Exhibit 10.4
Execution Copy
SECOND LIEN PLEDGE AND SECURITY AGREEMENT
by and between
DAY INTERNATIONAL, INC.
DAY INTERNATIONAL GROUP, INC.
VARN INTERNATIONAL, INC.
DAY INTERNATIONAL FINANCE, INC.
NETWORK DISTRIBUTION INTERNATIONAL
NETWORK DISTRIBUTION INTERNATIONAL, INC.
as Grantors
and
THE BANK OF NEW YORK,
as Collateral Agent
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS; GRANT OF SECURITY
2
1.1 General Definitions
2
1.2 Definitions; Interpretation
9
SECTION 2. GRANT OF SECURITY
10
2.1 Grant of Security
10
2.2 Certain Limited Exclusions
10
2.3 Lien Subordination
10
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE
11
3.1 Security for Obligations
11
3.2 Continuing Liability Under Collateral
11
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS
12
4.1 Generally
12
4.2 Equipment and Inventory
15
4.3 Receivables
16
4.4 Investment Related Property
18
4.5 Material Contracts
24
4.6 Letter of Credit Rights
25
4.7 Intellectual Property
26
4.8 Commercial Tort Claims
29
SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL
GRANTORS
29
5.1 Access; Right of Inspection
30
5.2 Further Assurances
30
5.3 Additional Grantors
31
SECTION 6. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT
31
6.1 Power of Attorney
31
6.2 No Duty on the Part of Collateral Agent or Secured Parties
32
SECTION 7. REMEDIES
32
7.1 Generally
32
7.2 Application of Proceeds
34
7.3 Sales on Credit
34
7.4 Deposit Accounts
34
7.5 Investment Related Property
35
7.6 Intellectual Property
35
7.7 Cash Proceeds
37
SECTION 8. COLLATERAL AGENT
37
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS
38
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SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM
38
SECTION 11. MISCELLANEOUS
39
SECTION 12. CONFLICTS WITH FIRST LIEN LOAN DOCUMENTS
38
SCHEDULE 4.1 - GENERAL INFORMATION
SCHEDULE 4.2 - LOCATION OF EQUIPMENT AND INVENTORY
SCHEDULE 4.4 - INVESTMENT RELATED PROPERTY
SCHEDULE 4.6 - DESCRIPTION OF LETTERS OF CREDIT
SCHEDULE 4.7 - INTELLECTUAL PROPERTY - EXCEPTIONS
SCHEDULE 4.8 - COMMERCIAL TORT CLAIMS
EXHIBIT A - PLEDGE SUPPLEMENT
EXHIBIT B - UNCERTIFICATED SECURITIES CONTROL AGREEMENT
EXHIBIT C - SECURITIES ACCOUNT CONTROL AGREEMENT
EXHIBIT D - DEPOSIT ACCOUNT CONTROL AGREEMENT
EXHIBIT E - TRADEMARK SECURITY AGREEMENT
EXHIBIT F - COPYRIGHT SECURITY AGREEMENT
EXHIBIT G - PATENT SECURITY AGREEMENT
ii
This SECOND LIEN PLEDGE AND SECURITY AGREEMENT (as amended, restated,
supplemented or otherwise modified from time to time, this "Agreement"), dated
as of December 5, 2005, is made by and between DAY INTERNATIONAL, INC., a
Delaware corporation (the "Company"), DAY INTERNATIONAL GROUP, INC., a Delaware
corporation ("Holdings") and CERTAIN SUBSIDIARIES OF THE COMPANY, as Guarantors
(described below) (each of the Guarantors, the Company and Holdings are referred
to hereinafter individually as a "Grantor", and collectively as the "Grantors"),
and THE BANK OF NEW YORK, as collateral agent for the Secured Parties described
below (together with its successors, designees and permitted assigns in such
capacity, the "Collateral Agent").
RECITALS:
WHEREAS, reference is made to that certain Credit and Guaranty Agreement,
dated as of the date hereof (as it may be amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"),