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Exhibit: 10.18T
SECURITY AGREEMENT
March 30, 1998
Xxxxx Corporation d/b/a TMC Soundprints
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
(Individually and collectively "Debtor")
First Union National Bank
000 Xxxx Xxxxxx
Xxxxxxxx Xxxxxxxxxxx 00000
(Hereinafter referred to as the "Bank")
This Security Agreement also amends and restates in its entirety that certain
Security Agreement dated January 2, 1997 and applies to govern all of the loans
and letters of credit thereby.
For value received and to secure payment and performance of the obligations due
Bank under the Application and Agreement for Letter of Credit executed by
Debtor dated March 30, 1998, and any extensions, renewals, modifications or
novations thereof (the "Agreement"), and for value received and to secure the
payment and performance of the Promissory Note executed by the Debtor dated
March 30, 1998, in the original principal amount of $1,200,000.00, payable to
Bank, and any extensions, renewals, modifications or novations thereof and the
Promissory Note executed by the Debtor dated March 30, 1998, in the original
principal amount of $250,000.00, payable to Bank, and any extensions, renewals,
modifications or novations thereof (the "Note"), this Security Agreement and
the other Loan Documents, and any other obligations of Debtor to Bank however
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now existing or hereafter arising or acquired, including swap
agreements (as defined in 11 U.S.C. Section 101), future advances, and all
costs and expenses incurred by Bank to obtain, preserve, perfect and enforce
the security interest granted herein and to maintain, preserve and collect the
property subject to the security interest (collectively, "Obligations"), Debtor
hereby grants to Bank a continuing security interest in and lien upon the
following described property, now owned or hereafter acquired, any additions,
accessions, or substitutions thereof and thereto (including but not limited to
investment property and security entitlements), and all cash and non-cash
proceeds and products thereof (collectively, "Collateral"):
All accounts, contract rights, leases, and any other rights of Debtor to
payment for goods sold or leased or for services rendered; furniture;
furnishings; equipment; machinery; accessories; moveable trade fixtures; goods
held for sale or being processed for sale in Debtor's business, including all
raw materials, supplies, and other materials used or consumed in Debtor's
business, goods in process, finished goods, and all other items customarily
classified as inventory; building improvement and construction materials,
supplies and equipment; chattel paper; instruments; documents; all funds on
deposit with Bank and its affiliates; and all general intangibles; as well as
all parts, replacements, substitutions, profits, products and cash and non-cash
proceeds of the foregoing (including insurance and condemnation proceeds payable
by reason of condemnation of or loss or damage thereto) in any form and wherever
located.
Debtor hereby represents and agrees that:
OWNERSHIP. Debtor owns the Collateral or Debtor will purchase and acquire
rights in the Collateral within ten days of the date advances are made under
the Loan Documents. If Collateral is being acquired with the proceeds of an
advance under the Loan Documents, Debtor authorizes Bank to disburse proceeds
directly to the seller of the Collateral. The Collateral is free and clear of
all liens, security interests, and claims except those previously reported in
writing to Bank, and
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Debtor will keep the Collateral free and clear from all liens, security
interests and claims, other than those granted to Bank.
NAMES AND OFFICES. There has been no change in the name of Debtor, or the name
under which Debtor conducts business, within the 5 years preceding the date of
execution of this Security Agreement and Debtor has not moved its executive
offices or residence within the 5 years preceding the date of execution of this
Security Agreement except as previously reported in writing to Bank. The
taxpayer identification number of Debtor as provided herein is correct.
TITLE/TAXES. Debtor has good and marketable title to Collateral and will
warrant and defend same against all claims. Debtor will not transfer, sell, or
lease Collateral (except in the ordinary course of business). Debtor agrees to
pay promptly all taxes and assessments upon or for the use of Collateral and on
this Security Agreement. At its option, Bank may discharge taxes, liens,
security interests or other encumbrances at any time levied or placed on
Collateral. Debtor agrees to reimburse Bank, on demand, for any such payment
made by Bank. Any amounts so paid shall be added to the Obligations.
WAIVERS. Debtor waives presentment, demand, protest, notice of dishonor, notice
of default, demand for payment, notice of intention to accelerate, and notice
of acceleration of maturity. Debtor further agrees not to assert against Bank
as a defense (legal or equitable), as a set-off, as a counterclaim, or
otherwise, any claims Debtor may have against any seller or lessor that
provided personal property or services relating to any part of the Collateral.
Debtor waives all exemptions and homestead rights with regard to the
Collateral. Debtor waives any and all rights to notice or to hearing prior to
Bank's taking immediate possession or control of any Collateral, and to any
bond or security which might be required by applicable law prior to the exercise
of any of Bank's remedies against any Collateral.
EXTENSIONS, RELEASES. Debtor agrees that Bank may extend, renew or modify any
of the Obligations and grant any releases, compromises or indulgences with
respect to any security for the Obligations, or with respect to any party
liable for the Obligations, all without notice to or consent of Debtor and
without affecting the liability of Debtor or the enforceability of this
Security Agreement.
NOTIFICATIONS OF CHANGE. Debtor will notify Bank in writing at least 30 days
prior to any change in: (i) Debtor's chief place of business and/or residence;
(ii) Debtor's name or identity; or (iii) Debtor's corporate/organizational
structure. Debtor will keep Collateral at the location(s) previously provided
to Bank until such time as Bank provides written advance consent to a change of
location. Debtor will bear the cost of preparing and filing any documents
necessary to protect Bank's liens.
COLLATERAL CONDITION AND LAWFUL USE. Debtor represents that Collateral is in
good repair and condition and that Debtor shall use reasonable care to prevent
Collateral from being damaged or depreciating. Debtor shall immediately notify
Bank of any material loss or damage to Collateral. Debtor shall not permit any
item of equipment to become a fixture to real estate or an accession to other
personal property. Debtor represents it is in compliance in all respects with
all federal, state and local laws, rules and regulations applicable to its
properties, Collateral, operations, business, and finances, including, without
limitation, any federal or state laws relating to liquor (including 18 U.S.C.
Section 3617, et seq.) or narcotics (including 21 U.S.C. Section 801, et seq.)
and all applicable federal, state and local laws, and regulations intended to
protect the environment.
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RISK OF LOSS AND INSURANCE. Debtor shall bear all risk of loss with respect to
the Collateral. The injury to or loss of Collateral, either partial or total,
shall not release Debtor from payment or other performance hereof. Debtor agrees
to obtain and keep in force casualty and hazard insurance on Collateral naming
Bank as loss payee. Such insurance is to be in form and amounts satisfactory to
Bank. All such policies shall provide to Bank a minimum of 30 days written
notice of cancellation. Debtor shall furnish to Bank such policies, or other
evidence of such policies satisfactory to Bank. Bank is authorized, but not
obligated, to purchase any or all insurance or "Single Interest Insurance"
protecting such interest as Bank deems appropriate against such risks and for
such coverage and for such amounts, including either the loan amount or value of
the Collateral, all at its discretion, and at Debtor's expense. In such event,
Debtor agrees to reimburse Bank for the cost of such insurance and Bank may add
such cost to the Obligations. Debtor shall bear the risk of loss to the extent
of any deficiency in the effective insurance coverage with respect to loss or
damage to any of the Collateral. Debtor hereby assigns to Bank the proceeds of
all such insurance and directs any insurer to make payments directly to Bank.
Debtor hereby appoints Bank its attorney-in-fact, which appointment shall be
irrevocable and coupled with an interest for so long as the Obligations are
unpaid, to file proof of loss and/or any other forms required to collect from
any insurer any amount due from any damage or destruction of Collateral, to
agree to and bind Debtor as to the amount of said recovery, to designate
payee(s) of such recovery, to grant releases to insurer, to grant subrogation
rights to any insurer, and to endorse any settlement check or draft. Debtor
agrees not to exercise any of the foregoing powers granted to Bank without the
Bank's prior written consent.
ADDITIONAL COLLATERAL. If at any time Collateral is unsatisfactory to Bank, then
on demand of Bank, Debtor shall immediately furnish such additional Collateral
satisfactory to Bank to be held by Bank as if originally pledged hereunder and
shall execute such additional security agreements and financing statements as
requested by Bank.
FINANCING STATEMENTS. No financing statement (other than any filed by Bank or
disclosed above) covering any of Collateral or proceeds thereof is on file in
any public filing office. This Security Agreement, or a copy thereof, or any
financing statement executed hereunder may be recorded. On request of Bank,
Debtor will execute one or more financing statements in form satisfactory to
Bank and will pay all costs and expenses of filing the same or of filing this
Security Agreement in all public filing offices, where filing is deemed by Bank
to be desirable. Bank is authorized to file financing statements relating to
Collateral without Debtor's signature where authorized by law. Debtor appoints
Bank as its attorney-in-fact to execute such documents necessary to accomplish
perfection of Bank's security interest. The appointment is coupled with an
interest and shall be irrevocable as long as any Obligations remain outstanding.
Debtor further agrees to take such other actions as might be requested for the
perfection, continuation and assignment, in whole or in part, of the security
interests granted herein. If certificates are issued or outstanding as to any of
the Collateral, Debtor will cause the security interests of Bank to be property
protected, including perfection of notation thereon.
LANDLORD/MORTGAGEE WAIVERS. Debtor shall cause each mortgagee of real property
owned by Debtor and each landlord of real property leased by Debtor to execute
and deliver instruments satisfactory in form and substance to Bank by which such
mortgages or landlord waives its rights, if any, in the Collateral.
STOCK, DIVIDENDS. If, with respect to any security pledged hereunder, a stock
dividend is declared, any stock split made or right to subscribe is issued, all
the certificates for the shares representing such stock dividend, stock split or
right to subscribe will be immediately delivered, duly endorsed, to the Bank as
additional collateral, and any cash or non-cash proceeds and products thereof,
including investment property and security entitlements will be immediately
delivered to Bank. If Debtor has granted to Bank a security interest in
securities, Debtor
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acknowledges that such grant includes all investment property and security
entitlements, now existing or hereafter arising, relating to such securities. In
addition, Debtor agrees to execute such notices and instructions to securities
intermediaries as Bank may reasonably request.
CONTRACTS, CHATTEL PAPER, ACCOUNTS, GENERAL INTANGIBLES. Debtor warrants that
Collateral consisting of contract rights, chattel paper, accounts, or general
intangibles is (i) genuine and enforceable in accordance with its terms except
as limited by law; (ii) not subject to any defense, set-off, claim or
counterclaim of a material nature against Debtor except as to which Debtor has
notified Bank in writing; and (iii) not subject to any other circumstances that
would impair the validity, enforceability, value, or amount of such Collateral
except as to which Debtor has notified Bank in writing. Debtor shall not amend,
modify or supplement any lease, contract or agreement contained in Collateral or
waive any provision therein, without prior written consent of Bank.
ACCOUNT INFORMATION. From time to time, at the Bank's request, Debtor shall
provide Bank with schedules describing all accounts and contracts, including
customers' addresses, credited or acquired by Debtor and at the Bank's request
shall execute and deliver written assignments of contracts and other documents
evidencing such accounts and contracts to Bank. Together with each schedule,
Debtor shall, if requested by Bank, furnish Bank with copies of Debtor's sales
journals, invoices, customer purchase orders or the equivalent, and original
shipping or delivery receipts for all goods sold, and Debtor warrants the
genuineness thereof.
ACCOUNT AND CONTRACT DEBTORS. After a Default occurs, Bank shall have the right
to notify the account and contract debtors obligated on any or all of the
Collateral to make payment thereof directly to Bank and Bank may take control of
all proceeds of any such Collateral, which rights Bank may exercise at any time.
The cost of such collection and enforcement, including attorneys' fees and
expenses, shall be borne solely by Debtor whether the same is incurred by Bank
or Debtor. After a Default occurs, upon demand of Bank, Debtor will, upon
receipt of all checks, drafts, cash and other remittances in payment on
Collateral, deposit the same in a special bank account maintained with Bank,
over which Bank also has the power of withdrawal.
If a Default occurs, no discount, credit, or allowance shall be granted by
Debtor to any account or contract debtor and no return of merchandise shall be
accepted by Debtor without Bank's consent. Bank may, after Default, settle or
adjust disputes and claims directly with account contract debtors for amounts
and upon terms that Bank considers advisable, and in such cases, Bank will
credit the Obligations with the net amounts received by Bank, after deducting
all of the expenses incurred by Bank. Debtor agrees to indemnify and defend Bank
and hold it harmless with respect to any claim or proceeding arising out of any
matter related to collection of Collateral.
GOVERNMENT CONTRACTS. If any Collateral covered hereby arises from obligations
due to Debtor from any governmental unit or organization, Debtor shall
immediately notify Bank in writing and execute all documents and take all
actions demanded by Bank to ensure recognition by such governmental unit or
organization of the rights of Bank in the Collateral.
INVENTORY. So long as no Default has occurred, Debtor shall have the right in
the regular course of business, to process and sell Debtor's inventory, unless
Bank shall hereafter otherwise direct in writing. Upon demand of Bank, Debtor
will, upon receipt of all checks, drafts, cash and other remittances, in payment
of Collateral sold, deposit the same in a special bank account maintained with
Bank, over which Bank also has the power of withdrawal. Debtor shall comply with
all federal, state, and local laws, regulations, rulings, and orders applicable
to Debtor or its assets or business, in all respects. Without limiting the
generality of the previous sentence, Debtor shall comply with all requirements
of the federal Fair Labor Standards Act in the conduct of its business and the
production of inventory. Debtor shall notify Bank immediately of any violation
by Debtor of
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the Fair Labor Standards Act, and a failure of Debtor to so notify Bank shall
constitute a continuing representation that all inventory then existing has
been produced in compliance with the Fair Labor Standards Act.
INSTRUMENTS, CHATTEL PAPER. Any Collateral that is instruments, chattel paper
and negotiable documents will be properly assigned to, deposited with and held
by Bank, unless Bank shall hereafter otherwise direct or consent in writing.
Bank may, without notice, before or after maturity of the Obligations, exercise
any or all rights of collection, conversion, or exchange and other similar
rights, privileges and options pertaining to Collateral, but shall have no duty
to do so.
COLLATERAL DUTIES. Bank shall have no custodial or ministerial duties to
perform with respect to Collateral pledged except as set forth herein; and by
way of explanation and not by way of limitation, Bank shall incur no liability
for any of the following: (i) loss or depreciation of Collateral (unless caused
by its willful misconduct), (ii) its failure to present any paper for payment
or protest, to protest or give notice of nonpayment, or any other notice with
respect to any paper or Collateral or (iii) its failure to present or surrender
for redemption, conversion or exchange any bond, stock, paper or other security
whether in connection with any merger, consolidation, recapitalization, or
reorganization, arising out of the refunding of the original security, or for
any other reason, or its failure to notify any party hereto that Collateral
should be so presented or surrendered.
TRANSFER OF COLLATERAL. The Bank may assign its rights in the Collateral or any
part thereof to any assignee who shall thereupon become vested with all the
powers and rights herein given to the Bank with respect to the property so
transferred and delivered, and the Bank shall thereafter be forever relieved
and fully discharged from any liability with respect to such property so
transferred, but with respect to any property not so transferred the Bank shall
retain all rights and powers hereby given.
SUBSTITUTE COLLATERAL. With prior written consent of Bank, other Collateral may
be substituted for the original Collateral herein in which event all rights,
duties, obligations, remedies and security interests provided for, created or
granted shall apply fully to such substitute Collateral.
INSPECTION, BOOKS AND RECORDS. Debtor will at all times keep accurate and
complete records covering each item of Collateral, including the proceeds
therefrom. Bank, or any of its agents, shall have the right, at intervals to be
determined by Bank and without hindrance or delay, to inspect, audit, and
examine the Collateral and to make extracts from the books, records, journals,
orders, receipts, correspondence and other data relating to Collateral,
Debtor's business or any other transaction between the parties hereto. Debtor
will at its expense furnish Bank copies thereof upon request.
CROSS COLLATERALIZATION LIMITATION. As to any other existing or future consumer
purpose loan made by Bank to Debtor, within the meaning of the Federal Consumer
Credit Protection Act, Bank expressly waives any security interest granted
herein in Collateral that Debtor uses as a principal dwelling and household
goods.
ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Debtor shall pay all of Bank's
reasonable expenses incurred in enforcing this Agreement and in preserving and
liquidating Collateral, including but not limited to, reasonable arbitration,
paralegals', attorneys' and experts' fees and expenses, whether incurred
without the commencement of a suit, in any trial, arbitration, or
administrative proceeding, or in any appellate or bankruptcy proceeding.
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DEFAULT. If any of the following occurs, a default ("Default") under this
Security Agreement shall exist: (i) The failure of timely payment or performance
of any of the Obligations or a default under any Loan Document; (ii) Any breach
of any representation or agreement contained or referred to in this Security
Agreement or other Loan Document; (iii) Any loss, theft, substantial damage, or
destruction of Collateral not fully covered by insurance, or as to which
insurance proceeds are not remitted to Bank within 30 days of the loss; any sale
(except the sale of inventory in the ordinary course of business), lease, or
encumbrance of any Collateral without prior written consent of Bank; or the
making of any levy, seizure, or attachment on or of Collateral which is not
removed within 10 days; or (iv) the death of, appointment of guardian for,
dissolution of, termination of, existence of, loss of good standing status by,
appointment of a receiver for, assignment for the benefit of creditors of, or
commencement of any bankruptcy or insolvency proceeding by or against Debtor,
its Subsidiaries or Affiliates ("Affiliate" shall have the meaning as defined in
11 U.S.C. 1011 and "Subsidiary" shall mean any corporation of which more than
50% of the issued and outstanding voting stock is owned directly or indirectly
by Debtor), if any, or any general partner of the holder(s) of the majority
ownership interest in Debtor any party to the Loan Documents.
REMEDIES ON DEFAULT (INCLUDING POWER OF SALE). If a Default occurs, all of the
Obligations shall be immediately due and payable, without notice and Bank shall
have all the rights and remedies of a secured party under the Uniform Commercial
Code. Without limitation thereto, Bank shall have the following rights and
remedies: (i) to take immediate possession of Collateral, without notice or
resort to legal process, and for such purpose, to enter upon any premises on
which Collateral or any part thereof may be situated and to remove the same
therefrom, or, at its option, render the Collateral unusable or dispose of said
Collateral on Debtor's premises; (ii) to require Debtor to assemble the
Collateral and make it available to Bank at a place to be designated by Bank;
(iii) to exercise its right of set-off or bank lien as to any monies of Debtor
deposited in demand checking, time, savings, certificate of deposit or other
accounts of any nature maintained by Debtor with Bank or Affiliates of Bank,
without advance notice, regardless of whether such accounts are general or
special; (iv) to dispose of Collateral, as a unit or in parcels, separately or
such any real property interests also securing the Obligations, in any county or
place to be selected by Bank, at either private or public sale (at which public
sale bank may be the purchaser) with or without having the Collateral physically
present at said sale. Any notice of sale, disposition or any action by Bank
required by law and sent to Debtor at Debtor's address shown above, or at such
other address of Debtor as may from time to time be shown on the records of
Bank, at least 5 days prior to such action, shall constitute reasonable notice
to Debtor. Notice shall be deemed given or sent when mailed postage prepaid to
Debtor's address as provided herein. Bank shall be entitled to apply the
proceeds of any sale or other disposition of the Collateral, and the payments
received by Bank with respect to any of the Collateral, to the Obligations in
such order and manner as Bank may determine. Collateral that is subject to rapid
declines in value and is customarily sold recognized markets may be disposed of
by Bank in a recognized market for such collateral without providing notice of
sale.
REMEDIES ARE CUMULATIVE. No failure on the part of Bank to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Bank or any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any right, power or remedy. The remedies herein provided are
cumulative and are not exclusive of any remedies provided by law, in equity, or
in other Loan Documents.
MISCELLANEOUS. (i) AMENDMENTS AND WAIVERS. No waiver, amendment or modification
of any provision of this Security Agreement shall be valid unless in writing and
signed by an officer of Bank. No waiver by Bank of any Default shall operate as
a waiver of any other Default or of the same Default on a future occasion.
Neither the failure of, nor any delay by, Bank in exercising any right, power or
privilege granted pursuant to this Security Agreement shall operate as a waiver
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thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise of any other right, power or privilege. (ii) ASSIGNMENT. All
rights of Bank hereunder are freely assignable, in whole or in part, and shall
inure to the benefit of and be enforceable by Bank, its successors, assigns and
affiliates. Debtor shall not assign its rights and interest hereunder without
the prior written consent of Bank, and any attempt by Debtor to assign without
Bank's prior written consent is null and void. Any assignment shall not release
Debtor from the Obligations. This Security Agreement shall be binding upon
Debtor, and the heirs, personal representatives, successors, and assigns of
Debtor. (iii) APPLICABLE LAW; CONFLICT BETWEEN DOCUMENTS. This Security
Agreement shall be governed by and construed under the law of the state named in
Bank's address shown above without regard to that state's conflict of laws
principles. If any terms of this Security Agreement conflict with the terms of
any commitment letter or loan proposal, the terms of this Security Agreement
shall control. (iv) JURISDICTION. Debtor irrevocably agrees to non-exclusive
personal jurisdiction in the state named in Bank's address shown above. (v)
SEVERABILITY. If any provision of this Security Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective but only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Security Agreement (vi)
NOTICES. Any notices to debtor shall be sufficiently given, if in writing and
mailed or delivered to the address of Debtor shown above or such other address
as provided hereunder; and to Bank, if in writing and mailed or delivered to
Bank's office address shown above or such other address as Bank may specify in
writing from time to time. In the event that the Debtor changes Debtor's mailing
address at any time prior to the date the Obligations are paid in full, Debtor
agrees to promptly give written notice of said change of address by registered
or certified mail, return receipt requested, all charges prepaid. (vii)
CAPTIONS. The captions contained herein are inserted for convenience only and
shall not affect the meaning or interpretation of this Security Agreement or any
provision hereof. The use of the plural shall also mean the singular, and vice
versa. (viii) LOAN DOCUMENTS. The term "Loan Documents" refers to all documents,
whether now or hereafter existing, executed in connection with the Obligations
and may include, without limitation and whether executed by Borrower, Debtor or
others, commitment letters, loan agreements, guaranty agreements, other security
agreements, letters of credit, instruments, financing statements, mortgages,
deeds of trust, deeds to secure debt, and any amendments or supplements
(excluding swap agreements as defined in 11 U.S.C. Section 101). (ix) JOINT AND
SEVERAL LIABILITY. If more than one person has signed this Security Agreement,
such parties are jointly and severally obligated hereunder. (x) BINDING
CONTRACT. Debtor by execution and Bank by acceptance of this Security Agreement,
agree that each party is bound by all terms and provisions of this Security
Agreement.
IN WITNESS WHEREOF, Debtor, on the day and year first written above, has caused
this Security Agreement to be executed under seal.
Xxxxx Corporation d/b/a TMC Soundprints
Taxpayer Identification Number: 00-0000000
By: /s/ Xxxxxxx X. Xxxxxxx
CORPORATE -----------------------------------
SEAL Xxxxxxx X. Xxxxxxx, President
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SCHEDULE A TO UCC
Schedule A to UCC from Xxxxx Corporation d/b/a TMC Soundprints ("Debtor") and
for the benefit of First Union National Bank ("Secured Party").
Description of Collateral:
All accounts, contract rights, leases, and any other rights of Debtor to payment
for goods sold or leased or for services rendered; furniture; furnishings;
equipment; machinery; accessories; moveable trade fixtures; goods held for sale
or being processed for sale in Debtor's business, including all raw materials,
supplies, and other materials used or consumed in Debtor's business, goods in
process, finished goods, and all other items customarily classified as
inventory; building improvement and construction materials, supplies and
equipment; chattel paper; instruments; documents; all funds on deposit with Bank
and its affiliates; and all general intangibles; as well as all parts,
replacements, substitutions, profits, products and cash and non-cash proceeds of
the foregoing (including insurance and condemnation proceeds payable by reason
of condemnation of or loss or damage thereto) in any form and wherever located.
All products and proceeds (including investment property and security
entitlements) of any of the property described above in any form, and all
proceeds of such products.
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