Exhibit 10.32
SECURITY AGREEMENT
This SECURITY AGREEMENT dated as of January 5, 2000 (as amended,
supplemented or otherwise modified from time to time, the "AGREEMENT"), is made
between Lamonts Apparel, Inc., debtor and debtor in possession (hereinafter, the
"GRANTOR") and FLEET RETAIL FINANCE INC., a Delaware corporation ("FRF"), as
collateral agent (in such capacity, the "COLLATERAL AGENT") for the Secured
Parties (as defined herein) in consideration of the mutual covenants contained
herein and benefits to be derived herefrom,
WITNESSETH:
Reference is made to the Debtor in Possession Credit Agreement dated as
of January 5, 2000 (as amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"), among (i) the Grantor, (ii) the lenders from time
to time party thereto (the "LENDERS"), (iii) BankBoston, N.A. as Issuing Bank,
and (iv) FRF, as Collateral Agent, as Swingline Lender and as Administrative
Agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT").
The Lenders have agreed to make Loans to the Grantor, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Grantor,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The obligations of the Lenders to make Loans and of the
Issuing Bank to issue Letters of Credit are conditioned upon, among other
things, the execution and delivery by the Grantor of an agreement in the form
hereof to secure (a) the due and punctual payment by the Grantor of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of the Proceedings or any subsequent bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether such interest is
allowed or allowable as a claim in such proceeding) on the Loans, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (ii) each payment required to be made by the Grantor
under the Credit Agreement in respect of any Letter of Credit, when and as due,
including payments in respect of reimbursement of disbursements, interest
thereon and obligations to provide cash collateral and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of the Proceedings or any subsequent
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether such monetary obligations are allowed or allowable as a claim in such
proceeding), of the Grantor to the Secured Parties under the Credit Agreement
and the other Loan Documents, (b) the due and punctual performance of all
covenants, agreements, obligations and liabilities of the Grantor under or
pursuant to the Credit Agreement and the other Loan Documents, (c) the due and
punctual payment and performance of all the covenants, agreements, obligations
and liabilities of each Loan Party under or pursuant to this Agreement and the
other Loan Documents, (d) each of the
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foregoing as if each reference to the "Lenders" therein were to each Affiliate
of any Lender, and (e) any transaction with the Collateral Agent or any
Affiliate of the Collateral Agent, FRF or BankBoston, N.A. which arises out of
any cash management, depository, investment, letter of credit, interest rate
protection, equipment leasing or other banking or financial services provided
after the commencement of the Proceedings by the Collateral Agent or any
Affiliate of the Collateral Agent, FRF or BankBoston, N.A., as each may be
amended from time to time, (all the monetary and other obligations described in
the preceding clauses (a) through (e) being collectively called the
"OBLIGATIONS"). The term "Obligations" shall not include the Pre-Petition Lender
Debt.
Accordingly, the Grantor and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
ARTICLE 1.
Definitions
SECTION 1.1. DEFINITION OF TERMS USED HEREIN. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Credit Agreement and all references to the Uniform
Commercial Code shall mean the Uniform Commercial Code in effect in the
Commonwealth of Massachusetts as of the date hereof.
SECTION 1.2. DEFINITION OF CERTAIN TERMS USED HEREIN. As used herein,
the following terms shall have the following meanings:
"ACCOUNT DEBTOR" shall mean any person who is or who may become
obligated to the Grantor under, with respect to or on account of an Account.
"ACCOUNTS" shall have the meaning given that term in the Uniform
Commercial Code and shall mean any and all right, title and interest of the
Grantor to payment for goods and services sold or leased, including any such
right evidenced by Chattel Paper, whether due or to become due, whether or not
it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates of the
Grantor.
"ACCOUNTS RECEIVABLE" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.
"CHATTEL PAPER" shall have the meaning given that term in the Uniform
Commercial Code.
"COLLATERAL" shall mean all (a) Accounts Receivable, (b) Documents, (c)
Equipment, (d) General Intangibles, (e) Inventory, (f) Goods, (g) Chattel Paper,
(h) cash and cash accounts (including the Collection Deposit
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Accounts), (i) Investment Property, (j) Rights to Letter of Credit Proceeds and
(k) Proceeds, but shall exclude the Excluded Assets.
"COMMODITY ACCOUNT" shall mean an account maintained by a Commodity
Intermediary in which a Commodity Contract is carried out for a Commodity
Customer.
"COMMODITY CONTRACT" shall mean a commodity futures contract, an option
on a commodity futures contract, a commodity option or any other contract that,
in each case, is (a) traded on or subject to the rules of a board of trade that
has been designated as a contract market for such a contract pursuant to the
federal commodities laws or (b) traded on a foreign commodity board of trade,
exchange or market, and is carried on the books of a Commodity Intermediary for
a Commodity Customer.
"COMMODITY CUSTOMER" shall mean a person for whom a Commodity
Intermediary carries a Commodity Contract on its books.
"COMMODITY INTERMEDIARY" shall mean (a) a person who is registered as a
futures commission merchant under the federal commodities laws or (b) a person
who in the ordinary course of its business provides clearance or settlement
services for a board of trade that has been designated as a contract market
pursuant to federal commodities laws.
"COPYRIGHT LICENSE" shall mean any written agreement, now or hereafter
in effect, granting any right to any third party under any Copyright now or
hereafter owned by the Grantor or which the Grantor otherwise has the right to
license, or granting any right to the Grantor under any Copyright now or
hereafter owned by any third party, and all rights of the Grantor under any such
agreement.
"COPYRIGHTS" shall mean all of the following now owned or hereafter
acquired by the Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on SCHEDULE I.
"CREDIT AGREEMENT" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"DOCUMENTS" shall mean all instruments, files, records, ledger sheets
and documents covering or relating to any of the Collateral.
"ENTITLEMENT HOLDER" shall mean a person identified in the records of a
Securities Intermediary as the person having a Security Entitlement against the
Securities Intermediary. If a person acquires a Security Entitlement by virtue
of Section 8-501(b)(2) or (3) of the Uniform Commercial Code, such person is the
Entitlement Holder.
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"EQUIPMENT" shall have the meaning given that term in the Uniform
Commercial Code and shall mean all equipment, furniture and furnishings, and all
tangible personal property similar to any of the foregoing, including tools,
parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by the
Grantor. The term "Equipment" shall include Fixtures.
"FINANCIAL ASSET" shall mean (a) a Security, (b) an obligation of a
person (or a share, participation or other interest in a person or in property
or an enterprise of a person), that is, or is of a type, dealt with in or traded
on financial markets, or which is recognized in any area in which it is issued
or dealt in as a medium for investment or (c) any property that is held by a
Securities Intermediary for another person in a Securities Account if the
Securities Intermediary has expressly agreed with the other person that the
property is to be treated as a Financial Asset under Article 8 of the Uniform
Commercial Code. As the context requires, the term Financial Asset shall mean
either the interest itself or the means by which a person's claim to it is
evidenced, including a certificated or uncertificated security, a certificate
representing a Security or a Security Entitlement.
"FIXTURES" shall mean all items of Equipment, whether now owned or
hereafter acquired, of the Grantor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.
"GENERAL INTANGIBLES" shall have the meaning given that term in the
Uniform Commercial Code and shall mean all choses in action and causes of action
and all other assignable intangible personal property of the Grantor of every
kind and nature (other than Accounts Receivable) now owned or hereafter acquired
by any Grantor, including all rights and interests in partnerships, limited
partnerships, limited liability companies and other unincorporated entities,
corporate or other business records, indemnification claims, contract rights
(including rights under leases, whether entered into as lessor or lessee,
Hedging Agreements and other agreements), Intellectual Property, goodwill,
registrations, franchises, insurance refund claims and all other insurance
claims and proceeds, tax refund claims and any letter of credit, guarantee,
claim, security interest or other security held by or granted to the Grantor to
secure payment by an Account Debtor of any of the Accounts Receivable.
"GOODS" shall have the meaning given that term in the Uniform
Commercial Code.
"INTELLECTUAL PROPERTY" shall mean all intellectual and similar
property of the Grantor of every kind and nature now owned or hereafter acquired
by the Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to,
and books and records describing or used in connection with, any of the
foregoing.
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"INVENTORY" shall have the meaning given that term in the Uniform
Commercial Code and shall mean all goods of the Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
the Grantor under contracts of service, or consumed in the Grantor's business,
including raw materials, intermediates, work in process, packaging materials,
finished goods, semi-finished inventory, scrap inventory, manufacturing supplies
and spare parts, and all such goods that have been returned to or repossessed by
or on behalf of the Grantor.
"INVESTMENT PROPERTY" shall have the meaning given that term in the
Uniform Commercial Code and shall mean all Securities (whether certificated or
uncertificated), Security Entitlements, Securities Accounts, Financial Assets,
Commodity Contracts and Commodity Accounts of the Grantor, whether now owned or
hereafter acquired by the Grantor.
"LICENSE" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which the Grantor is a party,
including those listed in the Perfection Certificate (other than those license
agreements in existence on the date hereof and listed in the Perfection
Certificate that by their terms prohibit assignment or a grant of a security
interest by the Grantor as licensee thereunder).
"OBLIGATIONS" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"PATENT LICENSE" shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any invention
on which a Patent, now or hereafter owned by the Grantor or which the Grantor
otherwise has the right to license, is in existence, or granting to the Grantor
any right to make, use or sell any invention on which a Patent, now or hereafter
owned by any third party, is in existence, and all rights of the Grantor under
any such agreement.
"PATENTS" shall mean all of the following now owned or hereafter
acquired by the Grantor: (a) all letters patent of the United States or any
other country, all registrations and recordings thereof, and all applications
for letters patent of the United States or any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, including
those listed on SCHEDULE II, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
"PERFECTION CERTIFICATE" shall mean a certificate substantially in the
form of Annex 1 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Financial Officer of
the Grantor.
"PROCEEDS" shall mean any consideration received from the sale,
exchange, license, lease or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of the possession of
any Collateral and any payment received from any insurer or other person
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or entity as a result of the destruction, loss, theft, damage or other
involuntary conversion of whatever nature of any asset or property which
constitutes Collateral, and shall include (a) all cash and negotiable
instruments received by or held on behalf of the Collateral Agent, (b) any claim
of the Grantor against any third party for (and the right to xxx and recover for
and the rights to damages or profits due or accrued arising out of or in
connection with) (i) past, present or future infringement of any Patent now or
hereafter owned by the Grantor, or licensed under a Patent License, (ii) past,
present or future infringement or dilution of any Trademark now or hereafter
owned by the Grantor or licensed under a Trademark License or injury to the
goodwill associated with or symbolized by any Trademark now or hereafter owned
by the Grantor, (iii) past, present or future breach of any License and (iv)
past, present or future infringement of any Copyright now or hereafter owned by
the Grantor or licensed under a Copyright License and (c) any and all other
amounts from time to time paid or payable under or in connection with any of the
Collateral.
"RIGHTS TO LETTER OF CREDIT PROCEEDS" shall mean rights to proceeds of
letters of credit, whether or not written.
"SECURED PARTIES" shall mean (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent, (d) the Issuing Bank, (e) the beneficiaries of
each indemnification obligation undertaken by the Grantor under any Loan
Document, (f) any other Person to whom the Obligations are owing, and (g) the
successors and assigns of each of the foregoing.
"SECURITIES" shall mean any obligations of an issuer or any shares,
participations or other interests in an issuer or in property or an enterprise
of an issuer that (a) are represented by a certificate representing a security
in bearer or registered form, or the transfer of which may be registered upon
books maintained for that purpose by or on behalf of the issuer, (b) are one of
a class or series or by its terms is divisible into a class or series of shares,
participations, interests or obligations and (c)(i) are, or are of a type, dealt
with or traded on securities exchanges or securities markets or (ii) are a
medium for investment and by their terms expressly provide that they are a
security governed by Article 8 of the Uniform Commercial Code.
"SECURITIES ACCOUNT" shall mean an account to which a Financial Asset
is or may be credited in accordance with an agreement under which the person
maintaining the account undertakes to treat the person for whom the account is
maintained as entitled to exercise rights that comprise the Financial Asset.
"SECURITIES INTERMEDIARY" shall mean (a) a clearing corporation or (b)
a person, including a bank or broker, that in the ordinary course of its
business maintains Securities Accounts for others and is acting in that
capacity.
"SECURITY ENTITLEMENTS" shall mean the rights and property interests of
an Entitlement Holder with respect to a Financial Asset.
"SECURITY INTEREST" shall have the meaning assigned to such term in
Section 2.01.
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"TRADEMARK LICENSE" shall mean any written agreement, now or hereafter
in effect, granting to any third party any right to use any Trademark now or
hereafter owned by the Grantor or which the Grantor otherwise has the right to
license, or granting to the Grantor any right to use any Trademark now or
hereafter owned by any third party, and all rights of the Grantor under any such
agreement.
"TRADEMARKS" shall mean all of the following now owned or hereafter
acquired by the Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office,
any State of the United States or any similar offices in any other country or
any political subdivision thereof, and all extensions or renewals thereof,
including those listed on SCHEDULE III, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that uniquely
reflect or embody such goodwill.
SECTION 1.3. RULES OF INTERPRETATION. The rules of interpretation
specified in Section 1.3 of the Credit Agreement shall be applicable to this
Agreement.
ARTICLE 2.
SECURITY INTEREST
SECTION 2.1. SECURITY INTEREST. As security for the payment and
performance in full of the Obligations, the Grantor hereby bargains, sells,
conveys, assigns, sets over, mortgages, pledges, hypothecates and transfers to
the Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, and hereby grants to the Collateral Agent, its successors and
assigns, for the ratable benefit of the Secured Parties, a security interest in,
all of the Grantor's right, title and interest in, to and under the Collateral
(the "Security Interest"). Without limiting the foregoing, the Collateral Agent
is hereby authorized to file one or more financing statements (including fixture
filings), continuation statements, filings with the United States Patent and
Trademark Office or United States Copyright Office (or any successor office or
any similar office in any other country) or other documents for the purpose of
perfecting, confirming, continuing, enforcing or protecting the Security
Interest granted by the Grantor, without the signature of the Grantor (the
Grantor hereby appointing the Collateral Agent as the Grantor's attorney to sign
the Grantor's name to any such instrument or document, whether or not an Event
of Default exists), and naming the Grantor as debtor and the Collateral Agent as
secured party.
SECTION 2.2. NO ASSUMPTION OF LIABILITY. The Security Interest is
granted as security only and shall not subject the Collateral Agent or any other
Secured Party to, or in any way alter or modify, any obligation or liability of
the Grantor with respect to or arising out of the Collateral.
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ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
The Grantor represents and warrants to the Collateral Agent and the
Secured Parties that:
SECTION 3.1. TITLE AND AUTHORITY. The Grantor has good and valid rights
in and title to the Collateral and has full power and authority to grant to the
Collateral Agent the Security Interest in the Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other Person other than
any consent or approval which has been obtained.
SECTION 3.2. FILINGS. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete in all respects. Fully executed Uniform Commercial Code
financing statements (including fixture filings, as applicable) or other
appropriate filings, recordings or registrations containing a description of the
Collateral have been filed in each governmental, municipal or other office
applicable to the locations specified in Sections 3, 4 and 6 of the Perfection
Certificate, which are all the filings, recordings and registrations (other than
filings required to be made in the United States Patent and Trademark Office and
the United States Copyright Office in order to perfect the Security Interest in
Collateral consisting of United States Patents, Trademarks or Copyrights, as the
case may be) that are necessary to publish notice of and protect the validity of
and to establish a legal, valid and perfected security interest in favor of the
Collateral Agent (for the ratable benefit of the Secured Parties) in respect of
all Collateral in which the Security Interest may be perfected by filing,
recording or registration in the United States (or any political subdivision
thereof) and its territories and possessions, and no further or subsequent
filing, refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under applicable law with
respect to the filing of continuation statements. The Grantor hereby designates
the Collateral Agent as and for such Grantor's true and lawful attorney, with
full power of substitution, to sign and file any financing statements (whether
or not an Event of Default exists) in order to perfect or protect the Collateral
Agent's security and other collateral interests in the Collateral.
(b) The Grantor represents and warrants that fully executed security
agreements in the form hereof and containing a description of all Collateral
consisting of Intellectual Property with respect to United States Patents and
United States registered Trademarks (and Trademarks for which United States
registration applications are pending) and United States registered Copyrights
have been recorded by the United States Patent and Trademark Office and the
United States Copyright Office pursuant to 35 U.S.C. Section 261, 15 U.S.C.
Section 1060 or 17 U.S.C. Section 205 and the regulations thereunder, as
applicable, and otherwise as may be required pursuant to the laws of any other
necessary jurisdiction, to protect the validity of and to establish a legal,
valid and perfected security interest in favor of the Collateral Agent (for the
ratable benefit of the Secured Parties) in respect of all Collateral consisting
of Patents, Trademarks and Copyrights in which a
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security interest may be perfected by filing, recording or registration in the
United States (or any political subdivision thereof) and its territories and
possessions, or in any other necessary jurisdiction, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than such actions as are necessary to perfect
the Security Interest with respect to any Collateral consisting of Patents,
Trademarks and Copyrights (or registration or application for registration
thereof) acquired or developed after the date hereof). Each Grantor hereby
designates the Collateral Agent as and for such Grantor's true and lawful
attorney, with full power of substitution, to sign and file any instruments or
documents (whether or not an Event of Default exists) in order to perfect or
protect the Collateral Agent's security and other collateral interests in such
Collateral.
SECTION 3.3. VALIDITY OF SECURITY INTEREST. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.2 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions and
(c) a security interest that shall be perfected in all Collateral in which a
security interest may be perfected upon the receipt and recording of this
Agreement with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, within the three month period
(commencing as of the date hereof) pursuant to 35 U.S.C. Section 261 or 15
U.S.C. Section 1060 or the one month period (commencing as of the date hereof)
pursuant to 17 U.S.C. Section 205 and otherwise as may be required pursuant to
the laws of any other necessary jurisdiction. The Security Interest is and shall
be prior to any other Lien on any of the Collateral, other than (i) Liens
expressly permitted to be prior to the Security Interest pursuant to Section 6.2
of the Credit Agreement and (ii) the Carve Out.
SECTION 3.4. ABSENCE OF OTHER LIENS. The Collateral is owned by the
Grantor free and clear of any Lien, except for (i) Liens expressly permitted
pursuant to Section 6.2 of the Credit Agreement and (ii) the Carve Out. The
Grantor has not filed or consented to the filing of (a) any financing statement
or analogous document under the Uniform Commercial Code or any other applicable
laws covering any Collateral, (b) any assignment in which the Grantor assigns
any Collateral or any security agreement or similar instrument covering any
Collateral with the United States Patent and Trademark Office or the United
States Copyright Office or (c) any assignment in which the Grantor assigns any
Collateral or any security agreement or similar instrument covering any
Collateral with any foreign governmental, municipal or other office, which
financing statement or analogous document, assignment, security agreement or
similar instrument is still in effect, except, in each case, for Liens expressly
permitted pursuant to Section 6.2 of the Credit Agreement.
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ARTICLE 4.
COVENANTS
SECTION 4.1. CHANGE OF NAME; LOCATION OF COLLATERAL; RECORDS; PLACE OF
BUSINESS. (a) The Grantor agrees to give the Collateral Agent prompt written
notice of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in its identity or corporate structure (iv) in its Federal Taxpayer
Identification Number, or (v) the acquisition by the Grantor of any property for
which additional filings or recordings are necessary to perfect and maintain the
Collateral Agent's Security Interest therein. The Grantor agrees not to effect
or permit any change referred to in the preceding sentence unless all filings
have been made under the Uniform Commercial Code or otherwise that are required
in order for the Collateral Agent to continue at all times following such change
to have a valid, legal and perfected first priority security interest in all the
Collateral. The Grantor agrees promptly to notify the Collateral Agent if any
material portion of the Collateral owned or held by the Grantor is damaged or
destroyed.
(b) The Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which the Grantor is engaged, but in any event to include complete accounting
records indicating all payments and proceeds received with respect to any part
of the Collateral, and, at such time or times as the Collateral Agent may
reasonably request, promptly to prepare and deliver to the Collateral Agent a
duly certified schedule or schedules in form and detail satisfactory to the
Collateral Agent showing the identity, amount and location of any and all
Collateral.
SECTION 4.2. PERIODIC CERTIFICATION. Each year, at the time of delivery
of annual financial statements with respect to the preceding fiscal year
pursuant to Section 5.1 of the Credit Agreement, the Grantor shall deliver to
the Collateral Agent a certificate executed by a Financial Officer of the
Grantor (a) setting forth the information required pursuant the Perfection
Certificate or confirming that there has been no change in such information
since the date of such certificate or the date of the most recent certificate
delivered pursuant to this Section 4.2 and (b) certifying that all Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations, including all
refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to clause (a) above
to the extent necessary to protect and perfect the Security Interest for a
period of not less than 18 months after the date of such certificate (except as
noted therein with respect to any continuation statements to be filed within
such period and except for any fixture filings not filed as of the Closing
Date).
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Each certificate delivered pursuant to this Section 4.2 shall identify in the
format of Schedule I, II or III, as applicable, all Intellectual Property of any
Grantor in existence on the date thereof and not then listed on such Schedules.
SECTION 4.3. PROTECTION OF SECURITY. The Grantor shall, at its own cost
and expense, take any and all actions necessary to defend title to the
Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien not
consisting of the Carve Out or expressly permitted pursuant to Section 6.2 of
the Credit Agreement.
SECTION 4.4. FURTHER ASSURANCES. The Grantor agrees, at its own
expense, to execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and take all such actions as the Collateral
Agent may from time to time request to better assure, preserve, protect and
perfect the Security Interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interest
and the filing of any financing statements (including fixture filings) or other
documents in connection herewith or therewith.
Without limiting the generality of the foregoing, each Grantor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Grantor, to
supplement this Agreement by supplementing Schedules I, II or III hereto to
specifically identify any asset or item that may constitute Copyrights, Patents
or Trademarks; PROVIDED, HOWEVER, that the Grantor shall have the right,
exercisable within 10 days after it has been notified by the Collateral Agent of
the specific identification of such Collateral, to advise the Collateral Agent
in writing of any inaccuracy of the representations and warranties made by the
Grantor hereunder with respect to such Collateral. The Grantor agrees that it
will use its best efforts to take such action as shall be necessary in order
that all representations and warranties hereunder shall be true and correct with
respect to such Collateral within 30 days after the date it has been notified by
the Collateral Agent of the specific identification of such Collateral.
SECTION 4.5. INSPECTION AND VERIFICATION. The Collateral Agent and such
Persons as the Collateral Agent may reasonably designate shall have the right,
upon reasonable prior notice, at the Grantor's own cost and expense (but subject
to the expense provisions of the Credit Agreement), to inspect the Collateral,
all records related thereto (and to make extracts and copies from such records)
and the premises upon which any of the Collateral is located, to discuss the
Grantor's affairs with the officers of the Grantor and its independent
accountants and to verify under reasonable procedures the validity, amount,
quality, quantity, value, condition and status of, or any other matter relating
to, the Collateral, including, in the case of Accounts or Collateral in the
possession of any third person, by contacting Account Debtors or the third
person possessing such Collateral for the purpose of making such a verification.
Prior to the occurrence of a Default, such inspections, evaluations and
verifications shall be conducted not more than three times per rolling period of
twelve months. The Collateral Agent shall
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have the absolute right to share any information it gains from such inspection
or verification with any Secured Party.
SECTION 4.6. TAXES; ENCUMBRANCES. At its option, on five days' prior
notice to the Grantor, the Collateral Agent may discharge past due taxes,
assessments, charges, fees, Liens, security interests or other encumbrances at
any time levied or placed on the Collateral and not permitted pursuant to
Section 6.2 of the Credit Agreement, may cure defaults under executory contracts
and agreements and unexpired leases, may provide adequate assurance of future
performance on executory contracts and unexpired leases, and may pay for the
maintenance and preservation of the Collateral to the extent the Grantor fails
to do so as required by the Credit Agreement or this Agreement, and the Grantor
agrees to reimburse the Collateral Agent on demand for any payment made or any
expense incurred by the Collateral Agent pursuant to the foregoing
authorization; provided, however, that nothing in this Section 4.6 shall be
interpreted as excusing the Grantor from the performance of, or imposing any
obligation on the Collateral Agent or any Secured Party to cure or perform, any
covenants or other promises of any Grantor with respect to taxes, assessments,
charges, fees, liens, security interests or other encumbrances and maintenance
as set forth herein or in the other Loan Documents, and provided further that
the making of any such payments by the Collateral Agent shall not be deemed to
constitute a waiver of any Default or Event of Default arising from the
Grantor's failure to have made such payments.
SECTION 4.7. ASSIGNMENT OF SECURITY INTEREST; DELIVERY OF INVESTMENTS,
ETC. (a) If at any time the Grantor shall take a security interest in any
property of an Account Debtor or any other person to secure payment and
performance of an Account, such Grantor shall promptly assign such security
interest to the Collateral Agent. Such assignment need not be filed of public
record unless necessary to continue the perfected status of the security
interest against creditors of and transferees from the Account Debtor or other
person granting the security interest.
(b) Pursuant to the terms of this Agreement, the Grantor has endorsed,
assigned and delivered to the Collateral Agent all negotiable or non-negotiable
instruments, Financial Assets consisting of certificated securities and Chattel
Paper pledged by it hereunder, together with instruments of transfer or
assignment duly executed in blank as the Collateral Agent may have specified. In
the event that the Grantor shall, after the date of this Agreement, acquire any
other negotiable or non-negotiable instruments, Financial Assets consisting of
certificated securities or Chattel Paper to be pledged by it hereunder, the
Grantor shall forthwith endorse, assign and deliver the same to the Collateral
Agent, accompanied by such instruments of transfer or assignment duly executed
in blank as the Collateral Agent may from time to time specify.
(c) To the extent that any Financial Assets now or hereafter acquired
by the Grantor are uncertificated securities and are issued to the Grantor or
its nominee directly by the issuer thereof, the Grantor shall cause the issuer
to note on its books the Security Interest of the Collateral Agent in such
uncertificated securities and shall cause the issuer, pursuant to an agreement
in form and substance satisfactory to the Collateral Agent, to
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agree to comply with instructions from the Collateral Agent as to such
securities, without further consent of the Grantor or such nominee. To the
extent that any Financial Assets (including certificated or uncertificated
securities) or other Investment Property now or hereafter acquired by the
Grantor are held by the Grantor or its nominee through a Securities Intermediary
or Commodity Intermediary, the Grantor shall, at the request of the Collateral
Agent, cause such Securities Intermediary or (as the case may be) Commodity
Intermediary, pursuant to an agreement in form and substance satisfactory to the
Collateral Agent, to agree to comply with entitlement orders or other
instructions from the Collateral Agent to such Securities Intermediary as to
such Financial Assets or other Investment Property, or (as the case may be) to
apply any value distributed on account of any Commodity Contract as directed by
the Collateral Agent to such Commodity Intermediary, without further consent of
the Grantor or such nominee.
(d) To the extent that the Grantor is a beneficiary under any written
letter of credit now or hereafter issued in favor of the Grantor, the Grantor
shall deliver such letter of credit to the Collateral Agent. The Collateral
Agent shall from time to time, at the request and expense of the Grantor, make
such arrangements with the Grantor as are in the Collateral Agent's reasonable
judgment necessary and appropriate so that the Grantor may make any drawing to
which the Grantor is entitled under such letter of credit, without impairment of
the Collateral Agent's perfected security interest in the Grantor's rights to
proceeds of such letter of credit or in the actual proceeds of such drawing. At
the Collateral Agent's request, the Grantor shall, for any letter of credit,
whether or not written, now or hereafter issued in favor of the Grantor as
beneficiary, execute and deliver to the issuer and any confirmer of such letter
of credit an assignment of proceeds form, in favor of the Collateral Agent and
satisfactory to the Collateral Agent and such issuer or (as the case may be)
such confirmer, requiring the proceeds of any drawing under such letter of
credit to be paid directly to the Collateral Agent.
SECTION 4.8. CONTINUING OBLIGATIONS OF THE GRANTOR. The Grantor shall
remain liable to observe and perform all the conditions and obligations to be
observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and the Grantor jointly and severally agrees to indemnify and hold
harmless the Collateral Agent and the Secured Parties from and against any and
all liability for such performance.
SECTION 4.9. USE AND DISPOSITION OF COLLATERAL. The Grantor shall not
make or permit to be made an assignment, pledge or hypothecation of the
Collateral nor shall grant any other Lien in respect of the Collateral, except
as expressly permitted by Section 6.2 of the Credit Agreement. Except as
expressly permitted in the Credit Agreement, the Grantor shall not make or
permit to be made any transfer of the Collateral and the Grantor shall remain at
all times in possession of the Collateral owned by it, except that (a) Inventory
may be sold in the ordinary course of business and (b) unless and until an Event
of Default shall have occurred and be continuing, the Grantor may use and
dispose of the Collateral in any lawful manner not
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inconsistent with the provisions of this Agreement, the Credit Agreement or any
other Loan Document.
SECTION 4.10. LIMITATION ON MODIFICATION OF ACCOUNTS. The Grantor will
not, without the Collateral Agent's prior written consent, grant any extension
of the time of payment of any of the Accounts Receivable, compromise, compound
or settle the same for less than the full amount thereof, release, wholly or
partly, any person liable for the payment thereof or allow any credit or
discount whatsoever thereon, other than extensions, credits, discounts,
compromises or settlements granted or made in the ordinary course of business
and consistent with its current practices and in accordance with such prudent
and standard practices used in industries that are the same as or similar to
those in which the Grantor is engaged.
SECTION 4.11. INSURANCE. (a) The Grantor shall (i) maintain or shall
cause to be maintained insurance with financially sound and reputable insurers
with an A.M. Best rating of A- or better (or, to the extent consistent with
prudent business practice, a program of self-insurance approved by the
Administrative Agent) on such of its property and in at least such amounts and
against at least such risks as is customary with companies in the same or
similar businesses operating in the same or similar locations, including public
liability insurance against claims for personal injury or death occurring upon,
in or about or in connection with the use of any properties owned, occupied or
controlled by it; (ii) maintain such other insurance as may be required by law;
and (iii) furnish to the Collateral Agent, upon written request, full
information as to the insurance carried.
(b) Fire and extended coverage policies maintained with
respect to any Collateral shall be endorsed or otherwise amended to include (i)
a non-contributing mortgage clause (regarding improvements to real property) and
lenders' loss payable clause (regarding personal property), in form and
substance satisfactory to the Collateral Agent, which endorsements or amendments
shall provide that the insurer shall pay all proceeds otherwise payable to the
Grantor or the other Loan Parties under the policies directly to the
Administrative Agent or the Collateral Agent, (ii) a provision to the effect
that neither the Grantor, the Collateral Agent, the Administrative Agent, the
Lenders nor any other party shall be a coinsurer and (iii) such other provisions
as the Collateral Agent may reasonably require from time to time to protect the
interests of the Lenders. Commercial general liability policies shall be
endorsed to name the Collateral Agent as an additional insured. Business
interruption policies shall name the Collateral Agent as loss payee and shall be
endorsed or amended to include (i) a provision that the insurer shall pay all
proceeds otherwise payable to the Grantor or the other Loan Parties under the
policies directly to the Administrative Agent or the Collateral Agent, (ii) a
provision to the effect that none of the Grantor, the Administrative Agent, the
Collateral Agent, the Lenders or any other party shall be a co-insurer and (iii)
such other provisions as the Collateral Agent may reasonably require from time
to time to protect the interests of the Lenders. Each such policy referred to in
this paragraph also shall provide that it shall not be canceled, modified or not
renewed (i) by reason of nonpayment of premium except upon not less than 30
days' prior written notice thereof by the insurer to the Collateral Agent
(giving the Collateral Agent the right to cure defaults in the payment of
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premiums) or (ii) for any other reason except upon not less than 60 days' prior
written notice thereof by the insurer to the Collateral Agent. All such
insurance which covers the Collateral shall include an endorsement in favor of
the Collateral Agent, which endorsement shall provide that the insurance, to the
extent of the Collateral Agent's interest therein, shall not be impaired or
invalidated, in whole or in part, by reason of any act or neglect of the Grantor
or by the failure of any grantor to comply with any warranty or condition of the
policy. The Grantor shall deliver to the Collateral Agent, prior to the
cancellation, modification or nonrenewal of any such policy of insurance, a copy
of a renewal or replacement policy (or other evidence of renewal of a policy
previously delivered to the Collateral Agent) together with evidence
satisfactory to the Collateral Agent of payment of the premium therefor.
(c) The Grantor irrevocably makes, constitutes and appoints
the Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as the Grantor's true and lawful agent (and attorney-in-fact)
for the purpose of making, settling and adjusting claims in respect of
Collateral under policies of insurance, endorsing the name of the Grantor on any
check, draft, instrument or other item of payment for the proceeds of such
policies of insurance and for making all determinations and decisions with
respect thereto. In the event that the Grantor at any time or times shall fail
to obtain or maintain any of the policies of insurance required hereby or to pay
any premium in whole or part relating thereto, the Collateral Agent may, without
waiving or releasing any obligation or liability of the Grantor hereunder or any
Default or Event of Default, in its sole discretion, obtain and maintain such
policies of insurance and pay such premium and take any other actions with
respect thereto as the Collateral Agent deems advisable. All sums disbursed by
the Collateral Agent in connection with this Section 4.11, including reasonable
attorneys' fees, court costs, expenses and other charges relating thereto, shall
be payable, upon demand, by the Grantor to the Collateral Agent and shall be
additional Obligations secured hereby.
SECTION 4.12. LEGEND. The Grantor shall legend, in form and manner
satisfactory to the Collateral Agent, its Accounts Receivable and its books,
records and documents evidencing or pertaining thereto with an appropriate
reference to the fact that such Accounts Receivable have been assigned to the
Collateral Agent for the benefit of the Secured Parties and that the Collateral
Agent has a security interest therein.
SECTION 4.13. COVENANTS REGARDING PATENT, TRADEMARK AND COPYRIGHT
COLLATERAL. (a) The Grantor agrees that it will not, nor will it permit any of
its licensees to, do any act, or omit to do any act, whereby any Patent that is
material to the conduct of the Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall continue to xxxx any products
covered by a Patent with the relevant patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable patent laws.
(b) The Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of the Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of
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products and services offered under such Trademark, (iii) display such Trademark
with notice of Federal or foreign registration to the extent necessary and
sufficient to establish and preserve its maximum rights under applicable law and
(iv) not knowingly use or knowingly permit the use of such Trademark in
violation of any third party rights.
(c) The Grantor (either itself or through licensees) will, for
each work covered by a material Copyright, continue to publish, reproduce,
display, adopt and distribute the work with appropriate copyright notice as
necessary and sufficient to establish and preserve its maximum rights under
applicable copyright laws.
(d) The Grantor shall notify the Collateral Agent immediately
if it knows or has reason to know that any Patent, Trademark or Copyright
material to the conduct of its business may become abandoned, lost 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, United States Copyright Office or
any court or similar office of any country) regarding the Grantor's ownership of
any Patent, Trademark or Copyright, its right to register the same, or to keep
and maintain the same.
(e) In no event shall the Grantor, either itself or through
any agent, employee, licensee or designee, file an application for any Patent,
Trademark or Copyright (or for the registration of any Trademark or Copyright)
with the United States Patent and Trademark Office, United States Copyright
Office or any office or agency in any political subdivision of the United States
or in any other country or any political subdivision thereof, unless it promptly
informs the Collateral Agent, and, upon request of the Collateral Agent,
executes and delivers any and all agreements, instruments, documents and papers
as the Collateral Agent may request to evidence the Collateral Agent's security
interest in such Patent, Trademark or Copyright, and each Grantor hereby
appoints the Collateral Agent as its attorney-in-fact to execute and file such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable.
(f) The Grantor will take all necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of the Trademarks and Copyrights that is material to the conduct of
the Grantor's business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees, and, if consistent with good business judgment, to initiate opposition,
interference and cancellation proceedings against third parties.
(g) In the event that the Grantor has reason to believe that
any Collateral consisting of a Patent, Trademark or Copyright material to the
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conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, the Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly xxx for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.
(h) The Grantor shall use its best efforts to obtain all
requisite consents or approvals by the licensor of each Copyright License,
Patent License or Trademark License to effect the assignment of all of such
Grantor's right, title and interest thereunder to the Collateral Agent or its
designee.
ARTICLE 5.
COLLECTIONS
SECTION 5.1. COLLECTIONS. (a) The Grantor agrees (i) to notify and
direct promptly each Account Debtor and every other person obligated to make
payments on Accounts Receivable or in respect of any Inventory (other than
customers purchasing Inventory in the ordinary course of business who are not
Account Debtors in respect of such purchases) to make all such payments in
accordance with the provisions of Section 2.21 of the Credit Agreement, (ii) to
use all reasonable efforts to cause each Account Debtor and every other person
identified in clause (i) above to make all payments with respect to Accounts
Receivable and Inventory in accordance with the provisions of Section 2.21 of
the Credit Agreement and (iii) promptly to deposit all payments received by it
on account of Accounts Receivable and Inventory, whether in the form of cash,
checks, credit card payments, notes, drafts, bills of exchange, money orders or
otherwise, in accordance with the provisions of Section 2.21 of the Credit
Agreement in precisely the form in which received (but with any endorsements of
the Grantor necessary for deposit or collection), and until they are so
deposited such payments shall be held by the Grantor for the benefit of the
Collateral Agent.
(b) Without the prior written consent of the Collateral Agent,
the Grantor shall not, in a manner adverse to the Lenders, change the general
instructions given to Account Debtors in respect of payment on Accounts to be
deposited in accordance with the provisions of Section 2.21 of the Credit
Agreement. Until the Collateral Agent shall have advised the Grantor to the
contrary, the Grantor shall, and the Collateral Agent hereby authorizes the
Grantor to, enforce and collect all amounts owing on the Inventory and Accounts
Receivable, for the benefit and on behalf of the Collateral Agent and the other
Secured Parties; PROVIDED, HOWEVER, that such privilege may at the option of the
Collateral Agent be terminated upon the occurrence and during the continuance of
a Default or an Event of Default.
SECTION 5.2. POWER OF ATTORNEY. The Grantor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent) as the Grantor's true and lawful
agent and attorney-in-fact, and in such capacity the Collateral Agent shall have
the right, with power of substitution for the Grantor and in the
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Grantor's name or otherwise, for the use and benefit of the Collateral Agent and
the Secured Parties, (a) at any time whether or not any Default or Event of
Default has occurred to take actions required to be taken by the Grantor under
Section 5.1, above, and (b) upon the occurrence and during the continuance of an
Event of Default (i) to receive, endorse, assign and/or deliver any and all
notes, acceptances, checks, drafts, money orders or other evidences of payment
relating to the Collateral or any part thereof; (ii) to demand, collect, receive
payment of, give receipt for and give discharges and releases of all or any of
the Collateral; (iii) to sign the name of the Grantor on any invoice or xxxx of
lading relating to any of the Collateral; (iv) to commence and prosecute any and
all suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral; (v) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Collateral; and (vi) to use, sell, assign, transfer, pledge, make any
agreement with respect to or otherwise deal with all or any of the Collateral,
and to do all other acts and things necessary to carry out the purposes of this
Agreement, as fully and completely as though the Collateral Agent were the
absolute owner of the Collateral for all purposes; provided, however, that
nothing herein contained shall be construed as requiring or obligating the
Collateral Agent or any Secured Party to make any commitment or to make any
inquiry as to the nature or sufficiency of any payment received by the
Collateral Agent or any Secured Party, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken or omitted to be taken by the Collateral Agent or
any Secured Party with respect to the Collateral or any part thereof shall give
rise to any defense, counterclaim or offset in favor of the Grantor or to any
claim or action against the Collateral Agent or any Secured Party. It is
understood and agreed that the appointment of the Collateral Agent as the agent
and attorney-in-fact of the Grantor for the purposes set forth above is coupled
with an interest and is irrevocable. The provisions of this Section shall in no
event relieve the Grantor of any of its obligations hereunder or under any other
Loan Document with respect to the Collateral or any part thereof or impose any
obligation on the Collateral Agent or any Secured Party to proceed in any
particular manner with respect to the Collateral or any part thereof, or in any
way limit the exercise by the Collateral Agent or any Secured Party of any other
or further right which it may have on the date of this Agreement or hereafter,
whether hereunder, under any other Loan Document, by law or otherwise.
ARTICLE 6.
REMEDIES
SECTION 6.1. REMEDIES UPON DEFAULT. Upon the occurrence and during the
continuance of an Event of Default, subject to the terms and conditions of the
Interim Borrowing Order or the Final Borrowing Order, as the case may be,
subject to the provisions of Section 7.4 of the Credit Agreement, the Collateral
Agent shall have in any jurisdiction in which enforcement hereof is sought, in
addition to all other rights and remedies, the rights and remedies of a secured
party under the Uniform Commercial Code
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or other applicable law. The rights and remedies of the Collateral Agent shall
include, without limitation, the right to take any of or all the following
actions at the same or different times: (a) with respect to any Collateral
consisting of Intellectual Property, on demand, to cause the Security Interest
to become an assignment, transfer and conveyance of any of or all such
Collateral by the Grantor to the Collateral Agent, or to license or sublicense,
whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any such Collateral throughout the world on such terms and
conditions and in such manner as the Collateral Agent shall determine (other
than in violation of any then-existing licensing arrangements to the extent that
waivers cannot be obtained), and (b) with respect to any Collateral consisting
of Accounts Receivable, General Intangibles, Chattel Paper, Documents, and
Investment Property to collect the Collateral with or without the taking of
possession of any of the Collateral, and (c) with respect to any Collateral
consisting of Inventory, Goods, and Equipment, to conduct one or more going out
of business sales or any other sale or other disposition of such Collateral and
(d) with or without legal process and with or without prior notice or demand for
performance, to take possession of the Collateral and without liability for
trespass to enter any premises where the Collateral may be located for the
purpose of taking possession of or removing the Collateral. The Collateral Agent
may require the Grantor to assemble the Collateral not previously delivered to
the Collateral Agent, and make it available to the Collateral Agent on demand at
the Grantor's sole risk and expense at a place or places which are reasonably
convenient to both the Collateral Agent and the Grantor. Without limiting the
generality of the foregoing, the Grantor agrees that the Collateral Agent shall
have the right, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale or other disposition (if it deems it advisable to do
so) to restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing the Collateral for their own
account for investment and not with a view to the distribution or sale thereof,
and upon consummation of any such sale or other disposition the Collateral Agent
shall have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Collateral so sold. Each such purchaser at any such sale
or other disposition shall hold the property sold or otherwise disposed of
absolutely, free from any claim or right on the part of any Grantor, and the
Grantor hereby waives (to the extent permitted by law) all rights of redemption,
stay and appraisal which the Grantor now has or may at any time in the future
have under any rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall give the Grantor five (5) days' written
notice (which the Grantor agrees shall be reasonable notice) of the Collateral
Agent's intention to make any sale or other disposition of Collateral. Such
notice, in the case of a public sale, shall state the time and place for such
sale and, in the case of a sale at a broker's board or on a securities exchange,
shall state the board or exchange at which such sale is to be made and the day
on which the Collateral, or portion thereof, will first be offered for sale at
such board or exchange. Any such public sale shall be held at such time or times
within ordinary business hours and at such place or places as the Collateral
Agent may fix and state in the notice (if any) of such sale. At any sale or
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other disposition, the Collateral, or portion thereof, to be sold may be sold in
one lot as an entirety or in separate parcels, as the Collateral Agent may (in
its sole and absolute discretion) determine. The Collateral Agent, in the
exercise of the Collateral Agent's rights and remedies upon default, may conduct
one or more going out of business sales, in the Collateral Agent's own right or
by one or more agents and contractors. Such sale(s) may be conducted upon any
premises owned, leased, or occupied by the Grantor. The Collateral Agent and any
such agent or contractor, in conjunction with any such sale, may augment the
Inventory with other goods (all of which other goods shall remain the sole
property of the Collateral Agent or such agent or contractor). Any amounts
realized from the sale of such goods which constitute augmentations to the
Inventory (net of an allocable share of the costs and expenses incurred in their
disposition) shall be the sole property of the Collateral Agent or such agent or
contractor and none of the Grantor nor any Person claiming under or in right of
the Grantor shall have any interest therein. The Collateral Agent shall not be
obligated to make any sale or other disposition of any Collateral if it shall
determine not to do so, regardless of the fact that notice of sale or other
disposition of such Collateral shall have been given. The Collateral Agent may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale or other
disposition of all or any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the Collateral Agent until
the sale price is paid by the purchaser or purchasers thereof, but the
Collateral Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like notice. At any
public (or, to the extent permitted by applicable law, private) sale made
pursuant to this Section, any Secured Party may bid for or purchase, free from
any right of redemption, stay, valuation or appraisal on the part of the Grantor
(all said rights being also hereby waived and released to the extent permitted
by law), the Collateral or any part thereof offered for sale and may make
payment on account thereof by using any claim then due and payable to such
Secured Party from the Grantor as a credit against the purchase price, and such
Secured Party may, upon compliance with the terms of sale, hold, retain and
dispose of such property without further accountability to the Grantor therefor.
For purposes hereof, a written agreement to purchase the Collateral or any
portion thereof shall be treated as a sale or other disposition thereof; the
Collateral Agent shall be free to carry out such sale or other disposition
pursuant to such agreement and the Grantor shall not be entitled to the return
of the Collateral or any portion thereof subject thereto, notwithstanding the
fact that after the Collateral Agent shall have entered into such an agreement
all Events of Default shall have been remedied and the Obligations paid in full.
As an alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to foreclose
this Agreement and to sell or otherwise dispose of the Collateral or any portion
thereof pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.
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SECTION 6.2. OTHER REMEDIES. The Collateral Agent, or any successor to
the Collateral Agent or any purchaser at a foreclosure sale from the Collateral
Agent or similar Person, shall have the right to cause all rights and
obligations of the Grantor under or in respect of any or all executory contracts
and agreements and unexpired leases to which the Grantor is a party and which
constitute part of the Collateral to be assumed or rejected pursuant to
Section 365(a) of the Bankruptcy Code as the Collateral Agent or such Person may
direct (except to the extent that such obligations were theretofore duly
rejected by such Grantor), and to cause such rights or obligations to be
assigned to the Collateral Agent or to such Person pursuant to Section 365(f) of
the Bankruptcy Code (assuming that adequate assurance of future performance is
given). To the fullest extent permitted by law, the Grantor agrees that the
Collateral Agent and such other Persons shall have the right to effect such
assumption, rejection or assignment, all as the Collateral Agent or such Persons
may direct without further action by the Grantor. The Grantor hereby agrees to
take all such action as the Collateral Agent and such other Persons may
reasonably request to effect any such assumption, rejection or assignment
(including but not limited to, in the case of assumption, the Collateral Agent
reserving its rights under Section 4.6 to cure any defaults and provide adequate
assurance of future performance to the extent that the Grantor refuses or
otherwise fails to do so). In addition to the rights and remedies described
hereunder, the Collateral Agent shall have the rights and remedies set forth in
Section 7.4 of the Credit Agreement.
SECTION 6.3. APPLICATION OF PROCEEDS. The Collateral Agent shall apply
any Collateral consisting of cash and the proceeds of any collection, sale or
other disposition of the Collateral to the extent reduced to cash, in the manner
set forth in Section 7.5 of the Credit Agreement. The Collateral Agent shall
have absolute discretion as to the time of application of any such proceeds,
moneys or balances in accordance with this Agreement. Upon any sale or other
disposition of the Collateral by the Collateral Agent (including pursuant to a
power of sale granted by statute or under a judicial proceeding), the receipt of
the Collateral Agent or of the officer making the sale or other disposition
shall be a sufficient discharge to the purchaser or purchasers of the Collateral
so sold or otherwise disposed of and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 6.4. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, the Grantor hereby grants to the Collateral
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantor) to use, license or sub-license any
of the Collateral consisting of Intellectual Property now owned or hereafter
acquired by the Grantor, and wherever the same may be located, and including in
such license reasonable 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. The use of such license by the Collateral Agent
shall be exercised, at the option of the Collateral Agent, upon the occurrence
and during the continuation of an Event of Default, provided that any license,
sub-license or other transaction
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entered into by the Collateral Agent in accordance herewith shall be binding
upon the Grantor notwithstanding any subsequent cure of an Event of Default.
ARTICLE 7.
CONCERNING REVISED ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE
7.1. GENERAL. The parties acknowledge and agree to the following
provisions of this Agreement in anticipation of the possible application, in one
or more jurisdictions to the transactions contemplated hereby, of the revised
Article 9 of the Uniform Commercial Code in the form or substantially in the
form approved by the American Law Institute and the National Conference of
Commissioners on Uniform State Law and contained in the 1999 official text of
Revised Article 9 ("Revised Article 9").
7.2. ATTACHMENT. In applying the law of any jurisdiction in which
Revised Article 9 is in effect, the Collateral is all assets of the Grantor,
whether or not within the scope of Revised Article 9. The Collateral shall
include, without limitation, the following categories of assets as defined in
Revised Article 9: goods (including inventory, equipment and any accessions
thereto), instruments (including promissory notes), documents, accounts
(including health-care-insurance receivables), chattel paper (whether tangible
or electronic), deposit accounts, letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing), commercial tort claims, securities
and all other investment property, general intangibles (including payment
intangibles and software), supporting obligations and any and all proceeds of
any thereof, wherever located, whether now owned and hereafter acquired. If the
Grantor shall at any time, whether or not Revised Article 9 is in effect in any
particular jurisdiction, acquire a commercial tort claim, as defined in Revised
Article 9, the Grantor shall immediately notify the Collateral Agent in a
writing signed by the Grantor of the brief details thereof and grant to the
Collateral Agent in such writing a security interest therein and in the proceeds
thereof, all upon the terms of this Agreement, with such writing to be in form
and substance satisfactory to the Collateral Agent.
7.3. PERFECTION BY FILING. The Collateral Agent may at any time and
from time to time, pursuant to the provisions of Sections 3.2 and 5.2, file
financing statements, continuation statements and amendments thereto that
describe the Collateral as all assets of the Grantor or words of similar effect
and which contain any other information required by Part 5 of Revised Article 9
for the sufficiency or filing office acceptance of any financing statement,
continuation 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. Any such financing statements,
continuation statements or amendments may be signed by the Collateral Agent on
behalf of the Grantor, as provided in Sections 3.2 and 5.2, and may be filed at
any time in any jurisdiction whether or not Revised Article 9 is then in effect
in that jurisdiction.
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7.4. OTHER PERFECTION, ETC. The Grantor shall at any time and from time
to time, whether or not Revised Article 9 is in effect in any particular
jurisdiction, take such steps as the Collateral Agent may reasonably request for
the Collateral Agent (a) to obtain an acknowledgement, in form and substance
satisfactory to the Collateral Agent, of any bailee having possession of any of
the Collateral that the bailee holds such Collateral for the Collateral Agent,
(b) to obtain "control" of any investment property, deposit accounts,
letter-of-credit rights or electronic chattel paper (as such terms are defined
in Revised Article 9 with corresponding provisions in Rev. Sections 9-104,
9-105, 9-106 and 9-107 relating to what constitutes "control" for such items of
Collateral), with any agreements establishing control to be in form and
substance satisfactory to the Collateral Agent, and (c) otherwise to insure the
continued perfection and priority of the Collateral Agent's security interest in
any of the Collateral and of the preservation of its rights therein, whether in
anticipation and following the effectiveness of Revised Article 9 in any
jurisdiction.
7.5. SAVINGS CLAUSE. Nothing contained in this Article 7 shall be
construed to narrow the scope of the Collateral Agent's security interest in any
of the Collateral or the perfection or priority thereof or to impair or
otherwise limit any of the rights, powers, privileges or remedies of the
Collateral Agent or any Lender hereunder except (and then only to the extent)
mandated by Revised Article 9 to the extent then applicable.
ARTICLE 8.
MISCELLANEOUS
SECTION 8.1. NOTICES. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.1 of the Credit Agreement.
SECTION 8.2. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantor
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, the Grantor in respect of the Obligations or this Agreement.
SECTION 8.3. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Secured Parties and shall survive the making by the Lenders of the
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Loans, and the execution and delivery to the Lenders of any notes evidencing
such Loans, regardless of any investigation made by the Lenders or on their
behalf, and shall continue in full force and effect until this Agreement shall
terminate.
SECTION 8.4. BINDING EFFECT. This Agreement shall become effective when
a counterpart hereof executed on behalf of the Grantor shall have been delivered
to the Collateral Agent and a counterpart hereof shall have been executed on
behalf of the Collateral Agent, and thereafter shall be binding upon the Grantor
and the Collateral Agent and their respective successors and assigns, and shall
inure to the benefit of the Grantor, the Collateral Agent and the other Secured
Parties and their respective successors and assigns, except that Grantor shall
not have the right to assign or transfer its rights or obligations hereunder or
any interest herein or in the Collateral (and any such assignment or transfer
shall be void) except as expressly contemplated by this Agreement or the Credit
Agreement.
SECTION 8.5. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the Grantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 8.6. COLLATERAL AGENT'S FEES AND EXPENSES; INDEMNIFICATION. (a)
Without limiting any of its obligations under the Credit Agreement or other Loan
Documents but subject to any applicable limitations on expenses set forth in the
Credit Agreement, the Grantor agrees to pay upon demand to the Collateral Agent
the amount of any and all reasonable and documented expenses, including the
reasonable and documented fees, disbursements and other charges of its counsel
and of any experts or agents, which the Collateral Agent may incur in connection
with (i) the administration of this Agreement, (ii) the custody or preservation
of, or the sale of, collection from or other realization upon any of the
Collateral, (iii) the exercise, enforcement or protection of any of the rights
of the Collateral Agent hereunder or (iv) the failure of any Grantor to perform
or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations
under the other Loan Documents, the Grantor agrees to indemnify the Collateral
Agent and the other Indemnitees against, and hold each of them harmless from,
any and all losses, claims, damages, liabilities and related expenses, including
reasonable and documented fees, disbursements and other charges of counsel,
incurred by or asserted against any of them arising out of, in any way connected
with, or as a result of, the execution, delivery or performance of this
Agreement or any claim, litigation, investigation or proceeding relating hereto
or to the Collateral, whether or not any Indemnitee is a party thereto; PROVIDED
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.
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(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 8.6 shall remain operative and in full force and
effect regardless of the termination of this Agreement or any other Loan
Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans or other Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Collateral Agent or
any Lender. All amounts due under this Section 8.6 shall be payable on written
demand therefor.
SECTION 8.7. GOVERNING LAW. This agreement is an instrument under seal
governed by, and shall be construed in accordance with, the laws of the
Commonwealth of Massachusetts (excluding the laws applicable to conflicts or
choice of laws) and the provisions of the Bankruptcy Code.
SECTION 8.8. WAIVERS; AMENDMENT. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Agents, the Issuing Bank and the Lenders under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provisions of this Agreement or any
other Loan Document or consent to any departure by the Grantor therefrom shall
in any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on the
Grantor in any case shall entitle the Grantor to any other or further notice or
demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Collateral Agent and the Grantor, subject to any
consent required in accordance with Section 9.2 of the Credit Agreement.
SECTION 8.9. WAIVER OF JURY TRIAL. THE GRANTOR HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. THE
GRANTOR (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS,
THE WAIVERS SET FORTH IN THIS SECTION 8.9.
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SECTION 8.10. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 8.11. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract and shall become effective
as provided in Section 8.4. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof.
SECTION 8.12. HEADINGS. Article and Section headings used herein are
for the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 8.13. CONSENT TO SERVICE OF PROCESS. The Grantor irrevocably
consents to service of process in the manner referred to for notices in Section
8.1. Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 8.14. TERMINATION. This Agreement and the Security Interest
shall terminate when all the Obligations have been indefeasibly paid in full,
the Lenders have no further commitment to lend, there are no Letter of Credit
Outstandings and the Issuing Bank has no further commitment to issue Letters of
Credit under the Credit Agreement, at which time the Collateral Agent shall
execute and deliver to the Grantor, at the Grantor' expense, all Uniform
Commercial Code termination statements and similar documents that the Grantor
shall reasonably request in writing to evidence such termination. Any execution
and delivery of termination statements or documents pursuant to this Section
8.14 shall be without recourse to or warranty by the Collateral Agent.
SECTION 8.15. ORDERS. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT, ALL RIGHTS AND REMEDIES OF THE COLLATERAL AGENT OR
ANY LENDER UNDER THIS AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS OF THE
ORDERS, ANY REPRESENTATIONS AND WARRANTIES MADE BY THE GRANTOR IN THIS AGREEMENT
ARE SUBJECT TO THE EFFECTS OF SUCH ORDERS, AND ALL SUCH REMEDIES AND THE
ENFORCEMENT OF SUCH RIGHTS SHALL BE EXERCISED IN A MANNER CONSISTENT WITH SUCH
ORDERS THEN IN EFFECT. IF ANY PROVISION IN THIS AGREEMENT SHALL CONFLICT WITH
ANY OF THE PROVISIONS
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OF THE ORDERS THEN IN EFFECT, THE PROVISIONS OF THE APPLICABLE ORDER SHALL
CONTROL.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as an instrument under seal as of the day and year first above
written.
LAMONTS APPAREL, INC.,
debtor and debtor in possession
By: /s/Xxxxx Xxxxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Vice Chairman
FLEET RETAIL FINANCE INC.,
as Collateral Agent,
By: /s/ Xxxxx Xxxxx
--------------------------
Name: Xxxxx Xxxxx
Title: Vice President
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF Wash. )
---------------------------
) ss.
COUNTY OF King )
------------------------------------------------
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 5th day of Jan, 2000, personally appeared Xxxxx Xxxxxxxxxx to
me known personally, and who, being by me duly sworn, deposes and says that he
is the Vice Chairman of Lamonts Apparel, Inc., a debtor and debtor-in-possession
and that said instrument was signed and sealed on behalf of said corporation by
authority of its Board of Directors, and said Xxxxx Xxxxxxxxxx acknowledged said
instrument to be the free act and deed of said corporation.
/s/ Xxxxxxxxx X. Xxxxxxxxxx
------------------------------
Notary Public
My commission expires: 3/8/01
Xxxxxxxxx X. Xxxxxxxxxx
Annex 1 to the
Security Agreement
Form Of
PERFECTION CERTIFICATE
SCHEDULE I
Copyrights
SCHEDULE II
Patents
SCHEDULE III
Trademarks
