EXHIBIT 4.6
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AMERICAN BILTRITE INC.
K&M ASSOCIATES L.P.
THE SUBSIDIARIES PARTY HERETO
SECURITY AGREEMENT
Dated as of October 14, 2003
FLEET NATIONAL BANK, AS COLLATERAL AGENT
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TABLE OF CONTENTS
Page
1. Reference to Credit Agreement and Note Purchase Agreement;
Definitions; Certain Rules of Construction..............................1
2. Actions by Collateral Agent..............................................3
3. Security.................................................................3
3.1. Credit Security...............................................3
3.2. Additional Credit Security....................................7
3.3. Certain Covenants with Respect to Credit Security ...........7
3.4. Administration of Credit Security............................14
3.5. Right to Realize upon Credit Security........................16
3.6. Representations and Warranties...............................19
4. Successors and Assigns; Future Lenders..................................21
4.1. Successors and Assigns.......................................21
5. Expenses; Indemnity.....................................................21
5.1. Expenses.....................................................21
5.2. General Indemnity............................................21
5.3. Indemnity with Respect to Credit Security....................22
6. Continuing Agreement, Defeasance, Etc...................................22
6.1. Continuing Agreement.........................................22
6.2. Defeasance...................................................22
7. Notices.................................................................22
8. Venue; Service of Process...............................................23
9. WAIVER OF JURY TRIAL....................................................24
10.General.................................................................24
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AMERICAN BILRITE INC.
K&M ASSOCIATES, L.P.
SECURITY AGREEMENT
This Agreement, dated as of October 14, 2003, is among American
Biltrite Inc., a Delaware corporation ("the "Company"), K&M Associates L.P., a
Rhode Island limited partnership ("K&M"; the Company and K&M being
collectively the "Borrowers" and each a "Borrower"), the Subsidiaries of the
Company from time to time party hereto and Fleet National Bank, as collateral
agent (the "Collateral Agent") for itself, the other Lenders under the Credit
Agreement (as defined below) and the Noteholders under the Note Purchase
Agreement (as defined below). The parties agree as follows:
1. Reference to Credit Agreement and Note Purchase Agreement;
Definitions; Certain Rules of Construction. Reference is made to (i) the
Credit Agreement dated as of the date hereof, as from time to time in effect
(the "Credit Agreement"), among the Borrowers, the Lenders and Fleet National
Bank in its capacity as administrative agent for the Lenders and (ii) the Note
Purchase and Private Shelf Agreement and Facility Guarantee dated as of August
28, 2001, as from time to time in effect (the "Note Purchase Agreement"),
among the Company, K&M and The Prudential Insurance Company of America
("Prudential"). Capitalized terms defined in the Credit Agreement and not
otherwise defined herein are used herein with the meanings so defined as of
the date hereof and whether or not such Credit Agreement has been amended or
terminated. Certain other capitalized terms are used in this Agreement as
specifically defined below in this Section 1. Except as the context otherwise
explicitly requires, (a) the capitalized term "Section" refers to sections of
this Agreement, (b) the capitalized term "Exhibit" refers to exhibits to this
Agreement, (c) references to a particular Section shall include all
subsections thereof, (d) the word "including" shall be construed as "including
without limitation", (e) terms defined in the UCC and not otherwise defined
herein have the meaning provided under the UCC, (f) references to a particular
statute or regulation include all rules and regulations thereunder and any
successor statute, regulation or rules, in each case as from time to time in
effect and (g) references to a particular Person include such Person's
successors and assigns to the extent not prohibited by this Agreement and the
other Secured Credit Documents. References to "the date hereof" mean the date
first set forth above.
"Account Debtor" shall have the meaning given to such term in Article
9 of the UCC.
"Accounts" is defined in Section 3.1.2.
"Agreement" means this Security Agreement as from time to time in
effect.
"Collateral Agent" means Fleet National Bank in its capacity as
Collateral Agent under this Agreement.
"Event of Default" solely for purposes of this Agreement shall mean
an Event of Default as defined in the Credit Agreement or an Event of Default
as defined in the Note Purchase Agreement.
"Majority Holders" means the holders of not less than a majority of
the outstanding amount of the Note Obligations.
"Material Contract" means any contract identified as a "Material
Contract" in the Perfection Certificate delivered on the date hereof (except
for those contracts excluded by Section 3.1.15(a) and listed on Exhibit
3.1.15(a) hereto), or any other contract that is identified to the Collateral
Agent as a Material Contract pursuant to the terms of Section 3.6.
"Noteholders" means the holders of the Note Obligations.
"Note Obligations" means the obligations under the Note Purchase
Agreement and any documents executed in connection with the transactions
contemplated by the Note Purchase Agreement including, but not limited to, the
Notes as such term is defined in the Note Purchase Agreement, including,
without limitation, any fees, interest, and Yield Maintenance Amount (as
defined in the Note Purchase Agreement).
"Obligors" means the Company, K&M and the Subsidiaries of the Company
party hereto from time to time.
"Pledged Indebtedness" is defined in Section 3.1.6.
"Pledged Rights" is defined in Section 3.1.5.
"Pledged Securities" means the Pledged Stock, the Pledged Rights and
the Pledged Indebtedness, collectively.
"Pledged Stock" is defined in Section 3.1.4.
"Secured Credit Documents" means (i) the Credit Documents and (ii)
the Note Purchase Agreement and any documents executed in connection with the
transactions contemplated by the Note Purchase Agreement including, but not
limited to, the Notes as such term is defined in the Note Purchase Agreement.
"Secured Obligations" means (i) the Credit Obligations and (ii) the
Note Obligations.
"Side Letter Agreement" means the Side Letter Agreement dated the
date hereof among the Company, K&M and Fleet as Agent.
"Supporting Obligation" shall mean all "supporting obligations" as
defined in the UCC.
"UCC" means the Uniform Commercial Code as in effect in New York on
the date hereof; provided, however, that with respect to the perfection of the
Collateral Agent's Lien on the Credit Security and the effect of nonperfection
thereof, the term "UCC" means the Uniform
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Commercial Code as in effect in any jurisdiction the laws of which are made
applicable by section 9-301 of the Uniform Commercial Code as in effect in New
York.
2. Actions by Collateral Agent.
2.1. Actions by the Collateral Agent. The Collateral Agent shall not
take any action in connection with the enforcement or exercise of any remedies
in respect of the Secured Obligations, and shall not be obligated to take any
such action, except to the extent expressly specified in (a) a written notice
received by the Collateral Agent signed by Lenders holding not less than a
majority of the outstanding amount of the Credit Obligations and (b) a written
notice received by the Collateral Agent signed by the Majority Holders.
Notwithstanding the foregoing, to the extent any Lender or any Noteholder
requests that the Collateral Agent take any action expressly permitted by this
Agreement, the Collateral Agent shall promptly take such action. All actions
taken by the Collateral Agent in accordance with this Section 2.1 shall be
binding upon all Lenders and the Noteholders; provided, however, that the
foregoing shall not be deemed a waiver of any Lender's or any Noteholder's
rights against any other party hereto with respect to the taking of such
action. The Collateral Agent agrees that it shall promptly forward to the
Lenders and the Noteholders any notices that it receives pursuant to this
Agreement.
3. Security.
3.1. Credit Security. As security for the payment and performance of
the Secured Obligations, each Obligor party hereto mortgages, pledges and
collaterally grants and assigns to the Collateral Agent for the benefit of the
Noteholders, the Lenders and the holders from time to time of any Secured
Obligation, and creates a security interest in favor of the Collateral Agent
for the benefit of the Noteholders, the Lenders and such holders in, all of
such Obligor's right, title and interest in and to (but none of its
obligations or liabilities with respect to) the items and types of present and
future property described in Sections 3.1.1 through 3.1.14, whether now owned
or hereafter acquired, all of which shall be included in the term "Credit
Security":
3.1.1. Tangible Personal Property. All goods, machinery,
equipment, inventory, all materials used or consumed in the
manufacture, packing, shipping, advertising, selling, leasing,
furnishing or production of such inventory or otherwise used or
consumed in any Obligor's business; all goods in which any Obligor
has an interest in mass or a joint or other interest or right of any
kind; and all goods which are returned to or repossessed by any
Obligor, and all accessions thereto and products thereof (in each
case, regardless of whether characterized as inventory under the
UCC), and all other tangible personal property of any nature
whatsoever, wherever located in the United States, including raw
materials, work in process, finished parts and products, supplies,
spare parts, replacement parts, merchandise for resale, computers,
tapes, disks and computer equipment.
3.1.2. Rights to Payment of Money. All rights to receive the
payment of money, including accounts and receivables, health care
insurance receivables, rights to receive the payment of money under
contracts, franchises, licenses, permits, subscriptions or other
agreements (whether or not earned by performance), and rights to
receive payments
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from any other source (all such rights, other than Financing Debt,
being referred to herein as "Accounts").
3.1.3. Intangibles. All of the following (to the extent not
included in Section 3.1.2): (a) contracts, franchises, licenses,
permits, subscriptions and other agreements and all rights
thereunder; (b) rights granted by others which permit such Obligor to
sell or market items of personal property; (c) United States
copyrights and rights in literary property and rights and licenses
thereunder and any and all registrations and applications to register
the copyrights in said works and all copyrights and moral rights in
said works under United States law; (d) trade names, United States
trademarks, service marks, internet domain names, registrations of
any of the foregoing and related good will; (e) United States patents
and patent applications, including all continuations-in-part,
divisions, reissues and continuations thereof; (f) computer software,
designs, models, know-how, trade secrets, rights in proprietary
information, formulas, customer lists, backlog, orders,
subscriptions, royalties, catalogues, sales material, documents, good
will, inventions and processes and any documents relating thereto or
rights to collect or ▇▇▇ in respect of the rights described in
subsections (a) through (f) above; (g) judgments, causes in action,
commercial tort claims set forth from time to time on Exhibit 3.1.3
or any supplements thereto and other claims, whether or not inchoate,
and (h) all other general intangibles, payment intangibles and
intangible property and all rights thereunder, including such items
set forth from time to time on Exhibit 3.1.3 or any supplements
thereto.
3.1.4. Pledged Stock. (a) All shares of capital stock or other
evidence of beneficial interest in any corporation, business trust or
limited liability company (except for any such interest in Congoleum
Corporation), (b) all limited partnership interests in any limited
partnership, (c) all general partnership interests in any general or
limited partnership, (d) all joint venture interests in any joint
venture (except for the Congoleum Joint Venture Agreement) and (e)
all options, warrants and similar rights to acquire such capital
stock or such interests. All such capital stock, interests, options,
warrants and other rights are collectively referred to as the
"Pledged Stock".
3.1.5. Pledged Rights. All rights to receive profits or surplus
of, or other Distributions (including income, return of capital and
liquidating distributions) from, any partnership, joint venture or
limited liability company, including any distributions by any such
Person to partners, joint venturers or members. All such rights are
collectively referred to as the "Pledged Rights".
3.1.6. Pledged Indebtedness. All Financing Debt from time to
time owing to such Obligor from any Person (all such Financing Debt
being referred to as the "Pledged Indebtedness").
3.1.7. Chattel Paper, Instruments, etc. All chattel paper
(whether tangible or electronic), non-negotiable instruments,
negotiable instruments, letters of credit, documents, securities and
investment property.
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3.1.8. Leases. All leases of personal property, whether such
Obligor is the lessor or the lessee thereunder.
3.1.9. Deposit and Securities Accounts. All general or special
deposit accounts and securities accounts, including any demand, time,
savings, passbook or similar account maintained by such Obligor with
any bank, trust company, savings and loan association, credit union
or similar organization, and all money, cash and cash equivalents of
such Obligor, whether or not deposited in any such deposit or
securities account.
3.1.10. Credit Support. All collateral granted by third parties
to, or held by, such Obligor, and all letter of credit rights
(whether or not the letter of credit is evidenced in writing) and
other supporting obligations of such Obligor.
3.1.11. Books and Records. All books and records located in the
United States, including books of account and ledgers of every kind
and nature, all electronically recorded data (including all computer
programs, disks, tapes, electronic data processing media and software
used in connection with maintaining such Obligor's books and
records), all files, correspondence and all containers for the
foregoing.
3.1.12. Insurance. All insurance policies which insure against
any loss or damage to any other Credit Security or which are
otherwise owned by such Obligor, including key man life insurance
policies.
3.1.13. All Other Property. All other property, assets and
items of value (except for property expressly excluded pursuant to
Section 3.1.15 hereof and all intellectual property created under the
laws of a jurisdiction outside of the United States) of every kind
and nature, tangible or intangible, absolute or contingent, legal or
equitable, excluding any and all property of any nature in or owned
or held by Congoleum, the Congoleum Plan, the Congoleum Joint Venture
Agreement and the Congoleum Trust.
3.1.14. Proceeds and Products. All proceeds, including
insurance proceeds, and products of the items of Credit Security
described or referred to in Sections 3.1.1 through 3.1.13 (including,
by way of example only, licenses, royalties and proceeds of suits)
and, to the extent not included in the foregoing, all Distributions
with respect to the Pledged Securities.
3.1.15. Excluded Property. Notwithstanding Sections 3.1.1
through 3.1.14, the payment and performance of the Secured
Obligations shall not be secured by any of the following and all of
the following shall not be considered to be Credit Security hereunder
or to be within any classification contained in the definition of, or
otherwise constitute, Credit Security:
(a) any lease, contract, license, permit or franchise
(including, without limitation, insurance policies) that validly
prohibits (or with respect to any lease, contract, license, permit or
franchise existing on the date hereof, restricts or requires a third
party consent for) the creation by such Obligor of a security
interest in such lease, contract, license, permit
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or franchise (or in any rights or property obtained by such Obligor
under such contract, license, permit or franchise) each of which is
listed on Exhibit 3.1.15(a) if and for so long as the grant of such
security interest shall constitute or result in (i) the abandonment,
invalidation or unenforceability of any right, title or interest of
any Obligor therein or (ii) a breach or termination pursuant to the
terms of, or default under any such lease, contract, license, permit
or franchise (other than to the extent that any such term would be
rendered ineffective pursuant to Section 9-406, 9-407, 9-408 or 9-409
of the UCC (or any successor provision or provisions) of any relevant
jurisdiction or any other applicable law (including the Bankruptcy
Code) or principles of equity; provided, however, that the provisions
of this Section 3.1.15 shall not prohibit the security interests
created by this Agreement from extending to the proceeds of such
contract, license, permit or franchise (or such rights or property) or
to the monetary value of the good will and other general intangibles
of the Obligors relating thereto;
(b) any rights or property to the extent that any valid and
enforceable law or regulation applicable to such rights or property
prohibits the creation of a security interest therein; provided,
however, that the provisions of this Section 3.1.15 shall not
prohibit the security interests created by this Agreement from
extending to the proceeds of such rights or property or to the
monetary value of the good will and other general intangibles of the
Obligors relating thereto;
(c) any rights or property to the extent that such rights or
property secure purchase money financing therefor permitted by the
Credit Agreement and the agreements providing such purchase money
financing prohibit the creation of a further security interest
therein; provided, however, that the provisions of this Section
3.1.15 shall not prohibit the security interests created by this
Agreement from extending to the proceeds of such rights or property
or to the monetary value of the good will and other general
intangibles of the Obligors relating thereto;
(d) more than 65% of the outstanding voting stock or other
voting equity in any directly owned Foreign Subsidiary to the extent
that the pledge of voting stock or other voting equity above such
amount would result in a repatriation of a material amount of foreign
earnings under the Code (including the "deemed dividend" provisions
of section 956 of the Code); or
(e) the items described in Section 3.2 (but only in the event
and to the extent the Collateral Agent has not specified that such
items be included in the Credit Security pursuant thereto);
(f) any shares of capital stock, other evidence of beneficial
interest in or other equity right in Congoleum Corporation; or
(g) Accounts from Congoleum relating to rights under insurance
policies of Congoleum and indemnification rights under the Congoleum
Plan, the Congoleum Plan Trust, the Congoleum Joint Venture Agreement
and the Congoleum Plan Note, and (ii)
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proceeds from such insurance policies and such rights of
indemnification that are required to be pledged pursuant to the
Congoleum Plan.
3.2. Additional Credit Security. As additional Credit Security, each
Obligor covenants that it will mortgage, pledge and collaterally grant and
assign to the Collateral Agent for the benefit of the Noteholders, the Lenders
and any other holders from time to time of any Secured Obligation, and will
create a security interest in favor of the Collateral Agent for the benefit of
the Noteholders, the Lenders and such holders in, all of its right, title and
interest in and to (but none of its obligations with respect to) such of the
following present or future items as the Collateral Agent may from time to
time specify by notice to such Obligor, whether now owned or hereafter
acquired, and the proceeds and products thereof, except to the extent
consisting of rights or property of the types referred to in Section 3.1.15(a)
through (f), subject only to Liens permitted by Section 3.3.3, all of which
shall thereupon be included in the term "Credit Security":
3.2.1. Real Property. All real property and immovable property
and fixtures, leasehold interests and easements wherever located,
together with all estates and interests of such Obligor therein,
including lands, buildings, stores, manufacturing facilities and
other structures erected on such property, fixed plant, fixed
equipment and all permits, rights, licenses, benefits and other
interests of any kind or nature whatsoever in respect of such real
and immovable property. The Collateral Agent shall not give notice
with respect to the items of real property listed in this Section
3.2.1 until an Event of Default shall have occurred.
3.2.2. Motor Vehicles and Aircraft. All owned motor vehicles
and owned aircraft, if any.
3.3. Certain Covenants with Respect to Credit Security. Each Obligor
covenants that:
3.3.1. Pledged Stock. All shares of capital stock, limited
partnership interests, membership interests and similar securities
included in the Pledged Stock shall be at all times duly authorized,
validly issued, fully paid and (in the case of capital stock and
limited partnership interests) nonassessable. Each Obligor will
deliver to the Collateral Agent certificates representing any Pledged
Stock held by such Obligor, accompanied by a stock transfer power
executed in blank and, if the Collateral Agent so requests, with the
signature guaranteed, all in form and manner reasonably satisfactory
to the Collateral Agent. Pledged Stock that is not evidenced by a
certificate held by such Obligor will be described in UCC financing
statements provided to the Collateral Agent, all in form and
substance reasonably satisfactory to the Collateral Agent. In the
event the Pledged Stock includes uncertificated equity interests in a
limited liability company, limited partnership, general partnership
or other entity, except with the prior written consent of the
Collateral Agent, which consent may not be unreasonably withheld, the
Obligors shall take all action within their power to prevent such
limited liability company, limited partnership, general partnership
or other entity from (a) opting to have such uncertificated equity
interests treated as "securities" for purposes of Article 8 of the
UCC or (b) issuing certificates for such uncertificated equity
interests. Upon the occurrence and during the
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continuance of an Event of Default, the Collateral Agent may transfer
into its name or the name of its nominee any Pledged Stock. In the
event the Pledged Stock includes any Margin Stock, the Obligors will
furnish to the Lenders Federal Reserve Form U-1 and take such other
action as the Collateral Agent may reasonably request to ensure
compliance with applicable laws.
3.3.2. Accounts and Pledged Indebtedness. Each Obligor will,
immediately upon the receipt thereof, deliver to the Collateral Agent
any promissory note or similar instrument representing any Account or
Pledged Indebtedness, after having endorsed such promissory note or
instrument in blank.
3.3.3. No Liens or Restrictions on Transfer or Change of
Control. All Credit Security shall be free and clear of any Liens and
restrictions on the transfer thereof, including contractual
provisions which prohibit the assignment of rights under contracts,
except for Liens permitted by section 6.7 of the Credit Agreement or
by this Section 3.3.3. Without limiting the generality of the
foregoing, each Obligor will in good faith attempt to exclude from
agreements, instruments, deeds or leases to which it becomes a party
after the date hereof provisions that would prevent such Obligor from
creating a security interest in such agreement, instrument, deed or
lease or any rights or property acquired thereunder as contemplated
hereby. None of the Pledged Stock shall be subject to any option to
purchase or similar rights of any Person. Except with the written
consent of the Collateral Agent, which consent will not be
unreasonably withheld, each Obligor will in good faith attempt to
exclude from any agreement, instrument, deed or lease to which it
becomes a party after the date hereof provisions that would restrict
the change of control or ownership of the Company or any of its
Subsidiaries, or the creation of a security interest in the ownership
of the Company or any of its Subsidiaries.
3.3.4. Jurisdiction of Organization. Each Obligor shall at all
times maintain its jurisdiction of organization as set forth in
Exhibit 3.3 as in effect on the date hereof or, so long as such
Obligor shall have taken all steps reasonably necessary to perfect
the Collateral Agent's security interest in the Credit Security with
respect to such new jurisdiction, in such other jurisdiction as such
Obligor may specify by notice actually received by the Collateral
Agent not less than 10 Banking Days prior to such change of
jurisdiction of organization. The organizational identification
number of each Obligor is set forth in Exhibit 3.3.
3.3.5. Location of Credit Security. Each Obligor shall at all
times keep its books and records concerning the Accounts at its
domestic chief executive office and principal place of business,
which office and place of business shall be as set forth in Exhibit
3.3 or, so long as such Obligor shall have taken all steps reasonably
necessary to perfect the Collateral Agent's security interest in the
Credit Security with respect to such new address, at such other
address as such Obligor may specify by notice actually received by
the Collateral Agent not less than 10 Banking Days prior to such
change of address. No Obligor shall at any time keep tangible
personal property of the type referred to in Section 3.1.1 in any
jurisdiction other than the jurisdictions specified in such Exhibit
3.3 or, so long as such Obligor shall have taken all steps reasonably
necessary to perfect the
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Collateral Agent's security interest in the Credit Security with
respect to such other jurisdiction, other jurisdictions as such
Obligor may specify by notice actually received by the Collateral
Agent not less than 10 days prior to moving such tangible personal
property into such other jurisdiction.
3.3.6. Trade Names. No Obligor will adopt or do business under
any name other than its name or names designated in Exhibit 3.3 or
any other name specified by notice actually received by the
Collateral Agent not less than 10 Banking Days prior to the conduct
of business under such additional name. In the last 5 years, no
Obligor has changed its name or adopted or conducted business in a
United States jurisdiction under any trade name other than a name
specified in such Exhibit 3.3.
3.3.7. Insurance. Each insurance policy (except for K&M's
workers' compensation policies) included in, or insuring against loss
or damage to, the Credit Security, or insuring against liabilities of
the Company and its Subsidiaries, shall name the Collateral Agent as
additional insured party or as loss payee, as the case may be within
30 days of the date hereof. No such insurance policy shall be
cancelable or subject to termination or reduction in amount or scope
of coverage until after at least 30 days' prior written notice from
the insurer to the Collateral Agent. At least 10 days prior to the
expiration of any such material insurance policy for any reason, each
Obligor shall furnish the Collateral Agent with reasonably
satisfactory evidence of a renewal or replacement policy and payment
of the premiums therefor to the extent due. Each Obligor grants to
the Collateral Agent full power and authority as its
attorney-in-fact, effective upon notice to such Obligor after the
occurrence and during the continuance of an Event of Default, to
obtain, cancel, transfer, adjust and settle any such insurance policy
and to endorse any drafts thereon. Any amounts that the Collateral
Agent receives under any such policy (including return of unearned
premiums) when no Event of Default has occurred and is continuing
shall be delivered to the Obligors for the replacement, restoration
and maintenance of the Credit Security in the case of property
insurance or for reimbursing insured liabilities in the case of
liability insurance. Any such amounts that the Collateral Agent
receives after the occurrence and during the continuance of an Event
of Default shall, at the Collateral Agent's option, be applied in
accordance with Section 3.5.6 of this Agreement or to the
replacement, restoration and maintenance of the Credit Security in
the case of property insurance or to the reimbursement of insured
liabilities in the case of liability insurance. If any Obligor fails
to provide insurance as required by this Agreement, the Collateral
Agent may, at its option, purchase such insurance, and such Obligor
will on demand pay to the Collateral Agent the amount of any payments
made by the Collateral Agent, the Agent, Prudential, the Noteholders
or the Lenders for such purpose, together with interest on the
amounts so disbursed from five Banking Days after the date demanded
until payment in full thereof at the Overdue Reimbursement Rate.
3.3.8. Intellectual Property. Exhibit 3.3.8 shall set forth the
following items (collectively, the "Intellectual Property"):
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(a) all copyrights owned by the Obligors that are registered
with the United States Copyright Office and all applications for such
registration and
(b) all trademarks, tradenames, service marks, service names
and patents owned by the Obligors that are registered with the United
States Patent and Trademark Office and all applications for such
registration.
(c) all internet domain names owned by the Obligors and the
registry office on which such domain names are registered.
The Obligors shall duly authorize, execute and deliver to the
Collateral Agent appropriate documents evidencing the security
interests provided by the Collateral Agent with respect to the
foregoing Intellectual Property for filing in the offices described
above. Upon the registration of any additional Intellectual Property
(or the filing of applications therefor) in the offices described
above, the Obligors shall notify the Collateral Agent and duly
authorize, execute and deliver to the Collateral Agent separate
appropriate documents evidencing the security interests covering such
additional Intellectual Property for filing in such offices. The
Obligors hereby appoint and constitute the Collateral Agent as their
attorney in fact with full power and authority, in their place and
stead, to register with the Patent and Trademark Office, the U.S.
Copyright Office or any other applicable governmental authority the
assignment by the Obligors to the Collateral Agent of the
Intellectual Property after the occurrence and during the continuance
of an Event of Default, such appointment being coupled with an
interest.
3.3.9. Deposit Accounts. Each Obligor shall keep all its bank
and deposit accounts only with the Collateral Agent, other Lenders or
the financial institutions listed on Exhibit 3.3.9. Each Obligor
shall use reasonable efforts to cause such financial institutions
(other than the Lenders and the Collateral Agent) to enter into
account control agreements with the Collateral Agent in form and
substance reasonably satisfactory to the Collateral Agent.
3.3.10. Modifications to Credit Security. Except with the prior
written consent of the Collateral Agent, which consent will not be
unreasonably withheld, no Obligor shall amend or modify, or waive any
of its rights under or with respect to, any material Accounts,
material payment in respect of any general intangibles, material
Pledged Securities or material payment in respect of any leases if
the effect of such amendment, modification or waiver would be to
reduce the amount of any such items or to extend the time of payment
thereof, to waive any default by any other party thereto, or to waive
or impair any remedies of the Obligors, the Noteholders or the
Lenders under or with respect to any such Accounts, general
intangibles, Pledged Securities or leases, in each case other than
consistent with past practice in the ordinary course of business and
on an arm's-length basis. Each Obligor will promptly give the
Collateral Agent written notice of any request by any Person for any
material credit or adjustment with respect to any material Account,
material payment in respect of any general intangible, material
Pledged Securities or material payment in respect of any leases.
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3.3.11. Delivery of Documents. Upon the Collateral Agent's
reasonable request, each Obligor shall deliver to the Collateral
Agent, promptly upon such Obligor's receipt thereof, copies of any
agreements, instruments, documents or invoices comprising or relating
to the Credit Security in such Obligor's possession or under such
Obligor's control. Pending such request, such Obligor shall keep such
items at its chief executive office and principal place of business
(as specified pursuant to Section 3.3.5).
3.3.12. Perfection of Credit Security.
(a) This Agreement creates and shall create in favor of the
Collateral Agent, for the benefit of the Lenders and the Noteholders,
a legal, valid and enforceable security interest in the Credit
Security described herein, subject only (in the case of Credit
Security other than Pledged Stock) to Liens permitted by section 6.7
of the Credit Agreement.
(b) The Collateral Agent may at any time and from time to time
execute and file UCC financing statements, continuation statements
and amendments thereto that describe the Credit Security in any
manner it deems appropriate including, without limitation, describing
such property as "all assets, whether now owned or hereafter
required" or "all personal property, whether now owned or hereafter
acquired," and contain any information required by the UCC or the
applicable filing office with respect to any such UCC financing
statement, continuation statement or amendment thereof.
(c) Upon the Collateral Agent's reasonable request from time to
time, the Obligors will execute and deliver, and file and record in
the proper filing and recording places, all such instruments,
including UCC financing statements, appropriate documents evidencing
the Collateral Agent's lien in the U.S. Intellectual Property,
notations on certificates of title and written confirmation of the
grant of a security interest in commercial tort claims, and will take
all such other action, as the Collateral Agent deems reasonably
necessary for perfecting or otherwise confirming to it the Credit
Security or to carry out any other purpose of this Agreement or any
other Secured Credit Document.
(d) In furtherance of the foregoing, the Obligors shall, upon
the written request of the Collateral Agent, use reasonable efforts
to obtain (i) a written acknowledgment, in form and substance
reasonably satisfactory to the Collateral Agent, from any bailee
having possession of any Credit Security that such bailee holds such
Credit Security for the benefit of the Collateral Agent on behalf of
the Lenders and the Noteholders and (ii) control of any investment
property, deposit accounts, letter of credit rights or electronic
chattel paper that constitute Credit Security, with any agreements
establishing such control to be in form and substance reasonably
satisfactory to the Collateral Agent.
3.3.13. Further Covenants and Agreements. Each Obligor hereby
further covenants and agrees that:
(a) it shall pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon,
and all claims (including claims for labor,
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materials and supplies) against, the Credit Security, except to the
extent the validity thereof is being contested in good faith;
provided, such Obligor shall in any event pay such taxes, assessments,
charges, levies or claims not later than five (5) days prior to the
date of any proposed sale under any judgment, writ or warrant of
attachment entered or filed against such Obligor or any of the Credit
Security as a result of the failure to make such payment; (b) upon
such Obligor or any officer of such Obligor obtaining knowledge
thereof, it shall promptly notify the Collateral Agent in writing of
any event that may materially and adversely affect the value of the
Credit Security or any portion thereof, the ability of any Obligor or
the Collateral Agent to dispose of the Credit Security or any portion
thereof, or the rights and remedies of the Collateral Agent in
relation thereto, including, without limitation, the levy of any legal
process against the Credit Security or any portion thereof;
(c) it shall keep correct and accurate records of the Credit
Security, as is customarily maintained under similar circumstances by
Persons of established reputation engaged in similar business, and in
any event in conformity with GAAP;
(d) if any Credit Security is in possession or control of any
third party, including, without limitation, any warehouseman, bailee
or agent, each Obligor shall join with the Collateral Agent in
notifying the third party of the Collateral Agent's security interest
and obtaining an authenticated acknowledgment from such third party
that it is holding the equipment as defined in the UCC and inventory
as defined in the UCC for the benefit of the Collateral Agent;
(e) it shall perform in all material respects all of its
obligations with respect to the Accounts;
(f) it shall not amend, modify, terminate or waive any
provision of any Account in any manner which could reasonably be
expected to have a material adverse effect on the value of such
Account as Credit Security. Other than in the ordinary course of
business as generally conducted by it on and prior to the date
hereof, and except as otherwise provided in subsection (h) below,
following an Event of Default, such Obligor shall not (w) grant any
extension or renewal of the time of payment of any Account, (x)
compromise or settle any dispute, claim or legal proceeding with
respect to any Account for less than the total unpaid balance
thereof, (y) release, wholly or partially, any Person liable for the
payment thereof, or (z) allow any credit or discount thereon;
(g) except as otherwise provided in this subsection, each
Obligor shall continue to collect all amounts due or to become due to
such Obligor under the Accounts and any Supporting Obligation and
diligently exercise each material right it may have under any
Account, any Supporting Obligation or Credit Security Support, in
each case, at its own expense, and in connection with such
collections and exercise, such Obligor shall take such action as such
Obligor or the Collateral Agent may deem necessary or advisable.
Notwithstanding the foregoing, the Collateral Agent shall have the
right at any time to
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notify, or require any Obligor to notify, any Account Debtor of the
Collateral Agent's security interest in the Accounts and any
Supporting Obligation and, in addition, at any time following the
occurrence and during the continuation of an Event of Default, the
Collateral Agent may: (i) direct the Account Debtors under any
Accounts to make payment of all amounts due or to become due to such
Obligor thereunder directly to the Collateral Agent; (ii) notify, or
require any Obligor to notify, each Person maintaining a lockbox or
similar arrangement to which Account Debtors under any Accounts have
been directed to make payment to remit all amounts representing
collections on checks and other payment items from time to time sent
to or deposited in such lockbox or other arrangement directly to the
Collateral Agent; and (iii) enforce, at the expense of such Obligor,
collection of any such Accounts and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same
extent as such Obligor might have done. If the Collateral Agent
notifies any Obligor that it has elected to collect the Accounts in
accordance with the preceding sentence, any payments of Accounts
received by such Obligor shall be forthwith (and in any event within
two (2) business days) deposited by such Obligor in the exact form
received, duly indorsed by such Obligor to the Collateral Agent if
required, in a collateral account to the extent one is created
maintained under the sole dominion and control of the Collateral
Agent, and until so turned over, all amounts and proceeds (including
checks and other instruments) received by such Obligor in respect of
the Accounts, any Supporting Obligation or Credit Security shall be
received in trust for the benefit of the Collateral Agent hereunder
and shall be segregated from other funds of such Obligor and such
Obligor shall not adjust, settle or compromise the amount or payment
of any Account, or release wholly or partly any Account Debtor or
obligor thereof, or allow any credit or discount thereon;
(h) it shall use its best efforts to keep in full force and
effect any Supporting Obligation or Credit Security relating to any
Account;
(i) without the prior written consent of the Collateral Agent,
it shall not vote to enable or take any other action to: (i) amend or
terminate any partnership agreement, limited liability company
agreement, certificate of incorporation, by-laws or other
organizational documents in any way that materially changes the
rights of such Obligor with respect to any investment property or
adversely affects the validity, perfection or priority of the
Collateral Agent's security interest, (ii) permit any issuer of any
Pledged Stock to issue any additional stock, partnership interests,
limited liability company interests or other equity interests of any
nature or to issue securities convertible into or granting the right
of purchase or exchange for any stock or other equity interest of any
nature of such issuer, (iii) other than as permitted under the Credit
Agreement and the Note Purchase Agreement, permit any issuer of any
Pledged Stock to dispose of all or a material portion of their
assets, (iv) waive any default under or breach of any terms of any
(i) organizational document of an issuer of any Pledged Stock or (ii)
the terms of any Pledged Debt or (v) cause any issuer of any Pledged
Stock which are not securities (for purposes of the UCC) on the date
hereof to elect or otherwise take any action to cause such Pledged
Stock to be treated as securities for purposes of the UCC; provided,
however, notwithstanding the foregoing, if any issuer of any Pledged
Stock takes any such action in violation of the foregoing in this
clause (v), such Obligor shall promptly
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notify the Collateral Agent in writing of any such election or action
and, in such event, shall take all steps necessary or advisable to
establish the Collateral Agent's "control" thereof;
(j) it shall comply with all of its obligations under any
partnership agreement or limited liability company agreement relating
to Pledged Stock and shall enforce all of its rights with respect to
any investment property;
(k) in addition to any rights under the Section of this
Agreement relating to Accounts, the Collateral Agent may at any time
notify, or require any Obligor to so notify, the counterparty on any
Material Contract of the security interest of the Collateral Agent
therein. In addition, after the occurrence and during the continuance
of an Event of Default, the Collateral Agent may upon written notice
to the applicable Obligor, notify, or require any Obligor to notify,
the counterparty to make all payments under the Material Contracts
directly to the Collateral Agent;
(l) each Obligor shall deliver promptly to the Collateral Agent
a copy of each material demand, notice or document received by it
relating in any way to any Material Contract;
(m) each Obligor shall deliver promptly to the Collateral
Agent, and in any event within ten (10) business days, after (i) any
Material Contract of such Obligor is terminated or amended in a
manner that is materially adverse to such Obligor or (ii) any new
Material Contract is entered into by such Obligor, a written
statement describing such event, with copies of such material
amendments or new contracts, delivered to the Collateral Agent (to
the extent such delivery is permitted by the terms of any such
Material Contract, provided, no prohibition on delivery shall be
effective if it was bargained for by such Obligor with the intent of
avoiding compliance with this Section), and an explanation of any
actions being taken with respect thereto;
(n) it shall perform in all material respects all of its
obligations with respect to the Material Contracts; and
(o) it shall promptly and diligently exercise each material
right (except the right of termination) it may have under any
Material Contract, any Supporting Obligation or Credit Security, in
each case, at its own expense, and in connection with such
collections and exercise, such Obligor shall take such action as such
Obligor or the Collateral Agent may deem necessary or advisable.
3.4. Administration of Credit Security. The Credit Security shall be
administered as follows, and if an Event of Default shall have occurred and be
continuing, Section 3.5 shall also apply.
3.4.1. Use of Credit Security. Until the Collateral Agent
provides written notice to an Obligor that an Event of Default shall
occur and be continuing, each Obligor may use, commingle and dispose
of any part of the Credit Security in the ordinary course of
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its business, all subject to the provisions of the Credit Agreement
and the Note Purchase Agreement.
3.4.2. Accounts. To the extent specified by prior written
notice from the Collateral Agent after the occurrence and during the
continuance of an Event of Default, all sums collected or received
and all property recovered or possessed by any Obligor in connection
with any Credit Security shall be received and held by such Obligor
in trust for and on the Lenders' and the Noteholders' behalf, shall
be segregated from the assets and funds of such Obligor, and shall be
delivered to the Collateral Agent for the benefit of the Lenders and
the Noteholders. Without limiting the foregoing, upon the Collateral
Agent's request after the occurrence and during the continuance of an
Event of Default, each Obligor shall institute depository collateral
accounts, lock-box receipts and similar credit procedures providing
for the direct receipt of payment on Accounts at a separate address,
the segregation of such proceeds for direct payment to the Collateral
Agent and appropriate notices to Account debtors. Upon the Collateral
Agent's request after the occurrence and during the continuance of an
Event of Default, each Obligor will cause its accounting books and
records to be marked with such legends and segregated in such manner
as the Collateral Agent may specify.
3.4.3. Distributions on Pledged Securities.
(a) Until such time as an Event of Default shall occur and be
continuing, the respective Obligors shall be entitled, to the extent
permitted by the Secured Credit Documents, to receive all
Distributions on or with respect to the Pledged Securities (other
than Distributions constituting additional Pledged Securities or
liquidating Distributions). All Distributions constituting additional
Pledged Securities or liquidating Distributions will be retained by
the Collateral Agent (or if received by any Obligor shall be held by
such Person in trust and shall be promptly delivered by such Person
to the Collateral Agent in the original form received, endorsed in
blank, if applicable) and held by the Collateral Agent as part of the
Credit Security.
(b) If an Event of Default shall have occurred and be
continuing, all Distributions on or with respect to the Pledged
Securities shall be retained by the Collateral Agent (or if received
by any Obligor shall be held by such Person in trust and shall be
immediately delivered by it to the Collateral Agent in the original
form received, endorsed in blank, if applicable) and held by the
Collateral Agent as part of the Credit Security or applied by the
Collateral Agent to the payment of the Secured Obligations in
accordance with Section 3.5.6.
3.4.4. Voting Pledged Securities.
(a) Until such time as an Event of Default shall occur and be
continuing and the Collateral Agent shall have delivered a notice
contemplated by clause (b) below, the respective Obligors shall be
entitled to vote or consent (or refrain from voting and other
consensual rights) with respect to the Pledged Securities in any
manner not inconsistent with the terms hereof and of any Secured
Credit Document (it being understood that
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neither the voting by any Obligor of any Pledged Securities for, or
such Obligor's consent to the election of directors (or similar
governing body) at a regularly scheduled annual or other meeting of
stockholders or partners or with respect to incidental matters at any
such meeting, nor such Obligor's consent to or approval of any action
otherwise permitted under this Agreement and the Credit Agreement,
shall be deemed inconsistent with the terms of this Agreement or the
Secured Credit Documents within the meaning of this Section 3.4.4),
and no notice of any such voting or consent need be given to the
Collateral Agent, and the Collateral Agent will, if so requested,
execute appropriate proxies and other instruments as such Obligor may
from time to time reasonably request.
(b) If an Event of Default shall have occurred and be
continuing, if and to the extent that the Collateral Agent shall so
notify in writing the Obligor pledging the Pledged Securities in
question, only the Collateral Agent shall be entitled to vote or
consent or take any other action with respect to the Pledged
Securities (and any Obligor will, if so requested, execute
appropriate proxies therefor), which the Collateral Agent shall do in
accordance with the provisions of Section 2.
3.5. Right to Realize upon Credit Security. Except to the extent
prohibited by applicable law that cannot be waived or derogated from by
contract, this Section 3.5 shall govern the Collateral Agent's rights to
realize upon the Credit Security if any Event of Default shall have occurred
and be continuing. The provisions of this Section 3.5 are in addition to any
rights and remedies available at law or in equity and in addition to the
provisions of any other Secured Credit Document. In the case of a conflict
between this Section 3.5 and any other Secured Credit Document (other than the
Intercreditor Agreement), this Section 3.5 shall govern. In the case of a
conflict between this Section 3.5 and the Intercreditor Agreement, the
Intercreditor Agreement shall govern.
3.5.1. Assembly of Credit Security; Receiver. Each Obligor
shall, upon the Collateral Agent's request, assemble the tangible
Credit Security and otherwise make the Credit Security available to
the Collateral Agent, the Lenders and the Noteholders. The Collateral
Agent may have a receiver appointed for all or any portion of the
Obligors' assets or business which constitutes the Credit Security in
order to manage, protect, preserve, sell and otherwise dispose of all
or any portion of the Credit Security in accordance with the terms of
the Secured Credit Documents, to continue the operations of the
Obligors and to collect all revenues and profits therefrom to be
applied to the payment of the Secured Obligations, including the
compensation and expenses of such receiver.
3.5.2. General Authority. Each Obligor grants the Collateral
Agent full and exclusive power and authority, subject to the other
terms hereof and applicable law, to take any of the following actions
(for the sole benefit of the Collateral Agent on behalf of the
Lenders, the Noteholders and any other holder from time to time of
any Secured Obligations, but at such Obligor's expense):
(a) to ask for, demand, take, collect, ▇▇▇ for and receive all
payments in respect of any Accounts, general intangibles, Pledged
Securities or leases (to the extent they
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constitute Credit Security) which such Obligor then should have a
legal right to ask for, demand, take, collect, ▇▇▇ for and receive for
its own use;
(b) to extend the time of payment of any Accounts, general
intangibles, Pledged Securities or leases (to the extent they
constitute Credit Security) and to make any allowance or other
adjustment with respect thereto;
(c) to settle, compromise, prosecute or defend any action or
proceeding with respect to any Accounts, general intangibles, Pledged
Securities or leases (to the extent they constitute Credit Security)
and to enforce all rights and remedies thereunder which such Obligor
then should have a legal right to enforce;
(d) to enforce the payment of any Accounts, general
intangibles, Pledged Securities or leases (to the extent they
constitute Credit Security), either in the name of such Obligor or in
its own name, and to endorse the name of such Obligor on all checks,
drafts, money orders and other instruments tendered to or received in
payment of any Credit Security;
(e) to notify the third party payor with respect to any
Accounts, general intangibles, Pledged Securities or leases (to the
extent they constitute Credit Security) of the existence of the
security interest created hereby and to cause all payments in respect
thereof thereafter to be made directly to the Collateral Agent;
provided, however, that whether or not the Collateral Agent shall
have so notified such payor, such Obligor will at its expense render
all reasonable assistance to the Collateral Agent requested by the
Collateral Agent in collecting such items and in enforcing claims
thereon; and
(f) to use, operate, sell, transfer, assign or otherwise deal
in or with any Credit Security or the proceeds thereof, as fully as
such Obligor then should have a legal right to do;
provided, that the Collateral Agent shall promptly provide written
notice to the relevant Obligor of the taking of any such action.
3.5.3. Marshaling, etc. Neither the Collateral Agent nor the
Lenders nor the Noteholders shall be required to make any demand
upon, or pursue or exhaust any of their rights or remedies against,
any Obligor or any other guarantor, pledgor or any other Person with
respect to the payment of the Secured Obligations or to pursue or
exhaust any of their rights or remedies with respect to any
collateral therefor or any direct or indirect guarantee thereof.
Neither the Collateral Agent nor the Lenders nor the Noteholders
shall be required to marshal the Credit Security or any guarantee of
the Secured Obligations or to resort to the Credit Security or any
such guarantee in any particular order, and all of its and their
rights hereunder, or under any other Secured Credit Document shall be
cumulative. To the extent it may lawfully do so, each Obligor
absolutely and irrevocably waives and relinquishes the benefit and
advantage of, and covenants not to assert against the Collateral
Agent, the Lenders or the Noteholders, any valuation, stay,
appraisement, extension, redemption or similar laws now or hereafter
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existing which, but for this provision, might be applicable to the
sale of any Credit Security made under the judgment, order or decree
of any court, or privately under the power of sale conferred by this
Agreement, or otherwise. Without limiting the generality of the
foregoing, each Obligor (a) agrees that it will not invoke or utilize
any law which might prevent, cause a delay in or otherwise impede the
enforcement of the rights of the Collateral Agent, any Lender or any
Noteholder in the Credit Security, (b) waives its rights under all
such laws, and (c) agrees that it will not invoke or raise as a
defense to any enforcement by the Collateral Agent, any Lender or any
Noteholder of any rights and remedies relating to the Credit Security
or the Secured Obligations any legal or contractual requirement with
which the Collateral Agent, any Lender or any Noteholder may have in
good faith failed to comply. In addition, each Obligor waives any
right to prior notice (except to the extent expressly required by
this Agreement) or judicial hearing in connection with foreclosure on
or disposition of any Credit Security, including any such right which
such Obligor would otherwise have under the Constitution of the
United States of America, any state or territory thereof or any other
jurisdiction.
3.5.4. Sales of Credit Security. All or any part of the Credit
Security may be sold for cash or other value in any number of lots at
public or private sale, without demand, advertisement or notice;
provided, however, that unless the Credit Security to be sold is
likely to decline speedily in value or is of a type customarily sold
on a recognized market, the Collateral Agent shall give the Obligor
granting the security interest in such Credit Security 10 days' prior
written notice of the time and place of any public sale, or the time
after which a private sale may be made, which notice each of the
Obligors and the Collateral Agent agrees to be reasonable. At any
sale or sales of Credit Security, any Lender, any Noteholder or any
of their respective officers acting on their behalf, or such Lender's
or such Noteholder's assigns, may bid for and purchase all or any
part of the property and rights so sold, may use all or any portion
of the Secured Obligations owed to such Lender or such Noteholder as
payment for the property or rights so purchased, and upon compliance
with the terms of such sale may hold and dispose of such property and
rights without further accountability to the respective Obligors,
except for the proceeds of such sale or sales pursuant to Section
3.5.6. The Obligors acknowledge that any such sale will be made by
the Collateral Agent on an "as is" basis with disclaimers of all
warranties, whether express or implied (including warranties with
respect to title, possession, quiet enjoyment and other similar
warranties). The respective Obligors will execute and deliver or
cause to be executed and delivered such instruments, documents,
assignments, waivers, certificates and affidavits, will supply or
cause to be supplied such further information and will take such
further action, as the Collateral Agent shall reasonably request in
connection with any such sale.
3.5.5. Sale without Registration. If, at any time when the
Collateral Agent shall be instructed to exercise its rights hereunder
to sell all or part of the securities included in the Credit
Security, the securities in question shall not be effectively
registered under the Securities Act (or other applicable law), the
Collateral Agent may, in its sole discretion, sell such securities by
private or other sale not requiring such registration in such manner
and in such circumstances as the Collateral Agent may deem necessary
or advisable in order that such sale may be effected in accordance
with applicable securities laws without
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such registration and the related delays, uncertainty and expense.
Without limiting the generality of the foregoing, in any event the
Collateral Agent may, in its sole discretion, (a) approach and
negotiate with a single purchaser or one or more possible purchasers
to effect such sale, (b) restrict such sale to one or more purchasers
each of whom will represent and agree that such purchaser is
purchasing for its own account, for investment and not with a view to
the distribution or sale of such securities and (c) cause to be placed
on certificates representing the securities in question a legend to
the effect that such securities have not been registered under the
Securities Act (or other applicable law) and may not be disposed of in
violation of the provisions thereof. Each Obligor agrees that such
manner of disposition is commercially reasonable, that it will upon
the Collateral Agent's request give any such purchaser access to such
information regarding the issuer of the securities in question as the
Collateral Agent may reasonably request and that the Collateral Agent,
the Noteholders and the Lenders shall not incur any responsibility for
selling all or part of the securities included in the Credit Security
at any private or other sale not requiring such registration,
notwithstanding the possibility that a substantially higher price
might be realized if the sale were deferred until after registration
under the Securities Act (or other applicable law) or until made in
compliance with certain other rules or exemptions from the
registration provisions under the Securities Act (or other applicable
law). Each Obligor acknowledges that no adequate remedy at law exists
for breach by it of this Section 3.5.5 and that such breach would not
be adequately compensable in damages and therefore agrees that this
Section 3.5.5 may be specifically enforced.
3.5.6. Application of Proceeds. The proceeds of all sales and
collections in respect of any Credit Security or other assets of any
Obligor, all funds collected from the Obligors and any cash contained
in the Credit Security, the application of which is not otherwise
specifically provided for herein, shall be applied in accordance with
the terms of the Intercreditor Agreement.
3.6. Representations and Warranties. Each Obligor hereby represents
and warrants that:
(a) the Company owns the Credit Security purported to be owned
by it or otherwise has the rights it purports to have in each item of
Credit Security, and a complete and accurate list of the Credit
Security is set forth in the Perfection Certificate delivered by the
Company on the date hereof;
(b) the execution and delivery of this Agreement by such
Obligor and the performance by it of its obligations under this
Agreement are within its corporate or other powers and have been duly
authorized by all necessary corporate or other action;
(c) upon the filing of all UCC financing statements naming each
Obligor as "grantor" and the Collateral Agent as "Secured Party" and
describing the Credit Security in the filing offices in the State of
Delaware, the State of New York, the State of Rhode Island and the
State of Tennessee, as applicable, and the execution of control
agreements with respect to deposit accounts required to be subject to
a perfected security interest hereunder, the security interests
granted to the Collateral Agent hereunder constitute valid
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and perfected first priority Liens (subject only to Liens permitted by
Section 6.7 of the Credit Agreement or Section 3.3.3 hereof);
provided, however, that the recordation in the U.S. Copyright Office
and U.S. Patent and Trademark Office of the Security interest granted
hereunder may be necessary to perfect the security interest of the
Collateral Agent in registrations and applications for U.S.
Intellectual Property included in the Credit Security;
(d) other than the financing statements filed in favor of the
Collateral Agent, no effective UCC financing statement, fixture
filing or other instrument similar in effect under any applicable law
covering all or any part of the Credit Security is on file in any
filing or recording office except for (x) financing statements for
which proper termination statements have been delivered to the
Collateral Agent for filing and (y) financing statements filed in
connection with Liens permitted by Section 6.7 of the Credit
Agreement or Section 3.3.3 hereof;
(e) no authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory
body is required for either (i) the pledge or grant by any Obligor of
the Liens purported to be created in favor of the Collateral Agent
hereunder or (ii) the exercise by Collateral Agent of any rights or
remedies in respect of any Credit Security (whether specifically
granted or created hereunder or created or provided for by applicable
law), except (A) for the filings contemplated by clause (c) above and
(B) as may be required, in connection with the disposition of any
investment property, by laws generally affecting the offering and
sale of securities and as may be required under federal laws
pertaining to intellectual property;
(f) all actions and consents, including all filings, notices,
registrations and recordings necessary or desirable for the exercise
by the Collateral Agent of the voting or other rights provided for in
this Agreement or the exercise of remedies in respect of the Credit
Security have been made or obtained, provided that registrations and
applications for intellectual property included in the Credit
Security may require additional recordings with the applicable
intellectual property registries;
(g) none of the Credit Security is in the possession of an
issuer of a negotiable document (as defined in Section 7-104 of the
UCC) therefor or otherwise in the possession of a bailee or
warehouseman in an amount greater than $125,000 in the aggregate;
(h) except as set forth in the Side Letter Agreement, each
Obligor has taken all actions necessary or desirable to: (i)
establish the Collateral Agent's "control" (within the meanings of
Sections 8-106 and 9-106 of the UCC) over any portion of the Credit
Security constituting Certificated Securities, Uncertificated
Securities, Securities Accounts, Securities Entitlements or Commodity
Accounts (each as defined in the UCC); (ii) establish the Collateral
Agent's "control" (within the meaning of Section 9-104 of the UCC)
over all Deposit Accounts (as defined in the UCC); and (iii) to
deliver all Instruments (as defined in the UCC) to the Collateral
Agent except for the employee loan
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notes payable in favor of either the Company or K&M in the aggregate
amount of $14,100; and
(j) no Material Contract prohibits assignment or requires
consent of or notice to any Person in connection with the assignment
to the Collateral Agent hereunder, except such as has been given or
made.
4. Successors and Assigns.
4.1. Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of the holders of Secured Obligations and their
successors and assigns and shall be binding upon each of the parties hereto
and their respective successors and assigns.
5. Expenses; Indemnity.
5.1. Expenses. The Obligors will pay (a) all expenses (including the
reasonable fees and disbursements of the Collateral Agent's and the
Noteholders' special counsel) in connection with the negotiation, preparation
and duplication of this Agreement and the transactions contemplated hereby and
operations hereunder and (b) after the occurrence and during the continuance
of any Default or Event of Default all expenses incurred by any Lender or any
Noteholder in connection with the enforcement of any rights hereunder,
including without limitation costs of collection and reasonable attorneys'
fees (including a reasonable allowance for the hourly cost of attorneys
employed by the Lenders or any Noteholder on a salaried basis) and expenses.
5.2. General Indemnity. The Obligors shall indemnify each Lender, the
Collateral Agent, each Noteholder and each of the Lenders', the Collateral
Agent's or each Noteholder's directors, officers, employees, agents,
attorneys, accountants, consultants and Affiliates (each Lender, the
Collateral Agent, each Noteholder and each of such directors, officers,
employees, agents, attorneys, accountants, consultants and Affiliates is
referred to as an "Indemnified Party") and hold each of them harmless from and
against any and all claims, damages, liabilities and reasonable expenses
(including reasonable fees and disbursements of counsel with whom any
Indemnified Party may consult in connection therewith and all reasonable
expenses of litigation or preparation therefor) which any Indemnified Party
may incur or which may be asserted against any Indemnified Party in connection
with (a) the Indemnified Party's compliance with or contest of any subpoena or
other process issued against it in any proceeding involving the Company or any
of its Subsidiaries or their Affiliates, (b) any litigation or investigation
involving the Company, any of its Subsidiaries or their Affiliates, or any
officer, director or employee thereof, or (c) this Agreement, any other
Secured Credit Document or any transaction contemplated hereby or thereby;
provided, however, that the foregoing indemnity shall not apply (i) to
litigation commenced by the Obligors against the Lenders, the Collateral Agent
or the Noteholders which seeks enforcement of any of the rights of the
Obligors hereunder or under any other Secured Credit Document and is
determined adversely to the Lenders, the Collateral Agent or the Noteholders
in a final nonappealable judgment or (ii) to any Indemnified Party to the
extent such claims, damages, liabilities and expenses are determined in a
final, nonappealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's own gross negligence or willful
misconduct. THE OBLIGORS
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EXPRESSLY ACKNOWLEDGE THAT THEY MAY BE REQUIRED TO INDEMNIFY PERSONS AGAINST
THEIR OWN NEGLIGENCE.
5.3. Indemnity with Respect to Credit Security. The Obligors hereby,
jointly and severally, indemnify and hold harmless each Indemnified Party from
and against any and all claims, damages, losses, liabilities, judgments or
reasonable expenses (including all reasonable fees and disbursements of
counsel with whom any of them may consult in connection therewith and all
reasonable expenses of litigation or preparation therefor) which may be
incurred or sustained by or asserted against any of them, directly or
indirectly, in connection with the existence or exercise of any of the
security rights with respect to the Credit Security in accordance with the
Secured Credit Documents; provided, however, that the foregoing shall not
extend to actions or omissions which are taken by an Indemnified Party with
gross negligence or willful misconduct. The foregoing indemnity shall survive
the expiration of this Agreement or any of the agreements evidencing the
Secured Obligations. All amounts due under this Section 5.3 shall be payable
on written demand therefor.
6. Continuing Agreement, Defeasance, Etc.
6.1. Continuing Agreement. This Agreement shall be a continuing
agreement, shall be irrevocable and shall remain in full force and effect
until the payment in full of the Secured Obligations then outstanding in
accordance with the terms thereof. No action which the holders of the Secured
Obligations or the Obligors may take or refrain from taking with respect to
the Secured Obligations, including any amendments thereto, shall affect the
provisions of this Agreement or the obligations of the Obligors, the
Noteholders or any Lender hereunder. No right of the Lenders or the
Noteholders shall at any time be prejudiced or impaired by any act or failure
to act on the part of any Obligor or by any act or failure to act, in good
faith, by the Lenders, the Noteholders or the Collateral Agent, or by any
noncompliance by any Obligor with the terms of this Agreement, regardless of
any knowledge thereof which the Lenders or the Noteholders may have or
otherwise be charged with.
6.2. Defeasance. When all Secured Obligations have been performed,
paid and reasonably determined by the Lenders and the Noteholders to have been
indefeasibly discharged in full, and if at the time no Lender or Noteholder
continues to be committed to extend any credit to the Company under the Credit
Agreement or under any other Secured Credit Document, at the Obligors' written
request, accompanied by such certificates and proofs as the Collateral Agent
shall reasonably deem necessary, the Credit Security shall revert to the
Obligors and the rights, title and interest of the Collateral Agent therein
shall terminate. Thereupon, on the Obligors' demand and at their cost and
expense, the Collateral Agent shall execute proper instruments, acknowledging
satisfaction of and discharging this Agreement, and shall redeliver to the
Obligors the Credit Security then in its possession; provided, however, that
Section 5 shall survive the termination of this Agreement.
7. Notices.
Except as otherwise specified in this Agreement or any other Secured
Credit Document, any notice required to be given pursuant to this Agreement or
any other Secured Credit
-22-
Document shall be given in writing. Any notice, consent, approval, demand or
other communication in connection with this Agreement or any other Secured
Credit Document shall be deemed to be given if given in writing (including by
telecopy) addressed as provided below (or to the addressee at such other
address as the addressee shall have specified by notice actually received by
the addressor), and if either (a) actually delivered in fully legible form to
such address or (b) in the case of a letter, unless actual receipt of the
notice is required by any Secured Credit Document five days shall have elapsed
after the same shall have been deposited in the United States mails, with
first-class postage prepaid and registered or certified.
If to the Company or any of its Subsidiaries, to it at its address
set forth in Exhibit 3.3 to the attention of the chief financial officer.
If to any Lender or the Collateral Agent, to it at its address set
forth on the signature pages of the Credit Agreement or in the Register, with
a copy to the Collateral Agent.
If to any Noteholder, to it at its address as specified to the
Company in a notice given in accordance with the provisions of the Note
Purchase Agreement.
8. Venue; Service of Process.
(a) Each of the Obligors and the Collateral Agent irrevocably
submits to the nonexclusive jurisdiction of the state courts of the
State of New York and to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York for the
purpose of any suit, action or other proceeding arising out of or
based upon this Agreement or the subject matter hereof brought by the
Collateral Agent, any Obligor or their successors or assigns, and
(b) Each of the Obligors and the Collateral Agent waives to the
extent not prohibited by applicable law that cannot be waived, and
agrees not to assert, by way of motion, as a defense or otherwise, in
any such proceeding brought in any of the above-named courts, any
claim that it is not subject personally to the jurisdiction of such
court, that its property is exempt or immune from attachment or
execution, that any such proceeding is brought in an inconvenient
forum, that the venue of any such proceeding is improper, or that
this Agreement or any other Secured Credit Document, or the subject
matter hereof or thereof, may not be enforced in or by such court.
(c) Each of the Obligors and the Collateral Agent hereby
consents to service of process in any such proceeding in any manner
permitted by the Credit Agreement, the Note Purchase Agreement or the
Intercreditor Agreement, as the case may be, and agrees that service
of process by registered or certified mail, return receipt requested,
at its address specified in or pursuant to Section 7 is reasonably
calculated to give actual notice.
(d) Each of the Obligors and the Collateral Agent waives, to
the extent not prohibited by applicable law that cannot be waived,
any right it may have to claim or
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recover in any such proceeding any special, exemplary, punitive
or consequential damages.
9. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT
CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES AND COVENANTS THAT
IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO
TRIAL BY JURY IN ANY FORUM IN RESPECT TO ANY ISSUE, CLAIM OR PROCEEDING
ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR
ANY SECURED OBLIGATION OR IN ANY WAY CONNECTED WITH THE DEALINGS OF THE
PARTIES HERETO IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR OTHERWISE. Each
of the Obligors acknowledges that it has been informed by the Agent that the
foregoing sentence constitutes a material inducement upon which each of the
Lenders and the Noteholders has relied and will rely in entering into this
Agreement and any other Secured Credit Document. Each of the parties hereto
may file an original counterpart or a copy of this Agreement with any court as
written evidence of consent by the parties hereto to the waiver of the right
to trial by jury.
10. General.
All covenants, agreements, representations and warranties made herein
shall be deemed to have been relied on by each Lender and each Noteholder,
notwithstanding any investigation made by any Lender or any Noteholder or on
its behalf, and shall survive the execution and delivery to the Lenders and
the Noteholders hereof and thereof. The invalidity or unenforceability of any
term or provision hereof shall not affect the validity or enforceability of
any other term or provision hereof. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. No change, amendment, modification or supplementation of this
Agreement shall be binding on any party unless it is in writing and signed by
the parties hereto and the Majority Holders. This Agreement, the Consent
Letter Agreement, dated July 31, 2003, between the Borrower, K&M, Fleet
National Bank and Citizens Bank of Massachusetts, and the other agreements
referred to herein constitute the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede all prior and
current understandings and agreements, whether written or oral. This Agreement
is a Secured Credit Document. This Agreement may be executed in any number of
counterparts, which together shall constitute one instrument. This Agreement
shall be governed by and construed in accordance with the laws (other than the
conflict of laws rules) of the State of New York, except as may be required by
the UCC of other jurisdictions with respect to matters involving the
perfection of the Collateral Agent's Lien on the Credit Security located in
such other jurisdictions.
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Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first written above.
AMERICAN BILTRITE INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
---------------------------------
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇ III
Title: Vice President and Chief
Financial Officer
K&M Associates L.P.
By: AIMPAR, INC., its General Partner
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
-----------------------------------
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇ III
Title: Vice President
FLEET NATIONAL BANK,
as Collateral Agent
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
SUBSIDIARIES:
ABTRE, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
----------------------------------
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇ III
Title: Vice President
AIMPAR, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
----------------------------------
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇ III
Title: Vice President
AMERICAN BILTRITE INTELLECTUAL
PROPERTIES, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
----------------------------------
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇ III
Title: Vice President
IDEAL TAPE CO., INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
----------------------------------
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇ III
Title: Vice President
MAJESTIC JEWELRY, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
----------------------------------
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇ III
Title: Vice President
OCEAN STATE JEWELRY, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
----------------------------------
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇ III
Title: Vice President
425 DEXTER ASSOCIATES, L.P.
By: AIMPAR, INC., its General Partner
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
---------------------------------
Name: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇ III
Title: Vice President