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Exhibit 10.59
SECURITY AGREEMENT
This Security Agreement ("Security Agreement") is entered into effective
as of the ____ day of April, 1998, by and between DECORA, INCORPORATED, a
Delaware corporation, doing business as Decora Manufacturing ("Debtor"), and
XXXXXX XXXXXXXXXX AG, a German corporation ("Secured Party"), with reference to
the following facts:
A. Secured Party and Debtor have heretofore entered into that certain Loan
Agreement ("Loan Agreement") executed and dated concurrently herewith,
pursuant to which Debtor has acknowledged a current and continuing
indebtedness to Secured Party.
B. As security for the prompt and complete payment of the indebtedness of
Debtor to Secured Party under the Loan Agreement, Debtor has agreed to
grant Secured Party a security interest in and to all of its right, title
and interest in and to the property hereinafter described.
NOW, THEREFORE, for good and valuable consideration including the mutual
promises, conditions and covenants of the parties as set forth in the Loan
Agreement, it is agreed as follows:
1. Defined Terms. For purposes of this Security Agreement, all capitalized
terms shall have the same meaning as set forth in the Loan Agreement, unless
specifically noted
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otherwise herein, and all paragraph references shall relate to similarly
numbered paragraphs in the Loan Agreement.
2. Grant of Security Interest. As assurance and security for prompt and
complete payment and performance by Debtor of all of its respective obligations
and covenants under the Loan Agreement (including, without limitation,
attorneys' fees, court costs and collection, legal and receivers' expenses,
advanced or incurred by Secured Party in connection with the perfection and
protection of the security interest herein granted, the preservation or
disposition of the Collateral (as hereafter defined), or any part thereof, or
the enforcement by Secured Party of any of the foregoing obligations of Debtor
to Secured Party whether upon default by Debtor or otherwise), Debtor hereby
pledges, grants, bargains, assigns and transfers to Secured Party a security
interest, pursuant to the New York Commercial Code, in and to the collateral
described on Schedule "1," attached hereto and incorporated herein by this
reference, and all substitutions, replacements and proceeds thereof, including
cash proceeds. Such property, substitutions, and replacements, and all such
proceeds are hereafter collectively referred to as the "Collateral." For
purposes hereof, all terms set forth in Schedule 1 shall be defined as provided
in the New York Commercial Code.
3. Representations and Warranties of Debtor. Debtor represents and
warrants that:
(a) No financing statement covering the Collateral or any part of it
or any proceeds of it is on file in any public office. At the Secured Party's
request, the Debtor will join in executing and pay the filing fees required for
all necessary financing statements in forms satisfactory to the Secured Party
and will further execute all other instruments deemed necessary by the Secured
Party;
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(b) Upon the execution of this Security Agreement by Debtor and the
delivery hereof to the Secured Party, and the filing of a Form UCC-1 Financing
Statement with the New York Secretary of State, a Form UCC-1 Financing Statement
with the Office of the Clerk of Washington County, and a Form UCC-1 Financing
Statement with the Ohio Secretary of State, Secured Party shall have a first
perfected security interest in and to the Collateral listed on Schedule 1,
except that the security interest for all of the Collateral listed on Schedule 1
may in the future be subordinated as set in Section 7 hereof.
4. Default. Default under this Security Agreement will be deemed to have
occurred upon the happening of any of the following events:
(a) Upon any default or failure of performance by Debtor of the
duties and obligations set forth in the Loan Agreement, which default is not
cured within any grace period granted with respect to such default or, if no
specific grace period is granted with respect to such default, where such
default is not cured within thirty (30) business days after the date in which
written notice thereof is provided by Secured Party, or the occurrence of any
other event of default under any instrument or amendment executed or delivered
pursuant to the foregoing;
(b) Upon Debtor's dissolution, termination of existence, insolvency,
business failure, appointment of a receiver for any part of the Collateral,
assignment for the benefit of creditors, or the commencement of any proceeding
under any bankruptcy or insolvency law by or against the Debtor or any guarantor
or surety for the Debtor; or
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(c) Upon an attack by Debtor, its shareholders, officers or
directors, or Debtor's assignee, on the validity or enforceability of this
Security Agreement, and/or the Loan Agreement.
5. Remedies on Default. Upon the occurrence of a default, Secured Party
shall have all of the remedies of a secured party under the New York Commercial
Code and any other law, which rights shall include the right to enter upon the
premises and any other place where the Collateral may be located, to remove,
sell or dispose of the Collateral, or any part thereof, at public or private
sale, and to foreclose the lien or security interest created pursuant to this
Security Agreement by any available judicial procedure. The Collateral may then
be sold on such day and at such place as determined by Secured Party. Secured
Party shall deduct and retain from the proceeds of such sale or sales all costs,
expenses and charges paid or incurred on the taking, removal, handling and sale
of the Collateral, or otherwise incurred in connection therewith, including,
without limitation, all attorneys' fees incurred by Secured Party; the balance
of the proceeds shall be applied by Secured Party to the indebtedness,
obligations and liabilities secured by the Collateral; and the surplus, if any,
shall be paid to the person or persons lawfully entitled to receive the same. At
any sale or sales made under this Security Agreement, or authorized herein,
Secured Party or any person on behalf of Secured Party, or any other person, may
bid for and purchase the Collateral being sold.
6. Further Documents. Debtor agrees to execute and deliver such further
documents as may be required by Secured Party to more fully perfect or secure
its position under this Security Agreement, including, but not limited to
financing statements on Form
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UCC-1 with the Secretary of State of New York, Office of the Clerk of Washington
County, New York and Secretary of State of Ohio.
7. Sale or Hypothecation of Collateral.
(a) Permitted Sale or Hypothecation. Provided that no default under
this Security Agreement has occurred, or, if such a default has occurred,
provided that Secured Party has not exercised its permitted remedies with
respect thereto, Debtor shall not be prohibited: (i) from paying dividends out
of moneys of the Debtor properly available therefrom or (ii) after obtaining the
written consent of Secured Party, from selling, alienating, assigning, leasing,
mortgaging, charging, pledging or otherwise disposing of or dealing with the
Collateral; provided, however, that Debtor need not obtain such consent if, in
connection with or after such sale or disposition, (x) Debtor obtains
replacement Collateral or (y) applies the net cash proceeds of any such sale or
disposition of Collateral to reduce indebtedness of Debtor to Secured Party
under the Loan Agreement.
(b) Notwithstanding the provisions of subparagraph (a) above, Debtor
covenants to and in favor of Secured Party that, so long as any obligation
secured hereby remains outstanding, without the prior written consent of Secured
Party, Debtor shall not cause, suffer or permit the Collateral to be subjected
to any lien, encumbrance or security interest securing indebtedness for money
borrowed and ranking in priority senior to or equal with the security interest
created hereby, except such liens as may from time to time be expressly
permitted in writing by Secured Party.
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(c) Debtor further covenants not to take any action with respect to
the Collateral which is materially inconsistent with the provisions or purpose
of this Security Agreement or which would materially adversely affect the rights
of Secured Party hereunder.
8. Assignment. This Security Agreement and all rights hereunder may not be
assigned by either party without written consent of the other party hereto, and
any such assignment by either party without such consent shall be void.
9. Notices. All notices or other communications permitted or required
pursuant to this Security Agreement shall be in writing and shall be deemed
given upon deposit in the mail of the United States, first class, postage
prepaid, certified with return receipt, addressed to the last known address of
the parties or such other notification details as may be provided in writing by
one party to the other from time to time. Either party shall have the right to
change the place in which proper notice is to be made by providing written
notice of the change to the other party.
10. Entire Agreement. This Security Agreement, together with the Loan
Agreement, constitutes the entire agreement between the parties pertaining to
the security interest being granted hereby. This Security Agreement may not be
amended or modified except by a writing executed both by Secured Party and
Debtor.
11. Governing Law. This Security Agreement is to be governed by,
interpreted and enforced in accordance with the laws of the State of New York
applicable to agreements executed and to be performed wholly within the State of
New York. Venue shall be in New York, New York.
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12. Counterparts. This Security Agreement may be executed in counterparts,
each of which shall constitute an original document, but which together shall
constitute one and the same instrument.
AGREED TO AND ACCEPTED effective as of the ______ day of April, 1998.
"SECURED PARTY" "DEBTOR"
XXXXXX XXXXXXXXXX XX XXXXXX, INCORPORATED
a German corporation a Delaware Corporation
doing business as Decora Manufacturing
By: By:
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Its: Its:
-------------------------------- -----------------------------------
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SCHEDULE 1
(a) All of Debtor's now owned and hereafter acquired machinery,
equipment and fixtures, wherever located, and any interest of Debtor in any of
the foregoing; and
(b) All proceeds, replacements, substitutions, additions,
improvements, products and accessions of and to any and all of the foregoing.
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