Exhibit 10.2
 
INTERCREDITOR AND
LIEN SUBORDINATION AGREEMENT
 
THIS INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT, dated as of June 30, 2009
(this “Agreement”), is by and among WACHOVIA BANK, NATIONAL ASSOCIATION, in its
capacity as agent (in such capacity, “Agent” as hereinafter defined) pursuant to
the Credit Agreement (as hereinafter defined) acting for and on behalf of the
Credit Agreement Creditors (as hereinafter defined), FAUNUS GROUP INTERNATIONAL,
INC., a Delaware corporation (“FGI”), AMERICAN BILTRITE INC., a Delaware
corporation (“Parent”), and AMERICAN BILTRITE FAR EAST, INC., a Delaware
corporation (“Far East”; together with Parent, individually a “Debtor” and
collectively, “Debtors”).
 
BACKGROUND
 
A.           Agent and Lenders (as hereinafter defined) have made and may
hereafter make revolving loans and advances and have provided and may hereafter
provide other financial accommodations to Debtors and certain of their
affiliates secured by certain of their assets and properties; and
 
B.           Parent and FGI are parties to a certain Security Agreement, dated
on or about the date hereof (as amended, restated, supplemented or otherwise
modified from time to time, the “Parent Agreement”), and a Debt Purchase
Agreement, dated on or about the date hereof (as amended, restated, supplemented
or otherwise modified from time to time, the “Parent Receivables Finance
Agreement”), pursuant to which Parent established certain financing arrangements
with FGI; and
 
C.           Far East and FGI are parties to a certain Security Agreement, dated
on or about the date hereof (as amended, restated, supplemented or otherwise
modified from time to time, the “Far East Agreement”), and a Receivables Finance
Agreement, dated on or about the date hereof (as amended, restated, supplemented
or otherwise modified from time to time, the “Far East Receivables Finance
Agreement”), pursuant to which Far East established certain financing
arrangements with FGI;
 
D.           Parent has agreed to guaranty the obligations of Far East under the
Far East Agreement and the Far East Receivables Finance Agreement pursuant to
the Guaranty, dated on or about the date hereof, by Parent in favor of FGI (the
“Parent FGI Guaranty”), and to secure such Parent FGI Guaranty with a security
interest in certain assets and properties of Parent, subject to and in
accordance with the terms hereof;
 
E.           Far East has agreed to guaranty the obligations of Parent under the
Parent Agreement and the Parent Receivables Finance Agreement pursuant to the
Guaranty, dated on or about the date hereof, by Far East in favor of FGI (the
“Far East FGI Guaranty”), and to secure such Far East FGI Guaranty with a
security interest in certain assets and properties of Far East, subject to and
in accordance with the terms hereof; and
 
F.           FGI and Agent, for and on behalf of itself and Credit Agreement
Creditors, desire to enter into this Agreement in order to, inter alia, (i)
confirm the relative priority of the Liens of each party in the Agent Priority
Collateral and the FGI Priority Collateral, and (ii) provide for the orderly
sharing between FGI and Credit Agreement Creditors in accordance with such
priorities, of proceeds of the Agent Priority Collateral and/or FGI Priority
Collateral upon any sale thereof, foreclosure thereon or other disposition
thereof.
 

 
 

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NOW, THEREFORE, in consideration of the premises and the mutual agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
 
ARTICLE I
DEFINITIONS
 
Section 1.1      For purposes of this Agreement, the following terms shall have
the following meanings:
 
“Agent” shall mean Wachovia Bank, National Association, a national banking
association, in its capacity as agent pursuant to the Credit Agreement acting
for the benefit and on behalf of Credit Agreement Creditors, and its successors
and assigns (and including, without limitation, any successor, assignee or
additional person at any time acting as agent for the benefit of or on behalf of
it or Credit Agreement Creditors).
 
“Agent Priority Collateral” means all assets of Debtors (other than FGI Priority
Collateral), whether now owned or hereafter created, acquired or arising, in
which Agent and Credit Agreement Creditors have been granted a security interest
in under the Credit Documents.
 
“Bankruptcy Event” means with respect to any Person, any voluntary or
involuntary dissolution, winding-up, total or partial liquidation or
reorganization, or bankruptcy, insolvency, receivership or other statutory or
common law proceedings or arrangements involving such Person or the readjustment
of its liabilities or any assignment for the benefit of creditors or any
marshalling of its assets or liabilities.
 
“Credit Agreement” shall mean the Loan and Security Agreement, dated of even
date herewith, among Agent, Lenders, Debtors and certain of their affiliates, as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced in accordance with this Agreement.
 
“Credit Agreement Creditors” shall mean, collectively, Agent and Lenders, the
provider of any cash management or other bank products to Debtors as provided in
the Credit Agreement and their respective successors and assigns (and including
any other lender or group of lenders that at any time (a) refinances or succeeds
to all or any portion of the Credit Agreement Obligations or (b) is otherwise
party to the Credit Documents); each sometimes being referred to herein
individually as “Credit Agreement Creditor”.
 
“Credit Agreement Event of Default” means an “Event of Default” as defined in
the Credit Agreement.
 
“Credit Agreement Obligations” means the collective reference to all
obligations, now existing or hereafter arising, owing by any or all of the
Credit Parties to Credit Agreement Creditors under or pursuant to the Credit
Documents (including, without limitation, all of the “Obligations” as such term
is defined in the Credit Agreement, including, without limitation, interest
accruing at the
 

 
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then applicable rate provided in the Credit Agreements and any fees, costs or
other amounts arising after the commencement of any Bankruptcy Event or like
proceeding relating to any Credit Party (or would accrue or be payable but for
the commencement of such proceeding), whether or not a claim for post-filing or
post-petition interest, fees, costs or other amounts is allowed in such
proceeding), whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter incurred, which may arise under, out of,
or in connection with any of the Credit Documents, whether on account of
principal, advanced amounts, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to Agent and Credit Agreement Creditors that
are required to be paid by any Credit Party pursuant to the terms of the Credit
Documents).
 
“Credit Documents” means, collectively, the Credit Agreement and all agreements,
documents and instruments at any time executed and/or delivered by any Credit
Party or any other Person with, to or in favor of Agent or any Credit Agreement
Creditors in connection therewith or related thereto, as all of the foregoing
now exist or may hereafter be amended, restated, supplemented or otherwise
modified from time to time (and including any agreements which may be entered
into at any time and from time to time in connection with the refinancing or
replacement of the existing arrangements of Credit Agreement Creditors).
 
“Credit Parties” means, collectively, Debtors together with their respective
successors and assigns (including, without limitation, a receiver, trustee or
debtor-in-possession on behalf of such Person or on behalf of such successor or
assign); sometimes individually referred to herein as a “Credit Party”.
 
“Event of Default” means any Credit Agreement Event of Default or FGI Documents
Event of Default.
 
“FGI Documents” means, collectively, the Parent Agreement, the Far East
Agreement, the Parent Receivables Finance Agreement, the Far East Receivables
Financing Agreement, the Parent FGI Guaranty, the Far East FGI Guaranty and all
agreements, documents and instruments at any time executed and/or delivered by
any Credit Party or any other Person with, to or in favor of FGI in connection
therewith or related thereto, as all of the foregoing now exist or may hereafter
be amended, restated, supplemented or otherwise modified from time to time (and
including any agreements which may be entered into at any time and from time to
time in connection with the refinancing or replacement of the existing
arrangements of FGI).
 
“FGI Documents Event of Default” means an “Event of Default” as defined in any
FGI Document.
 
“FGI Documents Obligations” means all obligations, now existing or hereafter
arising, owing by any or all of the Credit Parties to FGI under or pursuant to
the FGI Documents (including, without limitation, all of the “Obligations” as
such term is defined in the Parent Agreement as in effect on the date hereof and
the Far East Agreement as in effect on the date hereof, as applicable),
including, without limitation interest accruing at the then applicable rate
provided in the FGI Documents and any fees, costs or other amounts arising after
the commencement of any Bankruptcy Event or like proceeding relating to any
Credit Party (or would accrue or be payable but for the commencement of such
proceeding), whether or not a claim for post-filing or post-petition interest,
 
 
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fees, costs or other amounts is allowed in such proceeding), whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter incurred, which may arise under, out of, or in connection with the FGI
Documents, whether on account of principal, advanced amounts, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to FGI
that are required to be paid by any Credit Party pursuant to the terms of the
FGI Documents).
 
“FGI Priority Collateral” means certain Accounts and other personal property of
Debtors, whether now owned or hereafter created, acquired or arising, listed on
Exhibit A attached hereto and made part hereof.
 
“Financing Agreements” means, collectively, the Credit Documents and the FGI
Documents.
 
“First Priority FGI Collateral Liens” shall have the meaning given to such term
in Section 2.1(b) hereof.
 
“First Priority Agent Collateral Liens” shall have the meaning given to such
term in Section 2.1(a) hereof.
 
“Foreign Accounts” shall have the meaning given to such term as set forth on
Exhibit A.  Under no circumstances shall Foreign Accounts include any Account
payable by any account debtor whose principal place of business or chief
executive office is located in the United States or Canada.
 
“Guaranty Obligations” means all obligations, now existing or hereafter arising,
owing by (a) Parent to FGI under or pursuant to the Parent FGI Guaranty
(including, without limitation, all of the “Obligations” as such term is defined
in the Parent FGI Guaranty, including, without limitation interest accruing at
the then applicable rate provided in the Far East Receivables Finance Agreement
and any fees, costs or other amounts arising after the commencement of any
Bankruptcy Event or like proceeding relating to Far East (or would accrue or be
payable but for the commencement of such proceeding), whether or not a claim for
post-filing or post-petition interest, fees, costs or other amounts is allowed
in such proceeding), whether direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter incurred, which may arise under, out
of, or in connection with the FGI Documents, whether on account of principal,
advanced amounts, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to FGI that are required to be paid by any Credit Party pursuant to
the terms of the Parent FGI Guaranty) and (b) Far East to FGI under or pursuant
to the Far East FGI Guaranty (including, without limitation, all of the
“Obligations” as such term is defined in the Far East FGI Guaranty, including,
without limitation interest accruing at the then applicable rate provided in the
Parent Receivables Finance Agreement and any fees, costs or other amounts
arising after the commencement of any Bankruptcy Event or like proceeding
relating to Parent (or would accrue or be payable but for the commencement of
such proceeding), whether or not a claim for post-filing or post-petition
interest, fees, costs or other amounts is allowed in such proceeding), whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter incurred, which may arise under, out of, or in connection with the
FGI Documents, whether on account of principal, advanced amounts, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to
 
 
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FGI that are required to be paid by any Credit Party pursuant to the terms of
the Far East FGI Guaranty).
 
“Lenders” shall mean, collectively, the lenders that are or may hereafter become
parties to the Credit Agreement and their respective successors and assigns
(including any other lender or group of lenders that at any time succeeds to or
refinances, replaces or substitutes for all or any portion of the Credit
Agreement Obligations at any time and from time to time); sometimes being
referred to herein individually as a “Lender”.
 
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
option, preference, priority or charge of any kind.
 
“Maximum FGI Debt” shall mean, as of any date of determination, (a) the lesser
of (i) the outstanding amount of the FGI Documents Obligations and (ii)
$4,400,000, plus (b) any interest on such amount (and including, without
limitation, any interest which would accrue and become due but for the
commencement of a Bankruptcy Event, whether or not such amounts are allowed or
allowable in whole or in part in such case or similar proceeding), plus iii) any
fees, costs, expenses and indemnities payable under the FGI Documents (and
including, without limitation, any fees, costs, expenses and indemnities which
would accrue and become due but for the commencement of a Bankruptcy Event,
whether or not such amounts are allowed or allowable in whole or in part in such
case or similar proceeding).
 
“Obligations” means, collectively, the Credit Agreement Obligations, the FGI
Documents Obligations and the Guaranty Obligations.
 
“Person” means any individual, corporation, partnership, limited liability
partnership, limited liability company, association, trust, unincorporated
organization, joint venture, court or government or political subdivision or
agency thereof, or other entity.
 
“Second Priority FGI Collateral Liens” shall have the meaning given to such term
in Section 2.1(a) hereof.
 
“Second Priority Agent Collateral Liens” shall have the meaning given to such
term in Section 2.1(b) hereof.
 
“UCC” means the Uniform Commercial Code of the State of New York or of any other
state the laws of which are required to be applied in connection with the
perfection of security interests in any collateral described herein.
 
ARTICLE II
GENERAL INTERCREDITOR AND SUBORDINATION PROVISIONS
 
Section 2.1          Agreement to Subordinate Liens.
 
(a)           FGI and Agent, for and on behalf of itself and Credit Agreement
Creditors, agree that, to the extent and in the manner set forth in this Section
2.1, all Liens now or hereafter acquired by Credit Agreement Creditors in any or
all of the Agent Priority Collateral (the “First
 

 
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Priority Agent Collateral Liens”) shall at all times be prior and superior to
any Lien now held or hereafter acquired by FGI in the Agent Priority Collateral
(the “Second Priority FGI Collateral Liens”).  Such priority shall be applicable
irrespective of the time or order of attachment or perfection of any security
interest or the time or order of filing of any financing statements or other
documents, or any statutes, rules of law, or court decisions to the
contrary.  The lien subordination provisions in this Section 2.1(a) are for the
benefit of and shall be enforceable by Credit Agreement Creditors, and Credit
Agreement Creditors shall be deemed to have acquired the Credit Agreement
Obligations in reliance upon this Agreement.
 
(b)           Agent, for and on behalf of itself and Credit Agreement Creditors,
and FGI agree that, to the extent and in the manner set forth in this Section
2.1, all Liens now or hereafter acquired by FGI to secure the FGI Documents
Obligations up to the amount of the Maximum FGI Debt in any or all of the FGI
Priority Collateral (the “First Priority FGI Collateral Liens”) shall at all
times be prior and superior to any Lien now held or hereafter acquired by Credit
Agreement Creditors in the FGI Priority Collateral (the “Second Priority Agent
Collateral Liens”).  Such priority shall be applicable irrespective of the time
or order of attachment or perfection of any security interest or the time or
order of filing of any financing statements or other documents, or any statutes,
rules of law, or court decisions to the contrary.  The lien subordination
provisions in this Section 2.1(b) are for the benefit of and shall be
enforceable by FGI, and FGI shall be deemed to have acquired the FGI Documents
Obligations in reliance upon this Agreement.
 
Section 2.2          Limitations on Rights and Remedies; Standstill with respect
to Agent Priority Collateral.
 
(a)           Until the Credit Agreement Obligations have been fully and finally
paid in cash and satisfied and the Credit Documents have been terminated in
accordance with their terms, FGI shall not exercise any rights or remedies with
respect to the Agent Priority Collateral, including, without limitation, (i)
enforcing any Second Priority FGI Collateral Liens or selling or otherwise
seeking to foreclose or realize upon any portion of the Agent Priority
Collateral or (ii) request any action, institute proceedings give any
instructions, or make any election with respect to any portion of the Agent
Priority Collateral.  In the event that FGI shall receive any proceeds of the
Agent Priority Collateral or possession of any Agent Priority Collateral, it
shall receive and hold the same in trust, as trustee, for the benefit of Credit
Agreement Creditors and shall immediately deliver the same to Agent (together
with any endorsement or assignment, as the case may be, where reasonably
necessary) for application in accordance with Section 2.6 hereof.
 
(b)           Until the Credit Agreement Obligations have been fully and finally
paid in cash and satisfied and the Credit Documents have been terminated in
accordance with their terms, FGI shall cooperate with Credit Agreement Creditors
at no cost or expense to Credit Agreement Creditors so as not to impede or
disrupt the collection efforts of Credit Agreement Creditors with respect to the
Agent Priority Collateral.
 
Section 2.3          Disposition of Agent Priority Collateral.  FGI agrees that,
notwithstanding anything to the contrary contained in any of the FGI Documents
or otherwise, until all Credit Agreement Obligations have been fully and finally
paid in cash and satisfied and the Credit Documents have been terminated in
accordance with their terms, Credit Agreement Creditors shall have the exclusive
right to restrict or permit, or approve or disapprove, the sale, transfer or
other
 

 
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disposition of any Agent Priority Collateral, and the exclusive right to
foreclose upon, compromise or otherwise dispose of, and exercise any other
rights with respect to, any or all of the Agent Priority Collateral, in each
case free of the Second Priority FGI Collateral Liens.  FGI shall, immediately
upon the request of Agent, release or otherwise terminate the Second Priority
FGI Collateral Liens, respectively, to the extent such Agent Priority Collateral
is sold or otherwise disposed of, with the consent of Agent, for and on behalf
of itself and Credit Agreement Creditors, under the Credit Agreement and will
immediately deliver such other release documents as Agent may reasonably require
in connection therewith.  Any proceeds from any such sale or other disposition
shall be applied in accordance with Section 2.6 hereof.
 
Section 2.4          Limitations on Rights and Remedies; Standstill with respect
to FGI Priority Collateral.
 
(a)           Until the FGI Documents Obligations have been paid in full in cash
and satisfied and the FGI Documents have been terminated, Agent and Credit
Agreement Creditors shall not exercise any rights or remedies with respect to
the FGI Priority Collateral, including, without limitation, (i) enforcing any
Second Priority Agent Collateral Liens or selling or otherwise seeking to
foreclose or realize upon any portion of the FGI Priority Collateral, or (ii)
request any action, institute proceedings give any instructions, or make any
election with respect to any portion of the FGI Priority Collateral.  In the
event that Agent or any Credit Agreement Creditor shall receive any proceeds of
the FGI Priority Collateral or possession of any FGI Priority Collateral, it
shall receive and hold the same in trust, as trustee, for the benefit of FGI and
shall immediately deliver the same to FGI (together with any endorsement or
assignment, as the case may be, where reasonably necessary) for application in
accordance with Section 2.6 hereof.
 
(b)           Until the FGI Documents Obligations have been paid in full in cash
and satisfied and the FGI Documents have been terminated, Agent and Credit
Agreement Creditors  shall cooperate with FGI so as not to impede or disrupt the
collection efforts of FGI with respect to the FGI Priority Collateral.
 
Section 2.5          Disposition of FGI Priority Collateral.  Agent, for and on
behalf of itself and Credit Agreement Creditors, agrees that, notwithstanding
anything to the contrary contained in any of the Credit Documents or otherwise,
until all FGI Documents Obligations have been paid in full in cash and satisfied
and the FGI Documents have been terminated, FGI shall have the exclusive right
to restrict or permit, or approve or disapprove, the sale, transfer or other
disposition of any FGI Priority Collateral, and the exclusive right to foreclose
upon or otherwise dispose of, and exercise any other rights with respect to, any
or all of the FGI Priority Collateral, in each case, free of the Second Priority
Agent Collateral Liens.  Agent, for and on behalf of itself and Credit Agreement
Creditors, shall, immediately upon the request of FGI, release or otherwise
terminate the Second Priority Agent Collateral Liens, respectively, to the
extent such FGI Priority Collateral is sold or otherwise disposed of, with the
consent of FGI under the FGI Documents and will immediately deliver such other
release documents as FGI may reasonably require in connection therewith.  Any
proceeds from any such sale or other disposition shall be applied in accordance
with Section 2.6 hereof.
 

 
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Section 2.6          Application of Proceeds.
 
(a)           Agent, for and on behalf of itself and Credit Agreement Creditors,
and FGI agree between themselves that, the proceeds of the Agent Priority
Collateral, or any part thereof, shall, to the extent available for
distribution, be distributed as follows:
 
(i)           First: to Credit Agreement Creditors for application to the Credit
Agreement Obligations in accordance with the terms and provisions of the Credit
Documents until all such Credit Agreement Obligations are fully and finally paid
in cash and satisfied;
 
(ii)           Second: to FGI for application to the FGI Documents Obligations
and the Guaranty Obligations in accordance with the terms and provisions of the
FGI Documents until all such FGI Documents Obligations are fully and finally
paid in cash and satisfied; and
 
(iii)           Third: if all Obligations shall have been paid in full in cash
and satisfied and the Financing Agreements shall have been terminated, any
surplus then remaining shall be paid to Debtors or to such other Person as may
be lawfully entitled to receive the same or as a court of competent jurisdiction
may direct.
 
(b)           Agent, for and on behalf of itself and Credit Agreement Creditors,
and FGI agree between themselves that, the proceeds of the FGI Priority
Collateral, or any part thereof, shall, to the extent available for
distribution, be distributed as follows:
 
(i)           First: to FGI for application to the FGI Documents Obligations in
accordance with the terms and provisions of the FGI Documents, up to the amount
of the Maximum FGI Debt;
 
(ii)           Second: to Credit Agreement Creditors for application to the
Credit Agreement Obligations in accordance with the terms and provisions of the
Credit Documents until all such Credit Agreement Obligations are fully and
finally paid in cash and satisfied; and
 
(iii)           Third, if all Obligations shall have been paid in full in cash
and satisfied and the Financing Agreements shall have been terminated, any
surplus then remaining shall be paid to Debtors or to such other Person as may
be lawfully entitled to receive the same or as a court of competent jurisdiction
may direct.
 
(c)           Agent, for and on behalf of itself and Credit Agreement Creditors,
and FGI consent and agree to the right of Agent, for and on behalf of itself and
Credit Agreement Creditors, and FGI to so apply such proceeds and each waives
and releases any claim or right against the other in connection with such
determination.
 
Section 2.7         Intercreditor Arrangements in Bankruptcy.  This Agreement
shall remain in full force and effect and enforceable pursuant to its terms
notwithstanding the occurrence of a Bankruptcy Event, and all references herein
to each Debtor shall be deemed to apply to such Person as debtor in possession
and to any trustee in bankruptcy for the estate of such Person.
 

 
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Section 2.8          Obligations of Credit Parties Unconditional.
 
(a)           Nothing contained in this Agreement is intended to or shall
relieve the obligations of any Credit Party to FGI, Credit Agreement Creditors
or any other Person with respect to such Credit Party’s obligations under any of
the Financing Agreements to pay any amount in respect of the Obligations or any
other amounts arising under any of the Financing Agreements as and when such
amount shall become due and payable in accordance with the terms thereof, or to
affect the relative rights of FGI and Credit Agreement Creditors, on the one
hand, and the other creditors or any Credit Party, on the other hand.  All
rights and interests of FGI and Credit Agreement Creditors hereunder, and all
agreements and obligations of the Credit Parties, FGI and Credit Agreement
Creditors hereunder, shall remain in full force and effect irrespective of:
 
(i)           any lack of validity or enforceability of any of the Financing
Agreements or any other agreement or instrument relating thereto;
 
(ii)           any change in the time, manner or place of, or in any other term
of, all or any of the Obligations, or any amendment or waiver of or any consent
to departure from any provision of any of the Financing Agreements;
 
(iii)           any exchange, release, non-perfection, or unenforceability of
any Lien or security interest in any Agent Priority Collateral, FGI Priority
Collateral or any other collateral, or any release or amendment or waiver of or
consent to departure from any guarantee, for all or any of the Obligations; or
 
(iv)           any other circumstances which might otherwise constitute a
defense available to, or a discharge of, any Credit Party in respect of all or
any of the Obligations;
 
(b)           Nothing contained in this Agreement shall affect the obligation of
any Credit Party to make, or prevent any of the Credit Parties from making, at
any time, payment of any amount in respect of the respective Obligations.
 
Section 2.9          No Other Beneficiaries.  This Agreement and the provisions
contained herein are intended only for the benefit of the holders of the
Obligations and no other creditor of any Credit Party; provided, that, this
Agreement is not for the benefit of any Credit Party and any provision contained
herein may be waived or amended by FGI and Agent, for and on behalf of itself
and Credit Agreement Creditors, without notice to or consent of the Credit
Parties.
 
Section 2.10        Rights Not to be Impaired.  No right of any present or
future holder of any Obligations to enforce any agreement as herein provided
shall at any time in any way be prejudiced or impaired by any act or omission in
good faith by any such holder, or by any noncompliance by any of the Credit
Parties with the terms and provisions and covenants herein regardless of any
knowledge thereof that any such holder may have or otherwise be charged with.
 
Section 2.11        Waivers; Acknowledgements.
 
(a)           FGI waives and releases any claim which FGI may now or hereafter
have against Credit Agreement Creditors arising out of any and all actions which
Credit Agreement Creditors, in good faith and in accordance with the terms of
this Agreement, takes or omits to take
 

 
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with respect to the Agent Priority Collateral, including without limitation, (i)
actions with respect to the creation, perfection or continuation of liens or
security interest in the Agent Priority Collateral, (ii) actions with respect to
the foreclosure upon, sale, release, or depreciation of, or failure to realize
upon, any of the Agent Priority Collateral, and (iii) any other action with
respect to the valuation, use, protection or disposition of the Agent Priority
Collateral.
 
(b)           Agent, for and on behalf of itself and Credit Agreement Creditors,
waives and releases any claim which Credit Agreement Creditors may now or
hereafter have against FGI arising out of any and all actions which FGI, in good
faith and in accordance with the terms of this Agreement, takes or omits to take
with respect to the FGI Priority Collateral, including without limitation, (i)
actions with respect to the creation, perfection or continuation of liens or
security interest in the FGI Priority Collateral, (ii) actions with respect to
the foreclosure upon, sale, release, or depreciation of, or failure to realize
upon, any of the FGI Priority Collateral, and (iii) any other action with
respect to the valuation, use, protection or disposition of the FGI Priority
Collateral.
 
Section 2.12        Assignment by Debtors of Amounts Due From FGI.  Within three
(3) days following the receipt by FGI of written instruction by Agent in the
form and text of Exhibit B attached hereto and made a part hereof, and completed
in full (the “Control Notice”) following the occurrence of a Credit Agreement
Event of Default, each Debtor hereby directs FGI to pay to Agent, for itself and
on behalf of Credit Agreement Creditors, and, to the extent permitted pursuant
to applicable law, FGI agrees to pay to Agent, for itself and on behalf of
Credit Agreement Creditors, such sums representing any amounts which would be
payable to either Debtor from time to time pursuant to the FGI Documents (the
“Amounts Due From FGI”), as and when such sums become due to any Debtor under
the FGI Documents.  Such payment shall be for the account of Debtors and,
commencing within three (3) days following receipt by FGI of the Control Notice,
shall be made by wire transfer of immediately available funds to the account set
forth in such Control Notice.  FGI is hereby authorized to recognize Credit
Agreement Creditors’ claims and rights hereunder without investigating the
reason for any action taken by Credit Agreement Creditors, or the validity or
the amount of obligations of Debtors to Credit Agreement Creditors.  Debtors
understand that, after delivery of the Control Notice, Agent, for itself and the
benefit of Credit Agreement Creditors, may, without notice to Debtors, collect,
realize or otherwise deal with the Amounts Due From FGI or any part thereof in
such manner and at such times as it deems advisable, and may charge on its own
behalf or pay to others reasonable sums for expenses incurred or services
rendered (expressly including legal advice and services) in or in connection
with collecting, realizing, selling or obtaining payment of the Amounts Due From
FGI and may add the amount of such sums to the Credit Agreement
Obligations.  After delivery of the Control Notice, Debtors shall have no right
to receive from FGI any amounts which would be payable to Debtors from time to
time pursuant to the FGI Documents and any monies received by Debtors in respect
of  amounts which would be payable to Debtors from time to time pursuant to the
FGI Documents will be received and held by it in trust for, and will immediately
be paid over to, Agent, for itself and the benefit of Credit Agreement
Creditors.  Each Debtor waives and releases any claim or right against FGI in
connection with FGI comply with the terms of this Section 2.12.
 
 
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ARTICLE III
BANKRUPTCY EVENTS
 
Section 3.1         Bankruptcy Financing.  If any Debtor becomes subject to any
Bankruptcy Event, until the full and final payment in cash and satisfaction of
all the Credit Agreement Obligations to Credit Agreement Creditors under the
Credit Documents has occurred, FGI agrees that:
 
(a)           it will raise no objection to, nor support any other Person
objecting to, and will be deemed to have consented to, the use of any Agent
Priority Collateral constituting cash collateral under Section 363 of the
Bankruptcy Code, or any comparable provision of any other Bankruptcy Law or any
post-petition financing, provided by Credit Agreement Creditors or any Person
approved by Credit Agreement Creditors under Section 364 of the Bankruptcy Code,
or any comparable provision of any other Bankruptcy Law (a “DIP Financing”),
will not request or accept adequate protection or any other relief in connection
with the use of such cash collateral or such DIP Financing and will subordinate
(and will be deemed hereunder to have subordinated) the Liens granted to FGI to
such DIP Financing on the same terms as such Liens are subordinated to the Liens
granted to Credit Agreement Creditors hereunder (and such subordination will not
alter in any manner the terms of this Agreement), to any adequate protection
provided to Credit Agreement Creditors and to any “carve out” agreed to by
Credit Agreement Creditors; provided, that:
 
(i)           Credit Agreement Creditors do not oppose or object to such use of
cash collateral or DIP Financing,
 
(ii)           the Liens granted to Agent, for and on behalf of itself and
Credit Agreement Creditors, or such other person in connection with such DIP
Financing are subject to this Agreement and considered to be Liens of Credit
Agreement Creditors for purposes hereof,
 
(iii)           FGI retains a Lien on the Agent Priority Collateral (including
proceeds thereof) with the same priority relative to the Liens of Credit
Agreement Creditors as existed prior to such Bankruptcy Event,
 
(iv)           FGI receives replacement Liens on all post-petition assets of
Debtors in which Credit Agreement Creditors obtain a replacement Lien, or which
secure the DIP Financing, with the same priority relative to the Liens of Credit
Agreement Creditors as existed prior to such Bankruptcy Event, and
 
(v)           FGI may oppose or object to such use of Cash Collateral or DIP
Financing on the same bases as an unsecured creditor, so long as such opposition
or objection is not based on FGI’s status as a secured creditor and in
connection with such opposition or objection, FGI affirmatively states that it
is an undersecured secured creditor; and
 
(b)           FGI shall not, directly or indirectly, provide, or seek to
provide, DIP Financing secured by Liens equal or senior in priority to the Liens
on the Agent Priority Collateral, without the prior written consent of Agent,
for and on behalf of itself and Credit Agreement Creditors.
 

 
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Section 3.2         Relief from the Automatic Stay.
 
(a)           FGI agrees that, so long as the full and final payment in cash and
satisfaction of all Obligations to Credit Agreement Creditors under the Credit
Documents has not occurred, FGI shall not, without the prior written consent of
Credit Agreement Creditors, seek or request relief from or modification of the
automatic stay or any other stay in any Bankruptcy Event in respect of any part
of the Agent Priority Collateral, any proceeds thereof or any Lien thereon
securing any of the obligations to FGI under the FGI Documents.  Notwithstanding
anything to the contrary set forth in this Agreement, Debtors do not waive and
shall not be deemed to have waived any rights under Section 362 of the
Bankruptcy Code.
 
(b)           Agent, for and on behalf of itself and Credit Agreement Creditors,
agrees that, so long as the full and final payment in cash and satisfaction of
all Obligations to FGI under the FGI Documents has not occurred, Credit
Agreement Creditors shall not, without the prior written consent of the FGI,
seek or request relief from or modification of the automatic stay or any other
stay in any Bankruptcy Event in respect of any part of the FGI Priority
Collateral, any proceeds thereof or any Lien thereon securing any of the
obligations to Credit Agreement Creditors under the Credit
Documents.  Notwithstanding anything to the contrary set forth in this
Agreement, Debtors do not waive and shall not be deemed to have waived any
rights under Section 362 of the Bankruptcy Code.
 
Section 3.3          Adequate Protection.
 
(a)           FGI agrees that it shall raise no objection to, contest, or
support any other Person objecting to or contesting, (i) any request by Credit
Agreement Creditors for adequate protection or any adequate protection provided
to Credit Agreement Creditors, or (ii) any objection by Credit Agreement
Creditors to any motion, relief, action or proceeding based on a claim of a lack
of adequate protection, or (iii) the payment of interest, fees, expenses or
other amounts to Credit Agreement Creditors under Section 506(b) or 506(c) of
the Bankruptcy Code or otherwise.
 
(b)           FGI agrees that it shall not seek or accept adequate protection
without the prior written consent of Credit Agreement Creditors; except, that,
the FGI shall be permitted (i) to obtain adequate protection in the form of the
benefit of additional or replacement Liens on the Collateral (including proceeds
thereof arising after the commencement of any Bankruptcy Event), or additional
or replacement collateral to secure the obligations to FGI under the FGI
Documents, in connection with any DIP Financing or use of cash collateral as
provided for in Section 3.1 above, or in connection with any such adequate
protection obtained by Credit Agreement Creditors, as long as in each case,
Credit Agreement Creditors are also granted such additional or replacement Liens
or additional or replacement collateral and such Liens of FGI are subordinated
to the Liens securing the obligations to Credit Agreement Creditors under the
Credit Documents to the same extent as the Liens of FGI on the Collateral are
subordinated to the Liens of Credit Agreement Creditors and (ii) to obtain
adequate protection in the form of reports, notices, inspection rights and
similar forms of adequate protection to the extent granted to Credit Agreement
Creditors.
 
Section 3.4          Reorganization Securities.  If, in any Bankruptcy Event,
debt obligations of any reorganized Debtor secured by Liens upon any property of
any reorganized Debtor are distributed, pursuant to a plan of reorganization, on
account of both the obligations to Credit Agreement Creditors under the Credit
Documents and the obligations to FGI under the FGI
 

 
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Documents, then, to the extent the debt obligations so distributed are secured
by Liens upon the same assets or property, the provisions of this Agreement will
survive the distribution of such debt obligations pursuant to such plan and will
apply with like effect to the Liens securing such debt obligations.
 
Section 3.5          Separate Classes.  Each of the parties hereto irrevocably
acknowledges and agrees that (a) the claims and interests of Credit Agreement
Creditors and FGI are not “substantially similar” within the meaning of Section
1122 of the Bankruptcy Code, or any comparable provision of any other Bankruptcy
Law, (b) the grants of the Liens to secure the obligations to Credit Agreement
Creditors under the Credit Documents and the grants of the Liens to secure the
obligations to FGI under the FGI Documents constitute two separate and distinct
grants of Liens, (c) Credit Agreement Creditors’ rights in the Collateral are
fundamentally different from FGI’s rights in the Collateral and (d) as a result
of the foregoing, among other things, obligations to Credit Agreement Creditors
under the Credit Documents and the obligations to FGI under the FGI Documents
must be separately classified in any plan of reorganization proposed or adopted
in any Bankruptcy Event.
 
Section 3.6          Asset Dispositions.
 
(a)           Until the full and final payment in cash and satisfaction of all
Credit Agreement Obligations to Credit Agreement Creditors under the Credit
Documents has occurred, FGI agrees that, in the event of any Bankruptcy Event,
FGI will not object or oppose (or support any Person in objecting or opposing) a
motion to any sale, lease, license, exchange, transfer or other disposition of
any Agent Priority Collateral free and clear of the Liens of FGI or other claims
under Section 363 of the Bankruptcy Code, or any comparable provision of any
Bankruptcy Law and shall be deemed to have consented to any such any sale,
lease, license, exchange, transfer or other disposition of any Agent Priority
Collateral under Section 363(f) of the Bankruptcy Code that has been consented
to by Credit Agreement Creditors; provided, that, the proceeds of such sale,
lease, license, exchange, transfer or other disposition of any Collateral to be
applied to the obligations to Credit Agreement Creditors under the Credit
Documents or the obligations to FGI under the FGI Documents, are applied in
accordance with Sections 2.6 hereof.
 
(b)           Until the full and final payment in cash and satisfaction of all
FGI Documents Obligations to FGI under the FGI Documents has occurred, Agent,
for and on behalf of itself and Credit Agreement Creditors, agrees that, in the
event of any Bankruptcy Event, Credit Agreement Creditors will not object or
oppose (or support any Person in objecting or opposing) a motion to any sale,
lease, license, exchange, transfer or other disposition of any FGI Priority
Collateral free and clear of the Liens of Credit Agreement Creditors or other
claims under Section 363 of the Bankruptcy Code, or any comparable provision of
any Bankruptcy Law and shall be deemed to have consented to any such any sale,
lease, license, exchange, transfer or other disposition of any FGI Priority
Collateral under Section 363(f) of the Bankruptcy Code that has been consented
to by the FGI; provided, that, the proceeds of such sale, lease, license,
exchange, transfer or other disposition of any Collateral to be applied to
obligations to Credit Agreement Creditors under the Credit Documents or the
obligations to FGI under the FGI Documents, are applied in accordance with
Sections 2.6 hereof.
 

 
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Section 3.7          Avoidance Issues.  If Credit Agreement Creditors or FGI are
required in the case of any Bankruptcy Event or otherwise to turn over or
otherwise pay to the estate of any Debtor any amount (a “Recovery”), then Credit
Agreement Creditors or FGI, as the case may be, shall be reinstated to the
extent of such Recovery.  If this Agreement shall have been terminated prior to
such Recovery, this Agreement shall be reinstated in full force and effect, and
such prior termination shall not diminish, release, discharge, impair or
otherwise affect the obligations of the parties hereto from such date of
reinstatement.
 
Section 3.8          Certain Waivers as to Section 1111(b)(2) of Bankruptcy
Code.  FGI waives any claim it may hereafter have against any Credit Agreement
Creditors arising out of the election by Credit Agreement Creditors of the
application of Section 1111(b)(2) of the Bankruptcy Code, or any comparable
provision of any other Bankruptcy Law.  Credit Agreement Creditors waives any
claim they may hereafter have against FGI arising out of the election by FGI of
the application of Section 1111(b)(2) of the Bankruptcy Code or any comparable
provision of any other Bankruptcy Law.
 
Section 3.9          Other Bankruptcy Laws.  In the event that a Bankruptcy
Event is instituted in a jurisdiction other than the United States or is
governed by any Bankruptcy Law other than the Bankruptcy Code, each reference in
this Agreement to a section of the Bankruptcy Code shall be deemed to refer to
the substantially similar or corresponding provision of the Bankruptcy Law
applicable to such Bankruptcy Event, or in the absence of any specific similar
or corresponding provision of the Bankruptcy Law, such other general Bankruptcy
Law as may be applied in order to achieve substantially the same result as would
be achieved under each applicable section of the Bankruptcy Code.
 
ARTICLE IV
MISCELLANEOUS
 
Section 4.1          Successors; Continuing Effect.  This Agreement is being
entered into for the benefit of, and shall be binding upon, the parties hereto
and their respective successors and assigns (to the extent permitted under the
applicable Financing Agreements).
 
Section 4.2          Terminations, Amendments, Etc.  Each of the parties hereto
agrees that this Agreement may not be terminated, amended, supplemented, waived
or modified unless such termination, amendment, supplement, waiver or
modification has been approved in writing by FGI and Agent, for and on behalf of
itself and Credit Agreement Creditors.
 
Section 4.3           Further Assurances.  Each of the parties hereto will, and
at any time and from time to time, promptly execute and deliver all further
instruments and documents, and take all further action, that Agent, for and on
behalf of itself and Credit Agreement Creditors, and FGI may reasonably request
in order to perfect or otherwise protect any right or interest granted or
purported to be granted hereby or to enable FGI or Credit Agreement Creditors,
as applicable, to exercise and enforce their respective rights and remedies
hereunder, but this Agreement shall remain fully effective notwithstanding any
failure to execute any additional documents or instruments.
 
Section 4.4           Expenses.  The Credit Parties shall pay upon demand, the
amount of any and all expenses of FGI and Credit Agreement Creditors, including,
without limitation, the reasonable
 

 
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fees and expenses of counsel, which any of FGI and Credit Agreement Creditors
may incur in connection with the exercise or enforcement of any of their rights
or interests hereunder.
 
Section 4.5           Notices.  All notices required or permitted to be given
hereunder shall be in writing and shall be deemed duly given, made or received
(a) if delivered in person, immediately upon delivery, (b) if by facsimile
transmission, immediately upon sending and confirmation of receipt, (c) if by
nationally recognized overnight courier service with instructions to deliver the
next business day, one (1) Business Day after sending and (d) if by certified
mail, return receipt requested, five (5) days after mailing to the parties at
their addresses set forth below (or such other addresses as the parties may
designate in accordance with the provisions of this Section 4.5):
 
If to the FGI:                 Faunus Group International, Inc.
80 Broad Street
New York, New York 10004
Attention:                    Mr. Sami Altaher
Telephone No.            212-248-3400
Telecopy No.:             212-248-3404

If to Agent:                   Wachovia Bank, National Association
            1133 Avenue of the Americas
New York, New York 10036
Attention:                    Portfolio Manager
Telephone No.:           212-840-2000
Telecopy No.:             212-545-4283

If to Debtors:                c/o American Biltrite, Inc.
57 River Street
Wellesley Hills, Massachusetts 02481
Attention:                    Howard N. Feist III
Telephone No.            781-237-6655
Telecopy No.:             781-237-6880

Section 4.6           Marshalling.  Each of the parties hereto agrees that
during the term hereof it will not exercise any rights it may have in law or
equity to require the other party to marshall Collateral.
 
Section 4.7           Term.  This Agreement shall remain in full force and
effect until all of the Obligations shall have been fully, finally and
indefeasibly paid in cash and all financing arrangements and commitments among
Credit Parties and FGI and Credit Agreement Creditors shall have been
terminated.  This Agreement shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Obligations is
rescinded or must otherwise be returned by either FGI or Credit Agreement
Creditors upon the insolvency, bankruptcy or reorganization of any Credit Party
or otherwise, all as though such payment had not been made.  This is a
continuing Agreement and FGI and Credit Agreement Creditors may, in their
discretion, continue to extend credit or other financial accommodations and loan
monies to or for the benefit of the Credit Parties, on the faith hereof, under
the Financing Documents, without notice to the other party.
 

 
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Section 4.8           Severability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction, shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
 
Section 4.9           WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
 
Section 4.10         Entire Agreement; Governing Law.  This Agreement embodies
the entire agreement and understanding of the parties hereto regarding the
subject matter hereof.  THIS AGREEMENT AND ALL MATTERS RELATING HERETO OR
THERETO OR ARISING THEREFROM (WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR
OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.  EACH OF THE PARTIES HERETO HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN NEW YORK, STATE OF NEW
YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT’S AND FGI’S ELECTION, ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE
LITIGATED IN SUCH COURTS.  EACH OF THE PARTIES HERETO HEREBY EXPRESSLY SUBMITS
AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE
OF FORUM NON CONVENIENS.  EACH OF THE PARTIES HERETO HEREBY WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE UPON SUCH PARTY BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, ADDRESSED TO SUCH PARTY AT THE ADDRESS SET FORTH IN THIS AGREEMENT
AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN
POSTED.
 
Section 4.11          Controlling Agreements.  To the extent of any conflict
between the terms hereof, on the one hand, and the terms of any of the FGI
Documents and the Credit Documents, on the other hand, the provisions of this
Agreement shall in all respects be controlling.
 
Section 4.12          Counterparts.  This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
taken together shall constitute one and the same agreement.  Delivery of an
executed counterpart of this Agreement by telefacsimile or other electronic
means shall have the same force and effect as the delivery of an original
executed counterpart of this Agreement.  Any party delivering an executed
counterpart of this Agreement by telefacsimile or other electronic means shall
also deliver an original executed counterpart, but the failure to do so shall
not affect the validity, enforceability or binding effect of this Agreement.
 
SIGNATURES ON FOLLOWING PAGE

 
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed and delivered by their duly authorized officers on the date and year
first above written.
 
AGENT:
 
WACHOVIA BANK, NATIONAL ASSOCIATION
 
 
By:      /s/ Marc J.
Breier                                                                             
Name: Marc J. Breier           
Title:    Managing Director         
 
   
FGI:
 
FAUNUS GROUP INTERNATIONAL, INC.
 
 
By:      /s/ David
DiPiero                                                                             
Name: David DiPiero            
Title:    CEO/President            
 
   
DEBTORS:
 
AMERICAN BILTRITE INC.
 
 
By:      /s/ Richard G.
Marcus                                                                           
Name: Richard G. Marcus          
Title:    President                
 
     
AMERICAN BILTRITE FAR EAST INC.
 
 
By:      /s/ Richard G.
Marcus                                                                           
Name: Richard G. Marcus          
Title:    President                                                                                   

[Signature Page to Intercreditor and Lien Subordination Agreement]

 
 

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EXHIBIT A
 
FGI Priority Collateral

All of Debtors’ Accounts owing from account debtors whose principal place of
business or chief executive office is not located in the United States or Canada
and, in the case of Parent, arise directly from the sale of Inventory by
Parent’s Belgian division to account debtors whose principal place of business
or chief executive office is not located in the United States or Canada and, in
the case of Far East, arise directly from the sale of Inventory by Far East to
account debtors whose principal place of business or chief executive office is
not located in the United States or Canada (collectively referred to herein as
“Foreign Accounts”), and all of Debtors’ money, contract rights, chattel paper,
documents, Deposit Accounts, securities accounts, securities, investment
property and Instruments with respect thereto, and all of Debtors’ rights,
remedies, security, Liens and supporting obligations, in, to and in respect of
the foregoing, including, without limitation, rights of stoppage in transit,
replevin, repossession and reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, guarantees or other contracts of
suretyship with respect to the Foreign Accounts, deposits or other security for
the obligation of any such Account Debtor, and credit and other insurance;
 
All of Debtors’ money, securities, investment property, Deposit Accounts,
Securities Accounts, Instruments and other property and the proceeds thereof
that are now or hereafter held or received by, in transit to, in possession of,
or under the control of FGI or a bailee of FGI, whether for safekeeping, pledge,
custody, transmission, collection or otherwise, in each case only to the extent
exclusively related to the Foreign Accounts and not any other assets or
properties of Debtors;
 
To the extent not listed above, all of Debtors’ now owned or hereafter acquired
Deposit Accounts or Securities Accounts into which Foreign Accounts or the
proceeds of Foreign Accounts are deposited, including all signature cards,
account agreements and other documents relating to such Deposit Accounts or
Securities Accounts, in each case only to the extent exclusively related to the
Foreign Accounts and not any other assets or properties of Debtors;
 
All of Debtors’ right, title and interest in, to and in respect of all goods
which by sale have resulted in, Foreign Accounts, including, without limitation,
all goods described in invoices or other documents or instruments with respect
to, or otherwise representing or evidencing, any Foreign Account, and all
returned, reclaimed or repossessed goods;
 
All of Debtors’ general intangibles (including, without limitation, payment
intangibles) and other property of every kind and description with respect to
its Foreign Accounts, including, without limitation, all existing and future
customer lists, choses in action, claims, books, records, ledger cards,
contracts, licenses, formulae, tax and other types of refunds, returned and
unearned insurance premiums, rights and claims under insurance policies, and
computer programs, tapes, programs, discs, information, software, records, and
data, all computers, word processors, printers, switches, interfaces, source
codes, mask works, software, web servers, website service contracts and all
parts, accessories, additions, substitutions, or options together with all
property or equipment used in connection with any of the above or which are used
to operate or cause to operate any features, special applications, format
controls, options or software of any or all of the above-mentioned items as the
same relates to the Foreign Accounts or is otherwise necessary or helpful in the
collection
 

 
 

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thereof or realization thereon, in each case only to the extent exclusively
related to the Foreign Accounts and not any other assets or properties of
Debtors; and
 
All cash and non-cash proceeds of the foregoing, including insurance proceeds.
 
Unless otherwise defined herein, capitalized terms on this Schedule A shall have
their respective meanings as set forth in the UCC.
 
 
 

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EXHIBIT B

CONTROL NOTICE

WACHOVIA BANK, NATIONAL ASSOCIATION
1133 Avenue of the Americas
New York, New York 10036

______________ 20__

Faunus Group International, Inc.
80 Broad Street
New York, New York 10004
Attention:  Mr. Sami Altaher
Telecopy No.:  212-248-3404
 
            Re:           Notice Pursuant to Assignment of Factoring Proceeds

Ladies and Gentlemen:

Pursuant to the Intercreditor and Lien Subordination Agreement, dated as of June
30, 2009 (the “Agreement”), by and among you, WACHOVIA BANK, NATIONAL
ASSOCIATION, in its capacity as agent (in such capacity, “Agent”), AMERICAN
BILTRITE INC., a Delaware corporation (“Parent”), and AMERICAN BILTRITE FAR
EAST, INC., a Delaware corporation (“Far East”; together with Parent,
individually a “Debtor” and collectively, “Debtors”), this letter shall serve as
the Control Notice as described in and contemplated by the
Agreement.  Capitalized terms used but not defined in this letter shall have the
meanings given them in the Agreement.  In accordance with Section 2.12 of the
Agreement, Agent hereby gives you notice that a Credit Agreement Event of
Default has occurred.  Accordingly, we hereby instruct you to transfer all
Amounts Due From FGI or any other amounts payable by you to Debtors under the
FGI Documents to the following account:
 

 
Wachovia Bank, National Association
 
ABA No.:
053000219
 
Account No.:
5000000030279
 
Account Name:
Wachovia Bank, National Association
 
Reference:
American Biltrite

 
Very truly yours
     
WACHOVIA BANK, NATIONAL ASSOCIATION, as Agent
     
By: __________________________________________________
 
Name: _______________________________________________
 
Title _________________________________________________

: