Exhibit 4.7
ESCROW AND SECURITY AGREEMENT
This ESCROW AND SECURITY AGREEMENT (this "Escrow Agreement") is made and
entered into as of April __, 1998 among CELLNET FUNDING, LLC, a Delaware limited
liability company (the "Issuer"), CELLNET DATA SYSTEMS, INC. ("CellNet"), a
Delaware corporation, and [BANK OF NEW YORK], as escrow agent (the "Escrow
Agent") for the holders (the "Holders") of the Preferred Securities (as defined
herein) issued by the Issuer under the LLC Agreement referred to below.
W I T N E S S E T H
WHEREAS, pursuant to the Underwriting Agreement (the "Underwriting
Agreement") dated April __, 1998, among the Issuer, CellNet and Xxxxxx
Xxxxxxx & Co. Incorporated (the "Underwriter"), the Issuer and CellNet have
agreed to sell to the Underwriter, 3,000,000 of Issuer's -% Exchangeable
Limited Liability Company Preferred Securities, liquidation preference $25
per preferred security (the "Firm Preferred Securities" and, together with
the Additional Preferred Securities (as defined herein), the "Preferred
Securities"), which will be mandatorily redeemable on May 1, 2010;
WHEREAS, pursuant to the Underwriting Agreement, the Issuer and CellNet
propose to issue and sell to the Underwriter not more than an additional
450,000 Preferred Securities (the "Additional Preferred Securities"), if and
to the extent that the Underwriter shall have determined to exercise the
right to purchase such additional Preferred Securities granted to the
Underwriter;
WHEREAS, the Issuer hereby agrees to (i) purchase or cause the purchase
of Pledged Securities (as defined herein) in an amount that will be
sufficient upon receipt of scheduled interest and principal payments in
respect thereof to provide for the payment in cash of the dividends due
quarterly in arrears on August -, November -, February - and May -,
commencing August -, 1998, on the Preferred Securities through and including
August -, 2001 and (ii) place such Pledged Securities (as defined herein) (or
cause them to be placed) in an account held by the Escrow Agent for the
benefit of Holders of the Preferred Securities; and
WHEREAS, to secure the obligations of the Issuer under the LLC Agreement
to pay in cash the first thirteen dividends on the Preferred Securities
through and including August 1, 2001 (the "Obligations"), the Issuer has
agreed to (i) pledge to the Escrow Agent for its benefit and the ratable
benefit of the Holders of the Preferred Securities, a security interest in
the Pledged Securities (as
defined herein) and related collateral and (ii) execute and deliver this
Escrow Agreement in order to secure the payment and performance by the Issuer
of all the Obligations. Capitalized terms used herein and not otherwise
defined herein shall have the meanings given to such terms in the Agreement
of Limited Liability Company of the Issuer (as amended, restated,
supplemented or otherwise modified from time to time, the "LLC Agreement") or
the Preferred Securities Designation. Unless otherwise defined herein or in
the LLC Agreement, terms used in Articles 8 or 9 of the Uniform Commercial
Code as enacted and in effect in the State of New York from time to time (the
"UCC") are used herein as therein defined on the date hereof.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises herein contained,
and in order to induce the Holders of the Preferred Securities to purchase the
Preferred Securities and as a condition to the Closing of the offering of the
Preferred Securities, the Issuer hereby agrees with the Escrow Agent, for the
benefit of the Escrow Agent and for the ratable benefit of the Holders of the
Preferred Securities, as follows:
SECTION 1. PLEDGE AND GRANT OF SECURITY INTEREST.
(a) The Issuer hereby pledges to the Escrow Agent for its benefit and
for the ratable benefit of the Holders of the Preferred Securities, as their
respective interests appear, and grants to the Escrow Agent for its benefit and
for the ratable benefit of the Holders of the Preferred Securities, a continuing
first priority security interest in and to all of the Issuer's right, title and
interest in, to and under the following (hereinafter collectively referred to as
the "Collateral"), whether evidenced by or characterized as investment property,
general intangibles, documents, instruments, accounts or otherwise: (a) the
United States Treasury securities identified in Annex 1 to Exhibit A to this
Escrow Agreement (the "Firm Pledged Securities" and, together with the
Additional Pledged Securities, the "Pledged Securities"), (b) the United States
Treasury securities, if any, to be purchased pursuant to Section 1(b), (c) any
and all applicable security entitlements to the Pledged Securities, (d) The
[Bank of New York] account in the name of [The Bank of New York], as Escrow
Agent for the benefit of the holders of the -% Exchangeable Limited Liability
Company Preferred Securities mandatorily redeemable - of CellNet Funding, LLC
Collateral Escrow Account", Administrative Account No. - (the "Escrow Account")
established and maintained by the Escrow Agent pursuant to this Escrow
Agreement, (e) any and all related securities accounts in which security
entitlements to the Pledged Securities are carried, and (f) all proceeds in any
form of any and all of the foregoing Collateral (including, without limitation,
proceeds that constitute property of the types described in clauses (a) - (e) of
this Section 1) and, to the extent not otherwise included, all cash.
(b) In the event the Underwriter shall decide to exercise the
right to purchase the Additional Preferred Securities pursuant to the
Underwriting Agreement, the Issuer shall use a portion of the proceeds from
such purchase by the Underwriting to purchase and deliver to the Escrow Agent
additional United States Treasury securities (the "Additional Pledged
Securities")
-2-
in such amount as will be sufficient upon receipt of scheduled interest
and/or principal payments of all Pledged Securities thereafter held in the
Pledged Account to provide payment for the first thirteen cash dividends due
on the Preferred Securities. The Additional Pledged Securities shall be
pledged by the Issuer to the Escrow Agent for the benefit of the Holders and
shall be held by the Escrow Agent in the Pledged Account.
SECTION 2. SECURITY FOR OBLIGATION. This Escrow Agreement and the
pledge of Collateral hereunder secures the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or otherwise)
of all the Obligations.
SECTION 3. DELIVERY OF COLLATERAL; ESCROW ACCOUNT; INTEREST.
(a) The Pledged Securities shall be pledged and transferred to the
Escrow Agent and the Escrow Agent shall become the holder of a security
entitlement to the Pledged Securities, through action by the [Federal Reserve
Bank of New York] ("FRBNY") or another securities intermediary, as confirmed (in
writing or electronically or otherwise in accordance with standard industry
practice) to the Escrow Agent by FRBNY or such other securities intermediary
(i) indicating by book-entry that the Pledged Securities or a security
entitlement thereto has been credited to the Escrow Agent's account, or
(ii) acquiring the Pledged Securities or a security entitlement thereto for the
Escrow Agent and accepting the same for credit to a securities account of the
Escrow Agent.
(b) Prior to or concurrently with the execution and delivery hereof
and prior to the transfer to the Escrow Agent of the Pledged Securities (or
acquisition by the Escrow Agent of any security entitlement thereto), as
provided in subsection (a) of this Section 3, the Escrow Agent shall establish
the Escrow Account on its books as an account segregated from all other
custodial or collateral accounts at its office at - Attention: -. Upon transfer
of the Pledged Securities to the Escrow Agent (or the Escrow Agent's acquisition
of a security entitlement thereto), as confirmed to the Escrow Agent by FRBNY or
another securities intermediary, the Escrow Agent shall make appropriate book
entries indicating that the Pledged Securities and/or such security entitlement
have been credited to and are held in the Escrow Account. Subject to the other
terms and conditions of this Escrow Agreement, all funds or other property held
by the Escrow Agent pursuant to this Escrow Agreement shall be held in the
Escrow Account subject (except as expressly provided in Sections 4(a), (b) and
(c) hereof) to the exclusive dominion and control of the Escrow Agent and
exclusively for the benefit of the Escrow Agent and for the ratable benefit of
the Holders of the Preferred Securities, as their respective interests appear
and segregated from all other funds or other property otherwise held by the
Escrow Agent. No person other than the Escrow Agent shall be authorized to
issue entitlement orders with respect to the Pledged Securities.
(c) All Collateral shall be retained in the Escrow Account pending
disbursement pursuant to the terms hereof.
-3-
(d) Concurrently with the execution and delivery of this Escrow
Agreement the Escrow Agent is delivering to the Issuer and the Underwriter
a duly executed certificate, in the form of Exhibit A hereto, of an officer of
the Escrow Agent, confirming the Escrow Agent's establishment and maintenance of
the Escrow Account and its receipt and holding of the Firm Pledged Securities or
a security entitlement thereto and the crediting of the Firm Pledged Securities
or such security entitlement to the Escrow Account, all in accordance with this
Escrow Agreement.
(e) In the event the Underwriter shall decide to exercise the
right to purchase the Additional Preferred Securities pursuant to the
Underwriting Agreement, the Escrow Agent shall deliver, on the Option Closing
Date (as defined in the Underwriting Agreement), to the Issuer and the
Underwriter a duly executed certificate, substantially in the form of Exhibit
A hereto, with respect to the Additional Pledged Securities, of an officer of
the Escrow Agent, confirming the Escrow Agent's maintenance of the Escrow
Account and its receipt and holding of the Additional Pledged Securities or a
security entitlement thereto and the crediting of the Additional Pledged
Securities or such security entitlement to the Escrow Account, all in
accordance with this Escrow Agreement.
(f) Concurrently with the execution and delivery of this Escrow
Agreement, the Issuer is delivering to the Escrow Agent acknowledgment copies or
stamped receipt copies of proper financing statements, duly filed on or before
the Closing Date (as defined in the LLC Agreement) under the UCC of the State of
California, covering the Collateral described in this Escrow Agreement.
SECTION 4. DISBURSEMENTS.
(a) The Issuer hereby agrees that, three business days prior to
the date of each of the first thirteen scheduled dividend payments on the
Preferred Securities, the Escrow Agent shall release from the Escrow Account
and pay to the Holders of the Preferred Securities proceeds sufficient to
provide for payment in full of such dividend payment then due on the
Preferred Securities. The Escrow Agent will release funds in an amount
sufficient to provide for the payment of the dividend on the Preferred
Securities in accordance with the terms hereof and the payment provisions of
the LLC Agreement to the Holders of the Preferred Securities from (and to the
extent of) proceeds of the Pledged Securities in the Escrow Account.
(b) If the Issuer makes any dividend payment or portion of a dividend
payment for which the Collateral is security from a source of funds other than
the Escrow Account ("Issuer Funds"), the Issuer may deliver to the Escrow Agent,
provided the Escrow Agent has received such dividend payment, the Escrow Agent
shall pay over to the Issuer or the Issuer's Designee, as the case may be, the
requested amount from proceeds in the Escrow Account as soon as practicable to
another party at the direction of the Issuer (the "Issuer's Designee") proceeds
from the Escrow Account in an amount less than or equal to the amount of Issuer
Funds applied to such dividend payment.
-4-
(c) Upon (i) payment in full of the first thirteen scheduled dividend
payments on the Preferred Securities or (ii) exchange of all of the Preferred
Securities into shares of CellNet Common Stock, the security interest in the
Collateral (except, with respect to subsection (ii) in this Section 4(c), the
Class of Pledged Securities (as defined below), if any, that will mature within
[15 days] from the date of such exchange) evidenced by this Escrow Agreement and
held in the Escrow Account will automatically terminate and be of no further
force and effect and the Collateral (except, with respect to subsection (ii) in
this Section 4(c), the Class of Pledged Securities, if any, that will mature
within [15 days] from the date of such exchange) shall promptly be paid over and
transferred to the Issuer. Furthermore, upon the release of any Collateral from
the Escrow Account in accordance with the terms of this Escrow Agreement,
whether upon release of Collateral to Holders as payment of dividends or
otherwise, the security interest evidenced by this Escrow Agreement in such
released Collateral will automatically terminate and be of no further force and
effect. The Escrow Agent will take all steps reasonably requested by CellNet or
Funding to evidence such release of record.
(d) At least three Business Days prior to the due date of each of the
first thirteen scheduled dividend payments on the Preferred Securities, the
Issuer shall give the Escrow Agent notice as to whether such dividend payment
will be made pursuant to Section 4(a) or 4(b) and the respective amounts of the
dividend that will be paid from the Escrow Account and from Issuer Funds. Any
Issuer Funds to be used to make any dividend payment shall be delivered to the
Escrow Agent, in immediately available funds, prior to 10 a.m. one business day
prior to such dividend payment date. If no such notice is given or such Issuer
Funds have not been so delivered, the Escrow Agent will act pursuant to
Section 4(a) as if it had received an Issuer Order pursuant thereto for the
payment in full of the dividend then due from the Escrow Account.
(e) Upon any Automatic Exchange, the Escrow Agent, pursuant to a
written notice given by the Issuer to the Escrow Agent, shall release from
the Escrow Account and pay the Holders whose Preferred Securities are being
automatically exchanged for shares of CellNet Common Stock pursuant to such
Automatic Exchange, such Holders' pro rata share of the entire Collateral.
(f) The Escrow Agent shall liquidate Collateral in the Escrow Account
(pursuant to written instructions from Issuer) in order to make any scheduled
payment of dividends or payment pursuant to Section 4(e) above unless there are
sufficient funds in the Escrow Account on such dividend payment date.
(g) In the event that, prior to August 1, 2001, a holder of the
Preferred Securities exchanges such Preferred Securities with the Issuer for
shares of CellNet Common Stock in accordance with the LLC Agreement, the
Escrow Agent, pursuant to a written notice of the Issuer, shall release
[and pay to CellNet] from the Escrow Account an amount of each Class of
Pledged Securities (other than the Class of Pledged Securities, if any, that
will mature within [15 days] from the date of such exchange) that are then
held in the Escrow Account equal to all of the Pledged Securities in such
Class of Pledged Securities multiplied by a fraction, the numerator of which
is the number of Preferred Securities which are being exchanged and the
denominator of which is all of the outstanding
-5-
Preferred Securities; provided however, that the Escrow Agent shall only
release each such Class of Pledged Securities to the extent that it receives
from an officer of the Issuer a written notice stating that it is his/her
reasonable opinion that after such release, the Pledged Securities remaining
in the Escrow Account will be sufficient upon receipt of scheduled interest
and/or principal payment of all remaining Pledged Securities thereafter held
in the Pledged Account to provide payment for the remaining cash dividends
due on the Preferred Securities. Each group of Pledged Securities that will
mature on or about a dividend payment date with respect to the Preferred
Securities shall be considered, for purposes of this Section 4, a "Class of
Pledged Securities".
(h) Nothing contained in this Escrow Agreement shall (i) afford the
Issuer any right to issue entitlement orders with respect to any security
entitlement to the Pledged Securities or any securities account in which any
such security entitlement may be carried, or otherwise afford the Issuer control
of any such security entitlement or (ii) otherwise give rise to any rights of
the Issuer with respect to the Pledged Securities, any security entitlement
thereto or any securities account in which any such security entitlement may be
carried, other than the Issuer's rights under this Escrow Agreement as the
beneficial owner of Collateral pledged to and subject to the exclusive dominion
and control (except as expressly provided in Sections 4(a), (b), (c), (e) and
(g) hereof) of the Escrow Agent in its capacity as such (and not as a securities
intermediary). The Issuer acknowledges, confirms and agrees that the Escrow
Agent is an entitlement holder of the security entitlements to the Pledged
Securities solely as Escrow Agent for the Holders of the Preferred Securities
and not as a securities intermediary.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Issuer hereby
represents and warrants that:
(a) The execution and delivery by the Issuer of, and the performance
by the Issuer of its obligations under, this Escrow Agreement will not
contravene any provision of applicable law or the Certificate of Formation of
the Issuer or any material agreement or other material instrument binding upon
the Issuer or any of its subsidiaries or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Issuer or any of
its subsidiaries, or result in the creation or imposition of any lien on any
assets of the Issuer, except for the security interests granted under this
Escrow Agreement; no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required (i) for the
performance by the Issuer of its obligations under this Escrow Agreement,
(ii) for the pledge by the Issuer of the Collateral pursuant to this Escrow
Agreement or (iii) except for any such consents, approvals, authorizations or
orders required to be obtained by the Escrow Agent (or the Holders) for reasons
other than the consummation of this transaction, for the exercise by the Escrow
Agent of the rights provided for in this Escrow Agreement or the remedies in
respect of the Collateral pursuant to this Escrow Agreement.
(b) The Issuer is the beneficial owner of the Collateral, free and
clear of any Lien or claims of any person or entity (except for the security
interests granted under this Escrow
-6-
Agreement). No financing statement covering the Issuer's interest in the
Pledged Securities is on file in any public office, other than the financing
statements filed pursuant to this Escrow Agreement.
(c) This Escrow Agreement has been duly authorized, validly
executed and delivered by the Issuer and constitutes a valid and binding
agreement of the Issuer, enforceable against the Issuer in accordance with
its terms, except as (i) the enforceability hereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, preference, reorganization,
moratorium or similar laws now or hereafter in effect relating to or
affecting creditors' rights or remedies generally, (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability, (iii) the exculpation provisions and rights to indemnification
hereunder may be limited by U.S. federal and state securities laws and public
policy considerations and (iv) the waiver of rights and defenses contained in
Section 11(b) and Section 14.11 hereof may be limited by applicable law.
(d) Upon the transfer to the Escrow Agent of the Pledged Securities
and the acquisition by the Escrow Agent of a security entitlement thereto, in
accordance with Section 3, the pledge of and grant of a security interest in the
Collateral securing the payment of the Obligations for the benefit of the Escrow
Agent and the Holders of the Preferred Securities will constitute a perfected
security interest in such Collateral with first priority against all creditors
of the Issuer (and any persons purporting to purchase any of the Collateral from
the Issuer).
(e) There are no legal or governmental proceedings pending or, to the
best of the Issuer's knowledge, threatened to which the Issuer or any of its
subsidiaries is a party or to which any of the properties of the Issuer or any
such subsidiary is subject that would materially adversely affect the power or
ability of the Issuer to perform its obligations under this Escrow Agreement or
to consummate the transactions contemplated hereby.
(f) The pledge of the Collateral pursuant to this Escrow Agreement is
not prohibited by law or governmental regulation (including, without limitation,
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System) applicable to the Issuer.
(g) No Event of Default exists.
SECTION 6. FURTHER ASSURANCES. The Issuer will, promptly upon
request by the Escrow Agent, execute and deliver or cause to be executed and
delivered, or use its reasonable best efforts to procure, all assignments,
instruments and other documents, all in form and substance reasonably
satisfactory to the Escrow Agent, deliver any instruments to the Escrow Agent
and take any other actions that are necessary or, in the reasonable opinion
of the Escrow Agent, desirable to perfect, continue the perfection of, or
protect the first priority of the Escrow Agent's security interest in and to
the Collateral, to protect the Collateral against the rights, claims, or
interests of third persons (other than any such rights, claims or interests
created by or arising through the Escrow Agent) or to effect the purposes of
this Escrow Agreement. The Issuer also hereby authorizes the Escrow Agent to
file any
-7-
financing or continuation statements in the United States with respect to the
Collateral without the signature of the Issuer (to the extent permitted by
applicable law). The Issuer will promptly pay all reasonable costs incurred
in connection with any of the foregoing within 60 days of receipt of an
invoice therefor. The Issuer also agrees, whether or not requested by the
Escrow Agent, to take all actions that are necessary to perfect or continue
the perfection of, or to protect the first priority of, the Escrow Agent's
security interest in and to the Collateral, including the filing of all
necessary financing and continuation statements, and to protect the
Collateral against the rights, claims or interests of third persons (other
than any such rights, claims or interests created by or arising through the
Escrow Agent).
SECTION 7. COVENANTS. The Issuer covenants and agrees with the Escrow
Agent and the Holders of the Preferred Securities that from and after the date
of this Escrow Agreement until the earlier of payment in full in cash of the
Obligations:
(a) that (i) it will not (and will not purport to) sell or otherwise
dispose of, or grant any option or warrant with respect to, any of the
Collateral or its beneficial interest therein, and (ii) it will not create or
permit to exist any Lien or other adverse interest in or with respect to its
beneficial interest in any of the Collateral (except for the security interests
granted under this Escrow Agreement); and
(b) that it will not (i) enter into any agreement or understanding
that restricts or inhibits or purports to restrict or inhibit the Escrow Agent's
rights or remedies hereunder, including, without limitation, the Escrow Agent's
right to sell or otherwise dispose of the Collateral or (ii) fail to pay or
discharge any tax, assessment or levy of any nature with respect to its
beneficial interest in the Collateral not later than five days prior to the date
of any proposed sale under any judgment, writ or warrant of attachment with
respect to such beneficial interest.
SECTION 8. POWER OF ATTORNEY. In addition to all of the powers granted
to the Escrow Agent pursuant to the LLC Agreement, the Issuer hereby appoints
and constitutes the Escrow Agent as the Issuer's attorney-in-fact (with full
power of substitution) to exercise to the fullest extent permitted by law all of
the following powers upon and at any time after the occurrence and during the
continuance of an Event of Default: (a) collection of proceeds of any
Collateral; (b) conveyance of any item of Collateral to any purchaser thereof;
(c) giving of any notices or recording of any Liens under Section 6 hereof; and
(d) paying or discharging taxes or Liens levied or placed upon the Collateral,
the legality or validity thereof and the amounts necessary to discharge the same
to be determined by the Escrow Agent in its sole reasonable discretion, and such
payments made by the Escrow Agent to become part of the Obligations of the
Issuer to the Escrow Agent, due and payable immediately upon demand. The Escrow
Agent's authority under this Section 8 shall include, without limitation, the
authority to endorse and negotiate any checks or instruments representing
proceeds of Collateral in the name of the Issuer, execute and give receipt for
any certificate of ownership or any document constituting Collateral, transfer
title to any item of Collateral, sign the Issuer's name on all financing
statements (to the extent permitted by applicable law) or any other documents
deemed necessary or appropriate by the Escrow Agent to preserve, protect or
perfect the security interest in the Collateral and to file the same, prepare,
file and sign the Issuer's name on any notice of Lien, and
-8-
to take any other actions arising from or incident to the powers granted to
the Escrow Agent in this Escrow Agreement. This power of attorney is coupled
with an interest and is irrevocable by the Issuer.
SECTION 9. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Escrow Agent hereunder are being granted in order to
preserve and protect the security interest of the Escrow Agent and the Holders
of the Preferred Securities in and to the Collateral granted hereby and shall
not be interpreted to, and shall not impose any duties on the Escrow Agent in
connection therewith other than those expressly provided herein or imposed under
applicable law. Except as provided by applicable law or by the LLC Agreement,
the Escrow Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which the Escrow Agent accords
similar property held by the Escrow Agent for similar accounts, it being
understood that the Escrow Agent in its capacity as such shall not have any
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities or other matters relative to any Collateral,
whether or not the Escrow Agent has or is deemed to have knowledge of such
matters, (b) taking any necessary steps to preserve rights against any parties
with respect to any Collateral or (c) investing or reinvesting any of the
Collateral or any loss on any investment. The Escrow Agent may reasonably rely
on the written instructions of the Issuer without any further investigation on
its part. Furthermore, the Escrow Agent assumes no responsibility for the
validity of the Pledged Securities nor the sufficiency of such Pledged
Securities to cover the first thirteen dividend payments on the Preferred
Securities.
SECTION 10. INDEMNITY. The Issuer shall indemnify, hold harmless and
defend the Escrow Agent and its directors, officers, agents and employees, from
and against any and all claims, actions, obligations, liabilities and expenses,
including reasonable defense costs, reasonable investigative fees and costs, and
reasonable legal fees and damages arising from the Escrow Agent's performance as
Escrow Agent under this Escrow Agreement, except to the extent that such claim,
action, obligation, liability or expense is directly attributable to the bad
faith, gross negligence or wilful misconduct of such indemnified person.
SECTION 11. REMEDIES UPON EVENT OF DEFAULT. If any Event of Default
under the LLC Agreement or default hereunder (any such Event of Default or
default being referred to in this Escrow Agreement as an "Event of Default")
shall have occurred and be continuing:
(a) The Escrow Agent and the Holders of the Preferred Securities
shall have, in addition to all other rights given by law or by this Escrow
Agreement or the LLC Agreement, all of the rights and remedies with respect to
the Collateral of a secured party under the UCC. In addition, with respect to
any Collateral that shall then be in or shall thereafter come into the
possession or custody of the Escrow Agent, the Escrow Agent may sell or cause
the same to be sold at any broker's board or at public or private sale, in one
or more sales or lots, at such price or prices as the Escrow Agent may deem
best, for cash or on credit or for future delivery, without assumption of any
credit risk. The purchaser of any or all Collateral so sold shall thereafter
hold the same absolutely, free
-9-
from any claim, encumbrance or right of any kind whatsoever created by or
through the Issuer. Unless any of the Collateral threatens, in the
reasonable judgment of the Escrow Agent, to decline speedily in value or is
or becomes of a type sold on a recognized market, the Escrow Agent will give
the Issuer reasonable notice of the time and place of any public sale
thereof, or of the time after which any private sale or other intended
disposition is to be made. Any sale of the Collateral conducted in
conformity with reasonable commercial practices of banks, insurance
companies, commercial finance companies, or other financial institutions
disposing of property similar to the Collateral shall be deemed to be
commercially reasonable. Any requirements of reasonable notice shall be met
if such notice is mailed to the Issuer as provided in Section 14.1 hereof at
least ten (10) days before the time of the sale or disposition. The Escrow
Agent or any Holder of Preferred Securities may, in its own name or in the
name of a designee or nominee, buy any of the Collateral at any public sale
and, if permitted by applicable law, at any private sale. All expenses
(including court costs and reasonable attorneys' fees, expenses and
disbursements) of, or incident to, the enforcement of any of the provisions
hereof shall be recoverable from the proceeds of the sale or other
disposition of the Collateral.
(b) The Issuer further agrees to use its reasonable best efforts to
do or cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Collateral pursuant to this Section 11
valid and binding and in compliance with any and all other applicable
requirements of law. The Issuer further agrees that a breach of any of the
covenants contained in this Section 11 will cause irreparable injury to the
Escrow Agent and the Holders of the Preferred Securities, that the Escrow Agent
and the Holders of the Preferred Securities have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section 11 shall be specifically enforceable against the
Issuer, and the Issuer hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred.
SECTION 12. EXPENSES. The Issuer will within 60 days after receipt of
invoice therefore, pay to the Escrow Agent the amount of any and all reasonable
expenses, including, without limitation, the reasonable fees, expenses and
disbursements of its counsel, experts and agents retained by the Escrow Agent,
that the Escrow Agent may incur in connection with (a) the review, negotiation
and administration of this Escrow Agreement, (b) the custody or preservation of,
or the sale of, collection from, or other realization upon, any of the
Collateral, (c) the exercise or enforcement of any of the rights of the Escrow
Agent and the Holders of the Preferred Securities hereunder or (d) the failure
by the Issuer to perform or observe any of the provisions hereof.
SECTION 13. SECURITY INTEREST ABSOLUTE. All rights of the Escrow Agent
and the Holders of the Preferred Securities and security interests hereunder,
and all obligations of the Issuer hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the LLC Agreement or
any other agreement or instrument relating thereto;
-10-
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the LLC Agreement;
(c) any exchange, surrender, release or non-perfection of any Liens
on any other collateral for all or any of the Obligations; or
(d) to the extent permitted by applicable law, any other circumstance
which might otherwise constitute a defense available to, or a discharge of, the
Issuer in respect of the Obligations or of this Escrow Agreement.
SECTION 14. MISCELLANEOUS PROVISIONS.
Section 14.1. NOTICES. Any notice or communication given hereunder shall
be sufficiently given if in writing and delivered in person or mailed by first
class mail, commercial courier service or telecopier communication, addressed as
follows:
if to the Issuer:
CellNet Funding, LLC
000 Xxxxxxxx Xxxx
Xxx Xxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Executive Vice President and Chief Financial Officer
with copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxx
if to CellNet:
CellNet Data Systems, Inc.
000 Xxxxxxxx Xxxx
Xxx Xxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxx and Xxx X. Xxxx
with copy to:
-11-
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax:
Attention:
if to the Escrow Agent:
Bank of New York
Fax:
Attention:
Section 14.2. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Escrow
Agreement may not be used to interpret another pledge, security or debt
agreement of the Issuer. No such pledge, security or debt agreement (other than
the LLC Agreement) may be used to interpret this Escrow Agreement.
Section 14.3. SEVERABILITY. The provisions of this Escrow Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Escrow Agreement in any jurisdiction.
Section 14.4. HEADINGS. The headings in this Escrow Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 14.5. COUNTERPART ORIGINALS. This Escrow Agreement may be signed
in two or more counterparts, each of which shall be deemed an original, but all
of which shall together constitute one and the same agreement.
Section 14.6. NO THIRD PARTY BENEFICIARIES. Nothing in this Escrow
Agreement, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder, and the Holders of the Preferred
Securities, any benefit or any legal or equitable right, remedy or claim under
this Escrow Agreement.
Section 14.7. AMENDMENTS, WAIVERS AND CONSENTS. Any amendment or waiver
of any provision of this Escrow Agreement and any consent to any departure by
the Issuer from any provision of this Escrow Agreement shall be effective only
if made or duly given in compliance with all of the terms and provisions of the
LLC Agreement, and neither the Escrow Agent nor any Holder of Preferred
Securities shall be deemed, by any act, delay, indulgence, omission or
otherwise, to have waived any right or remedy hereunder or to have acquiesced in
any Event of Default or in any breach of any of the terms and conditions hereof.
Failure of the Escrow Agent or any Holder of
-12-
Preferred Securities to exercise, or delay in exercising, any right, power or
privilege hereunder shall not preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. A waiver by the
Escrow Agent or any Holder of Preferred Securities of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy that the Escrow Agent or such Holder of Preferred Securities would
otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
Section 14.8. INTERPRETATION OF AGREEMENT. To the extent a term or
provision of this Escrow Agreement conflicts with the LLC Agreement, the LLC
Agreement shall control with respect to the subject matter of such term or
provision. Acceptance of or acquiescence in a course of performance rendered
under this Escrow Agreement shall not be relevant to determine the meaning of
this Escrow Agreement even though the accepting or acquiescing party had
knowledge of the nature of the performance and opportunity for objection.
Section 14.9. CONTINUING SECURITY INTEREST; TERMINATION.
(a) This Escrow Agreement shall create a continuing security interest
in and to the Collateral and shall, unless otherwise provided in this Escrow
Agreement, remain in full force and effect until the payment in full in cash of
the Obligations. This Escrow Agreement shall be binding upon the Issuer, its
transferees, successors and assigns, and shall inure, together with the rights
and remedies of the Escrow Agent hereunder, to the benefit of the Escrow Agent,
the Holders of the Preferred Securities and their respective successors,
transferees and assigns.
(b) This Escrow Agreement (other than Issuer's obligations under
Sections 10 and 12) shall terminate upon the payment in full in cash of the
Obligations. At such time, the Escrow Agent shall, at the Issuer's request,
reassign and redeliver to the Issuer all of the Collateral hereunder that has
not been sold, disposed of, retained or applied by the Escrow Agent in
accordance with the terms of this Escrow Agreement and the LLC Agreement and
take all actions that are necessary to release the security interest created by
this Escrow Agreement in and to the Collateral, including the execution and
delivery of all termination statements necessary to terminate any financing or
continuation statements filed with respect to the Collateral. Such reassignment
and redelivery shall be without warranty by or recourse to the Escrow Agent in
its capacity as such, except as to the absence of any Liens on the Collateral
created by or arising through the Escrow Agent, and shall be at the reasonable
expense of the Issuer.
Section 14.10. SURVIVAL OF REPRESENTATIONS AND COVENANTS. All
representations, warranties and covenants of the Issuer contained herein shall
survive the execution and delivery of this Escrow Agreement, and shall terminate
only upon the termination of this Escrow Agreement.
Section 14.11. WAIVERS. The Issuer waives presentment and demand for
payment of any of the Obligations, protest and notice of dishonor or default
with respect to any of the Obligations, and
-13-
all other notices to which the Issuer might otherwise be entitled, except as
otherwise expressly provided herein or in the LLC Agreement.
Section 14.12. AUTHORITY OF THE ESCROW AGENT.
(a) The Escrow Agent shall have and be entitled to exercise all
powers hereunder that are specifically granted to the Escrow Agent by the terms
hereof, together with such powers as are reasonably incident thereto. The
Escrow Agent may perform any of its duties hereunder or in connection with the
Collateral by or through agents or employees and shall be entitled to retain
counsel and to act in reliance upon the advice of counsel concerning all such
matters. Except as otherwise expressly provided in this Pledge Agreement or
the LLC Agreement, neither the Escrow Agent nor any director, officer, employee,
attorney or agent of the Escrow Agent shall be liable to the Issuer for any
action taken or omitted to be taken by the Escrow Agent, in its capacity as
Escrow Agent, hereunder, except for its own bad faith, gross negligence or
willful misconduct, and the Escrow Agent shall not be responsible for the
validity, effectiveness or sufficiency hereof or of any document or security
furnished pursuant hereto. The Escrow Agent and its directors, officers,
employees, attorneys and agents shall be entitled to rely on any communication,
instrument or document believed by it or them to be genuine and correct and to
have been signed or sent by the proper person or persons.
(b) The Issuer acknowledges that the rights and responsibilities of
the Escrow Agent under this Escrow Agreement with respect to any action taken by
the Escrow Agent or the exercise or non-exercise by the Escrow Agent of any
option, right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Escrow Agreement shall, as between the Escrow
Agent and the Holders of the Preferred Securities, be governed by the LLC
Agreement and by such other agreements with respect thereto as may exist from
time to time among them, but, as between the Escrow Agent and the Issuer, the
Escrow Agent shall be conclusively presumed to be acting as agent for the
Holders of the Preferred Securities with full and valid authority so to act or
refrain from acting, and the Issuer shall not be obligated or entitled to make
any inquiry respecting such authority.
Section 14.13. RIGHTS OF HOLDERS OF THE PREFERRED SECURITIES. No Holder of
Preferred Securities shall have any independent rights hereunder other than
those rights granted to individual Holders of the Preferred Securities pursuant
to the LLC Agreement; provided that nothing in this subsection shall limit any
rights granted to the Escrow Agent under the Preferred Securities or the LLC
Agreement.
Section 14.14. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES.
(A) THIS ESCROW AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER
THE LAWS OF THE STATE OF NEW YORK. NOTWITHSTANDING THE FOREGOING: THE MATTERS
IDENTIFIED IN 31 C.F.R. PART 357, 61 FED. REG. 43626
-14-
AUG. 23, 1996), INCLUDING REVISED ARTICLE 8, SHALL BE GOVERNED SOLELY BY THE
LAWS SPECIFIED THEREIN.
(B) THE ISSUER HAS APPOINTED CELLNET DATA SYSTEMS, INC., 000 XXXXXXXX
XXXX, XXX XXXXXX, XX 00000 AS ITS AGENT FOR SERVICE OF PROCESS IN ANY SUIT,
ACTION OR PROCEEDING WITH RESPECT TO THIS ESCROW AGREEMENT AND FOR ACTIONS
BROUGHT UNDER U.S. FEDERAL OR STATE SECURITIES LAWS BROUGHT IN ANY FEDERAL OR
STATE COURT LOCATED IN THE CITY OF [NEW YORK] AND AGREES TO SUBMIT TO THE
JURISDICTION OF ANY SUCH COURT.
(C) THE ISSUER AGREES THAT THE ESCROW AGENT SHALL, IN ITS CAPACITY AS
ESCROW AGENT OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF PREFERRED SECURITIES,
HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST
THE ISSUER OR THE COLLATERAL IN A COURT IN ANY LOCATION REASONABLY SELECTED IN
GOOD FAITH (AND HAVING PERSONAL OR IN REM JURISDICTION OVER THE ISSUER OR THE
COLLATERAL, AS THE CASE MAY BE) TO ENABLE THE ESCROW AGENT TO REALIZE ON SUCH
COLLATERAL, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
THE ESCROW AGENT. THE ISSUER AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS,
SETOFFS OR CROSSCLAIMS IN ANY PROCEEDING BROUGHT BY THE ESCROW AGENT TO REALIZE
ON SUCH PROPERTY OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
ESCROW AGENT, EXCEPT FOR SUCH COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF
NOT ASSERTED IN ANY SUCH PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED.
THE ISSUER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN
THE CITY OF NEW YORK ONCE THE ESCROW AGENT HAS COMMENCED A PROCEEDING DESCRIBED
IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(D) THE ISSUER AGREES THAT NEITHER ANY HOLDER OF PREFERRED SECURITIES
NOR (EXCEPT AS OTHERWISE PROVIDED IN THIS ESCROW AGREEMENT OR THE LLC AGREEMENT)
THE ESCROW AGENT IN ITS CAPACITY AS ESCROW AGENT SHALL HAVE ANY LIABILITY TO THE
ISSUER (WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY
THE ISSUER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS ESCROW
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS
BINDING ON THE ESCROW AGENT OR SUCH HOLDER OF PREFERRED SECURITIES, AS THE CASE
MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE
ESCROW AGENT
-15-
OR SUCH HOLDERS OF PREFERRED SECURITIES, AS THE CASE MAY BE, CONSTITUTING BAD
FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(E) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE ISSUER WAIVES THE
POSTING OF ANY BOND OTHERWISE REQUIRED OF THE ESCROW AGENT OR ANY HOLDER OF
PREFERRED SECURITIES IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO
ENFORCE ANY JUDGMENT OR OTHER COURT ORDER PERTAINING TO THIS ESCROW AGREEMENT OR
ANY RELATED AGREEMENT OR DOCUMENT ENTERED IN FAVOR OF THE ESCROW AGENT OR ANY
HOLDER OF PREFERRED SECURITIES, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION, THIS ESCROW AGREEMENT
OR ANY RELATED AGREEMENT OR DOCUMENT BETWEEN THE ISSUER ON THE ONE HAND AND THE
ESCROW AGENT AND/OR THE HOLDERS OF THE PREFERRED SECURITIES ON THE OTHER HAND.
-16-
IN WITNESS WHEREOF, the Issuer, CellNet and the Escrow Agent have each
caused this Escrow Agreement to be duly executed and delivered as of the date
first above written.
Issuer:
CELLNET FUNDING, LLC
By:
---------------------------------
CellNet Data Systems, Inc.,
Its: Manager
By:
--------------------------------
Name:
Title:
Escrow Agent:
BANK OF NEW YORK, as Escrow Agent
By:
-------------------------------
Name:
Title:
CELLNET:
CELLNET DATA SYSTEMS, INC.
By:
-------------------------------
Name:
Title:
-00-
XXXXXXX X
XXXX XX XXX XXXX OFFICER'S CERTIFICATE
Pursuant to Section 3(d) of the Escrow and Security Agreement (the
"Escrow Agreement") dated as of April __, 1998 among CellNet Funding, LLC
(the "Issuer"), CellNet Data Systems, Inc. ("CellNet") and [Bank of New York]
as escrow agent (the "Escrow Agent") for the holders of the Issuer's -%
Exchangeable Limited Liability Company Preferred Securities, liquidation
preference $25 per preferred security, which will be mandatorily redeemable
on -, the undersigned officer of the Escrow Agent, on behalf of the Escrow
Agent, makes the following certifications to the Issuer, CellNet and Xxxxxx
Xxxxxxx & Co. Incorporated. Capitalized terms used and not defined in this
Officer's Certificate have the meanings set forth or referred to in the
Escrow Agreement.
1. Substantially contemporaneously with the execution and delivery of
this Officer's Certificate, the Escrow Agent has established a securities
account in the name of "[Bank of New York], as Escrow Agent for the benefit of
the holders of the -% Exchangeable Limited Liability Company Preferred
Securities mandatorily redeemable - of CellNet Funding, LLC Collateral Escrow
Account", Administrative Account No. - with respect to which the Escrow Agent is
the entitlement holder and through which the Escrow Agent has acquired a
security entitlement to the United States Treasury securities identified in
Annex 1 to this Officer's Certificate (the "Pledged Securities") and has made
appropriate book entries in its records establishing that the Pledged Securities
and the Escrow Agent's securities entitlement thereto have been credited to and
are held in the [Bank of New York]'s Administrative Account No. - entitled
"[Bank of New York], as Escrow Agent for the benefit of the holders of the -%
Exchangeable Limited Liability Company Preferred Securities mandatorily
redeemable - of CellNet Funding, LLC Collateral Escrow Account" (the "Escrow
Account").
2. The Escrow Agent has established and maintained and will maintain the
Escrow Account and all securities entitlements and other positions carried in
the Escrow Account solely in its capacity as Escrow Agent and has not asserted
and will not assert any claim to or interest in the Escrow Account or any such
securities entitlements or other positions except in such capacity.
3. The Escrow Agent has acquired its security entitlement to the Pledged
Securities for value and without notice to an officer of the Escrow Agent of any
adverse claim thereto. Without limiting the generality of the foregoing, the
Pledged Securities are not and the Escrow Agent's security entitlement to the
Pledged Securities is not, to the Escrow Agent's knowledge, subject to any lien
granted by the Escrow Agent in favor of any securities intermediary (including,
without limitation, the [Federal Reserve Bank of New York]) through which the
Escrow Agent derives its security entitlement to the Pledged Securities.
4. The Escrow Agent has not caused or permitted the Pledged Securities or
its security entitlement thereto to become subject to any Lien created by or
arising through the Escrow Agent.
IN WITNESS WHEREOF, the undersigned officer has executed this Officer's
Certificate on behalf of The Bank of New York as Escrow Agent this ___th day
of April, 1998.
Name:
-----------------------------
Title:
-----------------------------
