Attached files
EXHIBIT 10.2
CANADIAN GUARANTOR SECURITY
AGREEMENT
This
Security Agreement (this “Agreement”) is made as of
March 19, 2010 by PRESSTEK
CANADA CORP./CORPORATION PRESSTEK CANADA, a Nova Scotia unlimited
liability company, having its principal place of business at 10 Glenville
Street, Greenwich, CT, USA 06831 (“Company”) in favour of PNC BANK, NATIONAL
ASSOCIATION, having an office at 340 Madison Avenue, New York, New York
10173, as agent for Lenders (as defined herein) (“Secured Party”).
BACKGROUND
Presstek,
Inc. (“PI” and together
with each other Person which becomes a borrower under the Loan Agreement (as
defined herein), collectively, “Debtor”) has entered into that
certain Revolving Credit and Security Agreement dated as of the date hereof with
Secured Party and the other financial institutions named therein or which
hereafter become a party thereto (each, a “Lender” and collectively,
“Lenders”) and Secured
Party as agent for Lenders (as amended, supplemented, restated or modified from
time to time, the “Loan
Agreement”). Pursuant to the terms of the Loan Agreement,
Lenders and Secured Party have agreed to make certain extensions of credit
available to the Debtor. Lenders and Secured Party are willing to
make such extensions of credit available to the Debtor only upon the condition,
among others, that Company execute and deliver its Guarantee of the obligations
of the Debtor to Lenders and Secured Party and that Company secure its Guarantee
by executing and delivering this Agreement to Secured Party.
NOW, THEREFORE, in
consideration of the mutual covenants and undertakings and the terms and
conditions contained herein, the parties hereto agree as follows:
1. (A) General
Definitions. When used in this Agreement, the following terms
shall have the following meanings:
“Activation Event”
shall mean a Default or Event of Default which has occurred and is
continuing.
“Activation Notice”
shall mean a notice from Secured Party to Blocked Account Bank in the form
attached to the applicable deposit account control agreement or blocked account
agreement.
“Affiliate” of any
Person shall mean (a) any Person which, directly or indirectly, is in control
of, is controlled by, or is under common control with such Person, or (b) any
Person who is a director, managing member, general partner or officer (i) of
such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote 10% or
more of the Equity Interests having ordinary voting power for the election of
directors of such Person or other Persons performing similar functions for any
such Person, or (y) to direct or cause the direction of the management and
policies of such Person whether by ownership of Equity Interests, contract or
otherwise.
“Blocked Account”
shall mean either (a) a lockbox account, dominion account or such other “blocked
account” established at a Blocked Account Bank.
“Blocked Account Bank”
shall mean a bank as may be selected by Company that shall be reasonably
acceptable to Secured Party with which Company and Secured Party have entered
into a blocked account agreement reasonably satisfactory to Secured Party and at
which there has been established a Blocked Account.
“Business Day” shall
mean any day other than Saturday or Sunday or a legal holiday on which
commercial banks are authorized or required by law to be closed for business in
Toronto, Ontario and East Brunswick, New Jersey.
“Collateral” shall,
subject to Section 2(b), Section 2(c) and Section 2(d) of this Agreement, mean and
include:
(a) all
Receivables;
(b) all
Equipment;
(c) all
Intangibles;
(d) all
Inventory;
(e) all
Investment Property;
(f) all
Equity Interests
(g) all of
Company’s right, title and interest in and to, whether now owned or hereafter
acquired and wherever located, (i) its respective goods and other property
including, but not limited to, all merchandise returned or rejected by
Customers, relating to or securing any of the Receivables; (ii) all of Company’s
rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or
other lienor, including stoppage in transit, setoff, detinue, replevin,
reclamation and repurchase; (iii) all additional amounts due to Company from any
Customer relating to the Receivables; (iv) other property, including warranty
claims, relating to any goods securing the Obligations; (v) all of Company’s
contract rights, rights of payment which have been earned under a contract
right, instruments (including promissory notes), documents, chattel paper
(including electronic chattel paper), warehouse receipts, bills of lading,
deposit accounts, letters of credit and other documents of title, whether
negotiable or not, and money; (vi) if and when obtained by Company, all real and
personal property of third parties in which Company has been granted a lien or
security interest as security for the payment or enforcement of Receivables;
(vii) all letters of credit and related rights (whether or not any such letter
of credit is evidenced by a writing) and advances of credit; (viii) all
supporting obligations; and (ix) any other goods, personal property or real
property now owned or hereafter acquired in which Company has expressly granted
a security interest or may in the future grant a security interest to Agent
hereunder, or in any amendment or supplement hereto or thereto, or under any
other agreement between Agent and Company;
(h) with
respect to the personal property described in paragraphs (a) to (g) inclusive,
all of Company’s ledger sheets, ledger cards, files, correspondence, records,
books of account, business papers, computers, computer software (owned by
Company or in which it has an interest), computer programs, tapes, disks,
documents, invoices, letters, papers, and other records in any form, electronic
or otherwise, evidencing or relating thereto; and all contracts, securities,
instruments and other rights and benefits in respect thereof;
(i) with
respect to the personal property described in paragraphs (a) to (h) inclusive,
all parts, components, renewals, substitutions and replacements thereof and all
attachments, accessories and increases, additions and accessions thereto;
and
(j) with
respect to the personal property described in paragraphs (a) to (i) inclusive,
all proceeds and products therefrom, including personal property in any form or
fixtures derived directly or indirectly from any dealing with such property or
proceeds therefrom, and any insurance or other payment as indemnity or
compensation for loss of or damage to such property or any right to such
payment, and any payment made in total or partial discharge or redemption of an
intangible, chattel paper, instrument or security.
“Company” shall have
the meaning set forth in the introductory paragraph hereof and shall extend to
all permitted successors and assigns of Company.
“Customer” means and
includes the account debtor with respect to any Receivable and/or the
prospective purchaser of goods, services or both with respect to any contract or
contract right, and/or any party who enters into or proposes to enter into any
contract or other arrangement with Company, pursuant to which Company is to
deliver any personal property or perform any services.
“Default” means any
act or event which, with the giving of notice or passage of time or both, would
constitute an Event of Default.
“Depository Account”
shall mean a depository account established at the Secured Party for the deposit
of proceeds of the Collateral.
“Environmental
Complaint” means any notice of violation, request for information or
notification that Company is potentially responsible for investigation or
cleanup of environmental conditions on its property, demand letter or complaint,
order, citation, or other written notice with regard to any Hazardous Discharge
or violation of any environmental laws affecting its property or Company’s
interest therein.
“Equipment” shall mean
and include as to Company all of Company’s goods (other than Inventory) whether
now owned or hereafter acquired and wherever located including all equipment,
machinery, apparatus, motor vehicles, fittings, furniture, furnishings,
fixtures, parts, accessories and all replacements and substitutions therefor or
accessions thereto.
“Equity Interests” of
any Person shall mean any and all shares, rights to purchase, options, warrants,
general, limited or limited liability partnership interests, member interests,
participation or other equivalents of or interest in (regardless of how
designated) equity of such Person, whether voting or nonvoting, including common
stock, preferred stock, convertible securities or any other document
constituting evidence of title to or interest in the capital, assets, property,
profits, earnings or royalties of a Person.
“Event of Default”
means the occurrence of any of the events set forth in Section 14 hereof.
“GAAP” means generally
accepted accounting principles, practices and procedures in effect from time to
time.
“Guarantee” means the
Guarantee dated as of the date hereof which is executed by Company in favor of
Secured Party and Lenders, as amended, modified, supplemented or restated from
time to time.
“Hazardous Discharge”
means any release or threat of release of a reportable quantity of any hazardous
substances on Company’s property.
“Intangibles” shall
mean and include as to Company all of Company’s intangibles, whether now owned
or hereafter acquired, including all payment intangibles, all choses in action,
causes of action, corporate or other business records, inventions, designs,
patents, patent applications, equipment formulations, manufacturing procedures,
quality control procedures, trademarks, trademark applications, service marks,
trade secrets, goodwill, copyrights, design rights, software, computer
information, source codes, codes, records and updates, registrations, licenses,
franchises, customer lists, tax refunds, tax refund claims, computer programs,
all claims under guaranties, security interests or other security held by or
granted to Company to secure payment of any of the Receivables by a Customer
(other than to the extent covered by Receivables) all rights of indemnification
and all other intangible property of every kind and nature (other than
Receivables).
“Inventory” shall mean
and include as to Company all of Company’s now owned or hereafter acquired
goods, merchandise and other personal property, wherever located, to be
furnished under any consignment arrangement, contract of service or held for
sale or lease, all raw materials, work in process, finished goods and materials
and supplies of any kind, nature or description which are or might be used or
consumed in Company’s business or used in selling or furnishing such goods,
merchandise and other personal property, and all documents of title or other
documents representing them.
“Investment Property”
means shall have the meaning set forth in the PPSA, and shall mean and include
as to Company all of Company’s now owned or hereafter acquired securities
(whether certificated or uncertificated), securities entitlements, securities
accounts, commodities contracts and commodities accounts.
“Loans” means all
extensions of credit under the Loan Agreement.
“Loan Agreement” shall
have the meaning set forth in the Background paragraph hereof.
“Obligations” means
and includes all Loans, all “Obligations” (as defined in the Guarantee) of
Company to Secured Party and Lenders under the Guarantee, all advances, debts,
liabilities, obligations, covenants and duties owing by Company to Secured Party
and Lenders (or any Person that directly or indirectly controls or is controlled
by or is under common control with Secured Party or any Lender) of every kind
and description (whether or not evidenced by the Guarantee, any note or other
instrument and whether or not for the payment of money or the performance or
non-performance of any act), direct or indirect, absolute or contingent, due or
to become due, contractual or tortious, liquidated or unliquidated, whether
existing by operation of law or otherwise now existing or hereafter arising
including, without limitation, all payments Company is required to make by law
or otherwise arising under or as a result of this Agreement, together with all
reasonable out-of-pocket expenses and reasonable legal fees chargeable to
Debtor’s account or incurred by Secured Party and/or any Lender in connection
herewith whether provided for herein or in any other agreement, instrument or
document executed by or on behalf of Company or delivered to Secured Party or
any Lender relating to this Agreement or the transactions contemplated
hereby.
“Permitted
Encumbrances” shall mean (a) liens in favor of Secured Party for the
benefit of Secured Party and Lenders; (b) liens for taxes, assessments or other
governmental charges not delinquent or being contested in good faith and by
appropriate proceedings and with respect to which proper reserves have been
taken by the Company; provided, that, the lien shall have no effect on the
priority of the liens in favor of Secured Party or the value of the assets in
which Secured Party has such a lien and a stay of enforcement of any such lien
shall be in effect; (c) liens disclosed in the financial statements referred to
in Section 5.5 of the Loan Agreement, the existence of which Secured Party has
consented to in writing; (d) deposits or pledges to secure obligations under
worker’s compensation, social security or similar laws, or under unemployment
insurance; (e) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations, surety
and appeal bonds and other obligations of like nature arising in the ordinary
course of business; (f) liens arising by virtue of the rendition, entry or
issuance against the Company, or any property of the Company, of any judgment,
writ, order, or decree for so long as each such lien (a) is in existence for
less than 30 consecutive days after it first arises or is being Properly
Contested (as defined in the Loan Agreement ) and (b) is at all times junior in
priority to any liens in favor of Secured Party; (g) mechanics’, workers’,
materialmen’s or other like liens arising in the ordinary course of business
with respect to obligations which are not overdue for a period of more than 30
days or which are being contested in good faith by the Company; (h) liens placed
upon fixed assets hereafter acquired to secure a portion of the purchase price
thereof, provided that (x) any such lien shall not encumber any other property
of the Company and (y) the aggregate amount of Indebtedness (as defined in the
Loan Agreement) secured by such liens incurred as a result of such purchases
during any fiscal year shall not exceed the amount provided for in Section 7.6
of the Loan Agreement; and (i) liens disclosed on Schedule 1(A)
hereto.
“Person” shall mean
any individual, sole proprietorship, partnership, corporation, business trust,
joint stock company, trust, unincorporated organization, association, limited
liability company, limited liability partnership, institution, public benefit
corporation, joint venture, entity or government (whether federal, state,
county, city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof).
“PPSA” means the Personal Property Security
Act (Ontario) as from time to time in effect; provided, however, that in
the event that, by reason of mandatory provisions of law, any of the attachment,
perfection or priority of the security interest hereunder in any collateral is
governed by the personal property security legislation as in effect in a
jurisdiction other than Ontario, the term “PPSA” shall mean the personal
property security legislation as in effect in such other jurisdiction for the
purposes of definitions related to such provisions.
“Receivables” shall
mean and include as to Company all of Company’s accounts, contract rights,
instruments (including those evidencing indebtedness owed to Company by its
Affiliates), documents, chattel paper (including electronic chattel paper),
intangibles relating to accounts, drafts and acceptances, credit card
receivables and all other forms of obligations owing to Company arising out of
or in connection with the sale or lease of Inventory or the rendition of
services, all supporting obligations, guarantees and other security therefor,
whether secured or unsecured, now existing or hereafter created, and whether or
not specifically sold or assigned to Secured Party hereunder.
“Secured Party” shall
have the meaning set forth in the introductory paragraph hereof and shall
include its successors and assigns.
“Subsidiary” of any
Person means a corporation or other entity of whose shares of stock or other
ownership interests having ordinary voting power (other than stock or other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the directors of such corporation, or other
Persons performing similar functions for such entity, are owned, directly or
indirectly, by such Person.
“UCC” means the
Uniform Commercial Code, as adopted in the State of New York, as amended or
revised from time to time and any successor statute.
(B) Accounting
Terms. Any accounting terms used in this Agreement which are
not specifically defined shall have the meanings customarily given them in
accordance with GAAP.
(C) Other
Terms. In this Agreement, (x) the words “goods”, “consumer
goods”, “account”, “inventory”, “crops”, “equipment”, “fixtures”, “chattel
paper”, “document of title”, “instrument”, “money”, “security”, “securities”,
“intangible”, “receiver”, “proceeds” and “accessions” shall have the same
meanings as their defined meanings where such words are defined in the PPSA, and
(y) the words “certificated security”; “security”, and “uncertificated security”
shall have the same meanings as their defined meanings where such words are
defined in the Securities
Transfer Act (Ontario) (the “STA”); provided that, when
used herein, the terms “certificated security” and “uncertificated security”
shall be understood to mean a certificated security or uncertificated security,
as the case may be, that is held directly by and registered in the name of or
endorsed to the Company or the Agent or their respective nominees, as
applicable, and not a certificated security or uncertificated security to which
the Company or the Agent, as applicable, has a security entitlement. All other
terms used in this Agreement and defined in the PPSA shall have the meaning
given therein unless otherwise defined herein. To the extent the
definition of any category or type of collateral is expanded by any amendment,
modification or revision to the PPSA, such expanded definition will apply
automatically as of the date of such amendment, modification or
revision.
2. Security
Interest.
(a) To secure
the prompt payment and performance to Secured Party and each Lender of the
Obligations, Company hereby assigns, pledges and grants to Secured Party for its
benefit and for the ratable benefit of each Lender a continuing security
interest in and to all of its Collateral, whether now owned or existing or
hereafter acquired or arising and wheresoever located. Company shall
mark its books and records as may be necessary or appropriate to evidence,
protect and perfect Secured Party’s security interest and shall cause its
financial statements to reflect such security interest.
(b) Notwithstanding
Section 2(a) of this Agreement, the Company’s grant of security in trade-marks
(as defined in the Trade-marks
Act (Canada)) under this Agreement shall be limited to a grant by the
Company of a security interest in all of the Company’s right, title and interest
in such trade-marks.
(c) If the
grant of any security interest created pursuant to the terms hereof in respect
of any contract, right, licence or permit would result in (i) the
unenforceability of any right of the Company therein or (ii) the termination or
breach pursuant to the terms of such contract, right, licence or permit, then
the applicable contract, right, licence or permit will be held in trust by the
Company for the Agent (for the benefit of the Lenders) and, on the exercise by
the Agent of any of its rights or remedies under this Agreement following an
Event of Default, will be assigned by the Company as directed by the Agent;
provided that
such security interest shall attach to such contract, right, licence or permit
immediately at such time as the condition causing such unenforceability,
termination or breach shall be remedied and, to the extent severable, shall
attach immediately to any portion of such contract, right, licence or permit
that does not result in any of the consequences specified in (i) or (ii)
above.
(d) The
security interest granted hereby shall not extend or apply to, and Collateral
shall not include, the last day of the term of any lease or agreement for lease
of real property, but upon enforcement of such security interest, the Company
shall stand possessed of such last day in trust to assign the same to any Person
acquiring such term.
(e) Company
shall take all action that may be necessary, or that Secured Party may
reasonably request, so as at all times to maintain the validity, perfection,
enforceability and priority of Secured Party’s security interest in the
Collateral or to enable Secured Party to protect, exercise or enforce its rights
hereunder and in the Collateral, including, but not limited to, (i) promptly
discharging all liens other than Permitted Encumbrances, (ii) taking
commercially reasonable efforts to obtain landlords’ or mortgagees’ lien
waivers, (iii) delivering to Secured Party, endorsed or accompanied by such
instruments of assignment as Secured Party may specify, and stamping or marking,
in such manner as Secured Party may specify, any and all chattel paper,
instruments, letters of credits and advices thereof and documents evidencing or
forming a part of the Collateral, (iv) entering into warehousing, lockbox and
other custodial arrangements satisfactory to Secured Party, and (v) executing
and delivering financing statements, control agreements, instruments of pledge,
mortgages, notices and assignments, in each case in form and substance
satisfactory to Secured Party, relating to the creation, validity, perfection,
maintenance or continuation of Secured Party’s security interest under the PPSA,
the UCC or other applicable law. By its signature hereto, Company
hereby authorizes Secured Party to file against Company, one or more financing
continuation or amendment statements pursuant to the PPSA, the UCC or other
applicable law in form and substance satisfactory to Secured Party (which
statements may have a description of collateral which is broader than that set
forth herein). All charges, expenses and fees Secured Party may incur
in doing any of the foregoing, and any local taxes relating thereto, shall be
paid to Secured Party promptly upon demand.
(f) The
Company acknowledges and agrees that: (i) value has been given by the Secured
Party; (ii) it has rights in the Collateral or the power to transfer rights in
the Collateral; (iii) the security interest will attach when the Debtor signs
this Agreement; and (iv) it has not otherwise agreed to postpone the time of
attachment.
3. Representations Concerning
the Collateral. Company represents and warrants:
(a) its
Collateral (i) is owned solely by Company free and clear of all claims, liens,
security interests and encumbrances (including without limitation any claims of
infringement) except (A) those in Secured Party’s favor and (B) Permitted
Encumbrances and (ii) is not subject to any agreement prohibiting the granting
of a security interest or requiring notice of or consent to the granting of a
security interest;
(b) (i) all
Receivables (x) represent complete bona fide transactions with Customers in the
ordinary course of Company’s business which require no further act under any
circumstances on Company’s part to make such Receivables payable by the
Customers, (y) to the best of Company’s knowledge, are not subject to any
present, future or contingent offsets, disputes or counterclaims, and (z) do not
represent bill and hold sales, consignment sales, guaranteed sales, sale or
return or other similar understandings or obligations of Company, (ii) to the
best of Company’s knowledge, there are no facts, events or occurrences which in
any way impair the validity of any Receivable or enforcement thereof or tend to
reduce the amount payable under any Receivables and (iii) Company has no
knowledge that any Customer is unable generally to pay its debts as they become
due.
(c) all
Inventory is of good and merchantable quality, free from any
defects. No Inventory is subject to any licensing, patent, royalty,
trademark, tradename or copyright agreements with any third
parties. The completion of manufacture, sale or other disposition of
Inventory by Secured Party following an Event of Default shall not require the
consent of any Person and shall not constitute a breach or default under any
contract or agreement to which Company is a party or to which such property is
subject.
(d) all
deposit accounts and investment accounts of Company are set forth on Schedule
3(d).
4. Covenants Concerning the
Collateral. Company covenants that from and after the date of
this Agreement and until the Obligations are paid in full in cash it
shall:
(a) not
dispose of any of the Collateral whether by sale, lease or otherwise except for
(i) the sale of Inventory in the ordinary course of business, (ii) the
disposition or transfer of obsolete surplus, scrap and worn-out Equipment in the
ordinary course of business during any fiscal year having an aggregate fair
market value of not more than $200,000 (inclusive of amounts disposed of by PI),
and (iii) transfers and dispositions in respect of obsolete intellectual
property assets;
(b) not
encumber, mortgage, pledge, assign or grant any security interest in any
Collateral or any of Company’s other assets to anyone other than Secured Party,
except for Permitted Encumbrances;
(c) place
notations upon Company’s books of account and any financial statement prepared
by Company to disclose Secured Party’s security interest in the
Collateral;
(d) defend
the Collateral against the claims and demands of third parties.
(e) keep and
maintain the Equipment in good operating condition, except for ordinary wear and
tear, and shall make all necessary repairs and replacements thereof so that the
value and operating efficiency shall at all times be maintained and
preserved. Company shall not permit any such items to become a
fixture to real estate or accessions to other personal property other than when
such real estate or other personal property is owned by Company, PI or any of
their Subsidiaries and Secured Party has a first priority lien or security
interest in such real estate or other personal property;
(f) not
extend the payment terms of any material amount of Receivables without prompt
notice thereof to Secured Party;
(g) perform
all other steps reasonably requested by Secured Party to create and maintain in
Secured Party’s favor a valid perfected first priority security interest in all
Collateral; and
(h) not grant
“control” (within the meaning of such term under Section 1(2) of the PPSA) over
any Investment Property to any Person other than Agent.
5. Establishment of Blocked
Accounts. All proceeds of Collateral of the Company shall be
deposited by the Company into either (x) Blocked Accounts established at a
Blocked Account Bank pursuant to an arrangement with such Blocked Account Bank
as may be selected by Secured Party and be reasonably acceptable to Secured
Party or (y) Depository Accounts established at the Secured Party for the
deposit of such proceeds. The Company, Secured Party and each Blocked
Account Bank shall enter into a deposit account control agreement or blocked
account agreement in form and substance reasonably satisfactory to Secured
Party, directing such Blocked Account Bank, upon and following the occurrence of
an Activation Event, in accordance with the terms of the applicable Activation
Notice, to transfer in immediately available funds, on a daily basis, all such
funds so deposited to Secured Party, either to any account maintained by Secured
Party at said Blocked Account Bank or by wire transfer to appropriate account(s)
of Secured Party. The Company will promptly deposit and direct its account
debtors that remit payments by electronic funds transfers to directly remit, all
payments constituting accounts and all payments constituting proceeds of
Collateral in the identical form in which such payments are made, whether by
cash, cheque or other manner into such Blocked Accounts as appropriate.
All funds deposited in such Blocked Accounts shall immediately become the
property of Secured Party for the rateable benefit of the Lenders and the
Company shall obtain the agreement by such Blocked Account Bank to waive any
offset rights against the funds so deposited. Each agreement with respect
to a Blocked Account shall not be terminable by the Company without the express
written consent of Secured Party, until this Agreement shall have been
terminated in accordance with its terms and all Obligations paid in full in
immediately available funds. Neither Secured Party nor any Lender assumes any
responsibility for such blocked account arrangement, including any claim of
accord and satisfaction or release with respect to deposits accepted by any
Blocked Account Bank thereunder.
6. Collection and Maintenance
of Collateral and Records. Company shall keep and maintain, at
its own cost and expense, satisfactory and complete records of the Collateral
including, without limitation, a record of any and all payments received and any
and all credits granted with respect to the Collateral and all other dealings
with the Collateral. Secured Party may at any time verify Company’s
Receivables utilizing an audit control company or any other agent of Secured
Party. Secured Party or Secured Party’s designee may notify Customers
at any time following the occurrence and during the continuance of an Event of
Default, at Secured Party’s reasonable discretion, of Secured Party’s security
interest in Receivables (contracts, instruments, or chattel paper as the case
may be), collect them directly from the Customers or parties to contracts,
instruments and chattel paper and charge the collection costs and expenses to
the applicable Company’s account, but, unless and until Secured Party does so or
gives Company other instructions, Company shall collect all Receivables for
Secured Party, receive all payments thereon for Secured Party’s benefit in trust
as Secured Party’s trustee and, in their original form with all necessary
endorsements, deposit them in the Blocked Account or, as directed by Secured
Party, immediately deliver them to Secured Party. Upon the occurrence and
continuation of an Activation Event, the Company shall collect as Secured
Party’s property and in trust for Secured Party all amounts received on its
Receivables and shall not commingle any collections received on its Receivables
with the Company’s funds or use the same except to pay the Obligations. Company
shall provide Secured Party, as requested by Secured Party, such schedules,
documents and/or information regarding the Collateral as Secured Party may
require.
7. Inspections. At
all reasonable times Agent and each Lender shall have full access to and the
right to audit, check, inspect and make abstracts and copies from Company’s
books, records, audits, correspondence and all other papers relating to the
Collateral and the operation of Company’s business (in each case, other than
such privileged communications with legal counsel). Agent, any Lender
and their agents may enter upon any premises of Company at any time during
business hours and at any other reasonable time, and from time to time, for the
purpose of inspecting the Collateral and any and all records pertaining thereto
and the operation of Company’s business and performing appraisals of Company’s
Inventory, at Company’s sole cost and expense, which appraisal shall be
performed one time during any year; provided, however, if a Default or Event of
Default has occurred and is continuing such appraisal shall be performed as
often as Agent in its sole discretion may request. The Company shall
be provided with reasonable notice of any of the foregoing, provided, that no
such notice shall be required at any time that an Event of Default has occurred
and is continuing.
8. Additional Representations,
Warranties and Covenants. Company represents, warrants, and
covenants that:
(a) Company
is an unlimited liability company duly organized, validly existing and in good
standing under the laws of the Province of Nova Scotia and duly qualified and in
good standing in every other state or jurisdiction in which the nature of
Company’s business or the ownership of its assets requires such qualification,
except where the failure to so qualify could not reasonably be expected to have
a Material Adverse Effect (as defined in the Loan Agreement).
(b) the
execution, delivery and performance of this Agreement (i) has been duly
authorized, (ii) is not in contravention of Company’s constating documents or of
any indenture, agreement or undertaking to which Company is a party or by which
Company is bound and (iii) is within Company’s corporate powers.
(c) this
Agreement is Company’s legal, valid and binding obligation, enforceable in
accordance with its terms, except as enforceability may be limited by applicable
federal or state bankruptcy, reorganization, moratorium or insolvency law
relating to or affecting the enforcement of creditor’s rights
generally.
(d) it keeps
and will continue to keep all of its books and records concerning the Collateral
at Company’s chief executive offices located at the address set forth in the
introductory paragraph of this Agreement and will not move such books and
records without giving Secured Party at least thirty (30) days prior written
notice and taking all actions deemed by the Secured Party necessary to
continuously protect and perfect Secured Party’s liens upon the Collateral; and
the Collateral is not stored or located at any locations other than as set forth
on Schedule 8(d).
(e) (i) the
operation of Company’s business is and will continue to be in compliance in all
material respects with all applicable federal, state and local laws, including
but not limited to all applicable environmental laws and regulations, except
where the failure to comply could not reasonably be expected to have a Material
Adverse Effect;
(ii) Company
will establish and maintain a system to assure and monitor continued compliance
in all material respects with all applicable environmental laws, which system
shall include periodic reviews of such compliance;
(iii) Company
shall respond promptly to any Hazardous Discharge or Environmental Complaint and
take all necessary action in order to safeguard the health of any Person and to
avoid subjecting the Collateral to any lien, charge, claim or
encumbrance;
(iv) Company
shall defend and indemnify the Secured Party and hold the Secured Party harmless
from and against all loss, liability, damage and expense, claims, costs, fines
and penalties, including attorney’s fees, suffered or incurred by the Secured
Party under or on account of any environmental laws.
(f) there is
no pending or threatened litigation, actions or proceeding which could
reasonably be expected to cause a Material Adverse Effect.
(g) it will
pay or discharge when due all taxes, assessments and governmental charges or
levies imposed upon it unless same are not delinquent or same constitute
Permitted Encumbrances.
(h) it will
promptly inform Secured Party in writing of: (i) the commencement of all
proceedings and investigations by or before and/or the receipt of any notices
from, any governmental or nongovernmental body and all actions and proceedings
in any court or before any arbitrator against or in any way concerning any of
Company’s properties, assets or business, which could reasonably be expected to
singly or in the aggregate, have a Material Adverse Effect; (ii) any amendment
of Company’s certificate of incorporation or by-laws; (iii) any change in
Company’s business, assets, liabilities, condition (financial or otherwise),
results of operations or business prospects which has had or could reasonably be
expected to have a Material Adverse Effect on Company; (iv) any Event of Default
or Default; (v) any default or any event which with the passage of time or
giving of notice or both would constitute a default under any agreement for the
payment of money to which Company is a party or by which Company or any of
Company’s properties may be bound which would have a Material Adverse Effect;
(vi) any change in the location of Company’s chief executive offices; (vii) any
change in the location of Company’s Inventory or Equipment from the locations
listed on Schedule 8(d) attached hereto, (viii) any additional licenses,
patents, copyrights, trademarks, tradenames or corporate names; (ix) any
material delay in Company’s performance of any of its obligations to any
Customer and of any assertion of any material claims, offsets or counterclaims
by any Customer and of any allowances, credits and/or other monies granted by it
to any Customer; (x) any material adverse information obtained by Company
relating to the financial condition of any Customer; and (xi) any material
return of goods.
(i) it will
bear the full risk of loss from any loss of any nature whatsoever with respect
to the Collateral. At its own cost and expense in amounts and with
carriers acceptable to Secured Party, it or the Debtor shall (i) keep all its
insurable properties and properties in which it has an interest insured against
the hazards of fire, flood, sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, as is customary
in the case of companies engaged in businesses similar to Company’s including,
without limitation, public and product liability insurance, worker’s
compensation, insurance against larceny, embezzlement or other criminal
misappropriation of insured’s officers and employees and business interruption
insurance; and (ii) furnish Secured Party with (x) copies of all policies and
evidence of the maintenance of such policies by the renewal thereof at least ten
(10) days before any expiration date, and (y) appropriate loss payable
endorsements in form and substance satisfactory to Secured Party, naming Secured
Party as loss payee and providing that as to Secured Party the insurance
coverage shall not be impaired or invalidated by any act or neglect of Company
and the insurer will provide Secured Party with at least thirty (30) days notice
prior to cancellation. Debtor shall instruct the insurance carriers
that in the event of any loss thereunder, the carriers shall make payment for
such loss to Secured Party and not to Debtor or Company and Secured Party
jointly. If any insurance losses are paid by check, draft or other
instrument payable to Debtor and/or Company and Secured Party jointly, Secured
Party may endorse Company’s name thereon and do such other things as Secured
Party may deem advisable to reduce the same to cash. Upon the
occurrence and continuation of a Default or Event of Default and the exercise by
Agent of remedies under Article XI of the Loan Agreement, Secured Party is
hereby authorized to adjust and compromise claims under the insurance coverage
referred to herein. All loss recoveries received by Secured Party
upon any such insurance may be applied to the Obligations, in such order as
Secured Party in its sole discretion shall determine. Any surplus
shall be paid by Secured Party to Company or applied as may be otherwise
required by law. Any deficiency thereon shall be paid by Company to
Secured Party, on demand.
(j) any time
and from time to time, upon the written request of Secured Party and at the sole
expense of the Debtor and Company, Company shall promptly and duly execute and
deliver any and all such further instruments and documents and take such further
actions as Secured Party may reasonably deem necessary to obtain the full
benefits of this Agreement and of the rights and powers herein
granted.
(k) it will
not (i) create, incur, assume or suffer to exist any indebtedness (exclusive of
trade debt) whether secured or unsecured other than Company’s indebtedness to
Secured Party and as set forth on Schedule 8(k) attached hereto and made a part
hereof; (ii) directly or indirectly, prepay any indebtedness (other than to
Secured Party), or repurchase, redeem, retire or otherwise acquire any
indebtedness of Company; (iv) make advances, loans or extensions of credit to
any Person; (v) become either directly or contingently liable upon the
obligations of any Person by assumption, endorsement or guarantee thereof or
otherwise; (vi) enter into any merger, amalgamation, consolidation or other
reorganization with or into any other Person or acquire all or a portion of the
assets or stock of any Person or permit any other Person to consolidate with or
merge with it; (vii) form any Subsidiary or enter into any partnership, joint
venture or similar arrangement, except that Company may form a new Subsidiary so
long as such new Subsidiary joins the Loan Agreement as a Borrower or becomes a
Guarantor of the “Obligations” (as defined in the Loan Agreement); (viii)
materially change the nature of the business in which it is presently engaged;
(ix) enter into any transaction with any Affiliate, except in ordinary course on
arms-length terms; (xi) bill Receivables under any name except its present name;
or (xii) substantially change the nature of its business in which it is
presently engaged.
9. Condition Precedent to
Effectiveness. This Agreement shall not be effective until the
Company has executed and delivered the agreements to which it is a party and
made or cause to have been made such deliveries and filings for which it is
responsible, in each case as set out in the closing agenda attached as Exhibit
“A” to this Agreement.
10. Power of
Attorney. Company hereby irrevocably appoints Secured Party or
any other Person whom Secured Party may designate as Company’s attorney-in-fact,
with full power and authority in place and stead of Company and in the name of
Company or in its own name to: (i) endorse Company’s name on any
checks, notes, acceptances, money orders, drafts or other forms of payment or
security that may come into Secured Party’s possession; (ii) sign Company’s name
on any invoice or bill of lading relating to any Receivables, drafts against
customers, schedules and assignments of Receivables, notices of assignment,
financing statements and other public records, verifications of account and
notices to or from Customers; (iii) verify the validity, amount or any other
matter relating to any Receivable by mail, telephone, telegraph or otherwise
with Customers; (iv) execute customs declarations and such other documents as
may be required to clear Inventory through United States or Canadian Customs;
(v) do all things necessary to carry out this Agreement and all related
documents; (vi) continue any insurance existing pursuant to the terms of this
Agreement and pay all or any part of the premium therefor and the cost thereof;
and (vii) notify the post office authorities to change the address for delivery
of Company’s mail to an address designated by Secured Party, and to receive,
open and dispose of all mail addressed to Company; provided, however, such power
shall not be exercised with respect to clauses (i), (ii) and (iv) through (vii)
unless an Event of Default has occurred and is continuing. Company
hereby ratifies and approves all acts of the attorney. The powers
conferred on the Secured Party hereunder are solely to protect its interests in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Neither Secured Party nor the attorney will be liable for any
acts or omissions or for any error of judgment or mistake of fact or
law. This power, being coupled with an interest, is irrevocable so
long as any Receivable which is assigned to Secured Party or in which Secured
Party has a security interest remains unpaid and until the Obligations are paid
in full in cash.
11. Expenses. Debtor
shall pay all of Secured Party’s out-of-pocket costs and expenses, including
without limitation fees and disbursements of counsel and appraisers, in
connection with the preparation, execution and delivery of this Agreement and in
connection with the prosecution or defense of any action, contest, dispute, suit
or proceeding concerning any matter in any way arising out of, related to or
connected with this Agreement. Debtor shall also pay all of Secured
Party’s reasonable out-of-pocket costs and expenses, including without
limitation fees and disbursements of counsel, in connection with (a) the
preparation, execution and delivery of any waiver, any amendment thereto or
consent proposed or executed in connection with the transactions contemplated by
this Agreement, (b) Secured Party’s obtaining performance of Company’s
obligations under this Agreement, including, but not limited to, the enforcement
or defense of Secured Party’s security interests, assignments of rights and
liens hereunder as valid perfected security interests, (c) any attempt to
inspect, verify, protect, collect, sell, liquidate or otherwise dispose of any
Collateral and (d) any consultations in connection with any of the
foregoing. All such costs and expenses together with all filing,
recording and search fees, taxes and interest payable by Debtor to Secured Party
shall be payable promptly following demand and shall be secured by the
Collateral.
12. Assignment By Secured Party
and Lenders. Secured Party and Lenders may assign any or all
of the Obligations together with any or all of the security therefor and any
transferee shall succeed to all of Secured Party’s and Lenders’ rights with
respect thereto. Upon such transfer, Secured Party and Lenders shall
be released from all responsibility for the Collateral to the extent same is
assigned to any transferee.
13. Waivers. Company
waives demand, notice, protest, notice of acceptance of this Agreement, notice
of loans made, credit extended, Collateral received or delivered or other action
taken in reliance hereon and all other demands and notices of any
description. With respect to both the Obligations and the Collateral,
Company assents to any extension or postponement of the time of payment or any
other indulgence, to any substitution, exchange or release of or failure to
perfect any security interest in any Collateral, to the addition or release of
any party or person primarily or secondarily liable, to the acceptance of
partial payment thereon and the settlement, compromising or adjusting of any
thereof, all in such manner and at such time or times as the Secured Party may
deem advisable.
14. Events of
Default. The occurrence of any one or more of the following
events shall constitute an “Event of Default”:
(a) the
occurrence of an Event of Default under the Loan Agreement.
(b) failure
by Company to make payment of any of its Obligations when required hereunder or
under the Guarantee.
(c) failure
to perform under and/or committing any breach of this Agreement or the Guarantee
or any other agreement between Company, Secured Party and/or any Lender, except
that the failure to perform any term, provision, condition or covenant similar
to those terms, provisions, conditions or covenants described in Section
10.5(ii) of the Loan Agreement shall constitute an Event of Default hereunder
only if such failure is not cured within thirty (30) days after receipt of
notice by the Secured Party of such failure.
(d) a default
by Company in the payment, when due, of any principal of or interest on any
indebtedness for money borrowed other than such a default that could not
reasonably be expected to have a Material Adverse Effect.
(e) occurrence
of a default under any agreement to which Company is a party with third parties
which has a Material Adverse Effect.
(f) any
representation, warranty or statement made by Company hereunder, in the
Guarantee, or in any certificate, statement or document delivered pursuant to
the terms hereof, or in connection with the transactions contemplated by this
Agreement should at any time be false or misleading in any material
respect.
(g) an
attachment or levy is made upon Company’s assets having an aggregate value in
excess of $25,000, or a judgment is rendered against Company or any of Company’s
property involving a liability of more than $25,000, which shall not have been
vacated, discharged, stayed or bonded pending appeal within forty (40) days from
the entry thereof; provided, however, if any such judgment is rendered against
the Company and PI jointly, no Event of Default shall be deemed to have occurred
under this subclause (g) unless such judgment is rendered against the Company
and PI for an aggregate amount in excess of $250,000.
(h) any lien
created hereunder for any reason ceases to be or is not a valid and perfected
lien having a first priority interest (other than any Permitted Encumbrances
which by operation of law would take priority over Agent’s liens in the subject
Collateral, it being understood that the lien described in clause (b) of the
definition of Permitted Encumbrances may not take priority over the Secured
Party’s liens and still constitute a Permitted Encumbrance).
(i) if
Company shall (i) apply for, consent to or suffer to exist the appointment of,
or the taking of possession by, a receiver, interim receiver, manager,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under the United States Bankruptcy Code, the Companies’ Creditors Arrangement
Act, the Bankruptcy and
Insolvency Act, the Winding-up and Restructuring
Act or any other U.S. or Canadian federal, Canadian provincial or U.S.
state bankruptcy, reorganization, moratorium or insolvency law relating to or
affecting the enforcement of creditors’ rights generally (as now or hereafter in
effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii) take any action for the purpose of effecting any of the
foregoing.
(j) Company
shall admit in writing its inability, or be generally unable to pay its debts as
they become due or cease operations of its present business.
(k) [RESERVED].
(l) if
Company attempts to terminate, challenges the validity of, or challenges its
liability under, the Guarantee.
15. Remedies. Upon
the occurrence and during the continuation of any Event of Default, Secured
Party shall have the right to demand repayment in full of all Obligations,
whether or not otherwise due (in such case Secured Party may deposit any and all
such amounts realized in a cash collateral deposit account to be maintained as
security for the Obligations). Until all Obligations have been fully
satisfied in cash, Secured Party shall retain its security interest in all
Collateral. Secured Party shall have, in addition to all other rights provided
herein, the rights and remedies of a secured party under the PPSA and under
other applicable law, and all other legal and equitable rights to which Secured
Party may be entitled, including without limitation, the right to take immediate
possession of the Collateral and to require Company to assemble the Collateral,
at Debtor’s expense, and to make it available to Secured Party at a place
designated by Secured Party which is reasonably convenient to both parties and
to enter any of the premises of Company or wherever the Collateral shall be
located, with or without force or process of law, and to keep and store the same
on said premises until sold (and if said premises be the property of Company,
Company agrees not to charge Secured Party for storage
thereof). Further, Secured Party may, at any time or times after the
occurrence and during the continuance of an Event of Default, sell and deliver
all Collateral held by or for Secured Party in one or more parcels at public or
private sale for cash, upon credit or otherwise, at such prices and upon such
terms as Secured Party, in Secured Party’s sole discretion, deems advisable or
Secured Party may otherwise recover upon the Collateral in any commercially
reasonable manner as Secured Party, in its sole discretion, deems
advisable. Except as to that part of the Collateral which is
perishable or threatens to decline speedily in nature or is of a type
customarily sold on a recognized market, the requirement of reasonable notice
shall be met if such notice is mailed postage prepaid to Debtor at Debtor’s
address as shown in Secured Party’s records, at least ten (10) days before the
time of the event of which notice is being given. Secured Party may
be the purchaser at any sale, if it is public. Until Secured Party is
able to effect a sale, lease, or other disposition of Collateral, Secured Party
shall have the right to use or operate 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 Secured
Party. Secured Party shall have no obligation to Company to maintain
or preserve the rights of Company as against third parties with respect to
Collateral while Collateral is in the possession of Secured Party. Secured Party
may, if it so elects, by appointment in writing appoint a receiver, interim
receiver, receiver and manager or agent (each referred to as the “Receiver”) over all or any
part of the Collateral, and may remove or replace such Receiver from time to
time or may institute proceedings in any court of competent jurisdiction for the
appointment of a Receiver of the Collateral; and the term “Secured Party” when
used in the remedial sections of this Agreement will include any Receiver so
appointed and the agents, officers and employees of such Receiver; and the
Secured Party will not be in any way responsible for any misconduct or
negligence of any such Receiver. In connection with the exercise of the
foregoing remedies, Secured Party is granted permission to use all of Company’s
(a) trademarks, tradenames, tradestyles, patents, patent applications, licenses,
franchises and other proprietary rights which are used in connection with
Inventory for the purpose of disposing of such Inventory and (b) Equipment for
the purpose of completing the manufacture of unfinished goods. The
proceeds realized from the sale of any Collateral shall be applied as follows:
first, to the costs, expenses and legal fees and expenses incurred by Secured
Party for collection and for acquisition, completion, protection, removal,
storage, sale and deliver of the Collateral; second, to the payment of the
Obligations in such order as Secured Party elects. If any deficiency
shall arise, Company shall remain liable to Secured Party therefor.
16. No Obligation to Exhaust
Remedies; Waiver. The Secured Party shall not be required to make any
demand upon, or pursue or exhaust any of their rights or remedies against, the
Company, or any other obligor, guarantor, pledgor or any other Person with
respect to the payment of the Obligations. The Secured Party may
grant extensions of time and other indulgences, take and give up security,
accept compositions, compound, compromise, settle, grant releases and discharges
and otherwise deal with the Company or any other Person and others and with
Collateral and other security as the Secured Party may see fit without prejudice
to the liability of the Company or the Secured Party’s right to hold and realize
the lien granted hereunder. Furthermore, without limiting any other
provision hereof, after and during the continuance of an Event of Default, the
Secured Party may demand, collect and sue on Collateral in either the Company or
the Secured Party’s name, at the Secured Party’s option, and may endorse the
Company’s name on any and all cheques, commercial paper and any other
instruments pertaining to or constituting Collateral. Nothing herein
contained shall in any way obligate the Secured Party to grant, continue, renew,
extend time for payment of or accept anything which constitutes or would
constitute Obligations. Failure by Secured Party to exercise any
right, remedy or option under this Agreement or any supplement hereto or any
other agreement between Company and Secured Party or delay by Secured Party in
exercising the same, will not operate as a waiver; no waiver by Secured Party
will be effective unless it is in writing and then only to the extent
specifically stated.
17. Cumulative
Remedies. Secured Party’s rights and remedies under this Agreement will
be cumulative and not exclusive of any other right or remedy which Secured Party
may have.
18. Delegation of Duties.
Secured Party may execute any of its rights and remedies under this Agreement by
or through agents, employees or attorneys-in-fact and shall be entitled to
advice of counsel and other consultants or experts concerning all matters
pertaining to such rights and remedies. Secured Party shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by Secured Party with reasonable care. Secured Party may
also from time to time, when the Secured Party deems it to be necessary or
desirable, appoint one or more trustees, co-trustees, collateral co-agents,
collateral subagents or attorneys-in-fact (each, a “Subagent”) with respect to all
or any part of the Collateral; provided that no such Subagent shall be
authorized to take any action with respect to any Collateral unless and except
to the extent expressly authorized in writing by Secured
Party. Should any instrument in writing from Secured Party be
required by any Subagent so appointed by Secured Party to more fully or
certainly vest in and confirm to such Subagent such rights, powers, privileges
and duties, the Company shall execute, acknowledge and deliver any and all such
instruments promptly upon request by Secured Party. If any Subagent,
or successor thereto, shall die, become incapable of acting, resign or be
removed, all rights, powers, privileges and duties of such Subagent, to the
extent permitted by law, shall automatically vest in and be exercised by Secured
Party until the appointment of a new Subagent. Secured Party shall
not be responsible for the negligence or misconduct of any agent,
attorney-in-fact or Subagent that it selects in accordance with the foregoing
provisions of this Section in the absence of Secured Party’s gross negligence or
misconduct.
19. Currency Indemnity.
If, for the purposes of obtaining judgment in any court in any jurisdiction with
respect to this Agreement or the Guarantee, it becomes necessary to convert into
the currency of such jurisdiction (the “Judgment Currency”) any amount
due under this Agreement or the Guarantee in any currency other than the
Judgment Currency (the “Currency Due”), then
conversion shall be made at the Exchange Rate (as hereinafter defined) at which
Secured Party is able, on the relevant date, to purchase the Currency Due with
the Judgment Currency prevailing on the Business Day before the day on which
judgment is given. In the event that there is a change in the rate of
Exchange Rate prevailing between the Business Day before the day on which the
judgment is given and the date of receipt by Secured Party of the amount due, a
Debtor will, on the date of receipt by Secured Party, pay such additional
amounts, if any, or be entitled to receive reimbursement of such amount, if any,
as may be necessary to ensure that the amount received by Secured Party on such
date is the amount in the Judgment Currency which when converted at the rate of
exchange prevailing on the date of receipt by Secured Party is the amount then
due under this Agreement or the Guarantee in the Currency Due. If the
amount of the Currency Due which Secured Party is able to purchase is less than
the amount of the Currency Due originally due to it, the Company shall indemnify
and save Secured Party harmless from and against loss or damage arising as a
result of such deficiency. The indemnity contained herein shall
constitute an obligation separate and independent from the other obligations
contained in this Agreement or the Guarantee, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence granted
by Secured Party from time to time and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum in respect of an
amount due under this Agreement or the Guarantee or under any judgment or
order. As used herein, “Exchange Rate” shall mean the
prevailing spot rate of exchange of such bank as Secured Party may reasonably
select for the purpose of conversion of one currency to another, at or around
11:00 a.m. Toronto time, on the date on which any such conversion of currency is
to be made under this Agreement.
20. Notices. Any
notice or request hereunder may be given to Company or to Secured Party at their
respective addresses set forth below or at such other address as may hereafter
be specified in a notice designated as a notice of change of address under this
Section 18. Any notice, request, demand, direction or other
communication (for purposes of this Section 18 only, a “Notice”) to be given to
or made upon any party hereto under any provision of this Agreement shall be
given or made by telephone or in writing (which includes by means of electronic
transmission (i.e., “e-mail”) or facsimile transmission or by setting forth such
Notice on a site on the World Wide Web (a “Website Posting”) if Notice of such
Website Posting (including the information necessary to access such site) has
previously been delivered to the applicable parties hereto by another means set
forth in this Section 18) in accordance with this Section 18. Any
such Notice must be delivered to the applicable parties hereto at the addresses
and numbers set forth under their respective names on Section 18 hereof or in
accordance with any subsequent unrevoked Notice from any such party that is
given in accordance with this Section 18. Any Notice shall be
effective:
(a) In the
case of hand-delivery, when delivered;
(b) If given
by mail, four (4) days after such Notice is deposited with the United States
Postal Service, with first-class postage prepaid, return receipt requested, or
with a recognized national or international courier service;
(c) In the
case of a telephonic Notice, when a party is contacted by telephone, if delivery
of such telephonic Notice is confirmed no later than the next Business Day by
hand delivery, a facsimile or electronic transmission, a Website Posting or an
overnight courier delivery of a confirmatory Notice (received at or before noon
on such next Business Day);
(d) In the
case of a facsimile transmission, when sent to the applicable party’s facsimile
machine’s telephone number, if the party sending such Notice receives
confirmation of the delivery thereof from its own facsimile
machine;
(e) In the
case of electronic transmission, when actually received;
(f) In the
case of a Website Posting, upon delivery of a Notice of such posting (including
the information necessary to access such site) by another means set forth in
this Section 18; and
(g) If given
by any other means (including by overnight courier), when actually
received.
|
|
If
to Secured Party:
|
PNC
Bank, National Association
|
|
|
340
Madison Avenue
|
|
|
New
York, New York 10173
|
|
|
Attention: Christopher
Gauch
|
|
|
Telephone:
|
(212)
752-6368
|
|
|
Telecopy:
|
(212)
303-0060
|
|
|
with
a copy to:
|
Hahn
& Hessen LLP
|
|
|
488
Madison Avenue
|
|
|
New
York, New York 10022
|
|
|
Attention:
|
Steven
J. Seif, Esq.
|
|
|
Telephone:
|
(212)
478-7200
|
|
|
Telecopy:
|
(212)
478-7400
|
|
|
If
to Company:
|
Presstek
Canada Corp.
|
|
|
10
Glenville Street
|
|
|
Greenwich,
Connecticut 06831
|
|
|
Attention:
|
James
R. Van Horn
|
|
|
Telephone:
|
(203)
769-8032
|
|
|
Facsimile:
|
(203)
769-8099
|
|
|
with
an additional copy to:
|
McDermott
Will & Emery LLP
|
|
|
227
West Monroe Street, Suite 4400
|
|
|
Chicago,
Illinois 60606
|
|
|
Attention:
|
Michael
L. Boykins, Esq.
|
|
|
Telephone:
|
(312)
984-7599
|
|
|
Facsimile:
|
(312)
984-7700
|
21. Governing Law and Waiver of
Jury Trial. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE PROVINCE OF
ONTARIO. SECURED PARTY SHALL HAVE THE RIGHTS AND REMEDIES OF A
SECURED PARTY UNDER APPLICABLE LAW INCLUDING, BUT NOT LIMITED TO, THE
PPSA. COMPANY AGREES THAT ALL ACTIONS AND PROCEEDINGS RELATING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR ANY OTHER OBLIGATIONS SHALL BE
LITIGATED IN THE FEDERAL DISTRICT COURT OF THE SOUTHERN DISTRICT OF THE STATE OF
NEW YORK OR, AT SECURED PARTY’S OPTION, IN ANY OTHER COURTS LOCATED IN THE STATE
OF NEW YORK OR ELSEWHERE AS SECURED PARTY MAY SELECT AND THAT SUCH COURTS ARE
CONVENIENT FORUMS AND COMPANY SUBMITS TO THE PERSONAL JURISDICTION OF SUCH
COURTS. COMPANY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS THAT
SERVICE OF PROCESS UPON COMPANY MAY BE MADE BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, DIRECTED TO COMPANY C/O DEBTOR AT DEBTOR’S ADDRESS
APPEARING ON SECURED PARTY’S RECORDS, AND SERVICE SO MADE SHALL BE DEEMED
COMPLETED TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED. EACH
PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
BETWEEN COMPANY AND SECURED PARTY, AND COMPANY WAIVES THE RIGHT TO ASSERT IN ANY
ACTION OR PROCEEDING INSTITUTED BY SECURED PARTY WITH REGARD TO THIS AGREEMENT
OR ANY OF THE OBLIGATIONS ANY OFFSETS OR COUNTERCLAIMS WHICH IT MAY
HAVE.
22. Limitation of
Liability. Company acknowledges and understands that in order
to assure repayment of the Obligations, Secured Party may be required to
exercise any and all of Secured Party’s rights and remedies hereunder and agrees
that neither Secured Party nor any of Secured Party’s agents shall be liable for
acts taken or omissions made in connection herewith or therewith except for
actual bad faith.
23. Entire
Understanding. This Agreement contains the entire
understanding between Company and Secured Party and any promises,
representations, warranties or guarantees not herein contained shall have no
force and effect unless in writing, signed by the Company and Secured
Party. Neither this Agreement, nor any portion or provisions thereof
may be changed, modified, amended, waived, supplemented, discharged, cancelled
or terminated orally or by any course of dealing, or in any manner other than by
an agreement in writing, signed by the party to be charged.
24. Severability. Wherever
possible each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
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
thereof.
25. Captions. All
captions are and shall be without substantive meaning or content of any kind
whatsoever.
26. Marshaling. Secured
Party shall not be required to marshal any present or future collateral security
(including but not limited to this Agreement and the Collateral) for, or other
assurances of payment of, the Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order, and
all of its rights hereunder and in respect of such collateral security and other
assurances of payment shall be cumulative and in addition to all other rights,
however existing or arising. To the extent that it lawfully may,
Company hereby agrees that it will not invoke any law relating to the marshaling
of collateral which might cause delay in or impede the enforcement of the
Secured Party’s rights under this Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
Company hereby irrevocably waives the benefits of all such laws.
27. Counterparts; Telecopied
Signatures. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which when
taken together shall constitute one and the same instrument. Any
signature delivered by a party by facsimile transmission or electronic “pdf”
transmission shall be deemed to be an original signature hereto.
28. Construction. The
parties acknowledge that each party and its counsel have reviewed this Agreement
and that the normal rule of construction to the effect that any ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments, schedules or exhibits
thereto.
29. Receipt of
Copy. The Company hereby acknowledges receipt of a copy of
this Agreement.
[Remainder
of Page Intentionally Left Blank]
BST99
1649182-1.069646.0035
IN
WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first above written.
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PRESSTEK
CANADA CORP. / CORPORATION PRESSTEK CANADA
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|||
|
Per:
|
/S/
Jeffrey Cook
|
||
|
Name:
Jeffrey Cook
|
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|
Title: Director
|
|||
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PRESSTEK,
INC.
|
|
|
Per:
|
/S/
Jeffrey Cook
|
|
Name:
Jeffrey Cook
|
|
|
Title:
Chief Financial Officer
|
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BST99
1649182-1.069646.0035
SCHEDULES
Schedule
1(A)
Permitted
Encumbrances
|
-
|
Liens
in favor of Royal Bank of Canada (“RBC”) to secure cash management
obligations owing to RBC in connection with a CAD 100,000 letter of credit
posted by the Company in favour of ADD Capital Corp., a third party
leasing company.
|
|
-
|
Liens
in favor of RBC to secure a Visa line of credit maintained by the Company
in the amount of CAD 12,000 (account number ending in
_____).
|
BST99
1649182-1.069646.0035
Schedule
3(d)
Deposit
Accounts and Investment Accounts
|
-
|
RBC
Business Account (CAD) ____________
|
|
-
|
RBC
Business Account (USD) ____________
|
BST99
1649182-1.069646.0035
Schedule
8(d)
Inventory
Locations
|
-
|
The
Company stores Inventory at the following third party warehouse
locations:
|
Molnar
Lithographic Supplies
5925
Tomken Road, Unit 10
Mississauga,
Ontario, Canada L4W 4L8
Xpedx
Canada West
8999
Fraserton Court
Burnaby,
BC, Canada V5J 5H8
|
-
|
The
Company maintains its books and records, including without limitation,
with respect to Receivables, at:
|
c/o
Presstek, Inc.
10
Glenville Street, 3rd
Floor
Greenwich,
CT 06831
USA
|
-
|
From
time to time, Equipment and Inventory owned by the Company may be stored
at the following Presstek, Inc.
location:
|
c/o
Presstek, Inc.
201 W.
Oakton Street
Des
Plaines, IL 60018
USA
|
-
|
To
the extent title is retained by Presstek, Equipment and Inventory owned by
the Company may be located at the Customer locations previously listed and
identified to Agent, as such list of locations may be amended by the
Company from time to time.
|
BST99
1649182-1.069646.0035
Schedule
8(k)
Permitted
Indebtedness
|
-
|
Reimbursement
or other payment obligations to RBC with respect to the CAD 100,000 letter
of credit posted by the Company in favour of ADD Capital Corp., a third
party leasing company.
|
|
-
|
Reimbursement
or other payment obligations to RBC with respect to the Visa line of
credit maintained by the Company in the amount of CAD 12,000 (account
number ending in _____).
|
BST99
1649182-1.069646.0035
EXHIBIT
A
Closing
Agenda
BST99
1649182-1.069646.0035