1
Exhibit 10.81
GUARANTY AND SECURITY AGREEMENT
Guaranty, dated as of August 27, 1997, by and among the Persons party
hereto (the "Current Guarantors"), such other Persons which from time to time
may become party hereto (the "Additional Guarantors" and, collectively with the
Current Guarantors, the "Guarantors"), and KeyBank National Association, as
Agent (as the same may be amended, supplemented or otherwise modified from time
to time, this "Agreement").
RECITALS
I. Reference is made to the Credit Agreement, dated as of the date hereof,
by and among Video Services Corporation, VSC MAL Corp., a Delaware corporation,
the Lenders party thereto and KeyBank National Association, as the Issuer and as
the Agent (as the same may be amended, supplemented or otherwise modified from
time to time, the "Credit Agreement").
II. The Borrower and the Guarantors are engaged in an integrated business
together. In the past, as now, the Borrower has provided financing for the
Guarantors and the Guarantors have relied upon the Borrower to provide such
financing. In addition, it is anticipated that, if the Guarantors execute and
deliver this Agreement to the Agent, the Borrower will continue to provide such
financing to the Guarantors, and that the proceeds of the Loans will be used, in
part, for the general working capital purposes of the Guarantors. Pursuant to
the Credit Agreement, the Lenders will not make Loans, and the Issuer will not
issue Letters of Credit, unless and until the Guarantors shall have executed and
delivered this Agreement.
III. In light of the foregoing, each Guarantor expects to derive
substantial benefit from the Credit Agreement and the transactions contemplated
thereby and, in furtherance thereof, has agreed to execute and deliver this
Agreement.
Therefore, in consideration of the Recitals, the terms and conditions
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the Agent and the
Guarantors hereby agrees as follows:
1. Defined Terms
(a) Capitalized terms used herein which are not otherwise defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
(b) When used in this Agreement, the following capitalized terms
shall have the respective meanings ascribed thereto as follows:
2
"Borrower Obligations": all of the obligations and liabilities of
the Borrower under each Interest Rate Protection Arrangement with one or more of
the Lenders and under the Loan Documents, in each case whether fixed,
contingent, now existing or hereafter arising, created, assumed, incurred or
acquired, and whether before or after the occurrence of any Insolvency Event,
and including (a) any obligation or liability in respect of any breach of any
representation or warranty, and (b) all post-petition interest, funding losses
and make-whole premiums, whether or not allowed as a claim in any proceeding
arising in connection with an Insolvency Event.
"Collateral": as defined in Section 4.
"Communications Act": the Communications Act of l934, and any
similar or successor federal statute, and the rules and regulations of the FCC
thereunder, all as amended and as the same may be in effect from time to time.
"Consideration": as of any date of determination and with respect to
each Guarantor, an amount equal to the lesser of (a) the total "value" (within
the meaning of Section 548 of the Bankruptcy Code as in effect on the date
hereof) given, directly or indirectly, to such Guarantor during the period
commencing on the date such Guarantor became a party to this Agreement and
ending on such date of determination, in exchange for its execution and delivery
of this Agreement, and (b) the amount of "fair consideration" (within the
meaning of Article 10 of the New York Debtor Creditor Law as in effect on the
date hereof) given, directly or indirectly, to such Guarantor during the period
commencing on the date such Guarantor became a party to this Agreement and
ending on such date of determination in exchange for its execution and delivery
of this Agreement.
"Equity Interest": (a) with respect to a corporation, capital stock
thereof, (b) with respect to a partnership, a partnership interest therein, (c)
with respect to any other firm, association, trust, business enterprise or other
entity which is similar to any other Person listed in clauses (a) and (b), and
this clause (c), of this definition, any equity interest therein, including any
interest therein which entitles the holder thereof to share in the revenue,
income, earnings or losses thereof or to vote or otherwise participate in any
election of one or more members of the managing body thereof, and (d) all
warrants and options in respect of any of the foregoing and all other securities
which are convertible or exchangeable therefor.
"Event of Default": as defined in Section 7.
"FCC": the Federal Communications Commission or any other similar or
successor agency of the federal government administering the Communications Act.
"Financing Statements": (i) with respect to each Current Guarantor,
the UCC financing statements copies of which are annexed hereto, and (ii) with
respect to each Additional Guarantor, the UCC financing statements copies of
which are annexed to the Supplement executed and delivered by such Additional
Guarantor.
2
3
"Guarantor Collateral": with respect to any Guarantor, any
Collateral which constitutes such Guarantor's Property.
"Guarantor Obligations": with respect to each Guarantor, all of the
obligations and liabilities of such Guarantor hereunder, whether fixed,
contingent, now existing or hereafter arising, created, assumed, incurred or
acquired.
"Insolvency Event": any Event of Default under Sections 9.1(g) or
9.1(h) of the Credit Agreement.
"Net Worth": as of any date and with respect to each Guarantor, the
lesser of the following:
(a)(i) all of such Guarantor's "property, at a fair valuation"
(within the meaning of Section 101(32) of the Bankruptcy Code as in effect
on the date hereof) on such date, minus (ii) the sum of such Guarantor's
"debts" (within the meaning of Section 101(12) of the Bankruptcy Code as
in effect on the date hereof) on such date (excluding its obligations
under this Agreement), or
(b)(i) the "fair salable value of the assets" (within the meaning of
Article 10 of the New York Debtor Creditor Law as in effect on the date
hereof) of such Guarantor on such date, minus (ii) "the amount that will
be required to pay such Guarantor's probable liability on its existing
debts as they become absolute and matured" (as such phrase would be
construed under Article 10 of the New York Debtor Creditor Law as in
effect on the date hereof) on such date (excluding its obligations under
this Agreement).
"NYUCC": the UCC as in effect in the State of New York on the date
hereof.
"Office Location": as defined in Section 5(a)(ii).
"Permitted Lien": a Lien permitted by Section 8.2 of the Credit
Agreement.
"Supplement": a Supplement to this Agreement, duly completed, in the
form of Annex A hereto.
"UCC": with respect to any jurisdiction, Articles 1, 8 and 9 of the
Uniform Commercial Code as from time to time in effect in such jurisdiction.
(c) When used in this Agreement, the following capitalized terms
shall have the respective meanings ascribed thereto in the NYUCC (provided,
however, that each such term shall be deemed to exclude all Excluded Property):
"Account ", "Certificated Security", " Chattel Paper", "Document", "Equipment",
"Fixture", "General Intangible", "Instrument", "Inventory", "Issuer",
"Proceeds", "Secured Party", "Security", "Security Interest" and "Uncertificated
Security".
3
4
2. Guaranty
(a) Subject to Section 2(b) hereof, each Guarantor jointly and
severally with each other Guarantor hereby absolutely, irrevocably and
unconditionally guarantees the full and prompt payment when due (whether at
stated maturity, by acceleration or otherwise) of the Borrower Obligations. This
Agreement constitutes a guaranty of payment, and neither the Agent, the Issuer
nor any Lender shall have any obligation to enforce any Loan Document or any
Interest Rate Protection Arrangement or exercise any right or remedy with
respect to any collateral security thereunder by any action, including making or
perfecting any claim against any Person or any collateral security for any of
the Borrower Obligations prior to being entitled to the benefits of this
Agreement. The Agent may, at its option, proceed against the Guarantors, or any
one or more of them, in the first instance, to enforce the Guarantor Obligations
without first proceeding against the Borrower or any other Person, and without
first resorting to any other rights or remedies, as the Agent may deem
advisable. In furtherance hereof, if the Agent, the Issuer or any Lender is
prevented by law from collecting or otherwise hindered from collecting or
otherwise enforcing any Borrower Obligation in accordance with its terms, the
Agent, the Issuer or such Lender, as the case may be, shall be entitled to
receive hereunder from the Guarantors after demand therefor, the sums which
would have been otherwise due had such collection or enforcement not been
prevented or hindered.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the maximum liability of each Guarantor hereunder shall not, as of
any date of determination, exceed the lesser of (i) the highest amount that is
valid and enforceable against such Guarantor under principles of New York State
contract law, and (ii) the sum of (A) all Consideration received by such
Guarantor as of such date of determination, plus (B) 95% of the Net Worth of
such Guarantor on such date of determination.
(c) Each Guarantor agrees that the Guarantor Obligations may at any
time and from time to time exceed the maximum liability of such Guarantor
hereunder without impairing this Agreement or affecting the rights and remedies
of the Agent, the Issuer or any Lender hereunder.
3. Absolute Obligation
No Guarantor shall be released from liability hereunder unless and
until the Revolving Credit Commitment Termination Date shall have occurred and
either (a)(i) the Issuer shall no longer have any obligation under the Letters
of Credit, and (ii) the Borrower shall have paid in full the outstanding
principal balance of the Loans together with all accrued interest thereon, all
of the Reimbursement Obligations and all other sums then due and owing under the
Loan Documents, or (b) the Guarantor Obligations of such Guarantor shall have
been paid in full. Each Guarantor acknowledges and agrees that (i) neither the
Agent, the Issuer nor any Lender has made any representation or warranty to such
Guarantor with respect to the Borrower, its Subsidiaries, any Loan Document, any
Interest Rate Protection Arrangement, or any agreement, instrument or document
executed or delivered in connection therewith or any other matter whatsoever,
and (ii) such Guarantor shall be liable hereunder, and such liability shall not
be affected or impaired, irrespective
4
5
of (A) the validity or enforceability of any Loan Document, any Interest Rate
Protection Arrangement, or any agreement, instrument or document executed or
delivered in connection therewith, or the collectability of any of the Borrower
Obligations, (B) the preference or priority ranking with respect to any of the
Borrower Obligations, (C) the existence, validity, enforceability or perfection
of any security interest or collateral security under any Loan Document, or any
Interest Rate Protection Arrangement, or the release, exchange, substitution or
loss or impairment of any such security interest or collateral security, (D) any
failure, delay, neglect or omission by the Agent, the Issuer or any Lender to
realize upon or protect any direct or indirect collateral security,
indebtedness, liability or obligation, any Loan Document, any Interest Rate
Protection Arrangement, or any agreement, instrument or document executed or
delivered in connection therewith, or any of the Borrower Obligations, (E) the
existence or exercise of any right of set-off by the Agent, the Issuer or any
Lender, (F) the existence, validity or enforceability of any other guaranty with
respect to any of the Borrower Obligations, the liability of any other Person in
respect of any of the Borrower Obligations, or the release of any such Person or
any other guarantor of any of the Borrower Obligations, (G) any act or omission
of the Agent, the Issuer or any Lender in connection with the administration of
any Loan Document, any Interest Rate Protection Arrangement, or any of the
Borrower Obligations, (H) the bankruptcy, insolvency, reorganization or
receivership of, or any other proceeding for the relief of debtors commenced by
or against, any Person, (I) the disaffirmance or rejection, or the purported
disaffirmance or purported rejection, of any of the Borrower Obligations, any
Loan Document, any Interest Rate Protection Arrangement, or any agreement,
instrument or document executed or delivered in connection therewith, in any
bankruptcy, insolvency, reorganization or receivership, or any other proceeding
for the relief of debtor, relating to any Person, (J) any law, regulation or
decree now or hereafter in effect which might in any manner affect any of the
terms or provisions of any Loan Document, any Interest Rate Protection
Arrangement, or any agreement, instrument or document executed or delivered in
connection therewith or any of the Borrower Obligations, or which might cause or
permit to be invoked any alteration in the time, amount, manner or payment or
performance of any of the Borrower's obligations and liabilities (including the
Borrower Obligations), (K) the merger or consolidation of the Borrower into or
with any Person, (L) the sale by the Borrower of all or any part of its assets,
(M) the fact that at any time and from time to time none of the Borrower
Obligations may be outstanding or owing to the Agent, the Issuer or any Lender,
(N) any amendment or modification of, or supplement to, any Loan Document or any
Interest Rate Protection Arrangement or (O) any other reason or circumstance
which might otherwise constitute a defense available to or a discharge of the
Borrower in respect of its obligations or liabilities (including the Borrower
Obligations) or of such Guarantor in respect of any of the Guarantor Obligations
(other than by the performance in full thereof).
4. Grant of Security Interest
To secure the prompt and complete payment, observance and
performance of its Guarantor Obligations, each Guarantor hereby grants to the
Agent, for its benefit and the ratable benefit of the Issuer and the Lenders, a
Security Interest in and to all of such Guarantor's right, title and interest in
and to all Accounts, Certificated Securities, Chattel Paper, Documents,
Equipment, Fixtures, General Intangibles (other than rights of such Guarantor in
and to any franchises, licenses,
5
6
permits or operating rights granted or issued by the FCC (the "Licenses") to the
extent that the granting of a Security Interest pursuant hereto is prohibited by
Applicable Law), Instruments, Inventory, Uncertificated Securities, and all of
the Proceeds (which shall include all dividends, distributions, accessions and
income on and in respect of all of the foregoing and all other rights and
benefits in respect thereof) of all of the foregoing, all whether now owned or
existing or hereafter arising or acquired (collectively, the "Collateral").
Notwithstanding the foregoing, the Security Interest granted hereby shall not
attach to any Property of any Guarantor to the extent that such Property (the
"Encumbered Property") is subject to a Permitted Lien granted by such Guarantor
to a third party, or a Permitted Lien granted prior to or in connection with the
acquisition by such Guarantor of such Property, and the terms of the agreement
between such Guarantor and such third party prohibit such Guarantor from
encumbering the Encumbered Property.
5. Representations and Warranties
Each Guarantor hereby represents and warrants to the Agent as
follows:
(a) Generally. (i) This Agreement constitutes the valid and binding
obligation of such Guarantor, enforceable in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws related to or affecting the
enforcement of creditors' rights generally and general principles of equity.
(ii) As of the date hereof, such Guarantor's place of business
or, if such Guarantor has more than one place of business, its chief executive
office, is located (the "Office Location") at, (A) if such Guarantor is a
Current Guarantor, the address therefor referred to in Schedule II hereto, or
(B) if such Guarantor is an Additional Guarantor, the address therefor set forth
on Schedule II to the Supplement delivered by such Guarantor. Except as
otherwise noted on each such Schedule II, such Guarantor's chief executive
office has been continuously located at the Office Location for the five month
period immediately preceding the date hereof. Such Guarantor, (1) in the case of
a Current Guarantor, except as set forth on Schedule II hereto, has not changed
its legal name during the 6 year period immediately preceding the date hereof,
and (2) in the case of an Additional Guarantor, has not changed its legal name
during the 6 year period immediately preceding the date it became a Guarantor
hereunder, except as otherwise disclosed on the Supplement delivered by such
Guarantor.
(iii) If such Guarantor is a Current Guarantor, all of the
information with respect to such Guarantor, or any of its Property, set forth on
each of the Schedules hereto is true, complete and correct as of the date
hereof. If such Guarantor is an Additional Guarantor, all of the information
with respect to such Guarantor, or any of its Property, set forth on each of the
Schedules to the Supplement delivered by such Guarantor is true, complete and
correct as of the date of such Supplement.
(iv) This Agreement, together with the delivery to the Agent
of the Certificated Securities constituting Collateral and the continuous
possession thereof by the Agent in
6
7
the State of New York, creates a continuing "enforceable" Security Interest in
such Guarantor's Guarantor Collateral in favor of the Agent. There are no Liens
upon such Guarantor Collateral other than Permitted Liens, if any. Upon (A) the
filing of its Financing Statements at the respective offices listed thereon
together with the payment of the appropriate filing fee therefor, (B) the
delivery to the Agent of the Certificated Securities and other Instruments
constituting such Guarantor Collateral, and (C) the registration, in accordance
with Article 8 of the UCC of the jurisdiction of organization of each applicable
Issuer, of the Security Interest granted hereby on the books of each Person
which is an Issuer of an Uncertificated Security constituting such Guarantor
Collateral, (1) such Security Interest shall (except (x) to the extent expressly
excluded from the purview of Article 9 of the UCC by Section 9-104 thereof, and
(y) with respect to motor vehicles) be perfected, and (2) assuming that the
Agent has acted in "good faith and without notice of any adverse claim" within
the meaning of Article 8 of the NYUCC, the Agent shall be a "bona fide
purchaser", within the meaning of such Article, with respect to such Guarantor
Collateral consisting of Securities.
(v) Such Guarantor (if a Current Guarantor, both immediately
before and after giving effect to this Agreement and to all Indebtedness
incurred by the Borrower in connection herewith or, if an Additional Guarantor,
immediately before and after giving effect to this Agreement and the Supplement
delivered by such Guarantor) (A) is not insolvent, (B) is not engaged, and is
not about to engage, in business or a transaction, for which it has unreasonably
small capital, and (C) does not intend to incur, and does not believe that it
would incur, debts that would be beyond its ability to pay such debts as they
mature, in each case referred to above within the meaning of both the Bankruptcy
Code and Article 10 of the New York Debtor Creditor Law, each as in effect on
the date hereof.
(b) Accounts. If such Guarantor is a Current Guarantor, as of the
date hereof, all records concerning any Account constituting such Guarantor's
Guarantor Collateral are located at its Office Location, and no such Account is
evidenced by a promissory note or other instrument. If such Guarantor is an
Additional Guarantor, as of the date of the Supplement delivered by such
Guarantor, all records concerning any Account constituting such Guarantor's
Guarantor Collateral are located at its Office Location, and no such Account is
evidenced by a promissory note or other instrument.
(c) Chattel Paper, Equity Interests and Debt Instruments. With
respect to each Current Guarantor, the Chattel Paper, Equity Interests and debt
Instruments listed on Schedule I hereto constitute, and with respect to each
Additional Guarantor, the Chattel Paper, Equity Interests and debt Instruments
listed on Schedule I to the Supplement delivered by such Guarantor constitute,
all of the Chattel Paper, Equity Interests and debt Instruments in which such
Guarantor has, as of the date hereof or the date of such Supplement, as the case
may be, any right, title or interest, and each such Equity Interest issued by a
corporate Issuer that is a Subsidiary has been duly authorized, validly issued
and fully paid for, and, except, in the case of Equity Interests in Issuers
organized under New York law, as provided in Section 630 of the New York
Business Corporation Law, is non-assessable, and to the best of such Guarantor's
knowledge, each such Chattel Paper and each such debt Instrument have been duly
authorized, issued and delivered, and constitute the legal, valid, binding
7
8
and enforceable obligations of the makers thereof.
(d) Equipment and Inventory. Except for Equipment and Inventory in
transit with common carriers, such Guarantor has exclusive possession and
control of all Equipment and Inventory constituting its Guarantor Collateral,
all of which is as of the date hereof and has been continuously for the 5 month
period immediately preceding the date hereof, located at one or more of the
places listed on, (i) if such Guarantor is a Current Guarantor, Schedule II
hereto, and (ii) if such Guarantor is an Additional Guarantor, Schedule II to
the Supplement delivered by such Guarantor.
6. Covenants
Each Guarantor hereby covenants with the Agent as follows:
(a) Generally. (i) Such Guarantor shall maintain its place of
business, or if such Guarantor has more than one place of business, its chief
executive office, at the Office Location or at such other location in respect of
which (A) such Guarantor shall have provided the Agent with prior written notice
thereof, and (B) UCC financing statements (or amendments thereto), in form and
substance reasonably satisfactory to the Agent, shall have been filed within two
months of such change.
(ii) Such Guarantor shall, at its own expense, promptly
execute and deliver all certificates, documents, instruments, financing and
continuation statements and amendments thereto, notices and other agreements,
and take all further action, that the Agent may reasonably request from time to
time, in order to perfect and protect the Security Interest granted hereby or to
enable the Agent to exercise and enforce its rights and remedies hereunder with
respect to its Guarantor Collateral.
(iii) Such Guarantor, at its own expense, shall furnish to the
Agent such information, reports, statements and schedules with respect to its
Guarantor Collateral as the Agent may reasonably request from time to time.
(iv) Such Guarantor, at its own expense, shall defend its
Guarantor Collateral against all claims of any kind or nature (other than
Permitted Liens, if any) of all Persons at any time claiming the same or any
interest therein adverse to the interests of the Agent, the Issuer or any
Lender, and such Guarantor shall not cause, permit or suffer to exist any Lien
upon its Guarantor Collateral other than (A) the Lien granted hereby, and (B)
Permitted Liens, if any.
(v) Such Guarantor shall cause each Person which is an Issuer
of an Uncertificated Security constituting the Guarantor Collateral of such
Guarantor (A) to register the Security Interest granted hereby upon the books of
such Person in accordance with Article 8 of the UCC of the jurisdiction of
organization of such Person, and (B) to issue to the Agent an initial
transaction statement in the form of Annex B hereto and issue to the Agent
subsequent transaction
8
9
statements in accordance with Section 8-408 of the UCC of the jurisdiction of
organization of such Person.
(vi) Except as otherwise required by law, such Guarantor
agrees that, with respect to its Guarantor Collateral, neither the Agent, the
Issuer nor any Lender has any obligation to preserve rights against prior or
third parties.
(vii) The Agent's only duty with respect to such Guarantor's
Guarantor Collateral delivered to it shall be to use reasonable care in the
custody and preservation of such Guarantor Collateral, and such Guarantor agrees
that if the Agent accords such Guarantor Collateral substantially the same kind
of care as it accords its own Property, such care shall conclusively be deemed
reasonable. In the event that all or any part of the Instruments constituting
such Guarantor Collateral are lost, destroyed or wrongfully taken while such
Instruments are in the possession of the Agent, such Guarantor agrees that it
will use its best efforts to cause the delivery of new Instruments in place of
the lost, destroyed or wrongfully taken Instruments upon request therefor by the
Agent, without the necessity of any indemnity bond or other security, other than
the Agent's agreement of indemnity upon usual and customary terms therefor.
(viii) Anything herein to the contrary notwithstanding, (A)
such Guarantor shall remain liable under the contracts and agreements included
in its Guarantor Collateral to the extent set forth therein to perform all of
its duties and obligations thereunder to the same extent as if this Agreement
had not been executed, (B) the exercise by the Agent, the Issuer or any Lender
of any of its rights hereunder shall not release such Guarantor from any of its
duties or obligations under any such contract or agreement, (C) neither the
Agent, the Issuer nor any Lender shall have any obligation or liability,
including indemnification obligations, under any such contract or agreement by
reason of this Agreement, nor shall the Agent, the Issuer or any Lender be
obligated to perform any of the obligations or duties of such Guarantor
thereunder, to make any payment, to make any inquiry as to the nature or
sufficiency of any payment received by such Guarantor or the sufficiency of any
performance by any party under any such contract or agreement or to take any
action to collect or enforce any claim for payment assigned hereunder, and (D)
neither the Agent, the Issuer nor any Lender shall be under any duty to send
notices, perform services, exercise any rights of collection, enforcement,
conversion or exchange, vote, pay for insurance, taxes or other charges or take
any action of any kind in connection with the management of its Guarantor
Collateral. Anything in this Agreement to the contrary notwithstanding, with
respect to contacts and agreements included in the Collateral or General
Intangibles arising thereunder, the grant by each Guarantor of a security
interest therein pursuant to this Agreement shall be limited to the extent that
such grant is not prohibited by the terms thereof without the consent of any
other person, or is permitted with consent if all necessary consents to such
grant of a security interest have not been obtained from all such other persons
(it being understood that the foregoing shall not be deemed to obligate such
Guarantor to obtain such consents), provided that the foregoing limitation shall
not affect, limit, restrict or impair the grant by such Guarantor of a security
interest pursuant to this Agreement in any Account or General Intangible or any
money or other amounts due or to become due under any such contract or agreement
to the extent provided in Section 9-318 of the NYUCC as in effect on the date
hereof.
9
10
(ix) Notwithstanding anything to the contrary contained in any
Loan Document, each Guarantor hereby agrees that it shall not pledge to any
holder of a Permitted Lien any Property not subject to such Lien on the date
hereof except to the extent that the agreements governing such Permitted Lien
require the same.
(b) Accounts. Except as otherwise provided in this paragraph 6(b),
such Guarantor shall continue to collect in accordance with its customary
practice, at its own expense, all amounts due or to become due to such Guarantor
in respect of such Guarantor's Accounts and, prior to the occurrence of an Event
of Default, such Guarantor shall have the right to adjust, settle or compromise
the amount or payment of any such Account, all in accordance with its customary
practices. In connection with such collections, such Guarantor may take and, at
the direction of the Agent at any time that an Event of Default shall have
occurred and be continuing shall take, such action as such Guarantor or the
Agent may reasonably deem necessary or advisable to enforce collection of such
Accounts.
(c) Chattel Paper, Documents and Instruments. All of the
Instruments, Documents and Chattel Paper now or hereafter owned by or in the
possession of such Guarantor which constitute Collateral (other than checks
received in the ordinary course of collection) shall be promptly delivered to
the Agent, to be held by the Agent pursuant hereto, in suitable form for
transfer by delivery or accompanied by duly executed documents of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Agent. Such Guarantor agrees that, with respect to all items of its Guarantor
Collateral which it is or shall hereafter be obligated to deliver to the Agent,
until so delivered such items shall be held by such Guarantor in trust for the
benefit of the Agent and be segregated from the other Property of such
Guarantor.
(d) Equipment and Inventory. (i) Such Guarantor shall keep the
Equipment and Inventory constituting its Guarantor Collateral at the places
listed on, (A) if such Guarantor is a Current Guarantor, Schedule II hereto, and
(B) if such Guarantor is an Additional Guarantor, Schedule II to the Supplement
delivered by such Guarantor, and such other places located within the United
States in respect of which (1) such Guarantor shall have provided the Agent with
prior written notice, and (2) UCC financing statements (or amendments thereto),
in form and substance satisfactory to the Agent, shall have been filed within
two months of such change.
(ii) Such Guarantor shall promptly furnish to the Agent a
statement respecting any material loss or damage to any of the Equipment or
Inventory constituting its Guarantor Collateral with an aggregate fair market
value exceeding $500,000 as a result of a single occurrence except to the extent
that such loss or damage shall be insured pursuant to policies required to be
maintained pursuant to the Credit Agreement.
(e) Equity Interests and Debt Instruments. Unless an Event of
Default shall have occurred and be continuing and the Agent shall have given
notice to the Borrower to the contrary, each Guarantor shall be permitted to
receive all cash dividends paid in respect of its Equity Interests and all
payments made in respect of debt Instruments pledged by it hereunder, and to
exercise all
10
11
voting and corporate or similar rights with respect to such Equity Interests;
provided, however, that no vote shall be cast or corporate or similar right
exercised or other action taken which, in the reasonable judgment of the Agent,
would impair the Collateral or the rights or remedies of the Agent, the Issuer
and the Lenders hereunder in any material respect or which would be inconsistent
with or result in any violation of any provision of the Credit Agreement, this
Agreement or any other Loan Document.
7. Events of Default
Each of the following shall constitute an "Event of Default":
(a) If any Guarantor shall fail to observe or perform any term,
covenant or agreement contained in this Agreement within 20 Domestic Business
Days after such Guarantor shall have become aware thereof; or
(b) The occurrence and continuance of an Event of Default under, and
as such term is defined in, the Credit Agreement.
8. Remedies
(a) Upon the occurrence of an Event of Default, or at any time
thereafter during the continuance thereof, the Agent may:
(i) exercise any and all rights and remedies (A) granted to a
Secured Party by the UCC in effect in the State of New York or otherwise allowed
at law, and (B) otherwise provided by this Agreement, and
(ii) dispose of the Collateral as it may choose, so long as
every aspect of the disposition including the method, manner, time, place and
terms are commercially reasonable, and each Guarantor agrees that, without
limitation, the following are each commercially reasonable: (A) the Agent shall
not in any event be required to give more than 14 days' prior notice to such
Guarantor of any such disposition, (B) any place within the City of New York or
the Counties of Nassau, Suffolk, and Westchester may be designated by the Agent
for disposition, and (C) the Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned.
(b) To the extent permitted by law, each Guarantor hereby expressly
waives and covenants not to assert any appraisement, valuation, stay, extension,
redemption or similar laws, now or at any time hereafter in force, which might
delay, prevent or otherwise impede the performance or enforcement of this
Agreement.
11
12
9. Notices
Except as otherwise specifically provided herein, all notices,
requests, consents, demands, waivers and other communications hereunder shall be
in writing (including facsimile) and shall be electronically transmitted or
mailed by registered or certified mail or delivered in person, and all
statements, reports, documents, certificates and papers to be delivered
hereunder shall be mailed by first class mail or delivered in person, in each
case to the respective parties to this Agreement as follows: in the case of the
Agent, as set forth in Section 11.2 of the Credit Agreement, in the case of each
Current Guarantor, as set forth in Schedule II hereto, and, in the case of each
Additional Guarantor, as set forth in the Supplement delivered by such
Additional Guarantor, or to such other addresses as to which the Agent may be
hereafter notified by the respective parties hereto. Any notice, request,
consent, demand, waiver or communication given in accordance with the provisions
of this Section 9 shall be conclusively deemed to have been received by a party
hereto and to be effective on the day on which delivered to such party at its
address specified above or, if sent by reg istered or certified mail, on the
delivery date noted on the receipt therefor, provided that a notice of change of
address shall be deemed to be effective only when actually received. Any party
hereto may rely on signatures of the other parties hereto which are transmitted
by facsimile or other electronic means as fully as if originally signed.
10. Expenses
Each Guarantor agrees that it shall, promptly after demand, pay to
the Agent any and all reasonable out-of-pocket sums, costs and expenses, which
the Agent, the Issuer or any Lender may pay or incur defending, protecting or
enforcing this Agreement (whether suit is instituted or not), including
reasonable fees and disbursements of counsel (including the allocated costs and
expenses of in-house counsel to the extent that outside counsel as not
utilized). All sums, costs and expenses which are due and payable pursuant to
this Section 10 and not paid within 10 days of demand therefor shall bear
interest, payable on demand, at the highest rate then payable on the Borrower
Obligations.
11. Repayment in Bankruptcy, etc.
If, at any time or times subsequent to the payment of all or any
part of the Borrower Obligations or the Guarantor Obligations, the Agent, the
Issuer or any Lender shall be required to repay any amounts previously paid by
or on behalf of the Borrower or any Guarantor in reduction thereof by virtue of
an order of any court having jurisdiction in the premises, includng as a result
of an adjudication that such amounts constituted preferential payments or
fraudulent conveyances, the Guarantors unconditionally agree to pay to the Agent
within 10 days after demand a sum in cash equal to the amount of such repayment,
together with interest on such amount from the date of such repayment by the
Agent, the Issuer or such Lender, as the case may be, to the date of payment to
the Agent at the applicable after-maturity rate set forth in the Credit
Agreement.
12. Additional Guarantors
12
13
Upon the execution and delivery to the Agent of a Supplement by any
Person, appropriately acknowledged, such Person shall be a Guarantor.
13. Miscellaneous
(a) Except as otherwise expressly provided in this Agreement, each
Guarantor hereby waives presentment, demand for payment, notice of default,
nonperformance and dishonor, protest and notice of protest of or in respect of
this Agreement, the other Loan Documents, each Interest Protection Arrangement,
and the Borrower Obligations, notice of acceptance of this Agreement and
reliance hereupon by the Agent, the Issuer and each Lender, and the incurrence
of any of the Borrower Obligations, notice of any sale of collateral security or
any default of any sort.
(b) No Guarantor is relying upon the Agent, the Issuer or any Lender
to provide to such Guarantor any information concerning the Borrower or any
Subsidiary, and each Guarantor has made arrangements satisfactory to such
Guarantor to obtain from the Borrower on a continuing basis such information
concerning the Borrower and the Subsidiaries as such Guarantor may desire.
(c) Each Guarantor agrees that any statement of account with respect
to the Borrower Obligations from the Agent, the Issuer or any Lender to the
Borrower which binds the Borrower shall also be binding upon such Guarantor, and
that copies of said statements of account maintained in the regular course of
the Agent's, the Issuer's or such Lender's business, as the case may be, may be
used in evidence against such Guarantor in order to establish its Guarantor
Obligations.
(d) Each Guarantor acknowledges that it has received a copy of each
existing Loan Document and each existing Interest Rate Protection Arrangement
and has approved of the same. In addition, such Guarantor acknowledges having
read each Loan Document and each such Interest Rate Protection Arrangement and
having had the advice of counsel in connection with all matters concerning its
execution and delivery of this Agreement.
(e) No Guarantor may assign any right, or delegate any duty, it may
have under this Agreement.
(f) Subject to the limitations set forth in Section 2(b), the
Guarantor Obligations shall be joint and several.
(g) Each Guarantor hereby agrees that all of the representations,
warranties and covenants of the Borrower under the Credit Agreement shall be, to
the extent applicable to such Guarantor, incorporated by reference herein as if
fully set forth herein, including the definitions of capitalized terms so
incorporated, mutatis mutandis.
(h) This Agreement is the "Guaranty" referred to in the Credit
Agreement. Each of the Agent and the Guarantors acknowledges that certain
provisions of the Credit Agreement, including Sections 1.2 (Principles of
Construction), 11.1 (Amendments and Waivers), 11.3 (No
13
14
Waiver; Cumulative Remedies), 11.4 (Survival of Representations and Warranties),
11.8 (Counterparts), 11.11 (Governing Law), 11.12 (Severability), 11.13
(Integration), 11.15 (Consent to Jurisdiction), 11.16 (Service of Process),
11.17 (No Limitation on Service or Suit) and 11.18 (WAIVER OF TRIAL BY JURY)
thereof, are made applicable to this Agreement and all such provisions are
incorporated by reference herein as if fully set forth herein.
(i) This Agreement and the rights and obligations of the parties
hereto shall be governed by, and construed and interpreted in accordance with,
the laws of the State of New York.
14. Release.
(a) This Agreement and the security interest created hereunder shall
terminate when all Obligations have been fully and indefeasibly paid and when
the Lenders have no further Commitments under the Credit Agreement and no
Letters of Credit are outstanding, at which time the Agent shall execute and
deliver to the Guarantors, or to such persons or persons as the Guarantors shall
reasonably designate, all Uniform Commercial Code termination statements and
similar documents prepared by the Guarantors at their expense which the
Guarantors shall reasonably request to evidence such termination. Any execution
and delivery of termination statements or documents pursuant to this Section 10
shall be without recourse to or representation or warranty by the Agent.
(b) All Collateral used, sold, transferred or otherwise disposed of
in accordance with the terms of the Credit Agreement (including pursuant to a
waiver or amendment of the terms thereof) shall be used, sold, transferred or
otherwise disposed of free and clear of the Lien and the security interest
created hereunder. In connection with the foregoing, (i) the Agent shall execute
and deliver to the Guarantors, or to such persons or persons as the Guarantors
shall reasonably designate, all Uniform Commercial Code termination statements
and similar documents prepared by the Guarantors at their expense which the
Guarantors shall reasonably request to evidence the release of the Lien and
security interest created hereunder with respect to such Collateral and (ii) any
representation, warranty or covenant contained herein relating to such
Collateral shall no longer be deemed to be made with respect to such used, sold,
transferred or otherwise disposed Collateral.
15. Other
(a) Notwithstanding anything herein to the contrary, (i) no action
shall be taken by the Agent with respect to the Licenses unless and until all
applicable requirements of statutes, rules and regulations of all Governmental
Authorities, including, without limitation, any required approval under the
Communications Act (collectively, "Applicable Law"), requiring the notice or
consent to, or approval of such action, by the FCC or any other Governmental
Authority, have been satisfied, and (ii) the right of the Agent to exercise
voting rights with respect to Equity Interests upon the occurrence and during
the continuance of an Event of Default shall not become effective unless and
until all provisions of the Communications Act requiring the consent to or
approval of such action by the FCC have been satisfied. Each Guarantor covenants
that, upon the occurrence and during the
14
15
continuation of an Event of Default, upon request of the Agent, it will
cooperate in causing to be filed such applications and taking such other action
as may be reasonably requested by the Agent to obtain consent or approval of the
FCC or any other Governmental Authority which has granted any License to such
Guarantor to any action contemplated by this Agreement and to give effect to the
Security Interest of the Agent (for itself and the ratable benefit of the
Lenders and the Issuer), including, without limitation, cooperating in the
execution of an application for consent by the FCC to an assignment or transfer
involving a change in ownership or control pursuant to the provisions of the
Communications Act.
(b) Anything herein to the contrary notwithstanding, the Agent
hereby acknowledges and agrees that any Intercompany Debt pledged to it
hereunder may be paid or prepaid by the issuer thereof at any time and unless an
Event of Default has occurred and is continuing at the time of such payment or
prepayment, as the case may be, the holder of the Instrument evidencing such
Intercompany Debt may retain the proceeds thereof. In addition, so long as both
immediately before and after giving effect thereto no Default or Event of
Default shall or would exist (i) the terms and conditions of any Instrument
evidencing Intercompany Debt may be amended, modified, restructured or restated
in any manner as the Guarantor to whom the Instrument evidencing such
Intercompany Debt and the issuer thereof may agree, as long as such Intercompany
Debt, after giving effect to any such amendment, modification or restatement,
continues to be Intercompany Debt as defined in the Credit Agreement, or (ii)
such Intercompany Debt may be forgiven. Upon request of the Guarantor pledging
the Instrument evidencing such Intercompany Debt, except upon the occurrence and
during the continuance of a Default or Event of Default, the Agent will release
to such Guarantor any Instrument evidencing Intercompany Debt that has been so
paid, prepaid or forgiven or will exchange any such Instrument for another
Instrument containing amended, modified or restated terms, as described in the
immediately preceding sentence.
15
16
IN EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Agreement to be
duly executed on its behalf.
KEYBANK NATIONAL ASSOCIATION,
as Agent
By: /s/ Xxxxxxx X. Xxxxxxxx
Name:
Title:
A.F. ASSOCIATES, INC.
By: /s/ Xxxxxxxxxxx Xxxxxxxxxx
Name:
Title:
ATLANTIC SATELLITE
COMMUNICATIONS, INC.
By: /s/ Xxxxxxxxxxx Xxxxxxxxxx
Name:
Title:
VIDEO RENTALS, INC.
By: /s/ Xxxxxxxxxxx Xxxxxxxxxx
Name:
Title:
AUDIO PLUS VIDEO INTERNATIONAL, INC.
16
17
By: /s/ Xxxxxxxxxxx Xxxxxxxxxx
Name:
Title:
ASSOCIATED IMAGES LIMITED
By: /s/ Xxxxxxxxxxx Xxxxxxxxxx
Name:
Title:
WATERFRONT COMMUNICATIONS
CORPORATION
By: /s/ Xxxxxxxxxxx Xxxxxxxxxx
Name:
Title:
VSC CORPORATION
By: /s/ Xxxxxxxxxxx Xxxxxxxxxx
Name:
Title:
IPL EXPRESS COURIER, INC.
By: /s/ Xxxxxxxxxxx Xxxxxxxxxx
Name:
Title:
17
18
CABANA CORP.
By: /s/ Xxxxxxxxxxx Xxxxxxxxxx
Name:
Title:
INTERACTIVE EDGE, INC.
By: /s/ Xxxxxxxxxxx Xxxxxxxxxx
Name:
Title:
INTERNATIONAL POST
FINANCE LIMITED
By: /s/ Xxxxxxxxxxx Xxxxxxxxxx
Name:
Title:
INTERNATIONAL POST
LEASING LIMITED
By: /s/ Xxxxxxxxxxx Xxxxxxxxxx
Name:
Title:
M2 ART, INC.
By: /s/ Xxxxxxxxxxx Xxxxxxxxxx
Name:
Title:
18
19
MANHATTAN TRANSFER/EDIT, INC.
By: /s/ Xxxxxxx Xxxxxxxxxx
Name:
Title:
PI EDIT, INC.
By:
Name:
Title:
THE POST EDGE, INC.
By: /s/ Xxxxxxx Xxxxxxxxxx
Name:
Title:
VSC LIMA CORP.
By: /s/ Xxxxxxx Xxxxxxxxxx
Name:
Title:
VSC MAL CORP.
By: /s/ Xxxxxxx Xxxxxxxxxx
Name:
Title:
19
