SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of May 9, 2001,
between Liberty Satellite, LLC, a Delaware limited liability company
("Pledgor"), and Liberty Satellite & Technology, Inc. (the "Secured Party").
WITNESSETH:
WHEREAS, Secured Party has sold to Pledgor beneficial interests
("Interests") in the Liberty PCS Trust (the "Trust") to 5,084,745 shares of
PCS Common Stock - Series 2 of Sprint Corporation ("Sprint Stock"), such
Interests being represented by Certificate Numbers 11 and 12
("Certificates"), pursuant to a Trust Interest Purchase Agreement, dated as
of the date hereof, between Pledgor and Secured Party;
WHEREAS, Pledgor has duly executed two promissory notes, each
dated as of the date hereof, in the aggregate amount of $224,225,597 (the
"Notes") and delivered the same to Secured Party; and
WHEREAS, Pledgor and Secured Party wish to enter into this
Agreement in order to secure the obligations of Pledgor under the Notes (such
obligations, together with any obligations of Pledgor under this Agreement,
the "Obligations").
NOW THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not defined herein
shall have the meanings provided therefor in the Notes.
2. SECURITY INTEREST. Pledgor hereby pledges to Secured Party, as
security for the Obligations, and grants to Secured Party a first priority
continuing security interest in, lien on and right of set-off against the
following described property (collectively referred to as the "Collateral"):
Interests in the Trust represented by the Certificates, together with the
products, proceeds and accessions of any of the foregoing.
3. DELIVERY OF COLLATERAL. Pledgor agrees that the Certificates
shall be delivered to Secured Party at the address set forth in the Notes or
otherwise specified by Secured Party. Such certificates shall be indorsed
either to Secured Party or in blank by an effective indorsement within the
meaning of the New York Uniform Commercial Code (the "UCC") and shall be in
suitable form for transfer by delivery or accompanied by duly executed stock
powers and any other instruments of transfer reasonably requested by Secured
Party. All other property comprising part of the Collateral shall be
accompanied by proper instruments of assignment duly executed by Pledgor, and
by any such other instruments or documents as Secured Party may reasonably
request. The Certificates shall be delivered in accordance with this Section
3 no later than the date hereof.
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4. REPRESENTATIONS AND AGREEMENTS OF PLEDGOR. In addition to
its other representations and agreements in the Notes, Pledgor represents and
agrees that:
(a) Except for (i) the security interest granted hereby, (ii) any
restriction on transfer under the Federal or State securities laws, (iii) any
encumbrance or restriction under the Final Judgment, entered August 23, 1999,
in the matter of United States of America v. AT&T Corp. and
Tele-Communications, Inc. (the "Final Judgment"), (iv) any encumbrance or
restriction under the March 5, 1999 order of the Federal Communications
Commission in the matter of Applications for Consent to the Transfer of
Control of Licenses and Section 214 Authorizations from Tele-Communications,
Inc. to AT&T Corp. (the "FCC Order"), (v) any encumbrance or restriction
which the Trust may have placed upon the Sprint Stock in favor of
[Financial Institution] in connection with the Collar (including the filing
of any financing statement in connection therewith), and (vi) any encumbrance
or restriction under the Trust's Trust Agreement, dated as of March 9, 1999
(the "Trust Agreement") (collectively, the "Permitted Encumbrances"), Pledgor
is, and as to Collateral acquired after the date hereof Pledgor will be as of
the time of acquisition, the owner and holder of the Collateral free from any
adverse claim, security interest, encumbrance, lien, charge, or other right,
title or interest of any person. Pledgor agrees that at all times the
Collateral will be and remain free of all such adverse claims, security
interests, or other liens or encumbrances, other than any Permitted
Encumbrance. Pledgor will promptly give Secured Party notice of, and defend
the Collateral against, all claims and demands (other than any Permitted
Encumbrance) of all persons at any time claiming the same or any interest
therein.
(b) Upon delivery to Secured Party of the Certificates in
accordance with Section 3 and the filing of financing statements relating to
the Collateral with the Office of the Secretary of State of Colorado and
Delaware, Secured Party will have a valid and perfected first priority
security interest in all Collateral (to the extent a security interest
therein may be perfected under the UCC and to the extent Collateral arising
after the date hereof may be perfected by the filing of a financing
statement).
(c) Pledgor has not heretofore signed any financing statement or
security agreement which covers any of the Collateral, and no financing
statement or security agreement naming Pledgor as secured party is now on
file in any public office. Pledgor will not enter into or execute any
security agreement or any financing statement covering the Collateral, other
than those security agreements and financing statements in favor of Secured
Party hereunder, and Pledgor agrees that, except for Permitted Encumbrances,
there will not be on file in any public office any financing statement or
statements (or any documents or papers filed as such) covering the
Collateral, other than financing statements in favor of Secured Party
hereunder, unless in any case the prior written consent of Secured Party
shall have been obtained.
(d) Pledgor is a limited liability company duly organized,
validly existing and in good standing under the laws of its jurisdiction of
its formation; and it has full power and authority to carry on its business
as currently conducted and to own, lease, use and operate its assets and
properties at the places currently located and in the manner currently used
and operated;
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(e) Pledgor has all requisite power and authority to enter into,
deliver and perform its obligations under this Agreement;
(f) Pledgor has duly executed and delivered this Agreement and
this Agreement constitutes the legal, valid and binding obligation of
Pledgor, enforceable against Pledgor in accordance with its terms;
(g) Pledgor's chief executive office (within the meaning of the
UCC) is located at 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx
00000. Pledgor shall give Secured Party not less than 10 days prior written
notice of any proposed change in its chief executive office.
5. RIGHTS OF SECURED PARTY AND PLEDGOR RELATED TO COLLATERAL.
(a) Subject to any Permitted Encumbrances, Secured Party may from time
to time following the occurrence of an Event of Default with respect to
Pledgor:
(i) transfer any of the Collateral into the name of Secured Party;
(ii) notify parties obligated on any of the Collateral to make payment
to Secured Party of any amounts due or to become due thereunder;
(iii) enforce collection of any of the Collateral by suit or otherwise;
surrender, release or exchange all or any part thereof, or compromise or
extend or renew for any period (whether or not longer than the original
period) any obligation of any nature of any party with respect thereto;
and (subject to any Permitted Encumbrance) exercise all other rights of
Pledgor in any of the Collateral (including, without limitation, the right
to vote or exercise other consensual interests in the Collateral); and/or
(iv) take possession or control of any proceeds of the Collateral.
(b) Until the occurrence of an Event of Default with respect to
Pledgor, Pledgor shall have the right to receive all income from or interest
on the Collateral. Upon the occurrence of an Event of Default with respect to
Pledgor, Pledgor will not demand or receive any income from or interest on
the Collateral, and if Pledgor receives any such income or interest without
any demand by it, the same shall be held by Pledgor in trust for Secured
Party in the same medium in which received, shall not be commingled with any
assets of Pledgor and shall be delivered to Secured Party in the form
received, properly indorsed to permit collection, not later than the second
business day following the day of its receipt.
(c) So long as no Event of Default with respect to Pledgor shall
have occurred, Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Collateral or any part thereof for
any purpose not inconsistent with the terms or purpose of this Agreement or
the Notes (and Secured Party shall exercise any voting and other consensual
rights it may have pertaining to the Collateral in accordance with any
instructions of Pledgor in that regard).
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(d) In the event Secured Party shall pay any taxes, assessments,
interests, costs, penalties or expenses incident to or in connection with the
collection of the Collateral or protection or enforcement of the Collateral
or any security therefor, Pledgor, upon demand of Secured Party, shall pay to
Secured Party the full amount thereof with interest thereon from the date
expended by Secured Party until repaid at a rate per annum equal to the
Interest Rate.
(e) Pledgor shall not (except as contemplated by the remaining
provisions of this clause (e)) sell, assign, alienate, exchange, convey,
transfer, hypothecate or otherwise dispose of or encumber the Collateral,
without the prior written consent of Secured Party.
6. FURTHER ASSURANCES; SECURED PARTY AS AGENT. Pledgor agrees to
take such actions and to execute such stock or bond powers and such other or
different writings as Secured Party may reasonably request (and irrevocably
authorizes Secured Party to execute such writings as Pledgor's agent and
attorney-in-fact) to create, preserve, perfect or validate Secured Party's
security interest in the Collateral, or to enable Secured Party to exercise
or enforce its rights under this Agreement with respect to the Collateral,
including (without limitation) the right to receive, indorse and collect all
instruments made payable to Pledgor representing any dividend, interest
payment or other distribution in respect of the Collateral or any part
thereof except for those distributions which Pledgor is entitled to retain
pursuant to Section 5(b). If any consent or approval or authorization of, or
filing with, any governmental authority or other person should be necessary
to effectuate any sale or other disposition of the Collateral as provided
herein, Pledgor agrees to execute all such documents as may be required in
connection with securing any such consent, approval or authorization, and
will otherwise use its best efforts to secure the same.
7. EVENTS OF DEFAULT. The occurrence of any Event of Default
with respect to Pledgor pursuant to the Notes shall constitute an "Event of
Default" with respect to Pledgor hereunder.
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8. RIGHTS AND REMEDIES OF SECURED PARTY UPON DEFAULT. (a) If an
Event of Default with respect to Pledgor shall have occurred:
(i) Subject to the Permitted Encumbrances: Secured Party shall have
and may exercise with reference to the Collateral and the Obligations any
or all of the rights and remedies of a secured party under the UCC, and as
otherwise granted herein or under any other applicable law or under any
other agreement now or hereafter in effect executed by Pledgor, including,
without limitation, the right and power to sell, at public or private sale
or sales, or otherwise dispose of, or otherwise utilize the Collateral and
any part or parts thereof in any manner authorized or permitted under the
UCC after default by a debtor, and to apply the proceeds in accordance
with Section 10 hereof. Without limiting the foregoing, Secured Party
shall have the right to take possession of all or any part of the
Collateral, subject to the Permitted Encumbrances, and of all books,
records, papers and documents of Pledgor or in Pledgor's possession or
control relating to the Collateral which are not already in Secured
Party's possession. To the extent permitted by law, Pledgor expressly
waives any notice of sale or other disposition of the Collateral and all
other rights or remedies of Pledgor or formalities prescribed by law
relative to sale or disposition of the Collateral or exercise of any other
right or remedy of Secured Party existing after default hereunder; and to
the extent any such notice is required and cannot be waived, Pledgor
agrees that if such notice is given in the manner provided in Section 14
hereof at least five (5) days before the time of the sale or disposition,
such notice shall be deemed reasonable and shall fully satisfy any
requirement for giving of said notice. Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. Secured Party may adjourn any public or private sale.
(ii) Upon notice by Secured Party to Pledgor, but subject to any
applicable limitations under the Permitted Encumbrances, Secured Party
shall have the sole and exclusive right to exercise all voting and
consensual powers pertaining to the Collateral or any part thereof and may
exercise such powers in such manner as Secured Party may elect.
(iii) All rights to marshalling of assets of Pledgor, including any
such right with respect to the Collateral, are hereby waived by Pledgor.
(iv) All recitals in any instrument of assignment or any other
instrument executed by Secured Party incident to sale, lease, transfer,
assignment or other disposition, lease or utilization of the Collateral or
any part thereof under this Section 8(a) shall be full proof of the
matters stated therein and no other proof shall be requisite to establish
full legal propriety of the sale or other action taken by Secured Party or
of any fact, condition or thing incident thereto and all prerequisites of
such sale or other action or of any fact, condition or thing incident
thereto shall be presumed conclusively to have been performed or to have
occurred.
(b) Secured Party shall never be under any obligation to collect,
attempt to collect, protect or enforce the Collateral, which Pledgor agrees
and undertakes to do at Pledgor's expense, but Secured Party may do so in its
discretion at any time after the occurrence of an
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Event of Default with respect to Pledgor. All expenses (including, without
limitation, attorneys' fees and expenses) incurred or paid by Secured Party
in connection with or incident to any such collection or attempt to collect
the Collateral or actions to protect or enforce the Collateral shall be borne
by the Pledgor or reimbursed by the Pledgor to Secured Party upon demand.
(c) The Secured Party will act in good faith and in a
commercially reasonable manner in the exercise of any of its rights and
remedies hereunder.
9. SPECIAL PROVISIONS. Pledgor hereby acknowledges that the sale
by Secured Party of any Collateral resulting from an exercise by Secured
Party of its rights hereunder must be made in compliance with the Securities
Act of 1933, as amended (the "Securities Act"), as well as any applicable
Blue Sky or other state securities laws that may impose limitations as to the
manner in which Secured Party or any other person may dispose of securities.
Pledgor acknowledges that any sale or disposition contemplated pursuant
hereto may be at prices and on terms less favorable to Secured Party than
those obtainable through a public sale without any applicable restrictions,
and, notwithstanding such circumstances, Pledgor agrees that any such sale or
other disposition shall be deemed to have been made in a commercially
reasonable manner. Secured Party shall have no obligation to engage in public
sales and no obligation to delay the sale of any Collateral for any period of
time; and Pledgor waives any claims against Secured Party arising by reason
of the fact that the price that might have been obtainable in a public sale
was greater than the price obtained in any such sale or disposition pursuant
hereto, even if Secured Party accepts the first offer received and does not
offer the Collateral to more than one offeree.
10. APPLICATION OF PROCEEDS. In the event Secured Party sells or
otherwise disposes of the Collateral in the course of exercising the remedies
provided for in this Agreement, any amounts held, realized or received by
Secured Party pursuant to the provisions hereof, including the proceeds of
the sale of any of the Collateral or any part thereof, shall be applied by
Secured Party first toward the payment of any costs and expenses incurred by
Secured Party in enforcing this Agreement, in realizing on or protecting any
Collateral and in enforcing or collecting any Obligations or any guaranty
thereof, including, without limitation, the reasonable attorneys' fees and
expenses incurred by Secured Party, all of which costs and expenses Pledgor
agrees to pay, and then to such other Obligations in such order as Secured
Party may elect. Any amounts and any Collateral remaining after such
application and after payment to Secured Party of satisfaction of all of the
Obligations in full shall be paid or delivered to Pledgor, its successor or
assigns, or as a court of competent jurisdiction may direct or as otherwise
may be required by law.
11. CARE OF COLLATERAL. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment substantially equal
to that which Secured Party accords its own property, it being understood
that Secured Party shall not have any responsibility for taking any necessary
steps to preserve rights against any parties with respect to any Collateral.
So long as no Event of Default with respect to Pledgor has occurred, Secured
Party agrees to follow Pledgor's reasonable instructions in connection with
any action with respect to the Collateral, provided that
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such action is not prohibited hereby and such action would not impair the
value or liquidity of the Collateral (or the relationship between the
Collateral and the Obligations).
12. TERMINATION. This Agreement and the security interest created
hereunder shall terminate upon such date on which all the Obligations have
been paid in full. Upon termination hereof, Secured Party shall execute and
deliver to Pledgor all documents which Pledgor shall reasonably request to
evidence termination of such security interest and shall return physical
possession of any Collateral then held by Secured Party to Pledgor; provided,
however, that all indemnities of Pledgor contained in this Agreement shall
survive, and remain in full force and effect regardless of the termination of
the security interest or this Agreement. Notwithstanding the foregoing, this
Agreement and the security interest granted hereunder shall be reinstated if
at any time any payment or delivery pursuant to an Obligation, in whole or in
part, is rescinded or must otherwise be returned by Secured Party upon the
insolvency, bankruptcy or reorganization of Pledgor, all as though such
payment or delivery had not been made.
13. ADDITIONAL INFORMATION. Pledgor agrees to furnish Secured
Party from time to time with such additional information and copies of such
documents relating to this Agreement and the Collateral, as Secured Party may
reasonably request.
14. NOTICES. Any communication, notice or demand to be given
hereunder shall be given in accordance with the Notes.
15. INDEMNITY AND EXPENSES. Pledgor agrees to indemnify Secured
Party from and against any and all claims, losses and liabilities growing out
of or resulting from this Agreement (including, without limitation,
enforcement of any rights under this Agreement, and any claims or demands of
any persons at any time claiming the Collateral or any interest therein),
except claims, losses or liabilities resulting from Secured Party's
negligence or willful misconduct. Pledgor agrees to pay on demand all
out-of-pocket expenses (including the reasonable fees and expenses of Secured
Party's counsel, experts and agents) in any way relating to the enforcement
or protection of the rights of Secured Party hereunder.
16. NO WAIVER; CUMULATIVE RIGHTS. No failure on the part of
Secured Party to exercise, and no delay in exercising, any right, remedy or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise by Secured Party of any right, remedy or power hereunder
preclude any other or future exercise of any other right, remedy or power.
Each and every right, remedy and power hereby granted to Secured Party or
allowed it by law or other agreement shall be cumulative and not exclusive of
any other, and may be exercised by Secured Party from time to time.
17. APPLICABLE LAW. This Agreement and the rights and
obligations of the parties hereunder shall be governed by, and construed in
accordance with, the internal laws of the State of New York.
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18. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first above written.
LIBERTY SATELLITE, LLC
By:___________________________
Name:
Title:
LIBERTY SATELLITE & TECHNOLOGY, INC.
By:___________________________
Name:
Title:
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