SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) January 28, 2000
----------------
Cone Mills Corporation
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(Exact Name of Registrant as Specified on its Charter)
North Carolina 1-3634 56-0367025
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(State or Other Jurisdiction (Commission File IRS Employer
of Incorporation) Number) Identification No.
3101 North Elm Street, Greensboro, North Carolina 27415
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (336) 379-6220
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 28, 2000, the Registrant entered into a Credit Agreement
with Bank of America, N.A., as agent, First Union National Bank, Wachovia Bank,
N.A., SunTrust Bank and Morgan Guaranty Trust Company of New York providing for
a new $80,000,000 revolving credit and letter of credit facility which matures
on August 7, 2000. This bank facility refinances the Registrant's prior
$80,000,000 revolving credit facility and is secured by liens on substantially
all of the assets of the Registrant, Cone Global Finance Corp., CIPCO S.C., Inc.
and Cone Foreign Trading LLC (each a wholly owned subsidiary of the Registrant),
including real property, accounts, inventory, equipment, general intangibles,
intellectual property, deposit accounts, chattel paper, investment property,
instruments and documents. In connection with the bank facility closing, the
Registrant also granted equal and ratable liens on the same assets to: (i) The
Prudential Insurance Company of America securing the Registrant's obligations
pursuant to a Note Agreement dated August 13, 1992 (the "Prudential Note
Agreement"), (ii) Atlantic Financial Group, Ltd. and SunTrust Bank securing the
Registrant's obligations with respect to a synthetic lease of its headquarters
property entered into on October 24, 1994 (the "Synthetic Lease"), (iii) The
Bank of New York, as trustee for the Registrant's publicly held 8 1/8%
Debentures due March 15, 2005 pursuant to an Indenture dated as of February 14,
1995, in each case as required by the terms of the documents relating to the
foregoing obligations. Also on January 28, 2000, the Registrant amended the
Prudential Note Agreement and the Synthetic Lease to reference the
above-described security interests and to incorporate the financial covenants
and certain other covenants, defaults and provisions from the new credit
facility documents.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS
(C) EXHIBITS.
1. Credit Agreement dated as of January 28, 2000 by and among Cone Mills
Corporation, as Borrower, Bank of America, N.A., as Agent and as Lender, and the
Lenders party thereto from time to time, together with all exhibits thereto.
2. Guaranty Agreement dated as of January 28, 2000 made by Cone Global Finance
Corp., CIPCO S.C., Inc. and Cone Foreign Trading LLC in favor of Bank of
America, N.A. as Revolving Credit Agent for the Lenders, The Prudential
Insurance Company of America, SunTrust Bank, Morgan Guaranty Trust Company of
New York, Wilmington Trust Company, as General Collateral Agent, Bank of
America, N.A., as Priority Collateral Agent, and Atlantic Financial Group, Ltd.,
together with all exhibits thereto.
3. Priority Security Agreement dated as of January 28, 2000 by Cone Mills
Corporation and certain of its subsidiaries, as Grantors, and Bank of America,
N.A., as Priority Collateral Agent, together with all exhibits thereto.
4. General Security Agreement dated as of January 28, 2000 by Cone Mills
Corporation and certain of its subsidiaries, as Grantors, and Wilmington Trust
Company, as General Collateral Agent, together with all exhibits thereto.
<PAGE>
5. Securities Pledge Agreement dated as of January 28, 2000 by Cone Mills
Corporation in favor of Wilmington Trust Company, as General Collateral Agent,
together with all exhibits thereto.
6. CMM Pledge Agreement dated as of January 28, 2000 by Cone Mills Corporation
in favor of Wilmington Trust Company, as General Collateral Agent, together with
all exhibits thereto.
7. Deed of Trust, Security Agreement, Fixture Filing, Assignment of Leases and
Rents and Financing Statement dated as of January 28, 2000 between Cone Mills
Corporation, as Grantor, TIM, Inc., as Trustee, Wilmington Trust Company, as
General Collateral Agent, and Bank of America, N.A., as Designated Collateral
Subagent, together with all exhibits thereto.
8. Deed of Trust, Security Agreement, Fixture Filing, Assignment of Leases and
Rents and Financing Statement dated as of January 28, 2000 between Cone Mills
Corporation, as Grantor, TIM, Inc., as Trustee, and Bank of America, N.A., as
Priority Collateral Agent, together with all exhibits thereto.
9. Amendment of 1992 Note Agreement dated as of January 28, 2000 by and among
Cone Mills Corporation and The Prudential Insurance Company of America, together
with all exhibits thereto.
10. Tenth Amendment to Master Lease dated as of January 28, 2000 between
Atlantic Financial Group, Ltd. and Cone Mills Corporation, together with all
exhibits thereto.
Schedules to each of the foregoing documents have not been filed. The
Registrant will furnish supplementally a copy of any omitted schedule to the
Securities and Exchange Commission upon request.
Also, in connection with the transactions described in Item 2 above,
the Registrant executed and delivered six priority deeds of trust substantially
identical to the priority deed of trust filed as item 7 above and six general
deeds of trust substantially identical to the general deed of trust filed as
item 8 above. The only material differences among the deeds of trust filed and
those omitted are the descriptions of the real property mortgaged in Exhibit A
to such documents, the county in which such deed of trust was filed and, in the
case of deeds of trust relating to real property located in South Carolina, the
title to the agreement (Mortgage as opposed to Deed of Trust) and certain minor
conforming changes required for South Carolina mortgages. Deeds of Trust (or
Mortgages) were filed with respect to all (or substantially all) of the
Registrant's real property situated in Guilford County, North Carolina, Rowan
County, North Carolina, Rutherford County, North Carolina, Alamance County,
North Carolina, Marion County, South Carolina and Union County, South Carolina.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CONE MILLS CORPORATION
(Registrant)
Date: February 11, 2000 By: /s/ Neil W. Koonce
--------------------------------
Neil W. Koonce
Vice President, General Counsel
and Secretary
<PAGE>
EXHIBIT INDEX
1. Credit Agreement dated as of January 28, 2000 by and among Cone Mills
Corporation, as Borrower, Bank of America, N.A., as Agent and as Lender and the
Lenders party thereto from time to time, together with all exhibits thereto.
2. Guaranty Agreement dated as of January 28, 2000 made by Cone Global Finance
Corp., CIPCO S.C., Inc. and Cone Foreign Trading LLC in favor of Bank of
America, N.A. as Revolving Credit Agent for the Lenders, The Prudential
Insurance Company of America, SunTrust Bank, Morgan Guaranty Trust Company of
New York, Wilmington Trust Company, as General Collateral Agent, Bank of
America, N.A., as Priority Collateral Agent, and Atlantic Financial Group, Ltd.,
together with all exhibits thereto.
3. Priority Security Agreement dated as of January 28, 2000 by Cone Mills
Corporation and certain of its subsidiaries, as Grantors, and Bank of America,
N.A., as Priority Collateral Agent, together with all exhibits thereto.
4. General Security Agreement dated as of January 28, 2000 by Cone Mills
Corporation and certain of its subsidiaries, as Grantors, and Wilmington Trust
Company, as General Collateral Agent, together with all exhibits thereto.
5. Securities Pledge Agreement dated as of January 28, 2000 by Cone Mills
Corporation in favor of Wilmington Trust Company, as General Collateral Agent,
together with all exhibits thereto.
6. CMM Pledge Agreement dated as of January 28, 2000 by Cone Mills Corporation
in favor of Wilmington Trust Company, as General Collateral Agent, together with
all exhibits thereto.
7. Deed of Trust, Security Agreement, Fixture Filing, Assignment of Leases and
Rents and Financing Statement dated as of January 28, 2000 between Cone Mills
Corporation, as Grantor, TIM, Inc., as Trustee, Wilmington Trust Company, as
General Collateral Agent, and Bank of America, N.A., as Designated Collateral
Subagent, together with all exhibits thereto.
8. Deed of Trust, Security Agreement, Fixture Filing, Assignment of Leases and
Rents and Financing Statement dated as of January 28, 2000 between Cone Mills
Corporation, as Grantor, TIM, Inc., as Trustee, and Bank of America, N.A., as
Priority Collateral Agent, together with all exhibits thereto.
9. Amendment of 1992 Note Agreement dated as of January 28, 2000 by and among
Cone Mills Corporation and The Prudential Insurance Company of America, together
with all exhibits thereto.
10. Tenth Amendment to Master Lease dated as of January 28, 2000 between
Atlantic Financial Group, Ltd. and Cone Mills Corporation, together with all
exhibits thereto.
Execution Copy
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CREDIT AGREEMENT
by and among
CONE MILLS CORPORATION
as Borrower,
BANK OF AMERICA, N.A.,
as Agent and as Lender
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
January 28, 2000
BANC OF AMERICA SECURITIES LLC,
as Sole Lead Arranger and Sole Book Manager
================================================================================
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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ARTICLE I
Definitions and Terms
<S> <C>
1.1 Definitions........................................................................................2
1.2 Rules of Interpretation...........................................................................35
ARTICLE II
The Credit Facilities
2.1 Revolving Loans...................................................................................37
2.2 Use of Proceeds...................................................................................40
2.3 Revolving Notes...................................................................................40
ARTICLE III
Letters of Credit
3.1 Letters of Credit.................................................................................41
3.2 Reimbursement and Participations..................................................................41
ARTICLE IV
Eurodollar Funding, Fees, and Payment Conventions
4.1 Interest Rate Options.............................................................................45
4.2 Conversions and Elections of Subsequent Interest Periods..........................................45
4.3 Payment of Interest...............................................................................46
4.4 Prepayments of Eurodollar Rate Loans..............................................................46
4.5 Manner of Payment.................................................................................47
4.6 Fees..............................................................................................47
4.7 Pro Rata Payments.................................................................................48
4.8 Computation of Rates and Fees.....................................................................48
4.9 Deficiency Advances; Failure to Purchase Participations...........................................48
4.10 Intraday Funding..................................................................................49
ARTICLE V
Security
5.1 Security..........................................................................................51
5.2 Further Assurances................................................................................52
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5.3 Information Regarding Collateral..................................................................52
5.4 Mortgages.........................................................................................53
ARTICLE VI
Change in Circumstances
6.1 Increased Cost and Reduced Return.................................................................55
6.2 Limitation on Types of Loans......................................................................56
6.3 Illegality........................................................................................57
6.4 Treatment of Affected Loans.......................................................................57
6.5 Compensation......................................................................................57
6.6 Taxes.............................................................................................58
ARTICLE VII
Conditions to Making Loans and Issuing Letters of Credit
7.1 Conditions of Initial Advance.....................................................................60
7.2 Conditions of Revolving Loans and Letter of Credit................................................64
ARTICLE VIII
Representations and Warranties
8.1 Organization and Authority........................................................................66
8.2 Loan Documents....................................................................................66
8.3 Solvency..........................................................................................67
8.4 Subsidiaries and Stockholders.....................................................................67
8.5 Ownership Interests...............................................................................67
8.6 Financial Condition...............................................................................67
8.7 Title to Properties...............................................................................68
8.8 Taxes.............................................................................................68
8.9 Other Agreements..................................................................................68
8.10 Litigation........................................................................................69
8.11 Margin Stock......................................................................................69
8.12 Investment Company................................................................................69
8.13 Patents, Etc......................................................................................69
8.14 No Untrue Statement...............................................................................69
8.15 No Consents, Etc..................................................................................70
8.16 Employee Benefit Plans............................................................................70
8.17 No Default........................................................................................71
8.18 Environmental Laws................................................................................71
8.19 Employment Matters................................................................................72
8.20 RICO..............................................................................................72
8.21 Year 2000 Compliance..............................................................................72
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ARTICLE IX
Affirmative Covenants
9.1 Financial Reports, Etc............................................................................73
9.2 Maintain Properties...............................................................................75
9.3 Existence, Qualification, Etc.....................................................................75
9.4 Regulations and Taxes.............................................................................75
9.5 Insurance.........................................................................................75
9.6 True Books........................................................................................76
9.7 Year 2000 Compliance..............................................................................76
9.8 Right of Inspection...............................................................................76
9.9 Observe all Laws..................................................................................76
9.10 Governmental Licenses.............................................................................76
9.11 Covenants Extending to Other Persons..............................................................76
9.12 Officer's Knowledge of Default....................................................................76
9.13 Suits or Other Proceedings........................................................................76
9.14 Notice of Environmental Complaint or Condition....................................................77
9.15 Environmental Compliance..........................................................................77
9.16 Indemnification...................................................................................77
9.17 Further Assurances................................................................................77
9.18 Employee Benefit Plans............................................................................78
9.19 Continued Operations..............................................................................78
9.20 New Subsidiaries..................................................................................79
9.21 Controlled Accounts...............................................................................82
9.22 Third-party Consultant............................................................................82
9.23 Post-Closing Deliveries...........................................................................82
ARTICLE X
Negative Covenants
10.1 Financial Covenants...............................................................................84
10.2 Acquisitions......................................................................................85
10.3 Capital Expenditures..............................................................................85
10.4 Liens.............................................................................................86
10.5 Indebtedness......................................................................................87
10.6 Transfer of Assets................................................................................89
10.7 Investments.......................................................................................89
10.8 Merger or Consolidation...........................................................................90
10.9 Restricted Payments...............................................................................90
10.10 Transactions with Affiliates......................................................................90
10.11 Compliance with ERISA, the Code and Foreign Benefit Laws..........................................90
10.12 Fiscal Year.......................................................................................91
10.13 Dissolution, etc..................................................................................91
10.14 Limitations on Sales and Leasebacks...............................................................91
10.15 Rate Hedging Obligations..........................................................................92
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10.16 Negative Pledge Clauses...........................................................................92
10.17 Compensation; Reimbursement of Expenses...........................................................92
10.18 Change in Accountants.............................................................................92
10.19 Prepayments, Etc. of Indebtedness.................................................................92
10.20 Partnerships......................................................................................92
ARTICLE XI
Events of Default and Acceleration
11.1 Events of Default.................................................................................93
11.2 Agent to Act......................................................................................96
11.3 Cumulative Rights.................................................................................96
11.4 No Waiver.........................................................................................96
11.5 Allocation of Proceeds............................................................................96
ARTICLE XII
The Agent
12.1 Appointment, Powers, and Immunities...............................................................98
12.2 Reliance by Agent.................................................................................98
12.3 Defaults..........................................................................................99
12.4 Rights as Lender..................................................................................99
12.5 Indemnification...................................................................................99
12.6 Non-Reliance on Agent and Other Lenders..........................................................100
12.7 Resignation of Agent.............................................................................100
ARTICLE XIII
Miscellaneous
13.1 Assignments and Participations...................................................................101
13.2 Notices..........................................................................................103
13.3 Right of Set-off; Adjustments....................................................................104
13.4 Survival.........................................................................................105
13.5 Expenses.........................................................................................105
13.6 Amendments and Waivers...........................................................................105
13.7 Counterparts; Facsimile Signatures...............................................................106
13.8 Termination......................................................................................106
13.9 Indemnification; Limitation of Liability.........................................................107
13.10 Severability.....................................................................................108
13.11 Entire Agreement.................................................................................108
13.12 Agreement Controls...............................................................................108
13.13 Usury Savings Clause.............................................................................108
13.14 Payments.........................................................................................109
13.15 Fees.............................................................................................109
13.16 Confidentiality..................................................................................110
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<PAGE>
13.17 GOVERNING LAW; WAIVER OF JURY TRIAL..............................................................110
EXHIBIT A Applicable Commitment Percentages..........................................................A-1
EXHIBIT B Form of Assignment and Acceptance..........................................................B-1
EXHIBIT C Notice of Appointment (or Revocation) of Authorized Representative.........................C-1
EXHIBIT D Form of Borrowing Notice...................................................................D-1
EXHIBIT E Form of Interest Rate Selection Notice.....................................................E-1
EXHIBIT F Form of Revolving Note.....................................................................F-1
EXHIBIT G Form of Opinion of Borrower's Counsel......................................................G-1
EXHIBIT H Compliance Certificate.....................................................................H-1
EXHIBIT I Form of Facility Guaranty..................................................................I-1
EXHIBIT J-1 Form of General Security Agreement.......................................................J-1-1
EXHIBIT J-2 Form of Priority Security Agreement......................................................J-2-1
EXHIBIT K Form of Pledge Agreement (Borrower)........................................................K-1
EXHIBIT L Form of Borrowing Base Certificate.........................................................L-1
EXHIBIT M-1 Form of General Deed of Trust............................................................M-1-1
EXHIBIT M-2 Form of General Mortgage.................................................................M-2-1
EXHIBIT M-3 Form of Priority Deed of Trust...........................................................M-3-1
EXHIBIT M-4 Form of Priority Mortgage................................................................M-4-1
Schedule 1.1 Disposition of Assets..................................................................S-1
Schedule 1.2 Material Subsidiaries..................................................................S-2
Schedule 5.3 Information Regarding Collateral ......................................................S-3
Schedule 5.4 Real Property Subject to Mortgages ....................................................S-4
Schedule 8.4 Subsidiaries and Investments in Other Persons .........................................S-5
Schedule 8.6 Indebtedness ..........................................................................S-6
Schedule 8.7 Liens..................................................................................S-7
Schedule 8.8 Tax Matters ...........................................................................S-8
Schedule 8.10 Litigation ............................................................................S-9
Schedule 8.16 Employee Benefit Plan Events .........................................................S-10
Schedule 8.18 Environmental Issues .................................................................S-11
Schedule 8.19 Employment Matters ...................................................................S-12
Schedule 9.5 Insurance.............................................................................S-13
Schedule 10.10 Transactions with Affiliates .........................................................S-14
Schedule 10.14 Sale and Leaseback Transactions ......................................................S-15
</TABLE>
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<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of January 28, 2000 (the "Agreement"),
is made by and among CONE MILLS CORPORATION, a North Carolina corporation having
its principal place of business in Greensboro, North Carolina (the "Borrower"),
BANK OF AMERICA, N.A., a national banking association organized and existing
under the laws of the United States, in its capacity as a Lender ("Bank of
America"), and each other financial institution executing and delivering a
signature page hereto and each other financial institution which may hereafter
execute and deliver an instrument of assignment with respect to this Agreement
pursuant to Section 13.1 (hereinafter such financial institutions may be
referred to individually as a "Lender" or collectively as the "Lenders"), and
BANK OF AMERICA, N.A., a national banking association organized and existing
under the laws of the United States, in its capacity as agent for the Lenders
(in such capacity, and together with any successor agent appointed in accordance
with the terms of Section 12.7, the "Agent" or "Revolving Credit Agent");
W I T N E S S E T H:
--------------------
WHEREAS, the Borrower has requested that the Lenders make available to
the Borrower a revolving credit facility of up to $80,000,000, the proceeds of
which are to be used for general corporate purposes and which shall include a
letter of credit facility of up to $10,000,000 for the issuance of standby and
commercial letters of credit; and
WHEREAS, the Lenders are willing to make such revolving credit and
letter of credit facilities available to the Borrower upon the terms and
conditions set forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as
follows:
<PAGE>
ARTICLE I
Definitions and Terms
---------------------
1.1 Definitions. For the purposes of this Agreement, in addition to the
definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Accounts" has the meaning given to such term in the Security
Agreement.
"Acquisition" means the acquisition of a controlling equity
interest in another Person (including the purchase of an option,
warrant or convertible or similar type security to acquire such a
controlling interest at the time it becomes exercisable by the holder
thereof), whether by purchase of such equity interest or upon exercise
of an option or warrant for, or conversion of securities into, such
equity interest, or assets of another Person which constitute all or
substantially all of the assets of such Person or of a line or lines of
business conducted by such Person.
"Advance" means a borrowing under the Revolving Credit
Facility consisting of a Base Rate Loan or a Eurodollar Rate Loan.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with the Borrower; or (ii) which beneficially owns
or holds 10% or more of any class of the outstanding voting stock (or
in the case of a Person which is not a corporation, 10% or more of the
equity interest) of the Borrower; or 10% or more of any class of the
outstanding voting stock (or in the case of a Person which is not a
corporation, 10% or more of the equity interest) of which is
beneficially owned or held by the Borrower. The term "control" means
the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through ownership of voting stock, by contract or otherwise.
"Applicable Commitment Fee" means .50% per annum.
"Applicable Commitment Percentage" means, for each Lender at
any time, a fraction the numerator of which shall be such Lender's
Revolving Credit Commitment and the denominator of which shall be the
Total Revolving Credit Commitment, which Applicable Commitment
Percentage for each Lender as of the Closing Date is as set forth in
Exhibit A; provided that the Applicable Commitment Percentage of each
Lender shall be increased or decreased to reflect any assignments to or
by such Lender effected in accordance with Section 13.1.
"Applicable Lending Office" means, for each Lender and for
each Type of Loan, the "Lending Office" of such Lender (or of an
affiliate of such Lender) designated for such Type of Loan on the
signature pages hereof or such other office of such Lender (or an
affiliate of such Lender) as such Lender may from time to time specify
to the Agent and the Borrower by written notice in accordance with the
terms hereof as the office by which its Loans of such Type are to be
made and maintained.
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<PAGE>
"Applicable Margin" means that percent per annum set forth
below for the Base Rate and the Eurodollar Rate, respectively:
Applicable Margin
-----------------------------------------------------------
Base Rate Eurodollar Rate
------------------------ -------------------------
1.75% 4.25%
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or
similar documentation, executed by the Borrower from time to time and
delivered to the Issuing Bank to support the issuance of Letters of
Credit.
"Approved Option Plan" means the Cone Mills Amended and
Restated 1992 Stock Option Plan, as amended, the Cone Mills 1983 ESOP,
as amended, the Cone Mills Corporation 1994 Stock Option Plan For
Non-Employee Directors, as amended, the Shareholder Rights Plan dated
October 14, 1999, and any other stock incentive plan, stock option plan
or similar stock rights plan approved by the Board of Directors of the
Borrower in the ordinary course of business.
"Asset Disposition" means any disposition, whether by sale,
lease, assignment or other transfer of (i) any of the assets of the
Borrower or its Subsidiaries, and (ii) any of the capital stock, or
securities or investments exchangeable, exercisable or convertible for
or into, or otherwise entitling the holder to receive any of the
capital stock, of any Subsidiary (other than a disposition to the
Borrower or a Guarantor).
"Assignment and Acceptance" shall mean an Assignment and
Acceptance in the form of Exhibit B (with blanks appropriately filled
in) delivered to the Agent in connection with an assignment of a
Lender's interest under this Agreement pursuant to Section 13.1.
"Authorized Representative" means any of the President or any
Vice President or the Treasurer or Controller of the Borrower or, with
respect to financial matters, the chief financial officer of the
Borrower, or any other Person expressly designated by the Board of
Directors of the Borrower (or the appropriate committee thereof) as an
Authorized Representative of the Borrower, as set forth from time to
time in a certificate in the form of Exhibit C.
"Bank of America" means Bank of America, N.A. and its
successors and permitted assigns.
"BAS" means Banc of America Securities LLC and its successors.
"Base Rate" means, for any day, the rate per annum equal to
the sum of (a) the higher of (i) the Federal Funds Rate for such day
plus one-half of one percent (0.5%) and (ii) the Prime Rate for such
day plus (b) the Applicable Margin. Any change in the Base
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<PAGE>
Rate due to a change in the Prime Rate or the Federal Funds Rate shall
be effective on the effective date of such change in the Prime Rate or
Federal Funds Rate.
"Base Rate Loan" means a Loan for which the rate of interest
is determined by reference to the Base Rate.
"Base Rate Refunding Loan" means a Base Rate Loan made to
satisfy Reimbursement Obligations arising from a drawing under a Letter
of Credit.
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body).
"Bond Trustee" means The Bank of New York, as successor to
Wachovia Bank, N.A. (formerly known as Wachovia Bank of North Carolina,
N.A.), as Trustee for the benefit of the holders of the Securities (as
defined in the Senior Indenture) under the Senior Indenture, and any
successor acting in such capacity.
"Borrower's Account" means demand deposit account number
3750377459 or any successor account with the Agent, which may be
maintained at one or more offices of the Agent or an agent of the
Agent.
"Borrowing Base" means, as of any date of determination
thereof, an amount equal to the sum of:
(i) the Eligible Receivables Amount multiplied
by 45%; plus
(ii) the Eligible Inventory Amount multiplied by
60%; plus
(iii) the Eligible Fixed Asset Amount multiplied
by 60%; plus
(iv) the Overadvance Basket if so included by the
Borrower in its determination of the Borrowing Base as set
forth in any Borrowing Base Certificate delivered to the Agent
and the Lenders pursuant to Section 9.1(g). In the event the
most recent Borrowing Base Certificate delivered to the Agent
and the Lenders pursuant to Section 9.1(g) does not include
the Overadvance Basket, and (A) the Borrower has requested an
Advance in an amount such that, immediately after giving
effect to such Advance, the Senior Debt Outstandings exceed
the Borrowing Base as so certified or (B) for any other reason
Senior Debt Outstandings exceed the Borrowing Base as so
certified, the Borrowing Base shall, ipso facto, be deemed to
include (1) such amount of the Overadvance Basket so that,
giving effect thereto, Senior Debt Outstandings do not exceed
the Borrowing Base as increased by such amount of the
Overadvance Basket or otherwise (2) the entire amount of the
Overadvance Basket and the terms of Sections 2.1(a) and (b)
shall then be applicable.
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<PAGE>
"Borrowing Base Certificate" means a certificate of the chief
financial officer, chief executive officer, Treasurer or Controller of
the Borrower setting forth the calculation of the Borrowing Base in the
form of Exhibit L.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving Credit
Facility in the form of Exhibit D.
"Business Day" means, (i) except as expressly provided in
clause (ii), any day which is not a Saturday, Sunday or a day on which
banks in the States of New York and North Carolina are authorized or
obligated by law, executive order or governmental decree to be closed
and, (ii) with respect to the selection, funding, interest rate,
payment, and Interest Period of any Eurodollar Rate Loan, any day which
is a Business Day, as described above, and on which the relevant
international financial markets are open for the transaction of
business contemplated by this Agreement in London, England, New York,
New York and Charlotte, North Carolina.
"Capital Expenditures" means, with respect to the Borrower and
its Subsidiaries, for any period the sum of (without duplication) (i)
all expenditures (whether paid in cash or accrued as liabilities) by
the Borrower or any Subsidiary during such period for items that would
be classified as "property, plant or equipment" or comparable items on
the consolidated balance sheet of the Borrower and its Subsidiaries,
including without limitation all transactional costs incurred in
connection with such expenditures provided the same have been
capitalized, excluding, however, the amount of any Capital Expenditures
paid for with proceeds of casualty insurance as evidenced in writing
and submitted to the Agent together with any compliance certificate
delivered pursuant to Section 9.1(a) or (b), and (ii) with respect to
any Capital Lease entered into by the Borrower or its Subsidiaries
during such period, the present value of the lease payments due under
such Capital Lease over the term of such Capital Lease applying a
discount rate equal to the interest rate provided in such lease (or in
the absence of a stated interest rate, that rate used in the
preparation of the financial statements described in Section 9.1(a)),
all the foregoing in accordance with GAAP applied on a Consistent
Basis.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement Nos. 13 and 98 of the Financial Accounting
Standards Board and any successor thereof.
"Capital Market Transaction" means the issuance or sale in a
registered public offering, Rule 144A/Regulation S transaction or
private placement of capital stock (including equity-linked
securities), other than the issuance of capital stock in connection
with the exercise of stock options existing as of the Closing Date or
hereafter granted in accordance with an Approved Option Plan.
5
<PAGE>
"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) either (A) becomes
the "beneficial owner" (as defined in Rule 13d-3 of the
Exchange Act ), directly or indirectly, of Voting Securities
of the Borrower (or securities convertible into or
exchangeable for such Voting Securities) representing 25% or
more of the combined voting power of all Voting Securities of
the Borrower (on a fully diluted basis) or (B) otherwise has
the ability, directly or indirectly, to elect a majority of
the board of directors of the Borrower;
(ii) during any period of up to 24 consecutive
months, commencing on the Closing Date, individuals who at the
beginning of such 24-month period were directors of the
Borrower shall cease for any reason (other than the death,
disability or retirement of an officer of the Borrower that is
serving as a director at such time so long as another officer
of the Borrower replaces such Person as a director) to
constitute a majority of the board of directors of the
Borrower; or
(iii) any Person or two or more Persons acting in
concert shall have acquired by contract or otherwise, or shall
have entered into a contract or arrangement that, upon
consummation thereof, will result in its or their acquisition
of the power to exercise, directly or indirectly, a
controlling influence on the management or policies of the
Borrower.
"CIPSA" means Compania Industrial de Parras, S.A.
"Closing Date" means the date as of which this Agreement is
executed by the Borrower, the Lenders and the Agent and on which the
conditions set forth in Section 7.1 have been satisfied.
"Closing Date Quarter" has the meaning given to such term in
Section 10.1(a).
"Code" means the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder.
"Collateral" means, collectively, all General Collateral and
all Priority Collateral.
"Collateral Agency Agreements" means, collectively, the
General Collateral Agency Agreement and the Priority Collateral Agency
Agreement, as amended, supplemented or restated from time to time.
"Collateral Agents" means, collectively, the Priority
Collateral Agent, the General Collateral Agent and the Agent for the
Lenders and itself with respect to the Lien on the Senior Lease
Facility.
6
<PAGE>
"Compliance Certificate" means a certificate of an Authorized
Representative of the Borrower demonstrating compliance with the
covenants contained in Sections 10.1, 10.3 and 10.7(g), substantially
in the form of Exhibit H.
"Consistent Basis" in reference to the application of GAAP
means the accounting principles observed in the period referred to are
comparable in all material respects to those applied in the preparation
of the audited financial statements of the Borrower referred to as of
the Closing Date in Section 8.6(a).
"Consolidated EBITDA" means, with respect to the Borrower and
its Subsidiaries for any period ending on the date of computation
thereof, the sum of, without duplication, (i) Consolidated Net Income,
(ii) Consolidated Interest Expense, (iii) taxes on income, (iv)
amortization, (v) depreciation, (vi) non-cash charges otherwise
deducted in calculating Consolidated Net Income resulting from FASB No.
88 Adjustments, FASB No. 106 Adjustments, FASB No. 112 Adjustments or
FASB No. 121 Adjustments and (vii) Non-cash Restructuring Charges, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis; provided, however, in the event that any Non-Cash
Restructuring Charges accrued in a prior period are paid in cash in any
subsequent period, the amount of such cash payment shall be subtracted
from Consolidated EBITDA for such subsequent period.
"Consolidated Indebtedness" means all Indebtedness for Money
Borrowed of the Borrower and its Subsidiaries, all determined on a
consolidated basis.
"Consolidated Interest Coverage Ratio" means for any
Four-Quarter Period ending on the date of computation thereof, the
ratio of (i) Consolidated EBITDA for such Four-Quarter Period, to (ii)
Consolidated Interest Expense for such Four-Quarter Period.
"Consolidated Interest Expense" means, with respect to any
period of computation thereof, the gross interest expense of the
Borrower and its Subsidiaries, including without limitation (i) the
current amortized portion of debt discounts to the extent included in
gross interest expense, (ii) the current amortized portion of all fees
(including fees payable in respect of any Rate Hedging Obligations)
payable in connection with the incurrence of Indebtedness to the extent
included in gross interest expense, (iii) the portion of any payments
made in connection with Capital Leases allocable to interest expense,
and (iv) the net cash financing costs incurred in connection with any
Securitization Transaction, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Leverage Ratio" means, as of the date of
computation thereof, the ratio of (i) Consolidated Indebtedness
(determined as at such date) to (ii) Consolidated EBITDA (for the
Four-Quarter Period ending on (or most recently ended prior to) such
date).
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Borrower and its
Subsidiaries other than Parras
7
<PAGE>
Cone to the extent it constitutes a Subsidiary (including payments
received by the Borrower and its Subsidiaries of (i) interest income,
and (ii) dividends and distributions made in the ordinary course of
their businesses by Persons (including Parras Cone) in which investment
is permitted pursuant to this Agreement and not related to an
extraordinary event), less all operating and non-operating expenses of
the Borrower and its Subsidiaries including taxes on income, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis; but excluding (for all purposes other than compliance
with Section 10.1(a) hereof as income): (a) net gains or losses on the
sale, conversion or other disposition of capital assets, (b) net gains
or losses on the acquisition, retirement, sale or other disposition of
capital stock and other securities of the Borrower or its Subsidiaries,
(c) net gains on the collection of proceeds of life insurance policies,
(d) any write-up of any asset, (e) any net gain or loss recorded as a
result of FASB 133 Adjustments, and (f) any other net gain or credit of
an extraordinary nature as determined in accordance with GAAP applied
on a Consistent Basis.
"Consolidated Net Worth" means, as of any date on which the
amount thereof is to be determined, the sum of the following in respect
of the Borrower and its Subsidiaries (determined on a consolidated
basis and excluding any upward adjustment after the Closing Date due to
revaluation of assets, including without limitation any FASB 133
Adjustment): (i) the amount of issued and outstanding share capital,
plus (ii) the amount of additional paid-in capital and retained
earnings (or, in the case of a deficit, minus the amount of such
deficit), plus (iii) the amount of any foreign currency translation
adjustment (if positive, or, if negative, minus the amount of such
translation adjustment), minus (iv) the amount of any treasury stock,
minus (v) (without duplication of deductions in respect of items
already deducted in arriving at surplus and retained earnings) all
reserves (other than contingency reserves not allocated to any
particular purpose), including without limitation reserves for
depreciation, depletion, amortization, obsolescence, deferred income
taxes, insurance and inventory valuation, all as determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness,
lease, dividend, guaranty, letter of credit or other obligation (each a
"primary obligation") of another Person (the "primary obligor"),
whether or not contingent, (i) to purchase, repurchase or otherwise
acquire any such primary obligation or any property constituting direct
or indirect security therefor, or (ii) to advance or provide funds (a)
for the payment or discharge of any such primary obligation, or (b) to
maintain working capital or equity capital of the primary obligor in
respect of any such primary obligation or otherwise to maintain the net
worth or solvency or any balance sheet item, level of income or
financial condition of such primary obligor, or (iii) to purchase
property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary
obligor thereof to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss or failure or inability to perform in respect
thereof. The amount of any Contingent Obligation, to the extent not
expressly limited, shall be deemed to be an amount equal to the stated
or determinable amount of
8
<PAGE>
the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof.
"Continue," "Continuation," and "Continued" shall refer to the
continuation pursuant to Section 4.2 hereof of a Eurodollar Rate Loan
of one Type as a Eurodollar Rate Loan of the same Type from one
Interest Period to the next Interest Period.
"Controlled Accounts" means all depository accounts of the
Borrower and its Subsidiaries, other than the Excluded Deposit
Accounts, each of which shall be maintained with a Lender in accordance
with Section 9.21.
"Convert," "Conversion," and "Converted" shall refer to a
conversion pursuant to Section 4.2 of one Type of Loan into another
Type of Loan.
"Cost of Acquisition" means, with respect to any Acquisition,
as at the date of entering into any agreement therefor, the sum of the
following (without duplication): (i) the value of the capital stock,
warrants or options to acquire capital stock of Borrower or any
Subsidiary to be transferred in connection therewith, (ii) the amount
of any cash and fair market value of other property (excluding property
described in clause (i) and the unpaid principal amount of any debt
instrument) given as consideration, (iii) the amount (determined by
using the face amount or the amount payable at maturity, whichever is
greater) of any Indebtedness incurred, assumed or acquired by the
Borrower or any Subsidiary in connection with such Acquisition, (iv)
all additional purchase price amounts in the form of earnouts and other
contingent obligations that should be recorded on the financial
statements of the Borrower and its Subsidiaries in accordance with
GAAP, (v) all amounts paid in respect of covenants not to compete,
consulting agreements that should be recorded on financial statements
of the Borrower and its Subsidiaries in accordance with GAAP, and other
affiliated contracts in connection with such Acquisition, (vi) the
aggregate fair market value of all other consideration given by the
Borrower or any Subsidiary in connection with such Acquisition, and
(vii) out of pocket transaction costs for the services and expenses of
attorneys, accountants and other consultants incurred in effecting such
transaction, and other similar transaction costs so incurred. For
purposes of determining the Cost of Acquisition for any transaction,
(A) the capital stock of the Borrower shall be valued (I) in the case
of capital stock that is then listed on a national securities exchange
or a national market system, the average of the last reported bid and
ask quotations or the last prices reported thereon, and (II) with
respect to any other shares of capital stock, as determined by a
committee composed of the disinterested members of the Board of
Directors of the Borrower and, if requested by the Agent, determined to
be a reasonable valuation by the independent public accountants
referred to in Section 9.1(a), (B) the capital stock of any Subsidiary
shall be valued as determined by a committee composed of the
disinterested members of the Board of Directors of such Subsidiary and,
if requested by the Agent, determined to be a reasonable valuation by
the independent public accountants referred to in Section 9.1(a), and
(C) with respect to any Acquisition accomplished pursuant to the
exercise of options or warrants or the conversion of securities, the
Cost of Acquisition shall include both the
9
<PAGE>
cost of acquiring such option, warrant or convertible security as well
as the cost of exercise or conversion.
"Credit Parties" means, collectively, the Borrower, each
Guarantor and each other Person providing Collateral pursuant to any
Security Document from time to time (which Credit Parties as of the
Closing Date are listed on Schedule 1.2).
"Debenture Holders" means, at any time, collectively each of
the holders of the Senior Debentures then outstanding.
"Default" means any event or condition which, with the giving
or receipt of notice or lapse of time or both, would constitute an
Event of Default hereunder.
"Default Rate" means (i) with respect to each Eurodollar Rate
Loan, until the end of the Interest Period applicable thereto, a rate
of two percent (2%) above the Eurodollar Rate applicable to such Loan,
and thereafter at a rate of interest per annum which shall be two
percent (2%) above the Base Rate, (ii) with respect to Base Rate Loans,
Reimbursement Obligations, fees, and other amounts payable in respect
of Obligations or (except as otherwise expressly provided therein) the
obligations of any other Credit Party under any of the other Loan
Documents, a rate of interest per annum which shall be two percent (2%)
above the Base Rate and (iii) in any case, the maximum rate permitted
by applicable law, if lower.
"Designated Collateral Subagent" means Bank of America, N.A.,
not individually but solely in its capacity as designated collateral
subagent on behalf of the General Secured Parties hereunder with
respect to the General Collateral, pursuant to the terms of the General
Collateral Agency Agreement, and its agents, successors and permitted
assigns.
"Direct Foreign Subsidiary" means a Subsidiary other than a
Domestic Subsidiary a majority of whose Voting Securities, or a
majority of whose Subsidiary Securities, are owned by the Borrower or a
Domestic Subsidiary.
"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United States
of America.
"Domestic Subsidiary" means any Subsidiary of the Borrower
organized under the laws of the United States of America, any state or
territory thereof or the District of Columbia.
"Eligible Assignee" means (i) a Lender, (ii) an affiliate of a
Lender, and (iii) any other Person approved by the Agent and, unless an
Event of Default has occurred and is continuing at the time any
assignment is effected in accordance with Section 13.1, the Borrower,
such approvals not to be unreasonably withheld or delayed and such
approval to be deemed given by the Borrower (in the absence of notice
to the contrary, effective upon receipt) within two Business Days after
notice of such proposed assignment has
10
<PAGE>
been provided by the assigning Lender to the Borrower; provided,
however, that neither the Borrower nor an affiliate of the Borrower
shall qualify as an Eligible Assignee.
"Eligible Fixed Assets" means the land and completed
improvements thereon constituting real property and fixtures and all
fully operable machinery and equipment of the Borrower and its Domestic
Subsidiaries constituting fixed operating assets and associated repair
parts, in each case in which (i) as to such as constitute Priority
Collateral, the Priority Collateral Agent for the benefit of the
Priority Secured Parties shall have a Priority Lien pursuant to any
Priority Mortgage, and (ii) the General Collateral Agent for the
benefit of the General Secured Parties shall have a General Lien
pursuant to any General Mortgage or other General Security Instrument.
"Eligible Fixed Assets Amount" means the net book value of
Eligible Fixed Assets, all as determined in accordance with GAAP
applied on a Consistent Basis and reflected on the financial statements
of the Borrower most recently furnished to the Lenders pursuant to
Section 9.1 hereof; for purposes of calculating net book value of
Eligible Fixed Assets, the Borrowers shall not adopt any method or
schedule of depreciation providing for depreciation of such assets less
rapidly than the depreciation methods and schedules in effect as of the
Closing Date.
"Eligible Inventory" means the Inventory of the Borrower and
its Domestic Subsidiaries which consists of the raw material, yarn and
finished goods inventory (including greige goods) located in the United
States of America and in which (i) the Priority Collateral Agent for
the benefit of the Priority Secured Parties shall have a Priority Lien
pursuant to the Priority Security Agreement and (ii) the General
Collateral Agent for the benefit of the General Secured Parties shall
have a General Lien pursuant to the General Security Agreement.
"Eligible Inventory Amount" means the net book value of
Eligible Inventory, all as determined in accordance with GAAP applied
on a Consistent Basis and reflected on the financial statements of the
Borrower most recently furnished to the Lenders pursuant to Section 9.1
hereof.
"Eligible Receivables" means, as at any date of determination,
the sum of (i) the aggregate of all Accounts of the Borrower and its
Domestic Subsidiaries (other than Accounts subject to a Securitization
Transaction) arising from the sale of Inventory or services by the
Borrower or its Domestic Subsidiaries and in which (i) the Priority
Collateral Agent for the benefit of the Priority Secured Parties shall
have a Priority Lien pursuant to the Priority Security Agreement and
(ii) the General Collateral Agent for the benefit of the General
Secured Parties shall have a General Lien pursuant to the General
Security Agreement and (iii) the Overcollateralization Amount.
"Eligible Receivables Amount" means the net book value of
Eligible Receivables, all as determined in accordance with GAAP applied
on a Consistent Basis and reflected on the financial statements of the
Borrower most recently furnished to the Lenders pursuant to Section 9.1
hereof.
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<PAGE>
"Eligible Securities" means the following obligations and any
other obligations previously approved in writing by the Agent:
(i) Government Securities;
(ii) obligations of any corporation organized under the laws
of any state of the United States of America or under the laws of any
other nation, payable in the United States of America, expressed to
mature not later than 92 days following the date of issuance thereof
and rated in an investment grade rating category by S&P and Moody's;
(iii) interest bearing demand or time deposits issued by any
Lender; and
(iv) Repurchase Agreements.
"Employee Benefit Plan" means (i) any employee benefit plan,
including any Pension Plan, within the meaning of Section 3(3) of ERISA
which (a) is maintained for employees of the Borrower or any of its
ERISA Affiliates, or any Subsidiary or is assumed by the Borrower or
any of its ERISA Affiliates, or any Subsidiary in connection with any
Acquisition or (b) has at any time been maintained for the employees of
the Borrower, any current or former ERISA Affiliate, or any Subsidiary
and (ii) any plan, arrangement, understanding or scheme maintained by
the Borrower or any Subsidiary that provides retirement, deferred
compensation, employee or retiree medical or life insurance, severance
benefits or any other benefit covering any employee or former employee
and which is administered under any Foreign Benefit Law or regulated by
any Governmental Authority other than the United States of America.
"Environmental Laws" means any federal, state or local
statute, law, ordinance, code, rule, regulation, order, decree, permit
or license regulating, relating to, or imposing liability or standards
of conduct concerning, any environmental matters or conditions,
environmental protection or conservation, including without limitation,
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended; the Superfund Amendments and Reauthorization
Act of 1986, as amended; the Resource Conservation and Recovery Act, as
amended; the Toxic Substances Control Act, as amended; the Clean Air
Act, as amended; the Clean Water Act, as amended; together with all
regulations promulgated thereunder, and any other "Superfund" or
"Superlien" law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.
"ERISA Affiliate," as applied to the Borrower, means any
Person or trade or business which is a member of a group which is under
common control with the Borrower, who together with the Borrower, is
treated as a single employer within the meaning of Section 414(b) and
(c) of the Code.
12
<PAGE>
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Eurodollar = Interbank Offered Rate + Applicable
Rate ------------------------------------- Margin
1- Reserve Requirement
</TABLE>
"Eurodollar Rate Loan" means a Loan for which the rate of
interest is determined by reference to the Eurodollar Rate.
"Event of Default" means any of the occurrences set forth as
such in Section 11.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Excluded Deposit Accounts" means (i) deposit account no.
613237765 held at Chase Manhattan Bank with aggregate deposits not in
excess of $2,000,000, (ii) deposit account no. 40001796 held at
Citibank, N.A., with aggregate deposits not in excess of $100,000,
(iii) Comercializadora accounts nos. 36169262 and 270296009 held with
Citibank, N.A., with aggregate deposits not in excess of $500,000, (iv)
cotton margin accounts with aggregate deposits not in excess of
$3,000,000 and (v) all de minimis depository accounts with aggregate
deposits not in excess of $200,000.
"Existing Credit Agreement" means that certain Credit
Agreement dated as of August 7, 1997 by and among the Borrower, Morgan
Guaranty Trust Company of New York, as agent, and the lenders party
thereto, as amended.
"Facility Guaranty" means each Guaranty Agreement between one
or more Guarantors and the Agent for the benefit of the Agent and the
Lenders, Prudential, the Senior Lease Creditor, Morgan, the General
Collateral Agent, the Designated Collateral Subagent and the Priority
Collateral Agent delivered as of the Closing Date and otherwise
pursuant to Section 9.20, as the same may be amended, supplemented, or
restated from time to time.
"Facility Termination Date" means such date as all of the
following shall have occurred: (i) the Borrower shall have permanently
terminated the Revolving Credit Facility by payment in full of all
Revolving Credit Outstandings and Letter of Credit Outstandings,
together with all accrued and unpaid interest thereon, except for the
undrawn portion of Letters of Credit as have been fully cash
collateralized in a manner consistent with the terms of Section
11.1(B), (ii) Revolving Credit Commitments and Letter of Credit
Commitments shall have terminated or expired and (iii) the Borrower
shall have fully, finally and irrevocably paid and satisfied in full
all Obligations (other than the Morgan Swap Obligations and Obligations
consisting of continuing indemnities and other Contingent Obligations
of the Borrower or any Guarantor that may be owing to the Lenders
pursuant to the Loan Documents and expressly survive termination of
this Agreement).
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<PAGE>
"FASB No. 88 Adjustments" means adjustments charged to income
(or loss) and a corresponding liability resulting from "settlements and
curtailments of pension plans" (as defined in the Statement of
Financial Accounting Standards No. 88) and for related termination
benefits.
"FASB No. 106 Adjustments" means adjustments to income (or
loss) less actual cash payments resulting from "retirement benefits
other than pensions" (as defined in the Statement of Financial
Accounting Standards No. 106).
"FASB No. 112 Adjustments" means adjustments to income (or
loss) less actual cash payments resulting from "post-employment
benefits" (as defined in the Statement of Financial Accounting
Standards No. 112).
"FASB No. 121 Adjustments" means adjustments charged to income
(or loss) resulting from impairment of long-lived assets (as defined in
the Statement of Financial Accounting Standards No. 121).
"FASB 133 Adjustments" means entries on or adjustments to any
balance sheet or statement of income in respect of derivatives or
hedging instruments as required or permitted by Statement of Financial
Accounting Standards No. 133 other than adjustments relating to
transactions in cotton derivatives in the ordinary course of business.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; provided
that (i) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and
(ii) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate
charged to the Agent (in its individual capacity) on such day on such
transactions as determined by the Agent.
"Fiscal Quarter" means each of the three month fiscal periods
of the Borrower and its Subsidiaries ending on January 2, 2000, April
2, 2000, July 2, 2000, October 1, 2000 and December 31, 2000.
"Fiscal Year" means, with respect to fiscal year 1999, the
fiscal period of the Borrower and its Subsidiaries ending on January 2,
2000 and, with respect to fiscal year 2000, the fiscal period ending
December 31, 2000.
"Foreign Benefit Law" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign
nation or any province, state, territory,
14
<PAGE>
protectorate or other political subdivision thereof regulating,
relating to, or imposing liability or standards of conduct concerning,
any Employee Benefit Plan.
"Four-Quarter Period" means a period of four full consecutive
Fiscal Quarters of the Borrower and its Subsidiaries, taken together as
one accounting period.
"Fully Satisfied" means, with respect to (i) the Senior
Revolving Credit Obligations, the Facility Termination Date shall have
occurred, (ii) the Senior Note Obligations, the same shall have been
paid in full in cash, (iii) the Senior Lease Obligations, the same
shall have been paid in full in cash, (iv) the Senior Debenture
Obligations, the same shall have been paid in full in cash and (v) the
Morgan Swap Obligations, the same, if any, shall have been paid in full
in cash and the Morgan Swap Agreement shall have terminated.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public
Accountants, or which have other substantial authoritative support and
are applicable in the circumstances as of the date of a report.
"General Collateral" means the real and personal property,
fixtures and assets of the Borrower and its Material Subsidiaries
whether now existing or hereafter arising, created or acquired upon
which a General Lien has been granted to the General Collateral Agent
for the benefit of the General Secured Parties pursuant to the General
Security Instruments.
"General Collateral Agency Agreement" means that certain
Collateral Agency Agreement dated as of the date hereof among the
General Secured Parties and the General Collateral Agent, as amended,
supplemented or restated from time to time.
"General Collateral Agent" means Wilmington Trust Company, not
individually but solely in its capacity as collateral agent on behalf
of the General Secured Parties hereunder with respect to the General
Collateral, pursuant to the terms of the General Collateral Agency
Agreement, and the Designated Collateral Subagent and their agents,
successors and permitted assigns.
"General Lien" means, with respect to any General Collateral,
a valid and enforceable Lien thereon in favor of the General Collateral
Agent for the benefit of the General Secured Parties conferred under
the General Security Instruments which is fully perfected and ranking
of higher priority than any other Lien on such property other than a
Priority Lien and Permitted Liens.
"General Mortgages" means, collectively, all mortgages, deeds
of trust and deeds to secure debt substantially in the form of Exhibit
M-1 or Exhibit M-2 granting a General Lien by the Borrower or a
Guarantor to the General Collateral Agent (or a trustee for the benefit
of the General Collateral Agent) for the benefit of the General Secured
Parties in
15
<PAGE>
General Collateral constituting real property and fixtures as
collateral security for the General Senior Obligations, and the
Guarantors' Obligations with respect thereto, as such documents may be
amended, supplemented or restated from time to time.
"General Secured Parties" means the Lenders, the Revolving
Credit Agent, Prudential, Atlantic Financial Group, Ltd. and SunTrust
Bank, Morgan and the Bond Trustee for the benefit of the Debenture
Holders.
"General Security Agreement" means that certain General
Security Agreement dated as of the date hereof, and each additional
General Security Agreement entered into after the date hereof by any
Subsidiary in accordance with the terms of any Senior Credit Document,
granting a General Lien to the General Collateral Agent for the benefit
of the General Secured Parties pursuant to the General Collateral
Agency Agreement, as collateral security for the General Senior
Obligations, and the Guarantors' Obligations with respect thereto, as
amended, supplemented or restated from time to time.
"General Security Instruments" means (i) the General Security
Agreement, (ii) the General Mortgages, (iii) the Pledge Agreement and
(iv) all other agreements, instruments and other documents, whether now
existing or hereafter in effect, pursuant to which the Borrower or any
Material Subsidiary shall grant or convey to the General Collateral
Agent for the benefit of the General Secured Parties a General Lien in
property as security for payment of all or any portion of the General
Senior Obligations, and the Guarantors' Obligations with respect
thereto, all as amended, supplemented or restated from time to time.
"General Senior Obligations" mean all Senior Debt Obligations
other than Priority Senior Obligations, comprised of a pro rata portion
of the Senior Revolving Credit Obligations, the Senior Note
Obligations, the Senior Lease Obligations, Morgan Swap Obligations and
Senior Debenture Obligations outstanding at any time.
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are
fully and unconditionally guaranteed by, the United States of America
or any agency thereof.
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission,
board, bureau, court, agency or instrumentality or political
subdivision thereof or any entity or officer exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to any government or any court, in each case whether
associated with a state of the United States, the United States, or a
foreign entity or government.
"Guarantors" means, at any date, the Material Subsidiaries who
are parties to a Facility Guaranty at such date which as of the Closing
Date includes the Material Subsidiaries identified on Schedule 1.2.
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"Guarantors' Obligations" has the meaning given to such term
in the Facility Guaranty.
"Hazardous Material" means and includes any pollutant,
contaminant, or hazardous, toxic or dangerous waste, substance or
material (including without limitation petroleum products,
asbestos-containing materials and lead), the generation, handling,
storage, transportation, disposal, treatment, release, discharge or
emission of which is subject to any Environmental Law.
"Indebtedness" means as to any Person, without duplication,
(i) all Indebtedness for Money Borrowed of such Person, (ii) all Rate
Hedging Obligations of such Person, (iii) all indebtedness secured by
any Lien on any property or asset owned or held by such Person
regardless or whether the indebtedness secured thereby shall have been
assumed by such Person or is non-recourse to the credit of such Person,
and (iv) all Contingent Obligations of such Person.
"Indebtedness for Money Borrowed" means with respect to any
Person, without duplication, all indebtedness in respect of money
borrowed, including without limitation, all obligations under Capital
Leases, all Synthetic Lease Indebtedness, all Securitization
Outstandings, the deferred purchase price of any property or services,
the aggregate face amount of all surety bonds, letters of credit, and
bankers' acceptances, and (without duplication) all payment and
reimbursement obligations in respect thereof whether or not matured,
evidenced by a promissory note, bond, debenture or similar written
obligation for the payment of money (including reimbursement agreements
and conditional sales or similar title retention agreements), other
than trade payables, documentary letters of credit and accrued expenses
incurred in the ordinary course of business.
"Interbank Offered Rate" means, with respect to any Eurodollar
Rate Loan for the Interest Period applicable thereto, the rate per
annum (rounded upwards, if necessary), to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately 11:00
A.M. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period. If for
any reason such rate is not available, the term "Interbank Offered
Rate" shall mean, with respect to any Eurodollar Rate Loan for the
Interest Period applicable thereto, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 A.M. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to
such Interest Period, provided, however; if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to
the nearest 1/100 of 1%).
"Intercreditor Agreements" means, collectively, the Senior
Debt Intercreditor Agreement, the Leased Facility Intercreditor
Agreement and the Securitization Intercreditor Agreement.
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"Interest Period" means, for each Eurodollar Rate Loan, a
period commencing on the date such Eurodollar Rate Loan is made or
Converted or Continued and ending, at the Borrower's option, on the
date one, two or three months thereafter as notified to the Agent by
the Authorized Representative in accordance with the terms hereof;
provided that,
(i) if an Interest Period for a Eurodollar Rate Loan
would end on a day which is not a Business Day, such Interest
Period shall be extended to the next Business Day (unless such
extension would cause the applicable Interest Period to end in
the succeeding calendar month, in which case such Interest
Period shall end on the next preceding Business Day); and
(ii) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month.
"Interest Rate Selection Notice" means the written notice
delivered by an Authorized Representative in connection with the
election of a subsequent Interest Period for any Eurodollar Rate Loan
or the Conversion of any Eurodollar Rate Loan into a Base Rate Loan or
the Conversion of any Base Rate Loan into a Eurodollar Rate Loan, in
the form of Exhibit E.
"Inventory" has the meaning given to such term in the Security
Agreement.
"Issuing Bank" means Bank of America as issuer of Letters of
Credit under Article III and its successors and permitted assigns.
"Leased Facility Intercreditor Agreement" means that certain
Intercreditor Agreement dated as of the date hereof between the Agent
and the Senior Lease Creditor relating to relative rights and remedies
with respect to the Senior Leased Facility, as from time to time
amended, supplemented or replaced.
"Letter of Credit" means each standby or commercial letter of
credit issued by the Issuing Bank pursuant to Article III hereof for
the account of the Borrower in favor of a Person advancing credit or
securing an obligation on behalf of the Borrower.
"Letter of Credit Commitment" means, with respect to each
Lender, the obligation of such Lender to acquire Participations in
respect of Letters of Credit and Reimbursement Obligations up to an
aggregate amount at any one time outstanding equal to such Lender's
Applicable Commitment Percentage of the Total Letter of Credit
Commitment as the same may be increased or decreased from time to time
pursuant to this Agreement.
"Letter of Credit Facility" means the facility described in
Article III hereof providing for the issuance by the Issuing Bank for
the account of the Borrower of Letters
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of Credit in an aggregate stated amount at any time outstanding not
exceeding the Total Letter of Credit Commitment minus outstanding
Reimbursement Obligations.
"Letter of Credit Outstandings" means, as of any date of
determination, the aggregate amount available to be drawn under all
Letters of Credit plus Reimbursement Obligations then outstanding.
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes. For the purposes of this Agreement, the Borrower and any
Subsidiary shall be deemed to be the owner of any property which it has
acquired or holds subject to a conditional sale agreement, financing
lease, or other arrangement pursuant to which title to the property has
been retained by or vested in some other Person for security purposes.
"Loan" or "Loans" means any of the Revolving Loans made under
the Revolving Credit Facility.
"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Intercreditor Agreements, the Facility Guaranties, the
Applications and Agreements for Letter of Credit, and all other
instruments and documents heretofore or hereafter executed or delivered
to or in favor of any Lender (including the Issuing Bank) or the Agent
in connection with the Loans made and transactions contemplated under
this Agreement, as amended, supplemented or restated from time to time.
"Master Lease" means that certain Master Lease Agreement dated
as of October 24, 1994 between the Borrower, as Lessee, and TCB Realty
II Corporation, as Lessor ("TCB"), relating to the North Pointe Center
Development, as amended, supplemented or restated from time to time and
as assigned by TCB to Atlantic Financial Group, Ltd. pursuant to that
certain Assignment Agreement dated as of April 15, 1999 among Citicorp
Leasing, Inc. and SunTrust Bank.
"Material Adverse Effect" means a material adverse effect on
(i) the business, properties, operations, prospects or condition,
financial or otherwise, of the Borrower and its Subsidiaries, taken as
a whole, (ii) the ability of any Credit Party to pay or perform its
respective obligations, liabilities and indebtedness under the Loan
Documents as such payment or performance becomes due in accordance with
the terms thereof, or (iii) the rights, powers and remedies of the
Agent or any Lender under any Loan Document or the validity, legality
or enforceability thereof.
"Material Direct Foreign Subsidiary" means any Direct Foreign
Subsidiary which would be considered a Material Subsidiary under
clauses (i) or (ii) of the definition "Material Subsidiary" if it were
a Domestic Subsidiary.
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"Material Real Property" means (i) each Mortgaged Property set
forth on Schedule 5.4 and (ii) each other parcel of real property owned
from time to time by the Borrower or any Domestic Subsidiary having a
fair market value at any time of determination of at least $1,000,000.
"Material Real Property Support Documents" means for each
Material Real Property (other than the Comfort Sleep property) and,
with respect to Mortgaged Property subject to Sections 5.4(a)(ii)(B)
and 5.4(b)(ii)(B), only such of the following as are required by the
applicable Governmental Authority), (i) the Title Policy pertaining
thereto, (ii) such surveys, flood hazard certifications, appraisals,
and environmental assessments thereof as the Agent may require prepared
by recognized experts in their respective fields selected by the
Borrower and reasonably satisfactory to the Agent, (iii) as to Material
Real Property located in a flood hazard area, such flood hazard
insurance as the Agent may require, (iv) as to leasehold interests,
such lessor estoppel, waiver and consent certificates, (v) with respect
to facilities leased or subleased to third parties (other than
properties leased for less than $300,000 per Fiscal Year), such
lessees' estoppel, waiver and consent certificates and subordination,
nondisturbance and attornment agreements, (vi) such owner's or lessee's
affidavits as the Agent may require, (vii) such opinions of local
counsel with respect to the Mortgages or leasehold mortgages, as
applicable, as the Agent may require, and (viii) such other
documentation as the Agent may reasonably require, in each case as
shall be in form and substance reasonably acceptable to the Agent.
"Material Subsidiary" means any direct or indirect Domestic
Subsidiary of the Borrower which (i) has total assets equal to or
greater than 2% of consolidated total assets of the Borrower and its
Domestic Subsidiaries (calculated as of the most recent fiscal period
with respect to which the Agent shall have received financial
statements required to be delivered pursuant to Sections 9.1(a) or (b)
(or if prior to delivery of any financial statements pursuant to such
Sections, then calculated with respect to the Fiscal Year end financial
statements referenced in Section 8.6) (the "Required Financial
Information")) or (ii) has revenue equal to or greater than 2% of
consolidated total revenue of the Borrower and its Domestic
Subsidiaries (calculated for the most recent period for which the Agent
has received the Required Financial Information); provided, however,
that notwithstanding the foregoing, the term "Material Subsidiary"
shall mean each of those Domestic Subsidiaries that together with the
Borrower and each other Material Subsidiary have assets equal to not
less than 98% of consolidated total assets of the Borrower and its
Domestic Subsidiaries (calculated as described above) and revenue of
not less than 98% of consolidated total revenue of the Borrower and its
Domestic Subsidiaries (calculated as described above); provided further
that if more than one combination of Domestic Subsidiaries satisfies
both such thresholds, then those Domestic Subsidiaries so determined to
be "Material Subsidiaries" shall be specified by the Borrower, and
which include as of the Closing Date the Subsidiaries identified on
Schedule 1.2.
"Material Supply Agreement" means, collectively, (i) the
exclusive Supply Agreement dated as of March 30, 1992 between the
Borrower and Levi Strauss & Co., as
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amended or replaced from time to time, and (ii) any other contract or
agreement with any retail or wholesale customer of the Borrower or any
Subsidiary the cancellation, termination, or non-renewal of which would
reasonably be likely to have a Material Adverse Effect.
"Mexican Capital Expenditures" means all Capital Expenditures
made with respect to property, plant or equipment located in Mexico
other than Parras Cone Capital Expenditures.
"Moody's" means Moody's Investors Service, Inc.
"Morgan" means Morgan Guaranty Trust Company of New York, in
its capacity as party to the Morgan Swap Agreement and obligee of the
Morgan Swap Obligations.
"Morgan Swap Agreement" means that certain ISDA Master
Agreement dated as of July 20, 1998 between the Borrower and Morgan as
supplemented pursuant to that certain letter agreement dated as of July
20, 1998, as from time to time amended, supplemented or restated.
"Morgan Swap Obligations" means all obligations and
liabilities of the Borrower to Morgan in respect of the interest rate
hedging agreements entered into prior to, and outstanding on, the
Closing Date under the Morgan Swap Agreement, including, but not
limited to, (i) the obligations of the Borrower to make periodic
payments to Morgan in accordance with the terms of the Morgan Swap
Agreement and (ii) the obligation of the Borrower to make a termination
payment to Morgan under Section 6(e) of the Morgan Swap Agreement,
provided, however, that in the event that the payments to be made by
the Borrower to Morgan under (i) and (ii) above are greater than
$3,000,000, the amount of such obligations shall be deemed to be
$3,000,000 for purposes of this definition.
"Mortgaged Property" means, collectively, (i) the real
property, leasehold interests, improvements, fixtures and other items
of real and personal property related thereto and the products thereof
of the Borrower and its Domestic Subsidiaries which are subject to a
Mortgage on the Closing Date, and (ii) thereafter, any of such property
owned or acquired by the Borrower or any Domestic Subsidiary, including
any Subsidiary that is or is required to become a Guarantor after the
Closing Date pursuant to Section 9.20, which has a fair market value in
excess of $300,000 which is required to become subject to a Mortgage
hereunder and (iii) any other real property with respect to which the
Borrower or a Domestic Subsidiary has elected in its sole discretion to
make subject to a Mortgage.
"Mortgages" means, collectively, each of the Priority
Mortgages, the General Mortgages and the Senior Lease Facility
Mortgage.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate is making,
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or is accruing an obligation to make, contributions or has made, or
been obligated to make, contributions within the preceding six (6)
Fiscal Years.
"Non-cash Restructuring Charges" means those expenses and
charges against earnings incurred in connection with the Borrower's
comprehensive corporate downsizing and reorganization program and which
do not result in any cash payment by the Borrower or any Subsidiary,
all as determined on a consolidated basis in accordance with GAAP
applied on a Consistent Basis.
"Notes" means the Revolving Notes.
"Obligations" means the obligations, liabilities and
Indebtedness of the Borrower with respect to (i) the principal and
interest on the Loans as evidenced by the Notes, (ii) the Reimbursement
Obligations and otherwise in respect of the Letters of Credit, and
(iii) the payment and performance of all other obligations, liabilities
and Indebtedness of the Borrower to the Lenders (including the Issuing
Bank), the Agent or BAS hereunder, under any one or more of the other
Loan Documents or with respect to the Loans.
"Operating Documents" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, the bylaws, operating agreement, partnership
agreement, limited partnership agreement or other applicable documents
relating to the operation, governance or management of such entity.
"Organizational Action" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, any corporate, organizational or partnership
action (including any required shareholder, member or partner action),
or other similar official action, as applicable, taken by such entity.
"Organizational Documents" means with respect to any
corporation, limited liability company, partnership, limited
partnership, limited liability partnership or other legally authorized
incorporated or unincorporated entity, the articles of incorporation,
certificate of incorporation, articles of organization, certificate of
limited partnership or other applicable organizational or charter
documents relating to the creation of such entity.
"Outstandings" means, collectively, at any date, the Letter of
Credit Outstandings and Revolving Credit Outstandings on such date.
"Overadvance Basket" means an amount of up to $5,000,000 which
may be utilized by the Borrower in the determination of the Borrowing
Base in the manner set forth in the definition of "Borrowing Base."
"Overcollateralization Amount" means, at any date of
determination, the excess of the aggregate Outstanding Balance (as
defined in the Receivables Purchase Agreement)
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of all Transferred Receivables (as defined in the Receivables Purchase
Agreement) over the Capital Investment (as defined in the Receivables
Purchase Agreement) with respect to such Transferred Receivables.
"Parras Cone" means Parras Cone de Mexico, S. A., a joint
venture of the Borrower and CIPSA.
"Parras Cone Acquisition" means the purchase of (i)
substantially all of the assets of, or (ii) a controlling equity
interest in, Parras Cone, in each case, pursuant to a transaction
financed exclusively with Parras Cone Debt and investments permitted
under Section 10.7(h).
"Parras Cone Capital Expenditures" means all Capital
Expenditures made by Parras Cone financed exclusively from internally
generated revenue and/or the Parras Cone Debt.
"Parras Cone Debt" means Indebtedness (other than Advances
under the Revolving Credit Facility) incurred to finance the Parras
Cone Acquisition (which may include refinancing the existing
Indebtedness of Parras Cone), which Indebtedness is non-recourse to the
Borrower and its Subsidiaries.
"Participation" means, with respect to any Lender (other than
the Issuing Bank) and a Letter of Credit, the extension of credit
represented by the participation of such Lender hereunder in the
liability of the Issuing Bank in respect of a Letter of Credit issued
by the Issuing Bank in accordance with the terms hereof.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"PBGC Agreement" means (i) initially, the Memorandum of
Understanding dated January 3, 2000 between the Borrower and the PBGC
concerning certain of the Borrower's Pension Plans and (ii) from and
after the execution of definitive documentation thereafter entered into
between the Borrower on substantially the same terms as set forth in
such Memorandum of Understanding, such definitive documentation.
"Pension Plan" means any employee pension benefit plan within
the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412
of the Code and which (i) is maintained for employees of the Borrower
or any of its ERISA Affiliates or is assumed by the Borrower or any of
its ERISA Affiliates in connection with any Acquisition or (ii) has at
any time been maintained for the employees of the Borrower or any
current or former ERISA Affiliate.
"Permitted Asset Dispositions" means Asset Dispositions
consisting of (i) dispositions of inventory in the ordinary course of
business, (ii) dispositions of items of equipment which, in the
aggregate during any Fiscal Year, have a fair market value or
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book value, whichever is greater, of $2,000,000 or less, (iii)
dispositions of property that is substantially worn, damaged, obsolete
or, in the judgment of the Borrower, no longer best used or useful in
its business or that of any Subsidiary which in the aggregate during
any Fiscal Year has a fair market value or book value, whichever is
greater, of $1,000,000 or less, (iv) transfers of assets necessary to
give effect to merger or consolidation transactions permitted by
Section 10.8, (v) the disposition of cash or Eligible Securities in the
ordinary course of management of the investment portfolio of the
Borrower and its Subsidiaries, (vi) securitization of accounts
receivable and related rights pursuant to the Securitization
Transaction, (vii) the sale or discount without recourse of accounts
receivable or notes receivable, or the conversion or exchange of
accounts receivable into or for notes receivable in connection with the
compromise or collection thereof, each in the ordinary course of
business, (viii) dispositions of assets with an aggregate book value or
fair market value, whichever is greater, of up to $2,000,000 during any
Fiscal Year of the Borrower or any Subsidiary the proceeds of which are
reinvested within 180 days of such disposition by the Borrower or such
Subsidiary in replacement assets of substantially the same or greater
such value and utility as the assets so disposed of (or such
replacement asset is otherwise purchased by the Borrower or such
Subsidiary within 180 days prior to such disposition), (ix)
dispositions of assets described on Schedule 1.1 hereto and (x) sale
and leaseback transactions permitted under Section 10.14.
"Permitted Liens" has the meaning given to such term in
Section 10.4.
"Person" means an individual, partnership, corporation,
limited liability company, limited liability partnership, trust,
unincorporated organization, association, joint venture or a government
or agency or political subdivision thereof.
"Pledge Agreement" means, collectively (or individually as the
context may indicate), (i) that certain Securities Pledge Agreement
dated as of the date hereof from the Borrower to the General Collateral
Agent for the benefit of the General Secured Parties, (ii) that certain
Pledge Agreement dated as of the date hereof from the Borrower pledging
65% of the total outstanding shares of each of its Material Direct
Foreign Subsidiaries to the General Collateral Agent for the benefit of
the General Secured Parties, (iii) any additional Securities Pledge
Agreement delivered to the General Collateral Agent pursuant to Section
5.1 and 9.20, and (iv) with respect to any Subsidiary Securities issued
by a Material Direct Foreign Subsidiary, any additional or substitute
charge, agreement, document, instrument or conveyance, in form and
substance acceptable to the General Collateral Agent, conferring under
applicable foreign law upon the General Collateral Agent for the
benefit of the General Secured Parties a General Lien upon such
Subsidiary Securities and equity interests as are owned by the Borrower
or any Domestic Subsidiary, in each case as hereafter amended,
supplemented (including by Pledge Agreement Supplement) or restated
from time to time.
"Pledge Agreement Supplement" means, with respect to each
Pledge Agreement, the Pledge Agreement Supplement in the form affixed
as an exhibit to such Pledge Agreement.
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"Pledged Interests" means the Subsidiary Securities required
to be pledged as General Collateral pursuant to Article V or the terms
of any Pledge Agreement.
"Prime Rate" means the per annum rate of interest established
from time to time by Bank of America as its prime rate, which rate may
not be the lowest rate of interest charged by Bank of America to its
customers.
"Principal Office" means the principal office of Bank of
America, presently located at 101 North Tryon Street, 15th Floor, NC1
001-15-04, Charlotte, North Carolina 28255, Attention: Agency Services,
or such other office and address as the Agent may from time to time
designate.
"Priority Collateral" means the certain personal and real
property, assets and fixtures of the Borrower and its Material
Subsidiaries whether now existing or hereafter arising, created or
acquired, upon which a Priority Lien has been granted to the Priority
Collateral Agent for the benefit of the Priority Secured Parties
pursuant to the Priority Security Instruments.
"Priority Collateral Agency Agreement" means that certain
Collateral Agency Agreement dated as of the date hereof among the
Priority Secured Parties and the Priority Collateral Agent, as amended,
supplemented or restated from time to time.
"Priority Collateral Agent" means Bank of America not
individually but solely in its capacity as collateral agent for the
Priority Secured Parties with respect to the Priority Collateral
pursuant to the terms of the Priority Collateral Agency Agreement, and
its agents, successors and permitted assigns.
"Priority Lien" means, with respect to any Priority
Collateral, a valid and enforceable Lien thereon in favor of the
Priority Collateral Agent for the benefit of the Agent, the Lenders and
the other Priority Secured Parties conferred under the Priority
Security Instruments which is fully perfected and ranking of higher
priority than any other Lien, including any General Lien, on such
property, except for Permitted Liens.
"Priority Mortgages" means, collectively, all mortgages, deeds
of trust and deeds to secure debt substantially in the form of Exhibit
M-3 or Exhibit M-4 granting a Priority Lien by the Borrower or a
Guarantor to the Priority Collateral Agent (or a trustee for the
benefit of the Priority Collateral Agent) for the benefit of the
Priority Secured Parties in Priority Collateral constituting real
property and fixtures as collateral security for the Priority Senior
Obligations, and if applicable, the Guarantors' Obligations with
respect thereto, as such documents may be amended, supplemented or
restated from time to time.
"Priority Secured Parties" means the Lenders, the Revolving
Credit Agent, Prudential, Atlantic Financial Group, Ltd. and SunTrust
Bank.
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"Priority Security Agreement" means that certain Priority
Security Agreement dated as of the date hereof, and each additional
Priority Security Agreement entered into after the date hereof by any
Subsidiary in accordance with the terms of any Senior Credit Document,
granting a Priority Lien to the Priority Collateral Agent for the
benefit of the Priority Secured Parties pursuant to the Priority
Collateral Agency Agreement as collateral security for the Priority
Senior Obligations, and if applicable, the Guarantors' Obligations with
respect thereto, as amended, supplemented or restated from time to
time.
"Priority Security Instruments" means (i) the Priority
Security Agreement, (ii) the Priority Mortgages and (iii) all other
agreements, instruments and other documents, whether now existing or
hereafter in effect pursuant to which the Borrower or any Material
Subsidiary shall grant or convey a Priority Lien to the Priority
Collateral Agent for the benefit of the Priority Secured Parties as
collateral security for the Priority Senior Obligations, and if
applicable, the Guarantors' Obligations with respect thereto, all as
amended, supplemented and restated from time to time.
"Priority Senior Obligations" has the meaning given to such
term in the Intercreditor Agreement.
"Prudential" means The Prudential Insurance Company of
America, in its capacity as holder of the Senior Notes.
"Rate Hedging Obligations" means, without duplication, any and
all obligations of the Borrower or any Subsidiary, whether absolute or
contingent and howsoever and whensoever created, arising, evidenced or
acquired (including all renewals, extensions and modifications thereof
and substitutions therefor), under (i) any and all agreements, devices
or arrangements designed to protect at least one of the parties thereto
from the fluctuations of interest rates, exchange rates or forward
rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, Dollar-denominated or
cross-currency interest rate exchange agreements, forward currency
exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts, warrants and
those commonly known as interest rate "swap" agreements; (ii) all other
"derivative instruments" as defined in FASB 133 and which are subject
to the reporting requirements of FASB 133; and (iii) any and all
cancellations, buybacks, reversals, terminations or assignments of any
of the foregoing; provided, however, under no circumstances shall
obligations for cotton hedging in the ordinary course of business be
considered Rate Hedging Obligations.
"Receivables Purchase Agreement" means that certain
Receivables Purchase and Servicing Agreement dated September 1, 1999 by
and among Cone Receivables II LLC, as Seller, Redwood Receivables
Corporation, as Purchaser, Cone Mills Corporation, as Servicer, and
General Electric Capital Corporation, as Operating Agent and Collateral
Agent, as amended by the First Amendment and Waiver to Securitization
Agreements dated as of November 16, 1999 and the Second Amendment to
Securitization Agreements dated as of the Closing Date and as amended,
supplemented or restated from time to time.
"Receivables Transfer Agreement" means that certain
Receivables Transfer Agreement dated September 1, 1999 by and among
Cone Mills Corporation, the other originators party thereto and Cone
Receivables II LLC, as amended by the First Amendment and Waiver to
Securitization Agreements dated as of November 16, 1999 and the Second
Amendment to Securitization
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Agreements dated as of the Closing Date and as amended, supplemented or
restated from time to time.
"Registrar" means, with respect to any Subsidiary Securities
required to be pledged pursuant to the terms of any Pledge Agreement,
any Person authorized or obligated to maintain records of the
registration of ownership or transfer of ownership of interests in such
Subsidiary Securities, and in the event no such Person shall have been
expressly designated by the related Subsidiary, shall mean (i) as to
any corporation or limited liability company, its Secretary (or
comparable official), and (ii) as to any partnership, its general
partner (or managing general partner if one shall have been appointed).
"Regulation D" means Regulation D of the Board as the same may
be amended or supplemented from time to time.
"Reimbursement Obligation" shall mean at any time, the
obligation of the Borrower with respect to any Letter of Credit to
reimburse the Issuing Bank and the Lenders to the extent of their
respective Participations (including by the receipt by the Issuing Bank
of proceeds of Loans pursuant to Section 2.1(c)(iii)) for amounts
theretofore paid by the Issuing Bank pursuant to a drawing under such
Letter of Credit.
"Repurchase Agreement" means a repurchase agreement entered
into with any financial institution whose debt obligations or
commercial papers are rated "A" by either of S&P or Moody's or "A-1" by
S&P or "P-1" by Moody's with a term of no more than seven days.
"Required Enforcement General Secured Parties" shall have the
meaning given to such term in the Intercreditor Agreement.
"Required General Secured Parties" means, as of any date,
General Secured Parties (other than the Bond Trustee and the Debenture
Holders) holding more than fifty percent (50%) of the General Senior
Obligations (other than the Senior Debenture Obligations) outstanding
on such date.
"Required Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating (i) if there
shall be fewer than three (3) Lenders, 100% of the aggregate Credit
Exposures of all Lenders on such date, and (ii) if there shall be three
(3) or more Lenders, more than 66-2/3% of the aggregate Credit
Exposures of all the Lenders on such date. For purposes of the
preceding sentence, the
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amount of the "Credit Exposure" of each Lender shall be equal at all
times (a) other than following the occurrence and during the
continuance of an Event of Default, to its Revolving Credit Commitment,
and (b) following the occurrence and during the continuance of an Event
of Default, to the sum of (i) the amount of such Lender's Applicable
Commitment Percentage of Revolving Credit Outstandings plus (ii) the
amount of such Lender's Applicable Commitment Percentage of Letter of
Credit Outstandings; provided that, for the purpose of this definition
only, (A) if any Lender shall have failed to fund its Applicable
Commitment Percentage of any Advance, then the Revolving Credit
Commitment of such Lender shall be deemed reduced by the amount it so
failed to fund for so long as such failure shall continue and such
Lender's Credit Exposure attributable to such failure shall be deemed
held by any Lender making more than its Applicable Commitment
Percentage of such Advance to the extent it covers such failure and (B)
if any Lender shall have failed to pay to the Issuing Bank upon demand
its Applicable Commitment Percentage of any drawing under any Letter of
Credit resulting in an outstanding Reimbursement Obligation (whether by
funding its Participation therein or otherwise), such Lender's Credit
Exposure attributable to all Letter of Credit Outstandings shall be
deemed to be held by the Issuing Bank until such Lender shall pay such
deficiency amount to the Issuing Bank together with interest thereon as
provided in Section 4.9.
"Required Priority Secured Parties" means, as of any date,
Priority Secured Parties holding more than fifty percent (50%) of the
Priority Senior Obligations outstanding on such date.
"Required Secured Parties" means, as of any date, (i) Priority
Secured Parties holding more than fifty percent (50%) of the Priority
Senior Obligations outstanding on such date and (ii) General Secured
Parties (other than the Debenture Holders) holding more than fifty
percent (50%) of the General Senior Obligations outstanding on such
date, excluding in such calculations for all purposes of determination
the Senior Debenture Obligations.
"Reserve Requirement" means, at any time, the maximum rate at
which reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained
under regulations issued from time to time by the Board by member banks
of the Federal Reserve System against "Eurocurrency liabilities" (as
such term is used in Regulation D). Without limiting the effect of the
foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks with respect to (i) any
category of liabilities which includes deposits by reference to which
the Eurodollar Rate is to be determined, or (ii) any category of
extensions of credit or other assets which include Eurodollar Rate
Loans. The Eurodollar Rate shall be adjusted automatically on and as of
the effective date of any change in the Reserve Requirement.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock of Borrower or any Subsidiary Securities of its Subsidiaries
(other than those payable or distributable solely to the
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Borrower) now or hereafter outstanding, except a dividend payable
solely in shares of a class of stock to the holders of that class; (ii)
any redemption, conversion, exchange, put, call, retirement or similar
payment, purchase or other acquisition for value, direct or indirect,
of any shares of any class of stock of Borrower or any of its
Subsidiaries (other than those payable or distributable solely to the
Borrower) now or hereafter outstanding; (iii) any payment made to
retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock of
Borrower or any Subsidiary Securities of its Subsidiaries now or
hereafter outstanding; and (iv) any issuance and sale of Subsidiary
Securities (other than director qualifying shares) of any Subsidiary of
the Borrower (or any option, warrant or right to acquire such stock)
other than to the Borrower; excluding in all instances however all
payments which would otherwise be considered "Restricted Payments" made
in accordance with the terms of an Approved Option Plan.
"Revolving Credit Commitment" means, with respect to each
Lender, the obligation of such Lender to make Revolving Loans to the
Borrower up to an aggregate principal amount at any one time
outstanding equal to such Lender's Applicable Commitment Percentage of
the Total Revolving Credit Commitment.
"Revolving Credit Facility" means the facility described in
Section 2.1 hereof providing for Loans to the Borrower by the Lenders
in the aggregate principal amount of the Total Revolving Credit
Commitment.
"Revolving Credit Outstandings" means, as of any Determination
Date, the aggregate principal amount of all Revolving Loans then
outstanding.
"Revolving Credit Termination Date" means (i) the Stated
Termination Date or (ii) such earlier date of termination of Lenders'
obligations pursuant to Section 11.1 upon the occurrence of an Event of
Default, or (iii) such date as the Borrower may voluntarily and
permanently terminate the Revolving Credit Facility by payment in full
of all Revolving Credit Outstandings and Letter of Credit Outstandings
and cancellation (or cash collateralization) of all Letters of Credit,
together with all accrued and unpaid interest thereon.
"Revolving Loan" means any borrowing pursuant to an Advance
under the Revolving Credit Facility in accordance with Section 2.1.
"Revolving Notes" means, collectively, the promissory notes of
the Borrower evidencing Revolving Loans executed and delivered to the
Lenders as provided in Section 2.3(a) substantially in the form of
Exhibit F-1, with appropriate insertions as to amounts, dates and names
of Lenders.
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc.
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"Secured Parties" means, collectively, the Priority Secured
Parties, the General Secured Parties and the Agent and the Lenders with
respect to the Senior Leased Facility.
"Securitization Deposit Accounts" means those certain lockbox
deposit accounts nos. 3750818293 and 1233-0-02323 with Bank of America,
N.A. and the deposit account no. 613237765 with Chase Manhattan Bank,
N.A., in each case held with such financial institutions in connection
with the transactions contemplated under the Receivables Purchase
Agreement.
"Securitization Intercreditor Agreement" means the
Intercreditor Agreement of even date herewith among General Electric
Capital Corporation, the General Collateral Agent and certain other
parties and more particularly described in the definition of "Permitted
Encumbrances" in Annex X to the Receivables Purchase Agreement, as
amended, supplemented or restated from time to time.
"Securitization Outstandings" means, at any time, the Capital
Investment (as defined in the Receivables Purchase Agreement) under the
Receivables Purchase Agreement, in an aggregate amount not in excess of
$60,000,000 at any time.
"Securitization Transaction" means any transaction pursuant to
which the Borrower or any Subsidiary, through Cone Receivables II LLC,
sells, disposes of or otherwise transfers any interest, including any
security interest, in accounts receivable and related rights pursuant
to the Receivables Purchase Agreement.
"Security Agreement" means, collectively (or individually as
the context may indicate), (i) the Priority Security Agreement, (ii)
the General Security Agreement, and (iii) any additional Security
Agreement delivered to the Agent pursuant to Section 9.20, as amended,
supplemented or restated from time to time.
"Security Documents" means, collectively, the General Security
Instruments, the Priority Security Instruments and the Senior Lease
Facility Mortgage.
"Security Termination Date" means the earliest date on which
any of the following shall occur: (i) all Senior Debt Obligations are
Fully Satisfied, (ii) all Senior Revolving Credit Obligations, all
Senior Note Obligations and all Senior Lease Obligations are Fully
Satisfied, or (iii) when each of the Agent (at the direction of all the
Lenders), the holders of the Senior Notes and the Senior Lease Creditor
agree in writing to the termination of all the General Security
Instruments and the Priority Security Instruments and to the release of
all General Liens and Priority Liens granted thereto thereunder.
"Senior Credit Documents" means, collectively, each of the
Loan Documents, the Senior Debenture Documents, the Senior Lease
Documents, the Senior Note Documents, and the Morgan Swap Agreement, as
amended, supplemented or restated from time to time.
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"Senior Creditors" means, collectively, all of (i) the Agent
and the Lenders and (ii) Prudential, (iii) the Senior Lease Creditor,
(iv) Morgan and (v) the Bond Trustee on behalf of and for the benefit
of the Debenture Holders.
"Senior Debenture Documents" means, collectively, the Senior
Indenture, the Senior Debentures and all documents delivered by or on
behalf of the Borrower to the Bond Trustee or the Debenture Holders in
connection therewith, as amended, supplemented or restated from time to
time.
"Senior Debenture Obligations" means, as of any date, all
obligations, liabilities and indebtedness of the Borrower with respect
to the payment of (i) all outstanding principal, together with accrued
and unpaid interest thereon, and premium thereon, if any, of the Senior
Debentures, and (ii) all fees, expenses and other payments required by
or under the Senior Debenture Documents.
"Senior Debentures" means the 8x% Debentures due March 15,
2005 issued by the Borrower pursuant to the Senior Indenture in an
aggregate original principal amount of $100,000,000, as amended,
restated or supplemented from time to time.
"Senior Debt Intercreditor Agreement" means that certain
Intercreditor Agreement dated as of the date hereof among the
Collateral Agents and the Senior Creditors, as amended, supplemented or
restated from time to time.
"Senior Debt Obligations" means, collectively, all of the
Senior Revolving Credit Obligations, the Senior Note Obligations, the
Senior Lease Obligations, the Senior Debenture Obligations and the
Morgan Swap Obligations.
"Senior Debt Outstandings" means the sum of (i) the aggregate
amount of Revolving Credit Outstandings and Letter of Credit
Outstandings, plus (ii) the aggregate outstanding principal amount of
the Senior Debentures, plus (iii) the aggregate outstanding principal
amount of the Senior Notes.
"Senior Indenture" means that certain Indenture dated as of
February 14, 1995 between the Borrower and the Bond Trustee, as
amended, restated or supplemented from time to time.
"Senior Lease Creditor" means, collectively, SunTrust Bank and
Atlantic Financial Group, Ltd., as creditors of the Senior Lease
Obligations.
"Senior Lease Documents" means the Master Lease, the Loan
Agreement (up to $16,000,000) dated as of October 24, 1994 between
Atlantic Financial Group, Ltd. (as successor to TCB Realty II
Corporation), as borrower, and SunTrust Bank (as successor to Citicorp
Leasing, Inc.), as lender (the "Development Loan Agreement") and the
other Key Agreements (as defined in the Development Loan Agreement), as
amended by the Tenth Amendment to Master Lease of even date herewith
and as amended, supplemented or restated from time to time.
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"Senior Lease Facility" means the Borrower's corporate
headquarters, including land and improvements, located at 3101 North
Elm Street, Greensboro, North Carolina and leased by the Borrower
pursuant to the Senior Lease Documents.
"Senior Lease Facility Mortgage" means the Deed of Trust and
Security Agreement dated as of the Closing Date from Atlantic Financial
Group, Ltd. in favor of the Agent for the benefit of itself and the
Lenders granting a Lien on the Senior Lease Facility, as such document
may be amended, supplemented or restated from time to time.
"Senior Lease Obligations" means, as of any date, all
obligations, liabilities and indebtedness of the Borrower with respect
to the payment of all rent, fees, expenses and other payments required
by or under the Senior Lease Documents to which it is a party.
"Senior Note Agreement" means that certain Note Agreement
dated August 13, 1992 between the Borrower and The Prudential Insurance
Company of America pursuant to which the Senior Notes were issued, as
amended by Amendment of 1992 Note Agreement, as amended, supplemented
or restated from time to time.
"Senior Note Documents" means the Senior Note Agreement, the
Senior Notes and all documents delivered by or on behalf of the
Borrower to Prudential in connection therewith, as amended,
supplemented or restated from time to time.
"Senior Note Obligations" means, as of any date, all
obligations, liabilities and indebtedness of the Borrower with respect
to the payment of (i) all outstanding principal, together with accrued
and unpaid interest and Yield Maintenance Amount (as defined in the
Senior Note Agreement) thereon, on the Senior Notes, and (ii) all fees,
expenses and other payments required by or under the Senior Note
Agreement or any other Senior Note Document to which it is a party.
"Senior Notes" means the 8.00% Senior Notes Due August 13,
2002 issued by the Borrower pursuant to the Senior Note Agreement in
the original aggregate principal amount of $75,000,000, as amended,
supplemented or restated from time to time.
"Senior Revolving Credit Obligations" means, except as set
forth below, all obligations, liabilities and indebtedness of the
Borrower with respect to the payment of (i) all outstanding principal,
together with accrued and unpaid interest thereon, on the Revolving
Notes, (ii) all Letter of Credit Outstandings and (iii) all fees,
expenses and other payments required by or under this Agreement or any
other Loan Document to which it is a party; provided, however, with
respect to all matters covered by Section 5.5 hereof and Section 1.2(b)
of the Senior Debt Intercreditor Agreement for which determination is
made at any time other than following the occurrence and during the
continuance of an Event of Default under this Agreement or any other
Loan Document, Senior Revolving Credit Obligations shall mean and be
equal to the Total Revolving Credit Commitment.
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"Solvent" means, when used with respect to any Person, that at
the time of determination:
(a) the fair value of its assets (both at fair valuation and
at present fair saleable value on an orderly basis) is in excess of the
total amount of its liabilities, including Contingent Obligations; and
(b) it is then able and expects to be able to pay its debts as
they mature; and
(c) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"Stated Termination Date" means August 7, 2000.
"Subsidiary" means any corporation or other entity in which
more than 50% of its outstanding Voting Securities or more than 50% of
all equity interests is owned directly or indirectly by the Borrower
and/or by one or more of the Borrower's Subsidiaries; provided however
that neither Cone Receivables II LLC nor Parras Cone (prior to the
consummation of the Parras Cone Acquisition in compliance with the
terms hereof) shall constitute Subsidiaries for the purposes of this
Agreement.
"Subsidiary Securities" means the shares of capital stock or
the other equity interests issued by or equity participations in any
Subsidiary, whether or not constituting a "security" under Article 8 of
the Uniform Commercial Code as in effect in any jurisdiction.
"Swap Agreement" means one or more agreements between the
Borrower and any Person with respect to Indebtedness evidenced by any
or all of the Notes, on terms mutually acceptable to Borrower and such
Person and approved by the Required Lenders, which agreements create
Rate Hedging Obligations, as amended, supplemented or restated from
time to time; provided, however, that no such approval of the Lenders
shall be required to the extent such agreements are entered into
between the Borrower and any Lender or any affiliate of any Lender.
"Synthetic Lease" means a leveraged leasing arrangement under
which the lease of property is treated as an operating lease under GAAP
but is treated as a financing lease arrangement for legal and tax
purposes and in which a special purpose entity incurs Indebtedness to
acquire such property and leases such property to the Borrower.
"Synthetic Lease Indebtedness" means, with respect to a Person
that is a lessee under a Synthetic Lease, at any time an amount equal
to (i) the aggregate purchase price of any property that the lessor
under such synthetic lease acquired, through one or a series of related
transactions, and thereafter leased to such Person pursuant to such
Synthetic Lease less (ii) the aggregate amount of all payments made on
or prior to such time of fixed rent or other rent payments which
reduced such Person's obligation under such Synthetic Lease and which
are not the financial equivalent of interest. Synthetic Lease
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Indebtedness of a Person shall also include, without duplication, the
amount of Synthetic Lease Indebtedness of others to the extent
guarantied by such Person.
"Termination Event" means: (i) a "Reportable Event" described
in Section 4043 of ERISA and the regulations issued thereunder (unless
the notice requirement has been waived by applicable regulation) other
than any reportable event that is the subject of the PBGC Agreement; or
(ii) the withdrawal of the Borrower or any ERISA Affiliate from a
Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed such
under Section 4062(e) of ERISA; or (iii) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate a Pension Plan by the PBGC other than those actions by the
PBGC that are the subject of the PBGC Agreement; or (v) any other event
or condition which would constitute grounds under Section 4042(a) of
ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan other than those actions by the PBGC that
are the subject of the PBGC Agreement; or (vi) the partial or complete
withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer
Plan; or (vii) the imposition of a Lien pursuant to Section 412 of the
Code or Section 302 of ERISA other than those actions by the PBGC that
are the subject of the PBGC Agreement; or (viii) any event or condition
which results in the reorganization or insolvency of a Multiemployer
Plan under Section 4241 or Section 4245 of ERISA, respectively; or (ix)
any event or condition which results in the termination of a
Multiemployer Plan under Section 4041A of ERISA or the institution by
the PBGC of proceedings to terminate a Multiemployer Plan under Section
4042 of ERISA; or (x) any event or condition with respect to any
Employee Benefit Plan which is regulated by any Foreign Benefit Law
that results in the termination of such Employee Benefit Plan or the
revocation of such Employee Benefit Plan's authority to operate under
the applicable Foreign Benefit Law.
"Title Policy" means, with respect to each Mortgaged Property
as to which Mortgage Support Documents are required hereunder, the
mortgagee title insurance policy (together with such endorsements as
the Agent may reasonably require) issued to the General Collateral
Agent in respect of such Mortgaged Property by an insurer selected by
the Borrower and reasonably acceptable to the Revolving Credit Agent,
insuring (in an amount satisfactory to the Agent) the General Lien of
the General Collateral Agent for the benefit of the General Secured
Parties on such Mortgaged Property to be duly perfected and of first
priority, subject only to such exceptions as shall be acceptable to the
Agent.
"Total Letter of Credit Commitment" means an amount not to
exceed $10,000,000.
"Total Revolving Credit Commitment" means a principal amount
equal to $80,000,000, as reduced from time to time in accordance with
Sections 2.1(e) and (f).
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"Twelve-Month Period" means a period of twelve consecutive
calendar months taken together as one accounting period.
"Type" shall mean any type of Loan (i.e., a Base Rate Loan or
a Eurodollar Rate Loan).
"UCC" means the Uniform Commercial Code of the State of North
Carolina as codified from time to time in the North Carolina General
Statutes.
"U.S. Capital Expenditures" means all Capital Expenditures
other than Mexican Capital Expenditures and Parras Cone Capital
Expenditures.
"Voting Securities" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders
of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
"Year 2000 Compliant" means all computer applications
(including those affected by information received from its suppliers
and vendors) that are material to the Borrower's or any of its
Subsidiaries' business and operations are able to perform properly
date-sensitive functions involving all dates on and after January 1,
2000.
"Year 2000 Problem" means that computer applications used by
the Borrower or any of its Subsidiaries (including those affected by
information received from its suppliers and vendors) are unable to
recognize correctly and perform properly date-sensitive functions
involving certain dates on and after January 1, 2000.
1.2 Rules of Interpretation.
-----------------------
(a) All accounting terms not specifically defined herein shall
have the meanings assigned to such terms and shall be interpreted in
accordance with GAAP applied on a Consistent Basis.
(b) Each term defined in Articles 1, 8 or 9 of the North
Carolina Uniform Commercial Code shall have the meaning given therein
unless otherwise defined herein, except to the extent that the Uniform
Commercial Code of another jurisdiction is controlling, in which case
such terms shall have the meaning given in the Uniform Commercial Code
of the applicable jurisdiction.
(c) The headings, subheadings and table of contents used
herein or in any other Loan Document are solely for convenience of
reference and shall not constitute a part of any such document or
affect the meaning, construction or effect of any provision thereof.
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(d) Except as otherwise expressly provided, references in any
Loan Document to articles, sections, paragraphs, clauses, annexes,
appendices, exhibits and schedules are references to articles,
sections, paragraphs, clauses, annexes, appendices, exhibits and
schedules in or to such Loan Document.
(e) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of such
defined term, and all references to the masculine gender shall include
reference to the feminine or neuter gender, and VICE VERSA, as the
context may require.
(f) When used herein or in any other Loan Document, words such
as "hereunder," "hereto," "hereof" and "herein" and other words of like
import shall, unless the context clearly indicates to the contrary,
refer to the whole of the applicable document and not to any particular
article, section, subsection, paragraph or clause thereof.
(g) References to "including" means including without limiting
the generality of any description preceding such term, and for purposes
hereof the rule of EJUSDEM GENERIS shall not be applicable to limit a
general statement, followed by or referable to an enumeration of
specific matters, to matters similar to those specifically mentioned.
(h) Except as otherwise expressly provided, all dates and
times of day specified herein shall refer to such dates and times at
Charlotte, North Carolina.
(i) Whenever interest rates or fees are established in whole
or in part by reference to a numerical percentage expressed as "___%,"
such arithmetic expression shall be interpreted in accordance with the
convention that 1% = 100 basis points.
(j) Each of the parties to the Loan Documents and their
counsel have reviewed and revised, or requested (or had the opportunity
to request) revisions to, the Loan Documents, and any rule of
construction that ambiguities are to be resolved against the drafting
party shall be inapplicable in the construing and interpretation of the
Loan Documents and all exhibits, schedules and appendices thereto.
(k) Any reference to an officer of the Borrower or any other
Person by reference to the title of such officer shall be deemed to
refer to each other officer of such Person, however titled, exercising
the same or substantially similar functions.
(l) All references to any agreement or document as amended,
supplemented or restated, or words of similar effect, shall mean such
document or agreement, as the case may be, as amended, supplemented or
restated from time to time only as and to the extent permitted therein
and in the Loan Documents.
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ARTICLE II
The Credit Facilities
---------------------
2.1 Revolving Loans.
---------------
(a) Commitment. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances to the
Borrower under the Revolving Credit Facility from time to time from the
Closing Date until the Revolving Credit Termination Date on a pro rata
basis as to the total borrowing requested by the Borrower on any day
determined by such Lender's Applicable Commitment Percentage up to but
not exceeding the Revolving Credit Commitment of such Lender, provided,
however, that the Lenders will not be required and shall have no
obligation to make any such Advance (i) so long as a Default or an
Event of Default has occurred and is continuing or (ii) if the Agent
has accelerated the maturity of any of the Notes as a result of an
Event of Default; provided further, however, that immediately after
giving effect to each such Advance, (A) the amount of Revolving Credit
Outstandings plus Letter of Credit Outstandings shall not exceed the
Total Revolving Credit Commitment and (B) Senior Debt Outstandings
shall not exceed the Borrowing Base. Within such limits and subject to
the other terms and conditions of this Agreement, the Borrower may
borrow, repay and reborrow under the Revolving Credit Facility on any
Business Day from the Closing Date until, but (as to borrowings and
reborrowings) not including, the Revolving Credit Termination Date.
(b) Amounts. Except as otherwise permitted by the Lenders from
time to time, the amount of (i) Revolving Credit Outstandings plus
Letter of Credit Outstandings shall not exceed the Total Revolving
Credit Commitment and (ii) Senior Debt Outstandings shall not exceed
the Borrowing Base, and, in the event there shall be outstanding any
such excess, the Borrower shall immediately make such payments and
prepayments of the Revolving Credit Facility as shall be necessary to
comply with these restrictions. Each Advance under the Revolving Credit
Facility, other than Base Rate Refunding Loans, shall be in an amount
of at least $1,000,000, and, if greater than $1,000,000, an integral
multiple of $1,000,000.
(c) Advances.
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(i) An Authorized Representative shall give the Agent
(1) at least three (3) Business Days' irrevocable telephonic
notice of each Eurodollar Rate Loan (whether representing an
additional borrowing or the Continuation of a borrowing
hereunder or the Conversion of a borrowing hereunder from a
Base Rate Loan to a Eurodollar Rate Loan) prior to 11:00 A.M.
and (2) irrevocable telephonic notice of each Base Rate Loan
(other than Base Rate Refunding Loans to the extent the same
are effected without notice pursuant to Section 2.1(c)(iii)
and whether representing an additional borrowing hereunder or
the Conversion of borrowing hereunder from Eurodollar Rate
Loans to Base Rate Loans) prior to 11:00 A.M. on the day of
such proposed Revolving Loan. Each such notice shall be
effective upon receipt by the Agent, shall specify the amount
of the borrowing,
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the type of Revolving Loan (Base Rate or Eurodollar Rate), the
date of borrowing and, if a Eurodollar Rate Loan, the Interest
Period to be used in the computation of interest. The
Authorized Representative shall provide the Agent written
confirmation of each such telephonic notice in the form of a
Borrowing Notice or Interest Rate Selection Notice (as
applicable) with appropriate insertions but failure to provide
such confirmation shall not affect the validity of such
telephonic notice. Notice of receipt of such Borrowing Notice
or Interest Rate Selection Notice, as the case may be,
together with the amount of each Lender's portion of an
Advance requested thereunder, shall be provided by the Agent
to each Lender by telefacsimile transmission with reasonable
promptness, but (provided the Agent shall have received such
notice by 11:00 A.M.) not later than 1:00 P.M. on the same day
as the Agent's receipt of such notice.
(ii) Not later than 2:00 P.M. on the date specified
for each borrowing under this Section 2.1, each Lender shall,
pursuant to the terms and subject to the conditions of this
Agreement, make the amount of the Advance or Advances to be
made by it on such day available by wire transfer to the Agent
in the amount of its pro rata share, determined according to
such Lender's Applicable Commitment Percentage of the
Revolving Loan or Revolving Loans to be made on such day. Such
wire transfer shall be directed to the Agent at the Principal
Office and shall be in the form of Dollars constituting
immediately available funds. The amount so received by the
Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Borrower by delivery of
the proceeds thereof to the Borrower's Account or otherwise as
shall be directed in the applicable Borrowing Notice by the
Authorized Representative and reasonably acceptable to the
Agent.
(iii) Notwithstanding the foregoing, if a drawing is
made under any Letter of Credit, such drawing is honored by
the Issuing Bank, and the Borrower shall not immediately fully
reimburse the Issuing Bank in respect of such drawing from
other funds available to the Borrower, (A) provided that the
conditions to making a Loan as herein provided shall then be
satisfied, the Reimbursement Obligation arising from such
drawing shall be paid to the Issuing Bank by the Agent without
the requirement of notice to or from the Borrower from
immediately available funds which shall be advanced as a Base
Rate Refunding Loan to the Agent at its Principal Office by
each Lender under the Revolving Credit Facility in an amount
equal to such Lender's Applicable Commitment Percentage of
such Reimbursement Obligation, and (B) if the conditions to
making a Revolving Loan as herein provided shall not then be
satisfied, each of the Lenders shall fund by payment to the
Agent (for the benefit of the Issuing Bank) at its Principal
Office in immediately available funds the purchase from the
Issuing Bank of their respective Participations in the related
Reimbursement Obligation based on their respective Applicable
Commitment Percentages of the Total Letter of Credit
Commitment. If a drawing is presented under any Letter of
Credit in accordance with the terms thereof and the Borrower
shall not immediately reimburse the Issuing Bank in respect
thereof, then notice of such
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drawing or payment shall be provided promptly by the Issuing
Bank to the Agent and the Agent shall provide notice to each
Lender by telephone or telefacsimile transmission. If notice
to the Lenders of a drawing under any Letter of Credit is
given by the Agent at or before 12:00 noon on any Business
Day, each Lender shall either make a Base Rate Refunding Loan
or fund the purchase of its Participation as specified above
in the amount of such Lender's Applicable Commitment
Percentage of such drawing or payment and shall pay such
amount to the Agent for the account of the Issuing Bank at the
Principal Office in Dollars and in immediately available funds
before 2:30 P.M. on the same Business Day. If such notice to
the Lenders is given by the Agent after 12:00 noon on any
Business Day, each Lender shall either make such Base Rate
Refunding Loan or fund such purchase before 12:00 noon on the
next following Business Day.
(d) Repayment of Revolving Loans. The principal amount of each
Revolving Loan shall be due and payable to the Agent for the benefit of
each Lender in full on the Revolving Credit Termination Date, or
earlier as specifically provided herein. The principal amount of any
Revolving Loan may be prepaid in whole or in part (without penalty or
premium, but subject to payment of any amounts required to be paid
pursuant to Section 6.5) on any Business Day, upon (A) at least three
(3) Business Days' irrevocable telephonic notice in the case of each
Revolving Loan that is a Eurodollar Rate Loan from an Authorized
Representative (effective upon receipt) to the Agent prior to 11:00
A.M. and (B) irrevocable telephonic notice in the case of each
Revolving Loan that is a Base Rate Loan from an Authorized
Representative (effective upon receipt) to the Agent prior to 11:00
A.M. on the day of such proposed repayment. The Authorized
Representative shall provide the Agent written confirmation of each
such telephonic notice but failure to provide such confirmation shall
not effect the validity of such telephonic notice. All prepayments of
Revolving Loans made by the Borrower shall be in the amount of
$1,000,000 or such greater amount which is an integral multiple of
$1,000,000, or the amount equal to all Revolving Credit Outstandings,
or such other amount as necessary to comply with Section 2.1(b) or
Section 2.1(g). Subject to Sections 2.1(a) and 7.2, all amounts repaid
under this Section 2.1(d) may be reborrowed hereunder.
(e) Optional Reductions. The Borrower shall, by notice from an
Authorized Representative, have the right from time to time but not
more frequently than once each calendar month, upon not less than three
(3) Business Days' written notice to the Agent, effective upon receipt,
to reduce the Total Revolving Credit Commitment. The Agent shall give
each Lender, within one (1) Business Day of receipt of such notice,
telefacsimile notice, or telephonic notice (confirmed in writing), of
such reduction. Each such reduction shall be in the aggregate amount of
$1,000,000 or such greater amount which is in an integral multiple of
$1,000,000, or the entire remaining Total Revolving Credit Commitment,
and shall permanently reduce the Total Revolving Credit Commitment.
Each reduction of the Total Revolving Credit Commitment shall be
accompanied by payment of the Revolving Loans to the extent that the
principal amount of Revolving Credit Outstandings plus Letter of Credit
Outstandings exceeds the Total Revolving Credit Commitment after giving
effect to such reduction, together with any
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amounts required to be paid pursuant to Section 6.5 and accrued and
unpaid interest on the amounts prepaid.
(f) Mandatory Reductions. In addition to any optional
reductions of the Total Revolving Credit Commitment effected under
Section 2.1(e), the Borrower shall make a reduction of the Total
Revolving Credit Commitment in an amount equal to 100% of the Net
Proceeds of each Capital Market Transaction of the Borrower or any
Subsidiary (other than securities issued to the Borrower or another
Subsidiary) permitted, each such reduction to be effective on the date
of receipt of such proceeds and upon not less than five (5) Business
Days' prior written notice to the Agent, which notice shall include a
certificate of an Authorized Representative setting forth in reasonable
detail the calculations utilized in computing the amount of such
reduction. The Agent shall give each Lender, within one (1) Business
Day of receipt of such notice, telefacsimile notice, or telephonic
notice (confirmed in writing) of such reduction. Each reduction of the
Total Revolving Credit Commitment shall be accompanied by prepayment of
the Revolving Loans to the extent that the principal amount of
Revolving Credit Outstandings plus Letter of Credit Outstandings
exceeds the Total Revolving Credit Commitment after giving effect to
such reduction, together with any amounts required to be paid pursuant
to Section 6.5 and accrued and unpaid interest on the amounts prepaid.
(g) Cash Flow Reductions. The Borrower shall use its best
efforts to ensure that the principal amount of all Revolving Loans is
prepaid on each Business Day in an amount equal to the difference of
(i) the aggregate collected cash balance of all Controlled Accounts as
of the close of the immediately preceding Business Day less (ii)
$3,000,000. Prepayments under this subsection shall be applied first to
Base Rate Loans and then, if no such Loans are outstanding, to
Eurodollar Rate Loans, such prepayment to be subject to the provisions
of Section 6.5. Subject to Sections 2.1(a) and 7.2, all amounts repaid
pursuant to this Section 2.1(f) may be reborrowed hereunder.
2.2 Use of Proceeds. The proceeds of Revolving Loans shall be used
by the Borrower to refinance certain existing Indebtedness of the Borrower and
for general working capital needs and other corporate purposes.
2.3 Revolving Notes. Revolving Loans made by each Lender shall be
evidenced by the Revolving Note payable to the order of such Lender in the
respective amount of its Applicable Commitment Percentage of the Total Revolving
Credit Commitment, which Revolving Note shall be dated the Closing Date or a
later date pursuant to an Assignment and Acceptance and shall be duly completed,
executed and delivered by the Borrower.
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ARTICLE III
Letters of Credit
-----------------
3.1 Letters of Credit. The Issuing Bank agrees, subject to the
terms and conditions of this Agreement, upon request of the Borrower to issue
from time to time for the account of the Borrower Letters of Credit upon
delivery to the Issuing Bank of an Application and Agreement for Letter of
Credit relating thereto in form and content acceptable to the Issuing Bank;
provided, that (i) the Issuing Bank shall not issue (or renew) any Letter of
Credit if it has been notified by the Agent or has actual knowledge that a
Default or Event of Default has occurred and is continuing, (ii) the Letter of
Credit Outstandings shall not exceed the Total Letter of Credit Commitment and
(iii) no Letter of Credit shall be issued (or renewed) if, after giving effect
thereto, Letter of Credit Outstandings plus Revolving Credit Outstandings shall
exceed the Total Revolving Credit Commitment or Senior Debt Outstandings shall
exceed the Borrowing Base. No Letter of Credit shall have an expiry date
(including all rights of the Borrower or any beneficiary named in such Letter of
Credit to require renewal) or payment date occurring later than the earlier to
occur of one year after the date of its issuance or the seventh Business Day
prior to the Stated Termination Date.
3.2 Reimbursement and Participations.
--------------------------------
(a) The Borrower hereby unconditionally agrees to pay to the
Issuing Bank immediately on demand at the Principal Office all amounts
required to pay all drafts drawn or purporting to be drawn under the
Letters of Credit and all reasonable expenses incurred by the Issuing
Bank in connection with the Letters of Credit, and in any event and
without demand to place in possession of the Issuing Bank (which shall
include Advances under the Revolving Credit Facility if permitted by
Section 2.1) sufficient funds to pay all debts and liabilities arising
under any Letter of Credit. The Issuing Bank agrees to give the
Borrower prompt notice of any request for a draw under a Letter of
Credit. The Issuing Bank may charge any account the Borrower may have
with it for any and all amounts the Issuing Bank pays under a Letter of
Credit, plus charges and reasonable expenses as from time to time
agreed to by the Issuing Bank and the Borrower; provided that to the
extent permitted by Section 2.1(c)(iii) and Section 2.4, amounts shall
be paid pursuant to Advances under the Revolving Credit Facility. The
Borrower agrees to pay the Issuing Bank interest on any Reimbursement
Obligations not paid when due hereunder at the Default Rate.
(b) In accordance with the provisions of Section 2.1(c), the
Issuing Bank shall notify the Agent of any drawing under any Letter of
Credit promptly following the receipt by the Issuing Bank of such
drawing.
(c) Each Lender (other than the Issuing Bank) shall
automatically acquire on the date of issuance thereof a Participation
in the liability of the Issuing Bank in respect of each Letter of
Credit in an amount equal to such Lender's Applicable Commitment
Percentage of such liability, and to the extent that the Borrower is
obligated to pay the Issuing Bank under Section 3.2(a), each Lender
(other than the Issuing Bank) thereby
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shall absolutely, unconditionally and irrevocably assume, and shall be
unconditionally obligated to pay to the Issuing Bank, its Applicable
Commitment Percentage of the liability of the Issuing Bank under such
Letter of Credit in the manner and with the effect provided in Section
2.1(c)(iii).
(d) Simultaneously with the making of each payment by a Lender
to the Issuing Bank pursuant to Section 2.1(c)(iii)(B), such Lender
shall, automatically and without any further action on the part of the
Issuing Bank or such Lender, acquire a Participation in an amount equal
to such payment (excluding the portion thereof constituting interest
accrued prior to the date the Lender made its payment) in the related
Reimbursement Obligation of the Borrower. Each Lender's obligation to
make payment to the Agent for the account of the Issuing Bank pursuant
to Section 2.1(c)(iii) and Section 3.2(c), and the right of the Issuing
Bank to receive the same, shall be absolute and unconditional, shall
not be affected by any circumstance whatsoever and shall be made
without any offset, abatement, withholding or reduction whatsoever. In
the event the Lenders have purchased Participations in any
Reimbursement Obligation as set forth above, then at any time payment
(in fully collected, immediately available funds) of such Reimbursement
Obligation, in whole or in part, is received by the Issuing Bank from
the Borrower, the Issuing Bank shall promptly pay to each Lender an
amount equal to its Applicable Commitment Percentage of such payment
from the Borrower.
(e) Promptly following the end of each calendar quarter, the
Issuing Bank shall deliver to the Agent a notice describing the
aggregate undrawn amount of all Letters of Credit at the end of such
quarter. Upon the request of any Lender from time to time, the Issuing
Bank shall deliver to the Agent, and the Agent shall deliver to such
Lender, any other information reasonably requested by such Lender with
respect to each Letter of Credit outstanding.
(f) The issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in Article
VII, be subject to the conditions that such Letter of Credit be in such
form and contain such terms as shall be reasonably satisfactory to the
Issuing Bank consistent with the then current practices and procedures
of the Issuing Bank with respect to similar letters of credit, and the
Borrower shall have executed and delivered such other instruments and
agreements relating to such Letters of Credit as the Issuing Bank shall
have reasonably requested consistent with such practices and
procedures. All Letters of Credit shall be issued pursuant to and
subject to the Uniform Customs and Practice for Documentary Credits,
1993 revision, International Chamber of Commerce Publication No. 500
or, if the Issuing Bank shall elect by express reference in an affected
Letter of Credit, the International Chamber of Commerce International
Standby Practices commonly referred to as "ISP98," or any subsequent
amendment or revision of either thereof.
(g) The Borrower agrees that the Issuing Bank may, in its sole
discretion, accept or pay, as complying with the terms of any Letter of
Credit, any drafts or other documents otherwise in order which may be
signed or issued by an administrator, executor, trustee in bankruptcy,
debtor in possession, assignee for the benefit of creditors,
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liquidator, receiver, attorney in fact or other legal representative of
a party who is authorized under such Letter of Credit to draw or issue
any drafts or other documents.
(h) Without limiting the generality of the provisions of
Section 13.9, the Borrower hereby agrees to indemnify and hold harmless
the Issuing Bank, each other Lender and the Agent from and against any
and all claims and damages, losses, liabilities, reasonable costs and
expenses which the Issuing Bank, such other Lender or the Agent may
incur (or which may be claimed against the Issuing Bank, such other
Lender or the Agent) by any Person by reason of or in connection with
the issuance or transfer of or payment or failure to pay under any
Letter of Credit; provided that the Borrower shall not be required to
indemnify the Issuing Bank, any other Lender or the Agent for any
claims, damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, (i) caused by the willful misconduct or gross
negligence of the party to be indemnified or (ii) caused by the failure
of the Issuing Bank to pay under any Letter of Credit after the
presentation to it of a request for payment strictly complying with the
terms and conditions of such Letter of Credit, unless such payment is
prohibited by any law, regulation, court order or decree. The
indemnification and hold harmless provisions of this Section 3.2(h)
shall survive repayment of the Obligations, occurrence of the Revolving
Credit Termination Date, the Facility Termination Date and expiration
or termination of this Agreement.
(i) Without limiting Borrower's rights as set forth in Section
3.2(h), the obligation of the Borrower to immediately reimburse the
Issuing Bank for drawings made under Letters of Credit and the Issuing
Bank's right to receive such payment shall be absolute, unconditional
and irrevocable, and such obligations of the Borrower shall be
performed strictly in accordance with the terms of this Agreement and
such Letters of Credit and the related Application and Agreement for
any Letter of Credit, under all circumstances whatsoever, including the
following circumstances:
(i) any lack of validity or enforceability of the
Letter of Credit, the obligation supported by the Letter of
Credit or any other agreement or instrument relating thereto
(collectively, the "Related LC Documents");
(ii) any amendment or waiver of or any consent to or
departure from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense
(other than the defense of payment in accordance with the
terms of this Agreement) or other rights which the Borrower
may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any persons or entities for whom any
such beneficiary or any such transferee may be acting), the
Agent, the Lenders or any other Person, whether in connection
with the Loan Documents, the Related LC Documents or any
unrelated transaction;
(iv) any breach of contract or other dispute between
the Borrower and any beneficiary or any transferee of a Letter
of Credit (or any persons or entities
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for whom such beneficiary or any such transferee may be
acting), the Agent, the Lenders or any other Person;
(v) any draft, statement or any other document
presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect
whatsoever;
(vi) any delay, extension of time, renewal,
compromise or other indulgence or modification granted or
agreed to by the Agent, with or without notice to or approval
by the Borrower in respect of any of Borrower's Obligations
under this Agreement; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
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ARTICLE IV
Eurodollar Funding, Fees, and Payment Conventions
-------------------------------------------------
4.1 Interest Rate Options.
---------------------
(a) Eurodollar Rate Loans and Base Rate Loans may be
outstanding at the same time and, so long as no Default or Event of
Default shall have occurred and be continuing, the Borrower shall have
the option to elect the Type of Loan and the duration of the initial
and any subsequent Interest Periods and to Convert Revolving Loans in
accordance with Sections 2.1(c)(i) and 4.2, as applicable; provided,
however, (a) there shall not be outstanding at any one time Eurodollar
Rate Loans having more than six (6) different Interest Periods, (b)
each Eurodollar Rate Loan (including each Conversion into and each
Continuation as a Eurodollar Rate Loan) shall be in an amount of
$1,000,000 or, if greater than $1,000,000, an integral multiple of
$1,000,000, and (c) no Eurodollar Rate Loan shall have an Interest
Period that extends beyond the Stated Termination Date. If the Agent
does not receive a Borrowing Notice or an Interest Rate Selection
Notice giving notice of election of the duration of an Interest Period
or of Conversion of any Loan to or Continuation of a Loan as a
Eurodollar Rate Loan by the time prescribed by Sections 2.1(c)(i) and
4.2, as applicable, the Borrower shall be deemed to have elected to
obtain or Convert such Loan to (or Continue such Loan as) a Base Rate
Loan until the Borrower notifies the Agent in accordance with Section
4.2. The Borrower shall not be entitled to elect to Continue any Loan
as or Convert any Loan into a Eurodollar Rate Loan if a Default or
Event of Default shall have occurred and be continuing.
(b) In the event the Borrowing Base includes the Overadvance
Basket, either as set forth in any Borrowing Base Certificate or as
otherwise determined in the definition of Borrowing Base, the
Applicable Margin shall, ipso facto, be increased by 25 basis points
(.25%) commencing on the date of inclusion of the Overadvance Basket in
the Borrowing Base as a result of a calculation of Senior Debt
Outstandings or request for an Advance, and continue to be in effect at
such increased level for each day until and including the date on which
the Borrowing Base does not include the Overadvance Basket.
4.2 Conversions and Elections of Subsequent Interest Periods. Subject
to the limitations set forth in the definition of "Interest Period" and in
Section 4.1 and Article VI, the Borrower may:
(a) upon delivery of telephonic notice to the Agent (which
shall be irrevocable) on or before 11:00 A.M. on any Business Day,
Convert any Eurodollar Rate Loan to a Base Rate Loan on the last day of
the Interest Period for such Eurodollar Rate Loan; and
(b) provided that no Default or Event of Default shall have
occurred and be continuing, upon delivery of telephonic notice to the
Agent (which shall be irrevocable
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on or before 11:00 A.M. three (3) Business Days' prior to the date of
such Conversion or Continuation:
(i) elect a subsequent Interest Period for any
Eurodollar Rate Loan to begin on the last day of the then
current Interest Period for such Eurodollar Rate Loan; or
(ii) Convert any Base Rate Loan to a Eurodollar Rate
Loan on any Business Day.
Each such notice shall be effective upon receipt by the Agent, shall specify the
amount of the Eurodollar Rate Loan affected and, if a Continuation as or
Conversion into a Eurodollar Rate Loan, the Interest Period to be used in the
computation of interest. The Authorized Representative shall provide the Agent
written confirmation of each such telephonic notice in the form of a Borrowing
Notice or Interest Rate Selection Notice (as applicable) with appropriate
insertions but failure to provide such confirmation shall not affect the
validity of such telephonic notice. Notice of receipt of such Borrowing Notice
or Interest Rate Selection Notice, as the case may be, shall be provided by the
Agent to each Lender by telefacsimile transmission with reasonable promptness,
but (provided the Agent shall have received such notice by 11:00 A.M.) not later
than 3:00 P.M. on the same day as the Agent's receipt of such notice. All such
Continuations or Conversions of Loans shall be effected pro rata based on the
Applicable Commitment Percentages of the Lenders.
4.3 Payment of Interest. The Borrower shall pay interest on the
outstanding and unpaid principal amount of each Revolving Loan, commencing on
the first date of such Revolving Loan until such Revolving Loan shall be repaid
at the applicable Base Rate or Eurodollar Rate as designated by the Borrower in
the related Borrowing Notice or Interest Rate Selection Notice or as otherwise
provided hereunder. Interest on each Revolving Loan shall be paid on the earlier
of (a) in the case of any Base Rate Loan, quarterly in arrears of the last
Business Day of each March, June, September and December, commencing on March
31, 2000, until the Revolving Credit Termination Date, at which date as
applicable the entire principal amount of and all accrued interest on the
Revolving Loans shall be paid in full, (b) in the case of any Eurodollar Rate
Loan, on last day of the applicable Interest Period for such Eurodollar Rate
Loan and if such Interest Period extends for more than three (3) months, at
intervals of three (3) months after the first day of such Interest Period, and
(c) upon payment in full of the Revolving Loan; provided, however, that if any
Event of Default shall occur and be continuing, all amounts outstanding
hereunder shall bear interest thereafter until paid in full at the Default Rate.
4.4 Prepayments of Eurodollar Rate Loans. Whenever any payment of
principal shall be made in respect of any Loan hereunder, whether at maturity,
on acceleration, by prepayment or as otherwise required or permitted hereunder,
with the effect that any Eurodollar Rate Loan shall be prepaid in whole or in
part prior to the last day of the Interest Period applicable to such Eurodollar
Rate Loan, such payment of principal shall be accompanied by the additional
payment, if any, required by Section 6.5.
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4.5 Manner of Payment.
-----------------
(a) Each payment of principal (including any prepayment) and
payment of interest and fees, and any other amount required to be paid
by or on behalf of the Borrower to the Lenders, the Issuing Bank, the
Agent, or Bank of America with respect to any Revolving Loan, Letter of
Credit or Reimbursement Obligation, shall be made to the Agent at the
Principal Office in Dollars in immediately available funds without
condition or deduction for any setoff, recoupment, deduction or
counterclaim on or before 12:30 P.M. on the date such payment is due.
The Agent may, but shall not be obligated to, debit the amount of such
payment from any one or more ordinary deposit accounts of the Borrower
with the Agent.
(b) Any payment made by or on behalf of the Borrower that is
not made both in Dollars in immediately available funds and prior to
12:30 P.M. on the date such payment is to be made shall constitute a
non-conforming payment. Any such non-conforming payment shall not be
deemed to be received until the later of (i) the time such funds become
available funds and (ii) the next Business Day. Any non-conforming
payment may constitute or become a Default or Event of Default as
otherwise provided herein. Interest shall continue to accrue at the
Default Rate on any principal or fees as to which no payment or a
non-conforming payment is made from the date such amount was due and
payable until the later of (i) the date such funds become available
funds or (ii) the next Business Day.
(c) In the event that any payment hereunder or under any of
the Notes becomes due and payable on a day other than a Business Day,
then such due date shall be extended to the next succeeding Business
Day unless provided otherwise under the definition of "Interest
Period"; provided, however, that interest shall continue to accrue
during the period of any such extension; and provided further, however,
that in no event shall any such due date be extended beyond the
Revolving Credit Termination Date.
4.6 Fees.
----
(a) Commitment Fee. For the period beginning on the Closing
Date and ending on the Revolving Credit Termination Date, the Borrower
agrees to pay to the Agent, for the pro rata benefit of the Lenders
based on their Applicable Commitment Percentages, a commitment fee
equal to the Applicable Commitment Fee multiplied by the average daily
amount by which the Total Revolving Credit Commitment exceeds the sum
of (i) Revolving Credit Outstandings plus (ii) Letter of Credit
Outstandings. Such fees shall be due in arrears on the last Business
Day of each March, June, September and December, commencing March 31,
2000 to and on the Revolving Credit Termination Date. Notwithstanding
the foregoing, so long as any Lender fails to make available any
portion of its Revolving Credit Commitment when requested, such Lender
shall not be entitled to receive payment of its pro rata share of such
fee until such Lender shall make available such portion.
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(b) Letter of Credit Facility Fees. The Borrower shall pay to
the Agent, for the pro rata benefit of the Lenders based on their
Applicable Commitment Percentages, a fee on the aggregate amount
available to be drawn on each outstanding Letter of Credit at a rate
equal to the Applicable Margin for Eurodollar Rate Loans. Such fees
shall be due with respect to each Letter of Credit quarterly in arrears
on the last day of each March, June, September and December, the first
such payment to be made on the first such date occurring after the date
of issuance of a Letter of Credit.
(c) Letter of Credit Fronting and Administrative Fees. The
Borrower shall pay to the Issuing Bank a fronting fee of one-eighth
percent per annum (.125%) on the stated amount of each Letter of Credit
calculated for the stated term, such fee to be payable in full at or
prior to the time of issuance of such Letter of Credit. Any renewal or
continuation of a Letter of Credit beyond its current stated term shall
be deemed to be a new issuance of such Letter of Credit subject to
payment of a fronting fee as herein calculated. The Borrower shall also
pay to the Issuing Bank such administrative fee and other fees, if any,
in connection with the Letters of Credit in such amounts and at such
times as the Issuing Bank and the Borrower shall agree from time to
time.
(d) Agent Fees. The Borrower agrees to pay to the Agent, for
the Agent's individual account, an annual Agent's fee, such fee to be
payable in such amounts and at such dates as from time to time agreed
to by the Borrower and Agent in writing.
4.7 Pro Rata Payments. Except as otherwise specified herein, (a)
each payment on account of the principal of and interest on Loans, the fees
described in Section 4.6(a), (b) and (c), and Reimbursement Obligations as to
which the Lenders have funded their respective Participations which remain
outstanding, shall be made to the Agent for the account of the Lenders pro rata
based on their Applicable Commitment Percentages, and (b) the Agent will
promptly distribute to the Lenders in immediately available funds payments
received in fully collected, immediately available funds from the Borrower.
4.8 Computation of Rates and Fees. Except as may be otherwise
expressly provided, all interest rates (other than the Prime Rate which shall be
computed on the basis of the actual number of days elapsed in a year of 365/366
days) and fees shall be computed on the basis of a year of 360 days and
calculated for actual days elapsed.
4.9 Deficiency Advances; Failure to Purchase Participations. No
Lender shall be responsible for any default of any other Lender in respect to
such other Lender's obligation to make any Loan or Advance hereunder or to fund
its purchase of any Participation hereunder nor shall the Revolving Credit
Commitment or Letter of Credit Commitment of any Lender hereunder be increased
as a result of such default of any other Lender. Without limiting the generality
of the foregoing or the provisions of Section 4.10, in the event any Lender
shall fail to advance funds to the Borrower as herein provided, the Agent may in
its discretion, but shall not be obligated to, advance under the applicable Note
in its favor as a Lender all or any portion of such amount or amounts (each, a
"deficiency advance") and shall thereafter be entitled to payments of principal
of and interest on such deficiency advance in the same manner and at the same
interest rate or rates to which such other Lender would have been entitled had
it made such
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Advance under its Note; provided that, (i) such defaulting Lender shall not be
entitled to receive payments of principal, interest or fees with respect to such
deficiency advance until such deficiency advance (together with interest thereon
as provided in clause (ii)) shall be paid by such Lender and (ii) upon payment
to the Agent from such other Lender of the entire outstanding amount of each
such deficiency advance, together with accrued and unpaid interest thereon at
the Federal Funds Rate, from the most recent date or dates interest was paid to
the Agent by the Borrower on each Loan comprising the deficiency advance, then
such payment shall be credited against the applicable Note of the Agent in full
payment of such deficiency advance and the Borrower shall be deemed to have
borrowed the amount of such deficiency advance from such other Lender as of the
most recent date or dates, as the case may be, upon which any payments of
interest were made by the Borrower thereon. In the event any Lender shall fail
to fund its purchase of a Participation after notice from the Issuing Bank, such
Lender shall pay to the Issuing Bank, such amount on demand, together with
interest at the Federal Funds Rate on the amount so due from the date of such
notice to the date such purchase price is received by the Issuing Bank.
4.10 Intraday Funding. Without limiting the provisions of Section 4.9,
unless the Borrower or any Lender has notified the Agent not later than 12:00
Noon of the Business Day before the date any payment (including in the case of
Lenders any Advance) to be made by it is due, that it does not intend to remit
such payment, the Agent may, in its discretion, assume that the Borrower or each
Lender, as the case may be, has timely remitted such payment in the manner
required hereunder and may, in its discretion and in reliance thereon, make
available such payment (or portion thereof) to the Person entitled thereto as
otherwise provided herein. If such payment was not in fact remitted to the Agent
in the manner required hereunder, then:
(i) if the Borrower failed to make such payment, each Lender
shall forthwith on demand repay to the Agent the amount of such assumed
payment made available to such Lender, together with interest thereon
in respect of each day from and including the date such amount was made
available by the Agent to such Lender to the date such amount is repaid
to the Agent at the Federal Funds Rate; and
(ii) if any Lender failed to make such payment, the Agent
shall be entitled to recover such corresponding amount forthwith upon
the Agent's demand therefor, the Agent promptly shall notify the
Borrower, and the Borrower shall promptly pay such corresponding amount
to the Agent in immediately available funds upon receipt of such
demand. The Agent also shall be entitled to recover interest on such
corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to
the date such corresponding amount is recovered by the Agent, (A) from
such Lender at a rate per annum equal to the daily Federal Funds Rate
or (B) from the Borrower, at a rate per annum equal to the interest
rate applicable to the Loan which includes such corresponding amount.
Until the Agent shall recover such corresponding amount together with
interest thereon, such corresponding amount shall constitute a
deficiency advance within the meaning of Section 4.9. Nothing herein
shall be deemed to relieve any Lender from its obligation to fulfill
its commitments hereunder or to prejudice any rights which the Agent or
the
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Borrower may have against any Lender as a result of any default by such
Lender hereunder.
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ARTICLE V
Security
5.1 Security.
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(a) As security for the full and timely payment and
performance of all Obligations, the Borrower shall, and shall cause all
other Credit Parties to, on or before the Closing Date, do or cause to
be done all things necessary in the opinion of the Agent and its
counsel to (i) grant to the Priority Collateral Agent for the benefit
of the Priority Secured Parties to secure the Priority Senior
Obligations a Priority Lien in all now owned or hereafter acquired
Priority Collateral subject to no prior Lien or other encumbrance or
restriction on transfer (other than restrictions on transfer imposed by
applicable securities laws), and (ii) grant to the General Collateral
Agent for the benefit of the General Secured Parties to secure the
General Senior Obligations a General Lien in all now owned or hereafter
acquired General Collateral subject to no prior Lien or other
encumbrance or restriction on transfer (other than any Priority Lien
and restrictions on transfer imposed by applicable securities laws).
(b) Without limiting the foregoing, the Borrower and each
Domestic Subsidiary having rights in any Subsidiary Securities shall on
the Closing Date deliver to the General Collateral Agent, in form and
substance reasonably acceptable to the Agent, (A) a Pledge Agreement
which shall pledge to the General Collateral Agent for the benefit of
the General Secured Parties (i) 65% of the Voting Securities of each
Material Direct Foreign Subsidiary (to the extent 65% of such Voting
Securities is owned by the Borrower or such Domestic Subsidiary and, if
less than such 65% is so owned, then 100% of such lesser amount) and
100% of the non-voting Subsidiary Securities of such Direct Foreign
Subsidiary, (ii) 100% of the Subsidiary Securities of all Domestic
Subsidiaries and (iii) all of the membership interests of the Borrower
in Cone Receivables II LLC, (B) if such Subsidiary Securities are in
the form of certificated securities, such certificated securities,
together with undated stock powers or other appropriate transfer
documents endorsed in blank pertaining thereto, (C) if such Subsidiary
Securities do not constitute securities and the issuer thereof has not
elected to have such interests treated as securities under Article 8 of
the Uniform Commercial Code, a control agreement (containing the
provisions described in Section 9.20(f)(ii)) from the Registrar of such
Subsidiary Securities and (D) Uniform Commercial Code financing
statements reflecting the General Lien in favor of the General
Collateral Agent on such Subsidiary Securities, each in form and
substance acceptable to the Agent, and shall take such further action
and deliver or cause to be delivered such further documents as required
by the Security Documents or otherwise as the Agent may request to
effect the transactions contemplated by this Article V. The Borrower
shall, and shall cause each Domestic Subsidiary to, pledge to the
General Collateral Agent for the benefit of the General Secured Parties
to secure the General Senior Obligations (and as appropriate to
reaffirm its prior pledge of) all of the Pledged Interests of any
Domestic Subsidiary or Direct Foreign Subsidiary acquired or created
after the Closing Date to the respective extent set forth above and
deliver to the General Collateral Agent all of the documents
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and instruments in connection therewith as are required pursuant to the
terms of Section 9.20 and of the Security Documents.
(c) As further security for the full and timely payment and
performance of all Obligations, Atlantic Financial Group, Ltd.
(borrower under the Senior Lease Documents) on or before the Closing
Date the Borrower will execute and deliver the Senior Lease Facility
Mortgage and do or cause to be done all things necessary in the opinion
of the Agent and its counsel to grant to the Agent for the benefit of
the Agent and the Lenders a Lien on the Senior Lease Facility subject
to no prior Lien or other encumbrance or restriction on transfer other
than Permitted Liens and Liens in favor of the Senior Lease Creditor.
The Agent and the Senior Lease Creditor shall have entered into the
Leased Facility Intercreditor Agreement on or prior to the Closing
Date.
5.2 Further Assurances. At the request of the Agent, the Borrower
will or will cause all other Credit Parties, as the case may be, to execute, by
its duly authorized officers, alone or with the Agent, General Collateral Agent
or the Priority Collateral Agent, as applicable, any certificate, instrument,
financing statement, control agreement, statement or document, or to procure any
such certificate, instrument, statement or document, or to take such other
action (and pay all connected costs) which the Agent, the Priority Collateral
Agent, the General Collateral Agent or any of them reasonably deems necessary
from time to time to create, continue or preserve the Priority Liens in the
Priority Collateral, the General Liens in the General Collateral and the Lien on
the Senior Leased Facility (and the perfection and priority thereof) and
specifically including all Collateral acquired by the Borrower or other Credit
Party after the Closing Date. Each of the Agent, General Collateral Agent and
the Priority Collateral Agent is hereby irrevocably authorized to execute and
file or cause to be filed, with or if permitted by applicable law without the
signature of the Borrower or any Credit Party appearing thereon, all Uniform
Commercial Code financing statements reflecting the Borrower or any other Credit
Party as "debtor" and the Agent (on behalf of the Lenders), General Collateral
Agent (on behalf of the General Secured Parties) or the Priority Collateral
Agent (on behalf of the Priority Secured Parties), as applicable, as "secured
party", and continuations thereof and amendments thereto, as the Agent or either
of the Collateral Agents reasonably deems necessary or advisable to give effect
to the transactions contemplated hereby and by the other Loan Documents.
5.3 Information Regarding Collateral. The Borrower represents,
warrants and covenants that (i) the chief executive office of the Borrower and
each other Person providing Collateral pursuant to a Security Document (each, a
"Grantor") at the Closing Date is located at the address or addresses specified
on Schedule 5.3, and (ii) Schedule 5.3 contains a true and complete list of (a)
the exact legal name, jurisdiction of formation, and address of each Grantor and
of each other Person that has effected any merger or consolidation with a
Grantor or contributed or transferred to a Grantor any property constituting
Collateral at any time since January 1, 1995 (excluding Persons making sales in
the ordinary course of their businesses to a Grantor of property constituting
inventory in the hands of such seller), (b) the exact legal name, jurisdiction
of formation, and each location of the chief executive office of each Grantor at
any time since January 1, 1995, (c) each location in the United States in which
goods constituting material Collateral are or have been located since January 1,
1995 (together with the name of each owner of the property located at such
address if not the applicable Grantor, and a summary
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description of the relationship between the applicable Grantor and such Person),
and (d) each trade style used by any Grantor or any division thereof since
January 1, 1995 and the purposes for which it was used. The Borrower shall not
change, and shall not permit any other Grantor to change, its name, jurisdiction
of formation (whether by reincorporation, merger or otherwise), the location of
its chief executive office or any location specified in clause (c) of the
immediately preceding sentence, or use or permit any other Grantor or any
division thereof to use, any additional trade style, except upon giving not less
than thirty (30) days' prior written notice to the Agent and taking or causing
to be taken all such action at Borrower's or such other Grantor's expense as may
be reasonably requested by the Agent, the General Collateral Agent or the
Priority Collateral Agent to perfect or maintain the perfection of the General
Lien in the General Collateral and the Priority Lien in the Priority Collateral.
5.4 Mortgages.
---------
(a) Without limiting the generality of Section 5.1, the
Borrower, as security for all Priority Senior Obligations, and each
Domestic Subsidiary, as security for the Guarantors' Obligations and
for all Priority Senior Obligations, as applicable, shall deliver to
the Priority Collateral Agent (i) on the Closing Date, with respect to
each parcel of real property owned or leased by the Borrower or a
Subsidiary listed on Schedule 5.4, a Priority Mortgage, and (ii)
thereafter, with respect to each parcel of real property owned,
acquired or leased by the Borrower or a Domestic Subsidiary with a fair
market value greater than $300,000, unless otherwise determined by the
Required Lenders, a Priority Mortgage with respect to such parcel of
real property and, (A) to the extent such real property is or becomes
Material Real Property, the related Material Real Property Support
Documents and (B) to the extent required by any law, regulation or
directive of any applicable Governmental Authority, such required
Material Real Property Support Documents.
(b) Without limiting the generality of Section 5.1, the
Borrower, as security for all General Senior Obligations, and each
Domestic Subsidiary, as security for all General Senior Obligations
and, if a Guarantor, for the Guarantors' Obligations, as applicable,
shall deliver to the General Collateral Agent (i) on the Closing Date,
with respect to each parcel of real property owned or leased by the
Borrower or a Subsidiary listed on Schedule 5.4, a General Mortgage,
and (ii) thereafter, with respect to each parcel of real property
owned, acquired or leased by the Borrower or a Domestic Subsidiary with
a fair market value greater than $300,000, unless otherwise determined
by the Required Lenders, a General Mortgage with respect to such parcel
of real property and, (A) to the extent such real property is or
becomes Material Real Property, the related Material Real Property
Support Documents and (B) to the extent required by any law, regulation
or directive of any applicable Governmental Authority, such required
Material Real Property Support Documents.
5.5 Intercreditor Matters.
---------------------
(a) Each Lender from time to time party hereto, the Agent and
the Borrower hereby consent to and agree with the terms of the Senior
Debt Intercreditor Agreement
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and such Lenders hereby (i) acknowledge and agree that each General
Lien and/or Priority Lien in all Collateral now owned or hereafter
acquired and all remedies available with respect to such Collateral are
subject to the terms of the Senior Debt Intercreditor Agreement, (ii)
directs the Agent on their behalf to enter into each of the Senior Debt
Intercreditor Agreement and the Collateral Agency Agreements and
consents to the service by the Agent in the capacity of Priority
Collateral Agent and Designated Collateral Subagent (as defined in the
General Security Agreement) and (iii) acknowledges and agrees that:
(A) With respect to the Debenture Holders, the
determination of the Required Enforcement General Secured
Parties shall be made based on the entire amount of Senior
Debenture Obligations then outstanding voting on a
consolidated basis as a single vote as directed to the Bond
Trustee by such Debenture Holders as may be required for any
enforcement action under the terms of the Indenture, and
(B) With respect to the Lenders, the determination of
the Required Enforcement General Secured Parties, the Required
General Secured Parties and the Required Priority Secured
parties shall be made based on the entire amount of Senior
Revolving Credit Obligations then outstanding voting on a
consolidated basis as a single vote as directed by the
Required Lenders.
(b) Each Lender from time to time party hereto, the Agent and
the Borrower hereby further consent to and agree with the terms of the
Leased Facility Intercreditor Agreement and the Securitization
Intercreditor Agreement and directs the Agent on their behalf to enter
into such agreements.
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ARTICLE VI
Change in Circumstances
6.1 Increased Cost and Reduced Return.
---------------------------------
(a) If, after the date hereof, the adoption of any applicable
law, rule, or regulation, or any change in any applicable law, rule, or
regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank, or comparable
agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any
such governmental authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable
Lending Office) to any tax, duty, or other charge with respect
to any Eurodollar Rate Loans, its Note, or its obligation to
make Eurodollar Rate Loans, or change the basis of taxation of
any amounts payable to such Lender (or its Applicable Lending
Office) under this Agreement or its Note in respect of any
Eurodollar Rate Loans (other than taxes imposed on the overall
net income of such Lender by the jurisdiction in which such
Lender has its principal office or such Applicable Lending
Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement
(other than the Reserve Requirement utilized in the
determination of the Eurodollar Rate) relating to any
extensions of credit or other assets of, or any deposits with
or other liabilities or commitments of, such Lender (or its
Applicable Lending Office), including the Revolving Credit
Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable
Lending Office) or on the London interbank market any other
condition affecting this Agreement or its Note or any of such
extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such
Lender (or its Applicable Lending Office) of making, Converting into,
Continuing, or maintaining any Loans or to reduce any sum received or
receivable by such Lender (or its Applicable Lending Office) under this
Agreement or its Note with respect to any Eurodollar Rate Loans, then
the Borrower shall pay to such Lender on demand such amount or amounts
as will compensate such Lender for such increased cost or reduction. If
any Lender requests compensation by the Borrower under this Section
6.1(a), the Borrower may, by notice to such Lender (with a copy to the
Agent), suspend the obligation of such Lender to make or Continue Loans
of the Type with respect to which such compensation is requested, or to
Convert Loans of any other Type into Loans of such Type, until the
event or condition giving rise to such request ceases to be in effect
(in which case the
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provisions of Section 6.4 shall be applicable); provided that such
suspension shall not affect the right of such Lender to receive the
compensation so requested.
(b) If, after the date hereof, any Lender shall have
determined that the adoption of any applicable law, rule, or regulation
regarding capital adequacy or any change therein or in the
interpretation or administration thereof by any governmental authority,
central bank, or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
governmental authority, central bank, or comparable agency, has or
would have the effect of reducing the rate of return on the capital of
such Lender or any corporation controlling such Lender as a consequence
of such Lender's obligations hereunder to a level below that which such
Lender or such corporation could have achieved but for such adoption,
change, request, or directive (taking into consideration its policies
with respect to capital adequacy), then from time to time upon demand
the Borrower shall pay to such Lender such additional amount or amounts
as will compensate such Lender for such reduction.
(c) Each Lender shall promptly notify the Borrower and the
Agent of any event of which it has knowledge, occurring after the date
hereof, which will entitle such Lender to compensation pursuant to this
Section 6.1 and will designate a different Applicable Lending Office if
such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of such Lender, be otherwise
disadvantageous to it. Any Lender claiming compensation under this
Section 6.1 shall furnish to the Borrower and the Agent a statement
setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive in the absence of manifest error.
In determining such amount, such Lender may use any reasonable
averaging and attribution methods.
6.2 Limitation on Types of Loans. If on or prior to the first
day of any Interest Period for any Eurodollar Rate Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) the Required Lenders determine (which determination shall
be conclusive) and notify the Agent that the Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding
Eurodollar Rate Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and the Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected Type, either prepay such Loans or Convert such Loans into another Type
of Loan in accordance with the terms of this Agreement.
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6.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Rate Loans
hereunder, then such Lender shall promptly notify the Borrower thereof and such
Lender's obligation to make or Continue Eurodollar Rate Loans and to Convert
other Types of Loans into Eurodollar Rate Loans shall be suspended until such
time as such Lender may again lawfully make, maintain, and fund Eurodollar Rate
Loans (in which case the provisions of Section 6.4 shall be applicable).
6.4 Treatment of Affected Loans. If the obligation of any Lender
to make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other
Type into, Loans of a particular Type shall be suspended pursuant to Section 6.1
or 6.3 hereof (Loans of such Type being herein called "Affected Loans" and such
Type being herein called the "Affected Type"), such Lender's Affected Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for Affected Loans (or, in the case of a
Conversion required by Section 6.3 hereof, on such earlier date as such Lender
may specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
Section 6.1 or 6.3 hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been
so Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Affected Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by
such Lender as Loans of the Affected Type shall be made or Continued
instead as Base Rate Loans, and all Loans of such Lender that would
otherwise be Converted into Loans of the Affected Type shall be
Converted instead into (or shall remain as) Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 6.1 or 6.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 6.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Revolving
Credit Commitments.
6.5 Compensation. Upon the request of any Lender, the Borrower
shall pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
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(a) any payment, prepayment, or Conversion of a Eurodollar
Rate Loan for any reason (including, without limitation, the
acceleration of the Loans pursuant to Section 11.1) on a date other
than the last day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in
Article VII to be satisfied) to borrow, Convert, Continue, or prepay a
Eurodollar Rate Loan on the date for such borrowing, Conversion,
Continuation, or prepayment specified in the relevant notice of
borrowing, prepayment, Continuation, or Conversion under this
Agreement.
6.6 Taxes.
-----
(a) Any and all payments by the Borrower to or for the account
of any Lender or the Agent hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any and all
present or future taxes, duties, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, excluding,
in the case of each Lender and the Agent, taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction under the laws
of which such Lender (or its Applicable Lending Office) or the Agent
(as the case may be) is organized or any political subdivision thereof
(all such non-excluded taxes, duties, levies, imposts, deductions,
charges, withholdings, and liabilities being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable under this Agreement or any other
Loan Document to any Lender or the Agent, (i) the sum payable shall be
increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 6.6) such Lender or the Agent receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law, and (iv) the Borrower
shall furnish to the Agent, at its address referred to in Section 13.2,
the original or a certified copy of a receipt evidencing payment
thereof.
(b) In addition, the Borrower agrees to pay any and all
present or future stamp or documentary taxes and any other excise or
property taxes or charges or similar levies which arise from any
payment made under this Agreement or any other Loan Document or from
the execution or delivery of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other
Taxes").
(c) The Borrower agrees to indemnify each Lender and the Agent
for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 6.6) paid by such
Lender or the Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect
thereto.
(d) Each Lender organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and
delivery of this Agreement in the case
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of each Lender listed on the signature pages hereof and on or prior to
the date on which it becomes a Lender in the case of each other Lender,
and from time to time thereafter if requested in writing by the
Borrower or the Agent (but only so long as such Lender remains lawfully
able to do so), shall provide the Borrower and the Agent with (i)
Internal Revenue Service Form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying
that such Lender is entitled to benefits under an income tax treaty to
which the United States is a party which reduces the rate of
withholding tax on payments of interest or certifying that the income
receivable pursuant to this Agreement is effectively connected with the
conduct of a trade or business in the United States, (ii) Internal
Revenue Service Form W-8 or W-9, as appropriate, or any successor form
prescribed by the Internal Revenue Service, and (iii) any other form or
certificate required by any taxing authority (including any certificate
required by Sections 871(h) and 881(c) of the Internal Revenue Code),
certifying that such Lender is entitled to an exemption from or a
reduced rate of tax on payments pursuant to this Agreement or any of
the other Loan Documents.
(e) For any period with respect to which a Lender has failed
to provide the Borrower and the Agent with the appropriate form
pursuant to Section 6.6(d) (unless such failure is due to a change in
treaty, law, or regulation occurring subsequent to the date on which a
form originally was required to be provided), such Lender shall not be
entitled to indemnification under Section 6.6(a) or 6.6(b) with respect
to Taxes imposed by the United States; provided, however, that should a
Lender, which is otherwise exempt from or subject to a reduced rate of
withholding tax, become subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps
as such Lender shall reasonably request to assist such Lender to
recover such Taxes.
(f) If the Borrower is required to pay additional amounts to
or for the account of any Lender pursuant to this Section 6.6, then
such Lender will agree to use reasonable efforts to change the
jurisdiction of its Applicable Lending Office so as to eliminate or
reduce any such additional payment which may thereafter accrue if such
change, in the judgment of such Lender, is not otherwise
disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of
Taxes, the Borrower shall furnish to the Agent the original or a
certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 6.6 shall survive the termination of
the Revolving Credit Commitments and the payment in full of the Notes
and the Facility Termination Date.
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ARTICLE VII
Conditions to Making Loans and Issuing Letters of Credit
--------------------------------------------------------
7.1 Conditions of Initial Advance. The obligation of the Lenders
to make the initial Advance under the Revolving Credit Facility, and of the
Issuing Bank to issue any Letter of Credit, is subject to the conditions
precedent that:
(a) the Agent shall have received on the Closing Date,
in form and substance satisfactory to the Agent and Lenders, the
following:
(i) executed originals of each of this Agreement, the
Notes, the initial Facility Guaranties, the initial Security
Documents, and the other Loan Documents, together with all
schedules and exhibits thereto;
(ii) the favorable written opinions with respect to
the Loan Documents and the transactions contemplated thereby
of special counsel to the Credit Parties (including special
indenture counsel) in the jurisdictions of North Carolina,
South Carolina, New York and Mexico, dated the Closing Date,
addressed to the Agent and the Lenders and satisfactory to
Smith Helms Mulliss & Moore, L.L.P., special counsel to the
Agent, substantially in the form of Exhibit G;
(iii) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee
thereof) of each Credit Party certified by its secretary or
assistant secretary as of the Closing Date, approving and
adopting the Loan Documents to be executed by such Person, and
authorizing the execution and delivery thereof;
(iv) specimen signatures of officers or other
appropriate representatives executing the Loan Documents on
behalf of each of the Credit Parties, certified by the
secretary or assistant secretary of such Credit Party;
(v) the Organizational Documents of each of the
Credit Parties certified as of a recent date by the Secretary
of State of its state of organization;
(vi) Operating Documents of each of the Credit
Parties certified as of the Closing Date as true and correct
by its secretary or assistant secretary;
(vii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of
formation of each of the Credit Parties as to the due
existence and good standing of such Person;
(viii) appropriate certificates of qualification to
do business, good standing and, where appropriate, authority
to conduct business under assumed name, issued in respect of
each of the Credit Parties as of a recent date by the
Secretary of State or comparable official of each jurisdiction
in which the failure
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to be qualified to do business or authorized so to conduct
business could have a Material Adverse Effect;
(ix) notice of appointment of the initial Authorized
Representative(s);
(x) a Compliance Certificate as of the end of the
fiscal quarter most recently ended prior to the Closing Date;
(xi) evidence of all insurance required by the Loan
Documents;
(xii) an initial Borrowing Notice, if any, and, if
elected by the Borrower, Interest Rate Selection Notice;
(xiii) evidence of the filing of Uniform Commercial
Code financing statements reflecting the filing in all places
required by applicable law to perfect the General Liens of the
General Collateral Agent under the General Security
Instruments and the Priority Liens of the Priority Collateral
Agent under the Priority Security Instruments and the Lien of
the Agent in the Senior Leased Facility, as to items of
Collateral in which a security interest may be perfected by
the filing of financing statements, and such other documents
and/or evidence of other actions as may be necessary under
applicable law to perfect the General Liens of the General
Collateral Agent under the General Security Instruments and
the Priority Liens of the Priority Collateral Agent under the
Priority Security Instruments and the Lien of the Agent in the
Senior Leased Facility, as the Agent, General Collateral Agent
or Priority Collateral Agent may require, including without
limitation the delivery by the Borrower of all certificates
evidencing Pledged Interests, accompanied in each case by duly
executed stock powers (or other appropriate transfer
documents) in blank affixed thereto;
(xiv) evidence satisfactory to the Agent of the
payment in full and termination of the Existing Credit
Agreement;
(xv) executed originals of the Collateral Agency
Agreements and the Senior Debt Intercreditor Agreement;
(xvi) executed originals of the Securitization
Intercreditor Agreement and the Leased Facility Intercreditor
Agreement;
(xvii) copies of the Senior Indenture, the Senior
Note Agreement, the Morgan Swap Agreement, the Receivables
Transfer Agreement, the Receivables Purchase Agreement and the
Senior Lease Documents, together with all material agreements
executed in connection therewith, and amendments of the Senior
Note Agreement, the Senior Lease Documents, the Receivables
Transfer Agreement and the Receivables Purchase Agreement each
in form and substance acceptable to the Lenders, certified as
true and correct by an Authorized Officer of the Borrower;
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(xviii) evidence that all fees payable by the
Borrower on the Closing Date to the Agent, BAS and the Lenders
have been paid in full;
(xix) Uniform Commercial Code search results showing
only those Liens as are acceptable to the Lenders;
(xx) the consolidated financial statements of the
Borrower and its Subsidiaries for the fiscal years ended 1996,
1997 and 1998, including balance sheets, income and cash flow
statements audited by independent public accountants of
recognized national standing and prepared in conformity with
GAAP and such other financial information as the Agent may
request, all in form and substance acceptable to the Agent and
the Lenders;
(xxi) information as may be requested by the Agent
regarding litigation, tax, accounting, labor, insurance,
pension liabilities (actual or contingent), real estate
leases, material contracts, debt agreements, property
ownership, environmental matters, contingent liabilities and
management of the Borrower and its Subsidiaries, which
information shall include, if requested by the Agent, (a)
asset appraisal reports with respect to all of the material
real and personal property owned by the Borrower and its
Subsidiaries, and (b) a written audit of the accounts
receivable not sold to Cone Receivables II LLC, inventory,
payables, controls and systems of the Borrower and its
Subsidiaries, all in form and substance acceptable to the
Agent and the Lenders;
(xxii) information confirming that the Borrower's and
its Subsidiaries' material computer applications and those of
its key vendors and customers adequately address the Year 2000
Problem in all material respects, all in form and substance
acceptable to the Agent and the Lenders;
(xxiii) delivery of Material Real Property Support
Documents as may be required by any Governmental Authority in
connection with the delivery of any Mortgage;
(xxiv) executed officer's certificate by the chief
financial officer of the Borrower as to compliance with
Section 3.9(i) of the Indenture;
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(xxv) the projected Borrowing Base as of the Closing
Date, acceptable to the Lenders in form and substance;
(xxvi) thirteen week consolidated cash flow
projections of the Borrower and its Subsidiaries commencing
with the week starting January 17, 2000, acceptable to the
Lenders in form and substance;
(xxvii) such other documents, instruments,
certificates and opinions as the Agent or any Lender may
reasonably request on or prior to the Closing Date in
connection with the consummation of the transactions
contemplated hereby; and
(b) In the good faith judgment of the Agent and the
Lenders:
(i) except as otherwise disclosed in public filings
made with the Securities and Exchange Commission or disclosed
in the financial projections delivered to the Agent by the
Borrower dated October, 1999 (the "October Projections"), or
as disclosed to the Lenders with respect to a certain
customer's payment practices, there shall not have occurred a
material adverse change since January 3, 1999 in the business,
assets, liabilities (actual or contingent), operations,
condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole or in the facts
and information regarding such entities as represented to date
other than as reflected in the October Projections;
(ii) no litigation, action, suit, investigation or
other arbitral, administrative or judicial proceeding shall be
pending or threatened in any court or before any arbitrator or
Governmental Authority which could reasonably be likely to
result in a Material Adverse Effect;
(iii) the Credit Parties shall have received all
governmental, shareholder and third party approvals, consents
and waivers necessary or advisable in connection with the Loan
Documents and the transactions contemplated thereby, all of
which shall be in full force and effect, and shall have made
or given all necessary filings and notices as shall be
required, and all applicable waiting periods shall have
expired, to consummate the transactions contemplated hereby
without the occurrence of any default under, conflict with or
violation of (A) any applicable law, rule, regulation, order
or decree of any Governmental Authority or arbitral authority
or (B) any agreement, document or instrument to which any of
the Credit Parties is a party or by which any of them or their
properties is bound, except for such approvals, consents,
waivers, filings and notices the receipt, making or giving of
which will not have a Material Adverse Effect;
(iv) each of the lenders under the Existing Credit
Agreement is a Lender party hereto with a Revolving Credit
Commitment hereunder of not less than its equivalent
commitment under the Existing Credit Agreement; and
(v) each of the Lenders is satisfied with (a) the
form and content of all agreements relating to other
Indebtedness of the Borrower and its Subsidiaries, including
the Intercreditor Agreements, (b) the corporate capital and
ownership structure of the Borrower and its Subsidiaries
(including articles of incorporation, bylaws and management of
the Borrower and its Subsidiaries) and (c) the status of all
litigation of the Borrower and its Subsidiaries.
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7.2 Conditions of Revolving Loans and Letter of Credit. The
obligations of the Lenders to make any Revolving Loans, and the Issuing Bank to
issue (or renew) Letters of Credit, hereunder on or subsequent to the Closing
Date are subject to the satisfaction of the following conditions:
(a) the Agent shall have received a Borrowing Notice if
required by Article II;
(b) the representations and warranties of the Credit Parties
set forth in Article VIII and in each of the other Loan Documents shall
be true and correct in all material respects on and as of the date of
such Advance or Letter of Credit issuance or renewal, with the same
effect as though such representations and warranties had been made on
and as of such date, except to the extent that such representations and
warranties expressly relate to an earlier date and except that the
financial statements referred to in Section 8.6(a) shall be deemed
(solely for the purpose of the representation and warranty contained in
such Section 8.6(a) but not for the purpose of any cross reference to
such Section 8.6(a) or to the financial statements described therein
contained in any other provision of Section 8.6 or elsewhere in Article
8) to be those financial statements most recently delivered to the
Agent and the Lenders pursuant to Section 9.1 from the date financial
statements are delivered to the Agent and the Lenders in accordance
with such Section;
(c) in the case of the issuance of a Letter of Credit, the
Borrower shall have executed and delivered to the Issuing Bank an
Application and Agreement for Letter of Credit in form and content
acceptable to the Issuing Bank together with such other instruments and
documents as it shall request;
(d) at the time of (and after giving effect to) each Advance
or the issuance of a Letter of Credit, no Default or Event of Default
specified in Article XI shall have occurred and be continuing; and
(e) immediately after giving effect to:
(i) a Revolving Loan, the aggregate principal balance
of all outstanding Revolving Loans for each Lender shall not
exceed such Lender's Revolving Credit Commitment;
(ii) a Letter of Credit or renewal thereof, the
aggregate principal balance of all outstanding Participations
in Letters of Credit and Reimbursement Obligations (or in the
case of the Issuing Bank, its remaining interest after
deduction of all Participations in Letters of Credit and
Reimbursement Obligations of other Lenders) for each Lender
and in the aggregate shall not exceed, respectively, (X) such
Lender's Letter of Credit Commitment or (Y) the Total Letter
of Credit Commitment;
(iii) a Revolving Loan or a Letter of Credit or
renewal thereof, (A) the sum of Revolving Credit Outstandings
plus Letter of Credit Outstandings shall
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not exceed the Total Revolving Credit Commitment and (B)
Senior Debt Outstandings shall not exceed the Borrowing Base.
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ARTICLE VIII
Representations and Warranties
------------------------------
The Borrower represents and warrants with respect to itself and to its
Subsidiaries (which representations and warranties shall survive the delivery of
the documents mentioned herein and the making of Loans), that:
8.1 Organization and Authority.
--------------------------
(a) The Borrower and each Subsidiary is a corporation duly
organized and validly existing under the laws of the jurisdiction of
its formation;
(b) The Borrower and each Subsidiary (x) has the requisite
power and authority to own its properties and assets and to carry on
its business as now being conducted and as contemplated in the Loan
Documents, and (y) is qualified to do business in every jurisdiction in
which failure so to qualify would have a Material Adverse Effect;
(c) The Borrower has the power and authority to execute,
deliver and perform this Agreement and the Notes, and to borrow
hereunder, and to execute, deliver and perform each of the other Loan
Documents to which it is a party;
(d) Each Credit Party (other than the Borrower) has the power
and authority to execute, deliver and perform the Facility Guaranty and
each of the other Loan Documents to which it is a party;
(e) When executed and delivered, each of the Loan Documents to
which any Credit Party is a party will be the legal, valid and binding
obligation or agreement, as the case may be, of such Credit Party,
enforceable against such Credit Party in accordance with its terms,
subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the effect of
general principles of equity (whether considered in a proceeding at law
or in equity); and
(f) The Security Documents create valid security interests in
the Collateral purported to be covered thereby, which security
interests and Liens are and will remain perfected security interests
and Liens, prior to all other Liens other than Permitted Liens.
8.2 Loan Documents. The execution, delivery and performance by
each Credit Party of each of the Loan Documents to which it is a party:
(a) have been duly authorized by all requisite Organizational
Action of such Credit Party required for the lawful execution, delivery
and performance thereof;
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(b) do not violate any provisions of (i) any applicable law,
rule or regulation, (ii) any judgment, writ, order, determination,
decree or arbitral award of any Governmental Authority or arbitral
authority binding on such Credit Party or its properties, or (iii) the
Organizational Documents or Operating Documents of such Credit Party;
(c) does not and will not be in conflict with, result in a
breach of or constitute an event of default, or an event which, with
notice or lapse of time or both, would constitute an event of default,
under any contract, indenture, agreement or other instrument or
document to which such Credit Party is a party, or by which the
properties or assets of such Credit Party are bound; and
(d) does not and will not result in the creation or imposition
of any Lien upon any of the properties or assets of such Credit Party
or any Subsidiary except any Liens in favor of the Secured Parties
created by the Security Documents.
8.3 Solvency. Each Credit Party is Solvent after giving effect to
the transactions contemplated by the Loan Documents.
8.4 Subsidiaries and Stockholders. The Borrower has no
Subsidiaries other than those Persons listed as Subsidiaries in Schedule 8.4 and
additional Subsidiaries created or acquired after the Closing Date in compliance
with Section 9.20; Schedule 8.4 states as of the date hereof the organizational
form of each entity, the authorized and issued capitalization of each Subsidiary
listed thereon, the number of shares or other equity interests of each class of
capital stock or interest issued and outstanding of each such Subsidiary and the
number and/or percentage of outstanding shares or other equity interest
(including options, warrants and other rights to acquire any interest) of each
such class of capital stock or other equity interest owned by Borrower or by any
such Subsidiary; the outstanding shares or other equity interests of each such
Subsidiary have been duly authorized and validly issued and are fully paid and
nonassessable; and Borrower and each such Subsidiary owns beneficially and of
record all the shares and other interests it is listed as owning in Schedule
8.4, free and clear of any Lien (other than Liens in favor of the Collateral
Agents under the Security Documents).
8.5 Ownership Interests. Borrower owns no interest in any Person
other than the Persons listed in Schedule 8.4, equity investments in Persons not
constituting Material Subsidiaries permitted under Section 10.7 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
Section 9.20.
8.6 Financial Condition.
-------------------
(a) The Borrower has heretofore furnished to each Lender an
audited consolidated balance sheet of the Borrower and its Subsidiaries
as at January 3, 1999 and the notes thereto and the related
consolidated statements of income, stockholders' equity and cash flows
for the Fiscal Year then ended as examined and certified by McGladrey &
Pullen LLP, and unaudited consolidated interim financial statements of
the Borrower and its Subsidiaries consisting of a consolidated balance
sheets and related consolidated
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statements of income, stockholders' equity and cash flows, in each case
without notes, for and as of the end of the nine month period ending
October 3, 1999. Except as set forth therein, such financial statements
(including the notes thereto) present fairly the financial condition of
the Borrower and its Subsidiaries as of the end of such Fiscal Year and
nine month period and results of their operations and the changes in
its stockholders' equity for the Fiscal Year and interim period then
ended, all in conformity with GAAP applied on a Consistent Basis,
subject however, in the case of unaudited interim statements to year
end audit adjustments;
(b) since the later of (i) the date of the audited financial
statements delivered pursuant to Section 8.6(a) hereof or (ii) the date
of the audited financial statements most recently delivered pursuant to
Section 9.1(a) hereof, there has been no material adverse change in the
condition, financial or otherwise, of the Borrower or any of its
Subsidiaries or in the businesses, properties, performance, prospects
or operations of the Borrower or its Subsidiaries, nor have such
businesses or properties been materially adversely affected as a result
of any fire, explosion, earthquake, accident, strike, lockout,
combination of workers, flood, embargo or act of God other than (i) as
set forth in the October Projections and (ii) as disclosed to the
Lenders with respect to a certain customer's payment practices; and
(c) except as set forth in the financial statements referred
to in Section 8.6(a) or in Schedule 8.6 or permitted by Section 10.5,
neither the Borrower nor any Subsidiary has incurred, other than in the
ordinary course of business, any material Indebtedness, Contingent
Obligation or other commitment or liability which remains outstanding
or unsatisfied.
8.7 Title to Properties. The Borrower and each of its Subsidiaries
and each other Credit Party has good and marketable title to all its real and
personal properties, subject to no transfer restrictions or Liens of any kind,
except for the transfer restrictions and Liens described in Schedule 8.7 and
Liens permitted by Section 10.4.
8.8 Taxes. Except as set forth in Schedule 8.8, the Borrower and
each of its Subsidiaries has filed or caused to be filed all federal, state and
local tax returns which are required to be filed by it and, except for taxes and
assessments being contested in good faith by appropriate proceedings diligently
conducted and against which reserves (if required in accordance with GAAP) are
reflected in the financial statements described in Section 8.6(a) or Sections
9.1(a) or (b) and satisfactory to the Borrower's independent certified public
accountants have been established, have paid or caused to be paid all taxes as
shown on said returns or on any assessment received by it, to the extent that
such taxes have become due.
8.9 Other Agreements. No Credit Party nor any Subsidiary is
----------------
(a) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions, which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect; or
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(b) in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any
agreement or instrument to which such Credit Party or any Subsidiary is
a party, which default has, or if not remedied within any applicable
grace period could reasonably be likely to have, a Material Adverse
Effect.
8.10 Litigation. Except as set forth in Schedule 8.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary or other Credit Party or affecting the Borrower or any Subsidiary or
other Credit Party or any properties or rights of the Borrower or any Subsidiary
or other Credit Party, which could reasonably be likely to have a Material
Adverse Effect.
8.11 Margin Stock. The proceeds of the borrowings made hereunder
will be used by the Borrower only for the purposes expressly authorized herein.
None of such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of the Loans
under this Agreement a "purpose credit" within the meaning of said Regulation U
or Regulation X (12 C.F.R. Part 221) of the Board. Neither the Borrower nor any
agent acting in its behalf has taken or will take any action which might cause
this Agreement or any of the documents or instruments delivered pursuant hereto
to violate any regulation of the Board or to violate the Securities Exchange Act
of 1934, as amended, or the Securities Act of 1933, as amended, or any state
securities laws, in each case as in effect on the date hereof.
8.12 Investment Company. No Credit Party is an "investment
company," or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended (15 U.S.C. ss. 80a-1, et seq.). The application
of the proceeds of the Loans and repayment thereof by the Borrower and the
performance by the Borrower and the other Credit Parties of the transactions
contemplated by the Loan Documents will not violate any provision of said Act,
or any rule, regulation or order issued by the Securities and Exchange
Commission thereunder, in each case as in effect on the date hereof.
8.13 Patents, Etc. The Borrower and each other Credit Party owns or
has the right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, trade secrets and copyrights necessary to or used in the conduct of
its businesses as now conducted and as contemplated by the Loan Documents,
without known conflict with any patent, license, franchise, trademark, trade
secret, trade name, copyright, other proprietary right of any other Person.
8.14 No Untrue Statement. Neither (a) this Agreement nor any other
Loan Document or certificate or document executed and delivered by or on behalf
of the Borrower or any other Credit Party in accordance with or pursuant to any
Loan Document nor (b) any statement, representation, or warranty provided to the
Agent in connection with the negotiation or preparation of the Loan Documents
contains any misrepresentation or untrue statement of
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material fact or omits to state a material fact necessary, in light of the
circumstance under which it was made, in order to make any such warranty,
representation or statement contained therein not misleading.
8.15 No Consents, Etc. Neither the respective businesses or
properties of the Credit Parties or any Subsidiary, nor any relationship among
the Credit Parties or any Subsidiary and any other Person, nor any circumstance
in connection with the execution, delivery and performance of the Loan Documents
and the transactions contemplated hereby and thereby, is such as to require a
consent, approval or authorization of, or filing, registration or qualification
with, any Governmental Authority or any other Person on the part of any Credit
Party as a condition to the execution, delivery and performance of, or
consummation of the transactions contemplated by the Loan Documents, which, if
not obtained or effected, would be reasonably likely to have a Material Adverse
Effect, or if so, such consent, approval, authorization, filing, registration or
qualification has been duly obtained or effected, as the case may be.
8.16 Employee Benefit Plans.
----------------------
(a) The Borrower and each ERISA Affiliate is in compliance
with all applicable provisions of ERISA and the regulations and
published interpretations thereunder and in compliance with all Foreign
Benefit Laws with respect to all Employee Benefit Plans except for any
required amendments for which the remedial amendment period as defined
in Section 401(b) of the Code has not yet expired. Each Employee
Benefit Plan that is intended to be qualified under Section 401(a) of
the Code has been determined or the Borrower or its Subsidiaries is in
the process of obtaining a determination by the Internal Revenue
Service to be so qualified, each trust related to such plan has been
determined to be exempt under Section 501(a) of the Code, and each
Employee Benefit Plan subject to any Foreign Benefit Law has received
the required approvals by any Governmental Authority regulating such
Employee Benefit Plan. No material liability has been incurred by the
Borrower or any ERISA Affiliate which remains unsatisfied for any taxes
or penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan;
(b) Neither the Borrower nor any ERISA Affiliate has (i)
engaged in a nonexempt prohibited transaction described in Section 4975
of the Code or Section 406 of ERISA affecting any of the Employee
Benefit Plans or the trusts created thereunder which could subject any
such Employee Benefit Plan or trust to a material tax or penalty on
prohibited transactions imposed under Internal Revenue Code Section
4975 or ERISA, (ii) incurred any accumulated funding deficiency with
respect to any Employee Benefit Plan, whether or not waived, or any
other liability to the PBGC which remains outstanding other than the
payment of premiums and there are no premium payments which are due and
unpaid, (iii) failed to make a required contribution or payment to a
Multiemployer Plan, (iv) failed to make a required installment or other
required payment under Section 412 of the Code, Section 302 of ERISA or
the terms of such Employee Benefit Plan, or (v) failed to make a
required contribution or payment, or otherwise failed to operate in
compliance with any Foreign Benefit Law regulating any Employee Benefit
Plan;
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(c) Except as set forth on Schedule 8.16 hereto, no
Termination Event has occurred or is reasonably expected to occur with
respect to any Pension Plan or Multiemployer Plan, and neither the
Borrower nor any ERISA Affiliate has incurred any unpaid withdrawal
liability with respect to any Multiemployer Plan;
(d) The present value of all vested accrued benefits under
each Employee Benefit Plan which is subject to Title IV of ERISA, or
the funding of which is regulated by any Foreign Benefit Law did not,
as of the most recent valuation date for each such plan, exceed the
then current value of the assets of such Employee Benefit Plan
allocable to such benefits;
(e) To the best of the Borrower's knowledge, each Employee
Benefit Plan which is subject to Title IV of ERISA or the funding of
which is regulated by any Foreign Benefit Law, maintained by the
Borrower or any ERISA Affiliate, has been administered in accordance
with its terms in all material respects and is in compliance in all
material respects with all applicable requirements of ERISA, applicable
Foreign Benefit Law and other applicable laws, regulations and rules;
(f) The consummation of the Loans and the issuance of the
Letters of Credit provided for herein will not involve any prohibited
transaction under ERISA which is not subject to a statutory or
administrative exemption; and
(g) No material proceeding, claim, lawsuit and/or
investigation exists or, to the best knowledge of the Borrower after
due inquiry, is threatened concerning or involving any Employee Benefit
Plan;
8.17 No Default. As of the date hereof, there does not exist any
Default or Event of Default hereunder.
8.18.....Environmental Laws. Except as listed on Schedule 8.18 or as
otherwise could not reasonably be expected to have a Material Adverse Effect,
the Borrower and each Subsidiary is in compliance with all applicable
Environmental Laws and has been issued and currently maintains all required
federal, state and local permits, licenses, certificates and approvals. Except
as listed on Schedule 8.18 or as otherwise could not reasonably be expected to
have a Material Adverse Effect, neither the Borrower nor any Subsidiary has been
notified of any pending or threatened action, suit, proceeding or investigation,
and neither the Borrower nor any Subsidiary is aware of any facts, which (a)
calls into question, or could reasonably be expected to call into question,
compliance by the Borrower or any Subsidiary with any Environmental Laws, (b)
seeks, or could reasonably be expected to form the basis of a meritorious
proceeding, to suspend, revoke or terminate any license, permit or approval
necessary for the operation of the Borrower's or any Subsidiary's business or
facilities or for the generation, handling, storage, treatment or disposal of
any Hazardous Materials, or (c) seeks to cause, or could reasonably be expected
to form the basis of a meritorious proceeding to cause, any property of the
Borrower or any Subsidiary or other Credit Party to be subject to any
restrictions on ownership, use, occupancy or transferability under any
Environmental Law.
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8.19 Employment Matters.
------------------
(a) None of the employees of the Borrower or any Subsidiary is
subject to any collective bargaining agreement except as set forth on
Schedule 8.19 and there are no strikes, work stoppages, election or
decertification petitions or proceedings, unfair labor charges, equal
opportunity proceedings, or other material labor/employee related
controversies or proceedings pending or, to the best knowledge of the
Borrower, threatened against the Borrower or any Subsidiary or between
the Borrower or any Subsidiary and any of its employees, other than
employee grievances arising in the ordinary course of business which
could not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect; and
(b) Except to the extent a failure to maintain compliance
would not have a Material Adverse Effect, the Borrower and each
Subsidiary is in compliance in all respects with all applicable laws,
rules and regulations pertaining to labor or employment matters,
including without limitation those pertaining to wages, hours,
occupational safety and taxation and there is neither pending or
threatened any litigation, administrative proceeding nor, to the
knowledge of the Borrower, any investigation, in respect of such
matters which, if decided adversely, could reasonably be likely,
individually or in the aggregate, to have a Material Adverse Effect.
8.20.....RICO. Neither the Borrower nor any Subsidiary is engaged in or
has engaged in any course of conduct that could subject any of their respective
properties to any Lien, seizure or other forfeiture under any racketeer
influenced and corrupt organizations law, whether civil or criminal, or other
similar laws.
8.21.....Year 2000 Compliance. All computer applications (including
those affected by information received from its suppliers and vendors) that are
material to the business and operations of the Borrower and any of its
Subsidiaries are Year 2000 Compliant, except to the extent that a failure to do
so could not reasonably be expected to have Material Adverse Effect.
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ARTICLE IX
Affirmative Covenants
---------------------
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will cause
each Subsidiary to:
9.1 Financial Reports, Etc.
----------------------
(a) As soon as practical and in any event within 90 days after
the end of each Fiscal Year of the Borrower, deliver or cause to be
delivered to the Agent and each Lender (i) consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as at
the end of such Fiscal Year, and the notes thereto, and the related
consolidated and consolidating statements of income, stockholders'
equity and cash flows, and the respective notes thereto, for such
Fiscal Year, setting forth (other than for consolidating statements)
comparative financial statements for the preceding Fiscal Year, all
prepared in accordance with GAAP applied on a Consistent Basis and
containing, with respect to the consolidated financial statements,
opinions of McGladrey & Pullen LLP, or other such independent certified
public accountants selected by the Borrower and approved by the Agent,
which are unqualified as to the scope of the audit performed and as to
the "going concern" status of the Borrower and without any exception
not acceptable to the Lenders, and (ii) a Compliance Certificate as of
the end of such Fiscal Year;
(b) as soon as practical and in any event within 45 days after
the end of each fiscal quarter (except for the last fiscal quarter of
the Fiscal Year, as to which the following shall not be required to be
delivered), deliver to the Agent and each Lender (i) consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as at
the end of such fiscal quarter, and the related consolidated and
consolidating statements of income, stockholders' equity and cash flows
for such fiscal quarter and for the period from the beginning of the
then current Fiscal Year through the end of such reporting period, and
accompanied by a certificate of an Authorized Representative to the
effect that such financial statements present fairly the financial
position of the Borrower and its Subsidiaries as of the end of such
fiscal period and the results of their operations and the changes in
their financial position for such fiscal period, in conformity with the
standards set forth in Section 8.6(a) with respect to interim financial
statements, and (ii) a Compliance Certificate as of the end of such
quarter;
(c) as soon as practical and in any event within 45 days after
the end of each Fiscal Quarter deliver to the Agent and each Lender a
certificate of an Authorized Representative of the Borrower certifying
all Asset Dispositions for such Fiscal Quarter constituting Permitted
Asset Dispositions under the terms of clause (viii) of such defined
term together with evidence of application of all proceeds of each such
Permitted Asset Disposition consummated more than 180 days prior to the
end of such Fiscal Quarter;
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(d) together with each delivery of the financial statements
required by Section 9.1(a)(i), deliver to the Agent and each Lender a
letter from the Borrower's accountants specified in Section 9.1(a)(i)
stating that in performing the audit necessary to render an opinion on
the financial statements delivered under Section 9.1(a)(i), they
obtained no knowledge of any Default or Event of Default by the
Borrower in the fulfillment of the terms and provisions of this
Agreement insofar as they relate to financial matters (which at the
date of such statement remains uncured); or if the accountants have
obtained knowledge of such Default or Event of Default, a statement
specifying the nature and period of existence thereof;
(e) promptly upon their becoming available to the Borrower,
the Borrower shall deliver to the Agent and each Lender a copy of (i)
all regular or special reports or effective registration statements
which Borrower or any Subsidiary shall file with the Securities and
Exchange Commission (or any successor thereto) or any securities
exchange, (ii) any proxy statement distributed by the Borrower or any
Subsidiary to its shareholders, bondholders or the financial community
in general, and (iii) any management letter or other report submitted
to the Borrower or any Subsidiary by independent accountants in
connection with any annual, interim or special audit of the Borrower or
any Subsidiary; and
(f) not later than the last Business Day of each Fiscal Year,
deliver to the Agent and each Lender a capital and operating expense
budget and consolidated financial projections for the Borrower and its
Subsidiaries for the next Fiscal Year, prepared in accordance with GAAP
applied on a Consistent Basis;
(g) as soon as practicable and in any event within twenty-five
(25) days following the end of each fiscal month, deliver to the Agent
and each Lender (i) a Borrowing Base Certificate as of the end of such
month and an accounts receivable aging report in form and substance
acceptable to the Agent and (ii) a Compliance Certificate as of the end
of such month in form and substance acceptable to the Agent;
(h) as soon as practical and in any event within 25 days after
the end of each fiscal month, deliver to the Agent and each Lender
consolidated balance sheets of the Borrower and its Subsidiaries as at
the end of such fiscal month, and the related consolidated statements
of income, stockholders' equity and cash flows for such fiscal month
and for the period from the beginning of the then current Fiscal Year
through the end of such fiscal month all prepared by management of the
Borrower using inventory estimation, and accompanied by a certificate
of an Authorized Representative to the effect that such financial
statements present fairly the financial position of the Borrower and
its Subsidiaries as of the end of such fiscal month and the results of
their operations and the changes in their financial position for such
fiscal month; and
(i) promptly, from time to time, deliver or cause to be
delivered to the Agent and each Lender such other information regarding
Borrower's and any Subsidiary's operations, business affairs and
financial condition as the Agent or such Lender may reasonably request.
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The Agent and the Lenders are hereby authorized to deliver a copy of
any such financial or other information delivered hereunder to the Lenders (or
any affiliate of any Lender) or to the Agent, to any Governmental Authority
having jurisdiction over the Agent or any of the Lenders pursuant to any written
request therefor or in the ordinary course of examination of loan files, or to
any other Person who shall acquire or consider the assignment of, or acquisition
of any participation interest in, any Obligation permitted by this Agreement.
9.2 Maintain Properties. Maintain all properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens all
trademarks, trade names, patents, copyrights, trade secrets, know-how, and other
intellectual property and proprietary information (or adequate licenses
thereto), in each case as are reasonably necessary to conduct its business as
currently conducted or as contemplated hereby, all in accordance with customary
and prudent business practices.
9.3 Existence, Qualification, Etc. Except as otherwise expressly
permitted under Section 10.8, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material rights
and franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary except where the failure to so qualify would not have
a Material Adverse Effect.
9.4 Regulations and Taxes. Comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien against any of its
properties except liabilities being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves acceptable
to the Borrower's independent certified public accountants have been established
unless and until any Lien resulting therefrom attaches to any of its property
and becomes enforceable against its creditors.
9.5 Insurance. (a) Keep all of its insurable properties adequately
insured at all times with responsible insurance carriers (or on a self-insured
basis customary for companies similarly situated and in accordance with prudent
business practices) against loss or damage by fire and other hazards to the
extent and in the manner as are customarily insured against by similar
businesses owning such properties similarly situated and otherwise as required
by the Security Documents, (b) maintain general public liability insurance with
responsible insurance carriers (or self-insurance as is customary for similarly
situated companies and in accordance with prudent business practices) at all
times against liability on account of damage to persons and property and (c)
maintain insurance under all applicable workers' compensation laws (or in the
alternative, maintain required reserves if self-insured for workers'
compensation purposes) and against loss by reason by business interruption, each
of the foregoing policies of insurance to have such limits, deductibles,
exclusions, co-insurance and other provisions providing no less coverages than
that specified in Schedule 9.5, and such insurance policies to be in form
reasonably satisfactory to the Agent, General Collateral Agent and/or Priority
Collateral Agent.
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9.6 True Books. Keep true books of record and account in which
full, true and correct entries will be made of all of its dealings and
transactions, and set up on its books such reserves as may be required by GAAP
with respect to doubtful accounts and all taxes, assessments, charges, levies
and claims and with respect to its business in general, and include such
reserves in interim as well as year-end financial statements.
9.7 Year 2000 Compliance. The Borrower will promptly notify the
Agent and the Lenders in the event the Borrower discovers or determines that any
computer application (including those affected by information received from its
suppliers and vendors) that is material to its or any of its Subsidiaries'
business and operations is not Year 2000 Compliant, except to the extent that
such failure could not reasonably be expected to have a Material Adverse Effect.
9.8 Right of Inspection. Permit any Person designated by any
Lender or the Agent to visit and inspect, at the Borrower's expense, any of the
properties, corporate books and financial reports of the Borrower or any
Subsidiary and to discuss its affairs, finances and accounts with its principal
officers and independent certified public accountants, all at reasonable times,
at reasonable intervals and with reasonable prior notice.
9.9 Observe all Laws. Conform to and duly observe in all material
respects all laws, including all Environmental Laws and ERISA, rules and
regulations and all other valid requirements of any Governmental Authority with
respect to the conduct of its business, except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect.
9.10 Governmental Licenses. Obtain and maintain all licenses,
permits, certifications and approvals of all applicable Governmental Authorities
as are required for the conduct of its business as currently conducted and as
contemplated by the Loan Documents, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
9.11 Covenants Extending to Other Persons. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of the Borrower in Sections 9.2 through 9.10, inclusive and
9.21.
9.12 Officer's Knowledge of Default. Upon any officer of the
Borrower obtaining knowledge of any Default or Event of Default hereunder or
under any other obligation of the Borrower or any Subsidiary or other Credit
Party to any Lender, or any event, development or occurrence which could
reasonably be expected to have a Material Adverse Effect, cause such officer or
an Authorized Representative to promptly notify the Agent of the nature thereof,
the period of existence thereof, and what action the Borrower or such Subsidiary
or other Credit Party proposes to take with respect thereto.
9.13 Suits or Other Proceedings. Upon any officer of the Borrower
obtaining knowledge of any litigation or other proceedings being instituted
against the Borrower or any Subsidiary or other Credit Party, or any attachment,
levy, execution or other process being instituted against any assets of the
Borrower or any Subsidiary or other Credit Party, making a claim or claims in an
aggregate amount greater than $3,000,000, to the extent not covered by
insurance, promptly deliver to the Agent written notice thereof stating the
nature and status of such litigation, dispute, proceeding, levy, execution or
other process.
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9.14 Notice of Environmental Complaint or Condition. Promptly
provide to the Agent true, accurate and complete copies of any and all notices,
complaints, orders, directives, claims or citations received by the Borrower or
any Subsidiary relating to any (a) material violation or alleged material
violation by the Borrower or any Subsidiary of any applicable Environmental Law;
(b) release or threatened release by the Borrower or any Subsidiary, or by any
Person handling, transporting or disposing of any Hazardous Material on behalf
of the Borrower or any Subsidiary, or at any facility or property owned or
leased or operated by the Borrower or any Subsidiary, of any Hazardous Material,
except where occurring legally pursuant to a permit or license or to the extent
such release could not have a Material Adverse Effect; or (c) material liability
or alleged material liability of the Borrower or any Subsidiary for the costs of
cleaning up, removing, remediating or responding to a release of Hazardous
Materials.
9.15 Environmental Compliance. If the Borrower or any Subsidiary
shall receive any letter, notice, complaint, order, directive, claim or citation
alleging that the Borrower or any Subsidiary has violated any Environmental Law,
has released any Hazardous Material, or is liable for the costs of cleaning up,
removing, remediating or responding to a release of Hazardous Materials, the
Borrower and any Subsidiary shall, within the time period permitted and to the
extent required by the applicable Environmental Law or the Governmental
Authority responsible for enforcing such Environmental Law, remove or remedy, or
cause the applicable Subsidiary to remove or remedy, such violation or release
or satisfy such liability.
9.16 Indemnification. Without limiting the generality of Section
13.9, the Borrower hereby agrees to indemnify and hold the Agent and the Lenders
and any affiliate of any Lender party to a Swap Agreement, and their respective
officers, directors, employees and agents, harmless from and against any and all
claims, losses, penalties, liabilities, damages and expenses (including
assessment and cleanup costs and reasonable attorneys', consultants' or other
expert fees, expenses and disbursements) arising directly or indirectly from,
out of or by reason of (a) the violation of any Environmental Law by the
Borrower or any Subsidiary or with respect to any property owned, operated or
leased by the Borrower or any Subsidiary or (b) the handling, storage,
transportation, treatment, emission, release, discharge or disposal of any
Hazardous Materials by or on behalf of the Borrower or any Subsidiary, or on or
with respect to property owned or leased or operated by the Borrower or any
Subsidiary. The provisions of this Section 9.16 shall survive repayment of the
Obligations, occurrence of the Facility Termination Date and expiration or
termination of this Agreement.
9.17 Further Assurances. At the Borrower's cost and expense, upon
request of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the reasonable opinion of
the Agent to carry out more effectively the provisions and purposes of this
Agreement, the Security Documents and the other Loan Documents.
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9.18 Employee Benefit Plans.
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(a) With reasonable promptness, and in any event within thirty
(30) days thereof, give notice to the Agent of (a) the establishment of
any new Pension Plan (which notice shall include a copy of such plan),
(b) the commencement of contributions to any Employee Benefit Plan to
which the Borrower or any of its ERISA Affiliates was not previously
contributing, (c) any material increase in the benefits of any existing
Employee Benefit Plan, (d) each funding waiver request filed with
respect to any Pension Plan and all communications received or sent by
the Borrower or any ERISA Affiliate with respect to such request,
including any communications relating to the PBGC Agreement and (e) the
failure of the Borrower or any ERISA Affiliate to make a required
installment or payment under Section 302 of ERISA or Section 412 of the
Code (in the case of Employee Benefit Plans regulated by the Code or
ERISA and including any installments or payments relating to the PBGC
Agreement) or under any Foreign Benefit Law (in the case of Employee
Benefit Plans regulated by any Foreign Benefit Law) by the due date;
(b) Promptly and in any event within fifteen (15) days of
becoming aware of the occurrence or forthcoming occurrence of any (a)
Termination Event or (b) nonexempt "prohibited transaction," as such
term is defined in Section 406 of ERISA or Section 4975 of the Code, in
connection with any Employee Benefit Plan or any trust created
thereunder, deliver to the Agent a notice specifying the nature
thereof, what action the Borrower or any ERISA Affiliate has taken, is
taking or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto; and
(c) With reasonable promptness but in any event within fifteen
(15) days for purposes of clauses (a), (b) and (c), deliver to the
Agent copies of (a) any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an Employee
Benefit Plan under Section 401(a) of the Code, (b) all notices received
by the Borrower or any ERISA Affiliate of the PBGC's or any
Governmental Authority's intent to terminate any Pension Plan or to
have a trustee appointed to administer any Pension Plan, including all
correspondence associated with the PBGC Agreement, (c) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed
by the Borrower or any ERISA Affiliate with the Internal Revenue
Service with respect to each Employee Benefit Plan and (d) all notices
received by the Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor concerning the imposition or amount of withdrawal
liability pursuant to Section 4202 of ERISA. The Borrower will notify
the Agent in writing within five (5) Business Days of the Borrower or
any ERISA Affiliate obtaining knowledge or reason to know that the
Borrower or any ERISA Affiliate has filed or intends to file a notice
of intent to terminate any Pension Plan under a distress termination
within the meaning of Section 4041(c) of ERISA.
9.19 Continued Operations. Continue at all times to conduct its
business and engage principally in the same line or lines of business
substantially as heretofore conducted.
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9.20 New Subsidiaries. Simultaneously with (i) the acquisition or
creation of any Material Subsidiary which is a Domestic Subsidiary, or upon any
existing Domestic Subsidiary becoming a Material Subsidiary, cause to be
delivered to the Agent each of the following and (ii) the acquisition or
creation of any Material Direct Foreign Subsidiary, cause to be delivered to the
Agent each of the items set forth in (d), (e), (f), (h) (subclauses (i), (ii),
(iii) and (v) only) and (i), below:
(a) a Facility Guaranty executed by such Subsidiary
substantially in the form of Exhibit I;
(b) a General Security Agreement of such Subsidiary
substantially in the form of Exhibit J-1, and a Priority Security
agreement substantially in the form of Exhibit J-2, together with such
Uniform Commercial Code financing statements on Form UCC-1 or otherwise
duly executed by such Subsidiary as "Debtor" and (i) naming the General
Collateral Agent for the benefit of the General Secured Parties, as
"Secured Party," and (ii) naming the Priority Collateral Agent for the
benefit of the Priority Secured Parties as "Secured Party", in each
case in form, substance and number sufficient in the reasonable opinion
of the Collateral Agents and their special counsel to be filed in all
Uniform Commercial Code filing offices in all jurisdictions in which
filing is necessary or advisable to perfect (y) the General Lien in
favor of the General Collateral Agent for the benefit of the General
Secured Parties and (z) the Priority Lien in favor of the Priority
Collateral Agent for the benefit of the Priority Secured Parties, in
each case to the extent such General Lien or Priority Lien may be
perfected by Uniform Commercial Code filing;
(c) Priority Mortgages and General Mortgages with respect to
all parcels of real property with a fair market value in excess of
$300,000 owned by such Subsidiary and with respect to any Material Real
Property or to the extent required by any law, regulation or directive
of any applicable Governmental Authority, Material Real Property
Support Documents, as applicable, and related Uniform Commercial Code
financing statements on Form UCC-1 or otherwise pertaining to fixtures;
(d) if the Subsidiary Securities issued by such Subsidiary
that are, or are required to become, Pledged Interests, shall be owned
by a Subsidiary who has not then executed and delivered to the General
Collateral Agent a Pledge Agreement granting a General Lien to the
General Collateral Agent, for the benefit of the General Secured
Parties, in such equity interests, a Pledge Agreement executed by the
Subsidiary that directly owns such Subsidiary Securities substantially
in the form attached hereto as Exhibit K (or, as to the Pledged
Interests issued by any Direct Foreign Subsidiary, in a form acceptable
to the Agent), and if such Subsidiary Securities shall be owned by the
Borrower or a Subsidiary who has previously executed a Pledge
Agreement, a Pledge Agreement Supplement in the form required by such
Pledge Agreement pertaining to such Subsidiary Securities;
(e) if the Pledged Interests issued by such Subsidiary
constitute securities under Article 8 of the Uniform Commercial Code
(i) the certificates representing such
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Pledged Interests and (ii) duly executed, undated stock powers or other
appropriate powers of assignment in blank affixed thereto;
(f) (i) Uniform Commercial Code financing statements on form
UCC-1 or otherwise duly executed by the pledgor as "Debtor" and naming
the General Collateral Agent for the benefit of the General Secured
Parties as "Secured Party," in form, substance and number sufficient in
the reasonable opinion of the Agent and its special counsel to be filed
in all Uniform Commercial Code filing offices and in all jurisdictions
in which filing is necessary or advisable to perfect in favor of the
General Collateral Agent for the benefit of the General Secured Parties
the General Lien on such Subsidiary Securities and (ii) if the Pledged
Interests issued by such Subsidiary do not constitute securities and
such Subsidiary has not elected to have such interests treated as
securities under Article 8 of the applicable Uniform Commercial Code, a
control agreement from the Registrar of such Subsidiary, in form and
substance acceptable to the Agent and in which the Registrar (1)
acknowledges that the pledgor is at the date of such acknowledgment the
sole record, and to its knowledge, beneficial owner of such Subsidiary
Securities, (2) acknowledges the General Lien in favor of the General
Collateral Agent conferred under the Pledge Agreement and that such
General Lien will be reflected on the registry for such Subsidiary
Securities, (3) agrees that it will not register any transfer of such
Subsidiary Securities nor acknowledge any Lien in favor of any other
Person on such Subsidiary Securities, without the prior written consent
of the General Collateral Agent, in each instance, until it receives
notice from the General Collateral Agent that all General Liens on such
Collateral in favor of the General Collateral Agent for the benefit of
the General Secured Parties have been released or terminated, and (4)
agrees that upon receipt of notice from the Agent or the General
Collateral Agent that an Event of Default has occurred and is
continuing and that the Subsidiary Securities identified in such notice
have been transferred to a transferee identified in such notice, it
will duly record such transfer of Subsidiary Securities on the
appropriate registry without requiring further consent from the pledgor
and shall thereafter treat the transferee as the sole record and
beneficial owner of such Subsidiary Securities pending further
transfer, notwithstanding any contrary instruction received from the
pledgor;
(g) a supplement to the appropriate schedule attached to the
appropriate Security Documents listing the additional Collateral,
certified as true, correct and complete by the Authorized
Representative (provided that the failure to deliver such supplement
shall not impair the rights conferred under the Security Documents in
after acquired Collateral);
(h) an opinion or opinions of counsel to the Subsidiary
(including local counsel in each jurisdiction where Mortgaged Property
is located) dated as of the date of delivery of the Facility Guaranty
and other Loan Documents provided for in this Section 9.20 and
addressed to the Collateral Agents, in form and substance reasonably
acceptable to the Collateral Agents (which opinion may include
assumptions and qualifications of similar effect to those contained in
the opinions of counsel delivered pursuant to Section 7.1(a)), to the
effect that:
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(i) such Subsidiary is duly organized, validly
existing and in good standing in the jurisdiction of its
formation, has the requisite power and authority to own its
properties and conduct its business as then owned and then
conducted and proposed to be conducted and to execute, deliver
and perform the Facility Guaranty and other Loan Documents
described in this Section 9.20 to which such Subsidiary is a
signatory, and is duly qualified to transact business and is
in good standing as a foreign corporation or partnership in
each other jurisdiction in which the character of the
properties owned or leased, or the business carried on by it,
requires such qualification and the failure to be so qualified
would reasonably be likely to result in a Material Adverse
Effect;
(ii) the execution, delivery and performance of the
Facility Guaranty and other Loan Documents described in this
Section 9.20 to which such Subsidiary is a signatory have been
duly authorized by all requisite corporate or partnership
action (including any required shareholder or partner
approval), each of such agreements has been duly executed and
delivered and constitutes the valid and binding agreement of
such Subsidiary, enforceable against such Subsidiary in
accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency, reorganization
or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general
principles of equity (whether considered in a proceeding at
law or in equity);
(iii) the Subsidiary Securities of such Subsidiary
are duly authorized, validly issued, fully paid and
nonassessable, and free of any preemptive rights, and the
applicable General Security Instrument (including foreign
collateral documents) is effective to create a valid security
interest in favor of the General Collateral Agent for the
benefit of the General Secured Parties in such Subsidiary
Securities as constitute Pledged Interests;
(iv) (A) the Uniform Commercial Code financing
statements on Form UCC-1 delivered to the General Collateral
Agent by the Subsidiary in connection with the delivery of the
General Security Instruments of such Subsidiary have been duly
executed by the Subsidiary and are in form, substance and
number sufficient for filing in all Uniform Commercial Code
filing offices in all jurisdictions in which filing is
necessary to perfect in favor of the General Collateral Agent
for the benefit of the General Secured Parties the General
Lien on General Collateral conferred under such General
Security Instruments to the extent such General Lien may be
perfected by Uniform Commercial Code filing;
(B) the Uniform Commercial Code financing
statements on Form UCC-1 delivered to the Priority Collateral
Agent by the Subsidiary in connection with the delivery of the
Priority Security Instruments of such Subsidiary have been
duly executed by the Subsidiary and are in form, substance and
number sufficient for filing in all Uniform Commercial Code
filing offices in all jurisdictions in which filing is
necessary to perfect in favor of the Priority Collateral Agent
for the benefit of the Priority Secured Parties the Priority
Lien on Priority Collateral conferred under such Priority
Security Instruments to the extent such Priority Lien may be
perfected by Uniform Commercial Code filing;
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(v) in the case of Direct Foreign Subsidiaries only,
that under the laws of the applicable foreign jurisdiction,
all agreements, notices and other documents that are required
to be executed, delivered, filed or recorded and all other
action required to be taken, within or pursuant to the laws of
such jurisdiction to perfect the General Lien conferred in
favor of the General Collateral Agent under the applicable
General Security Instrument as against creditors of and
purchasers for value from the holder of the Pledged Interests
has been duly executed, delivered, filed, recorded or taken,
as the case may be;
(vi) each Mortgage is in appropriate form for due
recordation and upon recordation shall constitute a valid and
effective, fully perfected Priority Lien and General Lien, as
applicable, on the real property and fixtures described
therein; and
(i) current copies of the Organizational Documents and
Operating Documents of such Subsidiary, minutes of duly called and
conducted meetings (or duly effected consent actions) of the Board of
Directors, partners, or appropriate committees thereof (and, if
required by such Organizational Documents, Operating Documents or
applicable law, of the shareholders, members or partners) of such
Subsidiary authorizing the actions and the execution and delivery of
documents described in this Section 9.20.
9.21 Controlled Accounts. Cause at all times all of its depository
accounts, other than Excluded Deposit Accounts, to be held by and maintained
with the Agent or any Lender.
9.22 Third-party Consultant. Pay all fees and expenses of a
third-party business consultant to be hired on or before February 15, 2000 in a
manner acceptable to the Agent on behalf of the Lenders, the Senior Lease
Creditor and Prudential, such consultant to be mutually acceptable to the
Borrower, Agent and Lenders, to report to and be available for meetings with the
Lenders, the Agent, the Senior Lease Creditor and Prudential and to have a scope
of duties and cost structure to be agreed upon. Copies of any consultant reports
will be delivered to the Borrower. In the event such consultant shall cease to
be acceptable to the Agent and the Lenders or shall not be available for
meetings or shall not deliver copies of such consultant reports as a result of
its employment by or client relationship with Prudential, the Borrower agrees to
pay all fees and expenses of an additional independent third-party consultant to
be hired thereafter by the Agent on behalf of the Lenders and to have a scope of
duties and cost structure to be agreed upon.
9.23 Post-Closing Deliveries. Deliver to the Agent within the time
periods indicated the following documents in form and substance satisfactory to
the Agent and the Lenders:
(a) within ninety (90) days of the Closing Date, the following
Material Real Property Support Documents relating to each Mortgaged
Property set forth on Schedule 5.4 hereto (other than the Comfort Sleep
property) to the extent not delivered at the Closing Date:
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(i) commitments for Title Policies with such
endorsements as may be requested by the Agent;
(ii) copies of title exceptions with respect to the
Mortgaged Property, acceptable in form and substance to the
Agent;
(iii) Phase I environmental reports with respect to
the Mortgaged Property, acceptable in form, scope, detail,
analysis, and results to the Agent;
(iv) current surveys of the Mortgaged Property and
surveyor's affidavits;
(v) appraisals of the Mortgaged Property and all
machinery and equipment constituting Collateral;
(vi) Borrower's affidavit for the Mortgaged Property;
(b) Within thirty (30) days of the Closing Date, the
following to the extent not delivered at the Closing Date:
(i) stock certificates and stock registry forms, as
required by and acceptable in detail to the Agent, including
any schedules affected thereby;
(ii) Account Control Agreements together with
attached copies of account statements and customer-commodities
intermediary account agreements;
(iii) third party consent of CIPCO S.C., Inc. and
Prospin Industries, Inc. to assignment of any rights under
their respective License Agreements with the Borrower; and
(iv) third party consent of Cluett, Peabody & Co.,
Inc. to assignment of any rights under its License Agreement
with the Borrower, subject to the Borrower's exercise of its
best efforts.
(c) Within five (5) business days of the Closing
Date, the following to the extent not delivered at Closing
Date:
(i) all original schedules to this Agreement and any
other Loan Document, revised and completed; and
(ii) executed originals of the Compliance
Certificate, Initial Borrowing Notice, Interest Rate Selection
Notice, Certificate of Borrowing Base and any other
certificates required under this Agreement.
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ARTICLE X
Negative Covenants
------------------
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will not, nor will it permit any
Subsidiary to:
10.1 Financial Covenants.
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(a) Consolidated Net Worth. Permit Consolidated Net Worth to
be less than (i) $145,000,000 from the Closing Date until (but
excluding) the last day of the fiscal quarter that includes the Closing
Date (the "Closing Date Quarter"), and (ii) as at the last day of each
fiscal quarter of the Borrower commencing with the Closing Date Quarter
and until (but excluding) the last day of the next following fiscal
quarter of the Borrower, the sum of (A) the amount of Consolidated Net
Worth required to be maintained pursuant to this Section 10.1(a) as at
the end of the immediately preceding fiscal quarter (or, in the case of
the Closing Date Quarter, required to be maintained as of the Closing
Date), plus (B) 100% of the aggregate amount of all increases in the
stated capital and additional paid-in capital accounts of the Borrower
resulting from the issuance of equity securities or other capital
investments.
(b) Consolidated Leverage Ratio. Permit as of the end of each
Four-Quarter Period set forth below the Consolidated Leverage Ratio to
be more than that set forth opposite each such period:
Period Leverage Ratio
Must Not Exceed
---------------------------- -----------------------------
Four Quarter Period ended
January 2, 2000 13.05 to 1.00
Four Quarter Period ending
April 2, 2000 10.25 to 1.00
Four Quarter Period ending
July 2, 2000 9.50 to 1.00
(c) Consolidated Interest Coverage Ratio. Permit as of the end
of each month for the Twelve-Month Periods set forth below the
Consolidated Interest Coverage Ratio to be less than that set forth
opposite each such period:
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Interest Coverage Ratio
Period Must Exceed
---------------------------- --------------------------------
Twelve Month Period ended
January 2, 2000 1.00 to 1.00
Twelve Month Period ending
April 2, 2000 1.35 to 1.00
Twelve Month Period
ending July 2, 2000 1.40 to 1.00
(d) Consolidated EBITDA. Permit Consolidated EBITDA for each
period set forth below to be less than the amount set forth opposite
such period:
Period Ending Consolidated EBITDA Must Exceed
---------------------------- --------------------------------
Fiscal Quarter ended
January 2, 2000 $2,000,000
Fiscal Quarter ending
April 2, 2000 $8,550,000
Two Fiscal Quarters ending
July 2, 2000 $20,450,000
10.2 Acquisitions. Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition; provided however, the Borrower may (a)
consummate the Parras Cone Acquisition and (b) enter into such agreements and
take other actions to effect any Acquisition other than the Parras Cone
Acquisition to the extent the Cost of Acquisition with respect thereto when
aggregated with the Cost of Acquisition of all other Acquisitions other than the
Parras Cone Acquisition and all loans, advances and investments permitted under
Section 10.7(h) (including any such investment to finance the Parras Cone
Acquisition) does not exceed $500,000.
10.3 Capital Expenditures.
--------------------
(a) Make or become committed to make U.S. Capital Expenditures
which exceed in the aggregate in any Fiscal Year of the Borrower
described below (on a noncumulative basis, with the effect that amounts
not expended in any Fiscal Year may not be carried forward to a
subsequent period), the amount set forth opposite each such period:
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Capital Expenditures
Period Not to Exceed
--------------------------------------- -----------------------
Fiscal Year ended January 2, 2000 $13,500,000
January 3, 2000 through and including $8,000,000
Facility Termination Date
(b) Make or become committed to make Mexican Capital
Expenditures from the Closing Date until the Facility Termination Date
except to the extent an Event of Default has not occurred and is
continuing, for Capital Expenditures in an aggregate amount not in
excess of $1,000,000 for the purpose of purchasing certain real
property in Altamira, Mexico and making certain improvements thereto to
the extent such improvements have been contractually agreed to with
third parties prior to the Closing Date.
10.4 Liens. Incur, create or permit to exist any Lien, charge or other
encumbrance of any nature whatsoever with respect to any property or assets now
owned or hereafter acquired by the Borrower or any Subsidiary, other than the
following (collectively, "Permitted Liens"):
(a) Liens on the General Collateral and the Priority
Collateral created under the General Security Instruments and the
Priority Security Instruments in favor of the General Collateral Agent
or the Priority Collateral Agent, as applicable;
(b) Liens on Receivables (as defined in and transferred by an
Originator in accordance with the Receivables Transfer Agreement) and
Returned Goods (as defined in the Securitization Intercreditor
Agreement) in favor of General Electric Capital Corporation, as
collateral agent under the Receivables Purchase Agreement including,
but not limited to, either (i) Liens securing an increase in the
Securitization Outstandings under the Receivables Purchase Agreement
from $50,000,000 to $60,000,000 or (ii) Liens securing an additional
factoring or securitization of receivables in an aggregate amount not
to exceed $10,000,000;
(c) Liens existing on the date hereof, other than as referred
to in clauses (a) and (b) above, and set forth on Schedule 8.7;
(d) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings diligently
conducted, which, except as expressly so specified on Schedule 8.7, are
inferior in respect of the Collateral to the Liens conferred under the
Security Documents, and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
GAAP and which Liens are not yet enforceable by such creditors against
other creditors;
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(e) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens imposed by
law or created in the ordinary course of business and in existence less
than 90 days from the date of creation thereof for amounts not yet due
or which are being contested in good faith by appropriate proceedings
diligently conducted, which, except as expressly so specified on
Schedule 8.7, are inferior in respect of the Collateral to the Liens
conferred under the Security Documents, and with respect to which
adequate reserves or other appropriate provisions are being maintained
in accordance with GAAP and which Liens are not yet enforceable by such
creditors against other creditors;
(f) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds)
in connection with workers' compensation, unemployment insurance and
other types of social security benefits or to secure the performance of
tenders, bids, leases, contracts (other than for the repayment of
Indebtedness), statutory obligations and other similar obligations or
arising as a result of progress payments under government contracts;
(g) with respect to all real property to which (h) below does
not apply, easements (including reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and zoning and other restrictions, charges or
encumbrances (whether or not recorded), which do not interfere
materially with the ordinary conduct of the business of the Borrower or
any Subsidiary and which do not materially detract from the value of
the property to which they attach or materially impair the use thereof
to the Borrower or any Subsidiary;
(h) with respect to Mortgaged Real Property for which a Title
Policy is required to be issued pursuant to the terms hereof, matters
acceptable to the Agent appearing as exceptions to coverage on the
Title Policies;
(i) purchase money Liens to secure Indebtedness permitted
under Section 10.5(d) and incurred to purchase fixed assets, provided
such Indebtedness represents not less than 75% and not more than 95% of
the purchase price of such assets as of the date of purchase thereof
and no property other than the assets so purchased secures such
Indebtedness;
(j) Liens arising in connection with Capital Leases permitted
under Section 10.5(f); provided that no such Lien shall extend to any
Collateral or to any other property other than the assets subject to
such Capital Leases; and
(k) Liens on assets of Parras Cone to secure Indebtedness
permitted under Section 10.5(i).
10.5 Indebtedness. Incur, create, assume or permit to exist any
Indebtedness, howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as set forth
in Schedule 8.6; provided, none of the instruments and agreements
evidencing or governing such Indebtedness shall be amended,
supplemented or restated after the Closing Date to change any terms of
subordination, repayment or rights of enforcement, conversion, put or
exchange rights to be materially less favorable to the Agent or the
Lenders than the terms and rights as in effect on the Closing Date;
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(b) Indebtedness owing to the Agent or any Lender in
connection with this Agreement, any Note or other Loan Document;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(d) purchase money Indebtedness (other than the Parras Cone
Debt) described in Section 10.4(i) not to exceed an aggregate
outstanding principal amount at any time of $10,000,000;
(e) Indebtedness arising from Rate Hedging Obligations
permitted under Section 10.15;
(f) obligations under Capital Leases not to exceed an
aggregate principal amount at any time in excess of $5,000,000;
(g) unsecured intercompany Indebtedness for loans and advances
made by the Borrower or any Guarantor to the Borrower or any Guarantor,
any such Indebtedness of the Borrower owing to any Guarantor shall be
subordinate to payment of the Obligations hereunder at all times in
accordance with the terms of the Facility Guaranty;
(h) additional unsecured Indebtedness for Money Borrowed not
otherwise covered by clauses (a) through (g) above, provided that the
aggregate outstanding principal amount of all such other Indebtedness
permitted under this clause (h) shall in no event exceed $10,000,000 at
any time;
(j) the Parras Cone Debt;
(k) Indebtedness extending the maturity of, or renewing,
refunding or refinancing, in whole or in part, Indebtedness incurred
under clauses (a), (b), (g), (h) and (i) of this Section 10.5, provided
that the terms of any such extension, renewal, refunding or refinancing
Indebtedness (and of any agreement or instrument entered into in
connection therewith) shall not change any terms of subordination,
repayment or rights of enforcement, conversion, put or exchange rights
to be materially less favorable to the Agent and the Lenders than the
terms of the Indebtedness as in effect prior to such action, and
provided further that (1) the aggregate principal amount of such
extended, renewed, refunded or refinanced Indebtedness shall not be
increased by such action, (2) the group of direct or contingent
obligors on such Indebtedness shall not be expanded as a result of any
such action, and (3) immediately before and immediately after giving
effect to any such extension, renewal, refunding or refinancing, no
Default or Event of Default shall have occurred and be continuing; and
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(l) Securitization Outstandings or Indebtedness described in
and secured by Liens permitted under Section 10.4(b)(ii).
10.6 Transfer of Assets. Conduct, permit, or suffer, or agree to
conduct or permit, or acquiesce in, any Asset Disposition other than Permitted
Asset Dispositions.
10.7 Investments. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any stock or other securities, or make or permit to
exist any interest whatsoever in any other Person or permit to exist any loans
or advances to any Person, except that Borrower may make or maintain:
(a) investments in securities of any Person acquired in
an Acquisition permitted hereunder;
(b) investments in Eligible Securities;
(c) investments existing as of the date hereof and as set
forth in Schedule 8.4;
(d) accounts receivable arising and trade credit granted in
the ordinary course of business and any securities received in
satisfaction or partial satisfaction thereof in connection with
accounts of financially troubled Persons to the extent reasonably
necessary in order to prevent or limit loss; and
(e) investments in (i) Guarantors and (ii) Cone Receivables II
LLC in connection with the Securitization Transaction;
(f) loans between the Borrower and the Guarantors described in
Section 10.5(g);
(g) investments made at such time as no Event of Default shall
have occurred and be continuing relating to the site in Altamira,
Mexico (at which site the Borrower intends to construct a denim
manufacturing facility), not in excess of the amounts set forth below
for the periods indicated (but in no event shall such facility
construction be commenced prior to the Facility Termination Date);
provided that any amount not invested during the period indicated may
be carried forward and invested in any following period.
Mexico Investments
Period: Not to Exceed:
------
------------------
First Fiscal Quarter of 2000 $2,195,000
Second Fiscal Quarter 2000 $2,577,500
August 1, 2000 through the Facility
Termination Date $ 955,300
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(h) other loans, advances and investments (including
investments to finance the Parras Cone Acquisition) in an aggregate
principal amount at any time outstanding which, when aggregated with
the aggregate Costs of Acquisition for all Acquisitions (other than the
Parras Cone Debt in the case of the Parras Cone Acquisition) agreed to
or consummated after the Closing Date permitted under Section 10.2(b),
does not exceed $500,000.
10.8 Merger or Consolidation. (a) Consolidate with or merge into any
other Person, or (b) permit any other Person to merge into it, or (c) sell,
transfer or lease or otherwise dispose of all or a substantial part of its
assets (other than Permitted Asset Dispositions); provided, however, any
Subsidiary of the Borrower may merge or transfer all or substantially all of its
assets into or consolidate with the Borrower (with the Borrower as the survivor)
or any Guarantor, provided further, that any resulting or surviving entity shall
execute and deliver such agreements and other documents, including a Facility
Guaranty, and take such other action as the Agent may require to evidence or
confirm its express assumption of the obligations and liabilities of its
predecessor entities under the Loan Documents.
10.9 Restricted Payments. Make any Restricted Payment or apply or set
apart any of their assets therefor or agree to do any of the foregoing.
10.10 Transactions with Affiliates. Other than transactions permitted
under Sections 10.7 and 10.8 or as set forth on Schedule 10.10, enter into any
transaction after the Closing Date, including, without limitation, the purchase,
sale, lease or exchange of property, real or personal, or the rendering of any
service, with any Affiliate of the Borrower, except (a) that such Persons may
render services to the Borrower or its Subsidiaries for compensation at the same
rates generally paid by Persons engaged in the same or similar businesses for
the same or similar services, (b) that the Borrower or any Subsidiary may render
services to such Persons for compensation at the same rates generally charged by
the Borrower or such Subsidiary and (c) in either case in the ordinary course of
business and pursuant to the reasonable requirements of the Borrower's (or any
Subsidiary's) business consistent with past practice of the Borrower and its
Subsidiaries and upon fair and reasonable terms no less favorable to the
Borrower (or any Subsidiary) than would be obtained in a comparable arm's-length
transaction with a Person not an Affiliate.
10.11 Compliance with ERISA, the Code and Foreign Benefit Laws. With
respect to any Pension Plan, Employee Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of (i) any Termination Event which
would result in a material liability on the part of the Borrower or any
ERISA Affiliate to the PBGC or to any Governmental Authority, (ii) any
action that violates the Borrower's material obligations under the PBGC
Agreement, except those that are waived by the PBGC; or
(b) except for amounts defined as "Unfunded Benefit Liability"
in the PBGC Agreement, permit the present value of all accumulated
benefit obligations under all Pension Plans to exceed the current value
of the assets of such Pension Plans allocable to such benefit
liabilities; or
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(c) permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived, except for the "Unfunded Benefit
Liability" as defined in the PBGC Agreement; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto; or
(e) engage, or permit any Borrower or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or
Sections 4975 of the Code for which a civil penalty pursuant to Section
502(I) of ERISA or a tax pursuant to Section 4975 of the Code may be
imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
liability to the Borrower or any ERISA Affiliate or increase the
obligation of the Borrower or any ERISA Affiliate to a Multiemployer
Plan which annual liability or increase, individually or together with
all similar liabilities and increases, is in excess of $1,000,000; or
(g) fail, or permit the Borrower or any ERISA Affiliate to
fail, to establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with the provisions of ERISA, the
Code, all applicable Foreign Benefit Laws and all other applicable laws
and the regulations and interpretations thereof.
10.12 Fiscal Year. Change its Fiscal Year.
10.13 Dissolution, etc. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to Section 10.8.
10.14 Limitations on Sales and Leasebacks. Other than sale and
leaseback transactions in the ordinary course of business having an aggregate
value not in excess of $250,000 in any Fiscal Year and except as set forth on
Schedule 10.14, enter into any arrangement or arrangements with any Person
providing for the leasing by the Borrower or any Subsidiary of real or personal
property, whether now owned or hereafter acquired in a single transaction or
series of related transactions, which has been or is to be sold or transferred
by the Borrower or any Subsidiary to such Person or to any other Person to whom
funds have been or are to be advanced by such Person on the security of such
property or rental obligations of the Borrower or any Subsidiary.
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10.15 Rate Hedging Obligations. Incur any Rate Hedging Obligations or
enter into any agreements, arrangements, devices or instruments relating to Rate
Hedging Obligations, except pursuant to Swap Agreements, in an aggregate
notional amount not to exceed at any time 50% of the Total Revolving Credit
Commitment, which create Rate Hedging Obligations incurred to limit risks of
currency or interest rate fluctuations to which the Borrower and its
Subsidiaries are otherwise subject by virtue of the operations of their
businesses, and not for speculative purposes.
10.16 Negative Pledge Clauses. Except (i) as may exist on the Closing
Date pursuant to any Senior Credit Documents or any Securitization Transaction
documents or (ii) in connection with any refinancing of the foregoing, enter
into or cause, suffer or permit to exist any agreement with any Person other
than the Agent and the Lenders pursuant to this Agreement or any other Loan
Documents which prohibits or limits the ability of any of the Borrower or any
Subsidiary to create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, provided
that the Borrower and any Subsidiary may enter into such an agreement in
connection with, and that applies only to, property acquired with the proceeds
of purchase money Indebtedness permitted hereunder.
10.17 Compensation; Reimbursement of Expenses.
(a) Pay any salary, fees, and other direct and indirect
remuneration and compensation to any of its directors and executive
officers in an amount in excess of those amounts paid to directors and
executive officers of comparable companies engaged in the same general
type of business and in similar financial condition;
(b) Reimburse any stockholder, officer, director, employee or
agent of the Borrower or any Subsidiary for any expenses incurred by
such Person other than reasonable expenses incurred for or on behalf of
the Borrower or any Subsidiary in the ordinary course of business.
10.18 Change in Accountants. Change its independent public accountants.
10.19 Prepayments, Etc. of Indebtedness. Prepay, redeem,
purchase, defease or otherwise satisfy prior to the scheduled maturity
thereof in any manner, or make any payment in violation of any
subordination terms of, any Indebtedness (other than the Obligations)
other than in connection with any refinancing permitted under Section
10.5(j).
10.20 Partnerships. Become a general partner in any general or
limited partnership.
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ARTICLE XI
Events of Default and Acceleration
----------------------------------
11.1 Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual payment
of the principal of any Loan, Reimbursement Obligation or other
Obligation, when and as the same shall be due and payable whether
pursuant to any provision of Article II or Article III or Article IV,
at maturity, by acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment
of any amount of interest on any Loan, Reimbursement Obligation or
other Obligation or of any fees or other amounts payable to any of the
Lenders or the Agent on the date on which the same shall be due and
payable and such default shall continue for a period of two or more
days; or
(c) if default shall be made in the performance or observance
of any covenant set forth in Section 9.8, 9.12, 9.13, 9.20, 9.21 or
Article X;
(d) if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or
provision contained in this Agreement or the Notes (other than as
described in clauses (a), (b) or (c) above) and such default shall
continue for thirty (30) or more days after the earlier of receipt of
notice of such default by the Authorized Representative from the Agent
or an officer of the Borrower becomes aware of such default, or if a
default shall be made in the performance or observance of, or shall
occur under any covenant, agreement or provision contained in any of
the other Loan Documents (beyond any applicable grace period, if any,
contained therein) or in any instrument or document evidencing or
creating any obligation, guaranty, or Lien in favor of the Agent or any
of the Lenders or delivered to the Agent or any of the Lenders in
connection with or pursuant to this Agreement or any of the
Obligations, or if any Loan Document ceases to be in full force and
effect (other than as expressly provided for hereunder or thereunder or
with the express written consent of the Agent), or if without the
written consent of the Lenders, this Agreement or any other Loan
Document or either of the Collateral Agency Agreements or any of the
Intercreditor Agreements shall be disaffirmed or shall terminate, be
terminable or be terminated or become void or unenforceable for any
reason whatsoever (other than as expressly provided for hereunder or
thereunder or with the express written consent of the Agent), or if the
Lien created by any of the Security Documents shall at any time fail to
constitute a valid and perfected Lien on any material portion of the
Collateral purported to be secured thereby, subject to no prior or
equal Lien except Permitted Liens and, with respect only to General
Collateral, the Priority Liens, or the Borrower or any other Credit
Party shall so assert in writing; or
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(e) if there shall occur (i) a default, which is not waived,
in the payment of any principal, interest, premium or other amount with
respect to any Indebtedness or Rate Hedging Obligation (other than the
Loans and other Obligations) of the Borrower or any Subsidiary in an
amount not less than $500,000 in the aggregate outstanding, or (ii) a
default, which is not waived, in the performance, observance or
fulfillment of any term or covenant contained in any agreement or
instrument under or pursuant to which any such Indebtedness or Rate
Hedging Obligation may have been issued, created, assumed, guaranteed
or secured by the Borrower or any Subsidiary, or (iii) any other event
of default as specified in any agreement or instrument under or
pursuant to which any such Indebtedness or Rate Hedging Obligation may
have been issued, created, assumed, guaranteed or secured by the
Borrower or any Subsidiary, and such default or event of default
referred to in clauses (i), (ii) and (iii) above shall continue for
more than the period of grace, if any, therein specified, or such
default or event of default shall permit the holder of any such
Indebtedness (or any agent or trustee acting on behalf of one or more
holders) to accelerate the maturity thereof or to commence any remedy
in respect thereof ; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report
or statement at any time furnished to the Agent or any Lender by or on
behalf of the Borrower or any other Credit Party pursuant to or in
connection with any Loan Document, or otherwise, shall be false or
misleading in any material respect when given; or
(g) if the Borrower or any Subsidiary or other Credit Party
shall be unable to pay its debts generally as they become due; file a
petition to take advantage of any insolvency statute; make an
assignment for the benefit of its creditors; commence a proceeding for
the appointment of a receiver, trustee, liquidator or conservator of
itself or of the whole or any substantial part of its property; file a
petition or answer seeking liquidation, reorganization or arrangement
or similar relief under the federal bankruptcy laws or any other
applicable law or statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of the Borrower or any Subsidiary or other
Credit Party or of the whole or any substantial part of its properties
and such order, judgment or decree continues unstayed and in effect for
a period of sixty (60) days, or approve a petition filed against the
Borrower or any Subsidiary seeking liquidation, reorganization or
arrangement or similar relief under the federal bankruptcy laws or any
other applicable law or statute of the United States of America or any
state, which petition is not dismissed within sixty (60) days; or if,
under the provisions of any other law for the relief or aid of debtors,
a court of competent jurisdiction shall assume custody or control of
the Borrower or any Subsidiary or other Credit Party or of the whole or
any substantial part of its properties, which control is not
relinquished within sixty (60) days; or if there is commenced against
the Borrower or any Subsidiary or other Credit Party any proceeding or
petition seeking reorganization, arrangement or similar relief under
the federal bankruptcy laws or any other applicable law or statute of
the United States of America or any state which proceeding or petition
remains undismissed for a period of sixty (60) days; or if the Borrower
or any Subsidiary or other Credit Party takes any action to indicate
its consent to or approval of any such proceeding or petition; or
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(i) if (i) one or more judgments or orders where the amount
not covered by insurance (or the amount as to which the insurer denies
liability) is in excess of $2,500,000 is rendered against the Borrower
or any Subsidiary, or (ii) there is any attachment, injunction or
execution against any of the Borrower's or Subsidiaries' properties for
any amount in excess of $5,000,000 in the aggregate; and such judgment,
attachment, injunction or execution remains unpaid, unstayed,
undischarged, unbonded or undismissed for a period of thirty (30) days;
or
(j) if the Borrower or any Subsidiary shall, other than in the
ordinary course of business (as determined by past practices), suspend
all or any part of its operations material to the conduct of the
business of the Borrower or such Subsidiary for a period of more than
60 days; or
(k) if the Borrower or any Subsidiary shall breach any of the
material terms or conditions of any agreement under which any Rate
Hedging Obligations permitted hereby is created and such breach shall
continue beyond any grace period, if any, relating thereto pursuant to
the terms of such agreement, or if the Borrower or any Subsidiary shall
disaffirm or seek to disaffirm any such agreement or any of its
obligations thereunder; or
(l) if any Material Supply Agreement shall be terminated,
canceled or not renewed, or any notice of the foregoing shall be given
by any other party thereto, or a default shall occur under such
agreement and continue beyond the grace or cure period, if any,
applicable thereto; or
(m) if there shall occur any Change in Control; or
(n) if there shall occur any Termination Event as defined in
the Receivables Purchase Agreement; or
(o) if there shall occur any Event of Default as defined in
the Senior Note Agreement;
then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall have not been waived,
(A) either or both of the following actions may be taken: (i)
the Agent may, and at the direction of the Required Lenders shall,
declare any obligation of the Lenders and the Issuing Bank to make
further Revolving Loans or to issue additional Letters of
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Credit terminated, whereupon the obligation of each Lender to make
further Revolving Loans, and of the Issuing Bank to issue additional
Letters of Credit, hereunder shall terminate immediately, and (ii) the
Agent shall at the direction of the Required Lenders, at their option,
declare by notice to the Borrower any or all of the Obligations to be
immediately due and payable, and the same, including all interest
accrued thereon and all other obligations of the Borrower to the Agent
and the Lenders, shall forthwith become immediately due and payable
without presentment, demand, protest, notice or other formality of any
kind, all of which are hereby expressly waived, anything contained
herein or in any instrument evidencing the Obligations to the contrary
notwithstanding; provided, however, that notwithstanding the above, if
there shall occur an Event of Default under clause (g) or (h) above,
then the obligation of the Lenders to make Revolving Loans, and of the
Issuing Bank to issue Letters of Credit hereunder shall automatically
terminate and any and all of the Obligations shall be immediately due
and payable without the necessity of any action by the Agent or the
Required Lenders or notice to the Agent or the Lenders;
(B) The Borrower shall, upon demand of the Agent or the
Required Lenders, deposit cash with the Agent in an amount equal to the
amount of any Letter of Credit Outstandings, as collateral security for
the repayment of any future drawings or payments under such Letters of
Credit, and such amounts shall be held by the Agent pursuant to the
terms of a cash collateral agreement acceptable to the Agent; and
(C) the Agent and each of the Lenders shall have all of the
rights and remedies available under the Loan Documents or under any
applicable law.
11.2 Agent to Act. In case any one or more Events of Default shall
occur and not have been waived, subject to the provisions of Article XII, the
Agent may, and at the direction of the Required Lenders shall, proceed to
protect and enforce their rights and remedies contained herein or in any other
Loan Document, or as may be otherwise available at law or in equity.
11.3 Cumulative Rights. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
11.4 No Waiver. No course of dealing between the Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
11.5 Allocation of Proceeds. If an Event of Default has occurred and
not been waived, and the maturity of the Notes has been accelerated pursuant to
Article XI hereof, all payments received by the Agent pursuant to the terms of
the Intercreditor Agreements, in respect of any principal of or interest on the
Obligations or any other amounts payable by the Borrower hereunder, shall be
applied by the Agent in the following order:
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(a) the reasonable expenses incurred in connection with
retaking, holding, preserving, processing, maintaining or preparing for
sale, lease or other disposition of, any Collateral, including
reasonable attorney's fees and legal expenses pertaining thereto;
(b) amounts due to the Lenders and the Issuing Bank pursuant
to Sections 4.6(a), 4.6(b), 4.6(c) and 13.5;
(c) amounts due to the Agent pursuant to Section 4.6(d);
(d) payments of interest on Revolving Loans and Reimbursement
Obligations, to be applied for the ratable benefit of the Lenders;
(e) payments of principal of Loans and Reimbursement
Obligations, to be applied for the ratable benefit of the Lenders;
(f) payments of cash amounts to the Agent in respect of
outstanding Letters of Credit pursuant to Section 11.1(B);
(g) amounts due to the Issuing Bank, the Agent and the Lenders
pursuant to Sections 3.2(h), 9.16 and 13.9;
(h) payments of all other amounts due under any of the Loan
Documents, if any, to be applied for the ratable benefit of the
Lenders; and
(i) any surplus remaining after application as provided for
herein, to the Borrower or otherwise as may be required by applicable
law.
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ARTICLE XII
The Agent
---------
12.1 Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in Section 12.5 and
the first sentence of Section 12.6 hereof shall include its affiliates and its
own and its affiliates' officers, directors, employees, and agents):
(a) shall not have any duties or responsibilities except those
expressly set forth in this Agreement and the other Loan Documents and
shall not be a trustee or fiduciary for any Lender;
(b) shall not be responsible to the Lenders for any recital,
statement, representation, or warranty (whether written or oral) made
by any Credit Party in or in connection with any Loan Document or any
certificate or other document referred to or provided for in, or
received by any of them under, any Loan Document, or for the value,
validity, effectiveness, genuineness, enforceability, or sufficiency of
any Loan Document, or any other document referred to or provided for
therein or for any failure by any Credit Party or any other Person to
perform any of its obligations thereunder;
(c) shall not be responsible for or have any duty to
ascertain, inquire into, or verify the performance or observance of any
covenants or agreements by any Credit Party or the satisfaction of any
condition or to inspect the property (including the books and records)
of any Credit Party or any of its Subsidiaries or affiliates;
(d) shall not be required to initiate or conduct any
litigation or collection proceedings under any Loan Document (except as
directed by the Required Lenders in accordance with the terms of the
Loan Documents); and
(e) shall not be responsible for any action taken or omitted
to be taken by it under or in connection with any Loan Document, except
for its own gross negligence or willful misconduct.
The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
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12.2 Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telefacsimile) believed by it to
be genuine and correct and to have been signed, sent or made by or on behalf of
the proper Person or Persons, and upon advice and statements of legal counsel
(including counsel for any Credit Party), independent accountants, and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the holder thereof for all purposes hereof unless and until the Agent
receives and accepts an Assignment and Acceptance executed in accordance with
Section 13.1 hereof. As to any matters not expressly provided for by this
Agreement, the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding on all of the
Lenders; provided, however, that the Agent shall not be required to take any
action that exposes the Agent to personal liability or that is contrary to any
Loan Document or applicable law or unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking any such action.
12.3 Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the Agent has
received written notice from a Lender or the Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default." In the
event that the Agent receives such a notice of the occurrence of a Default or
Event of Default, the Agent shall give prompt notice thereof to the Lenders. The
Agent shall (subject to Section 12.2 hereof) take such action with respect to
such Default or Event of Default as shall reasonably be directed by the Required
Lenders, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders.
12.4 Rights as Lender. With respect to its Revolving Credit Commitment
and the Loans made by it and Letters of Credit issued by it, Bank of America
(and any successor acting as Agent) in its capacity as a Lender hereunder shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. Bank of America (and any successor acting as Agent) and
its affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide services to, and
generally engage in any kind of lending, trust, or other business with any
Credit Party or any of its Subsidiaries or affiliates as if it were not acting
as Agent, and Bank of America (and any successor acting as Agent) and its
affiliates may accept fees and other consideration from any Credit Party or any
of its Subsidiaries or affiliates for services in connection with this Agreement
or otherwise without having to account for the same to the Lenders.
12.5 Indemnification. The Lenders agree to indemnify the Agent (to the
extent not reimbursed under Section 13.9 hereof, but without limiting the
obligations of the Borrower under such Section) ratably in accordance with their
respective Revolving Credit Commitments, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including reasonable attorneys' fees), or disbursements of any kind
and nature whatsoever that may be imposed on, incurred by or asserted (including
by any Lender) against the Agent in any way relating to or arising out of any
Loan Document or the transactions contemplated thereby or any action taken or
omitted by the Agent under any Loan Document; provided that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any costs or expenses payable by the
Borrower under Section 13.5, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by the Borrower. The agreements contained
in this Section 12.5 shall survive payment in full of the Loans and all other
amounts payable under this Agreement.
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12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Credit Parties and their Subsidiaries and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under the Loan Documents. Except for
notices, reports, and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition, or business of any
Credit Party or any of its Subsidiaries or affiliates that may come into the
possession of the Agent or any of its affiliates.
12.7 Resignation of Agent. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States of America having combined capital
and surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article XII shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
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ARTICLE XIII
Miscellaneous
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13.1 Assignments and Participations.
------------------------------
(a) Each Lender may assign to one or more Eligible Assignees
all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Loans, its Note
and its Revolving Credit Commitment); provided, however, that
(i) each such assignment shall be to an Eligible
Assignee;
(ii) except in the case of an assignment to another
Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, any such partial assignment
shall be in an amount at least equal to $5,000,000 or an
integral multiple of $5,000,000 in excess thereof;
(iii) each such assignment by a Lender shall be of a
constant, and not varying, percentage of all of its rights and
obligations under this Agreement and the Notes (except that
any assignment by Bank of America shall not include its
rights, benefits or duties as the Issuing Bank);
(iv) the parties to such assignment shall execute and
deliver to the Agent for its acceptance an Assignment and
Acceptance in the form of Exhibit B hereto, together with any
Note subject to such assignment and a processing fee of
$3,500; and
(v) the Eligible Assignee shall execute and deliver
to the Collateral Agents a supplement to the Intercreditor
Agreement in form and substance acceptable to the Collateral
Agents; and
Upon execution, delivery, and acceptance of such Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to the
extent of such assignment, have the obligations, rights, and benefits
of a Lender hereunder and the assigning Lender shall, to the extent of
such assignment, relinquish its rights and be released from its
obligations under this Agreement. Upon the consummation of any
assignment pursuant to this Section, the assignor, the Agent and the
Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is
not incorporated under the laws of the United States of America or a
state thereof, it shall deliver to the Borrower and the Agent
certification as to exemption from deduction or withholding of Taxes in
accordance with Section 6.6.
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(b) The Agent shall maintain at its address referred to in
Section 13.2 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Revolving Credit Commitments of, and
principal amount of the Loans owing to, each Lender from time to time
(the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the
Agent and the Lenders may treat each Person whose name is recorded in
the Register as a Lender hereunder for all purposes of this Agreement.
The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable
prior notice.
(c) Upon its receipt of an Assignment and Acceptance executed
by the parties thereto, together with any Note subject to such
assignment and payment of the processing fee, the Agent shall, if such
Assignment and Acceptance has been completed and is in substantially
the form of Exhibit B hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the parties thereto.
(d) Each Lender may sell participations to one or more Persons
in all or a portion of its rights, obligations or rights and
obligations under this Agreement (including all or a portion of its
Revolving Credit Commitment or its Loans); provided, however, that (i)
such Lender's obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the participant
shall be entitled to the benefit of the yield protection provisions
contained in Article VI and the right of set-off contained in Section
13.3, and (iv) the Borrower shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole
right to enforce the obligations of the Borrower relating to its Loans
and its Note and to approve any amendment, modification, or waiver of
any provision of this Agreement (other than amendments, modifications,
or waivers decreasing the amount of principal of or the rate at which
interest is payable on such Loans or Note, extending any scheduled
principal payment date or date fixed for the payment of interest on
such Loans or Note, or extending its Revolving Credit Commitment).
(e) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time assign and pledge all or any
portion of its Loans and its Note to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank. No such assignment shall release
the assigning Lender from its obligations hereunder.
(f) Any Lender may furnish any information concerning the
Borrower or any of its Subsidiaries in the possession of such Lender
from time to time to assignees and participants (including prospective
assignees and participants) to the extent such recipients agree to be
bound by the terms of Section 13.16.
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(g) Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors
and permitted assigns of such party and all covenants, provisions and
agreements by or on behalf of the Borrower which are contained in the
Loan Documents shall inure to the benefit of the successors and
permitted assigns of the Agent, the Lenders, or any of them. The
Borrower may not assign or otherwise transfer to any other Person any
right, power, benefit, or privilege (or any interest therein) conferred
hereunder or under any of the other Loan Documents, or delegate (by
assumption or otherwise) to any other Person any duty, obligation, or
liability arising hereunder or under any of the other Loan Documents,
and any such purported assignment, delegation or other transfer shall
be void.
13.2 Notices. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of transmission to such party, in the case
of notice by telefacsimile (where the proper transmission of such notice is
either acknowledged by the recipient or electronically confirmed by the
transmitting device), or (iii) on the fifth Business Day after the day on which
mailed to such party, if sent prepaid by certified or registered mail, return
receipt requested, in each case delivered, transmitted or mailed, as the case
may be, to the address or telefacsimile number, as appropriate, set forth below
or such other address or number as such party shall specify by notice hereunder:
(a) if to the Borrower:
Cone Mills Corporation
3101 North Elm Street
Greensboro, North Carolina 27415-6540
Attn: David E. Bray, Treasurer
Telephone: (336) 379-6098
Telefacsimile: (336) 379-6043
with a copy to:
Cone Mills Corporation
3101 North Elm Street
Greensboro, North Carolina 27415-6540
Attn: Neil W. Koonce, Esq.
Telephone: (336) 379-6568
Telefacsimile: (336) 379-6972
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(b) if to the Agent:
Bank of America, N.A.
101 North Tryon Street, 15th Floor
NC1-001-15-03
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 386-9368
Telefacsimile: (704) 409-0012
with a copy to:
Bank of America, N.A.
100 North Tryon Street, NC-1007-17-01
Charlotte, North Carolina 28255
Attention: Phifer Helms
Telephone: (704) 386-5358
Telefacsimile: (704) 386-1270
(c) if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature page of each Assignment
and Acceptance;
(d) if to any other Credit Party, at the address set forth on
the signature page of the Facility Guaranty or Security Document
executed by such Credit Party, as the case may be.
13.3 Right of Set-off; Adjustments.
-----------------------------
(a) Upon the occurrence and during the continuance of any
Event of Default, each Lender (and each of its affiliates) is hereby
authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender (or any of its
affiliates) to or for the credit or the account of the Borrower against
any and all of the obligations of the Borrower now or hereafter
existing under this Agreement and the Note held by such Lender,
irrespective of whether such Lender shall have made any demand under
this Agreement or such Note and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower after any
such set-off and application made by such Lender; provided, however,
that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender under this
Section 13.3 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) that such Lender may have.
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(b) If any Lender (a "benefited Lender") shall at any time
receive any payment of all or part of the Loans owing to it, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, or otherwise), in a greater
proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Loans owing to it, or
interest thereon, such benefited Lender shall purchase for cash from
the other Lenders a participating interest in such portion of each such
other Lender's Loans owing to it, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such benefited Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each of
the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such benefited
Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without
interest. The Borrower agrees that any Lender so purchasing a
participation from a Lender pursuant to this Section 13.3 may, to the
fullest extent permitted by law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as
fully as if such Person were the direct creditor of the Borrower in the
amount of such participation.
13.4 Survival. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit and the execution and delivery to the
Lenders of this Agreement and the Notes and shall continue in full force and
effect so long as any of Obligations remain outstanding or any Lender has any
Revolving Credit Commitment hereunder or the Borrower has continuing obligations
hereunder unless otherwise provided herein.
13.5 Expenses. The Borrower agrees to pay on demand all costs and
expenses of the Agent and the Lenders in connection with the preparation,
execution and delivery of this Agreement, the other Loan Documents, and the
other documents to be delivered hereunder, including, without limitation, the
reasonable fees and expenses of counsel for the Agent and each of the Lenders
with respect thereto and with respect to advising the Agent and the Lenders as
to their rights and responsibilities under the Loan Documents. The Borrower also
agrees to pay on demand all costs and expenses of the Agent in connection with
the syndication and administration and any modification or amendment of this
Agreement, the other Loan Documents, and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and expenses of
counsel for the Agent. The Borrower further agrees to pay on demand all costs
and expenses of the Agent and the Lenders, if any (including, without
limitation, reasonable attorneys' fees and expenses and the cost of internal
counsel), in connection with the enforcement (whether through negotiations,
legal proceedings, or otherwise) of the Loan Documents and the other documents
to be delivered hereunder.
13.6 Amendments and Waivers. Any provision of this Agreement or any
other Loan Document may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower or other applicable Credit
Party party to such Loan Document and either the Required Lenders or (as to Loan
Documents other than the Credit Agreement) the Agent on behalf of the Required
Lenders (and, if Article XII or the rights or duties of the Agent are affected
thereby, by the Agent); provided that no such amendment or waiver shall, unless
signed by all the Lenders, (i) increase the Revolving Credit Commitments of the
Lenders or the Total Revolving Credit Commitment, (ii) reduce the principal of
or rate of interest on any Loan or any fees or other amounts payable hereunder,
(iii) postpone any date fixed for the payment of any scheduled installment of
principal of or interest on any Loan or any fees or other amounts payable
hereunder or for termination of any Revolving Credit Commitment, or (iv) change
the percentage of the Revolving Credit Commitment or of the unpaid principal
amount of the Notes, or the number of Lenders, which shall be required for the
Lenders or any of them to take any action under this Section 13.6 or any other
provision of this Agreement or (v) release any Guarantor or all or any material
portion of the Collateral except as otherwise permitted by the Loan Documents or
(vi) increase the amount of the Overadvance Basket or change any term relating
thereto or (vii) modify the calculation of the Borrowing Base; and provided,
further, that no such amendment or waiver that affects the rights, privileges or
obligations of the Issuing Bank as issuer of Letters of Credit, shall be
effective unless signed in writing by the Issuing Bank. Notwithstanding the
foregoing, each amendment, modification, supplement or restatement of any Loan
Document shall also comply with the terms of Section 5.11 of the Intercreditor
Agreement.
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No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances, except as otherwise expressly provided herein. No delay or
omission on any Lender's or the Agent's part in exercising any right, remedy or
option shall operate as a waiver of such or any other right, remedy or option or
of any Default or Event of Default.
13.7 Counterparts; Facsimile Signatures. This 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 Agreement to produce or account for more than one such fully-executed
counterpart. Signatures on communications and other documents may be transmitted
by facsimile only with the consent of the Agent in its sole and absolute
discretion in each instance. The effectiveness of any such signatures accepted
by the Agent shall, subject to applicable law, have the same force and effect as
manual signatures and shall be binding on all parties. The Agent may also
require that any such signature be confirmed by a manually-signed hard copy
thereof. Each party hereto hereby adopts as an original executed signature page
each signature page hereafter furnished by such party to the Agent (or an agent
of the Agent) bearing (with the consent of the Agent) a facsimile signature by
or on behalf of such party. Nothing contained in this Section shall limit the
provisions of Section 12.2.
13.8 Termination. The termination of this Agreement shall not affect
any rights of the Borrower, the Lenders or the Agent or any obligation of the
Borrower, the Lenders or the Agent, arising prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into or rights created or obligations incurred
prior to such termination have been fully disposed of, concluded or liquidated
and the Obligations arising prior to or after such termination have been
irrevocably paid in full. The rights granted to the Agent for the benefit of the
Lenders under the Loan Documents shall continue in full force and effect,
notwithstanding the termination of this Agreement, until all of the Obligations
have been paid in full after the termination hereof (other than Obligations in
the nature of continuing indemnities or expense reimbursement obligations not
yet due and payable, which shall continue) or the Borrower has furnished the
Lenders and the Agent with an indemnification satisfactory to the Agent and each
Lender with respect thereto. Notwithstanding the foregoing, if after receipt of
any payment of all or any part of the Obligations, any Lender is for any reason
compelled to surrender such payment to any Person because such payment is
determined to be void or voidable as a preference, impermissible setoff, a
diversion of trust funds or for any other reason, this Agreement shall continue
in full force and the Borrower shall be liable to, and shall indemnify and hold
the Agent or such Lender harmless for, the amount of such payment surrendered
until the Agent or such Lender shall have been finally and irrevocably paid in
full. The provisions of the foregoing sentence shall be and remain effective
notwithstanding any contrary action which may have been taken by the Agent or
the Lenders in reliance upon such payment, and any such contrary action so taken
shall be without prejudice to the Agent or the Lenders' rights under this
Agreement and shall be deemed to have been conditioned upon such payment having
become final and irrevocable.
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13.9 Indemnification; Limitation of Liability.
----------------------------------------
(a) The Borrower agrees to indemnify and hold harmless the
Agent and each Lender and each of their respective 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 (including the reasonably
documented allocated cost of internal counsel) and settlement costs)
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) the Revolving Credit Facility, the Loan
Documents, any of the transactions contemplated herein or therein or
the actual or proposed use of the proceeds of the Loans, 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 investigation,
litigation or other proceeding to which the indemnity in this Section
13.9 applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Borrower, its
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.
The foregoing provisions of this Section 13.9(a) shall be in addition
to any right that an Indemnified Party shall have at common law or
otherwise. No Indemnified Party shall be liable for any damages arising
from the use by others of information or other materials obtained
through internet, Intralinks or other similar information transmission
systems in connection with the Loan Documents, 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. The
Borrower 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, any Guarantor, or any security holders or
creditors thereof arising out of, related to or in connection with the
transactions contemplated herein and in the other Loan Documents,
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. The Borrower agrees not to assert any claim against
the Agent, any Lender, any of their affiliates, or any of their
respective directors, officers, employees, attorneys, agents, and
advisers, on any theory of liability, for special, indirect,
consequential, or punitive damages arising out of or otherwise relating
to the Loan Documents, any of the transactions contemplated herein or
therein or the actual or proposed use of the proceeds of the Loans.
107
<PAGE>
(b) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 13.9 shall survive the payment in
full of the Loans and all other amounts payable under this Agreement.
13.10 Severability. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.
13.11 Entire Agreement. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations, commitments and other communications between or among the
parties, both oral and written, with respect thereto (except that those
provisions (if any) which by the express terms of the commitment letter and
joint investor letter, both dated as of January 14, 2000, executed by Bank of
America and BAS and accepted by the Borrower, survive the closing of the
Revolving Credit Facility and Letter of Credit Facility, shall survive and
continue in effect).
13.12 Agreement Controls. In the event that any term of any of the Loan
Documents other than this Agreement conflicts directly with any express term of
this Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
13.13 Usury Savings Clause. Notwithstanding any other provision herein,
the aggregate interest rate charged under any of the Notes, including all
charges or fees in connection therewith deemed in the nature of interest under
applicable law shall not exceed the Highest Lawful Rate (as such term is defined
below). If the rate of interest (determined without regard to the preceding
sentence) under this Agreement at any time exceeds the Highest Lawful Rate (as
defined below), the outstanding amount of the Loans made hereunder shall bear
interest at the Highest Lawful Rate until the total amount of interest due
hereunder equals the amount of interest which would have been due hereunder if
the stated rates of interest set forth in this Agreement had at all times been
in effect. In addition, if when the Loans made hereunder are repaid in full the
total interest due hereunder (taking into account the increase provided for
above) is less than the total amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect, then to the extent permitted by law, the Borrower shall
pay to the Agent an amount equal to the difference between the amount of
interest paid and the amount of interest which would have been paid if the
Highest Lawful Rate had at all times been in effect. Notwithstanding the
foregoing, it is the intention of the Lenders and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be canceled automatically
and, if previously paid, shall at such Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the Borrower.
As used in this paragraph, the term "Highest Lawful Rate" means the maximum
lawful interest rate, if any, that at any time or from time to time may be
contracted for, charged, or received under the laws applicable to such Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
108
<PAGE>
13.14 Payments. All principal, interest, and other amounts to be paid
by the Borrower under this Agreement and the other Loan Documents shall be paid
to the Agent at the Principal Office in Dollars and in immediately available
funds, without setoff, recoupment, deduction or counterclaim. Subject to the
definition of "Interest Period" herein, whenever any payment under this
Agreement or any other Loan Document shall be stated to be due on a day that is
not a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time in such case shall be included in the
computation of interest and fees, as applicable, and as the case may be.
13.15 Fees. The Borrower agrees to pay to the General Collateral Agent,
for its individual account, an annual agent's fee in such amount as shall be
agreed to from time to time by the Borrower and the General Collateral Agent,
not to exceed the fee customarily charged by the General Collateral Agent in
similar transactions, such fee to be deemed and agreed by the Borrower to be
earned upon payment and to be paid in one installment in advance on the date of
this Agreement and on each anniversary date hereof with respect to the period
commencing on the date hereof and continuing until the General Collateral Agent
resigns or is removed as General Collateral Agent hereunder or the occurrence of
the Termination Date, whichever shall first occur.
109
<PAGE>
13.16 Confidentiality. The Agent and each Lender (each, a "Lending
Party") agrees to keep confidential any information furnished or made available
to it by the Borrower pursuant to this Agreement; provided that nothing herein
shall prevent any Lending Party from disclosing such information (a) to any
other Lending Party or any affiliate of any Lending Party, or any officer,
director, employee, agent, or advisor of any Lending Party or affiliate of any
Lending Party whom it determines has a reasonable need to be furnished such
information and who agrees to be bound by the terms of this Section 13.16, (b)
to any other Person who agrees to be bound by the terms of this Section 13.16 if
such disclosure is reasonably incidental to the administration of the Revolving
Credit Facility or Letter of Credit Facility, (c) as required by any law, rule,
or regulation, (d) upon a request or requirement (orally or in writing, by
interrogatory, court order, subpoena, administrative proceeding, civil
investigatory demand, or any similar legal process) of any court or
administrative agency, governmental authority or civil litigant (each Lending
Party, however, shall to the extent permitted by law and as promptly as
practicable, notify Borrower prior to such disclosure so that the Borrower may
seek at the Borrower's sole expense a protective order or other appropriate
remedy), (e) upon the request or demand of any regulatory agency or authority,
(f) that is or becomes available to the public or that is or becomes available
to any Lending Party other than as a result of a disclosure by any Lending Party
prohibited by this Agreement, (g) to the extent necessary in connection with the
exercise of any remedy under this Agreement or any other Loan Document, and (h)
subject to provisions substantially similar to those contained in this Section,
to any actual or proposed participant or assignee.
13.17 GOVERNING LAW; WAIVER OF JURY TRIAL.
-----------------------------------
(A) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN
THOSE SECURITY DOCUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE
GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) 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.
(B) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS 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 AGREEMENT, THE BORROWER EXPRESSLY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY
BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE
BORROWER HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO
THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR
PROCEEDING.
110
<PAGE>
(C) THE BORROWER 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 THE BORROWER
PROVIDED IN SECTION 13.2, 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 THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE
COURTS OF ANY JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S
PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY
THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY
WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO
THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH OTHER
COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER
APPLICABLE LAW.
(E) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE
AGENT AND THE LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THAT ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, 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) THE BORROWER 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.
[Signatures on following pages]
111
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
CONE MILLS CORPORATION
By:________________________________
Name: Gary L. Smith
Title: Executive Vice President and
Chief Financial Officer
BANK OF AMERICA, N.A.,
as Agent for the Lenders
By:________________________________
Name: Phifer Helms
Title: Managing Director
CREDIT AGREEMENT
Signature Page 1 of 6
<PAGE>
BANK OF AMERICA, N.A.
By:_______________________________
Name: Phifer Helms
Title: Managing Director
Lending Office for Base Rate Loans:
Bank of America, N.A.
101 North Tryon Street, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: CCS/Agency Services
Telephone:(704) 386-9368
Telefacsimile:(704) 409-0012
Wire Transfer Instructions:
Bank of America, N.A.
ABA# 053000196
Account No.: 1366212250600
Reference: Cone Mills Corporation
Attention: CCS/Agency Services
Lending Office for Eurodollar Rate Loans:
Bank of America, N.A.
101 North Tryon Street,15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: CCS/Agency Services
Telephone:(704) 386-9368
Telefacsimile:(704) 409-0012
Wire Transfer Instructions:
Bank of America, N.A.
ABA# 053000196
Account No.: 1366212250600
Reference: Cone Mills Corporation
Attention: CCS/Agency Services
CREDIT AGREEMENT
Signature Page 2 of 6
<PAGE>
FIRST UNION NATIONAL BANK
By:___________________________________
Name: Roger Pelz
Title: Senior Vice President
Lending Office for Base Rate Loans:
First Union National Bank
201 South College Street
Charlotte, North Carolina 28288
Attention: Gary Burkart
Telephone: (704) 374-6613
Telefacsimile: (704) 383-7999
Wire Transfer Instructions:
First Union National Bank
ABA# 053 000219
Account No.: 1459168109011
Reference: Cone Mills
Attention: Gary Burkart
Lending Office for Eurodollar Rate Loans:
First Union National Bank
201 South College Street
Charlotte, North Carolina 28288
Attention: Gary Burkart
Telephone: (704) 374-6613
Telefacsimile: (704) 383-7999
Wire Transfer Instructions:
First Union National Bank
ABA# 053 000219
Account No.: 1459168109011
Reference: Cone Mills
Attention: Gary Burkart
CREDIT AGREEMENT
Signature Page 3 of 6
<PAGE>
WACHOVIA BANK, N.A.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Lending Office for Base Rate Loans:
Wachovia Bank, N.A.
100 N. Main Street
Winston-Salem, NC 27150
Attention: Lisa Crabb or Janet Yates
Telephone: 336-732-6609 or -5181
Telefacsimile: 336-732-3257
Wire Transfer Instructions:
Wachovia Bank, N.A.
ABA# 0531 00494
Account No.: 8791-998539
Reference: Loan Proceeds for Cone Mills
Attention: Agency Services
Lending Office for Eurodollar Rate Loans:
Wachovia Bank, N.A.
100 N. Main Street
Winston-Salem, NC 27150
Attention: Lisa Crabb or Janet Yates
Telephone: 336-732-6609 or -5181
Telefacsimile: 336-732-3257
Wire Transfer Instructions:
Wachovia Bank, N.A.
ABA# 0531 00494
Account No.: 8791-998539
Reference: Loan Proceeds for Cone Mills
Attention: Agency Services
CREDIT AGREEMENT
Signature Page 4 of 6
<PAGE>
SUNTRUST BANK
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Lending Office for Base Rate Loans:
SunTrust Bank
25 Park Place, 21st Floor, MC-1941
Atlanta, Georgia 30303
Attention: Michelle Wood-Welch
Telephone: (404) 588-8038
Telefacsimile: (404) 230-1940
Wire Transfer Instructions:
SunTrust Bank
ABA# 061-000-104
Account No.: 9088000112
Reference: Cone Mills
Attention: Corporate Banking Operations
Support (Patrice Ransom)
Lending Office for Eurodollar Rate Loans:
SunTrust Bank
25 Park Place, 21st Floor, MC-1941
Atlanta, Georgia 30303
Attention: Michelle Wood-Welch
Telephone: (404) 588-8038
Telefacsimile: (404) 230-1940
Wire Transfer Instructions:
SunTrust Bank
ABA# 061-000-104
Account No.: 9088000112
Reference: Cone Mills
Attention: Corporate Banking Operations
Support (Patrice Ransom)
CREDIT AGREEMENT
Signature Page 5 of 6
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Lending Office for Base Rate Loans:
Morgan Guaranty Trust Company of
New York
60 Wall Street
New York, New York
Attention: Corrine Schoeb
Telephone: 302-634-1836
Telefacsimile: 302-634-4300
Wire Transfer Instructions:
Morgan Guaranty Trust Company of
New York
ABA# 021-000-238
Account No.: 999-99-090
Reference: Cone Mills Corp.
Attention: Unit # 8
Lending Office for Eurodollar Rate Loans:
Morgan Guaranty Trust Company of
New York
60 Wall Street
New York, New York
Attention: Corrine Schoeb
Telephone: 302-634-1836
Telefacsimile: 302-634-4300
Wire Transfer Instructions:
Morgan Guaranty Trust Company of
New York
ABA# 021-000-238
Account No.: 999-99-090
Reference: Cone Mills Corp.
Attention: Unit # 8
CREDIT AGREEMENT
Signature Page 6 of 6
<PAGE>
EXHIBIT A
Applicable Commitment Percentages
<TABLE>
<CAPTION>
Lender Revolving Credit Applicable Commitment
Commitment Percentage
- --------------------- ---------------- ---------------------
<S> <C> <C>
Bank of America, N.A. $ 25,000,000.00 31.250000%
First Union National Bank $ 20,000,000.00 25.000000%
Morgan Guaranty Trust $ 10,000,000.00 12.500000%
Company of New York
SunTrust Bank $ 5,000,000.00 6.250000%
Wachovia Bank, N.A. $ 20,000,000.00 25.000000%
--------------- ----------
TOTAL $ 80,000,000.00 100%
</TABLE>
A-1
<PAGE>
EXHIBIT B
Form of Assignment and Acceptance
Reference is made to the Credit Agreement dated as of January 28, 2000
(the "Credit Agreement") among Cone Mills Corporation, a North Carolina
corporation (the "Borrower"), the Lenders (as defined in the Credit Agreement)
and Bank of America, N.A., as agent for the Lenders (the "Agent"). Terms defined
in the Credit Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, WITHOUT
RECOURSE and without representation or warranty except as expressly set forth
herein, and the Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor's rights and obligations under the Credit
Agreement and the other Loan Documents as of the date hereof equal to the
percentage interest specified on Schedule 1 of all outstanding rights and
obligations under the Credit Agreement and the other Loan Documents.* After
giving effect to such sale and assignment, the Assignee's Revolving Credit
Commitment and the amount of the Loans owing to the Assignee will be as set
forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Credit Party or
the performance or observance by any Credit Party of any of its obligations
under the Loan Documents or any other instrument or document furnished pursuant
thereto; and (iv) attaches the Notes held by the Assignor and requests that the
Agent exchange such Notes for new Notes payable to the order of the Assignee in
an amount equal to the Revolving Credit Commitment assumed by the Assignee
pursuant hereto and to the Assignor in an amount equal to the Revolving Credit
Commitment retained by the Assignor, if any, as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 9.1 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement as are delegated to the
Agent by the terms thereof, together with such powers and discretion as are
reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations that by the terms of the Credit
Agreement are required to be performed by it as a Lender; and (vi) attaches any
U.S. Internal Revenue Service or other forms required under Section 6.6.
- -----------
*In the case of Bank of America as Assignor, excluding any rights, benefits or
duties as Issuing Bank.
B-1
<PAGE>
4. Following the execution of this Assignment and Acceptance, it will
be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "Effective Date") shall
be the date of acceptance hereof by the Agent, unless otherwise specified on
Schedule 1.
5. Upon such acceptance and recording by the Agent, as of the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement and
the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Notes for periods
prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of North Carolina.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telefacsimile
shall be effective as delivery of a manually executed counterpart of this
Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule
1 to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.
B-2
<PAGE>
Schedule 1
Revolving Credit
Facility
Percentage interest assigned: _____%
Assignee's Commitment: $
_____________
Aggregate outstanding principal amount of Loans assigned: $
_____________
Principal amount of Note payable to Assignee: $
_____________
Principal amount of Note payable to Assignor: $
_____________
Effective Date (if other than date of acceptance by Agent): *________, ___
[NAME OF ASSIGNOR], as Assignor
By: ____________________
Title:
Dated: __________, ____
[NAME OF ASSIGNEE], as Assignee
By: ____________________
Title:
Domestic Lending Office:
Eurodollar Lending Office:
- -----------------------
* This date should be no earlier than five Business Days after the
delivery of this Assignment and Acceptance to the Agent.
B-3
<PAGE>
Accepted [and Approved] **
this ___ day of ___________, ____
BANK OF AMERICA, N.A., as Agent
By: __________________________
Title:
[Approved this ____ day
of ____________, ____
[NAME OF BORROWER]
By:_____________________________]**
Title:
- -----------------------
** Required if the Assignee is an Eligible Assignee solely by reason of
clause (iii) of the definition of "Eligible Assignee."
B-4
<PAGE>
EXHIBIT C
Notice of Appointment (or Revocation) of Authorized Representative
Reference is hereby made to the Credit Agreement dated as of January
28, 2000 (the "Agreement") among Cone Mills Corporation, a North Carolina
corporation (the "Borrower"), the Lenders (as defined in the Agreement), and
Bank of America, N.A., as Agent for the Lenders ("Agent"). Capitalized terms
used but not defined herein shall have the respective meanings therefor set
forth in the Agreement.
The Borrower hereby nominates, constitutes and appoints each individual
named below as an Authorized Representative under the Loan Documents, and hereby
represents and warrants that (i) set forth opposite each such individual's name
is a true and correct statement of such individual's office (to which such
individual has been duly elected or appointed), a genuine specimen signature of
such individual and an address for the giving of notice, and (ii) each such
individual has been duly authorized by the Borrower to act as Authorized
Representative under the Loan Documents:
Name and Address Office Specimen Signature
- --------------------- --------------- ----------------------
- --------------------- --------------- ----------------------
- ---------------------
- ---------------------
- --------------------- --------------- ----------------------
- --------------------- --------------- ----------------------
- ---------------------
Borrower hereby revokes (effective upon receipt hereof by the Agent) the prior
appointment of ________________ as an Authorized Representative.
This the ___ day of __________________, ____.
CONE MILLS CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
C-1
<PAGE>
EXHIBIT D
Form of Borrowing Notice
To: Bank of America, N.A.,
as Agent
101 North Tryon Street, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704)386-9923
Reference is hereby made to the Credit Agreement dated as of January
28, 2000 (the "Agreement") among Cone Mills Corporation, a North Carolina
corporation (the "Borrower"), the Lenders (as defined in the Agreement), and
Bank of America, N.A., as Agent for the Lenders ("Agent"). Capitalized terms
used but not defined herein shall have the respective meanings therefor set
forth in the Agreement.
The Borrower through its Authorized Representative hereby gives notice
to the Agent that Loans of the type and amount set forth below be made on the
date indicated:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Type of Loan (check one) Interest Period(1) Aggregate Amount(2) Date of Loan(3)
- ------------------------------- -- ------------------------ -- ---------------------------- --- --------------------
Revolving Loan
- -------------------------------
Base Rate Loan
Eurodollar Rate Loan ------------------------ ---------------------------- -------------------- ---
------------------------ ---------------------------- -------------------- ---
- -------------------------------
</TABLE>
(1) For any Eurodollar Rate Loan, one, two or three months.
(2) Must be $_________ or if greater an integral multiple of $_______,
unless a Base Rate Refunding Loan.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan;
The Borrower hereby requests that the proceeds of Loans described in
this Borrowing Notice be made available to the Borrower as follows: [insert
transmittal instructions] .
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or
after giving effect to the borrowing described herein; and
2. All the representations and warranties set forth in Article VIII of
the Agreement and in the Loan Documents (other than those expressly stated to
refer to a particular date) are
D-1
<PAGE>
true and correct as of the date hereof except that the reference to the
financial statements in Section 8.6(a) of the Agreement shall be deemed (solely
for the purpose of the representation and warranty contained in such Section
8.6(a) but not for the purpose of any cross reference to such Section 8.6(a) or
to the financial statements described therein contained in any other provision
of Section 8.6 or elsewhere in Article 8) to refer to those financial statements
most recently delivered to you pursuant to Section 9.1 of the Agreement (it
being understood that any financial statements delivered pursuant to Section
9.1(b) have not been certified by independent public accountants).
3. All conditions contained in the Agreement to the making of
any Loan requested hereby have been met or satisfied in full.
CONE MILLS CORPORATION
BY:________________________________
Authorized Representative
DATE:______________________________
D-2
<PAGE>
EXHIBIT E
Form of Interest Rate Selection Notice
To: Bank of America, N.A., as Agent
101 North Tryon Street, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
Reference is hereby made to the Credit Agreement dated as of January
28, 2000 (the "Agreement") among Cone Mills Corporation, a North Carolina
corporation (the "Borrower"), the Lenders (as defined in the Agreement), and
Bank of America, N.A., as Agent for the Lenders ("Agent"). Capitalized terms
used but not defined herein shall have the respective meanings therefor set
forth in the Agreement.
The Borrower through its Authorized Representative hereby gives notice
to the Agent of the following selection of a type of Loan and Interest Period:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Type of Loan (check one) Interest Period(1) Aggregate Amount(2) Date of Loan(3)
- ---------------------------------- ---------------------- -------------------------- --------------------
Revolving Loan
- ----------------------------------
Base Rate Loan
---------------------- -------------------------- --------------------
Eurodollar Rate Loan
---------------------- -------------------------- --------------------
- -----------------------
</TABLE>
(1) For any Eurodollar Rate Loan, one, two or three months.
(2) Must be $_________ or if greater an integral multiple of $_______,
unless a Base Rate Refunding Loan.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan;
CONE MILLS CORPORATION
BY:________________________________
Authorized Representative
DATE:______________________________
E-1
<PAGE>
EXHIBIT F
Form of Revolving Note
Promissory Note
(Revolving Loan)
$______________ Charlotte, North Carolina
-------- --, ----
FOR VALUE RECEIVED, CONE MILLS CORPORATION, a North Carolina
corporation having its principal place of business located in Greensboro, North
Carolina (the "Borrower"), hereby promises to pay to the order of
_______________________________________________ (the "Lender"), in its
individual capacity, at the office of BANK OF AMERICA, N.A., as agent for the
Lenders (the "Agent"), located at 101 North Tryon Street, NC1-001-15-04,
Charlotte, North Carolina 28255 (or at such other place or places as the Agent
may designate in writing) at the times set forth in the Credit Agreement dated
as of ________________, ____ among the Borrower, the financial institutions
party thereto (collectively, the "Lenders") and the Agent (the "Agreement" --all
capitalized terms not otherwise defined herein shall have the respective
meanings set forth in the Agreement), in lawful money of the United States of
America, in immediately available funds, the principal amount of
________________________________ DOLLARS ($__________) or, if less than such
principal amount, the aggregate unpaid principal amount of all Revolving Loans
made by the Lender to the Borrower pursuant to the Agreement on the Revolving
Credit Termination Date or such earlier date as may be required pursuant to the
terms of the Agreement, and to pay interest from the date hereof on the unpaid
principal amount hereof, in like money, at said office, on the dates and at the
rates provided in Articles II and IV of the Agreement. All or any portion of the
principal amount of Loans may be prepaid or required to be prepaid as provided
in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Loan Documents executed in
connection with the Agreement, the then remaining principal amount and accrued
but unpaid interest thereon evidenced by this Revolving Note shall become
immediately due and payable, without presentation, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest due hereunder thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
F-1
<PAGE>
This Revolving Note is one of the Revolving Notes referred to in the
Agreement and is issued pursuant to and entitled to the benefits and security of
the Agreement to which reference is hereby made for a more complete statement of
the terms and conditions upon which the Revolving Loans evidenced hereby were or
are made and are to be repaid. This Revolving Note is subject to certain
restrictions on transfer or assignment as provided in the Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law all defenses based on suretyship or
impairment of collateral and the benefits of all provisions of law for stay or
delay of execution or sale of property or other satisfaction of judgment against
any of them on account of liability hereon until judgment be obtained and
execution issued against any other of them and returned satisfied or until it
can be shown that the maker or any other party hereto had no property available
for the satisfaction of the debt evidenced by this instrument, or until any
other proceedings can be had against any of them, also their right, if any, to
require the holder hereof to hold as security for this Revolving Note any
collateral deposited by any of said Persons as security. Protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.
[SIGNATURE PAGE FOLLOWS.]
F-2
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
made, executed and delivered by its duly authorized representative as of the
date and year first above written, all pursuant to authority duly granted.
CONE MILLS CORPORATION
By:___________________________
Name:_________________________
Title:_________________________
F-3
<PAGE>
EXHIBIT G
Form of Opinion of Borrower's Counsel
H-1
<PAGE>
EXHIBIT H
Compliance Certificate
Bank of America, N.A.,
as Agent
100 North Tryon Street, 8th Floor
NC1-007-08-17
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
Bank of America, N.A.,
as Agent
100 North Tryon Street
Charlotte, North Carolina 28255
Attention: Phifer Helms
Telefacsimile: (704) 386-1270
Reference is hereby made to the Credit Agreement dated as of January
28, 2000 (the "Agreement") among Cone Mills Corporation, a North Carolina
corporation (the "Borrower"), the Lenders (as defined in the Agreement) and Bank
of America, N.A., as Agent for the Lenders ("Agent"). Capitalized terms used but
not otherwise defined herein shall have the respective meanings therefor set
forth in the Agreement. The undersigned, a duly authorized and acting Authorized
Representative, hereby certifies to you as of __________ (the "Determination
Date") as follows:
1. Calculations:
I. Compliance with Section 10.1(a): Consolidated Net Worth
<TABLE>
<CAPTION>
<S> <C>
A. Consolidated Net Worth as of the Closing Date Quarter $__________
REQUIRED: THE CONSOLIDATED NET WORTH FROM THE CLOSING DATE UNTIL
THE END OF THE CLOSING DATE QUARTER (I.A) MUST NOT BE
LESS THAN $145,000,000.
B. Consolidated Net Worth as at the last day of most recent Fiscal
Quarter $__________
C. amount of Consolidated Net Worth required to be maintained
as of the end of the penultimate Fiscal Quarter $__________
H-2
<PAGE>
D. 100% of the aggregate amount of increases in stated capital
and additional paid-in capital accounts resulting from
issuance of equity securities or other capital investments
during the most recent Fiscal Quarter $__________
E. Sum of I.C and I.D $__________
REQUIRED: I.B MUST NOT BE LESS THAN I.E.
II. Compliance with Section 10.1(b): Consolidated Leverage Ratio
A. Consolidated Indebtedness $_________
B. Consolidated EBITDA
1. Consolidated Net Income (as calculated
in the definition thereof, including certain
exclusions therefrom) $_________
2. Consolidated Interest Expense (as
calculated in the definition thereof) $_________
3. Taxes on income $_________
4. Amortization $_________
5. Depreciation $_________
6. non-cash charges otherwise deducted
in calculating Consolidated Net Income
resulting from FASB No. 88,
FASB No. 106 Adjustments,
FASB No. 112 Adjustments
or FASB No. 121 Adjustments $_________
7. Non-cash Restructuring Charges $_________
8. Consolidated EBITDA
(sum of B.1, B.2, B.3, B.4, B.5.,
B.6 and B.7) $_________
</TABLE>
C. Consolidated Leverage Ratio: Ratio of Consolidated
Indebtedness (II.A.) to Consolidated EBITDA
(II.B.8) is ____ to 1.00.
REQUIRED: THE CONSOLIDATED LEVERAGE RATIO FOR A FOUR QUARTER PERIOD
ENDING DURING THE APPLICABLE PERIOD BELOW MUST NOT EXCEED THE
CORRESPONDING RATIO:
H-3
<PAGE>
LEVERAGE RATIO
PERIOD MUST NOT EXCEED
-------------------------- ----------------------
FOUR QUARTER PERIOD ENDED
JANUARY 2, 2000 13.05 TO 1.00
FOUR QUARTER PERIOD ENDING
APRIL 2, 2000 10.25 TO 1.00
FOUR QUARTER PERIOD
ENDING JULY 2, 2000 9.50 TO 1.00
III. Compliance with Section 10.1(c): Consolidated Interest Coverage Ratio
A. Consolidated EBITDA (from II.B.8, above) $_________
B. Consolidated Interest Expense
1. Debt discounts $_________
2. Fees in connection with Indebtedness $_________
3. Payments in connection with Capital Leases$_________
4. Net cash financing costs in connection
with any Securitization Transaction $_________
5. Consolidated Interest Expense
(sum of B.1, B.2, B.3 and B.4) $_________
--
C. Consolidated Interest Coverage Ratio: The ratio of the
Consolidated EBITDA (III.A) to Consolidated Interest Expense
(III.B.5, above) is ______ to 1.00.
REQUIRED: THE CONSOLIDATED INTEREST COVERAGE RATIO FOR A TWELVE-
MONTH PERIOD ENDING DURING THE APPLICABLE PERIOD MUST EXCEED
THE CORRESPONDING RATIO:
INTEREST COVERAGE RATIO
PERIOD MUST EXCEED
------------------------ --------------------
TWELVE-MONTH PERIOD ENDED
JANUARY 2, 2000 1.00 TO 1.00
TWELVE-MONTH PERIOD ENDING
APRIL 2, 2000 1.35 TO 1.00
TWELVE-MONTH PERIOD
ENDING JULY 2, 2000 1.40 TO 1.00
H-4
<PAGE>
IV. Compliance with Section 10.1(d): Consolidated EBIDTA
Consolidated EBITDA (from 11.B.8 above) for the most recent
Fiscal Quarter $________
REQUIRED: THE CONSOLIDATED EBIDTA FOR A FOUR-QUARTER PERIOD ENDING
DURING THE APPLICABLE PERIOD MUST EXCEED THE CORRESPONDING
RATIO:
PERIOD ENDING CONSOLIDATED EBITDA MUST EXCEED
------------- -------------------------------
FISCAL QUARTER ENDED JANUARY 2, 2000 $2,000,000
FISCAL QUARTER ENDING
APRIL 2, 2000 $8,550,000
TWO FISCAL QUARTERS ENDING
JULY 2, 2000 $20,450,000
V. Compliance with Section 10.3: Capital Expenditures
A. U.S. Capital Expenditures $________
REQUIRED: U.S. CAPITAL EXPENDITURES FOR THE FOLLOWING PERIODS MUST
NOT EXCEED THE CORRESPONDING AMOUNTS:
CAPITAL EXPENDITURES
PERIOD: NOT TO EXCEED:
------- --------------
FISCAL YEAR ENDED JANUARY 2, 2000 $13,500,000
JANUARY 3, 2000 THROUGH AND INCLUDING FACILITY
TERMINATION DATE $8,000,000
B. Mexican Capital Expenditures $________
REQUIRED: MEXICAN CAPITAL EXPENDITURES FROM THE CLOSING DATE
UNTIL THE FACILITY TERMINATION DATE MUST NOT EXCEED
AN AGGREGATE AMOUNT OF $1,000,000 FOR THE PURPOSE OF
PURCHASING CERTAIN REAL PROPERTY IN ALTAMIRA, MEXICO
AND MAKING CERTAIN IMPROVEMENTS THERETO TO THE EXTENT
SUCH IMPROVEMENTS HAVE BEEN CONTRACTUALLY AGREED TO
WITH THIRD PARTIES PRIOR TO THE CLOSING DATE.
VI. Compliance with Section 10.7(g): Investments in Altamira, Mexico site:
H-5
<PAGE>
A. Altamira, Mexico site investments for [___ Fiscal
Quarter of 2000] [the period of August 1, 2000
through the Facility Termination Date]: $________
REQUIRED: INVESTMENTS MADE RELATING TO ALTAMIRA, MEXICO SITE FOR THE
FOLLOWING PERIODS MUST NOT EXCEED THE CORRESPONDING AMOUNTS:
MEXICAN INVESTMENTS
PERIOD: NOT TO EXCEED:
------ ----------------------
FIRST FISCAL QUARTER OF 2000 $2,195,000
SECOND FISCAL QUARTER OF 2000 JANUARY
$2,577,500
AUGUST 1, 2000 THROUGH THE FACILITY $955,300
TERMINATION DATE
2. No Default
A. Since __________ (the date of the last similar
certification), (a) the Borrower has not defaulted in the keeping,
observance, performance or fulfillment of its obligations pursuant to
any of the Loan Documents; and (b) no Default or Event of Default
specified in Article XI of the Agreement has occurred and is
continuing.
B. If a Default or Event of Default has occurred since
__________ (the date of the last similar certification), the Borrower
proposes to take the following action with respect to such Default or
Event of Default: ___________________________________________________
_____________________________________________________________________.
(Note, if no Default or Event of Default has occurred, insert
"Not Applicable").
The Determination Date is the date of the last required financial
statements submitted to the Lenders in accordance with Section 9.1 of the
Agreement.
H-6
<PAGE>
IN WITNESS WHEREOF, I have executed this Certificate this _____ day of
__________, 20__.
CONE MILLS CORPORATION
By:___________________________________
Authorized Representative
Name:_________________________________
Title:________________________________
H-7
<PAGE>
EXHIBIT I
Form of Facility Guaranty
I-1
<PAGE>
EXHIBIT J-1
Form of General Security Agreement
J-1-1
<PAGE>
EXHIBIT J-2
Form of Priority Security Agreement
J-2-1
<PAGE>
EXHIBIT K
Form of Pledge Agreement (Borrower)
K-1
<PAGE>
EXHIBIT L
Form of Borrowing Base Certificate
Bank of America, N.A.,
as Agent
100 North Tryon Street, 8th Floor
NC1-007-08-17
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
Bank of America, N.A.,
as Agent
100 North Tryon Street
Charlotte, North Carolina 28255
Attention: Phifer Helms
Telefacsimile: (704) 386-1270
Reference is hereby made to the Credit Agreement dated as of January
28, 2000 (the "Agreement") among Cone Mills Corporation (the "Borrower"), the
Lenders (as defined in the Agreement) and Bank of America, N.A., as Agent for
the Lenders ("Agent"). Capitalized terms used but not defined herein shall have
the respective meanings therefor set forth in the Agreement. The undersigned, a
duly authorized and acting chief financial officer, chief executive officer,
treasurer or controller, hereby certifies to you as of __________ [insert
Determination Date] as follows:
<TABLE>
<CAPTION>
Compliance with Borrowing Base Requirement
A. Borrowing Base
<S> <C> <C> <C> <C>
1. Eligible Receivables Amount $_______
2. A1 Times 45% $_______
3. Eligible Inventory Amount $_______
4. A3 Times 60% $_______
5. Eligible Fixed Asset Amount $_______
6. A5 Times 60% $_______
7. Overadvance Basket* $_______
8. TOTAL (Sum of A2, A4, A6 and A7) $_______
B. Revolving Credit Facility
1. Revolving Credit Outstandings $_______
2. Letter of Credit Outstandings $_______
3. TOTAL (Sum of B1 and B2) $_______
L-1
<PAGE>
C. Senior Debt
1. Senior Debentures $_______
2. Senior Notes $_______
3. TOTAL (Sum of C1 and C2) $_______
D. Senior Debt Outstandings
1. Revolving Credit Facility (Item B4) $_______
2. Senior Debt (Item C3) $_______
3. TOTAL (Sum of D1 and D2) $_______
E. Borrowing Base - Senior Debt Outstandings (A8 minus D3) $_______
</TABLE>
Line E must be greater than zero. If Line E is less than zero,
either (i) the Overadvance Basket (Line A7) must be
included/increased by such deficiency, and (ii) if a deficiency
still exists with the Overadvance Basket equal to $5,000,000, then
the Revolving Credit Facility (Line B4) must be reduced immediately
by an amount not less than the absolute value of Line E.
*Not to exceed $5,000,000.
CONE MILLS CORPORATION
By: __________________________
Name:_________________________
Position:_____________________
Date:_________________________
L-2
<PAGE>
EXHIBIT M-1
Form of General Deed of Trust
M-2-1
<PAGE>
EXHIBIT M-2
Form of General Mortgage
M-2-1
<PAGE>
EXHIBIT M-3
Form of Priority Deed of Trust
M-3-1
<PAGE>
EXHIBIT M-4
Form of Priority Mortgage
M-4-1
<PAGE>
Schedule 1.1
Disposition of Assets
S-1
<PAGE>
Schedule 1.2
Material Subsidiaries
S-2
<PAGE>
Schedule 5.3
Information Regarding Collateral
S-3
<PAGE>
Schedule 5.4
Real Property Subject to Mortgages
S-4
<PAGE>
Schedule 8.4
Subsidiaries and Investments in Other Persons
S-5
<PAGE>
Schedule 8.6
Indebtedness
S-6
<PAGE>
Schedule 8.7
Liens
S-7
<PAGE>
Schedule 8.8
Tax Matters
S-8
<PAGE>
Schedule 8.10
Litigation
S-9
<PAGE>
Schedule 8.16
Employee Benefit Plan Events
S-10
<PAGE>
Schedule 8.18
Environmental Issues
S-11
<PAGE>
Schedule 8.19
Employment Matters
S-12
<PAGE>
Schedule 9.5
Insurance
S-13
<PAGE>
Schedule 10.10
Transactions with Affiliates
S-14
<PAGE>
Schedule 10.14
Sale and Leaseback Transactions
S-15
EXECUTION COPY
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty Agreement"), dated as of
January 28, 2000, is made by EACH OF THE UNDERSIGNED (each a "Guarantor" and
collectively the "Guarantors") to BANK OF AMERICA, N.A., a national banking
association organized and existing under the laws of the United States, as agent
(in such capacity, the "Revolving Credit Agent") for each of the lenders (the
"Lenders") now or hereafter party to the Credit Agreement (as defined below),
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA (together with its successors and
assigns "Prudential"), SUNTRUST BANK and ATLANTIC FINANCIAL GROUP, LTD.
(together, the "Senior Lease Creditor"), and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK ("Morgan"), WILMINGTON TRUST COMPANY ("WTC"), not individually but
solely as General Collateral Agent (in such capacity, and together with its
agents and successors and permitted assigns, the "General Collateral Agent") for
each of the General Secured Parties (as defined in the Intercreditor Agreement
referenced below) and BANK OF AMERICA, N.A., not individually but solely as
Priority Collateral Agent (in such capacity, and together with its agents and
successors, the "Priority Collateral Agent") for each of the Priority Secured
Parties. All capitalized terms used but not otherwise defined herein shall have
the meanings ascribed to such terms in the Intercreditor Agreement dated of even
date herewith among the Revolving Credit Agent, Prudential, the Senior Lease
Creditor, Morgan, the General Collateral Agent, Designated Collateral Subagent
and the Priority Collateral Agent.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement dated as of the date
hereof among Cone Mills Corporation (the "Borrower"), the Revolving Credit Agent
and the Lenders (as amended, supplemented or restated from time to time, the
"Credit Agreement"), the Lenders are making and have committed to make Revolving
Loans to the Borrower; and
WHEREAS, pursuant to that certain Note Agreement dated as of August 13,
1992 between the Borrower and Prudential (as amended, supplemented or restated
from time to time, the "Senior Note Agreement"), the Borrower has issued and
sold the Senior Notes to Prudential; and
WHEREAS, pursuant to that certain Master Lease Agreement dated as of
October 24, 1994 between the Borrower and Atlantic Financial Group, Ltd. (as
successor to TCB Realty II Corporation) ("Atlantic Financial") (as amended,
supplemented or restated from time to time, the "Master Lease"), and the Loan
Agreement (up to $16,000,000) dated as of October 24, 1994 (as amended,
supplemented or restated from time to time, the "Development Loan Agreement")
between Atlantic Financial and SunTrust Bank ("SunTrust", as successor to
Citicorp Leasing, Inc.), the Borrower has incurred certain obligations to
Atlantic Financial and to SunTrust for payment of rent and other amounts due
thereunder; the Master Lease, the Development Loan Agreement and the other Key
Documents (as defined in the Development Loan Agreement) are referred to
collectively herein as the "Senior Lease Documents"; and
<PAGE>
WHEREAS, pursuant to that certain ISDA Master Agreement dated as of
July 20, 1998 between the Borrower and Morgan as supplemented pursuant to that
certain letter agreement dated as of July 20, 1998 (as from time to time
amended, supplemented or replaced, the "Morgan Swap Agreement"), the Borrower
has incurred obligations and liabilities to Morgan in respect of interest rate
hedging agreements thereunder, including, but not limited to (i) the obligations
of the Borrower to make periodic payments to Morgan in accordance with the terms
of the Morgan Swap Agreement and (ii) the obligation of the Borrower to make a
termination payment to Morgan under Section 6(e) of the Morgan Swap Agreement,
provided, however, that in the event that the obligations to be made by the
Borrower to Morgan under (i) and (ii) above are greater than $3,000,000, the
amount of such payments shall be deemed to be $3,000,000 (the "Morgan Swap
Obligations"); and
WHEREAS, it is a condition to (i) the Lenders making available the
Revolving Loans to the Borrower, (ii) Prudential entering into the amendment to
the Senior Note Documents and (iii) the Senior Lease Creditor amending the
Senior Lease Documents that the parties hereto enter into this Agreement; and
WHEREAS, each Guarantor is, directly or indirectly, a wholly owned
Subsidiary of the Borrower, has materially benefited from the credit extended to
the Borrower pursuant to the Senior Notes, the Senior Lease Obligations and the
Morgan Swap Obligations, and will materially benefit from the Revolving Loans
made and to be made under the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:
1. Guaranty. Each Guarantor hereby jointly and severally,
unconditionally, absolutely, continually and irrevocably guarantees the payment
and performance in full of the Borrower's Liabilities (as defined below) to each
of the Revolving Credit Agent for the benefit of the Lenders, Prudential, the
Senior Lease Creditor and Morgan (together with the Lenders collectively
referred to as the "Secured Parties"). For all purposes of this Guaranty
Agreement, "Borrower's Liabilities" means: (a) the Borrower's prompt payment in
full, when due or declared due and at all such times, of all Senior Debt
Obligations and all other amounts pursuant to the terms of the Senior Credit
Documents, the Senior Lease Documents, the Senior Note Documents and the Morgan
Swap Agreement heretofore, now or at any time or times hereafter owing, arising,
due or payable from the Borrower to any one or more of the Secured Parties,
including principal, interest, premiums and fees (including, but not limited to,
loan fees and attorneys' fees and expenses); and (b) the Borrower's prompt, full
and faithful performance, observance and discharge of each and every agreement,
undertaking, covenant and provision to be performed, observed or discharged by
the Borrower under the Senior Credit Documents, the Senior Lease Documents, the
Senior Note Documents and the Morgan Swap Agreement. The Guarantors' obligations
to the Secured Parties under this Guaranty Agreement are hereinafter
collectively referred to as the "Guarantors' Obligations" and, with respect to
each Guarantor individually, the "Guarantor's Obligations". Notwithstanding the
foregoing, the liability of each Guarantor individually with respect to its
Guarantor's Obligations shall be limited to an aggregate amount equal to the
largest amount that would not render its obligations hereunder
2
<PAGE>
subject to avoidance under Section 548 of the United States Bankruptcy Code or
any comparable provisions of any applicable state law.
Each Guarantor agrees that it is jointly and severally, directly and
primarily liable (subject to the limitation in the immediately preceding
sentence) for the Borrower's Liabilities.
The Guarantors' Obligations are secured by various Security Documents
referred to in the Credit Agreement, including without limitation the General
Security Instruments and the Priority Security Instruments to which such
Guarantor is a party.
2. Payment. If the Borrower shall default in payment or performance of
any of the Borrower's Liabilities, whether principal, interest, premium, fee
(including, but not limited to, loan fees and attorneys' fees and expenses), or
otherwise, when and as the same shall become due, and after expiration of any
applicable grace period, whether according to the terms of any Transaction
Document, by acceleration, or otherwise, or upon the occurrence and during the
continuance of any Event of Default, then any or all of the Guarantors will,
upon demand thereof by either the General Collateral Agent or the Priority
Collateral Agent, or both, pursuant to the terms of the Intercreditor Agreement,
fully pay to either the General Collateral Agent or the Priority Collateral
Agent, or both, as applicable, for the benefit of the respective Secured Parties
and distribution thereto in accordance with the terms of the Intercreditor
Agreement, subject to any restriction on each Guarantor's Obligations set forth
in Section 1 hereof, an amount equal to all the Borrower's Liabilities then due
and owing.
3. Absolute Rights and Obligations. This is a guaranty of payment and
not of collection. The Guarantors' Obligations under this Guaranty Agreement
shall be joint and several, absolute and unconditional irrespective of, and each
Guarantor hereby expressly waives, to the extent permitted by law, any defense
to its obligations under this Guaranty Agreement and all Security Documents to
which it is a party by reason of:
(a) any lack of legality, validity or enforceability of any
Transaction Document, or of any other agreement or instrument creating,
providing security for, or otherwise relating to any of the Guarantors'
Obligations, any of the Borrower's Liabilities, or any other guaranty
of any of the Borrower's Liabilities (the Transaction Documents and all
such other agreements and instruments being collectively referred to as
the "Related Agreements");
(b) any action taken under any of the Related Agreements, any
exercise of any right or power therein conferred, any failure or
omission to enforce any right conferred thereby, or any waiver of any
covenant or condition therein provided;
(c) any acceleration of the maturity of any of the Borrower's
Liabilities, of the Guarantor's Obligations of any other Guarantor, or
of any other obligations or liabilities of any Person under any of the
Related Agreements;
(d) any release, exchange, non-perfection, lapse in
perfection, disposal, deterioration in value, or impairment of any
security for any of the Borrower's Liabilities,
3
<PAGE>
for any of the Guarantor's Obligations of any Guarantor, or for any
other obligations or liabilities of any Person under any of the Related
Agreements;
(e) any dissolution of the Borrower or any Guarantor or any
other party to a Related Agreement, or the combination or consolidation
of the Borrower or any Guarantor or any other party to a Related
Agreement into or with another entity or any transfer or disposition of
any assets of the Borrower or any Guarantor or any other party to a
Related Agreement;
(f) any extension (including without limitation extensions of
time for payment), renewal, amendment, restructuring or restatement of,
and any acceptance of late or partial payments under any Transaction
Document or any other Related Agreement, in whole or in part;
(g) the existence, addition, modification, termination,
reduction or impairment of value, or release of any other guaranty (or
security therefor) of the Borrower's Liabilities (including without
limitation the Guarantor's Obligations of any other Guarantor and
obligations arising under any other Facility Guaranty now or hereafter
in effect);
(h) any waiver of, forbearance or indulgence under, or other
consent to any change in or departure from any term or provision
contained in any Transaction Document or any other Related Agreement,
including without limitation any term pertaining to the payment or
performance of any of the Borrower's Liabilities, any of the
Guarantor's Obligations of any other Guarantor, or any of the
obligations or liabilities of any party to any other Related Agreement;
(i) any other circumstance whatsoever (with or without notice
to or knowledge of any Guarantor) which may or might in any manner or
to any extent vary the risks of such Guarantor, or might otherwise
constitute a legal or equitable defense available to, or discharge of,
a surety or a guarantor, including without limitation (A) any right to
require or claim that resort be had to the Borrower or any other Credit
Party or to any collateral in respect of the Borrower's Liabilities or
Guarantors' Obligations, and (B) any defense available to the Guarantor
arising under North Carolina General Statutes Sections 26-7 through
26-9.
It is the express purpose and intent of the parties hereto that this Guaranty
Agreement and the Guarantors' Obligations hereunder shall be absolute and
unconditional under any and all circumstances and shall not be discharged except
by payment as herein provided.
4. Currency and Funds of Payment. All Guarantors' Obligations will be
paid in lawful currency of the United States of America and in immediately
available funds, regardless of any law, regulation or decree now or hereafter in
effect that might in any manner affect the Borrower's Liabilities, or the rights
of any Secured Party with respect thereto as against the Borrower, or cause or
permit to be invoked any alteration in the time, amount or manner of payment by
the Borrower of any or all of the Borrower's Liabilities.
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5. Events of Default. Without limiting the provisions of Section 2
hereof, in the event that there shall occur and be continuing an Event of
Default, then notwithstanding any collateral or other security or credit support
for the Borrower's Liabilities, at the election of the Required Enforcement
General Secured Parties and written direction thereby to the General Collateral
Agent, or at the election of the Required Priority Secured Parties and written
direction thereby to the Priority Collateral Agent, or both, all pursuant to the
Intercreditor Agreement, and without notice thereof or demand therefor, the
Guarantors' Obligations shall immediately be and become due and payable.
6. Subordination. Until this Guaranty Agreement is terminated in
accordance with Section 23 hereof, each Guarantor hereby unconditionally
subordinates all present and future debts, liabilities or obligations now or
hereafter owing to such Guarantor (i) of the Borrower, to the payment in full of
the Borrower's Liabilities, (ii) of every other Guarantor (an "obligated
guarantor"), to the payment in full of the Guarantors' Obligations of such
obligated guarantor, and (iii) of each other Person now or hereafter
constituting a Credit Party, to the payment in full of the obligations of such
Credit Party owing to any Secured Party and arising under the respective
Transaction Documents. All amounts due under such subordinated debts,
liabilities, or obligations shall, upon the occurrence and during the
continuance of an Event of Default, be collected and, upon request by the
General Collateral Agent at the election of, and written direction by, the
Required Enforcement General Secured Parties, paid over forthwith to the General
Collateral Agent for the benefit of the General Secured Parties, or upon request
by the Priority Collateral Agent at the election of, and written direction by,
the Required Priority Secured Parties, paid over forthwith to the Priority
Collateral Agent for the benefit of the Priority Secured Parties, in each
instance on account of the Borrower's Liabilities and subject to the terms of
the Intercreditor Agreement, the Guarantors' Obligations, or such other
obligations, as applicable, and, after such request and pending such payment,
shall be held by such Guarantor as agent and bailee of the Secured Parties
separate and apart from all other funds, property and accounts of such
Guarantor.
7. Suits. Each Guarantor from time to time shall pay to the General
Collateral Agent or the Priority Collateral Agent (collectively, the "Agents")
or both, as applicable, for the benefit of the General Secured Parties or the
Priority Secured Parties, or both, as applicable, on demand, at such Agent's
place of business set forth in the Intercreditor Agreement or such other address
as such Agent shall give notice of to such Guarantor, the Guarantors'
Obligations as they become or are declared due, and in the event such payment is
not made forthwith, such Agent or both Agents may proceed to suit against any
one or more or all of the Guarantors. At the election of either or both Agents,
as applicable, one or more and successive or concurrent suits may be brought
hereon against any one or more or all of the Guarantors, whether or not suit has
been commenced against the Borrower, any other Guarantor, or any other Person
and whether or not the Secured Parties have taken or failed to take any other
action to collect all or any portion of the Borrower's Liabilities or have taken
or failed to take any actions against any collateral securing payment or
performance of all or any portion of the Borrower's Liabilities, and
irrespective of any event, occurrence, or condition described in Section 3
hereof.
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8. Set-Off and Waiver. Each Guarantor waives any right to assert
against any Secured Party as a defense, counterclaim, set-off or cross claim,
any defense (legal or equitable) or other claim which such Guarantor may now or
at any time hereafter have against the Borrower or the Secured Parties without
waiving any additional defenses, set-offs, counterclaims or other claims
otherwise available to such Guarantor. Each Guarantor agrees that each Secured
Party shall have a lien for all the Guarantor's Obligations upon all deposits or
deposit accounts, of any kind, or any interest in any deposits or deposit
accounts, now or hereafter pledged, mortgaged, transferred or assigned to such
Secured Party or otherwise in the possession or control of such Secured Party
for any purpose (other than solely for safekeeping) for the account or benefit
of such Guarantor, including any balance of any deposit account or of any credit
of such Guarantor with the Secured Party, whether now existing or hereafter
established, and hereby authorizes each Secured Party from and after the
occurrence of an Event of Default at any time or times with or without prior
notice to apply such balances or any part thereof to such of the Guarantor's
Obligations to the Secured Parties then due and in such amounts as provided for
in the Credit Agreement or otherwise as they may elect. For the purposes of this
Section 8, all remittances and property shall be deemed to be in the possession
of a Secured Party as soon as the same may be put in transit to it by mail or
carrier or by other bailee.
9. Waiver of Notice; Subrogation.
(a) Each Guarantor hereby waives to the extent permitted by
law notice of the following events or occurrences: (i) acceptance of
this Guaranty Agreement; (ii) the Secured Parties' heretofore, now or
from time to time hereafter making Revolving Loans and otherwise
loaning monies or giving or extending credit to or for the benefit of
the Borrower, whether pursuant to any Transaction Document or Related
Agreement or any amendments, modifications, or supplements thereto, or
replacements or extensions thereof; (iii) presentment, demand, default,
non-payment, partial payment and protest; and (iv) any other event,
condition, or occurrence described in Section 3 hereof. Each Guarantor
agrees that each Secured Party may heretofore, now or at any time
hereafter do any or all of the foregoing in such manner, upon such
terms and at such times as each Secured Party, in its sole and absolute
discretion, deems advisable, without in any way or respect impairing,
affecting, reducing or releasing such Guarantor from its Guarantor's
Obligations, and each Guarantor hereby consents to each and all of the
foregoing events or occurrences.
(b) Each Guarantor hereby agrees that payment or performance
by such Guarantor of its Guarantor's Obligations under this Guaranty
Agreement may be enforced by either or both of the Agents on behalf of
the General Secured Parties or the Priority Secured Parties or both, as
applicable, upon demand by such Agent to such Guarantor without the
Agent being required, such Guarantor expressly waiving to the extent
permitted by law any right it may have to require such Agent, to (i)
prosecute collection or seek to enforce or resort to any remedies
against the Borrower or any other Guarantor or any other guarantor of
the Borrower's Liabilities, or (ii) seek to enforce or resort to any
remedies with respect to any security interests, Liens or encumbrances
granted to either Agent or any Secured Party or other party to a
Related Agreement by the Borrower, any other Guarantor or any other
Person on account of the Borrower's Liabilities or any
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guaranty thereof, IT BEING EXPRESSLY UNDERSTOOD, ACKNOWLEDGED AND
AGREED TO BY SUCH GUARANTOR THAT DEMAND UNDER THIS GUARANTY AGREEMENT
MAY BE MADE BY EITHER AGENT, AND THE PROVISIONS HEREOF ENFORCED BY
EITHER AGENT, EFFECTIVE AS OF THE FIRST DATE ANY EVENT OF DEFAULT
OCCURS AND IS CONTINUING.
(c) Each Guarantor further agrees with respect to this
Guaranty Agreement that it shall have no right of subrogation,
reimbursement, contribution or indemnity, nor any right of recourse to
security for the Borrower's Liabilities unless and until 93 days
immediately following the 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 Guarantor 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. If an amount shall be
paid to any Guarantor on account of such rights at any time prior to
termination of this Guaranty Agreement in accordance with the
provisions of Section 23 hereof, such amount shall be held in trust for
the benefit of the Secured Parties and shall forthwith be paid to the
Agents, for the benefit of the Secured Parties, to be credited and
applied upon the Guarantors' Obligations, whether matured or unmatured,
in accordance with the terms of the Intercreditor Agreement. The
agreements in this subsection shall survive repayment of all of the
Guarantors' Obligations, the termination or expiration of this Guaranty
Agreement in any manner, including but not limited to termination in
accordance with Section 23 hereof, and occurrence of the Security
Termination Date.
10. Effectiveness; Enforceability. This Guaranty Agreement shall be
effective as of the date first above written and shall continue in full force
and effect until termination in accordance with Section 23 hereof. Any claim or
claims that any Secured Party may at any time hereafter have against a Guarantor
under this Guaranty Agreement may be asserted by the respective Agent on behalf
of such Secured Party by written notice directed to such Guarantor in accordance
with Section 25 hereof.
11. Representations and Warranties. Each Guarantor warrants and
represents to the Secured Parties that it is duly authorized to execute, deliver
and perform this Guaranty Agreement; that this Guaranty Agreement has been duly
executed and delivered on behalf of such Guarantor by its duly authorized
representatives; that this Guaranty Agreement is legal, valid, binding and
enforceable against such Guarantor in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles; and that such Guarantor's
execution, delivery and performance of this Guaranty Agreement do not violate or
constitute a breach of any of its Operating Documents or Organizational
Documents (as each such capitalized term is defined in the Credit Agreement),
any agreement or
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instrument to which such Guarantor is a party, or any law, order, regulation,
decree or award of any governmental authority or arbitral body to which it or
its properties or operations is subject.
12. Expenses. Each Guarantor agrees to be jointly and severally liable
for the payment of all reasonable fees and expenses, including attorneys' fees,
incurred by any Secured Party in connection with the enforcement of this
Guaranty Agreement, whether or not suit be brought.
13. Reinstatement. Each Guarantor agrees that this Guaranty Agreement
shall continue to be effective or be reinstated, as the case may be, at any time
payment received by any Secured Party in respect of any Borrower's Liabilities
is rescinded or must be restored for any reason.
14. Attorney-in-Fact. To the extent permitted by law, each Guarantor
hereby appoints each of the General Collateral Agent and the Designated
Collateral Subagent, for the benefit of the General Secured Parties, and the
Priority Collateral Agent, for the benefit of the Priority Secured Parties, as
such Guarantor's attorney-in-fact for the purposes of carrying out the
provisions of this Guaranty Agreement and taking any action and executing any
instrument which any such Agent may deem necessary or advisable to accomplish
the purposes hereof, which appointment is coupled with an interest and is
irrevocable; provided, that each Agent shall have and may exercise rights under
this power of attorney only upon the occurrence and during the continuance of an
Event of Default.
15. Reliance. Each Guarantor represents and warrants to the Secured
Parties, that: (a) such Guarantor has adequate means to obtain on a continuing
basis (i) from the Borrower, information concerning the Borrower and the
Borrower's financial condition and affairs and (ii) from other reliable sources,
such other information as it deems material in deciding to provide this Guaranty
Agreement ("Other Information"), and has full and complete access to the
Borrower's books and records and to such Other Information; (b) such Guarantor
is not relying on any Secured Party or its or their employees, directors, agents
or other representatives or affiliates, to provide any such information, now or
in the future; (c) such Guarantor has been furnished with and reviewed the terms
of the Transaction Documents as it has requested, is executing this Guaranty
Agreement freely and deliberately, and understands the obligations and financial
risk undertaken by providing this Guaranty Agreement; (d) such Guarantor has
relied solely on the Guarantor's own independent investigation, appraisal and
analysis of the Borrower, the Borrower's financial condition and affairs, the
"Other Information", and such other matters as it deems material in deciding to
provide this Guaranty Agreement and is fully aware of the same; and (e) such
Guarantor has not depended or relied on any Secured Party or its or their
employees, directors, agents or other representatives or affiliates, for any
information whatsoever concerning the Borrower or the Borrower's financial
condition and affairs or any other matters material to such Guarantor's decision
to provide this Guaranty Agreement, or for any counseling, guidance, or special
consideration or any promise therefor with respect to such decision. Each
Guarantor agrees that no Secured Party has any duty or responsibility
whatsoever, now or in the future, to provide to such Guarantor any information
concerning the Borrower or the Borrower's financial condition and affairs, or
any Other Information, other than as expressly provided herein, and that, if
such Guarantor receives any such information from any Secured Party or its or
their
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employees, directors, agents or other representatives or affiliates, such
Guarantor will independently verify the information and will not rely on any
Secured Party or its or their employees, directors, agents or other
representatives or affiliates, with respect to such information.
16. 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 Guaranty 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 guaranteed hereby.
17. Entire Agreement. This Guaranty Agreement, together with the
Transaction Documents and the Security Documents, constitutes and expresses the
entire understanding between the parties hereto with respect to the subject
matter hereof, and supersedes all prior negotiations, agreements,
understandings, inducements, commitments or conditions, express or implied, oral
or written, except as herein contained. The express terms hereof control and
supersede any course of performance or usage of the trade inconsistent with any
of the terms hereof. Except as provided in Section 23, neither this Guaranty
Agreement nor any portion or provision hereof may be changed, altered, modified,
supplemented, discharged, canceled, terminated, or amended orally or in any
manner other than in writing by each of the Required Priority Secured Parties
and the Required General Secured Parties.
18. Binding Agreement; Assignment. This Guaranty 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 heirs, legal
representatives, successors and assigns; provided, however, that no Guarantor
shall be permitted to assign any of its rights, powers, duties or obligations
under this Guaranty Agreement or any other interest herein without the prior
written consent of each of the Required Priority Security Parties and the
Required General Security Parties. Without limiting the generality of the
foregoing sentence of this Section 18, any Secured Party may assign to one or
more Persons, or grant to one or more Persons participations in or to, all or
any part of its rights and obligations under the respective Transaction
Documents (to the extent permitted thereby); and to the extent of any such
assignment or participation such other Person shall, to the fullest extent
permitted by law, thereupon become vested with all the benefits in respect
thereof granted to such Secured Party herein or otherwise, subject however, to
the provisions of the respective Transaction Documents concerning assignments
and participations. All references herein to any Agent shall include any
successor thereof.
19. Severability. The provisions of this Guaranty 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 Guaranty Agreement shall be construed as if such invalid or
unenforceable provision had never been contained herein.
20. Counterparts. This Guaranty Agreement may be executed in any number
of counterparts each of which when so executed and delivered shall be deemed an
original, and it
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shall not be necessary in making proof of this Guaranty Agreement to produce or
account for more than one such counterpart executed by the Guarantor against
whom enforcement is sought.
21. Indemnification. Without limitation of any other indemnification
provision in any Transaction Document, each Guarantor agrees to indemnify and
hold harmless each 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) the
Transaction Documents, any of the transactions contemplated herein or therein or
the actual or proposed use of the proceeds of the Loans or other extension 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 investigation,
litigation or other proceeding to which the indemnity in this Section 22
applies, such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by such Guarantor 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
Guarantor 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,
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 Guarantor
agrees not to assert any claim against any Indemnified Party, any of its
affiliates, or any of their 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 any of the
Transaction Documents, any of the transactions contemplated herein or therein or
the actual or proposed use of the proceeds of the Loans or other extension of
credit under the Transaction Documents. The agreements in this Section 22 shall
survive repayment of all of the Guarantors' Obligations and the termination or
expiration of this Guaranty Agreement in any manner, including but not limited
to termination upon occurrence of the Security Termination Date.
22. Termination. Subject to reinstatement pursuant to Section 13
hereof, this Guaranty Agreement and all of the Guarantors' Obligations hereunder
(excluding those obligations and liabilities that expressly survive such
termination) shall terminate on the Security Termination Date.
23. Remedies Cumulative; Late Payments. All remedies hereunder are
cumulative and are not exclusive of any other rights and remedies of any Secured
Party provided by law or under the Transaction Documents or other applicable
agreements or instruments. The making of the Loans and other extensions of
credit to the Borrower pursuant to the Transaction Documents shall be
conclusively presumed to have been made or extended, respectively, in reliance
upon
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each Guarantor's guaranty of the Borrower's Liabilities pursuant to the terms
hereof. Any amounts not paid when due under this Guaranty Agreement shall bear
interest at the Default Rate.
24. Notices. Any notice required or permitted hereunder shall be given,
(a) with respect to each Guarantor, at the address of the Borrower indicated in
Section 13.2 of the Credit Agreement and (b) with respect to any Secured Party,
at the applicable address indicated in Section 4.8 of the Intercreditor
Agreement. All such addresses may be modified, and all such notices shall be
given and shall be effective, as provided in Section 4.8 of the Intercreditor
Agreement.
25. Governing Law; Venue; Waiver of Jury Trial.
(a) THIS 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.
(b) EACH GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS 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 AGREEMENT, SUCH GUARANTOR EXPRESSLY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY
BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND EACH
GUARANTOR HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO
THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR
PROCEEDING.
(c) EACH GUARANTOR 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 FOR NOTICES TO SUCH
GUARANTOR IN EFFECT PURSUANT TO SECTION 25 HEREOF, 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 THE AGENT FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO ANY LOAN
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DOCUMENT IN THE COURTS OF ANY JURISDICTION WHERE ANY GUARANTOR OR ANY
OF SUCH GUARANTOR'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE
EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH
GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH
COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS
PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER 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 AGREEMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE
BE DELIVERED IN CONNECTION THEREWITH, EACH GUARANTOR AND EACH AGENT ON
BEHALF OF THE SECURED PARTIES HEREBY AGREE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THAT ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT ANY SUCH PERSON MAY
HAVE TO TRIAL BY JURY IN ANY SUCH ACTION, SUIT OR PROCEEDING.
(f) EACH GUARANTOR 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 page follows.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Guaranty Agreement as of the day and year first written above.
GUARANTORS:
CONE GLOBAL FINANCE CORP.
By:_________________________________
Name:_______________________________
Title:______________________________
CIPCO S.C., INC.
By:_________________________________
Name:_______________________________
Title:______________________________
CONE FOREIGN TRADING LLC
By:_________________________________
Name:_______________________________
Title:______________________________
BANK OF AMERICA, N.A., as Revolving
Credit Agent for the Lenders
By:_________________________________
Name: Phifer Helms
Title: Managing Director
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, as Senior Note Holder
By:_________________________________
Name:_______________________________
Title:______________________________
GUARANTY AGREEMENT
Signature Page 1 of 2
<PAGE>
SUNTRUST BANK, as Senior Lease
Creditor
By:_________________________________
Name:_______________________________
Title:______________________________
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as counterparty to the
Morgan Swap Agreement
By:_________________________________
Name:_______________________________
Title:______________________________
WILMINGTON TRUST COMPANY, as General
Collateral Agent
By:_________________________________
Name:_______________________________
Title:______________________________
BANK OF AMERICA, N.A., as Priority
Collateral Agent
By:_________________________________
Name: Phifer Helms
Title: Managing Director
ATLANTIC FINANCIAL GROUP, LTD.
By:_________________________________
Name:_______________________________
Title:______________________________
GUARANTY AGREEMENT
Signature Page 2 of 2
EXECUTION COPY
PRIORITY SECURITY AGREEMENT
THIS PRIORITY SECURITY AGREEMENT (this "Priority 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 BANK OF
AMERICA, N.A., as Priority Collateral Agent (in such capacity, the "Priority
Collateral Agent") under that certain Priority Collateral Agency Agreement of
even date herewith among the Priority 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") and Bank of America, N.A., as Revolving Credit Agent (in such
capacity, the "Revolving Credit Agent") for each of the Lenders (the "Lenders")
now or hereafter party to the Credit Agreement (as defined in the Intercreditor
Agreement), pursuant to which the Priority Collateral Agent serves as Priority
Collateral Agent for the benefit of the Senior Note Holder, the Senior Lease
Creditor, the Revolving Credit Agent and the Lenders. The Priority Collateral
Agent and the Revolving Credit Agent, the Lenders, the Senior Note Holder,
SunTrust and Atlantic Financial are collectively referred to herein as the
"Priority 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 Borrower is indebted to certain Senior Creditors pursuant
to the Loan Documents, the Senior Note Documents and the Senior Lease Documents,
as applicable; and
WHEREAS, as collateral security for payment and performance of all
Priority Senior Obligations, the Borrower is willing to grant to the Priority
Collateral Agent for the benefit of the Priority Secured Parties a security
interest in all of its personal property and assets located in the United States
pursuant to the terms of this Priority 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
Priority Secured Parties pursuant to the Senior Credit Documents to which they
are party; 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 Priority Senior
Obligations;
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 Priority Senior Obligations, each Subsidiary
Grantor is willing to grant to the Priority Collateral Agent for the benefit of
the Priority Secured Parties a security interest in all of its personal property
and assets located in the United States pursuant to the terms of this Priority
Security Agreement; and
<PAGE>
WHEREAS, each of the Senior Note Holder, the Senior Lease Creditor,
Morgan, the Priority Collateral Agent, the Designated Collateral Subagent, the
General Priority 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;
NOW, THEREFORE, in order to induce the Lenders to enter into the Loan
Documents, and to induce the other Priority Secured Parties to make and maintain
the extensions of credit evidenced by the Senior Notes 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 Priority 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 Priority
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 Priority Senior Obligations, and for the payment,
performance and satisfaction of all Priority Senior Obligations, and the prompt
payment and performance when due of its obligations and liabilities hereunder
(such Priority 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 Priority Collateral Agent for the benefit of the Priority Secured Parties a
continuing security interest in and to, and collaterally assigns to the Priority
Collateral Agent for the benefit of the Priority 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");
(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
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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");
(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
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(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
Priority 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 Priority 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 Priority
Security Agreement, each Grantor shall have:
(a) furnished the Priority Collateral Agent with properly
executed financing statements in form, number and substance suitable
for filing, sufficient under applicable law, and satisfactory to the
Priority Collateral Agent in order that upon the filing of the same the
Priority Collateral Agent, for the benefit of the Priority 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;
(b) to the extent expressly required by the terms hereof or of
any other Priority Security Instrument or any Transaction Document, or
otherwise as the Priority Collateral Agent may request, furnished the
Priority Collateral Agent with properly executed Qualifying Control
Agreements, registrars' certificates, issuer acknowledgments of the
Priority Collateral Agent's interest in letter of credit rights, and
evidence of the electronic identification of the Priority Collateral
Agent's interest for the benefit of the Priority 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
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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 the Priority Collateral Agent and sufficient
under applicable law so that the Priority Collateral Agent, for the
benefit of the Priority 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 of
any Transaction Document, or otherwise as the Priority Collateral Agent
may request, delivered to the Priority Collateral Agent, 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 Priority
Collateral Agent and sufficient under applicable law so that the
Priority Collateral Agent, for the benefit of the Priority Secured
Parties, shall have a security interest in all such Collateral
perfected by possession; subject in each case only to Permitted Liens;
and
(d) executed in blank and delivered to the Priority Collateral
Agent 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
Priority Collateral Agent 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 Priority Collateral Agent agrees not to so file
the Assignment of Trademarks and Licenses until an Event of Default has
occurred.
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 Priority 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 Priority Collateral Agent
to create, enforce, protect, perfect, or establish or maintain the priority of,
the security interest of the Priority Collateral Agent for the benefit of the
Priority Secured Parties in the Collateral is sometimes referred to herein as
"Perfection Action."
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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
Priority Collateral Agent may reasonably request in connection with the
administration or enforcement of this Priority Security Agreement or
related to the Collateral or any part thereof in order to carry out the
terms of this Priority Security Agreement, to perfect, protect,
maintain the priority of or enforce the Priority Collateral Agent's
security interest in the Collateral, subject only to Permitted Liens,
or otherwise to better assure and confirm unto the Priority Collateral
Agent its rights, powers and remedies for the benefit of the Priority
Secured Parties hereunder. Without limiting the foregoing, each Grantor
hereby irrevocably authorizes the Priority Collateral Agent 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 Priority Collateral Agent in such capacity
as "Priority Secured Party" at such time or times and in all filing
offices as the Priority Collateral Agent may from time to time
determine to be necessary or advisable to perfect or protect the rights
of the Priority Collateral Agent and the Priority 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 Priority 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 Priority Collateral Agent, on behalf of the Priority Secured
Parties, may reasonably request, in order to perfect and preserve the
security interests granted hereby.
(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 Priority Collateral Agent for the benefit of
the Priority Secured Parties, including, but not limited to, the prompt
payment upon demand therefor by the Priority Collateral Agent 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 Priority Collateral Agent for the benefit of the Priority
Secured Parties, subject only to 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
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financial statements of, the security interest granted hereunder to the
Priority Collateral Agent for the benefit of the Priority 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 Priority
Collateral Agent, (B) with respect to Material Trademarks, cause such
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 Priority Collateral Agent, on behalf of the Priority Secured
Parties, reasonably requests in order to perfect the security interest
of the Priority Collateral Agent, on behalf of the Priority Secured
Parties, therein. Each Grantor authorizes the Priority Collateral
Agent, on behalf of the Priority 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 Priority 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.
(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 Priority 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 Priority Collateral Agent for the benefit of the
Priority Secured Parties, and as the property of the Priority Collateral Agent
for the benefit of the Priority Secured
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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 Priority Collateral Agent such Grantor shall cause such Collateral to be
forwarded to the Priority Collateral Agent for its custody, possession and
disposition on behalf of the Priority Secured Parties in accordance with the
terms hereof and of the Intercreditor Agreement.
6. PRESERVATION AND PROTECTION OF COLLATERAL.
(a) The Priority Collateral Agent shall be under no 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 Priority
Collateral Agent 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
Priority Collateral Agent for the benefit of the Priority Secured
Parties a Lien on such real property having a priority acceptable to
the Required Priority Secured Parties) or accessions to other personal
property.
(c) Each Grantor agrees (i) to pay when due all taxes, charges
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 Priority Collateral Agent 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 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 Priority
Collateral Agent at its option may pay or contest any of them or
amounts relating thereto (the Priority Collateral Agent having the sole
right to determine the legality or validity of 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 Priority Collateral Agent, including reasonable
attorneys' fees, court costs, expenses and other charges related
thereto, shall be payable on demand by the applicable Grantor to the
Priority Collateral Agent 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.
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7. STATUS OF GRANTORS AND COLLATERAL GENERALLY. Each Grantor
represents and warrants to, and covenants with, the Priority Collateral Agent
for the benefit of the Priority 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
Priority Collateral Agent for the benefit of the Priority Secured
Parties 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
Permitted Liens) at any time claiming the same or any interest therein
adverse to the Priority Secured Parties. Upon the failure of any
Grantor to so defend, the Priority Collateral Agent may do so at its
option but shall not have any obligation to do so. All sums so
disbursed by the Priority Collateral Agent, including reasonable
attorneys' fees, court costs, expenses and other charges related
thereto, shall be payable on demand by the applicable Grantor to the
Priority Collateral Agent 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 Priority Security Agreement 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 Priority
Collateral Agent for the benefit of the Priority Secured Parties.
(c) It has full power, legal right and lawful authority to
enter into this Priority Security Agreement and to perform its terms,
including the grant of the security interests in the Collateral herein
provided for and this Priority 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 Priority Security Agreement by such Grantor, or
(ii) for the perfection of or the exercise by the Priority Collateral
Agent on behalf of the Priority Secured Parties, of its rights and
remedies hereunder, except for action required by the Uniform
Commercial Code to perfect the security interest conferred hereunder.
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(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 Permitted Liens and such as may have been filed for the
benefit of, delivered to, or taken in favor of, the Priority Collateral
Agent for the benefit of the Priority 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 Priority Collateral Agent 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 Priority Collateral Agent to perfect or
protect, or maintain the perfection and priority of, the Lien of the
Priority Collateral Agent for the benefit of the Priority Secured
Parties in Collateral contemplated hereunder within thirty (30) days
from such change.
(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 Priority Collateral Agent in
each instance.
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(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 Priority Collateral Agent shall have received written notice
of each such transaction, the Priority Collateral Agent 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 Priority Collateral Agent may deem
necessary or advisable to carry out the transactions contemplated by
this Priority 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 Priority Collateral Agent, (y) such lessor acknowledges
the Lien in favor of the Priority Collateral Agent for the benefit of
the Priority Secured Parties conferred hereunder and waives its
statutory and consensual liens and rights with respect to such
Collateral in form and substance acceptable to the Priority Collateral
Agent and delivered in writing to the Priority Collateral Agent 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 Priority Collateral Agent may deem necessary
or advisable to carry out the transactions contemplated by this
Priority Security Agreement, in each case within thirty (30) days of
the movement of such Collateral to such new location.
(j) It has notified the Priority 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.
(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
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material to its business or otherwise of material value (respectively,
"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 Priority 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 Priority
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
Priority Collateral Agent, on behalf of the Priority Secured Parties,
reasonably requests in order to perfect the security interest of the
Priority Collateral Agent, on behalf of the Priority Secured Parties,
therein. Each Grantor authorizes the Priority Collateral Agent, on
behalf of the Priority 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 Priority Collateral Agent (by any of its officers,
employees and agents), on behalf of the Priority 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 the any of the Transaction Documents) and to verify with any Person
other than (except as expressly otherwise permitted in any of the Transaction
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 Priority Collateral Agent may at any time and from time to time
employ and maintain on such Grantor's premises a custodian selected by the
Priority Collateral Agent who shall have full authority to do all acts necessary
to protect the Priority Collateral Agent's (for the benefit of the Priority
Secured Parties) security interests in the Collateral. All reasonable expenses
incurred by the Priority Collateral Agent, on behalf of the Priority 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.
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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 Priority Collateral Agent for the benefit of the
Priority 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 Priority Collateral Agent
such Grantor shall provide the Priority Collateral Agent with
a schedule of Accounts in form and substance acceptable to the
Priority Collateral Agent 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
Priority Collateral Agent's security interest or other rights
in and to any Accounts for the benefit of the Priority Secured
Parties. If requested by the Priority Collateral Agent, each
Grantor shall furnish the Priority Collateral Agent 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
Priority Collateral Agent shall request.
(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 Priority Collateral
Agent, 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
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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 Priority Collateral Agent 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 Priority Collateral
Agent for the benefit of Priority Secured Parties 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 Priority Collateral Agent 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.
(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 Priority Collateral
Agent for the benefit of the Priority 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
Priority Collateral Agent from time to time at reasonable
intervals designated by the Priority Collateral Agent, 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 no less frequently than annually, and shall furnish
to the Priority Collateral Agent such other documents and
reports thereof as the Priority Collateral Agent 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.
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(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 Priority Collateral
Agent 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 Priority Collateral
Agent for the benefit of the Priority Secured Parties that:
(i) The Grantors, as soon as practicable following a
request therefor by the Priority Collateral Agent, shall
deliver to the Priority Collateral Agent 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 Priority Collateral
Agent 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
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covenants to the Priority Collateral Agent for the benefit of the
Priority Secured Parties that:
(i) Each Grantor shall (i) maintain at all times, and
furnish to the Priority Collateral Agent from time to time at
the Priority Collateral Agent'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 Priority Collateral
Agent from time to time following the occurrence and during
the continuance of any Default or Event of Default, deliver to
the Priority Collateral Agent 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
Priority Collateral Agent 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 the Priority Collateral Agent a
Qualifying Control Agreement.
(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
Priority Collateral Agent 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 Priority Collateral Agent 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 Priority Collateral Agent 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 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 Priority Collateral Agent for the benefit of the Priority 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
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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 Priority Collateral Agent for the benefit of the
Priority Secured Parties pursuant to a Pledge Agreement.
(ii) Except with the express prior written consent of
the Priority Collateral Agent in each instance, all Investment
Property 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 shall be maintained at all times in the form
of (A) certificated securities, which certificates shall have
been delivered to the Priority 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
Priority Collateral Agent 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 Grantor) and (y) a
Qualifying Control Agreement from the applicable securities
intermediary which remains in full force and effect and as to
which the Priority 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
Priority Collateral Agent 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 Priority 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 Priority Collateral Agent
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
Priority Collateral Agent to perfect or protect, or maintain
the perfection and priority of, the Lien of the Priority
Collateral Agent for the benefit of the Priority 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
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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 Priority Collateral
Agent or written direction of the Required Priority 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 Priority Collateral Agent may thereupon (but shall not
be obligated to), at its request, cause such Collateral to be
registered in the name of the Priority Collateral Agent or its
nominee or agent for the benefit of the Priority 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 the Priority Collateral
Agent 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
Grantor hereby agrees to provide such further proxies as the
Priority Collateral Agent may request; provided, however, that
the Priority Collateral Agent 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 Priority
Collateral Agent for the benefit of the Priority 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 Priority
Collateral Agent (together, if the Priority Collateral Agent
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 Priority 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 Priority Collateral Agent for
the benefit of the Priority 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
Priority Collateral Agent in each instance, all
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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 the Priority Collateral
Agent 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
Priority 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 Priority
Collateral Agent 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 Priority Collateral Agent to perfect or
protect, or maintain the perfection and priority of, the Lien
of the Priority Collateral Agent for the benefit of the
Priority Secured Parties in such Collateral as contemplated
hereunder.
(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 Priority Collateral Agent for
the benefit of the Priority 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 Priority Collateral Agent from
time to time, such Grantor shall immediately deliver physical
possession of such Chattel Paper to the Priority Collateral
Agent 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 BANK OF
AMERICA, N.A. AS PRIORITY COLLATERAL AGENT FOR CERTAIN
PRIORITY SECURED PARTIES PURSUANT TO A PRIORITY 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 PRIORITY 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 Priority
Collateral Agent and sufficient under applicable law to
constitute perfection by control in
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order to identify the interest of the Priority Collateral
Agent for the benefit of the Priority 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 Priority Collateral Agent for
the benefit of the Priority Secured Parties that:
(i) Each Grantor shall (i) maintain at all times, and
furnish to the Priority Collateral Agent from time to time at
the Priority Collateral Agent'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 Priority Collateral Agent from time to time deliver to the
Priority Collateral Agent 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 Priority
Collateral Agent 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
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Trademark Office and the equivalent offices in any foreign
jurisdiction, except such as may have been filed in favor of
the Priority Collateral Agent, for the benefit of the Priority
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.
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 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 Priority
Secured Parties), with the Priority Collateral Agent and each
of the Priority Secured Parties named as additional insureds
thereunder, in amounts as shall be reasonably satisfactory to
Priority Collateral Agent;
(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 Priority
Collateral Agent; and
(iv) business interruption insurance in amounts
as shall be reasonably satisfactory to Priority Collateral
Agent.
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(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 Priority Collateral Agent;
(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 Priority Collateral Agent;
(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 Priority
Collateral Agent, except for non-payment of premium, as to
which such policies shall provide for at least ten (10) days'
prior written notice to the Priority Collateral Agent;
(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 Priority Collateral
Agent, for the benefit of the Priority 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 Priority Collateral Agent with evidence satisfactory to the
Priority Collateral Agent that the policy or certificate has been
renewed or replaced or is no longer required by this Priority Security
Agreement.
(d) Each Grantor hereby makes, constitutes and appoints the
Priority Collateral Agent (and all officers, employees or agents
designated by the Priority Collateral Agent), for the benefit of the
Priority 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 Priority Collateral Agent may
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(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 Priority Collateral Agent, including
reasonable attorneys' fees, court costs, expenses and other charges
related thereto, shall be payable on demand by such Grantor to the
Priority Collateral Agent, 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
Grantor's failure to so comply, pay promptly to the Priority Collateral
Agent, for the benefit of the Priority 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 Priority Collateral Agent, for the
benefit of the Priority 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 Priority
Collateral Agent, for the benefit of the Priority Secured Parties, as
additional Collateral to be held and disposed of in accordance with the
Intercreditor Agreement, subject to the provisions of this Priority
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 Priority Collateral Agent shall be
entitled to receive direct and immediate payment of the proceeds of
such insurance and such Grantor shall take all action as the Priority
Collateral Agent may reasonably request to accomplish such payment.
Notwithstanding the foregoing, in the event such Grantor shall receive
any
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such proceeds, such Grantor shall immediately deliver such proceeds to
such Priority Collateral Agent for the benefit of the Priority Secured
Parties as additional Collateral, and pending such delivery shall hold
such proceeds in trust for the benefit of the Priority 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 the Priority Collateral Agent. Each such
notice shall describe generally 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 Priority Secured Party as to which the insurance
described in Section 10(a)(ii) or (iii) is applicable.
(k) The provisions contained in this Priority 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 Security Instrument.
11. RIGHTS AND REMEDIES UPON EVENT OF DEFAULT. Upon and after the
occurrence of an Event of Default, the Priority Collateral shall have the
following rights and remedies on behalf of the Priority Secured Parties in
addition to any rights and remedies set forth elsewhere in this Priority
Security Agreement or the other Priority 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 Priority 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 Priority Security Agreement or any other
Priority Security Instruments or the Intercreditor Agreement or the
Priority Collateral Agency Agreement;
(b) The right to foreclose the Liens and security interests
created under this Priority 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 Priority Collateral Agent'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
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the Priority Collateral Agent or any agent thereof, for such time as
the Priority Collateral Agent 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 Priority Collateral Agent at a place to be
designated by the Priority Collateral Agent 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;
(d) The right to (i) exercise all of a Grantor's rights and
remedies with respect to the collection of its 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 Priority Collateral
Agent, on behalf of the Priority 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 Priority Collateral Agent, on behalf of the
Priority 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 Priority Collateral
Agent for the benefit of the Priority Secured Parties and that the
Priority Collateral Agent has a security interest therein for the
benefit of the Priority Secured Parties (provided that the Priority
Collateral Agent 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
Priority Collateral Agent '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 Priority Collateral Agent; and (xi) do all
acts and things and execute all documents necessary, in Priority
Collateral Agent'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
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cash or on credit, with or without representations and warranties, all
as the Priority Collateral Agent, in its sole discretion, may deem
advisable. The Priority Collateral Agent 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 Priority Collateral Agent may see fit. The
Priority Collateral Agent 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 may, without further notice, be made at the time and place to
which it was so adjourned. Each Grantor agrees that the Priority
Collateral Agent has no obligation to preserve rights to the Collateral
against prior parties or to marshall any Collateral for the benefit of
any Person. The Priority Collateral Agent for the benefit of the
Priority 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 Priority Collateral Agent
for the benefit of the Priority Secured Parties. If any of the
Collateral shall require repairs, maintenance, preparation or the like,
or is in process or other unfinished state, the Priority Collateral
Agent 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 Priority Collateral Agent shall deem appropriate, but the
Priority Collateral Agent shall have the right to sell or dispose of
the Collateral without such processing and no Grantor shall have any
claim against the Priority Collateral Agent 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 Priority Collateral Agent 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 the Priority Collateral Agent may be unable 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 the Priority Collateral Agent 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
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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 either at public sales or at private sales not subject to
other regulatory restrictions, and that the Priority Collateral Agent
has no 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 Priority Collateral
Agent, for the benefit of the Priority Secured Parties, and shall pay to the
Priority Collateral Agent, for the ratable benefit of the Priority 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 the Priority
Collateral Agent as the Grantor's attorney-in-fact for the purposes of carrying
out the provisions of this Priority Security Agreement and taking any action and
executing any instrument which the Priority Collateral Agent may deem necessary
or advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest; provided, that the Priority Collateral Agent 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 of any other rights and powers granted to the
Priority Collateral Agent herein, upon the occurrence and during the continuance
of an Event of Default, the Priority Collateral Agent 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;
(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
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possession or the control of the Priority Collateral Agent, and deposit
the same to the account of the Priority Collateral Agent, for the
benefit of the Priority 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 Priority Collateral Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Priority Collateral Agent, for the benefit of
the Priority 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 Priority 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
Priority 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 Priority Secured Party
or the Priority Collateral Agent 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 Priority 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 Priority Collateral Agent for the
benefit of the Priority Secured Parties. Each Grantor authorizes each Priority
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 Priority Secured Parties.
Each Subsidiary which is a Grantor further agrees with respect to this
Priority 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
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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 Priority Senior Obligations, the
termination or expiration of this Priority Security Agreement in any manner,
including but not limited to termination in accordance with Section 24, and
occurrence of the Security Termination Date.
The Priority Collateral Agent 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 Priority Collateral Agent
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 the
Priority Collateral Agent for the benefit of the Priority Secured Parties
hereunder shall continue to exist and may be exercised by the Priority
Collateral Agent at any time and from time to time irrespective of the fact that
any of the Priority 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 the Priority
Collateral Agent for the benefit of the Priority Secured Parties by this
Priority Security Agreement shall be in addition to all rights, powers and
remedies given to the Priority Collateral Agent or any Priority Secured Party
under any other Priority Security Instrument or any Transaction Document or by
virtue of any statute or rule of law. Any forbearance or failure or delay by the
Priority Collateral Agent 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
Priority 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 Priority Security Instrument or Transaction Document.
17. ANTI-MARSHALING PROVISIONS. The right is hereby given by each
Grantor to the Priority Collateral Agent, for the benefit of the Priority
Secured Parties, to make releases (whether in whole or in part) of all or any
part of the Collateral agreeable to the Priority Collateral Agent 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 Priority Collateral Agent, for the
benefit of the Priority Secured Parties, the Priority Collateral Agent 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 Priority Security Agreement.
Each Grantor hereby waives any and all right to
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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 Priority
Security Instrument or Transaction Document.
18. ENTIRE AGREEMENT. This Priority Security Agreement, together with
the Transaction Documents, the Security Documents, 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 Priority 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 Priority 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 Priority Collateral
Agent, on behalf of the Priority 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 Priority 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 Priority
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 otherwise, 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 Priority Collateral Agent and to
the Priority Secured Parties shall include any successor thereof or permitted
assignee, and any other obligees from time to time of the Secured Obligations.
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 Priority 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.
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22. SEVERABILITY. The provisions of this Priority 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 Priority Security Agreement shall be construed as if
such invalid or unenforceable provision had never been contained herein.
23. COUNTERPARTS. This Priority 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
Priority 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 Priority
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 Priority
Security Agreement, the Priority 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
Priority Collateral Agent and each Priority 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 Priority Security Agreement, the Transaction
Documents or Priority 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 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 Priority 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
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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 Priority Security
Agreement, any of the Transaction Documents or Priority 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 Priority 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 Priority
Collateral Agent, 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 Priority 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.
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(A) THIS PRIORITY 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
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
33
<PAGE>
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 PRIORITY 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 PRIORITY 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 PRIORITY SECURED PARTY OR THE PRIORITY COLLATERAL AGENT
FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS PRIORITY 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 PRIORITY SECURITY AGREEMENT
OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT
MAY IN THE
34
<PAGE>
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]
35
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Priority
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: _________________________________
PRIORITY SECURITY AGREEMENT
Signature 1 of 2
<PAGE>
AGENT:
BANK OF AMERICA, N. A., as Priority
Collateral Agent for the Priority Secured
Parties
By:_____________________________________
Name: Phifer Helms
Title: Managing Director
PRIORITY SECURITY AGREEMENT
Signature 2 of 2
<PAGE>
SCHEDULE 1
For purposes of this Priority 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 Priority Collateral Agent
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 Priority Collateral Agent
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 Priority Collateral Agent
for the benefit of the Priority 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 Priority
Collateral Agent that an Event of Default has occurred and is
continuing under any of the Transaction Documents or the Priority
Security Instruments (a "Default Notice"), until such time as the
Priority Collateral Agent 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 Priority
Collateral Agent at the request of the Priority Collateral Agent,
without requiring further consent from the Grantor, following receipt
of any Default Notice from the Priority Collateral Agent, (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 Priority Collateral
Agent that all Liens on such Collateral in favor of the Priority
Secured Parties have been released or terminated, (v) agrees to waive
or subordinate to the Lien conferred hereunder, on terms acceptable to
the Priority Collateral Agent, 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 ;
S-1-1
<PAGE>
(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 Priority Collateral Agent and in which
the Issuer (i) acknowledges the Lien in favor of the Priority
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 Priority Collateral Agent that all Liens on
such Collateral in favor of the Priority 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 Priority
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
Priority Collateral Agent 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 Priority Collateral Agent
for the benefit of the Priority 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 Priority Collateral Agent in each
instance, until it receives notice from the Priority Collateral Agent
that all Liens on such Collateral in favor of the Priority 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.
S-1-2
<PAGE>
SCHEDULE 1-A
------------
ACCOUNT CONTROL AGREEMENT
_________________________, as Priority Collateral Agent (in such capacity, the
"Priority Collateral Agent") for the benefit of each of the Priority Secured
Parties (the "Priority Secured Parties") under that certain General Priority
Security Agreement dated as of January 28, 2000 (as amended, revised, modified,
supplemented, amended and restated, or replaced from time to time, the "Priority
Security Agreement") among Bank of America, N.A. as Priority Collateral Agent,
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 Priority Collateral Agent a security interest in
the Account for the benefit of the Priority Secured Parties pursuant to
the Priority Security Agreement.
3. Priority 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 Priority Collateral Agent in the Account.
4. All capitalized terms used but not otherwise defined herein shall have
the respective meanings assigned thereto in the Priority Security
Agreement.
TERMS:
SECTION 1. THE ACCOUNT. Broker hereby represents and warrants to Priority
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 Priority
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
<PAGE>
SECTION 2. PRIORITY OF LIEN. Broker hereby acknowledges the security interest
granted to Priority Collateral Agent for the benefit of the Priority Secured
Parties by Debtor. Broker hereby subordinates, to Priority 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 Priority 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 Priority
Collateral Agent and, pending delivery thereof to Priority 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 Priority Collateral Agent 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
Priority Collateral Agent 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
Priority Collateral Agent delivers a written notice to Broker that Priority
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 Priority Collateral
Agent.
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 the Debtor and Priority Collateral Agent 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
S-1-4
<PAGE>
carried therein adverse to Debtor or Priority Collateral Agent, Broker will
promptly notify Priority Collateral Agent and Debtor thereof.
SECTION 6. RESPONSIBILITY OF BROKER. Broker shall have no responsibility or
liability to Priority 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 Priority Collateral Agent. Broker shall have no duty to investigate or make
any determination as to whether a default exists or any agreement between Debtor
and any Priority 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 Priority Collateral Agent's security interest in
the Account.
SECTION 9. TERMINATION. The rights and powers granted herein to Priority
Collateral Agent have been granted in order to perfect its security interest for
the benefit of the Priority 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 Priority 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, the Priority Collateral Agent
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.
S-1-5
<PAGE>
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
Priority 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
<PAGE>
SIGNATURES:
BANK OF AMERICA, N.A.,
as Priority Collateral Agent
By: ______________________________________
Name:____________________________________
Title:_____________________________________
Address for Notices:
Bank of America, N.A.
Agency Services
101 North Tryon Street, NC1-001-15-04
Charlotte, NC 28255
Telephone: (704)386-9368
Telefacsimile: (704)409-0012
DEBTOR
CONE MILLS CORPORATION
By:______________________________________
Name: Gary L. Smith
Title: Executive Vice President and
Chief Financial Officer
Address for Notices:
Cone Mills Corporation
3101 North Elm Street
Greensboro, North Carolina 27415-6540
Attention: David E. Bray, Treasurer
Telephone: (336) 379-6098
Telefacsimile: (336) 379-6043
ACCOUNT CONTROL AGREEMENT
(Priority Security Agreement - Securities)
Signature Page 1 of 2
<PAGE>
[BROKER NAME]
By:______________________________________
Name:____________________________________
Title:___________________________________
Address for Notices:
_________________________________________
_________________________________________
_________________________________________
_________________________________________
Fax: ( ) ____ - ________
ACCOUNT CONTROL AGREEMENT
(Priority Security Agreement - Securities)
Signature Page 2 of 2
<PAGE>
SCHEDULE 1-B
ACCOUNT CONTROL AGREEMENT
_________________________, as Priority Collateral Agent (in such capacity, the
"Priority Collateral Agent") for the benefit of each of the Priority Secured
Parties (the "Priority Secured Parties") under that certain General Priority
Security Agreement dated as of January 28, 2000 (as amended, revised, modified,
supplemented, amended and restated, or replaced from time to time, the "Priority
Security Agreement") among Bank of America, N.A. as Priority Collateral Agent,
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 Priority Collateral Agent a security interest in
the Account for the benefit of the Priority Secured Parties pursuant to
the Priority Security Agreement.
3. Priority 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 Priority Collateral Agent in the Account.
4. All capitalized terms used but not otherwise defined herein shall have
the respective meanings assigned thereto in the Priority Security
Agreement.
TERMS:
SECTION 1. THE ACCOUNT. Intermediary hereby represents and warrants to Priority
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 Priority 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
<PAGE>
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 Priority Collateral Agent for the benefit of the Priority
Secured Parties by Debtor. Intermediary hereby subordinates, to Priority
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 Priority
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 Priority Collateral Agent and, pending delivery thereof to
Priority 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 Priority Collateral Agent 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
Priority Collateral Agent 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 Priority Collateral Agent delivers a written notice to
Intermediary that Priority 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 Priority Collateral Agent.
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 and Priority Collateral
<PAGE>
Agent 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 Priority Collateral
Agent, Intermediary will promptly notify Priority Collateral Agent and Debtor
thereof.
SECTION 6. RESPONSIBILITY OF INTERMEDIARY. Intermediary shall have no
responsibility or liability to Priority 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 Priority Collateral Agent. Intermediary shall have no
duty to investigate or make any determination as to whether a default exists or
any agreement between Debtor and any Priority 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 Priority Collateral Agent's
security interest in the Account.
SECTION 9. TERMINATION. The rights and powers granted herein to Priority
Collateral Agent have been granted in order to perfect its security interest for
the benefit of the Priority 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 Priority 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, the Priority
Collateral Agent 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.
<PAGE>
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
Priority 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.
<PAGE>
SIGNATURES:
BANK OF AMERICA, N.A.,
as Priority Collateral Agent
By: ______________________________________
Name:____________________________________
Title:_____________________________________
Address for Notices:
Bank of America, N.A.
Agency Services
101 North Tryon Street, NC1-001-15-04
Charlotte, NC 28255
Telephone: (704)386-9368
Telefacsimile: (704)409-0012
DEBTOR
CONE MILLS CORPORATION
By:______________________________________
Name: Gary L. Smith
Title: Executive Vice President and
Chief Financial Officer
Address for Notices:
Cone Mills Corporation
3101 North Elm Street
Greensboro, North Carolina 27415-6540
Attention: David E. Bray, Treasurer
Telephone: (336) 379-6098
Telefacsimile: (336) 379-6043
ACCOUNT CONTROL AGREEMENT
(Priority Security Agreement - Commodities)
Signature Page 1 of 2
<PAGE>
[INTERMEDIARY NAME]
By:______________________________________
Name:____________________________________
Title:___________________________________
Address for Notices:
_________________________________________
_________________________________________
_________________________________________
_________________________________________
Fax: ( ) ____ - ________
ACCOUNT CONTROL AGREEMENT
(Priority Security Agreement - Commodities)
Signature Page 2 of 2
<PAGE>
SCHEDULE 2
GRANTOR INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
I. II. III. IV. V. VI. VII.
Collateral Name and Address Relationship of Persons
Locations of Owner of listed in VI to Grantor
Jurisdiction of Address of Chief (and Type Collateral Location (e.g., lessor,
Name Formation Executive Office Trade Styles of Collateral) (if other than Grantor) warehousemen)
- ---- --------- ---------------- ------------ -------------- ----------------------- -----------------------
</TABLE>
S-2
<PAGE>
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
<PAGE>
SCHEDULE 4
DEPOSIT ACCOUNTS
----------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Name and Address of Certificate of Deposit No.
Grantor Depository Institution Account No. (if applicable)
- ------- ---------------------- ----------- ---------------
</TABLE>
S-4
<PAGE>
SCHEDULE 5-A
------------
TRADEMARKS AND TRADEMARK APPLICATIONS
-------------------------------------
S-5-1
<PAGE>
SCHEDULE 5-B
------------
LICENSE AGREEMENTS
------------------
S-5-2
<PAGE>
EXHIBIT A
---------
ASSIGNMENT OF TRADEMARKS AND LICENSES
THIS ASSIGNMENT OF TRADEMARKS AND LICENSES (this "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 "Grantor", and
collectively with the Borrower, the "Grantors"), and BANK OF AMERICA, N.A., as
Priority Collateral Agent (in such capacity, the "Priority Collateral Agent")
under that certain Priority Collateral Agency Agreement of even date herewith
among the Priority 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 Priority Collateral Agent serves as such on behalf of and for the benefit of
the Senior Note Holder, the Senior Lease Creditor and the Revolving Credit Agent
and the Lenders. The Priority Collateral Agent and the Revolving Credit Agent,
the Lenders, the Senior Note Holder, and the Senior Lease Creditor are
collectively referred to herein as the "Priority 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, the Senior Notes and the Senior Lease Documents,
as applicable; and
WHEREAS, as collateral security for payment and performance of its
Obligations and all other Priority Senior Obligations, the Borrower is willing
to grant to the Priority Collateral Agent for the benefit of the Priority
Secured Parties a security interest in all of its personal property and assets
pursuant to the terms of the Priority 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
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
A-1
<PAGE>
WHEREAS, each Grantor has entered into a Priority Security Agreement
(the "Priority Security Agreement") dated as of January 28, 2000 pursuant to
which each Grantor has granted to the Priority Collateral Agent for the benefit
of the Priority Secured Parties a Priority Lien in the Material Trademarks and
Licenses defined below in order to secure the Borrower's Obligations and all
other Priority Senior Obligations (collectively, the "Priority 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", and together with
the Trademarks, the "Collateral"); and
WHEREAS, the Priority Collateral Agent for the benefit of the Priority
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 Priority 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 Priority Collateral Agent, for the
benefit of the Priority Secured Parties, and notice is hereby given that each
Grantor has granted to the Priority Collateral Agent, for the benefit of the
Priority Secured Parties and the Priority Collateral Agent, a Priority Lien in
the Collateral to secure the payment and performance in full of all of the
Priority Senior Obligations.
This Assignment is intended to and shall take effect as a sealed
instrument at such time as the Priority 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
<PAGE>
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
SIGNATURE PAGE 1 OF 3
<PAGE>
The foregoing assignment of the Trademarks and Licenses and the
registrations thereof and registration applications therefor by the Assignee and
the Priority Collateral Agent is hereby accepted as of the ____ day of _______,
2000.
BANK OF AMERICA, N.A.,
AS PRIORITY COLLATERAL AGENT FOR THE
PRIORITY SECURED PARTIES
By:_________________________________
Name: Phifer Helms
Title: Managing Director
ASSIGNMENT OF TRADEMARKS AND LICENSES
SIGNATURE PAGE 2 OF 3
<PAGE>
STATE OF _____________________________________________________ )
) ss.
COUNTY OF________________________________________________ )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ______ day of ____________, ____, 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 _______, ____, personally appeared
__________________________________________ to me known personally, and who,
being by me duly sworn, deposes and says that s/he is the
__________________________________ of Bank of America, N.A., a national banking
association, 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
SIGNATURE PAGE 3 OF 3
<PAGE>
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]
<PAGE>
ANNEX II
--------
Material Licenses
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:
--------------------
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
<PAGE>
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):
2
<PAGE>
(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");
3
<PAGE>
(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");
4
<PAGE>
(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;
5
<PAGE>
(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
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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.
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(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:
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(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
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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
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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;
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(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
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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
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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;
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(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.
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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
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(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
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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
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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
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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]
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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
<PAGE>
AGENTS:
WILMINGTON TRUST COMPANY, as General
Collateral Agent for the General Secured
Parties
By:______________________________________
Name:____________________________________
Title:___________________________________
GENERAL SECURITY AGREEMENT
SIGNATURE PAGE 2 of 2
<PAGE>
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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<PAGE>
(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.
S-1-2
<PAGE>
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
<PAGE>
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
<PAGE>
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.
S-1-5
<PAGE>
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
<PAGE>
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
<PAGE>
[BROKER NAME]
By:______________________________________
Name:____________________________________
Title:_____________________________________
Address for Notices:
__________________________________________
__________________________________________
__________________________________________
__________________________________________
Fax:( )_____________________________ ___
ACCOUNT CONTROL AGREEMENT
(General Security Agreement - Securities)
Signature Page 2 of 2
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
[INTERMEDIARY NAME]
By:______________________________________
Name:____________________________________
Title:____________________________________
Address for Notices:
__________________________________________
__________________________________________
__________________________________________
__________________________________________
Fax: ( ) ____ - ________
ACCOUNT CONTROL AGREEMENT
(General Security Agreement - Commodities)
Signature Page 2 of 2
<PAGE>
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
<PAGE>
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
<PAGE>
SCHEDULE 4
DEPOSIT ACCOUNTS
----------------
Name and Address of Certificate of Deposit No.
Grantor Depository Institution Account No. (if applicable)
- ------- ---------------------- ----------- -------------------------
S-4
<PAGE>
SCHEDULE 5-A
TRADEMARKS AND TRADEMARK APPLICATIONS
-------------------------------------
S-5-1
<PAGE>
SCHEDULE 5-B
LICENSE AGREEMENTS
------------------
S-5-2
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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]
<PAGE>
ANNEX II
LICENSES
---------
SECURITIES PLEDGE AGREEMENT
(BORROWER)
THIS SECURITIES PLEDGE AGREEMENT (this "Pledge Agreement") is made and
entered into as of January 28, 2000 by CONE MILLS CORPORATION, a North Carolina
corporation (the "Pledgor"), in favor of 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
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 of 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 (as defined below)), and the General Collateral
Agent 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
the Debenture Holders and all other Senior Creditors at any time existing and
agreed to by BANK OF AMERICA, N.A., as Designated Collateral Subagent (in such
capacity the "Designated Collateral Subagent"). 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 Pledgor 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 the payment and performance of all
General Senior Obligations, the Pledgor is willing to pledge and grant to the
General Collateral Agent for the benefit of the General Secured Parties a
security interest in (i) 65% of the Voting Securities of each of its Material
Direct Foreign Subsidiaries (to the extent 65% of such Voting Securities is
owned by the Pledgor and, if less than such 65% is so owned, then 100% of such
lesser amount) and 100% of the non-voting Subsidiary Securities of each such
Direct Foreign Subsidiary, and (ii) 100% of the Subsidiary Securities of all
Domestic Subsidiaries, in each case under (i) and (ii), whether now existing or
hereafter created or acquired (collectively, the "Pledged Interests"), and
certain related property, including without limitation the Pledged Interests
more particularly described on Schedule I hereto (such Subsidiaries, together
with all other Subsidiaries whose Subsidiary Securities may be required to be
subject to this Pledge Agreement from time to time, are hereinafter referred to
collectively as the "Pledged Subsidiaries"); and
WHEREAS, each of the Senior Note Holder, the Senior Lease Creditor,
Morgan, the General Collateral Agent, the Priority Collateral Agent, the
Designated Collateral Subagent and
<PAGE>
the Revolving Credit Agent for itself and on
behalf of the Lenders have entered into the Intercreditor Agreement dated as of
the date hereof for their mutual benefit, the benefit of those Persons for whom
they respectively serve as agent, as applicable, and the benefit of the
Debenture Holders, which Intercreditor Agreement provides, among other terms, as
to the allocation of proceeds derived from any remedial actions undertaken
pursuant to the terms of this Pledge 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 Pledge Agreement to any Senior Creditor party to
the General Collateral Agency Agreement and the General Collateral Agent has so
authorized and appointed the Designated Collateral Subagent and the Designated
Collateral Subagent, by its execution and delivery of this Pledge Agreement,
accepts such authorization and appointment as to those express matters herein
for which it is responsible; and
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
and the Senior Lease Documents, and in consideration of the premises and the
mutual covenants contained herein, the parties hereto agree as follows:
1. PLEDGE OF PLEDGED INTERESTS; OTHER COLLATERAL.
(a) As collateral security for the payment and performance by
the Pledgor of all now or hereafter existing General Senior
Obligations, and the prompt payment and performance when due of its
obligations and liabilities hereunder, and the payment, performance and
satisfaction of all Guarantor's Obligations (as defined in the Credit
Agreement)(collectively the "Secured Obligations"), the Pledgor hereby
grants, pledges and collaterally assigns to the General Collateral
Agent for the benefit of the General Secured Parties a first priority
security interest in all of the following items of property in which it
now has or may at any time hereafter acquire an interest, and
wheresoever located:
(i) the Pledged Interests; and
(ii) all cash, securities, dividends, options, rights,
and other property at any time and from time to time (x)
declared or distributed in respect of or in exchange for or on
conversion of any Pledged Interest, or (y) by its or their
terms exchangeable or exercisable for or convertible into any
Pledged Interest; and
(iii) all other property hereafter delivered to the
General Collateral Agent in substitution for or as an addition
to any of the foregoing, and all certificates and instruments
representing or evidencing such property, all security
2
<PAGE>
entitlements constituting any Pledged Interest, and all
securities accounts to which may at any time be credited any
or all of the Pledged Interests; and
(iv) all proceeds of any of the foregoing.
All such Pledged Interests, certificates, instruments, cash,
securities, interests, dividends, rights and other property referred to
in clauses (i) through (iv) of this Section 1 are herein collectively
referred to as the "Collateral."
(b) Subject to Section 10(a), the Pledgor agrees to deliver
all certificates, instruments or other documents representing any
Collateral to the General Collateral Agent, or upon its request to the
Designated Collateral Subagent at such location as the General
Collateral Agent or upon its request the Designated Collateral Agent
shall from time to time designate by written notice pursuant to Section
23 for its custody at all times until termination of this Pledge
Agreement, together with such instruments of assignment and transfer as
requested by the General Collateral Agent or by the Designated
Collateral Subagent.
(c) The Pledgor agrees to execute and deliver, or cause to be
executed and delivered by other Persons, at Pledgor's expense, all
share certificates, documents, instruments, agreements, financing
statements (and amendments thereto and continuations thereof),
assignments, control agreements, or other writings as the General
Collateral Agent or the Designated Collateral Subagent may request from
time to time to carry out the terms of this Pledge Agreement or to
protect or enforce the General Collateral Agent's Lien and security
interest in the Collateral hereunder granted to the General Collateral
Agent for the benefit of the General Secured Parties and further agrees
to do and cause to be done upon the request of the General Collateral
Agent or the Designated Collateral Subagent, at Pledgor's expense, all
things determined by the General Collateral Agent or by the Designated
Collateral Subagent to be necessary or advisable to perfect and keep in
full force and effect the Lien in the Collateral hereunder granted to
the General Collateral Agent for the benefit of the General Secured
Parties, including the prompt payment of all out-of-pocket fees and
expenses incurred in connection with any filings made to perfect or
continue the Lien and security interest in the Collateral hereunder
granted in favor of the General Collateral Agent for the benefit of the
General Secured Parties. The Pledgor hereby irrevocably authorizes each
of the General Collateral Agent and the Designated Collateral Subagent
to execute and file, with or if permitted by applicable law without the
signature of the Pledgor, all such financing statements and amendments
thereto and continuations thereof reflecting the Pledgor as "debtor"
and the General Collateral Agent as "secured party," as the General
Collateral Agent or the Designated Collateral Subagent may at any time
deem necessary or advisable to carry out the purposes of this Pledge
Agreement.
(d) All filing fees, advances, charges, costs and expenses,
including reasonable attorneys' fees, incurred or paid by the General
Collateral Agent or by the Designated Collateral Subagent or any
General Secured Party in exercising any right,
3
<PAGE>
power or remedy
conferred by this Pledge Agreement, or in the enforcement thereof,
shall become a part of the Secured Obligations secured hereunder and
shall be paid to the General Collateral Agent or to the Designated
Collateral Subagent or such General Secured Party, as applicable, by
the Pledgor immediately upon demand therefor, 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.
(e) The Pledgor agrees to register and cause to be registered
the interest of the General Collateral Agent, for the benefit of the
General Secured Parties, in the Collateral on its own books and records
and the registration books of each of the Pledged Subsidiaries.
2. STATUS OF PLEDGED INTERESTS. The Pledgor hereby represents,
warrants and covenants to the General Collateral Agent for the benefit of the
General Secured Parties that:
(a) All of the Pledged Interests are and shall at all times be
validly issued and outstanding, fully paid and nonassessable and
constitute (i) 65% of the issued and outstanding Voting Securities of
each Material Direct Foreign Subsidiary (to the extent 65% of such
Voting Securities is owned by the Pledgor, and, if less than such 65%
is so owned, then 100% of such lesser amount) and 100% of the
non-voting issued and outstanding Subsidiary Securities of each Direct
Foreign Subsidiary, and (ii) 100% of the issued and outstanding
Subsidiary Securities of all Domestic Subsidiaries) and are accurately
described on Schedule I. Schedule I may be updated by the Pledgor as
necessary from time to time.
(b) The Pledgor is and shall at all times be the sole
registered and record and beneficial owner of the Pledged Interests,
free and clear of all Liens, charges, equities, encumbrances and
restrictions on pledge or transfer (other than the pledge hereunder and
applicable restrictions pursuant to federal and state and applicable
foreign securities laws).
(c) At no time shall any Pledged Interests (i) be held or
maintained in the form of a security entitlement or credited to any
securities account and (ii) which constitute a "security" (or as to
which the related Pledged Subsidiary has elected to have treated as a
"security") under Article 8 of the Uniform Commercial Code of the State
of North Carolina or of any other jurisdiction whose laws may govern
(the "UCC") be maintained in the form of uncertificated securities.
With respect to Pledged Interests that are "securities" under the UCC,
or as to which the issuer has elected at any time to have such
interests treated as "securities" under the UCC, such Pledged Interests
are, and shall at all times be, represented by the share certificates
listed on Schedule I hereto, which share certificates, with stock
powers duly executed in blank by the Pledgor, have been delivered to
the General Collateral Agent or upon its request to the Designated
Collateral Subagent or are being delivered to the General Collateral
Agent or upon its request to the Designated Collateral Subagent
simultaneously herewith or, in the case of Additional
4
<PAGE>
Interests as
defined in Section 22, shall be delivered pursuant to Section 22. With
respect to Pledged Interests that are not "securities" under the UCC
and the issuer thereof has not elected to have such interests treated
as "securities" under the UCC, the Pledgor has simultaneously herewith
delivered to the General Collateral Agent or upon its request to the
Designated Collateral Subagent (or has previously delivered to the
General Collateral Agent or upon its request to the Designated
Collateral Subagent or, in the case of Additional Interests as defined
in Section 22, shall deliver pursuant to Section 22) a control
agreement (or appropriate amendments thereto) duly executed by the
Registrar of the applicable Pledged Subsidiary (the "Registrar"), in
form and substance acceptable to each of the General Collateral Agent
and to the Designated Collateral Subagent and in which the Registrar
(A) acknowledges that the Pledgor is at the date of such acknowledgment
the sole record, and to its knowledge, beneficial owner of the Pledged
Interests, (B) 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
Pledged Interests, (C) agrees that it will not consent to, effect,
acknowledge or register any transfer of such Pledged Interests nor
acknowledge or register any Lien in favor of any other Person on such
Pledged Interests, without the prior written consent of each of the
General Collateral Agent and the Designated Collateral Subagent in each
instance, until it receives notice from the General Collateral Agent or
from the Designated Collateral Subagent that all Liens on such
Collateral in favor of the General Secured Parties have been released
or terminated, and (D) agrees that upon receipt of notice from the
General Collateral Agent or from the Designated Collateral Subagent
that an Event of Default has occurred and is continuing and that the
Pledged Interests identified in such notice have been transferred to a
transferee (including any General Secured Party) identified in such
notice, it will duly record such transfer of such Pledged Interests on
the appropriate registry without requiring further consent from the
Pledgor and shall thereafter treat the transferee as the sole record
and beneficial owner of such Pledged Interests pending further
transfer, in each case notwithstanding any contrary instruction
received from the Pledgor. In addition, with respect to all Pledged
Interests, the Pledgor has simultaneously herewith delivered to the
General Collateral Agent or upon its request to the Designated
Collateral Subagent (or has previously delivered to the General
Collateral Agent or upon its request to the Designated Collateral
Subagent or, in the case of Additional Interests shall deliver pursuant
to Section 22) Uniform Commercial Code financing statements on Form
UCC-1 (or appropriate amendments thereto) duly executed by or on behalf
of the Pledgor as "debtor" and naming the General Collateral Agent for
the benefit of the General Secured Parties as "secured party," in form,
substance and number sufficient in the reasonable opinion of the
Designated Collateral Subagent to be filed in all UCC filing offices
and in all jurisdictions in which filing is necessary or advisable to
perfect in favor of the General Collateral Agent for the benefit of the
General Secured Parties the Lien on such Pledged Interests, together
with all required filing fees. Without limiting the foregoing
provisions of this Section 2(c), with respect to any Pledged Interests
issued by any Direct Foreign Subsidiary, Pledgor shall deliver or cause
to be delivered, (i) in addition to or in substitution for all or any
of the foregoing items, as the General Collateral Agent or the
Designated Collateral Subagent may elect, such other instruments,
certificates, agreements, notices, filings, and
5
<PAGE>
other documents, and
take or cause to be taken such other action, as the General Collateral
Agent or the Designated Collateral Subagent may determine to be
necessary or advisable under the laws of the jurisdiction of formation
of such Direct Foreign Subsidiary, to grant, perfect and protect as a
first priority lien in such Collateral in favor of the General
Collateral Agent for the benefit of the General Secured Parties, and
(ii) an opinion of counsel acceptable in form and substance to the
Designated Collateral Subagent issued by a law firm acceptable to the
Designated Collateral Subagent licensed to practice law in such foreign
jurisdiction, addressing with respect to such Pledged Interests the
matters described in Section 9.20(h)(iii) and (v) of the Credit
Agreement.
(d) It has full corporate power, legal right and lawful
authority to execute this Pledge Agreement and to pledge, assign and
transfer its Pledged Interests in the manner and form hereof.
(e) The pledge, assignment and delivery of its Pledged
Interests (along with undated stock powers executed in blank, financing
statements and control agreements) to the General Collateral Agent for
the benefit of the General Secured Parties pursuant to this Pledge
Agreement creates or continues, as applicable, a valid and perfected
first priority security interest in such Pledged Interests in favor of
the General Collateral Agent for the benefit of the General Secured
Parties, securing the payment of the Secured Obligations, assuming, in
the case of the Pledged Interests which constitute certificated
"securities" under the UCC, continuous and uninterrupted possession by
or on behalf of the General Collateral Agent.
(f) Except as otherwise expressly provided herein or in each
of the Transaction Documents, none of the Pledged Interests (nor any
interest therein or thereto) shall be sold, transferred or assigned
without the Designated Collateral Subagent's prior written consent,
which may be withheld for any reason.
(g) It shall at all times cause the Pledged Interests that
constitute "securities" (or as to which the issuer elects to have
treated as "securities") under the UCC to be represented by the
certificates now and hereafter delivered to the General Collateral
Agent in accordance with Sections 1, 2 and 22 hereof and that it shall
cause each of the Pledged Subsidiaries not to issue any Subsidiary
Securities, or securities convertible into, or exchangeable or
exercisable for, Subsidiary Securities, at any time during the term of
this Pledge Agreement unless the Pledged Interests of such Pledge
Subsidiary are issued solely to either (y) the Pledgor who shall
immediately comply with Sections 2 and 22 hereof with respect to such
property or (z) another Credit Party who shall immediately pledge such
additional Subsidiary Securities to the General Collateral Agent for
the benefit of the General Secured Parties on substantially identical
terms as are contained herein and deliver or cause to be delivered the
appropriate documents described in Section 2(c) hereof to the General
Collateral Agent and take such further actions as the General
Collateral Agent or the Designated Collateral Subagent may deem
necessary in order to perfect a first priority security interest in
such Subsidiary Securities.
6
<PAGE>
(h) Pledgor shall not cause, suffer or permit to occur a
change in the identity of any Registrar for any Pledged Interests
except upon giving not less than ten (10) days' prior written notice to
each of the General Collateral Agent and to the Designated Collateral
Subagent and providing evidence reasonably satisfactory to the
Designated Collateral Subagent (which shall include the written
acknowledgment of such new Registrar if the Designated Collateral
Subagent shall elect) of continuing compliance with the provisions of
Sections 1(e) and 2(c) hereof.
3. 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, beyond the use of reasonable care in the custody and
preservation thereof while in its possession.
(b) The Pledgor agrees to pay when due all taxes, charges,
Liens and assessments against the Collateral, 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. Upon the failure of the Pledgor to so pay or contest such
taxes, charges, Liens or assessments, or upon the failure of the
Pledgor to pay any amount pursuant to Section 1(c), the Designated
Collateral Subagent at its option may pay or contest any of them (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 Pledgor 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.
(c) The Pledgor hereby irrevocably authorizes each of the
General Collateral Agent and the Designated Collateral Subagent to file
(with, or to the extent permitted by applicable law, without the
signature of the Pledgor appearing thereon) financing statements
(including amendments thereto and continuations and copies thereof)
showing the Pledgor as "debtor" at such time or times and in all filing
offices as the General Collateral Agent 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.
7
<PAGE>
4. DEFAULT. Upon the occurrence and during the continuance of any Event
of Default, each of the General Collateral Agent and the Designated Collateral
Subagent is given full power and authority on behalf of the General Secured
Parties, then or at any time thereafter, to sell, assign, deliver or collect the
whole or any part of the Collateral, or any substitute therefor or any addition
thereto, in one or more sales, with or without any previous demands or demand of
performance or, to the extent permitted by law, notice or advertisement, in such
order as the General Collateral Agent or the Designated Collateral Subagent may
elect; and any such sale may be made either at public or private sale at the
General Collateral Agent's or the Designated Collateral Subagent's place of
business or elsewhere, either for cash or upon credit or for future delivery, at
such price or prices as the General Collateral Agent or the Designated
Collateral Subagent may reasonably deem fair; and any of the General Collateral
Agent, the Designated Collateral Subagent or any other General Secured Party may
be the purchaser of any or all Collateral so sold and hold the same thereafter
in its own right free from any claim of the Pledgor or right of redemption.
Demands of performance, advertisements and presence of property and sale and
notice of sale are hereby waived to the extent permissible by law. Any sale
hereunder may be conducted by an auctioneer or any officer or agent of the
General Collateral Agent or the Designated Collateral Subagent. Pledgor
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 and 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 the 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. The Pledgor agrees and
acknowledges that private sales so made may be at prices and upon terms less
favorable to Pledgor than if such Affected Collateral was sold 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 of the Affected Collateral for the
period of time necessary to permit the Pledged Subsidiary to register or
otherwise qualify them under or exempt them from any applicable restriction,
even if such Pledged Subsidiary 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. The Pledgor further agrees, to the
extent permitted by applicable law, that the use of private sales made under the
foregoing circumstances to dispose of the Affected Collateral shall be deemed to
be dispositions in a commercially reasonable manner. The Pledgor hereby
acknowledges that a ready market may not exist for the Pledged Interests if they
are not traded on a national securities exchange or quoted on an automated
quotation system and agrees and acknowledges that in such event the Pledged
Interests may be sold for an amount less than a pro rata share of the fair
market value of the Pledged Subsidiary's assets of the issuer of such Affected
Collateral minus its liabilities. In addition to the foregoing, the General
Secured Parties may exercise such other rights and
8
<PAGE>
remedies as may be available under the applicable Transaction Documents, at law
(including without limitation the UCC) or in equity.
5. PROCEEDS OF SALE. The proceeds of the sale of any of the Collateral
by the General Collateral Agent and all sums received or collected from or on
account of such Collateral by the General Collateral Agent shall be applied
ratably by the General Collateral Agent for the benefit of the General Secured
Parties in accordance with the terms of the Intercreditor Agreement.
6. PRESENTMENTS, DEMANDS AND NOTICES. Neither the General Collateral
Agent nor the Designated Collateral Subagent shall be under any duty or
obligation whatsoever to make or give any presentments, demands for
performances, notices of nonperformance, protests, notice of protest or notice
of dishonor in connection with any obligations or evidences of indebtedness held
thereby as collateral, or in connection with any obligations or evidences of
indebtedness which constitute in whole or in part the Secured Obligations
secured hereunder.
7. ATTORNEY-IN-FACT. The Pledgor hereby appoints the General Collateral
Agent and the Designated Collateral Subagent as the Pledgor's attorney-in-fact
for the purposes of carrying out the provisions of this Pledge 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, 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 to receive, endorse and collect all checks and other orders for
the payment of money made payable to the Pledgor representing any dividend,
interest payment, principal payment or other distribution payable or
distributable in respect to the Collateral or any part thereof and to give full
discharge for the same.
8. 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 the Pledgor or any other
Credit Party or otherwise, all as though such payment had not been made. The
provisions of this Section 8 shall survive repayment of all of the Secured
Obligations and the termination or expiration of this Pledge Agreement in any
manner, including but not limited to termination upon occurrence of the Security
Termination Date.
9. WAIVER BY THE PLEDGOR. The Pledgor 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
9
<PAGE>
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. The Pledgor authorizes each of the General Collateral
Agent and the Designated Collateral Subagent 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.
Either of the General Collateral Agent or the Designated Collateral
Subagent may at any time deliver (without representation, recourse or warranty)
the Collateral or any part thereof to the Pledgor and the receipt thereof by the
Pledgor shall be a complete and full acquittance for the Collateral so
delivered, and the General Collateral Agent and the Designated Collateral
Subagent, as the case may be, shall thereafter be discharged from any liability
or responsibility therefor.
10. DIVIDENDS AND VOTING RIGHTS.
(a) All dividends and other distributions with respect to any
of the Pledged Interests shall be subject to the pledge hereunder,
provided, however, that cash dividends paid to the Pledgor as record
owner of the Pledged Interests, to the extent permitted by each
Transaction Document to be declared and paid, may be retained by the
Pledgor so long as no Event of Default shall have occurred and be
continuing, free from any Liens hereunder.
(b) So long as no Event of Default shall have occurred and be
continuing, the registration of the Collateral in the name of the
Pledgor as record and beneficial owner shall not be changed and the
Pledgor shall be entitled to exercise all voting and other rights and
powers pertaining to the Collateral for all purposes not inconsistent
with the terms hereof.
(c) Upon the occurrence and during the continuance of any
Event of Default, all rights of the Pledgor to receive and retain cash
dividends and other distributions upon the Collateral pursuant to
subsection (a) above shall cease and shall thereupon be vested in the
General Collateral Agent for the benefit of the General Secured
Parties, and the Pledgor shall, or shall cause, all such cash dividends
and other distributions with respect to the Pledged Interests to be
promptly delivered to the General Collateral Agent or upon its request
to the Designated Collateral Subagent (together, if the General
Collateral Agent or the Designated Collateral Subagent shall request,
with the documents described
10
<PAGE>
in Sections 1(c) and 2(c) hereof or other
negotiable documents or instruments so distributed) to be held,
released or disposed of by it hereunder or, at the option of the
Designated Collateral Subagent or as directed in writing by the
Required Enforcement General Secured Parties, to be applied to the
Secured Obligations.
(d) Upon the occurrence and during the continuance of any
Event of Default, at the option of the General Collateral Agent or the
Designated Collateral Subagent or as directed in writing by the
Required Enforcement General Secured Parties, all rights of the Pledgor
to exercise the voting or consensual rights and powers which it is
authorized to exercise pursuant to subsection (b) above shall cease and
the General Collateral Agent may thereupon (but shall not be obligated
to), at its request or the request of the Designated Collateral
Subagent, cause such Collateral to be registered in the name of the
General Collateral Agent or 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 the Pledgor 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 shareholder with respect to
such Pledged Interests hereunder upon the occurrence and during the
continuance of any Event of Default, each of which proxy is coupled
with an interest and is irrevocable until the Security Termination
Date, and the Pledgor 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.
11. CONTINUED POWERS. Until the Security Termination Date shall have
occurred, the power of sale and other rights, powers and remedies granted to
either or both 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 each of the General Collateral Agent and by the
Designated Collateral Subagent at any time and from time to time irrespective of
the fact that any of the Secured Obligations or any part thereof may have become
barred by any statute of limitations or that any part of the liability of the
Pledgor may have ceased.
12. OTHER RIGHTS. The rights, powers and remedies given to each of the
General Collateral Agent and to the Designated Collateral Subagent for the
benefit of the General Secured Parties by this Pledge Agreement shall be in
addition to all rights, powers and remedies given to either or both of the
General Collateral Agent and the Designated Collateral Subagent or any General
Secured Party under any Transaction Document or by virtue of any statute or rule
of law. Any forbearance or failure or delay by the General Collateral Agent or
the Designated Collateral Subagent or any General Secured Party 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
11
<PAGE>
force and effect until such right, power or remedy is specifically waived in
accordance with the terms of the applicable Transaction Documents.
13. ANTI-MARSHALING PROVISIONS. Notwithstanding the existence of any
other security interest in the Collateral held by the General Collateral Agent
or the Designated Collateral Subagent, for the benefit of the General Secured
Parties, 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 Pledge Agreement. The Pledgor 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
Transaction Document.
14. ENTIRE AGREEMENT. This Pledge Agreement, together with the other
General Security Instruments the Intercreditor Agreement, the General Collateral
Agency Agreement and the Transaction Documents, 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 herein contained. 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 Pledge Agreement nor any portion or provision
hereof may be changed, altered, modified, supplemented, discharged, canceled,
terminated, or amended orally or in any manner other than with the prior written
consent of the Required General Secured Parties.
15. FURTHER ASSURANCES. The Pledgor agrees at its own expense to do
such further acts and things, and to execute and deliver, and cause to be
executed and delivered as may be necessary or advisable to give effect thereto,
such additional conveyances, assignments, financing statements, control
agreements, documents, certificates, stock powers, agreements and instruments,
as the Designated Collateral Subagent may at any time reasonably request in
connection with the administration or enforcement of this Pledge Agreement or
related to the Collateral or any part thereof or in order better to assure and
confirm unto each of the General Collateral Agent and the Designated Collateral
Subagent their rights, powers and remedies for the benefit of the General
Secured Parties hereunder. The Pledgor hereby consents and agrees that the
Pledged Subsidiaries and their respective Registrars, and all other Persons,
shall be entitled to accept the provisions hereof as conclusive evidence of the
right of each of the General Collateral Agent and the Designated Collateral
Subagent, on behalf of the General Secured Parties, to exercise the rights,
privileges, and remedies hereunder with respect to the Collateral,
notwithstanding any other notice or direction to the contrary heretofore or
hereafter given by the Pledgor or any other Person to any of such Pledged
Subsidiaries or Registrars or other Persons.
16. BINDING AGREEMENT; ASSIGNMENT. This Pledge 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 the Pledgor shall not be permitted to assign this Pledge Agreement
or any interest herein, or in the Collateral or any part thereof, or otherwise,
pledge, encumber or grant any option with respect to the Collateral, or any part
thereof, or any cash or property held by the General Collateral Agent as
Collateral under this Pledge Agreement. All references herein to the General
Collateral Agent and the Designated
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<PAGE>
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.
17. SWAP AGREEMENTS. All obligations of the Pledgor under Swap
Agreements, as defined in the Credit Agreement, (which are not prohibited under
the terms of each 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.
18. SEVERABILITY. The provisions of this Pledge 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 Pledge Agreement shall be construed as if such invalid or unenforceable
provision had never been contained herein.
19. COUNTERPARTS. This Pledge 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 Pledge Agreement
to produce or account for more than one such counterpart executed by the Pledgor
against whom enforcement is sought.
20. TERMINATION. Subject to the provisions of Section 8, this Pledge
Agreement and all obligations of the Pledgor 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 Pledge
Agreement, the General Collateral Agent or the Designated Collateral Subagent as
the case may be shall, at the sole expense of the Pledgor, promptly deliver to
the Pledgor the certificates evidencing its shares of Pledged Interests (and any
other property received as a dividend or distribution or otherwise in respect of
such Pledged Interests), together with any cash then constituting the Collateral
not then sold or otherwise disposed of in accordance with the provisions hereof,
and take such further actions at the request of the Pledgor as may be necessary
to effect the same.
21. INDEMNIFICATION. Without limitation of Section 13.9 of the Credit
Agreement or any other indemnification provision in any Transaction Document,
the Pledgor agrees 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) the Transaction Documents or General Security Instruments,
13
<PAGE>
any of the transactions contemplated herein or therein or the actual or proposed
use of the proceeds of the Revolving Loans or other extension 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 investigation,
litigation or other proceeding to which the indemnity in this Section 21
applies, such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by the Pledgor 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. The
Pledgor 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. The Pledgor 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 any of the Transaction Documents
or General Security Instruments, any of the transactions contemplated therein or
herein 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 21 shall survive repayment of all of the Secured Obligations and
the termination or expiration of this Pledge Agreement in any manner, including
but not limited to termination upon occurrence of the Security Termination Date.
22. ADDITIONAL INTERESTS. If the Pledgor shall at any time acquire or
hold any additional Pledged Interests, including any Pledged Interests issued by
any Subsidiary not listed on Schedule I hereto which are required to be subject
to a Lien pursuant to a Pledge Agreement by the terms hereof or of Article V or
any other provision of the Credit Agreement or of any term of any other
Transaction Document (any such shares being referred to herein as the
"Additional Interests"), the Pledgor shall deliver to the General Collateral
Agent or, upon its request, to the Designated Collateral Subagent for the
benefit of the General Secured Parties (i) a revised Schedule I hereto
reflecting the ownership and pledge of such Additional Interests and (ii) a
Pledge Agreement Supplement in the form of Exhibit A hereto with respect to such
Additional Interests duly completed and executed by the Pledgor and (iii) any
other document required in connection with such Additional Interests as
described in Section 2(c). The Pledgor shall comply with the requirements of
this Section 22 concurrently with the acquisition of any such Additional
Interests or, in the case of Additional Interests to which Section 9.20 of the
Credit Agreement applies, within the time period specified in Article V, Section
9.20 or elsewhere in the Credit Agreement with respect to such Additional
Interests; provided, however, that the failure to comply with the provisions of
this Section 22 shall not impair the Lien on Additional Interests conferred
hereunder.
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<PAGE>
23. NOTICES. Any notice required or permitted hereunder
shall be given (a) with respect to the Pledgor, at the address of the Pledgor
indicated in Section 13.2 of the Credit Agreement, (b) 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 (c) 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.
24. 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 Pledge 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.
25. DIRECTION CONCERNING DELIVERY. Until the General Collateral
Agent provides notice otherwise, the General Collateral Agent hereby
directs that all items to be delivered to it pursuant to this Pledge
Agreement be delivered to the Designated Collateral Subagent on its behalf.
26. GOVERNING LAW; WAIVERS.
(A) THIS PLEDGE 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.
(B) THE PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS PLEDGE 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 PLEDGE 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) THE PLEDGOR 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
15
<PAGE>
PREPAID) TO THE ADDRESS OF THE PLEDGOR PROVIDED
IN SECTION 23 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 OR RELATING TO THIS PLEDGE AGREEMENT IN THE
COURTS OF ANY PLACE WHERE THE PLEDGOR OR ANY OF THE PLEDGOR'S PROPERTY
OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE
APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE PLEDGOR HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY
WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO
THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH 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 PLEDGE 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, SUIT OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY AND HEREBY IRREVOCABLY 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) THE PLEDGOR 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.
[SIGNATURES ON FOLLOWING PAGES]
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Pledge
Agreement on the day and year first written above.
PLEDGOR:
CONE MILLS CORPORATION
By:
______________________________________
Name: Gary L. Smith
Title: Executive Vice President and
Chief Financial Officer
DESIGNATED COLLATERAL SUBAGENT:
BANK OF AMERICA, N.A.
AS DESIGNATED COLLATERAL SUBAGENT
By:
______________________________________
Name:
____________________________________
Title:
___________________________________
SECURITIES PLEDGE AGREEMENT (BORROWER)
Signature Page 1 of 2
<PAGE>
AGENT:
WILMINGTON TRUST COMPANY, as General
Collateral Agent for the General Secured
Parties
By:
________________________________________
Name:
______________________________________
Title:
_____________________________________
SECURITIES PLEDGE AGREEMENT (BORROWER)
Signature Page 2 of 2
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Name of Pledgor Name, Class or Type Total Amount Total Amount Total Amount Certificate Par Value (if Name and
--------------- ------ -------------- ------------- ------------- ------------- ------------ -------------- --------
Jurisdiction of Pledged of Class or of Class or Pledged Number (if applicable) Title of
------------- ----------- ------------ ------------ ------- ----------- ----------- --------
of Formation Interest Type of Type applicable) Registrar
------------- -------- -------- ----- ----------- ---------
and Type of Pledged Outstanding
----------- ------- -----------
Entity of Interests
--------- ---------
Pledged Authorized
------- ----------
Subsidiary
----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT A
PLEDGE AGREEMENT SUPPLEMENT
THIS PLEDGE AGREEMENT SUPPLEMENT (as from time to time amended,
modified or restated, this " Supplement"), dated as of ______________ ___, ____
is made by and between CONE MILLS CORPORATION, a North Carolina corporation (the
"Pledgor"), and WILMINGTON TRUST COMPANY, as General Collateral Agent (in such
capacity, the "Collateral Agent") under that certain General Collateral Agency
Agreement dated as of January 28, 2000 among The Prudential Insurance Company of
America, as holder of the Senior Notes (together, the "Senior Note Holder"),
SunTrust Bank and Atlantic Financial Group, Ltd., as creditors of the Senior
Lease Obligations (the "Senior Lease Creditor"), MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as counterparty of the Morgan Swap Agreement ("Morgan"), and BANK
OF AMERICA, N. A., a national banking association, as Agent (the "Revolving
Credit Agent") for each of the Lenders (as described in the Pledge Agreement
referred to below) now or hereafter party to the Credit Agreement (as defined in
the Pledge Agreement referred to below) pursuant to which the General Collateral
Agent serves as General Collateral Agent for the benefit of the Senior Note
Holder, the Senior Lease Creditor, Morgan, the Revolving Credit Agent, the
Lenders, the Bond Trustee for the benefit of the Debenture Holders and all other
Senior Creditors at any time existing and agreed to by BANK OF AMERICA, N.A. as
Designated Collateral Subagent (the "Designated Collateral Subagent"). All
capitalized terms used but not otherwise defined herein shall have the
respective meanings assigned thereto in the Pledge Agreement (as defined below).
WHEREAS, the Pledgor is required under the terms of the Credit
Agreement and that certain Securities Pledge Agreement dated as of January 28,
2000 by the Pledgor in favor of the General Collateral Agent for the benefit of
the General Secured Parties (as from time to time amended, modified,
supplemented or amended and restated, the "Pledge Agreement"), to cause certain
Pledged Interests held by it and listed on Annex A to this Supplement (the
"Additional Interests") to be specifically identified as subject to the Pledge
Agreement; and
WHEREAS, the Pledgor 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, a material part of the consideration given in connection with
and as an inducement to the execution and delivery of the Credit Agreement by
the Lenders and to the maintenance of the extensions of credit evidenced by the
Senior Notes, the Senior Debentures and the Senior Lease Documents was the
obligation of the Pledgor to pledge to the General Collateral Agent for the
benefit of the General Secured Parties the Additional Interests, whether then
owned or subsequently acquired or created; and
WHEREAS, the Pledgor has acquired rights in the Additional Interests
and desires to pledge, and evidence its prior pledge, to the General Collateral
Agent for the benefit of the
A-1
<PAGE>
General Secured Parties all of the Additional
Interests in accordance with the terms of the Credit Agreement and the Pledge
Agreement;
WHEREAS, each of the Senior Note Holder, the Senior Lease Creditor, the
Revolving Credit Agent for itself and on behalf the Lenders, Morgan, the General
Collateral Agent, the General Collateral Agent have entered into the
Intercreditor Agreement dated as of January 28, 2000 for their mutual benefit,
the benefit of those Persons for whom they respectively serve as agent, as
applicable, and the benefit of the Debenture Holders, which Intercreditor
Agreement provides, among other terms, as to the allocation of proceeds derived
from any remedial actions undertaken pursuant to the terms of the Pledge
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 the Pledge Agreement to any Senior Creditor party to
the General Collateral Agency Agreement and the General Collateral Agent 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 Pledge Agreement, accepted such authorization and
appointment as to those express matters therein for which it was responsible;
NOW, THEREFORE, the Pledgor hereby agrees as follows with the General
Collateral Agent, for the benefit of the General Secured Parties:
The Pledgor hereby reaffirms and acknowledges the pledge and collateral
assignment to, and the grant of security interest in, the Additional Interests
contained in the Pledge Agreement and pledges and collaterally assigns to the
General Collateral Agent for the benefit of the General Secured Parties, and
grants to the General Collateral Agent for the benefit of the General Secured
Parties a first priority lien and security interest in, the Additional Interests
and all of the following:
(a) all cash, securities, dividends, rights, and other
property at any time and from time to time (x) declared or distributed
in respect of or in exchange for or on conversion of any or all of the
Additional Interests or (y) by its or their terms exchangeable or
exercisable for or convertible into any Additional Interest or other
Pledged Interest;
(b) all other property hereafter delivered to the General
Collateral Agent in substitution for or as an addition to any of the
foregoing, and all certificates and instruments representing or
evidencing such property, all security entitlements constituting
Additional Interests, and all securities accounts to which may at any
time be credited any or all of the Additional Interests; and
(c) all proceeds of any of the foregoing.
A-2
<PAGE>
The Pledgor hereby acknowledges, agrees and confirms by its execution of this
Supplement that the Additional Interests constitute "Pledged Interests" under
and are subject to the Pledge Agreement, and the items of property referred to
in clauses (a) through (c) above (the "Additional Collateral") shall
collectively constitute "Collateral" under and are subject to the Pledge
Agreement. Each of the representations and warranties with respect to Pledged
Interests and Collateral contained in the Pledge Agreement is hereby made by the
Pledgor with respect to the Additional Interests and the Additional Collateral,
respectively. The Pledgor further represents and warrants that a true, correct
and complete revised Schedule I to the Pledge Agreement reflecting the
Additional Interests and all other Pledged Interests is attached hereto and
hereby incorporated by reference into the Pledge Agreement, and that all other
documents required to be furnished to the General Collateral Agent pursuant to
Section 2(c) of the Pledge Agreement in connection with the Additional
Collateral have been delivered or are being delivered simultaneously herewith to
the General Collateral Agent or the Designated Collateral Agent.
IN WITNESS WHEREOF, the Pledgor has caused this Supplement to be duly
executed by its authorized officer as of the day and year first above written.
PLEDGOR:
CONE MILLS CORPORATION
By:
_________________________________________
Name:
_______________________________________
Title:
______________________________________
Acknowledged and accepted:
WILMINGTON TRUST COMPANY,
as General Collateral Agent for the General Secured Parties
By:
______________________________
Name:
____________________________
Title:
___________________________
BANK OF AMERICA, N.A.
as Designated Collateral Subagent
By:
______________________________
Name:
____________________________
Title:
___________________________
A-3
<PAGE>
ANNEX A
(to Pledge Agreement Supplement of __________ dated __________)
Additional Interests
<TABLE>
<CAPTION>
Name of Pledgor Name, Class or Type Total Amount Total Amount Total Amount Certificate Par Value (if Name and
- --------------- ------ -------------- ------------- ------------- -------------- ------------ -------------- --------
Jurisdiction of Additional of Class or of Class or Pledged Number (if applicable) Title of
------------- -------------- ------------ ------------ ------- ----------- ----------- --------
of Formation Interest Type of Type applicable) Registrar
------------- -------- -------- ----- ----------- ---------
and Type of Additional Outstanding
------------ ----------- -----------
Entity of Interests
---------- ---------
Pledged Authorized
-------- ----------
Subsidiary
----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
REVISED SCHEDULE I TO SECURITIES PLEDGE AGREEMENT
Date: __________
<TABLE>
<CAPTION>
Name of Pledgor Name, Class or Type Total Amount Total Amount Total Amount Certificate Par Value (if Name and
--------------- ------ -------------- ------------- ------------- ------------- ------------ -------------- --------
Jurisdiction of Pledged of Class or of Class or Pledged Number (if applicable) Title of
------------- ----------- ------------ ------------ ------- ----------- ----------- --------
of Formation Interest Type of Type applicable) Registrar
------------- -------- -------- ----- ----------- ---------
and Type of Pledged Outstanding
----------- ------- -----------
Entity of Interests
--------- ---------
Pledged Authorized
------- ----------
Subsidiary
----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
EXECUTION COPY
CMM PLEDGE AGREEMENT
(BORROWER)
THIS PLEDGE AGREEMENT (this "CMM Pledge Agreement") is made and entered
into as of January 28, 2000 by CONE MILLS CORPORATION, a North Carolina
corporation (the "Pledgor"), in favor of 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
Prudential Life Insurance Company of America, as holder of the Senior Notes (the
"Senior Note Holder"), SunTrust Bank, Atlanta and Atlantic Financial Group,
Ltd., as creditors of the Senior Lease Obligations (collectively, the "Senior
Lease Creditor"), Morgan Guaranty Trust Company of New York, as counterparty of
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 (as defined below)), pursuant to which the General Collateral Agent
serves as collateral agent for the benefit of the Senior Note Holder, the Senior
Lease Creditor, the Revolving Credit Agent, the Lenders, Morgan, the Bond
Trustee for the benefit of the Debenture Holders and all other Senior Creditors
at any time existing and agreed to by BANK OF AMERICA, N.A. as Designated
Collateral Subagent (in such capacity the "Designated Collateral Subagent". 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 Pledgor 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 the payment and performance of all
General Senior Obligations, the Pledgor is willing to pledge and grant to the
General Collateral Agent for the benefit of the General Secured Parties a
security interest in 65% of the Voting Securities and 100% of the non-voting
Subsidiary Securities (the "CMM Shares")of Cone Mills (Mexico), S.A. de C.V.
("CMM"); and
WHEREAS, each of the Senior Note Holder, the Senior Lease Creditor,
Morgan, the Priority General Collateral Agent, the General Collateral Agent, the
Designated Collateral Subagent and the Revolving Credit Agent for itself and on
behalf of the Lenders have entered into the Intercreditor Agreement dated as of
the date hereof for their mutual benefit and the benefit of those Persons for
whom they respectively serve as agent, as applicable and the benefit of the
holders of the Senior Debentures, which Intercreditor Agreement provides, among
other terms, as to the allocation of proceeds derived from any remedial actions
undertaken pursuant to the terms of this CMM Pledge Agreement; and
<PAGE>
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 CMM Pledge Agreement to any Senior Creditor party
to the General Collateral Agency Agreement and the General Collateral Agent has
so authorized and appointed the "Designated Collateral Subagent" and the
Designated Collateral Subagent, by its execution and delivery of this CMM Pledge
Agreement, accepts 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 and to make and
maintain the extensions of credit evidenced by the Senior Notes, the Senior
Debentures and the Senior Lease Documents, and in consideration of the premises
and the mutual covenants contained herein, the parties hereto agree as follows:
1. PLEDGE OF PLEDGED INTERESTS; OTHER COLLATERAL.
(a) As collateral security for the payment and performance by
the Pledgor of all now or hereafter existing General Senior Obligations
(the "Secured Obligations"), the Pledgor hereby pledges to the General
Collateral Agent for the benefit of the General Secured Parties, in
terms of articles 334 to 345 of the General Law of Negotiable
Instruments and Credit Transactions, a first priority security interest
in all of the following items of property in which it now has or may at
any time hereafter acquire an interest, and wheresoever located:
(i) the CMM Shares; and
(ii) all cash, securities, dividends, options, rights,
and other property at any time and from time to time (x)
declared or distributed in respect of or in exchange for or on
conversion of the CMM Shares, or (y) by its or their terms
exchangeable or exercisable for or convertible into any CMM
Shares; and
All such CMM Shares, certificates, instruments, cash, securities,
interests, dividends, rights and other property referred to in clauses
(i) through (i1) of this Section 1 are herein collectively referred to
as the "Collateral."
(b) Subject to Section 8(a), the Pledgor agrees to deliver all
certificates, instruments or other documents representing any
Collateral to the General Collateral Agent or upon its request to the
Designated Collateral Subagent at such location as the General
Collateral Agent or the Designated Collateral Subagent shall from time
to time designate by written notice pursuant to Section 21 for its
custody at all times until termination of this CMM Pledge Agreement,
together with such instruments necessary to
2
<PAGE>
evidence or perfect the pledge of the Collateral as reasonably
requested by the General Collateral Agent or by the Designated
Collateral Subagent.1
(c) The Pledgor agrees to execute and deliver, or cause to be
executed and delivered by other Persons, at Pledgor's expense, all
share certificates, documents, instruments, agreements, or other
writings as the General Collateral Agent or the Designated Collateral
Subagent may reasonably request from time to time to carry out the
terms of this CMM Pledge Agreement or to protect or enforce the General
Collateral Agent's Lien and security interest in the Collateral
hereunder granted to the General Collateral Agent for the benefit of
the General Secured Parties and further agrees to do and cause to be
done upon the request of the General Collateral Agent or the Designated
Collateral Subagent, at Pledgor's expense, all things reasonably
determined by the General Collateral Agent or by the Designated
Collateral Subagent to be necessary or advisable to perfect and keep in
full force and effect the Lien in the Collateral hereunder granted to
the General Collateral Agent for the benefit of the General Secured
Parties, including the prompt payment of all out-of-pocket fees and
expenses incurred in connection with any filings made to perfect or
continue the Lien and security interest in the Collateral hereunder
granted in favor of the General Collateral Agent for the benefit of the
General Secured Parties.
(d) All filing fees, advances, charges, costs and expenses,
including reasonable attorneys' fees, incurred or paid by the General
Collateral Agent or by the Designated Collateral Subagent or any
General Secured Party in exercising any right, power or remedy
conferred by this CMM Pledge Agreement, or in the enforcement thereof,
shall become a part of the Secured Obligations secured hereunder and
shall be paid to the General Collateral Agent or to the Designated
Collateral Subagent or such General Secured Party, as applicable, by
the Pledgor immediately upon demand therefor, 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.
(e) The Pledgor agrees to register and cause to be registered
the interest of the General Collateral Agent, for the benefit of the
General Secured Parties, in the Collateral on the books of CMM.
2. STATUS OF CMM SHARES. The Pledgor hereby represents, warrants
and covenants to the General Collateral Agent for the benefit of the General
Secured Parties that:
(a) All of the CMM Shares are validly issued and outstanding,
fully paid and nonassessable and constitute 65% of the issued and
outstanding Voting Securities of CMM, and 100% of the non-voting issued
and outstanding Subsidiary Securities issued
- ---------------
1 Please note that the pledge will be perfected upon delivery of duly
endorsed certificates and registration of the Pledge in the stock registry book
of CMM
3
<PAGE>
by CMM and are accurately described on Schedule I. Schedule I may be
updated by the Pledgor as necessary from time to time.
(b) It has full corporate power, legal right and lawful
authority to execute this CMM Pledge Agreement and to pledge its CMM
Shares in the manner and form hereof.
(c) The pledge to the General Collateral Agent for the benefit
of the General Secured Parties and delivery of its CMM Shares to the
General Collateral Agent or at its request to the Designated Collateral
Subagent for the benefit of the General Secured Parties pursuant to
this CMM Pledge Agreement creates or continues, as applicable, a valid
and perfected first priority security interest in such CMM Shares in
favor of the General Collateral Agent for the benefit of the General
Secured Parties, securing the payment of the Secured Obligations.
3. 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, beyond the use of reasonable care in the custody and
preservation thereof while in its possession.
(b) The Pledgor 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 Permitted Liens) on the Collateral.
Upon the failure of the Pledgor to so pay or contest such taxes,
charges, Liens or assessments, or upon the failure of the Pledgor to
pay any amount pursuant to Section 1(c), the Designated Collateral
Subagent at its option may pay or contest any of them (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 Pledgor 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.
4. DEFAULT. Upon the occurrence and during the continuance of
any Event of Default, each of the General Collateral Agent and the Designated
Collateral Subagent is given full power and authority on behalf of the General
Secured Parties, then or at any time thereafter,
4
<PAGE>
to sell, assign, deliver or collect the whole or any part of the Collateral, or
any substitute therefor or any addition thereto, in one or more sales, subject
to the following provisions:
(a) The General Collateral Agent and the Designated Collateral
Subagent shall be entitled to sell the CMM Shares either by
means of a judicial auction or in a non-judicial sale, as
provided for in Articles 340, 341 and 342 of the General Law
of Negotiable Instruments and Credit Transactions.
(b) In the event that the General Collateral Agent or the
Designated Collateral Subagent elect to carry out a
non-judicial sale, they shall give written notice to the
Pledgor upon the occurrence of any Event of Default. The
Pledgor shall have a term of 15 days to present to the General
Collateral Agent documentation evidencing that there is no
Event of Default. In the event that the Pledgor does not
present such evidence, then the sale shall be made though an
authorized public broker appointed by the General Collateral
Agent or the Designated Collateral Subagent. Any such sale may
be made either at public or private sale at the public
broker's place of business or elsewhere, either for cash
or upon credit or for future delivery.
(c) In the event General Collateral Agent or the Designated
Collateral Subagent elect to carry out a judicial sale, the
base price for the sale at the public auction of the CMM
Shares pursuant to the first bid shall be 100% of the fair
market value of the CMM Shares.
(d) In the event that any or all of the CMM Shares are not sold in
the first bid, the sale price may be reduced by intervals of
10% (ten percent), until such CMM Shares are sold.
5. PROCEEDS OF SALE. The proceeds of the sale of any of the Collateral
by the General Collateral Agent and all sums received or collected from or on
account of such Collateral by the General Collateral Agent shall be applied
ratably by the General Collateral Agent for the benefit of the General Secured
Parties in accordance with the terms of the Intercreditor Agreement.
6. 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 the Pledgor or any other
Credit Party or otherwise, all as though such payment had not been made. The
provisions of this Section 6 shall survive repayment of all of the Secured
Obligations and the termination or expiration of this CMM Pledge Agreement in
any manner, including but not limited to termination upon occurrence of the
Security Termination Date.
7. WAIVER BY THE PLEDGOR. The Pledgor waives to the extent permitted by
applicable law (a) any right to require any General Secured Party, the General
Collateral Agent
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<PAGE>
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 right of subrogation, (c) 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. Either of the General
Collateral Agent or the Designated Collateral Subagent may at any time deliver
(without representation, recourse or warranty) the Collateral or any part
thereof to the Pledgor and the receipt thereof by the Pledgor shall be a
complete and full acquittance for the Collateral so delivered, and the General
Collateral Agent and the Designated Collateral Subagent, as the case may be,
shall thereafter be discharged from any liability or responsibility therefor.
8. DIVIDENDS AND VOTING RIGHTS.
(a) All dividends and other distributions with respect to any
of the CMM Shares shall be subject to the pledge hereunder, provided,
however, that cash dividends paid to the Pledgor as record owner of the
CMM Shares, to the extent permitted by each Transaction Document to be
declared and paid, may be retained by the Pledgor so long as no Event
of Default shall have occurred and be continuing, free from any Liens
hereunder.
(b) So long as no Event of Default shall have occurred and be
continuing the Pledgor shall be entitled to exercise all voting and
other rights and powers pertaining to the Collateral for all purposes
not inconsistent with the terms hereof.
(c) Upon the occurrence and during the continuance of any
Event of Default, all rights of the Pledgor to receive and retain cash
dividends and other distributions upon the Collateral pursuant to
subsection (a) above shall cease and shall thereupon be pledged to the
General Collateral Agent for the benefit of the General Secured
Parties, and the Pledgor shall, or shall cause, all such cash dividends
and other distributions with respect to the CMM Shares to be promptly
delivered to the General Collateral Agent or upon its request to the
Designated Collateral Subagent (together, if the General Collateral
Agent or the Designated Collateral Subagent shall request, with the
documents described in Sections 1(c) and 2(c) hereof or other
negotiable documents or instruments so distributed) to be held,
released or disposed of by it hereunder or, at the option of the
Designated Collateral Subagent or as directed by the Required
Enforcement General Secured Parties, to be applied to the Secured
Obligations.
(d) Upon the occurrence and during the continuance of any
Event of Default, at the option of the General Collateral Agent or the
Designated Collateral Subagent or as directed by the Required
Enforcement General Secured Parties, all rights of the Pledgor to
exercise the voting or consensual rights and powers which it is
authorized to exercise pursuant to subsection (b) above shall cease and
the General Collateral Agent may
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<PAGE>
thereupon (but shall not be obligated to) exercise such voting or
consensual rights and powers as appertain to ownership of such
Collateral, and to that end the Pledgor 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 shareholder with respect to such CMM Shares hereunder upon
the occurrence and during the continuance of any Event of Default and
the Pledgor 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.
9. CONTINUED POWERS. Until the Security Termination Date shall have
occurred, the rights, powers and remedies granted to either or both 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 each of the General Collateral Agent and by the Designated
Collateral Subagent at any time and from time to time irrespective of the fact
that any of the Secured Obligations or any part thereof may have become barred
by any statute of limitations or that any part of the liability of the Pledgor
may have ceased, to the extent any part of the Secured Obligations continues to
be due.
10. OTHER RIGHTS. The rights, powers and remedies given to each of the
General Collateral Agent and to the Designated Collateral Subagent for the
benefit of the General Secured Parties by this CMM Pledge Agreement shall be in
addition to all rights, powers and remedies given to either or both of the
General Collateral Agent and the Designated Collateral Subagent or any General
Secured Party under any Transaction Document or by virtue of any statute or rule
of law. Any forbearance or failure or delay by the General Collateral Agent or
the Designated Collateral Subagent or any General Secured Party 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 Transaction Documents.
11. ANTI-MARSHALING PROVISIONS. Notwithstanding the existence of any
other security interest in the Collateral held by the General Collateral Agent
or upon its request the Designated Collateral Subagent, for the benefit of the
General Secured Parties, 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 CMM Pledge Agreement. The Pledgor 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 Transaction Document.
12. ENTIRE AGREEMENT. This CMM Pledge Agreement, together with the
other General Security Instruments, the Intercreditor Agreement, the General
Collateral Agency
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Agreement and the Transaction Documents, 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 herein contained. 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 CMM Pledge Agreement nor any portion or provision hereof
may be changed, altered, modified, supplemented, discharged, canceled,
terminated, or amended orally or in any manner other than with the prior written
consent of the Required General Secured Parties.
13. FURTHER ASSURANCES. The Pledgor agrees at its own expense to do
such further acts and things, and to execute and deliver, and cause to be
executed and delivered as may be necessary or advisable to give effect thereto,
such additional conveyances, assignments, documents, certificates, agreements
and instruments, as the Designated Collateral Subagent may at any time
reasonably request in connection with the administration or enforcement of this
CMM Pledge Agreement or related to the Collateral or any part thereof or in
order better to assure and confirm unto each of the General Collateral Agent and
the Designated Collateral Subagent their rights, powers and remedies for the
benefit of the General Secured Parties hereunder. The Pledgor hereby consents
and agrees that CMM and its Registrars, and all other Persons, shall be entitled
to accept the provisions hereof as conclusive evidence of the right of each of
the General Collateral Agent and the Designated Collateral Subagent, on behalf
of the General Secured Parties, to exercise the rights, privileges, and remedies
hereunder with respect to the Collateral, notwithstanding any other notice or
direction to the contrary heretofore or hereafter given by the Pledgor or any
other Person to CMM or Registrars or other Persons.
14. BINDING AGREEMENT; ASSIGNMENT. This CMM Pledge 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 the Pledgor shall not be permitted to assign this CMM Pledge
Agreement or any interest herein, or in the Collateral or any part thereof, or
otherwise, except as expressly permitted herein or in the applicable Transaction
Document, pledge, encumber or grant any option with respect to the Collateral,
or any part thereof, or any cash or property held by the General Collateral
Agent as Collateral under this CMM Pledge Agreement. All references herein to
the General Collateral Agent and 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.
15. SWAP AGREEMENTS. All obligations of the Pledgor under Swap
Agreements (which are not prohibited under the terms of each 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.
8
<PAGE>
16. SEVERABILITY. The provisions of this CMM Pledge 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 CMM Pledge Agreement shall be construed as if such invalid or
unenforceable provision had never been contained herein.
17. COUNTERPARTS. This CMM Pledge 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 CMM
Pledge Agreement to produce or account for more than one such counterpart
executed by the Pledgor against whom enforcement is sought.
18. TERMINATION. Subject to the provisions of Section 8, this CMM
Pledge Agreement and all obligations of the Pledgor 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 CMM Pledge
Agreement, the General Collateral Agent or the Designated Collateral Subagent as
the case may be shall, at the sole expense of the Pledgor, promptly deliver to
the Pledgor the certificates evidencing its shares of CMM Shares (and any other
property received as a dividend or distribution or otherwise in respect of such
CMM Shares), together with any cash then constituting the Collateral not then
sold or otherwise disposed of in accordance with the provisions hereof, and take
such further actions at the request of the Pledgor as may be necessary to effect
the same.
19. INDEMNIFICATION. Without limitation of Section 13.9 of the Credit
Agreement or any other indemnification provision in any Transaction Document,
the Pledgor agrees 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) 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 extension 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 investigation,
litigation or other proceeding to which the indemnity in this Section 19
applies, such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by the Pledgor 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. The
Pledgor agrees that no Indemnified Party shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to it, any
9
<PAGE>
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. The Pledgor
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 any of the Transaction Documents or General Security Instruments,
any of the transactions contemplated therein or herein 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 19 shall survive
repayment of all of the Secured Obligations and the termination or expiration of
this CMM Pledge Agreement in any manner, including but not limited to
termination upon occurrence of the Security Termination Date.
20. ADDITIONAL INTERESTS. If the Pledgor shall at any time acquire or
hold any additional CMM Shares, which are required to be subject to a Lien
pursuant to a CMM Pledge Agreement by the terms hereof or any other provision of
the Credit Agreement or of any term of any other Transaction Document (any such
shares being referred to herein as the "Additional Interests"), the Pledgor
shall deliver to the General Collateral Agent or upon its request to the
Designated Collateral Subagent for the benefit of the General Secured Parties
(i) a revised Schedule I hereto reflecting the pledge of such Additional
Interests and (ii) a CMM Pledge Agreement Supplement in the form of Exhibit A
hereto with respect to such Additional Interests duly completed and executed by
the Pledgor and (iii) any other document required in connection with such
Additional Interests as described in Section 2(c). The Pledgor shall comply with
the requirements of this Section 20 concurrently with the acquisition of any
such Additional Interests; provided, however, that the failure to comply with
the provisions of this Section 20 shall not impair the Lien on Additional
Interests conferred hereunder.
21. NOTICES. Any notice required or permitted hereunder shall be given
(a) with respect to the Pledgor, at the address of the Pledgor indicated in
Section 13.2 of the Credit Agreement, (b) 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 (c) 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.
22. 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 CMM Pledge Agreement and are hereby incorporated by reference.
23. DIRECTION CONCERNING DELIVERY. Until the General Collateral Agent
provides notice otherwise, the General Collateral Agent hereby directs that all
items to be delivered to it
10
<PAGE>
pursuant to this CMM Pledge Agreement be delivered to the Designated Collateral
Subagent on its behalf.
24. GOVERNING LAW; WAIVERS.
(A) THIS CMM PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE UNITED MEXICAN STATES.
(B) THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY AGREE AND
CONSENT THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS CMM PLEDGE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN THE COMPETENT COURTS OF MEXICO, FEDERAL DISTRICT
AND, BY THE EXECUTION AND DELIVERY OF THIS CMM PLEDGE AGREEMENT, THE
PARTIES EXPRESSLY WAIVE ANY OBJECTION THAT THEY MAY HAVE NOW OR
HEREAFTER TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING,
AND IRREVOCABLY SUBMIT GENERALLY AND UNCONDITIONALLY TO THE
JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. THE
PLEDGOR HEREBY EXPRESSLY WAIVES ANY OBJECTION IT MAY HAVE THAT THE
COURTS TO WHOSE JURISDICTION IT HAS SUBMITTED PURSUANT TO THE TERMS
HEREOF IS AN INCONVENIENT FORUM.
[SIGNATURES ON FOLLOWING PAGES]
11
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this CMM Pledge
Agreement on the day and year first written above.
PLEDGOR:
CONE MILLS CORPORATION
By:
------------------------------------
Name: Gary L. Smith
Title: Executive Vice President and
Chief Financial Officer
CMM PLEDGE AGREEMENT (BORROWER)
Signature Page 1 of 2
<PAGE>
AGENT:
WILMINGTON TRUST COMPANY, as General
Collateral Agent for the General Secured
Parties
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
BANK OF AMERICA, N. A., as Designated
Collateral Subagent for the General Secured
Parties
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CMM PLEDGE AGREEMENT (BORROWER)
Signature Page 2 of 2
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Certificate
Class or Type of Total Shares Total Shares Number (if Par Value (if Name of
Pledged Interest Outstanding Pledged applicable) applicable) Registrar
- ---------------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Class II, Series 171,331,046 111,365,180 1-B $1.00 (Mexican Alberto
B Pesos) Sepulveda Cosio
</TABLE>
<PAGE>
EXHIBIT A
CMM PLEDGE AGREEMENT SUPPLEMENT
THIS CMM PLEDGE AGREEMENT SUPPLEMENT (as from time to time amended,
modified or restated, this " Supplement"), dated as of ______________ ___, ____
is made by and between CONE MILLS CORPORATION, a North Carolina corporation (the
"Pledgor"), and WILMINGTON TRUST COMPANY, as General Collateral Agent under that
certain General Collateral Agency Agreement dated as of January __, 2000 among
The Prudential Life Insurance Company of America, as holder of the Senior Notes
(the "Senior Note Holder"), SunTrust Bank, Atlanta, as creditor of the Senior
Lease Obligations (the "Senior Lease Creditor"), MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as counterparty of the Morgan Swap Agreement ("Morgan"), and BANK
OF AMERICA, N. A., a national banking association, as Agent (the "Revolving
Credit Agent") for each of the Lenders (as described in the CMM Pledge Agreement
referred to below) now or hereafter party to the Credit Agreement (as defined in
the CMM Pledge Agreement referred to below) pursuant to which the General
Collateral Agent serves as General Collateral Agent for the benefit of the
Senior Note Holder, the Senior Lease Creditor, Morgan, the Revolving Credit
Agent, the Lenders, the Bond Trustee for the benefit of the Debenture Holders
and all other Senior Creditors at any time existing and agreed to by BANK OF
AMERICA, N.A. as Designated Collateral Subagent (the "Designated Collateral
Subagent"). All capitalized terms used but not otherwise defined herein shall
have the respective meanings assigned thereto in the CMM Pledge Agreement (as
defined below).
WHEREAS, the Pledgor is required under the terms of the Credit
Agreement and that certain Securities CMM Pledge Agreement dated as of January
___, 2000 by the Pledgor in favor of the General Collateral Agent for the
benefit of the General Secured Parties (as from time to time amended, modified,
supplemented or amended and restated, the "CMM Pledge Agreement"), to cause
certain CMM Shares held by it and listed on Annex A to this Supplement (the
"Additional Interests") to be specifically identified as subject to the CMM
Pledge Agreement; and
WHEREAS, the Pledgor 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, a material part of the consideration given in connection with
and as an inducement to the execution and delivery of the Credit Agreement by
the Lenders and to the maintenance of the extensions of credit evidenced by the
Senior Notes, the Senior Debentures and the Senior Lease Documents was the
obligation of the Pledgor to pledge to the General Collateral Agent for the
benefit of the General Secured Parties the Additional Interests, whether then
owned or subsequently acquired or created; and
WHEREAS, the Pledgor has acquired rights in the Additional Interests
and desires to pledge, and evidence its prior pledge, to the General Collateral
Agent for the benefit of the
A-1
<PAGE>
General Secured Parties all of the Additional Interests in accordance with the
terms of the Credit Agreement and the CMM Pledge Agreement;
WHEREAS, each of the Senior Note Holder, the Senior Lease Creditor, the
Revolving Credit Agent for itself and on behalf the Lenders, Morgan, the
Priority Collateral Agent, the General Collateral Agent have entered into the
Intercreditor Agreement dated as of January __, 2000 for their mutual benefit
and the benefit of those Persons for whom they respectively serve as agent, as
applicable, and the benefit of the holders of the Senior Debentures, which
Intercreditor Agreement provides, among other terms, as to the allocation of
proceeds derived from any remedial actions undertaken pursuant to the terms of
the CMM Pledge 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 the CMM Pledge Agreement to any Senior Creditor party
to the General Collateral Agency Agreement and the General Collateral Agent 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 CMM Pledge Agreement, accepted such authorization
and appointment as to those express matters therein for which it was
responsible;
NOW, THEREFORE, the Pledgor hereby agrees as follows with the General
Collateral Agent, for the benefit of the General Secured Parties:
The Pledgor hereby reaffirms and acknowledges the pledge to, and the
grant of security interest in, the Additional Interests contained in the CMM
Pledge Agreement and pledges to the General Collateral Agent for the benefit of
the General Secured Parties, and grants to the General Collateral Agent for the
benefit of the General Secured Parties a first priority lien and security
interest in, the Additional Interests and all of the following:
(a) all cash, securities, dividends, rights, and other
property at any time and from time to time (x) declared or distributed
in respect of or in exchange for or on conversion of any or all of the
Additional Interests or (y) by its or their terms exchangeable or
exercisable for or convertible into any Additional Interest or other
CMM Shares;
(b) all other property hereafter delivered to the General
Collateral Agent in substitution for or as an addition to any of the
foregoing, and all certificates and instruments representing or
evidencing such property, all security entitlements constituting
Additional Interests; and
(c) all proceeds of any of the foregoing.
The Pledgor hereby acknowledges, agrees and confirms by its execution of this
Supplement that the Additional Interests constitute "CMM Shares" under and are
subject to the CMM Pledge Agreement, and the items of property referred to in
clauses (a) through (c) above (the
A-2
<PAGE>
"Additional Collateral") shall collectively constitute "Collateral" under and
are subject to the CMM Pledge Agreement. Each of the representations and
warranties with respect to CMM Shares and Collateral contained in the CMM Pledge
Agreement is hereby made by the Pledgor with respect to the Additional Interests
and the Additional Collateral, respectively. The Pledgor further represents and
warrants that a true, correct and complete revised Schedule I to the CMM Pledge
Agreement reflecting the Additional Interests and all other CMM Shares is
attached hereto and hereby incorporated by reference into the CMM Pledge
Agreement, and that all other documents required to be furnished to the General
Collateral Agent or the Designated Collateral Subagent pursuant to Section 2(c)
of the CMM Pledge Agreement in connection with the Additional Collateral have
been delivered or are being delivered simultaneously herewith to the General
Collateral Agent or the Designated Collateral Subagent.
IN WITNESS WHEREOF, the Pledgor has caused this Supplement to be duly
executed by its authorized officer as of the day and year first above written.
PLEDGOR:
CONE MILLS CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Acknowledged and accepted:
WILMINGTON TRUST COMPANY,
as General Collateral Agent for the General Secured Parties
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
BANK OF AMERICA, N.A.,
as Designated Collateral Subagent for the Secured Parties
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
A-3
<PAGE>
ANNEX A
(to CMM Pledge Agreement Supplement of __________ dated __________)
Additional Interests
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Class or Type of Certificate
Additional Total Shares Total Shares Number (if Par Value (if Name of
Interest Outstanding Pledged applicable) applicable) Registrar
- -------- ----------- ------- ----------- ----------- ---------
</TABLE>
REVISED SCHEDULE I TO CMM PLEDGE AGREEMENT
<PAGE>
Date: __________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Certificate
Class or Type of Total Amount Total Amount Number (if Par Value (if Name of
CMM Shares Outstanding Pledged applicable) applicable) Registrar
---------- ----------- ----------- ---------- ----------- ---------
</TABLE>
General DOT NC
PREPARED BY AND WHEN
RECORDED MAIL TO:
Charles N. Anderson, Jr.
Smith, Helms, Mulliss & Moore, L.L.P.
201 North Tryon Street
Charlotte, North Carolina 28202
- --------------------------------------------------------------------------------
DEED OF TRUST, SECURITY AGREEMENT,
FIXTURE FILING, ASSIGNMENT OF LEASES AND RENTS
AND
FINANCING STATEMENT
Dated and effective as of January , 2000
between
CONE MILLS CORPORATION, a North Carolina corporation
Grantor,
and
TIM, INC. (the "Trustee"),
and
WILMINGTON TRUST COMPANY
not in its individual capacity but solely as
General Collateral Agent and Beneficiary,
and
BANK OF AMERICA, N.A.,
as Designated Collateral Subagent
THIS INSTRUMENT SECURES GENERAL SENIOR OBLIGATIONS WHICH INCLUDES
FUTURE ADVANCES BY CERTAIN GENERAL SECURED PARTIES TO GRANTOR
INCLUDING, AMONG OTHER THINGS, TERM LOANS, SWING LINE LOANS,
A REVOLVING LINE OF CREDIT AND REIMBURSEMENT OF
ADVANCES MADE UNDER LETTERS OF CREDIT.
THIS INSTRUMENT COVERS GOODS WHICH ARE OR ARE TO BECOME
FIXTURES RELATED TO THE REAL ESTATE DESCRIBED HEREIN AND IS TO BE
RECORDED IN THE DEED RECORDS AND IS ALSO TO BE
INDEXED IN THE INDEX OF FINANCING STATEMENTS OR OF
FIXTURE FILINGS.
REFER TO PAGE ONE OF THIS INSTRUMENT FOR ADDITIONAL
INFORMATION CONCERNING THE DEBTOR AND SECURED PARTY.
<PAGE>
Table of Contents
ARTICLE I
DEFINITIONS
1.1 Definitions..........................................................2
1.2 Defined Terms........................................................9
ARTICLE II
GRANT
2.1 Grant................................................................9
2.2 Defeasance and Reconveyance.........................................10
2.3 Provisions Concerning North Carolina; Future Advances...............10
2.4 Credit Agreement....................................................10
ARTICLE III
WARRANTIES AND REPRESENTATIONS
3.1 Title to Mortgaged Property and Lien of this Instrument.............11
3.2 [Intentionally Omitted].............................................11
3.3 [Intentionally Omitted].............................................11
3.4 Powers of Termination and Rights of Reverter........................11
3.5 Wetlands............................................................11
3.6 Environmental Matters...............................................12
ARTICLE IV
AFFIRMATIVE COVENANTS
4.1 Payment and Performance.............................................13
4.2 Compliance with Legal Requirements..................................13
4.3 Lien Status.........................................................13
4.4 Payment of Impositions and Other Amounts............................14
4.5 Repair..............................................................15
4.6 Insurance...........................................................15
4.7 Restoration Following Casualty......................................17
4.8 Application of Proceeds.............................................18
4.9 Inspection..........................................................19
4.10 Leases..............................................................19
4.11 [Intentionally Omitted].............................................20
<PAGE>
4.12 Taxes...............................................................20
4.13 Collection Costs....................................................20
4.14 Reserves............................................................21
4.15 Estoppel Certificates...............................................22
4.16 Creation and Recordation of Additions and Betterments...............22
4.17 Consents............................................................22
4.18 [Intentionally Omitted].............................................22
4.19 [Intentionally Omitted].............................................22
4.20 [Intentionally Omitted].............................................22
4.21 Change of Name or Address...........................................22
4.22 [Intentionally Omitted].............................................22
4.23 Notice of and Response to Environmental Complaint...................22
4.24 Indemnification.....................................................23
4.25 Other Agreements....................................................24
4.26 Transfer of License.................................................24
ARTICLE V
NEGATIVE COVENANTS
5.1 Use Violations......................................................24
5.2 Waste...............................................................24
5.3 Transfer of Mortgaged Property; Partial Release.....................25
5.4 Rights of Reverter and Powers of Termination........................25
ARTICLE VI
DEFAULT AND FORECLOSURE
6.1 Remedies............................................................25
6.2 No Conditions Precedent to Exercise of Remedies.....................28
6.3 Release of and Resort to Collateral.................................29
6.4 Waivers.............................................................29
6.5 Discontinuance of Proceedings.......................................29
6.6 Application of Proceeds.............................................30
6.7 Cooperation.........................................................30
ARTICLE VII
CONDEMNATION
7.1 General.............................................................31
7.2 Rebuilding, Restoration and Repair..................................31
<PAGE>
ARTICLE VIII
SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS
8.1 Assignment..........................................................32
8.2 Collection of Rents.................................................33
8.3 Beneficiary's Powers of Attorney....................................33
8.4 Grantor Remains Liable..............................................35
8.5 Grantor's Representations and Warranties............................35
8.6 Grantor's Covenants.................................................36
8.7 Effect of Release of Mortgaged Property.............................37
8.8 Hold Harmless.......................................................38
ARTICLE IX
CONCERNING THE TRUSTEE
9.1 No Required Action..................................................39
9.2 Certain Rights......................................................39
9.3 Retention of Moneys.................................................40
9.4 Successor Trustees..................................................40
9.5 Perfection of Appointment...........................................40
9.6 Succession Instruments..............................................40
9.7 No Representation by Trustee........................................41
9.8 [Intentionally Omitted].............................................41
ARTICLE X
MISCELLANEOUS
10.1 Performance at Grantor's Expense....................................41
10.2 Survival of Secured Obligations.....................................41
10.3 Further Assurances..................................................41
10.4 Recording and Filing................................................41
10.5 Notices.............................................................41
10.6 No Waiver...........................................................43
10.7 Beneficiary's and Secured Creditors' Right to Perform the
Obligations.......................................................44
10.8 Covenants Running with the Land.....................................45
10.9 Successors and Assigns..............................................45
10.10 Severability........................................................45
10.11 Entire Agreement and Modification...................................45
10.12 APPLICABLE LAW......................................................45
10.13 No Partnership; Control in Grantor..................................47
10.14 Headings............................................................47
<PAGE>
10.15 Hold Harmless.......................................................48
10.16 Pronouns and Plurals................................................48
10.17 WAIVER OF TRIAL BY JURY.............................................49
10.18 Assignment..........................................................49
10.19 No Merger...........................................................49
10.20 Enforceability of Lien..............................................49
10.21 Knowledge...........................................................49
10.22 Best Efforts........................................................49
10.23 Usury Savings Clause................................................49
10.24 Payment of Prior Encumbrances.......................................49
EXHIBIT A Land................................................................53
<PAGE>
THIS INSTRUMENT IS A DEED OF TRUST, SECURITY AGREEMENT, FIXTURE FILING,
ASSIGNMENT OF LEASES AND RENTS AND FINANCING STATEMENT OF BOTH REAL AND PERSONAL
PROPERTY, INCLUDING GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE REAL
PROPERTY DESCRIBED HEREIN, AND IS TO BE FILED FOR RECORD IN THE RECORDS WHERE
DEEDS OF TRUST OF REAL ESTATE ARE RECORDED. ADDITIONALLY, THIS INSTRUMENT SHOULD
BE APPROPRIATELY INDEXED, NOT ONLY AS A DEED OF TRUST, BUT ALSO AS A FINANCING
STATEMENT OR FIXTURE FILING COVERING GOODS THAT ARE OR ARE TO BECOME FIXTURES ON
THE REAL PROPERTY DESCRIBED HEREIN. THE NAMES OF THE GRANTOR (DEBTOR/MORTGAGOR)
AND THE TRUSTEE AND BENEFICIARY (SECURED PARTY/MORTGAGEE), THE MAILING ADDRESSES
OF THE GRANTOR (DEBTOR/MORTGAGOR), THE ADDRESS OF THE TRUSTEE AND BENEFICIARY
(SECURED PARTY/MORTGAGEE) FROM WHICH INFORMATION CONCERNING THE SECURITY
INTEREST MAY BE OBTAINED, AND A STATEMENT INDICATING THE TYPES, OR DESCRIBING
THE ITEMS OF COLLATERAL, ARE SET FORTH BELOW IN SECTIONS 1.1 AND 10.5 OF THIS
INSTRUMENT, RESPECTIVELY. THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY
PROVISIONS AND SECURES OBLIGATIONS CONTAINING PROVISIONS FOR CHANGES IN INTEREST
RATES, EXTENSIONS OF TIME FOR PAYMENT AND OTHER MODIFICATIONS IN THE TERMS OF
THE OBLIGATIONS. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN CONTAINED, THIS
INSTRUMENT SHALL BE DEEMED TO BE AND SHALL BE ENFORCEABLE AS A DEED OF TRUST AND
AS A SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FINANCING STATEMENT.
THIS INSTRUMENT SECURES FUTURE ADVANCES MADE PURSUANT TO THE PROVISIONS HEREOF
AND THE SENIOR CREDIT DOCUMENTS REFERRED TO BELOW.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
DEED OF TRUST, SECURITY AGREEMENT,
FIXTURE FILING, ASSIGNMENT OF LEASES AND RENTS AND
FINANCING STATEMENT
THIS DEED OF TRUST, SECURITY AGREEMENT, FIXTURE FILING, ASSIGNMENT OF
LEASES AND RENTS, AND FINANCING STATEMENT (hereinafter referred to as this "Deed
of Trust" or this "Mortgage"), is entered into as of the _____ day of January,
2000, by and among CONE MILLS CORPORATION, a North Carolina corporation, the
mortgagor, grantor and trustor hereunder (herein called "Grantor"), whose
address for all purposes hereunder is 3101 North Elm Street, Greensboro, North
Carolina 27415; TIM, INC., a North Carolina corporation, the trustee hereunder
(herein called "Trustee"), whose address for all purposes hereunder is 100 North
Tryon Stret, 17th Floor, Charlotte, North Carolina 28255; WILMINGTON TRUST
COMPANY, not in its individual capacity but solely as General Collateral Agent
(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 Notes Holder", which term shall include each of its successors and
assigns in such capacity), SunTrust Bank ("SunTrust") and Atlantic Financial
Group, Ltd. ("Atlantic Financial"), as creditor of the Senior Lease Obligations
(together, the "Senior Lease Creditor", which term shall include each of their
successors and assigns in such capacity), Bank of America, N.A., a national
banking association, acting in its capacity as Agent (in such capacity the
"Revolving Credit Agent", which term shall include each of its successors and
assigns in such capacity) for each of the Lenders now or hereafter party to the
Credit Agreement executed by the Grantor, the Revolving Credit Agent and the
Lenders (as amended from time to time, the "Credit Agreement"), and Morgan
Guaranty Trust Company of New York as holder of the Morgan Swap Obligations
("Morgan", which term shall include each of its successors and assigns in such
capacity) pursuant to which the General Collateral Agent serves as such on
behalf of and for the benefit of the Senior Notes Holder, the Senior Lease
Creditor, the Revolving Credit Agent, the Lenders, the holders of the Senior
Debentures, Morgan and all other General Secured Parties at any time existing.
The General Collateral Agent is the beneficiary hereunder (herein called
"Beneficiary", which term shall include each of its successors and assigns in
such capacity), whose address for all purposes hereunder is 1100 North Market
Street, Wilmington, Delaware 19890 Attention: Corporate Trust Administration.
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
Deed of Trust to any General Secured Party party to the General Collateral
Agency Agreement, and the General Collateral Agent has so authorized and
appointed the Revolving Credit Agent (in such capacity, the "Designated
Collateral Subagent", which term shall include each of its successors and
assigns in such capacity) and the Revolving Credit Agent has accepted such
authorization and appointment. Beneficiary, and to the extent provided for
herein the Designated Collateral Subagent, shall hold the interests and exercise
the rights granted hereunder in trust as General Collateral Agent for the
benefit of and as security for all General Secured Parties. This Deed of Trust
secures the General Senior Obligations and any modifications, extensions and
renewals of the General Senior Obligations, it being the intention of the
parties
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hereto that this Deed of Trust shall be deemed an open and continuing lien
instrument to secure all such General Senior Obligations now existing or
hereafter arising regardless of the extinguishment and payment of any one or
more obligations owed to the General Secured Parties. This Deed of Trust secures
future advances constituting General Senior Obligations made by the General
Secured Parties to the Grantor under the Senior Credit Documents and hereunder,
and each such future advance, whether or not evidenced by a note, and each note
or other instrument evidencing the same, shall be secured hereby. All provisions
of this Deed of Trust shall apply to each future advance as well as to all other
General Senior Obligations secured hereby, whether or not evidenced by a note,
and all such advances and other General Senior Obligations, and any
modifications, extensions and renewals of the same shall have the same lien
priority as if made on the date this Deed of Trust is recorded.
This Deed of Trust secures the General Senior Obligations (as defined
below in Section 1.1), and any modifications, extensions and renewals of the
same, which shall be construed in all cases to consist of, among other
obligations, the covenants of Grantor set forth in, and the amounts advanced to
or for the account, use or benefit of Grantor from time to time pursuant to the
Loan Documents (as defined below) and the Senior Credit Documents (as defined
below), the aggregate amount of the General Senior Obligations (as defined
below) actually outstanding at any particular time being subject to fluctuations
up or down due to further advances of loan proceeds, future repayments of such
loan proceeds from time to time over the term of such General Senior
Obligations, changes in the rate of interest charged in respect of General
Senior Obligations bearing interest at a floating rate, and/or changes in the
amount of the Morgan Swap Obligations due to fluctuations in interest rates (all
of which advances and repayments are hereby declared to be contemplated by the
Grantor and the Beneficiary at the time this Deed of Trust is executed).
At the request and direction of the General Secured Parties, the
General Collateral Agent has entered into an Intercreditor Agreement of even
date herewith by and among the General Collateral Agent, the Revolving Credit
Agent, the Senior Notes Holder, the Senior Lease Creditor, Morgan, and Bank of
America, N.A. in its capacity as Priority General Collateral Agent as therein
defined (the "Senior Debt Intercreditor Agreement") for their mutual benefit,
the benefit of the Persons for whom any of them serve as agent, as applicable,
and the benefit of the Debenture Holders and the Bond Trustee, in which the
parties thereto acknowledged and agreed to certain rights and undertakings with
respect to Liens and security interests on collateral securing, inter alia, the
General Senior Obligations (including the lien conferred under this Deed of
Trust) and for the allocation of proceeds derived from any remedial actions
undertaken pursuant to the General Security Instruments, including this Deed of
Trust.
WITNESSETH:
ARTICLE I
DEFINITIONS
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1.1 DEFINITIONS: In addition to terms defined in the foregoing
recitals, as used herein, the following terms shall have the following meanings:
ASSIGNMENT: The assignment and delivery to Beneficiary as security for
the payment and performance of the General Senior Obligations of all of the
rights, titles, interests and estates of Grantor in and to all of the following:
(a) the Leases, (b) the Rents, (c) the Fixtures and (d) the Personalty.
BANKRUPTCY ACT: The Bankruptcy Reform Act of 1978, 11 U.S.C.ss.101, et
seq., as the same may be amended from time to time.
BUILDINGS: Any and all buildings, parking structures, utility sheds,
workrooms, air conditioning towers, open parking areas, and other structures or
improvements, and any and all additions, alterations, betterments or
appurtenances thereto, now or at any time hereafter situated, placed or
constructed upon the Land or any part thereof.
BUSINESS DAY: As defined in the Senior Debt Intercreditor Agreement.
DEBENTURE HOLDERS: As defined in the Senior Debt Intercreditor
Agreement.
DEFAULT: Any event, occurrence or condition which with the giving of
notice or lapse of time or both may become an Event of Default.
DEFAULT RATE: As defined in the Senior Debt Intercreditor Agreement.
ENVIRONMENTAL LAWS: Any federal, state or local statute, law,
ordinance, code, rule, regulation, order, decree, permit or license regulating,
relating to, or imposing liability or standards of conduct concerning,
environmental matters or conditions, environmental protection or conservation,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended; the Superfund Amendments and
Reauthorization Act of 1986, as amended; the Resource Conservation and Recovery
Act, as amended; the Toxic Substances Control Act, as amended; the Clean Air
Act, as amended; the Clean Water Act, as amended; together with all regulations
promulgated thereunder, and any other "Superfund" or "Superlien" law.
EQUIPMENT: All of the Grantor's right, title and interest in and to all
"equipment", as such term is defined in Section 9-109(2) of the UCC (as defined
below), now or hereafter existing, now owned or hereafter acquired by the
Grantor, which are now or hereafter located or to be located upon, within or
about the Land and the Buildings, or which are used in or related to the
operation of the Mortgaged Property, including, but not limited to, all
machinery, equipment, furnishings, fixtures, electrical equipment, vehicles and
computer and other electronic data-processing and other office equipment, any
movable walls and partitions and any and all additions, substitutions
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and replacements of any of the foregoing, wherever located, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto.
EVENT OF DEFAULT: As defined in the Senior Debt Intercreditor
Agreement.
EXHIBITS: The exhibits attached hereto and incorporated herein by this
reference.
EXPENSES: All out-of-pocket costs and expenses (including reasonable
fees and expenses of counsel and court costs) incurred and all advances made, by
the Beneficiary, the Designated Collateral Subagent and/or Trustee, as
applicable, or any trustee, co-trustee or agent of the Beneficiary, the
Designated Collateral Subagent and/or Trustee pursuant to the provisions of, or
in furtherance of the Beneficiary's and/or Trustee's and/or any of the General
Secured Parties' ( or any agent on any of their behalf) duties or rights under,
the Senior Credit Documents, including, without limitation, expenses of
retaking, holding, preparing for sale or lease, selling and/or leasing the
Mortgaged Property, but excluding any of the same specifically described in the
Senior Credit Documents as being the responsibility of the Beneficiary or the
Designated Collateral Subagent.
FINANCING STATEMENT: As defined in Section 8.5 below.
FIXTURES: Equipment now owned or the ownership of which is hereafter
acquired by Grantor which is so related to the Land and Buildings forming part
of the Mortgaged Property that it is deemed a fixture or real property under the
laws of the State, including, without limitation, all building or construction
materials intended for construction, reconstruction, alteration or repair of or
installation on the Mortgaged Property, construction equipment, appliances,
machinery, plant equipment, fittings, apparatuses, fixtures and other items now
owned or the ownership of which is hereafter acquired by Grantor and now or
hereafter attached to, installed on or in, or used in connection with
(temporarily or permanently), any of the Buildings or the Land, or which in some
fashion are deemed to be fixtures to the Land or Buildings under the laws of the
State, including, but not limited to, the items described in the definition of
Equipment, furnaces, boilers, heaters, engines, devices for the operation of
pumps, pipes, plumbing, cleaning, call and sprinkler systems, fire and theft
protection apparatus and equipment, water tanks, air and water pollution
control, waste disposal, heating, ventilating, plumbing, lighting,
refrigerating, laundry, incinerating, air conditioning and air cooling equipment
and systems, gas and electric machinery, appurtenances and equipment, pollution
control equipment, disposals, dishwashers, refrigerators and ranges,
recreational equipment and facilities of all kinds, carpet, moveable or
immoveable walls or partitions, built-in oxygen and vacuum systems and water,
gas, electrical, storm and sanitary sewer facilities, utility lines and
equipment (whether owned individually or jointly with others, and, if owned
jointly, to the extent of Grantor's interest therein) and all other utilities
whether or not situated in easements, all water tanks, water supply, water power
sites, fuel stations, fuel tanks, fuel supply, and all other structures,
together with all accessions, appurtenances, additions, replacements,
betterments and substitutions for any of the foregoing and the proceeds thereof.
Notwithstanding the foregoing, "Fixtures" shall not include any property which
tenants are entitled to remove pursuant to their Leases.
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FULLY SATISFIED: As defined in the Senior Debt Intercreditor Agreement.
GENERAL COLLATERAL AGENCY AGREEMENT: As defined in the Senior Debt
Intercreditor Agreement.
GENERAL SECURED PARTIES: As defined in the Senior Debt Intercreditor
Agreement.
GENERAL SENIOR OBLIGATIONS: As defined in the Senior Debt Intercreditor
Agreement.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES: As defined in the Credit
Agreement.
GRANTOR: The above-defined Grantor and any and all subsequent owners of
the Mortgaged Property.
HAZARDOUS MATERIAL: Any pollutant, contaminant, or hazardous, toxic or
dangerous waste, substance or material (including, without limitation, petroleum
products, asbestos-containing materials and lead), the generation, handling,
storage, transportation, disposal, treatment, release, discharge or emission of
which is subject to any Environmental Law.
HIGHEST LAWFUL RATE: As defined in Section 10.23 hereof.
IMPOSITIONS: All real estate and personal property taxes; water, gas,
sewer, electricity and other utility rates and charges; charges for any
easement, license or agreement maintained for the benefit of the Mortgaged
Property; and all other taxes, standby fees, levies, claims, charges and
assessments, general and special, ordinary and extraordinary, foreseen and
unforeseen of any kind and nature whatsoever which at any time prior to or after
the execution hereof may be assessed, levied or imposed upon the Mortgaged
Property or the Rents or the ownership, use, occupancy or enjoyment thereof, and
any interest, costs or penalties with respect to any of the foregoing.
INVENTORY: All of the Grantor's right, title and interest, whether now
owned or hereafter acquired, in and to all inventory in all of its forms,
wherever located, now or hereafter existing, including, but not limited to, (i)
goods in which the Grantor has an interest in mass or a joint or other interest
or right of any kind (including, without limitation, goods in which the Grantor
has an interest or right as consignee or consignor) and (ii) goods that are
returned to or repossessed by the Grantor, and all accessions thereto and
products thereof and documents therefor.
ISSUING BANK: Bank of America, N.A., or any successor or replacement
bank, as issuer of Letters of Credit in accordance with the Credit Agreement.
LAND: The real estate owned in fee or leased by the Grantor and
described in Exhibit "A" attached hereto, and all rights, titles and interests
appurtenant thereto.
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LEASES: Any and all leases, subleases, licenses, concessions or other
agreements (written or verbal, now or hereafter in effect) through which Grantor
directly or indirectly grants a possessory interest in and to, or the right to
occupy and use, all or any portion of the Mortgaged Property that constitutes
real property together with any renewals or extensions thereof and all leases,
subleases, licenses, concessions or other agreements in substitution therefor.
LEGAL REQUIREMENTS: (i) Any and all present and future decisions,
statutes, rulings, rules, regulations, permits, certificates or ordinances of
any governmental authority in any way applicable to Grantor or the Mortgaged
Property, including, without limitation, the ownership, use, occupancy,
possession, operation, maintenance, alteration, repair or reconstruction
thereof, (ii) Grantor's presently or subsequently effective Certificate of
Incorporation and Bylaws, (iii) any and all Leases and other contracts (written
or oral) of any nature by which the Grantor or the Mortgaged Property may be
bound, and (iv) any and all restrictions, reservations, conditions, easements or
other covenants or agreements of record affecting the Mortgaged Property.
LENDERS: As defined in the Credit Agreement, and specifically including
Bank of America, N.A. as the Issuing Bank, or any successor Issuing Bank and
each other Lender which may hereafter become a party to the Credit Agreement
pursuant to the terms thereof.
LIEN: As defined in the Senior Debt Intercreditor Agreement.
LOAN DOCUMENTS: As defined in the Credit Agreement.
MATERIAL REAL PROPERTY: As defined in the Credit Agreement.
MECHANIC'S LIENS: As defined in Section 4.4 hereof.
MORGAN SWAP OBLIGATIONS: As defined in the Senior Debt Intercreditor
Agreement.
MORTGAGED PROPERTY OR MORTGAGED PROPERTIES: The Land, Buildings,
Fixtures, Personalty, Leases and Rents together with:
(i) all rights, privileges, tenements, licenses,
hereditaments, rights-of-way, easements, utility use, air rights,
appendages, division rights, and appurtenances in any way appertaining
thereto, and all right, title, interest or estate of Grantor in and to
any streets, ways, alleys, roadbeds, inclines, tunnels, culverts,
strips or gores of land adjoining or serving the Land or any part
thereof subject to the rights of others, if any;
(ii) all betterments, additions, alterations, appurtenances,
substitutions, replacements and revisions thereof and thereto and all
reversions and remainders therein;
(iii) all of Grantor's right, title and interest in and to any
awards, remuneration, settlements or compensation hereafter to be made
by any insurer, governmental authority or
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other person or entity as a result of the destruction, loss, theft,
taking by eminent domain or other involuntary conversion of whatever
nature (whether occurring prior to or after the date of this Deed of
Trust) of any of the Land, Buildings, Fixtures, Leases, Rents or
Personalty, including those for any condemnation and vacation of, or
change of grade in, any streets affecting the Land or the Buildings;
(iv) any and all other security and collateral of any nature
whatsoever, now or hereafter given by Grantor to secure the payment and
performance of the General Senior Obligations;
(v) all water and water rights (whether riparian,
appropriative, or otherwise and whether or not appurtenant) in or
hereafter relating to or used in connection with the Land, including,
without limitation, any surface water management permits, any
consumption use permits or general permits subject to the rights of
others, if any;
(vi) any right, title, interest or estate hereafter acquired
by Grantor in any of the foregoing and in and to the Land, Buildings,
Fixtures, Personalty (except as otherwise provided herein), Leases and
Rents. To the extent permitted by law, all of the Fixtures are to be
deemed and held to be a part of and affixed to the Land. In the event
the estate of the Grantor in and to any of the Land and Buildings is a
leasehold estate, this conveyance shall include and the lien, security
interest and assignment created hereby shall encumber and extend to all
other, further or additional title, estates, interest or rights which
may exist now or at any time be acquired by Grantor in or to the
property demised under the lease creating such leasehold estate and
including Grantor's rights, if any, to purchase the property demised
under such lease and, if fee simple title to any of such property shall
ever become vested in Grantor, such fee simple interest shall be
encumbered by this Deed of Trust in the same manner as if Grantor had
fee simple title to such property as of the date of execution hereof;
(vii) all of Grantor's right, title and interest in and to any
and all funds deposited by or on behalf of Grantor with any city,
county, public body or agency, irrigation, sewer or water district or
company, gas or electric company, telephone company, and any other body
or agency for the installation, or to secure the installation, of any
utility pertaining to the Land, Buildings, Fixtures and all
betterments, additions, alterations, appurtenances, substitutions,
replacements and revisions thereof and thereto;
(viii) all of Grantor's right, title and interest in and to
(i) all oil, gas and other minerals located in, on or under the Land,
(ii) all oil, gas or mineral leases, royalty agreements and other
contracts that have been or in the future are entered into with respect
to the Land or with respect to any oil, gas or other minerals located
in, on or under the Land ("Mineral Leases"), and (iii) all rents,
profits, royalties and income at any time arising from the Mineral
Leases or from the sale of oil, gas or other minerals located in, on or
under the Land; and
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(ix) all proceeds and products of the foregoing. As used in
this Deed of Trust, the term "Mortgaged Property", including each
component thereof, shall be expressly interpreted as meaning all or,
where the context permits or requires, any portion of the above, and
all or, where the context permits or requires, any interest of Grantor
therein.
PARCEL: A single parcel of real property identified as a unit in
Exhibit "A" hereto. For purposes of legal description and real property title
records, a Parcel may be comprised of more than one lot.
PERMITTED ENCUMBRANCES: Those title exceptions (i) with respect to the
Material Real Property only, shown in Schedule B, Part II on Investors Title
Insurance Company Commitment Numbers 9901333CA, 9901334CA, 9901335CA and
9901336CA, submitted to and approved by the General Collateral Agent and the
Designated Collateral Subagent, (ii) with respect to any Mortgaged Property that
is not Material Real Property, appearing in the public records and (iii) such
other title exceptions submitted in writing to, and approved by the Designated
Collateral Subagent.
PERSON: As defined in the Senior Debt Intercreditor Agreement.
PERSONALTY: All of the right, title and interest of Grantor in and to
all tangible and intangible personal property including all furniture,
furnishings, Equipment, machinery, goods, tools, supplies, appliances, general
intangibles, construction contracts, architect's contracts, technical services
agreements, contract rights, franchises, licenses, certificates, operating
rights, approvals, consents, authorizations and permits, and all other personal
property (other than Inventory, accounts receivable, and Fixtures) of any kind
or character (as defined in and subject to the provisions of the UCC) which are
now or hereafter located or to be located upon, within or about the Land and the
Buildings, or which are used in or related to the construction of the Buildings
or the use, occupancy or operation of the Mortgaged Property, together with all
accessories, replacements and substitutions thereto or therefor and the proceeds
thereof; and all insurance proceeds and condemnation proceeds received by
Grantor with respect to the Mortgaged Property to the extent provided herein.
Furthermore, with respect to any of the above-described personal property
represented by a contract, agreement or other instrument or consisting of a
permit, certificate or similar item issued by a governmental authority, then, to
the extent that the granting of the lien or security interest or exercise of
Beneficiary's rights under this Deed of Trust would constitute a breach or
violation of the terms of such instrument, or any Legal Requirement applicable
to such permit, certificate or similar item that would impose material liability
on the Grantor or that would result in a revocation or forfeiture of such item
of personal property, such personal property shall not constitute "Personalty"
hereunder.
PRIORITY LIEN: As defined in the Senior Debt Intercreditor Agreement.
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RENTS: All of the rents, revenues, income, proceeds, profits, security
and other types of deposits, and other benefits paid or payable and to become
due or payable to Grantor by parties to the Leases for using, leasing,
licensing, possessing, operating from, residing in, selling or otherwise
enjoying any portion or portions of the Mortgaged Property.
REQUIRED GENERAL SECURED PARTIES: As defined in the Senior Debt
Intercreditor Agreement.
SECURITY DOCUMENTS: As defined in the Senior Debt Intercreditor
Agreement.
SECURITY TERMINATION DATE: As defined in the Senior Debt Intercreditor
Agreement.
SENIOR CREDIT DOCUMENTS: As defined in the Senior Debt Intercreditor
Agreement.
SENIOR CREDITORS: As defined in the Senior Debt Intercreditor
Agreement.
SENIOR DEBT OBLIGATIONS: As defined in the Senior Debt Intercreditor
Agreement.
STATE: North Carolina.
SUBSIDIARY: As defined in the Senior Debt Intercreditor Agreement.
TRANSFER: As defined in Section 5.3 below.
TRUSTEE: TIM, Inc., a North Carolina corporation, its successors and
assigns, as applicable and any successor Trustee hereunder.
UCC: The Uniform Commercial Code as adopted in the State.
WORK: As defined in Section 4.7 hereof.
1.2 DEFINED TERMS: Any other capitalized term used herein but not
otherwise defined herein, shall have the same respective meanings given to them
in the Senior Debt Intercreditor Agreement as it existed on the date hereof, and
as it may be modified from time to time.
ARTICLE II
GRANT
2.1 GRANT: NOW THEREFORE, for and in consideration of Ten Dollars
($10.00), and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by Grantor, and to secure the Grantor's full
and faithful performance and satisfaction of the General Senior Obligations,
Grantor, intending to be legally bound hereby, has
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GIVEN, ALIENATED, REMISED, GRANTED, BARGAINED, MORTGAGED, SOLD, RELEASED,
CONVEYED, ASSIGNED, TRANSFERRED, WARRANTED, SET OVER AND CONFIRMED WITH MORTGAGE
COVENANTS and by these presents does GIVE, ALIENATE, REMISE, GRANT, BARGAIN,
MORTGAGE, SELL, RELEASE, CONVEY, ASSIGN, TRANSFER, WARRANT, SET OVER AND CONFIRM
WITH MORTGAGE COVENANTS AND GRANT A SECURITY INTEREST IN unto Trustee, its
successors in trust and its assigns forever, in trust, for the benefit of
Beneficiary, with POWER OF SALE and right to entry for the benefit of
Beneficiary, all of the Mortgaged Property, subject only to the Permitted
Encumbrances and to Priority Liens, TO HAVE AND TO HOLD the Mortgaged Property
and (except as otherwise set forth herein) all parts, rights, members and
appurtenances thereof for the use, benefit and behoof of the Trustee and its
successors and assigns in trust, for the benefit of Beneficiary, in fee simple
forever, hereby releasing and waiving all rights under and by virtue of the
homestead exemption laws of the State, to the extent permitted by the applicable
Legal Requirements of such State; and Grantor hereby absolutely and irrevocably
assigns to Beneficiary the Leases and Rents for the purposes and upon the terms
and conditions herein set forth; and Grantor does hereby bind itself, its
successors and assigns to FOREVER WARRANT AND DEFEND the title to the Mortgaged
Property and every part thereof, subject only to the Permitted Encumbrances and
to Priority Liens, unto Trustee, in trust, for the benefit of Beneficiary,
against every person whomsoever lawfully claiming or to claim the same or any
part thereof.
2.2 DEFEASANCE AND RECONVEYANCE: If the Security Termination Date has
occurred, and provided that there exists no pending or threatened unsatisfied
obligation pursuant to any environmental indemnification contained in any of the
Senior Credit Documents, then, with respect to the Mortgaged Property, the
liens, security interests, estates and rights granted by this Deed of Trust
shall terminate; whereupon upon surrender to Trustee of this Deed of Trust for
cancellation (which shall be made promptly upon request by Grantor), if required
by applicable law, Beneficiary shall execute a request for reconveyance and
thereafter the Trustee shall reconvey, without warranty, the Mortgaged Property,
or that portion thereof then held hereunder. To the extent permitted by law, any
reconveyance delivered hereunder may describe the grantee as "the person or
persons legally entitled thereto." Neither Beneficiary nor the Designated
Collateral Subagent (nor Trustee, if applicable) shall have any duty to
determine the rights of persons claiming to be rightful grantees of any
reconveyance. Each reconveyance of Mortgaged Property or portions thereof shall
also operate as a reassignment of all future rents, issues and profits
appertaining to the Parcel(s) or portions thereof covered by such reconveyance
to the person or persons legally entitled thereto, unless its reconveyance
expressly provides otherwise.
2.3 PROVISIONS CONCERNING NORTH CAROLINA; FUTURE ADVANCES:
Notwithstanding anything to the contrary herein contained, this instrument shall
be deemed to be and shall be enforceable as a deed of trust and as an assignment
of leases and rents, security agreement and financing statement. This Deed of
Trust shall secure present and future obligations which may be incurred
hereunder, including, but not limited to, periodic advances and readvances on a
revolving basis which will be made from time to time, it being understood and
agreed by the parties hereto that all future advances and readvances on a
revolving basis shall be secured to the same extent as
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the original advances made under any of the Senior Credit Documents. The amount
of present obligations secured hereby is $_____________. The maximum principal
amount, including present and future obligations, which may be secured hereby at
any one time is $200,000,000. The time period within which such future
obligations may be incurred is the period between the date of this Deed of Trust
and the date fifteen (15) years from the date hereof. It shall not be necessary
at the time any future advance is made or obligation incurred for Grantor to
execute any form of written instrument or notation stipulating that such advance
or obligation is secured by this Deed of Trust. Wherever herein contained, the
phrase "Trustee and Beneficiary, as applicable" or any similar phrase, shall be
deemed to refer to (a) Trustee for the benefit of Beneficiary and (b) if the
context so requires or permits, and if Beneficiary so elects, Beneficiary
(including the Designated Collateral Subagent).
2.4 SENIOR CREDIT DOCUMENTS: Various of the Senior Credit Documents
include swing line loans and a revolving credit facility, and in connection
therewith and with other General Senior Obligations there may be repayments and
disbursements and other reductions and increases of principal from time to time.
It is expressly agreed that the outstanding principal balance of the General
Senior Obligations may, from time to time, be reduced to a zero balance without
such repayment or reduction operating to extinguish and release the lien,
security titles and security interests created by this Deed of Trust. This Deed
of Trust shall remain in full force and effect as to any subsequent future
advances made after the zero balance without loss of priority until the Security
Termination Date. Grantor waives the operation of any applicable statute, law or
regulation having a contrary effect.
ARTICLE III
WARRANTIES AND REPRESENTATIONS
For the consideration aforesaid and to protect the security of this
Deed of Trust, Grantor hereby unconditionally warrants and represents to
Beneficiary as follows:
3.1 TITLE TO MORTGAGED PROPERTY AND LIEN OF THIS INSTRUMENT: Grantor
has good and record and marketable title in fee to the Land, Buildings and
Fixtures and good title to the Personalty and Leases, in all cases free and
clear of any Liens and claims of Liens except the Permitted Encumbrances and the
Priority Liens. This Deed of Trust constitutes a valid lien or deed of trust on
the Grantor's fee interests in the Land, the Buildings and the Fixtures, and a
valid security interest in and to, and a valid assignment of, the Fixtures,
Personalty, Leases and Rents, all in accordance with the terms hereof, in each
case subject only to the Permitted Encumbrances.
3.2 [INTENTIONALLY OMITTED]
3.3 [INTENTIONALLY OMITTED]
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3.4 POWERS OF TERMINATION AND RIGHTS OF REVERTER: With respect to any
fee-owned Parcel of Mortgaged Property subject to a right of reverter or power
of termination, no event has occurred or is threatened, or is likely to occur by
virtue of the performance by Grantor of any of its General Senior Obligations
under any of the Senior Credit Documents, which would enable the beneficiary of
such right or power to cause such reversion or termination.
3.5 WETLANDS: GRANTOR SHALL BE SOLELY RESPONSIBLE FOR AND AGREES TO
INDEMNIFY TRUSTEE, BENEFICIARY, THE DESIGNATED COLLATERAL SUBAGENT AND EACH
GENERAL SECURED PARTY, PROTECT AND DEFEND WITH COUNSEL REASONABLY ACCEPTABLE TO
BENEFICIARY AND THE DESIGNATED COLLATERAL SUBAGENT, AND HOLD TRUSTEE,
BENEFICIARY, THE DESIGNATED COLLATERAL SUBAGENT AND EACH GENERAL SECURED PARTY
HARMLESS FROM AND AGAINST ANY CLAIMS (INCLUDING WITHOUT LIMITATION THIRD PARTY
CLAIMS FOR PERSONAL INJURY OR REAL OR PERSONAL PROPERTY DAMAGE), ACTIONS,
ADMINISTRATIVE PROCEEDINGS (INCLUDING INFORMAL PROCEEDINGS) JUDGMENTS, DAMAGES,
PUNITIVE DAMAGES, PENALTIES, FINES, COSTS, LIABILITIES (INCLUDING SUMS PAID IN
SETTLEMENTS OF CLAIMS), INTEREST OR LOSSES, REASONABLE ATTORNEYS' FEES
(INCLUDING ANY FEES AND EXPENSES INCURRED IN ENFORCING THIS INDEMNITY),
CONSULTANT FEES, AND EXPERT FEES THAT ARISE DIRECTLY OR INDIRECTLY FROM OR IN
CONNECTION WITH THE PRESENCE ON THE MORTGAGED PROPERTY OF WETLANDS, TIDELANDS OR
SWAMP AND OVERFLOW LANDS, OR ANY BREACH OF THE FOREGOING REPRESENTATION AND
WARRANTY 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. THE PROVISIONS OF THIS SECTION 3.5 SHALL SURVIVE THE
TERMINATION AND RECONVEYANCE OF THIS DEED OF TRUST. THE FOREGOING INDEMNITY
SHALL INCLUDE WITHOUT LIMITATION OF THE FOREGOING INDEMNITY, THE INDEMNITY OF
EACH OF THE PARTIES INDEMNIFIED HEREIN WITH RESPECT TO CLAIMS, DEMANDS, LOSSES,
DAMAGES (INCLUDING CONSEQUENTIAL DAMAGES) LIABILITIES, CAUSES OF ACTION,
JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES
AND COURT COSTS) AND MATTERS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE
OUT OF THE NEGLIGENCE OTHER THAN GROSS (WHETHER SOLE, CONTRIBUTORY, COMPARATIVE,
OR OTHERWISE) OF SUCH AND/OR ANY OTHER INDEMNIFIED PARTY OR FOR WHICH SUCH
INDEMNIFIED PARTY MAY HAVE STRICT LIABILITY.
3.6 ENVIRONMENTAL MATTERS: Except as listed on Schedule 8.18 of the
Credit Agreement, or as otherwise could not reasonably be expected to have a
Material Adverse Effect (as
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defined in the Credit Agreement), the Grantor is in compliance with all
applicable Environmental Laws and has been issued and will maintain and keep
current all required federal, state and local permits, licenses, certificates
and approvals. Except as listed on Schedule 8.18 of the Credit Agreement, or as
otherwise could not reasonably be expected to have a Material Adverse Effect (as
defined in the Credit Agreement), neither the Grantor nor, to the best of
Grantor's knowledge, and, with respect to the Material Real Property only, after
reasonable investigation, any previous owner or operator of the Mortgaged
Property or any other Person, (a) has used or is using the Mortgaged Property in
violation of any Environmental Law; (b) has managed, generated, stored,
released, discharged, treated, or disposed of any Hazardous Material on any
portion of the Mortgaged Property; or (c) has transferred or caused to be
transferred any Hazardous Material from the Mortgaged Property to any other
location. Except for Hazardous Materials necessary for the routine maintenance
of the Mortgaged Property and as used in the ordinary course of the Mortgagor's
business, which Hazardous Material shall be used in accordance with all
applicable Environmental Laws, the Grantor covenants that it shall not permit
any Hazardous Materials to be brought on to the Mortgaged Property, or if so
brought or found located thereon, shall be immediately removed, with proper
disposal, and all environmental cleanup requirements shall be diligently
undertaken pursuant to all Environmental Laws. Neither the Grantor nor any
Subsidiary has been notified of any pending or threatened action, suit,
proceeding or investigation, and neither the Grantor nor any Subsidiary is aware
of any facts which (i) calls into question, or could reasonably be expected to
call into question, compliance by the Grantor or any Subsidiary with any
Environmental Laws, (ii) seeks, or could reasonably be expected to form the
basis of a meritorious proceeding to seek, to suspend, revoke or terminate any
license, permit or approval necessary for the operations of the Grantor's or
Subsidiary's business or facilities or for the generation, handling, storage,
treatment or disposal of any Hazardous Materials, or (iii) seeks to cause, or
could reasonably be expected to form the basis of a meritorious proceeding to
cause, any property of the Grantor or any Subsidiary to be subject to any
restrictions on ownership, use, occupancy or transferability under any
Environmental Laws.
Except as listed on Schedule 8.18 of the Credit Agreement, or as
otherwise could not reasonably be expected to have a Material Adverse Effect (as
defined in the Credit Agreement), neither the Grantor nor any Subsidiary, nor,
to the best of Grantor's knowledge, any previous owner or operator of the
Mortgaged Property or any other Person has used or is using the Mortgaged
Property in violation of any Environmental Law, has managed, generated, stored,
released, treated, or disposed of any Hazardous Material on any portion of the
Mortgaged Property, or transferred or caused to be transferred any Hazardous
Material from the Mortgaged Property to any other location. Except for Hazardous
Materials necessary for the routine maintenance of the Mortgaged Property and as
used in the ordinary course of the Grantor's or Subsidiary's business, which
Hazardous Material shall be used in accordance with all applicable Environmental
Laws, the Grantor and any Subsidiary covenant that they shall not permit any
Hazardous Materials to be brought on to the Mortgaged Property, or if so brought
or found located thereon, shall be immediately removed, with proper disposal,
and all environmental cleanup requirements shall be diligently undertaken
pursuant to all Environmental Laws.
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ARTICLE IV
AFFIRMATIVE COVENANTS
Grantor hereby unconditionally covenants and agrees with Beneficiary as
follows:
4.1 PAYMENT AND PERFORMANCE: Grantor will satisfy and perform the
General Senior Obligations, including the payment of any sums required thereby,
in full and on or before the dates the same are to be satisfied and performed.
4.2 COMPLIANCE WITH LEGAL REQUIREMENTS: Grantor will promptly and
faithfully comply with, conform to and obey in all material respects all Legal
Requirements whether or not the same shall necessitate structural changes in or
improvements to, or interfere with the use or enjoyment of, the Mortgaged
Property, and provided that Grantor shall have the right in good faith to
contest any such Legal Requirement provided that the Mortgaged Property affected
thereby shall be in no danger of being sold, forfeited or lost pursuant to such
contest and provided that adequate reserves have been set aside by Grantor, in
accordance with Generally Accepted Accounting Principles, to pay the cost
necessary to comply with such Legal Requirement in the event Grantor fails to
prevail in such contest. Grantor will procure and continuously maintain in full
force and effect all permits, licenses and other authorizations required for
construction of improvements, for any permitted use of the Mortgaged Property or
any part thereof then being made and for the lawful and proper installation,
operation and maintenance of the Mortgaged Property. Grantor will not maintain
any nuisance on the Mortgaged Property.
4.3 LIEN STATUS: Grantor will defend and protect the lien, security
title and security interest status of this Deed of Trust subject only to the
Permitted Encumbrances and to Priority Liens and the Liens granted under the
other Security Documents. If Grantor shall fail to satisfy its obligations under
this Section 4.3, Beneficiary and the Designated Collateral Subagent shall have
the rights granted by Section 10.7 hereof to take such actions as Beneficiary or
the Designated Collateral Subagent deems necessary to defend and protect the
lien, security title and security interest status of this Deed of Trust, subject
as aforesaid. Grantor shall reimburse Beneficiary and the Designated Collateral
Subagent for any losses or Expenses incurred by Beneficiary or the Designated
Collateral Subagent if an interest in the Mortgaged Property, other than as
permitted hereunder, is claimed by others.
4.4 PAYMENT OF IMPOSITIONS AND OTHER AMOUNTS:
(a) Grantor will duly pay and discharge, or cause to be paid
and discharged, the Impositions before the earlier of (i) the day any
fine, penalty, interest or cost may be added thereto or imposed thereon
or (ii) the day any Lien may be filed for the non-payment thereof;
provided, however, that (1) Grantor may, if permitted by law and if
such installment payment would not result in the imposition of any
fine, penalty or cost on the
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remaining amount then due, pay the Impositions in installments whether
or not interest shall accrue on the unpaid balance of such Impositions,
and (2) unless an Event of Default, or any material Default, has
occurred and is continuing, Grantor shall not be required to pay and
discharge or to cause to be paid and discharged any such Impositions so
long as (u) the validity or amount thereof shall be contested
diligently and in good faith by appropriate proceedings, (v) the
Mortgaged Property shall then be in no danger of being sold, forfeited
or lost pursuant to such contest, and (w) adequate reserves have been
set aside by Grantor to pay the Impositions, and any fine, penalty,
interest or cost that may be added thereto or imposed thereon, in
accordance with Generally Accepted Accounting Principles, consistently
applied by Grantor in connection therewith.
(b) Notwithstanding the foregoing subsection (a), but subject
to subsection (c) below, Grantor (i) shall pay all lawful claims and
demands of mechanics, materialmen, laborers and others with respect to
the Mortgaged Property before the earlier of (y) the day any fine,
penalty, interest or cost may be added thereto or imposed thereon or
(z) the day any Lien or claim of Lien may be filed for the non-payment
thereof; and (ii) shall not create or suffer or permit any mechanic's
liens or claims of lien, materialmen's liens or claims of lien, or
other liens or claims for lien made by parties claiming to have
provided labor or materials with respect to the Mortgaged Property
(which liens and claims of lien are herein referred to as "Mechanic's
Liens") to attach to or be filed against the Mortgaged Property,
whether such Mechanic's Liens are inferior or superior to the lien of
this Deed of Trust, except to the extent permitted by subsection (c)
below.
(c) Notwithstanding the foregoing prohibition against
Mechanic's Liens against the Mortgaged Property, Grantor, or any party
obligated to Grantor to do so, may in good faith and with reasonable
diligence by appropriate proceedings contest the validity or amount of
any Mechanic's Lien and defer payment and discharge thereof during the
pendency of such contest, provided: (i) that such contest shall have
the effect of preventing the sale or forfeiture of the affected Parcels
and any part thereof, or any interest therein, to satisfy any such
Mechanic's Lien; (ii) that, within twenty (20) days after Grantor has
been notified of the filing of any Mechanic's Lien, any affidavit
claiming a Mechanic's Lien or any notice of intention to file a
Mechanic's Lien, Grantor shall have notified Beneficiary and the
Designated Collateral Subagent in writing of Grantor's intention to
contest such Mechanic's Lien or to cause such other party to contest
such Mechanic's Lien; (iii) that to the extent required by applicable
Legal Requirements in connection with such contest, Grantor shall
deposit with the court or other applicable Person such bonds or other
security as is so required; and (iv) that adequate reserves have been
set aside by Grantor, in accordance with Generally Accepted Accounting
Principles, to pay in full such Mechanic's Lien and all interest which
may be due in connection therewith.
4.5 REPAIR: Grantor will maintain and preserve the Material Real
Property it uses in the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and will make all repairs,
replacements, renewals, additions, betterments, improvements and
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alterations thereof and thereto, interior and exterior, structural and
non-structural, ordinary and extraordinary, foreseen and unforeseen, which are
necessary to keep same in such order and condition.
4.6 INSURANCE: Grantor will maintain or cause to be maintained upon and
relating to the Mortgaged Property policies of liability and casualty insurance
in amounts and otherwise in accordance with the Senior Credit Documents, the
Security Documents and this Section 4.6. In addition to the policies referred to
above, Grantor will maintain the following policies:
(a) Prior to construction of any improvements on the Mortgaged
Property, an "all-risk", completed value, non-reporting builder's risk
insurance policy or policies that provide coverage similar to the
foregoing must be submitted to the Designated Collateral Subagent. This
policy must be from a company and in an amount satisfactory to the
Designated Collateral Subagent, must have a vandalism and malicious
mischief endorsement and must be sufficient to avoid the application of
any co-insurance provisions, must include provisions for a minimum
30-day advance written notice of any intended policy cancellation or
non-renewal, and must designate the Beneficiary and the Designated
Collateral Subagent as mortgagee and loss payee in a standard mortgagee
endorsement
Address: Bank of America, N.A.
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
(b) The Grantor covenants to maintain or cause to be
maintained, by the Grantor and, during the construction of any
improvements on the Mortgaged Property, the general contractor, general
accident and public liability insurance against all claims for bodily
injury, death or property damage occurring upon, in or about any part
of the Mortgaged Property. The policies must be from companies and in
amounts satisfactory to the Designated Collateral Subagent. The
contractor's policy must include worker's compensation coverage in an
amount sufficient to satisfy statutory requirements.
(c) An "all-risk" permanent insurance policy must be in
effect, and an original certificate from the issuing insurance company
evidencing that the policy is in full force and effect must be
submitted to the Designated Collateral Subagent. The policy must be
from a company satisfactory to the Designated Collateral Subagent, must
be in an amount satisfactory to the Designated Collateral Subagent,
must eliminate all co-insurance provisions, must include a Replacement
Cost and Agreed Amount/Stipulated Value Endorsement, must include a
Sinkhole Endorsement, if appropriate, must include provisions for a
minimum 30-day advance written notice to the Designated Collateral
Subagent of any intended policy cancellation or non-renewal, and must
designate the
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Beneficiary and the Designated Collateral Subagent as mortgagee and
loss payee in a standard mortgagee endorsement, as its interest may
appear.
(d) The Grantor shall, at its own cost, maintain rent
loss/business interruption insurance as to the Buildings now or
hereafter comprising a part of the Mortgaged Property and being used by
Grantor in the conduct of its business. The policy must be from a
company and in an amount satisfactory to the Designated Collateral
Subagent and must include provisions for a minimum 30-day advance
written notice to the Designated Collateral Subagent of any intended
policy cancellation or non-renewal.
(e) If, and to the extent that, the Mortgaged Property is
located within an area that has been or is hereafter designated or
identified as an area having special flood hazards as defined in the
Federal Flood Disaster Protection Act of 1973, as such act may from
time to time be amended and in effect, or pursuant to any other
national or state program of flood insurance, the Grantor shall carry
flood insurance with respect to the Mortgaged Property in an amount not
less than the maximum amount available under the Flood Disaster
Protection Act of 1973 and the regulations issued pursuant thereto, as
amended from time to time, in form complying with the "insurance
purchase" requirement of that Act.
(f) Each such liability insurance policy shall name the
Beneficiary and the Designated Collateral Subagent and each General
Secured Party as an additional insured party with respect to the
Mortgaged Property, and each such casualty insurance policy shall name
the Beneficiary and the Designated Collateral Subagent as a loss payee,
and shall provide by way of endorsements, riders or otherwise that (i)
proceeds will be payable to the Designated Collateral Subagent as its
interest may appear; (ii) the Designated Collateral Subagent will be
loss payee for all proceeds payable if the proceeds payable are equal
to or greater than $1,000,000 in amount on a per occurrence or claim
basis; (iii) such insurance policy shall be renewed, if renewal is
available, and shall not be canceled and further, shall not be
endorsed, altered or reissued to effect a change in coverage in any
manner materially adverse to the Beneficiary or the Designated
Collateral Subagent, for any reason and to any extent whatsoever unless
such insurer shall have first given the Designated Collateral Subagent
thirty (30) days' prior written notice thereof; (iv) such insurance
policy shall not be impaired by any act or neglect of Grantor or any
use of the Mortgaged Property for purposes more hazardous than are
permitted by such policy; and (v) the Beneficiary or the Designated
Collateral Subagent may, but shall not be obliged to, make premium
payments to prevent any nonrenewal, cancellation, endorsement,
alteration or reissuance and such payments shall be accepted by the
insurer to prevent same.
(g) The Designated Collateral Subagent shall be furnished with
the original of each such initial policy or a certificate with a
duplicate of such original policy coincident with the execution of this
Deed of Trust and satisfactory evidence of renewal thereof not less
than thirty (30) days prior to the expiration of the initial or each
preceding renewal
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policy together with receipts or other evidence that the premiums
thereon have been paid, with the original of each renewal policy or a
certificate with a duplicate of such renewal policy to follow as soon
as available or, in any such case, an appropriate broker's certificate
in respect thereto. Upon request by the Designated Collateral Subagent,
Grantor shall furnish to the Designated Collateral Subagent a statement
certified by Grantor or a duly authorized officer of Grantor of the
amounts of insurance maintained in compliance with this Section 4.6, a
general description of the risks covered by such insurance and of the
insurance company or companies which carry such insurance. In addition,
Grantor will promptly comply with any and all requirements of any
insurer of any portion of the Mortgaged Property and any and all rules
and regulations of any insurance commission or board of fire
underwriters having jurisdiction over the Mortgaged Property.
4.7 RESTORATION FOLLOWING CASUALTY: If any acts or occurrences of any
kind or nature, ordinary or extraordinary, foreseen or unforeseen, shall result
in damage to or loss or destruction of the Mortgaged Property, Grantor will give
prompt notice thereof to Beneficiary and the Designated Collateral Subagent. If
(a) there are sufficient insurance proceeds or sufficient other amounts
available to Grantor to fully pay for the restoration, repair or replacement
(hereinafter called "Work") of the Mortgaged Property and the projected
appraised value of the Mortgaged Property upon completion of the Work is equal
to or greater than the appraised value of the Mortgaged Property immediately
prior to the casualty, (b) no Default or Event of Default shall have occurred
and be continuing, (c) all parties having commitments to provide financing with
respect to the Mortgaged Property, to purchase Grantor's interest in full or in
part in the Mortgaged Property or to purchase the General Senior Obligations
agree in a manner satisfactory to the Designated Collateral Subagent that their
commitments will continue in full force and effect and, if necessary, the
expiration of such commitments will be extended by the time necessary to
complete the restoration or repair, and (d) neither the Beneficiary nor the
Designated Collateral Subagent will incur any liability to any other person as a
result of such use or release of insurance proceeds, then Grantor will so
certify to Beneficiary and the Designated Collateral Subagent, and will certify
that it will, and shall, within 30 days following reaching an agreement with the
insurer under the property insurance policy relating thereto with regard to the
disbursement of insurance proceeds commence and thereafter continue diligently
to completion, to restore, repair, replace and rebuild such Mortgaged Property
as nearly as possible to its value, condition and character immediately prior to
such damage, loss or destruction with such alterations, modifications and/or
betterments reasonably deemed necessary or desirable by Grantor in its business
judgment. If the conditions set forth in such certificate of Grantor are not
satisfied with respect to an occurrence resulting in a claim against the
Grantor's property insurance policy, or if Grantor fails to deliver such a
certificate to Beneficiary and the Designated Collateral Subagent within 180
days following such occurrence, or if Grantor shall otherwise fail to restore,
repair, replace or rebuild such Mortgaged Property as provided herein, the
insurance proceeds related thereto shall be promptly paid to the Designated
Collateral Subagent and held in a segregated cash collateral account as
collateral security for the General Senior Obligations until the earliest to
occur of (i) the Security Termination Date, at which time such proceeds shall be
paid to the Grantor, (ii) the occurrence of an Event of Default, at which time
such proceeds shall be applied (subject to compliance with
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Senior Debt Intercreditor Agreement) to the General Senior Obligations, or (iii)
the Required General Secured Parties direct the Beneficiary in writing to
release such proceeds to the Grantor, at which time such proceeds shall be paid
to the Grantor.
4.8 APPLICATION OF PROCEEDS: Insurance proceeds to be used for Work,
which proceeds are equal to or greater than $1,000,000 on a per occurrence or
claim basis, initially shall be paid to the Designated Collateral Subagent, and
shall be paid out by the Designated Collateral Subagent to Grantor from time to
time as the Work progresses, subject to the following conditions: (a) prior to
the commencement thereof (other than Work to be performed on an emergency basis
to protect the Mortgaged Property or prevent interference therewith), an
architect, engineer or construction manager, reasonably approved by the
Designated Collateral Subagent, shall be retained by Grantor (at Grantor's
expense) and charged with the supervision of the Work; (b) each request for
payment by Grantor shall be made on ten (10) days prior notice to the Designated
Collateral Subagent and shall be accompanied by a certificate by an executive
officer of Grantor, stating that: (i) all of the Work completed has been
completed in substantial compliance with the plans and specifications therefor;
(ii) the sum requested is justly required to reimburse Grantor for payments by
Grantor to, or is justly due to, the contractor, subcontractors, materialmen,
laborers, engineers, architects or other Persons rendering services or materials
for the Work; and (iii) when added to all sums previously paid out by Grantor,
the sum requested does not exceed the value of the Work completed to the date of
such certificate; (c) the amount of insurance proceeds remaining in the hands of
the Designated Collateral Subagent or remaining to be disbursed by the
applicable insurance company, plus any further reserves agreed to be maintained
by Grantor in conformity with Generally Accepted Accounting Principles in
connection with the Work, will in the Designated Collateral Subagent's
reasonable judgment be sufficient to complete the Work; (d) each request shall
be accompanied by certification by an executive officer of Grantor or copies of
waivers of Lien reasonably satisfactory in form and substance to the Designated
Collateral Subagent covering that part of the Work for which payment or
reimbursement is being requested; provided, however, that in the event it is
customary State practice not to grant such waivers prior to the making of such
payments, Grantor shall have obtained affidavits from the parties requesting
such payment (i) stating the amount then due and (ii) promising the delivery of
the waiver upon the making of the payment; (e) a Default has not occurred and is
not continuing since the hazard, casualty or contingency giving rise to payment
of the insurance proceeds occurred; (f) in the case of the request for the final
disbursement, such request is accompanied by a copy of any certificates of
occupancy or other certificate required by any Legal Requirement to render
occupancy of the damaged portion of the Mortgaged Property lawful; and (g) if,
in the Designated Collateral Subagent's reasonable judgment, the amount of such
insurance proceeds will not be sufficient to complete the Work (which
determination may be made prior to or from time to time during the performance
of the Work), Grantor shall maintain adequate reserves in conformity with
Generally Accepted Accounting Principles equal to an amount of money which when
added to such insurance proceeds will be sufficient, in the Designated
Collateral Subagent's reasonable judgment, to complete the Work. Insurance
proceeds to be used for Work, which proceeds are less than $1,000,000 on a per
occurrence or claim basis, initially shall be paid to Grantor and shall be used
by Grantor to perform such Work in accordance with its certificate delivered
pursuant to Section
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4.7, with any excess thereof being retained by the Grantor. In the event Grantor
elects to restore, repair, replace or rebuild the Mortgaged Property and
subsequently fails to comply with any of the conditions set forth herein for
disbursement of insurance proceeds, any proceeds remaining to be disbursed,
whether held by Grantor, Beneficiary, the Designated Collateral Subagent or an
insurance company, shall be paid to the Designated Collateral Subagent and held
in a segregated cash collateral account as collateral security for the General
Senior Obligations until the earliest to occur of (i) the Security Termination
Date, at which time such proceeds shall be paid to the Grantor, (ii) the
occurrence of an Event of Default, at which time such proceeds shall be applied
(subject to compliance with the Senior Debt Intercreditor Agreement) to the
General Senior Obligations, or (iii) the Required General Secured Parties direct
the Beneficiary in writing to release such proceeds to the Grantor, at which
time such proceeds shall be paid to the Grantor.
4.9 INSPECTION: Grantor will permit Trustee, Beneficiary, the
Designated Collateral Subagent, any of the General Secured Parties and any of
their agents, representatives and employees, upon reasonable advance notice to
Grantor to inspect the Mortgaged Property at any reasonable time.
4.10 LEASES:
(a) Grantor shall promptly and fully keep, observe and
perform, or cause to be kept, observed and performed, all of the
material terms, covenants, provisions and agreements imposed upon or
assumed by Grantor under any Leases, now or hereafter in effect,
including any amendments or supplements to such Leases covering any
part of the Mortgaged Property that is affected by the terms,
covenants, provisions and agreements imposed upon or assumed by Grantor
in such Leases and Grantor will not do or fail to do, or permit or fail
to permit to be done, any act or thing, the doing or omission of which
will give any party a right to terminate any of such Leases or, in the
case of any tenant, to abate the rental or other material payment due
thereunder;
(b) If Grantor shall, in any manner, fail to comply with
subsection (a) above, Grantor agrees that Beneficiary or the Designated
Collateral Subagent may (but shall not be obligated to) take, upon ten
(10) days' written notice to Grantor (or upon lesser notice, or without
notice, if Beneficiary reasonably deems that the same is required to
protect its interest in the Mortgaged Property), any action which
Beneficiary or the Designated Collateral Subagent shall reasonably deem
necessary or desirable to keep, observe and perform or cause to be
kept, observed or performed any such terms, covenants, provisions or
agreements and to enter upon the Mortgaged Property and take all action
thereon as may be necessary therefor, or to prevent or cure any default
by Grantor in the performance of or compliance with any of Grantor's
covenants or obligations under said Leases. Beneficiary and the
Designated Collateral Subagent may rely on any notice of default
received from any tenant unless, in connection with any such default or
alleged default Grantor in good faith notifies Beneficiary and the
Designated Collateral Subagent of Grantor's election to contest such
default by appropriate procedures and diligently pursues such contest.
Grantor
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shall promptly deliver to Beneficiary and the Designated Collateral
Subagent a copy of any notice relating to defaults received from any
tenant that is a party, or the trustee, receiver or successor for or to
a party, to any of said Leases. Beneficiary or the Designated
Collateral Subagent may expend such sums of money as are reasonable and
necessary for any such purposes, and Grantor hereby agrees to pay to
Beneficiary and the Designated Collateral Subagent, immediately upon
demand, all sums so expended by Beneficiary or the Designated
Collateral Subagent, together with interest thereon from the date of
such payment at the Default Rate, and until so paid by Grantor, all
sums so expended by Beneficiary or the Designated Collateral Subagent
and the interest thereon shall be added to the General Senior
Obligations secured by the lien and legal operation and effect of this
Deed of Trust; and
(c) Grantor will not, without the prior written consent of the
Beneficiary and the Designated Collateral Subagent, amend, modify,
terminate or cancel any of the Leases of any part of the Mortgaged
Property in any way which could reasonably be expected to materially
adversely affect the interests of the General Secured Parties.
4.11 [INTENTIONALLY OMITTED]
4.12 TAXES: Grantor shall pay, together with interest, fines, and
penalties, if any, any documentary stamp, recording, transfer, mortgage,
intangibles (including without limitation all recurring intangible taxes) or
other taxes or fees whatsoever due under the laws of the State in connection
with the making, execution, delivery, filing of record, recordation, assignment,
release, or discharge of any of the Senior Credit Documents or in connection
with any advances made thereunder. This obligation shall survive the repayment
of the General Senior Obligations and shall continue for so long as Beneficiary
could be assessed for such taxes or fees, or for penalties or interest with
respect to such taxes or fees.
4.13 COLLECTION COSTS: In the event that this Deed of Trust is
foreclosed, or in the event this Deed of Trust is put into the hands of an
attorney for collection, suit, action or foreclosure, or in the event of the
foreclosure of any mortgage prior to or subsequent to this Deed of Trust, in
which proceeding Beneficiary or the Designated Collateral Subagent is made a
party, or in the event of the bankruptcy of the Grantor, or an assignment by the
Grantor for the benefit of creditors, Grantor, its successors and assigns, shall
be chargeable with and agrees to pay all costs of collection and defense,
including an amount as attorneys' fees not to exceed such amount as may be
permitted by the laws of the applicable State including reasonable actual
attorneys' fees for all appellate proceedings and post-judgment action involved
therein, which shall be due and payable at once together with all required
service or use taxes; the payment of which charges, fees and taxes together with
all costs and expenses, shall be secured hereby, and may be recovered in any
suit or action hereupon or hereunder.
4.14 RESERVES:
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(a) If the Designated Collateral Subagent so requires, Grantor
shall deposit with the Designated Collateral Subagent from time to time
a sum, as reasonably estimated by the Designated Collateral Subagent,
equal to (i) the Impositions (ii) the rents under any ground lease, if
any, and (iii) the premiums next due on the insurance policies required
under this Deed of Trust, less all sums already deposited therefor,
divided by the number of months to elapse before two months prior to
the beginning of such tax year or the date when such Impositions, rents
and premiums will become delinquent, as the case may be. The Designated
Collateral Subagent may require Grantor to deposit with the Designated
Collateral Subagent, in advance, such other sums for other taxes,
assessments, premiums, charges, and impositions in connection with the
Property as the Designated Collateral Subagent deems necessary to
protect Beneficiary's interests (collectively, the "Other Reserves").
Such sums for Other Reserves shall be deposited in a lump sum or in
periodic installments, at the Designated Collateral Subagent's option.
If requested by the Designated Collateral Subagent, Grantor shall
promptly deliver to the Designated Collateral Subagent all bills and
notices with respect to any rents, taxes, assessments, premiums, and
Other Reserves. All sums deposited with the Designated Collateral
Subagent under this Section 4.14 are hereby pledged to the General
Collateral Agent for the benefit of the General Secured Parties as
additional security for the General Senior Obligations.
(b) All sums deposited by Grantor under this Section 4.14
shall be held by the Designated Collateral Subagent and applied in such
order as Beneficiary or the Designated Collateral Subagent elects to
pay such Impositions, rents, premiums, and Other Reserves; in the Event
of Default hereunder, such sums may be applied, in whole or in part, to
the indebtedness secured hereby in accordance with the Senior Debt
Intercreditor Agreement. The arrangement provided for in this Section
4.14 is solely for the added protection of Beneficiary and entails no
responsibility on Beneficiary's part beyond the allowing of due credit,
without interest, for the sums actually received by it. Upon any
assignment of this Deed of Trust by Beneficiary, any funds on hand
shall be turned over to the assignee and any responsibility of
Beneficiary with respect thereto shall terminate. Each permitted
transfer of the Mortgaged Property shall automatically transfer to the
grantee all rights of Grantor with respect to any funds accumulated
hereunder.
(c) If the total deposits held by the Designated Collateral
Subagent under this Section 4.14 exceeds the amount deemed necessary by
the Designated Collateral Subagent to provide for the payment of such
Impositions, rents, premiums, and Other Reserves as the same fall due,
then such excess shall be credited by the Designated Collateral
Subagent on the next due installment or installments of such deposits,
provided no Event of Default then exists hereunder. If at any time the
total deposits held by the Designated Collateral Subagent is less than
the amount deemed necessary by the Designated Collateral Subagent to
provide for the payment thereof as the same fall due, then Grantor
shall deposit the deficiency with the Designated Collateral Subagent
within 30 days after written notice to Grantor stating the amount of
the deficiency.
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4.15 ESTOPPEL CERTIFICATES: Grantor, upon request of the Designated
Collateral Subagent, shall, from time to time, certify to the best of its
knowledge to Beneficiary and the Designated Collateral Subagent or to any
permitted assignee of this Deed of Trust, by an instrument in form satisfactory
to the Designated Collateral Subagent or such assignee, in its reasonable
discretion, duly acknowledged, inter alia, the amount then owing under the
Senior Credit Documents and the date through which interest thereon has been
paid, and whether any offsets, counterclaims, credits, or defenses exist against
payment thereof or performance of any of the Senior Debt Obligations of Grantor
under the Senior Credit Documents or this Deed of Trust, within ten (10) days of
such request. Beneficiary, the Designated Collateral Subagent and any permitted
assignee of this Deed of Trust shall have the right to rely on any such
certification.
4.16 CREATION AND RECORDATION OF ADDITIONS AND BETTERMENTS: Grantor
shall arrange for timely recording or filing as required of all documents having
to do with additions to or betterments of any portion of the Mortgaged Property,
and the covenants and agreements set forth in this Deed of Trust shall apply to
all such additions and betterments.
4.17 CONSENTS: Grantor will obtain and maintain the consent or approval
of any Person whose consent or approval is required to the granting of a Lien on
any interest in the Mortgaged Property to the Beneficiary.
4.18 [INTENTIONALLY OMITTED]
4.19 [INTENTIONALLY OMITTED]
4.20 [INTENTIONALLY OMITTED]
4.21 CHANGE OF NAME OR ADDRESS: Within 10 days following any change in
Grantor's name or address (as specified in the Loan Documents), Grantor shall
give written notice of such change to Beneficiary and the Designated Collateral
Subagent, and shall promptly execute (and acknowledge, as necessary) all
documents and agreements reasonably required by Beneficiary or the Designated
Collateral Subagent to confirm or maintain the security interests granted herein
or in the other Senior Credit Documents.
4.22 [INTENTIONALLY OMITTED]
4.23 NOTICE OF AND RESPONSE TO ENVIRONMENTAL COMPLAINT: Grantor shall
give to the Beneficiary and the Designated Collateral Subagent immediate written
notice and true, accurate and complete copies of any material complaint, order,
directive, claim, citation or notice by any governmental authority or any Person
to Grantor, any Subsidiary or any successor relating to any (a) violation or
alleged violation by the Grantor or any Subsidiary or any tenant of the
Mortgaged Property of any Environmental Law; (b) release or threatened release
by or on behalf of the Grantor or any Subsidiary or any tenant or by any person,
handling, transporting or disposing of any Hazardous Material on behalf of
Grantor or any Subsidiary or any such tenant or at any facility
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or property owned or leased or operated by Grantor or any Subsidiary or any
tenant, of any Hazardous Material; or (c) liability or alleged liability of the
Grantor or any Subsidiary or any such tenant for the costs of cleaning up,
removing, remediating or responding to a release of Hazardous Materials. Such
notice shall include, among other information, the name of the party making the
claim, the nature of the claim and the actual or potential amount of the claim.
Grantor shall, within the time period permitted and to the extent required by
the applicable Environmental Law or the governmental authority responsible for
enforcing such Environmental Law, remove, remedy, or respond to or cause to be
removed, remedied or responded to, any violation of any Environmental Law or any
release of any Hazardous Material or satisfy any liability for the costs of
cleaning up, removing, remediating or responding to a release of Hazardous
Materials.
4.24 INDEMNIFICATION: THE GRANTOR HEREBY AGREES THAT IT WILL REIMBURSE
THE TRUSTEE, THE BENEFICIARY, THE DESIGNATED COLLATERAL SUBAGENT AND EACH OF THE
GENERAL SECURED PARTIES FOR, AND DEFEND, INDEMNIFY AND HOLD THE TRUSTEE, THE
BENEFICIARY, THE DESIGNATED COLLATERAL SUBAGENT AND EACH OF THE GENERAL SECURED
PARTIES, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS HARMLESS
FROM AND AGAINST, ANY AND ALL CLAIMS, COSTS, EXPENSES, LOSSES, PENALTIES,
LIABILITIES AND DAMAGES (INCLUDING, WITHOUT LIMITATION, ASSESSMENT AND CLEANUP
COSTS AND REASONABLE ATTORNEYS', CONSULTANTS' AND OTHER EXPERTS' FEES, EXPENSES
AND DISBURSEMENTS) AND ALL JUDGMENTS, FINES AND PENALTIES INCURRED, ENTERED OR
LEVIED AGAINST THE TRUSTEE, THE BENEFICIARY, THE DESIGNATED COLLATERAL SUBAGENT
OR ANY OF THE GENERAL SECURED PARTIES BY ANY GOVERNMENTAL AGENCY OR AUTHORITY
ARISING DIRECTLY OR INDIRECTLY FROM, OR AS A RESULT OF OR IN CONNECTION WITH (A)
THE USE OF THE MORTGAGED PROPERTY; (B) THE USE OF THE FACILITIES THEREON; (C)
THE USE, GENERATION, STORAGE, TRANSPORTATION, TREATMENT, EMISSION, DISCHARGE,
DISPOSAL, RELEASE OR HANDLING OF ANY HAZARDOUS MATERIALS AT, UPON OR FROM THE
MORTGAGED PROPERTY; OR (D) THE VIOLATION OR ALLEGED VIOLATION OF ANY
ENVIRONMENTAL LAW BY GRANTOR OR ANY SUBSIDIARY EXCEPT TO THE EXTENT SUCH CLAIM
IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT
JURISDICTION TO HAVE RESULTED FROM ANY SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT. THE FOREGOING INDEMNITY SHALL INCLUDE WITHOUT LIMITATION
OF THE FOREGOING INDEMNITY, THE INDEMNITY OF EACH OF THE PARTIES INDEMNIFIED
HEREIN WITH RESPECT TO CLAIMS, DEMANDS, LOSSES, DAMAGES (INCLUDING CONSEQUENTIAL
DAMAGES) LIABILITIES, CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES AND COURT COSTS) AND MATTERS WHICH IN
WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OTHER THAN GROSS
(WHETHER SOLE, CONTRIBUTORY, COMPARATIVE, OR
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OTHERWISE) OF SUCH AND/OR ANY OTHER INDEMNIFIED PARTY OR FOR WHICH SUCH
INDEMNIFIED PARTY MAY HAVE STRICT LIABILITY. THE GRANTOR'S OBLIGATIONS UNDER
THIS SECTION 4.24 SHALL SURVIVE THE REPAYMENT OF THE SENIOR DEBT OBLIGATIONS,
THE OCCURRENCE OF THE SECURITY TERMINATION DATE, AND EXPIRATION OR TERMINATION
OF THIS DEED OF TRUST OR ANY FORECLOSURE OR A DEED IN LIEU OF FORECLOSURE OF
THIS DEED OF TRUST OR OTHER COLLATERAL SECURING THE SENIOR DEBT OBLIGATIONS.
4.25 OTHER AGREEMENTS: Without first obtaining on each occasion the
written approval of the Designated Collateral Subagent, the Grantor shall not,
except to the extent not prohibited by the Credit Agreement, enter into, cancel,
surrender or modify or permit the cancellation of any rental agreement,
management contract, franchise agreement, construction contract, technical
services agreement or other contract, license or permit now or hereafter
affecting the Material Real Property, or modify any of said instruments, or
accept or permit to be made any prepayment of any installment of rent or fees
thereunder. Certified copies of each such agreement shall be submitted to the
Designated Collateral Subagent as soon as possible. The Grantor shall faithfully
keep and perform, or cause to be kept and performed, all of the covenants,
conditions, and agreements contained in each of said instruments, now or
hereafter existing, on the part of the Grantor to be kept and performed
(including performance of all covenants to be performed under any and all leases
of the Material Real Property or any part thereof) and shall at all times do all
things necessary and appropriate to compel performance by each other party to
said instruments of all obligations, covenants and agreements by such other
party to be performed thereunder.
4.26 TRANSFER OF LICENSE: If Beneficiary acquires title to the
Mortgaged Property, Grantor shall execute, deliver and file or use its best
efforts to cause the tenant under the Lease of the Mortgaged Property to
execute, deliver and file all documents and statements requested by the
Beneficiary or the Designated Collateral Subagent to effect the transfer of the
licenses and other governmental authorizations necessary for the continued use
and operation of the Mortgaged Property, subject to any required approval of
governmental regulatory authorities, and shall provide to the Designated
Collateral Subagent all information and records required in connection
therewith.
ARTICLE V
NEGATIVE COVENANTS
Grantor hereby covenants and agrees with Beneficiary that, until the
Security Termination Date shall have occurred:
5.1 USE VIOLATIONS: Grantor will not use, maintain, operate or occupy,
or allow the use, maintenance, operation or occupancy of, any portion of the
Mortgaged Property in any manner
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which would result in a violation of Section 4.2 above or make void, voidable or
cancelable, any insurance then in force with respect thereto.
5.2 WASTE: Grantor will not commit or permit any waste of the Mortgaged
Property or permit any nuisance to be maintained thereon.
5.3 TRANSFER OF MORTGAGED PROPERTY; PARTIAL RELEASE: Except as
permitted under the Senior Credit Documents, Grantor will not, without the prior
written consent of Beneficiary or the Designated Collateral Subagent acting at
the direction of the Required General Secured Parties, permit any of the
Mortgaged Property to be sold, transferred, conveyed, mortgaged, pledged,
encumbered, disposed of, leased or removed at any time (any or all of the
foregoing being referred to herein as a "Transfer"). If such Transfer is
permitted by the Required General Secured Parties, then, upon at least ten (10)
days' prior notice to Beneficiary and the Designated Collateral Subagent,
Grantor shall have the right to obtain from the Trustee and the Beneficiary, as
applicable, the release or reconveyance of such transferred portions of the
Mortgaged Property. As a condition of any such release or reconveyance, (i)
Grantor shall pay all trustees' fees, recording fees, escrow fees, attorneys'
fees and other costs and expenses incurred by Beneficiary, the Designated
Collateral Subagent and/or Trustee in connection with any release or
reconveyance given hereunder; and (ii) Grantor shall deliver to the Designated
Collateral Subagent such evidence as the Designated Collateral Subagent
reasonably requests that (A) such release or reconveyance of any portion of the
Mortgaged Property can be done in compliance with all applicable subdivision and
other laws and regulations, and (B) Beneficiary's and the General Secured
Parties' rights and remedies with respect to the remaining Mortgaged Property
under the Senior Credit Documents will not be impaired by such release or
reconveyance.
5.4 RIGHTS OF REVERTER AND POWERS OF TERMINATION: With respect to any
fee-owned Parcel of Mortgaged Property subject to a right of reverter or power
of termination, and so long as such right or power is or may be enforceable,
Grantor:
(a) will not take or omit to take any action or change the use
of such Parcel or otherwise so as to enable the beneficiary of such
right or power to enforce or obtain the benefit of such reversion or
termination; and
(b) will not file for or otherwise initiate any proceedings to
abandon such Parcel.
ARTICLE VI
DEFAULT AND FORECLOSURE
6.1 REMEDIES: Upon and after the occurrence of an Event of Default
under any of the Senior Credit Documents (collectively, an "Event of Default"),
and if upon and after
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such occurrence all or any portion of the General Senior Obligations then
remaining unpaid shall have been declared due and payable in accordance with the
applicable Senior Credit Documents, then, without notice or demand, which are
hereby expressly waived to the extent permitted under applicable law, the
Trustee, Beneficiary or the Designated Collateral Subagent, as applicable, may,
and upon the written directions of the Required Enforcement General Secured
Parties shall, exercise any or all of the following rights, remedies and
recourses:
(A) ENTRY UPON MORTGAGED PROPERTY: To the extent permitted by
applicable Legal Requirements, enter upon all or any part of the
Mortgaged Property and take exclusive possession thereof and of all
books, records and accounts relating thereto. If Grantor remains in
possession of all or any part of the Mortgaged Property after an Event
of Default and without Beneficiary's prior written consent thereto,
Trustee, Beneficiary or the Designated Collateral Subagent, as
applicable, may invoke any and all legal remedies to dispossess
Grantor, including without limitation one or more actions for forcible
entry and detainer, trespass to try title and writ of restitution.
Nothing contained in the foregoing sentence shall, however, be
construed to impose any greater obligation or any prerequisites to
acquiring possession of the Mortgaged Property after an Event of
Default than would have existed in the absence of such sentence.
(B) OPERATION OF MORTGAGED PROPERTY:
(i) To the extent permitted by applicable Legal
Requirements, by itself or by the appointment of a receiver in
accordance with applicable Legal Requirements, hold, lease,
manage, operate or otherwise use or permit the use of all or
any portion of the Mortgaged Property, either by itself or by
other persons, firms or entities, in such manner, for such
time and upon such other terms as Trustee, Beneficiary or the
Designated Collateral Subagent, as applicable, may deem to be
prudent and reasonable under the circumstances (making such
repairs, alterations, additions and improvements thereto and
taking any and all other action with reference thereto, from
time to time, as Beneficiary or the Designated Collateral
Subagent shall reasonably deem necessary or desirable), and
apply all Rents and other amounts collected by Trustee or
Beneficiary or Designated Collateral Subagent in connection
therewith in accordance with the provisions of Section 6.6
below.
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(ii) To the extent permitted by applicable Legal
Requirements, as attorney-in-fact or agent of the Grantor, or
in its own name as Beneficiary or by the appointment of a
receiver in accordance with applicable Legal Requirements and
under the powers herein granted, hold, operate, manage, and
control all or any portion of the Mortgaged Property and
conduct the business, if any, thereof, either personally or by
its agents, and to exercise the powers described in Section
8.3 hereof. Such remedies may be exercised cumulatively and
concurrently, and in this respect Beneficiary and the
Designated Collateral Subagent shall be entitled to avail
itself of the benefits and rights stated in Section 6.3 below.
(C) FORECLOSURE: Institute a proceeding, judicial or
otherwise, for the complete foreclosure of this Deed of Trust to the
fullest extent permitted by law; or (ii) institute a proceeding or
proceedings, judicial or otherwise, for the partial foreclosure of this
Deed of Trust, as permitted by applicable Legal Requirements for the
portion of the General Senior Obligations then due and payable, with
this Deed of Trust then continuing unimpaired and without loss of
priority so as to secure the balance of the General Senior Obligations.
(D) SALE: To the extent permitted by applicable Legal
Requirements, sell or offer for sale the Mortgaged Property, in such
portions, order and parcels as Trustee may determine, with or without
having first taken possession of same, to the highest bidder for cash
in lawful money of the United States at public auction in accordance
with applicable Legal Requirements, or the UCC, and in the event of a
sale, by foreclosure or otherwise, of less than all of the Mortgaged
Property, this Deed of Trust shall continue as a lien and security
interest on the remaining portion of the Mortgaged Property. Trustee
may postpone any sale by public announcement at the time and place
noticed for the sale. If the Mortgaged Property consists of several
lots, Parcels or items of property, Trustee may, in its sole discretion
and to the extent permitted by applicable law: (i) designate the order
in which such lots, parcels or items shall be offered for sale or
sales, or (ii) elect to sell such lots, parcels or items through a
single sale, or through two or more successive sales or in any other
manner Trustee deems in its best interest. Should Trustee desire that
more than one sale or other disposition of the Mortgaged Property or
any portion thereof be conducted simultaneously, or successively, on
the same day, or at such different days or times and in such order as
Trustee may deem to be in its best interests, no such sale shall
terminate or otherwise affect the lien and security interest of this
Deed of Trust on any part of the Mortgaged Property not sold until all
the General Senior Obligations have been Fully Satisfied. Grantor shall
pay the Expenses of any sale of the Mortgaged Property, whether one or
more, and of any judicial proceedings wherein the same may be made,
including reasonable compensation to Trustee, its agents and counsel,
and shall pay all expenses, liabilities and advances made or incurred
by Trustee in connection with such sale or sales, together with
interest on all such advances made by Trustee at the Default Rate. Upon
any sale hereunder, Trustee shall execute and deliver to the purchaser
or purchasers a deed or deeds conveying the property so sold, but
without any covenant or warranty whatsoever, express or implied,
whereupon such purchaser or purchasers shall be let into immediate
possession; and the recitals in any such deed or deeds of facts, such
as default, the giving of notice of default and notice of sale, and
other facts affecting the regularity or validity of such sale or
disposition, shall be conclusive proof of the truth of such facts; and
any such deed or deeds shall be conclusive against all persons as to
such facts recited therein.
(E) TRUSTEE OR RECEIVER: Prior to, upon or at any time after,
commencement of foreclosure of the lien, security title and security
interest provided for herein or any legal proceedings pursuant hereto,
make application to a court of competent jurisdiction for appointment
of a receiver of the Mortgaged Property. Such application may be made
as a
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matter of strict right and without notice to Grantor (unless notice is
required by applicable Legal Requirements and such right of notice may
not be waived) or regard to the adequacy of the Mortgaged Property or
insolvency of the Grantor or any person who may be legally or equitably
liable to pay the General Senior Obligations and without giving bond to
Grantor (unless bond is required by applicable Legal Requirements and
such right of bond may not be waived), and Grantor does hereby
irrevocably consent to such appointment. Any such receiver shall have
all the usual powers and duties of receivers in similar cases,
including the full power to rent, maintain and otherwise operate the
Mortgaged Property all upon such terms as may be approved by the court,
and shall apply the Rents in accordance with the provisions of this
Deed of Trust.
(F) SEPARATE SALES: To the extent permitted by applicable
Legal Requirements, the Mortgaged Property may be sold in one or more
Parcels and in such manner and order as Trustee, Beneficiary and the
Designated Collateral Subagent, as applicable, in their sole
discretion, may elect, it being expressly understood and agreed that
the right of sale arising out of any Event of Default shall not be
exhausted by any one or more sales.
(G) OTHER: Exercise any and all other rights, remedies and
recourses granted under the Loan Documents or now or hereafter existing
in equity or at law, by virtue of statute or otherwise, including,
without limitation, the right to bring an action in any court of
competent jurisdiction to foreclose this instrument as a realty
mortgage or enforce any of the terms hereof.
(H) REMEDIES CUMULATIVE, CONCURRENT AND NONEXCLUSIVE: Trustee,
Beneficiary and the Designated Collateral Subagent shall have all
rights, remedies and recourses granted in the Senior Credit Documents
and the General Security Instruments and available at law or equity
(including specifically those granted by the UCC in effect and
applicable to the Mortgaged Property) and, except as limited by
applicable Legal Requirements, the same (a) shall be cumulative and
concurrent; (b) may be pursued separately, successively or concurrently
against Grantor or against all or any portion of the Mortgaged
Property, at the sole discretion of Trustee; (c) may be exercised as
often as occasion therefor shall arise, it being agreed by Grantor that
the exercise or failure to exercise any of same shall in no event be
construed as a waiver or release thereof or of any other right, remedy
or recourse; and (d) are intended to be, and shall be nonexclusive.
(I) COLLECTION OF COSTS AND EXPENSES: The Trustee, the
Beneficiary and the Designated Collateral Subagent shall be entitled to
receive all costs and expenses of the sale or repossession of the
Mortgaged Property including the Trustee's fees and reasonable
attorneys' fees or receiver's reasonable fee or commission, if any,
title and abstracting charges, reasonable attorneys' fees and a
reasonable auctioneer's fees, and all other costs and expenses incurred
in exercising its remedies hereunder.
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6.2 NO CONDITIONS PRECEDENT TO EXERCISE OF REMEDIES: The Grantor shall
not be relieved of any obligation it has under the Senior Credit Documents by
reason of (i) the release, regardless of consideration, of any of the Mortgaged
Property or any other collateral held pursuant to any of the Senior Credit
Documents or the addition of any other property to the Mortgaged Property or any
other such collateral; (ii) any agreement or stipulation between any subsequent
owner of all or any portion of the Mortgaged Property and Beneficiary or the
Designated Collateral Subagent or any of the General Secured Parties extending,
renewing, rearranging or in any other way modifying the terms of any of the
Senior Credit Documents without first having obtained the consent of, given
notice to or paid any consideration to the Grantor, and in such event the
Grantor shall continue to be liable to make payment according to the terms of
any such extension or modification agreement unless expressly released and
discharged in writing by Beneficiary and the Designated Collateral Subagent; or
(iii) any other acts or occurrence, save and except payment and performance of
all of the General Senior Obligations and the occurrence of the Security
Termination Date.
6.3 RESORT TO COLLATERAL: For payment of the General Senior
Obligations, to the fullest extent permitted by applicable Legal Requirements,
Beneficiary and the Designated Collateral Subagent may resort to any other
security therefor held by Trustee in such order and manner as Beneficiary and
the Designated Collateral Subagent may elect, and such resort may be taken
concurrently or successively and in one or several consolidated or independent
judicial actions or lawfully taken non-judicial proceedings, or both.
6.4 WAIVERS: To the fullest extent permitted by applicable Legal
Requirements, Grantor hereby irrevocably and unconditionally, WAIVES and
RELEASES (a) all benefits that might accrue to Grantor by virtue of any present
or future law exempting the Mortgaged Property from attachment, levy or sale on
execution or providing for any appraisement, valuation, homestead exemption,
stay of execution, exemption from civil process, redemption or extension of time
for payment; (b) except as otherwise provided in the Senior Credit Documents,
all notices of any demand, presentment, Event of Default, intent to accelerate
or acceleration or the election by Trustee, Beneficiary, the Designated
Collateral Subagent, or any of the General Secured Parties (or any agent on
their behalf), as applicable, to exercise or the actual exercise of any right,
remedy or recourse provided for under any of the Senior Credit Documents; (c)
any right to a marshaling of assets or a sale in inverse order of alienation;
and (d) any restrictions or conditions upon the exercise by the Trustee,
Beneficiary or the Designated Collateral Subagent, as applicable, of the
remedies set forth in Section 6.1.
6.5 DISCONTINUANCE OF PROCEEDINGS: To the extent permitted by
applicable Legal Requirements, in case Trustee, Beneficiary, the Designated
Collateral Subagent, or any of the General Secured Parties (or any agent on
their behalf), as the case may be, shall have proceeded to invoke any right,
remedy or recourse permitted under any of the Senior Credit Documents and shall
thereafter elect to discontinue or abandon same for any reason, Trustee,
Beneficiary, the Designated Collateral Subagent, or any of the General Secured
Parties (or any agent on their behalf), as the case may be, shall have the
unqualified right so to do and, in such an event, the
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Grantor, Trustee, Beneficiary and such other Person shall be restored to
their former positions with respect to the Senior Credit Documents, the
Mortgaged Property and otherwise, and the rights, remedies, recourses and powers
of Trustee, Beneficiary, the Designated Collateral Subagent and such other
Person shall continue as if same had never been invoked.
6.6 APPLICATION OF PROCEEDS:
(a) To the extent permitted by applicable Legal Requirements,
all proceeds received from the sale or other dispositions of the
Mortgaged Property, including but not limited to, the Rents and other
income generated by the holding, leasing, operating or other use of the
Mortgaged Property, pursuant to Article 6 of this Deed of Trust shall
be applied by the Trustee and/or Beneficiary or Designated Collateral
Subagent (or the receiver, if one is appointed), as applicable, to the
extent that funds are so available therefrom, in accordance with the
following priorities:
First: to the costs and expenses of the sale or possession of
the Mortgaged Property including the Trustee's or receiver's reasonable
fee or commission, if any, title and abstracting charges, reasonable
attorneys' fees and a reasonable auctioneer's fee if such expense has
been incurred;
Second: ratably to the satisfaction of the General Senior
Obligations in accordance with the terms of the Senior Debt
Intercreditor Agreement; provided, however, that the portion of such
proceeds applied to the Senior Revolving Credit Obligations shall be
further applied in accordance with the terms of the Credit Agreement;
Third: to the payment to whomsoever shall be entitled thereto
under applicable Legal Requirements, if the person who made the sale
knows who is entitled thereto. Otherwise, the surplus shall be paid to
the clerk of the superior, district or circuit court (or other court
having jurisdiction) of the county where the sale was had.
(b) If the Trustee and/or Beneficiary shall be ordered, in
connection with any bankruptcy, insolvency or reorganization of the
Grantor, to restore or repay to or for the account of the Grantor or
any of their creditors any amount theretofore received under this
Section 6.6, the amount for such restoration or repayment shall be
deemed to be a General Senior Obligation so as to place the Trustee
and/or Beneficiary or Designated Collateral Subagent in the position
they would have been in had such amount never been received by any
party hereto.
6.7 COOPERATION: If an Event of Default shall occur, Grantor will use
its best efforts to cooperate with Trustee, Beneficiary and the Designated
Collateral Subagent and promptly do all things reasonably required of it toward
obtaining all necessary authority and permission from any governmental authority
or otherwise to accomplish any disposition, abandonment or change in use of the
Mortgaged Property (or any portion thereof) as Trustee, Beneficiary or the
Designated
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Collateral Subagent, as the case may be, may request in connection with the
exercise of rights and powers hereunder and under the Senior Credit Documents.
Without limiting the generality of the foregoing, following an Event of Default
and reasonable advance notice to Grantor, Grantor agrees upon such request
therefor to relocate operations located on the Mortgaged Property to accommodate
the disposition, abandonment, change in use or foreclosure by Trustee of any
portion thereof, provided that such relocation does not materially violate any
Legal Requirement applicable to Grantor or the Mortgaged Property.
ARTICLE VII
CONDEMNATION
7.1 GENERAL: Promptly following the date on which an executive officer
of Grantor obtains knowledge of the institution or the threatened institution of
any proceeding for the condemnation of all or any portion of the Mortgaged
Property, Grantor shall notify Trustee, Beneficiary and the Designated
Collateral Subagent of such fact. Grantor shall then, unless Beneficiary or the
Designated Collateral Subagent waives this requirement, file or defend its claim
in respect of such proceeding and prosecute same with due diligence to its final
disposition. Grantor may be the nominal party in such proceeding but Beneficiary
and the Designated Collateral Subagent shall be entitled to participate in same
and to be represented therein by counsel of its own choice, and Grantor will
deliver or cause to be delivered to Beneficiary and the Designated Collateral
Subagent such instruments as may be reasonably requested by it from time to time
to permit such participation. All proceeds received from any such condemnation
proceeding shall be paid to the Designated Collateral Subagent and held in a
segregated cash collateral account as collateral security for the General Senior
Obligations until the earliest to occur of (i) the Security Termination Date, at
which time such proceeds shall be paid to the Grantor, (ii) the occurrence of an
Event of Default, at which time such proceeds shall be applied (subject to
compliance with the Senior Debt Intercreditor Agreement) to the General Senior
Obligations, or (iii) the Required General Secured Parties direct the
Beneficiary in writing to release such proceeds to the Grantor, at which time
such proceeds shall be paid to the Grantor.
7.2 REBUILDING, RESTORATION AND REPAIR: In the event (a) no Default or
Event of Default shall have occurred and be continuing, (b) only a portion of
the Mortgaged Property is taken, (c) Grantor elects to rebuild, restore or
repair the remaining portion of the Mortgaged Property, (d) the cost of the
rebuilding, restoration or repair reasonably estimated by the Designated
Collateral Subagent shall not exceed $1,000,000.00, (e) there are sufficient
proceeds or other amounts available to Grantor to fully pay for the rebuilding,
restoration or repair of the Mortgaged Property and the projected appraised
value of the Mortgaged Property upon completion of the same is equal to or
greater than the appraised value of the Mortgaged Property immediately prior to
the condemnation, (f) all parties having commitments to provide financing with
respect to the Mortgaged Property, to purchase Grantor's interest in full or in
part in the Mortgaged Property or to purchase the General Senior Obligations
agree in a manner satisfactory to the Designated
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Collateral Subagent that their commitments will continue in full force and
effect and, if necessary, the expiration of such commitments will be extended by
the time necessary to complete the restoration, and (g) the Beneficiary will not
incur any liability to any other person as a result of such use or release of
proceeds, then Grantor will so certify to Beneficiary and the Designated
Collateral Subagent, and will certify that it will and shall continue diligently
to completion to restore, repair, replace and rebuild such Mortgaged Property as
nearly as possible to its value, condition and character immediately prior to
such condemnation with such alterations, modifications and/or betterments
reasonably deemed necessary or desirable by Grantor in its business judgment.
With the certification described in the preceding sentence, then Grantor shall
deliver to the Designated Collateral Subagent plans and specifications for such
rebuilding, restoration or repair; and Grantor shall thereafter commence the
rebuilding, restoration or repair in accordance with the plans and
specifications required pursuant to the preceding provisions within sixty (60)
days after the date of the disbursement of the award or settlement, and complete
same to the satisfaction of the Designated Collateral Subagent within a
reasonable time thereafter. In the event each of the conditions set forth above
in the first sentence of this Section are satisfied except that the cost of
rebuilding, restoration or repair is in excess of $1,000,000.00, the above
provisions shall apply except that the proceeds shall be paid to Beneficiary and
disbursed in accordance with Section 4.8 (with all references to insurance
proceeds being revised to be condemnation proceeds). Upon completion of such
rebuilding, restoration and repair in accordance with the preceding provisions,
Grantor may apply such amount or settlement to the costs of such rebuilding,
restoration or repair. If (i) there is a total condemnation of the Mortgaged
Property, or (ii) if the cost of rebuilding, restoration or repair is reasonably
estimated to be in excess of $1,000,000.00, or (iii) if Grantor elects not to
rebuild, restore or repair as specified above, or (iv) the requirements set
forth above for rebuilding, restoration or repair after a partial condemnation
are not met to the Designated Collateral Subagent's satisfaction, then Grantor
shall pay to the Designated Collateral Subagent such award or settlement to be
held in a segregated cash collateral account as collateral security for the
General Senior Obligations until the earliest to occur of (i) the Security
Termination Date, at which time such proceeds shall be paid to the Grantor, (ii)
the occurrence of an Event of Default, at which time such proceeds shall be
applied (subject to the compliance with the Senior Debt Intercreditor Agreement)
to the General Senior Obligations, or (iii) the Required General Secured Parties
direct the Beneficiary in writing to release such proceeds to the Grantor, at
which time such proceeds shall be paid to the Grantor.
ARTICLE VIII
SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS
8.1 ASSIGNMENT: Subject to the terms and conditions hereinafter set
forth, Grantor as debtor does hereby irrevocably transfer, assign and deliver
unto Beneficiary as secured party for its benefit and the ratable benefit of the
General Secured Parties, as security for the payment and performance of the
General Senior Obligations, and grant a security interest in, all of the right,
title and interest of Grantor in and to all of the following:
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(a) The Leases;
(b) The Rents;
(c) The Fixtures; and
(d) The Personalty.
This assignment of rentals and any other assignments required by the
provisions hereof shall terminate and become null and void upon release of this
Deed of Trust.
The Grantor shall execute and deliver to Beneficiary and the Designated
Collateral Subagent, in form and substance satisfactory to Beneficiary and the
Designated Collateral Subagent, such financing statements and such further
assurances as required by applicable law or as Beneficiary and the Designated
Collateral Subagent may, from time to time, consider reasonably necessary to
create, perfect and preserve Beneficiary's security interest herein granted, and
Grantor will (or Beneficiary at its option may) cause such statements and
assurances to be recorded and filed at such times and places as may be required
or permitted by law to so create, perfect and preserve such security interest.
Trustee and Beneficiary shall have all the rights, remedies and
recourses with respect to the Personalty, Fixtures, Leases and Rents afforded a
secured party by the aforesaid UCC in addition to, and not in limitation of, the
other rights, remedies and recourses afforded by the Senior Credit Documents and
at law.
This instrument covers goods that are or are to become fixtures on the
Land described herein. This instrument shall be deemed to be a fixture filing
and for such purpose the following information is set forth:
(1) Name and Address of Debtor: as set forth on page 1 hereof.
(2) Name and Address of Secured Party: as set forth on page 1
hereof.
(3) Description of the types (or items) of property covered by
this financing statement: as set forth in Section 1.1 and this Section
8.1.
(4) Description of real estate to which collateral is attached
or upon which it is located: as set forth on Exhibit "A".
8.2 COLLECTION OF RENTS: Grantor absolutely and irrevocably assigns to
Beneficiary, with or without taking possession of the Land or the Buildings, the
Rents, and hereby authorizes and empowers Beneficiary and the Designated
Collateral Subagent to collect the Rents as the same shall become due, and does
hereby irrevocably direct each and all of the lessees, sublessees, licensees, or
other occupants of the Mortgaged Property to pay to Beneficiary or the
Designated Collateral Subagent, as either may direct, upon demand by Beneficiary
or the Designated
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Collateral Subagent, the Rents. The foregoing assignment shall not impose upon
Beneficiary or the Designated Collateral Subagent any duty to produce Rents from
the Mortgaged Property, and shall not cause Beneficiary or the Designated
Collateral Subagent to be a "mortgagee-in-possession" for any purpose.
8.3 BENEFICIARY'S POWERS OF ATTORNEY: Grantor does hereby irrevocably
constitute and appoint each of Beneficiary and the Designated Collateral
Subagent, while this Deed of Trust remains in force and effect, its true and
lawful attorney-in-fact, coupled with an interest and with full power of
substitution, delegation and revocation, for Grantor and in its name, place and
stead, to enter and take possession of the Mortgaged Property after an Event of
Default by actual physical possession without the commencement of any action to
foreclose this Deed of Trust or to exercise any power of sale Beneficiary or the
Designated Collateral Subagent may have hereunder and to do and perform any or
all of the following actions, as fully as Grantor could do if personally
present, hereby ratifying and confirming all that either of Beneficiary and the
Designated Collateral Subagent, as attorney or its substitute, shall lawfully do
or cause to be done by virtue hereof:
(a) to enter into subordination and non-disturbance agreements
with respect to any Leases or with any of the tenants or lessees under
any of the Leases;
(b) to demand, collect, sue for, attach, levy, recover,
receive, compromise and adjust, and make, execute and deliver receipts,
releases, discharges or other instruments for all Rents, issues, and
other amounts that may hereafter become due, owing or payable with
respect to the Mortgaged Property or any part thereof from any present
or future tenants, lessees, sublessees, licensees or other occupants
thereof;
(c) to institute, prosecute to completion, or compromise and
settle, all summary proceedings, actions for rent or for removing any
and all tenants, lessees, sublessees, licensees or other occupants of
the Mortgaged Property or any part or parts thereof;
(d) to enforce or enjoin or restrain the violation of any of
the terms, provisions and conditions of any of the Leases;
(e) to pay, from and out of any Rents and issues collected in
respect of the Mortgaged Property or any part thereof, or from or out
of any other funds, any taxes, assessments, water rates, sewer rates,
or other government charges levied, assessed, or imposed against the
Mortgaged Property, or any portion thereof, and also any and all other
charges, costs and expenses which it may be reasonably necessary or
advisable for Beneficiary or the Designated Collateral Subagent to pay
in the management or operation of the Mortgaged Property, including
commissions for renting the Mortgaged Property or any portion thereof,
management and consulting fees, and legal expenses incurred in
enforcing claims, drafting and negotiating documents or for any other
services that may be required;
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(f) 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 Personalty;
(g) to receive, indorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with subsection
(f) above;
(h) to file any claims or take any action or institute any
proceedings which the Beneficiary or the Designated Collateral Subagent
may deem necessary or desirable for the collection of any of the
Personalty or otherwise to enforce the rights of the Beneficiary with
respect to any of the Personalty, including without limitation the
execution, delivery and filing of financing statements, continuation
statements, affidavits or other security instruments and agreements
necessary to perfect, confirm and continue in effect the lien of this
Deed of Trust with respect to the Leases, the Rents, the Fixtures and
the Personalty; and
(i) to generally do, execute, and perform any other act, deed,
matter or thing whatsoever that ought to be done, executed and
performed in and about or with respect to the Mortgaged Property, the
Leases and the Personalty, as fully as Grantor might do; provided,
however, that this Assignment shall not operate to place upon
Beneficiary or the Designated Collateral Subagent any responsibility or
obligation to take any of the above actions or any action whatsoever
with respect to the operation, control, care, management or repair of
the Mortgaged Property, and that any action taken or failure or refusal
to act by Beneficiary or the Designated Collateral Subagent under this
Deed of Trust shall be at Beneficiary's election and without any
liability on its part.
8.4 GRANTOR REMAINS LIABLE: Anything herein to the contrary
notwithstanding:
(a) Grantor shall remain liable under the Leases to the extent
set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Deed of Trust had not been
executed;
(b) the exercise by the Beneficiary or the Designated
Collateral Subagent of any of the rights hereunder shall not release
the Grantor from any of its duties or obligations under any of the
Leases; and
(c) neither the Beneficiary nor the Designated Collateral
Subagent shall have any obligation or liability under any of the Leases
to any person or entity under this Deed of Trust nor shall the
Beneficiary be obligated to perform any of the obligations or duties of
the Grantor thereunder or to take any action to collect or enforce any
claims thereunder.
8.5 GRANTOR'S REPRESENTATIONS AND WARRANTIES: Grantor
represents and warrants that:
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(a) No Rents, nor any part thereof becoming due subsequent to
the date hereof, have been collected with respect to the Leases
(excepting an amount not exceeding one month's installment under the
Leases), nor has payment of any of the same been anticipated, waived,
released, discounted or otherwise discharged or compromised;
(b) This Deed of Trust creates a valid security interest in
the Personalty as security for the payment and performance of the
General Senior Obligations. Upon the filing of financing statements
(the "Financing Statement") under the UCC naming the Grantor as debtor
and the Beneficiary as secured party and covering the Personalty, such
security interests shall be perfected under the UCC and such security
interests are not subject to any prior lien, or to any agreement
purporting to grant to any Person, other than the Beneficiary, a
security interest in any of the Personalty, in each case other than
with respect to the Permitted Encumbrances, the Priority Liens and the
Liens granted under the other Security Documents. No further filings,
recordings or other actions are necessary to perfect or maintain the
priority of such security interests other than the filing of UCC
continuation statements on or prior to the date required by applicable
Legal Requirements. The Financing Statements are in appropriate form
and have been duly filed pursuant to the UCC;
(c) The chief place of business and chief executive office of
the Grantor are located at the address first specified above for the
Grantor;
(d) Each of the Leases described in Section 4.10 hereof, as
amended to the date of execution and delivery hereof, true and complete
copies of which have been delivered to the Designated Collateral
Subagent, has been duly authorized, executed and delivered by Grantor
(and to Grantor's knowledge all other parties thereto) and is in full
force and effect and binding upon and enforceable against Grantor and,
to Grantor's knowledge, against the other parties thereto, in
accordance with its terms. No event has occurred and is continuing, or
will occur as a result of the performance of this Deed of Trust, that
constitutes or would constitute any material event of default under any
of the Leases or would constitute such an event of default but for the
requirement that notice be given or time lapse or both.
8.6 GRANTOR'S COVENANTS: In addition to Grantor's obligations in
Section 4.10, Grantor covenants and agrees with respect to the Leases that:
(a) It will perform and observe each of its material
obligations under the terms of the Leases now or hereafter in effect
(except when the amount or validity of such obligations is being
contested in good faith) and use best efforts to cause the other
parties thereto to comply with their obligations thereunder;
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(b) It will, upon the reasonable written request by the
Designated Collateral Subagent, while this Assignment remains in force
and effect, serve written notices of this Assignment upon any lessor or
lessee, sublessee, licensee, or other occupant of any portion of the
Mortgaged Property or include among the written provisions of any
instrument hereafter creating any such lease, sublease, license, or
right of occupancy specific reference to this Assignment, and make,
execute and deliver all such powers of attorney or instrument of pledge
or assignment, and such other instrument or documents as the Designated
Collateral Subagent may reasonably request at any time for the purpose
of securing its rights hereunder;
(c) It will furnish to the Designated Collateral Subagent,
promptly following demand, true copies of all Leases hereafter executed
and true copies of each agreement or letter effecting the renewal,
amendment or modification of any Lease; and in each case after request
by the Designated Collateral Subagent, furnish to the Designated
Collateral Subagent promptly following receipt thereof copies of all
notices, requests and other documents received by the Grantor under or
pursuant to the Leases during the term of each of the Leases and from
time to time (A) furnish to the Designated Collateral Subagent such
information and reports regarding the Leases as the Designated
Collateral Subagent may reasonably request, and (B) promptly following
request of the Designated Collateral Subagent make such demands and
requests for information or action upon such person, firm, corporation,
or other entity as the Grantor is entitled to make under the Leases;
(d) It will cause the security interest in the Personalty to
remain a continuously perfected, first priority security interest free
and clear of any liens (other than the Beneficiary's lien hereunder the
Priority Liens and the Permitted Encumbrances), and from time to time,
at its own expense, the Grantor will promptly execute and deliver all
further instruments and documents and take all further action, that may
be necessary or desirable, or that the Beneficiary or the Designated
Collateral Subagent may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby
or to enable the Beneficiary and the Designated Collateral Subagent to
otherwise enforce its rights and remedies hereunder with respect to the
Personalty. Without limiting the generality of the foregoing or of
Section 4.3 hereof, the Grantor will: (i) at the request of the
Beneficiary or the Designated Collateral Subagent, mark conspicuously
any item of chattel paper relating to or evidencing the Personalty with
a legend, in form and substance satisfactory to the Beneficiary and the
Designated Collateral Subagent, indicating that the Personalty is
subject to the security interest granted hereby, (ii) execute and file
such financing or continuation statements, or amendments thereto, and
such other collateral assignments, security agreements, instruments or
notices, as may be necessary or desirable, or as the Beneficiary or the
Designated Collateral Subagent may reasonably request, in order to
perfect and preserve the security interests granted or purported to be
granted hereby, and (iii) defend the title to the Personalty and the
Beneficiary's lien thereon and security interest therein against the
claim of any person, firm, corporation, or other entity
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claiming against or through Grantor and will maintain and preserve such
lien and security interest so long as this Deed of Trust shall remain
in effect;
(e) It authorizes the Beneficiary and the Designated
Collateral Subagent to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the
Personalty without the signature of the Grantor where permitted by law;
and
(f) It will furnish to the Beneficiary and the Designated
Collateral Subagent from time to time statements and schedules further
identifying and describing the Personalty and such other reports in
connection with the Personalty as the Beneficiary or the Designated
Collateral Subagent may reasonably request, all in reasonable detail.
8.7 EFFECT OF RELEASE OF MORTGAGED PROPERTY: The Grantor hereby
consents to, and hereby agrees that the rights of the Beneficiary or the
Designated Collateral Subagent and the security interests hereunder, and the
obligations of the Grantor hereunder, to the fullest extent permitted by
applicable Legal Requirements, shall not be affected by any and all releases of
any of the Mortgaged Property from the liens or security interests created by
this Deed of Trust or otherwise, whether for purposes of sales or other
dispositions of assets or for some other purpose, except to the extent expressly
provided herein, by any agreement extending the time or otherwise altering the
terms of payment of all or any part of the indebtedness secured hereby, or
subordinating, modifying or waiving any obligation, or subordinating, modifying
or otherwise dealing with the lien or charge hereof, each such agreement to be
in writing to be binding and effective, by exercising or refraining from
exercising or waiving any right Beneficiary or the Designated Collateral
Subagent may have hereunder, or by accepting additional security of any kind or
additional parties to the General Senior Obligations secured hereby or
instruments creating or evidencing such.
8.8 HOLD HARMLESS: WITHOUT LIMITATION OF THE INDEMNITY SET FORTH IN
SECTION 10.15, GRANTOR HEREBY AGREES TO INDEMNIFY AND HOLD THE TRUSTEE, THE
BENEFICIARY, THE DESIGNATED COLLATERAL SUBAGENT AND EACH OF THE GENERAL SECURED
PARTIES HARMLESS (A) AGAINST AND FROM ANY AND ALL LIABILITY, LOSS, DAMAGE AND
EXPENSE, INCLUDING REASONABLE ATTORNEYS' FEES, WHICH IT MAY OR SHALL INCUR UNDER
OR IN CONNECTION WITH THE EXERCISE BY THE BENEFICIARY OR THE DESIGNATED
COLLATERAL SUBAGENT OF ITS RIGHTS HEREUNDER IN RESPECT OF ANY OF THE LEASES, OR
BY REASON OF ANY ACTION TAKEN OR EXPENSES PAID OR INCURRED BY THE BENEFICIARY OR
THE DESIGNATED COLLATERAL SUBAGENT UNDER AND IN ACCORDANCE WITH THE TERMS OF
THIS DEED OF TRUST, AND (B) AGAINST AND FROM ANY AND ALL CLAIMS AND DEMANDS
WHATSOEVER WHICH MAY BE ASSERTED AGAINST GRANTOR BY REASON OF ANY ALLEGED
OBLIGATIONS OR UNDERTAKING ON ITS PART TO PERFORM OR DISCHARGE ANY OF THE TERMS,
COVENANTS AND CONDITIONS CONTAINED IN ANY OF THE LEASES EXCEPT TO
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THE EXTENT SUCH CLAIM IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF
COMPETENT JURISDICTION TO HAVE RESULTED FROM ANY SUCH INDEMNIFIED PARTY'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. SHOULD BENEFICIARY OR THE DESIGNATED
COLLATERAL SUBAGENT PAY OR INCUR ANY SUCH LIABILITY, LOSS, DAMAGE OR EXPENSE,
THE AMOUNT THEREOF, TOGETHER WITH INTEREST THEREON FROM THE DATE OF SUCH PAYMENT
AT THE DEFAULT RATE, SHALL BE PAYABLE BY GRANTOR TO BENEFICIARY IMMEDIATELY UPON
DEMAND THEREFOR; AND UNTIL SO PAID BY GRANTOR, ALL SUMS SO EXPENDED BY
BENEFICIARY OR THE DESIGNATED COLLATERAL SUBAGENT, AND INTEREST THEREON, SHALL
BE ADDED TO THE GENERAL SENIOR OBLIGATIONS AND SECURED BY THE LIEN AND LEGAL
OPERATION AND EFFECT OF THIS DEED OF TRUST. AT ITS OPTION, BENEFICIARY MAY
REIMBURSE ITSELF THEREFOR OUT OF ANY RENTS WHICH IT HAS COLLECTED OR MAY
COLLECT. THE FOREGOING INDEMNITY SHALL INCLUDE WITHOUT LIMITATION OF THE
FOREGOING INDEMNITY, THE INDEMNITY OF EACH OF THE PARTIES INDEMNIFIED HEREIN
WITH RESPECT TO CLAIMS, DEMANDS, LOSSES, DAMAGES (INCLUDING CONSEQUENTIAL
DAMAGES) LIABILITIES, CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES AND COURT COSTS) AND MATTERS WHICH IN
WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OTHER THAN GROSS
(WHETHER SOLE, CONTRIBUTORY, COMPARATIVE, OR OTHERWISE) OF SUCH AND/OR ANY OTHER
INDEMNIFIED PARTY OR FOR WHICH SUCH INDEMNIFIED PARTY MAY HAVE STRICT LIABILITY.
ARTICLE IX
CONCERNING THE TRUSTEE
9.1 NO REQUIRED ACTION: Trustee shall not be required to take any
action toward the execution and enforcement of the trust hereby created or to
institute, appear in or defend any action, suit or other proceeding in
connection therewith where in his opinion such action will be likely to involve
him in expense or liability, unless requested to do so by a written instrument
signed by Beneficiary and the Designated Collateral Subagent and, if Trustee so
requests, unless Trustee is tendered security and indemnity satisfactory to it
against any and all costs, expense and liabilities arising therefrom. Trustee
shall not be responsible for the execution, acknowledgment or validity of the
Senior Credit Documents or for the proper authorization thereof, or for the
sufficiency of the lien and security interest purported to be created hereby,
and makes no representation in respect thereof or in respect of the rights,
remedies and recourses of Beneficiary or the Designated Collateral Subagent.
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9.2 CERTAIN RIGHTS: With the approval of Beneficiary or the Designated
Collateral Subagent, Trustee shall have the right to take any and all of the
following actions: (a) to select, employ and consult with counsel (who may be,
but need not be, counsel for Beneficiary or the Designated Collateral Subagent)
upon any matters arising hereunder, including the preparation, execution and
interpretation of the Senior Credit Documents, and shall be fully protected in
relying as to legal matters on the advice of counsel; (b) to execute any of the
trusts and powers hereof and to perform any duty hereunder either directly or
through its agents or attorneys; (c) to select and employ, in and about the
execution of its duties hereunder, suitable accountants, engineers and other
experts, agents and attorneys-in-fact, either corporate or individual, not
regularly in the employ of Trustee, and Trustee shall not be answerable for any
act, default or misconduct of any such accountant, engineer or other expert,
agent or attorney-in-fact, if selected with reasonable care, or be otherwise
responsible or accountable under any circumstances whatsoever, except for
Trustee's gross negligence or bad faith; and (d) to take any and all other
lawful action as Beneficiary or the Designated Collateral Subagent may instruct
Trustee to take to protect or enforce Beneficiary's or the Designated Collateral
Subagent's rights hereunder. Trustee shall not be personally liable, except for
its gross negligence or misconduct, in case of entry by it, or anyone entering
by virtue of the rights herein granted to it, upon the Mortgaged Property for
debts contracted or liability or damages incurred in the management or operation
of the Mortgaged Property. Trustee shall have the right to rely on any
instrument, document or signature authorizing or supporting any action taken or
proposed to be taken by it hereunder believed by it in good faith to be genuine.
Trustee shall be entitled to reimbursement for reasonable expenses incurred by
it in the performance of its duties hereunder and to reasonable compensation for
such of its services hereunder as shall be rendered. Grantor will, from time to
time, pay the reasonable compensation due to Trustee hereunder and reimburse
Trustee for, and save it harmless against, any and all liability and expenses
which may be incurred by it in the performance of its duties.
9.3 RETENTION OF MONEYS: All moneys received by Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated in any manner from any other
moneys (except to the extent required by law) and Trustee shall be under no
liability for interest on any moneys received by it hereunder.
9.4 SUCCESSOR TRUSTEES: Trustee may resign by the giving of sixty (60)
days written notice of such resignation in recordable form to Beneficiary and
the Designated Collateral Subagent. If Trustee shall resign or become
disqualified from acting in the execution of this trust, or shall fail or refuse
to execute the same when requested by Beneficiary or the Designated Collateral
Subagent so to do, or if, for any reason and without cause, Beneficiary or the
Designated Collateral Subagent shall prefer to appoint a substitute trustee or
trustees to act instead of the aforenamed Trustee, or any successor or
substitute trustee, Beneficiary and the Designated Collateral Subagent shall
have full power to appoint a substitute trustee or trustees and, if preferred,
several substitute trustees in succession who shall succeed to all the estates,
properties, rights, powers and duties of the aforenamed Trustee. Such
appointment may be executed by any authorized agent or officer of Beneficiary or
the Designated Collateral Subagent, and if such Beneficiary or the Designated
Collateral Subagent be a corporation and such appointment be
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executed in its behalf by any officer of such corporation, such appointment
shall be conclusively presumed to be executed with authority and shall be valid
and sufficient without proof of any action by the Board of Directors or any
superior officer of the corporation. Such appointment shall be duly recorded in
the appropriate real estate records at any time before or, if permitted by
applicable law, upon sale of Mortgaged Property by the successor appointed
thereby. Grantor hereby ratifies and confirms any and all acts which the
aforementioned Trustee, or his successor or successors in this trust, lawfully
does by virtue hereof. Grantor shall reimburse Beneficiary, the Designated
Collateral Subagent, and/or Trustee for any Expenses incurred pursuant to the
provisions of this Section 9.4.
9.5 PERFECTION OF APPOINTMENT: Should any deed, conveyance or
instrument of any nature be required from Grantor by any successor Trustee to
more fully and certainly vest in and confirm to such new Trustee such estates,
rights, powers and duties, then, upon request by such Trustee, any and all such
deeds, conveyances and instruments shall be made, executed, acknowledged and
delivered and shall be caused to be recorded and/or filed by Grantor and Grantor
shall pay for any Expenses incurred by Trustee pursuant to this Section 9.5.
9.6 SUCCESSION INSTRUMENTS: Any new Trustee appointed pursuant to any
of the provisions hereof shall, without any further act, deed or conveyance,
become vested with all the estates, properties, rights, powers and trusts of its
predecessor in the rights hereunder with like effect as if originally named as
Trustee herein; but nevertheless, upon the written request of Beneficiary or of
the successor Trustee, the Trustee ceasing to act shall execute and deliver an
instrument in recordable form transferring to such successor Trustee, upon the
trusts herein expressed, all the estates, properties, rights, powers and trusts
of the Trustee so ceasing to act, and shall duly assign, transfer and deliver
any of the property and moneys held by such Trustee to the successor Trustee so
appointed in its place.
9.7 NO REPRESENTATION BY TRUSTEE: By accepting or approving anything
required to be observed, performed or fulfilled or to be given to Trustee or
Beneficiary pursuant to the Senior Credit Documents, including but not limited
to, any officer's certificate, balance sheet, statement of profit and loss or
other financial statement, survey, appraisal or insurance policy, neither
Trustee nor Beneficiary shall be deemed to have warranted, consented to, or
affirmed the sufficiency, legality, effectiveness or legal effect of the same,
or of any term, provision or condition thereof, and such acceptance or approval
thereof shall not be or constitute any warranty, consent or affirmation with
respect thereto by Trustee or Beneficiary.
9.8 [INTENTIONALLY OMITTED]
ARTICLE X
MISCELLANEOUS
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10.1 PERFORMANCE AT GRANTOR'S EXPENSE: The cost and expense of
performing or complying with any and all of the General Senior Obligations shall
be borne solely by Grantor, and no portion of such cost and expense shall be, in
any way or to any extent, credited against any installment on or portion of the
General Senior Obligations which may be payable by Grantor pursuant to the
Senior Credit Documents.
10.2 SURVIVAL OF GENERAL SENIOR OBLIGATIONS: Each and all of the
General Senior Obligations shall survive the execution and delivery of the
Senior Credit Documents and the consummation of the loans and other extensions
of credit called for therein and shall continue in full force and effect with
respect to Grantor until the Security Termination Date shall have occurred.
10.3 FURTHER ASSURANCES: Grantor, upon the request of Trustee,
Beneficiary or the Designated Collateral Subagent, will execute, acknowledge,
and record and/or file such further instruments and do such further acts as may
be reasonably necessary, desirable or proper to carry out more effectively the
purpose of the Senior Credit Documents and to subject to the liens and security
interests thereof any property intended by the terms thereof to be covered
thereby, including specifically but without limitation, any renewals, additions,
substitutions, replacements, betterments or appurtenances to the then Mortgaged
Property.
10.4 RECORDING AND FILING: Grantor will cause this Deed of Trust and
all amendments and supplements thereto and supplements therefor to be recorded,
filed, re-recorded and refiled in such manner and in such places as required by
applicable law or as Trustee, Beneficiary or the Designated Collateral Subagent
shall reasonably request, and will pay all such recording, filing, re-recording
and refiling taxes, fees and other charges.
10.5 NOTICES: Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor) (provided that if such day is not a Business Day, such date of
delivery or receipt shall be deemed to be the next following Business Day), (ii)
on the day of receipt (provided that if such day is not a Business Day, such
date of delivery or receipt shall be deemed to be the next following Business
Day) at such address, telefacsimile number or telex number as may from time to
time be specified by such party in written notice to the other parties hereto or
otherwise received), in the case of notice by telegram or telefacsimile,
respectively (where the receipt of such message is verified by return), or (iii)
on the fifth Business Day after the day on which mailed, if sent prepaid by
certified or registered mail, return receipt requested, in each case delivered,
transmitted or mailed, as the case may be, to the address or telefacsimile
number, as appropriate, set forth below or such other address or number as such
party shall specify by notice hereunder:
(a) if to the Grantor:
Cone Mills Corporation
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3101 North Elm Street
Greensboro, North Carolina 27415-6540
Attention: David E. Bray
Telephone: (336) 379-6098
Telefacsimile: (336) 379-6043
with a copy to:
Schell Bray Aycock Abel & Livingston P.L.L.C.
Suite 1500 Renaissance Plaza
230 North Elm Street
Greensboro, North Carolina 27401
Attention: William P. Aycock, II
Telephone: (336) 370-8800
Telefacsimile: (336) 370-8830
(b) if to the Beneficiary:
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Telephone: (302) 651-1000
Telefacsimile: (302) 651-8882
(c) if to the Designated Collateral Subagent:
Bank of America, N.A.
100 North Tryon Street, 17th Floor
Charlotte, North Carolina 28202
Attention: Pfifer Helms
Telephone: (704) 386-5358
Telefacsimile: (704) 386-1270
with a copy to:
Bank of America, N.A.
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 386-9368
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Telefacsimile: (704) 386-9923
(d) If to the Trustee:
TIM, Inc.
100 North Tryon Street, 17th Floor
Charlotte, North Carolina 28202
Attention: Pfifer Helms
Telephone: (704) 386-5358
Telefacsimile: (704) 386-1270
10.6 NO WAIVER; REMEDIES: The Beneficiary's failure, at any time or
times hereafter, to require strict performance by the Grantor of any provision
of this Deed of Trust shall not waive, affect or diminish any right of the
Beneficiary, the Designated Collateral Subagent or Trustee thereafter to demand
strict compliance and performance therewith, and the Beneficiary's, Designated
Collateral Subagent's or Trustee's single or partial exercise of any right,
remedy, power or privilege hereunder shall not preclude any other or further
exercise thereof or the exercise of any other right, remedy, power, or
privilege. The rights, remedies, powers or privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers or privileges
provided by applicable Legal Requirements. Any suspension or waiver by the
Beneficiary, the Designated Collateral Subagent, Trustee or the applicable
General Secured Parties (or an agent on their behalf) of a default by the
Grantor under this Deed of Trust or under any of the other Senior Credit
Documents shall not suspend, waive or affect any other default thereunder,
whether the same is prior or subsequent thereto and whether of the same or of a
different kind of character. None of the undertakings, agreements, warranties,
covenants and representations of the Grantor contained in this Deed of Trust and
no default by the Grantor under this Deed of Trust shall be deemed to have been
suspended or waived unless such suspension or waiver is in writing signed by an
officer of the Beneficiary or the Designated Collateral Subagent, and directed
to the Grantor specifying such suspension or waiver.
10.7 BENEFICIARY'S AND GENERAL SECURED PARTIES' RIGHT TO PERFORM THE
OBLIGATIONS:
(A) If Grantor shall fail, refuse or neglect to make any
payment or perform any act required of it by this Deed of Trust
(including the Grantor's obligation under Section 4.3 hereof to defend
the first lien status of this Deed of Trust), then at any time
thereafter, upon reasonable notice to Grantor and without waiving or
releasing any other right, remedy or
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recourse Beneficiary or the applicable General Secured Parties (or an
agent on their behalf) may have because of same, Beneficiary or the
Designated Collateral Subagent may (but shall not be obligated to) make
such payment or perform such act for the account of and at the expense
of Grantor, and shall have the right to enter upon or in the Land and
Buildings for such purpose and to take all such action thereon and with
respect to the Mortgaged Property as it may deem reasonably necessary
or appropriate. In its exercise of its rights under this Section 10.7,
if Beneficiary or the Designated Collateral Subagent shall elect to pay
any Imposition or other sums due with reference to the Mortgaged
Property, Beneficiary or the Designated Collateral Subagent may do so
in reliance on any bill, statement or assessment procured from the
appropriate governmental authority or other issuer thereof without
inquiring into the accuracy or validity thereof subject to any other
applicable terms and provisions set forth herein. Similarly, in making
any payments to protect the security intended to be created by the
Senior Credit Documents, Beneficiary or the Designated Collateral
Subagent shall not be bound to inquire into the validity of any
apparent or threatened adverse title, lien, encumbrance, claim or
charge before making an advance for the purpose of preventing or
removing the same subject to any other applicable terms and provisions
set forth herein. GRANTOR SHALL INDEMNIFY BENEFICIARY AND THE
DESIGNATED COLLATERAL SUBAGENT FOR ALL LOSSES, EXPENSES, DAMAGE, CLAIMS
AND CAUSES OF ACTION, INCLUDING REASONABLE ATTORNEY'S FEES, INCURRED OR
ACCRUING BY REASON OF ANY ACTS PERFORMED BY BENEFICIARY OR THE
DESIGNATED COLLATERAL SUBAGENT PURSUANT TO THE PROVISIONS OF THIS
SECTION 10.7. ALL SUMS PAID BY BENEFICIARY OR THE DESIGNATED COLLATERAL
SUBAGENT PURSUANT TO THIS SECTION 10.7 AND ALL OTHER SUMS EXPENDED BY
BENEFICIARY OR THE DESIGNATED COLLATERAL SUBAGENT TO WHICH IT SHALL BE
ENTITLED TO BE INDEMNIFIED, TOGETHER WITH INTEREST THEREON AT THE
DEFAULT RATE FROM THE DATE OF SUCH PAYMENT OR EXPENDITURE, SHALL
CONSTITUTE ADDITIONS TO THE OBLIGATIONS, AND SHALL BE SECURED BY THE
LOAN DOCUMENTS AND GRANTOR COVENANTS AND AGREES TO PAY THEM TO THE
ORDER OF BENEFICIARY UPON DEMAND. THE FOREGOING INDEMNITY SHALL INCLUDE
WITHOUT LIMITATION OF THE FOREGOING INDEMNITY, THE INDEMNITY OF EACH OF
THE PARTIES INDEMNIFIED HEREIN WITH RESPECT TO CLAIMS, DEMANDS, LOSSES,
DAMAGES (INCLUDING CONSEQUENTIAL DAMAGES) LIABILITIES, CAUSES OF
ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES AND COURT COSTS) AND MATTERS WHICH IN WHOLE OR IN PART
ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OTHER THAN GROSS (WHETHER
SOLE, CONTRIBUTORY, COMPARATIVE, OR OTHERWISE) OF SUCH AND/OR ANY OTHER
INDEMNIFIED PARTY OR FOR WHICH SUCH INDEMNIFIED PARTY MAY HAVE STRICT
LIABILITY.
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(b) Any reference in this Deed of Trust to amounts advanced by
or owed to Beneficiary or the Designated Collateral Subagent shall be
deemed to refer equally to amounts advanced by or owed to the Trustee
or the General Secured Parties, and wherever Beneficiary or the
Designated Collateral Subagent is required or permitted to advance
funds, such funds may be advanced by the Trustee or the General Secured
Parties with the same effect as if advanced by Beneficiary or the
Designated Collateral Subagent.
10.8 COVENANTS RUNNING WITH THE LAND: All General Senior Obligations
are intended by the parties to be, and shall be construed as, covenants running
with the Mortgaged Property until such Mortgaged Property has been released from
the lien of this Deed of Trust.
10.9 SUCCESSORS AND ASSIGNS: All of the terms of this Deed of Trust
shall apply to, be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
10.10 SEVERABILITY: This Deed of Trust is intended to be performed in
accordance with, and only to the extent permitted by, applicable Legal
Requirements. If any provision of this Deed of Trust or the application thereof
to any person or circumstance shall, for any reasons and to any extent, be
invalid or unenforceable, then neither the remainder of this Deed of Trust nor
the application of such provision to other persons or circumstances nor the
other instruments referred to above shall be affected thereby, but rather shall
be enforced to the greatest extent permitted by applicable law.
10.11 ENTIRE AGREEMENT AND MODIFICATION: The Senior Credit Documents
including the Security Documents contain the entire agreement between the
parties relating to the subject matter hereof and thereof and all prior
agreements relative thereto which are not contained herein or therein are
terminated. This Deed of Trust may not be amended, revised, waived, discharged,
released or terminated orally but only by a written instrument or instruments
executed by the party against which enforcement of the amendment, revision,
waiver, discharge, release or termination is asserted. Any alleged amendment,
revision, waiver, discharge, release or termination which is not so documented
shall not be effective as to any party. In the event of a conflict between the
covenants contained herein and the covenants contained in the other Senior
Credit Documents, the more specific covenants contained herein shall govern with
respect to the Mortgaged Property.
10.12 APPLICABLE LAW: THE PARTIES TO THIS DEED OF TRUST AGREE
THAT THEIR RIGHTS AND OBLIGATIONS UNDER THIS DEED OF TRUST SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF NORTH CAROLINA,
WITHOUT GIVING EFFECT TO THE CONFLICTS-OF LAW RULES AND PRINCIPLES THEREOF. THE
PARTIES FURTHER AGREE AND STIPULATE THAT THIS DEED OF TRUST WAS NEGOTIATED
PRIMARILY IN NORTH CAROLINA AND THAT NORTH CAROLINA HAS A SUBSTANTIAL
RELATIONSHIP TO
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THE PARTIES AND TO THE UNDERLYING TRANSACTIONS SECURED BY THIS DEED OF TRUST.
NOTWITHSTANDING THE FOREGOING, THE PARTIES AGREE THAT:
(A) THE PROCEDURES GOVERNING THE ENFORCEMENT BY BENEFICIARY
AND THE DESIGNATED COLLATERAL SUBAGENT OF THE PROVISIONAL REMEDIES
AGAINST GRANTOR, INCLUDING BY WAY OF ILLUSTRATION BUT NOT LIMITATION,
ACTIONS FOR REPLEVIN, FOR CLAIM AND DELIVERY OF PROPERTY, FOR
INJUNCTIVE RELIEF OR FOR THE APPOINTMENT OF A RECEIVER AND THE
REQUIREMENTS NECESSARY TO CREATE OR GRANT, PERFECT OR FORECLOSE ON, OR
DETERMINE THE PRIORITY OF, THE LIEN AND SECURITY INTEREST OF THIS DEED
OF TRUST, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NORTH CAROLINA;
(B) OTHER THAN AS SET FORTH IN SUBSECTION (A) ABOVE, TRUSTEE,
BENEFICIARY AND THE DESIGNATED COLLATERAL SUBAGENT SHALL COMPLY WITH
THE APPLICABLE LAW OF THE STATE OF NORTH CAROLINA, TO THE EXTENT
REQUIRED IN CONNECTION WITH THE POWER OF SALE OR THE FORECLOSURE OF THE
SECURITY INTERESTS AND LIENS CREATED HEREBY. THE PARTIES FURTHER AGREE
THAT EITHER BENEFICIARY OR THE DESIGNATED COLLATERAL SUBAGENT MAY
ENFORCE ITS RIGHTS UNDER THIS DEED OF TRUST, INCLUDING BUT NOT LIMITED
TO, ITS RIGHT TO SUE GRANTOR, TO COLLECT ANY OUTSTANDING INDEBTEDNESS
OR TO OBTAIN A JUDGMENT FOR ANY DEFICIENCY FOLLOWING FORECLOSURE, IN
ACCORDANCE WITH THE LAWS OF NORTH CAROLINA.
(C) GRANTOR HEREBY ACKNOWLEDGES, WARRANTS AND REPRESENTS THAT
IT IS SOPHISTICATED, KNOWLEDGEABLE AND EXPERIENCED IN COMMERCIAL
TRANSACTIONS SIMILAR TO THE TRANSACTION EMBODIED IN THIS DEED OF TRUST
AND THE SENIOR CREDIT DOCUMENTS; IT HAS BEEN FULLY, COMPLETELY AND
ADEQUATELY REPRESENTED AND ADVISED BY COMPETENT COUNSEL AND OTHER
CONSULTANTS RETAINED FOR SUCH PURPOSES IN CONNECTION WITH ALL ASPECTS
(INCLUDING BUSINESS AND LEGAL) OF THE TRANSACTIONS UNDER THIS DEED OF
TRUST AND THE SENIOR CREDIT DOCUMENTS; ALL PARTIES TO SUCH TRANSACTION
HAVE EQUAL BARGAINING STRENGTH; AND, BASED ON THE FOREGOING, THE
PARTIES HAVE SELECTED THE LAW OF THE STATE OF NORTH CAROLINA TO GOVERN
THIS DEED OF TRUST AS HEREIN SPECIFIED; AND
(D) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE TERMS AND
CONDITIONS IMPLIED IN MORTGAGES BY VIRTUE OF ANY PRESENT OR FUTURE
STATUTE IN FORCE IN NORTH CAROLINA SHALL FOR THE
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PURPOSES OF THIS DEED OF TRUST BE NEGATED OR VARIED ONLY SO FAR AS THEY
ARE INCONSISTENT WITH THE TERMS AND CONDITIONS HEREOF AND ARE OTHERWISE
HEREBY VARIED SO AS TO BECOME CONSISTENT WITH THIS DEED OF TRUST.
10.13 NO PARTNERSHIP; CONTROL IN GRANTOR: Except to the extent
occurring as a matter of law (a) nothing contained in this Deed of Trust is
intended to, or shall be construed as, creating to any extent and in any manner
whatsoever, any partnership, joint venture, or association between Grantor,
Trustee, Beneficiary, the Designated Collateral Subagent or any of the General
Secured Parties, or in any way make Beneficiary, the Designated Collateral
Subagent, the Trustee or any of the General Secured Parties co-principals with
Grantor with reference to all or any portion of the Mortgaged Property, and any
inferences to the contrary are hereby expressly negated; (b) notwithstanding
anything contained herein which may be to the contrary, this Deed of Trust, the
Senior Credit Documents, any agreement, deed of trust or other document referred
to herein by reference, whether specifically or generally, and the transactions
contemplated hereby do not and will not constitute or create indirect, actual or
practical ownership of the Mortgaged Property of Grantor by Beneficiary, the
Designated Collateral Subagent or any of the General Secured Parties, or
control, affirmative or negative, direct or indirect, by Beneficiary, the
Designated Collateral Subagent or any of the General Secured Parties over the
programming, management, or any other aspect of the day-to-day operation of the
Mortgaged Property or Grantor, which control remains in Grantor, its
shareholders and board of directors; and (c) Beneficiary's and the Designated
Collateral Subagent's activities in connection with this Deed of Trust, the Loan
Documents and the Senior Credit Documents shall not be "outside the scope of the
activities of a lender of money" within the meaning of any applicable statutes,
as amended or recodified from time to time, and Beneficiary and the Designated
Collateral Subagent do not intend to ever assume any responsibility to any
person for the quality, suitability, safety or condition of the Mortgaged
Property. Neither Beneficiary nor the Designated Collateral Subagent nor any of
the General Secured Parties shall be directly or indirectly liable or
responsible for any loss, claim, cause of action, liability, indebtedness,
damage or injury of any kind or character to any person or property arising from
any construction, or occupancy or use of, any of the Mortgaged Property, whether
caused by or arising from: (i) any defect in any building, structure, grading,
fill, landscaping or other improvements-thereon or in any on-site or off-site
improvement or other facility therein or thereon; (ii) any act or omission of
Grantor or any of its agents, employees, independent contractors, licensees or
invitees; (iii) any accident in or on any of the Mortgaged Property or any fire,
flood or other casualty or hazard thereon; (iv) the failure of Grantor, any of
its licensees, employees, invitees, agents, independent contractors or other
representatives to maintain the Mortgaged Property in a safe condition; and (v)
any nuisance made or suffered on any part of the Mortgaged Property.
10.14 HEADINGS: The Article, Section and Subsection titles hereof are
inserted for convenience of reference only and shall in no way alter, modify or
define, or be used in construing, the text of such Articles, Sections or
Subsections.
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10.15 HOLD HARMLESS: NEITHER TRUSTEE, BENEFICIARY, THE DESIGNATED
COLLATERAL SUBAGENT NOR ANY OF THE GENERAL SECURED PARTIES SHALL BE OBLIGATED TO
PERFORM OR DISCHARGE, NOR DO ANY OF THEM HEREBY UNDERTAKE TO PERFORM OR
DISCHARGE, ANY OBLIGATION, DUTY OR LIABILITY WITH RESPECT TO THE MORTGAGED
PROPERTY UNDER OR BY REASON OF THIS DEED OF TRUST OR ANY OF THE SENIOR CREDIT
DOCUMENTS, AND GRANTOR SHALL AND DOES HEREBY AGREE TO INDEMNIFY TRUSTEE,
BENEFICIARY, THE DESIGNATED COLLATERAL SUBAGENT AND EACH GENERAL SECURED PARTY
FOR AND TO HOLD TRUSTEE, BENEFICIARY, THE DESIGNATED COLLATERAL SUBAGENT AND
EACH GENERAL SECURED PARTY HARMLESS FROM ANY AND ALL LIABILITY, LOSS OR DAMAGE
WHICH THEY MAY OR MIGHT INCUR WITH RESPECT TO THE MORTGAGED PROPERTY OR UNDER OR
BY REASON OF THIS DEED OF TRUST OR ANY OF THE SENIOR CREDIT DOCUMENTS AND FROM
ANY AND ALL CLAIMS AND DEMANDS WHATSOEVER WHICH MAY BE ASSERTED AGAINST THEM BY
REASON OF ANY ALLEGED OBLIGATIONS OR UNDERTAKINGS ON THEIR PART TO PERFORM OR
DISCHARGE ANY OF THE TERMS, COVENANTS, OR AGREEMENTS RELATING TO THE MORTGAGED
PROPERTY EXCEPT TO THE EXTENT SUCH CLAIM IS FOUND IN A FINAL, NON-APPEALABLE
JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM ANY SUCH
INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. SHOULD TRUSTEE,
BENEFICIARY, THE DESIGNATED COLLATERAL SUBAGENT OR ANY GENERAL SECURED PARTY
INCUR ANY SUCH LIABILITY, LOSS OR DAMAGE, THE AMOUNT THEREOF, INCLUDING ALL
ATTORNEYS' FEES AND COSTS AND EXPENSES ASSOCIATED WITH ACTIONS TAKEN BY TRUSTEE,
BENEFICIARY, THE DESIGNATED COLLATERAL SUBAGENT OR ANY SUCH GENERAL SECURED
PARTY IN DEFENSE THEREOF, OR OTHERWISE IN PROTECTING THEIR INTERESTS HEREUNDER,
SHALL BE SECURED HEREBY, AND GRANTOR COVENANTS AND AGREES TO REIMBURSE TRUSTEE,
BENEFICIARY, THE DESIGNATED COLLATERAL SUBAGENT OR ANY SUCH GENERAL SECURED
PARTY THEREFOR IMMEDIATELY UPON DEMAND. THE FOREGOING INDEMNITY SHALL INCLUDE
WITHOUT LIMITATION OF THE FOREGOING INDEMNITY, THE INDEMNITY OF EACH OF THE
PARTIES INDEMNIFIED HEREIN WITH RESPECT TO CLAIMS, DEMANDS, LOSSES, DAMAGES
(INCLUDING CONSEQUENTIAL DAMAGES) LIABILITIES, CAUSES OF ACTION, JUDGMENTS,
PENALTIES, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES AND COURT
COSTS) AND MATTERS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE
NEGLIGENCE OTHER THAN GROSS (WHETHER SOLE, CONTRIBUTORY, COMPARATIVE, OR
OTHERWISE) OF SUCH AND/OR ANY OTHER INDEMNIFIED PARTY OR FOR WHICH SUCH
INDEMNIFIED PARTY MAY HAVE STRICT LIABILITY.
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10.16 PRONOUNS AND PLURALS: All pronouns used herein shall be deemed to
refer to the masculine, feminine, neuter, singular or plural as the context may
require, and the singular form of nouns, pronouns and verbs shall include the
plural, and vice versa, whichever the context may require.
10.17 WAIVER OF TRIAL BY JURY: TO THE EXTENT PERMITTED UNDER THE LAWS
OF THE STATE IN WHICH THE APPLICABLE PORTION OF THE MORTGAGED PROPERTY IS
SITUATED, GRANTOR AND THE BENEFICIARY EACH HEREBY WAIVES AND SHALL WAIVE TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS DEED OF TRUST.
10.18 ASSIGNMENT: Beneficiary and the Designated Collateral Subagent
each may assign or transfer all or any portion of its rights under this Deed of
Trust.
10.19 NO MERGER: So long as this Deed of Trust is an encumbrance upon
the Mortgaged Property, there shall be no merger of the interest of any lessor
or any lessee under any Lease or sublease.
10.20 ENFORCEABILITY OF LIEN: In the event that any part of the General
Senior Obligations cannot be lawfully secured by this Deed of Trust, or the lien
or security interest hereof cannot be lawfully enforced to pay any part of the
General Senior Obligations, then and in either such event, at the option of
Beneficiary, all payments on the General Senior Obligations shall be deemed to
have been first applied against the unsecured part of the General Senior
Obligations.
10.21 KNOWLEDGE: Whenever referenced in this Deed of Trust, the
"knowledge" or "best knowledge" of Grantor shall include the knowledge of its
parent corporations, if any, and its Subsidiaries, if any.
10.22 BEST EFFORTS: Whenever referenced in this Deed of Trust, the term
"best efforts" shall not be interpreted as requiring the expenditure of
unreasonable sums of money, in view of the objectives sought.
10.23 USURY SAVINGS CLAUSE: Nothing contained herein or in the Senior
Credit Documents shall be deemed to require the payment of interest or other
charges by Grantor in excess of the amount Beneficiary and the applicable
General Secured Parties may lawfully charge under the applicable usury laws (the
"Highest Lawful Rate"). In the event Beneficiary shall collect monies which are
deemed to constitute interest which would increase the effective interest rate
to a rate in excess of that permitted to be charged by applicable law, all such
sums deemed to constitute interest in excess of the legal rate shall, upon such
determination, at the option of Beneficiary, be returned to the Grantor or
credited against the principal balance of any General Senior Obligation secured
hereby then outstanding.
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10.24 PAYMENT OF PRIOR ENCUMBRANCES: If any or all of the proceeds of
the General Senior Obligations have been used to extinguish, extend or renew any
indebtedness heretofore existing against the Mortgaged Property or to satisfy
any indebtedness or obligation secured by a lien or encumbrance of any kind
(including liens securing the payment of any Impositions), such proceeds have
been advanced by Beneficiary at Grantor's request, and, to the extent of such
funds so used, the General Senior Obligations in this Deed of Trust shall be
subrogated to and extend to all of the rights, claims, liens, titles and
interests heretofore existing against the Mortgaged Property to secure the
indebtedness or obligation so extinguished, paid, extended or renewed, and the
former rights, claims, liens, title and interests, if any, shall not be waived
but rather shall be continued in full force and effect and in favor of the
Beneficiary and shall be merged with the lien and security for the repayment of
and satisfaction of the General Senior Obligations.
[Signatures on following page]
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Grantor hereby acknowledges that it has received a copy of this Deed
of Trust free of charge.
WITNESS THE EXECUTION OF THIS DEED OF TRUST, SECURITY AGREEMENT,
FIXTURE FILING, ASSIGNMENT OF LEASES AND RENTS AND FINANCING STATEMENT under
seal as of the date first above written.
CONE MILLS CORPORATION
a North Carolina corporation
By: (SEAL)
-------------------------
Name:
Title:
Attest: (SEAL)
-------------------------
Name:
Title:
(CORPORATE SEAL)
This Instrument prepared by and
when recorded mail to:
Charles N. Anderson, Jr.
Smith Helms Mulliss & Moore, L.L.P.
201 North Tryon Street
Charlotte, North Carolina 28202
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STATE OF ___________________
COUNTY OF _________________
I, the undersigned, a Notary Public of said County and State, do hereby
certify that _______________________________ personally appeared before me this
day and acknowledged that _____ is the ________ Secretary of Cone Mills
Corporation, a North Carolina corporation, and that by authority duly given, and
as the act of the corporation, the foregoing instrument was signed in its name
by its __________ President, sealed with its corporate seal and attested by
__________ as its Secretary.
WITNESS my hand and official seal or stamp, this the _____ day of
January, 2000.
-----------------------
Notary Public
My Commission Expires:
- ----------------------------
[SEAL or STAMP]
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EXHIBIT A
Land
55
Priority DOT NC
PREPARED BY AND WHEN
RECORDED MAIL TO:
Charles N. Anderson, Jr.
Smith, Helms, Mulliss & Moore, L.L.P.
201 North Tryon Street
Charlotte, North Carolina 28202
- --------------------------------------------------------------------------------
DEED OF TRUST, SECURITY AGREEMENT,
FIXTURE FILING, ASSIGNMENT OF LEASES AND RENTS
AND
FINANCING STATEMENT
Dated and effective as of January , 2000
between
CONE MILLS CORPORATION, a North Carolina corporation
Grantor,
and
TIM, INC. (the "Trustee"),
and
BANK OF AMERICA, N.A.,
as Priority Collateral Agent
and Beneficiary
THIS INSTRUMENT SECURES PRIORITY SENIOR OBLIGATIONS WHICH INCLUDES FUTURE
ADVANCES BY CERTAIN PRIORITY SECURED PARTIES TO GRANTOR
INCLUDING, AMONG OTHER THINGS, TERM LOANS, SWING LINE LOANS,
A REVOLVING LINE OF CREDIT AND REIMBURSEMENT OF
ADVANCES MADE UNDER LETTERS OF CREDIT.
THIS INSTRUMENT COVERS GOODS WHICH ARE OR ARE TO BECOME
FIXTURES RELATED TO THE REAL ESTATE DESCRIBED HEREIN AND IS TO BE
RECORDED IN THE DEED RECORDS AND IS ALSO TO BE
INDEXED IN THE INDEX OF FINANCING STATEMENTS OR OF
FIXTURE FILINGS.
REFER TO PAGE ONE OF THIS INSTRUMENT FOR ADDITIONAL
INFORMATION CONCERNING THE DEBTOR AND SECURED PARTY.
<PAGE>
Table of Contents
ARTICLE I
DEFINITIONS
1.1 Definitions.........................................................2
1.2 Defined Terms.......................................................9
ARTICLE II
GRANT
2.1 Grant...............................................................9
2.2 Defeasance and Reconveyance.........................................9
2.3 Provisions Concerning North Carolina; Future Advances..............10
2.4 Credit Agreement...................................................10
ARTICLE III
WARRANTIES AND REPRESENTATIONS
3.1 Title to Mortgaged Property and Lien of this Instrument............10
3.2 [Intentionally Omitted]............................................11
3.3 [Intentionally Omitted]............................................11
3.4 Powers of Termination and Rights of Reverter.......................11
3.5 Wetlands...........................................................11
3.6 Environmental Matters..............................................12
ARTICLE IV
AFFIRMATIVE COVENANTS
4.1 Payment and Performance............................................13
4.2 Compliance with Legal Requirements.................................13
4.3 Lien Status........................................................13
4.4 Payment of Impositions and Other Amounts...........................13
4.5 Repair.............................................................14
4.6 Insurance..........................................................15
4.7 Restoration Following Casualty.....................................17
4.8 Application of Proceeds............................................17
4.9 Inspection.........................................................18
4.10 Leases.............................................................18
4.11 [Intentionally Omitted]............................................18
<PAGE>
4.12 Taxes..............................................................19
4.13 Collection Costs...................................................19
4.14 Reserves...........................................................20
4.15 Estoppel Certificates..............................................21
4.16 Creation and Recordation of Additions and Betterments..............21
4.17 Consents...........................................................21
4.18 [Intentionally Omitted]............................................21
4.19 [Intentionally Omitted]............................................21
4.20 [Intentionally Omitted] ...........................................21
4.21 Change of Name or Address..........................................21
4.22 [Intentionally Omitted]............................................21
4.23 Notice of and Response to Environmental Complaint..................21
4.24 Indemnification....................................................22
4.25 Other Agreements...................................................23
4.26 Transfer of License................................................23
ARTICLE V
NEGATIVE COVENANTS
5.1 Use Violations.....................................................23
5.2 Waste..............................................................23
5.3 Transfer of Mortgaged Property; Partial Release....................24
5.4 Rights of Reverter and Powers of Termination.......................24
ARTICLE VI
DEFAULT AND FORECLOSURE
6.1 Remedies...........................................................24
6.2 No Conditions Precedent to Exercise of Remedies....................27
6.3 Release of and Resort to Collateral................................27
6.4 Waivers............................................................28
6.5 Discontinuance of Proceedings......................................28
6.6 Application of Proceeds............................................28
6.7 Cooperation........................................................29
ARTICLE VII
CONDEMNATION
7.1 General............................................................29
7.2 Rebuilding, Restoration and Repair.................................29
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ARTICLE VIII
SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS
8.1 Assignment.........................................................30
8.2 Collection of Rents................................................31
8.3 Beneficiary's Powers of Attorney...................................31
8.4 Grantor Remains Liable.............................................33
8.5 Grantor's Representations and Warranties...........................33
8.6 Grantor's Covenants................................................34
8.7 Effect of Release of Mortgaged Property............................35
8.8 Hold Harmless......................................................35
ARTICLE IX
CONCERNING THE TRUSTEE
9.1 No Required Action.................................................36
9.2 Certain Rights.....................................................37
9.3 Retention of Moneys................................................37
9.4 Successor Trustees.................................................37
9.5 Perfection of Appointment..........................................38
9.6 Succession Instruments.............................................38
9.7 No Representation by Trustee.......................................38
9.8 [Intentionally Omitted]............................................38
ARTICLE X
MISCELLANEOUS
10.1 Performance at Grantor's Expense...................................38
10.2 Survival of Secured Obligations....................................39
10.3 Further Assurances.................................................39
10.4 Recording and Filing...............................................39
10.5 Notices............................................................39
10.6 No Waiver..........................................................40
10.7 Beneficiary's and Secured Creditors' Right to Perform the
Obligations......................................................41
10.8 Covenants Running with the Land....................................42
10.9 Successors and Assigns.............................................42
10.10 Severability.......................................................42
10.11 Entire Agreement and Modification..................................42
10.12 APPLICABLE LAW.....................................................43
10.13 No Partnership; Control in Grantor.................................44
10.14 Headings...........................................................44
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10.15 Hold Harmless......................................................45
10.16 Pronouns and Plurals...............................................45
10.17 WAIVER OF TRIAL BY JURY............................................45
10.18 Assignment.........................................................46
10.19 No Merger..........................................................46
10.20 Enforceability of Lien.............................................46
10.21 Knowledge..........................................................46
10.22 Best Efforts.......................................................46
10.23 Usury Savings Clause...............................................46
10.24 Payment of Prior Encumbrances......................................46
EXHIBIT A Land...............................................................50
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THIS INSTRUMENT IS A DEED OF TRUST, SECURITY AGREEMENT, FIXTURE FILING,
ASSIGNMENT OF LEASES AND RENTS AND FINANCING STATEMENT OF BOTH REAL AND PERSONAL
PROPERTY, INCLUDING GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE REAL
PROPERTY DESCRIBED HEREIN, AND IS TO BE FILED FOR RECORD IN THE RECORDS WHERE
DEEDS OF TRUST OF REAL ESTATE ARE RECORDED. ADDITIONALLY, THIS INSTRUMENT SHOULD
BE APPROPRIATELY INDEXED, NOT ONLY AS A DEED OF TRUST, BUT ALSO AS A FINANCING
STATEMENT OR FIXTURE FILING COVERING GOODS THAT ARE OR ARE TO BECOME FIXTURES ON
THE REAL PROPERTY DESCRIBED HEREIN. THE NAMES OF THE GRANTOR (DEBTOR/MORTGAGOR)
AND THE TRUSTEE AND BENEFICIARY (SECURED PARTY/MORTGAGEE), THE MAILING ADDRESSES
OF THE GRANTOR (DEBTOR/MORTGAGOR), THE ADDRESS OF THE TRUSTEE AND BENEFICIARY
(SECURED PARTY/MORTGAGEE) FROM WHICH INFORMATION CONCERNING THE SECURITY
INTEREST MAY BE OBTAINED, AND A STATEMENT INDICATING THE TYPES, OR DESCRIBING
THE ITEMS OF COLLATERAL, ARE SET FORTH BELOW IN SECTIONS 1.1 AND 10.5 OF THIS
INSTRUMENT, RESPECTIVELY. THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY
PROVISIONS AND SECURES OBLIGATIONS CONTAINING PROVISIONS FOR CHANGES IN INTEREST
RATES, EXTENSIONS OF TIME FOR PAYMENT AND OTHER MODIFICATIONS IN THE TERMS OF
THE OBLIGATIONS. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN CONTAINED, THIS
INSTRUMENT SHALL BE DEEMED TO BE AND SHALL BE ENFORCEABLE AS A DEED OF TRUST AND
AS A SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FINANCING STATEMENT.
THIS INSTRUMENT SECURES FUTURE ADVANCES MADE PURSUANT TO THE PROVISIONS HEREOF
AND THE PRIORITY CREDIT DOCUMENTS REFERRED TO BELOW.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
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DEED OF TRUST, SECURITY AGREEMENT,
FIXTURE FILING, ASSIGNMENT OF LEASES AND RENTS AND
FINANCING STATEMENT
THIS DEED OF TRUST, SECURITY AGREEMENT, FIXTURE FILING, ASSIGNMENT OF
LEASES AND RENTS, AND FINANCING STATEMENT (hereinafter referred to as this "Deed
of Trust" or this "Mortgage"), is entered into as of the _____ day of January,
2000, by and among CONE MILLS CORPORATION, a North Carolina corporation, the
mortgagor, grantor and trustor hereunder (herein called "Grantor"), whose
address for all purposes hereunder is 3101 North Elm Street, Greensboro, North
Carolina 27415; TIM, INC., a North Carolina corporation, the trustee hereunder
(herein called "Trustee"), whose address for all purposes hereunder is 100 North
Tryon Street, 17th Floor, Charlotte, North Carolina 28255; and BANK OF AMERICA,
N.A., as Priority Collateral Agent (the "Priority Collateral Agent") under that
certain Priority Collateral Agency Agreement of even date herewith among the
Priority Collateral Agent, The Prudential Insurance Company of America, as
holder of the Senior Notes (the "Senior Notes Holder", which term shall include
each of its successors and and assigns in such capacity), SunTrust Bank
("SunTrust") and Atlantic Financial Group, Ltd. ("Atlantic Financial"), as
creditor of the Senior Lease Obligations (together, the "Senior Lease Creditor",
which term shall include each of their successors and assigns in such capacity),
and Bank of America, N.A., a national banking association, acting in its
capacity as Agent (in such capacity the "Revolving Credit Agent", which term
shall include each of its successors and and assigns in such capacity) for each
of the Lenders now or hereafter party to the Credit Agreement executed by the
Grantor, the Revolving Credit Agent and the Lenders (as amended from time to
time, the "Credit Agreement"), pursuant to which the Priority Collateral Agent
serves as such on behalf of and for the benefit of the Senior Notes Holder, the
Senior Lease Creditor, the Revolving Credit Agent, the Lenders, and all other
Priority Secured Parties at any time existing. The Priority Collateral Agent is
the beneficiary hereunder (herein called "Beneficiary", which term shall include
each of its successors and assigns in such capacity), whose address for all
purposes hereunder is 101 North Tryon Street, NC1-001-15-04, Charlotte, North
Carolina 28255. Beneficiary shall hold the interests and exercise the rights
granted hereunder in trust as Priority Collateral Agent for the benefit of and
as security for all Priority Secured Parties. This Deed of Trust secures the
Priority Senior Obligations (as defined below in Section 1.1) and, subject to
the limitation on the aggregate amount of Priority Senior Obligations contained
in the definition thereof, any modifications, extensions and renewals of the
Priority Senior Obligations, it being the intention of the parties hereto that
this Deed of Trust shall be deemed an open and continuing lien instrument to
secure all such Priority Senior Obligations now existing or hereafter arising
regardless of the extinguishment and payment of any one or more obligations owed
to the Priority Secured Parties. This Deed of Trust secures future advances
constituting Priority Senior Obligations made by the Priority Secured Parties to
the Grantor under the Senior Credit Documents and hereunder, and each such
future advance, whether or not evidenced by a note, and each note or other
instrument evidencing the same, shall, subject to the limitation on the
aggregate amount of Priority Senior Obligations contained in the definition
thereof, be secured hereby. All provisions of this Deed of Trust shall apply to
each future advance as well as to all other Priority Senior Obligations secured
hereby, whether or not evidenced by a
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note, and all such advances and other Priority Senior Obligations, and any
modifications, extensions and renewals of the same shall have the same lien
priority as if made on the date this Deed of Trust is recorded.
This Deed of Trust secures the Priority Senior Obligations (as defined
below in Section 1.1), and any modifications, extensions and renewals of the
same, which shall be construed in all cases to consist of, among other
obligations, the covenants of Grantor set forth in, and the amounts advanced to
or for the account, use or benefit of Grantor from time to time pursuant to the
Loan Documents (as defined below) and the Priority Credit Documents (as defined
below), the aggregate amount of the Priority Senior Obligations (as defined
below) actually outstanding at any particular time being subject to fluctuations
up or down due to further advances of loan proceeds and/or future repayments of
such loan proceeds from time to time over the term of such Priority Senior
Obligations and/or changes in the rate of interest charged in respect of
Priority Senior Obligations bearing interest at a floating rate (all of which
advances and repayments are hereby declared to be contemplated by the Grantor
and the Beneficiary at the time this Deed of Trust is executed).
At the request and direction of the Priority Secured Parties, the
Priority Collateral Agent has entered into an Intercreditor Agreement of even
date herewith by and among the Priority Collateral Agent, the Revolving Credit
Agent, the Senior Notes Holder, the Senior Lease Creditor, Morgan, and
Wilmington Trust Company, not individually but solely in its capacity as General
Collateral Agent as therein defined (the "Senior Debt Intercreditor Agreement")
for their mutual benefit, the benefit of the Persons for whom any of them serve
as agent, as applicable, in which the parties thereto acknowledged and agreed to
certain rights and undertakings with respect to Liens and security interests on
collateral securing, inter alia, the Priority Senior Obligations (including the
Lien conferred under this Deed of Trust) and for the allocation of proceeds
derived from any remedial actions undertaken pursuant to the Priority Security
Instruments, including this Deed of Trust.
WITNESSETH:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS : In addition to terms defined in the foregoing
recitals, as used herein, the following terms shall have the following meanings:
ASSIGNMENT: The assignment and delivery to Beneficiary as security for
the payment and performance of the Priority Senior Obligations of all of the
rights, titles, interests and estates of
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Grantor in and to all of the following: (a) the Leases, (b) the Rents, (c) the
Fixtures and (d) the Personalty.
BANKRUPTCY ACT: The Bankruptcy Reform Act of 1978, 11 U.S.C.ss.101, et
seq., as the same may be amended from time to time.
BUILDINGS: Any and all buildings, parking structures, utility sheds,
workrooms, air conditioning towers, open parking areas, and other structures or
improvements, and any and all additions, alterations, betterments or
appurtenances thereto, now or at any time hereafter situated, placed or
constructed upon the Land or any part thereof.
BUSINESS DAY: As defined in the Senior Debt Intercreditor Agreement.
DEFAULT: Any event, occurrence or condition which with the giving of
notice or lapse of time or both may become an Event of Default.
DEFAULT RATE: As defined in the Senior Debt Intercreditor Agreement.
ENVIRONMENTAL LAWS: Any federal, state or local statute, law,
ordinance, code, rule, regulation, order, decree, permit or license regulating,
relating to, or imposing liability or standards of conduct concerning,
environmental matters or conditions, environmental protection or conservation,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended; the Superfund Amendments and
Reauthorization Act of 1986, as amended; the Resource Conservation and Recovery
Act, as amended; the Toxic Substances Control Act, as amended; the Clean Air
Act, as amended; the Clean Water Act, as amended; together with all regulations
promulgated thereunder, and any other "Superfund" or "Superlien" law.
EQUIPMENT: All of the Grantor's right, title and interest in and to all
"equipment", as such term is defined in Section 9-109(2) of the UCC (as defined
below), now or hereafter existing, now owned or hereafter acquired by the
Grantor, which are now or hereafter located or to be located upon, within or
about the Land and the Buildings, or which are used in or related to the
operation of the Mortgaged Property, including, but not limited to, all
machinery, equipment, furnishings, fixtures, electrical equipment, vehicles and
computer and other electronic data-processing and other office equipment, any
movable walls and partitions and any and all additions, substitutions and
replacements of any of the foregoing, wherever located, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto.
EVENT OF DEFAULT: As defined in the Senior Debt Intercreditor
Agreement.
EXHIBITS: The exhibits attached hereto and incorporated herein by this
reference.
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EXPENSES: All out-of-pocket costs and expenses (including reasonable
fees and expenses of counsel and court costs) incurred and all advances made, by
the Beneficiary, and/or Trustee, as applicable, or any trustee, co-trustee or
agent of the Beneficiary, and/or Trustee pursuant to the provisions of, or in
furtherance of the Beneficiary's and/or Trustee's and/or any of the Priority
Secured Parties' (or any agent on their behalf) duties or rights under the
Priority Credit Documents, including, without limitation, expenses of retaking,
holding, preparing for sale or lease, selling and/or leasing the Mortgaged
Property, but excluding any of the same specifically described in the Priority
Credit Documents as being the responsibility of the Beneficiary.
FINANCING STATEMENT: As defined in Section 8.5 below.
FIXTURES: Equipment now owned or the ownership of which is hereafter
acquired by Grantor which is so related to the Land and Buildings forming part
of the Mortgaged Property that it is deemed a fixture or real property under the
laws of the State, including, without limitation, all building or construction
materials intended for construction, reconstruction, alteration or repair of or
installation on the Mortgaged Property, construction equipment, appliances,
machinery, plant equipment, fittings, apparatuses, fixtures and other items now
owned or the ownership of which is hereafter acquired by Grantor and now or
hereafter attached to, installed on or in, or used in connection with
(temporarily or permanently), any of the Buildings or the Land, or which in some
fashion are deemed to be fixtures to the Land or Buildings under the laws of the
State, including, but not limited to, the items described in the definition of
Equipment, furnaces, boilers, heaters, engines, devices for the operation of
pumps, pipes, plumbing, cleaning, call and sprinkler systems, fire and theft
protection apparatus and equipment, water tanks, air and water pollution
control, waste disposal, heating, ventilating, plumbing, lighting,
refrigerating, laundry, incinerating, air conditioning and air cooling equipment
and systems, gas and electric machinery, appurtenances and equipment, pollution
control equipment, disposals, dishwashers, refrigerators and ranges,
recreational equipment and facilities of all kinds, carpet, moveable or
immoveable walls or partitions, built-in oxygen and vacuum systems and water,
gas, electrical, storm and sanitary sewer facilities, utility lines and
equipment (whether owned individually or jointly with others, and, if owned
jointly, to the extent of Grantor's interest therein) and all other utilities
whether or not situated in easements, all water tanks, water supply, water power
sites, fuel stations, fuel tanks, fuel supply, and all other structures,
together with all accessions, appurtenances, additions, replacements,
betterments and substitutions for any of the foregoing and the proceeds thereof.
Notwithstanding the foregoing, "Fixtures" shall not include any property which
tenants are entitled to remove pursuant to their Leases.
FULLY SATISFIED: As defined in the Senior Debt Intercreditor
Agreement.
GRANTOR: The above-defined Grantor and any and all subsequent owners of
the Mortgaged Property.
HAZARDOUS MATERIAL: Any pollutant, contaminant, or hazardous, toxic or
dangerous waste, substance or material (including, without limitation, petroleum
products, asbestos-containing
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materials and lead), the generation, handling, storage, transportation,
disposal, treatment, release, discharge or emission of which is subject to any
Environmental Law.
HIGHEST LAWFUL RATE: As defined in Section 10.23 hereof.
IMPOSITIONS: All real estate and personal property taxes; water, gas,
sewer, electricity and other utility rates and charges; charges for any
easement, license or agreement maintained for the benefit of the Mortgaged
Property; and all other taxes, standby fees, levies, claims, charges and
assessments, general and special, ordinary and extraordinary, foreseen and
unforeseen of any kind and nature whatsoever which at any time prior to or after
the execution hereof may be assessed, levied or imposed upon the Mortgaged
Property or the Rents or the ownership, use, occupancy or enjoyment thereof, and
any interest, costs or penalties with respect to any of the foregoing.
INVENTORY: All of the Grantor's right, title and interest, whether now
owned or hereafter acquired, in and to all inventory in all of its forms,
wherever located, now or hereafter existing, including, but not limited to, (i)
goods in which the Grantor has an interest in mass or a joint or other interest
or right of any kind (including, without limitation, goods in which the Grantor
has an interest or right as consignee or consignor) and (ii) goods that are
returned to or repossessed by the Grantor, and all accessions thereto and
products thereof and documents therefor.
ISSUING BANK: Bank of America, N.A., or any successor or replacement
bank, as issuer of Letters of Credit in accordance with the Credit Agreement.
LAND: The real estate owned in fee or leased by the Grantor and
described in Exhibit "A" attached hereto, and all rights, titles and interests
appurtenant thereto.
LEASES: Any and all leases, subleases, licenses, concessions or other
agreements (written or verbal, now or hereafter in effect) through which Grantor
directly or indirectly grants a possessory interest in and to, or the right to
occupy and use, all or any portion of the Mortgaged Property that constitutes
real property together with any renewals or extensions thereof and all leases,
subleases, licenses, concessions or other agreements in substitution therefor.
LEGAL REQUIREMENTS: (i) Any and all present and future decisions,
statutes, rulings, rules, regulations, permits, certificates or ordinances of
any governmental authority in any way applicable to Grantor or the Mortgaged
Property, including, without limitation, the ownership, use, occupancy,
possession, operation, maintenance, alteration, repair or reconstruction
thereof, (ii) Grantor's presently or subsequently effective Certificate of
Incorporation and Bylaws, (iii) any and all Leases and other contracts (written
or oral) of any nature by which the Grantor or the Mortgaged Property may be
bound, and (iv) any and all restrictions, reservations, conditions, easements or
other covenants or agreements of record affecting the Mortgaged Property.
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LENDERS: As defined in the Credit Agreement, and specifically including
Bank of America, N.A. as the Issuing Bank, or any successor Issuing Bank and
each other Lender which may hereafter become a party to the Credit Agreement
pursuant to the terms thereof.
LIEN: As defined in the Senior Debt Intercreditor Agreement.
LOAN DOCUMENTS: As defined in the Credit Agreement.
MATERIAL REAL PROPERTY: As defined in the Credit Agreement.
MECHANIC'S LIENS: As defined in Section 4.4 hereof.
MORTGAGED PROPERTY OR MORTGAGED PROPERTIES: The Land, Buildings,
Fixtures, Personalty, Leases and Rents together with:
(i) all rights, privileges, tenements, licenses,
hereditaments, rights-of-way, easements, utility use, air rights,
appendages, division rights, and appurtenances in any way appertaining
thereto, and all right, title, interest or estate of Grantor in and to
any streets, ways, alleys, roadbeds, inclines, tunnels, culverts,
strips or gores of land adjoining or serving the Land or any part
thereof subject to the rights of others, if any.
(ii) all betterments, additions, alterations, appurtenances,
substitutions, replacements and revisions thereof and thereto and all
reversions and remainders therein;
(iii) all of Grantor's right, title and interest in and to any
awards, remuneration, settlements or compensation hereafter to be made
by any insurer, governmental authority or other person or entity as a
result of the destruction, loss, theft, taking by eminent domain or
other involuntary conversion of whatever nature (whether occurring
prior to or after the date of this Deed of Trust) of any of the Land,
Buildings, Fixtures, Leases, Rents or Personalty, including those for
any condemnation and vacation of, or change of grade in, any streets
affecting the Land or the Buildings;
(iv) any and all other security and collateral of any nature
whatsoever, now or hereafter given by Grantor to secure the payment and
performance of the Priority Senior Obligations;
(v) all water and water rights (whether riparian,
appropriative, or otherwise and whether or not appurtenant) in or
hereafter relating to or used in connection with the Land, including,
without limitation, any surface water management permits, any
consumption use permits or general permits subject to the rights of to
others, if any;
(vi) any right, title, interest or estate hereafter acquired
by Grantor in any of the foregoing and in and to the Land, Buildings,
Fixtures, Personalty (except as otherwise
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provided herein), Leases and Rents. To the extent permitted by law, all
of the Fixtures are to be deemed and held to be a part of and affixed
to the Land. In the event the estate of the Grantor in and to any of
the Land and Buildings is a leasehold estate, this conveyance shall
include and the lien, security interest and assignment created hereby
shall encumber and extend to all other, further or additional title,
estates, interest or rights which may exist now or at any time be
acquired by Grantor in or to the property demised under the lease
creating such leasehold estate and including Grantor's rights, if any,
to purchase the property demised under such lease and, if fee simple
title to any of such property shall ever become vested in Grantor, such
fee simple interest shall be encumbered by this Deed of Trust in the
same manner as if Grantor had fee simple title to such property as of
the date of execution hereof;
(vii) all of Grantor's right, title and interest in and to any
and all funds deposited by or on behalf of Grantor with any city,
county, public body or agency, irrigation, sewer or water district or
company, gas or electric company, telephone company, and any other body
or agency for the installation, or to secure the installation, of any
utility pertaining to the Land, Buildings, Fixtures and all
betterments, additions, alterations, appurtenances, substitutions,
replacements and revisions thereof and thereto;
(viii) all of Grantor's right, title and interest in and to
(i) all oil, gas and other minerals located in, on or under the Land,
(ii) all oil, gas or mineral leases, royalty agreements and other
contracts that have been or in the future are entered into with respect
to the Land or with respect to any oil, gas or other minerals located
in, on or under the Land ("Mineral Leases"), and (iii) all rents,
profits, royalties and income at any time arising from the Mineral
Leases or from the sale of oil, gas or other minerals located in, on or
under the Land; and
(ix) all proceeds and products of the foregoing. As used in
this Deed of Trust, the term "Mortgaged Property", including each
component thereof, shall be expressly interpreted as meaning all or,
where the context permits or requires, any portion of the above, and
all or, where the context permits or requires, any interest of Grantor
therein.
PARCEL: A single parcel of real property identified as a unit in
Exhibit "A" hereto. For purposes of legal description and real property title
records, a Parcel may be comprised of more than one lot.
PERMITTED ENCUMBRANCES: Those title exceptions (i) with respect to the
Material Real Property only, shown in Schedule B, Part II on Investors Title
Insurance Company Commitment Numbers 9901333CA, 9901334CA, 9901335CA and
9901336CA, submitted to and approved by the Priority Collateral Agent, (ii) with
respect to any Mortgaged Property that is not Material Real Property, appearing
in the public records and (iii) such other title exceptions submitted in writing
to, and approved by the Priority Collateral Agent.
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PERSON: As defined in the Senior Debt Intercreditor Agreement.
PERSONALTY: All of the right, title and interest of Grantor in and to
all tangible and intangible personal property including all furniture,
furnishings, Equipment, machinery, goods, tools, supplies, appliances, general
intangibles, construction contracts, architect's contracts, technical services
agreements, contract rights, franchises, licenses, certificates, operating
rights, approvals, consents, authorizations and permits, and all other personal
property (other than Inventory, accounts receivable, and Fixtures) of any kind
or character (as defined in and subject to the provisions of the UCC) which are
now or hereafter located or to be located upon, within or about the Land and the
Buildings, or which are used in or related to the construction of the Buildings
or the use, occupancy or operation of the Mortgaged Property, together with all
accessories, replacements and substitutions thereto or therefor and the proceeds
thereof; and all insurance proceeds and condemnation proceeds received by
Grantor with respect to the Mortgaged Property to the extent provided herein.
Furthermore, with respect to any of the above-described personal property
represented by a contract, agreement or other instrument or consisting of a
permit, certificate or similar item issued by a governmental authority, then, to
the extent that the granting of the lien or security interest or exercise of
Beneficiary's rights under this Deed of Trust would constitute a breach or
violation of the terms of such instrument, or any Legal Requirement applicable
to such permit, certificate or similar item that would impose material liability
on the Grantor or that would result in a revocation or forfeiture of such item
of personal property, such personal property shall not constitute "Personalty"
hereunder.
PRIORITY COLLATERAL AGENCY AGREEMENT: As defined in the Senior Debt
Intercreditor Agreement.
PRIORITY CREDIT DOCUMENTS: All documents that evidence or secure the
Priority Senior Obligations.
PRIORITY SECURED PARTIES: As defined in the Senior Debt Intercreditor
Agreement.
PRIORITY SENIOR OBLIGATIONS: As defined in the Senior Debt
Intercreditor Agreement.
RENTS: All of the rents, revenues, income, proceeds, profits, security
and other types of deposits, and other benefits paid or payable and to become
due or payable to Grantor by parties to the Leases for using, leasing,
licensing, possessing, operating from, residing in, selling or otherwise
enjoying any portion or portions of the Mortgaged Property.
REQUIRED PRIORITY SECURED PARTIES: As defined in the Senior Debt
Intercreditor Agreement.
SECURITY DOCUMENTS: As defined in the Senior Debt Intercreditor
Agreement.
SECURITY TERMINATION DATE: As defined in the Senior Debt Intercreditor
Agreement.
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SENIOR CREDIT DOCUMENTS: As defined in the Senior Debt Intercreditor
Agreement.
SENIOR CREDITORS: As defined in the Senior Debt Intercreditor
Agreement.
SENIOR DEBT OBLIGATIONS: As defined in the Senior Debt Intercreditor
Agreement.
STATE: North Carolina.
SUBSIDIARY: As defined in the Senior Debt Intercreditor Agreement.
TRANSFER: As defined in Section 5.3 below.
TRUSTEE: TIM, Inc., a North Carolina corporation, its successors and
assigns, as applicable and any successor Trustee hereunder.
UCC: The Uniform Commercial Code as adopted in the State.
WORK: As defined in Section 4.7 hereof.
1.2 DEFINED TERMS: Any other capitalized term used herein but not
otherwise defined herein, shall have the same respective meanings given to them
in the Senior Debt Intercreditor Agreement as it existed on the date hereof, and
as it may be modified from time to time.
ARTICLE II
GRANT
2.1 GRANT: NOW THEREFORE, for and in consideration of Ten Dollars
($10.00), and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by Grantor, and to secure the Grantor's full
and faithful performance and satisfaction of the Priority Senior Obligations,
Grantor, intending to be legally bound hereby, has GIVEN, ALIENATED, REMISED,
GRANTED, BARGAINED, MORTGAGED, SOLD, RELEASED, CONVEYED, ASSIGNED, TRANSFERRED,
WARRANTED, SET OVER AND CONFIRMED WITH MORTGAGE COVENANTS and by these presents
does GIVE, ALIENATE, REMISE, GRANT, BARGAIN, MORTGAGE, SELL, RELEASE, CONVEY,
ASSIGN, TRANSFER, WARRANT, SET OVER AND CONFIRM WITH MORTGAGE COVENANTS AND
GRANT A SECURITY INTEREST IN unto Trustee, its successors in trust and its
assigns forever, in trust, for the benefit of Beneficiary, with POWER OF SALE
and right to entry for the benefit of Beneficiary, all of the Mortgaged
Property, subject only to the Permitted Encumbrances, TO HAVE AND TO HOLD the
Mortgaged Property and (except as otherwise set forth herein) all parts, rights,
members and appurtenances thereof for the use, benefit and behoof of the Trustee
and its successors and assigns in trust, for the benefit of Beneficiary, in fee
simple
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forever, hereby releasing and waiving all rights under and by virtue of the
homestead exemption laws of the State, to the extent permitted by the applicable
Legal Requirements of such State; and Grantor hereby absolutely and irrevocably
assigns to Beneficiary the Leases and Rents for the purposes and upon the terms
and conditions herein set forth; and Grantor does hereby bind itself, its
successors and assigns to FOREVER WARRANT AND DEFEND the title to the Mortgaged
Property and every part thereof, subject only to the Permitted Encumbrances,
unto Trustee, in trust, for the benefit of Beneficiary, against every person
whomsoever lawfully claiming or to claim the same or any part thereof.
2.2 DEFEASANCE AND RECONVEYANCE: If the Security Termination Date shall
have occurred, and provided that there exists no pending or threatened
unsatisfied obligation pursuant to any environmental indemnification contained
in any of the Senior Credit Documents, then, with respect to the Mortgaged
Property, the liens, security interests, estates and rights granted by this Deed
of Trust shall terminate; whereupon upon surrender to Trustee of this Deed of
Trust for cancellation (which shall be made promptly upon request by Grantor),
if required by applicable law, Beneficiary shall execute a request for
reconveyance and thereafter the Trustee shall reconvey, without warranty, the
Mortgaged Property, or that portion thereof then held hereunder. To the extent
permitted by law, any reconveyance delivered hereunder may describe the grantee
as "the person or persons legally entitled thereto." Neither Beneficiary nor the
Trustee, if applicable, shall have any duty to determine the rights of persons
claiming to be rightful grantees of any reconveyance. Each reconveyance of
Mortgaged Property or portions thereof shall also operate as a reassignment of
all future rents, issues and profits appertaining to the Parcel(s) or portions
thereof covered by such reconveyance to the person or persons legally entitled
thereto, unless its reconveyance expressly provides otherwise.
2.3 PROVISIONS CONCERNING NORTH CAROLINA; FUTURE ADVANCES:
Notwithstanding anything to the contrary herein contained, this instrument shall
be deemed to be and shall be enforceable as a deed of trust and as an assignment
of leases and rents, security agreement and financing statement. Subject to the
limitation on the amount of Priority Senior Obligations contained in the
definition thereof, this Deed of Trust shall secure present and future
obligations which may be incurred hereunder, including, but not limited to,
periodic advances and readvances on a revolving basis which will be made from
time to time, it being understood and agreed by the parties hereto that all
future advances and readvances on a revolving basis shall be secured to the same
extent as the original advances made under any of the Senior Credit Documents.
The amount of present obligations secured hereby is $28,000,000. The maximum
amount of principal, interest and other indebtedness, including present and
future obligations, which may be secured hereby at any one time is $28,000,000.
The time period within which such future obligations may be incurred is the
period between the date of this Deed of Trust and the date fifteen (15) years
from the date hereof. It shall not be necessary at the time any future advance
is made or obligation incurred for Grantor to execute any form of written
instrument or notation stipulating that such advance or obligation is secured by
this Deed of Trust. Wherever herein contained, the phrase "Trustee and
Beneficiary, as applicable" or any similar phrase, shall be deemed to refer to
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(a) Trustee for the benefit of Beneficiary and (b) if the context so requires or
permits, and if Beneficiary so elects, Beneficiary.
2.4 PRIORITY CREDIT DOCUMENTS: Various of the Priority Credit Documents
include swing line loans and a revolving credit facility, and in connection
therewith and with other Priority Senior Obligations there may be repayments and
disbursements and other reductions and increases of principal from time to time.
It is expressly agreed that the outstanding principal balance of the Priority
Senior Obligations may, from time to time, be reduced to a zero balance without
such repayment or reduction operating to extinguish and release the lien,
security titles and security interests created by this Deed of Trust. This Deed
of Trust shall remain in full force and effect as to any subsequent future
advances made after the zero balance without loss of priority until the Security
Termination Date. Grantor waives the operation of any applicable statute, law or
regulation having a contrary effect.
ARTICLE III
WARRANTIES AND REPRESENTATIONS
For the consideration aforesaid and to protect the security of this
Deed of Trust, Grantor hereby unconditionally warrants and represents to
Beneficiary as follows:
3.1 TITLE TO MORTGAGED PROPERTY AND LIEN OF THIS INSTRUMENT: Grantor
has good and record and marketable title in fee to the Land, Buildings and
Fixtures and good title to the Personalty and Leases, in all cases free and
clear of any Liens and claims of Liens except the Permitted Encumbrances. This
Deed of Trust constitutes a valid lien or deed of trust on the Grantor's fee
interests in the Land, the Buildings and the Fixtures, and a valid security
interest in and to, and a valid assignment of, the Fixtures, Personalty, Leases
and Rents, all in accordance with the terms hereof, in each case subject only to
the Permitted Encumbrances.
3.2 [INTENTIONALLY OMITTED]
3.3 [INTENTIONALLY OMITTED]
3.4 POWERS OF TERMINATION AND RIGHTS OF REVERTER: With respect to any
fee-owned Parcel of Mortgaged Property subject to a right of reverter or power
of termination, no event has occurred or is threatened, or is likely to occur by
virtue of the performance by Grantor of any of its Priority Senior Obligations
under any of the Priority Credit Documents, which would enable the beneficiary
of such right or power to cause such reversion or termination.
3.5 WETLANDS: GRANTOR SHALL BE SOLELY RESPONSIBLE FOR AND AGREES TO
INDEMNIFY TRUSTEE, BENEFICIARY AND EACH PRIORITY SECURED PARTY, PROTECT AND
DEFEND WITH COUNSEL REASONABLY ACCEPTABLE TO BENEFICIARY, AND HOLD TRUSTEE,
BENEFICIARY AND EACH
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PRIORITY SECURED PARTY HARMLESS FROM AND AGAINST ANY CLAIMS (INCLUDING WITHOUT
LIMITATION THIRD PARTY CLAIMS FOR PERSONAL INJURY OR REAL OR PERSONAL PROPERTY
DAMAGE), ACTIONS, ADMINISTRATIVE PROCEEDINGS (INCLUDING INFORMAL PROCEEDINGS)
JUDGMENTS, DAMAGES, PUNITIVE DAMAGES, PENALTIES, FINES, COSTS, LIABILITIES
(INCLUDING SUMS PAID IN SETTLEMENTS OF CLAIMS), INTEREST OR LOSSES, REASONABLE
ATTORNEYS' FEES (INCLUDING ANY FEES AND EXPENSES INCURRED IN ENFORCING THIS
INDEMNITY), CONSULTANT FEES, AND EXPERT FEES THAT ARISE DIRECTLY OR INDIRECTLY
FROM OR IN CONNECTION WITH THE PRESENCE ON THE MORTGAGED PROPERTY OF WETLANDS,
TIDELANDS OR SWAMP AND OVERFLOW LANDS, OR ANY BREACH OF THE FOREGOING
REPRESENTATION AND WARRANTY 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. THE PROVISIONS OF THIS SECTION 3.5 SHALL
SURVIVE THE TERMINATION AND RECONVEYANCE OF THIS DEED OF TRUST. THE FOREGOING
INDEMNITY SHALL INCLUDE WITHOUT LIMITATION OF THE FOREGOING INDEMNITY, THE
INDEMNITY OF EACH OF THE PARTIES INDEMNIFIED HEREIN WITH RESPECT TO CLAIMS,
DEMANDS, LOSSES, DAMAGES (INCLUDING CONSEQUENTIAL DAMAGES) LIABILITIES, CAUSES
OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES AND COURT COSTS) AND MATTERS WHICH IN WHOLE OR IN PART ARE
CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OTHER THAN GROSS (WHETHER SOLE,
CONTRIBUTORY, COMPARATIVE, OR OTHERWISE) OF SUCH AND/OR ANY OTHER INDEMNIFIED
PARTY OR FOR WHICH SUCH INDEMNIFIED PARTY MAY HAVE STRICT LIABILITY.
3.6 ENVIRONMENTAL MATTERS: Except as listed on Schedule 8.18 of the
Credit Agreement, or as otherwise could not reasonably be expected to have a
Material Adverse Effect (as defined in the Credit Agreement), the Grantor is in
compliance with all applicable Environmental Laws and has been issued and will
maintain and keep current all required federal, state and local permits,
licenses, certificates and approvals. Except as listed on Schedule 8.18 of the
Credit Agreement, or as otherwise could not reasonably be expected to have a
Material Adverse Effect (as defined in the Credit Agreement), neither the
Grantor nor, to the best of Grantor's knowledge, and, with respect to the
Material Real Property only, after reasonable investigation, any previous owner
or operator of the Mortgaged Property or any other Person, (a) has used or is
using the Mortgaged Property in violation of any Environmental Law; (b) has
managed, generated, stored, released, discharged, treated, or disposed of any
Hazardous Material on any portion of the Mortgaged Property; or (c) has
transferred or caused to be transferred any Hazardous Material from the
Mortgaged Property to any other location. Except for Hazardous Materials
necessary for the routine maintenance of the Mortgaged Property and as used in
the ordinary course of the
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Mortgagor's business, which Hazardous Material shall be used in accordance with
all applicable Environmental Laws, the Grantor covenants that it shall not
permit any Hazardous Materials to be brought on to the Mortgaged Property, or if
so brought or found located thereon, shall be immediately removed, with proper
disposal, and all environmental cleanup requirements shall be diligently
undertaken pursuant to all Environmental Laws. Neither the Grantor nor any
Subsidiary has been notified of any pending or threatened action, suit,
proceeding or investigation, and neither the Grantor nor any Subsidiary is aware
of any facts which (i) calls into question, or could reasonably be expected to
call into question, compliance by the Grantor or any Subsidiary with any
Environmental Laws, (ii) seeks, or could reasonably be expected to form the
basis of a meritorious proceeding to seek, to suspend, revoke or terminate any
license, permit or approval necessary for the operations of the Grantor's or
Subsidiary's business or facilities or for the generation, handling, storage,
treatment or disposal of any Hazardous Materials, or (iii) seeks to cause, or
could reasonably be expected to form the basis of a meritorious proceeding to
cause, any property of the Grantor or any Subsidiary to be subject to any
restrictions on ownership, use, occupancy or transferability under any
Environmental Laws.
Except as listed on Schedule 8.18 of the Credit Agreement, or as
otherwise could not reasonably be expected to have a Material Adverse Effect (as
defined in the Credit Agreement), neither the Grantor nor any Subsidiary, nor,
to the best of Grantor's knowledge, any previous owner or operator of the
Mortgaged Property or any other Person has used or is using the Mortgaged
Property in violation of any Environmental Law, has managed, generated, stored,
released, treated, or disposed of any Hazardous Material on any portion of the
Mortgaged Property, or transferred or caused to be transferred any Hazardous
Material from the Mortgaged Property to any other location. Except for Hazardous
Materials necessary for the routine maintenance of the Mortgaged Property and as
used in the ordinary course of the Grantor's or Subsidiary's business, which
Hazardous Material shall be used in accordance with all applicable Environmental
Laws, the Grantor and any Subsidiary covenant that they shall not permit any
Hazardous Materials to be brought on to the Mortgaged Property, or if so brought
or found located thereon, shall be immediately removed, with proper disposal,
and all environmental cleanup requirements shall be diligently undertaken
pursuant to all Environmental Laws.
ARTICLE IV
AFFIRMATIVE COVENANTS
Grantor hereby unconditionally covenants and agrees with Beneficiary as
follows:
4.1 PAYMENT AND PERFORMANCE: Grantor will satisfy and perform the
Priority Senior Obligations, including the payment of any sums required thereby,
in full and on or before the dates the same are to be satisfied and performed.
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4.2 COMPLIANCE WITH LEGAL REQUIREMENTS: Grantor will promptly and
faithfully comply with, conform to and obey in all material respects all Legal
Requirements whether or not the same shall necessitate structural changes in or
improvements to, or interfere with the use or enjoyment of, the Mortgaged
Property, and provided that Grantor shall have the right in good faith to
contest any such Legal Requirement provided that the Mortgaged Property affected
thereby shall be in no danger of being sold, forfeited or lost pursuant to such
contest and provided that adequate reserves have been set aside by Grantor, in
accordance with Generally Accepted Accounting Principles, to pay the cost
necessary to comply with such Legal Requirement in the event Grantor fails to
prevail in such contest. Grantor will procure and continuously maintain in full
force and effect all permits, licenses and other authorizations required for
construction of improvements, for any permitted use of the Mortgaged Property or
any part thereof then being made and for the lawful and proper installation,
operation and maintenance of the Mortgaged Property. Grantor will not maintain
any nuisance on the Mortgaged Property.
4.3 LIEN STATUS: Grantor will defend and protect the lien, security
title and security interest status of this Deed of Trust subject only to the
Permitted Encumbrances. If Grantor shall fail to satisfy its obligations under
this Section 4.3, Beneficiary shall have the rights granted by Section 10.7
hereof to take such actions as Beneficiary deems necessary to defend and protect
the lien, security title and security interest status of this Deed of Trust,
subject as aforesaid. Grantor shall reimburse Beneficiary for any losses or
Expenses incurred by Beneficiary if an interest in the Mortgaged Property, other
than as permitted hereunder, is claimed by others.
4.4 PAYMENT OF IMPOSITIONS AND OTHER AMOUNTS:
(a) Grantor will duly pay and discharge, or cause to be paid
and discharged, the Impositions before the earlier of (i) the day any
fine, penalty, interest or cost may be added thereto or imposed thereon
or (ii) the day any Lien may be filed for the non-payment thereof;
provided, however, that (1) Grantor may, if permitted by law and if
such installment payment would not result in the imposition of any
fine, penalty or cost on the remaining amount then due, pay the
Impositions in installments whether or not interest shall accrue on the
unpaid balance of such Impositions, and (2) unless an Event of Default,
or any material Default, has occurred and is continuing, Grantor shall
not be required to pay and discharge or to cause to be paid and
discharged any such Impositions so long as (u) the validity or amount
thereof shall be contested diligently and in good faith by appropriate
proceedings, (v) the Mortgaged Property shall then be in no danger of
being sold, forfeited or lost pursuant to such contest, and (w)
adequate reserves have been set aside by Grantor to pay the
Impositions, and any fine, penalty, interest or cost that may be added
thereto or imposed thereon, in accordance with Generally Accepted
Accounting Principles, consistently applied by Grantor in connection
therewith.
(b) Notwithstanding the foregoing subsection (a), but subject
to subsection (c) below, Grantor (i) shall pay all lawful claims and
demands of mechanics, materialmen, laborers and others with respect to
the Mortgaged Property before the earlier of (y) the day
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any fine, penalty, interest or cost may be added thereto or imposed
thereon or (z) the day any Lien or claim of Lien may be filed for the
non-payment thereof; and (ii) shall not create or suffer or permit any
mechanic's liens or claims of lien, materialmen's liens or claims of
lien, or other liens or claims for lien made by parties claiming to
have provided labor or materials with respect to the Mortgaged Property
(which liens and claims of lien are herein referred to as "Mechanic's
Liens") to attach to or be filed against the Mortgaged Property,
whether such Mechanic's Liens are inferior or superior to the lien of
this Deed of Trust, except to the extent permitted by subsection (c)
below.
(c) Notwithstanding the foregoing prohibition against
Mechanic's Liens against the Mortgaged Property, Grantor, or any party
obligated to Grantor to do so, may in good faith and with reasonable
diligence by appropriate proceedings contest the validity or amount of
any Mechanic's Lien and defer payment and discharge thereof during the
pendency of such contest, provided: (i) that such contest shall have
the effect of preventing the sale or forfeiture of the affected Parcels
and any part thereof, or any interest therein, to satisfy any such
Mechanic's Lien; (ii) that, within twenty (20) days after Grantor has
been notified of the filing of any Mechanic's Lien, any affidavit
claiming a Mechanic's Lien or any notice of intention to file a
Mechanic's Lien, Grantor shall have notified Beneficiary in writing of
Grantor's intention to contest such Mechanic's Lien or to cause such
other party to contest such Mechanic's Lien; (iii) that to the extent
required by applicable Legal Requirements in connection with such
contest, Grantor shall deposit with the court or other applicable
Person such bonds or other security as is so required; and (iv) that
adequate reserves have been set aside by Grantor, in accordance with
Generally Accepted Accounting Principles, to pay in full such
Mechanic's Lien and all interest which may be due in connection
therewith.
4.5 REPAIR: Grantor will maintain and preserve the Material Real
Property it uses in the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and will make all repairs,
replacements, renewals, additions, betterments, improvements and alterations
thereof and thereto, interior and exterior, structural and non-structural,
ordinary and extraordinary, foreseen and unforeseen, which are necessary to keep
same in such order and condition.
4.6 INSURANCE: Grantor will maintain or cause to be maintained upon and
relating to the Mortgaged Property policies of liability and casualty insurance
in amounts and otherwise in accordance with the Priority Credit Documents, the
Security Documents and this Section 4.6. In addition to the policies referred to
above, Grantor will maintain the following policies:
(a) Prior to construction of any improvements on the Mortgaged
Property, an "all-risk", completed value, non-reporting builder's risk
insurance policy or policies that provide coverage similar to the
foregoing must be submitted to the Beneficiary. This policy must be
from a company and in an amount satisfactory to the Beneficiary, must
have a vandalism and malicious mischief endorsement and must be
sufficient to avoid the
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application of any co-insurance provisions, must include provisions for
a minimum 30-day advance written notice of any intended policy
cancellation or non-renewal, and must designate the Beneficiary as
mortgagee and loss payee in a standard mortgagee endorsement
Address: Bank of America, N.A.
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
(b) The Grantor covenants to maintain or cause to be
maintained, by the Grantor and, during the construction of any
improvements on the Mortgaged Property, the general contractor, general
accident and public liability insurance against all claims for bodily
injury, death or property damage occurring upon, in or about any part
of the Mortgaged Property. The policies must be from companies and in
amounts satisfactory to the Beneficiary. The contractor's policy must
include worker's compensation coverage in an amount sufficient to
satisfy statutory requirements.
(c) An "all-risk" permanent insurance policy must be in
effect, and an original certificate from the issuing insurance company
evidencing that the policy is in full force and effect must be
submitted to the Beneficiary. The policy must be from a company
satisfactory to the Beneficiary, must be in an amount satisfactory to
the Beneficiary, must eliminate all co-insurance provisions, must
include a Replacement Cost and Agreed Amount/Stipulated Value
Endorsement, must include a Sinkhole Endorsement, if appropriate, must
include provisions for a minimum 30-day advance written notice to the
Beneficiary of any intended policy cancellation or non-renewal, and
must designate the Beneficiary as mortgagee and loss payee in a
standard mortgagee endorsement, as its interest may appear.
(d) The Grantor shall, at its own cost, maintain rent
loss/business interruption insurance as to the Buildings now or
hereafter comprising a part of the Mortgaged Property and being used by
Grantor in the conduct of its business. The policy must be from a
company and in an amount satisfactory to the Beneficiary and must
include provisions for a minimum 30-day advance written notice to the
Beneficiary of any intended policy cancellation or non-renewal.
(e) If, and to the extent that, the Mortgaged Property is
located within an area that has been or is hereafter designated or
identified as an area having special flood hazards as defined in the
Federal Flood Disaster Protection Act of 1973, as such act may from
time to time be amended and in effect, or pursuant to any other
national or state program of flood insurance, the Grantor shall carry
flood insurance with respect to the Mortgaged Property in an amount not
less than the maximum amount available under the Flood
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Disaster Protection Act of 1973 and the regulations issued pursuant
thereto, as amended from time to time, in form complying with the
"insurance purchase" requirement of that Act.
(f) Each such liability insurance policy shall name the
Beneficiary and each Priority Secured Party as an additional insured
party with respect to the Mortgaged Property, and each such casualty
insurance policy shall name the Beneficiary a loss payee, and shall
provide by way of endorsements, riders or otherwise that (i) proceeds
will be payable to the Beneficiary as its interest may appear; (ii) the
Beneficiary will be loss payee for all proceeds payable if the proceeds
payable are equal to or greater than $1,000,000 in amount on a per
occurrence or claim basis; (iii) such insurance policy shall be
renewed, if renewal is available, and shall not be canceled and
further, shall not be endorsed, altered or reissued to effect a change
in coverage in any manner materially adverse to the Beneficiary, for
any reason and to any extent whatsoever unless such insurer shall have
first given the Beneficiary thirty (30) days' prior written notice
thereof; (iv) such insurance policy shall not be impaired by any act or
neglect of Grantor or any use of the Mortgaged Property for purposes
more hazardous than are permitted by such policy; and (v) the
Beneficiary may, but shall not be obliged to, make premium payments to
prevent any nonrenewal, cancellation, endorsement, alteration or
reissuance and such payments shall be accepted by the insurer to
prevent same.
(g) The Beneficiary shall be furnished with the original of
each such initial policy or a certificate with a duplicate of such
original policy coincident with the execution of this Deed of Trust and
satisfactory evidence of renewal thereof not less than thirty (30) days
prior to the expiration of the initial or each preceding renewal policy
together with receipts or other evidence that the premiums thereon have
been paid, with the original of each renewal policy or a certificate
with a duplicate of such renewal policy to follow as soon as available
or, in any such case, an appropriate broker's certificate in respect
thereto. Upon request by the Beneficiary, Grantor shall furnish to the
Beneficiary a statement certified by Grantor or a duly authorized
officer of Grantor of the amounts of insurance maintained in compliance
with this Section 4.6, a general description of the risks covered by
such insurance and of the insurance company or companies which carry
such insurance. In addition, Grantor will promptly comply with any and
all requirements of any insurer of any portion of the Mortgaged
Property and any and all rules and regulations of any insurance
commission or board of fire underwriters having jurisdiction over the
Mortgaged Property.
4.7 RESTORATION FOLLOWING CASUALTY: If any acts or occurrences of any
kind or nature, ordinary or extraordinary, foreseen or unforeseen, shall result
in damage to or loss or destruction of the Mortgaged Property, Grantor will give
prompt notice thereof to Beneficiary. If (a) there are sufficient insurance
proceeds or sufficient other amounts available to Grantor to fully pay for the
restoration, repair or replacement (hereinafter called "Work") of the Mortgaged
Property and the projected appraised value of the Mortgaged Property upon
completion of the Work is equal to or
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greater than the appraised value of the Mortgaged Property immediately prior to
the casualty, (b) no Default or Event of Default shall have occurred and be
continuing, (c) all parties having commitments to provide financing with respect
to the Mortgaged Property, to purchase Grantor's interest in full or in part in
the Mortgaged Property or to purchase the Priority Senior Obligations agree in a
manner satisfactory to the Beneficiary that their commitments will continue in
full force and effect and, if necessary, the expiration of such commitments will
be extended by the time necessary to complete the restoration or repair, and (d)
the Beneficiary will not incur any liability to any other person as a result of
such use or release of insurance proceeds, then Grantor will so certify to
Beneficiary, and will certify that it will, and shall, within 30 days following
reaching an agreement with the insurer under the property insurance policy
relating thereto with regard to the disbursement of insurance proceeds commence
and thereafter continue diligently to completion, to restore, repair, replace
and rebuild such Mortgaged Property as nearly as possible to its value,
condition and character immediately prior to such damage, loss or destruction
with such alterations, modifications and/or betterments reasonably deemed
necessary or desirable by Grantor in its business judgment. If the conditions
set forth in such certificate of Grantor are not satisfied with respect to an
occurrence resulting in a claim against the Grantor's property insurance policy,
or if Grantor fails to deliver such a certificate to Beneficiary within 180 days
following such occurrence, or if Grantor shall otherwise fail to restore,
repair, replace or rebuild such Mortgaged Property as provided herein, the
insurance proceeds related thereto shall be promptly paid to Beneficiary and
applied (subject to compliance with the Senior Debt Intercreditor Agreement) to
the outstanding balance of the Priority Senior Obligations in accordance with
the Senior Debt Intercreditor Agreement.
4.8 APPLICATION OF PROCEEDS: Insurance proceeds to be used for Work,
which proceeds are equal to or greater than $1,000,000 on a per occurrence or
claim basis, initially shall be paid to the Beneficiary, and shall be paid out
by the Beneficiary to Grantor from time to time as the Work progresses, subject
to the following conditions: (a) prior to the commencement thereof (other than
Work to be performed on an emergency basis to protect the Mortgaged Property or
prevent interference therewith), an architect, engineer or construction manager,
reasonably approved by Beneficiary, shall be retained by Grantor (at Grantor's
expense) and charged with the supervision of the Work; (b) each request for
payment by Grantor shall be made on ten (10) days prior notice to Beneficiary
and shall be accompanied by a certificate by an executive officer of Grantor,
stating that: (i) all of the Work completed has been completed in substantial
compliance with the plans and specifications therefor; (ii) the sum requested is
justly required to reimburse Grantor for payments by Grantor to, or is justly
due to, the contractor, subcontractors, materialmen, laborers, engineers,
architects or other Persons rendering services or materials for the Work; and
(iii) when added to all sums previously paid out by Grantor, the sum requested
does not exceed the value of the Work completed to the date of such certificate;
(c) the amount of insurance proceeds remaining in the hands of the Beneficiary
or remaining to be disbursed by the applicable insurance company, plus any
further reserves agreed to be maintained by Grantor in conformity with Generally
Accepted Accounting Principles in connection with the Work, will in the
Beneficiary's reasonable judgment be sufficient to complete the Work; (d) each
request shall be accompanied by certification by an executive officer of Grantor
or copies of waivers of Lien reasonably satisfactory
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in form and substance to the Beneficiary covering that part of the Work for
which payment or reimbursement is being requested; provided, however, that in
the event it is customary State practice not to grant such waivers prior to the
making of such payments, Grantor shall have obtained affidavits from the parties
requesting such payment (i) stating the amount then due and (ii) promising the
delivery of the waiver upon the making of the payment; (e) a Default has not
occurred and is not continuing since the hazard, casualty or contingency giving
rise to payment of the insurance proceeds occurred; (f) in the case of the
request for the final disbursement, such request is accompanied by a copy of any
certificates of occupancy or other certificate required by any Legal Requirement
to render occupancy of the damaged portion of the Mortgaged Property lawful; and
(g) if, in the Beneficiary's reasonable judgment, the amount of such insurance
proceeds will not be sufficient to complete the Work (which determination may be
made prior to or from time to time during the performance of the Work), Grantor
shall maintain adequate reserves in conformity with Generally Accepted
Accounting Principles equal to an amount of money which when added to such
insurance proceeds will be sufficient, in the Beneficiary's reasonable judgment,
to complete the Work. Insurance proceeds to be used for Work, which proceeds are
less than $1,000,000 on a per occurrence or claim basis, initially shall be paid
to Grantor and shall be used by Grantor to perform such Work in accordance with
its certificate delivered pursuant to Section 4.7, with any excess thereof used
to repay the Priority Senior Obligations in accordance with Section 4.7. In the
event Grantor elects to restore, repair, replace or rebuild the Mortgaged
Property and subsequently fails to comply with any of the conditions set forth
herein for disbursement of insurance proceeds, any proceeds remaining to be
disbursed, whether held by Grantor, Beneficiary, or an insurance company, shall
be paid to Beneficiary and, at its option, applied (subject to compliance with
the Senior Debt Intercreditor Agreement) to the outstanding balance of the
Priority Senior Obligations in accordance with the Senior Debt Intercreditor
Agreement.
4.9 INSPECTION: Grantor will permit Trustee, Beneficiary, any of the
Priority Secured Parties and any of their agents, representatives and employees,
upon reasonable advance notice to Grantor to inspect the Mortgaged Property at
any reasonable time.
4.10 LEASES:
(a) Grantor shall promptly and fully keep, observe and
perform, or cause to be kept, observed and performed, all of the
material terms, covenants, provisions and agreements imposed upon or
assumed by Grantor under any Leases, now or hereafter in effect,
including any amendments or supplements to such Leases covering any
part of the Mortgaged Property that is affected by the terms,
covenants, provisions and agreements imposed upon or assumed by Grantor
in such Leases and Grantor will not do or fail to do, or permit or fail
to permit to be done, any act or thing, the doing or omission of which
will give any party a right to terminate any of such Leases or, in the
case of any tenant, to abate the rental or other material payment due
thereunder;
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(b) If Grantor shall, in any manner, fail to comply with
subsection (a) above, Grantor agrees that Beneficiary may (but shall
not be obligated to) take, upon ten (10) days' written notice to
Grantor (or upon lesser notice, or without notice, if Beneficiary
reasonably deems that the same is required to protect its interest in
the Mortgaged Property), any action which Beneficiary shall reasonably
deem necessary or desirable to keep, observe and perform or cause to be
kept, observed or performed any such terms, covenants, provisions or
agreements and to enter upon the Mortgaged Property and take all action
thereon as may be necessary therefor, or to prevent or cure any default
by Grantor in the performance of or compliance with any of Grantor's
covenants or obligations under said Leases. Beneficiary may rely on any
notice of default received from any tenant unless, in connection with
any such default or alleged default Grantor in good faith notifies
Beneficiary of Grantor's election to contest such default by
appropriate procedures and diligently pursues such contest. Grantor
shall promptly deliver to Beneficiary a copy of any notice relating to
defaults received from any tenant that is a party, or the trustee,
receiver or successor for or to a party, to any of said Leases.
Beneficiary may expend such sums of money as are reasonable and
necessary for any such purposes, and Grantor hereby agrees to pay to
Beneficiary, immediately upon demand, all sums so expended by
Beneficiary together with interest thereon from the date of such
payment at the Default Rate, and until so paid by Grantor, all sums so
expended by Beneficiary and the interest thereon shall be added to the
Priority Senior Obligations secured by the lien and legal operation and
effect of this Deed of Trust; and
(c) Grantor will not, without the prior written consent of the
Beneficiary, amend, modify, terminate or cancel any of the Leases of
any part of the Mortgaged Property in any way which could reasonably be
expected to materially adversely affect the interests of the Priority
Secured Parties in any way which could reasonably be expected to
materially adversely affect the interests of the Priority Secured
Parties.
4.11 [INTENTIONALLY OMITTED]
4.12 TAXES: Grantor shall pay, together with interest, fines, and
penalties, if any, any documentary stamp, recording, transfer, mortgage,
intangibles (including without limitation all recurring intangible taxes) or
other taxes or fees whatsoever due under the laws of the State in connection
with the making, execution, delivery, filing of record, recordation, assignment,
release, or discharge of any of the Priority Credit Documents or in connection
with any advances made thereunder. This obligation shall survive the repayment
of the Priority Senior Obligations and shall continue for so long as Beneficiary
could be assessed for such taxes or fees, or for penalties or interest with
respect to such taxes or fees.
4.13 COLLECTION COSTS: In the event that this Deed of Trust is
foreclosed, or in the event this Deed of Trust is put into the hands of an
attorney for collection, suit, action or foreclosure, or in the event of the
foreclosure of any mortgage prior to or subsequent to this Deed of Trust, in
which proceeding Beneficiary is made a party, or in the event of the bankruptcy
of the Grantor, or
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an assignment by the Grantor for the benefit of creditors, Grantor, its
successors and assigns, shall be chargeable with and agrees to pay all costs of
collection and defense, including an amount as attorneys' fees not to exceed
such amount as may be permitted by the laws of the applicable State including
reasonable actual attorneys' fees for all appellate proceedings and
post-judgment action involved therein, which shall be due and payable at once
together with all required service or use taxes; the payment of which charges,
fees and taxes together with all costs and expenses, shall be secured hereby,
and may be recovered in any suit or action hereupon or hereunder.
4.14 RESERVES:
(a) If the Beneficiary so requires, Grantor shall deposit with
Beneficiary from time to time a sum, as reasonably estimated by the
Beneficiary, equal to (i) the Impositions (ii) the rents under any
ground lease, if any, and (iii) the premiums next due on the insurance
policies required under this Deed of Trust, less all sums already
deposited therefor, divided by the number of months to elapse before
two months prior to the beginning of such tax year or the date when
such Impositions, rents and premiums will become delinquent, as the
case may be. The Beneficiary may require Grantor to deposit with
Beneficiary, in advance, such other sums for other taxes, assessments,
premiums, charges, and impositions in connection with the Property as
the Beneficiary deems necessary to protect Beneficiary's interests
(collectively, the "Other Reserves"). Such sums for Other Reserves
shall be deposited in a lump sum or in periodic installments, at the
Beneficiary's option. If requested by the Beneficiary, Grantor shall
promptly deliver to the Beneficiary all bills and notices with respect
to any rents, taxes, assessments, premiums, and Other Reserves. All
sums deposited with Beneficiary under this Section 4.14 are hereby
pledged to the Priority Collateral Agent for the benefit of the
Priority Secured Parties as additional security for the Priority Senior
Obligations.
(b) All sums deposited by Grantor under this Section 4.14
shall be held by Beneficiary and applied in such order as Beneficiary
elects to pay such Impositions, rents, premiums, and Other Reserves; in
the Event of Default hereunder, such sums may be applied, in whole or
in part, to the indebtedness secured hereby in accordance with the
Senior Debt Intercreditor Agreement. The arrangement provided for in
this Section 4.14 is solely for the added protection of Beneficiary and
entails no responsibility on Beneficiary's part beyond the allowing of
due credit, without interest, for the sums actually received by it.
Upon any assignment of this Deed of Trust by Beneficiary, any funds on
hand shall be turned over to the assignee and any responsibility of
Beneficiary with respect thereto shall terminate. Each permitted
transfer of the Mortgaged Property shall automatically transfer to the
grantee all rights of Grantor with respect to any funds accumulated
hereunder.
(c) If the total deposits held by Beneficiary under this
Section 4.14 exceeds the amount deemed necessary by the Beneficiary to
provide for the payment of such Impositions, rents, premiums, and Other
Reserves as the same fall due, then such excess shall be credited by
Beneficiary on the next due installment or installments of such
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deposits, provided no Event of Default then exists hereunder. If at any
time the total deposits held by Beneficiary is less than the amount
deemed necessary by the Beneficiary to provide for the payment thereof
as the same fall due, then Grantor shall deposit the deficiency with
Beneficiary within 30 days after written notice to Grantor stating the
amount of the deficiency.
4.15 ESTOPPEL CERTIFICATES: Grantor, upon request of the Beneficiary,
shall, from time to time, certify to the best of its knowledge to Beneficiary or
to any permitted assignee of this Deed of Trust, by an instrument in form
satisfactory to the Beneficiary or such assignee, in its reasonable discretion,
duly acknowledged, inter alia, the amount then owing under the Priority Credit
Documents and the date through which interest thereon has been paid, and whether
any offsets, counterclaims, credits, or defenses exist against payment thereof
or performance of any of the Senior Debt Obligations of Grantor under the
Priority Credit Documents or this Deed of Trust, within ten (10) days of such
request. Beneficiary and any permitted assignee of this Deed of Trust shall have
the right to rely on any such certification.
4.16 CREATION AND RECORDATION OF ADDITIONS AND BETTERMENTS: Grantor
shall arrange for timely recording or filing as required of all documents having
to do with additions to or betterments of any portion of the Mortgaged Property,
and the covenants and agreements set forth in this Deed of Trust shall apply to
all such additions and betterments.
4.17 CONSENTS: Grantor will obtain and maintain the consent or approval
of any Person whose consent or approval is required to the granting of a Lien on
any interest in the Mortgaged Property to the Beneficiary.
4.18 [INTENTIONALLY OMITTED]
4.19 [INTENTIONALLY OMITTED]
4.20 [INTENTIONALLY OMITTED]
4.21 CHANGE OF NAME OR ADDRESS: Within 10 days following any change in
Grantor's name or address (as specified in the Loan Documents), Grantor shall
give written notice of such change to Beneficiary, and shall promptly execute
(and acknowledge, as necessary) all documents and agreements reasonably required
by Beneficiary to confirm or maintain the security interests granted herein or
in the other Priority Credit Documents.
4.22 [INTENTIONALLY OMITTED]
4.23 NOTICE OF AND RESPONSE TO ENVIRONMENTAL COMPLAINT: Grantor shall
give to the Beneficiary immediate written notice and true, accurate and complete
copies of any material complaint, order, directive, claim, citation or notice by
any governmental authority or any Person to Grantor, any Subsidiary or any
successor relating to any (a) violation or alleged violation by the
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Grantor or any Subsidiary or any tenant of the Mortgaged Property of any
Environmental Law; (b) release or threatened release by or on behalf of the
Grantor or any Subsidiary or any tenant or by any person, handling, transporting
or disposing of any Hazardous Material on behalf of Grantor or any Subsidiary or
any such tenant or at any facility or property owned or leased or operated by
Grantor or any Subsidiary or any tenant, of any Hazardous Material; or (c)
liability or alleged liability of the Grantor or any Subsidiary or any such
tenant for the costs of cleaning up, removing, remediating or responding to a
release of Hazardous Materials. Such notice shall include, among other
information, the name of the party making the claim, the nature of the claim and
the actual or potential amount of the claim. Grantor shall, within the time
period permitted and to the extent required by the applicable Environmental Law
or the governmental authority responsible for enforcing such Environmental Law,
remove, remedy, or respond to or cause to be removed, remedied or responded to,
any violation of any Environmental Law or any release of any Hazardous Material
or satisfy any liability for the costs of cleaning up, removing, remediating or
responding to a release of Hazardous Materials.
4.24 INDEMNIFICATION: THE GRANTOR HEREBY AGREES THAT IT WILL REIMBURSE
THE TRUSTEE, THE BENEFICIARY AND EACH OF THE PRIORITY SECURED PARTIES FOR, AND
DEFEND, INDEMNIFY AND HOLD THE TRUSTEE, THE BENEFICIARY AND EACH OF THE PRIORITY
SECURED PARTIES, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
HARMLESS FROM AND AGAINST, ANY AND ALL CLAIMS, COSTS, EXPENSES, LOSSES,
PENALTIES, LIABILITIES AND DAMAGES (INCLUDING, WITHOUT LIMITATION, ASSESSMENT
AND CLEANUP COSTS AND REASONABLE ATTORNEYS', CONSULTANTS' AND OTHER EXPERTS'
FEES, EXPENSES AND DISBURSEMENTS) AND ALL JUDGMENTS, FINES AND PENALTIES
INCURRED, ENTERED OR LEVIED AGAINST THE TRUSTEE, THE BENEFICIARY OR ANY OF THE
PRIORITY SECURED PARTIES BY ANY GOVERNMENTAL AGENCY OR AUTHORITY ARISING
DIRECTLY OR INDIRECTLY FROM, OR AS A RESULT OF OR IN CONNECTION WITH (A) THE USE
OF THE MORTGAGED PROPERTY; (B) THE USE OF THE FACILITIES THEREON; (C) THE USE,
GENERATION, STORAGE, TRANSPORTATION, TREATMENT, EMISSION, DISCHARGE, DISPOSAL,
RELEASE OR HANDLING OF ANY HAZARDOUS MATERIALS AT, UPON OR FROM THE MORTGAGED
PROPERTY; OR (D) THE VIOLATION OR ALLEGED VIOLATION OF ANY ENVIRONMENTAL LAW BY
GRANTOR OR ANY SUBSIDIARY EXCEPT TO THE EXTENT SUCH CLAIM IS FOUND IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
FROM ANY SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. THE
FOREGOING INDEMNITY SHALL INCLUDE WITHOUT LIMITATION OF THE FOREGOING INDEMNITY,
THE INDEMNITY OF EACH OF THE PARTIES INDEMNIFIED HEREIN WITH RESPECT TO CLAIMS,
DEMANDS, LOSSES, DAMAGES (INCLUDING CONSEQUENTIAL DAMAGES) LIABILITIES, CAUSES
OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES AND COURT COSTS) AND MATTERS WHICH IN
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WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OTHER THAN GROSS
(WHETHER SOLE, CONTRIBUTORY, COMPARATIVE, OR OTHERWISE) OF SUCH AND/OR ANY OTHER
INDEMNIFIED PARTY OR FOR WHICH SUCH INDEMNIFIED PARTY MAY HAVE STRICT LIABILITY.
THE GRANTOR'S OBLIGATIONS UNDER THIS SECTION 4.24 SHALL SURVIVE THE REPAYMENT OF
THE SENIOR DEBT OBLIGATIONS, THE OCCURRENCE OF THE SECURITY TERMINATION DATE,
AND EXPIRATION OR TERMINATION OF THIS DEED OF TRUST OR ANY FORECLOSURE OR A DEED
IN LIEU OF FORECLOSURE OF THIS DEED OF TRUST OR OTHER COLLATERAL SECURING THE
PRIORITY SENIOR OBLIGATIONS.
4.25 OTHER AGREEMENTS: Without first obtaining on each occasion the
written approval of the Beneficiary, the Grantor shall not, except to the extent
not prohibited by the Credit Agreement, enter into, cancel, surrender or modify
or permit the cancellation of any rental agreement, management contract,
franchise agreement, construction contract, technical services agreement or
other contract, license or permit now or hereafter affecting the Material Real
Property, or modify any of said instruments, or accept or permit to be made any
prepayment of any installment of rent or fees thereunder. Certified copies of
each such agreement shall be submitted to the Beneficiary as soon as possible.
The Grantor shall faithfully keep and perform, or cause to be kept and
performed, all of the covenants, conditions, and agreements contained in each of
said instruments, now or hereafter existing, on the part of the Grantor to be
kept and performed (including performance of all covenants to be performed under
any and all leases of the Material Real Property or any part thereof) and shall
at all times do all things necessary and appropriate to compel performance by
each other party to said instruments of all obligations, covenants and
agreements by such other party to be performed thereunder.
4.26 TRANSFER OF LICENSE: If Beneficiary acquires title to the
Mortgaged Property, Grantor shall execute, deliver and file or use its best
efforts to cause the tenant under the Lease of the Mortgaged Property to
execute, deliver and file all documents and statements requested by the
Beneficiary to effect the transfer of the licenses and other governmental
authorizations necessary for the continued use and operation of the Mortgaged
Property, subject to any required approval of governmental regulatory
authorities, and shall provide to the Beneficiary all information and records
required in connection therewith.
ARTICLE V
NEGATIVE COVENANTS
Grantor hereby covenants and agrees with Beneficiary that, until the
Security Termination Date shall have occurred:
5.1 USE VIOLATIONS: Grantor will not use, maintain, operate or occupy,
or allow the use, maintenance, operation or occupancy of, any portion of the
Mortgaged Property in any manner
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which would result in a violation of Section 4.2 above or make void, voidable or
cancelable, any insurance then in force with respect thereto.
5.2 WASTE: Grantor will not commit or permit any waste of the Mortgaged
Property or permit any nuisance to be maintained thereon.
5.3 TRANSFER OF MORTGAGED PROPERTY; PARTIAL RELEASE: Except as
permitted under the Senior Credit Documents, Grantor will not, without the prior
written consent of Beneficiary acting at the direction of the Required Priority
Secured Parties, permit any of the Mortgaged Property to be sold, transferred,
conveyed, mortgaged, pledged, encumbered, disposed of, leased or removed at any
time (any or all of the foregoing being referred to herein as a "Transfer"). If
such Transfer is permitted by the Required Priority Secured Parties, then, upon
at least ten (10) days' prior notice to Beneficiary, Grantor shall have the
right to obtain from the Trustee and the Beneficiary, as applicable, the release
or reconveyance of such transferred portions of the Mortgaged Property. As a
condition of any such release or reconveyance, (i) Grantor shall pay all
trustees' fees, recording fees, escrow fees, attorneys' fees and other costs and
expenses incurred by Beneficiary and/or Trustee in connection with any release
or reconveyance given hereunder; and (ii) Grantor shall deliver to the
Beneficiary such evidence as the Beneficiary reasonably requests that (A) such
release or reconveyance of any portion of the Mortgaged Property can be done in
compliance with all applicable subdivision and other laws and regulations, and
(B) Beneficiary's and the Priority Secured Parties' rights and remedies with
respect to the remaining Mortgaged Property under the Priority Credit Documents
will not be impaired by such release or reconveyance.
5.4 RIGHTS OF REVERTER AND POWERS OF TERMINATION: With respect to any
fee-owned Parcel of Mortgaged Property subject to a right of reverter or power
of termination, and so long as such right or power is or may be enforceable,
Grantor:
(a) will not take or omit to take any action or change the use
of such Parcel or otherwise so as to enable the beneficiary of such
right or power to enforce or obtain the benefit of such reversion or
termination; and
(b) will not file for or otherwise initiate any proceedings to
abandon such Parcel.
ARTICLE VI
DEFAULT AND FORECLOSURE
6.1 REMEDIES: Upon and after the occurrence of an Event of Default
under any of the Priority Credit Documents (collectively, an "Event of
Default"), and if upon and after such occurrence all or any portion of the
Priority Senior Obligations then remaining unpaid shall have been declared due
and payable in accordance with the applicable Priority Credit Documents, then,
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without notice or demand, which are hereby expressly waived to the extent
permitted under applicable law, the Trustee or Beneficiary, as applicable, may
exercise any or all of the following rights, remedies and recourses:
(A) ENTRY UPON MORTGAGED PROPERTY: To the extent permitted by
applicable Legal Requirements, enter upon all or any part of the
Mortgaged Property and take exclusive possession thereof and of all
books, records and accounts relating thereto. If Grantor remains in
possession of all or any part of the Mortgaged Property after an Event
of Default and without Beneficiary's prior written consent thereto,
Trustee or Beneficiary as applicable, may invoke any and all legal
remedies to dispossess Grantor, including without limitation one or
more actions for forcible entry and detainer, trespass to try title and
writ of restitution. Nothing contained in the foregoing sentence shall,
however, be construed to impose any greater obligation or any
prerequisites to acquiring possession of the Mortgaged Property after
an Event of Default than would have existed in the absence of such
sentence.
(B) OPERATION OF MORTGAGED PROPERTY:
(i) To the extent permitted by applicable Legal
Requirements, by itself or by the appointment of a receiver in
accordance with applicable Legal Requirements, hold, lease,
manage, operate or otherwise use or permit the use of all or
any portion of the Mortgaged Property, either by itself or by
other persons, firms or entities, in such manner, for such
time and upon such other terms as Trustee or Beneficiary, as
applicable, may deem to be prudent and reasonable under the
circumstances (making such repairs, alterations, additions and
improvements thereto and taking any and all other action with
reference thereto, from time to time, as Beneficiary shall
reasonably deem necessary or desirable), and apply all Rents
and other amounts collected by Trustee or Beneficiary in
connection therewith in accordance with the provisions of
Section 6.6 below.
(ii) To the extent permitted by applicable Legal
Requirements, as attorney-in-fact or agent of the Grantor, or
in its own name as Beneficiary or by the appointment of a
receiver in accordance with applicable Legal Requirements and
under the powers herein granted, hold, operate, manage, and
control all or any portion of the Mortgaged Property and
conduct the business, if any, thereof, either personally or by
its agents, and to exercise the powers described in Section
8.3 hereof. Such remedies may be exercised cumulatively and
concurrently, and in this respect Beneficiary shall be
entitled to avail itself of the benefits and rights stated in
Section 6.3 below.
(C) FORECLOSURE: Institute a proceeding, judicial or
otherwise, for the complete foreclosure of this Deed of Trust to the
fullest extent permitted by law; or (ii) institute a proceeding or
proceedings, judicial or otherwise, for the partial foreclosure of this
Deed of
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Trust, as permitted by applicable Legal Requirements for the portion of
the Priority Senior Obligations then due and payable, with this Deed of
Trust then continuing unimpaired and without loss of priority so as to
secure the balance of the Priority Senior Obligations.
(D) SALE: To the extent permitted by applicable Legal
Requirements, sell or offer for sale the Mortgaged Property, in such
portions, order and parcels as Trustee may determine, with or without
having first taken possession of same, to the highest bidder for cash
in lawful money of the United States at public auction in accordance
with applicable Legal Requirements, or the UCC, and in the event of a
sale, by foreclosure or otherwise, of less than all of the Mortgaged
Property, this Deed of Trust shall continue as a lien and security
interest on the remaining portion of the Mortgaged Property. Trustee
may postpone any sale by public announcement at the time and place
noticed for the sale. If the Mortgaged Property consists of several
lots, Parcels or items of property, Trustee may, in its sole discretion
and to the extent permitted by applicable law: (i) designate the order
in which such lots, parcels or items shall be offered for sale or
sales, or (ii) elect to sell such lots, parcels or items through a
single sale, or through two or more successive sales or in any other
manner Trustee deems in its best interest. Should Trustee desire that
more than one sale or other disposition of the Mortgaged Property or
any portion thereof be conducted simultaneously, or successively, on
the same day, or at such different days or times and in such order as
Trustee may deem to be in its best interests, no such sale shall
terminate or otherwise affect the lien and security interest of this
Deed of Trust on any part of the Mortgaged Property not sold until all
the Priority Senior Obligations have been Fully Satisfied. Grantor
shall pay the Expenses of any sale of the Mortgaged Property, whether
one or more, and of any judicial proceedings wherein the same may be
made, including reasonable compensation to Trustee, its agents and
counsel, and shall pay all expenses, liabilities and advances made or
incurred by Trustee in connection with such sale or sales, together
with interest on all such advances made by Trustee at the Default Rate.
Upon any sale hereunder, Trustee shall execute and deliver to the
purchaser or purchasers a deed or deeds conveying the property so sold,
but without any covenant or warranty whatsoever, express or implied,
whereupon such purchaser or purchasers shall be let into immediate
possession; and the recitals in any such deed or deeds of facts, such
as default, the giving of notice of default and notice of sale, and
other facts affecting the regularity or validity of such sale or
disposition, shall be conclusive proof of the truth of such facts; and
any such deed or deeds shall be conclusive against all persons as to
such facts recited therein.
(E) TRUSTEE OR RECEIVER: Prior to, upon or at any time after,
commencement of foreclosure of the lien, security title and security
interest provided for herein or any legal proceedings pursuant hereto,
make application to a court of competent jurisdiction for appointment
of a receiver of the Mortgaged Property. Such application may be made
as a matter of strict right and without notice to Grantor (unless
notice is required by applicable Legal Requirements and such right of
notice may not be waived) or regard to the adequacy of the Mortgaged
Property or insolvency of the Grantor or any person who may be legally
or equitably liable to pay the Priority Senior Obligations and without
giving bond to
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Grantor (unless bond is required by applicable Legal Requirements and
such right of bond may not be waived), and Grantor does hereby
irrevocably consent to such appointment. Any such receiver shall have
all the usual powers and duties of receivers in similar cases,
including the full power to rent, maintain and otherwise operate the
Mortgaged Property all upon such terms as may be approved by the court,
and shall apply the Rents in accordance with the provisions of this
Deed of Trust.
(F) SEPARATE SALES: To the extent permitted by applicable
Legal Requirements, the Mortgaged Property may be sold in one or more
Parcels and in such manner and order as Trustee and Beneficiary, as
applicable, in their sole discretion, may elect, it being expressly
understood and agreed that the right of sale arising out of any Event
of Default shall not be exhausted by any one or more sales.
(G) OTHER: Exercise any and all other rights, remedies and
recourses granted under the Loan Documents or now or hereafter existing
in equity or at law, by virtue of statute or otherwise, including,
without limitation, the right to bring an action in any court of
competent jurisdiction to foreclose this instrument as a realty
mortgage or enforce any of the terms hereof.
(H) REMEDIES CUMULATIVE, CONCURRENT AND NONEXCLUSIVE: Trustee
and Beneficiary shall have all rights, remedies and recourses granted
in the Priority Credit Documents and available at law or equity
(including specifically those granted by the UCC in effect and
applicable to the Mortgaged Property) and, except as limited by
applicable Legal Requirements, the same (a) shall be cumulative and
concurrent; (b) may be pursued separately, successively or concurrently
against Grantor or against all or any portion of the Mortgaged
Property, at the sole discretion of Trustee; (c) may be exercised as
often as occasion therefor shall arise, it being agreed by Grantor that
the exercise or failure to exercise any of same shall in no event be
construed as a waiver or release thereof or of any other right, remedy
or recourse; and (d) are intended to be, and shall be nonexclusive.
(I) COLLECTION OF COSTS AND EXPENSES: The Trustee and the
Beneficiary shall be entitled to receive all costs and expenses of the
sale or repossession of the Mortgaged Property including the Trustee's
fees and reasonable attorneys' fees or receiver's reasonable fee or
commission, if any, title and abstracting charges, reasonable
attorneys' fees and a reasonable auctioneer's fees, and all other costs
and expenses incurred in exercising its remedies hereunder.
6.2 NO CONDITIONS PRECEDENT TO EXERCISE OF REMEDIES: The Grantor shall
not be relieved of any obligation it has under the Loan Documents or the
Priority Credit Documents by reason of (i) the release, regardless of
consideration, of any of the Mortgaged Property or any other collateral held
pursuant to any of the Priority Credit Documents or the addition of any other
property to the Mortgaged Property or any other such collateral; (ii) any
agreement or stipulation between any subsequent owner of all or any portion of
the Mortgaged Property and Beneficiary or
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any of the Priority Secured Parties extending, renewing, rearranging or in any
other way modifying the terms of any of the Priority Credit Documents without
first having obtained the consent of, given notice to or paid any consideration
to the Grantor, and in such event the Grantor shall continue to be liable to
make payment according to the terms of any such extension or modification
agreement unless expressly released and discharged in writing by Beneficiary; or
(iii) any other acts or occurrence, save and except the occurrence of the
Security Termination Date.
6.3 RESORT TO COLLATERAL: For payment of the Priority Senior
Obligations, to the fullest extent permitted by applicable Legal Requirements,
Beneficiary may resort to any other security therefor held by Trustee in such
order and manner as Beneficiary may elect, and such resort may be taken
concurrently or successively and in one or several consolidated or independent
judicial actions or lawfully taken non-judicial proceedings, or both.
6.4 WAIVERS: To the fullest extent permitted by applicable Legal
Requirements, Grantor hereby irrevocably and unconditionally WAIVES and RELEASES
(a) all benefits that might accrue to Grantor by virtue of any present or future
law exempting the Mortgaged Property from attachment, levy or sale on execution
or providing for any appraisement, valuation, homestead exemption, stay of
execution, exemption from civil process, redemption or extension of time for
payment; (b) except as otherwise provided in the Priority Credit Documents, all
notices of any demand, presentment, Event of Default, intent to accelerate or
acceleration or the election by Trustee, Beneficiary or any of the Priority
Secured Parties (or any agent on their behalf), as applicable, to exercise or
the actual exercise of any right, remedy or recourse provided for under any of
the Priority Credit Documents; (c) any right to a marshaling of assets or a sale
in inverse order of alienation; and (d) any restrictions or conditions upon the
exercise by the Trustee or Beneficiary, as applicable, of the remedies set forth
in Section 6.1.
6.5 DISCONTINUANCE OF PROCEEDINGS: To the extent permitted by
applicable Legal Requirements, in case Trustee, Beneficiary or any of the
Priority Secured Parties (or any agent on their behalf), as the case may be,
shall have proceeded to invoke any right, remedy or recourse permitted under any
of the Priority Credit Documents and shall thereafter elect to discontinue or
abandon same for any reason, Trustee, Beneficiary or any of the Priority Secured
Parties (or any agent on their behalf), as the case may be, shall have the
unqualified right so to do and, in such an event, the Grantor, Trustee,
Beneficiary and such other Person shall be restored to their former positions
with respect to the Loan Documents and the Priority Credit Documents, the
Mortgaged Property and otherwise, and the rights, remedies, recourses and powers
of Trustee, Beneficiary and such other Person shall continue as if same had
never been invoked.
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6.6 APPLICATION OF PROCEEDS:
(a) To the extent permitted by applicable Legal Requirements,
all proceeds received from the sale or other dispositions of the
Mortgaged Property, including but not limited to, the Rents and other
income generated by the holding, leasing, operating or other use of the
Mortgaged Property, pursuant to Article 6 of this Deed of Trust shall
be applied by the Trustee and/or Beneficiary (or the receiver, if one
is appointed), as applicable, to the extent that funds are so available
therefrom, in accordance with the following priorities:
First: to the costs and expenses of the sale or possession of
the Mortgaged Property including the Trustee's or receiver's reasonable
fee or commission, if any, title and abstracting charges, reasonable
attorneys' fees and a reasonable auctioneer's fee if such expense has
been incurred;
Second: ratably to the satisfaction of the General Senior
Obligations in accordance with the terms of the Senior Debt
Intercreditor Agreement;
Third: to the payment to whomsoever shall be entitled thereto
under applicable Legal Requirements, if the person who made the sale
knows who is entitled thereto. Otherwise, the surplus shall be paid to
the clerk of the superior, district or circuit court (or other court
having jurisdiction) of the county where the sale was had.
(b) If the Trustee and/or Beneficiary shall be ordered, in
connection with any bankruptcy, insolvency or reorganization of the
Grantor, to restore or repay to or for the account of the Grantor or
any of their creditors any amount theretofore received under this
Section 6.6, the amount for such restoration or repayment shall be
deemed to be a Priority Senior Obligation so as to place the Trustee
and/or Beneficiary in the position they would have been in had such
amount never been received by any party hereto.
6.7 COOPERATION: If an Event of Default shall occur, Grantor will use
its best efforts to cooperate with Trustee and Beneficiary and promptly do all
things reasonably required of it toward obtaining all necessary authority and
permission from any governmental authority or otherwise to accomplish any
disposition, abandonment or change in use of the Mortgaged Property (or any
portion thereof) as Trustee or Beneficiary, as the case may be, may request in
connection with the exercise of its rights and powers hereunder and under the
Priority Credit Documents. Without limiting the generality of the foregoing,
following an Event of Default and reasonable advance notice to Grantor, Grantor
agrees upon such request therefor to relocate operations located on the
Mortgaged Property to accommodate the disposition, abandonment, change in use or
foreclosure by Trustee of any portion thereof, provided that such relocation
does not materially violate any Legal Requirement applicable to Grantor or the
Mortgaged Property.
ARTICLE VII
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CONDEMNATION
7.1 GENERAL: Promptly following the date on which an executive officer
of Grantor obtains knowledge of the institution or the threatened institution of
any proceeding for the condemnation of all or any portion of the Mortgaged
Property, Grantor shall notify Trustee and Beneficiary of such fact. Grantor
shall then, unless Beneficiary waives this requirement, file or defend its claim
in respect of such proceeding and prosecute same with due diligence to its final
disposition. Grantor may be the nominal party in such proceeding but Beneficiary
shall be entitled to participate in same and to be represented therein by
counsel of its own choice, and Grantor will deliver or cause to be delivered to
Beneficiary such instruments as may be reasonably requested by it from time to
time to permit such participation. All proceeds received from any such
condemnation proceeding shall be paid to Beneficiary and applied ratably in
accordance with the terms of the Senior Debt Intercreditor Agreement to reduce
the outstanding balance of the Priority Senior Obligations.
7.2 REBUILDING, RESTORATION AND REPAIR: In the event (a) no Default or
Event of Default shall have occurred and be continuing, (b) only a portion of
the Mortgaged Property is taken, (c) Grantor elects to rebuild, restore or
repair the remaining portion of the Mortgaged Property, (d) the cost of the
rebuilding, restoration or repair reasonably estimated by the Beneficiary shall
not exceed $1,000,000.00, (e) there are sufficient proceeds or other amounts
available to Grantor to fully pay for the rebuilding, restoration or repair of
the Mortgaged Property and the projected appraised value of the Mortgaged
Property upon completion of the same is equal to or greater than the appraised
value of the Mortgaged Property immediately prior to the condemnation, (f) all
parties, having commitments to provide financing with respect to the Mortgaged
Property, to purchase Grantor's interest in full or in part in the Mortgaged
Property or to purchase the Priority Senior Obligations agree in a manner
satisfactory to the Beneficiary that their commitments will continue in full
force and effect and, if necessary, the expiration of such commitments will be
extended by the time necessary to complete the restoration, (g) the Beneficiary
will not incur any liability to any other person as a result of such use or
release of proceeds, then Grantor will so certify to Beneficiary, and will
certify that it will and shall continue diligently to completion to restore,
repair, replace and rebuild such Mortgaged Property as nearly as possible to its
value, condition and character immediately prior to such condemnation with such
alterations, modifications and/or betterments reasonably deemed necessary or
desirable by Grantor in its business judgment. With the certification described
in the preceding sentence, then Grantor shall deliver to the Beneficiary plans
and specifications for such rebuilding, restoration or repair; and Grantor shall
thereafter commence the rebuilding, restoration or repair in accordance with the
plans and specifications required pursuant to the preceding provisions within
sixty (60) days after the date of the disbursement of the award or settlement,
and complete same to the satisfaction of the Beneficiary within a reasonable
time thereafter. In the event each of the conditions set forth above in the
first sentence of this Section are satisfied except that the cost of rebuilding,
restoration or repair is in excess of $1,000,000.00, the above provisions shall
apply except that the proceeds shall be paid to Beneficiary and disbursed in
accordance with Section 4.8 (with all references to insurance proceeds being
revised to be condemnation proceeds). Upon completion of such
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rebuilding, restoration and repair in accordance with the preceding provisions,
Grantor may apply such amount or settlement to the costs of such rebuilding,
restoration or repair. If (i) there is a total condemnation of the Mortgaged
Property, or (ii) if the cost of rebuilding, restoration or repair is reasonably
estimated to be in excess of $1,000,000.00, or (iii) if Grantor elects not to
rebuild, restore or repair as specified above, or (iv) the requirements set
forth above for rebuilding, restoration or repair after a partial condemnation
are not met to the Beneficiary's satisfaction, then Grantor shall pay to
Beneficiary such award or settlement to be held in a segregated cash collateral
account as collateral security for the Priority Senior Obligations until the
earliest to occur of (i) the Security Termination Date, at which time such
proceeds shall be paid to the Grantor, (ii) the occurrence of an Event of
Default, at which time such proceeds shall be applied (subject to compliance
with the Senior Debt Intercreditor Agreement) to the Priority Senior
Obligations, or (iii) the Required Priority Secured Parties direct the
Beneficiary in writing to release such proceeds to the Grantor, at which time
such proceeds shall be paid to the Grantor.
ARTICLE VIII
SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS
8.1 ASSIGNMENT: Subject to the terms and conditions hereinafter set
forth, Grantor as debtor does hereby irrevocably transfer, assign and deliver
unto Beneficiary as secured party for its benefit and the ratable benefit of the
Priority Secured Parties, as security for the payment and performance of the
Priority Senior Obligations, and grant a security interest in, all of the right,
title and interest of Grantor in and to all of the following:
(a) The Leases;
(b) The Rents;
(c) The Fixtures; and
(d) The Personalty.
This assignment of rentals and any other assignments required by the
provisions hereof shall terminate and become null and void upon release of this
Deed of Trust.
The Grantor shall execute and deliver to Beneficiary, in form and
substance satisfactory to Beneficiary, such financing statements and such
further assurances as required by applicable law or as Beneficiary may, from
time to time, consider reasonably necessary to create, perfect and preserve
Beneficiary's security interest herein granted, and Grantor will (or Beneficiary
at its option may) cause such statements and assurances to be recorded and filed
at such times and places as may be required or permitted by law to so create,
perfect and preserve such security interest.
Trustee and Beneficiary shall have all the rights, remedies and
recourses with respect to the Personalty, Fixtures, Leases and Rents afforded a
secured party by the aforesaid UCC in addition
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to, and not in limitation of, the other rights, remedies and recourses afforded
by the Priority Credit Documents and at law.
This instrument covers goods that are or are to become fixtures on the
Land described herein. This instrument shall be deemed to be a fixture filing
and for such purpose the following information is set forth:
(1) Name and Address of Debtor: as set forth on page 1
hereof.
(2) Name and Address of Secured Party: as set forth on page
1 hereof.
(3) Description of the types (or items) of property covered
by this financing statement: as set forth in Section 1.1
and this Section 8.1.
(4) Description of real estate to which collateral is
attached or upon which it is located: as set forth on
Exhibit "A".
8.2 COLLECTION OF RENTS: Grantor absolutely and irrevocably assigns to
Beneficiary, with or without taking possession of the Land or the Buildings, the
Rents, and hereby authorizes and empowers Beneficiary to collect the Rents as
the same shall become due, and does hereby irrevocably direct each and all of
the lessees, sublessees, licensees, or other occupants of the Mortgaged Property
to pay to Beneficiary, upon demand by Beneficiary, the Rents. The foregoing
assignment shall not impose upon Beneficiary any duty to produce Rents from the
Mortgaged Property, and shall not cause Beneficiary to be a
"mortgagee-in-possession" for any purpose.
8.3 BENEFICIARY'S POWERS OF ATTORNEY: Grantor does hereby irrevocably
constitute and appoint Beneficiary, while this Deed of Trust remains in force
and effect, its true and lawful attorney-in-fact, coupled with an interest and
with full power of substitution, delegation and revocation, for Grantor and in
its name, place and stead, to enter and take possession of the Mortgaged
Property after an Event of Default by actual physical possession without the
commencement of any action to foreclose this Deed of Trust or to exercise any
power of sale Beneficiary may have hereunder and to do and perform any or all of
the following actions, as fully as Grantor could do if personally present,
hereby ratifying and confirming all that Beneficiary, as attorney or its
substitute, shall lawfully do or cause to be done by virtue hereof:
(a) to enter into subordination and non-disturbance agreements
with respect to any Leases or with any of the tenants or lessees under
any of the Leases;
(b) to demand, collect, sue for, attach, levy, recover,
receive, compromise and adjust, and make, execute and deliver receipts,
releases, discharges or other instruments for all Rents, issues, and
other amounts that may hereafter become due, owing or payable with
respect to the Mortgaged Property or any part thereof from any present
or future tenants, lessees, sublessees, licensees or other occupants
thereof;
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(c) to institute, prosecute to completion, or compromise and
settle, all summary proceedings, actions for rent or for removing any
and all tenants, lessees, sublessees, licensees or other occupants of
the Mortgaged Property or any part or parts thereof;
(d) to enforce or enjoin or restrain the violation of any of
the terms, provisions and conditions of any of the Leases;
(e) to pay, from and out of any Rents and issues collected in
respect of the Mortgaged Property or any part thereof, or from or out
of any other funds, any taxes, assessments, water rates, sewer rates,
or other government charges levied, assessed, or imposed against the
Mortgaged Property, or any portion thereof, and also any and all other
charges, costs and expenses which it may be reasonably necessary or
advisable for Beneficiary to pay in the management or operation of the
Mortgaged Property, including commissions for renting the Mortgaged
Property or any portion thereof, management and consulting fees, and
legal expenses incurred in enforcing claims, drafting and negotiating
documents or for any other services that may be required;
(f) 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 Personalty;
(g) to receive, indorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with subsection
(f) above;
(h) to file any claims or take any action or institute any
proceedings which the Beneficiary may deem necessary or desirable for
the collection of any of the Personalty or otherwise to enforce the
rights of the Beneficiary with respect to any of the Personalty,
including without limitation the execution, delivery and filing of
financing statements, continuation statements, affidavits or other
security instruments and agreements necessary to perfect, confirm and
continue in effect the lien of this Deed of Trust with respect to the
Leases, the Rents, the Fixtures and the Personalty; and
(i) to generally do, execute, and perform any other act, deed,
matter or thing whatsoever that ought to be done, executed and
performed in and about or with respect to the Mortgaged Property, the
Leases and the Personalty, as fully as Grantor might do; provided,
however, that this Assignment shall not operate to place upon
Beneficiary any responsibility or obligation to take any of the above
actions or any action whatsoever with respect to the operation,
control, care, management or repair of the Mortgaged Property, and that
any action taken or failure or refusal to act by Beneficiary under this
Deed of Trust shall be at Beneficiary's election and without any
liability on its part.
8.4 GRANTOR REMAINS LIABLE: Anything herein to the contrary
notwithstanding:
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(a) Grantor shall remain liable under the Leases to the extent
set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Deed of Trust had not been
executed;
(b) the exercise by the Beneficiary of any of the rights
hereunder shall not release the Grantor from any of its duties or
obligations under any of the Leases; and
(c) the Beneficiary shall not have any obligation or liability
under any of the Leases to any person or entity under this Deed of
Trust nor shall the Beneficiary be obligated to perform any of the
obligations or duties of the Grantor thereunder or to take any action
to collect or enforce any claims thereunder.
8.5 GRANTOR'S REPRESENTATIONS AND WARRANTIES: Grantor represents and
warrants that:
(a) No Rents, nor any part thereof becoming due subsequent to
the date hereof, have been collected with respect to the Leases
(excepting an amount not exceeding one month's installment under the
Leases), nor has payment of any of the same been anticipated, waived,
released, discounted or otherwise discharged or compromised;
(b) This Deed of Trust creates a valid security interest in
the Personalty as security for the payment and performance of the
Priority Senior Obligations. Upon the filing of financing statements
(the "Financing Statement") under the UCC naming the Grantor as debtor
and the Beneficiary as secured party and covering the Personalty, such
security interests shall be perfected under the UCC and such security
interests are not subject to any prior lien, or to any agreement
purporting to grant to any Person, other than the Beneficiary, a
security interest in any of the Personalty, in each case other than
with respect to the Permitted Encumbrances. No further filings,
recordings or other actions are necessary to perfect or maintain the
priority of such security interests other than the filing of UCC
continuation statements on or prior to the date required by applicable
Legal Requirements. The Financing Statements are in appropriate form
and have been duly filed pursuant to the UCC;
(c) The chief place of business and chief executive office of
the Grantor are located at the address first specified above for the
Grantor;
(d) Each of the Leases described in Section 4.10 hereof, as
amended to the date of execution and delivery hereof, true and complete
copies of which have been delivered to the Beneficiary, has been duly
authorized, executed and delivered by Grantor (and to Grantor's
knowledge all other parties thereto) and is in full force and effect
and binding upon and enforceable against Grantor and, to Grantor's
knowledge, against the other parties thereto, in accordance with its
terms. No event has occurred and is continuing, or will
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occur as a result of the performance of this Deed of Trust, that
constitutes or would constitute any material event of default under any
of the Leases or would constitute such an event of default but for the
requirement that notice be given or time lapse or both.
8.6 GRANTOR'S COVENANTS: In addition to Grantor's obligations in
Section 4.10, Grantor covenants and agrees with respect to the Leases that:
(a) It will perform and observe each of its material
obligations under the terms of the Leases now or hereafter in effect
(except when the amount or validity of such obligations is being
contested in good faith) and use best efforts to cause the other
parties thereto to comply with their obligations thereunder;
(b) It will, upon the reasonable written request by the
Beneficiary, while this Assignment remains in force and effect, serve
written notices of this Assignment upon any lessor or lessee,
sublessee, licensee, or other occupant of any portion of the Mortgaged
Property or include among the written provisions of any instrument
hereafter creating any such lease, sublease, license, or right of
occupancy specific reference to this Assignment, and make, execute and
deliver all such powers of attorney or instrument of pledge or
assignment, and such other instrument or documents as the Beneficiary
may reasonably request at any time for the purpose of securing its
rights hereunder;
(c) It will furnish to the Beneficiary, promptly following
demand, true copies of all Leases hereafter executed and true copies of
each agreement or letter effecting the renewal, amendment or
modification of any Lease; and in each case after request by the
Beneficiary, furnish to the Beneficiary promptly following receipt
thereof copies of all notices, requests and other documents received by
the Grantor under or pursuant to the Leases during the term of each of
the Leases and from time to time (A) furnish to the Beneficiary such
information and reports regarding the Leases as the Beneficiary may
reasonably request, and (B) promptly following request of the
Beneficiary make such demands and requests for information or action
upon such person, firm, corporation, or other entity as the Grantor is
entitled to make under the Leases;
(d) It will cause the security interest in the Personalty to
remain a continuously perfected, first priority security interest free
and clear of any liens (other than the Beneficiary's lien hereunder,
the Liens conferred under the other Security Documents and the
Permitted Encumbrances), and from time to time, at its own expense, the
Grantor will promptly execute and deliver all further instruments and
documents and take all further action, that may be necessary or
desirable, or that the Beneficiary may reasonably request, in order to
perfect and protect any security interest granted or purported to be
granted hereby or to enable the Beneficiary to otherwise enforce its
rights and remedies hereunder with respect to the Personalty. Without
limiting the generality of the foregoing or of Section 4.3 hereof, the
Grantor will: (i) at the request of the Beneficiary, mark conspicuously
any item of chattel paper relating to or evidencing the Personalty with
a
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legend, in form and substance satisfactory to the Beneficiary,
indicating that the Personalty is subject to the security interest
granted hereby, (ii) execute and file such financing or continuation
statements, or amendments thereto, and such other collateral
assignments, security agreements, instruments or notices, as may be
necessary or desirable, or as the Beneficiary may reasonably request,
in order to perfect and preserve the security interests granted or
purported to be granted hereby, and (iii) defend the title to the
Personalty and the Beneficiary's lien thereon and security interest
therein against the claim of any person, firm, corporation, or other
entity claiming against or through Grantor and will maintain and
preserve such lien and security interest so long as this Deed of Trust
shall remain in effect;
(e) It authorizes the Beneficiary to file one or more
financing or continuation statements, and amendments thereto, relative
to all or any part of the Personalty without the signature of the
Grantor where permitted by law; and
(f) It will furnish to the Beneficiary from time to time
statements and schedules further identifying and describing the
Personalty and such other reports in connection with the Personalty as
the Beneficiary may reasonably request, all in reasonable detail.
8.7 EFFECT OF RELEASE OF MORTGAGED PROPERTY: The Grantor hereby
consents to, and hereby agrees that the rights of the Beneficiary and the
security interests hereunder, and the obligations of the Grantor hereunder, to
the fullest extent permitted by applicable Legal Requirements, shall not be
affected by any and all releases of any of the Mortgaged Property from the liens
or security interests created by this Deed of Trust or otherwise, whether for
purposes of sales or other dispositions of assets or for some other purpose,
except to the extent expressly provided herein, by any agreement extending the
time or otherwise altering the terms of payment of all or any part of the
indebtedness secured hereby, or subordinating, modifying or waiving any
obligation, or subordinating, modifying or otherwise dealing with the lien or
charge hereof, each such agreement to be in writing to be binding and effective,
by exercising or refraining from exercising or waiving any right Beneficiary may
have hereunder, or by accepting additional security of any kind or additional
parties to the Priority Senior Obligations secured hereby or instruments
creating or evidencing such.
8.8 HOLD HARMLESS: WITHOUT LIMITATION OF THE INDEMNITY SET FORTH IN
SECTION 10.15, GRANTOR HEREBY AGREES TO INDEMNIFY AND HOLD THE TRUSTEE, THE
BENEFICIARY AND EACH OF THE PRIORITY SECURED PARTIES HARMLESS (A) AGAINST AND
FROM ANY AND ALL LIABILITY, LOSS, DAMAGE AND EXPENSE, INCLUDING REASONABLE
ATTORNEYS' FEES, WHICH IT MAY OR SHALL INCUR UNDER OR IN CONNECTION WITH THE
EXERCISE BY THE BENEFICIARY OF ITS RIGHTS HEREUNDER IN RESPECT OF ANY OF THE
LEASES, OR BY REASON OF ANY ACTION TAKEN OR EXPENSES PAID OR INCURRED BY THE
BENEFICIARY UNDER AND IN ACCORDANCE WITH THE TERMS OF THIS DEED OF TRUST, AND
(B) AGAINST AND FROM ANY AND ALL CLAIMS AND DEMANDS WHATSOEVER
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WHICH MAY BE ASSERTED AGAINST GRANTOR BY REASON OF ANY ALLEGED OBLIGATIONS OR
UNDERTAKING ON ITS PART TO PERFORM OR DISCHARGE ANY OF THE TERMS, COVENANTS AND
CONDITIONS CONTAINED IN ANY OF THE LEASES EXCEPT TO THE EXTENT SUCH CLAIM IS
FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO
HAVE RESULTED FROM ANY SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. SHOULD BENEFICIARY PAY OR INCUR ANY SUCH LIABILITY, LOSS, DAMAGE OR
EXPENSE, THE AMOUNT THEREOF, TOGETHER WITH INTEREST THEREON FROM THE DATE OF
SUCH PAYMENT AT THE DEFAULT RATE, SHALL BE PAYABLE BY GRANTOR TO BENEFICIARY
IMMEDIATELY UPON DEMAND THEREFOR; AND UNTIL SO PAID BY GRANTOR, ALL SUMS SO
EXPENDED BY BENEFICIARY AND INTEREST THEREON, SHALL BE ADDED TO THE PRIORITY
SENIOR OBLIGATIONS AND SECURED BY THE LIEN AND LEGAL OPERATION AND EFFECT OF
THIS DEED OF TRUST. AT ITS OPTION, BENEFICIARY MAY REIMBURSE ITSELF THEREFOR OUT
OF ANY RENTS WHICH IT HAS COLLECTED OR MAY COLLECT. THE FOREGOING INDEMNITY
SHALL INCLUDE WITHOUT LIMITATION OF THE FOREGOING INDEMNITY, THE INDEMNITY OF
EACH OF THE PARTIES INDEMNIFIED HEREIN WITH RESPECT TO CLAIMS, DEMANDS, LOSSES,
DAMAGES (INCLUDING CONSEQUENTIAL DAMAGES) LIABILITIES, CAUSES OF ACTION,
JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES
AND COURT COSTS) AND MATTERS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE
OUT OF THE NEGLIGENCE OTHER THAN GROSS (WHETHER SOLE, CONTRIBUTORY, COMPARATIVE,
OR OTHERWISE) OF SUCH AND/OR ANY OTHER INDEMNIFIED PARTY OR FOR WHICH SUCH
INDEMNIFIED PARTY MAY HAVE STRICT LIABILITY.
ARTICLE IX
CONCERNING THE TRUSTEE
9.1 NO REQUIRED ACTION: Trustee shall not be required to take any
action toward the execution and enforcement of the trust hereby created or to
institute, appear in or defend any action, suit or other proceeding in
connection therewith where in his opinion such action will be likely to involve
him in expense or liability, unless requested to do so by a written instrument
signed by Beneficiary and, if Trustee so requests, unless Trustee is tendered
security and indemnity satisfactory to it against any and all costs, expense and
liabilities arising therefrom. Trustee shall not be responsible for the
execution, acknowledgment or validity of the Priority Credit Documents or for
the proper authorization thereof, or for the sufficiency of the lien and
security interest purported to be created hereby, and makes no representation in
respect thereof or in respect of the rights, remedies and recourses of
Beneficiary.
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9.2 CERTAIN RIGHTS: With the approval of Beneficiary, Trustee shall
have the right to take any and all of the following actions: (a) to select,
employ and consult with counsel (who may be, but need not be, counsel for
Beneficiary) upon any matters arising hereunder, including the preparation,
execution and interpretation of the Priority Credit Documents, and shall be
fully protected in relying as to legal matters on the advice of counsel; (b) to
execute any of the trusts and powers hereof and to perform any duty hereunder
either directly or through its agents or attorneys; (c) to select and employ, in
and about the execution of its duties hereunder, suitable accountants, engineers
and other experts, agents and attorneys-in-fact, either corporate or individual,
not regularly in the employ of Trustee, and Trustee shall not be answerable for
any act, default or misconduct of any such accountant, engineer or other expert,
agent or attorney-in-fact, if selected with reasonable care, or be otherwise
responsible or accountable under any circumstances whatsoever, except for
Trustee's gross negligence or bad faith; and (d) to take any and all other
lawful action as Beneficiary may instruct Trustee to take to protect or enforce
Beneficiary's rights hereunder. Trustee shall not be personally liable, except
for its gross negligence or misconduct, in case of entry by it, or anyone
entering by virtue of the rights herein granted to it, upon the Mortgaged
Property for debts contracted or liability or damages incurred in the management
or operation of the Mortgaged Property. Trustee shall have the right to rely on
any instrument, document or signature authorizing or supporting any action taken
or proposed to be taken by it hereunder believed by it in good faith to be
genuine. Trustee shall be entitled to reimbursement for reasonable expenses
incurred by it in the performance of its duties hereunder and to reasonable
compensation for such of its services hereunder as shall be rendered. Grantor
will, from time to time, pay the reasonable compensation due to Trustee
hereunder and reimburse Trustee for, and save it harmless against, any and all
liability and expenses which may be incurred by it in the performance of its
duties.
9.3 RETENTION OF MONEYS: All moneys received by Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated in any manner from any other
moneys (except to the extent required by law) and Trustee shall be under no
liability for interest on any moneys received by it hereunder.
9.4 SUCCESSOR TRUSTEES: Trustee may resign by the giving of sixty (60)
days written notice of such resignation in recordable form to Beneficiary. If
Trustee shall resign or become disqualified from acting in the execution of this
trust, or shall fail or refuse to execute the same when requested by Beneficiary
so to do, or if, for any reason and without cause, Beneficiary shall prefer to
appoint a substitute trustee or trustees to act instead of the aforenamed
Trustee, or any successor or substitute trustee, Beneficiary shall have full
power to appoint a substitute trustee or trustees and, if preferred, several
substitute trustees in succession who shall succeed to all the estates,
properties, rights, powers and duties of the aforenamed Trustee. Such
appointment may be executed by any authorized agent or officer of Beneficiary,
and if such Beneficiary be a corporation and such appointment be executed in its
behalf by any officer of such corporation, such appointment shall be
conclusively presumed to be executed with authority and shall be valid and
sufficient without proof of any action by the Board of Directors or any superior
officer of the corporation. Such appointment shall be duly recorded in the
appropriate real estate records at any
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time before or, if permitted by applicable law, upon sale of Mortgaged Property
by the successor appointed thereby. Grantor hereby ratifies and confirms any and
all acts which the aforementioned Trustee, or his successor or successors in
this trust, lawfully does by virtue hereof. Grantor shall reimburse Beneficiary,
and/or Trustee for any Expenses incurred pursuant to the provisions of this
Section 9.4.
9.5 PERFECTION OF APPOINTMENT: Should any deed, conveyance or
instrument of any nature be required from Grantor by any successor Trustee to
more fully and certainly vest in and confirm to such new Trustee such estates,
rights, powers and duties, then, upon request by such Trustee, any and all such
deeds, conveyances and instruments shall be made, executed, acknowledged and
delivered and shall be caused to be recorded and/or filed by Grantor and Grantor
shall pay for any Expenses incurred by Trustee pursuant to this Section 9.5.
9.6 SUCCESSION INSTRUMENTS: Any new Trustee appointed pursuant to any
of the provisions hereof shall, without any further act, deed or conveyance,
become vested with all the estates, properties, rights, powers and trusts of its
predecessor in the rights hereunder with like effect as if originally named as
Trustee herein; but nevertheless, upon the written request of Beneficiary or of
the successor Trustee, the Trustee ceasing to act shall execute and deliver an
instrument in recordable form transferring to such successor Trustee, upon the
trusts herein expressed, all the estates, properties, rights, powers and trusts
of the Trustee so ceasing to act, and shall duly assign, transfer and deliver
any of the property and moneys held by such Trustee to the successor Trustee so
appointed in its place.
9.7 NO REPRESENTATION BY TRUSTEE: By accepting or approving anything
required to be observed, performed or fulfilled or to be given to Trustee or
Beneficiary pursuant to the Priority Credit Documents, including but not limited
to, any officer's certificate, balance sheet, statement of profit and loss or
other financial statement, survey, appraisal or insurance policy, neither
Trustee nor Beneficiary shall be deemed to have warranted, consented to, or
affirmed the sufficiency, legality, effectiveness or legal effect of the same,
or of any term, provision or condition thereof, and such acceptance or approval
thereof shall not be or constitute any warranty, consent or affirmation with
respect thereto by Trustee or Beneficiary.
9.8 [INTENTIONALLY OMITTED]
ARTICLE X
MISCELLANEOUS
10.1 PERFORMANCE AT GRANTOR'S EXPENSE: The cost and expense of
performing or complying with any and all of the Priority Senior Obligations
shall be borne solely by Grantor, and no portion of such cost and expense shall
be, in any way or to any extent, credited against any installment on or portion
of the Priority Senior Obligations which may be payable by Grantor pursuant to
the Priority Credit Documents.
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10.2 SURVIVAL OF PRIORITY SENIOR OBLIGATIONS: Each and all of the
Priority Senior Obligations shall survive the execution and delivery of the
Priority Credit Documents and the consummation of the loans and other extensions
of credit called for therein and shall continue in full force and effect with
respect to Grantor until the Security Termination Date shall have occurred.
10.3 FURTHER ASSURANCES: Grantor, upon the request of Trustee or
Beneficiary, will execute, acknowledge, and record and/or file such further
instruments and do such further acts as may be reasonably necessary, desirable
or proper to carry out more effectively the purpose of the Priority Credit
Documents and to subject to the liens and security interests thereof any
property intended by the terms thereof to be covered thereby, including
specifically but without limitation, any renewals, additions, substitutions,
replacements, betterments or appurtenances to the then Mortgaged Property.
10.4 RECORDING AND FILING: Grantor will cause this Deed of Trust and
all amendments and supplements thereto and supplements therefor to be recorded,
filed, re-recorded and refiled in such manner and in such places as required by
applicable law or as Trustee or Beneficiary shall reasonably request, and will
pay all such recording, filing, re-recording and refiling taxes, fees and other
charges.
10.5 NOTICES: Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor) (provided that if such day is not a Business Day, such date of
delivery or receipt shall be deemed to be the next following Business Day), (ii)
on the day of receipt (provided that if such day is not a Business Day, such
date of delivery or receipt shall be deemed to be the next following Business
Day) at such address, telefacsimile number or telex number as may from time to
time be specified by such party in written notice to the other parties hereto or
otherwise received), in the case of notice by telegram or telefacsimile,
respectively (where the receipt of such message is verified by return), or (iii)
on the fifth Business Day after the day on which mailed, if sent prepaid by
certified or registered mail, return receipt requested, in each case delivered,
transmitted or mailed, as the case may be, to the address or telefacsimile
number, as appropriate, set forth below or such other address or number as such
party shall specify by notice hereunder:
(a) if to the Grantor:
Cone Mills Corporation
3101 North Elm Street
Greensboro, North Carolina 27415-6540
Attention: David E. Bray
Telephone: (336) 379-6098
Telefacsimile: (336) 379-6043
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with a copy to:
Schell Bray Aycock Abel & Livingston P.L.L.C.
Suite 1500 Renaissance Plaza
230 North Elm Street
Greensboro, North Carolina 27401
Attention: William P. Aycock, II
Telephone: (336) 370-8800
Telefacsimile: (336) 370-8830
(b) if to the Beneficiary:
Bank of America, N.A.
100 North Tryon Street, 17th Floor
Charlotte, North Carolina 28202
Attention: Pfifer Helms
Telephone: (704) 386-5358
Telefacsimile: (704) 386-1270
with a copy to:
Bank of America, N.A.
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 386-9368
Telefacsimile: (704) 386-9923
(c) If to the Trustee:
TIM, Inc.
100 North Tryon Street, 17th Floor
Charlotte, North Carolina 28202
Attention: Pfifer Helms
Telephone: (704) 386-5358
Telefacsimile: (704) 386-1270
10.6 NO WAIVER; REMEDIES: The Beneficiary's failure, at any time or
times hereafter, to require strict performance by the Grantor of any provision
of this Deed of Trust shall not waive, affect or diminish any right of the
Beneficiary or Trustee thereafter to demand strict compliance
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and performance therewith, and the Beneficiary's or Trustee's single or partial
exercise of any right, remedy, power or privilege hereunder shall not preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power, or privilege. The rights, remedies, powers or privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers or
privileges provided by applicable Legal Requirements. Any suspension or waiver
by the Beneficiary, Trustee or the applicable Priority Secured Parties (or an
agent on their behalf) of a default by the Grantor under this Deed of Trust or
under any of the other Loan Documents or the Priority Credit Documents shall not
suspend, waive or affect any other default thereunder, whether the same is prior
or subsequent thereto and whether of the same or of a different kind of
character. None of the undertakings, agreements, warranties, covenants and
representations of the Grantor contained in this Deed of Trust and no default by
the Grantor under this Deed of Trust shall be deemed to have been suspended or
waived unless such suspension or waiver is in writing signed by an officer of
the Beneficiary, and directed to the Grantor specifying such suspension or
waiver.
10.7 BENEFICIARY'S AND PRIORITY SECURED PARTIES' RIGHT TO PERFORM THE
OBLIGATIONS:
(A) If Grantor shall fail, refuse or neglect to make any
payment or perform any act required of it by this Deed of Trust
(including the Grantor's obligation under Section 4.3 hereof to defend
the first lien status of this Deed of Trust), then at any time
thereafter, upon reasonable notice to Grantor and without waiving or
releasing any other right, remedy or recourse Beneficiary or the
applicable Priority Secured Parties (or an agent on their behalf) may
have because of same, Beneficiary may (but shall not be obligated to)
make such payment or perform such act for the account of and at the
expense of Grantor, and shall have the right to enter upon or in the
Land and Buildings for such purpose and to take all such action thereon
and with respect to the Mortgaged Property as it may deem reasonably
necessary or appropriate. In its exercise of its rights under this
Section 10.7, if Beneficiary shall elect to pay any Imposition or other
sums due with reference to the Mortgaged Property, Beneficiary may do
so in reliance on any bill, statement or assessment procured from the
appropriate governmental authority or other issuer thereof without
inquiring into the accuracy or validity thereof subject to any other
applicable terms and provisions set forth herein. Similarly, in making
any payments to protect the security intended to be created by the
Priority Credit Documents, Beneficiary shall not be bound to inquire
into the validity of any apparent or threatened adverse title, lien,
encumbrance, claim or charge before making an advance for the purpose
of preventing or removing the same subject to any other applicable
terms and provisions set forth herein. GRANTOR SHALL INDEMNIFY
BENEFICIARY FOR ALL LOSSES, EXPENSES, DAMAGE, CLAIMS AND CAUSES OF
ACTION, INCLUDING REASONABLE ATTORNEY'S FEES, INCURRED OR ACCRUING BY
REASON OF ANY ACTS PERFORMED BY BENEFICIARY PURSUANT TO THE PROVISIONS
OF THIS SECTION 10.7. ALL SUMS PAID BY BENEFICIARY PURSUANT TO THIS
SECTION 10.7 AND ALL OTHER SUMS EXPENDED BY BENEFICIARY TO WHICH IT
SHALL BE ENTITLED TO BE INDEMNIFIED, TOGETHER WITH INTEREST THEREON AT
THE DEFAULT RATE FROM THE DATE OF SUCH PAYMENT OR
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EXPENDITURE, SHALL CONSTITUTE ADDITIONS TO THE OBLIGATIONS, AND SHALL
BE SECURED BY THE LOAN DOCUMENTS AND GRANTOR COVENANTS AND AGREES TO
PAY THEM TO THE ORDER OF BENEFICIARY UPON DEMAND. THE FOREGOING
INDEMNITY SHALL INCLUDE WITHOUT LIMITATION OF THE FOREGOING INDEMNITY,
THE INDEMNITY OF EACH OF THE PARTIES INDEMNIFIED HEREIN WITH RESPECT TO
CLAIMS, DEMANDS, LOSSES, DAMAGES (INCLUDING CONSEQUENTIAL DAMAGES)
LIABILITIES, CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES AND COURT COSTS) AND MATTERS
WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE
OTHER THAN GROSS (WHETHER SOLE, CONTRIBUTORY, COMPARATIVE, OR
OTHERWISE) OF SUCH AND/OR ANY OTHER INDEMNIFIED PARTY OR FOR WHICH SUCH
INDEMNIFIED PARTY MAY HAVE STRICT LIABILITY.
(b) Any reference in this Deed of Trust to amounts advanced by
or owed to Beneficiary shall be deemed to refer equally to amounts
advanced by or owed to the Trustee or the Priority Secured Parties, and
wherever Beneficiary is required or permitted to advance funds, such
funds may be advanced by the Trustee or the Priority Secured Parties
with the same effect as if advanced by Beneficiary.
10.8 COVENANTS RUNNING WITH THE LAND: All Priority Senior Obligations
are intended by the parties to be, and shall be construed as, covenants running
with the Mortgaged Property until such Mortgaged Property has been released from
the lien of this Deed of Trust.
10.9 SUCCESSORS AND ASSIGNS: All of the terms of this Deed of Trust
shall apply to, be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
10.10 SEVERABILITY: This Deed of Trust is intended to be performed in
accordance with, and only to the extent permitted by, applicable Legal
Requirements. If any provision of this Deed of Trust or the application thereof
to any person or circumstance shall, for any reasons and to any extent, be
invalid or unenforceable, then neither the remainder of this Deed of Trust nor
the application of such provision to other persons or circumstances nor the
other instruments referred to above shall be affected thereby, but rather shall
be enforced to the greatest extent permitted by applicable law.
10.11 ENTIRE AGREEMENT AND MODIFICATION: The Priority Credit Documents
including the Security Documents contain the entire agreement between the
parties relating to the subject matter hereof and thereof and all prior
agreements relative thereto which are not contained herein or therein are
terminated. This Deed of Trust may not be amended, revised, waived, discharged,
released or terminated orally but only by a written instrument or instruments
executed by the party
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against which enforcement of the amendment, revision, waiver, discharge, release
or termination is asserted. Any alleged amendment, revision, waiver, discharge,
release or termination which is not so documented shall not be effective as to
any party. In the event of a conflict between the covenants contained herein and
the covenants contained in the other Senior Credit Documents, the more specific
covenants contained herein shall govern with respect to the Mortgaged Property.
10.12 APPLICABLE LAW: THE PARTIES TO THIS DEED OF TRUST AGREE
THAT THEIR RIGHTS AND OBLIGATIONS UNDER THIS DEED OF TRUST SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF NORTH CAROLINA,
WITHOUT GIVING EFFECT TO THE CONFLICTS-OF LAW RULES AND PRINCIPLES THEREOF. THE
PARTIES FURTHER AGREE AND STIPULATE THAT THIS DEED OF TRUST WAS NEGOTIATED
PRIMARILY IN NORTH CAROLINA AND THAT NORTH CAROLINA HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTIONS SECURED BY THIS
DEED OF TRUST. NOTWITHSTANDING THE FOREGOING, THE PARTIES AGREE THAT:
(A) THE PROCEDURES GOVERNING THE ENFORCEMENT BY BENEFICIARY OF
THE PROVISIONAL REMEDIES AGAINST GRANTOR, INCLUDING BY WAY OF
ILLUSTRATION BUT NOT LIMITATION, ACTIONS FOR REPLEVIN, FOR CLAIM AND
DELIVERY OF PROPERTY, FOR INJUNCTIVE RELIEF OR FOR THE APPOINTMENT OF A
RECEIVER AND THE REQUIREMENTS NECESSARY TO CREATE OR GRANT, PERFECT OR
FORECLOSE ON, OR DETERMINE THE PRIORITY OF, THE LIEN AND SECURITY
INTEREST OF THIS DEED OF TRUST, SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NORTH CAROLINA;
(B) OTHER THAN AS SET FORTH IN SUBSECTION (A) ABOVE, TRUSTEE
AND BENEFICIARY SHALL COMPLY WITH THE APPLICABLE LAW OF THE STATE OF
NORTH CAROLINA, TO THE EXTENT REQUIRED IN CONNECTION WITH THE POWER OF
SALE OR THE FORECLOSURE OF THE SECURITY INTERESTS AND LIENS CREATED
HEREBY. THE PARTIES FURTHER AGREE THAT EITHER BENEFICIARY MAY ENFORCE
ITS RIGHTS UNDER THIS DEED OF TRUST, INCLUDING BUT NOT LIMITED TO, ITS
RIGHT TO SUE GRANTOR, TO COLLECT ANY OUTSTANDING INDEBTEDNESS OR TO
OBTAIN A JUDGMENT FOR ANY DEFICIENCY FOLLOWING FORECLOSURE, IN
ACCORDANCE WITH THE LAWS OF NORTH CAROLINA.
(C) GRANTOR HEREBY ACKNOWLEDGES, WARRANTS AND REPRESENTS THAT
IT IS SOPHISTICATED, KNOWLEDGEABLE AND EXPERIENCED IN COMMERCIAL
TRANSACTIONS SIMILAR TO THE TRANSACTION EMBODIED IN THIS DEED OF TRUST
AND THE SENIOR CREDIT DOCUMENTS; IT HAS BEEN FULLY, COMPLETELY AND
ADEQUATELY REPRESENTED AND ADVISED BY COMPETENT COUNSEL AND OTHER
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CONSULTANTS RETAINED FOR SUCH PURPOSES IN CONNECTION WITH ALL ASPECTS
(INCLUDING BUSINESS AND LEGAL) OF THE TRANSACTIONS UNDER THIS DEED OF
TRUST AND THE SENIOR CREDIT DOCUMENTS; ALL PARTIES TO SUCH TRANSACTION
HAVE EQUAL BARGAINING STRENGTH; AND, BASED ON THE FOREGOING, THE
PARTIES HAVE SELECTED THE LAW OF THE STATE OF NORTH CAROLINA TO GOVERN
THIS DEED OF TRUST AS HEREIN SPECIFIED; AND
(D) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE TERMS AND
CONDITIONS IMPLIED IN MORTGAGES BY VIRTUE OF ANY PRESENT OR FUTURE
STATUTE IN FORCE IN NORTH CAROLINA SHALL FOR THE PURPOSES OF THIS DEED
OF TRUST BE NEGATED OR VARIED ONLY SO FAR AS THEY ARE INCONSISTENT WITH
THE TERMS AND CONDITIONS HEREOF AND ARE OTHERWISE HEREBY VARIED SO AS
TO BECOME CONSISTENT WITH THIS DEED OF TRUST.
10.13 NO PARTNERSHIP; CONTROL IN GRANTOR: Except to the extent
occurring as a matter of law (a) nothing contained in this Deed of Trust is
intended to, or shall be construed as, creating to any extent and in any manner
whatsoever, any partnership, joint venture, or association between Grantor,
Trustee, Beneficiary or any of the Priority Secured Parties, or in any way make
Beneficiary, Trustee or any of the Priority Secured Parties co-principals with
Grantor with reference to all or any portion of the Mortgaged Property, and any
inferences to the contrary are hereby expressly negated; (b) notwithstanding
anything contained herein which may be to the contrary, this Deed of Trust, the
Priority Credit Documents, any agreement, deed of trust or other document
referred to herein by reference, whether specifically or generally, and the
transactions contemplated hereby do not and will not constitute or create
indirect, actual or practical ownership of the Mortgaged Property of Grantor by
Beneficiary or any of the Priority Secured Parties, or control, affirmative or
negative, direct or indirect, by Beneficiary or any of the Priority Secured
Parties over the programming, management, or any other aspect of the day-to-day
operation of the Mortgaged Property or Grantor, which control remains in
Grantor, its shareholders and board of directors; and (c) Beneficiary's
activities in connection with this Deed of Trust, the Loan Documents and the
Priority Credit Documents shall not be "outside the scope of the activities of a
lender of money" within the meaning of any applicable statutes, as amended or
recodified from time to time, and Beneficiary does not intend to ever assume any
responsibility to any person for the quality, suitability, safety or condition
of the Mortgaged Property. Neither Beneficiary nor any of the Priority Secured
Parties shall be directly or indirectly liable or responsible for any loss,
claim, cause of action, liability, indebtedness, damage or injury of any kind or
character to any person or property arising from any construction, or occupancy
or use of, any of the Mortgaged Property, whether caused by or arising from: (i)
any defect in any building, structure, grading, fill, landscaping or other
improvements-thereon or in any on-site or off-site improvement or other facility
therein or thereon; (ii) any act or omission of Grantor or any of its agents,
employees, independent contractors, licensees or invitees; (iii) any accident in
or on any of the Mortgaged Property or any fire, flood or other casualty or
hazard thereon; (iv) the failure of Grantor, any of its
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licensees, employees, invitees, agents, independent contractors or other
representatives to maintain the Mortgaged Property in a safe condition; and (v)
any nuisance made or suffered on any part of the Mortgaged Property.
10.14 HEADINGS: The Article, Section and Subsection titles hereof are
inserted for convenience of reference only and shall in no way alter, modify or
define, or be used in construing, the text of such Articles, Sections or
Subsections.
10.15 HOLD HARMLESS: NEITHER TRUSTEE, BENEFICIARY NOR ANY OF THE
PRIORITY SECURED PARTIES SHALL BE OBLIGATED TO PERFORM OR DISCHARGE, NOR DO ANY
OF THEM HEREBY UNDERTAKE TO PERFORM OR DISCHARGE, ANY OBLIGATION, DUTY OR
LIABILITY WITH RESPECT TO THE MORTGAGED PROPERTY UNDER OR BY REASON OF THIS DEED
OF TRUST OR ANY OF THE SENIOR CREDIT DOCUMENTS, AND GRANTOR SHALL AND DOES
HEREBY AGREE TO INDEMNIFY TRUSTEE, BENEFICIARY AND EACH PRIORITY SECURED PARTY
FOR AND TO HOLD TRUSTEE, BENEFICIARY AND EACH PRIORITY SECURED PARTY HARMLESS
FROM ANY AND ALL LIABILITY, LOSS OR DAMAGE WHICH THEY MAY OR MIGHT INCUR WITH
RESPECT TO THE MORTGAGED PROPERTY OR UNDER OR BY REASON OF THIS DEED OF TRUST OR
ANY OF THE SENIOR CREDIT DOCUMENTS AND FROM ANY AND ALL CLAIMS AND DEMANDS
WHATSOEVER WHICH MAY BE ASSERTED AGAINST THEM BY REASON OF ANY ALLEGED
OBLIGATIONS OR UNDERTAKINGS ON THEIR PART TO PERFORM OR DISCHARGE ANY OF THE
TERMS, COVENANTS, OR AGREEMENTS RELATING TO THE MORTGAGED PROPERTY EXCEPT TO THE
EXTENT SUCH CLAIM IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF
COMPETENT JURISDICTION TO HAVE RESULTED FROM ANY SUCH INDEMNIFIED PARTY'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. SHOULD TRUSTEE, BENEFICIARY OR ANY PRIORITY
SECURED PARTY INCUR ANY SUCH LIABILITY, LOSS OR DAMAGE, THE AMOUNT THEREOF,
INCLUDING ALL ATTORNEYS' FEES AND COSTS AND EXPENSES ASSOCIATED WITH ACTIONS
TAKEN BY TRUSTEE, BENEFICIARY OR ANY SUCH PRIORITY SECURED PARTY IN DEFENSE
THEREOF, OR OTHERWISE IN PROTECTING THEIR INTERESTS HEREUNDER, SHALL BE SECURED
HEREBY, AND GRANTOR COVENANTS AND AGREES TO REIMBURSE TRUSTEE, BENEFICIARY OR
ANY SUCH PRIORITY SECURED PARTY THEREFOR IMMEDIATELY UPON DEMAND. THE FOREGOING
INDEMNITY SHALL INCLUDE WITHOUT LIMITATION OF THE FOREGOING INDEMNITY, THE
INDEMNITY OF EACH OF THE PARTIES INDEMNIFIED HEREIN WITH RESPECT TO CLAIMS,
DEMANDS, LOSSES, DAMAGES (INCLUDING CONSEQUENTIAL DAMAGES) LIABILITIES, CAUSES
OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES AND COURT COSTS) AND MATTERS WHICH IN WHOLE OR IN PART ARE
CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OTHER THAN GROSS (WHETHER SOLE,
CONTRIBUTORY, COMPARATIVE, OR
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OTHERWISE) OF SUCH AND/OR ANY OTHER INDEMNIFIED PARTY OR FOR WHICH SUCH
INDEMNIFIED PARTY MAY HAVE STRICT LIABILITY.
10.16 PRONOUNS AND PLURALS: All pronouns used herein shall be deemed to
refer to the masculine, feminine, neuter, singular or plural as the context may
require, and the singular form of nouns, pronouns and verbs shall include the
plural, and vice versa, whichever the context may require.
10.17 WAIVER OF TRIAL BY JURY: TO THE EXTENT PERMITTED UNDER THE LAWS
OF THE STATE IN WHICH THE APPLICABLE PORTION OF THE MORTGAGED PROPERTY IS
SITUATED, GRANTOR AND THE BENEFICIARY EACH HEREBY WAIVES AND SHALL WAIVE TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS DEED OF TRUST.
10.18 ASSIGNMENT: Beneficiary may assign or transfer all or any portion
of its rights under this Deed of Trust.
10.19 NO MERGER: So long as this Deed of Trust is an encumbrance upon
the Mortgaged Property, there shall be no merger of the interest of any lessor
or any lessee under any Lease or sublease.
10.20 ENFORCEABILITY OF LIEN: In the event that any part of the
Priority Senior Obligations cannot be lawfully secured by this Deed of Trust, or
the lien or security interest hereof cannot be lawfully enforced to pay any part
of the Priority Senior Obligations, then and in either such event, at the option
of Beneficiary, all payments on the Priority Senior Obligations shall be deemed
to have been first applied against the unsecured part of the Priority Senior
Obligations.
10.21 KNOWLEDGE: Whenever referenced in this Deed of Trust, the
"knowledge" or "best knowledge" of Grantor shall include the knowledge of its
parent corporations, if any, and its Subsidiaries, if any.
10.22 BEST EFFORTS: Whenever referenced in this Deed of Trust, the term
"best efforts" shall not be interpreted as requiring the expenditure of
unreasonable sums of money, in view of the objectives sought.
10.23 USURY SAVINGS CLAUSE: Nothing contained herein or in the Senior
Credit Documents shall be deemed to require the payment of interest or other
charges by Grantor in excess of the amount Beneficiary and the applicable
Priority Secured Parties may lawfully charge under the applicable usury laws
(the "Highest Lawful Rate"). In the event Beneficiary shall collect monies which
are deemed to constitute interest which would increase the effective interest
rate to a rate in excess of that permitted to be charged by applicable law, all
such sums deemed to constitute interest in excess of the legal rate shall, upon
such determination, at the option of Beneficiary, be
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returned to the Grantor or credited against the principal balance of any
Priority Senior Obligation secured hereby then outstanding.
10.24 PAYMENT OF PRIOR ENCUMBRANCES: If any or all of the proceeds of
the Priority Senior Obligations have been used to extinguish, extend or renew
any indebtedness heretofore existing against the Mortgaged Property or to
satisfy any indebtedness or obligation secured by a lien or encumbrance of any
kind (including liens securing the payment of any Impositions), such proceeds
have been advanced by Beneficiary at Grantor's request, and, to the extent of
such funds so used, the Priority Senior Obligations in this Deed of Trust shall
be subrogated to and extend to all of the rights, claims, liens, titles and
interests heretofore existing against the Mortgaged Property to secure the
indebtedness or obligation so extinguished, paid, extended or renewed, and the
former rights, claims, liens, title and interests, if any, shall not be waived
but rather shall be continued in full force and effect and in favor of the
Beneficiary and shall be merged with the lien and security for the repayment of
and satisfaction of the Priority Senior Obligations.
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Grantor hereby acknowledges that it has received a copy of this Deed
of Trust free of charge.
WITNESS THE EXECUTION OF THIS DEED OF TRUST, SECURITY AGREEMENT,
FIXTURE FILING, ASSIGNMENT OF LEASES AND RENTS AND FINANCING STATEMENT under
seal as of the date first above written.
CONE MILLS CORPORATION
a North Carolina corporation
By: (SEAL)
--------------------------
Name:
---------------------
Title:
--------------------
Attest: (SEAL)
----------------------------
Name:
---------------------
Title:
--------------------
(CORPORATE SEAL)
This Instrument prepared by and
when recorded mail to:
Charles N. Anderson, Jr.
Smith Helms Mulliss & Moore, L.L.P.
201 North Tryon Street
Charlotte, North Carolina 28202
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STATE OF ___________________
COUNTY OF _________________
I, the undersigned, a Notary Public of said County and State, do hereby
certify that _______________________________ personally appeared before me this
day and acknowledged that _____ is the ________ Secretary of Cone Mills
Corporation, a North Carolina corporation, and that by authority duly given, and
as the act of the corporation, the foregoing instrument was signed in its name
by its __________ President, sealed with its corporate seal and attested by
__________ as its Secretary.
WITNESS my hand and official seal or stamp, this the _____ day of
January 2000.
-------------------------
Notary Public
My Commission Expires:
- -----------------------------
[SEAL or STAMP]
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EXHIBIT A
Land
52
EXECUTION COUNTERPART
AMENDMENT OF
1992 NOTE AGREEMENT
This Amendment, entered into as of January 28, 2000, by and among CONE
MILLS CORPORATION (the "Company") and THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA ("Noteholder").
WHEREAS, the parties hereto have executed and delivered that certain
Note Agreement dated as of August 13, 1992 (as previously amended and as it may
be further amended, modified or supplemented, the "Note Agreement");
WHEREAS, the Company has requested a modification of, among other
things, the financial covenants under the Note Agreement and has agreed to
secure its obligations under the Note Agreement, the Credit Agreement (as
defined in Section 1F(b) below) and certain other debt instruments by pledging
its assets to Prudential and certain other lenders;
WHEREAS, Noteholder is willing to enter into this Amendment subject to
the satisfaction of conditions and terms set forth herein;
WHEREAS, capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Note Agreement; and
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Amendments to Note Amendment.
1A. Paragraph 1 of the Note Agreement. Insert the words "and upon the
occurrence and during the continuance of an Event of Default" in the seventh
line of paragraph 1 after the words "on overdue payments".
1B. Paragraph 5 of the Note Agreement. Paragraph 5 is amended by the
addition of new paragraphs 5L, 5M, 5N and 5O, as follows:
5L. Credit Facility. On and after July 3, 2000, the Company
shall maintain at all times a revolving credit facility (or a binding
commitment therefore with an effective date on or prior to August 7,
2000) having a maturity date no earlier than August 7, 2002 with at
least $80,000,000 in aggregate commitments available thereunder and
otherwise in form and substance satisfactory to the Required Holders.
<PAGE>
2
5M. Other Covenants. If (in the reasonable opinion of the
Required Holders) at any time and from time to time, after the date
hereof, any of the covenants, representations and warranties or events
of default, or any other material term or provision (other than any
term or provision relating to payment terms, interest rates or
penalties), contained in any other material debt agreement or
instrument of the Company ("Material Debt Document"), is more favorable
to the lender or lenders under such Material Debt Document than are the
terms of this Agreement to the holders of the Notes, this Agreement
shall be amended to contain each such more favorable covenant,
representation and warranty, event of default, term or provision, and
the Company hereby agrees to so amend this Agreement and to execute and
deliver all such documents requested by the Required Holder(s) to
reflect such Amendment. Prior to the execution and delivery of such
documents by the Company, this Agreement shall be deemed to contain
each such more favorable covenant, representation and warranty, event
of default, term or provision for purposes of determining the rights
and obligations hereunder.
5N. New Subsidiaries. Simultaneously with (1) the acquisition
or creation of any Material Subsidiary which is a Domestic Subsidiary,
or upon any existing Domestic Subsidiary becoming a Material
Subsidiary, cause to be delivered to the Agent each of the following
and (2) the acquisition or creation of any Material Direct Foreign
Subsidiary, cause to be delivered to the Agent each of the items set
forth in (d), (e), (f), (h) (subclauses (i), (ii), (iii) and (v) only)
and (i), below:
(a) a Facility Guaranty executed by such Subsidiary
substantially in the form of Exhibit F;
(b) a General Security Agreement of such Subsidiary
substantially in the form of Exhibit G, and a Priority
Security agreement substantially in the form of Exhibit H,
together with such Uniform Commercial Code financing
statements on Form UCC-1 or otherwise duly executed by such
Subsidiary as "Debtor" and (i) naming the General Collateral
Agent for the benefit of the General Secured Parties, as
"Secured Party," and (ii) naming the Priority Collateral Agent
for the benefit of the Priority Secured Parties as "Secured
Party", in each case in form, substance and number sufficient
in the reasonable opinion of the Collateral Agents and their
special counsel to be filed in all Uniform Commercial Code
filing offices in all jurisdictions in which filing is
necessary or advisable to perfect (y) the General Lien in
favor of the General Collateral Agent for the benefit of the
General Secured Parties and (z) the Priority Lien in favor of
the Priority Collateral Agent for the benefit of the Priority
Secured Parties, in each case to the extent such General Lien
or Priority Lien may be perfected by Uniform Commercial Code
filing;
(c) Priority Mortgages and General Mortgages with
respect to all parcels of real property with a fair market
value in excess of $300,000 owned by such Subsidiary and with
respect to any Material Real Property or to the extent
<PAGE>
3
required by any law, regulation or directive of any applicable
Governmental Authority, Material Real Property Support
Documents, as applicable, and related Uniform Commercial Code
financing statements on Form UCC-1 or otherwise pertaining to
fixtures;
(d) if the Subsidiary Securities issued by such
Subsidiary that are, or are required to become, Pledged
Interests, shall be owned by a Subsidiary who has not then
executed and delivered to the General Collateral Agent a
Pledge Agreement granting a General Lien to the General
Collateral Agent, for the benefit of the General Secured
Parties, in such equity interests, a Pledge Agreement executed
by the Subsidiary that directly owns such Subsidiary
Securities substantially in the form attached hereto as
Exhibit I (or, as to the Pledged Interests issued by any
Direct Foreign Subsidiary, in a form acceptable to the Agent),
and if such Subsidiary Securities shall be owned by the
Company or a Subsidiary who has previously executed a Pledge
Agreement, a Pledge Agreement Supplement in the form required
by such Pledge Agreement pertaining to such Subsidiary
Securities;
(e) if the Pledged Interests issued by such
Subsidiary constitute securities under Article 8 of the
Uniform Commercial Code (i) the certificates representing such
Pledged Interests and (ii) duly executed, undated stock powers
or other appropriate powers of assignment in blank affixed
thereto;
(f) (i) Uniform Commercial Code financing statements
on form UCC-1 or otherwise duly executed by the pledgor as
"Debtor" and naming the General Collateral Agent for the
benefit of the General Secured Parties as "Secured Party," in
form, substance and number sufficient in the reasonable
opinion of the Agent and its special counsel to be filed in
all Uniform Commercial Code filing offices and in all
jurisdictions in which filing is necessary or advisable to
perfect in favor of the General Collateral Agent for the
benefit of the General Secured Parties the General Lien on
such Subsidiary Securities and (ii) if the Pledged Interests
issued by such Subsidiary do not constitute securities and
such Subsidiary has not elected to have such interests treated
as securities under Article 8 of the applicable Uniform
Commercial Code, a control agreement from the Registrar of
such Subsidiary, in form and substance acceptable to the Agent
and in which the Registrar (1) acknowledges that the pledgor
is at the date of such acknowledgment the sole record, and to
its knowledge, beneficial owner of such Subsidiary Securities,
(2) acknowledges the General Lien in favor of the General
Collateral Agent conferred under the Pledge Agreement and that
such General Lien will be reflected on the registry for such
Subsidiary Securities, (3) agrees that it will not register
any transfer of such Subsidiary Securities nor acknowledge any
Lien in favor of any other Person on such Subsidiary
Securities, without the prior written consent of the General
Collateral Agent, in each instance, until it receives notice
from the General Collateral Agent that all General Liens on
such
<PAGE>
4
Collateral in favor of the General Collateral Agent for the
benefit of the General Secured Parties have been released or
terminated, and (4) agrees that upon receipt of notice from
the Agent or the General Collateral Agent that an Event of
Default has occurred and is continuing and that the Subsidiary
Securities identified in such notice have been transferred to
a transferee identified in such notice, it will duly record
such transfer of Subsidiary Securities on the appropriate
registry without requiring further consent from the pledgor
and shall thereafter treat the transferee as the sole record
and beneficial owner of such Subsidiary Securities pending
further transfer, notwithstanding any contrary instruction
received from the pledgor;
(g) a supplement to the appropriate schedule attached
to the appropriate Security Documents listing the additional
Collateral, certified as true, correct and complete by an
authorized officer (provided that the failure to deliver such
supplement shall not impair the rights conferred under the
Security Documents in after acquired Collateral);
(h) an opinion or opinions of counsel to the
Subsidiary (including local counsel in each jurisdiction where
Mortgaged Property is located) dated as of the date of
delivery of the Facility Guaranty and other Related Documents
provided for in this paragraph 5N and addressed to the
Collateral Agents, in form and substance reasonably acceptable
to the Collateral Agents (which opinion may include
assumptions and qualifications of similar effect to those
contained in the opinions of counsel delivered previously), to
the effect that:
(i) such Subsidiary is duly organized,
validly existing and in good standing in the
jurisdiction of its formation, has the requisite
power and authority to own its properties and conduct
its business as then owned and then conducted and
proposed to be conducted and to execute, deliver and
perform the Facility Guaranty and other documents
described in this paragraph 5N to which such
Subsidiary is a signatory, and is duly qualified to
transact business and is in good standing as a
foreign corporation or partnership in each other
jurisdiction in which the character of the properties
owned or leased, or the business carried on by it,
requires such qualification and the failure to be so
qualified would reasonably be likely to result in a
Material Adverse Effect;
(ii) the execution, delivery and performance
of the Facility Guaranty and other documents
described in this paragraph 5N to which such
Subsidiary is a signatory have been duly authorized
by all requisite corporate or partnership action
(including any required shareholder or partner
approval), each of such agreements has been duly
executed and delivered and constitutes the valid and
binding agreement of such Subsidiary, enforceable
against such Subsidiary in accordance with its
<PAGE>
5
terms, subject to the effect of any applicable
bankruptcy, moratorium, insolvency, reorganization or
other similar law affecting the enforceability of
creditors' rights generally and to the effect of
general principles of equity (whether considered in a
proceeding at law or in equity);
(iii) the Subsidiary Securities of such
Subsidiary are duly authorized, validly issued, fully
paid and nonassessable, and free of any preemptive
rights, and the applicable General Security
Instrument (including foreign collateral documents)
is effective to create a valid security interest in
favor of the General Collateral Agent for the benefit
of the General Secured Parties in such Subsidiary
Securities as constitute Pledged Interests;
(iv) (A) the Uniform Commercial Code
financing statements on Form UCC-1 delivered to the
General Collateral Agent by the Subsidiary in
connection with the delivery of the General Security
Instruments of such Subsidiary have been duly
executed by the Subsidiary and are in form, substance
and number sufficient for filing in all Uniform
Commercial Code filing offices in all jurisdictions
in which filing is necessary to perfect in favor of
the General Collateral Agent for the benefit of the
General Secured Parties the General Lien on General
Collateral conferred under such General Security
Instruments to the extent such General Lien may be
perfected by Uniform Commercial Code filing;
(B) the Uniform Commercial Code
financing statements on Form UCC-1 delivered to the
Priority Collateral Agent by the Subsidiary in
connection with the delivery of the Priority Security
Instruments of such Subsidiary have been duly
executed by the Subsidiary and are in form, substance
and number sufficient for filing in all Uniform
Commercial Code filing offices in all jurisdictions
in which filing is necessary to perfect in favor of
the Priority Collateral Agent for the benefit of the
Priority Secured Parties the Priority Lien on
Priority Collateral conferred under such Priority
Security Instruments to the extent such Priority Lien
may be perfected by Uniform Commercial Code filing;
(v) in the case of Direct Foreign
Subsidiaries only, that under the laws of the
applicable foreign jurisdiction, all agreements,
notices and other documents that are required to be
executed, delivered, filed or recorded and all other
action required to be taken, within or pursuant to
the laws of such jurisdiction to perfect the General
Lien conferred in favor of the General Collateral
Agent under the applicable General Security
Instrument as against creditors of and purchasers for
value from the holder of the Pledged Interests has
been duly executed, delivered, filed, recorded or
taken, as the case may be;
<PAGE>
6
(vi) each Mortgage is in appropriate form
for due recordation and upon recordation shall
constitute a valid and effective, fully perfected
Priority Lien and General Lien, as applicable, on the
real property and fixtures described therein; and
(i) current copies of the Organizational Documents
and Operating Documents of such Subsidiary, minutes of duly
called and conducted meetings (or duly effected consent
actions) of the Board of Directors, partners, or appropriate
committees thereof (and, if required by such Organizational
Documents, Operating Documents or applicable law, of the
shareholders, members or partners) of such Subsidiary
authorizing the actions and the execution and delivery of
documents described in this paragraph 5N.
5O. Post Closing Deliveries. The Company shall comply
with the covenant set forth in Section 9.23 of the Credit
Agreement within the time periods specified therein, without
giving effect to any amendment to or waiver under such Section
unless expressly consented to by the Required Holders.
1C. Paragraphs 6A and 6B of the Note Agreement. Paragraphs 6A and 6B
are amended in their entirety to read as follows:
6A. Financial Limitations. The Company covenants that it will
not permit at any time:
(a) Consolidated Net Worth. Consolidated Net Worth to be less
than (i) $145,000,000 from the Effective Date until (but excluding) the
last day of the fiscal quarter that includes the Effective Date (the
"Effective Date Quarter") plus commencing October 1, 2000, 50% of
Consolidated Net Income for each Fiscal Quarter, and (ii) as at the
last day of each fiscal quarter of the Company commencing with the
Effective Date Quarter and until (but excluding) the last day of the
next following fiscal quarter of the Company, the sum of (A) the amount
of Consolidated Net Worth required to be maintained pursuant to this
paragraph 6A(i) as at the end of the immediately preceding fiscal
quarter (or, in the case of the Effective Date Quarter, required to be
maintained as of the Effective Date), plus (B) 100% of the aggregate
amount of all increases in the stated capital and additional paid-in
capital accounts of the Company resulting from the issuance of equity
securities or other capital investments.
(b) Consolidated Leverage Ratio. As of the end of each
Four-Quarter Period set forth below the Consolidated Leverage Ratio to
be more than that set forth opposite each such period:
<PAGE>
7
Leverage Ratio
Period Must Not Exceed
---------------------------------------- -------------------------
Four Quarter Period ended January 2,
2000 13.05 to 1.00
Four Quarter Period ending April 2,
2000 10.25 to 1.00
Four Quarter Period ending July 2, 2000 9.50 to 1.00
Four Quarter Period ending October 1,
2000 7.30 to 1.00
Four Quarter Period ending December
31, 2000 5.80 to 1.00
Each Four Quarter Period ending April
1, 2001 through December 30, 2001 5.00 to 1.00
Four Quarter Period ending March 31,
2002 through June 30, 2002 and
thereafter 4.50 to 1.00
(c) Consolidated Interest Coverage Ratio. As of the end of each month
for the Twelve-Month Periods set forth below the Consolidated Interest Coverage
Ratio to be less than that set forth opposite each such period:
<PAGE>
8
Interest Coverage Ratio
Period Must Exceed
- --------------------------------------- ------------------------------
Twelve Month Period ended January 2,
2000 1.00 to 1.00
Twelve Month Period ending April 2,
2000 1.35 to 1.00
Twelve Month Period ending July 2,
2000 1.40 to 1.00
Twelve Month Period ending October 1,
2000 1.65 to 1.00
Twelve Month Period ending December
31, 2000 1.95 to 1.00
Each Twelve Month Period ending April
1, 2001 through December 30, 2001 2.20 to 1.00
Each Twelve Month Period ending
thereafter 2.25 to 1.00
(d) Consolidated EBITDA. Consolidated EBITDA for each period set forth
below to be less than the amount set forth opposite such period:
<PAGE>
9
Consolidated EBITDA
Period Ending Must Exceed
- ------------------------------------- ----------------------------------
Fiscal Quarter ended January 2, 2000 $2,000,000
One Fiscal Quarter ending April 2,
2000 $8,550,000
Two Fiscal Quarters ending July 2,
2000 $20,450,000
Three Fiscal Quarters ending
October 1, 2000 $33,750,000
Four Quarter Period ending December
31, 2000 $45,000,000
Each Four Quarter Period ending
April 1, 2001 through December 30,
2001 $50,000,000
Each Four Quarter Period ending
thereafter $52,000,000
6B. Capital Expenditures.
(a) Make or become committed to make U.S. Capital Expenditures which
exceed in the aggregate in any Fiscal Year of the Company described below (on a
noncumulative basis, with the effect that amounts not expended in any Fiscal
Year may not be carried forward to a subsequent period), the amount set forth
opposite each such period:
Capital Expenditures
Period Not to Exceed
- ------------------------------------------------ ----------------------
Fiscal Year ended January 2, 2000 $13,500,000
January 3, 2000 through and including August $8,000,000
7, 2000
(b) Make or become committed to make Mexican Capital Expenditures from
the Effective Date until August 7, 2000 except to the extent an Event of Default
has not occurred and is continuing, for Capital Expenditures in an aggregate
amount not in excess of $1,000,000 for the purpose of purchasing certain real
property in Altamira, Mexico
<PAGE>
10
and making certain improvements thereto to the extent such improvements have
been contractually agreed to with third parties prior to the Effective Date.
1D. Paragraph 6C of the Note Agreement. Paragraph 6C is amended as
follows:
(a) Paragraph 6C(1). Paragraph 6C(1) is amended by deleting clause (v)
thereof in its entirety and adding new clauses (v), (vi) and (vii) as follows:
(v) purchase money Liens to secure Debt permitted under
paragraph 6C(2)(e) and incurred to purchase fixed assets, provided such
Debt represents not less than 75% and not more than 95% of the purchase
price of such assets as of the date of purchase thereof and no property
other than the assets so purchased secures such Debt;
(vi) Liens on the General Collateral and the Priority
Collateral created under the General Security Instruments and the
Priority Security Instruments in favor of the General Collateral Agent
or the Priority Collateral Agent, as applicable, or any refinancing on
substantially the same terms as the Credit Agreement and otherwise in
form and substance acceptable to the Required Holders; and
(vii) Liens on Receivables (as defined in and transferred by
an Originator in accordance with the Receivables Transfer Agreement)
and Returned Goods (as defined in the Securitization Intercreditor
Agreement) in favor of General Electric Capital Corporation, as
collateral agent under the Receivables Purchase Agreement including,
but not limited to, either (i) Liens securing an increase in the
Securitization Outstandings under the Receivables Purchase Agreement
from $50,000,000 to $60,000,000 or (ii) Liens securing an additional
factoring or securitization of receivables in an aggregate amount not
to exceed $10,000,000.
(b) Paragraph 6C(2). Paragraph 6C(2) shall be deleted in its entirety
and the following shall be substituted therefor:
6C(2) Debt. Incur, create, assume or permit to exist any Debt,
howsoever evidenced, except:
(a) Debt existing as of the Effective Date as set forth in
Schedule 6C(2); provided, none of the instruments and agreements
evidencing or governing such Debt shall be amended, supplemented or
restated after the Effective Date to change any terms of subordination,
repayment or rights of enforcement, conversion, put or exchange rights
to be materially less favorable to the holders of the Notes than the
terms and rights as in effect on the Effective Date;
(b) Debt hereunder;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
<PAGE>
11
(d) Debt arising from Rate Hedging Obligations in an aggregate
notional amount not to exceed at any time $40,000,000, which create
Rate Hedging Obligations incurred to limit risks of currency or
interest rate fluctuations to which the Company and its Subsidiaries
are otherwise subject by virtue of the operations of their businesses,
and not for speculative purposes;
(e) purchase money Debt (other than the Parras Cone Debt)
described in paragraph 6C(1)(v) not to exceed an aggregate outstanding
principal amount at any time of $10,000,000;
(f) Capitalized Lease Obligations not to exceed an aggregate
principal amount at any time in excess of $5,000,000;
(g) unsecured intercompany Debt for loans and advances made by
the Company or any Guarantor to the Company or any Guarantor, any such
Debt of the Company owing to any Guarantor shall be subordinate to
payment of the Obligations hereunder at all times in accordance with
the terms of the Facility Guaranty;
(h) additional unsecured Debt for Money Borrowed not otherwise
covered by clauses (a) through (g) above, provided that the aggregate
outstanding principal amount of all such other Debt permitted under
this clause (h) shall in no event exceed $10,000,000 at any time;
(i) the Parras Cone Debt;
(j) Debt extending the maturity of, or renewing, refunding or
refinancing, in whole or in part, Debt incurred under clauses (a), (b),
(g), (h) and (i) of this paragraph 6C(2), provided that the terms of
any such extension, renewal, refunding or refinancing Debt (and of any
agreement or instrument entered into in connection therewith) shall not
change any terms of subordination, repayment or rights of enforcement,
conversion, put or exchange rights to be materially less favorable to
the holders of the Notes than the terms of the Debt as in effect prior
to such action, and provided further that (1) the aggregate principal
amount of such extended, renewed, refunded or refinanced Debt shall not
be increased by such action, (2) the group of direct or contingent
obligors on such Debt shall not be expanded as a result of any such
action, and (3) immediately before and immediately after giving effect
to any such extension, renewal, refunding or refinancing, no Default or
Event of Default shall have occurred and be continuing; and
(k) Securitization Outstandings or Indebtedness described in
and secured by Liens permitted under paragraph 6C(1)(vii).
(c) Paragraph 6C(3) through 6C(7). Each of Paragraph 6C(3) through
6C(7), inclusive, shall be deleted in its entirety and the following shall be
substituted therefor:
<PAGE>
12
6C(3) Incorporation of Credit Agreement. Each of Sections
10.2, 10.6 through 10.20, inclusive, of the Credit Agreement, together
with any relevant definitions, shall be incorporated herein by this
reference as though set forth herein and shall be in full force and
effect. Each such Section shall remain in effect until the Maturity
Date and shall not be modified or waived by any amendment to or consent
under the Credit Agreement.
1E. Paragraph 7 of the Note Agreement. Paragraph 7 is amended as
follows:
(a) by deleting clause (v) thereof and substituting the following
therefore:
(v) the Company fails to perform or observe any agreement
contained in paragraphs 5D, 5E, 5L, 5M, 5N or 6; or
(b) by the addition of the following new clauses:
(xv) the Company or any other Credit Party or any other Person
shall disavow or attempt to terminate any or all of the Related
Documents or any or all of the Related Documents shall cease to be in
full force and effect in whole or in part for any reason whatsoever; or
(xvi) if any of the Security Documents shall be cancelled,
terminated, revoked or rescinded or the security interests, mortgages
or liens in any of the Collateral shall cease to be perfected, or shall
cease to have the priority contemplated by the Security Documents, or
any action at law, suit or in equity or other legal proceeding to
cancel, revoke or rescind any of the Related Documents shall be
commenced by or on behalf of the Company or any of its Subsidiaries
party thereto or any of their respective stockholders or any other
Person, or any court or any other governmental or regulatory authority
or agency of competent jurisdiction shall make a determination that, or
issue a judgment, order, decree or ruling to the effect that, any one
or more of the Security Documents is illegal, invalid or unenforceable
in accordance with the terms thereof; or
(xv) (i) a default or event of default shall have occurred and
be continuing under the Credit Agreement, or (ii) the banks party to
the Credit Agreement shall accelerate the maturity of all or any part
of the indebtedness thereunder, or (iii) the commitments under the
Credit Agreement shall be terminated in whole or in part, or (iv) the
banks a party to the Credit Agreement shall refuse to advance funds
under the Credit Agreement for any reason whatsoever; or
(xvi) the Company or any Subsidiary shall, other than in the
ordinary course of business (as determined by past practices), suspend
all or any part of its operations material to the conduct of the
business of the Company or such Subsidiary for a period of more than 60
days; or
(xvii) the Company or any Subsidiary shall breach any of the
material terms or conditions of any agreement under which any Rate
Hedging Obligations permitted
<PAGE>
13
hereby is created and such breach shall continue beyond any grace
period, if any, relating thereto pursuant to the terms of such
agreement, or if the Company or any Subsidiary shall disaffirm or seek
to disaffirm any such agreement or any of its obligations thereunder;
or
(xviii) any Material Supply Agreement shall be terminated,
canceled or not renewed, or any notice of the foregoing shall be given
by any other party thereto, or a default shall occur under such
agreement and continue beyond the grace or cure period, if any,
applicable thereto; or
(xix) there shall occur any Change in Control; or
(xx) there shall occur any Termination Event as defined in the
Receivables Purchase Agreement; or
(xxi) the Company shall refuse to permit the engagement of a
third-party business consultant ("Consultant") to be hired by the
Noteholder on or before February 15, 2000 on terms and in a manner
acceptable to the Noteholder in its sole discretion or the Company
shall fail to pay any fees, expenses or other obligations owing to the
Consultant or otherwise fails to comply in any material respect with
the provisions of any agreement entered into with the Consultant; or
1F. Amendments to Paragraph 10B of the Note Agreement. (a) The
following definitions shall be added in the appropriate alphabetical order:
"Applicable Rate" means 11.00% per annum.
"Capital Expenditures" means, with respect to the Company and
its Subsidiaries, for any period the sum of (without duplication) (i)
all expenditures (whether paid in cash or accrued as liabilities) by
the Company or any Subsidiary during such period for items that would
be classified as "property, plant or equipment" or comparable items on
the consolidated balance sheet of the Company and its Subsidiaries,
including without limitation all transactional costs incurred in
connection with such expenditures provided the same have been
capitalized, excluding, however, the amount of any Capital Expenditures
paid for with proceeds of casualty insurance as evidenced in writing
and submitted to the Significant Holders together with a compliance
certificate, and (ii) with respect to any Capital Lease entered into by
the Company or its Subsidiaries during such period, the present value
of the lease payments due under such Capital Lease over the term of
such Capital Lease applying a discount rate equal to the interest rate
provided in such lease (or in the absence of a stated interest rate,
that rate used in the preparation of the audited financial statements
most recently delivered hereunder), all the foregoing in accordance
with GAAP applied on a Consistent Basis.
<PAGE>
14
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement Nos. 13 and 98 of the Financial Accounting
Standards Board and any successor thereof.
"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act) either (A) becomes the "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act ), directly or
indirectly, of Voting Securities of the Company (or securities
convertible into or exchangeable for such Voting Securities)
representing 25% or more of the combined voting power of all Voting
Securities of the Company (on a fully diluted basis) or (B) otherwise
has the ability, directly or indirectly, to elect a majority of the
board of directors of the Company;
(ii) during any period of up to 24 consecutive months,
commencing on the Effective Date, individuals who at the beginning of
such 24-month period were directors of the Company shall cease for any
reason (other than the death, disability or retirement of an officer of
the Company that is serving as a director at such time so long as
another officer of the Company replaces such Person as a director) to
constitute a majority of the board of directors of the Company; or
(iii) any Person or two or more Persons acting in concert
shall have acquired by contract or otherwise, or shall have entered
into a contract or arrangement that, upon consummation thereof, will
result in its or their acquisition of the power to exercise, directly
or indirectly, a controlling influence on the management or policies of
the Company.
"Collateral" means, collectively, all General Collateral and
all Priority Collateral.
"Collateral Agency Agreements" means, collectively, the
General Collateral Agency Agreement and the Priority Collateral Agency
Agreement, as amended, modified, supplemented or amended and restated
from time to time.
"Collateral Agents" means, collectively, the Priority
Collateral Agent and the General Collateral Agent.
"Compliance Certificate" means an Officer's Certificate of the
Company demonstrating compliance with the financial covenants contained
in paragraph 6A, substantially in the form of Exhibit J.
"Consistent Basis" in reference to the application of GAAP
means the accounting principles observed in the period referred to are
comparable in all material respects to those applied in the preparation
of the audited financial statements of the Company most recently
delivered as of the Effective Date.
<PAGE>
15
"Consolidated EBITDA" means, with respect to the Company and
its Subsidiaries for any period ending on the date of computation
thereof, the sum of, without duplication, (i) Consolidated Net Income,
(ii) Consolidated Interest Expense, (iii) taxes on income, (iv)
amortization, (v) depreciation, (vi) non-cash charges otherwise
deducted in calculating Consolidated Net Income resulting from FASB No.
88 Adjustments, FASB No. 106 Adjustments, FASB No. 112 Adjustments or
FASB No. 121 Adjustments and (vii) Non-cash Restructuring Charges, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis; provided, however, in the event that any Non-Cash
Restructuring Charges accrued in a prior period are paid in cash in any
subsequent period, the amount of such cash payment shall be subtracted
from Consolidated EBITDA for such subsequent period.
"Consolidated Indebtedness" means all Indebtedness for Money
Borrowed of the Company and its Subsidiaries, all determined on a
consolidated basis.
"Consolidated Interest Coverage Ratio" means for any
Four-Quarter Period ending on the date of computation thereof, the
ratio of (i) Consolidated EBITDA for such Four-Quarter Period, to (ii)
Consolidated Interest Expense for such Four-Quarter Period.
"Consolidated Interest Expense" means, with respect to any
period of computation thereof, the gross interest expense of the
Company and its Subsidiaries, including without limitation (i) the
current amortized portion of debt discounts to the extent included in
gross interest expense, (ii) the current amortized portion of all fees
(including fees payable in respect of any Rate Hedging Obligations)
payable in connection with the incurrence of Indebtedness to the extent
included in gross interest expense, (iii) the portion of any payments
made in connection with Capital Leases allocable to interest expense,
and (iv) the net cash financing costs incurred in connection with any
Securitization Transaction, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Leverage Ratio" means, as of the date of
computation thereof, the ratio of (i) Consolidated Indebtedness
(determined as at such date) to (ii) Consolidated EBITDA (for the
Four-Quarter Period ending on (or most recently ended prior to) such
date).
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Company and its
Subsidiaries other than Parras Cone to the extent it constitutes a
Subsidiary (including payments received by the Company and its
Subsidiaries of (i) interest income, and (ii) dividends and
distributions made in the ordinary course of their businesses by
Persons (including Parras Cone) in which investment is permitted
pursuant to this Agreement and not related to an extraordinary event),
less all operating and non-operating expenses of the Company and its
Subsidiaries including taxes on income, all determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis; but excluding (for all purposes
<PAGE>
16
other than compliance with paragraph 6A hereof as income): (a) net
gains or losses on the sale, conversion or other disposition of capital
assets, (b) net gains or losses on the acquisition, retirement, sale or
other disposition of capital stock and other securities of the Company
or its Subsidiaries, (c) net gains on the collection of proceeds of
life insurance policies, (d) any write-up of any asset, (e) any net
gain or loss recorded as a result of FASB 133 Adjustments, and (f) any
other net gain or credit of an extraordinary nature as determined in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Net Worth" means, as of any date on which the
amount thereof is to be determined, the sum of the following in respect
of the Company and its Subsidiaries (determined on a consolidated basis
and excluding any upward adjustment after the Effective Date due to
revaluation of assets, including without limitation any FASB 133
Adjustment): (i) the amount of issued and outstanding share capital,
plus (ii) the amount of additional paid-in capital and retained
earnings (or, in the case of a deficit, minus the amount of such
deficit), plus (iii) the amount of any foreign currency translation
adjustment (if positive, or, if negative, minus the amount of such
translation adjustment), minus (iv) the amount of any treasury stock,
minus (v) (without duplication of deductions in respect of items
already deducted in arriving at surplus and retained earnings) all
reserves (other than contingency reserves not allocated to any
particular purpose), including without limitation reserves for
depreciation, depletion, amortization, obsolescence, deferred income
taxes, insurance and inventory valuation, all as determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis.
"Credit Parties" means, collectively, the Company, each
Guarantor and each other Person providing Collateral pursuant to any
Security Document from time to time (which Credit Parties as of the
Effective Date are listed on Schedule 10B).
"Direct Foreign Subsidiary" means a Subsidiary other than a
Domestic Subsidiary a majority of whose Voting Securities, or a
majority of whose Subsidiary Securities, are owned by the Company or a
Domestic Subsidiary.
"Domestic Subsidiary" means any Subsidiary of the Company
organized under the laws of the United States of America, any state or
territory thereof or the District of Columbia.
"Effective Date" means January 28, 2000.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Facility Guaranty" means each Guaranty Agreement between one
or more Guarantors and the banks a party to the Credit Agreement,
Noteholder and certain other parties and the Priority Collateral Agent
delivered as of the Effective Date and otherwise
<PAGE>
17
pursuant to paragraph 5N, as the same may be amended, modified,
supplemented, or amended and restated from time to time.
"Fiscal Quarter" means each of the three month fiscal periods
of the Company and its Subsidiaries with respect to 2000, ending on
January 2, 2000, April 2, 2000, July 2, 2000, October 1, 2000 and
December 31, 2000; with respect to 2001, ending on April 1, 2001, July
1, 2001, September 30, 2001 and December 30, 2001; with respect to
2002, ending on March 31, 2002 and June 30, 2002.
"Four-Quarter Period" means a period of four full consecutive
Fiscal Quarters of the Company and its Subsidiaries, taken together as
one accounting period.
"Fiscal Year" means, with respect to fiscal year 1999, the
fiscal period of the Company and its Subsidiaries ending on January 2,
2000 and, with respect to fiscal year 2000, the fiscal period ending
December 31, 2000 and, with respect to fiscal year 2001, the fiscal
period ending December 30, 2001 and, with respect to the fiscal year
ending 2002, the fiscal period ending December 29, 2002.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public
Accountants, or which have other substantial authoritative support and
are applicable in the circumstances as of the date of a report.
"General Collateral" means the real and personal property,
fixtures and assets of the Company and its Material Subsidiaries
whether now existing or hereafter arising, created or acquired upon
which a General Lien has been granted to the General Collateral Agent
for the benefit of the General Secured Parties pursuant to the General
Security Instruments.
"General Collateral Agency Agreement" means that certain
Collateral Agency Agreement dated as of the date hereof among the
General Secured Parties and the General Collateral Agent, as amended,
modified, supplemented or amended and restated from time to time.
"General Collateral Agent" means Wilmington Trust Company, not
individually but solely in its capacity as collateral agent on behalf
of the General Secured Parties hereunder with respect to the General
Collateral, pursuant to the terms of the General Collateral Agency
Agreement, and the Designated Collateral Subagent and their agents,
successors and permitted assigns.
"General Lien" means, with respect to any General Collateral,
a valid and enforceable Lien thereon in favor of the General Collateral
Agent for the benefit of the General Secured Parties conferred under
the General Security Instruments which is fully
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18
perfected and ranking of higher priority than any other Lien on such
property other than a Priority Lien and Permitted Liens.
"General Mortgages" means, collectively, all mortgages, deeds
of trust and deeds to secure debt, substantially in the form delivered
on the Effective Date and otherwise satisfactory to the Required
Holders, granting a General Lien by the Company or a Guarantor to the
General Collateral Agent (or a trustee for the benefit of the General
Collateral Agent) for the benefit of the General Secured Parties in
General Collateral constituting real property and fixtures as
collateral security for the General Senior Obligations, and the
Guarantors' Obligations with respect thereto, as such documents may be
amended, supplemented or restated from time to time.
"General Secured Parties" shall have the meaning set forth in
the Senior Debt Intercreditor Agreement.
"General Security Agreement" means that certain General
Security Agreement dated as of the date hereof and each additional
General Security Agreement entered into after the Effective Date by any
Subsidiary granting a General Lien to the General Collateral Agent for
the benefit of the General Secured Parties pursuant to the General
Collateral Agency Agreement, as collateral security for the General
Senior Obligations, and the Guarantors' Obligations with respect
thereto, as amended, modified, supplemented or amended and restated
from time to time.
"General Security Instruments" means (i) the General Security
Agreement, (ii) the General Mortgages, (iii) the Pledge Agreement and
(iv) all other agreements, instruments and other documents, whether now
existing or hereafter in effect, pursuant to which the Company or any
Material Subsidiary shall grant or convey to the General Collateral
Agent for the benefit of the General Secured Parties a General Lien in
property as security for payment of all or any portion of the General
Senior Obligations and the Guarantors' Obligations with respect
thereto, as any of the foregoing may be amended, supplemented or
restated from time to time.
"Guarantors' Obligations" has the meaning given to such term
in the Facility Guaranty.
"Indebtedness for Money Borrowed" means with respect to any
Person, without duplication, all indebtedness in respect of money
borrowed, including without limitation, all Capital Leases Obligations,
all Synthetic Lease Indebtedness, all Securitization Outstandings, the
deferred purchase price of any property or services, the aggregate face
amount of all surety bonds, letters of credit, and bankers'
acceptances, and (without duplication) all payment and reimbursement
obligations in respect thereof whether or not matured, evidenced by a
promissory note, bond, debenture or similar written obligation for the
payment of money (including reimbursement agreements and conditional
sales or similar title retention agreements), other than trade
payables, documentary letters of credit and accrued expenses incurred
in the ordinary course of business.
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19
"Intercreditor Agreements" means, collectively, the Senior
Debt Intercreditor Agreement, the Leased Facility Intercreditor
Agreement and the Securitization Intercreditor Agreement.
"Leased Facility Intercreditor Agreement" means that certain
Intercreditor Agreement dated as of the date hereof between the Agent
and the Senior Lease Creditor relating to relative rights and remedies
with respect to the Senior Leased Facility, as from time to time
amended, supplemented or replaced.
"Material Adverse Effect" means a material adverse effect on
(i) the business, properties, operations, prospects or condition,
financial or otherwise, of the Company and its Subsidiaries, taken as a
whole, (ii) the ability of any Credit Party to pay or perform its
respective obligations, liabilities and indebtedness under the Related
Documents as such payment or performance becomes due in accordance with
the terms thereof, or (iii) the rights, powers and remedies of the
Noteholder under any Related Document or the validity, legality or
enforceability thereof.
"Material Direct Foreign Subsidiary" means any Direct Foreign
Subsidiary which would be considered a Material Subsidiary under
clauses (i) or (ii) of the definition "Material Subsidiary" if it were
a Domestic Subsidiary.
"Material Real Property Support Documents" means each Material
Real Property Support Document required to be delivered under the
Credit Agreement.
"Material Subsidiary" means any direct or indirect Domestic
Subsidiary of the Company which (i) has total assets equal to or
greater than 2% of consolidated total assets of the Company and its
Domestic Subsidiaries (calculated as of the most recent fiscal period
for which financial statements have been received) (the "Required
Financial Information")) or (ii) has revenue equal to or greater than
2% of consolidated total revenue of the Company and its Domestic
Subsidiaries (calculated for the most recent period for which the Agent
has received the Required Financial Information); provided, however,
that notwithstanding the foregoing, the term "Material Subsidiary"
shall mean each of those Domestic Subsidiaries that together with the
Company and each other Material Subsidiary have assets equal to not
less than 98% of consolidated total assets of the Company and its
Domestic Subsidiaries (calculated as described above) and revenue of
not less than 98% of consolidated total revenue of the Company and its
Domestic Subsidiaries (calculated as described above); provided further
that if more than one combination of Domestic Subsidiaries satisfies
both such thresholds, then those Domestic Subsidiaries so determined to
be "Material Subsidiaries" shall be specified by the Company, and which
include as of the Effective Date the Subsidiaries identified on
Schedule 10B.
"Material Supply Agreement" means, collectively, (i) the
exclusive Supply Agreement dated as of March 30, 1992 between the
Company and Levi Strauss & Co., as amended or replaced from time to
time, and (ii) any other contract or agreement with any
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20
retail or wholesale customer of the Company or any Subsidiary the
cancellation, termination, or non-renewal of which would reasonably be
likely to have a Material Adverse Effect.
"Maturity Date" means August 7, 2002, provided, however, that
in the event the Company shall fail to comply with paragraph 5L hereof,
then the Maturity Date shall be August 7, 2000.
"Mexican Capital Expenditures" means all Capital Expenditures
made with respect to property, plant or equipment located in Mexico
other than Parras Cone Capital Expenditures.
"Morgan Swap Agreement" means that certain ISDA Master
Agreement dated as of July 20, 1998 between the Company and Morgan as
supplemented pursuant to that certain letter agreement dated as of July
20, 1998, as from time to time amended, supplemented or replaced.
"Non-cash Restructuring Charges" means those expenses and
charges against earnings incurred in connection with the Company's
comprehensive corporate downsizing and reorganization program and which
do not result in any cash payment by the Company or any Subsidiary, all
as determined on a consolidated basis in accordance with GAAP applied
on a Consistent Basis.
"Operating Documents" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, the bylaws, operating agreement, partnership
agreement, limited partnership agreement or other applicable documents
relating to the operation, governance or management of such entity.
"Organizational Documents" means with respect to any
corporation, limited liability company, partnership, limited
partnership, limited liability partnership or other legally authorized
incorporated or unincorporated entity, the articles of incorporation,
certificate of incorporation, articles of organization, certificate of
limited partnership or other applicable organizational or charter
documents relating to the creation of such entity.
"Parras Cone Capital Expenditures" means all Capital
Expenditures made by Parras Cone financed exclusively from internally
generated revenue and/or the Parras Cone Debt.
"Pledge Agreement" means, collectively (or individually as the
context may indicate), (i) that certain Securities Pledge Agreement
dated as of the date hereof from the Company to the General Collateral
Agent for the benefit of the General Secured Parties, (ii) that certain
Pledge Agreement dated as of the date hereof from the Company pledging
65% of the total outstanding shares of each of its Material Direct
Foreign Subsidiaries to
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21
the General Collateral Agent for the benefit of the General Secured
Parties, (iii) any additional Securities Pledge Agreement delivered
pursuant to paragraph 5N, and (iv) with respect to any Subsidiary
Securities issued by a Material Direct Foreign Subsidiary, any
additional or substitute charge, agreement, document, instrument or
conveyance, in form and substance acceptable to the Required Holders,
conferring under applicable foreign law upon the General Collateral
Agent for the benefit of the General Secured Parties a General Lien
upon such Subsidiary Securities and equity interests as are owned by
the Company or any Domestic Subsidiary, in each case as hereafter
amended, supplemented (including by Pledge Agreement Supplement) or
restated from time to time.
"Pledge Agreement Supplement" means, with respect to each
Pledge Agreement, the Pledge Agreement Supplement in the form affixed
as an exhibit to such Pledge Agreement.
"Pledged Interests" means the Subsidiary Securities required
to be pledged as General Collateral pursuant to the terms of any Pledge
Agreement.
"Priority Collateral" means the certain personal and real
property, assets and fixtures of the Company and its Material
Subsidiaries whether now existing or hereafter arising, created or
acquired, upon which a Priority Lien has been granted to the Priority
Collateral Agent for the benefit of the Priority Secured Parties
pursuant to the Priority Security Instruments.
"Priority Collateral Agency Agreement" means that certain
Collateral Agency Agreement dated as of the date hereof among the
Priority Secured Parties and the Priority Collateral Agent, as amended,
supplemented or restated from time to time.
"Priority Collateral Agent" means Bank of America not
individually but solely in its capacity as collateral agent for the
Priority Secured Parties with respect to the Priority Collateral
pursuant to the terms of the Priority Collateral Agency Agreement, and
its agents, successors and permitted assigns.
"Priority Lien" means, with respect to any Priority
Collateral, a valid and enforceable Lien thereon in favor of the
Priority Collateral Agent for the benefit of the Priority Secured
Parties conferred under the Priority Security Instruments which is
fully perfected and ranking of higher priority than any other Lien,
including any General Lien, on such property, except for Permitted
Liens.
"Priority Mortgages" means, collectively, all mortgages, deeds
of trust and deeds to secure debt substantially in the form delivered
on the Effective Date granting a Priority Lien by the Company or a
Guarantor to the Priority Collateral Agent (or a trustee for the
benefit of the Priority Collateral Agent) for the benefit of the
Priority Secured Parties in Priority Collateral constituting real
property and fixtures as collateral security for the Priority Senior
Obligations, and if applicable, the Guarantors' Obligations with
respect thereto, as such documents may be amended, supplemented or
restated from time to time.
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22
"Priority Secured Parties" shall have the meaning set forth in
the Senior Debt Intercreditor Agreement.
"Priority Security Agreement" means that certain Priority
Security Agreement dated as of the date hereof, and each additional
Priority Security Agreement entered into after the Effective Date by
any Subsidiary in accordance with the terms of any Senior Credit
Document, granting a Priority Lien to the Priority Collateral Agent for
the benefit of the Priority Secured Parties pursuant to the Priority
Collateral Agency Agreement as collateral security for the Priority
Senior Obligations, and if applicable, the Guarantors' Obligations with
respect thereto, as amended, supplemented or restated from time to
time.
"Priority Security Instruments" means (i) the Priority
Security Agreement, (ii) the Priority Mortgages and (iii) all other
agreements, instruments and other documents, whether now existing or
hereafter in effect pursuant to which the Company or any Material
Subsidiary shall grant or convey a Priority Lien to the Priority
Collateral Agent for the benefit of the Priority Secured Parties as
collateral security for the Priority Senior Obligations, all as
amended, supplemented or restated from time to time.
"Rate Hedging Obligations" means, without duplication, any and
all obligations of the Company or any Subsidiary, whether absolute or
contingent and howsoever and whensoever created, arising, evidenced or
acquired (including all renewals, extensions and modifications thereof
and substitutions therefor), under (i) any and all agreements, devices
or arrangements designed to protect at least one of the parties thereto
from the fluctuations of interest rates, exchange rates or forward
rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, Dollar-denominated or
cross-currency interest rate exchange agreements, forward currency
exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts, warrants and
those commonly known as interest rate "swap" agreements; (ii) all other
"derivative instruments" as defined in FASB 133 and which are subject
to the reporting requirements of FASB 133; and (iii) any and all
cancellations, buybacks, reversals, terminations or assignments of any
of the foregoing; provided, however, under no circumstances shall
obligations for cotton hedging in the ordinary course of business be
considered Rate Hedging Obligations.
"Receivables Purchase Agreement" means that certain
Receivables Purchase and Servicing Agreement dated September 1, 1999 by
and among Cone Receivables II LLC, as Seller, Redwood Receivables
Corporation, as Purchaser, Cone Mills Corporation, as Servicer, and
General Electric Capital Corporation, as Operating Agent and Collateral
Agent, as amended by the First Amendment and Waiver to Securitization
Agreements dated as of November 16, 1999 and the Second Amendment to
Securitization Agreements dated as of the Effective Date and as
amended, supplemented or restated from time to time.
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23
"Receivables Transfer Agreement" means that certain
Receivables Transfer Agreement dated September 1, 1999 by and among
Cone Mills Corporation, the other originators party thereto and Cone
Receivables II LLC, as amended by the First Amendment and Waiver to
Securitization Agreements dated as of November 16, 1999 and the Second
Amendment to Securitization Agreements dated as of the Effective Date
and as amended, supplemented or restated from time to time.
"Related Documents" shall mean the Notes, the Facility
Guaranty Agreements, the Security Documents and any other agreement,
instrument or other document executed in connection therewith.
"Securitization Intercreditor Agreement" means the
Intercreditor Agreement of even date herewith among General Electric
Capital Corporation, the General Collateral Agent and certain other
parties and more particularly described in the definition of "Permitted
Encumbrances" in Annex X to the Receivables Purchase Agreement, as
amended, supplemented or restated from time to time.
"Securitization Outstandings" means, at any time, the Capital
Investment (as defined in the Receivables Purchase Agreement) under the
Receivables Purchase Agreement, in an aggregate amount not in excess of
$60,000,000 at any time.
"Security Agreement" means, collectively (or individually as
the context may indicate), (i) the Priority Security Agreement, (ii)
the General Security Agreement, and (iii) any additional Security
Agreement delivered pursuant to paragraph 5N, as amended, supplemented
or restated from time to time.
"Security Documents" means, collectively, the General Security
Instruments, the Priority Security Instruments and the Senior Lease
Facility Mortgage.
"Senior Indenture" means that certain Indenture dated as of
February 14, 1995 between the Company and The Bank of New York, as
Trustee, as amended, restated or supplemented from time to time.
"Senior Lease Documents" means the Master Lease, the Loan
Agreement (up to $16,000,000) dated as of October 24, 1994 between
Atlantic Financial Group, Ltd. (as successor to TCB Realty II
Corporation), as borrower, and SunTrust Bank (as successor to Citicorp
Leasing, Inc.), as lender (the "Development Loan Agreement") and the
other Key Agreements (as defined in the Development Loan Agreement), as
amended by the Tenth Amendment to Master Lease of even date herewith
and as amended, supplemented or restated from time to time.
"Subsidiary Securities" means the shares of capital stock or
the other equity interests issued by or equity participations in any
Subsidiary, whether or not constituting a "security" under Article 8 of
the Uniform Commercial Code as in effect in any jurisdiction.
<PAGE>
24
"Synthetic Lease" means a leveraged leasing arrangement under
which the lease of property is treated as an operating lease under GAAP
but is treated as a financing lease arrangement for legal and tax
purposes and in which a special purpose entity incurs Indebtedness to
acquire such property and leases such property to the Company.
"Synthetic Lease Indebtedness" means, with respect to a Person
that is a lessee under a Synthetic Lease, at any time an amount equal
to (i) the aggregate purchase price of any property that the lessor
under such synthetic lease acquired, through one or a series of related
transactions, and thereafter leased to such Person pursuant to such
Synthetic Lease less (ii) the aggregate amount of all payments made on
or prior to such time of fixed rent or other rent payments which
reduced such Person's obligation under such Synthetic Lease and which
are not the financial equivalent of interest. Synthetic Lease
Indebtedness of a Person shall also include, without duplication, the
amount of Synthetic Lease Indebtedness of others to the extent
guarantied by such Person.
"Twelve-Month Period" means a period of twelve consecutive
calendar months taken together as one accounting period.
"U.S. Capital Expenditures" means all Capital Expenditures
other than Mexican Capital Expenditures and Parras Cone Capital
Expenditures.
"Voting Securities" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders
of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
(b) The definition of the term Credit Agreement shall be
deleted in its entirety and the following definition shall be
substituted therefor:
"Credit Agreement" shall mean that certain Credit Agreement
dated as of January 28, 2000 among the Company, the banks a party
thereto and Bank of America, N.A., as Agent, as it may be amended,
modified or supplemented from time to time in accordance with its
terms.
(c) Each of the following defined terms shall be deleted in
its entirety:
Bank Facility
Current Assets
Current Liabilities
Current Ratio
<PAGE>
25
Fixed Charge Coverage
1G. Amendment to Paragraph 11 of the Note Agreement. A new paragraph
11P shall be added as follows:
11P. Third Party Beneficiary. The Company hereby agrees that
the Noteholder is an express third-party beneficiary of Article V of
the Credit Agreement and that the holders of the Notes shall have all
of the rights and benefits afforded thereby as though such Article V
were set forth herein. Furthermore, the Company agrees that,
notwithstanding any provision of the Credit Agreement to the contrary,
no consent or waiver under such Article V nor any amendment or
modification thereof shall be effective unless the Company shall have
received the prior written approval of the Required Holders.
1H. Amendment to Exhibit A of the Note Agreement. The Exhibit A to the
Note Agreement shall be deleted in its entirety and the Exhibit A attached
hereto shall be substituted therefor.
2. Conditions of Effectiveness. This Amendment shall become effective
when, and only when, (a) the Noteholder shall have received all of the following
documents, each (unless otherwise indicated) being dated the date hereof, in
form and substance satisfactory to the Noteholder:
(i) executed originals of each of this Amendment, the Notes,
the initial Facility Guaranties, the initial Security Documents and the
other Related Documents, together with all schedules and exhibits
thereto;
(ii) the favorable written opinions with respect to the
Related Documents and the transactions contemplated thereby of special
counsel to the Credit Parties (including special indenture counsel) in
the jurisdictions of North Carolina, South Carolina, New York and
Mexico, dated the Effective Date, addressed to the Noteholder and
satisfactory to its counsel;
(iii) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee thereof) of
each Credit Party certified by its secretary or assistant secretary as
of the Effective Date, approving and adopting the Related Documents to
be executed by such Credit Party, and authorizing the execution and
delivery thereof;
(iv) specimen signatures of officers or other appropriate
representatives executing the Related Documents on behalf of each of
the Credit Parties, certified by the secretary or assistant secretary
of such Credit Party;
(v) the Organizational Documents of each of the Credit Parties
certified as of a recent date by the Secretary of State of its state of
organization;
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26
(vi) Operating Documents of each of the Credit Parties
certified as of the Effective Date as true and correct by its secretary
or assistant secretary;
(vii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of formation of
each of the Credit Parties as to the due existence and good standing of
such Credit Party;
(viii) appropriate certificates of qualification to do
business, good standing and, where appropriate, authority to conduct
business under assumed name, issued in respect of each of the Credit
Parties as of a recent date by the Secretary of State or comparable
official of each jurisdiction in which the failure to be qualified to
do business or authorized so to conduct business could have a Material
Adverse Effect;
(ix) a Compliance Certificate as of the end of the fiscal
quarter most recently ended prior to the Effective Date;
(x) evidence of the filing of Uniform Commercial Code
financing statements reflecting the filing in all places required by
applicable law to perfect the General Liens of the General Collateral
Agent under the General Security Instruments and the Priority Liens of
the Priority Collateral Agent under the Priority Security Instruments,
as to items of Collateral in which a security interest may be perfected
by the filing of financing statements, and such other documents and/or
evidence of other actions as may be necessary under applicable law to
perfect the General Liens of the General Collateral Agent under the
General Security Instruments and the Priority Liens of the Priority
Collateral Agent under the Priority Security Instruments, as the
General Collateral Agent or Priority Collateral Agent may require,
including without limitation the delivery by the Company of all
certificates evidencing Pledged Interests, accompanied in each case by
duly executed stock powers (or other appropriate transfer documents) in
blank affixed thereto;
(xi) executed originals of the Collateral Agency Agreements
and the Senior Debt Intercreditor Agreement;
(xii) executed originals of the Securitization Intercreditor
Agreement and the Leased Facility Intercreditor Agreement;
(xiii) copies of the Senior Indenture, the Credit Agreement,
the Morgan Swap Agreement, the Receivables Transfer Agreement, the
Receivables Purchase Agreement and the Senior Lease Documents, together
with all material agreements executed in connection therewith, and
amendments of each of the foregoing, each in form and substance
acceptable to the Noteholder, certified as true and correct and in full
force and effect by an authorized officer of the Company;
(xiv) Uniform Commercial Code search results as of a recent
date showing only those Liens as are acceptable to the Noteholder;
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27
(xv) delivery of Material Real Property Support Documents as
may be required by any governmental authority in connection with the
delivery of any Mortgage;
(b) Satisfaction of the terms and provisions of that certain Letter
Agreement dated the date hereof between the Company and the Noteholder;
(c) The Company shall have paid in immediately available funds, the
nonrefundable restructuring fee to the Noteholder;
(d) The Company shall have paid all costs and expenses (including legal
fees) incurred by the Noteholder;
(e) executed officer's certificate by the chief financial officer of
the Company as to compliance with Section 3.9(i) of the Indenture;
(f) thirteen week consolidated cash flow projections of the Company and
its Subsidiaries commencing with the week starting January 17, 2000, acceptable
to the Noteholder in form and substance;
(g) Such other documents, instruments, approvals or opinions as the
Noteholder may reasonably request; and
(h) The representations and warranties contained herein shall be true
on and as of the date hereof, there shall exist on the date hereof, no Event of
Default or Default; there shall exist no material adverse change in the
financial condition, business operation or prospects of the Company or its
Subsidiaries since January 3, 1999 except (i) as set forth in the financial
projections dated October 1999 delivered to the Noteholder by the Company and
(ii) as disclosed to the Noteholder with respect to certain customer's payment
practices; and the Company shall have delivered to the Noteholder an Officer's
Certificate to such effect.
3. Representations and Warranties.
(a) The Company hereby repeats and confirms each of the representations
and warranties made by it in the Credit Agreement (it being understood that any
reference to (i) Lender includes the Noteholder, and (ii) Loan Documents
includes the Note Agreement and the Notes, as amended hereby) and in paragraph
8H of the Note Agreement, as amended hereby, as though made on and as of the
date hereof, with each reference therein to "this Agreement", "hereof",
"hereunder", "thereof", "thereunder" and words of like import being deemed to be
a reference to the Note Agreement as amended hereby.
(b) The Company further represents and warrants as follows:
(i) The execution, delivery and performance by the Company of
this Amendment and the Notes are within its corporate powers, have been
duly authorized by all necessary corporate action and do not contravene
(A) its charter or by-laws, (B) law or
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28
(C) any legal or contractual restriction binding on or affecting the
Company; and such execution, delivery and performance do not or will
not result in or require the creation of any Lien upon or with respect
to any of its properties.
(ii) No governmental approval is required for the due
execution, delivery and performance by the Company of this Amendment or
the Notes, except for such governmental approvals as have been duly
obtained or made and which are in full force and effect on the date
hereof and not subject to appeal.
(iii) This Amendment and the Notes constitute the legal, valid
and binding obligations of the Company enforceable against the Company
in accordance with its terms.
(iv) There are no pending or threatened actions, suits or
proceedings affecting the Company or any of its Subsidiaries or the
properties of the Company or any of its Subsidiaries before any court,
governmental agency or arbitrator, that may, if adversely determined,
materially adversely affect the financial condition, properties,
business, operations or prospects of the Company and it Subsidiaries,
considered as a whole, or affect the legality, validity or
enforceability of the Note Agreement or the Notes, as amended by this
Amendment.
4. Miscellaneous.
4A. Reference to and Effect on the Note Agreement. (a) Upon the
effectiveness of this Amendment, on and after the date hereof each reference in
the Note Agreement to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Note Agreement, and each reference in any other document
to "the Note Agreement", "thereunder", "thereof" or words of like import
referring to the Note Agreement, shall mean and be a reference to the Note
Agreement, as amended hereby and each reference to the Notes, and each reference
in any other document to "the Notes", "thereunder", "thereof" or words of like
import referring to the Notes, shall mean and be a reference to the Notes, as
amended hereby.
(b) Except as specifically amended above, the Note Agreement and the
Notes, and all other related documents, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any holder of a Note under the Note Agreement or the Notes,
nor constitute a waiver of any provision of any of the foregoing.
4B. Costs and Expenses. The Company agrees to pay on demand all costs
and expenses incurred by any holder of a Note in connection with the
preparation, execution and delivery of this Amendment, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel. The
Company further agrees to pay on demand all costs and expenses, if
<PAGE>
29
any (including, without limitation, reasonable counsel fees and expenses of
counsel), incurred by any holder of a Note in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this
Amendment, including, without limitation, counsel fees and expenses in
connection with the enforcement of rights under this paragraph 6B.
4C. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same
instrument.
4D. Governing Law. This Amendment shall be governed by, and construed
in accordance with, the laws of the State of New York.
4E. Nature of Purchase. The Noteholder did not acquire the Notes with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act, provided that the disposition of its property has
been and will remain within its control at all times.
4F. Estoppel. To induce the Noteholder to enter into this Amendment,
the Company hereby acknowledges and agrees that, as of the date hereof, there
exists no right of offset, defense or counterclaim in favor of the Company
against any holder of the Notes with respect to the obligations of the Company
to any such holder, either with or without giving effect to this Amendment.
[Signatures on Next Page.]
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30
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CONE MILLS CORPORATION
By_________________________
Name:
Title:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By_________________________
Robert R. Derrick
Vice President
<PAGE>
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE OFFERED OR SOLD IN VIOLATION OF SUCH ACT.
THIS NOTE IS GIVEN IN SUBSTITUTION AND WITHOUT NOVATION OF THE PROMISSORY NOTE
DATED AUGUST 13, 1992 ISSUED BY CONE MILLS CORPORATION.
CONE MILLS CORPORATION
11.00% SENIOR NOTE DUE AUGUST 7, 2002
No. R-__ January __, 2000
$----------
FOR VALUE RECEIVED, the undersigned, CONE MILLS CORPORATION, a
corporation organized and existing under the laws of the State of North
Carolina, hereby promises to pay to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
or registered assigns, the principal sum of __________________ DOLLARS on the
Maturity Date subject to the immediately following paragraph, with interest
(computed on the basis of a 360-day year having twelve 30-day months) on the
unpaid balance thereof (a) at the Applicable Rate per annum from the date hereof
subject to the immediately following paragraph, payable semiannually on the 7th
day of August and February in each year, commencing with August 7 or February 7
next succeeding the date hereof, until the principal hereof shall have become
due and payable, and (b) on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Yield-Maintenance Amount (as defined in the Note Agreement
referred to below) or if an Event of Default under the Note Agreement shall have
occurred and be continuing, at a rate per annum from time to time equal to the
greater of (i) Applicable Rate plus 2.5% or (ii) 2.5% over the rate of interest
publicly announced by Morgan Guaranty Trust Company of New York from time to
time in New York City as its Prime Rate payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand).
Payments of principal of, interest on and any Yield-Maintenance Amount
payment with respect to this Note are to be made at the main office of Bank of
New York in New York City or at such other place as the holder hereof shall
designate to the Company in writing, in lawful money of the United States of
America.
<PAGE>
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to the Note Agreement, dated as of August 13, 1992 (as
amended, modified or supplemented, the "Agreement"), among the Company and The
Prudential Insurance Company of America and is entitled to the benefits thereof.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
The Company agrees to make prepayments of principal on the dates and in
the amounts specified in the Agreement. This Note is also subject to optional
prepayment, in whole or from time to time in part, on the terms specified in the
Agreement.
In case an Event of Default, as defined in the Agreement, shall occur
and be continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner and with the effect provided in the
Agreement.
This Note is intended to be performed in the State of New York and
shall be construed and enforced in accordance with the law of such State. AS
PROVIDED IN PARAGRAPH 11L OF THE AGREEMENT, THE COMPANY SUBMITS TO THE
JURISDICTION OF THE SUPREME COURT OF NEW YORK COUNTY, NEW YORK AND THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, IN ANY ACTION OR
PROCEEDING RELATING TO THIS NOTE.
CONE MILLS CORPORATION
By:________________________
Name:
Title:
By:________________________
Name:
Title:
A-2
TENTH AMENDMENT TO MASTER LEASE
THIS TENTH AMENDMENT TO MASTER LEASE, dated as of January 28, 2000
(this "Amendment"), is between ATLANTIC FINANCIAL GROUP, LTD., a Texas limited
partnership ("Lessor"), and CONE MILLS CORPORATION, a North Carolina corporation
("Lessee").
BACKGROUND
1. Lessor (as assignee of TBC Realty II Corporation) and Lessee are
parties to that certain Master Lease, dated as of October 24, 1994 (as
heretofore amended, the "Lease").
2. Lessee and Lessor desire to amend the Lease in certain respects as
set forth herein.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Definitions. Capitalized terms used in this Amendment and
not otherwise defined herein shall have the meanings assigned thereto in the
Lease.
SECTION 2. Representations and Warranties; Covenants. Section 32 of the
Lease is hereby deleted in its entirety, and the following shall be substituted
therefor:
I. Representations and Warranties of Lessee; Covenants of Lessee
A. Representations and Warranties. The Lessee represents and warrants
with respect to itself and to its Subsidiaries that:
1. Organization and Authority.
(a) The Lessee and each Subsidiary is a corporation duly organized and validly
existing under the laws of the jurisdiction of its formation;
(a) The Lessee and each Subsidiary (x) has the requisite power and authority to
own its properties and assets and to carry on its business as now being
conducted and as contemplated in the Lease Documents, and (y) is qualified to do
business in every jurisdiction in which failure so to qualify would have a
Material Adverse Effect;
(a) The Lessee has the power and authority to execute, deliver and perform this
Amendment, and to execute, deliver and perform each of the other Lease Documents
to which it is a party;
<PAGE>
(a) Each Credit Party (other than the Lessee) has the power and authority to
execute, deliver and perform the Facility Guaranty and each of the other Lease
Documents to which it is a party;
(a) When executed and delivered, each of the Lease Documents to which any Credit
Party is a party will be the legal, valid and binding obligation or agreement,
as the case may be, of such Credit Party, enforceable against such Credit Party
in accordance with its terms, subject to the effect of any applicable
bankruptcy, moratorium, insolvency, reorganization or other similar law
affecting the enforceability of creditors' rights generally and to the effect of
general principles of equity (whether considered in a proceeding at law or in
equity); and
(a) The Security Documents create valid security interests in the Collateral
purported to be covered thereby, which security interests and Liens are and will
remain perfected security interests and Liens, prior to all other Liens other
than Permitted Liens.
1. Lease Documents. The execution, delivery and performance by each Credit Party
of each of the Lease Documents to which it is a party:
(a) have been duly authorized by all requisite Organizational Action of such
Credit Party required for the lawful execution, delivery and performance
thereof;
(a) do not violate any provisions of (i) any applicable law, rule or regulation,
(ii) any judgment, writ, order, determination, decree or arbitral award of any
Governmental Authority or arbitral authority binding on such Credit Party or its
properties, or (iii) the Organizational Documents or Operating Documents of such
Credit Party;
(a) does not and will not be in conflict with, result in a breach of or
constitute an event of default, or an event which, with notice or lapse of time
or both, would constitute an event of default, under any contract, indenture,
agreement or other instrument or document to which such Credit Party is a party,
or by which the properties or assets of such Credit Party are bound; and
(a) does not and will not result in the creation or imposition of any Lien upon
any of the properties or assets of such Credit Party or any Subsidiary, except
any Liens in favor of the Secured Parties created by the Security Documents.
1. Solvency. Each Credit Party is Solvent after giving effect to the
transactions contemplated by the Credit Agreement and the Lease Documents.
1. Subsidiaries and Stockholders. The Lessee has no Subsidiaries other than
those Persons listed as Subsidiaries in Schedule 8.4 and additional Subsidiaries
created or acquired after the Closing Date in compliance with Section 32(b)(xx);
<PAGE>
Schedule 8.4 states as of the date hereof the organizational form of each
entity, the authorized and issued capitalization of each Subsidiary listed
thereon, the number of shares or other equity interests of each class of capital
stock or interest issued and outstanding of each such Subsidiary and the number
and/or percentage of outstanding shares or other equity interest (including
options, warrants and other rights to acquire any interest) of each such class
of capital stock or other equity interest owned by Lessee or by any such
Subsidiary; the outstanding shares or other equity interests of each such
Subsidiary have been duly authorized and validly issued and are fully paid and
nonassessable; and Lessee and each such Subsidiary owns beneficially and of
record all the shares and other interests it is listed as owning in Schedule
8.4, free and clear of any Lien (other than Liens in favor of the Collateral
Agents under the Security Documents).
1. Ownership Interests. Lessee owns no interest in any Person other than the
Persons listed in Schedule 8.4, equity investments in Persons not constituting
Material Subsidiaries permitted under Section 32(c)(vii) and additional
Subsidiaries created or acquired after the date hereof in compliance with
Section 32(b)(xx).
1. Financial Condition.
(a) The Lessee has heretofore furnished to Lessor and Lender an audited
consolidated balance sheet of the Lessee and its Subsidiaries as at January 3,
1999 and the notes thereto and the related consolidated statements of income,
stockholders' equity and cash flows for the Fiscal Year then ended as examined
and certified by McGladrey & Pullen LLP, and unaudited consolidated interim
financial statements of the Lessee and its Subsidiaries consisting of a
consolidated balance sheets and related consolidated statements of income,
stockholders' equity and cash flows, in each case without notes, for and as of
the end of the nine month period ending October 3, 1999. Except as set forth
therein, such financial statements (including the notes thereto) present fairly
the financial condition of the Lessee and its Subsidiaries as of the end of such
Fiscal Year and nine month period and results of their operations and the
changes in its stockholders' equity for the Fiscal Year and interim period then
ended, all in conformity with GAAP applied on a Consistent Basis, subject
however, in the case of unaudited interim statements to year end audit
adjustments;
(a) since the later of (1) the date of the audited financial statements
delivered pursuant to subparagraph (A) above or (2) the date of the audited
financial statements most recently delivered pursuant to Section 32(b)(i)(A)
hereof, there has been no material adverse change in the condition, financial or
otherwise, of the Lessee or any of its Subsidiaries or in the businesses,
properties, performance, prospects or operations of the Lessee or its
Subsidiaries, nor have such businesses or properties been materially adversely
affected as a result of any fire, explosion, earthquake, accident, strike,
lockout, combination of workers, flood, embargo or act of God other than (i) as
set forth in the October Projections and (ii) as disclosed to Lessor and Lender
with respect to a certain customer's payment practices; and
<PAGE>
(a) except as set forth in the financial statements referred to in subparagraph
(A) above or in Schedule 8.6 or permitted by Section 32(c)(v), neither the
Lessee nor any Subsidiary has incurred, other than in the ordinary course of
business, any material Indebtedness, Contingent Obligation or other commitment
or liability which remains outstanding or unsatisfied.
1. Title to Properties. The Lessee and each of its Subsidiaries and each other
Credit Party has good and marketable title to all its real and personal
properties, subject to no transfer restrictions or Liens of any kind, except for
the transfer restrictions and Liens described in Schedule 8.7 and Liens
permitted by Section 32(c)(iv).
1. Taxes. Except as set forth in Schedule 8.8, the Lessee and each of its
Subsidiaries has filed or caused to be filed all federal, state and local tax
returns which are required to be filed by it and, except for taxes and
assessments being contested in good faith by appropriate proceedings diligently
conducted and against which reserves (if required in accordance with GAAP) are
reflected in the financial statements described in Section 32(a)(vi)(A) or
Section 32(b)(i)(A) or (B) and satisfactory to the Lessee's independent
certified public accountants have been established, have paid or caused to be
paid all taxes as shown on said returns or on any assessment received by it, to
the extent that such taxes have become due.
1. Other Agreements. No Credit Party nor any Subsidiary is
(a) a party to or subject to any judgment, order, decree, agreement, lease or
instrument, or subject to other restrictions, which individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect; or
(a) in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument to
which such Credit Party or any Subsidiary is a party, which default has, or if
not remedied within any applicable grace period could reasonably be likely to
have, a Material Adverse Effect.
1. Litigation. Except as set forth in Schedule 8.10, there is no action, suit,
investigation or proceeding at law or in equity or by or before any governmental
instrumentality or agency or arbitral body pending, or, to the knowledge of the
Lessee, threatened by or against the Lessee or any Subsidiary or other Credit
Party or affecting the Lessee or any Subsidiary or other Credit Party or any
properties or rights of the Lessee or any Subsidiary or other Credit Party,
which could reasonably be likely to have a Material Adverse Effect.
1. Investment Company. No Credit Party is an "investment company," or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended (15 U.S.C.ss. 80a-1, et seq.).
<PAGE>
1. Patents, Etc. The Lessee and each other Credit Party owns or has the right to
use, under valid license agreements or otherwise, all material patents,
licenses, franchises, trademarks, trademark rights, trade names, trade name
rights, trade secrets and copyrights necessary to or used in the conduct of its
businesses as now conducted and as contemplated by the Lease Documents, without
known conflict with any patent, license, franchise, trademark, trade secret,
trade name, copyright, other proprietary right of any other Person.
1. No Untrue Statement. Neither (A) this Lease nor any other Lease Document or
certificate or document executed and delivered by or on behalf of the Lessee or
any other Credit Party in accordance with or pursuant to any Lease Document nor
(B) any statement, representation, or warranty provided to the Lender or Lessor
in connection with the negotiation or preparation of the Lease Documents
contains any misrepresentation or untrue statement of material fact or omits to
state a material fact necessary, in light of the circumstance under which it was
made, in order to make any such warranty, representation or statement contained
therein not misleading.
1. No Consents, Etc. Neither the respective businesses or properties of the
Credit Parties or any Subsidiary, nor any relationship among the Credit Parties
or any Subsidiary and any other Person, nor any circumstance in connection with
the execution, delivery and performance of the Lease Documents and the
transactions contemplated hereby and thereby, is such as to require a consent,
approval or authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person on the part of any Credit Party as a
condition to the execution, delivery and performance of, or consummation of the
transactions contemplated by the Lease Documents, which, if not obtained or
effected, would be reasonably likely to have a Material Adverse Effect, or if
so, such consent, approval, authorization, filing, registration or qualification
has been duly obtained or effected, as the case may be.
1. Employee Benefit Plans.
(a) The Lessee and each ERISA Affiliate is in compliance with all applicable
provisions of ERISA and the regulations and published interpretations thereunder
and in compliance with all Foreign Benefit Laws with respect to all Employee
Benefit Plans except for any required amendments for which the remedial
amendment period as defined in Section 401(b) of the Code has not yet expired.
Each Employee Benefit Plan that is intended to be qualified under Section 401(a)
of the Code has been determined or the Lessee or its Subsidiaries is in the
process of obtaining a determination by the Internal Revenue Service to be so
qualified, each trust related to such plan has been determined to be exempt
under Section 501(a) of the Code, and each Employee Benefit Plan subject to any
Foreign Benefit Law has received the required approvals by any Governmental
Authority regulating such Employee Benefit Plan. No material liability has been
incurred by the Lessee or any ERISA Affiliate which remains unsatisfied for any
taxes or penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan;
<PAGE>
(a) Neither the Lessee nor any ERISA Affiliate has (i) engaged in a nonexempt
prohibited transaction described in Section 4975 of the Code or Section 406 of
ERISA affecting any of the Employee Benefit Plans or the trusts created
thereunder which could subject any such Employee Benefit Plan or trust to a
material tax or penalty on prohibited transactions imposed under Internal
Revenue Code Section 4975 or ERISA, (ii) incurred any accumulated funding
deficiency with respect to any Employee Benefit Plan, whether or not waived, or
any other liability to the PBGC which remains outstanding other than the payment
of premiums and there are no premium payments which are due and unpaid, (iii)
failed to make a required contribution or payment to a Multiemployer Plan, (iv)
failed to make a required installment or other required payment under Section
412 of the Code, Section 302 of ERISA or the terms of such Employee Benefit
Plan, or (v) failed to make a required contribution or payment, or otherwise
failed to operate in compliance with any Foreign Benefit Law regulating any
Employee Benefit Plan;
(a) Except as set forth on Schedule 8.16 hereto, no Termination Event has
occurred or is reasonably expected to occur with respect to any Pension Plan or
Multiemployer Plan, and neither the Lessee nor any ERISA Affiliate has incurred
any unpaid withdrawal liability with respect to any Multiemployer Plan;
(a) The present value of all vested accrued benefits under each Employee Benefit
Plan which is subject to Title IV of ERISA, or the funding of which is regulated
by any Foreign Benefit Law did not, as of the most recent valuation date for
each such plan, exceed the then current value of the assets of such Employee
Benefit Plan allocable to such benefits;
(a) To the best of the Lessee's knowledge, each Employee Benefit Plan which is
subject to Title IV of ERISA or the funding of which is regulated by any Foreign
Benefit Law, maintained by the Lessee or any ERISA Affiliate, has been
administered in accordance with its terms in all material respects and is in
compliance in all material respects with all applicable requirements of ERISA,
applicable Foreign Benefit Law and other applicable laws, regulations and rules;
(a) The consummation of the transactions evidenced by or contemplated by the
Lease Documents will not involve any prohibited transaction under ERISA which is
not subject to a statutory or administrative exemption; and
(a) No material proceeding, claim, lawsuit and/or investigation exists or, to
the best knowledge of the Lessee after due inquiry, is threatened concerning or
involving any Employee Benefit Plan;
1. Environmental Laws. Except as listed on Schedule 8.18 or as otherwise could
not reasonably be expected to have a Material Adverse Effect, the Lessee and
each Subsidiary is in compliance with all applicable Environmental Laws and has
been issued and currently maintains all required federal, state and local
permits, licenses, certificates and approvals. Except as listed on Schedule 8.18
or as otherwise could not
<PAGE>
reasonably be expected to have a Material Adverse Effect, neither the Lessee nor
any Subsidiary has been notified of any pending or threatened action, suit,
proceeding or investigation, and neither the Lessee nor any Subsidiary is aware
of any facts, which (a) calls into question, or could reasonably be expected to
call into question, compliance by the Lessee or any Subsidiary with any
Environmental Laws, (b) seeks, or could reasonably be expected to form the basis
of a meritorious proceeding, to suspend, revoke or terminate any license, permit
or approval necessary for the operation of the Lessee's or any Subsidiary's
business or facilities or for the generation, handling, storage, treatment or
disposal of any Hazardous Materials, or (c) seeks to cause, or could reasonably
be expected to form the basis of a meritorious proceeding to cause, any property
of the Lessee or any Subsidiary or other Credit Party to be subject to any
restrictions on ownership, use, occupancy or transferability under any
Environmental Law.
1. Employment Matters.
(a) None of the employees of the Lessee or any Subsidiary is subject to any
collective bargaining agreement except as set forth on Schedule 8.19 and there
are no strikes, work stoppages, election or decertification petitions or
proceedings, unfair labor charges, equal opportunity proceedings, or other
material labor/employee related controversies or proceedings pending or, to the
best knowledge of the Lessee, threatened against the Lessee or any Subsidiary or
between the Lessee or any Subsidiary and any of its employees, other than
employee grievances arising in the ordinary course of business which could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect; and
(a) Except to the extent a failure to maintain compliance would not have a
Material Adverse Effect, the Lessee and each Subsidiary is in compliance in all
respects with all applicable laws, rules and regulations pertaining to labor or
employment matters, including without limitation those pertaining to wages,
hours, occupational safety and taxation, and there is neither pending or
threatened any litigation, administrative proceeding nor, to the knowledge of
the Lessee, any investigation, in respect of such matters which, if decided
adversely, could reasonably be likely, individually or in the aggregate, to have
a Material Adverse Effect.
1. RICO. Neither the Lessee nor any Subsidiary is engaged in or has engaged in
any course of conduct that could subject any of their respective properties to
any Lien, seizure or other forfeiture under any racketeer influenced and corrupt
organizations law, whether civil or criminal, or other similar laws.
1. Year 2000 Compliance. All computer applications (including those affected by
information received from its suppliers and vendors) that are material to the
business and operations of the Lessee or any of its Subsidiaries are Year 2000
Compliant, except to the extent that a failure to be so could not reasonably be
expected to have a Material Adverse Effect.
<PAGE>
A. Affirmative Covenants. Unless the Lessor and the Lender shall otherwise
consent in writing, the Lessee will, and where applicable will cause each
Subsidiary to:
1. Financial Reports, Etc.
(a) As soon as practical and in any event within 90 days after the end of each
Fiscal Year of the Lessee, deliver or cause to be delivered to the Lessor and
Lender (1) consolidated and consolidating balance sheets of the Lessee and its
Subsidiaries as at the end of such Fiscal Year, and the notes thereto, and the
related consolidated and consolidating statements of income, stockholders'
equity and cash flows, and the respective notes thereto, for such Fiscal Year,
setting forth (other than for consolidating statements) comparative financial
statements for the preceding Fiscal Year, all prepared in accordance with GAAP
applied on a Consistent Basis and containing, with respect to the consolidated
financial statements, opinions of McGladrey & Pullen LLP, or other such
independent certified public accountants selected by the Lessee and approved by
the Lender, which are unqualified as to the scope of the audit performed and as
to the "going concern" status of the Lessee and without any exception not
acceptable to the Lender, and (2) a Compliance Certificate as of the end of such
Fiscal Year;
(a) as soon as practical and in any event within 45 days after the end of each
fiscal quarter (except for the last fiscal quarter of the Fiscal Year, as to
which the following shall not be required to be delivered), deliver to the
Lessor and Lender (1) consolidated and consolidating balance sheets of the
Lessee and its Subsidiaries as at the end of such fiscal quarter, and the
related consolidated and consolidating statements of income, stockholders'
equity and cash flows for such fiscal quarter and for the period from the
beginning of the then current Fiscal Year through the end of such reporting
period, and accompanied by a certificate of an Authorized Representative to the
effect that such financial statements present fairly the financial position of
the Lessee and its Subsidiaries as of the end of such fiscal period and the
results of their operations and the changes in their financial position for such
fiscal period, in conformity with the standards set forth in Section
32(a)(vi)(A) with respect to interim financial statements, and (2) a Compliance
Certificate as of the end of such quarter;
(a) as soon as practical and in any event within 45 days after the end of each
Fiscal Quarter, deliver to the Lessor and Lender a certificate of an Authorized
Representative of the Lessee certifying all Asset Dispositions for such Fiscal
Quarter constituting Permitted Asset Dispositions under the terms of clause
(viii) of such defined term, together with evidence of application of all
proceeds of each such Permitted Asset Disposition consummated more than 180 days
prior to the end of such Fiscal Quarter;
(a) together with each delivery of the financial statements required by Section
32(b)(i)(A)(1), deliver to the Lessor and Lender a letter from the Lessee's
accountants specified in Section 32(b)(i)(A)(1) stating that in performing the
audit necessary to render an opinion on the financial statements delivered under
Section 32(b)(i)(A)(1), they obtained no knowledge of any Default or Event of
Default by
<PAGE>
the Lessee in the fulfillment of the terms and provisions of this Lease insofar
as they relate to financial matters (which at the date of such statement remains
uncured); or if the accountants have obtained knowledge of such Default or Event
of Default, a statement specifying the nature and period of existence thereof;
(a) promptly upon their becoming available to the Lessee, the Lessee shall
deliver to the Lessor and Lender a copy of (1) all regular or special reports or
effective registration statements which Lessee or any Subsidiary shall file with
the Securities and Exchange Commission (or any successor thereto) or any
securities exchange, (2) any proxy statement distributed by the Lessee or any
Subsidiary to its shareholders, bondholders or the financial community in
general, and (3) any management letter or other report submitted to the Lessee
or any Subsidiary by independent accountants in connection with any annual,
interim or special audit of the Lessee or any Subsidiary;
(a) not later than the last Business Day of each Fiscal Year, deliver to the
Lessor and Lender a capital and operating expense budget and consolidated
financial projections for the Lessee and its Subsidiaries for the next Fiscal
Year, prepared in accordance with GAAP applied on a Consistent Basis;
(a) as soon as practicable and in any event within twenty-five (25) days
following the end of each fiscal month, deliver to the Lessor and Lender a
Compliance Certificate as of the end of such month in form and substance
acceptable to the Lender; and
(a) as soon as practical and in any event within 25 days after the end of each
fiscal month, deliver to Lessor and Lender consolidated balance sheets of the
Lessee and its Subsidiaries as at the end of such fiscal month, and the related
consolidated statements of income, stockholders' equity and cash flows for such
fiscal month and for the period from the beginning of the then current Fiscal
Year through the end of such fiscal month all prepared by management of the
Lessee using inventory estimation, and accompanied by a certificate of an
Authorized Representative to the effect that such financial statements present
fairly the financial position of the Lessee and its Subsidiaries as of the end
of such fiscal month and the results of their operations and the changes in
their financial position for such fiscal month; and
(a) promptly, from time to time, deliver or cause to be delivered to the Lessor
and Lender such other information regarding Lessee's and any Subsidiary's
operations, business affairs and financial condition as the Lessor or Lender may
reasonably request.
The Lessor and the Lender are hereby authorized to deliver a
copy of any such financial or other information delivered hereunder to
the Lender (or any affiliate of Lender) or to the Lessor, to any
Governmental Authority having jurisdiction over the Lessor or the
Lender pursuant to any written request therefor or in the ordinary
course of examination of loan files, or to any other Person who
<PAGE>
shall acquire or consider the assignment of, or acquisition of any
participation interest in, any obligation related to this Lease.
1. Maintain Properties. Maintain all properties necessary to its operations in
good working order and condition, make all needed repairs, replacements and
renewals to such properties, and maintain free from Liens all trademarks, trade
names, patents, copyrights, trade secrets, know-how, and other intellectual
property and proprietary information (or adequate licenses thereto), in each
case as are reasonably necessary to conduct its business as currently conducted
or as contemplated hereby, all in accordance with customary and prudent business
practices.
1. Existence, Qualification, Etc. Except as otherwise expressly permitted under
Section 32(c)(viii), do or cause to be done all things necessary to preserve and
keep in full force and effect its existence and all material rights and
franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary, except where the failure to so qualify would not
have a Material Adverse Effect.
1. Regulations and Taxes. Comply in all material respects with or contest in
good faith all statutes and governmental regulations and pay all taxes,
assessments, governmental charges, claims for labor, supplies, rent and any
other obligation which, if unpaid, would become a Lien against any of its
properties, except liabilities being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves acceptable
to the Lessee's independent certified public accountants have been established
unless and until any Lien resulting therefrom attaches to any of its property
and becomes enforceable against its creditors.
1. Insurance. (A) Keep all of its insurable properties adequately insured at all
times with responsible insurance carriers (or on a self-insured basis customary
for companies similarly situated and in accordance with prudent business
practices) against loss or damage by fire and other hazards to the extent and in
the manner as are customarily insured against by similar businesses owning such
properties similarly situated and otherwise as required by the Security
Documents, (B) maintain general public liability insurance with responsible
insurance carriers (or self-insurance as is customary for similarly situated
companies and in accordance with prudent business practices) at all times
against liability on account of damage to persons and property and (C) maintain
insurance under all applicable workers' compensation laws (or, in the
alternative, maintain required reserves if self-insured for workers'
compensation purposes) and against loss by reason by business interruption, each
of the foregoing policies of insurance to have such limits, deductibles,
exclusions, co-insurance and other provisions providing no less coverages than
that specified in Schedule 9.5, and such insurance policies to be in form
reasonably satisfactory to the Lender, General Collateral Agent and/or Priority
Collateral Agent.
<PAGE>
1. True Books. Keep true books of record and account in which full, true and
correct entries will be made of all of its dealings and transactions, and set up
on its books such reserves as may be required by GAAP with respect to doubtful
accounts and all taxes, assessments, charges, levies and claims and with respect
to its business in general, and include such reserves in interim as well as
year-end financial statements.
1. Year 2000 Compliance. The Lessee will promptly notify the Lessor and the
Lender in the event the Lessee discovers or determines that any computer
application (including those affected by information received from its suppliers
and vendors) that is material to its or any of its Subsidiaries' business and
operations is not Year 2000 Compliant, except to the extent that such failure
could not reasonably be expected to have a Material Adverse Effect.
1. Right of Inspection. Permit any Person designated by Lender or the Lessor to
visit and inspect, at the Lessee's expense, any of the properties, corporate
books and financial reports of the Lessee or any Subsidiary and to discuss its
affairs, finances and accounts with its principal officers and independent
certified public accountants, all at reasonable times, at reasonable intervals
and with reasonable prior notice.
1. Observe all Laws. Conform to and duly observe in all material respects all
laws, including all Environmental Laws and ERISA, rules and regulations and all
other valid requirements of any Governmental Authority with respect to the
conduct of its business, except where the failure to do so could not reasonably
be expected to have a Material Adverse Effect.
1. Governmental Licenses. Obtain and maintain all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted and as
contemplated by the Lease Documents, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
1. Covenants Extending to Other Persons. Cause each of its Subsidiaries to do
with respect to itself, its business and its assets, each of the things required
of the Lessee in Sections 32(b)(i) through (x), inclusive, and Section
32(b)(xx).
1. Officer's Knowledge of Default. Upon any officer of the Lessee obtaining
knowledge of any Default or Event of Default hereunder or under any other
obligation of the Lessee or any Subsidiary or other Credit Party to Lessor or
Lender, or any event, development or occurrence which could reasonably be
expected to have a Material Adverse Effect, cause such officer or an Authorized
Representative to promptly notify the Lender of the nature thereof, the period
of existence thereof, and what action the Lessee or such Subsidiary or other
Credit Party proposes to take with respect thereto.
1. Suits or Other Proceedings. Upon any officer of the Lessee obtaining
knowledge of any litigation or other proceedings being instituted against the
<PAGE>
Lessee or any Subsidiary or other Credit Party, or any attachment, levy,
execution or other process being instituted against any assets of the Lessee or
any Subsidiary or other Credit Party, making a claim or claims in an aggregate
amount greater than $3,000,000, to the extent not covered by insurance, promptly
deliver to the Lender written notice thereof stating the nature and status of
such litigation, dispute, proceeding, levy, execution or other process.
1. Notice of Environmental Complaint or Condition. Promptly provide to the
Lender true, accurate and complete copies of any and all notices, complaints,
orders, directives, claims or citations received by the Lessee or any Subsidiary
relating to any (A) material violation or alleged material violation by the
Lessee or any Subsidiary of any applicable Environmental Law; (B) release or
threatened release by the Lessee or any Subsidiary, or by any Person handling,
transporting or disposing of any Hazardous Material on behalf of the Lessee or
any Subsidiary, or at any facility or property owned or leased or operated by
the Lessee or any Subsidiary, of any Hazardous Material, except where occurring
legally pursuant to a permit or license or to the extent such release could not
have a Material Adverse Effect; or (C) material liability or alleged material
liability of the Lessee or any Subsidiary for the costs of cleaning up,
removing, remediating or responding to a release of Hazardous Materials.
1. Environmental Compliance. If the Lessee or any Subsidiary shall receive any
letter, notice, complaint, order, directive, claim or citation alleging that the
Lessee or any Subsidiary has violated any Environmental Law, has released any
Hazardous Material, or is liable for the costs of cleaning up, removing,
remediating or responding to a release of Hazardous Materials, the Lessee and
any Subsidiary shall, within the time period permitted and to the extent
required by the applicable Environmental Law or the Governmental Authority
responsible for enforcing such Environmental Law, remove or remedy, or cause the
applicable Subsidiary to remove or remedy, such violation or release or satisfy
such liability.
1. Indemnification. Without limiting the generality of any other indemnities
contained in any Lease Document, the Lessee hereby agrees to indemnify and hold
the Lessor and the Lender and any affiliate of Lessor or Lender, and their
respective officers, directors, employees and agents, harmless from and against
any and all claims, losses, penalties, liabilities, damages and expenses
(including assessment and cleanup costs and reasonable attorneys', consultants'
or other expert fees, expenses and disbursements) arising directly or indirectly
from, out of or by reason of (a) the violation of any Environmental Law by the
Lessee or any Subsidiary or with respect to any property owned, operated or
leased by the Lessee or any Subsidiary or (b) the handling, storage,
transportation, treatment, emission, release, discharge or disposal of any
Hazardous Materials by or on behalf of the Lessee or any Subsidiary, or on or
with respect to property owned or leased or operated by the Lessee or any
Subsidiary. The provisions of this Section 32(b)(xvi) shall survive repayment of
the expiration or termination of this Lease.
<PAGE>
1. Further Assurances. At the Lessee's cost and expense, upon request of the
Lender, duly execute and deliver or cause to be duly executed and delivered, to
the Lender such further instruments, documents, certificates, financing and
continuation statements, and do and cause to be done such further acts that may
be reasonably necessary or advisable in the reasonable opinion of the Lender to
carry out more effectively the provisions and purposes of this Lease, the
Security Documents and the other Lease Documents.
1. Employee Benefit Plans.
(a) With reasonable promptness, and in any event within thirty (30) days
thereof, give notice to the Lender of (1) the establishment of any new Pension
Plan (which notice shall include a copy of such plan), (2) the commencement of
contributions to any Employee Benefit Plan to which the Lessee or any of its
ERISA Affiliates was not previously contributing, (3) any material increase in
the benefits of any existing Employee Benefit Plan, (4) each funding waiver
request filed with respect to any Pension Plan and all communications received
or sent by the Lessee or any ERISA Affiliate with respect to such request,
including any communications relating to the PBGC Agreement and (5) the failure
of the Lessee or any ERISA Affiliate to make a required installment or payment
under Section 302 of ERISA or Section 412 of the Code (in the case of Employee
Benefit Plans regulated by the Code or ERISA and including any installments or
payments relating to the PBGC Agreement) or under any Foreign Benefit Law (in
the case of Employee Benefit Plans regulated by any Foreign Benefit Law) by the
due date;
(a) Promptly and in any event within fifteen (15) days of becoming aware of the
occurrence or forthcoming occurrence of any (1) Termination Event or (2)
nonexempt "prohibited transaction," as such term is defined in Section 406 of
ERISA or Section 4975 of the Code, in connection with any Employee Benefit Plan
or any trust created thereunder, deliver to the Lender a notice specifying the
nature thereof, what action the Lessee or any ERISA Affiliate has taken, is
taking or proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto; and
(a) With reasonable promptness but in any event within fifteen (15) days for
purposes of clauses (1), (2) and (3), deliver to the Lender copies of (1) any
unfavorable determination letter from the Internal Revenue Service regarding the
qualification of an Employee Benefit Plan under Section 401(a) of the Code, (2)
all notices received by the Lessee or any ERISA Affiliate of the PBGC's or any
Governmental Authority's intent to terminate any Pension Plan or to have a
trustee appointed to administer any Pension Plan, including all correspondence
associated with the PBGC Agreement, (3) each Schedule B (Actuarial Information)
to the annual report (Form 5500 Series) filed by the Lessee or any ERISA
Affiliate with the Internal Revenue Service with respect to each Employee
Benefit Plan and (4) all notices received by the Lessee or any ERISA Affiliate
from a Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA. The Lessee will notify
the Lender in writing within five (5) Business Days of the Lessee or
<PAGE>
any ERISA Affiliate obtaining knowledge or reason to know that the Lessee or any
ERISA Affiliate has filed or intends to file a notice of intent to terminate any
Pension Plan under a distress termination within the meaning of Section 4041(c)
of ERISA.
1. Continued Operations. Continue at all times to conduct its business and
engage principally in the same line or lines of business substantially as
heretofore conducted.
1. New Subsidiaries. Simultaneously with (1) the acquisition or creation of any
Material Subsidiary which is a Domestic Subsidiary, or upon any existing
Domestic Subsidiary becoming a Material Subsidiary, and (2) the acquisition or
creation of any Material Direct Foreign Subsidiary, cause to be delivered the
documents, certificates and opinions required to be delivered pursuant to
Section 9.20 of the Credit Agreement (and provide copies thereof to the Lender).
1. Controlled Accounts. Cause at all times all of its depository accounts, other
than Excluded Deposit Accounts, to be held by and maintained with the agent or
any lender under the Credit Agreement.
1. Credit Facility. On and after July 3, 2000, maintain at all times a revolving
credit facility (or a binding commitment therefor with an effective date on or
prior to August 7, 2000) having a maturity date no earlier than August 7, 2002
with at least $80,000,000 in aggregate commitments available thereunder and
otherwise in form and substance satisfactory to the Lender, in its sole
discretion.
1. Third-party Consultant. Pay all fees and expenses of a third-party business
consultant to be hired on or before February 15, 2000 pursuant to Section 9.22
of the Credit Agreement, and furnish copies of all reports of such consultant to
Lender.
A. Negative Covenants. Unless the Lender and the Lessor shall otherwise consent
in writing, the Lessee will not, nor will it permit any Subsidiary to:
1. Financial Covenants.
(a) Consolidated Net Worth. Permit Consolidated Net Worth to be less than (i)
$145,000,000 from the Closing Date until (but excluding) the last day of the
fiscal quarter that includes the Closing Date (the "Closing Date Quarter"), and
(ii) as at the last day of each fiscal quarter of the Lessee commencing with the
Closing Date Quarter and until (but excluding) the last day of the next
following fiscal quarter of the Lessee, the sum of (1) the amount of
Consolidated Net Worth required to be maintained pursuant to this Section
32(c)(i)(A) as at the end of the immediately preceding fiscal quarter (or, in
the case of the Closing Date Quarter, required to be maintained as of the
Closing Date), plus (2) 100% of the aggregate amount of all increases in the
stated capital and additional paid-in capital accounts of the Lessee resulting
from the issuance of equity securities or other capital investments.
<PAGE>
(a) Consolidated Leverage Ratio. Permit as of the end of each Four-Quarter
Period set forth below the Consolidated Leverage Ratio to be more than that set
forth opposite each such period:
Leverage Ratio
Period Must Not Exceed
- ------------------------------------ ---------------------------------
Four Quarter Period ended 13.05 to 1.00
January 2, 2000
Four Quarter Period ending 10.25 to 1.00
April 2, 2000
Four Quarter Period ending 9.50 to 1.00
July 2, 2000
(a) Consolidated Interest Coverage Ratio. Permit as of the end of each month for
the Twelve-Month Periods set forth below the Consolidated Interest Coverage
Ratio to be less than that set forth opposite each such period:
Interest Coverage Ratio
Period Must Exceed
- -------------------------------------- ---------------------------------
Twelve Month Period ended 1.00 to 1.00
January 2, 2000
Twelve Month Period ending
April 2, 2000
1.35 to 1.00
Twelve Month Period ending 1.40 to 1.00
July 2, 2000
(a) Consolidated EBITDA. Permit Consolidated EBITDA for each period set forth
below to be less than the amount set forth opposite such period:
Consolidated EBITDA
Period Ending Must Exceed
- ------------------------------------- ------------------------------
Fiscal Quarter ended
January 2, 2000 $ 2,000,000
Fiscal Quarter ending
April 2, 2000 $ 8,550,000
Two Fiscal Quarters ending
July 2, 2000 $20,450,000
<PAGE>
From and after August 7, 2000, this Section 32(c)(i) shall be replaced
by the financial covenants set forth in Sections 32(c)(vii), (viii) and
(ix) of the Seventh Amendment to Master Lease, dated as of June 27,
1997, between Lessor and Lessee.
1. Acquisitions. Enter into any agreement, contract, binding commitment
or other arrangement providing for any Acquisition, or take any action to
solicit the tender of securities or proxies in respect thereof in order to
effect any Acquisition; provided, however, the Lessee may (a) consummate the
Parras Cone Acquisition and (b) enter into such agreements and take other
actions to effect any Acquisition other than the Parras Cone Acquisition to the
extent the Cost of Acquisition with respect thereto when aggregated with the
Cost of Acquisition of all other Acquisitions other than the Parras Cone
Acquisition and all loans, advances and investments permitted under Section
32(c)(x)(H) (including any such investment to finance the Parras Cone
Acquisition) does not exceed $500,000.
1. Capital Expenditures.
(a) Make or become committed to make U.S. Capital Expenditures which exceed in
the aggregate in any Fiscal Year of the Lessee described below (on a
noncumulative basis, with the effect that amounts not expended in any Fiscal
Year may not be carried forward to a subsequent period), the amount set forth
opposite each such period:
Capital Expenditures
Period Not to Exceed
--------------------------------------------------------------------------
Fiscal Year ended January 2, 2000 $13,500,000
January 3, 2000 through and including $8,000,000
August 7, 2000
(a) Make or become committed to make Mexican Capital Expenditures from the date
hereof through August 7, 2000 except, to the extent an Event of Default has not
occurred and is continuing, for Capital Expenditures in an aggregate amount not
in excess of $1,000,000 for the purpose of purchasing certain real property in
Altamira, Mexico and making certain improvements thereto to the extent such
improvements have been contractually agreed to with third parties prior to the
Closing Date.
1. Liens. Incur, create or permit to exist any Lien, charge or other
encumbrance of any nature whatsoever with respect to any property or assets now
owned or hereafter acquired by the Lessee or any Subsidiary, other than the
following (collectively, "Permitted Liens"):
<PAGE>
(a) Liens on the General Collateral and the Priority Collateral created under
the General Security Instruments and the Priority Security Instruments in favor
of the General Collateral Agent or the Priority Collateral Agent, as applicable;
(a) Liens on Receivables (as defined in and transferred by an Originator in
accordance with the Receivables Transfer Agreement) and Returned Goods (as
defined in the Securitization Intercreditor Agreement) in favor of General
Electric Capital Corporation, as collateral agent under the Receivables Purchase
Agreement, including, but not limited to, either (i) Liens securing an increase
in the Securitization Outstandings under the Receivables Purchase Agreement from
$50,000,000 to $60,000,000 or (ii) Liens securing an additional factoring or
securitization of receivables in an aggregate amount not to exceed $10,000,000;
(a) Liens existing on the date hereof, other than as referred to in clauses (A)
and (B) above, and set forth on Schedule 8.7;
(a) Liens imposed by law for taxes, assessments or charges of any Governmental
Authority for claims not yet due or which are being contested in good faith by
appropriate proceedings diligently conducted, which, except as expressly so
specified on Schedule 8.7, are inferior in respect of the Collateral to the
Liens conferred under the Security Documents, and with respect to which adequate
reserves or other appropriate provisions are being maintained in accordance with
GAAP and which Liens are not yet enforceable by such creditors against other
creditors;
(a) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
materialmen and other similar Liens imposed by law or created in the ordinary
course of business and in existence less than 90 days from the date of creation
thereof for amounts not yet due or which are being contested in good faith by
appropriate proceedings diligently conducted, which, except as expressly so
specified on Schedule 8.7, are inferior in respect of the Collateral to the
Liens conferred under the Security Documents, and with respect to which adequate
reserves or other appropriate provisions are being maintained in accordance with
GAAP and which Liens are not yet enforceable by such creditors against other
creditors;
(a) Liens incurred or deposits made in the ordinary course of business
(including, without limitation, surety bonds and appeal bonds) in connection
with workers' compensation, unemployment insurance and other types of social
security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations or arising as a result of progress payments under
government contracts;
(a) with respect to all real property to which (H) below does not apply,
easements (including reciprocal easement agreements and utility agreements),
rights-of-way, covenants, consents, reservations, encroachments, variations and
zoning and other restrictions, charges or encumbrances (whether or not
recorded), which do not interfere materially with the ordinary conduct of the
business of the Lessee or any Subsidiary and
<PAGE>
which do not materially detract from the value of the property to which they
attach or materially impair the use thereof to the Lessee or any Subsidiary;
(a) with respect to Mortgaged Real Property for which a Title Policy is required
to be issued pursuant to the terms hereof, matters acceptable to the agent
pursuant to the Credit Agreement appearing as exceptions to coverage on the
Title Policies;
(a) purchase money Liens to secure Indebtedness permitted under Section
32(c)(v)(D) and incurred to purchase fixed assets, provided such Indebtedness
represents not less than 75% and not more than 95% of the purchase price of such
assets as of the date of purchase thereof and no property other than the assets
so purchased secures such Indebtedness;
(a) Liens arising in connection with Capital Leases permitted under Section
32(c)(v)(F); provided that no such Lien shall extend to any Collateral or to any
other property other than the assets subject to such Capital Leases; and
(a) Liens on assets of Parras Cone to secure Indebtedness permitted under
Section 32(c)(v)(I).
1. Indebtedness. Incur, create, assume or permit to exist any Indebtedness,
howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as set forth in Schedule 8.6;
provided, none of the instruments and agreements evidencing or governing such
Indebtedness shall be amended, supplemented or restated after the Closing Date
to change any terms of subordination, repayment or rights of enforcement,
conversion, put or exchange rights to be materially less favorable to the Lessor
or the Lender than the terms and rights as in effect on the Closing Date;
(a) Indebtedness owing to the agent or any lender in connection with the Credit
Agreement;
(a) the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business;
(a) purchase money Indebtedness (other than the Parras Cone Debt) described in
Section 32(c)(iv)(I) not to exceed an aggregate outstanding principal amount at
any time of $10,000,000;
(a) Indebtedness arising from Rate Hedging Obligations permitted under Section
32(c)(xv);
(a) obligations under Capital Leases not to exceed an aggregate principal amount
at any time in excess of $5,000,000;
<PAGE>
(a) unsecured intercompany Indebtedness for loans and advances made by the
Lessee or any Guarantor to the Lessee or any Guarantor, any such Indebtedness of
the Lessee owing to any Guarantor shall be subordinate to payment of the
obligations hereunder at all times in accordance with the terms of the Facility
Guaranty;
(a) additional unsecured Indebtedness for Money Borrowed not otherwise covered
by clauses (A) through (G) above, provided that the aggregate outstanding
principal amount of all such other Indebtedness permitted under this clause (H)
shall in no event exceed $10,000,000 at any time;
(a) the Parras Cone Debt;
(a) Indebtedness extending the maturity of, or renewing, refunding or
refinancing, in whole or in part, Indebtedness incurred under clauses (A), (B),
(G), (H) and (I) of this Section 32(c)(v), provided that the terms of any such
extension, renewal, refunding or refinancing Indebtedness (and of any agreement
or instrument entered into in connection therewith) shall not change any terms
of subordination, repayment or rights of enforcement, conversion, put or
exchange rights to be materially less favorable to the Lessor and the Lender
than the terms of the Indebtedness as in effect prior to such action, and
provided further that (1) the aggregate principal amount of such extended,
renewed, refunded or refinanced Indebtedness shall not be increased by such
action, (2) the group of direct or contingent obligors on such Indebtedness
shall not be expanded as a result of any such action, and (3) immediately before
and immediately after giving effect to any such extension, renewal, refunding or
refinancing, no Default or Event of Default shall have occurred and be
continuing; and
(a) Securitization Outstandings or Indebtedness described in and secured by
Liens permitted under Section 32(c)(iv)(B)(ii).
1. Transfer of Assets. Conduct, permit, or suffer, or agree to conduct or
permit, or acquiesce in, any Asset Disposition other than Permitted Asset
Dispositions.
1. Investments. Purchase, own, invest in or otherwise acquire, directly or
indirectly, any stock or other securities, or make or permit to exist any
interest whatsoever in any other Person or permit to exist any loans or advances
to any Person, except that Lessee may make or maintain:
(a) investments in securities of any Person acquired in an Acquisition permitted
hereunder;
(a) investments in Eligible Securities;
(a) investments existing as of the date hereof and as set forth in Schedule 8.4;
<PAGE>
(a) accounts receivable arising and trade credit granted in the ordinary course
of business and any securities received in satisfaction or partial satisfaction
thereof in connection with accounts of financially troubled Persons to the
extent reasonably necessary in order to prevent or limit loss;
(a) investments in (i) Guarantors and (ii) Cone Receivables II LLC in connection
with the Securitization Transaction;
(a) loans between the Lessee and the Guarantors described in Section
32(c)(v)(G);
(a) investments made at such time as no Event of Default shall have occurred and
be continuing relating to the site in Altamira, Mexico (at which site the Lessee
intends to construct a denim manufacturing facility), not in excess of the
amounts set forth below for the periods indicated (but in no event shall such
facility construction be commenced prior to the Facility Termination Date);
provided that any amount not invested during the period indicated may be carried
forward and invested in any following period.
Period Mexico Investments
- ---------------------------------------- ---------------------------------------
First Fiscal Quarter of 2000 $2,195,000
Second Fiscal Quarter 2000 $2,577,500
August 1, 2000 through August 7, 2000 $ 955,300
(a) other loans, advances and investments (including investments to finance the
Parras Cone Acquisition) in an aggregate principal amount at any time
outstanding which, when aggregated with the aggregate Costs of Acquisition for
all Acquisitions (other than the Parras Cone Debt in the case of the Parras Cone
Acquisition) agreed to or consummated after the Closing Date permitted under
Section 32(c)(ii)(B), does not exceed $500,000.
1. Merger or Consolidation. (A) Consolidate with or merge into any other Person,
or (B) permit any other Person to merge into it, or (C) sell, transfer or lease
or otherwise dispose of all or a substantial part of its assets (other than
Permitted Asset Dispositions); provided, however, any Subsidiary of the Lessee
may merge or transfer all or substantially all of its assets into or consolidate
with the Lessee (with the Lessee as the survivor) or any Guarantor, provided
further, that any resulting or surviving entity shall execute and deliver such
agreements and other documents, including a Facility Guaranty, and take such
other action as the Lender may require to evidence or confirm its express
assumption of the obligations and liabilities of its predecessor entities under
the Lease Documents.
1. Restricted Payments. Make any Restricted Payment or apply or set apart any of
their assets therefor or agree to do any of the foregoing.
<PAGE>
1. Transactions with Affiliates. Other than transactions permitted under
Sections 32(c)(vii) and 32(c)(viii) or as set forth on Schedule 10.10, enter
into any transaction after the Closing Date, including, without limitation, the
purchase, sale, lease or exchange of property, real or personal, or the
rendering of any service, with any Affiliate of the Lessee, except (A) that such
Persons may render services to the Lessee or its Subsidiaries for compensation
at the same rates generally paid by Persons engaged in the same or similar
businesses for the same or similar services, (B) that the Lessee or any
Subsidiary may render services to such Persons for compensation at the same
rates generally charged by the Lessee or such Subsidiary and (C) in either case
in the ordinary course of business and pursuant to the reasonable requirements
of the Lessee's (or any Subsidiary's) business consistent with past practice of
the Lessee and its Subsidiaries and upon fair and reasonable terms no less
favorable to the Lessee (or any Subsidiary) than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate.
1. Compliance with ERISA, the Code and Foreign Benefit Laws. With respect to any
Pension Plan, Employee Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of (1) any Termination Event which would result in a
material liability on the part of the Lessee or any ERISA Affiliate to the PBGC
or to any Governmental Authority or (2) any action that violates the Lessee's
material obligations under the PBGC Agreement, except those that are waived by
the PBGC; or
(a) except for amounts defined as "Unfunded Benefit Liability" in the PBGC
Agreement, permit the present value of all accumulated benefit obligations under
all Pension Plans to exceed the current value of the assets of such Pension
Plans allocable to such benefit liabilities; or
(a) permit any accumulated funding deficiency (as defined in Section 302 of
ERISA and Section 412 of the Code) with respect to any Pension Plan, whether or
not waived, except for the "Unfunded Benefit Liability" as defined in the PBGC
Agreement; or
(a) fail to make any contribution or payment to any Multiemployer Plan which the
Lessee or any ERISA Affiliate may be required to make under any agreement
relating to such Multiemployer Plan, or any law pertaining thereto; or
(a) engage, or permit any Lessee or any ERISA Affiliate to engage, in any
prohibited transaction under Section 406 of ERISA or Sections 4975 of the Code
for which a civil penalty pursuant to Section 502(i) of ERISA or a tax pursuant
to Section 4975 of the Code may be imposed; or
(a) permit the establishment of any Employee Benefit Plan providing
post-retirement welfare benefits or establish or amend any Employee Benefit Plan
which establishment or amendment could result in liability to the Lessee or any
ERISA Affiliate or increase the obligation of the Lessee or any ERISA Affiliate
to a Multiemployer Plan
<PAGE>
which annual liability or increase, individually or together with all similar
liabilities and increases, is in excess of $1,000,000; or
(a) fail, or permit the Lessee or any ERISA Affiliate to fail, to establish,
maintain and operate each Employee Benefit Plan in compliance in all material
respects with the provisions of ERISA, the Code, all applicable Foreign Benefit
Laws and all other applicable laws and the regulations and interpretations
thereof.
1. Fiscal Year. Change its Fiscal Year.
1. Dissolution, etc. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to Section 32(c)(viii).
1. Limitations on Sales and Leasebacks. Other than sale and leaseback
transactions in the ordinary course of business having an aggregate value not in
excess of $250,000 in any Fiscal Year and except as set forth on Schedule 10.14,
enter into any arrangement or arrangements with any Person providing for the
leasing by the Lessee or any Subsidiary of real or personal property, whether
now owned or hereafter acquired in a single transaction or series of related
transactions, which has been or is to be sold or transferred by the Lessee or
any Subsidiary to such Person or to any other Person to whom funds have been or
are to be advanced by such Person on the security of such property or rental
obligations of the Lessee or any Subsidiary.
1. Rate Hedging Obligations. Incur any Rate Hedging Obligations or enter into
any agreements, arrangements, devices or instruments relating to Rate Hedging
Obligations, except pursuant to Swap Agreements, in an aggregate notional amount
not to exceed at any time 50% of the Total Revolving Credit Commitment, which
create Rate Hedging Obligations incurred to limit risks of currency or interest
rate fluctuations to which the Lessee and its Subsidiaries are otherwise subject
by virtue of the operations of their businesses, and not for speculative
purposes.
1. Negative Pledge Clauses. Except (1) as may exist on the Closing Date pursuant
to any Senior Credit Documents or any Securitization Transaction documents, or
(2) in connection with any refinancing of the foregoing, enter into or cause,
suffer or permit to exist any agreement with any Person other than the agent and
the lenders pursuant to the Credit Agreement or the Lessor and the Lender
pursuant to the Lease Documents, which prohibits or limits the ability of any of
the Lessee or any Subsidiary to create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, provided that the Lessee and any Subsidiary may enter into
such an agreement in connection with, and that applies only to, property
acquired with the proceeds of purchase money Indebtedness permitted hereunder.
1. Compensation; Reimbursement of Expenses.
<PAGE>
(a) Pay any salary, fees, and other direct and indirect remuneration and
compensation to any of its directors and executive officers in an amount in
excess of those amounts paid to directors and executive officers of comparable
companies engaged in the same general type of business and in similar financial
condition;
(a) Reimburse any stockholder, officer, director, employee or agent of the
Lessee or any Subsidiary for any expenses incurred by such Person other than
reasonable expenses incurred for or on behalf of the Lessee or any Subsidiary in
the ordinary course of business.
1. Change in Accountants. Change its independent public accountants.
1. Prepayments, Etc. of Indebtedness. Prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner, or make
any payment in violation of any subordination terms of, any Indebtedness (other
than the obligations under the Credit Agreement) other than in connection with
any refinancing permitted under Section 32(c)(v)(J).
1. Partnerships. Become a general partner in any general or limited partnership.
A. Definitions. As used in this Section 32, in Section 19 and in Exhibit D, the
following terms have the meanings indicated below:
"Acquisition" means the acquisition of a controlling equity
interest in another Person (including the purchase of an option,
warrant or convertible or similar type security to acquire such a
controlling interest at the time it becomes exercisable by the holder
thereof), whether by purchase of such equity interest or upon
exercise of an option or warrant for, or conversion of securities
into, such equity interest, or assets of another Person which
constitute all or substantially all of the assets of such Person or
of a line or lines of business conducted by such Person.
"Affiliate" means any Person (i) which directly or
indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with the Lessee; or (ii)
which beneficially owns or holds 10% or more of any class of the
outstanding voting stock (or in the case of a Person which is not a
corporation, 10% or more of the equity interest) of the Lessee; or
10% or more of any class of the outstanding voting stock (or in the
case of a Person which is not a corporation, 10% or more of the
equity interest) of which is beneficially owned or held by the
Lessee. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of
voting stock, by contract or otherwise.
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"Approved Option Plan" means the Cone Mills Amended and
Restated 1992 Stock Option Plan, as amended, the Cone Mills 1983
ESOP, as amended, the Cone Mills Corporation 1994 Stock Option Plan
For Non-Employee Directors, as amended, the Shareholder Rights Plan
dated October 14, 1999, and any other stock incentive plan, stock
option plan or similar stock rights plan approved by the Board of
Directors of the Lessee in the ordinary course of business.
"Asset Disposition" means any disposition, whether by sale,
lease, assignment or other transfer of (i) any of the assets of the
Lessee or its Subsidiaries, and (ii) any of the capital stock, or
securities or investments exchangeable, exercisable or convertible
for or into, or otherwise entitling the holder to receive any of the
capital stock, of any Subsidiary (other than a disposition to the
Lessee or a Guarantor).
"Authorized Representative" means any of the President or
any Vice President or the Treasurer or Controller of the Lessee or,
with respect to financial matters, the chief financial officer of the
Lessee, or any other Person expressly designated by the Board of
Directors of the Lessee (or the appropriate committee thereof) as an
Authorized Representative of the Lessee, as set forth from time to
time in a certificate delivered to the Lender.
"Capital Expenditures" means, with respect to the Lessee and
its Subsidiaries, for any period the sum of (without duplication) (i)
all expenditures (whether paid in cash or accrued as liabilities) by
the Lessee or any Subsidiary during such period for items that would
be classified as "property, plant or equipment" or comparable items
on the consolidated balance sheet of the Lessee and its Subsidiaries,
including without limitation all transactional costs incurred in
connection with such expenditures provided the same have been
capitalized, excluding, however, the amount of any Capital
Expenditures paid for with proceeds of casualty insurance as
evidenced in writing and submitted to the Lender together with any
compliance certificate delivered pursuant to Section 32(b)(i)(A) or
(B), and (ii) with respect to any Capital Lease entered into by the
Lessee or its Subsidiaries during such period, the present value of
the lease payments due under such Capital Lease over the term of such
Capital Lease applying a discount rate equal to the interest rate
provided in such lease (or in the absence of a stated interest rate,
that rate used in the preparation of the financial statements
described in Section 32(b)(i)(A)), all the foregoing in accordance
with GAAP applied on a Consistent Basis.
"Capital Leases" means all leases which have been or should
be capitalized in accordance with GAAP as in effect from time to time
including Statement Nos. 13 and 98 of the Financial Accounting
Standards Board and any successor thereof.
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"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) either (A)
becomes the "beneficial owner" (as defined in Rule 13d-3 of
the Exchange Act ), directly or indirectly, of Voting
Securities of the Lessee (or securities convertible into or
exchangeable for such Voting Securities) representing 25% or
more of the combined voting power of all Voting Securities
of the Lessee (on a fully diluted basis) or (B) otherwise
has the ability, directly or indirectly, to elect a majority
of the board of directors of the Lessee;
(ii) during any period of up to 24 consecutive months,
commencing on the Closing Date, individuals who at the
beginning of such 24-month period were directors of the
Lessee shall cease for any reason (other than the death,
disability or retirement of an officer of the Lessee that is
serving as a director at such time so long as another
officer of the Lessee replaces such Person as a director) to
constitute a majority of the board of directors of the
Lessee; or
(iii) any Person or two or more Persons acting in
concert shall have acquired by contract or otherwise, or
shall have entered into a contract or arrangement that, upon
consummation thereof, will result in its or their
acquisition of the power to exercise, directly or
indirectly, a controlling influence on the management or
policies of the Lessee.
"CIPSA" means Compania Industrial de Parras, S.A.
"Closing Date" means the date of this Amendment.
"Code" means the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder.
"Compliance Certificate" means a certificate of an
Authorized Representative of the Lessee demonstrating compliance with
the covenants contained in Sections 32(c)(i), (iii) and (vii)(G),
substantially in the form of Exhibit H to the Credit Agreement.
"Consistent Basis" in reference to the application of GAAP
means the accounting principles observed in the period referred to
are comparable in all material respects to those applied in the
preparation of the audited financial statements of the Lessee
referred to as of the Closing Date in Section 32(a)(vi)(A).
"Consolidated EBITDA" means, with respect to the Lessee and
its Subsidiaries for any period ending on the date of computation
thereof, the sum of, without duplication, (i) Consolidated Net
Income, (ii) Consolidated Interest
<PAGE>
Expense, (iii) taxes on income, (iv) amortization, (v) depreciation,
(vi) non-cash charges otherwise deducted in calculating Consolidated
Net Income resulting from FASB No. 88 Adjustments, FASB No. 106
Adjustments, FASB No. 112 Adjustments or FASB No. 121 Adjustments and
(vii) non-cash restructuring charges, all determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis; provided, however, in the event that any Non-Cash
Restructuring Charges accrued in a prior period are paid in cash in
any subsequent period, the amount of such cash payment shall be
subtracted from Consolidated EBITDA for such subsequent period.
"Consolidated Indebtedness" means all Indebtedness for Money
Borrowed of the Lessee and its Subsidiaries, all determined on a
consolidated basis.
"Consolidated Interest Coverage Ratio" means for any
Four-Quarter Period ending on the date of computation thereof, the
ratio of (i) Consolidated EBITDA for such Four-Quarter Period, to
(ii) Consolidated Interest Expense for such Four-Quarter Period.
"Consolidated Interest Expense" means, with respect to any
period of computation thereof, the gross interest expense of the
Lessee and its Subsidiaries, including without limitation (i) the
current amortized portion of debt discounts to the extent included in
gross interest expense, (ii) the current amortized portion of all
fees (including fees payable in respect of any Rate Hedging
Obligations) payable in connection with the incurrence of
Indebtedness to the extent included in gross interest expense, (iii)
the portion of any payments made in connection with Capital Leases
allocable to interest expense, and (iv) the net cash financing costs
incurred in connection with any Securitization Transaction, all
determined on a consolidated basis in accordance with GAAP applied on
a Consistent Basis.
"Consolidated Leverage Ratio" means, as of the date of
computation thereof, the ratio of (i) Consolidated Indebtedness
(determined as at such date) to (ii) Consolidated EBITDA (for the
Four-Quarter Period ending on (or most recently ended prior to) such
date).
"Consolidated Net Income" means, for any period of
computation thereof, the gross revenues from operations of the Lessee
and its Subsidiaries, other than Parras Cone to the extent it
constitutes a Subsidiary (including payments received by the Lessee
and its Subsidiaries of (i) interest income, and (ii) dividends and
distributions made in the ordinary course of their businesses by
Persons (including Parras Cone) in which investment is permitted
pursuant to this Agreement and not related to an extraordinary
event), less all operating and non-operating expenses of the Lessee
and its Subsidiaries including taxes on income, all determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis; but excluding (for all purposes other than
<PAGE>
compliance with Section 32(c)(i)(A) as income): (a) net gains or
losses on the sale, conversion or other disposition of capital
assets, (b) net gains or losses on the acquisition, retirement, sale
or other disposition of capital stock and other securities of the
Lessee or its Subsidiaries, (c) net gains on the collection of
proceeds of life insurance policies, (d) any write-up of any asset,
(e) any net gain or loss recorded as a result of FASB 133
Adjustments, and (f) any other net gain or credit of an extraordinary
nature as determined in accordance with GAAP applied on a Consistent
Basis.
"Consolidated Net Worth" means, as of any date on which the
amount thereof is to be determined, the sum of the following in
respect of the Lessee and its Subsidiaries (determined on a
consolidated basis and excluding any upward adjustment after the
Closing Date due to revaluation of assets, including without
limitation any FASB 133 Adjustment): (i) the amount of issued and
outstanding share capital, plus (ii) the amount of additional paid-in
capital and retained earnings (or, in the case of a deficit, minus
the amount of such deficit), plus (iii) the amount of any foreign
currency translation adjustment (if positive, or, if negative, minus
the amount of such translation adjustment), minus (iv) the amount of
any treasury stock, minus (v) (without duplication of deductions in
respect of items already deducted in arriving at surplus and retained
earnings) all reserves (other than contingency reserves not allocated
to any particular purpose), including without limitation reserves for
depreciation, depletion, amortization, obsolescence, deferred income
taxes, insurance and inventory valuation, all as determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis.
"Contingent Obligation" means, as to any Person, any direct
or indirect liability of that Person with respect to any
Indebtedness, lease, dividend, guaranty, letter of credit or other
obligation (each a "primary obligation") of another Person (the
"primary obligor"), whether or not contingent, (i) to purchase,
repurchase or otherwise acquire any such primary obligation or any
property constituting direct or indirect security therefor, or (ii)
to advance or provide funds (a) for the payment or discharge of any
such primary obligation, or (b) to maintain working capital or equity
capital of the primary obligor in respect of any such primary
obligation or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of such
primary obligor, or (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor thereof to
make payment of such primary obligation, or (iv) otherwise to assure
or hold harmless the owner of any such primary obligation against
loss or failure or inability to perform in respect thereof. The
amount of any Contingent Obligation, to the extent not expressly
limited, shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which
such Contingent Obligation is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof.
<PAGE>
"Cost of Acquisition" means, with respect to any
Acquisition, as at the date of entering into any agreement therefor,
the sum of the following (without duplication): (i) the value of the
capital stock, warrants or options to acquire capital stock of Lessee
or any Subsidiary to be transferred in connection therewith, (ii) the
amount of any cash and fair market value of other property (excluding
property described in clause (i) and the unpaid principal amount of
any debt instrument) given as consideration, (iii) the amount
(determined by using the face amount or the amount payable at
maturity, whichever is greater) of any Indebtedness incurred, assumed
or acquired by the Lessee or any Subsidiary in connection with such
Acquisition, (iv) all additional purchase price amounts in the form
of earnouts and other contingent obligations that should be recorded
on the financial statements of the Lessee and its Subsidiaries in
accordance with GAAP, (v) all amounts paid in respect of covenants
not to compete, consulting agreements that should be recorded on
financial statements of the Lessee and its Subsidiaries in accordance
with GAAP, and other affiliated contracts in connection with such
Acquisition, (vi) the aggregate fair market value of all other
consideration given by the Lessee or any Subsidiary in connection
with such Acquisition, and (vii) out of pocket transaction costs for
the services and expenses of attorneys, accountants and other
consultants incurred in effecting such transaction, and other similar
transaction costs so incurred. For purposes of determining the Cost
of Acquisition for any transaction, (A) the capital stock of the
Lessee shall be valued (I) in the case of capital stock that is then
listed on a national securities exchange or a national market system,
the average of the last reported bid and ask quotations or the last
prices reported thereon, and (II) with respect to any other shares of
capital stock, as determined by a committee composed of the
disinterested members of the Board of Directors of the Lessee and, if
requested by the Lender, determined to be a reasonable valuation by
the independent public accountants referred to in Section
32(b)(i)(A), (B) the capital stock of any Subsidiary shall be valued
as determined by a committee composed of the disinterested members of
the Board of Directors of such Subsidiary and, if requested by the
Lender, determined to be a reasonable valuation by the independent
public accountants referred to in Section 32(b)(i)(A), and (C) with
respect to any Acquisition accomplished pursuant to the exercise of
options or warrants or the conversion of securities, the Cost of
Acquisition shall include both the cost of acquiring such option,
warrant or convertible security as well as the cost of exercise or
conversion.
"Credit Agreement" means the Credit Agreement, dated as of
January 28, 2000, among the Lessee, Bank of America, N.A., as agent
and as lender, and the lenders party thereto from time to time, as it
may be amended, supplemented or otherwise modified from time to time.
"Credit Parties" means, collectively, the Lessee, each
Guarantor and each other Person providing Collateral pursuant to any
Security Document from time to time.
<PAGE>
"Direct Foreign Subsidiary" means a Subsidiary other than a
Domestic Subsidiary, a majority of whose Voting Securities, or a
majority of whose Subsidiary Securities, are owned by the Lessee or a
Domestic Subsidiary.
"Domestic Subsidiary" means any Subsidiary of the Lessee
organized under the laws of the United States of America, any state
or territory thereof or the District of Columbia.
"Employee Benefit Plan" means (i) any employee benefit plan,
including any Pension Plan, within the meaning of Section 3(3) of
ERISA which (a) is maintained for employees of the Lessee or any of
its ERISA Affiliates, or any Subsidiary or is assumed by the Lessee
or any of its ERISA Affiliates, or any Subsidiary in connection with
any Acquisition or (b) has at any time been maintained for the
employees of the Lessee, any current or former ERISA Affiliate, or
any Subsidiary and (ii) any plan, arrangement, understanding or
scheme maintained by the Lessee or any Subsidiary that provides
retirement, deferred compensation, employee or retiree medical or
life insurance, severance benefits or any other benefit covering any
employee or former employee and which is administered under any
Foreign Benefit Law or regulated by any Governmental Authority other
than the United States of America.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.
"ERISA Affiliate," as applied to the Lessee, means any
Person or trade or business which is a member of a group which is
under common control with the Lessee, who together with the Lessee,
is treated as a single employer within the meaning of Section 414(b)
and (c) of the Code.
"FASB No. 88 Adjustments" means adjustments charged to
income (or loss) and a corresponding liability resulting from
"settlements and curtailments of pension plans" (as defined in the
Statement of Financial Accounting Standards No. 88) and for related
termination benefits.
"FASB No. 106 Adjustments" means adjustments to income (or
loss) less actual cash payments resulting from "retirement benefits
other than pensions" (as defined in the Statement of Financial
Accounting Standards No. 106).
"FASB No. 112 Adjustments" means adjustments to income (or
loss) less actual cash payments resulting from "post-employment
benefits" (as defined in the Statement of Financial Accounting
Standards No. 112).
<PAGE>
"FASB No. 121 Adjustments" means adjustments charged to income
(or loss) resulting from impairment of long-lived assets (as defined in
the Statement of Financial Accounting Standards No. 121).
"FASB 133 Adjustments" means entries on or adjustments to
any balance sheet or statement of income in respect of derivatives or
hedging instruments as required or permitted by Statement of
Financial Accounting Standards No. 133 other than adjustments
relating to transactions in cotton derivatives in the ordinary course
of business.
"Fiscal Quarter" means each of the three month fiscal
periods of the Lessee and its Subsidiaries ending on January 2, 2000,
April 2, 2000, July 2, 2000, October 1, 2000 and December 31, 2000.
"Fiscal Year" means, with respect to fiscal year 1999, the
fiscal period of the Lessee and its Subsidiaries ending on January 2,
2000 and, with respect to fiscal year 2000, the fiscal period ending
December 31, 2000.
"Foreign Benefit Law" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign
nation or any province, state, territory, protectorate or other
political subdivision thereof regulating, relating to, or imposing
liability or standards of conduct concerning, any Employee Benefit
Plan.
"Four-Quarter Period" means a period of four full
consecutive Fiscal Quarters of the Lessee and its Subsidiaries, taken
together as one accounting period.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public
Accountants, or which have other substantial authoritative support
and are applicable in the circumstances as of the date of a report.
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are
fully and unconditionally guaranteed by, the United States of America
or any agency thereof.
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission,
board, bureau, court, agency or instrumentality or political
subdivision thereof or any entity or officer exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to any government or any court, in each case whether
associated with a state of the United States, the United States, or a
foreign entity or government.
<PAGE>
"Indebtedness" means as to any Person, without duplication,
(i) all Indebtedness for Money Borrowed of such Person, (ii) all Rate
Hedging Obligations of such Person, (iii) all indebtedness secured by
any Lien on any property or asset owned or held by such Person
regardless or whether the indebtedness secured thereby shall have
been assumed by such Person or is non-recourse to the credit of such
Person, and (iv) all Contingent Obligations of such Person.
"Indebtedness for Money Borrowed" means with respect to any
Person, without duplication, all indebtedness in respect of money
borrowed, including without limitation, all obligations under Capital
Leases, all Synthetic Lease Indebtedness, all Securitization
Outstandings, the deferred purchase price of any property or
services, the aggregate face amount of all surety bonds, letters of
credit, and bankers' acceptances, and (without duplication) all
payment and reimbursement obligations in respect thereof whether or
not matured, evidenced by a promissory note, bond, debenture or
similar written obligation for the payment of money (including
reimbursement agreements and conditional sales or similar title
retention agreements), other than trade payables, documentary letters
of credit and accrued expenses incurred in the ordinary course of
business.
"Lease Documents" means this Lease, all agreements executed
and delivered by the Lessee in connection with this Lease and the
Security Documents (as defined in the Credit Agreement).
"Lien" means any interest in property securing any
obligation owed to, or a claim by, a Person other than the owner of
the property, whether such interest is based on the common law,
statute or contract, and including but not limited to the lien or
security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. For the purposes of
this Lease, the Lessee and any Subsidiary shall be deemed to be the
owner of any property which it has acquired or holds subject to a
conditional sale agreement, financing lease, or other arrangement
pursuant to which title to the property has been retained by or
vested in some other Person for security purposes.
"Material Adverse Effect" means a material adverse effect on
(i) the business, properties, operations, prospects or condition,
financial or otherwise, of the Lessee and its Subsidiaries, taken as
a whole, (ii) the ability of any Credit Party to pay or perform its
respective obligations, liabilities and indebtedness under the Lease
Documents as such payment or performance becomes due in accordance
with the terms thereof, or (iii) the rights, powers and remedies of
the Lessor or Lender under any Lease Document or the validity,
legality or enforceability thereof.
<PAGE>
"Material Subsidiary" means any direct or indirect Domestic
Subsidiary of the Lessee which (i) has total assets equal to or
greater than 2% of consolidated total assets of the Lessee and its
Domestic Subsidiaries (calculated as of the most recent fiscal period
with respect to which the Lender shall have received financial
statements required to be delivered pursuant to Section 32(b)(i)(A)
or (B) (or if prior to delivery of any financial statements pursuant
to such Sections, then calculated with respect to the Fiscal Year end
financial statements referenced in Section 32(a)(vi) (the "Required
Financial Information")) or (ii) has revenue equal to or greater than
2% of consolidated total revenue of the Lessee and its Domestic
Subsidiaries (calculated for the most recent period for which the
Lender has received the Required Financial Information); provided,
however, that notwithstanding the foregoing, the term "Material
Subsidiary" shall mean each of those Domestic Subsidiaries that
together with the Lessee and each other Material Subsidiary have
assets equal to not less than 98% of consolidated total assets of the
Lessee and its Domestic Subsidiaries (calculated as described above)
and revenue of not less than 98% of consolidated total revenue of the
Lessee and its Domestic Subsidiaries (calculated as described above);
provided further that if more than one combination of Domestic
Subsidiaries satisfies both such thresholds, then those Domestic
Subsidiaries so determined to be "Material Subsidiaries" shall be
specified by the Lessee, and which include as of the Closing Date the
Subsidiaries identified on Schedule 1.2 to the Credit Agreement.
"Material Supply Agreement" means, collectively, (i) the
exclusive Supply Agreement dated as of March 30, 1992 between the
Lessee and Levi Strauss & Co., as amended or replaced from time to
time, and (ii) any other contract or agreement with any retail or
wholesale customer of the Lessee or any Subsidiary the cancellation,
termination, or non-renewal of which would reasonably be likely to
have a Material Adverse Effect.
"Mexican Capital Expenditures" means all Capital
Expenditures made with respect to property, plant or equipment
located in Mexico other than Parras Cone Capital Expenditures.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which the Lessee or any ERISA
Affiliate is making, or is accruing an obligation to make,
contributions or has made, or been obligated to make, contributions
within the preceding six (6) Fiscal Years.
"Non-Cash Restructuring Charges" means those expenses and
charges against earnings incurred in determination of Consolidated
Net Income related to the Lessee's comprehensive corporate downsizing
and reorganization program and which do not result in any cash
payment by the Lessee or any Subsidiary, all as determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis.
<PAGE>
"Operating Documents" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, the bylaws, operating agreement, partnership
agreement, limited partnership agreement or other applicable
documents relating to the operation, governance or management of such
entity.
"Organizational Action" means with respect to any
corporation, limited liability company, partnership, limited
partnership, limited liability partnership or other legally
authorized incorporated or unincorporated entity, any corporate,
organizational or partnership action (including any required
shareholder, member or partner action), or other similar official
action, as applicable, taken by such entity.
"Organizational Documents" means with respect to any
corporation, limited liability company, partnership, limited
partnership, limited liability partnership or other legally
authorized incorporated or unincorporated entity, the articles of
incorporation, certificate of incorporation, articles of
organization, certificate of limited partnership or other applicable
organizational or charter documents relating to the creation of such
entity.
"Parras Cone" means Parras Cone de Mexico, S. A., a joint
venture of the Lessee and CIPSA.
"Parras Cone Acquisition" means the purchase of (i)
substantially all of the assets of, or (ii) a controlling equity
interest in, Parras Cone, in each case, pursuant to a transaction
financed exclusively with Parras Cone Debt and investments permitted
under Section 32(c)(vii)(H).
"Parras Cone Capital Expenditures" means all Capital
Expenditures made by Parras Cone financed exclusively from internally
generated revenue and/or the Parras Cone Debt.
"Parras Cone Debt" means Indebtedness (other than Advances
under the Revolving Credit Facility) incurred to finance the Parras
Cone Acquisition (which may include refinancing the existing
Indebtedness of Parras Cone) which Indebtedness is non-recourse to
the Lessee and its Subsidiaries.
"PBGC" means the Pension Benefit Guaranty Corporation and any
succes sor thereto.
"PBGC Agreement" means (i) initially, the Memorandum of
Understanding dated January 3, 2000 between the Lessee and the PBGC
concerning certain of the Lessee's Pension Plans and (ii) from and
after the execution of definitive documentation thereafter entered
into between the Lessee
<PAGE>
on substantially the same terms as set forth in such Memorandum of
Understanding, such definitive documentation.
"Pension Plan" means any employee pension benefit plan
within the meaning of Section 3(2) of ERISA, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of
ERISA or Section 412 of the Code and which (i) is maintained for
employees of the Lessee or any of its ERISA Affiliates or is assumed
by the Lessee or any of its ERISA Affiliates in connection with any
Acquisition or (ii) has at any time been maintained for the employees
of the Lessee or any current or former ERISA Affiliate.
"Permitted Asset Dispositions" means Asset Dispositions
consisting of (i) dispositions of inventory in the ordinary course of
business, (ii) dispositions of items of equipment which, in the
aggregate during any Fiscal Year, have a fair market value or book
value, whichever is greater, of $2,000,000 or less, (iii)
dispositions of property that is substantially worn, damaged,
obsolete or, in the judgment of the Lessee, no longer best used or
useful in its business or that of any Subsidiary which in the
aggregate during any Fiscal Year has a fair market value or book
value, whichever is greater, of $1,000,000 or less, (iv) transfers of
assets necessary to give effect to merger or consolidation
transactions permitted by Section 32(c)(viii), (v) the disposition of
cash or Eligible Securities in the ordinary course of management of
the investment portfolio of the Lessee and its Subsidiaries, (vi)
securitization of accounts receivable and related rights pursuant to
the Securitization Transaction, (vii) the sale or discount without
recourse of accounts receivable or notes receivable, or the
conversion or exchange of accounts receivable into or for notes
receivable in connection with the compromise or collection thereof,
each in the ordinary course of business, (viii) dispositions of
assets with an aggregate book value or fair market value, whichever
is greater, of up to $2,000,000 during any Fiscal Year of the Lessee
or any Subsidiary the proceeds of which are reinvested within 180
days of such disposition by the Lessee or a such Subsidiary in
replacement assets of substantially the same or greater such value
and utility as the assets so disposed of (or such replacement asset
is otherwise purchased by the Lessee or such Subsidiary within 180
days prior to such disposition), (ix) dispositions of assets
described on Schedule 1.2 to the Credit Agreement and (x) sale and
leaseback transactions permitted under Section 32(c)(xiv).
"Person" means an individual, partnership, corporation,
limited liability company, limited liability partnership, trust,
unincorporated organization, association, joint venture or a
government or agency or political subdivision thereof.
"Rate Hedging Obligations" means, without duplication, any
and all obligations of the Lessee or any Subsidiary, whether absolute
or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under
<PAGE>
(i) any and all agreements, devices or arrangements designed to
protect at least one of the parties thereto from the fluctuations of
interest rates, exchange rates or forward rates applicable to such
party's assets, liabilities or exchange transactions, including, but
not limited to, Dollar-denominated or cross-currency interest rate
exchange agreements, forward currency exchange agreements, interest
rate cap or collar protection agreements, forward rate currency or
interest rate options, puts, warrants and those commonly known as
interest rate "swap" agreements; (ii) all other "derivative
instruments" as defined in FASB 133 and which are subject to the
reporting requirements of FASB 133; and (iii) any and all
cancellations, buybacks, reversals, terminations or assignments of
any of the foregoing; provided, however, under no circumstances shall
obligations for cotton hedging in the ordinary course of business be
considered Rate Hedging Obligations.
"Receivables Purchase Agreement" means that certain
Receivables Purchase and Servicing Agreement dated September 1, 1999
by and among Cone Receivables II LLC, as Seller, Redwood Receivables
Corporation, as Purchaser, Cone Mills Corporation, as Servicer, and
General Electric Capital Corporation, as Operating Agent and
Collateral Agent, as amended by the First Amendment and Waiver to
Securitization Agreements dated as of November 16, 1999 and the
Second Amendment to Securitization Agreements dated as of the Closing
Date and as amended, supplemented or restated from time to time.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any
class of stock of Lessee or any Subsidiary Securities of its
Subsidiaries (other than those payable or distributable solely to the
Lessee) now or hereafter outstanding, except a dividend payable
solely in shares of a class of stock to the holders of that class;
(ii) any redemption, conversion, exchange, put, call, retirement or
similar payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of stock of Lessee or any of its
Subsidiaries (other than those payable or distributable solely to the
Lessee) now or hereafter outstanding; (iii) any payment made to
retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock of
Lessee or any Subsidiary Securities of its Subsidiaries now or
hereafter outstanding; and (iv) any issuance and sale of Subsidiary
Securities (other than director qualifying shares) of any Subsidiary
of the Lessee (or any option, warrant or right to acquire such stock)
other than to the Lessee; excluding in all instances however all
payments which would otherwise be considered "Restricted Payments"
made in accordance with the terms of an Approved Option Plan.
"Securitization Outstandings" means, at any time, the
Capital Investment (as defined in the Receivables Purchase Agreement)
under the Receivables Purchase Agreement, in an aggregate amount not
in excess of $60,000,000 at any time.
<PAGE>
"Securitization Transaction" means any transaction pursuant
to which the Lessee or any Subsidiary, through Cone Receivables II
LLC, sells, disposes of or otherwise transfers any interest,
including any security interest, in accounts receivable and related
rights pursuant to the Receivables Purchase Agreement.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(a) the fair value of its assets (both at fair valuation and
at present fair saleable value on an orderly basis) is in excess of
the total amount of its liabilities, including Contingent
Obligations; and
(b) it is then able and expects to be able to pay its
debts as they mature; and
(c) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"Synthetic Lease" means a leveraged leasing arrangement
under which the lease of property is treated as an operating lease
under GAAP but is treated as a financing lease arrangement for legal
and tax purposes and in which a special purpose entity incurs
Indebtedness to acquire such property and leases such property to the
Lessee.
"Synthetic Lease Indebtedness" means, with respect to a
Person that is a lessee under a Synthetic Lease, at any time an
amount equal to (i) the aggregate purchase price of any property that
the lessor under such synthetic lease acquired, through one or a
series of related transactions, and thereafter leased to such Person
pursuant to such Synthetic Lease less (ii) the aggregate amount of
all payments made on or prior to such time of fixed rent or other
rent payments which reduced such Person's obligation under such
Synthetic Lease and which are not the financial equivalent of
interest. Synthetic Lease Indebtedness of a Person shall also
include, without duplication, the amount of Synthetic Lease
Indebtedness of others to the extent guarantied by such Person.
"Termination Event" means: (i) a "Reportable Event"
described in Section 4043 of ERISA and the regulations issued
thereunder (unless the notice requirement has been waived by
applicable regulation) other than any reportable event that is the
subject of the PBGC Agreement; or (ii) the withdrawal of the Lessee
or any ERISA Affiliate from a Pension Plan during a plan year in
which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA or was deemed such under Section 4062(e) of
ERISA; or (iii) the termination of a Pension Plan, the filing of a
notice of intent to terminate a Pension Plan or the treatment of a
Pension Plan amendment as a termination under Section 4041 of ERISA;
or (iv) the institution of proceedings to terminate a Pension Plan by
the PBGC other than those actions by the PBGC that are the subject of
the PBGC
<PAGE>
Agreement; or (v) any other event or condition which would constitute
grounds under Section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan other than
those actions by the PBGC that are the subject of the PBGC Agreement;
or (vi) the partial or complete withdrawal of the Lessee or any ERISA
Affiliate from a Multiemployer Plan; or (vii) the imposition of a
Lien pursuant to Section 412 of the Code or Section 302 of ERISA
other than those actions by the PBGC that are the subject of the PBGC
Agreement; or (viii) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Section
4241 or Section 4245 of ERISA, respectively; or (ix) any event or
condition which results in the termination of a Multiemployer Plan
under Section 4041A of ERISA or the institution by the PBGC of
proceedings to terminate a Multiemployer Plan under Section 4042 of
ERISA; or (x) any event or condition with respect to any Employee
Benefit Plan which is regulated by any Foreign Benefit Law that
results in the termination of such Employee Benefit Plan or the
revocation of such Employee Benefit Plan's authority to operate under
the applicable Foreign Benefit Law.
"Twelve-Month Period" means a period of twelve consecutive
calendar months taken together as one accounting period.
"U.S. Capital Expenditures" means all Capital Expenditures
other than Mexican Capital Expenditures and Parras Cone Capital
Expenditures.
"Voting Securities" means shares of capital stock issued by
a corporation, or equivalent interests in any other Person, the
holders of which are ordinarily, in the absence of contingencies,
entitled to vote for the election of directors (or persons performing
similar functions) of such Person, even if the right so to vote has
been suspended by the happening of such a contingency.
"Year 2000 Compliant" means all computer applications
(including those affected by information received from its suppliers
and vendors) that are material to the Lessee's or any of its
Subsidiaries' business and operations will be able to perform
properly date-sensitive functions involving all dates on and after
January 1, 2000.
"Year 2000 Problem" means that computer applications used by
the Lessee or any of its Subsidiaries (including those affected by
information received from its suppliers and vendors) are unable to
recognize correctly and perform properly date-sensitive functions
involving certain dates on and after January 1, 2000.
All capitalized terms used in this Section 32 and not otherwise defined herein
shall have the meanings assigned thereto in the Credit Agreement (whether or not
the Credit Agreement is then in effect).
<PAGE>
SECTION 3. Events of Default. Section 19(a)(viii) of the Lease is
hereby deleted in its entirety, and the following shall be substituted therefor:
(viii) if there shall occur (A) a default, which is not
waived, in the payment of any principal, interest, premium or other
amount with respect to any Indebtedness or Rate Hedging Obligation of
the Lessee or any Subsidiary in an amount not less than $500,000 in
the aggregate outstanding, or (B) a default, which is not waived, in
the performance, observance or fulfillment of any term or covenant
contained in any agreement or instrument under or pursuant to which
any such Indebtedness or Rate Hedging Obligation may have been
issued, created, assumed, guaranteed or secured by the Lessee or any
Subsidiary, or (C) any other event of default as specified in any
agreement or instrument under or pursuant to which any such
Indebtedness or Rate Hedging Obligation may have been issued,
created, assumed, guaranteed or secured by the Lessee or any
Subsidiary, and such default or event of default referred to in
clauses (A), (B) and (C) above shall continue for more than the
period of grace, if any, therein specified, or such default or event
of default shall permit the holder of any such Indebtedness (or any
agent or trustee acting on behalf of one or more holders) to
accelerate the maturity thereof ; or to commence any remedy in
respect thereof ; or
Sections 19(a)(ix) and (x) of the Lease are hereby deleted in their
entirety, and the following shall be substituted therefor:
(ix) if the Lessee or any Subsidiary or other Credit Party
shall be unable to pay its debts generally as they become due; file a
petition to take advantage of any insolvency statute; make an
assignment for the benefit of its creditors; commence a proceeding
for the appointment of a receiver, trustee, liquidator or conservator
of itself or of the whole or any substantial part of its property;
file a petition or answer seeking liquidation, reorganization or
arrangement or similar relief under the federal bankruptcy laws or
any other applicable law or statute; or
(x) if a court of competent jurisdiction shall enter an
order, judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of the Lessee or any Subsidiary or other
Credit Party or of the whole or any substantial part of its
properties and such order, judgment or decree continues unstayed and
in effect for a period of sixty (60) days, or approve a petition
filed against the Lessee or any Subsidiary seeking liquidation,
reorganization or arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any state, which petition is not dismissed
within sixty (60) days; or if, under the provisions of any other law
for the relief or aid of debtors, a court of competent jurisdiction
shall assume custody or control of the Lessee or any Subsidiary or
other Credit Party or of the whole or any substantial part of its
properties, which control is not relinquished within sixty (60) days;
or if there is commenced against the Lessee or any Subsidiary or
other Credit Party any proceeding or petition seeking
<PAGE>
reorganization, arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any state which proceeding or petition remains
undismissed for a period of sixty (60) days; or if the Lessee or any
Subsidiary or other Credit Party takes any action to indicate its
consent to or approval of any such proceeding or petition; or
Section 19(a)(xii) of the Lease is hereby deleted in its entirety,
and the following shall be substituted therefor:
(xii) if (A) one or more judgments or orders where the
amount not covered by insurance (or the amount as to which the
insurer denies liability) is in excess of $2,500,000 is rendered
against the Lessee or any Subsidiary, or (B) there is any attachment,
injunction or execution against any of the Lessee's or Subsidiaries'
properties for any amount in excess of $5,000,000 in the aggregate;
and such judgment, attachment, injunction or execution remains
unpaid, unstayed, undischarged, unbonded or undismissed for a period
of thirty (30) days; or
(xiii) if the Lessee or any Subsidiary shall, other than in
the ordinary course of business (as determined by past practices),
suspend all or any part of its operations material to the conduct of
the business of the Lessee or such Subsidiary for a period of more
than 60 days; or
(xiv) if the Lessee or any Subsidiary shall breach any of
the material terms or conditions of any agreement under which any
Rate Hedging Obligations permitted hereby is created and such breach
shall continue beyond any grace period, if any, relating thereto
pursuant to the terms of such agreement, or if the Lessee or any
Subsidiary shall disaffirm or seek to disaffirm any such agreement or
any of its obligations thereunder; or
(xv) if any Material Supply Agreement shall be terminated,
canceled or not renewed, or any notice of the foregoing shall be
given by any other party thereto, or a default shall occur under such
agreement and continue beyond the grace or cure period, if any,
applicable thereto; or
(xvi) if there shall occur any Change in Control; or
(xvii) if there shall occur any Termination Event as
defined in the Receivables Purchase Agreement; or
(xviii) if there shall occur any Event of Default as
defined in the Senior Note Agreement.
SECTION 4. Net Rent. Exhibit D to the Lease is hereby amended by
deleting the definition of "Applicable Rate" that appears in paragraph D thereof
in its entirety and substituting therefor the following:
<PAGE>
"Applicable Rate" means, for any Interest Period with
respect to both the Lessor's Investment and the Loans, the sum of (i)
the LIBO Rate for such Interest Period, plus (ii) the Applicable
Margin then in effect.
"Applicable Margin" means 4.25%, except that during the
continuance of any Event of Default, the Applicable Margin shall be
6.25%.
SECTION 5. Conditions Precedent. This Amendment shall become
effective upon (i) receipt by the Lender of a fully executed copy of this
Amendment and (ii) receipt by the Lender of evidence satisfactory to the Lender
of the satisfaction of the conditions precedent set forth in Section 7.1 of the
Credit Agreement, including without limitation, executed copies of all of the
Security Documents. As promptly as practicable, but in any event no later than
February 4, 2000, the Lessee shall deliver to Lessor and Lender an opinion of
counsel, addressed to Lessor and Lender, in form and substance reasonably
satisfactory to Lessor and Lender, with respect to the enforceability of this
Amendment and such other matters as Lessor or Lender shall reasonably request.
SECTION 6. Representations of Lessee. Lessee hereby represents and
warrants that, after giving effect to this Amendment (i) the representations and
warranties set forth in Section 32(a) of the Lease are true and correct as of
the date hereof, and shall be deemed to have been made such representations and
warranties as of the date hereof and (ii) no Event of Default, Environmental
Event, Casualty, Condemnation or Default has occurred and is continuing.
SECTION 7. Miscellaneous. The Lease as amended hereby, remains in
full force and effect. Any reference to the Lease after the date hereof shall be
deemed to refer to the Lease as amended hereby, unless otherwise expressly
stated. This Amendment shall be governed by, and construed in accordance, with
the laws of the State of North Carolina. This Amendment may be executed by the
different parties hereto on separate counterparts, each of which shall
constitute an original, and all of which together shall constitute one and the
same agreement. The Lessee shall promptly pay, or reimburse the Lender for, all
costs and expenses, including without limitation, legal fees and expenses,
incurred by the Lender or the Lessor in connection with this Amendment and the
other Lease Documents.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective duly authorized officers as of the date first
above written.
ATLANTIC FINANCIAL GROUP, LTD.
By: Atlantic Financial Managers, its
General Partner
By:______________________________________
Name Printed: Stephen Brookshire
Title: President
<PAGE>
CONE MILLS CORPORATION
By
Name Printed:
Title:
<PAGE>
CONSENT
SUNTRUST BANK hereby consents to the terms of the foregoing Tenth
Amendment to Master Lease.
SUNTRUST BANK
By:
Name Printed:
Title:
