EXHIBIT 10.2
GUARANTOR SECURITY AGREEMENT
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SECURITY AGREEMENT, dated as of July 29, 1999, made by XxXxxxxxxx
Apparel Holdings Inc. a South Carolina corporation (the "Grantor"), in favor of
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NATIONSBANC COMMERCIAL CORPORATION, as collateral agent for the Lenders parties
to the Amended and Restated Financing Agreement referred to below (in such
capacity, the "Collateral Agent").
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W I T N E S S E T H :
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WHEREAS, XxXxxxxxxx Apparel Group Inc., a Delaware corporation f/k/a
Norton XxXxxxxxxx, Inc. (the "Company"), Norton XxXxxxxxxx of Xxxxxx, Inc., a
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New York corporation ("Squire"), Miss Xxxxx, Inc. a Delaware corporation ("Miss
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Xxxxx"), Xxxx-Xx Knitwear, Inc., a Delaware corporation f/k/a JJ Acquisition
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Corp. ("Xxxx-Xx"), the financial institutions from time to time party to the
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Amended and Restated Financing Agreement (the "Lenders"), NationsBanc Commercial
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Corporation, as collateral agent (the "Collateral Agent"), The CIT
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Group/Commercial Services, Inc., as administrative agent (the "Administrative
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Agent") and Fleet Bank NA, as documentation agent (the "Documentation Agent")
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are parties to an Amended and Restated Financing Agreement, dated as of June 18,
1998, as amended through the date hereof (such agreement, as amended, restated
or otherwise modified from time to time, being hereinafter referred to as the
"Amended and Restated Financing Agreement");
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WHEREAS, the Company directly owns all of the issued and outstanding
shares of capital stock of the Grantor; and
WHEREAS, pursuant to Section 7.01(b) of the Amended and Restated
Financing Agreement, the Grantor is required to execute and deliver to the
Collateral Agent a security agreement providing for the grant to the Collateral
Agent for the benefit of the Lenders of a security interest in all personal
property of the Grantor;
NOW, THEREFORE, in consideration of the premises and the agreements
herein and in order to induce the Lenders to make and maintain the Loans and to
assist the Borrowers in obtaining the issuance of Letters of Credit pursuant to
the Amended and Restated Financing Agreement, the Grantor hereby agrees with the
Collateral Agent as follows:
SECTION 1. Definitions. Reference is hereby made to the Amended and
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Restated Financing Agreement for a statement of the terms thereof. All terms
used in this Agreement which are defined in the Amended and Restated Financing
Agreement or in Article 9 of the Uniform Commercial Code (the "Code") currently
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in effect in the State of New York and which are not otherwise defined herein
shall have the same meanings herein as set forth therein.
SECTION 2. Grant of Security Interest. As collateral security for
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all of the Guaranteed Obligations (as defined in Section 3 hereof), the Grantor
hereby pledges and collaterally assigns to the Collateral Agent, and grants to
the Collateral Agent for the benefit of
the Lenders a continuing security interest in, all personal property and
fixtures of the Grantor, wherever located and whether now or hereafter existing
and whether now owned or hereafter acquired, of every kind and description,
tangible or intangible (the "Collateral"), including, without limitation, all of
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the Grantor's right, title and interest in and to the following:
(a) all equipment of any kind including, without limitation, all
furniture, fixtures and machinery, wherever located and whether now or hereafter
existing and whether now owned or hereafter acquired, together with all
substitutes, replacements, accessions and additions thereto, and all tools,
parts, accessories and attachments used in connection therewith (hereinafter
collectively referred to as the "Equipment");
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(b) all inventory of any kind wherever located and whether now or
hereafter existing and whether now owned or hereafter acquired, (including,
without limitation, all types of inventory, merchandise, goods, property and
other assets that are held by the Grantor for sale, lease or other disposition
or to be furnished under a contract for services, whether such inventory,
merchandise, goods, property and other assets are raw, in process, finished,
trim or piece goods, and materials used or consumed in the business of the
Grantor, and goods returned to or repossessed by the Grantor and goods in which
the Grantor has an interest in mass or in joint or other interest or right of
any kind, including consigned goods and goods being processed), and all
accessions thereto and products thereof and all packing and shipping materials
(any and all such inventory, accessions and products being hereinafter referred
to as the "Inventory");
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(c) (i) all present and future accounts, contract rights, chattel
paper, documents, instruments, general intangibles and other obligations of any
kind arising out of or in connection with the sale, lease or other disposition
of goods or the rendering of services or otherwise; (ii) all of the Grantor's
right, title and interest, and all of the Grantor's rights, remedies, security
and Liens, in, to and in respect of any credit insurance, accounts (including,
without limitation, rights of stoppage in transit, replevin, repossession,
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party), guaranties or other contracts of suretyship with respect to accounts,
and deposits or other security for the obligation of any Account Debtor; (iii)
all rights relating to the sale or other transfer of property to, or the
construction, renovation, processing or other improvement of property by or for
the Grantor; (iv) all rights now or hereafter existing in and to all letters of
credit, security agreements, leases and other contracts now or hereafter
existing and securing or otherwise relating to such accounts, contract rights,
chattel paper, instruments, documents, general intangibles or other rights or
obligations (including, without limitation, the contracts described in Schedule
I hereto); and (v) all goods relating to, or which by sale have resulted in,
accounts, including, without limitation, all goods described in invoices or
other documents or instruments with respect to, or otherwise representing or
evidencing, any accounts, and all returned, reclaimed or repossessed goods (any
and all such accounts, contract rights, chattel paper, instruments, documents,
general intangibles and obligations being hereinafter referred to collectively
as the "Receivables", and any and all such credit insurance, guaranties, letters
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of credit, security agreements, leases and other contracts being hereinafter
referred to collectively as the "Related Contracts");
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(d) (i) all trademarks, service marks, trade names, business names,
trade styles, designs, logos and other source or business identifiers and all
general intangibles of like nature, now or hereafter owned, adopted, acquired or
used by the Grantor (including, without
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limitation, all trademarks, service marks, trade names, business names, trade
styles, designs, logos and other source or business identifiers described in
Schedule II or VI hereto), all applications, registrations and recordings
thereof (including, without limitation, applications, registrations and
recordings 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), and all reissues, extensions or renewals
thereof, together with all goodwill of the business symbolized by such marks and
all customer lists, formulae and other records of the Grantor relating to the
distribution of products and services in connection with which any of such marks
are used, and all income, royalties, damages and payments now or hereafter due
and/or payable under and with respect thereto, including, without limitation,
payments under all licenses entered into in connection therewith and damages and
payments for past and future infringements or dilution's thereof and the right
to xxx for past, present and future infringements and dilutions thereof
(hereinafter referred to collectively as the "Trademarks"), and (ii) all
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licenses, contracts or other agreements, whether written or oral, naming the
Grantor as licensor or licensee and providing for the grant of any right to use
any Trademark, including, without limitation, all Trademark Licenses described
in Schedule II hereto, together with any goodwill connected with and symbolized
by any such trademark licenses or agreements and the right to prepare for sale
and sell any and all Inventory now or hereafter owned by the Grantor and now or
hereafter covered by such licenses (hereinafter referred to collectively as the
"Trademark Licenses");
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(e) (i) all letters patent, design patents and utility patents, and
all inventions, trade secrets, proprietary information and technology, know-how,
formulae and other general intangibles of like nature, now existing or hereafter
acquired (including, without limitation, all letters patent, design patents and
utility patents described in Schedule III hereto), all applications,
registrations and recordings thereof (including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof (hereinafter referred to collectively as the "Patents"), and (ii) all
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licenses, contracts or other agreements, whether written or oral, naming the
Grantor as licensee or licensor and providing for the grant of any right to
manufacture, use or sell any invention covered by any patent (hereinafter
referred to collectively as the "Patent Licenses") (including, without
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limitation, all Patent Licenses set forth in Schedule III hereto);
(f) (i) all copyrights, including, without limitation, all original
works of authorship fixed in any tangible medium of expression, acquired or used
by the Grantor (including, without limitation, all copyrights described in
Schedule IV hereto), all applications, registrations and recordings thereof
(including, without limitation, applications, registrations and recordings in
the United States Copyright Office or in any similar office or agency of the
United States or any other country or any political subdivision thereof), and
all reissues, divisions, continuations, continuations in part and extensions or
renewals thereof (hereinafter referred to collectively as the "Copyrights"), and
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(ii) all licenses, contracts or other agreements, whether written or oral,
naming the Grantor as licensee or licensor and providing for the grant of any
right to use or sell any works covered by any copyright (hereinafter referred to
collectively as the "Copyright Licenses" and together with the Trademark
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Licenses and the Patent Licenses, the
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"Licenses") (including, without limitation, all Copyright Licenses set forth in
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Schedule IV hereto);
(g) (i) all moneys, securities and other property and the proceeds
thereof, now or hereafter held or received by, or in transit to, the Collateral
Agent, the Administrative Agent or any Lender from or for the Grantor, whether
for safekeeping, pledge, custody, transmission, collection or otherwise, and all
of the Grantor's sums and credits with, and all of the Grantor's claims against
the Collateral Agent, the Administrative Agent or any Lender at any time
existing; (ii) all rights, interests, choses in action, causes of actions,
claims and all other intangible property of every kind and nature, in each
instance whether now owned or hereafter acquired by the Grantor, including,
without limitation, all corporate and other business records, all loans,
royalties, and all other forms of obligations receivable whatsoever (other than
Receivables); (iii) all computer programs, software, printouts and other
computer materials, customer lists, credit files, correspondence, advertising
materials and other source or business identifiers; (iv) all customer and
supplier contracts, sale orders, rights under license and franchise agreements,
and other contracts and contract rights; (v) all interests in partnerships,
limited liability companies and joint ventures, including all moneys due from
time to time in respect thereof; (vi) all federal, state and local tax refunds
and federal, state and local tax refund claims and all judgments in favor of
Grantor and all of Grantor's rights with respect thereto; (vii) all right, title
and interest under leases, subleases, licenses and concessions and other
agreements relating to personal property, including all moneys due from time to
time in respect thereof; (viii) all payments due or made to the Grantor in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of any property by any Person or Governmental Authority; (ix) all
lock-box and all deposit accounts (general or special) or other accounts with
any bank or other financial institution, including, without limitation, all
depository or other accounts maintained by the Grantor at the Administrative
Agent, the Collateral Agent or any Lender and all funds on deposit therein; (x)
all credits with and other claims against third parties (including carriers and
shippers) (other than Receivables); (xi) all rights to indemnification; (xii)
all reversionary interests in pension and profit sharing plans and reversionary,
beneficial and residual interests in trusts; (xiii) all proceeds of insurance of
which the Grantor is the beneficiary; (xiv) all letters of credit, guaranties,
liens, security interests and other security held by or granted to the Grantor;
(xv) all instruments, files, records, ledger sheets and documents covering or
relating to any of the Collateral; and (xvi) all general intangibles, whether or
not similar to the foregoing, in each instance, however and wherever arising;
(h) the books and records of the Grantor relating to any of the
foregoing Collateral, including, without limitation, all customer contracts,
sale orders, minute books, ledgers, records, computer programs, software,
printouts and other computer materials, customer lists, credit files,
correspondence and advertising materials, in each case indicating, summarizing
or evidencing any of the Collateral; and
(i) all cash and non-cash proceeds of any and all of the foregoing
Collateral (including, without limitation, (i) damages and payments for past or
future infringements of the Trademarks, the Patents or the Copyrights and (ii)
the right to xxx for past, present and future infringements of the Trademarks,
the Patents or the Copyrights) and, to the extent not otherwise included, all
payments under insurance (whether or not the Collateral Agent is the loss payee
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thereof) and any indemnity, warranty or guaranty payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral;
in each case howsoever the Grantor's interest therein may arise or
appear (whether by ownership, security interest, claim or otherwise); provided
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that, nothing hereunder constitutes or shall be deemed to constitute the grant
of a security interest in favor of the Collateral Agent in the Grantor's
interest in any Related Contract or other contract right, any License or other
license agreement, any lease or any other general intangible (other than any of
the foregoing constituting an account or a general intangible for money due or
to become due to which Section 9-318(4) of the Code applies) (each such contract
right, license agreement, lease and other general intangible, other than those
described in the preceding parenthesis, being hereinafter referred to as
"Excluded Property"), if the granting of a security interest therein by the
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Grantor to the Collateral Agent is prohibited by the terms and provisions of the
written agreement, document or instrument creating or evidencing such Excluded
Property, and either (i) such agreement, document or instrument was entered into
prior to the date of this Agreement, or (ii) such agreement, document or
instrument is entered into after the date of this Agreement and the Grantor
delivers to the Collateral Agent a copy of such agreement, document or
instrument, provided, however, that (1) if and when the prohibition which
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prevents the granting by the Grantor to the Collateral Agent of a security
interest in any Excluded Property is removed or otherwise terminated, the
Collateral Agent will be deemed to have, and at all times to have had, a
security interest in such Excluded Property, and (2) the Grantor shall use its
reasonable efforts to exclude from any written agreement, document or instrument
entered into on or after the date of this Agreement creating or evidencing any
contract right, license, lease or general intangible, any prohibition against
the granting by the Grantor to the Collateral Agent of a security interest
therein to the extent that such exclusion or such efforts would not result in
such agreement, document or instrument containing terms which are less favorable
to the Grantor than would be the case but for such exclusion or such efforts or
would result in a decision by the Persons proposed to be parties to such
agreement, document or instrument not to enter into such agreement, document or
instrument. Notwithstanding anything set forth herein to the contrary, the
Collateral Agent will be deemed to have, and at all times to have had, a
security interest in the proceeds of such Excluded Property.
SECTION 3. Security for Guaranteed Obligations. The security
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interest created hereby in the Collateral constitutes continuing collateral
security for all of the following obligations, whether now existing or hereafter
incurred (the "Guaranteed Obligations"):
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(a) the prompt payment by the Grantor, as and when due and payable, of
all amounts from time to time owing by it in respect of its Guaranty, dated as
of July __, 1999 (as amended or otherwise modified from time to time, the
"Guaranty"), in favor of each of the Lenders and the Collateral Agent,
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including, without limitation, principal of and interest on the Loans
(including, without limitation, all interest that accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of any Borrower, whether or not a claim for post-filing
interest is allowed in such proceeding), all Letter of Credit Obligations and
Ledger Debt and all interest thereon, all fees, commissions, expense
reimbursements, indemnifications and all other amounts due or to become due
under any Loan Document to which it is a party; and
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(b) the due performance and observance by the Grantor of all of its
other obligations from time to time existing in respect of its Guaranty and all
other Loan Documents to which it is a party.
SECTION 4. Representations and Warranties. The Grantor represents
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and warrants as follows:
(a) There is no pending or, to the knowledge of the Grantor,
threatened action, suit, proceeding or claim before any court or other
Governmental Authority or any arbitrator, or any order, judgment or award by any
court or other Governmental Authority or arbitrator, that may adversely affect
the grant by the Grantor, or the perfection, of the security interest purported
to be created hereby in the Collateral, or the exercise by the Collateral Agent
of any of its rights or remedies hereunder.
(b) All taxes, assessments and other governmental charges imposed upon
the Grantor or any property of the Grantor (including, without limitation, all
federal income and social security taxes on employees' wages) and which have
become due and payable on or prior to the date hereof have been paid, except (i)
to the extent contested in good faith by proper proceedings which stay the
imposition of any penalty, fine and Lien resulting from the non-payment thereof
and with respect to which adequate reserves in accordance with GAAP have been
established for the payment thereof and (ii) Liens permitted by Section
7.01(c)(ii)(B) of the Amended and Restated Financing Agreement.
(c) All Equipment and Inventory is located at the addresses specified
therefor in Schedule V hereto or at such other locations permitted by the terms
of Section 5(b) hereof. The Grantor's chief place of business and chief
executive office, the place where the Grantor keeps its records concerning
Receivables and all originals of all chattel paper which constitute Receivables
are located at the addresses specified therefor in Schedule V hereto. None of
the Receivables is evidenced by a promissory note or other instrument unless
such promissory note or instrument has been pledged to the Collateral Agent.
Set forth in Schedule VI hereto is a complete and correct list of each trade
name used by the Grantor.
(d) The Grantor has delivered to the Collateral Agent complete and
correct copies of each Related Contract described on Schedule I hereto, which
represent all of the Related Contracts existing on the date of this Agreement
and each License described in Schedule II, Schedule III and Schedule IV hereto,
including in each such case all schedules and exhibits thereto. Each Related
Contract and License sets forth the entire agreement and understanding of the
parties thereto relating to the subject matter thereof, and there are no other
agreements, arrangements or understandings, written or oral, relating to the
matters covered thereby or the rights of the Grantor in respect thereof. Each
Related Contract now existing is, and each other Related Contract will be, the
legal, valid and binding obligation of the parties thereto, enforceable against
such parties in accordance with its terms, subject as to enforceability to
applicable bankruptcy, insolvency, reorganization and similar laws affecting
creditors' rights and to general principles of equity. To the knowledge of the
Grantor, no default thereunder by any such party has occurred, nor does any
defense, offset, deduction or counterclaim exist thereunder in favor of any such
party.
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(e) The Grantor owns and controls, or otherwise possesses adequate
rights to use, all Trademarks, Patents and Copyrights, which are the only
trademarks, patents and copyrights necessary to conduct its business in
substantially the same manner as conducted as of the date hereof. Schedule II
hereto sets forth a true and complete list of all Trademarks and Trademark
Licenses owned or used by the Grantor as of the date hereof. Schedule III
hereto sets forth a true and complete list of all Patents and Patent Licenses
owned or used by the Grantor as of the date hereof. Schedule IV hereto sets
forth a true and complete list of all Copyrights and Copyright Licenses owned or
used by the Grantor as of the date hereof. All of such Copyrights, Patents and
Trademarks are subsisting and in full force and effect, have not been adjudged
invalid or unenforceable, are valid and enforceable and have not been abandoned
in whole or in part. Except as set forth in Schedule II, III or IV hereto, none
of such Copyrights, Patents or Trademarks is the subject of any licensing or
franchising agreement. The Grantor has no knowledge of any conflict with the
rights of others to any Trademark, Patent or Copyright and, to the best
knowledge of the Grantor, the Grantor is not now infringing or in conflict with
any such rights of others in any material respect, and to the best knowledge of
the Grantor, no other Person is now infringing or in conflict in any material
respect with any such properties, assets and rights owned or used by the
Grantor.
(f) The Grantor is the sole and exclusive owner of the Collateral free
and clear of any Lien, except for (i) the security interest created by this
Agreement, (ii) the security interests and other encumbrances permitted by the
Amended and Restated Financing Agreement and (iii) sales of assets permitted by
the terms of the Amended and Restated Financing Agreement. No effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording or filing office, except (i)
such as may have been filed in favor of the Collateral Agent relating to this
Agreement, and (ii) such as may have been filed to perfect or protect any
security interest or encumbrance permitted by the Amended and Restated Financing
Agreement.
(g) The exercise by the Collateral Agent of any of its rights and
remedies hereunder will not contravene law or any contractual restriction
binding on or otherwise affecting the Grantor or any of its properties and will
not result in or require the creation of any Lien, security interest or other
charge or encumbrance upon or with respect to any of its properties.
(h) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or any other Person, is required for
(i) the grant by the Grantor, or the perfection, of the security interest
purported to be created hereby in the Collateral or (ii) the exercise by the
Collateral Agent of any of its rights and remedies hereunder, except (A) for the
filing under the Uniform Commercial Code as in effect in the applicable
jurisdiction of the financing statements described in Schedule VII hereto, (B)
with respect to the perfection of the security interest created hereby in the
United States Trademarks, United States Patents and United States Copyrights for
the recording of the Assignment for Security (Trademarks), substantially in the
form of Exhibit A hereto, the Assignment for Security (Patents), substantially
in the form of Exhibit B hereto, or the Assignment for Security (Copyrights),
substantially in the form of Exhibit C hereto, as applicable, in the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable or (C) with respect to the perfection of the security interest
created hereby in foreign Trademarks, Patents and Copyrights, for registrations
and
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filings in jurisdictions located outside of the United States and covering
rights in such jurisdictions relating to Patents, Trademarks, Copyrights, Patent
Licenses, Trademark Licenses and Copyright Licenses.
(i) This Agreement creates valid security interests in favor of the
Collateral Agent for the benefit of the Lenders in the Collateral, as security
for the Guaranteed Obligations. The Collateral Agent's having possession of all
instruments and cash constituting Collateral from time to time, the recording of
the Assignment for Security (Trademarks), the Assignment for Security (Patents)
and the Assignment for Security (Copyrights), as applicable, executed pursuant
hereto in the United States Patent and Trademark Office and the United States
Copyright Office, as applicable, and the filing of the financing statements
described in Schedule VII hereto and, with respect to Patents, Trademarks and
Copyrights hereafter existing and not covered by an Assignment for Security
(Trademarks), an Assignment for Security (Patents) or an Assignment for Security
(Copyrights), as applicable, the recording in the United States Patent and
Trademark Office or the United States Copyright Office, as applicable, of
appropriate instruments of assignment, result in the perfection of such security
interests. Such security interests are, or in the case of Collateral in which
the Grantor obtains rights after the date hereof, will be, perfected, first
priority security interests, subject only to the security interests and other
encumbrances permitted pursuant to the Amended and Restated Financing Agreement.
SECTION 5. Covenants as to the Collateral. So long as any of the
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Guaranteed Obligations shall remain outstanding or the Total Commitment shall
not have terminated, unless the Collateral Agent shall otherwise consent in
writing:
(a) Further Assurances. The Grantor will at its expense, at any time
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and from time to time, promptly execute and deliver all further instruments and
documents and take all further action that may be necessary or reasonably
desirable or that the Collateral Agent may reasonably request in order (i) to
perfect and protect the security interest purported to be created hereby; (ii)
to enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder in respect of the Collateral; or (iii) otherwise to effect the
purposes of this Agreement, including, without limitation: (A) marking
conspicuously each chattel paper included in the Receivables and each License
and Related Contract and, at the request of the Collateral Agent, each of its
records pertaining to the Collateral with a legend, in form and substance
reasonably satisfactory to the Collateral Agent, indicating that such chattel
paper, License, Related Contract or Collateral is subject to the security
interest created hereby, (B) if any Receivable shall be evidenced by a
promissory note or other instrument or chattel paper, delivering and pledging to
the Collateral Agent hereunder any such note, instrument or chattel paper duly
endorsed and accompanied by executed instruments of transfer or assignment, all
in form and substance reasonably satisfactory to the Collateral Agent, (C)
executing and filing such financing or continuation statements, or amendments
thereto, as may be necessary or reasonably desirable or that the Collateral
Agent may reasonably request in order to perfect and preserve the security
interest purported to be created hereby, and (D) furnishing to the Collateral
Agent from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Collateral Agent may reasonably request, all in reasonable
detail.
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(b) Location of Equipment and Inventory. The Grantor will keep the
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Equipment and Inventory (other than used Equipment and Inventory sold in the
ordinary course of business in accordance with Section 5(g) hereof) at the
locations specified therefor in Section 4(c) hereof, or, upon written notice to
the Collateral Agent in accordance with Section 7.01(n) of the Amended and
Restated Financing Agreement accompanied by a new Schedule V hereto indicating
each new location of the Equipment and Inventory, at such other locations in the
continental United States as the Grantor may elect, provided that (i) the
Grantor shall promptly have taken all action requested by the Collateral Agent
to grant to the Collateral Agent a perfected, first priority security interest
in such Equipment and Inventory, and (ii) the Collateral Agent's rights in such
Equipment and Inventory, including, without limitation, the existence,
perfection and priority of the security interest created hereby in such
Equipment and Inventory, are not adversely affected thereby.
(c) Condition of Equipment. The Grantor will maintain or cause to be
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maintained in good working order and condition, excepting ordinary wear and tear
and damage due to casualty, all of the Equipment. The Grantor shall promptly
furnish to the Collateral Agent a statement describing in reasonable detail any
loss or damage in excess of $100,000 to any Equipment or Inventory due to
casualty.
(d) Taxes, Etc. The Grantor will pay promptly when due all property
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and other taxes, assessments and governmental charges or levies imposed upon,
and all claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except (i) to the extent the validity thereof is being
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves in accordance with GAAP have been set aside for the
payment thereof or (ii) Liens permitted by Section 7.01(c)(ii)(B) of the Amended
and Restated Financing Agreement.
(e) Insurance.
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(i) The Grantor will, at its own expense, maintain insurance on
its property as required by Section 7.01(h) of the Amended and Restated
Financing Agreement. Each policy for liability insurance shall provide for all
losses to be paid on behalf of the Collateral Agent and the Grantor as their
respective interests may appear. Each policy for property damage insurance in
respect of the Grantor's property shall provide for all losses (except for
losses of less than $500,000 per occurrence and losses accruing during the
continuance of an Event of Default), to be adjusted with, and paid directly to
the Collateral Agent. Each such policy shall in addition (A) name the Grantor
and the Collateral Agent as insured parties thereunder (without any
representation or warranty by or obligation upon the Collateral Agent) as their
interests may appear, (B) contain the agreement by the insurer that any loss
thereunder shall be payable, notwithstanding any action, inaction or breach of
representation or warranty by the Grantor, (C) provide that there shall be no
recourse against the Collateral Agent for payment of premiums or other amounts
with respect thereto, and (D) provide that at least 30 days' prior written
notice of cancellation or of lapse shall be given to the Collateral Agent by the
insurer. The Grantor will, if so requested by the Collateral Agent, deliver to
the Collateral Agent original or duplicate policies of such insurance and, as
often as the Collateral Agent may reasonably request, a report of a reputable
insurance broker with respect to such insurance. The Grantor will
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also, at the request of the Collateral Agent, execute and deliver instruments of
assignment of such insurance policies and cause the respective insurers to
acknowledge notice of such assignment.
(ii) Payment under any liability insurance maintained by the
Grantor pursuant to this Section 5(e) may be paid directly to the Person who
shall have incurred liability covered by such insurance. In the case of any loss
involving damage to Equipment or Inventory as to which clause (iii) of this
Section 5(e) is not applicable, the Grantor will, in the exercise of its
reasonable business judgment, make or cause to be made the necessary repairs to
or replacements of such Equipment and Inventory, and any proceeds of insurance
maintained by the Grantor pursuant to this Section 5(e) shall upon receipt by
the Collateral Agent, be paid to the Grantor as reimbursement for the costs of
such repairs or replacements.
(iii) Upon the occurrence and during the continuance of an
Event of Default or the actual or constructive total loss (in excess of $500,000
per occurrence) of any Equipment or Inventory, all insurance payments in respect
of such Equipment and Inventory shall be paid to the Collateral Agent and
applied as specified in Section 7(b) hereof.
(f) Provisions Concerning the Receivables, the Related Contracts and
----------------------------------------------------------------
the Licenses.
------------
(i) The Grantor will (A) give the Collateral Agent at least 30
days' prior written notice of any change in the Grantor's name, identity or
corporate structure, (B) keep its chief place of business and chief executive
office and all originals of all chattel paper which constitute Receivables at
the location(s) specified therefor in Schedule V hereof or such other location
for which the Grantor has complied with all of the provisions of Section 5(b)
hereof, and (C) keep adequate records concerning the Receivables and such
chattel paper and permit representatives of the Collateral Agent during normal
business hours, upon reasonable notice and without undue interruption of the
business of the Grantor to inspect and make abstracts from such records and
chattel paper pursuant to the terms of the Amended and Restated Financing
Agreement, provided that such notice shall not be required during the
continuance of an Event of Default.
(ii) The Grantor will duly perform and observe all of its
obligations under each Related Contract and, except as otherwise provided in
this subsection (f), continue to collect, at its own expense, all amounts due or
to become due under the Receivables. In connection with such collections, the
Grantor may (and, at the Collateral Agent's direction, will) take such action as
the Grantor or the Collateral Agent may deem necessary or advisable to enforce
collection or performance of the Receivables; provided, however, the Collateral
Agent shall have the right at any time, upon the occurrence and during the
continuance of an Event of Default, to notify the Account Debtors or obligors
under any Receivables of the assignment of such Receivables to the Collateral
Agent and to direct such Account Debtors or obligors to make payment of all
amounts due or to become due to the Grantor thereunder directly to the
Collateral Agent or its designated agent and, upon such notification and at the
expense of the Grantor and to the extent permitted by law, to enforce collection
of any such Receivables and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as the Grantor might
have done. After receipt by the Grantor of a notice from the Collateral Agent
that
10
the Collateral Agent has notified or intends to notify the Account Debtors or
obligors under any Receivables as referred to in the proviso to the immediately
preceding sentence, (A) all amounts and proceeds (including instruments)
received by the Grantor in respect of the Receivables shall be received in trust
for the benefit of the Collateral Agent hereunder, shall be segregated from
other funds of the Grantor and shall be forthwith paid over to the Collateral
Agent in the same form as so received (with any necessary indorsement) to be
held as cash collateral and either (1) credited to the Loan Account so long as
no Event of Default shall have occurred and be continuing or (2) if any Event of
Default shall have occurred and be continuing, applied as specified in Section
7(b) hereof, and (B) the Grantor will not adjust, settle or compromise the
amount or payment of any Receivable or release wholly or partly any Account
Debtor or obligor thereof or allow any credit or discount thereon. In addition,
upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent shall have the right to notify the United States Postal Service
authorities to change the address for delivery of mail addressed to the Grantor
to such address as the Collateral Agent may designate and to do all other acts
and things necessary to carry out this Agreement.
(iii) Upon the occurrence and during the continuance of any
breach or default under any Related Contract referred to in Schedule I hereto or
otherwise specified in writing by the Collateral Agent from time to time or any
License referred to in Schedule II, III or IV hereto by any party thereto other
than the Grantor, the Grantor will (A) promptly after obtaining knowledge
thereof, give the Collateral Agent written notice of the nature and duration
thereof, specifying what action, if any, it has taken and proposes to take with
respect thereto, and (B) upon written instructions from the Collateral Agent and
at the Grantor's expense, take such action as the Collateral Agent may deem
reasonably necessary or advisable in respect thereof.
(iv) The Grantor will, at its expense, promptly deliver to the
Collateral Agent a copy of each notice or other communication received by it by
which any other party to any Related Contract referred to in Schedule I hereto
or otherwise specified by the Collateral Agent from time to time or any License
referred to in Schedule II, III or IV hereto purports to exercise any of its
rights or affect any of its obligations thereunder which is reasonably likely to
have a Material Adverse Effect, together with a copy of any reply by the Grantor
thereto.
(v) The Grantor will take all action necessary to maintain all
Licenses in full force and effect, except where such failure to maintain would
not be reasonably likely to have a Material Adverse Effect. The Grantor will
not, without the prior written consent of the Collateral Agent, cancel,
terminate, amend or otherwise modify in any respect, or waive any provision of,
any Related Contract referred to in Schedule I hereto or any License referred to
in Schedule II, III or IV hereto to the extent such action is reasonably likely
to have a Material Adverse Effect.
(g) Transfers and Other Liens.
-------------------------
(i) The Grantor will not sell, assign (by operation of law or
otherwise), lease, exchange or otherwise transfer or dispose of any of the
Collateral except to the extent permitted under Section 7.02(d)(ii) of the
Amended and Restated Financing Agreement, subject to the obligation of the
Borrowers to make payments pursuant to Section 2.07(g) of the Amended and
Restated Financing Agreement.
11
(ii) The Grantor will not create or suffer to exist any Lien,
security interest or other charge or encumbrance upon or with respect to any
Collateral, except for (A) the Liens and security interest created by this
Agreement and the other Loan Documents and (B) the Liens, security interests and
other encumbrances permitted by the Amended and Restated Financing Agreement.
(h) Trademarks, Patents and Copyrights.
----------------------------------
(i) If applicable, the Grantor has duly executed and delivered the
Assignment for Security (Trademarks) in the form attached hereto as Exhibit A,
the Assignment for Security (Patents) in the form attached hereto as Exhibit B
and the Assignment for Security (Copyrights) in the form attached hereto as
Exhibit C. The Grantor (either itself or through licensees) will, and will
cause each licensee thereof to, take all action reasonably necessary to maintain
all of the Trademarks, Patents and Copyrights in full force and effect,
including, without limitation, using the proper statutory notices and markings
and using the Trademarks on each applicable trademark class of goods in order to
so maintain the Trademarks in full force free from any claim of abandonment for
non-use, and the Grantor will not (and will not permit any licensee thereof to)
do any act or knowingly omit to do any act whereby any Trademark or Copyright
may become invalidated; provided, however, that so long as no Event of Default
-------- -------
has occurred and is continuing, the Grantor shall have no obligation to use or
to maintain any Trademark or Copyright (A) that relates solely to any product or
work that has been, or is in the process of being, discontinued, abandoned or
terminated, (B) that is being replaced with a trademark or copyright
substantially similar to the Trademark or Copyright, as the case may be, that
may be abandoned or otherwise become invalid, so long as such replacement
Trademark or Copyright, as the case may be is subject to the security interest
purported to be created by this Agreement, (C) that is substantially the same as
another Trademark or Copyright, as the case may be, that is in full force, so
long as such other Trademark or Copyright, as the case may be, is subject to the
Lien and security interest created by this Agreement, or (D) that is not
necessary for the operation of Grantor's business and is discontinued or
disposed of in the ordinary course of business. The Grantor will cause to be
taken all necessary steps in any proceeding before the United States Patent and
Trademark Office and the United States Copyright Office to maintain each
registration of the Trademarks, the Patents and the Copyrights (other than those
Trademarks and Copyrights described in the proviso to the immediately preceding
sentence), including, without limitation, filing of renewals, affidavits of use,
affidavits of incontestability and opposition, interference and cancellation
proceedings and payment of taxes. If any Trademark, Patent or Copyright is
infringed, misappropriated or diluted in any material respect by a third party,
the Grantor shall (x) upon learning of such infringement, misappropriation or
dilution, promptly notify the Collateral Agent and (y) to the extent the Grantor
shall deem appropriate under the circumstances, promptly xxx for infringement,
misappropriation or dilution, seek injunctive relief where appropriate and
recover any and all damages for such infringement, misappropriation or dilution,
or take such other actions as the Grantor shall deem appropriate under the
circumstances to protect such Trademark, Patent or Copyright. The Grantor shall
furnish to the Collateral Agent from time to time (but, unless an Event of
Default has occurred and is continuing, no more frequently than annually)
statements and schedules further identifying and describing the Patents, the
Trademarks and the Copyrights and such other reports in connection with the
Patents, the Trademarks and the Copyrights as the Collateral Agent may
reasonably request, all in reasonable detail and promptly upon request of the
Collateral Agent,
12
following receipt by the Collateral Agent of any such statements, schedules or
reports, the Grantor shall modify this Agreement by amending Schedules II, III
or IV hereto, as the case may be, to include any Patent, Trademark or Copyright
which becomes part of the Collateral under this Agreement. Notwithstanding
anything herein to the contrary, upon the occurrence and during the continuance
of an Event of Default the Grantor may not abandon or otherwise permit a
Trademark, Patent or Copyright to become invalid without the prior written
consent of the Collateral Agent, and if any Trademark, Patent or Copyright is
infringed, misappropriated or diluted in any material respect by a third party,
the Grantor will take such action as the Collateral Agent shall deem appropriate
under the circumstances to protect such Trademark, Patent or Copyright.
(ii) In no event shall the Grantor, either itself or through any agent,
employee, licensee or designee, file an application for the registration of any
Trademark or Copyright or the issuance of any Patent with the United States
Patent and Trademark Office or the United States Copyright Office, as
applicable, unless it gives the Collateral Agent written notice thereof, but in
no event later than 5 Business Days after the filing of any such application.
Upon request of the Collateral Agent, the Grantor shall execute and deliver any
and all assignments, agreements, instruments, documents and papers as the
Collateral Agent may reasonably request to evidence the Collateral Agent's
security interest hereunder in such Trademark, Patent or Copyright and the
general intangibles of the Grantor relating thereto or represented thereby, and
the Grantor hereby constitutes the Collateral Agent its attorney-in-fact to
execute and file, during the continuance of an Event of Default, all such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed, and such power (being coupled with an interest) shall be
irrevocable until the termination of the Total Commitment, the repayment of all
of the Guaranteed Obligations in full and the termination of each of the Loan
Documents.
(j) Inspection and Reporting. The Grantor shall permit the Collateral
------------------------
Agent, the Administrative Agent or any Lender, or any agents or representatives
thereof or such professionals or other Persons as the Collateral Agent may
designate (i) to examine and inspect the books and records of the Grantor and
take copies and extracts therefrom, (ii) to verify materials, leases, notes,
receivables, inventory and other assets of the Grantor from time to time, and
(iii) to conduct physical counts, appraisals and/or valuations at the locations
of the Grantor, in each case as provided and subject to the confidentiality
requirements set forth in the Amended and Restated Financing Agreement.
SECTION 6. Additional Provisions Concerning the Collateral.
-----------------------------------------------
(a) The Grantor hereby authorizes the Collateral Agent to file,
without the signature of the Grantor where permitted by law, one or more
financing or continuation statements, and amendments thereto, relating to the
Collateral.
(b) The Grantor hereby irrevocably appoints the Collateral Agent the
Grantor's attorney-in-fact and proxy, with full authority in the place and stead
of the Grantor and in the name of the Grantor or otherwise, from time to time in
the Collateral Agent's discretion upon the occurrence and during the continuance
of an Event of Default, to take any action and to execute any instrument which
the Collateral Agent may deem necessary or advisable to
13
accomplish the purposes of this Agreement (subject to the rights of the Grantor
under Section 5(f) hereof), including, without limitation, (i) to obtain and
adjust insurance required to be paid to the Collateral Agent pursuant to Section
5(e) hereof, and to receive, indorse and collect any drafts or other
instruments, documents and chattel paper in connection therewith, (ii) to ask,
demand, collect, xxx for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any Collateral,
(iii) to receive, indorse, and collect any drafts or other instruments,
documents and chattel paper in connection with clause (i) or (ii) above, and
(iv) to file any claims or take any action or institute any proceedings which
the Collateral Agent may deem necessary or desirable for the collection of any
Collateral or otherwise to enforce the rights of the Collateral Agent with
respect to any Collateral.
(c) For the purpose of enabling the Collateral Agent to exercise
rights and remedies hereunder at such time as the Collateral Agent shall be
lawfully entitled to exercise such rights and remedies, and for no other
purpose, the Grantor hereby grants to the Collateral Agent, to the extent
assignable, an irrevocable, non-exclusive license (exercisable without payment
of royalty or other compensation to the Grantor) to use, assign, license or
sublicense any of the Patents, Trademarks or Copyrights now owned or hereafter
acquired by the Grantor, wherever the same may be located, 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 programs used for the compilation or
printout thereof. Notwithstanding anything contained herein to the contrary,
but subject to the provisions of the Amended and Restated Financing Agreement
that limits the right of the Grantor to dispose of its property and Section 5(h)
hereof, so long as no Event of Default shall have occurred and be continuing,
the Grantor may exploit, use, enjoy, protect, license, sublicense, assign, sell,
dispose of or take other actions with respect to the Patents, Trademarks or
Copyrights in the ordinary course of the business of the Grantor. In
furtherance of the foregoing, unless an Event of Default shall have occurred and
be continuing the Collateral Agent shall promptly from time to time, upon the
request of the Grantor, execute and deliver any instruments, certificates or
other documents, in the form so requested, which the Grantor shall have
certified are appropriate (in its judgment) to allow it to take any action
permitted above (including relinquishment of the license provided pursuant to
this clause (c) as to any Patents, Trademarks or Copyrights and the release of
the Lien created hereby). Further, upon the payment in full of all of the
Guaranteed Obligations and cancellation or termination of the Total Commitments,
the Collateral Agent (subject to Section 10(e) hereof) shall transfer to the
Grantor all of the Collateral Agent's right, title and interest in and to the
Patents, Trademarks and Copyrights, and the Licenses, all without recourse,
representation or warranty whatsoever. The exercise of rights and remedies
hereunder by the Collateral Agent shall not terminate the rights of the holders
of any licenses or sublicenses theretofore granted by the Grantor in accordance
with the second sentence of this clause (c). The Grantor hereby releases the
Collateral Agent from any claims, causes of action and demands at any time
arising out of or with respect to any actions taken or omitted to be taken by
the Collateral Agent under the powers of attorney granted herein other than
actions taken or omitted to be taken through the Collateral Agent's gross
negligence or willful misconduct.
(d) If the Grantor fails to perform any agreement contained herein,
the Collateral Agent may itself perform, or cause performance of, such agreement
or obligation, in the name of the Grantor or the Collateral Agent, and the
expenses of the Collateral Agent
14
incurred in connection therewith shall be payable by the Grantor pursuant to
Section 8 hereof and shall be secured by the Collateral.
(e) The powers conferred on the Collateral Agent hereunder are solely
to protect its interest in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the safe custody of any Collateral in
its possession and the accounting for moneys actually received by it hereunder,
the Collateral Agent shall have no duty as to any Collateral or as to the taking
of any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral.
(f) Anything herein to the contrary notwithstanding (i) the Grantor
shall remain liable under the Related Contracts and Licenses and otherwise with
respect to any of the Collateral to the extent set forth therein to perform all
of its obligations thereunder to the same extent as if this Agreement had not
been executed, (ii) the exercise by the Collateral Agent of any of its rights
hereunder shall not release the Grantor from any its obligations under the
Related Contracts and Licenses or otherwise in respect of the Collateral, and
(iii) the Collateral Agent shall not have any obligation or liability by reason
of this Agreement under the Related Contracts and Licenses or with respect to
any of the other Collateral, nor shall the Collateral Agent be obligated to
perform any of the obligations or duties of the Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
SECTION 7. Remedies Upon Default. If any Event of Default shall have
---------------------
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all of the rights and remedies of a secured party upon default under the
Code (whether or not the Code applies to the affected Collateral), and also may
(i) require the Grantor to, and the Grantor hereby agrees that it will at its
expense and upon request of the Collateral Agent forthwith, assemble all or part
of the Collateral as directed by the Collateral Agent and make it available to
the Collateral Agent at a place or places to be designated by the Collateral
Agent which is reasonably convenient to both parties and (ii) without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Collateral Agent's offices
or elsewhere, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as the Collateral Agent may deem commercially
reasonable. The Grantor agrees that, to the extent notice of sale shall be
required by law, at least 10 Business Days' notice to the Grantor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Collateral Agent shall not
be obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. The Grantor hereby waives any claims against the Collateral Agent
and the Lenders arising by reason of the fact that the price at which the
Collateral may have been sold at a private sale was less than the price which
might have been obtained at a public sale or was less than the aggregate amount
of the Guaranteed Obligations, even if the Collateral Agent accepts the first
offer received and does not offer the Collateral to more than one offeree and
waives all rights which the Grantor may have to require that all or any part of
the Collateral be marshalled
15
upon any sale (public or private) thereof. In addition to the foregoing, (i)
upon written notice from the Collateral Agent, the Grantor shall cease any use
of the Trademarks, Patents or Copyrights or any xxxx, patent or copyright
similar thereto for any purpose described in such notice; (ii) the Collateral
Agent may, at any time and from time to time, upon 10 days' prior notice to the
Grantor, license, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any of the Trademarks, Patents and Copyrights,
throughout the world for such term or terms, on such conditions, and in such
manner, as the Collateral Agent shall in its sole discretion determine; and
(iii) the Collateral Agent may, at any time, pursuant to the authority granted
in Section 6 hereof (such authority being effective upon the occurrence of an
Event of Default), execute and deliver on behalf of the Grantor, one or more
instruments of assignment of the Trademarks, Patents and Copyrights (or any
application or registration thereof), in form suitable for filing, recording or
registration in any country.
(b) Any cash held by the Collateral Agent as Collateral and all cash
proceeds received by the Collateral Agent in respect of any sale of or
collection from, or other realization upon, all or any part the Collateral may,
in the discretion of the Collateral Agent, be held by the Collateral Agent as
collateral for, and/or then or at any time thereafter applied in whole or in
part by the Collateral Agent against, all or any part of the Guaranteed
Obligations as provided in Section 4.04(b) of the Amended and Restated Financing
Agreement.
(c) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Collateral Agent
and the Lenders are legally entitled, the Grantor shall be liable for the
deficiency, together with interest thereon at the highest rate specified in any
applicable Loan Document for interest on overdue principal thereof or such other
rate as shall be fixed by applicable law, together with the costs of collection
and the reasonable fees, costs, expenses of any attorneys employed by the
Collateral Agent to collect such deficiency.
SECTION 8. Indemnity and Expenses.
----------------------
(a) The Grantor agrees to indemnify and hold the Collateral Agent
harmless from and against any and all claims, damages, losses, liabilities,
obligations, penalties, costs or expenses (including, without limitation,
reasonable legal fees and disbursements of Collateral Agent's counsel) to the
extent that they arise out of or otherwise result from this Agreement
(including, without limitation, enforcement of this Agreement), except claims,
losses or liabilities resulting solely and directly from the Collateral Agent's
gross negligence or willful misconduct as determined by a final judgment of a
court of competent jurisdiction.
(b) The Grantor will upon demand pay to the Collateral Agent the
amount of any and all costs and expenses, including the reasonable fees and
disbursements of the Collateral Agent's counsel and of any experts and agents,
which the Collateral Agent may incur in connection with (i) the preparation,
negotiation, execution, delivery, recordation, administration, amendment, waiver
or other modification or termination of this Agreement, or (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any Collateral, (iii) the exercise or enforcement of any of
the rights of the Collateral Agent hereunder, or (iv) the failure by the Grantor
to perform or observe any of the provisions hereof.
16
SECTION 9. Notices, Etc. All notices and other communications
------------
provided for hereunder shall be in writing and shall be mailed (by certified
mail, postage prepaid and return receipt requested), telecopied or delivered, if
to the Grantor; to it at its address at c/x XxXxxxxxxx Apparel Group Inc., 000
Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000; if to the Collateral Agent, to it
at its address specified in the Amended and Restated Financing Agreement; or as
to any such Person at such other address as shall be designated by such Person
in a written notice to such other Person complying as to delivery with the terms
of this Section 9. All such notices and other communications shall be effective
(i) if sent by certified mail, return receipt requested, when received or 3
Business Days after mailing, whichever first occurs, (ii) if telecopied, when
transmitted and confirmation is received, provided same is on a Business Day
and, if not, on the next Business Day or (iii) if delivered, upon delivery,
provided same is on a Business Day and, if not, on the next Business Day.
SECTION 10. Miscellaneous.
-------------
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Grantor and the Collateral Agent, and
no waiver of any provision of this Agreement, and no consent to any departure by
the Grantor therefrom, shall be effective unless it is in writing and signed by
the Collateral Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(b) No failure on the part of the Collateral Agent to exercise, and no
delay in exercising, any right hereunder or under any other Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The rights and remedies of the Collateral Agent provided herein
and in the other Loan Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law. The rights of the
Collateral Agent under any Loan Document against any party thereto are not
conditional or contingent on any attempt by the Collateral Agent to exercise any
of its rights under any other Loan Document against such party or against any
other Person.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the payment in
full of the Guaranteed Obligations after the Total Commitment has been
terminated and all Letters of Credit have been canceled or cash collateralized,
and (ii) be binding on the Grantor and its successors and assigns and shall
inure, together with all rights and remedies of the Collateral Agent hereunder,
to the benefit of the Collateral Agent and the Lenders their respective
permitted successors, transferees and assigns. Without limiting the generality
of clause (ii) of the immediately preceding sentence and subject to the terms of
the Amended and Restated Financing Agreement, the Collateral Agent and Lenders
may assign or otherwise transfer their rights under this Agreement and any other
Loan Document, to any other Person and such other Person shall thereupon become
vested
17
with all of the benefits in respect thereof granted to the Collateral Agent and
the Lenders herein or otherwise. None of the rights or obligations of the
Grantor hereunder may be assigned or otherwise transferred without the prior
written consent of the Collateral Agent, and any such assignment or transfer
shall be null and void.
(e) Upon the satisfaction in full of the Guaranteed Obligations after
the Total Commitment has been terminated and all Letters of Credit have been
canceled or cash collateralized, (i) this Agreement and the security interests
created hereby shall terminate and all rights to the Collateral shall revert to
the Grantor, and (ii) the Collateral Agent will, upon the Grantor's request and
at the Grantor's expense promptly, (A) return to the Grantor such of the
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and (B) execute and deliver to the Grantor such
documents as the Grantor shall reasonably request to evidence such termination,
all without any representation, warranty or recourse whatsoever.
(f) This Agreement shall be governed by, and construed and interpreted
in accordance with, the laws of the State of New York, except as required by
mandatory provisions of law and except to the extent that the validity and
perfection or the perfection and effect of perfection or non-perfection of the
security interest created hereby or remedies hereunder, in respect of any
particular Collateral are governed by the law of a jurisdiction other than the
State of New York.
18
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
XXXXXXXXXX APPAREL HOLDINGS INC.
By: _________________________
Name: _________________________
Title: _________________________
19
SCHEDULE I TO GUARANTOR SECURITY AGREEMENT
RELATED CONTRACTS
Agreement of Lease dated as of May 14, 1999 by and between North Point
Park, LLC, as Landlord, and XxXxxxxxxx Apparel Holdings Inc., as Tenant
Letter Agreement dated as of May 14, 1999 by and between North Point Park,
LLC and XxXxxxxxxx Apparel Holdings Inc.
SCHEDULE II TO GUARANTOR SECURITY AGREEMENT
TRADEMARKS AND TRADEMARK LICENSES
None.
SCHEDULE III TO GUARANTOR SECURITY AGREEMENT
PATENTS AND PATENT LICENSES
None.
SCHEDULE IV TO GUARANTOR SECURITY AGREEMENT
COPYRIGHTS AND COPYRIGHT LICENSES
None.
SCHEDULE V TO GUARANTOR SECURITY AGREEMENT
(i) Locations of Equipment and Inventory:
c/x XxXxxxxxxx Apparel Group Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(ii) Grantor's chief place of business, chief executive office and location of
books and records:
c/x XxXxxxxxxx Apparel Group Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
SCHEDULE VI TO GUARANTOR SECURITY AGREEMENT
TRADE NAMES
None.
SCHEDULE VII TO GURANTOR SECURITY AGREEMENT
UCC-1 FINANCING STATEMENTS
UCC-1 Financing Statements to be filed in the following jurisdictions:
o Secretary of State of New York
o New York Co., New York
o Secretary of State of South Carolina
EXHIBIT A
ASSIGNMENT FOR SECURITY
-----------------------
(TRADEMARKS)
----------
WHEREAS, _________________________ (the "Assignor") has adopted, used
--------
and is using the trademarks and service marks listed on the annexed Schedule 1A,
which trademarks and service marks are registered or applied for in the United
States Patent and Trademark Office (the "Trademarks");
----------
WHEREAS, the Assignor, has entered into a Security Agreement dated
____ __, 1998 (the "Security Agreement") in favor of NATIONSBANC COMMERCIAL
------------------
CORPORATION., as collateral agent for certain lenders (the "Assignee"); and
--------
WHEREAS, pursuant to the Security Agreement, the Assignor has assigned
to the Assignee and granted to the Assignee a security interest in all right,
title and interest of the Assignor in, to and under the Trademarks together with
the good-will of the business symbolized by the Trademarks and the applications
and restrictions thereof, and all proceeds thereof, including, without
limitation, any and all causes of action which may exist by reason of
infringement thereof (the "Collateral"), to secure the payment, performance and
----------
observance of the Guaranteed Obligations (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, the Assignor does hereby assign unto the Assignee and
grants to the Assignee a security interest in the Collateral to secure the
prompt payment, performance and observance of the Guaranteed Obligations.
The Assignor does hereby further acknowledge and affirm that the
rights and remedies of the Assignee with respect to the Collateral are more
fully set forth in the Security Agreement, the terms and provisions of which are
hereby incorporated herein by reference as if fully set forth herein.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly
executed by its officer thereunto duly authorized as of _____________ __, 199__.
_________________________
By:_______________________
Name:_____________________
Title:______________________
STATE OF NEW YORK
ss.:
COUNTY OF NEW YORK
On this ____ day of _______________, 199__, before me personally came
________________, to me known to be the person who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
________________ of
_________________________, a _________ corporation, and that he executed the
foregoing instrument in the firm name of _________________________, and that he
had authority to sign the same, and he acknowledged to me that he executed the
same as the act and deed of said firm for the uses and purposes therein
mentioned.
SCHEDULE 1A TO ASSIGNMENT FOR SECURITY
--------------------------------------
(TRADEMARKS AND TRADEMARK APPLICATIONS)
---------------------------------------
EXHIBIT B
ASSIGNMENT FOR SECURITY
-----------------------
(PATENTS)
-------
WHEREAS, _________________________(the "Assignor") holds all right,
--------
title and interest in the letter patents, design patents and utility patents
listed on the annexed Schedule 1A, which patents are issued or applied for in
the United States Patent and Trademark Office (the "Patents");
-------
WHEREAS, the Assignor, has entered into a Security Agreement dated
____ __, 1998 (the "Security Agreement") in favor of NATIONSBANC COMMERCIAL
------------------
CORPORATION, as collateral agent for certain lenders (the "Assignee"); and
--------
WHEREAS, pursuant to the Security Agreement, the Assignor has assigned
to the Assignee and granted to the Assignee a security interest in all right,
title and interest of the Assignor in, to and under the Patents and the
applications and registrations thereof, and all proceeds thereof, including,
without limitation, any and all causes of action which may exist by reason of
infringement thereof (the "Collateral"), to secure the payment, performance and
----------
observance of the Guaranteed Obligations (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, the Assignor does hereby assign unto the Assignee and
grants to the Assignee a security interest in the Collateral to secure the
prompt payment, performance and observance of the Guaranteed Obligations.
The Assignor does hereby further acknowledge and affirm that the
rights and remedies of the Assignee with respect to the Collateral are more
fully set forth in the Security Agreement, the terms and provisions of which are
hereby incorporated herein by reference as if fully set forth herein.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly
executed by its officer thereunto duly authorized as of __________ __, 199__.
_________________________
By:_______________________
Name:_____________________
Title:______________________
STATE OF NEW YORK
ss.:
COUNTY OF NEW YORK
On this ____ day of _______________, 199__, before me personally came
________________, to me known to be the person who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
________________ of
_________________________, a ___________ corporation, and that he executed the
foregoing instrument in the firm name of _________________________, and that he
had authority to sign the same, and he acknowledged to me that he executed the
same as the act and deed of said firm for the uses and purposes therein
mentioned.
_____________________________
SCHEDULE 1B TO ASSIGNMENT FOR SECURITY
(PATENTS AND PATENT APPLICATIONS)
-------------------------------
EXHIBIT C
ASSIGNMENT FOR SECURITY
-----------------------
(COPYRIGHTS)
----------
WHEREAS, _________________________(the "Assignor") holds all right,
--------
title and interest in the copyrights listed on the annexed Schedule 1A, which
copyrights are registered in the United States Copyright Office (the
"Copyrights");
----------
WHEREAS, the Assignor, has entered into a Security Agreement dated
______ __, 1998 (the "Security Agreement") in favor of NATIONSBANC COMMERCIAL
------------------
CORPORATION, as collateral agent for certain lenders (the "Assignee");
--------
WHEREAS, pursuant to the Security Agreement, the Assignor has assigned
to the Assignee and granted to the Assignee a security interest in all right,
title and interest of the Assignor in, to and under the Copyrights and the
registrations thereof, and all proceeds thereof, including, without limitation,
any and all causes of action which may exist by reason of infringement thereof
(the "Collateral"), to secure the payment, performance and observance of the
----------
Guaranteed Obligations (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, the Assignor does hereby assign unto the Assignee and
grants to the Assignee a security interest in the Collateral to secure the
prompt payment, performance and observance of the Guaranteed Obligations.
The Assignor does hereby further acknowledge and affirm that the
rights and remedies of the Assignee with respect to the Collateral are more
fully set forth in the Security Agreement, the terms and provisions of which are
hereby incorporated herein by reference as if fully set forth herein.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly
executed by its officer thereunto duly authorized as of __________ __, 199__.
_________________________
By:_______________________
Name:_____________________
Title:______________________
STATE OF NEW YORK
ss.:
COUNTY OF NEW YORK
On this ____ day of _______________, 199__, before me personally came
________________, to me known to be the person who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that he is the
________________ of
_________________________, a __________ corporation, and that he executed the
foregoing instrument in the firm name of _________________________, and that he
had authority to sign the same, and he acknowledged to me that he executed the
same as the act and deed of said firm for the uses and purposes therein
mentioned.
_____________________________
SCHEDULE 1C TO ASSIGNMENT FOR SECURITY
(COPYRIGHTS AND COPYRIGHT APPLICATIONS)
-------------------------------------
