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EXHIBIT 4.30
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 26, 1999 , made by Team
Communications Group, Inc., a California corporation ("Company" or "Debtor"), in
favor of VMR Luxembourg, S.A., Chateau Woltz, 34 Rue Neuve, Remich, L5560
Luxembourg ("VMR" or "Secured Party").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Securities Purchase Agreement,
dated as of the date hereof, as well as the related Convertible Note and
Registration Rights Agreement(as the same may from time to time be amended,
modified or supplemented) (collectively the "Financing Agreement"), Secured
Party has agreed to advance to the Company certain funds in respect of its
development and production activities, and to make available certain overhead
sums (collectively, such sums are referred to herein as the "Advances"); and
WHEREAS, VMR is willing to make the Advances but only upon the
condition, among others, that Company shall have executed and delivered to VMR,
for its benefit, this Security Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined
in the note are used herein as therein defined, and the following terms shall
have the following meanings (such meanings being equally applicable to both the
singular and plural forms of the terms defined):
"Affiliated Person" shall mean any Person which directly or indirectly
controls, is controlled by or is under common control with Company. For the
purposes of this definition, "control" (including with corresponding meanings,
the terms "controlled by" and "under common control with"), as applied to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of that Person, whether
through the ownership of voting securities, by contract or otherwise.
"Collateral" shall have the meaning assigned to such term in Section 2
of this Security Agreement.
"Collateral Documents" shall mean all present and future notes
(including, without limitation, the notes), security agreements, mortgages,
deeds of trust, assignments, pledge agreements, financial agreements, consents
and other documents granting liens or other security interests to Debtor and/or
the Secured Party pursuant to this Security Agreement including, without
limitation, Copyright Mortgages, financing statements, mortgages, subordination
agreements, Laboratory Pledgeholder Agreements, consents and/or waivers to be
delivered pursuant to the various Sections of Article V.
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"Copyrights" shall mean all of Debtor's now owned or hereafter acquired
copyrights, copyright applications, copyright registrations and copyrightable
works and all renewals thereof and income, royalties, damages and payments
payable under or with respect thereto; together with any agreement granting any
right to use any copyright, copyright application, copyright registration or
copyrightable work.
"Copyright Mortgages" shall mean the instruments of transfer pursuant to
which the Debtor (to the extent that Debtor is a copyright proprietor or owns
any rights under copyright) grants to Secured Party a copyright mortgage and/or
security interest in its interest in the United States, Canadian and/or
worldwide copyrights (including, but not limited to, the video cassette
distribution rights) to any Film Asset, substantially in the form of Exhibit A
attached hereto
"Equipment" shall have the meaning set forth in Section 2(a) hereof.
"Event of Default" shall have the meaning set forth in Section 7.
"Film" shall mean any and every existing motion picture, television
series or television episode, or development project or other recording (or
proposed recording) of moving images by any means, manner, process or device now
known or hereafter devised.
"Film Assets" shall mean all rights and interests granted to/acquired or
retained by Debtor in connection with or related to the distribution or
exploitation of, or otherwise respecting, any Film, owned by Debtor to be
designated pursuant to the Financing Agreement, but excluding all rights and
interests in connection with or related to the distribution or exploitation of,
or otherwise respecting any such Film outside of the Licensed Territory (as such
term is defined in the Financing Agreement), including, but not limited to: any
distribution rights, license rights, and rights as a sub-distributor or
sub-licensee; all rights to distribute, sub-license, copy, exhibit, transmit,
broadcast, package, edit, reformat, advertise or exploit a Film, in any and all
media, and any syndication, television or cable television rights; all of
Debtor's copyrights or interests in any copyright on or relating to such Film;
and any of Debtor's collateral, allied, subsidiary or merchandising rights
appurtenant or related to any Film, including but not limited to the following
specific rights:
(a) all scenarios, screenplays and/or scripts at every stage of
the development of the Films;
(b) all common law and statutory copyright and other rights in
all literary and other properties ("Literary Properties") that form the basis of
the Films or which are or will be incorporated into the Films, all component
parts of the same Films consisting of the Literary Properties and other
properties, all motion picture rights in and to the story, all treatments of
said story and other literary material, together with all preliminary and final
screenplays used and to be used in connection with the Films, and all other
literary material upon which the Films are based or from which it is adapted;
(c) all motion picture rights in and to all music and musical
compositions connected with the Films, including, without limitation, all rights
to record, re-record, produce,
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reproduce, or synchronize all of said music and musical compositions in and in
connection with motion pictures;
(d) all exposed and/or delivered negative film, sound tracks,
positive prints, cutouts and trims connected with the Films, whether or not in
completed form or in some state of completion;
(e) all collateral, allied, subsidiary and merchandising rights
appurtenant or related to the Films now or hereafter owned or controlled by
Debtor, including, without limitation, the following rights: Literary
Properties, or the text or any part of the Literary Properties; all rights
throughout the world to broadcast, transmit and/or reproduce by means of
television (including, without limitation, free, commercially sponsored,
sustaining, subscription, cable and pay television) or by any process analogous
thereto, now known or hereafter devised, the Films; all rights to produce
primarily for television or similar use, by use of film or any other medium now
known or hereafter devised, a motion picture or series of motion pictures based
upon the Films, the Literary Properties, or any part thereof, including, without
limitation, any script, scenario or the like used in the Films; all
merchandising rights including, without limitation, all rights to use, exploit,
and license others to use and exploit any commercial tie-ups of any kind arising
out of or connected with the Literary Properties, the Films, the title or titles
of the Films, the characters of the Films or the Literary Properties, or the
names or characteristics of such characters and including further, without
limitation, any commercial exploitation in connection with or related to the
Films or the Literary Properties;
(f) all statutory copyrights, domestic and foreign, obtained or
to be obtained on the Films, together with any and all copyrights obtained or to
be obtained in connection with the Films or any underlying or component elements
of the Films, including, without limitation, all copyrights on the property
described in subparagraphs (a) through (e) of this definition, together with the
right to register for copyright, and all rights to renew or extend such
registration and the right to sue in the name of Debtor or in Secured Party's
name for past, present, or future infringements of copyrights;
(g) all insurance policies connected with the Films and all
proceeds which may be derived therefrom;
(h) all right to, and otherwise exploit and turn to account the
Films, the negatives, sound tracks, prints, and motion picture rights in and to
the Literary Properties, other literary material upon which the Films are based
or from which they are adapted, and such music and musical compositions used or
to be used in the Films;
(i) any and all sums, proceeds, money, products, profits, or
increases, and money profits or increases (as those terms are used in the
Uniform Commercial Code or otherwise) or other property obtained or to be
obtained from the distribution, exhibition, sale, or other uses or dispositions
of the Films or any part of the Films, including, without limitation, all
proceeds, profits, products, and increases, whether in money or otherwise, from
the sale, rental, or licensing of the Films and/or any of the elements of the
Films, including collateral, allied, subsidiary, and merchandising rights;
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(j) the dramatic, non-dramatic, stage, television, radio, and
publishing rights, title and interests in and to the Films, to the extent owned
by Debtor, and the rights to register for copyrights and renewals of same
therein;
(k) the title of the Films to the extent of Debtor's right to use
thereof, including, without limitation, rights protected pursuant to any
trademark, service mark, or unfair competition law, and/or the rules and
principles of law related to any other applicable statute, common law decision,
or other rule or principle of law;
(l) all of Debtor's rights which grant to any person any right to
acquire, produce, develop, reacquire, finance, release, sell, distribute, lease,
sublease, market, license, sublicense, exhibit, broadcast, transmit, reproduce,
publicize or otherwise exploit the Films or any rights in the Films including,
without limitation, all such rights pursuant to the any distribution agreement
or license agreement;
(m) with respect to the Films, all accounts and/or other rights
to payment which Debtor presently owns or which may arise in favor of Debtor in
the future, including, without limitation, any refund under a completion
guarantee, all accounts and/or rights to payment due from exhibitors in
connection with the distribution of the Films, and all accounts and/or rights to
payment arising from exploitation of any and all of the collateral, allied,
subsidiary, merchandising, and other rights in connection with the Films;
(n) any and all "general intangibles" (as that term is defined in
the Uniform Commercial Code) of Debtor in connection with the Films not
elsewhere included in this definition, including, without limitation, any and
all general intangibles consisting of any right to payment which may arise in
the distribution or exploitation of any of the rights set out herein, and any
and all general intangible rights in favor of Debtor or Secured Party in
connection with the Films for services or other performances by any third
parties, including actors, writers, directors, individual producers, and/or any
and all other performing or non-performing parties or artists in any way
connected with the Films, any and all general intangible rights in favor of
Debtor or Secured Party relating to licenses of sound or other equipment in
connection with the Films, and licenses for photographic or other processes, and
any and all general intangibles related to the exhibition, distribution or
exploitation of the Films including general intangibles related to or which grow
out of the exhibition of the Films and the exploitation of any and all other
rights in the Films set out in this definition;
(o) any and all goods including inventory (as that term is
defined in the Uniform Commercial Code) which may arise in connection with the
creation, production, or delivery of the Films and which goods, pursuant to any
production or distribution agreement or otherwise, are owned by Debtor;
(p) each and all of the rights, regardless of denomination, which
arise in connection with the creation, production, completion of production,
delivery, distribution, or other exploitation of the Films, including, without
limitation, any and all rights in favor of Debtor and/or Secured Party, the
ownership or control of which are or may become necessary or desirable, in the
opinion of Secured Party, in order to complete production of the Films in the
event that Secured
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Party exercises any rights it may have to take over and complete production of
the Films (which shall be subject to the rights to take over and complete
production of the Films as Debtor may grant to other parties);
(q) any and all documents issued by any pledgeholder or bailee
with respect to the Films or with respect to any negatives, sound tracks or
prints (whether or not in completed form) connected therewith; and
(r) any and all rights of Debtor under contracts relating to the
production of the Films, including but not limited to all contracts which have
been delivered to Secured Party pursuant to this Security Agreement.
"General Intangibles" shall have the meaning set forth in Section
2(a)(viii).
"hereby," "herein," "hereof," "hereunder" and words of similar import
refer to this Security Agreement as a whole and not merely to the specific
section, paragraph or clause in which the respective word appears.
"Permitted Liens" shall mean each of the following:
(i) Liens for taxes, assessments or governmental charges or
claims the payment of which is not at the time required;
(ii) Statutory liens of landlords and liens of carriers,
warehousemen, mechanics, materialmen, film laboratories, sound studios and other
liens imposed by law incurred in the ordinary course of business for sums not
yet delinquent or being contested in good faith;
(iii) Liens (other than any lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money);
(iv) Any attachment or judgment Lien, unless the judgment it
secures shall, within 45 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall have been discharged within 45
days after the expiration of any such stay;
(v) Leases or subleases granted to others not interfering with
the ordinary conduct of the business of Company; and
(vi) Easements, rights-of-way, restrictions and other similar
charges or encumbrances not interfering with the ordinary conduct of the
business of Company.
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"Person" shall mean any entity, corporation, company, association,
partnership, joint venture, joint stock company, unincorporated organization,
trust, individual (including personal representatives, executors and heirs of a
deceased individual), nation, state, government (including governmental
agencies, departments, bureaus, boards, divisions and instrumentalities
thereof), trustee, receiver or liquidator.
"Proceeds" shall mean "proceeds," as such term is defined in section
9-306(1) of the UCC and, in any event, shall include, without limitation, (i)
any and all proceeds of any insurance, indemnity, warranty or guaranty payable
to Company from time to time with respect to any of the Collateral, (ii) any and
all payments (in any form whatsoever) made or due and payable to Company from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any governmental
body, authority, bureau or agency (or any person acting under color of
governmental authority), (iii) any claim of Company against third parties (A)
for past, present or future infringement of any Patent or Patent License in
connection with the Collateral, or (B) for past, present or future infringement
or dilution of any Trademark or Trademark License in connection with the
Collateral, or for injury to the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark License in
connection with the Collateral, and (iv) any and all other amounts from time to
time paid or payable under or in connection with any of the Collateral.
"Secured Obligations" shall mean all of the unpaid principal amount of,
and accrued interest on, amounts owing by Company to VMR under the Financing
Agreement or this Security Agreement.
"Security Agreement" shall mean this Security Agreement, as the same may
from time to time be amended, modified or supplemented and shall refer to this
Security Agreement as in effect as of the date such reference becomes operative.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by Company: (i) all trademarks, trade names, corporate names, business
names, trade styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or appear, 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, without limitation, 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 reissues, extensions
or renewals thereof.
"UCC" shall mean the Uniform Commercial Code as the same may, from time
to time, be in effect in the State of California; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of VMR's security interest in any Collateral
is governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of California, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
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2. Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of all the Secured Obligations and to
induce VMR to enter into the Financing Agreement and to make the Advances (as
that term is defined in the Financing Agreement) in accordance with the terms
thereof, to the extent necessary to enable VMR to exercise its rights under the
Financing Agreement, Company hereby assigns, conveys, mortgages, pledges,
hypothecates and transfers to VMR, for its benefit, and hereby grants to VMR,
for its benefit, a security interest in, all of Company's right, title and
interest in, to and under the following (all of which being hereinafter
collectively called the "Collateral"):
(a) shall mean all of the assets and property of every kind of
the Debtor, including all assets and property now owned and hereafter acquired
by the Debtor, whether tangible or intangible, wherever located or situated,
whether or not in possession of the Debtor, including but not limited to: all of
the Debtor's right, title and interest in and to every Film Asset now owned or
hereafter acquired, and all other assets and property whether now owned or
hereafter at any time acquired relating to any Film or any Film Assets,
including, but not limited to, all goods, accounts, contract rights, general
intangibles, equipment, ancillary rights, Copyrights, Physical Properties, and
the products thereof, proceeds thereon or income therefrom; all common or
preferred stock certificates, bonds or securities of every kind and nature
whatsoever owned by Debtor; all properties, rights and things of value
pertaining to any and all of the foregoing, and all products and proceeds of and
replacements for any and all of the foregoing, whether now in existence or
hereafter existing, made, acquired or produced; and further including, without
limitation, each and all of the following particular rights, assets and
properties of the Debtor:
(i) All machinery, electrical and electronic components,
equipment, fixtures, furniture, office machinery, vehicles,
trailers, implements and other tangible personal property of
every kind and description now owned or hereafter acquired by
Debtor (including without limitation, all video recording,
transposition, duplication, viewing and other electronic
equipment used in the Debtor's business, all cameras and other
photographic, sound recording and editing equipment, projectors,
film developing equipment and machinery), and all goods of like
kind or type hereafter acquired by Debtor in substitution or
replacement thereof, and all additions and accessions thereto
(collectively hereinafter referred to as the "Equipment"), and
all rents, proceeds and products on or of the Equipment,
including without limitation, the rights to insurance proceeds
covering the Equipment;
(ii) The following personal property, whether now owned or
hereafter acquired: all inventions, processes, formulae,
licenses, patents, patent rights, trademarks, trademark rights,
service marks, service mark rights, trade names, trade name
rights, logos, indicia, corporate and company names, business
source or business identifiers and renewals and extensions
thereof, domestic and foreign, whether now owned or hereafter
used, acquired or developed, and the accompanying good will and
other like business property rights relating to any aspect of the
Debtor's business, and the right (but not the obligation) to
register claim under trademark or
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patent and to renew and extend such trademarks or patents and the
right (but not the obligation) to sue in the names of the Debtor
(or any of them) and/or in the name(s) of the Secured Party for
past, present or future infringement of trademark or patent (the
foregoing being referred to as "Intellectual Property");
(iii) All inventory of the Debtor, including, without
limitation all merchandise, raw materials, components, parts,
supplies, work-in-process, finished products intended for sale,
lease or other disposition, and packing and shipping materials of
every kind, nature and description, wherever any of the same may
be located and whether now owned or hereafter developed,
manufactured or acquired by the Debtor;
(iv) All deposits, cash and cash equivalents of the
Debtor, and all drafts, checks, certificates of deposit, notes,
bills of exchange and other writings which evidence a right to
the payment of money;
(v) All leasehold interests and other rights and interests
of the Debtor respecting the use or ownership of, or title to any
real property, including fee interests, easements, licenses, all
other rights and interests of any kind;
(vi) All Film Assets, all of the Debtor's right title and
interest in and to Physical Properties and all contract rights
relating to any Film Assets, any and all sums, proceeds, money,
products, profits or increases, including money profits or
increases (as those terms are used in the Uniform Commercial Code
or otherwise) or other property obtained or to be obtained from
the exploitation of any Film Assets, rights and interests in and
to Physical Properties, and any other collateral, allied,
subsidiary and merchandising rights relating to any Film; and any
and all documents and the rights of the Debtor's thereunder
issued by any pledgeholder or bailee with respect to any Physical
Properties;
(vii) All insurance policies on which the Debtor is named
as an insured or additional insured or loss payee and all
proceeds which may be derived therefrom;
(viii) All contracts and accounts and/or other rights to
payment which the Debtor presently owns or which may arise in
favor of the Debtor in the future, including, without limitation,
any refund of the fees, advances or royalties paid or prepaid,
all accounts and/or rights to payment due from third parties in
connection with the distribution of videocassette and from
exploitation of any and all of the Film Assets, including but not
limited to all contracts and accounts; and
(ix) Any and all "General Intangibles" (as that term is
defined in the applicable Uniform Commercial Codes) not elsewhere
included in this definition, including, without limitation, any
and all general intangibles consisting of any right to payment of
the Debtor which may arise in the distribution or exploitation of
any of the rights set out herein, and any and all general
intangible rights in favor of the
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Debtor or the Secured Party for services or other performances
by any third parties. all of Company's right, title, and
interest in and to the Film Assets and further including but not
limited to related goods, accounts, contract rights, general
intangibles, equipment, copyrights, trademarks, and any proceeds
thereof or income therefrom. The foregoing shall include, to the
extent they are owned by Company (it being understood that this
definition does not constitute a representation that each and
all the various rights listed are owned by Company), without
limitation, the scenario, screenplay or script upon which the
Films are based, all of the properties thereof, tangible and
intangible, whether now in existence or hereafter to be made or
produced and whether or not in possession of Company, and any
rights therein and thereto, of every kind and character,
including, without limiting the foregoing language, each and all
of the following particular rights and properties:
(b) To the extent granted under the Financing Agreement, the
following personal property, whether now owned or hereafter acquired,: (i) all
of Company's rights in and to the title of the Film Assets and the exclusive use
thereof including, without limitation, any and all rights protected pursuant to
trademark, service mark, unfair competition and/or other laws, rules or
principles of law or equity and (ii) all inventions, processes, formulae,
licenses, patents, patent rights, trademarks, trademark rights, service marks,
service mark rights, trade names, trade name rights, logos, indicia, corporate
and company names, business source or business identifiers and renewals and
extensions thereof, domestic and foreign, relating to the Film Assets, whether
now owned or hereafter acquired, and the accompanying good will and other like
business property rights, and the right (but not the obligation) to register
claim under trademark or patent and to renew and extend such trademarks or
patents and the right, but not the obligation, to sue in the name(s) of Company
or the Secured Party or both for past, present or future infringement of
trademark or patent; and
(c) To the extent granted under the Financing Agreement, all cash
and cash equivalents of Company derived from or relating to the Film Assets and
all drafts, checks, certificates of deposit, bills of exchange and other
writings relating to the Film Assets which evidence a right to the payment of
money and are not themselves security agreements or leases and are of a type
which is in the ordinary course of business transferred by delivery with any
necessary endorsement or assignment whether now owned or hereafter acquired.
3. Representations and Warranties
The Company hereby represents and warrants that:
(a) Except for the security interest granted to VMR pursuant to
this Security Agreement and other Permitted Liens, Company is the owner of
the Collateral in which it purports to grant a security interest
hereunder, having good and marketable title thereto, free and clear of any
and all Liens.
(b) No effective security agreement, financing statement,
equivalent security or lien instrument or continuation statement covering
all or any part of the Collateral is on file
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or of record in any public office, except such as may have been filed by
Company in favor of VMR, pursuant to this Security Agreement or such as
relate to other Permitted Liens.
(c) Provided that appropriate financing statements are properly
filed in all jurisdictions in which the Collateral is located, this
Security Agreement is effective to create a valid and continuing first
priority lien on and first priority perfected security interest in the
Collateral with respect to which a security interest may be perfected by
filing pursuant to the UCC in favor of VMR, prior to all other Liens
except Permitted Liens, and is enforceable as such as against creditors of
and purchasers from Company. All action necessary or desirable to protect
and perfect such security interest in each item of the Collateral has been
duly taken.
(d) Company's principal place of business and the place where its
records concerning the Collateral are kept is located at the address of
Company set forth in Section 11 below, and Company will not change such
principal place of business or remove such records without notifying VMR
in advance, by prior written notice.
4. Covenants. Company covenants and agrees with VMR that from and
after the date of this Security Agreement and until the Secured Obligations are
fully satisfied:
(a) Financing Statements and Further Documentation. Company
will join with VMR in the execution and filing of such financing
statement or statements in the form and content reasonably
required by VMR. VMR will advance (and recoup as distribution
expenses) all costs of filing any financing, continuation or
termination statements with respect to the security interest
created by this Agreement, together with costs and expenses of any
lien search reasonably required by VMR, during the term hereof. At
any time and from time to time, upon the written request of VMR,
Company will promptly and duly execute and deliver any and all
such further instruments and documents and take such further
action as VMR may reasonably deem desirable to obtain the full
benefits of this Security Agreement and of the rights and powers
herein granted, including, without limitation, using its
reasonable best efforts to secure all consents and approvals
necessary or appropriate for the assignment to VMR, of any License
or Contract held by Company or in which Company has any rights not
heretofore assigned, and the filing of any financing or
continuation statements under the UCC with respect to the liens
and security interests granted hereby. Company also hereby
authorizes VMR to file any such financing or continuation
statement without the signature of Company to the extent permitted
by applicable law.
(b) Maintenance of Records. Company will keep and maintain
at its own cost and expense satisfactory and complete records of
the Collateral, including, without limitation, a record of all
payments received and all credits granted with respect to the
Collateral and all other dealings with the Collateral. Prior to
the occurrence of an Event of Default and upon reasonable notice
from VMR, Company shall permit any representative of VMR to
inspect such books and records during
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normal business hours and will provide photocopies thereof to VMR
at VMR's expense.
(c) Indemnification. In any suit, proceeding or action
brought by VMR relating to the Collateral, Company will save,
indemnify and keep VMR harmless from and against all expense, loss
or damage suffered by reason of any defense, set off, counterclaim,
recoupment or reduction of liability whatsoever of the obligor with
respect thereto, arising out of a breach by Company of any material
obligation with respect thereto, and all such obligations of
Company shall be and remain enforceable against and only against
Company and shall not be enforceable against VMR.
(d) Compliance with Laws, etc. Company will comply, in all
material respects, with all acts, rules, regulations, orders,
decrees and directions of any governmental authority, applicable to
the Collateral or any part thereof or to the operation of Company's
business; provided, however, that Company may contest any act,
regulation, order, decree or direction in any reasonable manner
which shall not in the reasonable opinion of VMR, adversely affect
VMR's rights hereunder or adversely affect the first priority of
its security interest in the Collateral.
(e) Payment of Obligations. Company will pay promptly when
due all charges imposed upon the Collateral or in respect of its
income or profits therefrom and all claims of any kind (including,
without limitation, claims for labor, material and supplies) except
as otherwise provided in the Financing Agreement.
(f) Compliance with Terms of Accounts, etc. In all material
respects, Company will perform and comply with all obligations in
respect of Accounts Receivable, Chattel Paper, Contracts and
Licenses and all other agreements to which it is a party or by
which it is bound.
(g) Limitation on Liens on Collateral. Company will not
create, permit or suffer to exist, and will defend the Collateral
against and take such other action as is necessary to remove, any
Lien on the Collateral except Permitted Liens.
(h) Limitations on Disposition. Company will not sell,
lease, transfer or otherwise dispose of any of the Collateral, or
attempt or contract to do so except in the ordinary course of
business.
(i) Continuous Perfection. Consistent with the terms of the
Financing Agreement, Company will not change its name, identity or
corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith seriously
misleading within the meaning of section 9-402(7) of the UCC (or
any other then applicable provision of the UCC) unless Company
shall have given VMR at least thirty (30) days' prior written
notice thereof and shall have taken all action (or made
arrangements to take such action substantially simultaneously with
such change if it is impossible to take such action in advance)
necessary or reasonably
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requested by VMR to amend such financing statement or continuation
statement so that it is not seriously misleading.
5. VMR's Appointment as Attorney-in-Fact.
(a) Subject to Paragraph (b) below, Company hereby irrevocably
constitutes and appoints VMR and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Company and in
the name of Company or in its own name, from time to time in VMR's
discretion, for the purpose of carrying out the terms of this Security
Agreement, to take any and all appropriate action and to execute and
deliver any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Security Agreement and,
without limiting the generality of the foregoing, hereby gives VMR the
power and right, upon the occurrence of an Event of Default not otherwise
cured, on behalf of Company, without notice to or assent by Company to do
the following:
(i) to ask, demand, collect, receive and give acquittances
and receipts for any and all moneys due and to become due with
respect to the Collateral and, in the name of Company or its own
name or otherwise, to take possession of and endorse and collect
any checks, drafts, acceptances or other instruments for the
payment of moneys due with respect to the Collateral and to file
any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed reasonably appropriate by VMR for
the purpose of collecting any and all such moneys due under any
Collateral whenever payable and to file any claim or to take any
other action or proceeding in any court of law or equity or
otherwise deemed reasonably appropriate by VMR for the purpose of
collecting any and all such moneys due under any Collateral
whenever payable;
(ii) to pay or discharge taxes, liens, security interests
or other encumbrances levied or placed on or threatened against
the Collateral, to effect any insurance called for by the terms of
this Security Agreement and to pay all or any part of the premiums
therefor and the costs thereof; and
(iii)(A) to direct any party liable for any payment under
any of the Collateral to make payment of any and all moneys due,
and to become due thereunder, directly to VMR or as VMR shall
direct (but only to the extent of sums due to VMR from Company);
(B) to receive payment of and receipt for any and all moneys,
claims and other amounts due, and to become due at any time, in
respect of or arising out of any Collateral; (C) to sign and
indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts
and other Documents constituting or relating to the Collateral;
(D) to commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect
the Collateral or any part thereof and to enforce any other right
in respect of any Collateral; (E) to defend any suit, action or
proceeding brought against Company with respect to any Collateral;
(F)
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to settle, compromise or adjust any suit, action or proceeding
described above and, in connection therewith, to give such
discharges or releases as VMR may deem reasonably appropriate; (G)
subject to the Financing Agreement, to license or, to the extent
permitted by an applicable license, sublicense, whether general,
special or otherwise, and whether on an exclusive or non-exclusive
basis, any Patent or Trademark pertaining to the Collateral, on
such conditions, and in such manner, as VMR shall in its
discretion determine; and (H) generally to sell, transfer, pledge,
make any agreement with respect to or otherwise deal with any of
the Collateral as fully and completely as though VMR were the
absolute owner thereof for all purposes, and to do, at VMR's
option and Company's expense, at any time, or from time to time,
all acts and things which VMR reasonably deems necessary to
protect, preserve or realize upon the Collateral and VMR's Lien
therein, in order to effect the intent of this Security Agreement,
all as fully and effectively as Company might do.
(b) VMR agrees that, except upon the occurrence and during the
continuation of an Event of Default which is not otherwise cured, it will
not exercise the power of attorney or any rights granted to VMR pursuant
to this Section 5. Subject to the foregoing sentence, Company hereby
ratifies, to the extent permitted by law, all that said attorneys shall
lawfully do or cause to be done by virtue hereof. The power of attorney
granted pursuant to this Section 5 is a power coupled with an interest and
shall be irrevocable until the Secured Obligations are indefeasibly paid
in full.
(c) The powers conferred on VMR hereunder are solely to protect
VMR's interests in the Collateral and shall not impose any duty upon it to
exercise any such powers. VMR shall be accountable only for 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 Company for any act or failure to act, except for its
own gross negligence or willful misconduct.
(d) Company also authorizes VMR, at any time and from time to time
upon the occurrence and during the continuation of any Event of Default
which is not cured, to communicate in its own name with any party to any
contract relating to the Collateral with regard to the assignment of the
right, title and interest of Company in and under any such contract
hereunder and other matters relating thereto.
6. Performance by VMR of Company's Obligation. If Company fails to
materially perform or comply with any of its agreements contained herein (and
fails to so cure after notice thereof) and VMR, as provided for by the terms of
this Security Agreement, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the reasonable expenses of VMR
incurred in connection with such performance or compliance, together with
interest thereon at the rate then in effect in respect of the Advances, shall be
payable by Company to VMR on demand and shall constitute Secured Obligations
secured hereby.
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7. Events of Default. Except as otherwise expressly provided under the
Financing Agreement or this Security Agreement, as the case may be, the
following conditions or events shall constitute an Event of Default:
(a) The rejection, termination or disaffirmance or the attempted
rejection, termination or disaffirmance by Company (or any person or
entity acting on Company's behalf or in Company's place and stead) of the
Financing Agreement or this Security Agreement; or
(b) Any representation or warranty which materially adversely
affects the rights of VMR in connection with this Security Agreement or
the Financing Agreement shall be false in any material respect on the date
as of which made; or
(c) Company shall fail, breach or default in the performance of any
of the Secured Obligations which failure, breach or default materially
adversely affects VMR's rights therein (subject to any additional express
cure rights provided for in the Financing Agreement); or
(d) (i) A court having jurisdiction in the premises shall enter a
decree or order for relief in respect of Company in an involuntary
case under any applicable bankruptcy, insolvency or any other
similar law now or hereafter in effect, which decree or order is
not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or
(ii) An involuntary case shall be commenced against Company
under any applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of any court having
jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer
having similar powers over Company or over all or over a
substantial part of its property, shall have been entered; or there
shall have been an involuntary appointment of an interim receiver,
trustee or other custodian of Company for all or a substantial part
of its property; or there shall have been issued a warrant of
attachment, execution or similar process against any substantial
part of the property of Company and any such event in this clause
(ii) shall have continued for thirty (30) days unless dismissed,
bonded or discharged; or
(e) Company shall have an order for relief entered with respect to
it or commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or shall
consent to the entry of an order for relief in an involuntary case, or to
the conversion of an involuntary case to a voluntary case, under any such
law, or shall consent to the appointment of or taking possession by a
receiver or other custodian for all or a substantial part of its property;
or Company shall make any assignment for the benefit of creditors; or
Company shall fail or be unable or shall admit in writing its inability to
pay its debts as such debts become due; or the Board of Directors of
Company (or any committee thereof) shall adopt any resolution or
otherwise authorize any action to approve any of the foregoing; or
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(f) Company shall be dissolved or shall file a petition for
dissolution, unless Company's successor executes and delivers to VMR a
security agreement substantially similar in all respects to this Security
Agreement.
8. Remedies, Rights Upon Default.
(a) If any Event of Default shall occur and be continuing and not
otherwise timely cured, VMR may exercise in addition to all other rights
and remedies granted to it in this Security Agreement and in any other
instrument or agreement securing, evidencing or relating to the Secured
Obligations, all rights and remedies of a secured party under the UCC.
Without limiting the generality of the foregoing, Company expressly agrees
that in any such event VMR, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of
time and place of public or private sale) to or upon Company or any other
person (all and each of which demands, advertisements and/or notices are
hereby expressly waived to the maximum extent permitted by the UCC and
other applicable law), may forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith
sell, lease, assign, give an option or options to purchase, or sell or
otherwise dispose of and deliver said Collateral (or contract to do so),
or any part thereof, in one or more parcels at public or private sale or
sales, at any exchange or broker's board or at any of VMR's offices or
elsewhere at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. VMR shall have the
right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any
part of said Collateral so sold, free of any right or equity of
redemption, which equity of redemption Company hereby releases. Company
further agrees, at VMR's request, to assemble the Collateral and make it
available to VMR at places which VMR shall reasonably select, whether at
Company's premises or elsewhere. VMR shall apply the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale, as
provided in Section 8(d) hereof, Company remaining liable, as expressly
provided in the Financing Agreement only, for any deficiency remaining
unpaid after such application, and only after so paying over such net
proceeds and after the payment by VMR of any other amount required by any
provision of law, including Section 9-504(1)(c) of the UCC, need VMR
account for the surplus, if any, to Company. To the maximum extent
permitted by applicable law, Company waives all claims, damages, and
demands against VMR arising out of the repossession, retention or sale of
the Collateral except such as arise out of the gross negligence or wilful
misconduct of VMR. Company agrees that VMR need not give more than ten
(10) days' notice (which notification shall be deemed given when mailed or
delivered on an overnight basis, postage prepaid, addressed to Company at
its address referred to in Section 12 hereof) of the time and place of any
public sale or of the time after which a private sale may take place and
that such notice is reasonable notification of such matters. Company shall
remain liable, as expressly provided in the Financing Agreement only, for
any deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay all amounts to which VMR is entitled,
Company also being liable, as expressly provided in the Financing
Agreement only, for the reasonable fees of any attorneys employed by VMR
to collect such deficiency.
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(b) Company also agrees to pay all costs of VMR, including, without
limitation, reasonable attorneys' fees, incurred in connection with the
enforcement of any of its rights and remedies hereunder to the extent VMR
is adjudicated to be entitled to such enforcement.
(c) Company hereby waives presentment, demand, protest or any
notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Security Agreement or any Collateral.
(d) The Proceeds of any sale, disposition or other realization upon
all or any part of the Collateral shall be distributed by VMR in the
following order of priorities:
first, to VMR in an amount sufficient to pay in full the
reasonable expenses of VMR in connection with such sale,
disposition or other realization, including all expenses,
liabilities and advances incurred or made by VMR in connection
therewith, including, without limitation, reasonable attorney's
fees;
second, to VMR in an amount equal to the then unpaid
principal of and accrued interest and prepayment premiums, if any,
expressly due pursuant to the Financing Agreement; and
finally, upon payment in full of all of the obligations
outstanding and expressly due pursuant to the Financing Agreement,
to pay to Company, or its representatives or as a court of
competent jurisdiction may direct, any surplus then remaining from
such Proceeds.
9. Limitation on VMR's Duty in Respect of Collateral. VMR shall use
reasonable care with respect to the Collateral in its possession or under its
control. VMR shall not have any other duty as to any Collateral in its
possession or control or in the possession or control of any agent or nominee of
it or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto. VMR shall account for any moneys
or other property or rights received by it in respect of any foreclosure on or
disposition of the Collateral.
10. Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
Company for liquidation or reorganization, should Company become insolvent or
make an assignment for the benefit of creditors or should a receiver or trustee
be appointed for all or any significant part of Company's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Secured Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Secured Obligations, whether as a
"voidable preference", "fraudulent conveyance", or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Secured
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
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11. Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other party, or whenever any of the parties desires to give or
serve upon any other communication with respect to this Security Agreement, each
such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be delivered in person with receipt
acknowledged, or telecopied and confirmed immediately in writing by a copy
mailed by registered or certified mail, return receipt requested, postage
prepaid, addressed as hereafter set forth, or mailed by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
(a) If to VMR, at
VMR Luxembourg, S.A.,
Chateau Woltz, 34 Rue Neuve, Remich,
L5560 Luxembourg
With a copy to:
Freshman, Marantz, Orlanski, Cooper & Klein
9100 Wilshire Blvd., 8th Floor
Beverly Hills, California
Attention: Thomas J. Poletti, Esq.,
Fax (310) 273-1870
(b) If to the Company:
Team Communications Group, Inc.
12300 Wilshire Boulevard Suite 400,
Los Angeles, California 90025
Attn: Chief Financial Officer
Fax: (310) 442-3501
With a copy to
Kelly Lytton Mintz & Vann LLP
1900 Avenue of the Stars, Suite 1450
Los Angeles, California 90067
Attn: Bruce P. Vann, Esq.
Fax: (310) 277 5953
The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice,
demand, request, consent, approval,
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declaration or other communication hereunder shall be deemed to
have been duly given or served on the date on which personally
delivered, with receipt acknowledged, or the date of the telecopy
transmission, or three (3) Business Days after the same shall have
been deposited in the United States mail. Failure or delay in
delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons
designated above to receive copies shall in no way adversely
affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
12. Severability. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13. No Waiver; Cumulative Remedies. VMR shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
VMR and then only to the extent therein set forth. A waiver by VMR of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which VMR would otherwise have had on any future occasion. No
failure to exercise nor any delay in exercising on the part of VMR, any right,
power or privilege hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or future exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies hereunder provided are cumulative and may
be exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law. None of the terms or provisions of this Security
Agreement may be waived, altered, modified or amended except by an instrument in
writing, duly executed by VMR and, where applicable by Company. For the
avoidance of doubt, the foregoing rights and remedies are all subject to the
terms and provisions of the Financing Agreement.
14. Successor and Assigns. This Security Agreement and all
obligations of Company hereunder shall be binding upon the successors and
assigns of Company, and shall, together with the rights and remedies of VMR
hereunder, inure to the benefit of VMR, and all future holders of instruments or
agreements evidencing the Secured Obligations and their respective successors
and assigns. No sales of participation, other sales, assignments, transfers or
other dispositions of any agreement governing or instrument evidencing the
Secured Obligations or any portion thereof or interest therein shall in any
manner affect the security interest granted to VMR hereunder.
15. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED
IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF
LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. SECURED PARTY AND
COMPANY AGREE TO SUBMIT TO PERSONAL JURISDICTION AND TO WAIVE ANY OBJECTION AS
TO VENUE IN THE COUNTY OF LOS ANGELES, STATE OF
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CALIFORNIA. SERVICE OF PROCESS ON COMPANY OR SECURED PARTY IN ANY ACTION ARISING
OUT OF OR RELATING TO THIS SECURITY AGREEMENT SHALL BE EFFECTIVE IF MAILED TO
SUCH PARTY AT THE ADDRESS LISTED IN SECTION 11 HEREOF AND IN THE MANNER PROVIDED
THEREUNDER. EACH PARTY AGREES NOTHING HEREIN SHALL PRECLUDE THE OTHER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION.
16. Conflict of Terms. Except as otherwise explicitly provided in
this Security Agreement, a conflict or inconsistency, if any, between the terms
and provisions of this Security Agreement and the terms and provisions of the
Financing Agreement shall be controlled by the terms and provisions of the
Financing Agreement to the extent of such conflict or inconsistency.
17. Use and Protection of Patent and Trademark Collateral.
Notwithstanding anything to the contrary contained herein, unless an Event of
Default has occurred and is continuing and shall remain uncured, VMR shall from
time to time execute and deliver, upon the written request of Company, any and
all instruments, certificates or other documents, in the form so requested,
necessary or appropriate in the judgment of Company to permit Company to
continue to exploit, license, use, enjoy and protect the Patents and Trademarks
relating to the Collateral.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Security Agreement to be executed and delivered by its duly authorized officer
on the date first set forth above.
TEAM COMMUNICATIONS GROUP, INC.
By: /s/ DREW S. LEVIN
----------------------------------------
Name: Drew S. Levin
------------------------------------
Title: CEO
-------------------------------------
Accepted and acknowledged by:
VMR LUXEMBOURG, S.A.
By: /s/ FLORIAN HOMM
--------------------------------
Name: Florian Homm
----------------------------
Title:
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