Exhibit 10.17
EXECUTION COPY
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented or otherwise modified
from time to time, this "Security Agreement"), dated as of January 28, 1999, by
and among BNY LICENSING CORP. (with its successors and permitted assigns, the
"Grantor"), and CITICORP USA, INC., in its capacity as administrative agent
(with its successors in such capacity, the "Administrative Agent") for the
Lenders (as defined below) and the Issuing Banks (as defined below) under that
certain Credit Agreement dated as of January 28, 1999 (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
among Barney's, Inc., Barneys America, Inc., PFP Fashions Inc., Barneys (CA)
Lease Corp., Barneys (NY) Lease Corp., Xxxxx All-American Sportswear Corp., BNY
Licensing Corp., and Barneys America (Chicago) Lease Corp. (collectively, the
"Borrowers"), the Administrative Agent, the lenders from time to time a party
thereto (the "Lenders"), the issuing banks from time to time a party thereto
(the "Issuing Banks") and General Electric Capital Corporation, in its capacity
as documentation agent (in such capacity, the "Documentation Agent").
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Grantor is a party to the Credit Agreement, pursuant to
which the Lenders and the Issuing Banks have agreed, subject to certain
conditions precedent, to make certain loans and other financial accommodations
to the Borrowers from time to time; and
WHEREAS, in order to secure the prompt and complete payment, observance
and performance of (i) all of the Obligations and (ii) all of the Grantor's
obligations and liabilities hereunder and in connection herewith (all the
Obligations and such obligations and liabilities hereunder being hereinafter
referred to collectively as the "Liabilities"), the Administrative Agent, the
Lenders and the Issuing Banks have required as a condition, among others, to
entering into the Credit Agreement that the Grantor execute and deliver this
Security Agreement;
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used herein
that is defined in the Credit Agreement shall have the meaning specified for
such term in the Credit Agreement. Unless otherwise defined herein or in the
Credit Agreement, all terms defined in Article 8 and Article 9 of the Uniform
Commercial Code in effect as of the date hereof in the State of New York are
used herein as defined therein.
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(b) The words "hereby," "hereof," "herein" and "hereunder" and words of
like import when used in this Security Agreement shall refer to this Security
Agreement as a whole and not to any particular provision of this Security
Agreement, and section references are to this Security Agreement unless
otherwise specified.
(c) All terms defined in this Security Agreement in the singular shall
have comparable meanings when used in the plural, and VICE VERSA, unless
otherwise specified.
2. GRANT OF SECURITY INTEREST. To secure the prompt and complete
payment, observance and performance of all the Liabilities, the Grantor hereby
grants (subject as set forth below) to the Administrative Agent for the benefit
of the Administrative Agent, the Lenders, the Issuing Banks and the other
Holders, a security interest in all of the Grantor's rights, title and interests
in and to the following property, whether now owned or existing or hereafter
arising or acquired and wheresoever located (the "Collateral"):
(a) ACCOUNTS: All present and future accounts, accounts receivable and
other rights of the Grantor to payment for the sale or lease of goods or the
rendition of services (except those evidenced by instruments or chattel paper),
whether now existing or hereafter arising and wherever arising, and whether or
not they have been earned by performance (collectively, "Accounts");
(b) EQUIPMENT: All of the Grantor's present and future (i) equipment and
fixtures, including, without limitation, wherever located, printing presses and
other machinery, manufacturing, distribution, selling, data processing and
office equipment, furniture, furnishings, assembly systems, tools, tooling,
molds, dies, appliances and vehicles, vessels and aircraft, (ii) other tangible
personal property (other than the Grantor's Inventory) and (iii) any and all
accessions, parts and appurtenances attached to any of the foregoing or used in
connection therewith, and any substitutions therefor and replacements, products
and proceeds thereof (collectively, "Equipment");
(c) GENERAL INTANGIBLES: All of the Grantor's present and future general
intangibles, choses in action, causes of action, and all other intangible
personal property of every kind and nature including, without limitation,
corporate, partnership and other business books and records, interests in
partnerships and limited liability companies that do not constitute securities,
inventions, designs, patents, patent applications, trademarks, service marks,
trademark applications, service xxxx applications, trade names, trade secrets,
goodwill, registrations, copyrights, licenses, franchises, customer lists,
computer programs, software and other computer materials, tax refunds, tax
refund claims, rights and claims against charters, carriers, shippers,
franchisees, lessors, and lessees, and rights to indemnification, intercompany
receivables, and any security documents executed in connection therewith,
deposit accounts, proceeds of any letters of credit, indemnity, warranty or
guaranty payable to the Grantor from time to time with respect to the foregoing
or proceeds of any insurance policies on which the Grantor is named as
beneficiary, claims against third parties for advances and other financial
accommodations and any other obligations whatsoever owing to the Grantor,
contract rights, customer and supplier contracts, rights in and to all security
agreements, security interests or other security held by the
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Grantor to secure payment of the Grantor's accounts, all right, title and
interest under leases, subleases, and concessions and other agreements relating
to personal property (including, without limitation, all rents, issues and
profits related thereto), rights in and under guarantees, instruments,
securities, documents of title and other contracts securing, evidencing,
supporting or otherwise relating to any of the foregoing, together with all
rights in any goods, merchandise or Inventory (as defined below) which any of
the foregoing may represent (collectively, "General Intangibles");
(d) INVENTORY: All of the Grantor's present and future (i) inventory,
(ii) goods, merchandise and other personal property furnished or to be furnished
under any contract of service or intended for sale or lease, and all goods
consigned by the Grantor and all other items which have previously constituted
Equipment but are then currently being held for sale or lease in the ordinary
course of the Grantor's business, (iii) raw materials, work-in-process and
finished goods, (iv) materials, components and supplies of any kind, nature or
description used or consumed in the Grantor's business or in connection with the
manufacture, production, packing, shipping, advertising, finishing or sale of
any of the Property described in CLAUSES (I) through (III) above, (v) goods in
which the Grantor has a joint or other interest to the extent of the Grantor's
interest therein or right of any kind (including, without limitation, goods in
which the Grantor has an interest or right as consignee), and (vi) goods which
are returned to or repossessed by the Grantor; in each case whether in the
possession of the Grantor, a bailee, a consignee, or any other Person for sale,
storage, transit, processing, use or otherwise, and any and all documents for or
relating to any of the foregoing (collectively, "Inventory");
(e) CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper, all
instruments (as defined in Article 9 of the Uniform Commercial Code), all bills
of lading, warehouse receipts and other documents of title and documents, in
each instance whether now owned or hereafter acquired by the Grantor
(collectively, "Chattel Paper, Instruments and Documents");
(f) INVESTMENT PROPERTY: All investment property (as defined in Article
9 of the Uniform Commercial Code) including, without limitation, all securities
(as defined in Article 8 of the Uniform Commercial Code), whether certificated
or uncertificated, security entitlements, securities accounts, commodities
contracts and commodity accounts (collectively, "Investment Property");
(g) OTHER PROPERTY: All property or interests in property now owned or
hereafter acquired by the Grantor whether in the possession, custody or control
of the Administrative Agent, any Lender, any Issuing Bank or any other Holder,
or any agent or affiliate of any of them in any way or for any purpose (whether
for safekeeping, deposit, custody, pledge, transmission, collection or
otherwise), including, without limitation, (i) notes, drafts, letters of credit,
stocks, bonds, and debt and equity securities, whether or not certificated, and
warrants, options, puts and calls and other rights to acquire or otherwise
relating to the same (in each case only to the extent not otherwise constituting
Investment Property); (ii) money; (iii) proceeds of loans, including without
limitation, all the Loans made to the Grantor under the Credit Agreement; and
(iv) insurance proceeds and books and records relating to any of the
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property covered by this Agreement (collectively, "Other Property");
together with in respect to each of the items set forth in paragraphs (a)
through (g) above, all accessions and additions thereto, substitutions therefor,
and replacements, proceeds and products thereof. Notwithstanding anything to the
contrary in this Security Agreement, nothing herein or otherwise shall be deemed
or construed, directly or indirectly, as a grant by the Grantor to the
Administrative Agent, the Lenders, the Issuing Banks or the other Holders of a
Lien of any kind whatsoever on any "Collateral" (as defined in the (i) Security
Agreement dated as of the date hereof between the Grantor and BI-Equipment
Lessors LLC, (ii) the Security Agreement dated as of the date hereof between the
Grantor and Copelco Capital, Inc. and (iii) the Security Agreement dated as of
the date hereof between the Grantor and Xxxx Xxxxxxx Leasing Corporation)
subject to a Lien granted to any of the Equipment Lessors (as defined in the
Plan of Reorganization) pursuant to any of the Security Agreements referred to
immediately above as in effect on the date hereof.
This Security Agreement shall not create or be filed as a lien against the land,
building and/or improvements to the real property in which the goods, machinery,
equipment, appliances or other personal property covered hereby are to be
located or installed.
3. CONTINUING LIABILITY. The Grantor hereby expressly agrees that,
notwithstanding anything set forth herein to the contrary, the Grantor shall
remain solely responsible under each contract, agreement, interest or obligation
as to which a Lien has been granted to the Administrative Agent hereunder for
the observance and performance of all of the conditions and obligations to be
observed and performed by the Grantor thereunder, all in accordance with and
pursuant to the terms and provisions thereof, and the exercise by the
Administrative Agent, any Lender or any Issuing Bank of any rights under this
Security Agreement, the Credit Agreement or any other Loan Document shall not
release the Grantor from any of the Grantor's duties or obligations hereunder
and under each such contract, agreement, interest or obligation. Neither the
Administrative Agent nor any Lender or Issuing Bank shall have any duty,
responsibility, obligation or liability under any such contract, agreement,
interest or obligation by reason of or arising out of this Security Agreement or
the assignment thereof by the Grantor to the Administrative Agent or the
granting by the Grantor to the Administrative Agent of a Lien thereon or the
receipt by the Administrative Agent, any Lender or any Issuing Bank of any
payment relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall the Administrative Agent, any Lender or any Issuing
Bank be required or obligated (nor to the extent prohibited by the terms of such
contract, agreement, interest or obligation or applicable law, rule or
regulation, shall the Administrative Agent, Lender or Issuer be permitted), in
any manner, to (a) perform or fulfill any of the obligations of the Grantor
thereunder or pursuant thereto, (b) make any payment, or make any inquiry as to
the nature or the sufficiency of any payment received by the Grantor or the
sufficiency of any performance by any party under any such contract, agreement,
interest or obligation, or (c) present or file any claim, or take any action to
collect or enforce any performance or payment of any amounts which may have been
assigned to the Grantor, on which the Grantor has been granted a Lien to which
the Grantor may be entitled at any time or times.
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4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Grantor hereby
represents, warrants and covenants that as of the date of the execution of this
Security Agreement, and until the termination of this Security Agreement
pursuant to SECTION 14 below:
(a) All of the Equipment and Inventory (other than Inventory and
Equipment sold in accordance with the terms of the Credit Agreement,
Equipment being repaired or serviced, Inventory in transit or in the
possession and control of subcontractors of the Grantor or any other
Person for processing and vehicles) are located at the places specified
in SCHEDULE 1 attached hereto as amended from time to time pursuant to
SECTION 5(B) below and such location is an owned, leased or bailment
location as specified in SCHEDULE 1 attached hereto. As of the date
hereof, the correct corporate name, the principal place of business, the
chief executive office, and the federal tax identification number of the
Grantor and the places where the Grantor's books and records concerning
the Collateral are currently kept are set forth in SCHEDULE 2 attached
hereto and made a part hereof, and the Grantor will not change such
principal place of business or chief executive office or remove such
records without (i) providing the Administrative Agent with at least
thirty (30) days' prior written notice of such change, and (ii) making
all filings under the Uniform Commercial Code necessary or appropriate
to preserve the perfection of the security interests described herein to
the extent such security interest may be perfected by such filings. The
Grantor will not change its name, identity or corporate structure in any
manner which might make any financing statement filed hereunder
misleading, UNLESS the Grantor shall have (A) given the Administrative
Agent at least thirty (30) days' prior written notice thereof (and
received any consent that may be required under the terms of the Credit
Agreement), and (B) certified to the Administrative Agent that all
filings reflecting such new name, identity or structure have been made
which are necessary or appropriate to preserve the perfection of the
security interests described herein. The Grantor will hold and preserve
such records and chattel paper and will permit representatives of the
Administrative Agent, upon reasonable notice and at times during normal
business hours to inspect and make abstracts from such records and
chattel paper.
(b) The Grantor has exclusive possession and control of the
Equipment and Inventory except as permitted under the Credit Agreement.
(c) The Grantor is the legal and beneficial owner of the
Collateral free and clear of all Liens, except as permitted under
SECTION 9.03 of the Credit Agreement. The Grantor has not, during the
five (5) years preceding the date hereof, been known as or used any
other corporate or fictitious name, except as disclosed on SCHEDULE 3
hereto, nor acquired all or substantially all the assets, capital stock
or operating unit of any Person, except as disclosed on SCHEDULE 3
hereto and each predecessor in interest of the Grantor during the five
(5) years preceding the Closing Date is disclosed on SCHEDULE 3 hereto.
(d) This Security Agreement creates in favor of the
Administrative Agent a legal, valid and enforceable security interest in
the Collateral, securing the payment of the Liabilities. When financing
statements have been filed in the appropriate offices in the
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locations listed on SCHEDULES 1 AND 2 hereto, the Administrative Agent
will have a fully perfected first priority Lien on the Collateral to the
extent such Lien may be perfected by Uniform Commercial Code filings.
(e) No consent of any Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required either for
(i) the perfection or maintenance of the security interest created
hereby, except for the Uniform Commercial Code filings referred to in
clause (d) (and except for the filings with the United States Patent and
Trademark Office and except for, in the case of motor vehicles,
certificates of title which have been issued, which note the
Administrative Agent's security interest) or (ii) for the exercise by
the Administrative Agent of its rights provided for in this Agreement or
the remedies in respect of the Collateral pursuant to this Agreement.
(f) The Inventory produced by the Grantor has been produced in
compliance in all material respects with all requirements of the Fair
Labor Standards Act.
5. COVENANTS. The Grantor covenants and agrees with the Administrative
Agent that from and after the date of this Security Agreement and until the
termination of this Security Agreement pursuant to SECTION 14 below:
(a) At any time and from time to time, upon the Administrative
Agent's written request and at the expense of the Grantor, the Grantor
will promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as the
Administrative Agent reasonably may deem desirable in order to perfect
and protect any Lien granted or purported to be granted hereby or to
enable the Administrative Agent to exercise and enforce its rights and
remedies hereunder with respect to the Collateral. Without limiting the
generality of the foregoing, the Grantor will: (i) upon the occurrence
and during the continuance of an Event of Default, at the request of the
Administrative Agent, xxxx conspicuously each item of chattel paper
included in the Collateral and each related contract and each of its
records pertaining to the Collateral, with a legend, in form and
substance satisfactory to the Administrative Agent, indicating that such
document, chattel paper, related contract or Collateral is subject to
the security interest granted hereby; (ii) if any Collateral shall be
evidenced by a promissory note or other instrument (other than checks or
drafts received in the ordinary course of the Grantor's business),
deliver and pledge to the Administrative Agent hereunder such note or
instrument duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to the
Administrative Agent; and (iii) execute and file such financing or
continuation statements, or amendments thereto, and such other
instruments or notices as the Administrative Agent may request, as may
be necessary or desirable, in order to perfect and preserve the security
interest granted or purported to be granted hereby. The Grantor hereby
authorizes the Administrative Agent to file any such financing or
continuation
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statements without the signature of the Grantor to the extent permitted
by applicable law. The Grantor hereby agrees that a carbon,
photographic, photostatic or other reproduction of this Security
Agreement or of a financing statement is sufficient as a financing
statement to the extent permitted by applicable law.
(b) The Grantor shall keep the Equipment and Inventory (other
than Inventory and Equipment sold in accordance with the terms of the
Credit Agreement, Equipment being repaired or serviced, Inventory in
transit or in the possession and control of subcontractors of the
Grantor and vehicles) at the places specified in SCHEDULE 1 hereto and
deliver written notice to the Administrative Agent at least 30 days
prior to establishing any other location at which it reasonably expects
to maintain Inventory and/or Equipment (it being understood and agreed
that all action required by SECTION 5(A) hereof shall have been taken in
the relevant jurisdiction with respect to all such Equipment and/or
Inventory prior to the establishment of any such location). Upon the
establishment of any such location, and after notice thereof to the
Administrative Agent as required in the preceding sentence, SCHEDULE 1
hereto shall be deemed amended to add such location thereto without
further action by the Administrative Agent or the Grantor and the
Grantor hereby authorizes the Administrative Agent to substitute a new
SCHEDULE 1 hereto to reflect such additional location(s).
(c) The Grantor will keep and maintain at the Grantor's own cost
and expense satisfactory and complete records of the Collateral in a
manner reasonably acceptable to the Administrative Agent, including,
without limitation, a record of all payments received and all credits
granted with respect to such Collateral and a record of the
Administrative Agent's security interest in the Collateral. Upon the
occurrence and during the continuance of an Event of Default, the
Grantor shall, for the Administrative Agent's further security, deliver
and turn over to the Administrative Agent or the Administrative Agent's
designated representatives at any time upon three (3) Business Days'
notice from the Administrative Agent or the Administrative Agent's
designated representative, copies of any such books and records
(including, without limitation, any and all computer tapes, programs and
source codes relating to the Collateral or any part or parts thereof).
(d) In any suit, proceeding or action brought by the
Administrative Agent under any Account comprising part of the
Collateral, the Grantor will save, indemnify and keep the Administrative
Agent, each Lender and each Issuing Bank harmless from and against all
expense, loss or damages suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the
obligor thereunder, arising out of a breach by the Grantor of any
obligation or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such obligor or its
successors from the Grantor, and all such obligations of the Grantor
shall be and shall remain enforceable against and only against the
Grantor and shall not be enforceable against the Administrative Agent,
any Lender or any Issuing Bank; PROVIDED, HOWEVER, the Grantor shall
have no obligation to the Administrative Agent with respect to the
matters indemnified pursuant to this subsection (d) resulting from the
willful misconduct or gross negligence of the Administrative Agent, any
Lender or an Issuing Bank as determined
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in a final non-appealable judgment by a court of competent jurisdiction.
(e) The Grantor will not create, permit or suffer to exist, and
will defend the Collateral against and take such other action as is
necessary to remove, any Lien on such Collateral, other than Liens
permitted under SECTION 9.03 of the Credit Agreement, and will defend
the right, title and interest of the Administrative Agent in and to the
Grantor's rights to such Collateral, including, without limitation, the
proceeds and products thereof, against the claims and demands of all
Persons whatsoever other than claims secured by Liens permitted under
SECTION 9.03 of the Credit Agreement.
(f) Upon the occurrence and during the continuance of an Event
of Default, the Grantor will not, without the Administrative Agent's
prior written consent, except in the ordinary course of business and for
amounts which are not material to the Barneys Group, taken as a whole in
the aggregate, (i) grant any extension of the time of payment of any of
the Collateral or compromise, compound or settle the same for less than
the full amount thereof; (ii) release, wholly or partly, any Person
liable for the payment thereof; or (iii) allow any credit or discount
whatsoever thereon other than trade discounts granted in the ordinary
course of business.
(g) The Grantor will advise the Administrative Agent promptly,
in reasonable detail, of (i) any material Lien or claim made by or
asserted against any or all of the Collateral, and (ii) the occurrence
of any other event which would have a material adverse effect on the
aggregate value of the Collateral or on the Liens with respect to such
Collateral created hereunder.
6. COLLECTIONS. Except as otherwise provided in this SECTION 6, the
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to the Grantor under the Accounts. In connection with such
collections, the Grantor may take (and, after the occurrence and during the
continuation of an Event of Default, at the Administrative Agent's direction,
must take) such action as the Grantor or, after the occurrence and during the
continuation an Event of Default, the Administrative Agent may deem necessary or
advisable to enforce collection of the Accounts; PROVIDED, HOWEVER, that the
Administrative Agent shall have the right at any time, upon the occurrence and
during the continuance of an Event of Default, to require the Grantor to notify
the account debtors or obligors under any Accounts of the assignment of such
Accounts to the Administrative Agent and to direct such account debtors or
obligors to make payment of all amounts due or to become due to the Grantor
thereunder directly to the Administrative Agent and, upon such notification and
at the expense of the Grantor, to enforce collection of any such Accounts, and
to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as the Grantor might have done. After receipt by
the Grantor of the notice from the Administrative Agent referred to in the
proviso to the preceding sentence, all amounts and proceeds (including
instruments) received by the Grantor in respect of the Accounts shall be
received in trust for the benefit of the Administrative Agent, the Lenders, the
Issuing Banks and the other Holders hereunder, shall be segregated from other
funds of the Grantor and shall be forthwith paid over to the Administrative
Agent in the same form as so received (with any necessary endorsement) to be
applied to the
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Obligations in accordance with the Credit Agreement (including, without
limitation, SECTION 3.02(B)(II) thereof).
7. REMEDIES, APPLICATION OF PROCEEDS, RIGHTS UPON EVENT OF DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies provided for in the Credit
Agreement and all the rights and remedies of a secured party under the Uniform
Commercial Code, and all other applicable law as in effect in any relevant
jurisdiction. In addition, the Administrative Agent may also:
(i) require the Grantor to, and the Grantor hereby agrees that
it will at its expense and upon request of the Administrative Agent,
promptly assemble all, or such part, of the Collateral as directed by
the Administrative Agent and make such Collateral available to the
Administrative Agent at a place designated by the Administrative Agent,
which place shall be reasonably convenient to the Administrative Agent,
whether at the premises of the Grantor or otherwise;
(ii) enter, with or without process of law and without breach of
the peace, any premises where any of the Collateral or the books and
records of the Grantor related thereto are or may be located and,
without charge or liability to the Administrative Agent, seize and
remove such Collateral and such books and records from such premises, or
remain upon such premises and use the same for the purpose of enforcing
any and all rights and remedies of the Administrative Agent under this
Security Agreement, the Credit Agreement or any of the other Loan
Documents; and
(iii) without notice, except as specified below, sell, lease,
assign, grant an option or options to purchase or otherwise dispose of
all or any part of the Collateral in one or more parcels, at public or
private sale or sales, at any exchange, broker's board or at any of the
Administrative Agent's offices or elsewhere, at such prices as the
Administrative Agent may deem best, for cash, on credit or for future
delivery, and upon such other terms as the Administrative Agent may deem
commercially reasonable; PROVIDED, HOWEVER, that the Grantor shall not
be credited with the net proceeds of any such credit sale, future
delivery or lease of the Collateral until the cash proceeds thereof are
actually received by the Administrative Agent. The Grantor agrees that,
to the extent notice of sale shall be required by law, at least ten (10)
Business Days' notice, or such longer period as may be required by law,
to the Grantor of the time and place of any public sale, or the time
after which any private sale is to be made, shall constitute reasonable
notification. No notification required by law need be given to the
Grantor if the Grantor has signed, after the occurrence of an Event of
Default, a statement renouncing any right to notification of sale or
other intended disposition. The Administrative Agent shall not be
obligated to make any sale of any of the Collateral
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regardless of notice of sale having been given. The Administrative Agent
may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned. The
Administrative Agent, any Lender and any of the Issuing Banks shall have
the right upon any such public sale or sales and, to the extent
permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity
of redemption in the Grantor, which right or equity is hereby expressly
waived and released. In the event of a sale of any Collateral, or any
part thereof, to a Lender, an Issuing Bank, or the Administrative Agent
upon the occurrence and during the continuance of an Event of Default,
such Lender, Issuing Bank, or the Administrative Agent shall not deduct
or offset from any part of the purchase price to be paid therefor any
indebtedness owing to it by the Grantor. Any and all proceeds received
by the Administrative Agent with respect to any sale of, collection from
or other realization upon all or any part of the Collateral, whether
consisting of monies, checks, notes, drafts, bills of exchange, money
orders or commercial paper of any kind whatsoever, shall be held by the
Administrative Agent and distributed by the Administrative Agent in
accordance with the Credit Agreement (including, without limitation,
SECTION 3.02(B)(II) thereof) and the Grantor shall remain liable for any
deficiency following the sale of the Collateral. Subject to the terms of
any applicable license agreement to which the Grantor is a party, the
Administrative Agent is hereby granted an irrevocable license or other
right to use, without charge, the Grantor's labels, copyrights, patents,
rights of use of any name, trade names, general intangibles, trademarks
and advertising matter, or any property of a similar nature, in
completing production of, advertising for sale and selling any
Collateral.
(b) To the extent permitted by applicable law, the Grantor waives all
claims, damages and demands against the Administrative Agent, any Lender or any
Issuing Bank arising out of the repossession, retention or sale of the
Collateral, or any part or parts thereof, except any such claims, damages and
awards arising out of the gross negligence or willful misconduct of the
Administrative Agent.
(c) The Grantor recognizes that in the event the Grantor fails to
perform, observe or discharge any of its obligations or liabilities under this
Security Agreement, no remedy at law will provide adequate relief to the
Administrative Agent and the Administrative Agent shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
(d) The rights and remedies provided under this Security Agreement are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights and remedies provided by law or equity.
8. VOTING RIGHTS. During the term of this Security Agreement, and except
as provided in this SECTION 8 below, the Grantor shall have the right to vote
the Investment Property on all corporate questions in a manner not inconsistent
with the terms of this Security Agreement, the Credit Agreement and the other
Loan Documents. After the occurrence and
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during the continuation of an Event of Default, the Administrative Agent shall,
at the Administrative Agent's option and following written notice from the
Administrative Agent to the Grantor, exercise all voting rights pertaining to
the Investment Property, including the right to take action by shareholder
consent.
9. DIVIDENDS AND OTHER DISTRIBUTIONS. (a) So long as no Event of Default
shall have occurred and be continuing:
(i) The Grantor shall be entitled to receive and retain any and
all dividends, interest and distributions paid in respect of the
Collateral, notwithstanding such dividends, interest and distributions
being subject to the grant thereof pursuant to SECTION 1; PROVIDED,
HOWEVER, that any and all
(A) dividends, interest and distributions paid or
payable other than in cash with respect to, and instruments and
other property received, receivable or otherwise distributed
with respect to, or in exchange for, any of the Collateral;
(B) dividends and other distributions paid or payable in
cash with respect to any of the Collateral on account of a
partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in surplus;
and
(C) cash paid, payable or otherwise distributed with
respect to principal of, or in redemption of, or in exchange
for, any of the Collateral;
shall be Collateral, and shall be forthwith delivered to the Administrative
Agent to hold, for the benefit of the Administrative Agent, the Lenders, the
Issuing Banks and the other Holders, as Collateral and shall, if received by the
Grantor, be received in trust for the Administrative Agent, for the benefit of
the Administrative Agent, the Lenders, the Issuing Banks and the other Holders,
be segregated from the other property or funds of the Grantor, and be delivered
immediately to the Administrative Agent as Collateral in the same form as so
received (with any necessary endorsement); and
(ii) The Administrative Agent shall execute and deliver (or
cause to be executed and delivered) to the Grantor all such proxies and
other instruments as the Grantor may reasonably request for the purpose
of enabling the Grantor to receive the dividends or interest payments
which it is authorized to receive and retain pursuant to clause (i)
above.
(b) After the occurrence and during the continuation of an Event
of Default:
(i) All rights of the Grantor to receive the dividends, interest
payments and other distributions which it would otherwise be authorized
to receive and retain pursuant to SECTION 9(A)(I) hereof shall cease,
and all such rights shall thereupon become vested in the Administrative
Agent, for the benefit of the Administrative Agent, the Lenders, the
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Issuing Banks and the other Holders, which shall thereupon have the sole
right to receive and hold as Collateral such dividends, interest
payments and other distributions;
(ii) All dividends, interest payments and other distributions
which are received by the Grantor contrary to the provisions of clause
(i) of this SECTION 9(B) shall be received in trust for the
Administrative Agent, for the benefit of the Administrative Agent, the
Lenders, the Issuing Banks and the other Holders, shall be segregated
from other funds of the Grantor and shall be paid over immediately to
the Administrative Agent as Collateral in the same form as so received
(with any necessary endorsements);
(iii) The Grantor shall, upon the reasonable request of the
Administrative Agent, at the Grantor's expense, execute and deliver, and
cause the issuer of the Investment Property and its officers and
directors to execute and deliver, all such instruments and documents,
and do or cause to be done all such other acts and things, as may be
necessary or, in the opinion of the Administrative Agent, the Grantor or
its or their counsel, advisable to register the applicable Collateral
under the provisions of the Securities Act, and to exercise its best
efforts to cause the registration statement relating thereto to become
effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and
supplements thereto and to the related prospectus which, in the opinion
of the Administrative Agent, the Grantor or its or their counsel, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Commission
applicable thereto;
(iv) The Grantor shall, upon the reasonable request of the
Administrative Agent, at Grantor's expense, use its best efforts to
qualify the Collateral under state securities or "Blue Sky" laws and to
obtain all necessary governmental approvals for the sale of the
Collateral, as requested by the Administrative Agent;
(v) The Grantor shall, upon the reasonable request of the
Administrative Agent, at the Grantor's expense, cause the issuers of the
Investment Property to make available to the holders of its securities,
as soon as practicable, earnings statements which will satisfy the
provisions of Section 11(a) of the Securities Act; and
(vi) The Grantor shall, upon the reasonable request of the
Administrative Agent, at the Grantor's expense, do or cause to be done
all such other acts and things as may be necessary to make such sale of
the Collateral or any part thereof valid and binding and in compliance
with applicable law.
The Grantor will reimburse the Administrative Agent for all expenses incurred by
the Administrative Agent, including, without limitation, reasonable attorneys'
and accountants' fees and expenses in connection with the foregoing. Upon or at
any time after the occurrence and during the continuation of an Event of
Default, if the Administrative Agent determines that, prior
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to any public offering of any securities constituting part of the Collateral,
such securities should be registered under the Securities Act and/or registered
or qualified under any other federal or state law and such registration and/or
qualification is not practicable, then the Grantor agrees that it will be
commercially reasonable if a private sale, upon at least ten (10) Business Days'
notice to the Grantor, is arranged so as to avoid a public offering, even though
the sales price established and/or obtained at such private sale may be
substantially less than prices which could have been obtained for such security
on any market or exchange or in any other public sale.
10. THE ADMINISTRATIVE AGENT MAY PERFORM. If the Grantor fails to
perform any agreement contained herein, the Administrative Agent, upon written
notice to the Grantor if practicable, may itself perform, or cause performance
of, such agreement, and the expenses of the Administrative Agent incurred in
connection therewith shall constitute an Obligation payable by the Grantor on
demand.
11. THE ADMINISTRATIVE AGENT'S DUTY OF CARE. The Administrative Agent
shall not be liable for any acts, omissions, errors of judgment or mistakes of
fact or law including, without limitation, acts, omissions, errors or mistakes
with respect to the Collateral, except for those arising out of or in connection
with the Administrative Agent's (i) gross negligence or willful misconduct, or
(ii) failure to use reasonable care with respect to the safe custody of the
Collateral in the Administrative Agent's possession. Without limiting the
generality of the foregoing, the Administrative Agent shall be under no
obligation to take any steps necessary to preserve rights in the Collateral
against any other parties but may do so at its option. All expenses incurred in
connection therewith shall be for the sole account of the Grantor, and shall
constitute part of the Liabilities secured hereby.
12. MARSHALLING, PAYMENTS SET ASIDE; ADMINISTRATIVE AGENT APPOINTED
ATTORNEY-IN-FACT. The Administrative Agent shall be under no obligation to
marshal any assets in favor of the Grantor or against or in payment of any or
all of the Liabilities. To the extent that the Grantor makes a payment or
payments to the Administrative Agent or the Administrative Agent receives any
pay ment or proceeds of the Collateral for the benefit of the Administrative
Agent, any Lender, any Issuing Bank or any other Holder, which payment(s) or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any party under any bankruptcy law, state or federal law, common law
or equitable cause, then, to the extent of such payment or proceeds received,
the Liabilities or any part thereof intended to be satisfied shall be revived
and continue in full force and effect, as if such payment or proceeds had not
been received by the Administrative Agent.
The Grantor agrees, upon the request of the Administrative Agent and
promptly following such request, to take any action and execute any instrument
which the Administrative Agent may deem necessary or advisable to accomplish the
purposes of this Security Agreement. The Grantor hereby irrevocably constitutes
and appoints the Administrative Agent and any officer or Administrative Agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority in the name of the Grantor, or in
its own name, from time to time in the Administrative Agent's discretion upon
the occurrence and during the
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continuance of an Event of Default, for the purpose of carrying out the terms of
this Security Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes hereof and, without limiting the generality of the
foregoing, hereby gives the Administrative Agent the power and right on behalf
of the Grantor, without notice to or assent by the Grantor, to the extent
permitted by applicable law, to do the following:
(i) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to SECTION 8.05 of the Credit Agreement;
(ii) ask, demand, collect, xxx for, recover, compromise, receive
and give acquittance and receipt for monies due and to become due under
or in respect of any of the Collateral;
(iii) receive, take, endorse, assign and deliver any and all
checks, notes, drafts, acceptances, documents and other negotiable and
nonnegotiable instruments, documents and chattel paper taken or received
by the Administrative Agent in connection with this Security Agreement;
(iv) to commence, file, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding with respect to the
Collateral;
(v) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions of
this Security Agreement; and
(vi) to do, at its option and at the expense and for the account
of the Grantor, at any time or from time to time, all acts and things
which the Administrative Agent deems necessary to protect or preserve
the Collateral and to realize upon the Collateral.
13. SEVERABILITY. If any provision of this Security Agreement is held to
be prohibited or unenforceable in any jurisdiction the substantive laws of which
are held to be applicable hereto, such prohibition or unenforceability shall not
affect the validity or enforceability of the remaining provisions hereof and
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
14. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or provisions of
this Security Agreement may be waived, altered, modified or amended, and no
consent to any departure by the Grantor herefrom shall be effective, except by
or pursuant to an instrument in writing which (i) is duly executed by the
Grantor (if the Grantor is adversely affected by such amendment) and the
Administrative Agent and (ii) complies with the requirements of the Credit
Agreement. Any such waiver shall be valid only to the extent set forth therein.
A waiver by the Administrative Agent of any right or remedy under this Security
Agreement on any one occasion shall not be construed as a waiver of any right or
remedy which the Administrative Agent would otherwise have on any future
occasion. No failure to exercise or delay in exercising any right, power or
privilege under this Security Agreement on the part of the Administrative Agent
shall operate as a waiver thereof; and no single or partial exercise of any
right, power or privilege
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under this Security Agreement shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
15. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Security Agreement
shall be binding upon the Grantor and its successors and assign(s), and shall
inure to the benefit of the Administrative Agent, the Lenders, the Issuing Banks
and the other Holders, and their respective successors and assigns. Nothing set
forth herein or in any other Loan Document is intended or shall be construed to
give any other Person any right, remedy or claim under, to or in respect of this
Security Agreement, the Credit Agreement or any other Loan Document or any
Collateral. The Grantor's successors shall include, without limitation, a
receiver, trustee or debtor-in-possession of or for the Grantor.
16. TERMINATION OF THIS SECURITY AGREEMENT; RELEASE OF COLLATERAL. (a)
The security interest granted by the Grantor under this Security Agreement shall
terminate against all the Collateral upon final payment in full in cash of the
Obligations and termination of the Commitments. Upon such termination and at the
written request of the Grantor or its successors or assigns, and at the cost and
expense of the Grantor or its successors or assigns, the Administrative Agent
shall execute in a timely manner a satisfaction of this Security Agreement and
such instruments, documents or agreements as are necessary or desirable to
terminate and remove of record any documents constituting public notice of this
Security Agreement and the security interests and assignments granted hereunder
and shall assign and transfer, or cause to be assigned and transferred, and
shall deliver or cause to be delivered to the Grantor, all property, including
all monies, instruments and securities of the Grantor then held by the
Administrative Agent or any agent, bailee or nominee of the Administrative
Agent.
(b) Notwithstanding anything in this Security Agreement to the contrary,
the Grantor may, to the extent permitted by SECTION 9.02 of the Credit
Agreement, sell, assign, transfer or otherwise dispose of any Collateral. In
addition, the Collateral shall be subject to release in accordance with SECTION
12.09(C) of the Credit Agreement (such Collateral and the Collateral referred to
in the immediately preceding sentence being the "Released Collateral"). The
Liens under this Security Agreement shall terminate with respect to the Released
Collateral upon such sale, transfer, assignment, disposition or release and upon
the request of the Grantor, the Administrative Agent shall execute and deliver
such instrument or document as may be necessary to release the Liens granted
hereunder; PROVIDED, HOWEVER, that (i) the Administrative Agent shall not be
required to execute any such documents on terms which, in the Administrative
Agent's opinion, would expose the Administrative Agent to liability or create
any obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Liabilities or any Liens on (or obligations of
the Grantor in respect of) all interests retained by the Grantor, including
without limitation, the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
17. THE ADMINISTRATIVE AGENT'S EXERCISE OF RIGHTS AND REMEDIES UPON THE
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OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT. Notwithstanding
anything set forth herein to the contrary, it is hereby expressly agreed that
upon the occurrence and during the continuance of an Event of Default, the
Administrative Agent may, and upon the written direction of the Requisite
Lenders shall, exercise any of the rights and remedies provided in this Security
Agreement, the Credit Agreement and any of the other Loan Documents.
18. NOTICES. Any notice, demand, request or any other communication
required or desired to be served, given or delivered hereunder shall be in
writing and shall be served, given or delivered as provided in SECTION 13.08 of
the Credit Agreement.
19. SECTION HEADINGS. The section headings herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
20. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN OTHER
JURISDICTIONS, WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE JURISDICTIONS.
21. FURTHER INDEMNIFICATION. The Grantor agrees to pay, and to save the
Administrative Agent, each Lender and each Issuing Bank harmless from, any and
all liabilities with respect to, or resulting from any delay in paying, any and
all excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Security Agreement.
22. COUNTERPARTS. This Security Agreement may be executed in separate
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
23. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Grantor agrees
that the terms of SECTION 13.17 of the Credit Agreement with respect to consent
to jurisdiction and service of process shall apply equally to this Security
Agreement. The Administrative Agent shall have the right to proceed against the
Grantor or its personal property in a court in any location to enable the
Administrative Agent to obtain personal jurisdiction over the Grantor, to
realize on the Collateral or any other security for the Liabilities or to
enforce a judgment or other court order entered in favor of the Administrative
Agent.
24. WAIVER OF BOND. The Grantor waives the posting of any bond otherwise
required of the Administrative Agent in connection with any judicial process or
proceeding to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order entered in favor of
the Administrative Agent, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Security
Agreement or any other agreement or document between the Administrative Agent
and the Grantor.
25. ADVICE OF COUNSEL. The Grantor represents and warrants to the
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Administrative Agent, the Lenders and the Issuing Banks that it has discussed
this Security Agreement and, specifically, the provisions of SECTIONS 20, 23, 24
and 27 hereof, with the Grantor's attorneys.
26. FURTHER ASSURANCES. The Grantor agrees that at any time and from
time to time, at the expense of the Grantor, the Grantor will promptly execute
and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
27. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE ADMINISTRATIVE
AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND THE GRANTOR
ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS SECURITY
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH. EITHER THE GRANTOR OR THE ADMINISTRATIVE AGENT MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS SECURITY AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
28. MERGER. This Security Agreement, taken together with all the other
Loan Documents, embodies the entire agreement and understanding, between the
Grantor and the Administrative Agent, any Lender or any Issuing Banks and
supersedes all prior agreements and understandings, written and oral, relating
to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement or caused this Security Agreement to be executed and delivered by
their duly authorized officers as of the date first set forth above.
BNY LICENSING CORP.
By /s/ Xxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Executive VP and CFO
CITICORP USA, INC., as Administrative Agent
By /s/ Xxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
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