PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of June 26, 2000 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, this "Agreement"), made by and from ▇▇▇▇▇ ▇. ▇▇▇▇▇ ( the "Pledgor") to
DESIGNS, INC., a Delaware corporation (the "Secured Party"). Capitalized terms
used without definition herein shall have the meanings given to such terms in
the Note referred to below.
PRELIMINARY STATEMENTS:
(1) The Pledgor and the Secured Party have executed a Secured
Promissory Note, dated as of June 26, 2000 (as amended, supplemented, amended
and restated or otherwise modified from time to time, the "Note"), in favor of
the Secured Party, evidencing the loan made by the Secured Party to the Pledgor
(the "Loan").
(2) The Pledgor is the beneficial owner of 150,000 shares of
common stock of the Secured Party (such shares, including any other security
into which such shares shall be converted or for which such shares shall be
exchanged in any recapitalization, reorganization, merger, consolidation, share
exchange or similar business combination transaction, the "Pledged Shares").
(3) It is a condition to the making of the Loan by the Secured
Party under the Note that the Pledgor shall grant the assignment and security
interest and make the pledge and assignment contemplated by this Agreement.
(4) The Pledgor will obtain benefits from the incurrence of
the Loans under the Note and, accordingly, the Pledgor desires to execute this
Agreement to satisfy the conditions described in the preceding paragraph (3).
NOW, THEREFORE, in consideration of the premises and in order
to induce the Secured Party to make the Loans, the Pledgor hereby agrees with
the Secured Party as follows:
Section 1. GRANT AND PLEDGE OF SECURITY. The Pledgor hereby
assigns, conveys, mortgages, hypothecates, transfers and pledges to the Secured
Party and hereby grants to the Secured Party a first lien on, and a continuing
security interest in and to, the following, in each case, as to each type of
property described below, whether now owned or hereafter owned or acquired,
wherever located and whether now or hereafter existing (collectively, the
"Pledged Collateral"):
(a) all of the Pledgor's right, title and interest in
and to the Pledged Shares, the account and the certificates
representing the Pledged Shares, and all dividends, cash,
securities, interest, warrants, rights, options, instruments
and other property and proceeds from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares or other Pledged
Collateral (including additions to the Pledged Collateral
pursuant to Section 11(b)); and
(b) to the extent not covered by clause (a) above,
all of the Pledgor's right, title and interest in and to all
Proceeds and products of any and all of the foregoing Pledged
Collateral.
As used herein, the term "proceeds" means all
"proceeds" as such term is defined in Section 9-306(1) of the
Uniform Commercial Code in effect in the Commonwealth of
Massachusetts on the date hereof (the "UCC") and, in any
event, shall include, without limitation, all dividends,
interest or other income from the Pledged Collateral,
collections thereon or distributions with respect thereto.
Section 2. SECURITY FOR OBLIGATIONS. This Agreement secures
the full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations and liabilities (including,
without limitation, the principal of and interest on the Note) of the Pledgor to
the Secured Party, whether now existing or hereafter incurred under, arising out
of or in connection with the Note and this Agreement and the due performance and
compliance by the Pledgor with all of the terms, conditions and agreements
contained in the Note and this Agreement (all such principal, interest,
obligations and liabilities being herein collectively called the "Secured
Obligations").
Section 3. THE PLEDGOR REMAINS LIABLE. Anything herein to the
contrary notwithstanding, (a) the Pledgor shall remain liable under the
documents included in the Pledged Collateral to the extent set forth therein to
perform all of his duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Secured Party of
any of the rights hereunder shall not release the Pledgor from any of his duties
or obligations under the documents included in the Pledged Collateral and (c)
the Secured Party shall not have any obligation or liability under any of the
documents included in the Pledged Collateral by reason of this Agreement, nor
shall the Secured Party be obligated to perform any of the obligations or duties
of the Pledgor hereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.
Section 4. DELIVERY OF PLEDGED COLLATERAL. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of the Secured Party pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Secured Party. Upon the occurrence and during the
continuance of an Event of Default, the Secured Party shall have the right, at
any time in its discretion and without notice to the Pledgor, to transfer to or
to register in the name of the Secured Party or any of its nominees any or all
of the Pledged Collateral. In addition, the Secured Party shall have the right
at any time to exchange certificates or instruments representing or evidencing
the Pledged Collateral for certificates or instruments of smaller or larger
denominations.
Section 5. REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Pledgor represents, warrants, agrees and covenants as to himself and the Pledged
Collateral, which representations, warranties, agreements and covenants shall
survive execution and delivery of this Agreement, as follows:
(a) The Pledgor is the legal and beneficial owner of the
Pledged Collateral free and clear of any pledge, lien, mortgage,
hypothetication, security interest, charge, option or other encumbrance
whatsoever or other right, title or interest of any person or entity,
except for the security interest created under this Agreement, and the
Pledgor shall defend the Pledged Collateral against all claims and
demands of all persons or entities at any time claiming the same or any
interest therein adverse to the Secured Party. No effective financing
statement or other instrument similar in effect covering or purporting
to cover all or any part of the Pledged Collateral is on file in any
recording office, except such as may have been filed in favor of the
Secured Party relating to this Agreement.
(b) The Pledgor is the legal and beneficial owner of, and has
good and marketable title to, the Pledged Shares, subject to no pledge,
lien, mortgage, hypothetication, security interest, charge, option or
other encumbrance whatsoever, except the liens and security interests
created by this Agreement. The Pledgor has the legal right to pledge
the Pledged Shares pledged by him pursuant to this Agreement.
(c) All filings and other actions necessary or desirable to
perfect and protect the security interest in the Pledged Collateral
taken as a whole created under this Agreement have been duly made or
taken, and this Agreement, the pledge of the Pledged Collateral
pursuant hereto, together with such filings and other actions, create a
valid and perfected first priority security interest in the Pledged
Collateral taken as a whole, securing the payment of the Secured
Obligations.
(d) No consent of any other person or entity and no
authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body or other third
party is required (i) for the grant by the Pledgor of the assignment
and security interest granted hereunder, for the pledge by the Pledgor
of the Pledged Collateral pursuant hereto or for the execution,
delivery or performance of this Agreement by the Pledgor, (ii) for the
perfection or maintenance of the pledge, assignment and security
interest created hereunder (including the first priority nature of such
pledge, assignment or security interest), or (iii) for the exercise by
the Secured Party of its voting or other rights provided for in this
Agreement or the remedies in respect of the Pledged Collateral pursuant
to this Agreement.
Section 6. FURTHER ASSURANCES. The Pledgor agrees that from
time to time he shall promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that the Secured Party may reasonably request, in order to perfect and protect
any pledge, assignment or security interest granted or purported to be granted
hereby or to enable the Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any Pledged Collateral.
Section 7. VOTING RIGHTS; DIVIDENDS; ETC. (a) So long as no
Event of Default shall have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged Collateral
or any part thereof for any purpose not inconsistent with the terms of
this Agreement or the Note; provided, however, that the Pledgor shall
not exercise or refrain from exercising any such right if such action
(a) would reasonably be expected to have a material adverse effect on
the value of the Pledged Collateral or any part thereof or (b) would
violate or be inconsistent with any of the terms of this Agreement or
the Note;
(ii) The Pledgor shall be entitled to receive and retain any
and all dividends and interest paid in respect of the Pledged
Collateral; provided, however, that any and all
(A) dividends and interest paid or payable other than
in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of,
or in exchange for, such Pledged Collateral, and
(B) dividends and other distributions paid or payable
in cash in respect of such Pledged Collateral in connection
with a partial or total liquidation or dissolution
shall be, and shall be forthwith delivered to the Secured Party to hold
as, Pledged Collateral and shall, if received by the Pledgor, be
received in trust for the benefit of the Secured Party, be segregated
from the other property or funds of the Pledgor and be forthwith
delivered to the Secured Party as Pledged Collateral in the same form
as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an
Event of Default:
(i) All rights of the Pledgor (x) to exercise or refrain from
exercising the voting and other consensual rights that he would
otherwise be entitled to exercise pursuant to Section 7(a)(i) shall,
upon notice to the Pledgor by the Secured Party, cease and (y) to
receive the dividends and interest payments that he would otherwise be
authorized to receive and retain pursuant to Section 7(a)(ii) shall
automatically cease, and all such rights shall thereupon become vested
in the Secured Party, which shall thereupon have the sole right to
exercise or refrain from exercising such voting and other consensual
rights and to receive and hold as Pledged Collateral such dividends and
interest payments.
(ii) All dividends and interest payments that are received by
the Pledgor contrary to the provisions of paragraph (i) of this Section
7(b) shall be received in trust for the benefit of the Secured Party,
shall be segregated from other funds of the Pledgor and shall be
forthwith paid over to the Secured Party as Pledged Collateral in the
same form as so received (with any necessary endorsement).
Section 8. TRANSFERS AND OTHER LIENS. The Pledgor agrees not
(i) to sell, assign (by operation of law or otherwise) or otherwise dispose of,
or grant any option with respect to, any of the Pledged Collateral, or (ii) to
create or suffer to exist any lien or other encumbrance upon or with respect to
any of the Pledged Collateral, except for the pledge, assignment and security
interest created under this Agreement.
Section 9. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. The
Pledgor hereby irrevocably appoints the Secured Party, effective upon the
occurrence and during the continuation of any Event of Default, as the Pledgor's
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, from time to time in the Secured
Party's discretion and upon notice to the Pledgor, to take any action and to
execute any instrument that the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to ask for, demand, collect, ▇▇▇ for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Pledged Collateral,
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above, and
(c) to file any claims or take any action or institute any
proceedings that the Secured Party may deem necessary or desirable for
the collection of any of the Pledged Collateral or otherwise to enforce
the rights of the Secured Party with respect to any of the Pledged
Collateral.
Section 10. SECURED PARTY MAY PERFORM. If the Pledgor fails to
perform any agreement contained herein, the Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of the Secured Party
incurred in connection therewith shall be payable by the Pledgor under Section
12(b).
Section 11. REMEDIES. If any Event of Default shall have
occurred and be continuing:
(a) The Secured Party may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party upon default under the UCC (whether or not the UCC
applies to the affected Pledged Collateral) and also may (i) require
the Pledgor to, and the Pledgor hereby agrees that he will at his
expense and upon request of the Secured Party forthwith, assemble all
or part of the Pledged Collateral as directed by the Secured Party and
make it available to the Secured Party at a place and time to be
designated by the Secured Party and (ii) without notice except as
specified below, sell the Pledged Collateral or any part thereof at
public or private sale, for cash, on credit or for future delivery, and
upon such other terms as the Secured Party may deem commercially
reasonable. The Pledgor agrees that, to the extent notice of sale shall
be required by law, at least ten (10) days' notice to the Pledgor of
the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification.
The Secured Party shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Secured
Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned.
(b) (i) All cash proceeds received by the Secured Party in
respect of any sale of, collection from, or other realization
upon all or any part of the Pledged Collateral may, in the
discretion of the Secured Party, be held by the Secured Party
as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Secured
Party pursuant to Section 12) shall be applied to the payment
in full of the Secured Obligations. To the extent proceeds
remain after the application pursuant to the preceding
sentence, and following the termination of this Agreement
pursuant to Section 15, to the Pledgor or to whomever may be
lawfully entitled to receive such surplus.
(ii) It is understood that the Pledgor shall remain
liable to the extent of any deficiency between the amount of
the proceeds of the Pledged Collateral and the aggregate
amount of the Secured Obligations.
(c) The Secured Party may exercise any and all rights and
remedies of the Pledgor in respect of the Pledged Collateral.
Section 12. INDEMNITY AND EXPENSES. (a) The Pledgor agrees to
indemnify the Secured Party from and against any and all claims, losses and
liabilities growing out of or resulting from this Agreement (including, without
limitation, enforcement of this Agreement).
(b) The Pledgor agrees to pay to the Secured Party, upon
demand, the amount of any and all reasonable costs and expenses, including,
without limitation, the reasonable fees and expenses of counsel, that the
Secured Party may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Pledged Collateral, (iii)
the exercise or enforcement of any of the rights of the Secured Party hereunder
or (iv) the failure by the Pledgor to perform or observe any of the provisions
hereof.
Section 13. SECURITY INTEREST ABSOLUTE. All rights of the
Secured Party and the pledge, assignment and security interest hereunder, and
all obligations of the Pledgor hereunder, shall be absolute and unconditional,
irrespective of (i) any lack of validity or enforceability of the Note; (ii) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Secured Obligations, or any other amendment or waiver of or any
consent to any departure from the Note; (iii) any taking, exchange, release or
nonperfection of any other collateral, or any taking, release or amendment or
waiver of or consent to departure from any guaranty, for all or any of the
Secured Obligations; or (iv) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Pledgor or a
third-party grantor of a security interest.
Section 14. CONTINUING SECURITY INTEREST. This Agreement shall
create a continuing security interest in the Pledged Collateral and shall (a)
remain in full force and effect until the payment in full of the Secured
Obligations, (b) be binding upon the Pledgor, his successors and assigns and (c)
inure to the benefit of the Secured Party and its respective successors,
transferees and assigns.
Section 15. TERMINATION. Upon the irrevocable and indefeasible
payment in full of the Secured Obligations, the pledge, assignment and security
interest granted hereby shall terminate and all rights to the Pledged Collateral
shall revert to the Pledgor. Upon any such termination, the Secured Party will,
at the Pledgor's expense, execute and deliver to the Pledgor such documents as
the Pledgor shall reasonably request to evidence such termination.
Section 16. MISCELLANEOUS. This Agreement may be modified,
amended or terminated only by a writing signed by both parties hereto. This
Agreement shall be enforced, governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts. The Pledgor agrees that any suit for
the enforcement of this Agreement may be brought in any Massachusetts, New York
State or United States federal court located in the City of Boston or the
Borough of Manhattan in New York City and consents to the non-exclusive
jurisdiction of such court and to service of process in any such suit being made
upon the Pledgor by mail at the address specified below. The Pledgor hereby
waives any objection he may now have or hereafter have to the venue of any such
suit or any such court or that such suit was brought in an inconvenient court.
THE PLEDGOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY DISPUTE
BETWEEN THE PARTIES WITH RESPECT TO THIS AGREEMENT.
IN WITNESS WHEREOF, the Pledgor has duly executed and
delivered this Pledge and Security Agreement as of the date and year first
written above.
/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Address:
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Agreed and consented to as of
the date first above written:
DESIGNS, INC.
By:
Name:
Title:
The undersigned, ▇▇▇ ▇▇▇▇▇, wife of ▇▇▇▇▇ ▇. ▇▇▇▇▇ and co-maker of and
additional Obligor under the Note, has duly executed and delivered this Pledge
and Security Agreement as of the date and year first written above as additional
Pledgor under this Pledge and Security Agreement, to the extent of all right,
title and interest, if any, of the undersigned in and to the Pledged Shares or
other Pledged Collateral and all Proceeds and products thereof, and, without
limitation, the undersigned agrees to be bound by all of the agreements and
covenants of the Pledgor set forth herein with respect to, and to the extent of,
such right, title and interest.
/S/ ▇▇▇ ▇▇▇▇▇
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Address:
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