SECURITY AGREEMENT
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THIS SECURITY AGREEMENT, dated as of October 29, 1998, between STAR STRUCK,
INC., a Connecticut corporation (the "Borrower"), and PEOPLE'S BANK, a
Connecticut banking corporation (the "Lender").
WHEREAS, the Borrower has entered into a Loan Agreement of even date
herewith (as amended and in effect from time to time, the "Loan Agreement") with
the Lender, pursuant to which the Lender, subject to the terms and conditions
contained therein, is to make loans to the Borrower; and
WHEREAS, it is a condition precedent to the Lender's making any loans to
the Borrower under the Loan Agreement that the Borrower execute and deliver to
the Lender a security agreement in substantially the form hereof; and
WHEREAS, the Borrower wishes to grant security interests in favor of the
Lender as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. Certain capitalized terms used herein have the
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meaning ascribed to them in Exhibit A hereof. All capitalized terms used herein
but not defined in Exhibit A hereof or elsewhere in Agreement shall have the
respective meanings provided therefor in the Loan Agreement. The rules of
interpretation specified in Section 1.2 of the Loan Agreement shall be
applicable to this Agreement.
Section 2. Grant of Security Interest.
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(a) The Borrower hereby grants to the Lender, to secure the payment
and performance in full of all of the Obligations, a security interest in and
so pledges and assigns to the Lender the properties, assets and rights of the
Borrower wherever located, whether now owned or hereafter acquired or arising,
and all proceeds and products thereof (all of the same being hereinafter called
the "Collateral"):
All personal and fixture property of every kind and nature,
including, without limitation, all furniture, fixtures, equipment, raw
materials, inventory, goods, accounts, contract rights, rights to the payment of
money, insurance refund claims all other insurance claims and proceeds, tort
claims, chattel paper, documents, instruments (including certificated
securities), deposit accounts, security entitlements, investment property,
credit card receivables, and all general intangibles, including, without
limitation, all uncertificated securities, tax refund
claims, license fees, patents, patent applications, trademarks, trademark
applications, trade names, copyrights, copyright applications, rights to xxx and
recover for past infringement of patents, trademarks and copyrights, computer
programs, computer software, engineering drawings, service marks, customer
lists, goodwill, and all licenses, permits, agreements of any or nature pursuant
to which the Borrower possesses, uses or has authority to possess or use
property (whether tangible or intangible) of others or others possess, use or
have authority to possess or use property (whether tangible or intangible) of
the Borrower, and all recorded data of any kind or nature, regardless of the
medium of recording, including, without limitation, all software, writings,
plans, specifications and schematics.
(b) Pursuant to the terms hereof, the Borrower has endorsed, assigned
and delivered to the Lender all negotiable or non-negotiable instruments
(including certificated securities) and chattel paper pledged by it hereunder,
together with instruments of transfer or assignment duly executed in blank as
the Lender may have specified. In the event that the Borrower shall, after the
date of this Agreement, acquire any other negotiable or non-negotiable
instruments (including certificated securities) or chattel paper to be pledged
by it hereunder, the Borrower shall forthwith endorse, assign and deliver the
same to the Lender, accompanied by such instruments of transfer or assignment
duly executed in blank as the Lender may from time to time specify. To the
extent that any securities, certificated or uncertificated, are subject to book-
entry transfer procedures, such securities have been or, in the case of book-
entry securities hereafter acquired by the Borrower, will at the time of such
acquisition be, duly transferred to the account of the Lender or one or more
nominees of the Lender with such book-entry facility or other appropriate
financial intermediary, with the Lender having at all times the right to obtain
definitive certificates (in the Lender's name or in the name of one or more
nominees of the Lender) where the issuer customarily or otherwise issues
certificates, all to be held as Collateral hereunder. The Borrower hereby
acknowledges that the Lender may, in its discretion, appoint one or more
financial institutions to act as the Lender's agent in holding in custodial
account instruments in which the Lender is granted a security interest
hereunder, including, without limitation, certificates of deposit and other
instruments evidencing short-term obligations. Notwithstanding anything to the
contrary contained in this Section 2.(b), so long as no Event of Default shall
have occurred and be continuing, the Borrower may retain for collection in the
ordinary course of business any Instruments received by it in the ordinary
course of business.
Section 3. Title to Collateral, Etc. The Borrower is the owner of the
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Collateral free from any adverse lien, security interest or other encumbrance,
except for this Agreement and other liens permitted by the Loan Agreement. None
of the account debtors in respect of any accounts, chattel paper or general
intangibles and none of the obligors in respect of any instruments included in
the Collateral is a governmental authority subject to the Federal Assignment of
Claims Act.
Section 4. Continuous Perfection. The Borrower's place of business or, if
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more than one, chief executive office is indicated on the Certificate by
Officers completed by Borrower and delivered to the Lender on the date hereof.
The Borrower will not change the same, or the name, identity or corporate
structure of the Borrower in any manner, without providing at least thirty
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(30) days prior written notice to the Lender, and if required by Lender,
delivering an opinion of counsel with respect thereto, in accordance with this
Section 4. In each case, the opinion of counsel required by Section 4 shall be
provided at Borrower's sole cost expense, shall be an opinion of counsel
acceptable to the Lender, shall be satisfactory in form and substance to the
Lender, and shall be to the effect that all financing statements and amendments
or supplements thereto, continuation statements and other documents required to
be recorded or filed in order to perfect and protect Lender's security interest
in the Collateral against all creditors of and purchasers from the Borrower, for
a period specified in such opinion, have been filed in each filing office
necessary for such purpose and that all filing fees and taxes, if any, payable
in connection with such filings have been paid in full.
Section 5. No Liens. Except for the security interest herein granted and
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such permitted liens as set forth in Section 4.8 of the Loan Agreement, the
Borrower shall be the owner of the Collateral free from any lien, security
interest or other encumbrance, and the Borrower shall defend the same against
all claims and demands of all persons at any time claiming the same or any
interests therein adverse to the Lender. The Borrower shall not pledge, mortgage
or create, or suffer to exist a security interest in the Collateral in favor of
any person other than the Lender.
Section 6. No Transfers. The Borrower will not sell, offer to sell, lease
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or otherwise transfer the Collateral or any interest therein except for (a)
sales and leases of inventory and licenses of general intangibles in the
ordinary course of business and (b) sales or other dispositions of obsolescent
items of equipment in the ordinary course of business consistent with past
practices.
Section 7. Insurance. The Borrower will maintain insurance as required by
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Section 5.5 of the Loan Agreement.
Section 8. Accounts.
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(a) As of the time when each of its Accounts arises, the Borrower
shall be deemed to have represented and warranted that such Accounts and all
records, papers and documents relating thereto (i) are genuine and in all
respects what they purport to be, (ii) represent the legal, valid and binding
obligation of the related Account Debtor evidencing indebtedness unpaid and owed
by such Account Debtor arising out of the sale or lease (or both) and delivery
of the merchandise listed therein, (iii) will, except for the original or
duplicate original invoice sent to a purchaser evidencing such purchaser's
account, be the only original writings evidencing and embodying such obligation
of the Account Debtor named therein, (d) constitute and evidence true and valid
obligations, enforceable in accordance with their respective terms, not subject
to the fulfillment of any contract or condition whatsoever or to any defenses,
setoffs or counterclaims (except with respect to refunds, returns and allowances
in the ordinary course of business), or stamp or other taxes, and (e) are in all
material respects in compliance and conform with all applicable federal, state
and local laws and applicable laws of any relevant foreign jurisdiction;
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(b) The Borrower shall keep and maintain at its own cost expense
satisfactory and complete records of each Account for at least five years (with
the exception of sales slips which shall be retained for at least six months)
from the date on which such Account comes into existence, including records of
all payments received, all credits granted thereon, all merchandise returned and
all other documentation relating thereto, and the Borrower shall make the same
available to the Lender for inspection, at the Borrower's sole cost and expense,
in accordance with [Section 5.7] of the Loan Agreement. Upon the occurrence and
during the continuance of an Event of Default, the Borrower shall, at its own
cost and expense, deliver all tangible evidence of Accounts (including all
documents evidencing Accounts) such books and records to the Lender or to its
representatives (copies of which evidence and books and records may be retained
by the Borrower) at any time upon the Lender's demand. Upon the occurrence and
during the continuance of Event of Default, the Lender may transfer a full and
complete copy of the Borrower's books, records, credit information, reports,
memoranda, and all other writings relating to the Accounts to and for the use by
any person that has acquired or is contemplating acquisition of an interest in
the Accounts or the Lender's security interest therein without the consent of
the Borrower;
(c) The Borrower shall legend, in form and manner satisfactory to the
Lender, the Accounts and other books, records and documents of the Borrower
evidencing or pertaining to the Accounts with an appropriate reference to the
fact that the Accounts have been assigned to the Lender and that the Lender has
a security interest therein.
(d) The Borrower shall use all commercially reasonable efforts to
cause to be collected from its Account Debtors, as when due, any and all amounts
owing under or on account of each Account (including, without limitation,
Accounts which are delinquent, such Accounts to be collected in accordance with
lawful collection procedures) and shall apply forthwith upon receipt thereof all
such amounts as are so collected to the outstanding balance of such Account.
Subject to the rights of the Lender if an Event of Default shall have occurred
and be continuing, the Borrower may in the ordinary course of business (to the
extent consistent with its historical collection practices) allow as adjustments
to amounts owing under its Accounts (i) an extension or renewal of the time or
times of payment, or settlement for less the total unpaid balance, which the
Borrower finds appropriate in accordance with sound business judgment and (ii) a
refund or credit due as a result of returned or damaged merchandise. The costs
and expenses (including, without limitation, attorney's fees) of collection,
whether incurred by the Borrower or the Lender, shall be borne by the Borrower.
(e) If at any time Borrower shall take and perfect a security interest
in any property of an Account Debtor or any other Person to secure payment and
performance of an Account, the Borrower shall promptly assign such security
interest to the Lender. Such Assignment need not be filed of public record
unless necessary to continue the perfected status of the security interest
against creditors of and transference from the Account Debtor or other person
granting the security interest.
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Section 9. Equipment. The Borrower shall not permit any Equipment to
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become a fixture to real estate or accession to other personal property unless
the Lender shall have a first priority Lien thereon.
Section 10. Maintenance of Collateral; Compliance with Law. The Borrower
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will keep the Collateral in good order and repair and not use the same in
violation of law or any policy of insurance thereon. The Lender, or its
designee, may inspect the Collateral at any reasonable time, wherever located.
The Borrower will pay promptly when due all taxes, assessments, governmental
charges and levies upon the Collateral or incurred in connection with the use or
operation of such Collateral or incurred in connection with this Agreement. The
Borrower has at all times operated, and the Borrower will continue to operate,
its business in compliance with all applicable provisions of the federal Fair
Labor Standards, as amended.
Section 11. Collateral Protection Expenses; Preservation of Collateral.
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(a) In its discretion, the Lender may discharge taxes and other
encumbrances at any time levied or placed on any of the Collateral, make repairs
thereto and pay any necessary filing fees. The Borrower agrees to reimburse the
Lender on demand for any and all expenditures so made. The Lender shall have no
obligation to the Borrower to make any such expenditures, nor shall the making
thereof relieve the Borrower of any default.
(b) Anything herein to the contrary notwithstanding, the Borrower
shall remain liable under each contract or agreement comprised in the Collateral
to be observed or performed by the Borrower thereunder. The Lender shall not
have any obligation or liability under any such contract or agreement by reason
of or arising out of this Agreement or the receipt by the Lender of any payment
relating to any of the Collateral, nor shall the Lender be obligated in any
manner to perform any of the obligations of the Borrower under or pursuant to
any such contract or agreement, to make inquiry as to the nature or sufficiency
of any payment received by the Lender in respect of the Collateral or as to the
sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Lender or to which the Lender may be entitled at any time or
times. The Lender's sole duty with respect to the custody, safe-keeping and
physical preservation of the Collateral in its possession, under (S) 9-207 of
the Uniform Commercial Code of the State of Connecticut or otherwise, shall be
to deal with such Collateral in the same manner as the Lender deals with similar
property for its own account.
Section 12. Securities and Deposits. The Lender may at any time, at its
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option, transfer to itself or any nominee any securities constituting
Collateral, receive any income thereon and hold such income as additional
Collateral or apply it on the Obligations. Whether or not Obligations are due,
the Lender may demand, xxx for, collect, or make any settlement or compromise it
deems desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or other sums
at any time credited by or due from the Lender to the Borrower may at any time
be applied to or set off against any of the Obligations.
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Section 13. Notification to Account Debtors and Other Obligors. If an Event
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of Default shall have occurred and be continuing, the Borrower shall, at the
request of the Lender, notify account debtors on accounts, chattel paper and
general intangibles of the Borrower and obligors on instruments for which the
Borrower is an obligee of the security interest of the Lender in any account,
chattel paper, general intangible or instrument and that payment thereof is to
be made directly to the Lender or to any financial institution designated by the
Lender as the Lender's agent therefor, and the Lender may itself, without notice
to or demand upon the Borrower, so notify account debtors and obligors. After
the making of such a request or the giving of any such notification, the
Borrower shall hold any proceeds of collection of accounts, chattel paper,
general intangibles and instruments received by the Borrower as trustee for
the Lender without commingling the same with other funds of the Borrower and
shall turn the same over to the Lender in the identical form received, together
with any necessary endorsements or assignments. The Lender shall apply the
proceeds of collection of accounts, chattel paper, general intangibles and
instruments received by the Lender to the Obligations, such proceeds to be
immediately entered after final payment in cash or solvent credits of the items
giving rise to them.
Section 14. Further Assurances. The Borrower, at its own expense, shall do,
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make, execute and deliver all such additional and further acts, things, deeds,
assurances, assignments, documents, agreements and instruments as the Lender may
require more completely to vest in and assure to the Lender its rights hereunder
or in any of the Collateral, including, without limitation (a) executing,
delivering and, where appropriate, filing financing statements and continuation
statements under the Uniform Commercial Code, (b) obtaining governmental and
other third party consents and approvals, (c) obtaining waivers from mortgagees
and landlords, and (d) taking all actions required by Article 8 or "Revised
Article 8", of the Uniform Commercial Code, as applicable in each relevant
jurisdiction, with respect to certificated and uncertificated securities. To the
extent permitted by applicable law, the Borrower hereby authorizes the Lender to
execute and file financing statements or continuation statements without the
Borrower's signature appearing thereon. The Borrower agrees that a carbon,
photographic, photostatic or other reproduction of Agreement or of a financing
statement is sufficient as a financing statement. The Borrower shall pay the
costs of, or incidental to, any recording or filing of any financing or
continuation statements.
Section 15. Power of Attorney.
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(a) The Borrower hereby irrevocably constitutes and appoints the
Lender and any officer or agent thereof, with full power of substitution, as its
true and lawful attorneys-in-fact with full irrevocable power and authority in
the place and stead of the Borrower or in the Lender's own name, for the purpose
of carrying out the terms of this Agreement, to take any and all appropriate
action and to execute any and all documents and instruments that may be
necessary or desirable to accomplish the purposes of Agreement and, without
limiting the generality of the foregoing, hereby gives said attorneys the power
and right, on behalf of the Borrower, without
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notice to or assent by the Borrower upon the occurrence of an Event of Default
or a Default (as defined in the Loan Agreement), to do the following:
(i) to receive, open and dispose of all mail to Borrower, to
notify the Post Office authorities to change the address for
delivery of mail addressed to Borrower to such address as
Lender may designate; to endorse the name of Borrower on any
notes, acceptances, checks, drafts money orders, instruments
or other evidence of payment or proceeds of the Collateral
that may come into Lender's possession; to sign the name of
Borrower on any invoices, bills of lading, documents, drafts
against and notices (which also may direct, among other
things, that payment be made directly to Lender) to Account
Debtors or obligors of Borrower, assignments and requests
for verification of Accounts; to execute proofs of claim and
loss; to execute any endorsements, schedules, assignments,
or other instruments of conveyance or transfer, to adjust
and compromise any claims under insurance policies; to
execute releases;
(ii) upon the occurrence and during the continuance of an Event
of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the
Collateral in such manner as is consistent with the
Uniform Commercial Code of the State of Connecticut and as
fully and completely as though the Lender were the absolute
owner thereof for all purposes, and to do at the Borrower's
expense, at any time, or from time to time, all acts and
things which the Lender deems necessary to protect, preserve
or realize upon the Collateral and the Lender's security
interest therein, in order to effect the intent of this
Agreement, all as fully and effectively as the Borrower
might do, including, without limitation (A) the filing and
prosecuting of registration and transfer applications with
the appropriate federal or local agencies or authorities
with respect to trademarks, copyrights and patentable
inventions and processes, (B) upon written notice to the
Borrower, the exercise of voting rights with respect to
voting securities, which rights may be exercised, if the
Lender so elects, with a view to causing the liquidation in
a commercially reasonable manner of assets of the issuer of
any such securities, and (C) the execution, delivery and
recording, in connection with any sale or other disposition
of any Collateral, the endorsements, assignments or other
instruments of conveyance or transfer with respect to such
Collateral; and
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(iii) to file such financing statements with respect hereto, with
or without the Borrower's signature, or a photocopy of this
Agreement in substitution for a financing statement, as the
Lender may deem appropriate to execute in the Borrower's
name such financing statements and continuation statements
which may require the Borrower's signature;
(iv) to do all other acts and things necessary advisable in the
sole discretion of Lender to carry out and enforce this
Agreement.
(b) To the extent permitted by law, the Borrower hereby ratifies all
that said attorneys shall lawfully do or cause to be done by virtue hereof. This
power of attorney is a power coupled with an interest and shall be irrevocable.
(c) The powers conferred on the Lender hereunder are solely to protect
its interests in the Collateral shall not impose any duty upon it to exercise
any such powers. The Lender shall be accountable only for the amounts that it
actually receives as a result of the exercise of such powers and neither it nor
any of its officers, directors, employees or agents shall be responsible to the
Borrower for any act or failure to act, except for the Lender's own gross
negligence or willful misconduct.
Section 16. Remedies.
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(a) If an Event of Default shall have occurred and be continuing, the
Lender may, without notice or demand to the Borrower, declare this Agreement to
be in default, and the Lender shall thereafter have in any jurisdiction in which
enforcement hereof is sought, in addition to all other rights and remedies, the
rights and remedies of a secured party under the Uniform Commercial Code,
including, without limitation, the right to take possession of the Collateral,
and for that purpose the Lender may, so far as the Borrower can give authority
therefor, enter upon any premises on which the Collateral may be situated and
remove the same therefrom. The Lender may in its discretion require the Borrower
to assemble all or any part of the Collateral at such location or locations
within the state(s) of the Borrower's principal office(s) or at such other
locations as the Lender may designate. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Lender shall give to the Borrower at least five (5)
business days prior written notice of the time place of any public sale of
Collateral or of the time after which any private sale or any other intended
disposition is to be made. The Borrower hereby acknowledges that five (5)
business days prior written notice of such sale or sales shall be reasonable
notice. In addition, the Borrower waives any all rights that it may have to
judicial hearing in advance of the enforcement of any of the Lender's rights
hereunder, including, without 1imitation, its right following an Event of
Default to take immediate possession of the Collateral and exercise its rights
with respect thereto.
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(b) Without limiting the generality of the foregoing, the Borrower
agrees that the Lender shall have the right, subject to the mandatory
requirements of applicable law, to sell or otherwise dispose of all or any part
of the Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the Lender
shall deem appropriate. The Lender shall be authorized at any such sale (if it
deems it advisable to do so) to restrict the prospective bidders or purchasers
to persons who will represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to the distribution or
sale thereof, and upon consummation of any such sale the Lender shall have the
right to assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely free from any claim or right on the part of Borrower, and
Borrower hereby waives (to the fullest extent permitted by applicable law) all
rights of redemption, stay and appraisal that Borrower now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted.
(c) Any public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Lender may fix and
state in the notice (if any) of such sale. At any such sale, the Collateral, or
portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Lender may (in its sole and absolute discretion) determine. The
Lender shall not be obligated to make any sale of any Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Lender may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Lender until the sale price is paid by the purchaser or purchasers thereof, but
the Lender shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon notice. For purposes
hereof, (a) a written agreement to purchase the Collateral or any portion
thereof shall be treated as a sale thereof, (b) the Lender shall be free to
carry out such sale pursuant to such agreement and (c) no Borrower shall be
entitled to the return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Lender shall have entered into such an
agreement all Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale herein conferred
upon it, the Lender may proceed by a suit or suits at law or in equity to
foreclose upon the Collateral and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court appointed receiver. Any sale
pursuant to the provisions of this Section 16 shall be deemed to conform to the
commercially reasonable standards as provided in Section 9-504(3) (or any
successor thereto) of the Uniform Commercial Code as in effect in the State of
Connecticut or its equivalent in other jurisdictions.
Section 17. No Waiver, Etc. The Borrower waives demand, notice, protest,
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notice of acceptance of this Agreement, notice of loans made, credit extended,
Collateral received or
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delivered or other action taken in reliance hereon and all other demands and
notices of any description. With respect to both the Obligations and the
Collateral, the Borrower assents to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
Collateral, to the addition or release of any party or person primarily or
secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Lender may deem advisable. The Lender shall have no
duty as to the collection or protection of the Collateral or any income thereon,
nor as to the preservation of rights against prior parties, nor as to the
preservation of any rights pertaining thereto beyond the safe custody thereof.
The Lender shall not be deemed to have waived any of its rights upon or under
the Obligations or the Collateral unless such waiver shall be in writing and
signed by the Lender. No delay or omission on the part of the Lender in
exercising any right shall operate as a waiver of such right or any other right.
A waiver on any one occasion shall not be construed as a bar to or waiver of any
right on any future occasion. All rights and remedies of the Lender with respect
to the Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, shall be cumulative and may be exercised singularly,
alternatively, successfully or concurrently at such time or at such times as the
Lender deems expedient.
Section 18. Marshaling. The Lender shall not be required to marshal any
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present or future collateral security (including, but not limited to, this
Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of its rights hereunder
and in respect of such collateral security and other assurances of payment shall
be cumulative and in addition to all other rights, however existing or arising.
To the extent that it lawfully may, the Borrower hereby agrees that it will not
invoke any law relating to the marshaling of collateral which might cause delay
in or impede the enforcement of the Lender's rights under this Agreement or
under any other instrument creating or evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, the Borrower hereby irrevocably waives the benefits
of all such laws.
Section 19. Proceeds of Dispositions: Expenses. The Borrower shall pay to
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the Lender on demand any and all expenses, including reasonable attorneys' fees
and disbursements, incurred or paid by the Lender in protecting, preserving or
enforcing the Lender's rights under or in respect of any of the Obligations or
any of the Collateral. After deducting all of said expenses, the residue of any
proceeds of collection or sale of the Obligations or Collateral shall, to the
extent actually received in cash, be applied to the payment of the Obligations
in such order or preference as the Lender may determine, proper allowance being
made for any Obligations not then due. Upon the final payment and satisfaction
in full of all of the Obligations and after making any payments required by (S)
9-504(l)(c) (or any successor thereto) of the Uniform Commercial Code of the
State of Connecticut, any excess shall be returned to the Borrower, and the
Borrower shall remain liable for any deficiency in the payment of the
Obligations.
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Section 20. Overdue Amounts. Until paid, all amounts due and payable by the
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Borrower hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Loan Agreement.
Section 21. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS
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INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT. The Borrower
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the State of Connecticut or any federal court sitting therein and
consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Borrower by mail at the address
specified in Section 10.2 of the Loan Agreement. The Borrower hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
Section 22. Prejudgment Remedies. THE BORROWER AGREES THAT THIS IS A
--------------------
COMMERCIAL TRANSACTION AND NOT A CONSUMER TRANSACTION, AND WAIVES WITH RESPECT
TO ALL RIGHTS OF CREDITORS TO PROPERTY UNDER CONNECTICUT LAW, ANY RIGHT TO A
NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, AS
AMENDED, OR OTHER STATUTE OR STATUTES AFFECTING PREJUDGMENT REMEDIES AND
AUTHORIZES LENDER'S ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT
COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER, AND
WAIVES ANY CLAIM IN TORT, CONTRACT OR OTHERWISE AGAINST LENDER'S ATTORNEY WHICH
MAY ARISE OUT OF SUCH ISSUANCE OF THE WRIT FOR A PREJUDGMENT REMEDY WITHOUT
COURT ORDER. FURTHER, TO THE EXTENT ALLOWED UNDER APPLICABLE LAW, BORROWER
HEREBY WAIVES DEMAND, PRESENTMENT FOR PAYMENT, PROTEST, NOTICE OF PROTEST,
NOTICE OF DISHONOR, DILIGENCE IN COLLECTION, NOTICE OF NONPAYMENT OF THIS
AGREEMENT AND ANY AND ALL NOTICES OF A LIKE NATURE.
Section 23. Waiver of Jury Trial. BORROWER HEREBY EXPRESSLY WAIVES
--------------------
ANY AND ALL RIGHTS IT MAY HAVE TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
BORROWER HEREBY AGREES AND CONSENTS THAT
11
ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THE LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY
OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF DEBTOR'S CONSENT TO THE
WAIVER OF ITS RIGHT TO TRIAL BY JURY. Except as prohibited by law, the Borrower
waives any right which it may have to claim or recover in any litigation
referred to in the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages. The Borrower (a) certifies that neither the Lender nor any
representative, agent or attorney of the Lender has represented, expressly or
otherwise, that the Lender would not, in the event of litigation, seek to
enforce the foregoing waivers, and (b) acknowledges that, in entering into the
Loan Agreement and the other Loan Documents to which the Lender is a party, the
Lender is relying upon, among other things, the waivers and certifications
contained in this Section 23.
Section 24. Notices. All communications and notices hereunder shall (except
-------
as otherwise expressly permitted herein) be in writing and given as provided in
[Section 10.2] of the Loan Agreement.
Section 25. Security Interest Absolute. All rights of the Lender hereunder,
--------------------------
the security interest granted herein and all obligations of the Borrower
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Loan Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations
or any other amendment or waiver of or any consent to any departure from the
Loan Agreement, any other Loan Document or any other agreement or instrument
relating to the foregoing, (c) any exchange, release or nonperfection of any of
the Collateral or any other collateral, or any release or amendment or waiver of
or consent to or departure from any Guarantee, for all or any of the Obligations
or (d) any other circumstance that might otherwise constitute a defense
available to, or a discharge of Borrower in respect of the Obligations or in
respect of this Agreement (other than the indefeasible payment in full of all of
the Obligations).
Section 26. Miscellaneous. The headings of each section of this Agreement
-------------
are for convenience only and shall not define or limit the provisions thereof.
This Agreement and all rights and obligations hereunder shall be binding upon
the Borrower and its respective successors and assigns, and shall inure to the
benefit of the Lender and its successors and assigns. If any term of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity of
all other terms hereof shall in no way be affected thereby, and this Agreement
shall be construed and be enforceable as if such invalid, illegal or
unenforceable term had not been included herein. The Borrower acknowledges
receipt of a copy of this Agreement.
12
IN WITNESS WHEREOF, intending to be legally bound, the Borrower has caused
this Agreement to be duly executed as of the date first above written.
STAR STRUCK, INC.
By: /s/ Xxxxxxx Xxxxxx
-------------------------------
Xxxxxxx Xxxxxx
Its President
PEOPLE'S BANK
By: /s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx
Its Vice President
13
SCHEDULE I
COLLATERAL DESCRIPTION
----------------------
References herein to the (i) "Security Agreement" shall mean the Security
Agreement dated as of October 29, 1998 between Star Struck, Inc. ("Debtor") and
People's Bank, (ii) "UCC" shall mean the Uniform Commercial Code as in effect in
the State of Connecticut or its equivalent in other jurisdictions.
All of the Debtor's right, title and interest in and to the following
property, whether now owned or existing or hereafter arising or acquired and
regardless of where located (such property being referred to collectively as the
"Collateral"):
(a) Accounts. All "accounts" (as defined in the UCC) now owned or
--------
hereafter acquired by the Debtor, and all accounts receivable, contract rights,
book debts, notes, drafts, credit card receivables, and other obligations or
indebtedness owing to the Debtor arising from the sale, lease or exchange of
goods or other property by it and/or the performance of services by it
(including, without limitation, any such obligation which might be
characterized as an account, contract right or general intangible under the
Uniform Commercial Code in effect in any jurisdiction) and all of the Debtor's
rights in, to and under all purchase orders for goods, services or other
property represented by any of the foregoing (including returned or repossessed
goods and unpaid sellers' rights of rescission, replevin, reclamation and rights
to stoppage in transit) and all monies due to or to become due to the Debtor
under all contracts for the sale, lease or exchange of goods or other property
and/or the performance of services by it (whether or not yet earned by
performance on the part of the Debtor), in each case whether now in existence or
hereafter arising or acquired including, without limitation, the right to
receive the proceeds of said purchase orders and contracts and all collateral
security and guarantees of any kind given by any Person with respect to any of
the foregoing;
(b) Books and Records. All books and records (including), without
-----------------
limitation, customer lists, credit files, computer programs, printouts and other
computer materials and records) of the Debtor pertaining to any of the
Collateral;
(c) Capital Stock. All of the Debtor's right, title and interest in
-------------
the capital stock of any corporation, now owned or hereafter acquired, by
Debtor, and all income and profits thereon, and all dividends and other payments
and distributions with respect thereto, and all proceeds of the foregoing;
(d) Chattel Paper. All "chattel paper" (as defined in the UCC
-------------
evidencing, representing, arising from or existing in respect of, relating to,
securing or otherwise supporting the payment of, any of the Accounts, including
(but not limited to) promissory notes, drafts, bills of exchange and trade
acceptances, now owned or hereafter acquired by the Debtor;
(e) Copyrights. All copyrights, whether published or unpublished, all
----------
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Copyright Office or in any similar
office or agency of the United States, and all renewals thereof;
(f) Documents. All "documents" (as defined in the UCC) or other
---------
receipts covering, evidencing or representing goods, now owned or hereafter
acquired by the Debtor;
(g) Equipment. All "equipment" (as defined in the UCC) now owned or
---------
hereafter acquired by the Debtor (excluding motor vehicles), including without
limitation, all of Debtor's now owned or hereafter acquired machinery,
equipment, furniture, furnishings, fixtures and all tangible personal property
similar to any of the foregoing, including, without limitation, fixtures,
together with tools, machine parts, aircraft and motor vehicles of every kind
and description, all supplies used or consumed in the operation of any of the
above items, and all improvements, accessions or appurtenances thereto, and any
proceeds, including insurance proceeds, thereof;
(h) General Intangibles. All "general intangibles" (as defined in the
-------------------
UCC), now owned or hereafter acquired by the Debtor, including, without
limitation, (i) all obligations or indebtedness owing to the Debtor (other than
Accounts) from whatever source arising, (ii) all licenses, patents, patent
licenses, trademarks, trademark licenses, rights in intellectual property,
goodwill, trade names, service marks, trade secrets, copyrights and permits,
(iii) all rights or claims in respect of refunds for taxes paid and (iv) all
rights in respect of any pension plan or similar arrangement maintained for
employees of Borrower or of any ERISA Affiliate. As used herein, "ERISA
Affiliate" means any trade or business (whether or not incorporated) which is a
member of a group of which Borrower is a member or which is under common control
with the Borrower within the meaning of Section 414 of the Internal Revenue Code
of 1986, as the same may be amended from time to time, and the regulations
promulgated and rulings issued thereunder.
(i) Instruments. All "instruments" or "letters of credit" (each as
-----------
defined in the UCC) evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise supporting the payment of, any of
the Accounts, including (but not limited to) promissory notes, drafts, bills of
exchange and trade acceptances, now owned or hereafter acquired by the Debtor;
(j) Inventory. All "inventory" (as defined in the UCC), now owned or
---------
hereafter acquired by the Debtor, wherever located, including, without
limitation, all raw materials and other materials and supplies, work-in-process
and finished goods and any products made or processed therefrom and all
substances, if any, commingled therewith or added thereto;
2
(k) Security Entitlements; Investment Property. All "security
------------------------------------------
entitlements" and all "investment property " (each as defined in the UCC) now
owned or hereafter acquired by the Debtor, wherever located.
(l) Proceeds. All proceeds of, and all other profits, products, rents
--------
or receipts, in whatever form, arising from the collection, sale, lease,
exchange, assignment, licensing or other disposition of, or other realization
upon, Collateral, including without limitation all licenses, permits,
authorizations, and applications, all claims of the Debtor against third parties
for loss of, damage to or destruction of, or for proceeds payable under, or
unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any
Collateral, in each case whether now existing or hereafter arising;
(m) Trademarks. All of the following: (i) all trademarks, trade names,
------------
corporate names, company names, business names, logos, other source or business
identifiers, designs and general intangibles of like nature, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or any other country or
any political subdivision thereof, and (ii) all extensions or renewals thereof;
(n) Trademark License. All written agreements now or hereafter in
-----------------
existence granting to the Debtor any right to use any Trademark.
3
EXHIBIT A
---------
As used in this Security Agreement, the following terms shall have the
respective meanings ascribed to them below:
"Accounts" means all "accounts" (as defined in the UCC) now owned or
--------
hereafter acquired by the Borrower, and shall also mean and include all accounts
receivable, contract rights, book debts, notes, drafts and other obligations or
indebtedness owing to the Borrower arising from the sale, lease or exchange of
goods or other property by it and/or the performance of services by it
(including, without limitation, any such obligation which might be
characterized as an account, contract right or general intangible under the
Uniform Commercial Code in effect in any jurisdiction) and all of the Borrower's
rights in, to and under all purchase order for goods, services or other property
represented by any of the foregoing (including returned or repossessed goods and
unpaid sellers' rights of rescission, replevin, reclamation and rights to
stoppage in transit) and all monies due to or to become due to the Borrower
under all contracts for the sale, lease or exchange of goods or other property
and/or the performance of services by it (whether or not yet earned by
performance on the part of the Borrower), in each case whether now in existence
or hereafter arising or acquired including, without limitation, the right to
receive the proceeds of said purchase orders and contracts and all collateral
security and guarantees of any kind given by any Person with respect to any of
the foregoing.
"Account Debtor" means, any person who is or who may become obligated to
--------------
Borrower under, with respect to or on an Account.
"Chattel Paper" means all "chattel paper" (as defined in the UCC)
-------------
evidencing, representing, arising from or existing in respect of, relating to,
securing or otherwise supporting the payment of, any of the Accounts, including
(but not limited to) promissory notes, drafts, bills of exchange and trade
acceptances, now owned or hereafter acquired by the Debtor;
"Collateral" has the meaning set forth in Section 2.
----------
"Copyrights" means (a) all copyrights, whether published or unpublished,
----------
all registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Copyright Office or in any similar
office or agency of the United States and (b) all renewals thereof.
"Documents" means all "documents" (as defined in the UCC) or other receipts
---------
covering, evidencing or representing goods, now owned or hereafter acquired by
the Borrower.
"Equipment" means all "equipment" (as defined in the UCC) now owned or
---------
hereafter acquired by the Borrower (excluding motor vehicles), including without
limitation, all of Borrower's now owned or hereafter acquired machinery,
equipment, furniture, furnishings,
fixtures and all tangible personal property similar to any of the foregoing,
including, without limitation, fixtures, together with tools, machine parts,
aircraft and motor vehicles of every kind and description, all supplies used or
consumed in the operation of any of the above items, and all improvements,
accessions or appurtenances thereto, and any proceeds, including insurance
proceeds, thereof.
"General Intangibles" means all "general intangibles" (as defined in the
-------------------
UCC), now owned or hereafter acquired by the Borrower, including, without
limitation, (i) all obligations or indebtedness owing to the Borrower (other
than Accounts) from whatever source arising, (ii) all licenses, patents, patent
licenses, trademarks, trademark licenses, rights in intellectual property,
goodwill, trade names, service marks, trade secrets, copyrights and permits,
(iii) all rights or claims in respect of refunds for taxes paid and (iv) all
rights in respect of any pension plan or similar arrangement maintained for
employees of any member of the Controlled Group.
"Instruments" means all "instruments", "chattel paper" or "letters of
-----------
credit" (each as defined in the UCC) evidencing, representing, arising from or
existing in respect of, relating to, securing or otherwise supporting the
payment of, any of the Accounts, including (but not limited to) promissory
notes, drafts, bills of exchange and trade acceptances, now owned or hereafter
acquired by the Borrower.
"Inventory" means all "inventory" (as defined in the UCC), now owned or
---------
hereafter acquired by the Borrower, wherever located, and shall also mean and
include, without limitation, all raw materials and other materials and supplies,
work-in-process and finished goods and any products made or processed therefrom
and all substances, if any commingled therewith or added thereto.
"Obligations" means the obligations secured under this Agreement including
-----------
(a) all obligations of the Borrower under or in respect of the Loan Agreement,
including its obligations in respect of principal of and interest on any
Revolving Advance under, or any Notes issued pursuant to, the Loan Agreement,
and all other amounts payable under the Loan Agreement, (b) all other amounts
payable by the Borrower hereunder or under any other Loan Document, (c) all
interest on the Obligations listed in the foregoing clauses (a), and (b) and
(c), including without limitation, any interest which accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Borrower or any other Loan Party, or which
would accrue but for the commencement of such case, proceeding or other action,
whether or not allowed or allowable as a claim in any such proceeding and (d)
any renewals or extensions, replacements, modifications, substitutions,
amendments and restatements of any of the foregoing
"Proceeds" means all proceeds of, and all other profits, products, rents or
--------
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or other realization upon,
Collateral, including without limitation all licenses, permits, authorizations,
and applications, all claims of the Borrower against third parties for loss
A-2
of, damage to or destruction of, or for proceeds payable under, or unearned
premiums with respect to, policies of insurance in respect of, any Collateral,
and any condemnation or requisition payments with respect to any Collateral, in
each case whether now existing or hereafter arising.
"Trademarks" means all of the following: (i) all trademarks, trade names,
----------
corporate names, company names, business names, logos, other source or business
identifiers, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, and (ii) all extensions or
renewals thereof.
"Trademark License" means any written agreement now or hereafter in
-----------------
existence granting to the Borrower any right to use any Trademark.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
---
the State of Connecticut; provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
Security Interests in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than Connecticut, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or non-
perfection.
A-3
