SECURITY AGREEMENT
(Broadband Personal Communications Service, F Block: Auction Event No. 11)
License No. _______
This SECURITY AGREEMENT DATED ________, 1997, ("AGREEMENT"), dated this __st day
of ____, by and between AER FORCE COMMUNICATIONS B, L.P., a Delaware Limited
Partnership ("DEBTOR"), and the FEDERAL COMMUNICATIONS COMMISSION, an
independent regulatory agency of the United States ("COMMISSION" OR "SECURED
PARTY").
WITNESSETH
WHEREAS, Debtor has submitted the highest accepted bid for license
number _______ in the Broadband Personal Communications Service F Block auction
(hereinafter the "LICENSE") conducted by the Commission to assign such licenses;
WHEREAS, the Commission has duly determined to grant the License to
Debtor, subject to the terms and conditions set forth in the orders and
regulations of the Commission applicable to such licenses, and the
Communications Act of 1934, as amended;
WHEREAS, Debtor wishes to pay its auction price for the License by
installments through an Installment Payment Plan as provided by 47 C.F.R. xx.xx.
1.2110, 24.716 (hereinafter the "Installment Payment Plan") and undertakes to
hold the License under the terms and conditions set forth in the Commission's
orders and regulations, as amended, applicable to such licenses, and the
Communications Act of 1934, as amended and the terms and conditions of this
Agreement;
WHEREAS, the Commission has agreed to permit the Debtor to make payment
of the auction price for the License through an Installment Payment Plan; and
WHEREAS, as an additional condition to such agreement, Debtor has
agreed to execute the Installment Payment Plan Note of even date ("NOTE") and
enter into this Agreement and make the pledge and assignment of collateral
contemplated herein.
NOW, THEREFORE, in consideration of the premises, the mutual agreements
contained herein and for other good and valuable consideration, the receipt,
adequacy, and sufficiency of which is hereby acknowledged, and in order to
induce the Commission to permit Debtor to pay
the auction price for the License through the Installment Payment Plan, Debtor
hereby agrees with the Commission as follows:
1. PLEDGE AND ASSIGNMENT OF COLLATERAL FOR OBLIGATIONS UNDER NOTE.
Debtor hereby pledges, assignees, hypothecates, delivers, and sets over to the
Commission and grants to the Commission a first lien on and continuing security
interest in all of the Debtor's rights and interest in License (if and to the
extent it is ever determined that such License may be subject to a security
interest), and all proceeds, profits and products of any sale of or other
disposition thereof (collectively, the "COLLATERAL"), all as collateral security
for the prompt and complete payment when due (whether in accordance with the
schedule of payments, at the stated maturity, by acceleration, or otherwise) of
the unpaid Principal Amount plus all unpaid interest accrued thereon, and such
other additional costs, expenses, late charges, administrative charges,
attorneys fees, and default payments assessable under the terms of the Note, the
License, or the then-applicable orders, rules or regulations of the Commission
(all collectively, the "OBLIGATIONS"). It is expressly understood by Debtor that
all of the terms of the Note apply to this Agreement and that reference herein
to "this Agreement" includes both the Security Agreement herein and the Note.
For purposes of interpreting capitalized terms used in this Agreement, such
terms, unless otherwise defined in this Agreement, shall have the meaning
ascribed to them in the Uniform Commercial Code (Official Text and Comments,
American Law Institute).
2. INTEREST OF COMMISSION. It is understood and acknowledged by
Debtor that pursuant to Section 301 of the Communications Act of 1934, as
amended, the Commission is charged with the regulatory mandate to maintain
control over all channels of radio transmission (the "SPECTRUM"), and to provide
licenses for the use of such radio channels, but now ownership thereof. Debtor
understands and acknowledges that it holds a mere conditional license to use the
Spectrum with no ownership interest in the License (or any underlying right to
use the Spectrum), with no power to assign the License without the prior
approval of the Commission pursuant to Section 310(d) of the Communications Act
of 1934, as amended, and with no ability to retain the license without full and
continuing compliance with all terms and conditions of the License including
without limitation full and timely payment of all Debtor's financial obligations
under the Commission's installment payment plan. Debtor further understands and
acknowledges that it is giving a security interest to the Commission in the
Collateral only to assist the Commission in protecting its ability to enforce
the Commission's regulations which condition holding the license on compliance
with then-applicable orders and regulations of the Commission, including, but
not limited to, full and timely payment of all payments under the Installment
Payment Plan. To that end, and not in derogation of or in substitution for any
of the Commission's regulatory authority over the License or the right of the
Commission to cancel such license, or to have such License terminate
automatically, by reason of Debtor's failure to comply on a continuing basis
with the conditions of the License, Debtor hereby acknowledges that the
Commission has a first security interest in the Collateral, and Debtor shall not
dispute such first security interest, or the Commission's rights as a secured
party hereunder, or any of the Commission's rights under the License or under
the then-applicable orders, rules and regulations of the Commission, in any
legal or equitable proceeding in which Debtor, or any assignee or
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trustee of the estate of Debtor in bankruptcy, is a party. Nothing set forth
herein shall preclude the Debtor from granting to other parties a subordinated
security interest limited to a subordinated interest in the proceeds, if any,
arising from a Commission-authorized assignment of transfer of the License to a
third party (hereinafter a "Subordinated Security Interest"), provided however
that any such Subordinated Security Interest shall be subordinated to and in no
way inconsistent with the Commission's rights under the License or the
Commission's first security interest in the Collateral, including but not
limited to the proceeds of any disposition of the License, and further provided
that said Subordinated Security Interest shall not survive if the License is
rescinded, canceled, or revoked by regulatory action of the Commission or
otherwise for violation of the terms and conditions of the License, including
but not limited to regulatory action upon a default or Event of Default under
this Agreement or other failure of condition or violation of the License or of
47 C.F.R. ss. 1.2110. The Debtor shall provide to the Commission upon request
the name and address of any party with a Subordinated Security Interest in the
proceeds of any disposition of the License, and a copy of any documents setting
forth such a Subordinated Security Interest and such other documents related to
such Subordinated Security Interest as the Commission shall request.
3. COMPLIANCE WITH COMMISSION ORDERS AND REGULATIONS. Nothing in
this Agreement shall be deemed to modify any then-applicable orders and
regulations of the Commission or of the License, and nothing in this Agreement
shall be deemed to release Debtor from compliance therewith.
4. REPRESENTATIONS AND WARRANTIES OF DEBTOR. Debtor represents and
warrants to the Commission as follows:
(a) It has full power, authority and legal right to execute,
deliver and perform this Agreement, the Note, and any other documents
delivered in connection with the Note, this Agreement and the
transactions contemplated therein, to make the debt transaction
evidenced by the Note, and to pledge the Collateral pursuant to this
Agreement.
(b) It is a dully organized Limited Partnership, existing in
good standing under the laws of Delaware and is duly qualified to do
business wherever necessary to carry on its present operations. Its
principal place of business and chief executive office are located at
Rye, New York.
(c) The representative of Debtor purporting to act on behalf
of Debtor in executing this Agreement, the Note, and any other
documents delivered in connection with the Note, this Agreement and the
transactions contemplated therein, is duly authorized by Debtor to take
all such acts and to execute all such documents.
(d) No security agreements have been executed and delivered,
and no financing statements have been filed in any jurisdiction,
granting or purporting to grant a security interest in the Collateral
that would give any other person any right or interest in the
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Collateral, or any portion thereof, except for a Subordinated Security
Interest, as defined herein, and that no person has a secured interest
that is or will be in any way inconsistent with the rights of the
Commission herein as the first secured party or the terms of this
Agreement.
(e) No consent of any other party and no consent, license,
approval or authorization of, exemption by, or registration or
declaration with, any governmental instrumentality, domestic or foreign
other than the Commission, is required to be obtained in connection
with the execution, delivery or performance of this Agreement, the Note
or any other document executed and delivered in connection with the
delivery of the Note or this Agreement.
(f) The execution, delivery and performance of this Agreement
and the Note does not and will not violate any provision of any
applicable law or regulation or any order, judgment, writ, award or
decree of any court, arbitrator, governmental instrumentality, domestic
or foreign, or of any indenture, contract, agreement or other
undertaking to which Debtor is a party or which purports to be binding
upon of Debtor or upon any of Debtor's assets, and will not result in
the creation or imposition of any lien, charge or encumbrance on or
security interest in any of the assets of Debtor, except as
contemplated by this Agreement.
(g) Debtor will not permit any financing statement to be filed
with respect to the Collateral or any portion thereof or interest
therein that would give any other person a right or any interest in the
Collateral, or any portion thereof, except that Debtor may permit a
third party to file a Subordinated Security Interest, as defined
herein, so long as said Subordinated Security Interest, is not in any
way inconsistent with the terms of this Agreement and the rights of the
Commission herein as the first secured party. Debtor will promptly
notify Secured Party of, and will defend the Collateral against, all
claims and demands, of all persons at any time claiming the same or any
interest therein that would give any other person a right or any
interest in the Collateral not subordinated to the rights of the
Commission herein as the first secured party, or that is in any way
inconsistent with the terms of this Agreement.
5. COVENANTS OF DEBTOR. Debtor hereby covenants and agrees as
follows:
(a) That it will defend the Commission's right, title and
security interest in and to the Collateral against the claims and
demands of all persons whomsoever.
(b) That it will execute all financing statements and other
instruments or documents related to the perfection of the Commission's
security interest, including but not limited to any renewal financing
statements or instruments as required to maintain the Commission's
security interest, or as otherwise reasonably requested by the
Commission, and to file and pay the cost of filing any such instruments
or documents as required under
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this paragraph in whichever public office deemed advisable by the
Commission.
(c) That it will not make any indenture, contract, agreement
or other undertaking to which Debtor is a party or which purports to be
binding upon Debtor, or upon any of Debtor's assets, that would result
in the creation or imposition of any lien, charge or encumbrance on or
security interest in any of the assets of Debtor that would give any
other person a right or any interest in the Collateral, or any portion
thereof, except for a Subordinated Security Interest, as defined
herein, provided further that such Subordinated Security Agreement
shall not be inconsistent with the terms of this Agreement and interest
of the Commission as the first secured party.
(d) That it will pay all costs and expenses, including
reasonable attorneys' fees, of the Commission incurred in connection
with the enforcement of this Agreement and any and all liability
incurred by the Commission resulting from any act or omission of Debtor
with respect to the Collateral and this Agreement.
(e) That it will execute, alone or with Secured Party, any
document, procure any document, and do all other acts and pay all
connected costs, in a timely and proper manner, which from the
character or use of the Collateral may be reasonably necessary to
protect the Collateral against the rights, claims or interests of third
persons, and will otherwise preserve the Collateral as security
hereunder. The specific undertakings required of Debtor in this
Agreement shall not be construed to exclude the aforementioned general
obligation.
6. POWER OF ATTORNEY. Debtor hereby irrevocably constitutes and
appoints the Commission and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of Debtor and in the name of Debtor
or in its own name, from time to time in the Commission's discretion, for the
purpose of carrying out the terms of this Agreement and, to the extent permitted
by applicable law, to take any and all appropriate actions and to execute any
and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement. Such appointment is a power coupled
with an interest until all Obligations have been paid in full by debtor.
7. EVENT OF DEFAULT. Debtor shall be in default under this Agreement
if an Event of Default (as defined in the Note) has occurred.
8. REMEDIES. If an Event of Default shall occur, the Commission
shall thereafter have the following rights and remedies (to the extent permitted
by applicable law) in addition to the rights and remedies relating to the Note,
all such remedies being cumulative, not exclusive, and enforceable
alternatively, successively or concurrently at such xxx or times as Commission
deems expedient:
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(a) the License shall be automatically canceled pursuant to 47
C.F.R. ss.1.2110;
(b) all Obligations secured hereunder shall become immediately
due and payable without presentment, demand, protest, further notice,
or other requirements of any kind;
(c) the Commission may demand, xxx for, and collect the
outstanding balance of the unpaid Obligations, and make any compromise,
or settlement the Commission deems suitable with respect to any
Collateral which may be held by it hereunder;
(d) Debtor hereby acknowledges the Commission's authority,
pursuant to the Communications Act of 1934, as amended, and the
Commission's orders and regulations then-applicable to such licenses,
to conduct another public auction or assign the License in the event
that the Commission rescinds, cancels, or revokes the License for any
default under this Agreement or any other violation of the terms and
conditions of the License. Debtor hereby waives all notices prior to
the conduct of said public auction or assignment by the Commission or
its agents. Debtor further acknowledges that in the event that the
Commission rescinds, cancels, or revokes the License for any default
under this Agreement or any other violation of the terms and conditions
of the License, Debtor has no right or interest in any moneys or
evidence of indebtedness given to the Commission by a subsequent
licensee of the Spectrum and that all such moneys or evidence of
indebtedness are, and shall remain, the full property of the federal
Treasury, pursuant to Section 309(j) of the Communications Act of 1934,
as amended, and then-applicable Commission orders and regulations.
(e) In addition to other remedies hereunder, Debtor shall
remain liable, and obligated to pay on demand, all costs of collection
and reasonable attorneys' fees and expenses incurred or paid by the
Commission in enforcing this Agreement including, without limitation,
all administrative fees and expenses of the Commission in attempting to
collect the Obligations or to enforce this Agreement, or the
prosecution or defense of any action or proceeding related to the
subject matter of this Agreement, and all payments assessed by the
Commission in the event of default as specified in Commission orders
and regulations applicable to such licenses.
(f) Debtor hereby acknowledges that the Commission has no
adequate remedy at law with respect to a breach of any covenant
contained in this Agreement and, as a consequence, agrees that each and
every covenant contained in this Agreement shall be specifically
enforceable against Debtor, and Debtor hereby waives and agrees not to
assert any defense against an action for specific performance of such
covenants.
(g) Secured Party may exercise any and all of the rights and
remedies conferred upon Secured Party by this Agreement, any other loan
documents, or by applicable law, either concurrently or in such order
as Secured Party may determine.
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(h) Secured Party may make such payments and do such acts as
Secured Party may deem necessary to protect is security interest in the
Collateral.
(i) The Commission may exercise any remedies of a Secured
Party under the Uniform Commercial Code (Official Text and Comments,
American Law Institute), or any other applicable law.
(j) Secured Party shall have the right to enforce one or more
remedies hereunder or under the Note, successively or concurrently, and
such action shall not operate to estop or prevent Secured party from
pursuing any further remedy which it may have.
9. SEVERABILITY. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent such prohibition or unenforceability, without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10. NO WAIVER; CUMULATIVE REMEDIES. None of the terms or provisions
of this Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by the Commission. The Commission shall not
by any act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies under this Agreement, and no waiver shall be valid unless in
writing, signed by the Commission, and then only to the extent therein set
forth. A wavier by the Commission of any right or remedy under this Agreement on
any one occasion shall not be construed as a bar to any right or remedy which
the Commission would otherwise have on any future occasion. No failure to
exercise nor any delay in exercising on the part of the Commission, any right,
power or privilege under this Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power and privilege under
this Agreement preclude any other or further exercise thereof or the exercise of
any other right power or privilege. The rights and remedies provided in this
Agreement are cumulative and may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
11. COMPLIANCE WITH OTHER APPLICABLE ORDERS AND REGULATIONS. Debtor
recognizes that its continued retention of the License, and rights to operate as
a Commission licensee thereunder, are conditioned upon compliance with all
Commission orders and regulations applicable to the License and the
Communications Act of 1934, as amended. Debtor further recognizes that full and
timely payment as set forth in the Note does not otherwise relieve it of its
obligations otherwise to comply with the then-applicable orders and regulations
of the Commission, and the Communications Act of 1934, as amended.
12. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with Communications Act of 1934, as amended, then-applicable
Commission orders and regulations, as amended, and federal law.
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13. SUCCESSORS, ASSIGNS, DESIGNATED AGENTS. Subject to the provisions
of Section 2 of this Agreement regarding the restriction upon Debtor's ability
to assign the License, this Agreement shall be binding upon Debtor, its
successors and assigns and shall inure to the benefit of the Commission, and its
successors and assigns. The Commission may designate agents other than the
Commission to act on its behalf with respect to any and all rights and remedies
of the Commission under this Agreement or the Note, and such designee shall have
all of the rights, powers and remedies available to the Commission within the
scope of its designation. Nothing herein, however, shall be construed as
granting Debtor any right to sell or assign the License.
14. SINGULAR AND PLURAL. Wherever used, the singular number shall
include the plural, the plural shall include the singular, and the use of any
gender shall be applicable to all genders.
15. FINANCING STATEMENTS. To the extent permitted by applicable law,
Debtor authorizes the Commission to sign and file financing statements at any
time with respect to any of the Collateral without the signature of Debtor.
Debtor will, however, at the same time and from time to time, execute such
financing statements, agreements and other instruments and perform such acts as
Commission may request in order to establish and maintain a validly perfected
first priority security interest in the Collateral. The Parties hereby agree
that the Secured Party may file a carbon, photographic or other reproduction of
this Agreement to serve as a financing statement, and the parties further agree
that such a carbon, photographic, or other reproduction of this Agreement shall
be sufficient as a financing statement in lieu of filing the original executed
document. All reasonable costs of filing and recording will be paid by Debtor.
16. INDEMNIFICATION. Debtor hereby agrees to defend, indemnify and
hold harmless Secured Party and its employees, officers and agents from and
against any and all liabilities, claims and obligations which may be incurred,
asserted or imposed upon them or any of them as a result of or in connection
with any use, operation, lease or consumption of any of the Collateral or as a
result of Secured Party's seeking to obtain performance of any of the
obligations due with respect to the Collateral.
17. NOTICES. All notices, requests and demands hereunder shall be in
writing and shall deemed to have been duly given, made or served on the earliest
of (i) three (3) business days after the date mailed if sent by first-class U.S.
mail, postage prepaid, (ii) actual delivery thereof if delivered by hand to the
party to be notified, (iii) receipt thereof if sent by express mail or other
overnight courier service, or (iv) transmission to the telecopier number listed
below for the party to be notified if sent within normal business hours or,
otherwise, on the next business day thereafter. In each as such notification
with respect to the Debtor and the Commission shall be addressed as set forth
below or as may be hereafter designed by the respective parties hereto.
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AS TO DEBTOR:
Aer Force Communications B, L.P.
000 Xxxxxxxxxx Xxxxxx
Xxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxx
AS TO THE COMMISSION:
U.S. Mail:
Federal Communications Commission
C/O United States Treasury Department
Financial Management Service
Attn.: Xxxxxxx Xxxxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Express mail or overnight courier service:
Federal Communications Commission
C/O United States Treasury Department
Financial Management Service
Attn.: Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
(000) 000-0000 (Telecopier number)
with copies to:
Federal Communications Commission
Office of the General Counsel
Attn.: PCS Note and Security Agreement
0000 X Xxxxxx, X.X.
Xxxx 000
Xxxxxxxxxx, X.X. 00000
Federal Communications Commission
Wireless Telecommunications Bureau
Auctions and Industry Analysis Division
Attn.: PCS Note and Security Agreement
0000 X Xxxxxx, X.X.
Xxxx 0000
Xxxxxxxxxx, X.X. 00000
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
DEBTOR:
AER FORCE COMMUNICATIONS B, L.P.
Date:_________ By: Aer Force Communications, Inc.
Its: General Partner
By:__________________________________,
Xxxxxxxx Xxxx Its: President
Its: President
FEDERAL COMMUNICATIONS COMMISSION
Date:_________ By: ________________________
Its: Associate Managing Director for Operations (or
Designee)
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