EXHIBIT (10f)
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of December 7, 2001, between UNIFI INC., a
New York corporation ("Company"), and certain of its domestic Subsidiaries
(individually a "Subsidiary Borrower", and collectively the "Subsidiary
Borrowers"; and together with the Company, individually a "Grantor" and
collectively the "Grantors") and BANK OF AMERICA, N.A., in its capacity as Agent
for Lenders.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement dated as of the date
hereof by and among Grantors, Agent and Lenders (including all annexes, exhibits
and schedules thereto, as from time to time amended, restated, supplemented or
otherwise modified, the "Credit Agreement"), Lenders have agreed to make the
Loans and issue Letters of Credit on behalf of Grantors;
WHEREAS, in order to induce Agent and Lenders to enter into the Credit
Agreement and the other Loan Documents and to induce Lenders to make the Loans
to the Grantors and issue Letters of Credit on behalf of the Grantors as
provided for in the Credit Agreement, Grantors have agreed to grant a continuing
Lien on the Collateral (as hereinafter defined) to secure the Obligations;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINED TERMS. The following terms shall have the following
respective meanings:
"Accounts" means all of the Grantors' now owned or hereafter acquired
or arising accounts, as defined in the UCC, including any rights to payment for
the sale or lease of goods or rendition of services, whether or not they have
been earned by performance, and all medical receivables.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person or which owns, directly or indirectly, ten percent (10%) or
more of the outstanding equity interest of such Person. A Person shall be deemed
to control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Assigned Contracts" means, collectively, all of the Grantors' rights
and remedies under, and all moneys and claims for money due or to become due to
the Borrower or any of the
Grantors under those contracts set forth on Schedule VII hereto, and any other
material contracts, and any and all amendments, supplements, extensions, and
renewals thereof including all rights and claims of any Grantor now or hereafter
existing: (i) under any insurance, indemnities, warranties, and guarantees
provided for or arising out of or in connection with any of the foregoing
agreements; (ii) for any damages arising out of or for breach or default under
or in connection with any of the foregoing contracts; (iii) to all other amounts
from time to time paid or payable under or in connection with any of the
foregoing agreements; or (iv) to exercise or enforce any and all covenants,
remedies, powers and privileges thereunder.
"Chattel Paper" means all of the Grantors' now owned or hereafter
acquired chattel paper, as defined in the UCC, including electronic chattel
paper.
"Deposit Accounts" means all "deposit accounts" as such term is defined
in the UCC, now or hereafter held in the name of any Grantor.
"Documents" means all documents as such term is defined in the UCC,
including bills of lading, warehouse receipts or other documents of title, now
owned or hereafter acquired by any Grantor.
"General Intangibles" means all of the Grantors' now owned or hereafter
acquired general intangibles, choses in action and causes of action and all
other intangible personal property of any Grantor of every kind and nature
(other than Accounts), including, without limitation, all contract rights,
payment intangibles, Proprietary Rights, corporate or other business records,
inventions, designs, blueprints, plans, specifications, patents, patent
applications, trademarks, service marks, trade names, trade secrets, goodwill,
copyrights, computer software, customer lists, registrations, licenses,
franchises, tax refund claims, any funds which may become due to any Grantor in
connection with the termination of any employee benefit plan or any rights
thereto and any other amounts payable to any Grantor from any employee benefit
plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds thereof, property,
casualty or any similar type of insurance and any proceeds thereof, proceeds of
insurance covering the lives of key employees on which any Grantor is
beneficiary, rights to receive dividends, distributions, cash, Instruments and
other property in respect of or in exchange for pledged equity interests or
Investment Property and any letter of credit, guarantee, claim, security
interest or other security held by or granted to any Grantor.
"Instruments" means all instruments as such term is defined in the UCC,
now owned or hereafter acquired by any Grantor.
"Inventory" means all of the Grantors' now owned and hereafter acquired
inventory, goods and merchandise, wherever located, to be furnished under any
contract of service or held for sale or lease, all returned goods, raw
materials, work-in-process, finished goods (including embedded software), other
materials and supplies of any kind, nature or description which are used or
consumed in the Grantors' business or used in connection with the packing,
shipping, advertising, selling or finishing of such goods, merchandise, and all
documents of title or other Documents representing them.
"Letter-of-Credit Rights" means "letter-of-credit rights" as such term
is defined in the UCC, now owned or hereafter acquired by any Grantor, including
rights to payment or performance under a letter of credit, whether or not any
Grantor, as beneficiary, has demanded or is entitled to demand payment or
performance.
"Payment Account" means each bank account established pursuant to this
Security Agreement, to which the proceeds of Accounts and other Collateral are
deposited or credited, and which is maintained in the name of the Agent or any
Grantor, as the Agent may determine, on terms acceptable to the Agent.
"Proprietary Rights" means all of the Grantors' now owned and hereafter
arising or acquired: licenses, franchises, permits, patents, patent rights,
copyrights, works which are the subject matter of copyrights, trademarks,
service marks, trade names, trade styles, patent, trademark and service ▇▇▇▇
applications, and all licenses and rights related to any of the foregoing, and
all other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing, and
all rights to ▇▇▇ for past, present and future infringement of any of the
foregoing.
"Software" means all "software" as such term is defined in the UCC, now
owned or hereafter acquired by any Grantor, other than software embedded in any
category of Goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.
"Supporting Obligations" means all supporting obligations as such term
is defined in the UCC.
"UCC" means the Uniform Commercial Code, as in effect from time to
time, of the State of North Carolina or of any other state the laws of which are
required as a result thereof to be applied in connection with the issue of
perfection of security interests.
"Uniform Commercial Code jurisdiction" means any jurisdiction that has
adopted "Revised Article 9" of the UCC on or after July 1, 2001.
All other capitalized terms used but not otherwise defined herein have
the meanings given to them in the Credit Agreement or in Annex A thereto. All
other undefined terms contained in this Security Agreement, unless the context
indicates otherwise, have the meanings provided for by the UCC to the extent the
same are used or defined therein.
2. GRANT OF LIEN.
(a) As security for all Obligations, each of the Grantors
hereby grants to the Agent, for the benefit of the Agent and the
Lenders, a continuing security interest in, lien on, assignment of and
right of set-off against, all of the following property and assets of
each such respective Grantor, whether now owned or existing or
hereafter acquired or arising, regardless of where located:
(i) all Accounts;
(ii) all Inventory;
(iii) all contract rights, including Assigned
Contracts;
(iv) all Chattel Paper;
(v) all Documents;
(vi) all Instruments;
(vii) all Supporting Obligations and
Letter-of-Credit Rights;
(viii) all General Intangibles (including payment
intangibles and Software);
(ix) all of the Grantors' Deposit Accounts, credits,
and balances with and other claims against the Agent or any
Lender or any of their Affiliates or any other financial
institution with which any Grantor maintains deposits,
including any Payment Accounts;
(x) all books, records and other property related to
or referring to any of the foregoing, including books,
records, account ledgers, data processing records, computer
software and other property and General Intangibles at any
time evidencing or relating to any of the foregoing; and
(xi) all accessions to, substitutions for and
replacements, products and proceeds of any of the foregoing,
including, but not limited to, proceeds of any insurance
policies, claims against third parties, and condemnation or
requisition payments with respect to all or any of the
foregoing.
All of the foregoing and all other property of any Grantor in which the Agent or
any Lender may at any time be granted a Lien as collateral for the Obligations,
is herein collectively referred to as the "Collateral."
(b) All of the Obligations shall be secured by all of the
Collateral.
3. PERFECTION AND PROTECTION OF SECURITY INTEREST.
(a) Each Grantor shall, at its expense, perform all steps
requested by the Agent at any time to perfect, maintain, protect, and
enforce the Agent's Liens, including: (i) executing and filing
financing or continuation statements, and amendments thereof, in form
and substance reasonably satisfactory to the Agent; (ii) delivering to
the Agent warehouse receipts covering any portion of the Collateral
located in warehouses and for
which warehouse receipts are issued and certificates of title covering
any portion of the collateral for which certificates of title have been
issued; (iii) when an Event of Default has occurred and is continuing,
transferring Inventory to warehouses or other locations designated by
the Agent; (iv) placing notations on the Grantors' books of account to
disclose the Agent's security interest; and (v) taking such other steps
as are deemed necessary or desirable by the Agent to maintain and
protect the Agent's Liens. Each Grantor agrees that a carbon,
photographic, photostatic, or other reproduction of this Security
Agreement or of a financing statement is sufficient as a financing
statement.
(b) Unless Agent shall otherwise consent in writing (which
consent may be revoked), each Grantor shall deliver to Agent all
Collateral consisting of negotiable Documents, certificated securities
(accompanied by stock papers executed in blank), Chattel Paper and
Instruments promptly after such Grantor receives the same.
(c) Each Grantor shall in all instances use its commercially
reasonable best efforts to obtain signed acknowledgements of Agent's
Liens from bailees having possession of any Collateral that they hold
for the benefit of Agent and each Grantor shall use its commercially
reasonable best efforts to obtain waivers or subordinations of Liens
from landlords and mortgagees unless the Agent shall have agreed in its
sole discretion to make Reserves against the Borrowing Base for rent
under such leases.
(d) If required by the terms of the Credit Agreement and not
waived by Agent in writing (which waiver may be revoked), each Grantor
shall obtain authenticated control agreements from each issuer of
uncertificated securities, securities intermediary, or commodities
intermediary issuing or holding any financial assets or commodities to
or for such Grantor.
(e) If a Grantor is or becomes the beneficiary of a letter of
credit, such Grantor shall promptly notify Agent thereof and enter into
a tri-party agreement with Agent and the issuer and/or confirmation
bank with respect to Letter-of-Credit Rights assigning such
Letter-of-Credit Rights to Agent and directing all payments thereunder
to the Payment Account, all in form and substance reasonably
satisfactory to Agent.
(f) Each Grantor shall take all steps necessary to grant the
Agent control of all electronic chattel paper in accordance with the
Code and all "transferable records" as defined in the Uniform
Electronic Transactions Act.
(g) Each Grantor hereby irrevocably authorizes the Agent at
any time and from time to time to file in any filing office in any
Uniform Commercial Code jurisdiction any initial financing statements
and amendments thereto that (a) indicate the Collateral as being of an
equal or lesser scope or with greater detail, and (b) contain any other
information required by part 5 of Article 9 of the UCC of the State of
North Carolina for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether such Grantor is
an organization, the type of organization and any organization
identification number issued to such Grantor, and (ii) in the case of a
financing statement filed as a fixture filing or indicating Collateral
as
as-extracted collateral or timber to be cut, a sufficient description
of real property to which the Collateral relates. Each Grantor agrees
to furnish any such information to the Agent promptly upon request.
Each Grantor also ratifies its authorization for the Agent to have
filed in any Uniform Commercial Code jurisdiction any like initial
financing statements or amendments thereto if filed prior to the date
hereof.
(h) Unless otherwise consented by Agent, each Grantor shall
promptly after the filing of any commercial tort claim (as defined in
the UCC) acquired by it, enter into a supplement to this Security
Agreement, granting to Agent a Lien in such commercial tort claim.
(i) From time to time, each Grantor shall, upon the Agent's
request, execute and deliver confirmatory written instruments pledging
to the Agent, for the ratable benefit of the Agent and the Lenders, the
Collateral, but the Grantor's failure to do so shall not affect or
limit any security interest or any other rights of the Agent or any
Lender in and to the Collateral with respect to such Grantor. So long
as the Credit Agreement is in effect and until all Obligations have
been fully satisfied, the Agent's Liens shall continue in full force
and effect in all Collateral (whether or not deemed eligible for the
purpose of calculating the Availability or as the basis for any
advance, loan, extension of credit, or other financial accommodation).
(j) [reserved].
(k) No Reincorporation. Without limiting the prohibitions on
mergers involving the Grantors contained in the Credit Agreement, no
Grantor shall reincorporate or reorganize itself under the laws of any
jurisdiction other than the jurisdiction in which it is incorporated or
organized as of the date hereof or change its type of entity as
identified on Schedule II without the prior written consent of Agent.
(l) Terminations Amendments Not Authorized. Each Grantor
acknowledges that it is not authorized to file any financing statement
or amendment or termination statement with respect to any financing
statement without the prior written consent of Agent and agrees that it
will not do so without the prior written consent of Agent, subject to
such Grantor's rights under Section 9-509(d)(2).
(m) No Restriction on Payments to Agent. No Grantor shall
enter into any Contract that restricts or prohibits the grant of a
security interest in Accounts, Chattel Paper, Instruments or payment
intangibles or the proceeds of the foregoing to Agent.
4. LOCATION OF COLLATERAL. (a) Each Grantor represents and warrants to
the Agent and the Lenders that: (A) Schedule I is a correct and complete list of
the location of such Grantor's chief executive office, the location of its books
and records, the locations of the Collateral, and the locations of all of its
other places of business; and (b) Schedule I correctly identifies any of such
facilities and locations that are not owned by a Grantor and sets forth the
names of the owners and lessors or sublessors of such facilities and locations.
Each Grantor covenants and agrees that it will not (i) maintain any Collateral
at any location other than those
locations listed for such Grantor on Schedule I, (ii) otherwise change or add to
any of such locations, or (iii) change the location of its chief executive
office from the location identified in Schedule I, unless it gives the Agent at
least thirty (30) days' prior written notice thereof and executes any and all
financing statements and other documents that the Agent reasonably requests in
connection therewith. Without limiting the foregoing, each Grantor represents
that all of its Inventory (other than Inventory in transit) is, and covenants
that all of its Inventory will be, located either (a) on premises owned by such
Grantor, (b) on premises leased by such Grantor, provided that the Agent has
received an executed landlord waiver from the landlord of such premises in form
and substance satisfactory to the Agent, (c) in a warehouse or with a bailee,
provided that the Agent has received an executed bailee letter from the
applicable Person in form and substance satisfactory to the Agent or (d) on
premises leased by such Grantor provided that such Grantor has notified the
Agent of the amount of the monthly rent for such premises and the Agent has made
adequate reserves therefor.
5. JURISDICTION OF ORGANIZATION. Schedule II hereto identifies each
Grantor's name as of the Closing Date as it appears in official filings in the
state of its incorporation or other organization, the type of entity of each
such Grantor (including corporation, partnership, limited partnership or limited
liability company), organizational identification number issued by Grantor's
state of incorporation or organization or a statement that no such number has
been issued and the jurisdiction in which such Grantor is incorporated or
organized. Each Grantor has only one state of incorporation or organization.
6. TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL. Each Grantor
represents and warrants to the Agent and the Lenders and agrees with the Agent
and the Lenders that: (a) such Grantor has rights in and the power to transfer
all of the Collateral free and clear of all Liens whatsoever, except for
Permitted Liens; (b) the Agent's Liens in the Collateral will not be subject to
any prior Lien except for those Liens identified in clauses (c), (d) and (e) of
the definition of Permitted Liens; and (c) such Grantor will use, store, and
maintain the Collateral with all reasonable care and will use such Collateral
for lawful purposes only.
7. APPRAISALS. At such reasonable times as the Agent requests, each
Grantor shall, at its expense, provide the Agent with appraisals or updates
thereof of any or all of the Collateral from an appraiser, and prepared on a
basis, satisfactory to the Agent, such appraisals and updates to include,
without limitation, information required by applicable law and regulation and by
the internal policies of the Lenders; provided, however, so long as no Default
or Event of Default exists, no Grantor shall be responsible for the expense of
more than two (2) such appraisals per calendar year.
8. ACCESS AND EXAMINATION. The Agent, accompanied by any Lender which
so elects, may at all reasonable times during regular business hours (and at any
time when a Default or Event of Default exists and is continuing) have access
to, examine, audit, make extracts from or copies of and inspect any or all of
the Grantors' records, files, and books of account and the Collateral, and
discuss the Grantors' affairs with the Grantors' officers and management. Each
Grantor will deliver to the Agent any instrument necessary for the Agent to
obtain records from any service bureau maintaining records for such Grantor. The
Agent may, and at the direction of the Required Lenders shall, at any time when
a Default or Event of
Default exists, and at the Grantors' expense, make copies of all of the
Grantors' books and records, or require each Grantor to deliver such copies to
the Agent. The Agent may, without expense to the Agent, use such of the
Grantors' respective personnel, supplies, and Real Estate as may be reasonably
necessary for maintaining or enforcing the Agent's Liens. The Agent shall have
the right, at any time, in the Agent's name or in the name of a nominee of the
Agent, to verify the validity, amount or any other matter relating to the
Accounts, Inventory, or other Collateral, by mail, telephone, or otherwise.
9. COLLATERAL REPORTING. Each Grantor shall provide the Agent with the
documents specified in Section 5.2 of the Credit Agreement, each in form
satisfactory to the Agent and at the times specified in Section 5.2 of the
Credit Agreement, or more frequently if requested by the Agent. If any of a
Grantor's records or reports of the Collateral are prepared by an accounting
service or other agent, each Grantor hereby authorizes such service or agent to
deliver such records, reports, and related documents to the Agent, for
distribution to the Lenders.
10. ACCOUNTS.
(a) Each Grantor hereby represents and warrants to the Agent
and the Lenders, with respect to such Grantor's Accounts, that: (i)
each existing Account represents, and each future Account will
represent, a bona fide sale or lease and delivery of goods by such
Grantor, or rendition of services by such Grantor, in the ordinary
course of such Grantor's business; (ii) each existing Account is, and
each future Account will be, for a liquidated amount payable by the
Account Debtor thereon on the terms set forth in the invoice therefor
or in the schedule thereof delivered to the Agent, without any offset,
deduction, defense, or counterclaim except those known to such Grantor
and disclosed to the Agent and the Lenders pursuant to this Security
Agreement; (iii) no payment will be received with respect to any
Account, and no credit, discount, or extension, or agreement therefor
will be granted on any Account, except as reported to the Agent and the
Lenders in Borrowing Base Certificates delivered in accordance with
this Security Agreement; (iv) each copy of an invoice delivered to the
Agent by such Grantor will be a genuine copy of the original invoice
sent to the Account Debtor named therein; and (v) all goods described
in any invoice representing a sale of goods will have been delivered to
the Account Debtor and all services of such Grantor described in each
invoice will have been performed.
(b) No Grantor shall re-date any invoice or sale or make sales
on extended dating beyond that customary in such Grantor's business or
extend or modify any Account.
(c) No Grantor shall accept any note or other instrument
(except a check or other instrument for the immediate payment of money)
with respect to any Account without the Agent's written consent. If the
Agent consents to the acceptance of any such instrument, it shall be
considered as evidence of the Account and not payment thereof and such
Grantor will promptly deliver such instrument to the Agent, endorsed by
such Grantor to the Agent in a manner satisfactory in form and
substance to the Agent.
Regardless of the form of presentment, demand, notice of protest with
respect thereto, such Grantor shall remain liable thereon until such
instrument is paid in full.
(d) With respect to any disputes and claims in excess of
$250,000 with any Account Debtor, each Grantor agrees to settle,
contest, or adjust such dispute or claim at no expense to the Agent or
any Lender. No discount, credit or allowance shall be granted to any
such Account Debtor without the Agent's prior written consent, except
for discounts, credits and allowances made or given in the ordinary
course of a Grantor's business when no Event of Default exists
hereunder. The Agent may at all times when an Event of Default exists
hereunder, settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which the Agent or the Required
Lenders, as applicable, shall consider advisable and, in all cases, the
Agent will credit such Grantor's Loan Account with the net amounts
received by the Agent in payment of any Accounts.
(e) If an Account Debtor returns any Inventory to any Grantor
when no Event of Default exists, then such Grantor shall promptly
determine the reason for such return and shall issue a credit
memorandum to the Account Debtor in the appropriate amount. In the
event any Account Debtor returns Inventory to a Grantor when an Event
of Default exists, such Grantor, upon the request of the Agent, shall:
(i) hold the returned Inventory in trust for the Agent; (ii) segregate
all returned Inventory from all of its other property; (iii) dispose of
the returned Inventory solely according to the Agent's written
instructions; and (iv) not issue any credits or allowances with respect
thereto without the Agent's prior written consent. All returned
Inventory shall be subject to the Agent's Liens thereon. Whenever any
Inventory is returned, the related Account shall be deemed ineligible
to the extent of the amount owing by the Account Debtor with respect to
such returned Inventory and such returned Inventory shall not be
Eligible Inventory.
11. COLLECTION OF ACCOUNTS; PAYMENTS.
(a) Until the Agent notifies the Grantors to the contrary,
each Grantor shall make collection of all Accounts and other Collateral
for the Agent, shall receive all payments as the Agent's trustee, and
shall immediately deliver all payments in their original form duly
endorsed in blank into a Payment Account established for the account of
such Grantor at a Clearing Bank acceptable to the Agent, subject to a
Blocked Account Agreement. On or prior to the date hereof, each Grantor
shall establish a lock-box service for collections of Accounts at a
Clearing Bank acceptable to the Agent and subject to a Blocked Account
Agreement and other documentation acceptable to the Agent. Each Grantor
shall instruct all Account Debtors to make all payments directly to the
address established for such service. If, notwithstanding such
instructions, any Grantor receives any proceeds of Accounts, it shall
receive such payments as the Agent's trustee, and shall immediately
deliver such payments to the Agent in their original form duly endorsed
in blank or deposit them into a Payment Account, as the Agent may
direct. All collections received in any lock-box or Payment Account or
directly by any Grantor or the Agent, and all funds in any Payment
Account or other account to which such collections are deposited shall
be subject to the Agent's sole control and withdrawals by
such Grantor shall not be permitted. The Agent or the Agent's designee
may, at any time after the occurrence of an Event of Default, notify
Account Debtors that the Accounts have been assigned to the Agent and
of the Agent's security interest therein, and may collect them directly
and charge the collection costs and expenses to the Loan Account as a
Revolving Loan. So long as an Event of Default has occurred and is
continuing, each Grantor, at the Agent's request, shall execute and
deliver to the Agent such documents as the Agent shall require to grant
the Agent access to any post office box in which collections of
Accounts are received.
(b) If sales of Inventory are made or services are rendered
for cash, each Grantor shall immediately deliver to the Agent or
deposit into a Payment Account the cash which such Grantor receives.
(c) All payments including immediately available funds
received by the Agent at a bank account designated by it, will be the
Agent's sole property for its benefit and the benefit of the Lenders
and will be credited to the Loan Account (conditional upon final
collection) immediately upon receipt.
(d) In the event the Grantors repay all of the Obligations
upon the termination of the Credit Agreement or upon acceleration of
the Obligations, other than through the Agent's receipt of payments on
account of the Accounts or proceeds of the other Collateral, such
payment will be credited (conditioned upon final collection) to the
Grantor's Loan Account upon the Agent's receipt of immediately
available funds.
12. INVENTORY; PERPETUAL INVENTORY.
(a) Each Grantor represents and warrants to the Agent and the
Lenders and agrees with the Agent and the Lenders that all of the
Inventory owned by such Grantor is and will be held for sale or lease,
or to be furnished in connection with the rendition of services, in the
ordinary course of such Grantor's business, and is and will be fit for
such purposes. Each Grantor will keep its Inventory in good and
marketable condition, except for damaged or defective goods arising in
the ordinary course of such Grantor's business. No Grantor will,
without the prior written consent of the Agent, acquire or accept any
Inventory on consignment or approval. Each Grantor agrees that all
Inventory produced by such Grantor in the United States of America will
be produced in accordance with the Federal Fair Labor Standards Act of
1938, as amended, and all rules, regulations, and orders thereunder.
Each Grantor will conduct a physical or cycle count of the Inventory at
least once per Fiscal Year, and after and during the continuation of an
Event of Default, at such other times as the Agent requests. Each
Grantor will maintain a perpetual inventory reporting system at all
times. No Grantor will, without the Agent's written consent, sell any
Inventory on a ▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on
approval, consignment, or other repurchase or return basis.
(b) In connection with all Inventory financed by Letters of
Credit, each Grantor will, at the Agent's request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others
receiving or holding cash, checks, Inventory, Documents
or Instruments in which the Agent holds a security interest to deliver
them to the Agent and/or subject to the Agent's order, and if they
shall come into such Grantor's possession, to deliver them, upon
request, to the Agent in their original form. Each Grantor shall also,
at the Agent's request, designate the Agent as the consignee on all
bills of lading and other negotiable and non-negotiable documents.
13. ASSIGNED CONTRACTS. Each Grantor shall fully perform all of its
obligations under each of the Assigned Contracts, and shall enforce all of its
rights and remedies thereunder, in each case, as it deems appropriate in its
business judgment; provided, however, that no Grantor shall take any action or
fail to take any action with respect to its Assigned Contracts which would cause
the termination of a material Assigned Contract. Without limiting the generality
of the foregoing, each Grantor shall take all action necessary or appropriate to
permit, and shall not take any action which would have any materially adverse
effect upon, the full enforcement of all indemnification rights under its
Assigned Contracts. Each Grantor shall deposit into the Payment Account or remit
directly to the Agent for application to the Obligations in such order as the
Required Lenders shall determine, all amounts received by such Grantor as
indemnification or otherwise pursuant to its Assigned Contracts. If any Grantor
shall fail after the Agent's demand to pursue diligently any right under its
Assigned Contracts, or if an Event of Default then exists, the Agent may, and at
the direction of the Required Lenders shall, directly enforce such right in its
own or such Grantor's name and may enter into such settlements or other
agreements with respect thereto as the Agent or the Required Lenders, as
applicable, shall determine. In any suit, proceeding or action brought by the
Agent for the benefit of the Lenders under any Assigned Contract for any sum
owing thereunder or to enforce any provision thereof, each Grantor shall
indemnify and hold the Agent and Lenders harmless from and against all expense,
loss or damage suffered by reason of any defense, setoff, counterclaims,
recoupment, or reduction of liability whatsoever of the obligor thereunder
arising out of a breach by such Grantor of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing from
such Grantor to or in favor of such obligor or its successors. All such
obligations of the Grantors shall be and remain enforceable only against the
Grantors and shall not be enforceable against the Agent or the Lenders.
Notwithstanding any provision hereof to the contrary, each Grantor shall at all
times remain liable to observe and perform all of its duties and obligations
under its Assigned Contracts, and the Agent's or any Lender's exercise of any of
their respective rights with respect to the Collateral shall not release such
Grantor from any of such duties and obligations. Neither the Agent nor any
Lender shall be obligated to perform or fulfill any of the Grantors' duties or
obligations under its Assigned Contracts or to make any payment thereunder, or
to make any inquiry as to the nature or sufficiency of any payment or property
received by it thereunder or the sufficiency of performance by any party
thereunder, or to present or file any claim, or to take any action to collect or
enforce any performance, any payment of any amounts, or any delivery of any
property.
14. DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER. Each Grantor represents
and warrants to the Agent and the Lenders that (a) all Documents, Instruments,
and Chattel Paper describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon, are and will be complete, valid, and
genuine, and (b) all goods evidenced by such Documents, Instruments, Letter of
Credit Rights and Chattel Paper are and will be owned by such Grantor, free and
clear of all Liens other than Permitted Liens. If a Grantor
retains possession of any Chattel Paper or Instruments with Agent's consent,
such Chattel Paper and Instruments shall be marked with the following legend:
"This writing and the obligations evidenced or served hereby are subject to the
security interest of Bank of America, N.A., as Agent, for the benefit of Agent
and certain Lenders."
15. RIGHT TO CURE. The Agent may, in its discretion, and shall, at the
direction of the Required Lenders, pay any amount or do any act required of any
Grantor hereunder or under any other Loan Document in order to preserve or
protect the Collateral or the Agent's Liens therein, and which such Grantor
fails to pay or do, including payment of any judgment against such Grantor, any
insurance premium, any warehouse charge, any finishing or processing charge, any
landlord's or bailee's claim, and any other Lien upon or with respect to the
Collateral; provided that any payments made by the Agent under this Section 15
shall not at any one time outstanding exceed 10% of the Borrowing Base but not
in excess of the Maximum Revolver Amount; provided further, that the Majority
Lenders may at any time revoke the Agent's authorization to make such payments.
All payments that the Agent makes under this Section 15 and all out-of-pocket
costs and expenses that the Agent pays or incurs in connection with any action
taken by it hereunder shall be charged to such Grantor's Loan Account as a
Revolving Loan. Any payment made or other action taken by the Agent under this
Section 15 shall be without prejudice to any right to assert an Event of Default
hereunder and to proceed thereafter as herein provided.
16. POWER OF ATTORNEY. Each Grantor hereby appoints the Agent and the
Agent's designee as such Grantor's attorney, with power: (a) to endorse such
Grantor's name on any checks, notes, acceptances, money orders, or other forms
of payment or security that come into the Agent's or any Lender's possession;
(b) to sign such Grantor's name on any invoice, ▇▇▇▇ of lading, warehouse
receipt or other negotiable or non-negotiable Document constituting Collateral,
on drafts against customers, on assignments of Accounts, on notices of
assignment, financing statements and other public records and to file any such
financing statements by electronic means with or without a signature as
authorized or required by applicable law or filing procedure; (c) so long as any
Event of Default has occurred and is continuing, to notify the post office
authorities to change the address for delivery of such Grantor's mail to an
address designated by the Agent and to receive, open and dispose of all mail
addressed to such Grantor and concurrent with such notification, the Agent
shall, if not otherwise prohibited by applicable law, notify the Grantor of such
action; (d) to send requests for verification of Accounts to customers or
Account Debtors; (e) to complete in such Grantor's name or the Agent's name, any
order, sale or transaction, obtain the necessary Documents in connection
therewith, and collect the proceeds thereof; (f) to clear Inventory through
customs in such Grantor's name, the Agent's name or the name of the Agent's
designee, and to sign and deliver to customs officials powers of attorney in
such Grantor's name for such purpose; (g) to the extent that such Grantor's
authorization given in Section 3(g) of this Security Agreement is not
sufficient, to file such financing statements with respect to this Security
Agreement, with or without such Grantor's signature, or to file a photocopy of
this Security Agreement in substitution for a financing statement, as the Agent
may deem appropriate and to execute in such Grantor's name such financing
statements and amendments thereto and continuation statements which may require
such Grantor's signature; and (h) to do all things necessary to carry out the
Credit Agreement and this Security Agreement. Each Grantor ratifies and approves
all acts of such attorney. None
of the Lenders or the Agent nor their attorneys will be liable for any acts or
omissions or for any error of judgment or mistake of fact or law except for
their willful misconduct. This power, being coupled with an interest, is
irrevocable until the Credit Agreement has been terminated and the Obligations
have been fully satisfied.
17. THE AGENT'S AND LENDERS' RIGHTS, DUTIES AND LIABILITIES.
(a) Each Grantor assumes all responsibility and liability
arising from or relating to the use, sale, license or other disposition
of the Collateral. The Obligations shall not be affected by any failure
of the Agent or any Lender to take any steps to perfect the Agent's
Liens or to collect or realize upon the Collateral, nor shall loss of
or damage to the Collateral release any Grantor from any of the
Obligations. Following the occurrence and during the continuation of an
Event of Default, the Agent may (but shall not be required to), and at
the direction of the Required Lenders shall, without notice to or
consent from any Grantor, ▇▇▇ upon or otherwise collect, extend the
time for payment of, modify or amend the terms of, compromise or settle
for cash, credit, or otherwise upon any terms, grant other indulgences,
extensions, renewals, compositions, or releases, and take or omit to
take any other action with respect to the Collateral, any security
therefor, any agreement relating thereto, any insurance applicable
thereto, or any Person liable directly or indirectly in connection with
any of the foregoing, without discharging or otherwise affecting the
liability of any Grantor for the Obligations or under the Credit
Agreement or any other agreement now or hereafter existing between the
Agent and/or any Lender and any Grantor.
(b) It is expressly agreed by Grantors that, anything herein
to the contrary notwithstanding, each Grantor shall remain liable under
each of its contracts and each of its licenses to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder. Neither Agent nor any Lender shall have any obligation or
liability under any contract or license by reason of or arising out of
this Security Agreement or the granting herein of a Lien thereon or the
receipt by Agent or any Lender of any payment relating to any contract
or license pursuant hereto. Neither Agent nor any Lender shall be
required or obligated in any manner to perform or fulfill any of the
obligations of any Grantor under or pursuant to any contract or
license, or to make any payment, or to make any inquiry as to the
nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any contract or
license, or to present or file any claims, or to take any action to
collect or enforce any performance or the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time
or times.
(c) Agent may at any time after a Default or an Event of
Default has occurred and is continuing (or if any rights of set-off
(other than set-offs against an Account arising under the contract
giving rise to the same Account) or contra accounts may be asserted
with respect to the following), without prior notice to any Grantor,
notify Account Debtors, and other Persons obligated on the Collateral
that Agent has a security interest therein, and that payments shall be
made directly to Agent, for itself and the benefit of Lenders. Upon the
request of Agent, each Grantor shall so notify Account
Debtors and other Persons obligated on the Collateral. Once any such
notice has been given to any Account Debtor or other Person obligated
on the Collateral, no Grantor shall give any contrary instructions to
such Account Debtor or other Person without Agent's prior written
consent.
(d) Agent may at any time in Agent's own name or in the name
of a Grantor communicate with Account Debtors, parties to Contracts and
obligors in respect of Instruments to verify with such Persons, to
Agent's satisfaction, the existence, amount and terms of Accounts,
payment intangibles, Instruments or Chattel Paper. If a Default or
Event of Default shall have occurred and be continuing, each Grantor,
at its own expense, shall cause the independent certified public
accountants then engaged by such Grantor to prepare and deliver to
Agent and each Lender at any time and from time to time promptly upon
Agent's request the following reports with respect to such Grantor: (i)
a reconciliation of all Accounts; (ii) an aging of all Accounts; (iii)
trial balances; and (iv) a test verification of such Accounts as Agent
may request. Each Grantor, at its own expense, shall deliver to Agent
the results of each physical verification, if any, which such Grantor
may in its discretion have made, or caused any other Person to have
made on its behalf, of all or any portion of its Inventory.
18. PATENT, TRADEMARK AND COPYRIGHT COLLATERAL.
(a) No Grantor has any interest in, or title to, any patent,
material trademark or copyright except as set forth in Schedule III
hereto. This Security Agreement is effective to create a valid and
continuing Lien on and, upon filing of the Notice of Security Interest
in Copyrights with the United States Copyright Office and filing of
both the Notice of Security Interest in Patents and the Notice of
Security Interest in Trademarks with the United States Patent and
Trademark Office, perfected Liens in favor of Agent on each Grantor's
patents, material trademarks and copyrights and such perfected Liens
are enforceable as such as against any and all creditors of and
purchasers from such Grantor. Upon filing of the Notice of Security
Interest in Copyrights, in the form of Schedule IV hereto, with the
United States Copyright Office and filing of both the Notice of
Security Interest in Patents, in the form of Schedule V hereto, and the
Notice of Security Interest in Trademarks, in the form of Schedule VI
hereto, with the United States Patent and Trademark Office and the
filing of appropriate financing statements, all action necessary or
desirable to protect and perfect Agent's Lien on such Grantor's
patents, material trademarks or copyrights shall have been duly taken.
(b) [Reserved]
(c) In no event shall any Grantor, either directly or through
any agent, employee, licensee or designee, file an application for the
registration of any patent, material trademark or copyright with the
United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency without giving Agent prior
written notice thereof, and, upon request of Agent, each Grantor shall
execute and deliver any and all Notices of Security Interest in
Copyrights, Notices of Security Interest in Patents and/or Notices of
Security Interest in Trademarks as Agent may request to
evidence Agent's Lien on such patent, material trademark or copyright,
and the General Intangibles of such Grantor relating thereto or
represented thereby.
(d) Each Grantor shall take all actions necessary or requested
by Agent to maintain and pursue each application, to obtain the
relevant registration and to maintain the registration of each of the
patents, material trademarks and copyrights (now or hereafter
existing), including the filing of applications for renewal, affidavits
of use, affidavits of noncontestability and opposition and interference
and cancellation proceedings.
(e) In the event that any of the patent, trademark or
copyright Collateral is infringed upon, or misappropriated or diluted
by a third party, the affected Grantor shall, unless it shall
reasonably determine that such patent, trademark or copyright
Collateral is in no way material to the conduct of its business or
operations, promptly ▇▇▇ for infringement, misappropriation or dilution
and to recover any and all damages for such infringement,
misappropriation or dilution, and shall take such other actions as
Agent shall deem appropriate under the circumstances to protect such
patent, trademark or copyright Collateral.
19. INDEMNIFICATION. In any suit, proceeding or action brought by Agent
or any Lender relating to any Collateral for any sum owing with respect thereto
or to enforce any rights or claims with respect thereto, each Grantor will save,
indemnify and keep Agent and Lenders harmless from and against all expense
(including reasonable attorneys' fees and expenses), loss or damage suffered by
reason of any defense, setoff, counterclaim, recoupment or reduction of
liability whatsoever of the Account Debtor or other Person obligated on the
Collateral, arising out of a breach by such Grantor of any obligation thereunder
or arising out of any other agreement, indebtedness or liability at any time
owing to, or in favor of, such obligor or its successors from such Grantor,
except in the case of Agent or any Lender, to the extent such expense, loss, or
damage is attributable solely to the gross negligence or willful misconduct of
Agent or such Lender as finally determined by a court of competent jurisdiction.
All such obligations of such Grantor shall be and remain enforceable against and
only against such Grantor and shall not be enforceable against Agent or any
Lender.
20. LIMITATION ON LIENS ON COLLATERAL. No Grantor shall create, permit
or suffer to exist, and each Grantor shall defend the Collateral against, and
take such other action as is necessary to remove, any Lien on the Collateral
except Permitted Liens, and shall defend the right, title and interest of Agent
and Lenders in and to any of such Grantor's rights under the Collateral against
the claims and demands of all Persons whomsoever.
21. [Reserved]
22. REMEDIES; RIGHTS UPON DEFAULT.
(a) In addition to all other rights and remedies granted to it
under this Security Agreement, the Credit Agreement, the other Loan
Documents and under any other instrument or agreement securing,
evidencing or relating to any of the Obligations, if any
Event of Default shall have occurred and be continuing, Agent may
exercise all rights and remedies of a secured party under the UCC.
Without limiting the generality of the foregoing, each Grantor
expressly agrees that in any such event Agent, without demand of
performance or other demand, advertisement or notice of any kind
(except the notice specified below of time and place of public or
private sale) to or upon such Grantor or any other Person (all and each
of which demands, advertisements and notices are hereby expressly
waived to the maximum extent permitted by the UCC and other applicable
law), may forthwith enter upon the premises of such Grantor where any
Collateral is located through self-help, without judicial process,
without first obtaining a final judgment or giving such Grantor or any
other Person notice and opportunity for a hearing on Agent's claim or
action and may collect, receive, assemble, process, appropriate and
realize upon the Collateral, or any part thereof, and may forthwith
sell, lease, license, assign, give an option or options to purchase, or
sell or otherwise dispose of and deliver said Collateral (or contract
to do so), or any part thereof, in one or more parcels at a public or
private sale or sales, at any exchange at such prices as it may deem
acceptable, for cash or on credit or for future delivery without
assumption of any credit risk. Agent or any Lender shall have the right
upon any such public sale or sales and, to the extent permitted by law,
upon any such private sale or sales, to purchase for the benefit of
Agent and Lenders, the whole or any part of said Collateral so sold,
free of any right or equity of redemption, which equity of redemption
each Grantor hereby releases. Such sales may be adjourned and continued
from time to time with or without notice. Agent shall have the right to
conduct such sales on each Grantor's premises or elsewhere and shall
have the right to use such Grantor's premises without charge for such
time or times as Agent deems necessary or advisable.
(b) Each Grantor further agrees, at Agent's request, to
assemble the Collateral and make it available to Agent at a place or
places designated by Agent which are reasonably convenient to Agent and
such Grantor, whether at such Grantor's premises or elsewhere. Until
Agent is able to effect a sale, lease, or other disposition of
Collateral, Agent shall have the right to hold or use Collateral, or
any part thereof, to the extent that it deems appropriate for the
purpose of preserving Collateral or its value or for any other purpose
deemed appropriate by Agent. Agent shall have no obligation to any
Grantor to maintain or preserve the rights of such Grantor as against
third parties with respect to Collateral while Collateral is in the
possession of Agent. Agent may, if it so elects, seek the appointment
of a receiver or keeper to take possession of Collateral and to enforce
any of Agent's remedies (for the benefit of Agent and Lenders), with
respect to such appointment without prior notice or hearing as to such
appointment. Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale to the
Obligations as provided in the Credit Agreement, and only after so
paying over such net proceeds, and after the payment by Agent of any
other amount required by any provision of law, need Agent account for
the surplus, if any, to such Grantor. To the maximum extent permitted
by applicable law, each Grantor waives all claims, damages, and demands
against Agent or any Lender arising out of the repossession, retention
or sale of the Collateral except such as arise solely out of the gross
negligence or willful misconduct of Agent or such Lender as finally
determined by a court of competent jurisdiction. Each Grantor agrees
that ten (10) days prior notice by Agent of the time and
place of any public sale or of the time after which a private sale may
take place is reasonable notification of such matters. Each Grantor
shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all Obligations,
including any attorneys' fees or other expenses incurred by Agent or
any Lender to collect such deficiency.
(c) Except as otherwise specifically provided herein, each
Grantor hereby waives presentment, demand, protest or any notice (to
the maximum extent permitted by applicable law) of any kind in
connection with this Security Agreement or any Collateral.
(d) To the extent that applicable law imposes duties on the
Agent to exercise remedies in a commercially reasonable manner, each
Grantor acknowledges and agrees that it is not commercially
unreasonable for the Agent (a) to fail to incur expenses reasonably
deemed significant by the Agent to prepare Collateral for disposition
or otherwise to complete raw material or work in process into finished
goods or other finished products for disposition, (b) to fail to obtain
third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental
or third party consents for the collection or disposition of Collateral
to be collected or disposed of, (c) to fail to exercise collection
remedies against Account Debtors or other Persons obligated on
Collateral or to remove Liens on or any adverse claims against
Collateral, (d) to exercise collection remedies against Account Debtors
and other Persons obligated on Collateral directly or through the use
of collection agencies and other collection specialists, (e) to
advertise dispositions of Collateral through publications or media of
general circulation, whether or not the Collateral is of a specialized
nature, (f) to contact other Persons, whether or not in the same
business as such Grantor, for expressions of interest in acquiring all
or any portion of such Collateral, (g) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not
the Collateral is of a specialized nature, (h) to dispose of Collateral
by utilizing internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable
capacity of doing so, or that match buyers and sellers of assets, (i)
to dispose of assets in wholesale rather than retail markets, (j) to
disclaim disposition warranties, such as title, possession or quiet
enjoyment, (k) to purchase insurance or credit enhancements to insure
the Agent against risks of loss, collection or disposition of
Collateral or to provide to the Agent a guaranteed return from the
collection or disposition of Collateral, or (l) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist the
Agent in the collection or disposition of any of the Collateral. Each
Grantor acknowledges that the purpose of this Section 22(d) is to
provide non-exhaustive indications of what actions or omissions by the
Agent would not be commercially unreasonable in the Agent's exercise of
remedies against the Collateral and that other actions or omissions by
the Agent shall not be deemed commercially unreasonable solely on
account of not being indicated in this Section 22(d). Without
limitation upon the foregoing, nothing contained in this Section 22(d)
shall be construed to grant any rights to any Grantor or to impose any
duties on Agent that would not have been granted or imposed by this
Security Agreement or by applicable law in the absence of this Section
22(d).
23. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY. For the purpose of
enabling Agent to exercise rights and remedies under Section 22 hereof
(including, without limiting the terms of Section 22 hereof, in order to take
possession of, hold, preserve, process, assemble, prepare for sale, market for
sale, sell or otherwise dispose of Collateral) at such time as Agent shall be
lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to Agent, for the benefit of Agent and Lenders, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to any Grantor) to use, license or sublicense any Intellectual
Property now owned or hereafter acquired by any Grantor, and wherever the same
may be located, and including in such license access to all media in which any
of the licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof.
24. LIMITATION ON AGENT'S AND LENDERS' DUTY IN RESPECT OF COLLATERAL.
Agent and each Lender shall use reasonable care with respect to the Collateral
in its possession or under its control. Neither Agent nor any Lender shall have
any other duty as to any Collateral in its possession or control or in the
possession or control of any agent or nominee of Agent or such Lender, or any
income thereon or as to the preservation of rights against prior parties or any
other rights pertaining thereto.
25. MISCELLANEOUS.
(a) Reinstatement. This Security Agreement shall remain in
full force and effect and continue to be effective should any petition
be filed by or against any Grantor for liquidation or reorganization,
should any Grantor become insolvent or make an assignment for the
benefit of any creditor or creditors or should a receiver or trustee be
appointed for all or any significant part of any Grantor's assets, and
shall continue to be effective or be reinstated, as the case may be, if
at any time payment and performance of the Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent
conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof,
is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
(b) Notices. Except as otherwise provided herein, whenever it
is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served
upon any of the parties by any other party, or whenever any of the
parties desires to give and serve upon any other party any
communication with respect to this Security Agreement, each such
notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be given in the manner, and
deemed received, as provided for in the Credit Agreement.
(c) Severability. Whenever possible, each provision of this
Security Agreement shall be interpreted in a manner as to be effective
and valid under applicable law, but if any provision of this Security
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the
remaining provisions of this Security Agreement. This Security
Agreement is to be read, construed and applied together with the Credit
Agreement and the other Loan Documents which, taken together, set forth
the complete understanding and agreement of Agent, Lenders and the
Grantors with respect to the matters referred to herein and therein.
(d) No Waiver; Cumulative Remedies. Neither Agent nor any
Lender shall by any act, delay, omission or otherwise be deemed to have
waived any of its rights or remedies hereunder, and no waiver shall be
valid unless in writing, signed by Agent and then only to the extent
therein set forth. A waiver by Agent of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or
remedy which Agent would otherwise have had on any future occasion. No
failure to exercise nor any delay in exercising on the part of Agent or
any Lender, any right, power or privilege hereunder, shall operate as a
waiver thereof, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or future exercise
thereof or the exercise of any other right, power or privilege. The
rights and remedies hereunder provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights
and remedies provided by law. None of the terms or provisions of this
Security Agreement may be waived, altered, modified or amended except
by an instrument in writing, duly executed by Agent and the Grantors.
(e) Limitation by Law. All rights, remedies and powers
provided in this Security Agreement may be exercised only to the extent
that the exercise thereof does not violate any applicable provision of
law, and all the provisions of this Security Agreement are intended to
be subject to all applicable mandatory provisions of law that may be
controlling and to be limited to the extent necessary so that they
shall not render this Security Agreement invalid, unenforceable, in
whole or in part, or not entitled to be recorded, registered or filed
under the provisions of any applicable law.
(f) Termination of this Security Agreement. Subject to Section
25(a) hereof, this Security Agreement shall terminate upon the
satisfactory collateralization of all Letters of Credit and the payment
in full in cash of all other Obligations (other than indemnification
Obligations as to which no claim has been asserted).
(g) Successors and Assigns. This Security Agreement and all
obligations of the Grantors hereunder shall be binding upon the
successors and assigns of each Grantor (including any
debtor-in-possession on behalf of any Grantor) and shall, together with
the rights and remedies of Agent, for the benefit of Agent and Lenders,
hereunder, inure to the benefit of Agent and Lenders, all future
holders of any instrument evidencing any of the Obligations and their
respective successors and assigns. No sales of participations, other
sales, assignments, transfers or other dispositions of any agreement
governing or instrument evidencing the Obligations or any portion
thereof or interest therein shall in
any manner affect the Lien granted to Agent, for the benefit of Agent
and Lenders, hereunder. No Grantor may assign, sell, hypothecate or
otherwise transfer any interest in or obligation under this Security
Agreement.
(h) Counterparts. This Security Agreement may be authenticated
in any number of separate counterparts, each of which shall
collectively and separately constitute one and the same agreement. This
Security Agreement may be authenticated by manual signature, facsimile
or, if approved in writing by Agent, electronic means, all of which
shall be equally valid.
(i) Governing Law. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE, AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH GRANTOR HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN
MECKLENBURG COUNTY, CITY OF CHARLOTTE, SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY
GRANTOR, AGENT AND LENDERS PERTAINING TO THIS SECURITY AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING
TO THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENT, LENDERS AND GRANTORS ACKNOWLEDGE THAT ANY APPEALS
FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF
MECKLENBURG COUNTY, CITY OF CHARLOTTE, AND, PROVIDED, FURTHER, NOTHING
IN THIS SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
AGENT. EACH GRANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
EACH GRANTOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH GRANTOR HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH IN SECTION 14.8
OF THE CREDIT AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
(j) Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE
PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT DISPUTES ARISING HEREUNDER
OR RELATING HERETO BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE
LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE
JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE
ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG
AGENT, LENDERS, AND THE GRANTORS ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED IN CONNECTION
WITH, THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO.
(k) Section Titles. The Section titles contained in this
Security Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement
between the parties hereto.
(l) No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Security
Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Security Agreement shall be construed as if
drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Security Agreement.
(m) Advice of Counsel. Each of the parties represents to each
other party hereto that it has discussed this Security Agreement and,
specifically, the provisions of Section 25(i) and Section 25(j), with
its counsel.
(n) Benefit of Lenders. All Liens granted or contemplated
hereby shall be for the benefit of Agent and Lenders, and all proceeds
or payments realized from Collateral in accordance herewith shall be
applied to the Obligations in accordance with the terms of the Credit
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.
GRANTORS:
UNIFI, INC., a New York corporation
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
Title: Executive Vice President & CFO
UNIFI SALES & DISTRIBUTION, INC.,
a North Carolina corporation
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
Title: Executive Vice President & CFO
UNIFI MANUFACTURING, INC.,
a North Carolina corporation
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
Title: Executive Vice President & CFO
GLENTOUCH YARN COMPANY, LLC,
a North Carolina limited liability company
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
Title: Executive Vice President & CFO
UNIFI MANUFACTURING VIRGINIA, LLC,
a North Carolina limited liability company
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
Title: Executive Vice President & CFO
UNIFI EXPORT SALES, LLC,
a North Carolina limited liability company
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
Title: Executive Vice President & CFO
UNIFI TEXTURED POLYESTER, LLC,
a North Carolina limited liability company
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
Title: Executive Vice President & CFO
AGENT:
Bank of America, N.A., as the Agent
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: SVP