[LOGO]
BANKBOSTON.
BancBoston Leasing Inc.
BANCBOSTON LEASING INC.
MASTER SECURITY AGREEMENT
This MASTER SECURITY AGREEMENT (the "Agreement") is made as of this
26th day of August, 1999 by ▇▇▇▇▇ SHOE, INC., a Delaware corporation, with
its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
JBI, INC., a Massachusetts corporation, with its principal place of business
at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, THE CASUAL MALE, INC., a
Massachusetts corporation, with its principal place of business at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, WGS CORPORATION, a Massachusetts
corporation, with its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, TCMB&T, INC., a Massachusetts corporation, with its
principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
(collectively, the "Debtor" or "Debtors"), in favor of BANCBOSTON LEASING
INC., a Massachusetts corporation, with its head office at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Secured Party").
RECITALS
WHEREAS, each Debtor has requested and, from time to time, will
request certain credit and financial accommodations from the Secured Party in
order to acquire or finance certain capital equipment and for other purposes
as well;
WHEREAS, the obligations of each Debtor under credit and financial
accommodations are, and will be, represented by one or more Chattel
Promissory Notes executed by each Debtor in favor of the Secured Party; and
WHEREAS, the Secured Party has made and will make credit and
financial accommodations available to each Debtor provided the Secured Party
is granted the rights and remedies as set forth in this Agreement;
NOW, THEREFORE, IN CONSIDERATION OF the foregoing and the mutual
promises as hereinafter set forth, each Debtor and the Secured Party agree as
follows:
SECTION 1. DEFINITIONS. All capitalized terms used herein shall have
the meanings assigned to them below. Terms which are defined in the Uniform
Commercial Code shall have the meanings as set forth in the Uniform
Commercial Code unless they are otherwise defined in this Agreement.
1.1 COLLATERAL. See Section 2.
1.2 DEBTOR. The term "Debtor" shall refer to each Debtor
individually and collectively to all Debtors herein.
1.2 ENCUMBRANCE. Any lien, claim, encumbrance, security interest,
pledge, mortgage or other charge of any kind or nature upon or with respect
to any Collateral.
1.3 EQUIPMENT. All equipment including any and all equipment which
may be deemed to be Fixtures by a court of competent jurisdiction, any and
all furniture and any and all machinery and store fixtures now owned or
hereafter acquired by each Debtor, including but not limited to, racking,
shelving, displays, computer equipment, and office machines, together with
all parts, accessories, attachments, substitutions, and repairs thereto set
forth on Schedule 1 to any and a Notes executed by each Debtor in favor of
the Secured Party, together with each Debtor's interest in, and right to, any
and all manuals, computer programs, data bases and other materials relating
to the use, operation or structure of any of such equipment. "Fixture" shall
mean goods so related to particular real estate that an interest in them
arises under real estate law.
1.4 EVENT OF DEFAULT. See Section 10.
1.5 NOTE OR NOTE(S). Any and all Chattel Promissory Note(s) executed
by each Debtor in favor of the Secured Party.
1.6 OBLIGATIONS. All obligations of the Debtor to the Secured Party
of every kind and description, whether direct or indirect, absolute or
contingent, primary or secondary, joint or several, due or to become due, or
now existing or hereafter arising or acquired and whether by way of loan,
discount, letter of credit, lease, or otherwise including, without
limitation, the obligations arising under the Note, Security Agreement and
this Agreement.
1.7 UNIFORM COMMERCIAL CODE. The Uniform Commercial Code as in
effect in The Commonwealth of Massachusetts.
SECTION 2. GRANT OF SECURITY INTEREST. To secure the payment and
performance of the Obligations, each Debtor hereby assigns and pledges to the
Secured Party all of its right, title and interest in, and grants to the
Secured Party a continuing lien, claim, encumbrance and security interest in,
any and all (a) Equipment set forth on Schedule 1 to any and all Notes
executed by any Debtor, whether such Equipment is now owned or existing, or
hereafter arising or acquired, and which is owned by any Debtor or in which
any Debtor has an interest, together with (i) all, policies and certificates
of insurance pertaining to such Equipment, (ii) all attachments, accessions,
accessories, tools, parts, supplies, increases and additions to, and all
replacements of, and substitutions for, such Equipment, (iii) all accounts,
contract rights, general intangibles, instruments, rents, monies, payments,
and all other rights arising out of a sale, lease, or other disposition of
any of the Equipment, (iv) all proceeds (including insurance proceeds) from
the sale, destruction, loss, or other disposition of any of the Equipment,
and (v) all records and data relating to any of the Equipment, whether in the
form of a writing, photograph, microfilm, microfiche, or electronic media;
all of the above property whether now owned, now due, in which any Debtor has
an interest, or hereafter, at any time in the future, acquired, arising, to
become due, or in which any Debtor obtains an interest. All products,
proceeds and accessions of all of the above described property. The proceeds
in which the Secured Party has been granted a security interest hereunder
include, without limitation, insurance proceeds in each type of property
described in this Section 2 (collectively, the "Collateral").
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO
EACH DEBTOR. Each Debtor makes the following representations and warranties,
and agrees to the following covenants, each of which representations,
warranties and covenants shall be continuing and in force so long as any of
the Obligations remain outstanding.
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3.1 NAME; DEBTOR LOCATION; CHANGES. Each Debtor represents the
following: (i) the name of each Debtor set forth in this Agreement is the
true and correct legal name of each Debtor and the list attached as Exhibit A
hereto sets forth a complete and accurate statement of any trade name used
within the past year for the Debtors set forth therein and no Debtor has done
business under any other trade, assumed, fictitious or any other name during
such one year period; and (ii) the address of each Debtor set forth in this
Agreement is each Debtor's chief executive office and the place where its
business records are kept. Each Debtor will not (a) change its name, identity
or organizational structure or (b) change its chief executive office, or
place where its business records are kept, unless such Debtor shall have
given the Secured Party at least 30 days prior written notice and shall have
delivered to the Secured Party such new Uniform Commercial Code financing
statements or other documentation as may be necessary or required by the
Secured Party to ensure the continued perfection and priority of the security
interests granted by this Agreement.
3.2 ORGANIZATION; GOOD STANDING. Each Debtor is duly organized,
validly existing and in good standing under the laws of the state of its
organization and is duly qualified and in good standing in every other state
in which the nature of its business or properties requires such
qualification, except where the failure to so qualify would not have a
material adverse impact on the assets or operations of the affected Debtor.
3.3 AUTHORIZATION OF AGREEMENT; NO CONSENTS; NO CONFLICTS. The
execution, delivery and performance of this Agreement have been duly
authorized by all necessary action, corporate or otherwise, and do not and
will not (i) require any consent or approval of the stockholders of any
Debtor, if any, (ii) contravene the terms of the charter, by-laws or other
organizational papers of any Debtor, (iii) violate any applicable law, rule
or regulation of any governmental agency in any material respect, (iv)
contravene any provision of any agreement, instrument, order or undertaking
binding on any Debtor or by which any of its properties are bound or
affected, in any material respect, (v) other than as contemplated hereby,
result in or require the imposition of any Encumbrance on any of the
properties of any Debtor, or (vi) other than filings required by the Uniform
Commercial Code, require the approval or consent of, or filing or
registration with, any governmental or other agency or authority or any other
party, or, with respect to subsections (ii), (iii), (iv) and (v) above, to
the extent any Debtor has failed to make such filing, it does not and would
not have a material adverse impact on any Debtor.
3.4 LITIGATION; FINANCIAL CONDITIONS; Y2K PROBLEM. Each Debtor
represents and warrants that (i) there are no pending actions or proceedings
to which each Debtor is a party, and there are no threatened actions or
proceedings of which each Debtor has knowledge, before any court, arbitrator
or administrative agency which, either individually or in the aggregate,
would have a Material Adverse Effect on each Debtor except as set forth on
Exhibit B attached hereto, (ii) each Debtor is not in default under any
obligation for borrowed money, for the deferred purchase price of property or
any Agreement which, either individually or in the aggregate, would have a
Material Adverse Effect on each Debtor, (iii) the financial statements of
each Debtor (copies of which have been furnished to the Secured Party) have
been prepared in accordance with generally accepted accounting principles,
consistently applied, and fairly present the financial condition of each
Debtor and the results of its operations as of the date of, and for the
period covered by, such statements, and, since the date of such statements,
there has been no material adverse change in such conditions or operations,
(iv) each Debtor has reviewed the areas within its business and operations
which could be adversely affected by, and has developed or is developing a
program to address on a timely basis, the "Year 2000 Problem," that is, the
risk that computer applications used by each Debtor may be unable to
recognize and perform properly date-sensitive functions involving certain
dates prior to, and any date on or after, December 31, 1999, and have made
related appropriate inquiry of material suppliers and vendors and, based on
such review and program, each Debtor believes that the "Year 2000 Problem"
will not have a Material Adverse Effect on each Debtor, and (v) from time to
time, at the request of the Secured Party, each Debtor shall provide to the
Secured Party such updated information or documentation as is requested
regarding the status of its efforts to address the Year 2000 Problem. For
purposes of this Section 3.4, "Material Adverse Effect"
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shall mean (1) a materially adverse effect on the business, condition
(financial or otherwise), operations, performance or properties of each
Debtor, or (2) a material impairment of the ability of each Debtor to perform
its obligations under, or to remain in compliance with, this Agreement.
3.5 FINANCIAL PERFORMANCE COVENANTS. Each Debtor shall observe and
comply with the following financial performance covenants, which compliance
shall be determined as if no Material Accounting Change had occurred (other
than any Material Accounting Change specifically taken into account in the
setting of such covenants). Secured Party may determine Debtor's compliance
with such covenants based upon financial reports and statements provided to
Secured Party by Debtor, by BankBoston, N.A. or by BankBoston Retail Finance,
Inc. (whether or not such financial reports or statements are required to be
furnished pursuant to this Security Agreement) as well as by reference to
interim financial information provided to, or developed by, Secured Party.
For purposes hereof, any capitalized terms not otherwise defined in this
Security Agreement shall have the meanings assigned to them in that certain
Loan and Security Agreement dated as of August ____, 1999 ("Loan Agreement")
among BankBoston Retail Finance Inc. as administrative Agent and Collateral
Agent, certain other financial institutions as revolving credit lenders, Back
Bay Capital Funding LLC as term lender, and Debtor as lead borrower for
certain other borrowers, as the Loan Agreement existed as of the date of this
Security Agreement.
(i) Each Debtor shall not permit its cumulative Consolidated EBITDA,
tested quarterly on a rolling four-quarters basis (three-quarters basis for
the test as of October 31, 1999) to be less than the following:
------------------------------------------------------------------------
FISCAL QUARTERS ENDING MINIMUM CUMULATIVE
ON OR ABOUT CONSOLIDATED EBITDA
------------------------------------------------------------------------
------------------------------------------------------------------------
October 31, 1999 $27,000,000
------------------------------------------------------------------------
January 31, 2000 40,000,000
------------------------------------------------------------------------
April 30, 2000 40,000,000
------------------------------------------------------------------------
July 31, 2000 40,000,000
------------------------------------------------------------------------
October 31, 2000 41,500,000
------------------------------------------------------------------------
January 31, 2001 43,000,000
------------------------------------------------------------------------
Thereafter 43,000,000
------------------------------------------------------------------------
(ii) Each Debtor shall maintain a Fixed Charge Ratio equal to or
greater than 1.4 tested quarterly on a rolling four-quarters basis,
commencing with the four quarters ending on or about January 31, 2000;
(iii) Each Debtor shall maintain Overall Availability of not less
than $40 million for the period commencing December 10, 2001 and ending
December 30, 2001.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO THE
COLLATERAL. Each Debtor makes the following representations and warranties,
and agrees to the following covenants, each of which representations,
warranties and covenants shall be continuing and in force so long as any of
the Obligations remain outstanding.
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4.1 LOCATION OF COLLATERAL; CHANGES. Each Debtor represents that all
Collateral is located at the respective places as set forth on Schedule 1 of
the applicable Note. Each Debtor will not move any Collateral unless each
Debtor shall have given the Secured Party at least 30 days prior written
notice and shall have delivered to the Secured Party such new Uniform
Commercial Code financing statements as may be necessary or required by the
Secured Party to insure the continued perfection and priority of the security
interests granted by this Agreement.
4.2 PERSONAL PROPERTY. Under the laws of any state in which the
Equipment may be located, the Equipment consists solely of personal property
and, to the best of each Debtor's knowledge is removable without the consent
of any applicable landlord, unless otherwise indicated on Schedule 1 of the
applicable Note. In the event the Equipment constitutes fixtures under such
applicable laws and upon request of Secured Party, debtor will make
commercially reasonable efforts to make appropriate filings in such state to
perfect the security interest of the Secured Party; and to deliver to the
Secured Party such disclaimer, waiver, or other document as the Secured Party
may request, executed by each person having an interest in such real estate.
4.3 OWNERSHIP OF COLLATERAL; ABSENCE OF LIENS AND RESTRICTIONS. Each
Debtor is and, in the case of Collateral acquired after the date hereof, will
be the sole legal and equitable owner of the Collateral, holding good and
marketable title to the same, free and clear of all Encumbrances, and has
good right and legal authority to assign, deliver, and create a security
interest in the Collateral in the manner as contemplated by this Agreement.
The Collateral is genuine and is what it is purported to be. The Collateral
is not subject to any restriction that would prohibit or restrict the
assignment, delivery or creation of the security interests contemplated
hereunder.
4.4 FIRST PRIORITY SECURITY INTEREST. This Security Agreement, the
Agreement and the Note, together with the filing of Uniform Commercial Code
financing statements in the appropriate offices for the location of
Collateral, create a valid and continuing lien on and perfected security
interest in the Collateral subject only to the BBRF Interest (except for
property located in the United States in which a security interest may not be
perfected by filing under the Uniform Commercial Code), prior to all other
Encumbrances except the BBRF Interest, and is enforceable as such against
creditors of the Debtor. Other than in favor of BBRF, no financing statement
under the Uniform Commercial Code of any state or other instrument evidencing
a lien on the Collateral that names the Debtor as debtor is on file in any
jurisdiction and the Debtor has not signed any such document or any agreement
authorizing the filing of any such financing statement or instrument.
4.5 SALES AND FURTHER ENCUMBRANCES. EACH DEBTOR AGREES IT WILL NOT
SELL, GRANT, ASSIGN OR TRANSFER ANY INTEREST IN, OR PERMIT TO EXIST ANY
ENCUMBRANCE ON, ANY OF THE COLLATERAL OTHER THAN IN FAVOR OF THE SECURED
PARTY AND THE BBRF INTEREST EXCEPT AS PERMITTED BY THE SECURED PARTY IN
WRITING. EACH DEBTOR SHALL DEFEND ITS TITLE TO, AND THE INTEREST OF THE
SECURED PARTY IN, THE COLLATERAL AGAINST ALL CLAIMS AND TAKE ANY ACTION
NECESSARY TO REMOVE ANY ENCUMBRANCES OTHER THAN THOSE PERMITTED UNDER THIS
AGREEMENT. EACH DEBTOR WILL DEFEND THE RIGHT, TITLE AND INTEREST OF THE
SECURED PARTY IN AND TO ANY RIGHTS OF EACH DEBTOR IN THE COLLATERAL.
4.6 FIXTURE CONFLICTS; REQUIRED WAIVERS. INTENTIONALLY LEFT BLANK
4.7 MAINTENANCE AND INSPECTION OF COLLATERAL. Each Debtor shall
maintain all tangible Collateral in good condition and repair. Each Debtor
will not commit or permit damage to, or destruction of, the Collateral or any
part of the Collateral. The Secured Party and its designated representatives
and agents shall have the right at all reasonable times to examine, inspect,
and audit the Collateral wherever located. Each Debtor shall immediately
notify the Secured Party (i) of all cases involving the return, rejection,
repossession, loss or damage of or to any Collateral, (ii) of any request for
credit or adjustment
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or of any other dispute arising with respect to the Collateral, and (iii)
generally of all happenings and events affecting the Collateral or the value
or the amount of the Collateral.
4.8 TAXES, ASSESSMENTS AND LIENS. Each Debtor will pay, when due,
all taxes, assessments and liens upon the Collateral, its use or operation,
upon this Agreement, upon any Notes evidencing the Obligations, or upon any
of the other related documents. Each Debtor may withhold any such payment or
may elect to contest any lien if each Debtor is in good faith conducting an
appropriate proceeding to contest the obligation to pay provided that the
interest of the Secured Party in the Collateral is not jeopardized in the
sole opinion of the Secured Party. If the Collateral is subjected to a lien
which is not discharged within fifteen (15) days, each Debtor shall deposit
with the Secured Party cash, a sufficient corporate surety bond or other
security satisfactory to the Secured Party in an amount adequate to provide
for the discharge of the lien plus any interest, costs, attorneys' fees or
other charges that could accrue as a result of foreclosure or sale of the
Collateral. In any contest, each Debtor shall defend itself and the Secured
Party and shall satisfy any final adverse judgement before enforcement
against the Collateral. Each Debtor shall name the Secured Party as an
additional obligee under any surety bond furnished in the contest proceedings.
4.9 COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Each Debtor shall
comply promptly with all laws, ordinances and regulations of all governmental
authorities applicable to the production, disposition, or use of the
Collateral. Each Debtor may contest in good faith any such law, ordinance or
regulation and withhold compliance during any proceeding, including
appropriate appeals, provided that the interest of the Secured Party in the
Collateral, in the opinion of the Secured Party, is not jeopardized.
4.10 HAZARDOUS SUBSTANCES. Each Debtor represents and warrants that,
to the best of its knowledge, the Collateral never has been, and never will
be so long as any of the Obligations remain outstanding, used for the
generation, manufacture, storage, transportation, treatment, disposal,
release or threatened release of any hazardous waste or substance, as those
terms are defined in the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, ET SEQ.
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L.
No. 99-499 ("▇▇▇▇"), the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, ET SEQ., the Resource Conservation and Recovery Act, 49 U.S.C.
Section 6901, ET SEQ., or other applicable state or Federal laws, rules, or
regulations adopted pursuant to any of the foregoing. The terms "hazardous
waste" and "hazardous substance" shall also include, without limitation,
petroleum and petroleum by-products or any fraction thereof and asbestos. The
representations and warranties contained herein are based on each Debtor's
due diligence in investigating the Collateral for hazardous wastes and
substances. Each Debtor hereby (a) releases and waives any future claims
against the Secured Party for indemnity or contribution in the event each
Debtor becomes liable for cleanup or other costs under any such laws, and (b)
agrees to indemnify and hold harmless the Secured Party against any and all
claims and losses resulting from a breach of this provision of this
Agreement. This obligation to indemnify shall survive the payment of the
Obligations and the satisfaction of this Agreement.
4.11 FURTHER ASSURANCES. Upon the written request of the Secured
Party, and at the sole expense of each Debtor, each Debtor will promptly
execute and deliver such further instruments and documents and take such
further actions as the Secured Party may reasonably deem desirable to obtain
the full benefits of this Agreement and of the rights and powers herein
granted, including, without limitation, the filing of any financing statement
under the Uniform Commercial Code. Each Debtor authorizes the Secured Party
to file any such financing statement without the signature of each Debtor to
the extent permitted by applicable law and to file a copy of this Agreement
in lieu of a financing statement. If any amount payable under, or in
connection with, any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be
immediately delivered to the Secured Party, duly endorsed in a manner
satisfactory to it.
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SECTION 5. INSURANCE.
5.1 RISKS COVERED. Each Debtor shall maintain a standard all risks
of loss insurance policy keeping the Equipment insured against loss or damage
occurring while any of the Obligations remain outstanding for an amount not
less than the full replacement value of the Collateral. Each Debtor shall be
liable for any deductible portions of all required insurance.
5.2 FORM OF INSURANCE. All insurance required under this Section 5
shall be primary and shall name the Secured Party as loss payee. Such
insurance shall also be with such insurers and shall be in such form
reasonably satisfactory to the Secured Party and in such amounts as are
satisfactory to the Secured Party. All applicable policies shall provide that
no act, omission or breach of warranty by each Debtor shall give rise to any
defense against payment of the insurance proceeds to the Secured Party. Each
Debtor shall pay the premiums for such insurance and, at the request of the
Secured Party, deliver to the Secured Party duplicates of such policies or
other evidence satisfactory to the Secured Party of such insurance coverage.
In any event, each Debtor shall provide the Secured Party with certificates
of insurance or such other evidence of coverage, to include endorsements upon
the policies issued by the insurers which evidence the existence of insurance
coverage required by this Section 5 and by which the insurers agree to give
the Secured Party written notice at least thirty (30) days prior to the
effective date of any expiration, modification, reduction, termination,
refusal to renew or cancellation of any such policies. Each Debtor shall
cause to be provided to the Secured Party, not less than fifteen (15) days
prior to the scheduled expiration or lapse of such insurance coverage,
evidence satisfactory to the Secured Party of renewal or replacement coverage.
5.3 INSURANCE PROCEEDS. Provided no Event of Default, as defined in
Section 10 below, has occurred and is continuing, the proceeds of insurance
required under this Section 5 and payable as a result of loss or damage to
the Collateral shall be applied to the repair or replacement of the
Collateral. Upon the occurrence of an Event of Default as defined in Section
10 below, each Debtor hereby irrevocably appoints the Secured Party as its
attorney-in-fact, which power shall be deemed coupled with an interest, to
make claim for, receive payment of, execute and endorse all documents, checks
or drafts received in payment for loss or damage under any insurance policies
required by this Section 5.
5.4 EXAMINATION OF INSURANCE. Notwithstanding anything herein, the
Secured Party shall not be under any duty to examine any evidence of
insurance furnished hereunder, or to ascertain the existence of any policy or
coverage, or to advise each Debtor of any failure to comply with the
provisions of this Section 5.
SECTION 6. NOTICES AND REPORTS PERTAINING TO COLLATERAL. Each Debtor
will, with respect to the Collateral, promptly notify the Secured Party of
any Encumbrance asserted against the Collateral, including any attachment,
levy, execution or other legal process levied against any of the Collateral.
Each Debtor shall also provide the Secured Party with any information
received by each Debtor relating to the Collateral that may, in any way,
adversely affect the value of ten percent (10%) or more of the Collateral or
the rights and remedies of the Secured Party with respect thereto.
SECTION 7. SECURED PARTY'S RIGHTS WITH RESPECT TO COLLATERAL. The
Secured Party may, at its option and at any time after an Event of Default
has occurred, whether or not the Obligations are due, without notice or
demand on each Debtor, take the following actions with respect to the
Collateral: (i) subject to the provisions of Section 5, make, adjust and
settle claims under any insurance policy related thereto and place and pay
for appropriate insurance thereon; (ii) discharge taxes and other
Encumbrances at any time levied or placed thereon; (iii) make repairs or
provide
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maintenance with respect thereto; and (iv) pay any necessary filing fees and
any taxes arising as a consequence of any such filing. The Secured Party
shall have no obligation to make any such expenditures nor shall the making
thereof relieve each Debtor of its obligation to make such expenditures.
Except as otherwise provided herein, the Secured Party shall have no duty as
to the collection or protection of the Collateral nor as to the preservation
of any rights pertaining thereto.
SECTION 8. SET-OFF RIGHTS. Regardless of the adequacy of any
Collateral or any other means of obtaining repayment for any Obligations, the
Secured Party may, at any time after an Event of Default has occurred and
from time to time, without notice to each Debtor (any such notice being
expressly waived by each Debtor) and to the fullest extent permitted by law,
set off and apply any and all deposits (general or special, time or demand,
provisional or final) and other sums credited by or due from the Secured
Party to each Debtor or subject to withdrawal by each Debtor and any other
property and securities at any time in the possession or control of the
Secured Party (except for any ▇▇▇, ▇▇▇▇▇, payroll or trust accounts) against
any Obligations, whether or not the Secured Party shall have made any demand
for such Obligations and although such Obligations may be contingent or
unmatured.
SECTION 9. FINANCIAL STATEMENTS. Each Debtor shall annually, within
ninety-five (95) days after the close of the fiscal year for each Debtor,
furnish to the Secured Party financial statements of each Debtor, including a
balance sheet as of the close of such year and statements of income and
retained earnings for such year, prepared in accordance with generally
accepted accounting principles, consistently applied from year to year, and
certified by independent public accountants for each Debtor reasonably
acceptable to the Secured Party. If requested by the Secured Party, each
Debtor shall also provide quarterly financial statements of each Debtor,
similarly prepared for each of the first three quarters of each fiscal year,
certified (subject to normal year-end audit adjustments) by the chief
financial officer of each Debtor and furnished to the Secured Party within
fifty (50) days following the end of the quarter, and such other financial
information as may be reasonably requested by the Secured Party.
SECTION 10. DEFAULTS. The occurrence of any of the following events
which occurs as to any one of the Debtors shall constitute an event of
default as to each and every Debtor ("Event of Default") under this Agreement.
(a) Any Debtor fails to pay principal or interest under any Note when
due and such failure to pay continues for five (5) consecutive
days.
(b) Any Debtor fails to pay any other Obligation when due and such
failure to pay continues for ten (10) consecutive days following
written notice from the Secured Party.
(c) Any Debtor fails to maintain insurance as required by Section 5
above. Any Debtor fails to perform any other covenant, agreement
or obligation contained herein or in any agreement, instrument or
other document evidencing, securing or otherwise delivered in
connection with the Obligations and such failure continues for
thirty (30) consecutive days following written notice from Secured
Party.
(d) There is a loss, theft or substantial damage of or to the
Collateral, which is uninsured and which, in the aggregate exceeds
$500,000 of Secured Party's cost of Collateral, or the issuance of
an injunction against any Debtor affecting any of the Collateral.
(e) There is a default under any agreement relating to any Collateral,
having a material adverse effect on the Collateral.
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(f) Any Debtor ceases to exist or terminates its independent
operations by reason of any discontinuance, dissolution,
liquidation, or sale of substantially all of its assets in one
transaction or a series of related transactions, or otherwise
ceases doing business as a going concern.
(g) Any Debtor merges into or with any corporation or other legal
entity, other than another Debtor, and a Debtor is not the
surviving corporation or the surviving legal entity.
(h) Any Debtor (i) applies for, or consents to, the appointment of,
or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar official for itself or for all or a
substantial part of its property, (ii) makes a general assignment
for the benefit of its creditors, (iii) commences a voluntary
case under the United States Bankruptcy Code, as now or hereafter
in effect, seeking liquidation, reorganization or other relief
with respect to itself or its debts, (iv) files a petition
seeking to take advantage of any other law providing for the
relief of debtors, (v) takes any action under the laws of its
jurisdiction of incorporation or organization similar to any of
the foregoing, (vi) convenes a meeting of its creditors or
(vii) takes any corporate action for the purpose of effecting any
of the foregoing.
(i) A proceeding or case is commenced, without the application or
consent of the applicable Debtor, in any court of competent
jurisdiction, seeking (i) the liquidation, reorganization,
dissolution, winding up of any Debtor or composition or
readjustment of the debts of any Debtor, (ii) the appointment
of a trustee, receiver, custodian, liquidator or similar
official for any Debtor or for all or any substantial part of
its assets, or (iii) similar relief with respect to any Debtor
under any law providing for the relief of debtors and such
proceeding or case under any of the foregoing subsections
shall continue undismissed, or unstayed and in effect, for a
period of sixty (60) days; or an order for relief is entered
with respect to any Debtor in an involuntary case under the
United States Bankruptcy Code, as now or hereafter in effect,
or an action under the laws of the jurisdiction of
incorporation or organization of any Debtor, similar to any of
the foregoing, is taken with respect to any Debtor without its
application or consent and shall continue unstayed and in
effect for a period of sixty (60) days.
(j) Any Debtor makes any representation or warranty herein or in any
statement or certificate at any time given in writing pursuant to,
or in connection with, this Agreement or the Obligations, which is
false or misleading in any material respect at the time when made.
(k) Any Debtor defaults under any promissory note, credit agreement,
loan agreement, conditional sales contract, guaranty, lease,
indenture, bond, debenture or other material obligation
whatsoever, and a party thereto or a holder thereof is entitled to
accelerate the obligations of any Debtor thereunder; or any Debtor
defaults in meeting any of its trade, tax or other current
obligations as they mature, unless such obligations are being
contested diligently and in good faith, and all of the above, in
the aggregate, exceed $5,000,000.
(l) Any party to any guaranty, letter of credit, subordination or
credit agreement or other undertaking, given for the benefit of
the Secured Party and obtained in connection with this Agreement
or the Obligations, breaches, fails to continue, contests, or
purports to terminate or to disclaim such guaranty, letter of
credit, subordination or credit agreement or other undertaking; or
such guaranty, letter of credit, subordination agreement or other
undertaking becomes unenforceable while any of the Obligations
remain outstanding; or a guarantor of this Agreement shall die,
cease to exist or terminate its independent operations; or any
event
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or condition set forth in subsections (c), (f), (g), (h), (i),
(j) or (k) of this Section 10 shall occur with respect to any
guarantor or to the person responsible, in whole or in part, for
the payment or performance of the Obligations.
SECTION 11. SECURED PARTY'S RIGHTS AND REMEDIES.
11.1 Upon the occurrence of an Event of Default, the Secured Party,
at its sole option, upon its declaration, and to the extent not inconsistent
with applicable law, may exercise any one or more of the following remedies.
(a) The Secured Party may, at its option, without notice or
demand, cause all of the Obligations including, without
limitation, all principal and interest due or to become due
under all Notes to become immediately due and payable and take
immediate possession of the Collateral; for that purpose, the
Secured Party may, so far as each Debtor can give authority
therefor, enter upon any premises on which any of the
Collateral is situated and remove the same therefrom or remain
on such premises and in possession of such Collateral for
purposes of conducting a sale or enforcing the rights of the
Secured Party. Each Debtor will, upon demand, assemble the
Collateral and make it available to the Secured Party at a
place and time designated by the Secured Party that is
reasonably convenient to both parties.
(b) The Secured Party may collect and receive all income and
proceeds with respect to the Collateral and exercise all
rights of any Debtor with respect thereto.
(c) The Secured Party may sell, lease or otherwise dispose of the
Collateral at a public or private sale, with or without having
the Collateral at the place of sale, and upon such terms and
in such manner as the Secured Party may determine, and the
Secured Party may purchase any Collateral at any such public
sale or such private sale to the extent permitted by law.
Unless the Collateral threatens to decline rapidly in value or
is of the type customarily sold on a recognized market, the
Secured Party shall send to each Debtor prior written notice
(which, if given within ten (10) days of any sale, shall be
deemed to be reasonable) of the time and place of any public
sale of the Collateral or of the time after which any private
sale or other disposition thereof is to be made. Each Debtor
agrees that, upon any such sale, the Collateral shall be held
by the purchaser free from all claims or rights of every kind
and nature including any equity of redemption or similar
rights, and all such equity of redemption and similar rights
are hereby expressly waived and released by each Debtor. In
the event any consent, approval or authorization of any
governmental agency is necessary to effectuate any such sale,
each Debtor shall execute all applications or other
instruments as may be required.
(d) In any jurisdiction where the enforcement of its rights
hereunder is sought, the Secured Party shall have, in addition
to all other rights and remedies, the rights and remedies of a
secured party under the Uniform Commercial Code.
11.2 IMMEDIATE ACCELERATION. Upon the occurrence of an Event of
Default described in subsection 10(g) and (h), the remedy set forth in
subsection 11.1(a) shall be deemed to have been exercised immediately and
automatically without any act or declaration of the Secured Party and all
Obligations including, without limitation, all principal and interest due or
to become due under the Notes shall be immediately due and payable.
11.3 REPAIR OF COLLATERAL. Prior to any disposition of Collateral
pursuant to this Agreement, the Secured Party may, at its option, cause any of
the Collateral to be repaired or reconditioned (but not
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upgraded unless mutually agreed) in such manner and to such extent as to make
it saleable. The costs of any such repair or reconditioning shall be deemed
to be part of the Obligations under this Agreement, so long as Lessor
determines in good faith that such repair or reconditioning will increase the
value of the Collateral.
11.4 EXPENSES; DEFICIENCY. The Secured Party shall be entitled to
retain and to apply the proceeds of any disposition of the Collateral, FIRST,
to its reasonable expenses of retaking, holding, protecting and maintaining,
and preparing for disposition and disposing of, the Collateral, including
reasonable attorneys' fees and other legal expenses incurred by it in
connection therewith; and SECOND, to the payment of the Obligations in such
order of priority as the Secured Party shall determine. Any surplus remaining
after such application shall be paid to each Debtor or to whomever may be
legally entitled thereto, provided that, in no event, shall each Debtor be
credited with any part of the proceeds of the disposition of the Collateral
until such proceeds shall have been received in cash by the Secured Party.
Each Debtor shall remain liable for any deficiency.
SECTION 12. WAIVERS. Each Debtor waives presentment, demand, notice,
protest, notice of acceptance of this Agreement, notice of any loans made,
credit or other extensions granted, Collateral received or delivered or any
other action taken in reliance hereon, and all other demands and notices of
any description, except for such demands and notices as are expressly
required to be provided to each Debtor under this Agreement or any other
document evidencing the Obligations. With respect to both the Obligations and
the Collateral, each Debtor assents to any extension or postponement of the
time of payment or any other forgiveness or indulgence, to any substitution,
exchange or release of Collateral, to the addition or release of any party or
person primarily or secondarily liable, to the acceptance of partial payment
thereon, and the settlement, compromise or adjustment of any thereof, all in
such manner and at such time or times as the Secured Party may deem
advisable. The Secured Party shall have no duty as to the collection or
protection of the Collateral or any income thereon, nor as to the
preservation of rights against prior parties or relating to the Collateral.
The Secured Party may exercise its rights with respect to the Collateral
without resorting, or regard, to other collateral or sources of reimbursement
for Obligations. The Secured Party shall not be deemed to have waived any of
its rights with respect to the Obligations or the Collateral unless such
waiver is in writing and signed by the Secured Party. No delay or omission on
the part of the Secured Party in exercising any right shall operate as a
waiver of such right or any other right. A waiver on any one occasion shall
not bar or waive the exercise of any right on any future occasion. All rights
and remedies of the Secured Party in the Obligations or the Collateral,
whether evidenced hereby or by any other instrument or papers, are cumulative
and not exclusive of any remedies provided by law or any other agreement, and
may be exercised separately or concurrently.
SECTION 13. EXPENSES. Each Debtor shall, on demand, pay or reimburse
the Secured Party for all reasonable expenses (including reasonable and
documented attorneys' fees of outside counsel or allocation costs of in-house
counsel) incurred or paid by the Secured Party in connection with the
enforcement of this Agreement, up to three (3) on-site periodic examinations
of the Collateral in each calendar year, and any other amounts permitted to
be expended by the Secured Party hereunder including, without limitation,
such expenses as are incurred to preserve the value of the Collateral and the
validity, perfection, and priority of any security interest created hereby,
the collection, sale or other disposition of any of the Collateral, or the
exercise by the Secured Party of any of the rights conferred upon it under
this Agreement. The obligation to pay any such amount shall be an additional
Obligation secured by the Collateral and each such amount shall bear interest
from the time of demand at the rate per annum equal to the rate of interest
announced, from time to time, by BankBoston, N.A., or its successor and
assigns, at its head office as its Base Rate plus 6%, or 18% per annum,
whichever is less. If such rate violates applicable law, the rate shall be
the maximum rate of interest per annum allowed by such law.
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SECTION 14. NOTICES. Any demand upon or notice to each Debtor that
the Secured Party may give shall be effective when delivered by hand,
properly deposited in the mails postage prepaid, or sent by telex, answerback
received, or electronic facsimile transmission, receipt acknowledged, or
delivered to a telegraph company or a nationally recognized overnight
courier, in each case addressed to each Debtor at the address shown at the
beginning of this Agreement or as it appears on the books and records of the
Secured Party. Demands or notices addressed to any other address at which the
Secured Party customarily communicates with each Debtor also shall be
effective. Any notice by each Debtor to the Secured Party shall be given as
aforesaid, addressed to the Secured Party at the address shown at the
beginning of this Agreement or such other address as the Secured Party may
advise each Debtor in writing.
SECTION 15. SUCCESSORS AND ASSIGNS.
15.1 EACH DEBTOR SHALL NOT SELL, TRANSFER, ASSIGN, CONVEY OR PLEDGE
ANY OF ITS RIGHTS AND/OR OBLIGATIONS UNDER THIS AGREEMENT OR ANY NOTE WITHOUT
THE PRIOR WRITTEN CONSENT OF THE SECURED PARTY. Any such sale, transfer,
assignment, conveyance or pledge, whether by operation of law or otherwise,
without the prior written consent of the Secured Party, shall be void.
15.2 This Agreement shall be binding upon each Debtor, its
successors and assigns, and shall inure to the benefit of, and be enforceable
by, the Secured Party, its successors and assigns. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING SENTENCE, THE SECURED PARTY MAY ASSIGN OR
OTHERWISE TRANSFER ANY AGREEMENT OR ANY NOTE HELD BY IT EVIDENCING, SECURING
OR OTHERWISE EXECUTED IN CONNECTION WITH THE OBLIGATIONS, OR SELL
PARTICIPATIONS IN ANY INTEREST THEREIN, TO ANY OTHER PERSON OR ENTITY, AND
SUCH OTHER PERSON OR ENTITY SHALL THEREUPON BECOME VESTED, TO THE EXTENT SET
FORTH IN THE AGREEMENT EVIDENCING SUCH ASSIGNMENT, TRANSFER OR PARTICIPATION,
WITH ALL THE RIGHTS IN RESPECT THEREOF GRANTED TO THE SECURED PARTY UNDER
THIS AGREEMENT.
SECTION 16. GENERAL. This Agreement may not be amended or modified
except by a writing signed by each Debtor and the Secured Party, nor may any
Debtor assign any of its rights hereunder. This Agreement and the terms,
covenants and conditions hereof shall be construed in accordance with, and
governed by, the laws of The Commonwealth of Massachusetts, without giving
effect to any conflict-of-laws provisions contained therein. In the event
that any Collateral or any deposit or other sum due from or credited by the
Secured Party is held or stands in the name of each Debtor and another, or
others jointly, the Secured Party may deal with the same for all purposes as
if it belonged to, or stood in the name of, each Debtor alone.
SECTION 17. SECTION HEADINGS. Section headings are for
convenience of reference only and are not a part of this Agreement.
SECTION 18. CONSENT TO JURISDICTION. Each Debtor further agrees that
any suit based upon or arising out of this Agreement, the Notes, any related
agreements, the Collateral or the dealings or the relationship between or
among each Debtor and the Secured Party, and the successors and assigns of
the Secured Party, may be brought in the courts of The Commonwealth of
Massachusetts or any Federal court sitting therein and consents to the
non-exclusive jurisdiction of such court and to service of process in any
such suit being made upon each Debtor by mail in the manner specified in
Section 14 hereof. Each Debtor hereby waives any objection that it may now or
hereafter have to the venue of any such suit or any such court or that such
suit was brought in an inconvenient forum.
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SECTION 19. JURY WAIVER. THE SECURED PARTY (BY ITS ACCEPTANCE
HEREOF) AND EACH DEBTOR AGREE THAT NEITHER OF THEM, NOR ANY ASSIGNEE OR
SUCCESSOR, SHALL (a) SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM, OR ANY OTHER ACTION BASED UPON, OR ARISING OUT OF, THIS
AGREEMENT, THE NOTES, ANY RELATED INSTRUMENTS, ANY COLLATERAL OR THE DEALINGS
OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (b) SEEK TO CONSOLIDATE
ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS
NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED
BY THE SECURED PARTY AND EACH DEBTOR AND THESE PROVISIONS SHALL BE SUBJECT TO
NO EXCEPTIONS. NEITHER THE SECURED PARTY NOR EACH DEBTOR HAS AGREED WITH OR
REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE
FULLY ENFORCED IN ALL INSTANCES.
SECTION 20. IRREVOCABLE LIMITED POWER OF ATTORNEY. WITHOUT LIMITING
THE GENERALITY OF ANY OTHER POWER OF ATTORNEY SET FORTH HEREIN OR IN THE
RELATED DOCUMENTS, EACH DEBTOR HEREBY IRREVOCABLY APPOINTS THE SECURED PARTY,
AND ANY OTHER OFFICER OR AGENT OF THE SECURED PARTY, WITH FULL POWER OF
SUBSTITUTION, AS ITS TRUE AND LAWFUL AGENTS AND ATTORNEYS IN FACT ("ATTORNEYS
IN FACT") TO PREPARE, SIGN, DELIVER AND FILE, IN NAME, PLACE AND STEAD OF
EACH DEBTOR, ANY AND ALL FINANCING STATEMENTS IN CONNECTION HEREWITH AS SAID
ATTORNEYS IN FACT MAY DEEM APPROPRIATE. TO THE EXTENT PERMITTED BY LAW, EACH
DEBTOR HEREBY RATIFIES EACH AND EVERY ACT THAT SAID ATTORNEYS IN FACT MAY
LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF, PROVIDED THAT, AS TO THE
STATEMENTS GRANTING THE SECURITY INTEREST OR PROVIDING INITIAL NOTICE OF
SECURED PARTY'S INTEREST IN THE EQUIPMENT ONLY, AND NOT AS TO ANY
CONTINUATION OR ASSIGNMENT THEREOF, THE CONTENT OF SUCH FINANCING STATEMENTS
AND THE LOCATION OF FILING LOCATIONS HAVE BEEN PREVIOUSLY APPROVED BY DEBTOR,
WHICH APPROVAL SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED. THIS POWER OF
ATTORNEY IS A POWER COUPLED WITH AN INTEREST AND IS IRREVOCABLE. THIS POWER
OF ATTORNEY IS NOT INTENDED TO CREATE AN ATTORNEY/CLIENT RELATIONSHIP BETWEEN
THE PARTIES.
SECTION 21. RULES OF INTERPRETATION. The following rules of
interpretation shall apply to this Agreement, the Notes and any related
agreement: (i) a reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented, from time to
time, in accordance with its terms; (ii) the singular includes the plural and
the plural includes the singular; (iii) a reference to any law includes any
amendment or modification to such law; (iv) a reference to any party includes
its permitted successors and permitted assigns; (v) accounting terms not
otherwise defined herein have the meanings assigned to them by generally
accepted accounting principles applied on a consistent basis by the
accounting entity to which they refer; (vi) the words "include," "includes"
and "including" are not limiting; (vii) all terms not specifically defined
herein or by generally accepted accounting principles that are defined in the
Uniform Commercial Code shall have the meanings assigned to them therein,
with the term "instrument" being that defined under Article 9 of the Uniform
Commercial Code; (viii) the words "herein," "hereof," "hereunder" and words
of like import shall refer to this Agreement as a whole and not to any
particular section or subdivision of this Agreement; and (ix) unless
otherwise expressly indicated, in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to but excluding," and the
word "through" means "to and including."
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[LOGO]
BANKBOSTON.
BancBoston Leasing Inc.
IN WITNESS WHEREOF, each Debtor has caused this Agreement to be duly
executed as an instrument under seal as of the date first written above.
BANCBOSTON LEASING, INC. ▇▇▇▇▇ SHOE, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------- ---------------------------------
Title: Assistant Vice President Title: Executive Vice President
JBI, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Executive Vice President
THE CASUAL MALE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Executive Vice President
WGS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Executive Vice President
TCMB&T, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Executive Vice President