SECURITY AGREEMENT
SECURITY AGREEMENT dated as of January 2, 1998, between INTERNATIONAL
TELECOMMUNICATION DATA SYSTEMS, INC., a corporation duly organized and validly
existing under the laws of the State of Delaware (the "Borrower"); each of the
Subsidiaries of the Borrower identified under the caption "SUBSIDIARY
GUARANTORS" on the signature pages hereof (individually, a "Subsidiary
Guarantor" and, collectively, the "Subsidiary Guarantors" and, together with the
Borrower, the "Obligors"); and ▇▇▇▇▇▇ COMMERCIAL PAPER INC, as administrative
agent for the lenders or other financial institutions or entities party, as
lenders, to the Credit Agreement referred to below (in such capacity, together
with its successors in such capacity, the "Administrative Agent").
The Borrower, the Subsidiary Guarantors, certain lenders and the
Administrative Agent are parties to a Credit Agreement dated as of January 2,
1998 (as modified and supplemented and in effect from time to time, the "Credit
Agreement"), providing, subject to the terms and conditions thereof, for loans
to be made by said lenders to the Borrower in an aggregate principal amount not
exceeding $100,000,000. In addition, the Borrower may from time to time be
obligated to said lenders in respect of certain other indebtedness (such
indebtedness being herein referred to as the "Other Indebtedness").
To induce said lenders to enter into the Credit Agreement and to
extend credit thereunder and to extend credit that would constitute Other
Indebtedness, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Obligor has agreed to pledge
and grant a security interest in the Collateral (as hereinafter defined) as
security for the Secured Obligations (as so defined). Accordingly, the parties
hereto agree as follows:
Section 1. Definitions. Terms defined in the Credit Agreement are used
herein as defined therein. In addition, as used herein:
"Accounts" has the meaning assigned to such term in Section 3(d)
hereof.
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"Collateral" has the meaning assigned to such term in Section 3
hereof.
"Collateral Account" has the meaning assigned to such term in Section
4.01 hereof.
"Copyright Collateral" means all Copyrights, whether now owned or
hereafter acquired by any Obligor, including each Copyright identified in
Annex 2 hereto.
"Copyrights" means all copyrights, copyright registrations and
applications for copyright registrations, including, without limitation,
all renewals and extensions thereof, the right to recover for all past,
present and future infringements thereof, and all other rights of any kind
whatsoever accruing thereunder or pertaining thereto.
"Documents" has the meaning assigned to such term in Section 3(j)
hereof.
"Equipment" has the meaning assigned to such term in Section 3(h)
hereof.
"Instruments" has the meaning assigned to such term in Section 3(e)
hereof.
"Intellectual Property" means, collectively, all Copyright Collateral,
all Patent Collateral and all Trademark Collateral, together with (a) all
inventions, processes, production methods, proprietary information,
know-how and trade secrets; (b) all licenses or user or other agreements
granted to any Obligor with respect to any of the foregoing, in each case
whether now or hereafter owned or used including, without limitation, the
licenses or other agreements with respect to the Copyright Collateral, the
Patent Collateral or the Trademark Collateral, listed in Annex 5 hereto;
(c) all information, customer lists, identification of suppliers, data,
plans, blueprints, specifications, designs, drawings, recorded knowledge,
surveys, engineering reports, test reports, manuals, materials standards,
processing standards, performance standards, catalogs, computer and
automatic machinery software and programs; (d) all field repair data, sales
data and other information relating to sales or service of products now or
hereafter manufactured; (e) all accounting information and all media in
which or on which any information or knowledge or data or records may be
recorded or stored and all computer programs used for the compilation
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or printout of such information, knowledge, records or data; (f) all
licenses, consents, permits, variances, certifications and approvals of
governmental agencies now or hereafter held by any Obligor; and (g) all
causes of action, claims and warranties now or hereafter owned or acquired
by any Obligor in respect of any of the items listed above.
"Inventory" has the meaning assigned to such term in Section 3(f)
hereof.
"Issuers" means, collectively, the respective corporations identified
beneath the names of the Obligors on Annex 1 hereto under the caption
"Issuer".
"Motor Vehicles" means motor vehicles, tractors, trailers and other
like property, whether or not the title thereto is governed by a
certificate of title or ownership.
"Patent Collateral" means all Patents, whether now owned or hereafter
acquired by any Obligor, including each Patent identified in Annex 3
hereto.
"Patents" means all patents and patent applications, including,
without limitation, the inventions and improvements described and claimed
therein together with the reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, all income, royalties,
damages and payments now or hereafter due and/or payable under and with
respect thereto, including, without limitation, damages and payments for
past or future infringements thereof, the right to ▇▇▇ for past, present
and future infringements thereof, and all rights corresponding thereto
throughout the world.
"Pledged Stock" has the meaning assigned to such term in Section 3(a)
hereof.
"Secured Obligations" means, collectively, (a) in the case of the
Borrower, the principal and interest on the Loans made by the Lenders to,
and the Note(s) held by each Lender of, the Borrower and all other amounts
from time to time owing to the Lenders or the Administrative Agent by the
Borrower under the Loan Documents (including, without limitation, all Other
Indebtedness and interest thereon), (b) in the case of the Subsidiary
Guarantors, all obligations of the Subsidiary Guarantors under the Credit
Agreement and the other Loan Documents (including, without limitation, in
respect of their Guarantee under Section 6 of
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the Credit Agreement, and (c) all obligations of the Obligors to the
Lenders and the Administrative Agent hereunder.
"Stock Collateral" means, collectively, the Collateral described in
clauses (a) through (c) of Section 3 hereof and the proceeds of and to any
such property and, to the extent related to any such property or such
proceeds, all books, correspondence, credit files, records, invoices and
other papers.
"Trademark Collateral" means all Trademarks, whether now owned or
hereafter acquired by any Obligor, including each Trademark identified in
Annex 4 hereto. Notwithstanding the foregoing, the Trademark Collateral
does not and shall not include any Trademark that would be rendered
invalid, abandoned, void or unenforceable by reason of its being included
as part of the Trademark Collateral.
"Trademarks" means all trade names, trademarks and service marks,
logos, trademark and service ▇▇▇▇ registrations, and applications for
trademark and service ▇▇▇▇ registrations, including, without limitation,
all renewals of trademark and service ▇▇▇▇ registrations, all rights
corresponding thereto throughout the world, the right to recover for all
past, present and future infringements thereof, all other rights of any
kind whatsoever accruing thereunder or pertaining thereto, together, in
each case, with the product lines and goodwill of the business connected
with the use of, and symbolized by, each such trade name, trademark and
service ▇▇▇▇.
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect from time to time in the State of New York.
Section 2. Representations and Warranties. Each Obligor represents and
warrants to the Lenders and the Administrative Agent that:
(a) Such Obligor is the sole beneficial owner of the Collateral in
which it purports to grant a security interest pursuant to Section 3 hereof
and no Lien exists or will exist upon such Collateral at any time, except
for liens permitted under Section 9.06(h) of the Credit Agreement and
except for the pledge and security interest in favor of the Administrative
Agent for the benefit of the Lenders created
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or provided for herein, which pledge and security interest constitute a
first priority perfected pledge and security interest in and to all of such
Collateral.
(b) The Pledged Stock evidenced by the certificates identified under
the name of such Obligor in Annex 1 hereto is, and all other Pledged Stock
in which such Obligor shall hereafter grant a security interest pursuant to
Section 3 hereof will be, duly authorized, validly existing, fully paid and
non-assessable and none of such Pledged Stock is or will be subject to any
contractual restriction, or any restriction under the charter or by-laws of
the respective Issuer of such Pledged Stock, upon the transfer of such
Pledged Stock (except for any such restriction contained herein or in the
Credit Agreement).
(c) The Pledged Stock evidenced by the certificates identified under
the name of such Obligor in Annex 1 hereto constitutes all of the issued
and outstanding shares of capital stock of any class of the Issuers
beneficially owned by such Obligor on the date hereof (whether or not
registered in the name of such Obligor) and said Annex 1 correctly
identifies, as at the date hereof, the respective Issuers of such Pledged
Stock, the respective class and par value of the shares comprising such
Pledged Stock and the respective number of shares (and registered owners
thereof) represented by each such certificate.
(d) Annexes 2, 3 and 4 hereto, respectively, set forth under the name
of such Obligor a complete and correct list of all Copyrights, Patents and
Trademarks owned by such Obligor on the date hereof; except pursuant to
licenses and other user agreements entered into by such Obligor in the
ordinary course of business that are listed in Annex 5 hereto, such Obligor
owns and possesses the right to use, and has done nothing to authorize or
enable any other Person to use, any Copyright, Patent or Trademark listed
in said Annexes 2, 3 and 4, and all registrations listed in said Annexes 2,
3 and 4 are valid and in full force and effect; except as may be set forth
in said Annex 5, such Obligor owns and possesses the right to use all
Copyrights, Patents and Trademarks.
(e) Annex 5 hereto sets forth a complete and correct list of all
licenses and other user agreements included in the Intellectual Property on
the date hereof.
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(f) To such Obligor's knowledge, (i) except as set forth in Annex 5
hereto, there is no violation by others of any right of such Obligor with
respect to any Copyright, Patent or Trademark listed in Annexes 2, 3 and 4
hereto, respectively, under the name of such Obligor and (ii) such Obligor
is not infringing in any respect upon any Copyright, Patent or Trademark of
any other Person; and no proceedings have been instituted or are pending
against such Obligor or, to such Obligor's knowledge, threatened, and no
claim against such Obligor has been received by such Obligor, alleging any
such violation, except as may be set forth in said Annex 5.
(g) Such Obligor does not own any Trademarks registered in the United
States of America to which the last sentence of the definition of Trademark
Collateral applies.
(h) Any goods now or hereafter produced by such Obligor or any of its
Subsidiaries included in the Collateral have been and will be produced in
compliance with the requirements of the Fair Labor Standards Act, as
amended.
Section 3. Collateral. As collateral security for the prompt payment
in full when due (whether at stated maturity, by acceleration or otherwise) of
the Secured Obligations, each Obligor hereby pledges and grants to the
Administrative Agent, for the benefit of the Lenders as hereinafter provided, a
security interest in all of such Obligor's right, title and interest in the
following property, whether now owned by such Obligor or hereafter acquired and
whether now existing or hereafter coming into existence (all being collectively
referred to herein as "Collateral"):
(a) the shares of stock of the Issuers represented by the certificates
identified in Annex 1 hereto under the name of such Obligor and all other
shares of capital stock of whatever class of the the Issuers, now or
hereafter owned by such Obligor, in each case together with the
certificates evidencing the same (collectively, the "Pledged Stock");
(b) all shares, securities, moneys or property representing a dividend
on any of the Pledged Stock, or representing a distribution or return of
capital upon or in respect of the Pledged Stock, or resulting from a
split-up, revision, reclassification or other like change of the Pledged
Stock or otherwise received in exchange therefor,
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and any subscription warrants, rights or options issued to the holders of,
or otherwise in respect of, the Pledged Stock;
(c) without affecting the obligations of such Obligor under any
provision prohibiting such action hereunder or under the Credit Agreement,
in the event of any consolidation or merger in which an Issuer is not the
surviving corporation, all shares of each class of the capital stock of the
successor corporation (unless such successor corporation is such Obligor
itself) formed by or resulting from such consolidation or merger (the
Pledged Stock, together with all other certificates, shares, securities,
properties or moneys as may from time to time be pledged hereunder pursuant
to clause (a) or (b) above and this clause (c) being herein collectively
called the "Stock Collateral");
(d) all accounts and general intangibles (each as defined in the
Uniform Commercial Code) of such Obligor constituting any right to the
payment of money, including (but not limited to) all moneys due and to
become due to such Obligor in respect of any loans or advances or for
Inventory and Equipment or other goods sold or leased or for services
rendered, all moneys due and to become due to such Obligor under any
guarantee (including a letter of credit) of the purchase price of Inventory
and Equipment sold by such Obligor and all tax refunds (such accounts,
general intangibles and moneys due and to become due being herein called
collectively "Accounts");
(e) all instruments, chattel paper or letters of credit (each as
defined in the Uniform Commercial Code) of such Obligor evidencing,
representing, arising from or existing in respect of, relating to, securing
or otherwise supporting the payment of, any of the Accounts, including (but
not limited to) promissory notes, drafts, bills of exchange and trade
acceptances (herein collectively called "Instruments");
(f) all inventory (as defined in the Uniform Commercial Code) of such
Obligor, all goods obtained by such Obligor in exchange for such inventory,
and any products made or processed from such inventory including all
substances, if any, commingled therewith or added thereto (herein
collectively called "Inventory");
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(g) all Intellectual Property and all other accounts or general
intangibles of such Obligor not constituting Intellectual Property or or
Accounts;
(h) all equipment (as defined in the Uniform Commercial Code) of such
Obligor, including all Motor Vehicles (herein collectively called
"Equipment");
(i) each contract and other agreement of such Obligor relating to the
sale or other disposition of Inventory and Equipment;
(j) all documents of title (as defined in the Uniform Commercial Code)
or other receipts of such Obligor covering, evidencing or representing
Inventory and Equipment (herein collectively called "Documents");
(k) all rights, claims and benefits of such Obligor against any Person
arising out of, relating to or in connection with Inventory and Equipment
purchased by such Obligor, including, without limitation, any such rights,
claims or benefits against any Person storing or transporting such
Inventory and Equipment;
(l) the Collateral Account and all cash, securities and other Property
from time to time credited thereto; and
(m) all other tangible and intangible personal property and fixtures
of such Obligor, including, without limitation, all proceeds, products,
offspring, accessions, rents, profits, income, benefits, substitutions and
replacements of and to any of the property of such Obligor described in the
preceding clauses of this Section 3 (including, without limitation, any
proceeds of insurance thereon and all causes of action, claims and
warranties now or hereafter held by any Obligor in respect of any of the
items listed above) and, to the extent related to any property described in
said clauses or such proceeds, products and accessions, all books,
correspondence, credit files, records, invoices and other papers, including
without limitation all tapes, cards, computer runs and other papers and
documents in the possession or under the control of such Obligor or any
computer bureau or service company from time to time acting for such
Obligor.
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Section 4. Cash Proceeds of Collateral.
4.01 Collateral Account. The Administrative Agent may cause to be
established by a Securities Intermediary (as defined in Section 8-102(a)(14) of
the Uniform Commercial Code) a "securities account" (within the meaning of
Section 8-501 of the Uniform Commercial Code) in the name of the Administrative
Agent as "entitlement holder" (within the meaning of Section 8-102(a)(17) of
the Uniform Commercial Code) (the "Collateral Account") into which there shall
be deposited from time to time the cash proceeds of any of the Collateral
(including proceeds of insurance thereon) required to be delivered to the
Administrative Agent pursuant hereto and into which the Obligors may from time
to time deposit any additional amounts that any of them wishes to pledge to the
Administrative Agent for the benefit of the Lenders as additional collateral
security hereunder. Property from time to time credited to the Collateral
Account shall constitute part of the Collateral hereunder and shall not
constitute payment of the Secured Obligations until applied as hereinafter
provided. Except as expressly provided in the next sentence, the Administrative
Agent shall remit the collected cash credit balance of the Collateral Account to
or upon the order of the respective Obligor as such Obligor through the Borrower
shall from time to time instruct. However, at any time following the occurrence
and during the continuance of an Event of Default, the Administrative Agent may
(and, if instructed by the Lenders as specified in Section 10 of the Credit
Agreement, shall) in its (or their) discretion apply or cause to be applied
(subject to collection) the balance from time to time standing to the credit of
the Collateral Account to the payment of the Secured Obligations in the manner
specified in Section 5.09 hereof. The balance from time to time in the
Collateral Account shall be subject to withdrawal only as provided herein.
4.02 Proceeds of Accounts. At any time after the occurrence and during
the continuance of an Event of Default, each Obligor shall, upon the request of
the Administrative Agent, instruct all account debtors and other Persons
obligated in respect of all Accounts to make all payments in respect of the
Accounts either (a) directly to the Administrative Agent (by instructing that
such payments be remitted to a post office box which shall be in the name and
under the control of the Administrative Agent) or (b) to one or more other banks
in the United States of America (by instructing that such payments be remitted
to a post office box which shall be in the name and under the control of the
Administrative Agent) under arrangements, in form and substance satisfactory to
the Administrative Agent pursuant to which such Obligor shall have
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irrevocably instructed such other bank (and such other bank shall have agreed)
to remit all proceeds of such payments directly to the Administrative Agent for
deposit into the Collateral Account. All payments made to the Administrative
Agent, as provided in the preceding sentence, shall be immediately deposited in
the Collateral Account. In addition to the foregoing, each Obligor agrees that,
at any time after the occurrence and during the continuance of an Event of
Default, if the proceeds of any Collateral hereunder (including the payments
made in respect of Accounts) shall be received by it, such Obligor shall, upon
the request of the Administrative Agent, as promptly as possible deposit such
proceeds into the Collateral Account. Until so deposited, all such proceeds
shall be held in trust by such Obligor for and as the property of the
Administrative Agent and shall not be commingled with any other funds or
property of such Obligor.
4.03 Investment of Balance in Collateral Account. Amounts on deposit
in the Collateral Account shall be invested from time to time in such Permitted
Investments as the respective Obligor through the Borrower (or, after the
occurrence and during the continuance of a Default, the Administrative Agent)
shall determine, which Permitted Investments shall be credited to the Collateral
Account and held in the name of the Administrative Agent, provided that (i) at
any time after the occurrence and during the continuance of an Event of Default,
the Administrative Agent may (and, if instructed by the Lenders as specified in
Section 10 of the Credit Agreement, shall) in its (or their) discretion at any
time and from time to time elect to liquidate any such Permitted Investments and
to apply or cause to be applied the proceeds thereof to the payment of the
Secured Obligations in the manner specified in Section 5.09 hereof and (ii) if
requested by the respective Obligor through the Borrower, such Permitted
Investments may be held in the name and under the control of one or more of the
Lenders (and in that connection each Lender, pursuant to Section 4.07 of the
Credit Agreement has agreed that such Permitted Investments shall be held by
such Lender as a collateral sub-agent for the Administrative Agent hereunder).
Section 5. Further Assurances; Remedies. In furtherance of the grant
of the pledge and security interest pursuant to Section 3 hereof, the Obligors
hereby jointly and severally agree with each Lender and the Administrative Agent
as follows:
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5.01 Delivery and Other Perfection. Each Obligor shall:
(a) if any of the shares, securities, moneys or property required to
be pledged by such Obligor under clauses (a), (b) and (c) of Section 3
hereof are received by such Obligor, forthwith either (x) transfer and
deliver to the Administrative Agent such shares or securities so received
by such Obligor (together with the certificates for any such shares and
securities duly endorsed in blank or accompanied by undated stock powers
duly executed in blank), all of which thereafter shall be held by the
Administrative Agent, pursuant to the terms of this Agreement, as part of
the Collateral or (y) take such other action as the Administrative Agent
shall deem necessary or appropriate to duly record the Lien created
hereunder in such shares, securities, moneys or property in said clauses
(a), (b) and (c);
(b) deliver and pledge to the Administrative Agent any and all
Instruments, endorsed and/or accompanied by such instruments of assignment
and transfer in such form and substance as the Administrative Agent may
request; provided, that so long as no Default shall have occurred and be
continuing, such Obligor may retain for collection in the ordinary course
any Instruments received by such Obligor in the ordinary course of business
and the Administrative Agent shall, promptly upon request of such Obligor
through the Borrower, make appropriate arrangements for making any
Instrument pledged by such Obligor available to such Obligor for purposes
of presentation, collection or renewal (any such arrangement to be
effected, to the extent deemed appropriate by the Administrative Agent,
against trust receipt or like document);
(c) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that may
be necessary or desirable (in the judgment of the Administrative Agent) to
create, preserve, perfect or validate the security interest granted
pursuant hereto or to enable the Administrative Agent to exercise and
enforce its rights hereunder with respect to such pledge and security
interest, including, without limitation, causing any or all of the Stock
Collateral to be transferred of record into the name of the Administrative
Agent or its nominee (and the Administrative Agent agrees that if any Stock
Collateral is transferred into its name or the name of its nominee, the
Administrative Agent will thereafter
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promptly give to the respective Obligor copies of any notices and
communications received by it with respect to the Stock Collateral pledged
by such Obligor hereunder), provided that notices to account debtors in
respect of any Accounts or Instruments shall be subject to the provisions
of clause (i) below;
(d) without limiting the obligations of such Obligor under Section
5.04(c) hereof, upon the acquisition after the date hereof by such Obligor
of any Equipment covered by a certificate of title or ownership, cause the
Administrative Agent to be listed as the lienholder on such certificate of
title and within 120 days of the acquisition thereof deliver evidence of
the same to the Administrative Agent;
(e) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise ▇▇▇▇ such books and records in such
manner as the Administrative Agent may reasonably require in order to
reflect the security interests granted by this Agreement;
(f) furnish to the Administrative Agent from time to time (but, unless
a Default shall have occurred and be continuing, no more frequently than
quarterly) statements and schedules further identifying and describing the
Copyright Collateral, the Patent Collateral and the Trademark Collateral,
respectively, and such other reports in connection with the Copyright
Collateral, the Patent Collateral and the Trademark Collateral as the
Administrative Agent may reasonably request, all in reasonable detail;
(g) promptly upon request of the Administrative Agent, following
receipt by the Administrative Agent of any statements, schedules or reports
pursuant to clause (f) above, modify this Agreement by amending Annexes 2,
3 and/or 4 hereto, as the case may be, to include any Copyright, Patent or
Trademark that becomes part of the Collateral under this Agreement;
(h) permit representatives of the Administrative Agent, upon
reasonable notice, at any time during normal business hours to inspect and
make abstracts from its books and records pertaining to the Collateral, and
permit representatives of the Administrative Agent to be present at such
Obligor's place of business to receive copies of all communications and
remittances relating to the Collateral, and forward copies of any notices
or communications received
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by such Obligor with respect to the Collateral, all in such manner as the
Administrative Agent may require; and
(i) upon the occurrence and during the continuance of any Default,
upon request of the Administrative Agent, promptly notify (and such Obligor
hereby authorizes the Administrative Agent so to notify) each account
debtor in respect of any Accounts or Instruments that such Collateral has
been assigned to the Administrative Agent hereunder, and that any payments
due or to become due in respect of such Collateral are to be made directly
to the Administrative Agent.
5.02 Other Financing Statements and Liens. Except as otherwise
permitted under Section 9.06 of the Credit Agreement, without the prior written
consent of the Administrative Agent (granted with the authorization of the
Lenders as specified in Section 12.03 of the Credit Agreement), no Obligor shall
file or suffer to be on file, or authorize or permit to be filed or to be on
file, in any jurisdiction, any financing statement or like instrument with
respect to the Collateral in which the Administrative Agent is not named as the
sole secured party for the benefit of the Lenders.
5.03 Preservation of Rights. The Administrative Agent shall not be
required to take steps necessary to preserve any rights against prior parties to
any of the Collateral.
5.04 Special Provisions Relating to Certain Collateral.
(a) Stock Collateral.
(1) The Obligors will cause the Stock Collateral to constitute at all
times 100% of the total number of shares of each class of capital stock of each
Issuer then outstanding.
(2) So long as no Event of Default shall have occurred and be
continuing, the Obligors shall have the right to exercise all voting, consensual
and other powers of ownership pertaining to the Stock Collateral for all
purposes not inconsistent with the terms of this Agreement, the Credit
Agreement, the Notes or any other instrument or agreement referred to herein or
therein, provided that the Obligors jointly and severally agree that they will
not vote the Stock Collateral in any manner that is inconsistent with the terms
of this Agreement, the Credit Agreement, the Notes or any such other instrument
or agreement; and the Administrative Agent shall execute and deliver to the
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Obligors or cause to be executed and delivered to the Obligors all such proxies,
powers of attorney, dividend and other orders, and all such instruments, without
recourse, as the Obligors may reasonably request for the purpose of enabling the
Obligors to exercise the rights and powers that they are entitled to exercise
pursuant to this Section 5.04(a)(2).
(3) Unless and until an Event of Default has occurred and is
continuing, the Obligors shall be entitled to receive and retain any dividends
on the Stock Collateral paid in cash out of earned surplus.
(4) If any Event of Default shall have occurred, then so long as such
Event of Default shall continue, and whether or not the Administrative Agent or
any Lender exercises any available right to declare any Secured Obligation due
and payable or seeks or pursues any other relief or remedy available to it under
applicable law or under this Agreement, the Credit Agreement, the Notes or any
other agreement relating to such Secured Obligation, all dividends and other
distributions on the Stock Collateral shall be paid directly to the
Administrative Agent and retained by it in the Collateral Account as part of the
Stock Collateral, subject to the terms of this Agreement, and, if the
Administrative Agent shall so request in writing, the Obligors jointly and
severally agree to execute and deliver to the Administrative Agent appropriate
additional dividend, distribution and other orders and documents to that end,
provided that if such Event of Default is cured, any such dividend or
distribution theretofore paid to the Administrative Agent shall, upon request of
the Obligors (except to the extent theretofore applied to the Secured
Obligations), be returned by the Administrative Agent to the Obligors.
(b) Intellectual Property.
(1) For the purpose of enabling the Administrative Agent to exercise
rights and remedies under Section 5.05 hereof at such time as the Administrative
Agent shall be lawfully entitled to exercise such rights and remedies, and for
no other purpose, each Obligor hereby grants to the Administrative Agent, to the
extent assignable, an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to such Obligor) to use, assign,
license or sublicense any of the Intellectual Property now owned or hereafter
acquired by such Obligor, wherever the same may be located, including in such
license reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer
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programs used for the compilation or printout thereof, such grant to become
effective upon the occurrence of an Event of Default.
(2) Notwithstanding anything contained herein to the contrary, but
subject to the provisions of Section 9.05 of the Credit Agreement that limit the
rights of the Obligors to dispose of their property, so long as no Event of
Default shall have occurred and be continuing, the Obligors will be permitted to
exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or
take other actions with respect to the Intellectual Property in the ordinary
course of the business of the Obligors. In furtherance of the foregoing, unless
an Event of Default shall have occurred and be continuing the Administrative
Agent shall from time to time, upon the request of the respective Obligor,
execute and deliver any instruments, certificates or other documents, in the
form so requested, that such Obligor through the Borrower shall have certified
are appropriate (in its judgment) to allow it to take any action permitted above
(including relinquishment of the license provided pursuant to clause (1)
immediately above as to any specific Intellectual Property). Further, upon the
payment in full of all of the Secured Obligations and cancellation or
termination of the Commitments or earlier expiration of this Agreement or
release of the Collateral, the Administrative Agent shall grant back to the
Obligors the license granted pursuant to clause (1) immediately above. The
exercise of rights and remedies under Section 5.05 hereof by the Administrative
Agent shall not terminate the rights of the holders of any licenses or
sublicenses theretofore granted by the Obligors in accordance with the first
sentence of this clause (2).
(c) Motor Vehicles. At any time after the occurrence and during the
continuance of an Event of Default, each Obligor shall, upon the request of the
Administrative Agent, deliver to the Administrative Agent originals of the
certificates of title or ownership for the Motor Vehicles owned by it with the
Administrative Agent listed as lienholder and take such other action as the
Administrative Agent shall deem appropriate to perfect the security interest
created hereunder in all such Motor Vehicles.
5.05 Events of Default, Etc. During the period during which an Event
of Default shall have occurred and be continuing:
(a) each Obligor shall, at the request of the Administrative Agent,
assemble the Collateral owned by it at such place or places, reasonably
convenient to both the
Security Agreement
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Administrative Agent and such Obligor, designated in its request;
(b) the Administrative Agent may make any reasonable compromise or
settlement deemed desirable with respect to any of the Collateral and may
extend the time of payment, arrange for payment in installments, or
otherwise modify the terms of, any of the Collateral;
(c) the Administrative Agent shall have all of the rights and remedies
with respect to the Collateral of a secured party under the Uniform
Commercial Code (whether or not said Code is in effect in the jurisdiction
where the rights and remedies are asserted) and such additional rights and
remedies to which a secured party is entitled under the laws in effect in
any jurisdiction where any rights and remedies hereunder may be asserted,
including, without limitation, the right, to the maximum extent permitted
by law, to exercise all voting, consensual and other powers of ownership
pertaining to the Collateral as if the Administrative Agent were the sole
and absolute owner thereof (and each Obligor agrees to take all such action
as may be appropriate to give effect to such right);
(d) the Administrative Agent in its discretion may, in its name or in
the name of the Obligors or otherwise, demand, ▇▇▇ for, collect or receive
any money or property at any time payable or receivable on account of or in
exchange for any of the Collateral, but shall be under no obligation to do
so; and
(e) the Administrative Agent may, upon ten business days' prior
written notice to the Obligors of the time and place, with respect to the
Collateral or any part thereof that shall then be or shall thereafter come
into the possession, custody or control of the Administrative Agent, the
Lenders or any of their respective agents, sell, lease, assign or otherwise
dispose of all or any part of such Collateral, at such place or places as
the Administrative Agent deems best, and for cash or for credit or for
future delivery (without thereby assuming any credit risk), at public or
private sale, without demand of performance or notice of intention to
effect any such disposition or of the time or place thereof (except such
notice as is required above or by applicable statute and cannot be waived),
and the Administrative Agent or any Lender or anyone else may be the
purchaser, lessee, assignee or recipient of any or all of the Collateral so
disposed of at any public sale (or, to
Security Agreement
------------------
-17-
the extent permitted by law, at any private sale) and thereafter hold the
same absolutely, free from any claim or right of whatsoever kind, including
any right or equity of redemption (statutory or otherwise), of the
Obligors, any such demand, notice and right or equity being hereby
expressly waived and released. In the event of any sale, assignment, or
other disposition of any of the Trademark Collateral, the goodwill
connected with and symbolized by the Trademark Collateral subject to such
disposition shall be included, and the Obligors shall supply to the
Administrative Agent or its designee, for inclusion in such sale,
assignment or other disposition, all Intellectual Property relating to such
Trademark Collateral. The Administrative Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
the sale, and such sale may be made at any time or place to which the sale
may be so adjourned.
The proceeds of each collection, sale or other disposition under this Section
5.05, including by virtue of the exercise of the license granted to the
Administrative Agent in Section 5.04(b) hereof, shall be applied in accordance
with Section 5.09 hereof.
The Obligors recognize that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Administrative Agent may be compelled, with respect to any
sale of all or any part of the Collateral, to limit purchasers to those who will
agree, among other things, to acquire the Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. The
Obligors acknowledge that any such private sales may be at prices and on terms
less favorable to the Administrative Agent than those obtainable through a
public sale without such restrictions, and, notwithstanding such circumstances,
agree that any such private sale shall be deemed to have been made in a
commercially reasonable manner and that the Administrative Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of any
Collateral for the period of time necessary to permit the respective Issuer or
issuer thereof to register it for public sale.
5.06 Deficiency. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 5.05 hereof are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Secured Obligations, the Obligors shall remain liable for any
Security Agreement
------------------
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deficiency to the extent the Obligors are obligated under this Agreement.
5.07 Removals, Etc. Without at least 30 days' prior written notice to
the Administrative Agent, no Obligor shall (i) maintain any of its books and
records with respect to the Collateral at any office, or maintain its principal
place of business at any place, or permit any Inventory and Equipment to be
located anywhere, other than at the address indicated beneath the signature of
the Borrower to the Credit Agreement or at one of the locations identified in
Annex 6 hereto under its name or in transit from one of such locations to
another or (ii) change its name, or the name under which it does business, from
the name shown on the signature pages hereto.
5.08 Private Sale. The Administrative Agent and the Lenders shall
incur no liability as a result of the sale of the Collateral, or any part
thereof, at any private sale pursuant to Section 5.05 hereof conducted in a
commercially reasonable manner. Each Obligor hereby waives any claims against
the Administrative Agent or any Lender arising by reason of the fact that the
price at which the Collateral may have been sold at such a private sale was less
than the price that might have been obtained at a public sale or was less than
the aggregate amount of the Secured Obligations, even if the Administrative
Agent accepts the first offer received and does not offer the Collateral to more
than one offeree.
5.09 Application of Proceeds. Except as otherwise herein expressly
provided, the proceeds of any collection, sale or other realization of all or
any part of the Collateral pursuant hereto, and any other cash at the time held
by the Administrative Agent under Section 4 hereof or this Section 5, shall be
applied by the Administrative Agent:
First, to the payment of the reasonable costs and expenses of such
collection, sale or other realization, including reasonable out-of-pocket
costs and expenses of the Administrative Agent and the fees and expenses of
its agents and counsel, and all reasonable expenses incurred and advances
made by the Administrative Agent in connection therewith;
Next, to the payment in full of the Secured Obligations other than
Secured Obligations constituting Other Indebtedness, in each case equally
and ratably in accordance with the respective amounts thereof then due and
owing or as the Lenders holding the same may otherwise agree;
Security Agreement
------------------
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Next, to the payment in full of all other Secured Obligations
(including all Other Indebtedness), equally and ratably in accordance with
the respective amounts thereof then due and owing or as the Lenders holding
the same may otherwise agree; and
Finally, to the payment to the respective Obligor, or their respective
successors or assigns, or as a court of competent jurisdiction may direct,
of any surplus then remaining.
As used in this Section 5.09, "proceeds" of Collateral means cash,
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Obligors or any issuer of or obligor on
any of the Collateral.
5.10 Attorney-in-Fact. Without limiting any rights or powers granted
by this Agreement to the Administrative Agent while no Event of Default has
occurred and is continuing, upon the occurrence and during the continuance of
any Event of Default the Administrative Agent is hereby appointed the
attorney-in-fact of each Obligor for the purpose of carrying out the provisions
of this Section 5 and taking any action and executing any instruments that the
Administrative Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, so long as the
Administrative Agent shall be entitled under this Section 5 to make collections
in respect of the Collateral, the Administrative Agent shall have the right and
power to receive, endorse and collect all checks made payable to the order of
any Obligor representing any dividend, payment or other distribution in respect
of the Collateral or any part thereof and to give full discharge for the same.
5.11 Perfection. Prior to or concurrently with the execution and
delivery of this Agreement, each Obligor shall (i) file such financing
statements and other documents in such offices as the Administrative Agent may
request to perfect the security interests granted by Section 3 of this
Agreement, (ii) cause the Administrative Agent to be listed as the lienholder on
all certificates of title or ownership relating to Motor Vehicles owned by such
Obligor and (iii) deliver to the Administrative Agent all certificates
identified in Annex 1 hereto, accompanied by undated stock powers duly executed
in blank.
Security Agreement
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5.12 Termination. When all Secured Obligations shall have been paid in
full and the Commitments of the Lenders under the Credit Agreement shall have
expired or been terminated, this Agreement shall terminate, and the
Administrative Agent shall forthwith cause to be assigned, transferred and
delivered, against receipt but without any recourse, warranty or representation
whatsoever, any remaining Collateral and money received in respect thereof, to
or on the order of the respective Obligor and to be released and canceled all
licenses and rights referred to in Section 5.04(b) hereof. The Administrative
Agent shall also execute and deliver to the respective Obligor upon such
termination such Uniform Commercial Code termination statements, certificates
for terminating the Liens on the Motor Vehicles and such other documentation as
shall be reasonably requested by the respective Obligor to effect the
termination and release of the Liens on the Collateral.
5.13 Further Assurances. Each Obligor agrees that, from time to time
upon the written request of the Administrative Agent, such Obligor will execute
and deliver such further documents and do such other acts and things as the
Administrative Agent may reasonably request in order fully to effect the
purposes of this Agreement.
5.14 Release of Motor Vehicles. So long as no Default shall have
occurred and be continuing, upon the request of any Obligor, the Administrative
Agent shall execute and deliver to such Obligor such instruments as such Obligor
shall reasonably request to remove the notation of the Administrative Agent as
lienholder on any certificate of title for any Motor Vehicle; provided that any
such instruments shall be delivered, and the release effective only upon receipt
by the Administrative Agent of a certificate from such Obligor stating that the
Motor Vehicle the lien on which is to be released is to be sold or has suffered
a casualty loss (with title thereto passing to the casualty insurance company
therefor in settlement of the claim for such loss).
Section 6. Miscellaneous.
6.01 Notices. All notices, requests, consents and demands hereunder
shall be in writing and telecopied or delivered to the intended recipient at its
"Address for Notices" specified pursuant to Section 12.01 of the Credit
Agreement and shall be deemed to have been given at the times specified in said
Section 12.01.
Security Agreement
------------------
-21-
6.02 No Waiver. No failure on the part of the Administrative Agent or
any Lender to exercise, and no course of dealing with respect to, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Administrative Agent or
any Lender of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies herein are cumulative and are not exclusive of any remedies provided by
law.
6.03 Amendments, Etc. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by each
Obligor and the Administrative Agent (with the consent of the Lenders as
specified in Section 12.03 of the Credit Agreement). Any such amendment or
waiver shall be binding upon the Administrative Agent and each Lender, each
holder of any of the Secured Obligations and each Obligor.
6.04 Expenses. The Obligors jointly and severally agree to reimburse
each of the Lenders and the Administrative Agent for all reasonable costs and
expenses of the Lenders and the Administrative Agent (including, without
limitation, the reasonable fees and expenses of legal counsel) in connection
with (i) any Default and any enforcement or collection proceeding resulting
therefrom, including, without limitation, all manner of participation in or
other involvement with (w) performance by the Administrative Agent of any
obligations of the Obligors in respect of the Collateral that the Obligors have
failed or refused to perform, (x) bankruptcy, insolvency, receivership,
foreclosure, winding up or liquidation proceedings, or any actual or attempted
sale, or any exchange, enforcement, collection, compromise or settlement in
respect of any of the Collateral, and for the care of the Collateral and
defending or asserting rights and claims of the Administrative Agent in respect
thereof, by litigation or otherwise, including expenses of insurance, (y)
judicial or regulatory proceedings and (z) workout, restructuring or other
negotiations or proceedings (whether or not the workout, restructuring or
transaction contemplated thereby is consummated) and (ii) the enforcement of
this Section 6.04, and all such costs and expenses shall be Secured Obligations
entitled to the benefits of the collateral security provided pursuant to Section
3 hereof.
6.05 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of each Obligor,
the Administrative Agent, the Lenders and each holder of any of the Secured
Obligations (provided, however, that no Obligor shall assign or transfer its
Security Agreement
------------------
-22-
rights hereunder without the prior written consent of the Administrative Agent).
6.06 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
6.07 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York.
6.08 Captions. The captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
6.09 Agents and Attorneys-in-Fact. The Administrative Agent may employ
agents and attorneys-in-fact in connection herewith and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it in good faith.
6.10 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Administrative
Agent and the Lenders in order to carry out the intentions of the parties hereto
as nearly as may be possible and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
6.11 The Administrative Agent. As provided in Section 11.01 of the
Credit Agreement, each Lender has appointed ▇▇▇▇▇▇ Commercial Paper Inc. as its
Administrative Agent for purposes of this Agreement. Following the payment in
full of all Secured Obligations outstanding under the Credit Agreement and the
termination or expiration of the Commitments thereunder, the provisions of said
Section 11.01 shall be deemed to continue in full force and effect for the
benefit of the Administrative Agent under this Agreement. In that connection,
following such payment in full and expiration and termination of the
Commitments, the term "Majority Lenders" (as used in said Section 11.01) shall
be deemed to refer to Lenders holding Secured Obligations representing more than
50% of the aggregate Secured Obligations.
Security Agreement
------------------
-23-
6.12 Additional Obligors. As contemplated in Section 9.17(a) of the
Credit Agreement, a new Subsidiary of the Borrower formed by the Borrower after
the date hereof may become a "Subsidiiary Guarantor" under the Credit Agreement
and an "Obligor" under this Agreement, by executing and delivering to the
Administrative Agent a Guarantee Assumption Agreement in the form of Exhibit C
to the Credit Agreement. Accordingly, upon the execution and delivery of any
such Guarantee Assumption Agreement by any such Subsidiary, such new Subsidiary
shall automatically and immediately, and without any further action on the part
of any Person, become an "Obligor" for all purposes of this Agreement, and each
of the Annexes hereto shall be supplemented in the manner specified in such
Guarantee Assumption Agreement.
Security Agreement
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-24-
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the day and year first above
written.
INTERNATIONAL TELECOMMUNICATION DATA
SYSTEMS, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Title: President and
Chief Executive Officer
Security Agreement
------------------
-25-
▇▇▇▇▇▇ COMMERCIAL PAPER INC,
as Administrative Agent
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
--------------------------------
Title: Authorized Signatory
Address for Notices:
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Security Agreement
------------------
ANNEX 1
PLEDGED STOCK
[See Section 2(b) and (c).]
International Telecommunication Data Systems, Inc.
--------------------------------------------------
Certificate Registered Number
Issuer Nos. Owner of Shares
----------------- ------------- --------------------- -----------------
ITDS Intelicom 136 International 100 shares of
Services, Inc. Telecommunication common stock,
Data Systems, Inc. $1 par value per
share
Annex 1 to Security Agreement
-----------------------------
ANNEX 2
LIST OF COPYRIGHTS, COPYRIGHT REGISTRATIONS AND
APPLICATIONS FOR COPYRIGHT REGISTRATIONS
[See Section 2(d).]
International Telecommunication Data Systems, Inc.
--------------------------------------------------
Date of
Title Date Registered Registration No. Creation
--------------------- ---------------------- ---------------- --------
ITDS 10X Software December 3, 1990 TX2969733 1990
Annex 2 to Security Agreement
-----------------------------
ANNEX 3
LIST OF PATENTS AND PATENT APPLICATIONS
[See Section 2(d).]
International Telecommunication Data Systems, Inc.
--------------------------------------------------
File Patent Country Registration No. Data
---- ------ ------- ---------------- ----
NONE
Annex 3 to Security Agreement
-----------------------------
ANNEX 4
LIST OF TRADE NAMES, TRADEMARKS, SERVICES MARKS,
TRADEMARK AND SERVICE ▇▇▇▇ REGISTRATIONS AND
APPLICATIONS FOR TRADEMARK AND SERVICE ▇▇▇▇ REGISTRATIONS
[See Section 2(d).]
U.S. Trademarks
---------------
International Telecommunication Data Systems, Inc.
--------------------------------------------------
Application (A)
Registration (R) Registration
▇▇▇▇ or Series No. (S) or Filing Date
--------------------- ---------------- --------------------
Payscan S75283806 April 30, 1997
ITDS S75283805 April 30, 1997
ITDS and Design ▇▇▇▇▇▇▇▇▇ April 30, 1997
ITDS 10X R1664867 November 19, 1991
Annex 4 to Security Agreement
-----------------------------
- 2 -
Foreign Trademarks
------------------
International Telecommunication Data Systems, Inc.
--------------------------------------------------
Application (A) Registration or
▇▇▇▇ Registration (R) Country Filing Date (F)
----------------- ---------------- --------------- ---------------
ITDS S860,442 Canada October 30, 1997
ITDS and Design S860,441 Canada October 30, 1997
ITDS 10X S819880140 Brazil April 9, 1997
ITDS S819880132 Brazil April 9, 1997
ITDS S819880124 Brazil April 9, 1997
Annex 4 to Security Agreement
-----------------------------
ANNEX 5
LIST OF CONTRACTS, LICENSES AND OTHER AGREEMENTS
[See Section 2(d), (e) and (f).]
International Telecommunication ata Systems, Inc.
-------------------------------------------------
International Telecommunication Data Systems, Inc. (ITDS)
licenses for its use various off-the-shelf business software.
ITDS has a perpetual, limited use, non-exclusive license to use an ISIS
Reformatter from CSC and a software license to use Computer Associates'
software.
ITDS licenses certain of its intellectual property rights to the following
entities:
Advantage Cellular
Aliant Cellular (Lincoln)
Cellular ▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
CellularOne/Allegan Cellular
CellularOne of Albany
CellularOne of Kansas/Missouri
CellularOne of Mid-South Texas
Comsat
Brazos Cellular
CellularOne - ▇▇▇▇▇▇▇▇▇
CellularOne by Blue Mountain
CellularOne of Colorado
CellularOne of Lake ▇▇▇▇▇▇▇
CellularOne of San ▇▇▇▇ Obispo
Central Oregon Cellular Inc.
Copper Valley Cellular
Aliant Cellular (Grand Island)
Artice Slope Telecom & Cellular Inc.
Cellular Mobile System of St. Cloud
CellularOne Great Lakes of Iowa
CellularOne of El Dorado
CellularOne of Lewiston
CellularOne of Santa ▇▇▇▇
Columbia River Cellular/D.B.A. CellularOne
Data Cellular Computer Solutions
Farmers Cellular Telephone Inc.
Frontier CellularOne
▇▇▇▇ County Cellular Telephone Company Inc.
Annex 5 to Security Agreement
-----------------------------
- 2 -
New Wave Cellular
Pace Communications
Ramcell of Kentucky
Sygnet Communications
Thunder Bay Mobility
WirelessNorth
France Caraibe Mobiles
Highland (Frontier Cellular)
MComcast
PCM Management (for CellularOne)
Ramcell of North Carolina
Star Cellular
Sygnet Communications
WorldCom - WCW2
Frontier
HighwayMaster
Mercury Communications
Oklahoma Western Telephone Company
Ramcell of California
Ramcell of Oregon
Sygnet Communications
Sygnet Communications (▇▇▇▇)
Valley Telecommunications
Worldcom Airtouch Minnesota
Annex 5 to Security Agreement
-----------------------------
ANNEX 6
LIST OF LOCATIONS
[See Section 5.07.]
International Telecommunication Data Systems, Inc.
--------------------------------------------------
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇
Annex 6 to Security Agreement
-----------------------------