1
Exhibit 23.3
SECURITY AGREEMENT
FOR VALUE RECEIVED, and to induce the persons whose names appear on the list of
Secured Parties appended hereto as EXHIBIT A which may be supplemented from time
to time (hereinafter collectively referred to as "Secured Parties") to consent
to the transactions set forth in the Stock Purchase Agreement (the "Stock
Purchase Agreement") dated as of the date hereof, between Action Industries,
Inc., a Pennsylvania corporation having an office at 000 Xxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxxx 00000 (hereinafter referred to as "Debtor") and General Vision
Services, Inc. a Delaware corporation with offices at 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (hereinafter referred to as "GVS"), such persons having
loaned to Debtor up to an aggregate of Four Million ($4,000,000) Dollars which
loan is evidenced by a series of 10% convertible subordinated promissory notes
issued by Debtor to Secured Parties as set forth on EXHIBIT A, Debtor, GVS and
X. Xxxxxxx Securities, LLC as Agent for the Secured Parties, hereby agree that
Secured Parties shall have the rights, remedies and benefits hereinafter set
forth.
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
(i) "Collateral" shall mean the GVS Shares and all other assets belonging
to Debtor, together with all products, proceeds, additions and substitutions
thereto, but excluding all after acquired property, proceeds of income tax
refunds proceeds of the sales of any debt or equity securities.
(ii) "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 5 of the Notes.
(iii) "Financing Agreements" shall mean this Agreement, all current and
future related agreements, documents and instruments, as now existing and as
hereafter amended, modified or supplemented, and the Notes.
(iv) "GVS Note" shall mean the note given by Debtor to GVS as partial
consideration for the purchase of the GVS Shares.
(v) "GVS Shares" shall mean all of the 26,800,000 shares of GVS common
stock purchased by Debtor pursuant to the Stock Purchase Agreement and all
dividends thereon, including but not limited to Stock dividends, and shares
resulting from stock splits thereof.
(vi) "Notes" shall mean the 10% convertible subordinated promissory notes
issued by Debtor to Secured Parties as set forth on EXHIBIT A.
(vii) "Obligations" shall mean the Obligations as defined in the Notes.
PAGE 1 OF 8 PAGES
2
SECURITY AGREEMENT AMONG SECURED
PARTIES, ACTION INDUSTRIES, INC.,
AND GENERAL VISION SERVICES, INC.
DATED MARCH 18, 1996.
(viii) "Uniform Commercial Code" shall mean the Uniform Commercial
Code of the State of New York
All other terms defined in the preamble or the recitals hereto shall have the
respective meanings ascribed to them therein. Unless the context otherwise
indicates, all terms used without definition in this Agreement shall have the
meanings ascribed to them in the Uniform Commercial Code as currently in effect,
to the extent the same are used or defined therein.
ARTICLE II
SECURITY
As security for the payment and performance of the Obligations, Debtor hereby
grants to Secured Parties a continuing security interest in and a first general
lien upon the Collateral. GVS and Debtor hereby agree that the lien created by
this Agreement in favor of the Secured Parties shall be senior to any other lien
on that portion of the Collateral, consisting of the GVS Shares and pari passu
with GVS with respect to all other collateral.
ARTICLE III
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF DEBTOR
3.1 INCORPORATION OF COVENANTS, REPRESENTATIONS AND WARRANTIES.
All covenants set forth in Section I of the Notes and all representations and
warranties set forth in Section 3 of the Notes are hereby made a part hereof and
incorporated by reference herein.
3.2 FURTHER ASSURANCES; FINANCING STATEMENTS.
Upon request of X. Xxxxxxx Securities, LLC ("Agent"), as agent for Secured
Parties, at any time and from time to time, Debtor and GVS will, at their own
cost and expense, execute and deliver to Agent one or more financing statements
pursuant to the Uniform Commercial Code, or amendments or continuations thereof,
and any other documents required by Agent to further evidence, effect or perfect
the security interest granted herein or to otherwise effectuate the purposes of
this Agreement, and, to the extent permitted by applicable law, Debtor and GVS
each hereby authorizes Agent to execute and file at any time or times one or
more financing statements pursuant to the Uniform Commercial Code with respect
to any or all of the Collateral, signed only by Agent. Debtor and GVS each
hereby agrees that a carbon, photographic or other reproduction of this
Agreement or of a financing statement shall be sufficient as a financing
statement.
3.3 COLLATERAL TO BE HELD FREE AND CLEAR OF LIENS AND ENCUMBRANCES;
RESTRICTIONS ON SALE.
PAGE 2 OF 8 PAGES
3
SECURITY AGREEMENT AMONG SECURED
PARTIES, ACTION INDUSTRIES, INC.,
AND GENERAL VISION SERVICES, INC.
DATED MARCH 18, 1996.
During the term of this Agreement and until the Obligations are paid in full,
Debtor (i) shall not sell or otherwise transfer the GVS Shares and shall hold
such shares free and clear of all liens and encumbrances except for the
subordinate lien of GVS which partially secures the GVS Note; and (ii) shall
place a legend on the certificates representing the GVS Shares, acceptable to
Secured Party, referencing this Agreement and the restrictions set forth in this
SECTION 3.3, which legend shall not be removed without the written approval of
Secured Party.
3.4 DISCHARGE OF LIENS.
Debtor shall immediately pay and cause the discharge of any liens, taxes or
assessments which may be levied upon the Collateral; provided, however, that
Debtor shall not be required to pay or discharge any lien, tax or assessment
which is being contested in good faith by appropriate proceedings diligently
pursued, and for which adequate reserves have been established.
3.5 ACTIONS BY AGENT.
Agent may, in its sole discretion and at any time, for the account and expense
of Debtor, pay any amount or do any act required of Debtor hereunder or
requested by Agent to preserve, protect, maintain or enforce the Obligations,
the Collateral or security interest granted herein, and which Debtor fails to do
or pay, including, without limitation, payment of any judgment against Debtor,
and insurance premium, any warehouse charge and any lien, claim or encumbrance
upon or with respect to the Collateral, and any such payment shall be added to
the Obligations and shall be payable upon demand.
3.6 ADVERSE CHANGES
Debtor shall promptly notify Agent in writing of any event which materially
adversely affects the value of the Collateral.
3.7 PRESERVATION OF CORPORATE EXISTENCE.
Debtor will at all times preserve and keep in full force and effect its
corporate existence, licenses, permits, rights and franchises and those of any
of its subsidiaries.
ARTICLE IV
REMEDIES UPON EVENT OF DEFAULT
4.1 ACCELERATION OF OBLIGATIONS.
For purposes of this ARTICLE IV, upon the occurrence of an Event of Default as
set forth in Section 5 of the Notes, all or any portion of the Obligations
shall, at the option of Agent or Secured Parties holding at least 25% of the
principal of the Notes and without notice, demand or legal process, become
immediately due and payable.
PAGE 3 OF 8 PAGES
4
SECURITY AGREEMENT AMONG SECURED
PARTIES, ACTION INDUSTRIES, INC.,
AND GENERAL VISION SERVICES, INC.
DATED MARCH 18, 1996.
4.2 RIGHTS UNDER UNIFORM COMMERCIAL CODE.
In addition to all of its other rights and remedies under this Agreement, the
other Financing Agreements and any other agreement with Debtor, Secured Parties
shall have all of the rights and remedies of a secured party under the Uniform
Commercial Code of the State of New York and of any state in which the
Collateral is located from time to time except the right to retain the
Collateral in full satisfaction of the Obligations.
4.3 ACTION PENDING DISPOSITION.
Until Secured Parties are able to effect a sale or other disposition of the
Collateral, they shall have the right to use or take such action with respect to
the Collateral, or any part thereof, as they deem appropriate for the purpose of
preserving the Collateral or its value or for any other purpose deemed
appropriate by Secured Parties. Secured Parties shall have no obligation to
Debtor to maintain or preserve the rights of Debtor as against third parties
with respect to the Collateral while the Collateral is in the possession of
Secured Parties. Secured Parties may, if they so elect, seek the appointment of
a receiver or keeper to take possession of the Collateral and to enforce any of
Secured Parties' remedies with respect to such appointment without prior notice
or hearing.
4.4 DISPOSITION OF COLLATERAL.
4.41 Right to Sell or Otherwise Dispose of Collateral. Secured Parties shall
have the right to sell or otherwise dispose of all or any of the Collateral, at
a public sale or sales, with such notice as may be required by law but in any
event not less than 60 days, in lots equal to no greater than 25% of the
aggregate collateral, for cash or on credit, all as Secured Parties, in their
sole discretion, may deem advisable. Such sales may be adjourned and continued
from time to time with or without notice. To enable Secured Parties to effect
any such sale, assignment and/or transfer, Debtor hereby makes, constitutes and
appoints Agent as its true and lawful attorney, in its name, place and stead,
and for its account and risk, to make, execute and deliver any and all
assignments or other instruments which Secured Parties may deem necessary or
proper to effectuate the authority hereby conferred by signing Debtor's name
only or by signing the same as its attorney-in-fact, as may be deemed by Secured
Parties to be necessary or proper in connection with any sale, assignment or
transfer of all or any part of the Collateral. The foregoing power of attorney
is coupled with an interest and shall be a continuing one and irrevocable so
long as any portion of the Obligations remains unpaid in whole or in part.
4.42. Right to Purchase Collateral. Secured Parties may purchase all or any
part of the Collateral at public sale or, if permitted by law, private sale, and
in lieu of actual payment of such purchase price, may set off the amount of such
price against the Obligations.
4.43. Application of Proceeds of Sale of Collateral. Except as otherwise
provided by law, the proceeds realized from the sale of any of the Collateral
shall be applied by Secured Parties as follows:
PAGE 4 OF 8 PAGES
5
SECURITY AGREEMENT AMONG SECURED
PARTIES, ACTION INDUSTRIES, INC.,
AND GENERAL VISION SERVICES, INC.
DATED MARCH 18, 1996.
First, to the reasonable costs and expenses of every kind incurred in
connection with or incidental to the care, safekeeping or otherwise of any
and all of the Collateral or in any way relating to the rights of Secured
Parties hereunder, including reasonable attorney's fees and legal expenses;
Second, to the satisfaction of the Obligations;
Third, to the payment of any other amounts required by applicable law;
Fourth, to GVS to the extent that Debtor is then indebted to GVS as
provided in the GVS Note; and
Fifth, to Debtor to the extent of the surplus proceeds, if any.
In the event that the proceeds realized from the sale as aforesaid are
insufficient to pay all amounts to which Secured Parties are legally entitled,
Debtor will be liable for the deficiency, together with interest thereon, at the
rate of fifteen (15%) percent per annum, and the reasonable fees of any
attorneys employed by Secured Parties to collect such deficiency.
4.5 WAIVER OF BOND.
In connection with the foregoing remedies, Debtor hereby waives the posting of
any bond which might otherwise be required.
4.6 REMEDIES CUMULATIVE.
All rights and remedies of Secured Parties arising under this Agreement, the
other Financing Agreements, any other agreement with Debtor and/or GVS by
operation of law shall be cumulative and non-exclusive, to the fullest extent
permitted by law.
ARTICLE V
LIABILITY OF DEBTOR FOR
SECURED PARTIES' EXPENSES AND ATTORNEYS' FEES
Debtor will be liable to Secured Parties for any and all sums, costs and
expenses which Secured Parties may pay or incur pursuant to the provisions of
this Agreement or in defending, protecting and enforcing the security interest
granted herein or in enforcing payment of the Obligations or otherwise in
connection with the provisions hereof, including without limitation all search,
filing and recording fees, appraisal fees, taxes, levies and reasonable
attorneys' and accountants' fees and legal expenses, all fees and expenses for
the service and filing of papers, fees of marshals, sheriffs, custodians,
auctioneers and others, travel expenses, court costs and collection charges, all
expenditures in connection with the repossession, holding, preparation for sale
and sale of the Collateral, as well as all damages
PAGE 5 OF 8 PAGES
6
SECURITY AGREEMENT AMONG SECURED
PARTIES, ACTION INDUSTRIES, INC.,
AND GENERAL VISION SERVICES, INC.
DATED MARCH 18, 1996.
for breach of warranty, misrepresentation or breach of covenant by Debtor, and
all such liabilities shall be part of the Obligations and shall be payable upon
demand.
ARTICLE VI
MISCELLANEOUS
6.1 AMENDMENT.
This Agreement may be amended only by an instrument in writing executed by
Debtor, GVS and Agent for Secured Parties.
6.2 ENTIRE AGREEMENT.
This Agreement, the Stock Purchase Agreement, the Financing Agreements and any
exhibits, schedules, certificates or documents referred to herein and therein,
constitute the entire agreement of the parties hereto, and supersede all prior
understandings with respect to the subject matter hereof and thereof.
6.3 WAIVERS.
Any failure or delay by Secured Parties to require strict performance by Debtor
of any of the provisions, warranties, terms or conditions contained herein or in
any of the other Financing Agreements shall not affect Secured Parties' right to
demand strict compliance therewith and performance thereof, and any waiver of
any default shall not waive or affect any other default, whether prior or
subsequent thereto, and whether of the same or of a different type. None of the
warranties, conditions, provisions and terms contained herein or in any other
agreement, document or instrument shall be deemed to have been waived by any act
or knowledge of Secured Parties, their agents, officers, stockholders or
employees, but only by an instrument in writing, signed by Agent and directed to
Debtor, specifying such waiver.
6.4 NOTICES.
6.41 Procedure for Notice. Any notice, demand, consent, approval,
disapproval or statement (collectively, "Notices") required or permitted to be
given by the terms and provisions of this Agreement, or by any law or
governmental regulation, shall be in writing and, unless otherwise required by
such law or regulation, shall be personally delivered or sent by United States
mail, postage prepaid, as registered or certified mail or by nationally
recognized overnight courier service. Any Notice to Debtor or GVS shall be
addressed to such party at its address herein above set forth. Any Notice to
Secured Parties shall be addressed to Agent at 1345 Avenue of the Americas, 00
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxxxxxx. By giving the
other parties at least ten (10) days' prior written notice, any party may, by
Notice given as above provided, designate a different address or addresses for
Notices.
PAGE 6 OF 8 PAGES
7
SECURITY AGREEMENT AMONG SECURED
PARTIES, ACTION INDUSTRIES, INC.,
AND GENERAL VISION SERVICES, INC.
DATED MARCH 18, 1996.
6.42 When Notice Deemed Given. Any Notice shall be deemed given as of the date
of delivery as indicated by affidavit in the case of personal delivery; in the
case of mailing, any Notice shall be deemed given on the fifth day after
mailing; in the case of delivery by nationally recognized overnight courier
service, any Notice shall be deemed given on the next business day after
dispatch.
6.5. LIMITATION OF INTEREST PAYMENTS.
Nothing contained in this Agreement or in any other agreement between Debtor and
Secured Parties requires Debtor to pay or Secured Parties to accept interest in
an amount which would subject Secured Parties to any penalty or forfeiture under
applicable law. In no event shall the total of all charges payable hereunder,
whether of interest or of such other charges which may or might be characterized
as interest, exceed the lower of the maximum rate permitted to be charged under
the laws of the State of New York or the state in which a Secured Party resides.
Should Secured Parties receive any payment which is or would be in excess of
that permitted to be charged under such laws, such payment shall have been and
shall be deemed to have been made in error and shall automatically be applied to
reduce the principal outstanding on the Notes.
6.6 SEVERABILITY.
Wherever possible, each provision of this Agreement shall be interpreted in a
manner so as to be effective and valid under applicable law. If any provision
of this Agreement shall be held to be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such provision
and the remaining provisions of this Agreement shall remain unaffected and in
full force and effect.
6.7 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and for the benefit of the parties hereto
and their respective legal representatives, successors and assigns.
6.8 GOVERNING LAW; CONSENT TO JURISDICTION; VENUE WAIVER; WAIVER OF JURY
TRIAL.
The validity, interpretation and effect of this Agreement shall be governed by
the laws of the State of New York. Debtor and GVS hereby consent to the
non-exclusive jurisdiction of all courts in such State and hereby waives all
right to trial by jury in any action, suit or proceeding brought to enforce or
defend any rights or remedies under this Agreement.
6.9 ARTICLES AND SECTION TITLES.
The titles of articles and sections contained in this Agreement are merely for
convenience and shall be without substantive meaning or content.
PAGE 7 OF 8 PAGES
8
SECURITY AGREEMENT AMONG SECURED
PARTIES, ACTION INDUSTRIES, INC.,
AND GENERAL VISION SERVICES, INC.
DATED MARCH 18, 1996.
6.10 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be considered and original but all of which shall constitute one and the
same Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the 18th
day of March, 1998.
ACTION INDUSTRIES, INC.
a Pennsylvania corporation
By: /s/ T. XXXXXX XXXXXX
----------------------------------
T. Xxxxxx Xxxxxx, President
GENERAL VISION SERVICES, INC.
a Delaware corporation
By: /s/ XXXXXXX XXXXXXXXX
----------------------------------
Xxxxxxx Xxxxxxxxx, President and CEO
X. XXXXXXX SECURITIES, LLC
a New York limited liability company
as agent for Secured Parties
By:
----------------------------------
Xxxxx X. Xxxxxxxxx, President
PAGE 8 OF 8 PAGES
