Exhibit 10.2

 

PLEDGE AND SECURITY AGREEMENT

 

THIS PLEDGE AND SECURITY AGREEMENT (this “Pledge Agreement”) is dated as of
               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                (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 to the
Secured Party file-stamped copies or other evidence of such filings. 
Notwithstanding the

 

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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 Pledgor, enforceable against the Pledgor in
accordance with its terms, and except in each case as

 

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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.

 

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

 

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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 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

 

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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

 

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have been paid in full, this Pledge Agreement shall terminate.  Upon partial
release or 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.

 

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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:

 

 

 

Name:

 

 

Title: Authorized Signatory

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title: Authorized Signatory

 

 

 

 

 

AMERICAN HERITAGE LIFE INSURANCE COMPANY

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title: Authorized Signatory

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title: Authorized Signatory

 

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