EX-4.2 3 dex42.htm SECURITY AGREEMENT EXECUTION VERSION SECURITY AGREEMENT among SEARS HOLDINGS CORPORATION, and certain of its Subsidiaries, as Grantors and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Collateral Agent Dated as of October 12, 2010
Exhibit 4.2
EXECUTION VERSION
among
SEARS HOLDINGS CORPORATION,
and certain of its Subsidiaries,
as Grantors
and
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as Collateral Agent
Dated as of October 12, 2010
THIS SECURITY AGREEMENT is subject to the terms and provisions of the Intercreditor Agreement, dated as of October 12, 2010 (as such agreement may be amended, restated, amended and restated, supplemented or otherwise modified from time to time), among Xxxxx Fargo Bank, National Association, as Trustee and Collateral Agent, Bank of America, N.A., Xxxxx Fargo Retail Finance, LLC, and General Electric Capital Corporation, each as a Co-Collateral Agent and the other persons from time to time party thereto.
TABLE OF CONTENTS
| Page | ||||
| SECTION 1. DEFINED TERMS | 1 | |||
| 1.1. | Definitions | 1 | ||
| 1.2. | Other Definitional Provisions | 5 | ||
| 1.3. | Perfection Certificate | 5 | ||
| SECTION 2. GRANT OF SECURITY INTEREST | 5 | |||
| 2.1. | Collateral; Grant of Security Interest | 5 | ||
| 2.2. | No Assumption of Liability | 6 | ||
| SECTION 3. REPRESENTATIONS AND WARRANTIES | 6 | |||
| 3.1. | Title; No Other Liens | 6 | ||
| 3.2. | Perfected Liens | 6 | ||
| 3.3. | Jurisdiction of Organization | 7 | ||
| 3.4. | Credit Card Accounts Receivable | 7 | ||
| 3.5. | Related Intellectual Property | 7 | ||
| 3.6. | Dealer Store Inventory | 7 | ||
| SECTION 4. COVENANTS | 7 | |||
| 4.1. | Delivery of Instruments and Chattel Paper | 7 | ||
| 4.2. | [Intentionally Omitted] | 8 | ||
| 4.3. | Maintenance of Perfected Security Interest; Further Documentation | 8 | ||
| 4.4. | Changes in Name, etc | 8 | ||
| SECTION 5. REMEDIAL PROVISIONS | 8 | |||
| 5.1. | Certain Matters Relating to Credit Card Accounts Receivable | 8 | ||
| 5.2. | Communications with Obligors; Grantors Remain Liable | 9 | ||
| 5.3. | [Intentionally Omitted] | 9 | ||
| 5.4. | Application of Proceeds | 9 | ||
| 5.5. | Code and Other Remedies | 10 | ||
| 5.6. | Deficiency | 12 | ||
| 5.7. | Grant of License in Intellectual Property, Software and other Assets | 12 | ||
| SECTION 6. THE COLLATERAL AGENT | 13 | |||
| 6.1. | Collateral Agent’s Appointment as Attorney-in-Fact, etc | 13 | ||
| 6.2. | Duty of Collateral Agent | 14 | ||
| 6.3. | Execution of Financing Statements | 15 | ||
| 6.4. | Authority of the Collateral Agent | 15 | ||
| 6.5. | Pari Passu Obligations | 15 | ||
| SECTION 7. MISCELLANEOUS | 15 | |||
| 7.1. | Intercreditor Agreement | 15 | ||
| 7.2. | Pari Passu Obligations | 15 | ||
| 7.3. | Amendments in Writing | 16 | ||
| 7.4. | Notices | 16 | ||
| 7.5. | No Waiver by Course of Conduct; Cumulative Remedies | 16 | ||
| 7.6. | Enforcement Expenses; Indemnification | 16 | ||
| 7.7. | Successors and Assigns | 17 |
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| 7.8. | [Intentionally Omitted] | 17 | ||||
| 7.9. | Counterparts | 17 | ||||
| 7.10. | Severability | 17 | ||||
| 7.11. | Section Headings | 17 | ||||
| 7.12. | Integration | 17 | ||||
| 7.13. | GOVERNING LAW | 18 | ||||
| 7.14. | Acknowledgements | 18 | ||||
| 7.15. | Additional Grantors | 18 | ||||
| 7.16. | Releases | 18 | ||||
| 7.17. | Jurisdiction, Etc | 18 | ||||
| 7.18. | WAIVER OF JURY TRIAL | 19 |
SCHEDULES
| Schedule 1 | Grantors; Notice Addresses | |
| Schedule 2 | Perfection Matters | |
| Schedule 3 | Jurisdictions of Organization |
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THIS SECURITY AGREEMENT, dated as of October 12, 2010 (as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “Agreement”), is made by SEARS HOLDINGS CORPORATION, a Delaware corporation (the “Issuer”), and the guarantors from time to time party hereto (the “Guarantors” and, together with the Issuer, the “Grantors”), in favor of XXXXX FARGO BANK, NATIONAL ASSOCIATION, in its capacity as collateral agent (in such capacity and, together with any successors and assigns, the “Collateral Agent”).
SECTION 1. DEFINED TERMS
1.1. Definitions.
(a) Unless otherwise defined herein, terms defined in the Indenture and used herein shall have the meanings given to them in the Indenture, and the following terms are used herein as defined in the New York UCC: Accounts, Chattel Paper, Control, Documents, Equipment, Fixtures, General Intangibles, Goods, Instruments, Inventory, Proceeds and Supporting Obligations.
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(b) The following terms shall have the following meanings:
“ABL Agents” has the meaning provided in the Intercreditor Agreement.
“ABL Obligations” has the meaning provided in the Intercreditor Agreement.
“ABL Secured Parties” has the meaning provided in the Intercreditor Agreement.
“Additional First Lien Agent” means the Person appointed to act as trustee, agent or representative for the holders of Additional First Lien Obligations pursuant to any Additional First Lien Agreement.
“Additional First Lien Agreement” means any indenture, credit agreement or other agreement, if any, pursuant to which any Grantor has or will incur Additional First Lien Obligations.
“Agreement” has the meaning provided in the preamble hereof.
“Collateral” has the meaning provided in Section 2.1 hereof.
“Collateral Agent” has the meaning provided in the preamble hereof.
“Copyrights” means (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office and (ii) the right to obtain all renewals thereof.
“Copyright Licenses” means any written agreement naming any Grantor as licensor or licensee granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright.
“Credit Agreement” means the Amended and Restated Credit Agreement, dated as of May 21, 2009, among the Issuer, Sears Xxxxxxx Acceptance Corp., Kmart Corporation, the financial institutions party thereto as lenders, Bank of America, N.A., as administrative agent, co-collateral agent and swingline lender, Xxxxx Fargo Retail Finance, LLC, as co-collateral agent, and General Electric Capital Corporation, as co-collateral agent, together with the related documents thereto (including, without limitation, any guarantee agreements and security documents), in each case as such agreements may be amended (including any amendment and restatement thereof), supplemented or otherwise modified, replaced or refinanced from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including, without limitation, increasing the amount of available borrowings thereunder or adding Subsidiaries of the Issuer as additional borrowers or guarantors thereunder) all or any portion of the indebtedness under such agreement or any successor or replacement agreement or agreements and whether by the same or any other agent, lender or group of lenders.
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“Credit Card Accounts Receivables” means all Accounts together with all income, payments, and proceeds thereof, owed by a credit card payment processor or an issuer of credit cards to the Issuer or any Guarantor resulting from charges by a customer of the Issuer or such Guarantor on credit cards issued by such issuer in connection with the sale of goods by the Issuer or such Guarantor or services performed by the Issuer or such Guarantor.
“Discharge of First Lien Obligations” means the Discharge of ABL Obligations (as defined in the Intercreditor Agreement) and the payment in full in cash of all outstanding Additional First Lien Obligations.
“Discharge of Obligations” means (i) in the case of the Indenture, the discharge or defeasance of the Indenture in accordance with Article Nine thereof and (ii) in the case of each Pari Passu Agreement, the repayment, discharge or defeasance of the Pari Passu Obligations under such agreement or such other event which entitles the Grantors to obtain a release of the Liens securing such Pari Passu Obligations under the Security Documents.
“Event of Default” means (i) an “Event of Default” under and as defined in the Indenture or (ii) an “Event of Default” or equivalent term under and as defined in any Pari Passu Agreement.
“Final Date” means the earliest to occur of (i) a Discharge of Obligations or (ii) a Fall-Away Event.
“First Lien Collateral Agents” means (i) the ABL Agents and (ii) the Additional First Lien Agents.
“First Lien Obligations” means (i) the ABL Obligations and (ii) the Additional First Lien Obligations.
“First Lien Secured Parties” means (i) the ABL Secured Parties and (ii) each Additional First Lien Agent and each holder of Additional First Lien Obligations.
“First Lien Security Agreement” means that certain Amended and Restated Guarantee and Collateral Agreement, dated as of May 21, 2009, by and among the Issuer, the grantors party thereto and Bank of America, N.A., Xxxxx Fargo Retail Finance LLC and General Electric Capital Corporation, as co-collateral agents, as the same may be amended, supplemented or otherwise modified from time to time.
“Grantors” has the meaning provided in the preamble hereof.
“Guarantors” has the meaning provided in the preamble hereof.
“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, all Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses, know-how and processes, and all rights to xxx at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.
“Intercreditor Agreement” has the meaning provided in the recitals hereof.
“Issuer” has the meaning provided in the preamble hereof.
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“New York UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York.
“Note Documents” means the Notes, the Indenture and the Security Documents.
“Note Obligations” means the collective reference to (i) all obligations, liabilities and indebtedness (including, without limitation, principal, premium, interest (including, without limitation, all interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Grantor at the rate provided for in the respective documentation, whether or not such claim for post-petition interest is allowed in any such proceeding), fees, costs, expenses and indemnities, including the fees and expenses of counsel) owing to the Collateral Agent, the Trustee and Holders of the Notes under the Note Documents and the due performance and compliance by the Grantors with all of the terms, conditions and agreements contained in the Note Documents; (ii) any and all sums advanced by the Collateral Agent in accordance with any of the Note Documents in order to preserve the Collateral or preserve its security interest in the Collateral; and (iii) in the event of any proceedings for the collection or enforcement of any indebtedness, obligations or liabilities of the Grantors referred to in clause (i) above, the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Collateral Agent of its rights hereunder, together with reasonable attorneys’ fees and court costs.
“Pari Passu Agent” means the Person appointed to act as trustee, agent or representative for the holders of Pari Passu Obligations pursuant to any Pari Passu Agreement.
“Pari Passu Agreement” means any indenture, credit agreement or other agreement, if any, designated as such by the Issuer pursuant to, and as permitted by, Section 7.2 hereof.
“Pari Passu Joinder Agreement” means an agreement substantially in the form of Exhibit I hereto.
“Pari Passu Obligations” means all obligations, liabilities and indebtedness (including, without limitation, principal, premium, interest (including, without limitation, all interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Grantor at the rate provided for in the respective documentation, whether or not a claim for post-petition interest is allowed in any such proceeding)) incurred under any Pari Passu Agreement.
“Patents” means (i) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, (ii) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof and (iii) all rights to obtain any reissues or extensions of the foregoing.
“Patent License” means all agreements, whether written or oral, providing for the grant by or to any Grantor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent.
“Perfection Certificate” means that certain perfection certificate to be executed and delivered by the Grantors in connection with the execution and delivery of the Indenture, to be dated on or about the Issue Date.
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“Required Secured Parties” means the holders of a majority in aggregate principal amount of the Note Obligations and the Pari Passu Obligations voting together as a single class.
“Secured Obligations” means the collective reference to (i) the Note Obligations and (ii) Pari Passu Obligations.
“Secured Parties” shall mean, collectively, the Collateral Agent, the Trustee, the Holders of Notes, each Pari Passu Agent and each holder of Pari Passu Obligations.
“Securities Act” means the Securities Act of 1933, as amended.
“Software” means all “software” as such term is defined in the New York UCC used by any Grantor to process, assemble, prepare for sale, market for sale, sell or otherwise dispose of the Collateral, other than software embedded in any category of goods, including all computer programs and all supporting information provided in connection with a transaction related to any program.
“Trademarks” means (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto and (ii) the right to obtain all renewals thereof.
“Trademark License” means any agreement, whether written or oral, providing for the grant by or to any Grantor of any right to use any Trademark.
1.2. Other Definitional Provisions.
(a) The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part thereof.
1.3. Perfection Certificate. The Collateral Agent, each Grantor and each Secured Party agree that the Perfection Certificate and all descriptions of Collateral therein and schedules, amendments and supplements thereto are and shall at all times remain a part of this Agreement.
SECTION 2. GRANT OF SECURITY INTEREST
2.1. Collateral; Grant of Security Interest. Each Grantor hereby grants to the Collateral Agent for the equal and ratable benefit of the Secured Parties a security interest in all of the following property now owned, or at any time hereafter acquired, by such Grantor or in which such Grantor now has, or at any time in the future may acquire, any right, title or interest (collectively, the “Collateral”), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of such Grantor’s Secured Obligations:
(a) all Credit Card Accounts Receivable;
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(b) all Inventory;
(c) all Chattel Paper relating to Credit Card Accounts Receivable;
(d) all Instruments relating to Credit Card Accounts Receivable;
(e) all Documents relating to any Inventory;
(f) all books and records pertaining to the Collateral; and
(g) to the extent not otherwise included, all Proceeds, insurance claims, Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing.
2.2. No Assumption of Liability. The security interest in the Collateral granted to the Collateral Agent is granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Collateral. Anything contained herein to the contrary notwithstanding, each Grantor shall remain liable under any contracts and agreements included in the Collateral, to the extent set forth therein, to perform all of its duties and obligations thereunder to the same extent as if this Agreement and the Note Documents had not been executed, the exercise by Collateral Agent of any of its rights hereunder or any of the Note Documents shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral, and the Collateral Agent shall not have any obligation or liability under any contracts, licenses, and agreements included in the Collateral by reason of this Agreement or any of the Note Documents, nor shall Collateral Agent be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Each Grantor represents and warrants to the Collateral Agent and the other Secured Parties that:
3.1. Title; No Other Liens. Except for the security interest granted to the Collateral Agent for the ratable benefit of the Secured Parties pursuant to this Agreement and any other Permitted Lien, such Grantor owns each item of the Collateral free and clear of any and all Liens or claims of others. No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except (i) such as have been filed in favor of the Collateral Agent for the ratable benefit of the Secured Parties pursuant to this Agreement or (ii) as are permitted by the Indenture.
3.2. Perfected Liens.
(a) The security interests granted pursuant to this Agreement (a) upon completion of the filings specified on Schedule 2 (which, in the case of all financing statements referred to on said Schedule 2, have been delivered to the Collateral Agent in completed form) will constitute valid perfected security interests in all of the Collateral as to which a Lien can be perfected by filing in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, as collateral security for the Secured Obligations, enforceable in accordance with the terms hereof and (b) are prior to all other Liens on the Collateral in existence on the date hereof other than Permitted Liens having priority over the Liens of the Collateral Agent pursuant to applicable law or the Intercreditor Agreement.
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(b) Notwithstanding anything herein to the contrary, prior to the Discharge of First Lien Obligations, the requirements of this Agreement to deliver Collateral and any certificates, instruments or related documents to the Collateral Agent shall be deemed satisfied by delivery of such Collateral and such certificates, instruments or related documents to any First Lien Collateral Agent. The Issuer shall deliver copies of any such certificates, instruments or related documents to the Collateral Agent.
3.3. Jurisdiction of Organization. On the date hereof, such Grantor’s jurisdiction of organization and identification number from the jurisdiction of organization (if any) are specified on Schedule 3. Such Grantor has furnished to the Collateral Agent a charter, certificate of incorporation or other formation document and good standing certificate dated as of a date which is recent to the date hereof.
3.4. Credit Card Accounts Receivable.
(a) No amount payable to such Grantor under or in connection with any Credit Card Accounts Receivable is evidenced by any Instrument or Chattel Paper which has not been delivered to the Collateral Agent (or, if prior to the Discharge of First Lien Obligations, to any First Lien Collateral Agent for the benefit of the Collateral Agent).
(b) Except as would not be reasonably expected to result in a material adverse effect on the business or financial condition of the Issuer and its Subsidiaries considered as a whole (a “Material Adverse Effect”), there are no facts, events or occurrences which would impair the validity of any Credit Card Accounts Receivable, or tend to reduce the amount payable thereunder from the face amount of the claim or invoice or statements delivered to the Collateral Agent (or, if prior to the Discharge of First Lien Obligations, to any First Lien Collateral Agent for the benefit of the Collateral Agent) with respect thereto (other than arising in the ordinary course of business).
3.5. Related Intellectual Property. Such Grantor owns or has a license to use all Intellectual Property which is reasonably necessary to sell the Collateral in the ordinary course. Such Grantor shall take all reasonable and necessary steps to maintain and preserve the benefit of each Trademark License, Copyright License and Patent License which relates to Intellectual Property to the extent that the use of such Intellectual Property would be reasonably necessary in connection with the Collateral Agent’s enforcement of any of its remedies under the Note Documents.
3.6. Dealer Store Inventory. Except as would not be reasonably expected to result in a Material Adverse Effect, (a) all of the Inventory at each Dealer Store is owned by a Grantor free and clear of any and all Liens or claims of others except for any Permitted Liens, and (b) all such Inventory is subject to a legal, valid and perfected security interest in favor of the applicable Grantor, which is prior to any other Lien on such Inventory.
SECTION 4. COVENANTS
Each Grantor covenants and agrees with the Collateral Agent and the other Secured Parties that, until the Final Date:
4.1. Delivery of Instruments and Chattel Paper. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument, Chattel Paper or transferable records, such Instrument, Chattel Paper or transferable records, shall be promptly delivered to the
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Collateral Agent (or, if prior to the Discharge of First Lien Obligations, to any First Lien Collateral Agent for the benefit of the Collateral Agent), duly indorsed in a manner satisfactory to the Collateral Agent (or, if prior to the Discharge of First Lien Obligations, to any First Lien Collateral Agent for the benefit of the Collateral Agent), to be held as Collateral pursuant to this Agreement.
4.2. [Intentionally Omitted].
4.3. Maintenance of Perfected Security Interest; Further Documentation.
(a) Such Grantor shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority described in Section 3.2 and shall defend such security interest against the claims and demands of all Persons whomsoever, subject to the rights of such Grantor under the Security Documents to dispose of the Collateral.
(b) Each Grantor shall file, and if reasonably requested by the Collateral Agent will execute or authenticate and deliver to the Collateral Agent, all financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary, or as the Collateral Agent may reasonably request, from time to time in order to maintain a perfected security interest in the Collateral owned by such Grantor subject only to (i) Liens securing the First Lien Obligations and (ii) any other Permitted Lien. Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner as is necessary, advisable or prudent to ensure the perfection of the security interest in the Collateral granted to the Collateral Agent herein.
(c) Each Grantor agrees that, in the event any Grantor, pursuant to the First Lien Security Agreement, takes any action to grant or perfect a Lien in favor of any First Lien Collateral Agent in any assets that constitute Collateral (other than Proceeds in the form of cash or cash equivalents) hereunder, such Grantor shall, to the extent reasonable, take a corresponding action to grant or perfect a Lien (subject to the Intercreditor Agreement) in such Collateral in favor of the Collateral Agent to secure the Secured Obligations without the request of the Collateral Agent.
4.4. Changes in Name, etc. Such Grantor will not, except upon 15 days’ prior written notice to the Collateral Agent, the filing of all additional financing statements and other documents necessary to maintain the validity, perfection and priority of the security interests provided for herein and other documents necessary or reasonably requested by the Collateral Agent to maintain the validity, perfection and priority of the security interests provided for herein, change its organizational form from that of a registered entity to an unregistered entity (or from an unregistered entity to a registered entity), change its jurisdiction of organization from that referred to in Section 3.3 or change its name or organizational form.
SECTION 5. REMEDIAL PROVISIONS
5.1. Certain Matters Relating to Credit Card Accounts Receivable. At the Collateral Agent’s request (or, if prior to the Discharge of First Lien Obligations, at the request of any First Lien Collateral Agent for the benefit of the Collateral Agent), at any time after the occurrence and during the continuance of an Event of Default, each Grantor shall deliver to the Collateral Agent (or, if prior to the Discharge of First Lien Obligations, to any First Lien Collateral Agent for the benefit of the Collateral Agent) all original and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Credit Card Accounts Receivable.
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5.2. Communications with Obligors; Grantors Remain Liable.
(a) The Collateral Agent (or, if prior to the Discharge of First Lien Obligations, any First Lien Collateral Agent for the benefit of the Collateral Agent) in its own name or in the name of others may at any time after the occurrence and during the continuance of an Event of Default communicate with obligors under the Credit Card Accounts Receivable to verify with them to the satisfaction of the Collateral Agent the existence, amount and terms of any Credit Card Accounts Receivable.
(b) Upon the request of the Collateral Agent after the Discharge of First Lien Obligations, at any time after the occurrence and during the continuance of an Event of Default, each Grantor shall notify obligors on the Credit Card Accounts Receivable that the Credit Card Accounts Receivable have been assigned to the Collateral Agent for the benefit of the Secured Parties and that payments in respect thereof shall be made directly to the Collateral Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of the Credit Card Accounts Receivable to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto. Neither the Collateral Agent nor any other Secured Party shall have any obligation or liability under any Credit Card Accounts Receivable (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Party of any payment relating thereto, nor shall the Collateral Agent or any other Secured Party be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Credit Card Accounts Receivable (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.
5.3. [Intentionally Omitted].
5.4. Application of Proceeds. Subject to the terms of the Intercreditor Agreement, any proceeds received by the Collateral Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral pursuant to the exercise by the Collateral Agent of its remedies shall be applied, together with any other sums then held by the Collateral Agent pursuant to this Agreement, as follows:
First, to pay amounts owing to the Collateral Agent in its capacity as such in accordance with the terms of this Agreement and the Indenture, to the Trustee in its capacity as such in accordance with the terms of the Indenture and to any Pari Passu Junior Lien Agent in its capacity as such in accordance with the terms of the applicable Pari Passu Junior Lien Agreement, in each case ratably;
Second, to ratably pay all amounts owing to holders of Secured Obligations in accordance with the terms of the Indenture and any Pari Passu Junior Lien Agreement; and
Third, to pay the Issuer or to whomsoever may be lawfully entitled to receive the same.
All applications of proceeds pursuant to clause First above and, separately, clause Second above shall be allocated among the applicable Secured Parties on a pro rata basis according to the principal, interest and other amounts owing in respect of the Secured Obligations owing to such Secured Parties at the time of the distribution. In the event that any such proceeds are insufficient to pay in full the items described in clauses First through Third of this Section 5.4, the Grantors shall remain liable, jointly and severally, for any deficiency.
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If, despite the provisions of this Agreement, any Secured Party shall receive any payment or other recovery in excess of its portion of payments on account of the Secured Obligations to which it is then entitled in accordance with this Agreement, such Secured Party shall hold such payment or recovery in trust for the benefit of all Secured Parties for distribution in accordance with this Section 5.4.
Upon the request of the Collateral Agent prior to any distribution under this Section 5.4, each Secured Party shall provide to the Collateral Agent certificates, in form and substance reasonably satisfactory to the Collateral Agent, setting forth the respective amounts referred to in Section 5.4, that each such Secured Party believes it is entitled to receive, and the Collateral Agent shall be fully entitled to rely on such certificates.
5.5. Code and Other Remedies.
(a) If an Event of Default shall occur and be continuing, the Collateral Agent, on behalf of the Secured Parties, may (and at the direction of the Required Secured Parties shall) exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Secured Obligations, all rights and remedies of a secured party under the New York UCC or any other applicable law. Without limiting the generality of the foregoing, the Collateral Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may (and at the direction of the Required Secured Parties shall) in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Collateral Agent or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Each purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of any Grantor. The Collateral Agent 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, stay, valuation or appraisal on the part of any Grantor, which right or equity is hereby waived and released, and may credit against the purchase price the amount of any claim then due and payable from any Grantor on account of the Secured Obligations owed to the Collateral Agent, and the Collateral Agent may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. Each Grantor further agrees, at the Collateral Agent’s request, to assemble the Collateral and make it available to the Collateral Agent at the Grantor’s sole risk and expense, at places which the Collateral Agent shall reasonably select, whether at such Grantor’s premises or elsewhere. The Collateral Agent shall apply the net proceeds of any action taken by it pursuant to this Section 5.5, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Collateral Agent hereunder, including, without limitation, reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Secured Obligations, in the order set forth in Section 5.4, and only after such application and after the payment by the Collateral Agent of any other amount required by any provision of law, including, without limitation, Section 9-615(a)(3) of the New York UCC, need the Collateral Agent account for the surplus, if any, to any Grantor. To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against any Collateral Agent arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition. The Collateral Agent shall not be obligated to make any sale
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or other disposition of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale or other disposition of such Collateral shall have been given. The Collateral 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. Any public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice of such sale. If any of the Collateral is sold, leased, or otherwise disposed of by the Collateral Agent on credit, the Secured Obligations shall not be deemed to have been reduced as a result thereof unless and until payment is finally received thereon by the Collateral Agent.
(b) If an Event of Default shall occur and be continuing, with respect to any Collateral consisting of Inventory, the Collateral Agent may conduct one or more going out of business sales, in the Collateral Agent’s own right or by one or more agents and contractors. Such sale(s) may be conducted upon any premises owned, leased, or occupied by any Grantor. The Collateral Agent and any such agent or contractor, in conjunction with any such sale, may augment the Inventory with other goods (all of which other goods shall remain the sole property of the Collateral Agent or such agent or contractor). Any amounts realized from the sale of such goods which constitute augmentations to the Inventory (net of an allocable share of the costs and expenses incurred in their disposition) shall be the sole property of the Collateral Agent or such agent or contractor and neither any Grantor nor any Person claiming under or in right of any Grantor shall have any interest therein. Each purchaser at any such going out of business sale shall hold the property sold absolutely, free from any claim or right on the part of any Grantor.
(c) If an Event of Default shall occur and be continuing, with respect to any Collateral consisting of Accounts, the Collateral Agent may: (i) demand, collect and receive any amounts relating thereto, as the Collateral Agent may reasonably determine; (ii) commence and prosecute any actions in any court for the purposes of collecting any such Accounts and enforcing any other rights in respect thereof; (iii) defend, settle or compromise any action brought and, in connection therewith, give such discharges or releases as the Collateral Agent may reasonably deem appropriate; (iv) without limiting the Collateral Agent’s rights set forth in Section 6.1, receive, open and dispose of mail addressed to any Grantor and endorse checks, notes, drafts, acceptances, money orders, bills of lading, warehouse receipts or other instruments or documents evidencing payment, shipment or storage of the goods giving rise to such Accounts or securing or relating to such Accounts, on behalf of and in the name of such Grantor; and (v) sell, assign, transfer, make any agreement in respect of, or otherwise deal with or exercise rights in respect of, any such Accounts or the goods or services which have given rise thereto, as fully and completely as though the Collateral Agent was the absolute owner thereof for all purposes.
(d) If an Event of Default shall occur and be continuing, with or without legal process and with or without prior notice or demand for performance, the Collateral Agent may enter upon, occupy, and use any premises owned or occupied by each Grantor. The Collateral Agent shall not be required to remove any of the Collateral from any such premises upon taking possession thereof, and may render any Collateral unusable to the Grantors. In no event shall the Collateral Agent be liable to any Grantor for use or occupancy by the Collateral Agent of any premises pursuant to this Section 5.5, nor for any charge (such as wages for the Grantors’ employees and utilities) reasonably incurred in connection with the Collateral Agent’s exercise of its rights and remedies hereunder.
(e) For purposes of this Section 5.5, a written and fully executed agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof. The Collateral Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Secured Obligations paid in full.
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(f) To the extent permitted by applicable law, each Grantor hereby waives all rights of redemption, stay, valuation 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 Collateral Agent shall have no obligation to marshal any of the Collateral or resort to any of the property or assets of any Grantor in any particular manner or order.
5.6. Deficiency. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Secured Obligations and the fees and disbursements of any attorneys employed by the Collateral Agent or any other Secured Party to collect such deficiency.
5.7. Grant of License in Intellectual Property, Software and other Assets.
(a) For the purpose of enabling the Collateral Agent to exercise the rights and remedies under this Section 5 at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby (i) assigns and transfers to the Collateral Agent and grants the Collateral Agent, for the benefit of the Collateral Agent and the other Secured Parties, an irrevocable, nonexclusive license (exercisable without payment of royalty or any other compensation to such Grantor or any Affiliate of such Grantor) to use, license or sublicense, any related Intellectual Property now owned or licensed or hereafter owned, licensed or otherwise acquired by such Grantor, and wherever the same may be located, and including in such license 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 and (ii) irrevocably agrees that the Collateral Agent may sell any of such Grantor’s Inventory directly to any Person, including, without limitation, Persons who have previously purchased such Grantor’s Inventory from such Grantor and in connection with any such sale or other enforcement of the Collateral Agent’s rights under this Agreement, may sell Inventory which bears any Trademark owned by or licensed to such Grantor and any Inventory that is covered by any Copyright owned by or licensed to such Grantor and the Collateral Agent may finish any work in process and affix any Trademark owned by or licensed to such Grantor and sell such Inventory as provided herein; provided that, notwithstanding the foregoing, except as provided in any agreement between the Collateral Agent and the owner or licensor of such Intellectual Property, this Agreement shall not constitute a license to use, license or sublicense, any Intellectual Property to the extent such license or sublicense is prohibited by or results in the termination of or requires any consent not obtained under, any contract, license, agreement, instrument or other document evidencing or giving rise to such Intellectual Property, except to the extent that (x) the term in such contract, license, agreement, instrument or other document providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law, or (y) the contract, license, agreement, instrument or other document pursuant to which such Grantor was granted its rights to any such Intellectual Property was issued by a Subsidiary or Affiliate of such Grantor (and is not subject to an applicable constraint in an over-license or other agreement with a third party).
(b) For the purpose of enabling the Collateral Agent to exercise the rights and remedies under this Section 5 at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby assigns and transfers to the Collateral Agent and grants to the Collateral Agent, for the benefit of the Collateral Agent and the other Secured Parties, an irrevocable, nonexclusive license (exercisable without payment of royalty or any other compensation to such Grantor or any other Person) to use, license or sublicense, any Software now owned or licensed or hereafter owned, licensed or otherwise acquired by such Grantor; provided that, notwithstanding the foregoing, except as provided in any agreement between the Collateral Agent and the owner or licensor of such Software, this Agreement shall not constitute a license to use, license or sublicense, any Software to the extent such license or sublicense is prohibited by or results in the termination of or requires any
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consent not obtained under, any contract, license, agreement, instrument or other document evidencing or giving rise to such Software, except to the extent that (i) the term in such contract, license, agreement, instrument or other document providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law, or (ii) the contract, license, agreement, instrument or other document pursuant to which such Grantor was granted its rights to any such Software was issued by a Subsidiary or Affiliate of such Grantor (and is not subject to an applicable constraint in an over-license or other agreement with a third party).
(c) Without duplication of the rights granted to the Collateral Agent in clauses (a) and (b) of this Section 5.7, and for the purpose of enabling the Collateral Agent to exercise the rights and remedies under this Section 5 at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby assigns and transfers to the Collateral Agent and grants to the Collateral Agent, for the benefit of the Collateral Agent and the other Secured Parties, an irrevocable, nonexclusive license (exercisable without payment of royalty, rent or any other compensation to such Grantor or any other Person), to use, license or sublicense, any real property or personal property of such Grantor which does not constitute Collateral, including but not limited to, all Equipment, Fixtures, General Intangibles and Goods, whether now or hereafter owned, leased or occupied by such Grantor; provided that, notwithstanding the foregoing, except as provided in any agreement between the Collateral Agent and the owner or licensor of such real or personal property, this Agreement shall not constitute a license to use, license or sublicense, any real or personal property to the extent such license or sublicense is prohibited by or results in the termination of or requires any consent not obtained under, any lease, contract, license, agreement, instrument or other document evidencing or giving rise to such property or any rights therein, except to the extent that (i) the term in such lease, contract, license, agreement, instrument or other document providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law, or (ii) the contract, license, agreement, instrument or other document pursuant to which such Grantor was granted its rights to any such real property or personal property was issued by a Subsidiary or Affiliate of such Grantor (and is not subject to an applicable constraint in an over-license or other agreement with a third party).
SECTION 6. THE COLLATERAL AGENT
6.1. Collateral Agent’s Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this 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 of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Collateral Agent the power and right, on behalf of such Grantor, without notice to, or assent by such Grantor, to do any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Credit Card Accounts Receivable or with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Collateral Agent for the purpose of collecting any and all such moneys due under any Credit Card Accounts Receivable or with respect to any other Collateral whenever payable;
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(ii) pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof;
(iii) execute, in connection with any sale provided for in Section 5.5, any indorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and
(iv)(1) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder as the Collateral Agent shall direct; (2) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (3) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (4) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (5) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (6) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Collateral Agent may deem appropriate; and (7) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Collateral Agent was the absolute owner thereof for all purposes, and do, at the Collateral Agent’s option and such Grantor’s expense, at any time, or from time to time, all acts and things which the Collateral Agent deems necessary to protect, preserve or realize upon the Collateral and the Collateral Agent’s and any other Secured Party’s security interest therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 6.1(a) to the contrary notwithstanding, the Collateral Agent agrees that it will not exercise any rights under the power of attorney provided for in this Section 6.1(a) unless an Event of Default shall have occurred and be continuing.
(b) Without limitation to the Collateral Agent’s or any other Secured Party’s rights to payment, reimbursement or indemnification under any other Security Document, the expenses of the Collateral Agent incurred in connection with actions undertaken as provided in Sections 6.1 and 7.6 shall be payable by any applicable Grantor to the Collateral Agent on demand.
(c) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released.
6.2. Duty of Collateral Agent. The provisions of the Indenture are herein incorporated by reference and shall be applicable to the rights, obligations, privileges, protections, immunities and benefits given to the Collateral Agent hereunder, including without limitation its right to be compensated, reimbursed, and indemnified, and are extended to, and shall be enforceable by, each agent, custodian and other person employed to act on behalf of the Collateral Agent hereunder. The Collateral Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Collateral Agent deals with similar property for its own account. The Collateral Agent will not be responsible for filing any financing or continuation statements or recording any documents or instruments
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in any public office at any time or times or otherwise perfecting or maintaining the perfection of any Liens on the Collateral. Neither the Collateral Agent nor any other Secured Party nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The powers conferred on the Collateral Agent and the other Secured Parties hereunder are solely to protect the Collateral Agent’s and the other Secured Parties’ interests in the Collateral and shall not impose any duty upon the Collateral Agent or any other Secured Party to exercise any such powers. The Collateral Agent and the other Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct, as determined by a final and non-appealable judgment of a court of competent jurisdiction.
6.3. Execution of Financing Statements. Each Grantor authorizes the Collateral Agent to file or record financing statements and other filing or recording documents or instruments with respect to the Collateral without the signature of such Grantor in such form and in such offices as the Collateral Agent determines appropriate to perfect the security interests of the Collateral Agent under this Agreement.
6.4. Authority of the Collateral Agent. Each Grantor acknowledges that the rights and responsibilities of the Collateral Agent under this Agreement with respect to any action taken by the Collateral Agent or the exercise or non-exercise by the Collateral Agent of any request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Collateral Agent and the other Secured Parties, be governed by the Indenture and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Collateral Agent and the Grantors, the Collateral Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority.
6.5. Pari Passu Obligations. The Collateral Agent shall be permitted to rely on any certificate, direction or consent delivered by any Pari Passu Agent with respect to all matters relating to the Pari Passu Obligations.
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obligations are designated as Pari Passu Obligations for purposes hereof, (iii) representing that such designation of such obligations as Pari Passu Obligations complies with the terms of the Indenture and any Pari Passu Agreement and (iv) specifying the name and address of the Pari Passu Agent for such obligations and (b) a fully executed Pari Passu Joinder Agreement. Each Pari Passu Agent agrees that upon the satisfaction of all conditions set forth in the preceding sentence, the Collateral Agent shall act as agent under this Agreement for such Pari Passu Agent and the holders of such Pari Passu Obligations and as Collateral Agent for the benefit of all Secured Parties, including without limitation, any Secured Party that holds any such Pari Passu Obligations, and each Pari Passu Agent, for itself and the other holders of the applicable Pari Passu Obligations, agrees to the appointment, and acceptance of the appointment, of the Collateral Agent as agent for such Pari Passu Agent and the holders of such Pari Passu Obligations as set forth in each Pari Passu Joinder Agreement and agrees, on behalf of itself and each Secured Party it represents, to be bound by this Agreement and to be subject to, and, if requested, to become a party to, the Intercreditor Agreement.
(a) each Grantor jointly and severally agrees to pay or reimburse the Collateral Agent and the other Secured Parties for all their costs and expenses incurred in collecting against any Grantor under this Agreement or otherwise enforcing or preserving any rights under this Agreement and the other Security Documents, including, without limitation, the fees and disbursements of the Secured Parties’ counsel in accordance with the terms of the Indenture;
(b) each Grantor agrees to pay, and to save the Collateral Agent and the other Secured Parties harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, 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 Agreement and the other Security Documents;
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(c) each Grantor agrees to pay, and to save the Collateral Agent and the other Secured Parties harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement and the other Security Documents other than such as arise from the gross negligence or willful misconduct of such Person; and
(d) to the fullest extent permitted by applicable Law, no Grantor shall assert, and each Grantor hereby waives, any claim against the Collateral Agent and the other Secured Parties, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Security Document or any agreement or instrument contemplated hereby, or the transactions contemplated hereby or thereby. Neither the Collateral Agent nor any other Secured Party shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by the Collateral Agent or other Secured Party through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Security Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of the Collateral Agent or other Secured Party as determined by a final and non-appealable judgment of a court of competent jurisdiction.
The agreements in this Section 7.6 shall survive repayment of the Secured Obligations and all other amounts payable under the Indenture and the other Security Documents, the replacement of the Collateral Agent, the release of the Collateral from the Liens created hereby and the termination of this Agreement.
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7.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
7.14. Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Security Documents to which it is a party;
(b) neither the Collateral Agent nor any other Secured Party has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or any of the other Security Document, and the relationship between the Grantors, on the one hand, and the Collateral Agent and the other Secured Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Security Documents or otherwise exists by virtue of the transactions contemplated hereby among the Secured Parties or among the Grantors and the Secured Parties.
(a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive 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 Security 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
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determined in any such New York State court or, to the extent permitted by law, in such federal court. Each Grantor hereby irrevocably consents to the service of process in any action or proceeding in such courts by the mailing thereof by any parties hereto by registered or certified mail, postage prepaid, to the Issuer at its address specified pursuant to Section 12.02 of the Indenture. 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 any party may otherwise have to bring any action or proceeding relating to this Agreement or the other Security Documents in the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that 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 Security 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.
[Remainder of page intentionally left blank]
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| Grantors: | ||
| SEARS HOLDINGS CORPORATION | ||
| By: | /s/ Xxxxxxx X. Xxxxxx | |
| Name: Xxxxxxx X. Xxxxxx | ||
| Title: Senior Vice President, Controller and Chief | ||
| Accounting Officer | ||
| KMART CORPORATION | ||
| KMART HOLDING CORPORATION | ||
| KMART MANAGEMENT CORPORATION | ||
| SEARS HOLDINGS MANAGEMENT CORPORATION | ||
| SEARS, XXXXXXX AND CO., as Grantors | ||
| By: | /s/ Xxxxxxx X. Xxxxxx | |
| Name: Xxxxxxx X. Xxxxxx | ||
| Title: Senior Vice President and Controller | ||
| CALIFORNIA BUILDER APPLIANCES, INC. | ||
| FLORIDA BUILDER APPLIANCES, INC. | ||
| KLC, INC. | ||
| KMART OF MICHIGAN, INC. | ||
| LANDS’ END DIRECT MERCHANTS, INC. | ||
| LANDS’ END, INC. | ||
| PRIVATE BRANDS, LTD. | ||
| SEARS BRANDS MANAGEMENT CORPORATION | ||
| SEARS HOME IMPROVEMENT PRODUCTS, INC. | ||
| SEARS OUTLET STORES, L.L.C. | ||
| SEARS PROTECTION COMPANY | ||
| SEARS XXXXXXX ACCEPTANCE CORP. | ||
| SEARS, XXXXXXX DE PUERTO RICO, INC. | ||
| SOE, INC. | ||
| STARWEST, LLC, | ||
| as Grantors | ||
| By: | /s/ Xxxxxxx X. Xxxxxx | |
| Name: Xxxxxxx X. Xxxxxx | ||
| Title: Vice President |
| XXXXX.XXX LLC, as Grantor | ||
| By: | Xxxxxxxxx.xxx, Inc., its Member | |
| By: | /s/ Xxxxxxx X. Xxxxxx | |
| Name: Xxxxxxx X. Xxxxxx | ||
| Title: Vice President | ||
| KMART OF WASHINGTON LLC | ||
| KMART STORES OF ILLINOIS LLC | ||
| KMART STORES OF TEXAS LLC | ||
| MYGOFER LLC, as Grantors | ||
| By: | Kmart Corporation, its Member | |
| By: | /s/ Xxxxxxx X. Xxxxxx | |
| Name: Xxxxxxx X. Xxxxxx | ||
| Title: Senior Vice President and Controller | ||
| SEARS PROTECTION COMPANY (FLORIDA), L.L.C., as Grantor | ||
| By: | Sears Protection Company, its Member | |
| By: | /s/ Xxxxxxx X. Xxxxxx | |
| Name: Xxxxxxx X. Xxxxxx | ||
| Title: Vice President | ||
| A&E HOME DELIVERY, LLC | ||
| A&E LAWN & GARDEN, LLC | ||
| A&E SIGNATURE SERVICE, LLC | ||
| SEARS AUTHORIZED HOMETOWN STORES, LLC | ||
| SEARS HOME APPLIANCE SHOWROOMS, LLC, as Grantors | ||
| By: | Sears, Xxxxxxx and Co., its Member | |
| By: | /s/ Xxxxxxx X. Xxxxxx | |
| Name: Xxxxxxx X. Xxxxxx | ||
| Title: Senior Vice President and Controller |
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| Collateral Agent: | ||
| XXXXX FARGO BANK, NATIONAL ASSOCIATION | ||
| By: | /s/ Xxxxxxx X. Xxxxxx | |
| Name: Xxxxxxx X. Xxxxxx | ||
| Title: Vice President |
Schedule 1
GRANTORS AND NOTICE ADDRESSES OF GRANTORS
| Grantor | Notice Address | |
| Sears Xxxxxxx Acceptance Corp. | 0000 Xxxxxxx Xxxx Xxxxxxxxxx, XX 00000 | |
| Kmart Corporation | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Sears Holdings Corporation | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| A&E Home Delivery, LLC | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| A&E Lawn & Garden, LLC | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| A&E Signature Service, LLC | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| California Builder Appliances, Inc. | 0000 Xxxxx Xxxx Xx., Xxxxx 000 Xxxxxxx Xxxx, XX 00000 | |
| Florida Builder Appliances, Inc. | 0000 X. Xxxxxxxx Xxxx. Xxxxxxx Xxxxx, XX 00000 | |
| KLC, Inc. | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Kmart Holding Corporation | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Kmart Management Corporation | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Kmart of Michigan, Inc. | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Kmart of Washington LLC | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Kmart Stores of Illinois LLC | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Kmart Stores of Texas LLC | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Xxxxx.xxx LLC | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Lands’ End Direct Merchants, Inc. | 000 X. 00xx Xxxxxx Xxxxxxxxx, XX 00000 |
| Grantor | Notice Address | |
| Lands’ End, Inc. | 0 Xxxxx’ Xxx Xxxx Xxxxxxxxxx, XX 00000 | |
| MyGofer LLC | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Private Brands, Ltd. | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Sears Authorized Hometown Stores, LLC | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Sears Brands Management Corporation | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Sears Holdings Management Corporation | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Sears Home Appliance Showrooms, LLC | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Sears Home Improvement Products, Inc. | 0000 Xxxxxxx Xxxxxxx Xxxxxxx Xxxxxxxx, XX 00000 | |
| Sears Outlet Stores, L.L.C. | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Sears Protection Company | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Sears Protection Company (Florida), L.L.C. | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Sears, Xxxxxxx and Co. | 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx, XX 00000 | |
| Sears, Xxxxxxx de Puerto Rico, Inc. | Xxxxxxxxxxx Xxxx Xxxxxx-Xxxxx 0xx Xxx. 0000 Xxxxxxx Xxx Xxxxxxx Xxx Xxxx, XX 00000 | |
| SOE, Inc. | 000 Xxxxxxx Xxxxxx, Xxxxx X Xxx Xxxxx, XX 00000 | |
| StarWest, LLC | 0000 X. Xxxxxx Xxxx Xxxxx, XX 00000 |
Schedule 2
FILINGS
Uniform Commercial Code Filings
UCC-1 Financing Statements to be filed against the Grantors specified below with the Secretary of State of the jurisdictions set forth next to such Grantor’s name:
| Grantor | Jurisdiction | |
| Delaware | ||
| Kmart Corporation | Michigan, Puerto Rico and Guam | |
| Sears Holdings Corporation | Delaware | |
| A&E Home Delivery, LLC | Delaware | |
| A&E Lawn & Garden, LLC | Delaware | |
| A&E Signature Service, LLC | Delaware | |
| California Builder Appliances, Inc. | Delaware | |
| Florida Builder Appliances, Inc. | Delaware | |
| KLC, Inc. | Texas | |
| Kmart Holding Corporation | Delaware | |
| Kmart Management Corporation | Michigan | |
| Kmart of Michigan, Inc. | Michigan | |
| Kmart of Washington LLC | Washington | |
| Kmart Stores of Illinois LLC | Illinois | |
| Kmart Stores of Texas LLC | Texas | |
| Xxxxx.xxx LLC | Delaware | |
| Lands’ End Direct Merchants, Inc. | Delaware | |
| Lands’ End, Inc. | Delaware | |
| MyGofer LLC | Delaware | |
| Private Brands, Ltd. | West Virginia | |
| Sears Authorized Hometown Stores, LLC | Delaware and Puerto Rico | |
| Sears Brands Management Corporation | Delaware and Puerto Rico | |
| Sears Holdings Management Corporation | Delaware and Puerto Rico | |
| Sears Home Appliance Showrooms, LLC | Delaware | |
| Sears Home Improvement Products, Inc. | Pennsylvania |
| Sears Outlet Stores, L.L.C. | Delaware and Puerto Rico | |
| Sears Protection Company | Illinois | |
| Sears Protection Company (Florida), L.L.C. | Florida | |
| Sears, Xxxxxxx and Co. | New York, Puerto Rico and Guam | |
| Sears, Xxxxxxx de Puerto Rico, Inc. | Delaware and Puerto Rico | |
| SOE, Inc. | Delaware | |
| StarWest, LLC | Delaware |
Schedule 3
LOCATION OF JURISDICTION OF ORGANIZATION
| Grantor | Jurisdiction of Organization | Identification Number | ||
| Sears Xxxxxxx Acceptance Corp. | Delaware | 0506120 | ||
| Kmart Corporation | Michigan | 142467 | ||
| Sears Holdings Corporation | Delaware | 3881360 | ||
| A&E Home Delivery, LLC | Delaware | 3877029 | ||
| A&E Lawn & Garden, LLC | Delaware | 3748766 | ||
| A&E Signature Service, LLC | Delaware | 3748765 | ||
| California Builder Appliances, Inc. | Delaware | 2862479 | ||
| Florida Builder Appliances, Inc. | Delaware | 2143982 | ||
| KLC, Inc. | Texas | 1276656 | ||
| Kmart Holding Corporation | Delaware | 3648953 | ||
| Kmart Management Corporation | Michigan | 47792C | ||
| Kmart of Michigan, Inc. | Michigan | 33800A | ||
| Kmart of Washington LLC | Washington | 602292492 | ||
| Kmart Stores of Illinois LLC | Illinois | 00912026 | ||
| Kmart Stores of Texas LLC | Texas | 800200422 | ||
| Xxxxx.xxx LLC | Delaware | 3138594 | ||
| Lands’ End Direct Merchants, Inc. | Delaware | 2863159 | ||
| Lands’ End, Inc. | Delaware | 2099220 | ||
| MyGofer LLC | Delaware | 4631467 | ||
| Private Brands, Ltd. | Xxxx Xxxxxxxx | 000000 | ||
| Sears Authorized Hometown Stores, LLC | Delaware | 4516552 | ||
| Sears Brands Management Corporation | Delaware | 0617118 | ||
| Sears Holdings Management Corporation | Delaware | 4041132 | ||
| Sears Home Appliance Showrooms, LLC | Delaware | 4675850 | ||
| Sears Home Improvement Products, Inc. | Pennsylvania | 2204417 | ||
| Sears Outlet Stores, L.L.C. | Delaware | 4516559 | ||
| Sears Protection Company | Illinois | 61825622 | ||
| Sears Protection Company (Florida), L.L.C. | Florida | L03000020977 |
| Sears, Xxxxxxx and Co. | New York | NONE | ||
| Sears, Xxxxxxx de Puerto Rico, Inc. | Delaware | 0561919 | ||
| SOE, Inc. | Delaware | 3816328 | ||
| StarWest, LLC | Delaware | 3833707 |
EXHIBIT I
[Form of]
PARI PASSU JOINDER AGREEMENT
The undersigned is the [agent/trustee/representative] for Persons wishing to become “Secured Parties” (the “New Secured Parties”) under the Security Agreement, dated as of October 12, 2010 (as amended and/or supplemented, the “Security Agreement” (terms used without definition herein have the meanings assigned to such terms by the Security Agreement)) among Sears Holdings Corporation, the other Grantors party thereto and Xxxxx Fargo Bank, National Association, as Collateral Agent (the “Collateral Agent”) and the other Security Documents.
In consideration of the foregoing, the undersigned hereby:
(i) represents that the Pari Passu Agent has been authorized by the New Secured Parties to become a party to the Security Agreement on behalf of the New Secured Parties under that [DESCRIBE OPERATIVE AGREEMENT] (the obligations thereunder and under the ancillary documents referred to therein, the “New Secured Obligations”) and to act as the Pari Passu Agent for the New Secured Parties hereunder and under the Security Agreement;
(ii) acknowledges that the New Secured Parties have received a copy of the Security Agreement;
(iii) irrevocably appoints and authorizes the Collateral Agent to take such action as agent on its behalf and to exercise such powers under the Security Agreement and the other Security Documents as are delegated to the Collateral Agent by the terms thereof, together with all such powers as are reasonably incidental thereto; and
(iv) accepts and acknowledges, for itself and the other New Secured Parties, the terms of the Security Agreement applicable to it and the New Secured Parties and agrees to serve as Pari Passu Agent for the New Secured Parties with respect to the New Secured Obligations and agrees on its own behalf and on behalf of the New Secured Parties to be bound by the terms of the Security Agreement and the other Security Documents applicable to holders of Secured Obligations, with all the rights and obligations of a Secured Party thereunder and bound by all the provisions thereof as fully as if it had been a Secured Party on the effective date of the Security Agreement.
The name and address of the representative for purposes of Section 7.4 of the Security Agreement are as follows:
[name and address of Pari Passu Agent]
| [NAME] | ||
| By: |
| |
| Name: | ||
| Title: |
AGREED TO AND ACCEPTED:
The Collateral Agent hereby acknowledges its acceptance of this Pari Passu Joinder Agreement and agrees to act as Collateral Agent for the New Secured Parties, subject to the terms of the [agency agreement, dated as of ].
XXXXX FARGO BANK, NATIONAL ASSOCIATION, as Collateral Agent
| By: |
| |
| Name: | ||
| Title: |
EXHIBIT II
FORM OF ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT, dated as of [ , 20 ], made by [ ] (the “Additional Grantor”), in favor of XXXXX FARGO BANK, NATIONAL ASSOCIATION, as collateral agent (the “Collateral Agent”), for the benefit of the Secured Parties pursuant to the Security Agreement referred to below. All capitalized terms not defined herein shall have the meaning ascribed to them in such Security Agreement.
1. Security Agreement. By executing and delivering this Assumption Agreement, the Additional Grantor, as provided in Section 7.15 of the Security Agreement, hereby becomes a party to the Security Agreement as a Grantor thereunder with the same force and effect as if originally named therein as a Grantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Grantor thereunder, and grants to the Collateral Agent for the benefit of the Secured Parties a security interest in all Collateral of such Additional Grantor to secure the Secured Obligations. The information set forth in Annex 1-A hereto is hereby added to the information set forth in the Schedules to the Security Agreement. The Additional Grantor hereby represents and warrants that each of the representations and warranties contained in Section 3 of the Security Agreement is, as to such Additional Grantor, true and correct on and as of the date hereof (after giving effect to this Assumption Agreement) as if made on and as of such date.
2. Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
[Remainder of Page intentionally left blank]
| [ADDITIONAL GRANTOR] | ||
| By: |
| |
| Name: | ||
| Title: |
Annex 1-A to
Assumption Agreement
Supplement to Schedule 1
Supplement to Schedule 2
Supplement to Schedule 3