Exhibit 99.4
EXECUTION COPY
SECURITY AGREEMENT
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SECURITY AGREEMENT, dated as of January 31, 2001 made by Swift
Telecommunications, Inc., a New York corporation ("Grantor"), in favor of AT&T
Corp., a New York corporation ("Lender").
WHEREAS, Lender and Grantor have entered into an Asset Purchase
Agreement, dated December 13, 2000 (the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement, Grantor has issued to
Lender a promissory note in the original principal amount of $35,000,000 (the
"Swift Note"), and, pursuant to a Pledge Agreement of even date herewith (the
"Swift Pledge Agreement"), pledged to Lender certain shares of capital stock
held by Grantor securing all of the obligations to the Lender under the Swift
Note;
WHEREAS, Swift, ▇▇▇▇.▇▇▇, Inc., ML Acquisition Corp. and ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ have entered into an Agreement and Plan of Merger, dated as of January 31,
2001 (the "Merger Agreement"), contemplating the merger (the "Merger") of Swift
with and into ML Acquisition Corp. ("Acquisition Sub"), a wholly owned
subsidiary of ▇▇▇▇.▇▇▇, Inc., a Delaware corporation ("▇▇▇▇.▇▇▇");
WHEREAS, contemporaneously herewith ▇▇▇▇.▇▇▇ is executing and
delivering to Lender (i) an Amended and Restated Promissory Note (the "▇▇▇▇.▇▇▇
Note"), which will supersede and replace the Swift Note in the event that Swift
merges into ▇▇▇▇.▇▇▇ or a subsidiary of ▇▇▇▇.▇▇▇, or is acquired by ▇▇▇▇.▇▇▇ or
a subsidiary of ▇▇▇▇.▇▇▇; and (ii) a Pledge Agreement (the "▇▇▇▇.▇▇▇ Pledge
Agreement");
WHEREAS, as a condition precedent to the obligations of Lender under
the Purchase Agreement, including, without limitation, its acceptance of the
Swift Note and the ▇▇▇▇.▇▇▇ Note, Lender requires Grantor to grant, as security
for the obligations owing to Lender under the Swift Note and the ▇▇▇▇.▇▇▇ Note,
pursuant to the terms set forth herein, a first priority lien on, and security
interest in, all of Grantor's now existing and hereafter acquired assets in
accordance with the terms set forth herein.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lender to consummate the transactions contemplated by the Purchase Agreement,
including, without limitation, its acceptance of the Note, and in exchange for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Grantor hereby agrees with Lender as follows:
1. Definitions
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All capitalized terms used in this Agreement which are not otherwise
defined herein shall have the meanings ascribed to them in the Note or, if no
definition is so provided, Article 9 of the Uniform Commercial Code currently in
effect in the State of New York, as applicable.
"Note" means (i) prior to the consummation of the Merger, the Swift
Note, and (ii) upon the consummation of the Merger, the ▇▇▇▇.▇▇▇ Note.
2. Grant of Security Interest
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As collateral security for the prompt payment in full and performance
of the Obligations (as defined in Section 3 hereof) when due (whether at stated
maturity, by acceleration or otherwise), Grantor hereby pledges and assigns to
Lender, and grants to Lender, a continuing first priority security interest in
all of Grantor's property, whether currently owned or hereafter created,
acquired or reacquired by Grantor, wherever located, of every kind and
description, tangible or intangible (the "Collateral"), including, without
limitation, all of Grantor's right, title and interest in and to the property
described below and all substitutions therefor, accessions thereto and
improvements thereon:
(a) all equipment of any kind, including, without limitation, all
furniture, fixtures and machinery and all equipment, tools, supplies,
instruments and other like property (installed or uninstalled) not included in
Inventory (as defined below), whether or not title thereto is governed by a
certificate of title or ownership, and all parts, accessories and attachments
used in connection therewith, including, without limitation, motor vehicles and
all accretions and accessions thereto and any other equipment used in connection
with Grantor's business or otherwise owned by Grantor (hereinafter collectively
referred to as the "Equipment");
(b) all inventory and supplies of any kind and nature, wherever located
(including, without limitation, all types of goods, property and other assets,
raw, in process and finished, and all other inventory, components, work in
process, merchandise, finished goods, goods in transit and other tangible
personal property that are held for sale or lease by Grantor), and all materials
used or consumed in the business of Grantor, goods returned to or repossessed by
Grantor and goods in which Grantor has an interest in mass or in joint or other
interest or right of any kind (including consigned goods or goods being
processed), all accretions and accessions thereto and products thereof and all
packing and shipping materials (hereinafter collectively referred to as the
"Inventory");
(c) (i) all accounts, contract rights, chattel paper, instruments,
documents, general intangibles and other rights and obligations of any kind,
arising out of or in connection with the sale or lease of goods (whether
Inventory or otherwise) or the rendering of services or otherwise; and (ii) all
rights in and to all credit, insurance, guaranties, letters of credit, security
agreements, leases and other contracts securing or otherwise relating to any
such accounts, contract rights, contract remedies, contract provisions, chattel
paper, instruments, general intangibles or obligations, whether now existing or
hereafter arising (any and all such accounts, contract rights, chattel paper,
instruments, general intangibles and obligations being hereinafter referred to
collectively as the "Receivables," and any and all such credit, insurance,
guaranties, letters of credit, security agreements, leases and other contracts
(together with all amendments thereto and all other documents executed in
connection therewith) being hereinafter referred to collectively as the "Related
Contracts");
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(d) (i) all trademarks, service marks, tradenames, business names,
trade styles, designs, logos, internet domain names and other source or business
identifiers, and all general intangibles of like nature, owned, adopted,
acquired or used by Grantor, all pending applications, registrations and
recordings thereof (including, without limitation, applications, registrations
and recordings in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state thereof of any other
country or any political subdivision thereof), and all reissues, extensions or
renewals thereof, together with all goodwill of the business symbolized by such
marks and all customer lists, formulae and other records of Grantor relating to
the distribution of products and services in connection with which any of such
marks are used and all income, royalties, damages and payments due and/or
payable under and with respect thereto, including, without limitation, payments
under all licenses entered into in connection therewith and damages and payments
for all infringements or dilutions thereof and the right to ▇▇▇ for all
infringements or dilutions thereof (hereinafter referred to collectively as the
"Trademarks"), and (ii) all licenses, contracts or other agreements, whether
written or oral, naming Grantor as licensor or licensee and providing for the
grant of any right to use any Trademark, together with any goodwill connected
with and symbolized by any such trademark licenses or agreements and the right
to prepare for sale and sell any and all Inventory owned by Grantor and covered
by such licenses (hereinafter referred to collectively as the "Trademark
Licenses");
(e) (i) all letters patent, design patents and utility patents, and all
copyrights, inventions, trade secrets, proprietary information and technology,
know-how, formulae and other general intangibles of like nature owned by the
Grantor, all applications, registrations and recording thereof (including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office or in any similar office or agency of the
United States or any other country or any political subdivision thereof), and
all reissues, divisions, continuations in part and extensions or renewals
thereof (hereinafter referred to collectively as the "Patents"), and (ii) all
licenses, contracts or other agreements, whether written or oral, naming Grantor
as licensee or licensor and providing for the grant of any right to manufacture,
use or sell any invention covered by any patent (hereinafter referred to
collectively as the "Patent Licenses" and together with the Trademark Licenses,
the "Licenses");
(f) (i) all moneys, shares of capital stock of, membership interests
in, or other equity interests in, subsidiaries and other entities and other
securities (provided, however, that in the event that Grantor sells, transfers
or assigns all or substantially all of the assets or equity interests of GN
Comtext S.r.L., a wholly-owned Subsidiary of Grantor, in accordance with Section
1(d) of the Note, then the amounts received by Grantor pursuant to such transfer
shall not be Collateral hereunder); (ii) all property held by Lender for
Grantor, whether for safekeeping, pledge, custody, transmission, collection or
otherwise, (iii) all other general intangibles of every kind and nature,
including, without limitation, all corporate and other business records, all
loans, royalties, and all other forms of obligations receivable; (iv) all
computer programs, codes, software, printouts and other computer materials,
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customer lists, credit files, correspondence and advertising materials; (v) all
customer and supplier contracts, sale orders, rights under license and franchise
agreements, and other contracts and contract rights; (vi) all interests in
partnerships and joint ventures; (vii) all federal, state and local tax refunds
and federal, state and local tax refund claims; (viii) all right, title and
interest under leases, easements, rights of way, subleases, licenses and
concessions and other agreements relating to personal property; (ix) all deposit
accounts (general or special) with any bank or other financial institution; (x)
all credits with and other claims against third parties (including carriers and
shippers); (xi) all letters of credit, guaranties, liens, security interests and
other security held by or granted to Grantor; (xii) all instruments, files,
records, ledger sheets and documents covering or relating to any of the
Collateral; and (xiii) all other general intangibles, whether or not similar to
the foregoing;
(g) the books and records of Grantor relating to any of the foregoing
Collateral, including, without limitation, all customer contracts, sale orders,
minute books, ledgers, records, computer programs, software, printouts and other
computer materials, customer lists, credit files, correspondence and advertising
materials, in each case indicating, summarizing or evidencing any of the
Collateral;
(h) to the extent permitted under applicable law, all franchises,
operating rights, licenses and permits issued by the FCC or any other
governmental or regulatory body or agency, held by Grantor; and
(i) (i) all cash and non-cash proceeds and products of any and all of
the foregoing Collateral (including, without limitation, (A) damages and
payments for past or future infringements of the Trademarks or the Patents and
(B) the right to ▇▇▇ for past, present and future infringements of the
Trademarks or the Patents), (ii) all proceeds of any sale, lease or other
disposition of any Collateral, (iii) the proceeds of any award in condemnation
with respect to any of the Collateral, (iv) any rebates or refunds, whether for
taxes or otherwise, (v) any proceeds of any such proceeds, and, (vi) to the
extent not otherwise included, all payments under insurance (whether or not
Lender is the loss payee thereof), and any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of the
foregoing Collateral;
in each case howsoever Grantor's interests therein may arise or appear (whether
by ownership, security interest, claim or otherwise).
3. Security for Obligations
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This Agreement and the security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following
obligations, whether now existing or hereafter incurred (the "Obligations"):
(a) the prompt payment by (i) Grantor, as and when due and payable, of
all amounts from time to time owing by Grantor in respect of the Swift Note, the
Swift Pledge Agreement and this Agreement, in each case, as the same may be
amended from time to time, and (ii) ▇▇▇▇.▇▇▇, as and when due and payable, of
all amounts from time to time owing by ▇▇▇▇.▇▇▇ in respect of the ▇▇▇▇.▇▇▇ Note
and the ▇▇▇▇.▇▇▇ Pledge Agreement in each case, as the same may be amended from
time to time (collectively, the "Loan Documents"), whether for principal,
interest, costs, fees, expenses, indemnifications, or otherwise as and when the
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same shall become due and payable in accordance with the terms thereof, whether
at maturity or by prepayment, acceleration, declaration of default or otherwise;
and
(b) the due performance and observance by Grantor and ▇▇▇▇.▇▇▇ of all
of their other obligations from time to time existing in respect of all
applicable Loan Documents.
Without limiting the generality of the foregoing, this Agreement
secures the payment of all amounts that constitute part of the Obligations,
including, without limitation, amounts that would be owed by Grantor or ▇▇▇▇.▇▇▇
to Lender under the Swift Note or the ▇▇▇▇.▇▇▇ Note, respectively, but for the
fact that they are unenforceable due to the existence of a bankruptcy,
reorganization or similar proceeding involving Grantor or ▇▇▇▇.▇▇▇.
4. Representations and Warranties
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Grantor represents and warrants to Lender as follows:
(a) Except for the security interests created by this Agreement,
Grantor is and will be at all times the sole and exclusive owner of the
Collateral free and clear of any prior or pari passu Lien, with full authority
to sell, transfer and grant a security interest in each item of Collateral. No
effective financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any recording or filing office
except such as may have been filed in connection with this Agreement.
(b) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority, or any other Person, is required for
(i) the grant by Grantor and perfection of the first priority security interest
purported to be created hereby in the Collateral (other than the filing of
appropriate financing statements) or (ii) the exercise by Lender of any of its
rights and remedies hereunder.
(c) Other than with respect to the items referred to in Section 2(h),
this Agreement creates and, upon filing of all appropriate financing statements,
will continue to create valid and perfected Liens on, and security interests in,
the Collateral, in favor of Lender as security for the Obligations, which Liens
and security interests are, as to such Collateral, first priority.
(d) The correct corporate name of Grantor is set forth in the preamble
to this Agreement, the principal place of business and chief executive office of
Grantor, and the place where Grantor's books and records concerning the
Collateral are currently kept, is the address for notice pursuant to Section 15
hereof.
(e) The business conducted by Grantor has not been conducted under any
corporate, trade or fictitious name other than the name of Grantor set forth in
the preamble to this Agreement.
5. Further Assurances
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(a) Grantor agrees that at any time and from time to time, it will
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary, or that Lender may at any time reasonably
request, in order to (i) more fully perfect and protect any security interest
granted or purported to be granted hereby, (ii) preserve and defend against any
person its title to the Collateral and the rights purported to be granted
therein by this Agreement to Lender, (iii) enable Lender to exercise and enforce
its rights and remedies hereunder with respect to any Collateral, or (iv)
otherwise to effect the purposes of this Agreement, including, without
limitation executing and filing such financing or continuation statements, or
amendments thereto, as may be necessary in order to perfect and preserve the
security interest purported to be created hereby. Grantor shall take or cause to
be performed such acts and actions as shall be necessary or appropriate to
assure that the security interest granted hereunder upon the Collateral shall
not become subordinate or junior to the security interest, liens or claims of
any other person. If any Inventory or Equipment is stored with any third party,
Grantor will cause all documents, instruments and certificates as Lender may
from time to time reasonably require related to such Inventory and Equipment to
be delivered to Lender, and Grantor will take or cause to be taken all such
other reasonable actions as Lender may from time to time require in connection
with its security interest in such Inventory or Equipment.
(b) Upon the request of Lender, Grantor shall cause its lenders to
temporarily release any applicable Liens in the event that such is necessary in
order for Lender to perfect its first priority security interest in the
Collateral as such is granted hereunder.
6. Covenants as to the Collateral
------------------------------
So long as any of the Obligations shall remain outstanding, unless
Lender shall otherwise consent in writing:
(a) Grantor will cause the Equipment to be maintained and preserved in
working order in accordance with any manufacturer's manual, ordinary wear and
tear excepted; provided, however, that with respect to the Equipment sold to
Grantor under the terms of the Purchase Agreement, Grantor will cause such
Equipment to be maintained and preserved substantially in the condition in which
such Equipment was delivered to Grantor, ordinary wear and tear excepted.
Grantor will promptly furnish to Lender a statement describing in reasonable
detail any loss or damage (net of insurance proceeds) in excess of $25,000 to
any Equipment.
(b) Grantor will pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Equipment and
Inventory, except to the extent the validity thereof is being contested in good
faith by proper proceedings which stay the imposition of any penalty, fine or
lien resulting from the non-payment thereof and with respect to which adequate
reserves in accordance with GAAP have been set aside for the payment thereof.
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(c) Grantor will (i) fulfill, perform and observe each and every
material condition and covenant contained in any of the Related Contracts, (ii)
give prompt notice to Lender of any claim of default asserted by or against
Grantor and, to Grantor's knowledge, any default by Grantor or by any other
party under any of the Related Contracts, (iii) at the sole cost and expense of
Grantor and to the extent deemed reasonable and appropriate by Grantor in its
business judgment, enforce the performance and observance of each and every
material covenant and condition of the Related Contracts to be performed or
observed by other parties to any of the Related Contracts, and (iv) appear in
and defend any action growing out of or in any manner connected with any Related
Contract. The rights and interest transferred and assigned to Lender hereunder
include all of Grantor's rights and titles, (A) to modify the Related Contracts,
(B) to terminate the Related Contracts and (C) to waive or release performance
or observance of any obligation or condition of the Related Contracts; provided,
however, that these rights shall not be exercised by Lender unless there shall
exist and be continuing an Event of Default, and until such time, Grantor shall
(subject to paragraph (e) below) have the right to exercise such rights in its
reasonable judgment and pursuant to the terms of the Loan Documents.
(d) Grantor will exercise promptly and diligently each and every right
which it may have under each License and under each of the items described in
Section 2(h) (other than any right of termination) and will duly perform and
observe in all material respects all of its obligations thereunder and will take
all reasonable action necessary to maintain the same in full force and effect,
including without limitation making all installment payments required to be made
no later than the applicable due date and filing all documents, applications,
reports and fees as required. Grantor will not, without the prior written
consent of Lender, cancel, terminate, amend or otherwise modify in any respect,
or waive any material provision of, any Related Contract or any License.
(e) To the extent that Grantor owns Trademarks or Patents, Grantor
(either itself or through licensees) will, and will cause each licensee thereof
to, take all action necessary to maintain all of its Trademarks and Patents in
full force and effect, including, without limitation, using the proper statutory
notices and markings and using such Trademarks on each applicable trademark
class of goods in order to so maintain such Trademarks in full force free from
any claim of abandonment for non-use, and employing all of its Trademarks and
Patents with appropriate notice of registration, and Grantor will not (and will
not permit any licensee thereof to) do any act or knowingly omit to do any act
whereby any Trademark may become invalidated. Grantor will cause to be taken all
necessary steps in any proceeding before the United States Patent and Trademark
Office to maintain each registration of any such Trademarks and the Patents.
(f) If Grantor shall become entitled to receive or shall receive any
rights or securities, Grantor agrees to accept the same for Lender and to hold
the same in trust for Lender and to deliver the same forthwith to Lender in the
exact form received, with the endorsement of Grantor when necessary and
appropriate and undated stock powers duly executed in blank, to be held by
Lender, subject to the terms hereof, as security for the Obligations. In case
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any dividends payable in securities shall be distributed upon or with respect to
any Collateral hereunder, the securities so distributed shall be delivered to
Lender, to be held by Lender as collateral security for the Obligations.
(g) Grantor shall permit representatives of Lender, at any reasonable
time, to inspect and make abstracts from its books and records pertaining to the
Collateral, and permit representatives of Lender to be present at Grantor's
places of business to receive copies of all communications and remittances
relating to the Collateral, and to forward copies of any notices or
communications received or made by Grantor with respect to the Collateral, all
in such manner as Lender may reasonably require.
(h) Except in accordance with transactions contemplated by the Merger
Agreement, Grantor will not change its name, identity, form of doing business or
location of chief executive office, principal place of business or books and
records, nor will it register or conduct its business under any trade or
fictitious name other than its true corporate name, nor will it establish
additional places of business or additional locations at which any Collateral is
stored, unless such additional locations are within the continental United
States and unless Grantor shall have (i) given Lender sixty (60) days' written
notice thereof and (ii) certified that all filings reflecting such changes or
additional locations have been made which are necessary and appropriate to
preserve the perfection of the security interests described herein; provided,
however, that this Section 6(h) shall not be applicable to the transactions .
7. Additional Provisions Concerning the Collateral
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Grantor hereby authorizes Lender to file, without the signature of
Grantor where permitted by law, such financing or continuation statements and
such other documents as Lender may deem necessary or desirable to protect and
perfect the interest of Lender in the Collateral. Grantor further irrevocably
appoints Lender Grantor's attorney-in-fact, with power of attorney to execute on
behalf of Grantor such UCC financing statement amendment forms as Lender may
from time to time deem necessary or desirable to protect or perfect and protect
such interests. Such power of attorney is coupled with an interest and shall be
irrevocable for so long as the Obligations remain unpaid or underperformed.
8. Lender Appointed Attorney in Fact
---------------------------------
Grantor hereby irrevocably appoints Lender or its designee on behalf of
Lender Grantor's attorney-in-fact and proxy, with full authority in the place
and stead of Grantor and in the name of Grantor or otherwise, from time to time
in Lender's discretion, to take any action and to execute any instrument which
Lender deems to be necessary or advisable for accomplishing the purposes of this
Agreement including, without limitation, (i) to obtain and adjust insurance
required to be paid to Lender, (ii) to ask, demand, collect, ▇▇▇ for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any Collateral, (iii) to receive, endorse, assign and
collect any drafts or other instruments, documents and chattel paper in
connection with clause (i) or (ii) above, (iv) to prepare and file all
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applications and other documents necessary to maintain the items described in
Section 2(h) in full force and effect and Grantor the authorized legal holder
thereof and (v) to file any claims or take any action or institute any
proceedings which Lender may deem necessary or desirable for the collection of
any Collateral or otherwise to enforce the rights of Lender with respect to any
Collateral. All acts of such attorney or designee are hereby ratified and
approved, and such attorney or designee shall not be liable for any acts of
omission or commission (other than acts or omissions constituting gross
negligence or willful misconduct as determined by a final judgment or a court of
competent jurisdiction). This power of attorney is coupled with an interest and
is irrevocable until all of the Obligations are paid in full.
9. Lender May Perform
------------------
If Grantor fails to perform any agreement or obligation contained
herein, Lender may (without obligation to do so and without releasing Grantor
from its obligation to do so) itself perform, or cause performance of, such
agreement or obligation, in the name of Grantor or Lender, and the expenses of
Lender incurred in connection therewith, together with interest on such amounts
from the date of payment or incurrence, at a rate of interest per annum equal to
the interest rate then in effect under the Note, shall constitute additional
Obligations secured by this Agreement and shall be payable by Grantor,
including, without limitation, any costs or expenses of litigation associated
therewith.
10. Lender's Duties
---------------
(a) The powers conferred on Lender hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Lender shall have no duty as to any Collateral, as to ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Collateral, whether or not Lender has
or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral.
(b) Anything herein to the contrary notwithstanding (i) Grantor shall
remain liable under the Related Contracts and Licenses to which it is a party
and otherwise with respect to any of the Collateral to the extent set forth
therein to perform all of its obligations thereunder to the same extent as if
this Agreement had not been executed, (ii) the exercise by Lender of any of its
rights hereunder shall not release Grantor from any of its obligations under the
Related Contracts and Licenses or otherwise in respect of the Collateral, and
(iii) Lender shall not have any obligation or liability by reason of this
Agreement under the Related Contracts and Licenses or with respect to any of the
other Collateral, nor shall Lender be obligated to perform any of the
obligations or duties of Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
11. Remedies Upon Default
---------------------
In the event that an Event of Default under the Note shall have
occurred and be continuing:
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(a) Lender may (but shall not be obligated to) exercise in respect of
the Collateral, or any part thereof, in addition to other rights and remedies
provided for herein or otherwise available to it, all of the rights and remedies
of a secured party in default under the Code in effect in the State of New York
(or such other applicable jurisdiction as Lender may determine) at that time
(the "Code"), and may also, without demand of performance or other demand,
advertisement or notice, except as specified below (all of which demands,
advertisements, and/or notices are hereby expressly waived by Grantor) (i) take
absolute control of the Collateral, including without limitation transfer into
the name of Lender or into the name of its nominee or nominees (to the extent
Lender has not theretofore done so) and thereafter receive, for the benefit of
Lender, all payments made thereon, give all consents, waivers and ratifications
in respect thereof and otherwise act with respect thereto as though it were the
outright owner thereof, (ii) require Grantor to, and Grantor hereby agrees that
it will at its expense and upon request of Lender forthwith, assemble all or
part of the Collateral as directed by Lender and make it available to Lender at
a place or places to be designated by Lender which is reasonably convenient to
both parties, and Lender may enter into and occupy any premises owned or leased
by Grantor where the Collateral of any part thereof is located or assembled for
a reasonable period in order to effectuate the rights and remedies of Lender
hereunder, without obligation to Grantor in respect of such occupation, and
(iii) 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 of the offices
of Lender or elsewhere, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as Lender may deem commercially
reasonable. Grantor agrees that, to the extent notice of sale shall be required
by law, at least 10 days' notice to Grantor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. Lender shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Lender may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. Grantor hereby waives any claims
against Lender arising by reason of the fact that the price at which the
Collateral may have been sold at a private sale was less than the price which
might have been obtained at a public sale or was less than the aggregate amount
of the Obligations, even if Lender accepts the first offer received and does not
offer the Collateral to more than one offeree and waives all rights which a
Grantor may have to require that all or any part of the Collateral be marshaled
upon any sale (public or private) thereof.
(b) Any cash held by Lender as Collateral and all cash proceeds
received by Lender in respect of any sale or collection from, or other
realization upon, all or any part of the Collateral, after payment from such
proceeds of Lender's out-of-pocket costs and expenses in connection with such
sale, including, without limitation, reasonable attorneys' fees and expenses,
may, in the discretion of Lender, be held by Lender as collateral for, and/or
then or at any time thereafter be applied in whole or in part by Lender against,
all or any part of the Obligations in such manner as Lender may elect in its
sole discretion.
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(c) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which Lender is legally
entitled, Grantor shall be liable for the deficiency, together with interest
thereon at the applicable interest rate under the Note or such other rate as
shall be fixed by applicable law, together with the costs of collection and the
reasonable fees, costs, expenses and other client charges of any attorneys
employed by Lender to collect such deficiency. In the event that the proceeds of
any such sale, collection or realization are sufficient to pay all amounts to
which Lender is legally entitled, Grantor shall be entitled to receive any such
proceeds over and above such amounts.
(d) Upon the occurrence and during the continuance of an Event of
Default, (i) Lender may, but shall not be obliged to and without releasing
Grantor from its obligation to do so proceed to perform any and all of the
obligations of Grantor contained in any of the Related Contracts and exercise
any and all rights of the Grantor therein contained as fully as Grantor itself
could, and (ii) should Grantor fail to perform or observe any covenant or comply
with any condition contained in any of the Related Contracts, then the Lender
may, but without obligation to do so and without releasing Grantor from its
obligation to do so, perform such covenant or condition. To the extent that
Lender shall incur any costs or pay any expenses in connection therewith,
including, without limitation, any costs or expenses of litigation associated
therewith, such reasonable costs, expenses or payments shall be included in the
Obligations and shall bear interest from the payment of such costs or expenses
at the rate of the lower of 18% per annum and the highest interest rate
permitted under applicable law. Grantor hereby appoints Lender as its
attorney-in-fact, effective upon the occurrence and during the continuance of an
Event of Default, with power of substitution, to take such action, execute such
documents, and perform such work, as Lender may deem appropriate in exercise of
the rights and remedies granted Lender herein. The powers herein granted shall
include, but not be limited to, powers to ▇▇▇ on the Related Contracts. The
power of attorney granted herein is coupled with an interest and shall be
irrevocable for so long as any of the Obligations remains unpaid or
underperformed.
12. Expenses
--------
Grantor will upon demand pay to Lender the amount of any and all costs
and expenses, including the fees, costs, expenses and other client charges of
counsel for Lender and of any experts and agents (including, without limitation,
any Person which may act as agent of Lender), that Lender may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Lender hereunder, or (iv) the failure by Grantor to perform
or observe any of the provisions hereof. Any amounts payable under this Section
12 shall be included in the Obligations and shall bear interest from the payment
of such costs or expenses at the rate specified in the Note.
13. Security Interest Absolute; Termination
---------------------------------------
11
(a) All rights of Lender, all security interests and all obligations of
Grantor hereunder shall be absolute and unconditional irrespective of: (i) any
lack of validity or enforceability of the Loan Documents or any other agreement
or instrument relating thereto, (ii) any change in the time, manner or place of
payment of, or in any other term in respect of, all or any of the Obligations,
or any other amendment or waiver of or consent to any departure from the Loan
Documents or any other agreement or instrument relating thereto, (iii) any
exchange or release of, or non-perfection of any lien on any collateral, or any
release or amendment or waiver of or consent to departure from any guaranty, for
all or any of the Obligations, or (iv) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, Grantor in
respect of the Obligations.
(b) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the date Grantor
has indefeasibly paid in full in cash all of the Obligations, (ii) be binding
upon Grantor and its heirs, successors and assigns, and (iii) inure, together
with the rights and remedies of Lender hereunder, to the benefit of, and be
enforceable by, Lender and its successors and assigns. Grantor agrees that the
security interest in the Collateral shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment (in whole or in part)
of any of the Obligations is rescinded or must otherwise be restored by Lender
for any reason, all as though such payment had not been made. Subject to the
foregoing, upon the satisfaction in full of the Obligations (i) this Agreement
and the security interests created hereby shall terminate and all rights to the
Collateral shall revert to Grantor and (ii) Lender will, upon Grantor's request
and at Grantor's expense, (A) return to Grantor such of the Collateral as shall
not have been sold or otherwise disposed of or applied pursuant to the terms
hereof and (B) execute and deliver to Grantor such documents as Grantor shall
reasonably request to evidence such termination, all without any representation,
warranty or recourse whatsoever.
14. Amendments, etc.
----------------
No amendment or waiver of any provision of this Agreement, and no
consent to any departure by Grantor herefrom, shall in any event be effective
unless the same shall be in writing and signed by Grantor and Lender, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
15. Notices, Etc.
-------------
All notices and other communications under this Agreement shall be in
writing and shall be deemed given when delivered personally, mailed by
registered or certified mail, return receipt requested, sent by recognized
overnight delivery service (signature of receipt requested) or, to the extent
receipt is confirmed, by telecopy or telefax (provided that such party also
sends a copy by personal delivery or registered or certified mail, return
receipt requested, or recognized overnight delivery service, signature of
receipt requested), to the following addresses (or to such other address as a
party may have specified by notice given to the other party pursuant to this
provision):
12
Grantor:
Swift Telecommunications, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
Attention: President
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
Lender:
AT&T Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M&A
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
General Attorney
AT&T Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Room 3235C2
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
16. Governing Law, Choice of Forum, No Trial By Jury
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS
CONFLICT OF LAW PRINCIPLES, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW
AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OF THE SECURITY
INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
13
(b) ANY LEGAL ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT LOCATED IN NEW
YORK COUNTY, STATE OF NEW YORK, AND EACH PARTY AGREES NOT TO ASSERT, BY WAY OF
MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH ACTION, SUIT OR PROCEEDING, ANY
CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF SUCH COURTS, THAT
ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE ACTION,
SUIT OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE
ACTION, SUIT OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT OR THE SUBJECT
MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND HEREBY WAIVES ANY
OFFSETS IN ANY SUCH ACTION, SUIT OR PROCEEDING. EACH PARTY FURTHER IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH ACTION, SUIT OR
PROCEEDING. ANY AND ALL SERVICE OF PROCESS AND ANY OTHER NOTICE IN ANY SUCH
ACTION, SUIT OR PROCEEDING SHALL BE EFFECTIVE AGAINST ANY PARTY IF GIVEN
PERSONALLY OR BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY
ANY OTHER MEANS OF MAIL THAT REQUIRES A SIGNED RECEIPT, POSTAGE PREPAID, MAILED
TO SUCH PARTY AS HEREIN PROVIDED, OR BY PERSONAL SERVICE ON SUCH PARTY WITH A
COPY OF SUCH PROCESS MAILED TO SUCH PARTY BY REGISTERED OR CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, POSTAGE PREPAID. NOTHING HEREIN CONTAINED SHALL BE
DEEMED TO AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY MANNER PERMITTED
BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OTHER
PARTY IN ANY JURISDICTION OTHER THAN NEW YORK IN CONNECTION WITH ACTIONS
INITIATED BY THIRD PARTIES IN SUCH OTHER JURISDICTIONS.
(c) BY ITS EXECUTION AND DELIVERY OF THIS SECURITY AGREEMENT, LENDER
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH, THIS SECURITY AGREEMENT, THE NOTE OR ANY OTHER LOAN
DOCUMENT, ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF LENDER OR GRANTOR IN CONNECTION HEREWITH OR THEREWITH. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR LENDER TO MAKE ADVANCES UNDER THE NOTE.
17. Waiver
------
14
Grantor hereby waives promptness, diligence, notice of acceptance and
any other notice with respect to any Obligations or Grantor's obligations
hereunder and any requirement that Lender protect, secure, perfect or insure any
security interest or Lien, or any property subject thereto, or exhaust any right
or take any action against Grantor or any other Person.
18. Rights Cumulative
-----------------
No failure on the part of Lender to exercise, and no delay in
exercising, any right or power hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right or power preclude any
other or further exercise thereof or the exercise of any other right or power.
The rights and remedies of Lender provided herein are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law. No
provision for a specific remedy shall be deemed to limit Lender's remedies at
law or in equity. The rights of Lender hereunder are not conditional or
contingent on any attempt by Lender to exercise any of its rights under any
other document against Grantor or against any other Person.
19. Assignment
----------
This Agreement shall be binding on Grantor and its successors and
permitted assigns (including any trustee succeeding to the rights of Grantor
pursuant to Chapter 11 of the Bankruptcy Code or pursuant to any conversion to a
case or cases under Chapter 7 of the Bankruptcy Code), and shall inure, together
with all rights and remedies of Lender hereunder, to the benefit of Lender and
its successors and assigns, provided that Grantor may not assign any of its
rights or obligations hereunder without the prior written consent of Lender and
any purported assignment without such consent shall be null and void.
20. Survival of Representations and Warranties
------------------------------------------
All representations and warranties of Grantor contained herein or made
in connection herewith shall survive the making of and shall not be waived by
the execution and delivery of this Agreement or any other Loan Document or any
investigation by Lender. All covenants and agreements of Grantor contained
herein shall continue in full force and effect from and after the date hereof
until the indefeasible payment in full of the Obligations.
21. Severability
------------
Whenever possible each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by, illegal, unenforceable or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition, illegality, unenforceability or invalidity under such law,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
22. Interpretation
--------------
15
Grantor and Lender have participated jointly in the negotiation and
drafting of this Agreement. In the event that any ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of authorship of any provisions of
this Agreement.
23. Headings
--------
Section headings in this Agreement are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
24. Counterparts
------------
This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which, when taken together, shall constitute a single
contract. Delivery of an executed counterpart of a signature page to this
Agreement by telecopy shall be as effective as delivery of a manually executed
counterpart of this Agreement.
25. Entire Agreement
----------------
This Agreement and the other Loan Documents (together with the
schedules and exhibits hereto and thereto) embody the entire agreement between
the parties hereto and thereto relating to the transactions provided for herein
and therein and supersede all prior understandings and agreements, whether
written or oral, between the parties hereto and thereto with respect to such
transactions.
[Signature page follows]
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SWIFT TELECOMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
Title: President & CEO
ACKNOWLEDGED AND AGREED:
AT&T CORP.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: General Manager
