EXHIBIT 10.3
FIRST AMENDMENT, dated as of December 1, 2004, to the Security
Agreement defined below (this "Amendment") among Barneys New York, Inc., a
Delaware corporation (the "Grantor") and Wilmington Trust Company, as collateral
agent under the Security Agreement (the "Collateral Agent") for the benefit of
the Secured Parties (as defined in the Security Agreement).
W I T N E S S E T H
WHEREAS, the Grantor has heretofore executed and delivered to the
Collateral Agent a security agreement, dated as of April 1, 2003 (the "Security
Agreement"), between the Grantor and the Collateral Agent, in connection with
the issuance by Barney's, Inc., a New York Corporation ("Barneys") of an
aggregate principal amount at maturity of $106,000,000 of Barneys' 9.000% Senior
Secured Notes due 2008 (the "Notes") pursuant to an indenture, dated as of April
1, 2003, among Barneys, the guarantors parties thereto and Wilmington Trust
Company, as trustee (the "Indenture");
WHEREAS, under the Security Agreement, the Grantor granted to the
Collateral Agent for the benefit of the Secured Parties, a security interest in
all of the Grantor's rights, title and interest in and to the Collateral, to
secure the prompt and complete payment, observance and performance of all of the
Liabilities, including the payment of all of the principal of, interest and
premium on the Notes.
WHEREAS, the Grantor has agreed to amend certain provisions of the
Security Agreement, in the manner and on the terms and conditions provided
herein.
WHEREAS, Barneys has caused to be delivered to the Holders of the
Notes (the "Holders") an Offer to Purchase and Consent Solicitation Statement,
dated November 17, 2004 (as the same may be amended from time to time, the
"Offer to Purchase") and the related Consent and Letter of Transmittal, pursuant
to which Barneys has (i) offered to purchase for cash any and all of the
outstanding Notes (such offer on the terms set forth in the Offer to Purchase
and such Consent and Letter of Transmittal, the "Offer") and (ii) solicited
consents to the adoption of amendments to the Indenture, amendments to the
Security Documents (as defined in the Offer to Purchase), which include
amendments to the Security Agreement, as set forth in Section 2 hereof (the
"Security Agreement Amendments", and the Security Agreement as amended herein,
the "Amended Security Agreement"), and
WHEREAS, the execution and delivery of this Amendment have been duly
authorized and all conditions and requirements necessary to make the Amended
Security Agreement a valid and binding agreement have been duly performed and
complied with; and
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Grantor and the Collateral Agent hereby agree as follows:
1. Capitalized Terms. Capitalized terms used herein without definition shall
have the meanings assigned to them in the Security Agreement.
2. Amendment of Certain Provisions of the Security Agreement. The Security
Agreement is hereby amended to provide that, effective upon the Operative Time:
(a) SECTION 4.
(i) The text of Section 4(b) of the Security Agreement is hereby
deleted in its entirety and replaced with the following:
"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 such Grantor or any other Person for
processing and vehicles) are located at the places specified in
Schedule 1 attached hereto 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 its
incorporation or other organization, the type of entity of the Grantor
(including corporation, partnership, limited partnership or limited
liability company), organizational identification number issued by the
Grantor's state of incorporation or organization or a statement that no
such number has been issued, the Grantor's state of organization or
incorporation, and the places where such Grantor's books and records
concerning the Collateral are currently kept are set forth in Schedule
2 attached hereto and made a part hereof."
(ii) the following text of Section 4(j) of the Security
Agreement is hereby deleted:
"The Grantor will deliver to the Collateral Agent a copy of any
Collateral Report delivered to the Priority Lien Agent under the
Credit Agreement."
(b) SECTION 5.
(i) The text of Sections 5(b), (c), (h), (i), (p), (q) and (r)
of the Security Agreement is hereby deleted in its entirety and replaced with
"[Intentionally Omitted]" and all references made thereto throughout the
Security Agreement are hereby deleted in their entirety; and
2
(ii) The text of Section 5(o) is hereby deleted in its entirety
and replaced with the following:
"Upon request of the Collateral Agent, Grantor shall execute and
deliver any and all agreements as the Collateral Agent may request to evidence
the Collateral Agent's Lien on Intellectual Property, for which an application
for registration has been filed with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency, 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 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 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 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."
(c) SECTION 6. The following text of Section 6 of the Security
Agreement is hereby deleted and all references made thereto throughout the
Security Agreement are hereby deleted:
"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."
(d) DEFINITIONS. Terms defined in the Security Agreement shall
be deemed deleted when reference to such definitions would be eliminated as a
result of the Security Agreement Amendments.
3. Operative Time. Notwithstanding the execution of this Amendment on the date
hereof, the Amendment shall not amend the Security Agreement and become
operative unless and until Barneys accepts for purchase all of the outstanding
Notes validly tendered for purchase pursuant to the Offer as of such date and a
majority in principal amount at maturity of the outstanding Notes have been
tendered as of the date hereof (the date and the time of such acceptance being
3
referred to herein as the "Operative Time"). The Company will provide a written
notice to the Collateral Agent as soon as reasonably practicable after the
determination of such Operative Time. At the Operative Time, the Security
Agreement Amendments effected hereby shall be deemed fully operative without any
further notice or action on the part of Barneys, the Grantor, the Collateral
Agent, the Holders or any other person. In the event that the Offer is
terminated or withdrawn, or any condition of the Offer and the consent
solicitation is not satisfied or waived by Barneys, this Amendment shall be null
and void.
4. Miscellaneous.
(a) Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
(c) Collateral Agent Not Responsible. The recitals contained herein
shall be taken as the statements of the Grantor and the Collateral Agent assumes
no responsibility for their correctness.
(d) Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflicts of laws principles thereof.
(f) Severability. In case any provisions in this Amendment shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and attested, all as of the date first above written.
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/ Xxxxxxx X. Xxxx
-------------------------------
Name: Xxxxxxx X. Xxxx
Title: Financial Services Officer
5
