EXHIBIT 10.32
SECOND AMENDED AND RESTATED SECURITY AGREEMENT dated, December 31,
1997 ("Security Agreement") made by each of FiberMark, Inc. ("FiberMark"), a
Delaware corporation, FiberMark Durable Specialties, Inc. ("FiberMark Durable"),
a Delaware corporation, and FiberMark Filter and Technical Products, Inc.
("FiberMark Filter"), a Delaware corporation, to The CIT Group/Equipment
Financing, Inc. ("CITEF"). FiberMark, FiberMark Durable and FiberMark Filter are
each referred to herein as a "Guarantor" and collectively as the "Guarantors."
PRELIMINARY STATEMENTS.
1. Reference is made to the Amended and Restated Security Agreement,
dated December 31, 1996, made by each of Specialty Paperboard/Endura Inc., a
Delaware corporation ("Endura"), CPG Investors, Inc., a Delaware corporation
("CPG Investors"), CPG Holdings, Inc., a Delaware corporation ("CPG Holdings"),
CPG-Xxxxxx Xxxx, a Virginia corporation ("CPG Xxxxxx"), Custom Papers Group,
Inc., a Virginia corporation ("Custom"), Arcon Holdings Corp. ("Arcon
Holdings"), a ________ corporation, and Arcon Coating Xxxxx, Inc. ("Arcon
Coating"), a ________ corporation, to CITEF (the "December 1996 Agreement").
2. To the extent this Security Agreement amends the December 1996
Agreement, the December 1996 Agreement is amended, and to the extent this
Security Agreement restates the December 1996 Agreement, the December 1996
Agreement is restated.
3. Reference is made to each of (a) the Lease Agreement, dated as of
April 29, 1994, by and between Specialty Paperboard, Inc. ("Specialty
Paperboard"), as Lessee, and CITEF, as Lessor, as supplemented and amended by
that certain Lease Supplement No. 1, dated as of April 29, 1994, that certain
First Amendment to Lease Agreement, dated as of September 29, 1995, that certain
Second Amendment to Lease Agreement, dated as of December 29, 1995, as otherwise
amended, modified or supplemented from time to time, and as assigned and assumed
pursuant to the Assignment and Assumption Agreement--NY, dated as of December
31, 1997, by and between FiberMark and FiberMark Office Products, LLC
("FiberMark Office" or the "Company") (the "Assignment and Assumption
Agreement--NY") (the "Lease Agreement"), (b) the Third Amended and Restated
Financing Agreement and Guaranty, dated December 31, 1997, among FiberMark,
FiberMark Durable, FiberMark Filter and FiberMark Office, and CITEF, The CIT
Group/Business Credit, Inc. ("CITBC"), the other lenders that may, subsequent to
the date hereof, purchase from CITBC a portion of its rights and obligations
under such Financing Agreement pursuant to, and in accordance with the terms and
provisions thereof (CITBC and such other lenders each individually a "Lender"
and collectively the "Lenders"), and CITBC as agent for the Lenders (the
"Agent") (as it may hereafter be amended, modified or supplemented from time to
time, being the "Financing Agreement"), (c) the Amended and Restated Guaranty,
dated December 31, 1997, made by each Guarantor in favor of CITEF (the
"Guaranty"), (d) the Support Agreement, dated as of June 30, 1994, between CITEF
and Specialty Paperboard, as amended by that certain First Amendment to Support
Agreement, dated as of September 29, 1995, as otherwise amended, modified or
supplemented from time to time, and as assigned and assumed pursuant to the
Assignment and Assumption Agreement--NY (the "Support Agreement"), (e) the
Premises Lease, dated as of June 30, 1994, between Specialty Paperboard, as
Premises
Lessor, and CITEF, as Premises Lessee, as amended by that certain First
Amendment to Premises Lease, dated as of September 29, 1995, as otherwise
amended, modified or supplemented from time to time, and as assigned and assumed
pursuant to the Assignment and Assumption Agreement--VT, dated as of December
31, 1997, by and between FiberMark and FiberMark Office (the "Assignment and
Assumption Agreement--VT") (the "Premises Lease"), and (f) the Premises
Sublease, dated as of June 30, 1994, between CITEF, as Sublessor, and Specialty
Paperboard, as Sublessee, as amended, modified or supplemented from time to
time, and as assigned and assumed pursuant to the Assignment and Assumption
Agreement--VT, whereby FiberMark Office is subleasing the Premises from CITEF.
Capitalized terms used in this Security Agreement and not otherwise defined
herein shall have the meanings set forth in Annex I, attached hereto.
4. Each Guarantor represents that it is financially interested in
the affairs of FiberMark Office and expects to benefit from and derive advantage
from FiberMark Office's lease of certain equipment pursuant to the Lease
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Guarantor hereby agrees as
follows:
ARTICLE XXXVI. Grant of Security. Each Guarantor hereby grants to
CITEF a security interest in and on all of such Guarantor's right, title and
interest in and to all of the following whether now owned or hereafter acquired
or existing (the "Collateral"):
Section 36.01. All present and hereafter acquired merchandise,
inventory and goods held for sale or lease or to be furnished under contracts of
service, and all additions, substitutions and replacements thereof, wherever
located, together with all goods and materials used or usable in manufacturing,
processing, packaging or shipping same; in all stages of production- from raw
materials through work-in-process to finished goods - and all proceeds thereof
of whatever sort (any and all such inventory, accessions, products being the
"Inventory");
Section 36.02. All of the now existing and future: (i) right to
payment for goods sold by or services rendered by such Guarantor, including all
accounts arising from sales or rendition of services made under any of such
Guarantor's trade names or styles, or through any of such Guarantor's divisions;
regardless of how such right is evidenced, whether secured or unsecured, or now
existing or hereafter arising (whether or not specifically listed on schedules
furnished to CITEF) (the "Accounts Receivables"), and any and all instruments,
documents, contract rights, chattel paper, general intangibles, including,
without limitation, all accounts created by or arising from all of such
Guarantor's sales of goods or rendition of services to its respective customers,
(ii) unpaid seller's rights (including rescission, replevin, reclamation and
stoppage in transit) relating to the foregoing or arising therefrom; (iii)
rights to any goods represented by any of the foregoing, including rights to
returned or repossessed goods; (iv) reserves and credit balances arising
hereunder; (v) guarantees or collateral for any of the foregoing; (vi) insurance
policies or rights relating to any of the foregoing; and (vii) cash and non-cash
proceeds of any and all the foregoing; and
Section 36.03. all Proceeds of the foregoing. The security interests
granted hereunder shall extend and attach to:
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a. All Collateral which is presently in existence and which is owned by such
Guarantor or in which the Company has any interest, whether held by the Company
or others for its account; and
b. All Inventory and any portion thereof which may be returned, rejected,
reclaimed or repossessed by either CITEF or any Guarantor from any of the
Guarantor's respective customers, as well as to all supplies, goods,
incidentals, packaging materials, labels and any other items which contribute to
the finished goods or products manufactured or processed by each Guarantor, or
to the sale, promotion or shipment thereof.
ARTICLE XXXVII. Security for Guaranty Obligations. The Collateral
secures the prompt and complete payment when due and performance of all of such
Guarantor's obligations pursuant to the Guaranty (the "Obligations").
ARTICLE XXXVIII. Representations and Warranties. Each Guarantor
represents and warrants to CITEF as follows:
Section 38.01. All of the Inventory is located at the places
specified in Schedule I hereto. The chief place of business and chief executive
office of each Guarantor and the office where each Guarantor keeps its records
concerning Accounts Receivable are located at the address specified on Schedule
I hereto. All originals of all chattel paper which evidence Accounts Receivable
have been delivered to CITEF. None of the Accounts Receivable are evidenced by a
promissory note or other instrument.
Section 38.02. This Security Agreement has been duly executed and
delivered by each Guarantor and constitutes a legal, valid and binding
obligation of such Guarantor enforceable in accordance with its terms and will
not: (i) require any consent or approval of their respective stockholders; (ii)
contravene their respective certificates of incorporation or by-laws; (iii)
violate any provision of, or require any filing (other than the filing of the
financing statements contemplated by the Security Documents), registration,
consent or approval under any Law (including, without limitation, Regulation U),
order, writ, judgment, injunction, decree, determination or award presently in
effect having applicability to such corporation; or (iv) result in a breach of
or constitute a default under or require any consent under any indenture or loan
or credit agreement or any other agreement, lease or instrument to which such
Guarantor is a party or by which it or its properties may be bound or affected.
Section 38.03. Each Guarantor owns the Collateral free and clear of
any Lien, except for (i) the security interest created by this Security
Agreement and (ii) Liens granted in connection with or permitted pursuant to the
Financing Agreement. No effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in any
recording office, except (i) such as may have been filed in favor of CITEF
relating to this Security Agreement and (ii) such as may have been filed in
favor of the Agent relating to the Financing Agreement.
Section 38.04. None of the Guarantors conducts any business under
any name or trade name other than its proper corporate name.
Section 38.05. Each Guarantor has exclusive possession and control
of the Inventory.
Section 38.06. As of the date of this Security Agreement, this
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Security Agreement creates a continuing Lien in the Collateral, securing the
payment of the Obligations, all other actions necessary or desirable to perfect
and protect such security interest have been duly taken.
Section 38.07. No authorization, approval or other action by, and no
notice to or filing with, any Governmental Authority is required either (i) for
the grant by each Guarantor of the security interest granted hereby or for the
execution, delivery or performance of this Security Agreement by each Guarantor
or (ii) for the perfection of or the exercise by CITEF of their respective
rights and remedies hereunder.
Section 38.08. The Taxpayer Identification Number of each Guarantor
is set forth on Schedule III hereto. ARTICLE XXXIX. Further Assurances .
Section 39.01. Each Guarantor agrees that from time to time, at the
expense of the Guarantors, each Guarantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that CITEF may request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable CITEF to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
each Guarantor will: (i) xxxx conspicuously each document and agreement included
in the Collateral and, at the request of CITEF, each of its records pertaining
to the Collateral with a legend, in form and substance satisfactory to CITEF
indicating that such Collateral is subject to the security interest granted
hereby; (ii) if any Account Receivable shall be evidenced by a promissory note
or other instrument or chattel paper deliver such to CITEF duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to CITEF; and (iii) execute and file such financing
or continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as CITEF may request, in order to
perfect and preserve the security interest granted or purported to be granted
hereby.
Section 39.02. The Company hereby authorizes CITEF to file one or
more financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of each Guarantor where
permitted by Law. A carbon, photographic or other reproduction of this Security
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by Law.
Section 39.03. Each Guarantor will furnish to CITEF from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as CITEF may request,
all in reasonable detail.
Section 39.04. Each Guarantor will defend the Collateral against all
claims and demands of all Persons (other than CITBC, CITEF and Lender) claiming
an interest therein. Each Guarantor will pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including claims for labor, materials and supplies) against, the
Collateral, except to the extent where there is a Good Faith Contest to the
validity thereof. In connection with any such Good Faith Contest each Guarantor
will, at the request of CITEF, promptly
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provide a bond, cash deposit or other security reasonably satisfactory to
protect the security interest of CITEF should such Good Faith Contest be
unsuccessful.
Section 39.05. In furtherance of the continuing assignment and
security interest in each Guarantor's Accounts, each Guarantor will, upon the
creation of Accounts, execute and deliver to CITEF in such form and manner as
CITEF may reasonably require, solely for CITEF's convenience in maintaining
records of collateral, such confirmatory schedules of Accounts as CITEF may
reasonably request, and such other appropriate reports designating, identifying
and describing the Accounts as CITEF may reasonably require. In addition, upon
CITEF's request, each Guarantor shall provide CITEF with copies of agreements
with, or purchase orders from, each Guarantor's respective customers, and copies
of invoices to customers, proof of shipment or delivery and such other
documentation and information relating to said Accounts and other collateral as
CITEF may reasonably require. Failure to provide CITEF with any of the foregoing
shall in no way affect, diminish, modify or otherwise limit the security
interests granted herein. Each Guarantor hereby authorizes CITEF to regard its
printed name or rubber stamp signature on assignment schedules or invoices as
the equivalent of a manual signature by an authorized officer or agent of each
Guarantor.
Section 39.06. Each Guarantor hereby represents and warrants that
(i) each Account is based on an actual and bona fide sale and delivery of goods
or rendition of services to customers, made by each Guarantor in the ordinary
course of its business; (ii) the goods and inventory being sold and the Accounts
created are the exclusive property of each Guarantor and are not and shall not
be subject to any lien, consignment arrangement, encumbrance, security interest
or financing statement whatsoever, other than the Permitted Encumbrances; (iii)
the invoices evidencing such Accounts are in the name of each Guarantor; and
(iv) the respective customers of each Guarantor have accepted the goods or
services, owe and are obligated to pay the full amounts stated in the invoices
according to their terms, without dispute, offset, defense, counterclaim or
contra, except for disputes and other matters arising in the ordinary course of
business of which each Guarantor has advised CITEF pursuant to Section 4(h) of
this Security Agreement. Each Guarantor confirms to CITEF that any and all taxes
or fees relating to its business, its sales, the Accounts or goods relating
thereto, are its sole responsibility and that same will be paid by each
Guarantor or when due and than none of said taxes or fees represent a lien on or
claim against the Accounts. Each Guarantor also warrants and represents that it
is a duly and validly existing corporation, and is qualified in all states and
provinces where the failure to so qualify would have an adverse effect on the
business of each Guarantor or the ability of each Guarantor to enforce
collection of Accounts due from customers residing in such locations. Each
Guarantor agrees to maintain such books and records regarding Accounts as CITEF
may reasonably require and agrees that the books and records of each Guarantor
will reflect CITEF's interest in the Accounts. All of the books and records of
each Guarantor will be available to CITEF at normal business hours, including
any records handled or maintained for each Guarantor by any other company or
entity.
Section 39.07. Until CITEF has advised any Guarantor to the
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contrary after the occurrence of an Event of Default, such Guarantor may and
will enforce, collect and receive all amounts owing on the Accounts for CITEF's
benefit and on CITEF's behalf, but at such Guarantor's expense; such privilege
shall terminate automatically upon the institution by or against such Guarantor
of any proceeding under any bankruptcy or insolvency law or, at the election of
CITEF, upon the occurrence of any other Event of Default and until such Event of
Default is waived. Any checks, cash, notes or other instruments or property
received by such Guarantor with respect to any Accounts shall be held by such
Guarantor in trust for CITEF, separate from such Guarantor's own property and
funds, and immediately turned over to CITEF with proper assignments or
endorsements by deposit to the Depository Accounts. All amounts received by
CITEF in payment of Accounts will be credited to such Guarantor's accounts upon
CITEF's receipt of "collected funds" at CITEF's bank account in New York, New
York on the Business Day of receipt if received no later than 1:00 p.m. (New
York time) or on the next succeeding Business Day if received no later than 1:00
p.m. (New York time). No checks, drafts or other instrument received by CITEF
shall constitute final payment to CITEF unless and until such instruments have
actually been collected.
Section 39.08. Each Guarantor agrees to notify CITEF promptly of any
matters materially affecting the value, enforceability or collectibility of any
Account and of all material customer disputes, offsets, defenses, counterclaims,
returns, rejections and all reclaimed or repossessed merchandise or goods. Each
Guarantor agrees that it shall issue credit memoranda promptly (with duplicates
to CITEF upon request after the occurrence of an Event of Default) upon
accepting returns or granting allowances, and may continue to do so until CITEF
has notified any Guarantor that an Event of Default has occurred and that all
future credits or allowances are to be made only after CITEF's prior written
approval. Upon the occurrence of an Event of Default and until such time as such
Event of Default is waived and on notice from CITEF, such Guarantor agrees that
all returned, reclaimed or repossessed merchandise or goods shall be set aside
by such Guarantor, marked with CITEF's name and held by such Guarantor for
CITEF's account as owner.
Section 39.09. Each Guarantor will be credited with all amounts
received by CITEF from each Guarantor or from others for each Guarantor's
account, including, as set forth above, all amounts received by CITEF in payment
of assigned Accounts and such amounts will be applied to payment of the
Obligations. In no event shall prior recourse to any Accounts or other security
granted to or by each Guarantor be a prerequisite to CITEF's right to demand
payment of any Obligation. Further, it is understood that CITEF shall have no
obligation whatsoever to perform in any respect any of such Guarantor's
contracts or obligations relating to the Accounts. After the end of each month,
CITEF shall promptly send each Guarantor a statement showing the accounting for
the charges and other transactions occurring between CITEF and each Guarantor
during that month. The monthly statements shall be deemed correct and binding
upon each Guarantor and shall constitute an account stated between each
Guarantor and CITEF unless CITEF receives a written statement of the exceptions
within thirty (30) days of the date of the monthly statement.
ARTICLE XL. As to Inventory. Each Guarantor shall:
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Section 40.01. Keep their respective Inventory (other than Inventory
sold in the ordinary course of business) at the places therefor specified in
Schedule I hereto or, upon 30 days' prior written notice to CITEF, at such other
places in jurisdictions where all action required by Section 4 shall have been
taken with respect to the Inventory;
Section 40.02. Safeguard, protect and hold all Inventory for CITEF's
account and make no disposition thereof except in the regular course of the
business of such Guarantor as herein provided. Until CITEF has given such
Guarantor notice to the contrary, as provided for below, any Inventory may be
sold and shipped by such Guarantor to its customers in the ordinary course of
such Guarantor's business, on open account and on terms currently being extended
by such Guarantor to its customers, provided that all proceeds of all sales
(including cash, accounts receivable, checks, notes, instruments for the payment
of money and similar proceeds) are forthwith transferred, endorsed, and turned
over and delivered to CITEF in accordance with Section 4(g) of this Security
Agreement. CITEF shall have the right to withdraw this permission at any time
upon the occurrence of an Event of Default and until such time as such Event of
Default is waived, in which event no further disposition shall be made of the
Inventory by such Guarantor without CITEF's prior written approval. Cash sales
or sales of Inventory in which a Lien upon, or security interest in, Inventory
is retained by such Guarantor shall be made by such Guarantor only with the
approval of CITEF, and the proceeds of such sales or sales of Inventory for cash
shall not be commingled with such Guarantor's other property, but shall be
segregated, held by such Guarantor in trust for CITEF as CITEF's exclusive
property, and shall be delivered immediately by such Guarantor to CITEF in the
identical form received by such Guarantor by deposit to the Depository Accounts.
Upon the sale, exchange, or other disposition of Inventory, as herein provided,
the security interest in such Guarantor's Inventory provided for herein shall,
without break in continuity and without further formality or act, continue in,
and attach to, all proceeds, including any instruments for the payment of money,
accounts receivable, contract rights, documents of title, shipping documents,
chattel paper and all other cash and non-cash proceeds of such sale, exchange or
disposition. As to any such sale, exchange or other disposition, CITEF shall
have all of the rights of an unpaid seller, including stoppage in transit,
replevin, rescission and reclamation;
Section 40.03. Covenant that, except for Permitted Encumbrances, as
defined in the Financing Agreement, each Guarantor is or will be at the time
additional Collateral is acquired by it, the absolute owner of the Collateral
with full right to pledge, sell, consign, transfer and create a security
interest therein, free and clear of any and all claims or Liens in favor of
others other than the Liens in favor of the CITBC and CITEF; that each Guarantor
will at its expense forever warrant and, at CITEF's request, defend the same
from any and all claims and demands of any other person other than the Permitted
Encumbrances. Each Guarantor will not grant, create or permit to exist, any Lien
upon or security interest in the Collateral, or any proceeds thereof, in favor
of any other Person other than the holders of the Permitted Encumbrances. None
of the Guarantors will (i) change the location of its chief executive
office/chief place of business from that specified in Schedule I attached
hereto, or remove its
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books and records from the location specified in Schedule I, (ii) permit any of
the Inventory to be kept at a location other than those listed on such Schedule
I hereto or (iii) change its name (including the adoption of any new trade
name), identity or corporate structure unless it shall have provided at least
thirty (30) days prior written notice to CITEF of any such change. Each
Guarantor will from time to time notify CITEF of each location at which any
amount of the Collateral or such books and records are to be kept including for
temporary processing, storage or similar purposes. Each Guarantor shall not
remove any amount of Collateral or such books or records to a location not set
forth on Schedule I or otherwise keep any amount of Collateral at a location not
set forth on Schedule I unless, not less than thirty (30) days prior to the day
such removal or other change occurs such Guarantor shall give written notice to
CITEF of such removal or other change and the new location of such Collateral or
such books and records. No action requiring notice to CITEF under this paragraph
shall be effected until such filings and other measures required under
applicable Law to continue uninterrupted the perfected security interest and
Lien of CITEF in the Collateral affected thereby shall have been taken, and
until CITEF shall have received such opinions of counsel with respect thereto as
it shall have reasonably requested. Each Guarantor also agrees to advise CITEF
promptly, in sufficient detail, of any material adverse change relating to the
type, quantity or quality of the Collateral or to the security interests granted
to CITEF therein. Each Guarantor as to itself hereby authorizes CITEF to regard
its printed name or rubber stamp signature on assignment schedules or invoices
as the equivalent of a manual signature by one of its authorized officers or
agents;
Section 40.04. Permit CITEF or any agent thereof to have access to
the Inventory for purposes of inspection during normal business hours and upon
reasonable notice to such Guarantor;
Section 40.05. Promptly notify CITEF in writing of any material loss
or damage to the Inventory;
Section 40.06. Not sell, assign, lease, mortgage, transfer or
otherwise dispose of any interest in the Inventory except as permitted in the
Financing Agreement; and
Section 40.07. Not use or permit the Inventory to be used for any
unlawful purpose or in violation of any applicable Law or for hire.
ARTICLE XLI. Insurance.
Section 41.01. Each Guarantor shall, at its own expense, maintain
insurance with respect to its respective Inventory in such amounts, against such
risks, in such form and with such insurers, as shall be satisfactory to CITEF
from time to time. Each policy for: (i) liability insurance shall provide for
all losses to be paid on behalf of CITEF and such Guarantor as their respective
interests may appear; and (ii) property damage insurance shall provide for all
losses to be paid directly to CITEF. Each such policy shall in addition: (i)
name CITEF as an insured party thereunder (without any representation or
warranty by or obligation upon CITEF) as their interests may appear; (ii)
contain the agreement by the insurer that any loss thereunder shall be payable
to CITEF notwithstanding any action, inaction or breach of representation and
warranty by such Guarantor; (iii) provide that there shall be no
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recourse against CITEF for payment of premiums or other amounts with respect
thereto; and (iv) provide that at least thirty (30) days' prior written notice
of amendment to, cancellation of or lapse shall be given to CITEF by the
insurer. Each Guarantor shall, if so requested by CITEF, deliver to CITEF
original or duplicate policies of such insurance and, as often as CITEF may
request, a report of a reputable insurance broker with respect to such
insurance. Further, each Guarantor shall, at the request of CITEF, duly execute
and deliver instruments of assignment of such insurance policies to comply with
the requirements of Section 4 and cause the respective insurers to acknowledge
notice of such assignment.
Section 41.02. Reimbursement under any liability insurance
maintained by each Guarantor pursuant to this Section 6 may be paid directly to
the Person who shall have incurred liability covered by such insurance. In case
of any loss involving damage to Inventory when subsection (a) of this Section 6
is not applicable, each Guarantor shall make or cause to be made the necessary
repairs to or replacements of such Inventory, and any proceeds of insurance
maintained by such Guarantor pursuant to this Section 6 shall be paid to such
Guarantor as reimbursement for the costs of such repairs or replacements.
ARTICLE XLII. As to Accounts Receivable and Collateral Generally.
Section 42.01. Each Guarantor shall keep its chief place of business
and chief executive office and the office where it keeps its records concerning
the Accounts Receivable, at the location therefor specified in Schedule I hereto
or, upon 30 days' prior written notice to CITEF, at such other locations in a
jurisdiction where all action required by Section 4 shall have been taken with
respect to Accounts Receivable. Each Guarantor will hold and preserve such
records and will permit representatives of CITEF to inspect and make abstracts
from such records.
Section 42.02. Each Guarantor will not (i) amend, modify, terminate
or waive any provision of any contract, license or agreement giving rise to an
Account in any manner which could reasonably be expected to materially adversely
affect the value of such contract, license or Account as Collateral, (ii) fail
to exercise promptly and diligently each and every material right which it may
have under each material contract, license or agreement giving rise to an
Account (other than any right of termination), except in a manner consistent
with the ordinary and customary conduct of its business or (iii) fail to deliver
to CITEF upon its reasonable request a copy of each material demand, notice or
document received by it relating in any way to any material contract, license or
agreement giving rise to an Account.
Other than in the ordinary course of business as generally conducted
by each Guarantor over a period of time, each Guarantor will not grant any
extension of the time of payment of any of the Accounts, compromise, compound or
settle the same for less than the full amount thereof, release, wholly or
partially, any Person liable for the payment thereof, or allow any credit or
discount whatsoever thereon.
Section 42.03. Except as otherwise provided in this subsection (c),
each Guarantor shall continue to collect, at its own expense, all amounts due or
to become due to each Guarantor under the Accounts Receivable. In connection
with such collections, each Guarantor may take (and, at CITEF's discretion,
shall take) such
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action as such Guarantor or CITEF may deem necessary or advisable to enforce
collection of the Accounts Receivable; provided, however, that CITEF shall have
the right at any time, upon the occurrence and during the continuance of an
Event of Default upon written notice to such Guarantor of its intention to do
so, to notify the account debtors or obligors under any Accounts Receivable of
the assignment of such Accounts Receivable to CITEF and to direct such account
debtors or obligors to make payment of all amounts due or to become due to such
Guarantor thereunder directly to CITEF and, upon such notification and at the
expense of such Guarantor, to enforce collection of any such Accounts
Receivable, and to adjust, settle or compromise the amount or payment thereof,
in the same manner and to the same extent as such Guarantor might have done.
After receipt by such Guarantor of the notice from CITEF referred to in the
proviso to the preceding sentence and as long as there is an Event of Default,
(i) all amounts and proceeds (including instruments) received by such Guarantor
in respect of the Accounts Receivable shall be received in trust for the benefit
of CITEF, shall be segregated from other funds of such Guarantor and shall be
forthwith paid over to CITEF in the same form as so received (with any necessary
endorsement) to be held as cash Collateral, or be applied as provided by Section
13(b), as determined by CITEF, and (ii) no Guarantor shall adjust, settle or
compromise the amount or payment of any Account Receivable, or release wholly or
partly any account debtor or obligor thereof, or allow any credit or discount
thereon, other than any discount allowed for prompt payment.
Section 42.04. Upon the release of all Liens granted by each
Guarantor to the Agent under and pursuant to the Financing Agreement, and
provided that no Event of Default has occurred and is continuing under the Lease
Agreement, CITEF will release its Lien in the Collateral.
Section 42.05. Any delay, or omission by CITEF to exercise any right
hereunder, shall not be deemed a waiver thereof, or be deemed a waiver of any
other right, unless such waiver is in writing and signed by CITEF. A waiver on
any one occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion.
Section 42.06. To the extent that the Obligations are now or
hereafter secured by any assets or property other than the Collateral or by the
guarantee, endorsement, assets or property of any other Person, then CITEF shall
have the right in its sole discretion to determine which rights, security,
Liens, security interests or remedies CITEF shall at any time pursue, foreclose
upon, relinquish, subordinate, modify or take any other action with respect to,
without in any way modifying or affecting any of them, or any of CITEF's rights
hereunder.
Section 42.07. Upon the request of CITEF, each Guarantor will, at
the sole expense of each Guarantor, promptly and duly execute and deliver such
further instruments and documents and take such further action as CITEF may
reasonably request for the purpose of obtaining or preserving the full benefits
of the Lease Agreement, the Guaranty and this Security Agreement and of the
rights and powers herein and therein granted for the benefit of CITEF.
Each Guarantor will comply with the requirements of all state and
federal Laws in
10
order to grant to CITEF valid and continuing security interests and Liens in the
Collateral, subject only to the Permitted Encumbrances. CITEF is hereby
authorized by each Guarantor to file any financing statements covering the
Collateral whether or not each Guarantor's signature appears thereon. Each
Guarantor agrees to do whatever CITEF may request, from time to time, by way of:
filing notices of Liens, financing statements, amendments, renewals and
continuations thereof; cooperating with CITEF; keeping stock records; and
performing such further acts as CITEF may reasonably require in order to perfect
the Liens contemplated by this Security Agreement in favor of CITEF.
Any reserves or balances to the credit of each Guarantor and any
other property or assets of each Guarantor in the possession of CITEF may be
held by such holder as security for any Obligations and applied in whole or
partial satisfaction of such Obligations when due. The Liens and security
interests granted herein and any other Lien or security interest CITEF may have
in any other assets of the Company, shall secure payment and performance of all
now existing and future Obligations. CITEF may in its discretion charge any or
all of the Obligations to the account of each Guarantor when due.
ARTICLE XLIII. Transfer and Other Liens. No Guarantor shall:
Section 43.01. Sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except as permitted in the Financing
Agreement.
Section 43.02. Create or suffer to exist any Lien upon or with
respect to any of the Collateral except Permitted Encumbrances.
ARTICLE XLIV. CITEF Appointed Attorney-in-Fact . Each Guarantor
hereby irrevocably appoints CITEF such Guarantor's attorney-in-fact, with full
authority in the place and stead of the Company and in the name of such
Guarantor, CITEF or otherwise, to, after the occurrence and during the
continuance of an Event of Default, take any action and to execute any
instrument which CITEF may deem necessary or advisable to accomplish the
purposes of this Security Agreement, including, without limitation:
Section 44.01. to obtain and adjust insurance required to be paid to
CITEF pursuant to Section 6;
Section 44.02. to ask, demand, collect, xxx for, recover,
compromise, receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral;
Section 44.03. to receive, endorse, assign, and collect any and all
checks, notes, drafts and other negotiable and non-negotiable instruments,
documents and chattel paper, in connection with clause (a) or (b) above, and
such Guarantor waives notice of presentment, protest and non-payment of any
instrument, document or chattel paper so endorsed or assigned;
Section 44.04. to file any claims or take any action or institute
any proceedings which CITEF may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of CITEF with
respect to any of the Collateral;
Section 44.05. to sell, transfer, assign or otherwise deal in or
with
11
the Collateral or the proceeds or avails thereof, as full and effectually as if
CITEF were the absolute owner thereof;
Section 44.06. to receive, open and dispose of all mail addressed to
such Guarantor and to notify postal authorities to change the address for
delivery thereof to such address as CITEF may designate;
Section 44.07. to request from customers indebted on Accounts at any
time, in the name of CITEF or such Guarantor or that of CITEF's designee,
information concerning the amounts owing on the Accounts;
Section 44.08. to transmit to customers indebted on Accounts notice
of CITEF's interest therein and to notify customers indebted on Accounts to make
payment directly to CITEF for such Guarantor' account; and
Section 44.09. to take or bring, in the name of CITEF or such
Guarantor, all steps, actions, suits or proceedings deemed by CITEF necessary or
desirable to enforce or effect collection of the Accounts.
Notwithstanding anything herein above contained to the contrary, the
powers set forth in (f), (h) and (i) above may only be exercised after the
occurrence of an Event of Default and until such time as such Event of Default
is waived in writing.
Each Guarantor hereby ratifies and approves all acts other than
those which result from CITEF's gross negligence or willful misconduct, of
CITEF, as its attorney in-fact, pursuant to this Section 9, and CITEF, as its
attorney in-fact, will not be liable for any acts of commission or omission, nor
for any error of judgment or mistake of fact or law other than those which
result from CITEF's gross negligence or willful misconduct. This power, being
coupled with an interest, is irrevocable so long as this Security Agreement
remains in effect.
Each Guarantor also authorizes CITEF, at any time and from time to
time, to communicate in its own name with any party to any contract, agreement
or instrument included in the Collateral with regard to the assignment of such
contract, agreement or instrument and other matters relating thereto.
ARTICLE XLV. CITEF May Perform. If any Guarantor fails to perform
any agreement contained herein, CITEF may itself perform, or cause performance
of, such agreement, and the expenses of CITEF incurred in connection therewith
shall be payable by such Guarantor under Section 13(b).
ARTICLE XLVI. CITEF's Duties. The powers conferred on CITEF
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, CITEF shall not have any duty as to any Collateral or
as to the taking of any necessary steps to preserve rights against prior parties
or any other rights pertaining to any Collateral.
ARTICLE XLVII. Remedies. If any Event of Default as defined in the
Lease Agreement has occurred and is continuing:
Section 47.01. CITEF may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the
Uniform Commercial Code (the "Code") (whether or not the Code applies to the
affected Collateral) and also
12
may (i) require each Guarantor to, and such Guarantor hereby agrees that it will
at its expense and upon the request of CITEF forthwith, assemble all or part of
the Collateral as directed by CITEF and make it available to CITEF at a place to
be designated by CITEF which is reasonably convenient to both parties and (ii)
to enter the premises where any of the Collateral is located and take and carry
away the same, by any of its representatives, with or without legal process, to
CITEF's place of storage, and (iii) without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels at public or
private sale, at any of CITEF's offices or elsewhere, for cash, on credit or for
future delivery and upon such other terms as CITEF may deem commercially
reasonable. Each Guarantor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days' notice to such Guarantor of the time
and place of any public or private sale is to be made shall constitute
reasonable notification. CITEF shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. CITEF may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place it was so adjourned.
Section 47.02. All cash proceeds received by CITEF in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of CITEF, be held by CITEF as collateral for,
and/or then or at any time thereafter applied (after payment of any amounts
payable to CITEF pursuant to Section 13) in whole or in part by CITEF against,
all or any part of the Obligations in such order as CITEF shall elect. Any
surplus of such cash or cash proceeds held by CITEF and remaining after payment
in full of all the Obligations to CITEF shall be paid over to such Guarantor. If
the proceeds of the sale of the Collateral are insufficient to pay all the
Obligations each Guarantor agrees to pay upon demand any deficiency to CITEF.
Section 47.03. Immediately upon the occurrence of any Event of
Default and so long as such Event of Default is continuing, CITEF may to the
extent permitted by Law: (i) remove from any premises where same may be located
any and all documents, instruments, files and records, and any receptacles or
cabinets containing same, relating to the Accounts, or CITEF may use, at such
Guarantor's expense, any of such Guarantor's personnel, supplies or space at
such Guarantor's places of business or otherwise, as may be necessary to
properly administer and control the Accounts or the handling of collections and
realizations thereon; (ii) bring suit, in the name of such Guarantor or CITEF,
and generally shall have all other rights respecting said Accounts, including
without limitation the right to accelerate or extend the time of payment,
settle, compromise, release in whole or in part any amounts owing on any
Accounts and issue credits in the name of such Guarantor or CITEF; and (iii)
sell, assign and deliver the Collateral and any returned, reclaimed or
repossessed merchandise, with or without advertisement, at public or private
sale, for cash, on credit or otherwise, at CITEF's sole option and discretion,
and CITEF may bid or become a purchaser at any such sale, free from any right of
redemption, which right is hereby expressly waived by such Guarantor.
ARTICLE XLVIII. Indemnity and Expenses.
Section 48.01. Each Guarantor jointly and
13
severally agrees to indemnify CITEF from and against any and all claims, losses
and liabilities growing out of or resulting from this Security Agreement
(including, without limitation, enforcement of this Security Agreement), except
claims, losses or liabilities resulting from CITEF's gross negligence or willful
misconduct.
Section 48.02. Each Guarantor will upon demand pay to CITEF the
amount of any and all expenses, including the fees and out of pocket
disbursements of its counsel and of any experts and agents, which CITEF may
incur in connection with (i) filing or recording fees incurred in connection
with this Security Agreement, (ii) the custody, preservation, use or operation
of, or the sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of CITEF
hereunder, or (iv) the failure by any Guarantor to perform or observe any of the
provisions hereof. CITEF shall not be liable to the Company for damages as a
result of delays, temporary withdrawals of the Equipment from service or other
causes other than those caused by CITEF's gross negligence or willful
misconduct.
ARTICLE XLIX. Amendments; Etc. No amendment or waiver of any
provision of this Security Agreement nor consent to any departure by any
Guarantor herefrom shall in any event be effective unless the same shall be in
writing and signed by CITEF, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
ARTICLE L. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and, if to each
Guarantor, mailed or delivered by messenger or sent by facsimile, addressed to
it 000 Xxxxxxxxxx Xxxx, X.X. Xxx 000, Xxxxxxxxxxx, Xxxxxxx 00000; and if to
CITEF, mailed or delivered by messenger or sent by facsimile to it, addressed to
it at the address of CITEF at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Senior Credit Officer; or as to any such party at such other
address as shall be designated by such party in a written notice to the other
party complying as to delivery with the terms of this Section. All such notices
and other communications shall, when mailed or delivered by messenger or sent by
facsimile, respectively, be effective when received in the mails or delivered to
the messenger or sent by facsimile, respectively, addressed as aforesaid.
ARTICLE LI. Continuing Security Interest; Transfer of Lease. This
Security Agreement shall create a continuing security interest in the Collateral
and shall (i) remain in full force and effect until payment in full of the
Obligations (after the termination of the Guaranty), (ii) be binding upon each
Guarantor, its successors and assigns, and (iii) inure to the benefit of CITEF
and its successors, transferees and assigns. Without limiting the generality of
the foregoing clause (iii), subject to the terms of the Guaranty CITEF may
assign or otherwise transfer all or a portion of its rights and obligations
under the Guaranty to any other Person and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to CITEF herein
or otherwise. Upon the payment in full of the Obligations (after the termination
of the Guaranty), the security interest granted hereby shall terminate and all
rights to the Collateral shall revert to the respective Guarantor. Upon any such
termination, CITEF will, at such Guarantor's expense, execute and deliver to the
Company such documents as the Company shall reasonably request to evidence such
14
termination.
ARTICLE LII. Governing Law; Terms. This Security Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
except to the extent that the validity or perfection of the security interest
hereunder, or remedies hereunder, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than the State of New York. Unless
otherwise defined herein, terms used in Article 9 of the Uniform Commercial Code
in the State of New York are used herein as therein defined.
ARTICLE LIII. Miscellaneous. This Security Agreement is in addition
to and not in limitation of any other rights and remedies CITEF may have by
virtue of any other instrument or agreement heretofore, contemporaneously
herewith or hereafter executed by each Guarantor or by applicable Law or
otherwise. If any provision of this Security Agreement is contrary to applicable
Law, such provision shall be deemed ineffective without invalidating the
remaining provisions hereof. If and to the extent that applicable Law confers
any rights in addition to any of the provisions of this Security Agreement, the
affected provision shall be considered amended to conform thereto. CITEF shall
not by any act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies hereunder. A waiver by CITEF of any right or remedy hereunder
on any one occasion, shall not be construed as a bar to or waiver of any such
right or remedy which CITEF would have had on any future occasion nor shall
CITEF be liable for exercising or failing to exercise any such right or remedy
ARTICLE LIV. Waiver of Trial by Jury . THE PARTIES TO THIS SECURITY
AGREEMENT ACKNOWLEDGE THAT JURY TRIALS OFTEN ENTAIL ADDITIONAL EXPENSES AND
DELAYS NOT OCCASIONED BY NONJURY TRIALS. THE PARTIES TO THIS SECURITY AGREEMENT
AGREE AND STIPULATE THAT A FAIR TRIAL MAY BE HAD BEFORE A STATE OR FEDERAL JUDGE
IN A COURT LOCATED IN NEW YORK COUNTY BY MEANS OF A BENCH TRIAL WITHOUT A JURY.
IN VIEW OF THE FOREGOING, AND AS A SPECIFICALLY NEGOTIATED PROVISION OF THIS
SECURITY AGREEMENT, EACH PARTY TO THIS SECURITY AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER THIS SECURITY AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS SECURITY
AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
15
IN WITNESS WHEREOF, each Guarantor has caused this Security
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
FIBERMARK, INC.
By:_____________________________________
Name:
Title:
FIBERMARK DURABLE SPECIALTIES, INC.
By:_____________________________________
Name:
Title:
FIBERMARK FILTER AND TECHNICAL
PRODUCTS, INC.
By:_____________________________________
Name:
Title:
THE CIT GROUP/EQUIPMENT FINANCING, INC.
By______________________________________
Name:
Title:
16
SCHEDULE I
to Security Agreement
Place of Business and Locations of Collateral
Chief Place of Business
and Chief Executive Office
FiberMark, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
FiberMark Durable Specialties, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
FiberMark Filter and Technical Products, Inc.
___________________________
___________________________
___________________________
Location of Inventory
FiberMark, Inc.
none
FiberMark Durable Specialties, Inc.
Endura Converted Products
00 X. 0xx Xxxxxx
Xxxxxxxxxx, XX 00000
FiberMark Filter and Technical Products, Inc.
Virginia Bonded Warehouse
0000 Xxxxxxxxx Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Xxxxx River Corporation of Virginia
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Milco Warehouse - 6900 and 0000
Xxx Xxxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
Fitchburd Mill
00 Xxx Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
X-X-0
Xxxxxx Xxxxx
Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxx Xxxxx, XX 00000
Richmond Mill
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Rochester Mill
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
S-I-2
SCHEDULE II
to Security Agreement
SCHEDULE OF
OWNED AND LEASED REAL PROPERTY
[TO BE PROVIDED]
S-II-1
SCHEDULE III
to Security Agreement
TAXPAYER IDENTIFICATION NUMBER
FIBERMARK, INC.: ____________________
FIBERMARK DURABLE SPECIALTIES, INC.: ____________________
FIBERMARK FILTER AND TECHNICAL PRODUCTS, INC.: ____________________
S-III-1
ANNEX I
to Security Agreement
Accounts shall mean all of the applicable Guarantor's now existing
and future: (a) Accounts Receivable (whether or not specifically listed on
schedules furnished to CITEF), and any and all instruments, documents, contract
rights, chattel paper, general intangibles, including, without limitation, all
accounts created by or arising from all of each Guarantor's sales of goods or
rendition of services to its customers, (b) unpaid seller's rights (including
rescission, replevin, reclamation and stoppage in transit) relating to the
foregoing or arising therefrom; (c) rights to any goods represented by any of
the foregoing, including rights to returned or repossessed goods; (d) reserves
and credit balances arising hereunder; (e) guarantees or collateral for any of
the foregoing; (f) insurance policies or rights relating to any of the
foregoing; and (g) cash and non-cash proceeds of any and all the foregoing.
Accounts Receivable means any right to payment for goods sold by or
services rendered by each Guarantor, including all accounts arising from sales
or rendition of services made under each Guarantor's trade names or styles, or
through any of each Guarantor's divisions; regardless of how such right is
evidenced, whether secured or unsecured, or now existing or hereafter arising.
Brattleboro Collateral shall mean all of FiberMark Office's present
and future Equipment and Real Estate of FiberMark Office whether now or
hereafter owned by FiberMark Office and located on the Brattleboro, Vermont
property owned by FiberMark Office; and to the extent not otherwise included,
all proceeds and products of any and all of the foregoing.
Depository Accounts shall mean those accounts owned by, and in the
name of, the Agent and designated by the Agent for the deposit of proceeds of
Collateral.
Equipment shall mean all present and hereafter acquired machinery,
equipment, furnishings and fixtures, and all additions, substitutions and
replacements thereof, located the Brattleboro, Vermont property owned by
FiberMark Office, together with all attachments, components, parts, equipment
and accessories installed thereon or affixed thereto and all proceeds of
whatever sort.
Event of Default means a failure by any Guarantor to fulfill its
obligations under the Guaranty.
Governmental Authority shall mean any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
Indebtedness shall mean at any date:
(a) indebtedness or liability for borrowed money, or for the
deferred purchase price of property or services (including trade obligations);
(b) obligations as lessee under Capital Leases;
(c) reimbursement obligations under letters of credit issued for the
account of any Person;
(d) all reimbursement obligations arising under bankers' or trade
acceptances;
(d) all guarantees, endorsements (other than for collection or
deposit in the
A-I-1
ordinary course of business), and other contingent obligations to purchase any
of the items included in this definition, to provide funds for payment, to
supply funds to invest in any Person, or otherwise to assure a creditor against
loss;
(e) all obligations secured by any Lien on property owned by such
Person, whether or not the obligations have been assumed; and
(f) all obligations under any agreement providing for a swap,
ceiling rates, ceiling and floor rates, contingent participation or other
hedging mechanisms with respect to interest payable on any of the items
described in this definition.
Law means any treaty, foreign, federal, state or local statute, law,
rule, regulation, ordinance, order, code, policy, or rule of common law, now or
hereafter in effect, and in each case as amended, and any judicial or
administrative interpretation thereof by a Governmental Authority or otherwise,
including any judicial or administrative order, consent decree or judgment.
Lien shall mean any mortgage, pledge, lien, security interest,
charge, encumbrance, financing statement, title retention or any other right or
claim of any person, including, without limitation, any environmental lien.
Material Adverse Change means (a) a material adverse change in the
status of the business, results of operations, condition (financial or
otherwise), prospects, profitability, assets, operations, or property of any
Guarantor or the Company, or (b) any event or occurrence of whatever nature
which could have a material adverse effect on any Guarantor's ability to perform
its obligations under the Guaranty or the Company's ability to perform its
obligations under the Lease Agreement.
Permitted Encumbrances shall mean:
(a) Liens expressly permitted, or consented to, by the Agent;
(b) Liens expressly permitted, or consented to, by CITEF pursuant to
the Lease Agreement in the event that all Liens granted by FiberMark Office to
the Agent under and pursuant to the Financing Agreement have been released;
(c) Purchase Money Liens;
(d) Permitted Liens;
(e) Liens granted the Agent by FiberMark Office or any Guarantor;
(f) Liens granted CITEF by FiberMark Office in the event that all
Liens granted by FiberMark Office to the Agent under and pursuant to the
Financing Agreement have been released;
(g) Liens of judgment creditors provided such Liens do not exceed,
in the aggregate, at any time, Two Hundred Fifty Thousand Dollars ($250,000)
(other than Liens bonded or insured to the reasonable satisfaction of the Agent
or CITEF in the event that all Liens granted by FiberMark Office to the Agent
under and pursuant to the Financing Agreement have been released);
(h) Liens for taxes not yet due and payable or which are the subject
of a Good Faith Contest and which Liens are not x) other than with respect to
Real Estate, senior to the Liens of the Agent or y) for taxes due the United
States of America; provided, however, that in no event shall any Environmental
Lien be deemed to be a Permitted Encumbrance; and
(i) Liens granted by FiberMark Office to CITEF securing FiberMark
Office's obligations under the Lease Agreement and Liens granted by each
Guarantor securing
A-I-2
each Guarantor's guaranty of such obligations; and
(j) Liens granted by FiberMark Office or any Guarantor on any of its
assets other than (i) the Brattleboro Collateral, (ii) each Guarantor's or
FiberMark Office's Accounts and (iii) each Guarantor's and FiberMark Office's
Inventory.
Permitted Liens shall mean:
(i) Liens of local, provincial, or state authorities for franchise
or other like taxes provided the aggregate amounts secured by such Liens shall
not exceed One Hundred Thousand Dollars ($100,000) in the aggregate outstanding
at any one time;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other like Liens imposed by Law,
created in the ordinary course of business and for amounts not yet due or which
are the subject of a Good Faith Contest;
(iii) deposits made (and the Liens thereon) in the ordinary course
of business (including, without limitation, security deposits for leases, surety
bonds and appeal bonds) in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, contracts (other than for the repayment or
guarantee of Indebtedness), statutory obligations and other similar obligations
arising as a result of progress payments under government contracts; and
(iv) easements (including, without limitation, reciprocal easement
agreements and utility agreements), encroachments, minor defects or
irregularities in title, variation and other restrictions, charges or
encumbrances (whether or not recorded) affecting the Real Estate and which are
listed in Schedule B of the title insurance policy delivered to the Agent
pursuant to the Financing Agreement and delivered to CITEF; provided, however,
that in no event shall any Environmental Lien be deemed to be a Permitted Lien.
Person shall means an individual, a corporation, a partnership, an
unincorporated organization, an association, a joint stock company, a joint
venture, a trust, an estate, a government or any agency or political subdivision
thereof, or other entity, whether acting in an individual, fiduciary or other
capacity.
Proceeds shall have the meaning assigned to it in the Uniform
Commercial Code, and in any event, shall include, but not be limited to, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
CITEF from time to time with respect to any of the Collateral; (ii) any and all
payments (in any form whatsoever) made or due and payable to CITEF from time to
time in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau or agency or any other Person (whether or not acting under
color of governmental authority); (iii) any and all accounts arising out of, any
chattel paper evidencing, any lease of, and any and all other rents or profits
or other amounts from time to time paid or payable in connection with, any of
the Collateral; and (iv) any and all proceeds of any sale, transfer or other
disposition of the Collateral.
Purchase Money Liens shall mean Liens on any item of equipment
acquired by
A-I-3
FiberMark Office after the date of the Financing Agreement provided
that (a) each such Lien shall attach only to the property to be acquired, (b) a
description of the property so acquired is furnished to the Agent and CITEF, and
(c) the debt incurred in connection with such acquisitions shall not exceed, in
the aggregate, Five Hundred Thousand Dollars ($500,000) in any Fiscal Year.
Real Estate shall mean the fee and/or leasehold interests in the
real property of FiberMark Office located at Brattleboro, Vermont which has been
encumbered, mortgaged, pledged or assigned to the Agent or to the Agent's
designee for the ratable benefit of the Lenders.
Security Documents means this Security Agreement, the Guaranty and
any other security agreement granting a Lien on any assets of FiberMark Office
to secure the Obligations.
A-I-4
DRAFT 2/1/98
SECOND AMENDED AND RESTATED
SECURITY AGREEMENT
among
FIBERMARK, INC.
FIBERMARK DURABLE SPECIALTIES, INC.
and
FIBERMARK FILTER AND TECHNICAL PRODUCTS, INC.
and
THE CIT GROUP/EQUIPMENT FINANCING, INC.
Dated: December 31, 1997
Index
Page
PRELIMINARY STATEMENT.................................................. 1
SECTION 1. GRANT OF SECURITY ........................................ 9
SECTION 2. SECURITY FOR GUARANTY OBLIGATIONS......................... 10
SECTION 3. REPRESENTATIONS AND WARRANTIES............................ 10
SECTION 4. FURTHER ASSURANCES ....................................... 11
SECTION 5. AS TO INVENTORY .......................................... 14
SECTION 6. INSURANCE ................................................ 15
SECTION 7. AS TO ACCOUNTS RECEIVABLE ................................ 16
SECTION 8. TRANSFER AND OTHER LIENS ................................. 18
SECTION 9. CITEF APPOINTED ATTORNEY-IN-FACT ......................... 18
SECTION 10. CITEF MAY PERFORM ........................................ 19
SECTION 11. CITEF'S DUTIES ........................................... 19
SECTION 12. REMEDIES ................................................. 20
SECTION 13. INDEMNITY AND EXPENSES ................................... 21
SECTION 14. AMENDMENTS; ETC. ......................................... 21
SECTION 15. ADDRESSES FOR NOTICES .................................... 21
SECTION 16. CONTINUING SECURITY INTEREST; TRANSFER OF LEASE .......... 21
SECTION 17. GOVERNING LAW; TERMS ..................................... 22
SECTION 18. MISCELLANEOUS ............................................ 22
SECTION 19. WAIVER OF TRIAL BY JURY .................................. 22
SCHEDULE I S-I-1
SCHEDULE II............................................................ S-II-1
SCHEDULE III........................................................... S-III-1
ANNEX I................................................................ A-I-1
