SECURITY AGREEMENT
SECURITY
AGREEMENT,
dated
as of November 30, 2007, by and among (i) the Grantors identified as such on
the
signature pages hereof (the “Grantors”
and
each, individually, a “Grantor”)
and
(ii) Woodside Agency Services, LLC, as collateral agent (hereinafter, in such
capacity, the “Collateral Agent”)
for
itself and the Holders (as such term is defined in the Purchase Agreement
referred to below) under the Securities Purchase and Loan Agreement dated as
of
November 30, 2007 (as amended and in effect from time to time, the “Purchase Agreement”),
among
National Investment Managers Inc. (the “Company”),
the
Holders and the Collateral Agent.
WHEREAS,
it is a
condition precedent to the Holders' extending credit accommodations to the
Company under the Purchase Agreement that the Grantors execute and deliver
to
the Collateral Agent, for the benefit of the Holders and the Collateral Agent,
a
security agreement in substantially the form hereof; and
WHEREAS,
each
Grantor wishes to grant a security interest in favor of the Collateral Agent,
for the benefit of the Holders and the Collateral Agent, as herein
provided;
NOW,
THEREFORE,
in
consideration of the promises contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto agree as follows:
1. Definitions.
All
capitalized terms used herein without definitions shall have the respective
meanings provided therefor in the Purchase Agreement. The term “State”,
as
used herein, means the Commonwealth of Massachusetts. All terms defined in
the
Uniform Commercial Code of the State and used herein shall have the same
definitions herein as specified therein. However, if a term is defined in
Article 9 of the Uniform Commercial Code of the State differently than in
another Article of the Uniform Commercial Code of the State, the term has the
meaning specified in Article 9. The term “electronic document” applies in the
event that the 2003 revisions to Article 7, with amendments to Article 9, of
the
Uniform Commercial Code, in substantially the form approved by the American
Law
Institute and the National Conference of Commissioners on Uniform State Laws,
are now or hereafter adopted and become effective in the State or in any other
relevant jurisdiction.
2. Grant
of Security Interest.
2.1. Grant;
Collateral Description.
Each
Grantor hereby grants to the Collateral Agent, for the benefit of the Holders
and the Collateral Agent, to secure the payment and performance in full of
all
of the Obligations, a security interest in and pledges and assigns to the
Collateral Agent, for the benefit of the Holders and the Collateral Agent,
the
following properties, assets and rights of such Grantor, wherever located,
whether now owned or hereafter acquired or arising, and all proceeds and
products thereof (all of the same being hereinafter called the “Collateral”):
all
personal and fixture property of every kind and nature including all goods
(including inventory, equipment and any accessions thereto), instruments
(including promissory notes), documents (including, if applicable, electronic
documents), accounts (including health-care-insurance receivables), chattel
paper (whether tangible or electronic), deposit accounts, letter-of-credit
rights (whether or not the letter of credit is evidenced by a writing),
commercial tort claims, securities and all other investment property, supporting
obligations, any other contract rights or rights to the payment of money,
insurance claims and proceeds, and all general intangibles (including all
payment intangibles).
2.2. Commercial
Tort Claims.
The
Collateral Agent acknowledges that the attachment of its security interest
in
any commercial tort claim as original collateral is subject to each Grantor’s
compliance with §4.7.
3. Authorization
to File Financing Statements.
Each
Grantor hereby irrevocably authorizes the Collateral Agent at any time and
from
time to time to file in any filing office in any Uniform Commercial Code
jurisdiction any initial financing statements and amendments thereto that (a)
indicate the Collateral (i) as all assets of such Grantor or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the Uniform Commercial Code of the State
or such jurisdiction, or (ii) as being of an equal or lesser scope or with
greater detail, and (b) provide any other information required by part 5 of
Article 9 of the Uniform Commercial Code of the State or such other jurisdiction
for the sufficiency or filing office acceptance of any financing statement
or
amendment, including (i) whether such Grantor is an organization, the type
of
organization and any organizational identification number issued to such Grantor
and, (ii) in the case of a financing statement filed as a fixture filing or
indicating Collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the Collateral relates. Each
Grantor agrees to furnish any such information to the Collateral Agent promptly
upon request. Each Grantor also ratifies its authorization for the Collateral
Agent to have filed in any Uniform Commercial Code jurisdiction any like initial
financing statements or amendments thereto if filed prior to the date
hereof.
4. Other
Actions. Further
to insure the attachment, perfection and first priority of, and the ability
of
the Collateral Agent to enforce, the Collateral Agent’s security interest in the
Collateral, each Grantor agrees, in each case at such Grantor’s expense, to take
the following actions with respect to the following Collateral and without
limitation on such Grantor’s other obligations contained in this
Agreement:
4.1. Promissory
Notes and Tangible Chattel Paper.
If any
Grantor shall, now or at any time hereafter, hold or acquire any promissory
notes or tangible chattel paper, such Grantor shall forthwith endorse, assign
and deliver the same to the Collateral Agent, accompanied by such instruments
of
transfer or assignment duly executed in blank as the Collateral Agent may from
time to time specify.
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4.2. Deposit
Accounts.
For
each
deposit account that any Grantor, now or at any time hereafter, opens or
maintains, such Grantor shall, at the Collateral Agent’s request and option,
pursuant to an agreement in form and substance satisfactory to the Collateral
Agent, either (a) cause the depositary bank to agree to comply without further
consent of such Grantor, at any time with instructions from the Collateral
Agent
to such depositary bank directing the disposition of funds from time to time
credited to such deposit account, or (b) arrange for the Collateral Agent to
become the customer of the depositary bank with respect to the deposit account,
with such Grantor being permitted, only with the consent of the Collateral
Agent, to exercise rights to withdraw funds from such deposit account. The
Collateral Agent agrees with the Grantors that the Collateral Agent shall not
give any such instructions or withhold any withdrawal rights from any Grantor,
unless an Event of Default has occurred and is continuing, or, if effect were
given to any withdrawal not otherwise permitted by the Loan Documents, would
occur. The provisions of this paragraph shall not apply to (i) a deposit account
for which the Collateral Agent is the depositary bank and is in automatic
control, and (ii) any deposit accounts specially and exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of any Grantor’s salaried employees.
4.3. Investment
Property.
If any
Grantor shall, now or at any time hereafter, hold or acquire any certificated
securities, such Grantor shall forthwith endorse, assign and deliver the same
to
the Collateral Agent, accompanied by such instruments of transfer or assignment
duly executed in blank as the Collateral Agent may from time to time specify.
If
any securities now or hereafter acquired by any Grantor are uncertificated
and
are issued to such Grantor or its nominee directly by the issuer thereof, such
Grantor shall immediately notify the Collateral Agent thereof and, at the
Collateral Agent’s request and option, pursuant to an agreement in form and
substance satisfactory to the Collateral Agent, either (a) cause the issuer
to
agree to comply without further consent of such Grantor or such nominee, at
any
time with instructions from the Collateral Agent as to such securities, or
(b)
arrange for the Collateral Agent to become the registered owner of the
securities. If any securities, whether certificated or uncertificated, or other
investment property now or hereafter acquired by any Grantor are held by such
Grantor or its nominee through a securities intermediary or commodity
intermediary, such Grantor shall immediately notify the Collateral Agent thereof
and, at the Collateral Agent’s request and option, pursuant to an agreement in
form and substance satisfactory to the Collateral Agent, either (i) cause such
securities intermediary or (as the case may be) commodity intermediary to agree
to comply, in each case without further consent of such Grantor or such nominee,
at any time with entitlement orders or other instructions from the Collateral
Agent to such securities intermediary as to such securities or other investment
property, or (as the case may be) to apply any value distributed on account
of
any commodity contract as directed by the Collateral Agent to such commodity
intermediary, or (ii) in the case of financial assets or other investment
property held through a securities intermediary, arrange for the Collateral
Agent to become the entitlement holder with respect to such investment property,
with such Grantor being permitted, only with the consent of the Collateral
Agent, to exercise rights to withdraw or otherwise deal with such investment
property. The Collateral Agent agrees with the Grantors that the Collateral
Agent shall not give any such entitlement orders or instructions or directions
to any such issuer, securities intermediary or commodity intermediary, and
shall
not withhold its consent to the exercise of any withdrawal or dealing rights
by
any Grantor, unless an Event of Default has occurred and is continuing, or,
after giving effect to any such investment and withdrawal rights not otherwise
permitted by the Loan Documents, would occur. The provisions of this paragraph
shall not apply to any financial assets credited to a securities account for
which the Collateral Agent is the securities intermediary.
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4.4. Collateral
in the Possession of a Bailee.
If any
Collateral is, now or at any time hereafter, in the possession of a bailee,
the
Grantors shall promptly notify the Collateral Agent thereof and, at the
Collateral Agent’s request and option, shall promptly obtain an acknowledgement
from the bailee, in form and substance satisfactory to the Collateral Agent,
that the bailee holds such Collateral for the benefit of the Collateral Agent
and such bailee’s agreement to comply, without further consent of any Grantor,
at any time with instructions of the Collateral Agent as to such Collateral.
The
Collateral Agent agrees with the Grantors that the Collateral Agent shall not
give any such instructions unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by any Grantor
with respect to the bailee.
4.5. Electronic
Chattel Paper, Electronic Documents and Transferable
Records.
If any
Grantor, now or at any time hereafter, holds or acquires an interest in any
electronic chattel paper, any electronic document or any “transferable record,”
as that term is defined in Section 201 of the federal Electronic Signatures
in
Global and National Commerce Act, or in §16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction, such Grantor shall
promptly notify the Collateral Agent thereof and, at the request and option
of
the Collateral Agent, shall take such action as the Collateral Agent may
reasonably request to vest in the Collateral Agent control, under §9-105 of the
Uniform Commercial Code of the State or any other relevant jurisdiction, of
such
electronic chattel paper, control, under §7-106 of the Uniform Commercial Code
of the State or any other relevant jurisdiction, of such electronic document
or
control, under Section 201 of the federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, §16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such transferable
record. The Collateral Agent agrees with the Grantors that the Collateral Agent
will arrange, pursuant to procedures satisfactory to the Collateral Agent and
so
long as such procedures will not result in the Collateral Agent’s loss of
control, for the Grantors to make alterations to the electronic chattel paper,
electronic document or transferable record permitted under XXX §0-000, XXX
§0-000, or, as the case may be, Section 201 of the federal Electronic Signatures
in Global and National Commerce Xxx xx §00 of the Uniform Electronic
Transactions Act for a party in control to make without loss of control, unless
an Event of Default has occurred and is continuing or would occur after taking
into account any action by any Grantor with respect to such electronic chattel
paper, electronic document or transferable record. The
provisions of this §4.5 relating to electronic documents and “control” under UCC
§7-106 apply in the event that the 2003 revisions to Article 7, with amendments
to Article 9, of the Uniform Commercial Code, in substantially the form approved
by the American Law Institute and the National Conference of Commissioners
on
Uniform State Laws, are now or hereafter adopted and become effective in the
State or in any other relevant jurisdiction.
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4.6. Letter-of-Credit
Rights.
If any
Grantor is, now or at any time hereafter, a beneficiary under a letter of credit
now or hereafter, such Grantor shall promptly notify the Collateral Agent
thereof and, at the request and option of the Collateral Agent, such Grantor
shall, pursuant to an agreement in form and substance satisfactory to the
Collateral Agent, either (a) arrange for the issuer and any confirmer of such
letter of credit to consent to an assignment to the Collateral Agent of the
proceeds of the letter of credit or (b) arrange for the Collateral Agent to
become the transferee beneficiary of the letter of credit, with the Collateral
Agent agreeing, in each case, that the proceeds of the letter of credit are
to
be applied as provided in the Purchase Agreement.
4.7. Commercial
Tort Claims. If
any
Grantor shall, now or at any time hereafter, hold or acquire a commercial tort
claim, such Grantor shall immediately notify the Collateral Agent in a writing
signed by such Grantor of the particulars thereof and grant to the Collateral
Agent, for the benefit of the Holders and the Collateral Agent, in such writing
a security interest therein and in the proceeds thereof, all upon the terms
of
this Agreement, with such writing to be in form and substance satisfactory
to
the Collateral Agent.
4.8. Other
Actions as to any and all Collateral.
Each
Grantor further agrees, upon the request of the Collateral Agent and at the
Collateral Agent’s option, to take any and all other actions as the Collateral
Agent may determine to be necessary or useful for the attachment, perfection
and
first priority of, and the ability of the Collateral Agent to enforce, the
Collateral Agent’s security interest in any and all of the Collateral, including
(a) executing, delivering and, where appropriate, filing financing statements
and amendments relating thereto under the Uniform Commercial Code of any
relevant jurisdiction, to the extent, if any, that such Grantor’s signature
thereon is required therefor, (b) causing the Collateral Agent’s name to be
noted as secured party on any certificate of title for a titled good if such
notation is a condition to attachment, perfection or priority of, or ability
of
the Collateral Agent to enforce, the Collateral Agent’s security interest in
such Collateral, (c) complying with any provision of any statute, regulation
or
treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability
of
the Collateral Agent to enforce, the Collateral Agent’s security interest in
such Collateral, (d) obtaining governmental and other third party waivers,
consents and approvals, in form and substance satisfactory to the Collateral
Agent, including any consent of any licensor, lessor or other person obligated
on Collateral, (e) obtaining waivers from mortgagees and landlords in form
and
substance satisfactory to the Collateral Agent and (f) taking all actions under
any earlier versions of the Uniform Commercial Code or under any other law,
as
reasonably determined by the Collateral Agent to be applicable in any relevant
Uniform Commercial Code or other jurisdiction, including any foreign
jurisdiction.
5. Relation
to Other Security Documents.
The
provisions of this Agreement supplement the provisions of any real estate
mortgage or deed of trust granted by any Grantor to the Collateral Agent, for
the benefit of the Holders and the Collateral Agent, and which secures the
payment or performance of any of the Obligations. Nothing contained in any
such
real estate mortgage or deed of trust shall derogate from any of the rights
or
remedies of the Collateral Agent or any of the Holders hereunder. In addition,
to the provisions of this Agreement being so read and construed with any such
mortgage or deed of trust, the provisions of this Agreement shall be read and
construed with the other Security Documents referred to below in the manner
so
indicated.
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5.1. Securities
Pledge Agreement. Concurrently
herewith certain of the Grantors are executing and delivering to the Collateral
Agent, for the benefit of the Holders and the Collateral Agent, securities
pledge agreements pursuant to which such Grantors are pledging to the Collateral
Agent all of the shares of the equity interest of their subsidiaries. Such
pledges shall be governed by the terms of such securities pledge agreements
and
not by the terms of this Agreement.
6. Representations
and Warranties Concerning Grantors’ Legal Status.
Each
Grantor has previously delivered to the Collateral Agent a certificate signed
by
such Grantor and entitled “Perfection Certificate” (the “Perfection Certificate”).
Each
Grantor represents and warrants to the Holders and the Collateral Agent as
follows: (a) such Grantor’s exact legal name is that indicated on the Perfection
Certificate and on the signature page hereof, (b) such Grantor is an
organization of the type, and is organized in the jurisdiction, set forth in
the
Perfection Certificate, (c) the Perfection Certificate accurately sets forth
such Grantor’s organizational identification number or accurately states that
such Grantor has none, (d) the Perfection Certificate accurately sets forth
such
Grantor’s place of business or, if more than one, its chief executive office, as
well as such Grantor’s mailing address, if different, (e) all other information
set forth on the Perfection Certificate pertaining to such Grantor is accurate
and complete, and (f) there has been no change in any of such information
since the date on which the Perfection Certificate was signed by such
Grantor.
7. Covenants
Concerning Grantors’ Legal Status.
Each
Grantor covenants with the Holders and the Collateral Agent as follows: (a)
without providing at least thirty (30) days prior written notice to the
Collateral Agent, such Grantor will not change its name, its place of business
or, if more than one, chief executive office, or its mailing address or
organizational identification number if it has one, (b) if such Grantor does
not
have an organizational identification number and later obtains one, such Grantor
will forthwith notify the Collateral Agent of such organizational identification
number, and (c) such Grantor will not change its type of organization,
jurisdiction of organization or other legal structure.
8. Representations
and Warranties Concerning Collateral, Etc. Each
Grantor further represents and warrants to the Holders and the Collateral Agent
as follows: (a) such Grantor is the owner of the Collateral, free from any
right
or claim of any person or any adverse lien, except for the security interest
created by this Agreement and other Liens permitted by the Purchase Agreement,
(b) none of the Collateral constitutes, or is the proceeds of, “farm products”
as defined in §9-102(a)(34) of the Uniform Commercial Code of the State, (c)
none of the account debtors or other persons obligated on any of the Collateral
is a governmental authority covered by the Federal Assignment of Claims Act
or
like federal, state or local statute or rule in respect of such Collateral,
(d)
such Grantor holds no commercial tort claim except as indicated on the
Perfection Certificate, (e) such Grantor has at all times operated its business
in compliance with all applicable provisions of the federal Fair Labor Standards
Act, as amended, and with all applicable provisions of federal, state and local
statutes and ordinances dealing with the control, shipment, storage or disposal
of hazardous materials or substances, (f) all other information set forth on
the
Perfection Certificate pertaining to the Collateral is accurate and complete,
and (g) there has been no change in any of such information since the date
on
which the Perfection Certificate was signed by such Grantor.
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9. Covenants
Concerning Collateral, Etc.
Each
Grantor further covenants with the Holders and the Collateral Agent as follows:
(a) the Collateral, to the extent not delivered to the Collateral Agent pursuant
to §4, will be kept at those locations listed on the Perfection Certificate and
such Grantor will not remove the Collateral from such locations, without
providing at least 30 days prior written notice to the Collateral Agent, (b)
except for the security interest herein granted and
Liens
permitted by the Purchase Agreement, such Grantor shall be the owner of the
Collateral free from any right or claim of any other person or any lien, and
such Grantor shall defend the same against all claims and demands of all persons
at any time claiming the same or any interests therein adverse to the Collateral
Agent or any of the Holders, (c) such Grantor shall not pledge, mortgage or
create, or suffer to exist any right of any person in or claim by any person
to
the Collateral, or any lien in the Collateral in favor of any person, or become
bound (as provided in Section 9-203(d) of the Uniform Commercial Code of the
State or any other relevant jurisdiction or otherwise) by a security agreement
in favor of any person as secured party, other than the Collateral Agent except
for Liens permitted by the Purchase Agreement, (d) such Grantor will keep the
Collateral in good order and repair and will not use the same in violation
of
law or any policy of insurance thereon, (e) as provided in the Purchase
Agreement, such Grantor will permit the Collateral Agent, or its designee,
to
inspect the Collateral at any reasonable time, wherever located, (f) such
Grantor will pay promptly when due all taxes, assessments, governmental charges
and levies upon the Collateral or incurred in connection with the use or
operation of the Collateral or incurred in connection with this Agreement,
(g)
such Grantor will continue to operate, its business in compliance with all
applicable provisions of the federal Fair Labor Standards Act, as amended,
and
with all applicable provisions of federal, state and local statutes and
ordinances dealing with the control, shipment, storage or disposal of hazardous
materials or substances, and (h) such Grantor will not sell or otherwise
dispose, or offer to sell or otherwise dispose, of the Collateral or any
interest therein except for dispositions permitted by the Purchase
Agreement.
10. Insurance.
10.1. Maintenance
of Insurance. Each
Grantor will maintain with financially sound and reputable insurers insurance
with respect to its properties and business against such casualties and
contingencies as shall be in accordance with general practices of businesses
engaged in similar activities in similar geographic areas. Such insurance shall
be in such minimum amounts that no Grantor will be deemed a co-insurer under
applicable insurance laws, regulations and policies and otherwise shall be
in
such amounts, contain such terms, be in such forms and be for such periods
as
may be reasonably satisfactory to the Collateral Agent. In addition, all such
insurance shall be payable to the Collateral Agent as loss payee for
the
benefit of the Holders and the Collateral Agent. Without limiting the foregoing,
each Grantor will (a) keep all of its physical property insured with casualty
or
physical hazard insurance on an “all risks” basis, with broad form flood and
earthquake coverages and electronic data processing coverage, with a full
replacement cost endorsement and an “agreed amount” clause in an amount equal to
100% of the full replacement cost of such property, (b) maintain all such
workers' compensation or similar insurance as may be required by law and (c)
maintain, in amounts and with deductibles equal to those generally maintained
by
businesses engaged in similar activities in similar geographic areas, general
public liability insurance against claims of bodily injury, death or property
damage occurring, on, in or about the properties of such Grantor; business
interruption insurance; and product liability insurance.
-7-
10.2. Insurance
Proceeds. The
proceeds of any casualty insurance in respect of any casualty loss of any of
the
Collateral shall be applied to the Obligations in accordance with Section 3.1
of
the Purchase Agreement.
10.3. Continuation
of Insurance. All
policies of insurance shall provide for at least 30 days prior written
cancellation notice to the Collateral Agent. In the event of failure by any
Grantor to provide and maintain insurance as herein provided, the Collateral
Agent may, at its option, provide such insurance and charge the amount thereof
to such Grantor. The Grantors shall furnish the Collateral Agent with
certificates of insurance and policies evidencing compliance with the foregoing
insurance provision.
11. Collateral
Protection Expenses; Preservation of Collateral.
11.1. Expenses
Incurred by Collateral Agent. In
the
Collateral Agent’s discretion, the Collateral Agent may discharge taxes and
other encumbrances at any time levied or placed on any of the Collateral,
maintain any of the Collateral, make repairs thereto and pay any necessary
filing fees or insurance premiums, in each case if any Grantor fails to do
so.
Each Grantor agrees to reimburse the Collateral Agent on demand for all
expenditures so made. The Collateral Agent shall have no obligation to any
Grantor to make any such expenditures, nor shall the making thereof be construed
as a waiver or cure of any Default or Event of Default.
11.2. Collateral
Agent's Obligations and Duties. Anything
herein to the contrary notwithstanding, each Grantor shall remain obligated
and
liable under each contract or agreement comprised in the Collateral to be
observed or performed by such Grantor thereunder. Neither the Collateral Agent
nor any Holder shall have any obligation or liability under any such contract
or
agreement by reason of or arising out of this Agreement or the receipt by the
Collateral Agent or any Holder of any payment relating to any of the Collateral,
nor shall the Collateral Agent or any Holder be obligated in any manner to
perform any of the obligations of any Grantor under or pursuant to any such
contract or agreement, to make inquiry as to the nature or sufficiency of any
payment received by the Collateral Agent or any Holder in respect of the
Collateral or as to the sufficiency of any performance by any party under any
such contract or agreement, to present or file any claim, to take any action
to
enforce any performance or to collect the payment of any amounts which may
have
been assigned to the Collateral Agent or to which the Collateral Agent or any
Holder may be entitled at any time or times. The Collateral Agent's sole duty
with respect to the custody, safe keeping and physical preservation of the
Collateral in its possession, under §9-207 of the Uniform Commercial Code of the
State or otherwise, shall be to deal with such Collateral in the same manner
as
the Collateral Agent deals with similar property for its own
account.
-8-
12. Securities
and Deposits. The
Collateral Agent may at any time following and during the continuance of an
Event of Default, at its option, transfer to itself or any nominee any
securities constituting Collateral, receive any income thereon and hold such
income as additional Collateral or apply it to the Obligations. Whether or
not
any Obligations are due, the Collateral Agent may following and during the
continuance of an Event of Default demand, xxx for, collect, or make any
settlement or compromise which it deems desirable with respect to the
Collateral. Regardless of the adequacy of Collateral or any other security
for
the Obligations, any deposits or other sums at any time credited by or due
from
the Collateral Agent or any Holder to any Grantor may at any time be applied
to
or set off against any of the Obligations.
13. Notification
to Account Debtors and Other Persons Obligated on
Collateral. If
an
Event of Default shall have occurred and be continuing, each Grantor shall,
at
the request and option of the Collateral Agent, notify account debtors and
other
persons obligated on any of the Collateral of the security interest of the
Collateral Agent in any account, chattel paper, general intangible, instrument
or other Collateral and that payment thereof is to be made directly to the
Collateral Agent or to any financial institution designated by the Collateral
Agent as the Collateral Agent's agent therefor, and the Collateral Agent may
itself, if an Event of Default shall have occurred and be continuing, without
notice to or demand upon any Grantor, so notify account debtors and other
persons obligated on Collateral. After the making of such a request or the
giving of any such notification, each Grantor shall hold any proceeds of
collection of accounts, chattel paper, general intangibles, instruments and
other Collateral received by such Grantor as trustee for the Collateral Agent,
for the benefit of the Holders and the Collateral Agent, without commingling
the
same with other funds of such Grantor and shall turn the same over to the
Collateral Agent in the identical form received, together with any necessary
endorsements or assignments. The Collateral Agent shall apply the proceeds
of
collection of accounts, chattel paper, general intangibles, instruments and
other Collateral received by the Collateral Agent to the Obligations, such
proceeds to be immediately credited after final payment in cash or other
immediately available funds of the items giving rise to them.
14. Power
of Attorney.
14.1. Appointment
and Powers of Collateral Agent. Each
Grantor hereby irrevocably constitutes and appoints the Collateral Agent and
any
officer or agent thereof, with full power of substitution, as its true and
lawful attorneys-in-fact with full irrevocable power and authority in the place
and stead of such Grantor or in the Collateral Agent's own name, for the purpose
of carrying out the terms of this Agreement, to take any and all appropriate
action and to execute any and all documents and instruments that may be
necessary or useful to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, hereby gives said attorneys the power
and right, on behalf of such Grantor, without notice to or assent by such
Grantor, to do the following:
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(a) upon
the
occurrence and during the continuance of an Event of Default, generally to
sell,
transfer, pledge, make any agreement with respect to or otherwise dispose of
or
deal with any of the Collateral in such manner as is consistent with the Uniform
Commercial Code of the State or any other relevant jurisdiction and as fully
and
completely as though the Collateral Agent were the absolute owner thereof for
all purposes, and to do, at such Grantor's expense, at any time, or from time
to
time, all acts and things which the Collateral Agent deems necessary or useful
to protect, preserve or realize upon the Collateral and the Collateral Agent's
security interest therein, in order to effect the intent of this Agreement,
all
no less fully and effectively as such Grantor might do, including (i) the filing
and prosecuting of registration and transfer applications with the appropriate
federal, state or local agencies or authorities with respect to trademarks,
copyrights and patentable inventions and processes, (ii) upon written notice
to
such Grantor, the exercise of voting rights with respect to voting securities,
which rights may be exercised, if the Collateral Agent so elects, with a view
to
causing the liquidation of assets of the issuer of any such securities and
(iii)
the execution, delivery and recording, in connection with any sale or other
disposition of any Collateral, of the endorsements, assignments or other
instruments of conveyance or transfer with respect to such Collateral;
and
(b) to
the
extent that such Grantor’s authorization given in §3 is not sufficient, to file
such financing statements with respect hereto, with or without such Grantor
's
signature, or a photocopy of this Agreement in substitution for a financing
statement, as the Collateral Agent may deem appropriate and to execute in such
Grantor 's name such financing statements and amendments thereto and
continuation statements which may require such Grantor 's
signature.
14.2. Ratification
by Grantor. To
the
extent permitted by law, each Grantor hereby ratifies all that said attorneys
shall lawfully do or cause to be done by virtue hereof. This power of attorney
is a power coupled with an interest and is irrevocable.
14.3. No
Duty on Collateral Agent. The
powers conferred on the Collateral Agent hereunder are solely to protect the
interests of the Collateral Agent and the Holders in the Collateral and shall
not impose any duty upon the Collateral Agent to exercise any such powers.
The
Collateral Agent shall be accountable only for the amounts that it actually
receives as a result of the exercise of such powers, and neither it nor any
of
its officers, directors, employees or agents shall be responsible to any Grantor
for any act or failure to act, except for the Collateral Agent's own gross
negligence or willful misconduct.
-10-
15. Rights
and Remedies. If
an
Event of Default shall have occurred and be continuing, the Collateral Agent,
without any other notice to or demand upon any Grantor, shall have in any
jurisdiction in which enforcement hereof is sought, in addition to all other
rights and remedies, the rights and remedies of a secured party under the
Uniform Commercial Code of the State or any other relevant jurisdiction and
any
additional rights and remedies as may be provided to a secured party in any
jurisdiction in which Collateral is located, including the right to take
possession of the Collateral, and for that purpose the Collateral Agent may,
so
far as such Grantor can give authority therefor, enter upon any premises on
which the Collateral may be situated and remove the same therefrom. The
Collateral Agent may in its discretion require any Grantor to assemble all
or
any part of the Collateral at such location or locations within the
jurisdiction(s) of such Grantor 's principal office(s) or at such other
locations as the Collateral Agent may reasonably designate. Unless the
Collateral is perishable or threatens to decline speedily in value or is of
a
type customarily sold on a recognized market, the Collateral Agent shall give
to
the applicable Grantor at least five (5) Business Days prior written notice
of
the time and place of any public sale of Collateral or of the time after which
any private sale or any other intended disposition is to be made. Each Grantor
hereby acknowledges that five (5) Business Days prior written notice of such
sale or sales shall be reasonable notice. In addition, each Grantor waives
any
and all rights that it may have to a judicial hearing in advance of the
enforcement of any of the Collateral Agent's rights and remedies hereunder,
including its right following an Event of Default to take immediate possession
of the Collateral and to exercise its rights and remedies with respect
thereto.
16. Standards
for Exercising Rights and Remedies. To
the
extent that applicable law imposes duties on the Collateral Agent to exercise
remedies in a commercially reasonable manner, each Grantor acknowledges and
agrees that it is not commercially unreasonable for the Collateral Agent (a)
to
fail to incur expenses reasonably deemed significant by the Collateral Agent
to
prepare Collateral for disposition or otherwise to fail to complete raw material
or work in process into finished goods or other finished products for
disposition, (b) to fail to obtain third party consents for access to Collateral
to be disposed of, or to obtain or, if not required by other law, to fail to
obtain governmental or third party consents for the collection or disposition
of
Collateral to be collected or disposed of, (c) to fail to exercise collection
remedies against account debtors or other persons obligated on Collateral or
to
fail to remove Liens on or any adverse claims against Collateral, (d) to
exercise collection remedies against account debtors and other persons obligated
on Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral
is
of a specialized nature, (f) to contact other persons, whether or not in the
same business as such Grantor, for expressions of interest in acquiring all
or
any portion of the Collateral, (g) to hire one or more professional auctioneers
to assist in the disposition of Collateral, whether or not the collateral is
of
a specialized nature, (h) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties, (k) to purchase insurance
or
credit enhancements to insure the Collateral Agent against risks of loss,
collection or disposition of Collateral or to provide to the Collateral Agent
a
guaranteed return from the collection or disposition of Collateral, or (l)
to
the extent deemed appropriate by the Collateral Agent, to obtain the services
of
brokers, investment bankers, consultants and other professionals to assist
the
Collateral Agent in the collection or disposition of any of the Collateral.
Each
Grantor acknowledges that the purpose of this §16 is to provide non-exhaustive
indications of what actions or omissions by the Collateral Agent would fulfill
the Collateral Agent’s duties under the Uniform Commercial Code of the State or
any other relevant jurisdiction in the Collateral Agent’s exercise of remedies
against the Collateral and that other actions or omissions by the Collateral
Agent shall not be deemed to fail to fulfill such duties solely on account
of
not being indicated in this §16. Without limitation upon the foregoing, nothing
contained in this §16 shall be construed to grant any rights to any Grantor or
to impose any duties on the Collateral Agent that would not have been granted
or
imposed by this Agreement or by applicable law in the absence of this §16.
-11-
17. No
Waiver by Collateral Agent, etc.
The
Collateral Agent shall not be deemed to have waived any of its rights and
remedies in respect of the Obligations or the Collateral unless such waiver
shall be in writing and signed by the Collateral Agent with the consent of
the
Holders. No delay or omission on the part of the Collateral Agent in exercising
any right or remedy shall operate as a waiver of such right or remedy or any
other right or remedy. 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 rights
and
remedies of the Collateral Agent with respect to the Obligations or the
Collateral, whether evidenced hereby or by any other instrument or papers,
shall
be cumulative and may be exercised singularly, alternatively, successively
or
concurrently at such time or at such times as the Collateral Agent deems
expedient.
18. Suretyship
Waivers by Grantors. Each
Grantor waives demand, notice, protest, notice of acceptance of this Agreement,
notice of loans made, credit extended, Collateral received or delivered or
other
action taken in reliance hereon and all other demands and notices of any
description. With respect to both the Obligations and the Collateral, each
Grantor assents to any extension or postponement of the time of payment or
any
other indulgence, to any substitution, exchange or release of or failure to
perfect any security interest in any Collateral, to the addition or release
of
any party or person primarily or secondarily liable, to the acceptance of
partial payment thereon and the settlement, compromising or adjusting of any
thereof, all in such manner and at such time or times as the Collateral Agent
may deem advisable. The Collateral Agent shall have no duty as to the collection
or protection of the Collateral or any income therefrom, the preservation of
rights against prior parties, or the preservation of any rights pertaining
thereto beyond the safe custody thereof as set forth in §11.2. Each Grantor
further waives any and all other suretyship defenses.
19. Marshaling. Neither
the Collateral Agent nor any Holder shall be required to marshal any present
or
future collateral security (including but not limited to the Collateral) for,
or
other assurances of payment of, the Obligations or any of them or to resort
to
such collateral security or other assurances of payment in any particular order,
and all of the rights and remedies of the Collateral Agent or any Holder
hereunder and of the Collateral Agent or any Holder in respect of such
collateral security and other assurances of payment shall be cumulative and
in
addition to all other rights and remedies, however existing or arising. To
the
extent that it lawfully may, each Grantor hereby agrees that it will not invoke
any law relating to the marshaling of collateral which might cause delay in
or
impede the enforcement of the Collateral Agent's rights and remedies under
this
Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which
any
of the Obligations is secured or payment thereof is otherwise assured, and,
to
the extent that it lawfully may, each Grantor hereby irrevocably waives the
benefits of all such laws.
-12-
20. Proceeds
of Dispositions; Expenses. Each
Grantor shall pay to the Collateral Agent on demand any and all expenses,
including reasonable attorneys' fees and disbursements, incurred or paid by
the
Collateral Agent in protecting, preserving or enforcing the Collateral Agent's
rights and remedies under or in respect of any of the Obligations or any of
the
Collateral. After deducting all of said expenses, the residue of any proceeds
of
collection or sale or other disposition of Collateral shall, to the extent
actually received in cash, be applied to the payment of the Obligations in
such
order or preference as is provided in the Purchase Agreement, proper allowance
and provision being made for any Obligations not then due. Upon the final
payment and satisfaction in full of all of the Obligations and after making
any
payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the Uniform
Commercial Code of the State, any excess shall be returned to the Grantors.
In
the absence of final payment and satisfaction in full of all of the Obligations,
each Grantor shall remain liable for any deficiency.
21. Overdue
Amounts. Until
paid, all amounts due and payable by any Grantor hereunder shall be a debt
secured by the Collateral and shall bear, whether before or after judgment,
interest at the rate of interest for overdue principal set forth in the Purchase
Agreement.
22. Governing
Law; Consent to Jurisdiction. THIS
AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE. Each
Grantor agrees that any action or claim arising out of any dispute in connection
with this Agreement, any rights or obligations hereunder or the performance
or
enforcement of such rights or obligations may be brought in the courts of the
State or any federal court sitting therein and consents to the non-exclusive
jurisdiction of such court and to service of process in any such suit being
made
upon any Grantor by mail at the address specified in Section 17 of the Purchase
Agreement or Section 12 of any Guaranty, as applicable. Each Grantor hereby
waives any objection that it may now or hereafter have to the venue of any
such
suit or any such court or that such suit is brought in an inconvenient
court.
23. Waiver
of Jury Trial. EACH
GRANTOR WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THE PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS
OR
OBLIGATIONS. Except as prohibited by law, each Grantor waives any right which
it
may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. Each Grantor (a)
certifies that neither the Collateral Agent nor any Holder nor any
representative, agent or attorney of the Collateral Agent or any Holder has
represented, expressly or otherwise, that the Collateral Agent or any Holder
would not, in the event of litigation, seek to enforce the foregoing waivers
or
other waivers contained in this Agreement and (b) acknowledges that, in entering
into the Purchase Agreement and the other Financing Agreements to which the
Collateral Agent or any Holder is a party, the Collateral Agent and the Holders
are relying upon, among other things, the waivers and certifications contained
in this §23.
-13-
24. Miscellaneous. The
headings of each section of this Agreement are for convenience only and shall
not define or limit the provisions thereof. This Agreement and all rights and
obligations hereunder shall be binding upon each Grantor and its successors
and
assigns, and shall inure to the benefit of the Collateral Agent, the Holders
and
their respective successors and assigns. If any term of this Agreement shall
be
held to be invalid, illegal or unenforceable, the validity of all other terms
hereof shall in no way be affected thereby, and this Agreement shall be
construed and be enforceable as if such invalid, illegal or unenforceable term
had not been included herein. Each Grantor acknowledges receipt of a copy of
this Agreement.
25. Intercreditor
Agreement.
The
representations, warranties and covenants of the Grantors hereunder, and the
rights and remedies of the Collateral Agent hereunder, are subject to the
provisions of the Intercreditor Agreement and the rights of the Senior Creditor
therein.
[Signature
Pages to Follow]
-14-
IN
WITNESS WHEREOF,
intending to be legally bound, each Grantor has caused this Agreement to be
duly
executed as of the date first above written.
ABR
ADVISORS, INC.
|
|
ASSET
PRESERVATION CORP.
|
|
BENEFIT
DYNAMICS, INC.
|
|
BENEFIT
MANAGEMENT INC.
|
|
BPI/PPA,
INC.
|
|
CIRCLE
PENSION, INC.
|
|
COMPLETE
INVESTMENT MANAGEMENT, INC. OF PHILADELPHIA
|
|
HADDON
STRATEGIC ALLIANCES, INC.
|
|
LAMORIELLO
& CO., INC.
|
|
NATIONAL
ACTUARIAL PENSION SERVICES, INC.
|
|
NATIONAL
ASSOCIATES, INC., N.W.
|
|
PENSION
ADMINISTRATION SERVICES, INC.
|
|
PENTEC,
INC.
|
|
PENTEC
CAPITAL MANAGEMENT, INC.
|
|
SOUTHEASTERN
PENSION SERVICES, INC.
|
|
XXXXXXX
X. XXXXX & ASSOCIATES, INC.
|
|
THE
PENSION ALLIANCE, INC.
|
|
VALLEY
FORGE ENTERPRISES, LTD.
|
|
V.F.
ASSOCIATES, INC.
|
|
V.F.
INVESTMENT SERVICES, CORP.
|
|
VALLEY
FORGE CONSULTING
CORPORATION
|
By:
|
/s/Xxxxxx
Xxxx
|
|
Name:
Xxxxxx Xxxx
|
||
Title:
CEO
|
Accepted:
WOODSIDE
AGENCY SERVICES, LLC,
as
Collateral Agent
By: |
/s/Xxxxxx
Xxxxx
|
Name:
Xxxxxx Xxxxx
|
|
Title:
Executive Vice President
|
CERTIFICATE
OF ACKNOWLEDGMENT
COMMONWEALTH
OR STATE OF )
)
ss.
COUNTY
OF
)
On
this
___ day of __________________, 20__, before me, the undersigned notary public,
personally appeared ______________________, proved to me through satisfactory
evidence of identification, which were _____________________________, to be
the
person whose name is signed on the preceding or attached document, and
acknowledged to me that (he)(she) signed it voluntarily for its stated purpose
(as ______________ for __________________, a
_______________________).
(official
signature and seal of notary)
|
||
My
commission expires:
|
[Acknowledgment
to Security Agreement]