EXHIBIT 4.9
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of April 1, 2003 (as
amended, supplemented or otherwise modified from time to time, this "Security
Agreement"), by and between (a) BARNEYS NEW YORK, INC., a Delaware corporation
(the "Grantor"), and (b) WILMINGTON TRUST COMPANY, a Delaware banking
corporation, in its capacity as collateral agent (with its successors in such
capacity, the "Collateral Agent") for the benefit of the Secured Parties (as
defined below).
W I T N E S S E T H:
WHEREAS, the Grantor will receive substantial direct and
indirect benefits from issuance of the 9.00% Senior Secured Notes due 2008 (the
"Notes") of Barney's, Inc., a New York corporation ("Barneys") issued pursuant
to an indenture, dated as of the date hereof (as amended, restated, supplemented
or otherwise modified and in effect from time to time, the "Indenture"), among
the Grantor, Barneys, the Guarantors named therein and Wilmington Trust Company,
as trustee (in such capacity, the "Trustee");
WHEREAS, the Grantor is party to the Indenture, pursuant to
which the Grantor has guaranteed the full payment and performance of all of the
Note Obligations (as defined in the Indenture, collectively, the "Guaranteed
Obligations"); and
WHEREAS, in order to secure the prompt and complete
payment, observance and performance of (i) all of the Guaranteed Obligations and
(ii) all of the Grantor's obligations and liabilities hereunder and in
connection herewith (all the Guaranteed Obligations and such obligations and
liabilities hereunder being hereinafter referred to collectively as the
"Liabilities"), the Grantor is required to execute and deliver this Security
Agreement pursuant to the Indenture.
NOW, THEREFORE, in consideration of the premises set forth
above, the terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Defined Terms.(a) (a) Unless otherwise defined herein,
each capitalized term used herein that is defined in the Indenture shall have
the meaning specified for such term in the Indenture. All terms defined in
Article 8 and Article 9 of the Uniform Commercial Code in effect as of the date
hereof in the State of New York are used herein as defined therein.
(b) The words "hereby," "hereof," "herein" and "hereunder"
and words of like import when used in this Security Agreement shall refer to
this Security Agreement as a whole and not to any particular provision of this
Security Agreement, and section references are to this Security Agreement unless
otherwise specified.
(c) All terms defined in this Security Agreement in the
singular shall have comparable meanings when used in the plural, and vice versa,
unless otherwise specified.
(d) The following capitalized terms shall have the
following meanings when used herein:
"Barneys Group" means Barneys and each of its Subsidiaries.
"Blocked Account" means a deposit account for which the
Grantor has delivered a Collateral Account Control Agreement.
"Collateral Account Control Agreement" means a Collateral
Account Control Agreement in substantially the form of Exhibit B hereto or in
such other form as shall be reasonably satisfactory to the Collateral Agent.
"Collateral Report" means each "Collateral Report" as
defined in the Credit Agreement.
"Credit Agreement" means the Credit Agreement, dated as of
July 15, 2002, among Barneys, Grantor, the other Guarantors, the Priority
Lien Agent and the lenders from time to time party thereto (as such Credit
Agreement may be amended, restated, supplemented or otherwise modified from time
to time, including, without limitation, by the restated credit agreement dated
as of the date hereof.
"Eligible Receivables" shall have the meaning specified in
the Credit Agreement.
"Intellectual Property" means all trademarks, service
marks, designs, logos, trade dress, trade names, corporate names, together with
all translations, derivations and combinations thereof and including all
goodwill associated thereunder and all applications, registrations and renewals
in connection therewith, copyrights (whether registered or not), technology,
know-how and processes, computer software and all other proprietary rights
existing anywhere throughout the world.
"Intellectual Property Security Agreement" means the
Intellectual Property Security Agreement, dated as of the date hereof, among
Barneys, Barneys New York, Inc., the other Subsidiaries of Barneys party thereto
and the Collateral Agent.
"Intercredtor Agreement" means the Intercreditor Agreement,
dated as of the date hereof, among the Collateral Agent and the Priority
Lien Agent as acknowledged by Grantor, Barneys and the other guarantors named in
the Indenture (including, without limitation, the provisions of Article 12 of
the Indenture incorporated by reference therein).
"Secured Party" means each of the Collateral Agent, the
Trustee, the Holders of any Note and the holders of any other Liabilities.
"Senior Lien Satisfaction Date" means the first date on
which there is a Discharge of Priority Lien Obligations.
2. Grant of Security Interest. To secure the prompt and
complete payment, observance and performance of all the Liabilities, the Grantor
hereby grants (subject as set forth below) to the Collateral Agent for the
benefit of the Secured Parties, a security interest in all of the Grantor's
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rights, title and interests in and to the following property, whether now owned
or existing or hereafter arising or acquired and wheresoever located (the
"Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Documents;
(iv) all General Intangibles (including payment
intangibles and Software);
(v) all Goods (including Inventory, Equipment and
Fixtures);
(vi) all Instruments;
(vii) all Investment Property;
(viii) all Deposit Accounts of the Grantor, including all
Blocked Accounts, and all other bank accounts and all deposits
therein;
(ix) all money, cash or cash equivalents of the Grantor;
(x) all Supporting Obligations and Letter-of-Credit Rights
of the Grantor;
(xi) commercial tort claims; and
(xii) to the extent not otherwise included, all Proceeds,
tort claims, insurance claims and other rights to payments not
otherwise included in the foregoing and products of the foregoing and
all accessions to, substitutions and replacements for, and rents and
profits of, each of the foregoing.
This Security Agreement shall not create or be filed as a lien against the land,
building and/or improvements to the real property in which the goods, machinery,
equipment, appliances or other personal property covered hereby are to be
located or installed.
3. Continuing Liability. The Grantor hereby expressly
agrees that, notwithstanding anything set forth herein to the contrary, the
Grantor shall remain solely responsible under each contract, agreement, interest
or obligation as to which a Lien has been granted to the Collateral Agent
hereunder for the observance and performance of all of the conditions and
obligations to be observed and performed by the Grantor thereunder, all in
accordance with and pursuant to the terms and provisions thereof, and the
exercise by the Collateral Agent or any Holder of any rights under this Security
Agreement, the Indenture or any other Security Document shall not release the
Grantor from any of the Grantor's duties or obligations hereunder and under each
such contract, agreement, interest or obligation. Neither the Collateral Agent
nor any Holder shall have any duty, responsibility, obligation or liability
under any such contract, agreement, interest or obligation by reason of or
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arising out of this Security Agreement or the assignment thereof by the Grantor
to the Collateral Agent or the granting by the Grantor to the Collateral Agent
of a Lien thereon or the receipt by the Collateral Agent or any Holder of any
payment relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall the Collateral Agent nor any Holder be required or
obligated (nor to the extent prohibited by the terms of such contract,
agreement, interest or obligation or applicable law, rule or regulation, shall
the Collateral Agent or any Holder be permitted), in any manner, to (a) perform
or fulfill any of the obligations of the Grantor thereunder or pursuant thereto,
(b) make any payment, or make any inquiry as to the nature or the sufficiency of
any payment received by the Grantor or the sufficiency of any performance by any
party under any such contract, agreement, interest or obligation, or (c) present
or file any claim, or take any action to collect or enforce any performance or
payment of any amounts which may have been assigned to the Grantor, on which the
Grantor has been granted a Lien to which the Grantor may be entitled at any time
or times.
4. Representations, Warranties and Covenants. The Grantor
hereby represents, warrants and covenants that as of the date of the execution
of this Security Agreement, and until the termination of this Security Agreement
pursuant to Section 14 below:
(a) No effective security agreement, financing statement,
equivalent security or Lien instrument or continuation statement covering all or
any part of the Collateral is on file or of record in any public office, except
such as may have been filed (i) by the Grantor in favor of the Collateral Agent
pursuant to this Security Agreement or the other Security Documents, and (ii) in
connection with any Permitted Liens.
(b) All of the Equipment and Inventory (other than
Inventory and Equipment sold in accordance with the terms of the Indenture,
Equipment being repaired or serviced, Inventory in transit or in the possession
and control of subcontractors of the Grantor or any other Person for processing
and vehicles) are located at the places specified in Schedule 1 attached hereto
as amended from time to time pursuant to Section 5(b) below and such location is
an owned, leased or bailment location as specified in Schedule 1 attached
hereto. The Grantor's name as it appears in official filings in the State of
Delaware, the type of entity of the Grantor (including corporation, partnership,
limited partnership or limited liability company), organizational identification
number issued by the State of Delaware or a statement that no such number has
been issued, the Grantor's state of organization or incorporation, and the place
where the Grantor's books and records concerning the Collateral are currently
kept are set forth in Schedule 2 attached hereto and made a part hereof, and the
Grantor will not change such principal place of business or chief executive
office or remove such records without providing the Collateral Agent with at
least thirty (30) days' prior written notice of such change. The Grantor will
hold and preserve such records and Chattel Paper and will permit representatives
of the Collateral Agent, upon reasonable notice and at times during normal
business hours to inspect and make abstracts from such records and Chattel
Paper.
(c) The Grantor has exclusive possession and control of the
Equipment and Inventory except as permitted under the Indenture.
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(d) The Grantor is the legal and beneficial owner of the
Collateral in which it has rights free and clear of all Liens, except as
Permitted Liens. The Grantor has not, during the five (5) years preceding the
date hereof, been known as or used any other corporate or fictitious name,
except as disclosed on Schedule 3 hereto, nor acquired all or substantially all
the assets, capital stock or operating unit of any Person, except as disclosed
on Schedule 3 hereto and each predecessor in interest of the Grantor during the
five (5) years preceding the Closing Date is disclosed on Schedule 3 hereto.
(e) This Security Agreement creates in favor of the
Collateral Agent a legal, valid and enforceable security interest in the
Collateral, securing the payment of the Liabilities. When financing statements
have been filed in the appropriate offices in the Grantor's jurisdiction of
incorporation or organization listed on Schedule 2 hereto, the Collateral Agent
will have a fully perfected Lien on the Collateral, subject in terms of priority
solely to the Priority Lien and Permitted Liens that are prior to the security
interest hereunder by operation of law, to the extent such Lien may be perfected
by Uniform Commercial Code filings.
(f) Except for the consent of the Priority Lien Agent which
has been obtained, no consent of any Person 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 either for (i) the perfection
or maintenance of the security interest created hereby, except for the Uniform
Commercial Code filings referred to in clause (e) (and except for the filings
with the United States Patent and Trademark Office and except for, in the case
of motor vehicles, certificates of title which have been issued, which note the
Collateral Agent's security interest or (ii) for the exercise by the Collateral
Agent of its rights provided for in this Security Agreement or the remedies in
respect of the Collateral pursuant to this Security Agreement.
(g) The Inventory produced by the Grantor has been produced
in compliance in all material respects with all requirements of the Fair Labor
Standards Act.
(h) Schedule 4 hereto lists all Instruments,
Letter-of-Credit Rights and Chattel Paper of the Grantor.
(i) Schedule 5 hereto sets forth a complete, true and
accurate list of all registered Intellectual Property in which the Grantor has
interests in or hold title to. This Security Agreement is effective to create a
valid and continuing Lien on and, upon filing of the Intellectual Property
Security Agreement with the United States Patent and Trademark Office and the
United States Copyright Office and the filing of financing statements in the
appropriate offices in State of Delaware, perfected Liens in favor of the
Collateral Agent on the Grantor's registered Intellectual Property and such
perfected Liens are enforceable as such as against any and all creditors of and
purchasers from the Grantor. Upon filing of the Intellectual Property Security
Agreement with the United States Copyright Office and the United States Patent
and Trademark Office and the filing of appropriate financing statements in the
State of Delaware, all action necessary or desirable to protect and perfect the
Collateral Agent's Lien on the Grantor's Intellectual Property shall have been
duly taken.
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(j) The Grantor will deliver to the Collateral Agent a copy
of any Collateral Report delivered to the Priority Lien Agent under the Credit
Agreement. With respect to the Eligible Receivables, except as specifically
disclosed in the most recent such Collateral Report, (i) they represent bona
fide sales of Inventory or rendering of services to account debtors in the
ordinary course of the Grantor's business and are not evidenced by a judgment,
Instrument or Chattel Paper; (ii) there are no setoffs, claims or disputes
existing or asserted with respect thereto and no Grantor has made any agreement
with any account debtor for any extension of time for the payment thereof, any
compromise or settlement for less than the full amount thereof, any release of
any account debtor from liability therefor, or any deduction therefrom except a
discount or allowance allowed by the Grantor in the ordinary course of its
business for prompt payment and disclosed to the Collateral Agent; (iii) to the
Grantor's knowledge, there are no facts, events or occurrences which in any way
impair the validity or enforceability thereof or could reasonably be expected to
reduce the amount payable thereunder as shown on the Grantor's books and records
and any invoices, statements and Collateral Reports delivered to the Collateral
Agent with respect thereto; (iv) no Grantor has received any notice of
proceedings or actions which are threatened or pending against any account
debtor which might result in any adverse change in such account debtor's
financial condition; and (v) the Grantor has no knowledge that any account
debtor is unable generally to pay its debts as they become due. Further with
respect to the Eligible Receivables, (x) the amounts shown on all invoices,
statements and Collateral Reports which may be delivered to the Collateral Agent
with respect thereto are actually and absolutely owing to the Grantor as
indicated thereon and are not in any way contingent; and (y) to the Grantor's
knowledge, all account debtors have the capacity to contract.
5. Covenants. The Grantor covenants and agrees with the
Collateral Agent that from and after the date of this Security Agreement and
until the termination of this Security Agreement pursuant to Section 15 below:
(a) At any time and from time to time, upon the Collateral
Agent's written request and at the expense of the Grantor, the Grantor will
promptly and duly execute and deliver any and all such further instruments and
documents and take such further action as the Collateral Agent reasonably may
deem desirable in order to perfect and protect any Lien granted or purported to
be granted hereby or to enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to the Collateral. Without limiting
the generality of the foregoing, the Grantor will: (i) upon the occurrence and
during the continuance of an Event of Default, at the request of the Collateral
Agent, xxxx conspicuously each item of Chattel Paper included in the Collateral
and each related contract and each of its records pertaining to the Collateral,
with a legend, in form and substance satisfactory to the Collateral Agent,
indicating that such document, Chattel Paper, related contract or Collateral is
subject to the security interest granted hereby; (ii) if any Collateral shall be
evidenced by a promissory note or other instrument (other than checks or drafts
received in the ordinary course of the Grantor's business), deliver to the
Collateral Agent, and pledge to the Collateral Agent hereunder such note or
instrument duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to the Collateral
Agent; provided, however, that prior to the Senior Lien Satisfaction Date, such
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delivery shall be made to the Priority Lien Agent for the benefit of the
Collateral Agent; and (iii) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices as the
Collateral Agent may request, as may be necessary or desirable, in order to
perfect and preserve the security interest granted or purported to be granted
hereby. The Grantor hereby authorizes the Collateral Agent to file any such
financing or continuation statements without the signature of the Grantor to the
extent permitted by applicable law. The Grantor hereby agrees that a carbon,
photographic, photostatic or other reproduction of this Security Agreement or of
a financing statement is sufficient as a financing statement to the extent
permitted by applicable law.
(b) The Grantor shall keep the Equipment and Inventory
(other than Inventory and Equipment sold in accordance with the terms of the
Indenture, Equipment being repaired or serviced, Inventory in transit or in the
possession and control of subcontractors of the Grantor and vehicles) at the
places specified in Schedule 1 hereto and deliver written notice to the
Collateral Agent at least 30 days prior to establishing any other location at
which it reasonably expects to maintain Inventory and/or Equipment (it being
understood and agreed that all action required by Section 5(a) hereof shall have
been taken in the relevant jurisdiction with respect to all such Equipment
and/or Inventory prior to the establishment of any such location). Upon the
establishment of any such location, and after notice thereof to the Collateral
Agent as required in the preceding sentence, Schedule 1 hereto shall be deemed
amended to add such location thereto without further action by the Collateral
Agent or the Grantor and the Grantor hereby authorizes the Collateral Agent to
substitute a new Schedule 1 hereto to reflect such additional location(s).
(c) The Grantor will keep and maintain at the Grantor's own
cost and expense satisfactory and complete records of the Collateral in a manner
reasonably acceptable to the Collateral Agent, including, without limitation, a
record of all payments received and all credits granted with respect to such
Collateral and a record of the Collateral Agent's security interest in the
Collateral. Upon the occurrence and during the continuance of an Event of
Default, the Grantor shall, for the Collateral Agent's further security, deliver
and turn over to the Collateral Agent or the Collateral Agent's designated
representatives at any time upon three (3) Business Days' notice from the
Collateral Agent or the Collateral Agent's designated representative, copies of
any such books and records (including, without limitation, any and all computer
tapes, programs and source codes relating to the Collateral or any part or parts
thereof).
(d) In any suit, proceeding or action brought by the
Collateral Agent under any Account comprising part of the Collateral, the
Grantor will save, indemnify and keep the Collateral Agent and each Holder
harmless from and against all expense (including reasonable attorneys' fees and
expenses), loss or damages suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the obligor
thereunder, arising out of a breach by the Grantor of any obligation or arising
out of any other agreement, indebtedness or liability at any time owing to or in
favor of such obligor or its successors from the Grantor, and all such
obligations of the Grantor shall be and shall remain enforceable against and
only against the Grantor and shall not be enforceable against the Collateral
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Agent or any Holder; provided, however, the Grantor shall have no obligation to
the Collateral Agent or any Holder with respect to the matters indemnified
pursuant to this subsection (d) resulting from the willful misconduct or gross
negligence of the Collateral Agent or such Holder as determined in a final
non-appealable judgment by a court of competent jurisdiction.
(e) The Grantor will not create, permit or suffer to exist,
and will defend the Collateral against and take such other action as is
necessary to remove, any Lien on such Collateral, other than Permitted Liens,
and will defend the right, title and interest of the Collateral Agent in and to
the Grantor's rights to such Collateral, including, without limitation, the
proceeds and products thereof, against the claims and demands of all Persons
whatsoever other than claims secured by Permitted Liens.
(f) Upon the occurrence and during the continuance of an
Event of Default, and after the Senior Lien Satisfaction Date, the Grantor will
not, without the Collateral Agent's prior written consent, except in the
ordinary course of business and for amounts which are not material to the
Barneys Group, taken as a whole in the aggregate, (i) grant any extension of the
time of payment of any of the Collateral or compromise, compound or settle the
same for less than the full amount thereof; (ii) release, wholly or partly, any
Person liable for the payment thereof; or (iii) allow any credit or discount
whatsoever thereon other than trade discounts granted in the ordinary course of
business.
(g) The Grantor will advise the Collateral Agent promptly,
in reasonable detail, of (i) any material Lien or claim made by or asserted
against any or all of the Collateral, and (ii) the occurrence of any other event
which would have a material adverse effect on the aggregate value of the
Collateral or on the Liens with respect to such Collateral created hereunder.
(h) The Grantor shall obtain or use its commercially
reasonable efforts to obtain (i) waivers or subordinations of Liens from
landlords and mortgagees, and (ii) signed acknowledgements of the Collateral
Agent's Liens from bailees having possession of the Grantor's Goods that,
subject to the Priority Liens, they hold for the benefit of the Collateral
Agent.
(i) Whenever the Grantor is required under the Credit
Agreement, and such requirement has not been waived by the Priority Lien Agent,
to obtain authenticated control letters from each issuer of uncertificated
securities, securities intermediary, or commodities intermediary issuing or
holding any financial assets or commodities the Grantor shall also obtain
authenticated control letters from such Persons, in form and substance
reasonably satisfactory to the Collateral Agent, for the benefit of the
Collateral Agent and establishing the Collateral Agent's control (subject to the
Priority Liens) over the related uncertificated securities, securities accounts
or commodities accounts. After the Senior Lien Satisfaction Date, the Grantor
will deliver any such control letters as may be reasonably requested by the
Collateral Agent.
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(j) The Grantor shall use its commercially reasonable
efforts to obtain a Collateral Account Control Agreement with each bank or
financial institution holding a Deposit Account for the Grantor.
(k) Whenever the Grantor shall deliver a tri-party
agreement with the Priority Lien Agent and the issuer and/or confirmation bank
with respect to Letter of Credit Rights, the Grantor shall also deliver
substantially the same agreement assigning, subject to the Priority Liens, such
Letter-of-Credit Rights to the Collateral Agent. If at any time after the Senior
Lien Satisfaction Date the Grantor is or becomes the beneficiary of a letter of
credit, it shall promptly, and in any event within two (2) Business Days after
becoming a beneficiary, notify the Collateral Agent thereof and, upon the
request of the Collateral Agent, use commercially reasonable efforts to enter
into a tri-party agreement with the Collateral Agent and the issuer and/or
confirmation bank with respect to Letter-of-Credit Rights assigning such
Letter-of-Credit Rights to the Collateral Agent and directing all payments
thereunder to a deposit account specified by the Collateral Agent, all in form
and substance reasonably satisfactory to the Collateral Agent.
(l) The Grantor shall take all steps necessary to grant the
Collateral Agent control (subject to the Priority Liens) of all electronic
chattel paper in accordance with the Uniform Commercial Code and all
"transferable records" as defined in each of the Uniform Electronic Transactions
Act and the Electronic Signatures in Global and National Commerce Act.
(m) The Grantor hereby irrevocably authorizes the
Collateral Agent at any time and from time to time to file in any filing office
in any Uniform Commercial Code jurisdiction any initial financing statements and
amendments thereto that (i) indicate the Collateral (A) as all assets of the
Grantor or words of similar effect, regardless of whether any particular asset
comprised in the Collateral falls within the scope of Article 9 of the Uniform
Commercial Code or such jurisdiction, or (B) as being of an equal or lesser
scope or with greater detail, and (ii) contain any other information required by
part 5 of Article 9 of the Uniform Commercial Code for the sufficiency or filing
office acceptance of any financing statement or amendment, including whether the
Grantor is an organization, the type of organization and any organization
identification number issued to the Grantor. The Grantor agrees to furnish any
such information to the Collateral Agent promptly upon request. The Grantor also
ratifies its authorization for the Collateral Agent to have filed in any Uniform
Commercial Code jurisdiction any initial financing statements or amendments
thereto if filed prior to the date hereof.
(n) The Grantor shall promptly, and in any event within two
(2) Business Days after the same is acquired by it, notify the Collateral Agent
of any commercial tort claim (as defined in the Uniform Commercial Code)
acquired by it and unless otherwise consented by the Collateral Agent, the
Grantor shall enter into a supplement to this Security Agreement, granting to
the Collateral Agent a Lien in such commercial tort claim.
(o) The Grantor shall notify the Collateral Agent
immediately if it knows or has reason to know that any application or
registration relating to any material Intellectual Property (now or hereafter
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existing) may become abandoned or dedicated to the public, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court) regarding the
Grantor's ownership of any material Intellectual Property, its right to register
the same, or to keep and maintain the same. In no event shall the Grantor,
either itself or through any agent, employee, licensee or designee, file an
application for the registration of any Intellectual Property with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency without giving the Collateral Agent written notice
within thirty (30) Business Days thereof, and, upon request of the Collateral
Agent, Grantor shall execute and deliver any and all agreements and as the
Collateral Agent may request to evidence the Collateral Agent's Lien on such
Intellectual Property, and the General Intangibles of the Grantor relating
thereto or represented thereby. The Grantor shall take all actions necessary or
requested by the Collateral Agent to maintain and pursue each application, to
obtain the relevant registration and to maintain the registration of each of the
Intellectual Property (now or hereafter existing), including the filing of
applications for renewal, affidavits of use, affidavits of noncontestability and
opposition and interference and cancellation proceedings, unless the applicable
Grantor shall determine that such Intellectual Property is not material to the
conduct of its business. In the event that any of the Intellectual Property
constituting Collateral is infringed upon, or misappropriated or diluted by a
third party, the Grantor shall comply with Section 5(o) of this Security
Agreement. The Grantor shall, unless the Grantor shall reasonably determine that
such Intellectual Property constituting Collateral is in no way material to the
conduct of its business or operations, promptly pursue all possible remedies for
such for infringement, misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation or dilution, and shall take such
other actions as the Collateral Agent shall deem appropriate under the
circumstances to protect such Intellectual Property constituting Collateral.
(p) The Grantor will, if so requested by the Collateral
Agent, furnish to the Collateral Agent, as often as the Collateral Agent
requests, statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Collateral Agent may reasonably request, all in such detail as the Collateral
Agent may reasonably specify.
(q) The Grantor will advise the Collateral Agent promptly,
in reasonable detail, (i) of any Lien (other than Permitted Liens) or claim made
or, to its knowledge, asserted against any of the Collateral, and (ii) of the
occurrence of any other event which would have a material adverse effect on the
aggregate value of the Collateral or on the Liens created hereunder or under any
other Security Document.
(r) Without limiting the prohibitions on mergers involving
the Grantor contained in the Indenture, the Grantor shall not reincorporate or
reorganize itself under the laws of any jurisdiction other than the jurisdiction
in which it is incorporated or organized as of the date hereof without the prior
written consent of the Collateral Agent.
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(s) The Grantor acknowledges that it is not authorized to
file any financing statement or amendment or termination statement with respect
to any financing statement filed pursuant to this Security Agreement or any of
the other Security Documents without the prior written consent of the Collateral
Agent and agrees that it will not do so without the prior written consent of the
Collateral Agent, subject to the Grantor's rights under Section 9-509(d)(2) of
the Uniform Commercial Code.
6. Collections. Except as otherwise provided in this
Section 6, the Grantor shall continue to collect, at its own expense, all
amounts due or to become due the Grantor under the Accounts. Subject to the
Intercreditor Agreement, in connection with such collections, the Grantor may
take (and, after the occurrence and during the continuation of an Event of
Default, at the Collateral Agent's direction, must take) such action as the
Grantor or, after the occurrence and during the continuation an Event of
Default, the Collateral Agent may deem necessary or advisable to enforce
collection of the Accounts; provided, however, that the Collateral Agent shall
have the right at any time, upon the occurrence and during the continuance of an
Event of Default, to require the Grantor to notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to the Collateral
Agent and to direct such account debtors or obligors to make payment of all
amounts due or to become due to the Grantor thereunder directly to the
Collateral Agent and, upon such notification and at the expense of the Grantor,
to enforce collection of any such Accounts, and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent as the
Grantor might have done. After receipt by the Grantor of the notice from the
Collateral Agent referred to in the proviso to the preceding sentence, all
amounts and proceeds (including instruments) received by the Grantor in respect
of the Accounts shall be received in trust for the benefit of the Holders
hereunder, shall be segregated from other funds of the Grantor and shall be
forthwith paid over to the Collateral Agent in the same form as so received
(with any necessary endorsement) to be applied to the Guaranteed Obligations in
accordance with the Indenture. If an Event of Default shall have occurred and be
continuing, the Collateral Agent may at any time in the Collateral Agent's own
name, in the name of a nominee of the Collateral Agent or in the name of the
Grantor communicate (by mail, telephone, facsimile or otherwise) with account
debtors, parties to contracts and obligors in respect of Instruments to verify
with such Persons, to the Collateral Agent's satisfaction, the existence, amount
terms of, and any other matter relating to, Accounts, payment intangibles,
Instruments or Chattel Paper. If an Event of Default shall have occurred and be
continuing, the Grantor, at its own expense, shall cause the independent
certified public accountants then engaged by the Grantor or such other certified
public accountants reasonably acceptable to the Collateral Agent to prepare and
deliver to the Collateral Agent and each Holder at any time and from time to
time promptly upon the Collateral Agent's request the following reports with
respect to the Grantor: (i) a reconciliation of all Accounts; (ii) an aging of
all Accounts; (iii) trial balances; and (iv) a test verification of such
Accounts as the Collateral Agent may request. The Grantor, at its own expense,
shall deliver to the Collateral Agent the results of each physical verification,
if any, which the Grantor may in its discretion have made, or caused any other
Person to have made on its behalf, of all or any portion of its Inventory.
7. Remedies, Application of Proceeds, Rights upon Event of
Default.(a) (a) Upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may, subject to the Intercreditor Agreement,
exercise in respect of the Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it, all the rights and
11
remedies provided for in the Indenture and all the rights and remedies of a
secured party under the Uniform Commercial Code, and all other applicable law as
in effect in any relevant jurisdiction. In addition, the Collateral Agent may,
subject to the Intercreditor Agreement, also:
(i) require the Grantor to, and the Grantor hereby agrees
that it will at its expense and upon request of the Collateral Agent, promptly
assemble all, or such part, of the Collateral as directed by the Collateral
Agent and make such Collateral available to the Collateral Agent at a place
designated by the Collateral Agent, which place shall be reasonably convenient
to the Collateral Agent, whether at the premises of the Grantor or otherwise;
(ii) enter, with or without process of law and without
breach of the peace, any premises where any of the Collateral or the books and
records of the Grantor related thereto are or may be located and, without charge
or liability to the Collateral Agent, seize and remove such Collateral and such
books and records from such premises, or remain upon such premises and use the
same for the purpose of enforcing any and all rights and remedies of the
Collateral Agent under this Security Agreement, the Indenture or any of the
other Security Documents; and
(iii) without notice, except as specified below, sell,
lease, assign, grant an option or options to purchase or otherwise dispose of
all or any part of the Collateral in one or more parcels, at public or private
sale or sales, at any exchange, broker's board or at any of the Collateral
Agent's offices or elsewhere, at such prices as the Collateral Agent may deem
best, for cash, on credit or for future delivery, and upon such other terms as
the Collateral Agent may deem commercially reasonable; provided, however, that
the Grantor shall not be credited with the net proceeds of any such credit sale,
future delivery or lease of the Collateral until the cash proceeds thereof are
actually received by the Collateral Agent. The Grantor agrees that, to the
extent notice of sale shall be required by law, at least ten (10) Business Days'
notice, or such longer period as may be required by law, to the Grantor 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. No notification required
by law need be given to the Grantor if the Grantor has signed, after the
occurrence of an Event of Default, a statement renouncing any right to
notification of sale or other intended disposition. The Collateral Agent shall
not be obligated to make any sale of any of the Collateral regardless of notice
of sale having been given. The Collateral Agent 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. The Collateral Agent and any Holder shall
have the right upon any such public sale or sales and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in the
Grantor, which right or equity is hereby expressly waived and released. In the
event of a sale of any Collateral, or any part thereof, to a Holder or the
Collateral Agent upon the occurrence and during the continuance of an Event of
Default, such Holder or the Collateral Agent shall not deduct or offset from any
part of the purchase price to be paid therefor any indebtedness owing to it by
the Grantor. Any and all proceeds received by the Collateral Agent with respect
to any sale of, collection from or other realization upon all or any part of the
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Collateral, whether consisting of monies, checks, notes, drafts, bills of
exchange, money orders or commercial paper of any kind whatsoever, shall be held
by the Collateral Agent and distributed by the Collateral Agent in accordance
with the Indenture and the Grantor shall remain liable for any deficiency
following the sale of the Collateral. Subject to the terms of any applicable
license agreement to which the Grantor is a party, the Collateral Agent is
hereby granted an irrevocable license or other right to use, without charge, the
Grantor's labels, copyrights, patents, rights of use of any name, trade names,
general intangibles, trademarks and advertising matter, or any property of a
similar nature, in completing production of, advertising for sale and selling
any Collateral.
(b) To the extent permitted by applicable law, the Grantor
waives all claims, damages and demands against the Collateral Agent or any
Holder arising out of the repossession, retention or sale of the Collateral, or
any part or parts thereof, except any such claims, damages and awards arising
out of the gross negligence or willful misconduct of the Collateral Agent.
(c) The Grantor recognizes that in the event the Grantor
fails to perform, observe or discharge any of its obligations or liabilities
under this Security Agreement, no remedy at law will provide adequate relief to
the Collateral Agent and the Collateral Agent shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
(d) The rights and remedies provided under this Security
Agreement are cumulative and may be exercised singly or concurrently, and are
not exclusive of any rights and remedies provided by law or equity.
8. The Collateral Agent May Perform. If the Grantor fails
to perform any agreement contained herein, the Collateral Agent, upon written
notice to the Grantor if practicable, may itself perform, or cause performance
of, such agreement, and the expenses of the Collateral Agent incurred in
connection therewith shall constitute a Guaranteed Obligation payable by the
Grantor on demand.
9. The Collateral Agent's Duty of Care.
(a) The Collateral Agent shall not be liable for any acts,
omissions, errors of judgment or mistakes of fact or law including, without
limitation, acts, omissions, errors or mistakes with respect to the Collateral,
except for those arising out of or in connection with the Collateral Agent's (i)
gross negligence or willful misconduct, or (ii) failure to use reasonable care
with respect to the safe custody of the Collateral in the Collateral Agent's
possession. Without limiting the generality of the foregoing, the Collateral
Agent shall be under no obligation to take any steps necessary to preserve
rights in the Collateral against any other parties but may do so at its option.
All expenses incurred in connection therewith shall be for the sole account of
the Grantor, and shall constitute part of the Liabilities secured hereby.
(b) No provision of this Security Agreement shall require
the Collateral Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
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or liability is not reasonably assured to it. The Collateral Agent shall have no
duties or responsibilities except those expressly set forth in the Security
Documents, the Intercreditor Agreement or the Indenture. The Collateral Agent
shall not be liable for any delay or failure to act as may be required hereunder
when such delay or failure is due to any act of God, interruption or other
circumstances beyond its control provided it exercises such diligence as the
circumstances may reasonably require. The Collateral Agent shall be entitled to
rely on any communication, instrument, paper or other document reasonably
believed by it to be genuine and correct and to have been signed or sent by the
proper person. The Collateral Agent may consult with, and obtain advice from,
legal counsel as to the construction of any of the provisions of this Agreement,
and shall incur no liability in acting in good faith in accordance with the
reasonable advice of such counsel.
(c) The Collateral Agent shall not be deemed to have notice
of any Event of Default unless an officer of the Collateral Agent has actual
knowledge thereof or unless written notice of any such Event of Default is
received by the Collateral Agent at the office of the Collateral Agent specified
in or pursuant to Section 14.02 of the Indenture.
10. Additional Provisions Relating to the Collateral Agent.
(a) Any corporation, bank, trust company or association
into which the Collateral Agent may be merged or converted or with which it may
be consolidated, or any corporation, bank, trust company or association
resulting from any merger, conversion or consolidation to which the Collateral
Agent shall be a party, or any corporation, bank, trust company or association
succeeding to all or substantially all the corporate trust business of the
Collateral Agent, shall be the successor of the Collateral Agent hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
Any resignation or removal of the Collateral Agent as
Trustee under the Indenture in accordance with the provisions thereof shall
result in a resignation or removal of the Collateral Agent hereunder. The
provisions of Section 7.08 of the Indenture with respect to replacement of the
Trustee shall be applicable to the replacement of the Collateral Agent.
(b) At any time or times, for the purpose of meeting any
legal requirements of any jurisdiction in which any of the Collateral may at the
time be located, the Collateral Agent shall have the power to appoint any Person
or Persons either to act as co-collateral agent, or co-collateral agents,
jointly with the Collateral Agent of all or any part of the Collateral or to act
as separate collateral agent or separate collateral agents of all or any part of
the Collateral and to vest in such Person or Persons, in such capacity, such
title to the Collateral or any part thereof, and such rights, powers, duties or
obligations as the Collateral Agent may consider necessary or desirable, subject
to the other provisions of this Section 10.
(c) Unless otherwise provided in the instrument appointing
such co-collateral agent or separate collateral agent, every co-collateral agent
or separate collateral agent shall, to the extent permitted by law, be appointed
subject to the following terms namely:
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(i) All rights, power, duties and obligations under this
Security Agreement conferred upon the Collateral Agent in respect of the
custody, control or management of the Collateral, shall be exercised solely by
the Collateral Agent;
(ii) All rights, powers, duties and obligations conferred
or imposed upon the collateral agents shall be conferred or imposed upon and
exercised or performed by the Collateral Agent, or by the Collateral Agent and
such co-collateral agent or co-collateral agents, or separate collateral agent
or separate collateral agents jointly, except to the extent that, under the law
of any jurisdiction in which any particular act or acts are to be performed, the
Collateral Agent shall be incompetent or unqualified to perform such act or
acts, in which event such act or acts shall be performed by such co-collateral
agent or co-collateral agents or separate collateral agent or separate
collateral agents;
(iii) Any request in writing by the Collateral Agent to any
co-collateral agent or separate collateral agent to take or to refrain from
taking any action hereunder shall be sufficient warrant for the taking, or the
refraining from taking, of such action by such co-collateral agent or separate
collateral agent;
(iv) Any co-collateral agent or separate collateral agent
to the extent permitted by law may delegate to the Collateral Agent the exercise
of any right, power, duty or obligation, discretionary or otherwise;
(v) The Collateral Agent at any time, by an instrument in
writing, may accept the resignation of, or remove, any co-collateral agent or
separate collateral agent appointed under this Section 10. As successor to any
co-collateral agent or separate collateral agent so resigned or removed may be
appointed in the manner provided in this Section 10.
(vi) No collateral agent hereunder shall be personally
liable by reason of any act or omission of any other collateral agent hereunder;
(vii) Any demand, request, direction, appointment, removal,
notice, consent, waiver or other action in writing delivered to the Collateral
Agent shall be deemed to have been delivered to each such co-collateral agent or
separate collateral agent; and
(viii) Any Collateral received by any such co-collateral
agent or separate collateral agent hereunder shall forthwith, so far as may be
permitted by law, be turned over to the Collateral Agent to be held pursuant to
the terms hereof.
(d) Upon the acceptance in writing of such appointment by
any such co-collateral agent or separate collateral agent, it or he shall be
vested with the estate, right, title and interest in the Collateral, or any
portion thereof, and with such rights, powers, duties, trusts or obligations,
jointly or separately with the Collateral Agent, all as shall be specified in
the instrument of appointment, subject to all the terms hereof.
(e) In case any co-collateral agent or separate collateral
agent shall become incapable of acting, resign or be removed, the right, title
and interest in the collateral and all rights, powers, duties and obligations of
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said co-collateral agent or separate collateral agent shall, so far as permitted
by law, vest in and be exercised by the Collateral Agent unless and until a
successor co-collateral agent or separate collateral agent shall be appointed
pursuant to this Section 10.
11. Marshalling, Payments Set Aside; Collateral Agent
Appointed Attorney-in-Fact. The Collateral Agent shall be under no obligation to
marshal any assets in favor of the Grantor or against or in payment of any or
all of the Liabilities. To the extent that the Grantor makes a payment or
payments to the Collateral Agent or the Collateral Agent receives any payment or
proceeds of the Collateral for the benefit of the Holders, which payment(s) or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any party under any bankruptcy law, state or federal law, common law
or equitable cause, then, to the extent of such payment or proceeds received,
the Liabilities or any part thereof intended to be satisfied shall be revived
and continue in full force and effect, as if such payment or proceeds had not
been received by the Collateral Agent.
The Grantor agrees, upon the request of the Collateral
Agent and promptly following such request, to take any action and execute any
instrument which the Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Security Agreement.
On the Closing Date, the Grantor shall execute and deliver
to the Collateral Agent a power of attorney (the "Power of Attorney")
substantially in the form attached hereto as Exhibit A. The power of attorney
granted pursuant to the Power of Attorney is a power coupled with an interest
and shall be irrevocable until the payment in full of the Liabilities. The
powers conferred on the Collateral Agent, for the benefit of the Holders, under
the Power of Attorney are solely to protect the Collateral Agent's interests
(for the benefit of the Holders) in the Collateral and shall not impose any duty
upon the Collateral Agent to exercise any such powers. The Collateral Agent
agrees that (a) except for the powers granted in clause (h) of the Power of
Attorney, it shall not exercise any power or authority granted under the Power
of Attorney unless an Event of Default has occurred and is continuing, and (b)
the Collateral Agent shall account for any moneys received by the Collateral
Agent in respect of any foreclosure on or disposition of Collateral pursuant to
the Power of Attorney provided that the Collateral Agent shall not have any duty
as to any Collateral, and the Collateral Agent shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers.
NONE OF the Collateral Agent OR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO THE GRANTOR FOR ANY ACT OR
FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF
DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY
PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
12. Grant of License to Use Intellectual Property
Constituting Collateral. For the purpose of enabling the Collateral Agent to
exercise rights and remedies under Section 7 hereof (including, without limiting
the terms of Section 7 hereof, in order to take possession of, hold, preserve,
process, assemble, prepare for sale, market for sale, sell or otherwise dispose
16
of Collateral), the Grantor hereby grants to the Collateral Agent, for the
benefit of the Holders, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to the Grantor) to use, license
or sublicense any Intellectual Property now owned or hereafter acquired by the
Grantor, and wherever the same may be located, and including in such license
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof, unless prohibited by applicable law. The Collateral Agent will not
exercise the rights granted in this Section 11 until such time as the Collateral
Agent shall be lawfully entitled to exercise the rights and remedies under
Section 7 hereof.
13. Severability. If any provision of this Security
Agreement is held to be prohibited or unenforceable in any jurisdiction the
substantive laws of which are held to be applicable hereto, such prohibition or
unenforceability shall not affect the validity or enforceability of the
remaining provisions hereof and shall not invalidate or render unenforceable
such provision in any other jurisdiction.
14. Amendments, Waivers and Consents. None of the terms or
provisions of this Security Agreement may be waived, altered, modified or
amended, and no consent to any departure by the Grantor herefrom shall be
effective, except by or pursuant to an instrument in writing which (i) is duly
executed by the Grantor (if the Grantor is adversely affected by such amendment)
and the Collateral Agent and (ii) complies with the requirements of the
Indenture. Any such waiver shall be valid only to the extent set forth therein.
A waiver by the Collateral Agent of any right or remedy under this Security
Agreement on any one occasion shall not be construed as a waiver of any right or
remedy which the Collateral Agent would otherwise have on any future occasion.
No failure to exercise or delay in exercising any right, power or privilege
under this Security Agreement on the part of the Collateral Agent shall operate
as a waiver thereof; and no single or partial exercise of any right, power or
privilege under this Security Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
15. Binding Effect; Successors and Assigns. This Security
Agreement shall be binding upon the Grantor and its successors and assign(s),
and shall inure to the benefit of the Collateral Agent and the Holders, and
their respective successors and assigns. Nothing set forth herein or in any
other Security Document is intended or shall be construed to give any other
Person any right, remedy or claim under, to or in respect of this Security
Agreement, the Indenture or any other Security Document or any Collateral. The
Grantor's successors shall include, without limitation, a receiver, trustee or
debtor-in-possession of or for the Grantor.
16. Termination of this Security Agreement; Release of
Collateral.(a) The security interest granted by the Grantor under this Security
Agreement shall terminate against all the Collateral upon final payment in full
in cash of the Guaranteed Obligations. Upon such termination and at the written
request of the Grantor or its successors or assigns, and at the cost and expense
of the Grantor or its successors or assigns, the Collateral Agent shall execute
in a timely manner a satisfaction of this Security Agreement and such
instruments, documents or agreements as are necessary or desirable to terminate
and remove of record any documents constituting public notice of this Security
Agreement and the security interests and assignments granted hereunder and shall
assign and transfer, or cause to be assigned and transferred, and shall deliver
17
or cause to be delivered to the Grantor, all property, including all monies,
instruments and securities of the Grantor then held by the Collateral Agent or
any agent, bailee or nominee of the Collateral Agent.
(b) Notwithstanding anything in this Security Agreement to
the contrary, the Grantor may, to the extent permitted by Section 4.10 of the
Indenture, sell, assign, transfer or otherwise dispose of any Collateral. In
addition, the Collateral shall be subject to release in accordance with Section
13.04 of the Indenture (such Collateral and the Collateral referred to in the
immediately preceding sentence being the "Released Collateral"). The Liens under
this Security Agreement shall terminate with respect to the Released Collateral
upon such sale, transfer, assignment, disposition or release and upon the
request of the Grantor, the Collateral Agent shall execute and deliver such
instrument or document as may be necessary to release the Liens granted
hereunder; provided, however, that (i) the Collateral Agent shall not be
required to execute any such documents on terms which, in the Collateral Agent's
opinion, would expose the Collateral Agent or any Holder to liability or create
any obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Liabilities or any Liens on (or obligations of
the Grantor in respect of) all interests retained by the Grantor, including
without limitation, the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
17. Reinstatement. This Security Agreement shall remain in
full force and effect and continue to be effective should any petition be filed
by or against the Grantor for liquidation or reorganization, should the Grantor
become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of the Grantor's assets, and shall continue to be effective or
be reinstated, as the case may be, if at any time payment and performance of the
Liabilities, or any part thereof, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by any obligee of
the Liabilities, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Liabilities shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
18. Collateral Agent's Exercise of Rights and Remedies upon
the Occurrence and During the Continuance of an Event of Default.
Notwithstanding anything set forth herein to the contrary, it is hereby
expressly agreed that, subject to the Intercreditor Agreement, upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent may, and upon the written direction of Holders of a majority in principal
amount at maturity of the then outstanding Notes shall, exercise any of the
rights and remedies provided in this Security Agreement, the Indenture and any
of the other Security Documents.
19. Notices. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served, given or delivered as provided in
Section 14.02 of the Indenture.
20. Section Headings. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
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21. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE
GOVERNED BY, AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS
AND LIENS SUBJECT TO MANDATORY CHOICE OF LAW RULES, WHICH SHALL BE GOVERNED BY
THE LAWS OF SUCH JURISDICTIONS SELECTED IN ACCORDANCE WITH SUCH MANDATORY RULES.
THE COLLATERAL AGENT HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF THE
STATE OR FEDERAL COURTS LOCATED IN XXX XXXX XXXXXX, XXXX XX XXX XXXX, XXX XXXX.
THE GRANTOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED
IN XXX XXXX XXXXXX, XXXX XX XXX XXXX, XXX XXXX SHALL HAVE EXCLUSIVE JURISDICTION
TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE GRANTOR AND THE
COLLATERAL AGENT PERTAINING TO THIS SECURITY AGREEMENT OR TO ANY MATTER ARISING
OUT OF OR RELATING TO THIS Security AGREEMENT; PROVIDED THAT THE COLLATERAL
AGENT AND THE GRANTOR ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO
BE HEARD BY X XXXXX XXXXXXX XXXXXXX XX XXX XXXX XXXXXX; AND, PROVIDED, FURTHER,
NOTHING IN THIS SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE
COLLATERAL AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
GUARANTEED OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR
OF COLLATERAL AGENT. THE GRANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE
GRANTOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. THE GRANTOR HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE GRANTOR AT THE ADDRESS SET FORTH
IN THE INDENTURE AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF ACTUAL RECEIPT THEREOF OR FIVE (5) DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID.
22. Further Indemnification. The Grantor agrees to pay, and
to save the Collateral Agent harmless from, any and all liabilities with respect
to, or resulting from any delay in paying, any and all excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Security Agreement. In no event shall the Collateral Agent be liable for
any special, indirect or consequential loss or damage of any kind whatsoever,
even if the Collateral Agent has been advised of the likelihood of such loss or
damage.
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23. Counterparts. This Security Agreement may be executed
in separate counterparts, each of which shall be deemed to be an original and
all of which taken together shall constitute one and the same agreement.
24. Waiver of Bond. The Grantor waives the posting of any
bond otherwise required of the Collateral Agent in connection with any judicial
process or proceeding to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order entered in favor of
the Collateral Agent, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Security
Agreement or any other agreement or document between the Collateral Agent and
the Grantor.
25. Advice of Counsel. The Grantor represents and warrants
to the Collateral Agent and the Holders that it has discussed this Security
Agreement and, specifically, the provisions of Sections 20, 23, 24 and 27
hereof, with the Grantor's attorneys.
26. Further Assurances. The Grantor agrees that at any time
and from time to time, at the expense of the Grantor, the Grantor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Collateral Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Collateral Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
27. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE
COLLATERAL AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE COLLATERAL AGENT AND THE
GRANTOR ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
SECURITY AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EITHER THE GRANTOR OR THE COLLATERAL AGENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECURITY AGREEMENT WITH ANY COURT
AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
28. No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Security Agreement.
In the event an ambiguity or question of intent or interpretation arises, this
Security Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provisions of this Security
Agreement.
29. Merger. This Security Agreement, taken together with
all the other Security Documents, embodies the entire agreement and
understanding, between the Grantor and the Collateral Agent and supersedes all
prior agreements and understandings, written and oral, relating to the subject
matter hereof.
30. Intercreditor Agreement. Until the Senior Lien
Satisfaction Date, this Security Agreement shall be subject to the terms of the
Intercreditor Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Security Agreement or caused this Security Agreement to be executed and
delivered by their duly authorized officers as of the date first set forth
above.
BARNEYS NEW YORK, INC.
By /s/ XXXXXX X. XXXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
WILMINGTON TRUST COMPANY,
as Collateral Agent
By /s/ XXXXX X. XXXXX
-----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Authorized Signer
