1
Exhibit 10.80
SECURITY AGREEMENT
Security Agreement, dated as of August 27, 1997, by and between Video
Services Corporation, a Delaware corporation (the "Borrower"), and KeyBank
National Association, as Agent (as the same may be amended, supplemented or
otherwise modified from time to time, this "Agreement").
RECITALS
I. Reference is made to the Credit Agreement, dated as of the date hereof,
by and among the Borrower, VSC MAL Corp., a Delaware corporation, the Lenders
party thereto, and KeyBank National Association, as the Issuer and as the Agent
(as the same may be amended, supplemented or otherwise modified from time to
time, the "Credit Agreement").
II. It is a condition precedent to the making of all loans and all other
extensions of credit under the Credit Agreement that the Borrower shall have
executed and delivered this Agreement.
III. Therefore, in consideration of the Recitals, the terms and conditions
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Agent hereby
agree as follows:
1. Defined Terms
(a) Capitalized terms used herein which are not otherwise defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
(b) When used in this Agreement, the following capitalized terms
shall have the respective meanings ascribed thereto as follows:
"Collateral": as defined in Section 2.
"Communications Act": the Communications Act of l934, and any
similar or successor federal statute, and the rules and regulations of the FCC
thereunder, all as amended and as the same may be in effect from time to time.
"Equity Interest": (a) with respect to a corporation, capital stock
thereof, (b) with respect to a partnership, a partnership interest therein, (c)
with respect to any other firm,
2
association, trust, business enterprise or other entity which is similar to any
other Person listed in clauses (a) and (b), and this clause (c), of this
definition, any equity interest therein, including, without limitation, any
interest therein which entitles the holder thereof to share in the revenue,
income, earnings or losses thereof or to vote or otherwise participate in any
election of one or more members of the managing body thereof, and (d) all
warrants and options in respect of any of the foregoing and all other securities
which are convertible or exchangeable therefor.
"Event of Default": as defined in Section 5.
"FCC": the Federal Communications Commission or any other similar or
successor agency of the federal government administering the Communications Act.
"Financing Statements": the UCC financing statements copies of which
are annexed hereto.
"NYUCC": the UCC as in effect in the State of New York on the date
hereof.
"Obligations": all of the obligations and liabilities of the
Borrower under each Interest Rate Protection Arrangement with one or more of the
Lenders and under the Loan Documents, in each case whether fixed, contingent,
now existing or hereafter arising, created, assumed, incurred or acquired.
"Office Location": as defined in Section 3(a)(i).
"Permitted Lien": a Lien permitted by Section 8.2 of the Credit
Agreement.
"UCC": with respect to any jurisdiction, Articles 1, 8 and 9 of the
Uniform Commercial Code as from time to time in effect in such jurisdiction.
(c) When used in this Agreement, the following capitalized terms
shall have the respective meanings ascribed thereto in the NYUCC (provided,
however, that each such term shall be deemed to exclude all Excluded Property):
"Account", "Certificated Security", "Chattel Paper", "Document", "Equipment",
"Fixture", "General Intangible", "Instrument", "Inventory", "Issuer",
"Proceeds", "Secured Party", "Security", "Security Interest" and "Uncertificated
Security".
2. Grant of Security Interest
To secure the prompt and complete payment, observance and
performance of the Obligations, the Borrower hereby grants to the Agent, for its
benefit and the ratable benefit of the Issuer and the Lenders, a Security
Interest in and to all of the Borrower's right, title and interest in and to all
Accounts, Certificated Securities, Chattel Paper, Documents, Equipment,
Fixtures, General Intangibles (other than rights of the Borrower in and to any
franchises, licenses, permits or operating rights granted or issued by the FCC
(the "Licenses") to the extent that the granting of a Security Interest pursuant
hereto is prohibited by Applicable Law), Instruments,
3
Inventory, Uncertificated Securities, and all of the Proceeds (which shall
include all dividends, distributions, accessions and income on and in respect of
all of the foregoing and all other rights and benefits in respect thereof) of
all of the foregoing, whether now owned or existing or hereafter arising or
acquired (collectively, the "Collateral"). Notwithstanding the foregoing, the
Security Interest granted hereby shall not attach to any Property of the
Borrower to the extent that such Property (the "Encumbered Property") is subject
to a Permitted Lien granted by the Borrower to a third party, or a Permitted
Lien granted prior to or in connection with the acquisition by the Borrower of
such Property, and the terms of the agreement between the Borrower and such
third party prohibit the Borrower from encmbering the Encumbered Property.
3. Representations and Warranties
The Borrower hereby represents and warrants to the Agent as follows:
(a) Generally. (i) As of the date hereof, the Borrower's place of
business or, if the Borrower has more than one place of business, its chief
executive office, is located at the address set forth for notices to the
Borrower contained in the Credit Agreement (the "Office Location"). The
Borrower's chief executive office was located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx for the five consecutive months immediately preceding the Borrower's move
thereof to the Office Location. Except as set forth on Schedule III hereto, the
Borrower has not changed its legal name during the 6 year period immediately
preceding the date hereof.
(ii) As of the date hereof, all of the information set forth
on each of the Schedules hereto is true, complete and correct.
(ii) This Agreement, together with the delivery to the Agent
of the Certificated Securities constituting Collateral and the continuous
possession thereof by the Agent in the State of New York, creates a continuing
"enforceable" Security Interest in the Collateral in favor of the Agent. There
are no Liens upon the Collateral other than Permitted Liens, if any. Upon (A)
the filing of the Financing Statements at the respective offices listed thereon
together with the payment of the appropriate filing fee therefor, (B) the
delivery to the Agent of the Certificated Securities and other Instruments
constituting the Collateral, and (C) the registration, in accordance with
Article 8 of the UCC of the jurisdiction of organization of each applicable
Issuer, of the Security Interest granted hereby on the books of each Person
which is an Issuer of an Uncertificated Security constituting the Collateral,
(1) such Security Interest shall (except (x) to the extent expressly excluded
from the purview of Article 9 of the UCC by Section 9-104 thereof, and (y) with
respect to motor vehicles) be perfected, and (2) assuming that the Agent has
acted in "good faith and without notice of any adverse claim" within the meaning
of Article 8 of the NYUCC, the Agent shall be a "bona fide purchaser", within
the meaning of such Article, with respect to the Collateral consisting of
Securities.
4
(b) Accounts. As of the date hereof, all records concerning any
Account constituting the Collateral are located at the Office Location, and no
such Account is evidenced by a promissory note or other instrument.
(c) Chattel Paper, Equity Interests and Debt Instruments. The
Chattel Paper, Equity Interests and debt Instruments listed on Schedule I hereto
constitute all of the Chattel Paper, Equity Interests and debt Instruments in
which the Borrower has, as of the date hereof, any right, title or interest, and
(1) each such Equity Interest issued by a corporate Issuer that is a Subsidiary
has been duly authorized, validly issued and fully paid for, and, except, in the
case of Equity Interests in Issuers organized under New York law, as provided in
Section 630 of the New York Business Corporation Law, is non-assessable, and (2)
to the best of the Borrower's knowledge, each such Chattel Paper and each such
debt Instrument have been duly authorized, issued and delivered, and constitute
the legal, valid, binding and enforceable obligations of the makers thereof.
(d) Equipment and Inventory. Except for Equipment and Inventory in
transit with common carriers, the Borrower has exclusive possession and control
of all Equipment and Inventory constituting the Collateral, all of which is as
of the date hereof and has been continuously for the 5 month period immediately
preceding the date hereof, located at one or more of the places listed on
Schedule II hereto.
4. Covenants
The Borrower hereby covenants with the Agent as follows:
(a) Generally. (i) The Borrower shall maintain its place of
business, or if the Borrower has more than one place of business, its chief
executive office, at the Office Location or at such other location in respect of
which (A) the Borrower shall have provided the Agent with prior written notice
thereof, and (B) UCC financing statements (or amendments thereto), in form and
substance reasonably satisfactory to the Agent, shall have been filed within two
months of such change.
(ii) The Borrower shall, at its own expense, promptly execute
and deliver all certificates, documents, instruments, financing and continuation
statements and amendments thereto, notices and other agreements, and take all
further action, that the Agent may reasonably request from time to time, in
order to perfect and protect the Security Interest granted hereby or to enable
the Agent to exercise and enforce its rights and remedies hereunder with respect
to the Collateral.
(iii) The Borrower at its own expense shall furnish to the
Agent such information, reports, statements and schedules with respect to the
Collateral as the Agent may reasonably request from time to time.
(iv) The Borrower at its own expense shall defend the
Collateral against all claims of any kind or nature (other than Permitted Liens,
if any) of all Persons at any
5
time claiming the same or any interest therein adverse to the interests of the
Agent, the Issuer (as defined in the Credit Agreement) or any Lender, and the
Borrower shall not cause, permit or suffer to exist any Lien upon the Collateral
other than (A) the Lien granted hereby, and (B) Permitted Liens, if any.
(v) The Borrower shall cause each Person which is an Issuer of
an Uncertificated Security constituting the Collateral (A) to register the
Security Interest granted hereby upon the books of such Person in accordance
with Article 8 of the UCC of the jurisdiction of organization of such Person,
and (B) to issue to the Agent an initial transaction statement in the form of
Annex A hereto and issue to the Agent subsequent transaction statements in
accordance with Section 8-408 of the UCC in effect in the State of New York.
(vi) Except as otherwise required by law, the Borrower agrees
that, with respect to the Collateral, neither the Agent, the Issuer nor any
Lender has any obligation to preserve rights against prior or third parties.
(vii) The Agent's only duty with respect to the Collateral
delivered to it shall be to use reasonable care in the custody and preservation
of the Collateral, and the Borrower agrees that if the Agent accords the
Collateral substantially the same kind of care as it accords its own Property,
such care shall conclusively be deemed reasonable. In the event that all or any
part of the Instruments constituting the Collateral are lost, destroyed or
wrongfully taken while such Instruments are in the possession of the Agent, the
Borrower agrees that it will use its best efforts to cause the delivery of new
Instruments in place of the lost, destroyed or wrongfully taken Instruments upon
request therefor by the Agent, without the necessity of any indemnity bond or
other security, other than the Agent's agreement of indemnity upon usual and
customary terms therefor.
(viii) Anything herein to the contrary notwithstanding, (A)
the Borrower shall remain liable under the contracts and agreements included in
the Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (B) the exercise by the Agent, the Issuer or any Lender of any of its
rights hereunder shall not release the Borrower from any of its duties or
obligations under any such contract or agreement, (C) neither the Agent, the
Issuer nor any Lender shall have any obligation or liability, including
indemnification obligations, under any such contract or agreement by reason of
this Agreement, nor shall the Agent, the Issuer or any Lender be obligated to
perform any of the obligations or duties of the Borrower thereunder, to make any
payment, to make any inquiry as to the nature or sufficiency of any payment
received by the Borrower or the sufficiency of any performance by any party
under any such contract or agreement or to take any action to collect or enforce
any claim for payment assigned hereunder, and (D) neither the Agent, the Issuer
nor any Lender shall be under any duty to send notices, perform services,
exercise any rights of collection, enforcement, conversion or exchange, vote,
pay for
6
insurance, taxes or other charges or take any action of any kind in connection
with the management of the Collateral. Anything in this Agreement to the
contrary notwithstanding, with respect to contacts and agreements included in
the Collateral or General Intangibles arising thereunder, the grant by the
Borrower of a security interest therein pursuant to this Agreement shall be
limited to the extent that such grant is not prohibited by the terms thereof
without the consent of any other person, or is permitted with consent if all
necessary consents to such grant of a security interest have not been obtained
from all such other persons (it being understood that the foregoing shall not be
deemed to obligate the Borrower to obtain such consents), provided that the
foregoing limitation shall not affect, limit, restrict or impair the grant by
the Borrower of a security interest pursuant to this Agreement in any Account or
General Intangible or any money or other amounts due or to become due under any
such contract or agreement to the extent provided in Section 9-318 of the NYUCC
as in effect on the date hereof.
(b) Accounts. Except as otherwise provided in this paragraph 4(b),
the Borrower shall continue to collect in accordance with its customary
practice, at its own expense, all amounts due or to become due to the Borrower
in respect of the Borrower's Accounts and, prior to the occurrence of an Event
of Default, the Borrower shall have the right to adjust, settle or compromise
the amount or payment of any such Account, all in accordance with its customary
practices. In connection with such collections, the Borrower may take and, at
the direction of the Agent at any time that an Event of Default shall have
occurred and be continuing shall take, such action as the Borrower or the Agent
may reasonably deem necessary or advisable to enforce collection of such
Accounts.
(c) Chattel Paper, Documents and Instruments. All of the
Instruments, Documents and Chattel Paper now or hereafter owned by or in the
possession of the Borrower which constitute the Collateral (other than checks
received in the ordinary course of collection) shall be promptly delivered to
the Agent, to be held by the Agent pursuant hereto, in suitable form for
transfer by delivery or accompanied by duly executed documents of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Agent. The Borrower agrees that, with respect to all items of the Collateral
which it is or shall hereafter be obligated to deliver to the Agent, until so
delivered such items shall be held by the Borrower in trust for the benefit of
the Agent and be segregated from the other Property of the Borrower.
(d) Equipment and Inventory. (i) The Borrower shall keep the
Equipment and Inventory constituting the Collateral at the places listed on
Schedule II hereto, and such other places located within the United States in
respect of which (A) the Borrower shall have provided the Agent with prior
written notice, and (B) UCC financing statements (or amendments thereto), in
form and substance satisfactory to the Agent, shall have been filed within two
months of such change.
(ii) The Borrower shall promptly furnish to the Agent a statement
respecting any material loss or damage to any of the Equipment or Inventory
constituting the Collateral with an aggregate fair market value exceeding
$500,000 as a result of a single occurrence except to the extent that such loss
or damage shall be insured pursuant to policies required to be maintained
pursuant to the Credit Agreement.
7
(e) Equity Interests and Debt Instruments. Unless an Event of
Default shall have occurred and be continuing and the Agent shall have given
notice to the Borrower to the contrary, the Borrower shall be permitted to
receive all cash dividends paid in respect of Equity Interests and all payments
made in respect of debt Instruments pledged hereunder, and to exercise all
voting and corporate or similar rights with respect to such Equity Interests;
provided, however, that no vote shall be cast or corporate or similar right
exercised or other action taken which, in the reasonable judgment of the Agent,
would impair the Collateral or the rights or remedies of the Agent, the Issuer
and the Lenders hereunder in any material respect or which would be inconsistent
with or result in any violation of any provision of the Credit Agreement, this
Agreement or any other Loan Document.
5. Events of Default
Each of the following shall constitute an "Event of Default":
(a) If the Borrower shall fail to observe or perform any term,
covenant or agreement contained in this Agreement within 20 Domestic Business
Days after the Borrower shall have become aware thereof; or
(b) The occurrence and continuance of an Event of Default under, and
as such term is defined in, the Credit Agreement.
6. Remedies
(a) Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, the Agent may:
(i) exercise any and all rights and remedies (A) granted to a
Secured Party by the UCC in effect in the State of New York or otherwise
allowed at law, and (B) otherwise provided by this Agreement, and
(ii) dispose of the Collateral as it may choose, so long as
every aspect of the disposition including the method, manner, time, place
and terms are commercially reasonable, and the Borrower agrees that,
without limitation, the following are each commercially reasonable: (A)
the Agent shall not in any event be required to give more than 14 days'
prior notice to the Borrower of any such disposition, (B) any place within
the City of New York or the Counties of Nassau, Suffolk, and Westchester
may be designated by the Agent for disposition, and (C) the Agent may
adjourn any public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
8
(b) To the extent permitted by law, the Borrower hereby expressly
waives and covenants not to assert any appraisement, valuation, stay, extension,
redemption or similar laws, now or at any time hereafter in force, which might
delay, prevent or otherwise impede the performance or enforcement of this
Agreement.
7. Notices
All notices and other communications provided for or otherwise
required hereunder or in connection herewith shall be given in the manner and to
the addresses set forth in Section 11.2 of the Credit Agreement.
8. Relationship to Credit Agreement
This Agreement is the Security Agreement under, and as such term is
defined in, the Credit Agreement, and is subject to, and should be construed in
accordance with, the provisions thereof.
9. Governing Law
This Agreement and the rights and obligations of the parties hereto
shall be governed by, and construed and interpreted in accordance with, the laws
of the State of New York.
10. Release
(a) This Agreement and the security interest created hereunder shall
terminate when all Obligations have been fully and indefeasibly paid and when
the Lenders have no further Commitments under the Credit Agreement and no
Letters of Credit are outstanding, at which time the Agent shall execute and
deliver to the Borrower, or to such persons or persons as the Borrower shall
reasonably designate, all Uniform Commercial Code termination statements and
similar documents prepared by the Borrower at its expense which the Borrower
shall reasonably request to evidence such termination. Any execution and
delivery of termination statements or documents pursuant to this Section 10
shall be without recourse to or representation or warranty by the Agent.
(b) All Collateral used, sold, transferred or otherwise disposed of
in accordance with the terms of the Credit Agreement (including pursuant to a
waiver or amendment of the terms thereof) shall be used, sold, transferred or
otherwise disposed of free and clear of the Lien and the security interest
created hereunder. In connection with the foregoing, (i) the Agent shall execute
and deliver to the Borrower, or to such persons or persons as the Borrower shall
reasonably designate, all Uniform Commercial Code termination statements and
similar documents prepared by the Borrower at its expense which the Borrower
shall reasonably request to evidence the release of the Lien and security
interest created hereunder with respect to such Collateral and (ii) any
representation, warranty or covenant contained herein relating to such
Collateral shall no longer be deemed to be made with respect
9
to such used, sold, transferred or otherwise disposed Collateral.
11. Miscellaneous
(a) Notwithstanding anything herein to the contrary, (i) no action
shall be taken by the Agent with respect to the Licenses unless and until all
applicable requirements of statutes, rules and regulations of all Governmental
Authorities, including, without limitation, any required approval under the
Communications Act (collectively, "Applicable Law"), requiring the notice or
consent to, or approval of such action, by the FCC or any other Governmental
Authority, have been satisfied; and (ii) the right of the Agent to exercise
voting rights with respect to Equity Interests upon the occurrence and during
the continuance of an Event of Default shall not become effective unless and
until all provisions of the Communications Act requiring the consent to or
approval of such action by the FCC have been satisfied. The Borrower covenants
that, upon the occurrence and during the continuation of an Event of Default,
upon request of the Agent, it will cooperate in causing to be filed such
applications and taking such other action as may be reasonably requested by the
Agent to obtain consent or approval of the FCC or any other Governmental
Authority which has granted any License to the Borrower to any action
contemplated by this Agreement and to give effect to the Security Interest of
the Agent (for itself and the ratable benefit of the Lenders and the Issuer),
including, without limitation, cooperating in the execution of an application
for consent by the FCC to an assignment or transfer involving a change in
ownership or control pursuant to the provisions of the Communications Act.
(b) Anything herein to the contrary notwithstanding, the Agent
hereby acknowledges and agrees that any Intercompany Debt pledged to it
hereunder may be paid or prepaid by the issuer thereof at any time and unless an
Event of Default has occurred and is continuing at the time of such payment or
prepayment, as the case may be, the holder of the Instrument evidencing such
Intercompany Debt may retain the proceeds thereof. In addition, so long as both
immediately before and after giving effect thereto no Default or Event of
Default shall or would exist (i) the terms and conditions of any Instrument
evidencing Intercompany Debt may be amended, modified, restructured or restated
in any manner as the Borrower and the issuer thereof may agree, as long as such
Intercompany Debt, after giving effect to any such amendment, modification or
restatement, continues to be Intercompany Debt as defined in the Credit
Agreement, or (ii) such Intercompany Debt may be forgiven. Upon request of the
Borrower, except upon the occurrence and during the continuance of a Default or
Event of Default, the Agent will release to the Borrower any Instrument
evidencing Intercompany Debt that has been so paid, prepaid or forgiven or will
exchange any such Instrument for another Instrument containing amended, modified
or restated terms, as described in the immediately preceding sentence.
10
IN EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Agreement to be
duly executed on its behalf.
VIDEO SERVICES CORPORATION
By: /s/ Xxxxxxxxxxx X. Xxxxxxxxxx
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Name:
-----------------------------------
Title:
----------------------------------
KEYBANK NATIONAL ASSOCIATION, as Agent
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
- 1 -
