Document:

ex4-1.htm

    Exhibit
4.1

    EXECUTION
VERSION

    

    

    LIMITED
WAIVER AND MODIFICATION AGREEMENT

     

    This
LIMITED WAIVER AND MODIFICATION
AGREEMENT (this “Limited Waiver”) to
the Credit Agreement referred to below is made as of May 15, 2009, by and among
American Biltrite Inc., a Delaware corporation (the “Company”), K&M
Associates L.P., a Rhode Island limited partnership (“K&M” and together
with the Company, the “Domestic Borrowers”),
American Biltrite (Canada) Ltd., a corporation governed by the Canada Business
Corporations Act (the “Canadian Borrower”
and together with the Domestic Borrowers, the “Borrowers”), the
lenders hereto (collectively, the “Lenders”), Bank of
America, N.A., as the domestic administrative agent (the “Domestic Agent”), and
Bank of America, N.A., acting through its Canada Branch, as the Canadian
administrative agent (the “Canadian Agent” and
together with the Domestic Agent, the “Agents”).

     

    WHEREAS, the Borrowers, the
Lenders and the Agents are parties to that certain Amended and Restated Credit
Agreement, dated as of September 25, 2006 (as amended, amended and restated or
otherwise modified, the “Credit
Agreement”);

     

    WHEREAS, capitalized terms
used and not defined herein shall have the meanings ascribed thereto in the
Credit Agreement;

     

    WHEREAS, an Event of Default
under the Credit Agreement (hereinafter, the “Specified Default”)
may have occurred (and be continuing) as of March 31, 2009 as a result of the
failure of the Borrowers to comply with the fixed charge coverage covenant
contained in Section 6.5.5 of the Credit Agreement for the fiscal quarter ended
March 31, 2009;

     

    WHEREAS, the Borrowers have
requested that the Agents and the Lenders grant a limited waiver with respect to
the Specified Default; and

     

    WHEREAS, the Agents and the
Lenders have agreed, upon the terms and conditions set forth herein, to grant a
limited waiver with respect to the Specified Default;

     

    NOW THEREFORE, in
consideration of the foregoing, the promises and mutual agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows.

     

    §1           Ratification of Existing
Agreements.  

     

    Each
of the Borrowers and the Guarantors agrees that the Credit Obligations, as
evidenced by or otherwise arising under the Credit Agreement and the other
Credit Documents (in each case, as amended hereby) are, by each of the
Borrowers’ and Guarantors’ execution of this Limited Waiver, ratified and
confirmed in all respects.  The Borrowers and the Guarantors hereby
affirm their absolute and unconditional promise to pay to the Agents and the
Lenders the Credit Obligations and all other amounts due under the Credit
Agreement.  The Borrowers and the Guarantors hereby confirm that the
Credit Obligations are secured pursuant to the Credit Documents and pursuant to
all other instruments and documents executed and delivered by the Borrowers and
the Guarantors as security for the Credit Obligations. In addition, by
the execution of this Limited Waiver, each of the Borrowers and Guarantors
represents and warrants that no counterclaim, right of set-off or defense of any
kind exists or is outstanding as of the date hereof with respect to such Credit
Obligations.

    
      
         

      

      
         

        
          

        

      

      
         

      
-2-

     

    §2           Representations and
Warranties.  

     

    In
order to induce the Lenders to enter into this Limited Waiver, each of the
Borrowers jointly and severally represents and warrants that, immediately after
giving effect to this Limited Waiver, no Default or Event of Default
exists.

     

    §3           Limited
Waiver.  

     

      Subject
to all of the other terms and conditions set forth herein, the Agents and the
Lenders hereby temporarily waive, on a limited
basis, and subject to termination and expiration as set forth below, the
Specified Default, until that date (the “Termination Date”)
which is the earliest to occur of: (i) June 30, 2009, (ii) the failure after the
date hereof of any of the Borrowers or the Guarantors to comply with any of the
terms of this Limited Waiver and/or any of the Borrowers’ or Guarantors’ other
undertakings set forth herein, in the Credit Documents or in any other document
related to the Credit Documents, this Limited Waiver and the transactions
contemplated herein, (iii) the occurrence after the date hereof of any Default
or Event of Default other than the Specified Default, (iv) the occurrence of any
material adverse change in the business, assets, financial condition or
prospects of the Borrowers and the Guarantors, and (v) the date that any
Borrower, any Guarantor, any affiliate of the Borrowers or any person or entity
claiming by or through any of the Borrowers joins in, assists, cooperates or
participates as an adverse party or adverse witness in any suit or other
proceeding against any Agent, any Lender or any Affiliate of any Agent or any
Lender relating to the indebtedness referred to as the Credit Obligations or any
amounts owing hereunder in connection with or related to any of the transactions
contemplated by the Credit Agreement, the other Credit Documents, this Limited
Waiver or any documents, agreements or instruments executed in connection with
any of the foregoing. On and after the Termination Date, the waiver set forth
above shall automatically, without the requirement of any notice to the
Borrowers or Guarantors, terminate and expire and the Agents and the Lenders
shall be free in their sole and absolute discretion to proceed to enforce any or
all of their rights and remedies set forth in this Limited Waiver, the Credit
Agreement, the other Credit Documents, any other related documents and
applicable law, including without
limitation, those acceleration, enforcement and other rights and remedies
arising by virtue of the occurrence of the Specified Default and the Borrowers
and the Guarantors hereby waive notice thereof.

     

    §4           Additional Agreements and
Covenants.

     

    (a)           Notwithstanding
anything contained in the Credit Agreement to the contrary, without limiting any
borrowing restrictions contained in the Credit Agreement, at no time shall the
sum of the outstanding principal amount of the Domestic Revolving Loans, the
outstanding amount of the Domestic Letter of Credit Exposure, the outstanding
principal amount of the dollar equivalent of the Canadian Revolving Loans and
the outstanding amount of the dollar equivalent of the Canadian Letter of Credit
Exposure exceed $24,000,000.

    
      
         

      

      
         

        
          

        

      

      
         

      
-3-

     

    (b)           The
Borrowers covenant and agree to deliver to the Agents, on or prior to May 22,
2009, a copy of an executed commitment letter from a financial institution
reasonably acceptable to the Agents, which shall contemplate payment in full of
all Credit Obligations in cash on or prior to June 30, 2009, and be otherwise
reasonably acceptable to the Agents.

     

    (c)           Notwithstanding
anything contained in the Credit Agreement to the contrary, no Borrower,
Guarantor nor any of their Subsidiaries shall create, incur or enter into, or
suffer to be created or incurred to exist any Lien (or become contractually
committed to do so) on its real property (other than Liens securing the Credit
Obligations and Liens permitted under Section 6.7.3 of the Credit
Agreement).

     

    (d)           No Borrower or Guarantor shall enter
into, or permit to exist, any arrangement or agreement (other than the Credit
Documents) that (i) limits the ability of any Borrower or Guarantor to create,
incur, assume or suffer to exist Liens on the real property of such Person, or
(ii) requires the grant of a Lien on real property of a Borrower or Guarantor to
secure an obligation of such Person if a Lien on such real property is granted
to secure another obligation of such Person.

     

    (e)           Notwithstanding
anything contained in the Credit Agreement to the contrary, no Borrower,
Guarantor nor any of their Subsidiaries shall create, incur, assume or otherwise
become liable with respect to any Indebtedness without the prior written consent
of the Agents.

     

    (f)           Notwithstanding
anything contained in the Credit Agreement to the contrary, no Borrower,
Guarantor nor any of their Subsidiaries shall sell or otherwise dispose of any
assets (other than the sale of inventory in the ordinary course of business)
without the prior written consent of the Agents.

     

    (g)           Notwithstanding
anything contained in the Credit Agreement to the contrary, no Borrower,
Guarantor nor any of their Subsidiaries shall make any Investments (including
any Investment consisting of the acquisition of any business), loans or advances
of any kind (or become contractually committed to do so).

     

    (h)           Notwithstanding
anything contained in the Credit Agreement to the contrary, no Borrower,
Guarantor nor any of their Subsidiaries shall make any Distribution or any
payment on account of management fees, consulting fees or similar fees, other
than (i) payments on account of legal fees, (ii) Distributions or payments among
Borrowers and Guarantors consistent with past practices, (iii) Distributions or
payments from Subsidiaries to Borrowers and Guarantors consistent with past
practices, (iv) payments on account of accounting, actuarial, consulting and
other professional fees made in the ordinary course of business to Persons that
are not Affiliates of a Borrower, a Guarantor or any of their Subsidiaries and
(v) payments to Congoleum on account of IT consulting services in an amount not
to exceed $5,500 per month.

    
      
         

      

      
         

        
          

        

      

      
         

      
-4-

     

    (i)           Without
limiting any rights of the Agents and the Lenders under the Credit Agreement and
the other Credit Documents, in the event that the Agents do not receive a copy
of an executed commitment letter on or prior to May 22, 2009 pursuant to clause
(b) above, then, upon the request
of either Agent, the Borrowers will obtain and deliver to such Agent, or, if
such Agent so elects, will cooperate with such Agent in such Agent’s obtaining,
an appraisal of inventory, equipment and real property of the Borrowers and the
Guarantors from appraisers reasonably satisfactory to such agent; provided that, obtaining such appraisals shall
not constitute a waiver of the breach caused by the failure to deliver such
commitment letter.  The Borrowers shall reimburse the Agents for all
reasonable out-of-pocket expenses incurred in connection with such
appraisals.

     

    (j)           The Borrowers hereby covenant and agree
to pay an amendment fee of $25,000 to the Lenders (the “Amendment
Fee”).  Such fee
shall be fully earned on the date hereof and shall be payable to the Lenders as
follows:

     

    (i)           $5,000 on the date hereof;
and

     

    (ii)           $20,000 on the Termination
Date;

     

    provided, that if the Credit Obligations are
paid in full in cash and all commitments are terminated under the Credit
Agreement on or prior to June 29, 2009, the payment of the remaining portion of
the Amendment Fee otherwise payable on the Termination Date will not be due and
payable on such date and shall be deemed waived by the
Lenders.

     

    §5           Amendment
to Credit Agreement, the Domestic Security Agreement and all Credit
Documents.  

     

    (a)           The
definition of “Credit Obligations” contained in Section 1.2 of the Credit
Agreement is hereby amended by adding the following sentence at the end
thereof:

     

    “Credit
Obligations shall include any cash
management services provided by any Lender or any Affiliate thereof to any
Obligor, including treasury, depository, overdraft, credit or debit card, ACH
transactions, electronic funds transfer and other cash management
services.”

     

    (b)           The Credit Agreement is hereby further
amended by adding the following new Section 15.6 in the appropriate numerical
order:

     

    “15.6.       Joint and Several Liability
of Domestic Borrowers; Guarantee of Credit Obligations of Canadian
Borrower.

     

    (a)           Each Domestic Borrower hereby
irrevocably and unconditionally agrees that it is jointly and severally liable
for all of the liabilities, obligations, covenants and agreements of the
Domestic Borrowers hereunder and under the other Credit Documents, whether now
or hereafter existing or due or to become due. The obligations of the Domestic
Borrowers under the Credit Documents may be enforced by the Agents and the
Lenders against any Domestic Borrower or all Domestic Borrowers in any manner or
order selected by the Agents or the Lenders in their sole discretion. Each
Domestic Borrower hereby irrevocably waives (i) any rights of subrogation and
(ii) any rights of contribution, indemnity or reimbursement, in each case, that
it may acquire or that may arise against any other Domestic Borrower due to any
payment or performance made under this Agreement, in each case until all Credit
Obligations shall have been fully satisfied.

    
      
         

      

      
         

        
          

        

      

      
         

      
-5-

     

    (b)           Each Domestic Borrower hereby jointly
and severally guarantees to the Lenders and the Agents the full and punctual
payment when due (whether at stated maturity, by required pre-payment, by
acceleration or otherwise), as well as the performance, of all of the Credit
Obligations of the Canadian Borrower.  The guaranty contained in this
Section 15.6(b) is an absolute, unconditional and continuing guaranty of the
full and punctual payment and performance of all of the Credit Obligations of
the Canadian Borrower and not of their collectibility only and is in no way
conditioned upon any requirement that any Agent or any Lender first attempt to
collect any of the Credit Obligations of the Canadian Borrower from the Canadian
Borrower or resort to any collateral security or other means of obtaining
payment.  Should the Canadian Borrower default in the payment or
performance of any of its Credit Obligations, the obligations of each Domestic
Borrower hereunder shall, upon demand by any Agent, become immediately due and
payable to such Agent, for the benefit of the Lenders and the Agents, without
demand or notice of any nature, all of which are expressly waived by the
Domestic Borrowers.

     

    (c)           The Domestic Security Agreement is
hereby amended by deleting the second sentence contained in Section 1 thereof
and substituting in lieu thereof the following sentence:

     

    “Capitalized terms used and not
defined herein shall have the meanings ascribed thereto in the Credit
Agreement”.

     

    (d)           The parties hereto acknowledge and agree
that each reference to the Credit Agreement, however so defined, in the Credit
Documents shall mean the Credit Agreement (as amended, amended and restated or
otherwise modified from time to time).

     

    §6           Conditions
Precedent.  

     

    The
Agents, the Lenders, the Borrowers and the Guarantors agree that this Limited
Waiver shall become effective upon the satisfaction of the following conditions
precedent, each in form and substance reasonably satisfactory to the
Agents:

     

    (a)           The
Borrowers, the Guarantors and the Lenders shall have executed and delivered to
the Agents this Limited Waiver, which shall be in form and substance
satisfactory to the Agents.

    
      
         

      

      
         

        
          

        

      

      
         

      
-6-

     

    (b)           The Lenders shall have received a
portion of the Amendment Fee equal to $5,000 pursuant to Section 4(j)(i)
hereof.

     

    (c)           The
Agents shall have received evidence that all corporate action necessary for the
valid execution and delivery by the Company of this Limited Waiver and the
mortgage referred to in Section 7 below has been taken.

     

    (d)           The
Borrowers shall have delivered to the Agents an updated Borrowing Base
certificate, dated May 2, 2009, which shall be in form and substance reasonably
satisfactory to the Agents.

     

    §7           Mortgage.  The
Borrowers hereby covenant and agree to execute and deliver to the Domestic
Agent, on or prior to May 20, 2009, a mortgage covering the real property
located at 105 Whittendale Drive, Moorestown, NJ, which shall be in form and
substance reasonably satisfactory to the Agents and the Agents shall be entitled
to record such mortgage at the expense of the Borrowers.

     

    §8           Authorization
to File Financing Statements.  Each of the Borrowers and the
Guarantors hereby irrevocably authorizes the Agents at any time and from time to
time during the period in which any Credit Obligations or the Lenders’
commitment to make Loans under the Credit Agreement are outstanding, to file, in
any filing office in any Uniform Commercial Code jurisdiction where the filing
of an initial financing statement is necessary or desirable to perfect the
interest of the Agents in the collateral for the Credit Obligations, any initial
financing statements and amendments thereto that (a) indicate the collateral (i)
as all assets of each Borrower and Guarantor or words of similar effect,
regardless of whether any particular asset comprised in the collateral falls
within the scope of Article 9 of the Uniform Commercial Code of such
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) provide any other information required by part 5 of Article 9 of
the Uniform Commercial Code of such jurisdiction for the sufficiency or filing
office acceptance of any financing statement or amendment, including (i) whether
such Borrower or Guarantor is an organization, the type of organization and any
organization identification numbers issued to such Borrower or Guarantor, and,
(ii) in the case of a financing statement filed as a fixture filing or
indicating collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the collateral
relates.  Each of the Borrowers and the Guarantors agrees to furnish
any such information to the Agents as soon as reasonably practicable upon the
Agents’ request.  Each of the Borrowers and the Guarantors also
ratifies its authorization for the Agents to have filed in any Uniform
Commercial Code jurisdiction any like initial financing statements or amendments
thereto if filed prior to the date hereof.  The provisions of this Section 8 shall
apply mutatis mutandis with respect to PPSA financing
statements so that the Agents shall be authorized in the same manner to file
PPSA financing statements and amendments thereto in any PPSA
jurisdiction, and all previous PPSA financing statements and amendments thereto
are ratified.

    
      
         

      

      
         

        
          

        

      

      
         

      
-7-

     

    §9           No
Present Claims.  In order to induce the Agents and the
Lenders to enter into this Limited Waiver, the Borrowers and the Guarantors
acknowledge and agree that: (a) no Borrower or Guarantor has any claim or cause
of action against any Agent or any Lender (or any of their respective directors,
officers, employees or agents); (b) no Borrower or Guarantor has any offset
right, counterclaim or defense of any kind against any of its obligations,
indebtedness or liabilities to any Agent or any Lender; and (c)
each  Agent and each Lender have heretofore properly performed and
satisfied in a timely manner all of their respective obligations to each
Borrower and each Guarantor.  Each Borrower and each Guarantor agree
to eliminate any possibility that any past conditions, acts, omissions, events,
circumstances or matters would impair or otherwise adversely affect any Agent’s
or any Lender’s rights, interests, contracts, collateral security or
remedies.  Therefore, each Borrower and each Guarantor unconditionally
release, waive and forever discharge (i) any and all liabilities, obligations,
duties, promises or indebtedness of any kind of any Agent or any Lender to such
Borrower or such Guarantor, except the obligations to be performed by any Agent
or any Lender on or after the date hereof as expressly stated in this Limited
Waiver, the Credit Agreement (as amended hereby) and the other Credit Documents
(as amended hereby), and (ii) all claims, offsets, causes of action, suits or
defenses of any kind whatsoever (if any), whether arising at law or in equity,
whether known or unknown, which any Borrower or any Guarantor might otherwise
have against any Agent, any Lender or any of their directors, officers,
employees or agents, in either case (i) or (ii), on account of any past or
presently existing condition, act, omission, event, contract, liability,
obligation, indebtedness, claim, cause of action, defense, circumstance or
matter of any kind or which could arise after the date hereof as a result of the
execution of (or the satisfaction of any condition precedent to) this Limited
Waiver.

     

    §10           Marshalling.    No
Agent or Lender shall be required to marshal any present or future collateral
security for the Borrowers’ or Guarantors’ obligations to the Agents and the
Lenders under the Credit Agreement, this Limited Waiver, any other Credit
Document or any other documents relating thereto or to resort to such collateral
security or other assurances of payment in any particular order, and all of
their rights in respect of such collateral security shall be cumulative and in
addition to all other rights, however existing or arising.  To the
extent that they lawfully may, the Borrowers and the Guarantors hereby agree
that they will not invoke any law relating to the marshalling of collateral
which might cause delay in or impede the Agents’ or Lenders’ rights under any
document, agreement or instrument evidencing or securing the Borrowers’ and
Guarantors’ obligations to the Agents and the Lenders under the Credit
Agreement, this Limited Waiver, the other Credit Documents, or any other
documents relating thereto and, to the extent that they lawfully may, the
Borrowers and Guarantors hereby irrevocably waive the benefits of all such
laws.

     

    §11           No
Waiver.  Except as
otherwise expressly provided for in this Limited Waiver, nothing in this Limited
Waiver shall extend to or affect in any way any of the rights or obligations of
the Borrowers or the Guarantors or the Agents’ or Lenders’ obligations, rights
and remedies arising under the Credit Agreement, this Limited Waiver, the other
Credit Documents or any other documents relating thereto.  Except as
expressly provided in Section 3 of this Limited Waiver, no Agent or Lender shall
be deemed to have waived any or all of its rights or remedies with respect to
any Default or Event of Default existing on the date hereof or arising
hereafter.

    
      
         

      

      
         

        
          

        

      

      
         

      
-8-

     

    §12           Expenses.  The Borrowers agree to pay to the Agents
upon written demand therefor an amount equal to any and all reasonable
out-of-pocket costs, expenses, and liabilities incurred or sustained by the
Agents in connection with the Credit Agreement, this Limited Waiver, the other
Credit Documents and the transactions contemplated hereby and
thereby.

     

    §13           Miscellaneous.

    

    (a)           This Limited Waiver shall be governed by
and construed in accordance with the internal laws of the Commonwealth of
Massachusetts (excluding the laws applicable to conflicts or choice of law) and
shall take effect as a sealed instrument under such laws.  Any and all
notices or other communications required hereunder shall be in writing and shall
be delivered as required by the Credit Agreement.  In the event that
any of the terms or provisions herein are in conflict with any of the terms or
provisions in the Credit Agreement, this Limited Waiver shall
govern.

    

    (b)           This Limited Waiver shall constitute a
Credit Document under the Credit Agreement, and all obligations included in this
Limited Waiver (including, without limitation, all obligations for the payment
of principal, interest, fees, and other amounts and expenses) shall constitute
Credit Obligations under the Credit Agreement and be secured by the collateral
security for such Credit Obligations.

    

    (c)           Any failure by any Borrower or Guarantor
to comply with any of the terms and conditions of this Limited Waiver, including
any of the undertakings set forth in Section 4 hereof, shall constitute an
immediate Event of Default.

    

    (d)           The agreements and covenants of the
Borrowers and the Guarantors contained herein (including any of the undertakings
set forth in Section 4 hereof) shall survive the Termination
Date.

     

    (e)           This Limited Waiver may be executed in
any number of counterparts, but all such counterparts shall together constitute
but one instrument.  In making proof of this Limited Waiver it shall
not be necessary to produce or account for more than one counterpart signed by
each party hereto by and against which enforcement hereof is
sought.  Any signature delivered by a party by facsimile transmission
or other electronic method of transmission (including without limitation in
“pdf” format) shall be deemed to be an original signature
hereto.

     

    [Remainder
of page intentionally left blank]

    
      
         

      

      
         

        
          

        

      

      
         

      
-9-

     

    IN WITNESS
WHEREOF, the parties hereto
have executed this Limited Waiver and Modification Agreement as of the date
first written above.

     

    

    BORROWERS

    

    AMERICAN
BILTRITE INC.

    

    

    By:
/s/ Howard N. Feist
III

    Name:
Howard N. Feist III

    Title:
Vice President & CFO

    

    

    K&M
ASSOCIATES L.P.

    By:  AIMPAR,
INC., its general partner

    

    

    By:
/s/Howard N. Feist
III

    Name:
Howard N. Feist III

    Title:
Vice President

    

    

    AMERICAN
BILTRITE (CANADA) LTD.

    

    

    By:/s/Richard G.
Marcus

    Name:
Richard G. Marcus

    Title:
President

    

    

    GUARANTORS

    

    ABTRE,
Inc.

    

    

    By:
/s/Howard N. Feist
III

    Name:
Howard N. Feist III

    Title:
Vice President

    

    

    AIMPAR,
INC.

    

    By:
/s/Howard N. Feist
III

    Name:
Howard N. Feist III

    Title:
Vice President

    
      
         

      

      
         

        
          

        

      

      
         

      
-10-

    AMERICAN
BILTRITE INTELLECTUAL PROPERTIES, INC.

    

    By:
/s/Howard N. Feist
III

    Name:
Howard N. Feist III

    Title:
Vice President

    

    

    IDEAL
TAPE CO., INC.

    

    By:
/s/Howard N. Feist
III

    Name:
Howard N. Feist III

    Title:
Vice President

    

    

    MAJESTIC
JEWELRY, INC.

    

    By:
/s/Howard N. Feist
III

    Name:
Howard N. Feist III

    Title:
Vice President

    

    

    

    OCEAN
STATE JEWELRY, INC.

    

    By:
/s/Howard N. Feist
III

    Name:
Howard N. Feist III

    Title:
Vice President

    

    

    

    425
DEXTER ASSOCIATES, L.P.

    By:  AIMPAR,
INC., its general partner

    

    By: /s/Howard N. Feist
III

    Name:
Howard N. Feist III

    Title:
Vice President

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      
-11-

    K&M
LEGENDARY SERVICES, INC.

    

    

    By:
/s/Howard N. Feist
III

    Name:
Howard N. Feist III

    Title:
Vice President

    

    

    

    ABITALIA,
INC.

    

    

    By:
/s/Howard N. Feist
III

    Name:
Howard N. Feist III

    Title:
Vice President

    

    

    

    ABIMEX,
LLC

    

    

    By:
/s/Howard N. Feist
III

    Name:
Howard N. Feist III

    Title:
Manager

    

    

    

    AMERICAN
BILTRITE FAR EAST, INC.

    

    

    By:
/s/Howard N. Feist
III

    Name:
Howard N. Feist III

    Title:
Vice President

    

    
      
         

      

      
         

        
          

        

      

      
         

      
-12-

    AGENTS

    

    BANK
OF AMERICA, N.A., as Domestic Agent and Collateral Agent

    

    

    By:
/s/Sandra H.
Bennett

    Name:
Sandra H. Bennett

    Title:
Senior Vice President

    

    

    BANK
OF AMERICA, N.A., acting through its Canada Branch, as Canadian
Agent

    

    

    By: /s/ Medina Sales de
Andrade

    Name:
Medina Sales de Andrade

    Title:
Vice President

    

    

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      
-13-

    LENDERS

    

    BANK
OF AMERICA, N.A., as Domestic Lender

    

    By:
/s/Sandra H.
Bennett

    Name:
Sandra H. Bennett

    Title:
Senior Vice President

    

    

    

    BANK
OF AMERICA, N.A., acting through its Canada Branch, as Canadian
Lender

    

    

    By: /s/ Medina Sales de
Andrade

    Name:
Medina Sales de Andrade

    Title:
Vice Presidentex10-1.htm

    EXHIBIT
10.1

     

    

    

    WARRANT AND OPTION PURCHASE
AGREEMENT

    

    This
WARRANT AND OPTION PURCHASE AGREEMENT, dated as of March 24, 2009 (this “Agreement”), is by
and between GreenMan Technologies, Inc., a Delaware corporation (the “Purchaser”), and
PSource Structured Debt Ltd., a corporation governed under the laws of Guernsey
(the “Seller”).

     

    WHEREAS,
through various assignments from each of (a) Laurus Master Fund, Ltd., a company
governed under the laws of the Cayman Islands (“Laurus”), (b) Valens
Offshore SPV I, Ltd., a company governed under the laws of the Cayman Islands
(“Valens
Offshore”) and (c) Valens U.S. SPV I, LLC, a Delaware limited liability
company (“Valens
US”), the Seller owns an option to purchase an aggregate of 3,356,750
shares of common stock, par value $0.01 per share (“Common Stock”), of
the Purchaser and a warrant to purchase an aggregate of 1,455,155 shares of
Common Stock of the Purchaser (such option and warrant, together, the “Equity Interests”);
and

     

    WHEREAS,
upon the terms and conditions stated in this Agreement, the Seller wishes to
sell, and the Purchaser wishes to purchase all of the Equity
Interests.

     

    NOW,
THEREFORE, in consideration of the foregoing and the covenants, agreements and
warranties contained herein, the sufficiency of which as consideration is hereby
acknowledged, the parties agree as follows:

     

    1.           Definitions.  When used herein,
the following terms shall have the indicated meanings:

     

    “Encumbrance” means
any pledge, hypothecation, assignment, lien, restriction, charge, claim,
security interest, option, preference, priority or other preferential
arrangement of any kind or nature whatsoever.

     

    “Laurus Entities”
means each of Laurus, Valens Offshore and Valens US.

     

    2.           Sale and
Purchase.

     

    (a)           Effective
upon the execution of this Agreement, the Seller hereby sells, transfers,
conveys and assigns to the Purchaser, and the Purchaser hereby purchases and
acquires from the Seller (the “Transaction”), the
Equity Interests and any and all rights and benefits incident to the ownership
thereof, on the terms and conditions set forth herein.

     

    (b)           The
aggregate purchase price for the Equity Interests to be purchased by the
Purchaser shall be equal to $700,000 (the “Purchase
Price”).  Upon the execution of this Agreement by the Seller,
the Purchaser shall deliver the
Purchase Price by wire transfer of immediately available funds to the Seller in
accordance with the instructions set forth on Exhibit A attached
hereto. Within a commercially reasonable time after receipt of the Purchase
Price, the Seller shall cause the original instruments representing the Equity
Interests, endorsed for cancellation, to be delivered to the
Purchaser.

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.           Representations, Warranties
and Agreements of the Seller.

     

    The
Seller hereby represents, warrants and agrees that:

     

    (a)           The
Seller has full power and authority to enter into this Agreement and to
consummate the Transaction.  This Agreement has been duly and validly
executed and delivered by the Seller and constitutes the legal, valid and
binding obligation of the Seller, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws from time to time in
effect that affect creditors’ rights generally, and by legal and equitable
limitations on the availability of specific remedies.

     

    (b)           The
execution, delivery and performance by the Seller of this Agreement and
consummation by the Seller of the Transaction does not and will not: (i) violate
the organizational documents of the Seller; (ii) violate any decree or judgment
of any court or other governmental authority applicable to or binding on the
Seller or any of its assets or properties; (iii) violate any provision of any
federal or state statute, rule or regulation which is applicable to the Seller;
or (iv) violate any contract to which the Seller or any of its assets or
properties are bound.  No consent or approval of, or filing with, any
governmental authority or other person not a party hereto is required for the
execution, delivery and performance by the Seller of this Agreement or the
consummation of the Transaction.

     

    (c)           With
respect to the Transaction: (i) except for the record ownership of the Equity
Interests by the Laurus Entities on the books and records of the Purchaser, the
Seller is the sole record and beneficial owner of the Equity Interests, free and
clear of any taxes and Encumbrances; and (ii) upon the transfer of the Equity
Interests to the Purchaser, the Purchaser will acquire good and marketable title
thereto, and will be the legal and beneficial owner of such Equity Interests,
free and clear of any and all Encumbrances.

     

    (d)           The
Seller has taken no action that would give rise to any claim by any person for
brokerage commissions, finder’s fees or similar payments relating to this
Agreement or the Transaction.

     

    (e)           No
proceedings relating to the Equity Interests are pending or, to the knowledge of
the Seller, threatened before any court, arbitrator or administrative or
governmental body that would adversely affect the Seller’s right to transfer the
Equity Interests to the Purchaser.

     

    4.           Representations, Warranties
and Agreements of the Purchaser.

     

    The
Purchaser hereby represents, warrants and agrees that:

     

    (a)           The
Purchaser has full power and authority to enter into this Agreement and to
consummate the Transaction.  This Agreement has been duly and validly
executed and delivered by the Purchaser and constitutes the legal, valid and
binding obligation of the Purchaser, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect that affect the
enforcement of creditors’ rights generally and by equitable limitations on the
availability of specific remedies.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)           The
execution, delivery and performance by the Purchaser of this Agreement and
consummation by the Purchaser of the Transaction does not and will not: (i)
violate the organizational documents of the Purchaser; (ii) violate any decree
or judgment of any court or other governmental authority applicable to or
binding on the Purchaser or any of its assets or properties; (iii) violate any
provision of any federal or state statute, rule or regulation which is
applicable to the Purchaser; or (iv) violate any contract to which the Purchaser
is a party or by which the Purchaser or any of its respective assets or
properties are bound.  No consent or approval of, or filing with, any
governmental authority or other person not a party hereto is required for the
execution, delivery and performance by the Purchaser of this Agreement or the
consummation of the Transaction.

     

    (c)           As
the issuer of the Equity Interests, the Purchaser does not possess any material
non-public information that has not been disclosed to the Seller, which the
Purchaser believes to be indicative that the value of the Equity Interests is
substantially greater than the Purchase Price.

     

    (d)           Upon
the transfer of the Equity Interests to the Purchaser, the Purchaser shall
immediately cancel the Equity Interests.

     

    5.           Notices.  Any notice,
request, instruction or other document to be given hereunder by a party hereto
shall be in writing and shall be deemed to have been given: (a) when received if
given in person or by a courier or a courier service; or (b) on the date of
transmission if sent by facsimile transmission or e-mail:

     

    (i)         If
to the Seller, addressed as follows:

     

    PSource Structured Debt
Ltd.

    Sarnia
House

    Le
Truchot

    St
Peter Port

    Guernsey

    GY1
4NA

    Facsimile:
+44 (0) 207 533 1850

    Attention:  John
Gilfillan

    

    

    (ii)        If
to the Purchaser, addressed as follows:

     

    GreenMan
Technologies, Inc.

    7
Kimball Lane

    Building
A

    Lynnfield,
MA  01940

    Facsimile:
(781) 224-0114

    Attention:  Charles
E. Coppa, Chief Financial Officer

    

    

    or
to such other person or address as a party hereto may designate for itself by
notice given as herein provided.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    6.           Counterparts.  This Agreement
may be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

     

    7.           Applicable
Law.  The laws of the
State of New York, without giving effect to its choice-of-law rules, shall
govern the validity of this Agreement.

     

    8.           Entire
Agreement; Amendments; and Waivers.  This Agreement
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
between such parties with respect to such subject matter.  No
provision of this Agreement may be amended other than by an instrument in
writing signed by the Seller and the Purchaser.  No provision hereof
may be waived other than by an instrument in writing signed by the party against
whom enforcement is sought.

     

    9.           Severability.  If any provision
of this Agreement shall be held invalid, illegal or unenforceable, the validity,
legality and enforceability of the other provisions hereof shall not be affected
thereby.

     

    10.           Captions.  The Section
captions herein are for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this
Agreement.

     

    11.           No Third
Party Beneficiaries.  This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.

     

    12.           Survival;
Further Assurances.  The
representations, warranties and covenants of the parties shall survive the
execution of this Agreement and the consummation of the Transaction. Each party
shall do and perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the Transaction.

     

    

    

    

    

    [Remainder
of Page Intentionally Left Blank]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the Seller
and the Purchaser have caused this Warrant and Option Purchase Agreement to be
duly executed as of the date first written above.

     

     

    
      THE
SELLER:

       

      PSource
Structured Debt Ltd.

       

      By:  PSource
Capital Limited, its

              investment
consultant

       

      

       

      By:  
__________________

              Name:

              Title:

       

      

       

      THE
PURCHASER:

       

      GreenMan
Technologies, Inc.

       

      

       

      By:  
_________________________

              Name:

              Title

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