Exhibit 10.2
EQUIPMENT SECURITY AGREEMENT
The Financing Agreement dated on or about the date hereof (the "Financing
Agreement") between ALLIANCE DISTRIBUTORS HOLDING, INC., a corporation organized
under the laws of the State of New York, having its chief place of business at
00-00 000xx Xxxxxx, Xxxxxxx Xxxxx, XX 00000 (hereinafter referred to as the
"Debtor"),, and XXXXXXXXX & XXXXXXXXX, INC., a corporation organized under the
laws of the State of New York, with its chief place of business at 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (hereinafter referred to as the "Secured
Party"), is supplemented by adding thereto the following. (All capitalized terms
appearing in this Equipment Security Agreement (the "Security Agreement") that
are not defined herein shall have the meanings given in the Financing
Agreement):
1. As security for the Obligations, Debtor hereby grants to Secured Party
a security interest in all machinery, equipment, furniture and fixtures (if
any), now or hereafter owned or acquired by Debtor, wherever located, including
any and all parts, replacements, substitutions, improvements, accessories,
attachments and additions thereto and therefor, and all proceeds, if any (all of
the foregoing being hereinafter referred to as the "Collateral").
2. Debtor represents, warrants and covenants that: (a) the Collateral is
and will be located at the addresses set forth on Schedule "A" (upon which is
also set forth the name of the record owner(s) of all real estate upon which is
located any of the Collateral and a description of such real estate), and
without prior written notice to and written consent by Secured Party, none of
the Collateral will be moved from its present location or from any other
location to which any of the Collateral is moved with the written consent of
Secured Party; (b) the Collateral is and will be used in Debtor's business and
not for personal, family, household or farming use, and none of the loans or
advances made to or for the account of Debtor by Secured Party were or are to be
for the specific purpose of paying wages of employees of Debtor; (c) the
Collateral is and will be owned by Debtor free and clear of all liens, security
interests and encumbrances except as granted herein and as may be set forth in
the affidavit of title, liens and security interests subjoined hereto; (d)
Debtor will not assign, sell, mortgage, lease, transfer, pledge, grant a
security interest in, encumber or otherwise dispose of or abandon any or all of
the Collateral without the prior written consent of Secured Party; (e) Debtor
will, at its own expense, keep the Collateral in first class repair, running and
marketable condition, and without the prior written consent of Secured Party,
Debtor will not alter or remove any identifying symbol or number upon the
Collateral; (f) Debtor will use the Collateral with all reasonable care and
caution, and in conformity with all applicable laws, ordinances and regulations;
(g) Debtor will make payment or deposit when due of all taxes, assessments or
contributions required by law (including without limitation any taxes required
to be deducted and withheld from wages of employees of Debtor) which may be
levied or assessed against Debtor or with respect to any of the Collateral or
the Obligations; (h) Secured Party shall, upon reasonable advance notice and
during normal business hours, have access to and right of inspection of the
Collateral and any papers, instruments and records pertaining thereto (and the
right to make extracts therefrom and to receive originals or true copies
thereof); (i) Debtor will not permit any of the Collateral to be or become a
part of or affixed to real property without prior notice to Secured Party, and
without first making all arrangements and delivering to Secured Party all
instruments and documents requested by Secured Party (including without
limitation, instruments of waiver or subordination by landlords and real
property mortgagees of statutory and non-statutory liens and rights of
distraint) for the purpose of perfecting, preserving and protecting the security
interest granted herein against all persons; (j) Debtor assumes all
responsibility and liability arising from the use of the Collateral and Debtor,
at its own expense, will insure the Collateral in the name of and with loss or
damage payable to Secured Party, against loss or damage by fire (with extended
coverage), theft, burglary, bodily injury and such other risks, with such
companies and in such amounts as is required by Secured Party at any time;
Debtor will maintain such insurance in effect and pay all premiums thereon, and
Debtor shall deliver the original policies to Secured Party together with any
certificates or other evidence satisfactory to Secured Party of compliance with
these provisions (k) Debtor will promptly notify Secured Party of any loss or
damage to any of the Collateral or arising from its use and Debtor hereby
irrevocably appoints Secured Party as Debtor's lawful attorney-in-fact to
institute any action or proceeding necessary for the recovery and collection of
any moneys that may be due under the said policies of insurance, to discharge,
compound or release any claims, to execute, acknowledge and deliver any
instruments under said policies, to endorse Debtor's name to any check, draft or
other instrument given in payment or liquidation of any claim under the said
policies and to perform every other act and thing thereunder, such power of
attorney being coupled with an interest (but Secured Party agrees that it shall
not take any such action unless a Default has occurred); following a Default,
Secured Party may apply any insurance moneys received by it to the cost of
repairs to the Collateral and/or to payment of any of the Obligations, whether
or not due, in any order Secured Party may direct, any surplus to be remitted to
Debtor; (l) Debtor hereby authorizes Secured Party, at Debtor's expense, to file
one or more financing or other statements pursuant to the Uniform Commercial
Code (hereinafter referred to as the "UCC") with respect to the Collateral and
Debtor shall, upon request of Secured Party, execute and deliver to Secured
Party, at Debtor's expense, any other papers, documents or instruments requested
by Secured Party in connection with this Security Agreement,; (m) Debtor will,
at its own expense, perform all acts, execute all documents, and furnish all
information requested by Secured Party at any time with respect to any matters
referred to herein or to evidence, perfect, maintain and enforce Secured Party's
security interest in the Collateral, and Secured Party may in its discretion,
for the account and expense of Debtor, pay any amount or do any act required of
Debtor hereunder or requested by Secured Party to preserve, protect, maintain
and enforce the security interest granted herein, including without limitation
the payment of any judgment or judgments against Debtor and any premiums on
insurance policies, and all such amounts so paid by Secured Party for the
account of Debtor shall be added to the Obligations and shall be repayable upon
demand; (n) Secured Party may in its sole discretion, extend the time of
payment, arrange for payment in installments or otherwise modify the terms of,
or release, any of the Obligations and/or the Collateral, or any guarantor of
the Obligations and/or any collateral securing same, without discharging or
otherwise affecting the Obligations or the security interest granted herein; (o)
Debtor will promptly pay Secured Party any and all sums, costs and expenses
which Secured Party may pay or incur in defending, protecting or enforcing the
security interest granted herein or otherwise in connection with the provisions
hereof, including, but not limited to all filing and recording fees and taxes
and reasonable attorney's fees to protect or enforce its security interest in
the Collateral, and all fees and all expenses for the service and filing of
papers, premiums on bonds and undertakings, fees of marshals, sheriffs,
custodians, auctioneers and others, and all other court costs and collection
charges, all of which shall be part of the Obligations and shall be payable on
demand; (p) any transferee of the Obligations shall be vested with full powers
and rights of Secured Party with respect to the Collateral whereupon Secured
Party shall be fully discharged from all responsibility with respect thereto,
but Secured Party shall retain all rights and powers with respect to any
Collateral not assigned, transferred, sold, or otherwise disposed of.
3. Upon the occurrence of a Default including Debtor's breach of or
failure to observe and perform any of the terms of this Security Agreement,
Secured Party shall have the following rights and remedies in addition to all
other rights and remedies of a secured party under the UCC, all such rights and
remedies being cumulative and enforceable alternatively, successively, or
concurrently: Secured Party may, at any time or times, with or without judicial
process and the assistance of others, enter upon any premises on which any of
the Collateral may be located and, without interference by Debtor, take
possession of the Collateral and/or dispose of any part or all of the Collateral
on any premises of Debtor; and/or require Debtor, at Debtor's expense, to
assemble and make available to Secured Party any part or all of the Collateral
at any place and time designated by Secured Party and reasonably convenient to
both parties; and/or remove any or all of the Collateral from any premises on
which the same may be located for the purpose of effecting sale or other
disposition thereof or for any other purpose (and if any of the Collateral
consists of motor vehicles, Secured Party may use Debtor's license plates);
and/or sell, resell, lease, assign and deliver, grant options for or otherwise
dispose of any or all of the Collateral in its then condition or following any
commercially reasonable preparation or processing, at public or private sale or
proceedings, by one or more contracts, in one or more parcels, at the same or
different times, at any places, with or without leaving the Collateral at the
place of sale or other disposition, for cash and/or credit, upon any terms, and
to such persons, firms or corporations as Secured Party deems best, all without
demand for performance or any notice or advertisement whatsoever except that
where an applicable statute requires reasonable notice of sale or other
disposition Debtor hereby agrees that the sending of five days' notice, by
ordinary mail, postage prepaid, to any address of Debtor set forth in this
Security Agreement, of the place and time of any public sale or of the time
after which any private sale or other intended disposition is to be made shall
be deemed reasonable notice thereof. If any of the Collateral is sold by Secured
Party upon credit or for future delivery, Secured Party shall not be liable for
the failure of the purchaser to pay for same and in such event Secured Party may
resell or otherwise dispose of such Collateral. Secured Party may apply the cash
proceeds actually received from any sale or other disposition to the costs and
expenses in connection therewith, including the expenses of retaking, holding,
preparing for sale, selling or otherwise disposing of the Collateral, to
reasonable attorney's fees to legal and travel expenses, premiums on bonds,
custodian's fees, sheriff's, marshal's and auctioneer's fees (including
advertising and labor), and all other expenses which may be incurred by Secured
Party in attempting to collect the Obligations, proceed against the Collateral
or otherwise enforce this Security Agreement, or in the prosecution or defense
of any action or proceeding related to the Obligations or this Security
Agreement; and the balance of such cash proceeds actually received shall be
applied to the Obligations in such order and as to principal and interest as
Secured Party may desire; and Debtor shall remain liable and will pay Secured
Party on demand any deficiency remaining, together with any charges specified
herein or in any instruments evidencing any of the Obligations and the balance
of any expenses unpaid, with any surplus to be paid to Debtor subject to any
duty of Secured Party imposed by law in favor of the holder of any subordinate
security interest in the Collateral known to Secured Party.
4. Secured Party shall not be deemed to assume any responsibility for or
obligation or duty with respect to any part or all of the Collateral, or any
matter or proceedings arising out of or relating thereto, and the same shall be
at Debtor's sole risk at all times. Secured Party shall not be required to take
any action of any kind to collect, preserve, or protect its or Debtor's rights
in the Collateral or against other parties thereto. The grant herein of a
security interest in proceeds of the Collateral shall not be deemed a waiver or
release of the covenant by Debtor not to sell or otherwise dispose of any of the
Collateral without the prior written consent of Secured Party. Debtor hereby
releases Secured Party from any claims, causes of action and demands at any time
arising out of or with respect to this Security Agreement, the Obligations, the
use of the Collateral and/or any actions taken or omitted to be taken by Secured
Party with respect thereto, and Debtor agrees to hold Secured Party harmless
from and with respect to any and all such claims, causes of action and demands.
Secured Party's prior recourse to any part or all of the Collateral shall not
constitute a condition of any demand, suit or proceeding for payment or
collection of the Obligations, nor shall any demand, suit or proceeding for
payment or collection of the Obligations constitute a condition of any recourse
by Secured Party to the Collateral. Any suit or proceeding by Secured Party to
recover any of the Obligations shall not be deemed a waiver of or bar against,
subsequent proceedings by Secured Party with respect to any other Obligations
and/or with respect to the Collateral. Debtor, if more than one, shall he
jointly and severally liable hereunder. All terms used herein, if not defined
herein or in the Financing Agreement, shall have the meanings as defined in the
New York Uniform Commercial Code. If any term of or schedule to this Security
Agreement shall be held to be incomplete, invalid, illegal or unenforceable, the
validity of all other terms hereof shall in no way be affected thereby. Secured
Party is authorized to annex hereto any schedules referred to herein. Debtor has
received and read a copy of this Security Agreement.
IN WITNESS WHEREOF, the undersigned Debtor has executed this Security Agreement
in the State of New York on November 15, 2004
ALLIANCE DISTRIBUTORS HOLDING, INC.
By:
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Xxx Xxxxxx, CEO
Schedule A
The following are all of the locations of the Collateral:
00-00 000xx Xxxxxx, Xxxxxxx Xxxxx, XX 00000
00-00 000xx Xxxxxx, Xxxxxxx Xxxxx, XX 00000
By:
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Xxx Xxxxxx, CEO
