Exhibit 10.2

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (referred to herein as “Agreement”) is made March 15,
2016 by ST. LAWRENCE ZINC COMPANY, LLC, a Delaware limited liability company,
with an address of 408 Sylvia Lake Road, Gouverneur, New York 13642 (referred to
herein as “Debtor”) to DEVELOPMENT AUTHORITY OF THE NORTH COUNTRY, a New York
public benefit corporation, with an office located at 111 Clinton Street,
Watertown, New York 13601 (referred to herein as “Secured Party”).

 

W I T N E S S E T H:

 

WHEREAS, in order to induce Secured Party to make a loan concurrently herewith
as evidenced by that certain Promissory Note of even date herewith (the “Note”
or “Notes”) and to secure any other obligations owed by the Debtor to the
Secured Party now or in the future, Debtor has agreed to pledge to Secured Party
certain property as security for the loan;

 

NOW THEREFORE, in consideration of Ten Dollars, and other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Debtor hereto agrees as follows:

 

1. Definitions. The following terms as used in this Agreement shall have the
meanings set forth below:

 

“Collateral” shall mean the property set forth in EXHIBIT A attached hereto and
made a part hereof, and all proceeds thereof, and all replacements thereto,
wherever located.

 

“Event of Default” shall have the meanings set forth herein at ¶6.

 

“Note” or “Notes” shall mean that certain promissory note or those certain
promissory notes dated the same date as this Security Agreement made by Debtor
payable to Secured Party.

 

“Obligations” shall mean all principal and interest due or to become due under
the Note, and any other indebtedness or liability of Debtor to Secured Party,
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising.

 

2. Creation Of The Security Interest. Debtor hereby grants to Secured Party a
security interest in all of Debtor’s now owned or hereafter acquired right,
title and interest in and to the Collateral to secure the full and prompt
payment and performance of all of the Obligations.

 

3. Debtor’s Obligation To Pay. Debtor shall pay and perform all of the
Obligations of Debtor to Secured Party as the same may become due according to
their terms. Debtor shall be liable for, and shall reimburse to Secured Party,
all expenses, including reasonable attorneys’ fees, incurred or paid in
connection with establishing, perfecting, maintaining, protecting or enforcing
any of Secured Party’s rights and remedies hereunder.

 

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4.01 Protection Of The Collateral. Debtor shall defend the title to the
Collateral against all claims and demands whatsoever. Debtor shall keep the
Collateral free and clear of all liens, charges, encumbrances, taxes and
assessments, and shall pay all taxes, assessments and fees relating to the
Collateral. Upon request by Secured Party, Debtor shall furnish further
assurances of title, execute any further instruments and do any other acts
necessary to effectuate the purposes and provisions of this Security Agreement.
Debtor shall not sell, exchange, assign, transfer or otherwise dispose of the
Collateral, and shall not encumber, hypothecate, mortgage, create a lien on or
security interest in the Collateral, without the prior written consent of
Secured Party in each instance. The risk of loss of the Collateral at all times
shall be borne by Debtor. Debtor shall keep the Collateral in good repair and
condition and shall not misuse, abuse or waste the Collateral or allow the
Collateral to deteriorate except for normal wear and tear.

 

4.02 Debtor at all times shall maintain: (A) insurance covering the Collateral
and all other property of Debtor against loss or damage by fire and other
hazards; (B) insurance against liability on account of damage to persons and
property; (C) all insurance required under applicable workmen’s compensation
laws; and (D) insurance covering such other risks as Secured Party reasonably
may request. Such insurance shall be in amounts satisfactory to Secured Party,
shall be maintained with responsible insurance carriers, shall name Debtor and
Secured Party as their interests may appear as insured, and shall provide for at
least ten (10) days’ written notice to Secured Party prior to cancellation.
Debtor, from time to time, upon Secured Party’s written request, promptly shall
furnish or cause to be furnished to Secured Party evidence of the maintenance of
all insurance required to be maintained hereunder, including such originals or
copies of policies, certificates of insurance, riders and endorsements relating
thereto and proof of payment of premiums as Secured Party may request. If Debtor
shall fail to maintain any such insurance, Secured Party may, but shall not be
obligated to do so at the expense of Debtor, in addition to the other rights and
remedies of Secured Party. Debtor hereby irrevocably designates Secured Party,
its agents, representatives and designees, as agent and attorney-in-fact,
coupled with an interest, of Debtor for purposes of obtaining, adjusting and
canceling any such insurance and endorsing settlement drafts, and hereby assigns
to Secured Party all sums which may become payable under such insurance,
including returned premiums and dividends, as additional security for the
Obligations.

 

4.03 Secured Party shall have the right to enter upon the premises where the
Collateral is located at any reasonable time, and from time to time, to inspect
the Collateral.

 

5. Filing And Recording. Debtor, at its own cost and expense, shall execute and
deliver to Secured Party any financing statements, and shall procure for Secured
Party any other documents, necessary or appropriate to protect the security
interest granted to Secured Party hereunder against the rights and interests of
third parties, and shall cause the same to be duly recorded and filed in all
places necessary to perfect the security interest of Secured Party in the
Collateral. In the event that any recording or refiling thereof (or filing of
any statements of continuation or assignment of any financing statement) is
required to protect and preserve such security interest, Debtor, at its own cost
and expense, shall cause the same to be re-recorded and/or refiled at the time
and in the manner requested by Secured Party. Debtor hereby authorizes Secured
Party to file or refile any financing statements or continuation statements with
respect to the security interest granted pursuant to this Agreement which at any
time may be required or appropriate, although the same may have been executed
only by Secured Party, and to execute such financing statement on behalf of
Debtor. Debtor hereby irrevocably designates Secured Party, its agents,
representatives and designees, as agent and attorney-in-fact, coupled with an
interest, of Debtor for the aforesaid purposes.

 

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6. Default. The occurrence of any one or more of the following events
(hereinafter referred to as “Events of Default” or “Event of Default”) shall
constitute a default hereunder, whether such occurrence is voluntary or
involuntary or comes about or is effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental authority beyond the grace
period specified below: (A) If Debtor shall fail to pay, perform or observe any
covenant, agreement, term or provision of this Agreement, the Note or any other
agreement or arrangement now or hereafter entered into between the parties
hereto or with respect to any Obligation of Debtor to Secured Party; (B) If any
representation, warranty or other statement of fact herein or in any writing,
certificate, report or statement at any time furnished to Secured Party pursuant
to or in connection with this Agreement or the Note shall be false or misleading
in any material respect; (C) If any Debtor shall: admit in writing its inability
to pay its debts generally as they become due; file a petition for relief under
the bankruptcy laws or a petition to take advantage of any insolvency act; make
an assignment for the benefit of creditors; commence a proceeding for the
appointment of a receiver, trustee, liquidator or conservator of itself or the
whole or any substantial part of its property; file a petition or answer seeking
reorganization or arrangement or similar relief under the Federal Bankruptcy
Laws or any other applicable law or statute of the United States or any State;
or if Debtor shall be adjudged a bankrupt or insolvent, or a court of competent
jurisdiction shall enter any order, judgment or decree appointing a receiver,
trustee, liquidator or conservator of Debtor or of the whole or any substantial
part of the property of Debtor or approves a petition filed against Debtor
seeking reorganization or similar relief under the Federal Bankruptcy Laws or
any other applicable law or statute of the United States or any State; or if,
under the provisions of any other law for the relief or aid of debtors, a court
of competent jurisdiction shall assume custody or control of Debtor or the whole
or any substantial part of its property; or if there is commenced against Debtor
any proceeding for any of the foregoing relief; or if Debtor by any act
indicates its consent to, approval of, or acquiescence in any such proceeding;
(D) If any creditor of Debtor for any reason whatsoever hereafter shall
accelerate payment in whole or in part of any outstanding obligation owed to it
by Debtor under any agreement or arrangement, or if any judgment against the
Debtor or any execution against any of its property for any amount remains
unpaid, unstayed or undismissed for a period in excess of sixty (60) days; (E)
If Debtor shall cease to exist; (F) If there occurs any reduction in the value
of the Collateral or any act of Debtor which imperils the prospect of the full
performance or satisfaction of the Obligations; or (G) If all or any part of the
Collateral shall be sold, transferred or assigned, or shall be further
encumbered, hypothecated, mortgaged, or made subject to any other lien or
security interest, without the prior written consent of Secured Party.

 

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7. Rights And Remedies. Upon the occurrence of an Event of Default, Debtor shall
have a period of 25 days after its receipt of written notice of such default
specifying the reasons for the default. In the event the Event of Default cannot
be cured within 25 days, Debtor shall not be in default if, within such 25 day
period, it shall have commenced to cure the default and shall continue its
efforts to cure such default with due diligence. After such period of time, if
the Event of Default has not been cured, the Obligations shall immediately
become due and payable in full without further notice or demand. Secured Party
shall have all rights and remedies provided by the Uniform Commercial Code then
in effect in the State of New York. In addition to, or in conjunction with, or
substitution for such rights and remedies, Secured Party may at any time and
from and after the occurrence of an Event of Default hereunder: (A) with or
without notice to Debtor, foreclose the security interest created herein by any
available judicial procedure, or take possession of the Collateral, or any
portion thereof, with or without judicial process, and enter any premises where
the Collateral may be located for the purpose of taking possession of or
removing the same, or rendering the same unusable, or disposing of the
Collateral on such premises, and Debtor agrees not to resist or interfere
therewith; (B) require Debtor to prepare, assemble or collect the Collateral, at
Debtor’s own expense, and make the same available to Secured Party at such place
as Secured Party may designate, whether at Debtor’s premises or elsewhere; (C)
sell, lease or otherwise dispose of all or any part of the Collateral, whether
in its then condition or after further preparation, in Debtor’s name or in its
own name, or in the name of such party as Secured Party may designate, either at
public or private sale (at which Secured Party shall have the right to
purchase), in lots or in bulk, for cash or for credit, with or without
representations or warranties, and upon such other terms as Secured Party, in
its sole discretion, may deem advisable; and ten (10) days’ written notice of
such public sale date or dates after which private sale may occur, or such
lesser period of time in the case of an emergency, shall constitute reasonable
notice hereunder; (D) execute and deliver documents of title, certificates of
origin, or other evidence of payment, shipment or storage of any Collateral or
proceeds on behalf of and in the name of Debtor; (E) remedy any default by
Debtor hereunder, without waiving such default, and any monies expended in so
doing shall be chargeable with interest to Debtor and added to the Obligations
secured hereby; and (F) apply for an injunction to restrain a breach or
threatened breach of this Agreement by Debtor.

 

8. Cumulative Rights. All rights, remedies and powers granted to Secured Party
herein, or in any instrument or document related hereto, or provided or implied
by law or in equity shall be cumulative and may be exercised singly or
concurrently on any one or more occasions.

 

9. Debtor’s Representations And Warranties. Debtor hereby represents and
warrants to Secured Party that: (A) Debtor is not in default under any
indenture, mortgage, deed of trust, agreement or other instrument to which it is
a party or by which it may be bound. Neither the execution nor the delivery of
this Agreement, nor the consummation of the transactions herein contemplated,
nor compliance with the provisions hereof, will violate any law or regulation,
or any order or decree of any court or governmental authority, or will conflict
with, or result in the breach of, or constitute a default under, any indenture,
mortgage, deed of trust, agreement or other instrument to which Debtor is a
party or by which Debtor may be bound. (B) Debtor has the power to execute,
deliver and perform the provisions of this Agreement and all instruments and
documents delivered or to be delivered pursuant hereto, and has taken or caused
to be taken all necessary or appropriate actions to authorize the execution,
delivery and performance of this Agreement and all such instruments and
documents. (C) Debtor is the legal and equitable owner of the Collateral, free
and clear of all security interests, liens, claims and encumbrances of every
kind and nature. No financing statement covering the Collateral or its proceeds
is on file in any public office. (D) No default exists, and no event which with
notice or the passage of time, or both, would constitute a default hereunder
exists. (E) There are no offsets, claims or defenses against the Obligations.

 

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10. Notices. All notices, requests, demands or other communications provided for
herein shall be in writing and shall be deemed to have been properly given five
(5) days after the date sent by certified mail, addressed to the parties at
their respective addresses hereinabove set forth, with a copy to Star Mountain
Resources, Inc., 8307 Shaffer Parkway, Suite 102, Littleton, Coloardo 80127
Attn. Chief Financial Officer and to Legal & Compliance, LLC, 330 Clematis
Street, Suite 217, West Palm Beach, Florida 33401 Attn. Laura Anthony, Esq. and
Lazarus Rothstein, Esq. or at such other addresses as the parties may designate
in writing. Debtor immediately shall notify Secured Party of any change in the
address of Debtor or discontinuance of the place of business of Debtor.

 

11. Modification And Waiver. No modification or waiver of any provision of this
Agreement, and no consent by Secured Party to any breach thereof by Debtor,
shall be effective unless such modification or waiver shall be in writing and
signed by Secured Party, and the same shall then be effective only for the
period and on the conditions and for the specific instances and purposes
specified in such writing. No course of dealing between Debtor and Secured Party
in exercising any rights or remedies hereunder shall operate as a waiver or
preclude the exercise of any other rights or remedies hereunder. All such rights
and remedies shall continue unimpaired, notwithstanding any delay, extension of
time, renewal, compromise or other indulgence granted with respect to any of the
Obligations. Debtor hereby waives all notice of any such delay, extension of
time, renewal, compromise or indulgence, and consents to be bound thereby as
fully and effectually as if Debtor expressly had agreed thereto in advance. The
aforesaid Note may be negotiated by Secured Party without releasing Debtor or
the Collateral.

 

12. Applicable Law. This Agreement shall be construed in accordance with and
shall be governed by the laws of the State of New York. The invalidity or
unenforceability of any provision of this Agreement shall not effect the
validity or enforceability of any other provision of this Agreement. Debtor
covenants and agrees to execute and deliver to Secured Party on demand such
additional assurances, writings and instruments as may be required by Secured
Party for purposes of effectuating the intent of this Agreement. The captions in
this Agreement are for convenience only, and shall not be considered in
construing this Agreement.

 

13. Venue and Jurisdiction. Any legal action by any party against another
relating in any way to this instrument, or the indebtedness, or any relationship
between or conduct by the parties, whether at law or in equity, shall be
commenced in the Supreme Court of the State of New York in and for St. Lawrence
County, New York.

 

14. Benefit. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective distributees, executors, administrators,
successors and permitted assigns. Secured Party may assign this Agreement, and
if assigned, the assignee shall be entitled, upon notifying Debtor, to the
payment and performance of all of the Obligations and agreements of Debtor
hereunder and to all of the rights and remedies of Secured Party hereunder, and
Debtor shall assert no claims or defenses Debtor may have against Secured Party
against the assignee. The gender and number used in this Agreement are used for
reference only and shall apply with the same effect whether the parties are
masculine, feminine, neuter, singular or plural.

 

[This space was intentionally left blank].

 

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EXECUTED as of the day and year first above written.

 

DEBTOR:

 

ST. LAWRENCE ZINC COMPANY, LLC

By: Balmat Holding Corporation

A Delaware Corporation

Sole Member

 

/s/ Wayne Rich   By: Wayne Rich   Its: Chief Financial Officer  

 

STATE OF COLORADO                  )   )ss: COUNTY OF JEFFERSON     )

 

On the 15 day of March 2016, before me, the undersigned, a Notary Public in and
for said State, personally appeared WAYNE RICH, personally known to me or proved
to me on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his capacity, and that by his signature on the instrument, the
individual, entity or person upon behalf of which the individual acted, executed
the instrument.

 

  /s/ Bryan S. Doyle   Notary Public

 

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EXHIBIT A

 

Attachment to Security Agreement and UCC-1 Financing Statement between ST.
LAWRENCE ZINC COMPANY, LLC, Debtor, and DEVELOPMENT AUTHORITY OF THE NORTH
COUNTRY, Secured Party.

 

1. All Debtor’s machinery and equipment specified on the list annexed hereto.  
  2. All Debtor’s now owned and hereafter acquired or created mineral and mining
rights arising in the operations of Debtor’s business, including but not limited
to permits, licenses on the list annexed hereto, easements, and rights of way.  
  3. All accessions, accessories, additions, amendments, modifications, and
replacements to any of the above; all proceeds and products of any of the above;
all condemnation awards; all policies of insurance pertaining to any of the
above, as well as any proceeds and unearned premiums pertaining to such
policies, and all books and records pertaining to any of the above.

 

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