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EXHIBIT 4.7
AMENDED AND RESTATED LENDER SECURITY AGREEMENT
AMENDED AND RESTATED LENDER SECURITY AGREEMENT (this "Agreement"),
dated as of August 11, 1995, among ZALE DELAWARE, INC., a Delaware corporation
("Zale Delaware"), ZALE CORPORATION, a Delaware corporation ("Zale" and
together with Zale Delaware, the "Companies"), and THE FIRST NATIONAL BANK OF
BOSTON, a national banking association, as collateral agent (hereinafter, in
such capacity and for the benefit of the parties listed below, the "Secured
Party") for the benefit of (a) itself and other lending institutions
(hereinafter, collectively, the "Lenders") which are or may become parties to a
Revolving Credit Agreement dated as of August 11, 1995 (as amended, modified,
restated or supplemented and in effect from time to time, the "Credit
Agreement"), among the Companies, the Lenders, and The First National Bank of
Boston, as agent for itself and the Lenders (in such capacity, the "Agent" and
together with the Lenders, collectively, the "Creditors") and (b) the Agent.
WHEREAS, in connection with the Prior Credit Agreement (as defined in
the Credit Agreement), the Companies, certain of their affiliates, and The
First National Bank of Boston, as agent for itself and the other lenders under
the Prior Credit Agreement (in such capacity, the "Prior Secured Party"),
previously executed and delivered a certain Lender Security Agreement dated as
of July 30, 1993 (the "Prior Lender Security Agreement") pursuant to which the
Companies and such affiliates granted to the Prior Secured Party a security
interest in certain collateral;
WHEREAS, it is a condition precedent to the Lenders' making any loans
or otherwise extending credit to the Companies under the Credit Agreement that
each of the Companies agree to amend and restate the Prior Lender Security
Agreement pursuant to an amended and restated security agreement in
substantially the form hereof relating to Lender Collateral (as defined
herein);
WHEREAS, each of the Companies wishes to grant security interests in
the Lender Collateral in favor of the Secured Party, as herein provided, it
being intended that the Trustee (as defined in the Credit Agreement) and the
holders of the Debentures (as defined in the Credit Agreement) shall have no
interest in the Lender Collateral and that the Collateral Agency Agreement (as
defined in the Credit Agreement) shall have no application to the Lender
Collateral;
NOW, THEREFORE, in consideration of the promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
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1. Definitions. All capitalized terms used herein without
definitions shall have the respective meanings provided therefor in the Credit
Agreement. All terms defined in the Uniform Commercial Code of the Commonwealth
of Massachusetts and used herein shall have the same definitions herein as
specified therein. The following terms shall have the meanings set forth in
this $1 or elsewhere referred to below:
Debenture Termination Date. The date upon which the Debenture Debt
shall have been paid in full in cash.
Excluded Collateral. (a) Retail store leases, (b) inventory held by
either of the Companies on consignment from trade vendors or any proceeds
thereof up to the cost thereof to either of the Companies, (c) following the
Debenture Termination Date, the Subordinated Notes and the Trust Certificates
or any other equity interest in ZFT or any other Receivables Securitization
Subsidiary, (d) warrants and Zale stock acquired as permitted by Sections
9.3(q) and (t) of the Credit Agreement, and (e) any chattel paper and general
intangibles which are now or hereafter held by either of the Companies as
licensee, lessee or otherwise, to the extent that (i) such chattel paper and
general intangibles are not assignable or capable of being encumbered as a
matter of law or under the terms of the license, lease or other agreement
applicable thereto (but solely to the extent that any such restriction shall be
enforceable under applicable law), without the consent of the licensor or
lessor thereof or other applicable party thereto and (ii) such consent has not
been obtained; provided, however, that Excluded Collateral shall not include,
(A) any and all proceeds of such chattel paper and general intangibles to the
extent that the assignment or encumbering of such proceeds is not so restricted
and (B) upon any such licensor, lessor or other applicable party consent with
respect to any such otherwise excluded chattel paper or general intangibles
being obtained, thereafter such chattel paper or general intangibles as well as
any and all proceeds thereof.
Joint Collateral. As defined in the Collateral Agency Agreement.
Lender Collateral. The following properties, assets and rights of each
of the Companies, wherever located, whether now owned or hereafter acquired or
arising, and all proceeds and products thereof (a) at all times prior to the
Debenture Termination Date, (i) all accounts; (ii) the Trust Certificates and
all of Zale Delaware's interest in ZFT or any other Receivables Securitization
Subsidiary; (iii) the Subordinated Notes; (iv) cash, negotiable instruments,
documents of title, deposit accounts, securities or other cash equivalents
which would constitute "cash collateral" under Section 363(a) of the federal
Bankruptcy Code in the case of a perfected and unavoidable security interest
therein; and (v) any proceeds of Joint Collateral which constitute any of the
foregoing categories of Lender Collateral; and (b) from and after the Debenture
Termination Date, (i) all inventory, (ii) all accounts, (iii) all Indebtedness
of the Designated Subsidiaries to either of the Companies and any and
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all instruments, chattel paper, documents, notes or contract rights evidencing
or constituting any such Indebtedness of the Designated Subsidiaries to either
of the Companies and (iv) any proceeds of the foregoing. Notwithstanding
anything to the contrary herein contained, Lender Collateral shall not include,
and the Secured Party shall have no lien on or security interest in, the
Securitization Subsidiary Receivables or the Excluded Collateral.
Prior Lender Security Agreement. As defined in the preamble hereto.
Prior Secured Party. As defined in the preamble hereto.
Receivables Securitization Subsidiary. Any Subsidiary of Zale, the
principal purpose of which is to provide funds for working capital or other
general corporate purposes to Zale Delaware and its Subsidiaries through the
transfer of accounts or receivables created by Zale or Zale Delaware or their
respective Subsidiaries (or of instruments received in consideration of
accounts receivable transferred pursuant to the Receivables Securitization
Facility Documents).
Securitization Subsidiary Receivables. Any Receivables (as defined in
the Receivables Securitization Facility Documents, as the same may be amended
in compliance with Section 9.11 of the Credit Agreement), all monies due or to
become due thereon, all collateral security therefor, all proceeds of the
foregoing including Insurance Proceeds (as defined in the Receivables
Securitization Facility Documents, as the same may be amended in compliance
with Section 9.11 of the Credit Agreement) relating thereto, all Recoveries (as
defined in the Receivables Securitization Facility Documents, as the same may
be amended in compliance with Section 9.11 of the Credit Agreement) and all
other interests, rights and assets that have been transferred by either of the
Companies or any corporate predecessors thereof or successors thereto to any
Receivables Securitization Subsidiary pursuant to the Receivables
Securitization Facility Documents (as the same may be amended in compliance
with Section 9.11 of the Credit Agreement); provided, however, that
Securitization Subsidiary Receivables shall not include (a) any accounts
transferred to any such Receivables Securitization Subsidiary after the
occurrence of any Receivables Release Termination Date, (b) the Trust
Certificates or Zale Delaware's interest in ZFT or any other Receivables
Securitization Subsidiary, (c) the Subordinated Notes or (d) either of the
Companies' rights under the Receivables Securitization Facility Documents (as
the same may be amended in compliance with Section 9.11 of the Credit
Agreement); and provided, further, that nothing contained herein or in the
Credit Agreement shall be deemed to constitute a release of or in any way
negate the security interest of the Secured Party, for the benefit of the
Lenders, in any accounts, or in any proceeds or products thereof, transferred
to any Receivables Securitization Subsidiary following any Receivables Release
Termination Date.
Subordinated Notes. As defined in the Receivables Purchase Agreement
(as the same may be amended in compliance with Section 9.11 of the Credit
Agreement) or its
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substitute or equivalent pursuant to any other Receivables Securitization
Facility Documents (as the same may be amended in compliance with Section 9.11
of the Credit Agreement).
2. Grant of Security Interest.
(a) Each of the Companies hereby grants to the
Secured Party, to secure the payment and performance in full of all of
the Obligations, a security interest in and so pledges and assigns to
the Secured Party, the Lender Collateral.
(b) Pursuant to the terms hereof, each of the
Companies has endorsed, assigned and delivered to the Secured Party
all negotiable or non-negotiable instruments (including certificated
securities) and chattel paper pledged by it under Section 2(a) hereof,
together with instruments of transfer or assignment duly executed in
blank as the Secured Party may have specified. In the event that
either of the Companies shall, after the date of this Agreement,
acquire any other negotiable or non-negotiable instruments (including
certificated securities) or chattel paper to be pledged by it under
Section 2(a) hereof, such Company shall forthwith endorse, assign and
deliver the same to the Secured Party, accompanied by such instruments
of transfer or assignment duly executed in blank as the Secured Party
may from time to time specify. To the extent that any securities are
uncertificated, appropriate book-entry transfers reflecting the pledge
of such securities created hereby have been or, in the case of
uncertificated securities hereafter acquired by either of the
Companies, will at the time of such acquisition be, duly made for the
account of the Secured Party or one or more nominees of the Secured
Party with the issuer of such securities or other appropriate
book-entry facility or financial intermediary, with the Secured Party
having at all times the right to obtain definitive certificates (in
the Secured Party's name or in the name of one or more nominees of the
Secured Party) where the issuer customarily or otherwise issues
certificates, all to be held as Lender Collateral hereunder. Each of
the Companies hereby acknowledges that the Secured Party may, in its
discretion, appoint one or more financial institutions to act as the
Secured Party's agent in holding in custodial account instruments or
other financial assets in which the Secured Party is granted a
security interest hereunder, including, without limitation,
certificates of deposit and other instruments evidencing short term
obligations.
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3. Status of Certain Lender Collateral.
(a) Notwithstanding the Companies' grant to the
Secured Party of a security interest in accounts hereunder, the
Secured Party hereby agrees, subject to the limitation set forth in
the immediately following provisos hereinbelow, that it shall have no
right, title or interest in or to any Securitization Subsidiary
Receivables which, prior to the occurrence of any Receivables Release
Termination Date, have been transferred to ZFT or any other
Receivables Securitization Subsidiary; provided, however, that nothing
contained herein shall be deemed to constitute a release of or in any
way negate the security interest of the Secured Party, for the benefit
of the Creditors, in (i) prior to the Debenture Termination Date, Zale
Delaware's rights under the Subordinated Notes or the Trust
Certificates or Zale Delaware's interest in ZFT or any other
Receivables Securitization Subsidiary, and any other rights which the
Companies may have under the Receivables Securitization Facility
Documents and (ii) any accounts, or in any proceeds or products
thereof, transferred to ZFT or any Receivables Securitization
Subsidiary following the occurrence of any Receivables Release
Termination Date; and provided, further, that the Secured Party's
security interest shall extend to, and the term Lender Collateral
shall include, all accounts of the Companies, whether now existing or
hereafter acquired, which shall not have become Securitization
Subsidiary Receivables or which shall have been repurchased by,
reassigned to, reconveyed to or reacquired by either Company, except
pursuant to Section 2.09 of the Receivables Purchase Agreement (as the
same may be from time to time amended in compliance with Section 9.11
of the Credit Agreement). The foregoing shall in no way limit the
Secured Party's rights to, and the Secured Party shall have a security
interest in, all proceeds from the sale of Securitization Subsidiary
Receivables to ZFT or any other Receivables Securitization Subsidiary
to which Zale Delaware is entitled under the Receivables
Securitization Facility Documents; provided, however, that following
the Debenture Termination Date, nothing herein shall be construed as
granting the Secured Party a security interest in the Subordinated
Notes or the Trust Certificates or any other equity interest of the
Borrowers, or either of them, in ZFT or any other Receivables
Securitization Subsidiary.
(b) The Secured Party acknowledges that (a) prior
to its enforcement of its rights hereunder, ZFT and the Receivables
Purchase Agent shall have no obligation to the Lenders or the Agent
except as set forth in the Receivables Purchase Payment Instructions,
and (b) so long as ZFT and the Receivables Purchase Agent are
complying with the provisions of the Receivables Purchase Payment
Instructions and the Receivables Securitization Facility Documents,
Zale Delaware shall have no cause of action against ZFT or the
Receivables Purchase Agent. Further, the Agent shall only exercise its
remedies with respect to Zale Delaware's and Zale's rights under the
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Receivables Securitization Facility Documents in accordance with the
provisions of the Security Documents.
(c) Notwithstanding the foregoing, the Lenders
and the Agent are aware that any security interest granted by the
Security Documents in the Local Depository Accounts, the Corporate
Depository Accounts and the Store Concentration Accounts may not, to
the extent that such amounts represent Securitization Subsidiary
Receivables, be perfected first priority security interests.
4. Status of Lender Collateral, etc. None of the Lender
Collateral constitutes, or is the proceeds of, "farm products" as defined in
Section 9-109(3) of the Uniform Commercial Code of the Commonwealth of
Massachusetts. None of the account debtors in respect of any accounts arising
from the sale of Eligible Inventory and none of the obligers in respect of any
instruments included in the Lender Collateral which have been received by the
Companies as a result of the sale of Eligible Inventory is a governmental
authority subject to the Federal Assignment of Claims Act (unless there has
been compliance with such Act to give the Secured Party a perfected lien
therein).
5. Continuous Perfection. Each of the Companies' respective place
of business or, if more than one, chief executive office is indicated on the
Perfection Certificates delivered by each of the Companies to the Secured Party
herewith (the "Perfection Certificates"). Neither of the Companies will change
the same, or its name, identity or corporate structure in any manner, without
providing at least thirty (30) days' prior written notice to the Secured Party.
Except for Lender Collateral having a value in the aggregate not in excess of
$500,000, the Lender Collateral, to the extent not delivered to the Secured
Party pursuant to Section 2(b), will be kept at those locations listed on the
Perfection Certificates and neither of the Companies will remove the Lender
Collateral from such locations, without providing at least thirty (30) days'
prior written notice to the Secured Party.
6. No Liens. Except for the security interest herein granted and
liens permitted under the Credit Agreement, the Companies shall be the owners
of the Lender Collateral free from any other lien, security interest or other
encumbrance, and the Companies shall defend the same against all claims and
demands of all persons at any time claiming the same or any interests therein
adverse to the Secured Party or any of the Creditors. Neither of the Companies
shall pledge, mortgage or create, or suffer to exist a security interest in the
Lender Collateral in favor of any person other than the Secured Party except as
expressly permitted by the Credit Agreement.
7. No Transfers. Neither of the Companies will sell or offer to
sell or otherwise transfer the Lender Collateral or any interest therein except
for sales permitted by Section 9.5 of the Credit Agreement.
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8. Insurance.
(a) Each of the Companies will maintain with
financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as
shall be in accordance with general practices of businesses engaged in
similar activities in similar geographic areas. Such insurance shall
be in such minimum amounts and with such commercially reasonable
deductibles that neither Company will be deemed a co-insurer under
applicable insurance laws, regulations and policies and otherwise
shall be in such amounts, contain such terms, be in such forms and be
for such periods as may be reasonably satisfactory to the Secured
Party. In addition, all such insurance shall be payable to the Secured
Party as loss payee under a "standard" or "New York" loss payee
clause. Without limiting the foregoing, each of the Companies will (i)
keep all of its physical property insured with casualty or physical
hazard insurance on an "all risks" basis, with broad form flood and
earthquake overages and electronic data processing coverage, with a
full replacement cost endorsement and an "agreed amount" clause in an
amount equal to 100% of the full replacement cost of such property
(except inventory, which shall be in an amount equal to 100% of the
cost of such inventory), (ii) maintain all such workers' compensation
or similar insurance as may be required by law and (iii) maintain, in
amounts and with deductibles equal to those generally maintained by
businesses engaged in similar activities in similar geographic areas,
general public liability insurance against claims of bodily injury,
death or property damage occurring, on, in or about the properties of
such Company; and product liability insurance.
(b) The proceeds of any casualty insurance in
respect of any casualty loss of any property of the Companies shall,
subject to the rights, if any, of other parties with a prior interest
in the property covered thereby, (i) so long as no Default or Event of
Default has occurred and is continuing and to the extent that the
amount of such proceeds is less than $5,000,000, be disbursed directly
to either of the Companies for direct application by such Company
solely to the repair or replacement of such Company's property so
damaged or destroyed and (ii) in all other circumstances, at the
election of the Companies, either (A) be applied to the outstanding
Obligations (in which case, the Total Commitment shall be reduced by
the amount of such proceeds), or (B) be held by the Secured Party as
cash collateral for the Obligations and disbursed from time to time
upon such terms and conditions as the Secured Party and the Companies
may agree upon; provided, however, that if an Event of Default shall
have occurred and be continuing, such proceeds shall be held by the
Secured Party as cash collateral for the Obligations.
(c) All policies of insurance shall provide for
at least thirty (30) days' prior written notice of cancellation or
amendment to the Secured Party. In the
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event of failure by either of the Companies to provide and maintain
insurance as herein provided, the Secured Party may, at its option,
provide such insurance and charge the amount thereof to such Company.
Each of the Companies shall furnish the Secured Party with
certificates of insurance and policies evidencing compliance with the
foregoing insurance provision.
9. [INTENTIONALLY OMITTED]
10. Lender Collateral Protection Expenses: Preservation of Lender
Collateral.
(a) In its discretion, following the occurrence
of any Event of Default, the Secured Party may discharge taxes and
other encumbrances at any time levied or placed on any of the Lender
Collateral, make repairs thereto reasonably deemed necessary or
appropriate by the Secured Party and pay any necessary filing fees.
Each of the Companies agrees to reimburse the Secured Party on demand
for any and all reasonable expenditures so made. The Secured Party
shall have no obligation to such Company to make any such
expenditures, nor shall the making thereof relieve such Company of any
default.
(b) Anything herein to the contrary
notwithstanding, each of the Companies shall remain liable under each
contract or agreement comprised in the Lender Collateral to be
observed or performed by such Company thereunder. Neither the Secured
Party nor any of the Creditors shall have any obligation or liability
under any such contract or agreement by reason of or arising out of
this Agreement or the receipt by the Secured Party or any of the
Creditors of any payment relating to any of the Lender Collateral, nor
shall the Secured Party or any of the Creditors be obligated in any
manner to perform any of the obligations of either of the Companies
under or pursuant to any such contract or agreement, to make inquiry
as to the nature or sufficiency of any payment received by the Secured
Party or any of the Creditors in respect of the Lender Collateral or
as to the sufficiency of any performance by any party under any such
contract or agreement, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any
amounts which may have been assigned to the Secured Party or to which
the Secured Party or any of the Creditors may be entitled at any time
or times. The Secured Party's sole duty with respect to the custody,
safe keeping and physical preservation of the Lender Collateral in its
possession, under Section 9-207 of the Uniform Commercial Code of the
Commonwealth of Massachusetts or otherwise, shall be to deal with such
Lender Collateral in the same manner as the Secured Party deals with
similar property for its own account.
11. Securities: Settlement: Deposits. Following the occurrence of
any Event of Default, the Secured Party may at any time, at its option,
transfer to itself or
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any nominee any securities constituting Lender Collateral, receive any income
thereon and hold such income as additional Lender Collateral or apply it to the
Obligations. At all times prior to the occurrence of an Event of Default, the
Companies shall be entitled to receive any such income. When any Obligations
are due and after an occurrence of an Event of Default, the Secured Party may
demand, sue for, collect, or make any settlement or compromise which it deems
desirable with respect to the Lender Collateral. Regardless of the adequacy of
Lender Collateral or any other security for the Obligations, any deposits or
other sums at any time credited by or due from the Secured Party or any of the
Creditors to either of the Companies may at any time be applied to or set off
against any of the Obligations.
12. Notification to Account Debtors and Other Obligers.
(a) If an Event of Default shall have occurred
and be continuing, each of the Companies shall, at the request of the
Secured Party, notify account debtors on accounts, chattel paper and
general intangibles of such Company and obligers on instruments for
which such Company is an obligee of the security interest of the
Secured Party in any such account, chattel paper, general intangible
or instrument and that payment thereof is to be made directly to the
Secured Party, to the FNBB Concentration Accounts or to any financial
institution designated by the Secured Party as the Secured Party's
agent therefor, and the Secured Party may itself, if an Event of
Default shall have occurred and be continuing, without notice to or
demand upon either of the Companies, so notify account debtors and
obligers. After the making of such a request or the giving of any such
notification, each of the Companies shall hold any proceeds from
collection of accounts, chattel paper, general intangibles and
instruments received by such Company as trustee for the Secured Party,
without commingling the same with other funds of such Company and
shall turn the same over to the Secured Party in the identical form
received, together with any necessary endorsements or assignments. The
Secured Party shall apply the proceeds of collection of accounts,
chattel paper, general intangibles and instruments received by the
Secured Party to the Obligations, such proceeds to be immediately
entered after final payment in cash or solvent credits of the items
giving rise to them.
(b) Anything to the contrary contained herein
notwithstanding, the Secured Party shall not, so long as the
Receivables Securitization Facility Documents are in effect, notify
any account debtors on Securitization Subsidiary Receivables of its
security interest in any account with such account debtor or direct
that payment thereof is to be made directly to the Secured Party, and
nothing contained in this Section 12 shall be deemed to alter the
provisions of Section 2.08 of the Receivables Purchase Agreement with
respect to Securitization Subsidiary Receivables and Non-Purchased
Receivables (as defined in the Receivables Purchase Agreement). If the
Secured Party obtains
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any proceeds of collection from Securitization Subsidiary Receivables,
the Secured Party shall hold such proceeds as trustee for the
Receivables Securitization Subsidiary, and shall promptly turn the
same over to the Receivables Securitization Subsidiary in the
identical form received, together with any necessary endorsements or
assignments on a non-recourse basis.
13. Further Assurances. Each of the Companies, at its own expense,
shall do, make, execute and deliver all such additional and further acts,
things, deeds, assurances and instruments as the Secured Party may reasonably
require more completely to vest in and assure to the Secured Party its rights
hereunder or in any of the Lender Collateral, including, without limitation,
(a) executing, delivering and, where appropriate, filing financing statements
and continuation statements under the Uniform Commercial Code, (b) obtaining
governmental and other third party consents and approvals and (c) taking all
actions required by Sections 8-313 and 8321 of the Uniform Commercial Code, as
applicable in each relevant jurisdiction, with respect to certificated and
uncertificated securities.
14. Power of Attorney.
(a) Each of the Companies hereby irrevocably
constitutes and appoints the Secured Party and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorneys-in-fact with full irrevocable power and authority in the
place and stead of such Company or in the Secured Party's own name,
for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents
and instruments that may be necessary or desirable to accomplish the
purposes of this Agreement and, without limiting the generality of the
foregoing, hereby gives said attorneys the power and right, on behalf
of such Company, without notice to or assent by such Company, to do
the following:
(i) upon the occurrence and during
the continuance of an Event of Default, generally to
sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Lender
Collateral in such manner as is consistent with the
Uniform Commercial Code of the Commonwealth of
Massachusetts and as fully and completely as though
the Secured Party were the absolute owner thereof for
all purposes, and to do at the Companies' expense, at
any time, or from time to time, all acts and things
which the Secured Party deems necessary to protect,
preserve or realize upon the Lender Collateral and
the Secured Party's security interest therein, in
order to effect the intent of this Agreement, all as
fully and effectively as such Company might do,
including, without limitation, the execution,
delivery and recording, in connection with any sale
or other disposition of any Lender Collateral, of the
endorsements, assignments or other
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instruments of conveyance or transfer with respect to such Lender Collateral-,
and
(ii) to file such financing
statements with respect hereto, with or without such
Company's signature, or a photocopy of this Agreement
in substitution for a financing statement, as the
Secured Party may deem appropriate and to execute in
such Company's name such financing statements and
amendments thereto, and continuation statements which
may require such Company's signature.
(b) To the extent permitted by law, each of the
Companies hereby ratifiers all that said attorneys shall lawfully do
or cause to be done by virtue hereof, except for the Secured Party's
or such attorney's own gross negligence or willful misconduct or any
breach by it of this Agreement. This power of attorney is a power
coupled with an interest and shall be irrevocable.
(c) The powers conferred on the Secured Party
hereunder are solely to protect the interests of the Secured Party and
each of the Creditors in the Lender Collateral and shall not impose
any duty upon the Secured Party to exercise any such powers. The
Secured Party shall be accountable only for the amounts that it
actually receives as a result of the exercise of such powers and
neither it nor any of its officers, directors, employees or agents
shall be responsible to either of the Companies for any act or failure
to act, except for the Secured Party's own gross negligence or willful
misconduct or solely as a result of the Secured Party's breach of this
Agreement.
15. Remedies. If an Event of Default shall have occurred and be
continuing, the Secured Party may, without notice to or demand upon either of
the Companies, declare this Agreement to be in default, and the Secured Party
shall, subject to its agreements contained in Section 12(b) hereof, thereafter
have in any jurisdiction in which enforcement hereof is sought, in addition to
all other rights and remedies, the rights and remedies of a secured party under
the Uniform Commercial Code, including, without limitation, the right to take
possession of the Lender Collateral, and for that purpose the Secured Party
may, so far as either of the Companies can give authority therefor, enter upon
any premises on which the Lender Collateral may be situated and remove the same
therefrom. The Secured Party may in its discretion require either of the
Companies to assemble all or any part of the Lender Collateral at such location
or locations within the state(s) or territory(ies) of such Company's principal
office(s) or at such other locations as the Secured Party may designate. Unless
the Lender Collateral is perishable or threatens to decline speedily in value
or is of a type customarily sold on a recognized market, the Secured Party
shall give to each of the Companies at least ten (10) Business Days' prior
written notice of the time and place of any public sale of Lender Collateral or
of the time after which any private sale or any other intended disposition is
to be made. Each of the Companies hereby
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acknowledges that ten (IO) Business Days' prior written notice of such sale or
sales shall be reasonable notice. In addition, each of the Companies waives any
and all rights that it may have to a judicial hearing in advance of the
enforcement of any of the Secured Party's rights hereunder, including, without
limitation, its right following an Event of Default to take immediate
possession of the Lender Collateral and to exercise its rights with respect
thereto.
16. No Waiver, etc. Each of the Companies waives demand, notice,
protest, notice of acceptance of this Agreement, notice of loans made, credit
extended, Lender Collateral received or delivered or other action taken in
reliance hereon. With respect to both the Obligations and the Lender
Collateral, each of the Companies assents to any extension or postponement of
the time of payment or any other indulgence, to any substitution, exchange or
release of Lender Collateral, to any failure to perfect any security interest,
to the addition or release of any party or person primarily or secondarily
liable, to the acceptance of partial payment thereon and the settlement,
compromising or adjusting 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 Lender Collateral or any
income thereon, nor as to the preservation of rights against prior parties, nor
as to the preservation of any rights pertaining thereto beyond the safe custody
thereof as set forth in Section 10(b). The Secured Party shall not be deemed to
have waived any of its rights upon or under the Obligations or the Lender
Collateral unless such waiver shall be in writing and signed by the Secured
Party with the written consent of the Agent and the Majority Lenders. 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 be construed as a bar to or waiver of any right on any
future occasion. All rights and remedies of the Secured Party with respect to
the Obligations or the Lender Collateral, whether evidenced hereby or by any
other instrument or papers, shall be cumulative and may be exercised
singularly, alternatively, successively or concurrently at such time or at such
times as the Secured Party deems expedient.
17. Marshalling. None of the Secured Party or the Creditors shall
be required to marshal any present or future collateral security (including but
not limited to this Agreement and the Lender Collateral) for, or other
assurances of payment of, the Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order, and
all of the rights of the Secured Party hereunder and of the Secured Party or
any of the Creditors in respect of such collateral security and other
assurances of payment shall be cumulative and in addition to all other rights,
however existing or arising. To the extent that it lawfully may, each of the
Companies hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Secured Party's rights under this Agreement or under any other
instrument creating or evidencing any of the Obligations or under which any of
the Obligations
13
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is outstanding or by which any of the Obligations is secured or payment thereof
is otherwise assured, and, to the extent that it lawfully may, each of the
Companies hereby irrevocably waives the benefits of all such laws.
18. Proceeds of Dispositions, Expenses. The Companies shall pay to
the Secured Party on demand any and all reasonable expenses, including
reasonable attorneys' fees and disbursements, incurred or paid by the Secured
Party in protecting, preserving or enforcing the Secured Party's rights under
or in respect of any of the Obligations or any of the Lender Collateral. After
deducting all of said expenses, the residue of any proceeds of collection or
sale of the Obligations or Lender Collateral shall, to the extent actually
received in cash, be applied to the payment of the Obligations in such order or
preference as is provided in the Credit Agreement, proper allowance and
provision being made for any Obligations not then due. Upon the final payment
and satisfaction in full of all of the Obligations and after making any
payments required by Section 9-504(l)(c) of the Uniform Commercial Code of the
Commonwealth of Massachusetts, any excess shall be returned to the Companies,
and the Companies shall remain liable for any deficiency in the payment of the
Obligations.
19. Overdue Amounts. Until paid, all amounts due and payable by
either of the Companies hereunder shall be a debt secured by the Lender
Collateral and shall bear, whether before or after judgment, interest at the
rate of interest for overdue amounts set forth in Section 5.11 of the Credit
Agreement.
20. Secured Party. Each of the parties hereto acknowledges and
agrees that the Secured Party is acting in its capacity as collateral agent and
secured party for the benefit solely of the Creditors. Nothing contained herein
or in any other document, instrument or agreement shall be deemed to indicate
that the Secured Party is acting as collateral agent or secured party for any
other Person, including, without limitation, the Trustee and the holders of the
Debentures, or to extend the grant of the security interest in the Lender
Collateral to or for the benefit of the Trustee, the holders of the Debentures
or any other Person (other than the Creditors). Nothing contained herein or in
the Joint Collateral Security Agreement shall be deemed to extend to or create
in the Secured Party, in its capacity as Secured Party hereunder, any
obligations or duties under the Joint Collateral Security Agreement or with
respect to the Joint Collateral.
21. Governing Law: Consent to Jurisdiction. THIS AGREEMENT IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
Each of the Companies agrees that any suit for the enforcement of this
Agreement 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. Each of
14
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the Companies 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 is brought in an
inconvenient court.
22. Waiver of Jury Trial. EACH OF THE COMPANIES WAIVES ITS RIGHT
TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE
IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law,
each of the Companies waives any right which it may have to claim or recover in
any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. Each of the Companies (a) certifies that neither the Secured
Party nor any of the Creditors nor any representative, agent or attorney of the
Secured Party or any of the Creditors has represented, expressly or otherwise,
that the Secured Party or any of the Creditors would not, in the event of
litigation, seek to enforce the foregoing waivers and (b) acknowledges that, in
entering into the Credit Agreement and the other Loan Documents to which the
Secured Party or any of the Creditors is a party, the Secured Party and each of
the Creditors are relying upon, among other things, the waivers and
certifications contained in this Section 22.
23. Prior Agreement Superseded. This Agreement shall, on and as of
the date hereof, amend and restate in its entirety the Prior Lender Security
Agreement. From and after the date hereof, the rights and obligations of the
parties under the Prior Lender Security Agreement shall be subsumed within and
governed by this Agreement.
24. Miscellaneous. The headings of each section of this Agreement
are for convenience only and shall not define or limit the provisions thereof.
This Agreement and all rights and obligations hereunder shall be binding upon
each of the Companies and its respective successors and assigns, and shall
inure to the benefit of the Secured Party, each of the Creditors and their
respective successors and assigns. If any term of this Agreement shall be held
to be invalid, illegal or unenforceable, the validity of all other terms hereof
shall in no way be affected thereby, and this Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein. Each of the Companies acknowledges receipt of a copy of this
Agreement. All obligations of the Companies hereunder shall be joint and
several.
15
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IN WITNESS WHEREOF, intending to be legally bound. each of the
Companies has caused this Agreement to be duly executed as of the date first
above written.
ZALE DELAWARE, INC.
By: /s/ MERRILL WERTHEIMER
Name: Merrill Wertheimer
Title: Executive Vice President - Finance
and Administration
By: /s/ THOMAS E. WHIDDON
Name: Thomas E. Whiddon
Title: Senior Vice President and Treasurer
Address: 901 W. Walnut Hill Ln.
Irving, TX 75038- 1003
ZALE CORPORATION
By: /s/ MERRILL WERTHEIMER
Name: Merrill Wertheimer
Title: Executive Vice President - Finance
and Administration
By: /s/ THOMAS E. WHIDDON
Name: Thomas E. Whiddon
Title: Senior Vice President and Treasurer
Address: 901 W. Walnut Hill Ln.
Irving, TX 75038-1003
Accepted:
THE FIRST NATIONAL BANK OF BOSTON,
in its capacity as Secured Party
By:
Name:
Title:
16
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Agreed to solely for the purpose of consenting
and agreeing to the provisions of Section 23 hereof:
ZALE PUERTO RICO, INC.
By: /s/ THOMAS E. WHIDDON
Name: Thomas E. Whiddon
Title: Senior Vice President and Treasurer
DOBBINS JEWELERS, INC.
By: /s/ THOMAS E. WHIDDON
Name: Thomas E. Whiddon
Title: Senior Vice President and Treasurer
JEWELERS FINANCIAL SERVICES, INC.
By: /s/ THOMAS E. WHIDDON
Name: Thomas E. Whiddon
Title: Senior Vice President and Treasurer
17
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CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF TEXAS )
) ss
COUNTY OF DALLAS )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 11th day of August, 1995, personally appeared Merrill
Wertheimer and Thomas E. Whiddon to me known personally, and who, being by me
duly sworn, deposes and says that they are the Executive Vice President -
Finance and Administration and the Senior Vice President and Treasurer,
respectively, of Zale Delaware, Inc., and that said instrument was signed and
sealed on behalf of said corporation by authority of its Board of Directors,
and said Merrill Wertheimer and Thomas E. Whiddon each acknowledged said
instrument to be the free act and deed of said corporation.
/s/ CORINNE NEFF
---------------------------------
Notary Public
My Commission Expires: 2-25-99
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF TEXAS )
) ss
COUNTY OF DALLAS )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this day of August, 1995, personally appeared Merrill Wertheimer
and Thomas E. Whiddon to me known personally, and who, being by me duly sworn,
deposes and says that they are the Executive Vice President - Finance and
Administration and the Senior Vice President and Treasurer, respectively, of
Zale Corporation, and that said instrument was signed and sealed on behalf of
said corporation by authority of its Board of Directors, and said Merrill
Wertheimer and Thomas E. Whiddon each acknowledged said instrument to be the
free act and deed of said corporation.
/s/ CORINNE NEFF
---------------------------------
Notary Public
My Commission Expires: 2-25-99