Security Agreement
This Security Agreement (as it may be amended, this "Agreement") is entered
into on April 24, 1997 between NATIONSCREDIT COMMERCIAL CORPORATION, THROUGH ITS
NATIONSCREDIT COMMERCIAL FUNDING DIVISION ("Lender"), having an address at 1177
Avenue of the Americas, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and NORTHWEST
TELEPRODUCTIONS/KANSAS CITY, INC. ("Guarantor"), whose chief executive office is
located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Guarantor's
Address"). Schedule A to this Agreement is an integral part of this Agreement
and is incorporated herein by reference.
W I T N E S S E T H
WHEREAS, Lender has entered or is about to enter into certain financing
arrangements with NORTHWEST TELEPRODUCTIONS, INC., a Minnesota corporation,
NORTHWEST TELEPRODUCTIONS/CHICAGO, INC., a Minnesota corporation and SOUTHWEST
TELEPRODUCTIONS, INC., a Texas corporation (collectively, "Borrowers") pursuant
to which Lender may make loans and provide other financial accommodations to
Borrowers; and
WHEREAS, Guarantor has executed and delivered or is about to execute and
deliver to Lender a guarantee in favor of Lender pursuant to which Guarantor
absolutely and unconditionally guarantees to Lender the payment and performance
of all now existing and hereafter arising obligations, liabilities and
indebtedness of Borrowers to Lender; and
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
As used in this Agreement, the following terms have the following meanings:
1.1 "Account" means any right to payment for Goods sold or leased or
for services rendered which is not evidenced by an Instrument or Chattel
Paper, whether or not it has been earned by performance.
1.2 "Account Debtor" means the obligor on an Account or Chattel Paper.
1.3 "Affiliate" means, with respect to any Person, a relative,
partner, shareholder, member, manager, director, officer, or employee of
such Person, any parent or subsidiary of such Person, or any Person
controlling, controlled by or under common control with such Person or any
other Person affiliated, directly or indirectly, by virtue of family
membership, ownership, management or otherwise.
1.4 "Bankruptcy Code" means the United States Bankruptcy Code (11
▇.▇.▇.▇▇. 101 et seq.).
1.5 "Borrowers" has the meaning set forth in the heading to the
Agreement.
1.6 "Business Day" means a day other than a Saturday or Sunday or any
other day on which Lender or banks in New York are authorized to close.
1.7 "Chattel Paper" has the meaning set forth in the UCC.
1.8 "Collateral" means all of Guarantor's property and interests in
property in or upon which a security interest or other Lien is granted
pursuant to this Agreement or the other Loan Documents.
1.9 "Default" means any event which with notice or passage of time, or
both, would constitute an Event of Default.
1.10 "Deposit Account" has the meaning set forth in the UCC.
1.11 "Document" has the meaning set forth in the UCC.
1.12 "Equipment" means all Goods which are used or bought for use
primarily in business (including farming or a profession) or by a Person
who is a non-profit organization or governmental subdivision or agency and
which are not Inventory, farm products or consumer goods, including all
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dies and jigs, and
all attachments, accessories, accessions, replacements, substitutions,
additions or improvements to, or spare parts for, any of the foregoing.
1.13 "ERISA" means the Employee Retirement Income Security Act of 1974
and all rules, regulations and orders promulgated thereunder.
1.14 "Event of Default" has the meaning set forth in Section 6.1.
1.15 "General Intangibles" has the meaning set forth in the UCC, and
includes all books and records pertaining to the Collateral and other
business and financial records in the possession of Guarantor or any other
Person, inventions, designs, drawings, blueprints, patents, patent
applications, trademarks, trademark applications (other than "intent to
use" applications until a verified statement of use is filed with respect
to such applications) and the goodwill of the business symbolized thereby,
names, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, security and other deposits, causes
of action and other rights in all litigation presently or hereafter pending
for any cause or claim (whether in contract, tort or otherwise), and all
judgments now or hereafter arising therefrom, rights to purchase or sell
real or personal property, rights as a licensor or licensee of any kind,
royalties, telephone numbers, internet addresses, proprietary information,
purchase orders, and all insurance policies and claims (including life
insurance, key man insurance, credit insurance, liability insurance,
property insurance and other insurance), tax refunds and claims, letters of
credit, banker's acceptances and guaranties, computer programs, discs,
tapes and tape files in the possession of Guarantor or any other Person,
claims under guaranties, security interests or other security held by or
granted to Guarantor, all rights to indemnification and all other
intangible property of every kind and nature.
1.16 "Goods" means all things which are movable at the time the
security interest attaches or which are fixtures (other than money,
Documents, Instruments, Investment Property, Accounts, Chattel Paper,
General Intangibles, or minerals or the like (including oil and gas) before
extraction), including standing timber which is to be cut and removed under
a conveyance or contract for sale, the unborn young of animals, and growing
crops.
1.17 "Guarantor's Address" has the meaning set forth in the heading to
the Agreement.
1.18 "Instrument" has the meaning set forth in the UCC.
1.19 "Inventory" means all Goods held for sale or lease or furnished
or to be furnished under contracts of service, including all raw materials,
work in process, finished goods, goods in transit and materials and
supplies which are or might be used or consumed in a business or used in
connection with the manufacture, packing, shipping, advertising, selling or
finishing of such Goods, and all products of the foregoing, and shall
include interests in goods represented by Accounts, returned, reclaimed or
repossessed goods and rights as an unpaid vendor.
1.20 "Investment Property" shall mean all of Guarantor's securities,
whether certificated or uncertificated, securities entitlements, securities
accounts, commodity contracts and commodity accounts.
1.21 "Lender" has the meaning set forth in the heading to the
Agreement.
1.22 "Lien" means any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether
such interest is based on common law, statute or contract, including rights
of sellers under conditional sales contracts or title retention agreements
and reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting property. For the purpose of this Agreement,
Guarantor shall be deemed to be the owner of any property which it has
acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to which title to the property has been retained by or
vested in some other Person for security purposes.
1.23 "Loan Agreements" shall mean the Loan and Security Agreements of
even date herewith executed by Lender and each of the Borrowers in favor of
Lender.
1.24 "Loan Documents" means this Agreement, the Loan Agreements and
all notes, guaranties, security agreements, certificates, landlord's
agreements and all other agreements, documents and instruments now or
hereafter executed or delivered by Guarantor, Borrowers or any Obligor in
connection with, or to evidence the transactions contemplated by, this
Agreement.
1.25 "Obligations" means all present and future obligations,
liabilities, guaranties, covenants, duties and indebtedness at any time
owing by Guarantor to Lender, whether evidenced by this Agreement or any
note or other instrument or document, whether direct or indirect (including
those acquired by assignment), whether absolute or contingent, whether due
or to become due, and whether arising before or after the commencement of a
proceeding under the Bankruptcy Code or any similar statute, including all
interest, charges, expenses, fees, attorney's fees, expert witness fees,
audit fees, letter of credit fees, loan fees, and any other sums chargeable
to Guarantor under this Agreement.
1.26 "Obligor" means any guarantor, endorser, acceptor, surety or
other person liable on, or with respect to, the Obligations or who is the
owner of any property which is security for the Obligations, other than
Guarantor.
1.27 "Permitted Liens" means: (i) purchase money security interests in
specific items of Equipment in an aggregate amount not to exceed the limit
set forth in Section 2(a) of Schedule A; (ii) leases of specific items of
Equipment in an aggregate amount not to exceed the limit set forth in
Section 2(b) of Schedule A; (iii) Liens for taxes not yet due and payable;
(iv) additional Liens which are fully subordinate to the security interests
of Lender and are consented to in writing by Lender; (v) security interests
being terminated concurrently with the execution of this Agreement; (vi)
Liens of materialmen, mechanics, warehousemen or carriers arising in the
ordinary course of business and securing obligations which are not
delinquent; (vii) Liens incurred in connection with the extension, renewal
or refinancing of the indebtedness secured by Liens of the type described
in clause (i) or (ii) above; provided, that any extension, renewal or
replacement Lien is limited to the property encumbered by the existing Lien
and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase; and (viii) Liens in favor of customs and
revenue authorities which secure payment of customs duties in connection
with the importation of goods. Lender will have the right to require, as a
condition to its consent under clause (iv) above, that the holder of the
additional Lien sign an intercreditor agreement in form and substance
satisfactory to Lender, in its sole discretion, acknowledging that the Lien
is subordinate to the security interests of Lender, and agreeing not to
take any action to enforce its subordinate Lien so long as any Obligations
remain outstanding, and that Guarantor agrees that any uncured default in
any obligation secured by the subordinate Lien shall also constitute an
Event of Default under this Agreement.
1.28 "Person" means any individual, sole proprietorship, partnership,
joint venture, limited liability company, trust, unincorporated
organization, association, corporation, government or any agency or
political division thereof, or any other entity.
1.29 "Released Parties" has the meaning set forth in Section 5.1.
1.30 "Sale" has the meaning set forth in Section 6.2.
1.31 "Subsidiary" means any corporation or other entity of which a
Person owns, directly or indirectly, through one or more intermediaries,
more than 50% of the capital stock or other equity interest at the time of
determination.
1.32 "UCC" means, at any given time, the Uniform Commercial Code as
adopted and in effect at such time in the State of New York.
All other terms contained in this Agreement, unless otherwise indicated,
shall have the meanings provided by the UCC, to the extent such terms are
defined therein. The term "including," whenever used in this Agreement, shall
mean "including but not limited to." The singular form of any term shall include
the plural form, and vice versa, when the context so requires. References to
Sections, subsections and Schedules are to Sections and subsections of, and
Schedules to, this Agreement. All references to agreements and statutes shall
include all amendments thereto and successor statutes in the case of statutes.
2. SECURITY INTEREST.
2.1 To secure the full payment and performance of all of the
Obligations when due, Guarantor hereby grants to Lender a continuing
security interest in all of Guarantor's property and interests in property,
whether tangible or intangible, now owned or in existence or hereafter
acquired or arising, wherever located, including Guarantor's interest in
all of the following: (i) all Accounts, Chattel Paper, Instruments,
Documents, Goods (including Inventory, Equipment, farm products and
consumer goods), Investment Property, General Intangibles, Deposit Accounts
and money, (ii) all proceeds and products of all of the foregoing
(including proceeds of any insurance policies, proceeds of proceeds and
claims against third parties for loss or any destruction of any of the
foregoing) and (iii) all books and records relating to any of the
foregoing.
3. ADMINISTRATION.
3.1 Power of Attorney. Guarantor hereby grants to Lender an
irrevocable power of attorney, coupled with an interest, authorizing and
permitting Lender (acting through any of its officers, employees, attorneys
or agents), at any time (whether or not a Default or Event of Default has
occurred and is continuing, except as expressly provided below), at
Lender's option, but without obligation, with or without notice to
Guarantor, and at Guarantor's expense, to do any or all of the following,
in Guarantor's name or otherwise: (i) execute on behalf of Guarantor any
documents that Lender may, in its sole discretion, deem advisable in order
to perfect and maintain Lender's security interests in the Collateral, to
exercise a right of Guarantor or Lender, or to fully consummate all the
transactions contemplated by this Agreement and the other Loan Documents
(including such financing statements and continuation financing statements,
and amendments thereto, as Lender shall deem necessary or appropriate) and
to file as a financing statement any copy of this Agreement or any
financing statement signed by Guarantor; (ii) if Guarantor fails to do so
promptly after Lender's request, execute on behalf of Guarantor any
document exercising, transferring or assigning any option to purchase, sell
or otherwise dispose of or lease (as lessor or lessee) any real or personal
property which is part of the Collateral or in which Lender has an
interest; (iii) execute on behalf of Guarantor any invoices relating to any
Accounts, any draft against any Account Debtor and any notice to any
Account Debtor, any proof of claim in bankruptcy, any notice of Lien or
claim, assignment or satisfaction of mechanic's, materialman's or other
Lien; (iv) receive and otherwise take control in any manner of any cash or
non-cash items of payment or proceeds of Collateral; (v) endorse
Guarantor's name on all checks and other forms of remittances received by
Lender; (vi) pay, contest or settle any Lien, charge, encumbrance, security
interest and adverse claim in or to any of the Collateral, or any judgment
based thereon, or otherwise take any action to terminate or discharge the
same; (vii) after the occurrence of a Default or Event of Default, grant
extensions of time to pay, compromise claims relating to, and settle
Accounts, Chattel Paper and General Intangibles for less than face value
and execute all releases and other documents in connection therewith;
(viii) pay any sums required on account of Guarantor's taxes or to secure
the release of any Liens therefor; (ix) pay any amounts necessary to
obtain, or maintain in effect, any of the insurance described in Section
4.10; (x) settle and adjust, and give releases of, any insurance claim that
relates to any of the Collateral and obtain payment therefor; (xi) instruct
any third party having custody or control of any Collateral or books or
records belonging to, or relating to, Guarantor to give Lender the same
rights of access and other rights with respect thereto as Lender has under
this Agreement; and (xii) after the occurrence of a Default or Event of
Default, change the address for delivery of Guarantor's mail and receive
and open all mail addressed to Guarantor. Any and all sums paid, and any
and all costs, expenses, liabilities, obligations and reasonable attorneys'
fees incurred, by Lender with respect to the foregoing shall be added to
and become part of the Obligations, shall be payable on demand, and shall
bear interest at a rate equal to the highest interest rate set forth in the
Loan Agreements. Guarantor agrees that Lender's rights under the foregoing
power of attorney or any of Lender's other rights under this Agreement or
the other Loan Documents shall not be construed to indicate that Lender is
in control of the business, management or properties of Guarantor.
3.2 Access to Collateral, Books and Records. At reasonable times, and
on one (1) Business Day's notice prior to the occurrence of a Default or an
Event of Default, and at any time and with or without notice after the
occurrence and during the continuance of a Default or an Event of Default,
Lender or its agents shall have the right to inspect the Collateral, and
the right to examine and copy Guarantor's books and records. Lender shall
take reasonable steps to keep confidential all information obtained in any
such inspection or examination, but Lender shall have the right to disclose
any such information to its auditors, regulatory agencies, attorneys and
participants, and pursuant to any subpoena or other legal process.
Guarantor agrees to give Lender access to any or all of Guarantor's
premises to enable Lender to conduct such inspections and examinations.
Such inspections and examinations shall be at Guarantor's expense and the
charge therefor shall be $650 per person per day (or such higher amount as
shall represent Lender's then current standard charge), plus reasonable
out-of-pockets expenses. Lender may, at Guarantor's expense, use
Guarantor's personnel, computer and other equipment, programs, printed
output and computer readable media, supplies and premises for the
collection, sale or other disposition of Collateral to the extent Lender,
in its sole discretion, deems appropriate. Guarantor hereby irrevocably
authorizes all accountants and third parties to disclose and deliver to
Lender, at Guarantor's expense, all financial information, books and
records, work papers, management reports and other information in their
possession regarding Guarantor. Guarantor will not enter into any agreement
with any accounting firm, service bureau or third party to store
Guarantor's books or records at any location other than Guarantor's Address
without first obtaining Lender's written consent (which consent may be
conditioned upon such accounting firm, service bureau or other third party
agreeing to give Lender the same rights with respect to access to books and
records and related rights as Lender has under this Agreement).
4. REPRESENTATIONS, WARRANTIES AND COVENANTS.
To induce Lender to enter into this Agreement, Guarantor represents, warrants
and covenants as follows:
4.1 Existence and Authority. Guarantor is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation. Guarantor is qualified and licensed to do
business in all jurisdictions in which any failure to do so would have a
material adverse effect on Guarantor. The execution, delivery and
performance by Guarantor of this Agreement has been duly and validly
authorized, does not violate Guarantor's articles or certificate of
incorporation, by-laws or other organizational documents, or any law or any
agreement or instrument or any court order which is binding upon Guarantor
or its property, does not constitute grounds for acceleration of any
indebtedness or obligation under any agreement or instrument which is
binding upon Guarantor or its property, and does not require the consent of
any Person. This Agreement has been duly executed and delivered by, and is
enforceable against, Guarantor, in accordance with its terms.
4.2 Name; Trade Names and Styles. The name of Guarantor set forth in
the heading to this Agreement is its correct and complete legal name.
Listed in Schedule A are all prior names of Guarantor and all of
Guarantor's present and prior trade names. Guarantor shall give Lender at
least thirty (30) days' prior written notice before changing its name or
doing business under any other name. Guarantor has complied with all laws
relating to the conduct of business under a fictitious business name.
Guarantor represents and warrants that (i) each trade name does not refer
to another corporation or other legal entity; (ii) all Accounts invoiced
under any such trade names are owned exclusively by Guarantor and are
subject to the security interest of Lender and the other terms of this
Agreement and (iii) all schedules of Accounts, including any sales made or
services rendered using the trade name shall show Guarantor's name as
assignor.
4.3 Title to Collateral; Permitted Liens. Guarantor has good and
marketable title to the Collateral. The Collateral now is and will remain
free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for Permitted Liens. Lender now
has, and will continue to have, a first-priority perfected and enforceable
security interest in all of the Collateral, subject only to the Permitted
Liens, and Guarantor will at all times defend Lender and the Collateral
against all claims of others. None of the Collateral which is Equipment, if
any, is or will be affixed to any real property in such a manner, or with
such intent, as to become a fixture. Guarantor is not a lessee under any
real property lease pursuant to which the lessor may obtain any rights in
any of the Collateral, and no such lease now prohibits, restrains, impairs
or conditions, or will prohibit, restrain, impair or condition, Guarantor's
right to remove any Collateral from the leased premises. Guarantor will
keep in full force and effect, and will comply with all the terms of, any
lease of real property where any of the Collateral now or in the future may
be located.
4.4 Accounts and Chattel Paper. All Accounts and Chattel Paper are
genuine and in all respects what they purport to be, arise out of a
completed, bona fide and unconditional and non-contingent sale and delivery
of goods or rendition of services by Guarantor in the ordinary course of
its business and in accordance with the terms and conditions of all
purchase orders, contracts or other documents relating thereto, each
Account Debtor thereunder had the capacity to contract at the time any
contract or other document giving rise to such Accounts and Chattel Paper
were executed, and the transactions giving rise to such Accounts and
Chattel Paper comply with all applicable laws and governmental rules and
regulations.
4.5 Investment Property. Guarantor will take any and all actions
required or requested by Lender, from time to time, to (i) cause Lender to
obtain exclusive control of any Investment Property in a manner acceptable
to Lender and (ii) obtain from any issuers of Investment Property and such
other Persons as Lender shall specify, for the benefit of Lender, written
confirmation of Lender's exclusive control over such Investment Property.
For purposes of this Section 4.5, Lender shall have exclusive control of
Investment Property if (A) such Investment Property consists of
certificated securities and Guarantor delivers such certificated securities
to Lender (with appropriate endorsements if such certificated securities
are in registered form); (B) such Investment Property consists of
uncertificated securities and either (x) Guarantor delivers such
uncertificated securities to Lender or (y) the issuer thereof agrees,
pursuant to documentation in form and substance satisfactory to Lender,
that it will comply with instructions originated by Lender without further
consent by Guarantor, and (C) such Investment Property consists of security
entitlements and either (x) Lender becomes the entitlement holder thereof
or (y) the appropriate securities intermediary agrees, pursuant to
documentation in form and substance satisfactory to Lender, that it will
comply with entitlement orders originated by Lender without further consent
by Guarantor.
4.6 Place of Business; Location of Collateral. Guarantor's Address is
Guarantor's chief executive office and the location of its books and
records. In addition, except as provided in the immediately following
sentence, Guarantor has places of business and Collateral located only at
the locations set forth in Sections 1(d) and 1(e) of Schedule A. Guarantor
will give Lender at least thirty (30) days' prior written notice before
opening any additional place of business, changing its chief executive
office or the location of its books and records, or moving any of the
Collateral to a location other than Guarantor's Address or one of the
locations set forth in Sections 1(d) and 1(e) of Schedule A, and will
execute and deliver all financing statements and other agreements,
instruments and documents which Lender shall require as a result thereof.
4.7 Tax Returns and Payments; Pension Contributions. Guarantor has
timely filed all tax returns and reports required by applicable law, and
Guarantor has timely paid all applicable taxes, assessments, deposits and
contributions now or in the future owed by Guarantor. Guarantor may,
however, defer payment of any contested taxes; provided, that Guarantor (i)
in good faith contests Guarantor's obligation to pay such taxes by
appropriate proceedings promptly and diligently instituted and conducted;
(ii) notifies Lender in writing of the commencement of, and any material
development in, the proceedings; (iii) posts bonds or takes any other steps
required to keep the contested taxes from becoming a Lien upon any of the
Collateral and (iv) maintains adequate reserves therefor in conformity with
generally accepted accounting principles, consistently applied. Guarantor
is unaware of any claims or adjustments proposed for any of Guarantor's
prior tax years which could result in additional taxes becoming due and
payable by Guarantor. Guarantor has paid, and shall continue to pay, all
amounts necessary to fund all present and future pension, profit sharing
and deferred compensation plans in accordance with their terms, and
Guarantor has not withdrawn from participation in, permitted partial or
complete termination of, or permitted the occurrence of any other event
with respect to, any such plan which could result in any liability of
Guarantor, including any liability to the Pension Benefit Guaranty
Corporation or any other governmental agency. Guarantor shall, at all
times, utilize the services of an outside payroll service providing for the
automatic deposit of all payroll taxes payable by Guarantor.
4.8 Compliance with Laws. Guarantor has complied in all material
respects with all provisions of all applicable laws and regulations,
including those relating to Guarantor's ownership of real or personal
property, the conduct and licensing of Guarantor's business, the payment
and withholding of taxes, ERISA and other employee matters, safety and
environmental matters.
4.9 Litigation. Section 1(f) of Schedule A discloses all claims,
proceedings, litigation or investigations pending or (to the best of
Guarantor's knowledge) threatened against Guarantor. There is no claim,
suit, litigation, proceeding or investigation pending or (to the best of
Guarantor's knowledge) threatened by or against or affecting Guarantor in
any court or before any governmental agency (or any basis therefor known to
Guarantor) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of
Guarantor, or in any material impairment in the ability of Guarantor to
carry on its business in substantially the same manner as it is now being
conducted. Guarantor will promptly inform Lender in writing of any claim,
proceeding, litigation or investigation in the future threatened or
instituted by or against Guarantor.
4.10 Insurance. Guarantor will at all times carry property, liability
and other insurance, with insurers acceptable to Lender, in such form and
amounts, and with such deductibles and other provisions, as Lender shall
require, and Guarantor will provide evidence of such insurance to Lender,
so that Lender is satisfied that such insurance is, at all times, in full
force and effect. Each property insurance policy shall name Lender as loss
payee and shall contain a lender's loss payable endorsement in form
acceptable to Lender, each liability insurance policy shall name Lender as
an additional insured, and each business interruption insurance policy
shall be collaterally assigned to Lender, all in form and substance
satisfactory to Lender. All policies of insurance shall provide that they
may not be canceled or changed without at least thirty (30) days' prior
written notice to Lender, shall contain breach of warranty coverage, and
shall otherwise be in form and substance satisfactory to Lender. Upon
receipt of the proceeds of any such insurance, Lender shall apply such
proceeds in reduction of the Obligations (whether or not then due or
payable) as Lender shall determine in its sole discretion. Guarantor will
promptly deliver to Lender copies of all reports made to insurance
companies.
4.11 Litigation Cooperation. Should any third-party suit or proceeding
be instituted by or against Lender with respect to any Collateral or in any
manner relating to Guarantor, Guarantor shall, without expense to Lender,
make available Guarantor and its officers, employees and agents, and
Guarantor's books and records, without charge, to the extent that Lender
may deem them reasonably necessary in order to prosecute or defend any such
suit or proceeding.
4.12 Maintenance of Collateral, Etc. Guarantor will not use the
Collateral for any unlawful purpose. Guarantor will immediately advise
Lender in writing of any material loss or damage to the Collateral and of
any investigation, action, suit, proceeding or claim relating to the
Collateral or which may result in an adverse impact upon Guarantor's
business, assets or financial condition.
4.13 Notification of Changes. Guarantor will promptly notify Lender in
writing of any material adverse change in the business or financial affairs
of Guarantor or the existence of any circumstance which would make any
representation or warranty of Guarantor untrue in any material respect or
constitute a material breach of any covenant of Guarantor.
4.14 Further Assurances. Guarantor agrees, at its expense, to take all
actions, and execute or cause to be executed and delivered to Lender all
promissory notes, security agreements, agreements with landlords,
mortgagees and processors and other bailees, subordination and
intercreditor agreements and other agreements, instruments and documents as
Lender may request from time to time, to perfect and maintain Lender's
security interests in the Collateral and to fully effectuate the
transactions contemplated by this Agreement.
4.15 Negative Covenants. Guarantor will not, without Lender's prior
written consent which consent will not be unreasonably withheld, (i) merge
or consolidate with another Person, form any new Subsidiary or acquire any
interest in any Person; (ii) sell or transfer any Collateral or other
assets; (iii) incur any debt outside the ordinary course of business; (iv)
guaranty or otherwise become liable with respect to the obligations of
another party or entity; (v) dissolve or elect to dissolve; (vi) pay any
principal or interest on any indebtedness owing to an Affiliate, (vii)
enter into any transaction with an Affiliate other than on arms-length
terms; or (viii) agree to do any of the foregoing.
5. RELEASE AND INDEMNITY.
5.1 Release. Guarantor hereby releases Lender and its Affiliates and
their respective directors, officers, employees, attorneys and agents and
any other Person affiliated with or representing Lender (the "Released
Parties") from any and all liability arising from acts or omissions under
or pursuant to this Agreement, whether based on errors of judgment or
mistake of law or fact, except for those arising from gross negligence or
willful misconduct. However, in no circumstance will any of the Released
Parties be liable for lost profits or other special or consequential
damages.
5.2 Indemnity. Guarantor hereby agrees to indemnify the Released
Parties and hold them harmless from and against any and all claims, debts,
liabilities, demands, obligations, actions, causes of action, penalties,
costs and expenses (including attorneys' fees), of every nature, character
and description, which the Released Parties may sustain or incur based upon
or arising out of any of the transactions contemplated by this Agreement or
the other Loan Documents or any of the Obligations, or any other matter,
cause or thing whatsoever occurred, done, omitted or suffered to be done by
Lender relating to Guarantor or the Obligations (except any such amounts
sustained or incurred as the result of the gross negligence or willful
misconduct of the Released Parties). Notwithstanding any provision in this
Agreement to the contrary, the indemnity agreement set forth in this
Section 5.2 shall survive any termination of this Agreement.
6. EVENTS OF DEFAULT AND REMEDIES.
6.1 Events of Default. The occurrence or existence of any Event of
Default under the Loan Agreements is referred to herein as an "Event of
Default".
6.2 Remedies. Upon the occurrence of any Event of Default, and at any
time thereafter, Lender, at its option, and without notice or demand of any
kind (all of which are hereby expressly waived by Guarantor), may do any
one or more of the following: (i) accelerate and declare all or any part of
the Obligations to be immediately due, payable and performable,
notwithstanding any deferred or installment payments allowed by any
instrument evidencing or relating to any of the Obligations; (ii) take
possession of any or all of the Collateral wherever it may be found, and
for that purpose Guarantor hereby authorizes Lender, without judicial
process, to enter onto any of Guarantor's premises without interference to
search for, take possession of, keep, store, or remove any of the
Collateral, and remain (or cause a custodian to remain) on the premises in
exclusive control thereof, without charge for so long as Lender deems it
reasonably necessary in order to complete the enforcement of its rights
under this Agreement or any other agreement; provided, that if Lender seeks
to take possession of any of the Collateral by court process, Guarantor
hereby irrevocably waives (A) any bond and any surety or security relating
thereto required by law as an incident to such possession, (B) any demand
for possession prior to the commencement of any suit or action to recover
possession thereof and (C) any requirement that Lender retain possession
of, and not dispose of, any such Collateral until after trial or final
judgment; (iii) require Guarantor to assemble any or all of the Collateral
and make it available to Lender at one or more places designated by Lender
which are reasonably convenient to Lender and Guarantor, and to remove the
Collateral to such locations as Lender may deem advisable; (iv) complete
the processing, manufacturing or repair of any Collateral prior to a
disposition thereof and, for such purpose and for the purpose of removal,
Lender shall have the right to use Guarantor's premises, vehicles and other
Equipment and all other property without charge; (v) sell, lease or
otherwise dispose of any of the Collateral, in its condition at the time
Lender obtains possession of it or after further manufacturing, processing
or repair, at one or more public or private sales, in lots or in bulk, for
cash, exchange or other property, or on credit (a "Sale"), and to adjourn
any such Sale from time to time without notice other than oral announcement
at the time scheduled for Sale (and, in connection therewith, (A) Lender
shall have the right to conduct such Sale on Guarantor's premises without
charge, for such times as Lender deems reasonable, on Lender's premises, or
elsewhere, and the Collateral need not be located at the place of Sale; (B)
Lender may directly or through any of its Affiliates purchase or lease any
of the Collateral at any such public disposition, and if permissible under
applicable law, at any private disposition and (C) any Sale of Collateral
shall not relieve Guarantor of any liability Guarantor may have if any
Collateral is defective as to title, physical condition or otherwise at the
time of sale); (vi) demand payment of and collect any Accounts, Chattel
Paper, Instruments and General Intangibles included in the Collateral and,
in connection therewith, Guarantor irrevocably authorizes Lender to endorse
or sign Guarantor's name on all collections, receipts, Instruments and
other documents, to take possession of and open mail addressed to Guarantor
and remove therefrom payments made with respect to any item of Collateral
or proceeds thereof and, in Lender's sole discretion, to grant extensions
of time to pay, compromise claims and settle Accounts, General Intangibles
and the like for less than face value; and (vii) demand and receive
possession of any of Guarantor's federal and state income tax returns and
the books and records utilized in the preparation thereof or relating
thereto. In addition to the rights and remedies set forth above, Lender
shall have all the other rights and remedies accorded a secured party after
default under the UCC and under all other applicable laws, and under any
other Loan Document, and all of such rights and remedies are cumulative and
non-exclusive. Exercise or partial exercise by Lender of one or more of its
rights or remedies shall not be deemed an election or bar Lender from
subsequent exercise or partial exercise of any other rights or remedies.
The failure or delay of Lender to exercise any rights or remedies shall not
operate as a waiver thereof, but all rights and remedies shall continue in
full force and effect until all of the Obligations have been fully paid and
performed. If notice of any sale or other disposition of Collateral is
required by law, notice at least ten (10) days prior to the sale
designating the time and place of sale in the case of a public sale or the
time after which any private sale or other disposition is to be made shall
be deemed to be reasonable notice, and Guarantor waives any other notice.
6.3 Application of Proceeds. Subject to any application required by
law, all proceeds realized as the result of any Sale shall be applied by
Lender to the Obligations in such order as Lender shall determine in its
sole discretion. Any surplus shall be paid to Guarantor or other persons
legally entitled thereto; but Guarantor shall remain liable to Lender for
any deficiency. If Lender, in its sole discretion, directly or indirectly
enters into a deferred payment or other credit transaction with any
purchaser at any Sale, Lender shall have the option, exercisable at any
time, in its sole discretion, of either reducing the Obligations by the
principal amount of the purchase price or deferring the reduction of the
Obligations until the actual receipt by Lender of the cash therefor.
7. GENERAL PROVISIONS.
7.1 Notices. All notices to be given under this Agreement shall be in
writing and shall be given either personally, by reputable private delivery
service or by certified mail return receipt requested, addressed to Lender
or Guarantor at the address shown in the heading to this Agreement, or by
facsimile to the facsimile number shown in Section 1(i) of Schedule A, or
at any other address (or to any other facsimile number) designated in
writing by one party to the other party in the manner prescribed in this
Section 7.1. All notices shall be deemed to have been given when received
or when delivery is refused by the recipient.
7.2 Severability. If any provision of this Agreement, or the
application thereof to any party or circumstance, is held to be void or
unenforceable by any court of competent jurisdiction, such defect shall not
affect the remainder of this Agreement, which shall continue in full force
and effect.
7.3 Integration. This Agreement and the other Loan Documents to which
Guarantor is a party represent the final, entire and complete agreement
between Guarantor and Lender and supersede all prior and contemporaneous
negotiations, oral representations and agreements, all of which are merged
and integrated into this Agreement. THERE ARE NO ORAL UNDERSTANDINGS,
REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES WHICH ARE NOT SET FORTH
IN THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH GUARANTOR IS A
PARTY.
7.4 Waivers. The failure of Lender at any time or times to require
Guarantor to strictly comply with any of the provisions of this Agreement
or any other Loan Documents to which Guarantor is a party shall not waive
or diminish any right of Lender later to demand and receive strict
compliance therewith. Any waiver of any default shall not waive or affect
any other default, whether prior or subsequent, and whether or not similar.
None of the provisions of this Agreement or any other Loan Document shall
be deemed to have been waived by any act or knowledge of Lender or its
agents or employees, but only by a specific written waiver signed by an
authorized officer of Lender and delivered to Guarantor. Guarantor waives
demand, protest, notice of protest and notice of default or dishonor,
notice of payment and nonpayment, release, compromise, settlement,
extension or renewal of any commercial paper, Instrument, Account, General
Intangible, Document, Chattel Paper, Investment Property or guaranty at any
time held by Lender on which Guarantor is or may in any way be liable, and
notice of any action taken by Lender, unless expressly required by this
Agreement, and notice of acceptance hereof.
7.5 Amendment. The terms and provisions of this Agreement may not be
amended or modified except in a writing executed by Guarantor and a duly
authorized officer of Lender.
7.6 Time of Essence. Time is of the essence in the performance by
Guarantor of each and every obligation under this Agreement and the other
Loan Documents.
7.7 Attorneys Fees and Costs. Guarantor shall reimburse Lender for all
reasonable attorneys' and paralegals' fees (including in-house attorneys
and paralegals employed by Lender) and all filing, recording, search, title
insurance, appraisal, audit, and other costs incurred by Lender, pursuant
to, in connection with, or relating to this Agreement, including all
reasonable attorneys' fees and costs Lender incurs to prepare and negotiate
this Agreement and the other Loan Documents which are not paid by
Borrowers; to obtain legal advice in connection with this Agreement and the
other Loan Documents or Guarantor or any Obligor; to administer this
Agreement and the other Loan Documents (including the cost of periodic
financing statement, tax lien and other searches conducted by Lender); to
enforce, or seek to enforce, any of its rights; prosecute actions against,
or defend actions by, Account Debtors; to commence, intervene in, or defend
any action or proceeding; to initiate any complaint to be relieved of the
automatic stay in bankruptcy; to file or prosecute any probate claim,
bankruptcy claim, third-party claim, or other claim; to examine, audit,
copy, and inspect any of the Collateral or any of Guarantor's books and
records; to protect, obtain possession of, lease, dispose of, or otherwise
enforce Lender's security interests in, the Collateral; and to otherwise
represent Lender in any litigation relating to Guarantor. If either Lender
or Guarantor files any lawsuit against the other predicated on a breach of
this Agreement, the prevailing party in such action shall be entitled to
recover its reasonable costs and attorneys' fees, including reasonable
attorneys' fees and costs incurred in the enforcement of, execution upon or
defense of any order, decree, award or judgment. All attorneys' fees and
costs to which Lender may be entitled pursuant to this Section shall
immediately become part of the Obligations, shall be due on demand, and
shall bear interest at a rate equal to the highest interest rate set forth
in the Loan Agreements.
7.8 Benefit of Agreement; Assignability. The provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
successors, assigns, heirs, beneficiaries and representatives of Guarantor
and Lender; provided, that Guarantor may not assign or transfer any of its
rights under this Agreement without the prior written consent of Lender,
and any prohibited assignment shall be void. No consent by Lender to any
assignment shall release Guarantor from its liability for any of the
Obligations. Lender shall have the right to assign all or any of its rights
and obligations under the Loan Documents, and to sell participating
interests therein, to one or more other Persons, and Guarantor agrees to
execute all agreements, instruments and documents requested by Lender in
connection with each such assignment and participation.
7.9 Headings; Construction. Section and subsection headings are used
in this Agreement only for convenience. Guarantor and Lender acknowledge
that the headings may not describe completely the subject matter of the
applicable Sections or subsections, and the headings shall not be used in
any manner to construe, limit, define or interpret any term or provision of
this Agreement. This Agreement has been fully reviewed and negotiated
between the parties and no uncertainty or ambiguity in any term or
provision of this Agreement shall be construed strictly against Lender or
Guarantor under any rule of construction or otherwise.
7.10 GOVERNING LAW; CONSENT TO FORUM, ETC. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED, AND SHALL BE DEEMED TO HAVE BEEN MADE,
IN NEW YORK, NEW YORK, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF SUCH STATE. GUARANTOR HEREBY CONSENTS AND AGREES THAT THE
STATE AND FEDERAL COURTS IN NEW YORK OR THE STATE IN WHICH ANY OF THE
COLLATERAL IS LOCATED SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN GUARANTOR AND LENDER PERTAINING TO
THIS AGREEMENT, ANY OTHER LOAN DOCUMENTS OR ANY MATTER ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. GUARANTOR EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND WAIVES ANY OBJECTION WHICH GUARANTOR MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS. GUARANTOR ALSO AGREES THAT ANY CLAIM OR DISPUTE BROUGHT BY
GUARANTOR AGAINST LENDER PURSUANT TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR ANY MATTER ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT SHALL BE BROUGHT EXCLUSIVELY IN THE STATE AND FEDERAL COURTS OF
NEW YORK. EACH OF LENDER AND GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT
AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE
MADE IN THE MANNER AND SHALL BE DEEMED RECEIVED AS SET FORTH IN SECTION 7.1
FOR NOTICES, TO THE EXTENT PERMITTED BY LAW. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF BORROWER OR LENDER TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE
THE ENFORCEMENT BY BORROWER OR LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN
SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE THE
SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
7.11 WAIVER OF JURY TRIAL, ETC. GUARANTOR WAIVES (i) THE RIGHT TO
TRIAL BY JURY (WHICH LENDER ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN
DOCUMENTS TO WHICH IT IS A PARTY, THE OBLIGATIONS OR THE COLLATERAL OR ANY
CONDUCT, ACTS OR OMISSIONS OF LENDER OR GUARANTOR OR ANY OF THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OR ANY OTHER
PERSONS AFFILIATED WITH LENDER OR GUARANTOR, WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE; (ii) THE RIGHT TO INTERPOSE ANY CLAIMS, DEDUCTIONS,
SETOFFS OR COUNTERCLAIMS OF ANY KIND IN ANY ACTION OR PROCEEDING INSTITUTED
BY LENDER WITH RESPECT TO THE LOAN DOCUMENTS OR ANY MATTER RELATING
THERETO, EXCEPT FOR COMPULSORY COUNTERCLAIMS; (iii) NOTICE PRIOR TO
LENDER'S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR
SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO
EXERCISE ANY OF LENDER'S REMEDIES AND (iv) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS. GUARANTOR ACKNOWLEDGES THAT THE FOREGOING
WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT
AND THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH GUARANTOR. GUARANTOR WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
IN WITNESS WHEREOF, Guarantor and Lender have signed this Agreement as of
the date set forth in the heading.
Guarantor: Lender:
NORTHWEST TELEPRODUCTIONS/ NATIONSCREDIT COMMERCIAL CORPORATION,
KANSAS CITY, INC. THROUGH ITS NATIONSCREDIT COMMERCIAL
FUNDING DIVISION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its Chief Financial Officer Its Authorized Signatory
Schedule A
Description of Certain Terms
This Schedule is an integral part of the Security Agreement between
NORTHWEST TELEPRODUCTIONS/KANSAS CITY, INC. and NATIONSCREDIT COMMERCIAL
CORPORATION, THROUGH ITS NATIONSCREDIT COMMERCIAL FUNDING DIVISION (the
"Agreement").
1. Guarantor Information:
(a) Prior Names of Guarantor: Northwest Teleproductions/
Chicago, Inc.
(b) Prior Trade Names of Guarantor: None
(c) Existing Trade Names of Guarantor: None
(d) Inventory Locations: None
(e) Other Locations: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(f) Litigation: None
(g) Ownership of Guarantor: Wholly-owned subsidiary of
Northwest Teleproductions, Inc.
(h) Subsidiaries (and ownership thereof): None
(i) Facsimile Numbers:
Guarantor: (▇▇▇) ▇▇▇-▇▇▇▇
Lender: (▇▇▇) ▇▇▇-▇▇▇▇
2. Limitations of Liens:
(a) Limitation of Purchase Money not applicable
Security Interests:
(b) Limitation on Equipment Leases: not applicable
IN WITNESS WHEREOF, Guarantor and Lender have signed this Schedule A as of
the date set forth in the heading to the Agreement.
Guarantor: Lender:
NORTHWEST TELEPRODUCTIONS/ NATIONSCREDIT COMMERCIAL CORPORATION,
KANSAS CITY, INC. THROUGH ITS NATIONSCREDIT COMMERCIAL
FUNDING DIVISION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its C.F.O. Its Authorized Signatory
