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EXHIBIT 10.6
ACKNOWLEDGMENT AND PLEDGE AGREEMENT
ACKNOWLEDGEMENT AND PLEDGE AGREEMENT, dated as of May 14, 2001
(this "AGREEMENT"), by and among (i) Vector Group Ltd., a Delaware corporation
("VECTOR"), (ii) United States Trust Company of New York, a New York banking
corporation, as collateral agent (together with its successors and assigns, the
"COLLATERAL AGENT") on behalf of the holders (the "HOLDERS") of the 10% Senior
Secured Notes Due March 31, 2006 of BGLS Inc. issued pursuant to that certain
Note Purchase Agreement, dated as of May 14, 2001 (as amended, supplemented or
modified from time to time) between the Company and the Holders and (iii) the
Purchasers (as defined in the Note Purchase Agreement). Capitalized terms,
unless otherwise defined herein, are used herein with the meanings ascribed to
them in the Note Purchase Agreement.
1. ACKNOWLEDGEMENTS. Vector hereby acknowledges to the Holders that it
has read and understood the Note Purchase Agreement, and hereby agrees, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, that it shall comply with Sections 7.5, 8.5, 8.25, 9.1, 9.3(b),
9.4 and 9.6 of the Note Purchase Agreement. Vector shall be liable to the
Holders for any breach of such Sections of the Note Purchase Agreement to the
extent of any benefit accruing directly to it as a result of such breach.
2. PLEDGE OF COLLATERAL. As collateral security for the prompt payment
in full when due (whether at stated maturity, by acceleration or otherwise) and
performance of the Secured Obligations (as defined in the BGLS Pledge
Agreement), Vector hereby pledges and grants to the Collateral Agent for the
benefit of the Holders and the Collateral Agent a security interest in all of
Vector's right, title and interest in that certain $25,000,000 Secured Revolving
Demand Promissory Note, dated as of March 6, 2001, made by Vector Tobacco (USA)
Ltd. and Vector Tobacco Ltd. in favor of BGLS Inc. and Vector (the "SECURED
NOTE" or the "COLLATERAL").
3. NOTE POWER. Concurrently with the delivery to the Security Agent of
the Secured Note, Vector shall deliver an undated note power covering the
Secured Note, duly executed in blank by Vector.
4. REPRESENTATIONS AND WARRANTIES. Vector represents and warrants that:
(a) Vector is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation;
(b) Vector has the corporate power and authority and the legal
right to execute and deliver, to perform its obligations under, and to grant the
security interest in the Collateral pursuant to, this Agreement and has taken
all necessary corporate action to authorize its execution, delivery and
performance of, and grant of the security interest in the Collateral pursuant
to, this Agreement;
(c) this Agreement constitutes a legal, valid and binding
obligation of Vector, enforceable in accordance with its terms, and upon
delivery to the Collateral Agent of the Secured Note, the security interest
created pursuant to this Agreement will constitute a valid, perfected first
priority security interest in the Collateral, enforceable in accordance with its
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terms against all creditors of Vector and any Persons purporting to purchase any
Collateral from Vector, except in each case as enforceability may be affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing;
(d) the execution, delivery and performance by Vector of this
Agreement will not (i) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any property
of Vector under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, corporate charter or by-laws, or any other agreement or
instrument to which Vector is bound or by which Vector or any of its properties
is bound or affected, (ii) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental or Regulatory Authority applicable to Vector
or (iii) violate any provision of any statute or other rule or regulation of any
Governmental or Regulatory Authority applicable to Vector;
(e) no consent, approval or authorization of, or registration,
filing (other than the filing of any financing statements contemplated in any
Note Document) or declaration with, any Governmental or Regulatory Authority is
required in connection with the execution, delivery or performance by Vector of
this Agreement; and
(f) no litigation, investigation or proceeding of or before
any arbitrator or Governmental or Regulatory Authority is pending or, to the
knowledge of Vector, threatened by or against Vector against any of its
properties or revenues with respect to this Agreement or any of the transactions
contemplated hereby.
5. COVENANTS. Until the Secured Obligations have been repaid in full,
Vector shall do the following:
(a) give, execute, deliver, file and/or record any financing
statement, continuation statement, notice, instrument, document, agreement or
other papers that may be necessary or desirable or that the Collateral Agent may
reasonably request to create, preserve, perfect or validate the security
interest granted pursuant hereto or to enable the Collateral Agent to exercise
and enforce its rights hereunder with respect to such pledge and security
interest;
(b) upon the occurrence and during the continuance of any
Default, upon request of the Collateral Agent, promptly notify (and Vector
hereby authorizes the Collateral Agent so to notify) each maker of the Secured
Note that the Secured Note has been assigned to the Collateral Agent hereunder,
and that any payments due or to become due in respect of such Collateral are to
be made directly to the Securities Account;
(c) without the prior written consent of the Collateral Agent,
Vector shall not file or suffer to be on file, or authorize or permit to be
filed or to be on file, in any jurisdiction, any financing statement or like
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instrument with respect to the Collateral in which the Collateral Agent is not
named as the sole secured party.
6. PRESERVATION OF RIGHTS. The Collateral Agent shall not be required
to take steps necessary to preserve any rights against third parties to any of
the Collateral.
7. EVENTS OF DEFAULT, ETC. During the period during which an Event of
Default shall have occurred and be continuing:
(a) the Collateral Agent may make any reasonable compromise or
settlement deemed desirable with respect to any of the Collateral and may extend
the time of payment, arrange for payment in installments, or otherwise modify
the terms of, any of the Collateral;
(b) the Collateral Agent shall have all of the rights and
remedies with respect to the Collateral of a secured party under the Uniform
Commercial Code (whether or not the Uniform Commercial Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such additional
rights and remedies to which a secured party is entitled under the laws in
effect in any jurisdiction where any rights and remedies hereunder may be
asserted, including, without limitation, the right, to the maximum extent
permitted by law, to exercise all voting, consensual and other powers of
ownership pertaining to the Collateral as if the Collateral Agent were the sole
and absolute owner thereof (and Vector agrees to take all such action as may be
appropriate to give effect to such right);
(c) the Collateral Agent in its discretion may, in its name or
in the name of Vector or otherwise, demand, xxx for, collect or receive any
money or property at any time payable or receivable on account of or in exchange
for any of the Collateral, but shall be under no obligation to do so; and
(d) the Collateral Agent may, upon ten business days' prior
written notice to Vector of the time and place, with respect to the Collateral
or any part thereof that shall then be or shall thereafter come into the
possession, custody or control of the Collateral Agent or any of its agents,
sell, lease, assign or otherwise dispose of all or any part of such Collateral,
at such place or places as the Collateral Agent deems best, and for cash or for
credit or for future delivery (without thereby assuming any credit risk), at
public or private sale, without demand of performance or notice of intention to
effect any such disposition or of the time or place thereof (except such notice
as is required above or by applicable statute and cannot be waived), and the
Collateral Agent or anyone else may be the purchaser, lessee, assignee or
recipient of any or all of the Collateral so disposed of at any public sale (or,
to the extent permitted by law, at any private sale) and thereafter hold the
same absolutely, free from any claim or right of whatsoever kind, including any
right or equity of redemption (statutory or otherwise), of Vector, any such
demand, notice and right or equity being hereby expressly waived and released.
The Collateral Agent may, without notice or publication, adjourn any public or
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private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for the sale, and such sale may be made at any time
or place to which the sale may be so adjourned.
8. WAIVER OF SURETYSHIP DEFENSES. To the extent this Agreement is
deemed a guarantee, Vector hereby waves all defenses available to guarantors and
sureties, including, without limitation, the following:
(a) the occurrence of any Event of Default under, or any lack
of validity, legality or enforceability of any provision of any Note Document or
any other agreement or document;
(b) the failure of any Holder:
(i) to assert any claim or demand or to enforce any right or
remedy against any Document Party or any other Person under the
provisions of any Note Document, or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor of or other Person pledging collateral securing any of the
Secured Obligations;
(c) any change in the time, manner or place of payment of, or
in any term of, all or any of the Secured Obligations, or any other extension,
compromise, indulgence or renewal of any Secured Obligation;
(d) any reduction, limitation, variation, impairment,
discontinuance or termination of the Secured Obligations for any reason (other
than by reason of any payment which is not required to be rescinded), including
any claim of waiver, release, discharge, surrender, alteration or compromise,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or occurrence
affecting, the Secured Obligations or otherwise (other than by reason of any
payment which is not required to be rescinded);
(e) any amendment to, rescission, waiver or other modification
of, or any consent to any departure from, any of the terms of the Secured
Obligations or any guarantees or security;
(f) any addition, exchange, release, discharge, realization or
non-perfection of any collateral security in respect of the Secured Obligations;
(g) any amendment to, rescission, waiver or other modification
of, or release or addition of, or consent to any departure from, any other
guarantee held by the Holders as security for any of the Secured Obligations;
(h) the loss of or in respect of or the unenforceability of
any guarantee or other security which the Holders may now or hereafter hold in
respect of the Secured Obligations, whether occasioned by the fault of the
Holders or otherwise;
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(i) any change in the name of the Company or in the
constitutive documents, capital structure, capacity or constitution of the
Company, the bankruptcy or insolvency of the Company, the sale of any or all of
the Company's business or assets or the Company being consolidated, merged or
amalgamated with any other Person;
(j) any failure on the part of the Company or any other Person
to perform or comply with any term of the Note Purchase Agreement, the Notes,
any of the Secured Obligations or any other agreement or document;
(k) any suit or other action brought by any beneficiaries or
creditors of, or by, the Company or any other Person for any reason whatsoever,
including without limitation any suit or action in any way attacking or
involving any issue, matter or thing in respect of any Note Document, any of the
Secured Obligations or any other agreement or document;
(l) any lack or limitation of status or of power, incapacity
or disability of the Company or any trustee or agent thereof; or
(m) any other circumstance (other than final and indefeasible
payment in full) which might otherwise constitute a defense available to, or a
legal or equitable discharge of, the Company, Brooke Holding or NV Holdings or
any surety or any other guarantor of the foregoing.
9. NO WAIVER OF RIGHTS. No failure on the part of any Holder or the
Collateral Agent to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by any Holder or the
Collateral Agent of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
10. NOTICES. All notices and communications provided for hereunder
shall be in writing and sent (a) by telecopy if the sender on the same day sends
a confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(a) if to any Holder, to such Holder or it at the address
specified for such communications in SCHEDULE A to the Note Purchase Agreement,
or at such other address as it shall have specified to Vector and the Collateral
Agent in writing,
(b) if to the Collateral Agent, to the Collateral Agent at
such address as is set forth on its signature page thereto or at such other
address or at such other address as the Collateral Agent shall have specified to
each Holder and to Vector in writing, or
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(c) if to Vector, to Vector at its address set forth on its
signature page thereto to the attention of the General Counsel, or at such other
address as Vector shall have specified to each Holder and to the Collateral
Agent.
Notices under this SECTION 10 will be deemed given when actually received if
sent by telecopy, upon the succeeding Business Day if sent by overnight courier
and three days after deposit in the U.S. mail if sent by registered or certified
mail.
11. AMENDMENTS, ETC. The terms of this Agreement may be waived, altered
or amended only by an instrument in writing duly executed by Vector, the
Majority Holders and the Collateral Agent. Any such amendment or waiver shall be
binding upon the Collateral Agent, each holder of any of the Secured Obligations
and Vector.
12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of Vector, the
Holders, the Collateral Agent and each holder of any of the Secured Obligations
(PROVIDED, however, that Vector shall not assign or transfer its rights
hereunder without the prior written consent of the Collateral Agent).
13. CAPTIONS. The captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart. Delivery of an executed counterpart of a signature page of
this Agreement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart of this Agreement.
15. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of New York excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction other
than such State.
16. AGENTS AND ATTORNEYS-IN-FACT. The Collateral Agent may employ
agents and attorneys-in-fact in connection herewith and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it in good faith.
17. SEVERABILITY. If any provision hereof is invalid and unenforceable
in any jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Collateral Agent in order to carry
out the intentions of the parties hereto as nearly as may be possible and (ii)
the invalidity or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other
jurisdiction.
18. ENVIRONMENTAL INDEMNIFICATION OF COLLATERAL AGENT AND HOLDERS.
Vector hereby agrees to indemnify the Collateral Agent and the Holders from, and
hold the Collateral Agent and the Holders harmless against, any losses,
liabilities, claims, damages or expenses arising under any Environmental Law (as
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defined in the BGLS Pledge Agreement) as a result of the past, present or future
operations of the Company or any of its Subsidiaries following the exercise by
the Collateral Agent of its rights and remedies under any Note Document.
19. INDEMNIFICATION OF NV HOLDINGS. Vector hereby agrees to indemnify
NV Holdings for, and hold it harmless against, any claim, demand, expense
(including but not limited to attorneys' fees), loss or liability incurred by it
arising solely out of or in connection with its being an affiliate of Vector.
Vector hereby acknowledges that the indemnity contained in this Section
19 for the benefit of NV Holdings and that NV Holdings is relying on said
indemnity as a basis for entering into the NV Holdings Pledge Agreement.
20. INTEGRATION. This Agreement and the other Note Documents represent
the agreement of Vector, the Collateral Agent and the Holders with respect to
the subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the Collateral Agent or any Holder relative to
subject matter hereof and thereof not expressly set forth or referred to herein
or in the other Note Documents.
21. ACKNOWLEDGEMENTS. Vector hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Note Documents to which
it is a party;
(b) neither the Collateral Agent nor any Holder has any
fiduciary relationship with or duty to Vector arising out of or in connection
with this Agreement or any of the other Note Documents, and the relationship
between Vector, on the one hand, and the Collateral Agent and Holders, on the
other hand, in connection herewith or therewith is solely that of debtor and
creditor; and
(c) no joint venture is created hereby or by the other Note
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Holders or among Vector and the Holders.
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IN WITNESS WHEREOF, Vector Group Ltd. has executed this
Acknowledgment and Undertaking, intending to be legally bound, as of May 14,
2001.
VECTOR GROUP LTD.
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
000 X.X. Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
Executive Vice President
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UNITED STATES TRUST COMPANY OF NEW YORK
By: /s/ XXXXXXXX XXXXXXXXX
-----------------------------------
Name: Xxxxxxxx Xxxxxxxxx
Title: Assistant Vice President
ADDRESS FOR NOTICES:
-------------------
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxxxxxx
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TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Advisers (Bermuda), Ltd.
as its General Partner
By: /s/ XXXXXX X. XXXXXX
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
By: TCW Investment Management Company
as Investment Adviser
By: /s/ XXXX XXXXXXXXX
----------------------------------
Name: Xxxx Xxxxxxxxx
Title: Group Managing Director
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TCW LEVERAGED INCOME TRUST II, L.P.
By: TCW (XXXX XX), L.P.
as its General Partner
By: TCW Advisers (Bermuda), Ltd.
its General Partner
By: /s/ XXXXXX X. XXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
By: TCW Investment Management Company
as Investment Adviser
By: /s/ XXXX XXXXXXXXX
----------------------------
Name: Xxxx Xxxxxxxxx
Title: Group Managing Director
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TCW LINC III CBO LTD.
By: TCW Investment Management Company
as Collateral Manager
By: /s/ XXXXXX X. XXXXXX
--------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
By: /s/ XXXX XXXXXXXXX
--------------------------
Name: Xxxx Xxxxxxxxx
Title: Group Managing Director
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POWRs 1997-2 (Participating Obligations
with Residuals 1997-2)
By: Citibank Global Asset Management
Its Investment Advisor
By: TCW Asset Management Company
Its Portfolio Manager
By: /s/ XXXXXX X. XXXXXX
-------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
By: /s/ XXXX XXXXXXXXX
-------------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Group Managing Director
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CAPTIVA II FINANCE LTD.
By: TCW Advisors, Inc.
Its Financial Manager
By: /s/ XXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
By: /s/ XXXX XXXXXXXXX
---------------------------------
Name: Xxxx Xxxxxxxxx
Title: Group Managing Director
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AIMCO CDO, SERIES 2000-A
By: Allstate Investment Management Company
Its Collateral Manager
By: TCW Asset Management Company
Its Investment Advisor
By: /s/ XXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
By: /s/ XXXX XXXXXXXXX
---------------------------------
Name: Xxxx Xxxxxxxxx
Title: Group Managing Director
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