Collateral Agreement

Exhibit 10.2


================================================================================


COLLATERAL AGREEMENT


made by


BUSH INDUSTRIES, INC.


and certain of its Subsidiaries


in favor of


JPMORGAN CHASE BANK,


as Administrative Agent


Dated as of December 28, 2001


================================================================================


TABLE OF CONTENTS


Page
---- SECTION 1. DEFINED TERMS................................................................................. 1
1.1 Definitions................................................................................... 1
1.2 Other Definitional Provisions................................................................. 4


SECTION 2. [INTENTIONALLY OMITTED]....................................................................... 4


SECTION 3. GRANT OF SECURITY INTEREST.................................................................... 4


SECTION 4. REPRESENTATIONS AND WARRANTIES................................................................ 5
4.1 Title; No Other Liens......................................................................... 5
4.2 Perfected First Priority Liens................................................................ 6
4.3 Jurisdiction of Organization; Chief Executive Office.......................................... 6
4.4 Inventory and Equipment....................................................................... 6
4.5 Farm Products................................................................................. 6
4.6 Investment Property........................................................................... 6
4.7 Receivables................................................................................... 6
4.8 Intellectual Property......................................................................... 7


SECTION 5. COVENANTS..................................................................................... 7
5.1 Delivery of Instruments, Certificated Securities and Chattel Paper............................ 7
5.2 Maintenance of Insurance...................................................................... 7
5.3 Payment of Obligations........................................................................ 8
5.4 Maintenance of Perfected Security Interest; Further Documentation............................. 8
5.5 Changes in Locations, Name, etc............................................................... 8
5.6 Notices....................................................................................... 8
5.7 Investment Property........................................................................... 9
5.8 Receivables................................................................................... 9
5.9 Intellectual Property......................................................................... 9


SECTION 6. REMEDIAL PROVISIONS........................................................................... 10
6.1 Certain Matters Relating to Receivables....................................................... 10
6.2 Communications with Obligors; Grantors Remain Liable.......................................... 11
6.3 Pledged Notes................................................................................. 11
6.4 Proceeds to be Turned Over To Administrative Agent............................................ 12
6.5 Application of Proceeds....................................................................... 13
6.6 Code and Other Remedies....................................................................... 13
6.7 Registration Rights........................................................................... 13
6.8 Deficiency.................................................................................... 13


SECTION 7. THE ADMINISTRATIVE AGENT...................................................................... 14
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc................................... 14
7.2 Duty of Administrative Agent.................................................................. 15
7.3 Execution of Financing Statements............................................................. 15
7.4 Authority of Administrative Agent............................................................. 15


SECTION 8. MISCELLANEOUS................................................................................. 16
8.1 Amendments in Writing......................................................................... 16


8.2 Notices.................................................................................. 16
8.3 No Waiver by Course of Conduct; Cumulative Remedies...................................... 16
8.4 Enforcement Expenses; Indemnification.................................................... 16
8.5 Successors and Assigns................................................................... 17
8.6 Set-Off.................................................................................. 17
8.7 Counterparts............................................................................. 17
8.8 Severability............................................................................. 17
8.9 Section Headings......................................................................... 17
8.10 Integration.............................................................................. 17
8.11 GOVERNING LAW............................................................................ 17
8.12 Submission To Jurisdiction; Waivers...................................................... 18
8.13 Acknowledgements......................................................................... 18
8.14 Additional Grantors...................................................................... 18
8.15 Releases................................................................................. 18
8.16 WAIVER OF JURY TRIAL..................................................................... 19


SCHEDULES - ---------


Schedule 1 Notice Addresses Schedule 2 Investment Property Schedule 3 Perfection Matters Schedule 4 Jurisdictions of Organization and Chief Executive Offices Schedule 5 Inventory and Equipment Locations Schedule 6 Intellectual Property


COLLATERAL AGREEMENT


COLLATERAL AGREEMENT, dated as of December 28, 2001, made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the "Grantors"), in favor of JPMORGAN CHASE BANK, as
-------- Administrative Agent (in such capacity, the "Administrative Agent") for the
-------------------- banks and other financial institutions or entities (the "Lenders") from time to
------- time parties to the Credit and Guarantee Agreement, dated as of June 26, 1997 (as amended, supplemented or otherwise modified from time to time, the "Credit
------ and Guarantee Agreement"), among BUSH INDUSTRIES, INC. (the "Company"), each - ----------------------- ------- FOREIGN SUBSIDIARY BORROWER (as defined therein) (together with the Company, the "Borrowers"), the Lenders and the Administrative Agent. ---------


W I T N E S S E T H:
- - - - - - - - - -


WHEREAS, pursuant to the Credit and Guarantee Agreement and the other Loan Documents, the Lenders have severally agreed to make certain Extensions of Credit (as defined in the Credit and Guarantee Agreement) to or for the benefit of the Borrowers upon the terms and subject to the conditions set forth therein;


WHEREAS, the Borrowers are members of an affiliated group of companies that includes each other Grantor;


WHEREAS, the proceeds of the Extensions of Credit will be used in part to enable the Company to make valuable transfers (as determined as provided herein) to some of the other Grantors in connection with the operation of their respective businesses;


WHEREAS, the Borrowers and the other Grantors are engaged in related businesses, and each Grantor will derive substantial direct and indirect benefit from the making of the Extensions of Credit; and


WHEREAS, it is a condition precedent to the effectiveness of the Sixth Amendment to the Credit and Guarantee Agreement that the Grantors shall have executed and delivered this Agreement to the Administrative Agent for the ratable benefit of the Lenders;


NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, each Grantor hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders, as follows:


SECTION 1. DEFINED TERMS


1.1 Definitions. (a) Unless otherwise defined herein, terms defined in the
----------- Credit and Guarantee Agreement and used herein shall have the meanings given to them in the Credit and Guarantee Agreement, and the following terms are used herein as defined in the New York UCC: Accounts, Certificated Security, Chattel Paper, Documents, Equipment, Farm Products, General Intangibles, Instruments, Inventory, Letter-of-Credit Rights and Supporting Obligations.


(b) The following terms shall have the following meanings:


"Agreement": this Collateral Agreement, as the same may be amended,
--------- supplemented or otherwise modified from time to time.


2


"Borrower Obligations": the collective reference to the unpaid
-------------------- principal of and interest on the Loans and Reimbursement Obligations and all other obligations and liabilities of any Borrower (including, without limitation, interest accruing at the then applicable rate provided in the Credit and Guarantee Agreement after the maturity of the Loans and Reimbursement Obligations and interest accruing at the then applicable rate provided in the Credit and Guarantee Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to any Borrower, whether or not a claim for post-filing or post- petition interest is allowed in such proceeding) to the Administrative Agent or any Lender (or, in the case of any Lender Hedging Agreement, any Affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit and Guarantee Agreement, this Agreement, the other Loan Documents, any Letter of Credit, any Lender Hedging Agreement or any other document made, delivered or given in connection with any of the foregoing, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent or to the Lenders that are required to be paid by any Borrower pursuant to the terms of any of the foregoing agreements).


"Collateral": as defined in Section 3.
----------


"Collateral Account": any collateral account established by the
------------------ Administrative Agent as provided in Section 6.1 or 6.4.


"Copyrights": (i) all copyrights arising under the laws of the United
---------- States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished (including, without limitation, those listed in Schedule 6), all registrations and
---------- recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, and (ii) the right to obtain all renewals thereof.


"Copyright Licenses": any written agreement naming any Grantor as
------------------ licensor or licensee (including, without limitation, those listed in Schedule
-------- 6), granting any right under any Copyright, including, without limitation, the - - grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright.


"Deposit Account": as defined in the Uniform Commercial Code of any
--------------- applicable jurisdiction and, in any event, including, without limitation, any demand, time, savings, passbook or like account maintained with a depositary institution.


"Guarantor Obligations": with respect to any Guarantor, all
--------------------- obligations and liabilities of such Guarantor which may arise under or in connection with this Agreement, the Domestic Subsidiary Guarantee or any other Loan Document to which such Guarantor is a party, in each case whether on account of guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent or to the Lenders that are required to be paid by such Guarantor pursuant to the terms of this Agreement, the Domestic Subsidiary Guarantee or any other Loan Document).


"Guarantors": the collective reference to each Grantor other than the
---------- Company.


"Intellectual Property": the collective reference to all rights,
--------------------- priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent


3


Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.


"Intercompany Note": any promissory note evidencing loans made by any
----------------- Grantor to the Company or any of its Subsidiaries.


"Investment Property": the collective reference to (i) all
------------------- "investment property" as such term is defined in Section 9-102(a)(49) of the New York UCC (other than (x) the Capital Stock of any Subsidiaries of the Company, (y) publicly-traded securities with a market valuation in the aggregate not exceeding $50,000 and (z) the Capital Stock of National Product Services, Inc.) and (ii) whether or not constituting "investment property" as so defined, all Pledged Notes.


"Issuers": the collective reference to each issuer of any Investment
------- Property.


"Lender Hedging Agreements": all Hedging Agreements entered into by
------------------------- any Borrower with any Lender (or any Affiliate of any Lender).


"New York UCC": the Uniform Commercial Code as from time to time in
------------ effect in the State of New York.


"Obligations": (i) in the case of the Borrowers, the Borrower
----------- Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations.


"Patents": (i) all letters patent of the United States, any other
------- country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, including, without limitation, any of the foregoing referred to in Schedule 6, (ii) all applications for
---------- letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, including, without limitation, any of the foregoing referred to in Schedule 6, and (iii) all rights to obtain
---------- any reissues or extensions of the foregoing.


"Patent License": all agreements, whether written or oral, providing
-------------- for the grant by or to any Grantor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent, including, without limitation, any of the foregoing referred to in Schedule 6.
----------


"Pledged Notes": all promissory notes listed on Schedule 2, all
------------- ---------- Intercompany Notes at any time issued to any Grantor and all other promissory notes issued to or held by any Grantor (other than promissory notes issued in connection with extensions of trade credit by any Grantor in the ordinary course of business).


"Proceeds": all "proceeds" as such term is defined in Section 9-
-------- 102(a)(64) of the New York UCC and, in any event, shall include, without limitation, all dividends or other income from the Investment Property, collections thereon or distributions or payments with respect thereto.


"Receivable": any right to payment for goods sold or leased or for
---------- services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account).


"Receivables Collateral": Receivables which constitute Collateral.
----------------------


4


"Trademarks": (i) all trademarks, trade names, corporate names,
---------- company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, including, without limitation, any of the foregoing referred to in Schedule 6, and (ii) the right to obtain all renewals thereof.
----------


"Trademark License": any agreement, whether written or oral,
----------------- providing for the grant by or to any Grantor of any right to use any Trademark, including, without limitation, any of the foregoing referred to in Schedule 6.
----------


"Transferred Receivables": Receivables (including, without
----------------------- limitation, Documents and Instruments and Proceeds thereof) that are sold, contributed or otherwise transferred in connection with a Qualified Receivables Transaction entered into in accordance with the Credit and Guarantee Agreement.


"Vehicles": all cars, trucks, trailers, construction and earth moving
-------- equipment and other vehicles covered by a certificate of title law of any state.


1.2 Other Definitional Provisions. (a) The words "hereof," "herein",
----------------------------- "hereto" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified.


(b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.


(c) Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor's Collateral or the relevant part thereof.


SECTION 2. [INTENTIONALLY OMITTED]


SECTION 3. GRANT OF SECURITY INTEREST


Each Grantor hereby assigns and transfers to the Administrative Agent, and hereby grants to the Administrative Agent, for the ratable benefit of the Lenders, a security interest in, all of the following property now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the "Collateral"), as collateral security for the prompt and
---------- complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of such Grantor's Obligations,:


(a) all Accounts;


(b) all Chattel Paper;


(c) all Deposit Accounts;


(d) all Documents (other than title documents with respect to Vehicles);


5


(e) all Equipment;


(f) all General Intangibles;


(g) all Instruments;


(h) all Intellectual Property;


(i) all Inventory;


(j) all Investment Property;


(k) all Letter-of-Credit Rights;


(l) all other personal property not otherwise described or excluded above;


(m) all books and records pertaining to the Collateral; and


(n) to the extent not otherwise included, all Proceeds, Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing;


provided, however, that notwithstanding any of the other provisions
----------------- set forth in this Section 3, this Agreement shall not constitute a grant of a security interest in (i) any property to the extent that such grant of a security interest is prohibited by any Requirements of Law of a Governmental Authority, requires a consent not obtained of any Governmental Authority pursuant to such Requirement of Law or is prohibited by, or constitutes a breach or default under or results in the termination of or requires any consent not obtained under, any contract, license, agreement, instrument or other document evidencing or giving rise to such property or, in the case of any Investment Property or Pledged Note, any applicable shareholder or similar agreement, except to the extent that such Requirement of Law or the term in such contract, license, agreement, instrument or other document or shareholder or similar agreement providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law, or (ii) Transferred Receivables and (A) security interests or liens and property subject thereto purporting to secure payment of such Transferred Receivables, (B) guarantees, insurance and other arrangements supporting payment of such Transferred Receivables, (C) rights to payment and collections in respect of such Transferred Receivables, (D) books, records and similar information relating to such Transferred Receivables or the obligors thereon and (E) with respect to any such Transferred Receivables, the transferee's interest in goods the sale of which gave rise to such Transferred Receivables.


SECTION 4. REPRESENTATIONS AND WARRANTIES


To induce the Lenders to make their respective Extensions of Credit to the Borrowers, each Grantor hereby represents and warrants to the Administrative Agent and each Lender that:


4.1 Title; No Other Liens. Except for the security interest granted to the
--------------------- Administrative Agent for the ratable benefit of the Lenders pursuant to this Agreement and the other Liens permitted to exist on the Collateral by the Credit and Guarantee Agreement, such Grantor owns each item of the Collateral free and clear of any and all Liens or claims of others. No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Administrative Agent, for the ratable benefit of the Lenders,


6


pursuant to this Agreement or as are permitted by the Credit and Guarantee Agreement. For the avoidance of doubt, it is understood and agreed that any Grantor may, as part of its business, grant licenses to third parties to use Intellectual Property owned or developed by a Grantor. For purposes of this Agreement and the other Loan Documents, such licensing activity shall not constitute a "Lien" on such Intellectual Property. Each of the Administrative Agent and each Lender understands that any such licenses may be exclusive to the applicable licensees, and such exclusivity provisions may limit the ability of the Administrative Agent to utilize, sell, Lease or transfer the related Intellectual Property or otherwise realize value from such Intellectual Property pursuant hereto.


4.2 Perfected First Priority Liens. The security interests granted
------------------------------ pursuant to this Agreement (a) upon completion of the filings and other actions specified on Schedule 3 (which, in the case of all filings and other documents referred to on said Schedule, have been delivered to the Administrative Agent in completed and duly executed form) will constitute valid perfected security interests in all of the Collateral in favor of the Administrative Agent, for the ratable benefit of the Lenders, as collateral security for such Grantor's Obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons purporting to purchase any Collateral from such Grantor and (b) are prior to all other Liens on the Collateral in existence on the date hereof except for Liens permitted by the Credit and Guarantee Agreement which have priority over the Liens on the Collateral by operation of law.


4.3 Jurisdiction of Organization; Chief Executive Office. On the date
---------------------------------------------------- hereof, such Grantor's jurisdiction of organization, identification number from the jurisdiction of organization (if any), and the location of such Grantor's chief executive office or sole place of business or principal residence, as the case may be, are specified on Schedule 4. Such Grantor has furnished to the Administrative Agent a good standing certificate as of a date which is recent to the date hereof.


4.4 Inventory and Equipment. On the date hereof, the Inventory and the
----------------------- Equipment (other than mobile goods) are kept at the locations listed on Schedule
...