EXHIBIT 10.13
SECURITY AGREEMENT dated as of December 9, 1996 among
BRYLANE, L.P., a Delaware limited partnership (the "Borrower"),
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the subsidiaries of the Borrower listed on Schedule 1 hereto and
such other subsidiaries of the Borrower as shall become parties
hereto pursuant to Section 6.16 hereof (collectively, the
"Subsidiary Grantors", the Borrower and the Subsidiary Grantors
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being collectively called the "Grantors"); and ▇▇▇▇▇▇ GUARANTY
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TRUST COMPANY OF NEW YORK, as security agent (in such capacity,
the "Security Agent") for the Secured Parties, as defined herein.
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Reference is made to the Credit Agreement dated as of December 9, 1996
(as amended from time to time, the "Credit Agreement"), among the Borrower, the
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lenders party thereto (the "Lenders"), ▇▇▇▇▇▇ Guaranty Trust Company of New
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York, as administrative agent (in such capacity, the "Administrative Agent") and
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▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Corporation, as documentation agent (in such capacity, the
"Documentation Agent"). The Lenders have agreed to extend credit to the
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Borrower pursuant to, and subject to the terms and conditions specified in, the
Credit Agreement. The obligations of the Lenders to extend credit under the
Credit Agreement are conditioned upon, among other things, the execution and
delivery by the Grantors of a security agreement in the form hereof to secure
(a) the due and punctual payment by the Borrower of (i) the principal of and
interest on the Loans, when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise, (ii) each payment
required to be made by the Borrower under the Credit Agreement in respect of any
Letter or Letters of Credit, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon and obligations to provide cash
collateral, (iv) all other monetary obligations of the Borrower to the Secured
Parties under the Credit Agreement and the other Loan Documents to
which the Borrower is or is to be a party, and (v) each payment required to be
made by the Borrower under any Rate Protection Agreement entered into by the
Borrower with a counterparty that was a Lender at the time such Rate Protection
Agreement was entered into, (b) the due and punctual performance of all other
obligations of the Borrower under the Credit Agreement and the other Loan
Documents to which the Borrower is or is to be a party, (c) the due and punctual
performance of all obligations of the Borrower under each Rate Protection
Agreement entered into with any counterparty that was a Lender at the time such
Rate Protection Agreement was entered into and (d) the due and punctual payment
and performance of all obligations of each Subsidiary under the Loan Documents
to which it is or is to be a party (all the foregoing obligations being
collectively called the "Obligations").
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Accordingly, the Grantors and the Security Agent hereby agree as
follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Terms Defined in the Credit Agreement. Terms used
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herein and not otherwise defined herein shall have the meanings set forth in the
Credit Agreement.
SECTION 1.02. Definition of Certain Terms Used Herein. As used
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herein, the following terms shall have the following meanings:
"Collateral" shall mean all (i) Documents, (ii) General Intangibles
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and (iii) Proceeds.
"Copyright License" shall mean any written agreement, now or hereafter
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in effect, granting any right to any third party under any Copyright now or
hereafter owned by any Grantor or which such Grantor otherwise has the right to
license, or granting any right to such Grantor under any
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Copyright now or hereafter owned by any third party, and all rights of such
Grantor under any such agreement.
"Copyrights" shall mean all of the following now owned or hereafter
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acquired by any Grantor: (i) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (ii) all registrations and applications
for registration of any such copy right in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on Schedule I.
"Credit Agreement" shall have the meaning assigned to such term in the
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preliminary statement of this Agreement.
"Documents" shall mean all instruments, files, records, ledger sheets
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and documents covering or relating to any of the Collateral.
"General Intangibles" shall mean all choses in action and causes of
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action and all other assignable intangible personal property of any Grantor of
every kind and nature (other than accounts receivable) now owned or hereafter
acquired by any Grantor, including corporate or other business records,
mailing/customer lists, contract rights (including rights under leases, whether
entered into as lessor or lessee, Rate Protection Agreements, the Trademark
Agreements, the Transaction Agreement, the Asset Purchase Agreements and other
agreements), Intellectual Property, Partnership Interests, goodwill,
registrations, franchises and tax refund claims.
"Intellectual Property" shall mean all intellectual and similar
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property of any Grantor of every kind and nature now owned or hereafter acquired
by any Grantor, including Copyrights, Licenses, Trademarks, trade secrets,
confidential or proprietary technical and business information, know-how, show-
how or other data or
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information, software and databases and all embodiments or fixations thereof and
related documentation, registrations and franchises, and all additions,
improvements and accessions to, and books and records describing or used in
connection with, any of the foregoing.
"License" shall mean any Trademark License, Copyright License or other
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license or sublicense to which any Grantor is a party, including those listed on
Schedule II.
"Obligations" shall have the meaning assigned to such term in the
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preliminary statement of this Agreement.
"Partnership Interests" shall mean any interest of any Grantor in any
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general or limited partnership, whether as a general partner or limited partner,
and all rights of such Grantor in respect thereof, including any and all such
interests and rights of any Grantor as a partner in any Subsidiary that is a
partnership.
"Perfection Certificate" means a certificate substantially in the form
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of Exhibit I to the Credit Agreement, completed and supplemented with the
schedules and attachments contemplated thereby, and duly executed by a financial
officer of the Borrower.
"Proceeds" shall mean any consideration received from the sale,
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exchange, license, lease or other disposition of any asset or property which
constitutes Collateral, any value received as a consequence of the possession of
any Collateral (it being understood that "Proceeds" shall not include inventory
or other tangible personal property or any revenues generated by the Grantors in
the ordinary course of their respective businesses using trademarks and
tradenames constituting Collateral) and any payment received from any insurer or
other person or entity as a result of the destruction, loss, theft, damage or
other involuntary conversion of whatever nature of any asset or property which
constitutes Collateral, and shall include any claim of any
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Grantor against any third party for (and the right to ▇▇▇ and recover for and
the rights to damages or profits due or accrued arising out of or in connection
with) (i) past, present or future infringement or dilution of any Trademark now
or hereafter owned by any Grantor or licensed under a Trademark License or
injury to the goodwill associated with or symbolized by any Trademark now or
hereafter owned by any Grantor, (ii) past, present or future breach of any
License, (iii) past, present or future infringement of any Copyright now or
hereafter owned by any Grantor or licensed under a Copyright License, and (iv)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.
"Secured Parties" shall mean (a) the Lenders party to the Credit
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Agreement, (b) each counterparty to a Rate Protection Agreement entered into
with the Borrower, if such counterparty was a Lender at the time such Rate
Protection Agreement was entered into, (c) the Agent, the Security Agent, the
Documentation Agent and the Issuing Banks, in their capacities as such under
each Loan Document, (d) the beneficiaries of each indemnification obligation
undertaken by any Grantor under any Loan Document, and (e) the successors and
assigns of the foregoing.
"Security Interest" shall have the meaning as signed to such term in
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Section 2.01.
"Trademark License" shall mean any written agreement (including the
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Trademark Agreements), now or hereafter in effect, (a) granting to any third
party any right to use any Trademark now or hereafter owned by any Grantor or
which such Grantor otherwise has the right to license, and all rights of such
Grantor under any such agreement, or (b) granting to such Grantor any right to
use any Trademark now or hereafter owned by any third party, and all rights of
such Grantor under any such agreement.
"Trademarks" shall mean all of the following now owned or hereafter
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acquired (including acquisition of rights
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in respect thereof pursuant to a Trademark License) by any Grantor: (i) all
trademarks, service marks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, trade dress, logos, other source
or business identifiers, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all registration and recording applications filed in connection
therewith, including registrations and registration applications in the United
States Patent and Trademark Office, any State of the United States or any
similar offices in any other country or any political subdivision thereof, and
all extensions or renewals thereof, including those listed on Schedule III, (ii)
all goodwill associated therewith or symbolized thereby, and (iii) all other
assets, rights and interests that uniquely reflect or embody such goodwill.
ARTICLE II. SECURITY INTEREST
SECTION 2.01. Security Interest. As security for the payment or
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performance, as the case may be, of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Security Agent, its successors and its assigns, for the
benefit of the Secured Parties, and hereby grants to the Security Agent, its
successors and assigns, for the benefit of the Secured Parties, a security
interest in, all of such Grantor's right, title and interest in, to and under
the Collateral (the "Security Interest"). Without limiting the generality of
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the foregoing, the Borrower hereby assigns, as collateral security, to the
Security Agent all its right, title and interest in, to and under the
Acquisition Agreements, the Trademark Agreements and the Transaction Agreement
(which assignment also shall constitute part of the Security Interest). The
Security Agent is hereby authorized to file one or more financing statements,
continuation statements, filings with the United States Patent and Trademark
Office or United States
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Copyright Office (or any successor office or any similar office in any other
country) or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, naming any Grantor or the
Grantors as debtors and the Security Agent as secured party.
Anything in this Section 2.01 to the contrary notwithstanding, no
Grantor shall be deemed to have borrowed, sold, conveyed, assigned, set over,
mortgaged, pledged, hypothecated or transferred, or to have granted a security
interest in, any contract right (including any lease), or in any of such
Grantor's right, title or interest therein, thereto or thereunder, if any such
action, without the consent of a third party thereto, would constitute a breach
or other contravention thereof; provided that the foregoing shall not apply to
the Acquisitions Agreements, the Trademark Agreements (except for the agreements
referred to in clause (ii) of the definition thereof), the Transaction Agreement
or the partnership agreement of any partnership that is a Subsidiary. The
Grantors shall use their best efforts, upon the request of the Security Agent,
to obtain the consent of any such third party required with respect to any
contract right which is material, individually or in the aggregate, to the
business, condition or prospects of any Grantor.
The Grantors agree at all times to keep accurate and complete
accounting records with respect to the Collateral, including a record of all
payments and Proceeds received.
SECTION 2.02. No Assumption of Liability. The Security Interest is
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granted as security only and shall not subject the Security Agent or any Secured
Party to, or in any way alter or modify, any obligation or liability of any
Grantor with respect to or arising out of any of the Collateral.
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ARTICLE III. REPRESENTATIONS AND WARRANTIES
The Grantors jointly and severally represent and warrant to the
Security Agent and the Lenders that:
SECTION 3.01. Title and Authority. Each of the Grantors has good and
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valid rights in and title to the Collateral with respect to which it has
purported to grant a Security Interest hereunder (other than Trademarks which
are not, individually or in the aggregate, material to any Grantor's business,
condition or prospects) and has full power and authority to grant to the
Security Agent the Security Interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other person other than
any consent or approval which has been obtained.
SECTION 3.02. Filings. (a) The Perfection Certificate has been duly
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prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
statements or other appropriate filings, recordings or registrations containing
a description of the Collateral have been delivered to the Security Agent for
filing in each governmental, municipal or other office specified in Schedule 5
to the Perfection Certificate, which are all the filings, recordings and
registrations (other than filings, required to be made in the United States
Patent and Trademark Office and the United States Copyright Office in order to
perfect the Security Interest in Collateral consisting of United States
registered trademarks and registered copyrights) that are necessary to publish
notice of and protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Security Agent (for the benefit of
the Secured Parties) in respect of all Collateral in which the Security Interest
may be perfected by filing, recording or registration in the United States (or
any political subdivision thereof) and its territories and possessions, and no
further or subsequent filing, refiling, recording, rerecording, registration in
the United States (or any political subdivision thereof) and its
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territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.
(b) Each Grantor shall ensure and warrants that fully executed
security agreements in the form hereof and containing a description of all
Collateral consisting of Intellectual Property shall have been received and
delivered for recording within one month after the execution of this Agreement
with respect to United States registered Trademarks (and Trademarks for which
United States registration applications are pending) and within one month after
the execution of this Agreement with respect to United States registered
Copyrights by the United States Patent and Trademark Office and the United
States Copyright Office pursuant to 15 U.S.C. (S) 1060 or 17 U.S.C. (S) 205 and
the regulations thereunder, as applicable, to protect the validity of and to
establish a legal, valid and perfected security interest in favor of the
Security Agent (for the benefit of the Secured Parties) in respect of all
Collateral consisting of Licenses, Trademarks and Copyrights in which a security
interest may be perfected by filing, recording or registration in the United
States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary (other than such
actions as are necessary to perfect the Security Interest with respect to any
Collateral consisting of Licenses, Trademarks and Copyrights (or registration or
application for registration thereof) acquired or developed after the date
hereof).
SECTION 3.03. Validity of Security Interest. The Security Interest
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constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and
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performance of the Obligations, (b) subject to the filings described in Section
3.02 above, a perfected security interest in all Collateral in which a security
interest may be perfected by filing, recording or registering a financing
statement or analogous document in the United States (or any political
subdivision thereof) and its territories and possessions pursuant to the Uniform
Commercial Code or other applicable law in such jurisdictions, and (c) a
security interest that shall be perfected in all Collateral in which a security
interest may be perfected upon the receipt and recording of this Agreement with
the United States Patent and Trademark Office and the United States Copyright
Office, as applicable, within the one-month period (commencing as of the date
hereof) pursuant to 15 U.S.C. (S) 1060 or the one-month period (commencing as of
the date hereof) pursuant to 17 U.S.C. (S) 205. The Security Interest is and
shall be prior to any other Lien on any of the Collateral, other than Liens that
the Credit Agreement expressly permits to be prior to the Security Interest.
SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
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Grantors free and clear of any Lien, except for Liens expressly permitted by the
Credit Agreement. Other than as contemplated hereby, none of the Grantors has
filed or consented to the filing of (a) any financing statement or analogous
document under the Uniform Commercial Code or any other applicable laws covering
any Collateral, (b) any assignment in which any Grantor assigns any Collateral
or any security agreement or similar instrument covering any Collateral with
the United States Patent and Trademark Office or the United States Copyright
Office or (c) any assignment in which any Grantor assigns any Collateral or any
security agreement or similar instrument covering any Collateral with any
foreign governmental, municipal or other office.
ARTICLE IV. COVENANTS
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SECTION 4.01. Change of Name; Location of Collateral; Records; Place
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of Business. (a) Each of the Grantors agrees promptly to notify the Security
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Agent of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility) or
(iii) in its identity or corporate structure.
SECTION 4.02. Periodic Certification. Within 45 days after the
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Effective Date, the Borrower shall deliver to the Security Agent a certificate
executed by a financial officer and the chief legal officer of the Borrower
setting forth, with respect to each filing, recording or registra tion
contemplated by Section 3.02, the filing office, date and file number thereof
and attaching true, correct and complete acknowledgement copies of each such
filing, recording or registration. Each year, at the time of delivery of annual
financial statements with respect to the preceding fiscal year pursuant to
Section 5.01 of the Credit Agreement, the Borrower shall deliver to the Security
Agent a certificate executed by a financial officer and the chief legal officer
of the Borrower (a) setting forth the information with respect to the Grantors
required pursuant to Section 2 of the Perfection Certificate, (b) certifying
that all Uniform Commercial Code financing statements or other appropriate
filings, recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (a) above to the extent necessary to
protect and perfect the Security Interest for a period of not less than 18
months after the date of such certificate, (c) setting forth, with respect to
each filing, recording or registration (including each refiling, rerecording or
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reregistration) made since the date of the Perfection Certificate or the most
recent certificate delivered pursuant to this Section, the filing office, date
and file number thereof, and (d) attaching true, correct and complete
acknowledgement copies of each such filing, recording or registration not
theretofore delivered to the Security Agent.
SECTION 4.03. Protection of Security. Each of the Grantors shall, at
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its own cost and expense, take any and all actions necessary to defend title to
the Collateral against all persons and to defend the Security Interest of the
Security Agent in the Collateral and the priority thereof against any Lien not
expressly permitted under the Credit Agreement.
SECTION 4.04. Further Assurances. Each of the Grantors agrees, at
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its expense, to execute, acknowledge, deliver and cause to be duly filed all
such further instruments and documents and take all such actions as the Security
Agent or any of the Lenders may from time to time request to better assure,
preserve, protect and perfect the Security Interest and the rights and remedies
created hereby, including the payment of any fees and taxes required in
connection with the execution and delivery of this Agreement, the granting of
the Security Interest and the filing of any financing statements or other
documents in connection herewith. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any promissory note
or other instrument, such note or instrument shall be immediately pledged and
delivered to the Security Agent, duly endorsed in a manner satisfactory to the
Security Agent.
Without limiting the generality of the foregoing, each Grantor hereby
agrees, promptly upon receipt of notice from the Security Agent, to supplement
this Agreement by supplementing Schedule I, II or III hereto or adding
additional schedules hereto to specifically identify any asset or item that
constitutes Copyrights, Licenses, or
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Trademarks. Each Grantor agrees that it will use its best efforts to take such
action as shall be necessary in order that all representations and warranties
hereunder shall be true and correct with respect to such Collateral within 30
days after the date it has been notified by the Security Agent of the specific
identification of such Collateral.
SECTION 4.05. Taxes; Encumbrances. At its option, the Security Agent
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may discharge past due taxes, assessments, charges, fees, liens, security
interests or other encumbrances at any time levied or placed on the Collateral
and not permitted under the Credit Agreement, and may pay for the maintenance
and preservation of the Collateral to the extent any of the Grantors fails to
do so as required by the Credit Agreement or this Agreement, and each of the
Grantors jointly and severally agrees to reimburse the Security Agent on demand
for any payment made or any expense incurred by the Security Agent pursuant to
the foregoing authorization; provided, however, that nothing in this Section
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shall be interpreted as excusing any Grantor from the performance of, or
imposing any obligation on the Security Agent or any Secured Party to cure or
perform, any covenants or other promises of any Grantor with respect to taxes,
assessments, charges, fees, liens, security interests or other encumbrances and
maintenance as set forth herein or in the Credit Agreement.
SECTION 4.06. Continuing Obligations of the Grantors. Each of the
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Grantors shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it under each contract, agreement or
instrument relating to the Collateral, all in accordance with the terms and
conditions thereof, and the Grantors jointly and severally agree to indemnify
and hold harmless the Security Agent and the Secured Parties from and against
any and all liability for such performance.
SECTION 4.07. Use and Disposition of Collateral. None of the
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Grantors shall make or permit to be made an assignment, pledge or hypothecation
of the Collateral or
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shall grant any other Lien in respect of the Collateral except as expressly
permitted by the Credit Agreement. None of the Grantors shall make or permit to
be made any transfer of the Collateral and each Grantor shall remain at all
times in possession of the Collateral owned by it, except that unless and until
the Security Agent shall notify the Grantors that an Event of Default shall have
occurred and be continuing and that during the continuance thereof the Grantors
shall not sell, convey, lease, assign, transfer or otherwise dispose of any
Collateral (which notice may be given by telephone if promptly confirmed in
writing), the Grantors may use and dispose of the Collateral in any lawful
manner not inconsistent with the provisions of this Agreement, the Credit
Agreement or any other Loan Document.
SECTION 4.08. Covenants Regarding License, Trademark and Copyright
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Collateral. (a) Each Grantor (either itself or through its licensees or its
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sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use or knowingly permit the use of such Trademark in violation of any
third party rights.
(b) Each Grantor (either itself or through licensees) will, for each
work covered by a material Copyright, continue to publish, reproduce, display,
adopt and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws.
(c) Each Grantor shall notify the Security Agent immediately if it
knows or has reason to know that any Trademark or Copyright material to the
conduct of its business may become abandoned, lost or dedicated to the
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public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, United States Copyright Office or
any court or similar office of any country) regarding such Grantor's ownership
of any Trademark or Copyright, its right to register the same, or to keep and
maintain the same.
(d) In no event shall any Grantor, either itself or through any
agent, employee, licensee or designee, file an application for any Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or in any
other country or any political subdivision thereof, unless it promptly (or, in
the case of Trademarks and Copyrights which are not, individually or in the
aggregate, material to any Grantor's business, condition or prospects, no less
frequently than on a quarterly basis) informs the Security Agent, and, upon
request of the Security Agent, executes and delivers any and all agreements,
instruments, documents and papers as the Security Agent may request to evidence
the Security Agent's security interest in such Trademark or Copyright, and each
Grantor hereby appoints the Security Agent as its attorney-in-fact to execute
and file such writings for the foregoing purposes, all acts of such attorney
being hereby ratified and confirmed; such power, being coupled with an interest,
is irrevocable.
(e) Each Grantor will take all reasonably necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Trademarks and/or Copyrights (and to obtain the relevant grant
or registration) and to maintain each registration of the Trademarks and
Copyrights which is material to the
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conduct of any Grantor's business, including timely filings of applications for
renewal, affidavits of use, affidavits of incontestability and payment of
maintenance fees, and, if consistent with good business judgment, to initiate
opposition, interference and cancelation proceedings against third parties.
(f) In the event that any Collateral consisting of a Trademark or
Copyright material to the conduct of any Grantor's business is believed
infringed, misappropriated or diluted by a third party, such Grantor promptly
shall notify the Security Agent after it obtains knowledge thereof and shall, if
consistent with good business judgment, promptly ▇▇▇ for infringement,
misappropriation or dilution and to recover any and all damages for such
infringement, misappropriation or dilution (or, in the event any third party is
contractually entitled to maintain any such suit, such Grantor shall pursue all
its available remedies, including, if applicable, by demanding such third party
to commence such suit and pursue such recovery), and take such other actions as
are appropriate under the circumstances to protect such Collateral.
(g) Each Grantor shall use its best efforts to obtain all requisite
consents or approvals by the licensor of each Copyright License or Trademark
License to effect the assignment of all of the Grantors' right, title and
interest thereunder to the Security Agent or its designee.
ARTICLE V. REMEDIES
SECTION 5.01. Remedies upon Default. Upon the occurrence and during
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the continuance of an Event of Default, each of the Grantors agrees to deliver
each item of Collateral to the Security Agent on demand, and it is agreed that
the Security Agent shall have the right (subject to applicable law) to take any
of or all the following actions at the same or different times: on demand, to
cause the Security Interest to become an assignment, transfer and
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conveyance of any of or all such Collateral by the applicable Grantors to the
Security Agent, or to license or, to the extent permitted by applicable law,
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any such Collateral throughout the world on such terms
and conditions and in such manner as the Security Agent shall determine (other
than in violation of the Trademark Agreements or any other then-existing
licensing arrangements to the extent that waivers have not been obtained in the
Trademark Collateral Agreement or cannot otherwise be obtained), and with or
without legal process and with or without previous notice or demand for
performance, to exercise any and all rights afforded to a secured party under
the Uniform Commercial Code or other applicable law. Without limiting the
generality of the foregoing, each of the Grantors agrees that the Security Agent
shall have the right, subject to the mandatory requirements of current law, to
sell, assign or otherwise dispose of all or any part of the Collateral, at
public or private sale or at any broker's board or on any securities exchange,
for cash, upon credit or for future delivery as the Security Agent shall deem
appropriate. The Security Agent shall be authorized at any such sale (if it
deems it advisable to do so) to restrict the prospective bidders or purchasers
to persons who will represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to the distribution or
sale thereof, and upon consummation of any such sale the Security Agent shall
have the right to assign, transfer and deliver to the purchaser or purchasers
thereof the Collateral so sold. Each such purchaser at any such sale shall hold
the property sold absolutely, free from any claim or right on the part of any of
the Grantors, and each of the Grantors hereby waives (to the extent permitted by
law) all rights of redemption, stay and appraisal which such Grantor now has or
may at any time in the future have under any rule of law or statute now existing
or hereafter enacted.
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The Security Agent shall give the Grantors 10 days' written notice
(which each of the Grantors agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions) of the Security Agent's intention
to make any sale of Collateral. Such notice, in the case of a public sale,
shall state the time and place for such sale and, in the case of a sale at a
broker's board or on a securities exchange, shall state the board or exchange at
which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Security Agent may fix and state in the
notice (if any) of such sale. At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Security Agent may (in its sole and absolute discretion)
determine. The Security Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Security Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Security Agent until the sale price is paid by
the purchaser or purchasers thereof, but the Security Agent shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
be sold again upon like notice. At any public sale made pursuant to this
Section, any Secured Party may bid for or purchase, free (to the extent
permitted by law) from any right of redemption, stay, valuation or appraisal on
the part of any of the Grantors (all said rights being also hereby waived and
18
released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any claim then
due and payable to such Secured Party from any of the Grantors as a credit
against the purchase price, and such Secured Party may, upon compliance with the
terms of sale, hold, retain and dispose of such property without further
accountability to any of the Grantors therefor. For purposes hereof, a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof; the Security Agent shall be free to carry out such sale pursuant
to such agreement and none of the Grantors shall be entitled to the return of
the Collateral or any portion thereof subject thereto, notwithstanding the fact
that after the Security Agent shall have entered into such an agreement all
Events of Default shall have been remedied and the Obligations paid in full. As
an alternative to exercising the power of sale herein conferred upon it, the
Security Agent may proceed by a suit or suits at law or in equity to foreclose
this Agreement and to sell the Collateral or any portion thereof pursuant to a
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver.
SECTION 5.02. Application of Proceeds. The Security Agent shall
------------------------
apply the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by the Agent
or the Security Agent (in its capacity as such hereunder or under any other
Loan Document) in connection with such collection or sale or otherwise in
connection with this Agreement or any of the Obligations, including all
court costs and the fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Security Agent hereunder or under any
other Loan Document on behalf of any of the Grantors and any other costs or
expenses
19
incurred in connection with the exercise of any right or remedy hereunder
or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in accordance
with the amounts of the Obligations owed to them on the date of any such
distribution); and
THIRD, to the Grantors, their successors or assigns, or as a court of
competent jurisdiction may otherwise direct.
The Security Agent shall have absolute discretion as to the time of application
of any such proceeds, moneys or balances in accordance with this Agreement.
Upon any sale of the Collateral by the Security Agent (including pursuant to a
power of sale granted by statute or under a judicial proceeding), the receipt of
the Security Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Security Agent or such officer or be
answerable in any way for the misapplication thereof.
SECTION 5.03. Grant of License to Use Intellectual Property. For the
----------------------------------------------
purpose of enabling the Security Agent to exercise rights and remedies under
this Article at such time as the Security Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Security
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to use, license or sub-license
any of the Collateral now owned or hereafter acquired by such Grantor, and
wherever the same may be located, and including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof (other than in violation
20
of any Trademark Agreements or any other then-existing licensing arrangements to
the extent that waivers have not been obtained in the Trademark Collateral
Agreement or cannot otherwise be obtained). The use of such license by the
Security Agent shall be exercised, at the option of the Security Agent, upon the
occurrence and during the continuation of an Event of Default; provided that any
--------
license, sub-license or other transaction entered into by the Security Agent in
accordance herewith shall be binding upon the Grantors notwithstanding any
subsequent cure of an Event of Default.
ARTICLE VI. MISCELLANEOUS
SECTION 6.01. Notices. All communications and notices hereunder
--------
shall (except as otherwise expressly permitted herein) be in writing and given
as provided in Section 10.01 of the Credit Agreement. All communications and
notices hereunder to any Subsidiary Grantor shall be given to it in care of the
Borrower at the address specified in the Credit Agreement for notices to the
Borrower thereunder.
SECTION 6.02. Security Interest Absolute. All rights of the Security
---------------------------
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement or any other Loan Document,
any agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing; (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument;
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations; or
21
(d) any other circumstance which might otherwise constitute a defense available
to, or a discharge of, any Grantor in respect of the Obligations or this
Agreement.
SECTION 6.03. Survival of Agreement. All covenants, agreements,
----------------------
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the making by the Lenders
of the Loans, and the execution and delivery to the Lenders of the Notes
evidencing such Loans, regardless of any investigation made by the Lenders or on
their behalf, and shall continue in full force and effect until this Agreement
shall terminate.
SECTION 6.04. Binding Effect; Several Agreement. This Agreement
----------------------------------
shall become effective as to any Grantor when a counterpart hereof executed on
behalf of such Grantor shall have been delivered to the Security Agent and a
counterpart hereof shall have been executed on behalf of the Security Agent, and
thereafter shall be binding upon such Grantor and the Security Agent and their
respective successors and assigns, and shall inure to the benefit of such
Grantor, the Security Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign
its rights hereunder or any interest herein or in the Collateral except as
expressly contemplated by this Agreement or the Credit Agreement. This Agreement
shall be construed as a separate agreement with respect to each Grantor and may
be amended, modified, supplemented, waived or released with respect to any
Grantor without the approval of any other Grantor and without affecting the
obligations of any other Grantor hereunder.
SECTION 6.05. Successors and Assigns. Whenever in this Agreement any
-----------------------
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party; and all covenants, promises and
22
agreements by or on behalf of any Grantor or the Security Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
SECTION 6.06. Security Agent Appointed Attorney-in-Fact. Each of the
------------------------------------------
Grantors hereby appoints the Security Agent the attorney-in-fact of such Grantor
for the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument which the Security Agent may deem necessary
or advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest. Without limiting the generality of the foregoing,
the Security Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Security Agent's name or in the name of any Grantor, to ask for, demand, ▇▇▇
for, collect, receive and give acquittance for any and all moneys due or to
become due under and by virtue of any Collateral, to endorse checks, drafts,
orders and other instruments for the payment of money payable to such Grantor
representing any dividend or other distribution payable in respect of the
Collateral or any part thereof or on account thereof and to give full discharge
for the same, to settle, compromise, prosecute or defend any action, claim or
proceeding with respect thereto, and to sell, assign, endorse, pledge, transfer
and make any agreement respecting, or otherwise deal with, the same; provided,
--------
however, that nothing herein contained shall be construed as requiring or
-------
obligating the Security Agent to make any commitment or to make any inquiry as
to the nature or sufficiency of any payment received by the Security Agent, or
to present or file any claim or notice, or to take any action with respect to
the Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby, and no action taken by the Security
Agent or omitted to be taken with respect to the Collateral or any part thereof
shall give rise to any defense, counterclaim or offset in favor of any Grantor
or to any claim or action against the Security Agent or any other Secured Party.
23
SECTION 6.07. Security Agent's Fees and Expenses; Indemnification.
----------------------------------------------------
(a) Each of the Grantors jointly and severally agrees to pay upon demand to the
Security Agent the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts or agents, which
the Security Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from
or other realization upon any of the Collateral, (iii) the exercise, enforcement
or protection of any of the rights of the Security Agent hereunder or (iv) the
failure of the Grantors to perform or observe any of the provisions hereof.
(b) Without limitation of their indemnification obligations under the
other Loan Documents, each of the Pledgors jointly and severally agrees to
indemnify the Security Agent from and against any and all liabilities, losses,
damages, costs and expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be incurred by the
Security Agent in connection with any investigative, administrative or judicial
proceeding relating hereto or to the Collateral, whether or not the Security
Agent is a party thereto; provided that the Security Agent shall not have the
--------
right to be indemnified hereunder for its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
(c) Any such amounts payable as provided here under shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section shall remain operative and in full force and effect
regardless of the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Loans, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document, or any investigation made by or on behalf of the Security
Agent or any Bank. All amounts
24
due under this Section shall be payable on written demand therefor.
SECTION 6.08. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
--------------
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 6.09. Waivers; Amendment. (a) No failure or delay of the
-------------------
Security Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Security Agent hereunder
and of the Security Agent, the Agent and the Lenders under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies which
they would otherwise have. No waiver of any provisions of this Agreement or any
other Loan Document or consent to any departure by any Grantor therefrom shall
in any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand on any
Grantor in any case shall entitle such Grantor or any other Grantor to any other
or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Security Agent and the Grantor or Grantors with respect to
which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 10.05 of the Credit Agreement.
SECTION 6.10. Waiver of Jury Trial. Each of the parties hereto
---------------------
irrevocably waives any and all rights to trial by jury in any legal proceeding
arising out of or
25
relating to this Agreement or any other Loan Document or the transactions
contemplated hereby.
SECTION 6.11. Severability. In the event any one or more of the
------------
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 6.12. Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract (subject to Section 6.04),
and shall become effective as provided in Section 6.04.
SECTION 6.13. Headings. Article and Section headings used herein are
--------
for convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 6.14. Jurisdiction; Consent to Service of Process. (a) Each
-------------------------------------------
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such
26
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Security Agent or any
Bank may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against any Grantor or its properties in
the courts of any jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 6.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 6.15. Termination. This Agreement and the Security Interest
------------
shall terminate when all the Obligations (other than obligations of the Borrower
under Section 10.03(b) of the Credit Agreement, or any other indemnification
provisions contained in the Loan Documents, in respect of claims which have not
then been asserted) have been indefeasibly paid in full and the Lenders have no
further commitment to lend or to issue Letters of Credit under the Credit
Agreement, at which time the Security Agent shall execute and deliver to the
Grantors, at the Grantors' expense, all Uniform Commercial Code termination
statements and similar customary documents which the Grantors shall reasonably
request to evidence such termination. Any execution and delivery of termination
statements or
27
documents pursuant to this Section shall be without recourse to or warranty by
the Security Agent. Each Subsidiary Grantor shall automatically be released from
its obligations hereunder and the Security Interest in the Collateral of such
Subsidiary Grantor shall be automatically released in the event that all the
capital stock of such Subsidiary Grantor shall be sold, transferred or otherwise
disposed of to a person that is not an Affiliate of the Borrower in accordance
with the terms of the Credit Agreement; provided that the Required Lenders shall
--------
have consented to such sale, transfer or other disposition and the terms of such
consent did not provide otherwise.
SECTION 6.16. Additional Grantors. Upon execution and delivery by
--------------------
the Security Agent and a Subsidiary of an instrument in the form of Annex 1
hereto, such Subsidiary shall become a Subsidiary Grantor and Grantor hereunder
with the same force and effect as if originally named as a Subsidiary Grantor
and Grantor herein. The execution and delivery of any such instrument shall not
require the consent of any Grantor hereunder. The rights
28
and obligations of each Grantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Grantor as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BRYLANE, L.P.,
by VGP CORPORATION, General Partner
by /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President, Treasurer
and Secretary
▇.▇. CATALOG DISTRIBUTION, INC.,
by /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President,
Chief Financial Officer,
Secretary and Treasurer
29
▇.▇. CATALOG DISTRIBUTION PARTNERSHIP,
by ▇.▇. CATALOG DISTRIBUTION
INC., General Partner,
by /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President,
Chief Financial Officer,
Secretary and Treasurer
by BRYLANE, L.P., General
Partner
by VGP CORPORATION, General
Partner
by /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President, Treasurer
and Secretary
▇.▇. MANAGEMENT SERVICES, INC.,
by /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President,
Chief Financial Officer,
Secretary and Treasurer
30
▇.▇. MANAGEMENT SERVICES PARTNERSHIP,
by ▇.▇. MANAGEMENT SERVICES
INC., General Partner,
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
by B.N.Y. SERVICE CORP., General
Partner,
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and
Chief Executive Officer
B.N.Y. SERVICE CORP.
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and
Chief Executive Officer
K.S. MANAGEMENT SERVICES, INC.
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
31
C.O.B. MANAGEMENT SERVICES, INC.
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
▇▇▇▇▇▇▇▇'▇ TRADENAME SUB, INC.
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF
NEW YORK,
as Security Agent,
by
---------------------------
Title:
32
ANNEX 1 to
Security Agreement
SUPPLEMENT NO. dated as of , 199 , to the Security
Agreement dated as of December 9, 1996 among BRYLANE, L.P., a
Delaware limited partnership (the "Borrower"), the subsidiaries
--------
of the Borrower listed on Schedule 1 thereto and such other
subsidiaries of the Borrower as shall become parties thereto
pursuant to Section 6.16 thereof (collectively, the "Subsidiary
----------
Grantors", the Borrower and the Subsidiary Grantors being
--------
collectively called the "Grantors"); and ▇▇▇▇▇▇ GUARANTY TRUST
--------
COMPANY OF NEW YORK, a Delaware corporation, as security agent
(in such capacity, the "Security Agent") for the Secured Parties,
--------------
as defined therein.
A. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Security Agreement.
B. The Borrower and the Subsidiary Grantors have entered into the
Security Agreement in order to induce the Lenders to extend credit under the
Credit Agreement. The Security Agreement provides that additional Subsidiaries
may become Subsidiary Grantors under the Security Agreement by execution and
delivery of an instrument in the form of this Supplement. Pursuant to the
Credit Agreement, the undersigned Subsidiary (the "New Subsidiary Grantor") is
----------------------
required to become a Subsidiary Grantor under the Security Agreement. The New
Subsidiary Grantor desires to become a Subsidiary Grantor and Grantor under the
Security Agreement in order to induce the Lenders to continue to extend credit
under the Credit Agreement and as consideration therefor.
Accordingly, the Security Agent and the New Subsidiary Grantor agree
as follows:
SECTION 1. In accordance with the Security Agreement, the New
Subsidiary Grantor by its signature hereto shall become a Subsidiary Grantor and
Grantor under the Security Agreement with the same force and effect as if
originally named therein as a Subsidiary Grantor and Grantor and the New
Subsidiary Grantor hereby (a) agrees to all the terms and provisions of the
Security Agreement applicable to it as a Subsidiary Grantor and Grantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Subsidiary Grantor and Grantor thereunder are true
and correct on and as of the date hereof. In furtherance of the foregoing, the
New Subsidiary Grantor, as security for the payment or performance, as the case
may be, of the Obligations, does hereby create, grant, assign, set over,
mortgage, pledge, hypothecate and transfer to the Security Agent, its successors
and its assigns, for the benefit of the Secured Parties, a security interest in
all of the Subsidiary Grantor's right, title and interest in, to and under the
Collateral. Each reference to a "Grantor" or a "Subsidiary Grantor" in the
Security Agreement shall be deemed to include the New Subsidiary Grantor, and
each reference to the "Security Interest" in the Security Agreement shall be
deemed to include the security interest granted under this Section 1. The
Security Agreement is hereby incorporated herein by reference.
SECTION 2. This Supplement shall become effective when the Security
Agent shall have received a counterpart of this Supplement executed on behalf of
the New Subsidiary Grantor.
SECTION 3. The New Subsidiary Grantor hereby represents and warrants
that this Supplement has been duly authorized, executed and delivered by the New
Subsidiary Grantor and constitutes a valid and binding obligation of the New
Subsidiary Grantor, enforceable against it in accordance with its terms.
2
SECTION 4. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect in accordance with its terms.
SECTION 5. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provi sions contained in
this Supplement should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired. The parties hereto shall endeavor in good-faith negotiations to
replace any invalid, illegal or unenforceable provisions herein with valid
provisions, the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 7. This Supplement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument.
SECTION 8. The New Subsidiary Grantor agrees to reimburse the
Security Agent for its reasonable out-of-pocket expenses in connection with this
Supplement, includ ing the reasonable fees and expenses of counsel for the
Security Agent.
IN WITNESS WHEREOF, the New Subsidiary Grantor and the Security Agent
have duly executed this Supplement to the Security Agreement as of the day and
year first above written.
[NAME OF NEW SUBSIDIARY GRANTOR],
3
by
-------------------------
Name:
Title:
Address:
-----------------
-----------------
-----------------
▇▇▇▇▇▇ GUARANTY TRUST
COMPANY OF NEW YORK, as
Security Agent,
by
-------------------------
Name:
Title:
4