EXHIBIT 99.8
INTELLECTUAL PROPERTY SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of December 20,
2001, made by Covad Communications Company, a California corporation (the
"Grantor"), having its principal place of business at 0000 Xxxxxxx Xxxxxxxxxx,
Xxxxx Xxxxx, Xxxxxxxxxx 00000, in favor of SBC Communications Inc. (the "Secured
Party").
W I T N E S S E T H:
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WHEREAS, the Grantor is a direct Subsidiary of Covad Communications
Group, Inc. (the "Parent");
WHEREAS, the Parent has entered into a Credit Agreement, dated as of
November 12, 2001, with the Secured Party (said agreement, as it may hereafter
be amended or otherwise modified from time to time, being the "Credit Agreement"
and the terms defined therein and not otherwise defined herein being used herein
having the meanings therein assigned), for purposes of establishing a term loan
(the "Loan") to the Parent;
WHEREAS, the Parent has entered into a Resale Agreement, dated as of
November 12, 2001, with the Secured Party (as the same may from time to time be
amended, modified or supplemented, the "Resale Agreement") for the purpose of
establishing the terms of a prepayment for products and services from the Parent
by the Secured Party and the conditional repayment thereof by the Parent under
the circumstances described therein;
WHEREAS, the Grantor will received substantial direct and indirect
benefits from the making of the Loan and the arrangements under the Credit
Agreement and the Resale Agreement; and
WHEREAS, it is a condition precedent to the making of the Loan and the
effectiveness of the Resale Agreement that the Grantor shall have entered into
this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the
Secured Party to make the Loan, the Grantor hereby agrees with the Secured Party
as follows:
1. Defined Terms.
(a) The following terms have the following meanings (such meanings
being equally applicable to both the singular and the plural forms of the terms
defined):
"Agreement" means this Intellectual Property Security
Agreement, as the same may from time to time be amended, modified or
supplemented, and shall
refer to this Intellectual Property Security Agreement as in effect on
the date such reference becomes operative.
"Copyrights" means all copyrights of the United States or any
other country, and all registrations and recordings thereof, including,
applications, registrations and recordings in the United States
Copyright Office or in any similar office or agency of the United
States, any State thereof, or any other country or political
subdivision thereof, all whether now owned or hereafter acquired by the
Grantor, including those listed on Schedule B hereto and all (i)
renewals, reversions and extensions thereof, (ii) all licenses thereof,
(iii) income, royalties, damages and payments now and hereafter due or
payable or both with respect thereto, including damages and payments
for past or future infringements, dilutions or misappropriations
thereof, (iv) rights to xxx for past, present and future infringements,
dilutions or misappropriations thereof, and (v) all other rights
corresponding thereto in the United States and throughout the world,
and in any event, includes, without limitation, all Material
Copyrights.
"Intellectual Property Collateral" means:
(i) all Trademarks now owned or hereafter acquired by
the Grantor, including the Trademarks listed on Schedule A
hereto;
(ii) all Copyrights now owned or hereafter acquired
by the Grantor, including the Copyrights listed on Schedule B
hereto;
(iii) all Licenses now owned or hereafter acquired by
the Grantor, including the Licenses listed on Schedule C
hereto;
(iv) all Patents now owned or hereafter acquired by
the Grantor, including the Patents listed on Schedule D
hereto;
(v) all Works now owned or hereafter acquired by the
Grantor, including the Works listed on Schedule E hereto;
(vi) all Trade Secrets now owned or hereafter
acquired by the Grantor;
(vii) the entire goodwill of the Grantor's business
connected with and symbolized by the Trademarks;
(viii) all books, records, ledger cards and other
property now owned or hereafter acquired by the Grantor at any
time evidencing or relating to Trademarks, Patents, Licenses,
Works, Copyrights or Trade Secrets; and
(ix) all dividends, cash, interest, instruments and
other property or proceeds, from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all of the foregoing.
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"Licenses" means license agreements in which the Grantor
grants or receives a grant of any interest in Copyrights, Trademarks,
Patents and Trade Secrets and other intellectual property or any other
right to make, use, sell, lease, offer for sale or lease, or import any
product, software, or process embodying any material or technology that
is the subject of a Copyright, Trademark, Patent or Trade Secret, and
any and all (i) renewals, extensions, supplements, amendments and
continuations thereof, (ii) income, royalties, damages and payments now
and hereafter due or payable to the Grantor with respect thereto,
including damages and payments for past or future violations or
infringements or misappropriations thereof, and (iii) rights to xxx for
past, present and future violations or infringements thereof, and, in
any event, includes, without limitation, all Material Licenses.
"Mass-Market Licenses" means licenses granted to the Grantor
by third parties for off-the-shelf products such as word processing
software.
"Material Copyrights" means, any Copyrights hereafter acquired
by the Grantor, necessary to the operation of the business of the
Grantor or any other Loan Party.
"Material Licenses" means all Licenses EXCEPT Mass-Market
Licenses.
"Patents" means all letters patents of the United States or
any other country and all registrations and recordings thereof,
including applications, registrations and recordings in the United
States Patent and Trademark Office or in any similar office or agency
of the United States, any State thereof or any other country or
political subdivision thereof, all whether now owned or hereafter
acquired by the Grantor, including those listed in Schedule D hereto,
and all (i) inventions and improvements described and claimed therein,
(ii) reissues, provisionals, divisionals, continuations, renewals,
extensions and continuations-in-part thereof, (iii) income, royalties,
damages and payments now and hereafter due and/or payable to the
Grantor with respect thereto, including damages and payments for past
or future infringements or misappropriations thereof, (iv) rights to
xxx for past, present and future infringements or misappropriations
thereof, (v) all licenses thereof, and (vi) all other rights
corresponding thereto in the United States and throughout the world.
"Required Registration Date" means, with respect to (i) the
Copyright of the OSS, as soon as reasonably practicable after the
Execution Date, but in no event later than 90 days after the Effective
Date, (ii) any other Material Copyright, as soon as reasonably
practicable after, but in no event later than 180 days after, the
acquisition or completion of development or creation thereof, and (iii)
any new version or material revision of any Intellectual Property
Collateral that is the subject of a Material Copyright, as soon as
reasonably practicable after, but in no event later than 90 days after,
the release or material revision thereof; provided, that in each case,
the Required Registration Date shall not occur unless and until the
confidentiality of the Intellectual Property Collateral underlying the
applicable Copyright may be maintained and protected to a reasonable
degree notwithstanding the registration thereof in the United States
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Copyright Office; provided, further, however, that the Grantor shall
use all good faith efforts to effect such registration of such
Copyright.
"Special Powers of Attorney" means, individually and
collectively, the powers granted to the Secured Party for the
implementation of the assignment, sale or other disposal of the
Intellectual Property Collateral, including those powers granted under
the Special Power of Attorney set forth on Schedule G hereto.
"Trademarks" means all trademarks (including service marks and
trade names, whether registered or at common law), trade styles, prints
and labels on which the Trademarks, tradenames, trade styles and
service marks have appeared or appear, designs and all general
intangibles of like nature, now existing or hereafter acquired, all
right, title and interest therein and thereto, and all registrations
and recordings thereof, including applications, registrations, and
recordings in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof, any
other country or any political subdivision thereof, all whether now
owned or hereafter acquired by the Grantor including those listed on
Schedule A hereto and the entire product lines and goodwill of the
Grantor's business connected therewith and symbolized thereby, together
with any and all (i) renewals thereof, (ii) income, royalties, damages
and payments now and hereafter due or payable or both with respect
thereto, including damages and payments for past or future
infringements or misappropriations thereof, (iii) rights to xxx for
past, present and future infringements or misappropriations thereof,
and (iv) all other rights corresponding thereto in the United States
and throughout the world.
"Trade Secrets" means all trade secrets, including any of the
Grantor's information used in the Grantor's business which is eligible
for protection, secret and of commercial value, such as customer lists,
market studies, its know-how, expertise and other records, relating to
the business of the Grantor along with any and all (i) income,
royalties, damages and payments now and hereafter due and/or payable to
the Grantor with respect thereto, including damages and payments for
past or future infringements or misappropriations thereof, (ii) rights
to xxx for past, present and future infringements or misappropriations
thereof, and (iii) all other rights corresponding thereto in the United
States and throughout the world.
"Works" means:
(i) all literary, dramatic, design and artistic works
of authorship consisting of words and/or designs and all
contrivances by which images may be produced, owned on the
date hereof or hereafter acquired, in whole or in part,
directly or indirectly, by the Grantor, or in respect of which
the Grantor, on the date hereof or hereafter, exercises or has
or claims, in whole or in part, directly or indirectly, a
right of ownership or control or a right to receive income
including all present and future Copyrights in the Works and
all registrations, reversions and extensions of the Copyrights
in the Works, in the United States and throughout the world,
now or hereafter in effect, including the Works listed on
Schedule E hereto;
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(ii) all royalties, profits and other monies or
payments at any time, directly or indirectly, due or coming
due to the Grantor in connection with, relating to, or in
respect of, the Works, whether due from or payable by or
through licensees, publishers, agents, or other collecting
agencies, or otherwise, subject to the payment of all third
party royalties in accordance with any services agreement to
which the Grantor is a party and standard industry practice;
together with all monies, securities, drafts, notes, items and
other property of the Grantor, and the proceeds thereof, now
or hereafter held or received by or in transit to the Secured
Party from or for the Grantor whether for safekeeping,
custody, pledge, transmission, collection or otherwise, and
any and all deposits (general or special), balances, sums,
proceeds and credits of the Grantor with, and any and all
claims of the Grantor against, the Secured Party, at any time
existing; and
(iii) the right to xxx for infringements of any and
all rights in the Works, past, present and future and to
retain the proceeds thereof; all present and future license
agreements for the production, public presentation,
communication, synchronization, reproduction, distribution,
adaptation, design, display or performance of the Works or any
portion thereof, the conversion thereof from one form to
another, the making or reproducing of any contrivance by means
of which the Works may be performed or delivered, or for the
authorization of any of the foregoing activities, all
sublicense and further sublicense agreements now or hereafter
created, pursuant to which the Grantor transfers any rights to
all or a portion of the Works or the Copyrights in the Works,
and any and all additions, extension, renewals, supplements or
other modifications thereof, now or hereafter in effect.
(b) For purposes of this Agreement, all terms, other than capitalized
terms used in this Agreement that are defined in the UCC have the meanings
specified therein unless otherwise defined in the Credit Agreement. The words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole, including the Schedules hereto, and not to any
particular section, subsection or clause contained in this Agreement. Unless the
context of this Agreement clearly requires otherwise, references to the plural
include the singular; references to the singular include the plural; the term
"including" is not limiting; and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or."
2. Grant of Security Interest in Intellectual Property Collateral. In
order to secure the complete and due and punctual payment of all of the
Obligations, the Grantor hereby grants and conveys to the Secured Party as
collateral security, a continuing security interest in all of the Grantor's
entire right, title and interest in and to intellectual property rights now
owned or existing and hereafter acquired or arising in the Intellectual Property
Collateral.
3. Representations and Warranties. The Grantor represents and warrants
that:
(a) The Trademarks, Copyrights, Licenses, Works and Patents are
subsisting and have not been adjudged invalid or unenforceable, in whole or in
part.
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(b) The Grantor has the full right, power and authority to enter into
this Agreement and to grant all of the right, title and interest herein granted.
(c) The execution, delivery and performance by the Grantor of this
Agreement do not and will not contravene any contractual restriction binding on
or affecting the Grantor or any of its properties.
(d) This Agreement has been duly executed and delivered by the Grantor
and is a legal, valid and binding obligation of the Grantor enforceable against
the Grantor in accordance with its terms.
(e) Except for Licenses identified on Schedule C hereto, the Grantor
has not previously assigned, transferred, conveyed or otherwise encumbered any
right, title and interest under any license or other agreements relating to the
Intellectual Property Collateral.
(f) Except for Licenses identified on Schedule C hereto, the Grantor is
the sole and exclusive owner of the Intellectual Property Collateral, all of
which is free and clear of any Liens other than Permitted Liens, charges and
encumbrances, and no other person or entity has any claim with respect to the
Intellectual Property Collateral whatsoever.
(g) Schedules A, B, C, D and E attached hereto list all Trademarks,
Registered Copyrights, Material Copyrights, Copyright applications, Material
Licenses, Patents and Works related to the Intellectual Property Collateral.
(h) The Grantor has the sole, full and clear title to the registered
U.S. Trademarks shown on Schedule A hereto for the goods and services covered by
the registrations thereof or such applications therefor and such registrations
or applications are valid and subsisting and in full force and effect. Grantor,
however, makes no representation that the Trademark applications currently filed
with the United States Patent and Trademark Office will actually result in
trademark registrations.
(i) Except for Licenses identified on Schedule C hereto, the Grantor
has the sole, full and clear title to each of the Patents shown on Schedule D
hereto which are valid and subsisting and in full force and effect. None of the
Patents has been abandoned or dedicated to the public.
(j) Except for Licenses identified on Schedule C hereto, the Grantor
has the sole, full and clear title to each of the Copyrights shown on Schedule B
hereto and the Copyrights in the Works shown on Schedule E hereto which are
valid and subsisting and in full force and effect. None of the Copyrights or
Copyrights in the Works has been abandoned or fallen into public domain.
(k) The Grantor has the right and power to make the assignment and to
grant the security interest herein granted, and the Intellectual Property
Collateral is not now, and at all times hereafter will not be, subject to any
Liens, except
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those in favor of the Secured Party and Permitted Liens, and, to the best
knowledge of the Grantor, none of the Intellectual Property Collateral is
subject to any such claim.
(l) As of the date hereof neither the Grantor nor any Subsidiary
thereof owns any Patents, Material Copyrights or Trademarks or has any Patents,
Copyrights or Trademarks issued by or registered in, or the subject of pending
applications in, the United States Patent and Trademark Office or United States
Copyright Office or any similar office or agency of the United States, any State
thereof, any other country or any political subdivision thereof, other than
those described in Schedules A, B and D hereto.
(m) All Licenses now in effect of its Trademarks, Patents, Copyrights
and Works which the Grantor has granted to third parties are set forth in
Schedule C hereto.
(n) Grantor has not granted any License that in any way hinders or
prohibits Grantor's right, power, and authority to grant all of the right,
title, and interest herein granted.
(o) To the best of the Grantor's knowledge, the Intellectual Property
Collateral does not infringe any rights owned or possessed by any third party.
(p) There are no claims, judgments or settlements to be paid by the
Grantor or pending claims or litigation relating to the Intellectual Property
Collateral, except as set forth on Schedule F hereto.
(q) No effective security agreement, financing statement, equivalent
security or lien instrument or continuation statement covering all or any part
of the Intellectual Property Collateral is on file or of record in any public
office, except such as may have been filed by the Grantor in favor of the
Secured Party pursuant to this Agreement.
(r) All appropriate filings have been made with the United States
Patent and Trademark Office and the United States Copyright Office and the
appropriate UCC filing offices, and this Agreement is effective to create a
valid and continuing first priority lien on and first priority security interest
in favor of the Secured Party (i) to the fullest extent obtainable without the
registration of Intellectual Property Collateral which the Grantor would not, in
the ordinary course of business but for this Agreement, register (including any
Material Copyright prior to the Required Registration Date therefor, it being
understood that the Grantor shall register each Material Copyright no later than
the applicable Required Registration Date therefor) and (ii) in all Intellectual
Property Collateral not described in the foregoing clause (i). All action
necessary to protect and create such security interest in each item of the
Intellectual Property Collateral has been duly taken.
4. Rights and Remedies; Application of Monies.
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(a) Upon the occurrence and during the continuation of an Event of
Default, the Secured Party may to the fullest extent permitted by applicable
law, without prior notice to the Grantor, and without advertisement, hearing or
process of law in any kind, (i) exercise any and all rights as beneficial and
legal owner of the Intellectual Property Collateral, including any and all
consensual rights and powers with respect to the Intellectual Property
Collateral, and (ii) sell or assign or grant a license or franchise to use or
otherwise dispose of, or cause to be sold or assigned or granted a license or
franchise to use, any or all of the Intellectual Property Collateral, in each
case, free of all rights and claims of the Grantor therein and thereto, either
with or without special or other conditions or stipulations, with power to buy
the Intellectual Property Collateral or any part of it, and with power also to
execute assurances, and do all other acts and things for completing the
assignment, sale or other disposition which the Secured Party shall, in its sole
discretion, deem appropriate or proper, (iii) as fully as the Grantor can
authorize the same, enforce against any licensee or sublicensee, without
assuming any obligations or liability thereunder, all rights and remedies of the
Grantor in, to and under any one or more license agreements with respect to the
Intellectual Property Collateral, and take or refrain from taking any action
under any thereof and the Grantor hereby releases the Secured Party from and
agrees to hold the Secured Party free and harmless from and against any claims
arising out of any action taken or omitted to be taken with respect to any such
license agreement, and (iv) in order to implement the assignment, sale or other
disposal of any of the Intellectual Property Collateral pursuant to Sections
4(a)(i) and (ii) hereof, at any time pursuant to the authority granted in the
Special Powers of Attorney (such authority becoming effective on the occurrence
and during the continuation of an Event of Default), execute and deliver on
behalf of the Grantor, one or more instruments of assignment of the Patents,
Copyrights or Trademarks (or any application or registration thereof) in form
suitable for filing, recording or registration in any country. The Grantor
agrees to pay when due all reasonable costs incurred in such transfer including
any taxes, fees and reasonable attorney's fees and all such costs shall be added
to the Obligations.
(b) Upon the occurrence and during the continuation of an Event of
Default, the Secured Party may (i) sell or assign the Intellectual Property
Collateral, or any part thereof, for cash upon credit as the Secured Party may
deem appropriate or (ii) grant licenses or franchises or both to use the
Intellectual Property Collateral on such terms and conditions as the Secured
Party shall determine. In connection therewith, the Secured Party shall have the
right to impose such limitations and restrictions on the sale or assignment of
the Intellectual Property Collateral as the Secured Party may deem to be
necessary or appropriate to comply with any law, rule or regulation (Federal,
state, local or that of a foreign country) having applicability to any such sale
and requirements for any necessary governmental approvals.
(c) It is expressly understood that, anything herein to the contrary
notwithstanding, the Grantor shall remain liable under each of its Contracts (as
such term is defined in the Security Agreement entered into between the Grantor
and the Secured Party) and each of its Licenses to observe and perform all the
conditions and obligations to be observed by it thereunder and the Grantor shall
perform all of its duties and obligations thereunder, all in accordance with and
pursuant to the terms and
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provisions of each such Contract or License. The Secured Party shall not have
any obligation or liability under any Contract or License by reason of or
arising out of this Agreement or the granting to the Secured Party of a security
interest herein, nor shall the Secured Party be required or obligated in any
manner to perform or fulfill any of the obligations of the Grantor under or
pursuant to any Contract or License, or to make any payment, or to make any
inquiry as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any Contract or License, or to
present or file any claim, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
(d) The Secured Party may in its sole discretion pay any amount or do
any act required of the Grantor hereunder or requested by the Secured Party to
preserve, defend, protect, maintain, record or enforce the Grantor's obligations
contained herein, the Obligations, the Intellectual Property Collateral or the
right, title and interest granted to the Secured Party herein, and which the
Grantor is required to do or pay hereunder and pay, and any such payment shall
be deemed an advance by the Secured Party to the Grantor and shall be payable on
demand together with interest at the highest rate then applicable and payable to
the Obligations.
(e) The Grantor hereby expressly waives, to the fullest extent
permitted by applicable law, any and all notices (except such notices as are
expressly required by this Agreement), advertisements, hearings or process of
law in connection with the exercise by the Secured Party of any of its rights
and remedies hereunder. The Secured Party shall not be liable to any Person for
any incorrect or improper payment made pursuant to this Section 4, in the
absence of gross negligence or willful misconduct.
(f) Any cash held by the Secured Party as Intellectual Property
Collateral and all cash proceeds received by the Secured Party in respect of any
sale of, collection from or other realization upon all or any part of the
Intellectual Property Collateral shall be applied by the Secured Party, in the
following order of priority indicated:
(i) first, to the payment of the costs and expenses of such
sale, transfer, assignment or other disposition, including all expenses
and liabilities (including reasonable compensation to the agents of,
and counsel to, the Secured Party) and advances made or incurred by the
Secured Party in connection therewith or pursuant to Section 15 or 19
hereof;
(ii) next, to the Secured Party, for application in payment in
full of the Obligations; provided, that if the amount of such cash
proceeds exceeds the amount of the Obligations then due and payable,
the Secured Party may retain such excess cash proceeds in an amount not
to exceed 110% of the Obligations not then due, for application in
payment of the Obligations not then due, for a period up to the date
such Obligations become due and payable, but in no event later than 180
days after receipt thereof, such 180-day period to be extended for so
long as any dispute exists
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between any Loan Party and the Secured Party with respect to such
application of or the Secured Party's right to apply such proceeds; and
(iii) finally, after payment in full of all of the Obligations
and any other Persons who may be entitled to payment under UCC Sections
9-608 and 9-615, to the payment to the Grantor, or its successors or
assigns, or to whosoever may be lawfully entitled to receive the same
as a court of competent jurisdiction may direct of any surplus then
remaining.
(g) Concurrently with the execution and delivery hereof, the Grantor is
executing and delivering to the Secured Party, in the form of Schedule G hereto,
five originals of a Special Power of Attorney for the implementation of the
assignment, sale or other disposal of the Intellectual Property Collateral
pursuant to Sections 4(a)(i) and 4(a)(ii) hereof and the Grantor hereby releases
the Secured Party from any claims, causes of action and demands at any time
arising out of or with respect to any actions taken or omitted to be taken by
the Secured Party under the powers of attorney granted herein, other than
actions taken or omitted to be taken through the gross negligence or willful
misconduct of the Secured Party.
(h) If an Event of Default has occurred and is continuing, at the
request of the Secured Party, the Grantor agrees that it will promptly (and in
any event within three Business Days) deliver to the Secured Party or its
designee an assignment of the Intellectual Property Collateral, duly executed by
the Grantor, in substantially the form of Schedule H annexed hereto. The Grantor
agrees that the Secured Party may duly execute such an assignment pursuant to
the authority granted in the Special Powers of Attorney.
5. Covenants of Grantor.
(a) Notwithstanding anything to the contrary contained herein, unless
an Event of Default has occurred and is continuing, the Grantor may continue to
exploit, license, franchise, use, enjoy and protect (whether in the United
States of America or any foreign jurisdiction) the Intellectual Property
Collateral in the ordinary course of business and the Secured Party shall from
time to time execute and deliver, upon written request of the Grantor and at the
Grantor's sole cost and expense, any and all instruments, certificates or other
documents, in the form so requested, necessary or appropriate in the judgment of
the Grantor to enable the Grantor to do so.
(b) In order to more fully protect the Intellectual Property Collateral
in respect of which security interests have been granted to the Secured Party by
the Grantor hereunder, the Grantor may hereafter transfer to the Secured Party
such additional rights, privileges, marks and licenses as the Grantor may in its
discretion determine to be necessary and appropriate to the continuing
exploitation, licensing, use, enjoyment and protection (whether in the United
States of America or any foreign jurisdiction) of the Intellectual Property
Collateral.
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(c) The Grantor agrees that at any time and from time to time, at the
sole expense of the Grantor, the Grantor will promptly execute and deliver such
further instruments and documents, and take such further action, as may be
necessary or desirable, and as the Secured Party may reasonably request in
writing, in order to perfect and protect any security interests granted or
purported to be granted hereby or to enable the Secured Party to exercise and
enforce the rights and remedies pursuant hereto with respect to any of the
Intellectual Property Collateral; provided, that so long as no Event of Default
has occurred and is continuing, the Grantor shall not be required to register
Intellectual Property Collateral (other than any Material Copyright from and
after the Required Registration Date therefor) that the Grantor would not
otherwise register in the ordinary course of business but for this Agreement.
(d) The Grantor shall perform all acts and execute all documents,
including assignments for security in form suitable for filing with the United
States Patent and Trademark Office and the United States Copyright Office or any
other country, substantially in the form of Schedule H hereof, requested by the
Secured Party at any time to evidence, perfect, maintain record and enforce the
Secured Party's interest in the Intellectual Property Collateral or otherwise in
furtherance of the provisions of this Agreement, provided, that so long as no
Event of Default has occurred and is continuing, the Grantor shall not be
required to register Intellectual Property Collateral (other than any Material
Copyright from and after the Required Registration Date therefor) that the
Grantor would not otherwise register in the ordinary course of business but for
this Agreement, and the Grantor hereby authorizes the Secured Party to execute
and file one or more financing statements (and similar documents) or copies
thereof or of this Agreement with respect to the Intellectual Property
Collateral signed only by the Secured Party or without signature as permitted by
law.
(e) Except to the extent that the Secured Party, upon prior written
notice of the Grantor shall consent, the Grantor (either itself or through
licensees) shall continue to use the Trademarks, consisting of registered
Trademarks (including service marks and trade names), common law Trademarks
(including service marks and trade names), and applications for Trademarks
(including service marks and trade names), on each and every trademark class of
goods applicable to its current line as reflected in its catalogs, brochures,
price lists, products, Works or otherwise in order to maintain the Trademarks,
consisting of registered Trademarks (including service marks and trade names),
common law Trademarks (including service marks and trade names), and
applications for Trademarks (including service marks and trade names), in full
force free from any claim of abandonment for nonuse and the Grantor will not
(and will not permit any licensee thereof to) do any act or knowingly omit to do
any act whereby any Trademark, consisting of registered Trademarks (including
service marks and trade names), common law Trademarks (including service marks
and trade names), and applications for Trademarks (including service marks and
trade names), may become invalidated or diluted. Grantor shall promptly notify
the Secured Party if it knows that any Trademark, consisting of registered
Trademarks (including service marks and trade names), common law Trademarks
(including service marks and trade names), and applications for Trademarks
(including service marks and trade names), may become
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invalidated or diluted. Such notification shall be given before such
invalidation or dilution occurs.
(f) Except to the extent that the Secured Party, upon prior written
notice by the Grantor, shall consent, the Grantor shall not do any act or omit
to do any act, whereby any Patent may become abandoned or dedicated to the
public and shall promptly notify the Secured Party if it knows that any Patent
may become abandoned or dedicated to the public. Such notification shall be
given before such abandonment or dedication to the public occurs.
(g) Except to the extent that the Secured Party, upon prior written
notice by the Grantor, shall consent, the Grantor shall not do any act or omit
to do any act, whereby the Trade Secrets may become abandoned or dedicated to
the public and shall promptly notify the Secured Party if it knows that any
Trade Secret may become abandoned or dedicated to the public, except to the
extent that any such event would not reasonably be expected to have a Material
Adverse Effect. Such notification shall be given before such abandonment or
dedication to the public occurs.
(h) Except to the extent that the Secured Party, upon prior written
notice by the Grantor, shall consent, the Grantor shall not do any act or omit
to do any act whereby any registered Copyright, Copyright application, or
Material Copyright or any registered Copyright, Copyright application, or
Material Copyright in the Works may become abandoned, terminated or fall into
public domain and shall promptly notify the Secured Party if it knows that any
application or registration may terminate, become abandoned or fall into public
domain. Such notification shall be given before such termination, abandonment or
dedication to the public occurs.
(i) In no event shall the Grantor, either itself or through any agent,
employee, licensee or designee, (i) file an application for the registration of
any Patent or Trademark with the United States Patent and Trademark Office or
file an application for registration of any Copyright with the United States
Copyright Office or any similar offices or agencies of the United States, any
State thereof, any other country or any political subdivision thereof or (ii)
file any assignment of any Patent, Copyright or Trademark, which the Grantor may
acquire from a third party, with the United States Patent and Trademark Office,
United States Copyright Office or any similar office or agency of the United
States, any State thereof, any other country or any political subdivision
thereof, unless the Grantor shall, on or prior to the date of such filing,
notify the Secured Party thereof and upon request of the Secured Party, execute
and deliver any and all assignments, agreements, instruments, documents and
papers as the Secured Party may request to evidence its interest in such Patent,
Trademark or Copyright and the goodwill and general intangibles relating thereto
or represented thereby. The Grantor hereby constitutes the Secured Party its
attorney-in-fact to execute and file all such writings for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed; such
power being coupled with an interest is irrevocable until the Secured
Obligations are paid in full.
12
(j) Except to the extent that the Secured Party, upon prior written
notice from the Grantor, shall consent, the Grantor shall not assign, sell,
mortgage, lease, transfer, pledge, hypothecate, grant a security interest in or
lien upon, encumber, grant an exclusive or non-exclusive license (except (i)
non-exclusive licenses of rights in the Intellectual Property Collateral or (ii)
exclusive licenses (which exclude all Persons including the Grantor and all of
its Subsidiaries) of rights in the Intellectual Property Collateral to
non-United States Subsidiaries of the Grantor, (such rights only being
exercisable with respect to territories outside of the United States and Mexico,
and in either case, granted in the ordinary course of business), and that do not
in any way hinder or restrict the assignability to or assumption by the Secured
Party of the Grantor's interests in the Intellectual Property Collateral that is
the subject of any such license), or otherwise dispose of any of the
Intellectual Property Collateral, and nothing in this Agreement shall be deemed
a consent by the Secured Party to any such action except as expressly permitted
herein.
(k) The Grantor shall take all reasonably necessary steps in any
proceeding before the United States Patent and Trademark Office, United States
Copyright Office or any similar office or agency of the United States, any State
thereof, any other country or any political subdivision thereof, to maintain
each application and registration of the Trademarks, Copyrights and Patents,
including payment of annuities, filing of renewals, affidavits of use,
affidavits of incontestability and opposition, interference and cancellation
proceedings (except to the extent that dedication, abandonment or invalidation
is permitted under Sections 5(e) through 5(g) hereof).
(l) The Grantor agrees that if it, or any Affiliate or Subsidiary
thereof, learns of any use by any Person of any term or design which in its
judgment is likely to cause confusion with or dilute any registered Trademark,
it shall promptly notify the Secured Party of such use and, if requested by the
Secured Party, shall join with the Secured Party, at its expense, in such action
as the Secured Party, in its reasonable discretion may deem advisable for the
protection of its interest in and to such Trademarks.
6. Duties of Grantor. The Grantor shall have the duty to preserve and
maintain all rights in the Intellectual Property Collateral in respect of which
a failure to be able to continue to use the same would have a Material Adverse
Effect in a manner substantially consistent with its present practices. The
Grantor shall take all action reasonably requested by the Secured Party to
register, record and/or perfect the Secured Party's rights hereunder. Such
duties shall include, but not be limited to, the following:
(a) the Grantor shall take appropriate action at its expense to halt
the infringement, dilution or invalidation of any of the Intellectual Property
Collateral if such infringement would have a Material Adverse Effect on the
value of the Intellectual Property Collateral or the Grantor's ability to use
the Intellectual Property Collateral; and
(b) the Grantor shall not amend, modify, terminate or waive any
provisions of any other contract to which the Grantor is a party in any manner
which
13
might result in a Material Adverse Effect on the value of the Intellectual
Property Collateral or the Grantor's ability to use the Intellectual Property
Collateral.
7. Payment of Obligations. The Grantor will pay promptly when due all
taxes, assessments and governmental charges or levies imposed upon the
Intellectual Property Collateral or in respect of its income or profits
therefrom and all claims of any kind, except that no such charge need be paid if
(i) such non-payment does not involve any danger of forfeiture or loss of any of
the Intellectual Property Collateral or any interest therein and (ii) such
charge is adequately reserved against in accordance with and to the extent
required by GAAP.
8. The Secured Party's Right to Xxx. Whenever an Event of Default shall
have occurred and be continuing, the Secured Party shall have the right, but
shall in no way be obligated, to bring suit in its own name to protect or
enforce the Trademarks, Copyrights, Licenses, Patents and Trade Secrets, and, if
the Secured Party shall commence any such suit, the Grantor shall, at the
request of the Secured Party, do any and all lawful acts and execute any and all
proper documents required by the Secured Party in aid of such protection or
enforcement.
9. Maintenance of Records. The Grantor will keep and maintain at its
own cost and expense satisfactory and complete records of the Intellectual
Property Collateral, including a record of all payments received and all credits
granted with respect to the Intellectual Property Collateral and all other
dealings with the Intellectual Property Collateral. The Grantor will xxxx its
books and records pertaining to the Intellectual Property Collateral to evidence
this Agreement and the security interests granted hereby. For the Secured
Party's further security, the Grantor agrees that the Secured Party shall have a
special property interest in all of the Grantor's books and records pertaining
to the Intellectual Property Collateral and, upon the occurrence and during the
continuation of any Event of Default, the Grantor shall deliver and turn over
any such books and records to the Secured Party or its representatives at any
time on demand of the Secured Party.
10. Right of Inspection. Upon reasonable notice to the Grantor (unless
an Event of Default has occurred and is continuing, in which case no notice is
necessary), the Secured Party shall at all times, but no more frequently than
annually so long as no Default or Event of Default has occurred and is
continuing, have full and free access during normal business hours to all the
books and records and correspondence of the Grantor, and the Secured Party or
its representatives may examine the same, take extracts therefrom and make
photocopies thereof, and the Grantor agrees to render to the Secured Party, at
the Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto, subject to the confidentiality
provisions of Section 9.11 of the Credit Agreement.
11. Secured Party Appointed Attorney-in-Fact and Proxy. The Grantor
hereby irrevocably constitutes and appoints the Secured Party and any officer or
agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact and proxy with full irrevocable power and authority in the
place and stead of Grantor and in the name of the Grantor or in its own name,
from time to time in the Secured Party's
14
discretion, for the purpose of carrying out the terms of this Agreement, at any
time after the occurrence and during the continuance of an Event of Default, to
take any and all appropriate action and to execute and deliver any and all
documents and instruments which the Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including to receive,
indorse and collect all instruments made payable to the Grantor representing any
dividend, interest payment or other distribution or payment in respect of the
Intellectual Property Collateral or any part thereof and to give full discharge
for the same. The Grantor hereby ratifies, to the extent permitted by law, all
that any said attorney shall lawfully do or cause to be done by virtue hereof.
This power, being coupled with an interest, is irrevocable until the Obligations
are paid in full.
12. Secured Party May Perform. If the Grantor fails to perform any
agreement contained herein, the Secured Party may, but shall not be obligated
to, itself perform, or cause performance of, such agreement, and the expenses of
the Secured Party incurred in connection therewith shall be payable by the
Grantor under Section 14 hereof and constitute Secured Obligations secured
hereby.
13. New Intellectual Property. In the event, prior to the time the
Obligations have been paid and collected in full, the Grantor shall (i) obtain
any rights to or interests in any new invention whether or not patentable,
patent, patent application or any reissue, division, continuation, renewal,
extension, or continuation-in-part of any patent or improvement of any patent,
trademark, trade name, service xxxx, and registrations or applications therefor,
copyright and registrations or applications therefor, work or license, or (ii)
become entitled to the benefit of any patent, copyright or trademark, or any
registrations or applications therefor, license, license renewal, trade secret,
work or copyright renewal, the provisions of this Agreement shall automatically
apply thereto and anything enumerated in clause (i) or (ii) of this Section 13
shall constitute Intellectual Property Collateral. The Grantor agrees, promptly
following the written request by the Secured Party, to amend this Agreement by
amending any or all of Schedules A, B, C, D, E and F, as applicable, to include
any such future trademarks, (including service marks and trade names), trademark
(including service marks and trade names) registrations, trademark (including
service marks and trade names) applications, registered copyrights, copyright
applications, Material Copyrights, updated versions and material revisions of
Material Copyrights, patents, patent applications, works and licenses which
would be Intellectual Property Collateral, and to promptly (and in any event (A)
with respect to any Material Copyright and new versions or material revisions
thereof, no later than the applicable Required Registration Date with respect
thereto and (B) with respect to any other registrable Intellectual Property
Collateral, within five Business Days) prepare, file, execute and record with
all appropriate foreign country, Federal, state and/or local offices and
authorities a security agreement for any such new Intellectual Property
Collateral, in form and substance similar to this Agreement, and to deliver to
the Secured Party reasonable proof of such recordation.
14. Expenses. The Grantor will upon demand pay to the Secured Party the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and expenses of the Secured Party's counsel and of any experts
and agents, which the Secured Party may incur in connection with (i) the
administration of
15
this Agreement, (ii) the custody or preservation of, sale of, collection from,
or other realization upon, any of the Intellectual Property Collateral, (iii)
the exercise or enforcement of any of the rights and remedies hereunder of the
Secured Party, or (iv) the failure by the Grantor to perform or observe any of
the provisions hereof.
15. Security Interest Absolute. All rights of the Secured Party and
security interests hereunder, and all obligations of the Grantor pursuant
hereto, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of
the Credit Agreement, the Note or any other Loan Document or any other agreement
or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, or any increase in the amount of, all or any of the
Obligations, or any other amendment or waiver of or any term of, or consent to
any departure from any requirement of, the Credit Agreement, the Note or any
other Loan Document;
(c) any exchange, release or non-perfection of any Lien on any
other collateral, or any release or amendment or waiver of any term of any
guarantee of, or consent to departure from any guaranty of all or any of the
Obligations; or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, a borrower or a pledgor.
16. Amendments, Etc. No amendment or waiver of any provision of this
Agreement, nor consent to any departure by the Grantor herefrom, shall in any
event be effective unless the same shall be in writing and signed by the Secured
Party, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
17. Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, telecopy or cable
communication) and mailed, telegraphed, telexed, telecopied, cabled or delivered
by hand, if to the Grantor, addressed to it at, 0000 Xxxxxxx Xxxxxxxxxx, Xxxxx
Xxxxx, Xxxxxxxxxx 00000 (Telecopy No. (000) 000-0000), Attention: Xxxxxxxxx
Xxxxxx, and if to the Secured Party, addressed to it at, SBC Communications
Inc., 000 Xxxx Xxxxxxx Xxxxxx, Xx. 00-X-00, Xxx Xxxxxxx, Xxxxx 00000 (Telecopy
No. (000) 000-0000), Attention: Xx Xxxxxxxxx, VP Business Development and
Alliance Management, or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section. All such notices and other
communications shall, when mailed, telegraphed, telexed, telecopied, cabled or
delivered, be effective when deposited in the mails, delivered to the telegraph
company, confirmed by telex answerback, telecopied with confirmation of receipt,
delivered to the cable company or delivered by hand to the addressee or its
agent.
18. Binding Effect. This Agreement shall create a continuing security
interest in the Intellectual Property Collateral and shall (i) remain in full
force and effect
16
until payment in full (after the Termination Date) of the Obligations, (ii) be
binding upon the Grantor, its successors and assigns, and (iii) inure, together
with the rights and remedies hereunder, to the benefit of and be enforceable by
the Secured Party and its successors, transferees and assigns; provided,
however, that the Grantor may not assign its rights or obligations hereunder or
in connection herewith or any interest herein (voluntarily, by operation of law
or otherwise) without the prior written consent of the Secured Party. Except as
provided in Section 2, no other Person (including any other creditor of the
Grantor) shall have any interest herein or any right or benefit with respect
hereto and this Agreement shall not be construed so as to confer any right or
benefit upon any Person other than the parties to this Agreement and each of
their respective successors and assigns.
19. Termination. Upon the payment in full (after the Termination Date)
of the Obligations, the Grantor shall be entitled to the return, upon its
request and at its expense, of such of the Intellectual Property Collateral as
shall not have been sold or otherwise applied pursuant to the terms hereof.
20. Governing Law; Severability. This Agreement and the rights and
obligations of the parties hereto, including the interpretation, construction,
validity and enforceability thereof, shall be governed by and construed and
interpreted in accordance with the law of the State of Delaware. Wherever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity and
without invalidating the remaining provisions of this Agreement. Unless
otherwise defined herein or in the Credit Agreement, terms defined in Article 9
of the UCC.
21. Entire Agreement. Subject to the terms of the Dispute Resolution
Agreement, this Agreement, together with all of the other Loan Documents and all
certificates and documents delivered hereunder or thereunder, embodies the
entire agreement of the parties and supersedes all prior oral or written
agreements and understandings relating to the subject matter hereof, including
that certain term sheet, dated on or about October 19, 2001, between the Parent
and the Secured Party.
22. Section Titles. The Section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not part of this Agreement.
23. Counterparts. This Agreement may be executed in any number of
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute one and the same Agreement.
24. Further Indemnification. The Grantor agrees to pay, and save the
Secured Party harmless from, any and all liabilities with respect to, or
resulting from any delay in paying (other than a delay caused by the gross
negligence or willful misconduct
17
of the Secured Party), any and all excise, sales or other similar taxes which
may be payable with respect to any of the Intellectual Property Collateral or in
connection with any of the transactions contemplated by this Agreement.
25. No Waiver; Remedies.
(a) No failure on the part of the Secured Party to exercise, and no
delay in exercising any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative, may be exercised singly or concurrently, and are
not exclusive of any remedies provided by law or any of the other Loan
Documents.
(b) Failure by the Secured Party at any time or times hereafter to
require strict performance by the Grantor or any other Person of any of the
provisions, warranties, terms or conditions contained in any of the Loan
Documents now or at any time or times hereafter executed by the Grantor or any
such other Person and delivered to the Secured Party shall not waive, affect or
diminish any right of the Secured Party at any time or times hereafter to demand
strict performance thereof, and such right shall not be deemed to have been
modified or waived by any course of conduct or knowledge of the Secured Party,
or any agent, officer or employee of the Secured Party.
26. Waivers. The Grantor hereby waives presentment, demand, protest or
any notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Agreement or any Intellectual Property Collateral, except
such demands and notices as are expressly required by this Agreement.
27. Unpaid Obligations. Notwithstanding any provisions of this
Agreement to the contrary, if, after giving effect to any sale, transfer,
assignment or other disposition of any or all of the Intellectual Property
Collateral pursuant hereto and after the application of the proceeds hereunder
to Obligations, any Obligations remain unpaid or unsatisfied, Grantor shall
remain liable for the unpaid and unsatisfied amount of such Obligations.
18
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be
executed and delivered by its duly authorized officer, on the date first above
written.
COVAD COMMUNICATIONS COMPANY
By: /s/ Xxxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: President
Accepted and Acknowledged:
SBC COMMUNICATIONS INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: VP - Controller
19
