GUARANTOR SECURITY AGREEMENT
EXHIBIT 10.6
This
Security Agreement (this “Agreement”) is dated as of March 5, 2010 between PNC
BANK, NATIONAL ASSOCIATION, having an office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, as agent for Lenders (as defined herein) (“Secured Party”) and
PRESSTEK OVERSEAS CORP., a Delaware corporation, having its principal place of
business at 00 Xxxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000 (“Company”).
BACKGROUND
Presstek,
Inc. (“PI” and together with each other Person which becomes a borrower under
the Loan Agreement (as defined herein), collectively, “Debtor”) has entered into
that certain Revolving Credit and Security Agreement dated as of the date hereof
with Secured Party and the other financial institutions named therein or which
hereafter become a party thereto (each a “Lender” and collectively, “Lenders”)
and Secured Party as agent for Lenders (as amended, supplemented, restated or
modified from time to time, the “Loan Agreement”). Pursuant to the
terms of the Loan Agreement, Lenders and Secured Party have agreed to make
certain extensions of credit available to the Debtor. Lenders and
Secured Party are willing to make such extensions of credit available to the
Debtor only upon the condition, among others, that Company execute and deliver
its Guaranty of the obligations of the Debtor to Lenders and Secured Party and
that Company secure its Guaranty by executing and delivering this Agreement to
Secured Party.
NOW, THEREFORE, in
consideration of the mutual covenants and undertakings and the terms and
conditions contained herein, the parties hereto agree as follows:
1. A. General
Definitions. When used in this Agreement, the following terms
shall have the following meanings:
“Affiliate” of any
Person shall mean (a) any Person which, directly or indirectly, is in control
of, is controlled by, or is under common control with such Person, or (b) any
Person who is a director, managing member, general partner or officer (i) of
such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote 10% or
more of the Equity Interests having ordinary voting power for the election of
directors of such Person or other Persons performing similar functions for any
such Person, or (y) to direct or cause the direction of the management and
policies of such Person whether by ownership of Equity Interests, contract or
otherwise.
“Business Day” shall
mean any day other than Saturday or Sunday or a legal holiday on which
commercial banks are authorized or required by law to be closed for business in
East Brunswick, New Jersey.
“Collateral” shall
mean and include:
(a) all
Receivables;
(b) all
Equipment;
(c) all
General Intangibles;
(d) all
Inventory;
(e) all
Investment Property;
(f) all
Subsidiary Stock;
(g) all of
Company’s right, title and interest in and to, whether now owned or hereafter
acquired and wherever located, (i) its respective goods and other property
including, but not limited to, all merchandise returned or rejected by
Customers, relating to or securing any of the Receivables; (ii) all of Company’s
rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or
other lienor, including stoppage in transit, setoff, detinue, replevin,
reclamation and repurchase; (iii) all additional amounts due to Company from any
Customer relating to the Receivables; (iv) other property, including warranty
claims, relating to any goods securing the Obligations; (v) all of Company’s
contract rights, rights of payment which have been earned under a contract
right, instruments (including promissory notes), documents, chattel paper
(including electronic chattel paper), warehouse receipts, deposit accounts,
letters of credit and money; (vi) all commercial tort claims (whether now
existing or hereafter arising); (vii) if and when obtained by Company, all real
and personal property of third parties in which Company has been granted a lien
or security interest as security for the payment or enforcement of Receivables;
(viii) all letter of credit rights (whether or not the respective letter of
credit is evidenced by a writing); (ix) all supporting obligations; and (x) any
other goods, personal property or real property now owned or hereafter acquired
in which Company has expressly granted a security interest or may in the future
grant a security interest to Agent hereunder, or in any amendment or supplement
hereto or thereto, or under any other agreement between Agent and
Company;
(h) all of
Company’s ledger sheets, ledger cards, files, correspondence, records, books of
account, business papers, computers, computer software (owned by Company or in
which it has an interest), computer programs, tapes, disks and documents
relating to (a), (b), (c), (d), (e), (f) or (g) of this Paragraph;
and
(i) all
proceeds and products of (a), (b), (c), (d), (e), (f), (g) and (h) in whatever
form, including, but not limited to: cash, deposit accounts (whether
or not comprised solely of proceeds), certificates of deposit, insurance
proceeds (including hazard, flood and credit insurance), negotiable instruments
and other instruments for the payment of money, chattel paper, security
agreements, documents, eminent domain proceeds, condemnation proceeds and tort
claim proceeds.
Notwithstanding
anything herein to the contrary, in no event shall the Collateral include, and
Company shall not be deemed to have granted a security interest in (i) more than
65% of the voting Equity Interests of any Subsidiary (other than Presstek Europe
Limited) formed in any jurisdiction outside of the United States of America,
regardless of whether certificates representing a greater percentage may be
delivered to the Secured Party (ii) any of Company’s rights or interests in or
under any license, contract, permit, instrument, security or franchise to which
Company is a party or any of its rights or interests thereunder to the extent,
but only to the extent, that such a grant would, under the terms of such
license, contract, permit, instrument, security or franchise, result in a breach
of the terms of, or constitute a default under, such license, contract, permit,
instrument, security or franchise (other than to the extent that any such term
would be rendered ineffective pursuant to the UCC or any other applicable law),
and (iii) any money, cash or cash equivalents (and any bank accounts, deposit
accounts and securities accounts containing such monies, cash or investment
property), pledged to secure third party workers compensation liabilities of
Company.
“Company” shall have
the meaning set forth in the introductory paragraph hereof and shall extend to
all permitted successors and assigns of Company.
“Customer” means and
includes the account debtor with respect to any Receivable and/or the
prospective purchaser of goods, services or both with respect to any contract or
contract right, and/or any party who enters into or proposes to enter into any
contract or other arrangement with Company, pursuant to which Company is to
deliver any personal property or perform any services.
“Default” means any
act or event which, with the giving of notice or passage of time or both, would
constitute an Event of Default.
“Environmental
Complaint” means any notice of violation, request for information or
notification that Company is potentially responsible for investigation or
cleanup of environmental conditions on its property, demand letter or complaint,
order, citation, or other written notice with regard to any Hazardous Discharge
or violation of any environmental laws affecting its property or Company’s
interest therein.
“Equipment” shall mean
and include as to Company all of Company’s goods (other than Inventory) whether
now owned or hereafter acquired and wherever located including all equipment,
machinery, apparatus, motor vehicles, fittings, furniture, furnishings,
fixtures, parts, accessories and all replacements and substitutions therefor or
accessions thereto.
“Equity Interests” of
any Person shall mean any and all shares, rights to purchase, options, warrants,
general, limited or limited liability partnership interests, member interests,
participation or other equivalents of or interest in (regardless of how
designated) equity of such Person, whether voting or nonvoting, including common
stock, preferred stock, convertible securities or any other “equity security”
(as such term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the SEC under the Exchange Act).
“Event of Default”
means the occurrence of any of the events set forth in Section 12
hereof.
“GAAP” means generally
accepted accounting principles, practices and procedures in effect from time to
time.
“General Intangibles”
shall mean and include as to Company all of Company’s general intangibles,
whether now owned or hereafter acquired, including all payment intangibles, all
choses in action, causes of action, corporate or other business records,
inventions, designs, patents, patent applications, equipment formulations,
manufacturing procedures, quality control procedures, trademarks, trademark
applications, service marks, trade secrets, goodwill, copyrights, design rights,
software, computer information, source codes, codes, records and updates,
registrations, licenses, franchises, customer lists, tax refunds, tax refund
claims, computer programs, all claims under guaranties, security interests or
other security held by or granted to Company to secure payment of any of the
Receivables by a Customer (other than to the extent covered by Receivables) all
rights of indemnification and all other intangible property of every kind and
nature (other than Receivables).
“Guaranty” means the
Guaranty dated as of the date hereof which is executed by Company in favor of
Secured Party and Lenders, as amended, modified, supplemented or restated from
time to time.
“Hazardous Discharge”
means any release or threat of release of a reportable quantity of any hazardous
substances on Company’s property.
“Inventory” shall mean
and include as to Company all of Company’s now owned or hereafter acquired
goods, merchandise and other personal property, wherever located, to be
furnished under any consignment arrangement, contract of service or held for
sale or lease, all raw materials, work in process, finished goods and materials
and supplies of any kind, nature or description which are or might be used or
consumed in Company’s business or used in selling or furnishing such goods,
merchandise and other personal property, and all documents of title or other
documents representing them.
“Investment Property”
means shall have the meaning set forth in the UCC, and shall mean and include as
to Company all of Company’s now owned or hereafter acquired securities (whether
certificated or uncertificated), securities entitlements, securities accounts,
commodities contracts and commodities accounts.
“Loans” means all
extensions of credit under the Loan Agreement.
“Loan Agreement” shall
have the meaning set forth in the Background paragraph hereof.
“Obligations” means
and includes all Loans, all “Obligations” (as defined in the Guaranty) of
Company to Secured Party and Lenders under the Guaranty, all advances, debts,
liabilities, obligations, covenants and duties owing by Company to Secured Party
and Lenders (or any Person that directly or indirectly controls or is controlled
by or is under common control with Secured Party or any Lender) of every kind
and description (whether or not evidenced by the Guaranty, any note or other
instrument and whether or not for the payment of money or the performance or
non-performance of any act), direct or indirect, absolute or contingent, due or
to become due, contractual or tortious, liquidated or unliquidated, whether
existing by operation of law or otherwise now existing or hereafter arising
including, without limitation, all payments Company is required to make by law
or otherwise arising under or as a result of this Agreement, together with all
reasonable out-of-pocket expenses and reasonable attorneys’ fees chargeable to
Debtor’s account or incurred by Secured Party and/or any Lender in connection
herewith whether provided for herein or in any other agreement, instrument or
document executed by or on behalf of Company or delivered to Secured Party or
any Lender relating to this Agreement or the transactions contemplated
hereby.
“Permitted
Encumbrances” shall mean (a) liens in favor of Secured Party for the
benefit of Secured Party and Lenders; (b) liens for taxes, assessments or other
governmental charges not delinquent or being contested in good faith and by
appropriate proceedings and with respect to which proper reserves have been
taken by the Company; provided, that, the lien shall have no effect on the
priority of the liens in favor of Secured Party or the value of the assets in
which Secured Party has such a lien and a stay of enforcement of any such lien
shall be in effect; (c) liens disclosed in the financial statements referred to
in Section 5.5 of the Loan Agreement, the existence of which Secured Party has
consented to in writing; (d) deposits or pledges to secure obligations under
worker’s compensation, social security or similar laws, or under unemployment
insurance; (e) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations, surety
and appeal bonds and other obligations of like nature arising in the ordinary
course of business; (f) liens arising by virtue of the rendition, entry or
issuance against the Company, or any property of the Company, of any judgment,
writ, order, or decree for so long as each such lien (a) is in existence for
less than 30 consecutive days after it first arises or is being Properly
Contested (as defined in the Loan Agreement ) and (b) is at all times junior in
priority to any liens in favor of Secured Party; (g) mechanics’, workers’,
materialmen’s or other like liens arising in the ordinary course of business
with respect to obligations which are not overdue for a period of more than 30
days or which are being contested in good faith by the Company; (h) liens placed
upon fixed assets hereafter acquired to secure a portion of the purchase price
thereof, provided that (x) any such lien shall not encumber any other property
of the Company and (y) the aggregate amount of Indebtedness (as defined in the
Loan Agreement) secured by such liens incurred as a result of such purchases
during any fiscal year shall not exceed the amount provided for in Section 7.6
of the Loan Agreement; and (i) liens disclosed on Schedule 1(A)
hereto.
“Person” shall mean
any individual, sole proprietorship, partnership, corporation, business trust,
joint stock company, trust, unincorporated organization, association, limited
liability company, limited liability partnership, institution, public benefit
corporation, joint venture, entity or government (whether federal, state,
county, city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof).
“Receivables” shall
mean and include as to Company all of Company’s accounts, contract rights,
instruments (including those evidencing indebtedness owed to Company by its
Affiliates), documents, chattel paper (including electronic chattel paper),
general intangibles relating to accounts, drafts and acceptances, credit card
receivables and all other forms of obligations owing to Company arising out of
or in connection with the sale or lease of Inventory or the rendition of
services, all supporting obligations, guarantees and other security therefor,
whether secured or unsecured, now existing or hereafter created, and whether or
not specifically sold or assigned to Secured Party hereunder.
“Secured Party” shall
have the meaning set forth in the introductory paragraph hereof and shall
include its successors and assigns.
“Subsidiary” of any
Person means a corporation or other entity of whose shares of stock or other
ownership interests having ordinary voting power (other than stock or other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the directors of such corporation, or other
Persons performing similar functions for such entity, are owned, directly or
indirectly, by such Person.
“UCC” means the
Uniform Commercial Code as adopted in the State of New York as amended or
revised from time to time, and any successor statute.
B. Accounting
Terms. Any accounting terms used in this Agreement which are
not specifically defined shall have the meanings customarily given them in
accordance with GAAP.
C. Other
Terms. All other terms used in this Agreement and defined in
the UCC shall have the meaning given therein unless otherwise defined
herein. To the extent the definition of any category or type of
collateral is expanded by any amendment, modification or revision to the UCC,
such expanded definition will apply automatically as of the date of such
amendment, modification or revision.
2. Security
Interest.
(a) To secure
the prompt payment and performance to Secured Party and each Lender of the
Obligations, Company hereby assigns, pledges and grants to Secured Party for its
benefit and for the ratable benefit of each Lender a continuing security
interest in and to all of its Collateral, whether now owned or existing or
hereafter acquired or arising and wheresoever located. Company shall
xxxx its books and records as may be necessary or appropriate to evidence,
protect and perfect Secured Party’s security interest and shall cause its
financial statements to reflect such security interest. Company shall
promptly provide Secured Party with written notice of all commercial tort
claims, such notice to contain the case title together with the applicable court
and a brief description of the claim(s). Upon delivery of each such
notice, Company shall be deemed to hereby grant to Secured Party a security
interest and lien in and to such commercial tort claims and all proceeds
thereof.
(b) Company
shall take all action that may be necessary, or that Secured Party may
reasonably request, so as at all times to maintain the validity, perfection,
enforceability and priority of Secured Party’s security interest in the
Collateral or to enable Secured Party to protect, exercise or enforce its rights
hereunder and in the Collateral, including, but not limited to, (i) promptly
discharging all liens other than Permitted Encumbrances, (ii) taking
commercially reasonable efforts to obtain landlords’ or mortgagees’ lien
waivers, (iii) delivering to Secured Party, endorsed or accompanied by such
instruments of assignment as Secured Party may specify, and stamping or marking,
in such manner as Secured Party may specify, any and all chattel paper,
instruments, letters of credits and advices thereof and documents evidencing or
forming a part of the Collateral, (iv) entering into warehousing, lockbox and
other custodial arrangements satisfactory to Secured Party, and (v) executing
and delivering financing statements, control agreements, instruments of pledge,
mortgages, notices and assignments, in each case in form and substance
satisfactory to Secured Party, relating to the creation, validity, perfection,
maintenance or continuation of Secured Party’s security interest under the
Uniform Commercial Code or other applicable law. By its signature
hereto, Company hereby authorizes Secured Party to file against Company, one or
more financing continuation or amendment statements pursuant to the UCC in form
and substance satisfactory to Secured Party (which statements may have a
description of collateral which is broader than that set forth
herein). All charges, expenses and fees Secured Party may incur in
doing any of the foregoing, and any local taxes relating thereto, shall be paid
to Secured Party promptly upon demand.
3. Representations Concerning
the Collateral. Company represents and warrants:
(a) its
Collateral (i) is owned solely by Company free and clear of all claims, liens,
security interests and encumbrances (including without limitation any claims of
infringement) except (A) those in Secured Party’s favor and (B) Permitted
Encumbrances and (ii) is not subject to any agreement prohibiting the
granting of a security interest or requiring notice of or consent to the
granting of a security interest;
(b) (i)
all Receivables (x) represent complete bona fide transactions with Customers in
the ordinary course of Company’s business which require no further act under any
circumstances on Company’s part to make such Receivables payable by the
Customers, (y) to the best of Company’s knowledge, are not subject to any
present, future or contingent offsets, disputes or counterclaims, and (z) do not
represent xxxx and hold sales, consignment sales, guaranteed sales, sale or
return or other similar understandings or obligations of Company, (ii) to the
best of Company’s knowledge, there are no facts, events or occurrences which in
any way impair the validity of any Receivable or enforcement thereof or tend to
reduce the amount payable under any Receivables and (iii) Company has no
knowledge that any Customer is unable generally to pay its debts as they become
due.
(c) all
Inventory is of good and merchantable quality, free from any
defects. No Inventory is subject to any licensing, patent, royalty,
trademark, tradename or copyright agreements with any third
parties. The completion of manufacture, sale or other disposition of
Inventory by Secured Party following an Event of Default shall not require the
consent of any Person and shall not constitute a breach or default under any
contract or agreement to which Company is a party or to which such property is
subject.
4. Covenants Concerning the
Collateral. Company covenants that from and after the date of
this Agreement and until the Obligations are paid in full in cash it
shall:
(a) not
dispose of any of the Collateral whether by sale, lease or otherwise except for
(i) the sale of Inventory in the ordinary course of business, (ii) the
disposition or transfer of obsolete surplus, scrap and worn-out Equipment in the
ordinary course of business during any fiscal year having an aggregate fair
market value of not more than $200,000 (inclusive of amounts disposed of by PI),
and (iii) transfers and dispositions in respect of obsolete intellectual
property assets;
(b) not
encumber, mortgage, pledge, assign or grant any security interest in any
Collateral or any of Company’s other assets to anyone other than Secured Party,
except for Permitted Encumbrances;
(c) place
notations upon Company’s books of account and any financial statement prepared
by Company to disclose Secured Party’s security interest in the
Collateral;
(d) defend
the Collateral against the claims and demands of third parties.
(e) keep and
maintain the Equipment in good operating condition, except for ordinary wear and
tear, and shall make all necessary repairs and replacements thereof so that the
value and operating efficiency shall at all times be maintained and
preserved. Company shall not permit any such items to become a
fixture to real estate or accessions to other personal property other than when
such real estate or other personal property is owned by Company, PI or any of
their Subsidiaries and Secured Party has a first priority lien or security
interest in such real estate or other personal property;
(f) not
extend the payment terms of any material amount of Receivables without prompt
notice thereof to Secured Party; and
(g) perform
all other steps reasonably requested by Secured Party to create and maintain in
Secured Party’s favor a valid perfected first priority security interest in all
Collateral.
5. Collection and Maintenance
of Collateral and Records. Company shall keep and maintain, at
its own cost and expense, satisfactory and complete records of the Collateral
including, without limitation, a record of any and all payments received and any
and all credits granted with respect to the Collateral and all other dealings
with the Collateral. Secured Party may at any time verify Company’s
Receivables utilizing an audit control company or any other agent of Secured
Party. Secured Party or Secured Party’s designee may notify Customers
at any time following the occurrence and during the continuance of an Event of
Default, at Secured Party’s reasonable discretion, of Secured Party’s security
interest in Receivables (contracts, instruments, or chattel paper as the case
may be), collect them directly from the Customers or parties to contracts,
instruments and chattel paper and charge the collection costs and expenses to
the applicable Company’s account, but, unless and until Secured Party does so or
gives Company other instructions, Company shall collect all Receivables for
Secured Party, receive all payments thereon for Secured Party’s benefit in trust
as Secured Party’s trustee and immediately deliver them to Secured Party in
their original form with all necessary endorsements or, as directed by Secured
Party, deposit such payments as directed by Secured Party. Company
shall provide Secured Party, as requested by Secured Party, such schedules,
documents and/or information regarding the Collateral as Secured Party may
require.
6. Inspections. At
all reasonable times Agent and each Lender shall have full access to and the
right to audit, check, inspect and make abstracts and copies from Company’s
books, records, audits, correspondence and all other papers relating to the
Collateral and the operation of Company’s business (in each case, other than
such privileged communications with legal counsel). Agent, any Lender
and their agents may enter upon any premises of Company at any time during
business hours and at any other reasonable time, and from time to time, for the
purpose of inspecting the Collateral and any and all records pertaining thereto
and the operation of Company’s business and performing appraisals of Company’s
Inventory, at Company’s sole cost and expense, which appraisal shall be
performed one time during any year; provided, however, if a Default or Event of
Default has occurred and is continuing such appraisal shall be performed as
often as Agent in its sole discretion may request. The Company shall
be provided with reasonable notice of any of the foregoing, provided, that no
such notice shall be required at any time that an Event of Default has occurred
and is continuing.
7. Additional Representations,
Warranties and Covenants. Company represents, warrants, and
covenants that:
(a) Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and duly qualified and in good standing in every
other state or jurisdiction in which the nature of Company’s business or the
ownership of its assets requires such qualification, except where the failure to
so qualify could not reasonably be expected to have a Material Adverse Effect
(as defined in the Loan Agreement).
(b) the
execution, delivery and performance of this Agreement (i) has been duly
authorized, (ii) is not in contravention of Company’s certificate of
incorporation, by-laws or of any indenture, agreement or undertaking to which
Company is a party or by which Company is bound and (iii) is within Company’s
corporate powers.
(c) this
Agreement is Company’s legal, valid and binding obligation, enforceable in
accordance with its terms, except as enforceability may be limited by applicable
federal or state bankruptcy, reorganization, moratorium or insolvency law
relating to or affecting the enforcement of creditor’s rights
generally.
(d) it keeps
and will continue to keep all of its books and records concerning the Collateral
at Company’s chief executive offices located at the address set forth in the
introductory paragraph of this Agreement and will not move such books and
records without giving Secured Party at least thirty (30) days prior written
notice and taking all actions deemed by the Secured Party necessary to
continuously protect and perfect Secured Party’s liens upon the Collateral; and
the Collateral is not stored or located at any locations other than as set forth
on Schedule
7(d).
(e) (i) the
operation of Company’s business is and will continue to be in compliance in all
material respects with all applicable federal, state and local laws, including
but not limited to all applicable environmental laws and regulations, except
where the failure to comply could not reasonably be expected to have a Material
Adverse Effect;
(ii) Company
will establish and maintain a system to assure and monitor continued compliance
in all material respects with all applicable environmental laws, which system
shall include periodic reviews of such compliance;
(iii) Company
shall respond promptly to any Hazardous Discharge or Environmental Complaint and
take all necessary action in order to safeguard the health of any Person and to
avoid subjecting the Collateral to any lien, charge, claim or
encumbrance;
(iv) Company
shall defend and indemnify the Secured Party and hold the Secured Party harmless
from and against all loss, liability, damage and expense, claims, costs, fines
and penalties, including attorney’s fees, suffered or incurred by the Secured
Party under or on account of any environmental laws.
(f) there is
no pending or threatened litigation, actions or proceeding which could
reasonably be expected to cause a Material Adverse Effect.
(g) it will
pay or discharge when due all taxes, assessments and governmental charges or
levies imposed upon it unless same are not delinquent or same constitute
Permitted Encumbrances.
(h) it will
promptly inform Secured Party in writing of: (i) the commencement of all
proceedings and investigations by or before and/or the receipt of any notices
from, any governmental or nongovernmental body and all actions and proceedings
in any court or before any arbitrator against or in any way concerning any of
Company’s properties, assets or business, which could reasonably be expected to
singly or in the aggregate, have a Material Adverse Effect; (ii) any amendment
of Company’s certificate of incorporation or by-laws; (iii) any change in
Company’s business, assets, liabilities, condition (financial or otherwise),
results of operations or business prospects which has had or could reasonably be
expected to have a Material Adverse Effect on Company; (iv) any Event of Default
or Default; (v) any default or any event which with the passage of time or
giving of notice or both would constitute a default under any agreement for the
payment of money to which Company is a party or by which Company or any of
Company’s properties may be bound which would have a Material Adverse Effect;
(vi) any change in the location of Company’s chief executive offices; (vii) any
change in the location of Company’s Inventory or Equipment from the locations
listed on Schedule
7(d) attached hereto, (viii) any additional licenses, patents,
copyrights, trademarks, tradenames or corporate names; (ix) any material delay
in Company’s performance of any of its obligations to any Customer and of any
assertion of any material claims, offsets or counterclaims by any Customer and
of any allowances, credits and/or other monies granted by it to any Customer;
(x) any material adverse information obtained by Company relating to the
financial condition of any Customer; and (xi) any material return of
goods.
(i) it will
bear the full risk of loss from any loss of any nature whatsoever with respect
to the Collateral. At its own cost and expense in amounts and with
carriers acceptable to Secured Party, it or the Debtor shall (i) keep all its
insurable properties and properties in which it has an interest insured against
the hazards of fire, flood, sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, as is customary
in the case of companies engaged in businesses similar to Company’s including,
without limitation, public and product liability insurance, worker’s
compensation, insurance against larceny, embezzlement or other criminal
misappropriation of insured’s officers and employees and business interruption
insurance; and (ii) furnish Secured Party with (x) copies of all policies and
evidence of the maintenance of such policies by the renewal thereof at least ten
(10) days before any expiration date, and (y) appropriate loss payable
endorsements in form and substance satisfactory to Secured Party, naming Secured
Party as loss payee and providing that as to Secured Party the insurance
coverage shall not be impaired or invalidated by any act or neglect of Company
and the insurer will provide Secured Party with at least thirty (30) days notice
prior to cancellation. Debtor shall instruct the insurance carriers
that in the event of any loss thereunder, the carriers shall make payment for
such loss to Secured Party and not to Debtor or Company and Secured Party
jointly. If any insurance losses are paid by check, draft or other
instrument payable to Debtor and/or Company and Secured Party jointly, Secured
Party may endorse Company’s name thereon and do such other things as Secured
Party may deem advisable to reduce the same to cash. Upon the
occurrence and continuation of a Default or Event of Default and the exercise by
Agent of remedies under Article XI of the Loan Agreement, Secured Party is
hereby authorized to adjust and compromise claims under the insurance coverage
referred to herein. All loss recoveries received by Secured Party
upon any such insurance may be applied to the Obligations, in such order as
Secured Party in its sole discretion shall determine. Any surplus
shall be paid by Secured Party to Company or applied as may be otherwise
required by law. Any deficiency thereon shall be paid by Company to
Secured Party, on demand.
(j) any time
and from time to time, upon the written request of Secured Party and at the sole
expense of the Debtor and Company, Company shall promptly and duly execute and
deliver any and all such further instruments and documents and take such further
actions as Secured Party may reasonably deem necessary to obtain the full
benefits of this Agreement and of the rights and powers herein
granted.
(k) it will
not (i) create, incur, assume or suffer to exist any indebtedness (exclusive of
trade debt) whether secured or unsecured other than Company’s indebtedness to
Secured Party and as set forth on Schedule 7(k)
attached hereto and made a part hereof; (ii) directly or indirectly, prepay any
indebtedness (other than to Secured Party), or repurchase, redeem, retire or
otherwise acquire any indebtedness of Company; (iv) make advances, loans or
extensions of credit to any Person; (v) become either directly or contingently
liable upon the obligations of any Person by assumption, endorsement or guaranty
thereof or otherwise; (vi) enter into any merger, consolidation or other
reorganization with or into any other Person or acquire all or a portion of the
assets or stock of any Person or permit any other Person to consolidate with or
merge with it; (vii) form any Subsidiary or enter into any partnership, joint
venture or similar arrangement, except that Company may form a new Subsidiary so
long as such new Subsidiary joins the Loan Agreement as a Borrower or becomes a
Guarantor of the “Obligations” (as defined in the Loan Agreement); (viii)
materially change the nature of the business in which it is presently engaged;
(ix) enter into any transaction with any Affiliate, except in ordinary course on
arms-length terms; (xi) xxxx Receivables under any name except its present name;
or (xii) substantially change the nature of its business in which it is
presently engaged.
8. Power of
Attorney. Company hereby irrevocably appoints Secured Party or
any other Person whom Secured Party may designate as Company’s attorney-in-fact,
with full power and authority in place and stead of Company and in the name of
Company or in its own name to: (i) endorse Company’s name on any
checks, notes, acceptances, money orders, drafts or other forms of payment or
security that may come into Secured Party’s possession; (ii) sign Company’s name
on any invoice or xxxx of lading relating to any Receivables, drafts against
customers, schedules and assignments of Receivables, notices of assignment,
financing statements and other public records, verifications of account and
notices to or from Customers; (iii) verify the validity, amount or any other
matter relating to any Receivable by mail, telephone, telegraph or otherwise
with Customers; (iv) execute customs declarations and such other documents as
may be required to clear Inventory through United States Customs; (v) do all
things necessary to carry out this Agreement and all related documents; (vi)
continue any insurance existing pursuant to the terms of this Agreement and pay
all or any part of the premium therefor and the cost thereof; and (vii) notify
the post office authorities to change the address for delivery of Company’s mail
to an address designated by Secured Party, and to receive, open and dispose of
all mail addressed to Company; provided, however, such power shall not be
exercised with respect to clauses (i), (ii) and (iv) through (vii) unless an
Event of Default has occurred and is continuing. Company hereby
ratifies and approves all acts of the attorney. The powers conferred
on the Secured Party hereunder are solely to protect its interests in the
Collateral and shall not impose any duty upon it to exercise any such
powers. Neither Secured Party nor the attorney will be liable for any
acts or omissions or for any error of judgment or mistake of fact or
law. This power, being coupled with an interest, is irrevocable so
long as any Receivable which is assigned to Secured Party or in which Secured
Party has a security interest remains unpaid and until the Obligations are paid
in full in cash.
9. Expenses. Debtor
shall pay all of Secured Party’s out-of-pocket costs and expenses, including
without limitation fees and disbursements of counsel and appraisers, in
connection with the preparation, execution and delivery of this Agreement and in
connection with the prosecution or defense of any action, contest, dispute, suit
or proceeding concerning any matter in any way arising out of, related to or
connected with this Agreement. Debtor shall also pay all of Secured
Party’s reasonable out-of-pocket costs and expenses, including without
limitation fees and disbursements of counsel, in connection with (a) the
preparation, execution and delivery of any waiver, any amendment thereto or
consent proposed or executed in connection with the transactions contemplated by
this Agreement, (b) Secured Party’s obtaining performance of Company’s
obligations under this Agreement, including, but not limited to, the enforcement
or defense of Secured Party’s security interests, assignments of rights and
liens hereunder as valid perfected security interests, (c) any attempt to
inspect, verify, protect, collect, sell, liquidate or otherwise dispose of any
Collateral and (d) any consultations in connection with any of the
foregoing. All such costs and expenses together with all filing,
recording and search fees, taxes and interest payable by Debtor to Secured Party
shall be payable promptly following demand and shall be secured by the
Collateral.
10. Assignment By Secured Party
and Lenders. Secured Party and Lenders may assign any or all
of the Obligations together with any or all of the security therefor and any
transferee shall succeed to all of Secured Party’s and Lenders’ rights with
respect thereto. Upon such transfer, Secured Party and Lenders shall
be released from all responsibility for the Collateral to the extent same is
assigned to any transferee.
11. Waivers. Company
waives demand, notice, protest, notice of acceptance of this Agreement, notice
of loans made, credit extended, Collateral received or delivered or other action
taken in reliance hereon and all other demands and notices of any
description. With respect to both the Obligations and the Collateral,
Company assents to any extension or postponement of the time of payment or any
other indulgence, to any substitution, exchange or release of or failure to
perfect any security interest in any Collateral, to the addition or release of
any party or person primarily or secondarily liable, to the acceptance of
partial payment thereon and the settlement, compromising or adjusting of any
thereof, all in such manner and at such time or times as the Secured Party may
deem advisable.
12. Events of
Default. The occurrence of any one or more of the following
events shall constitute an “Event of Default”:
(a) the
occurrence of an Event of Default under the Loan Agreement.
(b) failure
by Company to make payment of any of its Obligations when required hereunder or
under the Guaranty.
(c) failure
to perform under and/or committing any breach of this Agreement or the Guaranty
or any other agreement between Company, Secured Party and/or any Lender, except
that the failure to perform any term, provision, condition or covenant similar
to those terms, provisions, conditions or covenants described in Section
10.5(ii) of the Loan Agreement shall constitute an Event of Default hereunder
only if such failure is not cured within thirty (30) days after receipt of
notice by the Secured Party of such failure.
(d) a default
by Company in the payment, when due, of any principal of or interest on any
indebtedness for money borrowed other than such a default that could not
reasonably be expected to have a Material Adverse Effect.
(e) occurrence
of a default under any agreement to which Company is a party with third parties
which has a Material Adverse Effect.
(f) any
representation, warranty or statement made by Company hereunder, in the
Guaranty, or in any certificate, statement or document delivered pursuant to the
terms hereof, or in connection with the transactions contemplated by this
Agreement should at any time be false or misleading in any material
respect.
(g) an
attachment or levy is made upon Company’s assets having an aggregate value in
excess of $25,000, or a judgment is rendered against Company or any of Company’s
property involving a liability of more than $25,000, which shall not have been
vacated, discharged, stayed or bonded pending appeal within forty (40) days from
the entry thereof; provided, however, if any such judgment is rendered against
the Company and PI jointly, no Event of Default shall be deemed to have occurred
under this subclause (g) unless such judgment is rendered against the Company
and PI for an aggregate amount in excess of $250,000.
(h) any lien
created hereunder for any reason ceases to be or is not a valid and perfected
lien having a first priority interest (other than any Permitted Encumbrances
which by operation of law would take priority over Agent’s liens in the subject
Collateral, it being understood that the lien described in clause (b) of the
definition of Permitted Encumbrances may not take priority over the Secured
Party’s liens and still constitute a Permitted Encumbrance).
(i) if
Company shall (i) apply for, consent to or suffer to exist the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of creditors, (iii) commence a voluntary case under
the federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated
a bankrupt or insolvent, (v) file a petition seeking to take advantage of any
other law providing for the relief of debtors, (vi) acquiesce to, or fail to
have dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (vii) take any action for the
purpose of effecting any of the foregoing.
(j) Company
shall admit in writing its inability, or be generally unable to pay its debts as
they become due or cease operations of its present business.
(k) [RESERVED].
(l) if
Company attempts to terminate, challenges the validity of, or challenges its
liability under, the Guaranty.
13. Remedies. Upon
the occurrence and during the continuation of any Event of Default, Secured
Party shall have the right to demand repayment in full of all Obligations,
whether or not otherwise due (in such case Secured Party may deposit any and all
such amounts realized in a cash collateral deposit account to be maintained as
security for the Obligations). Until all Obligations have been fully
satisfied in cash, Secured Party shall retain its security interest in all
Collateral. Secured Party shall have, in addition to all other rights
provided herein, the rights and remedies of a secured party under the UCC and
under other applicable law, and all other legal and equitable rights to which
Secured Party may be entitled, including without limitation, the right to take
immediate possession of the Collateral and to require Company to assemble the
Collateral, at Debtor’s expense, and to make it available to Secured Party at a
place designated by Secured Party which is reasonably convenient to both parties
and to enter any of the premises of Company or wherever the Collateral shall be
located, with or without force or process of law, and to keep and store the same
on said premises until sold (and if said premises be the property of Company,
Company agrees not to charge Secured Party for storage
thereof). Further, Secured Party may, at any time or times after the
occurrence and during the continuance of an Event of Default, sell and deliver
all Collateral held by or for Secured Party in one or more parcels at public or
private sale for cash, upon credit or otherwise, at such prices and upon such
terms as Secured Party, in Secured Party’s sole discretion, deems advisable or
Secured Party may otherwise recover upon the Collateral in any commercially
reasonable manner as Secured Party, in its sole discretion, deems
advisable. Except as to that part of the Collateral which is
perishable or threatens to decline speedily in nature or is of a type
customarily sold on a recognized market, the requirement of reasonable notice
shall be met if such notice is mailed postage prepaid to Debtor at Debtor’s
address as shown in Secured Party’s records, at least ten (10) days before the
time of the event of which notice is being given. Secured Party may
be the purchaser at any sale, if it is public. Until Secured Party is
able to effect a sale, lease, or other disposition of Collateral, Secured Party
shall have the right to use or operate Collateral, or any part thereof, to the
extent that it deems appropriate for the purpose of preserving Collateral or its
value or for any other purpose deemed appropriate by Secured
Party. Secured Party shall have no obligation to Company to maintain
or preserve the rights of Company as against third parties with respect to
Collateral while Collateral is in the possession of Secured
Party. Secured Party may, if it so elects, seek the appointment of a
receiver or keeper to take possession of Collateral and to enforce any of
Secured Party’s remedies with respect to such appointment without prior notice
or hearing. In connection with the exercise of the foregoing
remedies, Secured Party is granted permission to use all of Company’s (a)
trademarks, tradenames, tradestyles, patents, patent applications, licenses,
franchises and other proprietary rights which are used in connection with
Inventory for the purpose of disposing of such Inventory and (b) Equipment for
the purpose of completing the manufacture of unfinished goods. The
proceeds realized from the sale of any Collateral shall be applied as
follows: first, to the costs, expenses and attorneys’ fees and
expenses incurred by Secured Party for collection and for acquisition,
completion, protection, removal, storage, sale and deliver of the Collateral;
second, to the payment of the Obligations in such order as Secured Party
elects. If any deficiency shall arise, Company shall remain liable to
Secured Party therefor.
14. Waiver; Cumulative
Remedies. Failure by Secured Party to exercise any right,
remedy or option under this Agreement or any supplement hereto or any other
agreement between Company and Secured Party or delay by Secured Party in
exercising the same, will not operate as a waiver; no waiver by Secured Party
will be effective unless it is in writing and then only to the extent
specifically stated. Secured Party’s rights and remedies under this
Agreement will be cumulative and not exclusive of any other right or remedy
which Secured Party may have.
15. Notices. Any
notice or request hereunder may be given to Company or to Secured Party at their
respective addresses set forth below or at such other address as may hereafter
be specified in a notice designated as a notice of change of address under this
Section 15. Any notice, request, demand, direction or other
communication (for purposes of this Section 15 only, a “Notice”) to be given to
or made upon any party hereto under any provision of this Agreement shall be
given or made by telephone or in writing (which includes by means of electronic
transmission (i.e., “e-mail”) or facsimile transmission or by setting forth such
Notice on a site on the World Wide Web (a “Website Posting”) if Notice of such
Website Posting (including the information necessary to access such site) has
previously been delivered to the applicable parties hereto by another means set
forth in this Section 15) in accordance with this Section 15. Any
such Notice must be delivered to the applicable parties hereto at the addresses
and numbers set forth under their respective names on Section 15 hereof or in
accordance with any subsequent unrevoked Notice from any such party that is
given in accordance with this Section 15. Any Notice shall be
effective:
(a) In the
case of hand-delivery, when delivered;
(b) If given
by mail, four (4) days after such Notice is deposited with the United States
Postal Service, with first-class postage prepaid, return receipt
requested;
(c) In the
case of a telephonic Notice, when a party is contacted by telephone, if delivery
of such telephonic Notice is confirmed no later than the next Business Day by
hand delivery, a facsimile or electronic transmission, a Website Posting or an
overnight courier delivery of a confirmatory Notice (received at or before noon
on such next Business Day);
(d) In the
case of a facsimile transmission, when sent to the applicable party’s facsimile
machine’s telephone number, if the party sending such Notice receives
confirmation of the delivery thereof from its own facsimile
machine;
(e) In the
case of electronic transmission, when actually received;
(f) In the
case of a Website Posting, upon delivery of a Notice of such posting (including
the information necessary to access such site) by another means set forth in
this Section 15; and
(g) If given
by any other means (including by overnight courier), when actually
received.
|
If
to Secured Party:
|
PNC
Bank, National Association
|
|
000
Xxxxxxx Xxxxxx
|
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
|
Attention: Xxxxxxxxxxx
Xxxxx
|
|
|
Telephone: 000-000-0000
|
|
|
Telecopy: 212-303-0060
|
|
|
with
a copy to:
|
Xxxx
& Hessen LLP
|
|
000
Xxxxxxx Xxxxxx
|
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
|
Attention: Xxxxxx
X. Xxxx, Esq.
|
|
|
Telephone: (000)
000-0000
|
|
|
Telecopy: (000)
000-0000
|
|
|
If
to Company:
|
Presstek
Overseas Corp.
|
|
00
Xxxxxxxxx Xxxxxx
|
|
|
Xxxxxxxxx,
Xxxxxxxxxxx 00000
|
|
|
Attention: Xxxxx
X. Xxx Xxxx
|
|
|
Telephone: (000)
000-0000
|
|
|
Facsimile: (000)
000-0000
|
|
|
with
an additional copy to:
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XxXxxxxxx
Will & Xxxxx LLP
|
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000
Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
|
|
|
Xxxxxxx,
Xxxxxxxx 00000
|
|
|
Attention: Xxxxxxx
X. Xxxxxxx, Esq.
|
|
|
Telephone: (000)
000-0000
|
|
|
Facsimile: (000)
000-0000
|
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16. Governing Law and Waiver of
Jury Trial. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK. SECURED PARTY SHALL HAVE THE RIGHTS AND REMEDIES OF A SECURED
PARTY UNDER APPLICABLE LAW INCLUDING, BUT NOT LIMITED TO, THE
UCC. COMPANY AGREES THAT ALL ACTIONS AND PROCEEDINGS RELATING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR ANY OTHER OBLIGATIONS SHALL BE
LITIGATED IN THE FEDERAL DISTRICT COURT OF THE SOUTHERN DISTRICT OF THE STATE OF
NEW YORK OR, AT SECURED PARTY’S OPTION, IN ANY OTHER COURTS LOCATED IN THE STATE
OF NEW YORK OR ELSEWHERE AS SECURED PARTY MAY SELECT AND THAT SUCH COURTS ARE
CONVENIENT FORUMS AND COMPANY SUBMITS TO THE PERSONAL JURISDICTION OF SUCH
COURTS. COMPANY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS THAT
SERVICE OF PROCESS UPON COMPANY MAY BE MADE BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, DIRECTED TO COMPANY C/O DEBTOR AT DEBTOR’S ADDRESS
APPEARING ON SECURED PARTY’S RECORDS, AND SERVICE SO MADE SHALL BE DEEMED
COMPLETED TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED. EACH
PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
BETWEEN COMPANY AND SECURED PARTY, AND COMPANY WAIVES THE RIGHT TO ASSERT IN ANY
ACTION OR PROCEEDING INSTITUTED BY SECURED PARTY WITH REGARD TO THIS AGREEMENT
OR ANY OF THE OBLIGATIONS ANY OFFSETS OR COUNTERCLAIMS WHICH IT MAY
HAVE.
17. Limitation of
Liability. Company acknowledges and understands that in order
to assure repayment of the Obligations, Secured Party may be required to
exercise any and all of Secured Party’s rights and remedies hereunder and agrees
that neither Secured Party nor any of Secured Party’s agents shall be liable for
acts taken or omissions made in connection herewith or therewith except for
actual bad faith.
18. Entire
Understanding. This Agreement contains the entire
understanding between Company and Secured Party and any promises,
representations, warranties or guarantees not herein contained shall have no
force and effect unless in writing, signed by the Company and Secured
Party. Neither this Agreement, nor any portion or provisions thereof
may be changed, modified, amended, waived, supplemented, discharged, cancelled
or terminated orally or by any course of dealing, or in any manner other than by
an agreement in writing, signed by the party to be charged.
19. Severability. Wherever
possible each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable law such
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions thereof.
20. Captions. All
captions are and shall be without substantive meaning or content of any kind
whatsoever.
21. Marshaling. Secured
Party shall not be required to marshal any present or future collateral security
(including but not limited to this Agreement and the Collateral) for, or other
assurances of payment of, the Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order, and
all of its rights hereunder and in respect of such collateral security and other
assurances of payment shall be cumulative and in addition to all other rights,
however existing or arising. To the extent that it lawfully may,
Company hereby agrees that it will not invoke any law relating to the marshaling
of collateral which might cause delay in or impede the enforcement of the
Secured Party’s rights under this Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
Company hereby irrevocably waives the benefits of all such laws.
22. Counterparts; Telecopied
Signatures. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which when
taken together shall constitute one and the same instrument. Any
signature delivered by a party by facsimile transmission or electronic “pdf”
transmission shall be deemed to be an original signature hereto.
23. Construction. The
parties acknowledge that each party and its counsel have reviewed this Agreement
and that the normal rule of construction to the effect that any ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments, schedules or exhibits
thereto.
[Remainder
of Page Intentionally Left Blank]
IN
WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first above written.
|
PRESSTEK
OVERSEAS CORP.
|
|
|
By: /S/ Xxxxx Xxx
Xxxx
|
|
|
Name: Xxxxx
Xxx Xxxx
|
|
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Title: Secretary
|
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PNC
BANK, NATIONAL ASSOCIATION, as Agent
|
|
|
By: /S/ Xxxxxx X. Xxxxxx
|
|
|
Name: Xxxxxx
X. Xxxxxx
|
|
|
Title: Senior
Vice President
|
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AGREED
TO FOR PURPOSES OF
|
|
|
SECTIONS
9 AND 13 TO THIS
|
|
|
AGREEMENT
|
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PRESSTEK,
INC.
|
|
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By: /S/ Xxxxx Xxx
Xxxx
|
|
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Name: Xxxxx
Xxx Xxxx
|
|
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Title: Vice
President and Secretary
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SCHEDULES
Schedule
1(A)
Permitted
Encumbrances
|
·
|
None.
|
Schedule 1(A) -
Schedule
7(d)
Collateral
Locations
|
·
|
The
Company does not maintain any Inventory, but books and records are stored
in the care of Presstek, Inc. at the following location: 00 Xxxxxxxxx
Xxxxxx, Xxxxxxxxx, XX 00000.
|
Schedule 7(d) -
Schedule
7(k)
Permitted
Indebtedness
|
·
|
None.
|
Schedule 7(k) -
