EXHIBIT 10.2
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement"), dated this 4th day of May,
2001, by and between The Xxxxxx X. Xxxxxxx Family Trust No. 2 (hereinafter
called "Pledgor"), whose principal office is at 0000 XXX Xxxxxxx, Xxxxx 0000,
Xxxxxx XX 00000 and EMS Financial, Inc. a New Jersey corporation (the "Secured
Party"), in its capacity as the holder of the Note (as defined below).
Section 1. Security Interest. For value received, Pledgor hereby grants
to Secured Party, upon the terms and conditions of this Agreement, to secure the
"Obligation", as described in Section 2 below, a security interest in and to any
and all present or future rights of Pledgor in and to all of the following
rights, interests and property (all of the following being herein sometimes
called the "Pledged Shares"):
15,768 shares of Pledgor's Class A Common Stock of Contran
Corporation, par value of $.01 per share.
As used in this Agreement, the "Collateral" shall include the Pledged Shares
together with any and all products and proceeds of the Pledged Shares,
including, without limitation, all dividends, cash, instruments, subscriptions,
warrants and any other rights and options and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares.
Section 2. Loan Agreement. This Agreement is being executed and
delivered pursuant to the terms, conditions and requirements of that certain
Revolving Loan Note, dated as of May 4, 2001 ("Revolving Note"), pursuant to
which Secured Party has loaned monies to, and may in the future loan monies to
Pledgor. The security interests herein granted ("Security Interests") shall
secure full payment and performance of: (a) that certain Revolving Loan Note of
even date herewith in the principal amount of $25,000,000, made by Pledgor and
payable to the order of Secured Party (such note and any notes given in
modification, renewal, extension or substitution thereof being herein sometimes
collectively referred to as the "Notes" and individually as the "Note"); and (b)
the due and punctual observance and performance of each and every agreement,
covenant and condition on Pledgor's part to be observed or performed under this
Agreement or the Note (all of which debts, duties, liabilities and obligations
hereinbefore described and covered by this Agreement and the Note are
hereinafter referred to as the "Obligation").
Section 3. Priority. Pledgor represents and warrants that the Security
Interests are first and prior security interests in and to all of the
Collateral, subject to no other liens thereon or security interests therein.
Section 4. Title to Collateral. Pledgor represents and warrants to
Secured Party that: (a) Pledgor is the sole, direct, legal and beneficial owner
of the Collateral; (b) no dispute, right of offset, counterclaim, or defense to
the Security Interests exists with respect to all or any part of the Collateral;
and (c) Pledgor will defend the Collateral against the claims and demands of all
persons other than any subordinate claims or liens permitted by Secured Party in
its sole discretion.
Section 5. Pledgor's Obligations. So long as the Note is outstanding,
Pledgor covenants and agrees with Secured Party: (a) not to permit any part of
the Collateral to be levied upon under any legal process; (b) not to dispose of
any of the Collateral without the prior written consent of Secured Party; (c) to
comply with all applicable federal, state and local statutes, laws, rules and
regulations, the noncompliance with which could have a material and adverse
effect on the value of the Collateral; and (d) to pay all taxes accruing after
the date hereof which constitute, or may constitute, a lien against the
Collateral, prior to the date when penalties or interest would attach to such
taxes; provided, that Pledgor may contest any such tax claim if done diligently
and in good faith.
Pledgor agrees to execute and deliver to Secured Party (i) stock powers
appropriately endorsed in blank, with respect to the Collateral, and (ii) such
other documents of transfer as Secured Party may from time to time request to
enable Secured Party to transfer the Collateral into its name or the name of its
nominee.
Pledgor agrees (i) immediately to deliver to Secured Party or its
nominee all certificates evidencing any of the Collateral which may at any time
come into the possession of Pledgor, (ii) to execute and deliver to Secured
Party such financing statements as Secured Party may request with respect to the
Collateral, and (iii) to take such other steps as Secured Party may from time to
time reasonably request to perfect Secured Party's security interest in the
Collateral under applicable law. Pledgor agrees that this Agreement or a
photocopy of this Agreement shall be sufficient as a financing statement.
Section 6. Event of Default. As used herein, the term default shall
include any or all of the following:
(a) The assignment or voluntary or involuntary conveyance by
Pledgor of legal or beneficial interest, or Pledgor's mortgage, pledge
or grant of a security interest in any of the Collateral (as defined
herein); or
(b) The filing or issuance of a notice of any lien, warrant for
distraint or notice of levy for taxes or assessment against the
Collateral (except for those liens not securing indebtedness for
borrowed money which are being contested in good faith and for which
adequate reserves have been created); or
(c) Pledgor's nonpayment of any installment of principal or
interest or fees under the Note; or
(d) The adjudication of Pledgor as bankrupt, or the taking of any
voluntary action by Pledgor or any involuntary action against Pledgor
seeking an adjudication of Pledgor as bankrupt, or seeking relief by or
against Pledgor under any provision of the United States Bankruptcy
Code; or
(e) The failure by Pledgor to comply with any other covenant
contained in the Note or this Agreement; or
(f) Pledgor's default in any payment (regardless of amount) of
principal of or interest on any other indebtedness for borrowed money;
or
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(g) Pledgor's default in the observance or performance of any
other agreement or condition relating to any such other indebtedness for
borrowed money or contained in any instrument evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to
permit the holder of the indebtedness to cause, such other indebtedness
for borrowed money to become due prior to its stated maturity.
An "Event of Default" shall be deemed to have occurred immediately upon any
default described in clause (d) or (g) above; if any default described in
clauses (c) or (f) above is not cured within 5 days; and if any default
described in clauses (a), (b), or (e) is not cured within 30 days after written
notice from Secured Party to Pledgor.
Section 7. Remedies. Upon the occurrence and during the continuation of
an Event of Default as defined herein, in addition to any and all other rights
and remedies which Secured Party may then have hereunder or under the Note,
under the Uniform Commercial Code of the State of New Jersey or of any other
pertinent jurisdiction (the "Code"), or otherwise, Secured Party may, at its
option: (a) reduce its claim to judgment or foreclosure or otherwise enforce the
Security Interests, in whole or in part, by any available judicial procedure;
(b) sell, or otherwise dispose of, at the office of Secured Party, or elsewhere,
all or any part of the Collateral, and any such sale or other disposition may be
as a unit or in parcels, by public or private proceedings, and by way of one or
more contracts (it being agreed that the sale of any part of the Collateral
shall not exhaust the Secured Party's power of sale, but sales may be made from
time to time, and at any time, until all of the Collateral has been sold or
until the Obligation has been paid and performed in full); (c) at its
discretion, retain the Collateral in satisfaction of the Obligation whenever the
circumstances are such that Secured Party is entitled to do so under the Code or
otherwise; and (d) exercise any and all other rights, remedies and privileges he
may have under the Note and the other documents defining the Obligation.
Pledgor will pay to Secured Party all expenses (including, without
limitation, court costs and attorneys' fees and expenses) of, or incident to,
(i) the administration of this Agreement, (ii) the custody or preservation of,
or the sale or collection of or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of Secured Party
hereunder, or (iv) the failure by Pledgor to perform or observe any provision
hereof. All such reimbursement obligations shall constitute a part of the
Obligation.
In view of the fact that federal and state securities laws may impose
certain restrictions on the method by which a sale of the Collateral may be
effected, Pledgor agrees that upon the occurrence and during the continuance of
an Event of Default, Secured Party may, from time to time, attempt to sell all
or any part of the Collateral by means of a private placement restricting the
bidders and prospective purchasers to those who are qualified and will represent
and agree that they are purchasing for investment only and not for distribution.
In so doing, Secured Party may solicit offers to buy the Collateral, or any part
of it, from a limited number of investors deemed by Secured Party, in its
reasonable judgment, to be financially responsible parties who might be
interested in purchasing the Collateral. If Secured Party solicits such offers,
then the acceptance by Secured Party of the highest offer obtained therefrom
shall be deemed to be a commercially reasonable method of disposing of such
Collateral.
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Section 8. Application of Proceeds by Secured Party. Any and all
proceeds ever received by Secured Party from any sale or other disposition of
the Collateral, or any part thereof, or the exercise of any other remedy
pursuant hereto shall be applied by Secured Party to the Obligation in such
order and manner as Secured Party, in its sole discretion, may deem appropriate,
notwithstanding any directions or instructions to the contrary by Pledgor;
provided that the proceeds and/or accounts shall be applied toward satisfaction
of the Obligation. Any proceeds received by Secured Party under this Agreement
in excess of those necessary to fully and completely satisfy the Obligation
shall be distributed to Pledgor.
Section 9. Notice of Sale. Reasonable notification of the time and place
of any public sale of the Collateral, or reasonable notification of the time
after which any private sale or other intended disposition of the Collateral is
to be made, shall be sent to Pledgor and to any other persons entitled under the
Code to notice; provided, that if any of the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Secured Party may sell, pledge, assign or otherwise dispose of the Collateral
without notification, advertisement or other notice of any kind. It is agreed
that notice sent or given not less than ten (10) calendar days prior to the
taking of the action to which the notice relates is reasonable notification and
notice for the purposes of this paragraph.
Section 10. Right to Vote Collateral; Receipt of Dividends, Etc.
(a) Unless an Event of Default shall have occurred and be continuing,
the Pledgor shall have the right, from time to time, to vote and to give
consents, ratifications and waivers with respect to the Collateral, and the
Secured Party shall, upon receiving a written request from the Pledgor, which
request shall be deemed to be a representation and warranty by the Pledgor that
no Event of Default has occurred and is continuing, deliver to the Pledgor or,
as specified in such request, such proxies, powers of attorney, consents,
ratifications and waivers in respect of any Collateral which are registered in
the name of the Secured Party or a nominee as shall be specified in such request
and be in form and substance satisfactory to the Secured Party.
(b) If an Event of Default shall have occurred and be continuing, all
rights of the Pledgor to exercise the voting and other consensual rights which
it would otherwise be entitled to exercise pursuant to Section 10 (a) above
shall end upon five days' notice from the Secured Party to the Pledgor and
thereafter the Secured Party shall have the right to the extent permitted by
law, and the Pledgor shall take all such action as may be necessary or
appropriate to give effect to such right, to vote and to give consents,
ratifications and waivers, and take any other action with respect to all
Collateral with the same force and effect as if the Secured Party were the
absolute and sole owner thereof.
(c) Unless an Event of Default shall have occurred and be continuing,
the Pledgor shall be entitled to receive all regular cash dividends. Any other
extraordinary dividends or distributions or proceeds therefrom on account of the
Collateral shall, if received by the Pledgor, be received in trust for the
benefit of the Secured Party, be segregated from the other property or funds of
the Pledgor, and be forthwith delivered to the Secured Party as collateral in
the same form as so received (with any necessary endorsement).
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Section 11. Delivery of Notices. Any notice or demand required to be
given hereunder shall be in writing and shall be deemed to have been duly given
and received, if given by hand, when a writing containing such notice is
received by the person to whom addressed or, if given by mail, two (2) business
days after a certified or registered letter containing such notice, with postage
prepaid, is deposited in the United States mails, addressed to:
If to Secured Party:
EMS Financial, Inc.
00000 Xxxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx XX 00000
Attn: Vice President and Secretary
If to Pledgor:
The Xxxxxx X. Xxxxxxx Family Trust No. 2
0000 XXX Xxxxxxx
Xxxxx 0000
Xxxxxx XX 00000
Attn: Trust Counsel
Any such address may be changed from time to time by serving notice to the other
party as above provided. A business day shall mean a day of the week which is
not a Saturday or Sunday or a holiday recognized by national banking
associations.
Section 12. Binding Effect. This Agreement shall be binding upon
Pledgor, its successors and assigns, and shall inure to the benefit of Secured
Party, its heirs, successors, assigns, executors, administrators, and personal
or legal representatives.
Section 13. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the state of New Jersey.
Section 14. Severability. In the event that any one or more of the
provisions contained in this Agreement are held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement.
Section 15. Lender Appointed Attorney-in-Fact. Upon the occurrence and
during the continuance of an Event of Default, Pledgor hereby appoints Secured
Party as Pledgor's attorney-in-fact, with full authority in the place and stead
of Pledgor and in the name of Pledgor or otherwise, from time to time in its
discretion to take any action and to execute any instrument which Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all instruments
made payable to Pledgor representing any distribution, interest payment or other
dividend or distribution in respect of the Collateral or any part thereof and to
give full discharge for the same. This power of attorney created under this
Section 15, being coupled with an interest, shall be irrevocable for the term of
this Agreement and thereafter as long as any of the Obligation shall be
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outstanding, but shall not be deemed to authorize Secured Party to take an
action which Pledgor could not be required to take hereunder.
Section 16. Lender's Duty. Secured Party shall not be liable for any
acts, omissions, errors of judgment or mistakes of fact or law including,
without limitation, acts, omissions, errors or mistakes with respect to the
Collateral, except with respect to Secured Party's custodial duties and for
those arising out of or in connection with the Secured Party's gross negligence
or willful misconduct. Without limiting the generality of the foregoing, Secured
Party shall be under no obligation to take any steps necessary to preserve
rights in the Collateral against any other parties but may do so at its option,
and all expenses incurred in connection therewith shall be for the sole account
of Pledgor, and shall be added to the Obligation secured hereby.
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EXECUTED as of the day and year first herein set forth.
SECURED PARTY:
EMS Financial, Inc.
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Title: Treasurer
PLEDGOR:
The Xxxxxx X. Xxxxxxx Family Trust No. 2
By: /s/ X. Xxxxxxx
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X. Xxxxxxx
Title: Trustee
