EXHIBIT 10.53
SHIRT SHED GUARANTY AND SECURITY AGREEMENT
AGREEMENT dated as of November 22, 1994 between
THE SHIRT SHED COMPANY, INC., an Indiana corporation
(together with its successors, the "Guarantor"), and
GREYROCK CAPITAL GROUP INC., as Agent for the lenders
referred to below.
W I T N E S S E T H :
WHEREAS American Marketing Works, Inc. (the
"Company"), certain lenders and Greyrock Capital Group Inc.,
as agent for such lenders, are parties to an Amended and
Restated Credit Agreement dated as of February 16, 1993 (as
the same may be amended from time to time, the "Credit
Agreement"); and
WHEREAS in order to induce such lenders and
Greyrock Capital Group Inc., as agent for such lenders, to
enter into the Credit Agreement, the Guarantor has agreed to
guarantee the obligations of the Company under the Financing
Documents referred to in the Credit Agreement, and to grant
a continuing security interest in and to the Collateral (as
hereafter defined) to secure its guarantee of the Company's
obligations under the Financing Documents;
NOW THEREFORE in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. Definitions
Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the
respective meanings provided for therein. The following
additional terms, as used herein, have the following
respective meanings:
"Accounts" means all "accounts" (as defined in the
UCC) now owned or hereafter acquired by the Guarantor, and
shall also mean and include all accounts receivable,
contract rights, book debts, notes, drafts and other
obligations or indebtedness owing to the Guarantor arising
from the sale, lease or exchange of goods or other property
by it and/or the performance of services by it (including
any such obligation which might be characterized as an
account, contract right or general intangible under the
Uniform Commercial Code in effect in any jurisdiction) and
all of the Guarantor's rights in, to and under all purchase
orders for goods, services or other property, and all of the
Guarantor's rights to any goods, services or other property
represented by any of the foregoing (including returned or
repossessed goods and unpaid sellers' rights of rescission,
replevin, reclamation and rights to stoppage in transit) and
all monies due to or to become due to the Guarantor under
all contracts for the sale, lease or exchange of goods or
other property and/or the performance of services by it
(whether or not yet earned by performance on the part of the
Guarantor), in each case whether now in existence or
hereafter arising or acquired including, without limitation,
the right to receive the proceeds of said purchase orders
and contracts and all collateral security and guarantees of
any kind given by any Person with respect to any of the
foregoing.
"Collateral" has the meaning set forth in
Section 4.
"Documents" means all "documents" (as defined in
the UCC) or other receipts covering, evidencing or
representing goods, now owned or hereafter acquired by the
Guarantor.
"Equipment" means all "equipment" (as defined in
the UCC) now owned or hereafter acquired by the Guarantor,
including without limitation all motor vehicles, trucks,
trailers, railcars and barges.
"General Intangibles" means all "general
intangibles" (as defined in the UCC) now owned or hereafter
acquired by the Guarantor, including (i) all obligations or
indebtedness owing to the Guarantor (other than Accounts)
from whatever source arising, (ii) all patents, patent
licenses, trademarks, trademark licenses, rights in
intellectual property, goodwill, trade names, service marks,
trade secrets, copyrights, permits and licenses (except to
the extent that the granting by the Guarantor of a security
interest therein results in the violation or termination of,
or default under, any licensing agreement to which the
Guarantor is a party), (iii) all rights or claims in respect
of refunds for taxes paid and (iv) all rights in respect of
any pension plan or similar arrangement maintained for
employees of any member of the ERISA Group.
"Instruments" means all "instruments", "chattel
paper" or "letters of credit" (each as defined in the UCC),
including those evidencing, representing, arising from or
existing in respect of, relating to, securing or otherwise
supporting the payment of, any of the Accounts, including
(but not limited to) promissory notes, drafts, bills of
exchange and trade acceptances, now owned or hereafter
acquired by the Guarantor.
"Inventory" means all "inventory" (as defined in
the UCC), now owned or hereafter acquired by the Guarantor,
wherever located, and shall also mean and include all raw
materials and other materials and supplies, work-in-process
and finished goods and any products made or processed
therefrom and all substances, if any, commingled therewith
or added thereto.
"Perfection Certificate" means a certificate sub-
stantially in the form of Exhibit A, completed and supple-
mented with the schedules and attachments contemplated
thereby to the satisfaction of the Agent, and duly executed
by the chief executive officer and the chief legal officer
of the Guarantor.
"Permitted Liens" means the Security Interests and
the Liens on the Collateral permitted to be created, to be
assumed or to exist pursuant to the Shirt Shed Working
Capital Facility.
"Proceeds" means all proceeds of, and all other
profits, products, rents or receipts, in whatever form,
arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or other
realization upon, collateral, including all claims of the
Guarantor against third parties for loss of, damage to or
destruction of, or for proceeds payable under, or unearned
premiums with respect to, policies of insurance in respect
of, any collateral, and any condemnation or requisition
payments with respect to any collateral, in each case
whether now existing or hereafter arising.
"Secured Obligations" means the obligations
secured under this Agreement which include (a) all amounts
payable by the Guarantor in respect of the Guarantor's
guarantee under this Agreement of the full and punctual
payment of the principal of and interest on the obligations
of the Company under the Financing Documents and all other
amounts payable by the Company under the Financing Documents
and (b) any amendments, restatements, renewals, extensions
or modifications of any of the foregoing.
"Secured Parties" means the Agent and the Lenders.
"Security Interests" means the security interests
in the Collateral granted hereunder securing the Secured
Obligations.
"Shirt Shed Working Capital Facility" means the
BNY Financial Corporation Factoring Agreement dated as of
July 25, 1991 between the Guarantor and BNY Financial
Corporation, or any successor or replacement working capital
facility entered into by the Guarantor, in each case as
amended from time to time.
"UCC" means the Uniform Commercial Code as in
effect on the date hereof in the State of New York; provided
that if by reason of mandatory provisions of law, the
perfection or the effect of perfection or non-perfection of
the Security Interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other
than New York, "UCC" means the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of
perfection or non-perfection.
SECTION 2. Representations and Warranties
The Guarantor represents and warrants as follows:
(A) The Guarantor has good and marketable title
to all of the Collateral, free and clear of any Liens other
than the Permitted Liens. The Guarantor has taken all
actions necessary under the UCC to perfect its interest in
any Accounts purchased or otherwise acquired by it, as
against its assignors and creditors of its assignors.
(B) The Guarantor has not performed any acts
which might prevent the Agent from enforcing any of the
terms of this Agreement or which would limit the Agent in
any such enforcement. Other than financing statements or
other similar or equivalent documents or instruments with
respect to the Security Interests and Permitted Liens, no
financing statement, mortgage, security agreement or similar
or equivalent document or instrument covering all or any
part of the Collateral is on file or of record in any
jurisdiction in which such filing or recording would be
effective to perfect a Lien on such Collateral.
(C) The information set forth in the Perfection
Certificate delivered to the Agent prior to the Effective
Date is correct and complete after giving effect to the
consummation of the Acquisition. Not later than 30 days
following the Effective Date, the Guarantor shall furnish to
the Agent file search reports from each UCC filing office
set forth in Schedule 7 to the Perfection Certificate
confirming the filing information set forth in such
Schedule.
(D) The Security Interests constitute valid
security interests under the UCC securing the Secured
Obligations. When UCC financing statements in the form
specified in Exhibit A shall have been filed in the offices
specified in the Perfection Certificate, the Security
Interests shall constitute perfected security interests in
the Collateral (except Inventory in transit) to the extent
that a security interest therein may be perfected by filing
pursuant to the UCC, prior to all other Liens and rights of
others therein except for the Permitted Liens.
(E) The Guarantor will, and will cause each of
its Subsidiaries to, maintain (either in the name of the
Guarantor or in such Subsidiary's own name) with financially
sound and responsible insurance companies, insurance on all
their respective properties in at least such amounts and
against at least such risks (and with such risk retention)
as are usually insured against in the same general area by
companies of established repute engaged in the same or a
similar business; and will furnish to the Lenders, upon
request from the Agent, information presented in reasonable
detail as to the insurance so carried.
(F) All Inventory has or will have been produced
in compliance with the applicable requirements of the Fair
Labor Standards Act, as amended.
SECTION 3. The Guaranty
(A) The Guarantor hereby unconditionally guaran-
tees the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the principal
of and interest on each payment obligation of the Company
under the Financing Documents, and the full and punctual
payment of all other amounts payable by the Company there-
under. Upon failure by the Company to pay punctually any
such amount, the Guarantor shall forthwith on demand pay the
amount not so paid at the place and in the manner specified
in the Credit Agreement.
(B) Guaranty Unconditional. The obligations of
the Guarantor hereunder shall be unconditional and absolute
and, without limiting the generality of the foregoing, shall
not be released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compro-
mise, waiver or release in respect of any obligation of
the Company under Credit Agreement or any other Finan-
cing Document, by operation of law or otherwise;
(ii) any renewal, extension, modification, amend-
ment or restatement of or supplement to the Credit
Agreement or any other Financing Document;
(iii) any release, impairment, non-perfection or
invalidity of any direct or indirect security for any
obligation of the Company under the Credit Agreement or
any other Financing Document;
(iv) any change in the corporate existence,
structure or ownership of the Company, or any insol-
vency, bankruptcy, reorganization or other similar
proceeding affecting the Company or its assets or any
resulting release or discharge of any obligation of the
Company contained in the Credit Agreement or any other
Financing Document;
(v) the existence of any claim, set-off or other
rights which the Guarantor may have at any time against
the Company, the Agent, any Lender or any other corpor-
ation or person, whether in connection herewith or any
unrelated transactions, provided that nothing herein
shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating
to or against the Company for any reason of the Credit
Agreement or any other Financing Document, or any
provision of applicable law or regulation purporting to
prohibit the payment by the Company of the principal of
or interest on any Note or any other amount payable by
the Company under the Credit Agreement or any other
Financing Document; or
(vii) any other act or omission to act or delay
of any kind by the Company, the Agent, any Lender or
any other corporation or person or any other
circumstance whatsoever which might, but for the
provisions of this paragraph, constitute a legal or
equitable discharge of or defense to the Guarantor's
obligations hereunder.
(C) Discharge Only Upon Payment In Full; Rein-
statement In Certain Circumstances. The Guarantor's obliga-
tions hereunder shall remain in full force and effect until
the principal of and interest on the Notes and all other
amounts payable by the Company under the Credit Agreement
and the other Financing Documents shall have been paid in
full. If at any time any payment of the principal of or
interest on any Note or any other amount payable by the
Company under the Credit Agreement or the other Financing
Documents is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization
of the Company or otherwise, the Guarantor's obligations
hereunder with respect to such payment shall be reinstated
as though such payment had been due but not made at such
time.
(D) Waiver by the Guarantor. The Guarantor
irrevocably waives acceptance hereof, presentment, demand,
protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any
corporation or person against any Company or any other
corporation or person.
(E) Subrogation. The Guarantor shall not be
entitled, by operation of law or otherwise, upon making any
payment hereunder to be subrogated to the rights of the
payee against the Company with respect to such payment or
against any direct or indirect security therefor, or
otherwise to be reimbursed, indemnified or exonerated by or
for the account of the Company in respect thereof unless and
until the Secured Obligations shall have been fully and
finally paid.
(F) Stay of Acceleration. If acceleration of the
time for payment of any amount payable by the Company under
the Credit Agreement or any of the other Financing Documents
is stayed upon the insolvency, bankruptcy or reorganization
of the Company, all such amounts otherwise subject to accel-
eration under the terms of this Agreement shall nonetheless
be payable by the Guarantor hereunder forthwith on demand by
the Agent made at the request of the requisite proportion of
the Lenders specified in Article VIII of the Credit Agree-
ment.
SECTION 4. The Security Interests
(A) In order to secure the full and punctual
payment and performance of the Secured Obligations in
accordance with the terms thereof, the Guarantor hereby
grants to the Agent for the ratable benefit of the Secured
Parties a continuing security interest in and to all of the
following property of the Guarantor, whether now owned or
existing or hereafter acquired or arising and regardless of
where located (all being collectively referred to as the
"Collateral"):
(1) Accounts;
(2) Inventory;
(3) General Intangibles;
(4) Documents;
(5) Instruments;
(6) Equipment;
(7) All books and records (including customer
lists, credit files, computer programs, printouts and
other computer materials and records) of the Guarantor
pertaining to any of the Collateral; and
(8) All Proceeds of all or any of the Collateral
described in Clauses 1 through 8 hereof.
(B) The Security Interests are granted as securi-
ty only and shall not subject any Secured Party to, or
transfer or in any way affect or modify, any obligation or
liability of the Guarantor with respect to any of the
Collateral or any transaction in connection therewith.
SECTION 5. Further Assurances; Covenants
(A) The Guarantor will not change its name, iden-
tity or corporate structure in any manner unless it shall
have given the Agent (i) not less than 30 days' prior notice
thereof and (ii) delivered an opinion of counsel with
respect thereto in accordance with Section 5(K). The Guar-
antor will not change the location of (i) its chief
executive office or chief place of business or (ii) the
locations where it keeps or holds any Collateral or any
records relating thereto from the applicable location
described in the Perfection Certificate unless it shall have
given the Agent (i) not less than 30 days' prior notice
thereof and (ii) delivered an opinion of counsel with
respect thereto in accordance with Section 5(K). The
Guarantor shall not in any event change the location of any
Collateral if such change would cause the Security Interests
in such Collateral to lapse or cease to be perfected.
(B) The Guarantor will, from time to time, at its
expense, execute, deliver, file and record any statement,
assignment, instrument, document, agreement or other paper
and take any other action (including any filings of
financing or continuation statements under the UCC) that
from time to time may be necessary or desirable, or that the
Agent may request, in order to create, preserve, perfect,
confirm or validate the Security Interests or to enable the
Secured Parties to obtain the full benefits of this Agree-
ment, or to enable the Agent to exercise and enforce any of
its rights, powers and remedies hereunder with respect to
any of the Collateral. To the extent permitted by appli-
cable law, the Guarantor hereby authorizes the Agent, and
appoints the Agent as its true and lawful attorney (with
full power of substitution, in the name of the Guarantor,
the Secured Parties or otherwise, for the sole use and
benefit of the Secured Parties), to execute and file finan-
cing statements or continuation statements without the
Guarantor's signature appearing thereon. The Guarantor
agrees that a carbon, photographic, photostatic or other
reproduction of this Agreement or of a financing statement
is sufficient as a financing statement. The Guarantor shall
pay the costs of, or incidental to, any recording or filing
of any financing or continuation statements concerning the
Collateral.
(C) If any Collateral is at any time in the
possession or control of any warehouseman, bailee or any of
the Guarantor's agents or processors, the Guarantor shall
notify such warehouseman, bailee, agent or processor of the
Security Interests created hereby and to hold all such
Collateral for the Agent's account subject to the Agent's
instructions.
(D) The Guarantor shall keep full and accurate
books and records relating to the Collateral, and stamp or
otherwise mark such books and records in such manner as the
Required Lenders may reasonably require in order to reflect
the Security Interests.
(E) The Guarantor will immediately deliver and
pledge each Instrument to the Agent, appropriately endorsed
to the Agent, provided that so long as no Event of Default
shall have occurred and be continuing, the Guarantor may
retain for collection in the ordinary course any Instruments
received by it in the ordinary course of business and the
Agent shall, promptly upon request of the Guarantor, make
appropriate arrangements for making any other Instrument
pledged by the Guarantor available to it for purposes of
presentation, collection or renewal (any such arrangement to
be effected, to the extent deemed appropriate to the Agent,
against trust receipt or like document).
(F) The Guarantor shall use its best efforts to
cause to be collected from its account debtors, as and when
due, any and all amounts owing under or on account of each
Account (including Accounts which are delinquent, such
Accounts to be collected in accordance with lawful collec-
tion procedures) and shall apply forthwith upon receipt
thereof all such amounts as are so collected to the outstan-
ding balance of such Account. Subject to the rights of the
Secured Parties hereunder upon the occurrence and during the
continuance of an Event of Default, the Guarantor may allow
in the ordinary course of business as adjustments to amounts
owing under its Accounts (i) an extension or renewal of the
time or times of payment, or settlement for less than the
total unpaid balance, which the Guarantor finds appropriate
in accordance with sound business judgment and (ii) a refund
or credit due as a result of returned or damaged merchandise
or as a discount for prompt payment, all in accordance with
the Guarantor's ordinary course of business consistent with
its historical collection practices. The costs and expenses
(including attorney's fees) of collection, whether incurred
by the Guarantor or the Agent, shall be borne by the
Guarantor.
(G) Upon the occurrence and during the contin-
uance of any Event of Default, upon request of the Required
Lenders through the Agent, the Guarantor will promptly
notify (and the Guarantor hereby authorizes the Agent so to
notify) each account debtor in respect of any Account or
Instrument that such Collateral has been assigned to the
Agent hereunder, and that any payments due or to become due
in respect of such Collateral are to be made directly to the
Agent or its designee.
(H) The Guarantor shall, (i) upon the request of
the Agent, in the case of Equipment then owned and (ii)
thereafter, within 10 days of acquiring any other Equipment,
deliver to the Agent any and all certificates of title,
applications for title or similar evidence of ownership of
such Equipment and shall cause the Agent to be named as
lienholder on any such certificate of title or other evi-
dence of ownership. The Guarantor shall promptly inform the
Agent of any additions to or deletions from the Equipment
and shall not permit any such items to become a fixture to
real estate or an accession to other personal property.
(I) Without the prior written consent of the
Required Lenders, the Guarantor will not sell, lease,
exchange, assign or otherwise dispose of, or grant any
option with respect to, any Collateral except, subject to
the rights of the Secured Parties hereunder if an Event of
Default shall have occurred and be continuing, as permitted
under the Shirt Shed Working Capital Facility, whereupon, in
the case of such a sale or exchange, the Security Interests
created hereby in such item (but not in any Proceeds arising
from such sale or exchange) shall cease immediately without
any further action on the part of the Agent.
(J) The Guarantor will, promptly upon request,
provide to the Agent all information and evidence it may
reasonably request concerning the Collateral to enable the
Agent to enforce the provisions of this Agreement.
(K) Not more than six months nor less than 30
days prior to each date on which the Guarantor proposes to
take any action contemplated by Section 5(A), the Guarantor
shall give notice to the Agent of such proposed action, and,
at the Guarantor's cost and expense, cause to be delivered
to the Secured Parties with such notice, an opinion of
counsel, satisfactory to the Agent, substantially in the
form of Exhibit B to the effect that all financing state-
ments and amendments or supplements thereto, continuation
statements and other documents required to be recorded or
filed in order to perfect and protect the Security Interests
for a period (and after giving effect to the proposed action
that is the subject of such notice), specified in such
opinion, continuing until a date not earlier than eighteen
months from the date of such opinion, against all creditors
of and purchasers from the Guarantor have been filed in each
filing office necessary for such purpose and that all filing
fees and taxes, if any, payable in connection with such
filings have been paid in full.
(L) From time to time upon request by the Agent,
the Guarantor shall, at its cost and expense, cause to be
delivered to the Secured Parties an opinion of counsel
satisfactory to the Agent as to such matters relating to the
transactions contemplated hereby as the Required Lenders may
reasonably request.
SECTION 6. Insurance
The Guarantor will cause the Agent to be named as
an insured party and loss payee on each insurance policy
covering risks relating to any of its Inventory and Equip-
ment. The Guarantor will deliver to the Agent, upon request
of the Agent, the insurance policies for such insurance or
certificates of insurance evidencing such coverage. Each
such insurance policy shall include effective waivers by the
insurer of all claims for insurance premiums against the
Agent or any Lender, provide for coverage to the Agent
regardless of the breach by the Guarantor of any warranty or
representation made therein, not be subject to co-insurance,
provide that all insurance proceeds in excess of $100,000
per claim shall be adjusted with and payable to the Agent
and provide that no cancellation, termination or material
modification thereof shall be effective until at least 30
days after receipt by the Agent of written notice thereof.
The Guarantor hereby appoints the Agent as its attorney-in-
fact to make proof of loss, claim for insurance and adjust-
ments with insurers, and to execute or endorse all docu-
ments, checks or drafts in connection with payments made as
a result of any insurance policies.
SECTION 7. General Authority
The Guarantor hereby irrevocably appoints the
Agent its true and lawful attorney, with full power of
substitution, in the name of the Guarantor, the Secured
Parties or otherwise, for the sole use and benefit of the
Secured Parties, but at the Guarantor's expense, to the
extent permitted by law to exercise, at any time and from
time to time while an Event of Default has occurred and is
continuing, all or any of the following powers with respect
to all or any of the Collateral:
(i) to demand, sue for, collect, receive and give
acquittance for any and all monies due or to become due
thereon or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or
defend any action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal
in or with the same or the proceeds or avails thereof,
as fully and effectually as if the Agent were the
absolute owner thereof, and
(iv) to extend the time of payment of any or all
thereof and to make any allowance and other adjustments
with reference thereto;
provided that the Agent shall give the Guarantor not less
than ten days' prior written notice of the time and place of
any sale or other intended disposition of any of the Colla-
teral, except any Collateral which is perishable or threa-
tens to decline speedily in value or is of a type custom-
arily sold on a recognized market. The Agent and the Guar-
antor agree that such notice constitutes "reasonable noti-
fication" within the meaning of Section 9-504(3) of the UCC.
SECTION 8. Remedies upon Event of Default
(A) If any Event of Default has occurred and is
continuing, the Agent may exercise on behalf of the Secured
Parties all rights of a secured party under the UCC (whether
or not in effect in the jurisdiction where such rights are
exercised) and, in addition, the Agent may, without being
required to give any notice, except as herein provided or as
may be required by mandatory provisions of law, (i) apply
cash, if any, then held by it as Collateral as specified in
Section 10 and (ii) if there shall be no such cash or if
such cash shall be insufficient to pay all the Secured
Obligations in full, sell the Collateral or any part thereof
at public or private sale, for cash, upon credit or for
future delivery, and at such price or prices as the Agent
may deem satisfactory. The Agent or any other Secured Party
may be the purchaser of any or all of the Collateral so sold
at any public sale (or, if the Collateral is of a type
customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price
quotations, at any private sale). The Guarantor will
execute and deliver such documents and take such other
action as the Agent deems necessary or advisable in order
that any such sale may be made in compliance with law. Upon
any such sale the Agent shall have the right to deliver,
assign and transfer to the purchaser thereof the Collateral
so sold. Each purchaser at any such sale shall hold the
Collateral so sold to it absolutely and free from any claim
or right of whatsoever kind, including any equity or right
of redemption of the Guarantor which may be waived, and the
Guarantor, to the extent permitted by law, hereby
specifically waives all rights of redemption, stay or
appraisal which it has or may have under any law now
existing or hereafter adopted. The notice (if any) of such
sale required by Section 7 shall (1) in the case of a public
sale, state the time and place fixed for such sale and
(2) in the case of a private sale, state the day after which
such sale may be consummated. Any such public sale shall be
held at such time or times within ordinary business hours
and at such place or places as the Agent may fix in the
notice of such sale. At any such sale the Collateral may be
sold in one lot as an entirety or in separate parcels, as
the Agent may determine. The Agent shall not be obligated
to make any such sale pursuant to any such notice. The
Agent may, without notice or publication, adjourn any public
or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to
which the same may be so adjourned. In case of any sale of
all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the
Agent until the selling price is paid by the purchaser
thereof, but the Agent shall not incur any liability in case
of the failure of such purchaser to take up and pay for the
Collateral so sold and, in case of any such failure, such
Collateral may again be sold upon like notice. The Agent,
instead of exercising the power of sale herein conferred
upon it, may proceed by a suit or suits at law or in equity
to foreclose the Security Interests and sell the Collateral,
or any portion thereof, under a judgment or decree of a
court or courts of competent jurisdiction.
(B) For the purpose of enforcing any and all
rights and remedies under this Agreement the Agent may (i)
require the Guarantor to, and the Guarantor agrees that it
will, at its expense and upon the request of the Agent,
forthwith assemble all or any part of the Collateral as
directed by the Agent and make it available at a place
designated by the Agent which is, in its opinion, reasonably
convenient to the Agent and the Guarantor, whether at the
premises of the Guarantor or otherwise, (ii) to the extent
permitted by applicable law, enter, with or without process
of law and without breach of the peace, any premise where
any of the Collateral is or may be located, and without
charge or liability to it seize and remove such Collateral
from such premises, (iii) have access to and use the Guar-
antor's books and records relating to the Collateral and
(iv) prior to the disposition of the Collateral, store or
transfer it without charge in or by means of any storage or
transportation facility owned or leased by the Guarantor,
process, repair or recondition it or otherwise prepare it
for disposition in any manner and to the extent the Agent
deems appropriate and, in connection with such preparation
and disposition, use without charge any trademark, trade
name, copyright, patent or technical process used by the
Guarantor.
SECTION 9. Limitation on Duty of Agent in Respect
of Collateral
Beyond the exercise of reasonable care in the
custody thereof, the Agent shall have no duty as to any
Collateral in its possession or control or in the possession
or control of any agent or bailee or any income thereon or
as to the preservation of rights against prior parties or
any other rights pertaining thereto. The Agent shall be
deemed to have exercised reasonable care in the custody of
the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which it
accords its own property, and shall not be liable or
responsible for any loss or damage to any of the Collateral,
or for any diminution in the value thereof, by reason of the
act or omission of any warehouseman, carrier, forwarding
agency, consignee or other agent or bailee selected by the
Agent in good faith.
SECTION 10. Application of Proceeds
Upon the occurrence and during the continuance of
an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Collateral shall be
applied by the Agent in the following order of priorities:
first, to payment of the expenses of such sale or
other realization, including reasonable compensation to
agents and counsel for the Agent, and all expenses,
liabilities and advances incurred or made by the Agent
in connection therewith, and any other unreimbursed
expenses for which the Agent or any other Secured Party
is to be reimbursed pursuant to Section 9.03 of the
Credit Agreement or Section 13 hereof and unpaid fees
owing to the Agent under the Credit Agreement;
second, to the ratable payment of accrued but
unpaid interest on the Secured Obligations in accor-
dance with the provisions of the Credit Agreement;
third, to the ratable payment of unpaid principal
of the Secured Obligations;
fourth, to the ratable payment of all other
Secured Obligations, until all Secured Obligations
shall have been paid in full; and
finally, to payment to the Guarantor or its suc-
cessors or assigns, or as a court of competent juris-
diction may direct, of any surplus then remaining from
such proceeds.
The Agent may make distributions hereunder in cash or in
kind or, on a ratable basis, in any combination thereof.
SECTION 11. Concerning the Agent
The provisions of Section 9.04 and Article X of
the Credit Agreement shall inure to the benefit of the Agent
in respect of this Agreement and shall be binding upon the
Guarantor in such respect. In furtherance and not in dero-
gation of the rights, privileges and immunities of the Agent
therein set forth:
(A) The Agent is authorized to take all such
action as is provided to be taken by it as Agent hereunder
and all other action reasonably incidental thereto. As to
any matters not expressly provided for herein (including the
timing and methods of realization upon the Collateral) the
Agent shall act or refrain from acting in accordance with
written instructions from the Required Lenders or, in the
absence of such instructions, in accordance with its
discretion.
(B) The Agent shall not be responsible for the
existence, genuineness or value of any of the Collateral or
for the validity, perfection, priority or enforceability of
the Security Interests in any of the Collateral, whether
impaired by operation of law or by reason of any action or
omission to act on its part hereunder. The Agent shall have
no duty to ascertain or inquire as to the performance or
observance of any of the terms of this Agreement by the
Guarantor.
SECTION 12. Appointment of Co-Agents
At any time or times, in order to comply with any
legal requirement in any jurisdiction, the Agent may appoint
another bank or trust company or one or more other persons,
either to act as co-agent or co-agents, jointly with the
Agent, or to act as separate agent or agents on behalf of
the Secured Parties with such power and authority as may be
necessary for the effectual operation of the provisions
hereof and may be specified in the instrument of appointment
(which may, in the discretion of the Agent, include provi-
sions for the protection of such co-agent or separate agent
similar to the provisions of Section 11).
SECTION 13. Expenses
In the event that the Guarantor fails to comply
with the provisions of this Agreement, such that the value
of any Collateral or the validity, perfection, rank or value
of any Security Interest is thereby diminished or poten-
tially diminished or put at risk, the Agent if requested by
the Required Lenders may, but shall not be required to,
effect such compliance on behalf of the Guarantor, and the
Guarantor shall reimburse the Agent for the costs thereof on
demand. All insurance expenses and all expenses of
protecting, storing, warehousing, appraising, insuring,
handling, maintaining, and shipping the Collateral, any and
all excise, property, sales, and use taxes imposed by any
state, federal, or local authority on any of the Collateral,
or in respect of periodic appraisals and inspections of the
Collateral to the extent the same may be requested by the
Required Lenders from time to time, or in respect of the
sale or other disposition thereof shall be borne and paid by
the Guarantor; and if the Guarantor fails to promptly pay
any portion thereof when due, the Agent or any other Secured
Party may, at its option, but shall not be required to, pay
the same and charge the Guarantor's account therefor, and
the Guarantor agrees to reimburse the Agent or such other
Secured Party therefor on demand. All sums so paid or
incurred by the Agent or any Lender for any of the foregoing
and any and all other sums for which the Guarantor may
become liable hereunder and all costs and expenses
(including reasonable attorneys' fees, legal expenses and
court costs (including the reasonable allocation of the
compensation, costs and expenses of in-house counsel, based
upon time spent)) reasonably incurred by the Agent or any
other Secured Party in enforcing or protecting the Security
Interests or any of their rights or remedies under this
Agreement, shall, together with interest thereon until paid
at an annual rate equal to 2% plus the rate announced from
time by NationsBank of North Carolina, N.A. as its prime
rate, be additional Secured Obligations hereunder.
SECTION 14. Termination of Security
Interests Release of Collateral
Upon the repayment in full of all Secured Obliga-
tions, the Security Interests shall terminate and all rights
to the Collateral shall revert to the Guarantor. At any
time and from time to time prior to such termination of the
Security Interests, the Agent may release any of the
Collateral with the prior written consent of the Required
Lenders. Upon any such termination of the Security
Interests or release of Collateral, the Agent will, at the
expense of the Guarantor, execute and deliver to the
Guarantor such documents as the Guarantor shall reasonably
request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may
be.
SECTION 15. Notices
All notices, communications and distributions
hereunder shall be given in accordance with Section 11.03 of
the Credit Agreement, provided that the Guarantor's address
shall be that set forth on the signature pages hereof.
SECTION 16. Waivers, Non-Exclusive Remedies
No failure on the part of the Agent to exercise,
and no delay in exercising and no course of dealing with
respect to, any right under this Agreement shall operate as
a waiver thereof; nor shall any single or partial exercise
by the Agent or any Secured Party of any right under the
Credit Agreement, any of the other Financing Documents or
this Agreement preclude any other or further exercise there-
of or the exercise of any other right. The rights in this
Agreement, the Credit Agreement and the other Financing
Documents are cumulative and are not exclusive of any other
remedies provided by law.
SECTION 17. Successors and Assigns
This Agreement is for the benefit of the Agent and
the Secured Parties and their successors and assigns, and in
the event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable
to the indebtedness so assigned, may be transferred with
such indebtedness. This Agreement shall be binding on the
Guarantor and its successors and assigns.
SECTION 18. Changes in Writing
Neither this Agreement nor any provision hereof
may be changed, waived, discharged or terminated orally, but
only in writing signed by the Guarantor and the Agent with
the consent of the Required Lenders.
SECTION 19. NEW YORK LAW
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REFERENCE TO PRINCIPLES OR CONFLICTS OF LAW),
EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW
AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS
OF ANY JURISDICTION OTHER THAN NEW YORK ARE GOVERNED BY THE
LAWS OF SUCH JURISDICTION.
SECTION 20. Severability
If any provision hereof is invalid or unenfor-
ceable in any jurisdiction, then, to the fullest extent
permitted by law, (i) the other provisions hereof shall
remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Agent and the
other Secured Parties in order to carry out the intentions
of the parties hereto as nearly as may be possible; and
(ii) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
SECTION 21. Counterparts
This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were
upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
THE SHIRT SHED, INC.
By /s/ G. M. Grandin
---------------------------
Title: Vice President
GREYROCK CAPITAL GROUP INC.,
as Agent
By: /s/ Ron Cohn
--------------------------
Title: Authorized Signatory
LIST OF OMITTED EXHIBITS AND SCHEDULES
Exhibit A Perfection Certificate
Schedule 6(A) Description of Collateral
Schedule 7 Schedule of Filings
Exhibit B Opinion of counsel for the guarantor
Schedule 2(C) List of facility addresses
Schedule 2(E) Outside Contractors
Schedule 5(A) File Search Reports
Schedule 5(B) Financing Statements Identified in Search
Reports
Schedule 6(B) Acknowledged Financing Statements