EXHIBIT 10.28
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is dated as of the 31st day of
January, 1997, by and between CAMPUS VOICE, L.L.C., a Delaware limited liability
company ("Borrower"), and SIRROM INVESTMENTS, INC., a Tennessee corporation
("Lender").
WITNESSETH:
WHEREAS, Lender is making certain loans evidenced by that Senior
Secured Promissory Note of this date made by Borrower payable to the order of
Lender in the original principal amount of $660,000, by that Junior Secured
Promissory Note of this date made by Borrower payable to the order of SCCGS,
Inc., now held by Lender in the original principal amount of $300,000, and by
that Second Junior Secured Promissory Note of this date made by Borrower payable
to the order of SCCGS, Inc., now held by Lender in the original principal amount
of $1,263,222.83 (collectively the "Loan"), pursuant to that certain Loan
Agreement of even date herewith by and between Borrower and Lender (the "Loan
Agreement"); and
WHEREAS, in order to secure the Loan, Lender desires to obtain from
Borrower and Borrower desires to grant to Lender a security interest in certain
collateral more particularly described below.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant of Security Interest. Borrower hereby grants to Lender a
security interest in the following described property and any and all proceeds
and products thereof and accessions thereto (collectively the "Collateral"):
(a) Equipment. All equipment of Borrower of any kind and
description, whether now owned or hereafter acquired and wherever
located, together with all parts, accessories and attachments and all
replacements thereof and additions thereto;
(b) Inventory, Accounts, Contract Rights, Chattel Paper and
General Intangibles. All of Borrower's inventory and any agreements
for lease of same and rentals therefrom, and all of Borrower's
accounts, accounts receivable, contract rights, chattel paper and
general intangibles and the proceeds therefrom, whether now in
existence or owned or hereafter arising or acquired, entered into or
created, and wherever located; and whether held for lease or sale, or
furnished or to be furnished under contracts of service;
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(c) Trademarks, Etc. All trademarks and service marks now held or
hereafter acquired by Borrower, both those that are registered with
the United States Patent and Trademark Office and any unregistered
marks used by Borrower in the United States, and trade dress,
including logos and designs, in connection with which any such marks
are used, together with all registrations regarding such marks and the
rights to renewals thereof, and the goodwill of the business of
Borrower symbolized by such marks;
(d) Copyrights. All copyrights now held or hereafter acquired by
Borrower and any applications for U.S. copyrights hereafter made by
Borrower; and
(e) Proprietary Information, Computer Data, Etc. All proprietary
information and trade secrets of Borrower with respect to Borrower's
business and all of Borrower's computer programs and the information
contained therein and all intellectual property rights with respect
thereto.
2. Secured Indebtedness. The obligations secured hereby shall include
(a) the Loan to be made concurrently or in connection with this Agreement or the
Loan Agreement as evidenced by the promissory notes described above payable to
the order of Lender that shall be due and payable as set forth in such
promissory notes, and any renewals or extensions thereof, (b) the full and
prompt payment and performance of any and all other indebtednesses and other
obligations of Borrower to Lender, direct or contingent (including but not
limited to obligations incurred as indorser, guarantor or surety), however
evidenced or denominated, and however and whenever incurred, including but not
limited to indebtednesses incurred pursuant to any present or future commitment
of Lender to Borrower and (c) all future advances made by Lender for taxes,
levies, insurance and preservation of the Collateral and all attorney's fees,
court costs and expenses of whatever kind incident to the collection of any of
said indebtedness or other obligations and the enforcement and protection of the
security interest created hereby.
3. Representations, Warranties and Agreements of Borrower. Borrower
represents, warrants and agrees as follows:
(a) Borrower will promptly notify Lender, in writing, of any new
place or places of business if the Collateral is used in business, or
of any change in Borrower's residence if the Collateral is not used in
business, and regardless of use, of any change in the location of the
Collateral or any records pertaining thereto. Borrower's inadvertent
failure to notify Lender shall not be considered a default under this
Agreement unless, in Lender's reasonable judgment, the failure results
in Lender's not being perfected in a material portion of the
Collateral.
(b) Except as set forth on Schedule 3(b) hereto and as permitted
in the Loan Agreement (the "Permitted Liens") (this warranty being
made to the best of Borrower's knowledge based on Lender's
representations to Borrower in a Xxxx of Sale and Agreement dated this
date), Borrower is the owner of the Collateral free and clear of any
liens and
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security interests. Borrower will defend the Collateral against the
claims and demands of all persons other than Permitted Liens (as
defined in the Loan Agreement).
(c) Borrower will at all times keep the Collateral insured
against all insurable hazards in amounts equal to the full cash value
of the Collateral or such lesser amount as may be customary in
Borrower's industry. Such insurance shall be in such companies as may
be acceptable to Lender, with provisions satisfactory to Lender for
payment of all losses thereunder to Lender as its interests may
appear. If required by Lender, Borrower shall deposit the policies
with Lender. If any Event of Default under the Loan Agreement exists,
any money received by Lender under said policies may be applied to the
payment of any indebtedness secured hereby, whether or not due and
payable, or at Lender's option may be delivered by Lender to Borrower
for the purpose of repairing or restoring the Collateral. Subject to
the existence of an Event of Default under the Loan Agreement,
Borrower assigns to Lender all right to receive proceeds of insurance
on the Collateral not exceeding the amounts secured hereby, directs
any insurer to pay all proceeds directly to Lender, and appoints
Lender Borrower's attorney in fact to endorse any draft or check made
payable to Borrower in order to collect the benefits of such
insurance. If Borrower fails to keep the Collateral insured as
required by Lender, Lender shall have the right to obtain such
insurance at Borrower's expense and add the cost thereof to the other
amounts secured hereby.
(d) Borrower will pay all costs of filing of financing,
continuation and termination statements with respect to the security
interests created hereby, and Lender is authorized to do all things
that it deems necessary to perfect and continue perfection of the
security interests created hereby and to protect the Collateral.
(e) The address set forth after Borrower's signature on this
Agreement is Borrower's chief executive office and it, together with
the following addresses are the locations where Collateral and the
place where the records concerning all intangible Collateral may be
kept and/or maintained in addition to colleges, universities and other
locations at which advertising boards may be located from time to
time:
___________________________________
____________, Virginia
___________________________________
_____________, Oregon
___________________________________
_____________, New York
___________________________________
_____________, California
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4. Default. Borrower shall be in default hereunder upon the occurrence
and continuation of an Event of Default under the Loan Agreement.
5. Remedies Upon Default. Upon default hereunder as provided in Section
4 above, all sums secured hereby shall immediately become due and payable at
Lender's option without notice to Borrower, and Lender may proceed to enforce
payment of same and to exercise any and all rights and remedies provided by the
Uniform Commercial Code (Tennessee) or other applicable law, as well as all
other rights and remedies possessed by Lender, all of which shall be cumulative.
Whenever Borrower is in default hereunder, and upon demand by Lender, Borrower
shall assemble the Collateral and make it available to Lender at a place
reasonably convenient to Lender and Borrower. Any notice of sale, lease or other
intended disposition of the Collateral by Lender sent to Borrower at the address
hereinafter set forth, or at such other address of Borrower as may be shown on
Lender's records, at least five (5) days prior to such action, shall constitute
reasonable notice to Borrower.
Lender may waive any default before or after the same has been declared
without impairing its right to declare a subsequent default hereunder, this
right being a continuing one.
6. Severability. If any provision of this Agreement is held invalid,
such invalidity shall not affect the validity or enforceability of the remaining
provisions of this Agreement.
7. Binding Effect. This Agreement shall inure to the benefit of
Lender's successors and assigns and shall bind Borrower's heirs,
representatives, successors and assigns. If Borrower is composed of more than
one person, firm and/or entity, their obligations hereunder shall be joint and
several.
8. Financial Reporting. Lender shall have the right, at any time, by
its own auditors, accountants or other agents, to examine or audit any of the
books and records of Borrower, or the Collateral, all of which will be made
available upon request. Such accountants or other representatives of Lender will
be permitted to make any verification of the existence of the Collateral or
accuracy of the records that Lender deems necessary or proper. Any reasonable
expenses incurred by Lender in making such examination, inspection, verification
or audit shall be paid by Borrower promptly on demand and shall be secured by
the security interest granted hereby.
9. Termination Statement. Borrower agrees that, notwithstanding the
payment in full of all indebtedness secured hereby and whether or not there is
any outstanding obligation of Lender to make future advances, Lender shall not
be required to send Borrower a termination statement with respect to any
financing statement filed to perfect Lender's security interest(s) in any of the
Collateral, unless and until Borrower shall have made written demand therefor.
Upon receipt of proper written demand, Lender may at its option, in lieu of
sending a termination statement to Borrower, cause said termination statement to
be filed with the appropriate filing officer(s).
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10. Protection of Collateral. Borrower will not permit any liens or
security interests other than those created by this Agreement and the Permitted
Liens (as defined in the Loan Agreement) to attach to any of the Collateral, nor
permit any of the Collateral to be levied upon under any legal process, nor
permit anything to be done that may impair the security intended to be afforded
by this Agreement, nor permit any tangible Collateral to become attached to or
commingled with other goods without the prior written consent of Lender.
11. Special Agreements With Respect to Certain Tangible Collateral.
Borrower additionally agrees and warrants as follows:
(a) Borrower will not permit any of the Collateral to be removed
from the locations specified herein, except for temporary periods in
the ordinary course of business, without the prior written consent of
Lender, and will permit Lender to inspect the Collateral at any time;
provided, however, that if Borrower wishes to store Collateral at an
additional location for purposes that are not merely temporary, it may
do so by giving written notice to Lender and executing such documents
as Lender may require to assure the continuation of the perfection of
Lender's security interest in the relocated collateral;
(b) Borrower represents that the Collateral consisting of
advertising boards will be placed in various jurisdictions in the
ordinary course of business and agrees to provide Lender with a list
of the locations thereof from time to time upon Lender's request.
(c) Borrower will not sell, exchange, lease or otherwise dispose
of any of the Collateral or any interest therein without the prior
written consent of Lender, except for dispositions of immaterial
amounts of Collateral in the ordinary course of business.
(d) Borrower will keep the material items of the Collateral in
good condition and repair and will pay and discharge all taxes, levies
and other impositions levied thereon as well as the cost of repairs to
or maintenance of same, and will not permit anything to be done that
may impair the value of any of the Collateral. If Borrower fails to
pay such sums, Lender may do so for Borrower's account and add the
amount thereof to the other amounts secured hereby.
(e) Borrower will not allow the Collateral to be attached to real
estate in such manner as to become a fixture or a part of any real
estate.
12. Special Agreements With Respect to Intangible and Certain Tangible
Collateral. Borrower additionally warrants and agrees as follows:
(a) So long as Borrower is not in default hereunder, Borrower
shall have the right to process and sell Borrower's inventory in the
regular course of business. Lender's security interest hereunder shall
attach to all proceeds of all sales or other dispositions of the
Collateral. If at any time any such proceeds shall be represented by
any instruments, chattel
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paper or documents of title, then such instruments, chattel paper or
documents of title shall be promptly delivered to Lender and subject
to the security interest granted hereby. If at any time any of
Borrower's inventory is represented by any document of title, such
document of title will be delivered promptly to Lender and subject to
the security interest granted hereby.
(b) By the execution of this Agreement, Lender shall not be
obligated to do or perform any of the acts or things provided in any
contracts covered hereby that are to be done or performed by Borrower,
but if there is a default by Borrower in the payment of any amount due
in respect of any indebtedness secured hereby, then Lender may, at its
election, perform some or all of the obligations provided in said
contracts to be performed by Borrower, and if Lender incurs any
liability or expenses by reason thereof, the same shall be payable by
Borrower upon demand and shall also be secured by this Agreement.
(c) At any time after Borrower is in default hereunder as
provided in Section 4 hereof, Lender shall have the right to notify
the account debtors obligated on any or all of Borrower's accounts
receivable to make payment thereof directly to Lender, and to take
control of all proceeds of any such accounts receivable. Until such
time as Lender elects to exercise such right by mailing to Borrower
written notice thereof, Borrower is authorized, as agent of the
Lender, to collect and enforce said accounts receivable.
13. Power of Attorney. Borrower hereby constitutes the Lender or its
designee, as Borrower's attorney-in-fact with power, upon the occurrence and
during the continuance of an Event of Default, to endorse Borrower name upon any
notes, acceptances, checks, drafts, money orders, or other evidences of payment
or Collateral that may come into either its or the Lender's possession; to sign
the name of Borrower on any invoice or xxxx of lading relating to any of the
accounts receivable, drafts against customers, assignments and verifications of
accounts receivable and notices to customers; to send verifications of accounts
receivable; to notify the Post Office authorities to change the address for
delivery of mail addressed to Borrower to such address as the Lender may
designate; to execute any of the documents referred to in Section 3(e) hereof in
order to perfect and/or maintain the security interests and liens granted herein
by Borrower to the Lender; to do all other acts and things necessary to carry
out this Security Agreement. All acts of said attorney or designee are hereby
ratified and approved, and said attorney or designee shall not be liable for any
acts of commission or omission (other than acts of gross negligence or willful
misconduct), nor for any error of judgment or mistake of fact or law; this power
being coupled with an interest is irrevocable until all of the obligations
secured hereby are paid in full and any and all promissory notes executed in
connection therewith are terminated and satisfied.
14. Governing Law and Amendments. This Agreement and all of the Loan
Documents shall be construed and enforced under the laws of the State of
Tennessee applicable to contracts to be wholly performed in such State. No
amendment or modification hereof shall be effective except in a writing executed
by each of the parties hereto.
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15. Survival of Representations and Warranties. All representations and
warranties contained herein or made by or furnished on behalf of the Borrowers
in connection herewith shall survive the execution and delivery of this
Agreement.
16. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.
17. Construction and Interpretation. Should any provision of this
Agreement require judicial interpretation, the parties hereto agree that the
court interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against one party by reason of the
rule of construction that a document is to be more strictly construed against
the party that itself or through its agent prepared the same, it being agreed
that the Borrower, Lender and their respective agents have participated in the
preparation hereof.
IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement,
or have caused this Agreement to be executed as of the date first above written.
BORROWER:
CAMPUS VOICE, L.L.C.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Title: Secretary
-------------------------------------
Address: 000 Xxxxx Xxxxxx, 00xx Xxxxx
---------------------------------
Xxx Xxxx, XX 00000
---------------------------------
---------------------------------
LENDER:
SIRROM INVESTMENTS, INC.
By: /s/ Xxxx Xxxxxxxxx
---------------------------------------
Title: VP
-------------------------------------
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SCHEDULE 3(b)
(Liens)
NONE
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