SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made as of the 10th day of
July, 2003, by DCAP GROUP, INC., a corporation organized under the laws of the
State of Delaware, DCAP MANAGEMENT CORP., a corporation organized under the laws
of the State of New York, AIA-DCAP CORP., a corporation organized under the laws
of the Commonwealth of Pennsylvania, AARD-VARK AGENCY, LTD., a corporation
organized under the laws of the State of New York, XXXXX XXXXX AGENCY, INC., a
corporation organized under the laws of the State of New York, XXXXX XXXXX
COMPANIES, INC., a corporation organized under the laws of the State of
Delaware, XXXXX XXXXX ACQUISITION CORP., a corporation organized under the laws
of the State of New York, BARON CYCLE, INC., a corporation organized under the
laws of the State of New York, BLAST ACQUISITION CORP., a corporation organized
under the laws of the State of Delaware, DEALERS CHOICE AUTOMOTIVE PLANNING,
INC., a corporation organized under the laws of the State of New York, IAH,
INC., a corporation organized under the laws of the State of Delaware, and
INTANDEM CORP., a corporation organized under the laws of the State of New York
(collectively, the "Obligor") for the benefit of MANUFACTURERS AND TRADERS TRUST
COMPANY, a New York State Bank (the "Secured Party").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which
the Obligor hereby acknowledges,
FOR THE PURPOSE OF SECURING (i) all present and future indebtedness,
liabilities and other obligations of any nature whatsoever (direct or indirect,
fixed or contingent), and whether or not now contemplated, of the Obligor to
Secured Party including, without limitation, those indebtedness, liabilities and
other obligations arising pursuant to or in connection with this Agreement, that
certain Guaranty of Payment Agreement dated of even date herewith (the
"Guaranty") from the Obligor in favor of the Secured Party and/or (ii) all
present and future indebtedness, liabilities and other obligations of any nature
whatsoever (direct or indirect, fixed or contingent), and whether or not now
contemplated, under or secured by that certain Financing and Security Agreement
of even date herewith (as amended, modified, restated, substituted, extended and
renewed at any time and from time to time, the "Financing Agreement") between
Payments, Inc. and the Secured Party (all indebtedness, liabilities and other
obligations under clauses (i) and/or (ii) above collectively, the
"Obligations"),
THE OBLIGOR HEREBY assigns, pledges and grants a security interest to
Secured Party, and covenants and agrees that Secured Party shall have a
perfected and continuing security interest in, all of the following property of
the Obligor, all whether now owned or existing or hereafter acquired or created
wherever situated (collectively, the "Collateral"):
(a) All inventory, and all warranties, licenses, franchises,
documents, chattel paper and general intangibles related thereto (including,
without limitation, software), and all returned, rejected or repossessed goods;
and
(b) All accounts, contract rights, chattel paper (including,
without limitation, electronic chattel paper), instruments, payment intangibles
and other general intangibles, health-care-insurance receivables, money and
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documents, and all returned, rejected or repossessed goods, the sale or lease of
which shall have given or shall give rise to any of the foregoing; and
(c) All equipment, furniture, fixtures, and other goods together
with (i) all additions, parts, fittings, accessories, special tools, attachments
and accessions now and hereafter affixed thereto and/or used in connection
therewith, (ii) leases and chattel paper with respect thereto, (iii) all
replacements thereof and substitutions therefor and (iv) and all warranties,
licenses, franchises, and general intangibles related to the foregoing
(including, without limitation, software); and
(d) All general intangibles (including, without limitation, all
books and records, things in action, contractual rights, tax returns, goodwill,
literary rights, rights to performance, copyrights, trademarks and patents) and
commercial tort claims; and
(e) All notes, notes receivable, drafts, letters of credit,
letter-of-credit rights, supporting obligations, deposit accounts, investment
property, security, acceptances, instruments and documents; and
WITH RESPECT TO EACH AND ALL OF THE FOREGOING, all insurance policies and
insurance proceeds related to any and all of the foregoing or otherwise and all
cash and noncash proceeds thereof, and all books and records in whatever media
(paper, electronic or otherwise) recorded or stored, with respect to any or all
of the foregoing and all equipment, hardware and general intangibles necessary,
beneficial or desirable to retain, access and/or process the information
contained in those books and records, and all proceeds (cash and noncash) of the
foregoing, it being the intention of the Obligor that the Collateral shall
include all of the Obligor's personal property. All terms used herein which are
defined by the Maryland Uniform Commercial Code shall have the same meanings as
assigned to them by the Maryland Uniform Commercial Code unless and to the
extent varied by this Agreement.
The Obligor further agrees that the Secured Party shall have in respect
thereof all of the rights and remedies of a secured party under the Maryland
Uniform Commercial Code as well as those provided in this Agreement.
Notwithstanding the fact that the proceeds of the Collateral constitute a part
of the Collateral, the Obligor may not dispose of the Collateral, or any part
thereof.
1. The Obligor covenants with and warrants to Secured Party that:
(a) The Obligor will store the Collateral in appropriate containers,
in safe and secure locations, and in accordance with applicable laws, will take
all steps necessary to preserve and maintain the Collateral and its value, and
will not permit anything to be done to the Collateral which may materially
impair its value or security. Secured Party, or agents designated by Secured
Party, shall be permitted to enter the premises of the Obligor and examine,
audit and inspect the Collateral at any reasonable time and from time to time
without notice.
(b) At its expense, the Obligor will defend the title to the
Collateral (or any part thereof), and will promptly upon request by the Secured
Party execute, acknowledge and deliver or obtain any financing statement,
continuation statement, security agreement,
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assignment, instruments, acknowledgments, landlord, bailee and other third party
waivers, filings or other document as may be necessary or beneficial, in the
opinion of the Secured Party, to perfect (by control or otherwise), preserve,
provide notice of, maintain, continue, realize upon, protect and/or extend the
assignment, lien or security interest granted to the Secured Party under this
Agreement and its priority. The Obligor agrees that a copy of a fully executed
security agreement and/or financing statement shall be sufficient to satisfy for
all purposes the requirements of a financing statement as set forth in Article 9
of the applicable Uniform Commercial Code. Further, to the extent permitted by
applicable laws, the Secured Party is authorized to file, without the Obligor's
signature, one or more financing statements, amendments to financing statements,
correction statements or other notices disclosing the Secured Party's liens and
other security interests. All financing statements and notices may describe the
Secured Party's collateral as all assets or all personal property of Obligor.
The Obligor hereby ratifies and confirms the validity of any and all financing
statements filed by the Secured Party prior to the date of this Agreement.
(c) The Obligor will maintain on the goods included among the
Collateral hazard insurance with fire and extended coverage, naming Secured
Party as an additional insured and sole loss payee, in amounts, with
endorsements, from insurers and otherwise in form and substance satisfactory to
Secured Party as determined by Secured Party from time to time.
(d) The Obligor will immediately notify the Secured Party of each
change which has caused, and of each proposed change which the Obligor believes
would cause, the information contained on EXHIBIT A to this Agreement to be no
longer accurate, complete and correct
2. The Obligor hereby represents and warrants to and covenants with the
Secured Party that:
(a) The Obligor has full power and authority to execute and deliver
this Agreement and to incur and perform the obligations provided for therein,
all of which have been duly authorized by all proper and necessary action of the
appropriate governing body of the Obligor and by all necessary third parties
including, without limitation, Governmental Authorities. This Agreement
constitutes valid and legally binding obligations of the Obligor, enforceable in
accordance with their terms.
(b) There is no charter, bylaw, stock provision, partnership,
operating agreement, articles of organization, partnership agreement, or other
document pertaining to the organization, power or authority of the Obligor and
no provision of any existing agreement, mortgage, indenture, contract, law,
court or administrative order or proceeding binding on or applicable to the
Obligor or affecting its property, which would conflict with or in any way
prevent the execution, delivery or carrying out of the terms of this Agreement.
(c) The Obligor has good title to the Collateral and the Collateral
is free and clear of liens, security interests, claims, encumbrances, and
assignments, except those granted to the Secured Party and except, with respect
to the assets of Xxxxx Xxxxx Companies, Inc. only, those granted to The
Progressive Corporation.
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(d) The Secured Party has and will at all times continue to have as
security for the Obligations a valid and perfected security interest in all of
the Collateral.
(e) At the time this Agreement is executed and delivered, there
exists no default under this Agreement and no condition that with the giving or
notice or the passage of time would be a default under this Agreement.
(f) The information contained in EXHIBIT A, which is attached to and
a part of this Agreement, is accurate, complete and correct.
3. The Obligor shall be in default under this Agreement and the
Obligations if the Obligor (i) breaches any agreement, covenant and warranty
under this Agreement or any other agreement, covenant or warranty between the
Obligor and the Secured Party, (ii) is in default under any of the other
Obligations, including, without limitation, any agreement with respect thereto,
(iii) transfers to another location any of the Collateral, or makes any change
which would cause the information contained on EXHIBIT A to this Agreement to be
no longer accurate, complete and correct, (iv) transfers or assigns (including,
without limitation, transfers or assignments by merger, consolidation or
operation of law) or sells, conveys, leases, assigns, transfers or otherwise
disposes of all or any part of the Collateral, except inventory sold in the
ordinary course of business prior to an event of default, (v) permits (or if
there shall arise) any security interest, encumbrance, financing statement, lien
(including, without limitation, tax lien) or charge of any kind on the
Collateral, except for the liens of Secured Party pursuant to this Agreement and
except for the liens of The Progressive Corporation on the assets of Xxxxx Xxxxx
Companies, Inc., (vi) changes the Obligor's name, state of organization, or
entity structure, or become organized under the laws of an additional state,
(vii) liquidates, dissolves or terminates its existence, (viii) admits in
writing its inability generally to pay its debts as they mature or shall make
any assignment for the benefit of any of its creditors, (ix) is the subject of
federal or state bankruptcy, insolvency, receivership or trustee proceedings, or
(x) suffers (or if there shall occur) an "Event of Default" (as that term is
defined in the Financing Agreement or in any of the other Financing Documents).
4. Upon the occurrence of a default under this Agreement (and in addition
to all of its rights, powers and remedies under this Agreement, the Guaranty,
any other promissory notes, documents, instruments, guaranties, mortgages or
other contract with or for the benefit of the Secured Party, or securing or
evidencing payment of any indebtedness of the Obligor, at any time executed by
the Obligor and/or any other person in connection with any of the Obligations,
all as the same may be amended, modified, restated, substituted, extended and
renewed at any time and from time to time, the "Financing Documents"): The
Secured Party may, in the exercise of its sole and absolute discretion, declare
all or any part of the Obligations to be immediately due and payable. The
Secured Party shall have all of the rights and remedies of a secured party under
the Maryland Uniform Commercial Code and other applicable laws. If the sale or
other disposition of the Collateral fails to satisfy all of the Obligations, the
Obligor shall remain liable to Secured Party for any deficiency. Upon demand by
Secured Party, the Obligor shall assemble the Collateral and make it available
to Secured Party, at a place reasonably convenient for such purpose as
designated by Secured Party. The Obligor shall hold in trust for the Secured
Party all collections and proceeds of Collateral in the form received, shall not
commingle those collections or proceeds with any other assets of the Obligor and
shall deliver those collections
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and proceeds immediately to the Secured Party with any necessary endorsement.
The Secured Party or its agents may enter upon and remain on the Obligor's
premises to take possession of the Collateral, to remove it, to render it
unusable, to collect it, or to sell or otherwise dispose of it and to take any
other action permitted to be taken under this Agreement or under applicable
laws. Any proceeds of the collection, the sale or other disposition of the
Collateral will be applied by the Secured Party to the Obligations (whether then
due or not), at such time or times and in such order and manner of application
as the Secured Party may from time to time in its sole and absolute discretion
determine.
5. If the Obligor fails to take any action required to be taken by the
Obligor under this Agreement (including, without limitation, obtaining required
insurance), the Secured Party, in the exercise of its sole and absolute
discretion, may do so in the name of the Secured Party or the Obligor as the
Secured Party may elect, but at the cost and expense of the Obligor, which cost
and expense shall be immediately due and payable to the Secured Party as part of
the Obligations. In addition to all other rights and remedies provided hereunder
or as shall exist at law or in equity from time to time, the Secured Party may
(but shall be under no obligation to), without notice to the Obligor, in the
name of the Secured Party or in the name of the Obligor or otherwise, for the
use and benefit of the Secured Party, but at the cost and expense of the
Obligor, (i) following a default under this Agreement, extend, renew, demand,
collect, enforce by legal or equitable proceedings or otherwise, exchange,
surrender, compromise, give receipt for and give renewals, extensions,
discharges and releases of, any and all of the Collateral; (ii) endorse or sign
the name of the Obligor upon any items of payment, certificates of title,
instruments, financing statements, securities, powers, documents, documents of
title, or other writing relating to or part of the Collateral; and (iii)
following a default under this Agreement, take any other action necessary or
beneficial to realize upon or dispose of the Collateral. The Obligor hereby
irrevocably appoints the Secured Party as its attorney-in-fact, with power of
substitution from time to time, to take such actions as are described in this
paragraph as well as any other action which the Obligor is required to take
under this Agreement or under any of the other Financing Documents, including,
without limitation, the execution, acknowledgment and delivery of any financing
statement, continuation statement, security agreement, assignment, instruments,
filings or other document as may be necessary or beneficial, in the opinion of
the Secured Party, to perfect, preserve, provide notice of, maintain, continue,
realize upon, protect and/or extend the assignment, lien or security interest
granted to the Secured Party under this Agreement and its priority.
6. Without precluding other means for giving notice, any written notice
of the sale, disposition or other intended action by Secured Party with respect
to the Collateral given at least ten (10) days prior to such sale, disposition
or other action and sent to the mailing address set forth on EXHIBIT A attached
hereto, shall in all events constitute commercially reasonable notice to the
Obligor.
7. The Obligor agrees to pay to Secured Party as part of the Obligations
all reasonable expenses, charges, costs, taxes, and fees (including, without
limitation, reasonable attorney's fees and expenses, whether incurred prior to
the institution of any suit or other proceeding or otherwise) of any nature
whatsoever paid or incurred by or on behalf of Secured Party in connection with
the perfection, collection, maintenance, preservation, inspection,
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insuring, defense, protection, realization upon, disposition, sale or
enforcement of all or any part of the Collateral or the enforcement or
collection of the Obligations.
8. This Agreement may not be amended, modified, or changed in any respect
except by an agreement in writing signed by the Secured Party and the Obligor.
The Secured Party shall have the right at all times to enforce the provisions of
this Agreement in strict accordance with the terms hereof, notwithstanding any
conduct or custom on the part of the Secured Party in refraining from so doing
at any time or times. The failure or delay of the Secured Party at any time or
times to enforce the rights under such provisions, strictly in accordance with
the same, shall not be construed as having created a custom in any way or manner
contrary to specific provisions of this Agreement or as having in any way or
manner modified or waived the same.
9. The rights, powers and remedies provided in this Agreement are
cumulative, may be exercised concurrently or separately, may be exercised from
time to time and in such order as the Secured Party shall determine, and are in
addition to, and not exclusive of, rights, powers and remedies provided by
applicable laws, all without regard to any right of the Obligor or any other
person or entity to the marshalling of assets, which right the Obligor and any
other person or entity who may be liable (by endorsement, guaranty, indemnity or
otherwise) for all or any part of the Obligations hereby waive to the extent
permitted by applicable laws. Without limiting the generality of the foregoing,
the Secured Party may: (a) proceed against any one or more Obligors and/or the
Collateral with or without proceeding against any other Obligor or any other
person obligated under any of the Obligations; (b) proceed against the Obligor
with or without proceeding under the other Financing Documents; (c) without
reducing or impairing the obligation of the Obligor and without notice, release
or compromise with any guarantor or other person liable for all or any part of
the Obligations; and (d) without reducing or impairing the obligations of the
Obligor and without notice thereof: (i) fail to perfect the security interests
and/or other interests of the Secured Party in any or all Collateral or to
release any or all the Collateral or to accept substitute Collateral, (ii) allow
all or any Obligations to arise after the date of this Agreement, (iii) waive
any provision of this Agreement, (iv) exercise or fail to exercise rights of
set-off or other rights, (v) accept partial payments or extend from time to time
the maturity of all or any part of the Obligations, and (vi) take or fail to
take any action under this Agreement or against any one or more persons
obligated under the Obligations. The Obligor, together with any guarantor,
surety or indemnitor of all or any part of the Obligations, hereby waives and
releases all claims and defenses against the Secured Party and/or with respect
to the payment or enforcement of the Obligations and the Secured Party's rights
in the Collateral on account of any of the foregoing.
10. In case one or more provisions contained in this Agreement shall be
invalid, illegal or unenforceable in any respect under any law, the validity,
legality and enforceability of the remaining provisions contained herein shall
remain effective and binding on the parties hereto and shall not be affected or
impaired thereby.
11. This Agreement shall be binding upon and inure to the benefit of the
Obligor and Secured Party and their respective successors and assigns.
[Signatures follow on next page]
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First Signature Page to
Security Agreement from
DCAP Group, Inc. and its wholly-owned subsidiaries
in favor of
Manufacturers and Traders Trust Company
IN WITNESS WHEREOF, the Obligor has executed and delivered this Agreement
under seal as of the day and year first written above.
ATTEST: DCAP GROUP, INC.
_______________________________ By:_____________________________(Seal)
Xxxxx X. Xxxxxxxxx,
President
ATTEST: DCAP MANAGEMENT CORP.
_______________________________ By:_____________________________(Seal)
Xxxxx X. Xxxxxxxxx,
President
ATTEST: AIA-DCAP CORP.
_______________________________ By:_____________________________(Seal)
Xxxxx X. Xxxxxxxxx,
President
ATTEST: AARD-VARK AGENCY, LTD.
_______________________________ By:_____________________________(Seal)
Xxxxx X. Xxxxxxxxx,
President
[Signatures Follow on Next Page]
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Second Signature Page to
Security Agreement from
DCAP Group, Inc. and its wholly-owned subsidiaries
in favor of
Manufacturers and Traders Trust Company
ATTEST: XXXXX XXXXX AGENCY, INC.
_______________________________ By:_____________________________(Seal)
Xxxxx X. Xxxxxxxxx,
President
ATTEST: XXXXX XXXXX COMPANIES, INC.
_______________________________ By:_____________________________(Seal)
Xxxxx X. Xxxxxxxxx,
President
ATTEST: XXXXX XXXXX ACQUISITION CORP.
_______________________________ By:_____________________________(Seal)
Xxxxx X. Xxxxxxxxx,
President
ATTEST: BARON CYCLE, INC.
_______________________________ By:_____________________________(Seal)
Xxxxx X. Xxxxxxxxx,
President
[Signatures Continue on Next Page]
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Third Signature Page to
Security Agreement from
DCAP Group, Inc. and its wholly-owned subsidiaries
in favor of
Manufacturers and Traders Trust Company
ATTEST: BLAST ACQUISITION CORP.
_______________________________ By:_____________________________(Seal)
Xxxxx X. Xxxxxxxxx,
President
ATTEST: DEALERS CHOICE AUTOMOTIVE
PLANNING, INC.
_______________________________ By:_____________________________(Seal)
Xxxxx X. Xxxxxxxxx,
President
ATTEST: IAH, INC.
_______________________________ By:_____________________________(Seal)
Xxxxx X. Xxxxxxxxx,
President
ATTEST: INTANDEM CORP.
_______________________________ By:_____________________________(Seal)
Xxxxx X. Xxxxxxxxx,
President
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EXHIBIT A TO SECURITY AGREEMENT
The Obligor further represents and warrants to the Secured Party that the
information provided to the Lender on the Perfection Certificate dated on or
about the date of this Agreement provided by each Obligor to the Lender is true
and correct and is incorporated into this Agreement by reference.
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