EXECUTION COPY
GENERAL SECURITY AGREEMENT
THIS GENERAL SECURITY AGREEMENT (this "General Security Agreement") is
made and entered into as of January 28, 2000 by CONE MILLS CORPORATION, a North
Carolina corporation (the "Borrower" and a "Grantor"), EACH OF THE UNDERSIGNED
SUBSIDIARIES OF THE BORROWER (each a "Guarantor", and a "Subsidiary Grantor",
and collectively with the Borrower, the "Grantors"), and WILMINGTON TRUST
COMPANY, as General Collateral Agent (in such capacity, the "General Collateral
Agent") under that certain General Collateral Agency Agreement of even date
herewith among the General Collateral Agent, The Prudential Insurance Company of
America, as holder of the Senior Notes (the "Senior Note Holder"), SunTrust Bank
("SunTrust") and Atlantic Financial Group, Ltd. ("Atlantic Financial"), as
creditors of the Senior Lease Obligations (together, the "Senior Lease
Creditor"), Morgan Guaranty Trust Company of New York, as counterparty to the
Morgan Swap Agreement ("Morgan") and Bank of America, N.A., as Agent (in such
capacity, the "Revolving Credit Agent") for each of the Lenders now or hereafter
party to the Credit Agreement (as defined in the Intercreditor Agreement),
pursuant to which the General Collateral Agent serves as collateral agent for
the benefit of the Senior Note Holder, SunTrust, Atlantic Financial, the
Revolving Credit Agent, the Lenders, Morgan, the Bond Trustee for the benefit of
Debenture Holders and all other Senior Creditors at any time existing. The
General Collateral Agent and all the Senior Creditors are collectively referred
to herein as the "General Secured Parties." All capitalized terms used but not
otherwise defined herein shall have the respective meanings assigned thereto in
the Intercreditor Agreement (as defined below).
W I T N E S S E T H:
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WHEREAS, the Borrower is indebted to certain of the Senior Creditors
pursuant to the Loan Documents, the Senior Debentures, the Senior Notes, the
Morgan Swap Agreement and the Senior Lease Documents, as applicable; and
WHEREAS, as collateral security for payment and performance of all
General Senior Obligations, the Borrower is willing to grant to the General
Collateral Agent for the benefit of the General Secured Parties a security
interest in all of its personal property and assets located in the United States
pursuant to the terms of this General Security Agreement; and
WHEREAS, each Subsidiary Grantor has materially benefited, and will
materially benefit, from the extensions of credit to the Borrower by each of the
Senior Creditors pursuant to the Senior Credit Documents; and
WHEREAS, the Material Domestic Subsidiaries of the Borrower are
executing a Facility Guaranty dated as of the date hereof pursuant to which each
Guarantor has guaranteed payment and performance of all of the General Senior
Obligations; and
WHEREAS, as collateral security for payment and performance by each
Subsidiary Grantor of its Guarantor's Obligations and for payment and
performance by the Borrower of all General Senior Obligations, each Subsidiary
Grantor is willing to grant to the General Collateral Agent for the benefit of
the General Secured Parties a security interest in all of its personal property
and assets located in the United States pursuant to the terms of this General
Security Agreement; and
WHEREAS, each of the Senior Note Holder, the Senior Lease Creditor,
Morgan, the Priority Collateral Agent, the Designated Collateral Subagent, the
General Collateral Agent and the Revolving Credit Agent have entered into the
Intercreditor Agreement dated as of the date hereof (the "Intercreditor
Agreement") for their mutual benefit, the benefit of those Persons for whom they
respectively serve as agent, as applicable, and the benefit of the Bond Trustee
and the Debenture Holders, which Intercreditor Agreement provides, among other
terms, for the allocation of proceeds derived from any remedial actions
undertaken pursuant to the terms of this General Security Agreement; and
WHEREAS, pursuant to the General Collateral Agency Agreement, the
General Collateral Agent is authorized to delegate certain actions it would
otherwise undertake and certain responsibilities and obligations thereof
pursuant to the terms of this General Security Agreement to any Senior Creditor
party to the General Collateral Agency Agreement and the General Collateral
Agent, pursuant to the General Collateral Agency Agreement, has so authorized
and appointed the Revolving Credit Agent (in such capacity, the "Designated
Collateral Subagent") and the Revolving Credit Agent, by its execution and
delivery of the General Collateral Agency Agreement, has accepted such
authorization and appointment as to those express matters herein for which it is
responsible;
NOW, THEREFORE, in order to induce the Lenders to enter into the Loan
Documents, and to induce the other General Secured Parties to make and maintain
the extensions of credit evidenced by the Senior Notes, the Senior Debentures,
the Morgan Swap Agreement and the Senior Lease Documents and in further
consideration of the premises and the mutual covenants contained herein, the
parties hereto agree as follows:
1. CERTAIN DEFINITIONS. Terms used in this General Security Agreement,
not otherwise expressly defined herein or in the Intercreditor Agreement, and
for which meanings are provided in the Uniform Commercial Code of the State of
North Carolina (the "UCC"), shall have such meanings. The parties agree that
with respect to terms that describe items or types of Collateral, the parties
intend to and do hereby give effect, upon their respective effective dates, to
revisions to the UCC effective after the date hereof to the extent, but only to
the extent, such revisions either (i) provide meanings of terms not previously
defined as items or types of property or (ii) expand the items of or interests
in property that are included within a previously defined term, with the effect
that each of such terms describing items or types of property shall at all times
be interpreted in its broadest sense. The term "Qualifying Control Agreement"
shall have the meaning set forth on Schedule 1 hereto.
2. GRANT OF SECURITY INTEREST. The Borrower hereby grants as collateral
security for the payment, performance and satisfaction of all of the General
Senior Obligations now or hereafter owing by the Borrower, and the prompt
payment and performance when due of its obligations and liabilities hereunder,
and each Subsidiary Grantor hereby grants as collateral security for the
payment, performance and satisfaction of all of its Guarantor's Obligations
incurred with respect to the General Senior Obligations, and for the payment,
performance and satisfaction of all General Senior Obligations, and the prompt
payment and performance when due of its obligations and liabilities hereunder
(such General Senior Obligations, such Guarantor's Obligations, and all
obligations and liabilities hereunder of the Borrower and each Subsidiary
Grantor are referred to herein collectively as the "Secured Obligations"), to
the General Collateral Agent for the benefit of the General Secured Parties a
continuing security interest in and to, and collaterally assigns to the General
Collateral Agent for the benefit of the General Secured Parties, the following
property of such Grantor or in which such Grantor has or may have or may acquire
an interest, whether now owned or existing or hereafter created, acquired or
arising and wheresoever located (except that, in each case, such grant shall be
limited to property of each Grantor located in the United States):
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(a) All accounts, and including accounts receivable,
contracts, bills, acceptances, choses in action, and other forms of
monetary obligations at any time owing to such Grantor arising out of
property sold, leased, licensed, assigned or otherwise disposed of or
for services rendered or to be rendered by such Grantor, and all of
such Grantor's rights with respect to any property represented thereby,
whether or not delivered, property returned by customers and all rights
as an unpaid vendor or lienor, including rights of stoppage in transit
and of recovering possession by proceedings including replevin and
reclamation (collectively referred to hereinafter as "Accounts");
(b) All inventory, including all goods manufactured or
acquired for sale or lease, and any piece goods, raw materials, work in
process and finished merchandise, component materials, and all
supplies, goods, incidentals, office supplies, packaging materials and
any and all items used or consumed in the operation of the business of
such Grantor or which may contribute to the finished product or to the
sale, promotion and shipment thereof, in which such Grantor now or at
any time hereafter may have an interest, whether or not the same is in
transit or in the constructive, actual or exclusive occupancy or
possession of such Grantor or is held by such Grantor or by others for
such Grantor's account (collectively referred to hereinafter as
"Inventory");
(c) All goods, including all machinery, equipment, motor
vehicles, parts, supplies, apparatus, appliances, tools, patterns,
molds, dies, blueprints, fittings, furniture, furnishings, fixtures and
articles of tangible personal property of every description
(collectively referred to hereinafter as "Equipment");
(d) All general intangibles, including all rights now or
hereafter accruing to such Grantor under contracts, leases, agreements
or other instruments to perform or receive services, to purchase or
sell goods, to hold or use land or facilities, and to enforce all
rights thereunder, all causes of action, corporate or business records,
inventions, designs, goodwill, copyrights, licenses, permits,
franchises, customer lists, computer programs and software, all payment
intangibles, all claims under guaranties, tax refund claims, all rights
and claims against carriers and shippers, leases, all claims under
insurance policies, all interests in general and limited partnerships,
limited liability companies, and other Persons not constituting
Investment Property (as defined below), all rights to indemnification
and all other intangible personal property and intellectual property of
every kind and nature (collectively referred to hereinafter as "General
Intangibles");
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(e) All of such Grantor's right, title and interest, whether
now owned or hereafter acquired, in and to all United States and
foreign trademarks, trade names, trade dress, service marks, trademark
and service mark registrations, and applications for trademark or
service mark registration and any renewals thereof (including without
limitation each trademark, trade name, trade dress, registration and
application material to each Grantor's business or otherwise of
material value which are identified in Schedule 5-A attached hereto and
incorporated herein by reference or hereafter acquired (collectively,
the "Material Trademarks")) and including all income, royalties,
damages and payments now and hereafter due and/or payable with respect
thereto (including without limitation damages for past or future
infringements thereof), the right to sue or otherwise recover for all
past, present and future infringements thereof, all rights
corresponding thereto throughout the world (but only such rights as now
exist or may come to exist under applicable local law) and all other
rights of any kind whatsoever of each Grantor accruing thereunder or
pertaining thereto, together in each case with the goodwill of the
business connected with the use of, and symbolized by, each such
trademark and service mark (collectively, and including but not limited
to Material Trademarks, referred to as the "Trademarks");
(f) All license agreements regarding Trademarks with any other
party, whether such Grantor is a licensor or licensee under any such
license agreement (including without limitation the licenses material
to each Grantor's business or otherwise of material value which are
listed on Schedule 5-B attached hereto and incorporated herein by
reference or hereafter acquired (collectively the "Material
Licenses")), and the right to prepare for sale, sell and advertise for
sale, all Inventory now or hereafter owned by such Grantor and now or
hereafter covered by such licenses (collectively, and including but not
limited to Material Licenses, referred to as the "Licenses")); and
(g) All deposit accounts other than Securitization Deposit
Accounts, including demand, time, savings, passbook, or other similar
accounts maintained with any bank by or for the benefit of such Grantor
(collectively referred to hereinafter as "Deposit Accounts");
(h) All chattel paper, including tangible chattel paper,
electronic chattel paper, or any hybrid thereof (collectively referred
to hereinafter as "Chattel Paper");
(i) All investment property, including all securities,
security entitlements, securities accounts, commodity contracts and
commodity accounts of or maintained for the benefit of such Grantor
(collectively referred to hereafter as "Investment Property");
(j) All instruments, including all promissory notes
(collectively referred to hereinafter as "Instruments");
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(k) All documents, including warehouse receipts, bills of
lading and other documents of title (collectively referred to
hereinafter as "Documents");
(l) All supporting obligations pertaining to any of the
foregoing, including all letter of credit rights (including rights to
proceeds of letters of credit), and all guaranties and other Contingent
Obligations of any Person (collectively referred to hereinafter as
"Supporting Obligations");
(m) All books and records relating to any of the foregoing
(including customer data, credit files, ledgers, computer programs,
printouts, and other computer materials and records (and all media on
which such data, files, programs, materials and records are or may be
stored)); and
(n) All proceeds, products and replacements of, accessions to,
and substitutions for, any of the foregoing, including without
limitation proceeds of insurance policies insuring any of the
foregoing;
provided, however, notwithstanding the foregoing provisions of this Section 2,
upon the sale, contribution or other transfer by any Grantor prior to the
Security Termination Date of an interest in any Receivable (as defined in the
Receivables Purchase Agreement) to the Receivables Seller (as defined in the
Receivables Purchase Agreement) pursuant to the Transfer Agreement (as defined
in the Receivables Purchase Agreement), the security interest granted under this
General Security Agreement in items of property constituting such Receivable or
Collections (as defined in the Receivables Purchase Agreement) thereon shall
automatically and without further action cease and be released and discharged;
provided further, however, that such release and discharge shall occur and be
effective only with respect to interests in such property and only to the extent
expressly provided for in the Securitization Intercreditor Agreement (such items
of property in which the security interest hereunder is released by virtue of
the foregoing proviso are collectively referred to as the "Excluded Accounts").
All of the property and interests in property described in subsections
(a) through (n) (other than Excluded Accounts) are herein collectively referred
to as the "Collateral". Notwithstanding the foregoing, the grant by each
Subsidiary Grantor of a security interest in the Collateral individually to
secure any of the General Senior Obligations separate and apart from its
Guarantor's Obligation shall be limited to an aggregate amount of Collateral
equal to the largest amount of Collateral that would not render its obligations
hereunder subject to avoidance under Section 548 of the United States Bankruptcy
Code or any comparable provisions of any applicable state law.
3. PERFECTION. At the time of execution of this General
Security Agreement, each Grantor shall have:
(a) furnished the General Collateral Agent or the Designated
Collateral Subagent with properly executed financing statements in
form, number and substance suitable for filing, sufficient under
applicable law, and satisfactory to each of the General Collateral
Agent and the Designated Collateral Subagent in order that upon the
filing of the same the General Collateral Agent, for the benefit of the
General Secured Parties, shall have a duly perfected security interest
in all Collateral in which a security interest can be perfected by the
filing of financing statements;
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(b) to the extent expressly required by the terms hereof or of
any other General Security Instrument or any Transaction Document, or
otherwise as the General Collateral Agent or the Designated Collateral
Subagent may request, furnished each of the General Collateral Agent
and the Designated Collateral Subagent with properly executed
Qualifying Control Agreements, registrars' certificates, issuer
acknowledgments of the General Collateral Agent's interest in letter of
credit rights, and evidence of the electronic identification of the
General Collateral Agent's interest for the benefit of the General
Secured Parties in electronic chattel paper and of the placement of a
restrictive legend on tangible chattel paper, as appropriate, with
respect to Collateral in which either (i) a security interest can be
perfected only by control or such electronic identification or
restrictive legending, or (ii) a security interest perfected by control
or accompanied by such electronic identification or restrictive
legending shall have priority as against a security interest perfected
by Persons not having control or not accompanied by such electronic
identification or restrictive legending, in each case in form and
substance acceptable to each of the General Collateral Agent and the
Designated Collateral Subagent and sufficient under applicable law so
that the General Collateral Agent, for the benefit of the General
Secured Parties, shall have a security interest in all such Collateral
perfected by control; and
(c) to the extent expressly required by the terms hereof or
any Transaction Document, or otherwise as the General Collateral Agent
or the Designated Collateral Subagent may request, delivered to the
Designated Collateral Subagent, possession of all Collateral with
respect to which either a security interest can be perfected only by
possession or a security interest perfected by possession shall have
priority as against Persons not having possession, and including in the
case of Instruments, Documents, and Investment Property in the form of
certificated securities, duly executed endorsements or stock powers in
blank, as the case may be, affixed thereto in form and substance
acceptable to the Designated Collateral Subagent and sufficient under
applicable law so that the Designated Collateral Subagent, for the
benefit of the General Secured Parties, shall have a security interest
in all such Collateral perfected by possession; subject in each case
only to Priority Liens and Permitted Liens; and
(d) executed in blank and delivered to the Designated
Collateral Subagent an assignment of licenses and federally registered
trademarks and licenses (the "Assignment of Trademarks and Licenses")
owned by it in the form of Exhibit A hereto. Each Grantor hereby
authorizes the Designated Collateral Subagent to complete as Assignee
and record with the United States Patent and Trademark Office (the
"Patent and Trademark Office") each Assignment of Trademarks and
Licenses upon the occurrence of an Event of Default (as defined herein)
that is continuing at the time of filing, and the Designated Collateral
Subagent agrees not to so file the Assignment of Trademarks and
Licenses until an Event of Default has occurred.
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All financing statements (including all amendments thereto and
continuations thereof), control agreements, certificates, acknowledgments, stock
powers and other documents, electronic identification, restrictive legends, and
instruments furnished in connection with the creation, enforcement, protection,
perfection or priority of the General Collateral Agent's security interest in
Collateral, including such items as are described above in this Section 3 are
sometimes referred to herein as "Perfection Documents." The delivery of
possession of items of or evidencing Collateral, causing other Persons to
execute and deliver Perfection Documents as appropriate, the filing or
recordation of Perfection Documents, and the taking of such other actions as may
be necessary or advisable in the determination of the General Collateral Agent
or the Designated Collateral Subagent to create, enforce, protect, perfect, or
establish or maintain the priority of, the security interest of the General
Collateral Agent or the Designated Collateral Subagent for the benefit of the
General Secured Parties in the Collateral is sometimes referred to herein as
"Perfection Action."
4. MAINTENANCE OF SECURITY INTEREST; FURTHER ASSURANCES.
(a) Each Grantor will from time to time at its own expense,
deliver specific assignments of Collateral or such other Perfection
Documents, and take such other or additional Perfection Action, as may
be required by the terms of the Transaction Documents or as the General
Collateral Agent or the Designated Collateral Subagent may reasonably
request in connection with the administration or enforcement of this
General Security Agreement or related to the Collateral or any part
thereof in order to carry out the terms of this General Security
Agreement, to perfect, protect, maintain the priority of or enforce the
General Collateral Agent's security interest in the Collateral, subject
only to Priority Liens and Permitted Liens, or otherwise to better
assure and confirm unto each of the General Collateral Agent and the
Designated Collateral Subagent its and their rights, powers and
remedies for the benefit of the General Secured Parties hereunder.
Without limiting the foregoing, each Grantor hereby irrevocably
authorizes the General Collateral Agent or the Designated Collateral
Subagent to file (with, or to the extent permitted by applicable law,
without the signature of the Grantor appearing thereon) financing
statements or other Perfection Documents (including copies thereof)
showing such Grantor as "debtor" and the General Collateral Agent in
such capacity as "secured party" at such time or times and in all
filing offices as the General Collateral Agent or the Designated
Collateral Subagent may from time to time determine to be necessary or
advisable to perfect or protect the rights of the General Collateral
Agent and the General Secured Parties hereunder, or otherwise to give
effect to the transactions herein contemplated. Without limiting the
generality of the foregoing, each Grantor will execute and file (with
the appropriate governmental offices, authorities, agencies and
regulatory bodies in the United States and any applicable foreign
jurisdiction) such supplements to this General Security Agreement and
such financing or continuation statements, or amendments thereto, and
such other instruments or notices, including executed Assignments of
Trademarks and Licenses with the Patent and Trademark Office, as may be
necessary or desirable, or as the General Collateral Agent or the
Designated Collateral Subagent, on behalf of the General Secured
Parties, may reasonably request, in order to perfect and preserve the
security interests granted hereby.
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(b) With respect to any and all Collateral, each Grantor
agrees to do and cause to be done all things necessary to perfect,
maintain the priority of and keep in full force the security interest
granted in favor of the General Collateral Agent for the benefit of the
General Secured Parties, including, but not limited to, the prompt
payment upon demand therefor by the General Collateral Agent or the
Designated Collateral Subagent of all fees and expenses (including
documentary stamp, excise or intangibles taxes) incurred in connection
with the preparation, delivery, or filing of any Perfection Document or
the taking of any Perfection Action to perfect, protect or enforce a
security interest in Collateral in favor of the General Collateral
Agent for the benefit of the General Secured Parties, subject only to
Priority Liens and Permitted Liens. All amounts not so paid when due
shall constitute additional Secured Obligations and (in addition to
other rights and remedies resulting from such nonpayment) shall bear
interest from the date of demand until paid in full at the Default
Rate.
(c) Each Grantor agrees to maintain among its books and
records appropriate notations or evidence of, and to make or cause to
be made appropriate disclosure upon its financial statements of, the
security interest granted hereunder to the General Collateral Agent for
the benefit of the General Secured Parties.
(d) Each Grantor agrees that, should it have or obtain an
ownership interest in any Material Trademark or trademark application
that is not now identified on Schedule 5-A or any Material License that
is not now identified on Schedule 5-B: (i) the provisions of this
Agreement shall automatically apply to such item, and such item shall
automatically become part of the Collateral; and (ii) such Grantor
shall, within three months after acquiring or becoming aware of such
ownership interest, (A) give written notice thereof to the General
Collateral Agent, (B) with respect to Material Trademarks, cause such
Material Trademarks to be properly registered with the Patent and
Trademark Office and (C) with respect to Material Trademarks and
Material Licenses, prepare, execute and file in the Patent and
Trademark Office or in the equivalent agencies in any foreign
jurisdiction, and in each applicable filing or recording office under
the applicable Uniform Commercial Code, within the requisite time
period, all documents and financing statements that are known by such
Grantor to be necessary or that the General Collateral Agent, on behalf
of the General Secured Parties, reasonably requests in order to perfect
the security interest of the General Collateral Agent, on behalf of the
General Secured Parties, therein. Each Grantor authorizes the General
Collateral Agent, on behalf of the General Secured Parties, to execute
and file such a document in the name of such Grantor if such Grantor
fails to do so.
(e) No Grantor shall do any act or omit to do any act whereby
any Material Trademark may become dedicated or abandoned, except where
such dedication or abandonment (i) will not materially adversely affect
the business, condition (financial or otherwise), operations,
performance, or properties of such Grantor individually or of such
Grantor and its Subsidiaries taken as a whole, and (ii) is in the
ordinary course of such Grantor's business. Each Grantor agrees to
notify the General Collateral Agent promptly and in writing if it
learns that any Material Trademark may become abandoned or dedicated or
of any adverse determination or any development (including without
limitation the institution of any proceeding in the Patent and
Trademark Office or in the equivalent agencies in any foreign
jurisdiction, or any court) regarding any Material Trademark.
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(f) Each Grantor agrees that in the event that any Material
Trademark is infringed or misappropriated by a third party, such
Grantor shall promptly notify the General Collateral Agent and shall
take all reasonable steps to terminate the infringement or
misappropriation, and take such other actions as such Grantor shall
deem appropriate under the circumstances to protect such Trademark. Any
expense incurred in connection with such activities shall be borne by
such Grantor.
5. RECEIPT OF PAYMENT. In the event an Event of Default shall occur and
be continuing and a Grantor (or any of its affiliates, subsidiaries,
stockholders, directors, officers, employees or agents) shall receive any
proceeds of Collateral, including without limitation monies, checks, notes,
drafts or any other items of payment, each Grantor shall hold all such items of
payment in trust for the General Collateral Agent for the benefit of the General
Secured Parties, and as the property of the General Collateral Agent for the
benefit of the General Secured Parties, separate from the funds and other
property of such Grantor, and no later than the first Business Day following the
receipt thereof, at the election of the General Collateral Agent or the
Designated Collateral Subagent such Grantor shall cause such Collateral to be
forwarded to the General Collateral Agent for its custody, possession and
disposition on behalf of the General Secured Parties in accordance with the
terms hereof and of the Intercreditor Agreement.
6. PRESERVATION AND PROTECTION OF COLLATERAL.
(a) Neither the General Collateral Agent nor the Designated
Collateral Subagent shall be under any duty or liability with respect
to the collection, protection or preservation of the Collateral, or
otherwise, except to the extent expressly contemplated under Section
25. Each Grantor shall be responsible for the safekeeping of its
Collateral, and in no event shall the General Collateral Agent or the
Designated Collateral Subagent have any responsibility for (i) any loss
or damage thereto or destruction thereof occurring or arising in any
manner or fashion from any cause, (ii) any diminution in the value
thereof, or (iii) any act or default of any carrier, warehouseman,
bailee or forwarding agency thereof or other Person in any way dealing
with or handling such Collateral.
(b) Each Grantor shall keep and maintain its tangible personal
property Collateral in good operating condition and repair, ordinary
wear and tear excepted. No Grantor shall permit any such items to
become a fixture to real property (unless such Grantor has granted the
General Collateral Agent for the benefit of the General Secured Parties
a Lien on such real property having a priority acceptable to the
Required General Secured Parties) or accessions to other personal
property.
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(c) Each Grantor agrees (i) to pay when due all taxes,
charges, Liens and assessments against the Collateral in which it has
any interest, unless being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves
have been established in accordance with GAAP applied on a Consistent
Basis (as each capitalized term is defined in the Credit Agreement) and
evidenced to the satisfaction of the Designated Collateral Subagent and
provided that all enforcement proceedings in the nature of levy or
foreclosure are effectively stayed, and (ii) to cause to be terminated
and released all Liens (other than Priority Liens and Permitted Liens)
on the Collateral. Upon the failure of any Grantor to so pay or contest
such taxes, charges, or assessments, or cause such Liens to be
terminated, the Designated Collateral Subagent at its option may pay or
contest any of them or amounts relating thereto (the Designated
Collateral Subagent having the sole right to determine the legality or
validity and the amount necessary to discharge such taxes, charges,
Liens or assessments) but shall not have any obligation to make any
such payment or contest. All sums so disbursed by the Designated
Collateral Subagent, including reasonable attorneys' fees, court costs,
expenses and other charges related thereto, shall be payable on demand
by the applicable Grantor to the Designated Collateral Subagent and
shall be additional Secured Obligations secured by the Collateral, and
any amounts not so paid on demand (in addition to other rights and
remedies resulting from such nonpayment) shall bear interest from the
date of demand until paid in full at the Default Rate.
7. STATUS OF GRANTORS AND COLLATERAL GENERALLY. Each Grantor represents
and warrants to, and covenants with, the General Collateral Agent for the
benefit of the General Secured Parties, with respect to itself and the
Collateral as to which it has or acquires any interest, that:
(a) It is (or as to Collateral acquired after the date hereof
will be upon the acquisition of the same) and, except as permitted by
each of the Transaction Documents and subsection (b) of this Section 7,
will continue to be, the owner of the Collateral, free and clear of all
Liens, other than the security interest hereunder in favor of the
General Collateral Agent for the benefit of the General Secured
Parties, Priority Liens and Permitted Liens, and that it will at its
own cost and expense defend such Collateral and any products and
proceeds thereof against all claims and demands of all Persons (other
than holders of Priority Liens and Permitted Liens) at any time
claiming the same or any interest therein adverse to the General
Secured Parties. Upon the failure of any Grantor to so defend, the
General Collateral Agent or the Designated Collateral Subagent or both
of them may do so at its or their option but shall not have any
obligation to do so. All sums so disbursed by the General Collateral
Agent and the Designated Collateral Subagent or either of them,
including reasonable attorneys' fees, court costs, expenses and other
charges related thereto, shall be payable on demand by the applicable
Grantor to the General Collateral Agent or the Designated Collateral
Subagent, as the case may be, and shall be additional Secured
Obligations secured by the Collateral, and any amounts not so paid on
demand (in addition to other rights and remedies resulting from such
nonpayment) shall bear interest from the date of demand until paid in
full at the Default Rate.
(b) It shall not (i) sell, assign, transfer, lease, license or
otherwise dispose of any of, or grant any option with respect to, the
Collateral, except for dispositions permitted under each of the
Transaction Documents, (ii) create or suffer to exist any Lien upon or
with respect to any of the Collateral except for the security interests
created by this General Security Agreement, Priority Liens and
Permitted Liens, or (iii) take any other action in connection with any
of the Collateral that would materially impair the value of the
interest or rights of such Grantor in the Collateral taken as a whole
or that would materially impair the security interests or rights of the
General Collateral Agent for the benefit of the General Secured
Parties.
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(c) It has full power, legal right and lawful authority to
enter into this General Security Agreement and to perform its terms,
including the grant of the security interests in the Collateral herein
provided for and this General Security Agreement constitutes the valid
and binding obligations of such Grantor enforceable against such
Grantor in accordance with its terms.
(d) No authorization, consent, approval or other action by,
and no notice to or filing with, any Governmental Authority or any
other Person is required either (i) for the grant by such Grantor of
the security interests granted hereby or for the execution, delivery or
performance of this General Security Agreement by such Grantor, or (ii)
for the perfection of or the exercise by the General Collateral Agent,
or exercise by the Designated Collateral Subagent, on behalf of the
General Secured Parties, of its rights and remedies hereunder, except
for action required by the Uniform Commercial Code to perfect the
security interest conferred hereunder.
(e) No effective financing statement or other Perfection
Document similar in effect, nor any other Perfection Action, covering
all or any part of the Collateral purported to be granted or taken by
or on behalf of such Grantor (or by or on behalf of any other Person
and which remains effective as against all or any part of the
Collateral) has been filed in any recording office, delivered to
another Person for filing (whether upon the occurrence of a contingency
or otherwise), or otherwise taken, as the case may be, except such as
pertain to Priority Liens and Permitted Liens and such as may have been
filed for the benefit of, delivered to, or taken in favor of, the
General Collateral Agent for the benefit of the General Secured Parties
in connection with the security interests conferred hereunder.
(f) Schedule 2 attached hereto contains true and complete
information as to each of the following: (i) the exact legal name of
each Grantor as it appears in its Organizational Documents as of the
date hereof and at any time during the five (5) year period ending as
of the date hereof (the "Covered Period"), (ii) the jurisdiction of
formation and form of organization of each Grantor, (iii) each address
of the chief executive office of each Grantor as of the date hereof and
at any time during the Covered Period, (iv) all trade names or trade
styles used by such Grantor as of the date hereof and at any time
during the Covered Period, (v) the address of each location of such
Grantor within the United States at which any tangible personal
property Collateral with an aggregate book value or fair market value,
whichever is greater, of at least $500,000, and any Account Records and
Account Documents, are located at the date hereof or have been located
at any time during the Covered Period, (vi) with respect to each
location described in clause (v) that is not owned beneficially and of
record by such Grantor, the name and address of the owner thereof; and
(vii) the name of each Person other than such Grantor and the address
of such Person at which any tangible personal property Collateral of
such Grantor within the United States with an aggregate book value or
fair market value, whichever is greater, of at least $500,000 is held
under any warehouse, consignment, bailment or other arrangement as of
the date hereof. No Grantor shall change its name, change its
jurisdiction of formation (whether by reincorporation, merger or
otherwise), change the location of its chief executive office, utilize
any additional location within the United States where tangible
personal property Collateral with an aggregate book value or fair
market value, whichever is greater, of at least $500,000, or where any
Account Records and Account Documents, may be located, change or use
any additional or different trade name or style, except in each case
upon giving written notice to the Designated Collateral Subagent and
taking or causing to be taken at such Grantor's expense all such
Perfection Action, including the delivery of such Perfection Documents,
as may be reasonably requested by the Designated Collateral Subagent to
perfect or protect, or maintain the perfection and priority of, the
Lien of the General Collateral Agent for the benefit of the General
Secured Parties in Collateral contemplated hereunder within thirty (30)
days from such change.
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(g) No Grantor shall engage in any consignment transaction in
respect of any of the Collateral, whether as consignee or consignor,
without the prior written consent of the Designated Collateral Subagent
in each instance.
(h) No Grantor shall cause, suffer or permit any of the
tangible personal property Collateral with an aggregate book value or
fair market value, whichever is greater, of at least $500,000 (i) to be
evidenced by any document of title (except for shipping documents as
necessary or customary to effect the delivery of inventory to customers
in the ordinary course of business) or (ii) to be in the possession,
custody or control of any warehouseman or other bailee within the
United States unless such location and Person are set forth on Schedule
2 or the Designated Collateral Subagent shall have received written
notice of each such transaction, each of the General Collateral Agent
and the Designated Collateral Subagent shall have received a duly
executed Qualifying Control Agreement from such bailee, and the Grantor
shall have caused at its expense to be prepared and executed such
additional Perfection Documents and to be taken such other Perfection
Action as the General Collateral Agent or the Designated Collateral
Subagent may deem necessary or advisable to carry out the transactions
contemplated by this General Security Agreement within thirty (30) days
of such transaction.
(i) No tangible personal property Collateral (excluding
Account Records and Account Documents) with an aggregate book value or
fair market value, whichever is greater, in excess of $500,000, and no
Account Records or Account Documents, are or shall be located at any
location within the United States that is leased by such Grantor from
any other Person, unless (x) such location and lessor is set forth on
Schedule 2 attached hereto or such Grantor provides written notice
thereof to the Designated Collateral Subagent, (y) such lessor
acknowledges the Lien in favor of the General Collateral Agent for the
benefit of the General Secured Parties conferred hereunder and waives
its statutory and consensual liens and rights with respect to such
Collateral in form and substance acceptable to each of the General
Collateral Agent and the Designated Collateral Subagent and delivered
in writing to each of the General Collateral Agent and the Designated
Collateral Subagent prior to any Collateral being located at any such
location, and (z) the Grantor shall have caused at its expense to be
prepared and executed such additional Perfection Documents and to be
taken such other Perfection Action as the General Collateral Agent or
the Designated Collateral Subagent may deem necessary or advisable to
carry out the transactions contemplated by this General Security
Agreement, in each case within thirty (30) days of the movement of such
Collateral to such new location.
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(j) It has notified the General Collateral Agent in writing of
all uses of any Material Trademark prior to such Grantor's use, of
which such Grantor is aware, which would in the reasonable judgment of
such Grantor lead to such item becoming invalid or unenforceable,
including prior unauthorized uses by third parties and uses that were
not supported by the goodwill of the business connected with such item.
(k) No claim has been made (and, as to any Material Trademark
with respect to which such Grantor is a licensor, to the knowledge of
such Grantor, no claim has been made against the third party licensee),
and such Grantor has no knowledge of any claim that is likely to be
made, that the use by such Grantor of any Material Trademark does or
may violate the rights of any Person; and
(l) It has no right, title and interest, now owned, in any
United States or foreign copyrights and patents (nor applications for
copyrights or patents) that are material to its business or otherwise
of material value ("Material Patents" and "Material Copyrights"). Each
Grantor agrees that, should it have or obtain an ownership interest in
any Material Patent, Material Copyright, Material Patent application or
Material Copyright application: (i) the provisions of this General
Security Agreement shall automatically apply to such item, and such
item shall automatically become part of the Collateral and (ii) such
Grantor shall, within three months after acquiring or becoming aware of
such ownership interest, (A) give written notice thereof to the General
Collateral Agent, (B) cause such Material Patent or Material Copyright
to be properly registered with the Patent and Trademark Office and (C)
prepare, execute and file in the Patent and Trademark Office or in the
equivalent agencies in any foreign jurisdiction, and in each applicable
filing or recording office under the applicable Uniform Commercial
Code, within the requisite time period, all documents and financing
statements that are known by such Grantor to be necessary or that the
General Collateral Agent, on behalf of the General Secured Parties,
reasonably requests in order to perfect the security interest of the
General Collateral Agent, on behalf of the General Secured Parties,
therein. Each Grantor authorizes the General Collateral Agent, on
behalf of the General Secured Parties, to execute and file all such
documents and financing statements in the name of such Grantor if such
Grantor fails to do so.
8. INSPECTION. The Designated Collateral Subagent (by any of its
officers, employees and agents), on behalf of the General Secured Parties, shall
have the right upon prior notice to an executive officer of any Grantor, and at
any reasonable times during such Grantor's usual business hours, to inspect the
Collateral, all records related thereto (and to make extracts or copies from
such records), and the premises upon which any of the Collateral is located, to
discuss such Grantor's affairs and finances with any Person (other than Persons
obligated on any Accounts ("Account Debtors") except as expressly otherwise
permitted in any of the Transaction Documents) and to verify with any Person
other than (except as expressly otherwise permitted in any of the Transaction
13
Documents) Account Debtors the amount, quality, quantity, value and condition
of, or any other matter relating to, the Collateral and, if an Event of Default
has occurred and is continuing, to discuss such Grantor's affairs and finances
with such Grantor's Account Debtors and to verify the amount, quality, value and
condition of, or any other matter relating to, the Collateral with such Account
Debtors. Upon or after the occurrence and during the continuation of an Event of
Default, the General Collateral Agent or the Designated Collateral Subagent may
at any time and from time to time employ and maintain on such Grantor's premises
a custodian selected by the Designated Collateral Subagent who shall have full
authority to do all acts necessary to protect the General Collateral Agent's
(for the benefit of the General Secured Parties) security interests in the
Collateral. All reasonable expenses incurred by the General Collateral Agent or
the Designated Collateral Subagent, or both of them, on behalf of the General
Secured Parties, by reason of the employment of such custodian shall be paid by
such Grantor on demand from time to time and shall be added to the Secured
Obligations secured by the Collateral, and any amounts not so paid on demand (in
addition to other rights and remedies resulting from such nonpayment) shall bear
interest from the date of demand until paid in full at the Default Rate.
9. SPECIFIC COLLATERAL.
(a) ACCOUNTS. With respect to its Accounts (other than
Excluded Accounts) whether now existing or hereafter created or
acquired and wheresoever located, each Grantor represents, warrants and
covenants to the General Collateral Agent for the benefit of the
General Secured Parties that:
(i) Each Grantor shall keep accurate and complete
records of its Accounts ("Account Records") and from time to
time at intervals designated by the Designated Collateral
Subagent such Grantor shall provide the Designated Collateral
Subagent with a schedule of Accounts in form and substance
acceptable to the Designated Collateral Subagent describing
all Accounts created or acquired by such Grantor (a "Schedule
of Accounts"); provided, however, that such Grantor's failure
to execute and deliver any such Schedule of Accounts shall not
affect or limit the General Collateral Agent's security
interest or other rights in and to any Accounts for the
benefit of the General Secured Parties. If requested by the
Designated Collateral Subagent, each Grantor shall furnish the
Designated Collateral Subagent with copies of proof of
delivery and other documents relating to the Accounts so
scheduled, including without limitation repayment histories
and present status reports (collectively, "Account Documents")
and such other matter and information relating to the status
of then existing Accounts as the Designated Collateral
Subagent shall request.
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(ii) All Account Records and Account Documents are
and shall at all times be located only at such Grantor's
current chief executive office as set forth on Schedule 2
attached hereto, such other locations as are specifically
identified on Schedule 2 attached hereto as an "Account
Documents location," or as to which the Grantor has complied
with Section 7(f) hereof.
(iii) The Accounts are genuine, are in all respects
what they purport to be, are not evidenced by an instrument or
document or, if evidenced by an instrument or document, are
only evidenced by one original instrument or document.
(iv) The Accounts cover bona fide sales and
deliveries of Inventory usually dealt in by such Grantor, or
the rendition by such Grantor of services, to an Account
Debtor in the ordinary course of business.
(v) The amounts of the face value of any Account
shown or reflected on any Schedule of Accounts, invoice
statement, or certificate delivered to the Designated
Collateral Subagent, are actually owing to such Grantor and
are not contingent for any reason; and there are no setoffs,
discounts, allowances, claims, counterclaims or disputes of
any kind or description in an amount greater than $2,500,000
in the aggregate, or greater than $1,000,000 individually,
existing or asserted with respect thereto and such Grantor has
not made any agreement with any Account Debtor thereunder for
any deduction therefrom, except as may be stated in the
Schedule of Accounts and reflected in the calculation of the
face value of each respective invoice related thereto.
(vi) Except for conditions generally applicable to
such Grantor's industry and markets, there are no facts,
events, or occurrences known to such Grantor pertaining
particularly to any Accounts which are reasonably expected to
materially impair in any way the validity, collectibility or
enforcement of Accounts that would reasonably be likely, in
the aggregate, to be of material economic value, or in the
aggregate materially reduce the amount payable thereunder from
the amount of the invoice face value shown on any Schedule of
Accounts, or on any certificate, contract, invoice or
statement delivered to the Designated Collateral Subagent with
respect thereto.
(vii) The goods or services giving rise thereto are
not, and were not at the time of the sale or performance
thereof, subject to any Lien, claim, encumbrance or security
interest, except those granted to the General Collateral Agent
for the benefit of General Secured Parties, Priority Liens and
Permitted Liens.
(viii) In the event any amounts due and owing in
excess of $1,000,000 individually, or $2,500,000 in the
aggregate amount, are in dispute between any Account Debtor
and a Grantor (which shall include without limitation any
dispute in which an offset claim or counterclaim may result),
such Grantor shall provide the Designated Collateral Subagent
with written notice thereof as soon as practicable, explaining
in detail the reason for the dispute, all claims related
thereto and the amount in controversy.
15
(b) INVENTORY. With respect to its Inventory whether now
existing or hereafter created or acquired and wheresoever located, each
Grantor represents, warrants and covenants to the General Collateral
Agent for the benefit of the General Secured Parties that:
(i) Each Grantor shall keep accurate and complete
records itemizing and describing the kind, type, location and
quantity of Inventory, its cost therefor and the selling price
of Inventory held for sale, and the daily withdrawals
therefrom and additions thereto, and shall furnish to the
Designated Collateral Subagent from time to time at reasonable
intervals designated by the Designated Collateral Subagent, a
current schedule of Inventory ("Schedule of Inventory") based
upon its most recent physical inventory and its daily
inventory records. Each Grantor shall conduct a physical
inventory or cycle count no less frequently than annually, and
shall furnish to the Designated Collateral Subagent such other
documents and reports thereof as the Designated Collateral
Subagent shall reasonably request with respect to the
Inventory.
(ii) The aggregate book or market value, whichever is
greater, of all Inventory kept at locations listed on Schedule
2 which are not owned by the Grantors does not exceed
$2,000,000 in the aggregate or $1,000,000 individually at any
location.
(iii) The aggregate book or market value, whichever
is greater, of all Inventory of the Grantors kept at locations
outside the United States shall not exceed $3,000,000.
(iv) All Inventory required by Section 7(f) hereof
to be disclosed on Schedule 2 hereof is and shall at all times
be located only at the locations set forth on Schedule 2
hereto or at such other locations as to which such Grantor has
complied with Section 7(f) hereof provided, however, the
Grantor may remove Inventory in the ordinary course of
business in connection with its processing, transformation,
sale, lease, license or other permitted disposition.
(v) If any Account Debtor returns any Inventory to a
Grantor after shipment thereof, and such return generates a
credit in excess of $1,000,000 on any individual Account or
$2,500,000 in the aggregate on any Accounts of such Account
Debtor, such Grantor shall notify the Designated Collateral
Subagent in writing of the same as soon as practicable.
(c) EQUIPMENT. With respect to its Equipment whether now
existing or hereafter created or acquired and wheresoever located, each
Grantor represents, warrants and covenants to the General Collateral
Agent for the benefit of the General Secured Parties that:
16
(i) The Grantors, as soon as practicable following a
request therefor by the Designated Collateral Subagent, shall
deliver to the Designated Collateral Subagent any and all
evidence of ownership of any of the Equipment (including
without limitation certificates of title and applications for
certificates of title).
(ii) The Grantors shall maintain accurate, itemized
records describing the kind, type, quality, quantity and value
of its Equipment and shall furnish the Designated Collateral
Subagent upon request with a current schedule containing the
foregoing information, but, other than during the continuance
of an Event of Default, not more often than once per fiscal
quarter.
(iii) All Equipment, is and shall at all times be
located only at such Grantor's locations as set forth on
Schedule 2 attached hereto or at such other locations as to
which such Grantor has complied with Section 7(f) hereof or
locations outside the United States. No Grantor shall, other
than as expressly permitted under each of the Transaction
Documents, sell, lease, transfer, dispose of or remove any
Equipment from such locations or sell, lease, transfer,
dispose of or move any Equipment to any location outside of
the United States.
(d) SUPPORTING OBLIGATIONS. With respect to its Supporting
Obligations (other than those solely supporting Excluded Accounts)
whether now existing or hereafter created or acquired and wheresoever
located, each Grantor represents, warrants and covenants to the General
Collateral Agent for the benefit of the General Secured Parties that:
(i) Each Grantor shall (i) maintain at all times, and
furnish to the Designated Collateral Subagent from time to
time at the Designated Collateral Subagent's request, a
current list identifying in reasonable detail each Supporting
Obligation relating to any Collateral from a single obligor in
excess of $250,000, and (ii) upon the request of the
Designated Collateral Subagent from time to time following the
occurrence and during the continuance of any Event of Default,
deliver to the Designated Collateral Subagent the originals of
all documents evidencing or constituting Supporting
Obligations, together with such other documentation (executed
as appropriate by the Grantor) and information as may be
necessary to enable the Designated Collateral Subagent to
realize upon the Supporting Obligations in accordance with
their respective terms or transfer the Supporting Obligations
as may be permitted hereunder or under the terms of the
Intercreditor Agreement or by applicable law.
(ii) With respect to each letter of credit that
constitutes a Supporting Obligation and has an aggregate
stated amount available to be drawn in excess of $500,000,
each Grantor shall, within thirty (30) days of the issuance of
each such letter of credit, cause the issuer thereof to
execute and deliver to each of the General Collateral Agent
and the Designated Collateral Subagent a Qualifying Control
Agreement.
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(iii) With respect to each transferable letter of
credit that constitutes a Supporting Obligation and has an
aggregate stated amount available to be drawn in excess of
$500,000, each Grantor shall, within thirty (30) days of the
issuance of each such letter of credit, deliver to the
Designated Collateral Subagent a duly executed, undated
transfer form in blank sufficient in form and substance under
the terms of the related letter of credit to effect, upon
completion and delivery to the letter of credit issuer
together with any required fee, the transfer of such letter of
credit to the transferee identified in such form. Each Grantor
hereby expressly authorizes the Designated Collateral Subagent
following the occurrence and during the continuance of any
Event of Default to complete and tender each such transfer
form as transferor in its own name or in the name, place and
stead of the Grantor in order to effect any such transfer,
either to the General Collateral Agent or the Designated
Collateral Subagent or to another transferee, as the case may
be, in connection with any sale or other disposition of
Collateral or for any other purpose permitted hereunder or
under the terms of the Intercreditor Agreement or by
applicable law.
(e) INVESTMENT PROPERTY. With respect to its Investment
Property whether now existing or hereafter created or acquired and
wheresoever located, each Grantor represents, warrants and covenants to
the General Collateral Agent for the benefit of the General Secured
Parties that:
(i) Schedule 3 attached hereto contains a true and
complete description of (x) the name and address of each
securities intermediary and each commodity intermediary with
which such Grantor maintains a securities account or commodity
account in which Investment Property is or may at any time be
credited or maintained, and (y) all other Investment Property
of such Grantor other than interests in Subsidiaries in which
such Grantor has granted a Lien to the General Collateral
Agent for the benefit of the General Secured Parties pursuant
to a Pledge Agreement.
(ii) Except with the express prior written consent of
the Designated Collateral Subagent in each instance, all
Investment Property other than interests in Subsidiaries in
which such Grantor has granted a Lien to the Designated
Collateral Subagent for the benefit of the General Secured
Parties pursuant to a Pledge Agreement shall be maintained at
all times in the form of (A) certificated securities, which
certificates shall have been delivered to the General
Collateral Agent together with duly executed undated stock
powers endorsed in blank pertaining thereto, or (B) security
entitlements credited to one or more securities accounts as to
each of which the Designated Collateral Subagent has received
(x) copies of the account agreement between the applicable
securities intermediary and the Grantor and the most recent
statement of account pertaining to such securities account
(each certified to be true and correct by an officer of the
18
Grantor) and (y) a Qualifying Control Agreement from the
applicable securities intermediary which remains in full force
and effect and as to which the General Collateral Agent has
not received any notice of termination, or (C) commodity
contracts credited to one or more commodity accounts as to
each of which the Designated Collateral Subagent has received
(x) copies of the account agreement between the applicable
commodity intermediary and the Grantor and the most recent
statement of account pertaining to such commodity account
(each certified to be true and correct by an officer of the
Grantor) and (y) a Qualifying Control Agreement from the
applicable commodity intermediary which remains in full force
and effect and as to which the General Collateral Agent has
not received any notice of termination. Without limiting the
generality of the foregoing, no Grantor shall cause, suffer or
permit any Investment Property to be credited to or maintained
in any securities account not listed on Schedule 3 attached
hereto except in each case upon giving not less than thirty
(30) days' prior written notice to the Designated Collateral
Subagent and taking or causing to be taken at such Grantor's
expense all such Perfection Action, including the delivery of
such Perfection Documents, as may be reasonably requested by
the General Collateral Agent or the Designated Collateral
Subagent to perfect or protect, or maintain the perfection and
priority of, the Lien of the General Collateral Agent for the
benefit of the General Secured Parties in Collateral
contemplated hereunder.
(iii) All dividends and other distributions with
respect to any of the Investment Property shall be subject to
the security interest conferred hereunder.
(iv) So long as no Event of Default shall have
occurred and be continuing, the registration of Investment
Property in the name of a Grantor as record and beneficial
owner shall not be changed and such Grantor shall be entitled
to exercise all voting and other rights and powers pertaining
to Investment Property for all purposes not inconsistent with
the terms hereof or of any Qualifying Control Agreement
relating thereto.
(v) Upon the occurrence and during the continuance of
any Event of Default, at the option of the Designated
Collateral Subagent or written direction of the Required
Enforcement General Secured Parties, all rights of the
Grantors to exercise the voting or consensual rights and
powers which it is authorized to exercise pursuant to clause
(iv) immediately above shall cease and the General Collateral
Agent or the Designated Collateral Subagent may thereupon (but
shall not be obligated to), at its request, cause such
Collateral to be registered in the name of the Designated
Collateral Subagent or its nominee or agent for the benefit of
the General Secured Parties and/or exercise such voting or
consensual rights and powers as appertain to ownership of such
Collateral, and to that end each Grantor hereby appoints each
of the General Collateral Agent and the Designated Collateral
Subagent as its proxy, with full power of substitution, to
vote and exercise all other rights as a holder of such
Investment Property upon the occurrence and during the
continuance of any Event of Default, which proxy is coupled
with an interest and is irrevocable until the Security
Termination Date, and each
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Grantor hereby agrees to provide such further proxies as the
General Collateral Agent or the Designated Collateral Subagent
may request; provided, however, that each of the General
Collateral Agent and the Designated Collateral Subagent in its
discretion may from time to time refrain from exercising, and
shall not be obligated to exercise, any such voting or
consensual rights or such proxy.
(vi) Upon the occurrence and during the continuance
of any Event of Default, all rights of the Grantors to receive
and retain cash dividends and other distributions upon or in
respect to Investment Property pursuant to clause (iii) above
shall cease and shall thereupon be vested in the General
Collateral Agent for the benefit of the General Secured
Parties, and each Grantor shall, or shall cause, all such cash
dividends and other distributions with respect to the
Investment Property to be promptly delivered to the Designated
Collateral Subagent (together, if the Designated Collateral
Subagent shall request, with any documents related thereto) to
be held, released or disposed of by it hereunder or, at the
written direction of the Required Enforcement General Secured
Parties, to be applied to the Secured Obligations in
accordance with the Intercreditor Agreement.
(f) DEPOSIT ACCOUNTS. With respect to its Deposit Accounts
(other than Securitization Deposit Accounts) whether now existing or
hereafter created or acquired and wheresoever located, each Grantor
represents, warrants and covenants to the General Collateral Agent for
the benefit of the General Secured Parties that:
(i) Schedule 4 attached hereto contains a true and
complete description of (x) the name and address of each
depositary institution with which such Grantor maintains a
Deposit Account.
(ii) Except as otherwise permitted by the Credit
Agreement or with the express prior written consent of the
Designated Collateral Subagent in each instance, all Deposit
Accounts (other than Securitization Deposit Accounts) shall be
maintained at all times with the Agent or a Lender or a
depository institution as to which each of the General
Collateral Agent and the Designated Collateral Subagent shall
have received a Qualifying Control Agreement. Without limiting
the generality of the foregoing, no Grantor shall cause,
suffer or permit (x) any deposit to be evidenced by a
certificate of deposit unless immediately upon receipt thereof
such certificate shall have been delivered to the General
Collateral Agent, together with a duly executed undated
assignment in blank affixed thereto, or (y) any Deposit
Account not listed on Schedule 4 attached hereto to be opened
or maintained except in each case upon giving not less than
thirty (30) days' prior written notice to the Designated
Collateral Subagent and taking or causing to be taken at such
Grantor's expense all such Perfection Action, including the
delivery of such Perfection Documents, as may be reasonably
requested by the Designated Collateral Subagent to perfect or
protect, or maintain the perfection and priority of, the Lien
of the General Collateral Agent for the benefit of the General
Secured Parties in such Collateral as contemplated hereunder.
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(g) CHATTEL PAPER. With respect to its Chattel Paper (other
than Chattel Paper constituting Excluded Accounts) whether now existing
or hereafter created or acquired and wheresoever located, each Grantor
represents, warrants and covenants to the General Collateral Agent for
the benefit of the General Secured Parties that:
(i) Each Grantor shall at all times retain sole
physical possession of the originals of all Chattel Paper
(other than electronic Chattel Paper); provided, however, that
(x) upon the request of the Designated Collateral Subagent
from time to time, such Grantor shall immediately deliver
physical possession of such Chattel Paper to the Designated
Collateral Subagent or its designee, and (y) in the event that
there shall be created more than one original counterpart of
any document that alone or in conjunction with any other
physical or electronic document constitutes Chattel Paper,
then such counterparts shall be numbered consecutively
starting with "1" and such Grantor shall retain the
counterpart numbered "1".
(ii) All counterparts of all Chattel Paper shall
immediately upon the creation or acquisition thereof by any
Grantor be conspicuously legended as follows: "A SECURITY
INTEREST IN THIS CHATTEL PAPER HAS BEEN GRANTED TO WILMINGTON
TRUST COMPANY AS GENERAL COLLATERAL AGENT FOR CERTAIN GENERAL
SECURED PARTIES PURSUANT TO A GENERAL SECURITY AGREEMENT DATED
AS OF JANUARY 28, 2000 AS AMENDED FROM TIME TO TIME. NO
SECURITY INTEREST OR OTHER INTEREST IN FAVOR OF ANY OTHER
PERSON MAY BE CREATED BY THE TRANSFER OF PHYSICAL POSSESSION
OF THIS CHATTEL PAPER OR OF ANY COUNTERPART HEREOF EXCEPT BY
OR WITH THE CONSENT OF BANK OF AMERICA, N.A., AS PROVIDED IN
SUCH GENERAL SECURITY AGREEMENT"; provided, however, in the
case of electronic Chattel Paper (including the electronic
components of hybrid Chattel Paper), each Grantor may utilize
other means acceptable to the Designated Collateral Subagent
and sufficient under applicable law to constitute perfection
by control in order to identify the interest of the General
Collateral Agent for the benefit of the General Secured
Parties.
(iii) Other than in the ordinary course of business
and in keeping with reasonable and customary practice, no
Grantor shall amend, modify, waive or terminate any provision
of, or fail to exercise promptly and diligently each material
right or remedy conferred under or in connection with, any
Chattel Paper, in any case in such a manner as could
reasonably be expected to materially adversely affect the
value of affected Chattel Paper as collateral.
(h) INSTRUMENTS. With respect to its Instruments (other than
those evidencing solely Excluded Accounts) whether now existing or
hereafter created or acquired and wheresoever located, each Grantor
represents, warrants and covenants to the General Collateral Agent for
the benefit of the General Secured Parties that:
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(i) Each Grantor shall (i) maintain at all times, and
furnish to the Designated Collateral Subagent from time to
time at the Designated Collateral Subagent's request, a
current list identifying in reasonable detail Instruments of
which such Grantor is the payee or holder and having a face
amount payable in excess of $250,000, and (ii) upon the
request of the Designated Collateral Subagent from time to
time deliver to the Designated Collateral Subagent the
originals of all such Instruments, together with duly executed
undated endorsements in blank affixed thereto and such other
documentation and information as may be necessary to enable
the General Collateral Agent or the Designated Collateral
Subagent to realize upon the Instruments in accordance with
their respective terms or transfer the Instruments as may be
permitted under the Loan Documents or by applicable law.
(ii) Other than in the ordinary course of business
and in keeping with reasonable and customary practice, no
Grantor shall amend, modify, waive or terminate any provision
of, or fail to exercise promptly and diligently each material
right or remedy conferred under or in connection with, any
Instrument, in any case in such a manner as could reasonably
be expected to materially adversely affect the value of the
affected Instrument as Collateral.
(i) MATERIAL TRADEMARKS. Each Grantor represents and warrants
as follows:
(i) It is the sole, legal and beneficial owner of the
entire right, title and interest in and to the Material
Trademarks purported to be granted by it hereunder, free and
clear of any Lien, security interest, option, charge, pledge,
registered user agreement, assignment (whether conditional or
not), or covenant, or any other encumbrance, except for the
security interests created or permitted by this Agreement or
by each of the Transaction Documents and certain Material
Licenses and registered user agreements described on Schedule
5-B. No financing statement or other instrument similar in
effect covering all or any part of the Material Trademarks
purported to be granted by such Grantor hereunder is on file
in any recording office, including, without limitation, the
Patent and Trademark Office and the equivalent offices in any
foreign jurisdiction, except such as may have been filed in
favor of the General Collateral Agent, for the benefit of the
General Secured Parties.
(ii) Set forth on Schedule 5-A is a list of all of
the Material Trademarks owned by such Grantor necessary for
the conduct of its business as currently conducted or utilized
and material in such Grantor's manufacturing operations or
used in the selling or marketing of such Grantor's products.
(iii) Each Material Trademark of such Grantor
identified on Schedule 5-A is validly subsisting and has not
been abandoned or adjudged invalid, unregistrable or
unenforceable, in whole or in part, and is, to such Grantor's
knowledge, valid, registrable and enforceable.
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10. CASUALTY AND LIABILITY INSURANCE REQUIRED.
(a) Each Grantor will keep the Collateral continuously insured
against such risks as are customarily insured against by businesses of
like size and type engaged in the same or similar operations (or on a
self-insured basis customary for companies similarly situated and in
accordance with prudent business practice) including, without
limitation:
(i) property casualty insurance on the Inventory and
the Equipment in an amount not less than the replacement cost,
or actual cash value for vacated properties or properties
formerly used for manufacturing and currently used for
warehousing or other non-manufacturing purposes, against loss
or damage by theft, fire, lightning and other hazards
ordinarily included under uniform broad form standard extended
coverage policies, limited only as may be provided in the
standard broad form of extended coverage endorsement at the
time in use in the states in which the Collateral is located;
(ii) comprehensive general liability insurance
against claims for bodily injury, death or property damage
occurring with or about such Collateral (such coverage to
include provisions waiving subrogation against the General
Secured Parties), with the General Collateral Agent, the
Designated Collateral Subagent and each of the General Secured
Parties named as additional insureds thereunder, in amounts as
shall be reasonably satisfactory to Designated Collateral
Subagent;
(iii) liability insurance with respect to the
operation of its facilities under the workers' compensation
laws of the states in which such Collateral is located, in
amounts as shall be reasonably satisfactory to Designated
Collateral Subagent; and
(iv) business interruption insurance in amounts as
shall be reasonably satisfactory to Designated Collateral
Subagent.
(b) Each insurance policy obtained in satisfaction of the
requirements of Section 10(a):
-------------
(i) may be provided by blanket policies now or
hereafter maintained by each or any Grantor or by the
Borrower;
(ii) shall be issued by such insurer (or insurers) as
shall be financially responsible, of recognized standing and
reasonably acceptable to the Designated Collateral Subagent;
(iii) shall be in such form and have such provisions
(including without limitation the loss payable clause, the
waiver of subrogation clause, the deductible amount, if any,
and the standard mortgagee endorsement clause) as are
generally considered standard provisions for the type of
insurance involved and are reasonably acceptable in all
respects to the Designated Collateral Subagent;
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(iv) shall prohibit cancellation or substantial
modification, termination or lapse in coverage by the insurer
without at least 30 days' prior written notice to the
Designated Collateral Subagent, except for non-payment of
premium, as to which such policies shall provide for at least
ten (10) days' prior written notice to the Designated
Collateral Subagent;
(v) without limiting the generality of the foregoing,
all insurance policies where applicable under Section 10(a)(i)
carried on the Collateral shall name the Designated Collateral
Subagent, for the benefit of the General Secured Parties, as
loss payee thereunder in respect of any claim for payment.
(c) Prior to expiration of any such policy, such Grantor shall
furnish the Designated Collateral Subagent with evidence satisfactory
to the Designated Collateral Subagent that the policy or certificate
has been renewed or replaced or is no longer required by this General
Security Agreement.
(d) Each Grantor hereby makes, constitutes and appoints the
Designated Collateral Subagent (and all officers, employees or agents
designated by the Designated Collateral Subagent), for the benefit of
the General Secured Parties, as such Grantor's true and lawful attorney
(and agent-in-fact) for the purpose of making, settling and adjusting
claims under such policies of insurance, endorsing the name of such
Grantor on any check, draft, instrument or other item or payment for
the proceeds of such policies of insurance and for making all
determinations and decisions with respect to such policies of
insurance, which appointment is coupled with an interest and is
irrevocable; provided, however, that the powers pursuant to such
appointment shall be exercisable only upon the occurrence and during
the continuation of an Event of Default.
(e) In the event such Grantor shall fail to maintain, or fail
to cause to be maintained, the full insurance coverage required
hereunder or shall fail to keep any of its Collateral in good repair
and good operating condition, the Designated Collateral Subagent may
(but shall be under no obligation to), without releasing any Secured
Obligation or waiving any Event of Default by such Grantor hereunder,
contract for the required policies of insurance and pay the premiums on
the same or make any required repairs, renewals and replacements; and
all sums so disbursed by the Designated Collateral Subagent, including
reasonable attorneys' fees, court costs, expenses and other charges
related thereto, shall be payable on demand by such Grantor to the
Designated Collateral Subagent, shall be additional Secured Obligations
secured by the Collateral, and (in addition to other rights and
remedies resulting from such nonpayment) shall bear interest from the
date of demand until paid in full at the Default Rate.
(f) Each Grantor agrees that to the extent that it shall fail
to maintain, or fail to cause to be maintained, the full insurance
coverage required by Section 10(a), it shall in the event of any loss
or casualty which would have been insured against but for such
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Grantor's failure to so comply, pay promptly to the Designated
Collateral Subagent, for the benefit of the General Secured Parties, to
be held in a separate account for application in accordance with the
provisions of Sections 10(h), such amount as would have been received
as Net Proceeds (as hereinafter defined) by the General Collateral
Agent, for the benefit of the General Secured Parties, under the
provisions of Section 10(h) had such insurance been carried to the
extent required; provided that this Section 10(f) shall not be
construed to require any payment in the event of deductibles,
self-insurance permitted hereunder, denial of coverage or other
circumstances in which insurance proceeds are unavailable despite
compliance with Section 10(h).
(g) The Net Proceeds of the insurance carried pursuant to the
provisions of Sections 10(a)(ii) and 10(a)(iii) shall be applied by
such Grantor toward satisfaction of the claim or liability with respect
to which such insurance proceeds may be paid.
(h) The Net Proceeds of the insurance carried with respect to
the Collateral pursuant to the provisions of Section 10(a)(i) hereof
shall be paid to such Grantor and held by such Grantor in a separate
account and applied, as long as no Event of Default shall have occurred
and be continuing, as follows: after any loss under any such insurance
and payment of the proceeds of such insurance, each Grantor shall have
a reasonable period after payment of the insurance proceeds with
respect to such loss to elect to either (x) repair or replace the
Collateral so damaged or, (y) deliver such Net Proceeds to the General
Collateral Agent, for the benefit of the General Secured Parties, as
additional Collateral to be held and disposed of in accordance with the
Intercreditor Agreement, subject to the provisions of this General
Security Agreement. If such Grantor elects to repair or replace the
Collateral so damaged, such Grantor agrees the Collateral shall be
repaired to a condition substantially similar to or of better quality
or higher value than its condition prior to damage or replaced with
Collateral in a condition substantially similar to or of better quality
or higher value than the condition of the Collateral so replaced prior
to damage. At all times during which an Event of Default shall have
occurred and be continuing, the Designated Collateral Subagent shall be
entitled to receive direct and immediate payment of the proceeds of
such insurance and such Grantor shall take all action as the Designated
Collateral Subagent may reasonably request to accomplish such payment.
Notwithstanding the foregoing, in the event such Grantor shall receive
any such proceeds, such Grantor shall immediately deliver such proceeds
to such General Collateral Agent for the benefit of the General Secured
Parties as additional Collateral, and pending such delivery shall hold
such proceeds in trust for the benefit of the General Secured Parties
and keep the same segregated from its other funds.
(i) "Net Proceeds" when used with respect to any insurance
proceeds shall mean the gross proceeds from such proceeds, award or
other amount, less all taxes, fees and expenses (including attorneys'
fees) incurred in the realization thereof.
(j) In case of any material damage to, destruction or loss of,
or claim or proceeding against, all or any material part of the
Collateral pledged hereunder by a Grantor, such Grantor shall give
prompt notice thereof to each of the General Collateral Agent and the
Designated Collateral Subagent. Each such notice shall describe
generally
25
the nature and extent of such damage, destruction, loss, claim or
proceeding. Subject to Section 10(d), each Grantor is hereby authorized
and empowered to adjust or compromise any loss under any such insurance
other than losses relating to claims made directly against any General
Secured Party as to which the insurance described in Section 10(a)(ii)
or (iii) is applicable.
(k) The provisions contained in this General Security
Agreement pertaining to insurance shall be cumulative with any
additional provisions imposing additional insurance requirements with
respect to the Collateral or any other property on which a Lien is
conferred under any General Security Instrument.
11. RIGHTS AND REMEDIES UPON EVENT OF DEFAULT. Upon and after the
occurrence of an Event of Default, the General Collateral Agent and the
Designated Collateral Subagent and each of them shall have the following rights
and remedies on behalf of the General Secured Parties in addition to any rights
and remedies set forth elsewhere in this General Security Agreement or the other
General Security Instruments or the Intercreditor Agreement, all of which may be
exercised with or, if allowed by law, without notice to a Grantor:
(a) All of the rights and remedies of a secured party under
the UCC or under other applicable law, all of which rights and remedies
shall be cumulative, and none of which shall be exclusive, to the
extent permitted by law, in addition to any other rights and remedies
contained in this General Security Agreement or any other General
Security Instruments or the Intercreditor Agreement or the General
Collateral Agency Agreement;
(b) The right to foreclose the Liens and security interests
created under this General Security Agreement by any available judicial
procedure or without judicial process;
(c) The right to (i) enter upon the premises of a Grantor
through self-help and without judicial process, without first obtaining
a final judgment or giving such Grantor notice or opportunity for a
hearing on the validity of the General Collateral Agent's or the
Designated Collateral Subagent's claim and without any obligation to
pay rent to such Grantor, or any other place or places where any
Collateral is located and kept, and remove the Collateral therefrom to
the premises of the General Collateral Agent, the Designated Collateral
Subagent or any agent of either thereof, for such time as the General
Collateral Agent or the Designated Collateral Subagent may desire, in
order effectively to collect or liquidate the Collateral, (ii) require
such Grantor or any bailee or other agent of such Grantor to assemble
the Collateral and make it available to the General Collateral Agent at
a place to be designated by the General Collateral Agent or the
Designated Collateral Subagent that is reasonably convenient to both
parties, and (iii) notify any or all Persons party to a Qualifying
Control Agreement or who otherwise have possession of or control over
any Collateral of the occurrence of an Event of Default and other
appropriate circumstances, and exercise control over and take
possession or custody of any or all Collateral in the possession,
custody or control of such other Persons;
26
(d) The right to (i) exercise all of a Grantor's rights and
remedies with respect to the collection of Accounts, Chattel Paper,
Instruments, Supporting Obligations and General Intangibles
(collectively, "Payment Collateral"), including the right to demand
payment thereof and enforce payment, by legal proceedings or otherwise;
(ii) settle, adjust, compromise, extend or renew all or any Payment
Collateral or any legal proceedings pertaining thereto; (iii) discharge
and release all or any Payment Collateral; (iv) take control, in any
manner, of any item of payment or proceeds referred to in Section 5
above; (v) prepare, file and sign a Grantor's name on any Proof of
Claim in bankruptcy, notice of Lien, assignment or satisfaction of Lien
or similar document in any action or proceeding adverse to any obligor
under any Payment Collateral or otherwise in connection with any
Payment Collateral; (vi) endorse the name of a Grantor upon any chattel
paper, document, instrument, invoice, freight bill, bill of lading or
similar document or agreement relating to any Collateral; (vii) use the
information recorded on or contained in any data processing equipment
and computer hardware and software relating to any Collateral to which
a Grantor has access; (viii) open such Grantor's mail and collect any
and all amounts due to such Grantor from any Account Debtors or other
obligor in respect of Payment Collateral; (ix) take over such Grantor's
post office boxes or make other arrangements as the General Collateral
Agent, on behalf of the General Secured Parties, deems necessary to
receive such Grantor's mail, including notifying the post office
authorities to change the address for delivery of such Grantor's mail
to such address as the Designated Collateral Subagent, on behalf of the
General Secured Parties, may designate; (x) notify any or all Account
Debtors or other obligor on any Payment Collateral that such Payment
Collateral has been collaterally assigned to the General Collateral
Agent for the benefit of the General Secured Parties and that the
General Collateral Agent has a security interest therein for the
benefit of the General Secured Parties (provided that the General
Collateral Agent or the Designated Collateral Subagent may at any time
give such notice to an Account Debtor that is a department, agency or
authority of the United States government); each Grantor hereby agrees
that any such notice, in the Designated Collateral Subagent 's sole
discretion, may (but need not) be sent on such Grantor's stationery, in
which event such Grantor shall co-sign such notice with the General
Collateral Agent or the Designated Collateral Subagent; and (xi) do all
acts and things and execute all documents necessary, in General
Collateral Agent's or the Designated Collateral Subagent's sole
discretion, to collect the Payment Collateral; and
(e) The right to sell all or any Collateral in its then
existing condition, or after any further manufacturing or processing
thereof, at such time or times, at public or private sale or sales,
with such notice as may be required by law, in lots or in bulk, for
cash or on credit, with or without representations and warranties, all
as the General Collateral Agent or the Designated Collateral Subagent,
in its sole discretion, may deem advisable. The General Collateral
Agent and the Designated Collateral Subagent shall have the right to
conduct such sales on a Grantor's premises or elsewhere and shall have
the right to use a Grantor's premises without charge for such sales for
such time or times as the General Collateral Agent or the Designated
Collateral Subagent may see fit. The General Collateral Agent or the
Designated Collateral Subagent may, if it deems it reasonable, postpone
or adjourn any sale of the Collateral from time to time by an
announcement at the time and place of such postponed or adjourned sale,
and such sale
27
may, without further notice, be made at the time and place to which it
was so adjourned. Each Grantor agrees that neither the General
Collateral Agent nor the Designated Collateral Subagent has any
obligation to preserve rights to the Collateral against prior parties
or to marshall any Collateral for the benefit of any Person. Each of
the General Collateral Agent and the Designated Collateral Subagent for
the benefit of the General Secured Parties is hereby granted a license
or other right to use, without charge, each Grantor's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names,
trademarks and advertising matter, or any property of a similar nature,
as it pertains to the Collateral, in completing production of,
advertising for sale and selling any Collateral and a Grantor's rights
under any license and any franchise agreement shall inure to the
General Collateral Agent and the Designated Collateral Subagent for the
benefit of the General Secured Parties. If any of the Collateral shall
require repairs, maintenance, preparation or the like, or is in process
or other unfinished state, either or both of the General Collateral
Agent and the Designated Collateral Subagent shall have the right, but
shall not be obligated, to perform such repairs, maintenance,
preparation, processing or completion of manufacturing for the purpose
of putting the same in such saleable form as the General Collateral
Agent or the Designated Collateral Subagent shall deem appropriate, but
either or both of the General Collateral Agent and the Designated
Collateral Subagent shall have the right to sell or dispose of the
Collateral without such processing and no Grantor shall have any claim
against the General Collateral Agent or the Designated Collateral
Subagent for the value that may have been added to such Collateral with
such processing. In addition, each Grantor agrees that in the event
notice is necessary under applicable law, written notice mailed to such
Grantor in the manner specified herein seven (7) days prior to the date
of public sale of any of the Collateral or prior to the date after
which any private sale or other disposition of the Collateral will be
made shall constitute commercially reasonable notice to such Grantor.
All notice is hereby waived with respect to any of the Collateral which
threatens to decline speedily in value or is of a type customarily sold
on a recognized market. The General Collateral Agent or the Designated
Collateral Subagent may purchase all or any part of the Collateral at
public or, if permitted by law, private sale, free from any right of
redemption which is hereby expressly waived by such Grantor and, in
lieu of actual payment of such purchase price, may set off the amount
of such price against the Secured Obligations. Each Grantor recognizes
that neither the General Collateral Agent nor the Designated Collateral
Subagent may be able to effect a public sale of certain of the
Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended (the "Securities Act"), and
applicable state law, and may be otherwise delayed or adversely
affected in effecting any sale by reason of present or future
restrictions thereon imposed by governmental authorities ("Affected
Collateral"), and that as a consequence of such prohibitions and
restrictions either or both of the General Collateral Agent or the
Designated Collateral Subagent may be compelled (i) 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 Affected Collateral
for their own account, for investment and not with a view to the
distribution or resale thereof, or (ii) to seek regulatory approval of
any proposed sale or sales, or (iii) to limit the amount of Affected
Collateral sold to any Person or group. Each Grantor agrees and
acknowledges that private sales so made may be at prices and upon terms
less favorable to such Grantor than if such Affected Collateral was
sold
28
either at public sales or at private sales not subject to other
regulatory restrictions, and that neither the General Collateral Agent
nor the Designated Collateral Subagent has any obligation to delay the
sale of any Affected Collateral for the period of time necessary to
permit the Grantor or any other Person to register or otherwise qualify
them under or exempt them from any applicable restriction, even if such
Grantor or other Person would agree to register or otherwise qualify or
exempt such Affected Collateral so as to permit a public sale under the
Securities Act or applicable state law. Each Grantor further agrees, to
the extent permitted by applicable law, that the use of private sales
made under the foregoing circumstances to dispose of Affected
Collateral shall be deemed to be dispositions in a commercially
reasonable manner. Each Grantor hereby acknowledges that a ready market
may not exist for Affected Collateral that is not traded on a national
securities exchange or quoted on an automated quotation system and
agrees and acknowledges that in such event the Affected Collateral may
be sold for an amount less than a pro rata share of the fair market
value of the assets of the issuer of such Affected Collateral minus its
liabilities.
The net cash proceeds resulting from the collection, liquidation, sale, or other
disposition of the Collateral shall be applied first to the expenses (including
all attorneys' fees) of retaking, holding, storing, processing and preparing for
sale, selling, collecting, liquidating and the like, and then applied to the
satisfaction of all Secured Obligations in accordance with the terms of the
Intercreditor Agreement. Each Grantor shall be liable to the General Collateral
Agent, for the benefit of the General Secured Parties, and shall pay to the
General Collateral Agent, for the ratable benefit of the General Secured
Parties, on demand any deficiency which may remain after such sale, disposition,
collection or liquidation of the Collateral.
12. ATTORNEY-IN-FACT. Each Grantor hereby appoints each of the General
Collateral Agent and the Designated Collateral Subagent as the Grantor's
attorney-in-fact for the purposes of carrying out the provisions of this General
Security Agreement and taking any action and executing any instrument which the
General Collateral Agent or the Designated Collateral Subagent may deem
necessary or advisable to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest; provided, that each of the General
Collateral Agent and the Designated Collateral Subagent shall have and may
exercise rights under this power of attorney only upon the occurrence and during
the continuance of an Event of Default. Without limiting the generality of the
foregoing or any other rights and powers granted to the General Collateral Agent
and the Designated Collateral Subagent herein, upon the occurrence and during
the continuance of an Event of Default, each of the General Collateral Agent and
the Designated Collateral Subagent shall have the right and power
(a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (a)
above;
29
(c) to endorse such Grantor's name on any checks, notes,
drafts or any other payment relating to or constituting proceeds of the
Collateral which comes into the possession or the control of the
General Collateral Agent or the Designated Collateral Subagent,
respectively, and deposit the same to the account of the General
Collateral Agent, for the benefit of the General Secured Parties, on
account and for payment of the Secured Obligations;
(d) to file any claims or take any action or institute any
proceedings that the General Collateral Agent or the Designated
Collateral Subagent may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of the
General Collateral Agent or the Designated Collateral Subagent, for the
benefit of the General Secured Parties, with respect to any of the
Collateral; and
(e) to execute, in connection with any sale or other
disposition of Collateral provided for herein, any endorsement,
assignments, or other instruments of conveyance or transfer with
respect thereto.
13. REINSTATEMENT. The granting of a security interest in the
Collateral and the other provisions hereof shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Secured
Obligations is rescinded or must otherwise be returned by any General Secured
Party, whether upon the insolvency, bankruptcy or reorganization of any Grantor
or any other Credit Party or otherwise, all as though such payment had not been
made. The provisions of this Section 13 shall survive final repayment in full of
all of the Secured Obligations and the termination or expiration of this General
Security Agreement in any manner, including but not limited to termination upon
occurrence of the Security Termination Date.
14. CERTAIN WAIVERS BY THE GRANTORS. Each Grantor waives to the extent
permitted by applicable law (a) any right to require any General Secured Party,
the General Collateral Agent or the Designated Collateral Subagent or any other
obligee of the Secured Obligations to (x) proceed against any Person or entity,
including without limitation any Credit Party, (y) proceed against or exhaust
any Collateral or other collateral for the Secured Obligations, or (z) pursue
any other remedy in its power; (b) any defense arising by reason of any
disability or other defense of any other Person, or by reason of the cessation
from any cause whatsoever of the liability of any other Person or entity; (c)
any right of subrogation; (d) any right to enforce any remedy which any General
Secured Party or any other obligee of the Secured Obligations now has or may
hereafter have against any other Person and any benefit of and any right to
participate in any collateral or security whatsoever now or hereafter held by
the General Collateral Agent or the Designated Collateral Subagent for the
benefit of the General Secured Parties. Each Grantor authorizes each General
Secured Party and each other obligee of the Secured Obligations without notice
(except notice required by applicable law) or demand and without affecting its
liability hereunder or under the Loan Documents from time to time to: (i) take
and hold security, other than the Collateral herein described, for the payment
of such Secured Obligations or any part thereof, and exchange, enforce, waive
and release the Collateral herein described or any part thereof or any such
other security; and (ii) apply such Collateral or other security and direct the
order or manner of sale thereof as it may determine in its discretion or as
directed in writing by the Required Enforcement General Secured Parties.
30
Each Subsidiary which is a Grantor further agrees with respect to this
General Security Agreement that it shall have no right of subrogation,
reimbursement, contribution or indemnity, unless and until 93 days immediately
following the Security Termination Date shall have elapsed without the filing or
commencement, by or against any Credit Party, of any state or federal action,
suit, petition or proceeding seeking any reorganization, liquidation or other
relief or arrangement in respect of creditors of, or the appointment of a
receiver, liquidator, trustee or conservator in respect to, such Credit Party or
its assets. This waiver is expressly intended to prevent the existence of any
claim in respect to such subrogation, reimbursement, contribution or indemnity
by any Subsidiary which is a Grantor against the estate of any other Credit
Party within the meaning of Section 101 of the Bankruptcy Code, in the event of
a subsequent case involving any other Credit Party. The agreements in this
paragraph shall survive repayment of all of the General Senior Obligations, the
termination or expiration of this General Security Agreement in any manner,
including but not limited to termination in accordance with Section 24, and
occurrence of the Security Termination Date.
Each of the General Collateral Agent and the Designated Collateral
Subagent may at any time deliver (without representation, recourse or warranty)
the Collateral or any part thereof to a Grantor and the receipt thereof by such
Grantor shall be a complete and full acquittance for the Collateral so
delivered, and the General Collateral Agent or the Designated Collateral
Subagent, as the case may be, shall thereafter be discharged from any liability
or responsibility therefor.
15. CONTINUED POWERS. Until the Security Termination Date shall have
occurred, the power of sale and other rights, powers and remedies granted to
each of the General Collateral Agent and the Designated Collateral Subagent for
the benefit of the General Secured Parties hereunder shall continue to exist and
may be exercised by either or both of the General Collateral Agent and the
Designated Collateral Subagent at any time and from time to time irrespective of
the fact that any of the General Secured Obligations or any part thereof may
have become barred by any statute of limitations or that any part of the
liability of any Grantor may have ceased.
16. OTHER RIGHTS. The rights, powers and remedies given to each of the
General Collateral Agent and the Designated Collateral Subagent for the benefit
of the General Secured Parties by this General Security Agreement shall be in
addition to all rights, powers and remedies given to the General Collateral
Agent or the Designated Collateral Subagent or any General Secured Party under
any other General Security Instrument or any Transaction Document or by virtue
of any statute or rule of law. Any forbearance or failure or delay by either or
both of the General Collateral Agent or the Designated Collateral Subagent in
exercising any right, power or remedy hereunder shall not be deemed to be a
waiver of such right, power or remedy, and any single or partial exercise of any
right, power or remedy hereunder shall not preclude the further exercise
thereof; and every right, power and remedy of the General Secured Parties shall
continue in full force and effect until such right, power or remedy is
specifically waived in accordance with the terms of the applicable General
Security Instrument or Transaction Document.
17. ANTI-MARSHALING PROVISIONS. The right is hereby given by each
Grantor to the General Collateral Agent, for the benefit of the General Secured
Parties, to make releases
31
(whether in whole or in part) of all or any part of the Collateral agreeable to
both the General Collateral Agent and the Designated Collateral Subagent without
notice to, or the consent, approval or agreement of other parties and interests,
including junior lienors, which releases shall not impair in any manner the
validity of or priority of the Liens and security interests in the remaining
Collateral conferred hereunder, nor release any Grantor from personal liability
for the Secured Obligations. Notwithstanding the existence of any other security
interest in the Collateral held by the General Collateral Agent, for the benefit
of the General Secured Parties, either or both of the General Collateral Agent
and the Designated Collateral Subagent shall have the right to determine the
order in which any or all of the Collateral shall be subjected to the remedies
provided in this General Security Agreement. Each Grantor hereby waives any and
all right to require the marshaling of assets in connection with the exercise of
any of the remedies permitted by applicable law or provided herein or in any
other General Security Instrument or Transaction Document.
18. ENTIRE AGREEMENT. This General Security Agreement, together with
the Transaction Documents, the Security Documents, the General Collateral Agency
Agreement, the Priority Collateral Agency Agreement, the Facility Guaranty and
the Intercreditor Agreement, constitutes and expresses the entire understanding
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior negotiations, agreements and understandings, inducements,
commitments or conditions, express or implied, oral or written, except as
contained in the Loan Documents. The express terms hereof control and supersede
any course of performance or usage of the trade inconsistent with any of the
terms hereof. Neither this General Security Agreement nor any portion or
provision hereof may be changed, altered, modified, supplemented, discharged,
canceled, terminated, or amended orally or in any manner without the prior
written consent of the Required General Secured Parties.
19. THIRD PARTY RELIANCE. Each Grantor hereby consents and agrees that
all issuers of or obligors in respect of any Collateral, and all securities
intermediaries, warehousemen, bailees, public officials and other Persons having
any interest in, possession of, control over or right, privilege, duty or
discretion in respect of, any Collateral shall be entitled to accept the
provisions hereof as conclusive evidence of the right of the General Collateral
Agent, either by itself or through the Designated Collateral Subagent, on behalf
of the General Secured Parties, to exercise its rights hereunder with respect to
the Collateral, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by any Grantor or any other Person to any of such
Persons.
20. BINDING AGREEMENT; ASSIGNMENT. This General Security Agreement, and
the terms, covenants and conditions hereof, shall be binding upon and inure to
the benefit of the parties hereto, and to their respective successors and
assigns, except that no Grantor shall be permitted to assign this General
Security Agreement or any interest herein or, except as expressly permitted
herein or in each Transaction Document, in the Collateral or any part thereof,
or, except as expressly permitted herein or in each Transaction Document,
pledge, encumber or grant any option with respect to the Collateral or any part
thereof. All references herein to the General Collateral Agent, the Designated
Collateral Subagent and to the General Secured Parties shall include any
successor thereof or permitted assignee, and any other obligees from time to
time of the Secured Obligations.
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21. SWAP AGREEMENTS. All obligations of each Grantor under or in
respect of Swap Agreements (as defined in the Credit Agreement) (which are not
prohibited under the terms of any of the Transaction Documents) to which any
Lender or any affiliate of any Lender is a party, shall be deemed to be Secured
Obligations secured hereby, and each Lender or affiliate of a Lender party to
any such Swap Agreement shall be deemed to be a General Secured Party hereunder
with respect to such Secured Obligations; provided, however, that such
obligations shall cease to be Secured Obligations at such time as such Person
(or affiliate of such Person) shall cease to be a "Lender" under the Credit
Agreement.
22. SEVERABILITY. The provisions of this General Security Agreement are
independent of and separable from each other. If any provision hereof shall for
any reason be held invalid or unenforceable, such invalidity or unenforceability
shall not affect the validity or enforceability of any other provision hereof,
but this General Security Agreement shall be construed as if such invalid or
unenforceable provision had never been contained herein.
23. COUNTERPARTS. This General Security Agreement may be executed in
any number of counterparts each of which when so executed and delivered shall be
deemed an original, and it shall not be necessary in making proof of this
General Security Agreement to produce or account for more than one such
counterpart executed by the Grantor against whom enforcement is sought.
24. TERMINATION. Subject to the provisions of Section 13, this General
Security Agreement and all obligations of the Grantors hereunder (excluding
those obligations and liabilities that expressly survive such termination) shall
terminate without delivery of any instrument or performance of any act by any
party on the Security Termination Date. Upon such termination of this General
Security Agreement, the General Collateral Agent shall, at the request and sole
expense of the Grantors, promptly deliver to the Grantors such termination
statements and take such further actions as the Grantors may reasonably request
to terminate of record, or otherwise to give appropriate notice of the
termination of, any Lien conferred hereunder.
25. INDEMNIFICATION. Without limitation of Section 13.9 of the Credit
Agreement or any other indemnification provision in any Transaction Document,
the Grantors agree jointly and severally to indemnify and hold harmless the
General Collateral Agent, the Designated Collateral Subagent, and each General
Secured Party and each of their affiliates, and their respective officers,
directors, employees, agents, and advisors (each, an "Indemnified Party"), from
and against any and all claims, damages, losses, liabilities, costs, and
expenses (including, without limitation, reasonable attorneys' fees) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation or proceeding or
preparation of defense in connection therewith) this General Security Agreement,
the Transaction Documents or General Security Instruments, any of the
transactions contemplated herein or therein or the actual or proposed use of the
proceeds of the Revolving Loans or other extensions of credit under the
Transaction Documents, except to the extent such claim, damage, loss, liability,
cost, or expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct. In the case of an
33
investigation, litigation or other proceeding to which the indemnity in this
Section 25 applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by any Grantor or any other
Credit Party, any of their respective directors, shareholders or creditors, or
an Indemnified Party or any other Person, or any Indemnified Party is otherwise
a party thereto and whether or not the transactions contemplated hereby are
consummated. Each Grantor agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to it,
any of its subsidiaries or affiliates, or any security holders or creditors
thereof arising out of, related to or in connection with the transactions
contemplated herein or in the other Transaction Documents or General Security
Instruments, except to the extent that such liability is found in a final
non-appealable judgment by a court of competent jurisdiction to have directly
resulted from such Indemnified Party's gross negligence or willful misconduct.
Each Grantor agrees not to assert any claim against any Indemnified Party, any
of its affiliates, or any of their respective directors, officers, employees,
attorneys, agents, or advisers, on any theory of liability, for special,
indirect, consequential, or punitive damages arising out of or otherwise
relating to this General Security Agreement, any of the Transaction Documents or
General Security Instruments, any of the transactions contemplated herein or
therein or the actual or proposed use of the proceeds of the Revolving Loans or
other extensions of credit under the Transaction Documents. The agreements in
this Section 25 shall survive repayment of all of the Secured Obligations and
the termination or expiration of this General Security Agreement in any manner,
including but not limited to termination upon occurrence of the Security
Termination Date.
26. NOTICES. Any notice required or permitted hereunder shall be given
(a) with respect to the Borrower, at the address for the giving of notice then
in effect under the Credit Agreement, (b) with respect to any Grantor, at the
address then in effect for the giving of notices to such Grantor under the
Facility Guaranty to which it is a party, (c) with respect to the General
Collateral Agent, to: Wilmington Trust Company, 1100 North Market Street,
Wilmington, Delaware 19890, Attn: Corporate Trust Administration, Main Phone:
(302) 651-1000, Main Fax: (302) 651-8882, and (d) with respect to the Designated
Collateral Subagent, at the Revolving Credit Agent's address indicated in
Section 13.2 of the Credit Agreement. All such addresses may be modified, and
all such notices shall be given and shall be effective, as provided in Section
13.2 of the Credit Agreement.
27. RULES OF INTERPRETATION. The rules of interpretation contained in
Sections 1.2(c) through 1.2(l) of the Credit Agreement shall be applicable to
this General Security Agreement and are hereby incorporated by reference. All
representations and warranties contained herein shall survive the delivery of
documents and any extension of credit referred to herein or secured hereby.
28. GOVERNING LAW; WAIVERS.
(A) THIS GENERAL SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA
APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH
STATE; PROVIDED THAT (I) WITH RESPECT TO THOSE INSTANCES IN WHICH THE
34
APPLICABLE CHOICE OF LAWS RULES OF SUCH STATE, INCLUDING SECTION 9-103
OF THE UCC, REQUIRE THAT THE MANNER OF CREATION OF A SECURITY INTEREST
IN SPECIFIC COLLATERAL OR THE MANNER OR EFFECT OF PERFECTION OR
NONPERFECTION OR THE RULES GOVERNING PRIORITY OF SECURITY INTERESTS ARE
TO BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION, THEN THE LAWS OF
SUCH OTHER JURISDICTION SHALL GOVERN SUCH MATTERS, (II) EACH CONTROL
AGREEMENT (INCLUDING EACH QUALIFYING CONTROL AGREEMENT) APPLICABLE TO
ANY SECURITIES ACCOUNT OR COMMODITIES ACCOUNT OR DEPOSIT ACCOUNT SHALL
BE GOVERNED BY THE LAWS OF THE JURISDICTION SPECIFIED IN SUCH CONTROL
AGREEMENT, OR OTHERWISE BY THE LAWS OF THE JURISDICTION THAT GOVERN THE
SECURITIES ACCOUNT OR DEPOSIT ACCOUNT OR COMMODITIES ACCOUNT TO WHICH
SUCH CONTROL AGREEMENT RELATES, AND (III) IN THOSE INSTANCES IN WHICH
THE LAWS OF THE JURISDICTION IN WHICH COLLATERAL IS LOCATED GOVERN
MATTERS PERTAINING TO THE METHODS AND EFFECT OF REALIZING ON
COLLATERAL, SUCH LAWS SHALL BE GIVEN EFFECT WITH RESPECT TO SUCH
MATTERS.
(B) EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS GENERAL SECURITY AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREIN MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE
COUNTY OF MECKLENBURG, STATE OF NORTH CAROLINA, UNITED STATES OF
AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS GENERAL SECURITY
AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY HAVE NOW OR
HEREAFTER TO THE LAYING OF THE VENUE OR TO THE JURISDICTION OF ANY SUCH
SUIT, ACTION OR PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND
UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING.
(C) EACH GRANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH PARTY PROVIDED
IN SECTION 26 OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE
APPLICABLE LAWS IN EFFECT IN THE STATE OF NORTH CAROLINA.
(D) NOTHING CONTAINED IN SUBSECTIONS (B) OR (C) HEREOF SHALL
PRECLUDE ANY GENERAL SECURED PARTY, THE GENERAL COLLATERAL AGENT OR THE
DESIGNATED COLLATERAL SUBAGENT FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF
35
OR RELATING TO THIS GENERAL SECURITY AGREEMENT IN THE COURTS OF ANY
PLACE WHERE ANY OTHER PARTY OR ANY OF SUCH PARTY'S PROPERTY OR ASSETS
MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS
OF ANY SUCH JURISDICTION, EACH GRANTOR HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF
ANY SUCH SUIT, ACTION OR PROCEEDING, THE JURISDICTION OF ANY OTHER
COURT OR COURTS WHICH NOW OR HEREAFTER, BY REASON OF ITS PRESENT OR
FUTURE DOMICILE, OR OTHERWISE, MAY BE AVAILABLE UNDER APPLICABLE LAW.
(E) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO THIS GENERAL SECURITY AGREEMENT
OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT
MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH
PARTY HEREBY AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY AND HEREBY EXPRESSLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY
SUCH ACTION, SUIT OR PROCEEDING.
(F) EACH GRANTOR HEREBY EXPRESSLY WAIVES ANY OBJECTION IT MAY
HAVE THAT ANY COURT TO WHOSE JURISDICTION IT HAS SUBMITTED PURSUANT TO
THE TERMS HEREOF IS AN INCONVENIENT FORUM.
[SIGNATURE PAGES FOLLOW]
36
IN WITNESS WHEREOF, the parties have duly executed this General
Security Agreement on the day and year first written above.
GRANTORS:
CONE MILLS CORPORATION
By: __________________________________
Name: Gary L. Smith
Title: Executive Vice President and
Chief Financial Officer
CONE GLOBAL FINANCE CORP.
By:______________________________________
Name:____________________________________
Title:___________________________________
CIPCO S.C., INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
CONE FOREIGN TRADING, LLC
By:______________________________________
Name:____________________________________
Title:___________________________________
GENERAL SECURITY AGREEMENT
SIGNATURE PAGE 1 of 2
AGENTS:
WILMINGTON TRUST COMPANY, as General
Collateral Agent for the General Secured
Parties
By:______________________________________
Name:____________________________________
Title:___________________________________
GENERAL SECURITY AGREEMENT
SIGNATURE PAGE 2 of 2
SCHEDULE 1
For purposes of this General Security Agreement, a "Qualifying Control
Agreement" shall mean each of the following, as applicable to the respective
items or types of property in which the Grantor now has or may hereafter acquire
an interest:
(a) With respect to Investment Property credited to any securities account,
an agreement executed by the applicable securities intermediary
substantially in the form of Schedule 1-A hereto or in such other form
as may be consented to by the Designated Collateral Subagent in its
discretion;
(b) With respect to Investment Property credited to any commodity account,
an agreement executed by the applicable commodity intermediary
substantially in the form of Schedule 1-B hereto or in such other form
as may be consented to by the Designated Collateral Subagent in its
discretion;
(c) With respect to deposit accounts or tangible personal property
Collateral in the possession, custody or control of any warehouseman or
other bailee, an acknowledgment and agreement executed by the
depositary institution or bailee (each, a "Custodian"), as the case may
be, in form and substance acceptable to the Designated Collateral
Subagent and in which the Custodian (i) acknowledges the Lien created
hereunder (and, in the case of any Custodian of tangible personal
property, that such Custodian holds such Collateral for the General
Collateral Agent for the benefit of the General Secured Parties), (ii)
agrees to discontinue accepting requests or demands from or on behalf
of the applicable Grantor for access to or possession of any Collateral
of which it is Custodian upon receipt of notice from the Designated
Collateral Subagent that an Event of Default has occurred and is
continuing under any of the Transaction Documents or the General
Security Instruments (a "Default Notice"), until such time as the
Designated Collateral Subagent may furnish it with a subsequent notice
that such Event of Default has been cured or waived, (iii) agrees to
make the Collateral of which it is Custodian available to the
Designated Collateral Subagent at the request of the Designated
Collateral Subagent, without requiring further consent from the
Grantor, following receipt of any Default Notice from the Designated
Collateral Subagent, (iv) agrees that it will not consent to or
acknowledge any Lien on Collateral of which it is Custodian in favor of
any other Person and, as to Deposit Accounts only, agrees that it will
not permit any withdrawals from such deposit accounts, until it
receives notice from the Designated Collateral Subagent that all Liens
on such Collateral in favor of the General Secured Parties have been
released or terminated, (v) agrees to waive or subordinate to the Lien
conferred hereunder, on terms acceptable to the Designated Collateral
Subagent, any lien, claim, or right of setoff or recoupment (whether
statutory or consensual) in favor of the Custodian on any of the
Collateral; provided, however, deposit account Custodians may retain a
prior Lien solely for the payment of routine deposit account
maintenance and activity charges, and (vi) in the case of any
warehouseman or other bailee of tangible personal property collateral,
agrees to deliver (and accompanies such agreement with any then
existing) warehouse receipts or other Documents pertaining to such
Collateral;
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(d) With respect to letter of credit rights (including those
constituting Supporting Obligations), an acknowledgment and agreement
of the issuer (the "Issuer") of the related letter of credit in form
and substance acceptable to the Designated Collateral Subagent and in
which the Issuer (i) acknowledges the Lien in favor of the General
Collateral Agent conferred hereunder in proceeds of drawings under the
related letter of credit, (ii) agrees that it will not acknowledge any
Lien in favor of any other Person on letter of credit rights until it
receives notice from the General Collateral Agent or the Designated
Collateral Subagent that all Liens on such Collateral in favor of the
General Secured Parties have been released or terminated, and (iii) to
the extent not inconsistent with the express terms of the related
letter of credit, agrees that upon receipt of a Default Notice, it will
make all payments of drawings honored by it under the related letter of
credit to the General Collateral Agent, notwithstanding any contrary
instruction received from the Grantor; and
(e) With respect to any Investment Property (x) that is not (i) a
certificated security or (ii) a security entitlement or commodity
contract maintained in a securities account or commodity account and
(y) as to which a registrar (the "Registrar") has been or is at any
time appointed to maintain records for the registry of the ownership or
transfer of ownership of such Investment Property, an acknowledgment
and agreement of the Registrar in form and substance acceptable to the
Designated Collateral Subagent and in which the Registrar (i)
acknowledges that the Grantor is at the date of such acknowledgment the
sole record and, to its knowledge, beneficial owner of the Investment
Property, (ii) acknowledges the Lien in favor of the General Collateral
Agent for the benefit of the General Secured Parties conferred
hereunder and that such Lien will be reflected on the registry for such
Investment Property, (iii) agrees that it will not register any
transfer of such Investment Property nor register, consent to or
acknowledge any Lien in favor of any other Person on such Investment
Property, without the prior written consent of the Designated
Collateral Subagent in each instance, until it receives notice from the
General Collateral Agent or the Designated Collateral Subagent that all
Liens on such Collateral in favor of the General Secured Parties have
been released or terminated, and (iv) agrees that upon receipt of a
Default Notice and that the Investment Property identified in such
notice have been transferred to a transferee identified in such notice,
it will duly record such transfer of Investment Property on the
appropriate registry without requiring further consent from the Grantor
and shall thereafter treat such transferee as the sole record and
beneficial owner of such Investment Property pending further transfer,
notwithstanding any contrary instruction received from the Grantor.
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SCHEDULE 1-A
ACCOUNT CONTROL AGREEMENT
_________________________, as General Collateral Agent (in such capacity, the
"General Collateral Agent") for the benefit of each of the General Secured
Parties (the "General Secured Parties") under that certain General Security
Agreement dated as of January 28, 2000 (as amended, revised, modified,
supplemented, amended and restated, or replaced from time to time, the "General
Security Agreement") among the General Collateral Agent, Bank of America, N.A.,
as the Designated Collateral Subagent (as defined therein), and Cone Mills
Corporation ("Debtor"), the undersigned Broker-Dealer ("Broker"), and Debtor
hereby agree as follows:
PREAMBLE:
1. Broker has established a securities account number __________ in the
name of Debtor (the "Account").
2. Debtor has granted the General Collateral Agent a security interest in
the Account for the benefit of the General Secured Parties pursuant to
the General Security Agreement.
3. General Collateral Agent, Debtor and Broker are entering into this
Agreement to provide for the control of the Account and to perfect the
security interest of General Collateral Agent in the Account.
4. All capitalized terms used but not otherwise defined herein shall have
the respective meanings assigned thereto in the General Security
Agreement.
TERMS:
SECTION 1. THE ACCOUNT. Broker hereby represents and warrants to General
Collateral Agent and Debtor that (a) the Account has been established in the
name of Debtor as recited above, (b) Exhibit A hereto is a complete and accurate
statement of the Account and the financial assets carried therein and any free
credit balance thereunder as of the date thereof, (c) Exhibit A does not reflect
any financial assets which are registered in the name of Debtor, payable to its
order, or specially endorsed to it, which have not been endorsed to Broker or in
blank, (d) the security entitlements arising out of the financial assets carried
in the Account and such free credit balance are valid and legally binding
obligations of Broker, and (e) except for the claims and interest of General
Collateral Agent and Debtor in the Account (subject to any claim in favor of
Broker permitted under Section 2), Broker does not know any of claim to or
interest in Account. Broker will treat all property held by it in the Account as
financial assets under Article 8 of the Uniform Commercial Code of the State of
North Carolina (the "State").
S-1-3
SECTION 2. PRIORITY OF LIEN. Broker hereby acknowledges the security interest
granted to General Collateral Agent for the benefit of the General Secured
Parties by Debtor. Broker hereby subordinates, to General Collateral Agent's
security interest in the Account and to the payment and performance of all
obligations and liabilities of Debtor to any of the General Secured Parties
secured by the Account, all liens, encumbrances, claims and rights of setoff or
recoupment it may have against the Account or any property in the Account and
agrees that, except for payment of its customary fees and commissions pursuant
to its agreement with Debtor pertaining to the Account (the "Customer
Agreement") and for payment of the purchase price of property purchased for the
Account in compliance with this Agreement, it will not assert any such lien,
encumbrance, claim or right against the Account or any property in the Account.
In the event that, notwithstanding the foregoing subordination, Broker shall
receive any cash or other property in respect of any subordinated claim, lien,
or right, Broker shall hold such cash or other property in trust for General
Collateral Agent and, pending delivery thereof to General Collateral Agent,
maintain such cash or other property in a segregated account. Broker will not
agree with any third party that Broker will comply with entitlement orders
concerning the Account originated by such third party without the prior written
consent of Designated Collateral Subagent and Debtor.
SECTION 3. CONTROL. From and after the receipt of Notice of Exclusive Control
from the Agent, Broker will comply with entitlement orders originated by General
Collateral Agent or the Designated Collateral Subagent concerning the Account
without further consent by Debtor. Except as otherwise provided in Section 2
above and 4 below, Broker will make trades of financial assets held in the
Account at the direction of Debtor, or his authorized representatives, and
comply with entitlement orders concerning the Account from Debtor, or its
authorized representatives, until such time as General Collateral Agent delivers
a written notice to Broker that General Collateral Agent is thereby exercising
exclusive control over the Account. Such notice may be referred to herein as the
"Notice of Exclusive Control" and will only be delivered following an Event of
Default
After Broker receives the Notice of Exclusive Control, it will immediately cease
complying with entitlement orders or other directions concerning the Account
originated by Debtor or its representatives.
SECTION 4. NO WITHDRAWALS. Notwithstanding the provisions of Section 3 above,
from and after receipt of a Notice of Exclusive Control, Broker shall neither
accept nor comply with any entitlement order from Debtor withdrawing any
financial assets from the Account nor deliver any such financial assets (or
dividends or income received in respect of such property) to Debtor nor pay any
free credit balance or other amount owing from Broker to Debtor with respect to
the Account without the specific prior written consent of Designated Collateral
Subagent.
SECTION 5. STATEMENTS, CONFIRMATIONS AND NOTICES OF ADVERSE CLAIMS. From and
after receipt of written notice of an Event of Default, Broker will send copies
of all statements, confirmations and other correspondence concerning the Account
simultaneously to each of Debtor, General Collateral Agent and the Designated
Collateral Subagent at the address set forth on the signature page of this
Agreement. If any person asserts any lien, encumbrance or claim in or against
the
S-1-4
Account or in any financial asset carried therein adverse to Debtor or General
Collateral Agent, Broker will promptly notify General Collateral Agent, the
Designated Collateral Subagent and Debtor thereof.
SECTION 6. RESPONSIBILITY OF BROKER. Broker shall have no responsibility or
liability to General Collateral Agent for making trades of financial assets held
in the Account at the direction of Debtor, or his authorized representatives, or
complying with entitlement orders concerning the Account from Debtor, or his
authorized representatives, which are received by Broker before Broker receives
a Notice of Exclusive Control. Broker shall have no responsibility or liability
to Debtor for complying with a Notice of Exclusive Control or complying with
entitlement orders concerning the Account originated by General Collateral Agent
or the Designated Collateral Subagent. Broker shall have no duty to investigate
or make any determination as to whether a default exists or any agreement
between Debtor and any General Secured Party and shall comply with a Notice of
Exclusive Control even if it believes that no such default exists. This
Agreement does not create any obligation or duty of Broker other than those
expressly set forth herein.
SECTION 7. TAX REPORTING. All items of income, gain, expense, and loss
recognized in the Account shall be reported to the Internal Revenue Service and
all state and local taxing authorities under the name of taxpayer identification
number of Debtor.
SECTION 8. CUSTOMER AGREEMENT. In the event of a conflict between this Agreement
and any other agreement between the Broker and the Debtor, the terms of this
Agreement will prevail. Regardless of any provision in such agreement, the State
shall be deemed to be Broker's location for the purposes of this Agreement and
the perfection and priority of General Collateral Agent's security interest in
the Account.
SECTION 9. TERMINATION. The rights and powers granted herein to General
Collateral Agent have been granted in order to perfect its security interest for
the benefit of the General Secured Parties in the Account, are powers coupled
with an interest and will neither be affected by the death, dissolution or
insolvency of Debtor nor by the lapse of time. The obligations and agreements of
Broker under Section 2, 3, 4 and 5 above shall continue in effect until the
security interest of General Collateral Agent in the Account has been
terminated. Upon receipt of such notice the obligations of Broker under Section
2, 3, 4 and 5 above with respect to the operation and maintenance of the Account
after the receipt of such notice shall terminate, neither the General Collateral
Agent nor the Designated Collateral Subagent shall have no further right to
originate entitlement orders concerning the Account and Broker may take such
steps as Debtor may request to vest full ownership and control of Account in
Debtor including, but not limited to, transferring all of the financial assets
and credit balances in the Account to another securities account in the name of
Debtor or its designee.
SECTION 10. THIS AGREEMENT. This Agreement, the schedules and exhibits hereto
and the agreements and instruments required to be executed and delivered
hereunder set forth the entire agreement of the parties with respect to the
subject matter hereof and supersede and discharge all prior agreements (written
or oral) and negotiations and all contemporaneous oral agreements concerning
such subject matter and negotiations. There are no oral conditions precedent to
the effectiveness of this Agreement.
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SECTION 11. AMENDMENTS. No amendment, modification or termination of this
Agreement or waiver of any right hereunder shall be binding on any party hereto
unless it is in writing and is signed by the party to be charged.
SECTION 12. SEVERABILITY. If any term or provision set forth in this Agreement
shall be invalid or unenforceable, the remainder of this Agreement, or the
application of such terms or provisions to persons or circumstances, other than
those to which it is held invalid or unenforceable, shall be construed in all
respects as if such invalid or unenforceable term or provision were omitted.
SECTION 13. SUCCESSORS. The terms of this Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective corporate
successors or heirs and personal representatives, and the assignees of any
General Secured Party.
SECTION 14. RULES OF CONSTRUCTION. In this Agreement, words in the singular
number include the plural, and in the plural include the singular; words of the
masculine gender include the feminine and the neuter, and when the sense so
indicates words of the neuter gender may refer to any gender and the word "or"
is disjunctive, but not exclusive. The captions and section numbers appearing in
this Agreement are inserted only as a matter of convenience. They do not define,
limit or describe the scope or intent of the provisions of this Agreement.
SECTION 15. NOTICES. Any notice, request or other communication required or
permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of error free receipt is
received or two days after being sent by certified or registered United States
mail, return receipt requested, postage prepaid, addressed to the party at the
address set forth immediately following the signature of its authorized
representative set forth below. Any party may change his address for notices in
the manner set forth above.
SECTION 16. FINANCIAL ASSETS. All property credited to the Account will be
treated as financial assets under Article 8 of the Uniform Commercial Code of
the State.
SECTION 17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.
SECTION 18. CHOICE OF LAW. The parties hereto agree that certain material
events, occurrences and transactions relating to this Agreement bear a
reasonable relationship to the State. The validity, terms, performance and
enforcement of this Agreement shall be governed by those laws of the State which
are applicable to agreements which are negotiated, executed, delivered and
performed solely in the State.
S-1-6
SIGNATURES:
WILMINGTON TRUST COMPANY,
as General Collateral Agent
By: ______________________________________
Name:____________________________________
Title:_____________________________________
Address for Notices:
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Main Telephone: (302) 651-1000
Main Telefacsimile: (302) 651-8882
DEBTOR
CONE MILLS CORPORATION
By:______________________________________
Name: Gary L. Smith
Title: Executive Vice President and
Chief Financial Officer
Address for Notices:
3101 North Elm Street
Greensboro, NC 27415-6540
Phone: (336) 379-6220
Fax: (336) 379-6043
ACCOUNT CONTROL AGREEMENT
(General Security Agreement - Securities)
Signature Page 1 of 2
[BROKER NAME]
By:______________________________________
Name:____________________________________
Title:_____________________________________
Address for Notices:
__________________________________________
__________________________________________
__________________________________________
__________________________________________
Fax:( )_____________________________ ___
ACCOUNT CONTROL AGREEMENT
(General Security Agreement - Securities)
Signature Page 2 of 2
SCHEDULE 1-B
ACCOUNT CONTROL AGREEMENT
_________________________, as General Collateral Agent (in such capacity, the
"General Collateral Agent") for the benefit of each of the General Secured
Parties (the "General Secured Parties") under that certain General Security
Agreement dated as of January 28, 2000 (as amended, revised, modified,
supplemented, amended and restated, or replaced from time to time, the "General
Security Agreement") among the General Collateral Agent, Bank of America, N.A.,
as the Designated Collateral Subagent (as defined therein), and Cone Mills
Corporation ("Debtor"), the undersigned Commodity Intermediary ("Intermediary"),
and Debtor hereby agree as follows:
PREAMBLE:
1. Intermediary has established a commodity account number __________ in
the name of Debtor (the "Account").
2. Debtor has granted the General Collateral Agent a security interest in
the Account for the benefit of the General Secured Parties pursuant to
the General Security Agreement.
3. General Collateral Agent, Debtor and Intermediary are entering into
this Agreement to provide for the control of the Account and to perfect
the security interest of General Collateral Agent in the Account.
4. All capitalized terms used but not otherwise defined herein shall have
the respective meanings assigned thereto in the General Security
Agreement.
TERMS:
SECTION 1. THE ACCOUNT. Intermediary hereby represents and warrants to General
Collateral Agent and Debtor that (a) the Account has been established in the
name of Debtor as recited above, (b) Exhibit A hereto is a complete and accurate
statement of the Account and the financial assets carried therein and any free
credit balance thereunder as of the date thereof, (c) Exhibit A does not reflect
any financial assets which are registered in the name of Debtor, payable to its
order, or specially endorsed to it, which have not been endorsed to Intermediary
or in blank, (d) the commodity contracts arising out of the financial assets
carried in the Account and such free credit balance are valid and legally
binding obligations of Intermediary, and (e) except for the claims and interest
of General Collateral Agent and Debtor in the Account (subject to any claim in
favor of Intermediary permitted under Section 2), Intermediary does not know any
of claim to or interest in Account. Intermediary will treat all
property held by it in the Account as financial assets under Article 8 of the
Uniform Commercial Code of the State of North Carolina (the "State").
SECTION 2. PRIORITY OF LIEN. Intermediary hereby acknowledges the security
interest granted to General Collateral Agent for the benefit of the General
Secured Parties by Debtor. Intermediary hereby subordinates, to General
Collateral Agent's security interest in the Account and to the payment and
performance of all obligations and liabilities of Debtor to any of the General
Secured Parties secured by the Account, all liens, encumbrances, claims and
rights of setoff or recoupment it may have against the Account or any property
in the Account and agrees that, except for payment of its customary fees and
commissions pursuant to its agreement with Debtor pertaining to the Account (the
"Customer Agreement") and for payment of the purchase price of property
purchased for the Account in compliance with this Agreement, it will not assert
any such lien, encumbrance, claim or right against the Account or any property
in the Account. In the event that, notwithstanding the foregoing subordination,
Intermediary shall receive any cash or other property in respect of any
subordinated claim, lien, or right, Intermediary shall hold such cash or other
property in trust for General Collateral Agent and, pending delivery thereof to
General Collateral Agent, maintain such cash or other property in a segregated
account. Intermediary will not agree with any third party that Intermediary will
comply with contract orders concerning the Account originated by such third
party without the prior written consent of Designated Collateral Subagent and
Debtor.
SECTION 3. CONTROL. From and after the receipt of Notice of Exclusive Control
from the Agent, Intermediary will comply with entitlement orders originated by
General Collateral Agent or the Designated Collateral Subagent concerning the
Account without further consent by Debtor. Except as otherwise provided in
Section 2 above and 4 below, Intermediary will make trades of financial assets
held in the Account at the direction of Debtor, or his authorized
representatives, and comply with contract orders concerning the Account from
Debtor, or its authorized representatives, until such time as General Collateral
Agent delivers a written notice to Intermediary that General Collateral Agent is
thereby exercising exclusive control over the Account. Such notice may be
referred to herein as the "Notice of Exclusive Control" and will only be
delivered following an Event of Default
After Intermediary receives the Notice of Exclusive Control, it will immediately
cease complying with contract orders or other directions concerning the Account
originated by Debtor or its representatives.
SECTION 4. NO WITHDRAWALS. Notwithstanding the provisions of Section 3 above,
after written notice from the Agent that an Event of Default has occurred and is
continuing, Intermediary shall neither accept nor comply with any contract order
from Debtor withdrawing any financial assets from the Account nor deliver any
such financial assets (or dividends or income received in respect of such
property) to Debtor nor pay any free credit balance or other amount owing from
Intermediary to Debtor with respect to the Account without the specific prior
written consent of Designated Collateral Subagent.
SECTION 5. STATEMENTS, CONFIRMATIONS AND NOTICES OF ADVERSE CLAIMS. From and
after an Event of Default, Intermediary will send copies of all statements,
confirmations and other
correspondence concerning the Account simultaneously to each of Debtor, General
Collateral Agent and the Designated Collateral Subagent at the address set forth
on the signature page of this Agreement. If any person asserts any lien,
encumbrance or claim in or against the Account or in any financial asset carried
therein adverse to Debtor or General Collateral Agent, Intermediary will
promptly notify General Collateral Agent, the Designated Collateral Subagent and
Debtor thereof.
SECTION 6. RESPONSIBILITY OF INTERMEDIARY. Intermediary shall have no
responsibility or liability to General Collateral Agent for making trades of
financial assets held in the Account at the direction of Debtor, or his
authorized representatives, or complying with contract orders concerning the
Account from Debtor, or his authorized representatives, which are received by
Intermediary before Intermediary receives a Notice of Exclusive Control.
Intermediary shall have no responsibility or liability to Debtor for complying
with a Notice of Exclusive Control or complying with contract orders concerning
the Account originated by General Collateral Agent or the Designated Collateral
Subagent. Intermediary shall have no duty to investigate or make any
determination as to whether a default exists or any agreement between Debtor and
any General Secured Party and shall comply with a Notice of Exclusive Control
even if it believes that no such default exists. This Agreement does not create
any obligation or duty of Intermediary other than those expressly set forth
herein.
SECTION 7. TAX REPORTING. All items of income, gain, expense, and loss
recognized in the Account shall be reported to the Internal Revenue Service and
all state and local taxing authorities under the name of taxpayer identification
number of Debtor.
SECTION 8. CUSTOMER AGREEMENT. In the event of a conflict between this Agreement
and any other agreement between the Intermediary and the Debtor, the terms of
this Agreement will prevail. Regardless of any provision in such agreement, the
State shall be deemed to be Intermediary's location for the purposes of this
Agreement and the perfection and priority of General Collateral Agent's security
interest in the Account.
SECTION 9. TERMINATION. The rights and powers granted herein to General
Collateral Agent have been granted in order to perfect its security interest for
the benefit of the General Secured Parties in the Account, are powers coupled
with an interest and will neither be affected by the death, dissolution or
insolvency of Debtor nor by the lapse of time. The obligations and agreements of
Intermediary under Section 2, 3, 4 and 5 above shall continue in effect until
the security interest of General Collateral Agent in the Account has been
terminated. Upon receipt of such notice the obligations of Intermediary under
Section 2, 3, 4 and 5 above with respect to the operation and maintenance of the
Account after the receipt of such notice shall terminate, neither the General
Collateral Agent nor the Designated Collateral Subagent shall have no further
right to originate contract orders concerning the Account and Intermediary may
take such steps as Debtor may request to vest full ownership and control of
Account in Debtor including, but not limited to, transferring all of the
financial assets and credit balances in the Account to another commodity
contract in the name of Debtor or its designee.
SECTION 10. THIS AGREEMENT. This Agreement, the schedules and exhibits hereto
and the agreements and instruments required to be executed and delivered
hereunder set forth the entire
agreement of the parties with respect to the subject matter hereof and supersede
and discharge all prior agreements (written or oral) and negotiations and all
contemporaneous oral agreements concerning such subject matter and negotiations.
There are no oral conditions precedent to the effectiveness of this Agreement.
SECTION 11. AMENDMENTS. No amendment, modification or termination of this
Agreement or waiver of any right hereunder shall be binding on any party hereto
unless it is in writing and is signed by the party to be charged.
SECTION 12. SEVERABILITY. If any term or provision set forth in this Agreement
shall be invalid or unenforceable, the remainder of this Agreement, or the
application of such terms or provisions to persons or circumstances, other than
those to which it is held invalid or unenforceable, shall be construed in all
respects as if such invalid or unenforceable term or provision were omitted.
SECTION 13. SUCCESSORS. The terms of this Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective corporate
successors or heirs and personal representatives, and the assignees of any
General Secured Party.
SECTION 14. RULES OF CONSTRUCTION. In this Agreement, words in the singular
number include the plural, and in the plural include the singular; words of the
masculine gender include the feminine and the neuter, and when the sense so
indicates words of the neuter gender may refer to any gender and the word "or"
is disjunctive, but not exclusive. The captions and section numbers appearing in
this Agreement are inserted only as a matter of convenience. They do not define,
limit or describe the scope or intent of the provisions of this Agreement.
SECTION 15. NOTICES. Any notice, request or other communication required or
permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of error free receipt is
received or two days after being sent by certified or registered United States
mail, return receipt requested, postage prepaid, addressed to the party at the
address set forth immediately following the signature of its authorized
representative set forth below. Any party may change his address for notices in
the manner set forth above.
SECTION 16. FINANCIAL ASSETS. All property credited to the Account will be
treated as financial assets under Article 8 of the Uniform Commercial Code of
the State.
SECTION 17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.
SECTION 18. CHOICE OF LAW. The parties hereto agree that certain material
events, occurrences and transactions relating to this Agreement bear a
reasonable relationship to the State. The validity, terms, performance and
enforcement of this Agreement shall be governed by those laws of the State which
are applicable to agreements which are negotiated, executed, delivered and
performed solely in the State.
SIGNATURES:
WILMINGTON TRUST COMPANY,
as General Collateral Agent
By: ______________________________________
Name:____________________________________
Title:_____________________________________
Address for Notices:
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Main Telephone: (302) 651-1000
Main Telefacsimile: (302) 651-8882
DEBTOR
CONE MILLS CORPORATION
By:______________________________________
Name: Gary L. Smith
Title: Executive Vice President and
Chief Financial Officer
Address for Notices:
3101 North Elm Street
Greensboro, NC 27415-6540
Phone: (336) 379-6220
Fax: (336) 379-6043
ACCOUNT CONTROL AGREEMENT
(General Security Agreement - Commodities)
Signature Page 1 of 2
[INTERMEDIARY NAME]
By:______________________________________
Name:____________________________________
Title:____________________________________
Address for Notices:
__________________________________________
__________________________________________
__________________________________________
__________________________________________
Fax: ( ) ____ - ________
ACCOUNT CONTROL AGREEMENT
(General Security Agreement - Commodities)
Signature Page 2 of 2
SCHEDULE 2
GRANTOR INFORMATION
I. II. III. IV.
Jurisdiction of Address of Chief
Name Formation Executive Office Trade Styles
- ---- --------- ---------------- ------------
V. VI. VII.
Collateral Name and Address Relationship of
Locations of Owner of Persons listed in VI to
(and Type Collateral Location Grantor (e.g., lessor,
of Collateral) (if other than Grantor) warehousemen)
- -------------- ----------------------- -------------------------
S-2
SCHEDULE 3
INVESTMENT PROPERTY
-------------------
SECURITIES ACCOUNTS
-------------------
Name and Address of Securities Account
Securities Intermediary Number
----------------------- -------------------
GRANTOR
- --------
COMMODITY ACCOUNTS
------------------
Name and Address of Commodity Account
Commodity Intermediary Number
---------------------- -----------------
OTHER INVESTMENT PROPERTY
-------------------------
Name and Type Quantity of Shares Certificate
of Issuer or Other Interest Number(s)
--------- ----------------- ---------
S-3
SCHEDULE 4
DEPOSIT ACCOUNTS
----------------
Name and Address of Certificate of Deposit No.
Grantor Depository Institution Account No. (if applicable)
- ------- ---------------------- ----------- -------------------------
S-4
SCHEDULE 5-A
TRADEMARKS AND TRADEMARK APPLICATIONS
-------------------------------------
S-5-1
SCHEDULE 5-B
LICENSE AGREEMENTS
------------------
S-5-2
EXHIBIT A
ASSIGNMENT OF TRADEMARKS AND LICENSES
THIS ASSIGNMENT OF TRADEMARKS AND LICENSES (this "Agreement") is made
and entered into as of _____________ ____, ____ by CONE MILLS CORPORATION, a
North Carolina corporation (the "Borrower" and a "Grantor"), EACH OF THE
UNDERSIGNED SUBSIDIARIES OF THE BORROWER (each a "Guarantor" and a "Subsidiary
Grantor", and collectively with the Borrower, the "Grantors"), and WILMINGTON
TRUST COMPANY, as General Collateral Agent (in such capacity, the "General
Collateral Agent") under that certain General Collateral Agency Agreement of
even date herewith among the General Collateral Agent, The Prudential Insurance
Company of America, as holder of the Senior Notes (the "Senior Note Holder"),
SunTrust Bank and Atlantic Financial Group, Ltd., as creditors of the Senior
Lease Obligations (together, the "Senior Lease Creditor") and Bank of America,
N.A., as Agent (in such capacity, the "Revolving Credit Agent") for each of the
Lenders now or hereafter party to the Credit Agreement (as defined below),
pursuant to which the General Collateral Agent serves as such on behalf of and
for the benefit of the Senior Note Holder, the Senior Lease Creditor, the
Revolving Credit Agent and the Lenders, the holders of the Senior Debentures and
all other Senior Creditors at any time existing. The General Collateral Agent
and all the Senior Creditors are collectively referred to herein as the "General
Secured Parties." All capitalized terms used but not otherwise defined herein
shall have the respective meanings assigned thereto in the Intercreditor
Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the Lenders have agreed to provide to the Borrower a certain
revolving credit facility with a letter of credit sublimit and swing line
facility pursuant to the Credit Agreement dated as of January 28, 2000 by and
among the Borrower, the Revolving Credit Agent and the Lenders (as from time to
time amended, supplemented or restated, the "Credit Agreement"); and
WHEREAS, the Borrower is indebted to certain of the Senior Creditors
pursuant to the Loan Documents, Senior Debentures, the Senior Notes, the Morgan
Swap Agreement and the Senior Lease Documents, as applicable; and
WHEREAS, as collateral security for payment and performance of its
Obligations and all other General Senior Obligations, the Borrower is willing to
grant to the General Collateral Agent for the benefit of the General Secured
Parties a security interest in all of its personal property and assets pursuant
to the terms of the General Security Agreement (as defined below; and
WHEREAS, each Guarantor will materially benefit from the Loans and
Advances to be made, and the Letters of Credit to be issued, under the Credit
Agreement and each Guarantor is a party to a Facility Guaranty pursuant to which
each Guarantor guarantees the Obligations of the Borrower; and
A-1
WHEREAS, each Subsidiary Grantor has materially benefited from the
extensions of credit to the Borrower by each of the Senior Creditors pursuant to
the Senior Credit Documents; and
WHEREAS, each Grantor has entered into an General Security Agreement
(the "General Security Agreement") dated as of January 28, 2000 pursuant to
which each Grantor has granted to the General Collateral Agent for the benefit
of the General Secured Parties a General Lien in the Trademarks and Licenses
defined below in order to secure the Borrower's Obligations and all other
General Senior Obligations (collectively, the "General Senior Obligations"); and
WHEREAS, each Grantor (a) has adopted and used and is using the
trademarks and service marks (the "Trademarks") identified on Annex I hereto,
and is the owner of the registrations of and pending registration applications
for such Trademarks in the United States Patent and Trademark Office identified
on Annex I hereto and (b) is a party to and has rights under the licenses and
license agreements listed on Annex II hereto (the "Licenses", together with the
Trademarks, the "Collateral"); and
WHEREAS, the General Collateral Agent for the benefit of the General
Secured Parties desires to acquire the Trademarks and the Licenses and the
registrations thereof and registration applications therefor, as applicable, in
connection with the exercise of its remedies after the occurrence of an Event of
Default under the Credit Agreement or any default or event of default under any
of the Senior Credit Documents (collectively, an "Event of Default");
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, each Grantor does hereby, effective as of the occurrence
of an Event of Default, assign, sell and transfer unto the General Collateral
Agent all right, title and interest in and to the Trademarks and Licenses,
together with (i) the registrations of and registration applications therefor,
as applicable, (ii) the goodwill of the business symbolized by and associated
with the Trademarks and the registrations thereof, (iii) the right to sue and
recover for, and the right to profits or damages due or accrued arising out of
or in connection with, any and all past, present or future infringements or
dilution of or damage or injury to the Trademarks or the registrations thereof
or such associated goodwill, and (iv) all rights of each Grantor to enforce all
Licenses.
Each Grantor hereby grants to the General Collateral Agent, for the
benefit of the General Secured Parties, and notice is hereby given that each
Grantor has granted to the General Collateral Agent, for the benefit of the
General Secured Parties and the General Collateral Agent, a General Lien in the
Collateral to secure the payment and performance in full of all of the Secured
Obligations.
This Assignment is intended to and shall take effect as a sealed
instrument at such time as the General Collateral Agent shall complete this
instrument after the occurrence of an Event of Default by signing its acceptance
of this Assignment below.
[Signature page follows.]
A-2
IN WITNESS WHEREOF, the parties have duly executed this Assignment of
Trademarks and Licenses on the day and year first written above.
GRANTORS:
CONE MILLS CORPORATION
By:_________________________
Name: Gary L. Smith
Title: Executive Vice President and
Chief Financial Officer
ASSIGNMENT OF TRADEMARKS AND LICENSES (General)
SIGNATURE PAGE 1 OF 3
The foregoing assignment of the Trademarks and Licenses and the
registrations thereof and registration applications therefor by the Assignee and
the General Collateral Agent is hereby accepted as of the ____ day of _____,
2000.
WILMINGTON TRUST COMPANY,
AS GENERAL COLLATERAL AGENT FOR THE GENERAL
SECURED PARTIES
BY:_____________________________________
NAME:___________________________________
TITLE:__________________________________
ASSIGNMENT OF TRADEMARKS AND LICENSES (General)
SIGNATURE PAGE 2 OF 3
STATE OF )
-----------------------------------------------------
) ss.
COUNTY OF )
----------------------------------------------------
Before me, the undersigned, a Notary Public in and for the county aforesaid, on
this __ day of _________, 2000, personally appeared __________________________
to me known personally, and who, being by me duly sworn, deposes and says that
he is the _____________________________ of Cone Mills Corporation, and that the
foregoing instrument was signed and sealed on behalf of said corporation by
authority of its Board of Directors, and said _______________________________
acknowledged said instrument to be the free act and deed of said corporation.
---------------------------
Notary Public
My commission expires:
STATE OF )
-----------------------------------------------------
) ss.
COUNTY OF )
----------------------------------------------------
Before me, the undersigned, a Notary Public in and for the county aforesaid, on
this __ day of _______, 2000, personally appeared _____________________________
to me known personally, and who, being by me duly sworn, deposes and says that
s/he is the __________________________________ of Wilmington Trust Company, and
that foregoing instrument was signed and sealed on behalf of said national
banking association by authority of its Board of Directors, and said
_______________________________ acknowledged said instrument to be the free act
and deed of said national banking association.
--------------------------------
Notary Public
My commission expires: ____________
ASSIGNMENT OF TRADEMARKS AND LICENSES (General)
SIGNATURE PAGE 3 OF 3
ANNEX I
TRADEMARK REGISTRATIONS
OR UNITED STATES PATENT AND TRADEMARK OFFICE
SERVICE MARK REGISTRATION NO. REGISTRATION DATE
------------ ---------------- -----------------
[LIST CHRONOLOGICALLY IN ASCENDING NUMERICAL ORDER]
TRADEMARK PENDING APPLICATIONS
OR UNITED STATES PATENT AND TRADEMARK OFFICE
SERVICE MARK SERIAL NO. FILING DATE
------------ ---------- -----------
[LIST CHRONOLOGICALLY IN ASCENDING NUMERICAL ORDER]
ANNEX II
LICENSES
---------