EXHIBIT 10.3
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of October 9, 1997 (as amended and modified,
the "Security Agreement" or this "Agreement") among T/SF COMMUNICATIONS
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CORPORATION, a Delaware corporation (the "Borrower"), and the subsidiaries and
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affiliates identified on the signature pages hereto and such other subsidiaries
and affiliates as may hereafter join this Security Agreement (as referenced in
the Credit Agreement, the "Guarantors" and collectively with the Borrower but
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excluding VSA-T/SF and Fir Tree, the "SA Credit Parties") and FIRST UNION
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NATIONAL BANK, as Administrative Agent (in such capacity, the "Administrative
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Agent") for the Lenders under the Credit Agreement described below and any
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Affiliates of Lenders which provide Interest Protection Agreements as hereafter
provided (collectively, the "Lenders").
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W I T N E S S E T H
WHEREAS, the Lenders have severally agreed to make loans and extensions of
credit to the Borrower upon the terms and conditions provided in the terms of
that Credit Agreement dated as of the date hereof (as amended and modified, the
"Credit Agreement") among the Borrower, the Lenders identified therein and First
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Union National Bank, as Administrative Agent, and the Guarantors have jointly
and severally agreed pursuant to the Guaranty to guaranty each of the payment
and performance obligations of each of the Borrower and each Credit Party under
the Credit Agreement and each other Credit Document to which any of the Borrower
or any Credit Party is a party;
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective loans and
extensions of credit to the Borrower thereunder that the SA Credit Parties shall
have executed and delivered this Security Agreement to the Administrative Agent
for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective loans and extensions of credit
thereunder, the SA Credit Parties hereby agree with the Administrative Agent,
for the ratable benefit of the Lenders, as follows:
1. Defined Terms.
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1.1 Definitions. (a) Unless otherwise defined herein, terms defined in
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the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of North Carolina on the date hereof are
used herein as so defined: Accounts, Chattel Paper, Documents, Equipment, Farm
Products, Fixtures, General Intangibles, Instruments, Inventory and Proceeds.
For purposes of this Agreement, the term "Lender" shall include any Affiliate of
any Lender which has entered into an Interest Protection Agreement with a SA
Credit Party to the extent permitted by the Credit Agreement.
(b) The following terms shall have the following meanings:
"Agreement": this Security Agreement, as the same may be amended,
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supplemented or otherwise modified from time to time.
"Code": the Uniform Commercial Code as from time to time in effect in the
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State of North Carolina.
"Collateral": as defined in Section 2 of this Agreement; provided that
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Collateral shall not include any property which is subject to a Lien
permitted under Section 6.2 of the Credit Agreement securing indebtedness
permitted under Section 6.1 of the Credit Agreement to the extent that the
grant of a security interest hereunder would be prohibited by such Lien or
by the terms of such indebtedness.
"Collateral Account": any collateral account established by the
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Administrative Agent as provided in subsection 3.3 or subsection 7.2.
"Contracts": all contracts and agreements to which a SA Credit Party is a
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party, as each may be amended, supplemented or otherwise modified from time
to time, including, without limitation, (a) all rights of a SA Credit Party
to receive moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of a SA Credit Party to damages arising out of or
for breach or default in respect thereof and (c) all rights of a SA Credit
Party to exercise all remedies thereunder.
"Copyright Licenses": any written agreement, naming any SA Credit Party as
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licensor, granting any right under any Copyright including, without
limitation, any thereof referred to in Schedule 3 hereto.
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"Copyrights": (i) all registered United States copyrights in all Works,
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now existing or hereafter created or acquired, all registrations and
recordings thereof, and all applications in connection therewith,
including, without limitation, registrations, recordings and applications
in the United States Copyright office including, without limitation, any
thereof referred to in Schedule 3 hereto, and (ii) all renewals thereof
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including, without limitation, any thereof referred to in Schedule 3
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hereto.
"Intellectual Property": collectively, all Copyrights, Copyright
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Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses,
together with (a) all inventions, processes, production methods,
proprietary information, know-how and trade secrets; (b) all licenses or
user or other agreements granted with respect to any of the foregoing, in
each case whether now or hereafter owned or used including, without
limitation, the licenses or other agreements with respect to Copyrights or
Copyright Licenses, the Patents or Patent Licenses or Trademarks or
Trademark Licenses, including those listed
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on the Schedules hereto; (c) all information, customer lists,
identification of suppliers, data, plans, blueprints, specifications,
designs, drawings, recorded knowledge, surveys, engineering reports, test
reports, manuals, materials standards, processing standards, performance
standards, catalogs, computer and automatic machinery software and
programs; (d) all field repair data, sales data and other information
relating to sales or service of products now or hereafter manufactured; (e)
all accounting information and all media in which or on which any
information or knowledge or data or records may be recorded or stored and
all computer programs used for the compilation or printout of such
information, knowledge, records or data; and (f) all licenses, consents,
permits, variances, certifications and approvals of governmental agencies
now or hereafter held.
"Patent License": all agreements, whether written or oral, providing for
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the grant by or to a SA Credit Party of any right to manufacture, use or
sell any invention covered by a Patent, including, without limitation, any
thereof referred to in Schedule 4 hereto.
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"Patents": (a) all letters patent of the United States or any other
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country and all reissues and extensions thereof, including, without
limitation, any thereof referred to in Schedule 4 hereto, and (b) all
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applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any thereof referred to in Schedule 4
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hereto.
"Secured Obligations": the collective reference to the following:
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(a) All unpaid principal of and interest on (including, without
limitation, interest accruing at the then applicable rate provided in
the Credit Agreement after the maturity of the Loans and other
obligations owing under the Credit Agreement and interest accruing at
the then applicable rate provided in the Credit Agreement after the
filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the
Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans and all other
obligations and liabilities of the Borrower to the Administrative
Agent and the Lenders, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the
Credit Agreement, any Notes, this Security Agreement, the other Credit
Documents, any Interest Protection Agreements with a Lender or an
Affiliate of a Lender to the extent permitted under the Credit
Agreement or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all reasonable fees and
disbursements of counsel to the Administrative Agent or to the Lenders
that are required to be paid by the Borrower pursuant to the terms of
the Credit Agreement, this Security Agreement, any other Credit
Document or any Interest Protection Agreements with a Lender or an
Affiliate of a Lender to the extent permitted under the Credit
Agreement); and
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(b) the prompt payment, performance and observance by the Guarantors of
all obligations of the Guarantors under the Guaranty and under this
Security Agreement and the other Credit Documents to which the
Guarantors are a party, or under any Interest Protection Agreement
with a Lender or an Affiliate of a Lender to the extent permitted
under the Credit Agreement, to which such Guarantor is a party or any
guaranty is given by it in connection therewith; and
(c) All other indebtedness, liabilities and obligations of any kind or
nature, now existing or hereafter arising, owing by the SA Credit
Parties to any Lender or the Administrative Agent, arising under this
Security Agreement or any of the other Credit Documents, whether
primary, secondary, direct, contingent, or joint and several; and
(d) All liabilities and obligations, now existing or hereafter arising,
owing by the Borrower to any Lender or any Affiliate of a Lender
arising under Interest Protection Agreements with a Lender or an
Affiliate of a Lender to the extent permitted under the Credit
Agreement.
"Trademark License": means any agreement, written or oral, providing for
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the grant by or to a SA Credit Party of any right to use any Trademark,
including, without limitation, any thereof referred to in Schedule 5
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hereto.
"Trademarks": (a) all trademarks, trade names, corporate names, company
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names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and the goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in Schedule 5
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hereto, and (b) all renewals thereof.
"Work": any work which is subject to copyright protection pursuant to
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Title 17 of the United States Code.
1.2 Other Definitional Provisions. (a) The words "hereof," "herein" and
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"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and section and paragraph references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
2. Grant of Security Interest. As collateral security for the prompt and
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complete payment and performance when due (whether at the stated maturity, by
acceleration or
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otherwise) of the Secured Obligations, each of the SA Credit Parties hereby
grants to the Administrative Agent, for the ratable benefit of the Lenders, a
security interest in all of the following property now owned or at any time
hereafter acquired by such SA Credit Party or in which such SA Credit Party now
has or at any time in the future may acquire any right, title or interest
(collectively, the "Collateral"):
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(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
(d) all Copyrights;
(e) all Copyright Licenses;
(f) all Documents;
(g) all Equipment;
(h) all Fixtures
(i) all General Intangibles, including the Contracts;
(j) all Instruments;
(k) all Intellectual Property;
(l) all Inventory;
(m) all Patents;
(n) all Patent Licenses;
(o) all Trademarks;
(p) all Trademark Licenses;
(q) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks, and related data processing software (owned by
such SA Credit Party or in which it has an interest) that at any time
evidence or contain information relating to any Collateral or are
otherwise necessary or helpful in the collection thereof or
realization thereupon; and
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(r) to the extent not otherwise included, all other tangible and
intangible personal property and fixtures of such SA Credit Party
and all Proceeds and products of any and all of the foregoing;
This Agreement shall create a continuing security interest in the
Collateral which shall remain in effect until all the Secured Obligations, now
existing or hereafter arising, shall have been paid in full, the commitments
relating thereto shall have been terminated and the Credit Agreement and the
other Credit Documents shall no longer be in effect.
3. Provisions Relating to Accounts.
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3.1 SA Credit Parties Remain Liable under Accounts. Anything herein to
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the contrary notwithstanding, each of the SA Credit Parties shall remain liable
under each of the Accounts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Account. Neither the
Administrative Agent nor any Lender shall have any obligation or liability under
any Account (or any agreement giving rise thereto) by reason of or arising out
of this Agreement or the receipt by the Administrative Agent or any Lender of
any payment relating to such Account pursuant hereto, nor shall the
Administrative Agent or any Lender be obligated in any manner to perform any of
the obligations of a SA Credit Party under or pursuant to any Account (or any
agreement giving rise thereto), to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Account (or any agreement
giving rise thereto), to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which may have
been assigned to it or to which it may be entitled at any time or times.
3.2 Analysis of Accounts. The Administrative Agent shall have the right,
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at any time after the occurrence and during the continuance of an Event of
Default, to make test verifications of the Accounts in any manner and through
any medium that it reasonably considers advisable, and the SA Credit Parties
shall furnish all such assistance and information as the Administrative Agent
may require in connection with such test verifications. At any time and from
time to time after the occurrence and during the continuation of an Event of
Default, upon the Administrative Agent's request and at the expense of the SA
Credit Parties, the SA Credit Parties shall cause independent public accountants
or others satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts. The Administrative
Agent in its own name or in the name of others may, after the occurrence of an
Event of Default and during the continuance, communicate with account debtors on
the Accounts to verify with them to the Administrative Agent's satisfaction the
existence, amount and terms of any Accounts.
3.3 Collections on Accounts. (a) The Administrative Agent hereby
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authorizes the SA Credit Parties to collect the Accounts, provided that the
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Administrative Agent may curtail or terminate said authority at any time after
the occurrence and during the continuance of an Event of Default. If required
by the Administrative Agent at any time after the occurrence and during the
continuance of an Event of Default, any payments of Accounts, when collected by
the SA
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Credit Parties, (i) shall be forthwith (and, in any event, within two Business
Days) deposited by the SA Credit Parties in a Collateral Account maintained
under the sole dominion and control of the Administrative Agent, subject to
withdrawal by the Administrative Agent for the account of the Lenders only as
provided in subsection 7.3, and (ii) until so turned over, shall be held by the
SA Credit Parties in trust for the Administrative Agent and the Lenders,
segregated from other funds of the SA Credit Parties.
(b) Each such deposit of Proceeds of Accounts shall be accompanied by a
report identifying in reasonable detail the nature and source of the payments
included in the deposit.
(c) At the Administrative Agent's request after the occurrence and during
the continuance of an Event of Default, the SA Credit Parties shall deliver to
the Administrative Agent all original and other documents in their possession or
control (or as to which they have a right or ability to get) evidencing, and
relating to, the agreements and transactions which gave rise to the Accounts.
4. Provisions Relating to Contracts.
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4.1 SA Credit Parties Remain Liable under Contracts. Anything herein to
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the contrary notwithstanding, each of the SA Credit Parties shall remain liable
under each of the Contracts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with and pursuant to the terms and provisions of each Contract. Neither the
Administrative Agent nor any Lender shall have any obligation or liability under
any Contract by reason of or arising out of this Agreement or the receipt by the
Administrative Agent or any such Lender of any payment relating to such Contract
pursuant hereto, nor shall the Administrative Agent or any Lender be obligated
in any manner to perform any of the obligations of a SA Credit Party under or
pursuant to any Contract, to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the sufficiency
of any performance by any party under any Contract, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.
4.2 Communication with Contracting Parties. The Administrative Agent in
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its own name or in the name of others at any time after the occurrence and
during the continuance of an Event of Default may communicate with parties to
the Contracts to verify with them to the Agent's satisfaction the existence,
amount and terms of any Contract.
5. Representations and Warranties. Each of the SA Credit Parties hereby
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represents and warrants that:
5.1 Title; No Other Liens. Except for Permitted Liens, each SA Credit
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Party owns each item of the Collateral free and clear of any and all Liens or
claims of others. No security agreement, financing statement or other public
notice with respect to all or any part of the Collateral is on file or of record
in any public office, except such as have been filed with respect to Permitted
Liens.
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5.2 Perfected First Priority Liens. The security interests granted
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pursuant to this Agreement (a) upon completion of the filings and other actions
specified on Schedule 2 attached hereto, and possession of such Collateral with
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respect to which perfection is acquired by possession, will constitute perfected
security interests in the Collateral in favor of the Administrative Agent, for
the ratable benefit of the Lenders, (b) are prior to all other Liens on the
Collateral in existence on the date hereof except for Permitted Liens and (c)
are enforceable as such against all creditors of and purchasers from the SA
Credit Party (except purchasers of Inventory in the ordinary course of
business).
5.3 Inventory and Equipment. The Inventory and the Equipment of the SA
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Credit Party are kept at the locations listed on Schedule 1 hereto. Insurance
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covering the Inventory and Equipment against loss or damage of the kinds
customarily insured against by corporations of established reputation engaged in
the same or similar businesses and similarly situated, of such types and in such
amounts as are customarily carried under similar circumstances by such other
corporations (hereinafter referred to as "Customary Business Insurance"), has
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been obtained with financially sound and reputable insurers and such insurance
is in full force and effect and will remain in full force and effect so long as
any Secured Obligation remains unpaid or unsatisfied.
5.4 Chief Executive Office. The SA Credit Party's chief executive office
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and chief place of business, and the place where it keeps its books and records,
is located at the address shown on Schedule 1.
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5.5 Farm Products. None of the Collateral constitutes, or is the Proceeds
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of, Farm Products.
5.6 Representations and Warranties Relating to Contracts. (a) SA Credit
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Party will provide notice to the Administrative Agent within sixty (60) days of
the Closing Date as to whether the consent of any party (other than the SA
Credit Party) to any material Contract is required, or purports to be required,
in connection with the execution, delivery and performance of this Agreement.
In the event that any such consent is required, such SA Credit Party will use
its reasonable good faith efforts to obtain such consent as soon as practical
after the Closing Date and will promptly provide the Administrative Agent with
originals of all consents obtained. Within six (6) months from the Closing
Date, such SA Credit Party will provide the Administrative Agent information
relating to which consents, if any, it has been unable to procure.
(b) Each material Contract is in full force and effect, constitutes a valid
and legally enforceable obligation of the parties thereto, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing and is in compliance in
all material respects with all applicable laws concerning form, content and
manner of preparation and execution, including, but not limited to, where
applicable, consumer credit laws.
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(c) No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any material
Contract by any party thereto other than those which have been duly obtained,
made or performed, are in full force and effect and do not subject the scope of
any such Contract to any material adverse limitation, either specific or general
in nature.
(d) Neither the SA Credit Party nor (to the best of the SA Credit Party's
knowledge) any other party to any material Contract is in default in any
material respects in the performance or observance of any of the terms thereof.
(e) The SA Credit Party has fully performed in all material respects all
its obligations under each material Contract.
(f) The right, title and interest of the SA Credit Party in, to and under
each material Contract are not subject, to the best of the SA Credit Party's
knowledge, to any defense, offset, counterclaim or claim which would materially
adversely affect the value of such Contract as Collateral, nor have any of the
foregoing been asserted or alleged against the SA Credit Party as to any
Contract.
(g) No amount payable to the SA Credit Party under or in connection with
any material Contract is evidenced by any Instrument or Chattel Paper which has
not been delivered to the Administrative Agent.
(h) Except as set forth on Schedule 6 hereto, none of the parties to any
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material Contracts is a Governmental Authority.
5.7 Copyrights, Patents and Trademarks. (a) Schedule 3 hereto includes
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all Copyrights and Copyright Licenses owned by the SA Credit Party in its own
name as of the date hereof. Schedule 4 hereto includes all Patents and Patent
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Licenses owned by the SA Credit Party in its own name as of the date hereof.
Schedule 5 hereto includes all Trademarks and Trademark Licenses owned by the SA
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Credit Party in its own name as of the date hereof. Registrations, if any, of
each such Copyright, Patent or Trademark is described in the applicable
Schedule.
(b) To the best of the SA Credit Party's knowledge, each Copyright, Patent
and Trademark of the SA Credit Party is valid, subsisting, unexpired,
enforceable and has not been abandoned, and such SA Credit Party has not done
anything to authorize or enable any other Person to use any such Copyright,
Patent or Trademark.
(c) Except as set forth in either Schedule 4 or Schedule 5, none of such
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Copyrights, Patents and Trademarks is the subject of any licensing, use or
franchise agreement.
(d) No holding, decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity of any Copyright,
Patent or Trademark.
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(e) No action or proceeding is pending seeking to limit, cancel or question
the validity of any Copyright, Patent or Trademark, or which, if adversely
determined, would have a material adverse effect on the value of any Copyright,
Patent or Trademark.
(f) All registrations listed in Schedule 3, Schedule 4 or Schedule 5 with
respect to any Copyright, Patent or Trademark is valid and is in full force and
effect.
(g) No SA Credit Party owns any Trademark registered in the United States
of America that would be rendered invalid, abandoned, void or unenforceable by
reason of its being included as part of the Collateral.
6. Covenants. Each of the SA Credit Parties covenants and agrees with the
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Administrative Agent and the Lenders that, from and after the date of this
Agreement until this Agreement is terminated and the security interests created
hereby are released:
6.1 Delivery of Instruments and Chattel Paper. If any amount payable
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under or in connection with any of the Collateral shall be or become evidenced
by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall be
promptly delivered to the Administrative Agent, duly endorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral pursuant to
this Agreement.
6.2 Marking of Records. At the request of the Administrative Agent upon
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the occurrence and during the continuation of an Event of Default, the SA Credit
Party will xxxx its books and records pertaining to the Collateral to evidence
this Agreement and the security interests created hereby.
6.3 Maintenance of Perfected Security Interest; Further Documentation. (a)
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The SA Credit Party shall maintain the security interest created by this
Agreement as a perfected security interest subject only to the Liens permitted
to exist pursuant to the Credit Agreement and shall defend such security
interest against claims and demands of all Persons whomsoever.
(b) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of the SA Credit Party, the SA
Credit Party will promptly and duly execute and deliver such further instruments
and documents and take such further action (including without limitation all
actions required under the Federal Assignment of Claims Act or any similar state
statute) as the Administrative Agent may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the security interests created hereby.
6.4 Changes in Locations, Name, etc. The SA Credit Party will not:
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(a) permit any of the Inventory or Equipment to be kept at a location other
than those listed on Schedule 5 hereto, unless it shall have given the
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Administrative
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Agent and the Lenders at least 30 days, prior written notice of such change
and any filings required under the Uniform Commercial Code in effect in the
affected jurisdiction to maintain the perfected security interest granted
pursuant to this Agreement shall have been made, except that Equipment may
be moved from such location for a reasonable period of time for purposes of
repair of such Equipment or for testing in the ordinary cause of business;
(b) change the location of its chief executive office and chief place of
business or the location at which it maintains its books and records from
that specified in subsection 5.4, unless it shall have given the
Administrative Agent and the Lenders at least 30 days' prior written notice
of such change and any filings required under the Uniform Commercial Code
in effect in the affected jurisdiction to maintain the perfected security
interest granted pursuant to this Agreement shall have been made; or
(c) change its name, identity or corporate structure to such an extent that
any financing statement filed by the Administrative Agent in connection
with this Agreement would become seriously misleading, unless it shall have
given the Administrative Agent and the Lenders at least 30 days' prior
written notice of such change and any filings required under the Uniform
Commercial Code in effect in the affected jurisdiction to maintain the
perfected security interest granted pursuant to this Agreement shall have
been made.
6.5 Further Identification of Collateral. The SA Credit Party will
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furnish to the Administrative Agent and the Lenders from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Administrative Agent may
reasonably request, all in reasonable detail.
6.6 Indemnification. The SA Credit Parties agree to indemnify, and to
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save the Administrative Agent and the Lenders harmless from, any and all
liabilities, costs and expenses (including, without limitation, reasonable legal
fees and expenses) (i) with respect to, or resulting from any delay in paying,
any and all excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral, (ii) with respect to, or
resulting from, any delay in complying with any Requirement of Law applicable to
any of the Collateral and (iii) in connection with any of the transactions
contemplated by this Agreement, except for any such liabilities which result
from the gross negligence or willful misconduct of the Administrative Agent.
In any suit, proceeding or action brought by the Administrative Agent or any
Lender under any Account for any sum owing thereunder, the SA Credit Party will
save, indemnify and keep the Administrative Agent and such Lender harmless from
and against all expense, loss or damage suffered by reason of any defense,
setoff, counterclaim, recoupment or reduction or liability whatsoever of the
account debtor thereunder, arising out of a breach by the SA Credit Party of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or its
successors from the SA Credit Party, except for any such liabilities which
result from the gross negligence or willful misconduct of the Administrative
Agent.
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6.7 Covenants Relating to Accounts Upon Default. At any time after the
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occurrence and during the continuation of an Event of Default:
(a) the amount represented by the SA Credit Party to the Lenders from time
to time as owing by each account debtor or by all account debtors in
respect of the Accounts will at such time be the correct amount actually
owing by such account debtor or debtors thereunder;
(b) the SA Credit Party will not amend, modify, terminate or waive any
agreement giving rise to an Account in any manner which could reasonably be
expected to materially adversely affect the value of the Accounts as
Collateral;
(c) the SA Credit Party will not fail to exercise promptly and diligently
each and every material right which it may have under each agreement giving
rise to an Account (other than any right of termination);
(d) the SA Credit Party will not fail to deliver to the Administrative
Agent a copy of each material demand, notice or document received by it
relating in any way to any agreement giving rise to an Account; and
(e) other than in the ordinary course of business as generally conducted by
the SA Credit Party, the SA Credit Party will not grant any extension of
the time of payment of any of the Accounts, compromise, compound or settle
the same for less than the full amount thereof, release, wholly or
partially, any Person liable for the payment thereof, or allow any credit
or discount whatsoever thereon.
6.8 Covenants Relating to Contracts. (a) The SA Credit Party will perform
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and comply in all material respects with all its obligations under the material
Contracts and all its other material contractual obligations relating to the
Collateral.
(b) The SA Credit Party will not amend, modify, terminate or waive any
provision of any material Contract in any manner which could reasonably be
expected to materially adversely affect the value of such material Contract as
Collateral.
(c) The SA Credit Party will not fail to exercise promptly and diligently
each and every material right which it may have under each material Contract
(other than any right of termination).
(d) The SA Credit Party will not fail to deliver to the Administrative
Agent a copy of each material demand, notice or document received by it relating
in any way to any material Contract.
(e) In any suit, proceeding or action brought by the Administrative Agent
or any Lender under any material Contract for any sum owing thereunder, or to
enforce any provisions of any material Contract, the SA Credit Party will save,
indemnify and keep the Administrative
12
Agent and such Lender harmless from and against all expense, loss or damage
suffered by reason of any defense, setoff, counterclaim, recoupment or reduction
or liability whatsoever of the obligor thereunder, arising out of a breach by
the SA Credit Party of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such
obligor or its successors from the SA Credit Party except for any such expense,
loss or damage which results from the gross negligence or the willful misconduct
of the Administrative Agent or such Lender.
(f) No SA Credit Party will directly or indirectly sell any of its
Accounts.
6.9 Covenants Relating to Copyrights. (a) The SA Credit Party will employ
--------------------------------
the Copyright for each Work with such notice of copyright as may be required by
law to secure copyright protection.
(b) The SA Credit Party will not do any act or knowingly omit to do any act
whereby any material Copyright may become invalidated and (i) will not do any
act, or omit to do any act, whereby any material Copyright may become injected
into the public domain; (ii) shall notify the Administrative Agent immediately
if it knows, or has reason to know, that any material Copyright may become
injected into the public domain or of any adverse determination or development
(including, without limitation, the institution of, or any such determination or
development in, any court or tribunal in the United States or any other country)
regarding the SA Credit Party's ownership of any such Copyright or its validity;
(iii) will take all necessary steps as it shall deem appropriate under the
circumstances, to maintain and pursue each application (and to obtain the
relevant registration) and to maintain each registration of each material
Copyright owned by the SA Credit Party including, without limitation, filing of
applications for renewal where necessary; and (iv) will promptly notify the
Administrative Agent of any material infringement of any material Copyright of
the SA Credit Party of which it becomes aware and will take such actions as it
shall reasonably deem appropriate under the circumstances to protect such
Copyright, including, where appropriate, the bringing of suit for infringement,
seeking injunctive relief and seeking to recover any and all damages for such
infringement.
6.10 Covenants Relating to Patents and Trademarks. (a) The SA Credit
--------------------------------------------
Party (either itself or through licensees) will, with respect to each material
Trademark, (i) continue to use each Trademark on each and every trademark class
of goods applicable to its current line as reflected in its current catalogs,
brochures and price lists in order to maintain such Trademark in full force free
from any claim of abandonment for non-use, (ii) maintain as in the past the
quality of products and services offered under such Trademark, (iii) employ such
Trademark with the appropriate notice of registration, (iv) not adopt or use any
xxxx which is confusingly similar or a colorable imitation of such Trademark
unless the Administrative Agent, for the ratable benefit of the Lenders, shall
obtain a perfected security interest in such xxxx pursuant to this Agreement,
and (v) not (and not permit any licensee or sublicensee thereof to) do any act
or knowingly omit to do any act whereby any Trademark may become invalidated.
(b) The SA Credit Party will not, with respect to any material Patent do
any act, or omit to do any act, whereby any Patent may become abandoned or
dedicated.
13
(c) The SA Credit Party will notify the Administrative Agent and the
Lenders promptly if it knows, or has reason to know, that any application or
registration relating to any material Patent or Trademark may become abandoned
or dedicated, or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office or any court or
tribunal in any country) regarding the SA Credit Party's ownership of any Patent
or Trademark or its right to register the same or to keep and maintain the same.
(d) Whenever the SA Credit Party, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Patent or Trademark with the United States Patent and Trademark Office or
any similar office or agency in any other country or any political subdivision
thereof, the SA Credit Party shall report such filing to the Administrative
Agent and the Lenders within five Business Days after the last day of the fiscal
quarter in which such filing occurs. Upon request of the Administrative Agent,
the SA Credit Party shall execute and deliver any and all agreements,
instruments, documents and papers as the Agent may reasonably request to
evidence the Administrative Agent's and the Lenders' security interest in any
Patent or Trademark and the goodwill and general intangibles of the SA Credit
Party relating thereto or represented thereby.
(e) The SA Credit Party will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue each application (and
to obtain the relevant registration) and to maintain each registration of all
material Patents and Trademarks, including, without limitation, filing of
applications for renewal, affidavits of use and affidavits of incontestability,
unless the SA Credit Party shall reasonably determine that i) the applicable
Patent or Trademark is of negligible economic value to it.
(f) In the event that any material Patent or Trademark included in the
Collateral is infringed, misappropriated or diluted by a third party, the SA
Credit Party shall promptly notify the Administrative Agent and the Lenders
after it learns thereof and shall, unless the SA Credit Party shall reasonably
determine that the likelihood of success of such action is slight, which
determination the SA Credit Party shall promptly report to the Administrative
Agent and the Lenders, promptly xxx for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to recover any and all
damages for such infringement, misappropriation or dilution, or take such other
actions as the SA Credit Party shall reasonably deem appropriate under the
circumstances to protect such Patent or Trademark.
6.11 Covenants Regarding Equipment. Each SA Credit Party will at its own
-----------------------------
expense maintain or cause to be maintained Customary Business Insurance in
respect of Equipment and shall apply the proceeds of such insurance in
accordance with the terms of the Credit Agreement. Each Grantor shall maintain
or cause to be maintained, to the extent required by sound business practices,
all Equipment used by such SA Credit Party in its business in good repair,
working order and condition and shall make all necessary replacements thereof so
that the value and
14
operating efficiency thereof shall at all times be maintained and preserved.
Each SA Credit Party, promptly on demand therefor by the Administrative Agent
(and in any event within ten (10) days of demand) shall use its good faith
efforts (provided upon the occurrence and continuance of a Default or an Event
of Default such SA Credit Party shall use its best efforts) to deliver to the
Administrative Agent any and all evidence of ownership of any of the Equipment.
7. Remedies.
--------
7.1 Notice to Account Debtors and Contract Parties. Upon the request of
----------------------------------------------
the Administrative Agent at any time after the occurrence and during the
continuance of an Event of Default, the SA Credit Parties shall notify account
debtors on the Accounts and parties to the Contracts that the Accounts and the
Contracts have been assigned to the Administrative Agent for the ratable benefit
of the Lenders and that payments in respect thereof shall be made directly to
the Administrative Agent.
7.2 Proceeds to be Turned Over To Administrative Agent. In addition to
--------------------------------------------------
the rights of the Administrative Agent and the Lenders specified in subsection
3.3 with respect to payments of Accounts, upon the request of the Administrative
Agent after the occurrence during the continuance of an Event of Default all
Proceeds received by the SA Credit Parties consisting of cash, checks and other
near-cash items shall be held by the SA Credit Parties in trust for the
Administrative Agent and the Lenders, segregated from other funds of the SA
Credit Parties, and shall, forthwith upon receipt by the SA Credit Parties, be
turned over to the Administrative Agent in the exact form received by the SA
Credit Parties (duly endorsed by the SA Credit Parties to the Administrative
Agent, if required) and held by the Administrative Agent in a Collateral Account
maintained under the sole dominion and control of the Administrative Agent. All
Proceeds while held by the Administrative Agent in a Collateral Account (or by
the SA Credit Parties in trust for the Administrative Agent and the Lenders)
shall continue to be held as collateral security for all the Secured Obligations
and shall not constitute payment thereof until applied as provided in subsection
7.3.
7.3 Application of Proceeds. At any time after an Event of Default shall
-----------------------
have occurred and be continuing, at the Administrative Agent's election, the
Administrative Agent may apply all or any part of Proceeds held in any
Collateral Account in payment of the Secured Obligations in such order as the
Administrative Agent may elect, and any part of such funds which the
Administrative Agent elects not so to apply and deems not required as collateral
security for the Secured Obligations shall be paid over from time to time by the
Administrative Agent to the SA Credit Parties or to whomsoever may be lawfully
entitled to receive the same. Any balance of such Proceeds remaining after the
Secured Obligations shall have been paid in full and the Commitments shall have
been terminated shall be paid over to the SA Credit Parties or to whomsoever may
be lawfully entitled to receive the same.
7.4 Code Remedies. At any time after an Event of Default shall have
-------------
occurred and be continuing, the Administrative Agent, on behalf of the Lenders
may exercise, in addition to all other rights and remedies granted to them in
this Agreement and in any other instrument or agreement securing, evidencing or
relating to the Secured Obligations, all rights and remedies of
15
a secured party under the Code. Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon the SA Credit Parties or
any other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived to the extent permitted by applicable law), may in
such circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Administrative Agent or any Lender or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. The Administrative Agent or any Lender shall have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in a SA Credit Parties, which
right or equity is hereby waived or released. The SA Credit Parties further
agree, at the Administrative Agent's request, to assemble the Collateral and
make it available to the Administrative Agent at places which the Administrative
Agent shall reasonably select, whether at the respective SA Credit Party's
premises or elsewhere. The Administrative Agent shall apply the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred therein
or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Administrative Agent and the
Lenders hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Secured Obligations, in
such order as the Administrative Agent may elect, and only after such
application and after the payment by the Administrative Agent of any other
amount required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Code, need the Administrative Agent account for the surplus,
if any, to each of the SA Credit Parties. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if received by the SA Credit Parties at least 10
days before such sale or other disposition.
7.5 Intellectual Property. (a) For the purpose of enabling the
---------------------
Administrative Agent to exercise rights and remedies hereunder after the
occurrence and during the continuation of an Event of Default, and for no other
purpose, each SA Credit Party hereby grants to the Administrative Agent, to the
extent assignable, an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to any SA Credit Party) to use, assign,
license or sublicense any of the Intellectual Property now owned or hereafter
acquired by such SA Credit Party, wherever the same may be located, including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer programs used for the compilation
or printout thereof.
(b) Notwithstanding anything contained herein to the contrary, but subject
to the provisions of Section 6.5 of the Credit Agreement that limit the right of
the SA Credit Parties to dispose of their property, so long as no Event of
Default shall have occurred and be continuing, the SA Credit Parties will be
permitted to exploit, use, enjoy, protect, license, sublicense, assign,
16
sell, dispose of or take other actions with respect to the Intellectual Property
in the ordinary course of the business. In furtherance of the foregoing, unless
an Event of Default shall have occurred and be continuing the Administrative
Agent shall from time to time, upon the request of any SA Credit Party, execute
and deliver any instruments, certificates or other documents, in the form so
requested and at the sole risk and expense of the SA Credit Parties, that any SA
Credit Party shall have certified are appropriate (in its judgment) to allow it
to take any action permitted above (including relinquishment of the license
provided pursuant to clause (a) immediately above as to any specific
Intellectual Property). Further, upon the payment in full of all of the Secured
Obligations and cancellation or termination of the commitments relating or
release of the Collateral, the license granted pursuant to clause (a)
immediately above shall automatically terminate. The exercise of rights and
remedies hereunder shall not terminate the rights of the holders of any licenses
or sublicenses theretofore granted by the SA Credit Parties as provided herein.
7.6 Deposit Accounts. Upon the occurrence and during the continuance of
----------------
an Event of Default, the Administrative Agent may exercise dominion and control
over, and refuse to permit further withdrawals (whether of money, securities,
instruments or other property) from, deposit accounts maintained with the
Administrative Agent or any Lender constituting part of the Collateral.
7.7 Deficiency. The SA Credit Parties shall remain liable for any
----------
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Secured Obligations and the reasonable fees and
disbursements of any attorneys employed by the Administrative Agent or any
Lender to collect such deficiency.
8. Administrative Agent's Appointment as Attorney-in-Fact; Administrative
----------------------------------------------------------------------
Agent's Performance of SA Credit Parties' Secured Obligations.
-------------------------------------------------------------
8.1 Powers. Each of the SA Credit Parties hereby irrevocably constitutes
------
and appoints the Administrative Agent and any officer or agent thereof, with
full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such SA Credit Party
and in the name of such SA Credit Party or in its own name, from time to time in
the Administrative Agent's discretion, for the purpose of carrying out the terms
of this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to secure the
Secured Obligations and grant security interests in the Collateral as
contemplated by this Agreement, and, without limiting the generality of the
foregoing, each SA Credit Party hereby gives the Administrative Agent the power
and right, on behalf of such SA Credit Party, without notice to or assent by
such SA Credit Party to do the following:
(a) in the name of the Borrower or its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account, Instrument, or General Intangible or with respect to any other
Collateral and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
17
Administrative Agent for the purpose of collecting any and all such moneys
due under any Account, Instrument or General Intangible or with respect to
any other Collateral whenever payable;
(b) in the case of any Copyrights, Patents or Trademarks, to execute and
deliver any and all agreements, instruments, documents, and papers as the
Administrative Agent may request to evidence the Administrative Agent's and
the Lenders', security interest in any copyright, Patent or Trademark and
the goodwill and general intangibles of the SA Credit Party relating
thereto or represented thereby;
(c) to pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral, to effect any repairs or any insurance called for
by the terms hereof or of any Credit Document and to pay any part of the
premiums therefor and the costs thereof;
(d) to execute, in connection with the sale provided for in Section 7.4
hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(e) (i) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (ii) to ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral;
(iii) to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (iv) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to enforce any other right in
respect of any Collateral; (v) to defend any suit, action or proceeding
brought against the SA Credit Party with respect to any Collateral; (vi) to
settle, compromise or adjust any such suit, action or proceeding and, in
connection therewith, to give such discharges or releases as the
Administrative Agent may deem appropriate; (vii) to assign or grant
licenses to any Copyright, Patent or Trademark (along with the goodwill of
the business to which any such Copyright, Patent or Trademark pertains),
throughout the world for such term or terms, on such conditions, and in
such manner, as the Administrative Agent shall in its sole discretion
determine; and (viii) generally, to sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Administrative Agent were the absolute
owner thereof for all purposes, and to do, at the Administrative Agent's
option and the SA Credit Party's expense, at any time, or from time to
time, all reasonable acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Administrative Agent's and the Lenders' security interests therein and to
effect the intent of this Agreement, all as fully and effectively as the SA
Credit Party might do.
18
The Administrative Agent agrees that, except after the occurrence and during the
continuation of an Event of Default, it will forbear from exercising the power
of attorney or any rights granted to the Administrative Agent pursuant to this
subsection 8.1.
8.2 Performance by Administrative Agent of SA Credit Party's Secured
----------------------------------------------------------------
Obligations. If the SA Credit Parties fail to perform or comply with any of
-----------
their agreements contained herein after a request from the Administrative Agent,
the Administrative Agent, at its option, but without any obligation so to do,
may perform or comply, or otherwise cause performance or compliance, with such
agreement.
8.3 SA Credit Parties' Reimbursement Obligation. The reasonable expenses
-------------------------------------------
of the Administrative Agent incurred in connection with actions undertaken as
provided in this Section, together with interest thereon at the rate per annum
set forth in Section 2.5 of the Credit Agreement for Base Rate Loans from the
date of payment by the Administrative Agent to the date reimbursed by the SA
Credit Parties, shall be payable by the SA Credit Parties to the Administrative
Agent on demand.
8.4 Ratification; Power Coupled With An Interest. The SA Credit Parties
--------------------------------------------
hereby ratify all that said attorneys shall lawfully do or cause to be done by
virtue hereof. All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until this Agreement
is terminated and the security interests created hereby are released.
9. Duty of Administrative Agent. The Administrative Agent's sole duty
----------------------------
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Administrative Agent deals
with similar property for its own account. Except as required by applicable
law, neither the Administrative Agent, any Lender nor any of their respective
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the SA Credit Parties or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof. The
powers conferred on the Administrative Agent and the Lenders hereunder are
solely to protect the Administrative Agent's and the Lenders' interests in the
Collateral and shall not impose any duty upon the Administrative Agent or any
Lender to exercise any such powers. The Administrative Agent and the Lenders
shall be accountable only for amounts that they actually receive as a result of
the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to the SA Credit Parties for
any act or failure to act hereunder, except for their own gross negligence or
willful misconduct.
10. Execution of Financing Statements. Pursuant to Section 9-402 of the
---------------------------------
Code, each of the SA Credit Parties authorizes the Administrative Agent to file
financing statements with respect to the Collateral without the signature of the
SA Credit Party in such form and in such filing offices as the Administrative
Agent reasonably determines appropriate to perfect the security interests of the
Administrative Agent and the Lenders under this Agreement. A carbon,
19
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
11. Authority of Administrative Agent. The SA Credit Parties acknowledge
---------------------------------
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting right
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the SA Credit Parties, the Administrative Agent shall
be conclusively presumed to be acting as agent for the Lenders with full and
valid authority so to act or refrain from acting, and the SA Credit Parties
shall be under no obligation, or entitlement, to make any inquiry respecting
such authority.
12. Notices. All notices shall be given or made in accordance with
-------
Section 9.2 of the Credit Agreement.
13. Severability. Any provision of this Agreement which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
14. Amendments in Writing; No Waiver; Cumulative Remedies.
-----------------------------------------------------
14.1 Amendments in Writing. None of the terms or provisions of this
---------------------
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the Administrative Agent and the SA Credit
Parties directly affected thereby; provided that any provision of this Agreement
--------
may be waived by the Administrative Agent in a letter or agreement executed by
the Administrative Agent or by facsimile transmission from the Administrative
Agent.
14.2 No Waiver by Course of Conduct. Neither the Administrative Agent nor
------------------------------
any Lender shall by any act (except by a written instrument pursuant to
subsection 14.1 hereof), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default or in any breach of any of the terms and conditions hereof.
No failure to exercise, nor any delay in exercising, on the part of the
Administrative Agent or any Lender, any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the
Administrative Agent or such Lender would otherwise have on any future occasion.
20
14.3 Remedies Cumulative. The rights and remedies herein provided are
-------------------
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
15. Section Headings. The section and subsection headings used in this
----------------
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
16. Successors and Assigns. This Agreement shall be binding upon the
----------------------
successors and assigns of the SA Credit Parties and shall inure to the benefit
of the Administrative Agent and the Lenders and their successors and assigns,
provided that the SA Credit Parties may not assign any of their rights or
--------
obligations under this Agreement without the prior written consent of the
Administrative Agent and any such purported assignment shall be null and void.
17. Further Assurances and Covenants. Each SA Credit Party agrees that it
--------------------------------
will execute and delivery such further documents and do such other acts and
things as the Administrative Agent may reasonably request in order fully to
effect the purposes of this Agreement. Each SA Credit party will furnish to the
Administrative Agent from time to time statements and schedules further
identifying and describing the Collateral of such SA Credit Party and such other
reports in connection with such Collateral as the Administrative Agent may
reasonably request, all in reasonable detail. Each SA Credit Party will
promptly and as soon as reasonably possible (but in any event within ten (10)
days) notify the Administrative Agent of any material event causing loss or
depreciation in value of the Collateral which is outside the ordinary course of
business of such SA Credit Party or any event which, in respect to any single
such event, causes loss or depreciation in excess of $100,000 and in respect of
any of such Events will also notify the Administrative Agent of the amount of
such loss or depreciation.
18. Compliance with Laws. No SA Credit Party shall use or permit any
--------------------
Collateral to be used unlawfully in any material respect or in violation of any
provision of this Agreement or any other Credit Document or in violation in any
material respect of any applicable statute, regulation or ordinance or any
policy of insurance covering such Collateral. Each SA Credit Party shall pay
promptly when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims (including claims for labor,
materials and supplies) against, the Collateral. Each SA Credit Party will use
reasonable commercial efforts to enter into only such Contracts which do not
prohibit the assigning of any rights of any SA Credit Party thereunder in the
manner contemplated by this Agreement. In the event that any SA Credit Party
enters into any Contract which does not permit the assignment of rights
thereunder in the manner contemplated by this Agreement, such SA Credit Party
shall provide prompt written notice thereof to the Administrative Agent and
shall provide a copy of such Contract to the Administrative Agent.
19. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
-------------
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA.
21
20. Arbitration; Consent to Jurisdiction and Service of Process.
-----------------------------------------------------------
(a) Upon demand of any party hereto, whether made before or after
institution of any judicial action, any dispute, claim or controversy arising
out of or connected with this Agreement or the Credit Documents ("Disputes")
--------
shall be resolved by binding arbitration as provided herein. Disputes may
include, without limitation, tort claims, counterclaims, claims brought as class
actions and claims arising from Credit Documents executed in the future.
Arbitration shall be conducted under the Commercial Financial Disputes
Arbitration Rules (the "Arbitration Rules") of the American Arbitration
-----------------
Association and Title 9 of the U.S. Code. All arbitration hearings shall be
conducted in Charlotte, North Carolina or such other place as agreed to in
writing by the parties. A judgment upon the award may be entered in any court
having jurisdiction, and all decisions shall be in writing. The panel from
which all arbitrators are selected shall be comprised of licensed attorneys
having at least ten years' experience representing parties in secured lending
transactions. Notwithstanding the foregoing, this arbitration provision does
not apply to disputes under or related to Interest Protection Agreements.
(b) Notwithstanding the preceding binding arbitration provision, the
Administrative Agent preserves certain remedies that may be exercised during a
Dispute. The Administrative Agent shall have the right to proceed in any court
of proper jurisdiction or by self help to exercise or prosecute the following
remedies, as applicable: (i) all rights to foreclose against any real or
personal property or other security by exercising a power of sale granted in
this Agreement or the Credit Documents or under applicable law, (ii) all rights
of self help including peaceful occupation of real property and collection of
rents, set-off and peaceful possession of personal property, (iii) obtaining
provisional or ancillary remedies including injunctive relief, sequestration,
garnishment, attachment and appointment of receiver, (iv) when applicable, a
judgment by confession of judgment and (v) other remedies. Preservation of
these remedies does not limit the power of an arbitrator to grant similar
remedies that may be requested by a party in a Dispute.
(c) By execution and delivery of this Agreement, each SA Credit Party
accepts, for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction relating to any arbitration
proceedings conducted under the Arbitration Rules in Charlotte, North Carolina
and irrevocably agrees to be bound by any final judgment rendered thereby in
connection with this Agreement from which no appeal has been taken or is
available. Each SA Credit Party and the Administrative Agent irrevocably waive
any objection, including, without limitation, any objection to the laying of
venue or based on the grounds of forum non conveniens which it may now or
hereafter have to the bringing of any such action or proceeding in any such
jurisdiction. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of the Administrative
Agent to bring proceedings against any or all SA Credit Parties in any court or
pursuant to arbitration proceedings in any other jurisdiction.
21. Security Interest Absolute. All rights of the Administrative Agent
--------------------------
and security interests hereunder, and all obligations of each SA Credit Party
hereunder, shall be absolute and unconditional, irrespective of:
22
(i) any lack of validity or enforceability of any of the Credit Agreement
or any other Credit Document; or any other agreement or instrument relating
to any of the foregoing;
(ii) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from the Credit Agreement or any
other Credit Document;
(iii) any exchange, release or non-perfection of any other collateral, or
any release or amendment or waiver of or consent to any departure from any
guaranty, for all or any of the Secured Obligations; or
(iv) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, such SA Credit Party or a third party
grantor.
[Remainder of Page Intentionally Left Blank]
23
IN WITNESS WHEREOF, the undersigned has caused this Security Agreement to
be duly executed and delivered as of the date first above written.
BORROWER:
T/SF COMMUNICATIONS CORPORATION,
a Delaware corporation
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
GUARANTORS/OTHER SA CREDIT PARTIES:
T/SF HOLDINGS, LLC
By: T/SF COMMUNICATIONS CORPORATION,
as Managing Member
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
XXXXXX, LLC
GALAXY REGISTRATION, LLC
GEM GAMING, LLC
By: T/SF HOLDINGS, LLC
as Sole Member
By: T/SF COMMUNICATIONS CORPORATION,
as Managing Member
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
(Signatures continued on the following page)
24
XXXXXX CONVENTION PUBLISHING, INC.
CORSEARCH, INC.
CRIMESEARCH, INC.
(formerly DacNet, Inc.)
EXPO MAGAZINE, INC.
GALAXY DESIGN & PRINTING, INC.
GALAXY REGISTRATION, INC.
G.E.M. COMMUNICATIONS, INC.
TRANSPORTATION COMMUNICATIONS SERVICES, INC.
TRANSPORTATION INFORMATION SERVICES, INC.
T/SF EUROPE, INC.
T/SF INVESTMENT CO.
T/SF OF NEVADA, INC.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
[Signatures continued on the following page]
25
ADMINISTRATIVE AGENT:
FIRST UNION NATIONAL BANK
as Administrative Agent
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
26
Schedule 1
----------
Chief Executive Office and Locations of Collateral
Chief Executive Locations of Record Owner
SA Credit Party Office Collateral (If other than SA Credit
--------------- ------ ---------- ------------------------
Party)
------
Schedule 2
----------
Filings and Actions required to Perfect Security Interests
UCC FILINGS
-----------
Schedule 3
----------
Copyrights and Copyright Licenses
Schedule 4
----------
Patents and Patent Licenses
Schedule 5
----------
Trademarks and Trademark Licenses
Schedule 6
----------
Contracts with Governmental Authorities
