Exhibit 10.20
SECURITY AGREEMENT AND
COLLATERAL AGENCY AGREEMENT
THIS SECURITY AGREEMENT made as of the 22nd day of December, 1999, by
and among (i) Semele Group Inc., a Delaware corporation (the "Pledgor"), (ii)
Xxxx X. Xxxxx; Xxxxx X. Xxxxx; Xxxxx Xxxxx Xxxxx, Trustee, Xxxxx Xxxxxx Trust
u/i/t dated July 21, 1998; Xxxxx Xxxxx Xxxxx, Trustee, Xxxxxxx Xxxxx Trust u/i/t
dated July 21, 1998; Xxxxx Xxxxx Xxxxx, Trustee, Sydney Xxxxxx Xxxxx Trust u/i/t
dated July 21, 1998; and Xxxxx Xxxxx Xxxxx, Trustee, Xxx X. Xxxxx Trust u/i/t
dated July 21, 1998 (each a "Secured Party" and collectively the "Secured
Parties"), and (iii) Xxxx X. Xxxxx as agent for the Secured Parties (the
"Collateral Agent");
W I T N E S S E T H:
WHEREAS, pursuant to a Stock Purchase Agreement dated as of the date
hereof (the "Purchase Agreement") the Pledgor purchased from the Secured Parties
an aggregate of 2,550 shares of the Voting and Non-Voting Common Stock, $.01 par
value (the "Stock"), of Equis II Corporation, a Delaware corporation (the
"Company"), as set forth on EXHIBIT A, which are 85% of the shares of capital
stock of the Company issued and outstanding;
WHEREAS, the Pledgor paid for the Stock by delivery to the Secured
Parties of Promissory Notes of the Pledgor in the aggregate original principal
amount of $19,586,000 (the "Notes");
WHEREAS, the Stock is currently subject to a pledge previously executed
by the Secured Parties securing certain indebtedness of the Company to Fleet
Bank, N.A., totalling $19,540,000 at September 30, 1999; and
WHEREAS, the Pledgor and the Secured Parties desire to enter into this
Agreement whereby the Pledgor will secure its commitments under the Notes by a
pledge of the Stock which is junior only to the currently existing pledge and
which will become a first priority pledge when such indebtedness to Fleet Bank
has been repaid and such prior pledge has been released;
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. RIGHTS OF PARTIES HEREUNDER SUBJECT TO PRIOR RIGHTS OF FLEET BANK.
The parties to this Agreement acknowledge and agree that their respective rights
and obligations hereunder are subject to the prior and superior rights of Fleet
Bank, N.A., as pledgee of the Stock, which pledge was made pursuant to a loan
agreement among the Company, Fleet Bank and other interested parties dated July
17, 1997, as amended (the "Acquisition Credit Agreement"), which pledge includes
the right of Fleet Bank to vote the Stock after an event of default under the
Acquisition Credit Agreement.
2. PLEDGE.
In consideration of the acceptance by the Secured Parties of
the Notes and the undertakings of the Pledgor in this Agreement, the Pledgor
hereby grants to the Collateral Agent as agent for the Secured Parties a
security interest in the Stock together with all of the Pledgor's rights to
receive distributions in respect to such securities, whether in cash, securities
or other property, and whether during the continuance of or on account of the
liquidation of the issuer of such securities, and all of its other rights as a
holder of securities of such issuer, and all of its rights, title and interest
in and to any certificate, instrument or other evidence of any of the foregoing,
and together with any and all substitutions and replacements thereof, including
any securities or other instruments into which any of the foregoing may at any
time and from time to time be converted or exchanged (the "Pledged Stock"). The
parties hereto acknowledge and agree that such pledge is junior to a prior
pledge of the Stock by the Secured Parties to Fleet Bank, N.A., to secure
certain indebtedness of the Company totalling $19,540,000 at September 30, 1999,
and that such pledge will become a first priority pledge when such indebtedness
has been repaid and such prior pledge has been released. The Pledgor covenants
upon such repayment and release to promptly deliver the Certificates
representing the Pledged Stock accompanied by eight separate stock powers duly
endorsed in blank by the Pledgor to the Collateral Agent as agent for the
Secured Parties, to be held on the terms and conditions contained herein. The
Pledgor hereby appoints the Collateral Agent as agent for the Secured Parties as
its attorney in fact to cause the transfer of the Pledged Stock on the books of
the Company to the Secured Parties or their respective designees, ratably in
proportion to their respective interests as shown on Exhibit A hereto, upon the
occurrence of an "Event of Default," as such term is defined in the Notes. The
Collateral Agent as agent for the Secured Parties shall hold the Pledged Stock
as security for the purposes described herein and shall not encumber or dispose
of such property except in accordance with the provisions of this Agreement.
3. STOCK DIVIDEND OR STOCK SPLIT; LIQUIDATION, RECAPITALIZATION,
MERGER, ETC.
Any additional shares of capital stock paid upon or
distributed with respect to any of the Pledged Stock in the event of any stock
dividend or stock split declared by the Company or any issuer thereof and any
sums paid upon or with respect to any of the Pledged Stock upon the merger,
consolidation, liquidation, recapitalization, dissolution or reorganization of
the Company or any other issuer thereof shall be paid over to the Collateral
Agent as agent for the Secured Parties to be held by him as security for the
Notes; and in case any distribution of capital shall be made upon or with
respect to any of the Pledged Stock or any property shall be distributed upon or
with respect to any of the Pledged Stock pursuant to the recapitalization or
reclassification of the capital of the issuer thereof or pursuant to the
reorganization, merger or consolidation thereof, the property so distributed
shall be delivered to the Collateral Agent as agent for the Secured Parties to
be held by him as security for the Notes. All securities, sums of money and
other property paid or distributed in respect of the Pledged Stock upon any such
stock dividend, stock split, merger, consolidation, liquidation, dissolution,
reorganization, recapitalization or reclassification which are received by the
Pledgor shall, until paid or delivered
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to the Collateral Agent as agent for the Secured Parties, be held in trust for
the Secured Parties as security for the Notes.
4. WARRANTY OF TITLE.
The Pledgor warrants that it has good and marketable title to
the Pledged Stock pledged hereunder on the date hereof, subject to no pledge,
lien, security interest, charge, option, restriction or other encumbrance except
as set forth on Exhibit B hereto, and that it has power, authority and legal
right to pledge such Pledged Stock pursuant to this Agreement. The Pledgor
covenants that it will defend the Secured Parties' rights and security interest
in such Pledged Stock against the claims and demands of all persons whomsoever
except for those persons described on Exhibit B, and their successors and
assigns; and the Pledgor covenants that it will have the like title to and right
to pledge all other property hereafter pledged with the Collateral Agent as
agent for the Secured Parties hereunder and will likewise defend the Secured
Parties' rights and security interest therein.
5. DIVIDENDS AND VOTING RIGHTS.
Unless and until an Event of Default shall have occurred and
be continuing, the Pledgor shall be entitled to receive all cash dividends paid
in respect of the Pledged Stock and to vote the Pledged Stock and to give
consents, waivers and ratifications in respect of the Pledged Stock; provided,
however, that no vote shall be cast, or consent, waiver or ratification given or
action taken which would be inconsistent with or violate any provisions of this
Agreement or the Notes. All such rights of the Pledgor to receive any cash
dividends shall cease in case an Event of Default shall have occurred and be
continuing, and in that case cash dividends shall be paid over by the Pledgor to
the Collateral Agent as agent for the Secured Parties to be applied by him to
the satisfaction of the Notes, and all cash dividends received by the Pledgor
shall, until so paid to the Collateral Agent as agent for the Secured Parties,
be held in trust for the Secured Parties as security for the Notes. All such
rights of the Pledgor to vote and give consents, waivers and ratifications with
respect to the Pledged Stock shall, at the Collateral Agent`s option as
evidenced by the Collateral Agent's notifying the Pledgor of such election,
cease in case an Event of Default shall have occurred and be continuing, and in
that case the Collateral Agent as agent for the Secured Parties shall have all
such rights.
6. DISCHARGE OF OBLIGATIONS.
Upon payment and performance in full of all obligations to be
performed by the Pledgor under the Notes, the Collateral Agent as agent for the
Secured Parties shall deliver to the Pledgor all of the certificates
representing the Pledged Stock together with any stock powers held by the
Collateral Agent as agent for the Secured Parties as a result of the pledge
contained herein.
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7. DEFAULT.
Upon the occurrence of an Event of Default, the Collateral
Agent as agent for the Secured Parties shall have the rights and remedies
provided in the Uniform Commercial Code of Massachusetts, and in that connection
the Collateral Agent as agent for the Secured Parties may, upon 5 days' notice
to each member of the board of directors of the Pledgor sent by registered mail
and without liability for any diminution in price which may have occurred, sell
all of the Pledged Stock in such manner and for such price as the Collateral
Agent as agent for the Secured Parties may determine. It is agreed by the
Pledgor that such notice is reasonable. At any public sale, the Collateral Agent
as agent for the Secured Parties shall be free to purchase all or any part of
the Pledged Stock. Out of the proceeds of any sale, the Collateral Agent as
agent for the Secured Parties may retain an amount equal to the principal and
interest then due under the Notes, plus the amount of the expenses of sale,
including legal costs and reasonable attorneys' fees, and shall pay any balance
of such proceeds to the Pledgor.
8. COLLATERAL AGENT.
Each Secured Party, by executing this Agreement, hereby
appoints the Collateral Agent and the Collateral Agent hereby accepts such
appointment, as collateral agent hereunder, and each of the Secured Parties
irrevocably authorizes the Collateral Agent to act as the agent of such Secured
Party. The Pledgor may tender performance of the Notes and give any notices
required or permitted to be given hereunder to the Collateral Agent on behalf of
all of the Secured Parties and may rely on all communications from and to the
Collateral Agent as having been given or received on behalf of all of the
Secured Parties.
9. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit
of the Pledgor, the Collateral Agent and the Secured Parties and their
respective successors and assigns; provided, however, that neither the Pledgor
nor the Collateral Agent may assign this Agreement without the consent of the
other. Any purchaser, assignee or transferee of any of the Notes shall become
vested with and entitled to exercise all the powers and rights of a Secured
Party hereunder upon execution of an instrument agreeing to be bound by the
terms of this Agreement.
10. OTHER PROVISIONS.
(a) WAIVERS; RIGHTS AND REMEDIES. No delay or omission on the
part of the Secured Parties in exercising any right or remedy shall operate as a
waiver thereof or of any other right or remedy. No waiver by the Secured Parties
shall be effective unless made in writing, and a waiver on any one occasion
shall not be construed as a bar to or waiver of any right or remedy on any
future occasion. All the Secured Parties' rights and remedies shall be
cumulative and may be exercised singularly or concurrently, and nothing herein
shall be deemed to limit in any way any rights the Secured Parties might
otherwise have under any other instrument or by law, including, without limiting
the generality thereof, the right to negotiate any note or other instrument
together with any collateral specifically described herein.
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(b) ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes
the entire agreement of the parties with respect to the subject matter hereof
and may be amended only by an instrument in writing referring to this Agreement
executed by the Pledgor and the Secured Parties.
(c) GOVERNING LAW. This Agreement shall be governed by and
construed and interpreted according to the laws of the Commonwealth of
Massachusetts.
(d) NOTICES. All notices required or permitted hereunder shall
be in writing and shall be deemed to have been duly given if delivered in hand
or deposited in the United States mail, postage prepaid, or with Federal Express
or comparable overnight delivery service, addressed as follows:
(i) if to the Pledgor:
Each Member of the Board
of Directors at his address
shown on EXHIBIT B
(ii) if to the Collateral Agent:
Xxxx X. Xxxxx
c/o Equis Financial Group Limited
Partnership
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
or to such other address, or in the case of any change in the Board of
Directors, to such other name and address, as a party shall designate by notice
to the other.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
SEMELE GROUP INC.
/s/ Xxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxx, as Collateral Agent Name: Xxxx X. Xxxxxx
Title: Chief Financial Officer
/s/ Xxxx X. Xxxxx
------------------------------------
Xxxx X. Xxxxx
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/s/ Xxxxx X. Xxxxx
-------------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx
-------------------------------------------
Xxxxx Xxxxx Xxxxx, Trustee, Xxxxx
Xxxxxx Trust u/i/t dated July 21, 1998
/s/ Xxxxx X. Xxxxx
-------------------------------------------
Xxxxx Xxxxx Xxxxx, Trustee, Xxxxxxx
Xxxxx Trust u/i/t dated July 21, 1998
/s/ Xxxxx X. Xxxxx
-------------------------------------------
Xxxxx Xxxxx Xxxxx, Trustee, Sydney
Xxxxxx Xxxxx Trust u/i/t dated July 21, 1998
/s/ Xxxxx X. Xxxxx
-------------------------------------------
Xxxxx Xxxxx Xxxxx, Trustee, Xxx X.
Xxxxx Trust u/i/t dated July 21, 1998
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EXHIBIT A
NAME NUMBER OF SHARES
VOTING NON-VOTING TOTAL
Xxxx X. Xxxxx 382 1,054 1,436
Xxxxx X. Xxxxx 42 816 858
Xxxxx Xxxxx Xxxxx, Trustee, Xxxxx Xxxxxx Xxxxx x/x/x Xxxx 00 00
dated July 21, 1998
Xxxxx Xxxxx Xxxxx, Trustee, Xxxxxxx Xxxxx Xxxxx x/x/x Xxxx 00 00
dated July 21, 1998
Xxxxx Xxxxx Xxxxx, Trustee, Sydney Xxxxxx Xxxxx Trust None 64 64
u/i/t dated July 21, 1998
Xxxxx Xxxxx Xxxxx, Trustee, Xxx X. Xxxxx Xxxxx x/x/x Xxxx 00 00
dated July 21, 1998 ---- ----- -----
TOTALS 424 2,126 2,550
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EXHIBIT B
Xxxxxx X. Xxxx 0000 Xxxxx 00xx Xxxxx
0000 Xxxxxxx Xxxxx Xxxxxxxx Xxxxxx, XX 00000 (Winter)
Xxxxxxx Xxxx
Xxxxxx, XX 00000 (Summer)
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Xxxxx X. Xxxxx
Semele Group Inc.
One Xxxxxxxxxx Xxxxx, 0xx Xxxxx
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxx X. Xxxxx
Xxx Xxxxxxxxxx Xxxxx, 0xx Xxxxx
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxxxxx
Xxxxxxx, Xxx & Xxxxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
