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EXHIBIT 10.16
AMENDED AND RESTATED
PLEDGE AND SECURITY AGREEMENT
(Net2000 Subsidiary)
THIS AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT ("Agreement")
dated as of July 30, 1999, is by and between _______________________, a Delaware
corporation ("Debtor"), whose address is c/o ______________________________, and
whose Tax I.D. No. is _______________, and NORTEL NETWORKS INC. (f/k/a Northern
Telecom Inc.), a Delaware corporation ("Secured Party"), as Administrative Agent
for the "Lenders", as that term is defined below, whose address is ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
R E C I T A L S:
A. Subject to the terms of that certain Credit Agreement dated as of
November 2, 1998, among Net2000 Communications Group, Inc. ("Borrower"), certain
of the Lenders and Administrative Agent (the "Original Credit Agreement"),
certain of the Lenders extended certain credit facilities to Borrower. As a
condition to the effectiveness of the Original Credit Agreement, Debtor executed
and delivered that certain Pledge and Security Agreement dated as of November 2,
1998 (the "Original Security Agreement") pursuant to which Debtor granted Liens
on Debtor's assets and properties to secure payment and performance of the
"Obligations" as such term is defined in the Original Credit Agreement.
B. Pursuant to that certain Amended and Restated Credit Agreement dated
as of July 30, 1999, among Borrower, the lenders named therein (together with
their successors and assigns, the "Lenders") and Administrative Agent (as the
same may be amended, renewed, extended, restated, replaced, substituted,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
the Original Credit Agreement is, concurrently herewith, being amended and
restated. In connection therewith and concurrently herewith, Borrower is, inter
alia, executing and delivering that certain Promissory Note dated July 30, 1999,
in the original principal amount of $75,000,000 payable to the order of Nortel
Networks Inc. (such promissory note, as amended, renewed, extended, restated,
replaced, substituted, supplemented or otherwise modified from time to time, the
"Note"; the Credit Agreement, the Note and the other Loan Documents (as such
terms are defined in the Credit Agreement), including, without limitation, any
and all security agreements, pledge agreements, assignments, guaranties,
licenses, lien waivers, collection account agreements and other agreements,
documents, instruments and certificates now or hereafter executed and/or
delivered in connection therewith, and any and all amendments, modifications,
renewals, extensions, restatements and/or supplements thereto from time to time,
are hereinafter collectively called the "Loan Documents").
C. Debtor has directly and indirectly benefitted and will directly and
indirectly benefit from the Loans evidenced and governed by the Credit Agreement
and the other transactions evidenced by and contemplated in the Loan Documents
(as defined in the Credit Agreement), and
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the execution and delivery of this Agreement is necessary and convenient to the
conduct, promotion and attainment of the business of Debtor.
D. The execution and delivery of this Agreement is required by the terms
of the Credit Agreement and is a condition to the availability of the Loans to
Borrower pursuant to the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Lenders to make the Loans under
the Credit Agreement, the parties hereto hereby agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. As used in this Agreement, the following
terms have the following meanings:
"Account" means any "account", as such term is defined in Article
or Chapter 9 of the UCC, now owned or hereafter acquired by Debtor and,
in any event, shall include, without limitation, each of the following,
whether now owned or hereafter acquired by Debtor: (a) all rights of
Debtor to payment for goods sold or leased, services rendered or the
license of Intellectual Property, whether or not earned by performance;
(b) all accounts receivable of Debtor; (c) all rights of Debtor to
receive any payment of money or other form of consideration; (d) all
security pledged, assigned or granted to or held by Debtor to secure any
of the foregoing; (e) all guaranties of, or indemnifications with
respect to, any of the foregoing; (f) all rights of Debtor as an unpaid
seller of goods or services, including, but not limited to, all rights
of stoppage in transit, replevin, reclamation and resale; and (g) all
rights to brokerage commissions.
"Borrower" means Net2000 Communications Group, Inc., a Delaware
corporation, with its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and whose tax
identification number is ▇▇-▇▇▇▇▇▇▇.
"Broker" means any "broker," as such term is defined in Article
or Chapter 8 of the UCC, and in any event shall include, but not be
limited to, any Person defined as a broker or dealer under the federal
securities laws, but without excluding a bank acting in that capacity.
"Capital Stock" means corporate stock and any and all securities,
shares, partnership interests, limited partnership interests, limited
liability company interests, membership interests, equity interests,
participations, rights or other equivalents (however designated) of
corporate stock or any of the foregoing issued by any entity (whether a
corporation, a
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partnership, a limited liability company or another entity) and
includes, without limitation, securities convertible into Capital Stock
and rights or options to acquire Capital Stock.
"Chattel Paper" means any "chattel paper," as such term is
defined in Article or Chapter 9 of the UCC, now owned or hereafter
acquired by Debtor.
"Clearing Corporation" means any "clearing corporation," as such
term is defined in Article or Chapter 8 of the UCC, and in any event
shall include, but not be limited to, any (a) Person that is registered
as a "clearing agency" under the federal securities laws, (b) federal
reserve bank, or (c) other Person that provides clearance or settlement
services with respect to Financial Assets that would require it to
register as a clearing agency under the federal securities laws but for
an exclusion or exemption from the registration requirement, if its
activities as a clearing corporation, including, without limitation,
promulgation of rules, are subject to regulation by a federal or state
governmental authority.
"Collateral" has the meaning specified in Section 2.1.
"Commodity Account" means any "commodity account," as such term
is defined in Article or Chapter 9 of the UCC, now owned or hereafter
acquired by Debtor, including, without limitation, all accounts
maintained by a Commodity Intermediary in which a Commodity Contract is
carried for Debtor.
"Commodity Contract" means any "commodity contract," as such term
is defined in Article or Chapter 9 of the UCC, and includes, without
limitation, a commodity futures contract, a commodity option, or other
contract that, in each case, is (a) traded on or subject to the rules of
a board of trade that has been designated as a contract market for such
a contract pursuant to the federal commodities laws, or (b) traded on a
foreign commodity board of trade, exchange or market, and is carried on
the books of a Commodity Intermediary for a Commodity Customer.
"Commodity Customer" means any "commodity customer" as such term
is defined in Article or Chapter 9 of the UCC, and includes, without
limitation, any Person for whom a Commodity Intermediary carries a
Commodity Contract on its books.
"Commodity Intermediary" means any "commodity intermediary," as
such term is defined in Article or Chapter 9 of the UCC, including,
without limitation, (a) a Person who is registered as a futures
commission merchant under the federal commodities laws, or (b) a Person
who in the ordinary course of its business provides clearance or
settlement services for a board of trade that has been designated as a
contract market pursuant to the federal commodities laws.
"Copyright License" means any written agreement now or hereafter
in existence granting to Debtor any right to use any Copyright
including, without limitation, the agreements identified on Schedule 3.
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"Copyright Security Agreement" means a copyright security
agreement, executed and delivered by Debtor to Secured Party,
substantially in the form of Exhibit A, as such agreement may be
amended, supplemented or otherwise modified from time to time.
"Copyrights" means all of the following: (a) all copyrights,
works protectable by copyright, copyright registrations and copyright
applications of Debtor, including, without limitation, those set forth
on Schedule 3; (b) all renewals, extensions and modifications thereof;
(c) all income, royalties, damages, profits and payments relating to or
payable under any of the foregoing; (d) the right to ▇▇▇ for past,
present or future infringements of any of the foregoing; (e) all other
rights and benefits relating to any of the foregoing throughout the
world; and (f) all goodwill associated with and symbolized by any of the
foregoing; in each case, whether now owned or hereafter acquired by
Debtor.
"Deposit Accounts" means any and all deposit accounts (including
cash collateral accounts), bank accounts or investment accounts now
owned or hereafter acquired or opened by Debtor, including, without
limitation, those set forth on Schedule 7, and any account which is a
replacement or substitute for any of such accounts, together with all
monies, Instruments, certificates, checks, drafts, wire transfer
receipts and other property deposited therein and all balances therein
and all investments made with funds deposited therein or otherwise held
in connection therewith, including, without limitation, indebtedness
(howsoever evidenced) and/or securities issued or guaranteed by the
government of the U.S., certificates of deposit and all contract rights,
General Intangibles, contracts, Instruments, Investment Property,
Security Entitlements, Financial Assets, Commodity Contracts and other
Documents now or hereafter existing with respect thereto, including, but
not limited to, any and all renewals, extensions, reissuances and
replacements and substitutions therefor with all earnings, profits or
other Proceeds therefrom in the form of interest or otherwise, from time
to time representing, evidencing, deposited into or held in the Deposit
Accounts.
"Document" means any "document," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by
Debtor, including, without limitation, all documents of title and all
receipts covering, evidencing or representing goods now owned or
hereafter acquired by Debtor.
"Entitlement Holder" means any "entitlement holder", as such term
is defined in Article or Chapter 8 of the UCC, and in any event shall
include, but not be limited to, any Person identified in the records of
a Securities Intermediary as the Person having a Security Entitlement
against the Securities Intermediary, including, without limitation, any
Person who acquires a security entitlement under Article or Chapter 8 of
the UCC.
"Equipment" means any "equipment," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by
Debtor and, in any event, shall include, without limitation, all
machinery, equipment, furniture, fixtures, trade fixtures, trailers,
rolling stock, vessels, aircraft and vehicles now owned or hereafter
acquired by Debtor and any and all additions, substitutions and
replacements of any of the foregoing, wherever
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located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"Financial Asset" means any "financial asset," as such term is
defined in Article or Chapter 8 of the UCC, and in any event shall
include, but not be limited to, any (a) Security, (b) obligation of a
Person or a share, participation or other interest in a Person or in
property or an enterprise of a Person, which is, or is of a type, dealt
in or traded on financial markets, or which is recognized in any area in
which it is issued or dealt in as a medium for investment, and (c) any
property that is held by a Securities Intermediary for another Person in
a Securities Account if the Securities Intermediary has expressly agreed
with the other Person that the property is to be treated as a Financial
Asset under Article or Chapter 8 of the UCC.
"General Intangibles" means any "general intangibles," as such
term is defined in Article or Chapter 9 of the UCC, now owned or
hereafter acquired by Debtor and, in any event, shall include, without
limitation, each of the following, whether now owned or hereafter
acquired by Debtor: (a) all of Debtor's service marks, trade names,
trade secrets, registrations, goodwill, franchises, licenses, permits,
proprietary information, customer lists, designs and inventions; (b) all
of Debtor's books and records, data, plans, manuals, computer software,
computer tapes, computer disks, computer programs, source codes, object
codes, management information systems and all rights of Debtor to
retrieve data and other information from third parties; (c) all of
Debtor's contract rights, partnership interests, joint venture
interests, securities, deposit accounts, investment accounts and
certificates of deposit (including, without limitation, all contracts
relating to the construction or operation of the Network, including
rights of way, easements, leases and all related contracts); (d) all
rights of Debtor to payment under letters of credit and similar
agreements; (e) all tax refunds and tax refund claims of Debtor; (f) all
choses in action and causes of action of Debtor (whether arising in
contract, tort or otherwise and whether or not currently in litigation)
and all judgments in favor of Debtor; (g) all rights and claims of
Debtor under warranties and indemnities; and (h) all rights of Debtor
under any insurance, surety or similar contract or arrangement.
"Guarantee" by any Person means any indebtedness, liability or
obligation, contingent or otherwise, of such Person directly or
indirectly guaranteeing any Debt or other obligation of any other Person
and, without limiting the generality of the foregoing, any indebtedness,
liability or obligation, direct or indirect, contingent or otherwise, of
such Person (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising
by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (b) entered
into for the purpose of assuring in any other manner the obligee of such
Debt or other indebtedness, liability or obligation as to the payment
thereof or to protect the obligee against loss in respect thereof (in
whole or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb
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has a corresponding meaning. The amount of any Guarantee shall be deemed
to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee is made or, if not
stated or determinable, the maximum anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as
reasonably determined.
"Instrument" means any "instrument," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by
Debtor, and, in any event, shall include all promissory notes, drafts,
bills of exchange and trade acceptances of Debtor, whether now owned or
hereafter acquired.
"Intellectual Property" means the Copyrights, Copyright Licenses,
Patents, Patent Licenses, Trademarks and Trademark Licenses.
"Inventory" means any "inventory," as such term is defined in
Article or Chapter 9 of the UCC, now owned or hereafter acquired by
Debtor, and, in any event, shall include, without limitation, each of
the following, whether now owned or hereafter acquired by Debtor: (a)
all goods and other personal property of Debtor that are held for sale
or lease or to be furnished under any contract of service; (b) all raw
materials, work-in-process, finished goods, inventory, supplies and
materials of Debtor; (c) all wrapping, packaging, advertising and
shipping materials of Debtor; (d) all goods that have been returned to,
repossessed by or stopped in transit by Debtor; and (e) all Documents
evidencing any of the foregoing.
"Investment Property" means any "investment property," as such
term is defined in Article or Chapter 9 of the UCC, now owned or
hereafter acquired by Debtor, and, in any event, shall include, without
limitation, each of the following, whether now owned or hereafter
acquired by Debtor: (a) the Securities Accounts and other Investment
Property described on Schedule 5; (b) any Security or Capital Stock,
whether certificated or uncertificated; (c) any Security Entitlement;
(d) any Commodity Contract; and (e) any Commodity Account.
"Issuer" means any "issuer," as such term is defined in Article
or Chapter 8 of the UCC, and in any event shall include, but not be
limited to, any Person that, with respect to an obligation on or a
defense to a Security, (a) places or authorizes the placing of its name
on a Security Certificate, other than as authenticating trustee,
registrar, transfer agent or the like, to evidence a share,
participation or other interest in its property or in an enterprise, or
to evidence its duty to perform an obligation represented by the
certificate; (b) creates a share, participation or other interest in its
property or in an enterprise, or undertakes an obligation, that is an
Uncertificated Security; (c) directly or indirectly creates a fractional
interest in its rights or property, if the fractional interest is
represented by a Security Certificate; or (d) becomes responsible for,
or in the place of, another Issuer.
"License" means any permit, certificate, approval, order, license
or other authorization, including, without limitation, any FCC License.
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"Network" means Borrower's long-distance telecommunications
network.
"Obligations" means the "Obligations," as such term is defined in
the Credit Agreement, and the obligations, indebtedness and liabilities
of Debtor under this Agreement and any other Loan Document to which
Debtor may be a party.
"Patent License" means any written agreement now or hereafter in
existence granting to Debtor any right to use any invention on which a
Patent is in existence including, without limitation, the agreements
described on Schedule 3.
"Patent Security Agreement" means a patent security agreement
executed and delivered by Debtor to Secured Party, substantially in the
form of Exhibit B, as such agreement may be amended, supplemented or
otherwise modified from time to time.
"Patents" means all of the following: (a) all patents, patent
applications and patentable inventions of Debtor, including, without
limitation, those set forth on Schedule 3, and all of the inventions and
improvements described and claimed therein; (b) all continuations,
divisions, renewals, extensions, modifications, substitutions,
continuations-in-part or reissues of any of the foregoing; (c) all
income, royalties, profits, damages, awards and payments relating to or
payable under any of the foregoing; (d) the right to ▇▇▇ for past,
present and future infringements of any of the foregoing; (e) all other
rights and benefits relating to any of the foregoing throughout the
world; and (f) all goodwill associated with any of the foregoing; in
each case, whether now owned or hereafter acquired by Debtor.
"Pledged Collateral" has the meaning specified in Section 4.16(b)
(i).
"Pledged Shares" means all Capital Stock now or hereafter owned
by Debtor, including, without limitation, the shares of Capital Stock
described on Schedule 4.
"Proceeds" means any "proceeds," as such term is defined in
Article or Chapter 9 of the UCC and, in any event, shall include, but
not be limited to, (a) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to Debtor from time to time with respect to
any of the Collateral, (b) any and all payments (in any form whatsoever)
made or due and payable to Debtor from time to time in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of
all or any part of the Collateral by any Governmental Authority (or any
Person acting, or purporting to act, for or on behalf of any
Governmental Authority), and (c) any and all other amounts from time to
time paid or payable under or in connection with any of the Collateral.
"Securities Account" means any "securities account," as such term
is defined in Article or Chapter 8 of the UCC, and in any event shall
include, but not be limited to, any account to which a Financial Asset
is or may be credited in accordance with an agreement
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under which the Person maintaining the account undertakes to treat the
Person for whom the account is maintained as entitled to exercise the
rights that comprise the Financial Asset.
"Securities Intermediary" means any "securities intermediary," as
such term is defined in Article or Chapter 8 of the UCC, and in any
event shall include, but not be limited to, any (a) Clearing
Corporation, or (b) Person, including a bank or Broker, that in the
ordinary course of its business maintains Securities Accounts for others
and is acting in that capacity.
"Security" means any "security," as such term is defined in
Article or Chapter 8 of the UCC and, in any event, shall include, but
not be limited to, any obligation of an Issuer or a share, participation
or other interest in an Issuer or in property or an enterprise of an
Issuer (a) which is represented by a Security Certificate in bearer or
registered form, or the transfer of which may be registered upon books
maintained for that purpose by or on behalf of the Issuer, (b) which is
one of a class or series or by its terms is divisible into a class or
series of shares, participations, interests or obligations, and (c)
which (i) is, or is of a type, dealt in or traded on securities
exchanges or securities markets, or (ii) is a medium for investment and
by its terms expressly provides that it is a security governed by
Article or Chapter 8 of the UCC.
"Security Certificate" means any "security certificate," as such
term is defined in Article or Chapter 8 of the UCC, and in any event
shall include, but not be limited to, any certificate representing a
Security.
"Security Entitlement" means any "security entitlement," as such
term is defined in Article or Chapter 8 of the UCC, and in any event
shall include, but not be limited to, any of the rights and property
interests of an Entitlement Holder with respect to a Financial Asset.
"Trademark License" means any written agreement now or hereafter
in existence granting to Debtor any right to use any Trademark,
including, without limitation, the agreements identified on Schedule 3.
"Trademark Security Agreement" means a trademark security
agreement executed and delivered by Debtor to Secured Party,
substantially in the form of Exhibit C, as such agreement may be
amended, supplemented or otherwise modified from time to time.
"Trademarks" means all of the following: (a) all trademarks,
trade names, corporate names, company names, business names, fictitious
business names, trade styles, service marks, logos, other business
identifiers, prints and labels on which any of the foregoing have
appeared or appear, all registrations and recordings thereof and all
applications in connection therewith, including, without limitation,
registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the U.S., any
state thereof or any other country or any political subdivision thereof,
including, without
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limitation, those described in Schedule 3; (b) all reissues, extensions
and renewals thereof; (c) all income, royalties, damages and payments
now or hereafter relating to or payable under any of the foregoing,
including, without limitation, damages or payments for past or future
infringements of any of the foregoing; (e) the right to ▇▇▇ for past,
present and future infringements of any of the foregoing; (f) all rights
corresponding to any of the foregoing throughout the world; and (g) all
goodwill associated with and symbolized by any of the foregoing; in each
case, whether now owned or hereafter acquired by Debtor.
"UCC" means the Uniform Commercial Code as in effect in the State
of New York; provided, that if, by applicable law, the perfection or
effect of perfection or non-perfection of the security interest created
hereunder in any Collateral is governed by the Uniform Commercial Code
as in effect on or after the date hereof in any other jurisdiction,
"UCC" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection or the effect of perfection or non-perfection.
"Uncertificated Security" means any "uncertificated security," as
such term is defined in Article or Chapter 8 of the UCC, and in any
event shall include, but not be limited to, any Security that is not
represented by a certificate.
Section 1.2 Other Definitional Provisions. Terms used herein that are
defined in the Credit Agreement and are not otherwise defined herein shall have
the meanings therefor specified in the Credit Agreement. References to
"Sections," "subsections," "Exhibits" and "Schedules" shall be to Sections,
subsections, Exhibits and Schedules, respectively, of this Agreement unless
otherwise specifically provided. All definitions contained in this Agreement are
equally applicable to the singular and plural forms of the terms defined. All
references to statutes and regulations shall include any amendments of the same
and any successor statutes and regulations. References to particular sections of
the UCC should be read to refer also to parallel sections of the Uniform
Commercial Code as enacted in each state or other jurisdiction where any portion
of the Collateral is or may be located.
ARTICLE 2
Security Interest
Section 2.1 Security Interest. As collateral security for the prompt
payment and performance in full when due of the Obligations (whether at stated
maturity, by acceleration or otherwise), Debtor hereby pledges and assigns (as
collateral) to Secured Party, and grants to Secured Party a continuing lien on
and security interest in, all of Debtor's right, title and interest in and to
the following, whether now owned or hereafter arising or acquired and wherever
located (collectively, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
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(c) all Instruments;
(d) all General Intangibles;
(e) all Documents;
(f) all Equipment (including, without limitation, Equipment at the
locations set forth on Schedule 1 hereto);
(g) all Inventory (including, without limitation, Inventory at the
locations set forth on Schedule 1 hereto);
(h) all Intellectual Property;
(i) all Investment Property, and the certificates and all dividends,
cash, instruments and other property from time to time received,
receivable or otherwise distributed or distributable in respect
of or in exchange for any or all of such Investment Property;
(j) all Deposit Accounts;
(k) the Pledged Shares and the certificates representing the Pledged
Shares, all additional Capital Stock of the Subsidiaries of
Debtor and all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed
or distributable in respect of or in exchange for any or all of
the Pledged Shares or such additional Capital Stock, and all
rights, interests and other property, including, without
limitation, General Intangibles, relating to any or all of the
Pledged Shares, such additional Capital Stock and such
dividends, cash, instruments and other property;
(l) all indebtedness from time to time owed to Debtor by its
Subsidiaries and the instruments evidencing such indebtedness,
and all interest, cash, instruments and other property from time
to time received, receivable or otherwise distributed or
distributable in respect of or in exchange for any or all of such
indebtedness;
(m) all proceeds, in cash or otherwise, of any of the property
described in the foregoing clauses (a) through (l) and all liens,
security, rights, remedies and claims of Debtor with respect
thereto;
(n) all other goods and personal property of Debtor of any kind or
character, whether tangible or intangible, including, without
limitation, any and all rights in and claims under insurance
policies, judgments and rights thereunder, and tort claims; and
(o) all Proceeds and products of any or all of the foregoing.
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Section 2.2 Debtor Remains Liable. Notwithstanding anything to the
contrary contained herein, (a) Debtor shall remain liable under the contracts,
agreements, documents and instruments included in the 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
Secured Party of any of its rights or remedies hereunder shall not release
Debtor from any of its duties or obligations under the contracts, agreements,
documents and instruments included in the Collateral, and (c) Secured Party
shall not have any indebtedness, liability or obligation under any of the
contracts, agreements, documents and instruments included in the Collateral by
reason of this Agreement, and Secured Party shall not 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.
Section 2.3 Delivery of Collateral. All certificates or instruments
representing or evidencing the Pledged Shares, any Instruments or Chattel Paper
or any other Collateral including, without limitation, any Investment Property,
promptly upon Debtor gaining any rights therein, shall be delivered to and held
by or on behalf of Secured Party pursuant hereto in suitable form for transfer
by delivery, or accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to
Secured Party. After the occurrence and during the continuation of a Default or
an Event of Default, Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing any Pledged Collateral in
its possession for certificates or instruments of smaller or larger
denominations.
ARTICLE 3
Representations and Warranties
To induce Secured Party and the Lenders to enter into this Agreement and
the other Loan Documents, Debtor represents and warrants that:
Section 3.1 Title. Debtor is, and with respect to Collateral acquired
after the date hereof Debtor will be, the legal and beneficial owner of the
Collateral free and clear of any Lien or other encumbrance, except for Permitted
Liens and Liens in favor of Secured Party.
Section 3.2 Accounts. Unless Debtor has given Secured Party written
notice to the contrary, whenever the security interest granted hereunder
attaches to an Account, Debtor shall be deemed to have represented and warranted
to Secured Party as to each of its Accounts that (a) each Account is genuine and
in all respects what it purports to be, (b) each Account represents the legal,
valid and binding obligation of the account debtor evidencing indebtedness
unpaid and owed by such account debtor, (c) except for defenses and business
disputes arising in the ordinary course of business which in the aggregate are
not material, the amount of each Account represented as owing is the correct
amount actually and unconditionally owing except for normal trade discounts
granted in the ordinary course of business, and (d) except for defenses and
business disputes arising in the
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ordinary course of business which in the aggregate are not material, no Account
is subject to any offset, counterclaim or other defense.
Section 3.3 Financing Statements. No financing statement, security
agreement or other Lien instrument covering all or any part of the Collateral is
on file in any public office, except as may have been filed in favor of Secured
Party pursuant to this Agreement and except for financing statements evidencing
Permitted Liens. Except as otherwise disclosed on Schedule 6 hereto, Debtor does
not do business and has not done business within the past five (5) years under a
trade name or any name other than its legal name set forth at the beginning of
this Agreement.
Section 3.4 Principal Place of Business. The principal place of business
and chief executive office of Debtor, and the office where Debtor keeps its
books and records, is located at the address of Debtor shown at the beginning of
this Agreement.
Section 3.5 Location of Collateral. All Inventory (except Inventory in
transit) and Equipment (other than vehicles) of Debtor is located at the places
specified on Schedule 1 hereto. If any such location is leased by Debtor, the
name and address of the landlord leasing such location is identified on Schedule
1 hereto. All Equipment consisting of switches, passport equipment, access node
equipment, Bay routing equipment and other equipment of material value which may
constitute fixtures from time to time is and will be located only at (a) the
specific locations which are described as locations for such types of Equipment
on Schedule 1 hereto or (b) subject to the requirements of this Agreement, such
other locations as may be expressly identified by Debtor from time to time as
locations for such types of Equipment, which identification shall be set forth
in a written notice given by Debtor to Secured Party at least 30 days prior to
the date upon which any such Equipment is located at such location. Debtor has
exclusive possession and control of its Inventory and Equipment. None of the
Inventory (other than Inventory in transit as to which all Documents evidencing
such Inventory have been delivered to Secured Party) or Equipment (other than
vehicles) of Debtor is evidenced by a Document (including, without limitation, a
negotiable document of title). All Instruments, Chattel Paper and Security
Certificates of Debtor have been delivered to Secured Party.
Section 3.6 Perfection. Upon the filing of Uniform Commercial Code
financing statements in the jurisdictions listed on Schedule 2, the filing of a
Patent Security Agreement (if any) and a Trademark Security Agreement (if any)
with the United States Patent and Trademark Office, the filing of a Copyright
Security Agreement (if any) with the United States Copyright Office, and upon
Secured Party's obtaining possession of the Pledged Shares and all other
Instruments, Chattel Paper and Security Certificates of Debtor, the security
interest in favor of Secured Party created herein will constitute a valid and
perfected Lien upon and security interest in the Collateral (except for (a)
vehicles covered by certificates of title, and (b) other Property excluded from
the application of Article or Chapter 9 of the UCC by Section 9-104 of the UCC),
subject to no equal or prior Liens except for those Liens (if any) which
constitute Permitted Liens and are permitted by the Credit Agreement to have
equal or greater priority.
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Section 3.7 Inventory. All production (if any) and purchase of
Inventory by Debtor has been in compliance with all requirements of the Fair
Labor Standards Act.
Section 3.8 Intellectual Property.
(a) All of the Intellectual Property is subsisting, valid and
enforceable. The information contained on Schedule 3 hereto is true,
correct and complete. All Intellectual Property existing on the date
hereof is identified on Schedule 3 hereto.
(b) Debtor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to the Intellectual
Property free and clear of any Liens, including, without limitation, any
pledges, assignments, licenses, user agreements and covenants by Debtor
not to ▇▇▇ third Persons, other than Permitted Liens.
(c) No claim has been made that the use of any of the
Intellectual Property violates or may violate the rights of any third
Person.
(d) Each of the Patents and Trademarks identified on Schedule 3
hereto has been properly registered with the United States Patent and
Trademark Office and each of the Copyrights identified on Schedule 3
hereto has been properly registered with the United States Copyright
Office.
Section 3.9 Pledged Shares and Instruments.
(a) The Pledged Shares that are shares of a corporation have
been duly authorized and validly issued and are fully paid and
nonassessable, and the Pledged Shares that are membership or partnership
interests have been validly granted, under the laws of the jurisdiction
of organization of the issuers thereof. To the best knowledge of Debtor,
the Instruments have been duly authorized and validly issued and
constitute legal and enforceable indebtedness of the makers or issuers
thereof.
(b) Debtor is the legal and beneficial owner of the Pledged
Shares and the Instruments, free and clear of any Lien (other than the
Lien created by this Agreement), and Debtor has not sold, granted any
option with respect to, assigned, transferred or otherwise disposed of
any of its rights or interest in or to the Pledged Shares or the
Instruments.
(c) On the date hereof, the Pledged Shares constitute the
percentage of the issued and outstanding Capital Stock of the issuers
thereof indicated on Schedule 4, as such Schedule 4 may from time to
time be supplemented, amended or modified.
Section 3.10 Investment Property. As of the Closing Date, Schedule 5
contains a complete and accurate description of all Investment Property owned by
Debtor.
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Section 3.11 Common Enterprise. Borrower, Debtor and each Subsidiary of
Borrower are members of an affiliated group and are engaged in a common
enterprise, and the expertise and efforts each such Person support and benefit
the other members of such affiliated group. Debtor expects to derive substantial
benefit (and Debtor may reasonably be expected to derive substantial benefit),
directly and indirectly, from the Loans and the other transactions contemplated
by the Credit Agreement, both in its separate capacity and as a member of an
affiliated and integrated group. Debtor will receive reasonably equivalent value
in exchange for the Collateral being provided by it pursuant to the Loan
Documents to which it is a party as security for the payment and performance of
the Obligations.
ARTICLE 4
Covenants
Debtor covenants and agrees with Secured Party that until the
Obligations are paid and performed in full, the obligations of Secured Party
under the Loan Documents and all Commitments of the Lenders have expired or have
been terminated:
Section 4.1 Encumbrances. Debtor shall not create, permit or suffer to
exist, and shall defend the Collateral against, any Lien or other encumbrance on
the Collateral except for those Permitted Liens (if any) which are permitted to
attach to the Collateral in accordance with the Credit Agreement, and shall
defend Debtor's rights in the Collateral and Secured Party's pledge and
collateral assignment of and security interest in the Collateral against the
claims and demands of all Persons. Debtor shall do nothing to impair the rights
of Secured Party in the Collateral.
Section 4.2 Modification of Accounts. Debtor shall, in accordance with
prudent business practices, endeavor to collect or cause to be collected from
each account debtor under its Accounts, as and when due, any and all amounts
owing under such Accounts. Without the prior written consent of Secured Party,
Debtor shall not, other than in the ordinary course of business and pursuant to
customary business practices in Debtor's industry, (a) grant any extension of
time for any payment with respect to any of the Accounts, (b) compromise,
compound or settle any of the Accounts for less than the full amount thereof,
(c) release, in whole or in part, any Person liable for payment of any of the
Accounts, (d) allow any credit or discount for payment with respect to any
Account other than trade discounts granted in the ordinary course of business,
or (e) release any Lien or Guarantee securing any Account.
Section 4.3 Disposition of Collateral. Except as expressly permitted by
the terms of the Credit Agreement, Debtor shall not sell, lease, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, the Collateral or any part thereof without the prior written consent
of Secured Party.
Section 4.4 Further Assurances. At any time and from time to time, upon
the request of Secured Party, and at the sole expense of Debtor, Debtor shall
promptly execute and deliver all such further agreements, documents and
instruments and take such further action as Secured Party may
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reasonably deem necessary or appropriate to preserve and perfect its security
interest in and pledge and collateral assignment of the Collateral and carry out
the provisions and purposes of this Agreement or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any of
the Collateral, and, to the extent any of the Collateral at any time constitutes
Investment Property, then Debtor shall cause Secured Party to obtain "control,"
as defined in Article or Chapter 8 of the UCC, of such Collateral in one (or
more, if Secured Party reasonably so requests) of the manners prescribed in
Section 8-106 of the UCC. Debtor and Secured Party agree that the grant of the
security interest in the Investment Property pursuant to this Agreement shall
have the effect of a delivery of such securities to Secured Party pursuant to
Section 8-301 of the UCC, and the effect of a taking of delivery by Secured
Party of such Collateral in accordance with Section 8-302 of the UCC. Except as
otherwise expressly permitted by the terms of the Credit Agreement relating to
disposition of assets and except for Permitted Liens, Debtor agrees to defend
the title to the Collateral and the Lien thereon of Secured Party against the
claim of any other Person and to maintain and preserve such Lien. Without
limiting the generality of the foregoing, Debtor shall (a) execute and deliver
to Secured Party such financing statements as Secured Party may from time to
time require; (b) deliver and pledge to Secured Party all Documents (including,
without limitation, all documents of title) evidencing Inventory or Equipment
(except for certificates of title covering vehicles) and cause Secured Party to
be named as lienholder on all such Documents; (c) deliver and pledge to Secured
Party all Instruments and Chattel Paper of Debtor with any necessary
endorsements; and (d) execute and deliver to Secured Party such other
agreements, documents and instruments as Secured Party may require to perfect
and maintain the validity, effectiveness and priority of the Liens intended to
be created by the Loan Documents. Debtor authorizes Secured Party to file one or
more financing or continuation statements, and amendments thereto, relating to
all or any part of the Collateral without the signature of Debtor where
permitted by law. A carbon, photographic or other reproduction of this Agreement
or of any financing statement covering the Collateral or any part thereof shall
be sufficient as a financing statement and may be filed as a financing
statement.
Section 4.5 Insurance. Debtor shall maintain insurance in the types and
amounts, and under the terms and conditions, specified in Section 8.5 of the
Credit Agreement. Recoveries under any such policy of insurance shall be paid as
provided in the Credit Agreement.
Section 4.6 Bailees. If any of the Collateral is at any time in the
possession or control of any warehouseman, bailee or any of Debtor's agents or
processors, Debtor shall, at the request of Secured Party, notify such
warehouseman, bailee, agent or processor of the security interest created
hereunder and shall instruct such Person to hold such Collateral for Secured
Party's account subject to Secured Party's instructions.
Section 4.7 Inspection Rights. Debtor shall permit Secured Party and its
representatives to examine, inspect and audit the Collateral and to examine,
inspect and audit Debtor's books and records at any reasonable time, and as the
Secured Party may desire. Secured Party may at any time and from time to time
contact account debtors to verify the existence, amounts and terms of the
Accounts.
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Section 4.8 Mortgagee and Landlord Waivers or Subordinations. Subject
to the provisions of the Credit Agreement, Debtor shall cause each mortgagee of
real property owned by Debtor and each landlord of real property leased by
Debtor to execute and deliver instruments satisfactory in form and substance to
Secured Party by which such mortgagee or landlord waives or subordinates its
rights, if any, in any of the Collateral.
Section 4.9 Corporate Changes. Debtor shall not change its name,
identity or corporate structure in any manner that might make any financing
statement filed in connection with this Agreement seriously misleading unless
Debtor shall have given Secured Party thirty (30) days prior written notice
thereof and shall have taken all action deemed necessary or appropriate by
Secured Party to protect its Liens and the perfection and priority thereof.
Debtor shall not change its principal place of business, chief executive office
or the place where it keeps its books and records unless it shall have given
Secured Party thirty (30) days prior written notice thereof and shall have taken
all action deemed necessary or appropriate by Secured Party to cause its
security interest in the Collateral to be perfected with the priority required
by this Agreement.
Section 4.10 Books and Records; Information. Debtor shall keep accurate
and complete books and records of the Collateral and Debtor's business and
financial condition in accordance with GAAP. Debtor shall from time to time at
the request of Secured Party deliver to Secured Party such information regarding
the Collateral and Debtor as Secured Party may reasonably request, including,
without limitation, lists and descriptions of the Collateral and evidence of the
identity and existence of the Collateral. To the extent required by Section 4.4
of this Agreement, Debtor shall ▇▇▇▇ its books and records to reflect the
security interest of Secured Party under this Agreement.
Section 4.11 Equipment and Inventory.
(a) Debtor shall keep the Equipment (other than vehicles) and
Inventory (other than Inventory in transit) at the locations specified
on Schedule 1 hereto or at such other places within the U.S. where all
action required to perfect Secured Party's security interest in the
Equipment and Inventory with the priority required by this Agreement
shall have been taken; provided that if any Equipment (other than
vehicles) or Inventory (other than Inventory in transit) is being
relocated to any jurisdiction where the security interest of Secured
Party under this Agreement has not been previously perfected, then in
such case Debtor shall deliver prompt (and in any event within not less
than thirty (30) days) notice thereof to Secured Party.
(b) Debtor shall maintain the Equipment and Inventory in good
condition and repair (ordinary wear and tear of the Equipment excepted).
Debtor shall not permit any waste or destruction of the Equipment or
Inventory or any part thereof. Debtor shall not permit the Equipment or
Inventory to be used in violation of any law, rule or regulation or the
terms of any policy of insurance. Debtor shall not use or permit any of
the Equipment or Inventory to be used in any manner or for any purpose
that would impair its value or expose it to unusual risk.
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(c) Debtor shall comply with all requirements of the Fair Labor
Standards Act in producing or purchasing Inventory.
(d) Within forty-five (45) days of the end of each of Debtor's
fiscal quarters, Debtor shall provide Secured Party with a report
setting forth in reasonable detail any change during such preceding
fiscal quarter of the location of any Equipment or Inventory (unless
such location is one of the locations already specified on Schedule 1
hereto).
Section 4.12 Warehouse Receipts Non-Negotiable. Debtor agrees that if
any warehouse receipt or receipt in the nature of a warehouse receipt is issued
in respect of any of the Collateral, such warehouse receipt or receipt in the
nature thereof shall not be "negotiable" (as such term is used in Section 7-104
of the UCC) unless such warehouse receipt or receipt in the nature thereof is
delivered to Secured Party.
Section 4.13 Notification. Debtor shall promptly notify Secured Party of
(a) any Lien, encumbrance or claim (other than Permitted Liens) that has
attached to or been made or asserted against any of the Collateral, (b) any
material change in any of the Collateral, including, without limitation, any
material damage to or loss of Collateral, and (c) the occurrence of any other
event or condition (including, without limitation, matters as to Lien priority)
that could have a material adverse effect on the Collateral or the security
interest created hereunder.
Section 4.14 Collection of Accounts. Debtor shall cause all collections
of Accounts and sales of Inventory to be conducted in compliance with the terms
of the Credit Agreement. In addition all cash proceeds (including, without
limitation, all Proceeds of Collateral) shall be deposited directly, as
received, into a collection account of Debtor and, on a daily basis after such
deposit, transferred into a concentration account as required under Section
8.13(b) of the Credit Agreement. Debtor agrees that all Proceeds of Collateral
deposited in any collection account or concentration account shall at all times
continue to be Collateral under the terms of this Agreement.
Section 4.15 Intellectual Property. Except with the written consent of
Secured Party:
(a) Debtor shall prosecute diligently all applications in
respect of Intellectual Property, now or hereafter pending;
(b) Debtor shall make federal applications on all of its
unpatented but patentable inventions and all of its registrable but
unregistered Copyrights and Trademarks other than any immaterial
Patents, Trademarks and Copyrights which are not useful in Debtor's
business;
(c) Debtor shall preserve and maintain all of its rights in the
Intellectual Property and shall protect the Intellectual Property from
infringement, unfair competition, cancellation or dilution by all
appropriate action, including, without limitation, the commencement and
prosecution of legal proceedings to recover damages for infringement and
to defend and preserve its rights in the Intellectual Property;
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(d) Debtor shall not abandon any of the Intellectual Property
except for any immaterial Intellectual Property which is not useful in
Debtor's business;
(e) Debtor shall not sell or assign any of its interest in, or
grant any license under (except as permitted by Section 5.5), any of the
Intellectual Property and shall maintain the quality of any and all
products and services with respect to which the Intellectual Property is
used. Debtor shall not enter into any agreement regarding Intellectual
Property, including, but not limited to, any licensing agreement not
permitted by Section 5.5, that is or may be inconsistent with Debtor's
obligations under this Agreement or any of the other Loan Documents;
(f) If Debtor shall obtain rights to or become entitled to the
benefit of any Intellectual Property not identified on Schedule 3
hereto, Debtor shall give Secured Party prompt written notice thereof
and the provisions of this Agreement shall automatically apply thereto
and Debtor hereby authorizes Secured Party to modify or update Schedule
3 hereto to include any such new Intellectual Property;
(g) Upon the occurrence of any event that would require any
addition to or modification of Schedule 3 hereto or upon the request of
Secured Party, Debtor shall furnish to Secured Party statements and
schedules further identifying the Intellectual Property and such other
items in connection with the Intellectual Property as Secured Party may
request. Promptly upon the request of Secured Party, Debtor shall modify
this Agreement by amending Schedule 3 hereto to include any Intellectual
Property that becomes part of the Collateral;
(h) If an Event of Default shall have occurred and be continuing,
Debtor shall use its best efforts to obtain any consents, waivers or
agreements necessary to enable Secured Party to exercise its rights and
remedies with respect to the Intellectual Property; and
(i) Debtor shall, at the request of Secured Party, execute and
deliver to Secured Party a Copyright Security Agreement, a Patent
Security Agreement, a Trademark Security Agreement and all other
agreements, documents, instruments and other items as may be necessary
for Secured Party to file such agreements with the United States
Copyright Office, the United States Patent and Trademark Office and any
similar domestic or foreign office, department or agency. Debtor will,
at any time and from time to time upon the request of Secured Party,
execute and deliver to Secured Party all such other agreements,
documents, instruments and other items as may be necessary or
appropriate for Secured Party to create and perfect its security
interest in the Intellectual Property and to make all appropriate
filings with respect thereto.
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Section 4.16 Voting Rights, Distributions, Etc..
(a) So long as no Default or Event of Default shall have
occurred and be continuing:
(i) Debtor shall be entitled to exercise any and all
voting and other consensual rights (including, without
limitation, the right to give consents, waivers and notifications
in respect of any of the Pledged Collateral) pertaining to any of
the Pledged Collateral or any part thereof; provided, however,
that without the prior written consent of Secured Party, no vote
shall be cast or consent, waiver or ratification given or action
taken which would (x) be inconsistent with or violate any
provision of this Agreement or any other Loan Document or (y)
amend, modify or waive any term, provision or condition of the
certificate of incorporation, by-laws, certificate of formation,
operating agreement, or other charter document or other agreement
relating to, evidencing, providing for the issuance of or
securing any Collateral; and provided further that Debtor shall
give Secured Party at least five (5) Business Days' prior written
notice in the form of an officer's certificate of the manner in
which it intends to exercise, or the reasons for refraining from
exercising, any voting or other consensual rights pertaining to
the Collateral or any part thereof which might have a material
adverse effect on the value of the Collateral or any part
thereof; and
(ii) Unless a Default or an Event of Default shall have
occurred and be continuing, Debtor shall be entitled to receive
and retain any and all dividends and interest paid in respect of
any of the Collateral to the extent permitted by the Credit
Agreement; provided, however, that any and all
(A) Restricted Payments paid or payable in
violation of Section 9.4 of the Credit Agreement,
(B) Restricted Payments paid or payable other than
in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect
of, or in exchange for, any Collateral,
(C) Restricted Payments hereafter paid or payable
in cash in respect of any Collateral in connection with a
partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus, and
(D) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Collateral,
shall be, and shall be forthwith delivered to Secured Party to hold as,
Collateral and shall, if received by Debtor, be received in trust for
the benefit of Secured Party, be segregated
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from the other property or funds of Debtor and be forthwith delivered to
Secured Party as Collateral in the same form as so received (with any
necessary endorsement). All amounts (other than amounts described in
clauses (ii)(A-D) above) received by Secured Party in respect of any
Pledged Collateral shall be either (1) promptly released to Debtor, so
long as no Default or Event of Default shall have occurred and be
continuing or (2) if any Default or Event of Default shall have occurred
and be continuing, held by Secured Party and (if an Event of Default
shall have occurred and be continuing) applied as provided by the Credit
Agreement. During the continuance of any Default, any dividends,
interest or other distributions (whether in cash, securities, property
or otherwise) received by Debtor with respect to any Pledged Collateral
shall be held by Debtor in trust for the benefit of Secured Party and,
upon the request of Secured Party, shall be delivered promptly to
Secured Party to hold as Collateral or shall be applied by Secured Party
toward payment of the Obligations, as Secured Party may in its
discretion determine. If such Default is waived or cured to the
satisfaction of Secured Party, any such distributions (except those of
the types described in clauses (ii)(A-D) above) shall be returned
promptly to Debtor (provided that no other Default or Event of Default
exists). If such Default remains uncured and becomes an Event of
Default, any such distributions will be applied by Secured Party as
provided in the Credit Agreement.
(b) Upon the occurrence and during the continuance of a Default
or an Event of Default:
(i) Secured Party may, without notice to Debtor, transfer
or register in the name of Secured Party or any of its nominees
any or all of the Collateral described in Section 2.1(k) or
Section 2.1(l), the proceeds thereof (in cash or otherwise) and
all liens, security, rights, remedies and claims of Debtor with
respect thereto (collectively, the "Pledged Collateral") held by
Secured Party hereunder, and Secured Party or its nominee may
thereafter, after delivery of notice to Debtor, exercise all
voting and corporate rights at any meeting of any corporation,
partnership or other business entity issuing any of the Pledged
Collateral and any and all rights of conversion, exchange,
subscription or any other rights, privileges or options
pertaining to any of the Pledged Collateral as if it were the
absolute owner thereof, including, without limitation, the right
to exchange at its discretion any and all of the Pledged
Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any corporation,
partnership or other business entity issuing any of such Pledged
Collateral or upon the exercise by any such issuer or Secured
Party of any right, privilege or option pertaining to any of the
Pledged Collateral, and in connection therewith, to deposit and
deliver any and all of the Pledged Collateral with any committee,
depositary, transfer agent, registrar or other designated agency
upon such terms and conditions as it may determine, all without
liability except to account for property actually received by it,
but Secured Party shall have no duty to exercise any of the
aforesaid rights, privileges or options, and neither Secured
Party nor any Lender shall be responsible for any failure to do
so or delay in so doing.
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(ii) All rights of Debtor to exercise the voting and other
consensual rights which it would otherwise be entitled to
exercise pursuant to subsection 4.16(a)(i) and to receive the
dividends, interest and other distributions which it would
otherwise be authorized to receive and retain pursuant to
subsection 4.16(a)(ii) shall be suspended until such Default or
Event of Default shall no longer exist, and all such rights
shall, until such Default or Event of Default shall no longer
exist, thereupon become vested in Secured Party which shall
thereupon have the sole right to exercise such voting and other
consensual rights and to receive and hold as Pledged Collateral
such dividends, interest and other distributions.
(iii) All dividends, interest and other distributions
which are received by Debtor contrary to the provisions of this
subsection 4.16(b) shall be received in trust for the benefit of
Secured Party, shall be segregated from other funds of Debtor and
shall be forthwith paid over to Secured Party as Collateral in
the same form as so received (with any necessary endorsement).
(iv) Debtor shall execute and deliver (or cause to be
executed and delivered) to Secured Party all such proxies and
other instruments as Secured Party may reasonably request for the
purpose of enabling Secured Party to exercise the voting and
other rights which it is entitled to exercise pursuant to this
subsection 4.16(b) and to receive the dividends, interest and
other distributions which it is entitled to receive and retain
pursuant to this subsection 4.16(b). The foregoing shall not in
any way limit Secured Party's power and authority granted
pursuant to Section 5.1.
Section 4.17 Transfers and Other Liens; Additional Investments.
(a) Except as may be expressly permitted by the terms of the
Credit Agreement, Debtor shall not grant any option with respect to,
exchange, sell or otherwise dispose of any of the Collateral or create
or permit to exist any Lien upon or with respect to any of the
Collateral except for the Liens created hereby.
(b) Debtor agrees that it will (i) cause each issuer of any of
the Pledged Collateral not to issue any Capital Stock, notes or other
securities or instruments in addition to or in substitution for any of
the Pledged Collateral, except, with the written consent of Secured
Party, to Debtor, (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all such Capital
Stock, notes or other securities or instruments, and (iii) promptly (and
in any event within three Business Days) deliver to Secured Party an
Amendment, duly executed by Debtor, in substantially the form of Exhibit
D (an "Amendment"), in respect of such Capital Stock, notes or other
securities or instruments, together with all certificates, notes or
other securities or instruments representing or evidencing the same.
Debtor hereby (i) authorizes Secured Party to attach each Amendment to
this Agreement, (ii) agrees that all such Capital Stock, notes or other
securities or instruments listed on any Amendment delivered to Secured
Party shall for all purposes hereunder constitute Pledged Collateral,
and (iii) is deemed to have made, upon such
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delivery, the representations and warranties contained in Article III
with respect to such Pledged Collateral.
Section 4.18 Possession; Reasonable Care. Regardless of whether a
Default or an Event of Default has occurred or is continuing, Secured Party
shall have the right to hold in its possession all Instruments, Chattel Paper
and Pledged Collateral pledged, assigned or transferred hereunder and from time
to time constituting a portion of the Collateral. Secured Party may, from time
to time, in its sole discretion, appoint one or more agents (which in no case
shall be Debtor or an Affiliate of Debtor) to hold physical custody, for the
account of Secured Party, of any or all of the Collateral. Secured Party shall
be deemed to have exercised reasonable care in the custody and preservation of
the Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which Secured Party accords its own property, it
being understood that Secured Party shall not have any responsibility for (a)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
Secured Party has or is deemed to have knowledge of such matters, or (b) taking
any necessary steps to preserve rights against any parties with respect to any
Collateral. Following the occurrence and during the continuation of an Event of
Default, Secured Party shall be entitled to take possession of the Collateral.
Section 4.19 Acknowledgment of Collateral Assignment of Deposit
Accounts. Debtor shall deliver to Secured Party, concurrently with the execution
hereof and at any time as Secured Party may request hereafter, acknowledgment by
each financial institution in which any Deposit Account is held or maintained
that the collateral assignment of such Deposit Account has been recorded in the
books and records of such financial institution, and that Secured Party shall
have dominion and control over such Deposit Account, such acknowledgment to be
in form and substance satisfactory to Secured Party.
Section 4.20 Statement of Account for Deposit Accounts. Debtor shall,
from time to time upon written request of Secured Party, provide to Secured
Party a copy of each statement of account for any Deposit Account received by
Debtor from the financial institution in which a Deposit Account is held or
maintained. At Secured Party's request, Debtor will use its reasonable efforts
to make such arrangements as are reasonably necessary in order to enable Secured
Party to access such information by inquiry of an officer or other
representative of any such financial institution or via any automated
information system which may be maintained by such financial institution.
ARTICLE 5
Rights of Secured Party
Section 5.1 Power of Attorney. Debtor hereby irrevocably constitutes and
appoints Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the name of Debtor or in its own name, to take after the
occurrence and during the continuance of an Event of Default and from time to
time thereafter, any and all action and to execute any and all documents and
instruments which Secured
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Party at any time and from time to time deems necessary or desirable to
accomplish the purposes of this Agreement and, without limiting the generality
of the foregoing, Debtor hereby gives Secured Party the power and right on
behalf of Debtor and in its own name to do any of the following after the
occurrence and during the continuance of an Event of Default and from time to
time thereafter, without notice to or the consent of Debtor:
(a) to demand, ▇▇▇ for, collect or receive, in the name of Debtor
or in its own name, any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral and,
in connection therewith, endorse checks, notes, drafts, acceptances,
money orders, documents of title or any other instruments for the
payment of money under the Collateral or any policy of insurance;
(b) to pay or discharge taxes, Liens or other encumbrances levied
or placed on or threatened against the Collateral;
(c) to notify post office authorities to change the address for
delivery of mail of Debtor to an address designated by Secured Party and
to receive, open and dispose of mail addressed to Debtor;
(d) (i) to direct account debtors and any other parties liable
for any payment under any of the Collateral to make payment of any and
all monies due and to become due thereunder directly to Secured Party or
as Secured Party shall direct; (ii) to receive payment of and receipt
for any and all monies, claims and other amounts due and to become due
at any time in respect of or arising out of any Collateral; (iii) to
sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors,
assignments, proxies, stock powers, verifications and notices in
connection with accounts and other documents relating to the Collateral;
(iv) to commence and prosecute any suit, action or proceeding at law or
in equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in respect
of any Collateral; (v) to defend any suit, action or proceeding brought
against Debtor with respect to any Collateral; (vi) to settle,
compromise or adjust any suit, action or proceeding described above and,
in connection therewith, to give such discharges or releases as Secured
Party may deem appropriate; (vii) to exchange any of the Collateral for
other property upon any merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof and, in
connection therewith, deposit any of the Collateral with any committee,
depositary, transfer agent, registrar or other designated agency upon
such terms as Secured Party may determine; (viii) to add or release any
guarantor, indorser, surety or other party to any of the Collateral;
(ix) to renew, extend or otherwise change the terms and conditions of
any of the Collateral; (x) to grant or issue any exclusive or
nonexclusive license under or with respect to any of the Intellectual
Property; (xi) to endorse Debtor's name on all applications, documents,
papers and instruments necessary or desirable in order for Secured Party
to use any of the Intellectual Property; (xii) to make, settle,
compromise or adjust any claims under or pertaining to any of the
Collateral (including, without limitation, claims under any policy of
insurance); and (xiii) to sell, transfer, pledge, convey, make any
agreement with respect
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to or otherwise deal with any of the Collateral as fully and completely
as though Secured Party were the absolute owner thereof for all
purposes, and to do, at Secured Party's option and Debtor's expense, at
any time, or from time to time, all acts and things which Secured Party
deems necessary to protect, preserve, maintain or realize upon the
Collateral and Secured Party's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable until this Agreement is terminated in accordance with its terms.
Secured Party shall be under no duty to exercise or withhold the exercise of any
of the rights, powers, privileges and options expressly or implicitly granted to
Secured Party in this Agreement, and shall not be liable for any failure to do
so or any delay in doing so. Neither Secured Party nor any Person designated by
Secured Party shall be liable for any act or omission or for any error of
judgment or any mistake of fact or law. This power of attorney is conferred on
Secured Party solely to protect, preserve, maintain and realize upon its
security interest in the Collateral. Secured Party shall not be responsible for
any decline in the value of the Collateral and shall not be required to take any
steps to preserve rights against prior parties or to protect, preserve or
maintain any Lien given to secure the Collateral.
Section 5.2 Set-off. Each of Secured Party and the Lenders shall have
the right to set-off and apply against the Obligations, at any time and without
notice to Debtor, any and all deposits (general or special, time or demand,
provisional or final) or other sums at any time credited by or owing from any of
Secured Party or the Lenders to Debtor whether or not the Obligations are then
due. The rights and remedies of Secured Party and the Lenders hereunder are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that Secured Party and the Lenders may have.
Section 5.3 Assignment by Secured Party. In accordance with the
provisions of the Credit Agreement, any of Secured Party and the Lenders may at
any time assign or otherwise transfer all or any portion of its rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, the Obligations), in connection with an assignment of the
Obligations, to any other Person, and such other Person shall thereupon become
vested with all the benefits thereof granted to Secured Party and the Lenders,
respectively, herein or otherwise.
Section 5.4 Performance by Secured Party. If Debtor shall fail to
perform any covenant or agreement contained in this Agreement, Secured Party may
perform or attempt to perform such covenant or agreement on behalf of Debtor. In
such event, Debtor shall, at the request of Secured Party, promptly pay any
amount expended by Secured Party in connection with such performance or
attempted performance to Secured Party, together with interest thereon at the
Default Rate from and including the date of such expenditure to but excluding
the date such expenditure is paid in full. Notwithstanding the foregoing, it is
expressly agreed that Secured Party shall not have any liability or
responsibility for the performance of any obligation of Debtor under this
Agreement.
Section 5.5 License. If no Event of Default shall have occurred and be
continuing, Debtor shall have the exclusive, non-transferrable right and license
to use the Intellectual Property in the ordinary course of business and the
exclusive right to grant to other Persons licenses and sublicenses
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with respect to the Intellectual Property for full and fair consideration.
Debtor agrees not to sell or assign its interest in, or grant any sublicense
under, the license granted under this Section 5.5 without the prior written
consent of Secured Party.
Section 5.6 Change of Depository. In the event of the termination by any
financial institution in which any Deposit Account is maintained of any
agreement with or for the benefit of Secured Party, or if any such financial
institution shall fail to comply with any provisions of any such agreement or
any instructions of Secured Party in accordance with any such agreement or this
Agreement, or if Secured Party determines in its sole discretion that the
financial condition of any such financial institution has materially
deteriorated, Debtor agrees to transfer the affected Deposit Account(s) to
another financial institution acceptable to Secured Party and cause such
substitute financial institution to execute such agreements as Secured Party may
require, in form and substance acceptable to Secured Party, to ensure that
Secured Party has a perfected, first priority collateral assignment of or
security interest in the Deposit Account(s) held with such substitute financial
institution. If any affected Deposit Account is a lockbox account, Debtor agrees
to notify its account debtors promptly to remit all payments which were being
sent to the terminated Deposit Account directly to the substitute Deposit
Account.
Section 5.7 Collection of Deposit Accounts. Upon written demand from
Secured Party to any financial institution in which any of the Deposit Accounts
are maintained, each such financial institution is hereby authorized and
directed by Debtor to make payment directly to Secured Party of the funds in or
credited to the Deposit Accounts, or such part thereof as Secured Party may
request, and each such financial institution shall be fully protected in relying
upon the written statement of Secured Party that the Deposit Accounts are at the
time of such demand assigned hereunder and that Secured Party is entitled to
payment of the Obligations therefrom. Secured Party's receipt for sums paid it
pursuant to such demand shall be a full and complete release, discharge and
acquittance to the depository or other financial institution making such payment
to the extent of the amount so paid. Debtor hereby authorizes Secured Party,
upon (a) Debtor's failure to make payment of any of the Obligations, or any part
thereof, or (b) any acceleration of the maturity of the Obligations upon the
occurrence of any Event of Default, each as provided in the Credit Agreement,
including, without limitation pursuant to Section 10.1(a) or Section 10.2(a) of
the Credit Agreement, (i) to withdraw, collect and receipt for any and all
funds, securities or other investments on deposit in or payable on the Deposit
Accounts, (ii) on behalf of Debtor to endorse the name of Debtor upon any
checks, drafts or other instruments payable to Debtor evidencing payment on the
Deposit Accounts, and (iii) to surrender or present for notation of withdrawal
the passbook, certificate or other documents issued to Debtor in connection with
the Deposit Accounts. No power granted herein to Secured Party by Debtor shall
terminate upon any disability of Debtor.
ARTICLE 6
Default
Section 6.1 Rights and Remedies. If an Event of Default shall have
occurred and be continuing, Secured Party shall have the following rights and
remedies (subject to Section 6.3):
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(a) In addition to all other rights and remedies granted to
Secured Party in this Agreement or in any other Loan Document or by
applicable law, Secured Party shall have all of the rights and remedies
of a secured party under the UCC (whether or not the UCC applies to the
affected Collateral) and Secured Party may also, without notice except
as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange, broker's board
or at any of Secured Party's offices or elsewhere, for cash, on credit
or for future delivery, and upon such other terms as Secured Party may
deem commercially reasonable or otherwise as may be permitted by law.
Without limiting the generality of the foregoing, Secured Party may (i)
without demand or notice to Debtor, collect, receive or take possession
of the Collateral or any part thereof and for that purpose Secured Party
may enter upon any premises on which the Collateral is located and
remove the Collateral therefrom or render it inoperable, and/or (ii)
sell, lease or otherwise dispose of the Collateral, or any part thereof,
in one or more parcels at public or private sale or sales, at Secured
Party's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as Secured Party may deem
commercially reasonable or otherwise as may be permitted by law. Secured
Party shall have the right at any public sale or sales, and, to the
extent permitted by applicable law, at any private sale or sales, to bid
(which bid may be, in whole or in part, in the form of cancellation of
indebtedness) and become a purchaser of the Collateral or any part
thereof free of any right or equity of redemption on the part of Debtor,
which right or equity of redemption is hereby expressly waived and
released by Debtor. Upon the request of Secured Party, Debtor shall
assemble the Collateral and make it available to Secured Party at any
place designated by Secured Party that is reasonably convenient to
Debtor and Secured Party. Debtor agrees that Secured Party shall not be
obligated to give more than five (5) days prior written notice of the
time and place of any public sale or of the time after which any private
sale may take place and that such notice shall constitute reasonable
notice of such matters. Secured Party shall not be obligated to make any
sale of Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of Collateral may have been given. Secured
Party 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 sale, and such sale may, without further
notice, be made at the time and place to which the same was so
adjourned. Debtor shall be liable for all expenses of retaking, holding,
preparing for sale or the like, and all attorneys' fees, legal expenses
and other costs and expenses incurred by Secured Party in connection
with the collection of the Obligations and the enforcement of Secured
Party's rights under this Agreement. Debtor shall remain liable for any
deficiency if the Proceeds of any sale or other disposition of the
Collateral applied to the Obligations are insufficient to pay the
Obligations in full. Secured Party may apply the Collateral against the
Obligations in such order and manner as Secured Party may elect in its
sole discretion. Debtor waives all rights of marshaling, valuation and
appraisal in respect of the Collateral. Any cash held by Secured Party
as Collateral and all cash proceeds received by Secured Party in respect
of any sale of, collection from or other realization upon all or any
part of the Collateral may, in the discretion of Secured Party, be held
by Secured Party as collateral for, and then or at any time thereafter
applied in whole or in part by Secured Party against, the Obligations in
such
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order as Secured Party shall select. Any surplus of such cash or cash
proceeds and interest accrued thereon, if any, held by Secured Party and
remaining after payment in full of all the Obligations shall be paid
over to Debtor or to whomsoever may be lawfully entitled to receive such
surplus; provided that Secured Party shall have no obligation to invest
or otherwise pay interest on any amounts held by it in connection with
or pursuant to this Agreement.
(b) Secured Party may cause any or all of the Collateral held by
it to be transferred into the name of Secured Party or the name or names
of Secured Party's nominee or nominees.
(c) Secured Party may exercise any and all rights and remedies of
Debtor under or in respect of the Collateral, including, without
limitation, any and all rights of Debtor to demand or otherwise require
payment of any amount under, or performance of any provision of, any of
the Collateral and any and all voting rights and corporate powers in
respect of the Collateral.
(d) Secured Party may collect or receive all 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.
(e) On any sale of the Collateral, Secured Party is hereby
authorized to comply with any limitation or restriction with which
compliance is necessary, in the view of Secured Party's counsel, in
order to avoid any violation of applicable law or in order to obtain any
required approval of the purchaser or purchasers by any applicable
Governmental Authority.
(f) For purposes of enabling Secured Party to exercise its rights
and remedies under this Section 6.1 and enabling Secured Party and its
successors and assigns to enjoy the full benefits of the Collateral,
Debtor hereby grants to Secured Party an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to
Debtor) to use, assign, license or sublicense any of the Intellectual
Property, including in such license reasonable access to all media in
which any of the licensed items may be recorded or stored and all
computer programs used for the completion or printout thereof. This
license shall also inure to the benefit of all successors, assigns and
transferees of Secured Party.
(g) Secured Party may require that Debtor assign all of its
right, title and interest in and to the Intellectual Property or any
part thereof to Secured Party or such other Person as Secured Party may
designate pursuant to documents satisfactory to Secured Party.
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Section 6.2 Registration Rights, Private Sales, Etc.
(a) If Secured Party shall determine to exercise its right to
sell all or any of the Collateral pursuant to Section 6.1, Debtor agrees
that, upon the request of Secured Party (which request may be made by
Secured Party in its sole discretion), Debtor will, at its own expense:
(i) execute and deliver, and cause each issuer of any of
the Collateral contemplated to be sold and the directors and
officers thereof to execute and deliver, all such agreements,
documents and instruments, and do or cause to be done all such
other acts and things, as may be necessary or, in the opinion of
Secured Party, advisable to register such Collateral under the
provisions of the Securities Act (as hereinafter defined) and to
cause the registration statement relating thereto to become
effective and to remain effective for such period as prospectuses
are required by law to be furnished and to make all amendments
and supplements thereto and to the related prospectus which, in
the opinion of Secured Party, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission
applicable thereto;
(ii) use its best efforts to qualify such Collateral under
all applicable state securities or "Blue Sky" laws and to obtain
all necessary governmental approvals for the sale of such
Collateral, as requested by Secured Party;
(iii) cause each such issuer to make available to its
security holders, as soon as practicable, an earnings statement
which will satisfy the provisions of Section 11(a) of the
Securities Act;
(iv) do or cause to be done all such other acts and things
as may be reasonably necessary to make such sale of the
Collateral or any part thereof valid and binding and in
compliance with applicable law; and
(v) bear all reasonable costs and expenses, including
reasonable attorneys' fees, of carrying out its obligations under
this Section 6.2.
(b) Debtor recognizes that Secured Party may be unable to effect
a public sale of any or all of the Collateral by reason of certain
prohibitions contained in the Securities Act of 1933, as amended from
time to time (the "Securities Act") and applicable state securities laws
but may be compelled to resort to one or more private sales thereof to a
restricted group of purchasers who will be obliged to agree, among other
things, to acquire such Collateral for their own account for investment
and not with a view to the distribution or resale thereof. Debtor
acknowledges and agrees that any such private sale may result in prices
and other terms less favorable to the seller than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any
such private sale shall, to the extent permitted by law, be deemed to
have been made in a commercially reasonable manner. Neither Secured
Party
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nor the Lenders shall be under any obligation to delay a sale of any of
the Collateral for the period of time necessary to permit the issuer of
such securities to register such securities under the Securities Act or
under any applicable state securities laws, even if such issuer would
agree to do so.
(c) Debtor further agrees to do or cause to be done, to the
extent that Debtor may do so under applicable law, all such other acts
and things as may be necessary to make such sales or resales of any
portion or all of the Collateral valid and binding and in compliance
with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction
over any such sale or sales, all at Debtor's expense. Debtor further
agrees that a breach of any of the covenants contained in this Section
6.2 will cause irreparable injury to Secured Party and the Lenders and
that Secured Party and the Lenders have no adequate remedy at law in
respect of such breach and, as a consequence, agrees that each and every
covenant contained in this Section 6.2 shall be specifically enforceable
against Debtor, and Debtor hereby waives and agrees, to the fullest
extent permitted by law, not to assert as a defense against an action
for specific performance of such covenants that (i) Debtor's failure to
perform such covenants will not cause irreparable injury to Secured
Party and the Lenders or (ii) Secured Party and the Lenders have an
adequate remedy at law in respect of such breach. Debtor further
acknowledges the impossibility of ascertaining the amount of damages
which would be suffered by Secured Party and the Lenders by reason of a
breach of any of the covenants contained in this Section 6.2 and,
consequently, agrees that, if Debtor shall breach any of such covenants
and Secured Party or any Lender shall ▇▇▇ for damages for such breach,
Debtor shall pay to Secured Party or such Lender, as liquidated damages
and not as a penalty, an aggregate amount equal to the value of the
Collateral on the date Secured Party or such Lender shall demand
compliance with this Section 6.2.
(d) DEBTOR HEREBY AGREES TO INDEMNIFY, PROTECT AND SAVE HARMLESS
SECURED PARTY AND THE LENDERS AND ANY CONTROLLING PERSONS THEREOF WITHIN
THE MEANING OF THE SECURITIES ACT FROM AND AGAINST ANY AND ALL
LIABILITIES, SUITS, CLAIMS, COSTS AND EXPENSES (INCLUDING COUNSEL FEES
AND DISBURSEMENTS) ARISING UNDER THE SECURITIES ACT, THE SECURITIES AND
EXCHANGE ACT OF 1934, AS AMENDED, ANY APPLICABLE STATE SECURITIES
STATUTE, OR AT COMMON LAW, OR PURSUANT TO ANY OTHER APPLICABLE LAW IN
CONNECTION WITH THE SALE OF ANY SECURITIES OR THE EXERCISE OF ANY OTHER
RIGHT OR REMEDY OF SECURED PARTY, INSOFAR AS SUCH LIABILITIES, SUITS,
CLAIMS, COSTS AND EXPENSES ARISE OUT OF, OR ARE BASED UPON, ANY UNTRUE
STATEMENT OR ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT MADE IN
CONNECTION WITH THE SALE OR PROPOSED SALE OF ANY PART OF THE COLLATERAL,
OR ARISES OUT OF, OR IS BASED UPON, THE OMISSION OR ALLEGED OMISSION TO
STATE A MATERIAL FACT REQUIRED TO BE STATED IN CONNECTION THEREWITH OR
NECESSARY
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TO MAKE THE STATEMENTS MADE NOT MISLEADING; PROVIDED, HOWEVER, THAT
DEBTOR SHALL NOT BE LIABLE IN ANY SUCH CASE TO THE EXTENT THAT ANY SUCH
LIABILITIES, SUITS, CLAIMS, COSTS AND EXPENSES ARISE OUT OF, OR ARE
BASED UPON, ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OR OMISSION
OR ALLEGED OMISSION MADE IN RELIANCE UPON AND IN CONFORMITY WITH WRITTEN
INFORMATION FURNISHED TO DEBTOR BY SECURED PARTY OR SUCH LENDER
SPECIFICALLY FOR INCLUSION IN CONNECTION THEREWITH. THE FOREGOING
INDEMNITY AGREEMENT IS IN ADDITION TO ANY INDEBTEDNESS, LIABILITY OR
OBLIGATION THAT DEBTOR MAY OTHERWISE HAVE TO SECURED PARTY OR ANY SUCH
LENDER OR ANY SUCH CONTROLLING PERSON.
Section 6.3 Compliance with Laws. Notwithstanding anything to the
contrary contained in any Loan Document or in any other agreement, instrument or
document executed by Debtor and delivered to Secured Party, Secured Party will
not take any action pursuant to this Agreement or any document referred to
herein which would constitute or result in any assignment of any FCC license or
any change of control (whether de jure or de facto) of Debtor if such assignment
of any FCC license or change of control would require, under then existing law,
the prior approval of the FCC or any other Governmental Authority without first
obtaining such prior approval of the FCC or other Governmental Authority. Upon
the occurrence of an Event of Default or at any time thereafter during the
continuance thereof, subject to the terms and conditions of this Agreement,
Debtor agrees to take any action which Secured Party may reasonably request in
order to obtain from the FCC or such other Governmental Authority such approval
as may be necessary to enable Secured Party to exercise and enjoy the full
rights and benefits granted to Secured Party by this Agreement and the other
documents referred to above, including specifically, at the cost and expense of
Debtor, the use of reasonable efforts to assist in obtaining approval of the FCC
or such other Governmental Authority for any action or transaction contemplated
by this Agreement for which such approval is or shall be required by law, and
specifically, without limitation, upon request, to prepare, sign and file with
the FCC or such other Governmental Authority the assignor's or transferor's
portion of any application or applications for consent to the assignment of
license or transfer of control necessary or appropriate under the FCC's or such
other Governmental Authority's rules and regulations for approval of (a) any
sale or other disposition of the Collateral by or on behalf of Secured Party, or
(b) any assumption by Secured Party of voting rights in the Collateral effected
in accordance with the terms of this Agreement.
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ARTICLE 7
Miscellaneous
Section 7.1 No Waiver; Cumulative Remedies. No failure on the part of
Secured Party to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
Section 7.2 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of Debtor and Secured Party and their respective heirs,
successors and permitted assigns, except that Debtor may not assign any of its
rights, indebtedness, liabilities or obligations under this Agreement without
the prior written consent of Secured Party.
Section 7.3 Entire Agreement; Amendment . THIS AGREEMENT EMBODIES THE
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES HERETO. The provisions of this Agreement may be
amended or waived only by an instrument in writing signed by the parties hereto,
except as provided in Section 4.15(g).
Section 7.4 Notices. All notices and other communications provided for
in this Agreement shall be given or made by telecopy or in writing and
telecopied, mailed by certified mail return receipt requested, or delivered to
the intended recipient at the "Address for Notices" specified below its name on
the signature pages hereof, or, as to any party, at such other address as shall
be designated by such party in a notice to the other party given in accordance
with this Section 7.4. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopy or when personally delivered or, in the case of a mailed notice, three
(3) Business Days after deposit in the mails, in each case given or addressed as
aforesaid; provided, however, that notices to Secured Party shall be deemed
given when received by Secured Party.
Section 7.5 Governing Law; Submission to Jurisdiction; Service of
Process. EXCEPT AS MAY BE EXPRESSLY STATED TO THE CONTRARY IN THE CREDIT
AGREEMENT, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES) AND EACH OF THE PARTIES HERETO CHOOSES THE LAWS OF THE STATE OF NEW
YORK TO GOVERN THIS
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AGREEMENT PURSUANT TO N.Y. GEN. OBLIG. LAW SECTION 5-1401 (CONSOL. 1995) AND
APPLICABLE LAWS OF THE U.S. DEBTOR HEREBY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF EACH OF (1) THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK, (2) ANY NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK, (3) THE
U.S. DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, AND (4) ANY TEXAS STATE
COURT SITTING IN DALLAS, COUNTY, TEXAS, FOR THE PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. DEBTOR IRREVOCABLY
CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES OF SUCH PROCESS TO DEBTOR AT ITS ADDRESS FOR NOTICES
SET FORTH UNDERNEATH ITS SIGNATURE HERETO. DEBTOR HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
Section 7.6 Headings. The headings, captions and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 7.7 Survival of Representations and Warranties. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by Secured Party shall affect the
representations and warranties or the right of Secured Party to rely upon them.
Section 7.8 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 7.9 Waiver of Bond. In the event Secured Party seeks to take
possession of any or all of the Collateral by judicial process, Debtor hereby
irrevocably waives any bonds and any surety or security relating thereto that
may be required by applicable law as an incident to such possession, and waives
any demand for possession prior to the commencement of any such suit or action.
Section 7.10 Severability. Any provision of this Agreement which is
determined by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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Section 7.11 Construction. Debtor and Secured Party acknowledge that
each of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by Debtor and Secured
Party.
Section 7.12 Termination. If all of the Obligations shall have been paid
and performed in full and all Commitments of the Lenders shall have expired or
terminated, Secured Party shall, upon the written request of Debtor, execute and
deliver to Debtor a proper instrument or instruments acknowledging the release
and termination of the security interests created by this Agreement, and shall
duly assign and deliver to Debtor (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of Secured Party and has not previously been sold or otherwise applied pursuant
to this Agreement.
Section 7.13 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF SECURED
PARTY IN THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT THEREOF.
Section 7.14 Amendment and Restatement. This Agreement shall constitute
an amendment and restatement of all, but not an extinguishment, discharge,
satisfaction or novation of any, indebtedness, liabilities and/or obligations
(including, without limitation, the "Obligations" as such term is defined in the
Original Security Agreement) of Debtor under the Original Security Agreement.
All Liens created under and/or evidenced by the Original Security Agreement
shall continue to be created under and/or evidenced by this Agreement, with the
same perfection and priority under this Agreement as existed under the Original
Security Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first written above.
DEBTOR:
NET2000 SUBSIDIARY
By:
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Name:
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Title:
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Address for Notices:
Net2000 Subsidiary
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer and Treasurer
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SECURED PARTY:
NORTEL NETWORKS INC.,
as Administrative Agent
By:
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Name:
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Title:
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Address for Notices:
Nortel Networks Inc.
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Finance
Carrier Packet Solutions
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Nortel Networks Inc.
GMS 991 15 A40
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▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President - Customer
Finance North America
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Nortel Networks Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Mail Stop 04D/02/A40
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇,
Loan Administration
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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