SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made and
entered into this fourth day of January, 1996, by and between
CONCEPT COMMUNICATIONS, INC., 000 Xxxxxxxxxxxxx Xxx., X.X.,
Xxxxxxxxxx, X.X., 00000, a Delaware Corporation ("Secured
party"), and THE NOSTALGIA NETWORK, INC., 000 Xxxxxxxxxxxxx Xxx.,
X.X., Xxxxxxxxxx, X.X., 00000, a Delaware Corporation ("Debtor").
WHEREAS, Secured Party, on date even herewith has loaned to
Debtor One Million And No/100 Dollars ($1,000,000.00), and Debtor
did, effectively on this date, execute a Promissory Note (the
"Note") on which Secured Party is payee in the principal amount
of One Million and No/100 Dollars ($1,000,000.00), plus interest
thereon; and
WHEREAS, as an inducement to Secured Party to accept the
Note Debtor has agreed to execute and deliver this Agreement to
Secured Party; and
WHEREAS, the parties hereby wish to secure in the manner set
forth in this Agreement the payment, performance and discharge of
all obligations of Debtor under the Note or otherwise.
NOW, THEREFORE, in consideration of the mutual promises of
the parties hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. The Security Interests
A. In order to secure the due and punctual payment of
the Note (and all sums which may be owed thereunder) in
accordance with the terms thereof, as the Note may be amended
from time to time, Debtor hereby grants to Secured Party a
continuing security interest in the following (hereinafter
collectively called the "Collateral"):
(i) all personal property and fixtures in which
Debtor has an interest, now or hereafter existing or acquired,
and wherever located, tangible or intangible, including but not
limited to all present and hereafter existing or acquired
accounts, contract rights, general intangibles, equipment, goods,
inventory (raw materials, components, work-in process, finished
merchandise and packing and shipping materials), personal
property made available to Debtor by Secured Party (or its agent
or bailee) pursuant to a trust receipt or other security
agreement the effect of which is to continue Secured Party's
security interest therein, money, instruments, documents, chattel
paper, securities, deposits, credits, claims and demands against
Secured Party;
(ii) all proceeds thereof; and
(iii) all increases, substitutions, replacements,
additions and accessions thereto.
Security Agreement
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B. The security interests granted pursuant to this
Section 1 (the "Security Interests") are granted as security only
and shall not subject Secured Party to, or transfer or in any way
affect any obligation or liability of Debtor with respect to any
of the Collateral or any transaction which gave rise thereto.
2. Possession
Debtor shall have the right to sell, mortgage or otherwise
dispose of Collateral in the usual course of business without the
prior written consent of Secured Party, so long as such items are
replaced with comparable items of equal or greater value.
Secured Party shall have a security interest in all such
replacements items. Any action with respect to the Collateral
that is not in the ordinary course of business shall not be taken
unless Debtor shall have obtained the prior written consent of
Secured Party to such action.
3. Location
Except as otherwise provided in Section 2 hereof, Debtor
hereby agrees to keep the Collateral at its principal office and
not to remove the same (except in the usual course of business
for temporary periods) without the prior written consent of
Secured Party.
4. Filing
Debtor will, at its expense, execute, deliver, file and
record (in such manner and form as Secured Party may require), or
permit Secured Party to file and record any financing statements,
continuation statements, specific assignment or other instruments
that may be necessary or desirable in order to create, preserve,
perfect or validate any security interest or to enable Secured
Party to exercise and enforce its rights hereunder.
5. Repairs
Debtor hereby agrees to keep the Collateral, at Debtor's own
expense and cost, in such repair and condition as exists on the
date hereof and available for inspection by Secured Party at all
reasonable times.
6. Liens
Debtor hereby agrees to keep the Collateral free and clear
of all liens, charges, encumbrances, taxes and assessments,
except as may have been or may be created by Secured Party.
Security Agreement
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7. Title
Debtor hereby agrees to defend the title to the Collateral
against all persons and against all claims and demands
whatsoever; provided, however, that Debtor shall not be required
to defend the title to the Collateral against any claim or demand
arising out of any act or failure to act by Secured Party.
8. Payment
Debtor hereby agrees to pay and perform all of the
obligations secured by this Agreement according to the terms
hereof.
9. Applicable Law
The Uniform Commercial Code as in effect in the District of
Columbia shall govern the rights, duties and remedies of the
parties hereto and any provisions herein declared invalid under
any law shall not invalidate any other provision of this
Agreement.
10. Events of Default
Debtor shall be in default under this Agreement upon the
occurrence of:
(i) the failure by Debtor to timely pay the
principal or any installment of principal or interest on the Note
or any other sum due thereunder or otherwise;
(ii) the failure by Debtor to comply with or
perform any provision of this Agreement;
(iii) the breach by Debtor of any covenant and
agreement or condition contained in any other security or other
agreement of any kind securing the payment of the indebtedness
(or any part thereof) under the Note or otherwise;
(iv) the execution by Debtor of an assignment for
the benefit of creditors;
(v) the subjection of the Collateral to levy of
execution or other judicial process;
(vi) the appointment of a receiver of Debtor or of
the Collateral, or of any substantial part thereof;
(vii) the commencement of any bankruptcy or
insolvency proceeding
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against Debtor; or
(viii) the commencement of any bankruptcy or
insolvency proceeding by Debtor.
11. Remedies Upon Event of Default
Upon any default by Debtor, at the option of Secured Party,
the obligations secured by this Agreement shall immediately
become due an payable in full and Secured Party shall have all
the rights, remedies and privileges with respect to repossession,
retention and sale of the Collateral and disposition of the
proceeds as are accorded by the applicable sections of the
Uniform Commercial Code as in effect in the District of Columbia.
12. General Authority
Debtor hereby irrevocably appoints Secured Party as Debtor's
true and lawful attorney, with full power of substitution, in the
name of Debtor, Secured Party or otherwise, for the sole use and
benefit of Secured Party, but at Debtor's expense, to the extent
permitted by law, to exercise, at any time and from time to time
while any default has occurred and is continuing, all or any of
the following powers with respect to all or any of the
Collateral:
(i) To receive, take endorse, assign and deliver
any and all checks, notes, drafts, documents and other negotiable
and non-negotiable instruments and chattel paper taken or
received by Secured Party in connection therewith;
(ii) To settle, compromise, compound, prosecute or
defend any action or proceeding with respect thereto;
(iii) To sell, transfer, assign or otherwise
deal in or with same or the proceeds or avails thereof as fully
and effectually as if Secured Party were the absolute owner
thereof;
(iv) To extend the time of payment of any or all
thereof and to make any allowance and other adjustments with
reference thereto; and
(v) To discharge any taxes, liens, security
interests or other encumbrances at any time placed thereon;
provided that Secured Party shall give Debtor not less than five
(5) days' prior written notice of the time and place of any sale
or other intended disposition of any of the Collateral, except
any Collateral which is perishable or threatens to decline
speedily in value or is of a type customarily sold on a
recognized market. Secured Party and Debtor agree that such
notice
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constitutes "reasonable notification" within the meaning
of Section 9-504(3) of the Uniform commercial Code.
13. Application of Preceeds
The proceeds of any sale of, or other realization upon, all
or any part of the Collateral shall be applied in the following
order or priorities:
First, to pay the expenses of retaking, holding,
preparing for sale or lease, selling, leasing and the like and
reasonable attorneys' fees and legal expenses incurred by Secured
Party;
Second, to the payment of the Note and any other
obligations secured hereby;
Third, to pay the indebtedness secured by any
subordinate security interest in the item of Collateral sold if
written notification of demand therefor is received before
distribution of the proceeds is completed; and
Finally, to pay to Debtor, or its assigns, or as a
court of competent jurisdiction may direct, any surplus then
remaining from such proceeds.
14. Expenses; Secured Party's Lien
Debtor will forthwith upon demand pay to Secured Party:
(i) the amount of any taxes which Secured Party
may have been required to pay by reason of the exercise of its
rights pursuant to Section 12 hereof (including any applicable
transfer taxes) or to free any of the Collateral from any lien
thereon, and
(ii) the amount of any and all reasonable out-of-
pocket expenses, including the fees and disbursements of its
counsel and of any agents not regularly in its employ, which
Secured Party may incur in connection with (a) the collection,
sale or other disposition of any of the Collateral, (b) the
exercise by Secured Party of any of the powers conferred upon it
hereunder or (c) any default on Debtor's part hereunder.
15. Termination of Security Interests; Release of
Collateral
Upon the repayment in full of the Note and all other
obligations secured hereby, the Security Interest shall terminate
and all rights to the Collateral shall revert to Debtor. Upon
any such termination of the Security Interest or release of
Collateral, Secured Party will, at Debtor's expense, execute and
deliver to Debtor such documents as Debtor shall reasonably
request to evidence the termination of the Security Interest or
the release of such Collateral,
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as the case may be.
16. Notices
All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been
duly given, if delivered or sent by registered or certified mail,
return receipt requested, first-class postage prepaid as follows:
(i) it to Secured Party, to Concept
Communications, Inc., 000 Xxxxxxxxxxxxx Xxx., X.X., Xxxxxxxxxx,
X.X. 00000, Attention: President, with a copy to Xxxxxx
Cirulnik, Xxxxxx, Flyer & Xxxxx, 0000 X Xxxxxx, X.X., Xxxxxxxxxx,
X.X. 00000.
(ii) if to Debtor, to The Nostalgia Network, Inc.,
000 Xxxxxxxxxxxxx Xxx., X.X., Xxxxxxxxxx, X.X., 00000, Attention:
President, with a copy to Xxxxx Casino, Esq., Fried, Frank,
Harris, Xxxxxxx & Xxxxxxxx, 0000 Xxxxxxxxxxxx Xxx., X.X., Xxxxx
000, Xxxxxxxxxx, X.X. 00000, or to such other address as any
such party may designate in accordance with this Section 16.
17. Waivers; Non-Exclusive Remedies
No failure on the part of Secured Party to exercise, and no
delay in exercising, and no course of dealing with respect to,
any rights, power or remedy under this Agreement shall operate as
a waiver thereof; nor shall any single or partial exercise by
Secured Party of any right, power or remedy under this Agreement
preclude any other right, power or remedy. The remedies in this
Agreement are cumulative and are not exclusive of any other
remedies provided by law.
18. Changes in Writing
Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought.
19. District of Columbia Law; Meaning of Terms
This Agreement shall be governed and construed according to
the laws of the District of Columbia and shall be binding upon
Debtor, and shall inure to the benefit of Secured Party and its
successors and assigns.
Security Agreement
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20. Severability
If any provision hereof is invalid or unenforceable in any
jurisdiction, the other provisions hereof shall remain in full
force and effect in such jurisdiction and shall be liberally
construed in favor of Secured Party in order to carry out the
intentions of the parties hereto as nearly as may be possible;
and the invalidity or unenforceability of any provision hereof in
any jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction.
21. Headings
The headings in this Agreement are for the purpose of
convenience and reference only and shall not limit or otherwise
affect the meaning hereof.
22. Binding Effect
The terms, warranties, agreements and covenants herein
contained shall bind and inure to the benefit of the respective
parties hereto, and their successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
SECURED PARTY:
Concept Communications, Inc.,
a Delaware Corporation
By: /s/ Xxxx Xxxx Joo
_________________________
Xxxx Xxxx Joo, President
DEBTOR:
The Nostalgia Network, Inc.,
a Delaware Corporation
By: /s/ Xxxx Xxxx
_________________________
Xxxx Xxxx, President
