EX-4.3 3 dex43.htm SECURITY AGREEMENT SECURITY AGREEMENT SECURITY AGREEMENT (this “Agreement”), dated as of August 24, 2010, by and among: Toys “R” Us- Delaware, Inc., a Delaware corporation (the “Issuer”);
Exhibit 4.3
SECURITY AGREEMENT (this “Agreement”), dated as of August 24, 2010, by and among:
Toys “R” Us-Delaware, Inc., a Delaware corporation (the “Issuer”);
the other Grantors identified on the signature pages hereto (each such Person, individually, a “Grantor; the Issuer and each Guarantor are hereinafter referred to individually as a “Grantor” and the Issuer and the other Grantors are hereinafter referred to collectively as the “Grantors”); and
THE BANK OF NEW YORK MELLON, having a place of business at x/x Xxx Xxxx xx Xxx Xxxx Xxxxxx Trust Company, N.A., 000 Xxxxxxx Xxxx Xxxxx, 00xx Xxxxx, Xxxxxxxxxx, XX 00000, as collateral agent for its own benefit and the benefit of the Trustee (as defined below) and the other Secured Parties (in such capacity, the “Collateral Agent”).
WITNESSETH:
WHEREAS, the Issuer is issuing $350,000,000 aggregate principal amount of 7 3/8% Senior Secured Notes due 2016 (together with any Additional Notes permitted to be incurred under the Indenture, the “Notes”) pursuant to the Indenture, dated as of August 24, 2010 (as it may be modified, amended or supplemented and in effect from time to time, the “Indenture”), by and among (i) Toys “R” Us-Delaware, Inc., as Issuer, (ii) the guarantors named therein, and (iii) The Bank of New York Mellon, as trustee (in such capacity, the “Trustee”) for the Holders of the Notes (the “Holders”); and
WHEREAS, the Indenture shall provide for, among other things, the issuance of Additional Notes with such Additional Notes ranking pari passu in right of payment and security with the Notes, issued on the Issue Date including, without limitation, by each holder of Additional Notes being automatically deemed a Secured Party for purposes of this Agreement; and
WHEREAS, this Agreement is given by each Grantor in favor of the Collateral Agent for the benefit of the Secured Parties to secure the payment and performance of all of the Secured Obligations.
NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged, the Grantors and the Collateral Agent hereby agree as follows:
ARTICLE I.
Definitions
SECTION 1.1. Generally. All references herein to the UCC shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided, however,
that if a term is defined in Article 9 of the UCC differently than in another Article thereof, the term shall have the meaning set forth in Article 9; provided further that if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection, of the Security Interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “UCC” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy, as the case may be.
SECTION 1.2. Definition of Certain Terms Used Herein. Unless the context otherwise requires, all capitalized terms used but not defined herein shall have the meanings set forth in the Indenture. In addition, the following terms shall have the following meanings:
“ABL Agent” shall mean Bank of America, N.A., in its capacity as Collateral Agent under the ABL Credit Agreement and its successors and assigns.
“ABL Collateral” shall have the meaning given that term in the Shared Collateral Intercreditor Agreement.
“ABL Credit Agreement” shall mean that certain Credit Agreement, dated as of July 21, 2005, as amended and restated as of June 24, 2009 and as further amended and restated as of August 10, 2010 (as modified, amended, supplemented, restated or replaced and in effect from time to time), by and among (i) Toys “R” Us-Delaware, Inc., as the lead borrower for the borrowers party thereto, (ii) the facility guarantors party thereto, (iii) Bank of America, N.A., as administrative agent, (iv) Bank of America, N.A. (acting through its Canada branch), as Canadian agent for its own benefit and the benefit of the other “Secured Parties” thereunder (and as defined therein), (v) the lenders party thereto and (vi) the other agents and parties thereto.
“ABL Obligations” shall have the meaning given that term in the Indenture.
“Accessions” shall have the meaning given that term in the UCC.
“Account Debtor” shall have the meaning given that term in the UCC and shall include any Person who is or who may become obligated to any Grantor under, with respect to or on account of an Account.
“Accounts” shall mean “accounts” as defined in the UCC, and also means a right to payment of a monetary obligation, whether or not earned by performance, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, or (c) arising out of the use of a credit or charge card or information contained on or for use with the card.
“Agent’s Rights and Remedies” shall have the meaning provided in Section 8.8.
“Applicable Law” means as to any Person: (a) all laws, statutes, rules, regulations, orders, codes, ordinances or other requirements having the force of law; and (b) all
-2-
court orders, decrees, judgments, injunctions, notices, binding agreements and/or rulings, in each case of or by any governmental authority which has jurisdiction over such Person, or any property of such Person.
“Blue Sky Laws” shall have the meaning provided in Section 6.1.
“Chattel Paper” shall have the meaning given that term in the UCC.
“Collateral” shall mean all of the following personal property of each Grantor (other than Xxxxxxxx): (a) Accounts, (b) Chattel Paper, (c) Commercial Tort Claims, (d) Deposit Accounts, (e) Documents, (f) Equipment, (g) General Intangibles (including Payment Intangibles and Intellectual Property), (h) Goods, (i) Instruments, (j) Inventory, (k) Investment Property, (l) Letter-of-Credit Rights, (m) Software, (n) Supporting Obligations, (o) money, policies and certificates of insurance, deposits, cash or other property, (p) all books, records, and information relating to any of the foregoing and/or to the operation of any Grantor’s business, and all rights of access to such books, records, and information, and all property in which such books, records, and information are stored, recorded and maintained, (q) all insurance proceeds, refunds, and premium rebates, including, without limitation, proceeds of fire and credit insurance, whether any of such proceeds, refunds, and premium rebates arise out of any of the foregoing ((a) through (p)) or otherwise, (r) all liens, guaranties, rights, remedies, and privileges pertaining to any of the foregoing ((a) through (q)), including the right of stoppage in transit, (s) all other personal property of every kind and nature of each Grantor, and (t) any of the foregoing whether now owned or now due, or in which any Grantor has an interest, or hereafter acquired, arising, or to become due, or in which any Grantor obtains an interest, and all products, Proceeds, substitutions, and Accessions of or to any of the foregoing; provided, however, that the Collateral shall not include the Excluded Collateral.
“Commercial Tort Claim” shall have the meaning given that term in the UCC.
“Control” shall have the meaning given that term in the UCC.
“Deposit Account” shall have the meaning given that term in the UCC.
“Discharge of ABL Obligations” shall have the meaning given that term in the Shared Collateral Intercreditor Agreement.
“Documents” shall have the meaning given that term in the UCC.
“Domestic Subsidiary” shall mean “Domestic Subsidiary” as such term is used and defined in the Parent Indentures.
“Electronic Chattel Paper” shall have the meaning given that term in the UCC.
“Equipment” shall mean “equipment” as defined in the UCC, and any and all Accessions or additions thereto or substitutions therefor. The term “Equipment” shall not include Fixtures.
-3-
“Excluded Collateral” shall mean (a) any rights or property acquired under a lease, contract, property rights agreement or license, the grant of a security interest in which shall constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of any Grantor therein or (ii) a breach or termination pursuant to the terms of, or a default under, any lease, contract, property rights agreement or license (other than to the extent that any restriction on such assignment would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other Applicable Law or principles of equity), provided that the proceeds therefrom shall not be excluded from the definition of Collateral to the extent that the assignment of such proceeds is not prohibited, (b) any governmental permit or franchise that prohibits Liens on or collateral assignments of such permit or franchise, (c) any Instrument evidencing indebtedness (defined consistently with such term as used in the Parent Indentures) of any Domestic Subsidiary, (d) any Security or other equity interest representing more than 65% of the outstanding voting stock of any Foreign Subsidiary, (e) any Security or other equity interest representing any ownership interest in any Domestic Subsidiary, (f) any Security or other equity interest representing any ownership interest in TRU of Puerto Rico, Inc., SALTRU Associates JV or ZT-Winston-Salem Associates, (g) the Designated Account (as defined in the ABL Credit Agreement) and any and all deposits, cash or other property in such account and (h) Fixtures.
“Excluded Xxxxxxxx Collateral” shall mean (a) any rights or property acquired under a lease, contract, property rights agreement or license, the grant of a security interest in which shall constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of any Grantor therein or (ii) a breach or termination pursuant to the terms of, or a default under, any lease, contract, property rights agreement or license (other than to the extent that any restriction on such assignment would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other Applicable Law or principles of equity); provided that the proceeds therefrom shall not be excluded from the definition of Collateral to the extent that the assignment of such proceeds is not prohibited, (b) any governmental permit or franchise that prohibits Liens on or collateral assignments of such permit or franchise, (c) any Instrument evidencing indebtedness (it being understood such term is defined consistently with such term as used in the Parent Indentures) of any Domestic Subsidiary, (d) any Security or other equity interest representing more than 65% of the outstanding voting stock of any Foreign Subsidiary, (e) any Security or other equity interest representing any ownership interest in any Domestic Subsidiary, (f) any Security or other equity interest representing any ownership interest in TRU of Puerto Rico, Inc., SALTRU Associates JV or ZT-Winston-Salem Associates and (g) Fixtures.
“Financing Statement” shall have the meaning given that term in the UCC.
“Fixtures” shall have the meaning given that term in the UCC.
-4-
“Foreign Subsidiary” shall mean, as to any Grantor, a Subsidiary that is organized under the laws of any jurisdiction other than the United States of America or any state thereof or the District of Columbia.
“General Intangibles” shall have the meaning given that term in the UCC, and shall also include, without limitation, all: Intellectual Property; Payment Intangibles; rights to payment for credit extended; deposits; amounts due to any Grantor; credit memoranda in favor of any Grantor; warranty claims; tax refunds and abatements; insurance refunds and premium rebates; all means and vehicles of investment or hedging, including, without limitation, options, warrants, and futures contracts; records; customer lists; telephone numbers; goodwill; causes of action; judgments; payments under any settlement or other agreement; literary rights; rights to performance; royalties; license and/or franchise fees; rights of admission; licenses; franchises; license agreements, including all rights of any Grantor to enforce same; permits, certificates of convenience and necessity, and similar rights granted by any governmental authority; internet addresses and domain names; developmental ideas and concepts; proprietary processes; blueprints, drawings, designs, diagrams, plans, reports, and charts; catalogs; technical data; computer software programs (including the source and object codes therefor), computer records, computer software, rights of access to computer record service bureaus, service bureau computer contracts, and computer data; tapes, disks, semi conductors chips and printouts; user, technical reference, and other manuals and materials; proposals; cost estimates, and reproductions on paper, or otherwise, of any and all concepts or ideas, and any matter related to, or connected with, the design, development, manufacture, sale, marketing, leasing, or use of any or all property produced, sold, or leased, by or credit extended or services performed, by any Grantor, whether intended for an individual customer or the general business of any Grantor, or used or useful in connection with research by any Grantor; provided that “General Intangibles” shall not include any indebtedness (defined consistently with such term as used in the Parent Indentures) of any Domestic Subsidiary.
“Xxxxxxxx” shall mean Xxxxxxxx, LLC, a Delaware corporation.
“Xxxxxxxx Collateral” shall mean all of the following personal property of Xxxxxxxx: (a) General Intangibles comprised of Intellectual Property, (b) all books, records, and information relating to any of the foregoing and all rights of access to such books, records, and information, and all property in which such books, records, and information are stored, recorded and maintained, (c) all liens, guaranties, rights, remedies, and privileges pertaining to any of the foregoing ((a) through ((b)), and (d) any of the foregoing whether now owned or now due, or in which Xxxxxxxx has an interest, or hereafter acquired, arising, or to become due, or in which Xxxxxxxx obtains an interest, and all products, Proceeds, substitutions, and Accessions of or to any of the foregoing; provided, however, that the Xxxxxxxx Collateral shall not include the Excluded Xxxxxxxx Collateral.
“Goods” shall have the meaning given that term in the UCC.
“Grantor” shall have the meaning given that term in the preliminary statement of this Agreement.
-5-
“Guarantee” shall have the meaning given that term in the preliminary statement of this Agreement.
“Indemnitee” shall have the meaning given that term in Section 8.6.
“Indenture” shall have the meaning given that term in the preliminary statement of this Agreement.
“Instruments” shall have the meaning given that term in the UCC; provided that “Instruments” shall not include any Instrument evidencing indebtedness of any Domestic Subsidiary.
“Intellectual Property” shall mean (a) the Intercompany Licenses and (b) all of the following owned by any Grantor (including Xxxxxxxx): all (i) patents, patent applications and patents pending; (ii) trade secret rights; (iii) copyrights and copyright applications, including mask work rights and derivative works; (iv) trade names, trademarks, trademark applications, service marks, and service xxxx applications; (v) Proprietary Marks and (vi) all other general intangible property in the nature of intellectual property recognized by the laws of the United States; provided that any “intent to use” trademark applications for which a statement of use has not been filed with the United States Patent and Trademark Office pursuant to Section 1(c) or Section 1(d) of the Xxxxxx Act (15 U.S.C. 1051, et seq.) (but only until such statement is filed and accepted by the United States Patent and Trademark Office) are excluded from this definition.
“Intercompany Licenses” shall mean the license agreements described on Exhibit A hereto between certain of the Grantors and Xxxxxxxx, pursuant to which Xxxxxxxx has granted to such Grantors licenses of the Proprietary Marks.
“Intercreditor Agreements” shall have the meaning given that term in the Indenture.
“Inventory” shall have the meaning given that term in the UCC, and shall also include, without limitation, all (a) Goods which (i) are leased by a Person as lessor, (ii) are held by a Person for sale or lease or to be furnished under a contract of service, (iii) are furnished by a Person under a contract of service, or (iv) consist of raw materials, work in process, or materials used or consumed in a business; (b) Goods of said description in transit; (c) Goods of said description which are returned, repossessed or rejected; (d) packaging, advertising, and shipping materials related to any of the foregoing; (e) all names, marks, and General Intangibles affixed or to be affixed thereto or associated therewith; and (f) Documents which represent any of the foregoing.
“Investment Property” shall have the meaning given that term in the UCC; provided that “Investment Property” (a) shall not include any Security representing more than 65% of the outstanding voting stock of any Foreign Subsidiary, (b) shall not include any Security representing any ownership interest in any Domestic Subsidiary and (c) shall not include any Security or other equity interest representing any ownership interest in TRU of Puerto Rico, Inc., SALTRU Associates JV or ZT-Winston-Salem Associates.
-6-
“Issuer” shall have the meaning provided in the preliminary statement of this Agreement.
“Letter-of-Credit Right” shall have the meaning given that term in the UCC.
“Liquidation” means the exercise by the Collateral Agent and the Trustee of those rights and remedies accorded to the Collateral Agent and Trustee under the Indenture, the Security Documents and Applicable Law as a creditor of the Grantors, including (after the occurrence and during the continuation of an Event of Default) the conduct by the Issuer, acting with the consent of the Collateral Agent and Trustee, of any public, private or “Going-Out-Of-Business Sale” or other disposition of Collateral for the purpose of liquidating the Collateral. Derivations of the word “Liquidation” (such as “Liquidate”) are used with like meaning in this Agreement.
“Parent Indentures” means each of:
(i) the Indenture, dated as of July 24, 2001, originally between Toys “R” Us, Inc. and The Bank of New York, as trustee, with respect to 7.625% Notes due 2011 (the “2011 Notes”),
(ii) the Indenture dated as of May 28, 2002 originally between Toys “R” Us, Inc. and The Bank of New York, as trustee, with respect to 7.875% Notes due 2013 (the “2013 Notes”),
(iii) the Indenture dated as of May 28, 2002 originally between Toys “R” Us, Inc. and The Bank of New York, as trustee, with respect to 7.375% Notes due 2018, and
(iv) the Indenture dated as of August 29, 1991 originally between Toys “R” Us, Inc. and The Bank of New York, as successor trustee, with respect to 8.75% Debentures due 2021 (the “2021 Debentures”), each as modified, amended, supplemented or restated and in effect from time to time.
“Payment Intangible” shall have the meaning given that term in the UCC.
“Perfection Certificate” shall mean a certificate substantially in the form of Annex 1 hereto, dated the date hereof, completed and supplemented with the schedules and attachments contemplated thereby, and duly executed by an Officer of each of the Grantors.
“Proceeds” shall include, without limitation, “Proceeds” as defined in the UCC and each type of property described in the definition of Collateral.
“Proprietary Marks” shall mean any and all United States trademarks (including any copyrights that exist in such trademarks, but excluding all other copyrights), service marks, trade names, corporate names, company names, business names, fictitious business names, trade dress, trade styles, designs, logos and other source or business identifiers,
-7-
whether registered or unregistered, which are owned or licensed, now or in the future, by Xxxxxxxx, including, but not limited to, as of the date hereof, the United States Proprietary Marks set forth on Exhibit B annexed hereto.
“Secured Parties” shall mean the Collateral Agent, the Trustee and the Holders.
“Secured Obligations” shall mean, collectively, the “Notes Obligations” (as defined in the Indenture).
“Securities Act” shall have the meaning provided in Section 6.1.
“Security” shall have the meaning given that term in the UCC.
“Security Documents” shall have the meaning given to that term in the Indenture.
“Security Interest” shall have the meaning provided in Section 2.1.
“Shared Collateral Intercreditor Agreement” shall have the meaning given that term in the Indenture.
“Software” shall have the meaning given that term in the UCC.
“Supporting Obligation” shall have the meaning given that term in the UCC.
“Term Loan Collateral Agent” means Bank of America, N.A., as administrative agent, under the Term Loan Credit Facility, or its successors.
“Term Loan Credit Facility” shall have the meaning given that term in the Indenture.
“Term Loan Credit Facility Obligations” means “Obligations” as defined in the Term Loan Credit Facility.
SECTION 1.3. Rules of Interpretation. The rules of construction specified in Section 1.04 of the Indenture shall be applicable to this Agreement.
ARTICLE II.
Security Interest
SECTION 2.1. Security Interest. As security for the payment or performance, as the case may be, in full of their respective Secured Obligations, (a) Xxxxxxxx hereby grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, a first priority security interest in all of Geoffrey’s right, title and interest in, to and under the Xxxxxxxx Collateral and (b) each other Grantor hereby grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, a second priority security interest in all of such Grantor’s right, title and interest in, to and under the Collateral, in each case wherever located,
-8-
whether now owned or hereafter acquired or arising (the “Security Interest”); provided that the security interest granted to the Collateral Agent in, to and under Intercompany Licenses shall be limited to the non-exclusive right to use the Proprietary Marks in exercising the Agent’s Rights and Remedies in connection with a Liquidation. Without limiting the foregoing, each Grantor hereby designates the Collateral Agent as such Grantor’s true and lawful attorney, exercisable by the Collateral Agent whether or not an Event of Default exists, with full power of substitution, at the Collateral Agent’s option, to file one or more Financing Statements, continuation statements, or to sign other documents for the purpose of perfecting, confirming or continuing the Security Interest granted by each Grantor, without the signature of any Grantor (each Grantor hereby appointing the Collateral Agent as such Person’s attorney to sign such Person’s name to any such instrument or document, whether or not an Event of Default exists), and naming any Grantor or the Grantors as debtors and the Collateral Agent as secured party.
Notwithstanding anything to the contrary in this Agreement, in the event that the Issuer becomes subject to Rule 3-16 of Regulation S-X under the Securities Act to the extent necessary and for so long as required for a Subsidiary of the Issuer not to be subject to the requirement to file separate financial statements with the Securities and Exchange Commission (or any other governmental agency), the Capital Stock of any Subsidiary of the Issuer shall not be included in the Collateral with respect to the Notes and shall not be subject to the Liens securing the Notes and the Notes Obligations.
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, any Grantor with respect to or arising out of the Collateral or the Xxxxxxxx Collateral.
ARTICLE III.
Representations and Warranties
The Grantors jointly and severally represent and warrant to the Collateral Agent and the Secured Parties that:
SECTION 3.1. Filings. The Perfection Certificate has been duly prepared, completed and executed, and the information set forth therein is correct and complete in all material respects as of the date hereof. Subject to the proviso to Section 4.3, UCC Financing Statements or other appropriate filings, recordings or registrations containing a description of the Collateral and the Xxxxxxxx Collateral (including, without limitation, the UCC Financing Statements identified on Schedule 3.2 hereto) have been or will be timely filed in each United States governmental, municipal or other office as is 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 benefit of the Secured Parties) in respect of all Collateral and all Xxxxxxxx Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and no further or subsequent filing, refiling, recording, rerecording, registration or re-registration is necessary in any such jurisdiction, except as provided under Applicable Law with respect to the filing of continuation
-9-
statements or as a result of any change in a Grantor’s name or jurisdiction of incorporation or formation or under any other circumstances under which, pursuant to the UCC, filings previously made have become misleading or ineffective in whole or in part.
SECTION 3.2. Validity and Priority of Security Interest. The Security Interest constitutes (a) a legal and valid security interest in all of the Collateral and all of the Xxxxxxxx Collateral securing the payment and performance of the Secured Obligations, (b) subject to the filings described on Schedule 3.2 or other requisite filings or registrations described in Section 3.2, a perfected security interest in all of the Collateral and the Xxxxxxxx Collateral (in each case to the extent perfection in such collateral and can be accomplished by such filing) and (c) subject to the obtaining of Control, a perfected security interest in all of the Collateral and all of the Xxxxxxxx Collateral (in each case to the extent perfection in such collateral can be accomplished by Control and perfection of the Security Interest in such collateral is required by the terms hereof). The Security Interest is and shall be prior to any other Lien on any of the Collateral, subject only to (i) with respect to ABL Collateral only, Liens securing the obligations of the Grantors with respect to the ABL Credit Agreement, and (ii) Permitted Liens having priority by operation of Applicable Law. The Security Interest is and shall be prior to any other Lien on any of the Xxxxxxxx Collateral, subject only to Permitted Liens having priority by operation of Applicable Law.
SECTION 3.3. Absence of Other Liens. The Collateral and the Xxxxxxxx Collateral is owned by the Grantors free and clear of any Lien, except for (i) Permitted Liens or (ii) Liens for which termination statements have been delivered to the Collateral Agent. Except as provided in the Indenture and the Security Documents, the Grantors have not filed or consented to the filing of (a) any Financing Statement or analogous document under the UCC or any other Applicable Law covering any Collateral or any Xxxxxxxx Collateral, or (b) any assignment in which any Grantor assigns any Collateral, any Xxxxxxxx Collateral or any security agreement or similar instrument covering any Collateral or any Xxxxxxxx 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 Permitted Liens.
SECTION 3.4. Bailees, Warehousemen, Etc. Schedule 3.4 hereto sets forth a list, as of the Closing Date, of each bailee, warehouseman and other third party in possession or control of any Inventory of any Grantor and specifies as to each bailee, warehouseman or other third party whether the value of the Inventory, at Cost (as defined in the ABL Credit Agreement), possessed or controlled by such bailee, warehouse-man or other third party exceeds $20,000,000.
SECTION 3.5. Consignments. No Grantor has, and none shall have, possession of any property on consignment from any consignor having a value greater than $10,000,000 unless a lien waiver or other agreement in favor of the Collateral Agent reasonably satisfactory to the Collateral Agent is delivered to the Collateral Agent by such consignor.
SECTION 3.6. Intercompany Licenses. The Intercompany Licenses have not been terminated and, to each Grantor’s knowledge, no breach, default or other circumstances exist in respect thereof which would reasonably likely materially impair or restrict the ability of the Collateral Agent to utilize the Proprietary Marks in exercising the Agent’s Rights and Remedies in connection with any Liquidation.
-10-
SECTION 3.7. Commercial Tort Claims. Except as set forth on Schedule 3.7 hereof, as of the Closing Date, no Grantor owns any rights in, to or under any Commercial Tort Claim having a value in excess of $1,000,000.
ARTICLE IV.
Covenants
The Grantors jointly and severally covenant and agree with the Collateral Agent and the Secured Parties as follows:
SECTION 4.1. Change of Name; Location of Collateral; Records; Place of Business.
(a) Each Grantor agrees to furnish to the Collateral Agent prompt written notice of any change in: (i) any Grantor’s name; (ii) the location of any Grantor’s chief executive office or, its principal place of business; (iii) any Grantor’s organizational legal entity designation or jurisdiction of incorporation or formation; (iv) any Grantor’s Federal Taxpayer Identification Number or organizational identification number assigned to it by its jurisdiction of incorporation or formation; or (v) the acquisition by any Grantor of any material property for which additional filings or recordings are necessary to perfect and maintain the Collateral Agent’s Security Interest therein (to the extent perfection of the Security Interest in such property is required by the terms hereof). Each Grantor agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or other Applicable Law that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected (to the extent perfection of the Security Interest in such property is required by the terms hereof) first priority security interest in all of the Xxxxxxxx Collateral (subject only to Permitted Liens having priority by operation of Applicable Law) and a second priority security interest in all of the Collateral (subject only to (i) with respect to the ABL Collateral only, Liens securing the obligations of the Grantors with respect to the ABL Credit Agreement, and (ii) Permitted Liens having priority by operation of Applicable Law) for its benefit and the benefit of the other Secured Parties.
(b) Each Grantor agrees to maintain, at its own cost and expense, such complete and accurate records with respect to the Collateral and the Xxxxxxxx Collateral owned by it as is consistent with its current practices or in accordance with such prudent and standard practices used in industries that are the same as, or similar to, those in which such Grantor is engaged, but in any event to include materially complete accounting records indicating all payments and proceeds received with respect to any part of the Collateral or the Xxxxxxxx Collateral, and, at such time or times as the Collateral Agent may reasonably request in writing, promptly to prepare and deliver to the Collateral Agent a duly certified schedule or schedules in form and detail reasonably satisfactory to the Collateral Agent showing the identity, amount and location of any and all Collateral and Xxxxxxxx Collateral.
-11-
SECTION 4.2. Protection of Security. Each Grantor shall, at its own cost and expense, take any and all actions reasonably necessary to defend the Security Interest of the Collateral Agent in the Collateral and the Xxxxxxxx Collateral against any Lien (other than Permitted Liens) and the priority thereof (except for Permitted Liens having priority by operation of Applicable Law).
SECTION 4.3. Further Assurances. Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further documents, financing statements, agreements and instruments and take all such further actions as the Collateral Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created or intended to be created hereby or the validity or priority of such Security Interest, 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 or other documents in connection herewith or therewith; provided, however that, prior to the Discharge of ABL Obligations, with respect to the ABL Collateral each such Grantor shall not be required to take any actions hereunder that the ABL Agent has not required such Grantors to take under the ABL Collateral Documents (as defined in the Shared Collateral Intercreditor Agreement). Without limiting the foregoing, each Grantor, at its own expense, shall execute, acknowledge, deliver and cause to be duly filed all such further documents, financing statements, agreements and instruments and take all such further actions as the Collateral Agent may from time to time reasonably request to perfect the Collateral Agent’s Security Interest in all Accounts, Inventory, Deposit Accounts, and the proceeds therefrom (including causing the Collateral Agent to have Control of any such Collateral or such Xxxxxxxx Collateral to the extent perfection in such Collateral or such Xxxxxxxx Collateral can be accomplished by Control to the extent required hereunder). If any amount payable under or in connection with any of the Collateral or the Xxxxxxxx Collateral shall be or become evidenced by any promissory note or other instrument with an individual face value in excess of $1,000,000, such note or instrument shall be promptly pledged to the Collateral Agent and delivered to the Collateral Agent, duly endorsed in a manner satisfactory to the Collateral Agent.
SECTION 4.4. Taxes; Encumbrances. At its option, 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 or the Xxxxxxxx Collateral (other than Permitted Liens), and may take any other action which the Collateral Agent may reasonably deem necessary or desirable to repair, maintain or preserve any of the Collateral or any of the Xxxxxxxx Collateral to the extent any Grantor fails to do so as required by the Indenture or this Agreement, and each Grantor jointly and severally agrees to reimburse the Collateral Agent for any payment made or any reasonable out-of-pocket expense incurred by the Collateral Agent pursuant to the foregoing authorization within fifteen (15) Business Days after receipt of an invoice therefore setting forth such payments or expenses in reasonable detail; provided, however, that nothing in this Section 4.4 shall be interpreted as excusing any 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 Indenture and the other Security Documents; and provided further that the making of
-12-
any such payments or the taking of any such action by the Collateral Agent shall not be deemed to constitute a waiver of any Default or Event of Default arising from any Grantor’s failure to have made such payments or taken such action.
SECTION 4.5. Assignment of Security Interest.
(a) If at any time any 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) To the extent that any Grantor is a beneficiary under any written letter of credit now or hereafter issued in favor of such Grantor having a face amount in excess of $1,000,000, such 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 such Grantor, promptly make such arrangements with such Grantor as are in the Collateral Agent’s reasonable judgment necessary and appropriate so that such Grantor may make any drawing to which such Grantor is entitled under such letter of credit, without impairment of the Collateral Agent’s perfected security interest in such Grantor’s rights to proceeds of such letter of credit or in the actual proceeds of such drawing. At the Collateral Agent’s request, such Grantor shall, for any such letter of credit now or hereafter issued in favor of such 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 reasonably satisfactory to the Collateral Agent and such issuer or (as the case may be) such confirmer, requiring, after the occurrence of an Event of Default, the proceeds of any drawing under such letter of credit to be paid directly to the Collateral Agent.
SECTION 4.6. Continuing Obligations of the Grantors. Each Grantor hereby acknowledges and agrees that the Collateral Agent shall have no obligation or duty to perform any obligation of any Grantor under the contracts, agreements or instruments constituting or relating to the Collateral or the Xxxxxxxx Collateral (including, without limitation, the Intercompany Licenses and the payment of royalties thereunder) and that each Grantor shall at all times remain solely and exclusively liable to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument constituting or relating to the Collateral and/or the Xxxxxxxx Collateral (including, without limitation, the Intercompany Licenses and the payment of royalties thereunder).
SECTION 4.7. Use and Disposition of Collateral and/or Xxxxxxxx Collateral. None of the Grantors shall make or permit to be made any collateral assignment, pledge or hypothecation of the Collateral or the Xxxxxxxx Collateral or shall grant any other Lien in respect of the Collateral or the Xxxxxxxx Collateral or shall grant Control (for purposes of security) of any Collateral or the Xxxxxxxx Collateral to any Person, except for Permitted Liens and other Liens permitted to be incurred under Section 4.13 of the Indenture. Except for sales, transfers or other dispositions of Collateral or Xxxxxxxx Collateral not prohibited under Section 4.11 of the Indenture, none of the Grantors shall make or permit to be made any sale or transfer of the Collateral and/or the Xxxxxxxx Collateral, and, except as expressly permitted in the Indenture with respect to Eligible In-Transit Inventory (as defined in the ABL
-13-
Credit Agreement) and Eligible Letter of Credit Inventory (as defined in the ABL Credit Agreement), each Grantor shall remain at all times in possession of the Collateral and/or the Xxxxxxxx Collateral, owned by it. The Grantors shall not permit any expiration, termination, modification, amendment or waiver of any Intercompany License that would reasonably likely materially impair or restrict the ability of the Collateral Agent to utilize the Proprietary Marks in exercising the Agent’s Rights and Remedies in connection with any Liquidation.
SECTION 4.8. Limitation on Modification of Accounts. None of the Grantors will, without the Collateral Agent’s prior written consent, grant any extension of the time of payment of any of the Accounts, 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, releases, credits, discounts, compromises or settlements granted or made in the ordinary course of business and consistent with its current practices or in accordance with such prudent business practices as determined by the Officers of the Grantors acting reasonably in their business judgment.
SECTION 4.9. Insurance.
(a) (i) Each of the Grantors shall maintain insurance with financially sound and reputable insurers (or, to the extent consistent with business practices in effect on the date hereof, a program of self-insurance) on such of its property and in at least such amounts and against at least such risks as is consistent with business practices in effect on the date hereof or as otherwise determined by the Officers of the Grantors acting reasonably in their business judgment, 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) Subject to the terms of the Intercreditor Agreements, each of the Grantors shall maintain fire and extended coverage policies with respect to any Collateral endorsed or otherwise amended to include (i) a lenders’ loss payable clause (regarding personal property), in form and substance reasonably satisfactory to the Collateral Agent, which endorsements or amendments shall provide that the insurer shall pay all proceeds otherwise payable to the Grantors under the policies directly to the Collateral Agent, (ii) a provision to the effect that none of the Grantors, the Secured Parties or any other Affiliate of a Grantor shall be a co-insurer (the foregoing not being deemed to limit the amount of self-insured retention or deductibles under such policies, which self-insured retention or deductibles shall be consistent with business practices in effect on the date hereof or as otherwise determined by the Officers of the Grantors acting reasonably in their business judgment), and (iii) such other provisions as the Collateral Agent may reasonably require from time to time to protect the interests of the Secured Parties. Subject to the terms of the Intercreditor Agreements (i) commercial general liability policies shall be endorsed to name the Collateral Agent as an additional insured and (ii) business interruption policies shall name the Collateral Agent as a loss payee and shall be endorsed or amended to include (x) a provision that, during the continuance of a Cash Dominion Event (as defined in the ABL Credit Agreement whether or not the ABL Credit Agreement is in effect), the insurer shall pay all proceeds otherwise payable to the Grantors under such policies directly to the Collateral
-14-
Agent, (y) a provision to the effect that none of the Grantors, Secured Parties (in their capacity as such) or any other Affiliate of a Grantor shall be a co-insurer and (z) such other provisions to the endorsement as the Collateral Agent may reasonably require from time to time to protect the interests of the Secured Parties. Each such casualty or liability policy referred to in this Section 4.9(b) shall also provide that it shall not be canceled, modified in any manner than would cause this Section 4.9(b) to be violated, or not renewed (i) by reason of nonpayment of premium except upon no less than thirty (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 premiums) or (ii) for any other reason except upon not less than thirty (30) days’ prior written notice thereof by the insurer to the Collateral Agent. The Issuer shall deliver to the Collateral Agent, prior to the cancellation, modification or non-renewal 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, including an insurance binder) together with evidence satisfactory to the Collateral Agent of payment of the premium therefor.
(c) Each Grantor hereby irrevocably makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor’s true and lawful agent and attorney-in-fact, exercisable only after the occurrence and during the continuance of an Event of Default, for the purpose of making, settling and adjusting claims in respect of Collateral and the Xxxxxxxx Collateral under policies of insurance, endorsing the name of such 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 any 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 Grantors 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 reasonably advisable. All sums reasonably disbursed by the Collateral Agent in connection with this Section 4.9, including reasonable attorneys’ fees, court costs, out-of-pocket expenses and other charges relating thereto, shall be payable, upon demand, by the Grantors to the Collateral Agent and shall be additional Secured Obligations secured hereby.
SECTION 4.10. Commercial Tort Claims. If any Grantor shall at any time acquire a Commercial Tort Claim having a value in excess of $1,000,000, such Grantor shall promptly notify the Collateral Agent in writing of the details thereof and the Grantors shall take such actions as the Collateral Agent shall reasonably request in order to grant to the Collateral Agent, for the benefit of the Secured Parties, a perfected and first priority security interest therein and in the Proceeds thereof.
SECTION 4.11. Legend. At the request of the Collateral Agent, each Grantor shall legend, in form and manner reasonably satisfactory to the Collateral Agent, its Accounts and its books, records and documents evidencing or pertaining thereto with an appropriate reference to the fact that such Accounts have been assigned to the Collateral Agent for the benefit of the Secured Parties and that the Collateral Agent has a security interest therein.
-15-
SECTION 4.12. Notices and Reports Pertaining to Intercompany Licenses. In addition to any other notice or reporting requirement imposed on the Grantors under this Agreement and the Indenture, the Grantors will promptly notify the Collateral Agent of any breach, default or other circumstance in respect of any Intercompany License which would reasonably likely materially impair or restrict the ability of the Collateral Agent to utilize the Proprietary Marks in exercising the Agent’s Rights and Remedies in connection with any Liquidation.
ARTICLE V.
Collections
SECTION 5.1. Deposit Accounts. Subject to the terms of the Intercreditor Agreements, until the occurrence of the Discharge of ABL Obligations, the Grantors acknowledge and agree that the ABL Agent has expressly agreed to act as agent for the benefit of the Collateral Agent and the Secured Parties under each control agreement or blocked account agreement with respect to any Deposit Accounts and Securities Accounts of a Grantor. Following the Discharge of ABL Obligations, the Grantors shall cause the Collateral Agent to have Control over each Deposit Account and Securities Accounts of a Grantor (other than the Designated Account).
SECTION 5.2. Power of Attorney. Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such 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 each Grantor and in each 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 a Default or Event of Default has occurred, to take actions required to be taken by the Grantors under Section 2.1 of this Agreement, (b) upon the occurrence and during the continuance of an Event of Default or as otherwise permitted under the Indenture, (i) to take actions required to be taken by the Grantors under Section 5.1 of this Agreement; (ii) 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 and/or the Xxxxxxxx Collateral or any part thereof; (iii) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral and/or any of the Xxxxxxxx Collateral; (iv) to sign the name of any Grantor on any invoices, schedules of Collateral, freight or express receipts, or bills of lading storage receipts, warehouse receipts or other documents of title relating to any of the Collateral and/or the Xxxxxxxx Collateral; (v) to sign the name of any Grantor on any notice to such Grantor’s Account Debtors; (vi) to sign the name of any Grantor on any proof of claim in bankruptcy against Account Debtors, and on notices of lien, claims of mechanic’s liens, or assignments or releases of mechanic’s liens securing the Accounts; (vii) to sign change of address forms to change the address to which each Grantor’s mail is to be sent to such address as the Collateral Agent shall designate; (viii) to receive and open each Grantor’s mail, remove any Proceeds of Collateral and/or Xxxxxxxx Collateral therefrom and turn over the balance of such mail either to the Issuer or to any trustee in bankruptcy or receiver of a Grantor, or other legal representative of a Grantor whom the Collateral Agent reasonably determines to be the appropriate person to whom to so turn over such mail; (ix) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to
-16-
collect or otherwise realize on all or any of the Collateral or the Xxxxxxxx Collateral to enforce any rights in respect of any Collateral and/or any Xxxxxxxx Collateral; (x) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral and/or any Xxxxxxxx Collateral; (xi) to take all such action as may be reasonably necessary to obtain the payment of any letter of credit and/or banker’s acceptance of which any Grantor is a beneficiary; (xii) to repair, manufacture, assemble, complete, package, deliver, alter or supply goods, if any, necessary to fulfill in whole or in part the purchase order of any customer of any Grantor; (xiii) to use, license or transfer any or all General Intangibles of any Grantor; and (xiv) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral and/or any Xxxxxxxx Collateral, and to do all other acts and things reasonably necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent was the absolute owner of the Collateral and/or the Xxxxxxxx Collateral for all purposes; provided, however, that nothing herein contained shall be construed as requiring or obligating the Collateral Agent or any other Secured Party to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent or any other Secured Party, or to present or file any claim or notice. It is understood and agreed that the appointment of the Collateral Agent as the agent and attorney-in-fact of the Grantors for the purposes set forth above is coupled with an interest and is irrevocable. The appointment of the Collateral Agent as the agent and attorney-in-fact of the Grantors for the purposes set forth above shall terminate when the principal of and interest on the Notes and all fees and other Secured Obligations (other than contingent indemnity obligations with respect to then unasserted claims) shall have been paid in full.
SECTION 5.3. No Obligation to Act. The Collateral Agent shall not be obligated to do any of the acts or to exercise any of the powers authorized by Section 5.2 of this Agreement, but if the Collateral Agent elects to do any such act or to exercise any of such powers, it shall not be accountable for more than it actually receives as a result of such exercise of power, and shall not be responsible to any Grantor for any act or omission to act except for any act or omission to act as to which there is a determination by a court of competent jurisdiction or another independent tribunal having jurisdiction that (i) the subject act or omission to act by the Collateral Agent or any Affiliate of the Collateral Agent or any officer, director, employee, advisor or agent of the Collateral Agent or such Affiliate constituted gross negligence, was in bad faith, or constituted willful misconduct or (ii) constituted a breach by the Collateral Agent or any Affiliate of the Collateral Agent or any officer, director, employee, advisor or agent of the Collateral Agent or such Affiliate of its obligations to such Grantor. The provisions of Section 5.2 of this Agreement shall in no event relieve any Grantor of any of its obligations hereunder or under the Indenture any other Security Document with respect to the Collateral and/or the Xxxxxxxx Collateral or any part thereof or impose any obligation on the Collateral Agent or any other Secured Party to proceed in any particular manner with respect to the Collateral and/or the Xxxxxxxx Collateral or any part thereof, or in any way limit the exercise by the Collateral Agent or any other Secured Party of any other or further right which it may have on the date of this Agreement or hereafter, whether hereunder, under the Indenture and any other Security Document, by law or otherwise.
-17-
ARTICLE VI.
Remedies
SECTION 6.1. Remedies upon Default. Upon the occurrence and during the continuance of an Event of Default, it is agreed that 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 UCC or other Applicable Law. The Collateral Agent’s Rights and Remedies shall include, without limitation, the right to take any of or all of the following actions at the same or different times as directed by the Collateral Agent acting at the direction of the Holders of a majority in aggregate principal amount of the then outstanding Notes:
(a) With respect to any Collateral and/or any Xxxxxxxx Collateral consisting of Accounts, General Intangibles (including Payment Intangibles and Intellectual Property), Letter-of-Credit Rights, Instruments, Chattel Paper, Documents, and Investment Property, the Collateral Agent may collect the Collateral and/or the Xxxxxxxx Collateral with or without the taking of possession of any of the Collateral and/or the Xxxxxxxx Collateral.
(b) With respect to any Collateral and/or any Xxxxxxxx Collateral consisting of Accounts, the Collateral Agent may (i) demand, collect and receive any amounts relating thereto, as the Collateral Agent may determine; (ii) commence and prosecute any actions in any court for the purposes of collecting any such Accounts and enforcing any other rights in respect thereof; (iii) defend, settle or compromise any action brought and, in connection therewith, give such discharges or releases as the Collateral Agent may reasonably deem appropriate; (iv) without limiting the rights of the Collateral Agent set forth in Section 5.2 hereof, receive, open and dispose of mail addressed to any Grantor and endorse checks, notes, drafts, acceptances, money orders, bills of lading, warehouse receipts or other instruments or documents evidencing payment, shipment or storage of the goods giving rise to such Accounts or securing or relating to such Accounts, on behalf of and in the name of such Grantor; and (v) sell, assign, transfer, make any agreement in respect of, or otherwise deal with or exercise rights in respect of, any such Accounts or the goods or services which have given rise thereto, as fully and completely as though the Collateral Agent was the absolute owner thereof for all purposes.
(c) With respect to any Collateral consisting of Investment Property, the Collateral Agent may (i) exercise all rights of any Grantor with respect thereto, including without limitation, the right to exercise all voting and corporate rights at any meeting of the shareholders of the issuer of any Investment Property and to exercise any and all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to any Investment Property as if the Collateral Agent was the absolute owner thereof, including the right to exchange, at its discretion, any and all of any Investment Property upon the merger, consolidation, reorganization, recapitalization or other readjustment of the issuer thereof, all without liability except to account for property actually received as provided in Section 5.3 hereof; (ii) transfer such Collateral at any time to
-18-
itself, or to its nominee, and receive the income thereon and hold the same as Collateral hereunder or apply it to the Secured Obligations; and (iii) demand, xxx for, collect or make any compromise or settlement it deems desirable. The Grantors recognize that (a) the Collateral Agent may be unable to effect a public sale of all or a part of the Investment Property by reason of certain prohibitions contained in the Securities Act of 1933, 15 U.S.C. § 77, (as amended and in effect, the “Securities Act”) or the securities laws of various states (the “Blue Sky Laws”), but may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire the Investment Property for their own account, for investment and not with a view to the distribution or resale thereof, (b) that private sales so made may be at prices and upon other terms less favorable to the seller than if the Investment Property were sold at public sales, (c) that neither the Collateral Agent nor any Secured Party has any obligation to delay sale of any of the Investment Property for the period of time necessary to permit the Investment Property to be registered for public sale under the Securities Act or the Blue Sky Laws, and (d) that private sales made under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner. Notwithstanding anything herein to the contrary, no Grantor shall be required to register, or cause the registration of, any Investment Property under the Securities Act or any or Blue Sky Laws.
(d) With respect to any Collateral consisting of Inventory, Goods, and Equipment, the Collateral Agent 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 any 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 neither any Grantor nor any Person claiming under or in right of any Grantor shall have any interest therein. Each purchaser at any such going out of business sale shall hold the property sold absolutely, free from any claim or right on the part of any Grantor.
(e) With respect to any Proprietary Marks, the Collateral Agent may exercise all of the rights granted to the Grantors under the Intercompany Licenses (for the limited purpose of allowing the Collateral Agent to utilize the Proprietary Marks in exercising the Agent’s Rights and Remedies in connection with any Liquidation of any Grantor’s Inventory or other Collateral).
(f) With or without legal process and with or without prior notice or demand for performance, the Collateral Agent may enter upon, occupy, and use any premises owned or occupied by each Grantor, and may exclude the Grantors from such premises or portion thereof as may have been so entered upon, occupied, or used by the Collateral Agent to the extent the Collateral Agent deems such exclusion reasonably necessary to preserve and protect the Collateral and/or the Xxxxxxxx Collateral. The Collateral Agent
-19-
shall not be required to remove any of the Collateral from any such premises upon the Collateral Agent’s taking possession thereof, and may render any Collateral and/or Xxxxxxxx Collateral unusable to the Grantors. In no event shall the Collateral Agent be liable to any Grantor for use or occupancy by the Collateral Agent of any premises pursuant to this Section 6.1, nor for any royalties or any other amounts due under, or any other obligations in respect of, the Intercompany Licenses, nor for any charge (such as wages for the Grantors’ employees and utilities) incurred in connection with the Collateral Agent’s exercise of the Agents’ Rights and Remedies.
(g) The Collateral Agent may require any Grantor to assemble the Collateral and make it available to the Collateral Agent at the Grantor’s sole risk and expense at a place or places which are reasonably convenient to both the Collateral Agent and such Grantor.
(h) Each Grantor agrees that the Collateral Agent shall have the right, subject to Applicable Law, to sell or otherwise dispose of all or any part of the Collateral and/or the Xxxxxxxx Collateral, at public or private sale, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. Each purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of any Grantor.
(i) Unless the Collateral and/or Xxxxxxxx Collateral is perishable or threatens to decline speedily in value, or is of a type customarily sold on a recognized market (in which event the Collateral Agent shall provide the Grantors such notice as may be practicable under the circumstances), the Collateral Agent shall give the Grantors at least ten (10) days’ prior written notice, by authenticated record, of the date, time and place of any proposed public sale, and of the date after which any private sale or other disposition of the Collateral and/or Xxxxxxxx Collateral may be made. Each Grantor agrees that such written notice shall satisfy all requirements for notice to that Grantor which are imposed under the UCC or other Applicable Law with respect to the exercise of the Agent’s Rights and Remedies upon default. The Collateral Agent shall not be obligated to make any sale or other disposition of any Collateral and/or Xxxxxxxx Collateral if it shall determine not to do so, regardless of the fact that notice of sale or other disposition of such Collateral and/or such Xxxxxxxx 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.
(j) Any 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 of such sale. At any sale or other disposition, the Collateral and/or the Xxxxxxxx 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. If any of the Collateral and/or the Xxxxxxxx Collateral is sold, leased, or otherwise disposed of by the Collateral Agent on credit, the Secured Obligations shall not be deemed to have been reduced as a result thereof unless and until payment is received thereon by the Collateral Agent.
-20-
(k) At any public (or, to the extent permitted by Applicable Law, private) sale made pursuant to this Section 6.1, the Collateral Agent or any other Secured Party may bid for or purchase, free (to the extent permitted by Applicable Law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor, the Collateral, the Xxxxxxxx Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to the Collateral Agent or such other Secured Party from any Grantor on account of the Secured Obligations as a credit against the purchase price, and the Collateral Agent or such other Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor.
(l) For purposes hereof, a written agreement to purchase the Collateral, the Xxxxxxxx Collateral or any portion thereof shall be treated as a sale thereof. The Collateral Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral, the Xxxxxxxx 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 Secured Obligations paid in full.
(m) 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 upon the Collateral and/or the Xxxxxxxx Collateral and to sell the Collateral and/or the Xxxxxxxx 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.
(n) To the extent permitted by Applicable Law, each Grantor hereby waives all rights of redemption, stay, valuation and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.
(o) In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting the Issuer or the creditors or property of the Issuer, the Collateral Agent and Secured Parties, to the extent permitted by Applicable Law, shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of the Collateral Agent and the other Secured Parties allowed in such proceedings for the entire amount of the Secured Obligations at the date of the institution of such proceedings and for any additional portion of the Secured Obligations accruing after such date.
Notwithstanding the foregoing to the contrary, prior to the occurrence of an Event of Default pursuant to Section 6.01 of the Indenture, the Agent’s exercise of any Rights and Remedies in respect of the Xxxxxxxx Collateral shall be subject to the rights of any third party under any international license and/or franchise agreements as in effect on such date.
-21-
SECTION 6.2. Application of Proceeds. After the occurrence and during the continuance of any Event of Default and acceleration of the Secured Obligations pursuant to Section 6.02 of the Indenture, the Collateral Agent shall promptly apply the proceeds of any collection or sale of the Collateral and/or the Xxxxxxxx Collateral, as well as any Collateral consisting of cash, or any Collateral and/or Xxxxxxxx Collateral granted under any other of the Security Documents, in accordance with Section 6.13 of the Indenture, subject to the terms of the Intercreditor Agreements.
Subject to the right of the Holders of a majority in aggregate principal amount of the then outstanding Notes to direct the exercise of the Agent’s Rights and Remedies upon the occurrence of an Event of Default and subject to the terms of the Intercreditor Agreements, 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 and/or the Xxxxxxxx Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the purchase money by 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 and/or the Xxxxxxxx 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.
ARTICLE VII.
Perfection of Security Interest
SECTION 7.1. Perfection by Filing. This Agreement constitutes an authenticated record, and each Grantor hereby authorizes the Collateral Agent, pursuant to the provisions of Sections 2.1 and 5.2 of this Agreement, to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral and/or the Xxxxxxxx Collateral, in such filing offices as the Collateral Agent shall reasonably deem appropriate, and, if and to the extent the Collateral Agent files financing or continuation statements, the Grantors shall pay the Collateral Agent’s reasonable costs and expenses incurred in connection therewith. Each Grantor hereby further agrees that a carbon, photographic, or other reproduction of this Agreement shall be sufficient as a Financing Statement and may be filed as a Financing Statement in any and all jurisdictions. Notwithstanding the above authorization, it is the obligation of each Grantor to file all financing or continuation statements, or amendments thereto, to perfect the security interests created by this Agreement.
SECTION 7.2. Other Perfection, Etc. The Grantors shall at any time and from time to time take such actions as are necessary for the Collateral Agent (a) to obtain Control of any Deposit Accounts to the extent required by Section 2.18 of the ABL Credit Agreement, with any agreements establishing control to be in form and substance reasonably satisfactory to the Collateral Agent; provided that prior to the Discharge of ABL Obligations the requirement of this Section 7.2(a) with respect to the delivery of any control agreement to the Collateral Agent shall be deemed satisfied by the delivery of such control agreement to the ABL Agent, (b) to obtain Control of any Investment Property, Letter-of-Credit Rights or Electronic Chattel Paper,
-22-
with any agreements establishing control to be in form and substance reasonably satisfactory to the Collateral Agent, and (c) otherwise to insure the continued perfection of the Collateral Agent’s security interest in any of the Collateral and/or the Xxxxxxxx Collateral with the priority described in Section 3.2 and of the preservation of its rights therein.
SECTION 7.3. Savings Clause. Nothing contained in this Article VII shall be construed to narrow the scope of the Collateral Agent’s Security Interest in any of the Collateral, the Xxxxxxxx Collateral or the perfection or priority thereof or to impair or otherwise limit any of the Agent’s Rights and Remedies hereunder except (and then only to the extent) as mandated by the UCC.
ARTICLE VIII.
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 14.02 of the Indenture.
SECTION 8.2. Grant of Non-Exclusive License. Without limiting the rights of the Collateral Agent under the assignment of the Intercompany Licenses provided herein, each Grantor hereby grants to the Collateral Agent a royalty free, non-exclusive, irrevocable license, which license shall be exercisable upon the existence and during the continuance of an Event of Default, to use, apply, and affix any Intellectual Property (other than Intellectual Property licensed pursuant to the Intercompany Licenses, including the Proprietary Marks) in which any Grantor now or hereafter has rights, such license being with respect to the Collateral Agent’s exercise of the Agent’s Rights and Remedies hereunder including, without limitation, in connection with any Liquidation of Inventory; provided, however, that the Collateral Agent’s exercise of the foregoing license shall be conditioned upon the Collateral Agent not violating any obligations (excluding the payment of royalties) or restrictions to which the Grantor of the related Intellectual Property is subject (except those obligations or restrictions which would reasonably likely materially impair or restrict the ability of the Collateral Agent to utilize the Intellectual Property in exercising the Agent’s Rights and Remedies). Nothing in this Section 8.2 shall require Xxxxxxxx to xxxxx any license that is prohibited by any rule of law, statute or regulation or is prohibited by, or constitutes a breach or default under or results in the termination of or gives rise to any right of acceleration, modification or cancellation under any contract, license, agreement, instrument or other document evidencing, giving rise to a right to use or theretofore granted with respect to such property; provided further that such licenses to be granted hereunder with respect to trademarks and Proprietary Marks shall be subject to the maintenance of quality standards with respect to the goods and services on which such trademarks are used sufficient to preserve the validity of such trademarks and Proprietary Marks.
SECTION 8.3. Security Interest Absolute. All rights of the Collateral Agent hereunder, the Security Interest and all obligations of the Grantors hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Indenture, any other Security Document, any agreement with respect to any of the Secured Obligations or any
-23-
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 Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Indenture, any other Security 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 the Guarantee or any other guarantee, securing or guaranteeing all or any of the Secured Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Secured Obligations or this Agreement (other than circumstances under which the principal of and interest on each Note and all fees and other Secured Obligations (other than contingent indemnity obligations with respect to then unasserted claims) shall have been paid in full.
SECTION 8.4. Survival of Agreement. All covenants, agreements, representations and warranties made by the Grantors herein and in any other Security Document and in the certificates or other instruments delivered in connection with or pursuant to this Agreement, the Indenture or any other Security Document shall be considered to have been relied upon by the Collateral Agent and the other Secured Parties and shall survive the execution and delivery of this Agreement, the Indenture and the other Security Documents and the issuance of any Notes, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Collateral Agent or any Secured Party may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty, and shall continue in full force and effect unless terminated in accordance with Section 8.15 hereof. In connection with the termination of this Agreement and the release and termination of the security interests in the Collateral and/or the Xxxxxxxx Collateral, the Collateral Agent, on behalf of itself and the other Secured Parties, may require such indemnities as it shall reasonably deem necessary or appropriate to protect the Secured Parties against any loss on account of credits previously applied to the Secured Obligations that may subsequently be reversed or revoked.
SECTION 8.5. Binding Effect; Several Agreement; Assignments. 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 Grantors that are contained in this Agreement shall bind and inure to the benefit of each Grantor and its respective successors and assigns. This Agreement shall be binding upon each Grantor and the Collateral Agent and its successors and permitted assigns, and shall inure to the benefit of each Grantor, the Collateral Agent and the other Secured Parties and their respective successors and permitted assigns, except that no Grantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral and/or the Xxxxxxxx Collateral (and any such attempted assignment or transfer shall be void) except as expressly permitted by this Agreement or the Indenture. This Agreement shall be construed as a separate agreement with respect to each Grantor and may be amended, modified, supplemented, waived or released with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.
-24-
SECTION 8.6. Fees and Expenses; Indemnification.
(a) Without limiting any of their obligations under the Indenture or the other Security Documents, and without duplication of any fees, expenses or indemnification provided for under the Indenture and the other Security Documents, the Grantors jointly and severally shall pay all reasonable out-of-pocket expenses incurred by the Collateral Agent, including the reasonable fees, charges and disbursements of any counsel and outside consultants for the Collateral Agent, within fifteen (15) Business Days after receipt of an invoice therefore setting forth such expenses in reasonable detail, 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 and/or the Xxxxxxxx Collateral, (iii) the exercise, enforcement or protection of any of the Agent’s Rights and Remedies hereunder or (iv) the failure of any Grantor to perform or observe any of the provisions hereof; provided that in the event the Grantors have a bona fide dispute with any such expenses, payment of such disputed amounts shall not be required until the earlier of the date such dispute is resolved to the reasonable satisfaction of the Grantors or thirty (30) days after receipt of any such invoice (and any such disputed amount which is so paid shall be subject to a reservation of the Grantors’ rights with respect thereto).
(b) Without limiting any of their indemnification obligations under the Indenture or the other Security Documents, and without duplication of any fees, expenses or indemnification provided for under the Indenture and the other Security Documents, each Grantor, shall, jointly and severally, indemnify the Collateral Agent and each of its Subsidiaries and Affiliates, and each of the respective stockholders, directors, officers, employees, agents, attorneys, and advisors of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all damages, actual out-of-pocket losses, claims, actions, causes of action, settlement payments, obligations, liabilities and related expenses, including the reasonable fees, charges and disbursements of one counsel for the Collateral Agent, incurred, suffered, sustained or required to be paid by, or asserted against, any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement, the Indenture or any other Security Document, the performance by any Grantor of its obligations under this Agreement, the Indenture or any other Security Document, or the consummation of the transactions contemplated by the Indenture and the Security Documents or any other transactions contemplated hereby, or (ii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing or to the Collateral, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided, however, that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (w) are determined by a court of competent jurisdiction or another independent tribunal having jurisdiction to have resulted from the gross negligence, bad faith or willful misconduct of any Agent or such Indemnitee or any Affiliate of such Indemnitee (or any officer, director, employee, advisor or agent of such Indemnitee or any such Indemnitee’s Affiliates), (x) are relating to disputes among Indemnitees, or (y) are determined by a court of competent jurisdiction or another independent tribunal having jurisdiction to have resulted from a breach by such Indemnitee of its obligations to a Grantor. No party hereto shall be liable to any other party hereto for any indirect, consequential, special or punitive damages except, in the case of any Grantor, to the extent such Grantor is otherwise required to provide indemnification pursuant to this Section 8.6(b). In connection with any indemnified claim hereunder, the Indemnitee shall be entitled to select its own counsel and the Grantors shall promptly pay the reasonable fees and expenses of such counsel.
-25-
(c) Any such amounts payable as provided hereunder shall be additional Secured 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, Indenture or any other Security Document, the consummation of the transactions contemplated hereby or thereby, the repayment of the Notes, the payment of all fees and other Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement, the Indenture or any other Security Document, or any investigation made by or on behalf of any Secured Party. All amounts due under this Section 8.6 shall be payable promptly after written demand therefor.
SECTION 8.7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
SECTION 8.8. Waivers; Amendment.
(a) The rights, remedies, powers, privileges, and discretions of the Collateral Agent hereunder (herein, the “Agent’s Rights and Remedies”) shall be cumulative and not exclusive of any rights or remedies which it would otherwise have. No delay or omission by the Collateral Agent in exercising or enforcing any of the Agent’s Rights and Remedies shall operate as, or constitute, a waiver thereof. No waiver by the Collateral Agent of any Event of Default or of any Default under any other agreement shall operate as a waiver of any other Event of Default or other Default hereunder or under any other agreement. No single or partial exercise of any of the Agent’s Rights or Remedies, and no express or implied agreement or transaction of whatever nature entered into between the Collateral Agent and any Person, at any time, shall preclude the other or further exercise of the Agent’s Rights and Remedies. No waiver by the Collateral Agent of any of the Agent’s Rights and Remedies on any one occasion shall be deemed a waiver on any subsequent occasion, nor shall it be deemed a continuing waiver. Subject to the right of the Collateral Agent acting at the direction of Holders of a majority in aggregate principal amount of the then outstanding Notes to direct the exercise of the Agent’s Rights and Remedies upon the occurrence and during the continuance of an Event of Default, the Agent’s Rights and Remedies may be exercised at such time or times and in such order of preference as the Collateral Agent may determine. The Agent’s Rights and Remedies may be exercised without resort or regard to any other source of satisfaction of the Secured Obligations. No waiver of any provisions of this Agreement, the Indenture or any other Security Document or consent to any departure by any 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 any Grantor in any case shall entitle such Grantor or any other 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 a written agreement entered into between the Collateral Agent and the Grantor or Grantors with respect to whom such waiver, amendment or modification is to apply, subject to any consent required in accordance with Article 9 of the Indenture.
-26-
SECTION 8.9. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE INDENTURE, ANY OTHER SECURITY DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY); AND WAIVES DUE DILIGENCE, DEMAND, PRESENTMENT AND PROTEST AND ANY NOTICES THEREOF AS WELL AS NOTICE OF NONPAYMENT. EACH PARTY HERETO (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 WAIVERS, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.9.
SECTION 8.10. Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement shall not be so affected or impaired thereby and (b) the parties hereto shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provision. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 8.11. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.
SECTION 8.12. Headings. Section headings used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
SECTION 8.13. Jurisdiction; Consent to Service of Process. The Grantors agree that any suit for the enforcement of this Agreement, the Indenture or any other Security Document may be brought in the courts of the State of New York sitting in the Borough of Manhattan or any federal court sitting therein as the Collateral Agent may elect in its sole discretion and consent to the non-exclusive jurisdiction of such courts. The Grantors hereby waive any objection which they may now or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient forum and agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Collateral Agent may otherwise have to bring any action or proceeding relating to this Agreement against a Grantor or its properties in the courts of any jurisdiction. The Grantors agree that any action commenced by any Grantor asserting any claim or counterclaim arising
-27-
under or in connection with this Agreement, Indenture or any other Security Document shall be brought solely in a court sitting in the Borough of Manhattan or any federal court sitting therein as the Collateral Agent may elect in its sole discretion and consent to the exclusive jurisdiction of such courts with respect to any such action. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 8.1 of this Agreement. Nothing in this Agreement, Indenture or any other Security Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
SECTION 8.14. Joinder to Security Agreement. As contemplated in the Indenture, additional Subsidiaries may from time to time become parties hereto and additional Grantors hereunder by execution and delivery of a Joinder to Security Agreement. Such Joinder to Security Agreement shall be effective upon delivery by such additional Grantor, without further action or consent or notice to any party hereto. Upon delivery of such Joinder to Security Agreement, all obligations of each Grantor hereunder shall be joint and several with the obligations of each other Grantor hereunder.
SECTION 8.15. Termination; Release of Collateral.
(a) Any Lien upon any Collateral and/or Xxxxxxxx Collateral will be released automatically if the Collateral and/or Xxxxxxxx Collateral constitutes property being sold, transferred or disposed of in a sale, transfer or other disposition not prohibited under Section 4.11 of the Indenture upon receipt by the Collateral Agent of the Net Proceeds thereof to the extent required by the Indenture and in the other circumstances contemplated in Section 11.04 of the Indenture.
(b) Upon at least two (2) Business Days’ prior written request by the Issuer, the Collateral Agent shall execute such documents as may be necessary to evidence the release of the Liens upon any Collateral and/or any Xxxxxxxx Collateral described in Section 8.15(a) of this Agreement; provided, however, that (i) the Collateral Agent shall not be required to execute any such document on terms which, in its reasonable opinion, would, under Applicable Law, expose the Collateral Agent to liability or create any obligation or entail any adverse consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Secured Obligations or any Liens (other than those expressly being released) upon (or obligations of any Grantor in respect of) all interests retained by any Grantor, including (without limitation) the proceeds of any sale, all of which shall continue to constitute part of the Collateral and/or the Xxxxxxxx Collateral.
(c) Except for those provisions which expressly survive the termination thereof, this Agreement and the Security Interest granted herein shall terminate when the principal of and interest on each Note and other Secured Obligations (other than contingent indemnity obligations with respect to then unasserted claims) shall have been paid in full, at which time the Collateral Agent shall execute and deliver to the Grantors, at the Grantors’ expense, all UCC termination statements and similar documents that the Grantors shall reasonably request to evidence such termination; provided, however, that the Indenture, this Agreement, and the Security Interest granted herein shall be reinstated if at any time payment, or any part thereof, of any Secured Obligation is rescinded or must otherwise be restored by any Secured Party upon the bankruptcy or reorganization of the Issuer or other Grantor. Any execution and delivery of termination statements or documents pursuant to this Section 8.15 shall be without recourse to, or warranty by, the Collateral Agent or any other Secured Party.
-28-
SECTION 8.16. Intercreditor Agreements. Notwithstanding anything herein to the contrary, the lien and Security Interest granted to the Collateral Agent pursuant to this Agreement and the exercise of any right or remedy by the Collateral Agent hereunder are subject to the provisions of the Intercreditor Agreements. In the event of any conflict between the terms of the Intercreditor Agreements and the terms of this Agreement, the terms of the Intercreditor Agreements shall govern and control. Without limiting the generality of the foregoing, and notwithstanding anything herein to the contrary, all rights and remedies of the Collateral Agent (and the Secured Parties) shall be subject to the terms of the Intercreditor Agreements, and any obligation of any Grantor hereunder or under any other Security Document with respect to the delivery or control of any Collateral, the novation of any lien on any certificate of title, xxxx of lading or other document, the giving of any notice to any bailee or other Person, the provision of voting rights or the obtaining of any consent of any Person, in each case in connection with any Collateral, shall be deemed to be satisfied if such Grantor, as applicable, complies with the requirements of the similar provision of the applicable document with respect to the ABL Obligations or the Term Loan Credit Facility Obligations. The delivery of any Collateral to or the control of any Collateral by to either the ABL Agent or the Term Loan Collateral Agent as required by the applicable Intercreditor Agreement shall satisfy any delivery or control requirement hereunder or under any other Security Document, with respect to the Collateral.
SECTION 8.17. Force Majeure. In no event shall the Collateral Agent be responsible or liable for any failure or delay in the performance of their obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services, it being understood that the Collateral Agent shall use reasonable efforts that are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
[SIGNATURE PAGES FOLLOW]
-29-
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement under seal as of the day and year first above written.
| GRANTORS: | ||||
| TOYS “R” US-DELAWARE, INC., | ||||
| as the Issuer and as a Grantor | ||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | Vice President-Treasurer | |||
| XXXXXXXX, LLC, | ||||
| as a Grantor | ||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | Vice President-Treasurer | |||
| XXXXXXXX INTERNATIONAL, LLC, | ||||
| as a Grantor | ||||
| By: | Xxxxxxxx, LLC, its sole member | |||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | Vice President-Treasurer |
| XXXXXXXX HOLDINGS, LLC, | ||||
| as a Grantor | ||||
| By: | TOYS “R” US-DELAWARE, INC., | |||
| its sole member | ||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | Vice President-Treasurer | |||
| TRU-SVC, LLC, | ||||
| as a Grantor | ||||
| By: | /s/ Xxxx Xxxxx | |||
| Name: | Xxxx Xxxxx | |||
| Title: | Manager | |||
| TOYS ACQUISITION, LLC, | ||||
| as a Grantor | ||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | Vice President-Treasurer | |||
| TRU OF PUERTO RICO, INC., | ||||
| as a Grantor | ||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | Vice President-Treasurer |
[Security Agreement]
| COLLATERAL AGENT: | THE BANK OF NEW YORK MELLON | |||||||
| By: | /s/ Xxxxxxx X. X’Xxxx | |||||||
| Name: | Xxxxxxx X. X’Xxxx | |||||||
| Title: | Senior Associate |
[Security Agreement]
Exhibit A
License Agreements
| 1. | License Agreement, dated as of January 23, 2004, by and between Xxxxxxxx, LLC (as successor in interest to Xxxxxxxx, Inc.), as Licensor, and Toys “R” Us-Delaware, Inc., as Licensee, as amended and in effect as of the date hereof. |
| 2. | License Agreement, dated as of January 23, 2004, by and between Xxxxxxxx, LLC (as successor in interest to Xxxxxxxx, Inc.), as Licensor, and Toys “R” Us-Delaware, Inc. (as successor by merger to Toys “R” Us-Mass., Inc., as Licensee. |
| 3. | License Agreement, dated as of January 23, 2004, by and between Xxxxxxxx, LLC (as successor in interest to Xxxxxxxx, Inc.), as Licensor, and Toys “R” Us-Delaware, Inc. (as successor by merger to Toys “R” Us-NY, LLC), as Licensee. |
| 4. | License Agreement, dated as of January 23, 2004, by and between Xxxxxxxx, LLC (as successor in interest to Xxxxxxxx, Inc.), as Licensor, and Toys “R” Us-Delaware, Inc. (as successor by merger to Toys “R” Us-Ohio, Inc.), as Licensee. |
| 5. | License Agreement, dated as of January 23, 2004, by and between Xxxxxxxx, LLC (as successor in interest to Xxxxxxxx, Inc.), as Licensor, and Toys “R” Us-Delaware, Inc. (as successor by merger to Toys “R” Us-Penn., Inc.), as Licensee. |
| 6. | License Agreement, dated as of January 23, 2004, by and between Xxxxxxxx, LLC (as successor in interest to Xxxxxxxx, Inc.), as Licensor, and Toys “R” Us-Delaware, Inc. (as successor by merger to Toys “R” Us-Texas LLC, as Licensee. |
| 7. | Second Amended and Restated License Agreement, dated as of January 7, 2002, among Xxxxxxxx, LLC (as successor in interest to Xxxxxxxx, Inc.) and Toys “R” Us (Canada) Ltd. Toys “R” Us (Canada) Ltee., as Licensors, and Toys “R” Us-Delaware, Inc. (as successor by merger to Xxxxxxx.xxx, LLC and Xxxxxxxxx.xxx, LLC), Xxxxxxxxxxx.xxx, LLC and Xxxxxxx.xxx, LLC, as Licensees. |
[Exhibit A to the Security Agreement]
Exhibit B
United States Proprietary Marks
| • | Schedule 7 to the Perfection Certificate is incorporated herein by reference, to the extent applicable. |
[Exhibit B to the Security Agreement]
Schedule 3.2
UCC Filings
| Item | Grantor | Filing Requirement | Filing Office | |||
| 1 | Toys “R” Us-Delaware, Inc. | UCC-1 financing statement | Secretary of State State of Delaware | |||
| 2 | TRU-SVC, LLC | UCC-1 Assignment | State Corporation Commission Commonwealth of Virginia | |||
| 3 | Toys Acquisition, LLC | UCC-1 financing statement | Secretary of State State of Delaware | |||
| 4 | TRU of Puerto Rico, Inc. | UCC-1 financing statement | State Department of Commonwealth of Puerto Rico | |||
| 5 | Xxxxxxxx Holdings, LLC | UCC-1 Assignment | Secretary of State State of Delaware | |||
| 6 | Xxxxxxxx, LLC | UCC-1 financing statement | Secretary of State State of Delaware | |||
| 7 | Xxxxxxxx International, LLC | UCC-1 financing statement | Secretary of State State of Delaware |
[Schedule 3.2 to the Security Agreement]
Schedule 3.4
Bailees, Warehousemen and Third Parties
| Bailee/Warehouseman | Address | Grantors |
Inventory > $20.0 million | |||
| California Cartage Co. | 0000 Xxxx Xxxxxxx Xxxxx Xxxxxxx Xxxxxxxxxx XX 00000 | Toy “R” Us-Delaware, Inc. | No | |||
| California Cartage Co. | 0000X Xxxx Xxxxxxxxx Xxxxxx Xxxxxx, XX 00000 | Toy “R” Us-Delaware, Inc. | No | |||
| Exel, Inc. | 0000 Xxxx Xxxx Xxxxxxxxx, XX 00000 | Toy “R” Us-Delaware, Inc. | Yes | |||
| Exel, Inc. | 000 Xxx Xxxx, Xxxxxxx, XX 00000 | Toy “R” Us-Delaware, Inc. | No |
[Schedule 3.4 to the Security Agreement]
Schedule 3.7
Certain Commercial Tort Claims
None.
[Schedule 3.7 to the Security Agreement]
