SECURITY AGREEMENT
This Security Agreement is entered into this 22nd day of September, 2000,
between LIBERTY FOOD GROUP, LLC, a Delaware limited liability company whose
address is ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (referred to hereinafter as
"Grantor") and ▇▇▇▇▇▇ ▇. ▇▇▇▇ whose address is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (referred to hereinafter as "▇▇▇▇).
BACKGROUND
Grantor is a Delaware limited liability company whose offices are located
at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The stock of Philadelphia Foods,
Inc., which is owned by ▇▇▇▇, is to be sold to Liberty Processing &
Distribution, Inc., a Delaware corporation ("Liberty") under the terms of a
Stock Purchase Agreement dated September 15, 2000 ("Stock Agreement"). Liberty
is a wholly owned subsidiary of Liberty Group Holdings. Inc., a Delaware
corporation ("LGHI") and sole owner of Grantor. Liberty has given a Promissory
Note dated even date herewith ("Note") in the amount of Five Hundred Thousand
($500,000.00) Dollars to ▇▇▇▇ for part of the cash payment due under the terms
of the Stock Agreement. If Closing pursuant to the Stock Agreement does not
occur on or before November 15, 2000, the Note becomes due and payable to ▇▇▇▇
as a break-up fee as the sole and complete remedy to ▇▇▇▇ to cover ▇▇▇▇'▇ costs
and time expended on the stock purchase transaction. As security for the payment
of the Note, the Grantor is pledging all of its accounts receivable and
inventory. This Security Agreement and the security interest created herein is
intended to continue until the Note is paid in full. Notwithstanding anything
contained herein to the contrary, in any action commenced to enforce the
obligations of the Grantor created or arising hereunder or under the Note, the
judgment shall not be enforceable against any assets of the Grantor or any of
its subsidiaries or affiliates other than the Collateral. Recourse for any
violation or breach of the terms of the Note or this Agreement shall only be
against the Collateral and any such judgment shall not be subject to execution
on, nor be a lien on, any other assets of the Grantor or the Grantor itself.
Grantor represents that the value of the Collateral owned by it and that
Collateral owned LGHI is sufficient to cover the obligations under the Note.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
1. Definitions. The following words shall have the following
meanings when used in this Agreement. Terms not otherwise defined in this
Agreement shall have the meanings attributed to such terms in the Uniform
Commercial Code as defined by New York Statute.
1.1 Agreement. This Security Agreement, as this Agreement may be
amended or modified from time to time, together with all exhibits and schedules
attached to this Agreement from time to time.
1.2 Collateral. The following described property of the Grantor,
whether now owned or hereafter acquired, whether now existing or hereafter
arising and wherever located: All inventory, accounts and accounts receivable.
1.2.1 In addition, the term Collateral includes all the
following, whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located:
1.2.1.1 All proceeds, including insurance
proceeds, from the sale, destruction, loss or other disposition of any of the
property described in this section.
1.2.1.2 All records and data relating to any of
the property described in this section, whether in the form of a writing,
photograph, microfilm, microfiche, or electronic media, together with all of
Grantor's rights, title and interest in and to all computer software required to
utilize, create, maintain and process any such records or data on electronic
media.
1.3 Event of Default. The words "Event of Default" means and
includes without limitation any of the events and defaults set forth below in
the section Events of Default.
1.4 Grantor. The word "Grantor" means Liberty Food Group, LLC, a
Delaware limited liability company, its successors and assigns together.
1.5 Indebtedness. The word "Indebtedness", means the indebtedness
evidenced by the Note, including all principal and interest, together with all
other indebtedness and costs and expenses for which Grantor is responsible under
the Note or this Agreement or under any of the related documents.
1.6 ▇▇▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇, his heirs, representatives,
successors and assigns.
1.7 Related Documents. The word "Related Documents" means and
include without limitation all this Agreement and the Note.
2. Obligations of Grantor. Grantor warrants and covenants to ▇▇▇▇
as follows:
2.1 Grantor agrees to execute such financing statements and to take
whatever other actions are reasonably requested by ▇▇▇▇ to perfect and continue
▇▇▇▇'▇ security interest in the Collateral. Upon the request of ▇▇▇▇, Grantor
will deliver to ▇▇▇▇ any and all of the documents evidencing or constituting the
Collateral, and Grantor will note ▇▇▇▇'▇ interest upon any and all chattel paper
if not delivered to ▇▇▇▇ for possession by ▇▇▇▇. Grantor hereby appoints ▇▇▇▇ as
its irrevocable attorney-in-fact for the purpose of executing any documents
necessary to perfect or to continue the security interest granted in this
Agreement. ▇▇▇▇ may at any time and without further authorization from Grantor,
file a carbon, photographic, or other reproduction of any financing statement or
of this Agreement for use as a financing statement. Grantor will reimburse ▇▇▇▇
for all reasonable expenses for the perfection and the continuation of the
perfection of ▇▇▇▇'▇ security interest in the collateral. Grantor promptly will
notify ▇▇▇▇ before any change in Grantor's name including any change to the
assumed business name of the Grantor. This is a continuing Security Agreement
and will continue in effect even though all or any part of the Indebtedness is
paid in full and even though for a period of time the Grantor may not be
indebted to ▇▇▇▇.
3. No Violation. The execution and delivery of this Agreement will
not violate any law or agreement governing Grantor or to which Grantor is a
party, and its certificate or articles of formation and operating agreement
do not prohibit any term or condition of this Agreement.
4. Enforceability of Collateral. To the extend the Collateral consists of
accounts, chattel paper, or general intangibles, the Collateral is enforceable
in accordance with its terms, it genuine, and complies with applicable laws
concerning form, content and manner of preparation and execution, and all
persons appearing to be obligated on the Collateral have authority and capacity
to contract and are in fact obligated as they appear to be on the Collateral. At
the time any account becomes subject to a security interest in favor of ▇▇▇▇,
the account shall be a good and valid account representing an undisputed, bona
fide indebtedness incurred by the account debtor, for merchandise held subject
to delivery instructions or therefore shipped or delivered pursuant to a
contract of sale, or for services therefore performed by Grantor with or for the
account debtor; there shall be no setoffs or counterclaims against any such
account as the account exists at the time of execution hereof; and no agreement
under which any deductions or discounts may be claimed shall have been made with
the account debtor except those disclosed to ▇▇▇▇ in writing.
5. Location of the Collateral. Grantor, upon the request of ▇▇▇▇, will
deliver to ▇▇▇▇ in form satisfactory to ▇▇▇▇ a schedule of the Collateral
locations relating to Grantor's operations, including without limitation the
following: (a) all real property being rented or leased by Grantor; (b) all
storage facilities owned, rented, leased or being used by Grantor; and (c) all
other properties where Collateral is or may be located. Except in the ordinary
course of its business, Grantor shall not remove the Collateral from its
existing locations without the prior written consent of ▇▇▇▇.
6. Removal of Collateral. Grantor shall keep the Collateral (or the extent
the Collateral consists of intangible property such as accounts, the records
concerning the Collateral) at Grantor's address shown above. Except in the
ordinary course of its business, including the sales of inventory, Grantor shall
not remove the Collateral from its existing locations, without the prior written
consent of ▇▇▇▇.
7. Transactions involving Collateral. Except for inventory sold in the
ordinary course of business or accounts collected in the ordinary course of
Grantor's business, Grantor shall not sell, offer to sell, or otherwise transfer
or dispose of Collateral. While Grantor is not in default under this Agreement,
Grantor may sell inventory, but only in the ordinary course of its business and
only to buyers who qualify as a buyer in the ordinary course of business. A sale
in the ordinary course of Grantor's business does not include a transfer in
partial or total satisfaction of a debt or any bulk sale. Grantor shall not
further pledge, mortgage, encumber or otherwise permit the Collateral to be
subject to any lien, security interest, encumbrance, or charge, other than the
security interest provided for in this Agreement, without the prior written
consent of ▇▇▇▇. Unless waived by ▇▇▇▇, all proceeds from any disposition of the
Collateral (for whatever reason) shall be held in trust for ▇▇▇▇ and shall not
be commingled with any other funds; provided however, this requirement shall not
constitute consent by ▇▇▇▇ for any sale or other disposition.
8. Title. Grantor represents and warrants to ▇▇▇▇ that it holds good and
marketable title to the Collateral, free and clear of all liens and encumbrances
except for the lien created by this Agreement and a prior lien granted to SUAN
INVESTMENT in a principal amount of One Hundred Fifty Thousand ($150,000.00)
Dollars plus interest accruing from April, 2000. Except as aforesaid, no
financing statement covering any of the Collateral is on file in any public
office other than those which reflect the security interests specified in this
Agreement or to which ▇▇▇▇ has specifically consented. Grantor shall defend
▇▇▇▇'▇ rights in the Collateral against the claims and demands of all other
persons other than SUAN INVESTMENTS.
9. Collateral Schedules and Locations. As often as ▇▇▇▇ shall require, but
no more than three (3) times during the term of this Agreement, and insofar as
the Collateral consists of accounts and general intangibles, Grantor shall
deliver to ▇▇▇▇ schedules of such Collateral, including such information as ▇▇▇▇
may reasonably require, but not in excess of once per five-day period, including
without limitation names and addresses of account debtors and agings of accounts
and general intangibles. Insofar as the Collateral consists of inventory,
Grantor shall deliver to ▇▇▇▇, as often as ▇▇▇▇ shall require, such lists,
descriptions and designations of such Collateral as ▇▇▇▇ may require to identify
the nature, extent, and location of such Collateral. Such information shall be
submitted for Grantor and each of its subsidiaries or related companies.
10. Maintenance and Inspection of Collateral. Grantor shall maintain all
tangible Collateral in good condition and repair. Grantor will not commit or
permit damage to or destruction of the Collateral or any part of the Collateral.
▇▇▇▇ and his designated representatives and agents shall have the right, upon no
less than 24-hours' prior notice to Grantor, at all reasonable times to examine,
inspect, and audit the Collateral wherever located. Grantor shall notify ▇▇▇▇ of
all cases involving the return, rejection, repossession, loss or damage of or to
any Collateral; or any request for credit or adjustment or of any other dispute
arising with respect to the Collateral; and generally of all happenings and
events affecting the Collateral or the value or the amount of the Collateral.
11. Taxes, Assessments and Liens. Grantor will pay when due all taxes,
assessments, and liens upon the Collateral; its use or operation, upon this
Agreement, upon any promissory note evidencing the Indebtedness, or upon any
other Related Documents. Grantor may withhold any such payment or may elect to
contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as ▇▇▇▇'▇ interest in
the Collateral is not jeopardized in ▇▇▇▇'▇ sole opinion. If the Collateral is
subject to a lien which is not discharged within fifteen (15) days, Grantor
shall deposit with ▇▇▇▇ cash, a sufficient corporate surety bond or other
security satisfactory to ▇▇▇▇ in an amount adequate to provide for the discharge
of the lien plus any interest, costs, attorneys' fees or other charges that
could accrue as a result of foreclosure or sale of the Collateral. In any
contest, ▇▇▇▇ shall defend itself and ▇▇▇▇ and shall satisfy any final adverse
judgment before enforcement against the Collateral. Grantor shall name ▇▇▇▇ as
an official obligee under any surety bond furnished in the contest proceedings.
12. Compliance With Government Requirements. Grantor shall comply promptly
with all laws, ordinances, rules and regulations of all governmental
authorities, now or hereafter in effect, applicable to the ownership,
production, disposition, or use of the Collateral. Grantor may contest in good
faith any such law, ordinance or regulation and withhold compliance during any
proceeding, including appropriate appeals, so long as ▇▇▇▇'▇ interest in the
Collateral, in ▇▇▇▇'▇ opinion, is not jeopardized.
13. Hazardous Substances. Grantor represents and warrants that the
Collateral never has been, and never will be so long as this Agreement remains a
lien on the Collateral, used for the generation, manufacture, storage,
transportation, treatment, disposal, release or threatened release of any
hazardous waste or substance, as those terms are defined in the Comprehensive
Environmental Response. Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("▇▇▇▇"), the Hazardous
Materials Transportation Act, 49 U.S.C., Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C., Section 6901, et seq., or other
applicable state or Federal laws, rules, or regulations adopted pursuant to any
of the foregoing. The terms "hazardous waste" and "hazardous substance" shall
also include, without limitation, petroleum and petroleum by-products or any
fraction thereof and asbestos. The representations and warranties contained
herein are based on Grantor's due diligence in investigation the Collateral for
hazardous wastes and substances. Grantor hereby (a) releases and waives any
future claims against ▇▇▇▇ for indemnity or contribution in the event Grantor
becomes liable for cleanup or other costs under any such laws and (b) agrees to
indemnify and hold harmless ▇▇▇▇ against any and all claims and losses resulting
from a breach of this provision of this Agreement. This obligation to indemnify
shall survive the payment of the indebtedness and the satisfaction of this
Agreement.
14. Maintenance of Casualty Insurance. Grantor shall procure and maintain
all risks insurance, including without limitation fire, theft and liability
coverage together with such other insurance as ▇▇▇▇ may require with respect to
the Collateral, in form, amounts, coverages and basis reasonably acceptable to
▇▇▇▇ and issued by a company or companies reasonably acceptable to ▇▇▇▇.
Grantor, upon request of ▇▇▇▇, will deliver to ▇▇▇▇ from time to time the
policies or certificates of insurance in form satisfactory to ▇▇▇▇, including
stipulations that coverages will not be cancelled or diminished without at least
thirty (30) days prior written notice to ▇▇▇▇ and not including any disclaimer
of the insurer's liability for failure to give such a notice. Each insurance
policy also shall include an endorsement providing that coverage in favor of
▇▇▇▇ will no be impaired in any way by any act, omission or default of Grantor
or any other person. In connection with all policies covering assets in which
▇▇▇▇ holds or is offered a security interest, Grantor will provide ▇▇▇▇ with
such loss payable or other endorsements as ▇▇▇▇ may require. If Grantor at any
time fails to obtain or maintain any insurance as required under this Agreement,
▇▇▇▇ may (but shall not be obligated to) obtain such insurance as ▇▇▇▇ deems
appropriate, including if it so chooses "single interest insurance" which will
cover only ▇▇▇▇'▇ interest in Collateral.
15. Application of Insurance Proceeds. Grantor shall promptly notify ▇▇▇▇
of any loss or damage of the Collateral. ▇▇▇▇ may make proof of loss if Grantor
fails to do so within fifteen (15) days of the casualty. All proceeds of any
insurance on the Collateral, including accrued proceeds thereon, shall be held
by ▇▇▇▇ as part of the Collateral. If ▇▇▇▇ consents to repair or replacement of
the damaged or destroyed Collateral, ▇▇▇▇ shall, upon satisfactory proof of
expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost
of repair or restoration. If ▇▇▇▇ does not consent to repair or replacement of
the Collateral, ▇▇▇▇ shall retain a sufficient amount of the proceeds to pay all
of the Indebtedness, and shall pay the balance to Grantor. Any proceeds which
have not been disbursed within six (6) months after their receipt and which
Grantor has not committed to the repair or restoration of the Collateral shall
be used to prepay the indebtedness.
16. Insurance Reserves. If Grantor fails to provide and maintain
insurances as required herein, ▇▇▇▇ may require Grantor to maintain with ▇▇▇▇
reserves for payment of insurance premiums, which reserves shall be created by
monthly payments from Grantor of a sum estimated by ▇▇▇▇ to be sufficient to
produce, at least fifteen (15) days before the premium due date, amounts at
least equal to the insurance premiums to be paid. If fifteen (15) days before
payment is due, the reserve funds are insufficient, Grantor shall upon demand
pay any deficiency to ▇▇▇▇. The reserve funds shall be held by ▇▇▇▇ as a general
deposit and shall constitute a non-interest-bearing account which ▇▇▇▇ may
satisfy by payment of the insurance premium required to be paid by Grantor as
they become due. ▇▇▇▇ does not hold the reserve funds in trust for Grantor, and
▇▇▇▇ is not the agent of Grantor for payment of the insurance premiums required
to be paid by Grantor. The responsibility for the payment of premiums shall
remain Grantor's sole responsibility.
17. Insurance Reports. Grantor, upon request of ▇▇▇▇, shall furnish to
▇▇▇▇ reports on each existing policy of insurance showing that information as
▇▇▇▇ may reasonably request including the following: (a) the name of the
insurer; (b) the risks insured; (c) the amount of the policy; (d) the property
insured; (e) the then current value on the basis of which insurance has been
obtained and the manner of determining that value; and (f) the expiration date
of the policy. In addition, Grantor shall upon request by ▇▇▇▇ (however not more
often that annually) and at his sole expense, have an independent appraiser
satisfactory to ▇▇▇▇ determine, the cash value or replacement cost of the
Collateral.
18. Grantor's Right to Possession and to Collect Accounts. Until default
and except as otherwise provided below with respect to accounts, Grantor may
have possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents. Until otherwise notified by ▇▇▇▇, Grantor
may collect any of the Collateral consisting of accounts. If ▇▇▇▇ at any time
has possession of any Collateral, whether before or after an Event of Default,
▇▇▇▇ shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral if ▇▇▇▇ takes such action for that purpose as
Grantor shall request or as ▇▇▇▇, in ▇▇▇▇'▇ sole discretion, shall deem
appropriate under the circumstances, but failure to honor any request by Grantor
shall not of itself be deemed to be a failure to exercise reasonable care. ▇▇▇▇
shall not be required to take any steps necessary to preserve any rights in the
Collateral against prior parties, nor to protect, preserve or maintain any such
security interest given to secure the indebtedness.
19. Expenditures by ▇▇▇▇. If not discharged or paid when due, ▇▇▇▇ may
(but shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. ▇▇▇▇ also may (but shall not be
obligated to) pay all costs for insuring, maintaining, and preserving the
Collateral. All such expenditures incurred or paid by ▇▇▇▇ for such purposes
will then bear interest at the rate of eighteen (18%) percent from the date
incurred or paid by ▇▇▇▇ to the date of repayment by Grantor. All such expenses
shall become a part of the indebtedness and, at ▇▇▇▇'▇ option, will (a) be
payable on demand, (b) be added to the balance of the Note and be appointed
among and be payable with any installment payments to become due during either
(i) the term of any applicable insurance policy or (ii) the remaining term of
the Note or (c) be treated as a balloon payment which will be due and payable at
the Note's maturity. This Agreement also will secure payment of these amounts.
Such right shall be in addition to all other rights and remedies to which ▇▇▇▇
may be entitled upon the occurrence of an Event of Default.
20. Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:
20.1 Default of Indebtedness. Failure of Grantor to may any
payment when due on the Indebtedness.
20.2 Other Defaults. Failure of Grantor to comply with or to
perform any other term, obligation, covenant or condition contained in this
Agreement or in any of the Related Documents.
20.3 False Statements. Any warranty, representation or statement
made or furnished to ▇▇▇▇ by or on behalf of Grantor under this Agreement, the
Note or the Related Documents is false or misleading in any material respect,
either now or at the time made or furnished.
20.4 Defective Collateralization. This Agreement or any of the
Related Documents ceases to be in full force and effect (including failure of
any collateral documents to create a valid and perfected security interest or
lien) at any time for any reason.
20.5 Insolvency. The dissolution or termination of Grantor's
existence as a going business, the insolvency of Grantor, the appointment of a
receiver for any part of Grantor's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Grantor.
20.6 Creditor or Forfeiture Proceedings. Commencement of foreclosure
or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
governmental agency against the Collateral or any other collateral securing the
indebtedness.
21. Events Affecting Guarantor. Any of the preceding events occurs
with respect to any Guarantor of any of the indebtedness or such Guarantor
dies or becomes incompetent.
22. Adverse Change. A material adverse change occurs in the
Collateral, or ▇▇▇▇ reasonably believes the prospect of payment or
performance of the Indebtedness is impaired.
23. Rights and Remedies on Default. If an Event of Default occurs under
this Agreement, at any time thereafter, ▇▇▇▇ shall have all the rights of a
secured party under the New York Uniform Commercial Code, even if the Collateral
is located in another jurisdiction, or the laws of the Uniform Commercial Code
in such other jurisdiction if the laws of New York cannot be applied. In
addition and without limitation, ▇▇▇▇ may exercise any one or more of the
following rights and remedies:
23.1 Assemble Collateral. ▇▇▇▇ may require Grantor to deliver to
▇▇▇▇ all or any portion of the Collateral and any and all certificates of title
and other documents relating to the Collateral. ▇▇▇▇ may require Grantor to
assemble the Collateral and make it available to ▇▇▇▇ at a place to be
designated by ▇▇▇▇. ▇▇▇▇ also shall have full power to enter upon the property
of Grantor to take possession of and remove the Collateral. If the Collateral
contains other goods not covered by this Agreement at the time of repossession,
Grantor agrees ▇▇▇▇ may take such other goods, provided that ▇▇▇▇ makes
reasonable efforts to return them to Grantor after repossession.
23.2 Sell the Collateral. ▇▇▇▇ shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds thereof in his own
name or that of Grantor. ▇▇▇▇ may sell the Collateral at public auction or
private sale. Unless the Collateral threatens to decline speedily in value or is
a type customarily sold on a recognized market, ▇▇▇▇ will give Grantor
reasonable notice of the time after which any private sale or any other intended
disposition of the Collateral is to be made. The requirements of reasonable
notice shall be met if such notice is given at least ten (10) days before the
time of the sale or disposition. All expenses relating to the disposition of the
collateral, including without limitation the expenses of retaking, holding,
insuring, preparing for sale and selling the Collateral, shall become a part of
the indebtedness secured by this Agreement and shall be payable on demand, with
interest at the Note rate from date of expenditure until repaid.
23.3 Appoint Receiver. To the extent permitted by applicable law,
▇▇▇▇ shall have the following rights and remedies regarding the appointment of a
receiver: (a) ▇▇▇▇ may have a receiver appointed as a matter of right, (b) the
receiver may be an employee of ▇▇▇▇ and may serve without bond, and (c) all fees
of the receiver and his or her attorney shall become part of the indebtedness
secured by this Agreement and shall be payable on demand, with interest at the
Note rate from date of expenditure until repaid.
23.4 Collect Revenues, Apply Accounts. ▇▇▇▇, either itself or
through a receiver, may collect the payments, rents, income, and revenues from
the Collateral. ▇▇▇▇ may at any time in his discretion transfer any Collateral
into his own name or that of his nominee and receive the payments, rents,
income, and revenues therefrom and hold the same as security for the
indebtedness or apply it to payment of the indebtedness in such order of
preference as ▇▇▇▇ may determine. Insofar as the Collateral consists of
accounts, general intangibles, insurance policies, instruments, chattel paper,
chooses in action, or similar property, ▇▇▇▇ may demand, collect, receipt for,
settle, compromise, adjust, ▇▇▇ for, foreclose or realize on the Collateral as
▇▇▇▇ may determine, whether or not indebtedness or Collateral is then due. For
these purposes, ▇▇▇▇ may, on behalf of and in the name of Grantor, receive, open
and dispose of mail addressed to Grantor; change any address to which mail and
payments are to be sent; and endorse notes, checks, drafts, money order,
documents of title, instruments and items pertaining to payment, shipment, or
storage of any Collateral. To facilitate collection, ▇▇▇▇ may notify account
debtors and obligers on any Collateral to make payments directly to ▇▇▇▇.
23.5 Obtain Deficiency. If ▇▇▇▇ chooses to sell any or all of the
Collateral, ▇▇▇▇ may obtain a judgment against Grantor for any deficiency
remaining on the indebtedness due to ▇▇▇▇ after application of all amounts
received from the exercise of the rights provided in this Agreement. Grantor
shall be liable for a deficiency even if the transaction described in this
subsection is a sale of accounts or chattel paper.
24. Other Rights and Remedies. ▇▇▇▇ shall have all the rights and remedies
of a secured creditor under the provisions of the Uniform Commercial Code, as
may be amended from time to time. In addition, ▇▇▇▇ shall have and may exercise
any or all other rights and remedies it may have available at law, in equity, or
otherwise.
25. Cumulative Remedies. All of ▇▇▇▇'▇ rights and remedies, whether
evidenced by this Agreement or the Related Documents or by any other writing,
shall be cumulative and may be exercised singularly or concurrently. Election by
▇▇▇▇ to pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation of
Grantor under this Agreement, after Grantor's failure to perform, shall not
affect ▇▇▇▇'▇ right to declare a default and to exercise his remedies.
26. Miscellaneous Provisions. The following miscellaneous provisions
are a part of this Agreement:
26.1 Amendments. This Agreement, together with any Related
Documents, constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or amendment.
26.2 Applicable Law. This Agreement has been delivered to ▇▇▇▇ and
accepted by ▇▇▇▇ in the State of New York. If there is a lawsuit, Grantor agrees
upon ▇▇▇▇'▇ request to submit to the jurisdiction of the courts of the State of
New York. ▇▇▇▇ and Grantor hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either ▇▇▇▇ or Grantor against
the other. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
26.3 Attorney's Fees; Expenses. Grantor agrees to pay upon demand
all of ▇▇▇▇'▇ costs and expenses, including attorneys' fees and ▇▇▇▇'▇ legal
expenses, incurred in connection with the enforcement of this Agreement. ▇▇▇▇
may pay someone else to help enforce this Agreement, and Grantor shall pay the
costs and expenses of such enforcement. Costs and expenses include ▇▇▇▇'▇
attorneys' fees and legal expenses whether or not there is a lawsuit, including
attorneys' fees and legal expenses for bankruptcy proceedings (and including
efforts to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Grantor also shall pay all court
costs and such additional fees as may be directed by the court.
26.4 Caption Headings. Caption headings in this Agreement are
for convenience purposes only and are not to be used to interpret or define
the provisions of this Agreement.
26.5 Notices. All notices required to be given under this Agreement
shall be given in writing, may be sent by telefacsimile (unless otherwise
required by law), and shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier or deposited in the
United States mail, first class, postage prepaid, addressed to the party to whom
the notice is to be given at the at the following addresses.
▇▇▇▇: ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Grantor: Liberty Food Group, LLC
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Any party may change its address for notices under this Agreement by
giving formal written notice to the other parties specifying that the purpose of
the notice is to change the party's address. To the extent permitted by
applicable law, if there is more than one Grantor, notice to any Grantor will
constitute notice to all Grantors. For notice purposes, Grantor will keep ▇▇▇▇
informed at all times of Grantor's current address(es).
26. No Joint Venture or Partnership. The relationship of Grantor and ▇▇▇▇
created by this Agreement is strictly that of debtor-creditor, and nothing
contained in this Agreement or in any of the Related Documents shall be deemed
or construed to create a partnership or joint venture between Grantor and ▇▇▇▇.
27. Power of Attorney. Grantor hereby appoints ▇▇▇▇ as his true and lawful
attorney-in-fact, irrevocably, with full power of substitution to do the
following: (a) to demand, collect, receive, receipt for, ▇▇▇ and recover all
sums of money or other property which may now or hereafter become due, owing or
payable from the Collateral; (b) to execute, sign and endorse any and all
claims, instruments, receipts, checks, drafts or warrants issued in payment for
the Collateral; (c) to settle or compromise any and all claims arising under the
Collateral, and, in the place and stead of Grantor, to execute and deliver his
release and settlement for the claim; and (d) to file any claim or claims or to
take any action or institute or take part in any proceedings, either in his own
name or in the name of Grantor, or otherwise, which in the discretion of ▇▇▇▇
may seem to be necessary or advisable. This power is given as security for the
indebtedness, and the authority hereby conferred is and shall be irrevocable and
shall remain in full force and effect until renounced by ▇▇▇▇.
28. Severability. If a court of competent jurisdiction finds any provision
of this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this Agreement in all
other respects shall remain valid and enforceable.
29. Successor Interests. Subject to the limitations set forth above
on transfer of the Collateral, this Agreement shall be binding upon and inure
to the benefit of the parties, their successors and assigns.
30. Waiver. ▇▇▇▇ shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by ▇▇▇▇. No delay or
omission on the part of ▇▇▇▇ in exercising any right shall operate as a waiver
of such right or any other right. A waiver by ▇▇▇▇ of a provision of this
Agreement shall not prejudice or constitute a waiver of ▇▇▇▇'▇ right otherwise
to demand strict compliance with that provision or any other provision of this
Agreement. No prior waiver by ▇▇▇▇, nor any course of dealing between ▇▇▇▇ and
Grantor, shall constitute a waiver of any of ▇▇▇▇'▇ rights or of any of
Grantor's obligations as to any future transactions. Whenever the consent of
▇▇▇▇ is required under this Agreement, the granting of such consent by ▇▇▇▇ in
any instance shall not constitute continuing consent to subsequent instances
where such consent is required and in all cases such consent may be granted or
withheld in the sole discretion of ▇▇▇▇.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties hereto have set their hands and seal or
caused this Security Agreement to be executed the day and year first above
written.
LIBERTY FOOD GROUP, LLC, a Delaware
Limited Liability Company, Grantor
BY:
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▇▇▇▇▇▇ ▇. ▇▇▇▇