EXHIBIT 10.8
GENERAL SECURITY AGREEMENT
This General Security Agreement ("Agreement") is made as of
this 11th day of October, 2002, between MMAC Communications Corp. ("Debtor"), a
corporation organized and existing pursuant to the laws of the State of
Delaware, having an address at 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000
and KELTIC FINANCIAL PARTNERS, LP ("the Lender"), a Delaware limited
partnership, with a place of business at 000 Xxxxxxxx Xxxxx Xxxxxx, Xxxxx X-000,
Xxx, Xxx Xxxx 00000.
ARTICLE I
DEFINITIONS
All words and terms used in this Agreement shall have the
meanings as set forth herein and where not otherwise defined herein shall be
deemed to have the meanings as accorded to them in the Uniform Commercial Code
as in effect from time to time ("UCC").
SECTION 1.1 "Account Debtor" shall mean any Person who is or
may become obligated under or on account of any Receivable.
SECTION 1.2 "Agreement" shall mean this General Security
Agreement.
SECTION 1.3 "Collateral" shall have the meaning given to such
term in Section 2.1 hereof.
SECTION 1.4 "Credit Agreement" shall mean the Revolving Loan
Agreement dated the date hereof between Debtor and the Lender, as the same may
be modified, amended, restated or replaced from time to time.
SECTION 1.5 "Deposit Accounts" shall have the meaning given to
such term in the UCC.
SECTION 1.6 "Equipment" shall mean all machinery, equipment,
office machinery, furniture, fixtures, conveyors, tools, materials storage and
handling equipment, molds, dies, stamps and other equipment of every kind and
nature and wherever situated now or hereafter owned by Debtor or in which Debtor
may have any interest (to the extent of such interest), together with all
additions and accessions thereto, all replacements and all accessories and parts
therefor, all manuals, blueprints, know-how, warranties and records in
connection therewith, all rights against suppliers, warrantors, manufacturers,
sellers or others in connection therewith, and together with all substitutes for
any of the foregoing.
SECTION 1.7 "General Intangibles" shall mean all general
intangibles, including, without limitation, all choses in action, causes of
action, payment intangibles, corporate or other business records, deposit
accounts, inventions, blueprints, designs, patents, patent applications,
trademarks, trademark applications, trade names, trade secrets, good will, brand
names, copyrights, registrations, licenses, franchises, customer lists, tax
refund claims, computer
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programs and software, operational manuals, capitalized finance costs,
origination fees, all equipment formulations, manufacturing procedures, quality
control procedures and product specifications relating to products sold under
patents, trademarks or copyrights owned by Debtor or in which Debtor has an
interest, the right to xxx for all past, present and future infringements of
such patents, trademarks and copyrights, all claims under guaranties, security
interests or other security held by or granted to Debtor to secure payment of
any of the Receivables by an Account Debtor, all rights to indemnification and
all other intangible property of every kind and nature (other than Receivables).
SECTION 1.8 "Guaranty" shall mean the Guaranty of Payment and
Performance by Debtor to the Lender dated of even date herewith, as the same may
be modified, amended, restated or replaced from time to time.
SECTION 1.9 "Inventory" shall have the meaning given to such
term in the UCC.
SECTION 1.10 "Investment Property" shall have the meaning
given to such term in the UCC.
SECTION 1.11 "Instruments" shall have the meaning given to
such term in the UCC.
SECTION 1.12 "Loan Documents" shall mean the Revolving Note
(as defined in the Credit Agreement), the Credit Agreement, the Guaranty,
together with this Agreement and any and all other documents, instruments or
agreements executed in connection therewith as the same may be modified,
amended, restated or replaced from time to time.
SECTION 1.13 "Letter-of-Credit Rights" shall have the meaning
given to such term in the UCC.
SECTION 1.14 "Obligations" shall mean and include all loans,
advances, debts, liabilities, obligations, covenants and duties owing by Debtor
to the Lender of any kind or nature, present or future, whether or not evidenced
by any note, guaranty or other instrument, whether arising under this Agreement,
the other Loan Documents or under any other agreement or by operation of law,
whether or not for the payment of money, whether arising by reason of an
extension of credit, opening, guaranteeing or confirming of a letter of credit,
loan, guaranty, indemnification or in any other manner, whether direct or
indirect (including those acquired by assignment), absolute or contingent, due
or to become due, now due or hereafter arising and however acquired, including,
without limitation, all interest, charges, expenses, commitment, facility,
collateral management or other fees, attorneys' fees and expenses, and any other
sum chargeable to Debtor under this Agreement, the other Loan Documents or any
other agreement with the Lender.
SECTION 1.15 "Person" shall mean an individual, partnership,
limited liability company, limited liability partnership, corporation, joint
venture, joint stock company, land trust, business trust or unincorporated
organization, or a government agency or political subdivision thereof,
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SECTION 1.16 "Property" shall mean any interest in any kind of
property or asset, whether real, personal or mixed, or tangible or intangible.
SECTION 1.17 "Receivables" shall mean and include all present
and future Accounts, including, without limitation, healthcare receivables,
credit card receivables, software and license fees, contract rights, promissory
notes, Chattel Paper, Electronic Chattel Paper, Instruments and Documents, all
tax refunds and rights to receive tax refunds, bonds, certificates, rights to
payment for the sale, lease or license of equipment and policies of insurance
and insurance proceeds, investment securities, notes and instruments, deposit
accounts, book accounts, credits and reserves and all forms of obligations
whatsoever owing, together with all instruments, all documents of title
representing any of the foregoing, and all rights in any merchandise or goods
which any of the same may represent, all files and records with respect to any
collateral or security given by Debtor to the Lender, together with all right,
title, security and guaranties with respect to each Receivable, including any
right of stoppage in transit, whether now owned or hereafter created or acquired
by Debtor or in which Debtor now has or hereafter acquires any interest.
ARTICLE II
SECURITY INTEREST
SECTION 2.1 SECURITY INTEREST. To secure the prompt payment
and performance of all of the Obligations to the Lender, Debtor hereby grants to
the Lender a first priority lien and security interest in all of the following
property and interests in Property of Debtor, whether now owned or existing or
hereafter created, acquired or arising and wheresoever located (collectively
"Collateral"):
(a) All Receivables;
(b) All Inventory;
(c) All Equipment;
(d) All General Intangibles;
(e) All Investment Property;
(f) All Deposit Accounts;
(g) Letter-of-Credit Rights;
(h) Money (of every jurisdiction whatsoever);
(i) All monies or other Property of any kind, now or at any
time or times hereafter, in the possession or under the control of the Lender or
any affiliate of the Lender or any representative, agent or correspondent of the
Lender;
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(j) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of (a), (b), (c), (d), (e), (f), (g),
(h) and (i) above, including, without limitation, proceeds of and unearned
premiums with respect to insurance policies insuring any of the Collateral and
claims against any Person for loss of, damage to, or destruction of any or all
of the Collateral; and
(k) All books and records (including, without limitation,
customer lists, credit files, computer programs, printouts and other computer
materials and records) of Debtor pertaining to any of (a), (b), (c), (d), (e),
(f), (g), (h), (i) or (j) above.
Notwithstanding any of the foregoing, Collateral shall not
include the ViewCast Obligation (as defined in the Credit Agreement).
SECTION 2.2 PERFECTION. Debtor will execute and deliver to the
Lender such security agreements, assignments (including, without limitation,
assignments of specific Accounts, Chattel Paper and General Intangibles), and
other papers as the Lender may at any time or from time to time reasonably
request that are required to perfect or protect the security interest granted
hereby. Debtor shall also cooperate with the Lender in obtaining appropriate
waivers or subordinations of interests from such third parties in any Collateral
and Debtor shall cooperate with the Lender in obtaining control of Collateral
consisting of Deposit Accounts, Investment Property, Letter-of-Credit Rights or
Electronic Chattel Paper. In the event that the Lender requests, during the
existence of a Default or an Event of Default (as defined in the Credit
Agreement), Debtor shall instruct its Account Debtors to remit payments directly
to the Lender or to the Lender's designee, which may be a Lockbox. Debtor
authorizes the Lender to execute alone any financing statements or other
documents or instruments that the Lender may require to perfect, protect or
establish any lien or security interest granted to the Lender by Debtor and
further authorizes the Lender to sign Debtor's name on the same and\or to file
or record the same without Debtor's signature thereon. Debtor will perform any
and all steps that the Lender may request to perfect the Lender's security
interest in Inventory, including, but without limitation, placing and
maintaining signs, appointing custodians, executing and filing financing or
continuation statements in form and substance satisfactory to the Lender,
maintaining stock records and transferring of Inventory to warehouses. If any
Inventory is in the possession or control of any third party other than a
purchaser in the ordinary course of business or a public warehouseman where the
warehouse receipt is in the name of or held by the Debtor, Debtor shall notify
such person of the Lender's security interest therein and, instruct such person
or persons to hold all such Inventory for the account and benefit of the Lender
and subject to the Lender's instructions. Debtor will deliver to the Lender
warehouse receipts covering any Inventory located in warehouses showing the
Lender as the beneficiary thereof and will also deliver to the warehouseman such
agreements relating to the release of warehouse Inventory as the Lender may
request. If the Collateral is a motor vehicle or any other personal property
required to be titled under applicable law, Debtor warrants that the Lender's
security interest will be recorded on the title certificates covering the
Collateral and will deliver such certificates or other evidence of ownership to
the Lender as the Lender requests. Debtor hereby appoints the Lender as its
attorney in fact to execute and deliver notices of lien, financing statements,
assignments, and any other documents, notices, and agreements necessary for the
perfection of
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the Lender's security interests in the Collateral. Debtor appoints such person
or persons as the Lender may designate as Debtor's attorney-in-fact to endorse
the name of Debtor on any checks, notes, drafts or other forms of payment or
security that may come into the possession of the Lender or any Affiliate of the
Lender, to sign Debtor's name on invoices or bills of lading, drafts against
customers, notice of assignment, verifications and schedules and, generally, to
do all things necessary to carry out this Agreement. Upon the occurrence of a
Default or Event of Default and during the continuation therein, such
attorney-in-fact may notify the Post Office authorities to change the address of
delivery of mail to an address designated by the Lender, and open and dispose of
mail addressed to Debtor. The powers granted herein, being coupled with an
interest, are irrevocable, and Debtor approves and ratifies all acts of the
attorney-in-fact. Neither the Lender nor the attorney-in-fact shall be liable
for any act or omission, error in judgment or mistake of law so long as the same
is not willful or grossly negligent. Debtor agrees to pay the costs of the
continuation of the Lender's security interests and releases or assignments of
the Lender's interests.
Debtor shall provide written notice to Lender of any
commercial tort claim to which Debtor is or becomes a party or which otherwise
inures to the benefit of Debtor. Such notice shall contain a sufficient
description of such commercial tort claim including the parties, the court in
which the claim is commenced (if applicable), the docket number assigned to the
case (if applicable) and a detailed explanation of the events giving rise to
such claim. Debtor shall grant Lender a security interest in such commercial
tort claim to secure payment of the Obligations. Debtor shall execute and
deliver such instruments, documents and agreements as Lender may reasonably
require in order to obtain and perfect such security interest including, without
limitation, a security agreement or amendment to this Agreement all in form and
substance satisfactory to Lender. Debtor authorizes Lender to file financing
statements or amendments to existing financing statements as Lender deems
necessary to perfect the security interest. Debtor shall provide Lender with
written notice of any letters of credit for which Debtor is the beneficiary.
Debtor shall execute and deliver such instruments, documents and agreements and
take such actions as Lender may reasonably require in order to obtain and
perfect its security interest in such Letter of Credit Rights.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Debtor represents, warrants and covenants to the Lender, and
shall be deemed to continually do so, as long as this Agreement shall remain in
force, that:
SECTION 3.1 INVENTORY.
(a) WARRANTIES WITH RESPECT TO INVENTORY. Debtor represents
and warrants to the Lender that (i) all representations made by Debtor to the
Lender and all documents and schedules given by Debtor to the Lender, relating
to the description, quantity, quality, condition and valuation of Inventory are
true and correct in all material respects, and (ii) Debtor has not received any
Inventory on consignment or approval unless Debtor has notified the Lender
thereof in a Record, has marked such Inventory on consignment or approval or has
segregated it
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from all other Inventory, and has appropriately marked its records to reflect
that such Inventory is held on consignment or approval.
(b) LENDER'S RIGHTS IN INVENTORY. The Lender's security
interests in the Inventory shall continue through all steps of manufacture and
sale and attach without further act to raw materials, work in process, finished
goods, returned goods, documents of title, warehouse receipts, and to proceeds
resulting from sale or disposition of Inventory. Until all Obligations of Debtor
to the Lender have been satisfied, the Lender's security interest in Inventory
and in all proceeds thereof shall continue in full force and effect. Upon the
occurrence of an Event of Default (as defined below), the Lender shall have, in
its discretion and at any time, the right to take physical possession of the
Inventory and to maintain it on Debtor's premises, in a public warehouse, or at
such place as the Lender may remove the Inventory or any part thereof. If the
Lender exercises its right to take possession of Inventory, Debtor will, upon
demand, and at Debtor's own cost and expense assemble the Inventory and make it
available to the Lender at a place or places reasonably convenient to the
Lender.
(c) DEBTOR'S OBLIGATION WITH RESPECT TO INVENTORY. All
Inventory is and shall be maintained at the locations shown on Schedule 3.1(c)
hereof. Other than Inventory that has become obsolete, no Inventory shall be
removed therefrom, except for the purpose of sale or in the ordinary course of
Debtor's business, and except for such sales, Debtor will not sell, encumber,
grant a security interest in, dispose of or permit the sale, encumbrance, or
disposal of any Inventory without the Lender's prior consent contained in an
Authenticated Record. If sales are made for cash, Debtor shall immediately
deliver to the Lender the identical checks or other forms of payment, which it
receives. In the event that Inventory is stored with the manufacturer thereof,
Debtor shall use its best efforts to cause such manufacturer to enter into a no
offset agreement with the Lender which agreement is in form and substance
satisfactory to the Lender.
(d) FURTHER OBLIGATIONS OF DEBTOR WITH RESPECT TO INVENTORY.
From time to time, and at least once every month in any event, Debtor shall
execute and deliver to the Lender, a confirmatory Record, in form and substance
satisfactory to the Lender, listing Debtor's Inventory, but any failure to
execute or deliver the same shall not affect or limit the Lender's security
interest in and to the Inventory.
(e) MAINTENANCE OF INVENTORY RECORDS. Debtor shall maintain
accurate and complete records respecting Inventory, including a perpetual
inventory, and all other Collateral at all times. Debtor will pay all costs to
be paid on taxes, assessments, governmental charges or private encumbrances
levied, assessed, imposed or payable upon or with respect to the Inventory,
Equipment or other Collateral or any part thereof.
(f) INVENTORY REPORT. A physical verification of all Inventory
wherever located will be taken by Debtor annually at the end of each year and as
often as reasonably required by the Lender, and a copy of such physical
verification shall be submitted to the Lender.
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SECTION 3.2 RECEIVABLES.
(a) Debtor represents and warrants to the Lender that each
Receivable created by it (i) will cover a bona fide sale and delivery of
merchandise usually dealt in by Debtor in the ordinary course of its business or
will cover the rendition of services by Debtor to customers of a kind ordinarily
rendered in the ordinary course of Debtor's business, (ii) will be for a
liquidated amount from a customer competent to contract therefor, (iii) except
as otherwise provided in the Credit Agreement, is not subject to renegotiation,
(iv) is not subject to any prepayment or credit and will not be subject to any
deduction, offset, counterclaim, lien or other condition other than in the
ordinary course of Debtor's business, and (v) is generally enforceable in
accordance with its terms. Debtor further represents and warrants that all
services to be performed by Debtor in connection with each Receivable have been
performed or will be performed under a service contract.
(b) CONFIRMATORY WRITTEN ASSIGNMENTS. Promptly after the
creation of any Receivable, if the Lender shall so request, Debtor shall execute
and deliver confirmatory written assignments to the Lender of Receivables, but
the failure to execute or deliver any schedule or assignment shall not affect or
limit any lien or other right of the Lender in and to any Receivable. Debtor
shall cause all of its invoices to be printed and to bear consecutive numbers,
and to issue its invoices in such consecutive numerical order. On the Lender's
request therefor, Debtor shall also furnish to the Lender copies of invoices to
customers and shipping and delivery receipts or warehouse receipts thereof.
Debtor will also furnish the Lender with such other documents and instruments as
the Lender may request in connection with any Receivables, including detailed
monthly agings. Debtor shall deliver to the Lender the originals of all letters
of credit, notes, and instruments in its favor and such endorsements or
assignments as the Lender may request.
(c) NOTICE OF CERTAIN EVENTS. Debtor will notify the Lender of
all returns and recoveries of merchandise and of all claims asserted with
respect to merchandise which such returns, recoveries or claims exceed
$25,000.00 per occurrence. Debtor shall promptly report each such return,
repossession or recovery of merchandise to the Lender, advising it of the
location thereof and providing it with a description of such goods and its
location. Debtor shall not settle or adjust any dispute or claim, or grant any
discount (except ordinary trade discounts), credit or allowance or accept any
return of merchandise (except in the ordinary course of Debtor's business,
provided that, such credit, allowance or return does not exceed $25,000.00),
without the Lender's consent. Upon the occurrence of an Event of Default, the
Lender may settle or adjust disputes or claims directly with customers or
Account Debtors of Debtor for amounts and upon terms which it considers
advisable. Where Debtor receives Collateral of any kind or nature by reason of
transactions between itself and its customers or Account Debtors, it will hold
the same on the Lender's behalf, subject to the Lender's instructions, and as
property forming part of the Receivables. Where Debtor sells to a customer or
Account Debtor which also sells to it or which may have other claims against it,
Debtor will so advise the Lender, promptly upon being notified of such order.
(d) COMMUNICATION WITH ACCOUNT DEBTORS. Debtor authorizes the
Lender, before or after and during the occurrence of an Event of Default,
without notice to or the consent of Debtor, to communicate directly with
customers or Account Debtors by whatever means the
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Lender shall elect for the purpose of verifying the information supplied by
Debtor to the Lender with respect to Receivables. Upon the Lender's request,
before or after the occurrence of an Event of Default, Debtor shall provide the
Lender with a list of the addresses of its Account Debtors.
SECTION 3.3
(a) EQUIPMENT. Attached hereto as Schedule 3.3(a) is a list
describing the location where the Debtor's Equipment is kept. Such list
indicates whether such premises are owned or leased by Borrower or whether the
premises are the premises of another Person, and if leased, the name and address
of such other Person. All Equipment hereafter acquired will be kept at the
location or locations shown on the Schedule unless Debtor shall have first
advised the Lender of its intention to maintain any Equipment at some other
location and obtained the Lender's prior consent contained in an Authenticated
Record. Notwithstanding anything contained herein to the contrary, certain of
Debtor's Equipment may, from time to time, be located at Debtor's customers'
locations. Debtor shall not be required to obtain Lender's prior consent to
locate any such Equipment at its customers' locations, provided such practice is
done in the ordinary course of Debtor's business. Debtor shall furnish updates
to Schedule 3.3(a) upon Lender's request.
(b) DEBTOR'S OBLIGATIONS WITH RESPECT TO EQUIPMENT. Debtor
shall keep all of its Equipment in a good state of repair, and will make all
repairs and replacements when and where necessary, will not waste or destroy
Equipment or any part thereof, and will not be negligent in the care, or use,
thereof. Debtor shall keep accurate lists and records reflecting its Equipment
and shall retain copies of all warranties, manuals and manufacturers or vendors'
requirements with respect thereto. All Equipment shall be used in accordance
with law and prudent business practice and the manufacturer's instructions and
shall be kept separate from and shall not be annexed or affixed to or become
part of the realty except where the Lender first consents in an Authenticated
Record.
SECTION 3.4 OWNERSHIP OF COLLATERAL. Debtor is the owner of
the Collateral with good, marketable and indefeasible title thereto, free and
clear of all liabilities, mortgages, security interests, leases, liens, pledges,
encumbrances, restrictions, charges, claims or imperfections of title (other
than those listed on Schedule 5.17 of the Credit Agreement) whatsoever.
SECTION 3.5 MAINTENANCE OF COLLATERAL. Debtor shall
continually take such steps as are necessary and prudent to protect the interest
of the Lender in the Collateral including, but not limited to, the following:
(a) Maintain books and records relating to the Collateral
satisfactory to the Lender and shall allow the Lender or its representatives
access to such records and the Collateral at all reasonable times for the
purpose of examination, inspection, verification, copying, extracting and other
reasonable purposes as the Lender may require;
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(b) Maintain the Collateral and the books and records relating
to the Collateral at Debtor's address indicated above, at any address listed on
Schedule A or at such other address as the Lender shall permit, in its sole
discretion, upon the request to the Lender contained in an Authenticated Record
from Debtor;
(c) Execute and deliver to the Lender such other and further
documentation necessary to evidence, effectuate or perfect its security interest
in the Collateral;
(d) Defend the Collateral against all claims and demands of
third parties at any time claiming the same or any interest therein, except
buyers of Inventory in the ordinary course of Debtor's business;
(e) Keep the Collateral free of all liens and encumbrances,
except for the security interest of the Lender, and Debtor will not, without
prior consent of the Lender contained in an Authenticated Record, sell, transfer
or otherwise dispose of the Collateral or any interest therein, in bulk or
otherwise, except in the ordinary course of business;
(f) Notify the Lender in the event of material loss or damage
to the Collateral or of any material adverse change in Debtor's business or the
Collateral, or of any other occurrences which could materially and adversely
affect the security of the Lender;
(g) Pay all expenses incurred in the manufacture, delivery,
storage or other handling of the Collateral and all taxes which are or may
become a lien on the Collateral, promptly when due, and in any event reimburse
the Lender, on demand, for any expenses which the Lender might incur following
the occurrence of an Event of Default, in satisfying such expenses or taxes,
which the Lender, in its sole discretion, deems necessary in order to protect
the Collateral;
(h) Maintain insurance on the Collateral from carriers
acceptable to Lender of such types, coverage, form and amount as is usually
carried on similar goods by similar enterprises. In the event Debtor fails to
maintain such insurance, the same may be maintained by the Lender, at its
option, and Debtor shall reimburse the Lender for the cost thereof, on demand;
and
(i) If requested by the Lender: (i) xxxx its records
evidencing the Collateral in a manner satisfactory to the Lender so as to
indicate the security interest of the Lender hereunder; (ii) furnish to the
Lender any Chattel Paper, invoices, documents, schedules, purchase orders,
delivery receipts, contracts or other documents representing or relating to any
of the Collateral; (iii) promptly reflect in its books, records, and reports to
the Lender the rejection of goods, delay in delivery or performance, or claims
made, in regard to any Collateral and after an Event of Default inform the
Lender immediately of any of the same; (iv) prior to an Event of Default, with
respect to material debtors and obligors, and thereafter with respect to all
debtors and obligors, furnish to the Lender all information received by Debtor
indicating a material adverse change in the financial standing of any Account
Debtor, debtor under any General Intangible, or obligor under any Chattel Paper;
(v) immediately notify the Lender if any of the Collateral arises out of
contracts for the improvement of real property, deals with a public improvement
or is with the United States, any state, or any department, agency or
instrumentality
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thereof, and execute any instruments and take any steps required by the Lender
in order that all moneys due or to become due under any such contract shall be
assigned to the Lender and notice thereof be given as required by law; (vi)
furnish to the Lender such financial statements, reports, certificates, lists of
Account Debtors (showing names, addresses, telephone and facsimile numbers, and
amounts owing) and other data concerning the Collateral and other matters as the
Lender may, from time to time, request; and (vii) fully cooperate with the
Lender in the exercising of its rights and methods for verification of the
Collateral.
SECTION 3.6 AUTHORITY. Debtor is authorized to enter into and
implement this Agreement and has taken all necessary actions, corporate or
otherwise, in relation to such authorization.
SECTION 3.7 FIXTURES/LANDLORDS. The Collateral will remain
personalty and will not be permanently affixed to real estate without the prior
consent of the Lender contained in an Authenticated Record. If any of the
Collateral is or will be a fixture, Debtor will provide legal descriptions and
the names of record owners of the premises to which the Collateral will be
affixed sufficient for perfection of the security interests of the Lender.
Debtor will provide disclaimers of interest and removal agreements, in form
satisfactory to the Lender.
ARTICLE IV
EVENTS OF DEFAULT
Any of the following events or occurrences shall constitute an
"Event of Default" under this Agreement: the occurrence of any Event of Default
under any of the Loan Documents.
ARTICLE V
RIGHTS OF THE LENDER
SECTION 5.1 GENERAL RIGHTS. The rights of the Lender shall at
all times be those of a secured party under the UCC. Without limiting the
generality of the foregoing, the Lender shall have the additional rights set
forth in this Agreement.
SECTION 5.2 LENDER'S RIGHT TO PERFORM DEBTOR'S OBLIGATIONS. In
the event that Debtor shall fail to purchase or maintain insurance, or to pay
any tax, assessment, government charge or levy, except as the same may be
otherwise permitted hereunder, or in the event that any lien, encumbrance or
security interest prohibited hereby shall not be paid in full or discharged, or
in the event that Debtor shall fail to perform or comply with any other
covenant, promise or Obligation to the Lender hereunder or under any other Loan
Document, the Lender may, but shall not be required to, perform, pay, satisfy,
discharge or bond the same for the account of Debtor, and all monies so paid by
the Lender, including actual attorneys' fees and expenses, shall be treated as
part of the Obligations.
SECTION 5.3 COLLECTIONS; MODIFICATION OF TERMS. Without
limiting any rights the Lender may have pursuant to this Agreement or otherwise,
upon the occurrence and during the continuance of an Event of Default, the
Lender may demand, xxx for, collect and give receipts for any money, Instruments
or property payable or receivable on account of or in
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exchange for any of the Collateral, or make any compromises it deems necessary
or proper, including without limitation, extending the time of payment,
permitting payment in installments, or otherwise modifying the terms or rights
relating to any of the Collateral, all of which may be effected without notice
to or consent by Debtor and without otherwise discharging or affecting the
Obligations, the Collateral or the security interest granted under this
Agreement or any of the Loan Documents.
SECTION 5.4 NOTIFICATION OF ACCOUNT DEBTORS. Without limiting
any rights of pursuant to this Agreement or under applicable law, after an Event
of Default has occurred, (i) Debtor, at the request of the Lender, shall notify
the Account Debtors of the Lender's security interest in Debtor's Receivables;
and (ii) the Lender may notify the Account Debtors on any of the Receivables to
make payment directly to the Lender, and the Lender may endorse all items of
payment received by it that are payable to Debtor. Debtor authorizes such
parties to make such payments directly to the Lender and to rely on notice from
the Lender without further inquiry. The Lender may demand and take all necessary
or desirable steps to collect such Collateral in either its or Debtor's, name,
with the right to enforce, compromise, settle, or discharge any of the
foregoing.
SECTION 5.5 INSURANCE. Without limiting any rights of the
Lender pursuant to this Agreement or under applicable law, after a Default or
Event of Default has occurred and during the continuation thereof, the Lender
may file proofs of loss and claim with respect to any of the Collateral with the
appropriate insurer, and may endorse in its own and Debtor's name any checks or
drafts constituting insurance proceeds. Any insurance proceeds received by the
Lender may be applied by it against Debtor's obligations under the Loan
Documents.
SECTION 5.6 WAIVER OF RIGHTS BY DEBTOR. Except as may be
otherwise specifically provided herein, Debtor waives, to the extent permitted
by law, any bonds, security or sureties required by any statute, rule or
otherwise by law as an incident to any taking of possession by the Lender of any
Collateral. Debtor authorizes the Lender, upon the occurrence of an Event of
Default, to enter upon any premises owned by or leased to Debtor where the
Collateral is kept, without obligation to pay rent or for use and occupancy,
through self help, without judicial process and without having first given
notice to Debtor or obtained an order of any court, and peacefully retake
possession thereof by securing at or removing same from such premises.
SECTION 5.7 LENDER'S RIGHTS. Debtor agrees that the Lender
shall not have any obligation to preserve rights to any Collateral against prior
parties or to xxxxxxxx any Collateral of any kind for the benefit of any other
creditor of Debtor or any other Person. After the occurrence of an Event of
Default, the Lender is hereby granted a license or other right to use, without
charge, Debtor's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and Debtor's rights under all
licenses and any franchise, sales or distribution agreements shall inure to the
Lender's benefit for such purpose.
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SECTION 5.8 RIGHTS ON DEFAULT. Upon the occurrence of any
Event of Default, and after giving effect to any applicable grace period, in
addition to and without limiting any rights the Lender may have under any
agreement, document or instrument evidencing or representing any obligation of
Debtor to the Lender or executed in connection with any such obligation, the
Lender is hereby authorized to declare any or all of the Obligations to be
immediately due and payable, and the rights and remedies of the Lender with
respect to the Collateral shall be as set forth herein, in the UCC and as
otherwise available under applicable law.
The Lender may, without demand, advertising or notice, all of
which Debtor hereby waives (except as the same may be required by law), sell,
lease, license, dispose of, deliver and grant options to a third party to
purchase, lease or otherwise dispose of any and all Collateral held by it or for
its account at any time or times in one or more public or private sales or other
dispositions, for cash, on credit or otherwise, as such prices and upon such
terms as the Lender, in its sole discretion, deems advisable. Without requiring
notice to Debtor, all requirements of reasonable notice under this section shall
be met if such notice is mailed, postage prepaid, to Debtor at its address set
forth herein or such other address as Debtor may have provided to the Lender, in
a Record, at least ten (10) days before the time of such sale or disposition.
The Lender may, if it deems it reasonable, postpone or adjourn any sale of any
Collateral from time to time by an announcement at the time and place of the
sale to be so postponed or adjourned without being required to give a new notice
of sale, provided, however, that the Lender shall provide Debtor with written
notice of the time and place of such postponed or adjourned sale. The Lender may
be the purchaser at any such sale, and payment may be made, in whole or in part,
in respect of such purchase price by the application of Obligations due from
Debtor to the Lender. Debtor shall be obligated for, and the proceeds of sale
shall be applied first to, the costs of retaking, refurbishing, storing,
guarding, insuring, preparing for sale, and selling the Collateral, including
the reasonable fees and disbursements of attorneys, auctioneers, appraisers,
consultants and accountants employed by the Lender. Proceeds from the Sale or
other disposition or Collateral shall be applied to the payment, in whatever
order the Lender may elect, of all Obligations of Debtor. The Lender shall
return any excess to Debtor and Debtor shall remain liable for any deficiency.
Collateral securing purchase money security interests also secures non-purchase
money security interests. To the extent Debtor uses an advance under the Loan
Documents to purchase Collateral, Debtor's repayment of such advance shall apply
on a "first-in-first-out" basis so that the portion of the advance used to
purchase a particular item of Collateral shall be paid in the chronological
order the Debtor purchased the Collateral. Upon request of the Lender, Debtor
will assemble and make the Collateral available to the Lender, at a reasonable
place and time designated by the Lender. Debtor's failure to take possession of
any Collateral at any time and place reasonably specified by the Lender in a
Record to the Debtor shall constitute an abandonment of such Property.
The Lender shall not be responsible to Debtor for loss or
damage resulting from the Lender's failure to enforce or collect any Collateral
or any monies due or to become due under any liability of Debtor to the Lender.
After an Event of Default, Debtor (i) will make no change in
any Receivable or General Intangible, and (ii) shall receive as the sole
property of the Lender and hold in trust for
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the Lender all monies, checks, notes, drafts, and other property (collectively
called "items of payment") representing the proceeds of any Collateral. During
the existence of an Event of Default, the Lender may but shall be under no
obligation to: (a) notify all appropriate parties that the Collateral, or any
part thereof, has been assigned to the Lender; (b) collect any Receivables or
General Intangibles in its or Debtor's name, and apply any such collections
against such obligations of Debtor to the Lender as the Lender may select; (c)
take control of any cash or non-cash proceeds of any item of the Collateral; (d)
compromise, extend or renew any Receivables, General Intangible, or Document, or
deal with the same as it may deem advisable; and (e) make exchanges,
substitutions or surrender of items comprising the Collateral.
SECTION 5.9 LENDER'S RIGHT OF SET-OFF. The Lender may, at any
time upon the occurrence of an Event of Default exists hereunder and without any
further notice to Debtor (such notice being expressly waived), set-off or apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held by, or any other Indebtedness at any time owing by the Lender
or any participant in the Lender's loans, to Debtor to or for the credit or the
account of Debtor against any Obligation irrespective of whether any demand has
been made hereunder or whether such Obligation is mature.
SECTION 5.10 EXPENSE OF COLLECTION AND SALE. Debtor agrees to
pay all costs and expenses incurred by the Lender in connection with the
negotiation and preparation of this Agreement or any other document, or any
other Loan Documents executed in connection herewith, in determining the
Lender's rights under, and in enforcing and collecting the indebtedness
represented by the guaranty and in determining its rights under and enforcing
the security interests created by this Agreement, including, without limitation,
costs and expenses relating to taking, holding, insuring, preparing for sale,
appraising, selling or otherwise realizing on the Collateral, and reasonable
attorneys' fees and expenses in connection with any of the foregoing. All such
reasonable costs and expenses shall be payable on demand, and shall bear
interest, payable on demand, from the date of the Lender's payment of such costs
and expenses until payment in full is made by Debtor, at the highest rate of
interest permitted by law.
SECTION 5.11 COMPLIANCE WITH OTHER LAWS. The Lender may comply
with any applicable law requirements in connection with a disposition of the
Collateral, and compliance will not be considered adversely to effect the
commercial reasonableness of any sale of the Collateral.
SECTION 5.12 WARRANTIES. The Lender may sell the Collateral
without giving any warranties. Lender may specifically disclaim any warranties
of title or the like. This procedure will not be considered adversely to affect
the commercial reasonableness of any sale of the Collateral.
SECTION 5.13 SALES ON CREDIT. If the Lender sells any of the
Collateral on credit, Debtor will be credited only with payments actually made
by the purchaser, received by Lender and applied to the Obligations. If the
purchaser fails to pay for the Collateral, Lender may resell the Collateral, and
Debtor shall be credited with the proceeds of the sale.
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ARTICLE VI
MISCELLANEOUS
SECTION 6.1 WAIVERS. Debtor expressly waives notice of
nonpayment, demand, presentment, protest or notice of protest in relation to the
Loan Documents or the Collateral. No delay or omission of the Lender in
exercising or enforcing any of its rights, powers, privileges, options or
remedies under this Agreement shall constitute a waiver thereof, and no waiver
by the Lender of any default by Debtor shall operate as a waiver of any other
default.
SECTION 6.2 REMEDIES NOT EXCLUSIVE. All rights and remedies of
the Lender under this Agreement shall be cumulative and not alternative or
exclusive, irrespective of any other collateral guaranty, right or remedy and
may be exercised by the Lender at such time or times and in such order as the
Lender, in its sole discretion, may determine, and are for the sole benefit of
the Lender. The exercise or failure to exercise such rights and remedies shall
not result in liability to Lender or others except in the event of willful
misconduct or bad faith by the Lender, and in no event shall the Lender be
liable for more than it actually receives as a result of the exercise or failure
to exercise such rights and remedies.
SECTION 6.3 SUCCESSORS AND SURVIVAL. This Agreement is entered
into for the benefit of the parties hereto and their successors and assigns. It
shall be binding upon and shall inure to the benefit of said parties, their
successors and assigns, and shall remain in force and effect until terminated as
to future transactions by a Record Authenticated by the parties. Lender shall
have the right, without the necessity of any further consent or authorization by
Debtor, to sell, assign, securitize or grant participation in all, or any
portion of, Lender's interest in the Loans, to other financial institutions of
the Lender's choice along such terms as are acceptable to Lender in its sole
discretion.
SECTION 6.4 NOTICES. Wherever this Agreement provides for
notice to any party (except as expressly provided to the contrary), it shall be
given by messenger, facsimile, certified U.S. mail with return receipt
requested, or nationally recognized overnight courier with receipt requested,
effective when received by the party to whom addressed, and shall be addressed
as follows, or to such other address as the party affected may hereafter
designate:
If to the Lender: Keltic Financial Partners, LP
Attn: Xxxx X. Xxxxxx, Managing Partner
000 Xxxxxxxx Xxxxx Xxxxxx, Xxxxx X-000
Xxx, Xxx Xxxx 00000
Tel: (000) 000-0000 (ext. 208)
Fax: (000) 000-0000
With a copy to: Pitney, Xxxxxx, Xxxx & Xxxxx LLP
Attn: Xxxxxxx X. Xxxxxx, Esq.
000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
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If to Debtor: MMAC Communications Corp.
Attn: President
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to: XxxxXxxx.xxx, Inc.
Attn: Chief Financial Officer
00000 Xxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
and to:
Xxxxxx and Xxxxx, LLP
Attn: Xxxxxx X. Xxxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
SECTION 6.5 ENTIRE AGREEMENT; AMENDMENTS; LENDER'S CONSENT.
This Agreement (including the Exhibits and Schedules thereto) and the other Loan
Documents supersede, with respect to their subject matter, all prior and
contemporaneous agreements, understandings, inducements or conditions between
the respective parties, whether express or implied, oral or written. No
amendment or waiver of any provision of this Agreement or any of the Loan
Documents, nor consent to any departure by Debtor therefrom, shall in any event
be effective unless the same shall be in a Record Authenticated by the Lender,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 6.6 CROSS DEFAULT; CROSS COLLATERAL. Debtor hereby
agrees that (a) all other agreements between Debtor and the Lender are hereby
amended so that a default under this Agreement is a default under all such other
agreements and a default under any of such other agreements is a default under
this Agreement, and (b) the Collateral under this Agreement secures the
Obligations now or hereafter outstanding under all other agreements between
Debtor and the Lender and the Collateral pledged under any other agreement with
the Lender secures the Obligations under this Agreement.
SECTION 6.7 EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
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SECTION 6.8 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement or any of the other Loan Documents that 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 of this Agreement or the other Loan Documents or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 6.9 TABLE OF CONTENTS; HEADINGS. The table of contents
and headings preceding the text of this Agreement are inserted solely for
convenience of reference and shall not constitute a part of this Agreement or
affect its meaning, construction or effect.
SECTION 6.10 EXHIBITS AND SCHEDULES. All of the Exhibits and
Schedules to this Agreement are hereby incorporated by reference herein and made
a part hereof.
SECTION 6.11 CONFLICTS OF LAW. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York; provided, however, that if any of the Collateral shall be located in
any jurisdiction other than New York, the laws of such jurisdiction shall govern
the method, manner and procedure for foreclosure of the Lenders' lien upon such
Collateral and the enforcement of the Lender's other remedies in respect of such
Collateral to the extent that the laws of such jurisdiction are different from
or inconsistent with the laws of New York. Notwithstanding the location where
this Agreement is executed and delivered by the Debtor, the location of the
execution and delivery of this Agreement shall be deemed to be in the State of
New York.
SECTION 6.12 WAIVER OF RIGHT TO JURY TRIAL. DEBTOR WAIVES THE
RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY ACTION, SUIT, PROCEEDING,
COUNTERCLAIM OR OTHER LITIGATION TO WHICH LENDER AND DEBTOR ARE PARTIES IN
RESPECT OF ANY MATTER ARISING UNDER THIS AGREEMENT OR ANY OTHER MATTER INVOLVING
DEBTOR AND LENDER, WHETHER OR NOT OTHER PERSONS ARE ALSO PARTIES THERETO. DEBTOR
ACKNOWLEDGES THAT THE FOREGOING WAIVER IS A MATERIAL INDUCEMENT TO LENDER'S
ENTERING INTO THIS AGREEMENT AND THAT LENDER IS RELYING ON THE FOREGOING WAIVER
IN ITS FUTURE DEALINGS WITH DEBTOR. DEBTOR REPRESENTS AND WARRANTS THAT DEBTOR
REVIEWED THIS JURY WAIVER PROVISION WITH ITS LEGAL COUNSEL, AND HAS MADE THIS
WAIVER KNOWINGLY AND VOLUNTARILY.
SECTION 6.13 CONSENT TO JURISDICTION. AS PART OF THE
CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE
DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF DEBTOR OR THE LENDER, DEBTOR HEREBY
CONSENTS AND AGREES THAT ANY FEDERAL OR STATE COURT LOCATED IN ANY COUNTY IN NEW
YORK STATE, SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN DEBTOR AND THE LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER
ARISING OUT OF OR RELATED TO THIS AGREEMENT; PROVIDED, HOWEVER, THE LENDER MAY,
AT ITS OPTION, COMMENCE ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER
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APPROPRIATE FORUM OR JURISDICTION TO OBTAIN POSSESSION OF OR FORECLOSE UPON ANY
COLLATERAL, TO OBTAIN EQUITABLE RELIEF OR TO ENFORCE ANY JUDGMENT OR ORDER
OBTAINED BY THE LENDER AGAINST DEBTOR OR WITH RESPECT TO ANY COLLATERAL, TO
ENFORCE ANY OTHER RIGHT OR REMEDY UNDER THIS AGREEMENT OR TO OBTAIN ANY OTHER
RELIEF DEEMED APPROPRIATE BY THE LENDER. DEBTOR EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND DEBTOR HEREBY WAIVES ANY OBJECTION WHICH DEBTOR MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. DEBTOR REPRESENTS AND WARRANTS THAT IT HAS REVIEWED
THIS CONSENT TO JURISDICTION PROVISION WITH ITS LEGAL COUNSEL, AND HAS MADE THIS
WAIVER KNOWINGLY AND VOLUNTARILY.
[END OF TEXT; SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been executed as of the
day and year first above written.
MMAC COMMUNICATIONS CORP.
By: /s/ XXXXXX X. XXXXXX
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
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SCHEDULE A
COLLATERAL LOCATIONS
000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000
19
SCHEDULE 3.1 (a)
INVENTORY LOCATIONS
000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000
20
SCHEDULE 3.3(a)
EQUIPMENT LOCATIONS
000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000
See List of Additional Locations Attached
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