EXHIBIT 4.5
SECURITY AND PLEDGE AGREEMENT
dated as of May 11, 2001
between
EMPIRE ONE TELECOMMUNICATIONS, INC. as
Debtor and Debtor in Possession
and
EOT LENDING CORP.
as
Lender
Table of Contents
ARTICLE 1DEFINITIONS 1
Section 1.1 Definitions 1
ARTICLE 2COLLATERAL 4
Section 2.1 Security Interest in the Collateral 4
ARTICLE 3REPRESENTATIONS AND WARRANTIES 6
Section 3.1 Representations and Warranties 6
ARTICLE 4FURTHER ASSURANCES; REMEDIES 7
Section 4.1 Further Assurances; Remedies 7
Section 4.2 Delivery and Other Perfection 7
Section 4.3 Preservation of Rights 8
Section 4.4 Special Provisions Relating to Certain Collateral 8
Section 4.5 Events of Default, Etc 9
Section 4.6 Deficiency 10
Section 4.7 Removals, Etc 10
Section 4.8 Application of Proceeds 10
Section 4.9 Attorney-in-Fact 11
Section 4.10 Perfection 11
Section 4.11 Termination 11
Section 4.12 Expenses and Indemnities 11
Section 4.13 Further Assurances 12
Section 4.14 Releases 12
Section 4.15 Other Financing Statements and Liens 12
ARTICLE 5MISCELLANEOUS 12
Section 5.1 No Waiver 12
Section 5.2 Notices 12
Section 5.3 Amendments, Etc 13
Section 5.4 Successors and Assigns 13
Section 5.5 Captions 13
Section 5.6 Counterparts 13
Section 5.7 Governing Law 13
Section 5.8 Severability 13
ANNEXES
Annex 1 List of Contracts
Annex 2 Locations
Annex 3 List of Copyrights
Annex 4 List of Patents
Annex 5 List of Trade Names
SECURITY AND PLEDGE AGREEMENT
SECURITY AND PLEDGE AGREEMENT, dated as of
_____________, 2001 by and among Empire One Telecommunications,
Inc., as debtor and debtor in possession (the "Borrower"), and
EOT Lending Corp., (the "Lender").
W I T N E S S E T H :
WHEREAS, the Borrower and the Lender have entered
into a Credit Agreement (as amended and in effect from time to
time, the "Credit Agreement"), dated as of __________,2001
pursuant to which the Lender has agreed to provide the Borrower
with a $600,000 working capital loan facility, and upon the
terms and subject to the conditions set forth therein, the
Lender has agreed to provide such facility;
WHEREAS, it is a condition precedent to the
effectiveness of the Credit Agreement that the Borrower shall
have executed and delivered to the Lender a Security and Pledge
Agreement in substantially the form hereof;
NOW THEREFORE, in consideration of the premises and
the agreements herein and in order to induce the Lender to make
the Loan, the Borrower hereby agrees as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. All terms used in this
Agreement that are not otherwise defined shall have the
meanings assigned to such terms in the Credit Agreement. As
used in this Agreement, the following terms shall have the
respective meanings indicated below, such meanings to be
applicable equally to both the singular and plural forms of the
terms defined:
"Accounts" shall have the meaning assigned to that
term in Section 2.1(d) hereof.
"Agreement" shall mean this Security and Pledge
Agreement, as the same may be modified, supplemented or amended
from time to time in accordance with its terms.
"Avoidance Actions" means all claims, actions, causes
of action arising under Sections 542, 544, 545, 547, 548, 549,
550,551, 553(b), or 724(a) of the Bankruptcy Code.
"Collateral" shall have the meaning assigned to that
term under Section 2.1 hereof.
"Collateral Account" shall have the meaning assigned
to that term in Section 4.1 hereof.
"Contracts" shall mean all contracts and leases (real
or personal) between a Borrower and one or more additional
parties.
"Contract Rights" shall mean all rights of a Borrower
under each Contract (including, without limitation, (i) all
right to receive moneys due or to become due under or pursuant
to all Contracts, (ii) all rights to terminate, and to perform
under, all Contracts, compel performance and otherwise exercise
all remedies under all Contracts, including, but not limited
to, rights to indemnification, and (iii) all rights to any
payments, distributions or proceeds assigned from time to time
in connection with, or with respect to, the assignor's interest
in any Person or any partnership or joint venture agreement to
which the Borrower is or may hereafter be a party).
"Copyrights" shall mean all copyrights, copyright
registrations and applications for copyright registrations,
including, without limitation, all renewals and extensions
thereof, the right to recover for all past, present and future
infringements thereof, and all other rights of any kind
whatsoever accruing thereunder or pertaining thereto.
"Documents" shall have the meaning assigned to that
term in Section 2.1(j) hereof.
"Equipment" shall have the meaning assigned to that
term under Section 2.1(h) hereof.
"Governmental Authority" shall mean (i) any
government or political subdivision thereof, whether foreign or
domestic, national, state, county, municipal or regional or any
other government authority, (ii) any agency or other
instrumentality of any such government, political subdivision
or other governmental entity (including any central bank or
comparable agency), (iii) any court, arbitral tribunal or
arbitrator and (iv) any non-governmental regulating body, to
the extent that the rules, regulations or orders of such body
have the force of law.
"Intellectual Property" shall mean, collectively, all
Copyrights, all Patents and all Trademarks, together with (a)
all inventions, processes, production methods, proprietary
information, know-how and trade secrets; (b) all licenses or
user or other agreements granted to the Borrower with respect
to any of the foregoing, in each case whether now or hereafter
owned or used; (c) all information, customer lists,
identification of suppliers, data, plans, blueprints,
specifications, designs, drawings, recorded knowledge, surveys,
engineering reports, test reports, manuals, materials
standards, processing standards, performance standards,
catalogs, computer and automatic machinery software and
programs; (d) all accounting information and all media in which
or on which any information or knowledge or data or records may
be recorded or stored and all computer programs used for the
compilation or printout of such information, knowledge, records
or data; (e) all licenses, consents, permits, variances,
certifications and approvals of governmental agencies now or
hereafter held by the Borrower; and (f) all causes of action,
claims and warranties now or hereafter owned or acquired by a
Borrower in respect of any of the items listed above.
"Instruments" shall have the meaning assigned to that
term in Section 2.1(e) hereof.
"Inventory" shall have the meaning assigned to such
term in Section 2.1(f) hereof.
"Motor Vehicles" shall mean motor vehicles, tractors,
trailers and other like property, whether or not the title
thereto is governed by a certificate of title or ownership,
having a fair market value in excess of $40,000.
"Patents" shall mean all patents and patent
applications, including, without limitation, the inventions and
improvements described and claimed therein together with the
reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, all income, royalties, damages
and payments now or hereafter due and/or payable under and with
respect thereto, including, without limitation, damages and
payments for past or future infringements thereof, the right to
xxx for past, present and future infringements thereof, and all
rights corresponding thereto throughout the world.
"Trademarks" shall mean all trade names, trademarks
and service marks, logos, trademark and service xxxx
registrations, and applications for trademark and service xxxx
registrations, including, without limitation, all renewals of
trademark and service xxxx registrations, all rights
corresponding thereto throughout the world, the right to
recover for all past, present and future infringements thereof,
all other rights of any kind whatsoever accruing thereunder or
pertaining thereto, together, in each case, with the product
lines and goodwill of the business connected with the use of,
and symbolized by, each such trade name, trademark and service
xxxx.
ARTICLE 2
COLLATERAL
Section 2.1 Security Interest in the
Collateral. As collateral security for the prompt payment in
full when due (whether at stated maturity, by acceleration or
otherwise) of the Obligations, the Borrower hereby pledges,
grants and assigns to the Lender a Lien and security interest
in all right, title and interest of the Borrower in the
following property, whether now owned by the Borrower or
hereafter acquired, and whether now existing or hereafter
coming into existence, other than Avoidance Actions (all being
collectively referred to herein as "Collateral"):
(1) all accounts and general intangibles (each
as defined in the Uniform Commercial Code) of the Borrower
constituting any right to the payment of money, including
(but not limited to) all moneys due and to become due to
it in respect of any loans or advances or for Inventory or
Equipment or other goods sold or leased or for services
rendered, all moneys due and to become due to it under any
guarantee (including a letter of credit) of the purchase
price of Inventory or Equipment sold by the Borrower and
all tax refunds (such accounts, general intangibles and
moneys due and to become due being herein called
collectively "Accounts");
(2) all instruments, chattel paper or letters
of credit (each as defined in the Uniform Commercial Code)
of the Borrower evidencing, representing, arising from or
existing in respect of, relating to, securing or otherwise
supporting the payment of, any of the Accounts, including
(but not limited to) promissory notes, drafts, bills of
exchange and trade acceptances (herein collectively called
"Instruments");
(3) all inventory (as defined in the Uniform
Commercial Code) of the Borrower, including Motor Vehicles
held by the Borrower for lease (including lease to
Subsidiaries of the Borrower), fuel, tires and other spare
parts, including Spare Parts, all goods obtained by the
Borrower in exchange for such inventory, and any products
made or processed from such inventory including all
substances, if any, commingled therewith or added thereto
(herein collectively called "Inventory");
(4) all other accounts or general intangibles
of the Borrower not constituting Accounts;
(5) all equipment (as defined in the Uniform
Commercial Code) of the Borrower, including all Motor
Vehicles (herein collectively called "Equipment");
(6) each contract and other agreement of the
Borrower relating to the sale or other disposition of
Inventory or Equipment;
(7) all documents of title (as defined in the
Uniform Commercial Code) or other receipts of the Borrower
covering, evidencing or representing Inventory or
Equipment (herein collectively called "Documents");
(8) all rights, claims and benefits of the
Borrower against any Person arising out of, relating to or
in connection with Inventory or Equipment purchased by the
Borrower, including, without limitation, any such rights,
claims or benefits against any Person storing or
transporting such Inventory or Equipment;
(9) all cash of the Borrower;
(10) all Contracts, together with all Contract
Rights;
(11) the balance from time to time in the
Collateral Account;
(12) all Intellectual Property, other than
non-assignable rights owned by the Borrower or any of its
Subsidiaries under licenses whose ownership is solely
incidental to the commercial activities of the Borrower
and its Subsidiaries;
(13) all other property of the Borrower's estate
(within the meaning of the Bankruptcy Code), real or
personal, including all rights of payment arising pursuant
to the provisions of the Bankruptcy Code; and
(14) all other tangible and intangible personal
property and fixtures of the Boower, including, without
limitation, all proceeds, products, offspring, accessions,
rents, profits, income, benefits, substitutions and
replacements of and to any of the property of the Borrower
described in the preceding clauses of this Section 2
(including, without limitation, any proceeds of insurance
thereon and all causes of action, claims and warranties
now or hereafter held by the Borrower in respect of any of
the items listed above) and, to the extent related to any
property described in said clauses or such proceeds,
products and accessions, all books, correspondence, credit
files, records, invoices and other papers, including
without limitation all tapes, cards, computer runs and
other papers and documents in the possession or under the
control of the Borrower or any computer bureau or service
company from time to time acting for the Borrower;
but excluding any right, title and interest of the Borrower in,
to or under any Collateral (the "Excluded Property"), to the
extent the security interest created hereby or an assignment as
security of all or part of the Borrower's right, title or
interest in, to or under such Excluded Property would breach,
violate or cause a default (which would not be excused or
permissible under the relevant provisions of the Bankruptcy
Code or by entry of the Final Order or Interim Order, as the
case may be) under any agreement or Contract, to which the
Borrower is a party or by which it is bound relating to such
Excluded Property (it being understood, however, that the
proceeds of Excluded Property shall not be excluded from the
Collateral except to the extent such a breach, violation or
default would arise from the inclusion of such proceeds in the
Collateral (which would not be excused or permissible under the
relevant provision of the Bankruptcy Code)). Without limiting
the Borrower's obligations under the Credit Agreement with
respect to such matters, the foregoing grant of a security
interest in and of itself shall not be deemed (i) to
constitute, require or prevent the assumption of any obligation
in the Chapter 11 Case or (ii) to prohibit the rejection of any
obligation in the Chapter 11 Case. Anything herein contained
to the contrary notwithstanding, the Borrower shall remain
liable under any agreements or Contracts, referred to in this
Section 2 and to perform all of its respective obligations
thereunder, all in accordance with the respective terms and
provisions thereof, but subject to the relevant provisions of
the Bankruptcy Code and without prejudice to the Borrower's
right to assume or reject such leases or executory contracts
under s 365 of the Bankruptcy Code, and the Lender shall have
no obligation or liability under any of the aforementioned
agreements or Contracts by reason of or arising out of the
foregoing grant, nor shall Lender be required or obligated in
any manner to perform or fulfill any obligation of the Borrower
pursuant thereto, or to make any payment, or to present or file
any claim, or to take any action to collect or enforce the
payment of any amounts which may have been assigned to Lender
or to which it may be entitled at any time. However, the
Lender shall, at its option, have the right, but not the
obligation, to cure any defaults under any such agreements or
Contracts being assumed and/or assumed and assigned to the
Lender or its designee in connection with the exercise of its
remedies hereunder and under Section 10.3 of the Credit
Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties. The
Borrower represents and warrants to the Lender as of the date
hereof as follows:
(1) The Borrower is (or will be at the time the
Lien created hereby attaches) and will continue to be
until all of the Obligations have been satisfied in full
the sole legal, beneficial and record owner of the
Collateral in which it purports to grant a security
interest pursuant to Section 2 hereof and no Lien exists
or will exist upon such Collateral at any time (and no
right or option to acquire the same exists in favor of any
other Person), except for the Liens and security interests
in favor of the Lender created or provided for herein, and
in the Credit Agreement and the Liens permitted under
Section 9.2 of the Credit Agreement, which Liens and
security interests constitute first priority perfected
Liens and security interests in and to all of such
Collateral, except for the Permitted Liens to which the
Lender's security interest herein is junior and
subordinate. There is no financing statement naming the
Borrower as debtor (or similar documents or instrument of
registration under the law of any jurisdiction) now on
file or registered in any public office covering any
interest of the Borrower in any Collateral, except as
permitted under Section 9.2 of the Credit Agreement.
(2) This Agreement creates a valid first
priority security interest in favor of the Lender in the
Collateral, as security for the Obligations, except for
Permitted Liens to which the Lender's security interest
herein is junior and subordinate. Upon entry of the
Interim Order or Final Order, as the case may be, such
security interest is, or in the case of Collateral in
which the Borrower obtains rights after the date hereof,
will be, a perfected first priority security interest,
subject to Permitted Liens. Upon entry of the Interim
Order or Final Order, as the case may be, all action
necessary or desirable to perfect and protect such
security interest has been duly taken.
(3) Annex 1 hereto sets forth all material
Contracts, and other material agreements under which the
Borrower holds, as of the date of this Agreement, a
leasehold or proprietary interest, which Annex shall be
updated from time to time promptly after the disposition
or acquisition of any such leasehold or proprietary
interests.
(4) Annexes 3, 4, and 5 hereto set forth a
complete and correct list of all Copyrights, Patents and
Trademarks (other than immaterial rights arising under
common law) owned by the Borrower on the date hereof; the
Borrower owns and possesses the right to use, and has done
nothing to authorize or enable any other Person to use,
any Copyright, Patent or Trademark listed in said Annexes
3,4, and 5, and all registrations listed in said Annexes
3, 4,and 5 are valid and in full force and effect; the
Borrower owns and possesses the right to use all
Copyrights, Patents and Trademarks.
(5) The chief executive office of the Borrower
is set forth on Annex 2.
ARTICLE 4
FURTHER ASSURANCES; REMEDIES
Section 4.1 Further Assurances; Remedies. In
furtherance of the grant of the security and pledge interest
pursuant to Section 2 hereof, each Borrower hereby agrees with
the Lender as follows:
Section 4.2 Delivery and Other Perfection. Each
Borrower shall:
(1) if any of the shares, securities,
interests, moneys or property required to be pledged by it
under Section 2.1 hereof are received by the Borrower,
forthwith either (i) transfer and deliver to the Lender
such shares or securities or interests so received by the
Borrower(together with the certificates for any such
shares and securities or interests duly endorsed in blank
or accompanied by undated stock powers duly executed in
blank), all of which thereafter shall be held by the
Lender, pursuant to the terms of this Agreement, as part
of the Collateral or (ii) take such other action as the
Lender shall deem necessary or reasonably appropriate to
duly record the Lien created hereunder in such shares,
securities, interests, moneys or property in said clauses
(a) and (b) of Section 2.1 herein;
(2) deliver and pledge to the Lender any and
all Instruments, endorsed and/or accompanied by such
instruments of assignment and transfer in such form and
substance as the Lender may request provided that so long
as no Default shall have occurred and be continuing, each
Borrower may retain for collection in the ordinary course
any Instruments received by the Borrower in the ordinary
course of business and the Lender shall, promptly upon
request of the Borrower make appropriate arrangements for
making any other Instrument pledged by the Borrower
available to the Borrower for purposes of presentation,
collection or renewal (any such arrangement to be
effected, to the extent deemed appropriate by the Lender,
against trust receipt or like document);
(3) give, execute, deliver, file and/or record
any financing statement, notice, instrument, document,
agreement or other papers that may be necessary or
desirable (in the reasonable judgment of the Lender) to
create, preserve, perfect or validate the security
interest granted pursuant hereto or to enable the Lender
to exercise and enforce its rights hereunder with respect
to such security and pledge interest;
(4) keep full and accurate books and records
relating to the Collateral, and stamp or otherwise xxxx
such books and records in such manner as the Lender may
reasonably require in order to reflect the security
interests granted by this Agreement; and
(5) permit representatives of the Lender, upon
reasonable notice, at any time during normal business
hours to inspect and make abstracts from its books and
records pertaining to the Collateral, and permit
representatives of the Lender to be present at the
Borrower's place of business to receive copies of all
communications and remittances relating to the Collateral,
and forward copies of any notices or communications
received by the Borrower with respect to the Collateral,
all in such manner as the Lender may reasonably require.
Section 4.3 Preservation of Rights. The Lender
shall not be required to take steps necessary to preserve any
rights against prior parties to any of the Collateral.
Section 4.4 Special Provisions Relating to Certain
Collateral.
(1) Intellectual Property.
(1) For the purpose of enabling the Lender
to exercise rights and remedies under Section 5.5 hereof
at such time as the Lender shall be lawfully entitled to
exercise such rights and remedies, and for no other
purpose, each Borrower hereby grants to the Lender, to the
extent assignable without any consent not theretofore
obtained, an irrevocable, non-exclusive license
(exercisable without payment of royalty or other
compensation to the Borrower) to use, assign, license or
sublicense any of the Intellectual Property now owned or
hereafter acquired by the Borrower, wherever the same may
be located.
(2) Notwithstanding anything contained
herein to the contrary, so long as no Event of Default
shall have occurred and be continuing, the Borrower will
be permitted to exploit, use, enjoy, protect, license,
sublicense, assign, sell, dispose of or take other actions
with respect to the Intellectual Property. The exercise
of rights and remedies under Section 4. 4(b) hereof by the
Lender shall not terminate the rights of the holders of
any licenses or sublicenses theretofore granted by the
Borrower in accordance with the first sentence of this
clause (2).
(2) Equipment. The Borrower shall, upon the
request of the Lender, deliver to the Lender originals of
the certificates of title or ownership for all Equipment,
including Motor Vehicles, covered by a certificate of
title owned by the Borrower with the Lender listed as
lienholder, and take such other action as the Lender shall
deem appropriate to perfect the security interest created
hereunder in all such Equipment.
Section 4.5 Events of Default, Etc. During any
period during which an Event of Default shall have occurred and
be continuing, but subject to the relevant provisions of
Section 10.3 of the Credit Agreement:
(1) the Borrower shall, at the request of the
Lender, assemble the Collateral owned by it at such place
or places, reasonably convenient to both the Lender and
the Borrower, designated in the Lender's request;
(2) the Lender may make any reasonable
compromise or settlement deemed desirable with respect to
any of the Collateral and may extend the time of payment,
arrange for payment in installments, or otherwise modify
the terms of, any of the Collateral;
(3) the Lender shall have all of the rights and
remedies with respect to the Collateral of a secured party
under the Uniform Commercial Code (whether or not said
Code is in effect in the jurisdiction where the rights and
remedies are asserted) and such additional rights and
remedies to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted, including, without
limitation, the right, to the maximum extent permitted by
law, to exercise all voting, consensual and other powers
of ownership pertaining to the Collateral as if the Lender
were the sole and absolute owner thereof (and the Borrower
agrees to take all such action as may be appropriate to
give effect to such right);
(4) the Lender in its discretion may, in its
name or in the name of the Borrower or otherwise, demand,
xxx for, collect or receive any money or property at any
time payable or receivable on account of or in exchange
for any of the Collateral, but shall be under no
obligation to do so;
(5) foreclose on this Agreement and the
security interests created thereby, and sell, lease,
assign or otherwise dispose of all or any part of the
Collateral or any part thereof which shall then be or
shall thereafter come into the possession, custody or
control of the Lender or any of its agents in a public or
private sale; and/or
(6) with respect to all unexpired leases and
executory contracts (within the meaning of the Bankruptcy
Code), the Lender shall, without application to or order
of the Bankruptcy Court, have the exclusive right, upon
the occurrence and during the continuance of an Event of
Default on the Termination Date, to direct the
disposition, subject to the rights and remedies
enforceable by or available to parties, other than the
Borrower (including rights under ss 365 of the Bankruptcy
Code), with respect to such property, of the Borrower's
right, title and interest in and to any such property,
including directing the Borrower to seek any consent
necessary to dispose of such property or assume and assign
such property to the Lender or its designee. The proceeds
from any such disposition shall be applied in accordance
with the terms of the Credit Agreement.
Section 4.6 Deficiency. If the proceeds of sale,
collection or other realization of or upon the Collateral
pursuant to Section 4.5 hereof are insufficient to cover the
costs and expenses of such realization and the payment in full
of the Obligations, the Borrower shall remain liable for any
deficiency.
Section 4.7 Removals, Etc. Without at least 30
days' prior written notice to the Lender, the Borrower shall
not maintain any of its books and records with respect to the
Collateral at any office or maintain its principal place of
business at any place, or permit any Inventory or Equipment to
be located anywhere, other than at one of the locations
identified in Annex 2 hereto under its name or in transit from
one of such locations to another or (ii) change its name, or
the name under which it does business, from the name shown on
the signature pages hereto.
Section 4.8 Application of Proceeds. Except as
otherwise herein expressly provided, the proceeds of any
collection, sale or other realization of all or any part of the
Collateral of the Borrower under Section 4.5 hereof, and any
other cash of the Borrower at the time held by the Lender under
and in accordance with Section 4 hereof or this Section 5,
shall be applied by the Lender to reduce the Obligation then
outstanding in accordance with the terms of the Credit
Agreement.
As used in this Section 4, "proceeds" of Collateral
shall mean cash, securities and other property realized in
respect of, and distributions in kind of, Collateral, including
any thereof received under any reorganization, liquidation or
adjustment of debt of the Borrower.
Section 4.9 Attorney-in-Fact. Without limiting
any rights or powers granted by this Agreement to the Lender
while no Event of Default has occurred and is continuing, upon
the occurrence and during the continuance of any Event of
Default, the Lender is hereby appointed the attorney-in-fact of
each Borrower for the purpose of carrying out the provisions of
this Section 5 and taking any action and executing any
instruments which the Lender may deem necessary or reasonably
advisable to accomplish the purposes hereof, which appointment
as attorney-in-fact is irrevocable and coupled with an
interest.
Section 4.10 Perfection. Prior to or concurrently
with the execution and delivery of this Agreement, each
Borrower shall file such financing statements and other
documents in such offices as the Lender may request to perfect
the security interests granted by Section 2.1 hereof.
Section 4.11 Termination. When all the Obligations
shall have been paid in full and the Commitments of the Lender
under the Credit Agreement shall have expired or been
terminated, this Agreement shall terminate, and the Lender
shall forthwith cause to be assigned, transferred and
delivered, against receipt but without any recourse, warranty
or representation whatsoever, any remaining Collateral and
money received in respect thereof, to or on the order of the
Borrower and to be released and cancelled all licenses and
rights referred to in Section 4.4(b) hereof. The Lender shall
also execute and deliver to the Borrower upon such termination
such Uniform Commercial Code termination statements,
certificates for terminating the Liens on the Motor Vehicles
and such other documentation as shall be reasonably requested
by the Borrower to effect the termination and release of the
Lien of this Agreement on the Collateral.
Section 4.12 Expenses and Indemnities.
(1) The Borrower agrees to reimburse the Lender
for all reasonable out-of-pocket expenses of the Lender
(including, without limitation, the reasonable fees and
expenses of outside and internal legal counsel) of, or
incident to (i) any Event of Default and (ii) any
enforcement or collection proceeding resulting therefrom,
including, without limitation, (A) performance by the
Lender of any obligations of the Borrower in respect of
the Collateral that the Borrower have failed or refused to
perform, (B) any actual or attempted sale, or any
exchange, enforcement, collection, compromise or
settlement in respect of any of the Collateral, and for
the care of the Collateral and defending or asserting
rights and claims of the Lender in respect thereof, by
litigation or otherwise, including expenses of insurance,
(C) judicial or regulatory proceedings and (D) the
enforcement of this Section 4, and all such expenses shall
be Obligations to the Lender secured under Section 2
hereof.
(2) The Borrower agrees to indemnify the Lender
from and against any and all reasonable claims, losses and
liabilities (including, without limitation, the reasonable
fees, client charges and other expenses of the Lender's
outside and internal counsel) growing out of or resulting
from this Agreement or the enforcement of any of the terms
hereof (including, without limitation, the sale of
Collateral pursuant to a public or private offering and
each and every document produced in furtherance thereof),
except claims, losses or liabilities resulting solely and
directly from the Lender's gross negligence, bad faith or
willful misconduct, subject to prior written notice to the
Borrower and the Committee with a period of ten Banking
Days to raise objections to such claims, losses, and
liabilities, and further, provided that all such
objections shall be resolved by the Bankruptcy Court..
Section 4.13 Further Assurances. The Borrower
agrees that, from time to time upon the written request of the
Lender, the Borrower will execute and deliver such further
documents and do such other acts and things as the Lender may
reasonably request in order fully to effect the purposes of
this Agreement.
Section 4.14 Releases. Without limiting the
obligations of the Borrower hereunder and under the Credit
Agreement, upon the sale, assignment, transfer or other
disposition of any property effected in accordance with the
Credit Agreement, the Lender shall, at the Borrower's expense,
execute and deliver to the Borrower such Uniform Commercial
Code termination statements and such other documentation as
shall be reasonably requested by the Borrower to effect the
termination and release of the Lien of this Agreement on such
property.
Section 4.15 Other Financing Statements and Liens.
Except as otherwise permitted under Section 9.2 of the Credit
Agreement and except for precautionary financing statements
filed with respect to operating leases (as defined in
accordance with GAAP) entered into by the Borrower, the
Borrower shall not file or suffer to be on file, or authorize
or permit to be filed or to be on file, in any jurisdiction,
any financing statement or like instrument with respect to the
Collateral in which the Lender is not named as the sole secured
party.
ARTICLE 5
MISCELLANEOUS
Section 5.1 No Waiver. No failure on the part of
the Lender or any agent of the Lender to exercise, and no
course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Lender
or any agent of the Lender of any right, power or remedy
hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies
herein are cumulative and are not exclusive of any remedies
provided by law.
Section 5.2 Notices. All notices, requests,
consents and demands hereunder shall be made in the manner and
at the addresses set forth in Section 11.5 of the Credit
Agreement.
Section 5.3 Amendments, Etc. The terms of this
Agreement may be waived, altered or amended only by an
instrument in writing duly executed by the Borrower and the
Lender. Any such amendment or waiver shall be binding upon the
Lender and the Borrower.
Section 5.4 Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the Borrower and the
Lender (provided that the Borrower shall not assign or transfer
its rights hereunder without the prior written consent of the
Lender).
Section 5.5 Captions. The captions and section
headings appearing herein are included solely for convenience
of reference and are not intended to affect the interpretation
of any provision of this Agreement.
Section 5.6 Counterparts. This Agreement may be
executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and any
of the parties hereto may execute this Agreement by signing any
such counterpart.
Section 5.7 Governing Law. This Agreement shall
be governed by, and construed in accordance with, the internal
law of the State of New York, without regard to choice of law
principles thereof, except to the extent governed by the
Bankruptcy Code.
Section 5.8 Severability. If any provision hereof
is invalid and unenforceable in any jurisdiction, then, to the
fullest extent permitted by law, (i) the other provisions
hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the
Lender in order to carry out the intentions of the parties
hereto as nearly as may be possible and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such
provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused
this Security and Pledge Agreement to be duly executed and
delivered as of the day and year first above written.
EMPIRE ONE TELECOMMUNICATIONS, INC.
By______________________________
Title:
Chief Executive Office:
EOT LENDING CORP.
By______________________________
Title: President
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