Exhibit 10.2

 

 

PLEDGE AND SECURITY AGREEMENT

 

THIS PLEDGE AND SECURITY AGREEMENT (this “Pledge Agreement”) is dated as of
June 17, 2011 and made by and between ROAD BAY INVESTMENTS, LLC (the “Pledgor”)
and AMERICAN HERITAGE LIFE INSURANCE COMPANY (the “Secured Party”).

 

W I T N E S S E T H

 

WHEREAS, the Secured Party and the Pledgor have entered into an Asset Purchase
Agreement dated June 17, 2011 (the “Asset Purchase Agreement”), under which the
Secured Party has agreed to sell, and the Pledgor has agreed to purchase from
the Secured Party, certain Assets (as defined in the Asset Purchase Agreement) ;
and

 

WHEREAS, as security for the payment and performance by the Pledgor of its
obligations under the Asset Purchase Agreement, the Pledgor has agreed to grant
a pledge of and security interest in the Pledgor’s right, title, and interest in
and to the Assets;

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the Pledgor and the Secured Party hereby agree as follows:

 

ARTICLE I

 

GRANT OF PLEDGE AND SECURITY INTEREST

 

Section 1.1       Grant of Security Interest.  To secure the payment in full
when due by the Pledgor to the Secured Party under the Asset Purchase Agreement
of all amounts (including fees, charges, and expenses) which accrue and become
due thereunder and the timely performance by the Pledgor of each of its other
obligations thereunder (collectively, the “Secured Obligations”), the Pledgor
hereby pledges and grants to the Secured Party a security interest in all of the
Pledgor’s right, title, and interest in, to, and under the following
(collectively, the “Collateral”): (a) the Assets and all certificates or
instruments evidencing the same and all proceeds thereof, all accessions
thereto, and substitutions therefor; (b) all interest, distributions, and other
proceeds from time to time received, receivable, or otherwise distributed to
Pledgor in respect of or in exchange for any or all of the Assets; and (c) all
“Proceeds” (as such term is defined in the Uniform Commercial Code as in effect
in the State of Illinois or any other relevant jurisdiction (the “UCC”)) of any
of the foregoing.

 

Section 1.2       Perfection of Security Interest.

 

(a)        The Pledgor agrees to take all other actions which may be necessary
under the laws of the State of Illinois or may be requested by the Secured Party
to protect and perfect the interest of the Secured Party in the Collateral
created hereby and to ensure that such interest is senior in rank to the claims
of any other creditor of the Pledgor claiming an interest in and to the
Collateral, including the filing of UCC-1 financing statements (including any
continuation statements with respect to such financing statements when
applicable) identifying the Assets and naming the Pledgor as debtor and the
Secured Party as secured party.  The Pledgor shall deliver

 

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to the Secured Party file-stamped copies or other evidence of such filings. 
Notwithstanding the agreements set forth in this Section 1.2, the Pledgor hereby
authorizes the Secured Party to take, and appoints the Secured Party as its
attorney-in-fact for the purpose of taking, any action necessary under the UCC
to perfect, and to maintain the perfection and priority of, the Secured Party’s
interest in the Collateral, including, without limitation, the filing of any
such financing and continuation statements.

 

(b)        Notwithstanding the agreements set forth in this Section 1.2, Pledgor
shall not be required to file or record any mortgage or other security
instrument in the event any recordation, transfer, stamp, documentary, or other
fees or taxes are or would be levied on Pledgor by reason of the making or
recording of any Note (as defined in the Asset Purchase Agreement) or mortgage. 
All such recordation, transfer, stamp, documentary, or other fees or taxes shall
be the sole responsibility of Secured Party.

 

ARTICLE II

 

REPRESENTATIONS, WARRANTIES, AND COVENANTS

 

Section 2.1       Representations, Warranties, and Covenants as to the Pledgor. 
The Pledgor hereby represents, warrants, and covenants to the Secured Party:

 

(a)        Title to Collateral.  The Assets and all of the other Collateral in
existence on the date hereof are, and all Assets and all of the other Collateral
issued subsequent to the date hereof will be, owned by the Pledgor free and
clear of any lien or encumbrance.  The Pledgor has not (i) filed or consented to
the filing with any governmental authority of any financing statement or
analogous document under the UCC or any other applicable laws covering any
Collateral, (ii) made any assignment to any other person of any interest in the
Collateral, or (iii) entered into any security agreement or similar instrument
or arrangement covering all or any part of the Collateral with any other person,
which financing statement or analogous document, assignment, security agreement,
or similar instrument is still in effect.

 

(b)        Organization.  The Pledgor is a limited liability company organized
under the laws of the State of Delaware.

 

(c)        Principal Office.  The Pledgor maintains its chief executive office
at 3075 Sanders Road, Northbrook, Illinois 60062.

 

(d)        No Liens.  Pledgor is as of the date hereof, and at the time of any
delivery of any Collateral to the Secured Party pursuant to Article I of this
Pledge Agreement, Pledgor will be, the sole legal and beneficial owner of the
Collateral.  All Collateral is on the date hereof, and will be, so owned by
Pledgor free and clear of any lien except for the lien created by this Pledge
Agreement.

 

(e)        Due Authorization.  The execution and delivery to the Secured Party
of this Pledge Agreement by the Pledgor, the delivery to the Secured Party of
the Assets together with any necessary endorsements, and the consummation of the
transactions provided for in this Pledge Agreement have been duly authorized by
the Pledgor by all necessary corporate action on its part and this Pledge
Agreement constitutes a legal, valid, and binding obligation of the

 

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Pledgor, enforceable against the Pledgor in accordance with its terms, and
except in each case as enforcement may be limited by bankruptcy, insolvency,
examination, suspension of payments, fraudulent transfer, reorganization,
moratorium, and other similar laws of general applicability affecting the
enforcement of creditors’ rights generally, public policy, and general
principles of equity (regardless of whether such proceeding is considered in a
proceeding in equity or law).

 

(f)         No Conflict.  The execution and delivery of this Pledge Agreement,
the delivery of the Collateral, the consummation of the transactions
contemplated hereby, and the fulfillment of the terms hereof will not conflict
with or result in the breach of any of the material terms and provisions of,
constitute (with or without notice or lapse of time or both) a default under, or
result in the creation of any lien upon any property or assets of the Pledgor
pursuant to, any indenture, contract, agreement, mortgage, deed of trust, or
other instrument to which the Pledgor is a party or by which it or any of its
properties is bound.

 

(g)        No Violation.  The execution and delivery of this Pledge Agreement,
the delivery of the Collateral, the consummation of the transactions
contemplated hereby, and the fulfillment of the terms hereof will not conflict
with or violate any organizational or governing documents of the Pledgor or any
law, treaty, rule, or regulation, or any judgment, order, or decree, or
determination of an arbitrator or governmental authority applicable to or
binding upon the Pledgor.

 

(h)        No Proceedings.  There are no actions at law, suits in equity, or
proceedings by or before any governmental commission, bureau, or administrative
agency pending or, to the best knowledge of the Pledgor, threatened against the
Pledgor or any of its assets, that would adversely affect the ability of the
Pledgor to perform its obligations under this Pledge Agreement.

 

(i)         No Authorization Required.  Except for such authorizations or
approvals as shall have been obtained prior to the date hereof, no authorization
or approval of any governmental agency or commission or public or quasi-public
body or authority with jurisdiction over the Pledgor or any of its assets is
necessary for the due execution and delivery of this Pledge Agreement or for the
validity or enforceability hereof.

 

Section 2.2       Delivery of Pledged Collateral; Filings.  Pledgor has
delivered, or will deliver, to the Secured Party an appropriate UCC-1 financing
statement to be filed with the Secretaries of State of the States of Delaware
and Illinois, the States in which the Pledgor is organized and located,
respectively, evidencing the lien created by this Pledge Agreement.  Pledgor has
delivered, or will deliver, to the Secured Party an appropriate mortgage or
other security instrument evidencing the lien of this Pledge Agreement on any
Assets constituting real property.

 

Section 2.3       Distributions; etc.  So long as no Event of Default shall have
occurred, Pledgor shall be entitled to receive and retain, and to utilize free
and clear of the lien of this Pledge Agreement, any and all distributions of
interest or other funds in respect of the Assets to the extent made in
accordance with the provisions of the Asset Purchase Agreement.

 

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Section 2.4       Transfers and Other Liens.  Pledgor shall not (i) sell,
convey, assign, or otherwise dispose of, or grant any option or right with
respect to, any of the Collateral except in connection with the full and
complete payment or prepayment of the Note issued in connection with the
acquisition of the Asset or Collateral to be sold, conveyed, assigned or
otherwise disposed of or (ii) create or permit to exist any lien or encumbrance
upon or with respect to any Collateral, other than the lien and security
interest granted to the Secured Party pursuant to this Pledge Agreement.

 

ARTICLE III

 

EVENTS OF DEFAULT; REMEDIES

 

Section 3.1       Events of Default.  Each of the following events shall
constitute an event of default (each, an “Event of Default”) under this Pledge
Agreement: (i) any material breach by the Pledgor of any term, provision, or
covenant of the Asset Purchase Agreement; (ii) any material breach by the
Pledgor of any term, provision, or covenant of this Pledge Agreement; (iii) the
Secured Party ceases to have a security interest in the Collateral; or (iv) the
Pledgor becomes subject to bankruptcy, insolvency, reorganization, liquidation,
conservation, rehabilitation, or other similar proceedings.

 

Section 3.2       Remedies Upon Default.

 

(a)        Upon the occurrence of an Event of Default, all rights of Pledgor to
receive distributions which it would otherwise be authorized to receive and
retain pursuant to Section 2.3 hereof shall cease and all such rights shall
thereupon become vested in the Secured Party, which shall thereupon have the
sole right to receive and hold as Collateral such distributions.

 

(b)        All distributions which are received by Pledgor contrary to the
provisions of paragraph (a) of this Section 3.2 shall be received in trust for
the benefit of the Secured Party, shall be segregated from other funds of
Pledgor and shall immediately be paid over to the Secured Party as Collateral in
the same form as so received (with any necessary endorsement).

 

(c)        If an Event of Default shall have occurred, Secured Party shall have
the right, in addition to the other rights and remedies provided for herein or
otherwise available to it to be exercised from time to time, (i) to retain and
apply the distributions to the Secured Obligations and (ii) to exercise all the
rights and remedies of a secured party on default under the UCC in effect in the
State of Illinois at that time, and the Secured Party may also in its sole
discretion, without notice except as specified below, sell the Collateral or any
part thereof (including, without limitation, any partial interest in the Assets)
in one or more parcels at public or private sale, at any exchange, broker’s
board, or at any of the Secured Party’s offices or elsewhere, at such price or
prices and upon such other terms as the Secured Party may deem commercially
reasonable.  Secured Party may be the purchaser of any or all of the Collateral
at any such sale and shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at such sale, to use and apply any of the Secured Obligations
owed to it as a credit on account of the purchase price of any Collateral
payable by it at such sale.  Each purchaser at any such sale shall acquire the
property

 

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sold absolutely free from any claim or right on the part of Pledgor, and Pledgor
hereby waives, to the fullest extent permitted by law, all rights of redemption,
stay, and/or appraisal which it now has, or may at any time in the future have,
under any rule of law or statute now existing or hereafter enacted.  Pledgor
acknowledges and agrees that five days’ notice to Pledgor of the time and place
of any public sale or the time after which any private sale or other intended
disposition is to take place shall constitute reasonable notification of such
matters.  No notification need be given to Pledgor if it has signed, after the
occurrence of an Event of Default, a statement renouncing or modifying any right
to notification of sale or other intended disposition.  The Secured Party shall
not be obligated to make any sale of Collateral regardless of notice of sale
having been given.  The Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefore, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned.  Pledgor hereby waives, to the fullest extent permitted by
law, any claims against the Secured Party arising by reason of the fact that the
price at which any Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale, even if the
Secured Party accepts the first offer received and does not offer such
Collateral to more than one offeree.  The Secured Party shall not be liable for
any incorrect or improper payment made pursuant to this Section in the absence
of gross negligence or willful misconduct.

 

(d)        Pledgor recognizes that, by reason of certain prohibitions contained
in the Securities Act of 1933, as amended (the “Securities Act”), and applicable
state securities law, the Secured Party may be compelled, with respect to any
sale of all or any part of the Collateral, to limit purchasers to persons who
will agree, among other things, to acquire the Collateral for their own account,
for investment and not with a view to the distribution or resale thereof. 
Pledgor acknowledges that any such private sales may be at prices and on terms
less favorable to the Secured Party than those obtainable through a public sale
without such restrictions (including, without limitation, a public offering made
pursuant to a registration statement under the Securities Act), and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that the
Secured Party shall have no obligation to engage in public sales and no
obligation to delay the sale of any Collateral for the period of time necessary
to permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities laws,
even if such issuer would agree to do so.

 

Section 3.3       Application of Proceeds.  All distributions held from time to
time by the Secured Party and all proceeds received by the Secured Party in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral pursuant to the exercise by the Secured Party of its
remedies as a secured creditor as provided herein shall be applied, together
with any other sums then held by the Secured Party pursuant to this Pledge
Agreement, promptly by the Secured Party as follows:

 

First, to the payment of all costs and expenses, fees, commissions, and taxes of
such sale, collection, or other realization, including, without limitation,
compensation to the Secured Party and its agents and counsel, and all expenses,
liabilities, and advances made or incurred by the Secured Party in connection
therewith, together with interest on each such amount at the highest rate then
in effect under the Asset Purchase Agreement from and after the date such amount
is due, owing, or unpaid until paid in full;

 

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Second, without duplication of amounts applied pursuant to clause First above,
to the indefeasible payment in full in cash of the Secured Obligations in
accordance with the terms of the Asset Purchase Agreement; and

 

Third, the balance, if any, to the persons lawfully entitled thereto (including
Pledgor or its successors or assigns).

 

Section 3.4       Expenses.  Pledgor will upon demand pay to the Secured Party
the amount of any and all expenses, including the fees and expenses of its
counsel and the fees and expenses of any experts and agents, which the Secured
Party may incur in connection with (i) the collection of the Secured
Obligations, (ii) the enforcement and administration of this Pledge Agreement,
(iii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iv) the exercise or enforcement of any
of the rights of the Secured Party hereunder, or (v) the failure by Pledgor to
perform or observe any of the provisions hereof.  All amounts payable by Pledgor
under this Section 3.4 shall be due upon demand and shall be part of the Secured
Obligations.  Pledgor’s obligations under this Section 3.4 shall survive the
termination of this Pledge Agreement and the discharge of Pledgor’s other
obligations hereunder.

 

ARTICLE IV

 

MISCELLANEOUS

 

Section 4.1       Notices.  All demands, notices, instructions, and
communications hereunder shall be in writing and shall be deemed to have been
duly given when received.  All notices or communications under this Pledge
Agreement shall be addressed as follows:

 

Notices to Secured Party:

 

American Heritage Life Insurance Company

3075 Sanders Road
Northbrook, Illinois 60062
Attention:  Commercial Mortgage Division
Facsimile:  847-402-4346

 

Notices to Pledgor:

 

Road Bay Investments, LLC
3075 Sanders Road, Suite G5C

Northbrook, IL 60062

Attention:  President

 

Section 4.2       Termination; Release.  When a Note issued in connection with
the acquisition of an Asset or Collateral has been paid in full, the security
interest in such Asset or Collateral created by this Pledge Agreement shall be
released.  When all the Secured Obligations have been paid in full, this Pledge
Agreement shall terminate.  Upon partial release or

 

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termination of this Pledge Agreement, the Secured Party shall, upon the request
and at the sole cost and expense of Pledgor, forthwith assign, transfer, and
deliver to Pledgor, against receipt and without recourse to or warranty by the
Secured Party, such of the Collateral to be released (in the case of a release)
as may be in the possession of the Secured Party and as shall not have been sold
or otherwise applied pursuant to the terms hereof, and, with respect to any
other Collateral, proper instruments (including UCC termination statements on
Form UCC-3) acknowledging the termination of this Pledge Agreement or the
release of such pledged Collateral, as the case may be.

 

Section 4.3       Continuing Security Interest; Assignment.  This Pledge
Agreement shall create a continuing security interest in the Collateral and
shall (i) be binding upon Pledgor, its successors, and assigns and (ii) inure,
together with the rights and remedies of the Secured Party hereunder, to the
benefit of the Secured Party and each of its successors, transferees, and
assigns; no other persons (including, without limitation, any other creditor of
Pledgor) shall have any interest herein or any right or benefit with respect
hereto.

 

Section 4.4       Severability of Provisions.  If any one or more of the
covenants, agreements, provisions, or terms of this Pledge Agreement shall for
any reason whatsoever be held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining covenants,
agreements, provisions, or terms of this Pledge Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Pledge
Agreement.

 

Section 4.5       Further Assurances.  The Pledgor agrees to do and perform,
from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the Secured Party to maintain
the perfection and the priority of the Secured Party’s interest and to effect
more fully the purposes of this Pledge Agreement.

 

Section 4.6       No Waiver; Cumulative Remedies.  No failure to exercise and no
delay in exercising, on the part of the Secured Party, any right, remedy, power,
or privilege hereunder, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power, or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power, or privilege.  The rights, remedies, powers, and privileges
herein provided are cumulative and not exhaustive of any rights, remedies,
powers, and privileges provided by law.

 

Section 4.7       Amendment.  This Pledge Agreement may not be modified,
amended, waived, or supplemented except by a writing signed by each of the
parties hereto.

 

Section 4.8       Headings.  The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.

 

Section 4.9       GOVERNING LAW.  THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LOCAL LAWS OF THE STATE OF ILLINOIS, WITHOUT
REGARD TO ITS PRINCIPLES OF CHOICE OF LAW.

 

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Section 4.10     Submission to Jurisdiction.  Pledgor hereby irrevocably submits
to the jurisdiction of the federal and state courts of competent jurisdiction in
the State of Illinois in any suit or proceeding arising out of this Pledge
Agreement or the transactions contemplated hereby, agrees to be bound by any
judgment rendered by such courts in connection with this Pledge Agreement, and
waives any and all objections to jurisdiction that it may have under the laws of
Illinois or any other jurisdiction.

 

Section 4.11     Execution in Counterparts.  This Pledge Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement.  Delivery of an executed counterpart of a signature page of this
Pledge Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Pledge Agreement.

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the undersigned have caused this Pledge Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
day and year first above written.

 

 

ROAD BAY INVESTMENTS, LLC

 

 

 

 

 

 

 

By:

 /s/ Michael T. Moran

 

 

Name: Michael T. Moran

 

 

Title:  Authorized Signatory

 

 

 

 

 

 

 

By:

 /s/ M.W. Sam Davis

 

 

Name: M.W. Sam Davis

 

 

Title:  Authorized Signatory

 

 

 

 

 

 

 

AMERICAN HERITAGE LIFE INSURANCE COMPANY

 

 

 

 

 

 

 

By:

 /s/ P. Sean Giblin

 

 

Name: P. Sean Giblin

 

 

Title:  Authorized Signatory

 

 

 

 

 

 

 

By:

 /s/ Mark A. Bishop

 

 

Name: Mark A. Bishop

 

 

Title:  Authorized Signatory

 

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