Exhibit 10.33
SECURITY AGREEMENT
This is a Security Agreement dated as of December 29, 2000 (this
"Agreement"), between NORTH ATLANTIC TRADING COMPANY, INC. (the "Borrower" and
an "Assignor"), NATIONAL TOBACCO COMPANY, L.P. ("NTCLP"), NORTH ATLANTIC
OPERATING COMPANY, INC. ("NAOC") and NATIONAL TOBACCO FINANCE CORPORATION
("NTFC") (the Borrower, NTCLP, NAOC and NTFC, each an "Assignor" and
collectively, the "Assignors") and BANK ONE, KENTUCKY, NA, a national banking
association, acting as Agent Bank (hereafter referred to as the "Agent Bank").
The Agent Bank at all times under this Agreement is acting for and on behalf of
the Banks as defined in the Loan Agreement dated December 29, 2000 (the "Loan
Agreement"), by and among the Assignors, the Banks party thereto (referred to
herein individually as a "Bank" and collectively as the "Banks"), and the Agent
Bank.
Recitals
A. The Assignors, the Agent Bank and the Banks are entering into the
Loan Agreement, pursuant to which, among other things, the Banks have agreed to
provide the Borrower with the Revolving Credit Facility, the Letter of Credit
Subfacility, and the Term Loans.
B. The Borrower is entering into this Agreement to secure the payment
of the Revolving Credit Loans, the Letter of Credit Subfacility, the Term Loans
and any other Obligations to the Agent Bank.
C. NTCLP, NAOC and NTFC are entering into this Agreement to secure
the payment of their obligations under the Guaranty Agreement and any other
Obligations to the Agent Bank.
D. This Agreement is being entered into concurrently with the
extension of the Revolving Credit Facility, the Letter of Credit Subfacility and
the Term Loans and the Banks are extending the Revolving Credit Facility, the
Letter of Credit Subfacility and the Term Loans in reliance up the Assignors'
obligations evidenced by this Agreement.
NOW, THEREFORE, the Assignors and the Agent Bank agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein shall have the
meanings given them in the Loan Agreement. In addition, the following terms
shall have the following meanings, and the meanings assigned to all capitalized
terms used herein shall be equally applicable to both the singular and plural
forms of the terms defined:
"Collateral" shall mean any or all of the property in which
the Assignors grant to the Agent Bank a security interest under Section 2 of
this Agreement.
"Copyrights" shall mean any United States or foreign
copyright owned by any Assignor now or hereafter, including any registration of
any copyrights, in the United States Copyright Office or the equivalent thereof
in any foreign country, as well as any application for a United States or
foreign copyright registration now or hereafter made with the United States
Copyright Office or the equivalent thereof in any foreign jurisdiction by any
Assignor.
"Event of Default" shall have the meaning given that term
in Section 8 of this Agreement.
"Marks" shall mean all right, title and interest in and to
any United States or foreign trademarks, service marks and trade names now held
or hereafter acquired by any Assignor, including any registration or application
for registration of any trademarks and service marks now held or hereafter
acquired by an Assignor, which are registered in the United States Patent and
Trademark Office or the equivalent thereof in any State of the United States or
in any foreign country, as well as any unregistered marks used by any Assignor,
and any trade dress including logos, designs, company names, business names,
fictitious business names and other business identifiers used by any Assignor in
the United States or any foreign country.
"Patents" shall mean any United States or foreign patent to
which any Assignor now or hereafter has title and any divisions or continuations
thereof, as well as any application for a United States or foreign patent now or
hereafter made by such Assignor.
"Permits" shall mean, to the extent permitted to be
assigned by the terms thereof or by applicable law, all licenses, permits,
rights, orders, variances, franchises or authorizations of or from any
governmental authority or agency.
"Secured Obligations" shall mean all of the obligations
secured by this Agreement as set forth in Section 3 of this Agreement.
"Trade Secret Rights" shall mean the rights of an Assignor
in any Trade Secret it holds.
"Trade Secrets" means any secretly held existing
engineering and other data, information, production procedures and other
know-how relating to the design, manufacture, assembly, installation, use,
operation, marketing, sale and servicing of any products or business of an
Assignor worldwide, whether written or not written.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in the State of New York.
"Warehouse Receipts" shall mean any and all of the
non-negotiable warehouse receipts and/or other documents of title issued by any
Warehousemen with respect to any Inventory.
"Warehousemen" shall mean any Persons holding or storing
any of the Inventory who have issued Warehouse Receipts evidencing their holding
or storage of such Inventory.
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To the extent this document contains references to multiple "Banks",
"Revolving Credit Notes" or "Term Notes," at a time when there exists only one
"Bank", "Revolving Credit Note" or "Term Note", such references shall be deemed
to refer to such single "Bank," "Revolving Credit Note" or "Term Note," as
appropriate.
2. Grant of Security Interests.
(a) Each Assignor grants to the Agent Bank, for the benefit
of the Banks, a security interest in all of such Assignor's right, title and
interest in the following property, whether now owned by such Assignor or
acquired subsequent to the date of this Agreement:
(i) all Accounts Receivable;
(ii) all General Intangibles;
(iii) all Inventory;
(iv) all Equipment;
(v) all Goods (as defined in the Uniform
Commercial Code);
(vi) all Chattel Paper (as defined in the Uniform
Commercial Code);
(vii) all Instruments (as defined in the Uniform
Commercial Code);
(viii) all Documents (as defined in the Uniform
Commercial Code);
(ix) all money;
(x) all Patents and Copyrights and all reissues,
renewals or extensions thereof;
(xi) all Marks, together with the registrations
and right to all renewals thereof, and the
goodwill of the business of such Assignor
symbolized by the Marks;
(xii) all computer programs of such Assignor and
all intellectual property rights therein and
all other proprietary information of such
Assignor, including, but not limited to,
Trade Secret Rights;
(xiii) all insurance policies;
(xiv) all Permits;
(xv) any and all property which any Assignor
receives or is or may hereafter be entitled
to receive on account of any collections of
or with respect to such Assignor's Accounts
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Receivable, or any instrument in payment of
or substitution for any of such Assignor's
Accounts Receivable or such Assignor's
General Intangibles, or any part thereof;
(xvi) any and all property which any Assignor
receives or which any Assignor may hereafter
become entitled to receive on account of any
sale, exchange, transfer or other
disposition of such Assignor's Inventory or
General Intangibles, or any part thereof;
(xvii) any and all property which each Assignor is
or may hereafter become entitled to receive
on account of any sale, exchange, transfer
or other disposition of such Assignor's
Equipment, or any part thereof; and
(xviii) the proceeds and products of any sale,
exchange, collection or other disposition of
any of the foregoing.
3. Obligations Secured. The security interests granted by each
Assignor hereby secure the payment and performance of all of the following
Secured Obligations: (a) any and all indebtedness of the Borrower to the Banks
evidenced by the Loan Agreement, the Revolving Credit Notes and Term Notes and
any and all obligations contained in the Revolving Credit Notes and Term Notes;
(b) any and all of the representations, warranties, obligations, agreements,
covenants and promises of the Borrower contained in the Loan Agreement, the
Revolving Credit Notes and Term Notes, this Agreement and the other Loan
Documents, whether or not now or hereafter evidenced by any note, instrument or
other writing and (c) any obligations of NTCLP, NAOC and NTFC to the Banks under
Guaranty Agreement.
4. Representations and Warranties. To induce the Agent Bank to enter
into this Agreement, any and all of the representations and warranties made by
the Borrower and the other Assignors in the Loan Agreement and the other Loan
Documents are incorporated herein by reference, and the Borrower and the other
Assignors further represent, warrant and agree as follows:
(a) Each Assignor has good and marketable title to such
Assignor's Collateral, and the Collateral is not subject to any lien, charge,
pledge, encumbrance, claim or security interest other than the security
interests created by this Agreement or permitted by the Loan Documents as being
of record on the Closing Date.
(b) The Collateral is used and will be used for business
use only.
(c) Each Assignor understands and acknowledges that the
Banks are making the Term Loans and extending the Revolving Credit Loans at
least in part in reliance upon each Assignor's execution and delivery of the
Guaranty Agreement and each Assignor's granting of the security interests
evidenced by this Agreement.
(d) The Borrower makes the following representations: It is
a corporation incorporated and in good standing under the laws of the state
identified in Schedule 1A hereto. It maintains its registered office and
principal place of business at the location identified in Schedule 1A hereto.
The books and records with respect to the Borrower's Accounts Receivable are
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kept at the Borrower's chief place of business, identified on Schedule 1A
hereto. Its registered agent is identified on Schedule 1A hereto. It keeps its
Inventory and Equipment at the locations set out on Schedule 1A attached to this
Agreement. Within the five (5) consecutive years last preceding the date of this
Agreement, it has not conducted business under, or otherwise used, any name
other than the names set forth on Schedule 1A hereto. Within the four (4)
consecutive months next preceding the date of this Agreement, it has not moved
Inventory or Equipment, except from jurisdictions specifically identified on
Schedule 1A.
(f) NTCLP makes the following representations: It is a
limited partnership formed and in good standing under the laws of the state
identified in Schedule 1B hereto. It maintains its registered office and
principal place of business at the location identified in Schedule 1B hereto.
The books and records with respect to such Assignor's Accounts Receivable are
kept at such Assignor's chief place of business, identified on Schedule 1B
hereto. Its registered agent is identified on Schedule 1B hereto. It keeps its
Inventory and Equipment at the locations set out on Schedule 1B attached to this
Agreement. Within the five (5) consecutive years last preceding the date of this
Agreement, it has not conducted business under, or otherwise used, any name
other than the names set forth on Schedule 1B hereto. Within the four (4)
consecutive months next preceding the date of this Agreement, it has not moved
Inventory or Equipment, except from jurisdictions specifically identified on
Schedule 1B.
(g) NAOC makes the following representations: It is a
corporation incorporated and in good standing under the laws of the state
identified in Schedule 1C hereto. It maintains its registered office and
principal place of business at the location identified in Schedule 1C hereto.
The books and records with respect to such Assignor's Accounts Receivable are
kept at such Assignor's chief place of business, identified on Schedule 1C
hereto. Its registered agent is identified on Schedule 1C hereto. It keeps its
Inventory and Equipment at the locations set out on Schedule 1C attached to this
Agreement. Within the five (5) consecutive years last preceding the date of this
Agreement, it has not conducted business under, or otherwise used, any name
other than the names set forth on Schedule 1C hereto. Within the four (4)
consecutive months next preceding the date of this Agreement, it has not moved
Inventory or Equipment, except from jurisdictions specifically identified on
Schedule 1C.
(h) NTFC makes the following representations: It is a
corporation incorporated and in good standing under the laws of the state
identified in Schedule 1D hereto. It maintains its registered office and
principal place of business at the location identified in Schedule 1D hereto.
The books and records with respect to such Assignor's Accounts Receivable are
kept at such Assignor's chief place of business, identified on Schedule 1D
hereto. Its registered agent is identified on Schedule 1D hereto. It keeps its
Inventory and Equipment at the locations set out on Schedule 1D attached to this
Agreement. Within the five (5) consecutive years last preceding the date of this
Agreement, it has not conducted business under, or otherwise used, any name
other than the names set forth on Schedule 1D hereto. Within the four (4)
consecutive months next preceding the date of this Agreement, it has not moved
Inventory or Equipment, except from jurisdictions specifically identified on
Schedule 1D.
5. Duration of Security Interests. The Agent Bank, and its successors
and assigns, for the benefit of the Banks, shall hold the security interests
created hereby upon the terms of this Agreement, and this Agreement shall
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continue until the Revolving Credit Notes and Term Notes have been paid in full,
the other Secured Obligations have been performed, executed, or satisfied in
their entirety, and no commitment to lend or extend credit which is intended to
be secured hereby remains outstanding. After payment of any part of the Secured
Obligations, the Agent Bank may, at its option, retain all or any portion of the
Collateral as security for any remaining Secured Obligations and retain this
Agreement as evidence of such security. The security interests granted hereunder
shall not be impaired or affected by any renewals or extensions of time for
payment of any of the Secured Obligations, or by release of any party liable on
the Secured Obligations; by any acquisition, release or surrender of other
security, collateral or guaranty; by delay in enforcement of payment of any of
the Secured Obligations; or by delay in enforcement of any security.
6. Certain Notices. Each Assignor shall notify the Agent Bank of any
and all changes of location of such Assignor's chief place of business and of
the registered office of such Assignor's registered agent and of the books and
records with respect to any Accounts Receivable and of the location of any other
of the Collateral at least thirty (30) days prior to effecting any such change.
7. Covenant Not to Dispose of or Impair Collateral. No Assignor
shall, without the prior written consent of the Agent Bank, sell, transfer or
otherwise dispose of the Collateral, or any part thereof or interest therein,
except (a) collections of Accounts Receivable permitted under this Agreement,
(b) sale of Inventory in the ordinary course of business (which shall not
include any transfer in complete or partial satisfaction of indebtedness), and
(c) otherwise as permitted by the Loan Documents. Each Assignor shall use its
best efforts to not permit anything to be done that may materially impair the
value of the Collateral or the security intended to be provided by this
Agreement.
8. Default. The occurrence of an Event of Default under the Loan
Agreement shall constitute an event of default under this Agreement (an "Event
of Default").
9. Loan Remedies. Upon any Event of Default, the Agent Bank may at
its option declare any and all of the Revolving Credit Notes, the Term Notes,
the Guaranty Agreement and the other Secured Obligations to be immediately due
and payable; and, in addition to that right, and in addition to exercising all
other rights or remedies, the Agent Bank may proceed to exercise with respect to
the Collateral all rights, options and remedies of a secured party upon default
as provided for under the Uniform Commercial Code. The rights of the Agent Bank
upon an Event of Default shall include, without limitation, any and all rights
and remedies in any and all other documents, instruments, agreements and other
writings between the Agent Bank and each Assignor, all rights and remedies as
provided by law, in equity or otherwise, and in addition thereto, the following:
(a) The right to require each Assignor to assemble the
Collateral and the books and records with respect to Accounts Receivable and
make them available to the Agent Bank at a place or places to be designated by
the Agent Bank which is reasonably convenient to the Assignors and the Agent
Bank.
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(b) The right to require the Assignors to store all or any
part of such Assignors' Inventory and Equipment, at such Assignor's own cost and
risk, on behalf of the Agent Bank after the Agent Bank has taken possession of
such Inventory and Equipment. Storage shall be in such manner as to prevent any
deterioration of such Inventory and Equipment, and shall be for a reasonable
time pending the sale or other disposition of such Inventory and Equipment.
(c) The right to sell the Collateral at public or private
sale in one or more lots in accordance with Uniform Commercial Code. The Agent
Bank may bid upon and purchase any or all of the Collateral at any public sale
thereof, and shall be entitled to apply the unpaid portion of the Secured
Obligations as a credit against the purchase price. The Agent Bank's purchase of
all or any of the Collateral shall extinguish the Assignor's rights under
section 9-506 of the Uniform Commercial Code upon application of the unpaid
portion of the Secured Obligations. The Agent Bank shall be entitled to apply
the proceeds of any such sale to the satisfaction of the Secured Obligations and
to expenses incurred in realizing upon the Collateral in accordance with the
Uniform Commercial Code.
(d) The right to notify the account debtors on all or any
part of any Assignor's Accounts Receivable of the Agent Bank's interest therein
and to require such account debtors to begin making payments directly to the
Agent Bank regardless of whether such Assignor was previously making collections
on all or any part of such Assignor's Accounts Receivable. The Agent Bank shall
have the right to proceed against any such account debtors in its own name, or
in the name of the Assignors (as appropriate) with or without the consent of the
Assignors. The Agent Bank may retain any such payments or collections and apply
them to the satisfaction of the Secured Obligations and to expenses incurred in
collection, all in accordance with the Uniform Commercial Code.
(e) The right to recover the reasonable expenses of taking
possession of any of the Collateral that may be reduced to possession, preparing
the Collateral for sale, selling the Collateral, collecting all or any part of
any Assignor's Accounts Receivable, and other like expenses.
(f) The right to recover all of the Agent Bank's expenses
of collection, including, without limitation, court costs and reasonable
attorneys' fees and disbursements incurred in realizing upon the Collateral or
enforcing or attempting to enforce any provision of this Agreement.
(g) The right to retain the Collateral and become the owner
thereof, in accordance with the provisions of the Uniform Commercial Code.
(h) The right to proceed by appropriate legal process at
law or in equity to enforce any provision of this Agreement or in aid of the
execution of any power of sale, or for foreclosure of the security interests of
the Agent Bank, or for the sale of the Collateral under the judgment or decree
of any court.
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(i) The right to enter any premises where any Collateral
may be located for the purpose of taking possession or removing the same.
(j) The right to (1) possession of any and all of the
Warehouse Receipts, (2) notify any of the Warehousemen holding any of the
Assignors' Inventory that a default has occurred and that the Agent Bank, to the
exclusion of the Assignors, is entitled to direct release and delivery of the
Inventory, and (3) otherwise cause the Warehousemen to store the Inventory as
the Agent Bank's agent.
10. Cumulative Remedies. The rights and remedies of the Agent Bank
shall be deemed to be cumulative, and any exercise of any right or remedy shall
not be deemed to be an election of that right or remedy to the exclusion of any
other right or remedy. Notwithstanding the foregoing, the Agent Bank shall be
entitled to recover by the cumulative exercise of all remedies no more than the
sum of (a) the Secured Obligations at the time of exercise of remedies, plus (b)
the costs, fees and expenses the Agent Bank is otherwise entitled to recover.
11. Waivers. Each Assignor acknowledges that this Agreement involves
the grant of multiple security interests, and each Assignor hereby waives, to
the extent permitted by applicable law, (a) any requirement of marshaling of
assets or proceeding against Persons or assets in any particular order, and (b)
any and all notices of every kind and description which may be required to be
given by any statute or rule of law and any defense of any kind which the
Assignors may now or hereafter have with respect to the rights of the Agent Bank
with respect to the Collateral under this Agreement.
12. Collections from Accounts Receivable.
(a) At any time when the Agent Bank may exercise remedies
under Section 9 of this Agreement, the Agent Bank shall have the right to notify
account debtors obligated on any or all Accounts Receivable to make payments
directly to the Agent Bank.
(b) Until the Agent Bank requests that account debtors of
Accounts Receivable be notified of the Agent Bank's security interest created at
a time when the Agent Bank may exercise remedies under Section 9 of this
Agreement, the Assignors shall continue to collect payments on the Assignors'
Accounts Receivable and use the proceeds thereof in the ordinary course of
business. In any event, if any Event of Default has occurred and is continuing,
the Assignors may not use the proceeds from payments on Accounts Receivable to
satisfy any indebtedness to any Person other than the Agent Bank. If the
Assignors collect payments on any Accounts Receivable after an Event of Default
has occurred and while it is continuing, the Assignors shall hold the proceeds
received from that collection as a constructive trust for the Agent Bank and
shall turn over such proceeds to the Agent Bank immediately upon demand in the
identical form received, if so requested by the Agent Bank. In the event of such
payment, the Agent Bank shall credit the proceeds as payment of the Secured
Obligations first to costs or penalties if any, second to interest, and then to
principal. Any credit given to the Assignors for proceeds in form other than
cash shall be conditional upon final payment to the Assignors in cash or solvent
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credit of the items, and if any item is not paid the amount of any credit given
for it shall be charged to the Assignors whether or not the item is returned,
and such amount shall be a part of the obligations secured by this Agreement.
(c) No Assignor shall have power to, and no Assignor shall,
waive, compromise or discount any Accounts Receivable, without the prior written
consent of the Agent Bank, except for (1) ordinary trade discounts and
allowances for payment within thirty days of the date of invoice or billing, and
(2) discounts or allowances in the ordinary course of collecting Accounts
Receivable.
13. The Agent Bank as Agent. Each Assignor hereby irrevocably
constitutes the Agent Bank as such Assignor's agent and attorney-in-fact at any
time during any period when the Agent Bank may exercise the remedies set forth
in Section 9 of this Agreement, to (a) proceed against account debtors obligated
on Accounts Receivable in such Assignor's name or in the Agent Bank's name, (b)
sign and endorse all checks, drafts and other instruments in payment of Accounts
Receivable, and (c) perform all such other acts with respect to Accounts
Receivable as the Agent Bank may in its discretion deem reasonably necessary to
effectuate the security intended to be granted in this Agreement.
14. Special Collection Procedure. Upon the Agent Bank's demand at any
time when the Agent Bank may exercise remedies under Section 9 of this
Agreement, the Assignors shall forthwith, upon receipt of all checks, drafts,
cash and other remittances in payment or on account of Accounts Receivable or
for the sale of Inventory or Equipment by the Assignors, deposit the same in a
special bank account maintained with the Agent Bank over which the Agent Bank
alone, to the exclusion of the Assignors, has the power of withdrawal. The funds
in such account shall be held by the Agent Bank for application toward the
Secured Obligations. Such proceeds paid on Accounts Receivable shall be
deposited in precisely the form received, except for the endorsement of the
Assignors where necessary to permit collection of items, which endorsement the
Assignors agree to make and which the Agent Bank is also hereby authorized by to
make in such Assignor's name and on such Assignor's behalf as attorney-in-fact.
Pending such deposit, each Assignor agrees that such Assignor will not commingle
any such checks, drafts, cash and other remittances with any other funds or
property, but will hold them separate and apart therefrom in express trust for
the Agent Bank until deposited in that special account. The Agent Bank will,
once each day, apply the whole or any part of the collected funds on deposit in
such special account against the principal and/or interest of the Term Note(s)
and the Revolving Credit Note(s), the order and method of such application being
in the sole discretion of the Agent Bank. Any portion of the funds in the
special account which the Agent Bank elects not to apply as provided in the
preceding sentence may be paid over by the Agent Bank to the Assignor or may be
retained in the special account, at the Agent Bank's sole discretion, as
continuing security and in which the Assignor hereby grants to the Agent Bank
security interests for all the Secured Obligations.
15. Books and Records. Each Assignor shall maintain books and records
with respect to Accounts Receivable in form and manner reasonably satisfactory
to the Agent Bank, and the Agent Bank shall have the right during business hours
with reasonable notice (and otherwise in a reasonable fashion) to inspect any
and all of the business properties, premises or books and records of the
Assignors relating to Accounts Receivable or other Collateral or the proceeds
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thereof. Each Assignor further agrees from time to time to furnish such reports,
data and financial statements with respect to the Collateral as the Agent Bank
may reasonably request from time to time.
16. Insurance. The provisions of Section 7.10 of the Loan Agreement
shall govern with respect to insurance and such provisions are incorporated
herein by reference.
17. Certain Obligations Regarding Collateral.
(a) Each Assignor shall keep and maintain such Assignor's
Inventory and Equipment in good condition and repair and under adequate
condition of storage to prevent its deterioration or depreciation in value.
(b) Each Assignor shall keep the Collateral free and clear
of any and all liens other than the security interests created in favor of the
Agent Bank under this Agreement or permitted by the Loan Documents, and shall
declare and pay any and all fees, assessments, charges and taxes allocable to
the Collateral, or which might result in a lien against the Collateral if left
unpaid, unless an Assignor at such Assignor's own expense is contesting the
validity or amount thereof in good faith by an appropriate proceeding timely
instituted which shall operate to prevent the collection or satisfaction of the
lien or amount so contested. If an Assignor fails to pay such amount and is not
contesting the validity or amount thereof in accordance with the preceding
sentence, the Agent Bank may, but is not obligated to, pay such amount, and such
payment shall be deemed conclusive evidence of the legality or validity of such
amount. Each Assignor shall promptly reimburse the Agent Bank for any and all
payments made by the Agent Bank in accordance with the preceding sentence, and
until reimbursement, such payments shall be part of the Secured Obligations.
(c) Each Assignor shall keep its Inventory and Equipment
only at the locations set out on its applicable Schedule 1 attached to and
incorporated into this Agreement.
17. Use and Inspection of Collateral. No Assignor shall use the
Collateral in violation of any statute or ordinance, and the Agent Bank shall
have the right, at reasonable hours (and otherwise in a reasonable fashion), to
inspect the Collateral at the premises of the Assignors or wherever the
Collateral may be located.
18. Special Provisions Concerning Trademarks
(a) Additional Representations and Warranties. Each
Assignor represents and warrants that it is the true, lawful and exclusive owner
or licensee of the Marks listed in Schedule 2 attached hereto indicated as being
owned by it and that Schedule 2 lists all the Marks registered in the United
States Patent and Trademark Office or the equivalent thereof in any foreign
country and all unregistered Marks that such Assignor now owns, licenses or uses
for products developed by such Assignor in connection with its business. Each
Assignor further warrants that it is aware of no third party claim that any
aspect of such Assignor's present or contemplated business operations infringes
or will infringe any trademark or service xxxx. Each Assignor represents and
warrants that it is the true and lawful owner of or otherwise has the right to
use all U.S. trademark registrations and applications listed in Schedule 2
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hereto indicated as being owned by it and that said registrations are valid,
subsisting, have not been cancelled and that such Assignor is not aware of any
third-party claim that any of said registration is invalid or unenforceable, or
is not aware that there is any reason that any of said registrations is invalid
or unenforceable, or is not aware that there is any reason that any of said
applications will not pass to registration. Each Assignor hereby grants to the
Agent Bank an absolute power of attorney to sign, upon the occurrence and during
the continuance of an Event of Default, any document which may be required by
the United States Patent and Trademark Office in order to effect an absolute
assignment of all right, title and interest in each Xxxx owned by an Assignor,
and record the same.
(b) Licenses and Assignments. Each Assignor hereby agrees
not to divest itself of any right under a Xxxx other than in the ordinary course
of business absent prior written approval of the Agent Bank.
(c) Infringements. Each Assignor agrees, promptly upon
learning thereof, to notify the Agent Bank in writing of the name and address
of, and to furnish such pertinent information that may be available with respect
to, any party who may be infringing or otherwise violating in any material
respect any of such Assignor's rights in and to any Xxxx, or with respect to any
party claiming that such Assignor's use of any Xxxx violates in any material
respect any property right of that party. Each Assignor further agrees, unless
otherwise directed by the Agent Bank, diligently to prosecute any Person
infringing any Xxxx owned by such Assignor in a manner consistent with its past
practice and in accordance with reasonable business practices.
(d) Preservation of Marks. Each Assignor agrees to use or
license the use of its Marks in interstate commerce during the time in which
this Agreement is in effect, sufficiently to preserve such Marks as trademarks
or service marks registered under the laws of the United States or the relevant
foreign jurisdiction.
(e) Maintenance of Registration. Each Assignor shall, at
its own expense, diligently process all documents required by the Trademark Act
of 1946, 15 U.S.C. xx.xx. 1051 et seq. and any foreign equivalent thereof to
maintain trademark registrations, including but not limited to affidavits of use
and applications for renewals of registration in the United States Patent and
Trademark Office or equivalent governmental agency in any foreign jurisdiction
for all of its Marks (excluding unregistered Marks) pursuant to 15 U.S.C. xx.xx.
1058(a), 1059 and 1065 and any foreign equivalent thereof, and shall pay all
fees and disbursements in connection therewith, and shall not abandon any such
filing of affidavit of use or any such application of renewal prior to the
exhaustion of all administrative and judicial remedies without prior written
consent of the Agent Bank.
(f) Future Registered Marks. If any Xxxx registration
issues hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office or equivalent
governmental agency in any foreign jurisdiction, within thirty (30) days of
receipt of such certificate such Assignor shall deliver a copy of such
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certificate, and a grant of security in such Xxxx to the Agent Bank, confirming
the grant thereof hereunder, the form of such confirmatory grant to be
substantially the same as the form hereof.
(g) Remedies. If an Event of Default shall occur and be
continuing, the Agent Bank may, by written notice to the relevant Assignor, take
any or all of the following actions: (i) declare the entire right, title and
interest of such Assignor in and to each of the Marks of such Assignor, together
with all trademark rights and rights of protection to the same, vested, in which
event such rights, title and interest shall immediately vest, in the Agent Bank
for the benefit of the Banks pursuant to a trademark security agreement in form
and substance satisfactory to the Agent Bank, executed by such Assignor and
filed on the date hereof, pursuant to which all of such Assignor's rights, title
and interest in and to the Marks are assigned to the Agent Bank for the benefit
of the Banks; (ii) take and use or sell the Marks of such Assignor and the
goodwill of such Assignor's business symbolized by the Marks and the right to
carry on the business and use the assets of such Assignor in connection with
which the Marks have been used; and (iii) direct such Assignor to refrain, in
which event such Assignor shall refrain, from using the Marks in any manner
whatsoever, directly or indirectly, and, if requested by the Agent Bank, change
such Assignor's corporate name to eliminate therefrom any use of any Xxxx and
execute such other and further documents that the Agent Bank may request to
further confirm this and to transfer ownership of the Marks and registrations
and any pending trademark application in the United States Patent and Trademark
Office or any equivalent governmental agency or office in any foreign
jurisdiction to the Agent Bank.
19. Special Provisions Concerning Trade Secret Rights, Patents and
Copyrights
(a) Additional Representations and Warranties. Each
Assignor represents and warrants that it is the true and lawful owner or
licensee of all rights in (i) Trade Secret Rights of such Assignor, (ii) the
Patents of such Assignor listed in Schedule 3 attached hereto and that said
Patents constitute all the patents and applications for patents that such
Assignor now owns and (iii) the Copyrights of such Assignor listed in Schedule 4
attached hereto and that said Copyrights constitute all the registered
copyrights and applications for copyright registrations that such Assignor now
owns. Each Assignor represents and warrants that it has the exclusive right to
use and practice under all Patents and Copyrights that it now owns, uses or
under which it practices. Each Assignor further warrants that it is aware of no
third party claim that any aspect of such Assignor's present or contemplated
business operations infringes or will infringe any patent or any copyright or
that such Assignor has misappropriated any Trade Secret Rights. Each Assignor
hereby grants to the Agent Bank an absolute power of attorney to sign, upon the
incurrence and during the continuance of an Event of Default, any document which
may be required by the United States Patent and Trademark Office or the United
States Copyright Office in order to effect an absolute assignment of all right,
title and interest in each Patent and Copyright, as the case may be, and record
the same.
(b) Licenses and Assignments. Each Assignor hereby agrees
not to divest itself of any right under a Patent or Copyright other than in the
ordinary course of business absent prior written approval of the Agent Bank.
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(c) Infringements. Each Assignor agrees, promptly upon
learning thereof, to furnish the Agent Bank in writing with all pertinent
information available to such Assignor with respect to any infringement or other
violation of such Assignor's rights in any Patent or Copyright, or with respect
to any claim that the practice of any Patent or the use of any Copyright
violates in any material respect any property right of a third party or with
respect to any misappropriation of any Trade Secret Right or any claim that the
practice of any Trade Secret Right violates any property right of a third party.
Each Assignor further agrees, absent direction of the Agent Bank to the
contrary, diligently to prosecute any Person infringing any Patent or Copyright
owned by such Assignor or any Person misappropriating any Trade Secret Right in
a manner consistent with its past practice and in accordance with reasonable
business practices.
(d) Maintenance of Patents and Copyrights. At its own
expense, each Assignor shall make timely payment of all post-issuance fees
required pursuant to 35 U.S.C. 41 and any foreign equivalent thereof to maintain
in force rights under each of its Patents and to apply as permitted pursuant to
applicable law for any renewal of each Copyright.
(e) Prosecution of Patent Applications and Copyright
Applications. At its own expense, each Assignor shall diligently prosecute all
applications for Patents of such Assignor listed on Schedule 3 hereto and for
copyrights of such Assignor listed on Schedule 4 hereto, and shall not abandon
any such application prior to exhaustion of all administrative and judicial
remedies, absent written consent of the Agent Bank, not to be unreasonably
withheld.
(f) Other Patents and Copyrights. Within thirty (30) days
of the acquisition or issuance of a Patent or Copyright registration, or of
filing of an application for a Patent or Copyright registration, the relevant
Assignor shall deliver to the Agent Bank a copy of said Patent or Copyright
registration or application, as the case may be, with a grant of security as to
such Patent or Copyright, as the case may be, confirming the grant thereof
hereunder, the form of such confirmatory grant to be substantially the same as
the form hereof.
(g) Remedies. If an Event of Default shall occur and be
continuing, the Agent Bank may by written notice to the relevant Assignor take
any or all of the following actions: (i) declare the entire right, title and
interest of such Assignor in each of the Patents and Copyrights of such Assignor
vested, in which event such right, title and interest shall immediately vest in
the Agent Bank for the benefit of the Banks, pursuant to a patent and copyright
security agreement in form and substance satisfactory to the Agent Bank,
executed by such Assignor and filed on the date hereof, pursuant to which all of
such Assignor's right, title, and interest to such Patents and Copyrights are
assigned to the Agent Bank for the benefit of the Banks; (ii) take and practice,
use or sell the Patents and Copyrights; (iii) direct such Assignor to refrain,
in which event such Assignor shall refrain, from practicing the Patents and
using the Copyrights directly or indirectly, and such Assignor shall execute
such other and further documents as the Agent Bank may request further to
confirm this and to transfer ownership of the Patents and Copyrights to the
Agent Bank for the benefit of the Banks.
20. Notice.
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(a) Any requirement of the Uniform Commercial Code or other
applicable law of reasonable notice shall be met if such notice is given at
least five (5) business days before the time of sale, disposition or other event
or thing giving rise to the requirement of notice.
(b) All notices and other communications under this
Agreement shall be delivered in accordance with and subject to Section 15 of the
Loan Agreement.
21. Further Assurance. Each Assignor shall sign from time to time
such financing statements and other documents and instruments and take such
other actions as the Agent Bank may reasonably request from time to time to more
fully create, perfect, continue, maintain or terminate the security interests in
the Collateral intended to be created in this Agreement.
22. Miscellaneous.
(a) Failure by the Agent Bank to exercise any right shall
not be deemed a waiver of that right, and any single or partial exercise of any
right shall not preclude the further exercise of that right. Every right of the
Agent Bank shall continue in full force and effect until such right is
specifically waived in a writing signed by the Agent Bank.
(b) If any part, term or provision of this Agreement is
held by any court to be prohibited by any law applicable to this Agreement, the
rights and obligations of the parties shall be construed and enforced with that
part, term or provision enforced to the greatest extent allowed by law, or if it
is totally unenforceable, as if this Agreement did not contain that particular
part, term or provision.
(c) The headings in this Agreement have been included for
ease of reference only, and shall not be considered in the construction or
interpretation of this Agreement.
(d) This Agreement shall inure to the benefit of the Agent
Bank, its successors and assigns, on behalf of the Banks, their successors and
assigns, and all obligations of the Assignors shall bind the Assignors'
successors and assigns.
(e) To the extent allowed under the Uniform Commercial
Code, this Agreement shall in all respects be governed by and construed in
accordance with the laws of the State of New York.
(f) This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof. No change, modification,
addition or termination of this Agreement shall be enforceable unless in writing
and signed by the party against whom enforcement is sought.
(g) This Agreement may be signed by each party upon a
separate copy, and in such cases one counterpart of this Agreement shall consist
of enough of such copies to reflect the signature of each party.
14
(h) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement or the terms thereof to produce or
account for more than one such counterpart.
(i) Each Assignor consents to one or more actions being
instituted and maintained in any of (i) the Jefferson County, Kentucky, Circuit
Court, (ii) the United States District Court for the Western District of
Kentucky, (iii) the New York County Supreme Court, or (iv) the United States
District Court for the Southern District of New York to enforce this Agreement
and/or one or more of the other Loan Documents, and waives any objection to any
such action based upon lack of personal or subject matter jurisdiction or
improper venue. Each Assignor agrees that any process or other legal summons in
connection with any such action or proceeding may be served by mailing a copy
thereof by certified mail, or any substantially similar form of mail, addressed
to the Assignors at the address set forth in Section 15 of the Loan Agreement.
IN WITNESS WHEREOF, the Assignors and the Agent Bank have executed
and delivered this Agreement as of the date set out in the preamble hereto, but
actually on the dates set forth below.
NORTH ATLANTIC TRADING COMPANY, INC.
By /s/ Xxxxx Xxxxxxx
---------------------------------------------
Title: Vice President
------------------------------------------
Date: December 29, 2000
------------------------------------------
NATIONAL TOBACCO COMPANY, L.P.
By NATIONAL TOBACCO FINANCE
CORPORATION as its general partner
By /s/ Xxxxx Xxxxxxx
---------------------------------------------
Title: Vice President
------------------------------------------
Date: December 29, 2000
------------------------------------------
15
NORTH ATLANTIC OPERATING COMPANY, INC.
By /s/ Xxxxx Xxxxxxx
---------------------------------------------
Title: Vice President
------------------------------------------
Date: December 29, 2000
------------------------------------------
NATIONAL TOBACCO FINANCE CORPORATION
By /s/ Xxxxx Xxxxxxx
---------------------------------------------
Title: Vice President
------------------------------------------
Date: December 29, 2000
------------------------------------------
16
AGENT BANK:
-----------
BANK ONE, KENTUCKY, NA
By /s/ Xxxxxx Xxxxxxx
---------------------------------------------
Title: Senior Vice President
------------------------------------------
Date: December 29, 2000
------------------------------------------
17
