EXHIBIT 10.2
SECURITY AGREEMENT
This SECURITY AGREEMENT (the "Agreement"), dated as of Sept. 6, 1996, is
made by Firestone Publishing, Inc., a Delaware corporation having an office at
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Debtor"), in favor of
Dugent Publishing Corp., a Florida corporation having an office at ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Secured Party").
R E C I T A L S :
A. Pursuant to a certain Asset Purchase Agreement of even date
herewith, by and between Debtor and Secured Party (the "Asset Purchase
Agreement"), Debtor has executed a promissory note in the principal amount of
U.S. $4,000,000.00, payable to Secured Party, a copy of which is attached hereto
(the "Note"), and has agreed to secure repayment under the Note as set forth
herein.
B. Debtor is the owner of the Pledged Collateral (as hereinafter
defined).
C. This Agreement is given by Debtor in favor of the Secured Party for
its benefit to secure the payment and performance of Debtor's obligations
pursuant to the Note (the "Secured Obligations").
A G R E E M E N T :
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor and Secured Party hereby agree as follows:
Section 1. Grant of Security Interests. As collateral security for the
prompt and complete payment and performance when due of Debtor's obligations
pursuant to the Note, Debtor hereby pledges, assigns, transfers and grants to
Secured Party a continuing first priority security interest in and to all those
assets purchased by Debtor from Secured Party this date pursuant to the Asset
Purchase Agreement and the proceeds thereof and all other assets now owned or
hereafter acquired by Debtor (real, personal, tangible and intangible, cash, and
accounts receivable) and all profits therefrom and proceeds thereof, wherever
located, including all beneficial interests (the "Pledged Collateral"); provided
that, notwithstanding anything set forth herein to the contrary, the foregoing
grant of a security interest shall not include a security interest in, and the
Pledged Collateral shall not include, any contract or intangible if the granting
of a security interest therein is prohibited by law or by the terms and
provisions of the written agreement, document or instrument creating or
evidencing such contract or intangible or rights related thereto. Debtor
represents and warrants that it has no knowledge of any prohibition by law, or
by the terms and provisions of any written agreement, to the granting of this
security interest in any of the Pledged Collateral.
Section 2. Representations, Warranties and Covenants. Debtor represents,
warrants and covenants as follows:
(a) No liens. Debtor is as of the date hereof, and, as to Pledged
Collateral acquired by it from time to time after the date hereof, Debtor will
be the owner of all Pledged Collateral free from any lien or other right, title
or interest of any person or entity, and Debtor shall defend the Pledged
Collateral against all claims and demands of all persons and entities at any
time claiming any interest therein adverse to Secured Party.
(b) Other Financing Statements. So long as any of the Secured
Obligations remains unpaid and this Agreement remains in effect, Debtor shall
not execute or authorize to be filed in any public office any financing
statement (or similar statement or instrument of registration under the law of
any jurisdiction) or statements relating to the Pledged Collateral, except
financing statements filed or to be filed in respect of and covering the
security interests granted hereby by Debtor.
(c) Chief Executive Office; Records. The chief executive office of
Debtor is located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
Debtor shall not move its chief executive office, except to such new location as
Debtor may establish in accordance with the last sentence of this Section 2(c).
Other than with respect to transactions occurring in the ordinary course of
Debtor's business (to which Secured Party consents notwithstanding contrary
provisions of this Agreement), all Pledged Collateral and all books of account
and records of Debtor relating to the Pledged Collateral are, and will continue
to be, kept at such chief executive office, or at such new location for such
chief executive office as Debtor may establish in accordance with the last
sentence of this Section 2(c). Debtor shall not establish a new location for
its chief executive office nor shall it change its name until (i) it shall have
given to Secured Party not less than 45 days' prior written notice of its
intention so to do, clearly describing such new location or name (which shall be
in the continental United States of America) and providing such other
information in connection therewith as Secured Party may request, and (ii) with
respect to such new location or name, Debtor shall have taken all action
satisfactory to Secured Party to maintain the perfection and proof of the
security interest of Secured Party in the Pledged Collateral intended to be
granted hereby, including, without limitation, obtaining waivers of landlord's
or warehouseman's liens with respect to such new location.
(d) Authorization, Enforceability. Debtor has full corporate power,
authority and legal right to pledge and grant a security interest in all the
Pledged Collateral pursuant to this Agreement, and this Agreement constitutes
the legal, valid and binding obligation of Debtor, enforceable against Debtor in
accordance with its terms.
(e) No Consents, etc. No consent of any other party and no consent,
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority (other than a court in connection with the exercise
of judicial remedies by Secured Party) or regulatory body is required either (x)
for the pledge by Debtor of the Pledged Collateral pursuant to this Agreement,
or for the execution, delivery or performance of this Agreement by Debtor or
(y) for the exercise by Secured Party of the rights provided for in this
Agreement or the remedies in respect of the Pledged Collateral pursuant to this
Agreement.
Section 3. Provisions Concerning Pledged Collateral.
(a) Protection of Secured Party's Security. Debtor shall not take any
action that impairs the rights of Secured Party in the Pledged Collateral.
Debtor shall at all times keep the tangible Pledged Collateral insured in favor
of Secured Party, at the Debtor's own expense, to Secured Party's reasonable
satisfaction against fire, theft and all other risks to which the Pledged
Collateral may be subject, in such amounts (but in no event greater than the
replacement cost thereof) and with such deductibles as would be maintained by
operators of businesses similar to the business of Debtor or as Secured Party
may otherwise require. Each policy or certificate with respect to such
insurance shall be endorsed to Secured Party's satisfaction for the benefit of
Secured Party (including, without limitation, by naming Secured Party as an
additional named insured or an additional loss payee as Secured Party may
request) and such policy or certificate shall be delivered to Secured Party.
Each such policy shall state that it cannot be canceled without 30 days' prior
written notice to Secured Party. At least 30 days prior to the expiration of
any such policy of insurance, Debtor shall deliver to Secured Party an extension
or renewal policy or an insurance certificate evidencing renewal or extension of
such policy. If Debtor shall fail to insure such Pledged Collateral to Secured
Party's reasonable satisfaction or if Debtor shall fail to so endorse and
deposit, or to extend or renew, all such insurance policies or certificates with
respect thereto, Secured Party shall have the right (but shall be under no
obligation) to advance funds to procure or renew or extend such insurance and
Debtor agrees to reimburse Secured Party for all costs and expenses thereof,
with interest on all such funds from the date advanced at the highest rate then
payable under the Note. In the event of insurable loss or damage to any Pledged
Collateral, then Secured Party must use such proceeds to repair, replace or
improve damaged Pledged Collateral unless Secured Party within thirty (30) days
after the receipt of such proceeds commences the repossession of the Pledged
Collateral upon an Event of Default in accordance with the provisions of Section
5 hereof.
(b) Maintenance of Pledged Collateral. Subject to transactions in the
ordinary course of Debtor's business, Debtor shall cause the Pledged Collateral
to be maintained and preserved in the same condition, repair and working order
as when purchased by Debtor, ordinary wear and tear excepted, and to the extent
consistent with past business practice.
(c) Payment of Taxes; Claims. Debtor shall pay promptly when due all
property and other taxes, assessments and governmental charges or levies imposed
upon, and all claims (including claims for labor, materials and supplies)
against, the Pledged Collateral.
(d) Financing Statements. Debtor, at its sole cost and expense, shall
sign and deliver to Secured Party such financing and continuation statements, in
form acceptable to Secured Party, as may from time to time be reasonably
requested by Secured Party in order to continue and maintain a valid,
enforceable, first priority security interest in, the Pledged Collateral as
provided herein and the other rights, as against third parties, provided hereby.
Debtor authorizes Secured Party to file any such financing or continuation
statements without the signature of Debtor.
(e) Nothing in this Section 3 shall be deemed to prohibit (i) the sale
of inventory and the collection of receivables by Debtor in the ordinary course
of business, or (ii) the disposition and replacement of obsolete assets.
Section 4. Transfers and Other Liens. Debtor agrees that it will not,
except as otherwise expressly permitted by Secured Party (i) sell, convey,
assign or otherwise dispose of, or grant any option with respect to, any of the
Pledged Collateral or (ii) create or permit to exist any lien upon or with
respect to any of the Pledged Collateral other than the lien and security
interest granted to Secured Party under this Agreement. While this Security
Agreement is in effect, Debtor shall not declare or pay any dividend on any of
its capital stock, nor increase any compensation of employees, officers or
directors in a manner inconsistent with prior practices of Secured Party.
Section 5. Remedies.
(a) Remedies; Obtaining the Pledged Collateral Upon Event of Default.
If any Event of Default as defined in the Note shall have occurred and be
continuing, then and in every such case, Secured Party may, at any time or from
time to time during the continuance of such Event of Default:
(i) Personally, or by agents or attorneys, immediately take
possession of the Pledged Collateral or any part thereof, from Debtor or
any other person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon
Debtor's premises where any of the Pledged Collateral is located and
remove such Pledged Collateral and use in connection with such removal any
and all services, supplies, aids and other facilities of Debtor; Debtor
hereby covenants and agrees that it shall allow such actions by Secured
Party without causing a breach of the peace;
(ii) Instruct the obligor or obligors on any agreement, instrument
or other obligation constituting the Pledged Collateral to make any
payment required by the terms of such instrument or agreement directly to
Secured Party; provided, however, that in the event that any such payments
are made directly to Debtor, Debtor shall segregate all amounts received
pursuant thereto in a separate account and pay the same promptly to
Secured Party;
(iii) Sell, assign or otherwise liquidate, or direct Debtor to sell,
assign or otherwise liquidate, any or all investments made in whole or in
part with the Pledged Collateral or any part thereof, and take possession
of the proceeds of any such sale, assignment or liquidation;
(iv) Take possession of the Pledged Collateral or any part thereof,
by directing Debtor in writing to deliver the same to Secured Party at any
place or places designated by Secured Party, in which event Debtor shall
at its own expense: (a) forthwith cause the same to be moved to the place
or place so designated by Secured Party and there delivered to Secured
Party; (b) store and keep any Pledged Collateral so delivered to Secured
Party at such place or places pending further action by Secured Party as
provided in Section 5(b); and (c) while the Pledged Collateral shall be so
stored and kept, provide such guards and maintenance services as shall be
necessary to protect the same and to preserve and maintain them in good
condition.
(b) Remedies: Disposition of the Pledged Collateral.
(i) Upon the occurrence and during the continuation of an Event of
Default, the Secured Party may from time to time exercise in respect of
the Pledged Collateral, in addition to other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies of a
secured party under the Uniform Commercial Code at the time of an event of
default, and the Secured Party may also in its sole discretion, without
notice except as specified below, sell the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange,
broker's board or at any of the Secured Party's offices or elsewhere, for
cash, on credit or for future delivery, and at such price or prices and
upon such other terms as the Secured Party may deem commercially
reasonable. The Secured Party may be the purchaser of any or all of the
Pledged Collateral at any such sale and shall be entitled, for the purpose
of bidding and making settlement or payment of the purchase price for all
or any portion of the Pledged Collateral sold at such sale, to use and
apply any of the Secured Obligations owed to such person as a credit on
account the purchase price of any Pledged Collateral payable by such
person at such sale. Each purchaser at any such sale shall acquire the
property sold absolutely free from any claim or right on the part of
Debtor, and Debtor hereby waives, to the full extent permitted by law, all
rights of redemption, stay or appraisal hereafter enacted. The Secured
Party shall not be obligated to make any sale of Pledged Collateral
regardless of notice of sale having been given. The Secured Party may
adjourn any public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
Debtor hereby waives, to the fullest extent permitted by law, any claims
against the Secured Party arising by reason of the fact that the price at
which any Pledged Collateral may have been sold at such a private sale was
less than the price which might have been obtained at a public sale, even
if the Secured Party accepts the first offer received and does not offer
such Pledged Collateral to more than one offeree.
(ii) Debtor agrees that, to the extent notice of sale shall be
required by law, 10 days' notice from Secured Party of the time and place
of any public sale or of the time after which a private sale or other
intended disposition is to take place shall be commercially reasonable
notification of such matters. No notification need be given to Debtor if
it has signed, after the occurrence of an Event of Default, a statement
renouncing or modifying any right to notification of sale or other
intended disposition. In addition to the rights and remedies provided in
this Agreement, Secured Party shall have all the rights and remedies of a
secured party under the Uniform Commercial Code.
Section 6. Application of Proceeds. The proceeds of any Pledged
Collateral obtained pursuant to the exercise of any remedy set forth in Section
5 shall be applied, together with any other sums then held by Secured Party
pursuant to this Agreement, promptly by Secured Party:
First, to the payment of all costs and expenses, fees, commissions and
taxes of such sale, collection or other realization, including, without
limitation, reasonable compensation to the Secured Party and its agents and
counsel, and all expenses, liabilities and advances made or incurred by the
Secured Party in connection therewith;
Second, to the indefeasible payment in full in cash of the Secured
Obligations, ratably according to the unpaid amounts thereof, without preference
or priority of any kind among amounts so due and payable; and
Third, to Debtor, or its successors or assigns, or to whomsoever may be
lawfully entitled to receive the same or as a court of competent jurisdiction
may direct, of any surplus remaining from such proceeds.
Section 7. Modifications in Writing. No amendment, modification,
supplement, termination or waiver of or to any provision of this Agreement, nor
consent to any departure by Debtor therefrom, shall be effective unless the same
shall be writing and signed by the Secured Party. Any amendment, modification
or supplement of or to any provision of this Agreement, any waiver of any
provision of this Agreement, and any consent to any departure by Debtor from the
terms of any provision of this Agreement, shall be effective only in the
specific instance and for the specific purpose for which made given. Except
where notice is specifically required by this Agreement or the Note, no notice
to or demand on Debtor in any case shall entitle Debtor to any other or further
notice or demand in similar or other circumstances.
Section 8. Termination; Release. When all the Secured Obligations have
been indefeasibly paid in full and have been terminated, this Agreement shall
terminate. Upon termination of this Agreement in the event of payment in full
of the Secured Obligations, Secured Party shall, upon the request and at the
expense of Debtor, forthwith assign, transfer and deliver to Debtor, proper
instruments (including Uniform Commercial Code termination statements on Form
UCC-3) acknowledging the termination of this Agreement.
Section 9. Notices. Unless otherwise provided herein or in the Note, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, telecopied, telexed or sent by United
States mail, to Debtor or Secured Party, as the case may be, addressed to it at
the respective address set forth in the Note, or at such other address as shall
be designated by Debtor or Secured Party, as the case may be, in a written
notice to the other party complying as to delivery with the terms of this
Section 9. All such notices and other communications shall be deemed to have
been given when delivered in person, or received by telecopy or telex; or four
business days after deposit in the United States mail, registered or certified,
with postage prepaid and properly addressed.
Section 10. Governing Law; Terms. This Agreement shall be governed by,
and shall be construed and enforced in accordance with, the laws of the State of
Florida, without regard to principles of conflicts of laws, except to the extent
that the validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular property are governed by the laws of a
jurisdiction other than the State of Florida. Each of the parties submits to
the jurisdiction of any state court sitting in Dade County, Florida and any
federal court for the Southern District of Florida, Dade County Division, in any
action or proceeding arising out of or relating to this Agreement and agrees
that proper venue for all claims in respect of the action or proceeding shall be
in any such court. Each party also agrees not to bring any action or proceeding
arising out of or relating to this Agreement in any other Court. Each party
waives the right to a jury trial in any action or proceeding arising out of or
relating to this Agreement. Each of the parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety, or other security that might be required of any other
Party with respect thereto. Each party agrees that a final judgment in any
action or proceeding so brought shall be conclusive and may be enforced by suit
on the judgment or in any other manner provided by law or in equity.
Section 11. Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 12. Execution in Counterparts. This Agreement and any
amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such counterparts together shall constitute one and the same agreement.
Section 13. Headings. The Section headings used in this Agreement are
for convenience of reference only and shall not affect the construction of this
Agreement.
IN WITNESS WHEREOF, Debtor has caused this Agreement to be executed and
delivered under seal by its duly authorized officer as of the date first above
written.
Firestone Publishing, Inc.
as Debtor
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
Dugent Publishing Corp.
as Secured Party
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President
