relating thereto; and (c)
promptly upon any Borrower's receipt or learning thereof, furnish to and
inform Bank of all material adverse information relating to the financial
condition of any Obligor on Accounts Receivable in excess of $250,000.
8.4 Enforcement of Right to Accounts Receivable. Upon the
occurrence and during the continuance of an Event of Default, Bank shall
have the right, at any time or times in its sole and absolute discretion,
without notice thereof to any Borrower: (a) to notify any or all Obligors
that the Accounts Receivable and Collateral have been assigned to Bank
and that Bank has a security interest therein; (b) to direct such
Obligors to make all payments due from them to any Borrower upon the
Accounts Receivable and Collateral directly to Bank; (c) to enforce
payment of and collect, by legal proceedings or otherwise, the Accounts
Receivable and Collateral in the name of Bank and any Borrower; and (d)
to take control, in any manner, of any item of payment or proceeds
referred to in Paragraph 7.6 above.
8.5 Appointment as Attorney-in-Fact. Each Borrower, irrevocably,
hereby designates, makes, constitutes and appoints Bank (and all Persons
designated by Bank), as each Borrower's true and lawful attorney and
agent-in-fact, with power, without notice to any Borrower and at such
time or times hereafter as Bank may determine, in any Borrower's or
Bank's name, upon the occurrence and during the continuance of an Event
of Default, to: (a) demand payment of the Accounts Receivable and
Collateral; (b) enforce payment of the Accounts Receivable and Collateral
by legal proceedings or otherwise; (c) exercise all of each Borrower's
rights and remedies with respect to the collection of the Accounts
Receivable and Collateral; (d) settle, adjust, compromise, extend or
renew the Accounts Receivable and Collateral; (e) settle, adjust or
compromise any legal proceedings brought to collect the Accounts
Receivable and Collateral; (f) sell or assign the Accounts Receivable and
Collateral upon such terms, for such amounts, and at such time or times
as Bank deems advisable; (g) discharge and release the Accounts
Receivable and Collateral; (h) take control, in any manner, of any item
of payment or proceeds referred to in Paragraph 7.6 above; (i) prepare,
file and sign any Borrower's name on any Notice of Lien, Assignment,
Satisfaction of Lien, financing statement or similar document in
connection with the Accounts Receivable and Collateral; (j) prepare, file
and sign each Borrower's name on any Proof of Claim in Bankruptcy or
similar document against any Obligor; (k) do all acts and things
necessary, in Bank's sole discretion, to fulfill each Borrower's
obligations under this Agreement; (l) endorse the name of any Borrower
upon any of the items of payment or proceeds referred to in Paragraph 7.6
above and to deposit the same to the account of Bank to and on account of
Borrowers' Liabilities;
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(m) endorse the name of each Borrower upon any chattel paper, document,
instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar document or
agreement relating to the Accounts Receivable and Collateral; and (n)
sign the name of each Borrower to verifications of the Accounts
Receivable and Collateral and notices thereof to Obligors.
9. COLLATERAL: INVENTORY
9.1 Inventory Representations and Warranties. Each Borrower
warrants and represents to and covenants with Bank that: (a) Inventory
shall be kept only at the locations specified in Schedule 7.5 hereof or
of which Bank is notified hereafter pursuant to Paragraph 7.5; (b) each
Borrower, at reasonable intervals upon the reasonable request of Bank
therefor, shall execute and deliver to Bank designations of Inventory
specifying the cost of Inventory and such other matters and information
relating to Inventory as Bank may reasonably request; (c) each Borrower
does now keep and hereafter at all times shall keep correct and accurate
records itemizing and describing the kind, type, quality and quantity of
Inventory, the cost therefor and selling price thereof and the daily
withdrawals therefrom and additions thereto, all of which records shall
be available to any of Bank's officers, employees or Bank for inspection
and copying thereof; (d) Inventory is not now and shall not at any time
or times hereafter be stored with a bailee, warehouseman or similar party
without Bank's prior written consent and, in such event, such Borrower
will concurrently therewith cause any such bailee, warehouseman or
similar party to issue and deliver to Bank, in form and substance
acceptable to Bank, warehouse receipts therefor in Bank's name; and (e)
Inventory is not now and shall not at any time be consigned to any Person
without Bank's prior written consent.
9.2 Ordinary Course Sales. Until the occurrence of an Event of
Default and thereafter until such time as Bank shall notify Borrowers of
the revocation of such power and authority, Borrowers, except as may
otherwise be required in the Agreement, at their own expense, (i) may
operate in the ordinary course of their businesses, respectively,
including the taking of such action with respect to such collection as
the Bank may reasonably request, or in the absence of such request, as
the Borrowers deem advisable.
10. COLLATERAL: EQUIPMENT
10.1 Equipment Representations and Warranties. Each Borrower
hereby warrants and represents to Bank with respect to the Equipment that
each Borrower has good, indefeasible and merchantable title, free and
clear of all Liens, claims and encumbrances, to and ownership of the
Equipment used in its business except for Liens of Bank granted hereunder
and Permitted Liens, and that Equipment shall be kept and/or maintained
solely at the locations specified on Schedule 7.5 hereof or of which Bank
is notified hereafter pursuant to Paragraph 7.5.
10.2 Maintenance. Each Borrower shall keep and maintain the
Equipment in good operating condition and repair and shall make all
necessary replacements thereof and renewals
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thereto so that the value and operating efficiency thereof shall at all
times be maintained and preserved, except where the failure to so
maintain and preserve would not have a material adverse effect on the
business, financial condition or operations of any Borrower. No Borrower
shall permit any material item of Equipment to become a fixture to real
estate or accession to other personal property.
10.3 Evidence of Ownership. Each Borrower, upon reasonable request
by Bank, shall deliver to Bank any and all evidence of ownership of,
including, without limitation, certificates of title to and applications
for title to, any Equipment.
11. REPRESENTATIONS AND WARRANTIES; COVENANTS;
INDEMNIFICATION; CONTINUING OBLIGATION
11.1 Representations and Warranties of Borrowers. Each Borrower
hereby represents and warrants to Bank as of the date hereof and, with
respect to subsections (a) through (d) and subsections (f) through (dd)
below, the date of disbursement of each Loan or advance hereunder, as
follows:
(a Existence and Authority. Each Borrower is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Indiana. Each Borrower is duly qualified to do business and
is in good standing under the laws of each state in which the ownership
of its properties and the nature and extent of the activities transacted
by it makes such qualification necessary. Each Borrower has all requisite
power and authority to conduct its activities as presently conducted, to
own their properties and to perform their obligations under this
Agreement.
(b Authorization; No Conflict. The execution, delivery and
performance by each Borrower of this Agreement and the Other Agreements
to which it is a party are within each Borrower's organizational powers,
have been duly authorized by all necessary corporate action and do not
contravene (i) any Borrower's Articles of Incorporation or By-laws; or
(ii) any law or any contractual restriction binding on or affecting any
Borrower or its properties, and do not result in or require the creation
of any Lien (except as may be created under this Agreement or the Other
Agreements) upon or with respect to any of its properties.
(c No Approval. No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and
performance by any Borrower of this Agreement or any Other Agreement to
which any Borrower is a party.
(d Validity and Binding Nature. This Agreement is, and the
Other Agreements to which each Borrower is a party when delivered
hereunder will be, legal, valid and binding obligations of each Borrower,
enforceable against each Borrower in accordance with their respective
terms.
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(e Financial Statements and Condition. The financial
statements and balance sheet (including the notes thereto) of Borrowers
as at January 31, 2000, and the related statements of income and equity
and statements of cash flows of Borrowers for the fiscal year then ended,
are complete and correct and fairly present the financial condition of
Borrowers as at such date and the results of the operations of Borrowers
for the period ended on such date, in accordance with GAAP, and since the
date of the last audited financial statements of Borrowers, there has
been no material adverse change in any Borrower's financial condition,
business, properties or operations. Except as set forth on Schedule
11.1(e) hereto, no Borrower has on the date hereof, nor will have on the
date of any Loan or advance made by Bank hereunder, any material
contingent obligations, long-term leases or material forward or long-term
commitments, which are not reflected in the financial statements (and the
related notes thereto).
(f Litigation. There is no pending or, to the best knowledge
of each Borrower, threatened action, suit, inquiry, investigation, or
proceeding affecting, directly or indirectly, any Borrower before any
court, governmental agency or arbitrator, which, in any case, may (i)
materially and adversely affect the financial condition or operation of
any Borrower, (ii) which seeks to restrain or would otherwise have a
material adverse effect on the transactions contemplated herein, or (iii)
which would affect the validity or enforceability of this Agreement or
the Other Agreements.
(g Securities Transaction. No proceeds of any Loan or advance
made by Bank to any Borrower hereunder will be used to acquire any
security in any transaction which is subject to Section 13 or 14 of the
Securities Exchange Act of 1934, as amended.
(h Regulation U. No Borrower is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System), and no proceeds of any Loan or advance made
by Bank to any Borrower hereunder will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing
or carrying any margin stock.
(i ERISA Termination Event and Funding. No ERISA Termination
Event has occurred nor is expected to occur with respect to any Plan and
all Plans, to the extent governed by ERISA, meet the minimum funding
standards of Section 302 of ERISA.
(j Withdrawal Liability and Reportable Events. No Borrower
nor any ERISA Affiliate has incurred, or expects to incur, any withdrawal
liability under Section 4201 of ERISA to any Multiemployer Plan. No
Reportable Event (as defined in ERISA) has occurred with respect to any
Plan.
(k Taxes. Borrowers have filed all tax returns (Federal,
state and local) required to be filed and paid all taxes shown thereon to
be due, including interest and penalties,
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other than such taxes that Borrowers are contesting in good faith by
appropriate legal proceedings and proper reserves therefor have been
established on the books of Borrowers.
(l Liens. There are no Liens upon or with respect to any of
the properties of any Borrower or any Collateral or any right to receive
revenues of any Borrower or any Collateral other than (i) Liens arising
under this Agreement, and (ii) Permitted Liens.
(m Conflicts. No Borrower is a party to any indenture, loan
or credit agreement or any lease or other agreement or instrument
(including corporate charters) which is likely to have a material adverse
effect on the ability of any Borrower to perform its obligations under
this Agreement or the Other Agreements or which would restrict or
otherwise limit the incurring of the Funded Debt represented by this
Agreement and the Other Agreements.
(n Environmental Matters. Except as disclosed on Schedule
11.1(n), to the best of Borrowers' knowledge,
(i the operations of each Borrower (including, without
limitation, all operations and conditions at or in the Facilities)
comply in all material respects with all Environmental Laws;
(ii Each Borrower has obtained or has timely applied
for all Governmental Authorizations under Environmental Laws
necessary to their respective operations, if any, and all such
Governmental Authorizations as have been obtained are in good
standing, and each Borrower is in compliance with all terms and
conditions of such Governmental Authorizations;
(iii No Borrower has received from any Person (A) any
notice or claim to the effect that it is or may be liable to any
Person as a result of the Release or threatened Release of any
Hazardous Materials or (B) any letter or request for information
under Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss.9604) or comparable
state laws, and none of the operations of any Borrower is the
subject of any federal or state investigation evaluating whether
any remedial action is needed to respond to a Release or
threatened Release of any Hazardous Materials at any Facility or
at any other location;
(iv no operations of any Borrower are subject to any
investigation or judicial or administrative proceeding alleging
the violation of or liability under any Environmental Laws;
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(v no Borrower or its Facilities or operations is
subject to any outstanding written order or agreement with any
governmental authority or private party relating to (a) any
Environmental Laws or (b) any Environmental Claims;
(vi no Borrower has any contingent liability in
connection with any Release or threatened Release of any Hazardous
Materials;
(vii neither Borrowers nor any predecessors thereof
have filed any notice under any Environmental Law indicating past
or present treatment, storage, disposal or Release of Hazardous
Materials at any Facility except in accordance with Environmental
Laws, and the operations of Borrowers do not involve the
generation, transportation, treatment, storage or disposal of
hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any
state equivalent;
(viii no Hazardous Material exists on, under or about
any Facility in a manner that is likely to give rise to an
Environmental Claim and no Borrower has filed any notice or report
of a Release of any Hazardous Materials that is reasonably likely
to give rise to an Environmental Claim;
(ix no Borrower has disposed of any Hazardous
Materials in a manner that is likely to give rise to an
Environmental Claim;
(x no underground storage tanks or surface
impoundments are on or at any Facility; and
(xi no lien in favor of any Person for (a) any
liability under any Environmental Laws or (b) damages arising from
or costs incurred by such Person in response to a Release or
threatened Release has been filed or has been attached to any
Facility.
(o Investment Company Act. No Borrower is an "investment
company" or a company "controlled by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
(p Compliance with Laws. Each Borrower is in compliance
with all laws, orders, regulations and ordinances of all federal,
foreign, state and local governmental authorities binding upon or
affecting the business, operation or assets of each Borrower including,
without limitation, zoning or other ordinances relating to permissive
non-conforming uses of property.
(q Other Agreements. Each Borrower makes each of the
representations and warranties of each Borrower contained in the Other
Agreements to which each Borrower is a party operative and applicable for
the benefit of Bank as if the same were set forth at length herein.
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(r Subsidiaries. Except as disclosed on Schedule
11.1(r), no Borrower has any Subsidiaries.
(s Intellectual Property. Borrowers own, are licensed
under, or otherwise have the rights to, all patents, trademarks, trade
names, copyrights, technology, know-how and processes used in or
necessary for the conduct of their respective businesses as currently
conducted that are material to the condition (financial or other),
business or operations of Borrowers (collectively, "Intellectual
Property") and all such Intellectual Property is identified on Schedule
11.1(s) and fully protected and/or duly and properly registered, filed or
issued in the appropriate office and jurisdictions for such
registrations, filing or issuances. Except as disclosed in Schedule
11.1(s), no material claim has been asserted by any Person with respect
to the use of any Intellectual Property, or challenging or questioning
the validity or effectiveness of any Intellectual Property. Except as
disclosed in Schedule 11.1(s), the use of such Intellectual Property by
Borrowers does not infringe on the rights of any Person.
(t Labor. Except for those certain six (6) employees of
Merchandising employed to perform packing and distribution duties at the
Distribution Center, each of whom is or may be a member of the United
Steel Workers Union of America, Local No. 1697, none of the employees of
any Borrower is subject to any collective bargaining agreement, and there
are no strikes, work stoppages, election or decertification petitions or
proceedings, unfair labor charges, equal employment opportunity
proceedings, wage payment or material unemployment compensation
proceedings, material workmen's compensation proceedings or other
material labor or employee-related controversies pending or threatened
involving any Borrower and any of their employees, except for any of the
foregoing which would not in the aggregate have a material adverse effect
on the financial condition, results of operations or business of any
Borrower.
(u Solvency. Each Borrower has capital sufficient to
carry on its business and transactions and all businesses and
transactions in which it is about to engage and is solvent and able to
pay its debts as they mature and each Borrower owns property the fair
saleable value of which is greater than the amount required to pay such
Borrower's indebtedness. No transfer of property is being made and no
Funded Debt is being incurred in connection with the transactions
contemplated by this Agreement with the intent to hinder, delay or
defraud either present or future creditors of any Borrower.
(v Title. Each Borrower has good, indefeasible and
merchantable title to and ownership of the Collateral, free and clear of
all Liens, claims, security interests and other encumbrances except for
the Liens of Bank granted hereunder and Permitted Liens.
(w Corporate Names. Except as disclosed on Schedule 11.1
(w), no Borrower has any assumed corporate names and is not doing
business under any other corporate name.
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(x Options. Except as set forth on Schedule 11.1(x)
hereto, no Person has any option to acquire ownership of the Collateral
or any portion thereof, other than Inventory of Borrowers sold in the
ordinary course of Borrowers' business.
(y Credit Agreements. Schedule 11.1(y) hereto is a
complete and correct list, as of the date of this Agreement, of each
credit agreement, loan agreement, indenture, purchase agreement,
guarantee or other arrangement providing for or otherwise relating to any
Funded Debt or any extension of credit (or commitment for any extension
of credit) to, or guarantee by, each Borrower, and the aggregate
principal or face amount outstanding or which may become outstanding
under each such arrangement is correctly described in such exhibit.
(z Debt. As of the date of this Agreement, no Borrower
has any Debt except for the Permitted Debt set forth in Schedule 11.3(e)
hereof.
(aa Insurance. Schedule 11.1(aa) sets forth a complete
and accurate description of all policies of insurance that will be in
effect as of the Closing Date for each Borrower. Borrowers are adequately
insured under such policies, no notice of cancellation has been received
with respect to such policies, and each Borrower is in compliance with
all conditions contained in such policies.
(bb Stock and Related Matters.
(i The authorized capital stock of each Borrower
pursuant to each Borrower's Articles of Incorporation and By-Laws,
as of the Closing Date is described on Schedule 11.1(bb). As of
the Closing Date, no other shares of any Borrower's Stock are
authorized, issued or outstanding. As of the Closing Date, the
ownership of each Borrower's Stock is as set forth on Exhibit
11.1(bb). As of the Closing Date, except as set forth on Exhibit
11.1(bb) hereto, no Borrower is subject to any obligation, option,
warrant, put or call right (contingent or otherwise) to
repurchase, issue, acquire or retire any of its Stock. As of the
Closing Date, all of the outstanding shares of Stock of each
Borrower is validly issued, fully paid and non-assessable.
(ii No Borrower has violated any applicable federal
or state securities laws in connection with the offer, sale or
issuance of its Stock. As of the Closing Date, there are no
agreements between any parties with respect to the voting or
transfer of any Borrower's Stock.
(cc Accuracy of Information. All factual information
heretofore or contemporaneously furnished by or on behalf of each
Borrower to Bank for purposes of or in connection with this Agreement or
any transaction contemplated hereby (excluding projections referred to
below in this Paragraph and factual information superseded or replaced
prior to the date hereof) is, and all other factual information (taken as
a whole) hereafter furnished by or
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on behalf of each Borrower to Bank will be, true and accurate in every
material respect on the date as of which such information is dated or
certified, and no Borrower has omitted and will not omit any material
fact necessary to prevent such information from being false or
misleading.
11.2 Affirmative Covenants. At all times prior to the Termination
Date and thereafter for so long as any amounts are due or owing to Bank
hereunder, each Borrower hereby covenants and agrees that it will, unless
Bank otherwise consents in writing:
(a Existence, Etc. Do or cause to be done all things
necessary to preserve and maintain each Borrower's existence in good
standing.
(b Compliance with Laws, Etc. Comply with all applicable
present and future laws, rules, ordinances, regulations and orders
including, without limitation, laws, rules, ordinances, regulations and
orders regarding the operation and maintenance of each Borrower's
business.
(c Payment of Taxes and Other Claims. Pay or discharge or
cause to be paid or discharged, before the same shall become delinquent,
all material Charges levied or imposed upon each Borrower or upon the
income, profits or property of any Borrower, provided, however, that
Borrowers shall not be required to pay or discharge or cause to be paid
or discharged any such Charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceedings to
the extent adequate reserves have been established on the books of
Borrowers.
(d Reporting Requirements. Maintain a system of accounting
in accordance with GAAP consistently applied with respect to all dealings
or transactions in relation to its business and activities, and Borrowers
shall furnish to Bank:
(i as soon as possible and in any event within ten
(10) days after the occurrence of an Event of Default or any event
which, with the giving of notice, lapse of time, or both, would
constitute an Event of Default, the statement of an Authorized
Officer setting forth details of such Event of Default or event
and the action which Borrowers have taken or proposes to take to
cure the same;
(ii as soon as available and in any event within
seven (7) days after the end of each week, (A) a duly completed
and executed borrowing base certificate and (B) a summary
Inventory report, in each case in form and substance acceptable to
Bank and certified as accurate by an Authorized Officer of
Representative;
(iii as soon as available and in any event within
thirty (30) days after the end of each month beginning with the
month ending April 29, 2000, an internally prepared consolidated
and consolidating balance sheet of Borrowers as at the
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end of such month and the related consolidated and consolidating
statements of net earnings and stockholders' equity and
consolidated and consolidating statements of cash flows of
Borrowers for such month and for the portion of the fiscal year
ended at the end of such month, setting forth in each case in
comparative form the figures for the corresponding month and the
corresponding portion of the previous fiscal year, all in
reasonable detail and certified (subject to normal year-end
adjustments) as to fairness of presentation, in accordance with
GAAP, by an Authorized Officer of Representative;
(iv as soon as available and in any event within
ninety (90) days after the end of each fiscal year of Borrowers, a
consolidated and consolidating balance sheet and the related
statements of consolidated and consolidating net earnings and
stockholders' equity and consolidated and consolidating statements
of cash flows of Borrowers as of the end of such fiscal year,
fairly and accurately presenting the financial condition of
Borrowers as at such date and the results of operations of
Borrowers for such fiscal year and setting forth in each case in
comparative form the corresponding figures for the corresponding
period of the preceding fiscal year, all in reasonable detail,
prepared in accordance with GAAP consistently applied, and audited
by independent certified public accountants acceptable to Bank;
(v as soon as available, copies of the periodic Form
10-Q quarterly report or comparable successor report filed by ▇▇▇▇
▇▇▇▇▇▇ with the Securities and Exchange Commission or any
successor agency; provided, that if such report is not made
available within forty-five (45) days after the end of each of the
first three quarterly accounting periods in each fiscal year of
▇▇▇▇ ▇▇▇▇▇▇ beginning with the quarter ending April 29, 2000,
Borrowers shall immediately deliver to Bank an internally-prepared
balance sheet of ▇▇▇▇ ▇▇▇▇▇▇ and its Subsidiaries on a
consolidated and consolidating basis as at the end of such quarter
and the related statements of operations and statements of cash
flows of ▇▇▇▇ ▇▇▇▇▇▇ and its Subsidiaries on a consolidated and
consolidating basis for such quarter and for the portion of the
fiscal year ended at the end of such quarter, setting forth in
each case in comparative form the figures for the corresponding
quarter and the corresponding portion of the previous fiscal year,
all in reasonable detail and certified (subject to normal year-end
adjustments) as to fairness of presentation, in accordance with
GAAP (other than footnotes thereto), by an Authorized Officer or
controller (if such controller is a corporate officer) of ▇▇▇▇
▇▇▇▇▇▇;
(vi as soon as available, copies of the Form 10-K
Annual Report or comparable successor report filed by ▇▇▇▇ ▇▇▇▇▇▇
with the Securities and Exchange Commission or any successor
agency; provided, that if such report is not made available within
ninety (90) days after the close of each fiscal year of ▇▇▇▇
▇▇▇▇▇▇, Borrowers shall immediately deliver to Bank a balance
sheet and the related consolidated and consolidating statements of
operations and stockholders' equity and
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consolidated and consolidating statements of cash flows of ▇▇▇▇
▇▇▇▇▇▇ and its Subsidiaries on a consolidated and consolidating
basis as of the end of such fiscal year, fairly and accurately
presenting the financial condition of ▇▇▇▇ ▇▇▇▇▇▇ and its
Subsidiaries on a consolidated basis as at such date and the
results of operations of ▇▇▇▇ ▇▇▇▇▇▇ and its Subsidiaries for such
fiscal year and setting forth in each case in comparative form the
corresponding figures for the corresponding period of the
preceding fiscal year, all in reasonable detail, prepared in
accordance with GAAP consistently applied, and audited by an
accounting firm acceptable to Bank;
(vii) concurrently with the delivery of the quarterly
financial reports and/or financial statements delivered to Bank
pursuant to Sub-paragraph (v) above, each of:
(A) a compliance certificate duly completed and
executed by the Authorized Officer of the Representative in the form of
Exhibit C hereto:
(a) stating that each Borrower has observed and performed all of
its covenants and other agreements and satisfied every condition,
contained in this Agreement, the Note and all Other Agreements to which
each Borrower is a party to be observed, performed or satisfied by it and
that such officer has no knowledge of any Event of Default except as
specified in such certificate;
(b) stating that, to the best of such officer's knowledge, all
such financial statements are complete and correct in all respects and
have been prepared in accordance with GAAP consistently applied
throughout the periods reflected therein; and
(c) showing calculations of compliance with the financial
covenants set forth in Paragraph 11.2(f) below;
(B) an analysis of sales, gross margin and profit before
allocation for each store location of each Borrower, both for the current
year to date and in comparison to the prior year; and
(C) an inventory valuation summary report, in form and
substance acceptable to Bank, listing total season inventory and prior
season inventory in aggregate for all Borrowers;
(viii) promptly upon receipt and, in any event, within fifteen
(15) days after receipt thereof, copies of all auditors' letters to
management and management's response thereto pertaining to the balance
sheet and related financial statements of Borrowers;
(ix) (A) as soon as possible and in any event (a) within
thirty (30) days after any Borrower or any ERISA Affiliate knows or has
reason to know that any ERISA Termination Event described in clause (i)
of the definition of ERISA Termination Event with respect to any Plan has
occurred and (b) within ten (10) days after any Borrower or any ERISA
Affiliate knows or has reason to know that any other ERISA Termination
Event with respect to any Plan has occurred, a statement of the Chief
Financial Officer (or designee) of each Borrower describing such ERISA
Termination Event and the action, if any, which each Borrower, or any
such ERISA Affiliate, proposes to take with respect thereto;
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(B) promptly and in any event within twenty (20)
Business Days after receipt thereof by any Borrower or any ERISA
Affiliate from the PBGC, copies of each notice received of the PBGC's
intention to terminate any Plan or to have a trustee appointed to
administer any Plan; and
(C) promptly and in any event within twenty (20)
Business Days after receipt thereof by any Borrower or any ERISA
Affiliate from a Multiemployer Plan sponsor, a copy of each notice
received concerning the imposition or amount of withdrawal liability
which has been assessed pursuant to Section 4202 of ERISA;
(x) within twenty (20) Business Days after notice to any
Borrower of the commencement thereof, notice, in writing, of any action,
suit, arbitration or other proceeding instituted, commenced or threatened
against or affecting any Borrower with an amount in controversy in excess
of $250,000;
(xi) at Bank's request, each Borrower's federal, state and
local tax returns as soon as said returns are completed in the form said
returns will be filed with the Internal Revenue Service and any state or
local department of revenue or taxing authority; and
(xii) such other information respecting the condition or
operations, financial or otherwise, of each Borrower as Bank may from
time to time reasonably request.
(e) Environmental Disclosure and Inspection.
(i) Exercise due diligence in order to comply with all
Environmental Laws and promptly take any and all necessary remedial
action in connection with the presence, storage, use, disposal,
transportation, Release or threatened Release of any Hazardous Materials
on, under or about any Facility in order to comply with all applicable
Environmental Laws and Governmental Authorizations.
(ii) Permit Bank, from time to time and in its sole
and absolute discretion, to retain, at Bank's expense (or, after
the assertion of an Environmental Claim, at Borrowers' expense),
an independent professional consultant to review any report
relating to Hazardous Materials prepared by or for any Borrower
and at reasonable times and subject to reasonable conditions to
conduct its own investigation of any Facility currently owned,
leased, operated or used by any Borrower and each Borrower agrees
to use its best efforts to obtain permission for Bank's
professional consultant to conduct its own investigation of any
Facility previously owned, leased, operated or used by any
Borrower. Each Borrower hereby grants to Bank, its
representatives, employees, consultants, and contractors the right
to enter into or on to, at reasonable times, the Facilities
currently owned,
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leased, operated or used by any Borrower to perform such tests on
such property as are reasonably necessary to conduct such a review
and/or investigation.
(iii) Promptly advise Bank in writing and in
reasonable detail of (i) any Release of any Hazardous Materials
required to be reported to any federal, state or local
governmental or regulatory agency under any applicable
Environmental Laws, (ii) any and all written communications with
respect to Environmental Claims or any Release of Hazardous
Material required to be reported to any federal, state or local
governmental or regulatory agency, (iii) any remedial action taken
by any Borrower or any other Person in response to (A) any
Hazardous Material on, under or about any Facility, the existence
of which is reasonably likely to give rise to an Environmental
Claim, or (B) any Environmental Claim that could have a material
adverse effect on any Borrower, (iv) any Borrower's discovery of
any occurrence or condition on any real property adjoining or in
the vicinity of any Facility that could cause such Facility or any
part thereof to be subject to any restrictions on the ownership,
occupancy, transferability or use there of under any Environmental
Laws, and (v) any request for information from any governmental
agency indicating that such agency has initiated an investigation
as to whether any Borrower may be potentially responsible for a
Release or threatened Release of Hazardous Materials.
(iv) Promptly notify Bank of (i) any acquisition of
stock, assets, or property by any Borrower that reasonably could
be expected to expose any Borrower to, or result in, Environmental
Claims that could have a material adverse effect or that could be
expected to have a material adverse effect on any Governmental
Authorization then held by any Borrower, and (ii) any proposed
action outside of the normal course of business to be taken by any
Borrower or any Affiliate to commence industrial or other
operations that could subject any Borrower to additional laws,
rules or regulation, including, without limitation, laws, rules
and regulations requiring additional environmental permits or
licenses.
(f) Financial Covenants. Maintain the following financial
covenants:
(i) Maintain a level of EBITDA at all times, measured
on a rolling four quarter basis, taking into account the quarter
first ended and the prior three (3) quarters which shall be
measured as of the end of each quarter, equal to or greater than
(i) $10,000,000 for the first two (2) quarters of fiscal year 2000
and (ii) $12,000,000 for each quarter thereafter.
(ii) Maintain a minimum Tangible Net Worth, at all
times, equal to or greater than $55,000,000.
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(iii) Reduce the aggregate total amount of all
Revolving Loans outstanding under the Revolving Credit Commitment
to no more than $10,000,000 for a period of forty-five (45)
consecutive days during each fiscal year of Borrowers.
(g) Insurance.
(i) At its sole cost and expense, keep and maintain
business interruption insurance and public liability and property
damage insurance relating to its business and properties and their
ownership and use of the Collateral. All such policies of
insurance shall be in form and with insurers recognized as
adequate by prudent business persons and all such policies shall
be in amounts no less than such policies set forth on Schedule
11.1(aa) or as otherwise may be reasonably satisfactory to Bank.
Borrowers shall deliver to Bank the original (or certified) copy
of each policy of insurance, or a certificate of insurance, and
evidence of payment of all premiums for each such policy on or
prior to the date of this Agreement. Such policies shall: (A)
contain a lender's loss payable clause naming Bank as lender's
loss payee and additional insured as its interest may appear; (B)
be accompanied by a separate mortgagee's and lender's loss payable
clause endorsement, executed by the applicable insurer, in form
and substance acceptable to Bank; and (C) provide that the
insurance companies will give Bank at least thirty (30) days
written notice before any such policy or policies of insurance
shall be altered or canceled.
(ii) In the event any Borrower at any time or times
hereafter shall fail to obtain or maintain any of the policies of
insurance required above or to pay any premium in whole or in part
relating thereto (the "Insurance Coverage"), then Bank after
giving five (5) days' prior notice to Representative, without
waiving or releasing any obligation or Event of Default by any
Borrower hereunder, may at any time or times thereafter (but shall
be under no obligation to) obtain and maintain such policies of
insurance and pay such premium and take any other action with
respect thereto which Bank deems advisable. All sums so disbursed
by Bank, including reasonable attorneys fees, court costs,
expenses and other charges relating thereto, shall be part of
Borrowers' Liabilities, payable by Borrowers to Bank on demand.
Each Borrower authorizes Bank, in Bank's sole discretion, to cause
such sums to be paid by making an advance in the amount thereof to
Borrowers under the Revolving Credit Commitment and paying the
proceeds thereof to Bank. In the event any Borrower, at any time,
fails to provide Bank with evidence of the Insurance Coverage as
required by this Agreement, Bank may purchase the Insurance
Coverage at Borrowers' expense to protect Bank's interests in the
Collateral. Such insurance may, but need not, protect Borrowers'
interests, and Bank shall be under no obligation to so protect
Borrowers' interests. The Insurance Coverage that Bank purchases
on behalf of the Borrowers may not pay any claim that Borrowers
make or any claim that is made against Borrowers in connection
with the Collateral. Borrowers may later cancel any Insurance
Coverage purchased by Bank, but only
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after providing Bank with evidence that Insurance Coverage has
been obtained as provided for in this Agreement. In the event Bank
purchases all or any portion of the Insurance Coverage for the
Collateral or as otherwise required hereunder, Borrowers will be
responsible for all costs and expenses of such Insurance Coverage,
including, but not limited to, interest and any other charges
imposed by Bank in connection with the purchase of the Insurance
Coverage, until the effective date of the cancellation or
expiration of the Insurance Coverage. The costs and expenses of
any Insurance Coverage purchased by Bank shall be added to
Borrowers' Liabilities. Borrowers acknowledge that the cost of the
Insurance Coverage purchased by Bank pursuant hereto may be more
than the cost of insurance Borrowers may be able to obtain on
their own. Borrowers shall deliver to Bank, in kind, all
instruments representing proceeds of insurance received by
Borrowers. Bank may apply any insurance proceeds received at any
time to the cost of repairs to or replacement of any portion of
the Collateral and/or, at Bank's option, to payment of or as
security for any of the Obligations, whether or not due, in any
order or manner as Bank determines.
(h) Leases. Maintain and comply with all leases covering the
Collateral used by each Borrower, including, without limitation, the
leases related to any leased property, in accordance with their terms so
as to prevent any default thereunder which may result in the exercise or
enforcement of any landlord's or other lien against any Borrower.
11.3 Negative Covenants. Prior to the later to occur of the
Termination Date and thereafter for so long as any amount is due or owing
to Bank hereunder, unless Bank shall otherwise consent in writing, no
Borrower shall:
(a) Liens, Etc. Create or suffer to exist, any Lien, other
charge or encumbrance, or any other type of preferential arrangement,
upon or with respect to any of its Collateral and properties, whether now
owned or hereafter acquired, or assign any right to receive income, in
each case to secure or provide for the payment of any Debt of any Person,
except for (i) the permitted Liens set forth on Schedule 11.3(a)(i)
("Permitted Liens") and (ii) any grant by Borrowers to a lessor pursuant
to a lease of real property of a security interest which has not been
perfected.
(b) Maintain Existence, Merger, Etc. (i) dissolve or
liquidate or amend or modify its Articles of Incorporation; or (ii)
convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) any Collateral or assets
(whether now owned or hereafter acquired) to any Person, (other than
sales of Inventory in the ordinary course of business); or (iii) together
with one or more Affiliates convey, transfer, lease or otherwise dispose
of (whether in one transaction or in a series of transactions) all or
substantially all of the assets of any Borrower (whether now owned or
hereafter acquired) to any Person; or (iv) purchase, lease or otherwise
acquire all or substantially all of the assets or properties of, or
acquire any capital stock, equity interests, debt or other securities of
any
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Person, or enter into any joint venture or become a partner in any
partnership; or (v) engage in any transaction out of the ordinary course
of business; or (vi) merge or consolidate with any Person.
(c) Sale and Lease-Back. Enter into any arrangement with any
Person or to which such Person is a party providing for the leasing by
any Borrower or any Affiliate of any principal asset which has been or is
to be sold or transferred by any Borrower or such Affiliate to such
Person or to any other Person to whom funds have been or are to be
advanced by such Person on the security of such property or rental
obligations of any Borrower or such Affiliate, other than sales or
transfers between Borrowers and any Affiliate or a lease for a temporary
period not to exceed twelve (12) months.
(d) Debt. Incur, create, assume, become or be liable in any
manner with respect to or permit to exist, any Debt, except for, without
duplication: (i) the Loans, (ii) operating lease obligations, (iii) other
debt incurred hereafter in connection with Permitted Liens, but in no
event in excess of $2,000,000 at any one time outstanding; (iv) current
accounts payable arising in the ordinary course of Borrowers' business;
(v) capitalized lease obligations not in excess of $1,000,000 in the
aggregate at any one time; (vi) other Debt outstanding on the date hereof
as disclosed in the financial statements referenced in Paragraph 11.1(e);
and (vii) the Debt set forth on Schedule 11.3(d) (collectively,
"Permitted Debt").
(e) Investments or Loans. Make or permit to exist investments
or loans in or to any other Person, except for (i) salaries and
reasonable advances of money to its employees in payment of reasonable
expenses incurred by such employees in the ordinary course of business,
(ii) loans to officers of Borrowers not in excess of $100,000
individually (except for one existing loan in the current principal
amount of $197,000.00 to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇) and $500,000 in aggregate, or
(iii) investments in certificates of deposits of a banking institution
having a net worth in excess of $100,000,000 or in securities of the
United States of America or commercial paper with a P1 rating (or
equivalent rating from a nationally recognized rating agency) (all of the
foregoing maturing within one year) ("Permitted Investments").
(f) Guaranties. Guaranty, endorse or otherwise in any way
directly, indirectly or contingently become liable for the obligations or
liabilities of any other Person, except endorsements of negotiable
instruments for collection in the ordinary course of business or
guaranties by ▇▇▇▇ ▇▇▇▇▇▇ of Retailing's leases.
(g) Stock and Dividends. Redeem, retire, purchase or otherwise
acquire, directly or indirectly, any Stock of any Borrower or other
evidence of ownership interest, or declare or pay dividends or
distributions upon any Stock of any Borrower (other than dividends
payable solely in the form of capital stock) or make any distribution of
any Borrower's property or assets.
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(h) Transactions with Affiliates or Insiders. Enter into, or
be a party to, any transaction with any Affiliate, stockholder or member
of any Borrower, except in the ordinary course of and pursuant to the
reasonable requirements of each Borrower's business and upon fair and
reasonable terms which are fully disclosed to Bank and are no less
favorable to Borrowers than would obtain in a comparable arm's length
transaction with a Person not an Affiliate, stockholder or member of such
Borrower, as applicable.
(i) Capital Structure and Line of Business. Make any change
in its capital structure or engage in any line of business materially
different from that previously engaged in by each Borrower.
(j) Prepayment or Modification of Debt. Make any prepayments
of Funded Debt (except as permitted or required hereunder) or enter into
or modify any agreement pursuant to which the terms of payment of any
Funded Debt are amended or modified.
(k) Subordinated Debt. Make any payments whatsoever on or
with respect to Subordinated Debt.
(l) Inter-Company Transfers. Make any loans, transfers or
advances of funds to, or borrow any funds from, any Affiliate of any
Borrower.
12. DEFAULT
12.1 Events of Default. The occurrence of any one of the following
events shall constitute a default ("Event of Default") by any Borrower
under this Agreement: (a) if any Borrower fails or neglects to perform,
keep or observe any covenant or agreement contained in this Agreement or
in the Other Agreements which is required to be performed, kept or
observed by Borrowers; (b) if any representation or warranty made by any
Borrower herein or in any Other Agreement is breached or is false or
misleading in any material respect, or any exhibit, schedule,
certificate, financial statement, report, notice or other writing
furnished by any Borrower or any of its partners, shareholders,
directors, officers, employees, managers, members or representatives to
Bank is false or misleading in any material respect on the date as of
which the facts therein set forth are stated or certified; (c) if any
Borrower fails to pay Borrowers' Liabilities when due and payable or
declared due and payable; (d) if any of the Collateral is attached,
seized, subjected to a writ or distress warrant or is levied upon, or
comes within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors and the same is not terminated or
dismissed within twenty (20) days thereafter; (e) if a petition under any
section or chapter of the Bankruptcy Reform Act of 1978, as amended, or
any similar law or regulation shall be filed by any Borrower or if any
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Borrower shall make an assignment for the benefit of its creditors or if
any case or proceeding is filed by any Borrower for its dissolution or
liquidation; (f) if any Borrower is enjoined, restrained or in any way
prevented by court order from conducting all or any material part of its
business affairs or if a petition under any section or chapter of the
Bankruptcy Reform Act of 1978, as amended, or any similar law or
regulation is filed against any Borrower or if any case or proceeding is
filed against any Borrower for its dissolution or liquidation and such
injunction, restraint or petition is not dismissed or stayed within
forty-five (45) days after the entry or filing thereof; (g) if an
application is made by any Borrower for the appointment of a receiver,
trustee or custodian for any of any Borrower's assets; (h) if an
application is made by any Person other than a Borrower for the
appointment of a receiver, trustee or custodian for the Collateral of any
Borrower and the same is not dismissed within thirty (30) days after the
application therefor; (i) if a notice of lien, levy, or assessment is
filed of record with respect to all or any of the Collateral by the
United States or any department, agency or instrumentality thereof or by
any state, county, municipal or other governmental agency, including
without limitation the PBGC, or if any taxes or debts owing at any time
or times thereafter to any one of them becomes a lien or encumbrance upon
any of the Collateral and the same is not released within thirty (30)
days after the same becomes a lien or encumbrance; (j) if any Borrower
becomes insolvent or is unable generally to pay its debts as they become
due; (k) if any Borrower is in default in the payment of Funded Debt in
an amount in excess of $50,000; (l) the appointment of a conservator for
all or any portion of the Collateral; (m) the occurrence of a material
breach, default or event of default under any agreement, instrument
and/or document executed and delivered by any Person to Bank pursuant to
which such Person has guaranteed to Bank the payment or collection of
Borrowers' Liabilities and/or has granted to Bank a security interest or
lien in and to some or all of such Person's real and/or personal property
to secure the payment of Borrowers' Liabilities; (n) the occurrence of a
material breach, a default or an event of default by any Borrower under
any of the Other Agreements; (o) any guaranty of Borrowers' Liabilities
shall be terminated, curtailed or restricted in scope without Bank's
consent; or (p) if any Borrower fails to comply with the terms of any
Post-Closing Matter Agreement within the time periods specified therein
to the extent applicable; provided, however, that with respect to any of
the Events of Default under Subparagraphs 12.1(d), (i) or (l), the value
of the Collateral involved must equal or exceed $50,000.
12.2 Cumulative Remedies. All of Bank's rights and remedies under
this Agreement and the Other Agreements are cumulative and non-exclusive.
12.3 Acceleration and Termination of Loans. Upon the occurrence
and during the continuance of an Event of Default, (a) upon notice by
Bank to Representative, Borrowers' Liabilities shall be immediately due
and payable, unless there shall have occurred an Event of Default under
Subparagraphs 12.1(c), (d), (e), (f), (g), (h), (i), (j), or (l), in
which case Borrowers' Liabilities shall automatically become due and
payable without notice or demand, and (b) without notice by Bank to or
demand by Bank of any Borrower, Bank shall have no
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further obligation to and may then forthwith cease advancing monies and
extending credit to or for the benefit of Borrowers under this Agreement
and the Other Agreements.
12.4 Rights of Secured Creditor. Upon an Event of Default, Bank,
in its sole and absolute discretion, may: (a) exercise any one or more of
the rights and remedies accruing to a secured party under the Uniform
Commercial Code of the relevant state or states and any other applicable
law upon default by a debtor; (b) enter, with or without process of law
and without breach of the peace, any premises where the Collateral or the
books and records of any Borrower related thereto is or may be located,
and without charge or liability to Bank therefor seize and remove the
Collateral (and copies of each Borrower's books and records in any way
relating to the Collateral) from said premises and/or remain upon said
premises and use the same (together with said books and records) for the
purpose of collecting, preparing and disposing of the Collateral, and
each Borrower hereby grants Bank a security interest in said books and
records for the purpose above stated; and (c) sell or otherwise dispose
of the Collateral at public or private sale for cash or credit, provided,
however, that Borrowers shall be credited with the net proceeds of such
sale only when such proceeds are actually received by Bank pursuant to
Paragraph 13.1 hereof.
12.5 Assembly of Collateral; Injunctive Relief. Upon an Event of
Default, each Borrower, immediately upon demand by Bank, shall assemble
the Collateral and make it available to Bank at a place or places to be
designated by Bank which is reasonably convenient to Bank and Borrowers.
Borrowers recognize that in the event any Borrower fails to perform,
observe or discharge any of its obligations or liabilities under this
Agreement or the Other Agreements, no remedy of law will provide adequate
relief to Bank, and agree that Bank shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of
proving actual damages or the posting of bond, surety or other security.
12.6 Notice of Collateral Disposition. Any notice required to be
given by Bank of a sale, lease or other disposition of the Collateral or
any other intended action by Bank, deposited in the United States mail,
postage prepaid and duly addressed to Representative at its principal
place of business specified on the signature page to this Agreement not
less than ten (10) days prior to such proposed action, shall constitute
commercially reasonable and fair notice to Borrowers thereof.
12.7 Matters Regarding Sale of Collateral. Upon an Event of
Default, each Borrower agrees that Bank may, if Bank deems it reasonable,
postpone or adjourn any such sale of the Collateral from time to time by
an announcement at the time and place of sale or by announcement at the
time and place of such postponed or adjourned sale, without being
required to give a new notice of sale. Each Borrower agrees that Bank has
no obligation to preserve rights against prior parties to the Collateral.
Further, each Borrower waives and releases any cause of action and claim
against Bank as a result of Bank's possession, collection or sale of the
Collateral, any liability or penalty for failure of Bank to comply with
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any requirement imposed on Bank relating to notice of sale, holding of
sale, or reporting of sale of the Collateral, and any right of redemption
from such sale; provided, however, nothing in this Paragraph shall be
deemed a waiver of any cause of action or claim against Bank as a result
of Bank's failure to dispose of the Collateral in a commercially
reasonable manner.
12.8 Replevin. In the event Bank seeks possession of the
Collateral through replevin or other court process, each Borrower hereby
irrevocably waives: (a) any bond, surety or security required as an
incident to such possession, and (b) any demand for possession of the
Collateral prior to commencement of any suit or action to recover
possession thereof.
12.9 Application of Proceeds. Except as otherwise herein
expressly provided, the proceeds of any collection, sale or other
realization of all or any part of the Collateral pursuant hereto, and any
other cash of Borrower at the time held by Bank hereunder, shall be
applied by Bank:
First, to the payment of the costs and expenses of such
collection, sale or other realization, including out-of-pocket
costs and expenses of Bank and the fees and expenses of its
representatives and counsel, and all expenses incurred and
advances made by Bank in connection therewith;
Next, to the payment in full of Borrowers' Liabilities; and
Finally, to the payment to Borrowers, or its successors or
assigns, or as a court of competent jurisdiction may direct, of
any surplus then remaining.
As used in this Paragraph, "proceeds" of Collateral shall mean
cash, securities and other property realized in respect of, and
distributions in kind of, Collateral, including any amount received under
any reorganization, liquidation or adjustment of debt of Borrowers or any
issuer of or obligor on any of the Collateral.
13. GENERAL
13.1 Payment Application Date. Any check, draft, or similar item
of payment by or for the account of Borrowers delivered to Bank on
account of Borrowers' Liabilities shall be applied by Bank on account of
Borrowers' Liabilities on the date final settlement thereof is reflected
by irrevocable credit to Bank.
13.2 Statement of Account. Each statement of account by Bank
delivered to Borrowers relating to Borrowers' Liabilities shall be
presumed correct and accurate, absent manifest error, and shall
constitute an account stated between Borrowers and Bank unless, within
sixty (60) days after Borrowers' receipt of said statement, Borrowers
deliver to Bank,
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by registered or certified mail addressed to Bank at its Address for
Notices specified on the signature pages hereto, written objection
thereto specifying the error or errors, if any, contained in any such
statement.
13.3 Manner of Application; Waiver of Setoff Prohibition.
Following an Event of Default, each Borrower waives the right to direct
the application of any and all payments at any time or times hereafter
received by Bank on account of Borrowers' Liabilities and each Borrower
agrees that Bank shall have the right, in its absolute and sole
discretion, to apply and re-apply any and all such payments in such
manner as Bank may deem advisable, notwithstanding any entry by Bank upon
any of its books and records. Each Borrower further waives any right
under or benefit of any law that would restrict or limit the right or
ability of Bank to obtain payment of Borrowers' Liabilities, including
any law that would restrict or limit Bank in the exercise of its right to
appropriate any indebtedness owing from Bank to Borrowers and any
deposits or other property of any Borrower in the possession or control
of Bank and apply the same toward or setoff the same against the payment
of Borrowers' Liabilities.
13.4 Survival of Representations and Warranties. Each Borrower
covenants, warrants and represents to Bank that all representations and
warranties of each Borrower contained in this Agreement and the Other
Agreements shall be true at the time of each Borrower's execution of this
Agreement and the Other Agreements and shall survive the execution,
delivery and acceptance thereof by the parties thereto and the closing of
the transactions described therein or related thereto.
13.5 Integration; Amendment; Assignment.
(a) This Agreement and the Other Agreements constitute the
entire agreement and understanding between the parties relating to the
subject matter hereof and supersede all prior agreements, whether oral or
written. This Agreement and the Other Agreements may not be modified,
altered or amended except by an agreement in writing signed by each
Borrower and Bank, and no provision of this Agreement may be waived
except with the written consent of Bank.
(b) Borrowers may not sell, assign or transfer this
Agreement, or the Other Agreements or any portion thereof, including
without limitation any Borrower's rights, titles, interests, remedies,
powers and/or duties hereunder or thereunder without the prior written
consent of Bank.
(c) Bank may assign or sell or agree to sell to one or more
other Persons a participation in all or any part of any Loan held by it
or Loans made or to be made by it.
13.6 No Waiver. Bank's failure at any time or times hereafter to
require strict performance by each Borrower of any provision of this
Agreement shall not waive, affect or
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diminish any right of Bank thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by Bank of an Event of
Default under this Agreement or the Other Agreements shall not suspend,
waive or affect any other Event of Default under this Agreement or the
Other Agreements, whether the same is prior or subsequent thereto and
whether of the same or of a different type. None of the undertakings,
agreements, warranties, covenants or representations of any Borrower
contained in this Agreement or the Other Agreements and no Event of
Default under this Agreement or the Other Agreements shall be deemed to
have been suspended or waived by Bank unless such suspension or waiver is
by an instrument in writing by Bank specifying such suspension or waiver
and given pursuant to the requirements of Paragraph 13.5 hereof.
13.7 Severability. If any provision of this Agreement or the Other
Agreements or the application thereof to any Person or circumstance is
held invalid or unenforceable, the remainder of this Agreement and the
Other Agreements and the application of such provision to other Persons
or circumstances will not be affected thereby and the provisions of this
Agreement and the Other Agreements shall be severable in any such
instance.
13.8 Successors and Assigns. This Agreement and the Other
Agreements shall be binding upon and inure to the benefit of the
respective successors and assigns of each Borrower and Bank. This
provision, however, shall not be deemed to modify Paragraph 13.5 hereof.
13.9 Conflict with Other Agreements. The provisions of the Other
Agreements are incorporated in this Agreement by this reference thereto.
Except as otherwise provided in the Other Agreements by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in conflict with, or inconsistent with,
any provision in the Other Agreements, the provision contained in this
Agreement shall govern and control.
13.10 No Impairment by Termination. Except to the extent provided
to the contrary in this Agreement and in the Other Agreements, no
termination or cancellation (regardless of cause or procedure) of this
Agreement or the Other Agreements shall in any way affect or impair the
powers, obligations, duties, rights and liabilities of any Borrower or
Bank in any way or respect relating to (a) any transaction or event
occurring prior to such termination or cancellation, (b) the Collateral
and/or (c) any of the undertakings, agreements, covenants, warranties and
representations of each Borrower contained in this Agreement or the Other
Agreements. All such undertakings, agreements, covenants, warranties and
representations shall survive such termination or cancellation.
13.11 Waivers. Except as otherwise specifically provided in this
Agreement, each Borrower waives any and all notice or demand which each
Borrower might be entitled to receive with respect to this Agreement or
the Other Agreements by virtue of any applicable statute or law and
waives presentment, demand and protest and notice of presentment,
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61
protest, default, dishonor, non-payment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Bank on which any Borrower may in any way
be liable and hereby ratify and confirm whatever Bank may do in this
regard.
13.12 Costs, Fees and Expenses Related to Agreement and Other
Agreements. In accordance with this Agreement on or prior to the date
hereof and thereafter upon demand by Bank therefor, Borrowers shall pay
or reimburse Bank for all costs, fees and expenses incurred by Bank, or
for which Bank becomes obligated, in connection with the negotiation,
preparation and consummation of this Agreement and the Other Agreements,
including but not limited to, attorneys' fees, costs and expenses; search
fees, costs and expenses; and all taxes payable in connection with this
Agreement or the Other Agreements. That portion of Borrowers' Liabilities
consisting of costs, expenses or advances to be reimbursed by Borrowers
to Bank pursuant to this Agreement or the Other Agreements which are not
paid on or prior to the date hereof shall be payable by Borrowers to Bank
on demand.
13.13 Environmental Indemnity. Each Borrower agrees to indemnify
and save Bank, its officers, directors, employees and representatives,
harmless of, from and against any liability, loss, damage or expense
(including reasonable attorneys' fees) to which Bank or any of such
persons may become subject, arising from or based upon (a) any violation,
or claim of violation, by any Borrower of any laws, regulations or
ordinances relating to Hazardous Materials, or (b) any Hazardous
Materials located or disposed of on or released or transported from any
property owned, leased or operated by any Borrower, or any claim of any
of the foregoing.
13.14 Release. Each Borrower releases Bank from any and all causes
of action, claims or rights which any Borrower may now or hereafter have
for, or which may arise from, any loss or damage caused by or resulting
from: (a) any failure of Bank to protect, enforce or collect in whole or
in part any of the Collateral; (b) Bank's notification to any Obligor of
Bank's security interest in the Accounts and the Collateral; (c) Bank's
directing any Obligor to pay any sums owing to any Borrower directly to
Bank in accordance with the terms thereof; and (d) any other act or
omission to act on the part of Bank, its officers, representatives or
employees, except in each instance for willful misconduct and gross
negligence.
13.15 Governing Law. This Agreement and the Other Agreements shall
be governed and controlled by the laws of the State of Illinois (without
regard to conflicts of laws) as to interpretation, enforcement, validity,
construction, effect, choice of law, and in all other respects including,
but not limited to, the legality of the interest rate and other charges.
13.16 Notices. All notices, consents, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given to any party or parties (a) upon delivery to the address of the
party or parties as specified in the "Address for Notices" below
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62
such party or parties' name on the signature pages hereof if delivered in
person or by courier or if sent by certified or registered mail (return
receipt requested), or (b) upon dispatch if transmitted by telecopy or
other means of facsimile transmission, in any case to the party or
parties at the telecopy numbers specified on the same, or to such other
address or telecopy number as any party may hereafter designate by
written notice in the aforesaid manner.
13.17 FORUM; VENUE; JURY TRIAL WAIVER. TO INDUCE BANK TO ACCEPT
THIS AGREEMENT AND THE OTHER AGREEMENTS, EACH BORROWER AND BANK
IRREVOCABLY AGREE THAT, SUBJECT TO BANK'S SOLE AND ABSOLUTE ELECTION, ALL
ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER, OR RESPECT, ARISING OUT OF OR
FROM OR RELATED TO THIS AGREEMENT OR THE OTHER AGREEMENTS SHALL BE
LITIGATED ONLY IN COURTS HAVING SITUS WITHIN CHICAGO, ILLINOIS. EACH
BORROWER AND BANK HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE, OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE. EACH
BORROWER AND BANK HEREBY WAIVE ANY RIGHT IT MAY HAVE TO TRANSFER OR
CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST SUCH PARTY IN
CONNECTION WITH THIS AGREEMENT IN ACCORDANCE WITH THIS PARAGRAPH. EACH
BORROWER AND BANK HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY
WITH RESPECT TO ANY ACTION IN WHICH ANY BORROWER OR BANK IS A PARTY IN
CONNECTION WITH THIS AGREEMENT.
13.18 Other Costs, Fees and Expenses. If at any time or times
hereafter Bank: (a) employs counsel for advice or other representation
(i) with respect to this Agreement or the Other Agreements, (ii) to
represent Bank in any litigation, contest, dispute, suit or proceeding or
to commence, defend, or intervene or to take any other action in or with
respect to any litigation, contest, dispute, suit, or proceeding (whether
instituted by Bank, any Borrower, or any other Person) in any way or
respect relating to this Agreement, the Other Agreements or any
Borrower's affairs, or (iii) to enforce any rights of Bank against any
Borrower or any other person that may be obligated to Bank by virtue of
this Agreement or the Other Agreements; (b) takes any action to protect,
collect, sell, liquidate, or otherwise dispose of any of the Collateral;
and/or (c) attempts to or enforces any of Bank's rights or remedies under
the Agreement or the Other Agreements, the costs and expenses incurred by
Bank in any manner or way with respect to the foregoing, shall be part of
Borrowers' Liabilities, payable by Borrowers to Bank on demand. Without
limiting the generality of the foregoing, such expenses, costs, charges
and fees include: (i) reasonable attorneys' fees, costs and expenses;
(ii) accountants' fees, costs and expenses; (iii) court costs and
expenses; (iv) court reporter fees, costs and expenses; (v) long distance
telephone charges; (vi) telegram charges; (vii) expenses for travel,
lodging and food; and (viii) costs and expenses incurred with respect to
exercise or enforcement of Bank's rights in or against Accounts
Receivable and/or any Obligor, including expenses incurred in fulfilling,
in whole
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or in part, any order of any Obligor from which an Account Receivable has
arisen or will arise.
13.19 Revival. To the extent that Bank receives any payment on
account of Borrowers' Liabilities, or any proceeds of Collateral are
applied on account of Borrowers' Liabilities and any such payment(s)
and/or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, subordinated and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy act, state or federal law, common law or equitable cause,
then, to the extent of such payment(s) and/or proceeds received,
Borrowers' Liabilities or part thereof intended to be satisfied shall be
revived and continue in full force and effect, as if such payment(s)
and/or proceeds had not been received by Bank and applied on account of
Borrowers' Liabilities.
13.20 Acknowledgments. Borrowers acknowledge that (i) it has been
advised by counsel of its choice with respect to this Agreement and the
transactions contemplated hereby, (ii) each of the waivers set forth
herein was knowingly and voluntarily made; and (iii) the obligations of
Bank hereunder, including the obligation to advance and lend funds to
Borrowers in accordance herewith, shall be strictly construed and shall
be expressly subject to each Borrower's compliance in all respects with
the terms and conditions herein set forth.
13.21 Section Headings. Section or Paragraph headings used in this
Agreement are for convenience only and shall not effect the construction
or interpretation of this Agreement.
13.22 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
taken together shall constitute one and the same instrument.
13.23 Effectiveness. This Agreement shall become effective upon
the execution and delivery to Bank of counterparts of this Agreement by
Borrowers and Bank.
13.24 Reimbursement Among Borrowers. To the extent that any
Borrower shall be required to pay a portion of the obligations created
under this Agreement of any other Borrower which shall exceed the amount
of loans, advances or other extensions of credit received by any such
Borrower and all interest, costs, fees and expenses attributable to such
loans, advances or other extensions of credit, then such Borrower shall
be reimbursed by the other Borrowers for the amount of such excess pro
rata, based on their respective net worths as of the date hereof. This
Paragraph 13.24 is intended only to define the relative rights of the
Borrowers among the Borrowers and nothing set forth in this Paragraph
13.24 is intended to or shall impair the obligations of Borrowers,
jointly and severally, to pay the obligations of the Borrowers to Bank as
and when the same shall become due and payable in accordance with the
terms hereof.
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13.25 Guaranty. The effect of the joint and several obligations of
each Borrower hereunder is that each Borrower hereby unconditionally and
absolutely guarantees to Bank, irrespective of the validity, regularity
or enforceability of this Agreement or any other agreement, the full and
prompt payment in full to Bank at maturity of all the obligations of the
Borrowers. The guaranty set forth in this Paragraph 13.25 shall in all
respects be continuing, absolute and unconditional, and shall remain in
full force and effect until the obligations of the Borrowers have been
fully repaid. The guaranty set forth in this Paragraph 13.25 is an
absolute and unconditional guaranty of payment and not of collectibility.
THE GUARANTY OBLIGATION SET FORTH IN THIS PARAGRAPH 13.25 SHALL IN ALL
RESPECTS BE IN FURTHERANCE, AND SHALL IN NO EVENT BE DEEMED IN
LIMITATION, OF THE OBLIGATIONS OF EACH BORROWER UNDER THIS AGREEMENT.
13.26 Joint and Several Liability. Except as specifically set
forth herein, the liability of each Borrower under this Agreement and the
other agreements in general shall be joint and several, and each
reference herein to the Borrowers shall be deemed to refer to each such
Borrower. In furtherance and not in limitation of Bank's rights and
remedies hereunder or at law, Bank may proceed under this Agreement and
the other agreements against any one or more of the Borrowers in its
absolute and sole discretion for any of the obligations of the Borrowers
or any other liability or obligation of the Borrowers arising hereunder.
13.27 Interrelationship Among the Borrowers. Each Borrower
acknowledges that (a) the business operations of each Borrower are
interrelated and compliment one another, and that such entities have a
common business purpose; and (b) to permit their uninterrupted and
continuous operations, such entities require various funds and other
credit accommodations from Bank.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
▇▇▇▇ ▇▇▇▇▇▇ STORES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Its:▇.▇.▇▇▇▇▇▇▇, Controller and Corporate
Secretary
▇▇▇▇ ▇▇▇▇▇▇ MERCHANDISING, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Its:▇.▇.▇▇▇▇▇▇▇, Controller and Corporate
Secretary
▇▇▇▇ ▇▇▇▇▇▇ RETAILING, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Its:▇.▇.▇▇▇▇▇▇▇, Controller and Corporate
Secretary
▇▇▇▇ ▇▇▇▇▇▇ DISTRIBUTING, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Its:▇.▇.▇▇▇▇▇▇▇, Controller and Corporate
Secretary
THE ▇. ▇▇▇▇▇▇▇▇ COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Its:▇.▇.▇▇▇▇▇▇▇, Controller and Corporate
Secretary
▇▇▇▇▇▇▇▇ WORLDWIDE CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Its:▇.▇.▇▇▇▇▇▇▇, Controller and Corporate
Secretary
66
▇▇▇▇▇▇▇▇ PROPERTY CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Its:▇.▇.▇▇▇▇▇▇▇, Controller and Corporate
Secretary
Address for Notices to Borrowers:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Its:Officer
Address for Notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
With a copy to:
Lane ▇. ▇▇▇▇▇, Esq.
Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
67
LIST OF EXHIBITS
Exhibit A - Form of Borrowing Base Certificate
Exhibit B - Form of Amended and Restated Revolving Note
Exhibit C - Form of Compliance Certificate
68
EXHIBIT A
to
Loan and Security Agreement
BORROWING BASE CERTIFICATE
[SEE ATTACHED]
A-1
69
EXHIBIT B
AMENDED AND RESTATED REVOLVING NOTE
$37,000,000 Chicago, Illinois
April 28, 2000
FOR VALUE RECEIVED, on or before June 30, 2001 (or, if such day is not a
Business Day, on the next following Business Day), the undersigned, ▇▇▇▇ ▇▇▇▇▇▇
STORES, INC., ▇▇▇▇ ▇▇▇▇▇▇ MERCHANDISING, INC., ▇▇▇▇ ▇▇▇▇▇▇ RETAILING, INC., ▇▇▇▇
▇▇▇▇▇▇ DISTRIBUTING, INC., THE ▇. ▇▇▇▇▇▇▇▇ COMPANY, ▇▇▇▇▇▇▇▇ WORLDWIDE CORP.,
each an Indiana corporation, and ▇▇▇▇▇▇▇▇ PROPERTY CORP., a Delaware corporation
(together with their successors and assigns, the "Borrowers"), jointly and
severally, promise to pay to the order of LASALLE BANK NATIONAL ASSOCIATION, a
national banking association (herein, together with its successors and assigns,
called the "Bank"), the maximum principal sum available of THIRTY-SEVEN MILLION
and 00/100 DOLLARS ($37,000,000) or, if less, the aggregate unpaid principal
amount of all Revolving Loans made by Bank to the Borrowers pursuant to that
certain Loan and Security Agreement of even date herewith among the Borrowers
and Bank (herein, as the same may be amended, modified or supplemented from time
to time, called the "Loan Agreement") as shown in the Bank's records.
The Borrowers further promise to pay to the order of Bank interest on the
aggregate unpaid principal amount hereof from time to time outstanding from the
date hereof until paid in full at such rates and at such times as shall be
determined in accordance with the provisions of the Loan Agreement. Accrued
interest shall be payable on the dates specified in the Loan Agreement.
Payments of both principal and interest are to be made in the lawful
money of the United States of America in immediately available funds at the
Bank's principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
or at such other place as may be designated by Bank to the Borrowers in writing.
This Note is the Revolving Note referred to in, evidences indebtedness
incurred under, and is subject to the terms and provisions of, the Loan
Agreement. The Loan Agreement, to which reference is hereby made, sets forth
said terms and provisions, including, but not limited to, those under which this
Note may be paid prior to its due date or may have its due date accelerated.
Terms used but not otherwise defined herein are used herein as defined in the
Loan Agreement. This Note is secured by the personal property described in and
pursuant to the Loan Agreement and various Other Agreements referred to therein,
and reference is made thereto for a statement of terms and provisions of such
Collateral security, a description of Collateral and the rights of Bank in
respect thereof.
In addition to, and not in limitation of, the foregoing and the
provisions of the Loan Agreement hereinabove referred to, the Borrowers further
agree, subject only to any limitation
B-1
70
imposed by applicable law, to pay all expenses, including attorneys' fees and
expenses, incurred by the holder of this Note in seeking to collect any amounts
payable hereunder which are not paid when due, whether by acceleration or
otherwise.
All parties hereto, whether as makers, endorsers or otherwise, severally
waive presentment, demand, protest and notice of dishonor in connection with
this Note.
The liability of each Borrower under this Note in general shall be joint
and several, and each reference herein to the Borrowers shall be deemed to refer
to each such Borrower. In furtherance and not in limitation of Bank's rights and
remedies hereunder or at law, Bank may proceed under this Note against any one
or more of the Borrowers in its absolute and sole discretion for any Borrower's
obligations under the Loan Agreement or any other liability or obligation of the
any Borrower arising hereunder.
This Note replaces in its entirety and is in substitution for, but not in
payment of, (i) that certain Revolving Note dated as of April 19, 1999 (the
"Prior Revolving Note") made by Borrowers in favor of the Bank in the maximum
principal amount available of $20,000,000 and (ii) that certain Term B Note in
the original principal amount of $10,000,000 dated as of April 19, 1999 (the
"Prior Term B Note" and, together with the Prior Revolving Note, the "Prior
Notes") and does not and shall not be deemed to constitute a novation thereof.
Such Prior Note shall be of no further force and effect upon the execution of
this Note; provided, however, that all outstanding indebtedness, including,
without limitation, principal and interest, under the Prior Notes as of the date
of this Note is hereby deemed indebtedness evidenced by this Note and is
incorporated herein by this reference.
This Note is binding upon each Borrower and its successors and assigns,
and shall inure to the benefit of Bank and its successors and assigns. This Note
is made under and governed by the laws of the State of Illinois without regard
to conflict of laws principles.
IN WITNESS WHEREOF, each Borrower has executed this Note as of the day
and year first above written.
ATTEST: ▇▇▇▇ ▇▇▇▇▇▇ STORES, INC.,
an Indiana corporation
By: By:
-------------------------- ------------------------------------
Its: Secretary Its:
-------------------------------
ATTEST: ▇▇▇▇ ▇▇▇▇▇▇ MERCHANDISING, INC.,
an Indiana corporation
By: By:
-------------------------- ------------------------------------
Its: Secretary Its:
-------------------------------
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71
ATTEST: ▇▇▇▇ ▇▇▇▇▇▇ RETAILING, INC.,
an Indiana corporation
By: By:
-------------------------- ------------------------------------
Its: Secretary Its:
-------------------------------
ATTEST: ▇▇▇▇ ▇▇▇▇▇▇ DISTRIBUTING, INC.,
an Indiana corporation
By: By:
-------------------------- ------------------------------------
Its: Secretary Its:
-------------------------------
ATTEST: THE ▇. ▇▇▇▇▇▇▇▇ COMPANY,
an Indiana corporation
By: By:
-------------------------- ------------------------------------
Its: Secretary Its:
-------------------------------
ATTEST: ▇▇▇▇▇▇▇▇ PROPERTY CORP.,
an Indiana corporation
By: By:
-------------------------- ------------------------------------
Its: Secretary Its:
-------------------------------
ATTEST: ▇▇▇▇▇▇▇▇ WORLDWIDE CORP.,
an Indiana corporation
By: By:
-------------------------- ------------------------------------
Its: Secretary Its:
-------------------------------
Borrowers' Address:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
B-3
72
EXHIBIT C
COMPLIANCE CERTIFICATE
for the Fiscal Quarter Ended _________________
TO: LaSalle Bank National Association
The undersigned, _______________________, the ___________________ of
▇▇▇▇ ▇▇▇▇▇▇ Stores, Inc., as representative for itself and its Subsidiaries
(collectively, the "Borrowers"), hereby delivers this certificate pursuant to
Paragraph 11.2(d)(vii)(A) of that certain Amended and Restated Loan and Security
Agreement dated as of April 28, 2000 (the "Loan Agreement") among Borrowers and
LaSalle Bank National Association (the "Bank") and certifies to Bank as of the
date hereof as follows:
Attached hereto are true and correct copies of the monthly [or annual]
financial reports described in Paragraph 11.2(d)(iii) [or 11.2(d)(iv)] of the
Loan Agreement for the above-referenced month [or year end, as applicable].
Borrowers are in compliance in all material respects with all covenants
contained in the Loan Agreement except as set forth hereafter: [List violations
here.]
The financial tests contained in Paragraph 11.2(f) of the Loan
Agreement, together with true and correct computations thereof which are
attached hereto, are as follows:
Paragraph 11.2(f)(i) - EBITDA
$ ___________________
-- Actual EBITDA
-- Minimum EBITDA as measured on a rolling four quarter basis, current
quarter and prior three quarters. $10,000,000 first two quarters of
C-1
73
fiscal year 2000, $12,000,000 for each quarter thereafter $ ______________
Paragraph 11.2(f)(ii) - Minimum Tangible Net Worth
-- Tangible Net Worth at the end of the relevant test period $ ______________
-- Minimum Tangible Net Worth required $ ______________
Paragraph 11.2(f)(iii) - Loan Clean-up Date from: _____
-- Period during which Revolving Loans outstanding are
outstanding in the aggregate principal amount of no more
than $10,000,000 for any 45 consecutive days in Borrowers'
fiscal year. Date to: _______
All of the representations and warranties contained in the Loan Agreement
are true, correct, and accurate in all material respects as of the
date hereof, as if made on the date hereof.
No Event of Default or Unmatured Event of Default has occurred or is
continuing.
Capitalized terms in this Compliance Certificate that are otherwise
undefined shall have the meanings assigned to them in the Loan Agreement.
Date: ___________________
▇▇▇▇ ▇▇▇▇▇▇ STORES, INC.
By:
------------------------------------
Its:
-------------------------------
▇-▇
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
TO THE
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
DATED AS OF APRIL 28, 2000
AMONG
▇▇▇▇ ▇▇▇▇▇▇ STORES, INC.
▇▇▇▇ ▇▇▇▇▇▇ MERCHANDISING, INC.
▇▇▇▇ ▇▇▇▇▇▇ RETAILING, INC.
▇▇▇▇ ▇▇▇▇▇▇ DISTRIBUTING, INC.
THE ▇. ▇▇▇▇▇▇▇▇ COMPANY
▇▇▇▇▇▇▇▇ PROPERTY CORP.
and ▇▇▇▇▇▇▇▇ WORLDWIDE CORP.
as Borrowers
and
LASALLE BANK NATIONAL ASSOCIATION
as Bank
75
LIST OF DISCLOSURE SCHEDULES
Schedule 7.5 Locations of Collateral
Schedule 11.1(e) Obligations Not Reflected on Borrowers' Financial Statements
Schedule 11.1(n) Environmental Matters
Schedule 11.1(r) Subsidiaries
Schedule 11.1(s) Intellectual Property
Schedule 11.1(w) Names
Schedule 11.1(x) Collateral Options
Schedule 11.1(y) Agreements for Credit
Schedule 11.1(aa) Insurance
Schedule 11.1(bb) Stock
Schedule 11.3(a)(i) Permitted Liens
Schedule 11.3(d) Permitted Debt
76
CERTIFICATION
I, ___________________, the __________________ of each of ▇▇▇▇ ▇▇▇▇▇▇
Stores, Inc., ▇▇▇▇ ▇▇▇▇▇▇ Merchandising, Inc., ▇▇▇▇ ▇▇▇▇▇▇ Retailing, Inc., ▇▇▇▇
▇▇▇▇▇▇ Distributing, Inc., The ▇. ▇▇▇▇▇▇▇▇ Company, ▇▇▇▇▇▇▇▇ Property Corp. and
▇▇▇▇▇▇▇▇ Worldwide Corp. (collectively, the "Borrowers"), hereby certify that
the Disclosure Schedules attached hereto have been delivered to LaSalle Bank
National Association in connection with that certain Loan and Security Agreement
of even date herewith among the Borrowers and such bank, and the information
contained thereon is true and correct.
Dated: as of April 28, 2000.
▇▇▇▇ ▇▇▇▇▇▇ STORES, INC.
By:
----------------------------------
Its:
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇ MERCHANDISING, INC.
By:
----------------------------------
Its:
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇ RETAILING, INC.
By:
----------------------------------
Its:
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇ DISTRIBUTING, INC.
By:
----------------------------------
Its:
--------------------------------
THE ▇. ▇▇▇▇▇▇▇▇ COMPANY
By:
----------------------------------
Its:
--------------------------------
77
▇▇▇▇▇▇▇▇ PROPERTY CORP.
By:
----------------------------------
Its:
--------------------------------
▇▇▇▇▇▇▇▇ WORLDWIDE CORP.
By:
----------------------------------
Its:
--------------------------------
78
ASSIGNMENT OF LEASES
This ASSIGNMENT OF LEASES (this "Assignment") is made as of April 28,
2000, by ▇▇▇▇ ▇▇▇▇▇▇ RETAILING, INC. and THE ▇. ▇▇▇▇▇▇▇▇ COMPANY, each an
Indiana corporation (each, an "Assignor" and, collectively, "Assignors"), to
LASALLE BANK NATIONAL ASSOCIATION, a national banking association ("Assignee").
RECITALS:
1. ▇▇▇▇ ▇▇▇▇▇▇ Stores, Inc., ▇▇▇▇ ▇▇▇▇▇▇ Merchandising, Inc., ▇▇▇▇ ▇▇▇▇▇▇
Distributing, Inc., ▇▇▇▇▇▇▇▇ Worldwide Corp., each an Indiana corporation,
▇▇▇▇▇▇▇▇ Property Corp., a Delaware corporation, and Assignors (collectively,
"Borrowers") have entered into with Assignee, among other things, an Amended and
Restated Loan and Security Agreement of even date herewith (as amended, modified
or restated from time to time, the "Loan Agreement"), pursuant to which Assignee
has agreed to make the "Loans" (as defined in the Loan Agreement) to the
Borrowers, subject to the terms and conditions set forth in such Loan Agreement.
2. Each Assignor is, or is the successor in interest to, the lessee under those
certain leases (individually, a "Lease" and collectively, the "Leases") with the
respective lessors (individually, a "Lessor" and collectively, the "Lessors")
listed on Exhibit A. The Leases pertain to the respective addresses (the
"Premises") which are set forth on such Exhibit A hereto and made a part hereof.
3. One of the conditions precedent to Assignee's making of the Loans is
Assignors' execution and delivery of this Assignment.
NOW, THEREFORE, to induce Assignee to make the Loans and for other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, Assignors hereby agree as follows:
79
1. DEFINITIONS. Any capitalized term not otherwise defined herein which is
defined in the Loan Agreement shall have the meaning ascribed in such Loan
Agreement.
2. ASSIGNMENT. To secure the payment, performance and observance of Borrowers'
Liabilities, each Assignor hereby transfers and assigns to Assignee all of its
right, title and interest in and to each of the Leases to which it is a party.
3. REPRESENTATIONS AND WARRANTIES. Each Assignor represents and warrants to
Assignee that: (a) Assignor is the sole owner of the entire leasehold interest
in each Lease, free and clear of all Liens, except for Liens created pursuant
to, or in connection with, the Loan Agreement; (b) each Lease is valid and
enforceable and has not been altered, modified or amended in any manner; (c)
neither Assignor, nor the Lessor under any Lease, is in default under such
Lease, nor has any event occurred which with the passage of time or giving of
notice would constitute a default under such Lease; (d) no rent reserved in any
Lease has been assigned or prepaid, except for prepaid rent for the current
month, and (e) the current monthly rent, security deposit and the commencement
and expiration date of each Lease are reflected accurately in the applicable
portion of Exhibit A.
4. COVENANTS. Each Assignor covenants and agrees with Assignee: (a) to observe
and perform all obligations imposed upon Assignor as the lessee under each
Lease, as appropriate, and not to do, or permit to be done, anything to impair
Assignor's rights thereunder; (b) not to assign Assignor's interest under any
Lease or sublet all or any part of the Premises; (c) not to alter, modify or
change the terms of any Lease, or cancel or terminate the same, or surrender
possession of the Premises, or any part thereof, without the prior written
consent of Assignee; and (d) to enforce the performance by the Lessor under each
Lease of all of such Lessor's obligations under such Lease.
5. SECURITY. This Assignment is for collateral security purposes only. So long
as no Event of Default has occurred, Assignor shall have the right to retain,
use and enjoy all rights under each Lease.
6. REMEDIES UPON DEFAULT. Upon the occurrence of any Event of Default, Assignee,
at its option, without in any way waiving such default and without notice, and
without regard to the adequacy of the security for Borrowers' Liabilities: (a)
either in person or by agent, with or without bringing any action or proceeding,
or by a receiver appointed by a court, may take possession of any or all of the
Premises and may have, hold, manage, lease and operate the same, on such terms,
and for such period of time, as Assignee may deem proper; and (b) in connection
with the exercise of its rights under clause (a) above, Assignee may terminate
all of Assignors' rights to retain, use and enjoy the respective Premises under
any Lease.
7. INDEMNIFICATION. Assignee may, but shall not be obligated to, perform or
discharge any obligation, duty or liability of Assignors under any Lease or
under or by reason of this Assignment, and each Assignor shall, and hereby
agrees to, indemnify, defend and hold Assignee harmless from, and against, any
and all liability, loss, cost, damage or expense which may, or might be,
incurred by Assignee, directly, or indirectly, under any Lease to which such
Assignor is a party or under or by reason of this Assignment and from any and
all claims and demands whatsoever which may be asserted against Assignee by
reason of any alleged obligations or undertakings on its part to
2
80
perform or discharge any of the covenants or agreement contained in any Lease.
If Assignee incurs any such liability under any Lease or under or by reason of
this Assignment or in defense of any such claims or demands, the amount thereof,
including all costs, expenses and attorneys' fees, shall be added to Borrowers'
Liabilities and Assignor shall reimburse Assignee therefor immediately upon
demand, and, upon the failure of Assignor to reimburse Assignee upon demand,
Assignee, at its option, may declare all of Borrowers' Liabilities immediately
due and payable. The parties hereto understand further that this Assignment
shall not operate to place responsibility for the control, care, management or
repair of any of the Premises upon Assignee, or for the carrying out of any of
the terms or conditions of any Lease, and it shall not operate to make Assignee
responsible or liable for any waste committed on any of the Premises by an
Assignor or any other Person or for any dangerous or defective condition of any
of the Premises or for any negligence in the management, upkeep, repair or
control of any of the Premises, resulting in loss, injury or death to any
lessee, sublessee, invitee, licensee, employee, stranger or any other Person.
8. RELEASE OF ASSIGNMENT. Upon payment, performance and observance in full of
Borrowers' Liabilities, this Assignment shall be void and of no further force or
effect and Assignee, upon the written request of Assignors, shall execute such
documents, as may be reasonably requested by Assignors, to confirm the same;
provided, however, that the certificate of any officer or agent of Assignee
certifying that any of Borrowers' Liabilities remain unsatisfied shall
constitute conclusive evidence of the validity, effectiveness and continuing
force of this Assignment and any Person may, and hereby is authorized to, rely
thereon.
9. REMEDIES CUMULATIVE. No right or remedy of Assignee hereunder is exclusive of
any other right or remedy hereunder or now or hereafter existing at law or in
equity or under the Loan Agreement, the Note or the Other Agreements, but is
cumulative and in addition thereto and Assignee may recover judgment thereon,
issue execution therefor, and resort to every other right or remedy available at
law or in equity or under the Loan Agreement, the Note or the Other Agreements,
without first exhausting or affecting or impairing the security or any right or
remedy afforded under this Assignment. No delay in exercising, or omission to
exercise, any such right or remedy will repair any such right or remedy or will
be construed to be a waiver of any default by Assignors hereunder, or
acquiescence therein, nor will it affect any subsequent default hereunder by
Assignors of the same or different nature. Every such right or remedy may be
exercised independently or concurrently, and when and so often as may be deemed
expedient by Assignee. No term or condition contained in this Agreement, may be
waived, altered or changed except as evidenced in writing signed by Assignors
and Assignee.
In case Assignee shall have proceeded to enforce any right under this
Assignment and such proceedings shall have been discontinued or abandoned for
any reason, or shall have been determined adversely to the Assignee, then, and
in every such case, Assignors and Assignee shall be restored to their former
positions and rights hereunder in respect to the Lease, and all rights,
remedies, and powers of Assignee shall continue as though no such proceedings
had been taken.
10. MISCELLANEOUS.
3
81
(1) NOTICES. All notices required or permitted to be given
hereunder shall be given as set forth in the Loan Agreement.
(2) HEADINGS. Section and subsection headings in this
Assignment are included herein for convenience of reference only and shall
not constitute a part of this Assignment for any other purpose or be given
any substantive effect.
(3) SUCCESSORS AND ASSIGNS; SUBSEQUENT HOLDERS OF NOTE. This
Assignment shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that neither
Assignor may assign its rights or obligations hereunder without the written
consent of Assignee as provided in the Loan Agreement.
(4) SEVERABILITY. The invalidity, illegality or
unenforceability in any jurisdiction of any provision in or obligation
under this Assignment, the Loan Agreement, the Note or the Other Agreements
shall not affect or impair the validity, legality or enforceability of the
remaining provisions or obligations under this Assignment, the Loan
Agreement, the Note or the Other Agreements or of such provision or
obligation in any other jurisdiction.
(5) AMENDMENT. This Assignment may not be amended,
supplemented, terminated or otherwise modified except by written instrument
executed by Assignors and Assignee or otherwise in accordance with the Loan
Agreement.
[SIGNATURE PAGE FOLLOWS]
4
82
[Signature Page to Assignment of Leases]
IN WITNESS WHEREOF, this Assignment has been made by Assignors as of
the day and year first written above.
ASSIGNORS:
▇▇▇▇ ▇▇▇▇▇▇ RETAILING, INC.
By:
-------------------------------
Name:
-------------------------------
Its:
-------------------------------
THE ▇. ▇▇▇▇▇▇▇▇ COMPANY
By:
-------------------------------
Name:
-------------------------------
Its:
-------------------------------
5
83
EXHIBIT A
LEASE SCHEDULE
84
AMENDED AND RESTATED
FUTURE ADVANCE
MORTGAGE,
ASSIGNMENT OF RENTS AND LEASES,
SECURITY AGREEMENT
AND FIXTURE FILING
from
▇▇▇▇ ▇▇▇▇▇▇ STORES, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Mortgagor
to
LaSALLE BANK NATIONAL ASSOCIATION
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Mortgagee
Dated as of April 28, 2000
THIS MORTGAGE SECURES FUTURE ADVANCES UNDER I.C. 32-8-11-9
--------------------------------------------------------------------------------
Location: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
85
AMENDED AND RESTATED
FUTURE ADVANCE
MORTGAGE, ASSIGNMENT OF RENTS AND LEASES,
SECURITY AGREEMENT AND FIXTURE FILING
TABLE OF CONTENTS
Article Page
1. Warranty of Title.....................................................6
2. Payment of Obligations................................................6
3. Requirements; Proper Care and Use.....................................6
4. Taxes on Mortgaged Property or Mortgagee..............................7
5. Payment of Impositions................................................8
6. Deposits..............................................................9
7. Insurance............................................................10
8. Condemnation/Eminent Domain..........................................12
9. Sale and Lease of Real Estate........................................13
10. Discharge of Liens...................................................13
11. Right of Contest.....................................................14
12. Leases and Operating Agreements......................................14
13. Estoppel Certificates................................................17
14. Expenses.............................................................17
15. Mortgagee's Right to Perform.........................................18
16. Mortgagor's Existence................................................18
17. Mortgagee's Costs and Expenses.......................................18
18. Event of Defaults....................................................19
19. Remedies.............................................................19
20. Security Agreement and Fixture Filing under Uniform Commercial Code..23
ii
86
21. No Waivers, Etc......................................................23
22. Trust Funds..........................................................24
23. Additional Rights....................................................24
24. Waivers by Mortgagor.................................................24
25. Failure to Consent...................................................25
26. No Joint Venture or Partnership......................................25
27. Notice...............................................................25
28. Conflict with the Loan Documents.....................................25
29. No Modification; Binding Obligations.................................26
30. Subrogation..........................................................26
31. No Merger............................................................26
32. No Liability on Mortgagee............................................26
33. Permitted Acts.......................................................27
34. Care by Mortgagee....................................................27
35. Defeasance...........................................................27
36. Miscellaneous........................................................27
37. Severability.........................................................28
38. Conflict With Loan Agreement.........................................28
39. Choice of Law........................................................28
40. Forum; Service; Jury Waiver..........................................29
41. Receipt of Copy......................................................29
iii
87
iv
88
AMENDED AND RESTATED
FUTURE ADVANCE
MORTGAGE, ASSIGNMENT OF RENTS AND LEASES,
SECURITY AGREEMENT AND FIXTURE FILING
This AMENDED AND RESTATED FUTURE ADVANCE MORTGAGE, ASSIGNMENT OF RENTS
AND LEASES, SECURITY AGREEMENT AND FIXTURE FILING (herein called this
"Mortgage") is made as of April 28, 2000 by ▇▇▇▇ ▇▇▇▇▇▇ STORES, INC., having an
address at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter, together
with its successor and assigns, called "Mortgagor"), to LaSALLE BANK NATIONAL
ASSOCIATION, having an office at ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter, together with its successors and assigns, called "Mortgagee")
pursuant to the "Loan Agreement", as hereinafter defined.
W I T N E S S E T H:
This Amended and Restated Future Advance Mortgage, Assignment of Rents
and Leases, Security Agreement and Fixture Filing amends and restates that
certain Mortgage, Assignment of Leases and Rents and Security Agreement dated
January 20, 1994, made by ▇▇▇▇ ▇▇▇▇▇▇ Stores, Inc., as Mortgagor, in favor of
LaSalle National Bank, as Mortgagee, recorded in the Recorder's Office of ▇▇▇▇▇▇
County, Indiana, on February 1, 1994, as INSTRUMENT NO. ▇▇-▇▇▇▇▇▇▇, as
heretofore amended, including by that certain First Supplement To Mortgage,
Assignment of Leases and Rents, and Security Agreement dated February 1, 1999,
recorded in the Recorder's Office of ▇▇▇▇▇▇ County, Indiana, on February 13,
1999 as INSTRUMENT NO. ▇▇-▇▇▇▇▇▇▇ (collectively the "PRIOR MORTGAGE").
Accordingly in amendment and restatement of the Prior Mortgage, and to
secure the following obligations and liabilities:
(a) the payment to Mortgagee of (i) indebtedness in the
maximum principal amount of Thirty-Seven Million and no/100 Dollars
($37,000,000.00) consisting of a revolving loan in said amount
("Revolving Loan") to be paid, together with all accrued interest
thereon including, without limitation, interest after commencement of a
bankruptcy case, in the amounts and at the times set forth pursuant to
the provisions of that certain Amended and Restated Loan and Security
Agreement of even date herewith made by Mortgagor and the Affiliated
Parties (as hereinafter defined), collectively as Borrowers, and
Mortgagee, as Lender (as amended from time to time, the "Loan
Agreement"), (ii) the Amended and Restated Revolving Note of even date
herewith made by Mortgagor and payable to the order of Mortgagee in the
maximum aggregate principal amount of Thirty-Seven Million and no/100
Dollars ($37,000,000.00) (as amended from time to time, the "Note"),
which Note is incorporated herein by reference (any term capitalized
but not specifically defined in this Mortgage which is defined in the
Loan Agreement shall have the same meaning in this Mortgage as in the
Loan Agreement); (iii) the Reimbursement Obligations defined in the
Loan Agreement with respect to the Letter of Credit Obligations defined
in the Loan Agreement with respect to any Letter of Credit as defined
in the Loan
89
Agreement (as amended from time to time, the "Letters of Credit")
issued by Mortgagee pursuant to the Loan Agreement; (iv) any and all
other sums due or to become due under the Loan Agreement, the Note,
this Mortgage or any other Loan Document (as hereinafter defined), (v)
any further or subsequent advances and all additional or new Loans
made under the Loan Agreement, the Note or this Mortgage, and (vi) any
extensions, renewals, replacements or modifications of the Loan
Agreement, the Note or any other Loan Document; and
(b) the payment to Mortgagee of any liabilities and
indebtedness of ▇▇▇▇ ▇▇▇▇▇▇ Merchandising, Inc., an Indiana
corporation, ▇▇▇▇ ▇▇▇▇▇▇ Retailing, Inc., an Indiana corporation, ▇▇▇▇
▇▇▇▇▇▇ Distributing, Inc., an Indiana corporation, The ▇. ▇▇▇▇▇▇▇▇
Company, an Indiana corporation, ▇▇▇▇▇▇▇▇ Property Corp., a Delaware
corporation, and ▇▇▇▇▇▇▇▇ Worldwide Corp., an Indiana corporation,
variously, as Borrowers (hereinafter referred to as the "Affiliated
Parties") to Mortgagee, as Lender, pursuant to the Loan Agreement, the
Note, the Letters of Credit and/or any other note, document or
instrument made by the Affiliated Parties, as Borrowers, and Mortgagee,
as Lender or Payee, and any and all sums due or to become due under any
such document or instrument executed in connection therewith
(hereinafter referred to as the "Affiliated Loan Documents"); and
(c) the payment and performance of all of the terms,
covenants, conditions, agreements, obligations and liabilities of
Mortgagor and the Affiliated Parties under (i) this Mortgage, (ii) the
Loan Agreement, (iii) the Note (including, without limitation, the
"Obligations" as defined in the Note), (iv) the Letters of Credit, (v)
any mortgages or deeds of trust in addition to this Mortgage now or
hereafter made by Mortgagor to Mortgagee to secure the payment
obligations set forth in paragraphs (a) and (b) above (such additional
mortgages and deeds of trust being hereinafter collectively referred to
as the "New Mortgages"), (vi) any supplemental agreements,
undertakings, instruments, documents or other writings executed by
Mortgagor or the Affiliated Parties as a condition to advances under
the Loan Agreement, or otherwise in connection with the Loan Agreement,
(vii) all chattel mortgages, pledges, powers of attorney, consents,
assignments, notices, leases and financing statements heretofore, now
or hereafter executed by or on behalf of Mortgagor or the Affiliated
Parties or any other Person (as herein defined) or delivered to
Mortgagee in connection with the Loan Agreement or the transactions
contemplated thereby, and (viii) any extensions, renewals, replacements
or modifications of any of the foregoing (the payment and performance
obligations set forth in paragraphs (a) and (b) and this paragraph (c)
are hereinafter collectively referred to as the "Obligations"; this
Mortgage, the Loan Agreement, the Note, the Letters of Credit, the New
Mortgages, the Affiliated Loan Documents and any instruments,
documents, or other writings executed in connection with any of the
foregoing, together with (1) powers of attorney, consents, assignments,
notices, leases and financing statements, (2) any guarantees of the
Obligations, and (3) any deeds of trust, mortgages, security agreements
or assignments, now or hereafter made by Mortgagor to secure the
Obligations are hereinafter collectively referred to as the "Loan
Documents"); and
2
90
(d) As reflected in the foregoing, the Loan Agreement and
Affiliated Loan Documents provide for revolving credit loans pursuant
to which disbursements of loan proceeds may be made as of the date
hereof or in the future and may be repaid and reborrowed as more
particularly set forth in the Loan Agreement and Affiliated Loan
Documents. Accordingly, and to the fullest extent provided by law,
including pursuant to IC 32-8-11-9, each advance made under the Loan
Agreement or the Affiliated Loan Documents after the date hereof shall
be secured by this Mortgage in accordance with all covenants,
conditions and agreements herein contained and shall be of equal
priority and on a parity with and shall not be subordinate to the
initial disbursement of indebtedness evidenced by the Loan Agreement or
the Affiliated Loan Documents; provided, however, the maximum principal
amount of indebtedness to be secured at any one time under this
Mortgage shall not exceed Thirty Seven Million and no/100 Dollars
($37,000,000.00); provided further, however, the foregoing limitation
is exclusive of interest and additional advances, if any, for the
protection of collateral or to cure Mortgagor defaults, regardless of
whether the same are considered obligatory or voluntary, and this
Mortgage also secures, on a priority equal to and on a parity with the
initial disbursement of indebtedness, any and all future modifications,
extensions, and renewals of the indebtedness and obligations evidenced
by the Loan Agreement and the Affiliated Loan Documents, and Mortgagor
acknowledges and agrees that this Mortgage shall secure all future
disbursements made under the Loan Agreement and Affiliated Loan
Documents without being evidenced by any further written instrument or
notation.
(e) As further reflected in the foregoing Note and Loan
Agreement, the interest rate(s) payable on the Obligations are not
fixed rates but are variable rates that fluctuate from time to time
based on changes in the indexes referred to in said Note and Loan
Agreement.
In consideration of Ten Dollars ($10.00), in hand paid, the receipt and legal
sufficiency of which are hereby acknowledged, Mortgagor does hereby MORTGAGE,
GRANT, BARGAIN, SELL, WARRANT, ALIENATE, REMISE, RELEASE, CONVEY, ASSIGN,
TRANSFER, HYPOTHECATE, DEPOSIT, PLEDGE, GRANT A SECURITY INTEREST IN, SET OVER
and CONFIRM unto Mortgagee the following described real and other property and
all substitutions for and all replacements, reversions and remainders of such
property, whether now owned or held or hereafter acquired by Mortgagor
(collectively, the "Mortgaged Property"):
Mortgagor's right, title and interest in and to all those plots, pieces
or parcels of land more particularly described in Exhibit A annexed hereto and
made a part hereof, together with the right, title and interest of Mortgagor, if
any, in and to the streets and in and to land lying in the bed of any streets,
roads or avenues, open or proposed, public or private, in front of, adjoining or
abutting said land to the center line thereof, the air space and development
rights pertaining to said land and the right to use such air space and
development rights, all rights of way, privileges, liberties, tenements,
hereditaments and appurtenances belonging to, or in any way pertaining to, said
land, all easements now or hereafter benefitting said land, all strips and gores
belonging, adjacent or pertaining to said land and all royalties and rights
appertaining to the use and enjoyment of said land, including, but without
limiting the generality of the foregoing, all alley, vault, drainage, mineral,
water, oil, coal, gas, timber and other similar rights (collectively the
"Land");
3
91
TOGETHER with Mortgagor's right, title and interest in and to the
buildings and other improvements now or hereafter erected on the Land (the
buildings and other improvements being hereinafter collectively referred to as
the "Buildings," and the Land together with the Buildings and the Fixtures (as
hereinafter defined) being hereinafter collectively referred to as the "Real
Estate");
TOGETHER with Mortgagor's right, title and interest in and to all and
singular the reversion or reversions, remainder or remainders, rents, issues,
profits and revenues of the Real Estate and all of the estate, right, title,
interest, dower and right of dower, courtesy and right of courtesy, property,
possession, claim and demand whatsoever, both in law and at equity, of Mortgagor
of, in and to the Real Estate and of, in and to every part and parcel thereof,
together with the appurtenances at any time belonging or in any way appertaining
thereto;
TOGETHER with Mortgagor's right, title and interest in and to all of
the fixtures, systems, machinery, apparatus, equipment and fittings of every
kind and nature whatsoever and all appurtenances and additions thereto and
substitutions or replacements thereof now owned or hereafter acquired by
Mortgagor and now or hereafter attached or affixed to, or constituting a part
of, the Real Estate or any portion thereof (collectively, the "Fixtures"),
including, but without limiting the generality of the foregoing, all heating,
electrical, mechanical, lighting, lifting, plumbing, ventilating, air
conditioning and air-cooling fixtures, systems, machinery, apparatus and
equipment, refrigerating, incinerating and power fixtures, systems, machinery,
apparatus and equipment, loading and unloading fixtures, systems, machinery,
apparatus and equipment, escalators, elevators, boilers, communication systems,
switchboards, sprinkler systems and other fire prevention and extinguishing
fixtures, systems, machinery, apparatus and equipment, and all engines, motors,
dynamos, machinery, wiring, pipes, pumps, tanks, conduits and ducts constituting
a part of any of the foregoing, it being understood and agreed that all of the
Fixtures are appropriated to the use of the Real Estate and, for the purposes of
this Mortgage, shall be deemed conclusively to be Real Estate and mortgaged
hereby;
TOGETHER with Mortgagor's right, title and interest in, to and under
all leases, subleases, underlettings, concession agreements, licenses, other
occupancy agreements, and all of Mortgagor's rights and benefits under all
documents which now or hereafter may affect the Real Estate or any portion
thereof, whether recorded or unrecorded, and under any and all guarantees,
modifications, renewals and extensions thereof (collectively, the "Leases"), and
in and to any and all deposits made or hereafter made as security under the
Leases, subject to the prior legal rights under the Leases of the lessees making
such deposits, together with any and all of the benefits, revenues, income,
rents, issues and profits due or to become due or to which Mortgagor is now or
hereafter may become entitled arising out of the Leases or the Real Estate or
any portion thereof (collectively, the "Rents");
TOGETHER with Mortgagor's right, title and interest in, to and under
all reciprocal easement agreements and similar agreements however labeled or
denominated and supplements to such agreements, and all guarantees,
modifications, extensions and renewals thereof affecting the Real Estate
(collectively, the "Operating Agreements");
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TOGETHER with, Mortgagor's rights, title and interest in and to (a) all
unearned premiums accrued, accruing or to accrue under any insurance policies
now or hereafter obtained by Mortgagor affecting the Real Estate and Mortgagor's
interest in and to all proceeds which now or hereafter may be paid in connection
with the conversion of the Mortgaged Property or any portion thereof into cash
or liquidated claims, together with the interest payable thereon and the right
to collect and receive the same, including, but without limiting the generality
of the foregoing, proceeds of casualty insurance, title insurance and any other
insurance now or hereafter maintained by Mortgagor with respect to the Real
Estate or in connection with the use or operation thereof (collectively, the
"Insurance Proceeds"), and (b) all awards, payments and other compensation,
together with the interest payable thereon and the right to collect and receive
the same, which now or hereafter may be made with respect to the Mortgaged
Property as a result of (i) a taking by eminent domain, condemnation or
otherwise, (ii) the change of grade of any street, road or avenue or the
widening of any streets, roads or avenues adjoining or abutting the Land, or
(iii) any other injury to, or decrease in the value of, the Mortgaged Property
or any portion thereof (collectively, the "Awards"), in any of the foregoing
circumstances described in clauses (a) or (b) above to the extent of the entire
amount of the Obligations outstanding as of the date of Mortgagee's receipt of
any such Insurance Proceeds or Awards, notwithstanding that the entire amount of
the Obligations may not then be due and payable, and also to the extent of
reasonable attorneys' fees, reasonable costs and disbursements incurred by
Mortgagee in connection with the collection of any such Insurance Proceeds or
Awards. Subject to such limits set forth herein, Mortgagor hereby assigns to
Mortgagee and Mortgagee is hereby authorized to collect and receive all
Insurance Proceeds and Awards and to give proper receipts and acquittances
therefor and to apply the same toward the Obligations as herein set forth
notwithstanding that the entire amount of the Obligations may not then be due
and payable. Mortgagor hereby agrees to make, execute and deliver, from time to
time, upon demand, such further documents, instruments or assurances as may be
requested by Mortgagee to confirm the assignment of the Insurance Proceeds and
the Awards to Mortgagee, free and clear of any interest of Mortgagor whatsoever
therein and free and clear of any other liens, claims or encumbrances of any
kind or nature whatsoever;
TOGETHER with Mortgagor's right, title and interest in and to all
extensions, improvements, betterments, renewals, substitutes and replacements
of, and all additions and appurtenances to, the Real Estate, and in each such
case, the foregoing shall be deemed a part of the Real Estate and shall become
subject to the lien of this Mortgage as fully and completely, and with the same
priority and effect, as though now owned by Mortgagor and specifically described
herein, without any further mortgage, conveyance, assignment or other act by
Mortgagor;
TO HAVE AND TO HOLD the Mortgaged Property and the rights and
privileges hereby mortgaged or intended so to be unto Mortgagee and its
successors and assigns for the uses and purposes herein set forth, until the
Obligations are fully paid and performed in accordance with the provisions set
forth herein and in the other Loan Documents.
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Mortgagor further represents, warrants, covenants and agrees with
Mortgagee as follows:
1. Warranty of Title. Mortgagor warrants that it has good and
marketable fee simple absolute title to the Real Estate and Fixtures and has the
right to mortgage the same in accordance with the provisions set forth in this
Mortgage and that this Mortgage is a valid and enforceable first lien on the
Mortgaged Property, subject only to the exceptions to title more particularly
described in the final Schedule B of the loan title insurance policy issued to
Mortgagee and accepted by Mortgagee in connection with this Mortgage
(collectively, the "Permitted Encumbrances"). Mortgagor shall (a) preserve such
title and the validity and priority of the lien of this Mortgage and shall
forever warrant and defend the same unto Mortgagee against the claims of all and
every person or persons, corporation or corporations and parties whomsoever, and
(b) make, execute, acknowledge and deliver all such further or other deeds,
documents, instruments or assurances and cause to be done all such further acts
and things as may at any time hereafter be reasonably required by Mortgagee to
confirm and fully protect the lien and priority of this Mortgage.
2. Payment of Obligations.
----------------------
(1) Mortgagor shall pay and perform the Obligations at the times,
places, manner and in accordance with the provisions set forth herein and in the
other Loan Documents.
(2) Any payment made in accordance with the terms of this Mortgage
by any person at any time liable for the payment of the whole or any part of the
Obligations, or by any subsequent owner of the Mortgaged Property, or by any
other person whose interest in the Mortgaged Property might be prejudiced in the
event of a failure to make such payment, or by any stockholder, officer or
director of a corporation, any partner of a partnership or any manager, member
or officer of a limited liability company who at any time may be liable for such
payment or may own or have such an interest in the Mortgaged Property shall be
deemed, as between Mortgagee and all persons who at any time may be liable as
aforesaid or may own the Mortgaged Property, to have been made on behalf of all
such persons.
3. Requirements; Proper Care and Use.
---------------------------------
(1) Mortgagor promptly shall comply with, or cause to be complied
with, all applicable present and future laws, statutes, codes, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, restrictions and
requirements (collectively, "Legal Requirements") of every Governmental
Authority (as hereinafter defined) having jurisdiction over Mortgagor or the
Mortgaged Property, without regard to the nature of the work to be done or the
cost of performing the same, whether foreseen or unforeseen, ordinary or
extraordinary, and shall perform, or cause to be performed, all obligations,
agreements, covenants, restrictions and conditions now or hereafter of record
which may be applicable to Mortgagor or to the Mortgaged Property or to the use,
manner of use, occupancy, possession, operation, maintenance, alteration, repair
or Restoration (as hereinafter defined) of the Real Estate.
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(2) Mortgagor shall (i) not abandon the Real Estate or any portion
thereof, (ii) maintain the Real Estate and Fixtures in good repair, order and
condition, ordinary wear and tear excepted, (iii) promptly make all necessary
repairs, replacements, additions and improvements to the Real Estate and
Fixtures, (iv) not commit or suffer waste with respect to the Real Estate and
Fixtures, (v) refrain from impairing or diminishing the value or integrity of
the Real Estate or the priority or security of the lien of this Mortgage, (vi)
not remove, demolish or materially alter any of the Real Estate and Fixtures
except in compliance with this Mortgage and except that Mortgagor shall have the
right to remove and dispose of, free of the lien of this Mortgage, such Fixtures
as may, from time to time, become worn out or obsolete, provided that,
simultaneously with or prior to such removal, any such Fixtures shall be
replaced with other Fixtures which shall have a value and utility at least equal
to that of the replaced Fixtures and which shall be free of any security
agreements or other liens or encumbrances of any kind or nature whatsoever; by
such removal and replacement, Mortgagor shall be deemed to have subjected such
replacement Fixtures to the lien and priority of this Mortgage, (vii) not make,
install or permit to be made or installed any alterations or additions to the
Real Estate if doing so would, in the reasonable opinion of Mortgagee, impair to
any extent the value of the Mortgaged Property and except in compliance with the
Loan Agreement, (viii) not make, suffer or permit any public nuisance to exist
on the Real Estate or any portion thereof, and (ix) permit Mortgagee and its
agents at all reasonable times to enter upon the Real Estate for the purpose of
inspecting and appraising the Real Estate or any portion thereof to the extent
permitted by the Note.
(3) Mortgagor shall not by any act or omission permit any building or
other improvement located on any property which is not subject to the lien of
this Mortgage to lie upon the Real Estate or any portion thereof or any interest
therein to fulfill any Legal Requirement, and Mortgagor hereby assigns to
Mortgagee any and all rights to give consent for all or any portion of the Real
Estate or any interest therein to be so used. Mortgagor's use of the Real Estate
is a permitted use under the applicable zoning for the Real Estate, and
Mortgagor shall not, by any act or omission, impair the integrity of the Real
Estate or initiate or join in any zoning change, private easement or any other
modification of the zoning regulating the Real Estate, without the written
consent of Mortgagee. Any act or omission by Mortgagor which would result in a
violation of any of the provisions of this Article 3 shall be null and void.
4. Taxes on Mortgaged Property or Mortgagee.
----------------------------------------
(1) If the United States of America, the State in which the Real Estate
is located or any political subdivision thereof or any city, town, county or
municipality in which the Real Estate is located or any agency, department,
bureau, board, commission or instrumentality of any of the foregoing now
existing or hereafter created (collectively, "Governmental Authorities") shall
levy, assess or charge any tax, assessment, fee or imposition upon all or any
portion of the Real Estate, this Mortgage or any other Loan Document, the
Obligations, the interest of Mortgager or Mortgagee in the Mortgaged Property,
or Mortgagee by reason of this Mortgage or any other Loan Document, the
Obligations or Mortgagee's interest in the Mortgaged Property (individually, a
"Tax", and collectively, "Taxes") (excepting therefrom any income tax or gross
receipts tax on payments of interest made under the Note), Mortgagor shall pay
all such Taxes to, for, or on account of Mortgagee as they become due and
payable and, on demand, shall furnish proof of such payment to
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Mortgagee. If Mortgagor shall fail to pay any such Tax, then, Mortgagee, at its
option (upon notice to Mortgagor and Mortgagor's failure to pay such Tax within
ten (10) days after such notice), may pay any such Tax and, in such event, the
amount so paid (i) shall be deemed to be Obligations, (ii) shall be a lien on
the Mortgaged Property prior to any right or title to, interest in, or claim
upon the Mortgaged Property subordinate to the lien of this Mortgage, and (iii)
immediately shall be due and payable, on demand, together with interest thereon
at the rate of interest then payable under the Note, including, in calculating
such rate of interest, any additional interest which may be imposed under the
Note or the Loan Agreement by reason of any Event of Default thereunder (such
rate of interest being hereinafter referred to as the "Interest Rate"), from the
date of any such payment by Mortgagee to the date of repayment. In the event of
the passage of any law or regulation permitting, authorizing or requiring any
such Tax to be levied, assessed or charged, which law or regulation, in the
reasonable judgment of Mortgagee, may prohibit Mortgagor from paying any Taxes
to, for or on account of, Mortgagee or which may make such payment by Mortgagor
result in the imposition of interest exceeding the maximum rate of interest then
permitted by law, then, Mortgagee shall give written notice of such fact to
Mortgagor and, may declare the entire amount of the Obligations due and payable
sixty (60) days from the date of such notice.
(2) If any Governmental Authority shall at any time require revenue,
documentary or similar stamps to be affixed to this Mortgage or any other Loan
Document or shall require the payment of any Taxes with respect to the ownership
or recording of this Mortgage or any other Loan Document, Mortgagor, upon
demand, shall pay for such stamps in the required amount and shall deliver the
same to Mortgagee, for its benefit, together with a copy of the receipted ▇▇▇▇
therefor. Mortgagee, at its option (upon notice to Mortgagor and Mortgagor's
failure to pay for such stamps within ten (10) days after such notice), may pay
for the same, and in such event, the amount so paid (i) shall be deemed to be
Obligations, (ii) shall be a lien on the Mortgaged Property prior to any right
or title to, or interest in, or claim upon, the Mortgaged Property subordinate
to the lien of this Mortgage, and (iii) immediately shall be due and payable on
demand together with interest thereon at the Interest Rate from the date of any
such payment by Mortgagee to the date of repayment. Mortgagor shall indemnify
Mortgagee for, and shall hold Mortgagee harmless from and against, any and all
liability which Mortgagee may incur on account of such revenue, documentary or
other similar stamps or by reason of any Taxes referred to in Article 4(a)
hereof whether such liability arises before or after payment of the Obligations
and whether or not the lien of this Mortgage shall have been released.
5. Payment of Impositions.
----------------------
(1) Except as otherwise provided in the Loan Agreement, not later than
the date (the "Delinquency Date") which is the day before the date on which any
fine, penalty, interest, late charge or loss may be added thereto or imposed by
reason of the non-payment thereof, Mortgagor shall pay and discharge all Taxes
(including, but without limiting the generality of the foregoing, all real
property taxes and assessments, personal property taxes, income, franchise,
withholding, profits and gross receipts taxes), charges for any easement or
agreement maintained for the benefit of the Mortgaged Property or any portion
thereof, general and special assessments and levies, permit, inspection and
license fees, water and sewer rents and charges and any other charges of every
kind
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and nature whatsoever, foreseen or unforeseen, ordinary or extraordinary, public
or private, which, at any time, are imposed upon or levied or assessed against
Mortgagor or the Mortgaged Property or any portion thereof, or which arise with
respect to, or in connection with, the use, manner of use, occupancy,
possession, operation, maintenance, alteration, repair or Restoration of the
Real Estate or any portion thereof, together with any penalties, interest or
late charges which may be imposed in connection with any of the foregoing (all
of the foregoing taxes, assessments, levies and other charges, together with
such interest, penalties and late charges, being hereinafter collectively
referred to as "Impositions"). If, however, any Legal Requirement shall allow
that any Imposition may, at Mortgagor's option, be paid in installments (whether
or not interest shall accrue on the unpaid balance of such Imposition),
Mortgagor may exercise the option to pay such Imposition in such installments,
and, in such event, Mortgagor shall be responsible for the payment of all such
installments, together with the interest, if any, thereon, in accordance with
the provisions of the applicable Legal Requirement. Not later than the
Delinquency Date, Mortgagor shall deliver to Mortgagee evidence acceptable to
Mortgagee showing the payment of such Imposition. Mortgagor also shall deliver
to Mortgagee, within ten (10) days after receipt thereof, copies of all
settlements and notices pertaining to any Imposition which may be issued by any
Governmental Authority.
(2) Nothing contained in this Mortgage shall affect any right or remedy
of Mortgagee under this Mortgage or the Loan Agreement to pay, without notice
and demand to Mortgagor except as provided in the Note or in any other Loan
Documents, any Imposition from and after the date on which such Imposition shall
have become due and payable (unless being contested as permitted under this
Mortgage or the Loan Agreement) and, in such event, the amount so paid (i) shall
be deemed to be Obligations, (ii) shall be a lien on the Mortgaged Property
prior to any right or title to, interest in, or claim upon the Mortgaged
Property subordinate to the lien of this Mortgage, and (iii) shall be
immediately due and payable on demand, together with interest thereon at the
Interest Rate, from the date of any such payment by Mortgagee to the date of
repayment.
(3) Notwithstanding the foregoing provisions, the Mortgagor shall have
the general right to contest such Impositions to the extent permitted by the
Loan Agreement or under Article 11 of this Mortgage.
6. Deposits. In order to assure the payment of all Impositions under
Article 5 hereof and all premiums for insurance required under Article 7 hereof,
Mortgagor agrees that, after occurrence and during the continuation of an Event
of Default upon demand made by Mortgagee, Mortgagor shall deposit with
Mortgagee, for its benefit on the first day of each month from and after the
date hereof, an amount equal to one-twelfth (1/12th) of each of (i) the annual
Impositions, and (ii) the annual premiums for the insurance required to be
provided under this Mortgage with respect to the Real Estate (such premiums for
insurance being hereinafter referred to as "Insurance Premiums"). The amount of
annual Impositions and Insurance Premiums when unknown shall be reasonably
estimated by Mortgagee. Such deposits shall be used by Mortgagee to pay
Impositions and Insurance Premiums when due. From time to time, on demand,
Mortgagor shall pay to Mortgagee additional sums sufficient to permit payment of
the next due installments of Impositions and Insurance Premiums, if, and to the
extent that, the required monthly deposits thereafter falling due before the
respective payment dates would otherwise be insufficient to permit the full
payment thereof. After
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occurrence and during the continuation of an Event of Default, Mortgagee may
apply any funds deposited with Mortgagee for Impositions or Insurance Premiums
to the payment or performance of any of the Obligations. To the extent permitted
by law, the sums deposited pursuant to this Article shall bear no interest and
may be commingled with other funds of Mortgagee. Upon an assignment of this
Mortgage, Mortgagee shall have the right to pay over the balance of any sums
deposited pursuant to this Article and then in its possession to Mortgagee's
assignee, and, thereupon, Mortgagee shall be completely released from all
liability with respect to such sums and Mortgagor shall look solely to
Mortgagee's assignee with respect thereto. The foregoing provisions shall apply
to every transfer of such deposits to a new assignee. Upon payment and
performance of all of the Obligations in accordance with the provisions of this
Mortgage and the other Loan Documents, or, at the election of Mortgagee, at any
prior time, the balance of the deposits then in Mortgagee's possession shall be
paid over to the record owner of the Mortgaged Property. Mortgagor, at
Mortgagee's request, shall make the aforesaid deposits with such servicer or
financial institution as Mortgagee from time to time shall designate.
7. Insurance.
---------
(1) Mortgagor shall provide and keep in full force and effect, or
require to be provided and kept in full force and effect, at its sole cost and
expense and for the benefit of Mortgagee the insurance coverage specified as
follows: property damage insurance on an "all-risk" basis for the full
replacement value of the Real Estate and public liability insurance in respect
of Mortgagor's ownership, use and occupancy of the Mortgaged Property
(collectively, "Insurance Coverage"). All such policies of insurance shall be in
form and with insurers recognized as adequate by prudent business persons, and
all such policies shall be in amounts no less than the amounts as may be
reasonably satisfactory to Mortgagee. Mortgagor shall deliver to Mortgagee the
original (or certified) copy of each policy of insurance, or an evidence of
insurance in form and substance satisfactory to Mortgagee, and evidence of
payment of all premiums for each such policy on or prior to the date of this
Mortgage and at all times thereafter. Such policies shall: (A) in the case of
the liability insurance, name Mortgagee as additional insured; (B) in the case
of property insurance, include a mortgagee's and lender's loss payable clause
endorsement, executed by the applicable insurer, in form and substance
acceptable to Mortgagee; and (C) provide that the insurance companies will give
Mortgagee at least thirty (30) days' prior written notice before any such policy
or policies of insurance shall be altered or canceled.
(2) Mortgagor promptly shall comply with, and shall cause the Real
Estate to comply with, (i) all of the provisions of each such insurance policy,
and (ii) all of the requirements of the insurers thereunder applicable to
Mortgagor or to any of the Real Estate or to the use, manner of use, occupancy,
possession, operation, maintenance, alteration, repair or Restoration (as
hereinafter defined) of any of the Real Estate, even if such compliance would
necessitate structural changes or improvements or would result in interference
with the use or enjoyment of the Real Estate or any portion thereof. If
Mortgagor shall use the Real Estate or any portion thereof in any manner which
would permit the insurer to cancel any insurance required to be provided
hereunder, Mortgagor immediately shall obtain a substitute policy which shall be
satisfactory to Mortgagee and which shall be effective on or prior to the date
on which any such other insurance policy shall be canceled.
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(3) Mortgagor hereby absolutely and unconditionally assigns to
Mortgagee all insurance proceeds which it may be entitled to receive and such
proceeds shall be delivered to and held by Mortgagee to be applied to
Mortgagee's expenses in settling, prosecuting or defending any insurance claim,
and then to the restoration of any portion of the Real Estate that has been
damaged or destroyed to the same condition, character and value as existed prior
to such damage or destruction so long as the following conditions are satisfied:
(i) Mortgagor is not in default hereunder, (ii) Mortgagee's security is not
materially impaired, and (iii) in the event that in Mortgagee's sole judgment
the insurance proceeds are not sufficient to accomplish restoration, Mortgagor
deposits with Mortgagee, within thirty (30) days of demand by Mortgagee, the
additional amounts necessary to accomplish restoration. Proceeds disbursed for
restoration will be released to Mortgagor under Mortgagee's then current
customary disbursement procedures. In the event any of the conditions set forth
above are not satisfied or if the insurance proceeds shall not be applied to the
restoration of the Real Estate within thirty (30) days after receipt of such
proceeds by Mortgagee, Mortgagee shall have the option to either apply the
insurance proceeds upon any indebtedness secured hereby in such order as
Mortgagee may determined or release such proceeds to Mortgagor without such
release being deemed a payment of any indebtedness secured hereby, rather than
to apply such proceeds to the restoration of the Real Estate. Such application
or release shall not cure or waive any default or notice of default hereunder or
invalidate any act done pursuant to such notice. If the Real Estate is restored
at a cost less than the available insurance proceeds, then such excess proceeds
shall, if Mortgagor is not then in default hereunder, be paid over to Mortgagor.
Mortgagee may commence, appear in, defend or prosecute any assigned claim or
action, and may adjust, compromise, settle and collect all claims, proceeds and
awards assigned to Mortgagee, but shall not be responsible for any failure to
collect any claim, proceeds or award, regardless of the cause of the failure.
Unless an Event of Default has occurred hereunder or under the other Loan
Documents, Mortgagee shall not adjust, settle or compromise any claim or award
with the insurer without Mortgagor's participation. Mortgagor promptly shall
commence and diligently shall continue and complete the repair, restoration,
replacement or rebuilding (hereinafter referred to as "Restoration") of the Real
Estate so damaged, destroyed or injured substantially to its value, condition
and character immediately prior to such damage, destruction or injury; provided,
however, if the conditions set forth in clauses (i), (ii) and (iii) above have
been fulfilled, Mortgagor's obligation to complete said restoration shall be
contingent upon Mortgagee's making available the net proceeds of the insurance
for payment toward the costs of such Restoration. Mortgagor diligently shall
complete the Restoration of the Real Estate which are at any time in the process
of construction, alteration or Restoration, subject to the terms of this
Mortgage. Notwithstanding any damage to, or destruction of, or injury to the
Real Estate or any portion thereof by fire or other casualty, Mortgagor shall
continue to make all payments due under this Mortgage, the Loan Agreement, the
Note and the other Loan Documents in accordance with the provisions of this
Mortgage, the Loan Agreement, the Note and the applicable provisions of the
other Loan Documents.
(4) Mortgagor shall not adjust, collect or compromise any insurance
claim without Mortgagee's prior written approval. Each insurer is hereby
authorized and directed to make payment of any Insurance Proceeds under any
policies of insurance, including the return of unearned premiums, directly to
Mortgagee for application as provided herein, instead of to Mortgagor and
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Mortgagee jointly, and Mortgagee is hereby authorized to endorse any draft
therefor as Mortgagor's attorney-in-fact. Reduction of the outstanding amount of
the Obligations resulting from the application of any such Insurance Proceeds to
such Obligations by Mortgagee shall be deemed to take effect only on the date of
Mortgagee's receipt of such Insurance Proceeds and its election to apply the
same against the Obligations then outstanding hereunder. If, prior to the
receipt by Mortgagee of any Insurance Proceeds, the Mortgaged Property or any
portion thereof shall have been sold on foreclosure of this Mortgage, Mortgagee
shall have the right to receive the Insurance Proceeds to the extent of any
deficiency found to be due upon such sale, whether or not a deficiency judgment
on this Mortgage shall have been sought or recovered or denied, together with
interest thereon at the Interest Rate, and the reasonable attorneys' fees,
reasonable costs and disbursements incurred by Mortgagee in connection with the
collection of the Insurance Proceeds. Anything contained in any Legal
Requirement or in this Mortgage to the contrary notwithstanding, Mortgagee shall
not be deemed to be a trustee or other fiduciary with respect to its receipt of
any Insurance Proceeds.
(5) Any transfer of the Mortgaged Property, in accordance with the
provisions hereof, including a transfer by foreclosure or deed in lieu of
foreclosure, shall transfer therewith all of Mortgagor's interest in all
insurance policies then covering the Buildings and the Fixtures or the
operations conducted at the Real Estate, including, but without limiting the
generality of the foregoing, any unearned premiums.
8. Condemnation/Eminent Domain.
---------------------------
(1) Notwithstanding (i) any taking by eminent domain, condemnation or
otherwise of all or any portion of the Mortgaged Property, or (ii) the change of
grade of any street, road or avenue or the widening of streets, roads or avenues
adjoining or abutting the Land, or (iii) any other injury to, or decrease in
value of, the Mortgaged Property caused in any manner by any Governmental
Authority (any of the foregoing events being hereinafter referred to as a
"TAKING"), Mortgagor shall continue to make all payments due under this
Mortgage, the Note and the other Loan Documents in accordance with the
provisions of this Mortgage, the Loan Agreement, the Note and the applicable
provisions of the other Loan Documents. Mortgagor shall notify Mortgagee
immediately upon obtaining knowledge of the institution of any proceedings for
any Taking or of any contemplated Taking. All Awards made in connection with any
Taking shall be paid to Mortgagee free and clear of all liens and encumbrances.
Mortgagee shall be entitled to the interest paid, in lieu of the Interest Rate,
on any such Award or proceeds thereof for such Taking. Mortgagor shall not
settle or stipulate to any matter or agree to judgment in any such proceedings
with respect to a Taking without Mortgagee's prior written approval. Each
Governmental Authority is hereby authorized and directed to make payment of any
Award made in connection with any Taking directly to Mortgagee for application
as provided herein, instead of to Mortgagor and Mortgagee jointly, and Mortgagee
is hereby authorized to endorse any draft therefor as Mortgagor's
attorney-in-fact. Reduction of the outstanding amount of the Obligations
resulting from the application of any such Award by Mortgagee shall be deemed to
take effect only on the date of Mortgagee's receipt of such Award and its
election to apply the same against the Obligations then outstanding hereunder.
If, prior to the receipt by Mortgagee of any Award, the Mortgaged Property or
any portion thereof shall have been sold on foreclosure of this Mortgage to
Mortgagee, Mortgagee shall have the right to receive the
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Award to the extent of any deficiency found to be due upon such sale, whether or
not a deficiency judgment on this Mortgage shall have been sought or recovered
or denied, together with interest thereon at the Interest Rate, and the
reasonable attorneys' fees, reasonable costs and disbursements incurred by
Mortgagee in connection with the collection of the Award.
(2) If there shall be any Taking, then Mortgagor promptly shall
commence and diligently shall continue and complete the Restoration of the Real
Estate remaining after such Taking substantially to their value, condition and
character immediately prior to such Taking, in accordance with the provisions of
this Mortgage. Mortgagor diligently shall complete, and pay for the cost of, the
Restoration of the Real Estate which is at any time in the process of
construction, alteration or Restoration. Any Award remaining after completion of
such Restoration shall be retained by Mortgagee and shall be applied to the
payment of the Obligations then outstanding, in such proportion and priority as
Mortgagee, in its sole discretion, may elect.
9. Sale and Lease of Real Estate. Except to the extent provided in, or
permitted by, the Loan Agreement, Mortgagor shall not, at any time, directly or
indirectly (by operation of law or otherwise), without the prior written consent
of Mortgagee:
(1) sell, assign, transfer or convey all or any part of the Mortgaged
Property or any interest therein; or
(2) transfer ownership or control of Mortgagor; or
(3) lease or sublease the Real Estate or any portion thereof, except in
accordance with the terms of Article 12 hereof; or
(4) (i) make any new or additional mortgage, deed of trust or other
loan which is secured by the Mortgaged Property or any portion thereof (whether
superior or junior to the lien of this Mortgage and whether recourse or
nonrecourse) unless such loan is made by Mortgagee, as Lender, or (ii) except
for the Permitted Encumbrances and subject to the provisions of Article 10 or 11
hereof, otherwise create, grant, permit or suffer any lien, security interest,
claim, charge or encumbrance of any kind or nature whatsoever, whether recorded
or unrecorded, against the Mortgaged Property or any portion thereof.
10. Discharge of Liens. Except as otherwise provided in, or permitted
by, the Loan Agreement, Mortgagor at all times shall keep the Mortgaged Property
free from the liens of mechanics, laborers, contractors, subcontractors and
materialmen and, except for the Permitted Encumbrances and any New Mortgages
which may be made to Mortgagee, free from any and all other liens, claims,
charges or encumbrances of any kind or nature whatsoever. If any such liens,
claims, charges or encumbrances shall be filed or recorded, Mortgagor shall
forthwith deliver copies thereof to Mortgagee, Mortgagor shall cause the same to
be discharged of record by payment, bonding or in such other manner as shall be
satisfactory to Mortgagee and shall exhibit to Mortgagee, upon demand, evidence
satisfactory to Mortgagee of such discharge.
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11. Right of Contest. Mortgagor, at its sole cost and expense, may, in good
faith, contest, by proper legal actions or proceedings, the validity of any
Legal Requirement or the application thereof to Mortgagor or the Mortgaged
Property, or the validity or amount of any Imposition or the validity of the
claims of any mechanics, laborers, subcontractors, contractors or materialmen
(hereinafter referred to as "CONTRACTOR'S Claims"). During the pendency of any
such action or proceeding, compliance with such contested Legal Requirement or
payment of such contested Imposition or payment of such contested Contractor's
Claim may be deferred provided that, in each case, at the time of the
commencement of any such action or proceeding and during the pendency of such
action or proceeding: (a) no Event of Default shall exist hereunder and no other
event shall have occurred which, with the giving of notice or lapse of time, or
both, would constitute an Event of Default hereunder, (b) adequate reserves with
respect thereto are maintained on Mortgagor's books in accordance with generally
accepted accounting principles and the applicable provisions of the Loan
Agreement, (c) and such contest operates to suspend enforcement of compliance
with the contested Legal Requirement or collection of the contested Imposition
or collection or enforcement of such contested Contractor's Claim and such
contest is maintained and prosecuted continuously and with diligence, and (d)
during such contest Mortgagor shall post with Mortgagee cash or a bond in an
amount determined by Mortgagee from a company and in form and content acceptable
to Mortgagee and provide such other security satisfactory to Mortgagee assuring
the discharge of Mortgagor's such contested Imposition or Contractor's Claim and
of any interest charge, cost, penalty or expense arising from such contest.
Notwithstanding any such reserves or the furnishing of any bond or other
security, Mortgagor promptly shall comply with any contested Legal Requirement
or shall pay any contested Imposition or Contractor's Claim, and compliance
therewith or payment thereof shall not be deferred, if, at any time, the
Mortgaged Property or any portion thereof shall be, in Mortgagee's reasonable
judgment, in danger of being forfeited or lost by reason of any such contest or
Mortgagor's non-compliance with any such Legal Requirement or non-payment of any
such Imposition or Contractor's Claim. If such action or proceeding is
terminated or discontinued adversely to Mortgagor, Mortgagor, upon demand, shall
deliver to Mortgagee evidence satisfactory to Mortgagee, in its sole discretion,
of Mortgagor's compliance with such contested Legal Requirement or payment of
such contested Imposition or Contractor's Claim, as the case may be.
12. Leases and Operating Agreements.
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(1) Mortgagor has no right or power, as against Mortgagee, without the
prior written consent of Mortgagee, in each case (i) to enter into or modify,
amend, or cancel, any of the terms, covenants or conditions of any Leases or
Operating Agreements, (ii) to consent to any assignment of any Lease or any
subletting of the portion of the Real Estate subject to any Lease, (iii) to
assign, mortgage or otherwise encumber any of the Leases or any of the Rents due
or to become due thereunder or to which Mortgagee may now or hereafter become
entitled, or (iv) to accept prepayments of installments of rent for more than
thirty (30) days in advance of the time when the same shall become due or to
anticipate the rents thereunder, except for security deposits. Mortgagor shall
notify Mortgagee not later than three (3) months prior to the date of the
expiration of the term of any Lease of its intention either to renew or not
renew any such Lease, and, if Mortgagor shall intend to renew the Lease, the
terms and conditions of any such renewal Lease.
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(2) In addition to containing such other terms and conditions as
Mortgagee shall approve, each Lease which shall be executed in accordance with
the provisions hereof shall (i) not permit the lessee thereunder to terminate or
invalidate the terms of its Lease as a result of any action taken by Mortgagee
to enforce this Mortgage either by foreclosure, or acceptance of a deed in lieu
of foreclosure, or by resort to any other rights or remedies available to
Mortgagee hereunder or at law or in equity, (ii) include a subordination clause
providing that the Lease and the interest of the lessee thereunder in the
Mortgaged Property are in all respects subject and subordinate to this Mortgage,
(iii) provide that, at the option of Mortgagee or the purchaser at a foreclosure
sale or the grantee in a voluntary conveyance in lieu of foreclosure, the lessee
thereunder shall attorn to Mortgagee or to such purchaser or grantee under all
of the terms of the Lease and recognize such entity as the lessor under the
Lease for the balance of the term of the Lease, and (iv) provide that, in the
event of the enforcement by Mortgagee of the rights and remedies provided by law
or in equity or by this Mortgage, any person succeeding to the interest of
Mortgagee as a result of such enforcement shall not be bound by any prepayment
of installments of rent for more than thirty (30) days in advance of the time
when the same shall become due or any amendment, modification, extension,
cancellation or renewal of the Lease made without the prior written consent of
Mortgagee.
(3) As to all Leases and Operating Agreements which shall be approved
by Mortgagee, Mortgagor shall (i) promptly perform, all of the provisions of
such Leases and Operating Agreements on its part to be performed, (ii) promptly
enforce in accordance with sound management practices all of the provisions of
such Leases and Operating Agreements on the part of the lessees and other
parties thereunder to be performed, (iii) refrain from taking any action which
would result in the termination of any Operating Agreement or the diminution of
the Rents under Leases, (iv) appear in and prosecute or defend any action or
proceeding arising under, growing out of, or in any manner connected with, the
Leases or Operating Agreements to which it is a party, (v) exercise, within ten
(10) days after demand by Mortgagee, any right to request from the lessee under
any Lease or other party to any Operating Agreement a certificate with respect
to the status thereof, (vi) deliver to Mortgagee, within five (5) days after
demand by Mortgagee, a written statement containing the names of all lessees,
the terms of all Leases and the spaces occupied and rentals payable thereunder
and a statement of all Leases which are then in Event of Default, including the
nature and magnitude of any such Event of Default, (vii) provide Mortgagee with
a copy of each notice of Event of Default received by Mortgagor under any
Operating Agreement immediately upon receipt thereof and deliver to Mortgagee a
copy of each notice of Event of Default sent by Mortgagor under any Operating
Agreement simultaneously with its delivery of such notice, and (viii) promptly
deliver to Mortgagee a fully executed counterpart of each Lease or Operating
Agreement upon the execution of the same. All Leases, if any, shall be subject
and subordinate to this Mortgage.
(4) Mortgagor hereby assigns to Mortgagee from and after the date
hereof (including any period allowed by law for redemption after any foreclosure
or other sale), primarily, on a parity with the Mortgaged Property, and not
secondarily, as further security for the payment and performance of the
Obligations, the Leases and the Rents. Nothing contained in this Article shall
be construed to bind Mortgagee to the performance of any of the terms,
covenants, conditions or agreements contained in any of the Leases or otherwise
impose any obligation on Mortgagee
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(including, but without limiting the generality of the foregoing, any liability
under the covenant of quiet enjoyment contained in any Lease in the event that
any lessee shall have been joined as a party defendant in any action to
foreclose this Mortgage or commenced by reason of an Event of Default hereunder
or in the event any lessee shall have been barred and foreclosed of any or all
right, title and interest and equity of redemption in the Mortgaged Property),
except that Mortgagee shall be accountable for any money actually received
pursuant to the aforesaid assignment. Mortgagor hereby further grants to
Mortgagee the right, but not the obligation (i) to enter upon and take
possession of the Real Estate for the purpose of collecting the Rents or
exercising any rights or remedies under the Leases, (ii) to dispossess by the
usual summary proceedings any lessee defaulting in making any payment due under
any Lease to Mortgagee or defaulting in the performance of any of its other
obligations under its Lease, (iii) to let the Real Estate or any portion
thereof, (iv) to apply the Rents on account of the Obligations, and (v) to
perform such other acts as Mortgagee is entitled to perform pursuant to this
Article. Such assignment and grant shall continue in effect until all of the
Obligations shall be paid and performed in full in accordance with this
Mortgage, the Loan Agreement and the other Loan Documents, the execution of this
Mortgage constituting and evidencing the irrevocable consent of Mortgagor to the
entry upon and taking possession of the Real Estate by Mortgagee pursuant to
such grant, whether or not an action to foreclose this Mortgage has been
instituted and without applying for a receiver. Mortgagee, however, grants to
Mortgagor, not as a limitation or condition hereof, but as a personal covenant
available only to Mortgagor and its successors and not to any lessee or other
person, a license, revocable upon five (5) days' written notice to Mortgagor, to
collect all of the Rents and to retain, use and enjoy the same, unless an Event
of Default shall exist hereunder or unless any event shall have occurred which,
with the giving of notice or the lapse of time, or both, would constitute an
Event of Default hereunder. In the event of any Event of Default hereunder,
Mortgagor shall pay monthly, in advance, to Mortgagee upon Mortgagee's entry
into possession pursuant to the foregoing grant, or to any receiver appointed to
collect the Rents, the fair and reasonable rental value for the use and
occupation of the Real Estate, and upon the failure of Mortgagor to make any
such payment, Mortgagor shall vacate and surrender the possession of the Real
Estate to Mortgagee or to such receiver, and upon Mortgagor's failure to so
vacate and surrender, Mortgagor may be evicted by summary proceedings. (1)
(5) Mortgagor shall receive the Rents as set forth in paragraph (d) of
this Article hereof and shall hold the right to receive the Rents as a trust
fund to be applied first to the payment of Impositions and then to the payment
of the Obligations and, thereafter, to the payment of insurance premiums for
policies required to be provided hereunder before using any part of the total of
the same for any other purpose.
(6) Upon notice and demand, Mortgagor shall, from time to time,
execute, acknowledge and deliver to Mortgagee, or shall cause to be executed,
acknowledged and delivered to Mortgagee in form reasonably satisfactory to
Mortgagee, one or more separate assignments (confirmatory of the general
assignment provided in this Article) of the lessor's interest in any Lease.
Mortgagor shall pay to Mortgagee the reasonable expenses incurred by Mortgagee
in connection with the preparation and recording of any such instrument.
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(7) Mortgagor, at its sole cost and expense, will at all times promptly
and faithfully abide by, discharge and perform all of the covenants, conditions
and agreements contained in the Operating Agreements, on the part of Mortgagor
to be kept and performed thereunder. If Mortgagor shall commit a breach or
default under the provisions of any Operating Agreement and such breach or
default shall not have been cured within the cure period provided therefor
(after required notices) under the applicable Operating Agreement, if any, then
and in any such event, such breach or default shall constitute an Event of
Default, entitling Mortgagee to remedies upon Event of Default as provided
herein and by law.
13. Estoppel Certificates. Mortgagor, within fifteen (15) Business Days
after request by Mortgagee, shall deliver, in form reasonably satisfactory to
Mortgagee, in its sole discretion, a written statement duly executed and
acknowledged by Mortgagor setting forth the amount of the Obligations then
outstanding and whether any offsets, claims, counterclaims or defenses exist
against the Obligations secured by this Mortgage and, if any are alleged to
exist, the nature thereof shall be set forth in detail.
14. Expenses. Mortgagor shall pay all reasonable out-of-pocket expenses of
Mortgagee in connection with the preparation of this Mortgage, the Loan
Agreement, the Note and the other Loan Documents (including, without limitation,
the reasonable fees and expenses of all of Mortgagee's counsel retained in
connection with this Mortgage, the Loan Agreement, the Note and the other Loan
Documents, and the transactions contemplated thereby). If, at any time or times,
regardless of the existence of an Event of Default (as hereinafter defined),
Mortgagee (and in the case of subparagraphs (b), (c) and (d) below, any Lender)
shall employ counsel for advice or other representation or incur reasonable
legal or other reasonable costs and expenses in connection with:
(1) any amendment or modification of this Mortgage, the Note or any of
the Loan Documents;
(2) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Mortgagee or any Lender, Mortgagor or any other Person
(as defined herein) relating to the Mortgaged Property, this Mortgage, the Loan
Agreement, the Note or any of the Loan Documents or any other agreements to be
executed or delivered in connection herewith (unless initiated by Mortgagee in
bad faith);
(3) any good faith attempt to enforce any rights of Mortgagee against
Mortgagor or any other Person, including, without limitation, Account Debtors
(as such term is defined in the Uniform Commercial Code), that may be obligated
to Mortgagee by virtue of any of the Loan Documents;
(4) any good faith attempt to protect Mortgagee's interests or to
verify, protect, collect, sell, liquidate or otherwise dispose of the Mortgaged
Property;
then, and in any such event, such reasonable attorneys' fees, including those of
any appellate proceedings, and all reasonable expenses, reasonable costs,
charges and other fees incurred by such
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counsel or Mortgagee in any way or respect arising in connection with or
relating to any of the events or actions described in this Article 14 shall be
payable, on demand, by Mortgagor to Mortgagee and shall be additional
Obligations secured under this Mortgage, the Loan Agreement and the Loan
Documents. Without limiting the generality of the foregoing, such reasonable
expenses, reasonable costs, charges and fees may include: paralegal fees, costs
and expenses, accountants' fees, costs and expenses, reasonable court costs and
expenses, photocopying and duplicating expenses, court reporter fees, reasonable
costs and expenses, long distance telephone charges, air express charges,
telegram charges, secretarial overtime charges, and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal
services.
15. Mortgagee's Right to Perform. In the event of any Event of Default
hereunder, Mortgagee may (but shall be under no obligation to) at any time
perform the Obligations, without waiving or releasing Mortgagor from any
Obligations or any Event of Default under this Mortgage, and, in such event, the
reasonable cost thereof, including, but without limiting the generality of the
foregoing, reasonable attorneys' fees, reasonable costs and disbursements
incurred in connection therewith (a) shall be deemed to be Obligations, (b)
shall be a lien on the Mortgaged Property prior to any right or title to,
interest in, or claim upon the Mortgaged Property subordinate to the lien of
this Mortgage, and (c) shall be payable, on demand, together with interest
thereon at the Interest Rate, from the date of any such payment by Mortgagee to
the date of repayment to Mortgagee. No payment or advance of money by Mortgagee
pursuant to the provisions of this Article shall cure, or shall be deemed or
construed to cure, any such Event of Default by Mortgagor hereunder or waive any
rights or remedies of Mortgagee hereunder or at law or in equity by reason of
any such Event of Default.
16. Mortgagor's Existence. Mortgagor shall do all things necessary to
preserve and keep in full force and effect its existence, franchises, rights and
privileges under the laws of its State of incorporation and the laws of the
State in which the Mortgaged Property is located and its right to own property
and transact business in such States.
17. Mortgagee's Costs and Expenses. If (a) Mortgagor shall fail to make any
payment of Obligations when the same shall be due and payable, or shall fail to
perform any of the Obligations under this Mortgage or any other Loan Document,
or (b) Mortgagee shall exercise any of its rights or remedies hereunder, or (c)
any action or proceeding involving Mortgagor or any of the Mortgaged Property is
commenced in which it becomes necessary to defend or uphold the lien or priority
of this Mortgage or any action or proceeding is commenced to which Mortgagee is
or becomes a party, or (d) the taking, holding or servicing of this Mortgage by
Mortgagee is alleged to subject Mortgagee to any civil or criminal fine or
penalty based on the taking, holding or servicing of this Mortgage and not based
on any other wrongful act or omission of Mortgagee, or (e) Mortgagee's review or
approval of any document, including, but without limiting the generality of the
foregoing, any Lease, is requested by Mortgagor or reasonably required by
Mortgagee, then, in any such event, all such reasonable costs, expenses and fees
incurred by Mortgagee in connection therewith (including, but without limiting
the generality of the foregoing, any civil or criminal fines or penalties and
attorneys' fees, reasonable costs and disbursements): (i) shall be deemed to be
Obligations, (ii) shall be a lien on the Mortgaged Property prior to any right
or title to, interest in, or claim upon the Mortgaged
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Property subordinate to the lien of this Mortgage, and (iii) shall be payable,
within ten (10) days after written demand, together with interest thereon at the
Interest Rate, from the date of such demand for payment by Mortgagee to the date
of repayment. In any action to foreclose this Mortgage or to recover or collect
the Obligations or any portion thereof, the provisions of this Article with
respect to the recovery of reasonable costs, expenses, disbursements and
penalties shall prevail unaffected by the provisions of any Legal Requirement
with respect to the same to the extent that the provisions of this Article are
not inconsistent therewith or violative thereof.
18. Event of Defaults.
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(1) The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute a default ("Event of
Default") hereunder:
(1) the failure to make any payment of principal, interest, fees or
premium or any other amount owing under the Loan Agreement, the Note or
under any of the Loan Documents when due and payable or declared due
and payable whether by maturity or acceleration, which failure
continues beyond any applicable grace period therefor set forth in the
Loan Agreement, the Note or any of the Loan Documents, and with regard
to any failure to pay any amount owing or to be paid under this
Mortgage, if such failure is not cured within ten (10) days after
notice of default, or within such other period of time as is expressly
provided under the particular provision of this Mortgage; or
(2) the failure to pay any other portion of the Obligations as and
when the same shall become due and payable whether by maturity or
acceleration, which failure continues beyond any applicable grace
period therefor set forth in the Loan Agreement, the Note or applicable
Loan Document; or
(3) any Event of Default by Mortgagor in the due observance or
performance of any of the terms, covenants or provisions contained in
this Mortgage including, without limitation, Mortgagor's failure to
comply with any of the provisions of Articles 3 or 9 hereof, which
Event of Default continues for thirty (30) days after written notice
thereof from Mortgagee to Mortgagor; provided, however, that if such
Event of Default cannot be cured within such thirty (30) day period
despite all reasonable efforts of Mortgagor, then such thirty (30) day
period shall be extended by an additional thirty (30) days or such
longer period of time approved by Mortgagee as is necessary to cure
such Event of Default, so long as Mortgagor is proceeding diligently to
cure such Event of Default; or
(4) the occurrence of any Event of Default under (and as defined,
and particularly described in) the Loan Agreement, the Note, or any of
the Loan Documents.
19. Remedies.
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(1) Upon the occurrence of any Event of Default hereunder, Mortgagee
may, without notice, presentment, demand or protest, all of which are hereby
expressly waived by
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Mortgagor to the extent permitted by applicable law and except as expressly
provided otherwise in this Mortgage, take such action as Mortgagee deems
advisable, in its sole discretion, to protect and enforce its rights in and to
the Mortgaged Property, including, but without limiting the generality of the
foregoing, the following actions, each of which may be pursued concurrently or
otherwise, at such time and in such manner as Mortgagee may determine, in its
sole discretion, without impairing or otherwise affecting the other rights and
remedies of Mortgagee hereunder or at law or in equity:
(1) Mortgagee may declare all of the Obligations immediately due
and payable.
(2) Mortgagee may, without releasing Mortgagor from any Obligation
under this Mortgage or any other Loan Document and without waiving any
Event of Default, exercise any of its rights and remedies under Article
15 hereof.
(3) Mortgagee may (1) institute and maintain an action of mortgage
foreclosure against any of the Mortgaged Property and against any of
the property subject to any of the New Mortgages, (2) institute and
maintain an action with respect to the Mortgaged Property under any
other Loan Document, or (3) take such other action as may be allowed at
law or in equity for the enforcement of this Mortgage or the other Loan
Documents. Mortgagee may proceed in any such action to final judgment
and execution thereon for the whole of the Obligations, together with
interest thereon at the Interest Rate, from the date on which Mortgagee
shall declare the same to be due and payable to the date of repayment,
and all reasonable costs of any such action, including, but without
limiting the generality of the foregoing, reasonable attorneys' fees,
reasonable costs and disbursements.
(4) Mortgagee may, without releasing Mortgagor from any Obligation
under this Mortgage and without waiving any Event of Default, enter
upon and take possession of the Real Estate or any portion thereof,
either personally or by its agents, nominees or attorneys, and
dispossess Mortgagor and its agents and servants therefrom. Thereupon,
Mortgagee may (1) use, manage and operate the Real Estate and the
business conducted upon the Real Estate, and (2) exercise all rights
and powers of Mortgagor with respect to the Mortgaged Property, either
in the name of Mortgagor or otherwise, including, but without limiting
the generality of the foregoing, the right to make, cancel, enforce or
modify Leases, obtain and evict lessees, establish or change the amount
of any Rents and the manner of collection thereof, and perform any acts
which Mortgagee deems proper, in its sole discretion, to protect the
security of this Mortgage. After deduction of all reasonable costs and
expenses of operating and managing the Real Estate, including, but
without limiting the generality of the foregoing, reasonable attorneys'
fees, costs and disbursements, administration expenses, management fees
and brokers' commissions, satisfaction of liens on any of the Mortgaged
Property, payment of Impositions, claims and Insurance Premiums,
invoices of persons who may have supplied goods and services to or for
the benefit of any of the Mortgaged Property and all reasonable costs
and expenses of the maintenance, repair, Restoration, alteration or
improvement of any of the Mortgaged Property, Mortgagee shall apply the
Rents received by Mortgagee to payment or performance of the
Obligations. Mortgagee may apply the Rents received by Mortgagee to the
payment of any or all of the foregoing in such order and amounts as
Mortgagee, in its sole discretion, may elect.
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Mortgagee may, in its sole discretion, determine the method by which, and
extent to which, the Rents will be collected and the obligations of the
lessees under the Leases enforced and Mortgagee may waive or fail to
enforce any right or remedy of the lessor under any Lease.
(2) Upon the filing of any complaint to foreclose this Mortgage, the
court in which such complaint is filed may, upon application of Mortgagee or at
any time thereafter, either before or after foreclosure sale, and without notice
to Mortgagor or to any party claiming under Mortgagor, without regard to the
solvency or insolvency at the time of such application of any person then liable
for payments of any of the Obligations, without regard to the then value of the
Real Estate, and without requiring any bond from the complainant in such
proceedings, appoint a receiver for the benefit of Mortgagee (which may be
Mortgagee), with power to take possession, charge, and control of the Mortgaged
Property, including, without limitation, the Real Estate, to operate or lease
the same, to keep the Real Estate insured and in good repair, and to collect any
revenues of operation or Rents during the pendency of such foreclosure suit and,
in case of foreclosure sale and a deficiency, during any period of redemption.
The court may, from time to time, authorize said receiver to pay the net amounts
remaining in said receiver's hands, after deducting reasonable compensation for
the receiver and the receiver's counsel to be allowed by the court, to Mortgagee
to be applied to the Obligations in accordance with the Note. This Mortgage and
the right of foreclosure hereunder shall not be impaired or exhausted by one or
any foreclosure or by one or any sale and may be foreclosed successively and in
parts until all of the Real Estate has been foreclosed against and sold.
(3) In the case of a sale pursuant to an order, decree or judgment of
foreclosure, the Real Estate may, at Mortgagee's election, be sold in one (1)
parcel. Mortgagee shall receive the proceeds of any such sale and shall apply
the proceeds of such sale as follows, in the following order:
(1) to all reasonable costs, fees, charges and expenses incurred by
Mortgagee in connection with any Event of Default hereunder, the
exercise of any of the rights and remedies of Mortgagee hereunder and
any such sale, including, but without limiting the generality of the
foregoing, reasonable attorneys' fees, reasonable costs and
disbursements, receiver's fees, all expenses of such sale, including
reasonable publication costs, stenographic charges, title searches and
surveys, guarantee policies and documentary stamps and transfer taxes
and recording fees and charges; and
(2) to payment of outstanding Impositions; and
(3) to payment and performance of all Obligations then outstanding
to Mortgagee and such other holders of instruments or agreements
evidencing the Obligations in such manner and order of priority or
preference as Mortgagee may, in its sole discretion, determine; and
(4) the balance, if any, to the persons legally entitled thereto.
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(4) Upon the occurrence of any Event of Default hereunder, Mortgagee
may exercise such power of sale, if any, as may be allowed under the laws of the
state in which the Mortgaged Property is located, all in accordance with such
notices and procedures for conducting such sales as is provided for under such
laws, and in connection with any lawfully conducted sale.
(5) Upon the occurrence of any Event of Default hereunder, Mortgagor
shall irrevocably appoint Mortgagee as true and lawful attorney of Mortgagor in
its name and stead and on its behalf, for the purpose of effectuating any
otherwise proper sale, assignment, transfer or delivery for the enforcement of
this Mortgage, whether pursuant to foreclosure (or power of sale, if available),
to execute and deliver all such deeds, bills of sale, assignments and other
instruments as Mortgagee may consider necessary or appropriate, with full power
of substitution, Mortgagor hereby ratifying and confirming all that its said
attorney or any substitute shall lawfully do by virtue hereof. Nevertheless, if
so requested by Mortgagee or any purchaser, Mortgagor shall ratify and confirm
any such sale, assignment, transfer or delivery by executing and delivering to
Mortgagee or such purchaser all proper deeds, bills of sale, assignments,
releases and other instruments as may be designated in any such request.
(6) Mortgagee may be a purchaser of the Mortgaged Property or of any
part thereof or of any interest therein at any sale thereof, whether pursuant to
foreclosure or power of sale or otherwise hereunder, and may apply upon the
purchase price thereof any outstanding Obligations. Mortgagee shall, upon such
purchase, acquire good title to the Mortgaged Property so purchased, free of the
lien of this Mortgage and free of all rights of redemption in Mortgagor.
(7) Upon any sale of the Mortgaged Property or any part thereof or any
interest therein, whether pursuant to foreclosure (or power of sale, if
available) or otherwise hereunder, the receipt of the officer making the sale
under judicial proceedings or of Mortgagee shall be sufficient discharge to the
purchaser for the purchase money and such purchaser shall not be obliged to see
to the application thereof.
(8) Any sale of the Mortgaged Property or any part thereof or any
interest therein, whether pursuant to foreclosure (or power of sale, if
available) or otherwise hereunder, shall forever be a perpetual bar against
Mortgagor.
(9) The remedies and rights granted to Mortgagee hereunder are
cumulative and are not in lieu of, but are in addition to, and shall not be
affected by the exercise of, any other remedy or right available to Mortgagee
whether now or hereafter existing either at law or in equity or under this
Mortgage or any other Loan Document.
(10) To the extent provided in the Loan Agreement, Mortgagor shall
indemnify and hold Mortgagee harmless and defend each such party from any loss,
liability, cost and expense (including without limitation reasonable attorneys'
fees and disbursements) and all claims, actions, proceedings and suits arising
out of, or in connection with, any lawful action by Mortgagee to enforce
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this Mortgage or any Loan Document, whether or not any action, proceeding or
suit is filed, unless due to Mortgagee's gross negligence.
20. Security Agreement and Fixture Filing under Uniform Commercial Code.
(a) It is the intention of Mortgagor and Mortgagee that this Mortgage shall
constitute a Security Agreement within the meaning of the Uniform Commercial
Code of the State in which the Mortgaged Property is located. Notwithstanding
the filing of a financing statement covering any of the Mortgaged Property in
the records normally pertaining to personal property, all of the Mortgaged
Property, for all purposes and in all proceedings, legal or equitable, shall be
regarded, at Mortgagee's option (to the extent permitted by law), as part of the
Real Estate whether or not any such item is physically attached to the Real
Estate or serial numbers are used for the better identification of certain
items. The mention in any such financing statement of any of the Mortgaged
Property shall never be construed in any way as derogating from or impairing
this declaration and hereby stated intention of Mortgagor and Mortgagee. It is
hereby acknowledged and agreed that such mention in the financing statement is
hereby declared to be for the protection of Mortgagee in the event any court
shall at any time hold that notice of Mortgagee's priority of interest, to be
effective against any third party, including the Federal government or any
authority or agency thereof, must be filed in the Uniform Commercial Code
records. Pursuant to the provisions of the Uniform Commercial Code, Mortgagor
hereby authorizes Mortgagee, without the signature of Mortgagor, to execute and
file financing and continuation statements if Mortgagee shall determine, in its
sole discretion, that such financing or continuation statements are necessary or
advisable in order to preserve or perfect its security interest in the Fixtures
covered by this Mortgage, and Mortgagor shall pay to Mortgagee, on demand, any
expenses incurred by Mortgagee in connection with the preparation, execution and
filing of such statements that may be filed by Mortgagee.
(b) Some of the items located on the Real Estate and included within the
definition of the Mortgaged Property are or are to become "fixtures" (as that
term is defined in Article 9 of the Uniform Commercial Code), and as provided
under Article 9 of the Uniform Commercial Code, this Mortgage upon being filed
for record in the real property records of county in which the Mortgaged
Property is located shall operate also as a "fixture filing" and financing
statement upon such of the items which are or may become fixtures. Mortgagor is
the record owner of the Real Estate and Mortgaged Property.
21. No Waivers, Etc. A failure by Mortgagee to insist upon the strict
performance by Mortgagor of any of the terms and provisions of this Mortgage
shall not be deemed to be a waiver of any of the terms, covenants, conditions
and provisions hereof. Mortgagee, notwithstanding any such failure, shall have
the right thereafter to insist upon the strict performance by Mortgagor of any
and all of the terms, covenants, conditions and provisions of this Mortgage to
be performed by Mortgagor. Mortgagee may release, regardless of consideration
and without the necessity for any notice to or consent by the holder of any
subordinate lien on the Mortgaged Property, any part of the security held for
payment or performance of the Obligations or any portion thereof secured by this
Mortgage without, as to the remainder of the security, in any manner whatsoever,
impairing or affecting the lien of this Mortgage or the priority of the lien of
this Mortgage over any subordinate
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lien. Mortgagee may resort for the payment of the Obligations secured by this
Mortgage to any other security therefor held by Mortgagee in such order and
manner as Mortgagee may elect.
22. Trust Funds. At such time as Mortgagee requests, Mortgagor shall
thereafter treat all deposits made as security under any Leases as trust funds,
which shall be segregated and thereafter not be commingled with any other funds
of Mortgagor. At all times Mortgagor shall hold any such security deposits in
accordance with the provisions of any applicable Legal Requirements. Within ten
(10) days after request by Mortgagee, Mortgagor shall furnish Mortgagee with
evidence, satisfactory to Mortgagee, in its sole discretion, of compliance with
this Article, together with a certified statement of the amount of all of the
security deposited by lessees and copies of all Leases not theretofore delivered
to Mortgagee.
23. Additional Rights.
-----------------
(1) Upon confirmation of a sale pursuant to any order, decree or
judgment of foreclosure of this Mortgage, the appropriate governmental officer
making such sale, or his successor in office, shall be and is hereby authorized
immediately to execute and deliver to the purchaser at such sale a deed,
assignment or appropriate document conveying the Mortgaged Property to such
purchaser. Upon the execution of such deed, assignment or appropriate document,
the recitals therein of facts such as the terms of the sale, the sale, the
purchase, payment of purchase money and other facts affecting the regularity or
validity of such sale shall be conclusive proof of the truthfulness thereof,
that such sale was regularly and validly made, and any such deed, assignment or
appropriate document shall be conclusive against all persons as to all matters
and facts recited therein.
(2) The holder of any subordinate lien on the Mortgaged Property shall
have no right to terminate any Lease whether or not such Lease is subordinate to
this Mortgage.
24. Waivers by Mortgagor.
--------------------
(1) Mortgagor hereby waives all errors and imperfections in any
proceedings instituted by Mortgagee under this Mortgage, the Loan Agreement, the
Note or any other Loan Document and all benefit of any present or future statute
of limitations or any other present or future statute, law, stay, moratorium,
appraisal or valuation law, regulation or judicial decision which, nor shall
Mortgagor at any time insist upon or plead or in any manner whatsoever claim or
take any benefit or advantage of any such statute, law, stay, moratorium,
regulation or judicial decision which (i) provides for the valuation or
appraisal of the Mortgaged Property prior to any sale or sales thereof which may
be made pursuant to any provision herein or pursuant to any decree, judgment or
order of any court of competent jurisdiction, (ii) exempts any of the Mortgaged
Property or any other property, real or personal or any part of the proceeds
arising from any sale thereof from attachment, levy or sale under execution,
(iii) provides for homestead rights or exemptions or provides for any stay of
execution, moratorium, marshaling of assets, exemption from civil process,
reinstatement, redemption or extension of time for payment, (iv) requires
Mortgagee to institute proceedings in mortgage foreclosure against the Mortgaged
Property before exercising any other remedy afforded Mortgagee hereunder in the
event of an Event of Default, (v) affects any of the terms, covenants,
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conditions or provisions of this Mortgage, or (vi) conflicts with or may affect,
in a manner which may be adverse to Mortgagee, any provision, covenant,
condition or term of this Mortgage, the Loan Agreement, the Note or any other
Loan Document, nor shall Mortgagor at any time after any sale or sales of the
Mortgaged Property pursuant to any provision herein, including, but without
limiting the generality of the foregoing, after any sale pursuant to a judgment
of foreclosure, claim or exercise any right under any present or future statute,
law, stay, moratorium, regulation or judicial decision to redeem the Mortgaged
Property or the portion thereof so sold.
(2) Mortgagor hereby waives the right, if any, to require any sale to
be made in parcels, or the right, if any, to select parcels to be sold, and
there shall be no requirement for marshaling of assets.
(3) Unless specifically required herein or in the Loan Agreement or
pursuant to applicable law, Mortgagor hereby waives all notices of default or of
Mortgagee's election to exercise or Mortgagee's actual exercise of any rights or
remedies hereunder or under any of the Loan Agreement.
25. Failure to Consent. Except as otherwise provided by the Loan
Agreement, if Mortgagor shall seek the approval by, or the consent of, Mortgagee
hereunder or under the Loan Agreement or any other Loan Document, and Mortgagee
shall fail or refuse to give such consent or approval, Mortgagor shall not be
entitled to any damages for any withholding or delay of such consent by
Mortgagee, it being intended that Mortgagor's sole remedy shall be to bring an
action for an injunction or specific performance, which remedy of an injunction
or specific performance shall be available only in those cases in which
Mortgagee has expressly agreed hereunder or under the Loan Agreement or any
other Loan Documents not to unreasonably withhold or delay its consent or
approval. Unless otherwise provided herein or in the Loan Agreement or any other
Loan Document, Mortgagee shall have the right to refuse to grant its consent,
approval or acceptance or to indicate its satisfaction whenever such consent,
approval, acceptance or satisfaction shall be required under the Loan Agreement
or any of the Loan Documents.
26. No Joint Venture or Partnership. Mortgagor and Mortgagee intend
that the relationship created hereunder be solely that of Mortgagor and
mortgagee or Mortgagor and lender, as the case may be. Nothing herein is
intended to create a joint venture, partnership, tenancy-in-common, or joint
tenancy relationship between Mortgagor and Mortgagee nor to grant Mortgagee any
interest in the Mortgaged Property other than that of mortgagee or lender.
27. Notice. All notices, requests and demands to or upon a party hereto
to be effective shall be in writing and shall be sent or delivered to the
appropriate party in the manner provided in the Note.
28. Conflict with the Loan Documents. To the extent there shall be any
conflict between the defined terms set forth herein and the defined terms set
forth in any other Loan Document (other than the Note), then, unless such other
Loan Document expressly provides otherwise, the terms, covenants, conditions and
provisions of the Mortgage shall prevail with respect to this Mortgage.
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Subject to the foregoing, if there shall be any inconsistencies between the
terms, covenants, conditions and provisions set forth in this Mortgage and the
terms, covenants, conditions and provisions set forth in the Loan Agreement,
then, unless this Mortgage expressly provides otherwise, the terms, covenants,
conditions and provisions of the Note shall prevail.
29. No Modification; Binding Obligations. This Mortgage may not be
modified, amended, discharged or waived in whole or in part except by an
agreement in writing signed by Mortgagor and Mortgagee. The covenants of this
Mortgage shall run with the Land and shall bind Mortgagor and the heirs,
distributees, personal representatives, successors and assigns of Mortgagor and
all present and subsequent encumbrances, lessees and sublessees of any of the
Mortgaged Property and shall inure to the benefit of Mortgagee and its
respective successors, assigns and endorsees.
30. Subrogation. To the extent that Mortgagee, after the date hereof,
pays any sum due under any provision of law or any instrument or documents
creating any lien prior or superior to the lien of this Mortgage, Mortgagee
shall have and be entitled to a lien on the Mortgaged Property equal in priority
to that discharged, and Mortgagee shall be subrogated to, and receive and enjoy
all rights and liens possessed, held or enjoyed by, the holder of such lien,
which shall remain in existence for the benefit of Mortgagee to secure the
Obligations. Mortgagee shall be subrogated, notwithstanding its release of
record, to mortgages, trust deeds, superior titles, vendor's liens, liens,
charges, encumbrances, rights and equities on the Mortgaged Property to the
extent that any obligation under any thereof is paid or discharged with proceeds
of disbursements or advances under any instrument evidencing the Obligations.
31. No Merger. Unless Mortgagee shall otherwise expressly consent
beforehand in writing, the fee title to any part of the Real Estate demised by
any lease and the leasehold estates thereunder shall not merge but shall always
remain separate and distinct, notwithstanding the union of said estates either
in the lessor or in the lessee, or in a third party by purchase or otherwise,
and in the event the owner or holder of the leasehold estate created by any such
lease becomes the owner of the fee title to the property demised thereby, this
Mortgage, without further act, deed, conveyance, mortgage, deed of trust or
other assurance on behalf of said owner or holder, shall be deemed to have
covered and spread to the fee estate of the property demised thereby and in the
event thereof, upon request of Mortgagee without cost or expense to Mortgagee or
any other secured party, the then owner or holder of said lease will execute,
acknowledge and deliver all and every such further acts, conveyances, deeds,
mortgages, deeds or trust and assurances as Mortgagee shall reasonably require
for purposes of accomplishing the subjection of the fee estate to this Mortgage
and the spread of this Mortgage thereto.
32. No Liability on Mortgagee. Notwithstanding anything contained
herein, this Mortgage is only intended as security for the Obligations, and
Mortgagee shall not be obligated to perform or discharge, and does not hereby
undertake to perform or discharge, any obligation, duty or liability of
Mortgagor under or pursuant to any of the Mortgaged Property. Except as
otherwise provided by the Loan Agreement, Mortgagor shall and does hereby agree
to indemnify and hold Mortgagee harmless of and from any and all liability, loss
or damage which it may or might incur under any of the Mortgaged Property or
under or by reason of their exercise of rights hereunder and
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of and from any and all claims and demands whatsoever which may be asserted
against it by reason of any alleged obligations or undertakings on its part to
perform or discharge any of the terms, covenants or agreements contained in any
of the Mortgaged Property. Mortgagee shall not have responsibility for the
control, care, management or repair of the Mortgaged Property, nor shall
Mortgagee be responsible or liable for any negligence in the management,
operation, upkeep, repair or control of the Mortgaged Property resulting in loss
or injury or death to any licensee, employee, tenant or stranger. Except as
otherwise may be provided by the Loan Agreement, no liability shall be enforced
or asserted against Mortgagee in its exercise of the powers herein granted to
it, and Mortgagor expressly waives and releases any such liability. Except as
otherwise may be provided by the Loan Agreement, should Mortgagee incur any such
liability, loss or damage, under or by reason hereof, or in the defense of any
claims or demands, Mortgagor agrees to reimburse Mortgagee immediately upon
demand for the amount thereof, including, without limitation, reasonable costs,
expenses and reasonable attorneys' fees.
33. Permitted Acts. Mortgagor agrees that, without affecting or diminishing
in any way the liability of Mortgagor or any other person (except any person
expressly released in writing) for payment or performance of the Obligations,
Mortgagee may at any time and from time to time, without notice to or consent of
any person, release any person liable for payment or performance of the
Obligations; extend the time or agree to alter the terms of payment for the
Obligations; modify or waive any Obligation; subordinate, modify or otherwise
deal with the lien hereof; accept additional security of any kind; release any
Mortgaged Property or other property securing the Obligations; make releases of
any portion of the Real Estate; consent to the making of any map or plat of the
Real Estate, the creation of any easements thereon or any covenants restraining
use of occupancy thereof; or exercise or refrain from exercising or waive any
right Mortgagee may have.
34. Care by Mortgagee. Mortgagee shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Mortgaged Property
in its possession if it takes such action for that purpose as Mortgagor requests
in writing, but failure of Mortgagee to comply with any such request shall not
of itself be deemed a failure to exercise reasonable care, and no failure of
Mortgagee to preserve or protect any rights with respect to such Mortgaged
Property against prior parties, shall be deemed a failure to exercise reasonable
care in the custody or preservation of such Mortgaged Property.
35. Defeasance. Upon the full and complete payment and satisfaction of the
Obligations, in accordance with the terms at the times and in the manner
provided in the Loan Agreement and the Note, this conveyance shall be null and
void and following such payment and satisfaction an appropriate instrument of
reconveyance or release shall promptly be made by Mortgagee to Mortgagor, at
Mortgagor's expense.
36. Miscellaneous. The Article headings in this Mortgage are used only for
convenience and are not part of this Mortgage and are not to be used in
determining the intent of the parties or otherwise in interpreting this
Mortgage. As used in this Mortgage, the singular shall include the plural, the
plural shall include the singular and the use of any gender shall be applicable
to all genders, as the context requires and the following words and phrases
shall have the following meanings:
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(a) "provisions" shall mean "provisions, terms, covenants or conditions"; (b)
"lien" shall mean "lien, pledge, hypothecation, charge, encumbrance, security
interest, mortgage or deed of trust"; (c) "obligation" shall mean "obligation,
duty, covenant or condition"; (d) "any of the Mortgaged Property" shall mean
"the Mortgaged Property or any portion thereof or interest therein"; and (e)
"Person" shall mean "any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including, but
without limiting the generality of the foregoing, any instrumentality, division,
agency, body or department thereof)". Any act which Mortgagee is permitted to
perform under this Mortgage, the Loan Agreement, the Note or any other Loan
Document may be performed at any time and from time to time by Mortgagee or by
any person or entity designated by Mortgagee. Any act which is prohibited to
Mortgagor under this Mortgage, the Loan Agreement, the Note or any other Loan
Document is also prohibited to all lessees of any of the Mortgaged Property.
Each appointment of Mortgagee as attorney-in-fact for Mortgagor under this
Mortgage, the Loan Agreement, the Note or any other Loan Document shall be
irrevocable as long as any of the Obligations shall remain unpaid or unperformed
and shall be deemed to be coupled with an interest.
37. Severability. Whenever possible, each provision of this Mortgage
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Mortgage shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remaining provisions
of this Mortgage.
38. Conflict With Loan Agreement. Notwithstanding anything to the
contrary contained herein, in the event that any of the representations and
warranties, terms, provisions or covenants contained in this Mortgage, or any
part or parts thereof, are in addition to, inconsistent with, expand upon,
conflict with, or are contrary to the representations and warranties, terms,
provisions and covenants contained in the Loan Agreement, then the Loan
Agreement shall govern, and any such representations and warranties, terms,
provisions or covenants or any part or parts thereof contained herein shall be
deemed to be deleted herefrom and shall have no force and effect except to the
extent that any such terms or covenants are necessary to enable the Mortgagee to
fully exercise its remedies hereunder. It is the intent of the parties hereto
that the Loan Agreement be the dispositive and controlling agreement between the
parties.
39. CHOICE OF LAW. THIS MORTGAGE HAS BEEN DELIVERED FOR ACCEPTANCE IN
THE STATE OF ILLINOIS AND SHALL BE INTERPRETED IN ACCORDANCE WITH THE INTERNAL
LAWS (AND NOT THE CONFLICT OF LAWS RULES) OF THE STATE OF ILLINOIS GOVERNING
CONTRACTS TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED, HOWEVER, THAT
WITH RESPECT TO THE PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO THE
CREATION, VALIDITY, PERFECTION AND ENFORCEMENT BY MORTGAGEE OF ITS RIGHTS AND
REMEDIES AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL LOCATED IN ANY STATE
OTHER THAN ILLINOIS, SUCH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE STATE IN
WHICH SUCH PROPERTY IS LOCATED.
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40. FORUM; SERVICE; JURY WAIVER. MORTGAGOR HEREBY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT HAVING JURISDICTION OVER THE COUNTY
OF ▇▇▇▇ IN THE STATE OF ILLINOIS OR, AT THE SOLE OPTION OF MORTGAGEE, IN ANY
OTHER COURT IN WHICH MORTGAGEE SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND
WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. MORTGAGOR
WAIVES ANY OBJECTION OF FORUM NON CONVENIENS AND VENUE. MORTGAGOR FURTHER WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY MESSENGER, CERTIFIED MAIL OR REGISTERED MAIL
DIRECTED TO MORTGAGOR AT THE ADDRESS SET FORTH BELOW ITS SIGNATURE HERETO AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL
RECEIPT OR THREE (3) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO MORTGAGOR'S
ADDRESS. MORTGAGOR FURTHER WAIVES ANY RIGHT IT MAY OTHERWISE HAVE TO
COLLATERALLY ATTACK ANY JUDGMENT ENTERED AGAINST IT. EACH OF MORTGAGEE AND
MORTGAGOR IRREVOCABLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING
UNDER OR IN CONNECTION WITH THIS MORTGAGE.
41. Receipt of Copy. Mortgagor acknowledges that it has received,
without charge, a true copy of this Mortgage and has fully examined executed
counterparts of the other Loan Documents.
[SIGNATURE PAGE FOLLOWS]
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[MORTGAGE SIGNATURE PAGE]
IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly
executed and acknowledged under seal the day and year first above written.
MORTGAGOR:
WITNESSES: ▇▇▇▇ ▇▇▇▇▇▇ STORES, INC.
----------
Signed and acknowledged in the
presence of:
-------------------------
Printed Name: Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
-------------------------- ▇▇▇▇▇▇▇▇▇▇▇▇,▇▇▇▇▇▇▇ ▇▇▇▇▇
Address:
-------------------------------
-------------------------------
-------------------------------
Printed Name:
--------------------------
Address:
-------------------------------
-------------------------------
-------------------------------
118
ACKNOWLEDGMENT
STATE OF )
---------------------------
) SS.
COUNTY OF )
---------------------------
I, the undersigned, a notary public in and for said County, in the
state aforesaid, DO HEREBY CERTIFY THAT ___________________________, personally
known to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person and acknowledged that he is
the duly authorized officer of said corporation and that he signed and delivered
the said instrument as his free and voluntary act, and as the free and voluntary
act of said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this ____ day of April, 2000.
Notary Public
--------------------------------
My commission expires: Print Name:
----------------------------
Resident of County,
----------------
State of
-------------------------------
This instrument was prepared by and
after recording should be returned to:
Lane ▇. ▇▇▇▇▇, Esq.
Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
119
EXHIBIT A
Legal Description
120
TRADEMARK AND LICENSE SECURITY AGREEMENT
This TRADEMARK AND LICENSE SECURITY AGREEMENT ("Agreement"), dated as of
April 28, 2000, is made by ▇▇▇▇ ▇▇▇▇▇▇ STORES, INC., ▇▇▇▇ ▇▇▇▇▇▇ MERCHANDISING,
INC., ▇▇▇▇ ▇▇▇▇▇▇ RETAILING, INC., ▇▇▇▇ ▇▇▇▇▇▇ DISTRIBUTING, INC., THE ▇.
▇▇▇▇▇▇▇▇ COMPANY, ▇▇▇▇▇▇▇▇ WORLDWIDE CORP., each an Indiana corporation, and
▇▇▇▇▇▇▇▇ PROPERTY CORP., a Delaware corporation (each, a "Borrower" and
collectively, "Borrowers"), and LASALLE BANK NATIONAL ASSOCIATION, a national
banking association ("Lender"), whose address is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, Lender and Borrowers have entered into that certain Amended and
Restated Loan and Security Agreement, dated of even date herewith (the "Loan
Agreement") pursuant to which, among other things, Borrowers have granted to the
Lender a security interest in substantially all of their assets to secure the
Borrowers' prompt and complete payment, performance and/or observance of all of
the Borrowers' obligations and liabilities under or in connection with the Loan
Agreement and the Borrowers' obligations and liabilities under any other Loan
Document (the "Obligations"); and
WHEREAS, Lender has required, as a further condition to entering into the
Loan Agreement and to secure the Obligations thereunder that the Borrowers
execute this Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrowers agree as follows:
1. Defined Terms.
(1) Unless otherwise defined herein, the capitalized terms used herein
which are defined in the Loan Agreement shall have the meanings
specified in the Loan Agreement.
(2) The words "hereof," "herein" and "hereunder" and words of like
import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement,
and section and schedule references are to this Agreement unless
otherwise specified.
(3) All terms defined in this Agreement in the singular shall have
comparable meanings when used in the plural, and vice versa,
unless otherwise specified.
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2. Security Interest in Trademarks. To secure the complete and timely
payment, performance and satisfaction of all of the Obligations, Borrowers
hereby grant to Lender a security interest, with power of sale (to the extent
permitted by applicable law) in all of Borrowers' interest in now owned or
existing and filed and hereafter acquired or arising and filed:
(1) trademarks, registered trademarks and trademark applications,
trademark registrations, trade names, service marks, registered
service marks, service ▇▇▇▇ applications, and service ▇▇▇▇
registrations, including, without limitation, the registered
trademarks, trademark applications, registered service marks and
service ▇▇▇▇ applications listed on Schedule A, and (a) all
renewals thereof, (b) all income, royalties, damage and payments
now and hereafter due and/or payable with respect thereto,
including, without limitation, payments under all licenses entered
into in connection therewith and damages and payments for past or
future infringements or dilutions thereof, (c) the right to ▇▇▇
for past, present and future infringements and dilutions thereof,
and (d) all of Borrowers' rights corresponding thereto throughout
the world (all of the foregoing registered trademarks, trademark
applications, registered service marks and service ▇▇▇▇
applications, together with the items described in clauses (a)-(d)
in this paragraph 2(i), being sometimes hereinafter individually
and/or collectively referred to as the "Trademarks");
(2) the goodwill of Borrower business connected with and symbolized
by the Trademarks; and
(3) license agreements with any other party in connection with any
Trademarks or such other party's trademarks, registered
trademarks, trademark applications, trademark registrations, trade
names, service marks, registered service marks, service ▇▇▇▇
applications and service ▇▇▇▇ registrations, whether Borrowers are
licensors or licensees under any such license agreement,
including, but not limited to, the license agreements listed on
Schedule B, and the right upon the occurrence and during the
continuance of an Event of Default to use the foregoing in
connection with the enforcement of Lender's rights under the Loan
Agreement (all of the foregoing being hereinafter referred to
collectively as the "Licenses"). Notwithstanding the foregoing
provisions of this Section 2, the Licenses shall not include any
license agreement which by its terms prohibits the grant of the
security interest contemplated by this Agreement.
3. Restrictions on Future Agreements. Borrowers will not, without Lender's
prior written consent, which consent will not be unreasonably withheld absent
the occurrence or continuance of an Event of Default under the Loan Agreement,
enter into any agreement, including, without limitation, any license agreement,
which is inconsistent with this Agreement, and Borrowers
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further agree that they will not take any action, and will use their best
efforts not to permit any action to be taken by others subject to their control,
including licensees, or fail to take any action, which would in any material
respect affect the validity or enforcement of the rights and interests of Lender
under this Agreement or the rights associated with those Trademarks which are
necessary or desirable in the operation of Borrowers' businesses.
4. New Trademarks and Licenses. Borrowers represent and warrant that the
Trademarks and Licenses listed on Schedule A and Schedule B, respectively,
include all of the Trademarks and Licenses now owned or held by Borrowers. If,
prior to the termination of this Agreement, Borrowers shall (i) obtain rights to
any new Trademark or Licenses or (ii) become entitled to the benefit of any new
or existing Trademark or License, the provisions of Section 2 shall
automatically apply thereto and Borrowers shall give to Lender prompt written
notice thereof. Borrowers hereby authorize Lender to unilaterally modify this
Agreement by (a) amending Schedule A or Schedule B, as the case may be, to
include any Trademarks or Licenses which are described under Section 2, or under
this Section 4, and (b) filing with the Patent and Trademark Office, in addition
to and not in substitution for, this Agreement, a duplicate original of this
Agreement or an appropriate document evidencing this Agreement containing on
Schedule A or Schedule B thereto, as the case may be, the revised list of
Trademarks and/or Licenses under Section 2 or this Section 4. Notwithstanding
the foregoing, the Borrowers hereby agree that Lender's security interest shall
extend to all of the collateral listed in Section 2 and this Section 4,
regardless of whether Lender actually amends Schedule A and Schedule B.
5. Royalties. Borrowers hereby agree that the use by Lender of the
Trademarks and Licenses as described in Section 2 and Section 4 and as
authorized hereunder shall be, to the extent permitted by applicable law,
co-extensive with Borrowers' rights thereunder and with respect thereto and
without any liability for royalties or other related charges from Lender to
Borrowers.
6. Nature and Continuation of Lender's Security Interest. This Agreement
is made for collateral security purposes only. This Agreement shall create a
continuing security interest in the Trademarks and Licenses and shall remain in
full force and effect until the Obligations have been paid in full and the Loan
Agreement terminated. At such time, the rights granted to Lender hereunder shall
also terminate.
7. Right to Inspect; Further Assignments and Security Interests. Lender
shall have the right, consistent with the Loan Agreement at any reasonable time
and from time to time, to inspect Borrower's premises and to examine Borrowers'
books, records, and operations relating to the Trademarks and the Licenses,
including, without limitation, Borrowers' quality control processes; provided,
that in conducting such inspections and examinations, Lender shall use
reasonable efforts not to disturb unnecessarily the conduct of Borrowers'
ordinary business operations. Upon the occurrence and continuance of an Event of
Default, and subject to the terms of the Loan Agreement, Borrowers agree that
Lender or a conservator appointed by Lender, shall have the right to establish
such reasonable additional product quality controls as Lender or such
conservator, in its sole judgment, may deem necessary to assure maintenance of
the quality of products sold by Borrowers
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under the Trademarks or the Licenses. Borrowers agrees not to sell or assign its
respective interests in, or grant any license under, the Trademarks or the
Licenses without the prior written consent of Lender.
8. Duties of Borrowers. Borrowers shall have the duty, to the extent
desirable in the normal conduct of Borrowers' business and consistent with
Borrowers' current business practices: (i) to prosecute diligently any trademark
applications or registrations or service ▇▇▇▇ applications or registrations that
are part of the Trademarks pending as of the date hereof or thereafter until the
termination of this Agreement, (ii) to make applications for trademarks and
service marks as Borrower deems appropriate, and (iii) to take reasonable steps
to preserve and maintain all of Borrower's rights in the trademark and service
▇▇▇▇ applications and trademark and service ▇▇▇▇ registrations that are part of
the Trademarks. Any expenses incurred in connection with the foregoing shall be
borne by Borrowers. Borrowers shall not abandon any material trademark or
service ▇▇▇▇ which is the subject of a registered trademark, service ▇▇▇▇ or
application therefor and which is or shall be necessary or economically
desirable in the operation of the Borrowers' business. Borrowers agree to retain
an experienced trademark attorney reasonably acceptable to Lender for the filing
and prosecution of all such applications and other proceedings. Lender shall not
have any duty with respect to the Trademarks or Licenses. Without limiting the
generality of the foregoing, Lender shall not be under any obligation to take
any steps necessary to preserve rights in the Trademarks and Licenses against
any other parties, but may do so at its option during the continuance of an
Event of Default, and all expenses incurred in connection therewith shall be for
the sole account of Borrowers and added to the Obligations secured hereby.
9. Lender's Right to ▇▇▇. From and after the occurrence and during the
continuance of an Event of Default, and subject to the terms of the Loan
Agreement, Lender shall have the right, but shall not be obligated, to bring
suit to enforce the Trademarks and the Licenses and, if Lender shall commence
any such suit, Borrower shall, at the request of Lender, do any and all lawful
acts and execute any and all proper documents required by Lender in aid of such
enforcement. Borrowers shall, upon demand, promptly reimburse and indemnify
Lender for all reasonable costs and expenses incurred by Lender in the exercise
of its rights under this Section 9 (including, without limitation, all
reasonable attorneys' and paralegals' fees). If, for any reason whatsoever,
Lender is not reimbursed with respect to the costs and expenses referred to in
the preceding sentence, such costs and expenses shall be added to the
Obligations secured hereby.
10. Waivers. No course of dealing between Borrowers and Lender, and no
failure to exercise or delay in exercising on the part of Lender any right,
power or privilege hereunder or under the Loan Agreement shall operate as a
waiver of any of Lender's rights, powers or privileges. No single or partial
exercise of any right, power or privilege hereunder or under the Loan Agreement
shall preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
11. Lender's Exercise of Rights and Remedies Upon Default. Notwithstanding
anything set forth herein to the contrary, it is hereby expressly agreed that
upon the occurrence and during the
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continuance of an Event of Default, Lender may exercise any of the rights and
remedies provided in this Agreement, the Loan Agreement, or any other agreement
executed in connection therewith. Without limiting the generality of the
foregoing, Borrowers acknowledge and agree that (i) the Trademarks and the
Licenses comprise a portion of the Collateral and Lender shall have the right to
exercise its rights under the Loan Agreement with respect to the Trademarks and
the Licenses to the same extent as with respect to all other items of Collateral
described therein, and (ii) from and after the occurrence and during the
continuance of an Event of Default, Lender or its nominee may use the Trademarks
and Licenses to complete the manufacture of, assemble, package, distribute,
prepare for sale and sell the Inventory, or for any other purpose in connection
with the conduct of Borrowers' businesses.
12. Intent-to-Use Applications. Notwithstanding any provision of this
Agreement, the applicable Uniform Commercial Code or any other agreement or law,
in no event shall any party be required or permitted to assign, convey or
transfer any trademark or service ▇▇▇▇ that is the subject of an application for
registration under Section 1(b) of the ▇▇▇▇▇▇ Act (15 U.S.C. ss. 1051(b)), as
amended, prior to the filing of the verified statement of use under Section 1(d)
of the ▇▇▇▇▇▇ Act (15 U.S.C. ss. 1051(d)), as amended.
13. Severability. The provisions of this Agreement are severable, and if
any clause or provision shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Agreement in any jurisdiction.
14. Modification. This Agreement cannot be altered, amended or modified in
any way, except as specifically provided in Section 2 and Section 4 hereof or by
a writing signed by the parties hereto.
15. Cumulative Remedies; Power of Attorney. All of Lender's rights and
remedies with respect to the Trademarks and the Licenses, whether established
hereby, by any other agreements or by law, shall be cumulative and may be
exercised singularly or concurrently. Borrower hereby irrevocably appoints
Lender as Borrowers' attorney-in-fact, with full authority in the place and
stead of Borrowers and in the name of Borrowers or otherwise to carry out the
acts described below upon the occurrence and during the continuance of an Event
of Default . Subject to the terms of the Loan Agreement, upon the occurrence and
during the continuance of an Event of Default Borrowers hereby authorize Lender
to, in its sole discretion, (i) endorse Borrowers' name on all applications,
documents, papers and instruments necessary or desirable for Lender in the use
of the Trademarks and the Licenses, (ii) take any other actions with respect to
the Trademarks and the Licenses as Lender deems are in its best interest, (iii)
grant or issue any exclusive or nonexclusive license under the Trademarks to
anyone on commercially reasonable terms, and (iv) assign, pledge, convey or
otherwise transfer title in or dispose of the Trademarks to anyone on
commercially reasonable terms. Lender shall take no action pursuant to
subsection (i), (ii), (iii) or (iv) of this Section 15 without taking like
action with respect to the entire goodwill of Borrowers' business connected with
the use of, and symbolized by, such Trademarks. Borrowers hereby ratifies all
that such attorney-in-fact shall
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lawfully do or cause to be done by virtue hereof. This power of attorney is
coupled with an interest and shall be irrevocable until this Agreement shall
have been terminated pursuant to Section 6 hereof. Borrowers acknowledge and
agree that this Agreement is not intended to expand, limit or restrict in any
way the rights and remedies of Lender under the Loan Agreement, but rather is
intended to facilitate the exercise of such rights and remedies. Lender shall
have, in addition to all other rights and remedies given it by the terms of this
Agreement, all rights and remedies allowed by law and the rights and remedies of
a secured party under the Uniform Commercial Code as enacted in any jurisdiction
in which, respectively, either (y) the Trademarks may be located or deemed
located, or (z) the Licenses were granted.
16. Binding Effect; Benefits. This Agreement shall be binding upon
Borrowers and their successors and assigns, and shall inure to the benefit of
Lender and its nominees, successors and assigns. Borrowers' successors and
assigns shall include, without limitation, a receiver, trustee or
debtor-in-possession of or for Borrowers; provided, however that Borrowers shall
not voluntarily assign their obligations hereunder without the prior written
consent of Lender.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (as distinguished from the conflicts of law
provisions) and decisions of the State of Illinois governing contracts to be
performed entirely within such state. Borrowers hereby consents to the exclusive
jurisdiction of any state or federal court located within the County of ▇▇▇▇ in
the State of Illinois or, at the sole option of Bank, in any other court in
which Bank shall initiate legal or equitable proceedings and which has subject
matter jurisdiction over the matter in controversy. Borrowers further waive
personal service of any and all process upon them, and consent that all such
service of process be made in the manner set forth in the Loan Agreement.
Borrowers further waive any right they may otherwise have to collaterally attack
any judgment entered against them.
18. Jury Trial. Bank and Borrowers each hereby waive the right to trial by
jury in any action or proceeding based upon, arising out of, or in any way
relating to: (i) this Agreement; (ii) any other present or future instrument or
agreement between Bank and Borrowers; or (iii) any conduct, acts or omissions of
Bank or Borrowers or any of their partners, directors, officers, employees,
agents, attorneys or any other persons affiliated with Bank or Borrowers, in
each of the foregoing cases, whether sounding in contract or tort or otherwise.
19. Notices. All notices or other communications hereunder shall be given
in the manner and to the addresses set forth in the Loan Agreement.
20. Section Headings. The section headings herein are for convenience of
reference only and shall not affect in any way the interpretation of any of the
provisions hereof.
21. Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
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22. Right of Recordal of Security Interest. Lender shall have the right,
but not the obligation, at the expense of Borrowers, to record this Agreement or
appropriate substitute in the United States Patent and Trademark Office and with
such other recording authorities deemed reasonable and proper by Lender, and
Lender shall advise Borrowers of such recordals. Upon satisfaction in full of
the Obligations and termination of the Loan Agreement, Borrowers shall have the
right to effect recordal of such satisfaction or termination at the expense of
Borrowers in the United States Patent and Trademark Office and with such other
recording authorities deemed reasonable and proper by Borrowers. Lender and
Borrowers shall cooperate to effect all such recordals hereunder.
[Signature Page Follows]
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[SIGNATURE PAGE TO TRADEMARK AND LICENSE SECURITY AGREEMENT]
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Agreement as of the day and year first above written.
▇▇▇▇ ▇▇▇▇▇▇ STORES, INC.
By:
---------------------------------
Its:
----------------------------
▇▇▇▇ ▇▇▇▇▇▇ MERCHANDISING, INC.
By:
---------------------------------
Its:
----------------------------
▇▇▇▇ ▇▇▇▇▇▇ RETAILING, INC.
By:
---------------------------------
Its:
----------------------------
▇▇▇▇ ▇▇▇▇▇▇ DISTRIBUTING, INC.
By:
---------------------------------
Its:
----------------------------
THE ▇. ▇▇▇▇▇▇▇▇ COMPANY
By:
---------------------------------
Its:
----------------------------
▇▇▇▇▇▇▇▇ PROPERTY CORP.
By:
---------------------------------
Its:
----------------------------
▇▇▇▇▇▇▇▇ WORLDWIDE CORP.
By:
---------------------------------
128
Its:
----------------------------
129
STATE OF _______)
) SS
COUNTY OF ______)
The foregoing Trademark and License Security Agreement was executed and
acknowledged before me this ____ day of _____, 2000, BY________________,
personally known to me to be an authorized signatory on behalf of each such
entity.
(SEAL)
Notary Public
-------------------------------
My commission expires
------------------------
130
SCHEDULE A
▇▇▇▇ AND LICENSE SECURITY AGREEMENT
131
SCHEDULE B
TO TRADEMARK AND LICENSE SECURITY AGREEMENT
LICENSES