TRADEMARK SECURITY AGREEMENT
THIS TRADEMARK SECURITY AGREEMENT ("Agreement") is made as of February 27,
1997, by and between GFSI, Inc., a Delaware corporation ("Borrower"), and The
First National Bank of Chicago, as contractual representative (the "Agent") for
its benefit and the benefit of the "Holders of Secured Obligations" (as such
term is defined in the "Credit Agreement" defined below).
W I T N E S S E T H:
WHEREAS, Borrower, the Agent and certain financial institutions from time
to time party thereto (the "Lenders") are parties to that certain Credit
Agreement of even date herewith (as the same may hereafter be modified, amended,
restated or supplemented from time to time, the "Credit Agreement"), pursuant to
which the Lenders may, from time to time, extend credit to Borrower; and
WHEREAS, Borrower and the Agent are parties to that certain Security
Agreement of even date herewith (as the same may hereafter be modified, amended,
restated or supplemented from time to time, the "Security Agreement"), pursuant
to which Borrower has granted a security interest in certain of its assets to
the Agent for the benefit of the Agent and the Holders of Secured Obligations;
and
WHEREAS, the Lenders have required Borrower to execute and deliver this
Agreement (i) in order to secure the prompt and complete payment, observance and
performance of all of the "Secured Obligations" (as defined in the Credit
Agreement) and (ii) as a condition precedent to any extension of credit under
the Credit Agreement;
NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrower agrees as follows:
1. Defined Terms.
(a) Unless otherwise defined herein, each capitalized term used herein that
is defined in the Credit Agreement shall have the meaning specified for such
term in the Credit Agreement. Unless otherwise defined herein or in the Credit
Agreement, each capitalized term used herein that is defined in the Security
Agreement shall have the meaning specified for such term in the Security
Agreement.
(b) The words "hereof," "herein" and "hereunder" and words of like import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular
provision of this Agreement, and section references are to this Agreement unless
otherwise specified.
(c) All terms defined in this Agreement in the singular shall have
comparable meanings when used in the plural, and vice versa, unless otherwise
specified.
2. Incorporation of Premises. The premises set forth above are incorporated
into this Agreement by this reference thereto and are made a part hereof.
3. Incorporation of the Credit Agreement. The Credit Agreement and the
terms and provisions thereof are hereby incorporated herein in their entirety by
this reference thereto.
4. Security Interest in Trademarks. To secure the complete and timely
payment, performance and satisfaction of all of the Secured Obligations,
Borrower hereby grants to the Agent, for the benefit of the Holders of Secured
Obligations, a security interest in, as and by way of a first mortgage and
security interest having priority over all other security interests, with power
of sale to the extent permitted by applicable law, all of Borrower's now owned
other than such as have been abandoned or not maintained by the Borrower as of
the Closing Date or existing and hereafter acquired or arising:
(i) trademarks, registered trademarks, trademark applications, service
marks, registered service marks and service xxxx applications, including,
without limitation, the trademarks, registered trademarks, trademark
applications, service marks, registered service marks and service xxxx
applications listed on Schedule A attached hereto and made a part hereof,
and (a) all renewals thereof, (b) all income, royalties, damages and
payments now and hereafter due and/or payable under and with respect
thereto, including, without limitation, and damages and payments for past
or future infringements or dilutions thereof, (c) the right (subject to
Section 11) to xxx for past, present and future infringements and dilutions
thereof, (d) the goodwill of Borrower's business symbolized by the
foregoing and connected therewith, and (e) all of Borrower's rights
corresponding thereto throughout the world (all of the foregoing
trademarks, registered trademarks and trademark applications, and service
marks, registered service marks and service xxxx applications, together
with the items described in clauses (a)-(e) in this paragraph 4(i), are
sometimes hereinafter individually and/or collectively referred to as the
"Trademarks"); and
(ii) rights under or interest in any trademark license agreements or
service xxxx license agreements with any other party where Borrower is a
licensor under any such license agreement, including, without limitation,
those trademark license agreements and service xxxx license agreements
listed on Schedule B attached hereto and made a part hereof, together with
any goodwill connected with and symbolized by any such trademark license
agreements or service xxxx license agreements, and the right after the
occurrence and continuance of a Designated Default to prepare for sale and
sell any and all Inventory
now or hereafter owned by Borrower and now or hereafter covered by such
licenses (all of the foregoing are hereinafter referred to collectively as
the "Licenses"). Notwithstanding the foregoing provisions of this Section 4
or any provision to the contrary in this Agreement, the Licenses shall not
include (i) any license agreement in effect as of the date hereof which by
its terms prohibits the grant of the security contemplated by this
Agreement, provided, however, that upon the termination of such
prohibitions for any reason whatsoever, the provisions of this Section 4
shall be deemed to apply thereto automatically or (ii) any license
agreement where Borrower is the licensee under such license agreement.
5. Restrictions on Future Agreements. Borrower will not, without the
Agent's prior written consent, enter into any agreement, including, without
limitation, any license agreement, which is inconsistent with this Agreement,
and Borrower further agrees that it will not take any action, and will use its
best efforts not to permit any action to be taken by others, including, without
limitation, licensees, or fail to take any action, which would materially affect
the validity or enforcement of the rights transferred to the Agent under this
Agreement or the rights associated with the Trademarks or Licenses.
6. New Trademarks and Licenses. Borrower represents and warrants that, from
and after the Closing Date, (a) the Trademarks listed on Schedule A include all
of the trademarks, registered trademarks, trademark applications, service marks,
registered service marks and service xxxx applications now owned or held by
Borrower, (b) the Licenses listed on Schedule B include all of the trademark
license agreements and service xxxx license agreements under which Borrower is
the licensor and (c) no liens, claims or security interests in such Trademarks
and Licenses have been granted by Borrower to any Person other than the Agent.
If, prior to the termination of this Agreement, Borrower shall (i) obtain rights
to any new trademarks, registered trademarks, trademark applications, service
marks, registered service marks or service xxxx applications, (ii) become
entitled to the benefit of any trademarks, registered trademarks, trademark
applications, trademark licenses, trademark license renewals, service marks,
registered service marks, service xxxx applications, service xxxx licenses or
service xxxx license renewals as licensor, or (iii) enter into any new trademark
license agreement or service xxxx license agreement as licensor, the provisions
of paragraph 4 above shall automatically, subject to the final sentence of
Section 4(ii), apply thereto. Borrower shall give to the Agent written notice of
events described in clauses (i), (ii) and (iii) of the preceding sentence
reasonably promptly after the occurrence thereof. Borrower hereby authorizes the
Agent to modify this Agreement unilaterally (after giving written prior notice
of such modification to the Borrower) (i) by amending Schedule A to include any
future trademarks, registered trademarks, trademark applications, service marks,
registered service marks and service xxxx applications and by amending Schedule
B to include any future trademark license agreements and service xxxx license
agreements, which are Trademarks or Licenses under paragraph 4 above or under
this paragraph 6, and (ii) by filing, in addition to and not in substitution for
this Agreement, a duplicate original of this Agreement containing on Schedule A
or B thereto, as the case may be, such future Trademarks or Licenses.
7. Royalties. Borrower hereby agrees that the use by the Agent of the
Trademarks and Licenses as authorized hereunder in connection with the Agent's
exercise of its rights and remedies under paragraph 15 or pursuant to Section 17
of the Security Agreement shall be coextensive with Borrower's rights thereunder
and with respect thereto and without any liability for royalties or other
related charges from the Agent or the other Holders of Secured Obligations to
Borrower.
8. Right to Inspect; Further Assignments and Security Interests. The Agent
shall have access to, examine, audit, make copies (at Borrower's expense) and
extracts from and inspect Borrower's premises and examine Borrower's books,
records and operations relating to the Trademarks and Licenses subject to and in
accordance with the provisions of Section 6.2(F) of the Credit Agreement;
provided, that in conducting such inspections and examinations, the Agent shall
use reasonable efforts not to disturb unnecessarily the conduct of Borrower's
ordinary business operations. From and after the occurrence of a Designated
Default, Borrower agrees that the Agent, or a conservator appointed by the
Agent, shall have the right to establish such reasonable additional product
quality controls as the Agent or such conservator may deem reasonably necessary
to assure maintenance of the quality of products sold by Borrower under the
Trademarks and the Licenses or in connection with which such Trademarks and
Licenses are used. Borrower agrees (i) not to sell or assign its respective
interests in, or grant any exclusive license under, the Trademarks or the
Licenses without the prior and express written consent of the Agent (such
consent not to be unreasonably withheld), (ii) use commercially reasonable
efforts to maintain the quality of such products as of the date hereof, and
(iii) not to change the quality of such products in any material respect without
the Agent's prior and express written consent.
9. Nature and Continuation of the Agent's Security Interest; Termination of
the Agent's Security Interest. This Agreement is made for collateral security
purposes only. This Agreement shall create a continuing security interest in the
Trademarks and Licenses and shall terminate when the Secured Obligations have
been paid in full in cash and the Credit Agreement and the Security Agreement
have been terminated. When this Agreement has terminated, the security interests
created hereby shall automatically terminate and the Agent shall promptly
execute and deliver to Borrower, at Borrower's expense, all termination
statements and other instruments as may be necessary or desirable to terminate
the Agent's security interest in the Trademarks and the Licenses, subject to any
disposition thereof which may have been made by the Agent pursuant to this
Agreement or the Security Agreement.
10. Duties of Borrower. Borrower shall have the duty, to the extent
desirable in the normal conduct of Borrower's business, to: (i) prosecute
diligently any trademark application or service xxxx application that is part of
the Trademarks pending as of the date hereof or hereafter until the termination
of this Agreement, and (ii) make application for trademarks or service marks.
Borrower further agrees (i) not to abandon any Trademark or License without the
prior written consent of the Agent (such consent not to be unreasonably
withheld), and (ii) to use commercially reasonable efforts to maintain in full
force and effect the Trademarks and the Licenses that are or shall be necessary
or economically desirable in the operation of Borrower's business. Any
reasonable and documented expenses incurred in
connection with the foregoing shall be borne by Borrower. Neither the Agent nor
any of the Holders of Secured Obligations shall have any duty with respect to
the Trademarks and Licenses. Without limiting the generality of the foregoing,
neither the Agent nor any of the Holders of Secured Obligations shall be under
any obligation to take any steps necessary to preserve rights in the Trademarks
or Licenses against any other parties, but the Agent may do so at its option
from and after the occurrence of a Default, and all reasonable and documented
expenses incurred in connection therewith shall be for the sole account of
Borrower and shall be added to the Secured Obligations secured hereby.
11. The Agent's Right to Xxx. From and after the occurrence and during the
continuance of a Designated Default, the Agent shall have the right, but shall
not be obligated, to bring suit in its own name to enforce the Trademarks and
the Licenses and, if the Agent shall commence any such suit, Borrower shall, at
the request of the Agent, do any and all lawful acts and execute any and all
proper documents reasonably required by the Agent in aid of such enforcement.
Borrower shall, upon demand, promptly reimburse the Agent for all reasonable and
documented costs and expenses incurred by the Agent in the exercise of its
rights under this paragraph 11 (including, without limitation, reasonable fees
and expenses of attorneys and paralegals for the Agent).
12. Waivers. The Agent's failure, at any time or times hereafter, to
require strict performance by Borrower of any provision of this Agreement shall
not waive, affect or diminish any right of the Agent thereafter to demand strict
compliance and performance therewith nor shall any course of dealing between
Borrower and the Agent have such effect. No single or partial exercise of any
right hereunder shall preclude any other or further exercise thereof or the
exercise of any other right. None of the undertakings, agreements, warranties,
covenants and representations of Borrower contained in this Agreement shall be
deemed to have been suspended or waived by the Agent unless such suspension or
waiver is in writing signed by an officer of the Agent and directed to Borrower
specifying such suspension or waiver.
13. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but the provisions of this Agreement are severable, and if any clause or
provision shall be held invalid and unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part hereof, in such jurisdiction, and shall not in any
manner affect such clause or provision in any other jurisdiction, or any other
clause or provision of this Agreement in any jurisdiction.
14. Modification. This Agreement cannot be altered, amended or modified in
any way, except as specifically provided in paragraph 6 hereof or by a writing
signed by the parties hereto.
15. Cumulative Remedies; Power of Attorney. Upon the occurrence and during
the continuance of a Designated Default Borrower hereby irrevocably designates,
constitutes and appoints the Agent (and all Persons designated by the Agent in
its sole and
absolute discretion) as Borrower's true and lawful attorney-in-fact, and
authorizes the Agent and any of the Agent's designees, in Borrower's or the
Agent's name, to take any action and execute any instrument which the Agent
reasonably deems necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, after the giving by the Agent of
notice to Borrower of the Agent's intention to enforce its rights and claims
against Borrower, including, without limitation, to (i) endorse Borrower's name
on all applications, documents, papers and instruments necessary or desirable
for the Agent in the use of the Trademarks or the Licenses, (ii) assign, pledge,
convey or otherwise transfer title in or dispose of the Trademarks or the
Licenses to anyone on commercially reasonable terms, and (iii) grant or issue
any exclusive or nonexclusive license under the Trademarks or, to the extent
permitted, under the Licenses, to anyone on commercially reasonable terms;
provided, however, that the Borrower hereby irrevocably designates constitutes
and appoints the Agent as Borrower's true and lawful attorney -in-fact and
authorizes the Agent, at any time, to take any other actions with respect to the
Trademarks or the Licenses as the Agent deems reasonably necessary to protect
its own or the Holders of Secured Obligations' interests under the Credit
Agreement consistent with the terms of this Agreement. Borrower hereby ratifies
all that such attorney shall lawfully do or cause to be done by virtue hereof.
This power of attorney is coupled with an interest and shall be irrevocable
until all of the Secured Obligations shall have been paid in full in cash and
the Credit Agreement shall have been terminated. Borrower acknowledges and
agrees that this Agreement is not intended to limit or restrict in any way the
rights and remedies of the Agent or the other Holders of Secured Obligations
under the Security Agreement, but rather is intended to facilitate the exercise
of such rights and remedies.
The Agent shall have, in addition to all other rights and remedies given it
by the terms of this Agreement, all rights and remedies allowed by law and the
rights and remedies of a secured party under the Uniform Commercial Code as
enacted in any jurisdiction in which the Trademarks or the Licenses may be
located or deemed located. Upon the occurrence and during the continuance of a
Designated Default and the election by the Agent to exercise any of its remedies
under Section 9-504 or Section 9-505 of the Uniform Commercial Code with respect
to the Trademarks and Licenses, Borrower agrees to assign, convey and otherwise
transfer title in and to the Trademarks and the Licenses to the Agent or any
transferee of the Agent and to execute and deliver to the Agent or any such
transferee all such agreements, documents and instruments as may reasonably be
necessary, in the Agent's sole discretion, to effect such assignment, conveyance
and transfer. All of the Agent's rights and remedies with respect to the
Trademarks and the Licenses, whether established hereby, by the Security
Agreement, by any other agreements or by law, shall be cumulative and may be
exercised separately or concurrently. Notwithstanding anything set forth herein
to the contrary, it is hereby expressly agreed that upon the occurrence and
during the continuance of a Designated Default, the Agent may exercise any of
the rights and remedies provided in this Agreement, the Security Agreement and
any of the other Loan Documents. Borrower agrees that any notification of
intended disposition of any of the Trademarks and Licenses required by law shall
be deemed reasonably and properly given if given at least ten (10) days before
such disposition; provided, however, that the Agent may give any shorter notice
that is commercially reasonable under the circumstances.
16. Successors and Assigns. This Agreement shall be binding upon Borrower
and its successors and assigns, and shall inure to the benefit of each of the
Holders of Secured Obligations and its nominees, successors and assigns, as
permitted and subject to the Credit Agreement. Borrower's successors and assigns
shall include, without limitation, a receiver, trustee or debtor-in-possession
of or for Borrower; provided, however, that Borrower shall not voluntarily
assign or transfer its rights or obligations hereunder without the Agent's prior
written consent.
17. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the internal laws (without regards to conflicts of law
provisions) and decisions of the State of Illinois.
18. Notices. All notices or other communications hereunder shall be given
in the manner and to the addresses set forth in the Credit Agreement.
19. Section Titles. The section titles herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
20. Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
21. Merger. This Agreement represents the final agreement of the Borrower
and the Agent with respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous agreements, or subsequent
oral agreements, between the Borrower and the Agent or any Holder of Secured
Obligations.
22. Interpretation and Inconsistencies. The rights and duties created by
this Agreement shall, in all cases, be interpreted consistently with, and shall
be in addition to (and not in lieu of), the rights and duties created by the
Credit Agreement and the other Loan Documents. In the event that any provision
of this Agreement shall be inconsistent with any provision of any other Loan
Document, such provision of the other Loan Document shall govern.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
GFSI, INC.
By: /s/ Illegible
-------------------------------
Title:
ATTEST:
By: /s/ Illegible
-------------------------
Title: Asst. Secretary
Accepted and agreed to as of the
day and year first above written.
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
By: /s/ Illegible
--------------------------------
First Vice President
Signature Page to Trademark Security Agreement
dated as of February 27, 1997
Schedule A
to
Trademark Security Agreement
Dated as of February 27, 1997
Trademarks
I. U.S. Trademarks and Trademark Applications.
None, except:
Trademark
Registration Registration Date Trademark
------------ ----------------- ---------
[1,887,563 04/04/95 TANDEM
MARKETING]
1,797,387 10/05/93 BIG COTTON
1,665,340 11/19/91 NO NAME SAYS
YOUR NAME LIKE
OUR NAME
1,677,151 02/25/92 GEAR FOR SPORTS
1,675,150 02/11/92 GEAR FOR SPORTS
and Design
1,675,149 02/11/92 GEAR FOR SPORTS
and Design
1,674,293 02/04/92 GEAR FOR SPORTS
1,447,605 07/14/87 ABOVE AND
BEYOND and Design
1,080,667 12/27/77 SPORTHREADS
1,016,367 07/22/75 WINNING WAYS
Trademark
Application Application Date Trademark
----------- ---------------- ---------
75-166,714 09/16/96 PROJECT WARMTH
and design
75-146,544 08/07/96 GS and design
75-145,742 08/06/96 GS and design
73-409,637 01/03/83 STREET SMARTS
Trademark and Service Xxxx Applications
None, except:
Trademark
Registration Registration Date Trademark
------------ ----------------- ---------
II. Foreign Trademarks and Trademark Applications.
None, except:
Serial Registra-
Country tion No. Registration Date Trademark
------- -------- ----------------- ---------
Switzerland 426,873 10/26/94 GEAR FOR SPORTS
Switzerland 423,902 10/26/94 GEAR FOR SPORTS
Denmark VR 2194 4/3/92 GEAR FOR SPORTS
and Design
Country Appln. No. Appln. Date Trademark
------- ---------- ----------- ---------
Italy 91 1312 4/10/91 GEAR FOR SPORTS
United Kingdom 1,589,028 10/26/94 GEAR FOR SPORTS
Schedule B
to
Trademark Security Agreement
Dated as of February 27, 1997
License Agreements
None, except:
1. The License Agreement dated April 1, 1994 between Winning Ways, Inc., as
Licensor, and Software Athletics, Inc., as Licensee, whereby Licensor granted
Licensee the right to use the trademarks "GEAR FOR SPORTS" and "BIG COTTON", and
the rights associated with those trademarks, in Canada.
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
On this 26th day of February, 1997, before me personally came Xxxxxx X.
Xxxxx, to me known, who being by me duly sworn, did depose and say that he is
First Vice President of The First National Bank of Chicago, the national banking
association described in and which executed the foregoing instrument, and that
he signed his name thereto on the date hereof by order of said national banking
association.
/s/ Xxxxx X. Xxxxxx
-----------------------------
Notary Public
XXXXX X. XXXXXX
Notary Public, State of New York
No 01AR5050761
Qualified in New York County
Commission Expires Oct. 16, 0000
XXXXX XX XXX XXXX )
) SS
COUNTY OF NEW YORK )
On this 26th day of February, 1997, before me personally came A. Xxxxxxx
Xxxxxx, Xx., to me known, who being by me duly sworn, did depose and say that he
is Vice President of GFSI, INC., the Delaware corporation described in and which
executed the foregoing instrument, and that he signed his name thereto on the
date hereof by order of said corporation.
/s/ Xxxxx X. Xxxxxx
-----------------------------
Notary Public
XXXXX X. XXXXXX
Notary Public, State of New York
No 01AR5050761
Qualified in New York County
Commission Expires Oct. 16, 1997
