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SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of November 15, 1995, between CHAMPION
COMMUNICATION SERVICES, INC., a Delaware corporation, its successors and
assigns (the "Debtor"), and CHAMPION COMMUNICATIONS COMPANY, a Texas
corporation (together with its successors and assigns, the "Secured Party").
R E C I T A L S
WHEREAS, the Secured Party has loaned the Debtor USD 2,799,581.26 as
evidenced by the promissory note of the Debtor dated November 15, 1995 (the
"Note"); and
WHEREAS, the Secured Party required, as a condition to its loan to the
Debtor, that the Debtor execute and deliver this Security Agreement to the
Secured Party as security for the Debtor's obligations under the Note.
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto agree and covenant as follows:
ARTICLE 1 - DEFINITIONS
Section 1.01. Certain Defined Terms. For purposes of this Security
Agreement:
(a) "Equipment" shall mean: (i) all of the community repeaters
now owned or hereafter acquired by the Debtor, (ii) all metal
products, machinery, equipment, materials or other goods of
any description whatsoever, used or acquired for use, now
owned or hereafter acquired, by the Debtor or any other party
using or operating the Equipment and other goods of any
description whatsoever installed in or affixed to or to be
used in connection with any item of Equipment or acquired for
installation on, affixation to, or use in connection with any
item of Equipment.
(b) "Insurances" shall mean: (i) all insurance in respect of the
Equipment whether now or hereafter to be effected and all
renewals of or replacements for the same, (ii) all claims and
other moneys and claims for moneys due and to become due under
said insurances and (iii) all other rights of the Debtor under
or in respect of said insurances.
(c) "Spectrum Sales Proceeds" shall mean the net proceeds to the
Company of any sales, leases or assignments of community
repeater spectrums or spectrum licenses.
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(d) Any proceeds or products of the above. (a) through (d) above
are referred to herein as the "Collateral."
ARTICLE 2 - SECURITY
Section 2.01. Grant of Security Interest. In consideration of the loan
by the Secured Party evidenced by the Note and by way of security for payment
of all amounts due by the Debtor under the Note as it may be amended, modified
or extended or any other amounts due by the Debtor to the Secured Party, the
Debtor does hereby sell, pledge, assign, transfer and set over unto, and does
hereby grant a security interest in favor of the Secured Party and unto the
Secured Party's successors' and assigns' as Secured Party for its own proper
use and benefit, as security for all amounts due and owing under the Note,
hereunder or otherwise by the Debtor to the Secured Party, all right, title and
interest of the Debtor under, in and to the Collateral.
Section 2.02. Continued Priority of Security Interest. The Debtor
agrees that it will not, without the prior written consent of the Secured
Party, create or suffer to exist any lien or security interest upon the
Collateral or any part thereof other than the lien and security interests
created hereby.
Section 2.03. Maintenance of Status of Security Interest. The Debtor
shall take all action that may be necessary or desirable, or that the Secured
Party reasonably may request, so as at all times (a) to grant and perfect the
security interest in the Collateral intended to be granted hereby and to
maintain the validity, enforceability, perfection and priority of the security
interest in the Collateral, (b) to protect or preserve the security interest
created by this Security Agreement and (c) to protect, preserve, exercise or
enforce the rights of the Secured Party hereunder, including but not limited to
executing and delivering Uniform Commercial Code financing statements,
continuation statements, notices, instructions and assignments, in each case in
form and substance reasonably satisfactory to the Secured Party and not
inconsistent with the terms hereof. The Debtor shall xxxx its books and records
and the Collateral as may be necessary or appropriate to evidence, protect and
perfect the security interest in the Collateral and shall cause its financial
statements to reflect such security interest.
Section 2.04. Evidence of Status of Security Interest. The Debtor
shall from time to time upon request of the Secured Party promptly deliver to
the Secured Party such file search reports from such Uniform Commercial Code
and other filing and recording offices as may be applicable from time to time
as the Secured Party may reasonably designate in order to establish that the
perfection and priority of the interest granted hereby are maintained.
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Section 2.05. Authorized Action. The Secured Party is hereby
authorized to file one or more financing or continuation statements (including
statements of assignment and renewals thereof) or amendments thereto without
the signature of, or in the name of, the Debtor. A photographic or other
reproduction of this Security Agreement or of any financing statement filed in
connection with this Security Agreement shall be sufficient as a financing
statement.
Section 2.06. The Debtor Remains Obligated; the Secured Party Not
Obligated. The grant by the Debtor to the Secured Party of the security
interest granted hereby shall not relieve the Debtor from the performance of
any term, covenant, condition or agreement on its part to be performed or
observed, or from any liability to any Person, under or in respect of any of
the Collateral or impose any obligation on the Secured Party to perform or
observe any such term, covenant, condition or agreement on the Debtor's part to
be so performed or observed or impose any liability on the Secured Party for
any act or omission on the part of the Debtor relating thereto.
Section 2.07. Representation. The Debtor hereby represents and
warrants to the Secured Party that there is no other perfected security
interest upon the Collateral as of the date of this Security Agreement.
Section 2.08 Mandatory Prepayment. Upon the sale or actual or
constructive total loss of any Collateral, the sale or insurance proceeds of
such sale or loss shall, upon receipt by the Debtor, be used to prepay amounts
outstanding under the Note along with all interest accrued on such amount
through such repayment date. Any prepayment under this Section 2.08 shall be
applied to amounts outstanding under the Note in inverse order of maturity.
ARTICLE 3 - MAINTENANCE; USE AND OPERATION;
INSPECTION; IDENTIFICATION MARKS
Section 3.01. Maintenance. The Debtor, at its sole cost and expense
(whether or not applicable insurance proceeds are adequate for the purpose),
shall, except as items of Equipment are retired or replaced because of damage
or obsolescence in accordance with the Debtor's ordinary course of business (i)
maintain and refurbish the Equipment, so as to keep it in good operating
condition, order and repair in the manner of other first class operators of
similar community repeaters, and (ii) keep the Equipment in compliance with all
applicable laws, regulations and orders of any governmental authority having
jurisdiction with respect thereto.
Section 3.02. Use and Operation. So long as no Event of Default shall
occur and be continuing, the Debtor shall have the full use of the Equipment;
provided, however, that the Debtor covenants and agrees that it will not permit
the Equipment to be
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incorporated or installed in or attached to any building or real property in
such manner as to become part of or subject to any liens or security interests
on such building or real property or so as to preclude the removal thereof
without material injury to the Equipment (it being the intention of the parties
that the Equipment is, and shall be and remain, personal property throughout
the term of the Note and this Agreement); and provided, further, that the
Equipment shall not be used or operated in any manner contrary to the
applicable law, treaty or convention, or any rule or regulation issued
thereunder.
Section 3.03. Inspection. The Debtor shall permit representatives
of the Secured Party at any reasonable time, on reasonable notice, to inspect
the Equipment, provided that any such inspection will not materially interfere
with the normal operation of the Equipment.
Section 3.04. Identification Marks. The Debtor will cause each item of
Equipment to be kept numbered with an identifying number. The Debtor will not
change the identifying number of any item of Equipment except in accordance
with a statement of new identifying number to be substituted therefor, which
statement previously shall have been filed with the Secured Party.
ARTICLE 4 - REPLACEMENT OF PARTS; ALTERATIONS,
MODIFICATIONS AND ADDITIONS
Section 4.01. Replacement of Parts. (a) Except as items of Equipment
are retired or replaced because of damage or obsolescence in accordance with
the Debtor's ordinary course of business, the Debtor, at its sole cost and
expense, will as necessary promptly replace all parts on the Equipment which
may from time to time become worn out, lost, destroyed, seized, damaged beyond
repair or permanently rendered unfit for use for any reason whatsoever. All
parts at any time removed from the Equipment shall remain subject to the
security interest granted herein until such time as such parts shall be
replaced by parts which meet the requirements for replacement parts specified
below. All replacement parts incorporated or installed in or attached to
any item of Equipment as provided by this Section 4.01 shall, without necessity
of further act, become part of such item of Equipment for all purposes hereof
and subject to the security interest granted herein.
(b) All replacement parts shall be free and clear of all liens or
security interests and shall be in as good operating condition as, and shall
have a value and utility at least equal to the parts replaced, assuming such
replaced part to be maintained in accordance with the terms of this Security
Agreement.
Section 4.02. Alterations, Modifications and Additions. The Debtor, at
its sole expense, will make such alterations and modifications in and additions
to the Equipment as may be required
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from time to time by any relevant governmental authority or as may be deemed
necessary from time to time by the Debtor, whether upon the recommendation of
any manufacturer or otherwise, for the purpose of the safe operation of the
Equipment (any such alteration, modification or addition as may be so required
or so deemed necessary being herein called a "Required Modification"). In
addition, the Debtor, at its sole expense, may from time to time make such
other alterations and modifications in and additions to the Equipment as the
Debtor may deem desirable in the proper conduct of its business (any such
alteration, modification or addition as may be so deemed desirable being herein
called an "Optional Modification"); provided, however, that (i) any Required
Modification shall be expeditiously completed in a good and workmanlike manner,
in compliance with all legal requirements applicable thereto, and (ii) no
Optional Modification shall diminish the value or utility of any item of
Equipment or impair the operating condition thereof immediately prior to such
optional Modification, assuming that such item of Equipment was then of the
value or utility and in the operating condition required to be maintained by
the terms of this Security Agreement. All parts incorporated or installed in or
attached to any item of Equipment as a result of any alteration, modification
or addition which are not readily removable without damage to such item of
Equipment shall, without necessity of further act, become part of such item of
Equipment for all purposes hereof and subject to the security interests granted
herein.
ARTICLE 5 - INSURANCE
Section 5.01. Insurance Against Loss or Damage to Equipment. The Debtor
covenants and agrees that it will, without cost to the Secured Party, maintain
or cause to be maintained in effect with respect to the Equipment throughout
the term of this Security Agreement with such underwriters against such risks
and with deductibles under the broadest policy forms currently available from
time to time and carried by prudent owners of similar equipment engaged in
similar community repeater operations (at the time of issue of the policies in
question) and approved by the Secured Party in accordance with applicable law,
an all risk physical damage insurance policy insuring the Equipment against,
among other things, loss, damage or destruction thereof from fire, explosion,
windstorm, theft, breakage, and such other risks as the Debtor may deem
necessary or desirable in an amount in U.S. dollars equal to, except as
otherwise approved or required in writing by the Secured Party, the greater of
the full replacement cost of the Equipment or the outstanding balance due under
the Note. Each policy of insurance with respect to the Equipment shall provide
that the Secured Party shall be the sole loss payee without liability for the
payment of premiums. All insurance maintained under this Article 5 shall be
primary insurance without right to contribution against any other insurance
maintained by the Secured Party and shall contain provisions waiving
underwriters' rights of
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subrogation thereunder against the Secured Party and any assured named in such
policy and any assignee of the Secured Party and any assured.
Section 5.02. Insurance Against Public Liability and Property Damage.
The Debtor covenants and agrees that it will, without cost to the Secured
Party, maintain or cause to be maintained in effect with respect to the
Equipment throughout the term of this Security Agreement with such underwriters
and under the broadest policy forms currently available from time to time and
carried by prudent owners of similar equipment engaged in similar community
repeater operations (at the time of issue of the policies in question) and
approved by the Secured Party in accordance with applicable law, commercial
general liability insurance policies insuring against liabilities for any
injury to the person of others and any damage to the property of others arising
from such risks, with such reasonable deductibles and in such amounts as shall
be approved by the Secured Party. Any insurance policies maintained in
accordance with this Section 5.02 shall include the Secured Party as an
additional insured without liability for the payment of premiums. Each such
policy shall also include effective waivers by the insurer of all claims for
insurance premiums against the Secured Party. All provisions of the liability
insurance policies, except for the limits of liability, shall operate in the
same manner as if there were a separate police of insurance covering each
insured. Furthermore, each such policy shall provide or be endorsed to provide
that violation of the terms, conditions or warranties of any policy of
insurance by the Debtor shall not invalidate any such insurance coverage
insofar as the interests of the Secured Party are concerned.
Section 5.03. Delivery of Policies. The Debtor will deliver to the
Secured Party original cover notes and true and correct copies of all policies
and binders and all endorsements and riders amendatory thereof, evidencing
insurance required to be carried and maintained by this Article 5. The Secured
Party shall not be responsible for any representations or warranties made to
the underwriters by the Debtor in connection with any policy of insurance
referred to herein.
Section 5.04. Notice of Cancellation. At the Debtor's expense the
Debtor will cause the relevant insurance brokers to agree to, and the Debtor
hereby covenants and agrees that it will, advise the Secured Party of any
expiration, termination, nonrenewal, alteration or cancellation of any policy,
any default in the payment of any premium and of any other act or omission on
the part of the Debtor of which it has knowledge and which might invalidate or
render unenforceable, in whole or in part, any insurance on the Equipment. All
policies required hereby shall provide for not less than 30 days prior written
notice to be received by the Secured Party of the termination or cancellation
of the insurance evidenced thereby, unless such termination or
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cancellation is a result of non-payment of premiums in which case ten (10) days
prior written notice shall be given to the Secured Party. The Debtor agrees
that, unless the Insurances by their terms provide that they cannot cease (by
reason of nonrenewal or otherwise) without the Secured Party being informed and
having the right to continue the insurance by paying any premiums not paid by
the Debtor, receipts showing payment of premiums for required insurance and
also for demands from underwriters shall be in the hands of the Secured Party
at least 14 days before the risk in question commences.
Section 5.05. No Act Impairing Insurance. The Debtor will not do or
omit any act, nor voluntarily suffer or permit any act to be done or omitted,
whereby the Insurance required to be carried or maintained hereunder shall or
may be suspended, impaired or canceled, and will not use or operate, or permit
the Equipment to be used or operated for purposes more hazardous than permitted
by the terms of the insurance policies carried by the Debtor pursuant to this
Article 5, without having previously notified the Secured Party in writing and
insured the Equipment by additional coverage to extend to such uses, operations
or risks.
Section 5.06. Proof of Loss. The Debtor will, at its own expense, make
or cause to be made all proofs of loss and take, or cause to be taken, all
other action necessary or appropriate to make collections from the underwriters
of insurance required to be carried and maintained by this Article 5.
Article 5.07. Insurances. It is expressly agreed that anything herein
contained to the contrary notwithstanding, the Debtor shall remain liable under
the Insurances referred to in Section 5.01 and 5.02 above to perform all of the
obligations assumed by it thereunder and the Secured Party shall have no
obligation or liability under the Insurances by reason of or arising out of
this Security Agreement nor shall the Secured Party be required or obligated in
any manner to perform or fulfill any obligations of the Debtor under or
pursuant to the Insurances or to make any payment or to make any inquiry as to
the nature or sufficiency of any payment received by it or to present or file
any claim, or to take any other action to collect or enforce the payment of any
amounts which may have been assigned to it or to which it may be entitled
hereunder at any time or times.
Section 5.08. Payment to Secured Party. Unless the Secured Party shall
otherwise agree, all amounts of whatsoever nature payable under any Insurances
must be payable to the Secured Party for distribution first to itself under
this Security Agreement and thereafter to the Debtor or others as their
interests may appear. Nevertheless, until an Event of Default shall have
occurred and be continuing, (i) amounts payable under any insurance on the
Equipment with respect to public liability and property damage may be paid
directly to the Debtor to reimburse it for any loss, damage
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or expense incurred by it and covered by such insurance has been incurred
provided that the underwriter shall have first received evidence that the
liability insured against has been discharged, and (ii) amounts payable under
any Insurances with respect to the Equipment involving any damage to the
Equipment not constituting an actual or constructive total loss, may be paid by
underwriters directly for the repair or other charges involved or, if the
Debtor shall have first fully repaired the damage or paid all of the salvage or
other charges, may be paid to the Debtor as reimbursement therefor;
provided, however, that if such amounts (including any franchise or deductible)
are in excess of USD 100,000, the underwriters shall not make such payment
without first obtaining the written consent of the Secured Party.
Section 5.09. Application of Proceeds. All amounts paid to the Secured
Party in respect of any Insurance on the Equipment shall be disposed of as
follows (after deduction of the reasonable expenses of the Secured Party in
collecting such amounts):
(i) any amount which might have been paid at the time, in
accordance with the provision of Section 5.01 and 5.02 above, directly
to the Debtor or others shall be paid by the Secured Party to, or as
directed by, the Debtor to be applied toward the repair or replacement
of the damaged Equipment; and
(ii) all amounts paid to the Secured Party in respect of an actual
or constructive total loss of the Equipment shall be applied pursuant
to Section 2.08 above.
ARTICLE 6 - COVENANTS OF THE DEBTOR
Section 6.01. Notice of Assignment. (a) Upon the occurrence and during
the continuance of an Event of Default, the Debtor will upon written request
from the Secured Party write letters to each of the Debtor's brokers, agents
and representatives into whose hands or control may come any proceeds of the
Spectrum Sales Proceeds hereby assigned, informing each such addressee of this
Security Agreement and instructing such addressee during the existence of an
Event of Default to remit promptly to the Secured Party at such account or
accounts designated by the Secured Party all proceeds of the Spectrum Sales
Proceeds hereby assigned which may come into the addressee's hands or control
and to continue to make such remittances until such time as the addressee may
receive written notice or instructions to the contrary direct from the Secured
Party. The Debtor further covenants that during the existence of an Event of
Default it will instruct each such addressee to acknowledge directly to the
Secured Party receipt of the Debtor's letter of notification and the
instructions. Any sum in respect of moneys assigned hereunder which is in the
hands of the Debtor's brokers, agents or other representatives during the
existence of an Event of Default shall be deemed to have been received by them
for the use and on behalf of the Secured Party.
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(b) If any of the Spectrum Sales Proceeds arise out of contracts with
the United States or any department, agency, or instrumentality thereof, the
Debtor will immediately notify the Secured Party in writing and execute any
instruments and take any steps required by the Secured Party in order that all
moneys due and to become due under such contracts shall be assigned to the
Secured Party and notice thereof given to the government under the Federal
Assignment of Claims Act.
Section 6.02. Compliance with Covenants. The Debtor will observe,
perform and comply with the covenants, terms and conditions herein, express or
implied, on its part to be observed, performed or complied with.
Section 6.03. No Sales or Transfers. The Debtor will not without the
prior written consent of the Secured Party and except in compliance with
Section 2.08 above, sell, mortgage or transfer any of the Collateral and any
such written consent to any one sale, mortgage, or transfer shall not be
construed to be a waiver of this provision with respect to any subsequent
proposed sale, mortgage, or transfer. Any such sale, mortgage, or transfer of
any of the Collateral shall be subject to the provisions of this Security
Agreement and the lien hereof.
Section 6.04. Payment of Moneys. The Debtor hereby covenants with the
Secured Party that it will pay to the Secured Party on demand all moneys
whatsoever which the Secured Party shall or may reasonably expend or become
liable for, in or about the protection or maintenance of the Collateral or
enforcement of the security interest created by this Security Agreement or in
or about the exercise by the Secured Party of any of the powers vested in it
hereunder together with interest thereon at the rate of 12% per annum from the
date when such moneys were expended by the Secured party until the date of
actual receipt whether before or after any relevant judgment.
Section 6.05. Chief Executive Office and Name. The Debtor shall
maintain its chief executive office and principal place of business at 0000
Xxxxxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxx 00000 and its present name
provided, the Debtor may relocate its chief executive office and principal
place of business or change its name so long as the Debtor at its own expense
(a) shall have given the Secured Party not less than thirty (30) days prior
written notice of such relocation or name change, and (b) shall have caused to
be filed in each jurisdiction such financing statements or similar papers as
the Secured Party. All reasonable expenses of the Secured Party (including
legal fees) incurred in connection with confirming the maintenance of its
security interest in the Collateral after relocation of the Debtor's chief
executive office and principal place of business or a change in its name or
shall be paid by the Debtor.
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Section 6.06. Taxes; Compliance. The Debtor shall (a) pay or discharge
when due all Taxes and all claims that might become a Lien on any of the
Collateral within 30 days of the due date thereof, except such Taxes, if any,
as are being contested in good faith and as to which adequate reserves
(determined in accordance with generally accepted accounting principles in the
United States) have been provided, and (b) comply in all material respects with
(i) all applicable laws relating to the Collateral and (ii) the terms and
provisions of any agreements pertaining to the Collateral.
Section 6.07. Liens. The interest of the Debtor in the Collateral will
continue to be held by the Debtor free and clear of any security interests,
liens, charges, claims or encumbrances other than the lien created pursuant to
this Security Agreement.
Section 6.08. Information. In addition to such other information as
shall be specifically provided for herein, the Debtor shall furnish to the
Secured Party such other information with respect to the Collateral as the
Secured Party may reasonably request from time to time.
ARTICLE 7 - EVENTS OF DEFAULT
Section 7.01. Events of Default. Each of the following, without further
notice or demand upon the Debtor (except as otherwise provided this Security
Agreement), shall constitute an Event of Default under this Security Agreement.
(a) The failure of the Debtor to pay any amount due under the Note when
due.
(b) The failure to cure the breach of any of the Debtor's
representations, covenants or warranties hereunder within twenty (20) days
following written notice by the Secured Party to the Debtor.
(c) The sale, encumbrance or disposition or attempted sale,
encumbrance or disposition of the any of the Collateral except as otherwise
expressly permitted in this Security Agreement.
Section 7.02. Application of Proceeds. Any sums recovered hereunder
after an Event of Default shall have occurred and be continuing shall be
applied as follows:
First: To the payment of all reasonable expenses and charges,
including the expenses of any sale, the expenses of any retaking,
attorney's fees, court costs, and any other expenses or advances made or
incurred by the Secured Party in the protection of its rights or the
pursuance of its remedies hereunder;
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Second: To the payment of the amounts outstanding under the Note or
otherwise due to the Secured Party, including interest thereon to the
date of such payment and, if applicable, compensatory interest to the
date of such payment; and
Third: To the payment of any surplus thereafter remaining to the
Debtor or to whomsoever may be entitled thereto.
Section 7.03. Remedies. Upon the occurrence and during the continuance
of an Event of Default, the security interest created by this Security
Agreement shall become immediately enforceable and the Secured Party shall have
the right to:
(i) Upon the declaration by the Secured Party that all the then
unpaid obligations of the Debtor to the Secured Party under the Note
or otherwise are due and payable immediately, the same shall become
and be immediately due and payable.
(ii) Demand, xxx for, collect or receive in the name and on behalf
of the Debtor or the Secured Party any money or property at any time
payable or receivable on account of or in exchange for, or make any
compromise or settlement deemed desirable with respect to, any of the
Collateral, but the Secured Party shall be under no obligation so to
do, or the Secured Party may extend the time of payment, arrange for
payment in installments or otherwise modify the terms of, or release
any of the Collateral without thereby incurring responsibility to, or
discharging or otherwise affecting any liability of the Debtor. The
Secured Party shall be under no duty to protect, secure, perfect or
insure the Collateral.
(iii) The Secured Party shall have the rights and remedies with
respect to the Collateral of a secured party under the Texas Uniform
Commercial Code, whether or not such code is in effect in the
jurisdiction where the rights and remedies are then asserted and any
other rights granted pursuant to applicable law. In addition, the
Secured Party is hereby granted the right to sell or cause to be sold
in Houston, Texas or elsewhere, in one or more sales or parcels, at
such price or prices as it may deem best and for cash or on credit or
for future delivery, without assumption of any credit risks, the
Collateral, at any broker's board or at public or private sale,
without demand of performance or notice of intention to sell, or of
time or place of sale (except 10 Business Days prior written notice to
the Debtor of the time and place of the sale at the Debtor's address
set forth in Section 8.05 below and the Debtor waives all other notice
of such sale), and the Secured Party may be the purchaser of any or
all of the Collateral so sold and thereafter hold the same absolutely
free from any claim or right of whatsoever kind,
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including any right or equity of redemption of Debtor, any such
demand, notice, right or equity being hereby expressly waived and
released (to the extent permitted by applicable statute). The Debtor
will pay to the Secured Party all expenses (including fees and
disbursements of counsel) of, or incidental to, the enforcement of any
of the provisions hereof or of any of the obligations of the Debtor,
of any actual or attempted sale, or any exchange, enforcement,
collection, compromise or settlement of any of the Equipment or
receipt of the proceeds thereof and for the care or preservation of
the Equipment; and all such expenses shall be obligations of the
Debtor within the terms of this Security Agreement. All proceeds from
the sale or other disposition of the Equipment or from the transfer of
the Secured Party's rights, title and interest in the Equipment shall
be held and applied by the Secured Party in the manner provided for in
Section 7.02 hereof.
(iv) The Debtor hereby irrevocably appoints the Secured Party its
true and lawful attorney-in-fact (which appointment is coupled with an
interest), with full power of substitution, to enforce its rights upon
occurrence and continuance of an Event of Default and to take any
action which the Secured Party may deem necessary or appropriate to
protect and preserve the security interest in the Collateral granted
herein.
Section 7.04. Power of Sale. Any sale of Collateral or transfer of
rights to the Collateral made pursuant to the terms of this Security Agreement,
whether under the power of sale hereby granted or any judicial proceedings,
shall operate to divest all right, title and interest of any nature whatsoever
of the Debtor thereto, and shall bar the Debtor and all persons claiming by,
through or under the Debtor. No purchaser shall be bound to inquire whether
notice has been given, or whether any default has occurred, or as to the
propriety of the sale, or as to the application of the proceeds thereof. In
case of any such sale, the Secured Party, if it is the purchaser, shall be
entitled, for the purpose of making settlement or payment for the property
purchased, to use and apply the obligations of the Borrower under the Note in
order that there may be credited against the amount remaining due and unpaid
thereon the sums payable out of the net proceeds of such sale to the Secured
Party after allowing for the costs and expense of sale and other charges. At
any such sale, the Secured Party may bid for and purchase such property and
upon compliance with the terms of sale may hold, retain and dispose of such
property.
Section 7.05. Power of Attorney - Sale. The Secured Party is hereby
irrevocably appointed attorney-in-fact of the Debtor (which appointment is
coupled with an interest) upon the happening and during the continuance of any
Event of Default to execute and deliver to any purchaser aforesaid, and is
hereby vested with full
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power and authority to make, in the name and in behalf of the Debtor, a good
conveyance of the title to the Collateral so sold. Any person dealing with the
Secured Party or its attorney-in-fact shall not be put on enquiry as to whether
the power of attorney contained herein has become exercisable. In the event of
any sale of any of the Collateral, under any power herein contained, the Debtor
will, if and when required by the Secured Party, execute such form of
conveyance of the Collateral as the Secured Party may direct or approve.
Section 7.06. Secured Party to Discharge Liens. The Debtor authorizes
and empowers the Secured Party or its appointees or any of them to appear in
the name of the Debtor in any court of any country or nation of the world where
a suit is pending against any of the Collateral because of or on account of any
alleged lien against any of the Collateral from which the Collateral have not
been released and to take such reasonable steps towards the defense of such
suit and the purchase or discharge of such lien. All reasonable expenditures
made or incurred by them or any of them for the purpose of such defense or
purchase or discharge shall be a debt due from the Debtor to the Secured Party
and shall be secured by the lien of this Security Agreement in like manner and
extent as if the amount and description thereof were written herein.
Section 7.07. Payment of Expenses. The Debtor covenants that upon the
happening and during the continuance of any Event of Default, then, upon
written demand of the Secured Party, the Debtor will pay to the Secured Party
the whole amount due and payable in respect of the obligations of the Debtor
under this Security Agreement; in case the Debtor shall fail to pay the same
forthwith upon such demand, the Secured Party shall be entitled to seek
judgment for the whole amount so due and unpaid, together with such further
amounts as shall be sufficient to cover the reasonable compensation to the
Secured Party or its agents, attorneys and counsel and any necessary advances,
expenses and liabilities made or incurred by it or them hereunder. All moneys
collected by the Secured Party under this Section 7.07 shall be applied in
accordance with the provisions of Section 7.02 above.
Section 7.08. Remedies Cumulative. Each and every power and remedy
herein given to the Secured Party shall be cumulative and shall be in addition
to every other power and remedy herein given or now or hereafter existing at
law, in equity or by statute, and each and every power and remedy whether
herein given or otherwise existing may be exercised from time to time and as
often and in such order as may be deemed expedient by the Secured Party, and
the exercise or the beginning of the exercise of any power or remedy shall not
be construed to be a waiver of the right to exercise at the same time or
thereafter any other power or remedy. The Secured Party shall not be required
or bound to enforce any other of its rights under any other agreement or
instrument securing the Note prior to enforcing its rights under this Security
Agreement. No
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delay or omission by the Secured Party in the exercise of any right or power or
in the pursuance of any remedy accruing upon any Event of Default shall impair
any such right, power or remedy or be construed to be a waiver of any such
Event of Default or to be an acquiescence therein; nor shall the acceptance by
the Secured Party of any security or of any payment of or on account of the
obligations of the Debtor under this Security Agreement or the Debtor under the
Note maturing after any Event of Default or of any payment on account of any
past default be construed to be a waiver of any right to exercise any remedies
due to any future Event of Default or of any past Event of Default not
completely cured thereby. No consent, waiver or approval of the Secured Party
shall be deemed to be effective unless in writing and duly signed by the
Secured Party; any waiver by the Secured Party of any of the terms of this
Security Agreement or any consent given under this Security Agreement shall
only be effective for the purpose and on the terms which it is given and shall
be without prejudice to the right to give or withhold consent in relation to
future matters.
Section 7.09. Cure of Defaults. If at any time after an Event of
Default and prior to the actual sale of any of the Collateral by the Secured
Party or prior to any enforcement or foreclosure proceedings the Debtor offers
completely to cure all Events of Default and to pay all expenses, advances and
damages to the Secured Party consequent on such Events of Default, with
interest at the interest rate of 12% per annum, then the Secured Party may
accept such offer and payment and restore the Debtor to its former position,
but such action, if taken, shall not affect any subsequent Event of Default or
impair any rights consequent thereon.
Section 7.10. Discontinuance of Proceedings. In case the Secured Party
shall have proceeded to enforce any right, power or remedy under this Security
Agreement by foreclosure, entry or otherwise, and such proceedings shall have
been discontinued or abandoned for any reason, then and in every such case the
Debtor and the Secured Party shall be restored to their former positions and
rights hereunder with respect to the property subject or intended to be subject
to this Security Agreement, and all rights, remedies and powers of the Secured
Party shall continue as if no such proceedings had been taken.
ARTICLE 8 - MISCELLANEOUS
Section 8.01. Contracts. It is expressly agreed that anything herein
contained to the contrary notwithstanding, the Secured Party shall have no
obligation or liability under any lease or other contract concerning the use or
operation of the Equipment by reason of or arising out of this Security
Agreement nor shall the Secured Party be required or obligated in any manner to
perform or fulfill any obligations of the Debtor under or pursuant to any lease
or other contract concerning the use or operation of the
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Equipment or to make any payment or to make any inquiry as to the nature or
sufficiency of any payment received by it or to present or file any claim, or
to take other action to collect or enforce the payment of any amounts which may
have been assigned to it or to which it may be entitled to hereunder at any
time or times.
Section 8.02. Power of Attorney. The Debtor does hereby appoint the
Secured Party, its successors and assigns (which appointment is coupled with an
interest), the Debtor's true and lawful attorney, irrevocably, with full power
(in the name of the Debtor or otherwise), if an Event of Default shall have
occurred and be continuing, to ask, require, demand, receive, compound and give
acquittance for any and all moneys, claims, property and rights hereby
assigned, and claims for moneys due and to become due under or arising out of
the Collateral hereby assigned, to endorse any checks or other instruments or
orders in connection therewith and to file any claims or to take any action or
institute any proceedings which the Secured Party may deem to be necessary or
advisable in the premises.
Section 8.03. Irrevocability. The powers and authority granted to the
Secured Party herein have been given for a valuable consideration and are
hereby declared to be irrevocable.
Section 8.04. Further Documents. The Debtor agrees that at any time and
from time to time, upon the written request of the Secured Party, it will
promptly and duly execute and deliver any and all such further instruments and
documents as the Secured Party may reasonably deem desirable in obtaining the
full benefits of this Security Agreement and of the rights and powers herein
granted.
Section 8.05. Notices. All notices or other communications which are
required to be made hereunder shall be in writing and, if to the Secured Party,
mailed or telecopied or delivered to it, addressed to it at 0000 Xxxxxxxx Xxxx,
Xxxxxx, Xxxxx 00000, and if to the Debtor, mailed or telecopied or delivered to
it at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxx 00000, Telecopier
No. (000) 000-0000 or to each party at such other address as shall be
designated by such party in a written notice to the other party. All such
notices and other communications shall, when mailed or telecopied, respectively
be effective when deposited in the mails or sent by telecopier (receipt
confirmed), respectively, addressed as aforesaid.
Section 8.06. Choice of Law. This Security Agreement shall be governed
by the internal laws of the State of Texas and may not be amended or changed
except by an instrument in writing signed by the parties hereto.
Section 8.07. Severability of Provisions. Any provision of this
Security Agreement that is prohibited or unenforceable in any
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jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction. To the extent permitted by applicable law, the
Debtor hereby waives any provision of law that renders any provision hereof
prohibited or unenforceable in any respect.
Section 8.08. Termination. Upon the payment in full to the Secured
Party of all amounts due under the Note or otherwise and the payment in full to
the Secured Party of any amounts due under this Security Agreement, this
Security Agreement shall terminate and the Secured Party shall sign and deliver
to the Debtor any termination statements or other documents necessary to
reflect such termination.
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed all as of the date noted above.
CHAMPION COMMUNICATION SERVICES, INC.
By: /s/ XXXXX XXXXXX
----------------------------
Name: Xxxxx Xxxxxx
--------------------------
Title: President
-------------------------
CHAMPION COMMUNICATIONS COMPANY
By: /s/ XXXXXX X. XXXXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxxxx
--------------------------
Title: President
-------------------------
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AMENDMENT NO. 1
TO
SECURITY AGREEMENT
Amendment No. 1 dated as of August 15, 1996, to the Security Agreement
(the "Security Agreement") dated as of November 15, 1995, between CHAMPION
COMMUNICATION SERVICES, INC., a Delaware corporation, its successors and
assigns (the "Debtor"), and CHAMPION COMMUNICATIONS COMPANY, a Texas
corporation, its successors and assigns (the "Secured Party").
WHEREAS, the Security Agreement was entered into by the Debtor and the
Secured Party as security for the payment of all amounts due under the Debtor's
Promissory Note dated as of November 15, 1995 (the "Note") in the original
principal amount of USD 2,799,581.26; and
WHEREAS, the Debtor and the Secured Party have executed and delivered
Endorsement No. 1 to the Note dated the date hereof, providing for, among other
things, a six month extension of the Maturity Date of the Note;
WHEREAS, the Secured Party requires as a condition to entering into
Endorsement No. 1 to the Note that the Debtor enter into this Amendment No. 1
to the Security Agreement;
NOW, THEREFORE, in consideration of the above recitals and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree to amend the Security Agreement as
follows:
1. The following additional paragraphs are hereby added
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to Section 1.01 of the Security Agreement:
(d) "Accounts Receivable" shall mean all of the Debtor's
accounts, chattel paper, documents, instruments and general
intangibles whether now existing or hereinafter created.
(e) "Inventory" shall mean all of the Debtor's inventory,
wherever located, including without limitation, any and all
goods held for sale or lease or being processed for sale or
lease in the Debtor's business, as now or hereafter conducted.
2. Paragraph (d) of Section 1.01 of the Security Agreement is hereby
renumbered "(f)" and the reference in the second sentence of such paragraph to
"(d)" is hereby changed to "(f)".
3. Section 6.01 of the Security Agreement is hereby amended by
adding the term "Accounts Receivable" to such Section immediately after the
term "Spectrum Sales Proceeds" wherever it appears.
4. Each reference in the Security Agreement to the term "Security
Agreement" shall mean the Security Agreement, as amended by this Amendment No.
1, as the same shall be amended, supplemented or extended in the future.
5. Each reference in the Security Agreement, as amended hereby, to
the Note shall mean the Note as amended by Endorsement No. 1.
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6. The covenants of the Debtor contained in the Security Agreement
are correct on and as of the date of this Amendment No. 1 as though made on and
as of such date.
7. THIS AMENDMENT NO. 1 TO SECURITY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS.
8. Except as specifically amended herein, all of the terms,
covenants and conditions of the Security Agreement shall remain in full force
and effect.
9. All capitalized terms used herein but not defined herein shall
have the meanings given to them in the Security Agreement.
IN WITNESS HEREOF, the parties hereto have caused this Amendment No. 1
to the Security Agreement to be executed by their duly authorized officers, all
as of the date noted above.
CHAMPION COMMUNICATION SERVICES, INC.
By: /s/ XXXXX XXXXXX
----------------------------------
Name: Xxxxx Xxxxxx
--------------------------------
Title: President
-------------------------------
CHAMPION COMMUNICATIONS COMPANY
By: /s/ XXXXXX X. XXXXXXXX
----------------------------------
Name: Xxxxxx Xxxxxxxx
--------------------------------
Title: President
-------------------------------
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