EXHIBIT 10.77
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, restated, or otherwise modified
from time to time, this "Agreement"), dated as of April 12, 2000, is made by
______________________ ("Debtor"), in favor of MCI WORLDCOM NETWORK SERVICES,
INC., a Delaware corporation ("Agent"), for itself and as collateral agent for
MCI WorldCom, Inc., and its subsidiaries and affiliates, with its principal
office at 6929 North Lakewood, Mail Drop 5.2-510, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
(collectively, "WorldCom").
W I T N E S S E T H:
WHEREAS, WorldCom provides telecommunications services to Debtor
pursuant to the Service Agreements; and
WHEREAS, Debtor is in default to WorldCom for, INTER ALIA, failure to
pay its obligations to WorldCom in a timely manner (the "Past Due
Indebtedness"); and
WHEREAS, Debtor and WorldCom have agreed to restructure certain of the
Past Due Indebtedness due to MCI WorldCom Network Services, Inc., as of February
3, 2000, pursuant to the terms and conditions of the Workout Agreement between
the parties of even date herewith (the "Workout Agreement"); and
WHEREAS, specifically, Debtor and WorldCom have agreed to restructure
Debtor's outstanding trade payables due WorldCom as of February 3, 2000 in the
aggregate amount of $56,017,698.87 into a Promissory Note, of even date herewith
(the "Note"), which contemporaneously herewith will be executed and delivered by
Debtor to WorldCom; and
WHEREAS, Debtor has agreed to secure its performance and payment of (a)
all obligations for the provision of services by WorldCom to Debtor pursuant to
any, and all related notes, instruments, documents, or agreements and any
amendments, extensions, renewals or replacements to or of any of the foregoing;
and (b) all other obligations and indebtedness of Debtor to WorldCom of whatever
kind and however created, whether presently existing or hereafter arising.
NOW, THEREFORE, for and in consideration of the premises set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Debtor hereby agrees with Agent,
for WorldCom's benefit, as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. Unless otherwise defined in this Agreement, terms used
herein shall have the meanings set forth in the Workout Agreement, or Credit
Agreement, in that order. Unless the context indicates otherwise or the terms
are otherwise defined herein, definitions in the Uniform Commercial Code as
enacted in the State of Oklahoma (the "UCC") apply to words and phrases in this
Agreement. "Debtor" includes, without limitation, such Person, such Person's
heirs, successors and assigns, such Person as a debtor-in-possession, and any
receiver, trustee, liquidator, conservator, custodian, or similar party
appointed for such Person or all or substantially all of its assets under any
law.
ARTICLE II
GRANT OF SECURITY INTEREST
2.1 ASSIGNMENT AND GRANT OF SECURITY INTEREST. Debtor hereby, in
partial consideration for WorldCom's agreement to restructure the Past Due
Obligations and to induce WorldCom to enter into such restructuring which will
facilitate the pending merger between the Debtor and World Access, Inc., assigns
and pledges to Agent, for the benefit of WorldCom, a security interest in the
entire right, title, and interest of Debtor in and to all assets of Debtor,
whether now owned or hereafter acquired, including, but not limited to, the
following property, wherever located, whether now owned or hereafter acquired by
the Debtor (collectively, the "Pledged Collateral")1, to secure payment of the
Obligations and performance by the Debtor of its obligations hereunder, under
the WorldCom Documents, and all other obligations and indebtedness of Debtor to
WorldCom of whatever kind and however created, whether now existing or hereafter
arising:
(a) all equipment in all of its forms, wherever located, now
or hereafter existing, all parts thereof and all accessions thereto, including,
but not limited to, all machinery, satellite receivers, antennas, headend
electronics, cables, telecommunications cable systems switches,
telecommunications switching systems, computers, computer systems, furniture,
motor vehicles, aircraft, rolling stock, operating equipment, and office
equipment, including specifically, but without limitation, those certain items
of equipment listed on Schedule 1 attached hereto and made a part
_________________
(1) The security interest in the Pledged Collateral described
herein is governed by that (i) certain Intercreditor Agreement dated as of
April 12, 2000, by and between World Access, Inc., a Delaware corporation,
and MCI WorldCom Network Services, Inc., a Delaware corporation and (ii)
certain Intercreditor Agreement dated as of April 12, 2000, by and between
World Access, Inc., MCI WorldCom Network Services, Inc., and RFC Capital
Corporation, a Delaware corporation.
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hereof (any and all such equipment, parts, and accessions being referred to
herein as the "Equipment");
(b) all inventory in all of its forms, wherever located, now
or hereafter existing, including, but not limited to, (i) all raw materials and
work in process therefor, finished goods thereof, and materials used or consumed
in the manufacture or production thereof; (ii) goods in which Debtor has an
interest in mass or a joint or other interest or right of any kind (including,
without limitation, goods in which Debtor has an interest or right as
consignee); and (iii) goods which are returned to or repossessed by Debtor and
all accessions thereto and products thereof and documents therefor (any and all
such inventory, accessions, products, and documents being referred to herein as
the "Inventory");
(c) all accounts, accounts receivable, contract rights,
chattel paper, documents, instruments, deposit accounts, general intangibles,
tax refunds and other obligations of any kind owing to Debtor, now or hereafter
existing, whether or not arising out of or in connection with the sale or lease
of goods or the rendering of services, and all rights now or hereafter existing
in and to all security agreements, leases, subleases, and other contracts
securing or otherwise relating to any such accounts, contract rights, chattel
paper, documents, instruments, deposit accounts, general intangibles, or
obligations (any and all such accounts, contract rights, chattel paper,
documents, instruments, deposit accounts, general intangibles, and obligations,
including those described in Section 2.1(e) hereto being referred to herein as
the "Receivables");
(d) all end user and wholesale customer accounts, end user and
wholesale customer bases, end user and wholesale letters of authorization, end
user and wholesale service agreements, end user and wholesale customer lists,
all documents containing the names, addresses, telephone numbers, and other
information regarding Debtor's end users, subscribers, and wholesale customers,
billing records, third-party verification records, call detail records, tapes,
programs, printouts, disks, and other material and documents (in whatever media)
relating to the recording, billing, or analyzing of any of the foregoing, and
any other right to payment (collectively, the "Customer Base", "End User Base",
or "Wholesale Base");
(e) all other general intangibles, whether now existing or
hereafter arising and wherever arising, including, but not limited to, all (i)
partnership, corporate, and other interests in and to any Person; (ii) letters
of authorization, permits, licenses, consents, contract rights, franchises,
documents, certificates, records, customer lists, customer and supplier
contracts, easements, variances, certifications and approvals of tribunals,
bills of lading (negotiable and non-negotiable), warehouse receipts, any claim
of Debtor against WorldCom, liquidated or unliquidated, and other rights,
privileges and goodwill obtained or used in connection with any property
described in this Section 2.1; (iii) rights of Debtor under any equipment
leases; and (iv) tax refunds and other refunds or rights to receive payment from
U. S. federal, state or local governments or foreign governments or other
tribunals;
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(f) all bank accounts, deposit accounts, and margin accounts,
maintained by Debtor with financial institutions, brokers, dealers, and all
other persons or entities relating to commodities and/or securities, including
all funds held therein and all certificates and instruments, if any, from time
to time representing or evidencing such accounts;
(g) all investment property (as defined in Section 9-115 of
the Uniform Commercial Code) ("Investment Property");
(h) to the extent it is possible to create a security interest
or perfect a security interest in such Pledged Collateral by filing a UCC-1
financing statement centrally, or in the case of dual filing states, centrally
and at the county level, as applicable, all of Debtor's fixtures now existing or
hereafter acquired, all substitutes and replacements therefor, all accessions
and attachments thereto, and all tools, parts, and equipment now or hereafter
added to or used in connection with the fixtures on or above all real property
now owned or hereafter acquired by Debtor;
(i) all Indefeasible Rights of Use in telecommunications
cables and cable systems ("IRU's"), including but not limited to the IRU's
described on Schedule 1 attached hereto and made a part hereof;
(j) all records and documents relating to any and all of the
foregoing, including, without limitation, records of account, whether in the
form of writing, microfilm, microfiche, tape, or electronic media;
(k) all obligations that support, and liens that secure, any
of Debtor's foregoing rights to payment, whether now in existence or hereafter
arising; and
(l) all substitutes and replacements for, accessions,
attachments, and other additions to tools, parts, and equipment used in
connection with, and all proceeds, products, and increases of, any and all of
the foregoing Pledged Collateral (including, without limitation, proceeds which
constitute property of the types described in this Section 2.1), in whatever
form, whether cash or non-cash; interest, premium, and principal payments,
redemption proceeds and subscription rights, and shares or other proceeds of
conversions or splits of any securities in Pledged Collateral, and returned or
repossessed Pledged Collateral; and, to the extent not otherwise included, all
(i) payments under insurance, or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the foregoing
Pledged Collateral, (ii) cash and (iii) security for the payment of any of the
Pledged Collateral, and all goods which gave or will give rise to any of the
Pledged Collateral or are evidenced, identified, or represented therein or
thereby;
provided, however, that the Pledged Collateral shall not include, and shall
specifically exclude, any right, title or interest in, to or under any
"Receivable", whether or not any such Receivable is a "Purchased Receivable," or
the "Lockbox Account", as such terms are defined by that certain Receivables
Sale Agreement, dated as of November 30, 1999, as may be amended from time to
time, by and among Debtor and certain of its affiliates, individually and
collectively as seller and
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subservicer thereunder, and RFC Capital Corporation, a Delaware corporation,
located at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, as
purchaser thereunder (the "Receivables Sale Agreement").
The inclusion of proceeds in this Agreement does not authorize
Debtor to sell, dispose of or otherwise use the Pledged Collateral in any manner
not specifically authorized by this Agreement.
2.2 SECURITY FOR OBLIGATIONS. This Agreement creates a second-priority
security interest, securing the payment and performance of any and all of the
Obligations, junior only to the liens and security interests of World Access,
Inc. ("World Access"). Without limiting the generality of the foregoing, this
Agreement secures the payment of all amounts which constitute part of the
Obligations and would be owed by Debtor, each Subsidiary, or any other Person to
WorldCom under any WorldCom Document, but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding under any Debtor Relief Law involving
Debtor, any Subsidiary, or any other Person (including, however, all such
amounts which would become due or would be secured but for the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization,
or like proceeding of Debtor, any Subsidiary or any other Person under any
Debtor Relief Law).
2.3 DEBTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) Debtor shall remain liable under the contracts and
agreements included in the Pledged 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 Agent of any of the
rights hereunder shall not release Debtor from any of its duties or obligations
under the contracts and agreements included in the Pledged Collateral, and (c)
neither Agent nor WorldCom shall have any obligation or liability under the
contracts and agreements included in the Pledged Collateral by reason of this
Agreement, nor shall Agent or WorldCom be obligated to perform any of the
obligations or duties of Debtor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
2.4 AGREEMENT WITH RESPECT TO PLEDGED COLLATERAL. Debtor and Agent
agree that to the extent that any of the Pledged Collateral may be deemed to be
a Fixture as opposed to Equipment, Inventory or any other form of Pledged
Collateral that may be perfected by the filing of a UCC financing statement, it
is the intention of each of these parties that such Pledged Collateral be deemed
to be Equipment, Inventory or any other form of Pledged Collateral that may be
perfected by the filing of a UCC financing statement and such Pledged Collateral
not be deemed to be a Fixture.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES. Debtor represents and
warrants, with respect to itself and the Pledged Collateral, as follows:
(a) All of the Equipment and Inventory pledged by Debtor
hereunder is located at the places specified on SCHEDULE 2 hereto (as
supplemented from time to time by Debtor by written notice to Agent) or in
transit to a place specified on SCHEDULE 2 hereto (as supplemented from time to
time by Debtor by written notice to Agent) or in transit (i) for sale to a
third-party purchaser that, upon such sale, will become the obligor under a
Receivable or (ii) in the ordinary course of Debtor's business. The chief place
of business and chief executive office of Debtor and the office where Debtor
keeps all of its records concerning the Receivables are set forth on SCHEDULE 15
of the Workout Agreement.
(b) All chattel paper, promissory notes, or other instruments
evidencing the Receivables, and all Investment Property have been delivered and
pledged to Agent or World Access, on behalf of Agent, as the case may be, duly
endorsed and accompanied by such duly executed instruments of transfer or
assignment as are necessary for such pledge to be held as Pledged Collateral.
(c) Debtor is the legal and beneficial owner of, or has valid
leasehold title to, the Pledged Collateral pledged by it free and clear of any
Lien, security interest, option or other charge or encumbrance except for the
security interest created by this Agreement (other than Permitted Liens, as
defined in the Credit Agreement. No effective financing statement or other
similar document used to perfect and preserve a security interest under the laws
of any jurisdiction covering all or any part of the Pledged Collateral is on
file in any recording office, except such as may have been filed (i) in respect
of Permitted Liens and (ii) in favor of Agent relating to this Agreement. As of
the date hereof, Debtor (including any corporate or partnership predecessor) has
not existed or operated under any name other than as stated in the preamble to
this Agreement.
(d) Debtor has possession and/or control of the Equipment and
Inventory pledged by it hereunder.
(d) This Agreement and the pledge of the Pledged Collateral
pursuant hereto creates a valid security interest in the Pledged Collateral
senior to all other liens and encumbrances, other than the Permitted Liens,
securing the payment of the Obligations which upon filings and other necessary
actions to perfect such security interest will create a perfected, security
interest in such collateral, junior only to the Permitted Liens, to the extent
that such security interest can be perfected by filing a UCC financing
statement.
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(e) Except as described on SCHEDULE 3 hereto, no consent of
any other Person and no authorization, approval, or other action by, and no
notice to or filing with, any tribunal is required (i) for the pledge by Debtor
of the Pledged Collateral pledged by it hereunder, for the grant by Debtor of
the security interest granted hereby or for the execution, delivery, or
performance of this Agreement by Debtor, (ii) for maintenance of the pledge,
assignment, and security interest created hereby or for the perfection of the
pledge, assignment, and security interest created hereby by filing a UCC- I
financing statement centrally, or in the case of dual filing states, centrally
and at the county level, as applicable (including the first priority nature of
such pledge, assignment, and security interest except for Permitted Liens) or
(iii) except as otherwise provided by law, for the exercise by Agent of the
rights provided for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement, except for consents, authorizations,
filings, notices, actions, and approvals by or with the FCC or any applicable
PUC ("FCC and PUC Consents").
(f) Debtor possesses all material licenses and permits,
including but not limited to all applicable certificates of occupancy, licenses,
and permits and all health and sanitation permits, required for the operations
of its business.
(g) Debtor has made no contract or arrangement of any kind or
type whatsoever (whether oral or written, formal, or informal), the performance
of which by the other party thereto could give rise to a lien on the Pledged
Collateral (other than Permitted Liens), except for its contracts (all of which
have been disclosed in writing to Agent) made by Debtor with parties who have
executed and delivered lien waivers to Debtor, and which, in the opinion of
Agent's counsel, will not create rights in existing or future lien claimants
which may be superior to this Agreement.
ARTICLE IV
COVENANTS
4.1 FURTHER ASSURANCES.
(a) Debtor agrees to obtain the necessary consent to or waiver
of any restriction from any Person so as to enable Debtor to effectively grant
to Agent the security interests contemplated under this Agreement.
(b) Debtor agrees that from time to time, at the expense of
Debtor, Debtor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Agent may reasonably request, in order to perfect and protect any pledge,
assignment, or security interest granted or purported to be granted hereby, and
the priority thereof, or to enable Agent to exercise and enforce its rights and
remedies hereunder with respect to any Pledged Collateral. Without limiting the
generality of the foregoing, upon written request by Agent, Debtor will: (i)
▇▇▇▇ conspicuously each chattel paper included in the Receivables, and, at the
request of Agent, each of its records pertaining to the Pledged Collateral with
the following legend:
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THIS INSTRUMENT IS SUBJECT TO A SECURITY INTEREST AND LIEN PURSUANT TO
A SECURITY AGREEMENT DATED AS OF APRIL 12, 2000, MADE BY DEBTOR, IN
FAVOR OF MCI WORLDCOM NETWORK SERVICES, INC., AS AGENT FOR MCI
WORLDCOM, INC. AND ITS SUBSIDIARIES AND AFFILIATES.
or such other legend, in form and substance satisfactory to and as specified by
Agent, indicating that such chattel paper or Pledged Collateral is subject to
the pledge, assignment, and security interest granted hereby; (ii) if any
Pledged Collateral shall be evidenced by a promissory note or other instrument
or be chattel paper, deliver and pledge to Agent hereunder such note,
instrument, or chattel paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
Agent; and (iii) execute and file such financing or continuation statements, or
amendments thereto and such other instruments or notices, as may be necessary or
desirable, or as Agent may request, in order to perfect and preserve the pledge,
assignment, and security interest granted or purported to be granted hereby.
(c) Debtor hereby authorizes Agent to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Pledged Collateral without the signature of Debtor where
permitted by applicable law. A photocopy or other reproduction of this Agreement
or any financing statement covering the Pledged Collateral or any part thereof
shall be sufficient as a financing statement where permitted by applicable law.
(d) Debtor will furnish to Agent from time to time statements
and schedules (including schedules to this Agreement) further identifying and
describing the Pledged Collateral and such other reports in connection with the
Pledged Collateral as Agent may reasonably request, all in reasonable detail.
Debtor will promptly furnish to Agent a copy of each new or renewal,
restatement, or modification of any agreement included in Pledged Collateral or
otherwise described in Section 2.1 herein.
(e) From and after the date hereof, Debtor shall not establish
or maintain any deposit or similar bank account unless Agent receives prior
written notice thereof, Debtor executes and delivers to Agent assignments of
such account in such form as Agent may request, and the financial institution in
which such account will be maintained delivers to Agent acknowledgments of the
assignment of such account in form and substance satisfactory to Agent.
(f) In addition to such other information as shall be
specifically provided for herein, Debtor and each of Debtor's Subsidiaries shall
permit such site visitations and inspections and furnish to Agent such other
information with respect to the Pledged Collateral as Agent may reasonably
request from time to time in connection with the Pledged Collateral, or the
protection, preservation, maintenance or enforcement of the security interest or
the Pledged Collateral as provided pursuant to the terms of the Credit
Agreement.
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(g) Debtor shall not sell, lease, exchange, or otherwise
dispose of any of the Pledged Collateral without the prior written consent of
Agent.
(h) Debtor shall not suffer to exist any loss, theft, damage,
destruction, levy, seizure, or attachment of any of the Pledged Collateral.
(i) Debtor shall diligently and in good faith use its best
efforts to protect the value of the Pledged Collateral and to prevent any action
from being taken that would or could, in the exercise of reasonable business
judgment, jeopardize or diminish the security afforded to Agent by this
Agreement or in any way diminish the value of the Pledged Collateral.
4.2 EQUIPMENT, FIXTURES AND INVENTORY.
(a) Debtor shall keep the Equipment, Fixtures, and Inventory
pledged by it hereunder (other than Inventory sold in the ordinary course of
business) at the places therefor specified in Section 3.1(a) herein or, upon
thirty days' prior written notice to Agent, at such other places in such
jurisdiction where all action required by Section 4.1 herein shall have been
taken with respect to the Equipment and Inventory.
(b) Debtor shall, and shall cause each Subsidiary of Debtor
to, maintain or cause to be maintained all their material properties necessary
to the conduct of their business (whether owned or held under lease) in
reasonably good repair, working order, and condition, taken as a whole, and from
time to time make or cause to be made all appropriate repairs, renewals,
replacements, additions, betterments, and improvements thereto.
(c) Debtor shall, and shall cause each Subsidiary of Debtor
to, pay and discharge all taxes, assessments, and governmental charges or levies
imposed upon it or its income or properties prior to the date on which penalties
attach thereto, and all lawful material claims for labor, materials, and
supplies which, if unpaid, might become a Lien upon any of their properties,
except those taxes, assessments, and charges contested by Debtor diligently in
good faith, and for which adequate reserves have been established in accordance
with GAAP. Debtor shall, and shall cause each Subsidiary of Debtor to, timely
file all information returns required by federal, state, or local tax
authorities.
4.3 INSURANCE. Debtor shall, and shall cause each Subsidiary
of Debtor to, maintain insurance from responsible companies in such amounts
and against such risks as shall be customary and usual in the industry for
companies of similar size and capability, but in no event less than the
amount and types insured as of the date hereof. Debtor shall promptly furnish
to Agent evidence of such insurance in form and content satisfactory to
Agent. If Debtor fails to perform or observe any applicable covenants as to
insurance on any of such Pledged Collateral, Agent may at its own option
obtain insurance on only Agent's interest in such Pledged Collateral, any
premium thereby paid by Agent to become part of the Obligations and bear
interest as provided in the Note. In the event Agent maintains such
substitute insurance, the additional premium for such insurance shall be due
on
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demand and payable by Debtor to Agent in accordance with any notice
delivered to Debtor by Agent. Debtor hereby grants Agent a security interest
in any refunds of unearned premiums in connection with any cancellation,
adjustment, or termination of any policy of insurance required by Agent and
in all proceeds of such insurance and hereby appoints Agent its
attorney-in-fact to endorse any check or draft that may be payable to Debtor
in order to collect such refunds or proceeds. Any such sums collected by
Agent shall be credited, except to the extent applied to the purchase by
Agent of similar insurance, to any amounts then owing on the Obligations in
accordance with the Note.
4.4 PLACE OF PERFECTION; RECORDS; COLLECTION OF RECEIVABLES.
(a) Debtor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Receivables, and the originals of all chattel paper (until delivered to Agent),
at the location therefor specified in Section 3.1(a) herein. Debtor shall have
given written notice thereof to Agent no later than thirty (30) days prior to
the moving thereto. Debtor will hold and preserve such records and chattel paper
and will permit representatives of Agent to inspect and make abstracts from and
copies of such records and chattel paper as provided in the Credit Agreement.
Debtor shall deliver to Agent or World Access, as the case may be, all
instruments and Investment Property to be held by Agent or World Access, as the
case may be, as collateral.
(b) Except as otherwise provided in this Section 4.4(b),
Debtor shall continue to collect, at its own expense, all amounts due or to
become due Debtor under the Receivables. In connection with such collections,
Debtor may take (and, at Agent's direction, shall take) such action as Debtor or
Agent may deem reasonably necessary or advisable to enforce collection of the
Receivables; PROVIDED, however, that Agent shall have the right (upon an Event
of Default which is continuing) (without notice to Debtor) to notify the account
debtors or obligors under any Receivables of the assignment of such Receivables
to Agent and to direct such account debtors or obligors to make payment of all
amounts due or to become due to Debtor thereunder directly to Agent and, at the
expense of Debtor, 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 Debtor might have done. Upon and after the occurrence of a
Default or Event of Default that is continuing, all amounts and proceeds
(including instruments) received by Debtor in respect of the Receivables shall
be received in trust for the benefit of Agent hereunder, shall be segregated
from other funds of Debtor, and shall be forthwith paid over to Agent in the
same form as so received (with any necessary indorsement) to be held as cash
collateral and either (a) released to Debtor so long as no Default or Event of
Default shall have occurred and be continuing or (b) if any Default or Event of
Default shall have occurred and be continuing, applied as provided herein.
Debtor shall not adjust, settle, or compromise the amount or payment of any
Receivable, release wholly or partly any account debtor or obligor thereof, or
allow any credit or discount thereon.
4.5 TRANSFERS AND OTHER LIENS. Debtor shall not (a) sell, assign
(by operation of law or otherwise), or otherwise dispose of, or grant any
option with respect to, any of the Pledged Collateral, except for sales of
Inventory in the ordinary course of business, or (b) create or permit
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to exist any Lien, security interest, option or other charge or encumbrance
upon or with respect to any of the Pledged Collateral, except for Permitted
Liens and the security interest under this Agreement.
4.6 AGENT APPOINTED ATTORNEY-IN-FACT. Debtor hereby irrevocably
appoints Agent as Debtor's attorney-in-fact, with full authority in the place
and stead of Debtor and in the name of Debtor or otherwise to take any action
and to execute any instrument which Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation
(provided that the actions listed in each clause below, other than the
obtainment and adjustment of insurance, may only be taken or exercised after
the occurrence of an Event of Default):
(a) to obtain and adjust insurance required to be paid
to Agent pursuant to Section 4.3 herein;
(b) to ask, demand, collect, ▇▇▇ for, recover, compromise,
receive, and give acquittance and receipts for moneys due and to become due
under or in connection with the Pledged Collateral;
(c) to endorse and collect any drafts or other instruments,
documents, and chattel paper; and
(d) to file any claims or take any action or institute any
proceedings which Agent may deem necessary or desirable for the collection of
any of the Pledged Collateral or otherwise to enforce compliance with the terms
and conditions of any Pledged Collateral or the rights of Agent with respect to
any of the Pledged Collateral. UPON AND AFTER THE OCCURRENCE OF A DEFAULT OR
EVENT OF DEFAULT, DEBTOR HEREBY IRREVOCABLY GRANTS TO AGENT DEBTOR'S PROXY
(EXERCISABLE FROM AND AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT) TO VOTE ANY
SECURITIES COLLATERAL AND APPOINTS AGENT DEBTOR'S ATTORNEY-IN-FACT TO PERFORM
ALL OBLIGATIONS OF DEBTOR UNDER THIS AGREEMENT AND TO EXERCISE ALL OF AGENT'S
RIGHTS HEREUNDER. THE PROXY AND POWER OF ATTORNEY HEREIN GRANTED, AND EACH STOCK
POWER AND SIMILAR POWER NOW OR HEREAFTER GRANTED (INCLUDING ANY EVIDENCED BY A
SEPARATE WRITING), ARE COUPLED WITH AN INTEREST AND ARE IRREVOCABLE PRIOR TO
FINAL PAYMENT IN FULL OF THE OBLIGATIONS.
ARTICLE V
RIGHTS AND POWERS OF AGENT
5.1 AGENT MAY PERFORM. If Debtor fails to perform any agreement
contained herein, Agent may itself perform, or cause performance of, such
agreement, and the expenses of Agent incurred in connection therewith shall
be payable by Debtor under Section 5.4 herein.
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5.2 AGENT'S DUTIES. The powers conferred on Agent hereunder
are solely to protect its interest in the Pledged Collateral and shall not
impose any duty upon Agent to exercise any such powers. Except for the safe
custody of any Pledged Collateral in its possession and the accounting for
moneys actually received by it hereunder, Agent shall have no duty as to any
Pledged Collateral, as to ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders, or other matters relative
to any Pledged Collateral, whether or not Agent has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
reasonable care in the custody and preservation of any Pledged Collateral in
its possession if such Pledged Collateral is accorded treatment substantially
equal to that which Agent accords its own property. Except as provided in
this Section 5.2, Agent shall not have any duty or liability to protect or
preserve any Pledged Collateral or to preserve rights pertaining thereto.
Nothing contained in this Agreement shall be construed as requiring or
obligating Agent, and Agent shall not be required or obligated, to (a)
present or file any claim or notice or take any action with respect to any
Pledged Collateral or in connection therewith or (b) notify Debtor of any
decline in the value of any Pledged Collateral.
5.3 REMEDIES. If any Event of Default shall have occurred and be
continuing:
(a) Agent may exercise in respect of the Pledged Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to Agent, all the rights and remedies of a secured party on default
under the Uniform Commercial Code in effect in the state in which the Pledged
Collateral is located at that time (whether or not the Uniform Commercial Code
applies to the affected Pledged Collateral), and also may (i) require Debtor to,
and Debtor hereby agrees that it will at its expense and upon request of Agent
forthwith, assemble all or part of the Pledged Collateral as directed by Agent
and make it available to Agent at a place to be designated by Agent which is
reasonably convenient to both parties or (ii) without notice, except as
specified below, sell the Pledged Collateral or any portion thereof in one or
more parcels at public or private sale, at any of Agent's offices or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as Agent
may deem commercially reasonable. Debtor agrees that, to the extent notice of
sale shall be required by law, ten (10) days' notice to Debtor 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. Agent shall not be obligated to make
any sale of Pledged Collateral regardless of notice of sale having been given.
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 at the time and place to which it was so adjourned.
(b) All cash proceeds received by Agent upon any sale of,
collection of, or other realization upon, all or any part of the Pledged
Collateral shall be applied as follows:
FIRST: To the payment of all out-of-pocket costs
and expenses incurred in connection with the sale of,
collection of, or other realization upon Pledged
Collateral, including reasonable attorneys' fees and
disbursements;
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SECOND: To the payment of the Obligations as provided
in the Credit Agreement and in such order and in such
manner consistent with applicable laws as Agent in its
reasonable discretion shall decide (with Debtor
remaining liable for any deficiency); and
THIRD: To the extent of the balance (if any) of such
proceeds,to the payment of the balance (if any) of
such proceeds to Debtor or other Person legally
entitled thereto.
(c) All payments received by Debtor under or
in connection with any Pledged Collateral shall be received in trust for
the benefit of Agent, shall be segregated from other funds of Debtor, and
shall be forthwith paid over to Agent in the same form as so received (with
any necessary indorsement).
5.4 INDEMNITY AND EXPENSES.
(a) Debtor agrees to indemnify Agent from
and against any and all claims, losses, and liabilities (including
reasonable attorneys' fees) growing out of or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), expressly
including such claims, losses, or liabilities arising out of mere negligence
of Agent, except claims, losses, or liabilities resulting from Agent's gross
negligence or willful misconduct.
(b) Debtor will upon demand pay to Agent
the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, which 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 Pledged Collateral, (iii) the
exercise or enforcement of any of the rights of Agent hereunder, or (iv) the
failure by Debtor to perform or observe any of the provisions hereof. Any
payments so made shall be a part of the Obligations, shall be payable upon
demand, and shall bear interest as provided in Section 2 of the Credit
Agreement.
5.5 FURTHER APPROVALS REQUIRED. In connection with the exercise
by Agent of its rights hereunder that affects the disposition of or
use of any Pledged Collateral, it may be necessary to obtain the prior
consent or approval of tribunals and other Persons to a transfer or
assignment of Pledged Collateral, including, without limitation, the FCC and
any applicable public utility commission or similar commission ("PUC"). In
connection with the exercise by Agent of its rights hereunder relating to the
disposition of or operation under any license issued by the FCC or any
applicable PUC or any other authorizations, agreements, permits, licenses,
and franchises constituting property of Debtor, it may be necessary to obtain
the prior consent or approval of the FCC or any applicable PUC, other
governmental authority, or other Persons to the exercise of rights with
respect to the Pledged Collateral. Debtor hereby agrees to execute, deliver,
and file, and hereby appoints (to the extent permitted under applicable law)
Agent as its attorney upon the occurrence and during the continuation of an
Event of Default to execute, deliver, and file on Debtor's behalf and
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in Debtor's name, all applications, certificates, filings, instruments, and
other documents (including, but not limited to, any application for an
assignment or transfer of control or ownership) that may be necessary or
appropriate, in Agent's opinion, to obtain such consents or approvals. Debtor
further agrees to use its best efforts to obtain such consents or approvals
upon and after the occurrence of a Default or Event of Default that is
continuing. Debtor acknowledges that there is no adequate remedy at law for
failure by Debtor to comply with the provisions of this section and that such
failure would not be adequately compensable in damages and therefore agrees
that this Section 5.5 may be specifically enforced.
ARTICLE IV
MISCELLANEOUS
6.1 CUMULATIVE RIGHTS. All rights of Agent under the Loan
Documents are cumulative of each other and of every other Right which Agent
may otherwise have at law or in equity or under any other contract or other
writing for the enforcement of the security interest granted hereby or the
collection of the Obligations. The exercise of one or more rights shall not
prejudice or impair the concurrent or subsequent exercise of other rights.
6.2 MODIFICATION, AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement, and no consent to any departure by Debtor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
6.3 CONTINUING SECURITY INTEREST. This Agreement shall create
a continuing security interest in the Pledged Collateral and shall (a)
remain in full force and effect until final payment in full of the
Obligations and all amounts payable under this Agreement, (b) be binding upon
Debtor, its successors, and assigns, and (c) inure to the benefit of and be
enforceable by Agent and its successors, transferees, and assigns.
6.4 GOVERNING LAW; WAIVER OF JURY TRIAL; SERVICE OF PROCESS.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE
IN TULSA, OKLAHOMA, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF OKLAHOMA AND THE UNITED STATES OF AMERICA,
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
GRANTED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
OKLAHOMA. WITHOUT EXCLUDING ANY OTHER JURISDICTION AND NOT AS A LIMITATION OF
THIS SECTION 6.4, DEBTOR AGREES THAT THE STATE AND FEDERAL COURTS OF OKLAHOMA
LOCATED IN TULSA, OKLAHOMA, WILL HAVE JURISDICTION OVER ALL PROCEEDINGS IN
CONNECTION HEREWITH. TO THE
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MAXIMUM EXTENT PERMITTED BY LAW, DEBTOR AND AGENT HEREBY WAIVE ANY RIGHT THAT
EITHER MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE (WHETHER A CLAIM IN TORT,
CONTRACT, EQUITY, OR OTHERWISE) ARISING UNDER OR RELATING TO THIS AGREEMENT,
THE OTHER WORLDCOM DOCUMENTS, OR ANY RELATED MATTERS, AND AGREE THAT ANY SUCH
DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
(b) DEBTOR HEREBY WAIVES PERSONAL SERVICE OF ANY LEGAL
PROCESS UPON IT. DEBTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO DEBTOR AT ITS ADDRESS
DESIGNATED FOR NOTICE UNDER THIS AGREEMENT AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE DAYS AFTER DEPOSIT IN THE UNITED STATES MAIL.
NOTHING IN THIS SECTION 6.4 SHALL AFFECT THE RIGHT OF AGENT TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
6.5 NO AGENCY. Neither Agent nor WorldCom is an agent or
representative of Debtor, and Debtor is not an agent or representative of
Agent or WorldCom, and nothing in this Agreement shall be construed to make
Agent or WorldCom liable to anyone for debts or claims accruing against
Debtor.
6.6 NO PARTNERSHIP OR JOINT VENTURE. This Agreement shall not in
any respect be interpreted, deemed, or construed as making Agent a partner or
joint venturer with Debtor or with any Subsidiary of Debtor or as creating
any similar relationship or entity, and Debtor agrees that Debtor will not
make any contrary assertion, contention, claim, or counterclaim in any
action, suit, or other legal proceeding involving Agent and Debtor.
6.7 AGENT'S RIGHT TO USE AGENTS. Agent may exercise its
rights under this Agreement through an agent or other designee.
6.8 NO INTERFERENCE, COMPENSATION, OR EXPENSE. Agent may
exercise its rights under this Agreement (a) without resistance or
interference by Debtor and (b) without payment of any rent, license fee, or
compensation of any kind to Debtor.
6.9 WAIVER. No waiver of any Event of Default shall be deemed to
be a waiver of any other subsequent Event of Default, nor shall any such
waiver be deemed to be a continuing waiver. No delay or omission by Agent in
exercising any Right hereunder, or under any other Loan Documents, shall
impair any such Right or be construed as a waiver thereof or any acquiescence
therein, nor shall any single or partial exercise of any such Right preclude
other or further exercise thereof, or the exercise of any other Right of
Agent hereunder or under such other agreements.
6.10 WAIVERS BY DEBTOR. Debtor waives notice of the creation,
advance, increase, existence, extension, or renewal of, or of any indulgence
with respect to, the Obligations; waives
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presentment, demand, notice of dishonor, and protest; and waives notice of
the amount of the Obligations outstanding at any time, notice of any change
in financial condition of any Subsidiary. Debtor waives (a) any claim that,
as to any part of the Pledged Collateral, a public sale, should Agent elect
so to proceed, is, in and of itself, not a commercially reasonable method of
sale for such Pledged Collateral, (b) except as otherwise provided in this
Agreement, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE OR JUDICIAL
HEARING IN CONNECTION WITH AGENT'S DISPOSITION OF ANY OF THE PLEDGED
COLLATERAL, INCLUDING ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT DEBTOR WOULD OTHERWISE
HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY
STATE, AND ALL OTHER REQUIREMENTS AS TO THE TIME, PLACE, AND TERMS OF SALE OR
OTHER REQUIREMENTS WITH RESPECT TO THE ENFORCEMENT OF AGENT'S RIGHTS
HEREUNDER, and (c) all rights of redemption, appraisal, or valuation.
6.11 OTHER PARTIES AND OTHER COLLATERAL. No renewal, increase, or
extension of, or any other indulgence with respect to, the Obligations or any
part thereof, no release, exchange, or taking of any security, no release of
any Person (including any Subsidiary, maker, endorser, guarantor, or surety)
liable on the Obligations, no delay in enforcement of payment, no delay or
omission or lack of diligence or care in exercising any Right or power with
respect to the Obligations or any security therefor or guaranty thereof or
under this Agreement, and no other circumstance or event which might
constitute a defense available to or discharge of Debtor, any Subsidiary, or
any other Person, shall in any manner impair or affect the rights of Agent
hereunder, under any other of the Loan Documents, at law, or in equity. Agent
need not file suit or assert a claim for personal judgment against any Person
for any part of the Obligations or seek to realize upon any other security
for the Obligations before foreclosing upon the Pledged Collateral for the
purpose of paying the Obligations. Debtor waives any Right to the benefit of
or to require or control application of any other security or proceeds
thereof and agrees that Agent shall have no duty or obligation to Debtor to
apply any such other security or proceeds thereof to the Obligations. Debtor
hereby waives all rights by which it might be entitled to require suit on an
accrued right of action in respect of any of the Obligations or require suit
against Debtor, any Subsidiary, or others, whether arising pursuant to any
statutory or case law of any jurisdiction or otherwise.
6.12 NOTICES. All notices, communications, and materials to be
given or delivered pursuant to this Agreement shall be given or delivered in
the manner provided in, and shall be deemed the effective in accordance with,
the provisions of the Credit Agreement. For purposes of notices,
communications, and materials to be given or delivered pursuant to this
Agreement, addresses and facsimile numbers and the individuals or departments
to whose attention the same shall be directed are, for Agent, as set forth in
the Credit Agreement and are, for Debtor, as follows:
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If to Debtor: ____________________________
____________________________
____________________________
____________________________
____________________________
with a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Twenty-Ninth Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
or at such other addresses or facsimile numbers or to the attention of such
other individuals or departments as Debtor may hereafter specify in a notice
to the other party specifically captioned "Notice of Change of Address."
6.13 PARTIES BOUND. This Agreement shall be binding on Debtor and
its successors, assigns, and other legal representatives and shall inure to
the benefit of Agent and its successors and assigns; PROVIDED, however, that
Debtor may not assign its rights or obligations hereunder without the prior
written consent of Agent. The rights, powers, and interests held by Agent
hereunder may be transferred or assigned, in whole or in part.
6.14 SEVERABILITY. If any provision of this Agreement is held
to be illegal, invalid, or unenforceable under present or future laws, such
provision shall be fully severable, this Agreement shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part hereof, and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance therefrom. Furthermore, in lieu
of such illegal, invalid, or unenforceable provision there shall be added
automatically as a part of this Agreement a legal, valid, and enforceable
provision as similar in terms to the illegal, invalid, or unenforceable
provision as may be possible.
6.15 CONTROL. Notwithstanding anything herein to the contrary,
this Agreement and the transactions contemplated hereby do not and shall not
constitute, create, or have the effect of constituting or creating, directly
or indirectly, actual or practical ownership by Agent of Debtor or any issuer
of the Pledged Collateral, or control, affirmative or negative, direct or
indirect, by Agent or WorldCom over the management or any aspect of the
day-to-day operation of Debtor or any such issuer, which control remains in
Debtor, each such issuer, and their respective boards of directors, partners,
and officers (as appropriate); PROVIDED, however, that if Agent becomes the
owner of any partnership interest, or other equity or ownership interest in
any issuer whether through foreclosure or otherwise, Agent shall be entitled
to exercise such legal rights as it may have by being an owner of such
partnership interest or other equity or ownership interest.
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6.16 HEADINGS; CONSTRUCTION. The headings of the articles,
sections, and subsections of this Agreement are for the convenience of
reference only, are not to be considered a part hereof or thereof, and shall
not limit or otherwise affect any of the terms hereof. Whenever the singular
or plural number, or the masculine, feminine, or neuter gender is used
herein, each shall equally include the other.
6.17 WORLDCOM DOCUMENT. This Agreement is a WorldCom Document
executed pursuant to the Workout Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered, and applied in
accordance with the terms and provisions thereof.
6.18 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but
one and the same instrument.
6.19 ENTIRE AGREEMENT. THIS AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES HERETO REGARDING THE SUBJECT MATTER HEREOF AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES HERETO REGARDING THE SUBJECT MATTER HEREOF.
THERE ARE NO CONTEMPORANEOUS ORAL AGREEMENTS WITH RESPECT TO THE SUBJECT
MATTER HEREOF.
6.20 TIME. Time is of the essence of this Agreement.
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IN WITNESS WHEREOF, Debtor and Agent, for the benefit of WorldCom,
have caused this Agreement to be duly executed and delivered as of the date
first above written.
DEBTOR:
By:________________________
By:_________________________
Its:________________________
Attest:_________________________________
Name: __________________________________
Title:__________________________________
(CORPORATE SEAL)
AGENT:
MCI WORLDCOM NETWORK SERVICES, INC.
By:_____________________________________
Name:___________________________________
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