SECURITY AGREEMENT
dated as of January __, 2003
among
XM SATELLITE RADIO INC.,
XM SATELLITE RADIO HOLDINGS INC.
and
XM EQUIPMENT LEASING LLC
as Grantors
and
THE BANK OF NEW YORK,
as Collateral Agent
TABLE OF CONTENTS
PAGE
----
1. DEFINITIONS. ................................................................... 2
1.1 General Definitions ..................................................... 2
1.2 Definitions; Interpretation ............................................. 7
2. GRANT OF SECURITY. ............................................................. 7
2.1 Grant of Security ....................................................... 7
2.2 Intercreditor Agreement ................................................. 8
3. SECURITY FOR OBLIGATIONS. ...................................................... 8
3.1 Security for Obligations ................................................ 8
3.2 Obligations Remain. ..................................................... 8
4. REPRESENTATIONS AND WARRANTIES AND COVENANTS. .................................. 9
4.1 Generally. .............................................................. 9
4.2 Intellectual Property. .................................................. 10
4.3 Investment Property. .................................................... 11
4.4 Documents, Chattel Paper, Instruments and Deposit Accounts .............. 13
5. FURTHER ASSURANCES; ADDITIONAL GRANTORS. ....................................... 14
5.1 Further Assurances ...................................................... 14
5.2 Additional Grantors ..................................................... 15
6. ATTORNEY-IN-FACT. .............................................................. 15
6.1 Power of Attorney ....................................................... 15
6.2 No Duty on the Part of Collateral Agent ................................. 16
7. REMEDIES. ...................................................................... 17
7.1 Generally ............................................................... 17
7.2 Application of Proceeds ................................................. 18
7.3 Investment Property ..................................................... 18
7.4 Intellectual Property. .................................................. 18
7.5 FCC Licenses ............................................................ 20
8. CONTINUING SECURITY INTEREST; TERMINATION AND RELEASE. ......................... 20
9. STANDARD OF CARE; SECURED PARTY MAY PERFORM. ................................... 21
10. INDEMNITY. ..................................................................... 21
11. MISCELLANEOUS. ................................................................. 22
11.1 Notices ................................................................. 22
11.2 Expenses ................................................................ 22
11.3 Amendments and Waivers .................................................. 22
11.4 Successors and Assigns .................................................. 22
11.5 Independence of Covenants ............................................... 22
11.6 Survival of Representations, Warranties and Agreements .................. 23
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11.7 No Waiver; Remedies Cumulative .......................................... 23
11.8 Marshaling; Payments Set Aside .......................................... 23
11.9 Severability ............................................................ 23
11.10 Headings ................................................................ 23
11.11 Applicable law .......................................................... 23
11.12 Consent To Jurisdiction ................................................. 23
11.13 Waiver Of Jury Trial .................................................... 23
11.14 Counterparts ............................................................ 23
11.15 Effectiveness ........................................................... 24
11.16 Entire Agreement ........................................................ 24
11.17 Trust Indenture Act Controls ............................................ 24
SCHEDULE 1.1 - FCC LICENSE
SCHEDULE 4.1 - FINANCING STATEMENTS
SCHEDULE 4.2 - INTELLECTUAL PROPERTY
SCHEDULE 4.3 - INVESTMENT PROPERTY
SCHEDULE 4.4(e) - COMMERCIAL TORT CLAIMS
EXHIBIT A - FORM OF SECURITY AGREEMENT SUPPLEMENT
EXHIBIT B - FORM OF JOINDER AGREEMENT
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SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement"), dated as of January __,
2003, made by XM SATELLITE RADIO INC., a Delaware corporation ("Company"), XM
Satellite Radio Holdings Inc., a Delaware corporation, ("Holdings"), XM
Equipment Leasing LLC, a Delaware limited liability company ("XM Leasing
Subsidiary") (the Company, Holdings, and XM Leasing Subsidiary, together with
each subsidiary that may from time to time become a party hereto pursuant to
Section 5.2, the "Grantors") and The Bank of New York, acting as collateral
agent ("Collateral Agent") for the benefit of the Secured Parties (as defined
below).
RECITALS
A. The Company and The Bank of New York, as Trustee (in such
capacity, the "New Trustee"), have entered into that certain Indenture dated as
of the date hereof (as amended, restated, supplemented or otherwise modified
from time to time, the "New Indenture"), pursuant to which the Company may issue
up to $474,200,000 aggregate principal amount at maturity of its 14% Senior
Secured Discount Notes due 2009 (the "New Notes").
B. The Company, Holdings and certain noteholders (the "Convertible
Notes Noteholders") have entered into that certain Note Purchase Agreement,
dated as of December 21, 2002, pursuant to which the Company and Holdings are
issuing on the date hereof 10% Senior Secured Discount Convertible Notes due
2009 in an aggregate principal amount at maturity of up to $363,400,000.
C. Company and Holdings have entered into (a) that certain Credit
Agreement with General Motors Corporation ("General Motors"), dated as of the
date hereof, pursuant to which the Company and Holdings may receive certain
advances in an aggregate principal amount not to exceed $100,000,000, and (b)
that certain Note Purchase Agreement with OnStar Corporation ("OnStar"), dated
as of December 21, 2002, pursuant to which the Company and Holdings are issuing
on the date hereof 10% Series GM Senior Secured Convertible Notes due 2009 in
the aggregate principal amount of $89,042,387.
D. From time to time after the date hereof, the Company may, subject
to the terms and conditions of the Secured Agreements (as defined below), incur
additional indebtedness to obligees (the "Additional Creditors") that is pari
passu in right of payment to the obligations described in Paragraphs A through C
above.
E. Holdings has guaranteed the obligations of the Company under the
New Indenture and the New Notes, and XM Leasing Subsidiary has guaranteed the
obligations of the Company under each of the agreements described in Paragraphs
A through C above.
F. Certain subsidiaries of the Company may from time to time execute
and deliver guaranties in respect of each of the agreements described in
Paragraphs A through D above and become Grantors hereunder.
G. The New Trustee, General Motors, OnStar, the Convertible Notes
Noteholders, the Additional Creditors that from time to time become party
thereto and The Bank of New York, as Collateral Agent, have entered into that
certain Intercreditor and Collateral Agency (General Security Agreement), dated
as of the date hereof (as amended, restated, supplemented or otherwise modified
from time to time, the "Intercreditor Agreement"), pursuant to which, among
other things, The Bank of New York was appointed to serve as Collateral Agent
under this Agreement on behalf of the New Trustee,
General Motors, OnStar, the Convertible Notes Noteholders and the other Persons
from time to time constituting "New Secured Parties" thereunder (collectively,
the "Secured Parties").
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, each Grantor and Collateral Agent,
for and on behalf of itself and the Secured Parties, agree as follows:
1. DEFINITIONS.
1.1 General Definitions. In this Agreement, the following terms shall have
the following meanings:
"Accounts" shall mean all "accounts" as defined in Article 9 of the
UCC, excluding assets described in the definition of Excluded Collateral.
"Acting Secured Parties" shall mean, as of any date of determination,
the Secured Parties holding (or, in the case of the New Trustee, acting as
trustee for the New Notes) more than 20% of the sum of (a) the unpaid Accreted
Value of the New Notes, (b) the unpaid Accreted Value of the Convertible Notes,
(c) the unpaid principal amount owing under the GM Convertible Notes, (d) the
unpaid principal amount owing under the GM Loan Agreement, and (e) the unpaid
principal amount owing under the Additional Debt (if any), or, if such debt is
issued at a discount, the unpaid accreted value of such Additional Debt. Any
action so taken by the New Trustee shall constitute an action on behalf of all
of the New Notes without regard to the percentage of the New Holders directing
or authorizing the New Trustee to take such action.
"Additional Grantors" shall mean those additional Persons that may
become parties to this Agreement as additional Grantors, by executing a Joinder
Agreement.
"Agreement" shall have the meaning set forth in the preamble.
"Boeing Credit Agreement" shall mean that certain Customer Credit
Agreement, dated as of December 5, 2001, between Holdings and Boeing Capital
Services Corporation and all other agreements relating thereto, as amended,
restated, supplemented or otherwise modified from time to time.
"Books" shall mean books and records of Grantors (including all of
their Records indicating, summarizing, or evidencing assets (including the
Collateral) or liabilities, all Records relating to Grantor's business
operations or financial conditions, and all of their goods or General
Intangibles related to such information.
"Capital Lease Obligations" shall mean a liability in respect of a
capital lease that at the time any determination thereof is to be made would be
required to be capitalized on a balance sheet in accordance with GAAP.
"Capital Stock" shall mean:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Chattel Paper" shall mean all "chattel paper" as defined in Article 9
of the UCC, including, without limitation, "electronic chattel paper" or
"tangible chattel paper", as each term is defined in Article 9 of the UCC,
excluding assets described in the definition of Excluded Collateral.
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"Collateral" shall have the meaning set forth in Section 2.1.
"Collateral Agent" shall have the meaning set forth in the preamble.
"Commercial Tort Claims" shall mean all "commercial tort claims" as
defined in Article 9 of the UCC, including, without limitation, the commercial
tort claims listed on Schedule 4.4(e), excluding assets described in the
definition of Excluded Collateral.
"Commodities Accounts" shall mean all "commodity accounts" as defined
in Article 9 of the UCC, excluding assets described in the definition of
Excluded Collateral.
"Communications Act" shall mean the Communications Act of 1934, as
amended, and the rules and regulations of the FCC, as from time to time in
effect.
"Controlled Foreign Corporation" shall mean "controlled foreign
corporation" as defined in the United States Internal Revenue Code of 1986, as
amended from time to time.
"Convertible Notes Noteholders" shall have the meaning set forth in
the Recitals.
"Copyrights" shall mean (i) copyrights and copyright registrations,
including, without limitation, the copyright registrations listed on Schedule
4.2(A) and (A) all renewals thereof, (B) all income, royalties, damages and
payments now and hereafter due or payable under and with respect thereto,
including, without limitation, payments under all licenses entered into in
connection therewith and damages and payments for past or future infringements
or dilutions thereof, (C) the right to xxx for past, present and future
infringements and dilutions thereof, (D) the goodwill of any Grantor's business
symbolized by the foregoing and connected therewith, and (E) all of any
Grantor's rights corresponding thereto throughout the world; and (ii) all
proceeds of any and all of the foregoing, including, without limitation,
licensed royalties and proceeds of infringement suits, in each case, excluding
assets described in the definition of Excluded Collateral.
"Deposit Accounts" shall mean all "deposit accounts" as defined in
Article 9 of the UCC, excluding assets described in the definition of Excluded
Collateral.
"Document" shall mean "document" as defined in Article 9 of the UCC,
excluding assets described in the definition of Excluded Collateral.
"Equipment" shall mean all equipment (whether or not any such
equipment is so attached to the real property that it constitutes fixtures),
machinery, machine tools, motors, furniture, satellites, furnishings, vehicles
(including motor vehicles), tools, parts, goods (other than consumer goods, farm
products, or Inventory), wherever located, including all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, excluding assets described in the
definition of Excluded Collateral.
"Excluded Collateral" shall mean all of each Grantor's right, title,
and interest in and to each of the following:
(a) any licenses issued by the FCC to XM Radio Inc., as more fully
described on Schedule 1.1 to the extent, but only to the extent that the Grantor
is prohibited from granting a security interest therein pursuant to the
Communications Act of 1934, as amended, and the policies and regulations
promulgated thereunder, but the Collateral expressly includes, to the maximum
extent
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permitted by law, all rights incident or appurtenant to such licenses and the
rights to receive all proceeds derived from or in connection with the sale,
assignment or transfer of such licenses;
(b) assets securing Purchase Money Obligations or Capital Lease
Obligations permitted to be incurred under the Secured Agreements;
(c) assets subject to that certain Amended and Restated Security
Agreement, dated as of the date hereof, by the Company in favor of The Bank of
New York, as collateral agent;
(d) any assets, agreements, leases, permits or licenses or other
property that are not permitted to be subjected to a Lien hereunder without the
consent of third parties, which consent has not been obtained, to the extent
that the requirement of such consent is not rendered ineffective (meaning that
such Lien would not create a default with respect to such assets, agreements,
leases, permits or licenses or other property) by Article 9 of the UCC;
(e) the outstanding capital stock of a Controlled Foreign
Corporation in excess of 65% of the voting power of all classes of capital stock
of such Controlled Foreign Corporation entitled to vote; provided that
immediately upon the amendment of the United States Internal Revenue Code of
1986, as amended, to allow the pledge of a greater percentage of the voting
power of capital stock in a Controlled Foreign Corporation without adverse tax
consequences, the Collateral shall include, and each Grantor shall be deemed to
have granted a security interest in, such greater percentage of capital stock of
the applicable Controlled Foreign Corporation; and
(f) all rights, title and interest of Holdings and the Company in
and to the "Collateral" described in the Boeing Credit Agreement, including,
without limitation, the Ground Spare Satellite Bus described therein and certain
insurance proceeds relating thereto.
"FCC" shall mean the Federal Communications Commission or any
Governmental Body succeeding to the functions thereof.
"Financial Asset" shall mean any "financial asset" as defined in
Article 8 of the UCC, excluding assets described in the definition of Excluded
Collateral.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.
"General Intangibles" shall mean any "general intangible" as defined
in Article 9 of the UCC, excluding assets described in the definition of
Excluded Collateral.
"General Motors" shall have the meaning set forth in the Recitals.
"Governmental Body" shall mean any nation or government, any state
or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator.
"Grantor" shall have the meaning set forth in the preamble hereof.
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"Instrument" shall mean any "instrument" as defined in Article 9 of
the UCC, excluding assets described in the definition of Excluded Collateral.
"Intellectual Property" shall mean, collectively, the Copyrights,
the Patents, the Trademarks and the Intellectual Property Licenses.
"Intellectual Property Licenses" shall mean all rights under or
interest in any Patent, Trademark or Copyright license agreements with any other
party, whether a Grantor is a licensee or licensor under any such license
agreement, excluding assets described in the definition of Excluded Collateral;
provided, however, that Intellectual Property Licenses shall not include any
license agreement in effect as of the date hereof which by its terms prohibits
the grant of the security interest contemplated by this Agreement and which
prohibition is not rendered ineffective (meaning that such Lien would not create
a default under such license agreement) by Article 9 of the UCC, except that
upon the termination of such prohibitions for any reason whatsoever, such
license agreement shall be deemed to be included in Intellectual Property
Licenses.
"Intercreditor Agreement" shall have the meaning set forth in the
Recitals.
"Inventory" shall mean any "inventory" as defined in Article 9 of
the UCC, excluding assets described in the definition of Excluded Collateral.
"Investment Property" shall mean all "investment property" as
defined in Article 9 of the UCC, including all Securities, Securities Accounts
and Commodities Accounts, excluding assets described in the definition of
Excluded Collateral.
"Joinder Agreement" shall mean any joinder to this Agreement in
substantially the form of Exhibit B.
"Letter-of-Credit Right" shall mean any "letter-of-credit right" as
defined in Article 9 of the UCC, excluding assets described in the definition of
Excluded Collateral.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest and any filing of or agreement to give any financing statement, under
the UCC (or equivalent statutes) of any jurisdiction.
"Material" shall mean, with respect to any subject matter in the
context of any representation, warranty or covenant under this Agreement that
can be expressed in monetary terms, an amount in excess of $5,000,000.
"Money" shall mean "money" as defined in Article 9 of the UCC,
excluding assets described in the definition of Excluded Collateral.
"New Holders" shall mean each Person in whose name any New Note is
registered from time to time.
"New Notes" shall have the meaning set forth in the Recitals hereof.
"New Trustee" shall have the meaning set forth in the Recitals
hereof.
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"OnStar" shall have the meaning set forth in the Recitals.
"Patents" shall mean all (i) patents and patent applications,
including, without limitation, the patents and patent applications listed on
Schedule 4.2(B), and (A) all extensions and adjustments thereof, (B) all income,
royalties, damages and payments now and hereafter due or payable under and with
respect thereto, including, without limitation, payments under all licenses
entered into in connection therewith and damages and payments for past or future
infringements thereof, (C) the right to xxx for past, present and future
infringements thereof, and (D) all of Grantor's rights corresponding thereto
throughout the world; and (ii) proceeds of any and all of the foregoing,
including, without limitation, license royalties and proceeds of infringement
suits, excluding assets described in the definition of Excluded Collateral.
"Permitted Liens" shall mean Liens that constitute "Permitted Liens"
within the meaning of each of the Secured Agreements or are otherwise not
prohibited under any of the Secured Agreements.
"Purchase Money Obligations" shall mean obligations incurred in
accordance with the Secured Agreements for the purpose of financing all or any
part of the purchase price or cost of acquisition, construction, installation or
improvement of property, plant equipment or other assets used in the business of
any Grantor; provided that the Liens attributable to such obligations cover only
the assets acquired, constructed, installed or improved with such financing.
"Record" shall mean information that is inscribed on a tangible
medium or that is stored in an electronic or other medium and is retrievable in
perceivable form.
"Secured Agreements" shall have the meaning set forth in Section 1
of the Intercreditor Agreement.
"Secured Obligations" shall have the meaning specified in Section
3.1.
"Secured Parties" shall have the meaning set forth in the recitals.
"Securities Accounts" shall mean all "securities accounts" as
defined in Article 8 of the UCC, excluding assets described in the definition of
Excluded Collateral.
"Security" shall mean any "security" as defined in Article 8 of the
UCC, excluding assets described in the definition of Excluded Collateral.
"Security Agreement Supplement" shall mean any supplement to this
agreement in substantially the form of Exhibit A.
"Subsidiary" shall have the meaning set forth in the Indenture.
"Supporting Obligation" shall mean any "supporting obligation" as
defined in Article 9 of the UCC, excluding assets described in the definition of
Excluded Collateral.
"Trademarks" shall mean (i) all trademarks, trade names, registered
trademarks, trademark applications, service marks, registered service marks and
service xxxx applications, including, without limitation, the trade names,
registered trademarks, trademark applications, registered service marks and
service xxxx applications listed on Schedule 4.2(C), and (A) all renewals
thereof, (B) all income, royalties, damages and payments now and hereafter due
or payable under and with respect
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thereto, including, without limitation, payments under all licenses entered into
in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (C) the right to xxx for past, present and
future infringements and dilutions thereof, (D) the goodwill of any Grantor's
business symbolized by the foregoing and connected therewith, and (E) all of any
Grantor's rights corresponding thereto throughout the world; and (ii) all
proceeds of any and all of the foregoing, including, without limitation, license
royalties and proceeds of infringement suits, in each case, excluding assets
described in the definition of Excluded Collateral.
"Trustee" shall have the meaning set forth in the Recitals.
"UCC" shall mean the Uniform Commercial Code as in effect from time
to time in the State of New York or, when the context requires, the Uniform
Commercial Code as in effect from time to time in any other applicable
jurisdiction.
1.2 Definitions; Interpretation. All capitalized terms used herein
(including the preamble and recitals hereto) and not otherwise defined herein
shall have the meanings ascribed thereto in the Intercreditor Agreement or, if
not defined therein, in the UCC. References to "Sections," "Exhibits" and
"Schedules" shall be to Sections, Exhibits and Schedules, as the case may be, of
this Agreement unless otherwise specifically provided. Any of the terms defined
herein may, unless the context otherwise requires, be used in the singular or
the plural, depending on the reference. The use herein of the word "include" or
"including", when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
All references herein to provisions of the UCC shall include all successor
provisions under any subsequent version or amendment to any Article of the UCC.
2. GRANT OF SECURITY.
2.1 Grant of Security. Each Grantor hereby grants to Collateral Agent for
its benefit and the benefit of the Secured Parties, a first priority security
interest and continuing lien on all of such Grantor's right, title and interest
in, to and under all property of such Grantor including, but not limited to the
following, in each case whether now owned or existing or hereafter acquired or
arising and wherever located (collectively, "Collateral"):
(A) Accounts;
(B) Books;
(C) Chattel Paper;
(D) Commercial Tort Claims;
(E) Deposit Accounts;
(F) Documents;
(G) Equipment;
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(H) Financial Assets;
(I) General Intangibles;
(J) Intellectual Property;
(K) Inventory;
(L) Investment Property;
(M) Instruments;
(N) Letter-of-Credit Rights;
(O) Money;
(P) Cash Equivalent Investments, or other assets of any
Grantor that now or hereafter come into the possession,
custody, or control of Collateral Agent;
(Q) to the extent not otherwise included above, all
Supporting Obligations relating to any of the
foregoing;
(R) to the extent not otherwise included above, all other
personal property of the Grantors of any kind or
description; and
(S) to the extent not otherwise included above, all of the
proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of
insurance covering any or all of the foregoing;
provided, however, notwithstanding anything herein to the contrary, in no event
shall the Collateral include any Excluded Collateral.
2.2 Intercreditor Agreement. Notwithstanding anything herein to the
contrary, the rights and remedies of Collateral Agent hereunder shall be subject
to and governed by the terms of the Intercreditor Agreement.
3. SECURITY FOR OBLIGATIONS.
3.1 Security for Obligations. With respect to each Grantor, this Agreement
secures, and the Collateral granted by such Grantor is collateral security for,
the prompt and complete payment or performance in full when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. ss.362(a) (and any successor provision thereof)), of all obligations of
such Grantor hereunder and under the Secured Agreements to which such Grantor is
a party, and for all Secured Obligations (as defined in the Intercreditor
Agreement) (the "Secured Obligations").
3.2 Obligations Remain. Anything contained herein to the contrary
notwithstanding (a) each Grantor shall remain liable under any partnership
agreement or limited liability company agreement
8
relating to any partnership interest or limited liability company interest
included in the Collateral and any other contracts and agreements included in
the Collateral, to the extent set forth therein, to perform all of its duties
and obligations thereunder to the same extent as if this Agreement had not been
executed; and (b) Collateral Agent shall not have any obligation or liability
under any partnership agreement or limited liability company agreement relating
to any partnership interest or limited liability company interest included in
the Collateral and any other contracts and agreements included in the Collateral
by reason of this Agreement, nor shall Collateral Agent, be obligated to perform
any of the obligations or duties of any Grantor thereunder or to take any action
to collect or enforce any claim for payment assigned hereunder.
4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.
4.1 Generally.
(a) Representations and Warranties. Each Grantor hereby represents and
warrants on the date hereof that:
(A) it is the sole legal and beneficial owner of the
Collateral with respect to which it is granting a
security interest hereunder free and clear of all Liens
other than Permitted Liens;
(B) upon the filing of all UCC financing statements naming
such Grantor as "Grantor" and Collateral Agent as
"Secured Party" and describing the Collateral, in the
filing offices set forth opposite such Grantor's name
on Schedule 4.1 hereof and, to the extent not subject
to Article 9 of the UCC, upon the recordation of the
security interest granted hereunder in Patents,
Trademarks and Copyrights in the applicable patent,
trademark and copyright registries (including the
United States Patent and Trademark Office and the
United States Copyright Office), the security interests
granted to Collateral Agent hereunder will constitute
valid and, to the extent that a security interest in
such Collateral (other than any Collateral constituting
fixtures) can be perfected by the filing of financing
statements under the UCC, perfected first priority
Liens (subject in the case of priority only to
Permitted Liens);
(C) no authorization, approval or other action by, and no
notice to or filing with, any Governmental Body is
required for either (i) the pledge or grant by any
Grantor of the Liens purported to be created in favor
of Collateral Agent hereunder or (ii) the exercise by
Collateral Agent of any rights or remedies in respect
of any Collateral (whether specifically granted or
created hereunder or created or provided for by
applicable law), except (A) for the filings
contemplated by Section 4.1(a)(ii) above, (B) as may be
required, in connection with the disposition of any
Investment Property, by laws generally affecting the
offering and sale of Securities and (C) to the extent
any consents or approvals are required under the
Assignment of Claims Act of 1940 or the Communications
Act; and
(D) in the case of Material Instruments and Material
Investment Property consisting of certificated
securities, upon delivery of such instruments and the
certificates representing such certificated securities
(in the case
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of such certificated securities, duly endorsed or
accompanied by duly executed instruments of assignment
of transfer in blank) Collateral Agent will have a
first priority perfected security interest in such
Instruments and Investment Property (subject in the
case of priority only to Permitted Liens).
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(A) except for the security interest created by this
Agreement, it shall not create or suffer to exist any
Lien upon or with respect to any of the Collateral,
except Permitted Liens, and such Grantor shall (A)
defend the Collateral against all Persons at any time
claiming any interest therein and (B) file such
financing or continuation statements, or amendments
thereto, as may be requested by the Collateral Agent to
preserve the perfection of the security interests
granted hereunder (other than any security interests in
Collateral constituting fixtures);
(B) it shall not use or permit any Collateral to be used
unlawfully or in violation of any provision of this
Agreement or any applicable statute, regulation or
ordinance or any policy of insurance covering the
Collateral;
(C) it shall not change Grantor's name or jurisdiction of
organization unless it shall have (a) notified
Collateral Agent in writing, by executing and
delivering to Collateral Agent a completed Security
Agreement Supplement, substantially in the form of
Exhibit A attached hereto, together with a supplement
to Schedule 4.1, at least thirty (30) days prior to any
such change, identifying such new proposed name or
jurisdiction of organization and (b) taken all actions
necessary to maintain the continuous validity and
perfection of Collateral Agent's security interest in
the Collateral intended to be granted hereby;
(D) it shall make payment of (i) all taxes, assessments,
license fees, levies and other charges of Governmental
Bodies imposed upon it which if unpaid, would be
reasonably likely to become a Lien on the Collateral
that is not a Permitted Lien, (ii) all claims
(including, without limitation, claims for labor,
services, materials and supplies) for sums which have
become due and payable and which by law have or are
reasonably likely to become a Lien upon any of the
Collateral other than a Permitted Lien;
(E) upon such Grantor or any officer of such Grantor
obtaining knowledge thereof, it shall promptly notify
Collateral Agent in writing of the levy of any legal
process against the Collateral or any portion thereof;
and
(F) if reasonably requested by the Collateral Agent at the
written direction of the Acting Secured Parties, it
shall provide to Collateral Agent a report identifying
any new Collateral acquired by such Grantor and not
previously disclosed hereunder and shall (i) provide
such other information and take such other actions in
connection therewith as Collateral Agent at the written
direction of the Acting Secured Parties may reasonably
request and (ii) to the extent not inconsistent with
any other applicable provisions of this Agreement
(including, without limitation, Sections 4.4 and 5.1),
take all actions necessary to establish and maintain
the validity and perfection of Collateral Agent's
security interest in such Collateral intended to be
granted hereby.
4.2 Intellectual Property.
(a) Representations and Warranties. Except with respect to any
patents that have expired or been abandoned on the date hereof, each Grantor
hereby represents and warrants, on the date hereof, that Schedule 4.2 sets forth
a true and complete list of all United States federal registrations of and
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applications for Patents, Trademarks, and registered Copyrights owned by such
Grantor and material to the business of such Grantor.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees as follows:
(A) except as permitted under the Secured Agreements, it
shall not do any act or omit to do any act whereby any
of the Intellectual Property which is material to the
business of such Grantor may lapse, or become
abandoned, dedicated to the public, or unenforceable,
or which would adversely affect the validity, grant, or
enforceability of the security interest granted therein
or herein;
(B) it shall take all reasonable steps in the United States
Patent and Trademark Office and the United States
Copyright Office, to pursue any application and
maintain any registration of each Trademark, Patent,
and Copyright owned by such Grantor and material to its
business which is now or shall become included in the
Collateral constituting Intellectual Property (except
for such works with respect to which such Grantor has
determined in the exercise of its commercially
reasonable judgment that it shall not seek
registration) including, but not limited to, those
items on Schedule 4.2(A), (B) and (C);
(C) reasonably promptly following each anniversary of the
date hereof or at any time upon the request of the
Collateral Agent (at the written direction of the
Acting Secured Parties), it shall report to Collateral
Agent (i) the filing of any new application to register
any Intellectual Property with the United States Patent
and Trademark Office or the United States Copyright
Office (whether such application is filed by such
Grantor or through any agent, employee, licensee, or
designee thereof) and (ii) any new registration of any
Intellectual Property by any such office, in each case
by executing and delivering to Collateral Agent a
completed Security Agreement Supplement, substantially
in the form of Exhibit A attached hereto, together with
a supplement to Schedule 4.2; provided that in the case
--------
of any Intellectual Property that is the subject of any
proposed filing described in the preceding clause (i)
that is reasonably expected at the time of such filing
to be material to the operation of such Grantor's
business, such Grantor shall also provide, within ten
(10) days prior to filing, notice of such filing to
Collateral Agent; and
(D) if requested by the Collateral Agent (at the written
direction of the Acting Secured Parties) in connection
with the actions required pursuant to Section
4.2(b)(C), it shall promptly execute and deliver to
Collateral Agent any document required to acknowledge,
confirm, register, record, or perfect Collateral
Agent's interest in any part of the new Intellectual
Property, whether now owned or hereafter acquired.
4.3 Investment Property.
(a) Representations and Warranties. Each Grantor hereby represents
and warrants, that on the date hereof:
(A) Schedule 4.3 sets forth under the headings "Pledged
Stock," "Pledged LLC Interests," and "Pledged
Partnership Interests", all equity interests of
Subsidiaries and all other Material equity interests
owned by any
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Grantor included in the Collateral and such equity
interests constitute the percentage of issued and
outstanding shares of stock, percentage of membership
interests, percentage of partnership interests or
percentage of beneficial interest of the respective
Companies thereof to the extent indicated on such
Schedule;
(B) it is the record and beneficial owner of the equity
interests included in the Collateral free of all Liens,
rights or claims of other Persons other than Permitted
Liens; and
(C) Schedule 4.3 sets forth under the heading "Pledged
Debt" all of the Material issued and outstanding
Indebtedness evidenced by an instrument or certificated
security of the respective issuers thereof owing to
such Grantor.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(A) it shall not vote to enable or take any other action
to: (a) amend or terminate any partnership agreement,
limited liability company agreement, certificate of
incorporation, by-laws or other organizational
documents in any way that adversely affects the
validity, perfection or priority of Collateral Agent's
security interest, (b) permit any of its Subsidiaries
to dispose of all or a material portion of their assets
in a manner which would be prohibited under the Secured
Agreements or (c) cause any issuer of any partnership
interests or limited liability company interests
included in the Collateral which are not securities
(for purposes of the UCC) on the date hereof to elect
or otherwise take any action to cause such partnership
interests or limited liability company interests to be
treated as securities for purposes of the UCC unless
such Grantor shall take all steps necessary to
establish Collateral Agent's "control" thereof;
(B) it shall report to the Collateral Agent the acquisition
of any new Material Investment Property not previously
disclosed hereunder promptly following the acquisition
thereof by delivering to Collateral Agent a completed
Security Agreement Supplement, substantially in the
form of Exhibit A attached hereto, together with a
supplement to Schedule 4.3, reflecting such new
Investment Property. To the extent that any Investment
Property specified on such Schedule 4.3 constitutes
certificated Capital Stock of a Subsidiary or Material
certificated Securities, such Grantor shall deliver
such certificates to the Collateral Agent, together
with undated stock powers executed in blank.
Notwithstanding the foregoing, it is understood and
agreed that the security interest of Collateral Agent
shall attach to all Investment Property immediately
upon any Grantor's acquisition of rights therein and
shall not be affected by the failure of any Grantor to
deliver a supplement to Schedule 4.3 as required
hereby;
(C) in the event such Grantor receives any dividends,
interest, distributions or any securities or other
property on account of any Collateral, then
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such dividends, interest, distributions, securities and
other property shall be included in the definition of
Collateral without further action; and
(D) each Grantor consents to the grant by any other Grantor
of a security interest in all Investment Property to
Collateral Agent.
(c) Voting and Distributions.
(A) So long as no Event of Default shall have occurred and
be continuing, subject to applicable laws:
(A) each Grantor shall be entitled to exercise or
refrain from exercising any and all voting and
other consensual rights pertaining to the
Investment Property or any part thereof for any
purpose not inconsistent with the terms of this
Agreement or any Secured Agreement; and
(B) Collateral Agent shall promptly execute and
deliver (or cause to be executed and delivered) to
each Grantor all proxies and other instruments as
such Grantor may from time to time reasonably
request for the purpose of enabling such Grantor
to exercise the voting and other consensual rights
it is entitled to exercise pursuant to clause (A)
above.
(B) Upon the occurrence and during the continuation of an
Event of Default, subject to applicable laws and the
terms of the Secured Agreements and the Intercreditor
Agreement:
(A) all rights of each Grantor to exercise or refrain
from exercising the voting and other consensual
rights which it would otherwise be entitled to
exercise pursuant hereto shall cease and all such
rights shall thereupon become vested in Collateral
Agent who shall thereupon have the sole right to
exercise such voting and other consensual rights;
and
(B) in order to permit Collateral Agent to exercise
the voting and other consensual rights which it
may be entitled to exercise pursuant hereto and to
receive all dividends and other distributions
which it may be entitled to receive hereunder: (1)
each Grantor shall promptly execute and deliver
(or cause to be executed and delivered) to
Collateral Agent all proxies, dividend payment
orders and other instruments as necessary or as
Collateral Agent (at the written direction of the
Acting Secured Parties) may from time to time
reasonably request and (2) each Grantor
acknowledges that Collateral Agent may utilize the
power of attorney set forth in Section 6.
4.4 Documents, Chattel Paper, Instruments and Deposit Accounts
(a) If requested by the Collateral Agent in writing (such request to
be given at the written direction of the Acting Secured Parties), each
Grantor shall deliver to the Collateral Agent all Collateral
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consisting of Material Documents, Material Chattel Paper, Material promissory
notes and Material Instruments (in each case, accompanied by stock powers,
allonges or other instruments of transfer executed in blank, as applicable)
promptly after such Grantor receives the same.
(b) If requested by the Collateral Agent in writing (such request to
be given at the written direction of the Acting Secured Parties), each Grantor
shall use commercially reasonable efforts (which shall be deemed to not include
any obligation to pay money to any third party other than reasonable attorney's
fees and expenses of the third party or other de minimus payments) to obtain
authenticated control agreements from each issuer of uncertificated Securities,
securities intermediary, or commodities intermediary issuing or holding any
Material Financial Assets for the account of such Grantor.
(c) If requested by the Collateral Agent in writing (such request to
be given at the written direction of the Acting Secured Parties), each Grantor
shall use commercially reasonable efforts (which shall include customary fees
charged by third parties that act as intermediaries but shall not be deemed to
include any obligation to pay money to any third party other than reasonable
attorney's fees and expenses of the third party or other de minimus payments) to
obtain a control agreement with each bank or financial institution holding a
Material Deposit Account for such Grantor, which agreement shall be in form and
substance reasonably satisfactory to the Collateral Agent.
(d) Each Grantor shall take all steps necessary to grant the
Collateral Agent control of all Material electronic chattel paper in accordance
with the UCC.
(e) Each Grantor hereby represents and warrants, on the date hereof,
that Schedule 4.4(e) sets forth all Material Commercial Tort Claims held by such
Grantor against third parties. If requested by the Collateral Agent in writing,
each Grantor shall identify any new Material Commercial Tort Claims held by it
at such time and shall deliver a completed Security Agreement Supplement,
substantially in the form of Exhibit A attached hereto, together with a
supplement to Schedule 4.4(e) identifying such new Commercial Tort Claims.
Upon the occurrence and during the continuance of an Event of Default, each
Grantor shall not, without the Collateral Agent's prior written consent (such
consent to be given at the written direction of the Required Secured Parties),
grant any extension of the time of payment for any of the Accounts, compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partly, any Person liable for the payment thereof or allow any credit
or discount whosoever thereon, other than extensions, credit, discounts,
compromises or settlements granted or made in the ordinary course of business
and consistent with its current practices and in accordance with prudent and
standard practices used in the industry in which such Grantor is engaged.
5. FURTHER ASSURANCES; ADDITIONAL GRANTORS.
5.1 Further Assurances
(a) Each Grantor agrees that from time to time, at the expense of
such Grantor, it shall promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or reasonably
requested by Collateral Agent (at the written direction of the Acting Secured
Parties) in order to create and/or maintain the validity, perfection or priority
of and protect or enforce any security interest granted or purported to be
granted hereby or to enable Collateral Agent to exercise and enforce its rights
and remedies hereunder with respect to any Collateral; provided, however, that
(i) so long as no Default of Event of Default shall have occurred and be
continuing, such Grantor shall not be required to take any actions to perfect or
protect the security interest granted hereunder or enable the
14
Collateral Agent to exercise and enforce its rights and remedies with respect to
the Collateral other than as is expressly required pursuant to Sections 4.1,
4.2, 4.3 and 4.4 hereof and (ii) in no event shall such Grantor be obligated to
perfect security interests in fixtures or obtain consents, waivers,
acknowledgment or access agreements from any landlord, bailee or other similar
party. Without limiting the generality of the foregoing, each Grantor shall:
(A) at any reasonable time and upon reasonable notice by
Collateral Agent, exhibit the Collateral to and allow
inspection of the Collateral by Collateral Agent, or
persons designated by Collateral Agent; and
(B) appear in and defend any action or proceeding that may
affect Grantor's title to or Collateral Agent's
security interest in all or any part of the Collateral.
(b) Each Grantor hereby authorizes Collateral Agent to file a Record
or Records, including, without limitation, financing or continuation statements,
and amendments thereto, in all jurisdictions and with all filing offices as are
necessary or advisable to perfect the security interest granted to Collateral
Agent herein. Such financing statements may describe the Collateral in the same
manner as described herein or may contain an indication or description of
collateral that describes such property in any other manner as is necessary,
advisable or customary to ensure the perfection of the security interest in the
Collateral granted to Collateral Agent herein. Each Grantor shall, promptly upon
request by Collateral Agent (at the written direction of the Acting Secured
Parties), furnish to Collateral Agent statements and schedules further
identifying and describing the Collateral, all in reasonable detail.
(c) Each Grantor hereby authorizes Collateral Agent to modify this
Agreement after obtaining such Grantor's approval of or signature to such
modification by amending Schedule 4.3 to include reference to any right, title
or interest in any existing Intellectual Property or any Intellectual Property
acquired or developed by any Grantor after the execution hereof or to delete any
reference to any right, title or interest in any Intellectual Property in which
any Grantor no longer has or claims any right, title or interest; provided such
approval or signature of Grantor shall not be required so long as an Event of
Default exists.
5.2 Additional Grantors. From time to time subsequent to the date hereof,
additional Persons may become Additional Grantors, by executing a Joinder
Agreement substantially in the form attached hereto as Exhibit B. Upon delivery
of any such Joinder Agreement to Collateral Agent, notice of which is hereby
waived by Grantors, (a) each Additional Grantor shall be a Grantor and shall be
as fully a party hereto as if such Additional Grantor were an original signatory
hereto and (b) the supplemental schedules thereto shall be incorporated into and
become a part of and supplement the respective schedules to this Agreement; and
each reference to such Schedules shall mean and be a reference to such Schedules
as supplemented pursuant to such Joinder Agreement. Each Grantor expressly
agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Grantor hereunder. This
Agreement shall be fully effective as to any Grantor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Grantor hereunder.
6. ATTORNEY-IN-FACT.
6.1 Power of Attorney. Each Grantor hereby irrevocably appoints Collateral
Agent (such appointment being coupled with an interest) as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor then in effect, from time to time in its discretion
to take any action permitted under this Agreement and consistent with the
relevant provisions
15
of the Intercreditor Agreement and to execute any instrument that it may deem
reasonably necessary or advisable to accomplish the purposes of this Agreement
and the Intercreditor Agreement, including, without limitation, the following:
(a) upon the occurrence and during the continuance of any Event of
Default, to obtain and adjust insurance required to be maintained by Grantors
pursuant to the Secured Agreements;
(b) upon the occurrence and during the continuance of any Event of
Default, to ask for, demand, collect, xxx for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) upon the occurrence and during the continuance of any Event of
Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above, subject in all
respects to the rights of any lender under the Credit Agreement to receive,
endorse and collect the same;
(d) upon the occurrence and during the continuance of any Event of
Default, to file any claims or take any action or institute any proceedings
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce the rights of Collateral Agent with respect to any of the Collateral;
(e) to prepare and file any UCC financing statements against such
Grantor as debtor;
(f) to prepare, sign, and file for recordation in any intellectual
property registry, appropriate evidence of the lien and security interest
granted herein in the Intellectual Property in the name of such Grantor as
assignor;
(g) to take or cause to be taken all actions necessary to perform or
comply or cause performance or compliance with the terms of this Agreement,
including, without limitation, access to pay or discharge taxes or Liens (other
than Permitted Liens) levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same, any such payments made by Collateral Agent to become
obligations of such Grantor to Collateral Agent, due and payable immediately
without demand; and
(h) upon the occurrence and during the continuance of any Event of
Default and subject to the provisions of the UCC, generally to sell, transfer,
pledge, make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though Collateral Agent were the absolute
owner thereof for all purposes, and to do, at Collateral Agent's option and such
Grantor's expense, at any time or from time to time, all acts and things
necessary to protect, preserve or realize upon the Collateral and Collateral
Agent's security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
6.2 No Duty on the Part of Collateral Agent. The powers conferred on
Collateral Agent hereunder are solely to protect the interests of Collateral
Agent in the Collateral and shall not impose any duty upon Collateral Agent to
exercise any such powers. Collateral Agent shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither it nor any of its officers, directors, employees or agents shall be
responsible to any Grantor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct. No provision of this Agreement
shall require Collateral Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it
16
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
7. REMEDIES.
7.1 Generally.
(a) Upon the occurrence and during the continuation of any Event of
Default, Collateral Agent may, subject to the requirements of the Intercreditor
Agreement and applicable law, including regulatory requirements, exercise any
and all remedies and other rights provided under this Agreement and by
applicable law, including, without limitation, the following:
(A) require Grantors to, and Grantors hereby agree that they
shall at their expense and promptly upon request of
Collateral Agent forthwith, assemble all or part of the
Collateral as directed by Collateral Agent and make it
available to Collateral Agent at a place to be designated by
Collateral Agent that is reasonably convenient to all
parties;
(B) enter onto the property where any Collateral is located and
take possession thereof with or without judicial process if
such may be done without a breach of the peace; and
(C) prior to the disposition of the Collateral, store, process,
repair or recondition the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent
Collateral Agent may deem commercially reasonable.
(b) The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party upon default under the UCC
or any other applicable laws and also may without notice, except as specified
below, sell, lease, assign, grant an option or options to purchase or otherwise
dispose of the Collateral or any part thereof in one or more parcels at public
or private sale, at any exchange, broker's board or at any of Collateral Agent's
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as Collateral Agent may deem commercially reasonable. Each Grantor
agrees that, to the extent notice of sale shall be required by law, at least ten
days' notice to the each Grantor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. The Collateral Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Collateral Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(c) All amounts and proceeds (including checks and other instruments)
received by any Grantor in respect of amounts due to such Grantor in respect of
the Collateral or any portion thereof following the occurrence and during the
continuance of an Event of Default shall be received in trust for the benefit of
Collateral Agent, shall be segregated from other funds of such Grantor and shall
be forthwith paid over or delivered to Collateral Agent in the same form as so
received (with any necessary endorsement) to be held as cash Collateral and
applied as provided by Section 7.2 following the occurrence and during the
continuance of an Event of Default. Upon demand from Collateral Agent, Grantors
shall not adjust, settle or compromise the amount or payment of any such amount
or release wholly or partly any obligor with respect thereto or allow any credit
or discount thereon.
17
(d) Each Grantor hereby expressly waives and covenants not to assert
any appraisement, valuation, extension, redemption or similar laws, now or at
any time hereafter in force, which might delay, prevent or otherwise impede the
performance or enforcement of this Agreement.
7.2 Application of Proceeds. Any cash held by Collateral Agent as
Collateral and all cash proceeds received by Collateral Agent in respect of any
sale of, collection from or other realization upon all or any part of the
Collateral shall be held by Collateral Agent as Collateral for, and then or at
any time thereafter applied (after the payment of any amounts payable to
Collateral Agent pursuant to Section 11.2 hereof) in whole or in part by
Collateral Agent for the benefit of the Secured Parties against the Secured
Obligations in such order of application as is required by the Intercreditor
Agreement. Any surplus of such cash or cash proceeds held by Collateral Agent
and remaining after payment of all of the Secured Obligations shall be paid over
to the Grantors or to whomsoever may be lawfully entitled to receive such
surplus.
7.3 Investment Property. Each Grantor acknowledges and agrees that
Collateral Agent may elect, with respect to the offer or sale of any or all of
the Collateral constituting Investment Property or Securities, to conduct such
offer and sale in such a manner as to avoid the need for registration or
qualification of the Collateral or the offer and sale thereof under any federal
or state securities laws and that Collateral Agent is authorized to comply with
any limitation or restriction in connection with such sale as counsel may advise
Collateral Agent is necessary in order to avoid any violation of applicable law
or avoid obtaining approval of the sale or of the purchaser by any Governmental
Body, including, without limitation, compliance with such procedures as may
restrict the number of prospective bidders and purchasers, requiring that such
prospective bidders and purchasers have certain qualifications, and restricting
such prospective bidders and purchasers to Persons who will represent and agree
that they are purchasing for their own account for investment and not with a
view to the distribution or resale of such Collateral. Each Grantor further
acknowledges and agrees that any such transaction may be at prices and on terms
less favorable than those which may be obtained through a public sale and not
subject to such restrictions and agrees that, notwithstanding the foregoing,
Collateral Agent is under no obligation to conduct any such public sale and may
elect to impose any or all of the foregoing restrictions, or any other
restrictions which may be necessary or desirable in order to avoid any such
registration or qualification, at its sole discretion or with the consent or
direction of the parties entitled to give direction pursuant to the
Intercreditor Agreement.
7.4 Intellectual Property.
(a) Anything contained herein to the contrary notwithstanding, upon the
occurrence and during the continuation of an Event of Default, subject to the
Intercreditor Agreement:
(A) Collateral Agent shall have the right (but not the
obligation) to bring suit or otherwise commence any action or
proceeding in the name of any Grantor, Collateral Agent or
otherwise, in Collateral Agent's sole discretion, to enforce
any Intellectual Property which is material to such Grantor's
business, in which event such Grantor shall, at the request
of Collateral Agent, do any and all lawful acts and execute
any and all documents required by Collateral Agent in aid of
such enforcement and such Grantor shall promptly, upon
demand, reimburse and indemnify Collateral Agent as provided
in Section 10 hereof in connection with the exercise of its
rights under this Section, and, to the extent that Collateral
Agent shall elect not to bring suit to enforce any
Intellectual Property which is material to such Grantor's
business as provided in this Section,
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such Grantor agrees to use all reasonable measures, whether
by action, suit, proceeding or otherwise, to prevent the
infringement of any such Intellectual Property by others and
for that purpose agrees to diligently maintain any action,
suit or proceeding against any Person so infringing as shall
be necessary to prevent such infringement;
(B) upon written demand from Collateral Agent, each Grantor shall
grant, assign, convey or otherwise transfer to Collateral
Agent all of such Grantor's right, title and interest in and
to the Intellectual Property and shall execute and deliver to
Collateral Agent such documents as are necessary or
appropriate to carry out the intent and purposes of this
Agreement;
(C) each Grantor agrees that such an assignment and/or recording
shall be applied to reduce the Secured Obligations
outstanding only to the extent that Collateral Agent receives
cash proceeds in respect of the sale of, or other realization
upon, the Intellectual Property; and
(D) Collateral Agent shall have the right to notify, or require
each Grantor to notify, any obligors with respect to amounts
due or to become due to such Grantor in respect of the
Intellectual Property, of the existence of the security
interest created herein, to direct such obligors to make
payment of all such amounts directly to Collateral Agent,
and, upon such notification and at the expense of such
Grantor, to enforce collection of any such amounts and to
adjust, settle or compromise the amount or payment thereof,
in the same manner and to the same extent as such Grantor
might have done.
(b) If (i) an Event of Default shall have occurred and no longer be
continuing, (ii) no other Event of Default shall have occurred and be
continuing, (iii) an assignment or other transfer to Collateral Agent of any
rights, title and interests in and to the Intellectual Property shall have been
previously made and shall have become absolute and effective, and (iv) the
Secured Obligations shall not have become immediately due and payable, upon the
written request of any Grantor, Collateral Agent shall promptly execute and
deliver to such Grantor, at such Grantor's sole cost and expense, such
assignments or other transfers as may be necessary to reassign to such Grantor
any such rights, title and interests as may have been assigned to Collateral
Agent as aforesaid, subject to any disposition thereof that may have been made
by Collateral Agent; provided, after giving effect to such reassignment,
Collateral Agent's security interest granted pursuant hereto, as well as all
other rights and remedies of Collateral Agent granted hereunder, shall continue
to be in full force and effect; and provided further, the rights, title and
interests so reassigned shall be free and clear of any Liens granted by or on
behalf of Collateral Agent.
(c) Solely for the purpose of enabling Collateral Agent to exercise
rights and remedies under this Section 7 and at such time as Collateral Agent
shall be lawfully entitled to exercise such rights and remedies, each Grantor
hereby grants to Collateral Agent, to the extent it has the right to do so an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to such Grantor), subject, in the case of Trademarks, to
sufficient rights to quality control and inspection in favor of such Grantor to
avoid the risk of invalidation of said Trademarks, to use, operate under,
license, or sublicense any Intellectual Property now owned or hereafter acquired
by such Grantor, and wherever the same may be located.
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7.5 FCC Licenses.
Notwithstanding anything to the contrary contained in this Agreement,
the Intercreditor Agreement, the Secured Agreements or in any other agreement,
instrument or document executed by any Grantor in connection with the Secured
Agreements, to the extent that any FCC license is included in the Collateral,
the Collateral Agent will not take any action pursuant to any document referred
to above which would constitute or result in any assignment of any FCC license
or any change of control (whether de jure or de facto) of any Grantor or
subsidiary of any Grantor if such assignment of any FCC license or change of
control would require, under then existing law, the prior approval of the FCC
without first obtaining such prior approval of the FCC. Upon the occurrence of
an Event of Default or at any time thereafter during the continuance thereof,
subject to terms and conditions of this Agreement, each Grantor agrees to take
any action that Collateral Agent may reasonably request in order to obtain from
the FCC such approval as may be necessary to enable Collateral Agent to exercise
and enjoy the full rights and benefits granted to Collateral Agent by this
Agreement and the other documents referred to above, including specifically, at
the cost and expense of each Grantor, the use of its best efforts to assist in
obtaining approval of the FCC for any action or transaction contemplated by this
Agreement for which such approval is or shall be required by law, and
specifically, without limitation, upon request, to prepare, sign and file with
the FCC the assignor's or transferor's portion of any application or
applications for consent to the assignment of license or transfer of control
necessary or appropriate under the FCC's rules and regulations for approval of
(i) any sale or other disposition of the Collateral by or on behalf of
Collateral Agent, or (ii) any assumption by Collateral Agent of voting rights in
the Collateral effected in accordance with the terms of this Agreement. It is
understood and agreed that all foreclosure and related actions will be made in
accordance with the Communications Act and other applicable FCC regulations and
published policies and decisions.
8. CONTINUING SECURITY INTEREST; TERMINATION AND RELEASE.
(a) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the payment in
full of all of the Secured Obligations, (ii) be binding upon the each Grantor,
its successors and assigns and (iii) inure, together with the rights and
remedies of Collateral Agent hereunder, to the benefit of Collateral Agent, the
Secured Parties and their respective successors, transferees and assigns.
(b) Subject to Section 314(d) of the Trust Indenture Act of 1939,
notwithstanding anything to the contrary in this Section 8, (i) the security
interests created under this Agreement shall terminate upon the termination of
the Intercreditor Agreement pursuant to Section 8.10 thereof or, if later,
payment in full of the Secured Obligations, and (ii) the security interests
created under this Agreement with respect to any Collateral that is permitted to
be released pursuant to Section 6.8 of the Intercreditor Agreement shall
automatically be released and, in each case, the Collateral Agent shall, at the
request and expense of any Grantor (and, if requested by the Collateral Agent,
upon the delivery of an officer's certificate by the Company certifying that
such release is permitted under the Secured Agreements), cause to be assigned,
transferred and delivered, against receipt but without recourse, warranty or
representation whatsoever, all Collateral subject to such termination or
release, as applicable, to or on the order of such Grantor, and shall execute
and deliver to such Grantor at Grantor's expense such documents and instruments
as such Grantor may reasonably request to evidence the release of such
Collateral from the Lien of this Agreement, including, without limitation, any
UCC termination statements and any filings with the United States Patent and
Trademark Office or the United States Copyright Office.
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9. STANDARD OF CARE; SECURED PARTY MAY PERFORM.
The powers conferred on Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Collateral Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. The Collateral
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Collateral Agent accords its own
similar property. None of the Collateral Agent, any Secured Party or any of
their respective directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of any Grantor or otherwise. If any
Grantor fails to perform any agreement contained herein, Collateral Agent may
itself perform, or cause performance of, such agreement, and the expenses of
Collateral Agent incurred in connection therewith shall be payable by each
Grantor under Section 11.2 hereof. The Collateral Agent may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed with due
care by it hereunder.
10. INDEMNITY.
(a) Each Grantor agrees to jointly and severally indemnify and hold
harmless Collateral Agent and the Secured Parties, the respective affiliates of
Collateral Agent and the Secured Parties, and the respective officers,
directors, employees, agents (including, without limitation each of their
counsel), and controlling persons of Collateral Agent and the Secured Parties,
and each such affiliate (each, an "Indemnified Party") from and against any and
all claims, actions and suits whether groundless or otherwise, and from and
against any and all liabilities, losses, damages and costs and expenses
(including, without limitation, the reasonable fees and disbursements of counsel
and with respect to Collateral Agent, reasonably allocated costs and expenses of
in-house counsel and legal staff) of every nature and character arising out of
or in connection with any actual or threatened claim, litigation, investigation
or proceeding relating to this Agreement or the Secured Agreements or the
transactions contemplated hereby or thereby (other than any such actions or
expenses resulting, as determined by a final order of a court of competent
jurisdiction, from the gross negligence or willful misconduct of the Indemnified
Party seeking indemnification hereunder), in each case including, without
limitation, the reasonable fees and disbursements of counsel and allocated costs
of in-house counsel and legal staff incurred in connection with any such claim
investigation, litigation or other proceeding whether or not such Indemnified
Party is a party thereto, and each Grantor agrees to reimburse each Indemnified
Party, upon demand, for all out-of-pocket costs and expenses (including, without
limitation, the reasonable fees and disbursements of counsel and with respect to
Collateral Agent and the Secured Parties, reasonably allocated costs and
expenses of in-house counsel and legal staff) incurred in connection with any of
the foregoing. In litigation, or the preparation therefor, Indemnified Parties
shall each be entitled to select their own counsel and, in addition to the
foregoing indemnity, each Grantor agrees to pay promptly the reasonable fees and
expenses of such counsel. If, and to the extent that the obligations of any
Grantor under this Section 10 are unenforceable for any reason, such Grantor
hereby agrees to make the maximum contribution to the payment in satisfaction of
such obligations which is permissible under applicable law.
(b) No Grantor shall make any claim against any Indemnified Party for
any special, indirect or consequential damages in respect of any breach or
wrongful conduct (whether the claim therefor is based in contract, tort or duty
imposed by law) in connection with, arising out of or in any way
21
related to the transactions contemplated by, and the relationship established by
the Secured Agreements, or any act, omission or event occurring in connection
therewith, and hereby waives, releases and agrees not to xxx upon any such claim
for any such damages, whether or not accrued and whether or not known or
suspected to exist in such Grantor's favor.
(c) The covenants contained in this Section 10 shall survive payment or
satisfaction in full of all other of the Secured Obligations.
11. MISCELLANEOUS.
11.1 Notices. Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given to a Grantor or
Collateral Agent shall be sent to such Person's address as set forth in the
Intercreditor Agreement. All such notices and other communications shall, when
mailed or telecopied, be effective when deposited in the mails or transmitted by
telecopier, respectively.
11.2 Expenses. Each Grantor will upon demand make payment to Collateral
Agent of any and all reasonable out-of-pocket sums, costs and expenses, which
Collateral Agent may pay or incur pursuant to the provisions of this Agreement
or in perfecting, defending, protecting or enforcing this Agreement or the
security interests granted herein or in enforcing payment of all of the Secured
Obligations or otherwise in connection with the provisions hereof, including,
but not limited to court costs, reasonable collection charges, reasonable travel
expenses, and reasonable attorneys' fees and expenses (including with respect to
Collateral Agent, the reasonable allocated costs and expenses of in-house
counsel and legal staff) all of which together with interest at the highest rate
then payable under the Indenture, shall be part of the Secured Obligations. The
covenants in this Section 11.2 shall survive payment or satisfaction in full of
all other of the Secured Obligations.
11.3 Amendments and Waivers. Subject to the requirements of Section 6.6 and
6.7 of the Intercreditor Agreement, any consent or approval required or
permitted by this Agreement to be given by Collateral Agent may be given, and
any term of this Agreement, may be amended, and the performance or observance by
the Grantors of any terms of this Agreement, or the continuance of any Default
or Event of Default may be waived (either generally or in a particular instance
and either retroactively or prospectively) with, but only with, the written
consent of the Grantors and the written consent of Collateral Agent. No waiver
shall extend to or affect any obligation not expressly waived or impair any
right consequent thereon. No course of dealing or delay or omission on the part
of Collateral Agent or any Secured Party in exercising any right shall operate
as a waiver thereof or otherwise be prejudicial thereto. No notice to or demand
upon the Grantors shall entitle the Grantors to other or further notice or
demand in similar or other circumstances.
11.4 Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns including all persons
who become bound as Grantor to this Agreement. No Grantor shall, except as
permitted under the Secured Agreements, assign any right, duty or obligation
hereunder.
11.5 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or would otherwise be within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is taken
or condition exists.
22
11.6 Survival of Representations, Warranties and Agreements. All
representations, warranties and agreements made herein shall survive the
execution and delivery hereof. Notwithstanding anything herein or implied by law
to the contrary, the agreements of Grantors set forth in Sections 10 and 11.2
shall survive the payment of the Secured Obligations under the Indenture and the
termination hereof.
11.7 No Waiver; Remedies Cumulative. No failure or delay on the part of
Collateral Agent in the exercise of any power, right or privilege hereunder or
under any Secured Agreement shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other power, right or privilege. All
rights, powers and remedies existing under this Agreement and the Secured
Agreements are cumulative, and not exclusive of, any rights or remedies
otherwise available. Any forbearance or failure to exercise, and any delay in
exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.
11.8 Marshaling; Payments Set Aside. The Collateral Agent shall not be
under any obligation to marshal any assets in favor of any Grantor or any other
Person or against or in payment of any or all of the Secured Obligations.
11.9 Severability. In case any provision in or obligation hereunder shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
11.10 Headings. Section headings herein are included herein for convenience
of reference only and shall not constitute a part hereof for any other purpose
or be given any substantive effect.
11.11 Applicable law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to any
conflicts of laws principles thereof other than New York General Obligations Law
Sections 5-1401 and 5-1402.
11.12 Consent To Jurisdiction. Each Grantor hereby appoints
[_______________] (the "Process Agent") at [________, New York _____], as its
legally authorized process agent to accept service on behalf of such Grantor.
Each Grantor agrees that any suit for the enforcement of this Agreement may be
brought in the courts of the State of New York or any federal court sitting
therein and consents to the nonexclusive jurisdiction of such court and service
of process in any such suit being made upon such Grantor by mail to the Process
Agent at the address specified above. Each Grantor hereby waives any objection
that it may now or hereafter have to the venue of any such suit or any such
court or that such suit is brought in an inconvenient court.
11.13 Waiver Of Jury Trial. Each Grantor hereby waives its right to a jury
trial with respect to any action or claim arising out of any dispute in
connection with this Agreement, or any of the Secured Agreements, any rights or
obligations hereunder or thereunder or the performance of such rights and
obligations.
11.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
23
11.15 Effectiveness. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
Collateral Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
11.16 Entire Agreement. This Agreement and the Intercreditor Agreement
embody the entire agreement and understanding between Grantors and Collateral
Agent and supersede all prior agreements and understandings between such parties
relating to the subject matter hereof and thereof. There are no unwritten oral
agreements between the parties.
11.17 Trust Indenture Act Controls. If any provision of this Agreement
limits, qualifies or conflicts with the duties imposed by the Trust Indenture
Act of 1939 as in effect on the date of this Agreement, the imposed duties shall
control.
[Remainder of page intentionally left blank; signature page follows.]
24
IN WITNESS WHEREOF, Grantors and Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
XM SATELLITE RADIO INC.
By: ________________________________
Name:
Title:
XM SATELLITE RADIO HOLDINGS INC.
By: ________________________________
Name:
Title:
XM EQUIPMENT LEASING LLC
By: ________________________________
Name:
Title:
THE BANK OF NEW YORK,
as Collateral Agent
By: ________________________________
Name:
Title:
EXHIBIT A
TO SECURITY AGREEMENT
FORM OF SECURITY AGREEMENT SUPPLEMENT
This SECURITY AGREEMENT SUPPLEMENT, dated [mm/dd/yy] (the
"Supplement"), is delivered pursuant to the Security Agreement, dated as of
January __, 2003 (as it may be from time to time amended, restated, modified or
supplemented, the "Security Agreement"), among XM Satellite Radio Holdings Inc.,
certain of its Subsidiaries party thereto and The Bank of New York, as
Collateral Agent. Capitalized terms used herein not otherwise defined herein
shall have the meanings ascribed thereto in the Security Agreement. This
Supplement is being delivered pursuant to Section [__]/1/ of the Security
Agreement.
Grantor hereby confirms, as of the date first written above, the grant
to Collateral Agent set forth in the Security Agreement of, does hereby grant to
Collateral Agent, for the benefit of itself and the Secured Parties, a security
interest in all of Grantor's right, title and interest in and to all Collateral
to secure the Secured Obligations, in each case whether now or hereafter
existing or in which Grantor now has or hereafter acquires an interest and
wherever the same may be located and hereby agrees, as of the date first above
written, to continue to be bound as a Grantor by all of the terms and provisions
of the Security Agreement, as supplemented by this Security Agreement
Supplement. Grantor hereby represents and warrants that the attached Supplements
to Schedules accurately and completely set forth all additional information with
respect to the Grantor currently required pursuant to the Security Agreement and
hereby agrees that such Supplements to Schedules shall constitute part of the
Schedules to the Security Agreement.
IN WITNESS WHEREOF, Grantor has caused this Security Agreement
Supplement to be duly executed and delivered by its duly authorized officer as
of [mm/dd/yy].
[NAME OF GRANTOR]
By: _______________________________
Name:
Title:
-------------------------
/1/ Insert Section 4.1(b)(iii), 4.2(b)(iii), 4.3(b)(ii), 4.4(e), as applicable.
SUPPLEMENT TO SCHEDULE 4.1
TO SECURITY AGREEMENT
Additional Information:
Financing Statements:
Name of Grantor Filing Jurisdiction(s)
--------------- ----------------------
SUPPLEMENT TO SCHEDULE 4.2
TO SECURITY AGREEMENT
Additional Information:
(A) Copyrights:
(B) Patents:
(C) Trademarks:
SUPPLEMENT TO SCHEDULE 4.3
TO SECURITY AGREEMENT
MATERIAL INVESTMENT PROPERTY
SUPPLEMENT TO SCHEDULE 4.4
TO SECURITY AGREEMENT
COMMERCIAL TORT CLAIMS
EXHIBIT B
TO SECURITY AGREEMENT
FORM OF JOINDER AGREEMENT
This JOINDER AGREEMENT, dated [mm/dd/yy], is delivered pursuant to the
Security Agreement, dated as of January __, 2003 (as it may be from time to time
amended, restated, modified or supplemented, the "Security Agreement"), among XM
Satellite Radio Holdings Inc., certain of its Subsidiaries party thereto and The
Bank of New York, as Collateral Agent. Capitalized terms used herein not
otherwise defined herein shall have the meanings ascribed thereto
Section 1. Grant of Security Interest. The undersigned hereby grants to
Collateral Agent for the benefit of itself and the Secured Parties, a security
interest and continuing lien on all of its right, title and interest in, to and
under all personal property of the undersigned that may be perfected by the
filing of UCC financing statements in the appropriate jurisdictions, including
without limitation, the property and assets of the undersigned set forth on the
attached supplemental schedules to the Schedules to the Security Agreement, in
each case whether now owned or existing or hereafter acquired or arising and
wherever located (the undersigned's "Collateral"), subject to the same limited
exclusions set forth in the Security Agreement.
Section 2. Security For Obligations. The grant of security interest and
continuing lien under this Joinder Agreement secures, and the Collateral is
collateral security for, the prompt and complete payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. ss.362(a) (and any successor provision thereof)),
of all obligations of Grantor hereunder and under the Secured Agreements to
which Grantor is a party, and for all Secured Obligations (as defined in the
Intercreditor Agreement).
Section 3. Supplements to Security Agreement Schedules. The undersigned
has attached hereto supplemental Schedules 4.1, 4.2, 4.3, and 4.4(e) to
Schedules 4.1, 4.2, 4.3, and 4.4(e) respectively, to the Security Agreement, and
the undersigned hereby certifies, as of the date first above written, that such
supplemental schedules have been prepared by the undersigned in substantially
the form of the equivalent Schedules to the Security Agreement and are complete
and correct in all material respects.
Section 4. Representations and Warrants and Covenants. As of the date
hereof, the undersigned hereby makes each representation and warranty and
covenant set forth in Section 4 of the Security Agreement (as supplemented by
the attached supplemental schedules) to the same extent as each other Grantor.
Section 5. Obligations Under the Security Agreement. The undersigned
hereby agrees, as of the date first above written, to be bound as a Grantor by
all of the terms and provisions of the Security Agreement to the same extent as
Grantor. The undersigned further agrees, as of the date first above written,
that each reference in the Security Agreement to an "Additional Grantor" or a
"Grantor" shall also mean and be a reference to the undersigned.
The terms of Sections 11.11, 11.12, 11.13 and 11.14 of the Security
Agreement are hereby incorporated by reference.
IN WITNESS WHEREOF, the undersigned has caused this Joinder Agreement
to be duly executed and delivered by its duly authorized officer as of
[mm/dd/yy].
[NAME OF ADDITIONAL GRANTOR]
By:______________________
Name:
Title:
SUPPLEMENT TO SCHEDULE 4.1
TO SECURITY AGREEMENT
Additional Information:
Financing Statements Filing Offices:
Name of Grantor Filing Jurisdiction(s)
--------------- ----------------------
SUPPLEMENT TO SCHEDULE 4.2
TO SECURITY AGREEMENT
Additional Information:
(A) Copyrights
(B) Patents
(C) Trademarks
SUPPLEMENT TO SCHEDULE 4.3
TO SECURITY AGREEMENT
Additional Information:
Pledged Stock:
Pledged Partnership Interests:
Pledged LLC Interests:
Pledged Debt:
SUPPLEMENT TO SCHEDULE 4.4(e)
TO SECURITY AGREEMENT
COMMERCIAL TORT CLAIMS
