**Exhibit 10.2**

 

**PLEDGE AND SECURITY AGREEMENT**

 

THISPLEDGE AND SECURITY AGREEMENT (this “Pledge Agreement”) is dated as of               and made by and between ROAD BAY INVESTMENTS, LLC (the “Pledgor”) andAMERICAN 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 Agreementdated               (the “Asset Purchase Agreement”), under which the Secured Party has agreed tosell, and the Pledgor has agreed to purchase from the Secured Party, certainAssets (as defined in the Asset Purchase Agreement) ; and

 

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

 

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

 

ARTICLE I

 

GRANTOF PLEDGE AND SECURITY INTEREST

 

Section 1.1                                      Grant of Security Interest.  Tosecure the payment in full when due by the Pledgor to the Secured Party underthe Asset Purchase Agreement of all amounts (including fees, charges, andexpenses) which accrue and become due thereunder and the timely performance bythe Pledgor of each of its other obligations thereunder (collectively, the “SecuredObligations”), the Pledgor hereby pledges and grants to the Secured Party asecurity interest in all of the Pledgor’s right, title, and interest in, to,and under the following (collectively, the “Collateral”): (a) the Assetsand all certificates or instruments evidencing the same and all proceedsthereof, all accessions thereto, and substitutions therefor; (b) allinterest, distributions, and other proceeds from time to time received,receivable, or otherwise distributed to Pledgor in respect of or in exchangefor any or all of the Assets; and (c) all “Proceeds” (as such term isdefined in the Uniform Commercial Code as in effect in the State of Illinois orany 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 underthe laws of the State of Illinois or may be requested by the Secured Party toprotect and perfect the interest of the Secured Party in the Collateral createdhereby and to ensure that such interest is senior in rank to the claims of anyother creditor of the Pledgor claiming an interest in and to the Collateral,including the filing of UCC-1 financing statements (including any continuationstatements with respect to such financing statements when applicable)identifying the Assets and naming the Pledgor as debtor and the Secured Partyas secured party.  The Pledgor shalldeliver to the Secured Party file-stamped copies or other evidence of suchfilings.  Notwithstanding the 

 

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agreements set forth in this Section 1.2, thePledgor hereby authorizes the Secured Party to take, and appoints the SecuredParty as its attorney-in-fact for the purpose of taking, any action necessaryunder the UCC to perfect, and to maintain the perfection and priority of, theSecured Party’s interest in the Collateral, including, without limitation, thefiling 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 securityinstrument in the event any recordation, transfer, stamp, documentary, or otherfees or taxes are or would be levied on Pledgor by reason of the making orrecording of any Note (as defined in the Asset Purchase Agreement) ormortgage.  All such recordation,transfer, stamp, documentary, or other fees or taxes shall be the soleresponsibility of Secured Party.

 

ARTICLE II

 

REPRESENTATIONS,WARRANTIES, AND COVENANTS

 

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

 

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

 

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

 

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

 

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

 

(e)                                  Due Authorization.  The execution and delivery to the SecuredParty of this Pledge Agreement by the Pledgor, the delivery to the SecuredParty of the Assets together with any necessary endorsements, and theconsummation of the transactions provided for in this Pledge Agreement havebeen duly authorized by the Pledgor by all necessary corporate action on itspart and this Pledge Agreement constitutes a legal, valid, and bindingobligation of the Pledgor, enforceable against the Pledgor in accordance withits terms, and except in each case as 

 

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enforcement may be limitedby bankruptcy, insolvency, examination, suspension of payments, fraudulenttransfer, reorganization, moratorium, and other similar laws of generalapplicability affecting the enforcement of creditors’ rights generally, publicpolicy, and general principles of equity (regardless of whether such proceedingis considered in a proceeding in equity or law).

 

(f)                                    No Conflict.  The execution and delivery of this PledgeAgreement, the delivery of the Collateral, the consummation of the transactionscontemplated hereby, and the fulfillment of the terms hereof will not conflictwith 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 thePledgor pursuant to, any indenture, contract, agreement, mortgage, deed oftrust, or other instrument to which the Pledgor is a party or by which it orany of its properties is bound.

 

(g)                                 No Violation.  The execution and delivery of this PledgeAgreement, the delivery of the Collateral, the consummation of the transactionscontemplated hereby, and the fulfillment of the terms hereof will not conflictwith or violate any organizational or governing documents of the Pledgor or anylaw, treaty, rule, or regulation, or any judgment, order, or decree, ordetermination of an arbitrator or governmental authority applicable to orbinding upon the Pledgor.

 

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

 

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

 

Section 2.2                                      Delivery of Pledged Collateral; Filings.

 

Pledgorhas delivered, or will deliver, to the Secured Party an appropriate UCC-1financing statement to be filed with the Secretaries of State of the States ofDelaware and Illinois, the States in which the Pledgor is organized andlocated, respectively, evidencing the lien created by this PledgeAgreement.  Pledgor has delivered, orwill deliver, to the Secured Party an appropriate mortgage or other securityinstrument evidencing the lien of this Pledge Agreement on any Assetsconstituting real property.

 

Section 2.3                                      Distributions; etc.  Solong as no Event of Default shall have occurred, Pledgor shall be entitled toreceive and retain, and to utilize free and clear of the lien of this PledgeAgreement, any and all distributions of interest or other funds in respect ofthe Assets to the extent made in accordance with the provisions of the AssetPurchase Agreement.

 

Section 2.4                                      Transfers and Other Liens. Pledgor shall not (i) sell, convey, assign, or otherwise disposeof, or grant any option or right with respect to, any of the Collateral 

 

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except in connection withthe full and complete payment or prepayment of the Note issued in connection withthe acquisition of the Asset or Collateral to be sold, conveyed, assigned orotherwise disposed of or (ii) create or permit to exist any lien orencumbrance upon or with respect to any Collateral, other than the lien andsecurity interest granted to the Secured Party pursuant to this PledgeAgreement.

 

ARTICLE III

 

EVENTSOF DEFAULT; REMEDIES

 

Section 3.1                                      Events of Default.  Eachof the following events shall constitute an event of default (each, an “Eventof Default”) under this Pledge Agreement: (i) any material breach bythe Pledgor of any term, provision, or covenant of the Asset PurchaseAgreement; (ii) any material breach by the Pledgor of any term, provision,or covenant of this Pledge Agreement; (iii) the Secured Party ceases tohave a security interest in the Collateral; or (iv) the Pledgor becomessubject 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 toreceive distributions which it would otherwise be authorized to receive andretain pursuant to Section 2.3 hereof shall cease and all such rightsshall thereupon become vested in the Secured Party, which shall thereupon havethe sole right to receive and hold as Collateral such distributions.

 

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

 

(c)                                  If an Event of Default shall have occurred, Secured Party shall have theright, in addition to the other rights and remedies provided for herein orotherwise available to it to be exercised from time to time, (i) to retainand apply the distributions to the Secured Obligations and (ii) toexercise all the rights and remedies of a secured party on default under theUCC in effect in the State of Illinois at that time, and the Secured Party mayalso in its sole discretion, without notice except as specified below, sell theCollateral or any part thereof (including, without limitation, any partialinterest in the Assets) in one or more parcels at public or private sale, atany exchange, broker’s board, or at any of the Secured Party’s offices orelsewhere, at such price or prices and upon such other terms as the SecuredParty may deem commercially reasonable. Secured Party may be the purchaser of any or all of the Collateral atany such sale and shall be entitled, for the purpose of bidding and makingsettlement or payment of the purchase price for all or any portion of theCollateral sold at such sale, to use and apply any of the Secured Obligationsowed to it as a credit on account of the purchase price of any Collateralpayable by it at such sale.  Eachpurchaser at any such sale shall acquire the property sold absolutely free fromany claim or right on the part of Pledgor, and Pledgor hereby waives, to thefullest extent permitted by law, all rights of redemption, stay, and/orappraisal which it now 

 

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has, or may at any time in the future have, underany rule of law or statute now existing or hereafter enacted.  Pledgor acknowledges and agrees that fivedays’ notice to Pledgor of the time and place of any public sale or the timeafter which any private sale or other intended disposition is to take placeshall constitute reasonable notification of such matters.  No notification need be given to Pledgor ifit has signed, after the occurrence of an Event of Default, a statementrenouncing or modifying any right to notification of sale or other intendeddisposition.  The Secured Party shall notbe obligated to make any sale of Collateral regardless of notice of sale havingbeen given.  The Secured Party may adjournany public or private sale from time to time by announcement at the time andplace fixed therefore, and such sale may, without further notice, be made atthe time and place to which it was so adjourned.  Pledgor hereby waives, to the fullest extentpermitted by law, any claims against the Secured Party arising by reason of thefact that the price at which any Collateral may have been sold at such aprivate sale was less than the price which might have been obtained at a publicsale, even if the Secured Party accepts the first offer received and does notoffer such Collateral to more than one offeree. The Secured Party shall not be liable for any incorrect or improperpayment made pursuant to this Section in the absence of gross negligenceor willful misconduct.

 

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

 

Section 3.3                                      Application of Proceeds.  Alldistributions held from time to time by the Secured Party and all proceedsreceived by the Secured Party in respect of any sale of, collection from, orother realization upon all or any part of the Collateral pursuant to theexercise by the Secured Party of its remedies as a secured creditor as providedherein shall be applied, together with any other sums then held by the SecuredParty pursuant to this Pledge Agreement, promptly by the Secured Party asfollows:

 

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 agentsand counsel, and all expenses, liabilities, and advances made or incurred bythe Secured Party in connection therewith, together with interest on each suchamount at the highest rate then in effect under the Asset Purchase Agreementfrom and after the date such amount is due, owing, or unpaid until paid infull;

 

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Second, without duplication of amounts appliedpursuant to clause First above, to the indefeasible payment in full in cash ofthe Secured Obligations in accordance with the terms of the Asset PurchaseAgreement; and

 

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

 

Section 3.4                                      Expenses.  Pledgorwill 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 anyexperts and agents, which the Secured Party may incur in connection with (i) thecollection of the Secured Obligations, (ii) the enforcement andadministration of this Pledge Agreement, (iii) the custody or preservationof, or the sale of, collection from, or other realization upon, any of theCollateral, (iv) the exercise or enforcement of any of the rights of theSecured Party hereunder, or (v) the failure by Pledgor to perform orobserve any of the provisions hereof. All amounts payable by Pledgor under this Section 3.4 shall be dueupon demand and shall be part of the Secured Obligations.  Pledgor’s obligations under this Section 3.4shall survive the termination of this Pledge Agreement and the discharge ofPledgor’s other obligations hereunder.

 

ARTICLE IV

 

MISCELLANEOUS

 

Section 4.1                                      Notices.  Alldemands, notices, instructions, and communications hereunder shall be inwriting and shall be deemed to have been duly given when received.  All notices or communications under thisPledge Agreement shall be addressed as follows:

 

**Notices to Secured Party:**

 

AmericanHeritage Life Insurance Company

 

3075Sanders RoadNorthbrook, Illinois  60062Attention:  Commercial Mortgage DivisionFacsimile:  847-402-4346

** **

**Notices to Pledgor:**

 

RoadBay Investments, LLC3075 Sanders Road, Suite G5C

Northbrook, IL60062

Attention:  President

Section 4.2                                      Termination; Release.  Whena Note issued in connection with the acquisition of an Asset or Collateral hasbeen paid in full, the security interest in such Asset or Collateral created bythis Pledge Agreement shall be released. When all the Secured Obligations 

 

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havebeen paid in full, this Pledge Agreement shall terminate.  Upon partial release or termination of thisPledge Agreement, the Secured Party shall, upon the request and at the solecost and expense of Pledgor, forthwith assign, transfer, and deliver toPledgor, against receipt and without recourse to or warranty by the SecuredParty, such of the Collateral to be released (in the case of a release) as maybe in the possession of the Secured Party and as shall not have been sold orotherwise applied pursuant to the terms hereof, and, with respect to any otherCollateral, proper instruments (including UCC termination statements on Form UCC-3)acknowledging the termination of this Pledge Agreement or the release of suchpledged Collateral, as the case may be.

 

Section 4.3                                      Continuing Security Interest; Assignment.  ThisPledge Agreement shall create a continuing security interest in the Collateraland 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 thebenefit of the Secured Party and each of its successors, transferees, andassigns; no other persons (including, without limitation, any other creditor ofPledgor) shall have any interest herein or any right or benefit with respecthereto.

 

Section 4.4                                      Severability of Provisions.  Ifany one or more of the covenants, agreements, provisions, or terms of thisPledge Agreement shall for any reason whatsoever be held invalid, then suchcovenants, agreements, provisions, or terms shall be deemed severable from theremaining covenants, agreements, provisions, or terms of this Pledge Agreementand shall in no way affect the validity or enforceability of the otherprovisions of this Pledge Agreement.

 

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

 

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

 

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

 

Section 4.8                                      Headings.  Theheadings herein are for purposes of reference only and shall not otherwiseaffect the meaning or interpretation of any provision hereof.

 

Section 4.9                                      **GOVERNING LAW****.  THISPLEDGE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THELOCAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO ITS PRINCIPLES OF CHOICEOF LAW.**

 

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

 

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INWITNESS WHEREOF, the undersigned have caused this Pledge Agreement to be dulyexecuted and delivered by their respective duly authorized officers as of theday 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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