SUBSIDIARY SECURITY AGREEMENT
THIS SUBSIDIARY SECURITY AGREEMENT (this "Security Agreement") is
entered into as of June 1, 1998, between National Datamax, Inc. a California
corporation having its principal place of business at 00000 Xxx Xxx Xxxxx, Xxxxx
000, Xxx Xxxxx, XX 00000 (the "Debtor"), and FIRST NATIONAL BANK OF OMAHA, a
national banking association having its principal place of business at Xxx Xxxxx
Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000 as agent ("Secured Party") for itself
("FNB-O") and FIRST NATIONAL BANK, WAHOO, NEBRASKA ("FNB-W"), a national banking
association having its principal place of business at Xxxxx, Xxxxxxxx 00000, NBD
BANK ("NBD"), a bank organized under the laws of the State of Michigan having
its principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000,
NORWEST BANK NEBRASKA, N.A. ("Norwest"), a national banking association having
its principal place of business at 20th and Farnam Streets, Omaha, Xxxxxxxx
00000, XX BANK, NATIONAL ASSOCIATION ("US Bank"), a national banking association
having its principal place of business at 00xx xxx X Xxxxxxx, Xxxxxxx, Xxxxxxxx
00000, the SUMITOMO BANK, LIMITED ("Sumitomo"), a Japanese bank being
represented by its office at 000 Xxxxx Xxxxxxxx, Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx
00000 and acting through its Chicago branch, MERCANTILE BANK OF ST. LOUIS,
N.A.("Mercantile"), a national banking association having its principal place of
business at One Mercantile, 7th and Xxxxxxxxxx Xxxxxxx, Xx. Xxxxx, Xxxxxxxx
00000, BANK OF MONTREAL ("Montreal"), a Canadian bank being represented by its
office at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, LASALLE NATIONAL BANK
("LaSalle"), a national banking association being represented by its office at
One Metropolitan Square, 000 Xxxxx Xxxxxxxx, Xx. Xxxxx, Xxxxxxxx 00000, and
NATIONSBANK, N.A. ("Nationsbank"), a national banking association having an
office at 000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xx. Xxxxx, Xxxxxxxx 00000-0000.
WITNESSETH:
WHEREAS, Debtor is a wholly-owned subsidiary of Data Transmission
Network Corporation ("DTN"); and
WHEREAS, DTN and Secured Party are parties to a 1997 Revolving Credit
Agreement (the "Revolving Credit Agreement") and a 1997 Term Credit Agreement
(the "Term Credit Agreement"), each dated as of February 26, 1997, as amended
from time to time (together, the "Credit Agreements"); and
WHEREAS, pursuant to the Revolving Credit Agreement, Secured Party and
the Revolving Lenders defined in such Revolving Credit Agreement from time to
time may make advances to DTN which may be used for the benefit of DTN and
Debtor; and
WHEREAS, pursuant to the Credit Agreements, DTN is required to have any
subsidiary execute a security agreement and file Uniform Commercial Code
financing statements as shall be necessary to grant and perfect a security
interest in favor of the lenders under such Credit Agreements;
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NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, it is agreed as follows:
1. Grant of Security Interest. Debtor hereby grants to Secured
Party a security interest in the personal property of Debtor as described on
Exhibit A to this Security Agreement (the "Collateral").
2. Obligations Secured. The security interest granted herein is
given to secure all present and future obligations of DTN: (i) under the
Revolving Credit Agreement; (iii) under the 1996 Revolving Credit Agreement
dated as of June 28, 1996 as amended from time to time between DTN, FNB-O,
FNB-W, Norwest, NBD, First Bank, Sumitomo, Mercantile, Montreal, LaSalle and The
Boatmen's National Bank of St. Louis ("Boatmen's"); (iv) under the 1995 Restated
Loan Agreement dated as of June 29, 1995, as amended from time to time between
DTN and FNB-O, FNB-W, US Bank, NBD , Norwest, and Boatmen's; (v) under the 1993
Restated Loan Agreement dated as of November 8, 1993, as amended from time to
time, between DTN and FNB-O, US Bank, FNB-W, NBD, Norwest and Boatmen's; (vi)
under the Loan Agreement dated as of October 9, 1992, as amended from time to
time, between DTN and FNB-O, US Bank, and FNB-W, or under any interest rate
protection agreement entered into by DTN with one or more Lenders; (vii) under
any and all Notes previously, now or hereafter made by DTN to the Lenders
pursuant to any of the foregoing Loan Agreements and interest rate protection
agreements (all of which are referred to herein as the "Loan Agreements") or any
predecessor loan agreements, including, without limitation, the Existing Term
Notes and any notes given in extension, renewal or substitution of the Notes;
(viii) to reimburse the Secured Party for all sums, if any, advanced to protect
the Collateral; and (ix) to reimburse Secured Party for all costs and expenses
incurred in collection of the foregoing, including, without limitation, costs of
repossession and sale and reasonable attorneys' fees. This Security Agreement
shall not be deemed to extinguish existing indebtedness of DTN under any of the
agreements referenced in this Section 3 or any of the notes issued thereunder or
to release, terminate or affect the priority of any security therefor.
4. Representations and Warranties. Debtor represents and
warrants:
(a) Possession and Ownership. Except as shown on Exhibit
4(a) attached to this Security Agreement, the Collateral is or will be in
Debtor's possession (except for equipment or inventory provided to Debtor's
customers in the ordinary course of business) and Debtor has or will acquire
absolute title thereto and will defend the Collateral against the claims and
demands of all persons other than Secured Party, the rights of customers to use
the Collateral in the ordinary course of Debtor's business, and existing
security interests and leaseholds shown on such Exhibit 4(a).
(b) Liens and Encumbrances. No financing statement covering
the Collateral or other filing evidencing any lien or encumbrance on the
Collateral is on file in any public office and there is no lien, security
interest or encumbrance on the Collateral except for the security interest held
by Secured Party pursuant to this Security Agreement and for those security
interests and leaseholds described in (a) above and Exhibit 4(a).
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(c) Truth of Representations. All information, statements,
representations, and warranties made by Debtor herein and in any financial or
credit statement, application for credit, or any other writing executed prior to
or substantially contemporaneously herewith are true, accurate and complete in
all material respects.
(d) Location. Debtor has its chief executive office and
principal place of business at 00000 Xxx Xxx Xxxxx, Xxxxx 000, Xxx Xxxxx, XX
00000 and Debtor keeps its records concerning the Collateral at such address and
at the offices of DTN located at Suite 200, 0000 Xxxx Xxxxx Xxxx, Xxxxx,
Xxxxxxxx 00000.
(e) Authority. Debtor has full authority to enter into this
Security Agreement and in so doing is not violating any law, regulation, or
agreement with third parties. This Security Agreement has been duly and validly
authorized by all necessary corporate action.
5. Covenants. Debtor covenants and agrees:
(a) Liens and Encumbrances. Except as otherwise expressly
allowed herein or as permitted to DTN under the Loan Agreements, Debtor shall
keep the Collateral free and clear of liens, encumbrances, security interests,
and other claims of third parties and will, at Debtor's expense, defend the
Collateral against the claims and demands of all third parties. Debtor shall
promptly pay and discharge any indebtedness owing to any third party who, by
reason of said indebtedness, could obtain or become entitled to a lien or
encumbrance on the Collateral, other than such indebtedness being contested in
good faith and with respect to which adequate reserves have been established.
(b) Proceeds; Sale. Debtor shall not sell or otherwise
dispose of any Collateral without first obtaining the written consent of Secured
Party; provided, however, that Debtor may (i) sell or provide equipment or
inventory to customers in the ordinary course of Debtor's business, and (ii)
dispose of obsolete or out-of-date equipment to others so long as the value of
equipment or inventory disposed of to others (e.g., for salvage purposes) does
not exceed, in aggregate,$500,000. Debtor shall at all times keep the Collateral
and the proceeds from any authorized or unauthorized disposition thereof
identifiable and separate from the other property of Debtor or any third party;
provided, however, that Debtor may commingle and use for general corporate
purposes (y) the proceeds of sales of inventory to customers sold in accordance
with clause (i) above in this Section 5(b) and (z) up to $500,000 in aggregate
net book value of the proceeds of sale or other disposition of obsolete or
out-of-date equipment disposed of in accordance with clause (ii) above in this
Section 5(b).
(c) Protection of Value. Debtor shall use the utmost care
and diligence to protect and preserve the Collateral, and shall not commit nor
suffer any waste to occur with respect to the Collateral. In pursuance of the
foregoing, Debtor shall maintain the Collateral in good condition and repair and
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shall take such steps as are necessary or as are requested by Secured Party to
prevent any impairment of the value of the Collateral.
(d) Taxes. Debtor shall pay and discharge prior to the
delinquency thereof any and all taxes, levies and other impositions made upon
the Collateral which may give rise to liens upon the Collateral if unpaid or
which are imposed upon the creation, perfection, or continuance of the security
interest provided for herein, other than taxes being contested in good faith and
with respect to which adequate reserves have been established.
(e) Insurance. All risk of loss of, damage to, or
destruction of the Collateral shall at all times be on Debtor. Debtor shall
procure and maintain, at its own expense, insurance covering the Collateral
against all risks under policies and with companies acceptable to Secured Party,
for the duration of this Security Agreement (except for equipment provided to
Debtor's Customers in the ordinary course of business). Such policies shall be
written for and shall name Debtor and Secured Party as their interests may
appear, shall contain a standard loss payable clause in favor of Secured Party.
Proof of insurance shall be provided to Secured Party upon request. For purposes
of security, Debtor hereby assigns to Secured Party any and all monies
(including, without limitation, proceeds of insurance and refunds of unearned
premiums) due or to become due under any such policy. Debtor hereby directs the
issuer of any such policy to pay any such monies directly to Secured Party.
Secured Party may act as attorney for Debtor in obtaining, settling and
adjusting such insurance and in endorsing any checks or drafts paid thereunder.
(f) Secured Party as Payee. Debtor shall take such steps as
are necessary or as are requested by Secured Party to have Secured Party named
as a payee on any check, draft or other document or instrument which Debtor may
obtain or anticipate obtaining with respect to the Collateral other than the
sale of inventory to customers in the ordinary course of Debtor's business and
the sale of obsolete or out-of-date equipment in accordance with Section 5(b)
hereof. Without limiting the generality of the foregoing, Secured Party shall be
named as a payee on all instruments from insurers of the Collateral.
Notwithstanding anything in the foregoing or in Subsection (e) above to the
contrary, Secured Party agrees that: (i) insurance proceeds may be paid to
Debtor so long as no event of default exists hereunder and such proceeds are, in
aggregate, less than $500,000; and (ii) Secured Party's rights hereunder are
subject to the interests of the parties identified on Exhibit 4 (a) and the
rights of Debtor's customers set forth in Section 4(a) above.
(g) Records. Debtor shall keep accurate and complete records
pertaining to the Collateral and pertaining to Debtor's business and financial
condition, and shall allow Secured Party to inspect the same from time to time
upon reasonable request and shall submit such periodic reports relating to the
same to Secured Party from time to time as Secured Party may reasonably request.
Debtor shall provide that the Secured Party's interest is noted on all chattel
paper and that there is only one single original of any chattel paper held by
Debtor and created after the date hereof.
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(h) Notice to Secured Party. Debtor shall promptly notify
Secured Party of any loss or damage to the Collateral, any impairment of the
value thereof, or any claim made thereto by any third party.
(i) Location. Except for equipment or inventory provided to
Debtor's customers in the ordinary course of business, Debtor will not move the
Collateral, its chief executive office, principal place of business or places
where it keeps its records concerning the Collateral from the locations
specified above without first obtaining the written consent of Secured Party and
shall not permit any Collateral to be located in any state in which a financing
statement covering the Collateral is required to be, but has not in fact been,
filed in order to perfect the security interest granted herein. Debtor shall not
change its name without giving Secured Party at least ninety (90) days' prior
notice thereof.
(j) Other Documents. Debtor shall execute such further
documents as may be requested by Secured Party to obtain and perfect a security
interest in the Collateral, including without limitation, Uniform Commercial
Code Financing Statements and amendments thereto. A carbon, photographic or
other reproduction of this Security Agreement or of any financing statement
signed by Debtor shall have the same force and effect as the original for all
purposes of a financing statement.
6. Default. Debtor shall be in default hereunder if any of the
following occurs:
(a) Event of Default. An Event of Default occurs under any
of the Notes or the Loan Agreements.
(b) Misrepresentation. Any of the representations or
warranties made by Debtor herein or in any of the documents referred to herein
or executed prior hereto or substantially contemporaneously herewith are or
become false or misleading in any material respect.
(c) Breach of Covenants. Debtor fails to perform any of its
covenants, agreements or obligations hereunder or under any document referred to
herein or executed prior hereto or substantially contemporaneously herewith and
such failure is not cured within ten (10) business days after knowledge of such
default; provided, however, that there shall be no cure period for the failure
of Debtor to comply with the provisions of Section 5 (b) hereof.
(d) Other Indebtedness. Any event occurs which results in
acceleration of the maturity of the indebtedness of Debtor under any material
agreement with any third party.
(f) Loss of Security. Collateral with an aggregate value in
excess of $500,000 is lost, damaged or destroyed and such Collateral is not
covered by insurance.
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(g) Business Failure. The death, dissolution, termination of
existence (other than a merger of Debtor into DTN), appointment of a receiver of
any part of the property of, assignment for the benefit of creditors by, or
commencement of any proceeding in bankruptcy or insolvency by or against Debtor
or any principals of Debtor or any guarantor or surety for Debtor.
7. Rights and Remedies of Secured Party. Secured Party shall have
all of the rights and remedies provided at law and in equity and in the Uniform
Commercial Code and in addition thereto and without limitation thereon shall
have the following rights which may be exercised singularly or concurrently:
(a) Inspection. Secured Party may at any time, with or
without notice, enter upon Debtor's premises or any other place where the
Collateral is located to inspect and examine the same and, if Debtor is in
default, to take possession thereof.
(b) Performance by Secured Party. If Debtor fails to perform
any of its obligations hereunder, Secured Party may, at its sole discretion, pay
or perform such obligations for Debtor's account and may add any cost or expense
thereof to the obligations secured hereby.
(c) Acceleration. Upon default, Secured Party may, without
demand or notice to Debtor, accelerate all of the obligations secured hereby and
proceed to enforce payment of the same with or without first resorting against
the Collateral.
(d) Proceed Against Collateral. Subject to applicable cure
periods, if any, upon default Secured Party may: require Debtor to make the
Collateral available to Secured Party at a place to be designated by Secured
Party; take possession of the Collateral, proceeding without judicial process or
by judicial process (without a prior hearing or notice thereof which Debtor
hereby expressly waives) and sell, retain or otherwise dispose of the Collateral
in full or partial satisfaction of the obligations secured hereby.
(e) Power of Attorney. Debtor hereby irrevocably appoints
(which appointment is coupled with an interest) Secured Party as Debtor's true
and lawful attorney, with full power of substitution, without notice to Debtor
and at such time or times as Secured Party in its sole discretion may determine
to: (i) create, prepare, complete, execute, deliver and file such documents,
instruments, financing statements, and other agreements and writings as may be
deemed appropriate by Secured Party to facilitate the intent of this Security
Agreement; (ii) notify account debtors and others with obligations to Debtor to
make payment of their obligations to Secured Party; (iii) demand, enforce and
receive payment of any accounts or obligations owing to Debtor, by legal
proceedings or otherwise; (iv) settle, adjust, compromise, release, renew or
extend any account or obligation owing to Debtor; (v) notify postal authorities
to change the address for delivery of mail to Debtor to such address as Secured
Party may designate; (vi) receive, open and dispose of all mail addressed to
Debtor; (vii) endorse Debtor's name on any check, note, draft, instrument or
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other form of payment that may come into Secured Party's possession; and (viii)
send requests to Debtor's customers and account debtors for verification of
amounts due to Debtor. Secured Party covenants not to exercise the foregoing
rights prior to the occurrence of an event of default hereunder.
8. Obligations of Secured Party. Secured Party has no obligations
to Debtor hereunder except those expressly required herein. Except as expressly
provided in the Loan Agreements, Secured Party has not agreed to make any
further advance or loan of any kind to Debtor or DTN. Secured Party's duty of
care with respect to the Collateral in its possession shall be deemed fulfilled
if Secured Party exercises reasonable care in physically safekeeping the
Collateral or, in the case of Collateral in the possession of a bailee or third
party, exercises reasonable care in the selection of the bailee or third party.
Secured Party need not otherwise preserve, protect, insure or care for the
Collateral. Secured Party need not preserve rights the Debtor may have against
prior parties, realize on the Collateral in any particular manner or order, or
apply proceeds of the Collateral in any particular order of application.
9. Miscellaneous.
(a) No Waiver. No delay or failure on the part of Secured
Party in the exercise of any right or remedy hereunder shall operate as a waiver
thereof and no single or partial exercise by Secured Party of any right or
remedy shall preclude other or further exercise thereof or the exercise of any
other right or remedy.
(b) Amendment and Termination. This Security Agreement may
be amended or terminated and the security interest granted herein can be
released only by an explicit written agreement signed by Debtor and Secured
Party.
(c) Choice of Law. This Security Agreement and the rights
and obligations of the parties hereto shall be governed by and construed in
accordance with the laws of the State of Nebraska.
(d) Binding Agreement. This Security Agreement shall be
binding upon the parties hereto and their heirs, successors, personal
representatives and permitted assigns.
(e) Assignment. This Security Agreement may be assigned by
Secured Party only.
(f) Captions. Captions and headings herein are for
convenience only and in no way define, limit or describe the scope or intent of
any provision or section of the Security Agreement.
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(g) Severability. If any provision of this Security
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement.
(h) Notices. All notices to be given shall be deemed
sufficiently given if delivered or mailed by registered or certified mail
postage prepaid if to Debtor in care of Data Transmission Network, Suite 200,
0000 Xxxx Xxxxx Xxxx, Xxxxx, Xxxxxxxx 00000; if to Secured Party at Xxx Xxxxx
Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000; or such other address as the parties may
designate in writing from time to time. Debtor shall promptly notify Secured
Party of any changes in Debtor's address.
(i) Priorities. The security interest of a Lender in any
property of the Debtor (i) arising under and in connection with the Credit
Agreements, this Security Agreement or any of the Related Loan Agreements and
(ii) granted to secure any obligation of DTN to such Lender, including, without
limitation, all Collateral, shall rank equally in priority with the security
interests of each of the other Lenders, if any, in such property of the
Borrower, irrespective of the time or order of attachment or perfection of such
security interest, or the time or order of filing, or the failure to file, and
regardless of the date any obligation of DTN to a Lender was incurred. Any
amounts or payments obtained upon disposition of any property securing an
obligation of DTN to a Lender shall be applied as provided in Article VII of the
1997 Revolving Credit Agreement as in effect on February 26, 1997. Unanimous
approval of the Lenders shall be required for amendments to this Section 9(i).
IN WITNESS WHEREOF, the undersigned have executed this Security
Agreement as of this 1st day of June, 1998.
NATIONAL DATAMAX, INC.
By /s/ Xxxxx X. Xxxxxx
Title Vice President, CFO and Secretary
FIRST NATIONAL BANK OF OMAHA,
as agent for itself, US Bank,
National Association, First
National Bank, Wahoo,
Nebraska, NBD Bank,
Norwest Bank Nebraska, N.A.,
Nationsbank, N.A., The Sumitomo Bank, Limited, Mercantile
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Bank of St. Louis, N.A., Bank of Montreal, and
LaSalle National Bank
By /s/ Xxxxx X. Xxxxxx
Title Vice President
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EXHIBIT A
TO SECURITY AGREEMENT
BY AND BETWEEN
FIRST NATIONAL BANK OF OMAHA, as Agent ("Secured Party")
AND
NATIONAL DATAMAX, INC. ("Debtor")
COLLATERAL
All of Debtor's accounts, accounts receivable, chattel paper,
documents, instruments, goods, inventory, equipment, general intangibles,
contract rights, all rights of Debtor in deposits and advance payments made to
Debtor by its customers and/or subscribers, accounts due from advertisers and
all ownership, proprietary, copyright, trade secret and other intellectual
property rights in and to computer software (and specifically including, without
limitation, all such rights in Debtor's computer software used in the provision
of the services to Debtor's customers and/or subscribers) and all documentation,
source code, information and works of authorship pertaining thereto, all now
owned or hereafter acquired by Debtor and all proceeds and products thereof; and
all proceeds and products of the foregoing.
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ATTACHMENT A TO UCC-1
COLLATERAL
All of Debtor's accounts, accounts receivable, chattel paper,
documents, instruments, goods, inventory, equipment, general intangibles,
contract rights, all rights of Debtor in deposits and advance payments made to
Debtor by its customers and/or subscribers, accounts due from advertisers and
all ownership, proprietary, copyright, trade secret and other intellectual
property rights in and to computer software (and specifically including, without
limitation, all such rights in Debtor's computer software used in the provision
of the services to Debtor's customers and/or subscribers) and all documentation,
source code, information and works of authorship pertaining thereto, all now
owned or hereafter acquired by Debtor and all proceeds and products thereof; and
all proceeds and products of the foregoing.
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EXHIBIT 4 (a)
TO SECURITY AGREEMENT
BY AND BETWEEN
FIRST NATIONAL BANK OF OMAHA, as Agent ("Secured Party")
AND
NATIONAL DATAMAX, INC. ("Debtor")
PERMITTED ENCUMBRANCES
Secured Party Comments
NONE
EQUIPMENT NOT LOCATED AT DEBTOR'S OR DTN'S ADDRESS
Equipment Location
NONE
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