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Exhibit 10.51
SECURITY AGREEMENT
(Subsidiary)
In consideration of financial accommodations (arising from any
guarantee, loan, advance, letter of credit, acceptance and/or other credit
transactions) given or to be given or to be continued to the undersigned (the
"Debtor") or to any other party(ies) at the request, or for the benefit, or upon
the undertaking, of the Debtor by EXCEL BANK, N.A., its successors or assigns
(together with its affiliates and subsidiaries, herein called the "Bank"), the
Debtor hereby agrees with the Bank that, whenever the Debtor shall be at any
time or times directly or contingently indebted, liable or obligated to the Bank
in any manner whatsoever, the Bank shall have the following rights and the
Debtor shall have the following obligations:
1. As security for the due and punctual payment of any and all of the
present and future Obligations of the Debtor (as defined in Section 2 below),
the Debtor hereby assigns, mortgages, pledges, hypothecates, transfers, sets
over and grants to the Bank a first lien on and security interest in (a) all of
the Collateral (as defined in Section 3 below), whether now or hereafter
existing or acquired, and (b) all present and future products and proceeds of
the Collateral.
2. As used herein, the term "Obligations" means all indebtedness,
liabilities or obligations, absolute or contingent, joint, several or
independent, of the Debtor now or hereafter existing, due or to become due to,
or held or to be held by, the Bank for its own account or as agent for another
or others, whether created directly or acquired by assignment or otherwise and
howsoever evidenced.
3. As used herein, the term "Collateral" means the property described
below together with the property described in Section 4 below:
All Personal Property. All of the personal property and fixtures of the
Debtor wherever located and whether now owned or in existence or hereafter
acquired or created, of every kind and description, tangible or intangible,
including without limitation all inventory, goods, equipment, farm products,
instruments, documents, chattel paper, accounts, contract rights and general
intangibles, such terms having the meaning ascribed by the Uniform
Commercial Code.
The Collateral shall include, without limitation:
a. all collateral securing the foregoing, and all
guarantees and any other instruments, agreements or documents now or
hereafter in existence relating to the foregoing (but in each case only to
the extent representing the right to payment); and
b. all replacements, substitutions and renewals for or of
the foregoing and all proceeds and products of the foregoing, including
proceeds of insurance thereon;
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In the event that (i) in addition to this Security Agreement the Debtor is a
party to one or more other security, pledge or similar agreements providing for
a security interest in personal property in favor of the Bank (collectively the
"Other Collateral Agreements"), and (ii) the collateral described in this
Agreement and the Other Collateral Agreements is not the same, then, in such
event, this Agreement and the Other Collateral Agreements shall be read together
as one agreement such that the Obligations shall be deemed secured by the
collateral described in each of such agreements. Notwithstanding the foregoing,
Collateral shall not include any particular personal property of Debtor to the
extent that the granting of a security interest in such personal property
requires third party consent which has not been obtained; provided that Debtor
agrees to use reasonable efforts to obtain such consent at the request of the
Bank..
4. Any and all deposits or other sums at anytime credited by or due from
the Bank to the Debtor; and any and all monies, securities and other property of
the Debtor, and the proceeds thereof now or hereafter held or received by or in
transit to the Bank from or for the Debtor, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, shall at all times constitute
security for any and all Obligations.
The Debtor hereby grants to the Bank, a lien, security interest and right of
setoff as security for all liabilities and obligations to the Bank, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property of the Debtor, now or hereafter in the possession,
custody, safekeeping or control of the Bank or any entity under the control of
the Bank, or in transit to any of them. At any time, Bank may set off the same
or any part thereof and apply the same to any liability or obligation of the
Debtor regardless of the adequacy of any other collateral securing the
Obligations. ANY AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS,
PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS
OR OTHER PROPERTY OF THE DEBTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED BY THE DEBTOR.
5. The Debtor assumes all liability and responsibility in connection with
all Collateral acquired by Debtor; and the obligation of the Debtor to pay all
Obligations shall in no way be affected or diminished by reason of the fact that
any such Collateral may be lost, destroyed or stolen.
6. As long as this Agreement shall remain in effect, the Debtor agrees:
(a) that after an Event of Default, if the Bank so demands
in writing at any time (i) all proceeds of the Collateral shall be delivered
to the Bank promptly upon their receipt in a form satisfactory to the Bank,
and (ii) all chattel paper, instruments and documents pertaining to the
Collateral shall be delivered to the Bank at the time and place and in the
manner in which specified in the Bank's demand;
(b) in order to enable the Bank to comply with the law of
any jurisdiction,
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including state, federal and foreign, applicable to any security interest
granted hereby or to the Collateral, to execute and deliver upon request, in
form acceptable to the Bank, any Financing Statement, notice, statement,
instrument, document, agreement or other paper and/or to perform any act
requested by the Bank which may be necessary to create, perfect, preserve,
validate or otherwise protect such security interest or to enable the Bank
to exercise and enforce the Bank's rights hereunder or with respect to such
security interest;
(c) promptly to pay any filing fees or other costs in
connection with (i) the filing or recordation of such Financing Statements
or any other papers described above and (ii) such searches of the public
records as the Bank in its sole discretion shall require;
(d) that the Bank is authorized to file or record any such
Financing Statements or other papers without the signature of the Debtor
if permitted by applicable law;
(e) the Bank may file a photographic or other reproduction
of this Agreement in lieu of a Financing Statement in any filing office
where it is permissible to do so;
(f) except for the security interest granted hereby or
otherwise existing on the date hereof or permitted under that certain letter
agreement dated as of September 20, 2000 between The Princeton Review, Inc,
and the Bank, or otherwise agreed to by the Bank in writing, the Debtor
shall keep the Collateral and proceeds and products thereof free and clear
of any security interest, liens or encumbrances of any kind, the Debtor
shall promptly pay, when due, all taxes and transportation, storage and
warehousing charges and fees affecting or arising out of the Collateral and
shall defend the Collateral against all claims and demands of all persons at
any time claiming the same or any interest therein adverse to the Bank;
(g) at all times to keep all insurable Collateral insured
at the expense of the Debtor of the kind and in the amounts that it is
common practice to insure such collateral against loss by fire, theft and
any other risk to which the Collateral may be subject; and if the Bank
requests, all policies shall be endorsed in favor of the Bank and shall be
deposited with the Bank; and in any event, such policies will provide that
each insurer will give the Bank not less than 30 days notice in writing
prior to the exercise of any right of cancellation; in the event the Debtor
fails to maintain any insurance, the Bank may (but shall not be obligated
to) place such insurance and pay the premium therefor, in which event the
Debtor will pay the Bank such premium with interest; the Bank may apply any
proceeds of such insurance which may be received by it toward payment of the
Obligations, whether or not due, in such order of application as the Bank
may determine;
(h) that the Bank's duty with respect to the Collateral
shall be solely to use reasonable care in the custody and preservation of
collateral in its possession; the Bank shall not be obligated to take any
steps necessary to preserve any rights in any of the Collateral against
prior parties, and the Debtor hereby agrees to take such steps; the Debtor
shall pay to
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the Bank all costs and expenses, including filing and reasonable attorney's
fees, incurred by the Bank in connection with the custody, care,
preservation or collection of the Collateral; the Bank may, but is not
obligated to, exercise any and all rights of conversion or exchange or
similar rights, privileges and options relating to the Collateral; the Bank
shall have no obligation to sell or otherwise realize upon any of the
Collateral as herein authorized and shall not be responsible for any failure
to do so or for any delay in so doing;
(i) to provide the Bank with such information as the Bank
may from time to time request with respect to the location of the Collateral
and any of its places of business;
(j) that the Bank will be notified promptly in writing of
any change in any office as set forth below;
(k) that the Debtor will permit the Bank, by its officers
and agents, to have access to and examine at all reasonable times, upon
reasonable notice, the properties, minute books and other corporate records,
and books of account and financial records of the Debtor;
(l) that the Debtor will promptly notify the Bank upon the
occurrence of any default, as provided in this Agreement, of which the
Debtor has knowledge.
(m) that the Debtor will not sell, transfer, lease or
otherwise dispose of any of the Collateral or any interest therein, or offer
to do so or permit anything to be done to impair the value of the Collateral
or the security interest granted to the Bank, except in the ordinary course
of business or with the written consent of the Bank.
(n) HEREBY WITH THE BANK TO MUTUALLY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT
OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
SECURITY AGREEMENT ANY OBLIGATION SECURED HEREBY OR ANY OTHER AGREEMENT IN
CONNECTION HEREWITH, OR ANY OTHER DOCUMENTS CONTEMPLATED TO BE EXECUTED IN
CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES
A MATERIAL INDUCEMENT FOR THE BANK TO MAKE LOANS FROM TIME TO TIME.
7. (a) Upon the occurrence of an Event of Default as defined in
Section 8 hereof, the Debtor agrees as follows: (i) the Debtor will not,
without first obtaining the written consent of the Bank, renew or extend the
time of payment of any Account; (ii) the Debtor will promptly notify the
Bank in writing of any compromise, settlement or adjustment with respect to
an Account and will forthwith account therefor to the Bank in cash for the
amount thereof without demand or notice; (iii) the Debtor will stamp, in
form and manner satisfactory to the Bank, its accounts receivable ledger and
other books and records pertaining to the Accounts, with an appropriate
reference to the security interest of the Bank in the
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Accounts; (iv) upon request, the Debtor will furnish the Bank original or
other papers relating to the performance of services which created any
Account; (v) the Debtor may collect the Accounts, subject to the discretion
and control of the Bank, but the Bank may, without cause or notice, curtail
or terminate such authority at any time; (vi) the proceeds of the Accounts,
when collected by the Debtor, whether consisting of cash, checks, notes,
drafts, money orders, commercial paper of any kind whatsoever, or other
documents, received in payment of the Accounts shall be promptly remitted by
the Debtor to the Bank, in precisely the form received, except for
endorsement by the Debtor when required; (vii) such proceeds until remitted
to the Bank, as aforesaid, shall be held in trust by the Debtor for, and as
the property of, the Bank and shall not be commingled with other funds,
money or property; (viii) proceeds of the Accounts will be received by the
Bank subject to final collection and receipt of proceeds in cash or by
unconditional credit to and acceptance by the Bank; (ix) the Bank shall
apply in its absolute discretion all collections received by it on the
Accounts, toward the payment of any of the Obligations whether due or not
due; (x) the Debtor will promptly notify the Bank in writing of the return
or rejection of any merchandise represented by the Accounts and the Debtor
shall forthwith account therefor to the Bank in cash without demand or
notice and until such payment has been received by the Bank, the Debtor will
receive and hold all such merchandise separate and apart, in trust for and
subject to the security interest in favor of the Bank; and (xi) the Bank is
authorized to sell, for the Debtor's account and sole risk, all or any part
of such merchandise in the manner and under the terms and conditions
hereinafter set forth.
(b) The Debtor represents and warrants to the Bank that
the Debtor is the sole owner of the Accounts and no one has or claims to
have an interest of any kind therein or thereto; each of the debtors named
in every such Account is indebted to the Debtor in the amount and on the
terms indicated in the invoice and schedule of Accounts; each Account is
bona fide and arises out of the performance of labor or services or the sale
and delivery or lease of merchandise or both; and none of the Accounts is
now, nor will at any time in the future become, contingent upon the
fulfillment of any contract or conditions whatsoever, nor subject to any
defense, offset or counterclaim.
(c) The Debtor will maintain accurate and complete records
of the Accounts and will make the same available to the Bank at any time
upon two days' notice. The Bank is entitled, at any time after an Event of
Default or after an event which with the giving of notice or lapse of time
or both would constitute an Event of Default, to notify the account debtors
of the Debtor to make payment upon the Accounts directly to the Bank.
8. Upon the occurrence of an event of default under the Obligations, or a
breach of any covenants or agreements contained in any promissory note,
guarantee or agreement relating thereto (an "Event of Default"), (a) all
Obligations shall become at once due and payable, without notice, presentment,
demand for payment or protest, which are hereby expressly waived; (b) the Bank
is authorized to take possession of the Collateral and, for that purpose may
enter, with the aid and assistance of any person or persons, any premises where
the Collateral, or any part thereof is, or may be, placed and remove same; (c)
the Bank may proceed to apply to the
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Obligations, any and all deposits or other sums described in Section 4 hereof;
(d) the Bank may require the Debtor to assemble the Collateral and to make it
available to the Bank at a place designated by the Bank which is reasonably
convenient to the Bank and the Debtor; (e) the Bank shall have the right from
time to time to sell, resell, assign, transfer and deliver all or any part of
the Collateral, at any broker's board or exchange, or at public or private sale
or otherwise, at the option of the Bank, for cash or on credit for future
delivery, in such parcel or parcels and at such time or times and at such place
or places, and upon such terms and conditions as the Bank may deem proper, and
in connection therewith may grant options and may impose reasonable conditions
such as requiring any purchaser to represent that any stock constituting part of
the Collateral is being purchased for investment purposes only, all without
(except as shall be required by applicable statute and cannot be waived)
advertisement or demand upon the Debtor or right of redemption to the Debtor,
which are hereby expressly waived: unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Bank will give the Debtor reasonable notice of the time
and place of any such public sale or of the time after which any private sale or
any other intended disposition thereof is to be made and Debtor agrees that five
(5) days prior written notice shall be deemed reasonable notice; (f) upon each
such sale, the Bank may, unless prohibited by applicable statute which cannot be
waived, purchase all or any part of the Collateral being sold, free from and
discharged of all trusts, claims, rights of redemption and equities of the
Debtor, which are hereby waived and released; (g) the Bank shall, upon mailing
notice to the Debtor that it so elects, have from the date of such mailing the
right from time to time to vote any shares of stock securing any of the
Obligations; provided, however, the Bank at any time, before or after the
occurrence of any Event of Default, may, but shall not be obligated to, transfer
into or out of its own name or that of its nominee all or any of the Collateral
which is instruments, stocks, bonds, and other securities, and the Bank or its
nominee may demand, xxx for, collect, receive and hold as like Collateral any or
all interest, dividends and income thereon and if any securities are held in the
name of the Bank or its nominee, the Bank may, after the occurrence of any such
events, exercise all voting and other rights pertaining thereto as if the Bank
were the absolute owner thereof; but the Bank shall not be obligated to demand
payment of, protest, or take any steps necessary to preserve any rights in any
such Collateral against prior parties, or take any action whatsoever in regard
to any such Collateral, all of which the Debtor assumes and agrees to do.
Without limiting the generality of the foregoing, the Bank shall not be
obligated to take any action in connection with any conversion, call,
redemption, retirement or any other event relating to any of such Collateral,
unless the Debtor gives written notice to the Bank that such action shall be
taken not more than thirty (30) days prior to the time such action may first be
taken and not less than ten (10) days prior to the expiration of the time during
which such action may be taken; (h) the Bank's obligations, if any, to give
additional (or to continue) financial accommodations of any kind to the Debtor
shall immediately terminate; and (i) in addition to the rights and remedies
given to the Bank hereunder or otherwise, the Bank shall have all of the rights
and remedies of a secured party under the Uniform Commercial Code of the State
of New York.
9. In the case of each such sale or of any proceedings to collect any of the
Obligations, the Debtor shall pay all costs and expenses of every kind for
collection, sale or delivery, including
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reasonable attorneys fees, and after deducting such costs and expenses from the
proceeds of sale or collection, the Bank may apply any residue to pay any of the
Obligations and the Debtor will continue to be liable to the Bank for any
deficiency with interest.
10. The Bank may, but is not obligated to, (a) demand, xxx for, collect or
receive any money or property at any time due, payable or receivable on account
of or in exchange for any obligations securing any of the Obligations; (b)
compromise and settle with any person liable on such obligation, and/or (c)
extend the time of payment of or otherwise change the terms thereof, as to any
party liable thereon; all without incurring responsibility to the undersigned or
affecting any of the Obligations.
11. In order to effectuate the terms and provisions hereof, the Debtor
hereof designates and appoints the Bank and its designees or agents, after an
Event of Default, as attorney-in-fact of the Debtor, irrevocably and with power
of substitution, with authority to receive, open and dispose of all mail
addressed to the Debtor, to notify the Post Office authorities to change the
address for delivery of mail addressed to the Debtor to such address as the Bank
may designate; to endorse the name of the Debtor on any notes, acceptances,
checks, drafts, money orders, instruments or other evidence of payment or
proceeds of the Collateral that may come into the Bank's possession to sign the
name of the Debtor on any invoices, documents, drafts against and notices (which
also may direct among other things that payment be made directly to the Bank) to
Account debtors or obligors of the Debtor, assignments and requests for
verification of Accounts; to execute proofs of claim and loss; to execute any
endorsements, assignments, or other instruments of conveyance or transfer, to
adjust and compromise any claims under insurance policies; to execute releases;
and to do all other acts and things necessary and advisable in the sole
discretion of the Bank to carry out and enforce this Agreement. 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 of omission, nor or any
error of judgment or mistake of fact or law. This power of attorney being
coupled with an interest is irrevocable while any of the Obligations shall
remain unpaid.
12. All options, powers and rights granted to the Bank hereunder or under
any promissory note, instrument, document or other writing delivered to the Bank
shall be cumulative and shall be in addition to any other options, powers or
rights which the Bank may now or hereafter have as a secured party under the
Uniform Commercial Code of the State of New York or under any other applicable
law or otherwise.
13. No delay on the part of the Bank in exercising any of its options,
powers, or rights, or partial or single exercise thereof, shall constitute a
waiver thereof. Neither this Agreement nor any provision hereof may be modified,
changed, waived, discharged or terminated orally, but only by an instrument in
writing, signed by the party against whom enforcement of the modification,
change, waiver, discharge or termination is sought.
14. Notice of acceptance of this Agreement by the Bank is hereby waived.
This Agreement shall be immediately binding upon the Debtor and its successors
and assigns,
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whether or not the Bank signs this Agreement.
15. It is the intention of the parties (a) that this Agreement shall
constitute a continuing agreement applying to any and all future, as well as
existing transactions between the Debtor and the Bank; and (b) that the security
interest provided for herein shall attach to after-acquired as well as existing
Collateral, and the Obligations covered by this Agreement shall include future
advances and other value, as well as existing advances and other value, whether
or not similar to prior or existing advances or other value, and whether or not
the advances or value are or shall be given pursuant to commitment, all to the
maximum extent permitted by the Uniform Commercial Code of the State of New
York.
16. Unless the context otherwise requires, all terms used herein which are
defined in the Uniform Commercial Code of the State of New York shall have the
meanings therein stated.
17. If this Agreement is signed by two or more parties as Debtors, they
shall be jointly and severally liable hereunder and the term "Debtor" wherever
used in this Agreement shall mean the parties who have signed this Agreement and
each of them.
18. Mailing Address of Debtor. For the purpose of Section 9.402(1) of the
Uniform Commercial Code, the address of the Debtor specified below under the
caption "Chief Executive Office" (or "Major Executive Office" address whenever
the Chief Executive Office is located outside of the United States) may be
designated as the Debtor's mailing address.
19. This Agreement shall be construed in accordance with and be governed by
the law of the State of New York.
20. Upon the indefeasible payment in full of all Obligations, if request to
do so by the Debtor, the security interest granted hereby shall be terminated
and the Bank shall, at Debtor's request, execute and deliver to Debtor such
documents as Debtor shall reasonably request.
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IN WITNESS WHEREOF, the Debtor has executed this Agreement or has
caused these presents to be executed and delivered by its proper corporate
officer or officers and caused its proper corporate seal to be hereto affixed,
this 27th day of October, 2000.
By:_______________________________________________
Name: Xxxxxxx Xxxxxx
Title: Treasurer and Chief Financial Officer
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the 27th day of October in the year 2000 before me, the undersigned, a Notary
Public in and for said State, personally appeared Xxxxxxx Xxxxxx, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacity, and that by his signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.
_________________________________
Notary Public
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