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Exhibit 4.13
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TRADEMARK COLLATERAL SECURITY AGREEMENT
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THIS TRADEMARK COLLATERAL SECURITY AGREEMENT (the "Agreement")
dated as of the 16th day of April, 1998, by and between NATIONAL RECORD MART,
INC., a Delaware corporation ("Grantor") and XXXXXX XXXXXXX INC., a Delaware
corporation, as agent (in such capacity, the "Agent") for the Holders under (and
as defined in) the Senior Subordinated Secured Note Purchase Agreement (as
hereinafter defined). Capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to such terms in the Senior Subordinated
Secured Note Purchase Agreement.
W I T N E S S E T H
WHEREAS, the Grantor, the Guarantors from time to time party
thereto, the Purchasers referred to therein, and the Agent have entered into a
Senior Subordinated Secured Note Purchase Agreement of even date herewith (as
amended, restated, supplemented or otherwise modified from time to time, the
"Secured Note Purchase Agreement"), pursuant to which, the Agent and the
Purchasers have agreed to purchase $7,500,000 in aggregate principal amount of
the Grantor's 11.75% Senior Subordinated Secured Notes due 2001 (the "Secured
Notes");
WHEREAS, the Grantor and the Agent are parties to that certain
Issuer Security and Pledge Agreement of even date herewith (as the same may
hereafter be modified, amended, restated or supplemented from time to time, the
" Security Agreement"), pursuant to which Grantor has granted a security
interest in certain of its assets to the Agent, for the benefit of the Agent and
the Purchasers; and
WHEREAS, the Agent has required the Grantor to execute and
deliver this Agreement (i) in order to secure the prompt and complete payment,
observance and performance of all of the Obligations and (ii) as a condition
precedent to the purchase of Secured Notes under the Secured Note Purchase
Agreement;
NOW, THEREFORE, in consideration of the premises set forth
herein and of the purchase of the Secured Notes by the Agent and the Purchasers
or any other Holder, or any of them the Grantor hereby agrees with the Agent,
for its benefit and the ratable benefit of the Holders, as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms
defined in the Secured Note Purchase Agreement shall have their defined meanings
when used herein and the following terms shall have the following meanings,
unless the context otherwise requires:
"Account" shall have the meaning assigned to it under Section
9-106 of the Code;
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"Code" shall mean the Uniform Commercial Code as the same may
from time to time be in effect in the State of New York.
"Collateral" shall have the meaning assigned to it in Section
2 of this Agreement.
"Event of Default" shall have the meaning assigned to it in
the Secured Note Purchase Agreement.
"General Intangibles" shall have the meaning assigned to it in
the Security Agreement.
"Obligations" shall have the meaning assigned to it in the
Secured Note Purchase Agreement.
"Proceeds" shall have the meaning assigned to it under Section
9-306 of the Code, and in any event, shall include, but not be limited to, (i)
any and all proceeds of any insurance, indemnity, warranty or guarantee payable
to Grantor from time to time with respect to any of the Collateral, (ii) any and
all payments (in any form whatsoever) made or due and payable to Grantor from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any governmental
body, authority, bureau or agency (or any person acting under color of
governmental authority), and (iii) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Trademarks" shall mean the U.S. registered trademarks and
pending applications shown in the attached SCHEDULE A, and those trademarks
which are hereafter adopted or acquired by Grantor, and all right, title and
interest therein and thereto, and all registrations, applications, 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, all whether
now owned or hereafter acquired by Grantor.
2. GRANT OF SECURITY INTEREST. As collateral security for the
prompt payment of the Obligations, Grantor hereby grants and xxxxxx to Agent a
security interest in and to (a) the entire right, title and interest of Grantor
in and to the Trademarks, including the applications appurtenant thereto, listed
in SCHEDULE A hereto (as the same may be amended pursuant thereto from time to
time), and in and to any and all trademarks, and registrations and applications
appurtenant thereto, hereafter acquired or filed by Grantor, including without
limitation all renewals thereof, all proceeds of infringement suits, the rights
to use for past, present and future infringements and all rights corresponding
thereto in the United States and the goodwill of the business to which each of
the Trademarks relates and (b) to the extent not otherwise included, all
Proceeds and products of any or all of the foregoing. All of the property
referred to in this paragraph 2 is hereinafter collectively called the
"Collateral."
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3. REPRESENTATIONS AND WARRANTIES. Grantor covenants and
warrants that as of the date of this Agreement:
(a) The Trademarks are subsisting and have not
been adjudged invalid or unenforceable; PROVIDED, HOWEVER, the applications
listed on SCHEDULE A attached hereto have not yet been approved for registration
by the United States Patent and Trademark Office;
(b) To the best of Grantor's knowledge, each of
the Trademarks is valid and enforceable;
(c) There is no outstanding claim that the use
of any of the Trademarks violates the rights of any third person;
(d) Grantor is the sole and exclusive owner of
the entire and unencumbered right, title and interest in and to each of the
Trademarks, free and clear of any liens, charges and encumbrances (including
without limitation pledges, assignments, licenses, registered user agreements
and covenants by Grantor not to xxx third persons);
(e) Grantor has the right to enter into this
Agreement and perform its terms;
(f) Grantor has used, and will continue to use
for the duration of this Agreement, proper statutory notice, where appropriate,
in connection with its use of the Trademarks; and
(g) Grantor has used, and will continue to use
for the duration of this Agreement, consistent standards of quality in its
manufacture of products sold under the Trademarks.
4. RIGHT OF INSPECTION. Grantor hereby grants to Agent and its
employees and agents the right to visit Grantor's plants and facilities which
manufacture, inspect or store products sold under any of the Trademarks, and to
inspect the products and quality control relating thereto at reasonable times
during regular business hours. Grantor shall use its best efforts to do any and
all acts required by Agent to ensure Grantor's compliance with paragraph 3(g)
above.
5. NEW TRADEMARKS.
(a) If, before the Obligations shall have been
paid in full, Grantor shall obtain rights to any new trademarks, the provisions
of paragraph 2 shall automatically apply thereto and Grantor shall give Agent
prompt written notice thereof.
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(b) Grantor grants Agent a power-of-attorney,
irrevocable so long as the Secured Note Purchase Agreement is in existence, to
modify this Agreement by amending SCHEDULE A to include any future trademarks,
including trademark registrations or applications appurtenant thereto covered by
this Agreement.
6. COVENANTS. Grantor covenants and agrees with Agent that
from and after the date of this Agreement and until the Obligations are fully
satisfied:
(a) FURTHER DOCUMENTATION; PLEDGE OF INSTRUMENTS.
At any time and from time to time, upon the written request of Agent, Grantor
will promptly and duly execute and deliver any and all such further instruments
and documents and take such further action as Agent may reasonably deem
necessary in obtaining the full benefits of this Agreement and of the rights and
powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Code with respect to the liens
and security interests granted hereby. Grantor also hereby authorizes Agent to
file any such financing or continuation statement without the signature of
Grantor to the extent permitted by applicable law. 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 to Agent hereunder, duly endorsed in a manner satisfactory
to Agent.
(b) MAINTENANCE OF TRADEMARKS. Grantor will not
do any act, or omit to do any act, whereby the Trademarks or any registration or
application appurtenant thereto, may become abandoned, invalidated,
unenforceable, avoided, avoidable, or will otherwise diminish in value, and
shall notify Agent immediately if it knows of any reason or has reason to know
of any ground under which this result may occur. Grantor shall take commercially
reasonable action at its expense to halt the infringement of the Trademarks.
(c) INDEMNIFICATION. Grantor assumes all
responsibility and liability arising from the use of the Trademarks, and Grantor
hereby indemnifies and holds Agent harmless from and against any claim, suit,
loss, damage or expense (including reasonable attorneys' fees) arising out of
Grantor's operations of its business from the use of the Trademarks.
(d) LIMITATION OF LIENS ON COLLATERAL. Grantor
will not create, permit or suffer to exist, and will defend the Collateral
against and take such other action as is necessary to remove any lien, security
interest, encumbrance, claim or right, in or to the Collateral.
(e) NOTICES. Grantor will advise Agent
promptly, in reasonable detail, (i) of any lien or claim made or asserted
against any of the Collateral, (ii) of any material change in the composition of
the Collateral, and (iii) of the occurrence of any other event which would have
a material adverse effect on the value of any of the Collateral or on the
security interests created hereunder.
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(f) LIMITATION ON FURTHER USES OF TRADEMARKS. Grantor will not
assign, sell, mortgage, lease, transfer, pledge, hypothecate, grant a security
interest in or lien upon, encumber, grant an exclusive or non-exclusive license,
or otherwise dispose of any of the Collateral, without prior written consent of
Agent except Grantor may grant a non-exclusive license to a department store in
which a portion thereof is used to sell Grantor's merchandise.
7. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) Grantor hereby irrevocably constitutes and appoints Agent
and any officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of Grantor and in the name of Grantor or in its own name, from
time to time in Agent's discretion, for the purposes of carrying out the terms
of this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement and, without limiting the generality of the
foregoing, hereby gives Agent the power and right, on behalf of Grantor, to do
the following:
(i) Upon the occurrence and continuance of an Event of
Default, to pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against the Collateral, to effect
any repairs or any insurance called for by the terms of this Agreement and to
pay all or any part of the premiums therefor and the costs thereof; and
(ii) Upon the occurrence and continuance of an Event of
Default, (A) to receive payment of and receipt for any and all moneys, claims
and other amounts due and to become due at any time in respect of or arising out
of any Collateral; (B) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any part thereof and to enforce any other right in
respect of any Collateral; (C) to defend any suit, action or proceeding brought
against Grantor with respect to any Collateral; (D) to settle, compromise, or
adjust any suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as Agent may deem appropriate;
and (E) generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
Agent were the absolute owner thereof for all purposes, and to do, at Agent's
option, all actions and things which Agent deems necessary to protect, preserve
or realize upon the Collateral and Agent's security interest therein, in order
to effect the intent of this Agreement, all as fully and effectively as Grantor
might do.
This power of attorney is a power coupled with an interest and
shall be irrevocable. Notwithstanding the foregoing, Grantor further agrees to
execute any additional documents which Agent may reasonably require in order to
confirm this power of attorney, or which may be necessary to enforce any of
Agent's rights contained in this Agreement.
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(b) The powers conferred on Agent hereunder are solely to
protect its interests in the Collateral and shall not impose any duty upon it to
exercise any such powers. Agent shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers and neither it nor
any of its officers, directors, employees or agents shall be responsible to
Grantor for any act or failure to act, except for its own gross negligence or
willful misconduct.
(c) Grantor also authorizes Agent to execute, in connection
with the sale provided for in paragraph 10(b) of this Agreement, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.
8. EXECUTION OF POWER OF ATTORNEY. Prior to the execution and
delivery hereof, Grantor has executed and delivered to Collateral Agent, in the
form of SCHEDULE I hereto, ten (10) originals of a Power of Attorney for the
implementation of the Assignment, sale or other disposal of the Trademarks
pursuant to paragraph 7 hereof.
9. PERFORMANCE BY AGENT OF GRANTOR'S OBLIGATIONS. If Grantor
fails to perform or comply with any of its agreements contained herein and
Agent, as provided for by the terms of this Agreement, shall itself perform or
comply, or otherwise cause performance or compliance, with such agreement, the
reasonable expenses of Agent incurred in connection with such performance or
compliance shall be payable by Grantor to Agent on demand and shall constitute
obligations secured hereby.
10. REMEDIES, RIGHTS UPON EVENT OF DEFAULT.
(a) If an event of Default shall occur and be continuing:
(i) All payments received by Grantor under or in connection
with any of the Collateral shall be held by Grantor in trust for Agent, shall be
segregated from other funds of Grantor and shall forthwith upon receipt by
Grantor, be turned over to Agent, in the same form as received by Grantor (duly
endorsed by Grantor to Agent, if required); and
(ii) Any and all such payments so received by Agent (whether
from Grantor or otherwise) may, in the sole discretion of Agent, be held by
Agent as collateral security for, and/or then or at any time thereafter applied
in whole or in part by Agent against all or any part of the Obligations in such
order as Agent shall elect. Any balance of such payments held by Agent and
remaining after payment in full of all the Obligations shall be paid over to
Grantor or to whomsoever may be lawfully entitled to receive the same.
(b) If any Event of Default shall occur and be continuing,
Agent may exercise in addition to all other rights and remedies granted to it in
this Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the Uniform Commercial Code. Grantor shall remain liable for
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any deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which Agent is entitled. Grantor shall also
be liable for the reasonable fees of any attorneys employed by Agent to collect
any such deficiency and also as to any reasonable attorney's fees incurred by
Agent with respect to the collection of any of the Obligations and the
enforcement of any of Agent's respective rights hereunder.
11. TERMINATION. At such time as Grantor shall completely pay
in full all of the Obligations and the Secured Note Purchase Agreement is
terminated, this Agreement shall terminate and Agent shall execute and deliver
to Grantor all such releases, deeds, assignments and other instruments as may be
necessary or proper to invest in Grantor full title to the Trademarks, subject
to any disposition thereof which may have been made by Agent pursuant hereto.
12. NOTICES. All notices or other communications hereunder
shall be given in the manner and to the addresses set forth in the Secured Note
Purchase Agreement.
13. NO WAIVER. No course of dealing between Grantor and Agent,
nor any failure to exercise, nor any delay in exercising, on the part of Agent,
any right, power or privilege hereunder or under the Secured Note Purchase
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
14. CUMULATIVE REMEDIES. All of Agent's rights and remedies
with respect to the Collateral, whether established hereby or by the Secured
Note Purchase Agreement, or by any other agreements or by law, shall be
cumulative and may be exercised singularly or concurrently.
15. SEVERABILITY. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid and
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction, and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this Agreement in
any jurisdiction.
16. NO MODIFICATION EXCEPT IN WRITING. This Agreement is
subject to modification only by a writing signed by the parties, except as
provided in paragraphs 5 and 7.
17. SUCCESSORS AND ASSIGNS. The benefits and burdens of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties.
18. GOVERNING LAW. The validity and interpretation of this
Agreement and the rights and obligations of the parties shall be governed by the
laws of the State of New York.
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19. APPOINTMENT OF COLLATERAL AGENT. The Company hereby
consents to the Agent's appointment of the Collateral Agent as the Agent's
representative with respect to the Trademarks, Licenses and the Agent's rights
hereunder all as set forth in the Collateral Agency Agreement. The Company
hereby acknowledges receipt of a copy of the Collateral Agency Agreement and
consents to the terms thereof.
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