EXHIBIT 10.10
SECURITY AGREEMENT
NEW ENGLAND AUDIO RESOURCE CORP.
Date: April 21, 1998
The undersigned, NEW ENGLAND AUDIO RESOURCE CORP., a Delaware
corporation with an office for the transaction of business at 00 Xxxx Xxxx,
Xxxxxxxx, Xxxxx, 00000 (herein referred to as "Guarantor"), hereby agrees in
favor of KEYBANK NATIONAL ASSOCIATION, a national banking association with an
office for the transaction of business at 00 Xxxxx Xxxxx Xxxxxx, Xxxxxx, Xxx
Xxxx 00000 (in its individual capacity, "Key"), as agent for the Banks, as
follows:
1. DEFINITIONS. All capitalized terms used herein which are defined in
the Credit Agreement of even date herewith (hereinafter, together with all
exhibits thereto, as it may from time to time be amended, modified or
supplemented, referred to as the "Credit Agreement") by and between Bogen
Communications International, Inc., Bogen Communications, Inc., various
financial institutions and Key as agent, shall have the respective meanings
provided therefor in the Credit Agreement, unless otherwise defined herein or
unless the context otherwise requires.
2. THE INDEBTEDNESS. In consideration of one or more loans, advances,
or other financial accommodations at any time before, at or after the date
hereof made or extended by the Banks to or for the account of Borrowers,
directly or indirectly, as principal, guarantor or otherwise, and guaranteed by
Guarantor (the "Indebtedness"), Guarantor hereby grants to the Banks a
continuing security interest in and a right of set-off against, and Guarantor
hereby assigns to the Banks, the Collateral described in Paragraph 3, to secure
the payment, performance and observance of (i) all indebtedness, obligations,
liabilities and agreements of any kind of Borrowers and/or Guarantor to the
Banks, now existing or hereafter arising, direct or indirect, absolute or
contingent, secured or unsecured, due or not, arising out of or relating to the
Indebtedness and (ii) all agreements, documents and instruments evidencing any
of the foregoing or under which any of the foregoing may have been issued,
created, assumed or guaranteed (all of the foregoing being herein referred to as
the "Obligations").
3. THE COLLATERAL. The Collateral is described on Schedule "A" annexed
hereto as part hereof and also includes all attachments, accessions and
equipment now or hereafter affixed to the Collateral or used in connection
therewith, substitutions and replacements therefor (unless the description of
Collateral expressly excludes after-acquired Collateral), all items of
Collateral now owned or existing and hereafter acquired, created or arising, and
all proceeds thereof (including, without limitation, claims of Guarantor against
third parties for loss or damage to or destruction of any Collateral).
4. WARRANTIES, REPRESENTATIONS AND COVENANTS. Guarantor warrants,
represents and covenants that:
(a) The chief executive office and other places of business of
Guarantor, the Collateral and the books and records relating to the
Collateral and the Collateral are, and have been during the four month
period prior to the date hereof (or in the case of a new
business, from the date of commencement of said business), located at
the address(es) set forth below and Guarantor will not change the same,
or merge or consolidate with any person or change its name, without
prior written notice to and consent of the Agent:
Addresses: 00 Xxxx Xxxx, Xxxxxxxx, Xxxxx, 00000;
(b) Guarantor will use the Collateral for lawful and business
purposes only, with all reasonable care and caution and in conformity
with all applicable laws, ordinances and regulations;
(c) Guarantor will keep the Collateral in first-class order,
repair, running and marketable condition, at Guarantor's sole cost and
expense;
(d) The Banks shall at all times have free access to and right
of inspection of the Collateral and any records pertaining thereto, and
the right to make extracts from and to receive from Guarantor originals
or true copies of such records and any papers and instruments relating
to any Collateral upon request therefor (which rights shall, except
after the occurrence of an Event of Default, be exercised only upon
reasonable notice during regular business hours), and Guarantor hereby
grants to the Banks a security interest in all such records, papers and
instruments to secure the payment, performance and observance of the
Obligations;
(e) The Collateral is now and shall remain personal property,
is not now a fixture and Guarantor will not permit any Collateral which
is not now a fixture to become a fixture without prior written notice
to and consent of the Banks and without first making all arrangements,
and delivering, or causing to be delivered, to the Agent all
instruments and documents, including, without limitation, waivers and
subordination agreements by any landlords or mortgagees, requested by
and satisfactory to the Banks to preserve and protect the primary
security interest granted herein against all persons;
(f) Guarantor, at its sole cost and expense, will insure the
Collateral in the name of and with loss or damage payable solely to the
Agent, as its interest may appear, against such risks, with such
companies and in such amounts, as may be required by the Banks from
time to time (all such policies providing ten (10) days minimum written
notice of cancellation to the Agent) and Guarantor will deliver to the
Agent the original or duplicate policies, or certificates or other
evidence satisfactory to the Agent attesting thereto, and Guarantor
will promptly notify the Agent of any loss or damage to any Collateral
or arising from its use;
(g) Guarantor will, at its sole cost and expense, and at all
times, pay and discharge all taxes and assessments and keep the
Collateral free and clear of any and all liens, security interests or
encumbrances (other than in favor of the Banks), perform all acts and
execute all documents requested by the Banks from time to time to
evidence, perfect,
2
maintain or enforce the Banks' primary security interest granted herein
or otherwise in furtherance of the provisions of this Security
Agreement;
(h) At any time and from time to time, Guarantor shall, at its
sole cost and expense, execute and deliver to the Banks such financing
statements pursuant to the Uniform Commercial Code ("UCC"),
applications for certificate of title and other papers, documents or
instruments as may be requested by the Banks in connection with this
Security Agreement, and Guarantor hereby authorizes the Banks to
execute and file at any time and from time to time one or more
financing statements or copies thereof or of this Security Agreement
with respect to the Collateral signed only by the Banks;
(i) In its discretion, the Agent may, at any time and from
time to time, after a Default (as hereinafter defined) has occurred and
is continuing, in its name or Guarantor's or otherwise, notify any
account debtor or obligor of any account, contract, document,
instrument, chattel paper or general intangible included in the
Collateral to make payment to the Banks;
(j) In their discretion, the Banks may, at any time and from
time to time, after a Default has occurred and is continuing, demand,
xxx for, collect or receive any money or property at any time payable
or receivable on account of or in exchange for, or make any compromise
or settlement deemed desirable by the Banks with respect to, any
Collateral, and/or extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, or release, any
Collateral or Obligations, all without notice to or consent by
Guarantor and without otherwise discharging or affecting the
Obligations, the Collateral or the security interest granted herein;
(k) In their discretion, the Banks may, at any time and from
time to time, for the account of Guarantor, pay any amount or do any
act required of Guarantor hereunder and which Guarantor fails to do or
pay, and any such payment shall be deemed an advance by the Banks to
Guarantor payable on demand together with interest at the highest rate
then payable on any of the Obligations;
(l) Guarantor will pay the Banks for any sums, costs, and
expenses which the Banks may pay or incur pursuant to the provisions of
this Security Agreement or in negotiating, executing, perfecting,
defending, or protecting the security interest granted herein or in
enforcing payment of the Obligations or otherwise in connection with
the provisions hereof, including but not limited to court costs,
collection charges, travel expenses, and reasonable attorneys' fees,
all of which, together with interest at the highest rate then payable
on any of the Obligations, shall be part of the Obligations and be
payable on demand;
(m) All proceeds of any other Collateral received by Guarantor
after the occurrence of a Default shall not be commingled with other
property of Guarantor, but shall
3
be segregated, held by Guarantor in trust for the Banks, and
immediately delivered to the Agent in the form received, duly endorsed
in blank where appropriate to effectuate the provisions hereof, the
same to be held by the Agent as additional Collateral hereunder or, at
the Banks' option, to be applied to payment of the Obligations, whether
or not due and in any order; and
(n) In their sole discretion, the Banks may, subject to the
terms of the Credit Agreement, at any time and from time to time,
assign, transfer or deliver to any transferee of any Obligations, any
Collateral, whereupon the Banks shall be fully discharged from all
responsibility and the transferee shall be vested with all powers and
rights of the Banks hereunder with respect thereto, but the Banks shall
retain all rights and powers with respect to any Collateral not
assigned, transferred or delivered.
5. DEFAULT. It shall constitute an event of default ("Default") under
this Security Agreement if an Event of Default shall have occurred under any of
the Loan Documents or if any one or more of the following shall occur:
(a) Guarantor shall fail to perform any covenant, agreement or
obligation contained in this Security Agreement; or
(b) the Collateral shall be subjected to waste, sale, transfer
or other disposition or any lien, encumbrance or other imposition is
placed upon said Collateral; or
(c) any levy, seizure, attachment, condemnation, forfeiture or
other proceeding shall be brought against or with respect to the
Collateral; or
(d) the occurrence of a material and adverse change in the
condition or affairs (financial or otherwise) of the Guarantor which
the Banks reasonably believe substantially impairs their security or
substantially increases the risk of failure of payment or performance
under any of the Loan Documents.
6. REMEDIES. Upon the occurrence and continuation of any Default and at
any time thereafter, the Banks shall have the following rights and remedies (to
the extent permitted by applicable law) in addition to all rights and remedies
of a secured party under the UCC or of the Banks under the Obligations, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively or concurrently:
(a) the Banks may at any time and from time to time, with or
without judicial process or the aid and assistance of others, enter
upon any premises in which any Collateral may be located and, without
resistance or interference by Guarantor, take possession of the
Collateral; and/or dispose of any Collateral on any such premises;
and/or require Guarantor to assemble and make available to the Banks at
the expense of Guarantor any Collateral at any place and time
designated by the Banks which is reasonably convenient to both parties;
4
and/or remove any Collateral from any such premises for the purpose of
effecting sale or other disposition thereof (and if any of the
Collateral consists of motor vehicles, the Banks may use Guarantor's
license plates); and/or sell, resell, lease, assign and deliver, grant
options for or otherwise dispose of any Collateral in its then
condition or following any commercially reasonable preparation or
processing, at public or private sale or proceedings or otherwise, by
one or more contracts, in one or more parcels, at the same or different
times, with or without having the Collateral at the place of sale or
other disposition, for cash and/or credit, and upon any terms, at such
place(s) and time(s) and to such person(s) as the Banks deem best, all
without demand, notice or advertisement whatsoever except that where an
applicable statute requires reasonable notice of sale or other
disposition Guarantor hereby agrees that the sending of five days'
notice by registered or certified mail, return receipt requested, to
any address of Guarantor set forth in this Security Agreement shall be
deemed reasonable notice thereof. If any Collateral is sold by the
Banks upon credit or for future delivery, the Banks shall not be liable
for the failure of the purchaser to pay for same and in such event the
Banks may resell such Collateral. The Banks may buy any Collateral at
any public sale and, if any Collateral is of a type customarily sold in
a recognized market or is of the type which is the subject of widely
distributed standard price quotations, the Banks may buy such
Collateral at private sale and in each case may make payment therefor
by any means. The Banks may apply the sale proceeds actually received
from any sale or other disposition to the reasonable expenses of
retaking, holding, preparing for sale, selling, leasing and the like,
to reasonable attorneys' fees and all legal, travel and other expenses
which may be incurred by the Banks in attempting to collect the
Obligations or enforce this Security Agreement or in the prosecution or
defense of any action or proceeding related to the subject matter of
this Security Agreement; and then to the Obligations in such order and
as to principal or interest as the Banks may desire; and Guarantor
shall remain liable and will pay the Banks on demand any deficiency
remaining, together with interest thereon at the highest rate then
payable on the Obligations and the balance of any expenses unpaid, with
any surplus to be paid to Guarantor, subject to any duty of the Banks
imposed by law to the holder of any subordinate security interest in
the Collateral known to the Banks;
(b) The Banks may appropriate, set off and apply to the
payment of the Obligations, any Collateral in or coming into the
possession of the Banks or their agents, without notice to Guarantor
and in such manner as the Banks may in their discretion determine.
7. DESIGNATION AND AUTHORIZATION. To effectuate the terms and
provisions hereof, Guarantor hereby designates and appoints the Agent and each
of its designees or agents as attorney-in-fact of Guarantor, irrevocably and
with power of substitution, with authority, after the occurrence of a Default,
to: receive, open and dispose of all mail addressed to Guarantor and notify the
Post Office authorities to change the address for delivery of mail addressed to
Guarantor to such address as the Agent may designate; endorse the name of
Guarantor on any notes, acceptances, checks, drafts, money orders, instruments
or other evidences of Collateral that may come into the Agent's possession; sign
the name of Guarantor on any invoices, documents, drafts
5
against and notices to account debtors or obligors of Guarantor, assignments and
requests for verification of accounts; execute proofs of claim and loss; execute
endorsements, assignments of other instruments of conveyance or transfer; adjust
and compromise any claims under insurance policies or otherwise; execute
releases; and do all other acts and things necessary or advisable in the sole
discretion of the Agent to carry out and enforce this Security Agreement or the
Obligations. All acts done under the foregoing authorization are hereby ratified
and approved and neither the Agent nor any designee or agent thereof shall be
liable for any acts of commission or omission, for any error of judgment or for
any mistake of fact or law. This power of attorney being coupled with an
interest is irrevocable while any Obligations shall remain unpaid.
8. PRESERVATION AND DISPOSITION OF COLLATERAL; MISCELLANEOUS. The Agent
shall have the duty to exercise reasonable care in the custody and preservation
of any Collateral in its possession, which duty shall be fully satisfied if the
Agent maintains safe custody of such Collateral. Except as hereinabove
specifically set forth, the Agent shall not be deemed to assume any other
responsibility for, or obligation or duty with respect to, any Collateral, or
its use, of any nature or kind, or any matter or proceedings arising out of or
relating thereto, including, without limitation, any obligation or duty to take
any action to collect, preserve or protect its or Guarantor's rights in the
Collateral or against any prior parties thereto, but the same shall be at
Guarantor's sole risk and responsibility at all times. Guarantor hereby releases
the Banks from any claims, causes of action and demands at any time arising out
of or with respect to this Security Agreement, the Obligations, the Collateral
and its use and/or any actions taken or omitted to be taken by the Banks with
respect thereto, and Guarantor hereby agrees to hold the Banks harmless from and
with respect to any and all such claims, causes of action and demands. The
Banks' prior recourse to any Collateral shall not constitute a condition of any
demand, suit or proceeding for payment or collection of the Obligations. No act,
omission or delay by any Bank shall constitute a waiver of its rights and
remedies hereunder or otherwise. No single or partial waiver by any Bank of any
Default or right or remedy which it may have shall operate as a waiver of any
other Default, right or remedy or of the same Default, right or remedy on a
future occasion. Guarantor hereby waives presentment, notice of dishonor and
protest of all instruments included in or evidencing any Obligations or
Collateral, and all other notices and demands whatsoever (except as expressly
provided herein). In the event of any litigation with respect to any matter
connected with this Security Agreement, the Obligations or the Collateral,
Guarantor hereby waives the right to a trial by jury. Guarantor hereby
irrevocably consents to the jurisdiction of the Courts of the State of New York
and of any Federal Court located in such State in connection with any action or
proceeding arising out of or relating to the Obligations, this Security
Agreement or the Collateral, or any document or instrument delivered with
respect to any of the Obligations. Guarantor hereby waives personal service of
any process in connection with any such action or proceeding and agrees that the
service thereof may be made by certified or registered mail directed to
Guarantor at any address of Guarantor set forth in this Security Agreement.
Guarantor so served shall appear or answer to such process within thirty (30)
days after the mailing thereof. Should Guarantor so served fail to appear or
answer within said thirty (30) day period, Guarantor shall be deemed in default
and judgment may be entered by any Bank against Guarantor for the amount or such
other relief as may be demanded in any process so served. In the alternative, in
its discretion, any Bank
6
may effect service upon Guarantor in any other form or manner permitted by law.
All capitalized terms used and not otherwise defined shall have the meanings set
forth in the Credit Agreement and other terms herein shall have the meanings as
defined in the UCC, unless the context otherwise requires. No provision hereof
shall be modified, altered or limited except by a written instrument expressly
referring to this Security Agreement and to such provision, and executed by the
party to be charged. This Security Agreement and all Obligations shall be
binding upon the successors, or assigns of Guarantor and shall, together with
the rights and remedies of the Banks hereunder, inure to the benefit of the
Banks and their successors, endorsees and assigns. This Security Agreement and
the Obligations shall be governed in all respects by the laws of the State of
New York applicable to contracts executed and to be performed in such State. If
any term of this Security Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby. The Banks are authorized to annex hereto any schedules
referred to herein. Guarantor acknowledges receipt of a copy of this Security
Agreement.
7
IN WITNESS WHEREOF, the undersigned has executed or caused this
Security Agreement to be executed in the State of New York as of the date first
above set forth.
NEW ENGLAND AUDIO RESOURCE CORP.
By:
---------------------------------
Name:
Title:
STATE OF NEW JERSEY )
) ss.:
COUNTY OF )
On this __ day of April, 1998, before me the subscriber personally
appeared __________, who being by me duly sworn, did depose and say; that he
resides at __________, that he is __________ of New England Audio Resource
Corp., the corporation described in and which executed the foregoing instrument;
and that he signed his name thereto by order of the Board of Directors of said
corporation.
______________________________________
NOTARY PUBLIC
8
Schedule "A"
All personal property and fixtures of the Guarantor, whether now or
hereafter existing or now owned or hereafter acquired and wherever located, of
every kind and description, tangible or intangible, and all goods, equipment,
inventory, accounts, chattel paper, general intangibles, credits, claims,
demands and any other property, rights and interests of the Guarantor, and any
and all additions and accessions thereto, all substitutions and replacements
therefor and all products and proceeds thereof and proceeds of insurance
thereon.