EXHIBIT 10.15
CHEX GUARANTEE SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made as of March 8,
2004,
by and between Chex Services, Inc.
("Chex"), a Minnesota corporation, Pandora
Select Partners, L.P., ("Pandora") and
Whitebox Hedged High Yield Partners,
L.P., ("WHHY").
RECITALS
A. Equitex, Inc., a Delaware corporation ("Equitex"), Pandora and
WHHY
have entered into a Purchase Agreement
dated as of this date, pursuant to which
Pandora is purchasing a $3,000,000, and
WHHY is purchasing a $2,000,000, face
amount promissory note (together the
"Notes") from Equitex in consideration of a
$5,000,000 loan (the "Equitex Loan") by
Pandora and WHHY to Equitex. Pandora and
WHHY are referred to herein as the "Secured
Parties."
B. In connection with the issuance of the Equitex Notes, Equitex
is
pledging to Secured Parties its interest in
the capital stock of Chex, its
wholly owned subsidiary, under the terms of
a Security Agreement dated as of
this date (the "Equitex Security
Agreement").
C. Equitex, concurrent with its borrowing of $5,000,000 from
Secured
Parties, is loaning $5,000,000 to Chex (the
"Chex Loan") under the terms of a
promissory note in the like principal
amount dated as of the date of this
Agreement.
D. As a condition to making the Equitex Loan, Secured Parties
are
requiring, and as a condition of making the
Chex Loan, Equitex is requiring,
that Chex guarantee (the "Guarantee") the
obligations of Equitex under the Notes
and Equitex Security Agreement, and secure
the Guarantee by pledging all of
Chex's assets.
NOW, THEREFORE, in consideration of the agreements herein and
in
reliance upon the representations and
warranties set forth herein and therein,
the parties agree as follows:
ARTICLE 1.
DEFINED TERMS
1.1 Definitions. Unless otherwise defined herein or unless the
context
otherwise requires, terms used in this
Agreement, including its preamble and
recitals, have the meanings provided in the
Uniform Commercial Code in effect in
the State of Minnesota (the "UCC"). In
addition, the following terms when used
in this Agreement, including its preamble
and recitals, shall have the following
meanings:
"Loan Documents" means the Guarantee and this Agreement.
"Obligations" means the payment and other performance
obligations under the Guarantee.
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ARTICLE 2.
SECURITY INTEREST
2.1 Grant of Security Interest. To secure
the timely payment and performance in
full of the Obligations, Chex does hereby
assign, grant and pledge to Secured
Parties, all of the estate, right, title
and interest of Chex in and to the
Collateral as more fully described on
Exhibit A hereto, whether now owned or
later acquired or created, and including
all proceeds of the Collateral, whether
cash or non-cash (the "Collateral"). As to
any equity interest that Chex may
acquire (the "Pledged Equity Interests") in
wholly or partially owned
subsidiaries (each a "Pledged Entity"), the
Collateral includes Chex's share of:
(a) all rights to receive income, gain, profit, dividends and
other
distributions allocated or distributed to
Chex in respect of or in exchange for
all or any portion of such Pledged Equity
Interests;
(b) all of Chex's capital or ownership interest, including
capital
accounts, in each Pledged Entity, and all
accounts, deposits or credits of any
kind with each Pledged Entity;
(c) all of Chex's voting rights in or rights to control or
direct
the affairs of each Pledged Entity;
(d) all of Chex's rights, title and interest, as a member or
shareholder of each Pledged Entity, in, to
or under any and all of each Pledged
Entity's assets or properties;
(e) all other rights, title and interest in or to each Pledged
Entity derived from the Pledged Equity
Interests;
(f) all indebtedness or other obligations of each Pledged
Equity
owed to Chex;
(g) all claims of Chex for damages arising out of, or for any
breach
or default relating to, any of the Pledged
Equity Interests;
(h) all rights of Chex to terminate, amend, supplement, modify,
or
cancel, the governing documents of any
Pledged Entity, to take all actions
thereunder and to compel performance and
otherwise exercise all remedies
thereunder; and
(i) all securities, notes, certificates and other instruments
representing or evidencing any of the
foregoing rights and interests or the
ownership thereof and any interest of Chex
reflected in the books of any
financial intermediary pertaining to such
rights and interests and all non-cash
dividends, cash, options, warrants, stock
splits, reclassifications, rights,
instruments or other investment property
and other property or proceeds from
time to time received, receivable or
otherwise distributed in respect of or in
exchange for any or all of such rights and
interests.
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2.2 Delivery of Certificates. All certificates, notes and other
instruments representing or evidencing any
Pledged Equity Interests shall be
delivered to and held by or on behalf of
Secured Parties, or their designee
pursuant hereto, in the manner set forth in
Section 4.6 (Delivery of Pledged
Equity Interests; Proxy).
2.3 Financing Statements.
(a) Chex hereby authorizes Secured Parties to file all
financing
statements, continuation statements,
assignments, certificates, and other
documents and instruments with respect to
the Collateral pursuant to the UCC and
otherwise as may be necessary or reasonably
requested by Secured Parties to
perfect or from time to time to publish
notice of, or continue or renew the
security interests granted hereby
(including, such financing statements,
continuation statements, certificates, and
other documents as may be necessary
or reasonably requested to perfect a
security interest in any additional
property rights hereafter acquired by Chex
or in any replacements, products or
proceeds thereof), in each case in form and
substance satisfactory to Secured
Parties.
(b) Secured Parties will pay the cost of filing the same in all
public
offices where filing is necessary or
reasonably requested by Secured Parties and
will pay any and all recording, transfer or
filing taxes that may due in
connection with any such filing. Chex
grants Secured Parties the right, at any
time and at Secured Parties' option, to
file any or all such financing
statements, continuation statements, and
other documents pursuant to the UCC and
otherwise as Secured Parties reasonably may
deem necessary or desirable.
(c) Chex hereby authorizes the filing of any financing statements
or
continuation statements, and amendments to
financing statements, or any similar
document in any jurisdictions and with any
filing offices as Secured Parties may
reasonably determine are necessary or
advisable to perfect the security
interests granted to Secured Parties. Such
financing statements may describe the
Collateral in the same manner as described
herein or may contain an indication
or description of collateral that describes
such property in any other manner as
Secured Parties may reasonably determine is
necessary, advisable or prudent to
ensure the perfection of the security
interest in the Collateral granted to
Secured Parties herein.
2.4 Debtor RemainS Liable.
(a) Anything herein contained to the contrary notwithstanding,
Chex
shall remain liable under its articles of
incorporation, bylaws or other
constituent documents (together, the
"Constituent Documents"), to perform all of
the obligations undertaken by it
thereunder, all in accordance with and pursuant
to the terms and provisions thereof, and
Secured Parties shall have no
obligations or liabilities under the
Constituent Documents by reason of or
arising out of this Agreement, nor shall
Secured Parties be required or
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obligated in any manner to perform or
fulfill any obligations of Chex thereunder
or to make any payment, or to make any
inquiry as to the nature or sufficiency
of any payment received by their or present
or file any claim, or take any
action to collect or enforce the payment of
any amounts which may have been
assigned to them or to which they may be
entitled at any time or times.
(b) If any default by Chex under any of the Constituent Documents
shall
occur, Secured Parties shall, at its
option, be permitted (but shall not be
obligated) to remedy any such default by
giving written notice of such intent to
Chex and to the parties to such agreement.
Any cure by Secured Parties of Chex's
default under a Constituent Document shall
not be construed as an assumption by
Secured Parties of any obligations,
covenants or agreements of Chex under the
Constituent Documents, and Secured Parties
shall not incur any liability to Chex
or any other person as a result of any
actions undertaken by Secured Parties in
curing or attempting to cure any such
default. This Agreement shall not be
deemed to release or to affect in any way
the obligations of Chex under any of
the Constituent Documents.
2.5 Retention of Certain Rights. So long as Secured Parties have
not
exercised remedies with respect to the
Collateral under and in accordance with
this Agreement, upon the occurrence and
during the continuance of an Event of
Default, Chex reserves the right to
exercise all voting rights with respect to
the Pledged Equity Interests; provided,
that no vote shall be cast, right
exercised or other action taken which could
materially impair the Collateral.
2.6 merger
or reorganization. Notwithstanding anything to the contrary
contained herein, Chex may engage in a
merger, consolidation or sale of its
business, but only as permitted by Section
2.6 of the Equitex Security
Agreement, which Section is incorporated
herein by reference.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF DEBTOR
Chex makes the following representations and warranties to and in
favor
of Secured Parties as of the date hereof.
All of these representations and
warranties shall survive the execution and
delivery of this Agreement:
3.1 ORGANIZATION. Chex:
(a) is a corporation duly incorporated and validly existing and in
good
standing under the laws of the state of
Minnesota;
(b) is duly qualified, authorized to do business as a foreign
corporation in each jurisdiction where the
character of its properties or the
nature of its activities makes such
qualification necessary; and
(c) has the corporate power (A) to enter into the Loan Documents
and to
perform its obligations thereunder and to
consummate the transactions
contemplated thereby, (B) to carry on its
business as now being conducted and as
proposed to be conducted by it, (C) to
execute, deliver and perform this
Agreement, (D) to take all action as may be
necessary to consummate the
transactions contemplated hereunder, and
(E) to grant the liens and security
interests provided for in this
Agreement.
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3.2 OFFICES, LOCATION OF COLLATERAL. The chief executive office
or
chief place of business of Chex is located
at 11100 Wayzata Boulevard,
Minnetonka, Minnesota 55305.
3.3 Title and Liens. The Pledged Equity Interests, if and when
owned by
Chex will be duly authorized and validly
issued, and fully paid and
non-assessable. Chex has good, valid, and
marketable title to the Collateral,
free from all liens and encumbrances of any
kind. As a result of this Agreement,
Secured Parties will have a security
interest in the Collateral, subordinate
only to the security interest of Equitex
under a Chex Note Security Agreement
entered into between Equitex and Chex as of
this date.
3.4 UCC Article 8. All membership interests or shares in any
Pledged
Entity that constitute the Pledged Equity
Interests will be securities governed
by Article 8 of the UCC.
3.5 Authorization; No Conflict. Chex has duly authorized, executed
and
delivered this Agreement, and Chex's
execution and delivery hereof and its
consummation of the transactions
contemplated hereby and the compliance with the
terms thereof:
(a) does not or will not contravene the Constituent Documents of
any
Pledged Entity or any other legal
requirements applicable to or binding on Chex
which could reasonably be expected to have
a material adverse effect upon the
Collateral or Secured Parties' rights
therein;
(b) does not or will not contravene or result in any breach of
or
constitute any default, or result in or
require the creation of any lien upon
any of Chex's property, under any agreement
or instrument to which Chex is a
party or by which it or any of its
properties may be bound or affected; and
(c) does not or will not require the consent or approval of any
third
party which has not already been
obtained.
3.6 Enforceability. This Agreement is a legal, valid and
binding
obligation of Secured Parties, enforceable
against Chex in accordance with its
terms, except to the extent that
enforceability may be limited by applicable
bankruptcy, insolvency, moratorium,
reorganization or other similar laws
affecting the enforcement of creditors'
rights or by the effect of general
equitable principles.
ARTICLE 4.
COVENANTS OF DEBTOR
Chex covenants to and in favor of Secured Parties as follows:
4.1 Compliance with Obligations. Chex shall perform and comply in
all
material respects with all obligations and
conditions on its part to be
performed with respect to the
Collateral.
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4.2 Information Concerning Collateral. Chex shall, promptly
upon
request, provide to Secured Parties all
information and evidence they may
reasonably request concerning the
Collateral to enable Secured Parties to
enforce the provisions of this
Agreement.
4.3 Defense of Collateral. Chex shall defend its title to the
Collateral and the interests of Secured
Parties in the Collateral pledged
hereunder against the claims and demands of
all third parties whomsoever.
4.4 Maintenance of Collateral. Chex shall not (i) take any action
to
terminate, modify or amend any Constituent
Document of any Pledged Entity which
impairs Secured Parties' interest in the
Collateral, except with the consent of
Secured Parties, (ii) fail to deliver to
Secured Parties a copy of each demand
or notice received or given by it relating
to any Constituent Document of Chex
or to any other Collateral which could
reasonably be expected to have a material
adverse effect upon the Collateral or
Secured Parties' rights therein, or (iii)
sell, contract to sell, assign, transfer or
dispose of any of the Collateral,
except, in the ordinary course of business,
or with the consent of Secured
Parties, which consent will not be
unreasonably withheld.
4.5 Events of Default. Chex shall give to Secured Parties prompt
notice
of any material default under any
Constituent Document of any Pledged Entity or
otherwise with respect to the Collateral,
of which Chex has knowledge or has
received notice.
4.6 DELIVERY OF PLEDGED EQUITY INTERESTS; PROXY. All certificates
or
instruments representing or evidencing the
Pledged Equity Interests shall be
delivered to and held by or on behalf of
Secured Parties pursuant hereto. All
such certificates or instruments shall be
in suitable form for transfer by
delivery, or shall be accompanied by duly
executed instruments of transfer or
assignment in blank, all in form and
substance acceptable to Secured Parties.
Secured Parties shall have the right, at
any time its discretion and without
prior notice to Chex, following the
occurrence and during the continuation of an
Event of Default, to transfer to or to
register in the name of Secured Parties
or any of its nominees any or all of the
Pledged Equity Interests and to
exchange certificates or instruments
representing or evidencing Pledged Equity
Interests for certificates or instruments
of smaller or larger denominations;
provided, however, that once such Event of
Default has been cured, Secured
Parties will promptly transfer to or
register in the name or cause its nominees
to transfer to or register in the name of
Chex all such Pledge Equity Interests.
In furtherance of the foregoing, Chex shall
further execute and deliver to
Secured Parties as to each of the Pledged
Equity Interests a proxy in the form
attached hereto as Exhibit B.
4.7 Preservation of Value; Limitation of Liens. Chex shall not take
any
action in connection with the Collateral
which would impair in any material
respect the interests or rights of Secured
Parties therein or with respect
thereto, except as expressly permitted
hereby; provided, however, that nothing
in this Agreement shall prevent Chex, prior
to the exercise by Secured Parties
of any rights pursuant to the terms hereof,
from undertaking Chex's operations
in the ordinary course of business. Chex
shall not directly or indirectly
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create, incur, assume or suffer to exist
any liens on or with respect to all or
any part of the Collateral (other than the
lien created by this Agreement). Chex
shall at its own cost and expense promptly
take such action as may be necessary
to discharge any such liens.
4.8 No Other Filings. Chex shall not file or authorize to be filed
in
any jurisdiction any financing statements
under the UCC or any like statement
relating to the Collateral, except as
contemplated by the Chex Note Security
Agreement dated as of this date between
Chex and Equitex.
4.9 Maintenance of Records. Chex shall, at all times, keep accurate
and
complete records of the Collateral. Chex
shall permit representatives of Secured
Parties, upon reasonable prior notice, at
any time during normal business hours
of Chex to inspect and make abstracts from
Chex's books and records pertaining
to the Collateral. Upon the occurrence and
during the continuation of any Event
of Default, at Secured Parties' request,
Chex shall promptly deliver copies of
any and all such records to Secured
Parties.
4.10 Payment of Taxes. Chex shall pay or cause to be paid, before
any
fine, penalty, interest or cost attaches
thereto, all taxes, assessments and
other governmental or non-governmental
charges or levies (other than those taxes
that it is contesting in good faith and by
appropriate proceedings, and in
respect of which it has established
adequate reserves for such taxes) now or
hereafter assessed or levied against the
Collateral pledged by them hereunder
and shall retain copies of, and, upon
request, permit Secured Parties to examine
receipts showing payment of any of the
foregoing.
4.11 Name; Jurisdiction of Organization. Chex shall give
Secured
Parties at least 30 days prior written
notice before Chex changes its name,
jurisdiction of organization or entity type
and shall at the expense of Chex
execute and deliver such instruments and
documents as may be required by Secured
Parties or applicable legal requirements to
maintain a first perfected security
interest in the Collateral.
4.12 Proceeds of Collateral. Chex shall, at all times, keep pledged
to
Secured Parties pursuant hereto all
Collateral and all dividends, distributions,
interest, principal and other proceeds
received by Chex with respect thereto,
and all other Collateral and other
securities, instruments, proceeds and rights
from time to time received by or
distributable to Chex in respect of any
Collateral, and shall not permit any issuer
of such Collateral to issue any
shares of stock or other equity interests
which shall not have been immediately
duly pledged to Secured Parties
hereunder.
ARTICLE 5.
RIGHTS AND REMEDIES
5.1 Event of Default Defined. Any event of default under the
Guarantee
shall constitute an "Event of Default"
hereunder.
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5.2 Remedies Upon Event of Default.
(a) During any period during which an Event of Default shall
have
occurred and be continuing, Secured Parties
may (but shall be under no
obligation to), directly or by using agent
or broker:
(i) in connection with any acceleration and foreclosure, vote
or
exercise, any and all of Chex's rights or
powers incident to its ownership of
any of the Pledged Equity Interests,
including any rights or powers to manage or
control a Pledged Entity;
(ii) proceed to protect and enforce the rights vested in it by
this
Agreement and under the UCC;
(iii) cause all moneys and other property pledged as security to
be
paid and/or delivered di
