Document:

jcg-ex46_16.htm

Exhibit 4.6

13.00% SENIOR SECURED NEW MONEY NOTES DUE 2021

SECURITY AGREEMENT

dated as of July 13, 2017

among

J. CREW BRAND, LLC,
as LLC Issuer

J. CREW BRAND CORP.,
as Corporate Issuer,

J. CREW BRAND INTERMEDIATE, LLC,
as Holdings,

THE SUBSIDIARY GUARANTORS PARTY HERETO FROM TIME TO TIME,

and

U.S. BANK NATIONAL ASSOCIATION,

as Collateral Agent

 

 

TABLE OF CONTENTS

	
 
	
 
	
Page

	
ARTICLE I  Definitions
	
1

	
 
	
 
	
 
	
 

	
 
	
Section 1.01.

Section 1.02.
	
Indenture 

Other Defined Terms
	
1

1

	
 
	
 
	
 
	
 

	
ARTICLE II  Pledge of Securities
	
5

	
 
	
 

	
 
	
Section 2.01.

Section 2.02.

Section 2.03.

Section 2.04.

Section 2.05.

Section 2.06.

Section 2.07.
	
Pledge

Delivery of the Pledged Collateral

Representations, Warranties and Covenants

Certification of Limited Liability Company and Limited Partnership Interests

Registration in Nominee Name; Denominations

Voting Rights; Dividends and Interest

Collateral Agent Not a Partner or Limited Liability Company Member
	
5

5

6

7

8

8

9

	
 
	
 
	
 
	
 

	
ARTICLE III  Security Interests in Personal Property
	
9

	
 
	
 

	
 
	
Section 3.01.

Section 3.02.

Section 3.03.

Section 3.04.
	
Security Interest

Representations and Warranties

Covenants

Other Actions
	
9

11

13

15

	
 
	
 
	
 
	
 

	
ARTICLE IV  Special Provisions Concerning IP Collateral
	
16

	
 
	
 

	
 
	
Section 4.01.

Section 4.02.
	
Grant of License to Use Intellectual Property

Protection of Collateral Agent’s Security
	
16

17

	
 
	
 
	
 
	
 

	
ARTICLE V  Remedies
	
18

	
 
	
 

	
 
	
Section 5.01.

Section 5.02.
	
Remedies Upon Default 

Application of Proceeds
	
18

20

	
 
	
 
	
 
	
 

	
ARTICLE VI  Indemnity, Subrogation and Subordination
	
20

	
 
	
 
	
 
	
 

 

 

	
ARTICLE VII  Miscellaneous
	
21

	
 
	
 

	
 
	
Section 7.01.

Section 7.02.

Section 7.03.

Section 7.04.

Section 7.05.

Section 7.06.

Section 7.07.

Section 7.08.

Section 7.09.

Section 7.10.

Section 7.11.

Section 7.12.

Section 7.13.

Section 7.14.

Section 7.15.

Section 7.16.

Section 7.17.

Section 7.18.

Section 7.19.
	
Notices 

Waivers; Amendment

Collateral Agent’s Fees and Expenses; Indemnification

Successors and Assigns

Survival of Agreement

Counterparts; Effectiveness; Several Agreement

Severability

GOVERNING LAW, ETC

WAIVER OF RIGHT TO TRIAL BY JURY

Headings

Security Interest Absolute

Termination or Release

[Reserved]

Collateral Agent Appointed Attorney-in-Fact

General Authority of the Collateral Agent

Collateral Agent’s Duties

Recourse; Limited Obligations

Discretionary Actions

Intercreditor Agreement
	
21

21

21

22

22

23

23

23

24

24

24

24

25

25

25

26

26

26

26

 

		
	

SCHEDULES
	
 

	
Schedule I
	
Subsidiary Guarantors

	
Schedule II
	
Pledged Equity; Pledged Debt

	
Schedule III
	
Commercial Tort Claims

	
Schedule IV
	
UCC Filing Offices

	
Schedule V
	
Litigation

	
 
	
 

	
EXHIBITS
	
 

	
Exhibit I
	
Form of Perfection Certificate

	
Exhibit II
	
Form of Trademark Security Agreement

	
Exhibit III
	
Form of Patent Security Agreement

	
Exhibit IV
	
Form of Copyright Security Agreement

 

 

 

This SECURITY AGREEMENT, dated as of July 13, 2017 (this “Agreement”), among J. Crew Brand, LLC, a Delaware limited liability company (the “LLC Issuer”), J. CREW BRAND CORP., a Delaware corporation (the “Corporate Issuer” and, together with the LLC Issuer, the “Issuers”), J. CREW BRAND INTERMEDIATE, LLC, a Delaware limited liability company (“Holdings”), the Subsidiaries of Holdings set forth on Schedule I hereto (collectively, the “Subsidiary Guarantors”) and U.S. Bank National Association, as Collateral Agent (in such capacity, together with its successors in such capacity, the “Collateral Agent”) for the Secured Parties (as defined below).

Reference is made to the Indenture, dated as of July 13, 2017 (as amended, restated, amended and restated, supplemented and/or otherwise modified from time to time, the “Indenture”) among the Issuers, Holdings, the Subsidiary Guarantors, U.S. Bank National Association, as Trustee (in such capacity, together with its successors in such capacity, the “Trustee”), and Collateral Agent, pursuant to which the Issuers have issued 13.00% Senior Secured New Money Notes due 2021 (the “Notes”).

Reference is made to the Intercreditor Agreement dated as of July 13, 2017 (as amended, restated, amended and restated, supplemented and/or otherwise modified from time to time, the “Intercreditor Agreement”), between U.S. Bank National Association, as collateral agent for the holders of the 13.00% Senior Secured Notes due 2021 (the “New Notes Secured Parties”), and the Collateral Agent, as New Private Placement Notes Collateral Agent, which Intercreditor Agreement governs the relative rights and priorities of the Secured Parties and the New Notes Secured Parties in respect of the Collateral.  The Notes are the “New Private Placement Notes” referred to in the Intercreditor Agreement.

This Agreement is integral to the transactions contemplated by the Indenture, and the execution and delivery hereof by the parties hereto is a condition precedent to the issuance of the Notes under the Indenture.  The Grantors (as defned below) are affiliates of one another, and will derive substantial direct and indirect benefits from the issuance of the Notes.

Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

Section 1.01.Indenture.  

(a)Capitalized terms used in this Agreement, including the preamble and introductory paragraphs hereto, and not otherwise defined herein have the meanings specified in the Indenture.

(b)Unless otherwise defined in this Agreement or in the Indenture, terms defined in Article 8 or 9 of the UCC (as defined below) are used in this Agreement as such terms are defined in such Article 8 or 9.

(c)The rules of construction specified in Article I of the Indenture also apply to this Agreement.

Section 1.02.Other Defined Terms.  As used in this Agreement, the following terms have the meanings specified below:

“Accommodation Payment” has the meaning assigned to such term in Article VI.

“Account(s)” means “accounts” as defined in Section 9-102 of the UCC, and also means a right to payment of a monetary obligation, whether or not earned by performance, (a) for property that has been or is to 

- 1 -

 

be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, or (c) arising out of the use of a credit or charge card or information contained on or for use with the card.

“Account Debtor” means any Person who is or who may become obligated to any Grantor under, with respect to or on account of an Account.

“After-Acquired Intellectual Property” has the meaning assigned to such term in Section 4.02(f).

“Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Allocable Amount” has the meaning assigned to such term in Article VI.

“Article 9 Collateral” has the meaning assigned to such term in Section 3.01(a).

“Bankruptcy Event of Default” means any Event of Default under Section 6.01(6) or Section 6.01(7) of the Indenture.

“Blue Sky Laws” has the meaning assigned to such term in Section 5.01.

“Collateral” means the Article 9 Collateral and the Pledged Collateral.

“Control Agreement” means an agreement, in form and substance reasonably satisfactory to the Collateral Agent, which provides for the Collateral Agent to have “control” (as defined in Section 9-104 of the UCC or Section 8-106 of the UCC, as applicable) of a Deposit Account or Securities Account, as applicable.

“Copyright License” means any written agreement, now or hereafter in effect, granting any right to any third party under any Copyright now or hereafter owned by any Grantor or that such Grantor otherwise has the right to license, or granting any right to any Grantor under any Copyright now or hereafter owned by any third party, and all rights of such Grantor under any such agreement.

“Copyrights” means all of the following now owned or hereafter acquired by or assigned to any Grantor: (a) all copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee, transferee or otherwise, whether registered or unregistered and whether published or unpublished, (b) all registrations and applications for registration of any such copyright in the United States or any other country, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office, including those listed on Schedule 7(c) to the Perfection Certificate and all: (i) rights and privileges arising under applicable law with respect to such Grantor’s use of such copyrights, (ii) reissues, renewals, and extensions thereof and amendments thereto, (iii) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable with respect thereto, including damages and payments for past, present or future infringements thereof, (iv) rights corresponding thereto throughout the world and (v) rights to sue for past, present or future infringements thereof.

“Corporate Issuer” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Debtor Relief Laws” shall mean any Bankruptcy Law, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“Domain Names” means all Internet domain names and associated URL addresses in or to which any Grantor now or hereafter has any right, title or interest.

- 2 -

 

“Equipment” shall mean (x) any “equipment” as such term is defined in Article 9 of the UCC and in any event, shall include, but shall not be limited to, all machinery, equipment, furnishings, appliances, furniture, fixtures, tools, and vehicles now or hereafter owned by any Grantor in each case, regardless of whether characterized as equipment under the UCC and (y) and any and all additions, substitutions and replacements of any of the foregoing and all accessions thereto, wherever located, whether or not at any time of determination incorporated or installed therein or attached thereto, and all replacements therefore, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto.

“Excluded Accounts” means (a) any account used exclusively for withholding tax, trust, escrow, payroll and other fiduciary purposes and (b) accounts with amounts not to exceed $50,000 in the aggregate for all such accounts described in this clause (b).

“General Intangibles” has the meaning provided in Article 9 of the UCC and shall in any event include all choses in action and causes of action and all other intangible personal property of every kind and nature (other than Accounts) now owned or hereafter acquired by any Grantor, as the case may be, including corporate or other business records, indemnification claims, contract rights (including rights under the IP License Agreements, leases, whether entered into as lessor or lessee, Swap Contracts and other agreements), goodwill, registrations, franchises, tax refund claims and any letter of credit, guarantee, claim, security interest or other security held by or granted to any Grantor.

“Grant of Security Interest” means a Grant of Security Interest in certain IP Collateral in the form of Exhibit II, III or IV attached hereto.

“Grantor” means the Issuers, Holdings and each Subsidiary Guarantor.

“Holdings” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Issuers” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Indenture” has the meaning assigned to such term in the preliminary statement of this Agreement.

“Intellectual Property” means all intellectual and similar property of every kind and nature now owned, licensed or hereafter acquired by any Grantor, including: inventions, designs, Patents, Copyrights, Licenses, Trademarks, Domain Names, trade secrets, confidential or proprietary technical and business information, know how, show how or other data or information, software, databases, all other proprietary information and all embodiments or fixations thereof and related documentation, registrations and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing.

“Intercreditor Agreement” has the meaning assigned to such term in the preliminary statement of this Agreement.

“IP Collateral” means the Collateral consisting of Intellectual Property.

“Issuers” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“License” means any Patent License, Trademark License, Copyright License or other license or sublicense agreement granting rights under Intellectual Property to which any Grantor is a licensee.

“LLC Issuer” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Notes” has the meaning assigned to such term in the preliminary statement of this Agreement.

- 3 -

 

“Patent License” means any written agreement, now or hereafter in effect, granting to any third party any right to develop, commercialize, import, make, have made, offer for sale, use or sell any invention on which a Patent, now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any such right with respect to any invention on which a Patent, now or hereafter owned by any third party, is in existence, and all rights of any Grantor under any such agreement.

“Patents” means all of the following now owned or hereafter acquired by any Grantor: (a) all letters patent of the United States or the equivalent thereof in any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or the equivalent thereof in any other country, including registrations, recordings and pending applications in the United States Patent and Trademark Office or any similar offices in any other country, including those listed on Schedule 7(a) to the Perfection Certificate, and (b) all (i) rights and privileges arising under applicable law with respect to such Grantor’s use of any patents, (ii) inventions and improvements described and claimed therein, (iii) reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof and amendments thereto, (iv) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable with respect to any of the foregoing including damages and payments for past, present or future infringements thereof, (v) rights corresponding thereto throughout the world and (vi) rights to sue for past, present or future infringements thereof.

“Perfection Certificate” means a certificate substantially in the form of Exhibit I, completed and supplemented with the schedules and attachments thereto, and duly executed by a Responsible Officer of each of the Grantors.

“Pledged Collateral” has the meaning assigned to such term in Section 2.01.

“Pledged Debt” has the meaning assigned to such term in Section 2.01.

“Pledged Equity” has the meaning assigned to such term in Section 2.01.

“Pledged Securities” means any Promissory Notes, stock certificates, unit certificates, limited or unlimited liability membership certificates or other Securities or Instruments now or hereafter included in the Pledged Collateral, including all Pledged Equity, Pledged Debt and all other certificates, instruments or other documents representing or evidencing any Pledged Collateral.

“Secured Obligations” means the “Notes Obligations” as defined in the Indenture; it being acknowledged and agreed that the term “Secured Obligations” as used herein shall include all obligations of the Grantors which arise under the Indenture, the Notes and the other Notes Documents (including the Guarantee) whether outstanding on the date of this Agreement or extended or arising from time to time after the date of this Agreement.

“Secured Parties” means the Holders, the Trustee, the Collateral Agent and any other holders of any Secured Obligations.

“Securities Act” has the meaning assigned to such term in Section 5.01.

“Security” means a “security” as such term is defined in Article 8 of the UCC and, in any event, shall include any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.

- 4 -

 

“Security Interest” has the meaning assigned to such term in Section 3.01(a).

“Subsidiary Guarantors” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Trademark License” means any written agreement, now or hereafter in effect, granting to any third party any right to use any Trademark now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any Trademark now or hereafter owned by any third party, and all rights of any Grantor under any such agreement (not including vendor or distribution agreements that allow incidental use of intellectual property rights in connection with the sale or distribution of such products or services).

“Trademarks” means all of the following now owned or hereafter acquired by any Grantor: (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, the goodwill of the business symbolized thereby or associated therewith, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office or any similar offices in any State of the United States or any other country or any political subdivision thereof, and all extensions or renewals thereof, including those listed on Schedule 7(b) to the Perfection Certificate, (b) all rights and privileges arising under applicable law with respect to such Grantor’s use of any trademarks, (c) all extensions and renewals thereof and amendments thereto, (d) all income, fees, royalties, damages and payments now and hereafter due and/or payable with respect to any of the foregoing, including damages, claims and payments for past, present or future infringements thereof, (e) all rights corresponding thereto throughout the world and (f) all rights to sue for past, present and future infringements or dilutions thereof or other injuries thereto.

“Trustee” has the meaning assigned to such term in the preliminary statement of this Agreement.

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection or the priority of a security interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “UCC” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or priority or availability of such remedy, as the case may be.

“UFCA” has the meaning assigned to such term in Article VI.

“UFTA” has the meaning assigned to such term in Article VI.

ARTICLE II

Pledge of Securities

Section 2.01.Pledge.  As security for the payment or performance, as the case may be, in full of the Secured Obligations, each Grantor hereby assigns and pledges to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, a continuing security interest in, all of such Grantor’s right, title and interest in, to and under (a) (i) all Equity Interests held by it (including those Equity Interests listed on Schedule II) and (ii) any other Equity Interests obtained in the future by such Grantor and the certificates representing all such Equity Interests (the foregoing clauses (i) and (ii) collectively, the “Pledged Equity”), in each case including all dividends, distributions, return of capital, cash, instruments and other property from 

- 5 -

 

time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Equity and all warrants, rights or options issued thereon or with respect thereto; (b)(i) the Promissory Notes and any Instruments evidencing indebtedness owned by it (including those listed opposite the name of such Grantor on Schedule II) and (ii) any Promissory Notes and Instruments evidencing indebtedness obtained in the future by such Grantor (the foregoing clauses (i) and (ii) collectively, the “Pledged Debt”), in each case including all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all Pledged Debt; (c) all other property that may be delivered to and held by the Collateral Agent pursuant to the terms of this Section 2.01; (d) subject to Section 2.06, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds received in respect of, the securities referred to in clauses (a), (b) and (c) above; (e) subject to Section 2.06, all rights and privileges of such Grantor with respect to the securities and other property referred to in clauses (a), (b), (c) and (d) above; and (f) all Proceeds of, and Security Entitlements in respect of, any of the foregoing (the items referred to in clauses (a) through (f) above being collectively referred to as the “Pledged Collateral”).

TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, forever; subject, however, to the terms, covenants and conditions hereinafter set forth.

Section 2.02.Delivery of the Pledged Collateral.  

(a)On the Issue Date, each Grantor shall deliver or cause to be delivered to the Collateral Agent, for the benefit of the applicable Secured Parties, any and all Pledged Securities (other than any uncertificated Pledged Securities, but only for so long as such Pledged Securities remain uncertificated); provided that Promissory Notes and Instruments evidencing Indebtedness shall only be so required to be delivered to the extent required pursuant to paragraph (b) of this Section 2.02.  Thereafter, whenever such Grantor acquires any other Pledged Security (other than any uncertificated Pledged Securities, but only for so long as such Pledged Securities remain uncertificated), such Grantor shall promptly deliver or cause to be delivered to the Collateral Agent such Pledged Security as Collateral; provided that Promissory Notes and Instruments evidencing Indebtedness shall only be so required to be delivered to the extent required pursuant to paragraph (b) of this Section 2.02.

(b)As promptly as practicable (and in any event within thirty (30) days after receipt by Grantor (or such longer period as the Collateral Agent may agree in its reasonable discretion)), each Grantor will cause any Indebtedness for borrowed money having an aggregate principal amount equal to or in excess of $250,000 owed to such Grantor by any Person (other than a Grantor) to be evidenced by a duly executed Promissory Note that is pledged and delivered to the Collateral Agent, for the benefit of the Secured Parties, pursuant to the terms hereof.

(c)Upon delivery to the Collateral Agent, (i) any certificate or promissory note representing Pledged Collateral shall be accompanied by undated stock or note powers, as applicable, duly executed in blank or other undated instruments of transfer duly-executed in blank reasonably satisfactory to the Collateral Agent and by such other instruments and documents as the Collateral Agent may reasonably request and (ii) all other property comprising part of the Pledged Collateral shall be accompanied by such instruments and documents as the Collateral Agent may reasonably request.  Each delivery of Pledged Securities shall be accompanied by a schedule describing such Pledged Securities, which schedule shall be deemed to supplement Schedule II and be made a part hereof; provided that failure to provide any such schedule hereto shall not affect the validity of such pledge of such Pledged Securities.  Each schedule so delivered shall supplement any prior schedules so delivered.

- 6 -

 

(d)The assignment, pledge and security interest granted in Section 2.01 are granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Pledged Collateral.

Section 2.03.Representations, Warranties and Covenants.  Each Grantor, jointly and severally, represents, warrants and covenants, as to itself and the other Grantors, to and with the Collateral Agent, for the benefit of the Secured Parties, that:

(a)Schedule II sets forth, as of the Issue Date and as of each date on which a supplement to Schedule II is delivered pursuant to Section 2.02(c), a true and correct list of (i) all the issued and outstanding units of each class of the Equity Interests of the issuer thereof represented by the Pledged Equity directly owned beneficially, or of record, by such Grantor specifying the issuer and certificate number (if any) of, and the number and percentage of ownership represented by, such Pledged Equity and (ii) all the Pledged Debt owned by such Grantor (other than checks to be deposited in the ordinary course of business), including all Promissory Notes and Instruments required to be pledged hereunder;

(b)the Pledged Equity issued by each Issuer, each other Grantor or their respective Subsidiaries and the Pledged Debt (solely with respect to Pledged Debt issued by a Person other than any Grantor or any of their respective Subsidiaries, to the best of each Grantor’s knowledge) have been duly and validly authorized and issued by the issuers thereof and (i) in the case of Pledged Equity (other than Pledged Equity consisting of limited liability company interests or partnership interests which, pursuant to the relevant organizational or formation documents, cannot be fully paid and non-assessable), are fully paid and nonassessable and (ii) in the case of Pledged Debt (solely with respect to Pledged Debt issued by a Person other than any Grantor or any of their respective Subsidiaries to the best of each Grantor’s knowledge), are legal, valid and binding obligations of the issuers thereof, subject to applicable Debtor Relief Laws and general principles of equity;

(c)Each of the Grantors (i) holds the Pledged Securities indicated on Schedule II as owned by such Grantor free and clear of all Liens, other than (A) Liens created by the Security Documents and (B) Permitted Liens, (ii) will make no assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than (A) Liens created by the Security Documents and (B) Permitted Liens, and (iii) will defend its title or interest thereto or therein against any and all Liens (other than the Liens permitted pursuant to this Section 2.03(c)), however arising, of all Persons whomsoever;

(d)except for (i) restrictions and limitations imposed by the Notes Documents or securities laws generally or by Permitted Liens and (ii) in the case of Pledged Equity of Persons that are not Subsidiaries, transfer restrictions that exist at the time of acquisition of Equity Interests in such Persons, the Pledged Equity is and will continue to be freely transferable and assignable, and none of the Pledged Equity is or will be subject to any option, right of first refusal, shareholders agreement, charter or by-law or other organizational document provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect in any manner material and adverse to the Secured Parties the pledge of such Pledged Equity hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Collateral Agent of rights and remedies hereunder;

(e)each of the Grantors has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated;

(f)no consent or approval of any governmental authority, any securities exchange or any other Person was or is necessary to the validity and perfection of the pledge effected hereby (other than such as have been obtained and are in full force and effect);

- 7 -

 

(g)by virtue of the execution and delivery by the Grantors of this Agreement, when any Pledged Securities are delivered to the Collateral Agent in accordance with this Agreement, the Collateral Agent will (i) obtain a legal, valid and first-priority (subject to non-consensual Permitted Liens and the Intercreditor Agreement) perfected lien upon and security interest in such Pledged Securities as security for the payment and performance of the Secured Obligations, (ii) have Control of such Pledged Securities and (iii) assuming that neither the Collateral Agent nor any of the Secured Parties have “notice of an adverse claim” (as defined in Section 8-105 of the UCC) with respect to such Pledged Securities at the time such Pledged Securities are delivered to the Collateral Agent, be a protected purchaser (within the meaning of Section 8-303 of the UCC) thereof;

(h)the pledge effected hereby is effective to vest in the Collateral Agent, for the benefit of the Secured Parties, the rights of the Collateral Agent in the Pledged Collateral as set forth herein; and

(i)subject to the terms of this Agreement and to the extent permitted by applicable Law, each Grantor hereby agrees that upon the occurrence and during the continuation of an Event of Default, it will comply with instructions of the Collateral Agent with respect to the Equity Interests in such Grantor that constitute Pledged Equity hereunder that are not certificated without further consent by the applicable owner or holder of such Pledged Equity.

Section 2.04.Certification of Limited Liability Company and Limited Partnership Interests.  Each Grantor acknowledges and agrees that, to the extent any interest in any limited liability company or limited partnership controlled by any Grantor and pledged under Section 2.01 is a “security” within the meaning of Article 8 of the UCC and is governed by Article 8 of the UCC, such interest shall be represented by a certificate.  Each Grantor further acknowledges and agrees that with respect to any interest in any limited liability company or limited partnership controlled on or after the date hereof by such Grantor and pledged hereunder that is not a “security” within the meaning of Article 8 of the UCC, such Grantor shall at no time elect to treat any such interest as a “security” within the meaning of Article 8 of the UCC, nor shall such interest be represented by a certificate, unless such election and such interest is thereafter represented by a certificate that is promptly delivered to the Collateral Agent pursuant to the terms hereof.

Section 2.05.Registration in Nominee Name; Denominations.  If an Event of Default shall have occurred and be continuing and the Collateral Agent shall have given the Issuers notice of its intent to exercise such rights, (a) the Collateral Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to cause each of the Pledged Securities to be transferred of record into the name of the Collateral Agent and (b) the Collateral Agent shall have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement; provided that, notwithstanding the foregoing, if a Bankruptcy Event of Default shall have occurred and be continuing, the Collateral Agent shall not be required to give the notice referred to above in order to exercise the rights described above.  Each Grantor will promptly give to the Collateral Agent copies of any material notices received by it with respect to Pledged Securities registered in the name of such Grantor.  Each Grantor will take any and all actions reasonably requested by the Collateral Agent to facilitate compliance with this Section 2.05.

Section 2.06.Voting Rights; Dividends and Interest.  (a)  Unless and until an Event of Default shall have occurred and be continuing and the Collateral Agent shall have notified the Issuers that the rights of the Grantors under this Section 2.06 are being suspended:

(i)Each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose consistent with the terms of this Agreement, the Indenture and the other Notes Documents; provided that such rights and powers shall not be exercised in any manner that could materially and adversely affect the rights inuring to a holder of any Pledged Securities or the rights and remedies of any of the Collateral Agent or the other Secured Parties under 

- 8 -

 

this Agreement, the Indenture or any other Notes Document or the ability of the Secured Parties to exercise the same.

(ii)The Collateral Agent shall promptly execute and deliver to each Grantor, or cause to be executed and delivered to such Grantor, all such proxies, powers of attorney and other instruments as such Grantor may reasonably request in writing for the purpose of enabling such Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to subparagraph (i) above, in each case as shall be specified in such request and be in form and substance reasonably satisfactory to the Collateral Agent.

(iii)Each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities, to the extent (and only to the extent) that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Indenture, the other Notes Documents and applicable Laws; provided that any noncash dividends, interest, principal or other distributions that would constitute Pledged Equity or Pledged Debt, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by any Grantor, shall not be commingled by such Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Collateral Agent and the other Secured Parties and shall be forthwith delivered to the Collateral Agent in the same form as so received (with any necessary endorsement reasonably requested by the Collateral Agent).  So long as no Event of Default has occurred and is continuing, the Collateral Agent shall promptly deliver to each Grantor (at the expense of such Grantor) any Pledged Securities in its possession if requested to be delivered to the issuer thereof in connection with any exchange or redemption of such Pledged Securities.

(b)Upon the occurrence and during the continuance of any Event of Default, after the Collateral Agent shall have notified the Issuers of the suspension of the rights of the Grantors under Section 2.06, then all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to Section 2.06(a)(iii) shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions.  All dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of this Section 2.06 shall be held in trust for the benefit of the Collateral Agent and the other Secured Parties, shall be segregated from other property or funds of such Grantor and shall be forthwith delivered to the Collateral Agent upon demand in the same form as so received (with any necessary stock or note powers and other instruments of transfer reasonably requested by the Collateral Agent).  Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 5.02.  After all Events of Default have been cured or waived and the Issuers have delivered to the Collateral Agent a certificate to such effect, the Collateral Agent shall promptly repay to each Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of Section 2.06(a)(iii) in the absence of any such Event of Default and that remain in such account, and such Grantor’s right to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities shall be automatically reinstated.

- 9 -

 

(c)Upon the occurrence and during the continuance of an Event of Default, after the Collateral Agent shall have notified the Issuers of the suspension of the rights of the Grantors under Section 2.06, then all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to Section 2.06(a)(i), and the obligations of the Collateral Agent under Section 2.06(a)(ii), shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers; provided that, unless otherwise directed by the Required Lenders, the Collateral Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights.  After all Events of Default have been cured or waived and the Issuers have delivered to the Collateral Agent a certificate to such effect, each Grantor shall have the exclusive right to exercise the voting and/or consensual rights and powers that such Grantor would otherwise be entitled to exercise pursuant to the terms of Section 2.06(a)(i), and the obligations of the Collateral Agent under Section 2.06(a)(ii) shall be reinstated.

(d)Any notice given by the Collateral Agent to the Issuers suspending the rights of the Grantors under this Section 2.06, (i) shall be given in writing, (ii) may be given with respect to one or more of the Grantors at the same or different times and (iii) may suspend the rights of the Grantors under Sections 2.06(a)(i) or (iii) in part without suspending all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Collateral Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.  Notwithstanding anything to the contrary contained in Section 2.06(a), (b) or (c), if a Bankruptcy Event of Default shall have occurred and be continuing, the Collateral Agent shall not be required to give any notice referred to in said Sections in order to exercise any of its rights described in such Sections, and the suspension of the rights of each of the Grantors under each such Section shall be automatic upon the occurrence of such Bankruptcy Event of Default

Section 2.07.Collateral Agent Not a Partner or Limited Liability Company Member.  Nothing contained in this Agreement shall be construed to make the Collateral Agent or any other Secured Party liable as a member of any limited liability company or as a partner of any partnership and neither the Collateral Agent nor any other Secured Party by virtue of this Agreement or otherwise (except as referred to in the following sentence) shall have any of the duties, obligations or liabilities of a member of any limited liability company or as a partner in any partnership.  The parties hereto expressly agree that, unless the Collateral Agent shall become the absolute owner of Pledged Equity consisting of a limited liability company interest or a partnership interest pursuant hereto, this Agreement shall not be construed as creating a partnership or joint venture among the Collateral Agent, any other Secured Party, any Grantor and/or any other Person.

ARTICLE III

Security Interests in Personal Property

Section 3.01.Security Interest.  

(a)As security for the payment or performance, as the case may be, in full of the Secured Obligations, each Grantor hereby grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest (the “Security Interest”) in, all of such Grantor’s right, title and interest in, to or under any and all of the following assets and properties, whether now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “Article 9 Collateral”):

(i)all Accounts;

(ii)all Chattel Paper;

(iii)all Documents;

- 10 -

 

(iv)all Equipment;

(v)all General Intangibles;

(vi)all Instruments;

(vii)all Inventory;

(viii)all Investment Property:

(ix)all books and records pertaining to the Article 9 Collateral;

(x)all Goods and Fixtures;

(xi)all Money, cash, cash equivalents and Deposit Accounts;

(xii)all Letter-of-Credit Rights;

(xiii)all Commercial Tort Claims described on Schedule III from time to time;

(xiv)all Deposit Accounts, and all cash, Money, Securities and other investments deposited therein;

(xv)all Supporting Obligations;

(xvi)all Security Entitlements in any or all of the foregoing;

(xvii)all Intellectual Property; and 

(xviii)to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing;

provided that “Collateral” shall not include any “intent to use” trademark application, solely during the period in which the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark application under applicable federal law, after which period such application shall be automatically subject to the security interest granted herein and deemed to be included in the Collateral.

(b)Each Grantor hereby irrevocably authorizes the Collateral Agent for the benefit of the Secured Parties at any time and from time to time to file in any relevant jurisdiction any financing statements or continuation statements (including fixture filings) with respect to the Article 9 Collateral or any part thereof and amendments thereto that (i) describe the collateral covered thereby in any manner necessary or advisable to ensure the perfection of the security interest in the Article 9 Collateral granted under this Agreement including indicating the Collateral as all assets or all personal property of such Grantor or words of similar effect and (ii) contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment, including (A) whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor and (B) in the case of a financing statement filed as a fixture filing, a sufficient description of the real property to which such Article 9 Collateral relates.  Each Grantor agrees to provide such information to the Collateral Agent promptly upon request.

- 11 -

 

(c)The Security Interest is granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Article 9 Collateral.

(d)Each Grantor hereby further authorizes the Collateral Agent to file a Grant of Security Interest substantially in the form of Exhibit II, III or IV, as applicable, covering relevant IP Collateral consisting of Patents (and Patents for which applications are pending), registered Trademarks (and Trademarks for which registration applications are pending) and registered Copyrights (and Copyrights for which registration applications are pending) with the United States Patent and Trademark Office or United States Copyright Office (or any successor office), as applicable, and such other documents as may be necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest granted by such Grantor hereunder, without the signature of such Grantor, and naming such Grantor, as debtor, and the Collateral Agent, as secured party.

Section 3.02.Representations and Warranties.  Each Grantor represents and warrants, as to itself and the other Grantors, to the Collateral Agent and the Secured Parties that:

(a)Each Grantor has good and valid rights (not subject to any Liens other than Permitted Liens) and/or good or marketable title in the Article 9 Collateral with respect to which it has purported to grant a Security Interest hereunder (which rights and/or title, are in any event, sufficient under Section 9-203 of the UCC), and has full power and authority to grant to the Collateral Agent the Security Interest in such Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval that has been obtained.

(b)The Perfection Certificate has been duly executed and delivered to the Collateral Agent and the information set forth therein, including the exact legal name of each Grantor and its jurisdiction of organization, taken as a whole, is correct and complete in all material respects as of the Issue Date.  The UCC financing statements (including fixture filings as applicable) prepared by the Collateral Agent based upon the information provided to the Collateral Agent in the Perfection Certificate for filing in each governmental, municipal or other office specified in Schedule IV of this Agreement (or specified by notice from the applicable Grantor to the Collateral Agent after the Issue Date in the case of filings, recordings or registrations required by Section 5.03 of the Indenture), are all the filings, recordings and registrations (other than any filings required to be made in the United States Patent and Trademark Office or the United States Copyright Office in order to perfect the Security Interest in Article 9 Collateral consisting of Intellectual Property) necessary to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the benefit of the Secured Parties) in respect of all Article 9 Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration with respect to such Article 9 Collateral is necessary in any such jurisdiction, except as provided under applicable law with respect to the filing of continuation statements.  Each Grantor represents and warrants that, as of the Issue Date, fully executed Grants of Security Interest in the form attached as Exhibit II, III or IV, as applicable, containing a description of all IP Collateral consisting of Patents (and Patents for which applications are pending), registered Trademarks (and Trademarks for which registration applications are pending) or registered Copyrights (and Copyrights for which registration applications are pending), as applicable, have been delivered to the Collateral Agent for recording by the United States Patent and Trademark Office or the United States Copyright Office, as applicable, pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205 and the regulations thereunder.

(c)The Security Interest constitutes (i) a legal and valid security interest in all the Article 9 Collateral securing the payment and performance of the Secured Obligations, (ii) subject to the filings described in Section 3.02(b), a perfected security interest in all Article 9 Collateral in which a security interest may be perfected by filing, recording or registering a financing statement in the United States (or any political 

- 12 -

 

subdivision thereof) and its territories and possessions pursuant to the UCC and (iii) a security interest that shall be perfected in all Article 9 Collateral (other than with respect to any Copyright that is not material to the business of the Grantors, taken as a whole) in which a security interest may be perfected upon the receipt and recording of the relevant Grants of Security Interest with the United States Patent and Trademark Office and the United States Copyright Office, as applicable, within the three month period (commencing as of the date hereof) pursuant to 35 U.S.C. § 261 or 15 U.S.C. § 1060 or the one month period (commencing as of the date hereof) pursuant to 17 U.S.C. § 205.  The Security Interest is and shall be prior to any other Lien on any of the Article 9 Collateral, other than Permitted Liens.

(d)The Article 9 Collateral is owned by the Grantors free and clear of any Lien, except for Permitted Liens.  None of the Grantors has filed or consented to the filing of (i) any financing statement or analogous document under the UCC or any other applicable Laws covering any Article 9 Collateral, (ii) any assignment in which any Grantor assigns any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with the United States Patent and Trademark Office or the United States Copyright Office, or (iii) any assignment in which any Grantor assigns any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Permitted Liens.

(e)All Commercial Tort Claims of each Grantor where the amount of the damages claimed by such Grantor is in excess of $250,000 in existence on the date of this Agreement (or on the date upon which such Grantor becomes a party to this Agreement) are described on Schedule III hereto.

(f)With respect to the IP Collateral:

(i)such Grantor is the exclusive owner of all right, title and interest in and to the IP Collateral or has the right or license to use the IP Collateral subject only to the terms of the Licenses;

(ii)the operation of such Grantor’s business as currently conducted and the use of the IP Collateral in connection therewith do not conflict with, infringe, misappropriate, dilute, misuse or otherwise violate the intellectual property rights of any third party;

(iii)the IP Collateral set forth on the Perfection Certificate includes all of the patents, patent applications, domain names, trademark registrations and applications, copyright registrations and applications owned by such Grantor as of the date hereof;

(iv)the IP Collateral is subsisting and has not been adjudged invalid or unenforceable in whole or in part, and to such Grantor’s knowledge, is valid and enforceable.  Such Grantor is not aware of any uses of any material item of IP Collateral that could be expected to lead to such item becoming invalid or unenforceable;

(v)such Grantor has made or performed all filings, recordings and other acts and has paid all required fees and taxes to maintain and protect its interest in each and every item of IP Collateral in full force and effect, and to protect and maintain its interest therein, except where the failure to do so would be permitted under Section 4.02(h);

(vi)no claim, action, suit, investigation, litigation or proceeding has been asserted or is pending or, to such Grantor’s knowledge, threatened against such Grantor (A) except as set forth in Schedule V hereto, based upon or challenging or seeking to deny or restrict the Grantor’s rights in or use of any of the IP Collateral, (B) alleging that the Grantor’s rights in or use of the IP Collateral or that any services provided by, processes used by, or products manufactured or sold by, such Grantor infringe, misappropriate, dilute, misuse 

- 13 -

 

or otherwise violate any Patent, Trademark, Copyright or any other Intellectual Property right of any third party, or (C) alleging that the IP Collateral is being licensed or sublicensed in violation or contravention of the terms of any license or other agreement.  To such Grantor’s knowledge, no Person is engaging in any activity that infringes, misappropriates, dilutes, misuses or otherwise violates the material IP Collateral or the Grantor’s rights in or use thereof.  The consummation of the transactions contemplated by the Notes Documents will not result in the termination or impairment of any of the IP Collateral;

(vii)with respect to each License: (A) such License is valid and binding and in full force and effect; (B) such Grantor has not received any notice of termination or cancellation under such License; (C) such Grantor has not received any notice of a breach or default under such License; and (D) neither such Grantor nor, to such Grantor’s knowledge, any other party to such License is in breach or default thereof in any material respect, and no event has occurred that, with notice or lapse of time or both, would constitute such a breach or default or permit termination, modification or acceleration under such License; and

(viii)to such Grantor’s knowledge, (A) none of the material trade secrets of such Grantor has been used, divulged, disclosed or appropriated to the detriment of such Grantor for the benefit of any other Person other than such Grantor; (B) no employee, independent contractor or agent of such Grantor has misappropriated any material trade secrets of any other Person in the course of the performance of his or her duties as an employee, independent contractor or agent of such Grantor; and (C) no employee, independent contractor or agent of such Grantor is in default or breach of any material term of any employment agreement, non-disclosure agreement, assignment of inventions agreement or similar agreement or contract relating in any way to the protection, ownership, development, use or transfer of such Grantor’s material IP Collateral.

Section 3.03.Covenants.  

(a)The Grantors agree to promptly (and in any event within thirty (30) calendar days of such event, or such later date as the Collateral Agent may agree in its reasonable discretion) notify the Collateral Agent of any change (i) in the legal name of any Grantor, (ii) in the identity or type of organization or corporate structure of any Grantor, (iii) in the jurisdiction of organization of any Grantor, (iv) in the location of any Grantor under the UCC or (v) in the organizational identification number of any Grantor. In addition, if any Grantor does not have an organizational identification number on the Issue Date (or the date such Grantor becomes a party to this Agreement) and later obtains one, the Issuers shall promptly thereafter notify the Collateral Agent of such organizational identification number and shall take all actions reasonably satisfactory to the Collateral Agent to the extent necessary to maintain the security interests (and the priority thereof) of the Collateral Agent in the Collateral intended to be granted hereby fully perfected and in full force and effect.  The Grantors agree not to effect or permit any change referred to in the preceding sentence unless all filings, publications and registrations, have been made (or will be made in a timely fashion) under the UCC or other applicable law that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected first priority security interest to the extent required under the Notes Documents (subject only to Permitted Liens and the Intercreditor Agreement).

(b)Each Grantor shall, at its own expense, take any and all commercially reasonable actions necessary to defend title to the Article 9 Collateral against all Persons, except with respect to Article 9 Collateral that such Grantor determines in its reasonable business judgment is no longer necessary or beneficial to the conduct of the business, and to defend the Security Interest of the Collateral Agent in the Article 9 Collateral and the priority thereof against any Lien not permitted pursuant to Section 4.12 of the Indenture.

(c)At the time of delivery of a Compliance Certificate pursuant to Section 4.04(a) of the Indenture in connection with the delivery of annual financial statements with respect to the preceding fiscal 

- 14 -

 

year pursuant to Section 4.03(a)(iv) of the Indenture, the Issuers shall deliver to the Collateral Agent a certificate executed by a Responsible Officer of the Issuers setting forth the information required pursuant to the Perfection Certificate (other than Section 1(b) or Section 1(c)(ii) of the Perfection Certificate) or confirming that there has been no change in such information since the date of such certificate or the date of the most recent certificate delivered pursuant to this Section 3.03(c).

(d)Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Collateral Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any fees and Taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements (including fixture filings) or other documents in connection herewith or therewith.  If any amount payable under or in connection with any of the Article 9 Collateral (other than by a Grantor) that equals or exceeds $250,000 shall be or become evidenced by any Promissory Note or Instrument, such Promissory Note or Instrument shall be promptly pledged and delivered to the Collateral Agent, for the benefit of the Secured Parties in a manner reasonably satisfactory to the Collateral Agent.

(e)At its option, the Collateral Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Article 9 Collateral and not permitted pursuant to Section 4.12 of the Indenture, and may pay for the maintenance and preservation of the Article 9 Collateral to the extent any Grantor fails to do so as required by the Indenture, this Agreement or any other Notes Document and within a reasonable period of time after the Collateral Agent has requested that it do so, and each Grantor jointly and severally agrees to reimburse the Collateral Agent within ten (10) days after demand for any payment made or any reasonable out-of-pocket expense incurred by the Collateral Agent pursuant to the foregoing authorization; provided that nothing in this paragraph shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the other Notes Documents.

(f)If at any time any Grantor shall take a security interest in any property of an Account Debtor or any other Person the value of which equals or exceeds $250,000 to secure payment and performance of an Account or related contracts, such Grantor shall promptly assign such security interest to the Collateral Agent for the benefit of the applicable Secured Parties.  Such assignment need not be filed of public record unless necessary to continue the perfected status of the security interest against creditors of and transferees from the Account Debtor or other Person granting the security interest.

(g)Each Grantor (rather than the Collateral Agent or any Secured Party) shall remain liable (as between itself and any relevant counterparty) to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Article 9 Collateral, all in accordance with the terms and conditions thereof, and each Grantor jointly and severally agrees to indemnify and hold harmless the Collateral Agent and the Secured Parties from and against any and all liability for such performance.

(h)Notwithstanding anything in this Agreement to the contrary other than the filing of a UCC financing statement, (i) no actions shall be required to perfect the security interest granted hereunder in Letter-of-Credit Rights, (ii) no actions shall be required to perfect the security interest granted hereunder in motor vehicles and other assets subject to certificates of title and (iii) no Grantor shall be required to complete any filings or other action with respect to the perfection of the security interests created hereby in any jurisdiction outside of the United States or any State thereof.

- 15 -

 

Section 3.04.Other Actions.  In order to further insure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the Security Interest, each Grantor agrees, in each case at such Grantor’s own expense, to take the following actions with respect to the following Article 9 Collateral:

(a)Instruments.  If any Grantor shall at any time hold or acquire any Instruments constituting Collateral and evidencing an amount equal to or in excess of $250,000 such Grantor shall promptly endorse, assign and deliver the same to the Collateral Agent for the benefit of the applicable Secured Parties, accompanied by such undated instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably request.

(b)Investment Property.  Except to the extent otherwise provided in Article II, if any Grantor shall at any time hold or acquire any Certificated Securities, such Grantor shall promptly endorse, assign and deliver the same to the Collateral Agent for the benefit of the applicable Secured Parties, accompanied by such undated instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably request.  If any Securities now or hereafter acquired by any Grantor are uncertificated and are issued to such Grantor or its nominee directly by the issuer thereof, upon the Collateral Agent’s request and following the occurrence of an Event of Default such Grantor shall promptly notify the Collateral Agent thereof and, at the Collateral Agent’s reasonable request, pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent, either (but only to the extent such Securities and other Investment Property constitute Collateral) (i) cause the issuer to agree to comply with instructions from the Collateral Agent as to such Securities, without further consent of any Grantor or such nominee, or (ii) arrange for the Collateral Agent to become the registered owner of the Securities.  If any Securities, whether certificated or uncertificated, or other Investment Property are held by any Grantor or its nominee through a Securities Intermediary, upon the Collateral Agent’s request and following the occurrence of an Event of Default, such Grantor shall immediately notify the Collateral Agent thereof and at the Collateral Agent’s request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent shall either (i) cause such Securities Intermediary to agree to comply with Entitlement Orders or other instructions from the Collateral Agent to such Securities Intermediary as to such Security Entitlements without further consent of any Grantor or such nominee, or (ii) in the case of Financial Assets or other Investment Property held through a Securities Intermediary, arrange for the Collateral Agent to become the Entitlement Holder with respect to such Investment Property, with the Grantor being permitted, only with the consent of the Collateral Agent, to exercise rights to withdraw or otherwise deal with such Investment Property.  Notwithstanding the foregoing, unless and until an Event of Default has occurred and is continuing, the Collateral Agent agrees with each of the Grantors that the Collateral Agent shall not give any such Entitlement Orders or instructions or directions to any such issuer, or Securities Intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by any Grantor.

(c)Commercial Tort Claims.  If any Grantor shall at any time after the date of this Agreement acquire a Commercial Tort Claim in an amount (taking the greater of the aggregate claimed damages thereunder or the reasonably estimated value thereof) of $250,000 or more, such Grantor shall promptly notify the Collateral Agent thereof in a writing signed by such Grantor and provide supplements to Schedule III describing the details thereof and shall grant to the Collateral Agent a security interest therein and in the proceeds thereof, all upon the terms of this Agreement.

(d)Deposit Accounts and Securities Accounts.  Each Grantor shall (i) cause all Deposit Accounts and Security Accounts (other than Excluded Accounts) existing on the Issue Date to be subject to a Control Agreement for such Deposit Accounts and Securities Accounts as promptly as practicable, and in any event within 60 days (or such longer period as agreed by the Collateral Agent in its sole discretion) after the Issue Date and (ii) cause any Deposit Account or Security Account (other than Excluded Accounts) opened or otherwise acquired after the Issue Date by any Grantor, to be subject to a Control Agreement for such Deposit Account or Securities Account at all times.

- 16 -

 

ARTICLE IV

Special Provisions Concerning IP Collateral

Section 4.01.Grant of License to Use Intellectual Property.  

Without limiting the provisions of Section 3.01 hereof or any other rights of the Collateral Agent as the holder of a Security Interest in any IP Collateral, for the purpose of enabling the Collateral Agent to exercise rights and remedies under this Agreement at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Collateral Agent, for the benefit of the Secured Parties, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Grantors) to use, license or sublicense any of the IP Collateral now owned or hereafter acquired by such Grantor, and wherever the same may be located (whether or not any license agreement by and between any Grantor and any other Person relating to the use of such IP Collateral may be terminated hereafter), and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof, provided, however, that any such license granted by the Collateral Agent to a third party shall include reasonable and customary terms necessary to preserve the existence, validity and value of the affected IP Collateral, including without limitation, provisions requiring the continuing confidential handling of trade secrets, requiring the use of appropriate notices and prohibiting the use of false notices, protecting and maintaining the quality standards of the Trademarks in the manner set forth below (it being understood and agreed that, without limiting any other rights and remedies of the Collateral Agent under this Agreement, any other Notes Document or applicable Law, nothing in the foregoing license grant shall be construed as granting the Collateral Agent rights in and to such IP Collateral above and beyond (x) the rights to such IP Collateral that each Grantor has reserved for itself and (y) in the case of IP Collateral that is licensed to any such Grantor by a third party, the extent to which such Grantor has the right to grant a sublicense to such IP Collateral hereunder).

The use of such license by the Collateral Agent may only be exercised, at the option of the Collateral Agent, during the continuation of an Event of Default; provided that any license, sublicense or other transaction entered into by the Collateral Agent in accordance herewith shall immediately terminate at such time as the Collateral Agent is no longer lawfully entitled to exercise its rights and remedies under this Agreement.  Nothing in this Section 4.01 shall require a Grantor to grant any license that is prohibited by any rule of law, statute or regulation, or is prohibited by, or constitutes a breach or default under or results in the termination of any contract, license, agreement, instrument or other document evidencing, giving rise to or theretofore granted, with respect to such property or otherwise unreasonably prejudices the value thereof to the relevant Grantor.  In the event the license set forth in this Section 4.01 is exercised with regard to any Trademarks, then the following shall apply: (i) all goodwill arising from any licensed or sublicensed use of any Trademark shall inure to the benefit of the Grantor; (ii) the licensed or sublicensed Trademarks shall only be used in association with goods or services of a quality and nature consistent with the quality and reputation with which such Trademarks were associated when used by Grantor prior to the exercise of the license rights set forth herein; and (iii) at the Grantor’s request and expense, licensees and sublicensees shall provide reasonable cooperation in any effort by the Grantor to maintain the registration or otherwise secure the ongoing validity and effectiveness of such licensed Trademarks, including, without limitation the actions and conduct described in Section 4.02 below.

Section 4.02.Protection of Collateral Agent’s Security.  

(a)With respect to registration or pending application of each item of its IP Collateral for which such Grantor has standing to do so, each Grantor agrees to take, at its expense, all reasonable steps, including, without limitation, in the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other governmental authority located in the United States to (i) maintain the validity and enforceability of any registered IP Collateral and maintain such IP Collateral in full force and effect, and (ii) pursue the registration 

- 17 -

 

and maintenance of each Patent, Trademark, or Copyright registration or application, now or hereafter included in such IP Collateral of such Grantor, including, without limitation, the payment of required fees and taxes, the filing of responses to office actions issued by the U.S. Patent and Trademark Office, the U.S. Copyright Office or other governmental authorities, the filing of applications for renewal or extension, the filing of affidavits under Sections 8 and 15 of the U.S. Trademark Act, the filing of divisional, continuation, continuation-in-part, reissue and renewal applications or extensions, the payment of maintenance fees and the participation in interference, reexamination, opposition, cancellation, infringement and misappropriation proceedings.

(b)No Grantor shall do or permit any act or knowingly omit to do any act whereby any of its IP Collateral may lapse, be terminated, or become invalid or unenforceable or placed in the public domain (or in case of a trade secret, lose its competitive value).

(c)In the event that any Grantor becomes aware that any material item of the IP Collateral is being infringed or misappropriated by a third party, such Grantor shall promptly notify the Collateral Agent and shall take such actions (except to the extent the failure to take such actions is permitted by subsection 4.02(h)), at its expense, as such Grantor reasonably deems appropriate under the circumstances to protect or enforce such IP Collateral, including, without limitation, suing for infringement or misappropriation and for an injunction against such infringement or misappropriation.

(d)Each Grantor shall use proper statutory notice as commercially practical in connection with its use of each item of its IP Collateral.  No Grantor shall do or permit any act or knowingly omit to do any act whereby any of its IP Collateral may lapse or become invalid or unenforceable or placed in the public domain.

(e)Each Grantor shall take all reasonable steps to preserve and protect each item of its IP Collateral, including, without limitation, maintaining the quality of any and all products or services used or provided in connection with any of the Trademarks, consistent with the quality of the products and services as of the date hereof, and taking all reasonable steps necessary to ensure that all licensed users of any of the Trademarks abide by the applicable license’s terms with respect to the standards of quality.

(f)Each Grantor agrees that, should it obtain an ownership or other interest in any IP Collateral after the Issue Date (the “After-Acquired Intellectual Property”) (i) the provisions of this Agreement shall automatically apply thereto, and (ii) any such After-Acquired Intellectual Property and, in the case of Trademarks, the goodwill symbolized thereby, shall automatically become part of the IP Collateral subject to the terms and conditions of this Agreement with respect thereto.

(g)At the time of delivery of quarterly financial statements pursuant to Section 4.03 (a)(v) of the Indenture with respect to the fiscal quarter in which the relevant IP Collateral was acquired, each Grantor shall sign and deliver to the Collateral Agent an appropriate Grant of Security Interest with respect to applications for registration or registrations of IP Collateral owned or exclusively licensed by it as of the last day of such fiscal quarter, to the extent that such IP Collateral is not covered by any previous Grant of Security Interest so signed and delivered by it.  In each case, it will promptly cooperate as reasonably necessary to enable the Collateral Agent to make any necessary or reasonably desirable recordations with the U.S. Copyright Office or the U.S. Patent and Trademark Office, as appropriate.

(h)Notwithstanding the foregoing provisions of this Section 4.02 or elsewhere in this Agreement, nothing in this Agreement shall prevent any Grantor from abandoning or discontinuing the use or maintenance of any or its IP Collateral, or from failing to take action to enforce license agreements or pursue actions against infringers, if (i) such IP Collateral is of de minimis value and (ii) is no longer used in, or useful to, the business of such Grantor or its Affiliates and such Grantor determines in its reasonable business judgment that such abandonment, discontinuance, or failure to take action is desirable in the conduct of its business or the business of its Affiliates.

- 18 -

 

ARTICLE V

Remedies

Section 5.01.Remedies Upon Default.

Upon the occurrence and during the continuance of an Event of Default, subject to the Intercreditor Agreement, it is agreed that the Collateral Agent shall have the right to exercise any and all rights afforded to a secured party under this Agreement, the UCC or other applicable Law, and, subject to the Intercreditor Agreement, also may (i) require each Grantor to, and each Grantor 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 and time to be designated by the Collateral Agent that is reasonably convenient to both parties; (ii) occupy any premises owned or, to the extent lawful and permitted, leased by any of the Grantors where the Collateral or any part thereof is assembled or located for a reasonable period in order to effectuate its rights and remedies hereunder or under law, without obligation to such Grantor in respect of such occupation; provided that the Collateral Agent shall provide the applicable Grantor with thereof prior to or promptly after such occupancy (iii) exercise any and all rights and remedies of any of the Grantors under or in connection with the Collateral, or otherwise in respect of the Collateral; provided that the Collateral Agent shall provide the applicable Grantor with notice thereof prior to or promptly after such exercise; (iv) withdraw any and all cash or other Collateral from any Deposit Account or Securities Account (other than an Excluded Account) and apply such cash and other Collateral to the payment of any and all Secured Obligations in the manner provided in Section 5.02 of this Agreement; (v) subject to the mandatory requirements of applicable law and the notice requirements described below, sell or otherwise dispose of all or any part of the Collateral securing the Secured Obligations at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate and (vi) with respect to any IP Collateral, on demand, cause the Security Interest to become an assignment, transfer and conveyance of any of or all such IP Collateral by the applicable Grantors to the Collateral Agent, or license or sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, any such IP Collateral throughout the world on such terms and conditions and in such manner as the Collateral Agent shall determine, provided, however, that such terms shall include all terms and restrictions that customarily required to ensure the continuing validity and effectiveness of the IP Collateral at issue, such as, without limitation, notice, quality control and inurement provisions with regard to Trademarks, patent designation provisions with regard to Patents, and copyright notices and restrictions or decompilation and reverse engineering of copyrighted software, and confidentiality protections for trade secrets.  Each Grantor acknowledges and recognizes that (a) the Collateral Agent may be unable to effect a public sale of all or a part of the Collateral consisting of securities by reason of certain prohibitions contained in the Securities Act of 1933, 15 U.S.C. §77, (as amended and in effect, the “Securities Act”) or the securities laws of various states (the “Blue Sky Laws”), but may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such securities for their own account, for investment and not with a view to the distribution or resale thereof, (b) private sales so made may be at prices and upon other terms less favorable to the seller than if such securities were sold at public sales, (c) neither the Collateral Agent nor any other Secured Party has any obligation to delay sale of any of the Collateral for the period of time necessary to permit such securities to be registered for public sale under the Securities Act or the Blue Sky Laws, and (d) private sales made under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner.  To the maximum extent permitted by Law, each Grantor hereby waives any claim against any Secured Party arising because the price at which any Collateral may have been sold at a private sale was less than the price that might have been obtained at a public sale, even if the Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree.  Upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold.  Each such purchaser at any sale of Collateral shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by applicable Law) all rights of redemption, 

- 19 -

 

stay and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

The Collateral Agent shall give the applicable Grantors ten (10) days’ written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the UCC or its equivalent in other jurisdictions) of the Collateral Agent’s intention to make any sale of Collateral.  Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange.  Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice (if any) of such sale.  The Collateral Agent may conduct one or more going out of business sales, in the Collateral Agent’s own right or by one or more agents and contractors.  Such sale(s) may be conducted upon any premises owned, leased, or occupied by any Grantor.  The Collateral Agent and any such agent or contractor, in conjunction with any such sale, may augment the Inventory with other goods (all of which other goods shall remain the sole property of the Collateral Agent or such agent or contractor).  Any amounts realized from the sale of such goods which constitute augmentations to the Inventory (net of an allocable share of the costs and expenses incurred in their disposition) shall be the sole property of the Collateral Agent or such agent or contractor and neither any Grantor nor any Person claiming under or in right of any Grantor shall have any interest therein.  At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine.  The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given.  The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned.  In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice.  At any public (or, to the extent permitted by applicable Law, private) sale made pursuant to this Agreement, any Secured Party may bid for or purchase, free (to the extent permitted by applicable Law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by applicable Law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor.  For purposes of determining the Grantors’ rights in the Collateral, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Secured Obligations paid in full, provided, however, that such agreements shall include all terms and restrictions that are customarily required to ensure the continuing validity and effectiveness of the IP Collateral at issue, such as, without limitation, quality control and inurement provisions with regard to Trademarks, patent designation provisions with regard to patents, and copyright notices and restrictions or decompilation and reverse engineering of copyrighted software, and protecting the confidentiality of trade secrets.  As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court appointed receiver.  Any sale pursuant to the provisions of this Section 5.01 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the UCC or its equivalent in other jurisdictions.

- 20 -

 

Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor’s true and lawful agent (and attorney-in-fact) during the continuance of an Event of Default and after notice to the Issuers of its intent to exercise such rights (except in the case of a Bankruptcy Event of Default, in which case no such notice shall be required), for the purpose of (i) making, settling and adjusting claims in respect of Article 9 Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and (ii) making all determinations and decisions with respect thereto.  All sums disbursed by the Collateral Agent in connection with this paragraph, including reasonable out-of-pocket attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable, within ten (10) days of demand, by the Grantors to the Collateral Agent and shall be additional Secured Obligations secured hereby.

By accepting the benefits of this Agreement and each other Security Document, the Secured Parties expressly acknowledge and agree that this Agreement and each other Security Document may be enforced only by the action of the Collateral Agent and that no other Secured Party shall have any right individually to seek to enforce or to enforce this Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may be exercised by the Collateral Agent for the benefit of the Secured Parties upon the terms of this Agreement and the other Security Documents.

Section 5.02.Application of Proceeds.  

The Collateral Agent shall apply the proceeds of any collection or sale of Collateral, including any Collateral consisting of cash, in accordance with the provisions of Section 6.13 of the Indenture and the Intercreditor Agreement.  The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement and the Intercreditor Agreement.  Upon any sale of Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof.  It is understood and agreed that the Grantors shall remain jointly and severally liable to the extent of any deficiency between the amount of the proceeds of the Collateral and the aggregate amount of the Secured Obligations.

ARTICLE VI

Indemnity, Subrogation and Subordination

Upon payment by any Grantor of any Secured Obligations, all rights of such Grantor against any Issuer or any other Grantor arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior payment in full in cash of all the Secured Obligations (other than contingent indemnity obligations for then unasserted claims) and the termination of all Commitments to any Grantor under any Notes Document.  If any amount shall erroneously be paid to any Issuer or any other Grantor on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness of any Issuer or any other Grantor, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Collateral Agent to be credited against the payment of the Secured Obligations, whether matured or unmatured, in accordance with the terms of the Indenture and the other Notes Documents.  Subject to the foregoing, to the extent that any Grantor (other than the Issuers) shall, under this Agreement or the Indenture as a joint and several obligor, repay any of the Secured Obligations (an “Accommodation Payment”), then the Grantor making such Accommodation Payment shall be entitled to contribution and indemnification from, and be reimbursed by, each of the other Grantors in an amount equal to a fraction of such Accommodation Payment, the numerator of which fraction is such other Grantor’s Allocable Amount and the denominator of which is the sum of the Allocable Amounts of all of the Grantors.  As of any date of determination, the 

- 21 -

 

“Allocable Amount” of each Grantor shall be equal to the maximum amount of liability for Accommodation Payments which could be asserted against such Grantor hereunder and under the Indenture without (a) rendering such Grantor “insolvent” within the meaning of Section 101 (31) of U.S. Bankruptcy Law, Section 2 of the Uniform Fraudulent Transfer Act (“UFTA”) or Section 2 of the Uniform Fraudulent Conveyance Act (“UFCA”), (b) leaving such Grantor with unreasonably small capital or assets, within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving such Grantor unable to pay its debts as they become due within the meaning of Section 548 of the U.S. Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA.

ARTICLE VII

Miscellaneous

Section 7.01.Notices.  

All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 12.02 of the Indenture.  

Section 7.02.Waivers; Amendment.  

(a)No failure or delay by the Collateral Agent in exercising any right or power hereunder or under any other Notes Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Collateral Agent hereunder and under the other Notes Documents are cumulative and are not exclusive of any other rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement or consent to any departure by any Grantor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 7.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  

(b)Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent and the Grantor or Grantors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Article IX of the Indenture.

Section 7.03.Collateral Agent’s Fees and Expenses; Indemnification.  

(a)The parties hereto agree that the Collateral Agent shall be entitled to reimbursement of its expenses incurred hereunder as provided in Section 7.07 of the Indenture.

(b)Without limitation of its indemnification obligations under the other Notes Documents, each Grantor jointly and severally agrees to indemnify the Collateral Agent and its officers, directors, employees and agents (each an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including, without limitation, all actual reasonable and documented fees and expenses of one counsel to the Collateral Agent, one counsel to the Secured Parties, taken as a whole, and, if reasonably necessary, one local counsel in each relevant jurisdiction material to the interests of all Indemnitees taken as a whole), imposed on, incurred by or asserted against any such Indemnitee arising out of, in connection with, (a) the execution, delivery, enforcement, performance or administration of this Agreement or any other agreement, letter or instrument delivered in connection with the transactions contemplated hereby or the consummation of the transactions contemplated hereby, (b) the ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of any Collateral or (c) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any 

- 22 -

 

other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether or not such investigation, litigation or proceeding is brought by any Grantor, its directors, stockholders or creditors or an Indemnitee or any other Person, whether or not any Indemnitee is otherwise a party thereto and, in each case, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements (i) resulted from the gross negligence, bad faith, or willful misconduct of such Indemnitee or of any Affiliate or Related Indemnified Person of such Indemnitee, as determined by the final non-appealable judgment of a court of competent jurisdiction, (ii) are relating to disputes amongst Indemnitees other than (1) any claim against an Indemnitee or its Related Parties in its capacity or in fulfilling its role as Collateral Agent and (2) any claim arising out of any act or omission of any Issuer or any of its Affiliates or (iii) related to Taxes (other than Taxes relating to liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements indemnified under this Section 7.03(b)).  No Indemnitee nor any Grantor shall have any liability and each party hereby waives, any claim against any other party to this Agreement or any Indemnitee, for any special, punitive, indirect or consequential damages relating to this Agreement or arising out of its activities in connection herewith or therewith (whether before or after the Issue Date) (other than, in the case of any Grantor, in respect of any such damages incurred or paid by an Indemnitee to a third party).

(c)Any such amounts payable as provided hereunder shall be additional Secured Obligations secured hereby and by the other Security Documents.  The provisions of this Section 7.03 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Notes Document, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Notes Document, any resignation of the Trustee, Collateral Agent, or any investigation made by or on behalf of the Collateral Agent or any other Secured Party.  All amounts due under this Section 7.03 shall be payable within twenty (20) Business Days after written demand therefor.

Section 7.04.Successors and Assigns.  

Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Grantor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective permitted successors and assigns.  No Grantor may assign any of its rights or obligations hereunder without the written consent of the Collateral Agent.

Section 7.05.Survival of Agreement.  

Without limitation of any provision of the Indenture or Section 7.03 hereof, all covenants, agreements, indemnities, representations and warranties made by the Grantors in the Notes Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Notes Document shall be considered to have been relied upon by the Secured Parties and shall survive the execution and delivery of the Notes Documents and the issuance of the Notes, regardless of any investigation made by any such Secured Party or on its behalf and notwithstanding that the Collateral Agent or any Secured Party may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time of the issuance of the Notes, and shall continue in full force and effect until this Agreement is terminated as provided in Section 7.12 hereof, or with respect to any individual Grantor until such Grantor is otherwise released from its obligations under this Agreement in accordance with the terms hereof.

Section 7.06.Counterparts; Effectiveness; Several Agreement.  

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which when taken together shall constitute one and the same instrument.  Delivery by telecopier or by electronic .pdf copy of an executed counterpart of a signature page to this Agreement shall be 

- 23 -

 

effective as delivery of an original executed counterpart of this Agreement.  This Agreement shall become effective when it shall have been executed by each Grantor and the Collateral Agent and thereafter shall be binding upon and inure to the benefit of each Grantor and the Collateral Agent and the other Secured Parties and their respective permitted successors and assigns, subject to Section 7.04 hereof.  This Agreement shall be construed as a separate agreement with respect to each Grantor and may be amended, restated, modified, supplemented, waived or released with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.

Section 7.07.Severability.  

If any provision of this Agreement is held to be invalid, illegal, or unenforceable, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 7.08.GOVERNING LAW, ETC.  

(a)THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b)THE GRANTORS AND THE COLLATERAL AGENT EACH IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY IN THE BOROUGH OF MANHATTAN AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  EACH PARTY HERETO AGREES THAT THE COLLATERAL AGENT RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION IN CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER THIS AGREEMENT OR THE ENFORCEMENT OF ANY JUDGMENT.

(c)THE GRANTORS AND THE COLLATERAL AGENT EACH IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

Section 7.09.WAIVER OF RIGHT TO TRIAL BY JURY.  

EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS 

- 24 -

 

AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 7.10.Headings.  

Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

Section 7.11.Security Interest Absolute.  

All rights of the Collateral Agent hereunder, the Security Interest, the grant of a security interest in the Pledged Collateral and all obligations of each Grantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Indenture, the Notes, any other Notes Document, any agreement with respect to any of the Secured Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Indenture, the Notes, any other Notes Document, or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Secured Obligations or (d) subject only to termination of a Grantor’s obligations hereunder in accordance with the terms of Section 7.12, but without prejudice to reinstatement rights related to the Guarantee under Section 10.01 of the Indenture, any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Secured Obligations or this Agreement.

Section 7.12.Termination or Release.  

(a)This Agreement, the Security Interest and all other security interests granted hereby shall terminate with respect to all Secured Obligations when all the outstanding Secured Obligations (other than contingent indemnification obligations with respect to then unasserted claims) shall have been paid in full in cash, provided that in connection with the termination of this Agreement, the Trustee or Collateral Agent may require such indemnities as it shall reasonably deem necessary or appropriate to protect the Secured Parties against loss on account of credits previously applied to the Secured Obligations that may subsequently be reversed or revoked.

(b)The Security Interest in any Collateral shall be automatically released in accordance with Section 5.04 of the Indenture.

(c)In connection with any termination or release pursuant to paragraph (a) or (b) above, the Collateral Agent shall promptly execute and deliver to any Grantor, at such Grantor’s expense, all documents that such Grantor shall reasonably request to evidence such termination or release.  Any execution and delivery of documents pursuant to this Section 7.12 shall be without recourse to or warranty by the Collateral Agent.

(d)At any time that the respective Grantor desires that the Collateral Agent take any of the actions described in immediately preceding clause (c), it shall, upon request of the Collateral Agent, deliver to the Collateral Agent an officer’s certificate certifying that the release of the respective Collateral is permitted pursuant to paragraph (a) or (b).  The Collateral Agent shall have no liability whatsoever to any 

- 25 -

 

Secured Party as the result of any release of Collateral by it as permitted (or which the Collateral Agent in good faith believes to be permitted) by this Section 7.12.

Section 7.13.[Reserved].  

Section 7.14.Collateral Agent Appointed Attorney-in-Fact.  

(a)Each Grantor hereby appoints the Collateral Agent the true and lawful attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof at any time after and during the continuance of an Event of Default, which appointment is irrevocable and coupled with an interest.  Without limiting the generality of the foregoing, the Collateral Agent shall have the right, upon the occurrence and during the continuance of an Event of Default and (unless a Bankruptcy Event of Default has occurred and is continuing, in which case no such notice shall be required) upon and after delivery of notice by the Collateral Agent to the Issuers of its intent to exercise such rights, with full power of substitution either in the Collateral Agent’s name or in the name of such Grantor (i) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof; (ii) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (iii) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral; (iv) to send verifications of Accounts to any Account Debtor; (v) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (vi) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (vii) to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Collateral Agent and adjust, settle or compromise the amount of payment of any Account or related contracts; (viii) to make, settle and adjust claims in respect of Collateral under policies of insurance and to endorse the name of such Grantor on any check, draft, instrument or any other item of payment with respect to the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto; and (ix) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes; provided that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby.  The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct or that of any of their Affiliates, directors, officers, employees, counsel, agents or attorneys-in-fact.

(b)All acts in accordance with the terms of this Section 7.14 of said attorney or designee are hereby ratified and approved by the Grantors.  The powers conferred on the Collateral Agent, for the benefit of the Secured Parties, under this Section 7.14 are solely to protect the Collateral Agent’s interests in the Collateral and shall not impose any duty upon the Collateral Agent or any Secured Party to exercise any such powers.

Section 7.15.General Authority of the Collateral Agent.  

By acceptance of the benefits of this Agreement and any other Security Documents, each Secured Party (whether or not a signatory hereto) shall be deemed irrevocably (a) to consent to the appointment of the Collateral Agent as its agent hereunder and under such other Security Documents, (b) to confirm that the Collateral Agent shall have the authority to act as the exclusive agent of such Secured Party for the 

- 26 -

 

enforcement of any provisions of this Agreement and such other Security Documents against any Grantor, the exercise of remedies hereunder or thereunder and the giving or withholding of any consent or approval hereunder or thereunder relating to any Collateral or any Grantor’s obligations with respect thereto, (c) to agree that it shall not take any action to enforce any provisions of this Agreement or any other Security Document against any Grantor, to exercise any remedy hereunder or thereunder or to give any consents or approvals hereunder or thereunder except as expressly provided in this Agreement or any other Security Document and (d) to agree to be bound by the terms of this Agreement and any other Security Documents.

Section 7.16.Collateral Agent’s Duties.  

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, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not any Secured Party has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral.  The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which it accords its own property.

Section 7.17.Recourse.  

This Agreement is made with full recourse to each Grantor and pursuant to and upon all the warranties, representations, covenants and agreements on the part of such Grantor contained herein, in the Indenture, the Notes and the other Notes Documents and otherwise in writing in connection herewith or therewith, with respect to the Secured Obligations of each applicable Secured Party.  It is the desire and intent of each Grantor and each applicable Secured Party that this Agreement shall be enforced against each Grantor to the fullest extent permissible under applicable law applied in each jurisdiction in which enforcement is sought. 

Section 7.18.Discretionary Actions.

Notwithstanding anything else to the contrary herein, whenever reference is made in this Agreement to any discretionary action by, consent, designation, specification, requirement or approval of, notice, request or other communication from, or other direction given or action to be undertaken or to be (or not to be) suffered or omitted by the Collateral Agent or to any election, decision, opinion, acceptance, use of judgment, expression of satisfaction or other exercise of discretion, rights or remedies to be made (or not to be made) by the Collateral Agent, it is understood that the Collateral Agent shall be acting at the direction of the Holders and shall be fully protected in acting pursuant to such directions.  In all cases the Collateral Agent shall be fully justified in failing or refusing to take any such action under this Agreement if they shall not have received written instruction, advice or concurrence from the Holders of a majority in principal amount of the then total outstanding Notes.  For purposes of clarity, phrases such as “satisfactory to the Collateral Agent”, “approved”, “approved by the Collateral Agent”, “acceptable to the Collateral Agent”, “as determined by the Collateral Agent”, “in the Collateral Agent’s discretion”, “selected by the Collateral Agent”, and phrases of similar import, except as otherwise expressly provided herein, authorize and permit the Collateral Agent to approve, disapprove, determine, act or decline to act only at the direction of the Holders of a majority in principal amount of the then total outstanding Notes. 

Section 7.19.Intercredior Agreement.

(a)Notwithstanding anything herein to the contrary, the relative rights and remedies of the Collateral Agent and the Secured Parties hereunder shall be subject to and governed by the terms of the Intercreditor Agreement.  In the event of any inconsistency between the terms hereof and the terms of the 

- 27 -

 

Intercreditor Agreement, the terms of the Intercreditor Agreement shall control at any time the Intercreditor Agreement is in effect.

(b)Notwithstanding anything herein to the contrary, the requirements of this Agreement to deliver pledged collateral and any certificate, instrument and/or document in relation thereto to the collateral agent or any obligation with respect to the delivery, transfer, control, notation or provision of voting rights with respect to any collateral shall be deemed satisfied by the delivery, transfer, control, notation or provision thereof in favor of the person entitled thereto under the Intercreditor Agreement as gratuitous bailee and non-fiduciary agent for the collateral agent for so long as the Intercreditor Agreement requires delivery to such person.

 

 [Signature Pages Follow]

 

- 28 -

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

J. CREW BRAND, LLC, as LLC Issuer

By:  /s/ Vincent Zanna

Name:Vincent Zanna

Title: SVP, Finance and Treasurer 

J. CREW BRAND CORP., as Corporate Issuer

By:  /s/ Vincent Zanna

Name:Vincent Zanna

Title: SVP, Finance and Treasurer 

J. CREW BRAND INTERMEDIATE, LLC, as Holdings

By:  /s/ Vincent Zanna

Name:Vincent Zanna

Title: SVP, Finance and Treasurer 

 

J. Crew – Signature Page to Security Agreement

 

SUBSIDIARY GUARANTOR:

J. Crew Domestic Brand, LLC
J. Crew International Brand, LLC

Each of the above as a Subsidiary Guarantor

By:  /s/ Vincent Zanna

Name:Vincent Zanna

Title: SVP, Finance and Treasurer 

 

 

J. Crew – Signature Page to Security Agreement

 

COLLATERAL AGENT:

U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent

	
 
	
By:
	
/s/ Christopher J. Grell
Name: Christopher J. Grell
Title: Vice President

 

 

J. Crew – Signature Page to Security Agreement

 

SCHEDULE I TO SECURITY AGREEMENT

SUBSIDIARY GUARANTORS

J. Crew Domestic Brand, LLC, a Delaware limited liability company

J. Crew International Brand, LLC, a Delaware limited liability company

 

 

 

SCHEDULE II TO SECURITY AGREEMENT

EQUITY INTERESTS

						
	
Issuer
	
Registered
Owner/Grantor
	
Percentage of
Equity Interests
	
Number of
Shares
	
Class of
Equity
Interest
	
Number of
Certificate

	
J. Crew Brand, LLC
	
J. Crew Brand Intermediate, LLC
	
100%
	
N/A
	
Common
	
N/A

	
J. Crew Brand Corp.
	
J. Crew Brand, LLC
	
100%
	
100
	
Common
	
N/A

	
J. Crew Domestic Brand, LLC
	
J. Crew Brand, LLC
	
100%
	
N/A
	
Common
	
N/A

	
J. Crew International Brand, LLC
	
J. Crew Brand, LLC
	
100%
	
N/A
	
Common
	
N/A

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

 

PLEDGED DEBT

1.IPCO Intercompany Note, dated as of July 13, 2017, among, J. Crew Group, Inc., as borrower, and J. Crew Brand Intermediate, LLC, J. Crew Brand, LLC, J. Crew Brand Corp., J. Crew Domestic Brand, LLC and J. Crew International Brand, LLC as lenders.

 

 

 

SCHEDULE III TO SECURITY AGREEMENT

COMMERCIAL TORT CLAIMS

None.

 

 

 

 

SCHEDULE IV TO SECURITY AGREEMENT

UCC FILINGS

		
	
Grantor
	
Jurisdiction

	
J. Crew Brand Intermediate, LLC
	
Delaware

	
J. Crew Brand, LLC
	
Delaware

	
J. Crew Brand Corp.
	
Delaware

	
J. Crew Domestic Brand, LLC
	
Delaware

	
J. Crew International Brand, LLC
	
Delaware

	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
 

 

 

 

SCHEDULE V TO SECURITY AGREEMENT

LITIGATION

Eaton Vance Management, et al vs. Wilmington Savings Fund Society, FSB, et al, Index No. 654397/2017 pending in the Supreme Court of the State of New York, County of New York, including any appeal relating thereto.

 

 

EXHIBIT I TO SECURITY AGREEMENT

FORM OF PERFECTION CERTIFICATE

Reference is made to the Indenture, dated as of July 13, 2017 (as amended, restated, amended and restated, supplemented and/or otherwise modified from time to time, the “Indenture”) among J. Crew Brand, LLC, a Delaware limited liability company, J. Crew Brand Corp., a Delaware corporation, J. Crew Brand Intermediate, LLC, a Delaware limited liability company, the Subsidiary Guarantors party thereto, U.S. Bank National Association, as Trustee, and Collateral Agent, pursuant to which the Issuers have issued 13.00% Senior Secured New Money Notes due 2021.  Capitalized terms used but not defined herein have the meanings assigned in the Indenture or the Security Agreement referred to therein, as applicable.

The undersigned, a Responsible Officer of each of the Grantors, hereby certifies to the Collateral Agent and each other Secured Party on behalf of the Grantors as follows:

SECTION 1.Names.  (a) Set forth on Schedule 1(a) is (i) the exact legal name of each Grantor, as such name appears in its certificate of organization or like document and (ii) each other legal name such Grantor has had in the past five years, together with the date of the relevant name change and each other name used by each Grantor on any filings with the Internal Revenue Service at any time in the past five years.

(b)Except as set forth on Schedule 1(b), no Grantor has changed its identity or corporate structure or entered into a similar reorganization in any way within the past five years.  Changes in identity or corporate structure would include mergers, consolidations and acquisitions of all or substantially all of the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of) a Person or other acquisitions of material assets outside the ordinary course of business, as well as any change in the form, nature or jurisdiction of organization.  With respect to any such change that has occurred within the past five years, Schedules 1(a), 1(b) and 2(a) set forth the information required by Sections 1(a) and 2(a) of this Perfection Certificate as to each acquiree or constituent party to such merger, consolidation or acquisition.

(c)Set forth on Schedule 1(c) is (i) the exact legal name of each direct and indirect Subsidiary of Holdings, as such name appears in its certificate of organization or like document and (ii) each contractual agreement existing on the date hereof that would restrict a Guarantee of the Obligations by any such Subsidiary that would otherwise be required to become a Guarantor pursuant to the Indenture.

SECTION 2.Jurisdictions and Locations.

(a)Set forth on Schedule 2(a) is (i) the jurisdiction of organization and the form of organization of each Grantor, (ii) the organizational identification number, if any, assigned by such jurisdiction and (iii) the address (including the county) of the chief executive office of such Grantor.

(b)Set forth on Schedule 2(b) are all locations where each Grantor maintains any books or records relating to any Collateral.

(c)Set forth on Schedule 2(c) hereto are all other locations where each Grantor maintains any of the Collateral consisting of Inventory or equipment, not identified above.

(d)Set forth on Schedule 2(d) hereto are the names, addresses and title in regards to the Collateral of all persons or entities other than each Grantor, such as lessees, consignees, warehousemen or purchasers of chattel paper, which have possession or are intended to have possession of any of the Collateral consisting of instruments, chattel paper, Inventory or equipment.

 

 

SECTION 3.Unusual Transactions.  Except for Inventory or Accounts acquired pursuant to any merger, consolidation or acquisition which is listed on Schedule 1(b) hereof, all Accounts have been originated by the Grantors and all Inventory has been acquired by the Grantors in the ordinary course of business.

SECTION 4.Stock Ownership and other Equity Interests.  Set forth on Schedule 4 is a true and correct list, for each Grantor, of all the issued and outstanding Pledged Equity owned, beneficially or of record, by such Grantor, specifying the issuer and certificate number (if any) of, and the number and percentage of ownership represented by, such Pledged Equity and setting forth the percentage of such Pledged Equity pledged under the Security Agreements.

SECTION 5.Debt Instruments.  Set forth on Schedule 5 is a true and correct list, for each Grantor, of all promissory notes and other evidence of indebtedness (other than checks to be deposited in the ordinary course of business) owned by such Grantor, and to the extent applicable, specifying the creditor and debtor thereunder and the outstanding principal amount thereof.

SECTION 6.Real Property.  Set forth on Schedule 6 is a true and correct list, for each Grantor, of all real property with a fair market value in excess of $250,000 owned by such Grantor.

SECTION 7.Intellectual Property.  (a) Set forth on Schedule 7(a) is a true and correct list, with respect to each Grantor, of all United States patents and patent applications owned by such Grantor (except, for the avoidance of doubt, as otherwise indicated on Schedule 7(a)), including the name of the owner, title, registration or application number of any registrations or applications.

(b)Set forth on Schedule 7(b) is a true and correct list, with respect to each Grantor, of all United States trademark registrations and applications owned by such Grantor (except, for the avoidance of doubt, as otherwise indicated on Schedule 7(b)), including the name of the registered owner and the registration or application number of any registrations and applications.

(c)Set forth on Schedule 7(c) is a true and correct list, with respect to each Grantor, of all United States copyright registrations and applications owned by such Grantor (except, for the avoidance of doubt, as otherwise indicated on Schedule 7(c)), including the name of the registered owner, title and the registration or serial number of any copyright registrations.

(d)Set forth on Schedule 7(d) is a true and correct list, with respect to each Grantor, of all exclusive Copyright Licenses under which such Grantor is a licensee, including the name and address of the licensor under such exclusive Copyright License and the name of the registered owner, title and the registration or serial number of any copyright registration to which such exclusive Copyright License relates.

SECTION 8.Commercial Tort Claims.  Set forth on Schedule 8 is a true and correct list of commercial tort claims in excess of $250,000 held by any Grantor, including a brief description thereof.

SECTION 9.Deposit Accounts.  Set forth on Schedule 9 is a true and correct list of deposit accounts, brokerage accounts, commodity accounts or securities investment accounts maintained by any Grantor, including the name and address of the applicable depositary or other institution, the name and type of account, the name of the Grantor that maintains each account and the account number.

 

 

IN WITNESS WHEREOF, the undersigned has duly executed this Certificate on the date above first written.

J. CREW BRAND, LLC

	
 
	
By:
	

Name:
Title:

J. CREW BRAND CORP.

	
 
	
By:
	

Name:
Title:

J. CREW BRAND INTERMEDIATE, LLC

	
 
	
By:
	

Name:
Title:

J. CREW DOMESTIC BRAND, LLC

	
 
	
By:
	

Name:
Title:

J. CREW BRAND INTERNATIONAL BRAND, LLC

	
 
	
By:
	

Name:
Title:

 

 

 

 

 

 

Schedule 1(a)

Names

 

 

 

 

Schedule 1(b)

Unusual Transactions

 

 

 

 

Schedule 1(c)

 

 

 

 

Schedule 2(a)

Jurisdictions and Locations

 

 

 

 

Schedule 2(b)

Material Books and Records

 

 

 

 

Schedule 2(c)

Location of Collateral

 

 

 

 

Schedule 2(d)

Holders of Collateral

 

 

 

 

Schedule 4

Stock Ownership and Other Equity Interests

 

 

 

 

Schedule 5

Debt Instruments

 

 

 

 

Schedule 6

Real Property

 

 

 

 

Schedule 7(a)

Intellectual Property

U.S. Patent Registrations and Patent Applications

 

 

 

 

Schedule 7(b)

Intellectual Property

U.S. Trademark Registrations

U.S. Trademark Applications

 

 

 

 

Schedule 7(c)

Intellectual Property

U.S. Copyright Registrations and Copyright Applications

 

 

 

 

Schedule 7(d)

Intellectual Property

Exclusive Copyright Licenses under which a Grantor is a Licensee

 

 

 

 

Schedule 8

Commercial Tort Claims

 

 

 

 

Schedule 9

Deposit Accounts

 

 

 

EXHIBIT II TO SECURITY AGREEMENT

[FORM OF] TRADEMARK SECURITY AGREEMENT

This TRADEMARK SECURITY AGREEMENT (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Trademark Security Agreement”) dated ______________, 20 ___, is made by the Persons listed on the signature pages hereof (collectively, the “Grantors”) in favor of U.S. BANK NATIONAL ASSOCIATION, as collateral agent (the “Collateral Agent”) for the Secured Parties (as defined in the Indenture referred to below).

Reference is made to the Indenture, dated as of July 13, 2017 (as amended, restated, amended and restated, supplemented and/or otherwise modified from time to time, the “Indenture”) among J. Crew Brand, LLC, a Delaware limited liability company, J. Crew Brand Corp., a Delaware corporation, J. Crew Brand Intermediate, LLC, a Delaware limited liability company, the Subsidiary Guarantors party thereto, U.S. Bank National Association, as Trustee, and Collateral Agent, pursuant to which the Issuers have issued 13.00% Senior Secured New Money Notes due 2021 (the “Notes”).

Whereas, as a condition precedent to the issuance of the Notes, each Grantor has executed and delivered that certain Security Agreement dated July 13, 2017, made by the Grantors to the Collateral Agent (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”).

Whereas, under the terms of the Security Agreement, the Grantors have granted to the Collateral Agent, for the benefit of the Secured Parties, a security interest in, among other property, certain intellectual property of the Grantors, and have agreed as a condition thereof to execute this Trademark Security Agreement for recording with the U.S. Patent and Trademark Office and other governmental authorities.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Grantor agrees as follows:

SECTION 1.Terms.  Terms defined in the Indenture and Security Agreement and not otherwise defined herein are used herein as defined in the Indenture and Security Agreement.

SECTION 2.Grant of Security.  Each Grantor hereby grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties a continuing security interest in all of the Grantor’s right, title and interest in, to and under the Trademarks, including the Trademarks set forth on Schedule A attached hereto.

SECTION 3.Security for Obligations.  The grant of a security interest in the Trademarks by each Grantor under this Trademark Security Agreement is made to secure the payment or performance, as the case may be, in full of the Secured Obligations.

SECTION 4.Recordation.  Each Grantor authorizes and requests that the Commissioner for Trademarks and any other applicable government officer record this Trademark Security Agreement.

SECTION 5.Execution in Counterparts.  This Trademark Security Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

SECTION 6.Security Agreement.  This Trademark Security Agreement has been entered into in conjunction with the provisions of the Security Agreement.  Each Grantor does hereby acknowledge and confirm that the grant of the security interest hereunder to, and the rights and remedies of, the Collateral Agent 

 

 

with respect to the Collateral are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated herein by reference as if fully set forth herein.

SECTION 7.Governing Law.  This Trademark Security Agreement shall be construed in accordance with and governed by the laws of the State of New York.

[Remainder of this page intentionally left blank]

 

 

IN WITNESS WHEREOF, the undersigned have executed this Trademark Security Agreement as of the date first above written.

[NAME OF GRANTOR], Grantor

	
 
	
By:
	

Name:
Title:

U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent and Grantee

	
 
	
By:
	

Name:
Title:

 

 

 

 

SCHEDULE A

			
	
MARK
	
SERIAL/REG. NO.
	
APP./REG. DATE

	
 
	
 
	
 

 

 

 

 

 

EXHIBIT III TO SECURITY AGREEMENT

[FORM OF] PATENT SECURITY AGREEMENT

This PATENT SECURITY AGREEMENT (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Patent Security Agreement”) dated __________, 20   , is made by the Persons listed on the signature pages hereof (collectively, the “Grantors”) in favor of U.S. BANK NATIONAL ASSOCIATION, as collateral agent (the “Collateral Agent”) for the Secured Parties (as defined in the Indenture referred to below).

Reference is made to the Indenture, dated as of July 13, 2017 (as amended, restated, amended and restated, supplemented and/or otherwise modified from time to time, the “Indenture”) among J. Crew Brand, LLC, a Delaware limited liability company, J. Crew Brand Corp., a Delaware corporation, J. Crew Brand Intermediate, LLC, a Delaware limited liability company, the Subsidiary Guarantors party thereto, U.S. Bank National Association, as Trustee, and Collateral Agent, pursuant to which the Issuers have issued 13.00% Senior Secured New Money Notes due 2021 (the “Notes”).

Whereas, as a condition precedent to the issuance of the Notes, each Grantor has executed and delivered that certain Security Agreement dated July 13, 2017, made by the Grantors to the Collateral Agent (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”).

Whereas, under the terms of the Security Agreement, the Grantors have granted to the Collateral Agent, for the benefit of the Secured Parties, a security interest in, among other property, certain intellectual property of the Grantors, and have agreed as a condition thereof to execute this Patent Security Agreement for recording with the U.S. Patent and Trademark Office and other governmental authorities.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Grantor agrees as follows:

SECTION 1.Terms.  Terms defined in the Indenture and Security Agreement and not otherwise defined herein are used herein as defined in the Indenture and Security Agreement.

SECTION 2.Grant of Security.  Each Grantor hereby grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties a continuing security interest in all of the Grantor’s right, title and interest in, to and under the Patents, including the Patents set forth on Schedule A attached hereto.

SECTION 3.Security for Obligations.  The grant of a security interest in the Patent by each Grantor under this Patent Security Agreement is made to secure the payment or performance, as the case may be, in full of the Secured Obligations.

SECTION 4.Recordation.  Each Grantor authorizes and requests that the Commissioner for Patents and any other applicable government officer record this Patent Security Agreement.

SECTION 5.Execution in Counterparts.  This Patent Security Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

SECTION 6.Security Agreement.  This Patent Security Agreement has been entered into in conjunction with the provisions of the Security Agreement.  Each Grantor does hereby acknowledge and confirm that the grant of the security interest hereunder to, and the rights and remedies of, the Collateral Agent with respect to the Collateral are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated herein by reference as if fully set forth herein.

 

 

SECTION 7.Governing Law.  This Patent Security Agreement shall be construed in accordance with and governed by the laws of the State of New York.

[Remainder of this page intentionally left blank]

 

 

IN WITNESS WHEREOF, the undersigned have executed this Patent Security Agreement as of the date first above written.

[NAME OF GRANTOR], Grantor

	
 
	
By:
	

Name:
Title:

U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent and Grantee

	
 
	
By:
	

Name:
Title:

 

 

 

 

SCHEDULE A

			
	
PATENT
	
PATENT NO.
	
FILING/ISSUE DATE

	
 
	
 
	
 

 

 

 

 

 

EXHIBIT IV TO SECURITY AGREEMENT

[FORM OF] COPYRIGHT SECURITY AGREEMENT

This COPYRIGHT SECURITY AGREEMENT (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Copyright Security Agreement”) dated __________, 20   , is made by the Persons listed on the signature pages hereof (collectively, the “Grantors”) in favor of U.S. BANK NATIONAL ASSOCIATION, as collateral agent (the “Collateral Agent”) for the Secured Parties (as defined in the Indenture referred to below).

Reference is made to the Indenture, dated as of July 13, 2017 (as amended, restated, amended and restated, supplemented and/or otherwise modified from time to time, the “Indenture”) among J. Crew Brand, LLC, a Delaware limited liability company, J. Crew Brand Corp., a Delaware corporation, J. Crew Brand Intermediate, LLC, a Delaware limited liability company, the Subsidiary Guarantors party thereto, U.S. Bank National Association, as Trustee, and Collateral Agent, pursuant to which the Issuers have issued 13.00% Senior Secured New Money Notes due 2021 (the “Notes”).

Whereas, as a condition precedent to the issuance of the Notes, each Grantor has executed and delivered that certain Security Agreement dated July 13, 2017, made by the Grantors to the Collateral Agent (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”).

Whereas, under the terms of the Security Agreement, the Grantors have granted to the Collateral Agent, for the benefit of the Secured Parties, a security interest in, among other property, certain intellectual property of the Grantors, and have agreed as a condition thereof to execute this Copyright Security Agreement for recording with the U.S. Copyright Office and other governmental authorities.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Grantor agrees as follows:

SECTION 1.Terms.  Terms defined in the Indenture and Security Agreement and not otherwise defined herein are used herein as defined in the Indenture and Security Agreement.

SECTION 2.Grant of Security.  Each Grantor hereby grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties a continuing security interest in all of the Grantor’s right, title and interest in, to and under the Copyrights and exclusive Copyright Licenses, including the Copyrights and exclusive Copyright Licenses set forth on Schedule A attached hereto.

SECTION 3.Security for Obligations.  The grant of a security interest in the Copyrights and exclusive Copyright Licenses by each Grantor under this Copyright Security Agreement is made to secure the payment or performance, as the case may be, in full of the Secured Obligations.

SECTION 4.Recordation.  Each Grantor authorizes and requests that the Commissioner for Copyrights and any other applicable government officer record this Copyright Security Agreement.

SECTION 5.Execution in Counterparts.  This Copyright Security Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

SECTION 6.Security Agreement.  This Copyright Security Agreement has been entered into in conjunction with the provisions of the Security Agreement.  Each Grantor does hereby acknowledge and confirm that the grant of the security interest hereunder to, and the rights and remedies of, the Collateral Agent 

 

 

with respect to the Collateral are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated herein by reference as if fully set forth herein.

SECTION 7.Governing Law.  This Copyright Security Agreement shall be construed in accordance with and governed by the laws of the State of New York.

[Remainder of this page intentionally left blank]

 

 

IN WITNESS WHEREOF, the undersigned have executed this Copyright Security Agreement as of the date first above written.

[NAME OF GRANTOR], Grantor

	
 
	
By:
	

Name:
Title:

U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent and Grantee

	
 
	
By:
	

Name:
Title:

 

 

 

 

SCHEDULE A

COPYRIGHTS

			
	
COPYRIGHT
	
COPYRIGHT NO.
	
APP./REG. DATE

	
 
	
 
	
 

 

 

COPYRIGHT LICENSES

				
	
AGREEMENT
	
PARTIES
	
DATE
	
SUBJECT MATTERjcg-ex47_15.htm

 

 

Exhibit 4.7

 

INTERCREDITOR AGREEMENT

Intercreditor Agreement (this “Agreement”), dated as of July 13, 2017, between U.S. Bank National Association, as Collateral Agent (in such capacity, with its successors and assigns, and as more specifically defined below, the “New Notes Collateral Agent”) for the New Notes Secured Parties (as defined below), and U.S. Bank National Association, as Collateral Agent (in such capacity, with its successors and assigns, and as more specifically defined below, the “New Private Placement Notes Collateral Agent”) for the New Private Placement Notes Secured Parties (as defined below).

RECITALS

WHEREAS, J. Crew Brand, LLC, (the “LLC Issuer”), J. Crew Brand Corp., (the “Corporate Issuer” and, together with the LLC Issuer, the “Issuers”), J. Crew Brand Intermediate, LLC (“Holdings”), the other Obligors party thereto and U.S. Bank National Association, as Trustee and as Collateral Agent are parties to an Indenture, dated as of July 13, 2017 (as amended, restated, amended and restated, supplemented and/or otherwise modified from time to time, the “New Notes Indenture”), pursuant to which the Issuers have issued 13.00% Senior Secured Notes due 2021 (the “New Notes”) in an initial aggregate principal amount of $249,596,000; 

WHEREAS, the Issuers, Holdings, the other Obligors party thereto and U.S. Bank National Association, as Trustee and as Collateral Agent are parties to an Indenture, dated as of July 13, 2017 (as amended, restated, amended and restated, supplemented and/or otherwise modified from time to time, the “New Private Placement Notes Indenture”), pursuant to which the Issuers have issued 13.00% Senior Secured New Money Notes due 2021 (the “New Private Placement Notes”) in an initial aggregate principal amount of $97,000,000;

WHEREAS, the Obligors have granted to the New Notes Collateral Agent, for the benefit of the New Notes Secured Parties, a first-priority security interest in the New Notes Priority Collateral, a second-priority security interest in the New Private Placement Notes Priority Collateral and a first-priority security interest (secured on a pari passu basis with the security interest granted to the New Private Placement Notes Collateral Agent) in the Pari Collateral as security for payment and performance of the New Notes Obligations; and

WHEREAS, the Obligors have granted to the New Private Placement Notes Collateral Agent, for the benefit of the New Private Placement Notes Secured Parties, a first-priority security interest in the New Private Placement Notes Priority Collateral, a second-priority security interest in the New Notes Priority Collateral and a first-priority security interest (secured on a pari passu basis with the security interest granted to the New Notes Collateral Agent) in the Pari Collateral as security for payment and performance of the New Private Placement Notes Obligations.

NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein contained and other good and valuable consideration, the existence and sufficiency of which is expressly recognized by all of the parties hereto, the parties agree as follows:

SECTION 1.  Definitions; Rules of Construction.

1.1Certain Defined Terms.  The following terms which are defined in the Uniform Commercial Code are used herein as so defined:  Accounts, Chattel Paper, Commercial Tort Claims, 

 

 

Deposit Accounts, Documents, Equipment, General Intangibles, Goods, Instruments, Inventory, Investment Property, Letter of Credit Rights, Records, Securities Account and Supporting Obligations.  

1.2Defined Terms.  The following terms, as used herein, have the following meanings:

“A&R IP License Agreement” means the Amended and Restated Intellectual Property License Agreement dated as of July 13, 2017 by and between IPCo, as licensor, JCI, as licensee, and OpCo, solely in its capacity as payor on behalf of JCI.

 

“Additional IP License Agreement” means the Intellectual Property License Agreement dated as of July 13, 2017 by and between IPCo, as licensor, JCI, as licensee, and OpCo, solely in its capacity as payor on behalf of JCI.

 

“Additional Transferred IP” means an undivided 27.96% ownership interest in the US Marks.

“Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person.  For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise.

“Bankruptcy Code” means the U.S. Bankruptcy Code and/or any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, re-arrangement, receivership, insolvency, reorganization, or similar debtor relief laws of any jurisdiction, in each case as amended from time to time and any successor statutes thereof.

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed.

“Call Right Election Notice” means a notice substantially in the form of Exhibit A hereto.

“Collateral” means, collectively, all New Notes Collateral and all New Private Placement Notes Collateral. 

“Collateral Agents” means, collectively, (i) the New Notes Collateral Agent and (ii) the New Private Placement Notes Collateral Agent.

“Enforcement Action” means, with respect to the New Notes Obligations or the New Private Placement Notes Obligations, the exercise of any rights and remedies with respect to any Collateral securing such obligations or the commencement or prosecution or enforcement of any of the rights and remedies with respect to Collateral, including, without limitation, the exercise of any rights of set-off or recoupment, and the exercise of any rights or remedies of a secured creditor under the Uniform Commercial Code of any applicable jurisdiction or under the Bankruptcy Code.

“Equity Interests” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing.

2

 

 

“Initial Transferred IP” means an undivided 72.04% ownership interest in the U.S. Marks that were transferred by JCI, to IPCo on December 5, 2016.

“Insolvency Proceeding” means (a) any voluntary or involuntary proceeding under the Bankruptcy Code or any other bankruptcy law with respect to any Obligor, (b) any voluntary or involuntary appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Obligor or for a substantial part of the property or assets of any Obligor, (c) any voluntary or involuntary winding-up or liquidation of any Obligor or (d) a general assignment for the benefit of creditors by any Obligor.

 

“IPCo” means J. Crew Domestic Brand, LLC.

 

“Issuers” has the meaning set forth in the Recitals above.

“JCI” means J. Crew Group, Inc.

 

“Junior Collateral” means, with respect to any Junior Secured Party, any Priority Collateral on which it has a Junior Lien.

“Junior Default” means an event of default under the Junior Documents.

“Junior Documents” means, collectively, with respect to any Junior Obligations, any provision pertaining to such Junior Obligation in any Notes Document or any other document, instrument or certificate evidencing or delivered in connection with such Junior Obligation.

“Junior Lien” means (a) with respect to the New Notes Priority Collateral, all Liens securing the New Private Placement Notes Obligations and (b) with respect to the New Private Placement Notes Priority Collateral, all Liens securing the New Notes Obligations.

“Junior Obligations” means (a) with respect to any New Notes Priority Collateral, all New Private Placement Notes Obligations and (b) with respect to any New Private Placement Notes Priority Collateral, all New Notes Obligations.

“Junior Representative” means (a) with respect to any New Private Placement Notes Obligations constituting Junior Obligations or any New Notes Priority Collateral, the New Private Placement Notes Collateral Agent and (b) with respect to any New Notes Obligations constituting Junior Obligations or any New Private Placement Notes Priority Collateral, the New Notes Collateral Agent.

“Junior Secured Parties” means (a) with respect to the New Private Placement Notes Priority Collateral, New Notes Secured Parties and (b) with respect to the New Notes Priority Collateral, the New Private Placement Notes Secured Parties.

“Junior Security Documents” means with respect to any Junior Secured Party, the Security Documents that secure the Junior Obligations.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, deed to secure debt, lien, pledge, hypothecation, assignment, assignation, debenture, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of 

3

 

 

the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

“Lien Priority” means with respect to any Lien of the New Notes Collateral Agent or New Private Placement Notes Collateral Agent in the Collateral, the order of priority of such Lien specified in Section 2.1.

“Majority Holders” means, as of any date of determination, the holders of the Notes representing more than 50% of the outstanding aggregate principal amount of the New Notes Obligations and the New Private Placement Notes Obligations as of such date.

“Majority Holders Representative” means, as of any date of determination, the Collateral Agent for the series of Notes representing more than 50% of the outstanding aggregate principal amount of the New Notes Obligations and the New Private Placement Notes Obligations as of such date.

“Majority New Notes Holders” means, as of any date of determination, the holders of New Notes representing more than 50% of the outstanding aggregate principal amount of the New Notes Obligations as of such date.

“Majority New Private Placement Notes Holders” means, as of any date of determination, the holders of New Private Placement Notes representing more than 50% of the outstanding aggregate principal amount of the New Private Placement Notes Obligations as of such date.

“Minority Holders Representative” means, as of any date of determination, the Collateral Agent for the series of Notes representing less than 50% of the outstanding aggregate principal amount of the New Notes Obligations and the New Private Placement Notes Obligations as of such date.

“New Notes” has the meaning set forth in the Recitals of this Agreement.

“New Notes Collateral” means all assets, whether now owned or hereafter acquired by any Obligor (including, without limitation, any such property acquired or created after the commencement of any Insolvency Proceeding), in which a Lien is granted or purported to be granted to any New Notes Secured Party as security for any New Notes Obligation.

“New Notes Collateral Agent” has the meaning set forth in the introductory paragraph hereof.

“New Notes Creditors” means, collectively, the “Holders” and the “Trustee” or such similar or analogous term (each as respectively defined in the New Notes Indenture) and the New Notes Collateral Agent.

“New Notes Documents” means the New Notes, New Notes Indenture, each New Notes Security Document, each New Notes Guarantee and each other “Notes Document” as defined in the New Notes Indenture.

“New Notes Guarantee” means any guarantee by any Obligor of any or all of the New Notes Obligations.

“New Notes Indenture” has the meaning set forth in the Recitals of this Agreement.

“New Notes Lien” means any Lien created by the New Notes Security Documents.

4

 

 

“New Notes Obligations” means the “Notes Obligations” as defined in the New Notes Indenture.  

“New Notes Obligations Payment Date” means the first date on which the New Notes Obligations have been indefeasibly paid in cash in full.

“New Notes Priority Collateral” means 

	
(a)
	
the Initial Transferred IP; 

	
(b)
	
 IPCo’s rights under the A&R IP License Agreement with respect to the Initial Transferred IP; and

	
(c)
	
to the extent not otherwise included, all Proceeds, Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing.

“New Notes Secured Parties” means the New Notes Collateral Agent, the New Notes Creditors and any other holders of the New Notes Obligations.

“New Notes Security Documents” means the “Security Documents” as defined in the New Notes Indenture and any other documents that are designated under the New Notes Indenture as “New Notes Security Documents” for purposes of this Agreement.

“New Private Placement Notes” has the meaning set forth in the Recitals of this Agreement.

“New Private Placement Notes Collateral” means all assets, whether now owned or hereafter acquired by any Obligor (including, without limitation, any such property acquired or created after the commencement of any Insolvency Proceeding), in which a Lien is granted or purported to be granted to any New Private Placement Notes Secured Party as security for any New Private Placement Notes Obligation.

“New Private Placement Notes Collateral Agent” has the meaning set forth in the introductory paragraph hereof.

“New Private Placement Notes Creditors” means, collectively, the “Holders” and the “Trustee” or such similar or analogous term (each as respectively defined in the New Private Placement Notes Indenture) and the New Private Placement Notes Trustee.

“New Private Placement Notes Documents” means the New Private Placement Notes, New Private Placement Notes Indenture, each New Private Placement Notes Security Document, each New Private Placement Notes Guarantee and each other “Notes Document” as defined in the New Private Placement Notes Indenture.

“New Private Placement Notes Guarantee” means any guarantee by any Obligor of any or all of the New Private Placement Notes Obligations.

“New Private Placement Notes Indenture” has the meaning set forth in the Recitals of this Agreement.

“New Private Placement Notes Lien” means any Lien created by the New Private Placement Notes Security Documents.

5

 

 

“New Private Placement Notes Obligations” means the “Notes Obligations” as defined in the New Private Placement Notes Indenture.  

“New Private Placement Notes Obligations Payment Date” means the first date on which the New Private Placement Notes Obligations have been indefeasibly paid in cash in full.

“New Private Placement Notes Priority Collateral” means 

	
(a)
	
the Additional Transferred IP; 

	
(b)
	
IPCo’s rights under the Additional IP License Agreement with respect to the Additional Transferred IP; and

	
(c)
	
to the extent not otherwise included, all Proceeds, Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing.

“New Private Placement Notes Secured Parties” means the New Private Placement Notes Collateral Agent, the New Private Placement Notes Creditors and any other holders of the New Private Placement Notes Obligations.

“New Private Placement Notes Security Documents” means the “Security Documents” as defined in the New Private Placement Notes Indenture and any other documents that are designated under the New Private Placement Notes Indenture as “New Private Placement Notes Security Documents” for purposes of this Agreement.

“Notes” means the New Notes and/or the New Private Placement Notes, as applicable.

“Notes Documents” means, collectively, (a) the New Notes Documents and (b) the New Private Placement Notes Documents.

“Notes Indenture” means the New Notes Indenture and/or the New Private Placement Notes Indenture, as applicable.

“Obligors” means the Issuers, Holdings and the Subsidiary Guarantors.

“OpCo” means J.Crew Operating Corp..

 

“Pari Collateral” means all Collateral other than Priority Collateral.

“Person” means any person, individual, sole proprietorship, partnership, joint venture, corporation, limited liability company, unincorporated organization, association, institution, entity, party, including any government and any political subdivision, agency or instrumentality thereof.

“Possessory Collateral” means any Pari Collateral in the possession or control of any Collateral Agent (or its agents or bailees) or any Representative, to the extent that possession or control thereof perfects a Lien thereon under the Uniform Commercial Code of any jurisdiction or otherwise.

“Post-Petition Interest” means any interest or entitlement to fees or expenses or other charges that accrues after the commencement of any Insolvency Proceeding (or would accrue but for the commencement of an Insolvency Proceeding), whether or not allowed or allowable in any such Insolvency Proceeding.

6

 

 

“Priority Collateral” means all Collateral that constitutes both New Notes Priority Collateral and New Notes Private Placement Priority Collateral.

 

“Proceeds” means (a) all “proceeds,” as defined in Article 9 of the Uniform Commercial Code, with respect to the Collateral, and (b) whatever is recoverable or recovered when any Collateral is sold, exchanged, collected, or disposed of, whether voluntarily or involuntarily.

“Receiver” means any receiver, interim receiver, receiver-manager or similar officer appointed by or in respect of a Senior Secured Party.

“Representative” means, as applicable, the New Notes Collateral Agent and the New Private Placement Notes Collateral Agent.

“Secured Obligations” means the New Notes Obligations and/or the New Private Placement Notes Obligations, as applicable.

“Secured Parties” means the New Notes Secured Parties and/or the New Private Placement Notes Secured Parties, as applicable.

“Security Documents” means, collectively, (a) the New Notes Security Documents, (b) the New Private Placement Notes Security Documents and (c) this Agreement.

“Senior Collateral” means with respect to any Senior Secured Party, any Priority Collateral on which it has a Senior Lien.

“Senior Documents” means, collectively, with respect to any Senior Obligation, any provision pertaining to such Senior Obligation in any Notes Document or any other document, instrument or certificate evidencing or delivered in connection with such Senior Obligation.

“Senior Liens” means (a) with respect to the New Notes Priority Collateral, all Liens securing the New Notes Obligations and (b) with respect to the New Private Placement Notes Priority Collateral, all Liens securing the New Private Placement Notes Obligations.

“Senior Obligations” means (a) with respect to any New Notes Priority Collateral, all New Notes Obligations and (b) with respect to any New Private Placement Notes Priority Collateral, all New Private Placement Notes Obligations.

“Senior Obligations Payment Date” means (a) with respect to New Notes Obligations, the New Notes Obligations Payment Date and (b) with respect to any New Private Placement Notes Obligations, the New Private Placement Notes Obligations Payment Date.

“Senior Representative” means (a) with respect to any New Notes Priority Collateral, the New Notes Collateral Agent and (b) with respect to any New Private Placement Notes Priority Collateral, the New Private Placement Notes Collateral Agent.

“Senior Secured Parties” means (a) with respect to the New Notes Priority Collateral, all New Notes Secured Parties and (b) with respect to the New Private Placement Notes Priority Collateral, all New Private Placement Notes Secured Parties.

“Senior Security Documents” means with respect to any Senior Secured Party, the Security Documents that secure the Senior Obligations.

7

 

 

“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof.

“Subsidiary Guarantors” means, each of IPCo and J. Crew International Brand, LLC and any other Subsidiary of IPCo that guarantees any of the New Notes and New Private Placement Notes.

“Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in the applicable jurisdiction.

“U.S.” or “United States” means the United States of America. 

“U.S. Bank” means U.S. Bank National Association.

“U.S. Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. §101 et seq.), as amended from time to time and any successor statutes thereof.

“U.S. Marks” means (i) all J.Crew® trademarks covered by the United States federal trademark registrations and applications for trademark registration listed on Exhibit A to the A&R IP License Agreement, (ii) any existing variation of such marks as used in the United States, (iii) all common law trademark rights in and to such marks in the United States, and (iv) all goodwill associated with the foregoing.

1.3Rules of Construction.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.  All references to any Obligor shall include such Obligor as debtor and debtor in possession and any receiver or trustee for such Obligor in any Insolvency Proceeding.  

SECTION 2.    Lien Ranking.

2.1Lien Subordination on Priority Collateral.  Notwithstanding the date, time, method, manner or order of grant, attachment or perfection of any Junior Lien in respect of any Priority Collateral or of any Senior Lien in respect of any Priority Collateral and notwithstanding any provision of the Uniform Commercial Code, any applicable law, any Security Document, any alleged or actual defect or deficiency 

8

 

 

in any of the foregoing or any other circumstance whatsoever, the Junior Representative, on behalf of each Junior Secured Party, in respect of such Priority Collateral hereby agrees that:

(a)any Senior Lien in respect of such Priority Collateral, regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be and shall remain senior and prior to any Junior Lien in respect of such Priority Collateral (whether or not such Senior Lien is subordinated to any Lien securing any other obligation); and

(b)any Junior Lien in respect of such Priority Collateral, regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to any Senior Lien in respect of such Priority Collateral.

2.2Equal and Ratable Lien on Pari Collateral.  Notwithstanding the date, time, method, manner or order of grant, attachment or perfection of any Lien securing any New Notes Obligations or New Private Placement Notes Obligations granted on the Pari Collateral and notwithstanding any provision of the Uniform Commercial Code, any applicable law, any Security Document, any alleged or actual defect or deficiency in any of the foregoing or any other circumstance whatsoever, each Secured Party hereby agrees that the Liens securing any New Notes Obligations or New Private Placement Notes Obligations on any Pari Collateral shall be of equal priority.

2.3Prohibition on Contesting Liens.  In respect of any Collateral, the Junior Representative, on behalf of each Junior Secured Party, in respect of such Collateral agrees that it shall not, and hereby waives any right to:

(a)contest, or support any other Person in contesting, in any proceeding (including any Insolvency Proceeding), the priority, validity or enforceability of any Senior Lien on such Collateral; or

(b)demand, request, plead or otherwise assert or claim the benefit of any marshalling, appraisal, valuation or similar right which it may have in respect of such Collateral or the Senior Liens on such Collateral, except to the extent that such rights are expressly granted in this Agreement.

2.4No New Liens.  

(a)Until the New Notes Obligations Payment Date, no New Private Placement Notes Secured Party shall acquire or hold any Lien on any assets of any Obligor securing any New Private Placement Notes Obligation which assets are not also subject to the Lien of the New Notes Collateral Agent under the New Notes Documents, subject to the Lien Priority set forth herein.  If any New Private Placement Notes Secured Party shall (nonetheless and in breach hereof) acquire or hold any Lien on any assets of any Obligor securing any New Private Placement Notes Obligation which assets are not also subject to the Lien of the New Notes Collateral Agent under the New Notes Documents, subject to the Lien Priority set forth herein, then the New Private Placement Notes Collateral Agent (or the relevant New Private Placement Notes Secured Party) shall, without the need for any further consent of any other New Private Placement Notes Secured Party and notwithstanding anything to the contrary in any other New Private Placement Notes Document be deemed to also hold and have held such lien for the benefit of the New Notes Collateral Agent as security for the New Notes Obligations (subject to the Lien Priority and other terms hereof) and shall promptly notify the New Notes Collateral Agent in writing of the existence of such Lien.

(b)Until the New Private Placement Notes Obligations Payment Date, no New Notes Secured Party shall acquire or hold any Lien on any assets of any Obligor securing any New Notes Obligation which assets are not also subject to the Lien of the New Private Placement Notes Collateral 

9

 

 

Agent under the New Private Placement Notes Documents, subject to the Lien Priority set forth herein.  If any New Notes Secured Party shall (nonetheless and in breach hereof) acquire or hold any Lien on any assets of any Obligor securing any New Notes Obligation which assets are not also subject to the Lien of the New Private Placement Notes Collateral Agent under the New Private Placement Notes Documents, subject to the Lien Priority set forth herein, then the New Notes Collateral Agent (or the relevant New Notes Secured Party) shall, without the need for any further consent of any other New Notes Secured Party and notwithstanding anything to the contrary in any other New Notes Document be deemed to also hold and have held such lien for the benefit of the New Private Placement Notes Collateral Agent as security for the New Private Placement Notes Obligations (subject to the Lien Priority and other terms hereof) and shall promptly notify the New Private Placement Notes Collateral Agent in writing of the existence of such Lien.

2.5Separate Grants of Security and Separate Classification.  Each Secured Party acknowledges and agrees that (i) the grants of Liens pursuant to the New Notes Security Documents and the New Private Placement Notes Security Documents constitute two separate and distinct grants of Liens and (ii) because of, among other things, their differing rights in the Collateral, the New Private Placement Notes Obligations are fundamentally different from the New Notes Obligations and should be separately classified in any plan of reorganization proposed or adopted in an Insolvency Proceeding.

2.6Agreements Regarding Actions to Perfect Liens.  Each of the New Notes Collateral Agent and the New Private Placement Notes Collateral Agent hereby acknowledges the intention and understanding of the parties that the New Notes Collateral of the Obligors and the New Private Placement Notes Collateral of the Obligors will be the same.  Each of the New Notes Collateral Agent and the New Private Placement Notes Collateral Agent hereby acknowledges that, to the extent that it holds, or a third party holds on its behalf, physical possession of or “control” (as defined in the Uniform Commercial Code) over Collateral pursuant to the New Notes Security Documents or the New Private Placement Notes Security Documents, as applicable, such possession or control is also for the benefit of the New Private Placement Notes Collateral Agent and the other New Private Placement Notes Secured Parties or the New Notes Collateral Agent and the other New Notes Secured Parties, as applicable, solely to the extent required to perfect their security interest in such Collateral.  Nothing in the preceding sentence shall be construed to impose any duty on the New Notes Collateral Agent or the New Private Placement Notes Collateral Agent (or any third party acting on either such Person’s behalf) with respect to such Collateral or provide the New Private Placement Notes Collateral Agent, any other New Private Placement Notes Secured Party, the New Notes Collateral Agent or any other New Notes Secured Party, as applicable, with any rights with respect to such Collateral beyond those specified in this Agreement, the New Notes Security Documents and the New Private Placement Notes Security Documents, as applicable, provided that (i) upon the written request of the New Private Placement Notes Collateral Agent, subsequent to the occurrence of the New Notes Obligations Payment Date (so long as the New Private Placement Notes Obligations Payment Date shall not have occurred), the New Notes Collateral Agent shall (A) deliver to the New Private Placement Notes Collateral Agent, at the Obligors' sole cost and expense, the Collateral in its possession together with any necessary endorsements to the extent required by the New Private Placement Notes Documents and take all commercially reasonable steps reasonably requested by the New Private Placement Notes Collateral Agent to transfer control, under applicable deposit account control, other similar control agreements and other third party collateral documentation, to the New Private Placement Notes Collateral Agent or (B) direct and deliver such Collateral as a court of competent jurisdiction otherwise directs; and (ii) that upon the written request of the New Notes Collateral Agent, subsequent to the occurrence of the New Private Placement Notes Obligations Payment Date (so long as the New Notes Obligations Payment Date shall not have occurred), the New Private Placement Notes Collateral Agent shall (A) deliver to the New Notes Collateral Agent, at the Obligors' sole cost and expense, the Collateral in its possession together with any necessary endorsements to the extent required by the New Notes Documents and take all commercially reasonable steps reasonably requested by the New Notes Collateral Agent to transfer control, under 

10

 

 

applicable deposit account control, other similar control agreements and other third party collateral documentation, to the New Notes Collateral Agent or (B) direct and deliver such Collateral as a court of competent jurisdiction otherwise directs.  The provisions of this Agreement shall not impose on the New Notes Secured Parties or the New Private Placement Notes Secured Parties any obligations in respect of the disposition of any Collateral (or any proceeds thereof) that would conflict with prior perfected Liens or any claims thereon in favor of any other Person that is not a Secured Party.

2.7Possessory Collateral Agent as Gratuitous Bailee for Perfection.

(a)The Collateral Agents agree to hold any Pari Collateral constituting Possessory Collateral in its possession or control (or in the possession or control of its agents or bailees) as gratuitous bailee for the benefit of each Secured Party and any assignee solely for the purpose of perfecting the security interest granted in such Possessory Collateral, if any, pursuant to the applicable Security Documents, in each case, subject to the terms and conditions of this Section 2.7.  Pending delivery to the Collateral Agent, each Representative and Secured Party agrees to hold any Pari Collateral constituting Possessory Collateral from time to time in its possession or control as gratuitous bailee for the benefit of each Secured Party and any assignee, solely for the purpose of perfecting the security interest granted in such Possessory Collateral, if any, pursuant to the applicable Security Documents, in each case subject to the terms and conditions of this Section 2.7.

(b)The duties and responsibilities of the Collateral Agents and each Representative under this Section 2.7 shall be limited solely to holding any Pari Collateral constituting Possessory Collateral as gratuitous bailee for the benefit of each Secured Party for purposes of perfecting the Lien for the benefit of the Secured Parties therein.

(c)The New Notes Collateral Agent and the New Private Placement Notes Collateral Agent hereby (i) appoint U.S. Bank as “Intercreditor Agent” for purposes of any deposit account control agreement, securities account control agreement or similar control agreement with respect to any deposit account, securities account or similar account of any Obligor and (ii) instruct and direct U.S. Bank as “Intercreditor Agent” to execute any such deposit account control agreement, securities account control agreement or similar control agreement.  To the extent that any deposit account, securities account or similar account of any Obligor is under the control of U.S. Bank in its capacity as “Intercreditor Agent” at any time, U.S. Bank will act as gratuitous bailee and agent for the New Notes Collateral Agent and the New Private Placement Notes Collateral Agent for the purpose of perfecting the Liens of the New Notes Secured Parties and the New Private Placement Notes Secured Parties in such deposit accounts, securities account or similar account and the cash, securities and/or other assets therein (but will have no duty, responsibility or obligation to the New Notes Secured Parties and the New Private Placement Notes Secured Parties (including, without limitation, any duty, responsibility or obligation as to the maintenance of such control, the effect of such arrangement or the establishment of such perfection).

SECTION 3.  Enforcement Rights.

3.1Exclusive Enforcement.  

(a)Priority Collateral.  Subject to Section 3.4(a), until the Senior Obligations Payment Date has occurred, whether or not an Insolvency Proceeding has been commenced by or against any Obligor, the Senior Secured Parties shall have the exclusive right to take and continue any Enforcement Action (including the right to credit bid their debt) with respect to the Senior Collateral, without any consultation with or consent of any Junior Secured Party.  Upon the occurrence and during the continuance of an event of default under the Senior Documents, the applicable Senior Representative and the applicable other Senior Secured Parties may take and continue any Enforcement Action with respect to its Senior 

11

 

 

Obligations and the applicable Senior Collateral in such order and manner as they may determine in their sole discretion in accordance with the terms and conditions of the Senior Documents. 

(b)Pari Collateral.  The Majority Holders Representative will have the exclusive right to take and continue any Enforcement Action with respect to the Pari Collateral, upon consultation with the Minority Holders Representative, and subject to any proceeds of Pari Collateral being applied in accordance with Section 4.1(d).  The foregoing shall not be construed to limit the rights and priorities of any Senior Secured Party with respect to any Senior Collateral.

3.2Standstill and Waivers on Priority Collateral.  Subject to Section 3.4(a), each Junior Representative, on behalf of itself and the other Junior Secured Parties, agrees that with respect to the Senior Collateral, until the Senior Obligations Payment Date has occurred:

(i)they will not take or cause to be taken any action, the purpose or effect of which is to make any Lien on any Senior Collateral that secures any Junior Obligation pari passu with or senior to, or to give any Junior Secured Party any preference or priority relative to, the Liens on the Senior Collateral securing the Senior Obligations;

(ii)they will not contest, oppose, object to, interfere with, hinder or delay, in any manner, whether by judicial proceedings (including without limitation the filing of an Insolvency Proceeding) or otherwise, any foreclosure, sale, lease, exchange, transfer or other disposition of the Senior Collateral by any Senior Secured Party or any other Enforcement Action taken (or any forbearance from taking any Enforcement Action) in respect of the Senior Collateral by or on behalf of any Senior Secured Party;

(iii)except as otherwise provided in this Agreement, they have no right to (x) direct either the Senior Representative or any other Senior Secured Party to exercise any right, remedy or power with respect to the Senior Collateral or pursuant to the Senior Security Documents in respect of the Senior Collateral or (y) consent or object to the exercise by the Senior Representative or any other Senior Secured Party of any right, remedy or power with respect to the Senior Collateral or pursuant to the Senior Security Documents with respect to the Senior Collateral or to the timing or manner in which any such right is exercised or not exercised (or, to the extent they may have any such right described in this clause (iii), whether as a junior lien creditor in respect of the Senior Collateral or otherwise, they hereby irrevocably waive such right);

(iv)except as otherwise provided in this Agreement, they will not institute any suit or other proceeding or assert in any suit, Insolvency Proceeding or other proceeding any claim against any Senior Secured Party seeking damages from or other relief by way of specific performance, instructions or otherwise, with respect to, and no Senior Secured Party shall be liable for, any action taken or omitted to be taken by any Senior Secured Party with respect to the Senior Collateral or pursuant to the Senior Documents in respect of the Senior Collateral;

(v)except as otherwise provided in this Agreement, they will not commence judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of any Senior 

12

 

 

Collateral, exercise any right, remedy or power with respect to, or otherwise take any action to enforce their interest in or realize upon, the Senior Collateral; and

(vi)except as otherwise provided in this Agreement, they will not seek, and hereby waive any right, to have the Senior Collateral or any part thereof marshaled upon any foreclosure or other disposition of the Senior Collateral;

provided that, the Junior Representative and any Junior Secured Party may take any action (not adverse to the priority status of the Liens on the Senior Collateral securing the Senior Obligations, or the rights of the Senior Representative or the Senior Secured Parties to exercise remedies in respect thereof or in contravention of this Section 3) in accordance with the Junior Documents and the terms of this Agreement in order to create, prove, perfect, preserve or protect its Junior Lien on the Collateral.

3.3Judgment Creditors.  In the event that any New Notes Secured Party becomes a judgment lien creditor in respect of Collateral as a result of its enforcement of its rights as an unsecured creditor, such judgment lien shall be subject to the terms of this Agreement for all purposes (including in relation to the New Private Placement Notes Liens and the New Private Placement Notes Obligations) to the same extent as all other Liens securing the New Notes Obligations are subject to the terms of this Agreement.  In the event that any New Private Placement Notes Secured Party becomes a judgment lien creditor in respect of Collateral as a result of its enforcement of its rights as an unsecured creditor, such judgment lien shall be subject to the terms of this Agreement for all purposes (including in relation to the New Notes Obligations) to the same extent as all other Liens securing the New Private Placement Notes Obligations are subject to the terms of this Agreement.  

3.4Disposition of the U.S. Marks.

(a)Notwithstanding anything contained herein, including anything in this Section 3, to the contrary, if upon an Enforcement Action, either (i) the Majority New Notes Holders and the Majority New Private Placement Notes Holders, collectively, or (ii) the Majority Holders wish to sell, transfer or otherwise dispose of all or substantially all of the U.S. Marks (a “Proposed Disposition”), the Collateral Agents shall consummate the Proposed Disposition so long as the proceeds thereof are applied to New Notes Obligations and New Private Placement Notes Obligations pro rata in accordance with the respective amounts of the New Notes Obligations and New Private Placement Notes Obligations (and in connection with the consummation of such Proposed Disposition, the Liens of the Collateral Agents on the U.S. Marks shall be released).

(b)If the Proposed Disposition is requested by the Majority Holders pursuant to clause (ii) of Section 3.4(a) and such requesting Majority Holders include the Majority New Note Holders but not the Majority New Private Placement Notes Holders (such requesting Majority Holders, the “Requesting New Notes Holders”; and such Proposed Disposition, a “New Notes Proposed Disposition”), then (i) the Requesting New Notes Holders shall give the New Private Placement Collateral Agent at least 15 days prior written notice of the Proposed Disposition and proposed date of disposition (such notice, the “Priority Collateral Disposition Notice”) and (ii) shall consult with the New Private Placement Notes Collateral Agent in conducting the Proposed Disposition.  If the New Private Placement Notes Secured Parties object to the New Notes Proposed Disposition, the New Private Placement Notes Secured Parties may, at their sole expense and effort, upon delivery of a Call Right Election Notice by the New Private Placement Notes Collateral Agent (acting pursuant to the written direction of the Purchasing New Private Placement Notes Secured Parties (as such term is defined below)) to the New Notes Collateral Agent irrevocably elect to acquire from the New Notes Secured Parties, without warranty or representation or recourse from or to the New Notes Secured Parties, all (but not less than all) of the New Notes Obligations outstanding on the Purchase Date (as defined below), for the purchase price specified below, and all rights of the New Notes 

13

 

 

Secured Parties under the New Notes Documents (the “New Private Placement Notes Call Right”); provided that (x) any such call right must be exercised within 10 days after the receipt by the New Private Placement Notes Collateral Agent of the Priority Collateral Disposition Notice (such 10 day period, the “Call Right Election Period”), (y) the New Notes Collateral Agent and the New Notes Secured Parties shall retain all rights to be indemnified or to be held harmless by the Obligors in accordance with the terms of the New Notes Documents, and (z) the Purchasing New Private Placement Notes Secured Parties shall have paid to the New Notes Collateral Agent, for the account of the respective New Notes Secured Parties, in immediately available funds, a purchase price in an amount equal to (I) 110% of the principal amount of the New Notes Obligations outstanding on the Purchase Date, plus (II) all accrued and unpaid interest thereon plus (III) all accrued and unpaid costs and expenses (including reasonable attorney’s fees and costs).  Absent receipt by the New Notes Collateral Agent of a Call Right Election Notice from the New Private Placement Notes Collateral Agent within the prescribed period, the New Notes Collateral Agent can assume that the New Private Placement Notes Secured Parties have not elected to exercise the call right set forth in this Section 3.4(b).  In order to effectuate the foregoing, the New Notes Collateral Agent shall calculate, upon the written request of the New Private Placement Notes Collateral Agent or the Purchasing New Private Placement Notes Secured Parties from time to time, the aggregate amount of principal and accrued and unpaid interest with respect to the New Notes Obligations as of the Purchase Date and shall provide the amount of any unpaid expenses of the New Notes Collateral Agent.

(c)If the New Private Placement Notes Call Right set forth in this Section 3.4(b) is exercised: (1) the parties shall close on the date occurring ten (10) Business Days after the date of receipt by the New Notes Collateral Agent of the Call Right Election Notice (such date, the “Purchase Date”; the period from receipt of the Call Right Election Notice through and including the date of the closing of the call right transaction contemplated by Section 3.4(b), the “Call Right Notice Period”), (2) the New Notes Obligations shall be purchased pro rata among the New Private Placement Notes Secured Parties giving notice to the New Notes Collateral Agent of their intent to exercise the purchase option hereunder (the “Purchasing New Private Placement Notes Secured Parties”) according to the Purchasing New Private Placement Notes Secured Parties’ portion of the New Private Placement Notes Obligations outstanding on the Purchase Date (or pursuant to such other allocation as the Purchasing New Private Placement Notes Secured Parties may agree), and the New Notes Collateral Agent shall arrange for the delivery of the New Notes to the designee of the Purchasing New Private Placement Notes Secured Parties specified in the Call Right Election Notice who will distribute the New Notes to the Purchasing New Private Placement Notes Secured Parties, and (3) during the Call Right Notice Period, the New Notes Collateral Agent and the New Notes Secured Parties shall (x) refrain from taking any enforcement action or exercise of remedies with respect to any Priority Collateral and (y) shall terminate any existing enforcement action or exercise of remedies with respect to any Priority Collateral, to the extent commenced prior to the commencement of the Call Right Notice Period.  In connection with the foregoing, the Purchasing New Private Placement Notes Secured Parties shall provide any transmittal, wire or other similar instructions or information reasonably required by the New Notes Collateral Agent in order to effectuate the purchase contemplated hereby.

Following the receipt of a Call Right Election Notice, the New Notes Collateral Agent agrees that it will resign under the New Notes Indenture until the date following the later of (i) the Purchase Date, (ii) the expiration of the Call Right Election Period and (iii) the date any successor trustee is appointed under the New Notes Indenture who accedes to this Agreement by delivering a signature page hereto.  Nothing herein shall require the New Notes Collateral Agent to resign or prohibit the New Notes Collateral Agent from availing itself of its rights under Section 7.08 of the New Notes Indenture to petition a court of competent jurisdiction for the appointment of a successor trustee pursuant to the terms therein.

3.5No Additional Rights For the Obligors Hereunder.  If any New Notes Secured Party or New Private Placement Notes Secured Party shall enforce its rights or remedies in violation of the terms of 

14

 

 

this Agreement, no Obligor shall be entitled to use such violation as a defense to any action by any New Notes Secured Party or New Private Placement Notes Secured Party, nor to assert such violation as a counterclaim or basis for set off or recoupment against any New Notes Secured Party or New Private Placement Notes Secured Party.

3.6Actions Upon Breach.  Should any New Notes Secured Party or New Private Placement Notes Secured Party, contrary to this Agreement, in any way take, attempt to or threaten to take any action with respect to the Collateral (including, without limitation, any attempt to realize upon or enforce any remedy with respect to this Agreement), or fail to take any action required by this Agreement, any New Notes Secured Party or New Private Placement Notes Secured Party (in its own name or in the name of the relevant Obligor), as applicable, may obtain relief against such New Notes Secured Party or New Private Placement Notes Secured Party, as applicable, by injunction, specific performance and/or other appropriate equitable relief, it being understood and agreed by each of the New Notes Collateral Agent on behalf of each New Notes Secured Party and the New Private Placement Notes Collateral Agent on behalf of each New Private Placement Notes Secured Party that (i) the New Notes Secured Parties' or New Private Placement Notes Secured Parties', as applicable, damages from its actions may at that time be difficult to ascertain and may be irreparable, and (ii) each New Private Placement Notes Secured Party or New Notes Secured Party, as applicable, waives any defense that the New Private Placement Notes Secured Parties and/or New Notes Secured Parties, as applicable, cannot demonstrate damage and/or be made whole by the awarding of damages.

3.7Rights As Unsecured Creditors. Except as otherwise set forth in this Agreement, each Junior Representative and Junior Secured Party may exercise rights and remedies as unsecured creditors against any Obligor in accordance with the terms of the Notes Documents to which it is a party and applicable law.  Except as otherwise set forth in this Agreement, nothing in this Agreement shall prohibit the receipt by a Junior Representative or any Junior Secured Party of the required payments of interest, principal, premiums, fees and other amounts in respect of Junior Obligations so long as such receipt is not the direct or indirect result of the (x) exercise by the Junior Representative or any Junior Secured Party of rights or remedies as a secured creditor (including set-off) in respect of the Junior Collateral in contravention of this Agreement or (y) enforcement in contravention of this Agreement of any Lien held by any of them.  In the event the Junior Representative or any other Junior Secured Party becomes a judgment Lien creditor in respect of Collateral as a result of its enforcement of its rights as an unsecured creditor, such judgment Lien shall be subordinated to the Liens securing Senior Obligations on the same basis as the other Junior Liens on the Collateral securing the Junior Obligations are so subordinated to the Senior Liens on the Collateral securing such Senior Obligations under this Agreement.

SECTION 4.  Application of Proceeds of Collateral; Dispositions and Releases of Lien.

4.1Application of Proceeds.

(a)Application of Proceeds of Senior Collateral.  The Senior Representative, on behalf of the Senior Secured Parties, and Junior Representative, on behalf of the Junior Secured Parties, hereby agree 

15

 

 

that all Senior Collateral, and all Proceeds thereof, received by any of them in connection with the collection, sale or disposition of Senior Collateral shall be applied:

first, to the payment of costs and expenses (including reasonable attorneys' fees and expenses and court costs) of the Senior Representative,

second, to the payment of the Senior Obligations in accordance with the Senior Documents until the payment in full in cash of the Senior Obligations,

third, to the payment of the Junior Obligations in accordance with the Junior Documents until the payment in full in cash of the Junior Obligations, and

fourth, the balance, if any, to the applicable Obligor or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

(b)Limited Obligation or Liability.  In exercising remedies, whether as a secured creditor or otherwise, the Senior Representative shall have no obligation or liability to the Junior Representative or to any Junior Secured Party, regarding the adequacy of any Proceeds or for any action or omission, save and except solely for an action or omission that breaches the express obligations undertaken by each party under the terms of this Agreement.

(c)Segregation of Collateral.  Until the occurrence of the Senior Obligations Payment Date, any Senior Collateral that may be received by any Junior Secured Party in violation of this Agreement shall be segregated and held in trust and promptly paid over to the Senior Representative, for the benefit of the Senior Secured Parties, in the same form as received, with any necessary endorsements, and each Junior Secured Party hereby authorizes the Senior Representative to make any such endorsements as agent for the Junior Representative (which authorization, being coupled with an interest, is irrevocable).

(d)Application of Proceeds of Pari Collateral.  The Collateral Agents, on behalf of the Secured Parties, hereby agree that all Pari Collateral, and all Proceeds thereof, received by any of them in connection with the collection, sale or disposition of Pari Collateral shall be applied:

first, to the payment of costs and expenses (including reasonable attorneys' fees and expenses and court costs) of the Representatives,

second, to the payment in full in cash of the New Notes Obligations and New Private Placement Notes Obligations pro rata in accordance with the respective amounts of the New Notes Obligations and New Private Placement Notes Obligations owed to them on the date of any such distribution, and

third, the balance, if any, to the applicable Obligor or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

Anything contained herein or in any of the Notes Documents to the contrary notwithstanding, if an event of default has occurred and is continuing under the Notes Documents and any Collateral Agent or any Secured Party is taking action to enforce rights in respect of any Pari Collateral, or any distribution is made to any Collateral Agent or any Secured Party in respect of any Pari Collateral in any Insolvency Proceeding of any Obligor, the proceeds of any sale, collection or other liquidation of any such Pari Collateral by any Collateral Agent or any Secured Party (and any distribution or other amount so received 

16

 

 

by any Collateral Agent or any Secured Party with respect to such Pari Collateral in any such Insolvency Proceeding) shall be applied by the Collateral Agents in the order specified in this Section 4.1(d).

4.2Releases of Liens.  Upon (A) the exercise of any Senior Representative’s remedies in respect of the Senior Collateral upon the occurrence of an Enforcement Action (with the net proceeds thereof being applied to in accordance with Section 4.1(a)), including any sale, lease, exchange, transfer or other disposition of any Senior Collateral, (B) any release, sale or disposition of Senior Collateral other than in connection with an Enforcement Action permitted pursuant to the terms of the Senior Documents and the Junior Documents or (C) any private or public sale, lease, exchange, transfer or other disposition of all or any material portion of the Senior Collateral by one or more Obligors with the consent of Senior Representative after the occurrence and during the continuance of an event of default under the Senior Documents, including any disposition contemplated by Section 9-620 of the UCC, which disposition is conducted by such Obligors with the consent of the Senior Representative in connection with good faith efforts by the Senior Representative to collect the Senior Obligations through such disposition of Senior Collateral (with the proceeds thereof being applied to in accordance with Section 4.1(a)), the Junior Lien on such Senior Collateral (excluding any portion of the proceeds of such Senior Collateral remaining after the Senior Obligations Payment Date occurs) shall be automatically and unconditionally released with no further consent or action of any Person.  The Junior Representative shall promptly execute and deliver such release documents and instruments and shall take such further actions as the Senior Representative shall reasonably request to evidence any release of the Junior Lien described in this Section 4.2.  The Junior Representative hereby appoints the Senior Representative and any officer or duly authorized person of the Senior Representative, with full power of substitution, as its true and lawful attorney in fact with full irrevocable power of attorney in the place and stead of the Junior Representative and in the name of the Junior Representative or in the Senior Representative’s own name, from time to time, in the Senior Representative’s sole discretion, for the purposes of carrying out the terms of this Section 4.2, to execute, deliver, file and take any other action with respect to any public records, including without limitation any termination or amendment of any financing statement.

4.3Notices.  The Senior Representative shall give the Junior Representative prompt written notice after the commencement of any Enforcement Action against its Senior Priority Collateral; provided that the failure to provide such written notice shall not result in a liability hereunder.

SECTION 5.  Insolvency Proceedings.

5.1Effectiveness in Insolvency Proceedings.  This Agreement shall continue in full force and effect notwithstanding the commencement of any proceeding under the Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law by or against the Obligors.

SECTION 6.  New Private Placement Notes Documents and New Notes Documents.

6.1Amendment to New Private Placement Notes Documents.   The New Private Placement Notes Collateral Agent, on behalf of itself and the New Private Placement Notes Secured Parties, agrees that it shall not at any time execute or deliver any amendment or other modification to any of the New Private Placement Notes Documents inconsistent with or in violation of this Agreement.

6.2Amendments to New Notes Documents.  The New Notes Collateral Agent, on behalf of itself and the New Notes Secured Parties, agrees that it shall not at any time execute or deliver any 

17

 

 

amendment or other modification to any of the New Notes Documents inconsistent with or in violation of this Agreement.

6.3No Debt Subordination.  Nothing contained in this Agreement is intended to or shall impair, as among Obligors and the New Private Placement Notes Secured Parties, the obligations of Obligors, which are absolute and unconditional, to pay the principal, interest, premiums, fees and other amounts included in the New Private Placement Notes Obligations, as and when the same shall become due and payable in accordance with the terms of the New Private Placement Notes Documents (as in effect on the date of this Agreement (or amended, modified or supplemented thereafter in accordance with the provisions of this Agreement). Nothing contained in this Agreement is intended to or shall impair, as among Obligors and the New Notes Secured Parties, the obligations of Obligors, which are absolute and unconditional, to pay the principal, interest, premiums, fees and other amounts included in the New Notes Obligations, as and when the same shall become due and payable in accordance with the terms of the New Notes Documents (as in effect on the date of this Agreement (or amended, modified or supplemented thereafter in accordance with the provisions of this Agreement).

SECTION 7.  Reliance; Waivers; etc.

7.1Reliance.  The New Notes Documents are deemed to have been executed and delivered, and all extensions of credit thereunder are deemed to have been made or incurred, in reliance upon this Agreement.  The New Private Placement Notes Collateral Agent, on behalf of it itself and the other New Private Placement Notes Secured Parties, expressly waives all notice of the acceptance of and reliance on this Agreement by the New Notes Collateral Agent and the other New Notes Secured Parties.  The New Private Placement Notes Documents are deemed to have been executed and delivered and all extensions of credit thereunder are deemed to have been made or incurred, in reliance upon this Agreement.  The New Notes Collateral Agent, on behalf of itself and the other New Notes Secured Parties, expressly waives all notices of the acceptance of and reliance on this Agreement by the New Private Placement Notes Collateral Agent and the other New Private Placement Notes Secured Parties.

7.2No Warranties or Liability.  The New Private Placement Notes Collateral Agent and the New Notes Collateral Agent acknowledge and agree that neither has made any representation or warranty with respect to the execution, validity, legality, completeness, collectibility or enforceability of any other New Notes Document or any New Private Placement Notes Document.  Except as otherwise provided in this Agreement, the New Private Placement Notes Collateral Agent and the New Notes Collateral Agent will be entitled to manage and supervise the respective extensions of credit to any Obligor in accordance with law and their usual practices, modified from time to time as they deem appropriate.

7.3No Waivers.  No right or benefit of any party hereunder shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of such party or any other party hereto or by any noncompliance by any Obligor with the terms and conditions of any of the New Notes Documents or the New Private Placement Notes Documents.

SECTION 8.  Obligations Unconditional.  All rights, interests, agreements and obligations hereunder of the Senior Representative and the Senior Secured Parties in respect of any Collateral and the Junior 

18

 

 

Representative and the Junior Secured Parties in respect of such Collateral shall remain in full force and effect regardless of:

(a)any lack of validity or enforceability of any Senior Document or any Junior Document and regardless of whether the Liens of the Senior Representative and Senior Secured Parties are not perfected or are voidable for any reason;

(b)any change in the time, manner or place of payment of, or in any other terms of, all or any of the Senior Obligations or Junior Obligations, or any amendment or waiver or other modification, including any increase in the amount thereof, whether by course of conduct or otherwise, of the terms of any Senior Document or any Junior Document;

(c)any exchange, release or lack of perfection of any Lien on any Collateral or any other asset, or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the Senior Obligations or Junior Obligations or any guarantee thereof;

(d)the commencement of any Insolvency Proceeding in respect of any Obligor; or

(e)any other circumstances which otherwise might constitute a defense available to, or a discharge of, any Obligor in respect of any Secured Obligation or of any Junior Secured Party in respect of this Agreement.

SECTION 9.  Miscellaneous.

9.1Rights of Subrogation.  The New Private Placement Notes Collateral Agent, for and on behalf of itself and the New Private Placement Notes Secured Parties, agrees that no payment to the New Notes Collateral Agent or any New Notes Secured Party pursuant to the provisions of this Agreement shall entitle the New Private Placement Notes Collateral Agent or any New Private Placement Notes Secured Party to exercise any rights of subrogation in respect thereof until the New Notes Obligations Payment Date.  Following the New Notes Obligations Payment Date, the New Notes Collateral Agent agrees to execute such documents, agreements, and instruments as the New Private Placement Notes Collateral Agent or any New Private Placement Notes Secured Party may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the New Notes Obligations resulting from payments to the New Notes Collateral Agent by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by the New Notes Collateral Agent are paid by such Person upon request for payment thereof.  The New Notes Collateral Agent, for and on behalf of itself and the New Notes Secured Parties, agrees that no payment to the New Private Placement Notes Collateral Agent or any New Private Placement Notes Secured Party pursuant to the provisions of this Agreement shall entitle the New Notes Collateral Agent or any New Notes Secured Party to exercise any rights of subrogation in respect thereof until the New Private Placement Notes Obligations Payment Date.  Following the New Private Placement Notes Obligations Payment Date, the New Private Placement Notes Collateral Agent agrees to execute such documents, agreements, and instruments as the New Notes Collateral Agent or any New Notes Secured Party may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the New Private Placement Notes Obligations resulting from payments to the New Private Placement Notes Collateral Agent by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by the New Private Placement Notes Collateral Agent are paid by such Person upon request for payment thereof.

9.2Further Assurances.  Each of the New Private Placement Notes Collateral Agent and the New Notes Collateral Agent will, from time to time, promptly execute and deliver all further instruments 

19

 

 

and documents, and take all further action, that may be necessary or desirable, or that the other party may reasonably request, in order to protect any right or interest granted or purported to be granted hereby or to enable the New Notes Collateral Agent or the New Private Placement Notes Collateral Agent to exercise and enforce its rights and remedies hereunder; provided, however, that no party shall be required to pay over any payment or distribution, execute any instruments or documents, or take any other action referred to in this Section 9.2, to the extent that such action would contravene any law, order or other legal requirement or any of the terms or provisions of this Agreement, and in the event of a controversy or dispute, such party may interplead any payment or distribution in any court of competent jurisdiction, without further responsibility in respect of such payment or distribution under this Section 9.2.

9.3Conflicts.  In the event of any conflict between the provisions of this Agreement and the provisions of any New Notes Document or any New Private Placement Notes Document, the provisions of this Agreement shall govern.

9.4Continuing Nature of Provisions.  This Agreement shall continue to be effective, and shall not be revocable by any party hereto, until the earlier of (i) the New Notes Obligations Payment Date and (ii) the New Private Placement Notes Obligations Payment Date, provided that, notwithstanding any such revocation, each of the Collateral Agent shall remain obligated to perform the obligations thereof specified in the proviso to Section 2.6 hereof.  This is a continuing agreement and the New Notes Secured Parties and the New Private Placement Notes Secured Parties may continue, at any time and without notice to the other parties hereto, to extend credit and other financial accommodations, lend monies and provide indebtedness to, or for the benefit of, any Obligor on the faith hereof.

9.5Amendments; Waivers.  No amendment or modification of any of the provisions of this Agreement shall be effective unless the same shall be in writing and signed by the New Notes Collateral Agent and the New Private Placement Notes Collateral Agent.

9.6Information Concerning Financial Condition of the Obligors.  Each of the New Private Placement Notes Collateral Agent and the New Notes Collateral Agent hereby assume responsibility for keeping itself informed of the financial condition of the Obligors and all other circumstances bearing upon the risk of nonpayment of the New Notes Obligations or the New Private Placement Notes Obligations.  The New Private Placement Notes Collateral Agent and the New Notes Collateral Agent hereby agree that no party shall have any duty to advise any other party of information known to it regarding such condition or any such circumstances (except as otherwise provided in the New Notes Documents and New Private Placement Notes Documents).  In the event the New Private Placement Notes Collateral Agent or the New Notes Collateral Agent, in its sole discretion, undertakes at any time or from time to time to provide any information to any other party to this Agreement, it shall be under no obligation (a) to provide any such information to such other party or any other party on any subsequent occasion, (b) to undertake any investigation not a part of its regular business routine, or (c) to disclose any other information.

9.7Governing Law.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.

9.8Submission to Jurisdiction; JURY TRIAL WAIVER.  (a)  Each New Notes Secured Party, each New Private Placement Notes Secured Party and each Obligor hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any U.S. Federal or New York State 

20

 

 

court sitting in New York, New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each such party hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each such party agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any right that any New Notes Secured Party or New Private Placement Notes Secured Party may otherwise have to bring any action or proceeding against any Obligor or its properties in the courts of any jurisdiction.

(b)Each New Notes Secured Party, each New Private Placement Notes Secured Party and each Obligor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so (i) any objection it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (a) of this Section and (ii) the defense of an inconvenient forum to the maintenance of such action or proceeding.

(c)Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.9.  Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

(d)EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH PARTY HERETO REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

9.9Notices.  Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telecopied, or sent by overnight express courier service or United States mail and shall be deemed to have been given when delivered in person or by courier service, upon receipt of a telecopy or five days after deposit in the United States mail (certified, with postage prepaid and properly addressed).  For the purposes hereof, the addresses of the parties hereto (until notice of a change thereof is delivered as provided in this Section 9.9) shall be as set forth below each party’s name on the signature pages hereof, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties.

9.10Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and each of the New Notes Secured Parties and New Private Placement Notes Secured Parties and their respective successors and assigns, and nothing herein is intended, or shall be construed to give, any other Person any right, remedy or claim under, to or in respect of this Agreement or any Collateral.

9.11Headings.  Section headings used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

9.12Severability.  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or 

21

 

 

unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

9.13Other Remedies.  For avoidance of doubt, it is understood that nothing in this Agreement shall prevent any New Notes Secured Party or any New Private Placement Notes Secured Party from exercising any available remedy to accelerate the maturity of any indebtedness or other obligations owing under the New Notes Documents or the New Private Placement Notes Documents, as applicable, or to demand payment under any guarantee in respect thereof.

9.14Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. This Agreement shall become effective when it shall have been executed by each party hereto.

9.15Benefit of the Agreement; No Impairment.  This Agreement and the rights and benefits hereof shall inure to the benefit of New Notes Creditors and the New Private Placement Notes Creditors and to their respective successors.  Nothing in this Agreement shall impair, as between any Obligor and the New Notes Creditors, or as between any Obligor and the New Private Placement Notes Creditors, the obligations of the Obligors under the New Notes Documents and the New Private Placement Notes Documents, respectively.

9.16Provisions Solely to Define Relative Rights.  The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the New Notes Creditors on the one hand and the New Private Placement Notes Creditors on the other hand.  No Obligor or any other creditor thereof shall have any rights hereunder and no Obligor may rely on the terms hereof or enforce the terms hereof.

 

[SIGNATURE PAGES FOLLOW]

 

 

22

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

U.S. BANK NATIONAL ASSOCIATION, as New Notes Collateral Agent for and on behalf of the New Notes Secured Parties

By:  /s/ Christopher J. Grell

Name:Christopher J. Grell

Title: Vice President

 

Address for Notices: 

100 Wall Street, 16th Floor
New York, NY, 10005
212-951-6990

212-361-6153

 

 

Signature Page to Intercreditor Agreement

 

U.S. BANK NATIONAL ASSOCIATION, as New Private Placement Notes Collateral Agent for and on behalf of the New Private Placement Notes Secured Parties

By:  /s/ Christopher J. Grell

Name:Christopher J. Grell

Title: Vice President

 

Address for Notices: 

100 Wall Street, 16th Floor
New York, NY, 10005
212-951-6990

212-361-6153

 

 

Signature Page to Intercreditor Agreement

 

	
	
	
 

 

ACKNOWLEDGMENT

Each of the undersigned hereby acknowledges that it has received a copy of the foregoing Intercreditor Agreement (the “Intercreditor Agreement”) and hereby acknowledges and agrees to recognize all rights granted thereby to New Notes Collateral Agent, New Notes Secured Parties, New Private Placement Notes Collateral Agent, and New Private Placement Notes Secured Parties.  Each of the undersigned further acknowledges and agrees that it is not an intended beneficiary or third party beneficiary under the Intercreditor Agreement.  None of the undersigned shall acquire any rights under the Intercreditor Agreement now or hereafter, whether as result of this acknowledgment, any right of subrogation or otherwise.

OBLIGORS:

 

 

	
	
J. Crew Brand, LLC,
as Corporate Issuer

By:      /s/ Vincent Zanna

Name: Vincent Zanna

Title:   SVP, Finance and treasurer

 

 

J. Crew Brand Corp.,
as Corporate Issuer

By:      /s/ Vincent Zanna

Name: Vincent Zanna

Title:   SVP, Finance and treasurer

 

 

 

 

 

 

	
	
	
J. CREW BRAND INTERMEDIATE, LLC,
as a Guarantor 

By:      /s/ Vincent Zanna

Name: Vincent Zanna

Title:   SVP, Finance and treasurer

 

 

 

	
	
J. CREW DOMESTIC BRAND, LLC,
as a Guarantor 

By:      /s/ Vincent Zanna

Name: Vincent Zanna

Title:   SVP, Finance and treasurer

 

 

 

	
	
J. CREW INTERNATIONAL BRAND, LLC,
as a Guarantor

By:      /s/ Vincent Zanna

Name: Vincent Zanna

Title:   SVP, Finance and treasurer

 

 

 

 

Exhibit A

Form of Call Right Election Notice

 

 

U.S. Bank National Association, as New Notes Collateral Agent

[Address]

 

CALL RIGHT ELECTION NOTICE

 

Ladies and Gentlemen:

 

Reference is made to that certain Intercreditor Agreement dated as of July 13, 2017 (the “Intercreditor Agreement”), between U.S. BANK NATIONAL ASSOCIATION, in its capacity as collateral agent for the holders of the New Notes Obligations, and U.S. BANK NATIONAL ASSOCIATION, in its capacity as collateral agent for the holders of the New Private Placement Notes Obligations.  Capitalized terms used but not defined herein are used as defined in the Intercreditor Agreement.

 

Under Section 3.4(b) of the Intercreditor Agreement, we have received a Priority Collateral Disposition Notice from the Requesting New Notes Holders.  We hereby notify the New Notes Collateral Agent that the New Private Placement Notes Secured Parties listed on Schedule 1 hereto are hereby exercising the call right set forth in Section 3.4(b) of the Intercreditor Agreement and shall purchase the outstanding New Notes Obligations on the terms provided in Sections 3.4(b) and 3.4(c) of the Intercreditor Agreement on the Purchase Date (as defined below).

 

Pursuant to Section 3.4(c) of the Intercreditor Agreement, the “Purchase Date” shall be [________], 20[__], being the date ten (10) Business Days after the date hereof.

 

For purposes of Section 3.4(c) of the Intercreditor Agreement, the Purchasing New Private Placement Notes Secured Parties have designated [________] as their designee.

 

 

U.S. BANK NATIONAL ASSOCIATION, as New Private Placement Notes Collateral Agent

	
 
	
By:
	
                
Name:
Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00272-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00272-of-00352.parquet"}]]