EXHIBIT 10(c)
SECURITY AGREEMENT
This is a Security Agreement made this 16th day of December, 1996 (the
"Agreement") between Choices Entertainment Corporation, a corporation having its
principal place of business at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxxxxx ("Debtor"), and West Coast Entertainment Corporation, a corporation
having its principal place of business at 0000 Xxxxxx Xxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx ("Secured Party").
1.0 SECURITY INTEREST Debtor, for valuable consideration, receipt of
which is acknowledged, hereby grants to Secured Party a security interest in the
following types of Debtor's property: (a) inventory, to the extent now located
or hereafter located at Debtor's store which is located at Village at Newtown,
South Eagle Road, Newtown, Pennsylvania 18940 (the "Newtown Store"); (b)
accounts (excluding bank accounts), contract rights, chattel paper, documents
and instruments relating to or used in the conduct of the business of the Xxxxxx
Store; (c) goodwill, records, computer programs and rights in premises relating
to or used in the conduct of the business of the Xxxxxx Store; (d) equipment,
machinery, tools, furniture and fixtures, to the extent now located or hereafter
located at the Newtown Store; (e) other personal property of every kind relating
to or used in the conduct of the business of the Newtown Store, including
interests in and claims under policies of insurance (but excluding cash in
excess of $600 located at the Newtown Store); and all products and proceeds of
the above (collectively, the "Collateral").
2.0 OBLIGATIONS SECURED The security interest granted hereby secures
payment and performance of all debts, loans, liabilities and agreements of
Debtor to Secured Party of every kind and description, whether now existing or
hereafter arising, including, without limitation, the obligations of the Debtor
under a certain Secured Promissory Note (the "Note"), of even date herewith,
payable to the Secured Party in the original principal amount of $150,000
(collectively, the "Obligations").
3.0 DEBTOR'S REPRESENTATIONS AND WARRANTIES
Debtor represents and warrants that:
3.1 It has no place of business other than that shown on Schedule A
attached hereto and that Debtor keeps its inventory and records concerning
accounts, contract rights and other property at 000 Xxxx Xxxxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxxxxx which is its chief executive office. Debtor will
promptly notify Secured Party in writing of any change in the location of its
chief executive office or the establishment of any new place of business where
its inventory or records are kept.
3.2 Except as set forth on Schedule B hereto, Debtor is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation and is duly qualified to do business under the laws of each
state where the nature of the business done or property owned requires such
qualification. The execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action. The execution, delivery
and performance of the Note and this Agreement, the borrowing under the Note and
the use of proceeds thereof will not violate the terms of any agreement,
instrument, note, indenture, debenture or other document by which the Debtor or
its property is bound or result in or require the creation of any lien, security
interest or mortgage on the property of Debtor, except in favor of Secured
Party.
3.3 Debtor will at all times keep in a manner satisfactory to the Secured
Party accurate and complete records of Debtor's inventory and accounts, will
maintain the Collateral in good repair and working order and will keep the
Collateral insured, naming the Secured Party as a loss payee. Debtor will
operate its business in accordance with its usual and customary practice, and
shall not remove any of the Collateral from the Newtown Store except in the
ordinary course of its business and in accordance with its usual and customary
practices.
4.0 FINANCING STATEMENTS Debtor hereby agrees to execute, deliver and
pay the cost of filing any financing statement, or other notices appropriate
under applicable law, in respect of any security interest created pursuant to
this Agreement which may at any time be required or which, in the opinion of
Secured Party, may at any time be desirable. 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, Debtor shall, at its cost and expense, cause the same
to be re-recorded and/or refiled at the time and in the manner requested by
Secured Party. Debtor hereby irrevocably designates Secured Party, its agents,
representatives and designees as agents and attorneys-in-fact for Debtor to sign
such financing statements on behalf of Debtor.
5.0 DEBTOR'S RIGHTS UNTIL DEFAULT In the absence of any default
hereunder, Debtor shall have the right to possess the Collateral, manage its
property and sell and lease its inventory in the ordinary course of business.
6.0 DEFAULT Debtor shall be in default under this Agreement upon the
happening of any of the following events or conditions, without demand or notice
from Secured Party:
6.1 Failure to observe or perform any of its agreements or covenants in
this Agreement or any other agreement with the Secured Party;
6.2 Failure to pay the Note when and as due;
6.3 Failure to pay when due any other obligation to the Secured Party,
whether by maturity, acceleration or otherwise;
6.4 Any representation or warranty made by the Debtor in this Agreement or
any other agreement between the Debtor and the Secured Party shall prove to have
been materially incorrect or misleading on or as of the date made or deemed
made;
6.5 Dissolution, termination of existence, insolvency, business failure,
appointment of a receiver or custodian of any part of Debtor's property,
assignment or trust mortgage for the benefit of creditors by Debtor, the
recording or existence of any lien for unpaid taxes, 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 Debtor's accounts or other property.
7.0 SECURED PARTY'S RIGHTS UPON DEFAULT Upon default and at any time
thereafter, Secured Party, without presentment, demand, notice, protest or
advertisement of any kind, may:
7.1 Notify account debtors that the Collateral has been assigned to
Secured Party and that payments shall be made directly to Secured Party and upon
request of Secured Party, Debtor will so notify such account debtors that their
accounts must be paid to Secured Party. After notification, Debtor shall
immediately upon receipt of all checks, drafts, cash and other remittances
deliver the same in kind to the Secured Party. Secured Party shall have full
power to collect, compromise, endorse, sell or otherwise deal with the
Collateral or proceeds thereof in its own name or in the name of Debtor and
Debtor hereby irrevocably appoints the Secured Party its attorney-in-fact for
this purpose.
7.2 Make all Obligations immediately due and payable, without presentment,
demand, protest, hearing or notice of any kind and exercise the remedies of a
Secured Party afforded by the Pennsylvania Uniform Commercial Code and other
applicable law or by the terms of any agreement between Debtor and Secured
Party.
7.3 Notify Debtor to assemble the Collateral at a place designated by
Secured Party.
7.4 Take possession of the Collateral and the premises at which any
Collateral is located and sell all or part of the Collateral at a public or
private sale.
7.5 In the case of any sale of disposition of the Collateral, or the
realization of funds therefrom, the proceeds thereof shall first be applied to
the payment of the expenses of such sale, commissions, reasonable attorneys fees
and all charges paid or incurred by Secured Party pertaining to said sale or
this Agreement, including any taxes or other charges imposed by law upon the
Collateral and/or the owning, holding or transferring thereof;
secondly, to pay, satisfy and discharge the Obligations secured hereby; and,
thirdly, to pay the surplus, if any, to Debtor, provided that the time of any
application of the proceeds shall be at the sole and absolute discretion of
Secured Party. To the extent such proceeds do not satisfy the foregoing
items, Debtor hereby promises and agrees to pay any deficiency. Except for
Collateral that is perishable or is a type customarily sold in a recognized
market, Secured Party will give Debtor at least ten (10) days' written notice
of the time and place of any sale of the Collateral.
8.0 MISCELLANEOUS (a) Neither this Agreement nor any part thereof can
be changed, waived, or amended except by an instrument in writing signed by
Secured Party; and waiver on one occasion shall not operate as a waiver on any
occasion. (b) 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. (c) The Uniform Commercial Code and other
laws of Pennsylvania shall govern the construction of this Agreement.
EXECUTED as an instrument under seal by the duly authorized officers of the
parties as of the date first above written.
DEBTOR: SECURED PARTY:
CHOICES ENTERTAINMENT CORPORATION WEST COAST ENTERTAINMENT CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxxx By: /s/ Xxxxxxx Xxxxx
------------------------------ ------------------------------
Title President Xxxxxx X. Xxxxxxxxxx Title CFO
Attest: /s/ Xxxx X. Xxxxxxxxx
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Schedule A
Places of Business
Morrisville Shopping Center
Xxxx Xxxxxxx & Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxxx, XX 00000
Xxxxxxx Shopping Plaza
000 Xxxxxx Xxxxx Xxxx Xxxx
Xxxxxxxxxxxxx, XX 00000
Lower Makefield Shopping Center
00-00 Xxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Village at Xxxxxxx
Xxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Town Center
000 Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Shoppes at Foxmoor
0000 Xxxxxxxxxx Xxxxxxxxx & Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Xxxxxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Fox Run Shopping Center
000 Xxxxxxx Xxxxx
Xxxx, XX 00000
Choices Movies & Games
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Schedule B
Exceptions to Representations
