[GRAPHIC OMITTED] FRANKLIN CAPITAL
CORPORATION
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (herein "Agreement") dated April 25th 2000 between
5TH AVENUE CHANNEL CORPORATION (hereafter, the "Debtor"), a Florida corporation,
having its chief executive office located at 0000 XX 000xx Xxxxxx, X. Xxxxx
Xxxxx, Xxxxxxx 00000, and FRANKLIN CAPITAL CORPORATION (hereafter, the "Secured
Party"), an Illinois corporation, 00 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000.
1. Grant of Security Interest. To secure the prompt and complete payment,
observance and performance of all the Liabilities (as hereinafter defined),
Debtor hereby gives, grants and pledges to the Secured Party a continuing
security interest in and to all of the Debtor's right, title and interest in and
to the following property and interests in property, whether now owned or
existing or hereafter acquired or arising and wheresoever located collectively,
the "Collateral"): all of Debtor's present and future accounts, inventory,
equipment, chattel paper, general intangibles, documents, instruments,
investment property and deposit accounts, all whether now owned or existing or
hereafter acquired or arising and wheresoever located, and all accessions and
additions thereto, substitutions thereto, and all renewals, replacements,
proceeds and products thereof.
The security interest granted hereby shall secure all of the following (which
shall collectively be referred to herein as the "Liabilities"): (1) the Debtor's
prompt and complete payment, performance and observance of that certain Lease
dated April 25th, 2000 between Debtor as lessee and Secured Party as lessor (the
"Lease"); and (2) the prompt and complete payment, performance and observance of
any and all other liabilities and obligations now or hereafter owed by Debtor to
Secured Party, of every kind and nature, howsoever created, arising or
evidenced, and howsoever owned, held or acquired, whether now due or to become
due, whether direct or indirect, or absolute or contingent, and whether several,
joint or joint and several; and (3) the payment of all advances made by Secured
Party to pay or discharge any other lien, security interest or encumbrance upon
the Collateral; and (4) the payment of all advances made by Secured Party to
protect the Collateral, and/or Secured Party's security interest therein; and
(5) the payment of all costs and expenses incurred by Secured Party in the
enforcement of Secured Party's security interest in the Collateral and in the
collection of the Liabilities and any other obligation or indebtedness secured
hereby, including reasonable attorneys' fees and legal expenses.
2. Attachment and Continuity of Security Interest. The pledge of, lien upon,
and security interest granted and hereby created in the Collateral shall extend
and attach to the entire Collateral which is presently in existence and which is
owned by Debtor or in which Debtor has an interest, and all Collateral which
Debtor may purchase or in which Debtor may acquire an interest at any time and
from time to time in the future, whether such Collateral is in transit or in
Secured Party's constructive, actual or exclusive occupancy or possession or
not, or held by Debtor or others for Debtor's or Secured Party's account and
wherever the same may be located, including, but without limiting the generality
of the foregoing, all Collateral which may be located on Debtor's premises or
upon the premises of any carriers, forwarding agents, truckers, warehousemen,
vendors, selling agents, consignees, finishers, converters or other third
parties who may have possession of the Collateral. Upon the sale, exchange, or
other disposition of the Collateral, the security interest and lien created and
provided for herein shall, without break in continuity and without further
formality or act, continue
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in and attach to the instruments for the payment of money, Accounts, contract
rights, documents of title, shipping documents, chattel paper and all other cash
and noncash proceeds of such sale, exchange or disposition, including Collateral
returned or rejected by customers or repossessed by Debtor or Secured Party. As
to any such sale, exchange or disposition, Secured Party shall have all the
rights of an unpaid seller, including stoppage in transit, replevin and
reclamation.
3. Right of Set-Off. Secured Party shall have the right of set-off against
(and Debtor hereby grants Secured Party a first priority security interest in
and to) any money, credits or property of Debtor which shall come into the
possession of Secured Party. Secured Party may, at any time, for its own
account, without notice to Debtor, apply towards the payment of any Liabilities,
whether due or not, any money, credits or other property belonging to the Debtor
which shall be in the possession or under the control of the Secured Party.
4. Representations and Warranties. Debtor represents and warrants to Secured
Party as follows:
(a) The correct corporate name of Debtor is set forth in the first paragraph of
this Agreement. The Debtor currently conducts business under its correct legal
name as set forth in the first paragraph of this Agreement. Except as set forth
in Exhibit A attached hereto, Debtor has not changed its corporate name or used
any trade or fictitious name in the last (5) five years. The locations listed on
Exhibit B constitute all locations at which Debtor's Inventory and/or Equipment
is located and Debtor has exclusive possession and/or control of its Equipment
and Inventory. The chief place of business and chief executive office of the
Debtor is located at the Debtor's address specified above in the first paragraph
of this Agreement. All records concerning Debtor's Accounts, general intangibles
and all originals of all chattel paper which evidence any Account or general
intangibles of Debtor are located at the Debtor's address set forth in the first
paragraph of this Agreement; and
(b) The Debtor is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Florida, and has the power and authority
to enter into and perform all of the obligations under this Agreement, the
Lease, and all other lease documents and instruments now or hereafter executed
in connection with the Lease; and
(c) The making and performance by Debtor of the Lease and this Agreement have
been duly authorized by all necessary corporate action and will not violate any
provision of law or of its charter or bylaws, or result in the breach of or
constitute a default or require any consent under, or result in the creation of
any lien, charge, or encumbrance (except the security interest of the Secured
Party) upon any property or assets of Debtor pursuant to any indenture or other
agreement or instrument to which Debtor is a party or by which Debtor or its
property may be bound or affected; and
(d) This Agreement, the Lease and each of the other related lease documents
executed by the Debtor are the legal, valid and binding obligations of Debtor
enforceable against Debtor in accordance with their respective terms, except as
limited by applicable bankruptcy, reorganization, insolvency or similar laws
affecting creditors' rights generally and by general principles of equity; and
(e) No authorization, approval or other action by, and no notice to or filing
with, any governmental authority that have not already been taken or made and
which are in full force and effect, is required (i) for the grant by the Debtor
of the security interest in the Collateral granted hereby; (ii) the execution,
delivery or performance of this Agreement by the Debtor; or (iii) for the
exercise by the Secured Party of its rights or remedies hereunder; and
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(f) There are no suits or proceedings pending, or to the knowledge of Debtor
threatened against or affecting Debtor which, if adversely determined, would
have an adverse effect on the financial condition or business of Debtor or its
ability to perform its obligations under the Lease or this Agreement, and there
are no proceedings by or before any court, governmental commission, board,
bureau, or other administrative agency pending or, to the knowledge of Debtor,
threatened against Debtor; and
(g) The Debtor is in compliance with all statutes, ordinances, governmental
rules and regulations to which it is subject and has not and shall not fail to
obtain any licenses, permits, franchises, or other governmental authorizations
necessary to the ownership of its properties or to the conduct of its business,
which violation or failure to obtain would adversely affect the business,
prospects, profits, properties, condition (financial or otherwise) of the
Debtor, or the security interest, liens, or rights of the Secured Party in the
Collateral; and
(h) The Debtor has satisfied all judgments and is not in default with respect
to any judgment, writ, injunction, decree, rule, or regulation of any court,
arbitrator, or federal, state, municipal, or other governmental authority,
commission, board, bureau, agency, or instrumentality, domestic or foreign; and
(i) The Debtor has filed all tax returns (federal, state and local) required to
be filed and has paid all taxes, assessments, and governmental charges and
levies thereon due, including interest and penalties; and
(j) The balance sheets and statements of income and retained earnings of
Debtor, and all accompanying financial information heretofore furnished to the
Secured Party, are complete and correct in all material respects and fairly
represent the financial condition of Debtor as at the dates of said financial
statements and the results of its operations for the periods ending on said
dates. Debtor has no material contingent obligations, liabilities for taxes,
long-term leases, or unusual forward or long-term commitments not disclosed by,
or reserved against in, said balance sheets or the notes thereto; and at the
present time there are no material unrealized or anticipated losses from current
operations. Said financial statements were prepared in accordance with generally
accepted accounting principles ("GAAP"). Since the date of the latest of such
statements there has been no material adverse change in the financial condition
of Debtor from that set forth in said balance sheets as at that date. No
information, exhibit, or report furnished by the Debtor to the Secured Party in
connection with the negotiation of this Agreement contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statement contained therein not materially misleading; and
(k) The Debtor is not a party to any indenture, loan or credit agreement, or to
any lease or other agreement or instrument, or subject to any charter or
corporate restriction which could have a material adverse effect on the
business, properties, assets, operations, or conditions, financial or otherwise,
of the Debtor, or the ability of the Debtor to carry out its obligations under
this Agreement, the Lease or the related lease documents to be executed
thereunder. The Debtor is not in default in any material respect in the
performance, observance, or fulfillment of any of the obligations, covenants, or
conditions contained in any agreement or instrument (material to its business)
to which it is a party; and
(l) The Debtor is the sole lawful owner of the Collateral, and has the sole
right and lawful authority to deliver this Agreement. The Collateral and every
part thereof is, and will hereafter remain, free and clear of all security
interests, liens, attachments, levies, and encumbrances of every kind, nature
and
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description, except for the security interest of the Secured Party, and Debtor
will warrant and defend the Collateral against any claims and demands of all
other persons at any time claiming the same or any interest therein. No
financing statement covering the Collateral or any part thereof, is on file in
any public office (other than financing statements in favor of Secured Party).
The security interest granted in the Collateral is valid and enforceable under
the laws of the State of Illinois and constitutes a first priority security
interest therein; and
(m) The Debtor is solvent on the date hereof and has induced Secured Party to
accept this Security Agreement and to enter into the Lease upon such
representation of financial solvency; and
(n) All annual contributions, if any, required to be made to any plan of Debtor
are current and not delinquent. No circumstances exist which constitute grounds
entitling the Pension Benefit Guaranty Corporation ("PBGC") to institute
proceedings to terminate any plan of Debtor, or to appoint a Trustee to
administer such plan, or to impose withdrawal liability against Debtor, and that
no notice of lien, levy or assessment has been filed of record, or threatened to
be filed, with respect to all or any portion of any Debtor's assets by the PBGC.
5. Affirmative Covenants. Debtor agrees that until the Liabilities have been
paid in full and the Secured Party's security interest in the Collateral
terminated, Debtor will:
(a) Keep its chief place of business and chief executive office and the office
where it keeps its records concerning its Accounts and general intangibles, and
the office where it keeps all originals of all chattel paper which evidence
Accounts and general intangibles, at the Debtor's address specified above in the
first paragraph of this Agreement, or, upon thirty (30) days prior written
notice to the Secured Party, at such other location in the State of Florida; and
(b) Keep Debtor's Equipment, Inventory and other tangible personal property at
the places specified in Section 4(a); and
(c) Keep and maintain at Debtor's own cost and expense satisfactory and
complete records of the Collateral in a manner consistent with Debtor's current
business practice, including, without limitation, a record of all payments
received and all credits granted with respect to such Collateral. Debtor shall,
for the Secured Party's further security, deliver and turn over to the Secured
Party or the Secured Party's designated representatives at any time following
the occurrence of an Event of Default and upon three (3) days' notice from the
Secured Party or the Secured Party's designated representative, any such books
and records (including, without limitation, any and all computer tapes, programs
and source codes relating to such Collateral in which such Debtor has an
interest or any part or parts thereof); and
(d) Debtor will not create, permit or suffer to exist, and will defend the
Collateral against, and take such other action as is necessary to remove, any
lien, security interest or encumbrance on such Collateral, other than the
security interest of Secured Party, and Debtor will defend the right, title and
interest of the Secured Party in and to Debtor's rights to such Collateral,
including, without limitation, the proceeds and products thereof, against the
claims and demands of all Persons whatsoever; and
(e) Debtor will advise the Secured Party promptly, in reasonable detail, of (i)
any lien, security interest, encumbrance, or claim made by or asserted against
any or all of the Collateral, and (ii) the occurrence of any other event which
would have a material adverse effect on the aggregate value of such Collateral
or on the security interests and liens with respect to such Collateral created
hereunder; and
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(f) Preserve and maintain, its corporate existence and good standing in the
State of Florida; and
(g) Keep adequate records and books of account, in which complete entries will
be made in accordance with GAAP consistently applied, reflecting all financial
transactions of the Debtor; and
(h) Execute, or cause to be executed, upon Secured Party's request, any
documents necessary to perfect Secured Party's security interest in the
Collateral; and
(i) Take all actions necessary or required by law to protect and preserve the
Collateral, the rights of the Debtor and Secured Party thereunder, and the
priority of the lien granted thereby, including, without limitation, the payment
of all amounts required for that purpose; and
(j) Furnish Secured Party, from time to time, with such information relevant to
this Agreement and Debtor's performance hereunder as Secured Party may request;
and
(k) Immediately upon the execution of this Agreement, make appropriate entries
upon its books disclosing Secured Party's security interest in the Collateral.
Upon Secured Party's request, following an Event of Default, Debtor will execute
and deliver all papers and instruments, and do all things required by Secured
Party to facilitate collection of the Collateral; and
(l) Maintain, keep and preserve all of its tangible assets in good condition
and repair. Debtor will not commit or permit damage to or destruction of its
tangible assets, or any portion thereof; and
(m) Continue to engage in a business of the same general type as conducted by
it on the date of this Agreement; and
(n) Pay when due all taxes, assessments and liens upon the Collateral (and all
other assets now or hereafter owned by it), its use or operation, upon this
Agreement, the Lease or upon any of the other related lease documents; and
(o) Procure and maintain "all risks" fire and extended casualty insurance, and
comprehensive public liability insurance, together with such other insurance as
the Secured Party may require with respect to the Collateral, in form, amounts,
coverages, and basis acceptable to Secured Party and issued by a company or
companies acceptable to Secured Party. Prior to closing and from time to time
thereafter, upon the request of Secured Party, Debtor shall deliver to Secured
Party duplicate originals of the aforesaid insurance policies, together with
certificates of insurance naming Secured Party as an "additional insured" with
respect to public liability coverage and as a "mortgagee and loss payee" with
respect to all other coverages. Debtor will also provide the Secured Party with
a Lender's Loss Payable Endorsement and such other endorsements as Secured Party
shall require; and
(p) Promptly notify Secured Party of any loss or damage to the Collateral
exceeding $10,000.00. Secured Party may make proof of loss if Debtor fails to do
so within fifteen (15) days of the casualty. All proceeds of any insurance on
the Collateral, including accrued proceeds thereon, shall be held by Secured
Party as part of the Collateral. Provided Debtor shall not then be in default in
the payment of any indebtedness to Secured Party or in the performance of any
other obligation to Secured Party hereunder or under the Lease or any related
lease document, Secured Party shall consent to the repair or replacement of the
damaged or destroyed Collateral, and Secured Party, shall, upon satisfactory
proof of expenditure, pay or reimburse Debtor from the proceeds for the
reasonable cost of repair or restoration. If Debtor shall be in default in the
payment or performance of any such indebtedness or
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obligation, Secured Party, at its option, may apply the insurance proceeds
toward payment of the remaining Liabilities, with the remainder, if any, being
paid to Debtor, or such other person legally entitled thereto; and
(q) Debtor shall also promptly provide Secured Party with such information,
financial or otherwise, concerning the Debtor, as the Secured Party may
reasonably request from time to time; and
(r) Promptly after the commencement thereof, give the Secured Party notice of
all actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Debtor, which, if determined adversely to the Debtor, could have a
material adverse effect on the financial condition, properties or operations of
Debtor; and
(s) At any reasonable time and from time to time, permit the Secured Party or
any agent or representative thereof to examine and make copies of and abstracts
from the records and books of account of, and visit the properties of, the
Debtor, and to discuss the affairs, finances, and Accounts of the Debtor with
any of its officers, directors and accountants; and
(t) Give Secured Party written notice thirty (30) days prior to any change in
Debtor's name, mailing address, principal place of business, chief executive
office, or location of the Collateral or Debtor's books and records. Debtor
further agrees to advise Secured Party promptly, in sufficient detail, of any
substantial change relating to the type, quantity or quality of the Collateral,
or any event which would have a material adverse effect on the value of the
Collateral or on the lien and security interest granted to Secured Party herein;
and
(u) Cause its compliance with all present and future environmental laws, rules
and regulations pertaining to Debtor, any real property owned or occupied by
Debtor, or its business, or the production, disposition or use of the
Collateral, and voluntarily to clean up all hazardous materials released,
discharged, stored or discharged upon their discovery and to be fully liable to
the Secured Party for all costs and expenses incurred by the Secured Party
arising from such environmental hazards and wastes; and
(v) That Debtor shall not sell, offer to sell, assign, encumber, transfer, or
dispose of the Collateral, or any portion thereof.
6. Negative Covenants. Debtor agrees that until the Liabilities shall have
been paid in full and the Secured Party's security interest in the Collateral
terminated, Debtor will not:
(a) Store any assets with any third party against whom or with respect to which
location, the Secured Party has not filed such UCC-1 financing statements and
taken all other actions as Secured Party deems necessary to preserve its
security interest in such assets unless Debtor gives Secured Party at least
thirty (30) days prior written notice thereof; or
(b) Change its corporate name or adopt any fictitious or trade name unless
Debtor gives Secured Party at least thirty (30) days prior written notice
thereof; or
(c) Grant, assign, pledge, hypothecate, create or permit to exist, any lien on
or security interest in any Collateral to or in favor of anyone other than
Secured Party, or sell, transfer, lease, conveyor otherwise dispose of any
Collateral (except for sale of Inventory in the ordinary course of business);
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or
(d) Wind up, liquidate, or dissolve itself, reorganize, merge or consolidate
with or into, or convey, sell, assign, transfer, lease, or otherwise dispose of
(whether in one transaction or a series of transactions) all or substantially
all of it assets (whether now owned or hereafter acquired) to any Person.
As used in this agreement, the term "Person" shall mean an individual,
partnership, corporation (including, without limitation, any affiliate or
subsidiary of Debtor), business trust, joint stock company, trust,
unincorporated association, joint venture, governmental authority, or other
entity of whatever nature; or
(e) Suffer any judgment for money in excess of $10,000.00 be entered and not
discharged, stayed or appealed with a supersedeas bond within a period of thirty
(30) days; or
(f) Sell, lease, transfer or otherwise dispose of any of its now owned or
hereafter acquired assets except for Inventory disposed of in the ordinary
course of business, and sales of obsolete, worn out or unusab1e tangible
personal property which is concurrently replaced with similar personal property
at least equal in value, quality and condition to that sold, and owned by Debtor
free and clear of all liens, claims and encumbrances except the security
interest of the Secured Party; or
(g) Sell the business or substantially all of the assets of Debtor.
7. Additional Financing Statements and Documents. The Debtor shall execute and
deliver to Secured Party, concurrently with the execution of this Agreement, and
at any time or times thereafter at the reasonable request of Secured Party, all
financing statements and other documents (and pay the cost of filing and
recording the same in all public offices deemed necessary by the Secured Party)
as the Secured Party may request, in a form reasonably satisfactory to the
Secured Party, to perfect and keep perfected the security interest in the
Collateral granted by the Debtor to the Secured Party or to otherwise protect
and preserve the Collateral and the Secured Party's security interest therein.
Should the Debtor fail to do so, the Secured Party is authorized to sign any
such financing statements as Debtor's agent. The Debtor further agrees that a
carbon, photographic, photostatic or other reproduction of this Security
Agreement or of a financing statement is sufficient as a financing statement.
8. Expenditures of Secured Party to Preserve or Protect Collateral. If not
discharged or paid when due, Secured Party may (but shall not be obligated to)
discharge or pay any amounts required to be discharged or paid by Debtor under
this Agreement, including, without limitation, all taxes, liens, security
interests, encumbrances, and other claims, at any time levied or placed on the
Collateral. Secured Party may also (but shall not be obligated to) pay all costs
for insuring, maintaining and preserving the Collateral. All such expenditures
incurred or paid by Secured Party for such purposes will then bear interest at
the variable rate of 12% per annum above the prime rate in effect at Bank of
America, N.A. (the "Default Rate") from the date incurred or paid by Secured
Party to the date of repayment by Debtor. All such expenses shall automatically
become a part of the Liabilities secured hereby, and, at Secured Party's option,
will be payable on demand.
9. Appointment of Attorney-In-Fact. The Debtor hereby constitutes Secured
Party or its designee, as Debtor's attorney-in-fact, with full power, following
the occurrence of an Event of Default, to demand payment of all Accounts; to
enforce payment of all Accounts by legal proceedings or
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otherwise; to exercise all of the Debtor's rights and remedies with respect to
proceedings brought to collect on the Accounts; to sell or assign any Accounts;
to settle, adjust, compromise, extend, renew, discharge or release any Accounts;
to have access to any lock box or postal box into which any of Debtor's mail is
deposited and to receive, open and dispose of all mail addressed to Debtor; to
notify the Post Office authorities to change the address for delivery of mail
addressed to Debtor to such address as Secured Party may designate; to endorse
the name of Debtor upon any notes, acceptances, checks, drafts, money orders or
other evidence of payment or Collateral that may come into Secured Party's
possession; to sign Debtor's name on any invoice or xxxx of lading relating to
any Collateral, on draft against debtors, assignments and verifications of
Collateral, notices to debtors and claims in bankruptcy or other proceedings; to
send verifications of Collateral to any debtor; and to do all other acts and
things necessary in Secured Party's sole discretion to carry out this Agreement
and fulfill Debtor's obligations hereunder. All acts of said attorney or
designee are hereby ratified and approved, and said attorney or designee shall
not be liable for any acts of commission or omission, nor for any error of
judgment, or mistake of fact or law. This power, being coupled with an interest,
is irrevocable while any Liabilities shall remain unpaid.
10. Default and Remedies. The Liabilities shall, at the option of Secured Party
and notwithstanding any maturity to the contrary, become immediately due and
payable, without notice or demand, upon the occurrence of any of the following
events of default (an "Event of Default"):
(a) Debtor shall default in the payment, when due, of any of the Liabilities,
including, without limitation, any monthly rent payment or other sum due under
the Lease or any other sum payable by the Debtor to the Secured Party; or
(b) Debtor shall default in the due observance or performance of any other
term, covenant, condition, obligation or representation contained herein or in
the Lease or any related lease document or any other document or instrument
executed by Debtor in connection with the Liabilities; or
(c) Any statement, warranty, or representation made by the Debtor in this
Agreement or in any other agreement, document, instrument, request, report,
schedule or certificate shall prove to have been incorrect, incomplete or
misleading in any material respect on the date when made; or
(d) Filing of a petition in bankruptcy by or against Debtor, or institution of
any proceeding by Debtor for corporate reorganization, readjustment, or similar
arrangement under any insolvency statute, filing of any proceeding by or against
Debtor for appointment of a receiver, trustee or liquidator of it, or all or any
substantial part of its assets or properties, filing of a petition for
dissolution or liquidation of Debtor, or making by Debtor of an assignment for
the benefit of creditors, or filing or imposition of any tax lien against the
Collateral or property of Debtor, or Debtor admits in writing its inability to
pay its debts as they become due, or Debtor ceases doing business as a going
concern; or
(e) The Secured Party, in good faith, deems itself reasonably insecure for any
reason due to any material adverse change in the business, assets or
liabilities, financial condition, results of operations or business prospects of
Debtor; or
(f) There shall occur any uninsured damage to or loss, theft, or destruction of
any of the Collateral securing the Liabilities exceeding $10,000.00; or
(g) All or any portion of the Collateral with a book value in excess of
$10,000.00, is attached, seized, levied upon or subjected to a writ or distress
warrant, or comes within the possession of any
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receiver, trustee, custodian or assignee for the benefit of creditors; or an
application is made by the Debtor or any other person or entity for the
appointment of a receiver, trustee, or custodian for such Collateral; or
(h) A notice of lien, levy or assessment is filed of record with respect to all
or any substantial portion of Debtor's assets by the United States, or any
department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, including, without limitation, the PBGC,
or any taxes or debts owing to any of the foregoing becomes a lien or
encumbrance upon all or any portion of Debtor's assets; or
(i) Creation by the Debtor of a security interest in any Collateral now
existing or hereafter acquired by Debtor in favor of any person other than the
Secured Party; or
(j) The Debtor is enjoined, restrained, or in any way prevented by the order of
any court or any administrative or regulatory agency from conducting all or any
part of its business affairs; or
(k) Any judgment or order requiring the payment of money exceeding $10,000.00
shall be rendered against the Debtor and such judgment or order shall remain
unsatisfied or undischarged and in effect for thirty (30) consecutive days
without a stay of enforcement or execution, provided, however, this subparagraph
shall not apply to any judgment for which the Debtor is fully insured, and with
respect to which the insurer has admitted liability in writing; or
(l) This Security Agreement shall at any time after its execution and delivery
and for any reason cease (i) to create a valid and perfected first priority
security interest in the Collateral; or (ii) to be in full force and effect or
shall be declared null and void, or the validity or enforceability hereof shall
be contested by the Debtor or Debtor shall deny it has any further liability or
obligation hereunder, or the Debtor shall fail to perform any of its obligations
hereunder; or
(m) Any proceeding shall be commenced or filing made under applicable law by
any stockholder, officer or director of Debtor to dissolve or liquidate the
Debtor; any order, judgment or decree shall be entered against Debtor decreeing
its involuntary dissolution or split up; or Debtor shall otherwise dissolve or
cease to exist; or
(n) If Debtor is in default in respect of any other indebtedness for borrowed
monies of the Debtor to third parties exceeding $10,000 in amount.
In the event any Event of Default has occurred, the Secured Party may declare
the Liabilities to be forthwith due and payable, whereupon the same shall become
forthwith due and payable, notwithstanding the maturity date or dates expressed
in any evidence thereof. Debtor waives presentment and protest of any
instruments and notice thereof, notice of default and all other notices to which
Debtor might otherwise be entitled except as specifically provided herein. The
Secured Party may pursue any and all remedies available to it hereunder, and
under the Lease and all other lease documents, including, but not limited to,
the remedies available to a Secured Party under the Uniform Commercial Code, or
any other applicable law. The Secured Party may require Debtor to make the
Collateral and the records pertaining to the Collateral available to the Secured
Party at a place designated by the Secured Party which is reasonably convenient
or may take possession of the Collateral and the records pertaining thereto
without the use of any judicial process and without any prior notice thereof to
Debtor. Except as otherwise provided by law, the Secured Party may, at its
option, and in its sole discretion, sell the Collateral at public or private
sale upon such terms and
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conditions as the Secured Party may reasonably deem proper (and the Secured
Party may purchase the Collateral at any such sale) and apply the net proceeds,
after deducting all reasonable costs, expenses and attorneys' fees incurred at
any time in the collection of the Liabilities and in the protection and sale of
the Collateral, to the payment of the Liabilities. Debtor shall remain liable
for any deficiency remaining after such application. In addition to all other
sums due the Secured Party, the Debtor shall pay the Secured Party all costs and
expenses incurred by the Secured Party, including a reasonable allowance for
attorneys' fees and court costs, to obtain, liquidate and/or enforce payment of
the Collateral or the Liabilities, or in the prosecution or defense of any
action or proceeding either against the Secured Party or against Debtor
concerning any matter arising out of or connected with the Collateral, this
Agreement, or the Liabilities.
In addition to any other rights or remedies available to Secured Party hereunder
or under applicable law, after an Event of Default shall have occurred
hereunder:
(a) Secured Party shall have the right to notify all Account Debtors and
obligors on the Collateral to make payments to Secured Party whether or not
Debtor was theretofore making collections on the Collateral. Secured Party may
proceed to collect from the Accounts Debtors and obligors and apply collections
on the Liabilities (first to interest, then to principal) after first deducting
all costs, expenses and reasonable attorneys' fees incurred by Secured Party;
and,
(b) Secured Party shall have the right to take control of all proceeds of the
Collateral and to take possession of all proceeds, returned and repossessed
goods and all goods covered by documents of title, with or without legal
process, and without notice or demand; and,
(c) Secured Party may reduce its claims, notes, leases and instruments to
judgment or otherwise enforce this Security Agreement and all debts and
obligations of Debtor by any available judicial or statutory procedure.
The enumeration of the foregoing rights and remedies is not intended to be
exhaustive and the exercise of any right or remedy shall not preclude the
exercise of any other rights or remedies all of which shall be cumulative. It is
expressly agreed by Debtor that the requirements of reasonable notice shall be
met if notice is mailed to Debtor at the address of Debtor shown herein [or to
such other address that Debtor may hereafter designate to Secured Party in
writing, provided such address change notice is sent by Debtor to Secured Party
by certified mail, return receipt requested at least twenty (20) days prior to
the applicable Event of Default] not less than ten (10) days prior to the sale
or other disposition of the Collateral.
Debtor agrees to pay Secured Party interest on all costs and expenses (including
legal fees and expenses) incurred by Secured Party in connection with this
Agreement (including, without limitation, costs and expenses incurred by Secured
Party in the collection of the Liabilities and/or any other obligation or
indebtedness secured hereby, the protection and defense of the Collateral or
Secured Party's security interest therein, the sale or other disposition of the
Collateral, and all other costs and expenses, of every kind whatsoever, incurred
by Secured Party as a result of any Event of Default hereunder) from the date
such costs and expenses are paid by Secured Party to the date Debtor reimburses
Secured Party therefor, calculated at the Default Rate.
To the extent that the Liabilities are now or hereafter secured by property
other than the Collateral or by the guarantee, endorsement or property of any
other person, firm or corporation, then Secured Party shall have the right in
its sole discretion to determine which rights, security, liens, security
interests or
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remedies Secured Party shall at any time pursue, relinquish, subordinate, modify
or take any other action with respect thereto, without in any way modifying or
affecting any of them or any of Secured Party's rights hereunder.
To the extent that Debtor makes a payment or payments to Secured Party or
Secured Party receives any payment or proceeds of the Collateral for Debtor's
benefit, which payment(s) or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy act, state or federal law, common law or equitable cause, then, to
the extent of such payment(s) or proceeds received, the Liabilities or part
thereof intended to be satisfied shall be revived and shall continue in full
force and effect, as if such payment(s) or proceeds had not been received by
Secured Party.
The Secured Party's failure at any time or times hereafter to require strict
performance by the Debtor of any provision of this Security Agreement shall not
waive, affect or diminish any right of the Secured Party thereafter to demand
strict compliance and performance therewith. Any suspension or waiver by the
Secured Party of a default by the Debtor under this Security Agreement shall not
suspend, waive or affect any other default by Debtor under this Security
Agreement, whether the same is prior or subsequent thereto and whether of the
same or of a different kind or character. None of the undertakings, agreements,
warranties, covenants and representations of the Debtor contained in this
Security Agreement and no default by the Debtor hereunder shall be deemed to
have been suspended or waived by the Secured Party unless such suspension or
waiver is in writing signed by an officer of the Secured Party and directed to
the Debtor specifying such suspension or waiver.
11. Miscellaneous:
(a) Debtor agrees to indemnify, pay and hold the Secured Party and its
officers, directors, employees, agents and affiliates (collectively, the
"Indemnitees") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including, without
limitation, reasonable fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitees are designated parties
thereto) that may be imposed on, incurred by, or asserted against the
Indemnitees, in any manner relating to or arising out of this Agreement, or
other agreements or documents executed and delivered by Debtor in connection
herewith or therewith, or the Liabilities (collectively, the "Indemnified
Liabilities"); provided, however, that the Debtor shall have no obligation to an
Indemnitee hereunder with respect to Indemnified Liabilities arising from gross
negligence or willful misconduct of that Indemnitee.
(b) This Agreement, together with the Lease and related lease documents
executed in connection therewith, constitute the entire understanding and
agreement of the parties as to the matters set forth in this Agreement. No
alteration of or amendment to this Agreement shall be effective unless given in
writing and signed by the party or parties sought to be charged or bound by the
alteration or amendment.
(c) All notices required to be given under this Agreement shall be in writing
and shall be deemed to have been given when delivered personally or two (2)
business days after mailing by United States certified mail, return receipt
requested, first class mail, postage prepaid, addressed to the parties hereto at
their addresses hereinbefore set forth or to such other and different address as
Debtor or Secured
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Party may designate pursuant to a written notice sent in accordance with the
provisions hereof.
(d) Whenever possible, each provision of this Security Agreement shall be
interpreted in such a manner as to be effective and valid pursuant to applicable
law; provided, however, that if any part hereof shall be prohibited by or
invalid thereunder, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remaining provisions of this
Security Agreement.
(e) The captions and headings of the various sections used in this Agreement
are for convenience only, and are not to be construed as confining or limiting
in any way the scope or intent of the provisions hereof.
(f) This Agreement shall inure to the benefit of and be binding upon the
parties, their respective successors and assigns, except that Debtor may not
assign this Agreement, without the prior written consent of the Secured Party.
(g) ANY DISPUTE AMONG THE SECURED PARTY AND DEBTOR, ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY,
OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS AND NOT THE
CONFLICTS OF LAW PROVISIONS OF THE STATE OF ILLINOIS.
(h) EXCEPT AS PROVIDED IN SUBSECTION (i) BELOW, THE SECURED PARTY AND DEBTOR
AGREE THAT, ALL DISPUTES BETWEEN THEM ARISING OUT OF, CONNECTED WITH, RELATED
TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION
WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR
OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED IN XXXX
COUNTY, ILLINOIS. DEBTOR WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE
TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(i) DEBTOR AGREES THAT THE SECURED PARTY SHALL HAVE THE RIGHT TO PROCEED
AGAINST DEBTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE THE SECURED
PARTY TO OBTAIN A JUDGMENT AGAINST THE DEBTOR OR TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE LIABILITIES, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER ENTERED IN FAVOR OF THE SECURED PARTY. DEBTOR WAIVES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE SECURED PARTY HAS
COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH.
(j) DEBTOR AND THE SECURED PARTY EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN THE SECURED PARTY AND DEBTOR OR ANY OF ITS SUBSIDIARIES
ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY
DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(k) DEBTOR WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY KIND PRIOR TO THE
EXERCISE BY THE SECURED PARTY OF ITS RIGHTS, FROM AND AFTER THE OCCURRENCE OF AN
EVENT OF DEFAULT, TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO
REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL, OR OTHER SECURITY FOR THE
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LIABILITIES. DEBTOR WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE
SECURED PARTY IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN
POSSESSION OF, REPLEVY, ATTACH, OR LEVY UPON COLLATERAL OR OTHER SECURITY FOR
THE LIABILITIES TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
THE SECURED PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING
ORDER, PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT, THE LEASE OR ANY
OTHER DOCUMENT OR INSTRUMENT NOW OR HEREAFTER EXECUTED IN CONNECTION WITH ANY OF
THE LIABILITIES.
(l) DEBTOR REPRESENTS TO THE SECURED PARTY THAT IT HAS DISCUSSED THIS AGREEMENT
WITH ITS LAWYER.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
delivered it in Chicago, Illinois, as of the date and year first above written.
5TH AVENUE CHANNEL CORPORATION FRANKLIN CAPITAL CORPORATION,
Debtor Secured Party
By: /s/ XXXX XXXXXXXXX By:
-------------------------------- --------------------------------
Xxxx Xxxxxxxxx Xxxxx X. Xxxx
Title: VP Marketing Title: Senior Vice President & COO
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EXHIBIT B TO SECURITY AGREEMENT
List of all locations of Inventory, Equipment and other tangible personal
property of Debtor:
Chief Executive Office:
0000 XX 000xx Xxxxxx
X. Xxxxx Xxxxx, XX 00000
Globe Coast (Debtor's Studio)
0000 XX 00 Xxxxxx
Xxxxx, XX 00000
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