Exhibit 10.67
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated January 27, 1997, is between Peaches
Entertainment Corp., a Florida corporation (the "Debtor"), and URT Industries,
Inc., a Florida corporation (the "Secured Party").
WHEREAS, the Debtor is obligated to the Secured Party for the repayment of
certain indebtedness, as evidenced by that certain URT Promissory Note, dated
January 27, 1997 and that certain Peaches-URT Reimbursement Agreement, dated as
of January 27, 1997; and
WHEREAS, the parties hereto desire to secure the obligations of the Debtor
to the Secured Party;
NOW, THEREFORE, intending to be legally bound, the Debtor and the Secured
party agree as follows:
1. Definitions.
Whenever used herein, the following terms shall, unless the context
otherwise requires, have the following respective meanings:
(a) "Account" means any right to payment for goods sold or leased or for
services rendered which is not evidenced by an instrument or chattel paper.
(b) "Account Debtor" means the Person who is obligated on an Account or
Contract Right.
(c) "Collateral" means all goods (including but not limited to Inventory),
equipment, accounts receivable, Contract Rights, Documents of Title,
instruments, fixtures, chattel paper, and General Intangibles owned by the
Debtor and all Proceeds thereof.
(d) "Contract Right" means any right to payment under a contract
(including, but not limited to, contracts for the sale or leasing of goods or
for the rendering of services) not yet earned by performance and not evidenced
by an instrument or chattel paper.
(e) "Document of Title" means a xxxx of lading, dock warrant, dock receipt,
warehouse receipt or order for the delivery of goods, and also any other
document which in the regular course of business or financing is treated as
adequately evidencing that the Person in possession of it is entitled to
receive, hold and dispose of the document and the goods it covers.
(f) "Fair Market Value" means the value of property determined in an arm's
length transaction between a willing and informed buyer under no compulsion to
buy and a willing and informed seller under no compulsion to sell.
(g) "General Intangibles" means things in action, patents, copyrights,
trademarks, royalties, goodwill, literary rights and all other personal property
other than goods, Accounts, Contract Rights, Documents of Title, chattel paper,
instruments and money.
(h) "Interest Rate" means the rate of interest payable by the Debtor under
the URT Promissory Note.
(i) "Inventory" means tangible person property held for sale or lease or to
be furnished under contracts of service, tangible personal property which has
been so leased or furnished, and raw materials, work in process and materials
used, produced or consumed in business, and shall include tangible personal
property sold on a sale or return basis, tangible personal property returned by
the purchaser following a sale thereof and tangible personal property
represented by Documents of Title. All equipment, accessories and parts at any
time attached or added to items of Inventory or used in connection therewith
shall be deemed to be part of the Inventory.
(j) "Liabilities" means all existing and future liabilities, whether
absolute or contingent, of the Debtor to the Secured Party of any nature
whatsoever arising under the URT Promissory Note or under the Peaches-URT
Reimbursement Agreement.
(k) "Person" means an individual, a corporation, a government or
governmental subdivision or agency or instrumentality, a business trust, an
estate, a trust, a partnership, a cooperative, an association, two or more
Persons having a joint or common interest, or any other legal or commercial
entity.
(l) "Proceeds" means whatever is received when Collateral or Proceeds of
Collateral is sold, exchanged, collected or otherwise disposed of and also
includes payments and rights to payment under any policies of insurance with
respect to any Collateral. The term includes the Account arising when the right
to payment is earned under a Contract Right representing such Proceeds and,
without limitation, any accounts receivable representing such Proceeds.
2. Grant of Security.
To secure the payment, promptly when due, and the punctual performance of
all of the Liabilities, the Debtor hereby grants to the Secured Party a
continuing lien upon and security interest in all of the Collateral.
3. Records and Certifications.
The Debtor shall faithfully keep complete and accurate books, records and
lists and make all necessary entries therein to reflect the quantities, costs,
current values and locations of its Inventory, Accounts, accounts receivable,
Contract Rights, Documents of Title, instruments, fixtures and General
Intangibles and the transactions and facts giving rise to such Collateral, and
the Debtor shall keep the Secured Party fully and accurately informed as to the
locations of all such books, lists and
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records. The Debtor shall permit the Secured Party's agents to have access to
such books, lists and records on the Debtor's premises for the purpose of
examining, auditing and copying them. If the Debtor refuses the Secured Party
access in accordance with this provision, then the Secured Party shall have the
right to take possession of such books, lists and records, which right shall be
enforceable by an action of replevin or by any other appropriate remedy at law
or in equity.
4. Title, Etc.
The Debtor has acquired absolute and exclusive title to each and every item
or unit of the Collateral free and clear of all liens, claims, security
interests and other encumbrances, except those created hereby in favor of the
Secured Party and those created in favor of the Majors and Alliance (as such
entities are defined in the plan of reorganization filed by the Debtor in its
bankruptcy case filed in the United States Bankruptcy Court for the Southern
District of Florida, Case No. 96-20153- BKC-RBR) in accordance with said plan of
reorganization. The Debtor will warrant and defend its title to the Collateral,
subject to the aforesaid rights of the Secured Party, the Majors and Alliance
against the claims and demands of all other persons whomsoever. Without limiting
the generality of the foregoing, the Debtor will not pledge, assign or otherwise
encumber, or permit any liens or security interests to attach to, any of the
Collateral, nor permit any of the Collateral to be levied upon under any legal
process, other than those liens described above. Upon any breach of the
foregoing covenant against encumbrances, the Secured Party may, at its sole
election but without obligation to do so, discharge the encumbrance for the
account of and without notice to the Debtor, and all expenses incurred by the
Secured Party in so doing, together with interest thereon at the Interest Rate,
shall be added to the Liabilities and shall be payable by the Debtor on demand.
Without the prior written consent of the Secured Party in each case, the Debtor
will not sell, exchange, lease, lend, salvage, replace or otherwise dispose of
any item or unit of the Collateral or any of the Debtor's rights therein, except
that so long as the Debtor is not in default hereunder, the Debtor shall have
the right in the ordinary course of its business to process and sell its
Inventory and collect payment therefor in the ordinary course of business.
5. Taxes and Liens.
The Debtor will immediately notify the Secured Party in the event there
ever arises against any of the Collateral any lien, assessment or tax or other
liability, whether or not entitled to priority over the Secured Party's security
interest hereunder. In any such event, whether or not such notice is given, the
Secured Party shall (unless such lien, assessment, tax or other liability is the
subject of an appeal by the Debtor and an appropriate bond has been posted to
stay the effect of any resulting lien) have the right (but shall be under no
obligation) to pay any tax or other liability of the Debtor deemed by the
Secured Party in good faith to affect the Secured Party's interests hereunder.
The Debtor shall repay to the Secured Party on demand all sums which the Secured
Party shall have paid under this section in respect of taxes or other
liabilities of the Debtor, with interest thereon at the Interest Rate, and the
Debtor's liability to the Secured Party for such repayment with interest shall
be included in the Liabilities. The Secured Party shall be subrogated to the
extent of any such payment by it to all the rights and liens of the payee
against the Debtor.
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6. Insurance.
The Debtor shall bear all risk of loss, destruction and damage to any and
all of the Collateral from any cause whatsoever at any time during the term of
this Agreement, and shall at its own cost and expense obtain and keep in full
force and effect, in kind and form reasonably satisfactory to the Secured Party
and with insurers of recognized standing in the financial community or otherwise
approved by the Secured Party, insurance covering the Collateral wherever the
same may be, insuring against the risks of fire, explosion and theft, all other
risk of physical loss or damage, and such other risks as are customarily insured
against by corporations engaged in the same business and similarly situated with
the Debtor (and specifically including vandalism and malicious mischief
coverage), in an amount or amounts usually carried by corporations engaged in
the same business and similarly situated with the Debtor. All policies of such
insurance shall be written for the benefit of the Debtor and the Secured Party
as the insureds, shall bear an endorsement in form satisfactory to the Secured
Party naming the Secured Party, the Majors, Alliance and the Debtor as loss
payees, as their respective interests may appear, and shall provide for at least
ten (10) days' advance written notice to the Secured Party of any cancellation.
The Secured Party and the Debtor agree that all insurance proceeds shall be
payable to the Debtor if at the time of such payment no Event of Default then
exists. A copy of all such policies (or, in the Secured Party's discretion,
certificates therefor) shall be lodged with the Secured Party. If the Debtor
fails to pay any premium on any such insurance, the Secured Party shall have the
right, but shall be under no obligation, to pay such premium for the Debtor's
account. The Debtor shall repay to the Secured Party on demand all sums which
the Secured Party shall have paid under this section in respect of insurance
premiums, with interest thereon at the Interest Rate, and the Debtor's liability
to the Secured Party for such repayment with interest shall be included in the
Liabilities. The Debtor hereby assigns to the Secured Party, the Majors and
Alliance, as their interests may appear, any return or unearned premium which
may be due upon the cancellation for any reason whatsoever of any policy of
insurance maintained in respect of the Collateral and hereby directs the insurer
to pay the Secured Party, the Majors and Alliance, as their interests may
appear, any amount so due, except that the Secured Party shall have no right to
any such amount unless and until there exists an Event of Default. The Debtor's
right to receive payment of any such return or unearned premium and the proceeds
of any such insurance shall constitute a part of the Collateral.
7. Control of and Access to Inventory.
The Debtor shall maintain possession and control of its Collateral at all
times, provided that upon the occurrence of an Event of Default the Secured
Party shall have the right to take possession of the Collateral or any portion
thereof, and for the purpose of taking custody of such Collateral the Debtor
agrees that upon request of the Secured Party it will lease warehousing space in
the Debtor's own premises to the Secured Party and will erect such structures
and post such signs as the Secured Party may require in order to place such
Collateral under the exclusive control of the Secured Party. Notwithstanding any
taking of possession by the Secured Party of any Collateral, the same shall
remain at all times at the Debtor's sole risk, and to the full extent permitted
by law the Secured Party shall not be responsible for any loss, damage or
diminution in the value thereof. If any of the
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Collateral is or becomes evidenced by a Document of Title, the Secured Party may
require the Debtor to promptly deliver the same to the Secured Party,
appropriately endorsed to the order of the Secured Party. All costs of
transportation, packaging, custody, processing, storage, insurance and salvage
of any unit or item of the Collateral which may be incurred by the Secured Party
shall be promptly repaid to the Secured Party by the Debtor together with
interest thereon at the Interest Rate, and the Debtor's liability to the Secured
Party for such repayment with interest shall be included in the Liabilities. The
Debtor will afford the Secured Party's agent access to the Collateral from time
to time upon request for purposes of examination, inspection and appraisal and
to verify the Debtor's records pertaining thereto.
8. Notices of Loss, Etc.
The Debtor will immediately notify the Secured Party of any event causing
any material deterioration, loss or depreciation in value of the Collateral.
9. Accounts and Contract Rights.
(a) The Secured Party hereby authorizes the Debtor to collect all Accounts
from the Account Debtors. Upon the occurrence of an Event of Default, the
Secured Party shall have the right, acting if it so chooses in the Debtor's
name, to collect the Debtor's Accounts itself, to sell, assign, compromise,
discharge or extend the time for repayment of any Account, to institute legal
action for the collection of any Account, and to do all reasonable acts and
things necessary or incidental thereto. The Debtor hereby ratifies all that the
Secured Party shall do in accordance with the terms hereof. The Secured Party
may at any time, after the occurrence of an Event of Default, notify any Account
Debtor that the Account payable by such Account Debtor has been assigned to the
Secured Party and is to be paid directly to the Secured Party. At the Secured
Party's request, after the occurrence of an Event of Default, the Debtor shall
so notify Account Debtors and shall indicate on all xxxxxxxx to Account Debtors
that payments thereon are to be made to the Secured Party. Without the written
consent of the Secured Party, the Debtor shall not unreasonably compromise,
discharge, extend the time for payment of or otherwise grant any indulgence or
allowance with respect to any Account.
(b) If any of the Debtor's Accounts is or becomes evidenced by a promissory
note, a trade acceptance or any other instrument for the payment of money, the
Debtor will promptly provide notice to the Secured Party of such instrument and,
upon the written request of the Secured Party, will promptly deliver such
instrument to the Secured Party appropriately endorsed to the order of the
Secured Party. Regardless of the form of such endorsement, the Debtor hereby
waives presentment, demand, notice of dishonor, protest and notice of protest
and all other notices with respect thereto.
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10. Significant Locations.
The Debtor represents and warrants to the Secured Party as follows: (i) the
chief executive office of the Debtor is located at 0000 Xxxx Xxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxx 00000, and such chief executive office is the
sole location where the Debtor maintains the records with respect to the
Collateral; and (ii) the locations set forth in Schedule A hereto are the only
locations where the Debtor stores or processes Inventory, other goods,
equipment, and instruments. The Debtor will notify the Secured Party in writing
prior to any change in any of the locations specified above and will reimburse
the Secured Party for the costs of any additional Uniform Commercial Code
filings requested by the Secured Party as a result thereof. If any of the
Collateral or any of the Debtor's records concerning any of the Collateral are
at any time to be located on premises leased by the Debtor, or any premises
owned by the Debtor subject to a mortgage or other lien, the Debtor will provide
notice of such intent to the Secured Party not less than 30 days prior to the
delivery of any such Collateral or records to such premises, and, upon the
written request of the Secured Party, the Debtor will promptly obtain and
deliver to the Secured Party an agreement in form satisfactory to the Secured
Party (a) subordinating the landlord's, mortgagee's or other lienholder's right
to enforce against the Debtor any claims for monies due under the lease,
mortgage or other lien by levy or distraint or other proceedings against the
Collateral or against the Debtor's records concerning the same and (b) assuring
the Secured Party's access to such Collateral and records to facilitate the
Secured Party's exercise of its right to take possession thereof. The Debtor
agrees to notify the Secured Party promptly in the event of a change in the
location of any place of business or the establishment of any additional place
of business of the Debtor.
11. Further Assurances.
The Debtor will execute and deliver to the Secured Party from time to time
all such other agreements, instruments and other documents (including without
limitation all requested financing and continuation statements) and do all such
other further acts and things as the Secured Party may reasonably request in
order to further evidence or carry out the intent of this Agreement or to
perfect the lien and security interest created hereby or intended so to be.
12. Default and Remedies.
The Debtor shall be in default hereunder upon the occurrence of an "Event
of Default" as defined in either of the URT Promissory Note or the Peaches-URT
Reimbursement Agreement.
Upon the occurrence of any Event of Default which shall be continuing, (i)
unless the Secured party shall elect otherwise, the entire unpaid amount of such
of the Liabilities as are not then otherwise due and payable shall become
immediately due and payable without notice to or demand on the Debtor or any
guarantor of any of the Liabilities (the Debtor and all such guarantors being,
collectively, the "Obligors") and (ii) the Secured Party may at its option
exercise from time to time any and all rights and remedies available to it under
the Uniform Commercial Code or otherwise, including the right to collect,
assemble, receipt for or foreclose or otherwise realize upon any of the
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Collateral and to dispose of any of the Collateral at one or more public or
private sales or other proceedings, and the Debtor agrees that the Secured Party
or its nominee may become the purchaser at any such sale or sales. The Debtor
agrees that ten (10) days shall be reasonable prior notice of the date of any
public sale or other disposition of all or any part of the Collateral, or of the
date on or after which any private sale or other disposition of the same may be
made.
All rights and remedies granted the Secured Party hereunder or under any
other agreement between the Secured Party and the Debtor shall be deemed
concurrent and cumulative and not alternative, and the Secured Party may proceed
with any number of remedies at the same time or at different times until all the
Liabilities are fully satisfied. The exercise of any one right or remedy shall
not be deemed a waiver or release of or an election against any other right or
remedy, and the Secured Party may proceed against any one or more of the
Obligors and the Collateral and any other collateral granted by the Debtor to
the Secured Party under any other agreement, all in any order and through any
available remedies. A waiver on any one occasion shall not be construed as a
waiver or bar on any future occasion. All property of any kind held at any time
by the Secured Party as Collateral shall stand as one general, continuing
collateral security for all the Liabilities and may be retained by the Secured
Party as security until all the Liabilities are fully satisfied.
13. Payment of Expenses.
The Debtor will pay to the Secured Party on demand (together with interest
thereon at the Interest Rate) any and all expenses (including all reasonable
attorneys' fees, whether incurred at trial, on appeal or without litigation, and
all legal expenses) which may have been incurred by the Secured Party (i) in the
prosecution or defense of (or otherwise in connection with) any action growing
out of or connected with the subject matter of this Agreement, the Liabilities,
the Collateral or any of the Secured Party's rights therein or thereto; or (ii)
in connection with the custody, preservation, use, operation, preparation for
sale or sale of any of the Collateral, the incurring of all of which are hereby
authorized to the extent the Secured Party in good xxxxx xxxxx the same
advisable. The Debtor's liability to the Secured Party for any such payment with
interest shall be included in the Liabilities. The enumeration of specific
Events of Default shall not compromise the demand character of any Liability
which by its terms is payable on demand, and demand may be made thereon at any
time irrespective of the non-occurrence of any such Event of Default, any
provision hereof to the contrary notwithstanding. The Proceeds of any Collateral
received by the Secured Party at any time before or after default, whether from
a sale or other disposition of Collateral or otherwise, or the Collateral
itself, may be applied with reasonable promptness to the payment in full or in
part of such of the Liabilities and in such order and manner as the Secured
Party may elect. The Debtor, to the extent of its rights in the Collateral,
waives and releases any right to require the Secured Party to collect any of the
Liabilities from any other of the Collateral or any other collateral then held
by the Secured Party under any theory of marshaling of assets or otherwise,
provided, however, that the Secured Party shall be subject to the obligations of
a secured party under the Uniform Commercial Code to act in a commercially
reasonable manner.
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14. Power of Attorney.
The Debtor hereby irrevocably appoints any officer, employee or agent of
the Secured Party as the Debtor's true and lawful attorney-in-fact with power,
upon the occurrence of an Event of Default, to (i) endorse the Debtor's name
upon any notes, checks, drafts, money orders, or other instruments of payment
that may come into the Secured Party's possession and which constitute
Collateral or proceeds of any Collateral; (ii) sign and endorse the Debtor's
name upon any documents of title, invoices, freight or express bills,
assignments, verifications and notices in connection with any of the Collateral,
and any instruments or documents relating thereto or to the Debtor's rights
therein; and (iii) execute in the Debtor's name and file one or more financing
statements covering the Collateral. Any such attorney-in-fact of the Debtor
shall have full power to do any and all things necessary to be done with respect
to the above transactions as fully and effectually as the Debtor might do, and
the Debtor hereby ratifies all that said attorney shall lawfully do or cause to
be done by virtue hereof.
15. Miscellaneous.
(a) At no time during the past five years has the Debtor been known by or
used any name, including any trade or fictitious name, other than that set forth
in the premises of this Agreement. The Debtor shall give the Secured Party
notice prior to any change in its name, or its use of any trade, fictitious or
other additional name.
(b) This Agreement shall commence on the date hereof and shall continue in
full force and effect so long as any of the Liabilities shall exist from time to
time. If after the discharge of all Liabilities the Debtor should subsequently
incur additional Liabilities, this Agreement shall automatically be revived and
thereafter continue in full force and effect until such time as the Debtor,
having no Liabilities then outstanding and not then being entitled to incur any
additional Liabilities, shall give written notice to the Secured Party of its
election to terminate this Agreement.
(c) Absent manifest error, statements of account rendered to the Debtor by
the Secured Party hereunder shall become final and be effective unless objection
thereto is made within thirty (30) days of receipt by the Debtor.
(d) No modification or waiver of any provision hereof shall be effective
unless the same is in writing and signed by the party against whom its
enforcement is sought.
(e) This Agreement may be signed in any number of counterparts and by
different parties in separate counterparts, all with the same effect as if the
signature were on the same counterpart, and all counterparts hereof, taken
together, shall constitute but one and the same Agreement.
(f) The representations, warranties, covenants and agreements contained
herein are all material and continuing, and any material breach of any of them
shall constitute a material breach of this Agreement.
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(g) Words of any gender shall include any other gender, and singular words
shall include the plural and vice versa, whenever the same is necessary to
produce a fair and meaningful construction.
(h) All the rights and remedies of the Secured Party hereunder shall be
cumulative with and not alternative to or in lieu of the Secured Party's rights
and remedies under any other agreement or agreements.
(i) This Agreement shall bind and inure to the benefit of the parties and
their respective successors and assigns, except that the Debtor shall not assign
any of its respective rights hereunder without the prior written consent of the
other party hereto, which consent shall not unreasonably be withheld.
(j) Captions in this Agreement are included for convenience of reference
only and shall not constitute a part of this Agreement for any other purpose.
(k) Any provision hereof which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without affecting the validity or
enforceability of the remainder of this Agreement or the validity or
enforceability of such provision in any other jurisdiction.
(l) This Agreement and all issues arising hereunder shall be governed by
the laws of the State of Florida, except to the extent that the enforceability
of any provision of this Agreement or the security interest created hereunder
requires the application of the law of a jurisdiction other than Florida.
(m) This Security Agreement is subject to that certain Subordination
Agreement among URT, the Majors and Alliance, dated January 27, 1997.
IN WITNESS WHEREOF, this Agreement has been duly executed under due
authorization on the day and year first set forth above.
Peaches Entertainment Corp.
By: s/Xxxxx Xxxx
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Title: Executive Vice-President
URT Industries, Inc.
By: s/Xxxxx Xxxx
--------------------------
Title: Executive Vice-President
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Schedule A
[Omitted]
