Exhibit 10.3
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "Security
Agreement"), dated as of September 7, 2004, is by and among the parties
identified as a "Grantor" on the signature pages hereto and such other parties
as may become a Grantor hereunder, by joinder or otherwise, after the date
hereof (individually a "Grantor", and collectively the "Grantors") and BANK OF
AMERICA, N.A., in its capacity as Collateral Agent under and as defined in the
Credit Agreement (defined below).
RECITALS
WHEREAS, Xxxxxxxx'x Inc., the Grantors, Bank of America, N.A., as
administrative agent, and certain lenders were parties, by joinder or
otherwise, to that certain Amended and Restated Credit Agreement, dated as of
August 28, 2002 (as such agreement has been amended or otherwise modified, the
"Existing Credit Agreement"). Pursuant to the Existing Credit Agreement, the
Grantors entered into a Security Agreement dated as of August 28, 2002 (the
"Existing Security Agreement").
WHEREAS, as of the date hereof the Grantors, the Agent, and the
lenders party thereto are entering into the certain Second Amended and
Restated Credit Agreement (the "Credit Agreement"), which amends and restates
the Existing Credit Agreement in its entirety.
WHEREAS, in order to induce the Collateral Agent, the other Agents,
and the Lenders to enter into the Credit Agreement and the Credit Documents
and to make Loans and issue Letters of Credit as provided for in the Credit
Agreement, the Grantors have agreed to grant a continuing Lien on the
Collateral to secure the Total Obligations and wishes to amend and restate the
Existing Security Agreement as hereinafter set forth.
NOW, THEREFORE, in consideration of these premises and mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to such terms in the Credit
Agreement. In addition, the following terms shall have the following meanings:
"Account" means accounts, as defined in the UCC, and any other rights
to payment for the sale or lease of goods or rendition of services or arising
out of the use of a credit or charge card or information contained on or for
use with the card, whether or not they have been earned by performance and
"Accounts" means all of the foregoing.
"Blocked Account Agreement" means any agreement among one or more of
the Grantors, the Collateral Agent, and a Clearing Bank concerning collection
of payments representing proceeds from Accounts or other Collateral, in form
and substance satisfactory to the Collateral Agent.
"Chattel Paper" has the meaning specified in the UCC, including,
without limitation, Electronic Chattel Paper.
"Clearing Bank" means Bank of America, N.A., or any other banking
institution reasonably acceptable to the Collateral Agent, with which a
Payment Account has been established pursuant to a Blocked Account Agreement.
"Commercial Tort Claims" has the meaning specified in the UCC.
"Contracts" means all of the Grantors' now owned and hereafter
acquired loan agreements, sales agreements, installment sale contracts,
Instruments, notes, Documents, Chattel Paper, and all other forms of
obligations owing to the Grantors and any collateral for any of the foregoing,
including all rights under any and all security agreements and merchandise
returned to or repossessed by the Grantors; provided that "Contracts" shall
not include contract rights the grant of a security interest in which would
violate the contract under which such rights arise except to the extent
provided under Section 9-406(d) of the UCC.
"Copyright License" means any agreements, whether written or oral,
providing for the grant by or to a Grantor of any right under any Copyright
including, without limitation, any thereof referred to in Schedule 1.1(a)
hereto.
"Copyright Security Agreement" means any Copyright Security Agreement
executed and delivered by a Grantor to the Collateral Agent, for the benefit
of the Agents and the Lenders, to evidence and perfect the Collateral Agent's
Liens in such Grantor's present and future Copyrights, Copyright Licenses, and
related rights, as such agreement may be amended, restated or otherwise
modified from time to time.
"Copyrights" means (a) all registered United States copyrights in all
Works, now existing or hereafter created or acquired, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, registrations, recordings and applications in the United
States Copyright office including, without limitation, any thereof referred to
in Schedule 1.1(a) hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in Schedule 1.1(a) hereto.
"Deposit Accounts" has the meaning specified in the UCC.
"Documents" means any documents, as defined in the UCC, and any other
bills of lading, warehouse receipts, or other documents of title.
"Electronic Chattel Paper" has the meaning specified in the UCC.
"Equipment" means any equipment, as defined in the UCC, and any other
machinery, equipment, furniture, furnishings, fixtures, and any other tangible
personal property (except Inventory), including, without limitation, embedded
software, motor vehicles and other rolling stock with respect to which a
certificate of title has been issued, aircraft, dies, tools, jigs, molds, and
office equipment, as well as any of such types of property leased by a Person
and any of such Person's rights and interests with respect thereto under such
leases (including, without limitation, options to purchase), together with any
present and future additions and accessions thereto, replacements therefor,
component and auxiliary parts and supplies used or to be used in connection
therewith, and all substitutes for any of the foregoing, and all manuals,
drawings, instructions, warranties, and rights with respect thereto.
"Event of Default" means the occurrence of an Event of Default under
the Credit Agreement.
"Existing Credit Agreement" has the meaning specified in the Recitals
hereto.
"Existing Security Agreement" has the meaning specified in the
Recitals hereto.
"Farm Products" has the meaning specified in the UCC.
"Fixtures" has the meaning specified in the UCC.
"General Intangibles" means general intangibles, as defined in the
UCC, choses in action and causes of action, and any other intangible personal
property of every kind and nature (other than Accounts), including, without
limitation, all rights under Merchant Accounts and Merchant Account
Agreements, contract rights, Payment Intangibles, Proprietary Rights,
corporate or other business records, inventions, designs, blueprints, plans,
specifications, trade secrets, goodwill, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, funds which may become
due to a Person in connection with the termination of any Plan or other
employee benefit plan or any rights thereto and any other amounts payable to a
Person from any Plan or other employee benefit plan, rights and claims against
carriers and shippers, rights to indemnification, business interruption
insurance and proceeds thereof, property, casualty or any similar type of
insurance and any proceeds thereof, proceeds of insurance covering the lives
of key employees on which a Person is beneficiary, rights to receive
dividends, distributions, cash, Instruments and other property in respect of
or in exchange for pledged equity interests or Investment Property, and any
letter of credit, guarantee, claim, security interest or other security held
by or granted to a Person.
"Goods" means any goods, as defined in the UCC, embedded software to
the extent included in goods, manufactured homes, standing timber that is cut
and removed for sale, and unborn young of animals.
"Intercompany Accounts" means all assets and liabilities, however
arising, which are due to a Grantor from, or are due from a Grantor to, any
Affiliate of such Grantor
"Instruments" has the meaning specified in the UCC.
"Inventory" means inventory, as defined in the UCC, goods,
merchandise to be furnished under any contract of service or held for sale or
lease, including, without limitation, any such inventory, goods, or
merchandise which has been delivered to and is in the possession or control of
another Person as a representative, agent, warehouseman, consignee, or bailee,
all returned goods, raw materials, work-in-process, finished goods (including
embedded software), other materials and supplies of any kind, nature, or
description which are used or consumed in a Person's business or used in
connection with the packing, shipping, advertising, selling, or finishing of
such goods, merchandise, or other property and all documents of title or other
Documents representing them.
"Investment Property" means any investment property, as defined in
the UCC, and all (a) securities, whether certificated or uncertificated, (b)
securities entitlements, (c) securities accounts, (d) commodity contracts, and
(e) commodity accounts, together with all other units, shares, partnership
interests, membership interests, equity interests, rights, or other equivalent
evidences of ownership (howsoever designated) issued by any person. With
respect to each Grantor, the term "Investment Property" also includes, without
limitation, all Capital Stock of any Affiliate at any time owned by such
Grantor.
"Letter-of-Credit Rights" means letter-of-credit rights, as defined
in the UCC, and any rights to payment or performance under a letter of credit,
whether or not the beneficiary has demanded or is entitled to demand payment
or performance.
"Patent License" means any agreements, whether written or oral,
providing for the grant by or to a Grantor of any right to manufacture, use or
sell any invention covered by a Patent, including, without limitation, any
thereof referred to in Schedule 1.1(a) hereto.
"Patent Security Agreement" means any Patent Security Agreement
executed and delivered by a Grantor to the Collateral Agent, for the benefit
of the Agents and the Lenders, to evidence and perfect the Collateral Agent's
Liens in such Grantor's present and future Patents, Patent Licenses, and
related rights, as such agreement may be amended, restated or otherwise
modified from time to time.
"Patents" means (a) all letters patent of the United States or any
other country and all reissues and extensions thereof, including, without
limitation, any thereof referred to in Schedule 1.1(a) hereto, and (b) all
applications for letters patent of the United States or any other country and
all divisions, continuations and continuations-in-part thereof, including,
without limitation, any thereof referred to in Schedule 1.1(a) hereto.
"Payment Account" means any bank account established pursuant to this
Security Agreement, into which funds of a Grantor (including proceeds of
Accounts, Chattel Paper, General Intangibles, and other Collateral) are
deposited or credited in accordance with the provisions of Section 2.3(e)
hereof, and which is maintained in the name of the Collateral Agent, a
Grantor, or any of them, as the Collateral Agent may determine, on terms
acceptable to Collateral Agent.
"Payment Intangibles" has the meaning specified in the UCC.
"Proceeds" has the meaning specified in the UCC.
"Proprietary Rights" means any licenses, franchises, permits,
Patents, Patent Licenses, patent rights, Copyrights, Works, Copyright
Licenses, Trademarks, Trademark Licenses, and any licenses and rights related
to any of the foregoing, including, with respect to each Grantor, those
Patents, Trademarks, and Copyrights set forth on Schedule 1.1(a) hereto as
owned by such Grantor, and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to xxx for past,
present, and future infringement of any of the foregoing.
"Real Estate" means, with respect to any Person, all of such Person's
now or hereafter owned or leased estates in real property, including, without
limitation, all fees, leaseholds, and future interests, together with all of
such Person's now or hereafter owned or leased interests in the improvements
thereon, the fixtures attached thereto, and the easements appurtenant thereto.
"Secured Obligations" means, collectively, all indebtedness,
liabilities, and obligations (including indemnities, payment of fees, recovery
of expenses and costs of enforcement and collection) of the Credit Parties
under the Credit Agreement and the other Credit Documents (including, interest
accruing after the occurrence of a Bankruptcy Event, regardless of whether
such interest is an allowed claim under the Bankruptcy Code). "Secured
Obligations" includes the Total Obligations and the prompt payment and
performance of the guaranty obligations of the Guarantors under the Guaranty
Agreement howsoever created, evidenced, incurred or acquired, whether primary,
secondary, direct, or joint and several.
"Software" means any software, as defined in the UCC, other than
software embedded in any category of Goods, and any computer programs and any
supporting information provided in connection with a transaction related to
any computer program.
"Supporting Obligations" means any supporting obligations, as defined
in the UCC, including Letters of Credit and guaranties issued in support of
Accounts, Chattel Paper, Documents, General Intangibles, Instruments, or
Investment Property.
"Trademark License" means any agreement, written or oral, providing
for the grant by or to a Grantor of any right to use any Trademark, including,
without limitation, any thereof referred to in Schedule 1.1(a) hereto.
"Trademark Security Agreement" means any Trademark Security Agreement
executed and delivered by a Grantor to the Collateral Agent, for the benefit
of the Agents and the Lenders, to evidence and perfect the Collateral Agent's
Liens in such Grantor's present and future Trademarks, Trademark Licenses, and
related rights, as such agreement may be amended, restated or otherwise
modified from time to time.
"Trademarks" means (a) all trademarks, with the sole exception of any
pending trademark applications which have been filed with the United States
Patent and Trademark Office on an "Intent to Use" basis, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, service marks, logos and other source or business identifiers,
and the goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in Schedule 1.1(a)
hereto, and (b) all renewals thereof.
"United States" means the United States of America.
"Work" means any work which is subject to copyright protection
pursuant to Title 17 of the United States Code.
ARTICLE 2
GRANT OF SECURITY INTEREST
Section 2.1 Grant of Security Interest in the Collateral. To secure
the prompt payment and performance in full when due, whether by lapse of time,
acceleration or otherwise, of the Secured Obligations, each Grantor hereby
grants to the Collateral Agent, for the benefit of the Agents and the Lenders,
a continuing security interest in, lien on, pledge of, collateral assignment
of, and a right to set-off against, any and all right, title and interest of
such Grantor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter:
(a) all Accounts, including all credit enhancements
therefor;
(b) all money, cash, Cash Equivalents, securities, and other
property of any kind held directly or indirectly by any Agent or any
Lender;
(c) all Chattel Paper;
(d) all Contracts;
(e) all Deposit Accounts, credits, and balances with and
other claims against any Agent or any Lender or any of their
Affiliates or any other financial institution with which any Grantor
maintains deposits, including any Payment Accounts;
(f) all Documents;
(g) all Equipment;
(h) all Fixtures;
(i) all General Intangibles (including, without limitation,
Payment Intangibles, Intercompany Accounts, and Software);
(j) all Instruments;
(k) all Inventory;
(l) all Investment Property; provided that with respect to
any Voting Stock of any Foreign Subsidiary (with respect to any
Grantor, the "more than fifty percent (50%)" ownership test for the
definition of a Foreign Subsidiary to be based solely upon the direct
ownership by such Grantor without regard to any indirect ownership
attributable to such Grantor), the amount of such Voting Stock of
such Foreign Subsidiary (with respect to any Grantor, the "more than
fifty percent (50%)" ownership test for the definition of a Foreign
Subsidiary to be based solely upon the direct ownership by such
Grantor without regard to any indirect ownership attributable to such
Grantor) included in the Collateral shall be limited to the maximum
amount thereof that is less than or equal to 65% of the issued and
outstanding Voting Stock of such Foreign Subsidiary (with respect to
any Grantor, the "more than fifty percent (50%)" ownership test for
the definition of a Foreign Subsidiary to be based solely upon the
direct ownership by such Grantor without regard to any indirect
ownership attributable to such Grantor);
(m) all Supporting Obligations and Letter-of-Credit Rights;
(n) all Goods;
(o) all Commercial Tort Claims from time to time disclosed
to the Collateral Agent pursuant to Sections 2.4(j) and 2.5(m);
(p) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks, and related data processing software
(owned by such Grantor or in which it has an interest) that at any
time evidence or contain information relating to any Collateral or
are otherwise necessary or helpful in the collection thereof or
realization thereupon;
(q) all accessions to, substitutions for, and replacements
and products of any of the foregoing; and
(r) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing, including, but not limited
to, proceeds of any insurance policies, claims against third parties,
and condemnation or requisition payments with respect to all or any
of the foregoing.
All of the foregoing, together with the Real Estate covered by each
Mortgage (if any), all equity interests in Subsidiaries pledged to
the Collateral Agent and all other property of each Grantor in which
any Agent or any Lender may at any time be granted a Lien as
collateral for the Secured Obligations, is herein collectively
referred to as the "Collateral".
Section 2.2 Security for Secured Obligations. The Grantors hereby
acknowledge and agree that the security interest created hereby in the
Collateral (i) constitutes continuing collateral security for all of the
Secured Obligations, whether now existing or hereafter arising (and to the
extent that the Collateral was also Collateral under the Existing Security
Agreement confirms and continues its prior granted security interest, pledge,
and assignment provided for in the Existing Security Agreement) and (ii) is
not to be construed as an assignment of any Copyrights, Copyright Licenses,
Patents, Patent Licenses, Trademarks or Trademark Licenses.
Section 2.3 Special Provisions.
(a) General Nature of Interest. Anything herein to the
contrary notwithstanding, each of the Grantors shall remain liable
under each of the Accounts, Chattel Paper, Contracts, and General
Intangibles to observe and perform all the conditions and obligations
to be observed and performed by it thereunder, all in accordance with
the terms of any agreement giving rise thereto. Neither any Agent nor
any Lender shall have any obligation or liability under any Accounts,
Chattel Paper, Contracts, or General Intangibles (or any agreement
giving rise thereto) by reason of or arising out of this Security
Agreement or the receipt by any Agent or any Lender of any payment
relating thereto, nor shall any Agent or any Lender be obligated in
any manner to perform any of the obligations of a Grantor under or
pursuant to any Account, Chattel Paper, Contract, or General
Intangible (or any agreement giving rise thereto), to make any
payment, to make any inquiry as to the nature or the sufficiency of
any payment received by it or as to the sufficiency of any
performance by any party thereunder (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time
or times.
(b) Field Audits and Inspections. The Collateral Agent
shall, at the Borrowers' expense, accompanied by any other Agent or
Lender which so elects with the consent of the Collateral Agent, have
the right to directly, or through the engagement of such independent
public accountants, agents and advisors as it may deem advisable or
appropriate, make periodic inspections and conduct periodic field
audits, including test verifications, of the Accounts, Chattel Paper,
Contracts, General Intangibles, and other Collateral, in such manner
as it may deem advisable or appropriate (i) whenever any Default or
Event of Default exists and (ii) at such other times as the
Collateral Agent may request, but not more frequently than once every
Fiscal Quarter. The Collateral Agent may communicate with account
debtors, in it own name or in the name of the account creditor, for
purposes of verifying Accounts, Chattel Paper, Contracts, or General
Intangibles. The Grantors will provide access to their books and
records, their facilities and their officers, employees and agents
and will cooperate with and accommodate reasonable requests in
connection with such inspections and field audits as provided in the
Credit Agreement. The cost of inspections and field audits shall
include, without limitation, in the case of inspections and field
audits conducted by employees of the Collateral Agent, a fee of $850
per day per auditor (subject to change) and out-of-pocket expenses.
(c) Appraisals. The Collateral Agent may, at the Borrowers'
expense, conduct periodic appraisals of the Collateral in such manner
as it may deem advisable or appropriate, including, without
limitation, to determine Net Orderly Liquidation Value and Appraisal
Value (i) whenever any Default or Event of Default exists and (ii) at
such other times as the Collateral Agent may request, but not more
frequently than once every Fiscal Quarter. The Collateral Agent,
accompanied by any other Agent or Lender which so elects with the
consent of the Collateral Agent, may conduct such appraisals directly
or may engage independent appraisers as it may deem advisable or
appropriate. The Grantors will provide access to their books and
records, their facilities and their officers, employees, and agents
and will cooperate with and accommodate reasonable requests in
connection with such appraisal inspections as provided in the Credit
Agreement.
(d) Legend. Each Grantor represents and warrants that it is
in compliance with the legend requirements of the Existing Security
Agreement with respect to all Documents, Instruments, Chattel Paper
and installment sales agreements existing as of the close of business
on the Business Day immediately preceding the Closing Date. Each
Grantor will print or otherwise affix a legend prominently on the
face of its Documents, Instruments, Chattel Paper, and installment
sales agreements, in each case providing notice of the security
interest therein provided hereunder. The legend shall be in form and
substance satisfactory to the Collateral Agent, but in the absence of
special instructions, may read as follows:
"THIS WRITING AND THE OBLIGATIONS EVIDENCED OR SERVED HEREBY ARE
SUBJECT TO THE SECURITY INTEREST OF BANK OF AMERICA, N.A., AS THE
COLLATERAL AGENT (THE "COLLATERAL AGENT"), FOR THE BENEFIT OF THE
COLLATERAL AGENT, THE OTHER AGENTS, AND THE LENDERS PURSUANT TO THAT
CERTAIN SECOND AMENDED AND RESTATED SECURITY AGREEMENT DATED AS OF
SEPTEMBER 7, 2004 BETWEEN XXXXXXXX'X INC., A DELAWARE CORPORATION,
AND THE COLLATERAL AGENT, AMONG OTHERS."
(e) Establishment of Payment Accounts.
(i) Until the Collateral Agent notifies the
Grantors to the contrary, each Grantor shall make collection
of all of its Accounts, Chattel Paper, General Intangibles,
and other Collateral for the Collateral Agent, shall receive
all payments as the Collateral Agent's trustee, and shall
immediately deliver all payments in their original form duly
endorsed in blank into one of the deposit accounts
identified on Schedule 6.22 to the Credit Agreement or any
other deposit account of such Grantor, acceptable to the
Collateral Agent, which has previously been disclosed to the
Collateral Agent in writing by such Grantor, and thereafter
cause all funds deposited in such deposit accounts to be
immediately delivered to a Payment Account established for
the account of one or more of the Borrowers at a Clearing
Bank acceptable to the Collateral Agent, subject to a
Blocked Account Agreement. If the Collateral Agent requests,
the Grantors shall establish a lock-box service for
collections of Accounts at a Clearing Bank acceptable to the
Collateral Agent and subject to a Blocked Account Agreement
and other documentation acceptable to the Collateral Agent.
If such lock-box service is established, the Grantors shall
instruct all account debtors to make all payments directly
to the address established for such service. If,
notwithstanding such instructions, any Grantor receives any
proceeds of Accounts and Payment Intangibles, it shall
receive such payments as the Collateral Agent's trustee, and
shall immediately deliver such payments to the Collateral
Agent in their original form duly endorsed in blank or
deposit them into a Payment Account, as the Collateral Agent
may direct. All collections received in any lock-box or
Payment Account or directly by the Grantors or the
Collateral Agent, and all funds in any Payment Account or
other account to which such collections are deposited shall
be subject to the Collateral Agent's sole control and
withdrawals by the Grantors shall not be permitted. During
the existence of an Event of Default, the Grantors, at the
Collateral Agent's request, shall execute and deliver to the
Collateral Agent such documents as the Collateral Agent
shall require to grant the Collateral Agent access to any
post office box in which collections of Accounts are
received.
(ii) If sales of Inventory are made or services are
rendered by any Grantor for cash or credit card, each
Grantor shall immediately deliver, or cause to be delivered
to the Collateral Agent or deposit into a Payment Account,
all cash which such Grantor receives or is entitled to
receive in connection with such sale.
(iii) All payments, including immediately available
funds received by the Collateral Agent at a bank designated
by it, whether or not received by the Agent on account of
Accounts, Chattel Paper, Contracts, General Intangibles,
Payment Intangibles, or as proceeds of other Collateral will
be under the sole dominion and control of the Collateral
Agent for its benefit and the benefit of the Agents and the
Lenders and will be credited to the outstanding Total
Obligations of the Borrowers (conditional upon final
collection) in accordance with the Credit Agreement on the
same day received (if received prior to 2:00 p.m. Pasadena,
California time), otherwise on the next Business Day.
(iv) In the event the Grantors repay all of the
Secured Obligations upon the termination of this Security
Agreement or upon acceleration of the Secured Obligations,
other than through the Collateral Agent's receipt of
payments on account of the Accounts and Payment Intangibles
or proceeds of the other Collateral, such payment will be
credited (conditional upon final collection) to the
Grantor's account upon the Collateral Agent's receipt of
immediately available funds.
(f) Inventory. Each Grantor will maintain a perpetual
inventory reporting system at all times and will conduct a physical
count of its Inventory as set forth in the Credit Agreement, and
during the existence of an Event of Default, at such other times as
the Collateral Agent may reasonably request. During the existence of
an Event of Default, the Grantors will, upon the Collateral Agent's
request, promptly instruct all suppliers, carriers, forwarders,
custom brokers, warehouses, or others receiving or holding cash,
checks, Inventory, Documents, or Instruments in which the Collateral
Agent holds a Lien to deliver such Collateral to the Collateral Agent
and/or subject to the Collateral Agent's order, and if any such
Collateral shall come into any Grantor's possession, to deliver such
Collateral, upon the Collateral Agent's request, to the Collateral
Agent in its original form. The Grantors shall also, at the
Collateral Agent's request, during the existence of an Event of
Default, designate the Collateral Agent as the consignee on all bills
of lading and other negotiable and non-negotiable documents.
(g) Consigned Inventory. Each Grantor will keep and maintain
complete and accurate books and records identifying all Inventory
held on consignment, all sales thereof, identification of the
consignor thereof, a true and complete copy of the consignment
agreement between such Grantor and such consignor in respect thereof,
and accounts payable by such Grantor to such consignor in respect
thereof. Each Grantor agrees that it will not grant to any such
consignor any interest in proceeds (including cash proceeds,
Accounts, Instruments, Chattel Paper, or Contracts constituting
proceeds) of any such consigned inventory.
Section 2.4 Representations and Warranties. Each Grantor hereby
represents and warrants to the Collateral Agent, for the benefit of the Agents
and the Lenders, that as of the Closing Date:
(a) Chief Executive Office; Books & Records. The chief
executive office and chief place of business of each Grantor is (and
for the prior four months has been) located at the location set forth
on Schedule 2.4(a) hereto, and such Grantor keeps its books and
records at such locations.
(b) Location of Collateral. The location of all Collateral
owned by each Grantor is as shown on Schedule 2.4(b) hereto.
(c) Ownership. It is the legal and beneficial owner of its
Collateral and has the right to pledge, sell, assign, or transfer the
same free and clear of all Liens whatsoever, except for Permitted
Liens. There exists no "adverse claim" within the meaning of Section
8-302 of the UCC with respect to the Capital Stock and other
Investment Property owned by such Grantor.
(d) Jurisdiction of Ownership; Prior Names; Tradenames.
Schedule 2.4(d) attached hereto correctly identifies such Grantor's
legal name as of the date hereof as it appears in official filings in
the jurisdiction of its incorporation or other organization, the type
of entity of such Grantor, the employer or taxpayer identification
number of such Grantor, the organizational identification number
issued by such Grantor's jurisdiction of incorporation or
organization or a statement that no such number has been issued, and
the jurisdiction in which such Grantor is incorporated or organized.
Each Grantor has only one jurisdiction of incorporation or
organization. No Grantor has in the past four months changed its
name, been party to a merger, consolidation or other change in
structure or used any tradename except as set forth in Schedule
2.4(d) attached hereto.
(e) Security Interest/Priority. This Security Agreement
creates a valid security interest in favor of the Collateral Agent,
for the benefit of the Agents and the Lenders, in the Collateral of
such Grantor and, when properly perfected by filing, shall constitute
a valid perfected security interest in such Collateral, to the extent
such security interests can be perfected by filing under the UCC,
free and clear of all Liens except for Permitted Liens.
(f) Farm Products. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
(g) Accounts, Chattel Paper. (i) Each Account and Chattel
Paper of the Grantors and the papers and documents relating thereto
are genuine and in all material respects what they purport to be,
(ii) each Account and Chattel Paper arises out of, and each future
Account and Chattel Paper will represent, a bona fide sale or lease
and delivery of goods by such Grantor, or rendition of services by
such Grantor, in the ordinary course of business, and (iii) no surety
bond was required or given in connection with any Account and Chattel
Paper of a Grantor or the contracts or purchase orders out of which
they arose.
(h) Inventory. All Inventory produced by any Grantor in the
United States has been produced in accordance with the Federal Fair
Labor Standards Act of 1938, as amended, and all rules, regulations
and orders promulgated thereunder.
(i) Copyrights, Patents and Trademarks.
(i) Schedule 1.1(a) hereto includes all Copyrights,
Copyright Licenses, Patents, Patent Licenses, Trademarks,
and Trademark Licenses owned by the Grantors in their own
names as of the date hereof.
(ii) To the best of each Grantor's knowledge, each
material Copyright, Patent and Trademark of such Grantor is
valid, subsisting, unexpired, enforceable and has not been
abandoned.
(iii) Except as set forth in Schedule 1.1(a)
hereto, no material Copyright, Patent or Trademark is the
subject of any licensing or franchise agreement.
(iv) To the best of each Grantor's knowledge, no
holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question
the validity of any material Copyright, Patent, or
Trademark.
(v) To the best of each Grantor's knowledge, no
action or proceeding is pending seeking to limit, cancel or
question the validity of any material Copyright, Patent or
Trademark, or which, if adversely determined, would have a
Material Adverse Effect on the value of any material
Copyright, Patent or Trademark.
(vi) All applications in the United States
pertaining to the material Copyrights, Patents, and
Trademarks of each Grantor have been duly and properly
filed, and all registrations or letters in the United States
pertaining to such Copyrights, Patents, and Trademarks have
been duly and properly filed and issued, and all of such
Copyrights, Patents, and Trademarks are valid and
enforceable.
(vii) No Grantor has made any assignment or
agreement in conflict with the security interest in the
Copyrights, Patents, or Trademarks of each Grantor
hereunder.
(j) Commercial Tort Claims. Schedule 2.4(j) attached hereto
is a complete list of the commercial tort claims owned by each
Grantor.
(k) Exercising of Rights. The exercise by the Collateral
Agent of its rights and remedies hereunder will not violate any
Requirement of Law or Contractual Obligation of such Grantor.
(l) No Other Shares. No Grantor owns any Capital Stock other
than as set forth on Schedule 1.1B or on Schedule 6.14 of the Credit
Agreement.
Section 2.5 Covenants. Each Grantor covenants that, so long as any of
the Secured Obligations remain outstanding and until this Security Agreement
shall have been terminated, such Grantor shall:
(a) Other Liens. Defend the Collateral against the claims
and demands of all other parties claiming an interest therein, keep
the Collateral free from all Liens, except for Permitted Liens, and
not sell, exchange, transfer, assign, lease, or otherwise dispose of
the Collateral or any interest therein, except as permitted under the
Credit Agreement.
(b) Preservation of Collateral. Keep the Collateral in good
order, condition and repair, ordinary wear and tear excepted, and not
use the Collateral in violation of the provisions of this Security
Agreement or any other agreement relating to the Collateral or any
policy insuring the Collateral or any applicable statute, law, bylaw,
rule, regulation, or ordinance.
(c) Instruments/Chattel Paper. Promptly upon demand, each
Grantor shall deliver to the Collateral Agent all Collateral
consisting of negotiable Documents, certificated securities
(accompanied by stock powers executed in blank), and Instruments
promptly after such Grantor receives the same properly endorsed to
the Collateral Agent in form and substance satisfactory to it. During
the existence of an Event of Default, upon the request of the
Collateral Agent, each Grantor shall deliver to the Collateral Agent
all Collateral consisting of Chattel Paper promptly after such
Grantor receives the same properly endorsed to the Collateral Agent
in form and substance satisfactory to it, promptly upon demand. If
any Grantor retains possession of any Documents, Instruments, or
Chattel Paper with the Collateral Agent's consent or pursuant to the
terms hereof, such Documents, Instruments, or Chattel Paper shall
bear a legend substantially in the form set forth in Section 2.3(d)
hereof.
(d) Change in Location. Not, without providing 10 days prior
written notice to the Collateral Agent and without filing such
amendments to any previously filed financing statements as the
Collateral Agent may require, (a) change the location of its chief
executive office and chief place of business (as well as its books
and records) from the locations set forth on Schedule 2.4(a) hereto,
(b) except in connection with the opening, acquisition, or relocation
of a retail store in accordance with Section 8.18 of the Credit
Agreement, change the location of its Collateral from the locations
set forth for such Grantor on Schedule 2.4(b) hereto, or (c) change
its name, be party to a merger, consolidation or other change in
structure or use any tradename other than as set forth on Schedule
2.4(d) attached hereto.
(e) Change in Jurisdiction or Type of Entity. Not, except as
provided in the Credit Agreement, reincorporate or reorganize itself
under the laws of any jurisdiction or change its type of entity
identified on Schedule 2.4(d) hereto without the prior written
consent of the Collateral Agent.
(f) Perfection of Security Interest. Execute, deliver,
and/or file and record such agreements, assignments or instruments
(including affidavits, notices, reaffirmations and amendments and
restatements of existing documents, as the Collateral Agent may
reasonably request) and do all such other things as the Collateral
Agent may reasonably deem necessary or appropriate (i) to assure to
the Collateral Agent its security interests hereunder, including,
without limitation, (A) with regard to Copyrights and Copyright
Licenses, a Copyright Security Agreement, (B) with regard to Patents
and Patent Licenses, a Patent Security Agreement, and (C) with regard
to Trademarks and Trademark Licenses, a Trademark Security Agreement,
and (D) with regard to Real Estate, a Mortgage, (ii) to consummate
the transactions contemplated hereby, and (iii) to otherwise protect
and assure the Collateral Agent of its rights and interests
hereunder. To that end, each Grantor hereby irrevocably authorizes
the Collateral Agent at any time and from time to time to file in any
filing office any financing statements and amendments thereto that
(y) indicate the Collateral (1) as "all assets" or "all personal
property" of such Grantor, or words of similar effect, regardless of
whether any particular asset comprised in the Collateral falls within
the scope of Article 9 of the UCC, or (2) as being of an equal or
lesser scope or with greater detail, and (z) contain any other
information required by Part 5 of Article 9 of the UCC for the
sufficiency or filing office acceptance of any financing statement or
amendment, including (1) whether such Grantor is an organization, the
type of organization, any organization identification number issued
to such Grantor, and any employer or taxpayer identification number
issued to such Grantor, and (2) in the case of a financing statement
filed as a fixture filing or indicating any Collateral as
as-extracted collateral or timber to be cut, a sufficient description
of real property to which such Collateral relates. Each Grantor
agrees to furnish any such information to the Collateral Agent
promptly upon request. Each Grantor also ratifies its authorization
for the Collateral Agent or any of the other Agents to file any like
financing statements or amendments thereto if filed prior to the date
hereof, whether in connection with the security interest granted
pursuant to this Security Agreement or the Existing Security
Agreement, as applicable. Each Grantor hereby agrees that a carbon,
photographic, photostatic, or other reproduction of this Security
Agreement or of a financing statement is sufficient for filing as a
financing statement by the Collateral Agent without notice thereof to
such Grantor wherever the Collateral Agent may in its sole discretion
desire to file the same. To the extent, if any, that any Grantor's
authorization given in this subsection (f) is not sufficient, and
without otherwise limiting such authorization, to file such financing
statements with respect to this Security Agreement, with or without
such Grantor's signature, or to file a photocopy of this Security
Agreement in substitution for a financing statement, as the
Collateral Agent may deem appropriate and to execute in such
Grantor's name such financing statements and amendments thereto and
continuation statements which may require such Grantor's signature.
If any Collateral is in the possession or control of a Grantor's
agent and the Collateral Agent so requests, such Grantor agrees to
notify such agent in writing of the Collateral Agent's security
interest therein and, upon the Collateral Agent's request, instruct
them to hold all such Collateral for the Agents' and the Lenders'
account and subject to the Collateral Agent's instructions. Each
Grantor agrees to xxxx its books and records to reflect the security
interest of the Collateral Agent in the Collateral. Each Grantor
acknowledges that it is not authorized to file any financing
statement or amendment or release or partial release or termination
statement or with respect to any financing statement filed by any
Agent or any Lender in connection with the Existing Security
Agreement, this Security Agreement or any other Credit Document
without the prior written consent of the Collateral Agent and agrees
that it will not do so without the prior written consent of the
Collateral Agent, subject to such Grantor's rights under Section
9-509(d)(2) of the UCC.
(g) Treatment of Accounts, Chattel Paper. Not grant or
extend the time for payment of any Account or Chattel Paper, or
compromise or settle any Account or Chattel Paper for less than the
full amount thereof, or release any person or property, in whole or
in part, from payment thereof, or allow any credit or discount
thereon, other than as normal and customary in the ordinary course of
a Grantor's business or as otherwise permitted by the Credit
Agreement.
(h) Collateral held by Other Parties. To the extent required
by the Credit Agreement, deliver to the Collateral Agent an
authenticated bailee letter, in form and substance satisfactory to
the Collateral Agent, from each warehouseman, bailee, agent and
processor in possession or control of any Collateral acknowledging
that such warehouseman, bailee, agent, or processor, as applicable,
will hold possession of the Collateral for the Collateral Agent's
benefit.
(i) Covenants Relating to Copyrights.
(i) Employ each material Copyright for each Work
with such notice of copyright as may be required by law to
secure copyright protection.
(ii) Not do any act or knowingly omit to do any act
whereby any material Copyright may become invalidated and
(A) not do any act, or knowingly omit to do any act, whereby
any material Copyright may become injected into the public
domain; (B) notify the Collateral Agent immediately if it
knows, or has reason to know, that any material Copyright
may become injected into the public domain or of any adverse
determination or development (including, without limitation,
the institution of, or any such determination or development
in, any court or tribunal in the United States or any other
country) regarding a Grantor's ownership of any such
Copyright or its validity; (C) take all necessary steps as
it shall deem appropriate under the circumstances, to
maintain and pursue each application (and to obtain the
relevant registration) and to maintain each registration of
each material Copyright owned by a Grantor including,
without limitation, filing of applications for renewal where
necessary; and (D) promptly notify the Collateral Agent of
any material infringement of any material Copyright of a
Grantor of which it becomes aware and take such actions as
it shall reasonably deem appropriate under the circumstances
to protect such Copyright, including, where appropriate, the
bringing of suit for infringement, seeking injunctive relief
and seeking to recover any and all damages for such
infringement.
(iii) Not make any assignment or agreement in
conflict with the security interest in the Copyrights of
each Grantor hereunder except as not prohibited under the
Credit Agreement.
(j) Covenants Relating to Patents and Trademarks.
(i) (A) Continue to use each material Trademark on
each and every trademark class of goods applicable to its
current line as reflected in its current catalogs,
brochures, and price lists in order to maintain such
Trademark in full force free from any claim of abandonment
for non-use, (B) maintain as in the past the quality of
products and services offered under such Trademark, (C)
employ such Trademark with the appropriate notice of
registration, (D) not adopt or use any xxxx which is
confusingly similar or a colorable imitation of such
Trademark unless the Collateral Agent, for the ratable
benefit of the Agents and the Lenders, shall obtain a
perfected security interest in such xxxx pursuant to this
Security Agreement, and (E) not (and not permit any licensee
or sublicensee thereof to) do any act or knowingly omit to
do any act whereby any material Trademark may become
invalidated.
(ii) Not do any act, or omit to do any act, whereby
any material Patent may become abandoned or dedicated.
(iii) Notify the Agents and the Lenders immediately
if it knows, or has reason to know, that any application or
registration relating to any material Patent or Trademark
may become abandoned or dedicated, or of any adverse
determination or development (including, without limitation,
the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark
Office or any court or tribunal in any country) regarding a
Grantor's ownership of any material Patent or Trademark or
its right to register the same or to keep and maintain the
same.
(iv) Whenever a Grantor, either by itself or
through an agent, employee, licensee or designee, shall file
an application for the registration of any Patent or
Trademark with the United States Patent and Trademark Office
or any similar office or agency in any other country or any
political subdivision thereof, a Grantor shall report such
filing to the Agents and the Lenders within five Business
Days after the last day of the Fiscal Quarter in which such
filing occurs. Upon request of the Collateral Agent, a
Grantor shall execute and deliver any and all agreements,
instruments, documents, and papers as the Collateral Agent
may request to evidence the Agents' and the Lenders'
security interest in any Patent or Trademark and the
goodwill and general intangibles of a Grantor relating
thereto or represented thereby.
(v) Take all reasonable and necessary steps,
including, without limitation, in any proceeding before the
United States Patent and Trademark Office, or any similar
office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application
(and to obtain the relevant registration) and to maintain
each registration of the Patents and Trademarks, including,
without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability.
(vi) Promptly notify the Agents and the Lenders
after it learns that any material Patent or Trademark
included in the Collateral is infringed, misappropriated or
diluted by a third party and promptly xxx for infringement,
misappropriation or dilution, to seek injunctive relief
where appropriate and to recover any and all damages for
such infringement, misappropriation or dilution, or take
such other actions as it shall reasonably deem appropriate
under the circumstances to protect such Patent or Trademark.
(vii) Not make any assignment or agreement in
conflict with the security interest in the Patents or
Trademarks of each Grantor hereunder except as not
prohibited under the Credit Agreement.
(k) New Patents, Copyrights and Trademarks. Promptly provide
the Collateral Agent with (i) a listing of all applications, if any,
for new Copyrights, Patents or Trademarks (together with a listing of
the issuance of registrations or letters on present applications),
which new applications and issued registrations or letters shall be
subject to the terms and conditions hereunder, and (ii) (A) with
respect to Copyrights, a Copyright Security Agreement, (B) with
respect to Patents, a Patent Security Agreement, (C) with respect to
Trademarks, a Trademark Security Agreement or (D) such other duly
executed documents as the Collateral Agent may request in a form
acceptable to counsel for the Collateral Agent and suitable for
recording to evidence the security interest in the Copyright, Patent,
or Trademark which is the subject of such new application.
(l) Insurance. Insure, repair, and replace the Collateral of
such Grantor as set forth in the Credit Agreement. All insurance
proceeds relating to the Collateral shall be subject to the security
interest of the Collateral Agent hereunder.
(m) Commercial Tort Claims. Promptly notify the Collateral
Agent of any Commercial Tort Claim acquired by such Grantor, and
unless otherwise consented by the Collateral Agent, such Grantor
shall enter into documentation satisfactory to the Collateral Agent
to (i) amend Schedule 2.4(j) to include such commercial tort claim,
and (ii) grant to the Collateral Agent a first priority perfected
Lien on such Commercial Tort Claim.
(n) Control Agreements; Blocked Account Agreements. Upon the
Collateral Agent's request and otherwise in accordance with the terms
of the Credit Agreement, obtain an authenticated control agreement
from each issuer of uncertificated securities and from each
securities intermediary or commodities intermediary issuing or
holding any financial assets or commodities to or for such Grantor.
In accordance with the UCC (or other applicable Requirements of Law)
and to the extent requested by the Collateral Agent, each Grantor
shall use commercially reasonable efforts to grant the Collateral
Agent control of all of such Grantor's (i) Deposit Accounts (pursuant
to a Blocked Account Agreement or other agreement in form and
substance satisfactory to the Collateral Agent), (ii) Electronic
Chattel Paper, and (iii) all "transferable records" (as defined in
the Uniform Electronic Transactions Act). Upon the Collateral Agent's
request, each Grantor shall cause to be delivered to the Collateral
Agent an agreement, in form and substance satisfactory to the
Collateral Agent, executed by each Person with whom such Grantor is a
party to a Merchant Account Agreement, pursuant to which such Person
shall agree to disburse to a Payment Account all deposits, payments,
credits, proceeds and other amounts from time to time payable to such
Grantor by such Person under such Merchant Account Agreement.
(o) Letters of Credit. If such Grantor is or becomes the
beneficiary of a letter of credit, promptly notify the Collateral
Agent thereof and upon the Collateral Agent's request enter into a
tri-party agreement with the Collateral Agent and the issuer and/or
confirmation bank with respect to all Letter-of Credit Rights
thereunder assigning such Letter-of-Credit Rights to the Collateral
Agent and directing all payments thereunder to the Payment Account,
all in form and substance reasonably satisfactory to the Collateral
Agent.
(p) Voting Rights, Distributions, Etc. in Respect of
Investment Property.
(i) So long as no Event of Default exists (A) each
Grantor shall be entitled to exercise any and all voting and
other consensual rights (including, without limitation, the
right to give consents, waivers, and notifications in
respect of any securities) pertaining to its Investment
Property or any part thereof; provided, however, that
without the prior written consent of the Collateral Agent
and the Required Lenders, no vote shall be cast or consent,
waiver, or ratification given or action taken which would
(1) be inconsistent with or violate any provision of the
Credit Agreement, this Security Agreement, or any other
Credit Document or (2) amend, modify, or waive any material
term, provision, or condition of the certificate of
incorporation, bylaws, certificate of formation, or other
charter document or other agreement relating to, evidencing,
providing for the issuance of, or securing any such
Investment Property, in any manner that would impair such
Investment Property, the transferability thereof, or the
Collateral Agent's Liens therein, and (B) each Grantor shall
be entitled to receive and retain any and all dividends and
interest paid in respect of any of such Investment Property
(unless otherwise required by this Security Agreement).
(ii) During the existence of an Event of Default,
(A) the Collateral Agent may, without notice to any Grantor
or any other Person obligated for payment of all or any part
of the Secured Obligations, transfer or register in the name
of the Collateral Agent or any of its nominees, for the
benefit of the Agents and the Lenders, any or all of the
Collateral consisting of Investment Property, the proceeds
thereof (in cash or otherwise), and all liens, security,
rights, remedies, and claims of any Grantor with respect
thereto (as used in this Section 2.5(p) collectively, the
"Pledged Collateral") held by the Collateral Agent
hereunder, and the Collateral Agent or its nominee may
thereafter, after delivery of notice to the applicable
Grantor, exercise all voting and corporate rights at any
meeting of any corporation, partnership, or other business
entity issuing any of the Pledged Collateral and any and all
rights of conversion, exchange, subscription, or any other
rights, privileges, or options pertaining to any of the
Pledged Collateral as if it were the absolute owner thereof,
including, without limitation, the right to exchange at its
discretion any and all of the Pledged Collateral upon the
merger, consolidation, reorganization, recapitalization, or
other readjustment of any corporation, partnership, or other
business entity issuing any of such Pledged Collateral or
upon the exercise by any such issuer or the Collateral Agent
of any right, privilege, or option pertaining to any of the
Pledged Collateral, and in connection therewith, to deposit
and deliver any and all of the Pledged Collateral with any
committee, depositary, transfer agent, registrar, or other
designated agency upon such terms and conditions as it may
determine, all without liability except to account for
property actually received by it, but the Collateral Agent
shall have no duty to exercise any of the aforesaid rights,
privileges, or options, and the Collateral Agent shall not
be responsible for any failure to do so or delay in so
doing, (B) after the Collateral Agent's giving of the notice
specified in clause (A) of this Section 2.5(p)(ii), all
rights of any Grantor to exercise the voting and other
consensual rights which it would otherwise be entitled to
exercise pursuant to clause (A) of Section 2.5(p)(i) and to
receive the dividends, interest, and other distributions
which it would otherwise be authorized to receive and retain
thereunder shall be suspended until such Event of Default
shall no longer exist, and all such rights shall, until such
Event of Default shall no longer exist, thereupon become
vested in the Collateral Agent which shall thereupon have
the sole right to exercise such voting and other consensual
rights and to receive and hold as Pledged Collateral such
dividends, interest, and other distributions, (C) all
dividends, interest, and other distributions which are
received by any Grantor contrary to the provisions of this
Section 2.5(p)(ii) shall be received in trust for the
benefit of the Collateral Agent, shall be segregated from
other funds of such Grantor and shall be forthwith paid over
to the Collateral Agent as Collateral in the same form as so
received (with any necessary endorsement), and (D) each
Grantor shall execute and deliver (or cause to be executed
and delivered) to the Collateral Agent all such proxies and
other instruments as the Agent may reasonably request for
the purpose of enabling the Collateral Agent to exercise the
voting and other rights which it is entitled to exercise
pursuant to this Section 2.5(p)(ii) and to receive the
dividends, interest, and other distributions which it is
entitled to receive and retain pursuant to this Section
2.5(p)(ii). The foregoing shall not in any way limit the
Collateral Agent's power and authority granted pursuant to
Section 2.9.
(q) Acknowledgment of Pledge. With respect to any Investment
Property issued by a Grantor which at any time is owned by another
Grantor and constitutes an uncertificated security as defined in the
UCC, such issuing Grantor will comply with instructions originated by
the Collateral Agent without further consent by the registered owner
thereof. All shares of Capital Stock, which constitute a certificated
security as defined in the UCC, issued by a Grantor at any time owned
by another Grantor, and all warrants, and all non-cash dividends and
other non-cash distributions in respect thereof at any time
registered in the name of, or otherwise deliverable to, such owning
Person, shall be delivered to the Collateral Agent, for the account
of such owning Person, at the Agent's address specified in the Credit
Agreement.
(r) Capital Stock. Promptly notify the Collateral Agent if
any Grantor acquires any Capital Stock other than as set forth on
Schedule 1.1B or on Schedule 6.14 of the Credit Agreement.
(s) Location of Collateral. Within seven (7) days of the
Collateral Agent's request, provide the Collateral Agent with the
names and contact address information (including telephone numbers)
of the owners of any property leased by the Grantors and of the
tenants of any property leased by the Grantors.
Section 2.6 Advances by Lenders. On failure of any Grantor to perform
any of the covenants and agreements contained herein, the Collateral Agent
may, at its sole option and in its sole discretion, perform the same and in so
doing may expend such sums as the Collateral Agent may reasonably deem
advisable in the performance thereof, including, without limitation, the
payment of any insurance premiums, the payment of any taxes, a payment to
obtain a release of a Lien or potential Lien, expenditures made in defending
against any adverse claim and all other reasonable expenditures which the
Collateral Agent or the Lenders may make for the protection of the security
hereof or which may be compelled to make by operation of law. All such sums
and amounts so expended shall be repayable by the Grantors on a joint and
several basis promptly upon timely notice thereof and demand therefor, shall
constitute additional Secured Obligations and shall bear interest from the
date said amounts are expended at the default rate specified in Sections 4.1
and 4.2 of the Credit Agreement. No such performance of any covenant or
agreement by the Agents or the Lenders on behalf of any Grantor, and no such
advance or expenditure therefor, shall relieve the Grantors of any default
under the terms of this Security Agreement or any of the other Credit
Documents. The Lenders may make any payment hereby authorized in accordance
with any xxxx, statement or estimate procured from the appropriate public
office or holder of the claim to be discharged without inquiry into the
accuracy of such xxxx, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to the extent
such payment is being contested in good faith by a Grantor in appropriate
proceedings and against which adequate reserves are being maintained in
accordance with GAAP.
Section 2.7 Exercise of Remedies. Remedies may be exercised hereunder
at any time during the existence of an Event of Default as set forth in the
Credit Agreement.
Section 2.8 Remedies.
(a) General Remedies. In addition to all other rights and
remedies provided herein or under the other Credit Documents or by
law (including, but not limited to, the rights and remedies set forth
in the Uniform Commercial Code of the jurisdiction applicable to the
affected Collateral), the Collateral Agent shall have the default
rights and remedies of a secured party under the UCC (regardless of
whether the UCC is the law of the jurisdiction where the rights and
remedies are asserted and regardless of whether the UCC applies to
the affected Collateral), and further, the Collateral Agent may,
during the existence of an Event of Default as provided in Section
2.7, with or without judicial process or the aid and assistance of
others, (i) enter on any premises on which any of the Collateral may
be located and, without resistance or interference by the Grantors,
take possession of the Collateral, (ii) dispose of any Collateral on
any such premises, (iii) require the Grantors to assemble and make
available to the Collateral Agent at the expense of the Grantors any
Collateral at any place and time designated by the Collateral Agent
which is reasonably convenient to both parties, (iv) remove any
Collateral from any such premises for the purpose of effecting sale
or other disposition thereof, and/or (v) without demand and without
advertisement, notice, hearing or process of law, all of which each
of the Grantors hereby waives to the fullest extent permitted by law,
at any place and time or times, sell and deliver any or all
Collateral held by or for it at public or private sale, at any
exchange or broker's board or elsewhere, by one or more contracts, in
one or more parcels, for cash, upon credit or otherwise, at such
prices and upon such terms as the Collateral Agent deems advisable,
in its sole discretion (subject to any and all mandatory legal
requirements). In addition to all other sums due the Agents and the
Lenders with respect to the Secured Obligations, the Grantors shall
pay each Agent and each Lender all reasonable documented costs and
expenses actually incurred by such Agent or Lender, including, but
not limited to, reasonable attorneys' fees and court costs, in
obtaining or liquidating the Collateral, in enforcing payment of the
Secured Obligations, or in the prosecution or defense of any action
or proceeding by or against any such Agent or Lender or the Grantors
concerning any matter arising out of or connected with this Security
Agreement, any Collateral or the Secured Obligations, including,
without limitation, any of the foregoing arising in, arising under or
related to a case under the Bankruptcy Code. To the extent the rights
of notice cannot be legally waived hereunder, each Grantor agrees
that any requirement of reasonable notice shall be met if such notice
is personally served on or mailed, postage prepaid, to the Grantors
in accordance with the notice provisions of Section 13.1 of the
Credit Agreement at least 10 days before the time of sale or other
event giving rise to the requirement of such notice. None of the
Agents or the Lenders shall be obligated to make any sale or other
disposition of the Collateral regardless of notice having been given.
To the extent permitted by applicable law, any Lender may be a
purchaser at any such sale or a bidder for any Investment Property.
To the extent permitted by applicable law, each of the Grantors
hereby waives all of its rights of redemption with respect to any
such sale. Subject to the provisions of applicable law, the
Collateral Agent and the Lenders may postpone or cause the
postponement of the sale of all or any portion of the Collateral by
announcement at the time and place of such sale, and such sale may,
without further notice, to the extent permitted by law, be made at
the time and place to which the sale was postponed, or the Collateral
Agent and the Lenders may further postpone such sale by announcement
made at such time and place.
(b) Remedies relating to Accounts, Chattel Paper, General
Intangibles. During the existence of an Event of Default, whether or
not the Collateral Agent has exercised any or all of its rights and
remedies hereunder, the Collateral Agent or the Collateral Agent's
designee may notify all of the Grantors' account debtors that the
Grantors' Accounts, Chattel Paper, General Intangibles, and Payment
Intangibles have been assigned to the Collateral Agent and of the
Collateral Agent's security interest therein, and may collect such
Accounts, Chattel Paper, General Intangibles, and Payment Intangibles
directly and charge the collection costs and expenses against the
proceeds received or the Grantors. Each Grantor acknowledges and
agrees that the Proceeds of its Accounts, Chattel Paper, and General
Intangibles remitted to or on behalf of the Collateral Agent in
accordance with the provisions hereof shall be solely for the
Collateral Agent's own convenience and that such Grantor shall not
have any right, title or interest therein or in any such other
amounts except as expressly provided herein. None of the Agents or
the Lenders shall have any liability or responsibility to any Grantor
for acceptance of a check, draft or other order for payment of money
bearing the legend "payment in full" or words of similar import or
any other restrictive legend or endorsement or be responsible for
determining the correctness of any remittance. Each Grantor hereby
agrees to indemnify the Agents and the Lenders from and against all
liabilities, damages, losses, actions, claims, judgments, costs,
expenses, charges and reasonable attorneys' fees suffered or actually
incurred by the Agents or the Lenders (each, an "Indemnified Party")
because of the maintenance of the foregoing arrangements except as
relating to or arising out of the gross negligence or willful
misconduct of an Indemnified Party or its officers, employees or
agents. In the case of any investigation, litigation or other
proceeding, the foregoing indemnity shall be effective whether or not
such investigation, litigation or proceeding is brought by a Grantor,
its directors, shareholders or creditors or an Indemnified Party or
any other Person or any other Indemnified Party is otherwise a party
thereto.
(c) Access. In addition to the rights and remedies
hereunder, during the existence of an Event of Default, the
Collateral Agent shall have the right to enter and remain upon the
various premises of the Grantors without cost or charge to the
Collateral Agent, and use the same, together with materials,
supplies, books and records of the Grantors for the purpose of
collecting and liquidating the Collateral, or for preparing for sale
and conducting the sale of the Collateral, whether by foreclosure,
auction or otherwise, and, in addition, the Collateral Agent may
remove Collateral, or any part thereof, from such premises and/or any
records with respect thereto, in order to effectively collect or
liquidate such Collateral.
(d) Nonexclusive Nature of Remedies. Failure by the Agents
or the Lenders to exercise any right, remedy, or option under this
Security Agreement, any other Credit Document or as provided by law,
or any delay by the Agents or the Lenders in exercising the same,
shall not operate as a waiver of any such right, remedy, or option.
No waiver hereunder shall be effective unless it is in writing,
signed by the party against whom such waiver is sought to be enforced
and then only to the extent specifically stated, which in the case of
the Agents or the Lenders shall only be granted as provided herein.
To the extent permitted by law, neither the Agents, the Lenders, nor
any party acting as attorney for the Agents or the Lenders, shall be
liable hereunder for any acts or omissions or for any error of
judgment or mistake of fact or law other than their gross negligence
or willful misconduct hereunder. The rights and remedies of the
Agents and the Lenders under this Security Agreement shall be
cumulative and not exclusive of any other right or remedy which the
Agents or the Lenders may have.
(e) Retention of Collateral. The Collateral Agent may, after
providing the notices required by Sections 9-620 and 9-621 of the UCC
or otherwise complying with the requirements of applicable law of the
relevant jurisdiction, to the extent the Collateral Agent is in
possession of any of the Collateral, retain the Collateral in
satisfaction of the Secured Obligations. Unless and until the
Collateral Agent shall have provided such notices in writing,
however, the Collateral Agent shall not be deemed to have retained
any Collateral in satisfaction of any Secured Obligations for any
reason.
(f) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to
which the Agents or the Lenders are legally entitled, the Grantors
shall be jointly and severally liable for the deficiency, together
with interest thereon at the default rate specified in Sections 4.1
and 4.2 of the Credit Agreement, together with the costs of
collection and the reasonable fees of any attorneys employed by the
Collateral Agent to collect such deficiency. Any surplus remaining
after the full payment and satisfaction of the Secured Obligations
shall be returned to the Grantors or to whomsoever a court of
competent jurisdiction shall determine to be entitled thereto.
(g) Private Sale of Pledged Collateral. During the existence
of an Event of Default, the Grantors recognize that the Collateral
Agent may deem it impracticable to effect a public sale of all or any
part of the Pledged Collateral (as defined in Section 2.5(p)(ii) of
this Security Agreement) and that the Collateral Agent may,
therefore, determine to make one or more private sales of any of such
Pledged Collateral to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such securities
for their own account, for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges that any
such private sale may be at prices and on terms less favorable to the
seller than the prices and other terms which might have been obtained
at a public sale and, notwithstanding the foregoing, agrees that such
private sale shall be deemed to have been made in a commercially
reasonable manner and that the Collateral Agent shall have no
obligation to delay sale of any such Pledged Collateral for the
period of time necessary to permit that issuer of such Pledged
Collateral to register such Pledged Collateral for public sale under
the Securities Exchange Act. Each Grantor further acknowledges and
agrees that any offer to sell such Pledged Collateral which has been
(i) publicly advertised on a bona fide basis in a newspaper or other
publication of general circulation in the financial community of New
York, New York (to the extent that such offer may be advertised
without prior registration under the Securities Exchange Act) or (ii)
made privately in the manner described above shall be deemed to
involve a "public sale" under the UCC, notwithstanding that such sale
may not constitute a "public offering" under the Securities Exchange
Act, and the Collateral Agent may, in such event, bid for the
purchase of such Pledged Collateral.
Section 2.9 Rights of the Collateral Agent.
(a) Power of Attorney. In addition to other powers of
attorney contained herein, each Grantor hereby designates and
appoints the Collateral Agent, on behalf of the Agents and the
Lenders, and each of its designees or agents, as attorney-in-fact of
such Grantor, irrevocably and with power of substitution, with
authority to take any or all of the following actions:
(i) (A) receive, open and dispose of mail addressed
to a 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 the Collateral of such
Grantor on behalf of and in the name of such Grantor, or
securing, or relating to such Collateral;
(B) execute and deliver all assignments,
conveyances, statements, financing statements, renewal
financing statements, security agreements, affidavits,
notices and other agreements, instruments and documents that
the Collateral Agent may determine reasonably necessary in
order to perfect and maintain the security interests and
liens granted in this Security Agreement and in order to
fully consummate all of the transactions contemplated
therein;
(ii) during the existence of an Event of Default,
(A) to demand, collect, settle, compromise, adjust,
give discharges and releases, all as the Collateral Agent
may reasonably determine;
(B) to commence and prosecute any actions at any
court for the purposes of collecting any Collateral and
enforcing any other right in respect thereof;
(C) to defend, settle, or compromise any action
brought and, in connection therewith, give such discharge or
release as the Collateral Agent may deem reasonably
appropriate;
(D) sell, assign, transfer, make any agreement in
respect of, or otherwise deal with or exercise rights in
respect of, any Collateral or the goods or services which
have given rise thereto, as fully and completely as though
the Collateral Agent were the absolute owner thereof for all
purposes;
(E) adjust and settle claims under any insurance
policy relating thereto;
(F) institute any foreclosure proceedings that the
Collateral Agent may deem appropriate;
(G) do and perform all such other acts and things
as the Collateral Agent may reasonably deem to be necessary
to carry out the terms of the Credit Agreement; and
(H) to pay or discharge taxes, liens, security
interests, or other encumbrances levied or placed on or
threatened against the Pledged Collateral (as defined in
Section 2.5(p)(ii) of this Security Agreement) or such
Grantor.
This power of attorney is a power coupled with an interest and shall
be irrevocable (y) for so long as any of the Secured Obligations
remain outstanding and (z) until this Security Agreement shall have
been terminated. The Collateral Agent shall be under no duty to
exercise or withhold the exercise of any of the rights, powers,
privileges and options expressly or implicitly granted to the
Collateral Agent in this Security Agreement, and shall not be liable
for any failure to do so or any delay in doing so. The Collateral
Agent shall not be liable for any act or omission or for any error of
judgment or any mistake of fact or law in its individual capacity or
its capacity as attorney-in-fact except acts or omissions resulting
from its gross negligence or willful misconduct. This power of
attorney is conferred on the Collateral Agent solely to protect,
preserve, and realize upon its security interest in the Collateral.
(b) Performance by the Collateral Agent of Obligations. If
any Grantor fails to perform any agreement or obligation contained
herein, the Collateral Agent itself may perform, or cause performance
of, such agreement or obligation, and the expenses of the Collateral
Agent actually incurred in connection therewith shall be payable by
the Grantors on a joint and several basis pursuant to Section 3.14
hereof.
(c) Assignment by the Collateral Agent. The Collateral Agent
may, for its own account, from time to time assign the Secured
Obligations and any portion thereof and/or the Collateral and any
portion thereof, and the assignee shall be entitled to all of the
rights and remedies of the Collateral Agent, as a secured party in
its individual capacity, under this Security Agreement in relation
thereto.
(d) The Collateral Agent's Duty of Care. Other than the
exercise of reasonable care to assure the safe custody of the
Collateral while being held by the Collateral Agent hereunder, the
Agent shall have no duty or liability to preserve rights pertaining
thereto, it being understood and agreed that the Grantors shall be
responsible for preservation of all rights in the Collateral, and the
Collateral Agent shall be relieved of all responsibility for the
Collateral upon surrendering it or tendering the surrender of it to
the Grantors. The Collateral 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 Collateral Agent accords its own property,
which shall be no less than the treatment employed by a reasonable
and prudent agent in the industry, it being understood that the
Collateral Agent shall not have responsibility for taking any
necessary steps to preserve rights against any parties with respect
to any of the Collateral.
(e) Indemnities and Standards under the Credit Agreement. In
addition to the foregoing provisions of this Section, the Collateral
Agent shall be entitled to the benefits, standards and indemnities
afforded to it under the Credit Agreement.
Section 2.10 Application of Proceeds. During the existence of an
Event of Default, any payments in respect of the Secured Obligations and any
proceeds of the Collateral, when received by the Collateral Agent or any of
the Lenders in cash or its equivalent, will be applied in reduction of the
Secured Obligations for application as provided in the Credit Agreement, and
each Grantor irrevocably waives the right to direct the application of such
payments and proceeds and acknowledges and agrees that the Collateral Agent
shall have the continuing and exclusive right to apply and reapply any and all
such payments and proceeds in the Collateral Agent's sole discretion,
notwithstanding any entry to the contrary upon any of its books and records.
Section 2.11 Costs of Counsel. If at any time hereafter, whether
during the existence of an Event of Default or not, the Agents employ counsel
to prepare or consider amendments, waivers or consents with respect to this
Security Agreement, or to take action or make a response in or with respect to
any legal or arbitral proceeding relating to this Security Agreement or
relating to the Collateral, or to protect the Collateral or exercise any
rights or remedies under this Security Agreement or with respect to the
Collateral, then the Grantors agree to promptly pay upon demand any and all
such reasonable documented costs and expenses actually incurred by the Agents,
all of which costs and expenses shall constitute Secured Obligations
hereunder.
ARTICLE 3
MISCELLANEOUS
Section 3.1 Continuing Agreement. This Security Agreement shall be a
continuing agreement in every respect and shall remain in full force and
effect so long as any of the Secured Obligations remain outstanding (other
than any obligations with respect to the indemnities and the representations
and warranties set forth in the Credit Documents) and upon satisfactory
collateralization of all Letters of Credit. Upon such payment and termination,
this Security Agreement shall be automatically terminated and the Collateral
Agent and the Lenders shall, upon the request and at the expense of the
Grantors, forthwith release all of their liens and security interests
hereunder and shall authorize all UCC termination statements and/or other
documents reasonably requested by the Grantors evidencing such termination.
Notwithstanding the foregoing all releases and indemnities provided hereunder
shall survive the termination of this Security Agreement.
Section 3.2 Reinstatement. This Security Agreement shall continue to
be effective or be automatically reinstated, as the case may be, if at any
time payment, in whole or in part, of any of the Secured Obligations is
rescinded or must otherwise be restored or returned by the Collateral Agent or
any Lender as a "voidable preference", "fraudulent conveyance" or otherwise
under any bankruptcy, insolvency or similar law, all as though such payment
had not been made; provided that in the event payment of all or any part of
the Secured Obligations is rescinded or must be restored or returned, all
reasonable costs and expenses (including without limitation any reasonable
legal fees and disbursements) incurred by any Agent or any Lender in defending
and enforcing such reinstatement shall be deemed to be included as a part of
the Secured Obligations.
Section 3.3 Amendments; Waivers; Modifications. This Security
Agreement and the provisions hereof may not be amended, waived, modified,
changed, discharged, or terminated except as set forth in Section 12.6 of the
Credit Agreement.
Section 3.4 Successors in Interest. This Security Agreement shall
create a continuing security interest in the Collateral and shall be binding
upon each Grantor, its successors and assigns and shall inure, together with
the rights and remedies of the Collateral Agent and the Lenders hereunder, to
the benefit of the Agents and the Lenders and their successors and permitted
assigns; provided, however, that none of the Grantors may assign its rights or
delegate its duties hereunder without the prior written consent of each Lender
or as set forth in the Credit Agreement. To the fullest extent permitted by
law, each Grantor hereby releases each Agent and each Lender, and their
respective successors and assigns, from any liability for any act or omission
relating to this Security Agreement or the Collateral, except for any
liability arising from the gross negligence or willful misconduct of such
Agent or such Lender, or its officers, employees or agents.
Section 3.5 Notices. All notices required or permitted to be given
under this Security Agreement shall be in conformance with Section 12.1 of the
Credit Agreement.
Section 3.6 Counterparts. This Security Agreement may be
authenticated in any number of counterparts, each of which where so
authenticated and delivered shall be an original, but all of which shall
constitute one and the same instrument. It shall not be necessary in making
proof of this Security Agreement to produce or account for more than one such
counterpart. This Security Agreement may be authenticated by manual signature,
facsimile, or, if approved in writing by the Collateral Agent, electronic
means, all of which shall be equally valid. A telecopy of any such executed
counterpart shall be deemed valid as an original.
Section 3.7 Headings. The headings of the sections and subsections
hereof are provided for convenience only and shall not in any way affect the
meaning or construction of any provision of this Security Agreement.
Section 3.8 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS SECURITY AGREEMENT IS GOVERNED BY THE APPLICABLE
LAW PERTAINING IN THE STATE OF NEW YORK, OTHER THAN THOSE CONFLICT OF
LAW PROVISIONS THAT WOULD DEFER TO THE SUBSTANTIVE LAWS OF ANOTHER
JURISDICTION; PROVIDED THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE
9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW
RULES SET FORTH IN ARTICLE 9 OF THE UCC) AND PROVIDED, FURTHER THAT
THE AGENTS AND THE LENDERS RETAIN ALL RIGHTS ARISING UNDER FEDERAL
LAW. THIS GOVERNING LAW ELECTION HAS BEEN MADE BY THE PARTIES IN
RELIANCE ON, AMONG OTHER THINGS, SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK, AS AMENDED (AS AND TO THE
EXTENT APPLICABLE), AND OTHER APPLICABLE LAW. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS SECURITY AGREEMENT MAY BE BROUGHT IN
THE COURTS OF THE STATES OF CALIFORNIA OR NEW YORK OR OF THE UNITED
STATES LOCATED IN LOS ANGELES COUNTY, CALIFORNIA, OR NEW YORK COUNTY,
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS SECURITY AGREEMENT,
EACH OF THE GRANTORS AND THE COLLATERAL AGENT CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH OF THE GRANTORS AND THE COLLATERAL AGENT
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO 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 ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS SECURITY
AGREEMENT, ANY OTHER CREDIT DOCUMENT, OR ANY OTHER AGREEMENT,
DOCUMENT, OR INSTRUMENT RELATED HERETO OR THERETO. NOTWITHSTANDING
THE FOREGOING (i) THE AGENTS AND THE LENDERS SHALL HAVE THE RIGHT TO
BRING ANY ACTION OR PROCEEDING AGAINST ANY GRANTOR OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION THE COLLATERAL AGENT OR THE
LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE
COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS AND (ii)
EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE
COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.
(b) EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY
BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO
SUCH GRANTOR AT ITS ADDRESS SET FORTH IN SECTION 13.1 OF THE CREDIT
AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE
(5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE
RIGHT OF THE AGENTS OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY
OTHER MANNER PERMITTED BY LAW.
(c) NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECURITY
AGREEMENT TO THE CONTRARY, ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG
THE PARTIES, ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR
ANY OTHER CREDIT DOCUMENT INCLUDING ANY CLAIM BASED ON OR ARISING
FROM AN ALLEGED TORT, SHALL AT THE REQUEST OF EITHER PARTY HERETO BE
DETERMINED BY BINDING ARBITRATION. The arbitration shall be conducted
in accordance with the United States Arbitration Act (Title 9, U.S.
Code), notwithstanding any choice of law provision in this Security
Agreement, and under the Commercial Rules of the American Arbitration
Association ("AAA"). The arbitrator(s) shall give effect to statutes
of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the
arbitrator(s). Judgment upon the arbitration award may be entered in
any court having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuant to a provisional or ancillary
remedy shall not constitute a waiver of the right of either party,
including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial
relief.
(d) Notwithstanding the provisions of clause (c) above, no
controversy or claim shall be submitted to arbitration without the
consent of all parties if, at the time of the proposed submission,
such controversy or claim arises from or related to an obligation to
the Collateral Agent which is secured by real estate property
collateral (exclusive of real estate space lease assignments). If all
the parties do not consent to submission of such a controversy or
claim to arbitration, the controversy or claim shall be determined as
provided in Section 3.8(e).
(e) At the request of any party a controversy or claim which
is not submitted to arbitration as provided and limited in
subsections 3.8(c) and (d) shall be determined by judicial reference.
If such an election is made, the parties shall designate to the court
a referee or referees selected under the auspices of the AAA in the
same manner as arbitrators are selected in AAA-sponsored proceedings.
The presiding referee of the panel, or the referee if there is a
single referee, shall be an active attorney or retired judge.
Judgment upon the award rendered by such referee or referees shall be
entered in the court in which such proceeding was commenced.
(f) No provision of clauses (c) through (f) shall limit the
right of the Agents or the Lenders to exercise self-help remedies
such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or obtaining provisional or
ancillary remedies from a court of competent jurisdiction before,
after, or during the pendency of any arbitration or other proceeding.
The exercise of a remedy does not waive the right of either party to
resort to arbitration or reference. At the Collateral Agent's option,
foreclosure under a deed of trust or mortgage may be accomplished
either by exercise of power of sale under the deed of trust or
mortgage or by judicial foreclosure.
Section 3.9 Waiver of Jury Trial. SUBJECT TO THE PROVISIONS OF
SECTION 3.8(c), EACH OF THE GRANTORS, THE AGENTS, AND THE LENDERS IRREVOCABLY
WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS SECURITY AGREEMENT, THE
OTHER CREDIT DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN
ANY ACTION, PROCEEDING, OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ONE PARTY
AGAINST THE OTHER PARTY OR ANY AGENT-RELATED PERSON OR PARTICIPANT, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH OF THE
GRANTORS, THE AGENTS, AND THE LENDERS AGREES THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, EACH OF THE GRANTORS, THE AGENTS, AND THE LENDERS FURTHER AGREES
THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM, OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS SECURITY
AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS SECURITY AGREEMENT
OR THE OTHER CREDIT DOCUMENTS.
Section 3.10 Severability. If any provision of any of this Security
Agreement is determined to be illegal, invalid or unenforceable, such
provision shall be fully severable and the remaining provisions shall remain
in full force and effect and shall be construed without giving effect to the
illegal, invalid or unenforceable provisions. This Security Agreement is to be
read, construed, and applied together with the Credit Agreement and the other
Credit Documents which, taken together, set forth the complete understanding
and agreement of the Agents, the Lenders, and the Grantors with respect to the
matters referred to herein and therein.
Section 3.11 Survival. All representations and warranties of the
Grantors hereunder shall survive the execution and delivery of this Security
Agreement, the other Credit Documents, the delivery of the Notes and the
Extensions of Credit under the Credit Agreement.
Section 3.12 Other Security. To the extent that any of the Secured
Obligations are now or hereafter secured by property other than the Collateral
(including, without limitation, real property and securities owned by a
Grantor), or by a guarantee, endorsement or property of any other Person, then
the Agents and the Lenders shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence of any Event of
Default, and the Agents and the Lenders have the right, in their sole
discretion, to determine which rights, security, liens, security interests or
remedies the Agents and the Lenders shall at any time pursue, relinquish,
subordinate, modify or take with respect thereto, without in any way modifying
or affecting any of them or any of the Agents' and the Lenders' rights or the
Secured Obligations under this Security Agreement or under any of the other
Credit Documents.
Section 3.13 Joint and Several Obligations of Grantors.
(a) Each of the Grantors is accepting joint and several
liability hereunder in consideration of the financial accommodation
to be provided by the Lenders under the Credit Agreement, for the
mutual benefit, directly and indirectly, of each of the Grantors and
in consideration of the undertakings of each of the Grantors to
accept joint and several liability for the obligations of each of
them.
(b) Each of the Grantors jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but
also as a co-debtor, joint and several liability with the other
Grantors with respect to the payment and performance of all of the
Secured Obligations arising under this Security Agreement and the
other Credit Documents, it being the intention of the parties hereto
that all the Secured Obligations shall be the joint and several
obligations of each of the Grantors without preferences or
distinction among them.
(c) Notwithstanding any provision to the contrary contained
herein, in any other of the Credit Documents, the obligations of each
Grantor under the Credit Agreement, this Security Agreement, and the
other Credit Documents shall be limited to a maximum aggregate amount
equal to the largest amount that would not render its obligations
hereunder subject to avoidance as a fraudulent transfer or conveyance
under any Requirement of Law, in each case after giving effect to all
other liabilities of such Grantor, contingent or otherwise, that are
relevant under such laws, and after giving effect to the value, as
assets (as determined under the applicable provisions of such laws)
of any rights of such Grantor to contribution, indemnity, and/or
subrogation from any Credit Party or other Person pursuant to any
Requirement of Law or any agreement providing for an equitable
allocation among such Grantor, any Credit Party, and any other Person
of their respective obligations thereunder.
Section 3.14 Contribution and Indemnification. To the extent that any
Grantor shall make any transfer (including, without limitation, any lien,
payment, grant, or guaranty) pursuant to this Security Agreement (any such
transfer hereinafter being called an "Accommodation Payment") then the Grantor
making such Accommodation Payment shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other Grantors in an
amount, for each of such other Grantors, equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Grantor's
Allocable Amount (as defined below) and the denominator of which is the sum of
the Allocable Amounts of all of the Grantors. As of any date of determination,
the "Allocable Amount" of each Grantor shall be equal to the maximum amount of
liability for Accommodation Payments which could be asserted against such
Grantor hereunder without (a) rendering such Grantor "insolvent" within the
meaning of Section 101(31) of the Bankruptcy Code, Section 2 of the Uniform
Fraudulent Transfer Act ("UFTA") or Section 2 of the Uniform Fraudulent
Conveyance Act ("UFCA") or (b) leaving such Grantor with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 5 of the UFCA. All rights and claims of
contribution, indemnification, and reimbursement under this paragraph shall be
subordinate in right of payment to the prior payment in full of the Secured
Obligations. The provisions of this paragraph shall, to the extent expressly
inconsistent with any provisions in any Credit Document, supersede such
inconsistent provision.
Section 3.15 Rights of Required Lenders. All rights of the Collateral
Agent hereunder, if not exercised by the Collateral Agent, may be exercised by
the Required Lenders and their representatives as set forth in the Credit
Agreement.
Section 3.16 Limitation by Law. All rights, remedies, and powers
provided in this Security Agreement may be exercised only to the extent that
the exercise thereof does not violate any applicable provision of law, and all
the provisions of this Security Agreement are intended to be subject to all
applicable mandatory provisions of law that may be controlling and to be
limited to the extent necessary so that they shall not render this Security
Agreement invalid, unenforceable, in whole or in part, or not entitled to be
recorded, registered, or filed under the provisions of any applicable law.
Section 3.17 No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Security
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Security Agreement shall be construed as if drafted jointly by
the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provisions of this
Security Agreement.
Section 3.18 Advice of Counsel. Each of the parties represents to
each other party hereto that it has discussed this Security Agreement and,
specifically, without limitation, the provisions of Section 3.8 and Section
3.9, with its counsel.
Section 3.19 Benefit of the Agents and the Lenders. All Liens granted
or contemplated hereby shall be for the benefit of the Agents and the Lenders,
and all proceeds or payments realized from Collateral in accordance herewith
shall be applied to the Secured Obligations in accordance with the terms of
the Credit Agreement.
Section 3.20 Amendment and Restatement. Each Grantor hereby ratifies
and confirms the Liens granted by it under the Existing Security Agreement to
the Collateral Agent, in its capacity as administrative agent under the
Existing Credit Agreement, and agrees that such Liens are valid and
enforceable and continue in full force and effect free of defense,
counterclaim or offset. This Security Agreement constitutes an amendment and
restatement of the Existing Security Agreement in its entirety. From and after
the date hereof, all Liens arising under the Existing Security Agreement are
hereby deemed to be renewed and continued (and not extinguished, discharged,
or satisfied) as security for the Secured Obligations and hereafter shall be
evidenced by and governed in accordance with this Security Agreement. All
references in any of the Credit Documents to the Existing Security Agreement
shall be deemed to mean this Security Agreement.
[Remainder of Page Intentionally Left Blank]
Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above
written.
GRANTORS:
XXXXXXXX'X FLORIDA PARTNERSHIP
By: Xxxxxxxx'x Management Corp., its
Managing Partner
By: /s/ Xxx Xxxxxx
----------------------------
Name: Xxx Xxxxxx
Title: President
FI STORES LIMITED PARTNERSHIP
By: Xxxxxxxx'x Inc., its general partner
By: /s/ Xxx Xxxxxx
-----------------------------
Name: Xxx Xxxxxx
Title: Chief Executive Officer
XXXXXXXX'X HOLDING CORP.
By: /s/ Xxx Xxxxxx
----------------------------------
Name: Xxx Xxxxxx
Title: President
XXXXXXXX'X MANAGEMENT CORP.
By: /s/ Xxx Xxxxxx
----------------------------------
Name: Xxx Xxxxxx
Title: President
FCJV HOLDING CORP.
By: /s/ Xxx Xxxxxx
---------------------------------
Name: Xxx Xxxxxx
Title: President
FCJV, L.P.
By: FCJV Holding Corp., its general partner
By: /s/ Xxx Xxxxxx
-----------------------------------
Name: Xxx Xxxxxx
Title: President
XXXXXXXX'X INVESTMENTS LLC
By: FCJV Holding Corp., its general
partner
By: /s/ Xxx Xxxxxx
-----------------------------------
Name: Xxx Xxxxxx
Title: President
XXXXXXXX'X BENEFICIARY INC.
By: /s/ Xxx Xxxxxx
--------------------------------
Name: Xxx Xxxxxx
Title: President
Accepted and agreed to as of the date first above written.
BANK OF AMERICA, N.A.,
as Collateral Agent
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
