Exhibit 10.4
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement"), dated as of
December 21, 2001, is by and among the parties identified as "GRANTORS" on the
signature pages hereto and such other parties as may become Grantors hereunder
after the date hereof (individually a "Grantor", and collectively the
"Grantors") and BANK OF AMERICA, N.A., as collateral agent (in such capacity,
the "Collateral Agent") for the holders of the Secured Obligations referenced
below.
W I T N E S S E T H
WHEREAS, a $600 million credit facility has been established in favor
of Loral SpaceCom Corporation, a Delaware corporation (the "Company"), pursuant
to the terms of that Amended and Restated Credit Agreement dated as of the date
hereof (as amended, modified, increased, extended, renewed or replaced, the
"SpaceCom Credit Agreement") among the Company, as borrower, the lenders
identified therein and Bank of America, N.A., as Administrative Agent;
WHEREAS, a $494 million credit facility has been established in favor
of Loral Satellite, Inc., a Delaware corporation ("Satellite") pursuant to the
terms of that Credit Agreement dated as of November 17, 2000 (as amended,
modified, extended, increased, renewed or replaced, the "Satellite Credit
Agreement") among Satellite, as borrower, the lenders identified therein and
Bank of America, N.A., as Administrative Agent; and
WHEREAS, the Company has agreed to provide, and to cause its Domestic
Subsidiaries to provide, a pledge of and security interest in substantially all
of the personal property of the Company and its Domestic Subsidiaries, subject
only to certain exceptions and qualifications identified herein and in the
Collateral Documents, to secure the loans and obligations owing under both the
SpaceCom Credit Agreement and the Satellite Credit Agreement as hereafter more
particularly described;
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
shall have the meanings provided in the Credit Agreement. In addition, the
following terms, which are defined in the UCC as in effect in the State of New
York on the date hereof, are used herein as so defined: Accession, Account,
As-Extracted Collateral, Chattel Paper, Commercial Tort Claim, Commingled Goods,
Consumer Goods, Deposit Account, Document, Equipment, Farm Products, Fixtures,
General Intangible, Goods, Instrument, Inventory, Investment Property,
Letter-of-Credit Right, Manufactured Home, Proceeds, Software, Standing Timber,
Supporting Obligation and Tangible Chattel Paper. As used herein:
"Collateral" has the meaning provided in Section 2 hereof.
"Collateral Documents" means any and all security agreements,
pledge agreements, deeds of trust, security deeds, mortgages or like
instruments establishing or otherwise giving effect to the liens and
security interests in the collateral, including UCC financing
statements and notice filings in respect of intellectual property, in
each case as amended and modified.
"Copyright License" means any written agreement, naming any
Grantor as licensor, granting any right under any Copyright including,
without limitation, any thereof referred to in Schedule 1(b) attached
hereto.
"Copyrights" means (a) all registered United States copyrights
in all Works, now existing or hereafter created or acquired, all
registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, registrations,
recordings and applications in the United States Copyright Office
including, without limitation, any thereof referred to in Schedule 1(b)
attached hereto, and (b) all renewals thereof including, without
limitation, any thereof referred to in Schedule 1(b) attached hereto.
"Credit Agreement" means the SpaceCom Credit Agreement, or if
the SpaceCom Credit Agreement has expired or been terminated, all
Commitments thereunder have been terminated, no Letter of Credit shall
remain outstanding and all amounts owing thereunder shall have been
paid in full, the Satellite Credit Agreement.
"Credit Documents" means the SpaceCom Credit Documents and the
Satellite Credit Documents.
"Event of Default" has the meaning provided in Section 7
hereof.
"Patent License" means any agreement, whether written or oral,
providing for the grant by or to a Grantor of any right to manufacture,
use or sell any invention covered by a Patent, including, without
limitation, any thereof referred to in Schedule 1(b) attached hereto.
"Patents" means (a) all letters patent of the United States or
any other country and all reissues and extensions thereof, including,
without limitation, any letters patent referred to in Schedule 1(b)
attached hereto, and (b) all applications for letters patent of the
United States or any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any
thereof referred to in Schedule 1(b) attached hereto.
"Permitted Liens" means Liens which are permitted pursuant to
Section 9.3 of the Credit Agreement.
"Revised Article 9" means the 1999 revision of Article 9 of
the UCC, in the form or substantially in the form approved by The
American Law Institute and the National Conference of Commissioners on
Uniform State Laws and as set forth in Appendix XVI of the 1999 edition
of the Official Text of the Uniform Commercial Code, as amended.
"Satellite Credit Documents" means (i) the Satellite Credit
Agreement, the notes issued thereunder and the other credit documents
referenced therein relating thereto, as amended, modified, extended or
replaced, and (ii) the Collateral Documents.
"Satellite Indebtedness" means all of the following, whether
now or hereafter outstanding or incurred: (i) the principal of and
interest (including interest accruing after commencement of a
proceeding in bankruptcy, reorganization or insolvency, whether or not
allowable as a claim) on the loans and obligations, and all other
amounts (including, without limitation, all fees, indemnities, charges,
expenses and other monetary obligations), owing from time to time under
the Satellite Credit Agreement or any of the other Satellite Credit
Documents; (ii) subject to Section 26 hereof, all guaranty obligations
given in respect of the Satellite Indebtedness; and (iii) all renewals,
extensions, refinancings, refundings, amendments and modifications of
any of the foregoing Satellite Indebtedness, whether in whole or in
part.
"Secured Obligations" means the SpaceCom Indebtedness and the
Satellite Indebtedness.
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"SpaceCom Credit Documents" means (i) the SpaceCom Credit
Agreement, the notes issued thereunder and the other credit documents
referenced therein relating thereto, as amended, modified, extended or
replaced, (ii) the interest rate protection or foreign currency
exchange agreements, the obligations under which constitute SpaceCom
Indebtedness hereunder, and (iii) the Collateral Documents.
"SpaceCom Indebtedness" means all of the following, whether
now or hereafter outstanding or incurred: (i) the principal of and
interest (including interest accruing after commencement of a
proceeding in bankruptcy, reorganization or insolvency, whether or not
allowable as a claim) on the loans and obligations, and all other
amounts (including, without limitation, all reimbursement obligations,
fees, indemnities, charges, expenses and other monetary obligations),
owing from time to time under the SpaceCom Credit Agreement and the
other SpaceCom Credit Documents; (ii) subject to Section 26 hereof, the
guaranty obligations of the guarantors under the SpaceCom Credit
Agreement and the other SpaceCom Credit Documents; (iii) the
obligations owing by the Company, or a subsidiary or affiliate of the
Company, to any lender or affiliate of a lender under the SpaceCom
Credit Agreement arising under any interest rate protection or foreign
currency exchange agreement or any guaranty given in respect thereof
(unless the foregoing specifies that such obligations are not SpaceCom
Indebtedness); and (iv) all amendments, modifications, renewals,
extensions, refinancings, refundings and restructurings of any of the
foregoing SpaceCom Indebtedness, whether in whole or in part, and the
agreements governing such SpaceCom Indebtedness; provided, however,
that under no circumstances shall the obligations owing under the
Collateral Documents to the lenders and the administrative agent under
the Satellite Credit Agreement be considered SpaceCom Indebtedness.
"Trademark License" means any agreement, written or oral,
providing for the grant by or to a Grantor of any right to use any
Trademark, including, without limitation, any thereof referred to in
Schedule 1(b) attached hereto.
"Trademarks" means (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers,
and the goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether 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, or otherwise, including, without limitation, any
thereof referred to in Schedule 1(b) attached hereto, and (b) all
renewals thereof.
"UCC" means the Uniform Commercial Code.
"Work" means any work that is subject to copyright protection
pursuant to Title 17 of the United States Code.
2. Grant of Security Interest in the Collateral. To secure the prompt
payment and performance in full when due, whether by lapse of time,
acceleration, mandatory prepayment or otherwise, of the Secured Obligations,
each Grantor hereby grants to the Collateral Agent, for the benefit of the
holders of the Secured Obligations, a continuing security interest in, and a
right to set off against, any and all right, title and interest of such Grantor
in and to all personal property of the Grantors of whatever type or description,
whether now owned or existing or owned, acquired, or arising hereafter
(collectively, the "Collateral"), including, without limitation, the following:
(a) all Accounts;
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(b) all cash and currency;
(c) all Chattel Paper (including all transponder lease and
sublease agreements);
(d) all Commercial Tort Claims identified on Schedule 2(d)
attached hereto;
(e) all Copyrights;
(f) all Copyright Licenses;
(g) all Deposit Accounts;
(h) all Documents;
(i) all Equipment (including all satellites and transponders);
(j) all Fixtures;
(k) all General Intangibles (including, to the extent
permitted by applicable law, all FCC licenses);
(l) all Instruments;
(m) all Inventory;
(n) all Investment Property;
(o) all Letter-of-Credit Rights;
(p) all Patents;
(q) all Patent Licenses;
(r) all Software;
(s) all Supporting Obligations;
(t) all Trademarks;
(u) all Trademark Licenses; and
(v) to the extent not otherwise included, all Accessions and
all Proceeds of any and all of the foregoing;
provided that, notwithstanding anything contained in this Security
Agreement to the contrary, the security interests granted under this
Security Agreement shall not extend to (i) any property which is
subject to a Lien of the type described in clauses (f), (g), (i), (k)
and (m) of Section 9.3 of the Credit Agreement pursuant to documents
which prohibit such Grantor from granting any other Liens in such
property or (ii) any lease, license or other contract if the grant of a
security interest therein in the manner contemplated by this Security
Agreement is, under the terms thereof and under applicable law, (x)
prohibited and (y) would result in the termination thereof, unless
consent from the relevant
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party or parties has been obtained and in any case only to the extent
that such prohibition is not (or could not be) rendered ineffective
pursuant to the UCC or any other applicable law (including the
Bankruptcy Code) or principles of equity.
The Grantors and the Collateral Agent, on behalf of the holders of the
Secured Obligations, hereby acknowledge and agree that the security interest
created hereby in the Collateral (i) constitutes continuing collateral security
for all of the Secured Obligations, whether now existing or hereafter arising
and (ii) is not to be construed as an assignment of any Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks or Trademark Licenses.
3. Provisions Relating to Accounts.
(a) Anything herein to the contrary notwithstanding, each of
the Grantors shall remain liable under each of the Accounts to observe
and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any
agreement giving rise to each such Account. Neither the Collateral
Agent nor any holder of the Secured Obligations shall have any
obligation or liability under any Account (or any agreement giving rise
thereto) by reason of or arising out of this Security Agreement or the
receipt by the Collateral Agent or any holder of the Secured
Obligations of any payment relating to such Account pursuant hereto,
nor shall the Collateral Agent or any holder of the Secured Obligations
be obligated in any manner to perform any of the obligations of a
Grantor under or pursuant to any Account (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or
the sufficiency of any payment received by it or as to the sufficiency
of any performance by any party under any Account (or any agreement
giving rise thereto), to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts
which may have been assigned to it or to which it may be entitled at
any time or times.
(b) At any time after the occurrence and during the
continuance of an Event of Default, the Collateral Agent shall have the
right, but not the obligation, to make test verifications of the
Accounts in any manner and through any medium that it reasonably
considers advisable, and the Grantors shall furnish all such assistance
and information as the Collateral Agent may require in connection with
such test verifications. At any time after the occurrence and during
the continuance of an Event of Default, upon the Collateral Agent's
request and at the expense of the Grantors, the Grantors shall cause
independent public accountants or others satisfactory to the Collateral
Agent to furnish to the Collateral Agent reports showing
reconciliations, aging and test verifications of, and trial balances
for, the Accounts. At any time after the occurrence and during the
continuance of an Event of Default, the Collateral Agent in its own
name or in the name of others may communicate with account debtors on
the Accounts to verify with them to the Collateral Agent's satisfaction
the existence, amount and terms of any Accounts.
4. Representations and Warranties. Each Grantor hereby represents and
warrants to the Collateral Agent, for the benefit of the holders of the Secured
Obligations, that so long as any of the Secured Obligations (other than any such
obligations that, by their terms, survive termination of the Credit Documents),
remains outstanding and until all of the commitments relating thereto have been
terminated:
(a) Legal Name; Chief Executive Office. As of the Closing
Date:
(i) Each Grantor's exact legal name, state of
incorporation or formation, principal place of business and
chief executive office are (and for the four months prior to
the date hereof has been) as set forth on Schedule 4(a)(i)
attached hereto.
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(ii) Other than as set forth on Schedule 4(a)(ii)
attached hereto, no Grantor has been party to a merger,
consolidation or other change in structure or used any
tradename in the four months prior to the date hereof.
(b) Location of Collateral. As of the Closing Date, other than
as set forth on Schedule 4(b) attached hereto, no Collateral is (or for
the four months prior to the date hereof has been) located in any
jurisdiction in which Revised Article 9 is not yet in effect.
(c) Ownership. Each Grantor is the legal and beneficial owner
of its Collateral and has the right to pledge, sell or transfer the
same.
(d) Security Interest/Priority. This Security Agreement
creates a valid security interest in favor of the Collateral Agent, for
the benefit of the holders of the Secured Obligations, in the
Collateral of such Grantor and, when properly perfected by filing,
shall constitute a valid perfected security interest in such
Collateral, to the extent such security interest can be perfected by
filing under the UCC, free and clear of all Liens except for Permitted
Liens.
(e) Types of Collateral. Except as disclosed to the
Administrative Agent, none of the Collateral consists of, or is the
Accessions or the Proceeds of, As-Extracted Collateral, Consumer Goods,
Farm Products, Manufactured Homes, or Standing Timber.
(f) Accounts. (i) Except as disclosed to the Administrative
Agent, each Account of the Grantors and the papers and documents
relating thereto are genuine and in all material respects what they
purport to be, (ii) except as disclosed to the Administrative Agent,
each Account arises out of (A) a bona fide sale of goods sold and
delivered by such Grantor (or is in the process of being delivered) or
(B) services theretofore actually rendered by such Grantor to, the
account debtor named therein and (iii) no Account of a Grantor is
evidenced by any Instrument or Chattel Paper unless such Instrument or
Chattel Paper has been theretofore endorsed over and delivered to, or
submitted to the control of, the Collateral Agent.
(g) Inventory. Except as disclosed to the Administrative
Agent, no Inventory of a Grantor is held by a third party (other than a
Grantor) pursuant to consignment, sale or return, sale on approval or
similar arrangement.
(h) Copyrights, Patents and Trademarks. As of the Closing
Date:
(i) Schedule 1(b) attached hereto includes all
material Copyrights, Copyright Licenses, Patents, Patent
Licenses, Trademarks and Trademark Licenses owned by any
Grantor in its own name, or to which any Grantor is a party,
as of the date hereof.
(ii) No Grantor has made any assignment or agreement
in conflict with the security interest in the Copyrights,
Patents or Trademarks of any Grantor hereunder.
5. Covenants. Each Grantor covenants that, so long as any of the
Secured Obligations (other than any such obligations that, by their terms,
survive termination of the Credit Documents) remains outstanding and until all
of the commitments relating thereto have been terminated, such Grantor shall:
(a) Other Liens. Defend the Collateral against the claims and
demands of all other parties claiming an interest therein, keep the
Collateral free from all Liens, except for Permitted Liens, and not
sell, exchange, transfer, assign, lease or otherwise dispose of the
Collateral or any interest therein, except as permitted under the
Credit Agreement.
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(b) Instruments/Tangible Chattel Paper/Documents. If any
amount payable under or in connection with any of the Collateral shall
be or become evidenced by any Instrument or Tangible Chattel Paper, or
if any property constituting Collateral shall be stored or shipped
subject to a Document, such Grantor shall ensure that such Instrument,
Tangible Chattel Paper or Document is either in the possession of such
Grantor at all times or, if requested by the Collateral Agent, is
immediately delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent. Such Grantor shall ensure
that any Collateral consisting of Tangible Chattel Paper is marked with
a legend acceptable to the Collateral Agent indicating the Collateral
Agent's security interest in such Tangible Chattel Paper.
(c) Change in Structure, Location or Type. Not, without
providing ten days prior written notice to the Collateral Agent and
without filing (or confirming that the Collateral Agent has filed) such
financing statements and amendments to any previously filed financing
statements as the Collateral Agent may require:
(i) change its name or state of formation or be party
to a merger, consolidation or other change in structure or use
any tradename other than as set forth on Schedule 4(a)(ii)
attached hereto, or
(ii) allow any of its Collateral to be moved to any
jurisdiction in which Revised Article 9 is not yet in effect.
(d) Inspection. Upon reasonable notice, and during reasonable
hours, at all times allow the Collateral Agent or its representatives
to visit and inspect the Collateral as set forth in the Credit
Agreement.
(e) Authorization. Authorize the Collateral Agent to prepare
and file such financing statements (including renewal statements),
amendments and supplements or such other instruments as the Collateral
Agent may from time to time reasonably deem necessary, appropriate or
convenient in order to perfect and maintain the security interests
granted hereunder in accordance with the UCC.
(f) Perfection of Security Interest. Execute and deliver to
the Collateral Agent such agreements, assignments or instruments
(including affidavits, notices, reaffirmations and amendments and
restatements of existing documents, as the Collateral Agent may
reasonably request) and do all such other things as the Collateral
Agent may reasonably deem necessary, appropriate or convenient (i) to
assure to the Collateral Agent the effectiveness and priority of its
security interests hereunder, including (A) such financing statements
(including renewal statements), amendments and supplements or such
other instruments as the Collateral Agent may from time to time
reasonably request in order to perfect and maintain the security
interests granted hereunder in accordance with the UCC, (B) with regard
to Copyrights, a Notice of Grant of Security Interest in Copyrights for
filing with the United States Copyright Office substantially in the
form of Schedule 5(f)(i) attached hereto, (C) with regard to Patents, a
Notice of Grant of Security Interest in Patents for filing with the
United States Patent and Trademark Office substantially in the form of
Schedule 5(f)(ii) attached hereto and (D) with regard to Trademarks, a
Notice of Grant of Security Interest in Trademarks for filing with the
United States Patent and Trademark Office substantially in the form of
Schedule 5(f)(iii) attached hereto, (ii) to consummate the transactions
contemplated hereby and (iii) to otherwise protect and assure the
Collateral Agent of its rights and interests hereunder. To that end,
each Grantor agrees that the Collateral Agent may file one or more
financing statements disclosing the Collateral Agent's security
interest in any or all of the Collateral of such Grantor without, to
the extent permitted by law, such Grantor's signature thereon
(including UCC financing statements with descriptions of collateral
broader than the granting clause), and further each Grantor also hereby
irrevocably makes, constitutes and appoints the Collateral Agent, its
nominee or any
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other Person whom the Collateral Agent may designate, as such Grantor's
attorney-in-fact with full power and for the limited purpose to sign in
the name of such Grantor any such financing statements (including
renewal statements), amendments and supplements, notices or any similar
documents which in the Collateral Agent's reasonable discretion would
be necessary, appropriate or convenient in order to perfect and
maintain perfection of the security interests granted hereunder, such
power, being coupled with an interest, being and remaining irrevocable
so long as the Secured Obligations (other than any such obligations
that, by the terms, survive termination of the Credit Documents),
remain unpaid and until the commitments relating thereto shall have
been terminated. Each Grantor hereby agrees that a carbon, photographic
or other reproduction of this Security Agreement or any such financing
statement is sufficient for filing as a financing statement by the
Collateral Agent without notice thereof to such Grantor wherever the
Collateral Agent may in its sole discretion desire to file the same. In
the event for any reason the law of any jurisdiction other than New
York becomes or is applicable to the Collateral of any Grantor or any
part thereof, or to any of the Secured Obligations, such Grantor agrees
to execute and deliver all such instruments and to do all such other
things as the Collateral Agent in its sole discretion reasonably deems
necessary, appropriate or convenient to preserve, protect and enforce
the security interests of the Collateral Agent under the law of such
other jurisdiction (and, if a Grantor shall fail to do so promptly upon
the request of the Collateral Agent, then the Collateral Agent may
execute any and all such requested documents on behalf of such Grantor
pursuant to the power of attorney granted hereinabove). If any
Collateral is in the possession or control of a Grantor's agents and
the Collateral Agent so requests, such Grantor agrees to notify such
agents in writing of the Collateral Agent's security interest therein
and, upon the Collateral Agent's request, instruct them to hold all
such Collateral for the account of the holders of the Secured
Obligations and subject to the Collateral Agent's instructions. Each
Grantor agrees to ▇▇▇▇ its books and records to reflect the security
interest of the Collateral Agent in the Collateral.
(g) Control. Execute and deliver all agreements, assignments,
instruments or other documents as the Collateral Agent shall reasonably
request for the purpose of obtaining and maintaining control within the
meaning of the UCC with respect to any Collateral consisting of Deposit
Accounts, Investment Property, Letter-of-Credit Rights and Electronic
Chattel Paper.
(h) Collateral held by Warehouseman, Bailee, etc. If any
Collateral is at any time in the possession or control of a
warehouseman, bailee, agent or processor of such Grantor, (i) notify
the Collateral Agent of such possession or control, (ii) notify such
Person of the Collateral Agent's security interest in such Collateral
and (iii) instruct such Person to hold all such Collateral for the
Collateral Agent's account and subject to the Collateral Agent's
instructions.
(i) Treatment of Accounts. Not grant or extend the time for
payment of any Account, or compromise or settle any Account for less
than the full amount thereof, or release any Person or property, in
whole or in part, from payment thereof, or allow any credit or discount
thereon, other than in the ordinary course of a Grantor's business or
as required by law.
(j) Covenants Relating to Copyrights. Unless the applicable
Grantor believes it is not necessary in the prudent conduct of its
business:
(i) Employ the Copyright for each Work with such
notice of copyright as may be required by law to secure
copyright protection.
(ii) Not do any act or knowingly omit to do any act
whereby any material Copyright may become invalidated and (A)
not do any act, or knowingly omit to do any act, whereby any
material Copyright may become injected into the public domain;
(B) notify the Collateral Agent promptly if it knows that any
material Copyright may become injected into the public domain
or of any adverse determination or development (including,
without
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limitation, the institution of, or any such determination or
development in, any court or tribunal in the United States or
any other country) regarding a Grantor's ownership of any such
Copyright or its validity; (C) take all necessary steps as it
shall deem appropriate under the circumstances, to maintain
and pursue each application (and to use its best efforts to
obtain the relevant registration) and to maintain each
registration of each material Copyright owned by a Grantor
including, without limitation, filing of applications for
renewal where necessary; and (D) promptly notify the
Collateral Agent of any material infringement of any material
Copyright of a Grantor of which it becomes aware and take such
actions as it shall reasonably deem appropriate under the
circumstances to protect such Copyright, including, where
appropriate, the bringing of suit for infringement, seeking
injunctive relief and seeking to recover any and all damages
for such infringement.
(iii) Not make any assignment or agreement in
conflict with the security interest in the Copyrights of each
Grantor hereunder.
(k) Covenants Relating to Patents and Trademarks. Unless the
applicable Grantor believes it is not necessary in the prudent conduct
of its business:
(i) (A) Continue to use each Trademark on each and
every trademark class of goods applicable to its current line
as reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force free
from any claim of abandonment for non-use, (B) maintain as in
the past the quality of products and services offered under
such Trademark, (C) employ such Trademark with the appropriate
notice of registration or notice of trademark or service ▇▇▇▇,
as applicable, sufficient to protect such Trademark, (D) not
adopt or use any ▇▇▇▇ which is confusingly similar or a
colorable imitation of such Trademark unless the Collateral
Agent, for the ratable benefit of the holders of the Secured
Obligations, shall obtain a perfected security interest in
such ▇▇▇▇ pursuant to this Security Agreement, and (E) not
(and not permit any licensee or sublicensee thereof to) do any
act or knowingly omit to do any act whereby any Trademark may
become invalidated.
(ii) Not do any act, or omit to do any act, whereby
any Patent may become abandoned or dedicated.
(iii) Notify the Collateral Agent and the holders of
the Secured Obligations promptly if it knows that any
application or registration relating to any material Patent or
material Trademark may become abandoned or dedicated, or of
any adverse determination or development (including, without
limitation, the institution of, or any such determination or
development in, any proceeding in the United States Patent and
Trademark Office or any court or tribunal in any country)
regarding a Grantor's ownership of any Patent or Trademark or
its right to register the same or to keep and maintain the
same.
(iv) Whenever a Grantor, either by itself or through
an agent, employee, licensee or designee, shall file an
application for the registration of any Patent or Trademark
with the United States Patent and Trademark Office or any
similar office or agency in any other country or any political
subdivision thereof, a Grantor shall report such filing to the
Collateral Agent and the holders of the Secured Obligations
within five Business Days after the last day of the fiscal
quarter in which such filing occurs. Upon request of the
Collateral Agent, a Grantor shall execute and deliver any and
all agreements, instruments, documents and papers as the
Collateral Agent may reasonably request to evidence the
security interest of the Collateral Agent and the holders of
the Secured Obligations in any Patent or Trademark and the
goodwill and general intangibles of a Grantor relating thereto
or represented thereby.
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(v) Take all reasonable and necessary steps,
including, without limitation, in any proceeding before the
United States Patent and Trademark Office, or any similar
office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application
(and to obtain the relevant registration) and to maintain each
registration of the Patents and Trademarks, including, without
limitation, filing of applications for renewal, affidavits of
use and affidavits of incontestability.
(vi) Promptly notify the Collateral Agent and the
holders of the Secured Obligations after it learns that any
material Patent or material Trademark included in the
Collateral is infringed, misappropriated or diluted in any
material manner by a third party, and take such actions as it
shall reasonably deem appropriate under the circumstances to
protect such Patent or Trademark, including, where it shall
reasonably deem appropriate, the bringing of suit for
infringement, misappropriation or dilution, seeking injunctive
relief where appropriate and seeking to recover any and all
damages for such infringement, misappropriation or dilution,
or taking such other actions as it shall reasonably deem
appropriate under the circumstances to protect such Patent or
Trademark.
(vii) Not make any assignment or agreement in
conflict with the security interest in the Patents or
Trademarks of each Grantor hereunder except as permitted under
the Credit Agreement.
(l) New Patents, Copyrights and Trademarks. Promptly provide
the Collateral Agent with (i) a listing of all applications, if any,
for new material Copyrights, Patents or Trademarks (together with a
listing of the issuance of registrations or letters on present
applications), which new applications and issued registrations or
letters shall be subject to the terms and conditions hereunder, and
(ii) (A) with respect to Copyrights, a duly executed Notice of Security
Interest in Copyrights, (B) with respect to Patents, a duly executed
Notice of Security Interest in Patents, (C) with respect to Trademarks,
a duly executed Notice of Security Interest in Trademarks or (D) such
other duly executed documents as the Collateral Agent may reasonably
request in a form acceptable to counsel for the Collateral Agent and
suitable for recording to evidence the security interest in the
Copyright, Patent or Trademark which is the subject of such new
application.
(m) Insurance. Insure, repair and replace the Collateral of
such Grantor as set forth in the Credit Agreement. All insurance
proceeds shall be subject to the security interest of the Collateral
Agent hereunder.
(n) Commercial Tort Claims.
(i) Promptly notify the Collateral Agent in writing
of the initiation of any Commercial Tort Claim before any
Governmental Authority by or affecting such Grantor or any of
its Subsidiaries.
(ii) Execute and deliver such statements, documents
and notices and do and cause to be done all such things as the
Collateral Agent may reasonably deem necessary, appropriate or
convenient, or as are required by law, to create, perfect and
maintain the Collateral Agent's security interest in any
Commercial Tort Claim.
6. Advances by Holders of the Secured Obligations. On failure of any
Grantor to perform any of the covenants and agreements contained herein, the
Collateral Agent may, at its sole option and in its reasonable discretion,
perform the same (provided that the Collateral Agent shall promptly give the
Borrower notice of such performance after the fact) and in so doing may expend
such sums as the Collateral Agent may
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reasonably deem advisable in the performance thereof, including, without
limitation, the payment of any insurance premiums, the payment of any taxes, a
payment to obtain a release of a Lien or potential Lien, expenditures made in
defending against any adverse claim and all other expenditures which the
Collateral Agent or the holders of the Secured Obligations may make for the
protection of the security hereof or which may be compelled to make by operation
of law. All such sums and amounts so expended shall be repayable by the Grantors
on a joint and several basis (subject to Section 26 hereof) promptly upon timely
notice thereof and demand therefor, shall constitute additional Secured
Obligations and shall bear interest from the date said amounts are expended at
the default rate specified in the Credit Agreement for Revolving Loans that are
Base Rate Loans. No such performance of any covenant or agreement by the
Collateral Agent or the holders of the Secured Obligations on behalf of any
Grantor, and no such advance or expenditure therefor, shall relieve the Grantors
of any default under the terms of this Security Agreement, the other Credit
Documents or any other documents relating to the Secured Obligations. The
holders of the Secured Obligations may make any payment hereby authorized in
accordance with any ▇▇▇▇, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the
accuracy of such ▇▇▇▇, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to the extent such
payment is being contested in good faith by a Grantor in appropriate proceedings
and against which adequate reserves are being maintained in accordance with
GAAP.
7. Events of Default.
The occurrence of an event which would constitute an Event of Default
under the Credit Agreement shall be an event of default hereunder (an "Event of
Default").
8. Remedies.
(a) General Remedies. Upon the occurrence of an Event of
Default and during the continuance thereof, the Collateral Agent and
the holders of the Secured Obligations shall have, in addition to the
rights and remedies provided herein, in the Credit Documents, in any
other documents relating to the Secured Obligations, or by law
(including, without limitation, levy of attachment and garnishment),
the rights and remedies of a secured party under the UCC of the
jurisdiction applicable to the affected Collateral and, further, the
Collateral Agent may, with or without judicial process or the aid and
assistance of others to the extent permitted by applicable law, (i)
enter on any premises on which any of the Collateral may be located
and, without resistance or interference by the Grantors, take
possession of the Collateral, (ii) dispose of any Collateral on any
such premises, (iii) require the Grantors to assemble and make
available to the Collateral Agent at the expense of the Grantors any
Collateral at any place and time designated by the Collateral Agent
which is reasonably convenient to both parties, (iv) remove any
Collateral from any such premises for the purpose of effecting sale or
other disposition thereof, and/or (v) without demand and without
advertisement, notice, hearing or process of law, all of which each of
the Grantors hereby waives to the fullest extent permitted by law, at
any place and time or times, sell and deliver any or all Collateral
held by or for it at public or private sale, by one or more contracts,
in one or more parcels, for cash, upon credit or otherwise, at such
prices and upon such terms as the Collateral Agent deems advisable, in
its sole discretion (subject to any and all mandatory legal
requirements). Each of the Grantors acknowledges that any private sale
referenced above may be at prices and on terms less favorable to the
seller than the prices and other terms which might have been obtained
at a public sale and, notwithstanding the foregoing, agrees that such
private sale shall be deemed to have been made in a commercially
reasonable manner. In addition to all other sums due the Collateral
Agent and the holders of the Secured Obligations with respect to the
Secured Obligations, the Grantors shall pay the Collateral Agent and
each of the holders of the Secured Obligations all reasonable costs and
expenses incurred by the Collateral Agent or any such holder of the
Secured Obligations, including, but not limited to, reasonable
attorneys' fees and court costs, in obtaining or liquidating the
Collateral, in enforcing payment of the Secured Obligations, or in the
prosecution or defense of any action or proceeding by
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or against the Collateral Agent or the holders of the Secured
Obligations or the Grantors concerning any matter arising out of or
connected with this Security Agreement, any Collateral or the Secured
Obligations, including, without limitation, any of the foregoing
arising in, arising under or related to a case concerning a Grantor
under the Bankruptcy Code. To the extent the rights of notice cannot be
legally waived hereunder, each Grantor agrees that any requirement of
reasonable notice shall be met if such notice is personally served on
or mailed, postage prepaid, to the Company in accordance with the
notice provisions of the Credit Agreement at least ten days before the
time of sale or other event giving rise to the requirement of such
notice. The Collateral Agent and the holders of the Secured Obligations
shall not be obligated to make any sale or other disposition of the
Collateral regardless of notice having been given. To the extent
permitted by law, any holder of the Secured Obligations may be a
purchaser at any such sale. To the extent permitted by applicable law,
each of the Grantors hereby waives all of its rights of redemption with
respect to any such sale. Subject to the provisions of applicable law,
the Collateral Agent and the holders of the Secured Obligations may
postpone or cause the postponement of the sale of all or any portion of
the Collateral by announcement at the time and place of such sale, and
such sale may, without further notice, to the extent permitted by law,
be made at the time and place to which the sale was postponed, or the
Collateral Agent and the holders of the Secured Obligations may further
postpone such sale by announcement made at such time and place.
(b) Remedies relating to Accounts. Upon the occurrence of an
Event of Default and during the continuance thereof, whether or not the
Collateral Agent has exercised any or all of its rights and remedies
hereunder, each Grantor will promptly upon request of the Collateral
Agent instruct all account debtors to remit all payments in respect of
Accounts to a mailing location selected by the Collateral Agent. In
addition, the Collateral Agent shall have the right to enforce any
Grantor's rights against its customers and account debtors, and the
Collateral Agent or its designee may notify any Grantor's customers and
account debtors that the Accounts of such Grantor have been assigned to
the Collateral Agent or of the Collateral Agent's security interest
therein, and may (either in its own name or in the name of a Grantor or
both) demand, collect (including without limitation by way of a lockbox
arrangement), receive, take receipt for, sell, ▇▇▇ for, compound,
settle, compromise and give acquittance for any and all amounts due or
to become due on any Account, and, in the Collateral Agent's
discretion, file any claim or take any other action or proceeding to
protect and realize upon the security interest of the holders of the
Secured Obligations in the Accounts. Each Grantor acknowledges and
agrees that the Proceeds of its Accounts remitted to or on behalf of
the Collateral Agent in accordance with the provisions hereof shall be
solely for the Collateral Agent's own convenience and that such Grantor
shall not have any right, title or interest in such Accounts or in any
such other amounts except as expressly provided herein. The Collateral
Agent and the holders of the Secured Obligations shall have no
liability or responsibility to any Grantor for acceptance of a check,
draft or other order for payment of money bearing the legend "payment
in full" or words of similar import or any other restrictive legend or
endorsement or be responsible for determining the correctness of any
remittance. Each Grantor hereby agrees to indemnify the Collateral
Agent and the holders of the Secured Obligations from and against all
liabilities, damages, losses, actions, claims, judgments, costs,
expenses, charges and reasonable attorneys' fees suffered or incurred
by the Collateral Agent or the holders of the Secured Obligations
(each, an "Indemnified Party") because of the maintenance of the
foregoing arrangements except as relating to or arising out of the
gross negligence or willful misconduct of an Indemnified Party or its
officers, employees or agents. In the case of any investigation,
litigation or other proceeding, the foregoing indemnity shall be
effective whether or not such investigation, litigation or proceeding
is brought by a Grantor, its directors, shareholders or creditors or an
Indemnified Party or any other Person or any other Indemnified Party is
otherwise a party thereto.
(c) Access. In addition to the rights and remedies hereunder,
upon the occurrence of an Event of Default and during the continuance
thereof, the Collateral Agent shall have the right to enter
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and remain upon the various premises of the Grantors without cost or
charge to the Collateral Agent, and use the same, together with
materials, supplies, books and records of the Grantors for the purpose
of collecting and liquidating the Collateral, or for preparing for sale
and conducting the sale of the Collateral, whether by foreclosure,
auction or otherwise. In addition, the Collateral Agent may remove
Collateral, or any part thereof, from such premises and/or any records
with respect thereto, in order to effectively collect or liquidate such
Collateral.
(d) Nonexclusive Nature of Remedies. Failure by the Collateral
Agent or the holders of the Secured Obligations to exercise any right,
remedy or option under this Security Agreement, any other Credit
Document, any other documents relating to the Secured Obligations, or
as provided by law, or any delay by the Collateral Agent or the holders
of the Secured Obligations in exercising the same, shall not operate as
a waiver of any such right, remedy or option. No waiver hereunder shall
be effective unless it is in writing, signed by the party against whom
such waiver is sought to be enforced and then only to the extent
specifically stated, which in the case of the Collateral Agent or the
holders of the Secured Obligations shall only be granted as provided
herein. To the extent permitted by law, neither the Collateral Agent,
the holders of the Secured Obligations, nor any party acting as
attorney for the Collateral Agent or the holders of the Secured
Obligations, shall be liable hereunder for any acts or omissions or for
any error of judgment or mistake of fact or law other than their gross
negligence or willful misconduct hereunder. The rights and remedies of
the Collateral Agents and the holders of the Secured Obligations under
this Security Agreement shall be cumulative and not exclusive of any
other right or remedy which the Collateral Agent or the holders of the
Secured Obligations may have.
(e) Retention of Collateral. To the extent permitted under
applicable law, in addition to the rights and remedies hereunder, upon
the occurrence of an Event of Default, the Collateral Agent may, after
providing the notices required by Sections 9-620 and 9-621 of the UCC
or otherwise complying with the requirements of applicable law of the
relevant jurisdiction, accept or retain all or any portion of the
Collateral in satisfaction of the Secured Obligations. Unless and until
the Collateral Agent shall have provided such notices, however, the
Collateral Agent shall not be deemed to have accepted or retained any
Collateral in satisfaction of any Secured Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which
the Collateral Agent or the holders of the Secured Obligations are
legally entitled, the Grantors (subject to Section 26 hereof) shall be
jointly and severally liable for the deficiency, together with interest
thereon at the default rate specified in the Credit Agreement for
Revolving Loans that are Base Rate Loans, together with the costs of
collection and reasonable fees of attorneys employed by the Collateral
Agent to collect such deficiency. Any surplus remaining after the full
payment and satisfaction of the Secured Obligations shall be returned
to the Grantors or to whomsoever a court of competent jurisdiction
shall determine to be entitled thereto.
9. Release of Collateral. Upon request, the Collateral Agent shall
promptly deliver to the Company (at the Company's expense) appropriate release
documentation to the extent the release of Collateral is permitted under, and on
the terms and conditions set forth in, the Credit Agreement; provided that any
such release, or the substitution of any of the Collateral for other Collateral,
will not alter, vary or diminish in any way the force, effect, lien, pledge or
security interest of this Security Agreement as to any and all Collateral not
expressly released or substituted, and this Security Agreement shall continue as
a first priority lien (subject to Permitted Liens) on any and all Collateral not
expressly released or substituted.
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10. Rights of the Collateral Agent.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Grantor hereby designates and appoints the
Collateral Agent, on behalf of the holders of the Secured Obligations,
and each of its designees or agents, as attorney-in-fact of such
Grantor, irrevocably and with power of substitution, with authority to
take any or all of the following actions upon the occurrence and during
the continuance of an Event of Default:
(i) to demand, collect, settle, compromise and
adjust, and give discharges and releases concerning the
Collateral, all as the Collateral Agent may reasonably deem
appropriate;
(ii) to commence and prosecute any actions at any
court for the purposes of collecting any of the Collateral and
enforcing any other right in respect thereof;
(iii) to defend, settle or compromise any action
brought and, in connection therewith, give such discharge or
release as the Collateral Agent may reasonably deem
appropriate;
(iv) to receive, open and dispose of mail addressed
to a Grantor and endorse checks, notes, drafts, acceptances,
money orders, bills of lading, warehouse receipts or other
instruments or documents evidencing payment, shipment or
storage of the goods giving rise to the Collateral on behalf
of and in the name of such Grantor, or securing, or relating
to such Collateral;
(v) to pay or discharge taxes, liens, security
interests or other encumbrances levied or placed on or
threatened against the Collateral;
(vi) to direct any parties liable for any payment in
connection with any of the Collateral to make payment of any
and all monies due and to become due thereunder directly to
the Collateral Agent or as the Collateral Agent shall direct;
(vii) to receive payment of and receipt for any and
all monies, claims, and other amounts due and to become due at
any time in respect of or arising out of any Collateral;
(viii) to sell, assign, transfer, make any agreement
in respect of, or otherwise deal with or exercise rights in
respect of, any Collateral or the goods or services which have
given rise thereto, as fully and completely as though the
Collateral Agent were the absolute owner thereof for all
purposes;
(ix) to adjust and settle claims under any insurance
policy relating thereto;
(x) to execute and deliver all assignments,
conveyances, statements, financing statements, renewal
financing statements, security and pledge agreements,
affidavits, notices and other agreements, instruments and
documents that the Collateral Agent may reasonably deem
appropriate in order to perfect and maintain the security
interests and liens granted in this Security Agreement and in
order to fully consummate all of the transactions contemplated
therein;
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(xi) to institute any foreclosure proceedings that
the Collateral Agent may reasonably deem appropriate; and
(xii) to do and perform all such other acts and
things as the Collateral Agent may reasonably deem appropriate
or convenient in connection with the Collateral.
This power of attorney is a power coupled with an interest and
shall be irrevocable for so long as any of the Secured Obligations
(other than any such obligations that, by their terms, survive
termination of the Credit Documents) shall remain outstanding and until
all of the commitments relating thereto shall have been terminated. The
Collateral Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges and options expressly
or implicitly granted to the Collateral Agent in this Security
Agreement, and shall not be liable for any failure to do so or any
delay in doing so. The Collateral Agent shall not be liable for any act
or omission or for any error of judgment or any mistake of fact or law
in its individual capacity or its capacity as attorney-in-fact except
acts or omissions resulting from its gross negligence or willful
misconduct. This power of attorney is conferred on the Collateral Agent
solely to protect, preserve and realize upon its security interest in
the Collateral.
(b) Performance by the Collateral Agent of Obligations. If any
Grantor fails to perform any agreement or obligation contained herein,
the Collateral Agent itself may perform, or cause performance of, such
agreement or obligation, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by the Grantors on a
joint and several basis pursuant to Section 26 hereof.
(c) The Collateral Agent's Duty of Care. Other than the
exercise of reasonable care to assure the safe custody of the
Collateral while being held by the Collateral Agent hereunder, the
Collateral Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that the Grantors
shall be responsible for preservation of all rights in the Collateral,
and the Collateral Agent shall be relieved of all responsibility for
the Collateral upon surrendering it or tendering the surrender of it to
the Grantors. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in
its possession if such Collateral is accorded treatment substantially
equal to that which the Collateral Agent accords its own property,
which shall be no less than the treatment employed by a reasonable and
prudent agent in the industry, it being understood that the Collateral
Agent shall not have responsibility for taking any necessary steps to
preserve rights against any parties with respect to any of the
Collateral. In the event of a public or private sale of Collateral
pursuant to Section 8 hereof, the Collateral Agent shall have no
obligation to clean, repair or otherwise prepare the Collateral for
sale.
11. Rights of Required Banks. All rights of the Collateral Agent
hereunder, if not exercised by the Collateral Agent, may be exercised by the
Required Banks.
12. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the Collateral
Agent or any of the holders of the Secured Obligations in cash or its
equivalent, will be applied in reduction of the Secured Obligations in the order
set forth in the Intercreditor Agreement or other document relating to the
Secured Obligations, and each Grantor irrevocably waives the right to direct the
application of such payments and proceeds and acknowledges and agrees that the
Collateral Agent shall have the continuing and exclusive right to apply and
reapply any and all such payments and proceeds in the Collateral Agent's sole
discretion, notwithstanding any entry to the contrary upon any of its books and
records.
15
13. Costs of Counsel. At all times hereafter, the Grantors agree to
promptly pay upon demand any and all reasonable costs and expenses (including,
without limitation, reasonable attorneys' fees) of the Collateral Agent and the
holders of the Secured Obligations (a) as required under the Credit Agreement
and (b) as necessary to protect the Collateral or to exercise any rights or
remedies under this Security Agreement or with respect to any of the Collateral.
All of the foregoing costs and expenses shall constitute Secured Obligations
hereunder.
14. Continuing Agreement.
(a) This Security Agreement shall be a continuing agreement in
every respect and shall remain in full force and effect so long as any
of the Secured Obligations (other than any such obligations that, by
their terms, survive termination of the Credit Documents) remains
outstanding and until all of the commitments relating thereto have been
terminated. Upon such payment and termination, this Security Agreement
shall be automatically terminated and the Collateral Agent and the
holders of the Secured Obligations shall, upon the request and at the
expense of the Grantors, forthwith release all of its liens and
security interests hereunder and shall execute and deliver all UCC
termination statements and/or other documents reasonably requested by
the Grantors evidencing such termination. Notwithstanding the
foregoing, all releases and indemnities provided hereunder shall
survive termination of this Security Agreement.
(b) This Security Agreement shall continue to be effective or
be automatically reinstated, as the case may be, if at any time
payment, in whole or in part, of any of the Secured Obligations is
rescinded or must otherwise be restored or returned by the Collateral
Agent or any holder of the Secured Obligations as a preference,
fraudulent conveyance or otherwise under any bankruptcy, insolvency or
similar law, all as though such payment had not been made; provided
that in the event payment of all or any part of the Secured Obligations
is rescinded or must be restored or returned, all reasonable costs and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements) incurred by the Collateral Agent or any holder of the
Secured Obligations in defending and enforcing such reinstatement shall
be deemed to be included as a part of the Secured Obligations.
15. Amendments and Waivers. This Security Agreement and the provisions
hereof may not be amended, waived, modified, changed, discharged or terminated
except as set forth in the Credit Agreement.
16. Successors in Interest. This Security Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Grantor, its successors and assigns, and shall inure, together with the rights
and remedies of the Collateral Agent and the holders of the Secured Obligations
hereunder, to the benefit of the Collateral Agent and the holders of the Secured
Obligations and their successors and permitted assigns; provided, however, that
none of the Grantors may assign its rights or delegate its duties hereunder
without the prior written consent of the requisite Lenders under the Credit
Agreement. To the fullest extent permitted by law, each Grantor hereby releases
the Collateral Agent and each holder of the Secured Obligations, and their
respective successors and assigns and any party acting as attorney for the
Collateral Agent or the holders of the Secured Obligations, from any liability
for any act or omission or for any error of judgment or mistake of fact or law
relating to this Security Agreement or the Collateral, except for any liability
arising from the gross negligence or willful misconduct of the Collateral Agent
or such holder, or their respective officers, employees or agents.
17. Notices. All notices required or permitted to be given under this
Security Agreement shall be given as provided in the Credit Agreement.
18. Counterparts. This Security Agreement may be executed in any number
of counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and
16
the same instrument. It shall not be necessary in making proof of this Security
Agreement to produce or account for more than one such counterpart.
19. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Security Agreement.
20. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any
legal action or proceeding with respect to this Security Agreement may
be brought in the state or federal courts located in New York, New
York, and, by execution and delivery of this Security Agreement, each
Grantor hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of such
courts. Each Grantor further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to it at the address for notices pursuant to the
Credit Agreement, such service to become effective three days after
such mailing. Nothing herein shall affect the right of the Collateral
Agent to serve process in any other manner permitted by law or to
commence legal proceedings or to otherwise proceed against any Grantor
in any other jurisdiction.
(b) Each Grantor hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with
this Security Agreement brought in the courts referred to in subsection
(a) hereof and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
21. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
22. Severability. If any provision of this Security Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
23. Entirety. This Security Agreement, the other Credit Documents and
the other documents relating to the Secured Obligations represent the entire
agreement of the parties hereto and thereto, and supersede all prior agreements
and understandings, oral or written, if any, including any commitment letters or
correspondence relating to the Credit Documents, any other documents relating to
the Secured Obligations, or the transactions contemplated herein and therein.
24. Survival. All representations and warranties of the Grantors
hereunder shall survive the execution and delivery of this Security Agreement,
the other Credit Documents and the other documents relating to the Secured
Obligations, the delivery of the Notes and the extension of credit thereunder or
in connection therewith.
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25. Other Security. To the extent that any of the Secured Obligations
are now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities owned by a Grantor), or by a
guarantee, endorsement or property of any other Person, then the Collateral
Agent shall have the right to proceed against such other property, guarantee or
endorsement upon the occurrence of any Event of Default, and the Collateral
Agent shall have the right, in its sole discretion, to determine which rights,
security, liens, security interests or remedies the Collateral Agent shall at
any time pursue, relinquish, subordinate, modify or take with respect thereto,
without in any way modifying or affecting any of them or the Secured Obligations
or any of the rights of the Collateral Agent or the holders of the Secured
Obligations under this Security Agreement, under any of the other Credit
Documents or under any other document relating to the Secured Obligations.
26. Joint and Several Obligations of Grantors.
(a) Subject to clause (c) of this Section 26, each of the
Grantors is accepting joint and several liability hereunder in
consideration of the financial accommodation to be provided by the
holders of the Secured Obligations, for the mutual benefit, directly
and indirectly, of each of the Grantors and in consideration of the
undertakings of each of the Grantors to accept joint and several
liability for the obligations of each of them.
(b) Subject to clause (c) of this Section 26, each of the
Grantors jointly and severally hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and
several liability with the other Grantors with respect to the payment
and performance of all of the Secured Obligations arising under this
Security Agreement, the other Credit Documents and any other documents
relating to the Secured Obligations, it being the intention of the
parties hereto that all the Secured Obligations shall be the joint and
several obligations of each of the Grantors without preferences or
distinction among them.
(c) Notwithstanding any provision to the contrary contained
herein, in any other of the Credit Documents or in any other documents
relating to the Secured Obligations, the obligations of each Guarantor
under the Credit Agreement and the other Credit Documents shall be
limited to an aggregate amount equal to the largest amount that would
not render such obligations subject to avoidance under Section 548 of
the Bankruptcy Code or any comparable provisions of any applicable
state law.
27. Regulatory Approvals.
(a) Any provision contained herein to the contrary
notwithstanding, except for the security interests expressly granted
herein or therein or upon the exercise by the Collateral Agent or the
Administrative Agent of rights and remedies in accordance herewith or
therewith and pursuant to clause (b), below, upon the occurrence and
continuation of an Event of Default, this Agreement, the Loan Documents
and the transactions contemplated hereby and thereby (i) do not and
will not constitute, create, or have the effect of constituting or
creating, directly or indirectly, actual or practical ownership of any
Loan Parties by the holders of the Secured Obligations, or control,
affirmative or negative, direct or indirect, by the holders of the
Secured Obligations over the management or any other aspect of the
operation of any Loan Party, which ownership and control remain
exclusively and at all times in such Loan Party or Loral, as the case
may be, and (ii) do not and will not constitute the transfer,
assignment, or disposition in any manner, voluntarily or involuntarily,
directly or indirectly, of any license, permit, certificate or
authorization at any time issued to any Loan Party by the Federal
Communications Commission (the "FCC"), any other federal, state or
local regulatory or governmental bodies applicable to or having
jurisdiction over the Grantor or any Governmental Authority, or the
transfer of control of any such Loan Party within the meaning of the
Federal Communications Act of 1934, as
18
amended, and the respective rules and regulations thereunder and
thereof, any other federal or state laws, rules and regulations of
other operating municipality regulatory or governmental bodies
applicable to or having jurisdiction over the Grantor as well as
pursuant to the terms of any franchise, license or similar operating
right held by the Grantor.
(b) Any provision contained herein to the contrary
notwithstanding, no action, including any foreclosure on, sale,
transfer or other disposition of, or the exercise of any right to vote
or consent, shall be taken hereunder by the Collateral Agent with
respect to any items of the Collateral unless and until all applicable
requirements (if any) of the FCC under the Federal Communications Act
of 1934, as amended, and the respective rules and regulations
thereunder and thereof, as well as any other federal or state laws,
rules and regulations of other operating municipality regulatory or
governmental bodies applicable to or having jurisdiction over the
Grantor, have been satisfied with respect to such action and there have
been obtained such consents, approvals and authorizations (if any) as
may be required to be obtained from the FCC, any operating municipality
and any other Governmental Authority under the terms of any franchise,
license or similar operating right held by the Grantor. It is the
intention of the parties hereto that the Liens in favor of the
Collateral Agent on the Collateral shall in all relevant aspects be
subject to and governed by said statutes, rules and regulations as well
as the terms of any franchise, license or similar operating right held
by the Grantor and that nothing in this Agreement shall be construed to
diminish the control exercised by the Grantor except in accordance with
the provisions of such statutory requirements and rules and regulations
as well as the terms of any franchise, license or similar operating
right held by the Grantor and the obtaining in advance of any necessary
consents, approvals or authorizations pursuant thereto. The Grantor
agrees that upon request by the Collateral Agent from time to time
after the occurrence and during the continuance of an Event of Default
it will use its reasonable best efforts to obtain any governmental,
regulatory or third party consents, approvals or authorizations
referred to in this Section 27.
28. Limitation. Notwithstanding anything herein to the contrary, the
obligations of the Grantors hereunder in respect of the Satellite Indebtedness
shall be limited to the Collateral hereunder.
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Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
GRANTORS: LORAL SPACECOM CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
SPACE SYSTEMS/LORAL, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
LORAL COMMUNICATIONS SERVICES, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
LORAL GROUND SERVICES, L.L.C.,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
LORAL SPACECOM CORPORATION
SECURITY AGREEMENT
Accepted and agreed to as of the date first above written.
BANK OF AMERICA, N.A.,
as Collateral Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Managing Director
LORAL SPACECOM CORPORATION
SECURITY AGREEMENT