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 XXXXX 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:
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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
WHEREAS, each of the Senior Note Holder, the Senior Lease Creditor,
Xxxxxx, 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 xxxx registrations, and applications for trademark or
service xxxx 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 xxx 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 xxxx
(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
12
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
17
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
18
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
20
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
21
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.
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(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 xxxx, xxxx 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
26
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 xxxxxxxx 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, xxx 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
28
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
29
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
30
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
32
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.
-----------------------
(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
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
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
IN WITNESS WHEREOF, the parties have duly executed this Priority
Security Agreement on the day and year first written above.
GRANTORS:
CONE XXXXX CORPORATION
By:_______________________________________
Name: Xxxx X. Xxxxx
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
AGENT:
BANK OF AMERICA, N. A., as Priority
Collateral Agent for the Priority Secured
Parties
By:_____________________________________
Name: Xxxxxx Xxxxx
Title: Managing Director
PRIORITY SECURITY AGREEMENT
Signature 2 of 2
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
(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
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 Xxxxx 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
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
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
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
SIGNATURES:
BANK OF AMERICA, N.A.,
as Priority Collateral Agent
By: ______________________________________
Name:____________________________________
Title:_____________________________________
Address for Notices:
Bank of America, N.A.
Agency Services
000 Xxxxx Xxxxx Xxxxxx, XX0-000-00-00
Xxxxxxxxx, XX 00000
Telephone: (000)000-0000
Telefacsimile: (000)000-0000
DEBTOR
CONE XXXXX CORPORATION
By:______________________________________
Name: Xxxx X. Xxxxx
Title: Executive Vice President and
Chief Financial Officer
Address for Notices:
Cone Xxxxx Corporation
0000 Xxxxx Xxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxx, Treasurer
Telephone: (000) 000-0000
Telefacsimile: (000) 000-0000
ACCOUNT CONTROL AGREEMENT
(Priority Security Agreement - Securities)
Signature Page 1 of 2
[BROKER NAME]
By:______________________________________
Name:____________________________________
Title:___________________________________
Address for Notices:
_________________________________________
_________________________________________
_________________________________________
_________________________________________
Fax: ( ) ____ - ________
ACCOUNT CONTROL AGREEMENT
(Priority Security Agreement - Securities)
Signature Page 2 of 2
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 Xxxxx 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
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
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.
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.
SIGNATURES:
BANK OF AMERICA, N.A.,
as Priority Collateral Agent
By: ______________________________________
Name:____________________________________
Title:_____________________________________
Address for Notices:
Bank of America, N.A.
Agency Services
000 Xxxxx Xxxxx Xxxxxx, XX0-000-00-00
Xxxxxxxxx, XX 00000
Telephone: (000)000-0000
Telefacsimile: (000)000-0000
DEBTOR
CONE XXXXX CORPORATION
By:______________________________________
Name: Xxxx X. Xxxxx
Title: Executive Vice President and
Chief Financial Officer
Address for Notices:
Cone Xxxxx Corporation
0000 Xxxxx Xxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxx, Treasurer
Telephone: (000) 000-0000
Telefacsimile: (000) 000-0000
ACCOUNT CONTROL AGREEMENT
(Priority Security Agreement - Commodities)
Signature Page 1 of 2
[INTERMEDIARY NAME]
By:______________________________________
Name:____________________________________
Title:___________________________________
Address for Notices:
_________________________________________
_________________________________________
_________________________________________
_________________________________________
Fax: ( ) ____ - ________
ACCOUNT CONTROL AGREEMENT
(Priority Security Agreement - Commodities)
Signature Page 2 of 2
SCHEDULE 2
GRANTOR INFORMATION
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)
---- --------- ---------------- ------------ -------------- ----------------------- -----------------------
S-2
SCHEDULE 3
INVESTMENT PROPERTY
-------------------
SECURITIES ACCOUNTS
-------------------
Name and Address of Securities Account
Securities Intermediary Number
----------------------- ------
GRANTOR
-------
COMMODITY ACCOUNTS
------------------
Name and Address of Commodity Account
Commodity Intermediary Number
---------------------- ------
OTHER INVESTMENT PROPERTY
-------------------------
Name and Type Quantity of Shares Certificate
of Issuer or Other Interest Number(s)
--------- ----------------- ---------
S-3
SCHEDULE 4
DEPOSIT ACCOUNTS
----------------
Name and Address of Certificate of Deposit No.
Grantor Depository Institution Account No. (if applicable)
------- ---------------------- ----------- ---------------
S-4
SCHEDULE 5-A
------------
TRADEMARKS AND TRADEMARK APPLICATIONS
-------------------------------------
S-5-1
SCHEDULE 5-B
------------
LICENSE AGREEMENTS
------------------
S-5-2
EXHIBIT A
---------
ASSIGNMENT OF TRADEMARKS AND LICENSES
THIS ASSIGNMENT OF TRADEMARKS AND LICENSES (this "Agreement") is made
and entered into as of January 28, 2000 by CONE XXXXX 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
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 xxx 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
IN WITNESS WHEREOF, the parties have duly executed this Assignment of
Trademarks and Licenses on the day and year first written above.
GRANTORS:
CONE XXXXX CORPORATION
By: ________________________
Name: Xxxx X. Xxxxx
Title: Executive Vice President and
Chief Financial Officer
ASSIGNMENT OF TRADEMARKS AND LICENSES
SIGNATURE PAGE 1 OF 3
The foregoing assignment of the Trademarks and Licenses and the
registrations thereof and registration applications therefor by the Assignee and
the 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: Xxxxxx Xxxxx
Title: Managing Director
ASSIGNMENT OF TRADEMARKS AND LICENSES
SIGNATURE PAGE 2 OF 3
STATE OF _____________________________________________________ )
) ss.
COUNTY OF________________________________________________ )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ______ day of ____________, ____, personally appeared
______________________________ to me known personally, and who, being by me duly
sworn, deposes and says that he is the _______________________________ of Cone
Xxxxx 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
ANNEX I
-------
TRADEMARK REGISTRATIONS
OR UNITED STATES PATENT AND TRADEMARK OFFICE
SERVICE XXXX REGISTRATION NO. REGISTRATION DATE
------------ ---------------- -----------------
[LIST CHRONOLOGICALLY IN ASCENDING NUMERICAL ORDER]
TRADEMARK PENDING APPLICATIONS
OR UNITED STATES PATENT AND TRADEMARK OFFICE
SERVICE XXXX SERIAL NO. FILING DATE
------------ ---------- -----------
[LIST CHRONOLOGICALLY IN ASCENDING NUMERICAL ORDER]
ANNEX II
--------
Material Licenses
