Exhibit 10.8
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is dated as of
September 8, 2004 and entered into by and among XXXXXXXX'X INC., a Delaware
corporation (the "Company"), the other 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 (including the
Company, individually "Grantor", and collectively the "Grantors") and Xxxxxxx
Xxxx, as the Approved Trade Creditor lien collateral trustee (in such
capacity, the "Collateral Trustee") for and representative of each Approved
Trade Creditor (as defined below).
PRELIMINARY STATEMENTS
WHEREAS, the Grantors and the Collateral Trustee have
entered into that certain Collateral Trust Agreement, dated as of the date
hereof (as such agreement may be amended, restated or otherwise modified from
time to time, the "Collateral Trust Agreement") in order to create a trust
estate unto the Collateral Trustee in order to effectuate the terms of the
this Agreement and the Letter Agreements (as defined below);
WHEREAS, in connection herewith the Collateral Trustee has
entered into that certain Intercreditor Agreement, dated as of the date hereof
(as such agreement may be amended, restated or otherwise modified from time to
time, the "Intercreditor Agreement"), by and between the Collateral Trustee
and the Senior Collateral Agent (as defined below), pursuant to which the
rights of the Collateral Trustee hereunder with respect to the Collateral (as
defined below) are subordinated to the rights of the Senior Collateral Agent
under the Senior Security Agreement with respect to the Collateral;
WHEREAS, Grantors have entered into that certain Second
Amended and Restated Credit Agreement dated as of September 7, 2004 (said
Second Amended and Restated Credit Agreement, as it may heretofore and
hereafter be amended, restated, supplemented or otherwise modified from time
to time, being the "Senior Credit Agreement") by and among the Grantors, the
revolving lenders, and term lenders party thereto, Bank of America, N.A. as
administrative agent for such revolving lenders, Jewelry Investors II, L.L.C.,
as administrative agent for such lenders, and Bank of America, N.A., as
Collateral Agent for all such lenders (the "Senior Collateral Agent");
WHEREAS, pursuant to the Senior Credit Agreement, the
Company has entered into that certain Second Amended and Restated Security
Agreement dated as of September 7, 2004 and the other Grantors have entered
into that certain Amended and Restated Security Agreement dated as of
September 7, 2004 (said security agreements, as they may heretofore and
hereafter be amended, restated, supplemented or otherwise modified from time
to time, being the "Senior Security Agreements"), in each case in favor of the
Senior Collateral Agent;
WHEREAS, Company has entered into and may from time to time
hereinafter enter into certain Secured Trade Credit Program Letter Agreements
(each, together with the "Terms and Conditions and Statement of
Qualifications" attached thereto, a "Letter Agreement" and, collectively, the
"Letter Agreements") among Grantors and the approved trade creditors from time
to time party thereto (each an "Approved Trade Creditor" and, collectively,
the "Approved Trade Creditors");
WHEREAS, Grantors other than Company have entered into that
certain Guaranty, dated as of the date hereof (as such agreement may be
amended, restated, or otherwise modified from time to time, the "Guaranty"),
with respect to the indebtedness, liabilities, and obligations of the Company
that are subject to the Letter Agreements; and
WHEREAS, the Senior Credit Agreement permits Grantors to
grant a security interest hereunder, junior to the security interests and
liens granted under the Senior Security Agreements, to secure the prompt
payment and performance when due of all obligations of Company in connection
with trade credit now or hereafter extended by Approved Trade Creditors to the
Company under the Letter Agreements and the obligations of the other Grantors
with respect thereto under the Guaranty.
WHEREAS, it is a condition precedent to the extensions of
trade credit by Approved Trade Creditors under the Letter Agreements that
Grantors shall have granted the security interests and undertaken the
obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in
order to induce the Approved Trade Creditors to make the extensions of trade
credit to Grantors under the Letter Agreements, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Grantors hereby agrees with Collateral Trustee as follows:
SECTION 1. Grant of Security.
Grantors hereby assign to Collateral Trustee, and hereby
grant to Collateral Trustee a security interest, junior to the security
interests and liens granted under the Senior Security Agreements, in, all of
Grantors' respective right, title and interest in and to the Collateral (as
defined in each Senior Security Agreement), whether now or hereafter existing
or in which Grantors now have or hereafter acquire an interest and wherever
the same may be located; provided that as used in this Agreement, the term
"Collateral" shall not include, for the avoidance of doubt, any property or
assets not subject to the security interest of the Lenders under the Senior
Security Agreements or under the Intercreditor Agreement.
SECTION 2. Security for Obligations.
Subject to the provisions of the Intercreditor Agreement and
the security interests and liens granted in the Senior Security Agreements,
this Agreement secures, and the Collateral assigned by Grantors is collateral
security for, the prompt payment or performance in full when due, by demand or
otherwise (including without limitation the payment of amounts that would
become due but for the operation of the automatic stay under Section 362 (a)
of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all Secured Obligations with
respect to Grantors. "Secured Obligations" means (a) the indebtedness,
liabilities, and obligations of the Grantors (other than the Company) under
the Guaranty, and (b) all obligations (including, without limitation, the
Trade Creditor Debt (as defined in the Letter Agreements)) of the Company in
connection with trade credit now or hereafter extended by any Approved Trade
Creditor to the Company, but only to the extent such obligations are to be
secured pursuant to the terms of any Letter Agreement, together with all
extensions or renewals thereof, whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion
of such obligations or liabilities that are paid, to the extent all or any
part of such payment is avoided or recovered directly or indirectly from
Collateral Trustee or any Approved Trade Creditor as a preference, fraudulent
transfer or otherwise, and all obligations of every nature of Grantors now or
hereafter existing under this Agreement; provided, that the Secured
Obligations with respect to any Approved Trade Creditor shall be subject to,
and limited by, the provisions of Section 17 hereof (as and to the extent
applicable to such Approved Trade Creditor).
SECTION 3. Representations and Warranties.
Each Grantor represents and warrants as of the date it
becomes a party hereto as follows:
(a) Except as expressly permitted by any Credit Document or
any Letter Agreement, and except for the security interest created by this
Agreement and the Senior Security Agreements, Grantors own the Collateral
owned by Grantors free and clear of any Lien.
(b) The respective jurisdictions of organization of Grantors
are set forth on Schedule 3(b) annexed hereto.
The security interests in the Collateral granted to
Collateral Trustee for the ratable benefit of the Approved Trade Creditors
hereunder constitute valid security interests in the Collateral. Upon the
filing of respective UCC financing statements naming Grantors as "debtor",
naming Collateral Trustee as "secured party" and describing the Collateral in
the filing offices set forth on Schedule 3(c) annexed hereto, the security
interests in the collateral granted to Collateral Trustee for the ratable
benefit of the Approved Trade Creditors will, to the extent a security
interest in the Collateral may be perfected by filing UCC financing
statements, constitute perfected security interests therein.
SECTION 4. Remedies.
(a) Subject to the terms of the Intercreditor Agreement, the
Collateral Trust Agreement, and the Letter Agreements, if an Event of Default
shall have occurred and then be continuing, Collateral Trustee 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
of a secured party on default under the Uniform Commercial Code as in effect
in any relevant jurisdiction (the "Code") (whether or not the Code applies to
the affected Collateral). Notwithstanding anything herein to the contrary, the
Collateral Trustee shall not be obligated to take any legal or other action
hereunder which might in its judgment involve or cause it to incur any expense
or liability unless it shall have been furnished with acceptable
indemnification.
(b) Anything contained herein or in the Guaranty, the
Collateral Trust Agreement or the Intercreditor Agreement to the contrary
notwithstanding, Grantors, Collateral Trustee, and, by its execution of a
Letter Agreement, each Approved Trade Creditor agrees that no Approved Trade
Creditor shall have any right individually to realize upon any of the
Collateral or to enforce this Agreement or the Guaranty, it being understood
and agreed that all powers, rights and remedies hereunder may be exercised
solely by the Collateral Trustee, on behalf of Approved Trade Creditors, in
accordance with the terms hereof, and subject to the terms of the
Intercreditor Agreement, and all powers, rights and remedies under this
Agreement, the Guaranty and the Intercreditor Agreement may be exercised
solely by the Collateral Trustee.
(c) Nothwithstanding anything to the contrary in this
Agreement or in the Collateral Documents, (i) the Collateral Trustee shall
have no rights, power or authority with respect to the Collateral which are
greater than the rights, power or authority that would have been conferred
upon the Approved Trade Creditors under the Letter Agreements if the Approved
Trade Creditors were directly granted an interest in the Collateral, and (ii)
the Collateral Trustee has only the rights, powers and authority conferred
upon the Collateral Trustee under the terms of the Collateral Trust Agreement.
SECTION 5. Continuing Security Interest; Transfer of Secured
Obligations; Termination.
(a) This Agreement shall create a continuing security
interest in the Collateral and shall (i) subject to clauses (b), (c) and (d)
of this Section 5, remain in full force and effect until the payment in full
of the Secured Obligations, (ii) be binding upon Grantors and their successors
and assigns, and (iii) inure, together with the rights and remedies of
Collateral Trustee hereunder, to the benefit of Collateral Trustee and each
Approved Trade Creditor and their respective successors and permitted
transferees and assigns.
(b) Upon the payment in full of all Secured Obligations
under the Letter Agreements, the security interest granted hereby shall
automatically terminate and all rights to the Collateral shall revert to the
respective Grantors.
(c) The security interest hereunder with respect to the
Secured Obligations to any Approved Trade Creditor shall automatically
terminate, and the Secured Obligations to such Approved Trade Creditor
hereunder shall be limited, in each case as and to the extent provided in the
Letter Agreement with respect to such Approved Trade Creditor.
(d) The security interest granted hereby shall automatically
terminate with respect to any Collateral that is conveyed, sold or otherwise
transferred or disposed of in accordance with the terms of the Senior Credit
Agreement, the Senior Security Agreements or the Intercreditor Agreement, and
all rights to such Collateral shall revert to the respective Grantors.
(e) Upon any such termination Collateral Trustee will, at
Grantors' expense, execute and deliver to Grantors such documents as any
Grantor shall reasonably request to evidence such termination.
SECTION 6. Additional Grantors.
From time to time subsequent to the date hereof,
Subsidiaries of Grantors may become parties hereto as additional Grantors
(each an "Additional Grantor") by executing a counterpart of this Agreement
and delivering supplements to Schedule 3(b) and Schedule 3(c) in substantially
the forms annexed hereto, which supplements shall thereby supplement and amend
such Schedules. Upon delivery of any such counterpart to the Collateral
Trustee, notice of which is hereby waived by Grantors, each such Additional
Grantor shall be a Grantor and shall be as fully a party hereto as if such
Additional Grantor were an original signatory hereto. Each Grantor expressly
agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Grantor hereunder, nor by
any election of Collateral Trustee not to cause any Subsidiary of Company to
become an Additional Grantor hereunder. This Agreement shall be fully
effective as to any Grantor that is or becomes a party hereto regardless of
whether any other Person becomes or fails to become or ceases to be a Grantor
hereunder.
SECTION 7. Amendments; Releases; Etc.
(a) No amendment, modification, termination or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Collateral Trustee and, in the case of any such amendment or
modification, by Grantors; provided that (i) any amendment hereto pursuant to
Section 6 shall be effective upon execution by any Additional Grantor and
Grantors hereby waive any requirement of notice of or consent to any such
amendment, (ii) notwithstanding anything to the contrary set forth herein,
this Agreement may be terminated as provided in Section 5 and (iii)
notwithstanding anything to the contrary set forth herein, this Agreement may
be amended or otherwise modified from time to time (A) as provided in the
Intercreditor Agreement and (B) by notice from any Grantor to the Collateral
Trustee and the Trust Board (except that no such modification or termination
under this clause (iii)(B) that adversely affects the Collateral Trustee or
the Approved Trade Creditors in any material respect shall be effective as to
any Collateral or any Secured Obligations outstanding at the time of such
notice unless agreed to in writing by the Collateral Trustee). Any such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which it was given.
(b) Notwithstanding anything to the contrary contained
herein or in the Collateral Trust Agreement, without further written consent
or authorization from the Approved Trade Creditors or the Trust Board, the
Collateral Trustee shall execute any documents or instruments necessary to (i)
release any lien encumbering any item of Collateral that is the subject of a
sale or other disposition or (ii) release any Grantor from the Guaranty upon
the release of such Grantor from any guaranty of the Senior Credit Agreement.
SECTION 8. Assignments.
Neither the Collateral Trustee nor the Approved Trade
Creditors may assign their rights and/or duties hereunder without the prior
written consent of the Grantors given at the Grantors' sole discretion, except
as provided in the Letter Agreements, it being understood that any such
assignee's rights with respect to the Collateral and this Agreement shall be
limited as set forth herein. Any other attempted assignment by any Approved
Trade Creditor without the Grantors' prior written consent, other than as set
forth in the immediately preceding sentence, shall be void and shall void such
Approved Trade Creditor's participation in the Program (as defined in the
applicable Letter Agreement) in accordance with the applicable Letter
Agreement.
SECTION 9. Notices.
Unless otherwise specifically provided in this Security
Agreement, all notices or other communications required or permitted to be
given under this Security Agreement shall be given as specified in the
Collateral Trust Agreement.
SECTION 10. Failure or Indulgence Not Waiver; Remedies
Cumulative.
No failure or delay on the part of Collateral Trustee in the
exercise of any power, right or privilege hereunder shall impair such power,
right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude any other or further exercise thereof or of
any other power, right or privilege. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
SECTION 11. Severability.
In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way
be affected or impaired thereby.
SECTION 12. Headings.
Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive
effect.
SECTION 13. Governing Laws; Terms; Rules of Construction.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Unless otherwise defined
herein or in the Letter Agreements, terms used in Articles 8 and 9 of the
Uniform Commercial Code in the State of New York are used herein as therein
defined.
SECTION 14. Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING
OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE
OF GEORGIA, CHATHAM COUNTY OR IN THE STATE OF NEW YORK, NEW YORK COUNTY. BY
EXECUTING AND DELIVERING THIS AGREEMENT, GRANTOR, FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SECTION 9; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE
(III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GRANTOR IN
ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT; AND (V) AGREES THAT COLLATERAL TRUSTEE
RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER
JURISDICTION.
SECTION 15. Waiver of Jury Trial.
GRANTORS AND COLLATERAL TRUSTEE HEREBY AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including without
limitation contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims. Grantors and Collateral Trustee acknowledge
that this waiver is a material inducement for Grantors and Collateral Trustee
to enter into a business relationship, that Grantors and Collateral Trustee
have already relied on this waiver in entering into this Agreement and that
each will continue to rely on this waiver in their related future dealings.
Grantors and Collateral Trustee further warrant and represent that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SECTION 15 AND EXECUTED BY EACH OF THE PARTIES
HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
SECTION 16. Counterparts.
This Agreement may be executed in one or more counterparts
and by different parties hereto in separate counterparts, each of which when
so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document.
SECTION 17. Intercreditor Agreement.
The Collateral Trustee hereby acknowledges and agrees, on
behalf of itself and each Approved Trade Creditor, that (a) this Agreement,
the security interests granted hereunder, and the exercise of any rights or
remedies hereunder by the Collateral Trustee or any Approved Trade Creditor
shall be subject to the terms of the Intercreditor Agreement and (b) in case
of a conflict between the terms of this Agreement and the terms of the
Intercreditor Agreement, the terms of the Intercreditor Agreement shall
govern.
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IN WITNESS WHEREOF, each Grantor and Collateral Trustee have
caused this Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first written above.
XXXXXXXX'X INC.
By: /s/ C. Xxxxxx Xxxxx
---------------------------------
Name: C. Xxxxxx Xxxxx
Title:
XXXXXXXX'X FLORIDA PARTNERSHIP
By: /s/ C. Xxxxxx Xxxxx
---------------------------------
Name: C. Xxxxxx Xxxxx
Title:
FI STORES LIMITED PARTNERSHIP
By: /s/ C. Xxxxxx Xxxxx
---------------------------------
Name: C. Xxxxxx Xxxxx
Title:
XXXXXXXX'X HOLDING CORP.
By: /s/ C. Xxxxxx Xxxxx
---------------------------------
Name: C. Xxxxxx Xxxxx
Title:
XXXXXXXX'X MANAGEMENT CORP.
By: /s/ C. Xxxxxx Xxxxx
---------------------------------
Name: C. Xxxxxx Xxxxx
Title:
FCJV HOLDING CORP.
By: /s/ C. Xxxxxx Xxxxx
---------------------------------
Name: C. Xxxxxx Xxxxx
Title:
FCJV, L.P.
By: /s/ C. Xxxxxx Xxxxx
---------------------------------
Name: C. Xxxxxx Xxxxx
Title:
XXXXXXXX'X INVESTMENTS LLC
By: /s/ C. Xxxxxx Xxxxx
---------------------------------
Name: C. Xxxxxx Xxxxx
Title:
XXXXXXXX'X BENEFICIARY INC.
By: /s/ C. Xxxxxx Xxxxx
---------------------------------
Name: C. Xxxxxx Xxxxx
Title:
XXXXXXX XXXX
as Collateral Trustee
By: /s/ Xxxxxxx Xxxx
-------------------------------
Name: Xxxxxxx Xxxx
Title: Collateral Trustee
