EXHIBIT 10.6
SECURITY AGREEMENT dated as of April 30, 1997 among BRYLANE,
L.P., a Delaware limited partnership (the "Borrower"), the
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subsidiaries of the Borrower listed on Schedule I hereto and such
other subsidiaries of the Borrower as shall become parties hereto
pursuant to Section 6.16 hereof (collectively, the "Subsidiary
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Grantors", the Borrower and the Subsidiary Grantors being
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collectively called the "Grantors"); and XXXXXX GUARANTY TRUST
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COMPANY OF NEW YORK, as security agent (in such capacity, the
"Security Agent") for the Secured Parties, as defined herein.
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Reference is made to the Credit Agreement dated as of April 30, 1997
(as amended from time to time, the "Credit Agreement"), among the Borrower, the
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lenders party thereto (the "Lenders"), Xxxxxx Guaranty Trust Company of New
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York, as administrative agent (in such capacity, the "Administrative Agent") and
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Xxxxxxx Xxxxx Capital Corporation, as documentation agent (in such capacity, the
"Documentation Agent"). The Lenders have agreed to extend credit to the
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Borrower pursuant to, and subject to the terms and conditions specified in, the
Credit Agreement. The obligations of the Lenders to extend credit under the
Credit Agreement are conditioned upon, among other things, the execution and
delivery by the Grantors of a security agreement in the form hereof to secure
(a) the due and punctual payment by the Borrower of (i) the principal of and
interest on the Loans, when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise, (ii) each payment
required to be made by the Borrower under the Credit Agreement in respect of any
Letter or Letters of Credit, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon and obligations to provide cash
collateral, (iii) all other monetary obligations of the Borrower to the Secured
Parties under the Credit Agreement and the other Loan Documents to which the
Borrower is or is to be a party, and (iv) each payment required to be made by
the Borrower under any Rate Protection Agreement entered into by the Borrower
with a counterparty that was a Lender at the time such Rate Protection Agreement
was entered into, (b) the due and punctual performance of all other obligations
of the Borrower under the Credit Agreement and the other Loan Documents to which
the Borrower is or is to be a party, and (c) the due and punctual payment and
performance of all
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obligations of each Subsidiary under the Loan Documents to which it is or is to
be a party (all the foregoing obligations being collectively called the
"Obligations").
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Accordingly, the Grantors and the Security Agent hereby agree as
follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Terms Defined in the Credit Agreement. Terms used
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herein and not otherwise defined herein shall have the meanings set forth in the
Credit Agreement.
SECTION 1.02. Definition of Certain Terms Used Herein. As used
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herein, the following terms shall have the following meanings:
"Collateral" shall mean all (i) Documents, (ii) General Intangibles
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and (iii) Proceeds.
"Copyright License" shall mean any written agreement, now or hereafter
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in effect, granting any right to any third party under any Copyright now or
hereafter owned by any Grantor or which such Grantor otherwise has the right to
license, or granting any right to such Grantor under any Copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" shall mean all of the following now owned or hereafter
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acquired by any Grantor: (i) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (ii) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on Schedule I.
"Credit Agreement" shall have the meaning assigned to such term in the
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preliminary statement of this Agreement.
"Documents" shall mean all instruments, files, records, ledger sheets
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and documents covering or relating to any of the Collateral.
"General Intangibles" shall mean all choses in action and causes of
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action and all other assignable
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intangible personal property of any Grantor of every kind and nature (other than
accounts receivable) now owned or hereafter acquired by any Grantor, including
corporate or other business records, mailing/customer lists, contract rights
(including rights under leases, whether entered into as lessor or lessee, Rate
Protection Agreements, the Trademark Agreements, the Transaction Agreement, the
Asset Purchase Agreements and other agreements), Intellectual Property,
Partnership Interests, goodwill, registrations, franchises and tax refund
claims.
"Intellectual Property" shall mean all intellectual and similar
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property of any Grantor of every kind and nature now owned or hereafter acquired
by any Grantor, including Copyrights, Licenses, Trademarks, trade secrets,
confidential or proprietary technical and business information, know-how, show-
how or other data or information, software and databases and all embodiments or
fixations thereof and related documentation, registrations and franchises, and
all additions, improvements and accessions to, and books and records describing
or used in connection with, any of the foregoing.
"License" shall mean any Trademark License, Copyright License or other
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license or sublicense to which any Grantor is a party, including those listed on
Schedule III.
"Obligations" shall have the meaning assigned to such term in the
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preliminary statement of this Agreement.
"Partnership Interests" shall mean any interest of any Grantor in any
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general or limited partnership, whether as a general partner or limited partner,
and all rights of such Grantor in respect thereof, including any and all such
interests and rights of any Grantor as a partner in any Subsidiary that is a
partnership.
"Perfection Certificate" means a certificate substantially in the form
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of Exhibit H to the Credit Agreement, completed and supplemented with the
schedules and attachments contemplated thereby, and duly executed by a financial
officer of the Borrower.
"Proceeds" shall mean any consideration received from the sale,
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exchange, license, lease or other disposition of any asset or property which
constitutes Collateral, any value received as a consequence of the possession of
any Collateral (it being understood that "Proceeds" shall not include inventory
or other tangible personal property or any
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revenues generated by the Grantors in the ordinary course of their respective
businesses using trademarks and tradenames constituting Collateral) and any
payment received from any insurer or other person or entity as a result of the
destruction, loss, theft, damage or other involuntary conversion of whatever
nature of any asset or property which constitutes Collateral, and shall include
any claim of any Grantor against any third party for (and the right to xxx and
recover for and the rights to damages or profits due or accrued arising out of
or in connection with) (i) past, present or future infringement or dilution of
any Trademark now or hereafter owned by any Grantor or licensed under a
Trademark License or injury to the goodwill associated with or symbolized by any
Trademark now or hereafter owned by any Grantor, (ii) past, present or future
breach of any License, (iii) past, present or future infringement of any
Copyright now or hereafter owned by any Grantor or licensed under a Copyright
License, and (iv) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Secured Parties" shall mean (a) the Lenders party to the Credit
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Agreement, (b) each counterparty to a Rate Protection Agreement entered into
with the Borrower, if such counterparty was a Lender at the time such Rate
Protection Agreement was entered into, (c) the Agent, the Security Agent, the
Documentation Agent and the Issuing Banks, in their capacities as such under
each Loan Document, (d) the beneficiaries of each indemnification obligation
undertaken by any Grantor under any Loan Document, and (e) the successors and
assigns of the foregoing.
"Security Interest" shall have the meaning assigned to such term in
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Section 2.01.
"Trademark License" shall mean any written agreement (including the
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Trademark Agreements), now or hereafter in effect, (a) granting to any third
party any right to use any Trademark now or hereafter owned by any Grantor or
which such Grantor otherwise has the right to license, and all rights of such
Grantor under any such agreement, or (b) granting to such Grantor any right to
use any Trademark now or hereafter owned by any third party, and all rights of
such Grantor under any such agreement.
"Trademarks" shall mean all of the following now owned or hereafter
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acquired (including acquisition of rights in respect thereof pursuant to a
Trademark License) by any Grantor: (i) all trademarks, service marks, trade
names, corporate names, company names, business names, fictitious
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business names, trade styles, trade dress, logos, other source or business
identifiers, designs and general intangibles of like nature, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith, including
registrations and registration applications in the United States Patent and
Trademark Office, any State of the United States or any similar offices in any
other country or any political subdivision thereof, and all extensions or
renewals thereof, including those listed on Schedule IV, (ii) all goodwill
associated therewith or symbolized thereby, and (iii) all other assets, rights
and interests that uniquely reflect or embody such goodwill.
ARTICLE II. SECURITY INTEREST
SECTION 2.01. Security Interest. As security for the payment or
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performance, as the case may be, of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Security Agent, its successors and its assigns, for the
benefit of the Secured Parties, and hereby grants to the Security Agent, its
successors and assigns, for the benefit of the Secured Parties, a security
interest in, all of such Grantor's right, title and interest in, to and under
the Collateral (the "Security Interest"). Without limiting the generality of
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the foregoing, the Borrower hereby assigns, as collateral security, to the
Security Agent all its right, title and interest in, to and under the
Acquisition Agreements, the Trademark Agreements and the Transaction Agreement
(which assignment also shall constitute part of the Security Interest). The
Security Agent is hereby authorized to file one or more financing statements,
continuation statements, filings with the United States Patent and Trademark
Office or United States Copyright Office (or any successor office or any similar
office in any other country) or other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting the Security Interest granted by
each Grantor, without the signature of any Grantor, naming any Grantor or the
Grantors as debtors and the Security Agent as secured party.
Anything in this Section 2.01 to the contrary notwithstanding, no
Grantor shall be deemed to have borrowed, sold, conveyed, assigned, set over,
mortgaged, pledged, hypothecated or transferred, or to have granted a security
interest in, any contract right (including any
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lease), or in any of such Grantor's right, title or interest therein, thereto or
thereunder, if any such action, without the consent of a third party thereto,
would constitute a breach or other contravention thereof; provided that the
foregoing shall not apply to the Acquisitions Agreements, the Trademark
Agreements (except for the agreements referred to in clause (ii) of the
definition thereof), the Transaction Agreement or the partnership agreement of
any partnership that is a Subsidiary. The Grantors shall use their best efforts,
upon the request of the Security Agent, to obtain the consent of any such third
party required with respect to any contract right which is material,
individually or in the aggregate, to the business, condition or prospects of any
Grantor.
The Grantors agree at all times to keep accurate and complete
accounting records with respect to the Collateral, including a record of all
payments and Proceeds received.
SECTION 2.02. No Assumption of Liability. The Security Interest is
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granted as security only and shall not subject the Security Agent or any Secured
Party to, or in any way alter or modify, any obligation or liability of any
Grantor with respect to or arising out of any of the Collateral.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
The Grantors jointly and severally represent and warrant to the
Security Agent and the Lenders that:
SECTION 3.01. Title and Authority. Each of the Grantors has good and
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valid rights in and title to the Collateral with respect to which it has
purported to grant a Security Interest hereunder (other than Trademarks which
are not, individually or in the aggregate, material to any Grantor's business,
condition or prospects) and has full power and authority to grant to the
Security Agent the Security Interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other person other than
any consent or approval which has been obtained.
SECTION 3.02. Filings. (a) The Perfection Certificate has been duly
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prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
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statements or other appropriate filings, recordings or registrations containing
a description of the Collateral have been delivered to the Security Agent for
filing in each governmental, municipal or other office specified in Schedule 5
to the Perfection Certificate, which are all the filings, recordings and
registrations (other than filings, required to be made in the United States
Patent and Trademark Office and the United States Copyright Office in order to
perfect the Security Interest in Collateral consisting of United States
registered trademarks and registered copyrights) that are necessary to publish
notice of and protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Security Agent (for the benefit of
the Secured Parties) in respect of all Collateral in which the Security Interest
may be perfected by filing, recording or registration in the United States (or
any political subdivision thereof) and its territories and possessions, and no
further or subsequent filing, refiling, recording, rerecording, registration in
the United States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.
(b) Each Grantor shall ensure and warrants that fully executed
security agreements in the form hereof and containing a description of all
Collateral consisting of Intellectual Property shall have been received and
delivered for recording within one month after the execution of this Agreement
with respect to United States registered Trademarks (and Trademarks for which
United States registration applications are pending) and within one month after
the execution of this Agreement with respect to United States registered
Copyrights by the United States Patent and Trademark Office and the United
States Copyright Office pursuant to 15 U.S.C. (S) 1060 or 17 U.S.C. (S) 205 and
the regulations thereunder, as applicable, to protect the validity of and to
establish a legal, valid and perfected security interest in favor of the
Security Agent (for the benefit of the Secured Parties) in respect of all
Collateral consisting of Licenses, Trademarks and Copyrights in which a security
interest may be perfected by filing, recording or registration in the United
States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary (other than such
actions as are necessary to perfect the Security Interest with respect to any
Collateral consisting
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of Licenses, Trademarks and Copyrights (or registration or application for
registration thereof) acquired or developed after the date hereof).
SECTION 3.03. Validity of Security Interest. The Security Interest
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constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions,
and (c) a security interest that shall be perfected in all Collateral in which a
security interest may be perfected upon the receipt and recording of this
Agreement with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, within the one-month period (commencing
as of the date hereof) pursuant to 15 U.S.C. (S) 1060 or the one-month period
(commencing as of the date hereof) pursuant to 17 U.S.C. (S) 205. The Security
Interest is and shall be prior to any other Lien on any of the Collateral, other
than Liens that the Credit Agreement expressly permits to be prior to the
Security Interest.
SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
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Grantors free and clear of any Lien, except for Liens expressly permitted by the
Credit Agreement. Other than as contemplated hereby, none of the Grantors has
filed or consented to the filing of (a) any financing statement or analogous
document under the Uniform Commercial Code or any other applicable laws covering
any Collateral, (b) any assignment in which any Grantor assigns any Collateral
or any security agreement or similar instrument covering any Collateral with
the United States Patent and Trademark Office or the United States Copyright
Office or (c) any assignment in which any Grantor assigns any Collateral or any
security agreement or similar instrument covering any Collateral with any
foreign governmental, municipal or other office.
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ARTICLE IV. COVENANTS
SECTION 4.01. Change of Name; Location of Collateral; Records; Place
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of Business. (a) Each of the Grantors agrees promptly to notify the Security
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Agent of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility) or
(iii) in its identity or corporate structure.
SECTION 4.02. Periodic Certification. Within 45 days after the
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Effective Date, the Borrower shall deliver to the Security Agent a certificate
executed by a financial officer and the chief legal officer of the Borrower
setting forth, with respect to each filing, recording or registration
contemplated by Section 3.02, the filing office, date and file number thereof
and attaching true, correct and complete acknowledgment copies of each such
filing, recording or registration. Each year, at the time of delivery of annual
financial statements with respect to the preceding fiscal year pursuant to
Section 5.01 of the Credit Agreement, the Borrower shall deliver to the Security
Agent a certificate executed by a financial officer and the chief legal officer
of the Borrower (a) setting forth the information with respect to the Grantors
required pursuant to Section 2 of the Perfection Certificate, (b) certifying
that all Uniform Commercial Code financing statements or other appropriate
filings, recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (a) above to the extent necessary to
protect and perfect the Security Interest for a period of not less than 18
months after the date of such certificate, (c) setting forth, with respect to
each filing, recording or registration (including each refiling, rerecording or
reregistration) made since the date of the Perfection Certificate or the most
recent certificate delivered pursuant to this Section, the filing office, date
and file number thereof, and (d) attaching true, correct and complete
acknowledgement copies of each such filing, recording or registration not
theretofore delivered to the Security Agent.
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SECTION 4.03. Protection of Security. Each of the Grantors shall, at
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its own cost and expense, take any and all actions necessary to defend title to
the Collateral against all persons and to defend the Security Interest of the
Security Agent in the Collateral and the priority thereof against any Lien not
expressly permitted under the Credit Agreement.
SECTION 4.04. Further Assurances. Each of the Grantors agrees, at
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its expense, to execute, acknowledge, deliver and cause to be duly filed all
such further instruments and documents and take all such actions as the
Security Agent or any of the Lenders may from time to time request to better
assure, preserve, protect and perfect the Security Interest and the rights and
remedies created hereby, including the payment of any fees and taxes required in
connection with the execution and delivery of this Agreement, the granting of
the Security Interest and the filing of any financing statements or other
documents in connection herewith. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any promissory note
or other instrument, such note or instrument shall be immediately pledged and
delivered to the Security Agent, duly endorsed in a manner satisfactory to the
Security Agent.
Without limiting the generality of the foregoing, each Grantor hereby
agrees, promptly upon receipt of notice from the Security Agent, to supplement
this Agreement by supplementing Schedule I, II or III hereto or adding
additional schedules hereto to specifically identify any asset or item that
constitutes Copyrights, Licenses, or Trademarks. Each Grantor agrees that it
will use its best efforts to take such action as shall be necessary in order
that all representations and warranties hereunder shall be true and correct with
respect to such Collateral within 30 days after the date it has been notified by
the Security Agent of the specific identification of such Collateral.
SECTION 4.05. Taxes; Encumbrances. At its option, the Security Agent
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may discharge past due taxes, assessments, charges, fees, liens, security
interests or other encumbrances at any time levied or placed on the Collateral
and not permitted under the Credit Agreement, and may pay for the maintenance
and preservation of the Collateral to the extent any of the Grantors fails to
do so as required by the Credit Agreement or this Agreement, and each of the
Grantors jointly and severally agrees to reimburse the Security Agent on demand
for any payment made or any expense incurred by the Security Agent pursuant to
the
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foregoing authorization; provided, however, that nothing in this Section
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shall be interpreted as excusing any Grantor from the performance of, or
imposing any obligation on the Security Agent or any Secured Party to cure or
perform, any covenants or other promises of any Grantor with respect to taxes,
assessments, charges, fees, liens, security interests or other encumbrances and
maintenance as set forth herein or in the Credit Agreement.
SECTION 4.06. Continuing Obligations of the Grantors. Each of the
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Grantors shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it under each contract, agreement or
instrument relating to the Collateral, all in accordance with the terms and
conditions thereof, and the Grantors jointly and severally agree to indemnify
and hold harmless the Security Agent and the Secured Parties from and against
any and all liability for such performance.
SECTION 4.07. Use and Disposition of Collateral. None of the Grantors
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shall make or permit to be made an assignment, pledge or hypothecation of the
Collateral or shall grant any other Lien in respect of the Collateral except as
expressly permitted by the Credit Agreement. None of the Grantors shall make or
permit to be made any transfer of the Collateral and each Grantor shall remain
at all times in possession of the Collateral owned by it, except that unless and
until the Security Agent shall notify the Grantors that an Event of Default
shall have occurred and be continuing and that during the continuance thereof
the Grantors shall not sell, convey, lease, assign, transfer or otherwise
dispose of any Collateral (which notice may be given by telephone if promptly
confirmed in writing), the Grantors may use and dispose of the Collateral in any
lawful manner not inconsistent with the provisions of this Agreement, the
Credit Agreement or any other Loan Document.
SECTION 4.08. Covenants Regarding License, Trademark and Copyright
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Collateral. (a) Each Grantor (either itself or through its licensees or its
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sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use or knowingly permit the use of such Trademark in violation of any
third party rights.
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(b) Each Grantor (either itself or through licensees) will, for each
work covered by a material Copyright, continue to publish, reproduce, display,
adopt and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws.
(c) Each Grantor shall notify the Security Agent immediately if it
knows or has reason to know that any Trademark or Copyright material to the
conduct of its business may become abandoned, lost or dedicated to the public,
or of any adverse determination or development (including the institution of, or
any such determination or development in, any proceeding in the United States
Patent and Trademark Office, United States Copyright Office or any court or
similar office of any country) regarding such Grantor's ownership of any
Trademark or Copyright, its right to register the same, or to keep and maintain
the same.
(d) In no event shall any Grantor, either itself or through any
agent, employee, licensee or designee, file an application for any Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or in any
other country or any political subdivision thereof, unless it promptly (or, in
the case of Trademarks and Copyrights which are not, individually or in the
aggregate, material to any Grantor's business, condition or prospects, no less
frequently than on a quarterly basis) informs the Security Agent, and, upon
request of the Security Agent, executes and delivers any and all agreements,
instruments, documents and papers as the Security Agent may request to evidence
the Security Agent's security interest in such Trademark or Copyright, and each
Grantor hereby appoints the Security Agent as its attorney-in-fact to execute
and file such writings for the foregoing purposes, all acts of such attorney
being hereby ratified and confirmed; such power, being coupled with an interest,
is irrevocable.
(e) Each Grantor will take all reasonably necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Trademarks and/or Copyrights (and to obtain the relevant grant
or registration) and to maintain each registration of
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the Trademarks and Copyrights which is material to the conduct of any Grantor's
business, including timely filings of applications for renewal, affidavits of
use, affidavits of incontestability and payment of maintenance fees, and, if
consistent with good business judgment, to initiate opposition, interference and
cancelation proceedings against third parties.
(f) In the event that any Collateral consisting of a Trademark or
Copyright material to the conduct of any Grantor's business is believed
infringed, misappropriated or diluted by a third party, such Grantor promptly
shall notify the Security Agent after it obtains knowledge thereof and shall, if
consistent with good business judgment, promptly xxx for infringement,
misappropriation or dilution and to recover any and all damages for such
infringement, misappropriation or dilution (or, in the event any third party is
contractually entitled to maintain any such suit, such Grantor shall pursue all
its available remedies, including, if applicable, by demanding such third party
to commence such suit and pursue such recovery), and take such other actions as
are appropriate under the circumstances to protect such Collateral.
(g) Each Grantor shall use its best efforts to obtain all requisite
consents or approvals by the licensor of each Copyright License or Trademark
License to effect the assignment of all of the Grantors' right, title and
interest thereunder to the Security Agent or its designee.
ARTICLE V. REMEDIES
SECTION 5.01. Remedies upon Default. Upon the occurrence and during
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the continuance of an Event of Default, each of the Grantors agrees to deliver
each item of Collateral to the Security Agent on demand, and it is agreed that
the Security Agent shall have the right (subject to applicable law) to take any
of or all the following actions at the same or different times: on demand, to
cause the Security Interest to become an assignment, transfer and conveyance of
any of or all such Collateral by the applicable Grantors to the Security Agent,
or to license or, to the extent permitted by applicable law, sublicense, whether
general, special or otherwise, and whether on an exclusive or non-exclusive
basis, any such Collateral throughout the world on such terms and conditions and
in such manner as the Security Agent shall determine (other than in violation of
the Trademark Agreements or any other then-existing licensing arrangements to
the extent that
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waivers have not been obtained in the Trademark Collateral Agreement or cannot
otherwise be obtained), and with or without legal process and with or without
previous notice or demand for performance, to exercise any and all rights
afforded to a secured party under the Uniform Commercial Code or other
applicable law. Without limiting the generality of the foregoing, each of the
Grantors agrees that the Security Agent shall have the right, subject to the
mandatory requirements of current law, to sell, assign or otherwise dispose of
all or any part of the Collateral, at public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for future
delivery as the Security Agent shall deem appropriate. The Security Agent shall
be authorized at any such sale (if it deems it advisable to do so) to restrict
the prospective bidders or purchasers to persons who will represent and agree
that they are purchasing the Collateral for their own account for investment and
not with a view to the distribution or sale thereof, and upon consummation of
any such sale the Security Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of any of the Grantors, and each of the Grantors
hereby waives (to the extent permitted by law) all rights of redemption, stay
and appraisal which such Grantor now has or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted.
The Security Agent shall give the Grantors 10 days' written notice
(which each of the Grantors agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions) of the Security Agent's intention
to make any sale of Collateral. Such notice, in the case of a public sale, shall
state the time and place for such sale and, in the case of a sale at a broker's
board or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Collateral, or portion thereof,
will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Security Agent may fix and state in the notice (if any)
of such sale. At any such sale, the Collateral, or portion thereof, to be sold
may be sold in one lot as an entirety or in separate parcels, as the Security
Agent may (in its sole and absolute discretion) determine. The Security Agent
shall not be obligated to make any sale of any Collateral if
15
it shall determine not to do so, regardless of the fact that notice of sale of
such Collateral shall have been given. The Security Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Security Agent until the sale price is paid by the purchaser
or purchasers thereof, but the Security Agent shall not incur any liability in
case any such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be sold
again upon like notice. At any public sale made pursuant to this Section, any
Secured Party may bid for or purchase, free (to the extent permitted by law)
from any right of redemption, stay, valuation or appraisal on the part of any of
the Grantors (all said rights being also hereby waived and released to the
extent permitted by law), the Collateral or any part thereof offered for sale
and may make payment on account thereof by using any claim then due and payable
to such Secured Party from any of the Grantors as a credit against the purchase
price, and such Secured Party may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further accountability to any of the
Grantors therefor. For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the
Security Agent shall be free to carry out such sale pursuant to such agreement
and none of the Grantors shall be entitled to the return of the Collateral or
any portion thereof subject thereto, notwithstanding the fact that after the
Security Agent shall have entered into such an agreement all Events of Default
shall have been remedied and the Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the Security Agent may
proceed by a suit or suits at law or in equity to foreclose this Agreement and
to sell the Collateral or any portion thereof pursuant to a judgment or decree
of a court or courts having competent jurisdiction or pursuant to a proceeding
by a court-appointed receiver.
SECTION 5.02. Application of Proceeds. The Security Agent shall
------------------------
apply the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:
16
FIRST, to the payment of all costs and expenses incurred by the Agent
or the Security Agent (in its capacity as such hereunder or under any other
Loan Document) in connection with such collection or sale or otherwise in
connection with this Agreement or any of the Obligations, including all
court costs and the fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Security Agent hereunder or under any
other Loan Document on behalf of any of the Grantors and any other costs or
expenses incurred in connection with the exercise of any right or remedy
hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in accordance
with the amounts of the Obligations owed to them on the date of any such
distribution); and
THIRD, to the Grantors, their successors or assigns, or as a court of
competent jurisdiction may otherwise direct.
The Security Agent shall have absolute discretion as to the time of application
of any such proceeds, moneys or balances in accordance with this Agreement.
Upon any sale of the Collateral by the Security Agent (including pursuant to a
power of sale granted by statute or under a judicial proceeding), the receipt of
the Security Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Security Agent or such officer or be
answerable in any way for the misapplication thereof.
SECTION 5.03. Grant of License to Use Intellectual Property. For the
----------------------------------------------
purpose of enabling the Security Agent to exercise rights and remedies under
this Article at such time as the Security Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Security
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to use, license or sub-license
any of the Collateral now owned or hereafter acquired by such Grantor, and
wherever the same may be located, and including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof (other than in violation
17
of any Trademark Agreements or any other then-existing licensing arrangements to
the extent that waivers have not been obtained in the Trademark Collateral
Agreement or cannot otherwise be obtained). The use of such license by the
Security Agent shall be exercised, at the option of the Security Agent, upon the
occurrence and during the continuation of an Event of Default; provided that any
--------
license, sub-license or other transaction entered into by the Security Agent in
accordance herewith shall be binding upon the Grantors notwithstanding any
subsequent cure of an Event of Default.
ARTICLE VI. MISCELLANEOUS
SECTION 6.01. Notices. All communications and notices hereunder
--------
shall (except as otherwise expressly permitted herein) be in writing and given
as provided in Section 9.01 of the Credit Agreement. All communications and
notices hereunder to any Subsidiary Grantor shall be given to it in care of the
Borrower at the address specified in the Credit Agreement for notices to the
Borrower thereunder.
SECTION 6.02. Security Interest Absolute. All rights of the Security
---------------------------
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement or any other Loan Document,
any agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing; (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument;
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations; or (d) any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.
SECTION 6.03. Survival of Agreement. All covenants, agreements,
----------------------
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and
18
shall survive the making by the Lenders of the Loans, and the execution and
delivery to the Lenders of the Notes evidencing such Loans, regardless of any
investigation made by the Lenders or on their behalf, and shall continue in full
force and effect until this Agreement shall terminate.
SECTION 6.04. Binding Effect; Several Agreement. This Agreement shall
----------------------------------
become effective as to any Grantor when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Security Agent and a
counterpart hereof shall have been executed on behalf of the Security Agent, and
thereafter shall be binding upon such Grantor and the Security Agent and their
respective successors and assigns, and shall inure to the benefit of such
Grantor, the Security Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign
its rights hereunder or any interest herein or in the Collateral except as
expressly contemplated by this Agreement or the Credit Agreement. This
Agreement shall be construed as a separate agreement with respect to each
Grantor and may be amended, modified, supplemented, waived or released with
respect to any Grantor without the approval of any other Grantor and without
affecting the obligations of any other Grantor hereunder.
SECTION 6.05. Successors and Assigns. Whenever in this Agreement any
-----------------------
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of any Grantor or the Security Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
SECTION 6.06. Security Agent Appointed Attorney-in-Fact. Each of the
------------------------------------------
Grantors hereby appoints the Security Agent the attorney-in-fact of such Grantor
for the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument which the Security Agent may deem necessary
or advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest. Without limiting the generality of the foregoing,
the Security Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Security Agent's name or in the name of any Grantor, to ask for, demand, xxx
for, collect, receive and give acquittance for any and all moneys due or to
become due under and by virtue of any Collateral, to endorse checks, drafts,
orders
19
and other instruments for the payment of money payable to such Grantor
representing any dividend or other distribution payable in respect of the
Collateral or any part thereof or on account thereof and to give full discharge
for the same, to settle, compromise, prosecute or defend any action, claim or
proceeding with respect thereto, and to sell, assign, endorse, pledge, transfer
and make any agreement respecting, or otherwise deal with, the same; provided,
--------
however, that nothing herein contained shall be construed as requiring or
-------
obligating the Security Agent to make any commitment or to make any inquiry as
to the nature or sufficiency of any payment received by the Security Agent, or
to present or file any claim or notice, or to take any action with respect to
the Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby, and no action taken by the Security
Agent or omitted to be taken with respect to the Collateral or any part thereof
shall give rise to any defense, counterclaim or offset in favor of any Grantor
or to any claim or action against the Security Agent or any other Secured Party.
SECTION 6.07. Security Agent's Fees and Expenses; Indemnification.
----------------------------------------------------
(a) Each of the Grantors jointly and severally agrees to pay upon demand to the
Security Agent the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts or agents, which
the Security Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from
or other realization upon any of the Collateral, (iii) the exercise, enforcement
or protection of any of the rights of the Security Agent hereunder or (iv) the
failure of the Grantors to perform or observe any of the provisions hereof.
(b) Without limitation of their indemnification obligations under the
other Loan Documents, each of the Pledgors jointly and severally agrees to
indemnify the Security Agent from and against any and all liabilities, losses,
damages, costs and expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be incurred by the
Security Agent in connection with any investigative, administrative or judicial
proceeding relating hereto or to the Collateral, whether or not the Security
Agent is a party thereto; provided that the Security Agent shall not have the
--------
right to be indemnified hereunder for its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
20
(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section shall remain operative and in full force and effect
regardless of the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Loans, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document, or any investigation made by or on behalf of the Security
Agent or any Bank. All amounts due under this Section shall be payable on
written demand therefor.
SECTION 6.08. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
--------------
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 6.09. Waivers; Amendment. (a) No failure or delay of the
-------------------
Security Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Security Agent hereunder
and of the Security Agent, the Agent and the Lenders under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies which
they would otherwise have. No waiver of any provisions of this Agreement or any
other Loan Document or consent to any departure by any Grantor therefrom shall
in any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand on any
Grantor in any case shall entitle such Grantor or any other Grantor to any other
or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Security Agent and the Grantor or Grantors with respect to
which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.05 of the Credit Agreement.
SECTION 6.10. Waiver of Jury Trial. Each of the parties hereto
---------------------
irrevocably waives any and all rights to trial by jury in any legal proceeding
arising out of or
21
relating to this Agreement or any other Loan Document or the transactions
contemplated hereby.
SECTION 6.11. Severability. In the event any one or more of the
-------------
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 6.12 Counterparts. This Agreement may be executed in two or
-------------
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract (subject to Section 6.04),
and shall become effective as provided in Section 6.04.
SECTION 6.13. Headings. Article and Section headings used herein are
---------
for convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 6.14. Jurisdiction; Consent to Service of Process. (a) Each
--------------------------------------------
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Security Agent or any Bank may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Grantor or
its properties in the courts of any jurisdiction.
22
(b) Each Grantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 6.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 6.15. Termination. This Agreement and the Security Interest
------------
shall terminate when all the Obligations (other than obligations of the Borrower
under Section 9.03(b) of the Credit Agreement, or any other indemnification
provisions contained in the Loan Documents, in respect of claims which have not
then been asserted) have been indefeasibly paid in full and the Lenders have no
further commitment to lend or to issue Letters of Credit under the Credit
Agreement, at which time the Security Agent shall execute and deliver to the
Grantors, at the Grantors' expense, all Uniform Commercial Code termination
statements and similar customary documents which the Grantors shall reasonably
request to evidence such termination. Any execution and delivery of termination
statements or documents pursuant to this Section shall be without recourse to or
warranty by the Security Agent. Each Subsidiary Grantor shall automatically be
released from its obligations hereunder and the Security Interest in the
Collateral of such Subsidiary Grantor shall be automatically released in the
event that all the capital stock of such Subsidiary Grantor shall be sold,
transferred or otherwise disposed of to a person that is not an Affiliate of the
Borrower in accordance with the terms of the Credit Agreement; provided that the
--------
Required Lenders shall have consented to such sale, transfer or other
disposition and the terms of such consent did not provide otherwise.
SECTION 6.16. Additional Grantors. Upon execution and delivery by
--------------------
the Security Agent and a Subsidiary of an instrument in the form of Annex 1
hereto, such Subsidiary shall become a Subsidiary Grantor and Grantor hereunder
with the same force and effect as if originally named as a Subsidiary Grantor
and Grantor herein.
23
The execution and delivery of any such instrument shall not require the consent
of any Grantor hereunder. The rights and obligations of each Grantor hereunder
shall remain in full force and effect notwithstanding the addition of any new
Grantor as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BRYLANE, L.P,
by VGP CORPORATION, General Partner
by
-------------------------------------
Name:
Title:
X.X. CATALOG DISTRIBUTION, INC.,
by
-------------------------------------
Name:
Title:
24
X.X. CATALOG DISTRIBUTION
PARTNERSHIP,
by X.X. CATALOG DISTRIBUTION
INC., General Partner,
by
--------------------------
Name:
Title:
by BRYLANE, L.P., General
Partner
by VGP CORPORATION, General
Partner
by
-------------------------
Name:
Title:
X.X. MANAGEMENT SERVICES, INC.,
by
-----------------------------
Name:
Title:
25
X.X. MANAGEMENT SERVICES
PARTNERSHIP,
by X.X. MANAGEMENT SERVICES
INC., General Partner,
by
----------------------------
Name:
Title:
by B.N.Y. SERVICE CORP., General
Partner,
by
----------------------------
Name:
Title:
B.N.Y. SERVICE CORP.
by
-----------------------------
Name:
Title:
K.S. MANAGEMENT SERVICES, INC.
by
-----------------------------
Name:
Title:
26
C.O.B. MANAGEMENT SERVICES, INC.
by
-----------------------------
Name:
Title:
XXXXXXXX'X TRADENAME SUB, INC.
by
-----------------------------
Name:
Title:
XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK,
as Security Agent,
by
-----------------------------
Title:
