EXHIBIT 10.5
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of September 7, 1999 (this "Security
Agreement"), is made by VERIDIAN CORPORATION, a Delaware corporation (the
"Company"), in favor of FIRST UNION NATIONAL BANK, a national banking
association, as administrative agent (in such capacity, the " Administrative
Agent") for the benefit of itself and the lenders (the "Lenders") now or
hereafter parties to the Credit Agreement described below.
RECITALS
A. The Company has entered into a Revolving Credit Agreement of even
date herewith (as amended or modified from time to time, including any agreement
entered into in substitution therefor, the "Credit Agreement"), with the Lenders
and the Administrative Agent pursuant to which the Lenders may make Advances (as
therein defined) to the Company.
B. Under the terms of the Credit Agreement, the Company has agreed
to grant to the Administrative Agent, for the benefit of itself and the Lenders,
a first-priority security interest, subject only to security interests expressly
permitted by the Credit Agreement in and to the Collateral hereinafter
described.
AGREEMENT
To secure (a) the prompt and complete payment of all indebtedness and
other obligations of the Company or any Guarantor now or hereafter owing to the
Lenders or the Administrative Agent under or on account of the Credit Agreement,
any Loan Document, any Security Document or any letters of credit, notes or
other instruments issued to the Administrative Agent or Lenders pursuant
thereto, (b) the performance of the covenants under the Credit Agreement, the
Loan Documents and the Security Documents and any monies expended by the
Administrative Agent or any Lender in connection therewith, (c) the prompt and
complete payment of all obligations and performance of all covenants of the
Company under any Rate Hedging Agreement (as defined in the Credit Agreement)
with any Lender or such Lender's Affiliate in connection with the Credit
Agreement or the transactions contemplated thereby, and (d) the prompt and
complete payment of any and all other indebtedness, obligations and liabilities
of any kind of the Company or any Guarantor to the Administrative Agent and the
Lenders in connection with the Credit Agreement or the transactions contemplated
thereby, in all cases, of any kind or nature, howsoever created or evidenced and
whether now or hereafter existing, direct or indirect (including without
limitation any participation interest acquired by any Lender in any such
indebtedness, obligations or liabilities of the Company or any Guarantor to any
other person), absolute or contingent, joint and/or several, secured or
unsecured, arising by operation of law or otherwise, and whether incurred by the
Company or any Guarantor as principal, surety, endorser, guarantor,
accommodation party or otherwise, including
without limitation all principal and all interest (including any interest
accruing subsequent to any petition filed by or against the Company or any
Guarantor under the U.S. Bankruptcy Code), indemnity and reimbursement
obligations, charges, expenses, fees, attorneys' fees and disbursements and any
other amounts owing thereunder (all of the aforesaid indebtedness, obligations
and liabilities of the Company and the Guarantors being herein called the
"Secured Obligations", and all of the documents, agreements and instruments
among the Company, the Guarantors, the Administrative Agent, the Lenders, or any
of them, evidencing or securing the repayment of, or otherwise pertaining to,
the Secured Obligations including without limitation the Credit Agreement, the
Notes (as defined in the Credit Agreement) and the Security Documents (as
defined in the Credit Agreement), being herein collectively called the
"Operative Documents"), for value received and pursuant to the Credit Agreement
the Company hereby grants, assigns and transfers to the Administrative Agent for
the benefit of the Lenders a first-priority security interest, subject only to
Permitted Liens, in and to the following described property whether now owned or
existing or hereafter acquired or arising and wherever located (all of which is
herein collectively called the "Collateral"):
(a) All of the Company's present and future accounts, documents,
instruments, general intangibles, investment property and chattel paper,
including, but without limitation, all accounts receivable, contract rights, all
deposit accounts and all monies and claims for money due or to become due to the
Company, security held or granted to the Company, and all assets described in
clause (d) below, including without limitation all of the Company's right, title
and interest in and to all government contracts of the Company or of the
Guarantors or of any of them, now existing or hereafter arising from time to
time;
(b) All of the Company's furniture, fixtures, machinery and equipment
and all parts thereof and accessions thereto, whether now owned or hereafter
acquired, and wherever located, and whether used by the Company or any other
person, or leased by the Company to any person and whether the interest of
Company is as owner, lessee or otherwise;
(c) All of the Company's present and future inventory of every type,
wherever located, including but not limited to raw materials, work in process,
finished goods and all inventory that is available for leasing or leased to
others by the Company;
(d) All other present and future assets of the Company (whether
tangible or intangible), including but not limited to all trademarks,
tradenames, service marks, patents, industrial designs, masks, trade names,
trade secrets, copyrights, franchises, customer lists, service marks, computer
programs, software, tax refund claims, licenses and permits, and the good will
associated therewith and all federal, state, foreign and other applications and
registrations therefor, all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof now or hereafter in effect, all
income, license royalties, damages and payments now and hereafter due or payable
under and with respect thereto, including, without limitation, any damages,
proceeds or payments for past or future infringements thereof and all income,
royalties, damages and payments under all licenses thereof, the right to xxx for
past, present and future infringements thereof, all right, title and interest of
the Company as licensor under any of the foregoing whether now owned and
existing or hereafter
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arising, and all other rights and other interests corresponding thereto
throughout the world (all of the assets described in this clause (d)
collectively referred to as the "Intellectual Property");
(e) All books, records, files, correspondence, computer programs,
tapes, disks, cards, accounting information and other data of the Company
related in any way to the Collateral described in clauses (a), (b), (c) and (d)
above, including but not limited to any of the foregoing necessary to
administer, sell or dispose of any of the Collateral;
(f) All substitutions and replacements for, and all additions and
accessions to, any and all of the foregoing; and
(g) All products and all proceeds of any and all of the foregoing,
and, to the extent not otherwise included, all (1) payments under insurance
(whether or not the Administrative Agent or any Lender is the loss payee
thereof), and any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing and (2) cash.
1. Representations, Warranties, Covenants and Agreements. The
Company further represents, warrants, covenants, and agrees with the
Administrative Agent for the benefit of the Lenders as follows:
(a) Ownership of Collateral; Security Interest Priority. At
the time any Collateral becomes subject to a security interest of the
Administrative Agent hereunder, unless the Administrative Agent and the Lenders
shall otherwise consent, the Company shall be deemed to have represented and
warranted that (i) the Company is the lawful owner of such Collateral and has
the right and authority to subject the same to the security interest of the
Administrative Agent; (ii) other than Permitted Liens (as defined in the Credit
Agreement) and lessors' interests with respect to any security interest in any
property leased by the Company as lessee, none of the Collateral is subject to
any Lien other than that in favor of the Administrative Agent and there is no
effective financing statement or other filing covering any of the Collateral on
file in any public office, other than in favor of the Administrative Agent. This
Security Agreement creates in favor of the Administrative Agent a valid
first-priority security interest, subject only to Permitted Liens, in the
Collateral enforceable against the Company and all third parties and securing
the payment of the Secured Obligations. All financing statements and other
documents necessary to perfect such security interest in the Collateral have
been delivered by the Company to the Administrative Agent for filing.
(b) Location of Offices, Records and Facilities. The
Company's chief executive office, chief place of business and the office where
the Company keeps its records concerning its accounts, contract rights, chattel
papers, instruments, general intangibles and other obligations arising out of or
in connection with the sale or lease of goods or the rendering of services or
otherwise ("Receivables") is located at 0000 X. Xxxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxxx, Xxxxxxxx 00000-0000. The Company will provide the Administrative
Agent with at least 40 days' prior written notice of any proposed change in the
location of its chief executive office. The Company's only other offices and
facilities are at the locations set forth in Schedule 1(b) hereto. The Company
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will provide the Administrative Agent with at least 40 days' prior written
notice of any change in the locations of its other offices and the facilities at
which any assets of the Company are located. The tax identification number of
the Company is 00-0000000. The name of the Company is "Veridian Corporation",
and the Company operates under no other names. The Company shall not change its
name without at least 40 days' prior written notice to the Administrative Agent,
except for any name change made in 1998 for which the Company shall give to the
Administrative Agent at least 1 day's prior written notice.
(c) Location of Inventory, Fixtures, Machinery and Equipment.
(i) All Collateral consisting of inventory is, and will be, located at the
locations listed on Schedule 1(c)(i) hereto, and at no other locations without
the prior written consent of the Administrative Agent; and (ii) all Collateral
consisting of fixtures, machinery or equipment, is, and will be, located at the
locations listed on Schedule 1(c)(ii) hereto, and at no other locations without
the prior written consent of the Administrative Agent. If the Collateral
described in clauses (i) or (ii) is kept at leased locations or warehoused, the
Company has obtained appropriate landlord's lien waivers or appropriate
warehousemen's notices have been sent, each satisfactory to the Administrative
Agent, unless waived by the Administrative Agent.
(d) Liens, Etc. The Company will keep the Collateral free at
all times from any and all liens, security interests or encumbrances other than
those described in Paragraph 1(a)(ii) and those consented to in writing by the
Required Lenders. The Company will not, without the prior written consent of the
Administrative Agent, sell, lease, license, transfer, assign or otherwise
dispose, or permit or suffer to be sold, leased, licensed, transferred, assigned
or otherwise disposed, any of the Collateral, except for, prior to an event of
default only (notwithstanding any other agreement), the following: inventory
sold in the ordinary course of business and other assets permitted to be sold,
leased, licensed, transferred, assigned or otherwise disposed under Section
5.2(i) of the Credit Agreement. The Administrative Agent or its attorneys may at
any and all reasonable times inspect the Collateral and for such purpose may
enter upon any and all premises where the Collateral is or might be kept or
located.
(e) Insurance. The Company shall keep the tangible Collateral
insured at all times against loss by theft, fire and other casualties. Said
insurance shall be issued by a company rated A- or better by Best and shall be
in amounts sufficient to protect the Administrative Agent and the Lenders
against any and all loss or damage to the Collateral. The policy or policies
which evidence said insurance shall be delivered to the Administrative Agent
upon request, shall contain a lender loss payable clause in favor of the
Administrative Agent, shall name the Administrative Agent for the benefit of the
Lenders as an additional insured, as its interest may appear, shall not permit
amendment, cancellation or termination without giving the Administrative Agent
at least 30 days' prior written notice thereof, and shall otherwise be in form
and substance satisfactory to the Administrative Agent. Reimbursement under any
liability insurance maintained by the Company pursuant to this Paragraph 1(e)
may be paid directly to the person who shall have incurred liability covered by
such insurance. In case of any loss involving loss to tangible Collateral, the
Company shall make or cause to be made the necessary repairs to or replacements
of such tangible Collateral and any proceeds of insurance maintained by the
Company pursuant to this paragraph 1(e) shall be
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paid to the Company as reimbursement for the costs of such repairs or
replacements; provided that if there is any event of default or any event or
condition which with notice or lapse of time or both would become an event of
default (whether before or after any event which caused any reimbursement under
any hazard insurance), or if such reimbursement is greater than $500,000, such
amounts shall be paid to the Administrative Agent for application to the Secured
Obligations whether or not then due or payable.
(f) Taxes, Etc. The Company will pay promptly, and within the
time that they can be paid without interest or penalty, any taxes, assessments
and similar imposts and charges, not being contested in good faith, which are
now or hereafter may become a Lien upon any of the Collateral. If the Company
fails to pay any such taxes, assessments or other imposts or charges in
accordance with this Paragraph 1(f), the Administrative Agent shall have the
option to do so and the Company agrees to repay forthwith all amounts so
expended by the Administrative Agent with interest at the Overdue Rate.
(g) Further Assurances. The Company will do all acts and
things and will execute all financing statements and writings reasonably
requested by the Administrative Agent to establish, maintain and continue a
perfected and valid security interest of the Administrative Agent in the
Collateral, and will promptly on demand pay all reasonable costs and expenses of
filing and recording all instruments, including the costs of any searches deemed
necessary by the Administrative Agent, to establish and determine the validity
and the priority of the Administrative Agent's security interests. A carbon,
photographic or other reproduction of this Security Agreement or any financing
statement covering the Collateral shall be sufficient as a financing statement.
Upon the request of the Administrative Agent, the Company will provide
information (including any copies of any documents) regarding the government
contracts of the Company, now existing or hereafter existing from time to time,
and will execute such documents reasonably requested by the Administrative Agent
to establish, maintain and continue a perfected and valid security interest of
the Administrative Agent in such government contracts and to comply with the
Assignment of Claims Act of 1940, as amended.
(h) List of Patents, Copyrights, Mask Works and Trademarks.
Attached hereto as Schedule 1(h)(i) is a list of all unexpired and maintained
patents and patent applications owned by the Company. Attached hereto as
Schedule 1(h)(ii) is a list of all registered copyrights and all mask works and
applications therefor owned by the Company. Attached hereto as Schedule
1(h)(iii) is a list of all trademarks and service marks owned by the Company. If
the Company at any time owns any additional patents, copyrights, mask works,
trademarks or any applications therefor not listed on such schedules, the
Company shall give the Administrative Agent prompt written notice thereof and
hereby authorizes the Administrative Agent to modify this Agreement by amending
Schedules 1(h)(i), 1(h)(ii) and 1(h)(iii) to include all future patents,
copyrights, mask works, trademarks and applications therefor and agrees to
execute all further instruments and agreements, if any, if requested by the
Administrative Agent to evidence the Administrative Agent's interest therein.
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(i) Maintenance of Tangible Collateral. The Company will
cause the tangible Collateral material to the conduct of its business to be
maintained and preserved in the same condition, repair and working order as when
new, ordinary wear and tear excepted, and in accordance with any manufacturer's
manual, and shall forthwith, or, in the case of any loss or damage to any of the
tangible Collateral as quickly as practicable after the occurrence thereof, make
or cause to be made all repairs, replacements, and other improvements which are
necessary or desirable to such end. The Company shall promptly furnish to the
Administrative Agent a statement respecting any loss or damage to any of the
tangible Collateral.
(j) Special Rights Regarding Receivables. The Administrative
Agent or any of its agents may, at any time and from time to time in its sole
discretion upon the existence of any event of default under this Security
Agreement, verify, directly with each person (collectively, the "Obligors")
which owes any Receivables to the Company, the Receivables in any manner. The
Administrative Agent or any of its agents may, at any time from time to time
after and during the continuance of an event of default under this Security
Agreement, notify the Obligors of the security interest of the Administrative
Agent in the Collateral and/or direct such account debtors that all payments in
connection with such obligations and the Collateral be made directly to the
Administrative Agent in the Administrative Agent's name. If the Administrative
Agent or any of its agents shall collect such obligations directly from the
Obligors, the Administrative Agent or any of its agents shall have the right to
resolve any disputes relating to returned goods directly with the Obligors in
such manner and on such terms as the Administrative Agent or any of its agents
shall deem appropriate. The Company directs and authorizes any and all of its
present and future account debtors to comply with requests for information from
the Administrative Agent, the Administrative Agent's designees and agents and/or
auditors, relating to any and all business transactions between the Company and
the Obligors. The Company further directs and authorizes all of its Obligors
upon receiving a notice or request sent by the Administrative Agent or the
Administrative Agent's agents or designees to pay directly to the Administrative
Agent any and all sums of money or proceeds now or hereafter owing by the
Obligors to the Company, and any such payment shall act as a discharge of any
debt of such Obligor to the Company in the same manner as if such payment had
been made directly to the Company. After and during the continuance of an event
of default, (i) all amounts and proceeds (including instruments) received by the
Company in respect of the Receivables shall be received in trust for the benefit
of the Administrative Agent hereunder, shall be segregated from other funds of
the Company and shall be forthwith paid over to the Administrative Agent in the
same form as so received (with any necessary endorsement) to be held as cash
collateral and either (A) released to the Company so long as no event of default
shall have occurred and be continuing or (B) if any event of default shall have
occurred and be continuing, applied by the Administrative Agent to the Secured
Obligations, whether or not then due or payable, and (ii) the Company shall not
adjust, settle or compromise the amount or payment of any Receivable, release
wholly or partly any Obligor thereof, or allow any credit or discount thereon.
The Company agrees to take any and all action as the Administrative Agent may
reasonably request to assist the Administrative Agent in exercising the rights
described in this Paragraph 1(j).
SECURITY AGREEMENT
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(k) Maintenance of Intellectual Property and Other Intangible
Collateral. The Company shall preserve and maintain all rights of the Company
and the Administrative Agent in all material Intellectual Property and all other
material intangible Collateral, including without limitation the payment of all
maintenance fees, filing fees and the taking of all appropriate action at the
Company's expense to halt the infringement of any of the Intellectual Property
or other Collateral, provided that, with respect to halting the infringement of
any Intellectual Property or other Collateral, the Company does not need to take
all such appropriate action if the Company has, or after an event of default the
Required Lenders have, reasonably determined that it is not in its best interest
to demand or enforce cessation of such infringement or other conduct because it
is either not material or because the adverse consequences to the Company would
outweigh the benefits gained by such demand or enforcement.
2. Events of Default. The occurrence of any Event of Default under
the Credit Agreement shall be deemed an event of default under this Security
Agreement.
3. Remedies. Upon the occurrence of any event of default specified
in Paragraph 2 hereof, the Administrative Agent shall have and may exercise any
one or more of the rights and remedies provided to it under this Security
Agreement or any of the other Operative Documents or provided by law, including
but not limited to all of the rights and remedies of a secured party under the
Uniform Commercial Code of the State of North Carolina, and the Company hereby
agrees to assemble the Collateral and make it available to the Administrative
Agent at a place to be designated by the Administrative Agent which is
reasonably convenient to both parties, authorizes the Administrative Agent to
take possession of the Collateral with or without demand and with or without
process of law and to sell and dispose of the same at public or private sale and
to apply the proceeds of such sale to the costs and expenses thereof (including
reasonable attorneys' fees and disbursements, incurred by the Administrative
Agent or any Lender) and then to the payment and satisfaction of the Secured
Obligations in the manner specified in Section 6.3 of the Credit Agreement. Any
requirement of reasonable notice shall be met if the Administrative Agent sends
such notice to the Company, by registered or certified mail, at least 5 days
prior to the date of sale, disposition or other event giving rise to a required
notice. The Administrative Agent or any Lender may be the purchaser at any such
sale. The Company expressly authorizes such sale or sales of the Collateral in
advance of and to the exclusion of any sale or sales of or other realization
upon any other collateral securing the Secured Obligations. The Administrative
Agent shall have no obligation to preserve rights against prior parties. The
Company hereby waives as to the Administrative Agent and each Lender any right
of subrogation or marshalling of such Collateral and any other collateral for
the Secured Obligations. To this end, the Company hereby expressly agrees that
any such collateral or other security of the Company or any other party which
the Administrative Agent may hold, or which may come to any of the Lenders or
any of their possession, may be dealt with in all respects and particulars as
though this Security Agreement were not in existence. The parties hereto further
agree that public sale of the Collateral by auction conducted in any county in
which any Collateral is located or in which the Administrative Agent or the
Company does business after advertisement of the time and place thereof shall,
among other manners of public and private sale, be deemed to be a commercially
reasonable disposition of the
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Collateral. The Company shall be liable for any deficiency remaining after
disposition of the Collateral.
4. Special Remedies Concerning Certain Collateral.
(a) Upon the occurrence of any event of default, the Company
shall, if requested to do so in writing by the Administrative Agent, and to the
extent so requested (i) promptly collect and enforce payment of all amounts due
the Company on account of, in payment of, or in connection with, any of the
Collateral, (ii) hold all payments in the form received by the Company as
trustee for the Administrative Agent, without commingling with any funds
belonging to the Company, and (iii) forthwith deliver all such payments to the
Administrative Agent with endorsement to the Administrative Agent's order of any
checks or similar instruments.
(b) Upon the occurrence of any event of default, the Company
shall, if requested to do so in writing by the Administrative Agent, and to the
extent so requested, notify all Obligors and other persons with obligations to
the Company on account of or in connection with any of the Collateral of the
security interest of the Administrative Agent in the Collateral and direct such
account debtors and other persons that all payments in connection with such
obligations and the Collateral be made directly to the Administrative Agent. The
Administrative Agent itself may, upon the occurrence of an event of default, so
notify and direct any such account debtor or other person that such payments are
to be made directly to the Administrative Agent.
(c) Upon the occurrence of any event of default, for purposes
of assisting the Administrative Agent in exercising its rights and remedies
provided to it under this Security Agreement, the Company (i) hereby irrevocably
constitutes and appoints the Administrative Agent its true and lawful attorney,
for and in the Company's name, place and stead, to collect, demand, receive, xxx
for, compromise, and give good and sufficient releases for, any monies due or to
become due on account of, in payment of, or in connection with the Collateral,
(ii) hereby irrevocably authorizes the Administrative Agent to endorse the name
of the Company, upon any checks, drafts, or similar items which are received in
payment of, or in connection with, any of the Collateral, and to do all things
necessary in order to reduce the same to money, (iii) with respect to any
Collateral, hereby irrevocably assents to all extensions or postponements of the
time of payment thereof or any other indulgence in connection therewith, to each
substitution, exchange or release of Collateral, to the addition or release of
any party primarily or secondarily liable, to the acceptance of partial payments
thereon and the settlement, compromise or adjustment (including adjustment of
insurance payments) thereof, all in such manner and at such time or times as the
Administrative Agent shall deem advisable, and (iv) hereby irrevocably
authorizes the Administrative Agent to notify the post office authorities to
change the address for delivery of the Company's mail to an address designated
by the Administrative Agent, and the Administrative Agent may receive, open and
dispose of all mail addressed to the Company. Notwithstanding any other
provisions of this Security Agreement, it is expressly understood and agreed
that the Administrative Agent shall have no duty, and shall not be obligated in
any manner, to make any demand or to make any inquiry as to the nature or
sufficiency of any payments received by it or to
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present or file any claim or take any other action to collect or enforce the
payment of any amounts due or to become due on account of or in connection with
any of the Collateral.
5. Remedies Cumulative. No right or remedy conferred upon or
reserved to the Administrative Agent under any Operative Document is intended to
be exclusive of any other right or remedy, and every right and remedy shall be
cumulative in addition to every other right or remedy given hereunder or now or
hereafter existing under any applicable law. Every right and remedy of the
Administrative Agent under any Operative Document or under applicable law may be
exercised from time to time and as often as may be deemed expedient by the
Administrative Agent. To the extent that it lawfully may, the Company agrees
that it will not at any time insist upon, plead, or in any manner whatever claim
or take any benefit or advantage of any applicable present or future stay,
extension or moratorium law, which may affect observance or performance of any
provisions of any Operative Document; nor will it claim, take or insist upon any
benefit or advantage of any present or future law providing for the valuation or
appraisal of any security for its obligations under any Operative Document prior
to any sale or sales thereof which may be made under or by virtue of any
instrument governing the same; nor will the Company, after any such sale or
sales, claim or exercise any right, under any applicable law to redeem any
portion of such security so sold.
6. Conduct No Waiver. No waiver of default shall be effective unless
in writing executed by the Administrative Agent and waiver of any default or
forbearance on the part of the Administrative Agent in enforcing any of its
rights under this Security Agreement shall not operate as a waiver of any other
default or of the same default on a future occasion or of such right.
7. Governing Law; Consent to Jurisdiction; Definitions. THIS
SECURITY AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NORTH CAROLINA, WITHOUT REFERENCE TO THE CONFLICTS
OR CHOICE OF LAW PRINCIPLES THEREOF. The Company hereby irrevocably consents to
the personal jurisdiction of the state and federal courts located in Mecklenburg
County, North Carolina, in any action, claim or other proceeding arising out of
any dispute in connection with this Security Agreement, any rights or
obligations hereunder or thereunder, or the performance of such rights and
obligations. The Company hereby irrevocably consents to the service of a summons
and complaint and other process in any action, claim or proceeding brought by
the Administrative Agent or any Lender in connection with this Security
Agreement, any rights or obligations hereunder, or the performance of any rights
and obligations, on behalf of itself or its property, in the manner specified in
Section 8.2 of the Credit Agreement. Nothing in this Paragraph 7 shall affect
the right of the Administrative Agent or any Lender to serve legal process in
any other manner permitted by applicable law or affect the right of the
Administrative Agent or any Lender to bring any action or proceeding against the
Company or its properties in the courts of any other jurisdictions. Terms used
but not defined herein shall have the respective meanings ascribed thereto in
the Credit Agreement. Unless otherwise defined herein or in the Credit
Agreement, terms used in Article 9 of the Uniform Commercial Code in the State
of North Carolina are used herein as therein defined on the date hereof. The
headings of the various subdivisions hereof are for convenience of reference
only and shall in no way modify and of the terms or provisions hereof.
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8. Notices. All notices, demands, requests, consents and other
communications hereunder shall be delivered in the manner described in the
Credit Agreement.
9. Rights Not Construed as Duties. The Administrative Agent neither
assumes nor shall it have any duty of performance or other responsibility under
any contracts in which the Administrative Agent has or obtains a security
interest hereunder. If the Company fails to perform any agreement contained
herein, the Administrative Agent may but is in no way obligated to itself
perform, or cause performance of, such agreement, and the reasonable expenses of
the Administrative Agent incurred in connection therewith shall be payable by
the Company under Paragraph 12. The powers conferred on the Administrative Agent
hereunder are solely to protect its and the Lenders' interests in the Collateral
and shall not impose any duty upon it to exercise any such powers. Except for
the safe custody of any Collateral in its possession and accounting for monies
actually received by it hereunder, the Administrative 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.
10. Amendments. None of the terms and provisions of this Security
Agreement may be modified or amended in any way except by an instrument in
writing executed by each of the parties hereto.
11. Severability. If any one or more provisions of this Security
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected, impaired or prejudiced thereby.
12. Expenses. (a) The Company agrees to indemnify the Administrative
Agent and the Lenders and their respective officers, directors, employees,
affiliates and agents from and against any and all claims, losses and
liabilities growing out of or resulting from this Security Agreement (including,
without limitation, enforcement of this Security Agreement), except claims,
losses or liabilities resulting from such indemnified party's gross negligence
or willful misconduct.
(b) The Company will, upon demand, pay to the Administrative
Agent an amount of any and all reasonable expenses, including the reasonable
fees and disbursements of its counsel and of any experts and agents, which the
Administrative Agent or any Lender may incur in connection with (i) the
administration of this Security Agreement, (ii) the custody, preservation, use
or operation of, or the sale of, collection from or other realization upon, any
of the Collateral, (iii) the exercise or enforcement of any of the rights of the
Administrative Agent hereunder or under the Operative Documents, or (iv) the
failure of the Company to perform or observe any of the provisions hereof.
13. Successors and Assigns; Termination. This Security Agreement
shall create a continuing security interest in the Collateral and shall be
binding upon the Company, its successors and assigns, and inure, together with
the rights and remedies of the Administrative Agent
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hereunder, to the benefit of the Administrative Agent and the Lenders and their
respective successors, transferees and assigns. Upon the payment in full in
immediately available funds of all of the Secured Obligations and the
termination of all commitments to lend under the Operative Documents, the
security interest granted hereunder shall terminate and all rights to the
Collateral shall revert to the Company.
14. Binding Arbitration; Waiver of Jury Trial.
(a) Binding Arbitration. Upon demand of any party, whether
made before or after institution of any judicial proceeding, any dispute, claim
or controversy arising out of, connected with or relating to this Security
Agreement or any other of the Operative Documents ("Disputes"), between or among
parties to this Security Agreement, or any other Operative Document shall be
resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, claims brought as class actions, claims arising from Operative
Documents executed in the future, disputes as to whether a matter is subject to
arbitration, or claims concerning any aspect of the past, present or future
relationships arising out of or connected with the Operative Documents.
Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and the Federal Arbitration Act. All arbitration
hearings shall be conducted in Charlotte, North Carolina. The expedited
procedures set forth in Rule 51, et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000. All applicable statutes of
limitations shall apply to any Dispute. A judgment upon the award may be entered
in any court having jurisdiction. Notwithstanding anything foregoing to the
contrary, any arbitration proceeding demanded hereunder shall begin within
ninety (90) days after such demand thereof and shall be concluded within
one-hundred twenty (120) days after such demand. These time limitations may not
be extended unless a party hereto shows cause for extension and then such
extension shall not exceed a total of sixty (60) days. The panel from which all
arbitrators are selected shall be comprised of licensed attorneys selected from
the Commercial Finance Dispute Arbitration Panel of the AAA. The single
arbitrator selected for expedited procedure shall be a retired judge from the
highest court of general jurisdiction, state or federal, of the state where the
hearing will be conducted. The parties hereto do not waive any applicable
Federal or state substantive law except as provided herein.
(b) JURY TRIAL. THE ADMINISTRATIVE AGENT, EACH LENDER AND THE COMPANY
HEREBY ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE IRREVOCABLY
WAIVED THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM
OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS SECURITY
AGREEMENT OR THE OTHER OPERATIVE DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER
OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
SECURITY AGREEMENT
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(c) Preservation of Certain Remedies. Notwithstanding the preceding
binding arbitration provisions, the parties hereto and the other Operative
Documents preserve, without diminution, certain remedies that such Persons may
employ or exercise freely, either alone, in conjunction with or during a
Dispute. Each such Person shall have and hereby reserves the right to proceed in
any court of proper jurisdiction or by self help to exercise or prosecute the
following remedies: (i) all rights to foreclose against any real or personal
property or other security by exercising a power of sale granted in the
Operative Documents or under applicable law or by judicial foreclosure and sale,
(ii) all rights of self help including peaceful occupation of property and
collection of rents, set off, and peaceful possession of property, (iii)
obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and in filing an
involuntary bankruptcy proceeding, and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.
15. Security Interest Absolute. The obligations of the Company under
this Security Agreement are independent of the Secured Obligations, and a
separate action or actions may be brought and prosecuted against the Company to
enforce this Security Agreement. All rights of the Administrative Agent and the
Lenders and the pledge, assignment and security interest hereunder, and all
obligations of the Company hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of the Credit
Agreement, the Notes or any other agreement or instrument relating thereto; (b)
any change in the time, manner or place of payment of, or in any other term of,
all or any of the Secured Obligations, or any other amendment or waiver of or
any consent to any departure from the Credit Agreement or the Notes, including,
without limitation, any increase in the Secured Obligations resulting from the
extension of additional credit to the Company or any of its Subsidiaries or
otherwise; (c) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations; (d) any
manner of application of collateral, or proceeds thereof, to all or any of the
Secured Obligations, or any manner of sale or other disposition of any
collateral for all or any of the Secured Obligations or any other assets of the
Company or any of its Subsidiaries; (e) any change, restructuring or termination
of the corporate structure or existence of the Company or any of its
Subsidiaries; or (f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Company or a third party grantor of
a security interest.
IN WITNESS WHEREOF, the Company has caused this Security Agreement to be
duly executed as of the day and year first set forth above.
[Corporate Seal] VERIDIAN CORPORATION
By:/s/ XXXXXXXXX X. XXXXXXX
---------------------------------
XXXXXXXXX X. XXXXXXX
SECURITY AGREEMENT
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EXHIBIT 10.6
Its: Senior Vice President, Finance, Chief
Financial Officer, Treasurer and Secretary
Accepted and Agreed:
FIRST UNION NATIONAL
BANK, as Administrative Agent and
on behalf of the Lenders
By: /s/ XXXXXXXXXXX XXXXXXXX
-------------------------------------
Xxxxxxxxxxx Xxxxxxxx
Its: Director
SECURITY AGREEMENT
-00-
XXXXXXXXXXX XX XXXXXXXXXXXXXX
XXXXXXXX XX XXXXXXXX) ss.
The foregoing Security Agreement was acknowledged before me on this __
day of September 1999 by Xxxxxxxxx X. Xxxxxxx, the Senior Vice President,
Finance, Chief Financial Officer, Treasurer and Secretary of Veridian
Corporation a Delaware corporation, on behalf of said corporation.
(Seal) Notary Public
------------------------------
DISTRICT OF COLUMBIA) ss.
The foregoing Security Agreement was acknowledged before me on this __
day of September, 1999, by Xxxxxxxxxxx Xxxxxxxx, the Director of First Union
National Bank, as Administrative Agent, a national banking association, on
behalf of said association.
(Seal) Notary Public
------------------------------
SECURITY AGREEMENT
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