Exhibit 10.2
SECOND AMENDED AND RESTATED SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED SECURITY AGREEMENT (this "Security
Agreement"), dated as of September 7, 2004, is by and between XXXXXXXX'X INC.
(the "Grantor") and BANK OF AMERICA, N.A., in its capacity as Collateral Agent
under and as defined in the Credit Agreement (defined below).
RECITALS
WHEREAS, the Grantor, certain subsidiaries of the Grantor, Bank of
America, N.A., as administrative agent, and certain lenders were parties to
that certain Amended and Restated Credit Agreement, dated as of August 28,
2002 (as such agreement has been amended or otherwise modified, the "Existing
Credit Agreement"). Pursuant to the Existing Credit Agreement, the Grantor
entered into an Amended and Restated Security Agreement dated as of August 28,
2002 (the "Existing Security Agreement").
WHEREAS, as of the date hereof the Grantor, each of the other Credit
Parties, the Collateral Agent, and the lenders party thereto are entering into
the certain Second Amended and Restated Credit Agreement (the "Credit
Agreement"), which amends and restates the Existing Credit Agreement in its
entirety.
WHEREAS, in order to induce the Collateral Agent, the other Agents,
and the Lenders to enter into the Credit Agreement and the Credit Documents
and to make Loans and issue Letters of Credit as provided for in the Credit
Agreement, the Grantor has agreed to grant a continuing Lien on the Collateral
to secure the Total Obligations and wishes to amend and restate the Existing
Security Agreement as hereinafter set forth.
NOW, THEREFORE, in consideration of these premises and mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to such terms in the Credit
Agreement. In addition, the following terms shall have the following meanings:
"Account" means accounts, as defined in the UCC, and any
other rights to payment for the sale or lease of goods or rendition
of services or arising out of the use of a credit or charge card or
information contained on or for use with the card, whether or not
they have been earned by performance and "Accounts" means all of the
foregoing.
"Blocked Account Agreement" means any agreement among the
Grantor, the Collateral Agent, and a Clearing Bank concerning
collection of payments representing proceeds from Accounts or other
Collateral, in form and substance satisfactory to the Collateral
Agent.
"Chattel Paper" has the meaning specified in the UCC,
including, without limitation, Electronic Chattel Paper.
"Clearing Bank" means Bank of America, N.A., or any other
banking institution reasonably acceptable to the Collateral Agent,
with which a Payment Account has been established pursuant to a
Blocked Account Agreement.
"Commercial Tort Claims" has the meaning specified in the
UCC.
"Contracts" means all of the Grantor's now owned and
hereafter acquired loan agreements, sales agreements, installment
sale contracts, Instruments, notes, Documents, Chattel Paper, and all
other forms of obligations owing to the Grantor and any collateral
for any of the foregoing, including all rights under any and all
security agreements and merchandise returned to or repossessed by the
Grantor; provided that "Contracts" shall not include contract rights
the grant of a security interest in which would violate the contract
under which such rights arise except to the extent provided under
Section 9-406(d) of the UCC.
"Copyright License" means any agreements, whether written or
oral, providing for the grant by or to a Grantor of any right under
any Copyright including, without limitation, any thereof referred to
in Schedule 1.1(a) hereto.
"Copyright Security Agreement" means any Copyright Security
Agreement executed and delivered by the Grantor to the Collateral
Agent, for the benefit of the Agents and the Lenders, to evidence and
perfect the Collateral Agent's Liens in the Grantor's present and
future Copyrights, Copyright Licenses, and related rights, as such
agreement may be amended, restated or otherwise modified from time to
time.
"Copyrights" means (a) all registered United States
copyrights in all Works, now existing or hereafter created or
acquired, all registrations and recordings thereof, and all
applications in connection therewith, including, without limitation,
registrations, recordings and applications in the United States
Copyright office including, without limitation, any thereof referred
to in Schedule 1.1(a) hereto, and (b) all renewals thereof including,
without limitation, any thereof referred to in Schedule 1.1(a)
hereto.
"Deposit Accounts" has the meaning specified in the UCC.
"Documents" means any documents, as defined in the UCC, and
any other bills of lading, warehouse receipts, or other documents of
title.
"Electronic Chattel Paper" has the meaning specified in the
UCC.
"Equipment" means any equipment, as defined in the UCC, and
any other machinery, equipment, furniture, furnishings, fixtures, and
any other tangible personal property (except Inventory), including,
without limitation, embedded software, motor vehicles and other
rolling stock with respect to which a certificate of title has been
issued, aircraft, dies, tools, jigs, molds, and office equipment, as
well as any of such types of property leased by a Person and any of
such Person's rights and interests with respect thereto under such
leases (including, without limitation, options to purchase), together
with any present and future additions and accessions thereto,
replacements therefor, component and auxiliary parts and supplies
used or to be used in connection therewith, and all substitutes for
any of the foregoing, and all manuals, drawings, instructions,
warranties, and rights with respect thereto.
"Event of Default" means the occurrence of an Event of
Default under the Credit Agreement.
"Existing Credit Agreement" has the meaning specified in the
Recitals hereto.
"Existing Security Agreement" has the meaning specified in
the Recitals hereto.
"Farm Products" has the meaning specified in the UCC.
"Fixtures" has the meaning specified in the UCC.
"General Intangibles" means general intangibles, as defined
in the UCC, choses in action and causes of action, and any other
intangible personal property of every kind and nature (other than
Accounts), including, without limitation, all rights under Merchant
Accounts and Merchant Account Agreements, contract rights, Payment
Intangibles, Proprietary Rights, corporate or other business records,
inventions, designs, blueprints, plans, specifications, trade
secrets, goodwill, computer software, customer lists, registrations,
licenses, franchises, tax refund claims, funds which may become due
to a Person in connection with the termination of any Plan or other
employee benefit plan or any rights thereto and any other amounts
payable to a Person from any Plan or other employee benefit plan,
rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds
thereof, property, casualty or any similar type of insurance and any
proceeds thereof, proceeds of insurance covering the lives of key
employees on which a Person is beneficiary, rights to receive
dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged equity interests or Investment
Property, and any letter of credit, guarantee, claim, security
interest or other security held by or granted to a Person.
"Goods" means any goods, as defined in the UCC, embedded
software to the extent included in goods, manufactured homes,
standing timber that is cut and removed for sale, and unborn young of
animals.
"Intercompany Accounts" means all assets and liabilities,
however arising, which are due to the Grantor from, or are due from
the Grantor to, any Affiliate of the Grantor.
"Instruments" has the meaning specified in the UCC.
"Inventory" means inventory, as defined in the UCC, goods,
merchandise to be furnished under any contract of service or held for
sale or lease, including, without limitation, any such inventory,
goods, or merchandise which has been delivered to and is in the
possession or control of another Person as a representative, agent,
warehouseman, consignee, or bailee, all returned goods, raw
materials, work-in-process, finished goods (including embedded
software), other materials and supplies of any kind, nature, or
description which are used or consumed in a Person's business or used
in connection with the packing, shipping, advertising, selling, or
finishing of such goods, merchandise, or other property and all
documents of title or other Documents representing them.
"Investment Property" means any investment property, as
defined in the UCC, and all (a) securities, whether certificated or
uncertificated, (b) securities entitlements, (c) securities accounts,
(d) commodity contracts, and (e) commodity accounts, together with
all other units, shares, partnership interests, membership interests,
equity interests, rights, or other equivalent evidences of ownership
(howsoever designated) issued by any person. With respect to the
Grantor, the term "Investment Property" also includes, without
limitation, all Capital Stock of any Affiliate at any time owned by
the Grantor.
Letter-of-Credit Rights" means letter-of-credit rights, as
defined in the UCC, and any rights to payment or performance under a
letter of credit, whether or not the beneficiary has demanded or is
entitled to demand payment or performance.
"Patent License" means any agreements, whether written or
oral, providing for the grant by or to the Grantor of any right to
manufacture, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in Schedule
1.1(a) hereto.
"Patent Security Agreement" means any Patent Security
Agreement executed and delivered by the Grantor to the Collateral
Agent, for the benefit of the Agents and the Lenders, to evidence and
perfect the Collateral Agent's Liens in the Grantor's present and
future Patents, Patent Licenses, and related rights, as such
agreement may be amended, restated or otherwise modified from time to
time.
"Patents" means (a) all letters patent of the United States
or any other country and all reissues and extensions thereof,
including, without limitation, any thereof referred to in Schedule
1.1(a) hereto, and (b) all applications for letters patent of the
United States or any other country and all divisions, continuations
and continuations-in-part thereof, including, without limitation, any
thereof referred to in Schedule 1.1(a) hereto.
"Payment Account" means any bank account established
pursuant to this Security Agreement, into which funds of the Grantor
(including proceeds of Accounts, Chattel Paper, General Intangibles,
and other Collateral) are deposited or credited in accordance with
the provisions of Section 2.3(e) hereof, and which is maintained in
the name of the Collateral Agent, the Grantor, or any of them, as the
Collateral Agent may determine, on terms acceptable to Collateral
Agent.
"Payment Intangibles" has the meaning specified in the UCC.
"Proceeds" has the meaning specified in the UCC.
"Proprietary Rights" means any licenses, franchises,
permits, Patents, Patent Licenses, patent rights, Copyrights, Works,
Copyright Licenses, Trademarks, Trademark Licenses, and any licenses
and rights related to any of the foregoing, including, with respect
to the Grantor, those Patents, Trademarks, and Copyrights set forth
on Schedule 1.1(a) hereto as owned by the Grantor, and all other
rights under any of the foregoing, all extensions, renewals,
reissues, divisions, continuations, and continuations-in-part of any
of the foregoing, and all rights to xxx for past, present, and future
infringement of any of the foregoing.
"Real Estate" means, with respect to any Person, all of such
Person's now or hereafter owned or leased estates in real property,
including, without limitation, all fees, leaseholds, and future
interests, together with all of such Person's now or hereafter owned
or leased interests in the improvements thereon, the fixtures
attached thereto, and the easements appurtenant thereto.
"Secured Obligations" means, collectively, all indebtedness,
liabilities and obligations (including indemnities, payment of fees,
recovery of expenses and costs of enforcement and collection) of the
Credit Parties under the Credit Agreement and other Credit Documents
(including, interest accruing after the occurrence of a Bankruptcy
Event, regardless of whether such interest is an allowed claim under
the Bankruptcy Code). "Secured Obligations" includes the Total
Obligations and the prompt payment and performance of the guaranty
obligations of the Guarantors under the Guaranty Agreement howsoever
created, evidenced, incurred or acquired, whether primary, secondary,
direct, contingent, or joint and several.
"Software" means any software, as defined in the UCC, other
than software embedded in any category of Goods, and any computer
programs and any supporting information provided in connection with a
transaction related to any computer program.
"Supporting Obligations" means any supporting obligations,
as defined in the UCC, including Letters of Credit and guaranties
issued in support of Accounts, Chattel Paper, Documents, General
Intangibles, Instruments, or Investment Property.
"Trademark License" means any agreement, written or oral,
providing for the grant by or to the Grantor of any right to use any
Trademark, including, without limitation, any thereof referred to in
Schedule 1.1(a) hereto.
"Trademark Security Agreement" means any Trademark Security
Agreement executed and delivered by the Grantor to the Collateral
Agent, for the benefit of the Agents and the Lenders, to evidence and
perfect the Collateral Agent's Liens in the Grantor's present and
future Trademarks, Trademark Licenses, and related rights, as such
agreement may be amended, restated or otherwise modified from time to
time.
"Trademarks" means (a) all trademarks, with the sole
exception of any pending trademark applications which have been filed
with the United States Patent and Trademark Office on an "Intent to
Use" basis, trade names, corporate names, company names, business
names, fictitious business names, trade styles, service marks, logos
and other source or business identifiers, and the goodwill associated
therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country or any political
subdivision thereof, or otherwise, including, without limitation, any
thereof referred to in Schedule 1.1(a) hereto, and (b) all renewals
thereof.
"United States" means the United States of America.
"Work" means any work which is subject to copyright
protection pursuant to Title 17 of the United States Code.
ARTICLE 2
GRANT OF SECURITY INTEREST
Section 2.1 Grant of Security Interest in the Collateral. To secure
the prompt payment and performance in full when due, whether by lapse of time,
acceleration or otherwise, of the Secured Obligations, the Grantor hereby
grants to the Collateral Agent, for the benefit of the Agents and the Lenders,
a continuing security interest in, lien on, pledge of, collateral assignment
of, and a right to set-off against, any and all right, title and interest of
the Grantor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter:
(a) all Accounts, including all credit enhancements
therefor;
(b) all money, cash, Cash Equivalents, securities, and other
property of any kind held directly or indirectly by any Agent or any
Lender;
(c) all Chattel Paper;
(d) all Contracts;
(e) all Deposit Accounts, credits, and balances with and
other claims against any Agent or any Lender or any of their
Affiliates or any other financial institution with which the Grantor
maintains deposits, including any Payment Accounts;
(f) all Documents;
(g) all Equipment;
(h) all Fixtures;
(i) all General Intangibles (including, without limitation,
Payment Intangibles, Intercompany Accounts, and Software);
(j) all Instruments;
(k) all Inventory;
(l) all Investment Property; provided that with respect to
any Voting Stock of any Foreign Subsidiary (the "more than (50.0%)"
ownership test for the definition of a Foreign Subsidiary to be based
solely upon the direct ownership by Grantor without regard to any
indirect ownership attributable to Grantor) other than Cougar, the
amount of such Voting Stock of such Foreign Subsidiary (the "more
than (50.0%)" ownership test for the definition of a Foreign
Subsidiary to be based solely upon the direct ownership by Grantor
without regard to any indirect ownership attributable to Grantor)
included in the Collateral shall be limited to the maximum amount
thereof that is less than or equal to 65% of the issued and
outstanding Voting Stock of such Foreign Subsidiary; provided further
that with respect to the Voting Stock of Cougar, the pledge and
security interest granted herein shall attach only upon approval of
the pledge by the Financial Services Commission of the Turks and
Caicos Islands, British West Indies;
(m) all Supporting Obligations and Letter-of-Credit Rights;
(n) all Goods;
(o) all Commercial Tort Claims from time to time disclosed
to the Collateral Agent pursuant to Sections 2.4(j) and 2.5(m);
(p) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks, and related data processing software
(owned by the Grantor or in which it has an interest) that at any
time evidence or contain information relating to any Collateral or
are otherwise necessary or helpful in the collection thereof or
realization thereupon;
(q) all accessions to, substitutions for, and replacements
and products of any of the foregoing; and
(r) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing, including, but not limited
to, proceeds of any insurance policies, claims against third parties,
and condemnation or requisition payments with respect to all or any
of the foregoing.
All of the foregoing, together with the Real Estate covered by each
Mortgage (if any), all equity interests in Subsidiaries pledged to
the Collateral Agent and all other property of the Grantor in which
the any Agent or any Lender may at any time be granted a Lien as
collateral for the Secured Obligations, is herein collectively
referred to as the "Collateral".
Section 2.2 Security for Secured Obligations. The Grantor hereby
acknowledges and agrees that the security interest created hereby in the
Collateral (i) constitutes continuing collateral security for all of the
Secured Obligations, whether now existing or hereafter arising (and to the
extent that the Collateral was also Collateral under the Existing Security
Agreement confirms and continues its prior granted security interest, pledge,
and assignment provided for in the Existing Security Agreement) and (ii) is
not to be construed as an assignment of any Copyrights, Copyright Licenses,
Patents, Patent Licenses, Trademarks, or Trademark Licenses.
Section 2.3 Special Provisions.
(a) General Nature of Interest. Anything herein to the
contrary notwithstanding, the Grantor shall remain liable under each
of the Accounts, Chattel Paper, Contracts, and General Intangibles to
observe and perform all the conditions and obligations to be observed
and performed by it thereunder, all in accordance with the terms of
any agreement giving rise thereto. Neither any Agent nor any Lender
shall have any obligation or liability under any Accounts, Chattel
Paper, Contracts, or General Intangibles (or any agreement giving
rise thereto) by reason of or arising out of this Security Agreement
or the receipt by any Agent or any Lender of any payment relating
thereto, nor shall any Agent or any Lender be obligated in any manner
to perform any of the obligations of the Grantor under or pursuant to
any Account , Chattel Paper, Contract, or General Intangible (or any
agreement giving rise thereto), to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received
by it or as to the sufficiency of any performance by any party
thereunder (or any agreement giving rise thereto), to present or file
any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it
or to which it may be entitled at any time or times.
(b) Field Audits and Inspections. The Collateral Agent
shall, at the Borrowers' expense, accompanied by any other Agent or
Lender which so elects with the consent of the Collateral Agent, have
the right to directly, or through the engagement of such independent
public accountants, agents and advisors as it may deem advisable or
appropriate, make periodic inspections and conduct periodic field
audits, including test verifications, of the Accounts, Chattel Paper,
Contracts, General Intangibles, and other Collateral, in such manner
as it may deem advisable or appropriate (i) whenever any Default or
Event of Default exists and (ii) at such other times as the
Collateral Agent may request, but not more frequently than once every
Fiscal Quarter. The Collateral Agent may communicate with account
debtors, in it own name or in the name of the account creditor, for
purposes of verifying Accounts, Chattel Paper, Contracts, or General
Intangibles. The Grantor will provide access to its books and
records, its facilities and its officers, employees and agents and
will cooperate with and accommodate reasonable requests in connection
with such inspections and field audits as provided in the Credit
Agreement. The cost of inspections and field audits shall include,
without limitation, in the case of inspections and field audits
conducted by employees of the Collateral Agent, a fee of $850 per day
per auditor (subject to change) and out-of-pocket expenses.
(c) Appraisals. The Collateral Agent may, at the Borrowers'
expense, conduct periodic appraisals of the Collateral in such manner
as it may deem advisable or appropriate, including, without
limitation, to determine Net Orderly Liquidation Value and Appraisal
Value (i) whenever any Default or Event of Default exists and (ii) at
such other times as the Collateral Agent may request, but not more
frequently than once every Fiscal Quarter. The Collateral Agent,
accompanied by any other Agent or Lender which so elects with the
consent of the Collateral Agent, may conduct such appraisals directly
or may engage independent appraisers as it may deem advisable or
appropriate. The Grantor will provide access to its books and
records, its facilities and its officers, employees, and agents and
will cooperate with and accommodate reasonable requests in connection
with such appraisal inspections as provided in the Credit Agreement.
(d) Legend. The Grantor represents and warrants that it is
in compliance with the legend requirements of the Existing Security
Agreement with respect to all Documents, Instruments, Chattel Paper
and installment sales agreements existing as of the close of business
on the Business Day immediately preceding the Closing Date. The
Grantor will print or otherwise affix a legend prominently on the
face of its Documents, Instruments, Chattel Paper, and installment
sales agreements, in each case providing notice of the security
interest therein provided hereunder. The legend shall be in form and
substance satisfactory to the Collateral Agent, but in the absence of
special instructions, may read as follows:
"THIS WRITING AND THE OBLIGATIONS EVIDENCED OR SERVED HEREBY ARE
SUBJECT TO THE SECURITY INTEREST OF BANK OF AMERICA, N.A., AS THE
COLLATERAL AGENT (THE "COLLATERAL AGENT"), FOR THE BENEFIT OF THE
COLLATERAL AGENT, THE OTHER AGENTS, AND THE LENDERS PURSUANT TO THAT
CERTAIN SECOND AMENDED AND RESTATED SECURITY AGREEMENT DATED AS OF
SEPTEMBER 7, 2004 BETWEEN XXXXXXXX'X INC., A DELAWARE CORPORATION,
AND THE COLLATERAL AGENT, AMONG OTHERS."
(e) Establishment of Payment Accounts.
(i) Until the Collateral Agent notifies the Grantor
to the contrary, the Grantor shall make collection of all of
its Accounts, Chattel Paper, General Intangibles, and other
Collateral for the Collateral Agent, shall receive all
payments as the Collateral Agent's trustee, and shall
immediately deliver all payments in their original form duly
endorsed in blank into one of the deposit accounts
identified on Schedule 6.22 to the Credit Agreement or any
other deposit account of the Grantor, acceptable to the
Collateral Agent, which has previously been disclosed to the
Collateral Agent in writing by the Grantor, and thereafter
cause all funds deposited in such deposit accounts to be
immediately delivered to a Payment Account established for
the account of one or more of the Borrowers at a Clearing
Bank acceptable to the Collateral Agent, subject to a
Blocked Account Agreement. If the Collateral Agent requests,
the Grantor shall establish a lock-box service for
collections of Accounts at a Clearing Bank acceptable to the
Collateral Agent and subject to a Blocked Account Agreement
and other documentation acceptable to the Collateral Agent.
If such lock-box service is established, the Grantor shall
instruct all account debtors to make all payments directly
to the address established for such service. If,
notwithstanding such instructions, the Grantor receives any
proceeds of Accounts and Payment Intangibles, it shall
receive such payments as the Collateral Agent's trustee, and
shall immediately deliver such payments to the Collateral
Agent in their original form duly endorsed in blank or
deposit them into a Payment Account, as the Collateral Agent
may direct. All collections received in any lock-box or
Payment Account or directly by the Grantor or the Collateral
Agent, and all funds in any Payment Account or other account
to which such collections are deposited shall be subject to
the Collateral Agent's sole control and withdrawals by the
Grantor shall not be permitted. During the existence of an
Event of Default, the Grantor, at the Collateral Agent's
request, shall execute and deliver to the Collateral Agent
such documents as the Collateral Agent shall require to
grant the Collateral Agent access to any post office box in
which collections of Accounts are received.
(ii) If sales of Inventory are made or services are
rendered by the Grantor for cash or credit card, the Grantor
shall immediately deliver, or cause to be delivered to the
Collateral Agent or deposit into a Payment Account, all cash
which the Grantor receives or is entitled to receive in
connection with such sale.
(iii) All payments, including immediately available
funds received by the Collateral Agent at a bank designated
by it, whether or not received by the Collateral Agent on
account of Accounts, Chattel Paper, Contracts, General
Intangibles, Payment Intangibles, or as proceeds of other
Collateral will be under the sole dominion and control of
the Collateral Agent for its benefit and the benefit of the
Agents and the Lenders and will be credited to the
outstanding Total Obligations of the Borrowers (conditional
upon final collection) in accordance with the Credit
Agreement on the same day received (if received prior to
2:00 p.m. Pasadena, California time), otherwise on the next
Business Day.
(iv) In the event the Grantor repays all of the
Secured Obligations upon the termination of this Security
Agreement or upon acceleration of the Secured Obligations,
other than through the Collateral Agent's receipt of
payments on account of the Accounts and Payment Intangibles
or proceeds of the other Collateral, such payment will be
credited (conditional upon final collection) to the
Grantor's account upon the Collateral Agent's receipt of
immediately available funds.
(f) Inventory. The Grantor will maintain a perpetual
inventory reporting system at all times and will conduct a physical
count of its Inventory as set forth in the Credit Agreement, and
during the existence of an Event of Default, at such other times as
the Collateral Agent may reasonably request. During the existence of
an Event of Default, the Grantor will, upon the Collateral Agent's
request, promptly instruct all suppliers, carriers, forwarders,
custom brokers, warehouses, or others receiving or holding cash,
checks, Inventory, Documents, or Instruments in which the Collateral
Agent holds a Lien to deliver such Collateral to the Collateral Agent
and/or subject to the Collateral Agent's order, and if any such
Collateral shall come into the Grantor's possession, to deliver such
Collateral, upon the Collateral Agent's request, to the Collateral
Agent in its original form. The Grantor shall also, at the Collateral
Agent's request, during the existence of an Event of Default,
designate the Collateral Agent as the consignee on all bills of
lading and other negotiable and non-negotiable documents.
(g) Consigned Inventory. The Grantor will keep and maintain
complete and accurate books and records identifying all Inventory
held on consignment, all sales thereof, identification of the
consignor thereof, a true and complete copy of the consignment
agreement between the Grantor and such consignor in respect thereof,
and accounts payable by the Grantor to such consignor in respect
thereof. The Grantor agrees that it will not grant to any such
consignor any interest in proceeds (including cash proceeds,
Accounts, Instruments, Chattel Paper, or Contracts constituting
proceeds) of any such consigned inventory.
Section 2.4 Representations and Warranties. The Grantor hereby
represents and warrants to the Collateral Agent, for the benefit of the Agents
and the Lenders, that as of the Closing Date:
(a) Chief Executive Office; Books & Records. The chief
executive office and chief place of business of the Grantor is (and
for the prior four months has been) located at the location set forth
on Schedule 2.4(a) hereto, and the Grantor keeps its books and
records at such locations.
(b) Location of Collateral. The location of all Collateral
owned by the Grantor is as shown on Schedule 2.4(b) hereto.
(c) Ownership. It is the legal and beneficial owner of its
Collateral and has the right to pledge, sell, assign, or transfer the
same free and clear of all Liens whatsoever, except for Permitted
Liens. There exists no "adverse claim" within the meaning of Section
8-302 of the UCC with respect to the Capital Stock and other
Investment Property owned by the Grantor.
(d) Jurisdiction of Ownership; Prior Names; Tradenames.
Schedule 2.4(d) attached hereto correctly identifies the Grantor's
legal name as of the date hereof as it appears in official filings in
the jurisdiction of its incorporation or other organization, the type
of entity of the Grantor, the employer or taxpayer identification
number of the Grantor, the organizational identification number
issued by the Grantor's jurisdiction of incorporation or organization
or a statement that no such number has been issued, and the
jurisdiction in which the Grantor is incorporated or organized. The
Grantor has only one jurisdiction of incorporation or organization.
The Grantor has not in the past four months changed its name, been
party to a merger, consolidation or other change in structure or used
any tradename except as set forth in Schedule 2.4(d) attached hereto.
(e) Security Interest/Priority. This Security Agreement
creates a valid security interest in favor of the Collateral Agent,
for the benefit of the Agents and the Lenders, in the Collateral of
the Grantor and, when properly perfected by filing, shall constitute
a valid perfected security interest in such Collateral, to the extent
such security interests can be perfected by filing under the UCC,
free and clear of all Liens except for Permitted Liens.
(f) Farm Products. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
(g) Accounts, Chattel Paper. (i) Each Account and Chattel
Paper of the Grantor and the papers and documents relating thereto
are genuine and in all material respects what they purport to be,
(ii) each Account and Chattel Paper arises out of, and each future
Account and Chattel Paper will represent, a bona fide sale or lease
and delivery of goods by the Grantor, or rendition of services by the
Grantor, in the ordinary course of business, and (iii) no surety bond
was required or given in connection with any Account or Chattel Paper
of the Grantor or the contracts or purchase orders out of which they
arose.
(h) Inventory. All Inventory produced by the Grantor in the
United States has been produced in accordance with the Federal Fair
Labor Standards Act of 1938, as amended, and all rules, regulations
and orders promulgated thereunder.
(i) Copyrights, Patents and Trademarks.
(i) Schedule 1.1(a) hereto includes all Copyrights,
Copyright Licenses, Patents, Patent Licenses, Trademarks,
and Trademark Licenses owned by the Grantor in its own name
as of the date hereof.
(ii) To the best of the Grantor's knowledge, each
material Copyright, Patent and Trademark of the Grantor is
valid, subsisting, unexpired, enforceable and has not been
abandoned.
(iii) Except as set forth in Schedule 1.1(a)
hereto, no material Copyright, Patent or Trademark is the
subject of any licensing or franchise agreement.
(iv) To the best of the Grantor's knowledge, no
holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question
the validity of any material Copyright, Patent, or
Trademark.
(v) To the best of the Grantor's knowledge, no
action or proceeding is pending seeking to limit, cancel or
question the validity of any material Copyright, Patent or
Trademark, or which, if adversely determined, would have a
Material Adverse Effect on the value of any material
Copyright, Patent or Trademark.
(vi) All applications in the United States
pertaining to the material Copyrights, Patents, and
Trademarks of the Grantor have been duly and properly filed,
and all registrations or letters in the United States
pertaining to such Copyrights, Patents, and Trademarks have
been duly and properly filed and issued, and all of such
Copyrights, Patents, and Trademarks are valid and
enforceable.
(vii) The Grantor has not made any assignment or
agreement in conflict with the security interest in the
Copyrights, Patents, or Trademarks of the Grantor hereunder.
(j) Commercial Tort Claims. Schedule 2.4(j) attached hereto
is a complete list of the commercial tort claims owned by the
Grantor.
(k) Exercising of Rights. The exercise by the Collateral
Agent of its rights and remedies hereunder will not violate any
Requirement of Law or Contractual Obligation of the Grantor.
(l) No Other Shares. The Grantor owns no Capital Stock other
than as set forth on Schedule 1.1B or Schedule 6.14 of the Credit
Agreement.
Section 2.5 Covenants. The Grantor covenants that, so long as any of
the Secured Obligations remain outstanding and until this Security Agreement
shall have been terminated, the Grantor shall:
(a) Other Liens. Defend the Collateral against the claims
and demands of all other parties claiming an interest therein, keep
the Collateral free from all Liens, except for Permitted Liens, and
not sell, exchange, transfer, assign, lease, or otherwise dispose of
the Collateral or any interest therein, except as permitted under the
Credit Agreement.
(b) Preservation of Collateral. Keep the Collateral in good
order, condition and repair, ordinary wear and tear excepted, and not
use the Collateral in violation of the provisions of this Security
Agreement or any other agreement relating to the Collateral or any
policy insuring the Collateral or any applicable statute, law, bylaw,
rule, regulation, or ordinance.
(c) Instruments/Chattel Paper. Promptly upon demand, the
Grantor shall deliver to the Collateral Agent all Collateral
consisting of negotiable Documents, certificated securities
(accompanied by stock powers executed in blank), and Instruments
promptly after the Grantor receives the same properly endorsed to the
Collateral Agent in form and substance satisfactory to it. During the
existence of an Event of Default, upon the request of the Collateral
Agent, the Grantor shall deliver to the Collateral Agent all
Collateral consisting of Chattel Paper promptly after the Grantor
receives the same properly endorsed to the Collateral Agent in form
and substance satisfactory to it, promptly upon demand. If the
Grantor retains possession of any Documents, Instruments, or Chattel
Paper with the Collateral Agent's consent or pursuant to the terms
hereof, such Documents, Instruments, or Chattel Paper shall bear a
legend substantially in the form set forth in Section 2.3(d) hereof.
(d) Change in Location. Not, without providing 10 days prior
written notice to the Collateral Agent and without filing such
amendments to any previously filed financing statements as the
Collateral Agent may require, (a) change the location of its chief
executive office and chief place of business (as well as its books
and records) from the locations set forth on Schedule 2.4(a) hereto,
(b) except in connection with the opening, acquisition, or relocation
of a retail store in accordance with Section 8.18 of the Credit
Agreement, change the location of its Collateral from the locations
set forth for the Grantor on Schedule 2.4(b) hereto, or (c) change
its name, be party to a merger, consolidation or other change in
structure or use any tradename other than as set forth on Schedule
2.4(d) attached hereto.
(e) Change in Jurisdiction or Type of Entity. Not, except as
provided in the Credit Agreement, reincorporate or reorganize itself
under the laws of any jurisdiction or change its type of entity
identified on Schedule 2.4(d) hereto without the prior written
consent of the Collateral Agent.
(f) Perfection of Security Interest. Execute, deliver,
and/or file and record such agreements, assignments or instruments
(including affidavits, notices, reaffirmations and amendments and
restatements of existing documents, as the Collateral Agent may
reasonably request) and do all such other things as the Collateral
Agent may reasonably deem necessary or appropriate (i) to assure to
the Collateral Agent its security interests hereunder, including,
without limitation, (A) with regard to Copyrights and Copyright
Licenses, a Copyright Security Agreement, (B) with regard to Patents
and Patent Licenses, a Patent Security Agreement, and (C) with regard
to Trademarks and Trademark Licenses, a Trademark Security Agreement,
and (D) with regard to Real Estate, a Mortgage, (ii) to consummate
the transactions contemplated hereby, and (iii) to otherwise protect
and assure the Collateral Agent of its rights and interests
hereunder. To that end, the Grantor hereby irrevocably authorizes the
Collateral Agent at any time and from time to time to file in any
filing office any financing statements and amendments thereto that
(y) indicate the Collateral (1) as "all assets" or "all personal
property" of the Grantor, or words of similar effect, regardless of
whether any particular asset comprised in the Collateral falls within
the scope of Article 9 of the UCC, or (2) as being of an equal or
lesser scope or with greater detail, and (z) contain any other
information required by Part 5 of Article 9 of the UCC for the
sufficiency or filing office acceptance of any financing statement or
amendment, including (1) whether the Grantor is an organization, the
type of organization, any organization identification number issued
to the Grantor, and any employer or taxpayer identification number
issued to the Grantor, and (2) in the case of a financing statement
filed as a fixture filing or indicating any Collateral as
as-extracted collateral or timber to be cut, a sufficient description
of real property to which such Collateral relates. The Grantor agrees
to furnish any such information to the Collateral Agent promptly upon
request. The Grantor also ratifies its authorization for the
Collateral Agent or any of the other Agents to file any like
financing statements or amendments thereto if filed prior to the date
hereof, whether in connection with the security interests granted
pursuant to this Security Agreement or the Existing Security
Agreement, as applicable. The Grantor hereby agrees that a carbon,
photographic, photostatic, or other reproduction of this Security
Agreement or of a financing statement is sufficient for filing as a
financing statement by the Collateral Agent without notice thereof to
the Grantor wherever the Collateral Agent may in its sole discretion
desire to file the same. To the extent, if any, that the Grantor's
authorization given in this subsection (f) is not sufficient, and
without otherwise limiting such authorization, to file such financing
statements with respect to this Security Agreement, with or without
the Grantor's signature, or to file a photocopy of this Security
Agreement in substitution for a financing statement, as the
Collateral Agent may deem appropriate and to execute in the Grantor's
name such financing statements and amendments thereto and
continuation statements which may require the Grantor's signature. If
any Collateral is in the possession or control of the Grantor's agent
and the Collateral Agent so requests, the Grantor agrees to notify
such agent in writing of the Collateral Agent's security interest
therein and, upon the Collateral Agent's request, instruct them to
hold all such Collateral for the Agents' and the Lenders' account and
subject to the Collateral Agent's instructions. The Grantor agrees to
xxxx its books and records to reflect the security interest of the
Collateral Agent in the Collateral. The Grantor acknowledges that it
is not authorized to file any financing statement or amendment or
release or partial release or termination statement or with respect
to any financing statement filed by any Agent or any Lender in
connection with the Existing Security Agreement, this Security
Agreement or any other Credit Document without the prior written
consent of the Collateral Agent and agrees that it will not do so
without the prior written consent of the Collateral Agent, subject to
the Grantor's rights under Section 9-509(d)(2) of the UCC.
(g) Treatment of Accounts, Chattel Paper. Not grant or
extend the time for payment of any Account or Chattel Paper, or
compromise or settle any Account or Chattel Paper for less than the
full amount thereof, or release any person or property, in whole or
in part, from payment thereof, or allow any credit or discount
thereon, other than as normal and customary in the ordinary course of
the Grantor's business or as otherwise permitted by the Credit
Agreement.
(h) Collateral held by Other Parties. To the extent required
by the Credit Agreement, deliver to the Collateral Agent an
authenticated bailee letter, in form and substance satisfactory to
the Collateral Agent, from each warehouseman, bailee, agent and
processor in possession or control of any Collateral acknowledging
that such warehouseman, bailee, agent, or processor, as applicable,
will hold possession of the Collateral for the Collateral Agent's
benefit.
(i) Covenants Relating to Copyrights.
(i) Employ each material Copyright for each Work
with such notice of copyright as may be required by law to
secure copyright protection.
(ii) Not do any act or knowingly omit to do any act
whereby any material Copyright may become invalidated and
(A) not do any act, or knowingly omit to do any act, whereby
any material Copyright may become injected into the public
domain; (B) notify the Collateral Agent immediately if it
knows, or has reason to know, that any material Copyright
may become injected into the public domain or of any adverse
determination or development (including, without limitation,
the institution of, or any such determination or development
in, any court or tribunal in the United States or any other
country) regarding the Grantor's ownership of any such
Copyright or its validity; (C) take all necessary steps as
it shall deem appropriate under the circumstances, to
maintain and pursue each application (and to obtain the
relevant registration) and to maintain each registration of
each material Copyright owned by the Grantor including,
without limitation, filing of applications for renewal where
necessary; and (D) promptly notify the Collateral Agent of
any material infringement of any material Copyright of the
Grantor of which it becomes aware and take such actions as
it shall reasonably deem appropriate under the circumstances
to protect such Copyright, including, where appropriate, the
bringing of suit for infringement, seeking injunctive relief
and seeking to recover any and all damages for such
infringement.
(iii) Not make any assignment or agreement in
conflict with the security interest in the Copyrights of the
Grantor hereunder except as not prohibited under the Credit
Agreement.
(j) Covenants Relating to Patents and Trademarks.
(i) (A) Continue to use each material Trademark on
each and every trademark class of goods applicable to its
current line as reflected in its current catalogs,
brochures, and price lists in order to maintain such
Trademark in full force free from any claim of abandonment
for non-use, (B) maintain as in the past the quality of
products and services offered under such Trademark, (C)
employ such Trademark with the appropriate notice of
registration, (D) not adopt or use any xxxx which is
confusingly similar or a colorable imitation of such
Trademark unless the Collateral Agent, for the ratable
benefit of the Agents and the Lenders, shall obtain a
perfected security interest in such xxxx pursuant to this
Security Agreement, and (E) not (and not permit any licensee
or sublicensee thereof to) do any act or knowingly omit to
do any act whereby any material Trademark may become
invalidated.
(ii) Not do any act, or omit to do any act, whereby
any material Patent may become abandoned or dedicated.
(iii) Notify the Agents and the Lenders immediately
if it knows, or has reason to know, that any application or
registration relating to any material Patent or Trademark
may become abandoned or dedicated, or of any adverse
determination or development (including, without limitation,
the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark
Office or any court or tribunal in any country) regarding
the Grantor's ownership of any material Patent or Trademark
or its right to register the same or to keep and maintain
the same.
(iv) Whenever the Grantor, either by itself or
through an agent, employee, licensee or designee, shall file
an application for the registration of any Patent or
Trademark with the United States Patent and Trademark Office
or any similar office or agency in any other country or any
political subdivision thereof, the Grantor shall report such
filing to the Agents and the Lenders within five Business
Days after the last day of the Fiscal Quarter in which such
filing occurs. Upon request of the Collateral Agent, the
Grantor shall execute and deliver any and all agreements,
instruments, documents, and papers as the Collateral Agent
may request to evidence the Agents' and the Lenders'
security interest in any Patent or Trademark and the
goodwill and general intangibles of the Grantor relating
thereto or represented thereby.
(v) Take all reasonable and necessary steps,
including, without limitation, in any proceeding before the
United States Patent and Trademark Office, or any similar
office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application
(and to obtain the relevant registration) and to maintain
each registration of the Patents and Trademarks, including,
without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability.
(vi) Promptly notify the Agents and the Lenders
after it learns that any material Patent or Trademark
included in the Collateral is infringed, misappropriated or
diluted by a third party and promptly xxx for infringement,
misappropriation or dilution, to seek injunctive relief
where appropriate and to recover any and all damages for
such infringement, misappropriation or dilution, or take
such other actions as it shall reasonably deem appropriate
under the circumstances to protect such Patent or Trademark.
(vii) Not make any assignment or agreement in
conflict with the security interest in the Patents or
Trademarks of the Grantor hereunder except as not prohibited
under the Credit Agreement.
(k) New Patents, Copyrights and Trademarks. Promptly provide
the Collateral Agent with (i) a listing of all applications, if any,
for new Copyrights, Patents or Trademarks (together with a listing of
the issuance of registrations or letters on present applications),
which new applications and issued registrations or letters shall be
subject to the terms and conditions hereunder, and (ii) (A) with
respect to Copyrights, a Copyright Security Agreement, (B) with
respect to Patents, a Patent Security Agreement, (C) with respect to
Trademarks, a Trademark Security Agreement or (D) such other duly
executed documents as the Collateral Agent may request in a form
acceptable to counsel for the Collateral Agent and suitable for
recording to evidence the security interest in the Copyright, Patent,
or Trademark which is the subject of such new application.
(l) Insurance. Insure, repair, and replace the Collateral of
the Grantor as set forth in the Credit Agreement. All insurance
proceeds relating to the Collateral shall be subject to the security
interest of the Collateral Agent hereunder.
(m) Commercial Tort Claims. Promptly notify the Collateral
Agent of any Commercial Tort Claim acquired by the Grantor, and
unless otherwise consented by the Collateral Agent, the Grantor shall
enter into documentation satisfactory to the Collateral Agent to (i)
amend Schedule 2.4(j) to include such commercial tort claim, and (ii)
grant to the Collateral Agent a first priority perfected Lien on such
Commercial Tort Claim.
(n) Control Agreements; Blocked Account Agreements. Upon the
Collateral Agent's request and otherwise in accordance with the terms
of the Credit Agreement, obtain an authenticated control agreement
from each issuer of uncertificated securities and from each
securities intermediary or commodities intermediary issuing or
holding any financial assets or commodities to or for the Grantor. In
accordance with the UCC (or other applicable Requirements of Law) and
to the extent requested by the Collateral Agent, the Grantor shall
use commercially reasonable efforts to grant the Collateral Agent
control of all of the Grantor's (i) Deposit Accounts (pursuant to a
Blocked Account Agreement or other agreement in form and substance
satisfactory to the Collateral Agent), (ii) Electronic Chattel Paper,
and (iii) all "transferable records" (as defined in the Uniform
Electronic Transactions Act). Upon the Collateral Agent's request,
the Grantor shall cause to be delivered to the Collateral Agent an
agreement, in form and substance satisfactory to the Collateral
Agent, executed by each Person with whom the Grantor is party to a
Merchant Account Agreement, pursuant to which such Person shall agree
to disburse to a Payment Account all deposits, payments, credits,
proceeds and other amounts from time to time payable to Grantor by
such Person under such Merchant Account Agreement.
(o) Letters of Credit. If the Grantor is or becomes the
beneficiary of a letter of credit, promptly notify the Collateral
Agent thereof and upon the Collateral Agent's request enter into a
tri-party agreement with the Collateral Agent and the issuer and/or
confirmation bank with respect to all Letter-of Credit Rights
thereunder assigning such Letter-of-Credit Rights to the Collateral
Agent and directing all payments thereunder to the Payment Account,
all in form and substance reasonably satisfactory to the Collateral
Agent.
(p) Voting Rights, Distributions, Etc. in Respect of
Investment Property.
(i) So long as no Event of Default exists (A) the
Grantor shall be entitled to exercise any and all voting and
other consensual rights (including, without limitation, the
right to give consents, waivers, and notifications in
respect of any securities) pertaining to its Investment
Property or any part thereof; provided, however, that
without the prior written consent of the Collateral Agent
and the Required Lenders, no vote shall be cast or consent,
waiver, or ratification given or action taken which would
(1) be inconsistent with or violate any provision of the
Credit Agreement, this Security Agreement, or any other
Credit Document or (2) amend, modify, or waive any material
term, provision, or condition of the certificate of
incorporation, bylaws, certificate of formation, or other
charter document or other agreement relating to, evidencing,
providing for the issuance of, or securing any such
Investment Property, in any manner that would impair such
Investment Property, the transferability thereof, or the
Collateral Agent's Liens therein, and (B) the Grantor shall
be entitled to receive and retain any and all dividends and
interest paid in respect of any of such Investment Property
(unless otherwise required by this Security Agreement).
(ii) During the existence of an Event of Default,
(A) the Collateral Agent may, without notice to the Grantor
or any other Person obligated for payment of all or any part
of the Secured Obligations, transfer or register in the name
of the Collateral Agent or any of its nominees, for the
benefit of the Agents and the Lenders, any or all of the
Collateral consisting of Investment Property, the proceeds
thereof (in cash or otherwise), and all liens, security,
rights, remedies, and claims of the Grantor with respect
thereto (as used in this Section 2.5(p) collectively, the
"Pledged Collateral") held by the Collateral Agent
hereunder, and the Collateral Agent or its nominee may
thereafter, after delivery of notice to the Grantor,
exercise all voting and corporate rights at any meeting of
any corporation, partnership, or other business entity
issuing any of the Pledged Collateral and any and all rights
of conversion, exchange, subscription, or any other rights,
privileges, or options pertaining to any of the Pledged
Collateral as if it were the absolute owner thereof,
including, without limitation, the right to exchange at its
discretion any and all of the Pledged Collateral upon the
merger, consolidation, reorganization, recapitalization, or
other readjustment of any corporation, partnership, or other
business entity issuing any of such Pledged Collateral or
upon the exercise by any such issuer or the Collateral Agent
of any right, privilege, or option pertaining to any of the
Pledged Collateral, and in connection therewith, to deposit
and deliver any and all of the Pledged Collateral with any
committee, depositary, transfer agent, registrar, or other
designated agency upon such terms and conditions as it may
determine, all without liability except to account for
property actually received by it, but the Collateral Agent
shall have no duty to exercise any of the aforesaid rights,
privileges, or options, and the Collateral Agent shall not
be responsible for any failure to do so or delay in so
doing, (B) after the Collateral Agent's giving of the notice
specified in clause (A) of this Section 2.5(p)(ii), all
rights of the Grantor to exercise the voting and other
consensual rights which it would otherwise be entitled to
exercise pursuant to clause (A) of Section 2.5(p)(i) and to
receive the dividends, interest, and other distributions
which it would otherwise be authorized to receive and retain
thereunder shall be suspended until such Event of Default
shall no longer exist, and all such rights shall, until such
Event of Default shall no longer exist, thereupon become
vested in the Collateral Agent which shall thereupon have
the sole right to exercise such voting and other consensual
rights and to receive and hold as Pledged Collateral such
dividends, interest, and other distributions, (C) all
dividends, interest, and other distributions which are
received by the Grantor contrary to the provisions of this
Section 2.5(p)(ii) shall be received in trust for the
benefit of the Collateral Agent, shall be segregated from
other funds of the Grantor and shall be forthwith paid over
to the Collateral Agent as Collateral in the same form as so
received (with any necessary endorsement), and (D) the
Grantor shall execute and deliver (or cause to be executed
and delivered) to the Collateral Agent all such proxies and
other instruments as the Collateral Agent may reasonably
request for the purpose of enabling the Collateral Agent to
exercise the voting and other rights which it is entitled to
exercise pursuant to this Section 2.5(p)(ii) and to receive
the dividends, interest, and other distributions which it is
entitled to receive and retain pursuant to this Section
2.5(p)(ii). The foregoing shall not in any way limit the
Collateral Agent's power and authority granted pursuant to
Section 2.9.
(q) Capital Stock. Promptly notify the Collateral Agent if
the Grantor acquires any Capital Stock other than as set forth on
Schedule 1.1B or on Schedule 6.14 of the Credit Agreement.
(r) Location of Collateral. Within seven (7) days of the
Collateral Agent's request, provide the Collateral Agent with the
names and contact address information (including telephone numbers)
of the owners of any property leased by the Grantor and of the
tenants of any property leased by the Grantor.
Section 2.6 Advances by Lenders. On failure of any the Grantor to
perform any of the covenants and agreements contained herein, the Collateral
Agent may, at its sole option and in its sole discretion, perform the same and
in so doing may expend such sums as the Collateral Agent may reasonably deem
advisable in the performance thereof, including, without limitation, the
payment of any insurance premiums, the payment of any taxes, a payment to
obtain a release of a Lien or potential Lien, expenditures made in defending
against any adverse claim and all other reasonable expenditures which the
Agents or the Lenders may make for the protection of the security hereof or
which may be compelled to make by operation of law. All such sums and amounts
so expended shall be repayable by the Grantor promptly upon timely notice
thereof and demand therefor, shall constitute additional Secured Obligations
and shall bear interest from the date said amounts are expended at the default
rate specified in Sections 4.1 and 4.2 of the Credit Agreement. No such
performance of any covenant or agreement by the Agents or the Lenders on
behalf of the Grantor, and no such advance or expenditure therefor, shall
relieve the Grantor of any default under the terms of this Security Agreement
or any of the other Credit Documents. The Lenders may make any payment hereby
authorized in accordance with any xxxx, statement or estimate procured from
the appropriate public office or holder of the claim to be discharged without
inquiry into the accuracy of such xxxx, statement or estimate or into the
validity of any tax assessment, sale, forfeiture, tax lien, title or claim
except to the extent such payment is being contested in good faith by the
Grantor in appropriate proceedings and against which adequate reserves are
being maintained in accordance with GAAP.
Section 2.7 Exercise of Remedies. Remedies may be exercised hereunder
at any time during the existence of an Event of Default as set forth in the
Credit Agreement.
Section 2.8 Remedies.
(a) General Remedies. In addition to all other rights and
remedies provided herein or under the other Credit Documents or by
law (including, but not limited to, the rights and remedies set forth
in the Uniform Commercial Code of the jurisdiction applicable to the
affected Collateral), the Collateral Agent shall have the default
rights and remedies of a secured party under the UCC (regardless of
whether the UCC is the law of the jurisdiction where the rights and
remedies are asserted and regardless of whether the UCC applies to
the affected Collateral), and further, the Collateral Agent may,
during the existence of an Event of Default and as provided in
Section 2.7, with or without judicial process or the aid and
assistance of others, (i) enter on any premises on which any of the
Collateral may be located and, without resistance or interference by
the Grantor, take possession of the Collateral, (ii) dispose of any
Collateral on any such premises, (iii) require the Grantor to
assemble and make available to the Collateral Agent at the expense of
the Grantor any Collateral at any place and time designated by the
Collateral Agent which is reasonably convenient to both parties, (iv)
remove any Collateral from any such premises for the purpose of
effecting sale or other disposition thereof, and/or (v) without
demand and without advertisement, notice, hearing or process of law,
all of which the Grantor hereby waives to the fullest extent
permitted by law, at any place and time or times, sell and deliver
any or all Collateral held by or for it at public or private sale, at
any exchange or broker's board or elsewhere, by one or more
contracts, in one or more parcels, for cash, upon credit or
otherwise, at such prices and upon such terms as the Collateral Agent
deems advisable, in its sole discretion (subject to any and all
mandatory legal requirements). In addition to all other sums due the
Agents and the Lenders with respect to the Secured Obligations, the
Grantor shall pay the each Agent and each Lender all reasonable
documented costs and expenses actually incurred by such Agent or
Lender, including, but not limited to, reasonable attorneys' fees and
court costs, in obtaining or liquidating the Collateral, in enforcing
payment of the Secured Obligations, or in the prosecution or defense
of any action or proceeding by or against any such Agent or Lender or
the Grantor concerning any matter arising out of or connected with
this Security Agreement, any Collateral or the Secured Obligations,
including, without limitation, any of the foregoing arising in,
arising under or related to a case under the Bankruptcy Code. To the
extent the rights of notice cannot be legally waived hereunder, the
Grantor agrees that any requirement of reasonable notice shall be met
if such notice is personally served on or mailed, postage prepaid, to
the Grantor in accordance with the notice provisions of Section 13.1
of the Credit Agreement at least 10 days before the time of sale or
other event giving rise to the requirement of such notice. None of
the Agents or the Lenders shall be obligated to make any sale or
other disposition of the Collateral regardless of notice having been
given. To the extent permitted by applicable law, any Lender may be a
purchaser at any such sale or a bidder for any Investment Property.
To the extent permitted by applicable law, the Grantor hereby waives
all of its rights of redemption with respect to any such sale.
Subject to the provisions of applicable law, the Collateral Agent and
the Lenders may postpone or cause the postponement of the sale of all
or any portion of the Collateral by announcement at the time and
place of such sale, and such sale may, without further notice, to the
extent permitted by law, be made at the time and place to which the
sale was postponed, or the Collateral Agent and the Lenders may
further postpone such sale by announcement made at such time and
place.
(b) Remedies relating to Accounts, Chattel Paper, General
Intangibles. During the existence of an Event of Default, whether or
not the Collateral Agent has exercised any or all of its rights and
remedies hereunder, the Collateral Agent or the Collateral Agent's
designee may notify the Grantor's account debtors that the Grantor's
Accounts, Chattel Paper, General Intangibles, and Payment Intangibles
have been assigned to the Collateral Agent and of the Collateral
Agent's security interest therein, and may collect such Accounts,
Chattel Paper, General Intangibles, and Payment Intangibles directly
and charge the collection costs and expenses against the proceeds
received or the Grantor. The Grantor acknowledges and agrees that the
Proceeds of its Accounts, Chattel Paper, and General Intangibles
remitted to or on behalf of the Collateral Agent in accordance with
the provisions hereof shall be solely for the Collateral Agent's own
convenience and that the Grantor shall not have any right, title or
interest therein or in any such other amounts except as expressly
provided herein. None of the Agents or the Lenders shall have any
liability or responsibility to the Grantor for acceptance of a check,
draft or other order for payment of money bearing the legend "payment
in full" or words of similar import or any other restrictive legend
or endorsement or be responsible for determining the correctness of
any remittance. The Grantor hereby agrees to indemnify the Agents and
the Lenders from and against all liabilities, damages, losses,
actions, claims, judgments, costs, expenses, charges and reasonable
attorneys' fees suffered or actually incurred by the Agents or the
Lenders (each, an "Indemnified Party") because of the maintenance of
the foregoing arrangements except as relating to or arising out of
the gross negligence or willful misconduct of an Indemnified Party or
its officers, employees or agents. In the case of any investigation,
litigation or other proceeding, the foregoing indemnity shall be
effective whether or not such investigation, litigation or proceeding
is brought by the Grantor, its directors, shareholders or creditors
or an Indemnified Party or any other Person or any other Indemnified
Party is otherwise a party thereto.
(c) Access. In addition to the rights and remedies
hereunder, during the existence of an Event of Default, the
Collateral Agent shall have the right to enter and remain upon the
various premises of the Grantor without cost or charge to the
Collateral Agent, and use the same, together with materials,
supplies, books and records of the Grantor for the purpose of
collecting and liquidating the Collateral, or for preparing for sale
and conducting the sale of the Collateral, whether by foreclosure,
auction or otherwise, and, in addition, the Collateral Agent may
remove Collateral, or any part thereof, from such premises and/or any
records with respect thereto, in order to effectively collect or
liquidate such Collateral.
(d) Nonexclusive Nature of Remedies. Failure by the Agents
or the Lenders to exercise any right, remedy, or option under this
Security Agreement, any other Credit Document or as provided by law,
or any delay by the Agents or the Lenders in exercising the same,
shall not operate as a waiver of any such right, remedy, or option.
No waiver hereunder shall be effective unless it is in writing,
signed by the party against whom such waiver is sought to be enforced
and then only to the extent specifically stated, which in the case of
the Agents or the Lenders shall only be granted as provided herein.
To the extent permitted by law, neither the Agents, the Lenders, nor
any party acting as attorney for the Agents or the Lenders, shall be
liable hereunder for any acts or omissions or for any error of
judgment or mistake of fact or law other than their gross negligence
or willful misconduct hereunder. The rights and remedies of the
Agents and the Lenders under this Security Agreement shall be
cumulative and not exclusive of any other right or remedy which the
Agents or the Lenders may have.
(e) Retention of Collateral. The Collateral Agent may, after
providing the notices required by Sections 9-620 and 9-621 of the UCC
or otherwise complying with the requirements of applicable law of the
relevant jurisdiction, to the extent the Collateral Agent is in
possession of any of the Collateral, retain the Collateral in
satisfaction of the Secured Obligations. Unless and until the
Collateral Agent shall have provided such notices in writing,
however, the Collateral Agent shall not be deemed to have retained
any Collateral in satisfaction of any Secured Obligations for any
reason.
(f) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to
which the Agents or the Lenders are legally entitled, the Grantor
shall be liable for the deficiency, together with interest thereon at
the default rate specified in Sections 4.1 and 4.2 of the Credit
Agreement, together with the costs of collection and the reasonable
fees of any attorneys employed by the Collateral Agent to collect
such deficiency. Any surplus remaining after the full payment and
satisfaction of the Secured Obligations shall be returned to the
Grantor or to whomsoever a court of competent jurisdiction shall
determine to be entitled thereto.
(g) Private Sale of Pledged Collateral. During the existence
of an Event of Default, the Grantor recognizes that the Collateral
Agent may deem it impracticable to effect a public sale of all or any
part of the Pledged Collateral (as defined in Section 2.5(p)(ii) of
this Security Agreement) and that the Collateral Agent may,
therefore, determine to make one or more private sales of any of such
Pledged Collateral to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such securities
for their own account, for investment and not with a view to the
distribution or resale thereof. The Grantor acknowledges that any
such private sale may be at prices and on terms less favorable to the
seller than the prices and other terms which might have been obtained
at a public sale and, notwithstanding the foregoing, agrees that such
private sale shall be deemed to have been made in a commercially
reasonable manner and that the Collateral Agent shall have no
obligation to delay sale of any such Pledged Collateral for the
period of time necessary to permit that issuer of such Pledged
Collateral to register such Pledged Collateral for public sale under
the Securities Exchange Act. The Grantor further acknowledges and
agrees that any offer to sell such Pledged Collateral which has been
(i) publicly advertised on a bona fide basis in a newspaper or other
publication of general circulation in the financial community of New
York, New York (to the extent that such offer may be advertised
without prior registration under the Securities Exchange Act) or (ii)
made privately in the manner described above shall be deemed to
involve a "public sale" under the UCC, notwithstanding that such sale
may not constitute a "public offering" under the Securities Exchange
Act, and the Collateral Agent may, in such event, bid for the
purchase of such Pledged Collateral.
Section 2.9 Rights of the Collateral Agent.
(a) Power of Attorney. In addition to other powers of
attorney contained herein, the Grantor hereby designates and appoints
the Collateral Agent, on behalf of the Agents and the Lenders, and
each of its designees or agents, as attorney-in-fact of the Grantor,
irrevocably and with power of substitution, with authority to take
any or all of the following actions:
(i) (A) receive, open and dispose of mail addressed
to the Grantor and endorse checks, notes, drafts,
acceptances, money orders, bills of lading, warehouse
receipts or other instruments or documents evidencing
payment, shipment or storage of the goods giving rise to the
Collateral of the Grantor on behalf of and in the name of
the Grantor, or securing, or relating to such Collateral;
(B) execute and deliver all assignments,
conveyances, statements, financing statements, renewal
financing statements, security agreements, affidavits,
notices and other agreements, instruments and documents that
the Collateral Agent may determine reasonably necessary in
order to perfect and maintain the security interests and
liens granted in this Security Agreement and in order to
fully consummate all of the transactions contemplated
therein;
(ii) during the existence of an Event of Default,
(A) to demand, collect, settle, compromise, adjust,
give discharges and releases, all as the Collateral Agent
may reasonably determine;
(B) to commence and prosecute any actions at any
court for the purposes of collecting any Collateral and
enforcing any other right in respect thereof;
(C) to defend, settle, or compromise any action
brought and, in connection therewith, give such discharge or
release as the Collateral Agent may deem reasonably
appropriate;
(D) sell, assign, transfer, make any agreement in
respect of, or otherwise deal with or exercise rights in
respect of, any Collateral or the goods or services which
have given rise thereto, as fully and completely as though
the Collateral Agent were the absolute owner thereof for all
purposes;
(E) adjust and settle claims under any insurance
policy relating thereto;
(F) institute any foreclosure proceedings that the
Collateral Agent may deem appropriate;
(G) do and perform all such other acts and things
as the Collateral Agent may reasonably deem to be necessary
to carry out the terms of the Credit Agreement; and
(H) to pay or discharge taxes, liens, security
interests, or other encumbrances levied or placed on or
threatened against the Pledged Collateral (as defined in
Section 2.5(p)(ii) of this Security Agreement) or the
Grantor.
This power of attorney is a power coupled with an interest and shall
be irrevocable (y) for so long as any of the Secured Obligations
remain outstanding and (z) until this Security Agreement shall have
been terminated. The Collateral Agent shall be under no duty to
exercise or withhold the exercise of any of the rights, powers,
privileges and options expressly or implicitly granted to the
Collateral Agent in this Security Agreement, and shall not be liable
for any failure to do so or any delay in doing so. The Collateral
Agent shall not be liable for any act or omission or for any error of
judgment or any mistake of fact or law in its individual capacity or
its capacity as attorney-in-fact except acts or omissions resulting
from its gross negligence or willful misconduct. This power of
attorney is conferred on the Collateral Agent solely to protect,
preserve, and realize upon its security interest in the Collateral.
(b) Performance by the Collateral Agent of Obligations. If
the Grantor fails to perform any agreement or obligation contained
herein, the Collateral Agent itself may perform, or cause performance
of, such agreement or obligation, and the expenses of the Collateral
Agent actually incurred in connection therewith shall be payable by
the Grantor pursuant to Section 3.14 hereof.
(c) Assignment by the Collateral Agent. The Collateral Agent
may, for its own account, from time to time assign the Secured
Obligations and any portion thereof and/or the Collateral and any
portion thereof, and the assignee shall be entitled to all of the
rights and remedies of the Collateral Agent, as a secured party in
its individual capacity, under this Security Agreement in relation
thereto.
(d) The Collateral Agent's Duty of Care. Other than the
exercise of reasonable care to assure the safe custody of the
Collateral while being held by the Collateral Agent hereunder, the
Collateral Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that the Grantor
shall be responsible for preservation of all rights in the
Collateral, and the Collateral Agent shall be relieved of all
responsibility for the Collateral upon surrendering it or tendering
the surrender of it to the Grantor. The Collateral Agent shall be
deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which the Collateral
Agent accords its own property, which shall be no less than the
treatment employed by a reasonable and prudent agent in the industry,
it being understood that the Collateral Agent shall not have
responsibility for taking any necessary steps to preserve rights
against any parties with respect to any of the Collateral.
(e) Indemnities and Standards under the Credit Agreement. In
addition to the foregoing provisions of this Section, the Collateral
Agent shall be entitled to the benefits, standards and indemnities
afforded to it under the Credit Agreement.
Section 2.10 Application of Proceeds. During the existence of an
Event of Default, any payments in respect of the Secured Obligations and any
proceeds of the Collateral, when received by the Collateral Agent or any of
the Lenders in cash or its equivalent, will be applied in reduction of the
Secured Obligations for application as provided in the Credit Agreement, and
the Grantor irrevocably waives the right to direct the application of such
payments and proceeds and acknowledges and agrees that the Collateral Agent
shall have the continuing and exclusive right to apply and reapply any and all
such payments and proceeds in the Collateral Agent's sole discretion,
notwithstanding any entry to the contrary upon any of its books and records.
Section 2.11 Costs of Counsel. If at any time hereafter, whether
during the existence of an Event of Default or not, the Agents employ counsel
to prepare or consider amendments, waivers or consents with respect to this
Security Agreement, or to take action or make a response in or with respect to
any legal or arbitral proceeding relating to this Security Agreement or
relating to the Collateral, or to protect the Collateral or exercise any
rights or remedies under this Security Agreement or with respect to the
Collateral, then the Grantor agrees to promptly pay upon demand any and all
such reasonable documented costs and expenses actually incurred by the Agents,
all of which costs and expenses shall constitute Secured Obligations
hereunder.
ARTICLE 3
MISCELLANEOUS
Section 3.1 Continuing Agreement. This Security Agreement shall be a
continuing agreement in every respect and shall remain in full force and
effect so long as any of the Secured Obligations remain outstanding (other
than any obligations with respect to the indemnities and the representations
and warranties set forth in the Credit Documents) and upon satisfactory
collateralization of all Letters of Credit. Upon such payment and termination,
this Security Agreement shall be automatically terminated and the Collateral
Agent and the Lenders shall, upon the request and at the expense of the
Grantor, forthwith release all of their liens and security interests hereunder
and shall authorize all UCC termination statements and/or other documents
reasonably requested by the Grantor evidencing such termination.
Notwithstanding the foregoing all releases and indemnities provided hereunder
shall survive the termination of this Security Agreement.
Section 3.2 Reinstatement. This Security Agreement shall continue to
be effective or be automatically reinstated, as the case may be, if at any
time payment, in whole or in part, of any of the Secured Obligations is
rescinded or must otherwise be restored or returned by the Collateral Agent or
any Lender as a "voidable preference", "fraudulent conveyance" or otherwise
under any bankruptcy, insolvency or similar law, all as though such payment
had not been made; provided that in the event payment of all or any part of
the Secured Obligations is rescinded or must be restored or returned, all
reasonable costs and expenses (including without limitation any reasonable
legal fees and disbursements) incurred by any Agent or any Lender in defending
and enforcing such reinstatement shall be deemed to be included as a part of
the Secured Obligations.
Section 3.3 Amendments; Waivers; Modifications. This Security
Agreement and the provisions hereof may not be amended, waived, modified,
changed, discharged, or terminated except as set forth in Section 13.6 of the
Credit Agreement.
Section 3.4 Successors in Interest. This Security Agreement shall
create a continuing security interest in the Collateral and shall be binding
upon the Grantor, its successors and assigns and shall inure, together with
the rights and remedies of the Collateral Agent and the Lenders hereunder, to
the benefit of the Agents and the Lenders and their successors and permitted
assigns; provided, however, that the Grantor may not assign its rights or
delegate its duties hereunder without the prior written consent of each Lender
or as set forth in the Credit Agreement. To the fullest extent permitted by
law, the Grantor hereby releases the each Agent and each Lender, and their
respective successors and assigns, from any liability for any act or omission
relating to this Security Agreement or the Collateral, except for any
liability arising from the gross negligence or willful misconduct of such
Agent or such Lender, or its officers, employees or agents.
Section 3.5 Notices. All notices required or permitted to be given
under this Security Agreement shall be in conformance with Section 13.1 of the
Credit Agreement.
Section 3.6 Counterparts. This Security Agreement may be
authenticated in any number of counterparts, each of which where so
authenticated and delivered shall be an original, but all of which shall
constitute one and the same instrument. It shall not be necessary in making
proof of this Security Agreement to produce or account for more than one such
counterpart. This Security Agreement may be authenticated by manual signature,
facsimile, or, if approved in writing by the Collateral Agent, electronic
means, all of which shall be equally valid. A telecopy of any such executed
counterpart shall be deemed valid as an original.
Section 3.7 Headings. The headings of the sections and subsections
hereof are provided for convenience only and shall not in any way affect the
meaning or construction of any provision of this Security Agreement.
Section 3.8 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS SECURITY AGREEMENT IS GOVERNED BY THE APPLICABLE
LAW PERTAINING IN THE STATE OF NEW YORK, OTHER THAN THOSE CONFLICT OF
LAW PROVISIONS THAT WOULD DEFER TO THE SUBSTANTIVE LAWS OF ANOTHER
JURISDICTION; PROVIDED THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE
9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW
RULES SET FORTH IN ARTICLE 9 OF THE UCC) AND PROVIDED, FURTHER THAT
THE AGENTS AND THE LENDERS RETAIN ALL RIGHTS ARISING UNDER FEDERAL
LAW. THIS GOVERNING LAW ELECTION HAS BEEN MADE BY THE PARTIES IN
RELIANCE ON, AMONG OTHER THINGS, SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK, AS AMENDED (AS AND TO THE
EXTENT APPLICABLE), AND OTHER APPLICABLE LAW. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS SECURITY AGREEMENT MAY BE BROUGHT IN
THE COURTS OF THE STATES OF CALIFORNIA OR NEW YORK OR OF THE UNITED
STATES LOCATED IN LOS ANGELES COUNTY, CALIFORNIA, OR NEW YORK COUNTY,
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS SECURITY AGREEMENT,
EACH OF THE GRANTOR AND THE COLLATERAL AGENT CONSENTS, FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. THE GRANTOR AND THE COLLATERAL AGENT IRREVOCABLY WAIVE
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS SECURITY AGREEMENT, ANY OTHER CREDIT
DOCUMENT, OR ANY OTHER AGREEMENT, DOCUMENT, OR INSTRUMENT RELATED
HERETO OR THERETO. NOTWITHSTANDING THE FOREGOING (i) THE AGENTS AND
THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST THE GRANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION THE COLLATERAL AGENT OR THE LENDERS DEEM NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY
FOR THE SECURED OBLIGATIONS AND (ii) EACH OF THE PARTIES HERETO
ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE
IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE THOSE JURISDICTIONS.
(b) THE GRANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY
BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE
GRANTOR AT ITS ADDRESS SET FORTH IN SECTION 13.1 OF THE CREDIT
AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE
(5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE
RIGHT OF THE AGENTS OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY
OTHER MANNER PERMITTED BY LAW.
(c) NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECURITY
AGREEMENT TO THE CONTRARY, ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG
THE PARTIES, ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR
ANY OTHER CREDIT DOCUMENT INCLUDING ANY CLAIM BASED ON OR ARISING
FROM AN ALLEGED TORT, SHALL AT THE REQUEST OF EITHER PARTY HERETO BE
DETERMINED BY BINDING ARBITRATION. The arbitration shall be conducted
in accordance with the United States Arbitration Act (Title 9, U.S.
Code), notwithstanding any choice of law provision in this Security
Agreement, and under the Commercial Rules of the American Arbitration
Association ("AAA"). The arbitrator(s) shall give effect to statutes
of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the
arbitrator(s). Judgment upon the arbitration award may be entered in
any court having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuant to a provisional or ancillary
remedy shall not constitute a waiver of the right of either party,
including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial
relief.
(d) Notwithstanding the provisions of clause (c) above, no
controversy or claim shall be submitted to arbitration without the
consent of all parties if, at the time of the proposed submission,
such controversy or claim arises from or related to an obligation to
the Collateral Agent which is secured by real estate property
collateral (exclusive of real estate space lease assignments). If all
the parties do not consent to submission of such a controversy or
claim to arbitration, the controversy or claim shall be determined as
provided in Section 3.8(e).
(e) At the request of any party a controversy or claim which
is not submitted to arbitration as provided and limited in
subsections 3.8(c) and (d) shall be determined by judicial reference.
If such an election is made, the parties shall designate to the court
a referee or referees selected under the auspices of the AAA in the
same manner as arbitrators are selected in AAA-sponsored proceedings.
The presiding referee of the panel, or the referee if there is a
single referee, shall be an active attorney or retired judge.
Judgment upon the award rendered by such referee or referees shall be
entered in the court in which such proceeding was commenced.
(f) No provision of clauses (c) through (f) shall limit the
right of the Agents or the Lenders to exercise self-help remedies
such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or obtaining provisional or
ancillary remedies from a court of competent jurisdiction before,
after, or during the pendency of any arbitration or other proceeding.
The exercise of a remedy does not waive the right of either party to
resort to arbitration or reference. At the Collateral Agent's option,
foreclosure under a deed of trust or mortgage may be accomplished
either by exercise of power of sale under the deed of trust or
mortgage or by judicial foreclosure.
Section 3.9 Waiver of Jury Trial. SUBJECT TO THE PROVISIONS OF
SECTION 3.8(c), EACH OF THE GRANTOR, THE AGENTS, AND THE LENDERS IRREVOCABLY
WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS SECURITY AGREEMENT, THE
OTHER CREDIT DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN
ANY ACTION, PROCEEDING, OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ONE PARTY
AGAINST THE OTHER PARTY OR ANY AGENT-RELATED PERSON OR PARTICIPANT, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH OF THE
GRANTOR, THE AGENTS, AND THE LENDERS AGREES THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, EACH OF THE GRANTOR, THE AGENTS, AND THE LENDERS AND THE COLLATERAL
AGENT FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM, OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY
OF THIS SECURITY AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS
SECURITY AGREEMENT OR THE OTHER CREDIT DOCUMENTS.
Section 3.10 Severability. If any provision of any of this Security
Agreement is determined to be illegal, invalid or unenforceable, such
provision shall be fully severable and the remaining provisions shall remain
in full force and effect and shall be construed without giving effect to the
illegal, invalid or unenforceable provisions. This Security Agreement is to be
read, construed, and applied together with the Credit Agreement and the other
Credit Documents which, taken together, set forth the complete understanding
and agreement of the Agents, the Lenders, and the Grantor with respect to the
matters referred to herein and therein.
Section 3.11 Survival. All representations and warranties of the
Grantor hereunder shall survive the execution and delivery of this Security
Agreement, the other Credit Documents, the delivery of the Notes and the
Extensions of Credit under the Credit Agreement.
Section 3.12 Other Security. To the extent that any of the Secured
Obligations are now or hereafter secured by property other than the Collateral
(including, without limitation, real property and securities owned by the
Grantor), or by a guarantee, endorsement or property of any other Person, then
the Agents and the Lenders shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence of any Event of
Default, and the Agents and the Lenders have the right, in their sole
discretion, to determine which rights, security, liens, security interests or
remedies the Agents and the Lenders shall at any time pursue, relinquish,
subordinate, modify or take with respect thereto, without in any way modifying
or affecting any of them or any of the Agents' and the Lenders' rights or the
Secured Obligations under this Security Agreement or under any of the other
Credit Documents.
Section 3.13 Rights of Required Lenders. All rights of the Collateral
Agent hereunder, if not exercised by the Collateral Agent, may be exercised by
the Required Lenders and their representatives as set forth in the Credit
Agreement.
Section 3.14 Limitation by Law. All rights, remedies, and powers
provided in this Security Agreement may be exercised only to the extent that
the exercise thereof does not violate any applicable provision of law, and all
the provisions of this Security Agreement are intended to be subject to all
applicable mandatory provisions of law that may be controlling and to be
limited to the extent necessary so that they shall not render this Security
Agreement invalid, unenforceable, in whole or in part, or not entitled to be
recorded, registered, or filed under the provisions of any applicable law.
Section 3.15 No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Security
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Security Agreement shall be construed as if drafted jointly by
the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provisions of this
Security Agreement.
Section 3.16 Advice of Counsel. Each of the parties represents to
each other party hereto that it has discussed this Security Agreement and,
specifically, without limitation, the provisions of Section 3.8 and Section
3.9, with its counsel.
Section 3.17 Benefit of the Agents and the Lenders. All Liens granted
or contemplated hereby shall be for the benefit of the Agents and the Lenders,
and all proceeds or payments realized from Collateral in accordance herewith
shall be applied to the Secured Obligations in accordance with the terms of
the Credit Agreement.
Section 3.18 Amendment and Restatement. The Grantor hereby ratifies
and confirms the Liens granted by it under the Existing Security Agreement to
the Collateral Agent, in its capacity as administrative agent under the
Existing Credit Agreement, and agrees that such Liens are valid and
enforceable and continue in full force and effect free of defense,
counterclaim or offset. This Security Agreement constitutes an amendment and
restatement of the Existing Security Agreement in its entirety. From and after
the date hereof, all Liens arising under the Existing Security Agreement are
hereby deemed to be renewed and continued (and not extinguished, discharged,
or satisfied) as security for the Secured Obligations and hereafter shall be
evidenced by and governed in accordance with this Security Agreement. All
references in any of the Credit Documents to the Existing Security Agreement
shall be deemed to mean this Security Agreement.
[Remainder of Page Intentionally Left Blank]
Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above
written.
GRANTOR:
XXXXXXXX'X INC.
By: /s/ Xxx Xxxxxx
-------------------------
Name: Xxx Xxxxxx
Title: Chief Executive Officer
Accepted and agreed to as of the date first above written.
BANK OF AMERICA, N.A.,
as Collateral Agent
By: /s/ Xxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
