AGENCY, GUARANTY AND SECURITY AGREEMENT Dated November 2, 2005 Among The Grantors referred to herein as Grantors The Investors referred to herein as Investors and DunKnight Telecom Partners, LLC as Administrative Agent
EXHIBIT
10.3
Dated
November 2, 2005
Among
The
Grantors referred to herein
as
Grantors
The
Investors referred to herein
as
Investors
and
DunKnight
Telecom Partners, LLC
as
Administrative Agent
Section
|
Page
|
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1.
|
Definitions
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1
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2.
|
Guaranty
|
7
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3.
|
Creation
of Security Interest
|
9
|
4.
|
Delivery
of Pledged Collateral
|
10
|
5.
|
Appointment
of the Agent
|
10
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6.
|
Payments
and Computations
|
13
|
7.
|
Sharing
of Payments, Etc.
|
13
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8.
|
Further
Assurances
|
14
|
9.
|
Voting
Rights; Dividends; Etc.
|
15
|
10.
|
Rights
as to Pledged Collateral During Event of Xxxxxxx
|
00
|
00.
|
Irrevocable
Proxy
|
16
|
12.
|
The
Grantors' Representations and Warranties
|
16
|
13.
|
Grantors'
Covenants
|
18
|
14.
|
Marks
|
19
|
15.
|
Collections
on the Collateral
|
20
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16.
|
Remedies
|
20
|
17.
|
Insurance
|
23
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18.
|
Notice
|
24
|
19.
|
Costs
and Expenses
|
24
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20.
|
Counterparts
|
24
|
21.
|
Understandings
With Respect to Waivers and Consents
|
25
|
22.
|
Indemnity
|
25
|
23.
|
Amendments,
Waivers, Etc.
|
26
|
24.
|
Notices
|
26
|
25.
|
Continuing
Security Interest; Transfer of Notes; Termination
|
26
|
26.
|
Release
of the Grantors
|
26
|
27.
|
Governing
Law
|
27
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28.
|
Jury
Trial
|
27
|
29.
|
Limitation
of Liability
|
28
|
30.
|
Covenant
Not to Issue Uncertificated Securities
|
28
|
31.
|
Covenant
Not to Dilute Interests of the Agent in Securities
|
28
|
32.
|
Pledged
Limited Liability Company Interests/Covenant Not to Dilute
|
28
|
33.
|
Pledged
Partnership Interests/Covenant Not to Dilute
|
28
|
34.
|
Confidentiality
|
28
|
Schedules
|
||
Schedule
1
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Grantors
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|
Schedule
2
|
Investors
|
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Schedule
3-A
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Asset
Location
|
|
Schedule
3-B
|
Deposit
Account
|
|
Schedule
3-C
|
Pledged
Collateral
|
|
Schedule
3-D
|
Location
of Chief Executive Office of each Grantor
|
|
Schedule
3-E
|
Tradenames
|
|
Schedule
3-F
|
Trademarks
|
|
Exhibits
|
||
Exhibit
A
|
Form
of Pledge Notice
|
|
Exhibit
B
|
Form
of Issuer Acknowledgement
|
|
Exhibit
C
|
Instrument
For Granting Security Interest in Trademarks
|
|
Exhibit
D
|
Subordination
Agreement
|
This
AGENCY, GUARANTY AND SECURITY AGREEMENT (this “Agreement”),
dated
as of November 2, 2005, is made by and among XXX.xxx, Inc. (the “Company”),
the
Subsidiaries of the Company listed on Schedule
1
hereto
(the Company and its Subsidiaries listed on Schedule
1
hereto,
being individually each a “Grantor”
and
collectively, the “Grantors”),
the
Investors listed on Schedule
2
hereto
(individually each an “Investor”
and
collectively, the “Investors”)
and
DunKnight Telecom Partners, LLC, as Administrative Agent (in such capacity,
the
“Agent”,
as
appointed pursuant to Section 5 of this Agreement) for the
Investors.
RECITALS
The
Company and the Investors have entered into that certain Securities Purchase
Agreement, dated as of November 2, 2005 ( as amended, restated, supplemented
or
otherwise modified from time to time, the “Purchase
Agreement”)
pursuant to which the Investors have purchased, and have committed further
purchase, certain 18% Secured Debentures (the “Notes”).
It
is a
condition precedent to the effectiveness of the Purchase Agreement that the
Company and the Investors shall have entered into this Agreement and that the
Investors shall have appointed the Agent in connection with the pledge of assets
by the Grantors to secure the obligations of the Company owing to the Investors
under and in respect of the Notes.
It
is
condition precedent to the effectiveness of the Purchase Agreement and this
Agreement that the Investors and Agent enter into a Subordination Agreement
(the
“Subordination
Agreement”)
with
Laurus Master Fund, Ltd (“Laurus”)
in the
form attached hereto as Exhibit
D,
and
that this Agreement be subject to the terms of the Subordination
Agreement.
The
Grantors will derive substantial direct and indirect benefits from the
transactions contemplated by this Agreement and the other Operative Documents
(as hereinafter defined).
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and in order to induce the Agent
and
the Investors to enter into the Purchase Agreement and for other good and
valuable consideration, the receipt and adequacy of which the parties hereby
acknowledge, the parties agree as follows:
1. Definitions.
Terms
defined in the Purchase Agreement and not otherwise defined in this Agreement
are used in this Agreement as defined in the Purchase Agreement. Further, unless
otherwise defined in this Agreement or in the Purchase Agreement, terms defined
in Article 8 or 9 of the UCC (as defined below) are used in this Agreement
as
such terms are defined in such Article 8 or 9 of the UCC (as defined below).
“UCC”
means
the Uniform Commercial Code as in effect, from time to time, in the State of
New
York; provided
that, if
perfection or the effect of perfection or non-perfection or the priority of
any
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, “UCC”
means
the Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non-perfection or priority.
“Affiliate”
means,
as to any Person, any other Person that, directly or indirectly, controls,
is
controlled by or is under common control with such Person or is a director
or
officer of such Person. For
purposes
of this definition, the term “control”
(including the terms “controlling”,
“controlled
by”
and
“under
common control with”)
of a
Person means the possession, direct or indirect, of the power to vote 20% or
more of the Voting Interests of such Person or to direct or cause the direction
of the management and policies of such Person, whether through the ownership
of
Voting Interests, by contract or otherwise.
“Certificates”
means
all certificates, instruments and other documents now or hereafter representing
or evidencing any Pledged Securities or Pledged Limited Liability Company
Interests.
“Closing
Date”
shall
mean November 2, 2005.
“Collateral”
means
and includes all present and future right, title, interest, claims and demands
of each Grantor in or to any personal property or assets whatsoever, whether
now
owned or existing or hereafter arising or acquired and wheresoever located,
including, without limitation, any and all of the following personal property:
(a) all
accounts (including, without limitation, health-care-insurance receivables),
chattel paper (including, without limitation, tangible chattel paper and
electronic chattel paper), instruments (including, without limitation,
promissory notes), deposit accounts, letter-of-credit rights, general
intangibles (including, without limitation, payment intangibles) and other
obligations of any kind, whether or not arising out of or in connection with
the
sale or lease of goods or the rendering of services and whether or not earned
by
performance, and all rights now or hereafter existing in and to all supporting
obligations and in and to all security agreements, mortgages, Liens, leases,
letters of credit and other contracts securing or otherwise relating to the
foregoing property (any and all of such accounts, chattel paper, instruments,
deposit accounts, letter-of-credit rights, general intangibles and other
obligations, to the extent not referred to in clause (d), (e) or (f)
below,
being the “Receivables”,
and
any and all such supporting obligations, security agreements, mortgages, Liens,
leases, letters of credit and other contracts being the “Related
Contracts”);
(b) All
present and future general intangibles, including, without limitation, (i)
all
tax refunds of every kind and nature to which such Grantor now or hereafter
may
become entitled, however arising, (ii) all other refunds, (iii) all commitments
to extend financing to such Grantor, (iv) all deposits, (v) all goodwill, (vi)
all choses in action, (vii) all insurance proceeds and (viii) all trade secrets,
computer programs, software, customer lists, trademarks (excluding Intent to
Use
Applications), trade names, patents, licenses, copyrights, technology, processes
and proprietary information, including, without limitation, the Copyrights,
the
Patents and the Marks (each as hereinafter defined) and the goodwill of such
Grantor’s business connected with and symbolized by the Marks;
(c) All
present and future demand, time, savings, passbook, deposit and like accounts
(general or special) (collectively, the “Deposit
Accounts”)
in
which such Grantor has any interest that is maintained with any bank, savings
and loan association, credit union or like organization, including, without
limitation, each account listed on Schedule
3-B
attached
hereto and all funds, financial assets, cash and cash equivalents from time
to
time credited thereto, whether or not deposited in any Deposit
Account;
(d) All
present and future books and records, including, without limitation, books
of
account and ledgers of every kind and nature, customer lists, credit files,
printouts and other computer output material and records, all electronically
recorded data relating to such Grantor, all receptacles and containers for
such
records, and all files and correspondence;
(e) All
present and future goods, including, without limitation, all equipment, in
all
its forms, including, without limitation, all machinery, tools, molds, dies,
motor vehicles, vessels, aircraft,
2
furniture,
furnishings, fixtures, trade fixtures, and all parts thereof and accessions
thereto and all other goods used in connection with or in the conduct of such
Grantor’s business including, without limitation, software embedded in the
equipment (collectively, the “Equipment”);
(f) All
present and future inventory and merchandise, including, without limitation,
all
present and future goods held for sale or lease or to be furnished under a
contract of service, all recorded media, all raw materials, work in process
and
finished goods, all packing materials, supplies and containers relating to
or
used in connection with the manufacture, production, preparation or shipping
of
any of the foregoing, all goods in which such Grantor has an interest in mass
or
a joint or other interest or right of any kind (including, without limitation,
goods in which such Grantor has an interest or right as consignee), all goods
that are returned to or repossessed or stopped in transit by such Grantor,
and
all accessions thereto and products thereof and documents therefor, and all
software related thereto, including, without limitation, software that is
embedded in the inventory and all bills of lading, warehouse receipts and
documents of title relating to any of the foregoing (collectively, the
“Inventory”);
(g) All
present and future accessions, appurtenances, components, repairs, repair parts,
spare parts, replacements, substitutions, additions, issue and/or improvements
to or of or with respect to any of the foregoing;
(h) All
other
tangible and intangible personal property of such Grantor not specifically
excluded from this definition of “Collateral”;
(i) All
rights, remedies, powers and/or privileges of such Grantor with respect to
any
of the foregoing; and
(j) Any
and
all proceeds and products of the foregoing, including, without limitation,
all
money, income, royalties and other payments now or hereinafter due and payable
and with respect to and supporting obligations relating to, any and all of
the
Collateral, including, without limitation, proceeds, collateral and supporting
obligations that constitute property of the types described in clauses (a)
through (i) above and in this clause (j) and to the extent not otherwise
included, all payments under insurance (whether or not the Agent is the loss
payee thereof) or any indemnity, warranty or guaranty, payable by reason of
loss
or damage to or otherwise with respect to the foregoing Collateral, any other
tangible or intangible property received upon the sale or disposition of any
of
the foregoing and all tort claims, including, without limitation, all Commercial
Tort Claims and cash.
Notwithstanding
the foregoing, the term “Collateral”
shall
not include (i) any Equipment that is subject to a Lien otherwise permitted
by
subsections (vii), (viii) or (ix) of the definition of Permitted Liens, (ii)
assets acquired subsequent to the date of this Agreement that are subject to
a
security interest, provided
that
such security interest is limited to the asset acquired, (iii) all equity
interests in Regulated Entities, and; provided
that
each of the assets referenced in clauses (i) and (ii) of this sentence shall
be
deemed to be Collateral and each Grantor shall be deemed to have granted a
security interest in, all of its right, title and interests in such assets,
upon
the ineffectiveness, lapse or termination of the security interests referenced
in clauses (i) or (ii) of this sentence. The items listed in clauses (i) through
(iii) above in the paragraph are referred to herein as “Exempted
Collateral”.
“Computer
Software”
means
all computer software, programs and databases (including, without limitation,
source code, object code and all related applications and data files), firmware
and documentation and materials relating thereto, together with any and all
maintenance rights, service rights, programming rights, hosting rights, test
rights, improvement rights, renewal rights and indemnification rights and any
substitutions, replacements, improvements, error corrections, updates and new
versions of any of the foregoing.
3
“Confidential
Information”
means
(i) all financial information that any Grantor furnishes to the Agent or any
Investor; (ii) any non-financial information that any Grantor furnishes to
the
Agent or any Investor which is designated in writing as confidential; and (iii)
any other information provided to or learned by such Person during the course
of
any audit or inspection of any Grantor permitted under the terms of this
Agreement which by its nature or by virtue of the circumstances under which
it
was provided or given should reasonably be understood to be confidential;
provided,
however,
that
Confidential Information does not include any such information that (a) is
or
becomes generally available to the public, (b) is or becomes available to the
Agent or such Investor from a source other than the Grantors or their officers,
directors, employees, agents or advisors, or (c) is independently developed
by
the Agent or such Investor, in each case without breach of any confidentiality
obligation.
“Copyright”
means
all:
(a) Copyrights,
whether or not published or registered under the Copyright Act of 1976, 17
U.S.C. Section 101 et seq., as the same shall be amended from time to time
and
any predecessor or successor statute thereto (the “Copyright
Act”),
and
applications for registration of copyrights, and all works of authorship and
other intellectual property rights therein, including, without limitation,
copyrights for computer programs, Computer Software, internet websites and
the
content thereof, whether registered or unregistered, source code and object
code
databases and related materials and documentation and, and (i) all renewals,
revisions, derivative works, enhancements, modifications, updates, new releases
and other revisions thereof, (ii) all income, royalties, damages and payments
now and hereafter due and/or payable with respect thereto, including, without
limitation, payments under all licenses entered into in connection therewith
and
damages and payments for past or future infringements thereof, (iii) the right
to xxx for past, present and future infringements thereof and (iv) all of such
Grantor’s rights corresponding thereto throughout the world;
(b) Rights
under or interests in any copyright license agreements with any other party,
whether each Grantor is a licensee or licensor under any such license agreement,
and the right to use the foregoing in connection with the enforcement of the
Agent’s rights under the Operative Documents; and
(c) Copyrightable
materials now or hereafter owned by such Grantor, including, without limitation,
all tangible property embodying the copyrights described in clause (a) hereof
or
such copyrightable materials, and all tangible property covered by the licenses
described in clause (b) hereof.
“Event
of Default”
shall
have the meaning ascribed to it in the Notes.
“Guarantor”
means
each Grantor other than the Company.
“Indebtedness”
shall
mean and include the aggregate amount of, without duplication (i) all
obligations for borrowed money of any Grantor, (ii) all obligations
evidenced by any Grantor’s bonds, debentures, notes or other similar
instruments, (iii) all obligations of any Grantor to pay the deferred
purchase price of property or services (other than accounts payable and accrued
expenses incurred in the ordinary course of business determined in accordance
with generally accepted accounting principles (“GAAP”)),
(iv) all obligations with respect to any Grantor’s capital leases,
(v) all obligations of any Grantor created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person, (vi) all reimbursement and other payment obligations of
any
Grantor, contingent or otherwise, in respect of letters of credit and similar
surety instruments and (vii) all guaranty obligations of any Grantor
with
respect to the types of Indebtedness listed in clauses (i) through
(vi) above.
4
“Issuer
Acknowledgement”
has the
meaning given to that term in Section 4(b) of this Agreement.
“Intent
to Use Application”
means
any application of the type described in 00 Xxxxxx Xxxxxx Code Section 1051(b)
that has been or may hereafter be filed by the Company with the United States
Patent and Trademark Office.
“Liens”
shall
mean, with respect to any property, any security interest, mortgage, pledge,
lien, claim, charge or other encumbrance of any kind, or any other type of
preferential arrangement, in, of, or on such property or the income therefrom,
including, without limitation, the interest of a vendor or lessor under a
conditional sale agreement, capital lease or other title retention agreement,
any easement, right of way or other encumbrance on title to real property or
any
agreement to provide any of the foregoing, and the filing of any financing
statement or similar instrument under the UCC or comparable law of any
jurisdiction.
“Limited
Liability Company Interests”
means
the entire limited liability company interest at any time owned by Grantor
in
any Pledged Entity.
“Majority
Investors”
means,
at any time, Investors holding at least 51% of the sum of the aggregate
unpaid principal amount owing under the Notes.
“Marks”
means
all (a) trademarks, trademark registrations, domain names, interest under
trademark license agreements, trade names, trademark applications, service
marks, business names, trade styles, trade dress, designs, logos, slogans,
corporate names, and other source, or business identifiers for which
registrations have been issued or applied for in the United States Patent and
Trademark Office or in any other office or with any other official anywhere
in
the world or which are used in the United States or any state, territory or
possession thereof, or in any other place, nation or jurisdiction anywhere
in
the world including, without limitation, the trademarks, trademark
registrations, domain names, interest under trademark license agreements, trade
names, trademark applications, service marks, business names, trade styles,
trade dress, design logos, slogans, corporate names, and other source or
business identifiers listed on Schedule
3-F
attached
hereto, but excluding any United States Intent to Use Applications, (to the
extent that, and solely during the period in which, the grant of a security
interest therein would impair the validity or enforceability of such Intent
to
Use Application under applicable federal law) (b) licenses pertaining to any
such Xxxx whether such Grantor is licensor or licensee, (c) all income,
royalties, damages and payments for past, present or future infringements
thereof, (d) rights to xxx for past, present and future infringements thereof,
(e) rights corresponding thereto throughout the world, (f) all product
specification documents and production and quality control manuals used in
the
manufacture of products sold under or in connection with such Marks, (g) all
documents that reveal the name and address of all sources of supply of, and
all
terms of purchase and delivery for, all materials and components used in the
production of products sold under or in connection with such Marks, (h) all
documents constituting or concerning the then current or proposed advertising
and promotion by such Grantor, their subsidiaries or licensees of products
sold
under or in connection with such Marks, including, without limitation, all
documents that reveal the media used or to be used and the cost for all such
advertising conducted within the described period or planned for such products,
(i) renewals and proceeds of any of the foregoing and (j) in each case, all
goodwill symbolized by such Marks.
“Material
Adverse Effect”
means a
material adverse effect on (a) the business, condition (financial or
otherwise), operations, performance or properties of the Grantors and their
Subsidiaries, considered as one enterprise, (b) the rights and remedies
of
the Agent and any Investor under any Operative Document or the Purchase
Agreement or (c) the ability of Grantors to perform their obligations
under
any Operative Document or the Purchase Agreement to which they are or are to
be
a party; provided,
however,
that
“Material
Adverse Effect”
shall
not include any change, circumstance or
5
condition
arising out of or attributable to (i) any changes in the Company’s stock price
or trading volume or a delisting of the Company’s common stock from the American
Stock Exchange in and of itself; (ii) events, circumstances, changes or effects
that generally affect the industry in which the Company operates and do not
affect the Company in a materially disproportionate manner relative to other
Persons engaged in the same industry; (iii) general economic conditions or
events, circumstances, changes or effects affecting the United States economy
generally; or (iv) changes arising from the consummation of the transactions
contemplated by, or the announcement, of the execution of any of the Operative
Documents.
“Operative
Documents”
means
this Agreement and the Notes.
“Patents”
means
all (a) letters patent, design patents, utility patents, inventions, statutory
invention registrations, all inventions claimed or disclosed therein and all
improvements thereto and trade secrets, all patents and patent applications
in
the United States Patent and Trademark Office, and interests under patent
license agreements, including, without limitation, the inventions and
improvements described and claimed or disclosed therein, (b) licenses pertaining
to any patent whether such Grantor is licensor or licensee, (c) income,
royalties, damages and payments now and hereafter due and /or payable under
and
with respect thereto, including, without limitation, damages and payments for
past, present or future infringements, (d) rights to xxx for past, present
and
future infringements thereof, (e) rights corresponding thereto throughout the
world in all jurisdictions in which such patents have been issued or applied
for
and (f) the reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing.
“Permitted
Liens”
shall
mean and include: (i) Liens for taxes or other governmental charges
not at
the time delinquent or thereafter payable without penalty or being contested
in
good faith; (ii) Liens of carriers, warehousemen, mechanics, materialmen,
vendors, and landlords incurred in the ordinary course of business for sums
not
overdue or being contested in good faith; (iii) deposits under workers’
compensation, unemployment insurance and social security laws or to secure
the
performance of bids, tenders, contracts (other than for the repayment of
borrowed money) or leases, or to secure statutory obligations of surety or
appeal bonds or to secure indemnity, performance or other similar bonds in
the
ordinary course of business; (iv) easements, reservations, rights of
way,
restrictions, minor defects or irregularities in title and other similar charges
or encumbrances affecting real property in a manner not materially or adversely
affecting the value or use of such property; (v) Liens in favor of
the
Agent, (vi) Liens in favor of Laurus as provided for in the Subordination
Agreement; (vii) Liens securing obligations under a capital lease if
such
lease is permitted under this Agreement and such Liens do not extend to property
other than the property leased under such capital lease; (viii) Liens
upon
any equipment or other assets acquired or held by the Company or any of its
subsidiaries to secure the purchase price of such equipment or other assets
or
indebtedness incurred solely for the purpose of financing the acquisition of
such equipment or other assets, so long as such Lien extends only to the
equipment or other assets financed, and any accessions, replacements,
substitutions and proceeds (including insurance proceeds) thereof or thereto;
and (ix) cash collateral securing letters of credit.
“Person”
shall
mean and include an individual, a partnership, a corporation (including a
business trust), a joint stock company, a limited liability company, an
unincorporated association, a joint venture or other entity or a governmental
authority.
“Partnership
Interests”
means
the entire partnership interest at any time owned by any Grantor in any Pledged
Partnership Entity.
“Pledged
Collateral”
means
the Certificates, the Pledged Securities, the Pledged Partnership Interests
and
the Pledged Limited Liability Company Interests.
6
“Pledged
Entity”
means
each limited liability company set forth in Schedule 3-C
attached
hereto, together with any other limited liability company (other than a
Regulated Entity) in which any Grantor may have an interest at any
time.
“Pledged
Limited Liability Company Interests”
means
all limited liability company interests (other than in, of or with respect
to a
Regulated Entity) held by any Grantor, including, but not limited to those
limited liability company interests set forth in Schedule 3-C
attached
hereto, as such Schedule may be supplemented from time to time in accordance
with the terms of this Agreement and all capital, limited liability company
assets, dividends, cash, instruments and other properties from time to time
received, to be received or otherwise distributed in respect of or in exchange
for any or all of such interests and all certificates and instruments
representing or evidencing such other property received, receivable or otherwise
distributed in respect of or in exchange for any or all thereof.
“Pledge
Notice”
shall
have the meaning ascribed to it in Section 4(b) of this
Agreement.
“Pledged
Partnership Entity”
means
each partnership interest set forth in Schedule 3-C
attached
hereto, together with any other partnership interest (other than in, of or
with
respect to a Regulated Entity) in which any Grantor may have an interest at
any
time.
“Pledged
Partnership Interests”
means
all interests in any partnership or joint venture held by any Grantor (other
than in, of or with respect to a Regulated Entity), including, but not limited
to those partnership interests set forth in Schedule 3-C
attached
hereto, as such Schedule may be supplemented from time to time in accordance
with the terms of this Agreement, and all dividends, cash, instruments and
other
properties from time to time received, to be received or otherwise distributed
in respect of or in exchange for any or all of such interests.
“Pledged
Securities”
means
all shares of capital stock of each issuer in which any Grantor has an interest
(other than in, of or with respect to a Regulated Entity), including, but not
limited to those shares of capital stock set forth in Schedule 3-C
attached
hereto, as such Schedule may be supplemented from time to time in accordance
with the terms of this Agreement, and all dividends, cash, instruments and
other
properties from time to time received, to be received or otherwise distributed
in respect of or in exchange for any or all of such shares.
“Regulated
Entity”
means
DSLnet Communications, LLC and DSLnet Communications VA, Inc.
“Subordination
Agreement”
shall
have the meaning ascribed to it in the Recitals to this Agreement.
“Voting
Interests”
means
shares of capital stock issued by a corporation, or equivalent equity interests
in any other Person, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even if the right so to vote
has
been suspended by the happening of such a contingency.
2. Guaranty.
(a) Each
Guarantor hereby absolutely, unconditionally and irrevocably guarantees the
punctual payment when due, whether at scheduled maturity or on any date of
a
required prepayment or by acceleration, demand or otherwise, of all obligations
of the Company now or hereafter existing under or in respect of the Operative
Documents or the Purchase Agreement (including, without limitation, any
extensions, modifications, substitutions, amendments or renewals of any or
all
of the foregoing obligations), whether direct or indirect, absolute or
contingent, and whether for principal, interest,
7
premiums,
fees, indemnities, contract causes of action, costs, expenses or otherwise
(such
obligations being the “Guaranteed
Obligations”),
and
agrees to pay any and all reasonable expenses (including, without limitation,
reasonable fees and expenses of counsel) reasonably incurred by the Agent or
any
Investor in enforcing any rights under or in respect of any Operative Document.
Without limiting the generality of the foregoing, each Guarantor’s liability
shall extend to all amounts that constitute part of the Guaranteed Obligations
and would be owed by the Company to any Investor under or in respect of the
Operative Documents or the Purchase Agreement but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Company.
(b) Each
Guarantor, and by its acceptance of this Guaranty, the Agent and each other
Investor, hereby confirms that it is the intention of all such Persons that
the
provisions of this Guaranty and the obligations of each Guarantor hereunder
not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law
(as hereinafter defined), the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar foreign, federal or state law to the
extent applicable to this Guaranty and the obligations of each Guarantor
hereunder. To effectuate the foregoing intention, the Agent, the other Investors
and the Guarantors hereby irrevocably agree that the obligations of each
Guarantor under this Guaranty at any time shall be limited to the maximum amount
as will result in the obligations of such Guarantor under this Guaranty not
constituting a fraudulent transfer or conveyance. For purposes hereof,
“Bankruptcy
Law”
means
any proceeding of the type referred to Title 11, U.S. Code, or any similar
foreign, federal or state law for the relief of debtors.
(c) Each
Guarantor hereby unconditionally and irrevocably agrees that in the event any
payment shall be required to be made to any Investor under this Guaranty or
any
other guaranty, such Guarantor will contribute, to the maximum extent permitted
by law, such amounts to each other Guarantor so as to maximize the aggregate
amount paid to the Investors under or in respect of the Operative
Documents.
(d) Each
Guarantor guarantees that the Guaranteed Obligations will be paid strictly
in
accordance with the terms of the Operative Documents and the Purchase Agreement,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of any Investor with
respect thereto. The obligations of each Guarantor under or in respect of this
Guaranty are independent of the Guaranteed Obligations or any other obligations
of any other Guarantor under or in respect of the Operative Documents and the
Purchase Agreement, and a separate action or actions may be brought and
prosecuted against each Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against the Company or any other Guarantor or
whether the Company or any other Guarantor is joined in any such action or
actions. The liability of each Guarantor under this Guaranty shall be
irrevocable, absolute and unconditional irrespective of, and each Guarantor
hereby irrevocably waives any defenses it may now have or hereafter acquire
in
any way relating to, any or all of the following:
(i) any
lack
of validity or enforceability of any Operative Document, the Purchase Agreement
or any agreement or instrument relating thereto;
(ii) any
change in the time, manner or place of payment of, or in any other term of,
all
or any of the Guaranteed Obligations or any other obligations of any other
Guarantor under or in respect of the Operative Documents or the Purchase
Agreement or any other amendment or waiver of or any consent to departure from
any Operative Document or the Purchase Agreement including, without limitation,
any increase in the Guaranteed Obligations resulting from the extension of
additional credit to the Company or any of its Subsidiaries or
otherwise;
8
(iii) any
taking, exchange, release or non-perfection of any Collateral or any other
collateral, or any taking, release or amendment or waiver of, or consent to
departure from, any other guaranty, for all or any of the Guaranteed
Obligations;
(iv) any
manner of application of Collateral or any other collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of sale
or
other disposition of any Collateral or any other collateral for all or any
of
the Guaranteed Obligations or any other obligations of the Company under or
in
respect of the Operative Documents and the Purchase Agreement or any other
assets of the Company or any of its Subsidiaries;
(v) any
change, restructuring or termination of the corporate structure or existence
of
the Company or any of its Subsidiaries;
(vi) any
failure of any Investor to disclose to any Guarantor any information relating
to
the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company now or hereafter known to such Investor
(each Guarantor waiving any duty on the part of the Investors to disclose such
information);
(vii) the
failure of any other Person to execute or deliver this Agreement or any other
guaranty or agreement or the release or reduction of liability of any Guarantor
or other guarantor or surety with respect to the Guaranteed Obligations;
or
(viii) any
other
circumstance (including, without limitation, any statute of limitations) or
any
existence of or reliance on any representation by any Investor that might
otherwise constitute a defense available to, or a discharge of, any Guarantor
or
any other guarantor or surety.
This
Guaranty shall continue to be effective or be reinstated, as the case may be,
if
at any time any payment of any of the Guaranteed Obligations is rescinded or
must otherwise be returned by any Investor or any other Person upon the
insolvency, bankruptcy or reorganization of the Company or any other Guarantor
or otherwise, all as though such payment had not been made.
3. Creation
of Security Interest.
(a) Each
Grantor does hereby grant and pledge to the Agent, for the ratable benefit
of
the Investors and the Agent, a security interest in and to, all right, title
and
interest of such Grantor in and to all presently existing and hereafter acquired
Collateral. The security interest hereunder secures the payment and performance
of all obligations of each Grantor now or hereafter existing under or in respect
of the Operative Documents and the Purchase Agreement. The security interest
and
pledge created by this Section 3 shall continue in effect so long as such
obligations remain outstanding. Notwithstanding the foregoing, the security
interests granted herein shall be subject to the terms of the Subordination
Agreement.
(b) Each
Grantor agrees that it will not sell, assign, or otherwise dispose of any of
the
Collateral other than (i) cash expenditures not otherwise in violation of the
Purchase Agreement or the Operative Documents, (ii) sales and leases of customer
premises equipment in the ordinary course of business, (iii) sales of inventory
in the ordinary course of business, (iv) sales of worn-out, obsolete or excess
equipment and (v) the sale of all or substantially all of the assets, or all
of
the equity stock, of Grantor, Vector Internet Services, Inc. (“VISI”);
provided
that
such sales are made on an arms length basis. Upon the consummation of any of
such sales or other dispositions, in the manner contemplated by
9
this
Section 3(b), the security interest granted herein with respect to such
Collateral shall be deemed released. In the event of the occurrence of the
disposition of VISI assets or stock as contemplated by clause (v) above, the
Agent and the Investors shall, in connection therewith, deliver any pledged
Collateral of VISI and any releases of liens necessary to consummate such sale
transaction; provided however, that the Agent, for the ratable benefit of the
Investors, shall retain a security interest in the net proceeds of the sale
of
all or substantially all of the assets and/or equity stock of VISI.
4. Delivery
of Pledged Collateral.
(a) Each
Certificate shall, within two (2) business days following (i) the Closing
Date (with respect to Certificates existing on the Closing Date) and
(ii) the day on which such Certificate shall be received or acquired
by a
Grantor (with respect to any Certificate received or acquired after the Closing
Date), be delivered to and held by or on behalf of the Agent, and shall be
in
suitable form for transfer by delivery, or shall be accompanied by duly executed
undated endorsements, instruments of transfer or assignment in blank, all in
form and substance reasonably satisfactory to the Agent.
(b) With
respect to each uncertificated Limited Liability Company Interest and each
uncertificated Partnership Interest, on (i) the Closing Date (with respect
such Limited Liability Company Interests and such Partnership Interests existing
on such date) and (ii) the day on which any such Limited Liability Company
Interest and any such Partnership Interest shall be acquired by a Grantor (with
respect to such Limited Liability Company Interests and such Partnership
Interests acquired after the Closing Date), a notice in the form set forth
in
Exhibit A-1 attached hereto (the “Pledge
Notice”)
shall
be appropriately completed and delivered to each Pledged Entity and each Pledged
Partnership Entity, notifying each Pledged Entity and each Pledged Partnership
Entity of the existence of this Agreement, a copy of this Agreement shall be
delivered by the Grantor to the relevant Pledged Entity and relevant Pledged
Partnership Entity, and such Grantor shall have received and delivered to the
Agent a copy of such Pledge Notice, along with an acknowledgment in the form
set
forth in Exhibit A-2 attached hereto (the “Issuer
Acknowledgment”),
duly
executed by the relevant Pledged Entity.
(c) The
Agent
shall have the right, during the existence of an Event of Default, without
notice to any of the Grantors, in connection with a commercially reasonable
foreclosure sale, to transfer to, or to direct the applicable Grantor or any
nominee of such Grantor to register or cause to be registered in the name of,
the Agent or any of its nominees any or all of the Pledged Securities, Pledged
Partnership Interests or Pledged Limited Liability Company Interests. In
addition, the Agent, in furtherance of any action referenced in the previous
sentence, shall have the right at any time to exchange certificates or
instruments representing or evidencing Pledged Securities for certificates
or
instruments of smaller or larger denominations.
5. Appointment
of the Agent.
(a) Authorization
and Action.
Each
Investor hereby appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers and discretion under this Agreement
and the other Operative Documents as are delegated to the Agent by the terms
hereof and thereof, together with such powers and discretion as are reasonably
incidental thereto and the Agent hereby accepts such appointment. As to any
matters not expressly provided for by the Operative Documents, the Agent shall
not be required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in
so
acting or refraining from acting) upon the instructions of the Majority
Investors, and such instructions shall be binding upon all Investors;
provided,
however,
that the
Agent shall not be required to take any action that exposes the Agent to
personal liability or that is contrary to this Agreement, the other Operative
Documents, the Purchase
10
Agreement
or applicable law. The Agent agrees to give to each Investor prompt notice
of
each notice given to it by any Grantor pursuant to the terms of the Operative
Documents and the Purchase Agreement.
(b) Agent’s
Reliance, Etc.
With
respect to the services to be provided by the Agent,, neither the Agent nor
any
of its respective directors, officers, agents or employees shall be liable
for
any action taken or omitted to be taken by it or them under or in connection
with the Operative Documents, except for its or their own gross negligence
or
willful misconduct. Without limitation of the generality of the foregoing,
the
Agent: (i) may consult with legal counsel (including counsel for any
Grantor), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith
by
it in accordance with the advice of such counsel, accountants or experts;
(ii) makes no warranty or representation to any Investor and shall not
be
responsible to any Investor for any statements, warranties or representations
(whether written or oral) made in or in connection with the Operative Documents
or the Purchase Agreement; (iii) shall not have any duty to ascertain
or to
inquire as to the performance or observance of any of the terms, covenants
or
conditions of any Operative Document on the part of any Grantor or to inspect
the property (including the books and records) of any Grantor; (iv) shall
not be responsible to any Grantor for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Operative Document, the Purchase Agreement
or
any other instrument or document furnished pursuant thereto; and (v) shall
incur no liability under or in respect of any Operative Document or the Purchase
Agreement by acting upon any notice, consent, certificate or other instrument
or
writing (which may be by telegram, telecopy or telex) believed by it to be
genuine and signed or sent by
the
proper party or parties.
(c) With
respect to the Note issued to Agent in its capacity as an Investor, Agent shall
have the same rights and powers under the Operative Documents and the Purchase
Agreement as any other Investor and may exercise the same as though it were
not
the Agent; and the term “Investors”
shall,
unless otherwise expressly indicated, include the Agent in its individual
capacity as an Investor.
(d) Investors
Credit Decision.
Each
Investor acknowledges that it has, independently and without reliance upon
the
Agent or any other Investor and based on the financial information and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into the Operative Documents and the
Purchase Agreement. Each Investor also acknowledges that it will, independently
and without reliance upon the Agent or any other Investor and based on such
documents and information as it shall deem appropriate at the time, continue
to
make its own credit decisions in taking or not taking action under the Operative
Documents and the Purchase Agreement.
(e) Successor
Agents.
The
Agent may resign at any time by giving written notice thereof to the Investors
and the Grantors. Upon any such resignation, the Majority Investors shall have
the right to appoint a successor Agent. If no successor Agent shall have been
so
appointed by the Majority Investors, and shall have accepted such appointment,
within 30 days after the retiring Agent’s giving of notice of resignation, then
the retiring Agent may, on behalf of the Investors, appoint a successor Agent,
which shall be a commercial bank organized under the laws of the United States
or of any State thereof and having a combined capital and surplus of at least
$250,000,000. Upon the acceptance of any appointment as the Agent hereunder
by a
successor Agent and, upon the execution and filing or recording of such
financing statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Majority Investors may
request, in order to continue the perfection of the Liens granted or purported
to be granted by this Agreement and the other Operative Documents, such
successor Agent shall succeed to and become vested with all the rights, powers,
discretion, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under the Operative
Documents. If within 45 days after written notice is given of
11
the
retiring Agent’s resignation under this Section 5(e) no successor Agent shall
have been appointed and shall have accepted such appointment, then on such
45th
day (a) the retiring Agent’s resignation shall become effective,
(b) the retiring Agent shall thereupon be discharged from its duties
and
obligations under the Operative Documents and (c) the Majority Investors
shall thereafter perform all duties of the retiring Agent under the Operative
Documents until such time, if any, as the Majority Investors appoint a successor
Agent as provided above. After any retiring Agent’s resignation hereunder as the
Agent shall have become effective, the provisions of this Section 5(e) shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Agent under this Agreement.
(f) Agent's
Rights Regarding Collateral.
At any
time and from time to time, the Agent may, to the extent necessary or desirable
to protect the security hereunder, but the Agent shall not be obligated to:
(a) (whether or not an Event of Default has occurred) itself or through
its
representatives, at its own expense (which shall be payable by Grantors under
Section 19), upon reasonable prior notice and at such reasonable times during
usual business hours, visit and inspect any of the Grantors' properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and discuss the business,
operations, properties and financial and other condition of any of the Grantors
with officers of such Grantors and with their accountants or (b) if
an
Event of Default has occurred and is continuing, at the expense of the Grantors,
perform any obligation of any of the Grantors under this Agreement. At any
time
and from time to time after an Event of Default has occurred and is continuing,
at the expense of the Grantors, the Agent may, to the extent necessary or
desirable to protect the security hereunder, but the Agent shall not be
obligated to: (i) notify obligors of the Collateral that the Collateral
has
been pledged as security to the Agent; (ii) request from obligors of the
Collateral, in the name of the applicable Grantor or in the name of the Agent,
information concerning the Collateral and the amounts owing thereon; and
(iii) direct obligors under the contracts included in the Collateral
to
direct their performance to the Agent. Each Grantor shall keep proper books
and
records and accounts in which full, true and correct entries in conformity
with
GAAP and all applicable laws (including, without limitation, all applicable
regulations, rules and orders) shall be made of all material dealings and
transactions pertaining to the Collateral owned by it. The Agent shall at all
reasonable times on reasonable prior notice have full access to and the right
to
audit any and all of Grantors' books and records pertaining to the Collateral,
and to confirm and verify the value of the Collateral. The Agent shall not
be
under any duty or obligation whatsoever to take any action to preserve any
rights of or against any prior or other parties in connection with the
Collateral, to exercise any voting rights or managerial rights with respect
to
any Collateral or to make or give any presentments for payment, demands for
performance, notices of non-performance, protests, notices of protest, notices
of dishonor or notices of any other nature whatsoever in connection with the
Collateral or the Notes. The Agent shall not be under any duty or obligation
whatsoever to take any action to protect or preserve the Collateral or any
rights of the Grantors therein, or to make collections or enforce payment
thereon, or to participate in any foreclosure or other proceeding in connection
therewith. Nothing contained herein or in any consent shall constitute an
assumption by the Agent of any of the Grantors' obligations under the contracts
assigned hereunder unless the Agent shall have given written notice to the
counterpart to such assigned contract of the Agent's intention to assume such
contract. Each Grantor shall continue to be liable for performance of its
obligations under such contracts.
(g) Possession
of Collateral by the Agent.
All the
Collateral now, heretofore or hereafter delivered to the Agent shall be held
by
the Agent in its possession, custody and control. During the existence of an
Event of Default, whenever any of the Collateral is in Agent's possession,
custody or control, the Agent may use, operate and consume the Collateral,
whether for the purpose of preserving and/or protecting the Collateral, or
for
the purpose of performing any of the Grantors’ obligations with respect thereto,
or otherwise so long as consistent with the Operative Documents or transactions
contemplated thereby. The Agent may at any time deliver or redeliver the
Collateral or any part thereof to the Grantors, and the receipt of any of the
same by the Grantors shall be complete and full acquittance
12
for
the
Collateral so delivered, and the Agent thereafter shall be discharged from
any
liability or responsibility arising after such delivery to the Grantors. The
Agent shall have no liability for any loss of or damage to any Collateral not
in
the Agent’s possession, and in no event shall the Agent have liability for any
diminution in value of Collateral occasioned by economic or market conditions
or
events. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession, if such Collateral
is accorded treatment substantially equal to that which it accords its own
property.
(h) Agent
Appointed Attorney-in-Fact.
To the
full extent permitted by applicable law, each Grantor hereby irrevocably
appoints the Agent as such Grantor's attorney-in-fact, with full authority
in
the place and stead of such Grantor, and in the name of such Grantor, or
otherwise, from time to time, in the Agent's sole and absolute discretion to
do
any of the following acts or things during the existence of an Event of Default:
(a) to do all acts and things and to execute all documents necessary
or
advisable to perfect and continue the perfection of the security interests
created by this Agreement and to preserve, maintain and protect the Collateral,
including, without limitation, to obtain and adjust insurance required to be
paid to the Agent pursuant to Section 17; (b) to do any and every act
that
such Grantor is obligated to do under this Agreement, including, without
limitation, to ask for, demand, collect, xxx for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in
respect of any of the Collateral; (c) to prepare, sign, file and record,
in
such Grantor's name, any financing statement covering the Collateral;
(d) to endorse and transfer the Collateral upon foreclosure by the Agent;
(e) to file any claims or take any action or institute any proceedings
that the Agent may deem necessary or desirable for the collection of any of
the
Collateral or the protection or enforcement of any of the rights of the Agent
with respect to any of the Collateral; and (f) to receive, indorse, and collect
any draft or other instruments, documents and chattel paper, in connection
with
any of the foregoing; provided,
however,
that
the Agent shall be under no obligation whatsoever to take any of the foregoing
actions, and the Agent shall have no liability or responsibility for any act
or
omission (other than the Agent's own gross negligence or willful misconduct)
taken with respect thereto.
6. Payments
and Computations.
(a) Each
payment or prepayment of principal or interest on the Notes shall be allocated
pro rata among the Investors in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof.
(b) The
Company will not directly or indirectly pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest, fee or
otherwise, or grant any security, to any Investor as consideration for or as
an
inducement to the entering into by any Investor of any waiver of amendment
of
any of the terms and provisions hereof unless such remuneration is concurrently
paid, or security is concurrently granted, on the same terms, ratably to all
Investors then outstanding even if such Investor did not consent to such waiver
or amendment, so long as such waiver or amendment was consented to by the
requisite Investors.
7. Sharing
of Payments, Etc.
If
any
Investor shall obtain at any time any payment (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise), on account
of
the obligations to such Investor under and in respect of the Notes at such
time
in excess of its ratable share of payments on account of the obligations to
all
Investors under and in respect of the Notes at such time obtained by all the
Investors at such time, such Investor shall forthwith purchase from the other
Investors such interests or participating interests in the obligations due
and
payable or owing to them, as the case may be, as shall be necessary to cause
such purchasing Investor to share the excess payment ratably with each of them;
provided,
however,
that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Investor, such purchase from each other Investor shall be rescinded
and such other
13
Investor
shall repay to the purchasing Investor the purchase price to the extent of
such
Investor’s ratable share of such recovery together with an amount equal to such
Investor’s ratable share of any interest or other amount paid or payable by the
purchasing Investor in respect of the total amount so recovered. The Company
agrees that any Investor so purchasing an interest or participating interest
from another Investor pursuant to this Section 7 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such interest or participating interest, as the case
may be, as fully as if such Investor were the direct creditor of the Company
in
the amount of such interest or participating interest, as the case may
be.
8. Further
Assurances.
(a) At
any
time and from time to time at the reasonable written request of the Agent,
each
Grantor shall promptly execute and deliver to the Agent, at such Grantor's
expense, all such financing statements and other instruments, certificates
and
documents (including account control agreements) in form and substance
reasonably satisfactory to the Agent, and perform all such other acts as shall
be necessary or reasonably desirable to fully perfect or protect or maintain,
when filed, recorded, delivered or performed, the Agent's security interests
granted pursuant to this Agreement or to enable the Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, each Grantor shall: (i) at
the
request of the Agent, xxxx conspicuously each document included in the Inventory
and each chattel paper relating to the Receivables, each Related Contract,
and
all instruments and other documents and each of its records pertaining to the
Collateral with a legend, in form and substance satisfactory to the Agent,
indicating that such document, chattel paper, Related Contract, instrument
or
Collateral is subject to the security interest granted hereby, (ii) at the
request of the Agent, if any account or contract or other writing relating
thereto shall be evidenced by a promissory note or other instrument, deliver
and
pledge to the Agent hereunder, such note or other instrument duly endorsed
and
accompanied by duly executed undated instruments of transfer or assignment,
all
in form and substance reasonably satisfactory to the Agent; (iii) execute or
authenticate and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Agent may reasonably request, in order to perfect and
preserve, with the required priority, the security interests granted, or
purported to be granted hereby, (iv) upon any Grantor’s registration or
application of any copyright under the Copyright Act, execute and deliver
promptly and in any event, within 5 days of registration or application, to
the
Agent for recordation and filing in the United States Copyright Office a Grant
of Security Interest, in the form of Exhibit B attached hereto, (v) upon any
Grantor’s registration or application of any Patent or Xxxx, execute and deliver
promptly and in any event, with 5 days of registration or application, to the
Agent for recordation and filing in the United States Patent and Trademark
Office a Grant of Security Interest, in the form of Exhibit B attached hereto,
(vi) with respect to any license or agreement in which any Grantor now has
or
hereafter acquires an interest which by its terms prohibits assignment, upon
the
Agent’s request such Grantor will use its commercially reasonable efforts to
procure the consent of the counterpart party thereto, (vii) deliver and pledge
to the Agent, certificates representing Pledged Securities, accompanied by
undated stock powers executed in blank, and (viii) take all action necessary
to
ensure that the Agent has control of Collateral consisting of deposit accounts,
electronic chattel paper, investment property, letter-of-credit rights and
transferable records as provided in Sections 9-104, 9-105, 9-106 and 9-107
of
the UCC and in Section 16 of UETA.
(b) Each
Grantor hereby authorizes the Agent to file one or more financing or
continuation statements, and amendments thereto (including, without limitation,
one or more financing statements indicating that such financing statement covers
all assets or all property (or words of similar effect) of such Grantor),
relative to the Collateral (or any part thereof), in each case without the
signature of such Grantor (and regardless of whether any particular asset
described in such financing statements falls within the scope of the UCC or
the
granting clause of this Agreement) where permitted by law. A
14
carbon,
photographic or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
(c) With
respect to any Collateral consisting of securities, instruments, partnership
or
joint venture interests, limited liability company interests, or the like,
each
Grantor hereby consents and agrees that, during the existence of an Event of
Default, the issuers of, or obligors on, any such Collateral, or any registrar
or transfer agent or trustee for any such Collateral, shall be entitled to
accept the provisions of this Agreement as conclusive evidence of the right
of
the Agent to effect any transfer or exercise any right hereunder or with respect
to any such Collateral subject to the terms hereof,
notwithstanding
any other notice or direction to the contrary heretofore or hereafter given
by
any Grantor or any other Person to such issuers or such obligors or to any
such
registrar or transfer agent or trustee.
(d) At
any
time and from time to time, the Agent shall be entitled to file and/or record
any instruments and documents held by it and any or all such further documents
and instruments, relative to the Collateral or any part thereof in each
instance, and to take all such other actions as the Agent may reasonably deem
appropriate or necessary to perfect and to maintain perfected the security
interests granted herein.
9. Voting
Rights; Dividends; Etc.
So
long
as no Event of Default shall have occurred and be continuing:
(a) Voting
Rights.
Each
Grantor shall be entitled to exercise any and all voting and other consensual
rights pertaining to its Pledged Securities, its Pledged Partnership Interests
and its Pledged Limited Liability Company Interests, or any part thereof, for
any purpose not inconsistent with the terms of this Agreement, the Purchase
Agreement or the other Operative Documents; provided,
however,
that
each Grantor shall not exercise, or shall refrain from exercising, any such
right if it would result in an Event of Default.
(b) Dividend
and Distribution Rights.
Subject
to the terms of the Purchase Agreement, each Grantor shall be entitled to
receive and to retain and use any and all dividends, interest or distributions
paid in respect of its Pledged Securities, its Pledged Partnership Interests
or
its Pledged Limited Liability Company Interests; provided,
however,
that
any and all:
(i) non-cash
dividends or distributions in the form of capital stock, certificated limited
liability company interests, instruments or other property received, receivable
or otherwise distributed in respect of, or in exchange for, any Pledged
Securities, Pledged Partnership Interests, Pledged Limited Liability Company
Interests,
(ii) dividends
and other distributions paid or payable in cash in respect of any Pledged
Securities, Pledged Partnership Interests or Pledged Limited Liability Company
Interests in connection with a partial or total liquidation or dissolution
or in
connection with a reduction of capital, capital surplus or paid-in-surplus,
and
(iii) cash
paid, payable or otherwise distributed in redemption of, or in exchange for,
any
Pledged Securities, Pledged Partnership Interests or Pledged Limited Liability
Company Interests,
shall,
except as otherwise provided for in the Operative Documents, be forthwith
delivered to the Agent, in the case of (i) above, to be held as Collateral
and shall, if received by such Grantor, be received in trust for the benefit
of
the Agent, be segregated from the other property of such Grantor and forthwith
be
15
delivered
to the Agent as Collateral in the same form as so received (with any necessary
endorsements), and in the case of (ii) and (iii) above, to be
held as
Collateral.
10. Rights
as to Pledged Collateral During Event of Default.
When
an
Event of Default has occurred and is continuing:
(a) Voting,
Dividend and Distribution Rights.
Upon
notice from the Agent to the Grantors, all rights of each Grantor to exercise
the voting and other consensual rights which it would otherwise be entitled
to
exercise pursuant to Section 9(a) above, and to receive the dividends and
distributions which it would otherwise be authorized to receive and retain
pursuant to Section 9(b) above, shall cease, and all such rights shall thereupon
become vested in the Agent who shall thereupon have the sole right to exercise
such voting and other consensual rights and to receive and to hold as Pledged
Collateral such dividends and distributions during the continuance of such
Event
of Default.
(b) Dividends
and Distributions Held in Trust.
All
dividends and other distributions which are received by any Grantor contrary
to
the provisions of Section 10(a) of this Agreement shall be received in trust
for
the benefit of the Agent, shall be segregated from other funds of such Grantor
and forthwith shall be paid over to the Agent as Collateral in the same form
as
so received (with any necessary endorsements).
11. Irrevocable
Proxy.
Each
Grantor hereby revokes all previous proxies with regard to its Pledged
Securities, its Pledged Partnership Interests and its Pledged Limited Liability
Company Interests and, appoints the Agent as its respective proxyholder to
(a) attend and vote at any and all meetings of the shareholders of the
corporation(s) which issued the Pledged Securities, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to
the
termination of this proxy and to execute any and all written consents of
shareholders of such corporation(s) executed on or after the date of the giving
of this proxy and prior to the termination of this proxy, with the same effect
as if such Grantor had personally attended the meetings or had personally voted
its shares or had personally signed the written consents, waivers or
ratification, and (b) to attend and vote at any and all meetings of
the
members of the Pledged Entities or partners of the Pledged Partnership Entities
(whether or not such Pledged Limited Liability Company Interests or Pledged
Partnership Interests are transferred into the name of the Agent), and any
adjournments thereof, held on or after the date of the giving of this proxy
and
to execute any and all written consents, waivers and ratifications of the
Pledged Entities or Pledged Partnership Entities executed on or after the date
of the giving of this proxy and prior to the termination of this proxy with
the
same effect as if such Grantor had personally attended the meetings or had
personally voted on their respective Limited Liability Company Interests or
Partnership Interests or had personally signed the consents, waivers or
ratifications; provided,
however,
that
the Agent as proxyholder shall have rights hereunder only during the existence
of an Event of Default. Each Grantor hereby authorizes the Agent to substitute
another Person (which Person shall be a successor to the rights of the Agent
hereunder, a nominee appointed by the Agent to serve as proxyholder, or
otherwise as approved by such Grantor in writing, such approval not to be
unreasonably withheld) as the proxyholder and, during the existence of any
Event
of Default, hereby authorizes and directs the proxyholder to file this proxy
and
the substitution instrument with the secretary of the appropriate corporation.
This proxy is coupled with an interest and is irrevocable until such time as
all
outstanding principal and interest on the Notes have been indefeasibly paid
in
full.
12. The
Grantors' Representations and Warranties.
Each
Grantor represents and warrants as follows:
(a) (i)
Such
Grantor’s exact legal name, as defined in Section 9-503(a) of the UCC, is
correctly set forth on Schedule
3-A
hereto;
(ii) the locations listed on the Schedule
3-A
constitute all
16
locations
at which Collateral owned by such Grantor is located; (iii) the chief
executive office of such Grantor, where such Grantor keeps its records
concerning the Collateral, is located at the address set forth for such Grantor
on Schedule
3-D;
(iv) such Grantor has exclusive possession and control of the Collateral
owned by such Grantor and (v) such Grantor has only the Deposit Accounts and
Investment Accounts listed on Schedule
3-B,
and
(vi) such Grantor has no registered Patents or Copyrights or pending Patent
or
Copyright applications with the US Office of Patents and Trademarks or the
US
office of Copyrights.
(b) Such
Grantor conducts business only under its own name and the trade names listed
on
Schedule
3-E.
(c) Such
Grantor is the legal and beneficial owner of the Collateral owned by such
Grantor free and clear of all Liens, claims, options or rights of others except
for the security interest created under this Agreement and for Permitted Liens.
Such Grantor has the power, authority and legal right to grant the security
interests in such Collateral purported to be granted hereby, and to execute,
deliver and perform this Agreement. The pledge of such Collateral pursuant
to
the Agreement creates a valid security interest in such Collateral (subject
to
any Permitted Liens), and upon the timely filing of UCC-1 financing statements
in the jurisdictions listed in Schedule
3-A attached
hereto, the execution and delivery of control agreement with the banks listed
on
Schedule
3-B
attached
hereto, and the Agents taking possession of and/or making all necessary filings
to perfect a security interest in any portion of the collateral for which
perfection may not be obtained by the filing of UCC-1 financing statements
and/or the execution and delivery of control agreements, such security interest
will be a first priority security interest (except for Permitted Liens).
(d)
Subject
to the prior rights of Laurus, Grantor will within 30 days following the Closing
Date negotiate and execute with the banks identified on Schedule
3-B
attached
hereto standard account control agreements in favor of the Agent over Grantor’s
depository accounts with such banks.
(e) No
consent of any Person, including, without limitation, any partner in a
partnership with respect to which such Grantor has pledged its interests as
a
Pledged Partnership Interest or any member in a Pledged Entity, or any lessor
or
warehouseman of any premises or warehouse upon or in which equipment and
inventory is located is required for the pledge by such Grantor of the
Collateral owned by such Grantor.
(f) The
Pledged Securities described on Schedule 3-C
attached
hereto constitute (i) all of the shares of capital stock of any Person,
other than a Regulated Entity, owned by such Grantor and (ii) that
percentage of the issued and outstanding shares of the respective issuers
thereof indicated on Schedule 3-C
attached
hereto, and there is no other class of shares issued and outstanding of the
respective issuers thereof except as set forth on Schedule 3-C
attached
hereto. The Pledged Limited Liability Company Interests described on
Schedule 3-C
attached
hereto constitute all of the Limited Liability Company Interests other than
in,
of or with respect to Regulated Entities of each Grantor and such Grantor's
percentage interest in each such Pledged Entity is as set forth on Schedule 3-C
attached
hereto.
(g) No
authorization, approval or other action by, and no notice to or filing with,
any
governmental authority or regulatory body or any third party (other than such
authorizations, approvals and other actions as have already been taken and
are
in full force and effect) is required (A) for the pledge of the Collateral
or the grant of the security interest in the Collateral by any of the Grantors
hereby or for the execution, delivery or performance of this Agreement by any
of
the Grantors, (B) for the exercise by the Agent of the voting rights
in the
Pledged Securities, the Pledged Partnership Interest or the Pledged Limited
Liability Company Interests or of any other rights or remedies in respect of
the
Collateral
17
hereunder
except as may be required in connection with any disposition of Collateral
consisting of securities by laws affecting the offering and sale of securities
generally or (C) the perfection or maintenance of the security interest created
hereunder (including the first priority nature of such security interest (except
for Permitted Liens), except for the filing of financing and continuation
statements under the UCC, which financing statements have been delivered to
the
Agent in proper form for filing, the agreements granting security interests
in
the Marks granted hereunder in the U.S. Patent and Trade Xxxx Office, which
agreements have been delivered to the Agent in proper form for filing and the
actions described in Section 3 with respect to Pledged
Securities.
13. Grantors'
Covenants.
In
addition to the other covenants and agreements set forth herein, in the other
Operative Documents and the Purchase Agreement, each Grantor covenants and
agrees as follows:
(a) Such
Grantor will pay, prior to delinquency, all taxes, charges, Liens and
assessments against the Collateral owned by it, except those with respect to
which the amount or validity is being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have
been
provided on the books of such Grantor and except those which could not
reasonably be expected to have a Material Adverse Effect.
(b) The
Collateral owned by it will not be used in violation of any material law,
regulation or ordinance or any applicable laws (including, without limitation,
all applicable regulations, rules and orders), nor used in any way that will
void or impair any insurance required to be carried in connection
therewith.
(c) The
Inventory produced or distributed by such Grantor will be produced in compliance
with all requirements of applicable law, including, without limitation, the
Fair
Labor Standards Act.
(d) Such
Grantor will keep the tangible Collateral owned by it in reasonably good repair,
working order and operating condition (normal wear and tear excluded), and
from
time to time make all necessary and proper repairs, renewals, replacements,
additions and improvements thereto and, as appropriate and applicable, will
otherwise deal with the Collateral in all such ways as are considered customary
practice by owners of like property.
(e) Such
Grantor will take all reasonable steps to preserve and protect the Collateral
owned by it except where the failure to do so could not reasonably be expected
to have a Material Adverse Effect.
(f) Such
Grantor will maintain all insurance coverage required pursuant to the terms
of
this Agreement.
(g) Such
Grantor will promptly notify the Agent in writing in the event of any material
damage to the Collateral from owned by it any source whatsoever which could
reasonably be expected to have a Material Adverse Effect.
(h) Such
Grantor will not (i), except for equipment located at such Grantor’s
customer’s premises in the ordinary course of business, establish any location
of Collateral owned by it not listed in Schedule
3-A,
(ii) move its principal place of business, chief executive offices or
any
other office listed in Schedule
3-D,
(iii) change its jurisdiction of incorporation or organization, or (iv)
adopt, use or conduct business under any trade name or other corporate or
fictitious name not disclosed in Schedule
3-E,
except
upon not less than 30 days prior written notice to the Agent and such Grantor's
prior
18
compliance
with all applicable requirements of Section 4 hereof necessary to perfect
the Agent's security interest hereunder.
(i) Such
Grantor shall cause all of its equipment constituting Collateral owned by it
to
be operated in accordance with any applicable manufacturer's manuals or
instructions and the requirements of its insurance policies. Such Grantor,
at
its expense, shall maintain such equipment in good condition, reasonable wear
and tear excepted, and will comply with all laws, ordinances and regulations
to
which the use and operation of such equipment may be or become subject. Such
obligation shall extend to repair and replacement of any partial loss or damage
to such equipment, regardless of the cause. All parts furnished in connection
with such maintenance or repair shall immediately become part of such equipment.
All such maintenance, repair and replacement services shall be promptly paid
for
and discharged by such Grantor with the result that no lien will attach to
such
equipment. Only qualified personnel of such Grantor or qualified contract
personnel shall operate such equipment. Such equipment shall be used only for
the purposes for which it was designed.
(j) Such
Grantor shall comply in all material respects, with the terms and conditions
of
all material agreements, commitments or instruments to which such Grantor is
a
party or by which it is bound. Such Grantor shall duly comply in all material
respects, with any applicable laws, ordinances, rules and regulations of any
foreign, federal, state or local government or any agency thereof having proper
jurisdiction over it, or any applicable writ, order or decree, and conform
in
all material respects, to all valid requirements of governmental authorities
relating to the conduct of its business, properties or assets.
(k) Such
Grantor shall maintain in all material respects, all necessary franchises,
permits, licenses and other rights and privileges from governmental authorities
necessary to permit it to own its property and to conduct its business as now
being conducted or as currently proposed to be conducted by it.
(l)
Promptly after any declaration of a dividend payment or any other distribution
with respect to its capital stock, the Company shall provide written notice
thereof to the Agent.
14. Marks.
(a) Royalties.
Each
Grantor hereby agrees that any rights granted hereunder to the Agent with
respect to Marks shall be applicable to all jurisdictions in which such Grantor
has the right to use such Marks, from time to time, and without any liability
for royalties or other related charges from the Agent to Grantors.
(b) Restrictions
on Future Agreements.
Each
Grantor will not, except in accordance with its standard commercial practices,
abandon any Xxxx in which such Grantor now owns or hereafter acquires any rights
or interests if such abandonment could reasonably be expected to have a Material
Adverse Effect or enter into any agreement, including, without limitation,
any
license agreement, which is inconsistent with such Grantor’s obligations under
this Agreement, if such actions could reasonably be expected to have a Material
Adverse Effect. Each Grantor further agrees that it will not take any action,
or
permit any action to be taken by others subject to its control, including
licensees, or fail to take any action which would customarily be taken by a
Person in the same business and in similar circumstances as such Grantor, which
could reasonably be expected to have a Material Adverse Effect.
(c) Duties
of Grantors.
In
accordance with its standard commercial practices, each Grantor shall have
the
duty to (i) prosecute diligently any trademark application pending as of the
date hereof or thereafter until the Notes shall have been indefeasibly paid
in
full, (ii) file and prosecute
19
opposition
and cancellation proceedings if the failure to do so could reasonably be
expected to have a Material Adverse Effect and (iii) take all reasonable action
necessary in such Grantor’s reasonable business judgment consistent with past
practices to preserve and maintain all rights in applications for registrations
of the Marks unless the failure so to do could not reasonably be expected to
have a Material Adverse Effect. Any expenses incurred in connection with the
foregoing applications shall be borne by Grantors. Each Grantor shall not
abandon any right to a Xxxx application except in accordance with its standard
commercial practices if such abandonment could reasonably be expected to have
a
Material Adverse Effect. Each Grantor shall give proper statutory notice in
connection with its use of each of the Marks to the extent necessary for the
protection of each of the Marks. Grantors shall notify the Agent of any suits
it
commences to enforce the Marks and shall provide the Agent with copies of any
documents reasonably requested by the Agent relating to such suits.
15. Collections
on the Collateral.
Each
Grantor shall have the right to use and to continue to make collections on
and
receive dividends and other proceeds of all of the Collateral in the ordinary
course of business so long as no Event of Default shall have occurred and be
continuing. Upon the occurrence and during the continuance of an Event of
Default, upon notice from the Agent to the Grantors, each Grantor's right to
make collections on and receive dividends and other proceeds of the Collateral
owned by it and to use or dispose of such collections and proceeds shall
terminate, and any and all dividends, proceeds and collections, including all
partial or total prepayments, then held or thereafter received on or on account
of the Collateral will be held or received by such Grantor in trust for the
Agent and promptly delivered in kind to the Agent (duly endorsed to the Agent,
if required), to be held as Collateral, as the Agent shall elect. During the
existence of an Event of Default, the Agent shall have the right at all times
to
receive, receipt for, endorse, assign, deposit and deliver, in the name of
any
of the Grantors, any and all checks, notes, drafts and other instruments for
the
payment of money constituting proceeds of or otherwise relating to the
Collateral; and each Grantor hereby authorizes the Agent to affix, by facsimile
signature or otherwise, the general or special endorsement of such Grantor,
in
such manner as the Agent shall deem advisable, to any such instrument in the
event the same has been delivered to or obtained by the Agent without
appropriate endorsement, and the Agent and any collecting bank are hereby
authorized to consider such endorsement to be a sufficient, valid and effective
endorsement by such Grantor, to the same extent as though it were manually
executed by the duly authorized representative of such Grantor, regardless
of by
whom or under what circumstances or by what authority such endorsement actually
is affixed, without duty of inquiry or responsibility as to such matters, and
such Grantor hereby expressly waives demand, presentment, protest and notice
of
protest or dishonor and all other notices of every kind and nature with respect
to any such instrument.
16. Remedies.
(a) Rights
During Event of Default.
During
the existence of an Event of Default, the Grantors shall be in default hereunder
and, subject to applicable law, Agent, shall have, in any jurisdiction where
enforcement is sought, in addition to all other rights and remedies that the
Agent may have under this Agreement and under applicable laws or in equity,
all
rights and remedies of a secured party under the UCC as enacted in any such
jurisdiction in effect at that time, and in addition the following rights and
remedies in accordance with applicable law, all of which may be exercised only
at the direction of the Majority Investors, but subject to the terms of the
Subordination Agreement, with or without further prior notice to the Grantors
except such notice as may be specifically required by applicable law:
(i) to foreclose the Liens and security interests created under any
Operative Document by any available judicial procedure or without judicial
process; (ii) to enter peaceably any premises where any Collateral may
be
located for the purpose of securing, protecting, inventorying, appraising,
inspecting, repairing, preserving, storing, preparing, processing, taking
possession of or removing the same; (iii) to sell, assign, lease or
otherwise dispose of any Collateral or any part thereof, either at public or
private sale or at any broker's board, in lot or in bulk, for cash, on credit
or
otherwise, with or without representations or warranties and
20
upon
such
terms as shall be commercially reasonable; (iv) to notify obligors on
the
Collateral that the Collateral has been assigned to the Agent and that all
payments thereon, or performance with respect thereto, are to be made directly
and exclusively to the Agent; (v) to collect by legal proceedings or
otherwise all dividends, distributions, interest, principal or other sums now
or
hereafter payable upon or on account of the Collateral; (vi) to enter
into
any extension, reorganization, disposition, merger or consolidation agreement,
or any other agreement relating to or affecting the Collateral, and in
connection therewith the Agent may deposit or surrender control of the
Collateral and/or accept other property in exchange for the Collateral as the
Agent reasonably deems appropriate and is commercially reasonable;
(vii) to settle, compromise or release, on terms acceptable
to the
Agent, in whole or in part, any amounts owing on the Collateral and/or any
disputes with respect thereto; (viii) to extend the time of payment,
make
allowances and adjustments and issue credits in connection with the Collateral
in the name of the applicable Grantor for the benefit of the Agent; (ix) to
enforce payment and prosecute any action or proceeding with respect to any
or
all of the Collateral and take or bring, on behalf of itself or in the name
of
the applicable Grantor, any and all steps, actions, suits or proceedings deemed
necessary or reasonably desirable by the Agent to effect collection of or to
realize upon the Collateral, including any judicial or nonjudicial foreclosure
thereof or thereon, and each Grantor specifically consents to any nonjudicial
foreclosure of any or all of the Collateral or any other action taken by the
Agent which may release any obligor from personal liability on any of the
Collateral, and each Grantor waives, to the extent permitted by applicable
law,
any right to receive prior notice of any public or private judicial or
nonjudicial sale or foreclosure of any security or any of the Collateral, and
any money or other property received by the Agent in exchange for or on account
of the Collateral, whether representing collections or proceeds of Collateral,
and whether resulting from voluntary payments or foreclosure proceedings or
other legal action taken by the Agent or any of the Grantors, may be applied
by
the Agent, without notice to the Grantors, to decrease the amount owed by the
Company under the Notes in such order and manner as described in the Notes;
(x) to insure, protect and preserve the Collateral; (xi) to exercise
all rights, remedies, powers or privileges provided under any of the Operative
Documents or the Purchase Agreement; and (xii) to remove peaceably,
from
any premises where the same may be located, the Collateral and any and all
documents, instruments, files and records, and any receptacles and cabinets
containing the same, relating to the Collateral, and the Agent may, at the
cost
and expense of the Grantors and subject to the rights of third parties, use
such
of its supplies, equipment, facilities and space at its places of business
as
may be necessary or appropriate to properly administer, process, store, control,
prepare for sale or disposition and/or sell or dispose of the Collateral or
to
properly administer and control the handling of collections and realizations
thereon, and, subject to the rights of third parties, the Agent shall be deemed
to have a rent-free tenancy of any premises of the Grantors for such purposes
and for such periods of time as reasonably required by the Agent. So long as
an
Event of Default has occurred and is continuing, each Grantor will, at the
Agent's request, assemble the Collateral and make it available to the Agent
at
places which the Agent may designate, whether at the premises of such Grantor
or
elsewhere, which are reasonably convenient to the Agent and the Grantors and
will make available to the Agent, free of cost and subject to the rights of
third parties, all premises, equipment and facilities of such Grantor for the
purpose of the Agent's taking possession of the Collateral or storing the same
or removing or putting the Collateral in salable form or selling or disposing
of
the same.
(b) Possession
by the Agent.
Subject
only to the terms of the Subordination Agreement, during the existence of an
Event of Default, the Agent also shall have the right, without prior notice
or
demand, either in person, by the Agent or by a receiver to be appointed by
a
court in accordance with the provisions of applicable law (and each Grantor
hereby expressly consents, to the fullest extent permitted by applicable law,
during the existence of an Event of Default to the appointment of such a
receiver), and, to the extent permitted by applicable law, without regard to
the
adequacy of any security for the Notes, to take possession of the Collateral
or
any part thereof and to collect and receive the rents, issues, profits, income
and proceeds thereof. The taking possession of the Collateral by the Agent
shall
not cure or waive any Event of Default or notice thereof or invalidate any
act
done pursuant to such
21
notice.
The rights, remedies and powers of any receiver appointed by a court shall
be as
ordered by said court.
(c) Sale
of Collateral.
Any
public or private sale or other disposition of the Collateral pursuant to this
Section 16 may be held, subject to the rights of third parties, at any office
of
the Agent, or at the Grantors’ places of business, or at any other place
permitted by applicable law, and without the necessity of the Collateral being
within the view of prospective purchasers. Subject only to the terms of the
Subordination Agreement, the Agent may direct the order and manner of sale
of
the Collateral, or portions thereof, as it in its sole and absolute discretion
may determine provided such sale is commercially reasonable, and each Grantor
expressly waives, to the extent permitted by applicable law, any right to direct
the order and manner of sale of any Collateral. The Agent or any Person acting
on the Agent's behalf may bid and purchase at any such sale or other
disposition. In furtherance of the Agent's rights hereunder, each Grantor hereby
grants to the Agent an irrevocable, non-exclusive license (exercisable without
royalty or other payment by the Agent) to use, license or sublicense any patent,
trademark, trade name, copyright or other intellectual property in which Grantor
now or hereafter has any right, title or interest together with the right of
access to all media in which any of the foregoing may be recorded or stored;
provided,
however,
that
such license shall only be exercisable in connection with the disposition of
Collateral upon the Agent's exercise of its remedies hereunder.
(d) Notice
of Sale.
Unless
the Collateral is perishable or threatens to decline speedily in value or is
of
a type customarily sold on a recognized market, the Agent will give the Grantors
reasonable notice of the time and place of any public sale thereof or of the
time on or after which any private sale thereof is to be made. The requirement
of reasonable notice conclusively shall be met if such notice is mailed,
certified mail, postage prepaid, to the Grantors at their addresses set forth
on
the signature page hereto or delivered or otherwise sent to the Grantors, at
least ten (10) business days before the date of the sale. Each Grantor expressly
waives, to the fullest extent permitted by applicable law, any right to receive
notice of any public or private sale of any Collateral or other security for
the
Notes except as expressly provided for in this paragraph. The Agent shall not
be
obligated to make any sale of the Collateral if it shall determine not to do
so
regardless of the fact that notice of sale of the Collateral may have been
given. The Agent may, without notice or publication, except as required by
applicable law, adjourn the sale from time to time by announcement at the time
and place fixed for sale, and such sale may, without further notice (except
as
required by applicable law), be made at the time and place to which the same
was
so adjourned.
(e) Private
Sales.
With
respect to any Collateral consisting of securities, partnership interests,
limited liability company interests, joint venture interests or the like, and
whether or not any of such Collateral has been effectively registered under
the
Securities Act of 1933, as amended, or other applicable laws, the Agent may,
in
its sole and absolute discretion sell all or any part of such Collateral at
private sale pursuant to this Section 15 in such manner and under such
circumstances as the Agent may deem necessary or advisable in order that the
sale may be lawfully conducted in a commercially reasonable manner. Without
limiting the foregoing, the Agent may (i) approach and negotiate with
a
limited number of potential purchasers, and (ii) restrict the prospective
bidders or purchasers to persons who will represent and agree that they are
purchasing such Collateral for their own account for investment and not with
a
view to the distribution or resale thereof. In the event that any such
Collateral is sold at private sale pursuant to this Section 15, each Grantor
agrees to the extent permitted by applicable law that if such Collateral is
sold
for a price which is commercially reasonable, then (A) the Grantors
shall
not be entitled to a credit against the Notes in an amount in excess of the
purchase price, and (B) the Agent shall not incur any liability or
responsibility to the Grantors in connection therewith, notwithstanding the
possibility that a substantially higher price might have been realized at a
public sale. Each Grantor recognizes that a ready market may not exist for
such
Collateral if it is not regularly traded on a recognized securities exchange,
and that a sale by the Agent of any such Collateral for an amount
22
substantially
less than a pro rata share of the fair market value of the issuer's assets
minus
liabilities may be commercially reasonable in view of the difficulties that
may
be encountered in attempting to sell a large amount of such Collateral or
Collateral that is privately traded.
(f) Title
of Purchasers.
Upon
consummation of any sale of Collateral hereunder, the Agent shall, subject
to
the terms of the Subordination Agreement, have the right to assign, transfer
and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each
such
purchaser at any such sale shall hold the Collateral so sold absolutely free
from any claim or right upon the part of any Grantor or any other Person
claiming through any Grantor, and each Grantor hereby waives (to the extent
permitted by applicable laws) all rights of redemption, stay and appraisal
which
it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. If the sale of all or any part of
the
Collateral hereunder is made on credit or for future delivery, the Agent shall
not be required to apply any portion of the sale price to the Notes until such
amount actually is received by the Agent, and, subject only to the terms of
the
Subordination Agreement, any Collateral so sold may be retained by the Agent
until the sale price is paid in full by the purchaser or purchasers thereof
The
Agent shall not incur any liability in case any such purchaser or purchasers
shall fail to pay for the Collateral so sold, and, in case of any such failure,
the Collateral may be sold again.
(g) Disposition
of Proceeds of Sale.
Subject
only to the terms of the Subordination Agreement, the proceeds resulting from
the collection, liquidation, sale or other disposition of the Collateral
hereunder shall be applied, first, to the reasonable costs and expenses
(including reasonable attorneys' fees) of retaking, holding, storing, processing
and preparing for sale, selling, collecting and liquidating the Collateral,
and
the like; and second, to the satisfaction of all obligations under or in respect
of the Notes; and third, any surplus remaining after the satisfaction of all
obligations under or in respect of the Notes, to be paid over to the Grantors
or
to whomsoever may be lawfully entitled to receive such surplus.
(h) Certain
Waivers.
To the
extent permitted by applicable law, each Grantor waives all claims, damages
and
demands against the Agent arising out of the repossession, retention or sale
of
the Collateral, or any part or parts thereof hereunder, except to the extent
any
such claims, damages and awards arise out of the gross negligence or willful
misconduct of the Agent or a violation of the terms of the Subordination
Agreement.
(i) Remedies
Cumulative.
The
rights and remedies provided under this Agreement are cumulative and may be
exercised singly or concurrently, and are not exclusive of any other rights
and
remedies provided by law or equity.
17. Insurance.
(a) Each
Grantor will, at its own expense, maintain insurance with respect to the
Equipment and Inventory of such Grantor in amounts, against risks, in form
and
with insurers consistent with its normal business practice. .
Each
policy of each Grantor for liability insurance shall provide for all covered
losses to be paid on behalf of the Agent and such Grantor as their interests
may
appear, and each policy for property damage insurance shall provide for all
covered losses (except for losses of less than $50,000 per occurrence) to be
paid directly to the Deposit Account bearing account number with the last four
digits 5973, as more fully described on Schedule 3-B, with notice by the
applicable Grantor to the Agent or, if the Agent so elects, directly to the
Agent. Each policy for property damage insurance shall (i) name such
Grantor and the Agent as insured parties thereunder (without any representation
or warranty by or obligation upon the Agent) as their interests may appear,
and
(ii) provide that at least ten
23
(10)
days’ prior written notice of cancellation or of lapse shall be given to the
Agent by the insurer, and (iii) provide that there shall be no recourse
against the Agent for payment of premiums or other amounts with respect thereto.
Each Grantor will, if so requested by the Agent, deliver to the Agent original
or duplicate policies of such insurance and, as often as the Agent may
reasonably request, a report of a reputable insurance broker with respect to
such insurance. Further, each Grantor will, at the request of the Agent
following the occurrence and during the continuation of any Event of Default,
duly execute and deliver instruments of assignment of such insurance policies
to
comply with the requirements of this Section and use its best efforts to cause
the insurers to acknowledge notice of such assignment.
(b) Payment
under any liability insurance maintained by any Grantor pursuant to this Section
will be paid directly to the Person who shall have incurred liability covered
by
such insurance. In case of any loss involving damage to Equipment or Inventory
when subsection (c) of this Section is not applicable, the applicable
Grantor will make or cause to be made the necessary repairs to or replacements
of such Equipment or Inventory, and any proceeds of insurance properly received
by or released to such Grantor shall be used by such Grantor, except as
otherwise required hereunder or by the Purchase Agreement, to pay or as
reimbursement for the costs of such repairs or replacements.
(c) So
long
as no Event of Default shall have occurred and be continuing, all insurance
payments received into the applicable Deposit Account or by the Agent in
connection with any loss, damage or destruction of any Inventory or Equipment
shall be used by the applicable Grantor for the repair, replacement or
restoration thereof, subject to such terms and conditions with respect to the
use thereof as the Agent may reasonably require. To the extent that (i) the
amount of any such insurance payments exceeds the cost of any such repair,
replacement or restoration, or (ii) such insurance payments are not
otherwise required by the applicable Grantor to complete any such repair,
replacement or restoration required hereunder, the Agent may require that the
amount thereof be held in the applicable Deposit Account. Upon the occurrence
and during the continuance of any Event of Default or the actual or constructive
total loss (in excess of $50,000 per occurrence) of any Equipment or Inventory,
all insurance payments in respect of such Equipment or Inventory shall be paid
to the Agent and shall, in the Agent’s sole discretion, (i) be released to
the applicable Grantor to be applied as set forth in the first sentence of
this
subsection (c) or (ii) be held as additional Collateral hereunder
18. Notice.
The
Agent
shall use reasonable efforts to give the Grantors reasonable prior written
notice of the exercise of any remedy provided for herein, provided
that the
failure to give such notice shall not subject the Agent to liability and shall
not affect the validity or exercise of any remedy hereunder.
19. Costs
and Expenses.
Each
Grantor shall pay on demand (i) all documented reasonable fees and expenses,
including reasonable attorneys' fees and expenses, incurred by the Agent in
connection with the exercise of its duties under, this Agreement and the
preparation, execution and delivery of amendments and waivers hereunder and
(ii)
all documented reasonable fees and expenses, including reasonable attorneys'
fees and expenses, incurred by the Agent and the Investors in connection with
the enforcement or attempted enforcement of this Agreement or any of the Notes
or in preserving any of the Agent's rights and remedies (including, without
limitation, all such fees and expenses incurred in connection with any “workout”
or restructuring affecting the Operative Documents or any bankruptcy or similar
proceeding involving such Grantor, any other Grantor, the Company or any of
their Affiliates).
20. Counterparts.
This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original, but all of which taken together shall constitute one and
the
same agreement. Delivery of an executed counterpart of a signature page to
this
Agreement by telecopier shall be effective as delivery of an original
counterpart of this Agreement.
24
21. Understandings
With Respect to Waivers and Consents.
Each
Grantor warrants and agrees that each of the waivers and consents set forth
herein are made with full knowledge of their significance and consequences,
with
the understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which such Grantor
otherwise may have against the Agent or others, or against any Collateral.
If
any of the waivers or consents herein are determined to be unenforceable under
applicable law, such waivers and consents shall be effective to the maximum
extent permitted by law.
22. Indemnity.
(a) Each
Grantor agrees to indemnify, defend and save and hold harmless the Agent and
each Investor and each of their Affiliates and their respective officers,
directors, employees, agents and advisors (each, an “Indemnified
Party”)
from
and against, and shall pay on demand, any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may reasonably be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection
with
or resulting from any Operative Document (including, without limitation,
enforcement of any Operative Document), except to the extent such claim, damage,
loss, liability or expense is found in a final, non-appealable judgment by
a
court of competent jurisdiction to have resulted from such Indemnified Party’s
gross negligence or willful misconduct;
(b) Each
Grantor will upon demand pay to the Agent the amount of any and all reasonable
expenses, including, without limitation, the reasonable fees and expenses of
its
counsel and of any experts and agents, that the Agent may reasonably incur
in
connection with (i)
the preservation, use or operation of, or the sale of, collection from or other
realization upon, any of the Collateral of such Grantor or (ii) the
exercise or enforcement of any of the rights of the Agent or the Investors
hereunder or (iii) the failure by such Grantor to perform or observe any of
the
provisions of any Operative Document. In the case of any investigation,
litigation or proceeding giving rise to any Indemnified Costs, this Section
22
applies whether any such investigation, litigation or proceeding is brought
by
any Grantor, Indemnified Party or any other Person and whether or not an
Indemnified Party is otherwise a party thereto.
(c) Each
Investor severally agrees to indemnify the Agent (to the extent not promptly
reimbursed by the Grantors) from and against such Investor’s ratable share
(determined as provided below) of any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may reasonably be imposed on, incurred
by,
or asserted against the Agent in any way relating to or arising out of the
Operative Documents or any action taken or omitted by the Agent under the
Operative Documents (collectively, the “Indemnified
Costs”);
provided,
however,
that no
Investor shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent’s gross negligence or willful misconduct
as found in a final, non-appealable judgment by a court of competent
jurisdiction. Without limitation of the foregoing, each Investor agrees to
reimburse the Agent promptly upon demand for its ratable share of any costs
and
expenses (including, without limitation, fees and expenses of counsel) payable
by the Grantors under any Operative Document, to the extent that the Agent
is
not promptly reimbursed for such costs and expenses by the Grantors. For
purposes of this Section 22, the Investors respective ratable shares of any
amount shall be determined, at any time, according to the sum of the aggregate
outstanding principal amount of the Notes at such time owing to the respective
Investor. The failure of any Investor to reimburse the Agent, promptly upon
demand for its ratable share of any amount required to be paid by the Investors
to the Agent, as provided herein and under the Operative Documents, shall not
relieve any other Investor of its obligation hereunder and under the Operative
Documents to reimburse the Agent for its ratable share of such amount, but
no
Investor
25
shall
be
responsible for the failure of any other Investor to reimburse the Agent for
such other Investor’s ratable share of such amount.
Without
prejudice to the survival of any other agreement of any party hereunder, the
agreement and obligations of each Grantor and Investor contained in this Section
22 shall survive the payment in full of principal, interest and all other
amounts payable hereunder, under the Purchase Agreement and under the other
Operative Documents.
23. Amendments,
Waivers, Etc.
No
amendment of any provision of this Agreement or the Notes, shall in any event
be
effective unless the same shall be in writing and signed by the Company and
the
Investors holding at least 80% of the sum of the aggregate unpaid principal
amount owing under the Notes. No waiver of any provision of this Agreement
or
the Notes, nor consent to any departure by any Grantor therefrom, shall in
any
event be effective unless the same shall be in writing and signed by the
Majority Investors, and then such waiver or consent shall be effective only
in
the specific instance and for the specific purpose for which given; provided,
however,
that no
amendment, waiver or consent shall, unless in writing and signed by all of
the
Investors, do any of the following at any time: (i) change the number of
Investors or the percentage of the aggregate amount outstanding under the Notes
that, in each case, shall be required for the Investors or any of them to take
any action hereunder, (ii) reduce or limit the obligations of any Guarantor
under Section 2 or release such Guarantor or otherwise limit such Guarantor’s
liability with respect to the obligations owing to the Agents and the Investors,
(iii) amend this Section 23, (iv) reduce the principal of, or interest
on,
the Notes or any fees or other amounts payable under any Operative Document,
(v) postpone any date scheduled for any payment of principal of, or
interest on, the Notes, or (vi) limit the liability of any Grantor under
any of the Operative Documents
or the
Purchase Agreement.
24. Notices.
All
notices and other communications provided for hereunder shall be given in
writing in the manner and to the addresses set forth in the Notes.
25. Continuing
Security Interest; Transfer of Notes; Termination.
This
Agreement shall create a continuing security interest in the Collateral pursuant
to Section 3 hereof and shall (i) remain in full force and effect until
indefeasible payment in full of the Notes (ii) be binding upon each
Grantor, their successors and assigns and (iii) inure, together with
the
rights and remedies of the Agent and the Investors hereunder, to the benefit
of
the Agent and the Investors and their respective successors, transferees and
assigns. Any Investor may assign or otherwise transfer its rights thereof,
or
any rights in Collateral held by it to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to such Investor or the Agent herein or otherwise. Nothing set forth in any
Operative Document is intended or shall be construed to give to any other party
any right, remedy or claim under, to or in respect of any Operative Document
or
any Collateral. The Grantors' successors and assigns shall include, without
limitation, a receiver, trustee or debtor-in-possession thereof or therefor,
provided
that,
except as otherwise permitted under the Purchase Agreement or any Operative
Document, none of the rights or obligations of the Grantors hereunder may be
assigned or otherwise transferred without the prior written consent of the
Agent.
26. Release
of the Grantors.
This
Agreement and all obligations of each Grantor hereunder and all security
interests granted hereby shall terminate and be released when all Notes and
all
other obligations of the Grantors under or in respect of the Operative Documents
and the Purchase Agreement have been paid in full. Upon such termination and
release all rights in and to the Collateral granted or
26
pledged
by the Grantors hereunder shall automatically revert to the Grantors, and the
Agent shall return any pledged Collateral in its possession to the Grantors,
or
to the Person or Persons legally entitled thereto, and shall endorse, execute,
deliver, record and file all instruments and documents, and do all other acts
and things, reasonably required for the return of the Collateral to the
Grantors, or to the Person or Persons legally entitled thereto, and to evidence
or document the release of the interests of the Agent arising under this
Agreement, all as reasonably requested by, and at the sole expense of, the
Grantors.
27. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York.
28. Jury
Trial.
Each
Grantor, each Investor and the Agent, to the fullest extent permitted by
applicable law, hereby irrevocably waives all right to trial by jury as to
any
issue relating hereto in any action, proceeding, or counterclaim arising out
of
or relating to this Agreement.
29. Limitation
of Liability.
No
claim
may be made by any Grantor against any Investor or the Agent or the members,
affiliates, directors, officers, employees, or attorneys of any Investor or
the
Agent for any special, indirect, consequential or punitive damages in respect
of
any claim (whether based upon any breach of contract, tort, breach of statutory
duty or any other theory of liability) arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith and each Grantor hereby waives, releases
and
agrees not to xxx upon any claim for any such damages, whether or not now
accrued and whether or not known or suspected to exist in its
favor.
27
30. Covenant
Not to Issue Uncertificated Securities.
Each
Grantor covenants to the Agent that any Pledged Securities held by it shall
be
in certificated form (as contemplated by Article 8 of the UCC), and that it
will
not seek to convert all or any part of any Pledged Securities into
uncertificated form (as contemplated by Article 8 of the UCC).
31. Covenant
Not to Dilute Interests of the Agent in Securities.
Each
Grantor represents, warrants and covenants to the Agent that it will (a) not
at
any time cause or permit any subsidiary that is an issuer of Pledged Securities
to issue any capital stock or any warrants, options or other rights to acquire
any capital stock and (b) pledge to the Agent in accordance with the
terms
hereof, promptly upon its acquisition (directly or indirectly) thereof, and
in
any event, within 5 days of such acquisition, any and all shares of stock or
other securities of each issuer of Pledged Securities.
32. Pledged
Limited Liability Company Interests/Covenant Not to
Dilute.
Each
Grantor represents, warrants and covenants to the Agent that it will
(a) not at any time cause or permit any Pledged Entities to issue any
additional membership interests or any other rights or options to acquire any
additional limited liability company interests and (b) pledge to the
Agent
in accordance with the terms hereof, promptly upon its acquisition (directly
or
indirectly) thereof, and in any event, within 5 days of such acquisition, any
and all additional Limited Liability Company Interests of each Pledged
Entity.
33. Pledged
Partnership Interests/Covenant Not to Dilute.
Each
Grantor represents, warrants and covenants to the Agent that it will
(a) not at any time cause or permit any Pledged Partnership Entities
to
issue any additional partnership interests or any other rights or options to
acquire any additional partnership interests, other than to the Grantors and
(b) pledge to the Agent in accordance with the terms hereof, promptly
upon
its acquisition (directly or indirectly) thereof, and in any event, within
5
days of such acquisition, any and all additional Partnership Interests of each
Pledged Partnership Entity.
34. Confidentiality.
The
Agent
and each Investor agree to use the same degree of care to safeguard and prevent
disclosure of the Confidential Information as such Person uses with its own
confidential information, but in any event no less than a reasonable degree
of
care. The Agent and each Investor shall not disclose such Confidential
Information to any Person without the consent of the Grantors and shall use
such
Confidential Information solely for purposes of the exercise of its rights
and
the enforcement of its remedies under or in respect of the Operative Documents.
These obligations of confidentiality shall not apply to any information provided
(a) to the Agent’s or such Investor’s Affiliates and their officers,
directors, employees, agents and advisors, and then only on a confidential
basis
(and the Agent and such Investor shall be responsible for any disclosure or
misuse of such Confidential Information by such Person), (b) as required
by
any law, rule or regulation or judicial process, (c) as requested or
required by any state, Federal or foreign authority or examiner regulating
such
Investor and (d) to any rating agency when required by it, provided
that,
prior to any such disclosure, such rating agency shall undertake to preserve
the
confidentiality of any Confidential Information relating to the Grantors
received by it from such Investor and provided further,
that
this Section 32 shall not apply to information related to the tax treatment
or
the Tax Structure (as defined below) of the transactions contemplated herein.
For this purpose “Tax
Structure”
is
limited to any facts relevant to the U.S. federal income tax treatment of the
transactions contemplated by the Operative Documents and does not include
information relating to the identity of the parties thereto.
[Remainder
of page intentionally left blank]
28
IN
WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.
XXX.XXX, INC. | ||
|
|
|
By: | /s/ Xxxxxx Xxxxxx | |
|
||
Name: | Xxxxxx Xxxxxx | |
|
||
Title: | Chief Financial Officer & Treasurer | |
|
VECTOR
INTERNET SERVICES, INC.
|
||
|
|
|
By: | /s/ Xxxxxx Xxxxxx | |
|
||
Name: | Xxxxxx Xxxxxx | |
|
||
Title: | Vice President | |
|
DSLNET
ATLANTIC, LLC
|
||
|
|
|
By: | /s/ Xxxxxx Xxxxxx | |
|
||
Name: | Xxxxxx Xxxxxx | |
|
||
Title: | Vice President | |
|
DUNKNIGHT TELECOM PARTNERS, LLC | ||
|
|
|
By: | /s/ Xxxx Xxxxxxxxxxx | |
|
||
Name: | Xxxx Xxxxxxxxxxx | |
|
||
Title: | President | |
|
Accepted and Agreed: | ||
DUNKNIGHT TELECOM PARTNERS, LLC, as Agent | ||
|
|
|
By: | /s/ Xxxx Xxxxxxxxxxx | |
|
||
Name: | Xxxx Xxxxxxxxxxx | |
|
||
Title: | President | |
|
Schedule
1
Grantors
Parent: | XXX.xxx, Inc. |
Subsidiary Grantors: | Vector Internet Services, Inc |
DSLnet Atlantic, LLC |
Schedule
2
Investors
DunKnight
Telecom Partners, LLC
Schedule
3-A
Grantors: |
XXX.xxx,
Inc.
|
Vector
Internet Services, Inc.
|
DSLnet
Atlantic, LLC
|
List
of Asset Locations
Title
Holder
|
city
|
state
|
|
DSLnet
Xxxxxxxx
|
00
XXXXXX XX
|
XXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0000
XXXX XX
|
XXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0000
XXXXXXXX XX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
000
00XX XX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0000
00 XX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
000
XXXXXXXX XX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0000
XXXX XX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
000
0XX XX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0000
X XX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0000
X XX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
00
X XX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0000
XXXX XX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0000
XXXXXXX XXX XXXX
|
XXXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0
XXXXXXXXXX XX
|
XXXXXX
|
XX
|
DSLnet
Atlantic
|
0000
XXXXXXXXXX XX
|
XXXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
000
X XXXXXXX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
00
XXXX XX
|
XXXXXXX
|
XX
|
DSLnet
Atlantic
|
00-00
XXXXXX XX
|
XXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
00
XXXXXXXXX XX
|
XXXXXX
|
XX
|
DSLnet
Atlantic
|
0
XXXXXXX XX
|
XXXXXX
|
XX
|
DSLnet
Atlantic
|
000
XXXXXXXX XX
|
XXXXXX
|
XX
|
DSLnet
Atlantic
|
0
XXXXXXXX XXX
|
XXXXXX
|
XX
|
DSLnet
Atlantic
|
0
XXXXXXX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0
XXXX XXXX XXX
|
XXXXXXX
|
XX
|
DSLnet
Atlantic
|
000
XXXX XX
|
XXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
000
XXXX XX
|
XXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
00
XXXX XX
|
XXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
000
XXXXX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
000
X XXXX XX
|
XXXX
XXXXX
|
XX
|
DSLnet
Atlantic
|
000
XXXXX XXX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
00
XXXXXXXX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
00
Xxxxxx Xxxxxx
|
XXXXXX
|
XX
|
DSLnet
Atlantic
|
00
XXXXX XX
|
XXXXXXX
|
XX
|
DSLnet
Atlantic
|
00
XXXXXXX XXX
|
XXXX
XXXX
|
XX
|
DSLnet
Atlantic
|
0
XXXXXXXXX XX
|
XXXXXXXX
|
XX
|
DSLnet
Atlantic
|
00
XXXXXXX XX
|
XXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0
XXX XX
|
XXXXXX
|
XX
|
DSLnet
Atlantic
|
0-0
XXXXXX XX
|
XXXXXXX
|
XX
|
DSLnet
Atlantic
|
ACUSHNET
AVE & ELM ST
|
NEW
BEDFORD
|
MA
|
DSLnet
Atlantic
|
00
XXXXXXXXX XX
|
XXXXXXX
|
XX
|
DSLnet
Atlantic
|
000
XXXXXXXXXX XX
|
XXXXXX
|
XX
|
DSLnet
Atlantic
|
00
XXXXXXX XX
|
XXXXXXX
|
XX
|
DSLnet
Atlantic
|
000
XXXXXXX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0
XXXXXXX XX
|
XXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
00
XXXXXX XX
|
XXXXXXX
|
XX
|
DSLnet
Atlantic
|
000
XXXX XX
|
XXXXXXX
|
XX
|
DSLnet
Atlantic
|
00
XXXXXX XXX
|
XXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
000
XXXX XX
|
XXXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
00
XXXXXXXX XX
|
XXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0
X
XXXX XX
|
XXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0000
XXXXX XXX
|
ARBUTUS
|
MD
|
DSLnet
Atlantic
|
16
N XXXX ST
|
BEL
AIR
|
MD
|
DSLnet
Atlantic
|
000
Xxxxx. Xxxxxxx, Xx.
|
XXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
000
X XXXXXXXXX XX
|
XXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0000
X XXXXXXX XX
|
XXXXXXXXX
|
XX
|
DSLnet
Atlantic
|
0000
XXXX XX
|
XXXXXXXXX
|
XX
|
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XXX.xxx,
Inc.
|
000
XXXXXXX XX
|
XXXXXXXXXXX
|
XX
|
XXX.xxx,
Inc.
|
000
X X X XXXX XXXX
|
XXXXXXXXXXX
|
XX
|
XXX.xxx,
Inc.
|
0000
XXXXX XXXX XX
|
XXXXXXXXX
|
XX
|
XXX.xxx,
Inc.
|
000
XXXXXXXX XXX / 000 XXXXX XX
|
XXXXXXXXX
|
XX
|
XXX.xxx,
Inc.
|
0000
X XXXXXXX X
|
XXXXXXXXX
|
XX
|
XXX.xxx,
Inc.
|
000
X XXXX XX
|
XXXXXXXXX
|
XX
|
XXX.xxx,
Inc.
|
0000
XXXXX XX
|
XXXXXXX
|
XX
|
XXX.xxx,
Inc.
|
0000
XXXXX XX
|
XXXXXXX
|
XX
|
XXX.xxx,
Inc.
|
0000
XXXXXXXXXX XX
|
XXXXXXX
|
XX
|
XXX.xxx,
Inc.
|
0000
XXXXXXX XX
|
XXXXXXX
|
XX
|
XXX.xxx,
Inc.
|
HIGH
LEA DR
|
NASHVILLE
|
TN
|
XXX.xxx,
Inc.
|
000
XXXXXXX XXX XX
|
XXXXXXXXX
|
XX
|
XXX.xxx,
Inc.
|
000
XXXXXXXX XXXX
|
XXXXXXXXX
|
XX
|
XXX.xxx,
Inc.
|
000
XXXXXX 000 0XX X
|
XXXXXXXXX
|
XX
|
XXX.xxx,
Inc.
|
0000
XXXXXXXX XX
|
XXXXXXXXX
|
XX
|
XXX.xxx,
Inc.
|
0000
XXXXXXXX XX
|
XXXXXXXXX
|
XX
|
XXX.xxx,
Inc.
|
000
XXXXX XX
|
XXX
XXXXX
|
XX
|
XXX.xxx,
Inc.
|
000
XXXX XX
|
XXXXXXXXXX
|
XX
|
VISI
|
00
Xxxxx 0xx Xxxxxx
|
Xxxxxxxxxxx
|
XX
|
VISI
|
000
Xxxx 0xx Xxxxxx
|
Xx.
Xxxx
|
XX
|
In
addition to the above locations: (a) customer premise equipment may be located
at customer locations, (b) customer premise equipment and network equipment
may
be located at staging areas (either a Grantor’s or vendor’s) prior to
deployment, (c) spare parts may also be located at such staging areas, and
(d)
Grantors may obtain additional facilities, including corporate office, warehouse
or collocation sites, in connection with corporate or asset acquisitions.
Schedule
3-B
Company
Accounts (Previously Provided To Investors)
Company
Accounts
|
||||||
Depositor’s
Name
|
Bank
|
Contact
Name
|
Address
|
Telephone
|
Account
Number
|
Account
Type
|
XXX.xxx,
Inc
|
Bank
of America
|
Xxx
Xxxxxxxx
|
000
Xxxxx Xxxxxx Xx 0xx
Xxxxx MADE12802B
Xxxxxxxxxx,
XX 00000
|
800-477-5592
x5916
|
Previously
Provided
|
Checking
|
|
||||||
XXX.xxx,
Inc
|
Bank
of America
|
Same
as Above
|
Same
as Above
|
Same
as Above
|
Previously
Provided
|
Trade
receivables
|
XXX.xxx,
Inc
|
Bank
of America
|
Same
as Above
|
Same
as Above
|
Same
as Above
|
Previously
Provided
|
Savings/Money
Mkt
|
XXX.xxx,
Inc
|
Bank
of America
|
Same
as Above
|
Same
as Above
|
Same
as Above
|
Previously
Provided
|
CD
|
XXX.xxx,
Inc
|
People’s
Bank
|
Xxxxxx
San Xxxxxx
|
One
Century Tower
000
Xxxxxx Xx Xxx Xxxxx, XX
00000
|
203-786-2623
|
Previously
Provided
|
CD
|
|
|
|||||
XXX.xxx,
Inc
|
People’s
Bank
|
Same
as Above
|
Same
as Above
|
Same
as Above
|
Previously
Provided
|
CD
|
XXX.xxx,
Inc
|
Deutsche
Bank
|
Xxxxx
Xxxxxxx
|
0
Xxxxx Xxxxxx
00xx
Xxxxx
Xxxxxxxxx,
XX 00000
|
000-000-0000
|
Previously
Provided
|
money
market-
Employee
Stock
Options.
|
|
|
|||||
Vector
Internet Services, Inc
|
Associated
Bank
|
Xxxxxx
Xxxxxx
|
0000
Xxxxxxx Xxxx.
|
952-591-2865
|
Previously
Provided
|
checking
|
|
|
|
Xx.
Xxxxx Xxxx, XX 00000
|
|
|
|
Schedule
3-C
List
of
Pledged Collateral
Grantor
|
Issuer
|
Cert.
No.
|
Shares
or
Interest
Pledged
|
Shares
Issued
and
Outstanding
|
Shares
Authorized
|
Percent
Owned
|
|
XXX.xxx, Inc. |
Vector
Internet
Services,
Inc.
|
20
|
1,000
|
1,000
|
1,000,000
|
100%
|
|
XXX.xxx, Inc. |
DSLnet
Atlantic,
LLC
|
n/a
|
100%
|
100%
|
n/a
|
100%
|
Schedule
3-D
Location
of Chief Executive Office of each Grantor
Grantor
|
Location
|
All
Grantors party to this
Agreement
(other than Vector
Internet
Services, Inc.
|
000
Xxxx Xxxxx Xxxxx
0xx
Xxxxx
Xxx
Xxxxx, XX 00000
|
Vector
Internet Services, Inc.
|
00
Xxxxx 0xx
Xxxxxx
Xxxxx
000
Xxxxxxxxxxx,
XX 00000
|
Schedule
3-E
List
of
Trade names
Grantor
|
Trade
Names
|
XXX.xxx,
Inc.
|
XXX.xxx
|
XXX.xxx,
Inc.
|
TalkingNets
|
XXX.xxx,
Inc.
|
Tycho
|
XXX.xxx,
Inc.
|
Tycho
Networks
|
XXX.xxx,
Inc.
|
Trusted
Net
|
DSLnet
Atlantic, LLC
|
Network
Access Solutions Corporation
|
DSLnet
Atlantic, LLC
|
Network
Access Solutions
|
DSLnet
Atlantic, LLC
|
NAS
|
DSLnet
Atlantic, LLC
|
DSLnet
Atlantic, LLC
|
DSLnet
Atlantic, LLC
|
DSLnet
Atlantic
|
Vector
Internet Services, Inc.
|
XXXX.xxx
|
Vector
Internet Services, Inc.
|
VISI
|
Vector
Internet Services, Inc.
|
Vector
Internet Services, Inc.
|
Schedule
3-F
To
Agency, Guaranty and Security Agreement
List
of
Trademarks
Trademark
|
Registration
Number
|
Registration
Date
|
DSL
|
Tunisia
EE98.1871
|
11/25/98
|
XXX.XXX
|
Supplemental-2,269,936
|
8/10/99
|
Vector
Internet Services
|
2,262,761
|
7/20/99
|
XXXX.xxx
(Stylized - the logo)
|
2,224,424
|
2/16/99
|
XXXX.xxx
(the words)
|
2,234,325
|
3/23/99
|
Tycho
Networks
|
Not
Registered
|
|
NetGain
|
Not
Registered
|
|
Trademark
Application
|
Application
Number
|
Application
Date
|
NONE
|
||
Exhibit
A
To
Agency, Guaranty and Security Agreement
FORM
OF PLEDGE NOTICE
[Letterhead
of Grantor]
[Date]
TO: [Name
of
Pledged Entity]
Notice
is
hereby given that, pursuant to the Agency, Guaranty and Security Agreement
(a
true and correct copy of which is attached hereto), dated as of November __,
2005 (as amended, modified or supplemented from time to time in accordance
with
the terms thereof, the “Agency
and Security Agreement”),
among
[NAME OF GRANTOR] (the “Grantor”),
the
other pledgors from time to time party thereto and [DunKnight Telecom Partners],
as administrative agent (the “Agent”),
the
Grantor has pledged and assigned to the Agent, and granted to the Agent a
continuing security interest in, all right, title and interest of the Grantor,
whether now existing or hereafter arising or acquired, as a [[limited partner]
[general partner]] [member] in [NAME OF PLEDGED ENTITY] (the [“Partnership”]
[“LLC”]),
and
in, to and under the [TITLE OF APPLICABLE AGREEMENT] (the “[Partnership]
[LLC]
Agreement”),
including, without limitation:
(i) all
the
capital of the [Partnership] [LLC] and the Grantor’s interest in all profits,
income, surplus, losses, [Partnership] [LLC] assets and other distributions
to
which the Grantor shall at any time be entitled in respect of such [Partnership]
[Membership] interest;
(ii) all
other
payments due or to become due to the Grantor in respect of such [partnership
[limited liability company] interest, whether under the [Partnership] [LLC]
Agreement or otherwise, whether as contractual obligations, damages, insurance
proceeds or otherwise;
(iii) all
of
its claims, rights, powers, privileges, authority, options, security interest,
liens and remedies, if any, under the [Partnership] [LLC] Agreement or at law
or
otherwise in respect of such [Partnership] [Membership] Interest;
(iv) all
present and future claims, if any, of the Grantor against the [Partnership]
[LLC] for moneys loaned or advanced, for services rendered or
otherwise;
(v)
all
of
the Grantor’s rights under the [Partnership] [LLC] Agreement or at law to
exercise and enforce every right, power, remedy, authority, option and privilege
of the Grantor relating to the [Partnership] [Membership] Interest, including
any power to terminate, cancel or modify the [Partnership] [LLC] Agreement,
to
execute any instruments and to take any and all other action on behalf of and
in
the name of the Grantor in respect of the [Partnership] [Membership] Interest
and the [Partnership] [LLC], to make determinations, to exercise any election
(including, but not limited, election of remedies) or
option
or
to give or receive any notice, consent, amendment, waiver or approval, together
with full power and authority to demand, receive, enforce, collect or receipt
for any of the foregoing, to enforce or execute any checks, or other instruments
or orders, to file any claims and to take any action in connection with any
of
the foregoing;
(vi) all
other
property hereafter delivered in substitution for or in addition to any of the
foregoing, all certificates and instruments representing or evidencing such
other property and all cash, securities, interest, dividends, rights and other
property at any time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all thereof;
and
(vii) to
the
extent not otherwise included, all proceeds of any or all of the
foregoing.
Pursuant
to the Agency and Security Agreement, the [Partnership] [LLC] is hereby
authorized and directed to register the Grantor’s pledge to the Agent of the
interest of the Grantor on the [Partnership’s] [LLC’s] books.
The
Grantor hereby requests the [Partnership] [LLC] to indicate the [Partnership’s]
[LLC’s] acceptance of this Notice and consent to and confirmation of its terms
and provisions by signing a copy hereof where indicated on the attached page
and
returning the same to the Agent.
[NAME
OF GRANTOR]
|
||
|
|
|
By: | ||
Name: |
||
Title: |
Exhibit
B
To
Agency, Guaranty and Security Agreement
FORM
OF ISSUER ACKNOWLEDGEMENT
[NAME
OF
PLEDGED ENTITY] (the [“Partnership”]
[“LLC”])
hereby acknowledges receipt of a copy of the assignment by [NAME OF GRANTOR]
(“Grantor”)
of its
interest under the [TITLE OF APPLICABLE AGREEMENT] (the “[Partnership]
[LLC]
Agreement”)
pursuant to the terms of the Agency, Guaranty and Security Agreement, dated
as
of November __, 2005 (as amended, modified or supplemented from time to time
in
accordance with the terms thereof, the “Agency
and Security Agreement”),
among
the Grantor, the other grantors from time to time party thereto, [DunKnight
Telecom Partners, LLC], as administrative agent (the “Agent”).
The
undersigned hereby further confirms (i) the registration of the Grantor’s
pledge of its interest to the Agent on behalf of the Investors on the
[Partnership’s] [LLC’s] books and (ii) upon receipt from the Agent of a
notice stating that an “Event
of Default”
has
occurred and is continuing, the undersigned shall only comply with instructions
originated by the Agent with respect to the pledge of the interest referred
to
above notwithstanding contrary instructions given by any other person or entity,
including the Grantor until such time as otherwise notified by the
Agent.
Dated:
_______, ____
[NAME
OF PLEDGED ENTITY]
|
||
|
|
|
By: | ||
Name: |
||
Title: |
Exhibit
C
To
Agency, Guaranty and Security Agreement
INSTRUMENT
FOR
GRANT
OF
SECURITY INTEREST
IN
TRADEMARKS
THIS
GRANT OF SECURITY INTEREST, dated as of ________________, 2005, is executed
by
[GRANTOR], a [state of incorporation] corporation (“Grantor”),
in
favor of DunKnight Telecom Partners, LLC], as administrative agent on behalf
of
the Investors and itself (“Agent”).
A. Grantor
has entered into an Agency, Guaranty and Security Agreement, dated the date
hereof (the “Agency
and Security Agreement”),
by
and between XXX.xxx, Inc., Vector Internet Services, Inc., DSLnet Atlantic,
LLC
and certain investors party thereto (the “Investors”)
in
favor of the Agent;
B. Grantor
has adopted, used and is using the trademarks, more particularly described
on
Schedules 1-A and 1-B annexed hereto as part hereof, which trademarks are
registered or subject to an application for registration in the United States
Patent and Trademark Office (collectively, the “Trademarks”);
C. Pursuant
to the Agency and Security Agreement, Grantor has granted to the Agent, for
the
benefit of the Investors and itself, a security interest in all right, title
and
interest of Grantor in and to the Trademarks, together with the goodwill of
the
business symbolized by the Trademarks and the customer lists and records related
to the Trademarks and the applications and registrations thereof, and all
proceeds thereof, including any and all causes of action which may exist by
reason of infringement thereof (the “Collateral”),
to
secure the payment, performance and observance of all obligations of Grantor
under or in respect of the Operative Documents;
NOW,
THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, Grantor does hereby further grant to the Agent a security interest
in the Collateral to secure the prompt payment, performance and observance
of
all obligations of Grantor under or in respect of the Operative
Documents.
Grantor
does hereby further acknowledge and affirm that the rights and remedies of
the
Agent with respect to the security interest in the Collateral granted hereby
are
more fully set forth in the Agency and Security Agreement, the terms and
provisions of which are hereby incorporated herein by reference as if fully
set
forth herein.
Agent's
address is: DunKnight
Telecom Partners, LLC, as Agent
[Remainder
of page intentionally left blank]
Exhibit
D
To
Agency, Guaranty and Security Agreement