EXHIBIT 10.28.5
---------------
SUBSIDIARY GUARANTY AND COLLATERAL AGREEMENT
SUBSIDIARY GUARANTY AND COLLATERAL AGREEMENT (as such
agreement may be amended, supplemented or otherwise modified from
time to time, this "Agreement"), dated as of June 30, 1998, is
---------
made by each of the signatories hereto (together with any other
entity that may become a party hereto as provided herein, the
"Grantors"), in favor of BANK OF AMERICA NATIONAL TRUST AND
--------
SAVINGS ASSOCIATION, with an office at 0000 Xxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, in its capacity as administrative
agent under the Credit Agreement (as defined below) (the
"Administrative Agent").
--------------------
R E C I T A L S:
ANNTAYLOR, INC., (the "Borrower"), certain financial
--------
institutions currently and in the future to be parties to the
Credit Agreement (such financial institutions being collectively
referred to as the "Lenders"), the Administrative Agent,
-------
BancAmerica Xxxxxxxxx Xxxxxxxx, as Arranger (in such capacity,
the "Arranger"), Citicorp USA, First Union Capital Markets, in
--------
their respective capacities as Syndication Agents (in such
capacities, the "Syndication Agents"), and Bank of America
------------------
National Trust and Savings Association, Citibank, N.A. and First
Union National Bank in their respective capacities as Issuing
Banks (in such capacities, the "Issuing Banks"), have entered
-------------
into a Credit Agreement dated as of June 30, 1998, (as such
agreement may be amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), which provides for the
----------------
Lenders to make Loans and the Issuing Banks to issue Letters of
Credit. Pursuant to the Credit Agreement, the Grantors are
required to execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the above premises
and in order to induce the Lenders to make Loans and each Issuing
Bank to issue Letters of Credit under the Credit Agreement, each
Grantor hereby agrees with the Administrative Agent for its
benefit, and for the benefit of the Lenders, the Issuing Banks,
the Arranger, the Syndication Agents and the Administrative
Agent, by acceptance hereof, hereby agrees as follows:
Section 1. Defined Terms and Other Definitional
------------------------------------
Provisions.
----------
(a) Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
(b) The following terms shall have the following
meanings:
"Accounts": all accounts receivable and other rights
--------
to payment arising out of the sale or lease of goods and
services, whether or not earned by performance, and all
Credit Card Accounts, including, without limitation, all
"accounts" as such term is defined in the Uniform Commercial
Code in the State of New York in effect on the date hereof
=======================================================================
-2-
(the "UCC") (in each instance, however, and wherever
---
arising, collectively, "Accounts").
--------
"Bankruptcy Code": as defined in Section 2(d)(iv).
--------------- ----------------
"Chattel Paper, Instruments, Investment Property and
---------------------------------------------------
Documents": All chattel paper, all instruments, all
---------
investment property and all documents (including, without
limitation, (a) the shares of stock described in Annex I-A
---------
hereto (the "Pledged Shares") and all dividends, instruments
--------------
and other property from time to time distributed in respect
thereof or in exchange therefor, and (b) the notes and debt
instruments described in Annex I-B hereto (the "Pledged
--------- -------
Debt") and all payments thereunder and instruments and other
----
property from time to time delivered in respect thereof or
in exchange therefor), and all bills of lading, warehouse
receipts and other documents of title and documents,
including, without limitation, all "chattel paper",
"instruments", "investment property" and documents", as such
terms are defined in the UCC, in each instance whether now
owned or hereafter acquired by any Grantor, other than any
promissory note with an original principal amount of less
than $1,000,000 owing to any Grantor from a senior executive
or key employee of such Grantor (an "Excluded Note")
-------------
(collectively, "Chattel Paper, Instruments, Investment
--------------------------------------
Property and Documents")
----------------------
"Collateral": as defined in Section 3.
---------- ---------
"Equipment": All machinery and equipment, all
---------
manufacturing, distribution, selling, data processing and
office equipment, all furniture, furnishings, appliances,
tools, tooling, molds, dies, vehicles, vessels, aircraft and
all other goods of every type and description, in each
instance whether now owned or hereafter acquired by any
Grantor and wherever located, including all "equipment", as
such term is defined in the UCC; provided that equipment
shall not include "fixtures" as defined in Section 9-313 of
the UCC (collectively, "Equipment").
---------
"General Intangibles": All rights, interests, choses
-------------------
in action, causes of action, claims and all other intangible
property of any Grantor of every kind and nature, in each
instance whether now owned or hereafter acquired by any
Grantor, including, without limitation, all corporate and
other business records; all loans, royalties, and other
obligations receivable; all inventions, designs, patents,
patent applications, service marks, trade names and
trademarks (including any applications for the foregoing and
whether or not registered) and the goodwill of any Grantor's
business connected with and symbolized by such trademarks,
trade secrets, computer programs, software, printouts and
other computer materials, goodwill, registrations, U.S.
registered copyrights, licenses relating to trademarks and
U.S. registered copyrights, franchises, customer lists,
credit files, correspondence and advertising materials; all
customer and supplier contracts, firm sale orders, rights
under license and franchise agreements, and other contracts
and contract rights; all interests in partnerships, joint
ventures and other entities; all tax refunds and tax refund
claims; all right, title and interest under leases,
subleases, licenses and concessions and other agreements
relating to real or personal property; all payments due or
made to any Grantor in connection with any requisition,
=====================================================================
-3-
confiscation, condemnation, seizure or forfeiture of any
property by any person or governmental authority; all
deposit accounts (general or special) with any bank or other
financial institution; all credits with and other claims
against carriers and shippers; all rights to
indemnification; all reversionary interests in pension and
profit sharing plans and reversionary, beneficial and
residual interest in trusts; all proceeds of insurance of
which any Grantor is a beneficiary; and all letters of
credit, guaranties, liens, security interests and other
security held by or granted to any Grantor; and all other
intangible property, whether or not similar to the
foregoing, including, without limitation, all "general
intangibles", as such term is defined in the UCC (in each
instance, however, and wherever arising, collectively,
"General Intangibles"); provided, that the foregoing
------------------- --------
limitation shall not affect, limit, restrict or impair the
grant by such Grantor of a security interest pursuant to
this Agreement in any receivable or any money or other
amounts due or to become due under any such contract,
agreement, instrument or indenture.
"Guaranteed Obligations": as defined in Section 2(a).
---------------------- ------------
"Inventory": all inventory, finished goods, raw
----------
materials, work in process and other goods, including,
without limitation, all "inventory" as such term is defined
in the UCC (in each instance, however, and wherever arising,
collectively, "Inventory").
---------
"Other Property": All property or interests in
--------------
property now owned or hereafter acquired by any Grantor
which now may be owned or hereafter may come into the
possession, custody or control of the Administrative Agent,
any of the Lenders, any Issuing Bank or any agent or
Affiliate of any of them in any way or for any purpose
(whether for safekeeping, deposit, custody, pledge,
transmission, collection or otherwise); and all rights and
interests of any Grantor, now existing or hereafter arising
and however and wherever arising, in respect of any and all
(i) notes, drafts, letters of credit, bank accounts, stocks,
bonds, and debt and equity securities, whether or not
certificated, and warrants, options, puts and calls and
other rights to acquire or otherwise relating to the same;
(ii) money; (iii) proceeds of loans; and (iv) insurance
proceeds and books and records relating to any of the
property covered by this Agreement (collectively, "Other
-----
Property").
--------
"Personal Property Collateral": as defined in Section
---------------------------- -------
4(d)(iv).
--------
"Pledged Collateral": as defined in Section 5(a)(i).
------------------ ---------------
"Securities Act": as defined in Section 6(c)(i).
-------------- ---------------
"Subordinated Debt": as defined in Section 2(c)(iv).
----------------- ----------------
(c) The words "hereof," "herein", "hereto" and
"hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section and Schedule
references are to this Agreement unless otherwise specified.
=======================================================================
-4-
(d) The meanings given to the terms defined herein
shall be equally applicable to both the singular and plural forms
of the such terms.
(e) Where the context requires, terms relating to the
Collateral or any part thereof, when used in relation to a
Grantor, shall refer to such Grantor's Collateral or the relevant
part thereof.
Section 2. Guaranty.
--------
(a) Guaranty. (i) Each Grantor hereby
--------
unconditionally and irrevocably guarantees to the Administrative
Agent, for its benefit and the benefit of the Lenders, the
Issuing Banks, the Arranger and the Syndication Agents, the full
and prompt payment when due, whether at maturity or earlier, by
reason of acceleration, mandatory prepayment or otherwise, and in
accordance with the terms and conditions of the Credit Agreement,
of all of the Obligations, whether or not from time to time
reduced or extinguished or hereafter increased or incurred,
whether or not recovery may be or hereafter may become barred by
any statute of limitations, and whether enforceable or
unenforceable as against the Borrower, now or hereafter existing,
or due or to become due (all such indebtedness, liabilities and
obligations being hereinafter collectively referred to as the
"Guaranteed Obligations").
----------------------
(b) No Subrogation. Notwithstanding anything to the
--------------
contrary in this Agreement, each Grantor hereby irrevocably
waives all rights which may have arisen in connection with this
Agreement to be subrogated to any of the rights (whether
contractual, under the Bankruptcy Code, including Section 509
-----------
thereof, under common law or otherwise) of the Administrative
Agent, the Lenders, the Issuing Banks, the Arranger or the
Syndication Agents against the Borrower or against any collateral
security or guarantee or right of offset held by such Person for
the payment of the Obligations. Each Grantor hereby further
irrevocably waives all contractual, common law, statutory or
other rights of reimbursement, contribution, exoneration or
indemnity (or any similar right) from or against the Borrower or
any other Person which may have arisen in connection with this
Agreement. So long as the Guaranteed Obligations remain
outstanding, if any amount shall be paid by or on behalf of the
Borrower to any Grantor on account of any of the rights waived in
this paragraph, such amount shall be held by such Grantor in
trust, segregated from other funds of such Grantor, and shall,
forthwith upon receipt by such Grantor, be turned over to the
Administrative Agent in the exact form received by such Grantor
(duly indorsed by such Grantor to the Administrative Agent, if
required), to be applied against the Obligations as provided
herein. The provisions of this paragraph shall survive the term
of this Agreement and the payment in full of the Obligations and
the termination of the commitments of the Lenders to extend
credit under the Credit Agreement.
(c) Waivers; Other Agreements.
-------------------------
(i) Subject to the terms hereof and of the Credit
Agreement, the Administrative Agent is hereby authorized,
without notice to or demand upon any Grantor, which notice
or demand is expressly waived hereby, and without
discharging or otherwise affecting the obligations of any
Grantor hereunder (which shall remain absolute and
====================================================================
-5-
unconditional notwithstanding any such action or omission to
act), from time to time, to:
(A) supplement, renew, extend,
accelerate or otherwise change the time for payment of,
or other terms relating to, the Guaranteed Obligations,
or otherwise modify, amend or change the terms of any
promissory note or other agreement, document or
instrument (including the Credit Agreement and the
other Loan Documents) now or hereafter executed by the
Borrower and delivered to the Administrative Agent,
including, without limitation, any increase or decrease
of the rate of interest thereon;
(B) waive or otherwise consent to
noncompliance with any provision of any instrument
evidencing the Guaranteed Obligations, or any part
thereof, or any other instrument or agreement in
respect of the Guaranteed Obligations (including the
Credit Agreement and the other Loan Documents) now or
hereafter executed by the Borrower and delivered to the
Administrative Agent;
(C) accept partial payments on the
Guaranteed Obligations;
(D) receive, take and hold additional
security or collateral for the payment of the
Guaranteed Obligations, or for the payment of any other
guaranties of the Guaranteed Obligations or other
liabilities of the Borrower, and exchange, enforce,
waive, substitute, liquidate, terminate, abandon, fail
to perfect, subordinate, transfer, otherwise alter and
release any such additional security or collateral;
(E) apply any and all such security or
collateral and direct the order or manner of sale
thereof as the Administrative Agent may determine in
its sole discretion;
(F) settle, release, compromise,
collect or otherwise liquidate the Guaranteed
Obligations or accept, substitute, release, exchange or
otherwise alter, affect or impair any security or
collateral for the Guaranteed Obligations or any other
guaranty therefor, in any manner;
(G) add, release or substitute any one
or more other guarantors, makers or endorsers of the
Guaranteed Obligations and otherwise deal with the
Borrower or any other guarantor, maker or endorser as
the Administrative Agent may elect in its sole
discretion;
(H) apply any and all payments or
recoveries from the Borrower, from any other guarantor,
maker or endorser of the Guaranteed Obligations or from
any Grantor to the Guaranteed Obligations to the
Obligations in such order as provided in Section
-------
2.05(b) of the Credit Agreement, whether such
-------
Guaranteed Obligations are secured or unsecured or
guaranteed or not guaranteed by others;
=======================================================================
-6-
(I) apply any and all payments or
recoveries from any Grantor or any other guarantor,
maker or endorser of the Guaranteed Obligations or sums
realized from security furnished by any of them upon
any of their indebtedness or obligations to the
Administrative Agent as the Administrative Agent in its
sole discretion, may determine, whether or not such
indebtedness or obligations relate to the Guaranteed
Obligations; and
(J) refund at any time, at the
Administrative Agent's sole discretion, any payment
received by the Administrative Agent in respect of any
Guaranteed Obligations, and payment to the
Administrative Agent of the amount so refunded shall be
fully guaranteed hereby even though prior thereto this
Agreement shall have been cancelled or surrendered (or
any release or termination of any collateral by virtue
thereof) by the Administrative Agent, and such prior
cancellation or surrender shall not diminish, release,
discharge, impair or otherwise affect the obligations
of any Grantor hereunder in respect of the amount so
refunded (and any collateral so released or terminated
shall be reinstated with respect to such obligations);
even if any right of reimbursement or subrogation or other
right or remedy of any Grantor is extinguished, affected or
impaired by any of the foregoing (including, without
limitation, any election of remedies by reason of any
judicial, non-judicial or other proceeding in respect of the
Guaranteed Obligations which impairs any subrogation,
reimbursement or other right of such Grantor).
(ii) Each Grantor hereby waives:
(A) any requirements of diligence or
promptness on the part of the Administrative Agent;
(B) presentment, demand for payment or
performance and protest and notice of protest with
respect to the Guaranteed Obligations;
(C) notices (I) of nonperformance, (II) of
acceptance of this Agreement, (III) of default in
respect of the Guaranteed Obligations, (IV) of the
existence, creation or incurrence of new or additional
indebtedness, arising either from additional loans
extended to the Borrower or otherwise, (V) that the
principal amount, or any portion thereof, and/or any
interest on any instrument or document evidencing all
or any part of the Guaranteed Obligations is due, (VI)
of any and all proceedings to collect from the
Borrower, any endorser or any other guarantor of all or
any part of the Guaranteed Obligations, or from anyone
else, and (VII) of exchange, sale, surrender or other
handling of any security or collateral given to the
Administrative Agent to secure payment of the
Guaranteed Obligations or any guaranty therefor;
(D) any right to require the Administrative
Agent to (I) proceed first against the Borrower, or any
other person whatsoever, (II) proceed against or
exhaust any security given to or held by the
Administrative Agent in connection with the Guaranteed
=====================================================================
-7-
Obligations, or (III) pursue any other remedy in the
Administrative Agent's power whatsoever;
(E) any defense arising by reason of (I) any
disability or other defense of the Borrower, (II) the
cessation from any cause whatsoever of the liability of
the Borrower, (III) any act or omission of the
Administrative Agent or others which directly or
indirectly, by operation of law or otherwise, results
in or aids the discharge or release of the Borrower or
any security given to or held by the Administrative
Agent in connection with the Guaranteed Obligations;
(F) any and all other suretyship defenses
under applicable law; and
(G) the benefit of any statute of
limitations affecting the Guaranteed Obligations or
such Grantor's liability hereunder or the enforcement
hereof.
In connection with the foregoing, each Grantor covenants
that this Agreement shall not be discharged, except by
complete performance of the obligations contained herein.
(iii) Each Grantor hereby assumes responsibility
for keeping itself informed of the financial condition of
the Borrower, of any and all endorsers and/or other
guarantors of any instrument or document evidencing all or
any part of the Guaranteed Obligations and of all other
circumstances bearing upon the risk of nonpayment of the
Guaranteed Obligations or any part thereof that diligent
inquiry would reveal and each Grantor hereby agrees that the
Administrative Agent shall not have any duty to advise any
Grantor of information known to the Administrative Agent
regarding such condition or any such circumstances.
(iv) Each Grantor hereby agrees that any
indebtedness of the Borrower now or hereafter owing to such
Grantor is hereby subordinated to all of the Guaranteed
Obligations, whether heretofore, now or hereafter created
(the "Subordinated Debt"), and that without the prior
-----------------
consent of the Administrative Agent, the Subordinated Debt
shall not be paid in whole or in part until the Guaranteed
Obligations have been paid in full, the commitments of the
Lenders to extend credit under the Credit Agreement have
been terminated, no Letters of Credit are outstanding and
the Credit Agreement has been terminated and is of no
further force or effect, except that payments of principal
and interest on the Subordinated Debt shall be permitted so
long as no Potential Event of Default or Event of Default
shall have occurred and be continuing to the extent such
payments would not render the Borrower incapable of
performing the Guaranteed Obligations. No Grantor will
accept any payment of or on account of any Subordinated Debt
at any time in contravention of the foregoing. At the
request of the Administrative Agent, the Borrower shall pay
to the Administrative Agent all or any part of the
Subordinated Debt and any amount so paid to the
Administrative Agent shall be applied to payment of the
Guaranteed Obligations. Each payment on the Subordinated
Debt received in violation of any of the provisions hereof
shall be deemed to have been received by the relevant
Grantor as trustee for the Administrative Agent and shall be
paid over to the Administrative Agent immediately on account
of the Guaranteed Obligations, but without otherwise
====================================================================
-8-
affecting in any manner such Grantor's liability under any
of the provisions of this Agreement. Each Grantor agrees to
file all claims against the Borrower in any bankruptcy or
other proceeding in which the filing of claims is required
by law in respect of any Subordinated Debt, and the
Administrative Agent shall be entitled to all of such
Grantor's right thereunder. If for any reason the relevant
Grantor fails to file such claim at least thirty (30) days
prior to the last date on which such claim should be filed,
the Administrative Agent, as such Grantor's
attorney-in-fact, is hereby authorized to do so in such
Grantor's name or, in the Administrative Agent's discretion,
to assign such claim to and cause proof of claim to be filed
in the name of the Administrative Agent or its nominee. In
all such cases, whether in administration, bankruptcy or
otherwise, the person or persons authorized to pay such
claim shall pay to the Administrative Agent the full amount
payable on the claim in the proceeding, and, to the full
extent necessary for that purpose, each Grantor hereby
assigns to the Administrative Agent all such Grantor's
rights to any payments or distributions to which such
Grantor otherwise would be entitled. If the amount so paid
is greater than such Grantor's liability hereunder, the
Administrative Agent will pay the excess amount to the party
entitled thereto. In addition, each Grantor hereby appoints
the Administrative Agent as its attorney-in-fact to exercise
all of such Grantor's voting rights in connection with any
bankruptcy proceeding or any plan for the reorganization of
the Borrower.
(v) Each Grantor shall comply with all covenants
applicable to it under the Credit Agreement and shall
otherwise take no action which will cause an Event of
Default or Potential Event of Default under the Credit
Agreement. Each Grantor shall also cause the Borrower to
comply with all covenants applicable to the Borrower under
the Credit Agreement.
(d) Guarantee Absolute and Unconditional. Each
------------------------------------
Grantor hereby agrees that its obligations under this Agreement
are absolute and unconditional and shall not be discharged or
otherwise affected as a result of:
(i) the invalidity or unenforceability of any
security for or other guaranty of the Guaranteed Obligations
or of any promissory note or other document (including,
without limitation, the Credit Agreement) evidencing all or
any part of the Guaranteed Obligations, or the lack of
perfection or continuing perfection or failure of priority
of any security for the Guaranteed Obligations or any other
guaranty therefor;
(ii) the absence of any attempt to collect the
Guaranteed Obligations from the Borrower or any other
guarantor or other action to enforce the same;
(iii) failure by the Administrative Agent to take
any steps to perfect and maintain any security interest in,
or to preserve any rights to, any security or collateral for
the Guaranteed Obligations or any other guaranty therefor;
(iv) the Administrative Agent's election, in any
proceeding instituted under Chapter 11 of Title 11 of the
s
United States Code (11 U.S.C. s 101 et seq.) (the
=====================================================================
-9-
"Bankruptcy Code"), of the application of Section 1111(b)(2)
--------------- ------------------
of the Bankruptcy Code;
(v) any borrowing or grant of a security interest
by the Borrower, as debtor-in-possession, or extension of
credit, under Section 364 of the Bankruptcy Code;
-----------
(vi) the disallowance, under Section 502 of the
-----------
Bankruptcy Code, of all or any portion of the Administrative
Agent's claim(s) for repayment of the Guaranteed
Obligations;
(vii) any use of cash collateral under Section
-------
363 of the Bankruptcy Code;
---
(viii) any agreement or stipulation as to the
provision of adequate protection in any bankruptcy
proceeding;
(ix) the avoidance of any lien in favor of the
Administrative Agent for any reason;
(x) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or
dissolution proceeding commenced by or against the Borrower,
any Grantor or any other guarantor, maker or endorser,
including without limitation, any discharge of, or bar or
stay against collecting, all or any of the Guaranteed
Obligations (or any interest thereon) in or as a result of
any such proceeding;
(xi) failure by the Administrative Agent to file
or enforce a claim against the Borrower or its estate in any
bankruptcy or insolvency case or proceeding;
(xii) any action taken by the Administrative
Agent that is authorized by this Agreement;
(xiii) any election by the Administrative Agent
under Section 9-501(4) of the Uniform Commercial Code as
----------------
enacted in any relevant jurisdiction as to any security for
the Guaranteed Obligations or any guaranty of the Guaranteed
Obligations; or
(xiv) any other circumstance which might
otherwise constitute a legal or equitable discharge or
defense of a guarantor.
(e) Reinstatement. Each Grantor further agrees that,
-------------
if any payment made by the Borrower or any other person and
applied to the Guaranteed Obligations is at any time annulled,
set aside, rescinded, invalidated, declared to be fraudulent or
preferential or otherwise required to be refunded or repaid, or
the proceeds of any Collateral are required to be returned by the
Administrative Agent, any of the Lenders, any Issuing Bank, the
Arranger or either Syndication Agent to the Borrower, its estate,
trustee, receiver or any other party, including, without
limitation, any Grantor, under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent
of such payment or repayment, each Grantor's liability hereunder
===================================================================
-10-
(and any lien, security interest or other collateral securing
such liability) shall be and remain in full force and effect, as
fully as if such payment had never been made, or, if prior
thereto this Agreement shall have been cancelled or surrendered
(and if any lien, security interest or other collateral securing
any Grantor's liability hereunder shall have been released or
terminated by virtue of such cancellation or surrender), this
Agreement (and such lien, security interest or other collateral)
shall be reinstated in full force and effect, and such prior
cancellation or surrender shall not diminish, release, discharge,
impair or otherwise affect the obligations of any Grantor in
respect of the amount of such payment (or any lien, security
interest or other collateral securing such obligation).
(f) Payment. Each Grantor further agrees to pay all
-------
costs and expenses upon demand including, without limitation, all
court costs and reasonable attorneys' fees and expenses paid or
incurred by the Administrative Agent (i) in endeavoring to
collect all or any part of the Guaranteed Obligations after the
same become due and owing from, or in prosecuting any action
against, any Grantor or any other guarantor of all or any part of
the Guaranteed Obligations or (ii) in endeavoring to realize upon
(whether by judicial, non-judicial or other proceedings) any
Collateral or any other collateral securing any Grantor's
liabilities under this Agreement.
Section 3. Grant of Security. To secure the prompt
-----------------
and complete payment, observance and performance when due
(whether at the stated maturity, by acceleration or otherwise) of
all the Guaranteed Obligations and all other obligations of any
Grantor, each Grantor hereby assigns and pledges to the
Administrative Agent, and hereby grants to the Administrative
Agent, for its benefit and the benefit of the Lenders, the
Issuing Banks, the Arranger and the Syndication Agents, a
security interest in, all of its right, title and interest in and
to the following, whether now owned or existing or hereafter
arising or acquired and wheresoever located (collectively, the
"Collateral"):
----------
(a) all Accounts;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Chattel Paper, Instruments, Investment
Property and Documents; and
(f) all Other Property;
together, in each instance, with all accessions and additions
thereto, substitutions therefor, and replacements, proceeds and
products thereof; provided, however, that the foregoing grant of
-----------------
a security interest shall not include a security interest in any
lease and any property subject to an enforceable lease which by
its terms expressly prohibits the right of the Grantor to grant a
security interest in such lease or property. Each Grantor agrees
to use its commercially reasonable efforts to ensure that no
future lease contains any restrictions on such Grantor's right to
grant a security interest in any equipment placed on the leased
premises.
================================================================
-11-
Section 4. Representations and Warranties.
-------------------------------
(a) Credit Agreement. Each Grantor hereby represents
----------------
and warrants to the Administrative Agent that each representation
and warranty made by Borrower in Article V of the Credit
---------
Agreement applicable to such Grantor is true and correct, which
representations and warranties (except such representations and
warranties which are expressly made as of a different date) shall
survive the execution and delivery of this Agreement, and shall,
except to the extent that the same have been modified by a
writing delivered to and accepted in writing by the
Administrative Agent, and, other than with respect to changes
permitted or contemplated by the Credit Agreement, continue to be
true and correct on the date of each Loan, and on the date of
issuance of each Letter of Credit.
(b) Perfected First Priority Liens. This Agreement
------------------------------
creates a valid security interest in the Collateral (other than
the Pledged Collateral), securing the payment of the Guaranteed
Obligations, and all filings and other actions necessary or
desirable to perfect such security interest under the Uniform
Commercial Code as enacted in each relevant jurisdiction have
been duly taken or will be duly taken not later than five
Business Days after the date hereof (all such actions being the
filing of financing statements in the filing offices listed on
Annex III hereto). The pledge and delivery of the Pledged
---------
Collateral pursuant to this Agreement and all other filings and
other actions taken by any Grantor to perfect such security
interest prior to the date hereof, create a valid and perfected
first priority security interest in the Pledged Collateral,
securing the payment of the Guaranteed Obligations except for
Pledged Collateral consisting of checks and drafts received in
the ordinary course of business with respect to which the
Administrative Agent has not at any time requested possession and
which are not a material portion of the Personal Property
Collateral, either singly or in the aggregate.
(c) Equipment; Chief Executive Office. As of the date
---------------------------------
of this Agreement, the locations listed on Annex II to this
--------
Agreement constitute all locations at which its Inventory (other
than raw materials and work in process) or Equipment is located,
except for (i) Inventory or Equipment temporarily in transit from
one location listed on such Annex to another location listed on
such Annex or (ii) Inventory or Equipment in transit with common
or other carriers to a location listed on such Annex. As of the
date of this Agreement, the chief place of business and chief
executive office of each Grantor are located at the address first
specified in the preamble hereto for such Grantor.
(d) Title; No Other Liens. Each Grantor also
---------------------
represents and warrants as follows:
(i) Each Grantor is the legal and beneficial owner of
the Collateral free and clear of all liens, security inter
ests or other encumbrances, except (other than in respect of
Pledged Collateral described in (iii) below) as expressly
permitted by Section 8.02(b) of the Credit Agreement. For
---------------
the past five years, each Grantor has conducted business
only under its own corporate name and not under any trade
name or other name.
=================================================================
-12-
(ii) Each Grantor has exclusive possession and control
of the Inventory (other than raw materials and work in
process) and Equipment, except for (A) Inventory and
Equipment in the possession and control of such Grantor's
lessees and licensees under written lease and license
agreements entered into in the ordinary course of business
and consistent with past practice and (B) Inventory and
Equipment in transit with common or other carriers.
(iii) The Pledged Shares have been duly authorized and
validly issued and are fully paid and non-assessable. The
Pledged Debt of each Grantor's Subsidiaries (if any), and,
to the best of each Grantor's knowledge, all other Pledged
Debt, has been duly authorized, issued and delivered, and is
the legal, valid, binding and enforceable obligation of the
issuers thereof.
(iv) The Pledged Shares indicated on Annex I-A hereto
---------
constitute all of the shares held by each Grantor of the
respective issuers thereof and constitute 65% of all of the
shares of stock of the respective issuers who are Foreign
Subsidiaries. The Pledged Shares and the Pledged Debt
constitute all of the Pledged Collateral except for Pledged
Collateral consisting of checks and drafts received in the
ordinary course of business and with respect to which the
Administrative Agent has not at any time requested
possession and which are not a material portion of the
Collateral under this Agreement (the "Personal Property
-----------------
Collateral"), either singly or in the aggregate.
----------
(v) Other than filings with the United States Patent
and Trademark Office, filings and registrations with the
United States Copyright Office and filings under the Uniform
Commercial Code in effect in each relevant jurisdiction, no
authorization, approval or other action by, and no notice to
or filing with, any federal, state or local governmental
authority in the United States that have not already been
taken or made and which are in full force and effect, is
required (A) for the pledge by each Grantor of the Pledged
Collateral or for the grant by each Grantor of the security
interest in the Collateral granted hereby or for the
execution, delivery or performance of this Agreement by such
Grantor, (B) for the exercise by the Administrative Agent of
the voting or other rights provided in this Agreement with
respect to the Pledged Collateral or the remedies in respect
of the Pledged Collateral pursuant to this Agreement (except
as may be required in connection with the disposition
thereof by laws affecting the offering and sale of
securities generally), or (C) for the exercise by the
Administrative Agent of any of its other rights or remedies
hereunder.
(e) Accounts. (i) No amount payable to any Grantor
--------
under or in connection with any Account is evidenced by any
"instrument" or "chattel paper", as such terms are defined in the
UCC, which has not been delivered to the Administrative Agent.
(ii) The amounts represented by any Grantor to the
Lenders from time to time as owing to such Grantor in
respect of the Accounts will at such times be accurate.
Section 5. Covenants. Each Grantor covenants and
---------
agrees with the Administrative Agent and the Lenders that, from
and after the date of this Agreement until the Obligations shall
==================================================================
-13-
have been paid in full, no Letter of Credit shall be outstanding
and the Commitments shall have terminated:
(a) Pledged Collateral.
------------------
(i) All certificates, notes and other instruments
representing or evidencing the Pledged Shares or the Pledged
Debt and all other instruments now owned or at anytime
hereafter acquired by any Grantor other than any Excluded
Notes (collectively, the "Pledged Collateral") shall be
------------------
delivered to and held by or on behalf of the Administrative
Agent pursuant hereto (except as otherwise provided in the
last sentence of Section 4(b) hereof) and shall be in
------------
suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or
assignments in blank, all in form and substance satisfactory
to the Administrative Agent. Upon the occurrence and during
the continuance of an Event of Default, the Administrative
Agent shall have the right, at any time in its discretion
and without notice to any Grantor, to transfer to or to
register in the name of the Administrative Agent or any
nominee of the Administrative Agent any or all of the
Pledged Collateral, subject only to the revocable rights
specified in Section 5(c) hereof. In addition, upon the
------------
occurrence and during the continuance of an Event of
Default, the Administrative Agent shall have the right at
any time to exchange certificates or instruments
representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger
denominations.
(ii) Each Grantor agrees that it will (A) cause
each issuer of the Pledged Shares subject to its control not
to issue any stock or other securities in addition to or in
substitution for the Pledged Shares issued by such issuer,
except to such Grantor or as otherwise permitted under the
Credit Agreement, and (B) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and
all additional shares of stock or other securities of each
issuer of the Pledged Shares. Each Grantor hereby
authorizes the Administrative Agent to modify this Agreement
by amending Annex I to include such additional shares or
-------
other securities.
(b) Maintenance of Perfected Security Interest;
------------------------------------------
Further Assurances.
------------------
(i) Each Grantor agrees that from time to time, at its
own expense, such Grantor will promptly execute and deliver
all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the
Administrative Agent may reasonably request, in order to
perfect and protect any security interest granted or
purported to be granted hereby or to enable the
Administrative Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral; provided,
--------
however, that such Grantor shall in no event be required to
-------
execute any leasehold mortgage with respect to any lease.
Without limiting the generality of the foregoing, at the
request of the Administrative Agent, each Grantor shall: (A)
if an Event of Default shall have occurred and be
continuing, xxxx conspicuously each document included in the
Collateral at the request of the Administrative Agent made
at any time, and whether or not an Event of Default shall
have occurred, xxxx each of its records pertaining to the
Collateral with a legend, in form and substance satisfactory
===============================================================
-14-
to the Administrative Agent, indicating that such document
or Collateral is subject to the security interest granted
hereby; (B) execute and file such financing or continuation
statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or
as the Administrative Agent may reasonably request, in order
to perfect and preserve the security interests granted or
purported to be granted hereby; and (C) in the case of
investment property and any other relevant Collateral,
taking any actions necessary to enable the Administrative
Agent to obtain "control" (within the meaning of the
applicable Uniform Commercial Code) with respect thereto.
Each Grantor shall maintain the security interest created by
this Agreement as a perfected security interest and shall
defend such security interest against the claims and demands
of all Persons whomsoever.
(ii) Each Grantor hereby authorizes the Administrative
Agent to file one or more financing or continuation
statements, and amendments thereto, relative to all or any
part of the Collateral without the signature of the relevant
Grantor where permitted by law. A carbon, photographic or
other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall
be sufficient as a financing statement where permitted by
law.
(iii) Each Grantor shall furnish to the Administrative
Agent from time to time statements and schedules further
identifying and describing the Collateral and such other
reports in connection with the Collateral as the
Administrative Agent may request, all in reasonable detail.
(c) As to Inventory, Equipment and Accounts. Each
---------------------------------------
Grantor shall:
(i) Keep the Inventory and Equipment (other than raw
materials and work in process and Inventory sold in the
ordinary course of business and Equipment sold in accordance
with Section 8.02 of the Credit Agreement) at the places
------------
specified in Section 4(c) hereof and deliver written notice
------------
to the Administrative Agent at least 30 days prior to
establishing any other location at which it reasonably
expects to maintain Inventory (other than raw materials and
work in process) or Equipment in which jurisdiction all
action required by Section 5(c) hereof shall have been taken
------------
with respect to all such Inventory or Equipment, as the case
may be, in order to perfect the security interest granted
therein under this Agreement.
(ii) Maintain or cause to be maintained in good
repair, working order and condition, excepting ordinary wear
and tear and damage due to casualty, all of the Inventory or
Equipment, and make or cause to be made all appropriate
repairs, renewals and replacements thereof, to the extent
not obsolete and consistent with past practice of the each
Grantor, as quickly as practicable after the occurrence of
any loss or damage thereto which are necessary or desirable
to such end. Each Grantor shall promptly furnish to the
Administrative Agent a statement respecting any material
loss or damage as a result of a single occurrence to any of
its Inventory or Equipment which has an aggregate fair
market value exceeding $250,000.
=======================================================================
-15-
(iii) No Grantor will, except upon 30 days' prior
written notice to the Administrative Agent and delivery to
the Administrative Agent of all additional executed
financing statements and other documents reasonably
requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests
provided for herein:
(A) change its jurisdiction of organization
or the location of its chief execute office or sole
place of business from that referred to in Section 4(c)
------------
above.
(b) change its name, identity or corporate
structure to such an extent that any financing
statement filed by the Administrative Agent in
connection with this Agreement would become misleading.
(d) Additional Shares. Each Grantor agrees that it
-----------------
will (i) cause each issuer of the Pledged Shares subject to its
control not to issue any stock or other securities in addition to
or in substitution for the Pledged Shares issued by such issuer,
except to such Grantor or as otherwise permitted under the Credit
Agreement, and (ii) pledge, hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all
additional shares of stock or other securities of each issuer of
the Pledged Shares; provided that in no event shall the Grantor
be required to pledge more than 65% of the shares of any Foreign
Subsidiary. Each Grantor hereby authorizes the Administrative
Agent to modify this Agreement by amending Annex I-A to include
such additional shares or other securities.
Section 6. Remedial Provisions.
-------------------
(a) Grantors Remain Liable. (i) Anything herein to
----------------------
the contrary notwithstanding, each Grantor shall remain liable
under the contracts and agreements included in the Collateral to
the extent set forth therein to perform its duties and
obligations thereunder to the same extent as if this Agreement
had not been executed, (ii) the exercise by the Administrative
Agent of any of its rights hereunder shall not release any
Grantor from any of its duties or obligations under the contracts
and agreements included in the Collateral (except to the extent
that such exercise prevents such Grantor from satisfying such
duties and obligations), and (iii) the Administrative Agent shall
not have any obligation or liability under the contracts and
agreements included in the Collateral by reason of this
Agreement, nor shall the Administrative Agent be obligated to
perform any of the obligations or duties of any Grantor
thereunder, to make any payment, to make any inquiry as to the
nature or sufficiency of any payment received by such Grantor or
the sufficiency of any performance by any party under any such
contract or agreement or to take any action to collect or enforce
any claim for payment assigned hereunder.
(b) As to the Pledged Collateral.
----------------------------
(i) So long as no Event of Default shall have occurred
and be continuing:
(A) Each Grantor and not the
Administrative Agent shall be entitled to exercise any
and all voting and other rights of consent or approval
========================================================================
-16-
pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms
of this Agreement or the Credit Agreement; provided,
--------
however, that no Grantor shall exercise or refrain from
-------
exercising any such right without the consent of the
Administrative Agent if such action or inaction would
have a material adverse effect on the value of the
Pledged Collateral or the benefits to the
Administrative Agent, the Lenders, the Issuing Banks,
the Arranger and the Syndication Agents, including,
without limitation, the validity, priority or
perfection of the security interest granted hereby or
the remedies of the Administrative Agent hereunder.
(B) Each Grantor and not the
Administrative Agent shall be entitled to receive and
retain any and all dividends and interest paid in
respect of the Pledged Collateral; provided, however,
-------- -------
that any and all
(I) dividends and interest
paid or payable other than in cash in respect of,
and instruments and other property received,
receivable or otherwise distributed in respect of,
or in exchange for, any Pledged Collateral,
(II) dividends and other
distributions paid or payable in cash in respect
of any Pledged Collateral consisting of stock of
any Subsidiary of any Grantors and dividends and
other distributions paid or payable in cash in
respect of any other Pledged Collateral, in each
case, in connection with a partial or total
liquidation or dissolution or in connection with a
reduction of capital, capital,surplus or
paid-in-surplus, and
(III) cash paid, payable or
otherwise distributed in respect of principal of,
or in redemption of, or in exchange for, any
Pledged Collateral,
shall forthwith be delivered to the Administrative
Agent, in the case of (I) above, to hold as Pledged
Collateral and shall, if received by such Grantor, be
received in trust for the benefit of the Administrative
Agent, the Lenders, the Issuing Banks, the Arranger and
the Syndication Agents, be segregated from the other
property or funds of such Grantor, and be forthwith
delivered to the Administrative Agent, as Pledged
Collateral in the same form as so received (with any
necessary indorsement) and, in the case of (II) and
(III) above, to the extent required under the terms of
the Credit Agreement, shall forthwith be delivered to
the Administrative Agent to be applied to the
Guaranteed Obligations in such order as provided in
Section 2.05(b) of the Credit Agreement.
---------------
(C) The Administrative Agent shall
promptly execute and deliver (or cause to be executed
and delivered) to any Grantor all such proxies and
other instruments as such Grantor may reasonably
request for the purpose of enabling such Grantor to
exercise the voting and other rights which it is
====================================================================
-17-
entitled to exercise pursuant to paragraph (A) above
and to receive the dividends or interest payments which
it is authorized to receive and retain pursuant to
paragraph (B) above.
(ii) Upon the occurrence and during the continuance of
an Event of Default and at the Administrative Agent's
option:
(A) All rights of each Grantor to
exercise the voting and other rights of consent or
approval which it would otherwise be entitled to
exercise pursuant to Section 6(b)(ii)(A) hereof and to
-------------------
receive the dividends and interest payments which it
would otherwise be authorized to receive and retain
pursuant to Section 6(b)(ii)(B) hereof shall cease, and
-------------------
all such rights shall thereupon become vested in the
Administrative Agent, who shall thereupon have the sole
right to exercise such voting and other rights of
consent or approval and to receive and hold as Pledged
Collateral such dividends and interest payments.
(B) All dividends and interest payments
which are received by any Grantor contrary to the
provisions of paragraph (A) of this Section 6(b)(i(B)
-----------------
hereof shall be received in trust for the benefit of
the Administrative Agent, the Lenders, the Issuing
Banks, the Arranger and the Syndication Agents and
shall be segregated from other funds of such Grantor
and shall be forthwith paid over to the Administrative
Agent as Pledged Collateral in the same form as so
received (with any necessary indorsement).
(c) Remedies. If any Event of Default shall have
--------
occurred and be continuing:
(i) The Administrative Agent may exercise in respect
of the Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the
rights and remedies of a secured party upon default under
the UCC (whether or not the UCC applies to the affected
Collateral) and also may (A) require each Grantor to, and
each Grantor hereby agrees that it will at its expense and
upon request of the Administrative Agent forthwith, assemble
all or any part of the Collateral as directed by the
Administrative Agent and make it available to the
Administrative Agent at a place to be designated by the
Administrative Agent which is reasonably convenient to both
parties and (B) without notice except as specified below,
sell, lease, assign, grant an option or options to purchase
or otherwise dispose of the Collateral or any part thereof
in one or more parcels at public or private sale, at any
exchange, broker's board or at any of the Administrative
Agent's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as may be
commercially reasonable. The Administrative Agent may be
the purchaser of any or all of the Collateral so sold at any
public sale (or, if the Collateral is of a type customarily
sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations, at
any private sale) and thereafter hold the same, absolutely,
free from any right or claim of whatsoever kind. The
Administrative Agent is authorized, at any such sale, if it
deems it advisable so to do, to restrict the prospective
bidders or purchasers of any of the Pledged Collateral to
persons who will represent and agree that they are
purchasing for their own account for investment, and not
with a view to the distribution or sale of any Pledged
=====================================================================
-18-
Collateral, and to take such other actions as it may deem
appropriate to exempt the offer and sale of the Collateral
from any registration requirements of state or federal
securities laws (including, if it deems it appropriate,
actions to comply with Regulation D of the Securities and
Exchange Commission under the Securities Act of 1933, as
from time to time amended (the "Securities Act")). To the
--------------
extent permitted by law, each Grantor hereby specifically
waives all rights of redemption, stay or appraisal which it
has or may have under any rule of law or statute now
existing or hereafter in force. Each Grantor agrees that,
to the extent notice of sale shall be required by law, at
least ten days' written notice to such Grantor of the time
and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable
notification. The Administrative Agent shall not be
obligated to make any sale of Collateral regardless of
notice of sale having been given. The Administrative Agent
may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and
place to which it was so adjourned. In case of any sale of
all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the
Administrative Agent until the selling price is paid by the
purchaser thereof, but the Administrative Agent shall not
incur any liability in case of the failure of such purchaser
to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may again be sold upon
like notice. The Administrative Agent instead of exercising
the power of sale herein conferred upon it, may proceed by a
suit or suits at law or in equity to foreclose the security
interests herein granted and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction.
(ii) Any cash held by the Administrative Agent as
Collateral and all cash proceeds received by the
Administrative Agent in respect of any sale of, collection
from, or other realization upon all or any part of the
Collateral may, in the discretion of the Administrative
Agent, be held by the Administrative Agent as Collateral
for, and/or then or at any time thereafter applied against
(after payment of any amounts payable to the Administrative
Agent pursuant to Section 8(b) hereof) in whole or in part
------------
by the Administrative Agent, for the benefit of the
Administrative Agent, the Lenders and the Issuing Banks, all
or any part of the Guaranteed Obligations in such order as
is provided in Section 2.05(b) of the Credit Agreement. Any
surplus of such cash or cash proceeds held by the
Administrative Agent and remaining after payment in full of
all the Guaranteed Obligations under this Agreement, the
expiration or termination of all outstanding Letters of
Credit and the termination of the commitments of the Lenders
to extend credit under the Credit Agreement shall be
promptly paid over to the relevant Grantor or to whomsoever
may be lawfully entitled to receive such surplus.
(iii) Subject to Section 7.06 of the Credit Agreement,
the Administrative Agent shall have the right to make test
verifications of the Accounts in any manner and through any
medium that it reasonably considers advisable, and the
Grantor shall furnish all such assistance and information as
the Administrative Agent may require in connection with such
test verifications. Subject to Section 7.06 of the Credit
Agreement, at any time and from time to time, upon the
Administrative Agent's request and at the expense of the
==============================================================
-19-
Grantor, the Grantor shall cause independent public
accountants or others satisfactory to the Administrative
Agent to furnish to the Administrative Agent reports showing
reconciliations, aging and test verifications of, and trial
balances for, the Accounts.
(iv) At any time after the occurrence and during the
continuance of an Event of Default, the Grantor hereby
authorizes the Administrative Agent to collect the Grantor's
Accounts. If required by the Administrative Agent at any
time after the occurrence and during the continuance of an
Event of Default, any payments of Accounts, when collected
by any Grantor, (A) shall be forthwith (and, in any event,
within two Business Days) deposited by the Grantor in the
exact form received, duly indorsed by such Grantor to the
Administrative Agent if required, in a Collateral Account
maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the
Administrative Agent for the account of the Lenders only as
provided herein, and (B) until so turned over, shall be held
by the Grantor in trust for the Administrative Agent, the
Lenders, the Issuing Banks, the Arranger and the Syndication
Agents, segregated from other funds of the Grantor. Each
such deposit of proceeds of Accounts shall be accompanied by
a report identifying in reasonable detail the nature and
source of the payments included in the deposit.
(v) At the Administrative Agent's request, the Grantor
shall deliver to the Administrative Agent all original and
other documents (other than register tapes) evidencing, and
relating to, the agreements and transactions which gave rise
to the Accounts, including, without limitation, all original
orders, invoices and shipping receipts.
(vi) The Administrative Agent in its own name or in
the name of others may at any time after the occurrence and
during the continuance of an Event of Default communicate
with obligors under the Accounts to verify with them to the
Administrative Agent's satisfaction the existence, amount
and terms of any Accounts.
(vii) Upon the request of the Administrative Agent at
any time after the occurrence and during the continuance of
an Event of Default, the Grantor shall notify obligors on
the Accounts that the Accounts have been assigned to the
Administrative Agent for the ratable benefit of the Lenders
and that payments in respect thereof shall be made directly
to the Administrative Agent.
(d) Registration Rights.
-------------------
(i) If the Administrative Agent shall determine to
exercise its right to sell all or any of the Pledged
Collateral pursuant to Section 6(c) hereof, each Grantor
------------
agrees that, upon request of the Administrative Agent, the
relevant Grantor will, at its own expense:
(A) execute and deliver, and cause each
issuer of the Pledged Collateral which is a Subsidiary
contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments
and documents, and do or cause to be done all such
=================================================================
-20-
other acts and things, as may be necessary or, in the
opinion of the Administrative Agent, advisable to
register such Pledged Collateral under the provisions
of the Securities Act, and to cause the registration
statement relating thereto to become effective and to
remain effective for such period as prospectuses are
required by law to be furnished, and to make all
amendments and supplements thereto and to the related
prospectus which, in the opinion of the Administrative
Agent, are necessary or advisable, all in conformity
with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange
Commission applicable thereto;
(B) use its best efforts to qualify the
Pledged Collateral under the state securities or "Blue
Sky" laws and to obtain all necessary approvals of all
Governmental Authorities for the sale of the Pledged
Collateral, as requested by the Administrative Agent;
(C) cause each such issuer to make
available to its security holders, as soon as
practicable, an earnings statement which will satisfy
the provisions of Section 11(a) of the Securities Act;
-------------
and
(D) do or cause to be done all such
other acts and things as may be necessary to make such
sale of the Pledged Collateral or any part thereof
valid and binding and in compliance with applicable
law.
(ii) Determination by the Administrative Agent to
exercise its right to sell any or all of the Pledged
Collateral pursuant to Section 6(c) hereof without making a
------------
request of the relevant Grantor pursuant to Section 6(d)(i)
---------------
hereof shall not by the sole fact of such sale be deemed to
be commercially unreasonable.
(e) Default, Remedies.
-----------------
(i) The obligations of each Grantor hereunder are
independent of and separate from the Guaranteed Obligations
and the obligations of any other guarantor of the Guaranteed
Obligations. If any of the Guaranteed Obligations are not
paid when due, or upon any Event of Default or any default
by the Borrower as provided in any other instrument or
document evidencing all or any part of the Guaranteed
Obligations, the Administrative Agent may, at its sole
election, proceed directly and at once, without notice,
against such Grantor to collect and recover the full amount
or any portion of the Guaranteed Obligations, without first
proceeding against the Borrower or any other guarantor of
the Guaranteed Obligations, or against any Collateral for
the Guaranteed Obligations under this Agreement or otherwise
against any Collateral under any other Collateral Documents.
(ii) At any time after maturity of the Guaranteed
Obligations, the Administrative Agent may, without notice to
any Grantor and regardless of the acceptance of any security
or collateral for the payment hereof, appropriate and apply
toward the payment of the Guaranteed Obligations (A) any
indebtedness due or to become due from the Administrative
====================================================================
-21-
Agent to such Grantor and (B) any moneys, credits or other
property belonging to such Grantor at any time held by or
coming into the possession of the Administrative Agent or
any of its affiliates.
(iii) Each Grantor hereby authorizes and empowers the
Administrative Agent, in its sole discretion, without any
notice (except notices required by law to the extent such
notice as a matter of law may not be waived) or demand to
any Grantor whatsoever and without affecting the liability
of any Grantor hereunder, to exercise any right or remedy
which the Administrative Agent may have available to it,
including but not limited to, foreclosure by one or more
judicial or nonjudicial sales, and each Grantor hereby
waives any defense to the recovery by the Administrative
Agent against such Grantor of any deficiency after such
action, notwithstanding any impairment or loss of any right
of reimbursement, contribution, subrogation or other right
or remedy against the Borrower, or any other guarantor,
maker or endorser, or against any security for the
Guaranteed Obligations or for any guaranty of the Guaranteed
Obligations. No exercise by the Administrative Agent of,
and no omission of the Administrative Agent to exercise, any
power or authority recognized herein and no impairment or
suspension of any right or remedy of the Administrative
Agent against any Grantor, any other guarantor, maker or
endorser or any security shall in any way suspend,
discharge, release, exonerate or otherwise affect any of
such Grantor's obligations hereunder or give to such Grantor
any right of recourse against the Administrative Agent, the
Lenders or the Issuing Banks.
(iv) Each Grantor consents and agrees that the
Administrative Agent shall not be under any obligation to
make any demand upon or pursue or exhaust any of its rights
or remedies against the Borrower or any guarantor or others
with respect to the payment of the Guaranteed Obligations,
or to pursue or exhaust any of its rights or remedies with
respect to any security therefor, or any direct or indirect
guaranty thereof or any security for any such guaranty, or
to marshal any assets in favor of any Grantor or against or
in payment of any or all of the Guaranteed Obligations or to
resort to any security or any such guaranty in any
particular order, and all of its rights hereunder and under
the other Loan Documents shall be cumulative. Each Grantor
hereby agrees to waive, and does hereby absolutely and
irrevocably waive and relinquish the benefit and advantage
of, and does hereby covenant not to assert against the
Administrative Agent any valuation, stay, appraisal,
extension or redemption laws now existing or which may
hereafter exist which, but for this provision, might be
applicable to any sale made under the judgment, order or
decree of any court, or privately under the power of sale
conferred by this Agreement. Without limiting the
generality of the foregoing, each Grantor hereby agrees that
it will not invoke or utilize any law which might cause
delay in or impede the enforcement of the rights under this
Agreement or any of the other Loan Documents.
Section 7. The Administrative Agent.
------------------------
(a) The Administrative Agent Appointed
----------------------------------
Attorney-in-Fact. Each Grantor hereby irrevocably appoints the
----------------
Administrative Agent such Grantor's attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name
=======================================================================
-22-
of such Grantor or otherwise, from time to time in the
Administrative Agent's discretion, to take, upon the occurrence
and during the continuance of an Event of Default, any action and
to execute any instrument which the Administrative Agent may deem
necessary or advisable to accomplish the purposes of this
Agreement (subject to the rights of the relevant Grantor under
Section 6(b) hereof), including, without limitation:
------------
(i) to obtain and adjust insurance required to be
paid to the Administrative Agent pursuant to Section 7.05 of
the Credit Agreement, with the understanding that all
insurance maintained by the Grantor with respect to the
Collateral shall (i) provide that no cancellation, material
reduction in amount or material change in coverage thereof
shall be effective until at least 30 days after receipt by
the Administrative Agent of written notice thereof, (ii)
name the Administrative Agent as insured party or loss
payee, (iii) if reasonably requested by the Administrative
Agent, include a breach of warranty clause and (iv) be
reasonably satisfactory in all other respects to the
Administrative Agent,
(ii) to ask, demand, collect, xxx for, recover,
compromise, receive and give acquittance and receipts for
moneys due and to become due under or in respect of any of
the Collateral,
(iii) to receive, indorse, and collect any drafts
or other instruments, documents and chattel paper, in
connection with clause (i) above or (ii) above,
(iv) to sell or assign any Account upon such
terms, for such amount and at such time or times as
Administrative Agent deems advisable, to settle, adjust,
compromise, extend or renew any Account or to discharge and
release any Account,
(v) to file any claims or take any action or
institute any proceedings which the Administrative Agent may
deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of the
Administrative Agent with respect to any of the Collateral,
and
(vi) to receive, indorse and collect all
instruments made payable to any Grantor representing any
dividend, interest payment or other distribution in respect
of the Pledged Collateral or any part thereof and to give
full discharge for the same.
Nothing set forth in this Section 7 and no exercise by
---------
the Administrative Agent of the rights and powers granted in this
Section 7 shall limit or impair any Grantor's rights under
---------
Section 6(b) hereof. Each Grantor hereby ratifies all that said
------------
attorneys shall lawfully do or cause to be done by virtue hereof.
All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and shall be irrevocable
until the Obligations are paid in full, no Letters of Credit are
outstanding and the commitments of the Lenders to extend credit
under the Credit Agreement are terminated.
(b) The Administrative Agent May Perform. If any
-------------------------------------
Grantor fails to perform any agreement contained herein, the
Administrative Agent, upon written notice to such Grantor if
practicable, may itself perform, or cause performance of, such
agreement, and the expenses of the Administrative Agent incurred
==================================================================
-23-
in connection therewith shall be payable by such Grantor under
Section 8(a) hereof.
------------
(c) The Administrative Agent's Duties. The powers
---------------------------------
conferred on the Administrative Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any
duty upon any of them, in the absence of willful misconduct or
gross negligence, to exercise any such powers. Except for the
safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the
Administrative Agent shall have no duty as to any Collateral.
The Administrative Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment
substantially equal to that which the Administrative Agent
accords its own property, it being understood that the
Administrative Agent shall be under no obligation to (i)
ascertain or take action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any
Pledged Collateral, whether or not the Administrative Agent has
or is deemed to have knowledge of such matters, or (ii) take any
necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral, but may do so at its
option, and all reasonable expenses incurred in connection
therewith shall be for the sole account of the relevant Grantor
and shall be added to the Guaranteed Obligations.
Section 8. Miscellaneous.
-------------
(a) Expenses. Each Grantor shall upon written demand
--------
pay to the Administrative Agent the amount of any and all
expenses, including the fees and disbursements of its counsel and
of any experts and agents, as provided in Section 12.03 of the
-------------
Credit Agreement.
(b) Amendments, Etc. No amendment or waiver of any
----------------
provision of this Agreement nor consent to any departure by any
Grantor herefrom shall in any event be effective unless the same
shall be in writing and signed by the party to be charged
therewith, and they waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
given.
(c) Notices. All notices and other communications
-------
provided for hereunder shall be given in the manner set forth in
the Credit Agreement and to the address first above written or,
as to each party, at such other address as may be designated by
such party in a written notice to the other party.
(d) Continuing Security Interest; Termination.
-----------------------------------------
(i) This Agreement shall create a continuing security
interest in the Collateral and shall (A) remain in full
force and effect until payment in full of the Guaranteed
Obligations, the termination of the commitments of the
Lenders to extend credit under the Credit Agreement, the
expiration or termination of all Letters of Credit and the
termination of the Credit Agreement, (B) be binding upon
each Grantor, its successors and assigns and (C) except to
the extent that the rights of any transferor or assignor are
limited by Section 12.01 (concerning assignments) of the
-------------
====================================================================
-24-
Credit Agreement, inure, together with the rights and
remedies of the Administrative Agent hereunder, to the
benefit of the Administrative Agent, the Lenders, the
Issuing Banks, the Arranger and the Syndication Agents
subject to the terms and conditions of the Credit Agreement.
Without limiting the generality of the foregoing clause (C),
any Lender may assign or otherwise transfer any interest in
any Loan owing to such Lender to any other Person, and such
other Person shall thereupon become vested with all the
benefits in respect thereof granted to the Administrative
Agent herein or otherwise, subject, however, to the
provisions of Section 12.01 (concerning assignments) of the
-------------
Credit Agreement. Nothing set forth herein or in any other
Loan Document is intended or shall be construed to give any
Grantor's successors and assigns any right, remedy or claim
under, to or in respect of this Agreement, any other Loan
Document or any Collateral. Each Grantor's successors and
assigns shall include, without limitation, a receiver,
trustee or debtor-in-possession thereof or therefor.
(ii) Upon the payment in full of the Guaranteed
Obligations, the termination of the commitments of the
Lenders to extend credit under the Credit Agreement and the
termination of the Credit Agreement, the security interest
granted hereby shall terminate and all rights to the
Collateral shall revert to the relevant Grantor. Upon any
such termination, the Administrative Agent shall promptly
return to the relevant Grantor, at such Grantor's expense,
such of the Collateral held by the Administrative Agent as
shall not have been sold or otherwise applied pursuant to
the terms hereof. The Administrative Agent will, at such
Grantor's expense, execute and deliver to such Grantor such
other documents as such Grantor shall reasonably request to
evidence such termination.
(iii) Upon any release of the Administrative Agent's
security interest in any part of the Collateral expressly
required to be given by the Administrative Agent pursuant to
Section 11.12(c) of the Credit Agreement, the Administrative
----------------
Agent shall execute and deliver to each Grantor, at such
Grantor's expense, all termination statements, assignments
and other documents and instruments as may be necessary or
desirable to release fully the security interest in such
Collateral granted hereby; provided, however, that (i) the
-------- -------
Administrative Agent shall not be required to execute any
such documents on terms which, in the Administrative Agent's
opinion, would expose the Administrative Agent to liability
or create any obligation or entail any consequence other
than the release of such security interests without recourse
or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Guaranteed Obligations or
any security interests, liens or other encumbrances upon (or
obligations of such Grantor in respect of) all interests
retained by such Grantor, including, without limitation, the
proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
(e) Additional Grantors. Each Subsidiary of the
-------------------
Borrower that is required to become a party to this Agreement
pursuant to Section 7.10 of the Credit Agreement shall become a
------------
Grantor for all purposes of this Agreement upon execution and
delivery by such Subsidiary of an Assumption Agreement in the
form of Annex IV hereto.
===============================================================
-25-
(f) Applicable Law; Severability. This Agreement
----------------------------
shall be construed in all respects in accordance with, and
governed by, the laws of the State of New York. Whenever
possible, each provision of this Agreement shall be interpreted
in such a manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
(g) Consent to Jurisdiction and Service of Process;
-----------------------------------------------
Waiver of Jury Trial. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
ANY PARTY HERETO WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN
ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE
OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH PARTY HERETO ACCEPTS, FOR ITSELF IN AND IN CONNECTION WITH
ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO
BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS
AVAILABLE. EACH PARTY HERETO IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED
ON THE FIRST PAGE HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN
(10) DAYS AFTER SUCH MAILING. EACH OF THE GRANTORS AND, BY
ACCEPTANCE HEREOF, THE ADMINISTRATIVE AGENT, THE ARRANGER, THE
SYNDICATION AGENTS AND THE LENDERS, IRREVOCABLY WAIVES (i) TRIAL
BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, AND (ii) ANY OBJECTION (INCLUDING WITHOUT LIMITATION,
ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
--------------------
BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN
SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.
================================================================
-26-
IN WITNESS WHEREOF, each Grantor has caused this
Agreement to be duly executed and delivered by its officer
thereunto duly authorized as of the day first above written.
ANNTAYLOR DISTRIBUTION
SERVICES, INC.
By:/s/ Xxxxxx X. Xxxxx
_________________________
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President-
Chief Financial Officer
Agreed and accepted to as of
the date first above written:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative Agent
By: /s/ Xxxxxxx Xxxxxx
-----------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
