EXHIBIT 10.2
SECURITY AGREEMENT
This Security Agreement (the "Agreement") is made as of the ___ day of
September, 1999 by and between Xxxxxxx Central Holdings, Inc., a Delaware
corporation having its principal place of business at 0000 Xxxxxx Xxxxx Xxxx,
Xxxxxxx, Xxxxxxx, 00000 for itself and on behalf of all of its subsidiaries and
the assets held thereby ("Debtor"), and Mestek, Inc., a Pennsylvania corporation
having its principal place of business at 000 Xxxxx Xxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx, 00000 ("Secured Party").
RECITALS
A. Debtor and Secured Party have previously entered into that certain
Agreement and Plan of Merger dated May 26, 1999, whereby MCS, Inc., a
wholly-owned subsidiary of Secured Party, shall be merged with and into
Debtor.
B. Debtor has, with the assent of Secured Party, entered into and consummated
a merger agreement with CareCentric Solutions, Inc., a Delaware corporation
("CareCentric"), whereby CareCentric merged with and into Debtor.
C. As evidenced by the Promissory Note of even date herewith (the "Note"),
Secured Party has loaned to Debtor the principal amount of the Promissory
Note, which shall be utilized by Debtor to finance a loan obligation
assumed in the above CareCentric merger and to provide working capital.
D. Secured Party and Debtor desire to secure to the fullest extent permissible
under law, the repayment of the indebtedness evidenced by the Note and the
full, complete, faithful and timely performance of any and all of Debtor's
obligations under and pursuant to the Note and this Agreement.
E. Debtor has agreed to grant a security interest in the Collateral (as
defined below) to Secured Party to secure certain of Debtor's obligations
to Secured Party under the Note, as provided herein.
AGREEMENT
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:
1. Security Interest. As collateral security for the prompt and complete payment
and performance when due of all the Obligations (defined below), Debtor hereby
pledges, assigns, transfers, grants and delivers to Secured Party a continuing
security interest in all of Debtor's right, title and interest in and to all of
Debtor's Accounts, Chattel Paper, Documents and Instruments, General
Intangibles, Goods, Equipment, and Inventory (as such terms are defined in
Article 9 of the Uniform Commercial Code as enacted in the State of Delaware
from time to time (the "Code")), including without limitation:
1.1 all of Debtor's accounts receivable, chattel paper, contract rights and
general intangibles ("Receivables"), and all books, records, ledgers,
print-outs, file materials and other papers relating to Receivables;
1.2 all of Debtor's inventory and stock in trade, including all work-in-process
or finished goods ("Inventory");
1.3 all of Debtor's computer equipment (including servers, desktops, and
portables), printers, monitors, scanners, data storage devices, cables, and all
other computer peripherals; all office equipment, telephone equipment and all
other fixed tangible assets of Debtor ("Equipment");
1.4 all of Debtor's patents, patent applications, trademarks, service marks,
trade names, copyrights and copyright applications, and all inventions,
inventor's notes, discoveries, trade secrets, ideas, proprietary processes and
formulae, improvements, designs and specifications (including design choices),
proprietary and trade rights, data and know-how, whether patentable or not, with
respect to the software and software products owned, developed, designed,
licensed or distributed by Debtor in its business as a software developer, and
all licenses and rights with respect to third party computer software, and any
and all claims for damages by way of past, present and future infringement of
any of the rights included above, with the right, but not the obligation, to xxx
for and collect such damages for said use or infringement of the intellectual
property rights identified above (the "Intellectual Property");
1.5 whether now owned or hereafter acquired, together with all additions,
accessions, substitutions and increases therein or thereto, and all products
thereof and all cash and noncash proceeds thereof, including without limitation
chattel paper and insurance proceeds (collectively, the "Collateral").
2. Obligations Secured. The security interest granted hereby secures all
payments and performances of Debtor under the Note, and all other debts,
liabilities and agreements of Debtor to Secured Party, whether now existing or
hereafter arising, which are reduced to writing and signed by the parties, and
which specifically state that such debts, liabilities and agreements of Debtor
are secured by the security interests granted herein (the "Obligations").
3. Debtor's Representations and Warranties. Debtor represents and warrants that:
3.1 Debtor is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and is duly qualified to do
business under the laws of any state where its business requires it to be
qualified. The execution, delivery and performance of this Agreement has been
duly authorized by all requisite corporate action of Debtor. This Agreement is
the valid and binding obligation of Debtor enforceable against Debtor in
accordance with its terms, subject to the effect of applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights and
remedies generally and general principles of equity.
3.2 The execution and delivery of this Agreement does not (i) conflict with or
violate any provision of the Certificate of Incorporation or By-laws of Debtor,
(ii) conflict with or violate any law, rule, regulation, ordinance, judgment or
decree applicable to Debtor or the Collateral, (iii) conflict with or result in
any breach of or constitute a default under, or give to others any rights of
termination or cancellation of, or accelerate the performance of any obligation
of Debtor under, any term, condition, or provision of any note, bond, mortgage,
indenture, contract, or other instrument or obligation to which Debtor is a
party or by which the Collateral is bound or affected, except as has been
consented to by the party entitled to the performance thereof.
3.3 Except for the security interest previously granted by Debtor to Silicon
Valley Bank (the "Bank") in and to certain items of the Collateral (the "Bank
Interest") which Bank Interest has been perfected and is represented in full by
that certain UCC-1 financing statement filed in Xxxx County, Georgia, which
security interest is prior to this security interest granted to Secured Party,
Debtor has all right, title and interest in and to the Collateral free and clear
of all liens, encumbrances, and other charges, and the Collateral will at all
times be the property of Debtor, and be used solely in Debtor's business. Debtor
represents and warrants that, except for the Bank Interest, the Debtor has not
granted to any party, or to any affiliate of Debtor, any security interest(s) in
the Collateral, and that the security interests granted herein shall, upon
perfection thereof, constitute a valid, perfected security interest and lien
upon the Collateral enforceable as such against Debtor.
3.4 Debtor has obtained from the Bank its consent to the grant of the security
interests referred to in Section 1, as may be required by Debtor's agreement(s)
with the Bank.
3.5 Debtor has its principal place of business at 0000 Xxxxxx Xxxxx Xxxx,
Xxxxxxx, Xxxxxxx, and has offices and business locations at which some of the
Collateral is located at the locations set forth in Exhibit A, as amended from
time to time. Debtor will notify Secured Party in writing at least forty-five
(45) days prior to any change in the location of its principal place of
business, and with such Notice, Debtor shall provide the full mailing address of
Debtor's new principal place of business.
3.6 All Collateral owned or held by Debtor on the date hereof is located at one
of the locations shown on Exhibit A. All Collateral now held or subsequently
acquired shall be kept at any one of the locations shown on Exhibit A, or such
new location as Debtor may establish providing that Debtor shall notify Secured
Party in writing thirty (30) days prior to the establishment of a new location
of the full mailing address of any new location of, or the establishment of any
new place of business, where the Collateral may be kept.
3.7 As of the date when each of the Receivables arise, Debtor shall be deemed to
have represented and warranted to Secured Party that such Receivable is, and all
records, papers and documents relating thereto (i) represent the legal, valid
and binding obligation of the account debtor evidencing indebtedness unpaid and
owed by such account debtor to Debtor except for a customary percentage of
accounts which may not be collectible, and (ii) represent and evidence true and
valid obligations, enforceable in accordance with their respective terms,
subject to the effect of applicable bankruptcy, insolvency, reorganization,
marshaling of assets or similar laws affecting creditors' rights and remedies
generally and general principles of equity.
4. Debtor's Covenants
4.1 Debtor hereby agrees to execute and deliver immediately upon the request of
Secured Party any UCC-1 financing statements, UCC-3 amendments, assignments or
continuation statements, or other documents, instruments, or other notices
prepared by Secured Party appropriate under applicable law, in respect of any
security interest created pursuant to this Agreement. In the event that any
re-recording or refiling thereof (or the filing of any statements of
continuation or assignment of any financing statement) is required to protect
and preserve such lien or security interest in the Collateral, Debtor shall, at
Secured Party's cost and expense, cause the same to be re-recorded and/or
refiled at the time and in the manner requested by Secured Party, its agents,
representatives and designees. Debtor hereby designates Secured Party, its
agents, representatives and designees as the agents and attorneys-in-fact,
coupled with an interest, for Secured Party to sign such financing statements,
and any continuations, assignments, re-recordings and/or re-filings thereof, on
behalf of Debtor.
4.2 Debtor shall at its own expense and at all times keep the Collateral insured
against fire, theft and all other risks which the Collateral may be subject, for
the full replacement value thereof; shall name Secured Party as a loss payee
under such insurance policies; and shall provide to Secured Party a certificate
of insurance evidencing such coverage. Each such policy shall state that it
cannot be cancelled without thirty (30) days' prior written notice to Secured
Party. If Debtor shall fail to insure the Collateral as required by this Section
, then Secured Party may, but shall not be required to, procure or renew or
extend such insurance and Debtor agrees to reimburse Secured Party for all costs
and expenses thereof.
4.3 Debtor will at all times keep accurate and complete records of the
Collateral, and will pay before delinquency any and all taxes, governmental
charges or assessments now or hereafter imposed on the Collateral.
4.4 Except as otherwise allowed in this Agreement or approved in advance by
Secured Party, Debtor shall refrain from (i) making, causing or permitting any
sale, conveyance, distribution or transfer of any of the Collateral other than a
sale of Inventory in the ordinary course of business in a bona fide arm's length
transaction for market value, without the express consent of Secured Party,
which consent shall not be unreasonably withheld; (ii) after the date hereof
mortgaging, pledging, subjecting to lien or otherwise encumbering any item of
the Collateral without the express written consent of Secured Party; (iii)
allowing any policies of insurance obtained with respect to the Collateral to
lapse, terminate or be reduced in scope or amount; (iv) failing to maintain the
Collateral in its present condition, ordinary wear and tear excepted; (v)
allowing any liens to be assessed against the Collateral after the date of this
Agreement as a result of the Debtor's failure to pay in a timely manner any
amounts in respect of the Collateral including all taxes with respect thereto;
or (vi) materially violating any applicable Federal, state or local laws that
affect the Collateral.
5. Debtor's Rights until Default. In the absence of the occurrence of any Event
of Default under this Agreement or in the performance or observance of the
Obligations, Debtor shall have the right, in the ordinary course of business, to
use, sell, control, collect and compromise the Collateral.
6. Default. Debtor shall be in default under this Agreement upon the happening
of any of the following events or conditions and the lapse of the applicable
cure period if any ("Event of Default").
6.1 Failure to pay when due any of the Obligations within five (5) calendar days
after receipt of written notice from Secured Party to Debtor.
6.2 Failure to perform any of the Obligations, or to pay, perform or observe any
of the terms, conditions, agreements, covenants and obligations of Debtor under
this Agreement within thirty (30) days after receipt of written notice from
Secured Party to Debtor; provided, however, if such failure is not capable of
being cured within such thirty day period, Debtor shall not take and continue to
take all commercially reasonable actions to cure such failure during such thirty
day period, and shall not fully cure such failure within sixty (60) days after
receipt of the above notice.
6.3 Debtor's dissolution, termination of existence whether by merger,
combination or otherwise, insolvency, business failure, discontinuance of
business, appointment of a receiver or custodian of any part of Debtor's
property, assignment for the benefit of creditors by Debtor, the recording or
existence of any lien for unpaid taxes other than taxes which are not yet due,
the commencement of any proceeding under any bankruptcy or insolvency laws of
any state or of the United States by or against Debtor, or service upon Secured
Party of any writ, summons, or process designed to affect any of the Collateral;
and such appointment, assignment, lien, proceeding, writ, summons or process
continues un-stayed and in effect for a period of sixty (60) consecutive days.
7. Secured Party's Rights upon Default. Upon an Event of Default and at any time
thereafter, Secured Party, without diligence, presentment, demand, protest or
notice or advertisement of any kind, and subject to the rights of the Bank, may:
7.1 Make all Obligations immediately due and payable in full.
7.2 Personally, or by its agents or attorneys, immediately take possession of
the Collateral or any part thereof, from Debtor or any other person who then has
possession of the Collateral or any part thereof, and for that purpose may enter
upon Debtor's premises where any of the Collateral is located and remove such
Collateral and use in connection with such removal any and all services,
supplies, aids and other facilities of Debtor.
7.3 Take possession of the 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 places so designated by
Secured Party and there delivered to Secured Party; (b) store and keep any
Collateral so delivered to Secured Party at such place or places pending further
action by Secured Party as provided in Section 7.4; and (c) provide guards and
maintenance services as shall be necessary to protect and preserve the
Collateral.
7.4 Sell the 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 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 Secured Party may deem commercially
reasonable. Notice of any sale shall be given to Debtor as set forth in the
applicable statute before the time of any intended public sale, or as set forth
in the applicable statute before the time at which any private sale which may be
made, or at any time thereafter, which Debtor hereby agrees shall constitute
reasonable notice of such sale. The Secured Party may be the purchaser of any or
all of the 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 Collateral sold at such sale, to use and apply any of the
Obligations as a credit on account of the purchase price of any Collateral
payable 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 fullest extent permitted by law, all rights of redemption,
stay or appraisal hereafter enacted. 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 Collateral may have been sold at such private
sale was less than the price which might have been obtained at a public sale.
7.5 Exercise the remedies of a secured party afforded by the Uniform Commercial
Code as enacted in the Commonwealth of Massachusetts and other applicable law or
by the terms of any agreement between Debtor and Secured Party.
7.6 Secured Party shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred therein or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of Secured Party hereunder, including, without limitation, reasonable
attorneys' fees and disbursements, to the payment in whole or in part of the
Obligations, and if the Obligations then currently due are fully paid, then any
surplus amounts shall be applied to payment of any other amounts required by
applicable law (including without limitation 9-504(1)(c) of the Code) and then
any remaining amounts shall be paid by Secured Party to Debtor. Debtor shall be
liable to Secured Party for any deficiency.
7.7 The rights and remedies of Secured Party herein provided are cumulative, may
be exercised singly or concurrently, and are not exclusive of any rights or
remedies provided by law.
8. Debtor's Obligation to Pay Fees and Expenses of Secured Party. Debtor shall
pay to Secured Party on demand any and all out-of-pocket expenses (including,
but not limited to, a collection charge on all accounts collected, all
reasonable attorneys' fees and expenses, and all other expenses of like or
unlike nature) incurred or paid by the Secured Party to obtain or enforce
payment of any of the Obligations, or in the prosecution or defense of any
action or concerning any matter growing out of or connected with the subject
matter of this Agreement, the Obligations, the Collateral or any of Secured
Party's rights or interests therein or thereto. All such expenses may be added
to the principal amount of any indebtedness owed by Debtor to Secured Party and
shall constitute part of the Obligations secured hereby.
9. Power of Attorney. Effective only upon the occurrence and during the
continuance of an Event of Default, Debtor hereby irrevocably appoints Secured
Party (and any officers and employees of Secured Party as it may designate) as
Debtor's true and lawful attorney to: (a) send requests for verification of
Receivables or notify account debtors of Secured Party's security interest in
the Receivables, (b) endorse Debtor's name on any checks or other forms of
payment or security that may come into the possession of Secured Party, (c)
make, settle, and adjust all claims with respect to the Receivables for amounts
and upon terms which Secured Party deems commercially reasonable, (d) to
transfer the Intellectual Property into the name of Secured Party or a third
party to the extent permitted under this Agreement or under the Code. The
appointment of Secured Party as Debtor's attorney in fact, and each and every
one of Secured Party's rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully repaid and performed.
10. Notices. All notices given hereunder shall be in writing and shall be deemed
delivered when served personally, transmitted to the facsimile number set forth
below, or on the second business day after being deposited in the United States
mail, certified or registered mail, postage prepaid, addressed as follows:
If to Secured Party: Mestek, Inc.
000 Xxxxx Xxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx
Fax: (000) 000-0000
With copies to: Mestek, Inc.
000 Xxxxx Xxx Xx.
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
If to Debtor: Xxxxxxx Central Holdings, Inc.
0000 Xxxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. X'Xxxxxxx
Fax: (000) 000-0000
With copies to: Xxxxxxx Central Holdings, Inc.
0000 Xxxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
11. Miscellaneous. This Agreement constitutes the entire agreement between the
parties regarding the subject matter hereof and supersedes all prior agreements,
understandings and negotiations. This Agreement or any part hereof may not be
changed, waived, or amended except by an instrument in writing signed by Debtor
and Secured Party. No waiver by Secured Party of any right or remedy provided
hereunder shall be valid unless made in writing and signed by an authorized
representative of Secured Party. Any waiver or forbearance by Secured Party of
any right or remedy provided hereunder on any one occasion shall not operate as
a waiver or promise of forbearance of such right or remedy on any other
occasion. The use of the singular number shall be held to include the plural
when the context requires. This Agreement shall be binding upon and inure to the
benefit of each corporate party hereto, its successors and assigns. Any notice
required or permitted hereunder shall be in writing and shall be duly given to
any party if hand delivered or if mailed first class postage prepaid to the
address set forth above or to such other address as may be specified by notice
in writing. The substantive and procedural laws of the State of Delaware,
excluding its principles of conflict of laws, shall govern the construction and
enforceability of this Agreement.
[Signatures on next page]
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement as an instrument under seal by the duly authorized officers of the
parties as of the date first above written.
ATTEST: XXXXXXX CENTRAL HOLDINGS, INC.
By:_________________________________
Xxxxxxx X. X'Xxxxxxx,
Chairman
ATTEST: MESTEK, INC.
By:__________________________________
Xxxxxxx X. Xxxx,
Senior Vice President - Finance
EXHIBIT A
1. Debtor's locations at which the Collateral is located.
Address City State Zip
0000 Xxxxxx Xxxxx Xxxx Xxxxxxx XX 00000
0000 Xxxxxxx Xxxxxx Xxxxxxx XX 00000
0000 Xxxx Xxxx Xx., X. 000 Xxxxxxxxxxx XX 00000
0000 XX 00xx Xxx. Xxxxxxx Xxxxx XX 00000
00000 Xxxxx Xxxx. Xxxxxxxxxx Xxxxx XX 00000
000 Xxxxxx Xx., X. 000 Xxxxxx XX 00000
0000 Xxxxxxxx Xx., X. 000 Xxxxxxxxxxxx XX 00000
000 Xxxxx Xxxxxxx 00 Xxxx Xxxxxxxxx XX 00000
0 Xxxxxxxxx Xxxxx Xxxxxx Xxxx., X. 000 Xxxxxxxxx XX 00000
00000 Xxxxxxx Xxxxxx Xx. Xxxxxx XX 00000
0000 Xxxxx Xxxxxx Xxxxx Xx. Xxxxxxxxxx XX 00000
