EXHIBIT 10.19.2
EXECUTION COPY
AMENDED AND RESTATED SECURITY AGREEMENT
Dated as of October 29, 2002
from
The Grantors referred to herein
as Grantors
to
Xxxxxx Xxxxxxx & Co. Incorporated
as Collateral Agent
TABLE OF CONTENTS
SECTION 1. Grant of Security ............................................................ 2
SECTION 2. Security for Obligations ..................................................... 8
SECTION 3. Grantors Remain Liable ....................................................... 9
SECTION 4. Delivery and Control of Security Collateral .................................. 9
SECTION 5. Delivery and Control of the Account Collateral; Maintaining the Collateral
Account ...................................................................... 10
SECTION 6. Investing of Amounts in the Collateral Account ............................... 11
SECTION 7. Release of Amounts ........................................................... 11
SECTION 8. Representations and Warranties ............................................... 12
SECTION 9. Further Assurances ........................................................... 16
SECTION 10. As to Equipment and Inventory ................................................ 17
SECTION 11. Insurance .................................................................... 18
SECTION 12. Place of Perfection; Records; Collection of Receivables ...................... 19
SECTION 13. As to Intellectual Property Collateral ....................................... 20
SECTION 14. Voting Rights; Dividends; Etc ................................................ 22
SECTION 15. As to the Assigned Agreements ................................................ 24
SECTION 16. Payments Under the Assigned Agreements ....................................... 25
SECTION 17. Transfers and Other Liens; Additional Shares ................................. 25
SECTION 18. Collateral Agent Appointed Attorney-in-Fact .................................. 26
SECTION 19. Collateral Agent May Perform ................................................. 26
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SECTION 20. The Collateral Agent's Duties ................................................ 26
SECTION 21. Remedies ..................................................................... 27
SECTION 22. Indemnity and Expenses ....................................................... 31
SECTION 23. Amendments; Waivers; Additional Grantors; Etc ................................ 31
SECTION 24. Notices, Etc ................................................................. 32
SECTION 25. Continuing Security Interest; Assignments under the Credit Agreement ......... 32
SECTION 26. Release; Termination ......................................................... 33
SECTION 27. Security Interest Absolute ................................................... 33
SECTION 28. Execution in Counterparts .................................................... 35
SECTION 29. The Mortgage ................................................................. 35
SECTION 30. Governing Law ................................................................ 35
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Schedules
Schedule I - Pledged Shares and Pledged Debt
Schedule II - Assigned Agreements
Schedule III - Locations of Equipment and Inventory
Schedule IV - Jurisdiction of Organization and Federal Tax
Identification Number
Schedule V - Patents, Trademarks and Trade Names, Copyrights and
Licenses
Schedule VI - Securities Accounts
Exhibits
Exhibit A - Form of Security Agreement Supplement
Exhibit B - Form of Consent and Agreement
Exhibit C - Form of Intellectual Property Security Agreement
Exhibit D - Form of Intellectual Property Security Agreement
Supplement
Exhibit E - Form of Securities Account Control Agreement
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AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT dated as of October 29, 2002,
made by Interstate FiberNet, Inc., a Delaware corporation (the "Borrower"),
ITC/\ Deltacom, Inc. (the "Parent"), the other Persons listed on the signature
pages hereof and the Additional Grantors (as defined in Section 23(b)) (the
Borrower, the Parent, the Persons so listed and the Additional Grantors being,
collectively, the "Grantors") to Xxxxxx Xxxxxxx & Co. Incorporated, as
collateral agent (together with any successor collateral agent appointed
pursuant to Article VIII of the Credit Agreement (as hereinafter defined), the
"Collateral Agent") for the Secured Parties (as defined in the Credit
Agreement).
PRELIMINARY STATEMENTS:
1. The Borrower entered into a Credit Agreement dated as of April 5,
2000 (the "Initial Credit Agreement"), with the Lender Parties and the Agents
named therein, pursuant to which the Grantors executed and delivered to the
Collateral Agent for the Secured Parties a Security Agreement, dated April 5,
2000 (the "Initial Security Agreement").
2. In order to restructure, continue, convert and consolidate the
loans advanced to the Borrower by the Lender Parties under the Initial Credit
Agreement, the Lender Parties, the Loan Parties and the Agents have entered into
an Amended and Restated Credit Agreement, dated as of October 29, 2002 (as may
be amended from time to time, the "Credit Agreement"). Any capitalized term used
herein and not otherwise defined has the meaning set forth in the Credit
Agreement.
3. Pursuant to the Credit Agreement, each Grantor is entering into
this Agreement in order to grant to the Collateral Agent for the ratable benefit
of the Secured Parties a security interest in all of its personal property and
fixtures now owned or hereafter acquired.
4. Each Grantor is the owner of the shares (the "Initial Pledged
Shares") of stock set forth opposite such Grantor's name on and as otherwise
described in Part I of Schedule I hereto and issued by the corporations named
therein and of the indebtedness (the "Initial Pledged Debt") set forth opposite
such Grantors name on and as otherwise described in Part II of Schedule I hereto
and issued by the obligors named therein.
5. The Borrower has opened a collateral securities account, Account
No. 27-l701H (the "Collateral Account"), with Xxxxxx Xxxxxxx & Co. Incorporated
at its office at 0000 Xxxxxxxx, 00/xx/ Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, in the
name of the Collateral Agent and
under the sole control and dominion of the Collateral Agent and subject to the
terms of this Agreement.
6. The Parent has security entitlements (the "Pledged Security
Entitlements") with respect to all the financial assets (the "Pledged Financial
Assets") credited from time to time to the Parent's accounts as otherwise
described in Schedule VI (each a "Securities Account" and collectively the
"Securities Accounts").
7. It is a condition precedent to the making of Advances by the
Lender Parties under the Credit Agreement and the entry into Secured Hedge
Agreements by the Hedge Banks from time to time that the Grantors shall have
granted the security interest and made the pledge contemplated by this
Agreement.
8. Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Loan Documents.
9. Unless otherwise defined in this Agreement or in the Credit
Agreement, terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. Uniform Commercial Code") and/or in the
Federal Book Entry Regulations (as defined below) are used in this Agreement as
such terms are defined in such Article 8 or 9 and/or the Federal Book Entry
Regulations. The term "Federal Book Entry Regulations" means (a) the federal
regulations contained in Subpart B ("Treasury/Reserve Automated Debt Entry
System (TRADES)") governing book-entry securities consisting of U.S. Treasury
bonds, notes and bills and Subpart D ("Additional Provisions") of 31 C.F.R. Part
357, 31 C.F.R. (S) 357.2, (S) 357.10 through (S) 357.14 and (S) 357.41 through
(S) 357.44 and (b) to the extent substantially identical to the federal
regulations referred to in clause (a) above (as in effect from time to time),
the federal regulations governing other book-entry securities.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and to induce the Hedge Banks to
enter into Secured Hedge Agreements from time to time, each Grantor hereby
agrees with the Collateral Agent for the ratable benefit of the Secured Parties
as follows:
SECTION 1. Grant of Security. Each Grantor hereby pledges to the
Collateral Agent for the ratable benefit of the Secured Parties (subject to the
terms of this Agreement), and hereby grants to the Collateral Agent for the
ratable benefit of the Secured Parties a security interest in, such Grantor's
right, title and interest in and to the following, in each case as to each type
of property described below, whether now owned or hereafter acquired by such
Grantor, wherever located, and whether now or hereafter existing or arising
(collectively, the "Collateral"):
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(a) all equipment in all of its forms, all fixtures and all parts
thereof and all accessions thereto (any and all such equipment, fixtures,
parts and accessions being the "Equipment");
(b) all inventory in all of its forms including, without limitation,
(i) all raw materials and work in process therefor, finished goods thereof
and materials used or consumed in the manufacture, production, preparation
or shipping thereof, (ii) 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) and (iii) goods that are returned to or repossessed or stopped
in transit by such Grantor) and all accessions thereto and products thereof
and documents therefor (any and all such inventory, accessions, products
and documents being the "Inventory");
(c) all accounts, chattel paper, instruments, deposit accounts,
general 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 security agreements, leases
and other contracts securing or otherwise relating to any such accounts,
chattel paper, instruments, deposit accounts, general intangibles or
obligations (any and all such accounts, chattel paper, instruments, deposit
accounts, general intangibles and obligations, to the extent not referred
to in clause (d), (e) or (f) below, being the "Receivables");
(d) the following (the "Security Collateral"):
(i) the Initial Pledged Shares and the certificates, if any,
representing the Initial Pledged Shares, and all dividends, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of the Initial Pledged Shares;
(ii) the Initial Pledged Debt and the instruments, if any,
evidencing the Initial Pledged Debt, and all interest, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of the Initial Pledged Debt;
(iii) all additional shares of stock from time to time acquired
by such Grantor in any manner (such shares, together with the Initial
Pledged Shares, being the "Pledged Shares") and the certificates, if
any, representing such additional shares, and all dividends, cash,
instruments and other property from
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time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such shares;
(iv) all additional indebtedness from time to time owed to such
Grantor (such indebtedness, together with the Initial Pledged Debt,
being the "Pledged Debt") and the instruments, if any, evidencing such
indebtedness, and all interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such indebtedness;
(v) the Securities Accounts, all Pledged Security Entitlements
with respect to all Pledged Financial Assets from time to time
credited to the Securities Accounts, and all Pledged Financial Assets,
and all dividends, interest, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such Pledged Security Entitlements
or such Pledged Financial Assets; and
(vi) all other investment property (including, without
limitation, all (A) securities, whether certificated or
uncertificated, (B) security entitlements, (C) securities accounts,
(D) commodity contracts and (E) commodity accounts) in which such
Grantor has now, or acquires from time to time hereafter, any right,
title or interest in any manner and the certificates or instruments,
if any, representing or evidencing such investment property, and all
dividends, interest, distributions, value, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
investment property;
(e) each of the agreements listed on Schedule II hereto, each of the
agreements set forth on the supplemental list of Material Contracts
delivered by the Parent pursuant to Section 5.01(n)(iii) of the Credit
Agreement (the "Supplemental List"), and each Hedge Agreement to which such
Grantor is now or may hereafter become a party, in each case as such
agreements may be amended, amended and restated, supplemented or otherwise
modified from time to time (collectively, the "Assigned Agreements"),
including, without limitation, (i) all rights of such Grantor to receive
moneys due and to become due under or pursuant to the Assigned Agreements,
(ii) all rights of such Grantor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of such Grantor for damages arising out of or for breach of or
default under the Assigned Agreements and (iv) the right of such Grantor to
terminate the Assigned Agreements, to perform
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thereunder and to compel performance and otherwise exercise all remedies
thereunder (all such Collateral being the "Agreement Collateral");
(f) the following (collectively, the "Account Collateral"):
(i) the Collateral Account, all financial assets from time to
time credited to the Collateral Account (including, without
limitation, all Cash Equivalents from time to time credited to the
Collateral Account) and all dividends interest, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
financial assets;
(ii) all deposit accounts of such Grantor from time to time, all
funds held therein and all certificates and instruments, if any, from
time to time representing or evidencing such deposit accounts;
(iii) all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time delivered to or
otherwise possessed by the Collateral Agent for or on behalf of such
Grantor, including, without limitation, those delivered or possessed
in substitution for or in addition to any or all of the then existing
Account Collateral; and
(iv) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing Account Collateral; and
(g) the following (collectively, the "Intellectual Property
Collateral"):
(i) all United States, international and foreign patents,
patent applications and statutory invention registrations, including,
without limitation, the patents and patent applications set forth in
Schedule V hereto (as such Schedule V may be supplemented from time to
time by supplements to this Agreement, each such supplement being in
substantially the form of Exhibit D hereto (an "IP Security Agreement
Supplement"), executed and delivered by such Grantor to the Collateral
Agent from time to time), together with all reissues, divisions,
continuations, continuations-in-part, extensions and reexaminations
thereof, all inventions therein, all rights therein provided by
international treaties or conventions and all improvements thereto,
and all other rights of any kind whatsoever of such Grantor accruing
thereunder or pertaining thereto (the "Patents");
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(ii) all trademarks (including, without limitation, service
marks), certification marks, collective marks, trade dress, logos,
domain names, product configurations, trade names, business names,
corporate names and other source identifiers, whether or not
registered, whether currently in use or not, including, without
limitation, all common law rights and registrations and applications
for registration thereof, including, without limitation, the trademark
registrations and trademark applications set forth in Schedule V
hereto (as such Schedule V may be supplemented from time to time by IP
Security Agreement Supplements executed and delivered by such Grantor
to the Collateral Agent from time to time), and all other marks
registered in the U.S. Patent and Trademark Office or in any office or
agency of any State or Territory of the United States or any foreign
country (but excluding any United States intent-to-use trademark
application prior to the filing and acceptance of a Statement of Use
or an Amendment to allege use in connection therewith to the extent
that a valid security interest may not be taken in such an
intent-to-use trademark application under applicable law), and all
rights therein provided by international treaties or conventions, all
reissues, extensions and renewals of any of the foregoing, together in
each case with the goodwill of the business connected therewith and
symbolized thereby, and all rights corresponding thereto throughout
the world and all other rights of any kind whatsoever of such Grantor
accruing thereunder or pertaining thereto (the "Trademarks");
(iii) all copyrights, copyright applications, copyright
registrations and like protections in each work of authorship, whether
statutory or common law, whether published or unpublished, any
renewals or extensions thereof, all copyrights of works based on,
incorporated in, derived from, or relating to works covered by such
copyrights, including, without limitation, the copyright registrations
and copyright applications set forth in Schedule V hereto (as such
Schedule V may be supplemented from time to time by IP Security
Agreement Supplements executed and delivered by such Grantor to the
Collateral Agent from time to time), together with all rights
corresponding thereto throughout the world and all other rights of any
kind whatsoever of such Grantor accruing thereunder or pertaining
thereto (the "Copyrights");
(iv) all confidential and proprietary information, including,
without limitation, know-how, trade secrets, manufacturing and
production processes and techniques, inventions, research and
development information, technical data, financial, marketing and
business data, pricing and cost information, business and
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marketing plans and customer and supplier lists and information (the
"Trade Secrets");
(v) 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, and all rights with respect to the foregoing,
together with any and all options, warranties, service contracts,
program services, test rights, maintenance rights, improvement rights,
renewal rights and indemnifications and any substitutions,
replacements, additions or model conversions of any of the foregoing
(the "Computer Software");
(vi) all license agreements, permits, authorizations and
franchises, whether with respect to the Patents, Trademarks,
Copyrights, Trade Secrets or Computer Software or with respect to the
patents, trademarks, copyrights, trade secrets, computer software or
other proprietary right of any other Person, including, without
limitation, the license agreements set forth in Schedule V hereto (as
such Schedule V may be supplemented from time to time by IP Security
Agreement Supplements executed and delivered by such Grantor to the
Collateral Agent from time to time), and all income, royalties and
other payments now or hereafter due and/or payable with respect
thereto, subject, in each case, to the terms of such license
agreements, permits, authorizations and franchises (the "Licenses");
and
(vii) any and all claims for damages for past, present and future
infringement, misappropriation or breach with respect to the Patents,
Trademarks, Copyrights, Trade Secrets, Computer Software or Licenses
together with the right, but not the obligation, to xxx for and
collect, or otherwise recover, such damages; and
(h) all proceeds of any and all of the Collateral (including, without
limitation, proceeds that constitute property of the types described in
clauses (a) through (g) of this Section 1 and this clause (h)) and, to the
extent not otherwise included, all (i) payments under insurance (whether or
not the Collateral 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 any of the foregoing Collateral and (ii) cash.
Notwithstanding anything herein to the contrary, the Collateral shall
not include: (i) any general intangibles or other rights arising under any
contracts, instruments, licenses, permits or other documents as to which the
grant of a security interest would constitute a
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violation of a valid and enforceable restriction (whether arising by contract or
under law or governmental regulation) in favor of a third party (including a
governmental authority) on such grant or a violation of law or governmental
regulation, unless and until any required consents shall have been obtained or,
(ii) any equipment and related computer programs, documentation, licenses and
sublicenses, and any additions, attachments and accessions to, and replacements
of, any of the foregoing, any agreements with the supplier of any or all of the
foregoing and purchase orders submitted to such supplier, and any products and
proceeds of any of the foregoing, pledged as collateral to secure the GECC
Capital Lease, the NTFC Capital Lease or any other Capitalized Lease
constituting Surviving Debt as of the Amendment Effective Date.
SECTION 2. Security for Obligations. This Agreement secures, in the
case of each Grantor, the payment of all Obligations of such Grantor now or
hereafter existing under the Loan Documents, whether direct or indirect,
absolute or contingent, and whether for principal, reimbursement obligations,
interest, fees, premiums, penalties, indemnifications, contract causes of
action, costs, expenses or otherwise (all such Obligations being the "Secured
Obligations").
The parties hereto intend to maintain the validity, effectiveness,
enforceability, perfection and priority of the Collateral Documents delivered
under the Initial Credit Agreement (the "Original Security Documents") and this
Agreement is intended, inter alia, to extend the obligations and indebtedness
secured by the security interests and pledges created and affected by the
Original Security Documents, in each case, except as specifically provided
herein including without limitation in the last paragraph of Section 1, without
terminating, limiting, modifying or otherwise affecting the validity,
effectiveness, enforceability, perfection and priority of the security interests
or the pledges created and affected in respect thereof. To the extent that any
security interest or pledge granted pursuant to the Original Security Documents
relates to collateral in which the Grantors have previously granted a security
interest to the Collateral Agent, this Agreement shall, except as specifically
provided herein including without limitation in the last paragraph of Section 1,
confirm the validity, effectiveness, enforceability and continuation of such
security interest or pledge as against the Grantors. All of the terms and
provisions of the Original Security Documents are hereby confirmed and ratified
in all respects, except as specifically modified herein.
Without limiting the generality of the foregoing, this Agreement
secures, as to each Grantor, the payment of all amounts that constitute part of
the Secured Obligations and would be owed by such Grantor to any Secured Party
under the Loan Documents but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving a Loan Party.
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SECTION 3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor's Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Collateral Agent
of any of the rights hereunder shall not release any Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral and (c) no Secured Party shall have any obligation or liability under
the contracts and agreements included in the Collateral by reason of this
Agreement or any other Loan Document, nor shall any Secured Party be obligated
to perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
SECTION 4. Delivery and Control of Security Collateral
(a) All certificates or instruments representing or evidencing
Security Collateral shall be delivered to and held by or on behalf of the
Collateral Agent pursuant hereto and shall be in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
the Collateral Agent. The Collateral Agent shall have the right, at any
time in its discretion and without notice to any Grantor, to transfer to or
to register in the name of the Collateral Agent or any of its nominees any
or all of the Security Collateral, subject only to the revocable rights
specified in Section 14(a). In addition, the Collateral Agent shall have
the right at any time to exchange certificates or instruments representing
or evidencing Security Collateral for certificates or instruments of
smaller or larger denominations. Also, the Collateral Agent shall have the
right at any time to convert Security Collateral consisting of financial
assets credited to the securities account to Security Collateral consisting
of financial assets held directly by the Collateral Agent, and to convert
Security Collateral consisting of financial assets held directly by the
Collateral Agent to Security Collateral consisting of financial assets
credited to the securities account.
(b) With respect to any Security Collateral in which any Grantor has
any right, title or interest and that constitutes an uncertificated
security, such Grantor will cause the issuer thereof either (i) to register
the Collateral Agent as the registered owner of such security or (ii) to
agree in writing with such Grantor and the Collateral Agent that such
issuer will comply with instructions with respect to such security
originated by the Collateral Agent without further consent of such Grantor,
such agreement to be in form and substance satisfactory to the Collateral
Agent.
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(c) With respect to any Security Collateral in which any Grantor has
any right, title or interest and that constitutes a security entitlement,
such Grantor will cause the securities intermediary with respect to such
security entitlement either (i) to identify in its records the Collateral
Agent as the entitlement holder of such security entitlement against such
securities intermediary or (ii) to agree in writing with such Grantor and
the Collateral Agent that such securities intermediary will comply with
entitlement orders (that is, notifications communicated to such securities
intermediary directing transfer or redemption of the financial asset to
which such Grantor has a security entitlement) originated by the Collateral
Agent without further consent of such Grantor, such agreement to be
substantially in the form of Exhibit E attached hereto or otherwise in form
and substance satisfactory to the Collateral Agent (such agreement being a
"Securities Account Control Agreement").
(d) With respect to any Security Collateral in which any Grantor has
any right, title or interest and that constitutes a commodity contract,
such Grantor shall cause the commodity intermediary with respect to such
commodity contract to agree in writing with such Grantor and the Collateral
Agent that such commodity intermediary will apply any value distributed on
account of such commodity contract as directed by the Collateral Agent
without further consent of such Grantor, such agreement to be in form and
substance satisfactory to the Collateral Agent (such agreement being a
"Commodity Account Control Agreement", and all such agreements together
with all Securities Account Control Agreements, being collectively, the
"Control Agreements").
(e) No Grantor will change or add any securities intermediary or
commodity intermediary that maintains any securities account or commodity
account in which any of the Collateral is credited or carried, or change or
add any such securities account or commodity account, in each case without
first complying with the above provisions of this Section 4 in order to
perfect the security interest granted hereunder in such Collateral.
SECTION 5. Delivery and Control of the Account Collateral; Maintaining
the Collateral Account.
(a) Promptly after opening an account with a bank or other financial
institution not subject to an account control agreement, each Grantor shall
cause the execution and delivery of an account control agreement or cash
management agreement, as applicable, with such bank or financial
institution in favor of the Collateral Agent, in form and substance
reasonably satisfactory to the Collateral Agent.
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(b) So long as any Advance or any other Obligation of any Loan Party
under any Loan Document shall remain unpaid, any Secured Hedge Agreement
shall be in effect or any Lender shall have any Commitment under the Credit
Agreement:
(i) The Borrower will maintain the Collateral Account with the
Collateral Agent or another commercial bank acceptable to the
Collateral Agent and that has entered into a Securities Account
Control Agreement (the Collateral Agent or any bank with which the
Collateral Account is maintained being a "Collateral Bank").
(ii) It shall be a term and condition of the Collateral Account,
notwithstanding any term or condition to the contrary in any other
agreement relating to the Collateral Account, as the case may be, and
except as otherwise provided by the provisions of Sections 7 and 21,
that no amount (including interest on Cash Equivalents credited
thereto) will be paid or released to or for the account of, or
withdrawn by or for the account of, the Borrower or any other Person
from the Collateral Account.
(iii) Each Grantor will deposit in the Collateral Account or pay
to the Collateral Agent for deposit in the Collateral Account all
funds contemplated by Section 2.05(b)(ii) of the Credit Agreement in
accordance with the terms thereof.
SECTION 6. Investing of Amounts in the Collateral Account. The
Collateral Agent will, subject to the provisions of Sections 7 and 21, from time
to time direct the Collateral Bank to (a) invest amounts received with respect
to the Collateral Account in such Cash Equivalents credited to the Collateral
Account as the Borrower may select and the Collateral Agent may approve and (b)
invest interest paid on the Cash Equivalents referred to in clause (a) above,
and reinvest other proceeds of any such Cash Equivalents that may mature or be
sold, in each case in such Cash Equivalents credited to the Collateral Account
as the Borrower may select and the Collateral Agent may approve. Interest and
proceeds that are not invested or reinvested in Cash Equivalents as provided
above shall be deposited and held in a deposit account with the Collateral Bank
in the name of the Collateral Agent and under the sole control and dominion of
the Collateral Agent, such deposit account to be deemed to constitute part of
the Collateral Account. In addition, the Collateral Agent shall have the right
at any time to direct the Collateral Bank to exchange such Cash Equivalents for
similar Cash Equivalents of smaller or larger determinations, or for other Cash
Equivalents, credited to the Collateral Account.
SECTION 7. Release of Amounts. So long as no Default shall have
occurred and be continuing, the Collateral Agent will direct the applicable
Collateral Bank to pay and
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release to the Borrower or at its order or, at the request of the Borrower, to
the Administrative Agent to be applied to the Obligations of the Borrower under
the Loan Documents, such amount, if any, as is then on deposit in the Collateral
Account, as the case may be, to the extent permitted to be released under the
terms of the Credit Agreement.
SECTION 8. Representations and Warranties. Each Grantor represents and
warrants as follows:
(a) All of the Equipment and Inventory of such Grantor are located at
the places specified therefor in Schedule III hereto or at such other
places as such Grantor shall have specified in writing to the Collateral
Agent (and upon notification to the Collateral Agent of such additional
places. Schedule III shall be automatically amended to include such other
places). The jurisdiction of organization of such Grantor is specified in
Schedule IV hereto, as such Schedule IV may be amended from time to time
pursuant to Section 12(a). Such Grantor's federal tax identification number
is set forth opposite such Grantor's name in Schedule IV hereto. All
Security Collateral consisting of certificated securities and instruments
has been delivered to the Collateral Agent. None of the Receivables or
Agreement Collateral is evidenced by a promissory note or other instrument
that has not been delivered to the Collateral Agent.
(b) Such Grantor is the legal and beneficial owner of the Collateral
of such Grantor free and clear of any Lien, claim, option or right of
others, except for the security interest created under this Agreement or
permitted under the Credit Agreement and except for rights of others under
any License. No effective financing statement or other instrument similar
in effect covering all or any part of such Collateral or listing such
Grantor or any trade name of such Grantor as debtor is on file in any
recording office, except such as may have been filed in favor of the
Collateral Agent relating to the Loan Documents or as otherwise permitted
under the Credit Agreement. Such Grantor has the trade names listed on
Schedule V hereto.
(c) Such Grantor has exclusive possession and control of the
Equipment and Inventory other than Inventory stored at any leased premises
or warehouse for which a landlord's or warehouseman's agreement, in form
and substance reasonably satisfactory to the Collateral Agent, is in effect
and which leased premises or warehouse is so indicated by an asterisk on
Schedule III hereto, or otherwise specified by such Grantor in writing to
the Collateral Agent (and upon notification to the Collateral Agent of such
additional leased premises or warehouse, Schedule III shall be
automatically amended to include such other leased premises or warehouse
with an asterix designation).
12
(d) The Pledged Shares pledged by such Grantor hereunder have been
duly authorized and validly issued and are fully paid and non-assessable.
The Pledged Debt pledged by such Grantor hereunder has been duly
authorized, authenticated or issued and delivered, is the legal, valid and
binding obligation of the issuers thereof, is evidenced by one or more
promissory notes (which notes have been delivered to the Collateral Agent)
and is not in default.
(e) The Initial Pledged Shares constitute the percentage of the
issued and outstanding shares of stock of the issuers thereof indicated on
Schedule I hereto as of the date hereof. The Initial Pledged Debt
constitutes all of the outstanding indebtedness owed to such Grantor by the
issuers thereof and is outstanding, as of the date hereof, in the principal
amount indicated on Schedule I hereto as of the date hereof.
(f) All of the investment property owned by such Grantor as of the
date hereof is listed on Schedule I hereto.
(g) The Assigned Agreements to which such Grantor is a party, true
and complete copies of which (other than the Hedge Agreements) have been
furnished to each Secured Party, have been duly authorized, executed and
delivered by all parties thereto, are in full force and effect and are
binding upon and enforceable against all parties thereto in accordance with
their terms. There exists no default under any Assigned Agreement to which
such Grantor is a party by any party thereto. Each Grantor will use its
best efforts to obtain, (x) on or prior to February 28, 2003, a consent
from each party to the Assigned Agreements listed on Part A to Schedule II
hereto to which such Grantor is a party, (y) within thirty days of the
satisfaction in full of all obligations, if any, of the Loan Parties with
respect to the Contingent Payments, a consent from each party to the
Assigned Agreement listed on Part B of Schedule II hereto to which such
Grantor is a party, and (z) within 120 days of delivery of the Supplemental
List, a consent from each party to the Assigned Agreements listed therein
to which such Grantor is a party (provided, that the Collateral Agent may,
in its sole discretion, waive the requirements of this provision with
respect to any such Assigned Agreement), all in substantially the form of
Exhibit B hereto or otherwise in form and substance reasonably satisfactory
to the Collateral Agent, to the assignment of the Agreement Collateral to
the Collateral Agent pursuant to this Agreement. Nothing herein shall be
construed to require any Grantor to give additional consideration of any
kind under any Assigned Agreement in connection with obtaining of any
consents under this Section 8(g).
(h) All filings and other actions necessary or desirable to perfect
and protect the security interest in the Collateral of such Grantor created
under this Agreement have
13
been duly made or taken and are in full force and effect, and this
Agreement creates in favor of the Collateral Agent for the benefit of the
Secured Parties a valid and, together with such filings and other actions,
perfected first priority security interest in the Collateral of such
Grantor, securing the payment of the Secured Obligations.
(i) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other
third party is required for (i) the grant by such Grantor of the pledge and
security interest granted hereunder or for the execution, delivery or
performance of this Agreement by such Grantor, (ii) the perfection or
maintenance of the pledge and security interest created hereunder
(including the first priority nature of such pledge or security interest),
except for the filing of financing statements under the Uniform Commercial
Code, which financing and continuation statements have been duly filed and
are in full force and effect, the recordation of the Intellectual Property
Security Agreements referred to in Section 13(f) with the U.S. Patent and
Trademark Office and the U.S. Copyright Office, which Agreements have been
duly recorded and are in full force and effect, and the actions described
in Section 4 with respect to Security Collateral, which actions have been
taken and are in full force and effect, or (iii) the exercise by the
Collateral Agent of its voting or other rights provided for in this
Agreement or the remedies in respect of the Collateral pursuant to this
Agreement, except as may be required in connection with the disposition of
any portion of the Security Collateral by laws affecting the offering and
sale of securities generally.
(j) The Inventory that has been produced or distributed by such
Grantor has been produced in compliance with all requirements of applicable
law, including, without limitation, the Fair Labor Standards Act.
(k) As to itself and its Intellectual Property Collateral:
(i) The rights of such Grantor in or to the Intellectual
Property Collateral do not conflict with, misappropriate or infringe
upon the intellectual property rights of any third party, and no claim
has been asserted that the use of such Intellectual Property
Collateral does or may infringe upon the intellectual property rights
of any third party.
(ii) Such Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to the Intellectual
Property Collateral and is entitled to use all such Intellectual
Property Collateral without limitation, subject only to the license
terns of the Licenses.
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(iii) The Intellectual Property Collateral set forth on Schedule
V hereto includes all of the patents, patent applications, trademark
registrations and applications, copyright registrations and
applications and Licenses, other than commercial off-the-shelf
software licenses, owned by such Grantor.
(iv) The Intellectual Property Collateral is subsisting and has
not been adjudged invalid or unenforceable in whole or part and, to
the best of such Grantor's knowledge, is valid and enforceable. Such
Grantor is not aware of any uses of any item of Intellectual Property
Collateral that could be expected to lead to such item becoming
invalid or unenforceable.
(v) Such Grantor has made or performed all commercially
reasonable filings, recordings and other acts and has paid all
required fees and taxes to maintain and protect its interest in each
and every material item of Intellectual Property Collateral in full
force and effect throughout the world, and to protect and maintain its
interest therein, including without limitation, any recordation of any
of its interests in the Patents and Trademarks with the U.S. Patent
and Trademark Office and in corresponding national and international
patent offices, and any recordation of any of its interests in the
Copyrights with the U.S. Copyright Office and in corresponding
national and international copyright offices. Such Grantor has used
commercially reasonable statutory notice in connection with its use of
each material patent, trademark and copyright of the Intellectual
Property Collateral.
(vi) No action, suit, investigation, litigation or proceeding
has been asserted or is pending or, to such Grantor's knowledge
threatened against such Grantor (i) based upon or challenging or
seeking to deny or restrict the use of any of the Intellectual
Property Collateral or (ii) alleging that any services provided by,
processes used by, or products manufactured or sold by, such Grantor
infringe upon or misappropriate any patent, trademark, copyright or
any other proprietary right of any third party. To the best of such
Grantor's knowledge, no Person is engaging in any activity that
infringes upon or misappropriates the Intellectual Property Collateral
or upon the rights of such Grantor therein. Except as set forth on
Schedule V hereto, such Grantor has not granted any license, release,
covenant not to xxx, non-assertion assurance or other right to any
Person with respect to any part of the Intellectual Property
Collateral. The consummation of the transactions contemplated by the
Transaction Documents will not result in the termination or impairment
of any of the Intellectual Property Collateral.
15
(vii) With respect to each License: (A) such License is valid
and binding and in full force and effect and represents the entire
agreement between the respective licensor and licensee with respect to
the subject matter of such License; (B) such License will not cease to
be valid and binding and in full force and effect on terms identical
to those currently in effect as a result of the rights and interest
granted herein, nor will the grant of such rights and interest
constitute a breach or default under such License or otherwise give
the licensor or licensee a right to terminate such License; (C) such
Grantor has not received any notice of termination or cancellation
under such License; (D) such Grantor has not received any notice of a
breach or default under such License, which breach or default has not
been cured; (E) such Grantor has not granted to any other third party
any rights, adverse or otherwise, under such License (except to the
extent that sublicensing is permitted); and (F) neither such Grantor
nor any other party to such License is in breach or default in any
material respect, and no event has occurred that, with notice or lapse
of time or both, would constitute such a breach or default or permit
termination, modification or acceleration under such License.
(viii) To the best of such Grantor's acknowledge, (A) none of
the Trade Secrets of such Grantor has been used, divulged, disclosed
or appropriated to the detriment of such Grantor for the benefit of
any other Person other than such Grantor; (B) no employee, independent
contractor or agent of such Grantor has misappropriated any trade
secrets of any other Person in the course of the performance of his or
her duties as an employee, independent contractor or agent of such
Grantor; and (C) no employee, independent contractor or agent of such
Grantor is in default or breach of any term of any employment
agreement, non-disclosure agreement, assignment of inventions
agreement or similar agreement or contract relating in any way to the
protection, ownership, development, use or transfer of such Grantor's
Intellectual Property Collateral.
SECTION 9. Further Assurances.
(a) Each Grantor agrees that from time to time, at the expense of
such Grantor, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be
necessary or desirable, or that the Collateral Agent may request, in order
to perfect and protect any pledge or security interest granted or purported
to be granted by such Grantor hereunder or to enable the Collateral Agent
to exercise and enforce its rights and remedies hereunder with respect to
any Collateral of such Grantor. Without limiting the generality of the
foregoing, each Grantor will promptly, with respect to Collateral of such
Grantor: (i) xxxx conspicuously
16
each chattel paper included in Receivables and, at the request of the
Collateral Agent, each of its records pertaining to such Collateral with a
legend, in form and substance reasonably satisfactory to the Collateral
Agent, indicating that such chattel paper or Collateral is subject to the
security interest granted hereby; (ii) if any such Collateral shall be
evidenced by a promissory note or other instrument or chattel paper,
deliver and pledge to the Collateral Agent hereunder such note or
instrument or chattel paper duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to the Collateral Agent; (iii) file such financing or
continuation statements, or amendments thereto, and such other instruments
or notices, as may be necessary or desirable, or as the Collateral Agent
may request, in order to perfect and preserve the security interest granted
or purported to be granted by such Grantor hereunder; (iv) deliver and
pledge to the Collateral Agent for the benefit of the Secured Parties
certificates representing Security Collateral that constitutes certificated
securities, accompanied by undated stock or bond powers executed in blank;
and (v) deliver to the Collateral Agent evidence that all other action that
the Collateral Agent may deem reasonably necessary or desirable in order to
perfect and protect the security interest created by such Grantor under
this Agreement has been taken.
(b) Each Grantor hereby authorizes the Collateral Agent to file one
or more financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral of such Grantor. A photocopy
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) Each Grantor will furnish to the Collateral Agent from time to
time statements and schedules further identifying and describing the
Collateral of such Grantor and such other reports in connection with such
Collateral as the Collateral Agent may reasonably request, all in
reasonable detail.
SECTION 10. As to Equipment and Inventory.
(a) Intentionally omitted.
(b) Each Grantor will cause the Equipment of such Grantor to be
maintained and preserved in good working order and condition, ordinary wear
and tear excepted, and will forthwith, or in the case of any loss or damage
to any of such Equipment as soon as practicable after the occurrence
thereof, make or cause to be made all repairs, replacements and other
improvements in connection therewith that are necessary or desirable to
such end. Each Grantor will promptly furnish to the Collateral Agent a
17
statement respecting any loss or damage exceeding $500,000 to any of the
Equipment or Inventory of such Grantor.
(c) Each Grantor will pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including, without limitation, claims for labor, materials and
supplies) against, the Equipment and Inventory of such Grantor provided,
however, that such Grantor shall not be required to pay or discharge any
such tax, assessment, charge or claim that is being contested in good faith
and by proper proceedings and as to which appropriate reserves are being
maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors.
SECTION 11. Insurance.
(a) Each Grantor will, at its own expense, maintain insurance with
respect to the Equipment and Inventory (it being understood that Equipment
and Inventory shall not include fiber optic cables) of such Grantor with
responsible and reputable insurance companies or associations in such
amounts, against such risks as is usually carried by companies engaged in
similar business and owning similar properties in the same general area in
which such Grantor operates. Each policy of each Grantor for liability
insurance shall (i) name such Grantor and the Collateral Agent as insured
parties thereunder (without any representation or warranty by or obligation
upon the Collateral Agent) as their interests may appear, (ii) contain the
agreement by the insurer that any loss thereunder shall be payable to the
Collateral Agent notwithstanding any action, inaction or breach of
representation or warranty by such Grantor, (iii) provide that there shall
be no recourse against the Collateral Agent for payment of premiums or
other amounts with respect thereto and (iv) provide that at least 10 days'
prior written notice of cancellation or of lapse shall be given to the
Collateral Agent by the insurer. Each Grantor will, if so requested by the
Collateral Agent, deliver to the Collateral Agent original or duplicate
policies of such insurance and, as often as the Collateral 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
Collateral Agent, duly execute and deliver instruments of assignment of
such insurance policies to comply with the requirements of Section 10 and
cause the insurers to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 11 may 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 no Event of Default
shall have occurred and be continuing, the
18
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 Credit
Agreement, to pay or to reimburse 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 by the Collateral Agent in
connection with any loss, damage or destruction of any Inventory or
Equipment will be released, subject to the provisions of Section
2.05(b)(ii) of the Credit Agreement, by the Collateral Agent to the
applicable Grantor for the repair, replacement or restoration thereof.
SECTION 12. Place of Perfection; Records; Collection of Receivables.
(a) Each Grantor will keep its jurisdiction of organization, and
originals of the Assigned Agreements to which such Grantor is a party and
all originals of all chattel paper that evidence Receivables of such
Grantor, at the location therefor specified in Section 8(a) or, upon 30
days' prior written notice to the Collateral Agent, at such other location
in a jurisdiction where all actions required by Section 9 shall have been
taken with respect to the Collateral of such Grantor (and, upon the taking
of such action in such jurisdiction, Schedule IV hereto shall be
automatically amended to include such other location). Each Grantor will
hold and preserve its records relating to the Collateral, the Assigned
Agreements and chattel paper and will permit representatives of the
Collateral Agent at any time during normal business hours to inspect and
make abstracts from such records and other documents.
(b) Except as otherwise provided in this subsection (b), each Grantor
will continue to collect, at its own expense, all amounts due or to become
due to such Grantor under the Receivables. In connection with such
collections, such Grantor may take such action as such Grantor may deem
necessary or advisable to enforce collection of the Receivables; provided,
however, that the Collateral Agent shall have the right at any time, upon
the occurrence and during the continuance of an Event of Default and upon
written notice to such Grantor of its intention to do so, to notify the
Obligors under any Receivables of the assignment of such Receivables to the
Collateral Agent and to direct such Obligors to make payment of all amounts
due or to become due to such Grantor thereunder directly to the Collateral
Agent and, upon such notification and at the expense of such Grantor, to
enforce collection of any such Receivables, and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the
same extent as such Grantor might have done. After receipt by any Grantor
of the notice from the
19
Collateral Agent referred to in the proviso to the preceding sentence, (i)
all amounts and proceeds (including instruments) received by such Grantor
in respect of the Receivables of such Grantor shall be received in trust
for the benefit of the Collateral Agent hereunder, shall be segregated from
other funds of such Grantor and shall be forthwith paid over to the
Collateral Agent in the same form as so received (with any necessary
indorsement) to be deposited in the Collateral Account and either (A)
released to such Grantor on the terms set forth in Section 7 so long as no
Event of Default shall have occurred and be continuing or (B) if any Event
of Default shall have occurred and be continuing, applied as provided in
Section 21(b) and (ii) such Grantor will not adjust, settle or compromise
the amount or payment of any Receivable, release wholly or partly any
Obligor thereof, or allow any credit or discount thereon. No Grantor will
permit or consent to the subordination of its right to payment under any of
the Receivables to any other indebtedness or obligations of the Obligor
thereof.
SECTION 13. As to Intellectual Property Collateral.
(a) Each Grantor agrees to take, at its expense, all necessary steps
that such Grantor shall have determined are commercially reasonable in the
conduct of such Grantor's business with respect to each item of its
Intellectual Property Collateral, including, without limitation, in the
U.S. Patent and Trademark Office, the U.S. Copyright Office and any other
governmental authority, to (i) maintain the validity and enforceability of
such Intellectual Property Collateral and maintain such Intellectual
Property Collateral in full force and effect and (ii) pursue the
registration and maintenance of patent, trademark or copyright registration
or application now or hereafter included in the Intellectual Property
Collateral of such Grantor, including, without limitation, the payment of
required fees and taxes, the filing of responses to office actions issued
by the U.S. Patent and Trademark Office, the U.S. Copyright Office or other
governmental authorities, the filing of applications for renewal or
extension, the filing of affidavits under Sections 8 and 15 of the U.S.
Trademark Act, the filing of divisional, continuation,
continuation-in-part, reissue and renewal applications or extensions, the
payment of maintenance fees and the participation in interference,
reexamination, opposition, cancellation, infringement and misappropriation
proceedings. No Grantor shall discontinue use of or otherwise abandon any
Intellectual Property Collateral, or abandon any right to file an
application for letters patent, trademark or copyright, unless such Grantor
shall have previously determined that such use or the pursuit or
maintenance of such Intellectual Property Collateral is no longer desirable
in the conduct of such Grantor's business and that the loss thereof would
not be reasonably likely to have a Material Adverse Effect, in which case,
with respect to any material item of
20
Intellectual Property Collateral so abandoned such Grantor will give
reasonable notice of any such abandonment to the Collateral Agent.
(b) Each Grantor agrees promptly to notify the Collateral Agent if
such Grantor learns (i) that any material item of the Intellectual Property
Collateral may have become abandoned, placed in the public domain, invalid
or unenforceable, or of any adverse determination or development regarding
such Grantor's ownership of any material item of the Intellectual Property
Collateral or its right to register the same or to keep and maintain and
enforce the same, or (ii) of any adverse determination or the institution
of any proceeding (including, without limitation, the institution of any
proceeding in the U.S. Patent and Trademark Office or any court) regarding
any material item of the Intellectual Property Collateral.
(c) In the event that any Grantor becomes aware that any material
item of the Intellectual Property Collateral is being infringed or
misappropriated by a third party and communicate such awareness to such
third party, such Grantor shall reasonably notify the Collateral Agent and
shall take such actions, at its expense, as such Grantor deems reasonable
and appropriate under the circumstances to protect such Intellectual
Property Collateral, including, without limitation, suing for infringement
or misappropriation and for an injunction against such infringement or
misappropriation.
(d) Each Grantor shall use commercially reasonable statutory notice
in connection with its use of each material item of its Intellectual
Property Collateral. Except as set forth in Section 13(a), no Grantor shall
do or permit any act or knowingly omit to do any act whereby any of its
Intellectual Property Collateral may lapse or become invalid or
unenforceable or placed in the public domain.
(e) Each Grantor shall take all steps which it deems reasonable and
appropriate under the circumstances to preserve and protect each item of
its Intellectual Property Collateral, including, without limitation,
maintaining the quality of any and all products or services offered or
provided under any of the Trademarks, consistent with the quality of the
products and services as of the date hereof, and taking all steps necessary
to ensure that all licensed users of any of the Trademarks use such
consistent standards of quality.
(f) With respect to its Intellectual Property Collateral, each
Grantor agrees to execute an agreement, in substantially the form set forth
in Exhibit C hereto (an "Intellectual Property Security Agreement"), for
recording the security interest granted hereunder to the Collateral Agent
in such Intellectual Property Collateral with the U.S.
21
Patent and Trademark Office, the U.S. Copyright Office and any other
governmental authorities necessary to perfect the security interest
hereunder in such Intellectual Property Collateral.
(g) Each Grantor agrees that, should it obtain an ownership interest
in any item of the type set forth in Section 1(g) which is not on the date
hereof a part of the Intellectual Property Collateral (the "After-Acquired
Intellectual Property"), (i) the provisions of Section 1 shall
automatically apply thereto, (ii) any such After-Acquired Intellectual
Property and, in the case of trademarks, the goodwill of the business
connected therewith or symbolized thereby, shall automatically become part
of the Intellectual Property Collateral subject to the terms and conditions
of this Agreement with respect thereto, (iii) with respect. to only
material item of After-Acquired Intellectual Property, such Grantor shall
give written notice thereof to the Collateral Agent in accordance herewith
every calendar quarter and (iv) with respect to registrations and
applications for registration of such After-Acquired Intellectual Property
which are registered or filed with the U.S. Patent and Trademark Office,
U.S. Copyrights Office or order governmental authorities, such Grantor
shall execute and deliver to the Collateral Agent an IP Security Agreement
Supplement covering such After-Acquired Intellectual Property as
"Additional Collateral" thereunder and as defined therein, and shall record
such IP Security Agreement Supplement with the U.S. Patent and Trademark
Office, the U.S. Copyright Office and any other governmental authorities
necessary to perfect the security interest hereunder in such After-Acquired
Intellectual Property.
SECTION 14. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Each Grantor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Security
Collateral of such Grantor or any part thereof for any purpose other
than to originate Entitlement Orders (as defined in any Control
Agreement) with respect to any securities account or commodity
account; provided, however, that such Grantor will not exercise or
refrain from exercising any such right if such action would have a
material adverse effect on the value of the Security Collateral or any
part thereof.
(ii) Each Grantor shall be entitled to receive and retain any and
all dividends, interest and other distributions paid in respect of the
Security Collateral of such Grantor if and to the extent that the
payment thereof is not otherwise
22
prohibited by the terms of the Loan Documents; provided, however, that
any and all:
(A) dividends, interest and other distributions paid or
payable other than in cash in respect of, and instruments and
other property received, receivable or otherwise distributed in
respect of, or in exchange for, any Security Collateral,
(B) dividends and other distributions paid or payable in
cash in respect of any Security Collateral 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
(C) cash paid, payable or otherwise distributed in respect
of principal of, or in redemption of, or in exchange for, any
Security Collateral,
shall be, and shall be forthwith delivered to the Collateral Agent to
hold as Security Collateral and shall, if received by such Grantor, be
received in trust for the benefit of the Collateral Agent, be
segregated from the other property or funds of such Grantor and be
forthwith delivered to the Collateral Agent as Security Collateral in
the same form as so received (with any necessary indorsement).
(iii) The Collateral Agent will execute and deliver (or cause to
be executed and delivered) to each Grantor all such proxies and other
instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the voting and other rights that it
is entitled to exercise pursuant to paragraph (i) above and to receive
the dividends or interest payments that it is authorized to receive
and-retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) All rights of each Grantor (x) to exercise or refrain from
exercising the voting and other consensual rights that it would
otherwise be entitled to exercise pursuant to Section 14(a)(i) shall,
upon notice to such Grantor by the Collateral Agent, cease and (y) to
receive the dividends, interest and other distributions that it would
otherwise be authorized to receive and retain pursuant to Section
14(a)(ii) shall automatically cease, and all such rights shall
thereupon become vested in the Collateral Agent, which shall thereupon
have the sole right to exercise or refrain from exercising such voting
and other consensual rights and
23
to receive and hold as Security Collateral such dividends, interest
and other distributions.
(ii) All dividends, interest and other distributions that are
received by any Grantor contrary to the provisions of paragraph (i) of
this Section 14(b) shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of such Grantor
and shall be forthwith paid over to the Collateral Agent as Security
Collateral in the same form as so received (with any necessary
indorsement).
(iii) The Collateral Agent shall be authorized to send to each
Securities Intermediary or Commodity Intermediary as defined in and
under any Control Agreement a Notice of Exclusive Control as defined
in and under such Control Agreement.
SECTION 15. As to the Assigned Agreements.
(a) Each Grantor will at its expense:
(i) perform and observe all terms and provisions of the
Assigned Agreements to be performed or observed by it, maintain the
Assigned Agreements to which it is a party in full force and effect,
enforce the Assigned Agreements to which it is a party in accordance
with the terms thereof and take all such action to such end as may be
reasonably requested from time to time by the Collateral Agent except
where the failure to do so would not have a Material Adverse Effect;
and
(ii) and from time to time (A) furnish to the Collateral Agent
such information and reports regarding the Assigned Agreements and
such other Collateral of such Grantor as the Collateral Agent may
reasonably request and (B) upon request of the Collateral Agent, make
to each other party to any Assigned Agreement to which it is a party
such demands and requests for information and reports or for action as
such Grantor is entitled to make thereunder.
(b) Each Grantor agrees that it will not, except to the extent
otherwise permitted under the Credit Agreement:
(i) cancel or terminate any Assigned Agreement to which it is a
party or consent to or accept any cancellation or termination thereof;
24
(ii) amend, amend and restate, supplement or otherwise modify
any such Assigned Agreement or give any consent, waiver or approval
thereunder;
(iii) waive any default under or breach of any such Assigned
Agreement; or
(iv) take any other action in connection with any such Assigned
Agreement that would impair the value of the interests or rights of
such Grantor thereunder or that would impair the interests or rights
of any Secured Party.
(c) Each Grantor hereby consents on its own behalf and on behalf of
its Subsidiaries to the assignment and pledge to the Collateral Agent for
benefit of the Secured Parties of each Assigned Agreement to which it is a
party by any other Grantor hereunder.
SECTION 16. Payments Under the Assigned Agreements.
(a) Each Grantor agrees, and has effectively so instructed each other
party to each Assigned Agreement to which it is a party, that, upon the
occurrence and during the continuance of an Event of Default, all payments
due or to become due under or in connection with such Assigned Agreement
will be made directly to the Collateral Account.
(b) All moneys received or collected pursuant to subsection (a) above
shall be (i) released to the applicable Grantor so long as no Event of
Default shall have occurred and be continuing or (ii) if any Event of
Default shall have occurred and be continuing, applied as provided in
Section 21(b).
SECTION 17. Transfers and Other Liens; Additional Shares.
(a) Each Grantor agrees that it will not (i) sell, assign or
otherwise dispose of, or grant any option with respect to, any of the
Collateral, other than sales, assignments and other dispositions of
Collateral, non-exclusive licenses granted in the ordinary course of
business and options relating to Collateral, permitted under the terms of
the Credit Agreement, or (ii) create or suffer to exist any Lien upon or
with respect to any of the Collateral of such Grantor except for the
pledge, assignment and security interest created under this Agreement and
Liens permitted under the Credit Agreement.
(b) Each Grantor agrees that it will (i) cause each issuer of the
Pledged Shares pledged by such Grantor not to issue any stock or other
securities in addition to or in
25
substitution for the Pledged Shares issued by such issuer, except to such
Grantor, and (ii) pledge hereunder, immediately upon its acquisition
(directly or indirectly) thereof, any and all additional shares of stock or
other securities.
SECTION 18. Collateral Agent Appointed Attorney-in-Fact. Each Grantor
hereby irrevocably appoints the Collateral Agent 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, upon the occurrence
and during the continuance of an Event of Default, in the Collateral Agent's
discretion, to take any action and to execute any instrument that the Collateral
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Collateral Agent pursuant to Section 11,
(b) 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 receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) or (b) above,
and
(d) to file any claims or take any action or institute any
proceedings that the Collateral Agent may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce compliance
with the terms and conditions of any Assigned Agreement or the rights of
the Collateral Agent with respect to any of the Collateral.
SECTION 19. Collateral Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Collateral Agent may, as the
Collateral Agent deems necessary to protect the security interest granted
hereunder in the Collateral or to protect the value thereof, but without any
obligation to do so and without notice, itself perform, or cause performance of,
such agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by such Grantor under Section 22(b).
SECTION 20. The Collateral Agent's Duties.
(a) The powers conferred on the Collateral Agent hereunder are solely
to protect the Secured Parties' interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe
custody of any Collateral in its
26
possession and the accounting for moneys actually received by it hereunder,
the Collateral Agent shall have no duty as to any Collateral, as to
ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Collateral,
whether or not any Secured Party has or is deemed to have knowledge of such
matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Collateral. The
Collateral 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.
(b) Anything contained herein to the contrary notwithstanding, the
Collateral Agent may from time to time, when the Collateral Agent deems it
to be necessary, appoint one or more subagents (each a "Subagent") for the
Collateral Agent hereunder with respect to all or any part of the
Collateral. In the event that the Collateral Agent so appoints any Subagent
with respect to any Collateral, (i) the assignment and pledge of such
Collateral and the security interest granted in such Collateral by each
Grantor hereunder shall be deemed for purposes of this Agreement to have
been made to such Subagent, in addition to the Collateral Agent, for the
ratable benefit of the Secured Parties, as security for the Secured
Obligations of such Grantor, (ii) such Subagent shall automatically be
vested, in addition to the Collateral Agent, with all rights, powers,
privileges, interests and remedies of the Collateral Agent hereunder with
respect to such Collateral, and (iii) the term "Collateral Agent," when
used herein in relation to any rights, powers, privileges, interests and
remedies of the Collateral Agent with respect to such Collateral, shall
include such Subagent; provided, however, that no such Subagent shall be
authorized to take any action with respect to any such Collateral unless
and except to the extent expressly authorized in writing by the Collateral
Agent.
SECTION 21. Remedies. If any Event of Default shall have occurred and
be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon
default under the N.Y. Uniform Commercial Code (whether or not the N.Y.
Uniform Commercial Code applies to the affected Collateral) and also may:
(i) require each Grantor to, and each Grantor hereby agrees that it will at
its expense and upon request of the Collateral Agent forthwith, assemble
all or part of the Collateral as directed by the Collateral Agent and make
it available to the Collateral Agent at a place and time to be designated
by the Collateral Agent that is reasonably convenient. to both parties;
(ii) without notice except as specified below, sell the
27
Collateral or any part thereof in one or more parcels, at public or private
sale, at any of the Collateral Agent's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the Collateral
Agent may deem commercially reasonable; (iii) occupy any premises owned or
leased by any of the Grantors where the Collateral or any part thereof is
assembled or located for a reasonable period in order to effectuate its
rights and remedies hereunder or under law, without obligation to such
Grantor in respect of such occupation; and (iv) exercise any and all rights
and remedies of any of the Grantors under or in connection with the
Assigned Agreements, the Receivables or otherwise in respect of the
Collateral, including, without limitation, any and all rights of such
Grantor to demand or otherwise require payment of any amount under, or
performance of any provision of the Assigned Agreements, the Receivables.
Each Grantor agrees that, to the extent notice of sale shall be required by
law, at least ten days' notice to such Grantor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. The Collateral Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made al the time
and place to which it was so adjourned.
(b) Any cash held by or on behalf of the Collateral Agent and all
cash proceeds received by or on behalf of the Collateral Agent in respect
of any sale of, collection from, or other realization upon all or any part
of the Collateral may, in the discretion of the Collateral Agent, be held
by the Collateral Agent as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the Collateral
Agent pursuant to Section 22), in whole or in part, by the Collateral Agent
for the ratable benefit of the Secured Parties against, all or any part of
the Secured Obligations, in the following manner:
(i) first, to the Agents for any amounts owing to the Agents
pursuant to Section 9.04 of the Credit Agreement or otherwise under
the Loan Documents, ratably in accordance with such respective amounts
then owing to the Agents; and
(ii) second, to the Lender Parties and the Hedge Banks,
respectively, for any amount then owing to them, in their capacities
as such, under the Loan Documents ratably in accordance with such
respective amounts then owing to the Lender Parties and the Hedge
Banks, provided that, for purposes of this Section 21, the amount
owing to any such Hedge Bank pursuant to any Secured Hedge Agreement
to which it is a party (other than any amount theretofore accrued and
unpaid) shall be deemed to be equal to the Agreement Value therefor.
28
Any surplus of such cash or cash proceeds held by or on the behalf of
the Collateral Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the applicable Grantor or to whomsoever may be
lawfully entitled to receive such surplus.
(c) All payments received by any Grantor under or in connection with
any Assigned Agreement or otherwise in respect of the Collateral shall be
(i) received in trust for the benefit of the Collateral Agent, (ii)
segregated from other funds of such Grantor and (iii) forthwith paid over
to the Collateral Agent in the same form as so received (with any necessary
indorsement).
(d) The Collateral Agent may, without notice to any Grantor except as
required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Secured Obligations against any
funds held in the Collateral Account or in any deposit account related
thereto.
(e) In the event of any sale or other disposition of any of the
Intellectual Property Collateral of any Grantor, the goodwill of the
business connected with and symbolized by any Trademarks subject to such
sale or other disposition shall be included therein, and such Grantor shall
supply to the Collateral Agent or its designee such Grantor's know-how and
expertise, and documents and things relating to any Intellectual Property
Collateral subject to such sale or other disposition, and such Grantor's
customer lists and other records and documents relating to such
Intellectual Property Collateral and to the manufacture, distribution,
advertising and sale of products and services of such Grantor.
(f) If the Collateral Agent shall determine to exercise its right to
sell all or any of the Security Collateral of any Grantor pursuant to this
Section 21, each Grantor agrees that, upon request of the Collateral Agent,
such Grantor will, at its own expense:
(i) execute and deliver, and cause each issuer of such Security
Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and documents,
and do or cause to be done all such other acts and things, as may be
necessary or, in the opinion of the Collateral Agent, advisable to
register such Security Collateral under the provisions of the
Securities Act of 1933 (as amended from time to time, the "Securities
Act"), to cause the registration statement relating thereto to become
effective and to remain effective for such period as prospectuses are
required by law to be furnished and to make all amendments and
supplements thereto and to
29
the related prospectus that, in the opinion of the Collateral Agent,
are necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto;
(ii) use its best efforts to qualify the Security Collateral
under the state securities or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of such Security
Collateral, as requested by the Collateral Agent;
(iii) cause each such issuer of such Security Collateral to make
available to its security holders, as soon as practicable, an earnings
statement that will satisfy the provisions of Section 11 (a) of the
Securities Act;
(iv) provide the Collateral Agent with such other information
and projections as may be necessary or, in the opinion of the
Collateral Agent, advisable to enable the Collateral Agent to effect
the sale of such Security Collateral; and
(v) do or cause to be done all such other acts and things as
may be necessary to make such sale of such Security Collateral or any
part thereof valid and binding and in compliance with applicable law.
(g) The Collateral Agent is authorized, in connection with any sale
of the Security Collateral pursuant to this Section 21, to deliver or
otherwise disclose to any prospective purchaser of the Security Collateral:
(i) any registration statement or prospectus, and all supplements and
amendments thereto, prepared pursuant to subsection (f)(i) above; (ii) any
information and projections provided to it pursuant to subsection (f)(iv)
above; and (iii) any other information in its possession relating to such
Security Collateral.
(h) Each Grantor acknowledges the impossibility of ascertaining the
amount of damages that would be suffered by the Secured Parties by reason
of the failure by such Grantor to perform any of the covenants contained in
subsection (f) above and, consequently, agrees that, if such Grantor shall
fail to perform any of such covenants, it will pay, as liquidated damages
and not as a penalty, an amount equal to the value of the Security
Collateral on the date the Collateral Agent shall demand compliance with
subsection (f) above.
30
SECTION 22. Indemnity and Expenses.
(a) Each Grantor agrees to indemnify, defend, save and hold harmless
each Secured Party 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 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 claims by third parties
involving this Agreement (including, without limitation, enforcement of
this Agreement), except to the extent such claim, damage, loss, liability
or expense resulted from such Indemnified Party's gross negligence or
willful misconduct.
(b) Each Grantor will upon demand pay to the Collateral 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 Collateral Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from or other realization upon,
any of the Collateral of such Grantor, (iii) the exercise or enforcement of
any of the rights of the Collateral Agent or the other Secured Parties
hereunder or (iv) the failure by such Grantor to perform or observe any of
the provisions hereof.
SECTION 23. Amendments; Waivers; Additional Grantors; Etc.
(a) No amendment or waiver of any provision of this Agreement, and no
consent to any departure by any Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Collateral
Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No failure
on the part of the Collateral Agent or any other 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 such right
preclude any other or further exercise thereof or the exercise of any other
right.
(b) Upon the execution and delivery by any Person of a security
agreement supplement in substantially the form of Exhibit A hereto (each a
"Security Agreement Supplement"), (i) such Person shall be referred to as
an "Additional Grantor" and shall be and become a Grantor hereunder and
each reference in this Agreement and the other Loan Documents to "Grantor"
shall also mean and be a reference to such Additional Grantor, and (ii) the
supplemental Schedules I, II, III, IV and V attached to each Security
31
Agreement Supplement shall be incorporated into and become a part of and
supplement Schedules I, II, III, IV and V, respectively, hereto, and the
Collateral Agent may attach such supplemental schedules to such Schedules,
and each reference to such Schedules shall mean and be a reference to such
Schedules as supplemented pursuant to each Security Agreement Supplement.
SECTION 24. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopier or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered
to, in the case of the Borrower or the Collateral Agent, addressed to it at its
address specified in the Credit Agreement and, in the case of each Grantor other
than the Borrower, addressed to it at its address set forth opposite such
Grantor's name on the signature pages hereto or on the signature page to the
Security Agreement Supplement pursuant to which it became a party hereto; or, as
to any party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and other communications
shall, when mailed, telegraphed, telecopied or telexed, be effective when
deposited in the mail, delivered to the telegraph company, telecopied or
confirmed by telex answerback, respectively, addressed as aforesaid; except that
notices and other communications to the Collateral Agent shall not be effective
until received by the Collateral Agent. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or of
any Security Agreement Supplement or Schedule hereto shall be effective as
delivery of an original executed counterpart thereof.
SECTION 25. Continuing Security Interest; Assignments under the Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the latest of (i)
the payment in full in cash of the Secured Obligations, (ii) the Termination
Date and (iii) the termination or expiration of all Secured Hedge Agreements,
(b) be binding upon each Grantor, its successors and assigns and (c) inure,
together with the rights and remedies of the Collateral Agent hereunder, to the
benefit of the Secured Parties and their respective successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), any Lender
Party may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including, without limitation, all or
any portion of its Commitment, the Advances owing to it and the Note or Notes,
if any, held by it) to any Eligible Assignee, and such Eligible Assignee shall
thereupon become vested with all the benefits in respect thereof granted to such
Lender Party herein or otherwise, in each case as provided in Section 9.07 of
the Credit Agreement.
32
SECTION 26. Release; Termination.
(a) Upon any sale, lease, transfer or other disposition of any item
of Collateral of any Grantor in accordance with the terms of the Loan
Documents (other than sales of Inventory in the ordinary course of
business), the Collateral Agent will, at such Grantor's expense, execute
and deliver to such Grantor such documents as such Grantor shall reasonably
request to evidence the release of such item of Collateral from the
assignment and security interest granted hereby; provided, however, that
(i) at the time of such request and such release no Event of Default shall
have occurred and be continuing, (ii) such Grantor shall have delivered to
the Collateral Agent, at least ten Business Days prior to the date of the
proposed release, a written request for release describing the item of
Collateral and the terms of the sale, lease, transfer or other disposition
in reasonable detail, including, without limitation, the price thereof and
any expenses in connection therewith, together with a form of release for
execution by the Collateral Agent and a certificate of such Grantor to the
effect that the transaction is in compliance with the Loan Documents and as
to such other matters as the Collateral Agent may request and (iii) the
proceeds of any such sale, lease, transferor other disposition required to
be applied, or any payment to be made in connection therewith, in
accordance with Section 2.05 of the Credit Agreement shall, to the extent
so required, be paid or made to the Collateral Agent when and as required
under Section 2.05 of the Credit Agreement.
(b) Upon the latest of (i) the payment in full in cash of the Secured
Obligations, (ii) the Termination Date and (iii) the termination or
expiration of all Secured Hedge Agreements, the pledge, assignment and
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the applicable Grantor. Upon any such
termination, the Collateral Agent will, at the applicable Grantor's
expense, execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such termination.
SECTION 27. Security Interest Absolute. The obligations of each
Grantor under this Agreement are independent of the Secured Obligations or any
other Obligations of any other Loan Party under or in respect of the Loan
Documents, and a separate action or actions may be brought and prosecuted
against each Grantor to enforce this Agreement, irrespective of whether any
action is brought against such Grantor or any other Loan Party or whether such
Grantor or any other Loan Party is joined in any such action or actions. All
rights of the Collateral Agent and the other Secured Parties and the pledge,
assignment and security interest hereunder, and all obligations of each Grantor
hereunder, shall be irrevocable, absolute and unconditional irrespective of, and
each Grantor hereby irrevocably waives (to the maximum extent permitted
33
by applicable law) any defenses it may now have or may hereafter acquire in any
way relating to, any or all of the following:
(a) any lack of validity or enforceability of any 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, all or any of the Secured Obligations or any other
Obligations of any other Loan Party under or in respect of the Loan
Documents or any other amendment or waiver of or any consent to any
departure from any Loan Document, including, without limitation, any
increase in the Secured Obligations resulting from the extension of
additional credit to any Loan Party or any of its Subsidiaries or
otherwise;
(c) 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 guaranty, for all or any of the Secured
Obligations;
(d) any manner of application of any Collateral or any other
collateral, or proceeds thereof, to all or any of the Secured Obligations,
or any manner of sale or other disposition of any Collateral or any other
collateral for all or any of the Secured Obligations or any other
Obligations of any other Loan Party under or in respect of the Loan
Documents or any other assets of any Loan Party or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any Loan Party or any of its Subsidiaries;
(f) any failure of any Secured Party to disclose to any Loan Party
any information relating to the business, condition (financial or
otherwise), operations, performance, assets, nature of assets, liabilities
or prospects of any other Loan Party now or hereafter known to such Secured
Party (each Grantor waiving any duty on the part of the Secured Parties to
disclose such information);
(g) the failure of any other Person to execute this Agreement or any
other Collateral Document, guaranty or agreement or the release or
reduction of liability of any Grantor or other grantor or surety with
respect to the Secured Obligations; or
(h) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by any Secured Party that might otherwise constitute a
defense available to, or a discharge of, such Grantor or any other Grantor
or a third party grantor of a security interest.
34
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Secured Party or by any other Person upon the
insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as
though such payment had not been made.
SECTION 28. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and 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 executed
counterpart of this Agreement.
SECTION 29. The Mortgage. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
Mortgage and the terms of such Mortgage are inconsistent with the terms of this
Agreement, then with respect to such Collateral, the terms of such Mortgage
shall be controlling, in the case of fixtures and real estate leases, letting
and licenses of, and contracts and agreements relating to the lease of, real
property, and the terms of this Agreement shall be controlling in the case of
all other Collateral.
SECTION 30. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
35
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
INTERSTATE FIBERNET, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and Chief
Financial Officer
Address for Notices: ITC /\DELTACOM, INC.
0000 X.X. Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and Chief
Financial Officer
Address for Notices: ITC /\DELTACOM COMMUNICATIONS, INC.
0000 X.X. Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and Chief
Financial Officer
Address for Notices: DELTACOM INFORMATION SYSTEMS, INC.
0000 X.X. Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and Chief
Financial Officer
36
Exhibit A to the
Security Agreement
FORM OF SECURITY AGREEMENT SUPPLEMENT
[Date of Security Agreement Supplement]
Xxxxxx Xxxxxxx & Co. Incorporated,
as the Collateral Agent for the
Secured Parties referred to in the
Credit Agreement referred to below
_______________________________________
_______________________________________
Attn:__________________________________
Ladies and Gentlemen:
Reference is made to (i) the Amended and Restated Credit
Agreement dated as of October 29, 2002 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among Interstate FiberNet, Inc., a Delaware corporation, as the Borrower, the
Lender Parties party thereto, Xxxxxx Xxxxxxx & Co. Incorporated, as collateral
agent (together with any successor collateral agent appointed pursuant to
Article VIII of the Credit Agreement, the "Collateral Agent"), and Xxxxxx
Xxxxxxx Senior Funding, Inc., as administrative agent, and (ii) the Amended and
Restated Security Agreement dated as of October 29, 2002 (as amended, amended
and restated, supplemented or otherwise modified from time to time, the
"Security Agreement") made by the Grantors from time to time party thereto in
favor of the Collateral Agent for the Secured Parties. Terms defined in the
Credit Agreement or the Security Agreement and not otherwise defined herein are
used herein as defined in the Credit Agreement or the Security Agreement.
SECTION 1. Grant of Security. The undersigned hereby assigns and
pledges to the Collateral Agent for the ratable benefit of the Secured Parties,
and hereby grants to the Collateral Agent for the ratable benefit of the Secured
Parties, a security interest in, all of its right, title and interest in and to
all of the Collateral of the undersigned, whether now owned or hereafter
acquired by the undersigned, wherever located and whether now or hereafter
existing or arising, including, without limitation, the property and assets of
the undersigned set forth on the attached supplemental schedules to the
Schedules to the Security Agreement.
SECTION 2. Security for Obligations. The pledge and assignment
of, and the grant of a security interest in, the Collateral by the undersigned
under this Security Agreement Supplement and the Security Agreement secures the
payment of all Obligations of the undersigned now or hereafter existing under or
in respect of the Loan Documents, whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations, interest,
premiums, penalties, fees, indemnifications, contract causes of action, costs,
expenses or otherwise.
Without limiting the generality of the foregoing, this Agreement
secures, as to each Grantor, the payment of all amounts that constitute part of
the Secured Obligations and would be owed by such Grantor to any Secured Party
under the Loan Documents but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving a Loan Party.
SECTION 3. Supplements to Security Agreement Schedules. The
undersigned has attached hereto supplemental Schedules I, II, III, IV and V to
Schedules I, II, III, IV and V, respectively, to the Security Agreement, and the
undersigned hereby certifies, as of the date first above written, that such
supplemental schedules have been prepared by the undersigned in substantially
the form of the equivalent Schedules to the Security Agreement and are complete
and correct in all material respects.
SECTION 4. Representations and Warranties. The undersigned hereby
makes each representation and warranty set forth in Section 8 of the Security
Agreement (as supplemented by the attached supplemental schedules) to the same
extent as each other Grantor.
SECTION 5. Obligations Under the Security Agreement. The
undersigned hereby agrees, as of the date first above written, to be bound as a
Grantor by all of the terms and provisions of the Security Agreement to the same
extent as each of the other Grantors. The undersigned further agrees, as of the
date first above written, that each reference in the Security Agreement to an
"Additional Grantor" or a "Grantor" shall also mean and be a reference to the
undersigned.
SECTION 6. Jurisdiction, Etc. (a) The undersigned hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Security Agreement Supplement or any of the other Loan Documents to which it is
a party, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be
2
heard and determined in any such New York State court or, to the fullest extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Security Agreement Supplement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Security Agreement Supplement or any of the other Loan
Documents in the courts of any jurisdiction.
(b) The undersigned hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Security Agreement
Supplement or any of the other Loan Documents to which it is a party in any New
York State or Federal court. The undersigned hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
SECTION 7. Governing Law. This Security Agreement Supplement
shall be governed by, and construed in accordance with, the laws of the State of
New York.
Very truly yours,
[NAME OF ADDITIONAL GRANTOR]
By__________________________________
Title:
Address for notices:
____________________________________
____________________________________
____________________________________
3
Exhibit B to the
Security Agreement
FORM OF CONSENT AND AGREEMENT
The undersigned hereby (a) acknowledges notice of, and consents to the
terms and provisions of, the Amended and Restated Security Agreement dated as of
October 29, 2002 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Security Agreement", the terms defined therein
being used herein as therein defined) from _______________ (the "Grantor") and
certain other grantors from time to time party thereto to Xxxxxx Xxxxxxx & Co.
Incorporated, as Collateral Agent (the "Collateral Agent") for the Secured
Parties referred to therein, (b) consents in all respects to the pledge and
assignment to the Collateral Agent of all of the Grantor's right, title and
interest in, to and under the Assigned Agreement (as defined below) pursuant to
the Security Agreement, (c) acknowledges that the Grantor has provided it with
notice of the right of the Collateral Agent in the exercise of its rights and
remedies under the Security Agreement to make all demands, give all notices,
take all actions and exercise all rights of the Grantor under the Assigned
Agreement, and (d) agrees with the Collateral Agent that:
(i) Upon its receipt from the Collateral Agent of a notice
specifying that an Event of Default under the Credit Agreement has
occurred and is continuing, the undersigned will make all payments to
be made by it under or in connection with the _______________
Agreement dated _______________, ____ (the "Assigned Agreement")
between the undersigned and the Grantor directly to the Collateral
Agent or otherwise in accordance with the instructions of the
Collateral Agent.
(ii) All payments referred to in paragraph (i) above shall be
made by the undersigned irrespective of, and without deduction for,
any counterclaim, defense, recoupment or set-off and shall be final,
and the undersigned will not seek to recover from any Secured Party
for any reason any such payment once made.
(iii) Upon the occurrence and during the continuance of an Event
of Default, the Collateral Agent or its designee shall be entitled to
exercise any and all rights and remedies of the Grantor under the
Assigned Agreement in accordance with the terms of the Security
Agreement, and the undersigned shall comply in all respects with such
exercise.
(iv) The undersigned will not, without the prior written consent
of the Collateral Agent, (A) cancel or terminate the Assigned
Agreement or consent to or accept any cancellation or termination
thereof, or (B) amend, amend and restate, supplement or
otherwise modify the Assigned Agreement, except, in each case, to the
extent otherwise permitted under the Credit Agreement referred to in the
Security Agreement.
(v) In the event of a default by the Grantor in the performance
of any of its obligations under the Assigned Agreement, or upon the
occurrence or non-occurrence of any event or condition under the Assigned
Agreement which would immediately or with the passage of any applicable
grace period or the giving of notice, or both, enable the undersigned to
terminate or suspend its obligations under the Assigned Agreement, the
undersigned shall not terminate the Assigned Agreement until it first gives
written notice thereof to the Collateral Agent and permits the Grantor and
the Collateral Agent the period of time afforded to the Grantor under the
Assigned Agreement to cure such default.
(vi) The undersigned shall deliver to the Collateral Agent,
concurrently with the delivery thereof to the Grantor, a copy of each
notice, request or demand given by the undersigned pursuant to the Assigned
Agreement.
(vii) Except as specifically provided in this Consent and
Agreement, neither the Collateral Agent nor any other Secured Party shall
have any liability or obligation under the Assigned Agreement as a result
of this Consent and Agreement, the Security Agreement or otherwise.
In order to induce the Lender Parties to make Advances and issue
Letters of Credit under the Credit Agreement and the Hedge Banks to enter into
Secured Hedge Agreements from time to time, the undersigned repeats and
reaffirms for the benefit of the Secured Parties the representations and
warranties made by it in the Assigned Agreement.
This Consent and Agreement shall be binding upon the undersigned and
its successors and assigns, and shall inure, together with the rights and
remedies of the Collateral Agent hereunder, to the benefit of the Secured
Parties and their successors, transferees and assigns. This Consent and
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
2
IN WITNESS WHEREOF, the undersigned has duly executed this Consent and
Agreement as of the date set opposite its name below.
Dated: _____________, ____ [NAME OF OBLIGOR]
By_____________________________
Title:
3
Exhibit C to the
Security Agreement
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT
This AMENDED AND RESTATED INTELLECTUAL PROPERTY SECURITY AGREEMENT (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "IP Security Agreement") dated as of October 29, 2002, is made by the
Persons listed on the signature pages hereof (collectively, the "Grantors") in
favor of Xxxxxx Xxxxxxx & Co. Incorporated, as collateral agent (the "Collateral
Agent") for the Secured Parties (as defined in the Credit Agreement referred to
below).
WHEREAS, Interstate FiberNet, Inc., a Delaware corporation, entered
into a Credit Agreement dated as of April 5, 2000 (the "Initial Credit
Agreement") with the Lender Parties and the Agents named therein, pursuant to
which the Grantors executed and delivered to the Collateral Agent for the
Secured Parties a Security Agreement dated April 5, 2000 and an Intellectual
Property Security Agreement dated April, 2000;
WHEREAS, in order to restructure, continue, convert and consolidate
the loans advanced to the Borrower by the Lender Parties under the Initial
Credit Agreement, the Lender Parties, the Loan Parties and the Agents have
entered into an Amended and Restated Credit Agreement, dated as of October 29,
2002 (as may be amended from time to time, the "Credit Agreement"); any
capitalized term used herein and not otherwise defined has the meaning set forth
in the Credit Agreement;
WHEREAS, as a condition precedent to the Amendment Effective Date,
each Grantor has executed and delivered that certain Amended and Restated
Security Agreement dated as of October 29, 2002 made by the Grantors to the
Collateral Agent (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Security Agreement"); and
WHEREAS, under the terms of the Security Agreement, Grantors have
granted a security interest in, among other property, certain intellectual
property of the Grantors to the Collateral Agent for the ratable benefit of the
Secured Parties, and have agreed as a condition thereof to execute this IP
Security Agreement covering such intellectual property for recording with the
U.S. Patent and Trademark Office, the United States Copyright Office and other
governmental authorities;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor agrees as follows:
SECTION 1. Grant of Security. Each Grantor hereby grants to the
Collateral Agent for the ratable benefit of the Secured Parties a security
interest in and to all of such Grantor's right, title and interest in and to the
following (the "Collateral"):
(a) the United States, international, and foreign patents and patent
applications set forth in Schedule A hereto (as such Schedule A may be
supplemented from time to time by supplements to the Security Agreement and
this IP Security Agreement, each such supplement being in substantially the
form of Exhibit D to the Security Agreement (an "IP Security Agreement
Supplement"), executed and delivered by such Grantor to the Collateral
Agent from time to time), together with all reissues, divisions,
continuations, continuations-in-part, extensions and reexaminations
thereof, and all rights therein provided by international treaties or
conventions (the "Patents");
(b) the United States and foreign trademark and service xxxx
registrations and applications set forth in Schedule B hereto (as such
Schedule B may be supplemented from time to time by IP Security Agreement
Supplements executed and delivered by such Grantor to the Collateral Agent
from time to time) (the "Trademarks");
(c) the United States and foreign copyright registrations and
applications set forth in Schedule C hereto (as such Schedule C may be
supplemented from time to time by IP Security Agreement Supplements
executed and delivered by such Grantor to the Collateral Agent from time to
time) (the "Copyrights");
(d) any and all claims for damages for past, present and future
infringement, misappropriation or breach with respect to the Patents,
Trademarks and Copyrights, with the right, but not the obligation, to xxx
for and collect, or otherwise recover, such damages; and
(e) any and all proceeds of the foregoing.
Notwithstanding anything herein to the contrary, the Collateral shall
not include any equipment and related computer programs, documentation, licenses
and sublicenses, and any additions, attachments and accessions to, and
replacements of, any of the foregoing, any agreements with the supplier of any
or all of the foregoing and purchase orders submitted to such supplier, and any
products and proceeds of any of the foregoing, pledged as collateral to secure
the GECC Capital Lease, the NTFC Capital Lease or any other Capitalized Lease
constituting Surviving Debt as of the Amendment Effective Date.
2
SECTION 2. Security for Obligations. The pledge and the grant of a
security interest in, the Collateral by each Grantor under this IP Security
Agreement secures the payment of all Obligations of such Grantor now or
hereafter existing under or in respect of the Loan Documents, whether direct or
indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, premiums, penalties, fees, indemnifications, contract
causes of action, costs, expenses or otherwise.
The parties hereto intend to maintain the validity, effectiveness,
enforceability, perfection and priority of the Collateral Documents delivered
under the Initial Credit Agreement (the "Original Security Documents") and this
IP Security Agreement is intended, inter alia, to extend the obligations and
indebtedness secured by the security interests and pledges created and affected
by the Original Security Documents, in each case, except as specifically
provided herein, including, without limitation, in the last paragraph of Section
1, without terminating, limiting, modifying or otherwise affecting the validity,
effectiveness, enforceability, perfection and priority of the security interests
or the pledges created and affected in respect thereof. To the extent that any
security interest or pledge granted pursuant to the Original Security Documents
relates to collateral in which the Grantors have previously granted a security
interest to the Collateral Agent, this IP Security Agreement shall, except as
specifically provided herein, including, without limitation, in the last
paragraph of Section 1, confirm the validity, effectiveness, enforceability and
continuation of such security interest or pledge as against the Grantors. All of
the terms and provisions of the Original Security Documents are hereby confirmed
and ratified in all respects, except as specifically modified herein.
Without limiting the generality of the foregoing, this IP Security
Agreement secures, as to each Grantor, the payment of all amounts that
constitute part of the Secured Obligations and would be owed by such Grantor to
any Secured Party under the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving a Loan Party.
SECTION 3. Recordation. Each Grantor authorizes and requests that the
Register of Copyrights, the Commissioner of Patents and Trademarks and any other
applicable government officer record this IP Security Agreement.
SECTION 4. Execution in Counterparts. This IP Security Agreement may
be executed in any number of counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute one
and the same agreement.
3
SECTION 5. Grants, Rights and Remedies. This IP Security Agreement has
been entered into in conjunction with the provisions of the Security Agreement.
Each Grantor does hereby acknowledge and confirm that the grant of the security
interest hereunder to, and the rights and remedies of, the Collateral Agent with
respect to the Collateral are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated herein by reference as if
fully set forth herein.
SECTION 6. Governing Law. This IP Security Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York.
4
IN WITNESS WHEREOF, each Grantor has caused this IP Security Agreement
to be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
INTERSTATE FIBERNET, INC.
By___________________________
Name:
Title:
Address for Notices:
0000 X.X. Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
ITC/\DELTACOM, INC.
By___________________________
Name:
Title:
Address for Notices:
0000 X.X. Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
ITC/\DELTACOM COMMUNICATIONS INC.
By___________________________
Name:
Title:
Address for Notices:
0000 X.X. Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
5
Exhibit D to the
Security Agreement
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT (this "IP
Security Agreement Supplement") dated _________, ____, is made by the Person
listed on the signature page hereof (the "Grantor") in favor of Xxxxxx Xxxxxxx &
Co. Incorporated, as collateral agent (the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement referred to below).
WHEREAS, Interstate FiberNet, Inc., a Delaware corporation, entered
into a Credit Agreement dated as of April 5, 2000 (the "Initial Credit
Agreement") with the Lender Parties and the Agents named therein, pursuant to
which the Grantors executed and delivered to the Collateral Agent for the
Secured Parties a Security Agreement dated April 5, 2000 and an Intellectual
Property Security Agreement dated April, 2000;
WHEREAS, in order to restructure, continue, convert and consolidate
the loans advanced to the Borrower by the Lender Parties under the Initial
Credit Agreement, the Lender Parties, the Loan Parties and the Agents have
entered into an Amended and Restated Credit Agreement, dated as of October 29,
2002 (as may be amended from time to time, the "Credit Agreement"); any
capitalized term used herein and not otherwise defined has the meaning set forth
in the Credit Agreement;
WHEREAS, pursuant to the Credit Agreement, the Grantor and certain
other Persons executed and delivered that certain Amended and Restated Security
Agreement dated as of October 29, 2002 made by the Grantors to the Collateral
Agent (as amended, amended and restated, supplemented or otherwise modified from
time to time, the "Security Agreement"); to create a short form version of the
Security Agreement covering certain intellectual property of the Grantor and
such other Persons for recording with the U.S. Patent and Trademark Office, the
United States Copyright Office and other governmental authorities, the Grantor
and such other Persons have executed and delivered that certain Amended and
Restated Intellectual Property Security Agreement made by the Grantor and such
other Persons to the Collateral Agent dated as of October 29, 2002 (as amended,
amended and restated, supplemented or otherwise modified from time to-time, the
"IP Security Agreement"); and
6
WHEREAS, under the terms of the Security Agreement and the IP Security
Agreement, the Grantor has granted a security interest in the Additional
Collateral (as defined in Section 1 below) of the Grantor to the Collateral
Agent for the ratable benefit of the Secured Parties and has agreed as a
condition thereof to execute this IP Security Agreement Supplement for recording
with the U.S. Patent and Trademark Office, the United States Copyright Office
and other governmental authorities;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Grantor agrees as follows:
SECTION 1. Confirmation of Grant of Security. The Grantor hereby
acknowledges and confirms the grant of a security interest to the Collateral
Agent for the ratable benefit of the Secured Parties under the Security
Agreement and the IP Security Agreement in and to all of the Grantor's right,
title and interest in and to the following (the "Additional Collateral"):
(i) the United States, international, and foreign patents and
patent applications, set forth in Schedule A hereto, together with all
reissues, divisions, continuations, continuations-in-part, extensions
and reexaminations thereof, and all rights therein provided by
international treaties or conventions (the "Patents");
(ii) the United States and foreign trademark and service xxxx
registrations and applications set forth in Schedule B hereto (the
"Trademarks");
(iii) United States and foreign copyright registrations and
applications set forth in Schedule C hereto (the "Copyrights");
(iv) any and all claims for damages for past, present and future
infringement, misappropriation or breach with respect to the Patents,
Trademarks and Copyrights, with the right, but not the obligation, to
xxx for and collect, or otherwise recover, such damages; and
(v) any and all proceeds of the foregoing.
SECTION 2. Supplement to Security Agreement and IP Security Agreement.
Schedule V to the Security Agreement and Schedule[s] [A,] [B and] [C] to the IP
Security Agreement are each, effective as of the date hereof, hereby
supplemented to add to such Schedules the Additional Collateral.
7
SECTION 3. Recordation. The Grantor authorizes and requests that the
Register of Copyrights, the Commissioner of Patents and Trademarks and any other
applicable government officer to record this IP Security Agreement Supplement.
SECTION 4. Governing Law. This IP Security Agreement Supplement shall
be governed by, and construed in accordance with, the laws of the State of New
York.
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
[NAME OF GRANTOR]
By:___________________________
Name:
Title:
Address for Notices:
_________________________
_________________________
_________________________
[ADD ACKNOWLEDGMENT FORM IF NEEDED]
8
Exhibit E to the
Security Agreement
FORM OF SECURITIES ACCOUNT CONTROL AGREEMENT
CONTROL AGREEMENT dated as of ________, ______, among _______, a
_____________ (the "Grantor"), Xxxxxx Xxxxxxx &Co. Incorporated, as Collateral
Agent (the "Secured Party"), and _________, as securities intermediary (the
"Securities Intermediary").
PRELIMINARY STATEMENTS:
(1) The Grantor has granted the Secured Party a security interest (the
"Security Interest") in account no. maintained by the Securities Intermediary
for the Grantor (the "Account").
(2) Terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. Uniform Commercial Code") are used in
this Agreement as such terms are defined in such Article 8 or 9.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto hereby agree as follows:
Section 1. The Account. The Securities Intermediary represents and
warrants to, and agrees with, the Secured Party that:
(a) The Securities Intermediary maintains the Account for the Grantor,
and all property held by the Securities Intermediary for the account of the
Grantor is, and will continue to be, credited to the Account.
(b) The Account is a securities account. The Securities Intermediary
is the securities intermediary with respect to the property credited from time
to time to the Account. The Grantor is the entitlement holder with respect to
the property credited from time to time to the Account.
(c) The Securities Intermediary's jurisdiction with respect to the
Account is, and will continue to be for so long as the Security Interest shall
be in effect, the State of New York.
(d) Exhibit A attached hereto is a statement of the property credited
to the Account on the date hereof.
(e) The Securities Intermediary does not know of any claim to or
interest in the Account or any property credited to the Account, except for
claims and interests of the parties referred to in this Agreement.
Section 2. Control by Secured Party. The Securities Intermediary will
comply with all notifications it receives directing it to transfer or redeem any
property in the Account (each an "Entitlement Order") or other directions
concerning the Account (including, without limitation, directions to distribute
to the Secured Party proceeds of any such transfer or redemption or interest or
dividends on property in the Account) originated by the Secured Party without
further consent by the Grantor or any other person.
Section 3. Grantor's Rights in Account. (a) Except as otherwise
provided in this Section 3, the Securities Intermediary will comply with
Entitlement Orders originated by the Grantor without further consent by the
Secured Party.
(b) Until the Securities Intermediary receives a notice from the
Secured Party that the Secured Party will exercise exclusive control over the
Account (a "Notice of Exclusive Control"), the Securities Intermediary may
distribute to the Grantor all funds and other property held in the Account.
(c) The Securities Intermediary will not comply with any Entitlement
Order originated by the Grantor that would require the Securities Intermediary
to make a free delivery to the Grantor or any other person.
(d) If the Securities Intermediary receives from the Secured Party a
Notice of Exclusive Control, the Securities Intermediary will cease:
(i) complying with Entitlement Orders or other directions concerning
the Account originated by the Grantor and
(ii) distributing to the Grantor any funds or other property held in
the Account.
Section 4. Priority of Secured Party's Security Interest. (a) The
Securities Intermediary subordinates in favor of the Secured Party any security
interest, lien, or right of set-off it may have, now or in the future, against
the Account or property in the Account, except that
2
the Securities Intermediary will retain its prior lien on property in the
Account to secure payment for property purchased for the Account and normal
commissions and fees for the Account.
(b) The Securities Intermediary will not agree with any third party
that the Securities Intermediary will comply with Entitlement Orders originated
by the third party.
Section 5. Statements, Confirmations, and Notices of Adverse Claims.
(a) The Securities Intermediary will send copies of all statements and
confirmations for the Account simultaneously to the Grantor and the Secured
Party.
(b) When the Securities Intermediary knows of any claim or interest in
the Account or any property credited to the Account other than the claims and
interests of the parties referred to in this Agreement, the Securities
Intermediary will promptly notify the Secured Party and the Grantor of such
claim or interest.
Section 6. The Securities Intermediary's Responsibility. (a) Except
for permitting a withdrawal, delivery, or payment in violation of Section 3, the
Securities Intermediary will not be liable to the Secured Party for complying
with Entitlement Orders or other directions concerning the Account from the
Grantor that are received by the Securities Intermediary before the Securities
Intermediary receives and has a reasonable opportunity to act on a Notice of
Exclusive Control.
(b) The Securities Intermediary will not be liable to the Grantor for
complying with a Notice of Exclusive Control or with an Entitlement Order or
other direction concerning the Account originated by the Secured Party; even if
the Grantor notifies the Securities Intermediary that the Secured Party is not
legally entitled to issue the Notice of Exclusive Control or Entitlement Order
or such other direction unless the Securities Intermediary takes the action
after it is served with an injunction, restraining order, or other legal process
enjoining it from doing so, issued by a court of competent jurisdiction, and had
a reasonable opportunity to act on the injunction, restraining order or other
legal process.
(c) This Agreement does not create any obligation of the Securities
Intermediary except for those expressly set forth in this Agreement and in Part
5 of Article 8 of the N.Y. Uniform Commercial Code. In particular, the
Securities Intermediary need not investigate whether the Secured Party is
entitled under the Secured Party's agreements with the Grantor to give an
Entitlement Order or other direction concerning the Account or a Notice of
Exclusive Control. The Securities Intermediary may rely on notices and
communications it believes to be given by the appropriate party.
3
Section 7. Indemnity. The Grantor will indemnify the Securities
Intermediary, its officers, directors, employees and agents against claims,
liabilities and expenses arising out of this Agreement (including, without
limitation, reasonable attorney's fees and disbursements), except to the extent
the claims, liabilities or expenses are caused by the Securities Intermediary's
gross negligence or willful misconduct as found by a court of competent
jurisdiction in a final, non-appealable judgment.
Section 8. Termination; Survival. (a) The Secured Party may terminate
this Agreement by notice to the Securities Intermediary and the Grantor. If the
Secured Party notifies the Securities Intermediary that the Security Interest
has terminated, this Agreement will immediately terminate.
(b) The Securities Intermediary may terminate this Agreement on 60
days' prior notice to the Secured Party and the Grantor, provided that before
such termination the Securities Intermediary and the Grantor shall make
arrangements to transfer the property in the Account to another securities
intermediary that shall have executed, together with the Grantor, a control
agreement in favor of the Secured Party in respect of such property in
substantially the form of this Agreement or otherwise in form and substance
satisfactory to the Secured Party.
(c) Sections 6 and 7 will survive termination of this Agreement.
Section 9. Governing Law. This Agreement and the Account will be
governed by the law of the State of New York. The Securities Intermediary and
the Grantor may not change the law governing the Account without the Secured
Party's express prior written agreement.
Section 10. Entire Agreement. This Agreement is the entire agreement,
and supersedes any prior agreements, and contemporaneous oral agreements, of the
parties concerning its subject matter.
Section 11. Amendments. No amendment of, or waiver of a right under,
this Agreement will be binding unless it is in writing and signed by the party
to be charged.
Section 12. Financial Assets. The Securities Intermediary agrees with
the Secured Party and the Grantor that, to the fullest extent permitted by
applicable law, all property credited from time to time to the Account will be
treated as financial assets under Article 8 of the N.Y. Uniform Commercial Code.
Section 13. Notices. A notice or other communication to a party under
this Agreement will be in writing (except that Entitlement Orders may be given
orally), will be sent
4
to the party's address set forth under its name below or to such other address
as the party may notify the other parties, and will be effective on receipt.
Section 14. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Grantor, the Secured Party and the Securities
Intermediary, and thereafter shall be binding upon and inure to the benefit of
the Grantor, the Secured Party and the Securities Intermediary and their
respective successors and assigns.
Section 15. Execution in 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
and 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 executed counterpart of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
[NAME OF GRANTOR]
By:________________________________________
Title:
Address:
_________________
_________________
_________________
XXXXXX XXXXXXX & CO.
INCORPORATED, as Collateral Agent
By:________________________________________
Title:
Address:
5
_________________
_________________
_________________
[NAME OF SECURITIES
INTERMEDIARY]
By:________________________________________
Title:
Address:
_________________
_________________
_________________
6
