1
EXHIBIT 10.20
WORLDCOM NETWORK SERVICES, INC.
CLASSIC/TRANSCEND(TM)SWITCHED SERVICES
PROGRAM ENROLLMENT TERMS
These PROGRAM ENROLLMENT TERMS (the "PET") are made by and between
WorldCom Network Services, Inc. ("WORLDCOM") and AmeriVision Communications,
Inc. ("CUSTOMER") and are a part of their Telecommunications Services Agreement
for Switched Services. Capitalized terms not defined herein shall have the
meaning ascribed to them in the TSA, the Service Schedule or the applicable Rate
and Discount Schedule.
1. SERVICE TERM: The Service Term shall commence as of --**-- (the
"EFFECTIVE DATE") and shall continue through and include --**-- (the
"SERVICE TERM"), subject to earlier termination as provided in
Subsection 2(B) below. Provided, however, notwithstanding the
immediately preceding sentence, the rates set forth herein will be
effective as of --**-- (the "RATE EFFECTIVE DATE"). Upon expiration of
the Service Term, the Switched Services in question will continue to be
provided pursuant to the same terms and conditions as are then in
effect (including without limitation, the applicable rates, discounts
and commitments, if any), subject to termination by either party upon
sixty (60) days prior written notice to the other party.
2. CUSTOMER'S MINIMUM REVENUE COMMITMENT:
(A) Commencing with the Effective Date (as determined under Section 1
above) and continuing through the end of the Service Term (including
any extensions thereto) (the "COMMITMENT PERIOD"), Customer agrees to
maintain, on a take-or-pay basis, cumulative Monthly Revenue (as
defined in the applicable Rate and Discount Schedule) equal to at least
the amounts shown below by the end of the respective months listed
("CUSTOMER'S MINIMUM REVENUE COMMITMENT").
END OF CUSTOMER'S END OF CUSTOMER'S
MONTH COMMITMENT MONTH COMMITMENT
----- ---------- ----- ----------
1 $2,000,000 19 $38,000,000
2 $4,000,000 20 $40,000,000
3 $6,000,000 21 $42,000,000
4 $8,000,000 22 $44,000,000
5 $10,000,000 23 $46,000,000
6 $12,000,000 24 $48,000,000
7 $14,000,000 25 $50,000,000
8 $16,000,000 26 $52,000,000
9 $18,000,000 27 $54,000,000
10 $20,000,000 28 $56,000,000
11 $22,000,000 29 $58,000,000
12 $24,000,000 30 $60,000,000
--------------------
--**-- This symbol signifies information from the agreement that has
been omitted because the Company has requested confidential treatment. The
information has been filed separately with the Securities and Exchange
Commission.
4/15/99 Page 1 of 9
CONFIDENTIAL - EXECUTION COPY
2
(B) Notwithstanding anything to the contrary contained in Subsection
(A) above, as soon as Customer's cumulative Monthly Revenue (which will
include any Deficiency Charges actually paid by Customer) is equal to
at least $72,000,000, either party may cancel this Agreement in its
entirety upon at least ninety (90) prior written notice to the other
party.
3. DEFICIENCY CHARGE: In the event Customer does not maintain Customer's
Minimum Revenue Commitment in any month during the Commitment Period
(regardless of whether Customer has commenced using any or all of the
Switched Services described herein), then for those month(s) only,
Customer will pay WorldCom the difference between Customer's Minimum
Revenue Commitment and Customer's actual Monthly Revenue (as described
in the applicable Rate and Discount Schedule) (the "DEFICIENCY
CHARGE"). The Deficiency Charge will be due at the same time payment is
due for Service provided to Customer, or immediately in an amount equal
to Customer's Minimum Revenue Commitment for the unexpired portion of
the Service Term, if WorldCom terminates this Agreement based on
Customer's default. Provided, however, WorldCom agrees to waive any
Deficiency Charges that arise solely due to a catastrophic network
event which materially prevents Customer's use of Services hereunder
sufficient to satisfy Customer's Minimum Revenue Commitment. In such
case, Customer shall have the burden of proof in establishing the date
and duration of such event as well as the general sources of Customer's
traffic affected by such event. Provided, for purposes of this
Agreement, any catastrophic network events lasting less than --**--
and/or affecting less than --**-- minutes of Customer's traffic will be
deemed not material.
4. CANCELLATION WITHOUT CHARGE: The parties agree to substitute Subsection
2(C) of the TSA to read in its entirety as follows:
(C) Cancellation Without Charge. Notwithstanding anything to the
contrary contained in Subsection 2(A) above, Customer may cancel this
Agreement without incurring any cancellation charge if:
i. WorldCom fails to provide a network as warranted in Section
8 below and fails to cure such default within five (5) days
following written notice from Customer; or
ii. WorldCom fails to (a) deliver call detail records promptly
based on the frequency selected by Customer (i.e., monthly,
weekly or daily); or (b) submit ANI(s) relevant to such
Service Requests to the LECs within the time period described
in Subsection 1(B) above. Provided, however, Customer must
give WorldCom written notice of any such default under this
Subpart (ii) and an opportunity to cure such default within
five (5) days of the notice. In the event WorldCom fails to
cure any such default within the five-day period set forth in
this Subpart (ii) on more than three (3) occasions within any
six (6) month period, Customer may cancel this Agreement
without incurring any cancellation charge.
4/15/99 Page 2 of 9
CONFIDENTIAL - EXECUTION COPY
3
5. DISPUTED TRANSFER CHARGES: The parties agree to substitute the first
sentence only of Subsection 3(A) and Subsection 3(B) of the TSA to read
in their entirety as follows:
(A) End Users. Customer will use reasonable efforts to obtain and upon
WorldCom's request will provide WorldCom (within two (2) business days
of the date of the request) a written Letter of Agency ("LOA")
acceptable to WorldCom [or with any other means if approved by the
Federal Communications Commission ("FCC") and any applicable public
utility commission ("PUC") and accepted by the applicable local
exchange provider provided the local exchange provider has the
authority to accept or deny certain forms of LOAs (provided, further,
nothing contained herein will require WorldCom to challenge the right
of local exchange providers to accept or deny certain forms of LOAs),
for each ANI indicating the consent of such end user of Customer ("END
USER") to be served by Customer and transferred (by way of such End
User's designated PIC) to the WorldCom network prior to order
processing.
(B) Transfer Charges/Disputed Transfers. Customer agrees that it is
responsible for (i) all charges incurred by WorldCom to change the PIC
of End Users to the WorldCom network, (ii) all charges incurred by
WorldCom to change End Users back to their previous PIC arising from
disputed transfers to the WorldCom network plus, at WorldCom's option,
an administrative charge equal to --**-- of such charges, and (iii) any
other damages suffered by or awards against WorldCom resulting from
disputed transfers unless such damages or awards are the result of
actions taken solely by WorldCom without any involvement (either
directly or indirectly) by Customer.
6. PAYMENT TERMS: The parties agree to substitute Subsection 5(A) and 5(B)
of the TSA to read in their entirety as follows:
(A) Payment. WorldCom ▇▇▇▇▇▇▇▇ for Switched Services hereunder are made
on a monthly basis (or such other basis as may be mutually agreed to by
the parties) following Start of Service. Subject to Subsection 5(C)
below, Switched Services shall be billed at the rates set forth in the
applicable Rate and Discount Schedule attached hereto. Customer will be
notified of WorldCom's time of day rate periods (including WorldCom
Recognized National Holidays). Discounts, if any, applicable to the
rates for certain Services are set forth in the Rate and Discount
Schedule. Customer will pay all undisputed charges relative to each
WorldCom invoice for Switched Services within (i) --**-- days of the
invoice date set forth on each WorldCom invoice to Customer with
respect to Services provided in months 1 through 3 following the
Effective Date of this Agreement, (ii) --**-- days of the invoice date
set forth on each WorldCom invoice to Customer with respect to Services
provided in months 4 through 6 following the Effective Date of this
Agreement, and (iii) --**-- days of the invoice date set forth on each
WorldCom invoice to Customer with respect to Services provided through
the remainder of the Service Term (collectively, the "DUE DATE"). If
payment is not received by WorldCom on or before the Due Date, Customer
shall also pay a late fee in the amount of the lesser of one and
one-half percent (1 1/2%) of the unpaid
4/15/99 Page 3 of 9
CONFIDENTIAL - EXECUTION COPY
4
balance of the charges for Switched Services rendered per month or the
maximum lawful rate under applicable state law. Commencing with the
Effective Date and continuing through the end of the Service Term,
Customer agrees to provide WorldCom (a) unaudited financial statements
within --**-- days following each month, (b) "reviewed" financial
statements within --**-- days following each quarter, and (c) audited
financial statements within --**-- days following the end of each of
Customer's fiscal years.
(B) Taxes. Customer acknowledges and understands that WorldCom computes
all charges herein exclusive of any applicable federal, state or local
use, excise, gross receipts, sales and privilege taxes, duties, fees or
similar liabilities (other than general income or property taxes),
whether charged to or against WorldCom or customer because of the
Switched Services furnished to Customer ("ADDITIONAL CHARGES").
Customer shall pay such Additional Charges in addition to all other
charges provided for herein. Customer will not be liable for certain
Additional Charges if Customer provides WorldCom with an appropriate
exemption certificate. Provided, to the extent Customer is not an "end
user" of the Services provided hereunder, with respect to any
Additional Charges which are assessed solely on WorldCom's end users
("END USER CHARGES"), WorldCom agrees not to assess Customer such End
User Charges. Provided, however, in the event WorldCom is required to
collect End User Charges from Customer, Customer agrees to pay WorldCom
such End User Charges unless Customer provides WorldCom a written
certification, signed by an officer of Customer, that Customer has
directly paid such End User Charges.
7. PAYMENT OF DISPUTED AMOUNTS: Notwithstanding anything to the contrary
contained in Subsection 5(D) of the TSA, in the event Customer pays
WorldCom any amount which is ultimately determined not to be due
WorldCom, WorldCom agrees to pay Customer such amount plus interest on
such amount equal to one and one-half (1 1/2%) of such amount per month
or the maximum lawful rate under applicable state law.
8. CREDIT: The parties agree to delete the first two sentences of
Subsection 6(A) of the TSA.
9. REMEDIES FOR BREACH: In the event WorldCom elects its remedies under
Subsection 7(B) of the Agreement and bills Customer's End Users
directly, WorldCom agrees to collect any amounts owing from such End
Users in good faith and in accordance with reasonable business
practices. In the event WorldCom collects any amounts from Customer's
End Users, such amounts will offset any amounts owed by Customer under
this Agreement. In other words, Customer's liability for charges for
Services rendered and the Deficiency Charge, if applicable, will be
reduced by any amounts WorldCom collects from Customer's End Users.
10. FORCE MAJEURE: The parties agree to substitute Section 10 of the TSA to
read in its entirety as follows:
4/15/99 Page 4 of 9
CONFIDENTIAL - EXECUTION COPY
5
If either party's performance of this Agreement or any obligation
hereunder (excluding payments owed by Customer for Services rendered by
WorldCom) is prevented, restricted or interfered with by causes beyond
its reasonable control including, but not limited to, acts of God,
fire, explosion, vandalism, cable cut, storm or other similar
occurrence, any law, order, regulation, direction, action or request of
the United States government, or state or local governments, or of any
department, agency, commission, court bureau, corporation or other
instrumentality of any one or more such governments, or of any civil or
military authority, or by national emergency, insurrection, riot, war,
strike, lockout or work stoppage or other labor difficulties, or
supplier failure, shortage, breach or delay, then the affected party
shall be excused from such performance on a day-to-day basis to the
extent of such restriction or interference. The affected party shall
use reasonable efforts under the circumstances to avoid or remove such
causes or nonperformance and shall proceed to perform with reasonable
dispatch whenever such causes are removed or cease.
11. OTHER AGREEMENTS: The parties agree to substitute Subsection 24(B) of
the TSA to read in its entirety as follows:
(B) Third Party Agreements. If Customer acquires or merges or combines
with a third party after the Effective Date of this Agreement, and such
third party has existing agreement(s) with a member of the WorldCom
Group (collectively referred to as the "THIRD PARTY AGREEMENTS") for
the provision of switched telecommunications services ("THIRD PARTY
EXISTING SERVICES"), then ninety (90) days following the date of such
acquisition, merger or combination (or such earlier date contained in a
written notice from customer to WorldCom) (the "TRANSFER DATE"), if
requested by WorldCom, Customer agrees to select one Agreement (either
this Agreement or a Third Party Agreement) (the "SURVIVING AGREEMENT")
pursuant to which all switched services will be provided to Customer
and all members of the Customer Group and all other agreements (the
"CANCELED AGREEMENTS") will be canceled and no longer in force or
effect except for commitments, if any, contained in the Canceled
Agreements and charges and credits due for Services provided prior to
the effective date of cancellation of such Canceled Agreements.
Further, as of the effective date of cancellation, Third Party Existing
Services or, if applicable, the Services provided under this Agreement
will be provisioned under the Surviving Agreement, and the aggregate
commitment(s) (e.g., revenue, volume, minute, etc.) remaining under the
Canceled Agreements shall be added on a pro rata basis to the
commitment(s), if any, existing under the Surviving Agreement.
Simultaneous with the closing of such acquisition, combination or
merger, Customer will cause such third party and all of its affiliates
who are parties to such Third Party Agreements, to agree to such
cancellation(s) as appropriate and the provision of such Services, as
appropriate under the terms and conditions of the Surviving Agreement
and Customer agrees to provide WorldCom with reasonable documentation
evidencing such agreement.
4/15/99 Page 5 of 9
CONFIDENTIAL - EXECUTION COPY
6
12. TARIFF REFERENCES: Except to the extent specifically referenced in this
Agreement, this Agreement does not incorporate any terms or conditions
contained in any federal and/or state tariffs filed or to be filed by
WorldCom or any of its affiliates.
13. DISPUTE RESOLUTION: If the parties are unable to resolve any dispute
arising under or relating to this Agreement, the parties may resolve
such disagreement or dispute as follows:
(a) Either party may, by written notice to the other party (the
"DISPUTE NOTICE"), request that a designated representative from each
of the parties attempt to resolve the matter. Within fifteen (15) days
after delivery of the Dispute Notice such representatives of both
parties will use good faith efforts to schedule a meeting at a mutually
acceptable time and place to attempt to resolve the dispute.
(b) If the matter has not been resolved within thirty (30) days after
delivery of the Dispute Notice, or if such representatives fail to meet
within fifteen (15) days after delivery of such Dispute Notice, either
party may initiate mediation in accordance with the procedures set
forth in (C) below. All negotiations conducted by such representatives
shall be confidential and shall be treated as compromise and settlement
negotiations for purposes of federal and state rules of evidence.
(c) If such representatives are unable to resolve the dispute or have
failed to meet, the parties may elect to participate in a nonbinding
mediation procedure as follows:
(A) A mediator will be selected by having counsel for each
party agree on a single person to act as mediator. The
parties' counsel as well as up to three (3) representatives of
each of the parties will appear before the mediator at a time
and place determined by the mediator, but not more than sixty
(60) days after delivery of the Dispute Notice. The fees of
the mediator and other costs of the mediation will be shared
equally by the parties.
(B) Each party will present a review of the matter and its
position with respect to such matter. At the conclusion of
both presentations the parties may ask questions of each
other. Either party may abandon the mediation procedure at the
end of the presentation and question periods and the mediation
procedure shall not be binding on either party.
(C) If the matter is not resolved after applying the mediation
procedure set forth above, or if either party refuses to take
part in the mediation process, either party may initiate legal
proceedings to resolve their dispute.
(D) The provisions of this Section 13 shall not preclude a party form
instituting legal proceedings seeking injunctive relief (including,
without limitation, a temporary restraining
4/15/99 Page 6 of 9
CONFIDENTIAL - EXECUTION COPY
7
order) prior to the commencement or completion of the specified dispute
resolution procedures.
14. REQUIREMENTS AGREEMENT: In consideration of the rates set forth in the
Rate Schedule, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, during the Service
Term Customer agrees to purchase one hundred percent (100%) of its
telecommunications services requirements for SWITCHED ACCESS Service
(1+ and Toll Free) (which services are described in this Agreement)
from WorldCom under the terms and conditions set forth in this
Agreement ("CUSTOMER'S REQUIREMENTS OBLIGATION"). Upon request from
WorldCom, Customer agrees to provide WorldCom reasonable documentation
evidencing Customer's compliance with this Section 14 and if requested
by WorldCom, agrees to allow WorldCom or its representatives to audit
Customer's books and records as may be necessary solely to ensure
Customer's compliance with Customer's Requirements Obligation. In the
event Customer is in breach of this Agreement, in addition to
WorldCom's other rights and remedies described in this Agreement,
notwithstanding anything to the contrary contained in the Agreement,
WorldCom shall have the right to immediately increase Customer's
SWITCHED ACCESS Service rates set forth in the Rate Schedule to --**--.
Any increase as described herein will not affect Customer's Minimum
Revenue Commitment set forth in Section 2 above.
15. SEMI-ANNUAL REVIEW OF RATES: Provided Customer is in substantial
compliance with the terms of this Agreement, commencing September 1,
1999, and continuing on the first day of every seventh (7th) month
thereafter (i.e., March 1, 2000; September 1, 2000; March 1, 2001;
etc.), WorldCom and Customer agree to review the rates hereunder with a
view to adjusting in good faith such rates taking into account (i)
rates then generally available to WorldCom's other wholesale customers
under other "programs" being offered by WorldCom when taken as a whole,
and (ii) rates then generally available to WorldCom's other wholesale
customers for similar services, commitments and other terms. In
conducting such review, the parties agree to take into account state
and/or federal mandates regarding local access reform, if any, that may
affect the cost of the Services provided hereunder and which result in
either an increase or decrease to such rates. Provided, however,
nothing contained in this Section 15 will obligate WorldCom to reduce
Customer's rates under this Agreement.
16. CUSTOMER PROPRIETARY INFORMATION: In addition to WorldCom's obligations
to protect Customer's Confidential Information under Section 20 of the
TSA, WorldCom agrees to comply with all applicable laws, rules and
regulations regarding Customer's proprietary network information and
the proprietary network information of Customer's End Users which
information has been directly provided or disclosed by Customer to
WorldCom.
17. SUBORDINATION AGREEMENT: Simultaneous with the execution of this
Agreement, WorldCom agrees to execute the attached Intercreditor
Agreement by and between WorldCom, Customer and Coast Business Credit,
a division of Southern Pacific Bank.
4/15/99 Page 7 of 9
CONFIDENTIAL - EXECUTION COPY
8
18. CREDIT/SETTLEMENT:
(A) In consideration of the terms and conditions contained in this
Agreement, Customer's payment to WorldCom of --**-- on or before the
due date of WorldCom's April 1, 1999 invoice, and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, upon execution of this Agreement, WorldCom agrees to give
Customer a credit (the "CREDIT") equal to --**-- which the parties
agree equals all invoiced and unpaid charges including interest and
late fees owed by Customer for Services provided by WorldCom prior to
January 1, 1999 (i.e., up through and including the January, 1999
invoice) (the "SETTLEMENT DATE") (including any Services provided to
Hebron Communication Corporation or American Electronics Corporation
d/b/a Discount Long Distance assertedly through Customer by WorldCom
through the Settlement Date. For purposes of this Agreement, such
Services shall include without limitation (i) the following WorldCom
billing account numbers for Switched Services: --**--; and the
following WorldCom billing account numbers for private line services:
--**--, and any other accounts for which Customer had payment
responsibility under that certain Payment Agreement dated June 1, 1996,
and executed by Customer, WorldCom and National Telephone &
Communications, Inc., including without limitation, billing account
numbers --**--. In addition to the Credit described herein, WorldCom
agrees to waive any finance charges up through and including March 31,
1999 (i.e., the April, 1999 invoice). WorldCom acknowledges that the
rates charged to Customer from and after November 30, 1998, through the
Rate Effective Date described in Section 1 above shall be consistent
with the rates provided under the WilMAX Telecommunications Services
Agreement dated June 1, 1996 (the "NTC AGREEMENT"), as referenced in
that certain Payment Agreement by and between WorldCom, Customer and
National Telephone & Communications, Inc. dated June 1, 1996.
(B) In consideration hereof, Customer and WorldCom, together with and
on behalf of their respective predecessors, successors, parents,
subsidiaries, affiliates, assigns, agents, directors, officers,
employees and shareholders hereby release the other party and its
respective predecessors, successors, parents, subsidiaries, affiliates,
assigns, agents, directors, officers, employees and shareholders, from
any and all claims, demands, damages, causes of action, debts,
obligations, liabilities or controversies of any kind whatsoever,
whether at law or in equity, whether before a local, state or federal
court, arbitrator or state or federal administrative agency or
commission, and whether known or unknown, liquidated or unliquidated,
that the releasing party has or may have against the other on account
of or in any way related to the NTC Agreement, any Services provided or
billed to Customer prior to the Settlement Date, or any statements
and/or representations made by the other party's personnel regarding
the Services provided to Customer (the "DISPUTED MATTERS"). Upon
receipt of the Credit, (i) it shall be the full and final settlement of
each party's disputes and claims pertaining to the Disputed Matters,
and (ii) each party shall thereafter be barred from bringing any
charge, complaint or other action against the other relating to the
Disputed Matters for all periods prior to the Settlement Date. It is
understood and agreed by the parties that this Amendment is not to be
construed or used as an admission of any liability
4/15/99 Page 8 of 9
CONFIDENTIAL - EXECUTION COPY
9
whatsoever by either party, its officers, directors, employees, agents,
representatives, affiliates or subsidiaries, which liability is
expressly denied, nor is it to be construed or used as an admission
that a party has committed or engaged in any deceptive or unlawful act,
violation or other breach of duty imposed by the NTC Agreement,
applicable tariffs or applicable law.
4/15/99 Page 9 of 9
CONFIDENTIAL - EXECUTION COPY
10
IN WITNESS WHEREOF, the parties have executed these
Classic/TRANSCEND(TM) Switched Services Program Enrollment Terms.
WORLDCOM NETWORK SERVICES, INC. AMERIVISION COMMUNICATIONS,
INC.
By: /s/ ▇▇▇▇ ▇. Krummez By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------- -----------------------------
(Signature) (Signature)
▇▇▇▇ ▇. Krummez ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------- --------------------------------
(Print Name) (Print Name)
Senior Vice President President
---------------------------------- --------------------------------
(Title) (Title)
4/15/99 Page 10 of 9
CONFIDENTIAL - EXECUTION COPY
11
WORLDCOM NETWORK SERVICES, INC.
SWITCHED SERVICES
RATE SCHEDULES FOR AMERIVISION
Capitalized terms not defined in this Rate Schedule shall have the
meaning ascribed to them in the Telecommunications Services Agreement,
TSA#AVI-990301, between AmeriVision Communications, Inc. and WorldCom Network
Services, Inc.
RATES
(A) TERMINATION Service
--**--
(B) TOLL FREE ORIGINATION Service
--**--
(C) SWITCHED ACCESS Service
--**--
(D) DEDICATED ACCESS Service
--**--
(E) TRAVEL CARD Service
--**--
(F) Directory Assistance
--**--
ATTACHMENTS:
--**--
-------------------
--**-- This symbol signifies information from the agreement that has
been omitted because the Company has requested confidential treatment. The
information has been filed separately with the Securities and Exchange
Commission.
12
Exhibit 10.21
SECURITY AGREEMENT
AMERIVISION COMMUNICATIONS, INC., an Oklahoma corporation with its
principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ("DEBTOR"), and WORLDCOM NETWORK SERVICES, INC., a Delaware corporation,
with its principal office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("SECURITY PARTY"), agree as follows:
SECTION 1. CREATION OF SECURITY INTEREST
Debtor hereby grants to secured Party a security interest in the
property described in Section 2 of this Agreement (the "COLLATERAL") to secure
performance and payment of (i) all obligations arising under or in connection
with that certain Telecommunications Services Agreement dated April 20, 1999
and more particularly described as TSA#AVI-990301 (including those certain
Program Enrollment Terms attached thereto) (collectively, the "TSA") between
Debtor and Secured Party, and all related instruments, documents or agreements
and any amendments, extensions, renewals or replacements of or to the
foregoing; and (ii) all other obligations and indebtedness of Debtor to Secured
Party of whatever kind and however created whether presently existing or
hereafter arising. All of the foregoing obligations and indebtedness described
in this Section 1 shall hereinafter be referred to as the "SECURED
INDEBTEDNESS," and the TSA and all other documents evidencing or giving rise to
the Secured Indebtedness shall hereinafter be referred to collectively as the
"SECURITY INSTRUMENTS."
SECTION 2. COLLATERAL
(a) As collateral for the Secured Indebtedness, Debtor hereby assigns
and grants to Secured Party a lien and security interest in all of the Debtor's
following property, wherever located, and whether now owned or hereafter
acquired or created:
(b) All of Debtor's now owned and hereafter acquired accounts (whether
or not earned by performance), letters of credit, contract rights, chattel
paper, instruments, securities, documents, securities accounts, security
entitlements, commodity contracts, commodity accounts, investment property and
all other forms of obligations at any time owing to Debtor, all guaranties and
other security therefor, all merchandise returned to or repossessed by Debtor,
and all rights of stoppage in transit and all other rights or remedies of any
unpaid vendor, lienor or secured party (collectively, "RECEIVABLES").
(c) All general intangibles of Debtor, whether now owned or hereafter
created or acquired by Debtor, including, without limitation, all choses in
action, causes of action, corporate or other business records, deposit
accounts, investment property (as such term is defined in the Uniform
Commercial Code in effect in the state of Oklahoma), inventions, designs,
drawings, blueprints, patents, patent applications, trademarks and the goodwill
of the business symbolized thereby, names,
Page 1 of 9
13
trade names, trade secrets, goodwill, copyrights, registrations, licenses,
franchises, customer lists, all documents containing the names, addresses,
telephone numbers, and other information regarding Debtor's customers and
tapes, programs, printouts, disks, and other material and documents relating to
the recording, billing or analyzing of any of the foregoing, customer contracts
for the furnishing by Debtor of telecommunications services, and billing and
collection contracts, whether evidenced by a document or otherwise, security
and other deposits, rights in all litigation presently or hereafter pending for
any good cause or claim (whether in contract, tort or otherwise), and all
judgments now or hereafter arising therefrom, all claims of Debtor against
Secured Party, rights to purchase or sell real or personal property, rights as
a licensor or licensee of any kind, royalties, telephone numbers, proprietary
information, purchase orders, and all insurance policies and claims (including
without limitation life insurance, key man insurance, credit insurance,
liability insurance, property insurance and other insurance), tax refunds and
claims, computer programs, discs, tape and tape files, claims under guaranties,
security interests or other security held by or granted to Debtor, all rights
to indemnification and all other intangible property of every kind or nature
(other than Receivables).
(d) All of Debtor's now owned and hereafter acquired goods,
merchandise or other personal property, wherever located, to be furnished under
any contract of service or held for sale or lease (including without limitation
all raw materials, work in process, finished goods and goods in transit, and
including without limitation all farm products), and all materials and supplies
of every kind, nature and description which are or might be used or consumed in
Debtor's business or used in connection with the manufacture, packing,
shipping, advertising, selling or finishing of such goods, merchandise or other
personal property, and all warehouse receipts, documents of title and other
documents representing any of the foregoing (collectively, "INVENTORY").
(e) All of Debtor's present and hereafter acquired machinery, molds,
machine tools, motors, furniture, equipment, furnishings, fixtures, trade
fixtures, motor vehicles, tools, parts, dies, jigs, goods and other goods
(other than Inventory) of every kind and description used in Debtor's
operations or owned by Debtor and any interests in any of the foregoing and all
attachments, accessories, accessions, replacements, substitutions, additions or
improvements to any of the foregoing, wherever located.
(f) All proceeds of any of the foregoing, all products of any of the
foregoing, and all books, records and documents relating to any and all of the
foregoing, whether in the form of writing, microfilm, microfiche, tape, or
electronic media.
SECTION 3. DEBTOR'S REPRESENTATIONS AND WARRANTIES
Debtor hereby represents and warrants to Secured Party that Debtor is
and will at all times in the future be, the sole owner of the Collateral,
having good and marketable title thereto (except for items of Equipment which
are leased by Debtor), free and clear of any and all liens, charges, security
interests, encumbrances, adverse claims or rights of others created by any acts
or omissions of Debtor, except for the security interest granted to Secured
Party and any and all liens and security interests that are defined as
Permitted Liens in that certain Loan and Security Agreement between Debtor and
Coast Business Credit ("COAST") dated February 4, 1999, as the same may be
amended from time to time, including, but not limited to the present and future
liens and security interests in favor of Coast and any and all additional
security interests and liens consented to in writing by Coast
Page 2 of 9
14
(collectively, "PERMITTED LIENS"). Debtor will at all times defend Secured
Party and the Collateral against all claims of others other than the holders of
Permitted Liens. None of the Collateral is or will be affixed to any real
property in such a manner, or with such intent, as to become a fixture. Debtor
is not and will not become a lessee under any real property lease pursuant to
which the lessor may obtain any rights in any of the Collateral and no such
lease now prohibits, restrains, impairs or will prohibit, restrain or impair
Debtor's right to remove any Collateral from the leased premises. Whenever any
Collateral is located upon premises in which any third party has an interest
(whether as owner, mortgagee, beneficiary under a deed of trust, lien or
otherwise), Debtor shall, whenever requested by Secured Party, use its
reasonable best efforts to cause such third party to execute and deliver to
Secured Party, in form acceptable to Secured Party, such waivers and
subordinations as Secured Party shall specify, so as to ensure that the rights
of the Secured Party in the Collateral are, and will continue to be, superior
to the rights of any such third party. Debtor will keep in full force and
effect, and will comply with all the terms of, any lease for a Leased Location
where any of the Collateral now or in the future may be located.
SECTION 4. EVENTS OF DEFAULT
The following events are "EVENTS OF DEFAULT":
4.1 Failure to Pay. Debtor does not pay when due any amount due under
any of the Security Instruments or the Debtor otherwise breaches the provisions
thereof, and such nonpayment or other breach is not cured within any cure
period provided thereunder.
4.2 Limitations Regarding Collateral. The Debtor sells, transfers,
leases or otherwise disposes of any of the Collateral, or attempts, offers or
contracts to do so (other than in the ordinary course of Debtor's business), or
Debtor creates, permits or suffers to exist any lien, security interest,
encumbrance, claim or right in or to the Collateral other than Permitted Liens
and those in favor of Secured Party (the "OTHER ENCUMBRANCES"). Debtor will, at
Debtor's sole expense, defend the Collateral against and take such other action
as is necessary to remove such Other Encumbrances and defend the right, title
and interest of Secured Party in and to any of Debtor's rights to the
Collateral, including without limitation any proceeds and products thereof,
against the claims and demands of all persons other than the holder of
Permitted Liens.
4.3 Misrepresentation. Any representation or warranty made by the
Debtor herein or in any of the Security Instruments proves to have been untrue
in any material respect, or any representation, statement (including Financial
Statements), certificate or data furnished or made by the Debtor (or any
officer, accountant or attorney of the Debtor) hereunder or under any of the
Security Instruments proves to have been untrue in any material respect, as of
the date as of which the facts therein set forth were stated or certified.
4.4 Impairment of Collateral. Secured Party, in good faith, considers
any Collateral to be unsafe or in such danger of misuse that Secured Party's
prospect of or right to payment or performance under this Agreement or any
instrument or agreement required hereunder or under any other agreement between
Secured Party and Debtor is materially impaired.
Page 3 of 9
15
4.5 Cross Default. Debtor breaches, defaults, or commits an event of
default under any other agreement, document or instrument between Secured Party
(or an affiliate of Secured Party) and Debtor and such breach, default or event
of default is not cured within any cure period provided thereunder.
4.6 Change of Name or Principal Place of Business. Debtor changes its
name, or its principal place of business, or changes its corporate structure in
any way that would make filed financing statements misleading without giving
Secured Party at least thirty (30) days advance written notice of such change
or move, and ensuring that any steps necessary to continue the perfection and
priority of Secured Party's security interest in the Collateral shall have been
taken, all at Debtor's expense.
4.7 Opportunity to Cure. Any Event of Default described in Subsections
4.1, 4.2 and 4.3, 4.4 and 4.5 may be cured within five (5) calendar days after
written notice by Secured Party to Debtor.
SECTION 5. SECURED PARTY'S RIGHTS
5.1 Rights of Secured Party Upon Default. If there is an Event of
Default and such default is not cured within any applicable cure period, the
Secured Party may, at its option and at any time thereafter:
(a) Declare the entire aggregate amount of the Secured
Indebtedness then outstanding and the interest and other fees
and expenses accrued thereon, and all other obligations of
debtor to Secured Party to be immediately due and payable
without notice and without presentment, demand, protest,
notice of protest, or other notice of default or dishonor of
any kind, all of which are hereby expressly waived by the
Debtor;
(b) require Debtor to assemble the Collateral, including any
books and records pertaining to the Collateral, and make them
available to Secured Party at a place designated by Secured
Party;
(c) notify any account debtor, any buyers of the Collateral,
and any other person of Secured Party's interest in the
Collateral;
(d) request confirmation from any account debtor of the
status of the account upon which the account debtor is
obligated;
(e) require Debtor to obtain Secured Party's prior written
consent to any sale, agreement to sell, or other disposition
of any Collateral (other than in the ordinary course of
Debtor's business);
(f) remedy any default or waive any default without waiving
the default remedies and without waiving any other prior or
subsequent default; and
Page 4 of 9
16
(g) take such measures as Secured Party may deem necessary or
advisable to take possession of, hold, preserve, process,
assemble, insure, collect on, prepare for sale or lease,
market for sale or lease, sell or lease, or otherwise dispose
of any Collateral.
Debtor hereby constitutes and appoints Secured Party as Debtor's
attorney-in-fact to perform all acts and execute all documents solely in
connection with the remedies described in this Agreement. This power of
attorney is coupled with an interest and shall be irrevocable until such time
as all of Debtor's obligations under the Security Instruments (including
without limitation, the TSA) are satisfied in full. Secured Party's rights
under this Subsection 5.1 may only be exercised to the extent any amount of the
Secured Indebtedness remains unpaid and specifically may not be exercised with
respect to any amounts in excess of the Secured Indebtedness.
5.2 Further Documentation; Pledge of Instruments. If Secured Party
reasonably determines that further action is necessary and desirable in order
to obtain the full benefits of this Agreement and the rights and powers granted
herein, Secured Party may request in writing that Debtor execute, deliver and
record further documents, instruments, agreements and amendments (including
without limitation, any financing statements or amendments under the applicable
Uniform Commercial Code), in which case Debtor agrees to act promptly. At any
time and from time to time, upon the written request of Secured Party, Debtor
promptly and duly shall execute, deliver and record any documents, instruments,
agreements and amendments, and take all such further action as Secured Party
may reasonably deem necessary and desirable in obtaining the full benefits of
this Agreement and of the rights and powers herein granted, including, without
limitation, the filing of any financing statements or amendments under the
applicable Uniform Commercial Code. Debtor also hereby authorizes Secured Party
to file any such financing statement or amendment thereto, without the
signature of Debtor, or with a copy or telecopy of Debtor's signature, to the
extent permitted by applicable law, or to execute any financing statement or
amendment thereof on behalf of Debtor as Debtor's attorney-in-fact.
5.3 Rights Under Uniform Commercial Code. Without limiting any of
Secured Party's rights and remedies under this Agreement, Secured Party may
enforce the security interests and other liens given hereunder, and under all
Security Instruments and documents referred to herein or contemplated hereby,
pursuant to the applicable Uniform Commercial Code and any other applicable law
including all legal and equitable remedies available to lenders generally.
5.4 Payments of Taxes and Insurance. If Debtor fails to pay any taxes,
assessments, insurance premiums, or other amounts due to third parties as
required by Debtor on the Collateral, Secured Party may in its discretion, upon
reasonable prior notice to Debtor make any such payment reasonably determined
by Secured Party to be due and owing. Any payments made by Secured Party under
this Subsection 5.4 shall not constitute (i) an agreement by Secured Party to
make similar payments in the future, or (ii) a waiver by Secured Party of any
Event of Default under this Agreement. Secured Party need not inquire as to, or
contest the validity of, any such expenses, tax security interest, encumbrance
or lien, and the receipt of the notice for the payment thereof shall be
conclusive evidence that the same was validly due and owing. Debtor agrees to
pay Secured Party, on demand, each payment made by Secured Party under this
Subsection 5.4 together with a late fee, if any, provided in the TSA.
Page 5 of 9
17
5.5 Rights and Remedies are Cumulative. All rights and remedies
provided herein are cumulative and may be exercised singly or concurrently, and
are not exclusive of any rights or remedies otherwise provided by law. Any
single or partial exercise of any right or remedy shall not preclude the
further exercise thereof or the exercise of any other right or remedy.
5.6 Self-Help Remedies. SECURED PARTY MAY ENFORCE ITS RIGHTS UNDER
THIS AGREEMENT WITHOUT RESORT TO PRIOR JUDICIAL PROCESS OR JUDICIAL HEARING.
NOTHING IN THIS AGREEMENT IS INTENDED TO PREVENT DEBTOR OR SECURED PARTY FROM
RESORTING TO JUDICIAL PROCESS AT SUCH PARTY'S OPTION.
5.7 Sale or Disposition of Collateral. Without limiting the generality
of the foregoing, if there is an Event of Default which the Debtor fails to
cure within any applicable cure period, the Secured Party may, at its option
and at any time thereafter, without further demand of performance, or other
demand, advertisement or notice of any kind (except the notice specified below
of time and place and public or private sale) to or upon Debtor or any other
person (all and each of which demands, advertisements and/or notices are hereby
expressly waived), may forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, in one or more parcel at public or private
sale or sales, at any exchange, broker's board or at any of Secured Party's
offices or elsewhere at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. Secured Party
shall have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the whole or
any part of said Collateral so sold, free of any right or equity of redemption
in Debtor. To the extent permitted by applicable law, Debtor waives all claims,
damages, and demands against Secured Party arising out of the lawful
repossession, retention or sale of the Collateral in accordance with the terms
hereof.
5.8 Notice of Sale. Debtor agrees that Secured Party need not give
more than ten (10) days' notice of the time and place of any public sale or of
the time after which a private sale may take place and that such notice is
reasonable notification of such matters.
5.9 Application of Sale Proceeds. Secured Party shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care, safekeeping or otherwise of any or
all of the Collateral or in any way relating to the rights of Secured Party
hereunder, including reasonable attorneys' fees and legal expenses, to the
payment in whole or in part of the Secured Indebtedness, in such order as
Secured Party may elect. Debtor shall remain liable for any deficiency
remaining unpaid after such application and the reasonable fees of any
attorneys employed by Secured Party to collect such deficiency, and only after
so applying such net proceeds and after the payment by Secured Party of any
other amount required by any provision of law, including Section 9-504(1) of
the Uniform Commercial Code, need Secured Party account for the surplus, if
any, to Debtor.
5.10 Inspection of Records. Secured Party and any of its employees and
agents may enter upon Debtor's premises at any reasonable time to inspect
Debtor's books and records pertaining to the Collateral.
Page 6 of 9
18
5.11 No Consequential Damages. SECURED PARTY SHALL NOT BE LIABLE FOR
ANY CONSEQUENTIAL, SPECIAL, INDIRECT OR INCIDENTAL DAMAGES IN CONNECTION WITH
THIS AGREEMENT OR THE COLLATERAL.
SECTION 6. ADDITIONAL PROVISIONS
6.1 Notices. Any communications between the parties hereto to be given
in writing shall be given by mailing the same, postage prepaid, or by telex,
cable, facsimile, overnight courier, or personal delivery, to each party at
their addresses set forth below or to such other addresses as either party may
in writing hereafter indicate. Any communication shall be effective upon the
earlier of delivery or five (5) days after sending.
Addresses for Notices and Communications Are:
If to the Secured Party: WorldCom Network Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Credit and Collections
If to Debtor: AmeriVision Communications, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
6.2 No Waiver; Cumulative Remedies. Secured Party shall not by any
act, delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
Secured Party. A waiver by Secured Party of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
Secured Party would otherwise have had on any future occasion. The rights and
remedies hereunder provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights or remedies provided by law.
6.3 Successors and Assigns. All covenants and agreements herein
contained by or on behalf of the Debtor shall bind its successor and assigns
and shall inure to the benefit of the Secured Party and its successors and
assigns. Secured Party's rights under this Agreement or the indebtedness hereby
secured may be assigned from time to time and in any such case the assignee
shall be entitled to all of the rights, privileges and remedies granted in this
Agreement to Secured Party. Debtor may not assign this Agreement or any
instruments or documents executed in connection herewith or any of the rights
of Debtor hereunder without the prior written consent of Secured Party.
6.4 Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Oklahoma, without regard to the
conflict of law provisions.
6.5 Severability. In the event any one or more of the provisions
contained in this Agreement, the Security Instruments, or in any other
instrument or document referred to herein or executed in connection with or as
a security for the TSA, shall, for any reason, be held to be invalid,
Page 7 of 9
19
illegal or unenforceable, such provision(s) shall not affect any other
provisions of this Agreement, the TSA, the Security Instruments, or any other
instrument or document referred to herein or executed in connection with or as
security for the TSA.
6.6 Defined Terms. Unless otherwise defined in this Agreement, terms
used in this Agreement which are defined in the applicable Uniform Commercial
Code are used with the meanings as therein defined.
6.7 Entire Agreement. This Agreement and all instruments, agreements,
and documents attached hereto, referred to herein or executed in connection
herewith, integrate all the terms and conditions mentioned herein or incidental
hereto, constitute the entire agreement between the parties with respect to the
subject matter thereof, and supersede all prior discussions, negotiations and
communication whether oral or written. Neither Secured Party nor Debtor shall
be bound by any promises, representations, warranties, or affirmations not
contained in this Agreement, in an agreement, instrument, or document attached
hereto or referred to herein or executed in connection herewith.
6.8 Paragraph Headings. Paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provision of this
Agreement.
6.9 Attorneys' Fees. In the event either party retains the services of
an attorney in any action involving the enforcement of any provision of the
TSA, this Agreement, or any other obligation of Debtor to Secured Party, the
prevailing party as determined by the jurisdiction in which such action is
brought, shall be entitled to reasonable attorneys' fees and other costs,
expenses, and disbursements incurred by the prevailing party in connection
therewith in addition to such other relief as may be available to the
prevailing party.
SECTION 7. PRIOR SECURITY AGREEMENT
The parties acknowledge there currently exists that certain Security
Agreement (the "PRIOR AGREEMENT") dated as of June 1, 1996, by and between
Debtor and Secured Party pursuant to which debtor granted Secured Party a
security interest in certain of its Collateral as defined in such Prior
Agreement. The parties agree that upon the execution and delivery of this
Security Agreement to Secured Party, the Prior Agreement will be canceled and
superseded in its entirety by this Agreement.
Page 8 of 9
20
EXECUTED as of the 20th day of April, 1999.
DEBTOR:
AmeriVision Communications, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Title: President
---------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
ATTEST:
Name:
------------------------------------
Title:
-----------------------------------
[SEAL]
SECURED PARTY:
WorldCom Network Services, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. Vetera
------------------------------------
Title: Vice President
---------------------------------
Print Name: ▇▇▇▇▇▇ ▇. Vetera
----------------------------
THE UNDERSIGNED HEREBY CONSENTS TO
AMERIVISION COMMUNICATIONS, INC.'S
GRANTING OF THE SECURITY INTEREST TO
WORLDCOM NETWORK SERVICES, INC. AS
SET FORTH IN THIS AGREEMENT:
Coast Business Credit(R), a division of
Southern Pacific Bank
By:
------------------------------------
Title:
---------------------------------
Print Name:
----------------------------
Page 9 of 9
