SECURITY AGREEMENT
THIS
SECURITY AGREEMENT (this “Agreement”) is made this 12th day of February, 2010 in
favor of RBS CITIZENS, N.A., a national banking association, with offices at 000
Xxxxxxxx, Xxxxxx, Xxx Xxxx 00000 (“Bank”) by PREMIER PACKAGING CORPORATION, a
corporation formed under the laws of the State of New York with offices at 0
Xxxxxxx Xxxxx, Xxxxxx, Xxx Xxxx 00000 (“Premier”), DOCUMENT SECURITY SYSTEMS,
INC., a corporation formed under the laws of the State of New York with offices
at 00 Xxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (“DSS”), SECUPRINT, INC., a
corporation formed under the laws of the State of [New York] with offices at
0000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (“Secuprint”), PLASTIC PRINTING
PROFESSIONALS, INC., a corporation formed under the laws of the State of New
York with offices at 000 Xxxx Xxxx, Xxxxxxxx, Xxxxxxxxxx 00000 (“Plastic
Printing,” and together with Premier, DSS and Secuprint bound hereby jointly and
severally, and individually and collectively called, “Grantor”).
1. DEFINITIONS.
Unless
otherwise indicated in this Agreement, all terms shall have the same meanings as
given to them in the Credit Facility Agreement, dated on even date herewith, and
to the extent not inconsistent therewith in the Uniform Commercial Code of the
State of New York as amended from time to time.
(a) “Collateral”
means all assets and property including, without limitation, all goods, tangible
property, machinery, equipment, furniture, vehicles, parts, leasehold
improvements, accounts (including, but not limited to, the Escrow Account),
inventory, chattel paper, documents, choses in action, general intangibles,
goodwill, insurance policies and proceeds, and intellectual property (including
among others operating systems, patents, copyrights, trademarks, tradenames,
licenses, trade secrets, know-how, franchises, and proprietary and other rights
in data, engineering, technical plans, drawings, information, methods, systems,
processes, inventions, formulas, applications, software, programs, manuals, and
technology, and all other technology and proprietary rights of Grantor and all
applications to acquire such rights, and in all rights and interests in any of
them unless the same are licensed or leased pursuant to an agreement that
prohibits the granting of a security interest in or similar assignment of the
same), of any kind or nature in which the Grantor has an interest now or in the
future, and which are now existing or hereafter created or acquired, together
with all additions, replacements, accessions, products, and proceeds in any form
thereof.
(b) “Debtor”
means Premier Packaging Corporation and its successors, legal representatives,
and assigns.
(c) “Liabilities”
mean all indebtedness, liabilities, and obligations of every kind or nature,
whether absolute or contingent, primary or secondary, direct or indirect, joint
or several, and whether heretofore or hereafter created, arising, or existing or
at any time due and owing from Grantor and/or Debtor to Bank (including without
limitation all obligations and liabilities of the Grantor and/or Debtor under
(i) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements, and all other agreements or arrangement with the Bank
designed to protect the Grantor and/or Debtor against fluctuations in interest
rates or currency exchange rates, (ii) guarantees, and all sums expended by the
Bank for protection of its interests such as payments made for taxes, insurance,
and expenses of collection).
(d) “Credit
Facility Agreement” means the Credit Facility Agreement between the Bank and
Borrower, dated on even date herewith, as the same may be modified, extended, or
replaced from time to time.
2. SECURITY
INTEREST. The Grantor hereby grants to the Bank a security interest
in the Collateral to secure the payment and performance of the
Liabilities. This security interest is specifically intended to be a
continuing interest and shall cover Collateral in which the Grantor acquires an
interest after the date of this Agreement as well as Collateral in which the
Grantor now has an interest. This security interest shall continue
until terminated as described in this Agreement even if all Liabilities are paid
in full from time to time. The Bank shall have the right to apply the
Collateral and any proceeds therefrom to all or any part of the Liabilities as
and in the order the Bank may elect, whether such Liabilities are otherwise
secured. Without limiting the generality of the foregoing, the Bank
shall have a first priority security interest on all business assets of the
Debtor and a first priority security interest on the equipment listed on
Schedule B hereto.
3. LOCATIONS
OF GRANTOR AND COLLATERAL. The principal office of the Grantor is at
the address shown in the preamble to this Agreement. All locations at
which the Collateral will be kept or at which the Grantor does business are
indicated on Schedule A attached to and made a part of this
Agreement. Grantor will notify the Bank immediately of any new or
changed locations at which any of the Collateral is kept or where the Grantor
does business, and of any change in the name of the Grantor. At the
request of Bank, the Grantor will provide disclaimers of interest and removal
agreements, in form satisfactory to the Bank, signed by all parties other than
Grantor having an interest in premises at which any Collateral is
located.
4. GRANTOR’S
REPRESENTATION. Except for the security interest granted hereby and
as otherwise allowed by the Credit Facility Agreement, (i) Grantor is the owner
of the Collateral free from all liens, encumbrances, and security interests,
(ii) Grantor will not sell or transfer the Collateral or any interest
(including, without limitation, a security interest) therein without the prior
written consent of the Bank except for sales in the ordinary course of business
for fair value, sales of obsolete equipment, and transfers of assets that do not
constitute a material portion of its assets for a fair consideration, and (iii)
Grantor will defend the Collateral against the claims and demands of all persons
(except for those persons who have a claim or lien permitted under the Credit
Facility Agreement), and will cause the immediate removal and termination of any
levy, execution, judgment or other lien, or similar claim of third persons to
the Collateral (except for those persons who have a claim or lien permitted
under the Credit Facility Agreement).
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5. PERFECTION
OF SECURITY INTEREST. Grantor will execute and deliver to the Bank
such financing statements, security agreements, assignments, and other documents
as Bank may at any time reasonably request that are required to perfect or
protect the security interest granted hereby. Grantor hereby
authorizes the Bank to execute and file financing statements with or without the
signature of the Grantor from time to time as the Bank may deem necessary or
desirable. If the Collateral is a motor vehicle required to be titled
under applicable law, Grantor warrants that the Bank’s security interest will be
recorded on the title certificates covering the Collateral and will deliver such
certificates or other evidence of ownership to the Bank, as the Bank
requests. Grantor hereby appoints Bank as its attorney in fact to
execute and deliver notices of lien, financing statements, assignments, and any
other documents, notices, and agreements necessary for the perfection of Bank’s
security interests in the Collateral. Grantor agrees to pay the costs
of filing or perfection of the Bank’s security interests and searches of the
public records necessary to confirm perfection and relative priority of Bank’s
security interests.
6. USE
OF COLLATERAL/MAINTENANCE. The Grantor will keep the Collateral in good order
and repair except for normal wear and tear in the ordinary course of
business. The Grantor will not use the Collateral in violation of law
or any policy of insurance thereon. The Bank or its nominees may
inspect the Collateral and the Grantor’s records regarding the same at any
reasonable time, wherever located, and may make extracts therefrom and copies
thereof.
7. TAXES. The
Grantor will pay promptly, when due, all taxes and assessments upon the
Collateral or its use or operation, or upon this Agreement.
8. INSURANCE. The
Grantor at all times will keep the Collateral insured in such amounts, with such
insurance companies chosen by the Grantor, and against such risks, all as are
reasonably satisfactory to the Bank. All insurance policies shall
name the Bank as additional insured/loss payee and shall provide for losses
covered thereby to be payable to the Bank and the Grantor as their respective
interests may appear. All policies of insurance shall provide for not
less than thirty (30) days’ prior notice of cancellation to the
Bank. The Grantor will deliver evidence required insurance to the
Bank upon its request and in any event at least annually.
After any
Event of Default hereunder, the Bank may, but need not, (i) cancel, in
accordance with applicable law, any insurance contract covering the Collateral
or its ownership or operation, (ii) demand and receive any return premiums,
unearned premium refunds and dividends payable in respect thereof (the Grantor
hereby irrevocably designating, constituting and appointing the Bank as its true
and lawful attorney in fact so to do) and (iii) apply any and all sums received
by the Bank as a result of such cancellation, after deducting therefrom any and
all expenses incident thereto, toward payment of the Liabilities.
The
Grantor will notify insurer and the Bank in the event of any loss, damage, or
other casualty affecting a material portion of the Collateral. The
Grantor hereby assigns to the Bank any and all monies which may become due and
payable under any policy insuring the Collateral, directs any such insurance
company to make payments directly to the Bank, and authorizes the Bank to apply
such monies in payment on account of the Liabilities, whether or not due, and to
remit any surplus to the Grantor; provided, however, that the
Bank will make available to the Grantor such insurance proceeds to repair or
replace the Collateral provided that no Event of Default has occurred and that
the Grantor has provided evidence satisfactory to the Bank that such proceeds
together with any necessary additional funds from sources acceptable to the Bank
are available for such repair or replacement and that such repair or replacement
can be accomplished within a reasonable period of time and without unreasonable
disruption of the Grantor’s business or operations beyond any period covered by
business interruption insurance. After an Event of Default, the
Grantor hereby irrevocably appoints the Bank as its attorney in fact, with full
power of substitution, to (i) make and adjust claims, (ii) receive all proceeds
and payments including the return of unearned premiums, (iii) execute proofs of
claim, (iv) endorse drafts and other instruments for the payment of money, (v)
execute releases, (vi) negotiate settlements, (vii) cancel any insurance
referred to in this Agreement, and (viii) do all other things necessary and
required to effect a settlement under or to realize the benefits of any
insurance policy.
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9. PROTECTION
OF BANK’S INTEREST. Seven or more days after the day the Bank mails
the Grantor notice, upon failure of the Grantor to (i) remove liens or interests
prohibited by Section 4 of this Agreement, (ii) comply with obligations to
maintain Collateral pursuant to Section 6 of this Agreement, (iii) pay taxes or
assessments as required by Section 7 of this Agreement, or (iv) provide evidence
satisfactory to the Bank of insurance as required by Section 8 of this
Agreement, the Bank in its discretion may discharge any such liens or interests,
pay taxes or assessments, and obtain insurance coverage on the
Collateral. The Bank also may pay any costs of perfection and
searches pursuant to Section 5 of this Agreement. The Grantor agrees
to reimburse the Bank on demand for any and all expenditures so made, and until
paid the amount thereof also shall be part of the Liabilities secured by the
Collateral. The Bank shall have no obligation to the Grantor to make
any such expenditures nor shall the making thereof relieve any default
hereunder.
10. GRANTOR’S
COVENANTS. So long as this Agreement remains in effect the Grantor
will: (i) furnish the Bank at such intervals as the Bank may reasonably
prescribe with a certificate (in such form as the Bank may from time to time
specify) containing such information with respect to the Collateral as the Bank
may reasonably require, including, without limitation, inventory listings and
account agings; and (ii) keep accurate and complete records of the
Collateral in accordance with generally accepted accounting principles
consistently applied.
If
requested by the Bank, the Grantor will also: (a) xxxx its records evidencing
the Collateral in a manner satisfactory to the Bank so as to indicate the
security interest of the Bank hereunder; (b) following an Event of Default
deliver to the Bank to hold pursuant hereto any chattel paper, instruments, or
other documents representing or relating to any of the Collateral; (c) promptly
reflect in its books, records, and reports to the Bank any claims made in regard
to any Collateral; (d) immediately notify the Bank if any of the Collateral
arises out of contracts for the improvement of real property, deals with a
public improvement or is with the United States, any state, or any department,
agency or instrumentality thereof, and execute any instruments and take an steps
required by the Bank in order that all moneys due or to become due under any
such contract shall be assigned to the Bank and notice thereof be given as
required by law; and (e) fully cooperate with the Bank in the exercising of its
rights and methods for verification of the Collateral.
11. DEFAULT. The
following events or conditions shall be an “Event of Default” under this
Agreement: (a) any Event of Default under the Credit Facility Agreement or (b)
loss, theft, material damage or destruction of a material portion of the
Collateral which is not covered by insurance.
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12. REMEDIES. Upon
the occurrence of an Event of Default, the Bank may declare all of the
Liabilities to be immediately due and payable and the Bank shall have the rights
and remedies of a secured party under the Uniform Commercial Code of the State
of New York as amended from time to time in any jurisdiction where enforcement
of this Agreement is sought, in addition to all other rights and remedies at law
or in equity. Among other remedies, the Bank may take immediate
possession of the Collateral and for that purpose the Bank may, so far as the
Grantor can give authority therefor, enter upon any premises on which the
Collateral or any part thereof may be situated and secure or remove the same
therefrom. Upon request of the Bank, the Grantor will assemble and make the
Collateral available to the Bank, at a reasonable place and time designated by
the Bank. The Grantor’s failure to take possession of any Collateral
in possession or under control of the Bank at any time and place reasonably
specified by the Bank in writing to the Grantor shall constitute an abandonment
of such property. The Grantor agrees that notice of the time and
place of public sale of any of the Collateral or of the time after which any
private sale thereof is to be made or of other disposition of the Collateral
shall be deemed reasonable notice seven days after such notice is deposited in
the mail or otherwise delivered to the Grantor at the address shown in the
preamble of this Agreement.
In
addition to its other rights, following an Event of Default the Bank may but
shall not be obligated to notify any parties which are obligated to pay the
Grantor any Collateral or proceeds thereof, to make all payments directly to the
Bank. The Grantor authorizes such parties to make such payments
directly to the Bank and to rely on notice from the Bank without further
inquiry. The Bank may demand and take all necessary or desirable
steps to collect such Collateral in either its or the Grantor’s, name, with the
right to enforce, compromise, settle, or discharge any of the
foregoing. The Bank may endorse the Grantor’s name on any checks,
commercial paper, instruments, and the like pertaining to the
foregoing.
The Bank
shall not be responsible to the Grantor for loss or damage resulting from the
Bank’s failure to enforce or collect any Collateral or any monies due or to
become due under any Liability of the Grantor to the Bank. The Bank
shall have no obligation to take, and the Grantor shall have the sole
responsibility for taking, any and all steps to preserve rights against any and
all prior parties to any Collateral, whether or not in the Bank’s
possession.
After an
Event of Default, the Grantor (i) will make no change in any account (or the
contract underlying such account), chattel paper, or general intangible, and
(ii) shall receive as the sole property of the Bank and hold in trust for the
Bank all monies, checks, notes, drafts, and other property (collectively called
“items of payment”) representing the proceeds of any
Collateral. After an Event of Default, the Bank may but shall be
under no obligation to: (a) notify all appropriate parties that the Collateral,
or any part thereof, has been assigned to the Bank; (b) collect any or all
accounts, chattel paper or general intangibles in its or the Grantor’s name, and
apply any such collections against such Liabilities as the Bank may select; (c)
take control of any cash or non-cash proceeds of any item of the Collateral; (d)
compromise, extend or renew any account, chattel paper, general intangible, or
document, or deal with the same as it may deem advisable; and (e) make
exchanges, substitutions or surrender of items comprising the
Collateral.
The
rights of the Bank are cumulative, and the Bank may enforce its rights under
this Agreement irrespective of any other collateral, guaranty, right, or remedy
it may have. The exercise of all or a part of its rights or remedies
hereunder shall not prevent the Bank from exercising at the same or any other
time any other right or remedy with respect to the Liabilities. The
Grantor authorizes the Bank in its sole discretion to direct the order or manner
of the disposition of the Collateral.
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From the
proceeds realized from the Collateral the Bank shall be entitled to retain all
sums secured hereby as well as their reasonable expenses of collection including
without limitation those of retaking, holding, safeguarding, accounting for,
preparing for sale, selling, and reasonable attorneys’ fees and legal
expenses. If the proceeds realized from the Collateral are not
sufficient to defray said expenses and to satisfy the balance due on the
Liabilities, the Grantor shall remain liable for such expenses. Any
payments or proceeds from realization on the Collateral may be applied to the
Liabilities in whatever order or manner the Bank elect.
13. CONTINUING
AGREEMENT, TERMINATION. This is a continuing Agreement, and no notice
of the creation or existence of the Liabilities, renewal, extension or
modification thereof need be given to the Grantor. This Agreement may
be terminated only (i) by a written agreement of the Bank, or (ii) upon written
request of the Grantor at such time as the Liabilities have been satisfied in
full and the Bank has no remaining commitments to Debtor of any
kind.
14. NO
WAIVER. The Grantor agrees that no representation, promise, or
agreement made by the Bank or by any officer or employee of the Bank, at, prior,
or subsequent to the execution and delivery of this Agreement shall modify,
alter, limit, or otherwise abridge the rights and remedies of the Bank hereunder
unless agreed by the Bank in writing. None of the rights and remedies
of the Bank hereunder shall be modified, altered, limited, or otherwise abridged
or waived by any representation, promise, or agreement hereafter made or by any
course of conduct hereafter pursued by the Bank. No delay or omission
on the part of the Bank in exercising any right hereunder shall operate as a
waiver of such right or of any other right under this Agreement, and waiver of
any right shall not be deemed waiver of any other right unless expressly agreed
by the Bank in writing.
15. CONFLICT
WITH CREDIT FACILITY AGREEMENT. If any provision hereof expressly
conflicts with any specific provision of the Credit Facility Agreement, the
terms of the Credit Facility Agreement shall be controlling.
16. LAWS. The
validity, construction, and performance of this Agreement shall be governed by
the laws of the State of New York, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of New York or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
17. PARTIES
IN INTEREST. All of the terms and provisions of this Agreement shall
inure to the benefit of, be binding upon and be enforceable by the respective
legal representatives, successors, and assigns of the parties
hereto.
18. SEVERABILITY. Any
partial invalidity of the provisions of this Agreement shall not invalidate the
remaining portions hereof or thereof.
19. WAIVER. The
Grantor hereby expressly waives demand, presentment, protest, or notice of
dishonor on any and all of the Liabilities and with respect to the
Collateral.
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IN
WITNESS WHEREOF, the Grantor has caused this Agreement to be executed by its
duly authorized officer as of the date first set forth above
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PREMIER
PACKAGING CORPORATION
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DOCUMENT
SECURITY SYSTEMS, INC.
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By:______________________________
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By:________________________
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Name:
Title:
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Name: Xxxxxxx
Xxxxx
Title: President
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SECUPRINT,
INC.
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PLASTIC
PRINTING PROFESSIONALS, INC.
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By:________________________
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Name: Xxxxxxx
Xxxxx
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By:________________________
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Title: President
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Name:
Xxxxxxx Xxxxx
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Title: President
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STATE
OF NEW YORK
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)
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)SS.:
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COUNTY
OF MONROE
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)
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On the
12th day of February in the year 2010 before me, the undersigned, a notary
public in and for said state, personally appeared Xxxxxxx Xxxxx, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacities, and that by his signatures on
the instrument, the individual, or the persons upon behalf of which the
individual acted, executed the instrument.
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Notary
Public
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STATE
OF NEW YORK
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)
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)SS.:
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COUNTY
OF MONROE
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)
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On the
12th day of February in the year 2010 before me, the undersigned, a notary
public in and for said state, personally
appeared ______________________________, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he
executed the same in his capacities, and that by his signatures on the
instrument, the individual, or the persons upon behalf of which the individual
acted, executed the instrument.
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Notary
Public
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ACKNOWLEDGED
BY:
RBS
CITIZENS, N.A.
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By:
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Xxxxxxx
X. Xxxxx, Assistant Vice President
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STATE
OF NEW YORK
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)
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)SS.:
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COUNTY
OF MONROE
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)
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On the
12th day of February in the year 2010 before me, the undersigned, a notary
public in and for said state, personally appeared Xxxxxxx X. Xxxxx, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacities, and that by his signature on the
instrument, the individual, or the persons upon behalf of which the individual
acted, executed the instrument.
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Notary
Public
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